COMMON STOCK PURCHASE AGREEMENT

Dated as of May 3, 2000

by and between

EARTHSHELL CORPORATION

and

ACQUA WELLINGTON

NORTH AMERICAN EQUITIES FUND, LTD.

TABLE OF CONTENTS

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Page

ARTICLE I         Definitions...................................................1

   Section 1.1    Definitions...................................................1

ARTICLE II        Purchase and Sale of Common Stock.............................2

   Section 2.1    Purchase and Sale of Stock....................................2
   Section 2.2    The Shares....................................................3
   Section 2.3    Purchase Price and Closing....................................3

ARTICLE III       Representations and Warranties................................3

   Section 3.1    Representation and Warranties of the Company..................3
   Section 3.2    Representation and Warranties of the Purchaser...............10

ARTICLE IV        Covenants....................................................11

   Section 4.1    Securities...................................................11
   Section 4.2    Registration and Listing.....................................11
   Section 4.3    Registration Statement.......................................12
   Section 4.4    Compliance with Laws.........................................12
   Section 4.5    Keeping of Records and Books of Account......................12
   Section 4.6    Reporting Requirements.......................................12
   Section 4.7    Other Agreements.............................................12
   Section 4.8    Effective Registration Statement.............................13
   Section 4.9    No Stop Orders...............................................13
   Section 4.10   Amendments to the Registration Statement.....................13
   Section 4.11   Prospectus Delivery..........................................13

ARTICLE V         Conditions to Closing and Draw Downs.........................14

   Section 5.1    Conditions Precedent to the Obligation of the Company to Sell
                  the Shares ..................................................14
   Section 5.2    Conditions Precedent to the Obligation of the Purchaser to
                  Close .......................................................15
   Section 5.3    Conditions Precedent to the Obligation of the Purchaser to
                  Accept a Draw Down and Purchase the Shares...................15

ARTICLE VI        Draw Down Terms; Call Option.................................16

   Section 6.1    Drawn Down Terms.............................................16
   Section 6.2    Purchaser's Call Option......................................19

ARTICLE VII       Termination..................................................19

   Section 7.1    Termination by Mutual Consent................................19
   Section 7.2    Other Termination............................................19
   Section 7.3    Effect of Termination........................................19

ARTICLE VIII      Indemnification..............................................20

   Section 8.1    General Indemnity............................................20
   Section 8.2    Indemnification Procedures...................................21

ARTICLE IX        Miscellaneous................................................22

   Section 9.1    Fees and Expenses............................................22
   Section 9.2    Specific Enforcement, Consent to Jurisdiction................22
   Section 9.3    Entire Agreement; Amendment..................................23
   Section 9.4    Notices......................................................23
   Section 9.5    Waivers......................................................24
   Section 9.6    Headings.....................................................24
   Section 9.7    Successors and Assigns.......................................24
   Section 9.8    Governing Law................................................24
   Section 9.9    Survival.....................................................24
   Section 9.10   Counterparts.................................................25
   Section 9.11   Publicity....................................................25
   Section 9.12   Severability.................................................25
   Section 9.13   Further Assurances...........................................25
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COMMON STOCK PURCHASE AGREEMENT

             This COMMON STOCK PURCHASE  AGREEMENT (this "Agreement") is dated as of May 3, 2000 byand  between  Earthshell  Corporation,  a  Delaware  corporation  (the  "Company")  and  AcquaWellington  North American  Equities  Fund,  Ltd., a company  organized  under the laws of theCommonwealth of The Bahamas (the "Purchaser").

            The parties hereto agree as follows:

ARTICLE I

Definitions

**Section 1.1**Definitions.

(a)“Call Option” shall have the meaning assigned to such term in Section 6.2(a) hereof.

(b)“Commission” shall have the meaning assigned to such term in Section 2.3 hereof.

(c)“Commission  Documents” shall have the meaning assigned to such term in Section 3.1(f) hereof.

(d) “Commission Filings” means theCompany’s Form 10-K for the fiscal year ended December 31, 1999,Registration Statement on Form S-1 No. 333-33752, and all other filings made bythe Company after the date hereof pursuant to the Securities Exchange Act of1934. 

(e) “Draw Down Amount” means the actual amountof a Draw Down up to $2,500,000, or such other amount mutually agreed upon bythe Purchaser and the Company. 

(f) “Draw Down Discount Price” means 95% of theVWAP of the Common Stock on any trading day during the Draw Down Pricing Period. 

(g) “Draw Down  Notice”  shall have the meaning  assigned  to such term in Section  6.1(j) hereof.

(h) “Draw Down Pricing Period” shall mean aperiod of twenty (20) consecutive trading days following a Draw Down Notice, orsuch other period mutually agreed upon by the Purchaser and the Company. 

(i) “Effective Date” shall mean the date theRegistration Statement of the Company covering the Shares being subscribed forhereby is declared effective. 

(j) “Material Adverse Effect” shall mean anyeffect on the business, results of operations, prospects, assets or financialcondition of the Company that is material and adverse to the Company and itssubsidiaries, taken as a whole and/or any condition, circumstance, or situationthat would prohibit the Company from entering into and performing any of itsobligations under this Agreement in any material respect. 

(k) “Prospectus” as used in this Agreementmeans the prospectus in the form included in the Registration Statement, or, ifthe prospectus included in the Registration Statement omits information inreliance on Rule 430A under the Securities Act of 1933, as amended, and therules and regulations of the Commission thereunder (collectively, the“Securities Act”), and such information is included in a prospectusfiled with the Commission pursuant to Rule 424(b) under the Securities Act, theterm “Prospectus” as used in this Agreement means the prospectus inthe form included in the Registration Statement as supplemented by the additionof the Rule 430A information contained in the prospectus filed with theCommission pursuant to Rule 424(b). 

(l) “Registration Statement” shall mean theregistration statement on Form S-3, Commission File 333-33752 under theSecurities Act, filed with the Securities and Exchange Commission for theregistration of the Shares, as such Registration Statement may be amended fromtime to time. 

(m) “Settlement  Date” shall have the  meaning  assigned  to such term in Section  6.1(d) hereof.

(n) “Shares”  shall  mean the  shares  of  Common  Stock of the  Company  being  purchasedhereunder.

(o) “Threshold Price” is the lowest VWAP atwhich the Company will sell Shares during each Draw Down Pricing Period. 

(p) “VWAP”  shall mean the daily  volume  weighted  average  price (based on a trading dayfrom 9:30 a.m.  to 4:00  p.m.,  eastern  time) of the  Company  on  NASDAQ  (or any  successorthereto) as reported by Bloomberg Financial LP using the AQR function.

(q) “Weekly Period” shall have the meaning assigned to such term in Section 6.1(c) hereof.

ARTICLE II

Purchase and Sale of Common Stock

**Section 2.1**Purchase and Sale of Stock. Subject tothe terms and conditions of this Agreement, the Company shall issue and sell tothe Purchaser and the Purchaser shall purchase from the Company up to$60,000,000 of the Company’s common stock, $.01 par value per share (the“Common Stock”), based on Draw Downs of up to $2,500,000 per Draw Downand Call Options of up to $2,500,000 per Draw Down Pricing Period. In no eventshall the amount of Common Stock purchased by the Purchaser exceed $2,500,000per Draw Down unless otherwise mutually agreed upon by the Purchaser and theCompany. 

**Section 2.2**The Shares. The Company has authorizedand has reserved and covenants to continue to reserve, subject toSection 4.4(b) hereof, free of preemptive rights and other similarcontractual rights of stockholders, a sufficient number of its authorized butunissued shares of its Common Stock to cover the Shares to be issued inconnection with all Draw Downs. 

**Section 2.3**Purchase Price and Closing. TheCompany agrees to issue and sell to the Purchaser and, in consideration of andin express reliance upon the representations, warranties, covenants, terms andconditions of this Agreement, the Purchaser, agrees to purchase that number ofthe Shares to be issued in connection with each Draw Down. The closing of theexecution and delivery of this Agreement shall take place at the offices ofParker Chapin LLP, The Chrysler Building, 405 Lexington Avenue, New York, NY10174 (the “Closing”) at 10:00 a.m. E.S.T. on (i) May 3, 2000, or(ii) such other time and place or on such date as the Purchaser and theCompany may agree upon (the “Closing Date”). Each party shall deliverall documents, instruments and writings required to be delivered by such partypursuant to this Agreement at or prior to the Closing. 

ARTICLE III

Representations and Warranties

**Section 3.1**Representation and Warranties of theCompany. The Company hereby makes the following representations andwarranties to the Purchaser: 

(a) Organization, Good Standing and Power. The Company isa corporation duly incorporated, validly existing and in good standing under thelaws of Delaware and has the requisite corporate power to own, lease and operateits properties and assets and to conduct its business as it is now beingconducted. The Company is duly qualified as a foreign corporation to do businessand is in good standing in every jurisdiction in which the nature of thebusiness conducted or property owned by it makes such qualification necessaryexcept for any jurisdiction in which the failure to be so qualified will nothave a Material Adverse Effect. 

