Document:

Exhibit 4.3

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

INTELLECTUAL
PROPERTY SECURITY AGREEMENT (the “Agreement”), date as of March 5, 2003,
among EarthShell Corporation, a Delaware corporation (the “Debtor”), E.
Khashoggi Industries LLC (“EKI”) and the investors signatory hereto
(each investor including their respective successors, endorsees, transferees
and assigns, a “Secured Party”, and collectively, the “Secured
Parties”).

 

W  I  T  N  E  S
S  E  T  H:

 

WHEREAS,
pursuant to that certain Amended and Restated License Agreement between the
Debtor and parties thereto, dated as of February 25, 1995 (as amended, the “EKI
License Agreement”), EKI has granted to the Debtor an exclusive license to
manufacture, use, sell and sublicense certain intangible property owned by EKI
(the “Property”).

 

WHEREAS,
pursuant to the Loan Agreement, dated the date hereof between the Debtor and
the Parties thereto (the “Purchase Agreement”), certain Secured Parties
have agreed to extend certain loans to the Debtor which shall be evidenced by
the issuance to such Secured Parties of the Debtors, 2% Convertible Debentures,
due March 5, 2006 in the aggregate principal amount of $10,550,000 (the “Purchase
Agreement Debentures”).

 

WHEREAS,
Omicron Master Trust ("Omicron") has acquired from the Debtor an
aggregate of $2,000,000 principal amount of Debtor's 2% Convertible Debentures
due March 5, 2006 (the "Omicron Debentures" and, together with the
Purchase Agreement Debentures, the "Debentures").

 

WHEREAS, in
order to induce the Secured Parties to enter into the contemplated
transactions, the Debtor has agreed to execute and deliver to the Secured
Parties this Agreement for the benefit of the Secured Parties and a separate
agreement granting to them a first priority security interest in the Property,
to secure the prompt payment, performance and discharge in full of all of the
Debtor’s obligations under this Agreement and the Debentures.

 

WHEREAS, as a
principal stockholder of the Debtor, EKI will benefit form the sale of the
Debentures to the Secured Parties and hereby consents to the grant of the
security interest in the Property to the Secured Parties pursuant to the terms
hereof.

 

NOW,
THEREFORE, in consideration of the agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows.

 

1.                                       Certain
Definitions.  As used in this
Agreement, the following terms shall have the meanings set forth in this
Section 1.  Terms used but not otherwise
defined in this Agreement that are defined in Article 9 of the UCC (such as “general
intangibles” and “proceeds”) shall have the respective meanings
given such terms in Article 9 of the UCC.

 

(a)                                  “Agent”
means SF Capital Partners, Ltd., as agent for each of the Secured Parties
pursuant to this Agreement, or such other Person as shall have been
subsequently appointed as a successor agent pursuant to this Agreement.

 

(b)                                 “Collateral”
means all of the Debtor’s right, title and interest in and to all of the IP
Property, including, without limitation, the Debtor’s rights, title and
interest with respect to (i) Debtor’s use of and right to sublicense the IP
Property pursuant to the EKI License

 

 

Agreement, and (ii) all license
fees, royalties and/or other forms of compensation due to the Debtor from
sublicensees under sublicenses granted by the Debtor in respect of the IP
Property, all of which are now or hereafter existing, created, acquired or
held.  The term “Collateral”
shall include all of the foregoing items, whether presently owned or existing
or hereafter acquired or coming into existence, all of Debtor’s additions and
accessions thereto, all of Debtor’s substitutions and replacements thereof, and
all of Debtor’s proceeds, products and accounts thereof, including without
limitation all proceeds from the licensing or sale or other transfer of
Collateral and of insurance covering the same and of any tort claims in
connection therewith.

 

(c)                                  “IP
Property” means the rights and interest of the Debtor under the EKI License
Agreement, including, without limitation (i) the Debtor’s right to license the
intellectual property and other rights as set forth in the EKI License
Agreement, (ii) the Debtor’s right to sublicense its rights under the EKI
License Agreement, and (iii) the Debtor’s rights in the Technology, Trademarks,
Process Improvements, Product Improvements and Jointly Developed Improvements
(as such terms are defined in the EKI License Agreement).

 

(d)                                 “Obligations”
means all of the Debtor’s obligations under this Agreement and the Debentures,
in each case, whether now or hereafter existing, voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all or any
portion of such obligations or liabilities that are paid, to the extent at or
any part of such payment is avoided or recovered directly or indirectly from
the Secured Parties as a preference, fraudulent transfer or otherwise as such
obligations may be amended, supplemented, converted, extended or modified from
time to time.

