SECURITIES PURCHASE AGREEMENT

      THIS  SECURITIES  PURCHASE  AGREEMENT  (this  "Agreement"),  dated  as  of
December 30, 2005, by and among EARTHSHELL  CORPORATION,  a Delaware corporation
(the   "Company"),   and  the  Buyers  listed  on  Schedule  I  attached  hereto
(individually, a "Buyer" or collectively "Buyers").

                                   WITNESSETH

      WHEREAS,  the Company and the Buyer(s) are executing and  delivering  this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D ("Regulation  D") as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act");

      WHEREAS,  the  parties  desire  that,  upon the terms and  subject  to the
conditions  contained herein,  the Company shall issue and sell to the Buyer(s),
as provided  herein,  and the  Buyer(s)  shall  purchase up to Four Million Five
Hundred Thousand  Dollars  ($4,500,000) of secured  convertible  debentures (the
"Convertible  Debentures"),  which  shall  be  convertible  into  shares  of the
Company's common stock, par value $0.001 (the "Common Stock") (as converted, the
"Conversion  Shares") and which shall be funded on the fifth (5th)  business day
following the date hereof (the  "Closing")  for a total  purchase price of up to
Four Million Five Hundred Thousand Dollars ($4,500,000),  (the "Purchase Price")
in the  respective  amounts set forth  opposite each Buyer(s) name on Schedule I
(the "Subscription Amount"); and

      WHEREAS,  contemporaneously  with  the  execution  and  delivery  of  this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement (the "Investor  Registration Rights Agreement")  pursuant to which the
Company has agreed to provide certain  registration  rights under the Securities
Act and the rules and regulations  promulgated there under, and applicable state
securities laws; and

      WHEREAS, the aggregate proceeds of the sale of the Convertible  Debentures
contemplated  hereby shall be held in escrow  pursuant to the terms of an escrow
agreement (the "Escrow  Agreement")  between the Company,  the Buyers, and David
Gonzalez, Esq. (the "Escrow Agent").

      WHEREAS, the Company's  obligations under this Agreement,  the Transaction
Documents (as defined  below),  or any other  obligations  of the Company to the
Buyers are secured by the Amended and Restated Security Agreement (the "Security
Agreement") dated the date hereof between the Company and the Buyers pursuant to
which the  Company  has  agreed to  provide  the  Buyers a  continuing  security
interest  in  Pledged  Collateral  (as  this  term is  defined  in the  Security
Agreement);
<PAGE>

      WHEREAS, the Company's  obligations under this Agreement,  the Transaction
Documents (as defined  below),  or any other  obligations  of the Company to the
Buyer  are  secured  by a Pledge  and  Escrow  Agreement  (the  "Company  Pledge
Agreement") dated the date hereof among the Company,  the Buyers, and the Escrow
Agent  pursuant  to which the Company has agreed to provide the Buyer a security
interest  in the Pledged  Shares (as this term is defined in the Company  Pledge
Agreement);

      WHEREAS, the Company's  obligations under this Agreement,  the Transaction
Documents (as defined  below),  or any other  obligations  of the Company to the
Buyer are  secured by an Insider  Pledge and  Escrow  Agreement  (the  "Wilcoxon
Pledge Agreement") dated the date hereof among the Company, Benton Wilcoxon, the
Buyers, and the Escrow Agent pursuant to which the Benton Wilcoxon has agreed to
provide the Buyer a security  interest  in the  Pledged  Shares (as this term is
defined in the Wilcoxon Pledge Agreement) and;

      WHEREAS,  contemporaneously  with  the  execution  and  delivery  of  this
Agreement,  the parties hereto are executing and delivering Irrevocable Transfer
Agent Instructions (the "Irrevocable Transfer Agent Instructions").

      NOW,  THEREFORE,  in  consideration  of the  mutual  covenants  and  other
agreements contained in this Agreement the Company and the Buyer(s) hereby agree
as follows:

            1. PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.

                  (a)  Purchase  of  Convertible  Debentures.   Subject  to  the
satisfaction  (or waiver) of the terms and  conditions of this  Agreement,  each
Buyer  agrees,  severally  and not jointly,  to purchase at each Closing and the
Company  agrees to sell and issue to each Buyer,  severally and not jointly,  at
each  Closing,   Convertible   Debentures  in  amounts  corresponding  with  the
Subscription  Amount set forth  opposite each Buyer's name on Schedule I hereto.
Upon execution hereof by a Buyer, the Buyer shall wire transfer the Subscription
Amount set forth  opposite  his name on Schedule I in same-day  funds or a check
payable to "David Gonzalez,  Esq., as Escrow Agent for EarthShell  Corporation",
which  Subscription  Amount shall be held in escrow pursuant to the terms of the
Escrow Agreement (as hereinafter defined) and disbursed in accordance therewith.
Notwithstanding the foregoing,  a Buyer may withdraw his Subscription Amount and
terminate this Agreement as to such Buyer at any time after the execution hereof
and prior to Closing (as hereinafter defined).

                  (b) Closing Date.  The Closing of the purchase and sale of the
Convertible  Debentures  shall take place at 10:00 a.m. Eastern Standard Time on
the fifth (5th) business day following the date hereof,  subject to notification
of  satisfaction  of the  conditions  to the  Closing  set forth  herein  and in
Sections  6 and 7 below  (or such  later  date as is  mutually  agreed to by the
Company and the Buyer(s)) (the "Closing  Date").  The Closing shall occur on the
Closing  Date at the offices of Yorkville  Advisors,  LLC,  3700 Hudson  Street,
Suite 3700,  Jersey  City,  New Jersey 07302 (or such other place as is mutually
agreed to by the Company and the Buyer(s)).

                  (c)  Escrow  Arrangements;  Form of  Payment.  Upon  execution
hereof by Buyer(s) and pending the Closing,  the aggregate  proceeds of the sale
of the Convertible  Debentures to Buyer(s) pursuant hereto shall be deposited in
a non-interest  bearing  escrow  account with the Escrow Agent,  pursuant to the
terms  the  Escrow  Agreement.  Subject  to the  satisfaction  of the  terms and
conditions of this  Agreement,  on the Closing Date,  (i) the Escrow Agent shall
deliver to the Company in accordance with the terms of the Escrow Agreement such
aggregate proceeds for the Convertible  Debentures to be issued and sold to such
Buyer(s),  minus the fees to be paid  directly  from the proceeds the Closing as
set forth herein, and (ii) the Company shall deliver to each Buyer,  Convertible
Debentures which such Buyer(s) is purchasing in amounts indicated  opposite such
Buyer's name on Schedule I, duly executed on behalf of the Company.


                                       2
<PAGE>

            2. BUYER'S REPRESENTATIONS AND WARRANTIES.

      Each Buyer represents and warrants, severally and not jointly, that:

                  (a)   Investment   Purpose.   Each  Buyer  is  acquiring   the
Convertible Debentures and, upon conversion of Convertible Debentures, the Buyer
will  acquire  the  Conversion  Shares  then  issuable,  for its own account for
investment only and not with a view towards,  or for resale in connection  with,
the public sale or distribution thereof,  except pursuant to sales registered or
exempted  under the  Securities  Act;  provided,  however,  that by  making  the
representations  herein,  such  Buyer  reserves  the  right  to  dispose  of the
Conversion  Shares at any time in  accordance  with or pursuant to an  effective
registration statement covering such Conversion Shares or an available exemption
under the Securities Act.