(b) Authorization; Enforcement. The Company has therequisite corporate power and authority to enter into and perform this Agreementand to issue and sell the Shares in accordance with the terms hereof. Theexecution, delivery and performance of this Agreement by the Company and theconsummation by it of the transactions contemplated hereby have been duly andvalidly authorized by all necessary corporate action, and, except ascontemplated by Section 4.4(b), no further consent or authorization of theCompany or its Board of Directors or stockholders is required. This Agreementhas been duly executed and delivered by the Company. This Agreement constitutes,or shall constitute when executed and delivered, a valid and binding obligationof the Company enforceable against the Company in accordance with its terms,except as such enforceability may be limited by applicable bankruptcy,insolvency, reorganization, moratorium, liquidation, conservatorship,receivership or similar laws relating to, or affecting generally the enforcementof, creditor’s rights and remedies or by other equitable principles ofgeneral application. 

(c) Capitalization. The authorized capital stock of theCompany and the shares thereof issued and outstanding as of the date hereof areset forth in the Registration Statement or in the Company’s most recentForm 10-K (the “Form 10-K”). All of the outstanding shares of theCompany’s Common Stock have been duly and validly authorized, and are fullypaid and non-assessable. Except as set forth in this Agreement or as set forthin the Registration Statement, the Commission Documents or the CommissionFilings, as of the date hereof, no shares of Common Stock are entitled topreemptive rights or registration rights and there are no outstanding options,warrants, scrip, rights to subscribe to, call or commitments of any characterwhatsoever relating to, or securities or rights convertible into, any shares ofcapital stock of the Company. Furthermore, except as set forth in thisAgreement, the Registration Statement, the Commission Documents or theCommission Filings, as of the date hereof, there are no contracts, commitments,understandings, or arrangements by which the Company is or may become bound toissue additional shares of the capital stock of the Company or options,securities or rights convertible into shares of capital stock of the Company.Except for customary transfer restrictions contained in agreements entered intoby the Company in order to sell restricted securities or as described in theRegistration Statement, the Commission Documents or the Commission Filings, asof the date hereof, the Company is not a party to any agreement grantingregistration rights to any person with respect to any of its equity or debtsecurities. Except as set forth in the Registration Statement, the CommissionDocuments or the Commission Filings, as of the date hereof, the Company is not aparty to, and it has no knowledge of, any agreement restricting the voting ortransfer of any shares of the capital stock of the Company. Except as set forthin the Registration Statement, the Commission Documents or the CommissionFilings, the offer and sale of all capital stock, convertible securities,rights, warrants, or options of the Company issued prior to the Closing compliedwith all applicable federal and state securities laws, and no stockholder has aright of rescission or damages with respect thereto which would have a MaterialAdverse Effect. The Company has furnished or made available to the Purchasertrue and correct copies of the Company’s Certificate of Incorporation as ineffect on the date hereof (the “Charter”), and the Company’sBylaws as in effect on the date hereof (the “Bylaws”). 

(d) Issuance of Shares. The Shares to be issued underthis Agreement have been duly authorized by all necessary corporate action and,when paid for and issued in accordance with the terms hereof, the Shares shallbe validly issued and outstanding, fully paid and non-assessable, and thePurchaser shall be entitled to all rights accorded to a holder of Common Stock. 

(e) No  Conflicts.  The  execution,  delivery  and  performance  of this  Agreement by theCompany and the  consummation by the Company of the  transactions  contemplated  herein do not(i) violate any provision of the Company’s Charter orBylaws, (ii) conflict with, or constitute a default (or an event which withnotice or lapse of time or both would become a default) under, or give to othersany rights of termination, amendment, acceleration or cancellation of, anymaterial agreement, mortgage, deed of trust, indenture, note, bond, license,lease agreement, instrument or obligation to which the Company is a party, (iii)create or impose a lien, charge or encumbrance on any property of the Companyunder any agreement or any commitment to which the Company is a party or bywhich the Company is bound or by which any of its respective properties orassets are bound, or (iv) result in a violation of any federal, state, local orforeign statute, rule, regulation, order, judgment or decree (including federaland state securities laws and regulations) applicable to the Company or any ofits subsidiaries or by which any property or asset of the Company or any of itssubsidiaries are bound or affected, except, in all cases, for such conflicts,defaults, terminations, amendments, acceleration, cancellations and violationsas would not, individually or in the aggregate, have a Material Adverse Effect.The Company is not required under federal, state or local law, rule orregulation to obtain any consent, authorization or order of, or make any filingor registration with, any court or governmental agency in order for it toexecute, deliver or perform any of its obligations under this Agreement, orissue and sell the Shares in accordance with the terms hereof (other than anyfilings which may be required to be made by the Company with the Commission, orNasdaq subsequent to the Closing, and, any registration statement which may befiled pursuant hereto); provided that, for purpose of the representation made inthis sentence, the Company is assuming and relying upon the accuracy of therelevant representations and agreements of the Purchaser herein. 

(f) Commission Documents, Financial Statements. TheCommon Stock of the Company is registered pursuant to Section 12(b) or 12(g) ofthe Securities Exchange Act of 1934, as amended (the “Exchange Act”),and, except as disclosed in the Registration Statement, or the CommissionDocuments or the Commission Filings or on Schedule 3.1(f) attachedhereto, as of the date hereof, the Company has timely filed all reports,schedules, forms, statements and other documents required to be filed by it withthe Commission pursuant to the reporting requirements of the Exchange Act,including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act(all of the foregoing including filings incorporated by reference therein beingreferred to herein as the “Commission Documents”). The Company hasdelivered or made available to the Purchaser true and complete copies of theCommission Documents filed with the Commission since December 31, 1999 and priorto the Closing Date. The Company has not provided to the Purchaser anyinformation which, according to applicable law, rule or regulation, should havebeen disclosed publicly by the Company but which has not been so disclosed,other than with respect to the transactions contemplated by this Agreement. TheForm 10-K for the year ended December 31, 1999 complied in all material respectswith the requirements of the Exchange Act and the rules and regulations of theCommission promulgated thereunder and other federal, state and local laws, rulesand regulations applicable to such documents, and the said Form 10-K did notcontain any untrue statement of a material fact or omit to state a material factrequired to be stated therein or necessary in order to make the statementstherein, in light of the circumstances under which they were made, notmisleading. The financial statements of the Company included in the CommissionDocuments comply as to form in all material respects with applicable accountingrequirements and the published rules and regulations of the Commission or otherapplicable rules and regulations with respect thereto. Such financial statementshave been prepared in accordance with generally accepted accounting principles(“GAAP”) applied on a consistent basis during the periods involved(except (i) as may be otherwise indicated in such financial statements or thenotes thereto or (ii) in the case of unaudited interim statements, to the extentthey may not include footnotes or may be condensed or summary statements), andfairly present in all material respects the financial position of the Companyand its subsidiaries as of the dates thereof and the results of operations andcash flows for the periods then ended (subject, in the case of unauditedstatements, to normal year-end audit adjustments). 

(g) Subsidiaries.  The Company has no subsidiaries.

(h) No Material  Adverse Change.  Since December 31, 1999, the Company has not experiencedor suffered any Material Adverse Effect.

(i) No Undisclosed Liabilities. Except as disclosed inthe Commission Documents or the Commission Filings, the Company has noliabilities, obligations, claims or losses (whether liquidated or unliquidated,secured or unsecured, absolute, accrued, contingent or otherwise) that would berequired to be disclosed on a balance sheet of the Company or any subsidiary(including the notes thereto) in conformity with GAAP not disclosed in theCommission Documents, other than those incurred in the ordinary course of theCompany’s businesses since December 31, 1999 and which, individually or inthe aggregate, do not or would not have a Material Adverse Effect. 

(j) No Undisclosed Events or Circumstances. No event orcircumstance has occurred or exists with respect to the Company or itssubsidiaries or their respective businesses, properties, prospects, operationsor financial condition, which, under applicable law, rule or regulation,requires public disclosure or announcement by the Company but which has not beenso publicly announced or disclosed and which, individually or in the aggregate,do not or would not have a Material Adverse Effect. 

(k) Indebtedness. The Commission Filings set forth as ofDecember 31, 1999 all outstanding secured and unsecured Indebtedness of theCompany, or for which the Company has commitments. For the purposes of thisAgreement, “Indebtedness” shall mean (a) any liabilities for borrowedmoney or amounts owed in excess of $100,000 (other than trade accounts payableincurred in the ordinary course of business), (b) all guaranties, endorsementsand other contingent obligations in respect of Indebtedness of others, whetheror not the same are or should be reflected in the Company’s balance sheet(or the notes thereto), except guaranties by endorsement of negotiableinstruments for deposit or collection or similar transactions in the ordinarycourse of business; and (c) the present value of any lease payments in excess of$100,000 due under leases required to be capitalized in accordance with GAAP.The Company is not in default with respect to any Indebtedness. 

(l) Title to Assets. The Company has good and marketabletitle to all of its real and personal property reflected in the CommissionDocuments, free of any mortgages, pledges, charges, liens, security interests orother encumbrances, except for those indicated in the Commission Documents andthe Commission Filings or such that could not reasonably be expected to cause aMaterial Adverse Effect. All said leases of the Company and each of itssubsidiaries are valid and subsisting and in full force and effect in allmaterial respects. 

