SETTLEMENTAGREEMENT AND MUTUAL RELEASE

     THISSETTLEMENT AGREEMENT AND MUTUAL RELEASE (this “Settlement Agreement”)is made this 18th day of January, 2001, but is effective as of December 31,2000, by and among EarthShell Corporation (hereinafter called“EarthShell”), CH2M Hill Industrial Design Corporation, IDCConstruction Management, Inc. and the business unit known as The Food Group(hereinafter collectively called “IDC”). EarthShell and IDC arereferred to hereinafter as the “Parties.” 

INTRODUCTORYSTATEMENT

     Pursuantto a Design, Procurement and Construction Management Service Agreement datedMay 13, 1998, as amended through the date hereof (the“Agreement”), the Parties, along with Sweetheart Cup Company Inc.(hereinafter called “Sweetheart”), entered into a contract by theterms of which IDC was to provide certain specified services with regard tocertain renovations to a facility owned by Sweetheart at Owings Mills Marylandand with regard to process equipment installation at the Owings Mills facility(collectively, the “Project”); and EarthShell was to make certainpayments to IDC in consideration of all such services. Thereafter, IDC providedthose certain specified services as contemplated by the Agreement. Certaindisputes regarding the performance obligations of IDC and the paymentobligations of EarthShell pursuant to the Agreement have arisen. The Partieshave agreed to settle and resolve those disputes in accordance with the terms ofthis Settlement Agreement. 

     Now,therefore, in consideration of the mutual covenants set forth herein, theParties agree as follows:

     1.     Release   by  EarthShell.  EarthShell  doeshereby  release and forever  discharge IDC and its individual  corporations  andbusiness units  including,  IDC Construction  Management,  Inc., CH2M IndustrialDesign Corporation, The Food Group and their agents, servants,  representatives,officers,  directors,  subsidiaries  and  affiliated  entities  from all claims,demands,  actions  and  causes of action,  including  claims  for  indemnity  orcontribution,  relating  directly  or  indirectly  to  the  Agreement  or to theperformance  by IDC of the services or  obligations  required of IDC pursuant tothe  Agreement.  The provisions of this  Section 1  are intended to includeclaims for damages,  including  claims for patent or latent  defects,  which areknown or unknown or those  which have  accrued or which may accrue in the futurerelating  to  IDC’s  performance  or  non-performance  of its  services  orobligations under the Agreement.  It is further  understood and agreed that thisrelease  includes  services  which  have  been  performed  as well as  services,including warranty obligations, which may not have been performed as of the datehereof relating to the Agreement.  EarthShell does hereby  acknowledge  that IDChas no remaining  obligations  pursuant to the Agreement.  This  acknowledgementincludes  any  obligations  regarding  latent  defects or warranty  obligations.

     2.     Release  by  IDC.  IDC and  its  individualcorporations and business units (collectively,  the “IDC Parties,” andindividually an “IDC  Party”) do hereby release and forever  dischargeEarthShell  and its  agents,  servants,  representatives,  employees,  officers,directors,  subsidiaries and affiliated entities, including, without limitation,Sweetheart,  any joint venture formed between  Sweetheart  and  EarthShell,  andE. Khashoggi   Industries,   LLC   (collectively,    the   “EarthShellParties,”  and individually,  an  “EarthShell  Party”),  from allclaims, demands, actions and causes of action, including claims for indemnity orcontribution,  relating  directly  or  indirectly  to  the  Agreement  or to theperformance or non-performance of an EarthShell  Party’s  obligations underthe Agreement,  including any payment obligations pursuant to the Agreement. Theprovisions of this Section 2 are intended to include obligations which haveaccrued or which may have accrued in the future  relating to the Agreement.  Theprovisions of this  Section 2  are intended to include  claims for damages,including  claims  for patent or latent  defects,  which are known or unknown orthose  which  have  accrued or which may  accrue in the  future  relating  to anEarthShell  Party’s  performance  or  non-performance  of its  services  orobligations  under  the  Agreement.  IDC,  for  itself  and on behalf of the IDCParties, does hereby acknowledge that each EarthShell Party has performed all ofits obligations,  including payment  obligations,  pursuant to the Agreement andthat they have been fully paid for all  services or  property  provided by them.