 

(e)                                  “UCC”
means the Uniform Commercial Code and/or any other applicable law of each
jurisdiction in which the Debtor is incorporated or organized (including,
without limitation the State of Delaware and the State of California) and any
jurisdiction as to any Collateral located therein.

 

2.                                       Grant
of Security Interest. As an inducement for the Secured Parties to enter
into the contemplated transactions and to secure the complete and timely
payment, performance and discharge in full, as the case may be, of all of the
Obligations, the Debtor hereby, unconditionally and irrevocably, pledges,
grants and hypothecates to the Secured Parties, a continuing first priority
security interest in, and a first lien upon and a right of set-off against all
of the Debtor’s right, title and interest of whatsoever kind and nature in and
to the Collateral (the “Security Interest”).

 

3.                                       Representations,
Warranties, Covenants and Agreements of the Debtor.  The Debtor represents and warrants to, and
covenant and agree with, each of the Secured Parties as follows:

 

(a)                                  The
Debtor has the requisite corporate power and authority to enter into this
Agreement and to otherwise carry out its obligations thereunder.  The execution, delivery and performance by
the Debtor of this Agreement and the filings contemplated therein have been
duly authorized by all necessary action on the part of the Debtor and no
further action is required by the Debtor.

 

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(b)                                 Except
for the Security Interest and subject to the EKI License Agreement, the Debtor
is the sole owner of its rights in the Collateral, free and clear of any liens,
security interests or encumbrances, and is fully authorized to grant the
Security Interest in and to pledge the Collateral.  There is not on file in any governmental or regulatory authority,
agency or recording office an effective financing statement, security agreement
or transfer or any notice of any of the foregoing (other than those that have
been filed in favor of the Secured Parties pursuant to this Agreement) covering
or affecting any of the Collateral.  So
long as this Agreement shall be in effect, the Debtor shall not execute and
shall not authorize the filing of in any such office or agency any such
financing statement or other document or instrument (except to the extent filed
or recorded in favor of the Secured Parties pursuant to the terms of this
Agreement) without the consent of the Secured Parties.

 

(c)                                  To
the knowledge of the Debtor, no part of the IP Property has been judged invalid
or unenforceable.  Debtor is in full
compliance with the EKI License Agreement and all sublicense agreements related
thereto.  No written claim has been
received, and Debtor has no knowledge of any claim that (1) any of the IP
Property or the Debtor’s use of any Collateral violates the rights of any third
party, or (2) Debtor is in breach of the EKI License Agreement or any
sublicense agreement with respect thereto. 
Subject to the EKI License Agreement, there has been no adverse decision
of which the Debtor is aware as to the Debtor’s exclusive (or nonexclusive, as
the case may be) rights to use the Collateral in any jurisdiction, and, to the
knowledge of the Debtor there is no proceeding involving said rights pending or
threatened before any court, judicial body, administrative or regulatory
agency, arbitrator or other governmental authority.

 

(d)                                 The
Debtor shall at all times maintain its books of account and records relating to
the Collateral at its principal place of business and may not relocate such
books of account and records unless it delivers to each of the Secured Parties
at least 30 days prior to such relocation (i) written notice of such relocation
and the new location thereof (which must be within the United States) and (ii)
evidence that appropriate financing statements and other necessary documents
have been filed and recorded and other steps have been taken to perfect the
Security Interest to create in favor of each of the Secured Parties a valid,
perfected and continuing first priority lien in the Collateral.

 

(e)                                  This
Agreement creates in favor of each of the Secured Parties a valid security
interest in the Collateral, securing the payment and satisfaction of the
Obligations, and, upon making the filings described in the immediately
following sentence, a perfected first priority security interest in such
Collateral that is senior to all hereinafter created security interests.  Except for: the filing of financing
statements on Form UCC-1 under the UCC with the jurisdictions indicated in Schedule
A, attached hereto, no authorization or approval of or filing with or notice
to any governmental authority or regulatory body is required either: (i) for
the grant by the Debtor of, or the effectiveness of, the Security Interest
granted hereby or for the execution, delivery and performance of this Agreement
by the Debtor or (ii) for the perfection of or exercise by the Secured Parties
of its rights and remedies hereunder.

 

(f)                                    On
the date of execution of this Agreement, the Debtor authorizes each Secured
Party to: (i) file one or more financing statements under the UCC with respect
to the Security Interest for filing with the jurisdictions indicated on Schedule
A, attached hereto and

 

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in such other jurisdictions as
the Secured Parties deem necessary and (ii) one or more executed recordation
sheets relating to the filing and recording of this Agreement with the United
States Patent and Trademark Office.