                  (b) Accredited  Investor Status.  Each Buyer is an "Accredited
Investor" as that term is defined in Rule 501(a)(3) of Regulation D.

                  (c) Reliance on Exemptions.  Each Buyer  understands  that the
Convertible  Debentures are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and state
securities  laws and that the  Company  is  relying  in part  upon the truth and
accuracy of, and such Buyer's compliance with, the representations,  warranties,
agreements, acknowledgments and understandings of such Buyer set forth herein in
order to determine the  availability  of such  exemptions and the eligibility of
such Buyer to acquire such securities.

                  (d) Information.  Each Buyer and its advisors (and his or, its
counsel),  if any,  have  been  furnished  with all  materials  relating  to the
business,  finances  and  operations  of the Company and  information  he deemed
material to making an informed investment decision regarding his purchase of the
Convertible  Debentures and the Conversion Shares,  which have been requested by
such  Buyer.  Each  Buyer  and its  advisors,  if any,  have been  afforded  the
opportunity  to ask  questions of the Company and its  management.  Neither such
inquiries nor any other due diligence  investigations conducted by such Buyer or
its advisors,  if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's  representations and warranties contained
in  Section  3  below.  Each  Buyer  understands  that  its  investment  in  the
Convertible Debentures and the Conversion Shares involves a high degree of risk.
Each Buyer is in a position regarding the Company, which, based upon employment,
family relationship or economic bargaining power, enabled and enables such Buyer
to obtain information from the Company in order to evaluate the merits and risks
of this investment. Each Buyer has sought such accounting, legal and tax advice,
as it has  considered  necessary to make an informed  investment  decision  with
respect to its  acquisition  of the  Convertible  Debentures  and the Conversion
Shares.


                                       3
<PAGE>

                  (e) No Governmental  Review.  Each Buyer  understands  that no
United States  federal or state agency or any other  government or  governmental
agency  has  passed  on  or  made  any  recommendation  or  endorsement  of  the
Convertible  Debentures or the Conversion Shares, or the fairness or suitability
of the investment in the Convertible  Debentures or the Conversion  Shares,  nor
have such authorities  passed upon or endorsed the merits of the offering of the
Convertible Debentures or the Conversion Shares.

                  (f) Transfer or Resale.  Each Buyer understands that except as
provided in the Investor  Registration  Rights  Agreement:  (i) the  Convertible
Debentures have not been and are not being  registered  under the Securities Act
or any state securities laws, and may not be offered for sale, sold, assigned or
transferred  unless (A) subsequently  registered  thereunder,  or (B) such Buyer
shall have  delivered  to the  Company an opinion  of  counsel,  in a  generally
acceptable  form,  to the effect that such  securities  to be sold,  assigned or
transferred may be sold,  assigned or transferred  pursuant to an exemption from
such  registration  requirements;  (ii)  any  sale  of such  securities  made in
reliance  on Rule 144 under the  Securities  Act (or a successor  rule  thereto)
("Rule  144")  may be made  only in  accordance  with the  terms of Rule 144 and
further,  if Rule 144 is not  applicable,  any resale of such  securities  under
circumstances  in which the seller (or the person through whom the sale is made)
may be deemed to be an  underwriter  (as that term is defined in the  Securities
Act) may require  compliance  with some other exemption under the Securities Act
or the rules and  regulations  of the SEC  thereunder;  and  (iii)  neither  the
Company nor any other person is under any obligation to register such securities
under the  Securities  Act or any state  securities  laws or to comply  with the
terms and conditions of any exemption thereunder. The Company reserves the right
to place stop transfer  instructions against the shares and certificates for the
Conversion Shares.

                  (g) Legends.  Each Buyer  understands that the certificates or
other instruments  representing the Convertible Debentures and or the Conversion
Shares shall bear a restrictive  legend in substantially the following form (and
a  stop  transfer   order  may  be  placed   against   transfer  of  such  stock
certificates):

            THE SECURITIES  REPRESENTED BY THIS CERTIFICATE HAVE NOT
            BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933, AS
            AMENDED,   OR  APPLICABLE  STATE  SECURITIES  LAWS.  THE
            SECURITIES  HAVE BEEN  ACQUIRED  SOLELY  FOR  INVESTMENT
            PURPOSES  AND NOT WITH A VIEW TOWARD  RESALE AND MAY NOT
            BE OFFERED FOR SALE,  SOLD,  TRANSFERRED  OR ASSIGNED IN
            THE ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT FOR
            THE  SECURITIES  UNDER THE  SECURITIES  ACT OF 1933,  AS
            AMENDED,  OR  APPLICABLE  STATE  SECURITIES  LAWS, OR AN
            OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
            REGISTRATION   IS  NOT   REQUIRED   UNDER  SAID  ACT  OR
            APPLICABLE STATE SECURITIES LAWS.

The legend set forth above shall be removed and the Company within two (2)
business days shall issue a certificate without such legend to the holder of the
Conversion Shares upon which it is stamped, if, unless otherwise required by
state securities laws, (i) in connection with a sale transaction, provided the
Conversion Shares are registered under the Securities Act or (ii) in connection
with a sale transaction, after such holder provides the Company with an opinion
of counsel, which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that a public
sale, assignment or transfer of the Conversion Shares may be made without
registration under the Securities Act.


                                       4
<PAGE>

                  (h) Authorization,  Enforcement.  This Agreement has been duly
and validly authorized,  executed and delivered on behalf of such Buyer and is a
valid and binding  agreement of such Buyer  enforceable  in accordance  with its
terms,  except as such  enforceability  may be limited by general  principles of
equity  or  applicable  bankruptcy,  insolvency,   reorganization,   moratorium,
liquidation  and other  similar laws  relating to, or affecting  generally,  the
enforcement of applicable creditors' rights and remedies.

                  (i)  Receipt of  Documents.  Each Buyer and his or its counsel
has  received  and  read  in  their  entirety:   (i)  this  Agreement  and  each
representation,  warranty  and  covenant  set forth  herein and the  Transaction
Documents (as defined  herein);  (ii) all due  diligence  and other  information
necessary  to verify the  accuracy  and  completeness  of such  representations,
warranties  and  covenants;  (iii) the  Company's  Form 10-K for the fiscal year
ended  December 31, 2004;  (iv) the Company's  Form 10-Q for the fiscal  quarter
ended  September 30, 2005 and (v) answers to all questions each Buyer  submitted
to the Company regarding an investment in the Company; and each Buyer has relied
on the  information  contained  therein  and has not been  furnished  any  other
documents, literature, memorandum or prospectus.

                  (j) Due  Formation  of  Corporate  and  Other  Buyers.  If the
Buyer(s) is a  corporation,  trust,  partnership  or other entity that is not an
individual  person,  it has been  formed  and  validly  exists  and has not been
organized for the specific purpose of purchasing the Convertible  Debentures and
is not prohibited from doing so.

                  (k) No Legal Advice From the Company. Each Buyer acknowledges,
that it had the  opportunity  to  review  this  Agreement  and the  transactions
contemplated  by this Agreement with his or its own legal counsel and investment
and tax advisors.  Each Buyer is relying solely on such counsel and advisors and
not  on  any  statements  or  representations  of  the  Company  or  any  of its
representatives  or agents for legal,  tax or investment  advice with respect to
this  investment,  the  transactions  contemplated  by  this  Agreement  or  the
securities laws of any jurisdiction.

