As filed with the Securities and Exchange Commission on June 20, 2000
Registration No. 333-
---------
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
EARTHSHELL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 77-0322379
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
9020 Junction Drive, Suite D
Annapolis Junction, Maryland 20701
(301) 957-1300
(Address, Including Zip Code, of Registrant's Principal Executive Offices)
EARTHSHELL CONTAINER CORPORATION 1994 STOCK OPTION PLAN
EARTHSHELL CORPORATION 1995 STOCK INCENTIVE PLAN
(Full Title of the Plans)
SIMON K. HODSON
Chief Executive Officer
EarthShell Corporation
9020 Junction Drive, Suite D
Annapolis Junction, Maryland 20701
(301) 957-1300
(Name, Address, and Telephone Number, Including Area Code, of Agent for Service)
WITH A COPY TO:
ROBERT K. MONTGOMERY, ESQ.
Gibson, Dunn & Crutcher LLP
2029 Century Park East
Los Angeles, California 90067
(310) 552-8500
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount to Offering Price per Aggregate Registration
to be Registered be Registered Share Offering Price Fee
--------------------------------- --------------------- -------------------------- -------------------------- ----------------------
Common Stock 10,000,000 shares(1) $21.00(2) $45,705,172(2) $12,067(2)
================================= ===================== ========================== ========================== ======================
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(1) Pursuant to Rule 416, we are also registering an indeterminate number of
additional shares of common stock that may become available under the
1994 Stock Option Plan and the 1995 Stock Incentive Plan through the
operation of anti-dilution provisions in the plan documents.
(2) We have estimated the price per share and aggregate offering price solely
for the purpose of calculating the registration fee pursuant to Rule
457(h) and Rule 457(c) of the Securities Act of 1933 as follows: $567,000
with respect to 150,000 shares of common stock that are currently under
option, based on the price of $3.78 per share at which the options may be
exercised; $1,536,289 with respect to 402,170 shares of common stock that
are currently under option, based on the price of $3.82 per share at
which the options may be exercised; $200,000 with respect to 50,000
shares of common stock that are currently under option, based on the
price of $4.00 per share at which the options may be exercised;
$5,175,000 with respect to 1,035,000 shares of common stock that are
currently under option, based on the price of $5.00 per share at which
the options may be exercised; $2,388,877 with respect to 313,090 shares
of common stock that are currently under option, based on the price of
$7.63 per share at which the options may be exercised; $1,603,500 with
respect to 150,000 shares of common stock that are currently under
option, based on the price of $10.69 per share at which the options may
be exercised; $1,354,016 with respect to 89,080 shares of common stock
that are currently under option, based on the price of $15.20 per share
at which the options may be exercised; $528,192 with respect to 31,440
shares of common stock that are currently under option, based on the
price of $16.80 per share at which the options may be exercised;
$5,019,000 with respect to 239,000 shares of common stock that are
currently under option, based on the price of $21.00 per share at which
the options may be exercised; and $27,333,298 with respect to 7,540,220
shares of common stock, based on a price of $3.625 per share, the average
of the high and low trading prices of the common stock of EarthShell
Corporation on the Nasdaq National Market on June 15, 2000.
EXPLANATORY NOTE
We are filing this registration statement in order to register
10,000,000 shares of our common stock, par value $0.01 per share, which we have
reserved for issuance under our 1994 Stock Option Plan (the "1994 Plan") and
1995 Stock Incentive Plan, as amended (the "1995 Plan;" collectively with the
1994 Plan, the "Plans"). Our 1995 Plan effectively supersedes our 1994 Plan for
options issued on or after the date we adopted our 1995 Plan. Therefore, this
registration statement also registers those 666,790 shares of common stock
subject to options granted under the 1994 Plan and which are now included in the
10,000,000 shares of common stock reserved for issuance under our 1995 Plan. We
are also registering the additional shares of common stock that may become
available for purchase in accordance with the provisions of the Plans in the
event of changes in the outstanding shares of our common stock, including, among
other things, stock dividends, stock splits, reverse stock splits,
reorganizations and recapitalizations.
The material, which immediately follows, constitutes a reoffer
prospectus, prepared in accordance with the requirements of Part I of Form S-3,
in accordance with General Instruction C to Form S-8. The reoffer prospectus is
to be used in connection with resales of securities acquired under the Plans by
persons who may be considered our "affiliates," as defined in Rule 405 under the
Securities Act of 1933, as amended. All references in this registration
statement to "EarthShell," "we," "our," "ours," and "us" refer to EarthShell
Corporation.
REOFFER PROSPECTUS
EARTHSHELL CORPORATION
COMMON STOCK
10,000,000 SHARES
This reoffer prospectus relates to 10,000,000 shares of common stock
("common stock" or the "securities"), of EarthShell Corporation, a Delaware
corporation, which we have reserved for issuance under our 1994 Stock Option
Plan (the "1994 Plan") and our 1995 Stock Incentive Plan, as amended (the "1995
Plan;" collectively with the 1994 Plan, the "Plans"). Our 1995 Plan effectively
supersedes our 1994 Plan for options issued on or after the date we adopted our
1995 Plan. These shares of common stock may be offered for resale from time to
time by those of our current and former directors, officers, employees and
consultants who we collectively refer to in this reoffer prospectus as "Selling
Stockholders" and who we have listed by name in the attached Annex 1. All
references in this reoffer prospectus to "EarthShell," "we," "our," "ours," and
"us" refer to EarthShell Corporation.
We will not receive any of the proceeds from the sale of the securities
covered by this reoffer prospectus. We will pay all of the expenses associated
with this reoffer prospectus. The Selling Stockholders will pay all selling and
other expenses, if any, associated with any sale of the securities offered
pursuant to this reoffer prospectus.
PLEASE CONSIDER CAREFULLY "RISK FACTORS" BEGINNING ON PAGE 1 OF THIS
REOFFER PROSPECTUS.
Our common stock is traded on the Nasdaq National Market under the
symbol "ERTH."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS REOFFER PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
EarthShell Corporation
9020 Junction Drive, Suite D
Annapolis Junction, MD 20701
(301) 957-1300
The date of this reoffer prospectus is
June 20, 2000.
TABLE OF CONTENTS
Page
RISK FACTORS...................................................................1
THE COMPANY....................................................................9
USE OF PROCEEDS................................................................9
SELLING STOCKHOLDERS...........................................................9
PLAN OF DISTRIBUTION..........................................................10
WHERE YOU CAN FIND MORE INFORMATION ABOUT EARTHSHELL..........................10
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.............................11
ANNEX 1......................................................................A-1
RISK FACTORS
BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE OF
VARIOUS RISKS ASSOCIATED WITH SUCH AN INVESTMENT, INCLUDING THOSE DESCRIBED
BELOW. YOU SHOULD CONSIDER CAREFULLY THESE RISK FACTORS TOGETHER WITH ALL OF THE
OTHER INFORMATION INCLUDED IN THIS PROSPECTUS AND IN THE DOCUMENTS INCORPORATED
BY REFERENCE BEFORE YOU DECIDE TO PURCHASE OUR COMMON STOCK.
EARTHSHELL(R)IS A REGISTERED TRADEMARK OF EARTHSHELL CORPORATION. ALIITE(R)IS A
REGISTERED TRADEMARK OF E. KHASHOGGI INDUSTRIES, LLC. BIG MAC(R)IS A REGISTERED
TRADEMARK OF THE MCDONALD'S CORPORATION.