(m) Actions Pending. There is no action, suit, claim,investigation or proceeding pending or, to the knowledge of the Company,threatened against the Company which questions the validity of this Agreement orthe transactions contemplated hereby or any action taken or to be taken pursuanthereto or thereto. Except as set forth in the Commission Documents or theCommission Filings, there is no action, suit, claim, investigation or proceedingpending or, to the knowledge of the Company, threatened, against or involvingthe Company, or any of its properties or assets which, if adversely determined,is reasonably likely to result in a Material Adverse Effect. 

(n) Compliance with Law. The business of the Company hasbeen and is presently being conducted in accordance with all applicable federal,state and local governmental laws, rules, regulations and ordinances, except asset forth in the Commission Documents or the Commission Filings or such that donot cause a Material Adverse Effect. The Company has all franchises, permits,licenses, consents and other governmental or regulatory authorizations andapprovals necessary for the conduct of its business as now being conductedunless the failure to possess such franchises, permits, licenses, consents andother governmental or regulatory authorizations and approvals, individually orin the aggregate, could not reasonably be expected to have a Material AdverseEffect. 

(o) Certain Fees. No brokers,  finders or financial  advisory fees or commissions  will bepayable by the Company with respect to the transactions contemplated by this Agreement.

(p) Disclosure. To the best of the Company’sknowledge, neither this Agreement or the Schedules hereto nor any otherdocuments, certificates or instruments furnished to the Purchaser by or onbehalf of the Company in connection with the transactions contemplated by thisAgreement contain any untrue statement of a material fact or omits to state amaterial fact necessary in order to make the statements made herein or therein,in the light of the circumstances under which they were made herein or therein,not misleading. 

(q) Operation of Business. The Company owns or possessesall patents, trademarks, service marks, trade names, copyrights, licenses andauthorizations as set forth or referred to in the Commission Documents or theCommission Filings and all rights with respect to the foregoing, which arenecessary for the conduct of its business as now conducted without any conflictwith the rights of others, except to the extent set forth in the CommissionDocuments or that a Material Adverse Effect could not reasonably be expected toresult from such conflict. 

(r) Environmental Compliance. Except as disclosed in theCommission Filings, the Company has obtained all material approvals,authorization, certificates, consents, licenses, orders and permits or othersimilar authorizations of all governmental authorities, or from any otherperson, that are required under any Environmental Laws. “EnvironmentalLaws” shall mean all applicable laws relating to the protection of theenvironment including, without limitation, all requirements pertaining toreporting, licensing, permitting, controlling, investigating or remediatingemissions, discharges, releases or threatened releases of hazardous substances,chemical substances, pollutants, contaminants or toxic substances, materials orwastes, whether solid, liquid or gaseous in nature, into the air, surface water,groundwater or land, or relating to the manufacture, processing, distribution,use, treatment, storage, disposal, transport or handling of hazardoussubstances, chemical substances, pollutants, contaminants or toxic substances,material or wastes, whether solid, liquid or gaseous in nature. Except for suchinstances as would not individually or in the aggregate have a Material AdverseEffect, to the best of the Company’s knowledge, there are no past orpresent events, conditions, circumstances, incidents, actions or omissionsrelating to or in any way affecting the Company that violate or could reasonablybe expected to violate any Environmental Law after the Closing or that couldreasonably be expected to give rise to any environmental liability, or otherwiseform the basis of any claim, action, demand, suit, proceeding, hearing, study orinvestigation (i) under any Environmental Law, or (ii) based on or related tothe manufacture, processing, distribution, use, treatment, storage (includingwithout limitation underground storage tanks), disposal, transport or handling,or the emission, discharge, release or threatened release of any hazardoussubstance. 

(s) Material Agreements. Except as set forth in theCommission Documents, the Company is not a party to any written or oralcontract, instrument, agreement, commitment, obligation, plan or arrangement, acopy of which would be required to be filed with the Commission as an exhibit toa registration statement on Form S-3 or applicable form (collectively,“Material Agreements”) if the Company was registering securities underthe Securities Act. The Company has in all material respects performed all theobligations required to be performed to date under the foregoing agreements, hasreceived no notice of default and, to the best of the Company’s knowledgeis not in default under any Material Agreement now in effect, the result ofwhich could reasonably be expected to cause a Material Adverse Effect. 

(t) Transactions with Affiliates. Except as set forth inthe Commission Documents or the Commission Filings, there are no loans, leases,agreements, contracts, royalty agreements, management contracts or arrangementsor other continuing transactions exceeding $100,000 between (a) the Company, orany of its customers (excluding agreements related to the purchase or lease ofthe Company’s products) or suppliers on the one hand, and (b) on the otherhand, any officer, employee, consultant or director of the Company, or anyperson who would be covered by Item 404(a) of Regulation S-K or any corporationor other entity controlled by such officer, employee, consultant, director orperson. 

(u) Securities Act of 1933. The Company has complied inall material respects with all applicable federal and state securities laws inconnection with the offer, issuance and sale of the Shares hereunder. 

     (i) Each Prospectus included as part of the RegistrationStatement as originally filed or as part of any amendment or supplement thereto,or filed pursuant to Rule 424 under the Securities Act, complied when so filedin all material respects with the provisions of the Securities Act. TheCommission has not issued any order preventing or suspending the use of anyProspectus. 

     (ii) The Company meets the requirements for the use of Form S-3under the Securities Act. The Registration Statement in the form in which itbecame effective and also in such form as it may be when any post-effectiveamendment thereto became effective and the Prospectus and any supplement oramendment thereto when filed with the Commission under Rule 424(b) under theSecurities Act, complied in all material respects with the provisions of theSecurities Act and did not at any such times contain an untrue statement of amaterial fact or omit to state a material fact required to be stated therein ornecessary to make the statements therein (in the case of the Prospectus, in thelight of the circumstances under which they made) not misleading, except thatthis representation and warranty does not apply to statements in or omissionsfrom the Registration Statement or the Prospectus made in reliance upon and inconformity with information relating to the Purchaser furnished to the Companyin writing by or on behalf of the Purchaser through you expressly for usetherein. 

     (iii) The Company has not distributed and, prior to thecompletion of the distribution of the Shares, will not distribute any offeringmaterial in connection with the offering and sale of the Shares other than theRegistration Statement, the Prospectus or other materials, if any, permitted bythe Securities Act. 

(v) Employees. As of the date hereof, the Company has nocollective bargaining arrangements or agreements covering any of its employees,except as set forth in the Commission Documents or the Commission Filings. As ofthe date hereof, except as set forth in the Commission Documents or theCommission Filings, the Company has no employment contract, agreement regardingproprietary information, noncompetition agreement, nonsolicitation agreement,confidentiality agreement, or any other similar contract or restrictivecovenant, relating to the right of any officer, employee or consultant to beemployed or engaged by the Company. As of the date hereof, since December 31,1999, except as disclosed in the Registration Statement, the CommissionDocuments or the Commission Filings, no officer, consultant or key employee ofthe Company whose termination, either individually or in the aggregate, couldreasonably be expected to have a Material Adverse Effect, has terminated or, tothe knowledge of the Company, has any present intention of terminating his orher employment or engagement with the Company. 

(w)  Use of  Proceeds.  The  proceeds  from  the  sale  of the  Shares  will be used by theCompany for general corporate purposes.

(x) Public Utility Holding Company Act and Investment CompanyAct Status. The Company is not a “holding company” or a“public utility company” as such terms are defined in the PublicUtility Holding Company Act of 1935, as amended. The Company is not, and as aresult of and immediately upon Closing will not be, an “investmentcompany” or a company “controlled” by an “investmentcompany,” within the meaning of the Investment Company Act of 1940, asamended. 

(y) ERISA. No liability to the Pension Benefit GuarantyCorporation has been incurred with respect to any Plan by the Company which isor would have a Material Adverse Effect. The execution and delivery of thisAgreement and the issue and sale of the Shares will not involve any transactionwhich is subject to the prohibitions of Section 406 of ERISA or in connectionwith which a tax could be imposed pursuant to Section 4975 of the InternalRevenue Code of 1986, as amended, provided that, if any of the Purchaser, or anyperson or entity that owns a beneficial interest in any of the Purchaser, is an“employee pension benefit plan” (within the meaning of Section 3(2) ofERISA) with respect to which the Company is a “party in interest”(within the meaning of Section 3(14) of ERISA), the requirements of Sections407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this Section3.1(y), the term “Plan” shall mean an “employee pension benefitplan” (as defined in Section 3 of ERISA) which is or has been establishedor maintained, or to which contributions are or have been made, by the Companyor by any trade or business, whether or not incorporated, which, together withthe Company, is under common control, as described in Section 414(b) or (c) ofthe Code. 

(z) Acknowledgment Regarding Purchaser’s Purchase ofShares. The Company acknowledges and agrees that the Purchaser is actingsolely in the capacity of arm’s length purchaser with respect to thisAgreement and the transactions contemplated hereunder. The Company furtheracknowledges that the Purchaser is not acting as a financial advisor orfiduciary of the Company (or in any similar capacity) with respect to thisAgreement and the transactions contemplated hereunder and any advice given bythe Purchaser or any of its representatives or agents in connection with thisAgreement and the transactions contemplated hereunder is merely incidental tothe Purchaser’s purchase of the Shares. 

