UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
EarthShell Corporation
(Name of Issuer)
Common Stock, Par Value $.01 Per Share
(Title of Class of Securities)
27032B209
(CUSIP Number)
James A. Cooper With a copy to:
100 South Brentwood Boulevard Roger R. Wilen
Suite 200 Schiff Hardin LLP
St. Louis, Missouri 63105-1691 6600 Sears Tower
(314) 727-2232 Chicago, IL 60606
(312) 258-5810
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
June 22, 2006
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition that is the subject
of this Schedule 13D, and is filing this schedule because of
Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box. /_/
NOTE: Schedules filed in paper format shall include a
signed+ original and five copies of the schedule, including
all exhibits. See Section 240.13d-7 for other parties to
whom copies are to be sent.
* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect
to the subject class of securities, and for any subsequent
amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section
18 of the Securities Exchange Act of 1934 ("Act") or
otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act
(however, see the Notes).
PERSONS WHO RESPOND TO THE COLLECTION OF
INFORMATION CONTAINED IN THIS FORM ARE NOT
REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
2
CUSIP No. 27032B209
1. Names of Reporting Persons. ReNewable Products, LLC
I.R.S. Identification Nos. of above persons (entities only)
20-2042611
2. Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /_/
(b) /X/
3. SEC Use Only
4. Source of Funds (See Instructions) OO
5. Check if Disclosure of Legal Proceedings Is Required
Pursuant to Items 2(d) or 2(e) /_/
6. Citizenship or Place of Organization Delaware
Number of 7. Sole Voting Power 0
Shares
Beneficially 8. Shared Voting Power 8,273,504
Owned by each
Reporting Person 9. Sole Dispositive Power 0
With
10. Shared Dispositive Power 8,273,504
11. Aggregate Amount Beneficially Owned by Each
Reporting Person 8,273,504
12. Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions) /X/
13. Percent of Class Represented by Amount in
Row (11) 29.96%
14. Type of Reporting Person (See Instructions)
OO
3
CUSIP No.27032B209
1. Names of Reporting Persons TSCP Machinery & Processing
Group, LLC
I.R.S. Identification Nos. of above persons (entities only)
2. Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /_/
(b) /X/
3. SEC Use Only
4. Source of Funds (See Instructions) OO
5. Check if Disclosure of Legal Proceedings Is Required
Pursuant to Items 2(d) or 2(e) /_/
6. Citizenship or Place of Organization Delaware
Number of 7. Sole Voting Power 0
Shares
Beneficially 8. Shared Voting Power 8,273,504
Owned by each
Reporting 9. Sole Dispositive Power 0
Person With
10. Shared Dispositive Power 8,273,504
11. Aggregate Amount Beneficially Owned by
Each Reporting Person 8,273,504
12. Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions) /X/
13. Percent of Class Represented by Amount in
Row (11) 29.96%
14. Type of Reporting Person (See Instructions)
OO
4
CUSIP No. 27032B209
1. Names of Reporting Persons. Thompson Street Capital
Partners, L.P.
