EXHIBIT 10.32


                               FIRST AMENDMENT TO

                       OPERATING AND SUBLICENSE AGREEMENT

      This  FIRST   AMENDMENT  TO  OPERATING  AND  SUBLICENSE   AGREEMENT  (this
"AMENDMENT"),  dated as of July 11,  2003   (the  "AMENDMENT  DATE"),  is by and
between  EARTHSHELL  CORPORATION,  a  Delaware  corporation  formerly  known  as
"EarthShell Container  Corporation"  ("EARTHSHELL"),  and SWEETHEART CUP COMPANY
INC.,  a Delaware  corporation  ("SWEETHEART,"  together  with  EarthShell,  the
"PARTIES"), with reference to the following facts:

                                     RECITAL

      The Parties  have  previously  entered into an  Operating  and  Sublicense
Agreement  dated as of October 3,2002 (the  "Agreement")  and wish to modify and
amend the  Agreement  upon and subject to the terms,  covenants  and  conditions
hereinafter set forth. Defined terms appearing in this Amendment and not defined
herein will have the meanings set forth in the Agreement.

      In consideration of the foregoing recital and the covenants and agreements
set forth  herein,  together  with other good and  valuable  consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the Parties hereby
agree, and amend the Agreement, as follows:

               1. (a) Notwithstanding anything to the contrary in the Agreement,
               whether expressed or implied, including, without limitation,
               Sections 2(a), 2(e) and 2(g) thereof, and subject to Sections
               2(f) and 25 of the Agreement, provided that Sweetheart timely
               satisfies each of the Equipment Milestones (as defined in
               Subparagraph 1(d) hereof) (the "Equipment Milestones") then, from
               and after the Amendment Date and until the earlier to occur of
               (i) the first anniversary of the date Sweetheart orders the third
               Line; and (ii) the date Sweetheart fails to meet an Equipment
               Milestone (the "Initial Exclusivity Period"), Sweetheart shall
               have the exclusive right to make, use, sell, offer to sell,
               import into, distribute and otherwise dispose of and
               commercialize any and all products now and/or hereafter
               incorporating the Technology, including, without limitation, the
               Products, and hot cups, to Persons within any and all Market
               Segments, except only the Institutional Market Segments provided
               that "Products" shall in all events include cups for hot
               beverages (it being agreed that the inclusion of cups for hot
               beverages shall not be subject to the provisions of Section 2(h),
               which provisions are hereby terminated). For the purposes hereof,
               (i) the term "Institutional Market Segments shall mean market
               segments involving anything that is sold for away from home
               dining or consumption, directly or indirectly and (ii) the term
               "Retail Market Segments" shall mean those Market Segment not
               included as part of the Institutional market Segments, meaning
               those Market Segments where consumers purchase Products for their
               own use. Throughout the term of the Agreement Sweetheart shall
               have all such non-exclusive rights in the Institutional Market
               Segments and, following the end of the Initial Exclusivity
               Period, Sweetheart shall have all such non-exclusive rights in
               all Market Segments. In furtherance of the foregoing, Exhibit B
               to the Agreement, and all references thereto, will be deleted as
               they pertain to this Amendment within 30 days of the signing of
               this Amendment. In furtherance of the foregoing, the Sublicense
               is hereby amended to comports with Sweetheart's rights as amended
               by this Amendment.

            (b) EarthShell  covenants that during the Initial Exclusivity Period
            it shall not  sublicense,  license,  or otherwise grant to or permit
            any Person other than Sweetheart the right to, nor shall it, utilize
            the  Technology or any part thereof to make,  have made,  use, sell,
            import into or otherwise commercialize any EarthShell Product within
            the Territory except only in the institutional  Market Segments.  In
            furtherance of the foregoing, except for non-exclusive rights in the
            institutional Market Segments,  EarthShell shall, promptly following
            the Amendment  Date,  terminate all rights,  if any, of EarthShell's
            sublicensees,  including,  without limitation, any such rights under
            the  sublicenses  and other  agreements  listed on  Exhibit B to the
            Agreement,  and Sections  2(e) and 4(c) of the  Agreement are hereby
            deleted  in  their  entirety  and  shall be of no  further  force or
            effect.


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            (c)  Sweetheart's  rights will not be subject to, Unfilled  Customer
            Requirements, Revenue Milestones, Net Sales Milestones, or any other
            Milestone  except  the  Equipment  Milestones.  Section  2(e) of the
            Agreement and Exhibit C to the Agreement  (Revenue  Milestones)  are
            hereby deleted in their entirety and shall be of no further force or
            effect.