 

(g)                                 The
execution, delivery and performance of this Agreement does not conflict with or
cause a breach or default, or an event that with or without the passage of time
or notice, shall constitute a breach or default, under any agreement to which
the Debtor is a party or by which the Debtor is bound.  No consent (including, without limitation,
from stock holders or creditors of the Debtor) is required for the Debtor to
enter into and perform its obligations hereunder.

 

(h)                                 The
Debtor shall at all times maintain the liens and Security Interest provided for
hereunder as valid and perfected first priority liens and security interests in
the Collateral in favor of each of the Secured Parties and insure that such
liens and Security Interests are and remain senior to all not existing and
hereafter created security interests and liens.  The Debtor hereby agrees to defend the same against any and all
persons.  The Debtor shall safeguard and
protect all Collateral for the account of each of the Secured Parties.  At the request of the Agent and/or Secured
Parties, the Debtor will sign and deliver to the Secured Parties at any time or
from time to time one or more financing statements pursuant to the UCC in form
reasonably satisfactory to the Secured Parties and will pay the cost of filing
the same in all public offices wherever filing is, or is deemed by the Secured
Parties to be, necessary or desirable to effect the rights and obligations
provided for herein.  Without limiting
the generality of the foregoing, the Debtor shall pay all fees, taxes and other
amounts necessary to maintain the Security Interest hereunder, and the Debtor
shall obtain and furnish to the Secured Parties from time to time, upon demand,
such releases and /or subordinations of claims and liens which may be required
to maintain the priority of the Security Interest hereunder.

 

(i)                                     Except
for sublicenses granted by the Debtor in respect of the IP Property pursuant to
the EKI License Agreement, the Debtor will not transfer, pledge, hypothecate,
encumber, license, sell or otherwise dispose of any IP Property, nor will it
exercise any right of termination under the EKI License Agreement, without the
prior written consent of the Secured Parties.

 

(j)                                     The
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the
Agent, in sufficient detail, of any substantial change in the Collateral, and
of the occurrence of any event which would have a material adverse effect on
the value of the Collateral or on the Secured Parties’ security interest
therein.

 

(k)                                  The
Debtor shall permit the Secured Parties and its representatives and agents upon
reasonable prior notice to inspect the Collateral at any time during normal
business hours, and to make copies of records pertaining to the Collateral as
may be reasonably requested by the Secured Parties from time to time.

 

(l)                                     The
Debtor is not in breach of the EKI License Agreement, and it will take all
actions necessary to ensure that it does not breach the EKI License Agreement
in the future.  The Debtor shall
promptly notify the Agent in sufficient detail upon becoming aware of any
attachment, garnishment, execution or other legal process levied against any
Collateral and

 

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of any other information
received by the Debtor that reasonably would be expected to substantially
affect the value of the Collateral, the Security Interest or the rights and
remedies of the Secured Parties hereunder.

 

(m)                               The
Debtor shall not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement, the EKI License Agreement, or any
applicable statute, regulation or ordinance or any policy of insurance covering
the Collateral where violation is reasonably likely to have a material adverse
effect on the Secured Parties’ rights in the Collateral or Secured Parties’
ability to foreclose on the Collateral.

 

(n)                                 The
Debtor shall not grant to any person or entity any rights or interest in or to
any of the Collateral that are senior to, or pari passu with, the Secured
Parties.

 

(o)                                 The
Debtor shall notify the Agent of any change in the Debtor’s name, identity,
chief place of business, chief executive office or residence within 5 days of
such change.

 

4.                                       Defaults.  The following events shall be “Events of
Default”:

 

(a)                                  The
occurrence of an Event of Default (as defined in the Debentures) under the
Debentures which shall not have been cured within 30 days, to the satisfaction
of the Agent; and

 

(b)                                 Any
representation or warranty of the Debtor in this Agreement shall prove to have
been incorrect in any material respect when made.

 

5.                                       Duty
To Hold In Trust.  Upon the
occurrence and during the continuation of any Event of Default, the Debtor
shall, upon receipt by it of any revenue, income or other sums subject to the
Security Interest, or of any check, draft, note, trade acceptance or other
instrument evidencing an obligation to pay any such sum, hold the same in trust
for the Secured Parties and shall forthwith endorse and transfer any such sums
or instruments, or both, to the Secured Parties for application to the
satisfaction of the Obligations.

 

6.                                       Rights
and Remedies Upon Default.  Upon the
occurrence and during the continuation of any Event of Default, the Agent (on
behalf of, and for the benefit of itself and each Secured Party) shall have the
right to exercise all of the remedies conferred hereunder, under the
Debentures, and the Agent and the Secured Parties shall have all the rights and
remedies of a secured party under the UCC. 
Without limitation, the Secured Parties shall have the following rights
and powers upon and during the continuance of an Event of Default:

 

(a)                                  The
Agent shall have the right to take possession of all tangible manifestations or
embodiments of the Collateral and, for that purpose, enter, with the aid and
assistance of any person, any premises where the Collateral, or any part
thereof, is or may be placed and remove the same, and the Debtor shall assemble
the Collateral and make it available to the Agent at places which the Agent
shall reasonably select, whether at the Debtor’s premises or elsewhere.