            3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

      The Company  represents  and warrants as of the date hereof to each of the
Buyers that,  except as set forth in the SEC Documents (as defined herein) or in
the Disclosure Schedule attached hereto (the "Disclosure Schedule"):

                  (a)  Organization  and  Qualification.  The  Company  and  its
subsidiaries  are  corporations  duly  organized  and  validly  existing in good
standing under the laws of the jurisdiction in which they are incorporated,  and
have the requisite corporate power to own their properties and to carry on their
business as now being  conducted.  Each of the Company and its  subsidiaries  is
duly  qualified as a foreign  corporation to do business and is in good standing
in every  jurisdiction in which the nature of the business conducted by it makes
such  qualification  necessary,  except to the extent  that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries taken as a whole.


                                       5
<PAGE>

                  (b)   Authorization,   Enforcement,   Compliance   with  Other
Instruments.  (i) The Company has the requisite corporate power and authority to
enter into and perform  this  Agreement,  the Security  Agreement,  the Investor
Registration  Rights Agreement,  the Irrevocable  Transfer Agent Agreement,  the
Escrow Agreement,  the Company Pledge Agreement,  the Wilcoxon Pledge Agreement,
and any related  agreements  (collectively  the "Transaction  Documents") and to
issue the  Convertible  Debentures and the Conversion  Shares in accordance with
the terms hereof and thereof, (ii) the execution and delivery of the Transaction
Documents  by  the  Company  and  the  consummation  by it of  the  transactions
contemplated hereby and thereby, including,  without limitation, the issuance of
the  Convertible  Debentures  the  Conversion  Shares  and the  reservation  for
issuance and the issuance of the Conversion  Shares  issuable upon conversion or
exercise thereof,  have been duly authorized by the Company's Board of Directors
and no further consent or authorization is required by the Company, its Board of
Directors or its  stockholders,  (iii) the Transaction  Documents have been duly
executed and delivered by the Company, (iv) the Transaction Documents constitute
the valid and binding obligations of the Company enforceable against the Company
in accordance with their terms,  except as such enforceability may be limited by
general   principles   of   equity   or   applicable   bankruptcy,   insolvency,
reorganization,   moratorium,  liquidation  or  similar  laws  relating  to,  or
affecting  generally,  the  enforcement of creditors'  rights and remedies.  The
authorized  officer of the Company executing the Transaction  Documents knows of
no reason why the Company  cannot file the  registration  statement  as required
under the Investor Registration Rights Agreement or perform any of the Company's
other obligations under such documents.

                  (c)  Capitalization.  The  authorized  capital  stock  of  the
Company consists of 40,000,000  shares of Common Stock and 10,000,000  shares of
Preferred Stock, par value $.01 ("Preferred  Stock") of which 18,881,167  shares
of Common Stock and zero shares of Preferred  Stock are issued and  outstanding.
All of such  outstanding  shares have been validly issued and are fully paid and
nonassessable. No shares of Common Stock are subject to preemptive rights or any
other similar rights or any liens or  encumbrances  suffered or permitted by the
Company. As of the date of this Agreement, (i) there are no outstanding options,
warrants,  scrip,  rights to subscribe to, calls or commitments of any character
whatsoever  relating to, or securities or rights convertible into, any shares of
capital  stock  of  the  Company  or  any of  its  subsidiaries,  or  contracts,
commitments,  understandings  or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional  shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character  whatsoever  relating to, or
securities  or rights  convertible  into,  any  shares of  capital  stock of the
Company  or  any  of its  subsidiaries,  (ii)  there  are  no  outstanding  debt
securities  and (iii) there are no  agreements or  arrangements  under which the
Company or any of its  subsidiaries  is obligated to register the sale of any of
their  securities  under the Securities Act (except pursuant to the Registration
Rights Agreement) and (iv) there are no outstanding  registration statements and
there are no outstanding  comment  letters from the SEC or any other  regulatory
agency.  There are no  securities or  instruments  containing  anti-dilution  or
similar  provisions  that will be triggered  by the issuance of the  Convertible
Debentures  as described  in this  Agreement.  The Company has  furnished to the
Buyer true and correct  copies of the Company's  Articles of  Incorporation,  as
amended and as in effect on the date hereof (the  "Articles of  Incorporation"),
and the Company's By-laws, as in effect on the date hereof (the "By-laws"),  and
the terms of all securities convertible into or exercisable for Common Stock and
the material  rights of the holders  thereof in respect thereto other than stock
options issued to employees and consultants.


                                       6
<PAGE>

                  (d) Issuance of  Securities.  The  Convertible  Debentures are
duly authorized and, upon issuance in accordance with the terms hereof, shall be
duly issued,  fully paid and  nonassessable,  are free from all taxes, liens and
charges with respect to the issue thereof.  The Conversion  Shares issuable upon
conversion of the Convertible  Debentures have been duly authorized and reserved
for issuance.  Upon  conversion or exercise in accordance  with the  Convertible
Debentures  the  Conversion   Shares  will  be  duly  issued,   fully  paid  and
nonassessable.

                  (e) No Conflicts.  The execution,  delivery and performance of
the Transaction  Documents by the Company and the consummation by the Company of
the transactions  contemplated  hereby will not (i) result in a violation of the
Articles of  Incorporation,  any  certificate of designations of any outstanding
series of preferred stock of the Company or the By-laws or (ii) conflict with or
constitute  a default  (or an event  which with  notice or lapse of time or both
would  become a default)  under,  or give to others  any rights of  termination,
amendment,   acceleration  or  cancellation  of,  any  agreement,  indenture  or
instrument to which the Company or any of its subsidiaries is a party, or result
in a  violation  of  any  law,  rule,  regulation,  order,  judgment  or  decree
(including  federal and state  securities laws and regulations and the rules and
regulations  of The  National  Association  of  Securities  Dealers  Inc.'s  OTC
Bulletin Board on which the Common Stock is quoted) applicable to the Company or
any of its  subsidiaries or by which any property or asset of the Company or any
of  its  subsidiaries  is  bound  or  affected.  Neither  the  Company  nor  its
subsidiaries  is in violation of any term of or in default under its Articles of
Incorporation   or  By-laws  or  their   organizational   charter  or   by-laws,
respectively,  or any  material  contract,  agreement,  mortgage,  indebtedness,
indenture,  instrument,  judgment,  decree  or  order  or any  statute,  rule or
regulation  applicable to the Company or its  subsidiaries.  The business of the
Company and its subsidiaries is not being conducted,  and shall not be conducted
in violation of any material law,  ordinance,  or regulation of any governmental
entity.  Except as  specifically  contemplated by this Agreement and as required
under the Securities Act and any applicable  state  securities laws, the Company
is not  required to obtain any consent,  authorization  or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under or contemplated by this
Agreement or the  Registration  Rights  Agreement in  accordance  with the terms
hereof  or  thereof.   All  consents,   authorizations,   orders,   filings  and
registrations  which the Company is required to obtain pursuant to the preceding
sentence  have been  obtained or effected  on or prior to the date  hereof.  The
Company and its  subsidiaries  are unaware of any facts or  circumstance,  which
might give rise to any of the foregoing.