BECAUSE WE ARE A DEVELOPMENT STAGE COMPANY SUBJECT TO THE INHERENT RISKS OF
ESTABLISHING A NEW BUSINESS, WE CANNOT ASSURE YOU THAT OUR OPERATIONS WILL
ULTIMATELY BE SUCCESSFUL AND GENERATE A PROFIT IN THE FUTURE.
To date, we have primarily focused on developing products.
Because we are a development stage company with no commercial operating history,
we are subject to the inherent risks of establishing a new business enterprise.
Although we have built our first plant to produce Big Mac(R) sandwich containers
for sale to Perseco, the primary packaging purchaser for the McDonald's
Corporation, under a supply agreement between our licensee, Sweetheart Cup
Company, Inc. ("Sweetheart"), and Perseco, it has not yet achieved full-scale
commercial operations. In addition, although we have developed a number of
prototype products, including bowls, plates, cups and other hinged-lid
containers in addition to the Big Mac(R) container, these products remain
subject to further development and customer-specific modification. Among other
things, we must:
o fully develop these prototype and additional products;
o develop commercially viable manufacturing processes and capacity;
o attract, retain and motivate qualified personnel;
o achieve market acceptance of our products;
o respond to competitive developments; and
o develop systems to manage our growth effectively.
At this stage in our development, we cannot assure you that we
will achieve these goals and that our operations will be successful and generate
a profit in the future. As of March 31, 2000, we had not yet reported any
operating revenues.
WE EXPECT TO CONTINUE TO EXPERIENCE OPERATING LOSSES UNTIL WE ARE ABLE TO
COMMERCIALLY PRODUCE AND SELL OUR PRODUCTS IN QUANTITIES NECESSARY TO GENERATE A
PROFIT.
Sweetheart has entered into a supply agreement with Perseco.
We are currently in the midst of a product validation process with Perseco with
respect to the EarthShell Big Mac(R) sandwich container made of the new
composite material ("EarthShell Products") which is typical for all new product
introductions into the McDonald's system. We expect to continue to incur
substantial operating losses until this product validation process is complete
and until we can commercially produce our products in quantities necessary to
generate a profit and our products achieve broad market acceptance and
penetration. We experienced aggregate net losses of approximately $145 million
from our inception on November 1, 1992 through December 31, 1999. The success of
our future operations depends upon our ability and the ability of our licensees
and joint venture partners to commercialize various types of EarthShell
Products. Due to the uncertainties inherent in product development, market
acceptance of newly-developed products and our need to rely on our licensees and
joint venture partners to manufacture, distribute and sell EarthShell Products,
we are unable to predict when our products will be introduced nationally or when
we will receive significant revenues from any EarthShell Product other than the
EarthShell Big Mac(R) sandwich container, which we currently expect to be able
to distribute nationally during the year 2000.
WE MAY NEED TO OBTAIN ADDITIONAL FINANCING IN ORDER TO FUND OUR OPERATIONS UNTIL
EARTHSHELL PRODUCTS ACHIEVE COMMERCIAL VIABILITY AND GENERATE SIGNIFICANT
REVENUES, WHICH COULD POTENTIALLY BE DILUTIVE TO EXISTING STOCKHOLDERS.
Although we believe the proceeds we anticipate receiving from
the offering of our common stock pursuant to our Registration Statement on Form
S-3 (File No. 333-33752) will provide EarthShell with the capital it needs for
the foreseeable future, we may need to seek additional third party financing in
the future to meet our operating and working capital needs and to fund the
further expansion of our business. We may not be able to obtain that capital or
that capital may not be available on terms satisfactory to us. If additional
funds are raised through the issuance of stock, dilution to existing
stockholders may result. If additional funds are raised through the incurrence
of debt, these debt instruments will likely contain restrictive financial,
maintenance and security covenants, which could restrict our ability to conduct
our business as we would prefer in the absence of those covenants.
WE MAY CONTINUE TO INCUR FINANCIAL LOSSES AS A RESULT OF FUNDING OBLIGATIONS
UNDER OUR AGREEMENTS WITH SOME OF OUR LICENSEES AND JOINT VENTURE PARTNERS, ONE
OF WHICH REQUIRES US TO FUND NEGATIVE CASH FLOWS UNTIL OUR MANUFACTURING
FACILITIES MEET EFFICIENCY CRITERIA SET FORTH IN THAT AGREEMENT.
We have refined our business strategy and are currently using
a joint venture structure in which our joint venture partners will generally
share equally in the cost of manufacturing facilities and will assume equally
the risks of any failure of the manufacturing facilities to meet targeted
efficiencies. The joint venture agreements we entered into with Finland-based
Huhtamaki Van Leer Oyj and with Prairie Packaging, Inc. contain this type of
risk-sharing arrangement. By contrast, our earlier agreement with Sweetheart is
structured so that we license or contribute manufacturing equipment to
Sweetheart and guarantee the performance of the equipment. This was done in an
effort to induce Sweetheart to begin to produce EarthShell Products during their
initial commercial introduction. In addition, under our operating agreement with
Sweetheart, we are obligated to fund negative operating cash flow until the date
upon which the turnkey manufacturing lines first meet specified efficiency
criteria. We are also obligated to fund additional costs incurred if the
equipment does not continue to satisfy these criteria for a two-year period
following that date. Our obligations to guarantee performance of these
manufacturing lines and to fund negative operating cash flows under this
agreement, and the possibility that we might ultimately fail to receive a return
on our investment in the equipment, may cause us to continue to incur losses for
a period of time and significantly impair our profitability.
THOUGH WE ARE PRODUCING A LIMITED AMOUNT OF OUR PRODUCTS ON AN INTEGRATED
PRODUCTION LINE ON A COMMERCIAL SCALE, WE ARE NOT YET SURE THAT THEY CAN BE
PRODUCED AT A COMPETITIVE COST. OUR FAILURE TO DO SO WOULD ADVERSELY AFFECT OUR
ABILITY TO COMPETE WITH CONVENTIONAL DISPOSABLE FOODSERVICE PACKAGERS.
Our success depends, in substantial part, on our ability to
produce EarthShell Products at a competitive cost. While we have been successful
at producing the EarthShell Big Mac(R) sandwich container on commercial scale
equipment, production volumes to date have been low relative to our purchase
order commitment. Until production volumes approach design capacity levels,
actual costs and profitability will not be certain. Further, all our other
products are currently in various stages of development and we have not yet
produced them on a fully integrated production line or on a commercial scale. We
have not, therefore, proven the actual cost of manufacturing EarthShell
Products, and we cannot assure you that we will be able to manufacture them at a
competitive cost. As licensees and joint ventures begin to commercially produce
EarthShell Products, they may encounter difficulties that cause costs of
production to exceed what we currently anticipate. Our failure to manufacture
EarthShell Products at commercially competitive costs would make it difficult to
compete with other foodservice disposables manufacturers.
BECAUSE WE ARE NOT YET PRODUCING OUR PRODUCTS ON A COMMERCIAL SCALE, WE DO NOT
KNOW WHETHER WE WILL BE ABLE TO CONSTRUCT SUFFICIENT MANUFACTURING CAPACITY THAT
WILL PERMIT A TIMELY ROLL-OUT AND MARKET ACCEPTANCE OF OUR PRODUCTS.