 

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(b)                                    The Agent shall have
the right to operate the business of the Debtor using the Collateral and
shall have the right to assign, sell, or otherwise dispose of and deliver all
or any part of the Collateral, at public or private sale or otherwise, either
with or without special conditions or stipulations, for cash or on credit or
for future delivery, in such parcel or parcels and at such time or times and at such place or
places, and upon such terms and conditions as the Agent may deem
commercially reasonable, all without (except as shall be required by applicable
statute and
cannot be waived) advertisement or demand upon or notice to the Debtor or right
of redemption
of the Debtor, which are hereby expressly waived. Upon each such sale,
assignment or
other transfer of Collateral, the Agent may, unless prohibited by applicable
law which cannot be waived, purchase all or any part of the Collateral being sold, free
from and discharged of all trusts, claims, right of redemption and equities of the
Debtor, which are hereby waived and released.

 

(c)                                     The Agent may sublicense
or, to the same extent the Debtor is permitted by law and contract to do so, whether or an
exclusive or non-exclusive basis, any of the Collateral throughout the world for such period,
on such conditions and in such manner as the Secured Parties shall, in its reasonable
discretion, determine.

 

(d)                                    The Agent may (without
assuming any obligations or liabilities thereunder), at any time, enforce (and
shall have the exclusive right to enforce) against licensee or sublicensee all
rights and remedies of the Debtor in, to and under any license agreement with respect to such
Collateral, and take or refrain from taking any action thereunder.

 

(e)                                     The Agent may, in order
to implement the assignment, license, sale or other disposition of any of the Collateral pursuant
to this Section, pursuant to the authority provided for in Section 11, execute and deliver
on behalf of the Debtor one or more instruments of assignment of the Collateral in form suitable
for filing, recording or registration in any jurisdictions as the Secured Parties may determine
advisable.

 

(f)                                       In the event that any Secured Party shall
recover from the Debtor or the Collateral
more than its pro rata share of the Obligations owed to all Secured Parties
hereunder, whether by agreement,
understanding or arrangement with the Debtor or any other Person, set off or other means, such Secured Party shall
immediately deliver or pay over to the other Secured Parties their pro rata portion of any such recovery
in the form received.

 

(g)                                    Agent may, at any time or
times that an Event of Default exists or has occurred and is continuing: (i) notify any or all
accounts of the Debtor (“Accounts”) that such Accounts have been assigned to Secured Parties and
that Secured Parties have a security interest therein and Agent may direct any or all accounts
Debtor to make payment of accounts directly to Secured Parties, (ii) extend the time of payment
of, compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Accounts or other obligations
included in the Collateral and thereby discharge or release the account debtor
or any
other party or parties in any way liable for payment thereof without affecting
any of the Obligations,
(iii) demand, collect or enforce payment of any Accounts or such other
obligations, but
without any duty to do so, and Agent shall not be liable for its failure to
collect or enforce the payment
thereof nor for the negligence of its agents or attorneys with respect thereto
and (iv) take whatever other action Agent
may deem necessary or desirable for the protection of its

 

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interests.  At any
time that an Event of Default exists or has occurred and is continuing, at Agent’s request, all invoices and statements
sent to any account debtor shall state that the Accounts and such other obligations have been assigned to Secured
Parties and are payable directly and
only to Secured Parties and the Debtor shall deliver to Agent such originals of
documents evidencing the sale and
delivery of goods or the performance of services giving rise to any Accounts as Agent may require.

 

7.                                          Applications of
Proceeds; Expenses.  (a) The proceeds of any such
sale, sublicense
or other disposition of the Collateral hereunder shall be applied first, to the
expenses of retaking, holding, storing, processing and preparing for sale,
selling, and the like (including, without limitation, any taxes, fees and other
costs incurred in connection therewith) of the Collateral, to the reasonable
attorneys’ fees and expenses incurred by the Agent and/or Secured Parties in enforcing
its rights hereunder and in connection with collecting, storing and disposing of the Collateral, and
then to satisfaction of the Obligations, and to the payment of any other
amounts required by applicable law, after which the Secured Parties shall pay
to the Debtor any surplus proceeds.  If,
upon the sale, license or other disposition of the Collateral, the proceeds
thereof are insufficient to pay all amounts to which the Secured Parties are
legally entitled, the Debtor will be liable for the deficiency, together with interest
thereon, at the rate of 12% per annum or the lesser amount permitted by applicable law
(the “Default Rate”), and the reasonable fees of any attorneys employed by the Agent and/or
Secured Parties to collect such deficiency. 
To the extent permitted by applicable law, the Debtor waives all claims,
damages and demands against the Secured Parties arising out of the
repossession, removal, retention or sale of the Collateral, unless due to the gross negligence or
willful misconduct of the Agent and/or Secured Parties.