I.R.S. Identification Nos. of above persons (entities only)
11-3568473
2. Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /_/
(b) /X/
3. SEC Use Only
4. Source of Funds (See Instructions) OO
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) /_/
6. Citizenship or Place of Organization Delaware
Number of 7. Sole Voting Power 0
Shares
Beneficially 8. Shared Voting Power 8,273,504
Owned by each
Reporting 9. Sole Dispositive Power 0
Person With
10. Shared Dispositive Power 8,273,504
11. Aggregate Amount Beneficially Owned by Each
Reporting Person 8,273,504
12. Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions) /X/
13. Percent of Class Represented by Amount
in Row (11) 29.96%
14. Type of Reporting Person (See Instructions)
PN
5
CUSIP No. 27032B209
1. Names of Reporting Persons. Thompson Street Capital GP LLC
I.R.S. Identification Nos. of above persons (entities only)
11-3568478
2. Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /_/
(b) /X/
3. SEC Use Only
4. Source of Funds (See Instructions) OO
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) /_/
6. Citizenship or Place of Organization Delaware
Number of 7. Sole Voting Power 0
Shares
Beneficially 8. Shared Voting Power 8,273,504
Owned by each
Reporting 9. Sole Dispositive Power 0
Person With
10. Shared Dispositive Power 8,273,504
11. Aggregate Amount Beneficially Owned by
Each Reporting Person 8,273,504
12. Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions) /X/
13. Percent of Class Represented by Amount in Row (11) 29.96%
14. Type of Reporting Person (See Instructions)
OO
6
CUSIP No. 27032B209
1. Names of Reporting Persons. James A. Cooper
I.R.S. Identification Nos. of above persons (entities only)
N/A
2. Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /_/
(b) /X/
3. SEC Use Only
4. Source of Funds (See Instructions) OO, PF
5. Check if Disclosure of Legal Proceedings Is Required
Pursuant to Items 2(d) or 2(e) /_/
6. Citizenship or Place of Organization United States
Number of 7. Sole Voting Power 13,200
Shares
Beneficially 8. Shared Voting Power 8,537,661
Owned by each
Reporting 9. Sole Dispositive Power 13,200
Person With
10. Shared Dispositive Power 8,537,661
11. Aggregate Amount Beneficially Owned by
Each Reporting Person 8,550,861
12. Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions) /X/
13. Percent of Class Represented by Amount in Row (11) 30.97%
14. Type of Reporting Person (See Instructions)
IN
7
CUSIP No. 27032B209
1. Names of Reporting Persons. Peter S. Finley
I.R.S. Identification Nos. of above persons (entities only)
2. Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) /_/
(b) /X/
3. SEC Use Only
4. Source of Funds (See Instructions) OO, PF
5. Check id Disclosure of Legal Proceedings Is Required
Pursuant to Items 2(d) or 2(e) /_/
6. Citizenship or Place of Organization United States
Number of 7. Sole Voting Power 0
Shares 8. Shared Voting Power 8,300,504
Beneficially
Owned by each 9. Sole Dispositive Power 0
Reporting
Person With 10. Shared Dispositive Power 8,300,504
11. Aggregate Amount Beneficially Owned by
Each Reporting Person 8,300,504
12. Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions) /X/
13. Percent of Class Represented by Amount in Row (11) 30.06%
14. Type of Reporting Person (See Instructions)
IN
8
EXPLANATORY NOTE:
This Amendment Number 2 to Schedule 13D is filed by the undersigned to
amend and supplement the Schedule 13D filed on June 27, 2005 (the
"Original 13D"), as amended by Amendment Number 1 to Schedule 13D
filed on June 30, 2005, relating to the common stock of EarthShell
Corporation (the Original 13D and Amendment Number 1 to Schedule 13D
are referred to collectively herein as the "Original 13D, as
amended"). The changes in the numbers of shares and percentage of
outstanding shares pertain to the purchase by TSCP Machinery &
Processing Group, LLC of shares of Series D Convertible Preferred
Stock of EarthShell Corporation, and warrants to purchase common stock
of EarthShell Corporation. This Amendment Number 2 amends and
restates Items 3,4, 5, 6 and 7 of the Original 13D, as amended. All
other Items presented in the Original 13D, as amended, remain
unchanged.
The Reporting Persons are making this single, joint filing because
they may be deemed to be a "group" Section 13(d)(3) of the Act. The
agreement among the Reporting Persons to file jointly (the "Joint
Filing Agreement") is attached to the Original 13D, as amended, as
Exhibit 5. All capitalized terms used but not defined herein shall
have the definitions assigned to them in the Original 13D, as amended.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Upon closing of the Merger Agreement, the Company will acquire
ownership of the Target and the Stockholder will acquire an aggregate
of 8,000,000 shares of a series of the Company's preferred stock,
designated Series C Convertible Preferred Stock (the "Convertible
Preferred Stock" or the "Series C Preferred Stock") that is
convertible into the Common Stock on a share-for-share basis (subject
to adjustment). The Reporting Persons have committed $12,000,000 of
capital to the Stockholder, of which $6,000,000 had been invested in
the Target, and an additional $6,000,000 was invested in the Target
within 30 days of the date of the Merger Agreement. The source of
this $12,000,000 was capital provided by limited partners of the Fund
pursuant to capital calls.