**Section 3.2**Representation and Warranties of thePurchaser. The Purchaser hereby makes the following representations andwarranties to the Company: 

(a) Organization and Standing of the Purchaser. ThePurchaser is a limited liability company duly organized, validly existing and ingood standing under the laws of the Commonwealth of the Bahamas. 

(b) Authorization and Power. The Purchaser has therequisite corporate power and authority to enter into and perform this Agreementand to purchase the Shares in accordance with the terms hereof. The execution,delivery and performance of this Agreement by Purchaser and the consummation byit of the transactions contemplated hereby have been duly authorized by allnecessary corporate action, and no further consent or authorization of thePurchaser, its Board of Directors or stockholders is required. This Agreementconstitutes, or shall constitute when executed and delivered, a valid andbinding obligation of the Purchaser enforceable against the Purchaser inaccordance with its terms, except as such enforceability may be limited byapplicable bankruptcy, insolvency, reorganization, moratorium, liquidation,conservatorship, receivership, or similar laws relating to, or affectinggenerally the enforcement of, creditor’s rights and remedies or by otherequitable principles of general application. 

(c) No Conflicts. The execution, delivery and performanceof this Agreement and the consummation by the Purchaser of the transactionscontemplated hereby and thereby or relating hereto do not and will not (i)result in a violation of such Purchaser’s charter documents or bylaws or(ii) conflict with, or constitute a default (or an event which with notice orlapse of time or both would become a default) under, or give to others anyrights of termination, amendment, acceleration or cancellation of any materialagreement, mortgage, deed of trust, indenture, note, bond, license, leaseagreement, instrument or obligation to which the Purchaser is a party,(iii) create or impose or lien, charge or encumbrance on any property ofthe Purchaser under any agreement or any commitment to which the Purchaser isparty or by which the Purchaser is on or by which any of its respectiveproperties or assets are bound or (iv) result in a violation of any law,rule, or regulation, or any order, judgment or decree of any court orgovernmental agency applicable to the Purchaser or its properties, except forsuch conflicts, defaults and violations as would not, individually or in theaggregate, prohibit or otherwise interfere with the ability of the Purchaser toenter into and perform its obligations under this Agreement in any materialrespect. The Purchaser is not required to obtain any consent, authorization ororder of, or make any filing or registration with, any court or governmentalagency in order for it to execute, deliver or perform any of its obligationsunder this Agreement or to purchase the Shares in accordance with the termshereof, provided that for purposes of the representation made in this sentence,the Purchaser is assuming and relying upon the accuracy of the relevantrepresentations and agreements of the Company herein. 

(d) Information. The Purchaser and its advisors, if any,have been furnished with all materials relating to the business, finances andoperations of the Company and materials relating to the offer and sale of theShares which have been requested by the Purchaser. The Purchaser and itsadvisors, if any, have been afforded the opportunity to ask questions of theCompany. The Purchaser has sought such accounting, legal and tax advice as ithas considered necessary to make an informed investment decision with respect toits acquisition of the Shares. Purchaser understands that it (and not theCompany) shall be responsible for its own tax liabilities that may arise as aresult of this investment or the transactions contemplated by this Agreement. 

(e) No Shorting. The Purchaser has the right to sellshares of the Company’s Common Stock equal in number to the number of theShares to be purchased pursuant to this Agreement during the Draw Down PricingPeriod. The Purchaser covenants, however, that prior to and during the term ofthe Draw Down Pricing Period, neither the Purchaser nor any of its affiliatesnor any entity managed by the Purchaser will ever be in a net short positionwith respect to shares of the Common Stock of the Company in any accountsdirectly or indirectly managed by the Purchaser or any affiliate of thePurchaser or any entity managed by the Purchaser. The Purchaser shall not sellshares of the Company’s Common Stock in block lots or through anyderivative transactions. 

ARTICLE IV

Covenants

The Company  covenants  with the  Purchaser as follows,  which  covenants  are for thebenefit of the Purchaser and its permitted assignees (as defined herein).

**Section 4.1**Securities. The Company shall notifythe Commission and NASD, if applicable, in accordance with their rules andregulations, of the transactions contemplated by this Agreement, and shall takeall other necessary action and proceedings as may be required and permitted byapplicable law, rule and regulation, for the legal and valid issuance of theShares to the Purchaser or subsequent holders. 

**Section 4.2**Registration and Listing. The Companywill take all action necessary to cause its Common Stock to continue to beregistered under Sections 12(b) or 12(g) of the Exchange Act, will comply in allrespects with its reporting and filing obligations under the Exchange Act, andwill not take any action or file any document (whether or not permitted by theSecurities Act or the rules promulgated thereunder) to terminate or suspend suchregistration or to terminate or suspend its reporting and filing obligationsunder the Exchange Act or Securities Act, except as permitted herein. TheCompany will take all action necessary to continue the listing or trading of itsCommon Stock and the listing of the Shares purchased by Purchaser hereunder onthe NASDAQ or any relevant market or system, if applicable, and will comply inall respects with the Company’s reporting, filing and other obligationsunder the bylaws or rules of the NASD or any relevant market or system. 

**Section 4.3**Registration Statement. Before thePurchaser shall be obligated to accept a Draw Down request from the Company, theCompany shall have caused a sufficient number of shares of Common Stock to beregistered to cover the Shares to be issued in connection with this Agreement. 

**Section 4.4**Compliance with Laws.

(a) The Company shall comply with all applicable laws, rules,regulations and orders, noncompliance with which could have a Material AdverseEffect. 

(b) The Company will not be obligated to issue and the Purchaserwill not be obligated to purchase any shares of the Company’s Common Stockwhich would result in the issuance under this Agreement of more than nineteenand nine-tenths percent (19.9%) of the issued and outstanding shares of theCompany’s Common Stock. 

**Section 4.5**Keeping of Records and Books ofAccount. The Company shall keep adequate records and books of account, inwhich complete entries will be made in accordance with GAAP consistentlyapplied, reflecting all financial transactions of the Company and itssubsidiaries, and in which, for each fiscal year, all proper reserves fordepreciation, depletion, obsolescence, amortization, taxes, bad debts and otherpurposes in connection with its business shall be made. 

**Section 4.6**Reporting Requirements. Upon request,the Company shall furnish the following to the Purchaser so long as suchPurchaser shall be obligated hereunder to purchase Shares: 

(a) Quarterly Reports filed with the Commission on Form 10-Q assoon as available, and in any event within 45 days after the end of each of thefirst three fiscal quarters of the Company; and 

(b) Annual Reports filed with the Commission on Form 10-K assoon as available, and in any event within 90 days after the end of each fiscalyear of the Company. 

**Section 4.7**Other Agreements. The Company isrestricted from entering in any other financing agreement (including, withoutlimitation, the issuance of Common Stock or securities convertible into CommonStock) (“Other Financing”) without the prior consent of the Purchaseror without terminating its agreement with the Purchaser, except that the Companymay (i) enter into a loan, credit or lease facility with a bank or financinginstitution, (ii) establish an employee stock option plan and/or (iii) issueshares of Common Stock in connection with the Company’s current optionplans or stock purchase plans, currently outstanding warrants or options,acquisition of products, licenses or other assets and strategic partnership orjoint ventures (the primary purpose of which is not to raise equity) (a“Permitted Transaction”). If the Purchaser consents to the Companyentering into an Other Financing, the Purchaser shall have the option, whichoption shall be exercised within ten (10) calendar days of its consent, topurchase all or a portion of the Other Financing on the same, absolute terms andconditions contemplated therein. If the Purchaser does not exercise its purchaseoption, the Company shall have the right to close the Other Financing on thescheduled closing date with a third party; provided that all of the termsand conditions of such closing are the same as those provided to the Purchaser. 

**Section 4.8**Effective Registration Statement. If,at the time this Agreement is executed and delivered, it is necessary for theRegistration Statement or a post-effective amendment thereto to be declaredeffective before the offering of the Shares may commence, the Company willendeavor to cause the Registration Statement or such post-effective amendment tobecome effective as soon as reasonably practicable and will advise the Purchaserpromptly and, if requested by the Purchaser, will confirm such advice inwriting, when it receives notice that the Registration Statement or suchpost-effective amendment has become effective. 

**Section 4.9**No Stop Orders. The Company willadvise the Purchaser promptly and, if requested by the Purchaser, will confirmsuch advice in writing: (i) of its receipt of notice of any request by theCommission for amendment of or a supplement to the Registration Statement, anyProspectus or for additional information; (ii) of its receipt of notice of theissuance by the Commission of any stop order suspending the effectiveness of theRegistration Statement or of the suspension of qualification of the Shares foroffering or sale in any jurisdiction or the initiation of any proceeding forsuch purpose; and (iii) of its becoming aware of the happening of any event,which makes any statement of a material fact made in the Registration Statementor the Prospectus (as then amended or supplemented) untrue or which requires themaking of any additions to or changes in the Registration Statement or theProspectus (as then amended or supplemented) in order to state a material factrequired by the Securities Act or the regulations thereunder to be statedtherein or necessary in order to make the statements therein not misleading, orof the necessity to amend or supplement the Prospectus (as then amended orsupplemented) to comply with the Securities Act or any other law. If at any timethe Commission shall issue any stop order suspending the effectiveness of theRegistration Statement, the Company will make commercially reasonable efforts toobtain the withdrawal of such order at the earliest possible time. 