Because of our inexperience in manufacturing, we cannot assure
you that we will be successful in producing quantities of EarthShell Products
sufficient to permit a timely commercial roll-out of EarthShell Products.
Moreover, it may require greater time and effort than we anticipate to achieve
the production volumes and efficiencies required. We cannot assure you that we
will be successful in building sufficient manufacturing capacity on a timely
basis or that we will have adequate manufacturing equipment available when
necessary to permit a timely roll-out of EarthShell Products. Our failure to
produce sufficient quantities of EarthShell Products or construct adequate
manufacturing equipment that is properly working in an integrated manner when
necessary to permit a timely roll-out of EarthShell Products could adversely
affect market acceptance of EarthShell Products.
CONSUMERS MAY NOT PERCEIVE EARTHSHELL PRODUCTS AS BEING BETTER FOR THE
ENVIRONMENT THAN CONVENTIONAL DISPOSABLE FOODSERVICE CONTAINERS, WHICH WOULD
ADVERSELY AFFECT MARKET ACCEPTANCE OF OUR PRODUCTS.
Our success depends substantially on our ability to design,
develop and manufacture foodservice disposables that are not as harmful to the
environment as conventional disposable foodservice containers made from paper,
plastic and polystyrene. EarthShell has used a life cycle inventory methodology
in its environmental assessment of EarthShell Products and in the development of
associated environmental claims and we have received support for the EarthShell
concept from a number of environmental groups. Although we believe that
EarthShell Products offer a number of environmental advantages over conventional
packaging products, our products may also possess characteristics that consumers
or some environmental groups could perceive as negative for the environment. In
particular, EarthShell Products may result in more solid waste by weight and, in
a dry environment, by volume, and manufacturing and distributing them may
release greater amounts of some pollutants, and lesser amounts of other
pollutants, than occurs with conventional packaging. Whether, on balance,
EarthShell Products are better for the environment than conventional packaging
products is a somewhat subjective judgment and we believe that we have addressed
the major concerns of environmental groups with respect to the EarthShell Big
Mac(R) sandwich container and have goals in place to:
o reduce the weight of the container;
o use reclaimed starch from sources not currently being reclaimed for
commercial uses; and
o continue our efforts to reduce the environmental impact of the
EarthShell Big Mac(R) sandwich container.
Additionally, we prefer to use, whenever possible, recycled or
reclaimed raw materials that meet our processing and product performance
criteria. For example, we are currently seeking commercial sources of recycled,
FDA-compliant, post consumer waste ("PCW") fiber. Should FDA-compliant PCW fiber
not be available, we will use the next most suitable, environmental fiber source
and adjust any relevant environmental claims accordingly. We cannot assure you
that environmental groups, regulators, customers or consumers will agree that
EarthShell Products have an environmental advantage over conventional packaging.
Nor can we assure you that all future EarthShell Products, some of which may
require unique material formulations and coatings, will have, or that the market
will recognize them as having, a reduced environmental impact. If EarthShell
Products do not have, or are not recognized by others as having, a reduced
environmental impact, this could adversely affect market acceptance of these
products.
WE HAVE NOT YET FULLY EVALUATED ALL OF THE EARTHSHELL PRODUCTS AND IT IS
POSSIBLE THAT SOME OF THE PRODUCTS MAY NOT PERFORM AS WELL AS CONVENTIONAL
PACKAGING PRODUCTS, WHICH WOULD ADVERSELY AFFECT MARKET ACCEPTANCE OF THESE
PRODUCTS.
Although we believe that we can engineer EarthShell Products
to meet many of the critical performance requirements for specific applications,
individual products may not perform as well as conventional foodservice
disposables; for example, some consumers may prefer clear cups and clear lids on
take-home containers, which are not available with our foam technology. We are
still developing many of our EarthShell Products and we have not yet evaluated
the performance of all of them. If we fail to develop EarthShell Products that
perform comparably with conventional foodservice disposables, this could cause
consumers to prefer our competitors' products.
WE ARE EXPOSED TO RISKS OF DELAY THAT COULD DELAY THE INTRODUCTION OR MARKET
ACCEPTANCE OF ONE OR MORE OF OUR PRODUCTS AND OBLIGATE US FINANCIALLY UNDER ONE
OF OUR OPERATING AGREEMENTS.
There are substantial risks of delay, some of which are beyond
our control, associated with:
o developing our products and related manufacturing processes;
o market acceptance of and demand for our products; and
o developing sufficient production capacity to produce our products.
For example, we have experienced significant delays in the
initial commercial production of the EarthShell Big Mac(R) sandwich container
for McDonald's. These delays resulted from, among other things, difficulties in
integrating manufacturing equipment and persistent, but typical, problems
debugging our manufacturing lines at Sweetheart's Owings Mills, Maryland
facility. The manufacturing process includes various stages of operation, such
as mixing, forming, trimming, sanding, coating, printing and stacking, all of
which are integrated and computer controlled along an assembly line. We believe
we will be successful in the debugging process going forward as we ramp up
production lines to produce at higher levels, but we cannot assure you that this
process will not result in further delays.
Future delays will obligate us financially under our operating
agreement with Sweetheart. In addition, we cannot assure you that we or our
licensees or joint venture partners will not experience similar or other
problems in start-up or ongoing operations. Delays in the introduction or market
acceptance of one or more EarthShell Products would delay our ability to realize
any revenues from sales of those products.
IF MCDONALD'S OR ANY OTHER OF OUR ANTICIPATED INITIAL PURCHASERS OF OUR PRODUCTS
DO NOT PURCHASE SIGNIFICANT QUANTITIES OF OUR PRODUCTS, IT COULD DELAY THE
INTRODUCTION AND MARKET ACCEPTANCE OF OUR PRODUCTS.
We intend McDonald's to be the first foodservice operator to
use EarthShell Products. If McDonald's or any other anticipated initial
purchasers of our products do not ultimately purchase significant quantities of
our products, it could delay the introduction and market acceptance of one or
more of our products and delay our ability to realize any revenues from sales of
those products. Our ongoing product validation process with respect to
EarthShell Products being developed for use in McDonald's restaurants does not
represent a binding development obligation on the part of McDonald's, and
McDonald's is therefore under no obligation to initiate or continue any
development relationship with us.
AN UNEXPECTED UNAVAILABILITY OF RAW MATERIALS USED TO MANUFACTURE OUR PRODUCTS,
INCREASES IN THE PRICE OF THE RAW MATERIALS, OR THE NECESSITY OF FINDING
ALTERNATIVE RAW MATERIALS TO USE IN OUR PRODUCTS COULD DELAY THE INTRODUCTION
AND MARKET ACCEPTANCE OF OUR PRODUCTS.
Although we believe that sufficient quantities of all raw
materials used in EarthShell Products are generally available, if any raw
materials become unavailable it could delay the commercial introduction and
hinder market acceptance of EarthShell Products. In addition, we and our
licensees may become significant consumers of certain key raw materials, such as
starch, and if such consumption is substantial in relation to the available
resources, raw material prices may increase which in turn may increase the cost
of EarthShell Products and impair our profitability. In addition, we may need to
seek alternative sources of raw materials or modify our product formulations if
the cost or availability of the raw materials that we currently use become
prohibitive.