 

(b)                                 The Debtor agree to pay
all out-of-pocket fees, costs and expenses reasonably incurred in connection with any filing required hereunder,
including, without limitation, any financing
statements, continuation statements, partial releases and/or termination statements related thereto or any expenses of any
searches reasonably required by the Agent. 
The Debtor shall also pay all
other claims and charges which in the reasonable opinion of the Agent and/or
Secured Parties would reasonably be expected to prejudice, imperil or otherwise
affect the Collateral or the Security Interest therein.  The Debtor will also, upon demand, pay to the Agent and/or Secured Parties the amount of any
and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and
agents, which the Agent and/or
Secured Parties may incur in connection with (i) the enforcement of this
Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon,
any of the Collateral, or (iii) the
exercise or enforcement of any of the rights of the Secured Parties under the Debentures.  Until so paid, any fees payable hereunder shall be added to the
principal amount of the Debentures
and shall bear interest at the Default Rate.

 

8.                                          Responsibility for
Collateral.  The Debtor assumes all
liabilities and responsibility in connection with all Collateral, and the obligations of
the Debtor hereunder or under the Debentures shall in no way be affected or diminished by
reason of the loss, destruction, damage or theft of any of the Collateral or its unenforceability
or unavailability for any reason.

 

9.                                          Security Interest
Absolute.  All rights of the Secured Parties and all
Obligations of the Debtor hereunder, shall be absolute and unconditional, irrespective
of: (a) any lack of validity

 

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or enforceability of this
Agreement, the Debentures or any agreement entered into in connection with the
foregoing, or any portion hereof or thereof; (b) any change in the time, manner
or place of payment or performance of, or in any other term of, all or any of
the Obligations, or any other amendment or waiver of or any consent to any
departure from the Debentures or any other agreement entered into in connection
with the foregoing; (c) any exchange, release or nonperfection of any of the
Collateral, or any release or amendment or waiver of or consent to departure
from any other collateral for, or any guaranty, or any other security, for all
or any of the Obligations; (d) any action by the Secured Parties to obtain, adjust,
settle and cancel in its sole discretion any insurance claims or matters made
or arising in connection with the Collateral; or (e) any other circumstance
which might otherwise constitute any legal or equitable defense available to
the Debtor, or a discharge of all or any part of the Security Interest granted
hereby.  Until the Obligations shall
have been paid and performed in full, the rights of the Secured Parties shall
continue even if the Obligations are barred for any reason, including, without
limitation, the running of the statute of limitations or bankruptcy.  The Debtor expressly waives presentment,
protest, notice of protest, demand, notice of nonpayment and demand for
performance.  In the event that at any
time any transfer of any Collateral or any payment received by the Secured
Parties hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
the bankruptcy or insolvency laws of the United States, or shall be deemed to
be otherwise due to any party other than the Secured Parties, then, in any such
event, the Debtor’s obligations hereunder shall survive cancellation of this
Agreement, and shall not be discharged or satisfied by any prior payment
thereof and/or cancellation of this Agreement, but shall remain a valid and
binding obligation enforceable in accordance with the terms and provisions
hereof.  The Debtor waives all right to
require the Secured Parties to proceed against any other person or to apply any
Collateral which the Secured Parties may hold at any time, or to marshal
assets, or to pursue any other remedy. 
The Debtor waives any defense arising by reason of the application of
the statute of limitations to any obligation secured hereby.

 

10.                                 Term
of Agreement.  This Agreement and
the Security Interest shall terminate on the date on which all payments under
the Debentures have been made in full or otherwise converted pursuant to the
terms thereof and all other Obligations have been paid or discharged in
full.  Upon such termination, the
Secured Parties, at the request and at the expense of the Debtor, will join in
executing any termination statement with respect to any financing statement
executed and filed pursuant to this Agreement.