**Section 4.10**Amendments to the RegistrationStatement. The Company will not (i) file any amendment to the RegistrationStatement or make any amendment or supplement to the Prospectus of which thePurchaser shall not previously have been advised or to which the Purchaser shallreasonably object after being so advised or (ii) so long as, in the reasonableopinion of counsel for the Purchaser, a Prospectus is required to be deliveredin connection with sales by any Purchaser or dealer, file any information,documents or reports pursuant to the Exchange Act without delivering a copy ofsuch information, documents or reports to the Purchaser, promptly following suchfiling. 

**Section 4.11**Prospectus Delivery. The Companyshall file a prospectus supplement to its Registration Statement on the firstbusiness day immediately following the end of each Weekly Period, and willdeliver to the Purchaser, without charge, in such quantities as reasonablyrequested by the Purchaser, copies of each form of Prospectus and prospectussupplement on each Settlement Date. The Company consents to the use of theProspectus (and of any amendment or supplement thereto) in accordance with theprovisions of the Securities Act and with the securities or Blue Sky laws of thejurisdictions in which the Shares may be sold by the Purchaser, in connectionwith the offering and sale of the Shares and for such period of time thereafteras the Prospectus is required by the Securities Act to be delivered inconnection with sales of the Shares. If during such period of time any eventshall occur that in the judgment of the Company or in the opinion of counsel forthe Purchaser is required to be set forth in the Prospectus (as then amended orsupplemented) or should be set forth therein in order to make the statementstherein, in the light of the circumstances under which they were made, notmisleading, or if it is necessary to supplement or amend the Prospectus tocomply with the Securities Act or any other law, the Company will forthwithprepare and, subject to the provisions of Section 4.10 above, file with theCommission an appropriate supplement or amendment thereto, and willexpeditiously furnish to the Purchaser a reasonable number of copies thereof. 

ARTICLE V

Conditions to Closing, Draw Downs and Call Options

**Section 5.1**Conditions Precedent to the Obligation ofthe Company to Sell the Shares. The obligation hereunder of the Company toissue and sell the Shares to the Purchaser is subject to the satisfaction orwaiver, at or before each Draw Down, of each of the conditions set forth below.These conditions are for the Company’s sole benefit and may be waived bythe Company at any time in its sole discretion. 

(a) Accuracy of the Purchaser’s Representations andWarranties. The representations and warranties of the Purchaser shall betrue and correct in all material respects as of the date when made and as ofeach Draw Down request as though made at that time, except for representationsand warranties that are expressly made as of a particular date. 

(b) Effective Registration Statement. The RegistrationStatement registering the Shares shall have been declared effective by theCommission and shall have been amended or supplemented, as required, to disclosethe sale of the Shares prior to each Settlement Date, as applicable. 

(c) Performance by the Purchaser. The Purchaser shallhave performed, satisfied and complied in all material respects with allcovenants, agreements and conditions required by this Agreement to be performed,satisfied or complied with by the Purchaser at or prior to each Settlement Date. 

(d) No Injunction. No statute, regulation, executiveorder, decree, ruling or injunction shall have been enacted, entered,promulgated or endorsed by any court or governmental authority of competentjurisdiction which prohibits the consummation of any of the transactionscontemplated by this Agreement. 

(e) No Suspension, Etc. Trading in the Company’sCommon Stock shall not have been suspended by the Commission or the NASD (exceptfor any suspension of trading of limited duration agreed to by the Company,which suspension shall be terminated prior to Closing), and, at any time priorto each Draw Down request, trading in securities generally as reported on NASDAQshall not have been suspended or limited, or minimum prices shall not have beenestablished on securities whose trades are reported by the American StockExchange, or on the New York Stock Exchange, nor shall a banking moratorium havebeen declared either by the United States or New York State authorities, norshall there have occurred any material outbreak or escalation of hostilities orother national or international calamity or crisis of such magnitude in itseffect on, or any material adverse change in any financial market which, in eachcase, in the judgment of the Company, makes it impracticable or inadvisable toissue the Shares. 

(f) No Proceedings or Litigation. No action, suit orproceeding before any arbitrator or any governmental authority shall have beencommenced, and no investigation by any governmental authority shall have beenthreatened, against the Company, or any of the officers, directors or affiliatesof the Company seeking to restrain, prevent or change the transactionscontemplated by this Agreement, or seeking damages in connection with suchtransactions. 

**Section 5.2**Conditions Precedent to the Obligation ofthe Purchaser to Close. The obligation hereunder of the Purchaser to enterthis Agreement is subject to the satisfaction or waiver, at or before theClosing, of each of the conditions set forth below. These conditions are for thePurchaser’s sole benefit and may be waived by the Purchaser at any time inits sole discretion. 

(a) Performance by the Company. The Company shall haveperformed, satisfied and complied in all material respects with all covenants,agreements and conditions required by this Agreement to be performed, satisfiedor complied with by the Company at or prior to the Closing. 

(b) No Injunction. No statute, rule, regulation,executive order, decree, ruling or injunction shall have been enacted, entered,promulgated or endorsed by any court or governmental authority of competentjurisdiction which prohibits the consummation of any of the transactionscontemplated by this Agreement. 

(c) No Proceedings or Litigation. No action, suit orproceeding before any arbitrator or any governmental authority shall have beencommenced, and no investigation by any governmental authority shall have beenthreatened, against the Company, or any of the officers, directors or affiliatesof the Company seeking to restrain, prevent or change the transactionscontemplated by this Agreement, or seeking damages in connection with suchtransactions. 

(d) Opinion of Counsel, Etc. At the Closing, thePurchaser shall have received an opinion of counsel to the Company, dated thedate of Closing, in the form of Exhibit A hereto, and such other certificatesand documents as the Purchaser or its counsel shall reasonably require incidentto the Closing. 

**Section 5.3**Conditions Precedent to the Obligation ofthe Purchaser to Accept a Draw Down or Call Option and Purchase the Shares.The obligation hereunder of the Purchaser to accept a Draw Down request and toacquire and pay for the Shares is subject to the satisfaction or waiver, at orbefore each Draw Down or Call Option request (the “Draw Down ExerciseDate”), of each of the conditions set forth below. The conditions are forthe Purchaser’s sole benefit and may be waived by the Purchaser at any timein its sole discretion.

(a) Accuracy of the Company’s Representations andWarranties. Each of the representations and warranties of the Company shallbe true and correct in all material respects as of the date when made and as ofthe Draw Down Exercise Date as though made at that time, except forrepresentations and warranties that speak as of a particular date. 

(b) Effective Registration Statement. The RegistrationStatement registering the Shares shall have been declared effective by theCommission and shall have been amended or supplemented, as required, to disclosethe sale of the Shares prior to the Closing Date or each Settlement Date, asapplicable. 

(c) No Suspension. Trading in the Company’s CommonStock shall not have been suspended by the Commission or the NASD (except forany suspension of trading of limited duration agreed to by the Company, whichsuspension shall be terminated prior to each Draw Down request), and, at anytime prior to such request, trading in securities generally as reported by theAmerican Stock Exchange shall not have been suspended or limited, or minimumprices shall not have been established on securities whose trades are reportedby the American Stock Exchange. 

(d) Performance by the Company. The Company shall haveperformed, satisfied and complied in all material respects with all covenants,agreements and conditions required by this Agreement to be performed, satisfiedor complied with by the Company at or prior to the Draw Down Exercise Date andthe Settlement Date and shall have delivered the Compliance Certificatesubstantially in the form attached hereto as Exhibit B. 

(e) No Injunction. No statute, rule, regulation,executive order, decree, ruling or injunction shall have been enacted, entered,promulgated or endorsed by any court or governmental authority of competentjurisdiction which prohibits the consummation of any of the transactionscontemplated by this Agreement. 

(f) No Proceedings or Litigation. No action, suit orproceeding before any arbitrator or any governmental authority shall have beencommenced, and no investigation by any governmental authority shall have beenthreatened, against the Company, or any of the officers, directors or affiliatesof the Company seeking to restrain, prevent or change the transactionscontemplated by this Agreement, or seeking damages in connection with suchtransactions. 

(g) Material Adverse Effec.  No Material Adverse Effect shall have occurred.

ARTICLE VI

Draw Down Terms; Call Option

**Section 6.1**Draw Down Terms.  Subject to the  satisfaction  of the  conditions set forth inthis Agreement, the parties agree as follows:

(a) The Company, may, in its sole discretion, issue a Draw DownNotice with respect to a draw down (a “Draw Down”) of up to$2,500,000 during each Draw Down Pricing Period; provided, that the Company may,in its sole discretion, issue a Draw Down Notice with respect to any Draw DownAmount at any Threshold Price or any Draw Down Discount Price pursuant to termsmutually agreed upon by the Purchaser and the Company, which Draw Down thePurchaser will be obligated to accept. Prior to issuing any Draw Down Notice,the Company shall have Shares registered under the Registration Statement whichare valued at an amount equal to or in excess of $2,500,000. 