WE CANNOT ASSURE YOU THAT OUR LICENSEES AND JOINT VENTURE PARTNERS WILL DEVOTE
SUFFICIENT RESOURCES TO OUR PRODUCTS OR SUCCESSFULLY MANUFACTURE, DISTRIBUTE OR
MARKET OUR PRODUCTS BECAUSE MANY OF THEM HAVE PRODUCTS THAT WILL COMPETE WITH
OUR PRODUCTS AND OUR LICENSEE MANUFACTURERS ARE NOT OBLIGATED TO ACHIEVE MINIMUM
SALES QUOTAS.
We have no experience in commercially manufacturing,
distributing and marketing foodservice disposables. We will depend on our
licensees and joint venture partners to manufacture and distribute EarthShell
Products. We have entered into agreements with Sweetheart, Finland-based
Huhtamaki Van Leer Oyj and Prairie Packaging, Inc., but these agreements permit
those licensees to manufacture and sell other foodservice disposable packaging
products that are not based on the EarthShell material. We intend to enter into
additional license agreements and joint venture relationships in the future.
Although we have produced EarthShell Products at a low volume level at
Sweetheart's facilities, none of our other licensees has commercially produced
or distributed any EarthShell Products. Our licensee manufacturers are not
obligated to achieve minimum sales quotas. Our licensees and joint venture
partners also manufacture paper or polystyrene packaging, which will compete
with EarthShell Products. We cannot assure you that our licensees and joint
venture partners will devote sufficient resources or otherwise be able
successfully to manufacture, distribute or market EarthShell Products. Their
failure to do so would inhibit our ability to distribute our products into the
marketplace.
OUR DEPENDENCE ON E. KHASHOGGI INDUSTRIES, LLC ("EKI") FOR THE TECHNOLOGY
NECESSARY TO MANUFACTURE EARTHSHELL PRODUCTS AND FOR CERTAIN TECHNICAL PERSONNEL
MEANS THAT A DISRUPTION IN THE OPERATIONS OR FINANCIAL CONDITION OF EKI EXPOSES
US TO RISKS THAT EKI MAY NOT BE ABLE TO PERFORM SERVICES THAT WE REQUIRE.
We do not own the technology necessary to manufacture
EarthShell Products and we are dependent upon our world-wide, royalty-free,
exclusive license pursuant to an Amended and Restated License Agreement with EKI
(the "License Agreement") to use that technology. We can only use the technology
to develop, manufacture and sell specified foodservice disposables for use in
the foodservice industry and we have no right to exploit opportunities to apply
this technology or improve it outside this field of use. EKI may cancel the
license if we are in breach of any material obligations under the License
Agreement and do not cure the breach within a specified period. If EKI were to
file for or be declared bankrupt, we would likely be able to retain our rights
under the License Agreement with respect to U.S. patents. However, it is
possible that EKI could take steps to terminate our rights under the License
Agreement with respect to international patents.
We share one key executive with EKI (Simon Hodson). EKI also
provides significant scientific and technical services to us pursuant to an
Amended and Restated Technical Services and Sublease Agreement (the "Technical
Services Agreement"), which runs through December 31, 2002, to support the
continued design and development of EarthShell Products. We also depend on EKI
to further develop and refine the basic technology used in EarthShell Products,
although EKI is not obligated to complete any further development or refinement
under the terms of the License Agreement. If anything disrupted the operations
or financial condition of EKI, it would expose us to the risk that EKI might
fail to perform services that we require.
BECAUSE ONE MAJORITY SHAREHOLDER CONTROLS BOTH EKI AND EARTHSHELL, CONFLICTS MAY
ARISE BETWEEN THE COMPANIES WITH RESPECT TO CORPORATE OPPORTUNITIES AND WE
CANNOT ASSURE YOU THAT THESE CONFLICTS WILL ALWAYS BE RESOLVED IN EARTHSHELL'S
FAVOR.
Mr. Essam Khashoggi is the indirect majority equity owner of
and therefore controls both EarthShell and EKI, which means that Mr. Khashoggi
owns a majority interest in both EarthShell and EKI through other entities which
he controls. Mr. Khashoggi is the beneficial owner of approximately 70% of the
outstanding shares of EarthShell's common stock directly or indirectly through
various entities that he controls, including EKI. As a result, Mr. Khashoggi is
able to:
o elect all of the directors of EarthShell;
o control the direction and policies of EarthShell;
o determine the outcome of corporate transactions requiring the
approval of EarthShell's stockholders, including mergers,
consolidations and the sale of all or substantially all of
the assets of EarthShell; and
o prevent or cause a change in control of EarthShell.
Mr. Khashoggi also has the power to control our relationship
with EKI, which he also controls, and upon which we depend for, among other
things, research and development. We cannot assure you that we will always agree
with Mr. Khashoggi's decisions regarding our business.
Conflicts may arise between EKI and EarthShell, particularly
with respect to corporate opportunities, including:
o developing new markets and uses for products based on the EarthShell
Products;
o allocating research and development resources;
o the time that the common directors and officers devote to EarthShell
and EKI; and
o how each of EKI and EarthShell performs its obligations under the
License Agreement, the Technical Services Agreement and the Amended
and Restated Agreement for the Allocation of Patent Costs
(the "Patent Allocation Agreement").
Under the Patent Allocation Agreement, we are obligated to pay
or reimburse EKI for all costs and expenses associated with filing, prosecuting,
acquiring and maintaining some patents or patent applications. EKI will control
the costs and expenses incurred in connection with these patents and patent
applications. Any patents granted will be the property of EKI, and EKI may
obtain a benefit from those patents other than under the License Agreement,
including using and/or licensing the patents and related technology in a manner
or for uses unrelated to the license which EKI granted to EarthShell in the
foodservice disposables field of use. We cannot assure that conflicts of
interest that arise between EKI and EarthShell will always be resolved in
EarthShell's favor.
DESPITE OUR ATTEMPTS TO PROTECT OUR PATENTED TECHNOLOGY, IT IS POSSIBLE THAT
THIRD PARTIES WILL INFRINGE OUR PATENTS, THAT NEW PRODUCTS THAT WE DEVELOP WILL
NOT BE COVERED BY OUR EXISTING PATENTS OR THAT WE COULD SUFFER AN ADVERSE
DETERMINATION IN A PATENT INFRINGEMENT PROCEEDING, ANY AND ALL OF WHICH COULD
ALLOW OUR COMPETITORS TO DUPLICATE OUR PRODUCTS WITHOUT HAVING HAD TO INCUR THE
RESEARCH AND DEVELOPMENT COSTS WE HAVE INCURRED AND THEREFORE ALLOW THEM TO
PRODUCE AND MARKET THOSE PRODUCTS MORE PROFITABLY THAN EARTHSHELL.
Our ability to compete effectively with conventional packaging
will depend, in part, on our ability to protect our proprietary rights to the
licensed technology. Although EKI and EarthShell endeavor to protect the
licensed technology through, among other things, U.S. and foreign patents, the
duration of these patents is limited and we cannot assure you that the patents
and patent applications licensed to us are sufficient to protect our technology.
We also cannot assure you that any patent that EKI obtains and licenses to us
will be held valid, or that others will not circumvent or infringe those
patents. We also rely on trade secrets and proprietary know-how that we try to
protect in part by confidentiality agreements with our licensee manufacturers,
proposed joint venture partners, employees and consultants. These agreements
have limited terms and we cannot assure you that these agreements will not be
breached, that we will have adequate remedies for any breach or that our
competitors will not learn our trade secrets or independently develop them.