On June 22, 2006, the Holding Company entered into a Securities
Purchase Agreement among the Company, the Holding Company and the
Edward W. Williams Revocable Trust, a trust formed under the laws of
Missouri (the "Securities Purchase Agreement"). On June 22, 2006, the
Holding Company closed the transactions contemplated therein and
acquired 51,282 shares of a new series of preferred stock, designated
Series D Convertible Preferred Stock of the Company (the "Series D
Preferred Stock") that is convertible into the Common Stock on a
share-for-share basis (subject to adjustment), as well as a warrant to
purchase 222,222 shares of Common Stock (the "Warrant"). The Holding
Company paid $200,000 to the Company for the consummation of the
transactions contemplated under the Securities Purchase Agreement.
9
The source of this $200,000 was capital provided by the limited
partners of the Fund pursuant to capital calls.
ITEM 4. PURPOSE OF TRANSACTION
Upon closing of the Merger Agreement, the Target will merge with
a wholly-owned subsidiary of the Company (as a result of which the
Target will become a wholly-owned subsidiary of the Company) and the
Stockholder will receive an aggregate of 8,000,000 shares of the
Series C Preferred Stock. The Series C Preferred Stock will then
represent the right to acquire not less than 24.6 percent of the
shares of the Common Stock outstanding on a fully-diluted basis.
As described in Item 6, under the terms of the Merger Agreement,
the Stockholder's ability to complete the Merger is subject to various
conditions. Even after those conditions have been met (or waived),
the closing will not occur unless the Reporting Persons cause the
Target to give a required notice, which they have no contractual
obligation to do. Also, the Target can terminate the Merger Agreement
at any time prior to closing for any reason. Although the Reporting
Persons currently do not intend to terminate the Merger Agreement and
expect that they will give the notice of closing if the conditions are
met, the Reporting Persons expressly reserve their contractual rights
to terminate, or otherwise not complete, the Merger Agreement.
Following completion of the Merger, the Stockholder will have
Board observer rights while it holds Series C Preferred Stock. After
all the Series C Preferred Stock is converted (and so long as the
Stockholder holds at least 25 percent (as adjusted) of the shares
issuable upon conversion at the Merger Agreement closing), the
Stockholder will have the right to nominate one candidate for election
as a director of the Company, and the Company will use its best
efforts to have that candidate elected as a Company director. Also,
while the Stockholder owns any shares of Series C Preferred Stock or
Common Stock, the Stockholder will be entitled to consult with and
advise management of the Company and its subsidiaries on significant
business issues and to have access to management, books and records
and facilities.
Additionally, upon the closing of the Securities Purchase
Agreement, the Company issued to the Holding Company 51,282 shares of
Series D Preferred Stock, as well as warrants to purchase 222,222
shares of Common. The Series D Preferred Stock and the Warrant are
each convertible or exercisable, as applicable, by the Holding Company
at any time after the date of such closing.
Except as described above or as otherwise described in Items 3, 5
and 6, the Reporting Persons currently have no specific plans or
proposals that relate to or would result in the events described in
paragraphs (a) through (j) of Item 4 of the instructions to Schedule
13D, although the Reporting Persons reserve the right to develop such
plans or proposals.
10
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
As described in Item 6, under the terms of the Merger Agreement,
the Stockholder's ability to complete the Merger is subject to various
conditions. As a result of these conditions, the Reporting Persons do
not currently have the right to acquire the Series C Preferred Stock.
Despite these conditions, however, the Reporting Persons may be deemed
to have a right to acquire, within 60 days, beneficial ownership of
the Common Stock into which the Series C Preferred Stock will be
convertible. Additionally, the Reporting Persons may be deemed to
have a right to acquire, within 60 days, beneficial ownership of the
Common Stock into which the Series D Preferred Stock is convertible
and which are underlying the Warrant, as each such type of acquired
security provides the Holding Company with the right to acquire such
shares of Common Stock at any time after the closing of the
transactions contemplated by the Securities Purchase Agreement, the
closing of which occurred on June 22, 2006.