                  (f) SEC  Documents:  Financial  Statements.  Since  January 1,
2003, the Company has filed all reports,  schedules, forms, statements and other
documents required to be filed by it with the SEC under the Securities  Exchange
Act of 1934, as amended (the "Exchange  Act") (all of the foregoing  filed prior
to the date hereof or amended  after the date hereof and all  exhibits  included
therein  and  financial   statements   and   schedules   thereto  and  documents
incorporated by reference  therein,  being  hereinafter  referred to as the "SEC
Documents").  The Company has delivered to the Buyers or their  representatives,
or made  available  through the SEC's website at  http://www.sec.gov.,  true and
complete  copies  of the  SEC  Documents.  As of  their  respective  dates,  the
financial  statements  of the  Company  disclosed  in  the  SEC  Documents  (the
"Financial  Statements")  complied  as to form  in all  material  respects  with
applicable  accounting  requirements  and the published rules and regulations of
the SEC with respect  thereto.  Such financial  statements have been prepared in
accordance with generally accepted accounting principles,  consistently applied,
during the periods  involved  (except (i) as may be otherwise  indicated in such
Financial  Statements  or the notes  thereto,  or (ii) in the case of  unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or  summary  statements)  and,  fairly  present  in all  material  respects  the
financial position of the Company as of the dates thereof and the results of its
operations  and cash flows for the periods then ended  (subject,  in the case of
unaudited   statements,   to  normal  year-end  audit  adjustments).   No  other
information  provided  by or on behalf of the  Company to the Buyer which is not
included  in the  SEC  Documents,  including,  without  limitation,  information
referred to in this Agreement,  contains any untrue statement of a material fact
or omits to state any material  fact  necessary in order to make the  statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading.


                                       7
<PAGE>

                  (g)  10(b)-5.  The SEC  Documents  do not  include  any untrue
statements  of  material  fact,  nor do they  omit to state  any  material  fact
required to be stated therein necessary to make the statements made, in light of
the circumstances under which they were made, not misleading.

                  (h)  Absence of  Litigation.  Except as set forth in  Schedule
3(h)  attached  hereto,  there  is  no  action,  suit,  proceeding,  inquiry  or
investigation  before  or  by  any  court,  public  board,   government  agency,
self-regulatory  organization  or body pending against or affecting the Company,
the Common Stock or any of the Company's  subsidiaries,  wherein an  unfavorable
decision,  ruling or  finding  would (i) have a material  adverse  effect on the
transactions   contemplated   hereby  (ii)  adversely  affect  the  validity  or
enforceability  of, or the  authority  or ability of the  Company to perform its
obligations under, this Agreement or any of the documents  contemplated  herein,
or (iii) have a material adverse effect on the business, operations, properties,
financial condition or results of operations of the Company and its subsidiaries
taken as a whole.

                  (i)   Acknowledgment   Regarding   Buyer's   Purchase  of  the
Convertible Debentures. The Company acknowledges and agrees that the Buyer(s) is
acting solely in the capacity of an arm's length  purchaser with respect to this
Agreement  and  the  transactions   contemplated  hereby.  The  Company  further
acknowledges that the Buyer(s) is not acting as a financial advisor or fiduciary
of the Company (or in any similar  capacity)  with respect to this Agreement and
the transactions contemplated hereby and any advice given by the Buyer(s) or any
of their respective  representatives or agents in connection with this Agreement
and the transactions  contemplated  hereby is merely  incidental to such Buyer's
purchase of the  Convertible  Debentures or the Conversion  Shares.  The Company
further  represents to the Buyer that the Company's  decision to enter into this
Agreement has been based solely on the independent evaluation by the Company and
its representatives.


                                       8
<PAGE>

                  (j) No General  Solicitation.  Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has engaged in any
form of general  solicitation  or general  advertising  (within  the  meaning of
Regulation D under the Securities  Act) in connection  with the offer or sale of
the Convertible Debentures or the Conversion Shares.

                  (k) No Integrated  Offering.  Neither the Company,  nor any of
its  affiliates,  nor any person acting on its or their behalf has,  directly or
indirectly,  made any offers or sales of any security or solicited any offers to
buy any security,  under  circumstances  that would require  registration of the
Convertible  Debentures or the  Conversion  Shares under the  Securities  Act or
cause this offering of the Convertible Debentures or the Conversion Shares to be
integrated  with prior  offerings by the Company for purposes of the  Securities
Act.

                  (l)  Employee  Relations.  Neither  the Company nor any of its
subsidiaries  is involved in any labor  dispute  nor,  to the  knowledge  of the
Company or any of its subsidiaries,  is any such dispute threatened. None of the
Company's or its subsidiaries'  employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

                  (m)  Intellectual   Property  Rights.   The  Company  and  its
subsidiaries  own or possess  adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations,  service names, patents,
patent  rights,  copyrights,   inventions,  licenses,  approvals,   governmental
authorizations,  trade secrets and rights  necessary to conduct their respective
businesses as now conducted.  The Company and its  subsidiaries  do not have any
knowledge of any  infringement by the Company or its  subsidiaries of trademark,
trade name rights, patents,  patent rights,  copyrights,  inventions,  licenses,
service names, service marks, service mark registrations,  trade secret or other
similar  rights of others,  and, to the  knowledge  of the  Company  there is no
claim,  action or proceeding being made or brought against,  or to the Company's
knowledge,  being threatened against, the Company or its subsidiaries  regarding
trademark,  trade name, patents, patent rights, invention,  copyright,  license,
service names, service marks, service mark registrations,  trade secret or other
infringement;  and the Company and its  subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.

                  (n)  Environmental  Laws. The Company and its subsidiaries are
(i) in compliance with any and all applicable foreign,  federal, state and local
laws and regulations  relating to the protection of human health and safety, the
environment  or  hazardous  or  toxic   substances  or  wastes,   pollutants  or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable  Environmental Laws to conduct
their  respective  businesses  and  (iii) are in  compliance  with all terms and
conditions of any such permit, license or approval.

                  (o) Title.  Any real property and facilities  held under lease
by the Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such  property and buildings by the
Company and its subsidiaries.


                                       9
<PAGE>

                  (p) Insurance.  The Company and each of its  subsidiaries  are
insured by insurers of recognized financial  responsibility  against such losses
and risks and in such  amounts  as  management  of the  Company  believes  to be
prudent  and  customary  in  the   businesses  in  which  the  Company  and  its
subsidiaries  are engaged.  Neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such  subsidiary has any reason to believe that it will not be able to renew
its existing  insurance  coverage as and when such coverage expires or to obtain
similar  coverage  from  similar  insurers as may be  necessary  to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise,  or the earnings,  business or operations of the Company
and its subsidiaries, taken as a whole.

                  (q)  Regulatory  Permits.  The  Company  and its  subsidiaries
possess all  material  certificates,  authorizations  and permits  issued by the
appropriate  federal,  state or  foreign  regulatory  authorities  necessary  to
conduct  their  respective  businesses,  and  neither  the  Company nor any such
subsidiary has received any notice of proceedings  relating to the revocation or
modification of any such certificate, authorization or permit.

                  (r) Internal Accounting  Controls.  Except as set forth in the
SEC  Documents,  the Company and each of its  subsidiaries  maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions  are executed in accordance with  management's  general or specific
authorizations,   (ii)   transactions   are  recorded  as  necessary  to  permit
preparation  of financial  statements  in  conformity  with  generally  accepted
accounting  principles  and to  maintain  asset  accountability,  and  (iii) the
recorded  amounts for assets is compared with the existing  assets at reasonable
intervals and appropriate action is taken with respect to any differences.

