Exhibit 4.4


 


WAIVER AND AMENDMENT TO


 


DEBENTURES AND WARRANTS


 


This Waiver and Amendment
(this “Waiver and Amendment”) to
Debentures and Warrants is entered into and dated as of March 5, 2003, among
EarthShell Corporation, a Delaware corporation (the “Company”), and the purchasers
identified on the signature pages hereto (each, a “Purchaser” and collectively,
the “Purchasers”).


 


WHEREAS, the Company and the
Purchasers are parties to that certain Securities Purchase Agreement (as
amended from time to time, the “Agreement”) dated as of August 12,
2002, pursuant to which the Company issued and sold to the Purchasers, and the
Purchasers purchased from the Company, certain securities of the Company
pursuant to the terms set forth therein;


 


WHEREAS, pursuant to the
Agreement, the Company issued to the Purchasers the Warrants and the
Debentures; and


 


WHEREAS, the Company and the
Purchasers desire to amend each of the Warrants as set forth herein, and the
Purchasers desire to provide certain waivers under the Debentures;


 


WHEREAS, the Company intends
to prepay (i) $1,404,000 of the $1,673,500 outstanding principal amount of the
Debentures issued by the Company to Cranshire Capital, L.P. (“Cranshire”) under the Agreement, (ii)
$1,092,000 of the $1,279,500 outstanding principal amount of the Debentures
issued by the Company to Cleveland Overseas Limited (“Cleveland”) under the Agreement, and (iii)
$2,704,000 of the $5,247,000 outstanding principal amount of the Debentures
issued by the Company to Beacon Equities, Inc. (“Beacon”) under the Agreement (the sum of the amounts referred
to in clauses (i) – (iii), the “Prepayment
Amount”);


 


WHEREAS, it has been
proposed that the Company issue a new series of 2% Convertible Debentures Due
March 5, 2006, in the aggregate principal amount of $10,550,000, pursuant to a
Securities Purchase Agreement among the Company and the purchasers named
therein (such transactions being collectively referred to as the “New Financing”);


 


NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the Company and the Purchasers agree to amend each of the
Warrants, and the Purchasers agree to provide certain waivers, as follows:


 


1.                                      Anti-Dilution
Adjustment Resulting from New Financing.


 


Notwithstanding any other
provision of the Warrant or the Debentures, each of the Purchasers and the
Company agree that the New Financing, if consummated, shall result in the
following:


 


(a)                                  the Conversion
Price of each Debentures shall be amended to be $0.50 per share, which is equal
to the initial conversion price of the debt securities in the New Financing;
and


 


1

















 


(b)                                 the Exercise
Price of each Warrant shall be amended to be $0.50 per share, which is equal to
the initial conversion price of the debt securities in the New Financing.  The Company will promptly, and in any event
on or prior to March 11, 2003, cause a new warrant reflecting such amended
Exercise Price to be issued in exchange for each Warrant.


 


2.                                      Pre-New
Financing Amendment to Warrant Anti-Dilution.


 


Each of the Purchasers
agrees that the New Financing shall not result in any increase in the number of
Warrant Shares issuable under any of the Warrants.  In addition, effective immediately prior to the consummation of
the New Financing and after giving effect only to the adjustments agreed upon
under Section 1 above, Section 9(f) of each of the Warrants is hereby amended
and restated in its entirety as follows:


 


“(f)                              Number of
Warrant Shares. 
Simultaneously with any adjustment to the Exercise Price pursuant to
paragraphs (a) or (b) of this Section, the number of Warrant Shares that may be
purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the increased or decreased number of Warrant Shares shall
be the same as the aggregate Exercise Price then in effect immediately prior to
such adjustment.”


 


3.                                      Sale by
Beacon of $2,000,000 Principal Amount of Debentures; Amendment.


 


Each of the Purchasers
hereby, for all purposes under the Debentures and the Warrants, acknowledges
and consents to the proposed sale by Beacon to Omicron Master Trust,
concurrently with the New Financing, of an aggregate principal amount of
$2,000,000 of the Debenture issued to Beacon under the Agreement (the “Sold Debentures”).  Each of the Purchasers hereby, for all
purposes under the Debentures and the Warrants, further acknowledges and
consents to the proposed amendment and modification of the Sold Debentures by
the Company and Omicron Mater Trust.