 

11.                                 Power
of Attorney; Further Assurances. 
(a) The Debtor authorizes the Secured Parties, and does hereby make,
constitute and appoint it, and its respective officers, agents, successors or
assigns with full power of substitution, as the Debtor’s true and lawful
attorney-in-fact, with power, in its own name or in the name of the Debtor, to,
after the occurrence and during the continuance of an Event of Default, (i)
endorse any notes, checks, drafts, money orders, or other instruments of
payment (including payments payable under or in respect of any policy of
insurance) in respect of the Collateral that may come into possession of the
Secured Parties; (ii) to sign and endorse any UCC financing statement or any
invoice, freight or express bill, bill of lading, storage or warehouse
receipts, drafts against Debtor, assignments, verifications and notices in
connection with accounts, and other documents relating to the Collateral; (iii)
to pay or discharge taxes, liens, security interests or other encumbrances at
any time levied or placed on or threatened against the Collateral; (iv) to
demand, collect, receipt for,

 

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compromise, settle and sue for
monies due in respect of the Collateral; and (v) generally, to do, at the
option of the Secured Parties, and at the Debtor’s expense, at any time, or
from time to time, all acts and things which the Secured Parties deem necessary
to protect, preserve and realize upon the Collateral and the Security Interest
granted therein, including, without limitation, executing any documents
necessary to evidence the assignment of the Debtor’s rights and obligations
under the EKI License Agreement to the Secured Parties, in order to effect the
intent of this Agreement and the Debentures, all as fully and effectually as
the Debtor might or could do; and the Debtor hereby ratifies all that said
attorney shall lawfully do or cause to be done by virtue hereof.  This power of attorney is coupled with an
interest and shall be irrevocable for the term of this Agreement and thereafter
as long as any of the Obligations shall be outstanding.

 

(b)                                 On
a continuing basis, the Debtor will make, execute, acknowledge, deliver, file
and record, as the case may be, with the proper filing and recording places in
any jurisdiction, including, without limitation, the jurisdictions indicated on
Schedule A, attached hereto, all such instruments, including appropriate
financing and continuation statements and collateral agreements and filings
with the United States Patent and Trademark Office, and take all such action as
may reasonably be deemed necessary or advisable, or as reasonably requested by
the Secured Parties, to perfect the Security Interest granted hereunder and
otherwise to carry out the intent and purposes of this Agreement, or for
assuring and confirming to the Secured Parties the grant or perfection of a
first priority security interest in all the Collateral.

 

(c)                                  The
Debtor hereby irrevocably appoints the Secured Parties as the Debtor’s
attorney-in-fact, with full authority in the place and stead of the Debtor and
in the name of the Debtor, from time to time in the Secured Parties’
discretion, to take any action and to execute any instrument which the Agent
may deem necessary or advisable to accomplish the purposes of this Agreement,
including (without limitation) to file, in its sole discretion, one or more
financing or continuation statements and amendments thereto, relative to any of
the Collateral.

 

12.                                 Agent.

 

(a)                                  Actions  The Agent shall at all times act upon and in
accordance with written instructions received from a Two-Thirds-in-Interest (as
defined in Section 15) time to time. 
The Agent shall be deemed to be authorized on behalf of each Secured
Party to act on behalf of such Secured Party under this Agreement and, in the
absence of written instructions from a Two-Thirds-in-Interest (with respect to
which the Agent agrees that it will, subject to the last two sentences of this
Section, comply, except as otherwise advised by counsel), to exercise such
powers hereunder and thereunder as are specifically delegated to or required of
the Agent by the terms hereof and thereof, together with such powers as may be
reasonably incidental thereto.  The
Agent shall have no duty to ascertain or inquire as to the performance or
observance of any of the terms of this Agreement by the Debtor.  By accepting their Debentures each Secured
Party shall be deemed to have agreed to indemnify the Agent (which agreement
shall survive any termination of such Secured Party’ percentage), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may at any time be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of this Agreement and
the

 

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Debentures, including the
reimbursement of the Agent for all out-of-pocket expenses (including attorneys’
fees) incurred by the Agent hereunder or in connection herewith or in enforcing
the Obligations of the Debtor under this Agreement or the Debentures, in all
cases as to which the Agent is not reimbursed by the Debtor; provided
that no Secured Party shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements determined by a court of competent
jurisdiction in a final proceeding to have resulted solely from the Agent’s
gross negligence or willful misconduct. 
The Agent shall not be required to take any action hereunder or under
the Debentures, or to prosecute or defend any suit in respect of this Agreement
or under the Debentures, unless the Agent is indemnified to its reasonable
satisfaction by the Secured Parties against loss, costs, liability and
expense.  If any indemnity in favor of
the Agent shall become impaired, it may call for additional indemnity and cease
to do the acts indemnified against until such additional indemnity is given.