(b) The number of Shares to be issued in connection with eachDraw Down shall be equal to the sum of the quotients (for each trading day ofthe Draw Down Pricing Period for which the VWAP equals or exceeds the ThresholdPrice) of (x) 1/20th (or such other fraction based on the length of the DrawDown Pricing Period) of the Draw Down Amount divided by (y) the applicable DrawDown Discount Price. 

(c) Only one Draw Down shall be allowed in each Draw DownPricing Period. Each Draw Down Pricing Period shall be divided into four (4)weekly periods, each consisting of five (5) trading days (each a “WeeklyPeriod”), unless otherwise mutually agreed upon by the Purchaser andthe Company 

(d) The number of Shares purchased by the Purchaser with respectto each Draw Down shall be determined on a daily basis during each Draw DownPricing Period and settled on the second business day following the end of aWeekly Period (the “Settlement Date”). 

(e) There shall be a minimum of five (5) trading days betweenDraw Downs, unless otherwise mutually agreed upon between the Purchaser and theCompany. 

(f) There shall be a maximum of twelve (12) monthly Draw Downs during the term of thisAgreement.

(g) At the end of each Draw Down Pricing Period, thePurchaser’s total Draw Down commitment shall be reduced by $2,500,000regardless of the Draw Down Amount requested by the Company. 

(h) Each Draw Down will expire on the last trading day of each Draw Down Pricing Period.

(i) If the VWAP on a given trading day is less than theThreshold Price, then the total amount of the Draw Down for the relevant DrawDown Pricing Period will be reduced by 1/20th (or such other fraction based onthe length of the Draw Down Pricing Period). Notwithstanding anything in theforegoing to the contrary, for each trading day during the Weekly Period thatthe VWAP is less than the Threshold Price, the Purchaser may elect in its solediscretion to purchase Shares at 95% of the Threshold Price at the end of theDraw Down Pricing Period. At no time shall the Threshold Price be set below$3.00 unless mutually agreed upon by the Company and the Purchaser. If tradingin the Company’s Common Stock is suspended for any reason for more thanthree (3) hours in any trading day, at the Purchaser’s option, the price ofthe Common Stock shall be deemed to be below the Threshold Price for thattrading day and the Draw Down for the relevant Draw Down Pricing Period shall bereduced by 1/20th (or such other fraction based on the length of the Draw DownPricing Period). 

(j) The Company must inform the Purchaser via facsimiletransmission as to the Draw Down Amount the Company wishes to exercise beforecommencement of trading on the first trading day of the Draw Down Pricing Period(the “Draw Down Notice”), substantially in the form attachedhereto as Exhibit C. In addition to the Draw Down Amount, the Company shall setthe Threshold Price with each Draw Down Notice and shall designate the firsttrading day of the Draw Down Pricing Period. At no time shall the Purchaser berequired to purchase more than $2,500,000 of the Company’s Common Stock fora given Draw Down Pricing Period so that if the Company chooses not to exercisethe Draw Down in a given Draw Down Pricing Period the Purchaser is not obligatedto purchase more than $2,500,000 in a subsequent Draw Down Pricing Period. 

(k) On each Settlement Date, the Company shall deliver theShares purchased by the Purchaser to the Purchaser or to The Depositary TrustCompany (“DTC”) on the Purchaser’s behalf via DWAC duringthe Draw Down Pricing Period, and upon receipt of the Shares, the Purchasershall cause payment therefor to be made to the account designated by the Companyby wire transfer of immediately available funds provided that the Shares arereceived no later than 1:00 p.m., eastern time or next day available funds ifthe Shares are received thereafter. 

(l) If during any Draw Down Pricing Period, the Company shallissue any shares of Common Stock (other than shares of Common Stock issued tocorporate partners or in connection with a joint venture), the Purchaser may inits sole discretion (i) purchase the Draw Down Amount of shares of Common Stockat the price at which the Company issued shares of Common Stock during such DrawDown Pricing Period, (ii) purchase the Draw Down Amount of shares of CommonStock at the applicable Draw Down Discount Price, or (iii) elect not to purchaseany Shares during such Draw Down Pricing Period. The Purchaser shall notify theCompany of its election on the business day preceding the Settlement Date. 

(m) If on the Settlement Date, the Company fails to deliver theShares to be purchased by the Purchaser, and such failure continues for ten (10)trading days, the Company shall pay, in cash or restricted shares of CommonStock, at the option of the Purchaser, as liquidated damages and not as apenalty to the Purchaser an amount equal to two percent (2%) of the Draw DownAmount for the initial thirty (30) days and each additional thirty (30) dayperiod thereafter until such failure has been cured, which shall be pro ratedfor such periods less than thirty (30) days (the “Periodic Amount”).Cash payments to be made pursuant to this clause (l) shall be due and payableimmediately upon demand in immediately available cash funds. Certificatesevidencing the restricted shares of Common Stock shall be delivered immediatelyupon demand. The parties agree that the Periodic Amount represents a reasonableestimate on the part of the parties, as of the date of this Agreement, of theamount of damages that may be incurred by the Purchaser if the Company fails todeliver the Shares on the Settlement Date. If the Purchaser elects to receiveshares of Common Stock instead of cash, the Purchaser shall have the right todemand registration once within twelve (12) months of the date of issuance ofsuch shares of Common Stock and piggyback registration rights if the Companyfiles a separate registration statement. 

**Section 6.2**Purchaser's Call Option.

(a) The Purchaser shall have the right to exercise multiple calloptions of up to $2,500,000 (a “Call Option”) during each DrawDown Pricing Period; provided, that no Call Option exceed $1,125,000 onany trading day during a Draw Down Pricing Period unless otherwise mutuallyagreed upon by the Purchaser and the Company. For each trading day during a DrawDown Pricing Period, the Purchaser may exercise a Call Option by providingnotice to the Company of the exercise of the Call Option (the “Call OptionNotice”). The total amount of Call Options exercised by the Purchaser shallnot exceed $30,000,000 in the aggregate. 

(b) The number of shares of Common Stock to be issued inconnection with each Call Option shall equal the quotient of the Call OptionAmount and 95% of the greater of (i) the VWAP for the Common Stock on the daythe Purchaser issues its Call Option Notice and (ii) the Threshold Price. 

(c) Each Call  Option  exercised  shall be  settled  on a weekly  basis on the  applicableSettlement Date.

(d) The Threshold Price designated by the Company in its DrawDown Notice shall apply to each Call Option. 

(e) For each Call Option that the Purchaser exercises pursuantto this Section, the Purchaser must issue via facsimile a Call Option Notice tothe Company no later than 5:00 p.m. (California time) on the day such CallOption is exercised. If the Purchaser does not exercise a Call Option by 5:00p.m. (California time) on the last day of the applicable Draw Down PricingPeriod, the Purchaser’s Call Options with respect to that Draw Down PricingPeriod shall terminate. 

ARTICLE VII

Termination

**Section 7.1**Termination by Mutual Consent. Theterm of this Agreement shall be fifteen (15) months from the Effective Date.This Agreement may be terminated at any time by mutual consent of the parties. 

**Section 7.2**Other Termination. The Purchaser mayterminate this Agreement upon (x) one (1) day’s notice if the Companyissues convertible debentures or enters an equity financing facility as setforth in Section 4.7 without the Purchaser’s prior written consent, or(y) one (1) day’s notice if an event resulting in a Material Adverse Effecthas occurred. 

**Section 7.3**Effect of Termination. In the event oftermination by the Company or the Purchaser, written notice thereof shallforthwith be given to the other party and the transactions contemplated by thisAgreement shall be terminated without further action by either party. If thisAgreement is terminated as provided in Section 7.1 or 7.2 herein, this Agreementshall become void and of no further force and effect, except as provided inSection 9.9. Nothing in this Section 7.3 shall be deemed to release the Companyor the Purchaser from any liability for any breach under this Agreement, or toimpair the rights of the Company and the Purchaser to compel specificperformance by the other party of its obligations under this Agreement. 

ARTICLE VIII

Indemnification

**Section 8.1** General Indemnity.

(a) Indemnification by the Company. The Company willindemnify and hold harmless the Purchaser and each person, if any, who controlsthe Purchaser within the meaning of Section 15 of the Securities Act or Section20(a) of the Exchange Act from and against any losses, claims, damages,liabilities and expenses (including reasonable costs of defense andinvestigation and all attorney’s fees) to which the Purchaser and eachperson, if any, who controls the Purchaser may become subject, under theSecurities Act or otherwise, insofar as such losses, claims, damages,liabilities and expenses (or actions in respect thereof) arise out of or arebased upon, (i) any untrue statement or alleged untrue statement of a materialfact contained, or incorporated by reference, in the Registration Statementrelating to Common Stock being sold to the Purchaser (including the anyprospectus supplement filed in connection with the transactions contemplatedhereunder (the “Prospectus Supplement”) which are a part of it), orany amendment or supplement to it, or (ii) the omission or alleged omission tostate in that Registration Statement or any document incorporated by referencein the Registration Statement, a material fact required to be stated therein ornecessary to make the statements therein not misleading. 