The share ownership percentages described in this Item 5 are
based on the Company's representation in the Securities Purchase
Agreement that 19,340,188 shares of Common Stock were outstanding as
of June 22, 2006. The Company's Quarterly Report on Form 10-Q, for
the quarter ended March 31, 2006, filed with the Securities and
Exchange Commission on May 18, 2006, reported that 19,340,188 shares
of Common Stock were outstanding as of May 17, 2006.
(a) The aggregate number and percentage of Common Stock that may
be beneficially owned by each of the persons identified in Item 2 of
the Original 13D, as amended, are provided in the following table:
NAME AGGREGATE NUMBER PERCENTAGE
The Stockholder 8,273,504 29.96%
The Holding Company 8,273,504 29.96%
The Fund 8,273,504 29.96%
The General Partner 8,273,504 29.96%
Mr. Cooper (1) 8,550,861 30.97%
Mr. Finley (2) 8,300,504 30.06%
Mr. Holiday 0 0
Mr. Glennon 0 0
____________________
(1) Includes (i) 264,157 shares of Common Stock held by Mr.
Cooper's spouse; (ii) 9,700 shares of Common Stock held by Mr. Cooper
as custodian for his children, and (iii) 3,500 shares of Common Stock
held by Mr. Cooper in his IRA.
(2) Includes (i) 12,000 shares of Common Stock held by Mr.
Finley as custodian of UGMA accounts for his three children, (ii)
5,000 shares of Common Stock held jointly with Mr. Finley's spouse,
11
and (iii) 10,000 shares of Common Stock held as co-trustee, along with
Ms. Finley, of the Peter S. Finley Living Trust of 4/12/02.
As described in Item 6, the Reporting Persons may be deemed to be
members of a group with the Khashoggi Holders. Based solely on the
information reported by the Company in its Annual Report on Form 10-K,
for the fiscal year ended December 31, 2005, filed with the Securities
and Exchange Commission on March 31, 2006, under the caption "Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters,(which, for purposes of clarity, incorporated by
reference the information contained in the Schedule 14A Definitive
Proxy Statement to Shareholders filed on May 1, 2006), the Reporting
Persons understand that the Khashoggi Holders were the beneficial
owners, as of March 31, 2006, of 13,943,542 shares of Common Stock,
which is reported as representing 55.75 percent of the Common Stock
then outstanding.
(b) The number of shares of Common Stock as to which each person
identified in Item 2 of the Original 13D, as amended, may have the
sole power to vote or to direct the vote, shared power to vote or
direct the vote, sole power to dispose or to direct the disposition,
or shared power to dispose or to direct the disposition is provided in
the following table:
SOLE SOLE
POWER TO SHARED POWER POWER TO SHARED POWER
NAME VOTE TO VOTE DISPOSE TO DISPOSE
The Stockholder 0 8,273,504 0 8,273,504
The Holding Company 0 8,273,504 0 8,273,504
The Fund 0 8,273,504 0 8,273,504
The General Partner 0 8,273,504 0 8,273,504
Mr. Cooper 13,200[1] 8,537,661[2] 13,200[1] 8,537,661[2]
Mr. Finley 0 8,300,504[3] 0 8,300,504[3]
Mr. Holiday 0 0 0 0
Mr. Glennon 0 0 0 0
--------------------
[1] Includes (i) 9,700 shares of Common Stock held by Mr. Cooper
as custodian of UMOUTMA for his children and (ii) 3,500 shares of
Common Stock held by Mr. Cooper in his IRA.
[2] Includes 264,157 shares of Common Stock held by Mr. Cooper's
spouse.
12
[3] Includes (i) 12,000 shares of Common Stock held by Mr.