                  (s) No Material Adverse Breaches, etc. Neither the Company nor
any of its  subsidiaries  is subject to any  charter,  corporate  or other legal
restriction,  or any judgment,  decree,  order,  rule or regulation which in the
judgment of the  Company's  officers  has or is expected in the future to have a
material  adverse  effect on the  business,  properties,  operations,  financial
condition,   results  of   operations   or  prospects  of  the  Company  or  its
subsidiaries.  Neither the Company nor any of its  subsidiaries  is in breach of
any  contract or  agreement  which  breach,  in the  judgment  of the  Company's
officers,  has or is expected to have a material adverse effect on the business,
properties,  operations, financial condition, results of operations or prospects
of the Company or its subsidiaries.

                  (t) Tax Status.  The Company and each of its  subsidiaries has
made and filed all federal and state income and all other tax  returns,  reports
and declarations required by any jurisdiction to which it is subject and (unless
and only to the extent  that the Company  and each of its  subsidiaries  has set
aside on its books provisions  reasonably adequate for the payment of all unpaid
and unreported taxes) has paid all taxes and other governmental  assessments and
charges  that are  material  in amount,  shown or  determined  to be due on such
returns,  reports and  declarations,  except those being contested in good faith
and has set aside on its books provision  reasonably adequate for the payment of
all taxes for periods  subsequent to the periods to which such returns,  reports
or declarations  apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any  jurisdiction,  and the officers of the
Company  know of no basis  for any such  claim  except  for  unpaid  taxes in an
aggregate  amount  not  greater  than  $150,000  charged  by  Baltimore  County,
Maryland, that are being contested or settled by the Company.


                                       10
<PAGE>

                  (u) Certain Transactions. Except for arm's length transactions
pursuant to which the Company makes payments in the ordinary  course of business
upon terms no less  favorable  than the Company  could obtain from third parties
and other than the grant of stock options  disclosed in the SEC Documents,  none
of the officers,  directors, or employees of the Company is presently a party to
any transaction with the Company (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement providing
for the  furnishing  of  services  to or by,  providing  for  rental  of real or
personal  property to or from,  or otherwise  requiring  payments to or from any
officer,  director or such  employee or, to the  knowledge  of the Company,  any
corporation,  partnership, trust or other entity in which any officer, director,
or any such  employee  has a  substantial  interest or is an officer,  director,
trustee or partner.

                  (v) Fees and  Rights  of First  Refusal.  The  Company  is not
obligated to offer the securities  offered hereunder on a right of first refusal
basis or otherwise to any third parties  including,  but not limited to, current
or former shareholders of the Company,  underwriters,  brokers,  agents or other
third parties.

            4. COVENANTS.

                  (a) Best  Efforts.  Each party  shall use its best  efforts to
timely  satisfy  each of the  conditions  to be  satisfied  by it as provided in
Sections 6 and 7 of this Agreement.

                  (b) Form D. The Company  agrees to file a Form D with  respect
to the Conversion  Shares as required  under  Regulation D and to provide a copy
thereof to each Buyer  promptly  after such  filing.  The Company  shall,  on or
before the  Closing  Date,  take such  action as the  Company  shall  reasonably
determine is necessary to qualify the Conversion  Shares, or obtain an exemption
for the Conversion Shares for sale to the Buyers at the Closing pursuant to this
Agreement  under  applicable  securities or "Blue Sky" laws of the states of the
United  States,  and shall  provide  evidence of any such action so taken to the
Buyers on or prior to the Closing Date.

                  (c) Reporting Status.  Until the earlier of (i) the date as of
which the Buyer(s) may sell all of the  Conversion  Shares  without  restriction
pursuant to Rule  144(k)  promulgated  under the  Securities  Act (or  successor
thereto),  or (ii) the date on which (A) the  Buyer(s)  shall  have sold all the
Conversion  Shares and (B) none of the  Convertible  Debentures are  outstanding
(the  "Registration  Period"),  the  Company  shall file in a timely  manner all
reports  required to be filed with the SEC  pursuant to the Exchange Act and the
regulations  of the SEC  thereunder,  and the Company  shall not  terminate  its
status as an issuer  required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would otherwise permit such
termination.

                  (d) Use of Proceeds.  The Company  will use the proceeds  from
the sale of the Convertible Debentures for general corporate and working capital
purposes, and for the repayment of prior amounts owed to the Buyers.


                                       11
<PAGE>

                  (e)  Reservation of Shares.  The Company shall take all action
reasonably  necessary  to at all times have  authorized,  and  reserved  for the
purpose of issuance, such number of shares of Common Stock as shall be necessary
to effect the issuance of the Conversion Shares. If at any time the Company does
not have  available  such  shares of Common  Stock as shall from time to time be
sufficient to effect the conversion of all of the Conversion Shares, the Company
shall call and hold a special  meeting of the  shareholders  within  thirty (30)
days of such occurrence, for the sole purpose of increasing the number of shares
authorized. The Company's management shall recommend to the shareholders to vote
in favor of  increasing  the  number  of  shares  of  Common  Stock  authorized.
Management  shall also vote all of its shares in favor of increasing  the number
of authorized shares of Common Stock.

                  (f) Listings or Quotation.  The Company shall promptly  secure
the listing or quotation of the Conversion Shares upon each national  securities
exchange,  automated quotation system or The National  Association of Securities
Dealers Inc.'s  Over-The-Counter  Bulletin Board  ("OTCBB") or other market,  if
any,  upon which  shares of Common  Stock are then listed or quoted  (subject to
official notice of issuance) and shall use its best efforts to maintain, so long
as any other  shares of Common  Stock  shall be so listed,  such  listing of all
Conversion  Shares from time to time issuable under the terms of this Agreement.
The Company shall maintain the Common Stock's authorization for quotation on the
OTCBB.

                  (g) Fees and Expenses.

                        (i) Each of the Company and the  Buyer(s)  shall pay all
costs and expenses  incurred by such party in connection  with the  negotiation,
investigation, preparation, execution and delivery of the Transaction Documents.
The Company shall pay Yorkville Advisors LLC a fee equal to Two Hundred Thousand
Dollars  ($200,000),  which shall be paid directly out of the gross  proceeds of
the Closing.

                        (ii)  The  Company  shall  pay  a  structuring  and  due
diligence fee to Yorkville Advisors, LLC of Ten Thousand Dollars ($10,000) which
shall be paid directly from the gross proceeds of the Closing.

                        (iii) The  Company  shall  issue to the Buyers  warrants
(the "Warrants") to purchase shares of the Common Stock in the amounts set forth
next to each Buyers name on  Schedule I. The shares of Common  Stock  underlying
the  Warrants  shall be referred to as the Warrant  Shares.  The Warrant  Shares
shall have "piggy-back" and demand registration rights.

                  (h)  Corporate  Existence.  So long as any of the  Convertible
Debentures  remain  outstanding,  the Company  shall not directly or  indirectly
consummate  any  merger,  reorganization,  restructuring,  reverse  stock  split
consolidation,  sale of all or substantially  all of the Company's assets or any
similar  transaction  or  related   transactions  (each  such  transaction,   an
"Organizational  Change") unless,  prior to the  consummation an  Organizational
Change, the Company obtains the written consent of each Buyer. In any such case,
the Company will make appropriate provision with respect to such holders' rights
and interests to insure that the provisions of this Section 4(h) will thereafter
be applicable to the Convertible Debentures.