It is necessary for us to litigate from time to time to
enforce patents issued or licensed to us, to protect our trade secrets or
know-how and to determine the enforceability, scope and validity of the
proprietary rights of others. As an example of this type of litigation, on
August 2, 1999, Novamont S.p.A., an Italian company specializing in the
manufacture of a biodegradable plastic resin and products, filed a complaint in
the United States District Court for the Northern District of Illinois alleging
infringement of three patents. We have analyzed all three patents and believe we
have strong meritorious defenses and have been vigorously defending the lawsuit.
Although we know of no other alleged or actual infringement by EarthShell or EKI
of third party patents, it is always possible that a third party could assert
infringement. Patent and patent applications on formulations of the new
composite material are based in part on specific proportional mixtures of the
components of the material. We continue to test and modify the components and
their proportional mixtures to balance environmental, economic and performance
concerns. We cannot assure you that the mixture that we ultimately determine to
be optimal will be protected under our patents or that it will not be subject to
a patent held by others. If our patents do not protect the optimal mixture, or
if the mixture is subject to a patent held by a third party and the third party
asserts patent infringement, this would restrict our ability to produce and
market our products.
We believe that we own or have the rights to use all of the
technology that we expect to incorporate into EarthShell Products, but an
adverse determination in litigation or infringement proceedings to which we are
or may become a party could subject us to significant liabilities and costs to
third parties or require us to seek licenses from third parties. Although patent
and intellectual property disputes are often settled through licensing or
similar arrangements, costs associated with those arrangements could be
substantial and could include ongoing royalties. Furthermore, we cannot assure
you that we could obtain the necessary licenses on satisfactory terms or at all.
We could incur substantial costs attempting to enforce our licensed patents
against third party infringement, or the unauthorized use of our trade secrets
and proprietary know-how or in defending ourselves against claims of
infringement by others. Accordingly, if we suffered an adverse determination in
a judicial or administrative proceeding or failed to obtain necessary licenses,
it would prevent us from manufacturing or licensing others to manufacture some
of our products.
ESTABLISHED COMPETITORS IN THE FOODSERVICE DISPOSABLES INDUSTRY COULD IMPROVE
THE ABILITY TO RECYCLE THEIR EXISTING PRODUCTS OR DEVELOP NEW ENVIRONMENTALLY
PREFERABLE, DISPOSABLE FOODSERVICE CONTAINERS WHICH COULD RENDER OUR TECHNOLOGY
OBSOLETE AND COULD NEGATIVELY IMPACT OUR ABILITY TO COMPETE.
Competition among existing food and beverage container
manufacturers in the foodservice industry is intense. At present, most of our
competitors have substantially greater financial and marketing resources at
their disposal than we do, and many have well-established supply, production and
distribution relationships and channels. Companies producing products utilizing
competitive materials such as paper, plastic or polystyrene may reduce their
prices or engage in advertising or marketing campaigns designed to protect their
respective market shares and impede market acceptance of EarthShell Products.
Recently, a number of paper and plastic disposable packaging manufacturers and
converters have tried to increase recycling of their products. Increased
recycling of paper and plastic products could reduce their negative
environmental impact, which is one significant basis upon which we intend to
compete. A number of companies have introduced starch-based materials or are
attempting to develop plastics that they claim are biodegradable and other
specialty polymers as potential environmentally superior packaging alternatives.
We expect that many existing packaging manufacturers may actively seek
competitive alternatives to our products and processes. The development of
competitive, environmentally preferable, disposable foodservice containers,
whether or not based on our products and technology, could render our technology
obsolete and could impair our ability to compete.
OUR LOSS OF KEY TECHNICAL AND MANAGEMENT PERSONNEL COULD BE HIGHLY DISRUPTIVE TO
OUR BUSINESS OPERATIONS.
At present we depend upon obtaining and retaining the services
of qualified scientific and technical personnel, many of whom are employees of
EKI and whose services are provided pursuant to the Technical Services
Agreement. We are highly dependent on our Vice Chairman of the Board, President
and Chief Executive Officer, Simon K. Hodson, who has been involved with
EarthShell since its inception. We do not hold "key man" insurance on any of our
personnel. If we lost the services of any of our key employees, it could be
highly disruptive to our business operations.
IF THE U.S. FOOD AND DRUG ADMINISTRATION (THE "FDA") WERE TO FIND THAT OUR
PRODUCTS DID NOT COMPLY WITH FDA REGULATIONS, THEY COULD ASK US TO VOLUNTARILY
WITHDRAW OUR PRODUCTS FROM THE MARKETPLACE OR SEEK LEGAL REMEDIES AND SANCTIONS
TO FORCE US TO WITHDRAW OUR PRODUCTS, EITHER OF WHICH WOULD PREVENT US FROM
REALIZING FUTURE REVENUES FROM THOSE PRODUCTS.
The FDA regulates the manufacture, sale and use of EarthShell
Products. The FDA's regulations are concerned with substances used in food
packaging materials, not with specific finished food packaging products. Thus,
food or beverage containers will comply with FDA regulations if the components
used in the food and beverage containers:
o are approved by the FDA as indirect food additives for their intended
uses and comply with the applicable FDA indirect food additive
regulations; or
o are generally recognized as safe for their intended uses and are of
suitable purity for those intended uses.
Each of the components of the EarthShell Big Mac(R) sandwich
container and all other current prototype products is either approved by the FDA
as an indirect food additive for its intended use, codified in the FDA's
regulations as generally recognized as safe for its intended use, or a commonly
recognized food ingredient that we and our consultants regard as generally
recognized as safe for its intended use. However, we have not asked the FDA
whether it concurs with our determination. We intend to ensure that the raw
materials used in the EarthShell Big Mac(R) sandwich container are of suitable
purity for their intended uses by specifying standards to be met by suppliers of
raw materials and by material and product testing. The FDA does not require that
manufacturers of EarthShell Products seek FDA concurrence that components are
generally recognized as safe for their intended uses or that the raw materials
are of suitable purity for their intended uses. As a result, we believe that the
EarthShell Big Mac(R) sandwich container and other current prototype EarthShell
Products will comply with all requirements of the FDA and do not require FDA
approval. We cannot assure you, however, that the FDA would agree with these
conclusions.
If the FDA were to disagree with our determinations with
respect to the EarthShell sandwich container or future products, the FDA could
ask us to voluntarily withdraw the products from the marketplace. They could
also begin legal action to remove the products from the marketplace and, if
appropriate, pursue additional sanctions against us and our management. Such
actions by the FDA would prevent us from realizing future revenues from those
products.
FLUCTUATIONS OR DECREASES IN THE TRADING PRICE OF OUR COMMON STOCK MAY ADVERSELY
AFFECT THE LIQUIDITY OF THE STOCK'S TRADING MARKET AND OUR ABILITY TO RAISE
CAPITAL THROUGH FUTURE OFFERINGS OF CAPITAL STOCK.
