EarthShell receives waiver on alleged default event connected to $4.5 million convertible debenture

By Sheri Kasprzak

New York, Oct. 4 - EarthShell Corp. said it has received a waiver on alleged default events related to $4.5 million in convertible debentures held by Cornell Capital Partners, LP.

Cornell, according to an 8-K filed by EarthShell with the Securities and Exchange Commission Wednesday, has agreed not to pursue action against the issuer for the default events or seek liquidated damages equal to 1% of the liquidated value of the debenture for each 30-day period after May 31, 2006.

The event of default, according to EarthShell, occurred when the registration statement covering the debentures was not declared effective by the SEC by June 30.

For the waiver agreement, Cornell received 187,500 shares of EarthShell.

If the registration statement is declared effective before Nov. 1, Cornell will return 125,000 of the shares, and if the statement is effective after Nov. 1 but before Dec. 1, 2006, Cornell will return 62,500 of the shares. Cornell will not return any of the shares if the statement is declared effective after Dec. 1, 2006.

EarthShell, located in Lutherville, Md., makes disposable packaging used in the foodservice sector.

The company's stock edged up 2 cents on Wednesday to end at $1.68 (OTCBB: ERTH).

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