            (d) The "Equipment Milestones" shall be as follows:

                  (i)   order  Line by the date  which  should  be five (5) days
                        following the Amendment Date;

                  (ii)  order  line two by the date which  shall be thirty  (30)
                        days   following   the   purchase,    installation   and
                        Sweetheart's  final  acceptance  of Line  one at a Plant
                        Facility; and

                  (iii) order Line three by the date of the first anniversary of
                        the  purchase,   installation  and  Sweetheart's   final
                        acceptance of Line two at a Plant Facility.

            (e) The provisions of Sections 3(a), 3(b) and 13(d) of the Agreement
            relating to the purchase of  Equipment  shall be deemed to have been
            satisfied on the Amendment Date.

      2.    The EC Profit  Distribution shall not be earned until Sweetheart has
            realized,  for a period of 3 consecutive  months,  a positive  gross
            profit on Product  sales  ("GROSS  PROFIT")  including  a charge for
            Sweetheart's  interest  expense on capital deployed on Equipment and
            other  EarthShell  fixed  assets.  At such time as a Gross Profit is
            realized,  the EC Profit  Distribution  shall be an amount  equal to
            fifty  percent  (50%)  of  such  Gross  Profit  until  such  time as
            EarthShell's  share reaches an amount equal to twelve  percent (12%)
            of  Net  Sales;  provided,  however,  that  if  from  time  to  time
            Sweetheart sells film sketons (waste), such twelve percent (12%) cap
            shall be increased by the percentage  points comparable to the waste
            proceeds as a percentage of Net Sales. All calculations  pursuant to
            this Section shall be made monthly.

      3.    (a) (i)  Concurrently  herewith,  EarthShell  and  Sweetheart  shall
            execute and deliver a  Termination  Agreement in  substantially  the
            form annexed hereto as EXHIBIT A and made a part hereof and (ii) EKI
            and Sweetheart shall execute and deliver a Recognition  Agreement in
            substantially the form annexed hereto and made a part hereof; and

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<PAGE>

            (b) EarthShell and Sweetheart have concurrently  herewith reconciled
            the following current accounts:

                  (i)   Open trade  account due to  Sweetheart  from  EarthShell
                        6/16/03 $100,000;

                  (ii)  Satisfaction of unpaid rent on  Sweetheart's  St. Thomas
                        warehouse at Owings Mill, Maryland 1/02 - 6/03;

                  (iii) EarthShell  transfer  of molds for  first 8  Modules  to
                        Sweetheart; and

                  (iv)  Sweetheart   agreement  to  fund  interim  operation  to
                        produce   Products  at  DTE  site  prior  to   Equipment
                        installation at a Plant Facility.

      4.    Except as amended  hereby,  the  Agreement  is hereby  ratified  and
            confirmed  and shall  remain in full force and effect in  accordance
            with the terms,  covenants and conditions  thereof.  In the event of
            any conflict  between the terms,  covenants  and  conditions of this
            Amendment and the Agreement,  the terms, covenants and conditions of
            this Amendment shall control.

      IN WITNESS WHEREOF,  the Parties have caused this Amendment to be executed
and  delivered  by their duly  authorized  representatives  as of the date first
herein written.


                                               EARTHSHELL CORPORATION


                                               By: /s/ Vincent J. Truant
                                                  -----------------------------
                                                  Name: Vincent J. Truant
                                                  Title: President & COO



                                               SWEETHEART CUP COMPANY, INC.

                                               By: /s/ Thomas Uleau
                                                  -----------------------------
                                                  Name: Thomas Uleau
                                                  Title: Vice Chairman




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                                    EXHIBIT A

                              TERMINATION AGREEMENT

      This Termination Agreement (this "Agreement"),  dated as of July 11, 2003
(the  "Effective  Date"),  is entered into  between  EarthShell  Corporation,  a
Delaware corporation ("EarthShell"), and Sweetheart Cup Company Inc., a Delaware
corporation  ("Sweetheart,"  and together  with  EarthShell,  collectively,  the
"Parties" and individually a "Party"), with reference to the following facts:

                                    RECITALS

      A.  EarthShell and  Sweetheart  are parties to (a) that certain  Operating
Agreement  for the  Production  of Hinged  Sandwich  Containers  for  McDonald's
Corporation,  dated as of October 16, 1997 (the "Operating Agreement"), (b) that
certain  Sublicense  Agreement,  dated as of October 16,  1997 (the  "Sublicense
Agreement"), and (c) that certain Confidentiality Agreement, dated as of October
16, 1997 (the "Confidentiality Agreement").  Capitalized terms appearing in this
Agreement and not defined  herein shall have the meaning  ascribed to such terms
in the Operating Agreement or the Sublicense Agreement, as the case may be.