The stock market from time to time experiences extreme price
and volume fluctuations, which are often unrelated to the operating performance
of particular companies. Since our initial public offering in March 1998, the
market price of our common stock has been volatile, and it may continue to be
volatile in the future. Factors that may significantly impact the market price
and marketability of our common stock include, but are not limited to:
o insufficient cash to finance our business;
o changes in our technological innovations or new commercial products or
those of our competitors;
o unacceptable economics of manufacturing our products;
o inability to license the technology to third parties;
o development or disputes concerning proprietary rights;
o failure to meet analysts' earnings estimates;
o loss of key management;
o adverse regulatory actions or decisions;
o general economic and other external factors; and
o period-to-period fluctuations in our financial results.
Fluctuations or decreases in the trading price of our common
stock may adversely affect the liquidity of the stock's trading market and our
ability to raise capital through future offerings of capital stock.
OVER 70 MILLION, OR MORE THAN 70%, OF OUR TOTAL OUTSTANDING SHARES MAY BE SOLD
INTO THE MARKET IN THE NEAR FUTURE. THIS COULD CAUSE THE MARKET PRICE OF OUR
COMMON STOCK TO DROP SIGNIFICANTLY, EVEN IF OUR BUSINESS IS DOING WELL.
Approximately 70 million of EarthShell's 100,045,166
outstanding shares of common stock are "restricted securities" within the
meaning of Rule 144 ("Rule 144") promulgated under the Securities Act of 1933.
This means that they may not be sold without first being registered under the
Securities Act unless an exemption from registration is available, including the
exemptions contained in Rule 144. These approximately 70 million shares, which
are held by current stockholders, are eligible for sale pursuant to Rule 144,
subject to the volume and manner of sale limitations under Rule 144. In
addition, we granted "demand" and "piggy-back" registration rights to all of our
stockholders who owned our preferred stock and common stock before our initial
public offering, including EKI. We cannot predict the effect, if any, that
public sales of these shares or the availability of shares for sale will have on
the market price of our common stock from time to time. Nevertheless, if our
stockholders, and particularly our directors and officers, sell substantial
amounts of our common stock in the public market, or if the public perceives
that such sales could occur, this could have an adverse impact on the market
price of our common stock, even if there is no relationship between such sales
and the performance of our business.
OUR CHARTER DOCUMENTS AND DELAWARE LAW INCLUDE PROVISIONS THAT MAY DISCOURAGE A
POTENTIAL TAKEOVER, EVEN IF IT WOULD BE BENEFICIAL TO OUR STOCKHOLDERS.
Our Certificate of Incorporation and Bylaws and the Delaware
General Corporation Law include provisions that may discourage persons from
pursuing a non-negotiated takeover of EarthShell and prevent changes of control
under some circumstances, even if doing so would be beneficial to our
stockholders.
OUR PROJECTED INTERNATIONAL REVENUES ARE SUBJECT TO RISKS INHERENT IN
INTERNATIONAL BUSINESS ACTIVITIES.
We expect sales of our products and services in foreign
countries to account for a material portion of our revenues. These sales are
subject to risks inherent in international business activities, including:
o any adverse change in the political or economic environments in these
countries;
o economic instability;
o any adverse change in tax, tariff and trade or other regulations;
o the absence or significant lack of legal protection for
intellectual property rights;
o exposure to exchange rate risk for revenues which are denominated in
currencies other than U.S. dollars; and
o difficulties in managing joint venture businesses spread over various
jurisdictions.
Our revenues could be substantially less than we expect if these risks
affect our ability to successfully sell our products in the international
market.
THE COMPANY
Our principal executive offices are located at 9020 Junction Drive,
Suite D, Annapolis Junction, Maryland 20701, telephone number (301) 957-1300.
Additional information regarding EarthShell is set forth in our Annual Report on
Form 10-K for the year ended December 31, 1999 and in our Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000, which are incorporated by
reference into this reoffer prospectus.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale by the Selling
Stockholders of their securities.
SELLING STOCKHOLDERS
Annex 1 to this reoffer prospectus is a table, as of June 1, 2000,
which shows:
o the name of each Selling Stockholder and his or her relationship to
EarthShell during the last three years;
o the number of shares of our common stock beneficially owned by
each Selling Stockholder prior to this offering (assuming that all
options to acquire shares are exercisable immediately);
o the number of shares of common stock offered pursuant to this
reoffer prospectus by each Selling Stockholder; and
o the amount and the percentage of our common stock that each Selling
Stockholder will own after completion of this offering (assuming all of
the outstanding options under the Plans are exercised, all of the
shares acquired are sold, no additional shares are acquired and no
shares, other than those offered pursuant to this reoffer prospectus,
are sold).
Annex 1 may be amended or supplemented from time to time.
PLAN OF DISTRIBUTION
The Selling Stockholders may sell securities offered pursuant to this
reoffer prospectus on the Nasdaq National Market or otherwise at prices and on
terms then prevailing, or at prices related to the then current market price or
in negotiated transactions. In addition, the Selling Stockholders may sell under
Rule 144 promulgated under the Securities Act of 1933, as amended, any
securities covered by this reoffer prospectus which qualify for sale under Rule
144 rather than pursuant to this reoffer prospectus. We will not receive any
part of the proceeds of the sales made hereunder. All expenses associated with
this reoffer prospectus are being borne by us, but all selling and other
expenses incurred by a Selling Stockholder will be borne by such Selling
Stockholder.
The securities may be:
o sold by reducing the amount of shares of common stock or other property
otherwise issuable to a Selling Stockholder pursuant to an option;
o purchased by a broker or dealer as principal and resold by such broker
or dealer for its account pursuant to this reoffer prospectus; and
o sold in ordinary brokerage transactions and transactions in which the
broker solicits purchases.
In effecting sales, brokers or dealers engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Selling
Stockholders also may, from time to time, authorize underwriters acting as their
agents to offer and sell securities upon the terms and conditions set forth in
any prospectus supplement. Underwriters, brokers or dealers will receive
commissions or discounts from Selling Stockholders in amounts to be negotiated
immediately prior to sale. These underwriters, brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended, in connection with such sales
and any discounts and commissions received by them. If so, any profit realized
by the brokers or dealers on the resale of the securities may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933, as
amended.
We cannot assure you that any of the Selling Stockholders will offer
for sale or sell any or all of the securities covered by this reoffer
prospectus.
WHERE YOU CAN FIND MORE INFORMATION ABOUT EARTHSHELL
We are subject to the informational requirements of the Securities
Exchange Act of 1934 and accordingly must file reports, proxy statements and
other information with the Securities and Exchange Commission. You may inspect
and copy these reports, proxy statements and other information at the public
reference facilities of the Commission, in Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York,
10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. You may also obtain copies of these materials from the public
reference section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. You may call the Commission at 1-800-SEC-0330 to
obtain further information about the operation of the public reference rooms.
The Commission also maintains an Internet website that contains reports, proxy
and information statements and other information regarding companies and other
persons that file electronically with the Commission. The Commission's Internet
website address is http://www.sec.gov. Our common stock is traded on the Nasdaq
National Market under the symbol "ERTH" and you may inspect reports and
information that we file at the offices of the Nasdaq National Market, 1735 K
Street, NW, Washington, D.C. 20006.
We have filed a registration statement and related exhibits on Form S-8
with the Commission under the Securities Act of 1933, as amended, with respect
to the securities covered by this reoffer prospectus. The registration
statement, which includes this reoffer prospectus, contains additional
information about EarthShell and the shares to be sold by the Selling
Stockholders. You may inspect the registration statement and exhibits without
charge at the Commission's offices at 450 Fifth Street, N.W., Washington, D.C.