                                       12
<PAGE>

                  (i) Transactions With Affiliates. Without prior consent of the
Buyers, so long as any Convertible Debentures are outstanding, the Company shall
not, and shall cause each of its subsidiaries not to, enter into, amend,  modify
or  supplement,  or  permit  any  subsidiary  to enter  into,  amend,  modify or
supplement any agreement,  transaction,  commitment,  or arrangement with any of
its or any  subsidiary's  officers,  directors,  person  who  were  officers  or
directors  at any time  during  the  previous  two (2) years,  stockholders  who
beneficially  own five percent (5%) or more of the Common  Stock,  or Affiliates
(as  defined  below)  or with any  individual  related  by blood,  marriage,  or
adoption to any such  individual  or with any entity in which any such entity or
individual owns a five percent (5%) or more beneficial interest (each a "Related
Party"),  except for (a) customary employment  arrangements and benefit programs
on reasonable terms, (b) any investment in an Affiliate of the Company,  (c) any
agreement,  transaction,  commitment,  or arrangement on an arms-length basis on
terms no less  favorable  than terms  which  would have been  obtainable  from a
person  other  than  such  Related  Party,   (d)  any  agreement,   transaction,
commitment,  or arrangement which is approved by a majority of the disinterested
directors  of the  Company;  for  purposes  hereof,  any director who is also an
officer  of  the  Company  or  any  subsidiary  of the  Company  shall  not be a
disinterested  director  with  respect  to  any  such  agreement,   transaction,
commitment, or arrangement.  "Affiliate" for purposes hereof means, with respect
to any person or entity,  another person or entity that, directly or indirectly,
(i) has a ten percent  (10%) or more  equity  interest in that person or entity,
(ii) has ten percent (10%) or more common  ownership with that person or entity,
(iii)  controls that person or entity,  or (iv) shares common  control with that
person or entity.  "Control"  or  "controls"  for  purposes  hereof means that a
person or entity has the  power,  direct or  indirect,  to conduct or govern the
policies of another person or entity.

                  (j) Transfer Agent. The Company  covenants and agrees that, in
the event that the Company's agency  relationship with the transfer agent should
be  terminated  for any reason  prior to a date which is two (2) years after the
Closing Date,  the Company shall  immediately  appoint a new transfer  agent and
shall  require that the new transfer  agent execute and agree to be bound by the
terms of the Irrevocable Transfer Agent Instructions (as defined herein).

                  (k)  Restriction on Issuance of the Capital Stock.  So long as
any Convertible  Debentures are outstanding,  the Company shall not, without the
prior written consent of the Buyer(s),  (i) issue or sell shares of Common Stock
or Preferred Stock without  consideration or for a consideration  per share less
than the bid  price of the  Common  Stock  determined  immediately  prior to its
issuance,  (ii) issue any preferred stock,  warrant,  option,  right,  contract,
call, or other  security or  instrument  ("Convertible  Security")  granting the
holder thereof the right to acquire Common Stock without  consideration or for a
consideration  less  than  the  bid  price  of  the  Common  Stock's  determined
immediately prior to the issuance of such Convertible Security, (iii) enter into
any security  instrument  granting the holder a security interest in any and all
assets of the Company, or (iv) file any registration statement on Form S-8.

                  (l) Neither the  Buyer(s)  nor any of its  affiliates  have an
open short position in the Common Stock of the Company,  and the Buyer(s) agrees
that it shall not, and that it will cause its  affiliates  not to, engage in any
short sales of or hedging  transactions with respect to the Common Stock as long
as any Convertible Debentures shall remain outstanding.


                                       13
<PAGE>

            5. TRANSFER AGENT INSTRUCTIONS.

                  (a) The Company  shall issue the  Irrevocable  Transfer  Agent
Instructions to its transfer agent irrevocably  appointing David Gonzalez,  Esq.
as the Company's agent for purpose of having certificates issued,  registered in
the name of the Buyer(s) or its respective nominee(s), for the Conversion Shares
representing  such amounts of  Convertible  Debentures as specified from time to
time  by the  Buyer(s)  to  the  Company  upon  conversion  of  the  Convertible
Debentures, for interest owed pursuant to the Convertible Debenture, and for any
and all Liquidated Damages (as this term is defined in the Investor Registration
Rights  Agreement).  David  Gonzalez,  Esq.  shall  be paid a cash  fee of Fifty
Dollars ($50) for every occasion they act pursuant to the  Irrevocable  Transfer
Agent Instructions.  The Company shall not change its transfer agent without the
express written  consent of the Buyer(s),  which may be withheld by the Buyer(s)
in its sole discretion. Prior to registration of the Conversion Shares under the
Securities  Act,  all  such  certificates  shall  bear  the  restrictive  legend
specified  in Section  2(g) of this  Agreement.  The  Company  warrants  that no
instruction other than the Irrevocable  Transfer Agent Instructions  referred to
in this Section 5, and stop transfer instructions to give effect to Section 2(g)
hereof  (in the case of the  Conversion  Shares  prior to  registration  of such
shares  under the  Securities  Act) will be given by the Company to its transfer
agent and that the Conversion  Shares shall otherwise be freely  transferable on
the books and  records  of the  Company as and to the  extent  provided  in this
Agreement  and the  Investor  Registration  Rights  Agreement.  Nothing  in this
Section 5 shall  affect in any way the  Buyer's  obligations  and  agreement  to
comply with all applicable  securities laws upon resale of Conversion Shares. If
the Buyer(s) provides the Company with an opinion of counsel, in form, scope and
substance  customary for opinions of counsel in comparable  transactions  to the
effect that  registration  of a resale by the Buyer(s) of any of the  Conversion
Shares is not required  under the  Securities  Act, the Company shall within two
(2) business days instruct its transfer agent to issue one or more  certificates
in such name and in such  denominations  as specified by the Buyer.  The Company
acknowledges  that  a  breach  by it of its  obligations  hereunder  will  cause
irreparable  harm to the  Buyer by  vitiating  the  intent  and  purpose  of the
transaction contemplated hereby. Accordingly,  the Company acknowledges that the
remedy  at law for a breach  of its  obligations  under  this  Section 5 will be
inadequate  and  agrees,  in the event of a breach or  threatened  breach by the
Company  of the  provisions  of this  Section  5,  that  the  Buyer(s)  shall be
entitled,  in  addition  to  all  other  available  remedies,  to an  injunction
restraining any breach and requiring  immediate  issuance and transfer,  without
the necessity of showing  economic  loss and without any bond or other  security
being required.

            6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

      The obligation of the Company  hereunder to issue and sell the Convertible
Debentures to the Buyer(s) at the Closings is subject to the satisfaction, at or
before the Closing  Dates,  of each of the following  conditions,  provided that
these  conditions  are for the  Company's  sole benefit and may be waived by the
Company at any time in its sole discretion:

                  (a) Each Buyer shall have executed the  Transaction  Documents
and delivered them to the Company.


                                       14
<PAGE>

                  (b) The Buyer(s)  shall have delivered to the Escrow Agent the
Purchase  Price for  Convertible  Debentures in respective  amounts as set forth
next to each Buyer as  outlined  on  Schedule  I attached  hereto and the Escrow
Agent shall have  delivered  the net proceeds to the Company by wire transfer of
immediately  available U.S. funds pursuant to the wire instructions  provided by
the Company.