Finley as custodian of UGMA accounts for his three children, (ii)
5,000 shares of Common Stock held jointly with Mr. Finley's spouse,
and (iii) 10,000 shares of Common Stock held as co-trustee, along with
Ms. Finley, of the Peter S. Finley Living Trust of 4/12/02.
Mr. Cooper's spouse's name is Stacy Cooper ("Ms. Cooper"). Ms.
Cooper's address is 26 Dromara Road, St. Louis, Missouri 63124. She
is not employed. During the last five years, Ms. Cooper (i) has not
been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) and (ii) was not a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
Ms. Cooper is a citizen of the United States.
Mr. Finley's spouse's name is Macon P. Finley ("Ms. Finley").
Ms. Finley's address is 12 Carrswold Drive, St. Louis, Missouri 63105.
Her principal occupation is a schoolteacher. During the last five
years, Ms. Finley (i) has not been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) and (ii) was
not a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect
to such laws. Ms. Finley is a citizen of the United States.
(c) In the past 60 days, Ms. Cooper has effected the following
purchases of shares of Common Stock through a broker:
DATE NUMBER OF SHARES PRICE PER SHARE
June 06, 2006 3,000 $2.15
June 06, 2006 11,000 $2.20
June 06, 2006 5,000 $2.25
June 07, 2006 7,500 $2.15
June 07, 2006 2,500 $2.05
Other than the transactions described in this part (c) of Item 5
of this Schedule 13D, none of the persons listed in part (a) of Item 5
of this Schedule 13D has effected any transactions in the Common Stock
during the past 60 days. The Reporting Persons have no information as
to any transactions by the Khashoggi Holders.
(d) No person, other than (i) those identified in Item 2 of the
Original 13D, as amended, (ii) Ms. Cooper, and (iii) Ms. Finley is
known to have the right to receive or the power to direct the receipt
of dividends from, or the proceeds from the sale of, the shares of
13
Common Stock beneficially owned by the persons identified in Item 2 of
the Original 13D, as amended.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER
The Company, EarthShell Triangle, Inc., which is a wholly-owned
subsidiary of the Company, the Target, which is a wholly-owned
subsidiary of the Stockholder, and the Stockholder entered into an
Agreement and Plan of Merger, dated as of June 17, 2005 (the "Merger
Agreement"). Upon closing of the Merger Agreement, the Company would
acquire the Target through the merger of EarthShell Triangle, Inc.
into the Target, and the Stockholder would receive, in exchange for
all of the outstanding shares of the Target, an aggregate of 8,000,000
shares of the Convertible Preferred Stock. Prior to closing, the
Merger Agreement may be terminated (i) at any time by the Target for
any reason and (ii) after March 31, 2006, by either the Company or the
Target if the terminating party was not the cause of the failure to
close. On February 17, 2006, the parties to the Merger Agreement
executed an Amendment to Agreement and Plan of Merger by and among
EarthShell Corporation, EarthShell Triangle, Inc., ReNewable Products,
Inc., and ReNewable Products, LLC, (the "Merger Agreement Amendment")
which extended the date on which either party may terminate, as set
forth under item (ii) above, to December 31, 2006. The Merger
Agreement Amendment is filed as Exhibit 1.1 hereto
Under the terms of the Merger Agreement, in addition to the
$12,000,000 investment referred to under Item 3 of this Schedule 13D,
the Company's obligation, and thus the Stockholder's ability, to
complete the Merger are subject to various conditions. Those
conditions stated in the Merger Agreement include the Target's making
payment under a purchase order for certain equipment placed with an
affiliate of Stockholder that is an EarthShell equipment supplier,
installing support systems for the equipment, obtaining certain
financing, operating the equipment at agreed-to levels of
effectiveness, generating royalty income for the Company pursuant to a
sublicense agreement between the Company and the Target, and
demonstrating that the Target's equity and debt financing are adequate
to operate the equipment without additional funding by the Company.
As a result of these conditions, the Reporting Persons do not
currently have a right to acquire the Series C Preferred Stock.
Despite these conditions, however, the Reporting Persons may be deemed
to have a right to acquire, within 60 days, beneficial ownership of
the Common Stock into which the Series C Preferred Stock will be
convertible.