20549 and you may obtain copies from the Commission at prescribed rates.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Commission allows us to "incorporate by reference" information that
we file with it, which means that we can disclose important information to you
by referring to those documents. The information incorporated by reference is an
important part of this reoffer prospectus, and the information that EarthShell
files later with the Commission will automatically update and supersede this
information. We incorporate by reference the following documents that we have
filed with the Commission:
o The description of our common stock which is set forth in full in our
Registration Statement on Form S-1 under the caption "Description
of Capital Stock," as filed with the Commission on March 23, 1998
(File No. 333-13287);
o Annual Report on Form 10-K for the year ended December 31, 1999, and
o Quarterly Report on Form l0-Q for the quarter ended March 31, 2000;
We are also incorporating by reference all other reports and documents
that we may file with the Commission pursuant to Section 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934, as amended, between the date of
this reoffer prospectus and the termination of the offering of the securities.
You may request, and if you do we will provide at no cost you, a copy
of any of the documents that we have incorporated by reference (not including
the exhibits to the documents, unless the exhibits are specifically incorporated
by reference into those documents or into this reoffer prospectus) by writing or
telephoning us at the following address:
EarthShell Corporation
800 Miramonte Drive
Santa Barbara, California 93109-1419
(805) 897-2294
Attention: Chief Financial Officer
You should rely only on the information incorporated by reference or
provided in this reoffer prospectus or any supplement. We have not authorized
anyone else to provide you with different information.
<TABLE>
<CAPTION>
ANNEX 1
Shares of Common Shares to be
Stock Beneficially Owned upon
Relationship to Beneficially Shares Completion of Offering
Company During Owned as of Offered ----------------------
Selling Stockholder* Last Three Years June 1, 2000 Hereby Number Percent
-------------------- ----------------------------- ---------------- ------- ---------------------- -------
<S> <C> <C> <C> <C> <C>
Wayne Altomonte Engineering Manager since 25,000 25,000 0 *
February 1999
Richard Baehr Process Development Manager 10,000 10,000 0 *
since May 2000
Donna Balinkie Marketing Director since 50,000 50,000 0 *
August 1998
Ellis Barksdale Engineering Manager since 36,080 35,000 1,080 *
February 1999
Teasha Blackman(2) Executive Assistant and 13,620 12,620 1,000 *
Corporate Governance
Specialist since October 1993
Raymond Blimkie Engineering Manager since 36,556 35,000 1,556 *
July 1999
Kenneth Bowman Engineering Manager since 25,000 25,000 0 *
December 1998
Holly Burkett Administrative Assistant 5,000 5,000 0 *
since November 1998
Wesley Bush Vice President of Process 76,000 75,000 1,000 *
Engineering since March 2000
and Director of Process
Engineering since July 1998
Laird Cagan Senior Vice President, 131,000 131,000 0 *
Corporate Development from
December 1995 to October 1996
Louis Cumbo Manufacturing Engineer since 10,000 10,000 0 *
May 1999
John Daoud(3) Corporate Secretary since May 97,160 97,160 0 *
1996 and Director
Virginia Dee Administrative Assistant 5,100 5,000 100 *
since March 1999
Richard DiPasquale Chief Technology Officer 30,000 30,000 0 *
since April 2000
Edward Ducote Engineering Manager since 35,425 35,000 425 *
November 1998
Michael Eckenrode Senior Accountant since May 5,215 5,000 215 *
1999
Karen Gatzke Communications Specialist 10,000 10,000 0 *
since April 2000
Jon Handrock Manufacturing Engineer since 25,000 25,000 0 *
December 1998
Thomas Hanley Manufacturing Engineer since 10,000 10,000 0 *
August 1999
Simon K. Hodson Chief Executive Officer and 521,960 20,960 501,000 *
Vice Chairman of the Board,
President from October 1997
to March 1998 and since
mid-May, 1999
D. Scott Houston(4) Chief Financial Officer from 542,000 542,000 0 *
July 1993
Andrew Jeanneret Vice President of Finance 75,000 75,000 0 *
from March to June 2000 and
Controller from August 1998
to March 2000
Andrew Jackson Accounting Assistant since 5,000 5,000 0 *
March 1999
Essam Khashoggi(5) Chairman of the Board 69,060,083 70,960 68,989,123 69.0%
Karim Khashoggi Vice-President, International 26,200 26,200 0 *
Marketing from September 1995
to October 1997 and
Consultant since October 1997
Layla Khashoggi Director since November 1992 70,960 70,960 0 *
Matthew Laine(6) Manufacturing Engineer since 18,000 18,000 0 *
May 1999
William A. Marquard Director from July 1994 to 75,891 45,960 29,931 *
May 2000
Howard J. Marsh Director since May 2000 51,000 50,000 1,000 *
Steve Mathey Engineering Manager since 10,000 10,000 1,184 *
December 1998
William Mooney Engineering Manager since 26,000 25,000 1,000 *
January 1999
John Nevling Product Manager since 36,000 35,000 1,000 *
September 1998
Robin O'Dell Vice President of Research & 75,000 75,000 0 *
Development since March 2000,
Director of Technology since
August 1999
Graham Phillips(1) Consultant since November 262,000 262,000 0 *
1997, Director from November
1997 to December 1998,
President from May 1996 to
October 1997, Senior Vice
President Marketing from
January 1993 to May 1996
James Rogers Engineering Manager since 35,300 35,000 300 *
January 1999
Jerold H. Rubinstein Director since July 1994 70,960 70,960 0 *
Lynn Scarlett Director since May 1999 50,000 50,000 0 *
Jeffrey Spilman Engineering Manager since 10,000 10,000 0 *
December 1998
Derek Tarrant Engineering Manager since 35,000 35,000 0 *
March 1999
Vincent J. Truant Senior Vice President of 296,000 295,000 1000 *
Marketing, Environmental
Affairs and Public Relations
since May 1998
Maria Tumbokon Manufacturing Engineer since 10,000 10,000 0 *
April 1999
Marcia Uranga Manufacturing Engineer since 10,000 10,000 0 *
March 1999
Karl Van Tine Manufacturing Engineer since 10,500 10,000 500 *
July 1999
</TABLE>
--------------------------------------------------------------------------------
* UNLESS OTHERWISE INDICATED BY FOOTNOTE FOLLOWING A SELLING STOCKHOLDER'S
NAME, ALL OPTIONS ISSUED TO SUCH SELLING STOCKHOLDER WERE ISSUED UNDER THE
1995 STOCK INCENTIVE PLAN
(1) Includes only options to purchase shares of common stock issued under
the 1994 Stock Option Plan.
(2) Includes options to purchase 2,636 shares of common stock under the 1994
Stock Option Plan and options to purchase 10,000 shares of common stock
under the 1995 Stock Incentive Plan.
(3) Includes options to purchase 25,000 shares of Common stock issued to Mr.
Daoud in his capacity as an officer of EKI and options to purchase 72,160
shares of common stock under the 1995 Stock Incentive Plan.
(4) Includes options to purchase 137,550 shares of common stock under the 1994
Stock Option Plan and options to purchase 404,450 shares of common stock
under the 1995 Stock Incentive Plan.
(5) Includes options to purchase 70,960 shares of common stock under the 1995
Stock Incentive Plan. Includes 57,694,130 shares held by EKI, in which Mr.