The Company will  reimburse the Purchaser and each such  controlling  person  promptlyupon  demand  for  any  legal  or  other  costs  or  expenses  reasonably  incurred  by or thecontrolling  person in investigating,  defending  against,  or preparing to defend against anysuch claim,  action,  suit or  proceeding,  except that the Company  will not be liable to theextent a claim or action which results in a loss, claim,  damage,  liability or expense arisesout of, or is based upon, an untrue statement,  alleged untrue statement,  omission or allegedomission,  included in any Prospectus or Prospectus  Supplement or any amendment or supplementto the Prospectus or Prospectus  Supplement in reliance upon, and in conformity with,  writteninformation  furnished  by the  Purchase to the Company for  inclusion  in the  Prospectus  orProspectus Supplement.

(b) Indemnification by the Purchaser. The Purchaser willindemnify and hold harmless the Company, each of its directors and officers, andeach person, if any, who controls the Company within the meaning of Section 15of the Securities Act or Section 20(a) of the Exchange Act from and against anyexpenses (including reasonable costs of defense and investigation and allattorneys fees) to which the Company and each director, officer and person, ifany, who controls the Company may become subject, under the Securities Act orotherwise, insofar as such losses, claims, damages, liabilities and expenses (oractions in respect thereof) arise out of or are based upon, (i) any untruestatement or alleged untrue statement of a material fact contained in anyProspectus or Prospectus Supplement or any amendment or supplement to it or (ii)the omission or alleged omission to state in any Prospectus or ProspectusSupplement or any amendment or supplement to it a material fact required to bestated therein or necessary to make the statements therein not misleading, tothe extent, but only to the extent, the untrue statement, alleged untruestatement, omission or alleged omission was made in reliance upon, and inconformity with, written information furnished by the Purchaser to the Companyfor inclusion in the Prospectus or Prospectus Supplement or an amendment orsupplement to it, and the Purchaser will reimburse the Company and each suchdirector, officer or controlling person promptly upon demand for any legal orother costs or expenses reasonably incurred by the Company or the other personin investigating, defending against, or preparing to defend against any suchclaim, action, suit or proceeding. 

**Section 8.2**Indemnification Procedures. Promptlyafter a person receives notice of a claim or the commencement of an action forwhich the person intends to seek indemnification under paragraph (a) or (b) ofSection 8.1, the person will notify the indemnifying party in writing of theclaim or commencement of the action, suit or proceeding, but failure to notifythe indemnifying party will not relieve the indemnifying party from liabilityunder paragraph (a) or (b) of Section 8.1, except to the extent it has beenmaterially prejudiced by the failure to give notice. The indemnifying party willbe entitled to participate in the defense of any claim, action, suit orproceeding as to which indemnification is being sought, and if the indemnifyingparty acknowledges in writing the obligation to indemnify the party against whomthe claim or action is brought, the indemnifying party may (but will not berequired to) assume the defense against the claim, action, suit or proceedingwith counsel satisfactory to it. After an indemnifying party notifies anindemnified party that the indemnifying party wishes to assume the defense of aclaim, action, suit or proceeding the indemnifying party will not be liable forany legal or other expenses incurred by the indemnified party in connection withthe defense against the claim, action, suit or proceeding except that if, in theopinion of counsel to the indemnifying party, one or more of the indemnifiedparties should be separately represented in connection with a claim, action,suit or proceeding the indemnifying party will pay the reasonable fees andexpenses of one separate counsel for the indemnified parties. Each indemnifiedparty, as a condition to receiving indemnification as provided in Paragraph (a)or (b) or Section 8.1, will cooperate in all reasonable respects with theindemnifying party in the defense of any action or claim as to whichindemnification is sought. No indemnifying party will be liable for anysettlement of any action effected without its prior written consent. Noindemnifying party will, without the prior written consent of the indemnifiedparty, effect any settlement of a pending or threatened action with respectwhich an indemnified party is, or is informed that it may be, made a party andfor which it would be entitled to indemnification, unless the settlementincludes an unconditional release of the indemnified party from all liabilityand claims which are the subject matter of the pending or threatened action. 

If for any reason the indemnification  provided for in this Agreement is not availableto, or is not  sufficient to hold  harmless,  an  indemnified  party in respect of any loss orliability  referred to in paragraph (a) or (b) of Section 8.1, each  indemnifying  party will,in lieu of  indemnifying  the indemnified  party,  contribute to the amount paid or payable bythe indemnified  party,  contribute to the amount paid or payable by the indemnified  party asa result of the loss or liability,  (i) in the proportion  which is appropriate to reflect therelative  benefits  received by the indemnifying  party on the one hand and by the indemnifiedparty on the other from the sale of stock which is the subject of the claim,  action,  suit orproceeding  which  resulted  in the  loss or  liability  or (ii)  if  that  allocation  is notpermitted by  applicable  law, in such  proportion as is  appropriate  to reflect not only therelative  benefits  of the sale of  stock,  but also the  relative  fault of the  indemnifyingparty and the  indemnified  party with respect to the  statements  or omissions  which are thesubject of the claim,  action,  suit or proceeding that resulted in the loss or liability,  aswell as any other relevant equitable considerations.

ARTICLE IX

Miscellaneous

**Section 9.1** Fees and Expenses.

(a) The Company shall pay all reasonable fees and expensesrelated to the transactions contemplated by this Agreement; provided,that the Company shall pay, at the Closing, all reasonable attorneys fees andexpenses, inclusive of disbursements and out-of-pocket expenses, incurred by thePurchaser up to $50,000 in connection with the preparation, negotiation,execution and delivery of this Agreement. In addition, the Company shall pay allreasonable fees and expenses incurred by the Purchaser in connection with anyamendments, modifications or waivers of this Agreement or incurred in connectionwith the enforcement of this Agreement, including, without limitation, allreasonable attorneys fees and expenses. The Company shall pay all stamp or othersimilar taxes and duties levied in connection with issuance of the Sharespursuant hereto. 

(b) If on the seventh (7) month anniversary of this Agreement,the Company has not requested Draw Downs in an aggregate amount of $10,000,000,the Company shall pay the Purchaser a fee of either (x) an amount equal to$300,000, in cash, or (ii) issue warrants to purchase 300,000 Shares at anexercise price of 110% of the VWAP of the Common Stock on the date of executionof this Agreement. If the Company elects to pay the fee in shares of CommonStock instead of cash, the Purchaser shall have the right to demand registrationonce within twelve (12) months of the date of issuance of such warrants andpiggyback registration rights if the Company files a separate registrationstatement. 

**Section 9.2**    Specific Enforcement, Consent to Jurisdiction.

(a) The Company and the Purchaser acknowledge and agree thatirreparable damage would occur in the event that any of the provisions of thisAgreement were not performed in accordance with their specific terms or wereotherwise breached. It is accordingly agreed that the parties shall be entitledto an injunction or injunctions to prevent or cure breaches of the provisions ofthis Agreement and to enforce specifically the terms and provisions hereof orthereof, this being in addition to any other remedy to which any of them may beentitled by law or equity. 

(b) Each of the Company and the Purchaser (i) hereby irrevocablysubmits to the jurisdiction of the United States District Court and other courtsof the United States sitting in the State of Delaware for the purposes of anysuit, action or proceeding arising out of or relating to this Agreement and (ii)hereby waives, and agrees not to assert in any such suit, action or proceeding,any claim that it is not personally subject to the jurisdiction of such court,that the suit, action or proceeding is brought in an inconvenient forum or thatthe venue of the suit, action or proceeding is improper. Each of the Company andthe Purchaser consents to process being served in any such suit, action orproceeding by mailing a copy thereof to such party at the address in effect fornotices to it under this Agreement and agrees that such service shall constitutegood and sufficient service of process and notice thereof. Nothing in thisSection shall affect or limit any right to serve process in any other mannerpermitted by law. 

**Section 9.3**Entire Agreement; Amendment. ThisAgreement contains the entire understanding of the parties with respect to thematters covered hereby and, except as specifically set forth herein, neither theCompany nor the Purchaser makes any representations, warranty, covenant orundertaking with respect to such matters. No provision of this Agreement may bewaived or amended other than by a written instrument signed by the party againstwhom enforcement of any such amendment or waiver is sought. 