Even after all the conditions to the obligations of the various
parties to the Merger Agreement have been met (or waived), the closing
will not occur until and unless the Target, which will then still be
14
owned and controlled by the Reporting Persons, gives a written notice
to the Company of its intent to consummate the transactions
contemplated by the Merger Agreement. The Target has no contractual
obligation to give notice.
As provided in the Certificate of Designation of the Series C
Preferred Stock (the "Series C Certificate of Designation"), the
Series C Preferred Stock will be convertible at any time at the
election of the holder into Common Stock on a share-for-share basis
(subject to certain adjustments). At any time after the second
anniversary of the closing under the Merger Agreement, the Company
can, on due notice, cause all of the Series C Preferred Stock to be
converted into Common Stock. In addition to various customary anti-
dilution adjustments, if the number of shares of Common Stock
outstanding on a fully-diluted basis as of the closing of the Merger
Agreement is more than 24,556,184, then the conversion rate will be
adjusted so that the Common Stock issuable on conversion of the
Convertible Preferred Stock would represent 24.6 percent of the Common
Stock then outstanding, on a fully-diluted basis, including after
conversion of the Series C Preferred Stock.
The Series C Preferred Stock will be entitled to one vote per
share and to vote generally with the Common Stock as one class. So
long as at least 4,000,000 shares of Series C Preferred Stock remain
outstanding, the Company will be precluded, without the approval of
the holders of the Series C Preferred Stock, voting as a single class,
from taking a number of potentially significant actions, including
certain issuances of capital stock at less than fair market value (as
defined), repurchasing capital stock, mergers, sales of certain assets
or capital stock of subsidiaries, transactions with affiliates (with
certain exceptions), amending material agreements (with certain
exceptions), making certain investments, certain acts of insolvency
and certain litigation settlements. The holders of Series C Preferred
Stock will also have certain board observer rights.
In connection with entering into the Merger Agreement, the
Company and the Stockholder signed a letter agreement with Essam
Khashoggi, the Company's principal stockholder, acting on behalf of
himself and his family and entities he owns or controls that hold
shares or rights to acquire Common Stock (together, the "Khashoggi
Holders"). The letter agreement (the "Khashoggi Lock-up Agreement"),
which is included as Exhibit 4 to the Original 13D, as amended and is
incorporated herein by reference, includes certain agreements relating
to possible sales of Common Stock by the Stockholder and by the
Khashoggi Holders. The agreements include (i) coordination designed
to reduce the adverse effect of sales of Common Stock (together with
certain other transactions that the Company views as likely) on the
Company's net operating loss carryforward; (ii) commitments relating
to sales that may affect the other party's exercise of registration
rights granted by the Company; and (iii) for two years after the
closing under the Merger Agreement, restrictions on certain
unregistered sales of Common Stock.
15
By virtue of the Khashoggi Lock-up Agreement, the Reporting
Persons and the Khashoggi Holders may be deemed to be members of a
group who have agreed, to the extent set forth in the Khashoggi Lock-
up Agreement, to act together with respect to the disposition of
Common Stock.
The Securities Purchase Agreement, among the Company, as issuer
and the Holding Company and an unaffiliated third party trust, as
purchasers, dated as of June 22, 2006, provides for the purchase of a
total of 128,205 shares of Series D Preferred Stock to purchasers, as
well as warrants to purchase of 555,555 shares of Common Stock. The
Securities Purchase Agreement provides for a simultaneous execution
and closing date; so the terms and rights set forth thereunder were
vested in the purchasers on June 22, 2006.
Under the terms of the Certificate of Designation of the Series D
Preferred Stock (the Series D Certificate of Designation"), which is
filed as Exhibit 7 hereto, the Reporting Persons are deemed to have a
right to acquire, within 60 days, beneficial ownership of the Common
Stock into which the Series D Preferred Stock will be convertible.