                  (c) The  representations  and warranties of the Buyer(s) shall
be true and correct in all material  respects as of the date when made and as of
the Closing  Dates as though made at that time (except for  representations  and
warranties  that  speak as of a  specific  date),  and the  Buyer(s)  shall have
performed,  satisfied and complied in all material  respects with the covenants,
agreements and conditions required by this Agreement to be performed,  satisfied
or complied with by the Buyer(s) at or prior to the Closing Dates.

            7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

                  (a) The  obligation of the Buyer(s)  hereunder to purchase the
Convertible  Debentures  at the  Closing is subject to the  satisfaction,  at or
before the First Closing Date, of each of the following conditions:

                        (i) The  Company  shall have  executed  the  Transaction
Documents and delivered the same to the Buyer(s).

                        (ii) The Common Stock shall be authorized  for quotation
on the OTCBB,  trading in the Common Stock shall not have been suspended for any
reason,  and all the  Conversion  Shares  issuable  upon the  conversion  of the
Convertible Debentures shall be approved by the OTCBB.

                        (iii) The  representations and warranties of the Company
shall be true and correct in all  material  respects  (except to the extent that
any  of  such   representations  and  warranties  is  already  qualified  as  to
materiality  in  Section  3  above,  in which  case,  such  representations  and
warranties  shall be true and correct without further  qualification)  as of the
date when made and as of the Closing  Date as though  made at that time  (except
for  representations  and  warranties  that speak as of a specific date) and the
Company shall have  performed,  satisfied and complied in all material  respects
with the covenants,  agreements and conditions  required by this Agreement to be
performed,  satisfied or complied with by the Company at or prior to the Closing
Date. If requested by the Buyer,  the Buyer shall have  received a  certificate,
executed by the  President of the Company,  dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably  requested by
the  Buyer  including,  without  limitation  an update  as of the  Closing  Date
regarding the representation contained in Section 3(c) above.

                        (iv) The Company  shall have  executed and  delivered to
the Buyer(s) the  Convertible  Debentures  in the  respective  amounts set forth
opposite each Buyer(s) name on Schedule I attached hereto.

                        (v) The  Buyer(s)  shall  have  received  an  opinion of
counsel from counsel to the company in a form satisfactory to the Buyer(s).


                                       15
<PAGE>

                        (vi) The Company  shall have  provided to the Buyer(s) a
certificate of good standing from the secretary of state from the state in which
the company is incorporated.

                        (vii) The Company  shall have filed a form UCC-1 or such
other forms as may be  required  to perfect the Buyer's  interest in the Pledged
Property as detailed in the Security Agreement and provided proof of such filing
to the Buyer(s).

                        (viii) The Company  shall have  provided to the Buyer an
acknowledgement,   to  the  satisfaction  of  the  Buyer,   from  the  Company's
independent  certified  public  accountants  as to its  ability to  provide  all
consents  required in order to file a registration  statement in connection with
this transaction.

                        (ix)  The  Company   shall  have  reserved  out  of  its
authorized  and unissued  Common Stock,  solely for the purpose of effecting the
conversion of the Convertible  Debentures,  shares of Common Stock to effect the
conversion of all of the Conversion  Shares then outstanding and exercise of the
Warrants.

                        (x) The Irrevocable Transfer Agent Instructions, in form
and  substance  satisfactory  to the  Buyer,  shall have been  delivered  to and
acknowledged in writing by the Company's transfer agent.

            8. INDEMNIFICATION.

                  (a) In consideration of the Buyer's  execution and delivery of
this  Agreement and  acquiring the  Convertible  Debentures  and the  Conversion
Shares  hereunder,  and in addition to all of the  Company's  other  obligations
under this  Agreement,  the Company  shall defend,  protect,  indemnify and hold
harmless the Buyer(s) and each other holder of the  Convertible  Debentures  and
the  Conversion  Shares,  and all of their  officers,  directors,  employees and
agents  (including,  without  limitation,  those retained in connection with the
transactions   contemplated  by  this  Agreement)   (collectively,   the  "Buyer
Indemnitees")  from and against any and all  actions,  causes of action,  suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection  therewith  (irrespective  of whether any such Buyer  Indemnitee is a
party  to the  action  for  which  indemnification  hereunder  is  sought),  and
including  reasonable   attorneys'  fees  and  disbursements  (the  "Indemnified
Liabilities"),  incurred by the Buyer Indemnitees or any of them as a result of,
or arising  out of, or relating  to (a) any  misrepresentation  or breach of any
representation  or  warranty  made  by  the  Company  in  this  Agreement,   the
Convertible  Debentures  or the Investor  Registration  Rights  Agreement or any
other certificate,  instrument or document  contemplated hereby or thereby,  (b)
any breach of any covenant,  agreement or obligation of the Company contained in
this  Agreement,  or the  Investor  Registration  Rights  Agreement or any other
certificate,  instrument or document  contemplated hereby or thereby, or (c) any
cause of action,  suit or claim  brought or made  against  such  Indemnitee  and
arising  out of or  resulting  from  the  execution,  delivery,  performance  or
enforcement  of this  Agreement or any other  instrument,  document or agreement
executed pursuant hereto by any of the parties hereto, any transaction  financed
or to be financed in whole or in part, directly or indirectly, with the proceeds
of the  issuance  of the  Convertible  Debentures  or the status of the Buyer or
holder  of the  Convertible  Debentures  the  Conversion  Shares,  as a Buyer of
Convertible  Debentures  in  the  Company.  To the  extent  that  the  foregoing
undertaking  by the Company  may be  unenforceable  for any reason,  the Company
shall make the maximum  contribution to the payment and  satisfaction of each of
the Indemnified Liabilities, which is permissible under applicable law.


                                       16
<PAGE>

                  (b) In consideration  of the Company's  execution and delivery
of this Agreement, and in addition to all of the Buyer's other obligations under
this Agreement, the Buyer shall defend, protect, indemnify and hold harmless the
Company and all of its officers,  directors,  employees  and agents  (including,
without   limitation,   those  retained  in  connection  with  the  transactions
contemplated by this Agreement)  (collectively,  the "Company Indemnitees") from
and against any and all Indemnified  Liabilities  incurred by the Indemnitees or
any of  them  as a  result  of,  or  arising  out  of,  or  relating  to (a) any
misrepresentation  or  breach  of any  representation  or  warranty  made by the
Buyer(s)  in this  Agreement,  instrument  or  document  contemplated  hereby or
thereby  executed by the Buyer,  (b) any breach of any  covenant,  agreement  or
obligation  of  the  Buyer(s)   contained  in  this   Agreement,   the  Investor
Registration  Rights Agreement or any other certificate,  instrument or document
contemplated  hereby  or  thereby  executed  by the  Buyer,  or (c) any cause of
action,  suit or claim brought or made against such Company  Indemnitee based on
material  misrepresentations  or due to a material  breach and arising out of or
resulting  from the  execution,  delivery,  performance  or  enforcement of this
Agreement,  the Investor  Registration Rights Agreement or any other instrument,
document or agreement  executed pursuant hereto by any of the parties hereto. To
the extent that the foregoing undertaking by each Buyer may be unenforceable for
any reason,  each Buyer shall make the maximum  contribution  to the payment and
satisfaction of each of the Indemnified Liabilities,  which is permissible under
applicable law.