      B.  EarthShell and  Sweetheart  are parties to that certain  Operating and
Sublicense  Agreement  dated as of October 3, 2002,  as amended by that  certain
First Amendment to Operating and Sublicense  Agreement dated as of the Effective
Date (collectively the "New Agreement").

      C. EKI,  EarthShell and  Sweetheart are parties to that certain  Agreement
dated as of the Effective Date (the "Recognition Agreement").

      D. By entering into this  Agreement,  the Parties  desire to terminate the
Operating  Agreement and the Sublicense  Agreement as of the Effective Date upon
and subject to the terms, covenants, and conditions hereinafter set forth.

                                    AGREEMENT

      In  view of the  foregoing  premises  and  for  other  good  and  valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:

      1. Except as set forth in Section 2 of this  Agreement,  (a) the Operating
Agreement;  and (b) the  Sublicense  Agreement,  and the  respective  rights and
obligations of the Parties thereunder,  are hereby terminated and shall be of no
further force or effect.

      2.  Notwithstanding  Section  12.23  of  the  Operating  Agreement  to the
contrary,  only the rights,  duties and obligations of the Parties under Article
X, Sections  10.1(a),  (b), and (c), Sections 10.2(a) and (b), and Section 10.3,
and, subject to the foregoing  limitation with respect to Section 12.23, Article
XII of the  Operating  Agreement and  Paragraph 6 of the  Sublicense  Agreement,
shall  survive the  termination  of the Operating  Agreement and the  Sublicense
Agreement with respect to any acts, omissions or occurrences arising or relating
to any period ending on or prior to the Effective Date.  Notwithstanding Section
11.7 of the Operating  Agreement to the contrary,  all  receivables  or deposits
which  arose or were  created  or  established  by  EarthShell  pursuant  to the
Operating Agreement during any fiscal period ending on or prior to the Effective
Date, and any proceeds from the sale of inventory and/or Equipment on hand as of
the Effective Date, shall be applied,  in the manner directed by EarthShell,  to
pay the outstanding balance of any unrelated third party liabilities or expenses
that were  incurred or which are  accrued as of the  Effective  Date,  provided,
that,  such  proceeds  shall be applied  first to any such third party costs for
which Sweetheart may be held responsible. If any of such liabilities or expenses
remain  unsatisfied  following the Effective Date and after  application of such
proceeds,  EarthShell shall pay such liabilities and expenses to the same extent
that it would have been obligated to pay such  liabilities or expenses under the
terms of the Operating Agreement or Sublicense Agreement.



<PAGE>

      3. EarthShell  shall, on or before December 31, 2003 and at its risk, cost
and  expense,

      a.    dismantle,  load and remove from the Facility all of its  furniture,
            equipment   and  other   personal   property,   including,   without
            limitation,  the  equipment  listed on  Exhibit  C to the  Operating
            Agreement (the  "EarthShell  Equipment")  except for (i) the Support
            Systems and Utilities; and (ii) those items of EarthShell Equipment,
            if any, as EarthShell may hereafter  agree to sell to Sweetheart and
            Sweetheart  may hereafter  agree to purchase from  EarthShell.  Such
            removal  shall  include,   without  limitation,   disconnecting  the
            EarthShell  Equipment  from all  utility  hook-ups  and  capping the
            applicable utility supply lines.

      b.    at  Sweetheart's  election,  (i) remove any and all portions made or
            installed by or for Earthshell (except those portions  creating the
            mixer room and storage rooms);  and (ii) seal and make  water-tight,
            all roof and other penetrations made by Tenant; and (iii) repair all
            damage to the Facility and/or other property caused by such removal.

      All work to be  performed  by or for  EarthShell  pursuant to this Section
shall be performed using  reasonable care, and in compliance with all applicable
governmental and insurance requirements. EarthShell shall keep the Facility free
of all  mechanics'  and  materialmen's  liens in  connection  with any  labor or
services furnished at EarthShell's request in connection with the performance of
such work. If any lien is filed, EarthShell shall cause such lien to be released
or removed  within ten (10) days  after the date of  filing,  and if  EarthShell
fails to do so,  Sweetheart  may take such action as may be  necessary to remove
such lien. If EarthShell fails to timely remove the EarthShell  Equipment or its
furniture,  equipment or other  personal  property,  the same shall be deemed to
have been abandoned by EarthShell and Sweetheart shall have the right to dispose
of the same in such manner as Sweetheart shall determine in its sole discretion.