As provided in the Series D Certificate of Designation, the
Series D Preferred Stock will be convertible at any time at the
election of the holder into Common Stock on a share-for-share basis
(subject to certain adjustments). At any time after the total per
share accrued dividends meets or exceeds $1.17 pre share, the Series D
Preferred Shares may be subject to mandatory conversion into Common
Stock. The Series D Certificate of Designation also contains various
customary anti-dilution adjustments.
The Series D Preferred Stock is senior to all other designated
series of Preferred Stock of the Company, and shall accrue dividends
at a rate of 20% per annum, (compounded monthly) of the total
liquidation value of $3.90 per share of the Series D Preferred Stock
held by each holder thereof, plus all accrued but unpaid dividends
thereon. The Series D Preferred Stock shall also be entitled to
receive, if and when declared by the Board of Directors of the
Company, dividends in an equal amount, on a per share basis, to those
paid to the holders of Common Stock.
The Series D Preferred Stock will be entitled to one vote per
share and to vote generally with the Common Stock as one class. So
long as any shares of Series D Preferred Stock remain outstanding, the
Company will be precluded, without the approval of at least seventy-
five percent (75%) of the holders of the Series D Preferred Stock,
voting as a single class, from taking a number of potentially
significant actions, including certain issuances of capital stock at
less than fair market value (as defined), repurchasing capital stock,
mergers, sales of certain assets or capital stock of subsidiaries,
transactions with affiliates (with certain exceptions), amending
material agreements (with certain exceptions), making certain
16
investments, certain acts of insolvency and certain litigation
settlements.
Under the terms of the Warrant, the Holding Company may exercise
its right to purchase 222,222 Common Shares at any time and from time
to time following the closing of the transactions contemplated by the
Securities Purchase Agreement, for a period of five years following
the date of issuance. The exercise price on the date of issuance
shall be $3.90 per share, subject to adjustment as per the terms of
the Warrant. Additionally, the number of shares the holder of the
Warrant may purchase is subject to adjustment from time to time, in
accordance with the terms of the Warrant.
The descriptions contained in Items 3, 4, 5 and 6 of the terms of
the Merger Agreement, the Series C Certificate of Designation, the
Registration and Investor Rights Agreement, the form of Khashoggi
Lock-up Agreement, the Securities Purchase Agreement, the Series D
Certificate of Incorporation and the Warrant are qualified in their
entirety by reference to the full text of the Merger Agreement, the
Series C Certificate of Designation, the Registration and Investor
Rights Agreement, the form of Khashoggi Lock-up Agreement, the
Securities Purchase Agreement, the Series D Certificate of
Incorporation and the Warrant, copies of which are attached to
Schedule 13D as Exhibits 1,2, 3,4, 5,7 and 8, respectively, and
incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Following is a list of the materials attached to this Amendment
Number 2 to Schedule 13D:
Exhibit 1 Agreement and Plan of Merger, dated as of June 17,
2005, among EarthShell Corporation, EarthShell
Triangle, Inc., ReNewable Products, Inc., and
ReNewable Products, LLC - Previously Filed
Exhibit 1.1 Amendment to Agreement and Plan of Merger, dated
as of June 17, 2005, among EarthShell Corporation,
EarthShell Triangle, Inc., ReNewable Products,
Inc., and ReNewable Products, LLC, dated as of
February 17, 2006
Exhibit 2 Certificate of Designation of the Series C
Convertible Preferred Stock of EarthShell
Corporation - Previously Filed
Exhibit 3 Registration and Investor Rights Agreement -
Previously Filed
Exhibit 4 Khashoggi Lock-up Agreement - Previously Filed
Exhibit 5 Securities Purchase Agreement among EarthShell
Corporation, TSCP Machinery & Processing Group,
LLC, and the Edward W. Williams Revocable Trust,
dated June 22, 2006
17
Exhibit 6 Joint Filing Agreement - Previously Filed
Exhibit 7 Certificate of Designation of the Series D
Convertible Preferred Stock of EarthShell
Corporation
Exhibit 8 EarthShell Corporation Common Stock Warrant of
TSCP Machinery & Processing Group, LLC
18