            9. GOVERNING LAW: MISCELLANEOUS.

                  (a)  Governing  Law. This  Agreement  shall be governed by and
interpreted  in  accordance  with the laws of the  State of New  Jersey  without
regard to the principles of conflict of laws. The parties further agree that any
action between them shall be heard in Hudson County,  New Jersey,  and expressly
consent  to the  jurisdiction  and venue of the  Superior  Court of New  Jersey,
sitting in Hudson County and the United States  District  Court for the District
of New Jersey sitting in Newark,  New Jersey for the  adjudication  of any civil
action asserted pursuant to this Paragraph.

                  (b)  Counterparts.  This  Agreement  may be executed in two or
more identical  counterparts,  all of which shall be considered one and the same
agreement and shall become effective when  counterparts have been signed by each
party and  delivered  to the other  party.  In the event any  signature  page is
delivered  by  facsimile  transmission,  the party  using such means of delivery
shall  cause  four  (4)  additional  original  executed  signature  pages  to be
physically  delivered to the other party  within five (5) days of the  execution
and delivery hereof.

                  (c)  Headings.   The  headings  of  this   Agreement  are  for
convenience   of   reference   and  shall  not  form  part  of,  or  affect  the
interpretation of, this Agreement.

                  (d) Severability.  If any provision of this Agreement shall be
invalid   or   unenforceable   in   any   jurisdiction,   such   invalidity   or
unenforceability  shall  not  affect  the  validity  or  enforceability  of  the
remainder  of  this   Agreement  in  that   jurisdiction   or  the  validity  or
enforceability of any provision of this Agreement in any other jurisdiction.


                                       17
<PAGE>

                  (e) Entire Agreement,  Amendments.  This Agreement  supersedes
all other prior oral or written  agreements  between the Buyer(s),  the Company,
their  affiliates and persons acting on their behalf with respect to the matters
discussed  herein,  and this  Agreement and the  instruments  referenced  herein
contain  the entire  understanding  of the parties  with  respect to the matters
covered  herein and therein  and,  except as  specifically  set forth  herein or
therein,  neither the Company nor any Buyer makes any representation,  warranty,
covenant or  undertaking  with  respect to such  matters.  No  provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.

                  (f)  Notices.  Any  notices,   consents,   waivers,  or  other
communications  required  or  permitted  to be  given  under  the  terms of this
Agreement  must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon confirmation of receipt, when sent
by  facsimile;  (iii)  three (3) days after being sent by U.S.  certified  mail,
return  receipt  requested,  or (iv) one (1) day after deposit with a nationally
recognized  overnight  delivery service,  in each case properly addressed to the
party to  receive  the  same.  The  addresses  and  facsimile  numbers  for such
communications shall be:

If to the Company, to:          EarthShell Corporation
                                1301 York Road, Suite 200
                                Lutherville, MD 20193
                                Attention:  Scott Houston
                                Telephone:  (410) 847-9420
                                Facsimile:  (410) 847-9431

With a copy to:                 Kirkpatrick & Lockhart Nicholson Graham LLP
                                201 S. Biscayne Blvd., Suite 2000
                                Miami, FL 33131
                                Attention:  Clayton E. Parker, Esq.
                                Telephone:  (305) 539-3306
                                Facsimile:  (305) 358-7095


      If to the  Buyer(s),  to its address and  facsimile  number on Schedule I,
with copies to the Buyer's  counsel as set forth on Schedule I. Each party shall
provide five (5) days' prior written  notice to the other party of any change in
address or facsimile number.

                  (g)  Successors and Assigns.  This Agreement  shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns.  Neither the Company nor any Buyer shall  assign this  Agreement or any
rights or obligations  hereunder  without the prior written consent of the other
party hereto.


                                       18
<PAGE>

                  (h) No Third Party  Beneficiaries.  This Agreement is intended
for the benefit of the parties hereto and their respective  permitted successors
and  assigns,  and is not for the  benefit of, nor may any  provision  hereof be
enforced by, any other person.

                  (i)  Survival.  Unless  this  Agreement  is  terminated  under
Section 9(l), the representations and warranties of the Company and the Buyer(s)
contained  in  Sections  2 and 3, the  agreements  and  covenants  set  forth in
Sections 4, 5 and 9, and the indemnification  provisions set forth in Section 8,
shall  survive the Closing for a period of two (2) years  following  the date on
which the  Convertible  Debentures  are converted in full. The Buyer(s) shall be
responsible  only  for  its  own  representations,  warranties,  agreements  and
covenants hereunder.

                  (j)  Publicity.  The Company and the  Buyer(s)  shall have the
right to  approve,  before  issuance  any  press  release  or any  other  public
statement  with  respect to the  transactions  contemplated  hereby  made by any
party; provided,  however, that the Company shall be entitled, without the prior
approval of the Buyer(s),  to issue any press release or other public disclosure
with respect to such transactions  required under applicable securities or other
laws or  regulations  (the  Company  shall use its best  efforts to consult  the
Buyer(s) in connection  with any such press  release or other public  disclosure
prior to its release and  Buyer(s)  shall be provided  with a copy  thereof upon
release thereof).

                  (k) Further  Assurances.  Each party shall do and perform,  or
cause to be done and  performed,  all such  further  acts and things,  and shall
execute and deliver all such other  agreements,  certificates,  instruments  and
documents,  as the other party may reasonably  request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

                  (l) Termination.  In the event that the Closing shall not have
occurred with respect to the Buyers on or before five (5) business days from the
date  hereof  due to the  Company's  or  the  Buyer's  failure  to  satisfy  the
conditions  set forth in Sections 6 and 7 above (and the  non-breaching  party's
failure to waive such unsatisfied  condition(s)),  the non-breaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of  business  on such date  without  liability  of any party to any
other party;  provided,  however,  that if this  Agreement is  terminated by the
Company  pursuant to this Section 9(l),  the Company  shall remain  obligated to
reimburse  the  Buyer(s)  for the fees and  expenses of  Yorkville  Advisors LLC
described in Section 4(g) above.

                  (m)  No  Strict  Construction.   The  language  used  in  this
Agreement  will be deemed to be the  language  chosen by the  parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.


                      [REMAINDER PAGE INTENTIONALLY LEFT BLANK]


                                       19
<PAGE>

      IN WITNESS WHEREOF, the Buyers and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.

                                         COMPANY:
                                         EARTHSHELL CORPORATION


                                         By: /s/ Scott Houston
                                            ------------------------------------
                                            Name:  Scott Houston
                                            Title: Chief Financial Officer


                                       20
<PAGE>

                                   SCHEDULE I

                               SCHEDULE OF BUYERS


           Name                          Address/Facsimile
----------------------------       ------------------------------

Cornell Capital Partners, LP       101 Hudson Street - Suite 3700
By: Yorkville Advisors, LLC        Jersey City, NJ  07303
Its: General Partner               Facsimile: (201) 985-8266

                                   With Copy to:
By:                                Troy Rillo, Esq.
   ----------------------          101 Hudson Street - Suite 3700
Name: Mark Angelo                  Jersey City, NJ 07302
Its:  Portfolio Manager            Facsimile: (201)985-8266

Subscription Amount:               $4,500,000

Warrants:                          350,000


<PAGE>



                             DISCLOSURE SCHEDULE



                                       2