Khashoggi owns a controlling interest. Also includes 11,294,993 shares held
by other entities, including Concrete Technology Corporation, in which Mr.
Khashoggi also has a controlling interest. Mr. Khashoggi has sole voting
and dispositive power with respect to all such 69,080,083 shares and is
therefore deemed to be the beneficial owner of such shares.
(6) Includes options to purchase 4,000 shares of Common stock issued to Mr.
Laine in his capacity as an employee of EKI.
* Represents less than 1% of issued and outstanding shares of our common
stock.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Commission allows us to "incorporate by reference" information that
we file with it, which means that we can disclose important information to you
by referring to those documents. The information incorporated by reference is an
important part of this reoffer prospectus, and the information that EarthShell
files later with the Commission will automatically update and supersede this
information. We incorporate by reference the following documents that we have
filed with the Commission:
o The description of our common stock which is set forth in full in our
Registration Statement on Form S-1 under the caption "Description
of Capital Stock," as filed with the Commission on March 23, 1998
(File No. 333-13287);
o Annual Report on Form 10-K for the year ended December 31, 1999, and
o Quarterly Report on Form l0-Q for the quarter ended March 31, 2000;
We are also incorporating by reference all other reports and documents
that we may file with the Commission pursuant to Section 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934, as amended, between the date of
this reoffer prospectus and the termination of the offering of the securities.
You may request, and if you do we will provide at no cost you, a copy
of any of the documents that we have incorporated by reference (not including
the exhibits to the documents, unless the exhibits are specifically incorporated
by reference into those documents or into this reoffer prospectus) by writing or
telephoning us at the following address:
EarthShell Corporation
800 Miramonte Drive
Santa Barbara, California 93109-1419
(805) 897-2294
Attention: Chief Financial Officer
Upon written or oral request to us at the same address, we will also
provide participants with copies of all documents that we are required to
deliver to our employees pursuant to Rule 428(b) of the Securities Act.
You should rely only on the information incorporated by reference or
provided in this registration statement. We have not authorized anyone else to
provide you with different information.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
EarthShell is a Delaware corporation. Section 145 of the Delaware
General Corporation Law (the "DGCL") empowers a Delaware corporation to
indemnify officers and directors of a corporation in terms sufficiently broad to
indemnify our officers and directors under certain circumstances from
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act. Our Charter and Bylaws provide, in effect, that, to the fullest
extent and under the circumstances permitted by Section 145 of the DGCL, we will
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person is a director or officer of EarthShell or is or was serving at the
request of EarthShell as a director or officer of another corporation or
enterprise. We may, in our discretion, similarly indemnify our employees and
agents. The Charter relieves our directors from monetary damages to us or our
stockholders for breach of a director's fiduciary duty as a director to the
fullest extent permitted by the DGCL. Under Section 102(b)(7) of the DGCL, a
corporation may relieve its directors from personal liability to such
corporation or its stockholders for monetary damages for any breach of their
fiduciary duty as directors except for the following:
o breach of the duty of loyalty;
o failure to act in good faith;
o intentional misconduct or knowing violation of law;
o willful or negligent violation of certain provisions in the DGCL that
impose certain requirements with respect to stock repurchases,
redemption and dividends; or
o any transactions from which the director derived an improper personal
benefit.
Depending upon the character of the proceeding, under Delaware law, we
may indemnify our directors and officers against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any action, suit or proceeding if the person
indemnified acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to our best interests, and, with respect to any criminal
action or proceeding, had no cause to believe his or her conduct was unlawful.
To the extent that one of our directors or officers has been successful in
defending any action, suit or proceeding referred to above, we will be obligated
to indemnify him or her against expenses (including attorneys' fees) actually
and reasonably incurred in connection therewith.
We maintain an insurance policy pursuant to which our directors and
officers are insured, within the limits and subject to the limitations of the
policy, against certain expenses incurred in connection with the defense of
certain claims, actions, suits or proceedings, and certain liabilities which
might be imposed as a result of such claims, actions, suits or proceedings.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit No. Description
----------- -----------
5.1 Opinion of Gibson, Dunn & Crutcher LLP
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on Signature Page)
99.1 Specimen certificate of Common Stock (1)
99.2 EarthShell Container Corporation 1994 Stock Option Plan (1)
99.3 EarthShell Container Corporation 1995 Stock Incentive Plan (1)
99.4 First Amendment to 1995 Stock Incentive Plan of EarthShell
Container Corporation (2)
99.5 Second Amendment to 1995 Stock Incentive Plan of EarthShell
Container Corporation (1)
99.6 Third Amendment to 1995 Stock Incentive Plan of EarthShell
Container Corporation (3)
99.7 Fourth Amendment to 1995 Stock Incentive Plan of EarthShell
Corporation (3)
99.8 Fifth Amendment to 1995 Stock Incentive Plan of EarthShell
Corporation
99.9 Form of Stock Option Agreement under the EarthShell Container
Corporation 1994 Stock Option Plan (1)
99.10 Form of Stock Incentive Agreement under the EarthShell Container
Corporation 1995 Stock Incentive Plan (1)
1 Filed as an exhibit to EarthShell's Registration Statement on Form S-1,
filed on March 23, 1998 (File No. 133-13287), incorporated herein by
reference.
2 Filed as an exhibit to EarthShell's Annual Report on Form 10-K (File No.
000-23567) for the fiscal year ended December 31, 1998, incorporated herein
by reference.
3 Filed as part of EarthShell's Definitive Proxy Statement on Schedule 14A
dated April 23, 1999 (File No. 000-23567) for its annual meeting of
stockholders, and incorporated herein by reference.
ITEM 9. UNDERTAKINGS.
(a) EarthShell hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement to
include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered, which remain, unsold
at the termination of the offering.
(b) EarthShell hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of EarthShell's annual
report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial BONA
FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of EarthShell pursuant to the foregoing provisions, or otherwise,
EarthShell has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by EarthShell of expenses
incurred or paid by a director, officer or controlling person of EarthShell in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, EarthShell will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Santa Barbara, State of California, on this 12th day
of May, 2000.
EARTHSHELL CORPORATION
By:/s/ Simon K. Hodson
-----------------------------------------
Simon K. Hodson
Vice Chairman of the Board, President and
Chief Executive Officer
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Simon K. Hodson and D. Scott Houston his or her true and lawful
attorneys-in-fact and agents, each acting alone, with full powers of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, each acting alone, full powers and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might, or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Essam Khashoggi Chairman of the Board May 12, 2000
-------------------------------
Essam Khashoggi
/s/ Simon K. Hodson Vice Chairman of the Board, May 12, 2000
-------------------------------
Simon K. Hodson President and Chief Executive
Officer (Principal Executive
Officer)
/s/ D. Scott Houston Chief Financial Officer and May 12, 2000
-------------------------------
D. Scott Houston Secretary (Principal Financial
and Accounting Officer)
/s/ John Daoud Director May 12, 2000
-------------------------------
John Daoud
/s/ Layla Khashoggi Director May 12, 2000
-------------------------------
Layla Khashoggi
/s/ Howard J. Marsh Director May 12, 2000
-------------------------------
Howard J. Marsh
/s/ Lynn Scarlett Director May 12, 2000
-------------------------------
Lynn Scarlett
</TABLE>
