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Exhibit 10.1

LOAN AGREEMENT

        This Loan Agreement (this "Agreement") is entered into as of
September 9, 2002 (the "Effective Date") by and between EarthShell Corporation,
a Delaware corporation (the "Company"), and E. Khashoggi Industries, LLC, a
Delaware limited liability company ("Lender").

        WHEREAS, Lender is willing, pursuant to the terms and conditions of this
Agreement, to extend certain loans (each of which is herein referred to as a
"Loan" and collectively, as the "Loans") to the Company, with the amount of
funds to be loaned to the Company to be determined by Lender in its sole
discretion;

        WHEREAS, the Loans shall be secured by an obligation of the Company to
issues shares of the Company's common stock, par value $.01 per (the "Common
Stock") in an amount equal to 2,000,000 shares of Common Stock for each
$1,000,000 of funds actually loaned (or a pro rated number of shares for each
portion of $1,000,000 loaned under each Loan) (the "Shares"), on the terms and
subject to the conditions set forth herein; and

        WHEREAS, the Company wishes to obtain such Loans;

        NOW, THEREFORE, the parties hereby agree as follows:

        1.    LOAN. Lender will extend certain Loans to the Company in amounts
and at times to be determined by Lender in its sole discretion, as described in
and subject to the terms and conditions set forth in this Agreement. Each Loan
will be evidenced by a Promissory Note in substantially the form attached hereto
as Exhibit A (each, a "Note").

        2.    MECHANICS. Each time the Company desires to obtain a Loan from
Lender hereunder, Company shall provide a notice in writing to Lender, stating
the amount of the requested Loan and the date on which the Loan shall be made
(the "Loan Date"). If Lender desires to extend such Loan to the Company
hereunder (which determination shall be made by Lender in Lender's sole
discretion) Lender shall so notify the Company in writing. If Lender notifies
Company that it is willing to extend the requested Loan, Company shall, on or
prior to the Loan Date, deliver to Lender a Note in the amount of such Loan. As
of the Effective Date, the Company has requested, and Lender has agreed to
extend a Loan (the "Initial Loan") to the Company in the amount of $350,000.

        3.    LOAN TERM; INTEREST; REPAYMENT; PREPAYMENT. The term of the this
Agreement will begin on the Effective Date. Interest on the unpaid principal
balance of any Loan (such unpaid principal balance with respect to any Loan is
referred to as the "Outstanding Balance") will accrue from the date of such loan
at the rate of ten percent (10%) per annum, calculated on the basis of a 360-day
year and actual days elapsed; provided, however, that no such accrued interest
shall be due and payable prior to the 30th day following the date of such Loan
(with respect to each such Loan, a "Repayment Commencement Date"). The Company
will repay the Outstanding Balance plus all interest accrued thereon on the
first to occur of (i) receipt by the Company of the proceeds from a Qualified
Financing (as defined below) and (ii) the Repayment Commencement Date. The
Company may prepay all or any portion of the Outstanding Balance with respect to
any Loan without penalty, together with accrued interest on the portion of the
Outstanding Balance to be prepaid, upon five days prior written notice to
Lender. The term "Qualified Financing" shall mean an investment in the Company's
Common Stock occurring after the date hereof by an established regional or
national venture capital fund or other similar investor, which investment and
investor is acceptable to Lender (or its affiliates), in which the Company
receives net proceeds greater that $4,000,000.

        4.    DEFAULT; CONVERSION. The failure by the Company to repay any Loan
as it becomes due in accordance with the terms of this Agreement and the Note
within five (5) business days after the

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due date thereof shall constitute a default hereunder (a "Default"). Upon a
Default by the Company, Lender may elect to convert the Outstanding Balance
under each Loan into Shares of Common Stock at the Conversion Price, by giving
written notice of default to the Company (the "Notice of Default"). The Notice
of Default shall state which Loans the Lender is electing to convert into Shares
of Common Stock. Within two (2) business days of receipt of the Notice of
Default, the Company shall deliver to Lender the Shares issuable to Lender
hereunder. The "Conversion Price" shall be equal to $0.50 per Share, subject to
adjustment for any stock split, reverse stock split, stock dividend or similar
transaction. The issuance of the Shares to Lender upon the conversion of the
Outstanding Balance shall be registered pursuant to the Company's Registration
Statement on Form S-3 (No. 333-76092) (the "Registration Statement"). The
Company shall maintain a reserve from its duly authorized shares of Common Stock
for issuance of the Shares pursuant to this Agreement in such amounts as may be
required to fulfill its obligations in full under this Agreement, and shall
reserve under the Registration Statement, for the life of the Loans, such number
of Shares as may be required to be issued hereunder.