 

(b)                                 Exculpation.  Neither the Agent nor any of its directors,
officers, partners, members, shareholders, employees or agents shall be liable
to any Secured Party for any action taken or omitted to be taken by it under
this Agreement or the Debentures, or in connection herewith or therewith,
except for its own willful misconduct or gross negligence or be responsible for
the consequences of any error in judgment. 
Neither the Agent nor any of its directors, officers, partners, members
shareholders, employees or agents has any fiduciary relationship with any
Secured Party by virtue of this Agreement. 
The Agent shall not be responsible to any Secured Party for any
recitals, statements, representations or warranties herein or in any
certificate or other document delivered in connection herewith or for the
authorization, execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, or sufficiency this Agreement or the Debentures,
the financial condition of the Debtor or the condition or value of any of the
Collateral, or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or the Debentures, the financial condition of the Debtor or the existence
or possible existence of any default or event of default.  The Agent shall be entitled to rely upon
advice of counsel concerning legal matters and upon any notice, consent,
certificate, statement or writing which it believes to be genuine and to have presented
by a proper person.

 

(c)                                  Obligations
Held by the Agent.  The Agent shall
have the same rights and powers with respect to any Debentures held by it or
any of its affiliates, as any Secured Party and may exercise the same as if it
were not the Agent.  Each of the Debtor
and each Secured Party hereby waives, and each successor to any Secured Party
shall be deemed to waive, any right to disqualify any Secured Party from
serving as the Agent or any claim against that Secured Party for serving as
Agent.

 

(d)                                 Copies,
etc.  The Agent shall give prompt
notice to each Secured Party of each notice or request required or permitted to
be given to the Agent by the Debtor pursuant to the terms of this Agreement.  The Agent will distribute to each Secured
Party each instrument and other agreement received for its account and copies
of all other communications received by the Agent from a Debtor for
distribution to the Secured Party by the Agent in accordance with the terms of
this Agreement.  Notwithstanding anything
herein contained to the contrary, all notices to and communications with the
Debtor under this Agreement shall be effected by the Secured Party through the
Agent.

 

10

 

(e)                                  Resignation
of Agent.  The Agent may resign as
such at any time upon at least thirty (30) days’ prior notice to the Debtor and
all the Secured Parties, such resignation not to be effective until a successor
Agent is in place.  If the Agent at any time
shall resign, a Two-Thirds-in-Interest may jointly appoint another Secured
Party as a successor Agent which shall thereupon become the Agent
hereunder.  Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
be entitled to receive from the retiring Agent such documents of transfer and
assignment as such successor.  Agent may
reasonably request, and shall thereupon succeed to and become vested with all
rights, powers, privileges, and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.

 

(f)                                    Replacement
of Agent.  A Two-Thirds-in-Interest
may at any time and for any reason replace the Agent with a successor Agent
jointly selected by them, upon at least five(5) days written notice to the
Debtor and the other Secured Parties. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall be entitled to
receive from the terminated Agent such documents of transfer and assignment as
such successor Agent may reasonably request, and shall thereupon succeed to and
become vested with all rights, powers, privileges, and duties of the retiring
Agent, and the terminated Agent shall be discharged form its duties and
obligations under this Agreement.

 

13.                                 Notices.  All notices, requests, demands and other
communications hereunder shall be in writing, with copies to all the other
parties hereto, and shall be deemed to have been duly given when (i) if
delivered by hand, upon receipt, (ii) if sent by facsimile, upon receipt of
proof of sending thereof, (iii) if sent by nationally recognized overnight
delivery service (receipt requested), the next business day or (iv) if mailed
by first-class registered or certified mail, return receipt requested, postage
prepaid, four days after posting in the U.S. mails, in each case if delivered
to the following addresses:

 

If to the Debtor:

 

EarthShell
Corporation

800 Miramonte
Drive

Santa Barbara,
California 93109

Facsimile No.:
(805)899-3517

Attn: Chief
Financial Officer

 

With a copy to:

 

Gibson, Dunn
& Crutcher LLP

2029 Century
Park East

Los Angeles,
California 90067

Facsimile No.:
(310) 551-8741

Attn: Robert
K. Montgomery, Esq.

 

11

 

If to EKI:

E. Khashoggi Industries LLC

800 Miramonte Drive

Santa Barbara, California 93109-1419

Facsimile No.:

Attn:

 

With a copy to:

 

Gibson, Dunn & Crutcher LLP.

333 South Grand Avenue

Los Angeles, CA 90071

Fax: (213) 229-6626

Attn: J. Nicholson Thomas, Esq.

 

If to Secured Parties:  To the address set forth under such Secured
Parties’ name on the signature pages hereto.

 

14.                                 Other
Security.  To the extent that the
Obligations are now or hereafter secured by property other than the Collateral
or by the guarantee, endorsement or property of any other person, firm,
corporation or other entity, then the Secured Parties shall have the right, in
its sole discretion, to pursue, relinquish, subordinate, modify or take any
other action with respect thereto, without in any way modifying or affecting
any of the Secured Parties’ rights and remedies hereunder.