      4. Except for the timely  performance of the duties and obligations of the
Parties under (a) this Agreement; (b) the Operating Agreement and the Sublicense
Agreement  which  survive  their  termination  as set forth in Section 2 of this
Agreement; (c) the Confidentiality  Agreement; (d) the New Agreement which arise
from and after the Effective Date and (e) the Recognition Agreement, each of the
Parties,  for itself,  its successors and assigns,  hereby covenants not to sue,
releases and forever  discharges  the other Party,  its  respective  successors,
assigns,  affiliated  entities  (including  in the case of  EarthShell,  EKI and
EarthShell Maryland, LLC), directors, officers, managers, beneficial owners, and
legal  representatives,  of and from any  claims,  demands,  actions,  cause and
causes  of  action,  suits,  liabilities,  obligations,  promises,  injuries  or
damages,  of any name, nature or description in law or in equity,  whether known
or unknown,  asserted  or  unasserted,  suspected  or  unsuspected,  or fixed or
contingent, which the releasing Party now has, or ever had, or which it shall or
may have in the future,  by reason of any matter,  cause or thing  arising on or
prior to the Effective Date (including,  without limitation, any act or omission
arising  out  of or by  reason  of the  Operating  Agreement  or the  Sublicense
Agreement, or any action taken or omitted under any of them). Each Party further
understands  that this is a general  release and intends to be legally  bound by
it.


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<PAGE>

      5. To the  extent  that any of the  provisions  of  California  Civil Code
Section 1542 might apply to the  releases  contemplated  hereunder,  each of the
parties  to this  Agreement  hereby  waives  the  protections  of that  section,
applicable case law, and similar  provisions.  Civil Code Section 1542 provides,
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF  EXECUTING  THE  RELEASE,  WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

      6. For the avoidance of doubt, neither the Confidentiality  Agreement, the
New Agreement  nor the  Recognition  Agreement  shall be terminated or otherwise
modified and shall continue in full force and effect.

      7. This Agreement  constitutes  the entire  agreement  between the Parties
with respect to the  termination  of the Operating  Agreement and the Sublicense
Agreement and shall supersede all prior negotiations and agreements with respect
to the subject matter of this  Agreement,  including any contrary or conflicting
provision in the Operating Agreement and/or the Sublicense Agreement.

      8. The Parties agree to cooperate with each other and to execute,  deliver
and record such other agreements and documents and to take such other actions as
are  reasonably  necessary  or  helpful  to  more  effectively   consummate  the
transactions  contemplated under this Agreement and to carry out its purpose and
intent.

      9.  This  Agreement  may be  amended  only by the  consent  of each of the
Parties expressed in writing, signed by their duly authorized representatives.

      10. The rights and  obligations  in, to and under this Agreement  shall be
binding   upon  and  inure  to  the   benefit  of  the   Parties,   their  legal
representatives, successors and assigns.

      11. Should any part or provision of this Agreement be rendered or declared
invalid by reason of any law or by decree of a court or competent  jurisdiction,
the  invalidation  of  such  part  or  provision  of this  Agreement  shall  not
invalidate the remaining parts or provisions hereof, and the remaining parts and
provisions of this Agreement shall remain in full force and effect.

      12.  Neither the failure or delay on the part of either  Party to exercise
any right, power or privilege  hereunder shall operate as a waiver thereof,  nor
shall any single or partial exercise of any such right or privilege preclude any
other or further exercise thereof or of any other right or privilege.

      This Agreement shall be governed by and interpreted in accordance with the
laws of the State of California,  may be executed by facsimile  signature and in
counterparts  which,  together,  shall  constitute  a single  agreement,  and is
executed and delivered as of Effective Date.


EARTHSHELL CORPORATION                  SWEETHEART CUP COMPANY INC.


By:   /s/ Vincent J. Truant             By: /s/ Thomas Uleau
      ---------------------------           ---------------------------
A duly authorized signatory             A duly authorized signatory
Name: Vincent J. Truant                 Name: Thomas Uleau
Its:  President and COO                 Its:  Vice Chairman






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