 


4.                                      Prepayment
of Aggregate Principal Amount of $5,200,000 of Debentures.


 


(a)                                  The Company and
each of the Purchasers hereby acknowledge and agree that this agreement shall
constitute a Company Prepayment Notice under each of the Debentures with
respect to the Company’s election to prepay an aggregate of $5.2 million
principal amount of the Debentures (the “Prepaid Debentures”) in the following
amounts pursuant to Section 8(a) of the Debentures: (i) $2,704,000 to Beacon,
together with the prepayment price of 4% in the amount of $108,160; (ii)
$1,404,000 to Cranshire, together with the prepayment price of 4% in the amount
of $56,160; and (iii) $1,092,000 to Cleveland, together with the prepayment
price of 4% in the amount of $43,680. 
Each of the Purchasers hereby agrees to waive (i) the 20 Trading Day
period under Section 8(a)(ii) of the Debentures between the Company Notice Date
(as defined in the Debentures) and payment of the Company Prepayment Price (as
defined in the Debentures) with respect to the Prepayment Amount, and (ii) the
obligation of the Company under Section 8(a)(iii) of the Debentures to make any
prepayment of the Debentures pro rata
among all holders of the Debentures with respect to the Prepayment Amount.


 


2

















 


(b)                                 Each Purchaser
shall, concurrently with the execution and delivery of this Agreement, deliver
a certificate to Wachovia Bank, National Association (the “Bank”), instructing
the Bank to reduce the undrawn face amount of the Irrevocable Standby Letter of
Credit issued to such Purchaser by the Bank (all of such Irrevocable Standby
Letters of Credit, collectively, the “Letters
of Credit”) in connection with the Agreement, in accordance with the
terms and conditions of the Letter of Credit, as follows:


 


(i)                                     Beacon shall
instruct the Bank to reduce to $543,000 the undrawn face amount of the Letter
of Credit issued by the Bank to Beacon;


 


(ii)                                  Cranshire shall
instruct the Bank to reduce to $269,500 the undrawn face amount of the Letter
of Credit issued by the Bank to Cranshire; and


 


(iii)                               Cleveland shall
instruct the Bank to reduce to $187,500 the undrawn face amount of the Letter
of Credit issued by the Bank to Cleveland.


 


5.                                      Payment of
Fees by the Company to the Purchasers and Beacon.


 


The Company and each of the
Purchasers hereby, for all purposes under the Debentures and the Warrants,
acknowledge and consent to the following fees to be paid by the Company:


 


(a)                                  Concurrently
with the consummation of the New Financing, the Company shall issue, as payment
of additional interest with respect to the Prepaid Debentures, an aggregate of
625,000 shares of Common Stock (the “Purchaser Shares”) to the Purchasers in
the following amounts:


 


(i)                                     Beacon:                                                     399,924 shares;


(ii)                                  Cranshire:                                          127,553 shares;
and


(iii)                               Cleveland:                                        97,523 shares.


 


(b)                                 Each Purchaser
agrees that it shall maintain beneficial ownership (as defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) of a number
of shares equal to at least the number of the shares issued to it under Section
5(a) hereof; provided that such obligation to maintain such beneficial ownership
shall be released and terminated as to 1/6 of such shares upon each of the
following dates:  the dates that are one
month, two months, three months, four months, five months and six months after
the closing of the New Financing.


 


(c)                                  Concurrently with
the consummation of the New Financing and in consideration of Beacon’s services
in working with the Purchasers to negotiate the terms and conditions hereof,
the Company shall issue to Beacon, as additional interest under the Debentures
retained by Beacon, an aggregate of $80,000.


 


(d)                                 Concurrently
with the issuance of the Purchaser Shares to the Purchasers under Section 5(a)
above, the Company will also issue shares of Common Stock to the Purchasers in
respect of the accrued interest on the Prepaid Debentures and the Sold
Debentures, as follows:  16,000 shares
to Beacon Equities, Inc.; 4,776 shares to Cranshire Capital, L.P.; and 3,715
shares to Cleveland Overseas Limited.


 


3

















 


6.                                      Finder
Agreement


 


The Company agrees that upon
consummation of the New Financing it will pay to Olympus Securities, LLC
(“Olympus”), under that certain letter agreement dated August 2, 2002 between
the Company and Olympus, a transaction fee in the amount of $216,000.


7.                                      Miscellaneous.


 


(a)                                  Each Purchaser
represents for itself that it has not transferred any interest in the Warrant
or the Debenture issued to it under the Agreement, except as set forth in
Section 3 above.


 


(b)                                 Each of the
Warrants and Debentures, as amended by this Waiver and Amendment, shall
continue to be and shall remain in full force and effect in accordance with
their respective terms.


 


(c)                                  This Waiver and
Amendment may be executed by facsimile in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.


 


(d)                                 Capitalized
terms used herein without definition shall have the meanings ascribed to such
terms in the Agreement.


 


4

















 


IN WITNESS WHEREOF, the
parties hereto have caused this Waiver and Amendment to Debentures and Warrants
to be duly executed by their respective authorized signatories as of the date
first indicated above.


 


	
   

  	
  EARTHSHELL
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BEACON
  EQUITIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CLEVELAND
  OVERSEAS LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CRANSHIRE
  CAPITAL, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				



 


5