        5.    INTENTIONALLY OMITTED.

        6.    MISCELLANEOUS.

        6.1.  Governing Law. This Agreement shall be governed in all respects by
and construed in accordance with the laws of the State of California without
regard to provisions regarding choice of laws.

        6.2.  Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto whose rights or obligations hereunder are affected by such
amendments. This Agreement and the rights and obligations therein may not be
assigned by Lender without the prior written consent of the Company except to a
parent corporation, a subsidiary or affiliate. This Agreement and the rights and
obligations therein may not be assigned by the Company without the prior written
consent of Lender.

        6.3.  Entire Agreement. This Agreement, the Note and the Security
Agreement (all of which are hereby expressly incorporated herein by this
reference) constitute the entire understanding and agreement between the parties
with regard to the subjects hereof and thereof.

        6.4.  Notices. Except as may be otherwise provided herein, all notices
and other communications required or permitted hereunder shall be in writing and
shall be conclusively deemed to have been duly given (a) when hand delivered to
the other party; (b) when received when sent by facsimile at the address and
number set forth below; (c) three business days after deposit in the U.S. mail
with first class or certified mail receipt requested postage prepaid and
addressed to the other party as set forth below; or (d) the next business day
after deposit with a national overnight delivery service, postage prepaid,
addressed to the parties as set forth below with next-business-day delivery
guaranteed, provided that the sending party receives a confirmation of delivery
from the delivery service provider.

To Lender: To the Company:
E. Khashoggi Industries, LLC
800 Miramonte Drive
Santa Barbara, CA 93109
Attn: John Daoud
Fax Number: 805 957-4362
EarthShell Corporation
800 Miramonte Blvd.
Santa Barbara, CA 93109
Attn: Chief Financial Officer
Fax Number: (805) 899-3517

        Each person making a communication hereunder by facsimile shall promptly
confirm by telephone to the person to whom such communication was addressed each
communication made by it by facsimile

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pursuant hereto but the absence of such confirmation shall not affect the
validity of any such communication. A party may change or supplement the
addresses given above, or designate additional addresses, for purposes of this
Section by giving the other party written notice of the new address in the
manner set forth above.

        6.5.  Amendments. Any term of this Agreement may be amended only with
the written consent of Company and Lender.

        6.6.  Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.

        6.7.  Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

        6.8.  Submission to Jurisdiction; Agent for Service. EACH OF THE PARTIES
HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
THE CITY OF SANTA BARBARA, STATE OF CALIFORNIA, AND IRREVOCABLY AGREES THAT ALL
ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY AGREEMENT OR INSTRUMENT
EXECUTED HEREUNDER SHALL BE LITIGATED IN SUCH COURTS, AND EACH OF THE PARTIES
WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON
CONVENIENS TO THE CONDUCT OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS TO ALL SUCH
SERVICE OF PROCESS MADE IN THE MANNER SET FORTH IN SECTION 6.4. Nothing
contained in this Section shall affect the right of any party to serve legal
process on any other party in any other manner permitted by law.

* * * *

        IN WITNESS WHEREOF, the parties have executed this Loan Agreement to be
effective as of the date first above written.

E. KHASHOGGI INDUSTRIES, LLC   EARTHSHELL CORPORATION
 
 
 
 
 
 
  By:   /s/  ESSAM KHASHOGGI      

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Name: Essam Khashoggi
Title: CEO and President   By:   /s/  D. SCOTT HOUSTON      

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Name: D. Scott Houston
Title: Chief Financial Officer

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Exhibit 10.1