 

15.                                 Actions
by Secured Parties.  Any action
required or permitted hereunder to be taken by or on behalf of the Secured
Parties shall, for such action to be valid, require the approval of the Two-Thirds-in-Interest
prior to the taking of such action. If the consent, approval or disapproval of
the Secured Parties is required or permitted pursuant to this Agreement, such
consent, approval or disapproval shall only be valid if given by the Two-Thirds-in-Interest.  “Two-Thirds-in-Interest” means the
Secured Parties or Secured Parties (as the case may be) holding in excess of
2/3 of the outstanding aggregate principal amount under the Debentures,
determined on a cumulative basis.

 

16.                                 EKI
Consent.  EKI hereby consents to the
grant of the Security Interest by the Debtor to the Secured Parties pursuant to
the terms hereof. EKI agrees to cooperate as reasonably necessary to effectuate
the purposes of this Agreement.

 

17.                                 Miscellaneous.  (a) No course of dealing between the Debtor
and the Secured Parties, nor any failure to exercise, nor any delay in
exercising, on the part of the Secured Parties, any right, power or privilege
hereunder, under the Debentures or under this Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.

 

(b)                                 All
of the rights and remedies of the Secured Parties with respect to the
Collateral, whether established hereby, by the Debentures or by any other
agreements,

 

12

 

instruments or documents or by
law shall be cumulative and may be exercised singly or concurrently.

 

(c)                                  This
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof and is intended to supersede all prior negotiations,
understandings and agreements with respect thereto. Except as specifically set
forth in this Agreement, no provision of this Agreement may be modified or
amended except by a written agreement signed by the parties hereto.

 

(d)                                 In
the event that any provision of this Agreement is held to be invalid,
prohibited or unenforceable in any jurisdiction for any reason, unless such
provision is narrowed by judicial construction, this Agreement shall, as to
such jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other jurisdiction.

 

(e)                                  No
waiver of any breach or default or any right under this Agreement shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
or right, whether of the same or similar nature or otherwise.

 

(f)                                    This
Agreement shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns.

 

(g)                                 Each
party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.

 

(h)                                 This
Agreement shall be construed in accordance with the laws of the State of New
York, except to the extent the validity, perfection or enforcement of a
security interest hereunder in respect of any particular Collateral which are
governed by a jurisdiction other than the State of New York in which case such
law shall govern. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of any New York State or United States Federal court
sitting in New York county over any action or proceeding arising out of or
relating to this Agreement, and the parties hereto hereby irrevocably agree
that all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. The parties hereto agree
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. The parties hereto further waive any objection to venue
in the State of New York and any objection to an action or proceeding in the
State of New York on the basis of forum non convenient.

 

13

 

(i)                                     EACH
PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL ENCOMPASSING ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO
THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS.  EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY HAS
ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH
PARTY WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.  EACH PARTY FURTHER WARRANTS AND REPRESENTS
THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY
KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL FOLLOWING SUCH
CONSULTATION.  THIS WAIVER IS IRREVOCABLE,
MEANING THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT.  IN THE EVENT OF A
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

 

(j)                                     This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. 
In the event that any signature is delivered by facsimile transmission,
such signature shall create a valid binding obligation of the party executing
(or on whose behalf such signature is executed) the same with the same force
and effect as if such facsimile signature were the original thereof.

 

18.           Independent Nature of Secured Parties.          The obligations of each Secured Party
hereunder are several and not joint with the obligations of any other Secured
Party, and no Secured Party shall be responsible in any way for the performance
of the obligations of any other Secured Party hereunder. The decision of each
Secured Party to enter into this Agreement has been made by such Secured Party
independently of any other Secured Party and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Debtor or of the Subsidiary which may have been
made or given by any other Secured Party or by any agent or employee of any
other Secured Party, and no Secured Party or any of its agents or employees
shall have any liability to any other Secured Party (or any other person)
relating to or arising from any such information, materials, statements or
opinions. Nothing contained herein, and no action taken by any Secured Party
pursuant hereto or thereto, shall be deemed to constitute the Secured Parties
as a partnership, an association, a joint venture or any other kind of entity,
or create a presumption that the Secured Parties are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated hereby. Each Secured Party shall be entitled to independently
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Secured
Party to be joined as an additional party in any proceeding for such purpose.

 

* * * * * * * * * * *

 

14

 

IN WITNESS
WHEREOF, the parties hereto have caused this Intellectual Property Security
Agreement to be duly executed on the day and year first above written.

 

	
   

  	
  EARTHSHELL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  With respect to Section 16 hereof:

  
	
   

  	
  E. KHASIIOGGI INDUSTRIES LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

15Exhibit 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

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