**Section 9.4**Notices. Any notice, demand, request,waiver or other communication required or permitted to be given hereunder shallbe in writing and shall be effective (a) upon hand delivery, by telex (withcorrect answer back received), telecopy or facsimile at the address or numberdesignated below (if delivered on a business day during normal business hourswhere such notice is to be received), or the first business day following suchdelivery (if delivered other than on a business day during normal business hourswhere such notice is to be received) or (b) on the second business day followingthe date of mailing by express courier service, fully prepaid, addressed to suchaddress, or upon actual receipt of such mailing, whichever shall first occur.The addresses for such communications shall be: 

```

If to the Company:              Earthshell Corporation
                                800 Miramonte
                                Santa Barbara, CA  93109

                                Tel. No.:  (805) 897-2220
                                Fax No.:  (805) 899-3517
                                Attention: Chairman of the Board

With copies to:                 Gibson, Dunn and Crutcher
                                2029 Century Park East
                                Suite 4000
                                Los Angeles, CA  90067
                                Tel. No:  (310) 557-8022
                                Fax No.:  (310) 557-8005
                                Attention:  Robert K. Montgomery

If to the Purchaser:            Acqua Wellington North American
                                        Equities Fund, Ltd.
                                c/o MeesPierson Fund Services (Bahamas) Ltd.
                                Montague Sterling Centre
                                East Bay Street, P. O. Box SS-6238
                                Nassau, Bahamas
                                Tel. No:  (242) 394-2700
                                Fax No.:  (242) 394-9667
                                Attention:  Anthony L.M. Inder Rieden

With copies to:                 Parker Chapin LLP
                                The Chrysler Building
                                405 Lexington Avenue
                                New York, NY  10174
                                Tel. No:  (212) 704-6000
                                Fax No:  (212)704-6288
                                Attention:  Christopher S. Auguste
```

Any party  hereto may from time to time  change its  address  for notices by giving atleast ten (10) days written notice of such changed address to the other party hereto.

**Section 9.5**Waivers. No waiver by either party ofany default with respect to any provision, condition or requirement of thisAgreement shall be deemed to be a continuing waiver in the future or a waiver ofany other provisions, condition or requirement hereof, nor shall any delay oromission of any party to exercise any right hereunder in any manner impair theexercise of any such right accruing to it thereafter. 

**Section 9.6**Headings. The article, section andsubsection headings in this Agreement are for convenience only and shall notconstitute a part of this Agreement for any other purpose and shall not bedeemed to limit or affect any of the provisions hereof. 

**Section 9.7**Successors and Assigns. The Purchasermay not assign this Agreement to any person without the prior consent of theCompany, which consent will not be unreasonably withheld. This Agreement shallbe binding upon and inure to the benefit of the parties and their successors andassigns. The parties hereto may not amend this Agreement or any rights orobligations hereunder without the prior written consent of the Company and eachPurchaser to be affected by the amendment. After Closing, the assignment by aparty to this Agreement of any rights hereunder shall not affect the obligationsof such party under this Agreement. 

**Section 9.8**Governing Law. This Agreement shall begoverned by and construed in accordance with the internal laws of the State ofNew York, without giving effect to the choice of law provisions. 

**Section 9.9**Survival. The representations andwarranties of the Company and the Purchaser contained in Article III and thecovenants contained in Article IV shall survive the execution and deliveryhereof and the Closing until the termination of this Agreement, and theagreements and covenants set forth in Article VIII of this Agreement shallsurvive the execution and delivery hereof and the Closing hereunder. 

**Section 9.10**Counterparts. This Agreement may beexecuted in any number of counterparts, all of which taken together shallconstitute one and the same instrument and shall become effective whencounterparts have been signed by each party and delivered to the other partieshereto, it being understood that all parties need not sign the same counterpart.In the event any signature is delivered by facsimile transmission, the partyusing such means of delivery shall cause four additional executed signaturepages to be physically delivered to the other parties within five days of theexecution and delivery hereof. 

**Section 9.11**Publicity. Prior to the Closing,neither the Company nor the Purchaser shall issue any press release or otherwisemake any public statement or announcement with respect to this Agreement or thetransactions contemplated hereby or the existence of this Agreement. In theevent the Company is required by law, based upon an opinion of theCompany’s counsel, that the Company must issue a press release or otherwisemake a public statement or announcement with respect to this Agreement prior tothe Closing, the Company shall consult with the Purchaser on the form andsubstance of such press release. After the Closing, the Company may issue apress release or otherwise make a public statement or announcement with respectto this Agreement or the transactions contemplated hereby or the existence ofthis Agreement; provided, that prior to issuing any such press release,making any such public statement or announcement, the Company obtains the priorconsent of the Purchaser, which consent shall not be unreasonably withheld ordelayed. 

**Section 9.12**Severability. The provisions of thisAgreement are severable and, in the event that any court of competentjurisdiction shall determine that any one or more of the provisions or part ofthe provisions contained in this Agreement shall, for any reason, be held to beinvalid, illegal or unenforceable in any respect, such invalidity, illegality orunenforceability shall not affect any other provision or part of a provision ofthis Agreement, and this Agreement shall be reformed and construed as if suchinvalid or illegal or unenforceable provision, or part of such provision, hadnever been contained herein, so that such provisions would be valid, legal andenforceable to the maximum extent possible. 

**Section 9.13**Further Assurances. From and afterthe date of this Agreement, upon the request of the Purchaser or the Company,each of the Company and the Purchaser shall execute and deliver such instrument,documents and other writings as may be reasonably necessary or desirable toconfirm and carry out and to effectuate fully the intent and purposes of thisAgreement. 

IN WITNESS WHEREOF,  the parties hereto have caused this Agreement to be duly executedby their respective authorized officer as of the date first above written.

```
                                            EARTHSHELL CORPORATION

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

                                             ACQUA WELLINGTON NORTH AMERICAN EQUITIES
                                             FUND, LTD.

                                             By: /s/ Anthony L. M. Inder Rieden
                                                  Name: Anthony L. M. Inder Rieden
                                                  Title: Director
```

EXHIBIT A TO THE

COMMON STOCK PURCHASE AGREEMENT

OPINION OF COUNSEL

EXHIBIT B

COMPLIANCE CERTIFICATE

     In connection with the issuance of shares of common stock of EarthshellCorporation (the "Company") pursuant to the Draw Dawn Notice, dated ___________ delivered bythe Company to Acqua Wellington North American Equities Fund, Ltd. (the "Purchaser")pursuant to Article VI of the Common Stock Purchase Agreement dated May __, 2000, by andbetween the Company and the Purchaser (the "Agreement"), the undersigned hereby certifies asfollows:

     1.      The undersigned is the duly elected Chief [Executive/Financial] Officer ofthe Company.

     2.      The representations and warranties of the Company set forth in Section 3.1of the Agreement are true and correct in all material respects as though made on and as ofthe date hereof, except for representations and warranties that speak as of a particulardate.

     3.      The Company has performed in all material respects all covenants andagreements to be performed by the Company on or prior to the Draw Down Exercise Date and theSettlement Date related to the Draw Down Notice and has complied in all material respectswith all obligations and conditions contained in Section 5.3 of the Agreement.

     The terms used herein but not defined herein shall have the meanings specifiedin the Agreement.

     The undersigned has executed this Certificate this ________ day of _________,2000.

```

                                    By:________________________________________________

                                    Name:______________________________________________

                                    Title:_____________________________________________
```

EXHIBIT C

TO THE COMMON STOCK PURCHASE AGREEMENT

FORM OF

DRAW DOWN NOTICE

     Reference  is made to the Common  Stock  Purchase  Agreement  dated as of May __, 2000(the  "Purchase  Agreement ") between  Earthshell  Corporation,  a Delaware  corporation  (the"Company") and Acqua  Wellington  North American  Equities Fund, Ltd.  Capitalized  terms usedand not  otherwise  defined  herein shall have the  meanings  given such terms in the PurchaseAgreement.

     In accordance with and pursuant to Section 6.1 of the Purchase Agreement,  the Companyhereby  issues this Draw Down Notice to exercise a Draw Down  request for the Draw Down Amountindicated below.
     
        Draw Down Amount: ___________________________________________        Call Option Amount: _________________________________________        Draw Down Pricing Period start date: ________________________        Draw Down Pricing Period end date: __________________________        Settlement Date: ____________________________________________        Threshold Price: ____________________________________________        Minimum Threshold Price: ________________________________________________________________________________________________________________________________      
       The  Company  hereby  certifies  that the  conditions  set forth in Section 5.3 of thePurchase Agreement have been satisfied as of the date hereof.
Dated:_______________________                                            ________________________________                                            By:______________________________                                                  Name:                                                  Title:                                            Address:                                            Facsimile No.:                                            Wire Instructions:__________________                                            Contact Name:_______________________  ___________________________________________________________________________________________DISCLOSURE SCHEDULESRELATING TO THE COMMON STOCKPURCHASE AGREEMENT, DATED AS MAY 3, 2000 OF BETWEEN EARTHSHELL CORPORATION AND                     ACQUA WELLINGTON NORTH AMERICAN EQUITIES FUND, LTD.
      ALL SECTION AND  SUBSECTION  NUMBERS AND LETTERS  RELATE AND  COINCIDE TO SUCH NUMBERSAND  LETTERS  AS SET FORTH IN THE COMMON  STOCK  PURCHASE  AGREEMENT  (THE  "AGREEMENT").  ANYTERMS REQUIRING DEFINITION HEREIN ARE DEFINED IN THE AGREEMENT.

     ALL  REPRESENTATIONS  AND  WARRANTIES SET FORTH IN THE AGREEMENT ARE MODIFIED IN THEIRENTIRETY  BY THESE  DISCLOSURE  SCHEDULES.  THE  DISCLOSURES  CONTAINED  IN  THESE  DISCLOSURESCHEDULES SHALL BE READ IN THEIR ENTIRETY, AND ALL THE DISCLOSURES SHALL BE READ TOGETHER.
____________________________________________________________________________________________