     3.     No  Admission  of  Liability.  Neither  theexecution of this  Settlement  Agreement  nor any provision or term hereof shallconstitute  an admission of liability or fault on the part of any party  hereto.The Parties  acknowledge  that this  Settlement  Agreement and Mutual Release isintended as a settlement  of claims made  against  each other,  which claims aredenied and disputed by the party against whom made. 

     4.     Indemnification.

          a.     Notwithstanding   the  provisions  of  Section  2,EarthShell shall fully indemnify the IDC Parties and hold them harmless from andagainst any and all claims,  demands,  actions and causes of action which may beasserted  or  initiated  against  any of the IDC Parties by reason of any claim,demand,  action or cause of action  asserted or initiated by EarthShell  againstthe following  subcontractors of IDC:  Integrated  Packaging  Systems,  AdvancedIndustrial   Systems,   Inc.,  Deca  Electric;   Goodhart  &  Sons,  KimballConstruction,  Burgermeister Bail, Gill-Simpson;  Green Construction,  M. NelsonBarnes,   Stonhard,   Grinnell,  White  Rose  Roofing  or  My  Cleaning  Service(collectively, the "Subcontractors"), arising from or related to the performanceor  non-performance by the Subcontractors of their services or obligations underthe  Agreement or  otherwise in respect of the Project  through the date of thisAgreement.

          b.     Any  IDC Party seeking  indemnification under thisSection 4 shall promptly notify EarthShell in writing of any claim in respect ofwhich it is entitled to be  indemnified  under this Section 4 (a "Claim").  Suchnotice  shall be given as soon as  reasonably  practicable  after  the IDC Partybecomes  aware of such Claim;  provided,  however,  that  failure to give promptnotice shall not adversely affect any claim for indemnification hereunder exceptto the extent  EarthShell's  ability to contest  any Claim by any third party ismaterially  adversely affected.  Such notice shall specify the nature and amountof such Claim (to the extent such amount is then known to such IDC Party at suchtime and without prejudice to any right such IDC Party may have to thereafter beindemnified in any greater amount) and all material  information  regarding suchClaim which is then known to the IDC Party.

          c.     EarthShell  shall  have  the  obligation,  at  itsexpense, to contest, defend and litigate, and to control the contest, defense orlitigation of, any Claim  (collectively  "Control Rights").  Except as otherwiseprovided  herein,  EarthShell  shall not be obligated to reimburse any IDC Partyfor any legal costs and  expenses  paid or incurred by such IDC Party in respectof the Claim. If EarthShell reasonably exercises its Control Rights with respectto the relevant  Claim in accordance  with the  provisions of this Section 4 andany IDC Party notifies  EarthShell that it thereafter desires to retain separatecounsel in order to participate in or proceed  independently  with such contest,defense or litigation,  then such IDC Party may do so at its own expense, exceptthat such IDC Party shall be reimbursed by EarthShell  for the  reasonable  feesand expenses of such counsel  incurred by such IDC Party if (i)  EarthShell,  inits  discretion,  authorized the employment of such counsel in writing,  or (ii)EarthShell does not reasonably exercise its Control Rights, thereby exposing theIDC Party to a greater risk of liability for the Claim that would not be coveredby EarthShell's  indemnification obligation hereunder.  EarthShell shall not, inconnection with any one action (or series of related actions), be liable for thereasonable  fees and expenses of more than one separate  counsel (to be selectedby EarthShell)  for all such IDC Parties unless  EarthShell,  in his discretion,authorizes the employment of additional counsel in writing.

          d.     Any  IDC Party claiming indemnification  hereunderwith respect to the compromise or settlement of any Claim shall,  as a conditionprecedent  to such  indemnification,  notify  EarthShell  in writing of any firmsettlement or compromise proposal it receives or intends to make with respect tosuch Claim prior to  accepting  or offering  such  proposal.  No IDC Party shallsettle  or  compromise  any  Claim in  respect  of which  it is  entitled  to beindemnified  by  EarthShell  hereunder  without  the prior  written  consent  ofEarthShell,  which consent may be withheld in EarthShell's  sole discretion,  aslong as EarthShell defends and satisfies the Claims in accordance with the termsof the indemnity obligation under this Section 4.

     5.     Representations  and Warranties of IDC. Allof the following  representations  and  warranties  made by IDC are deemed to becontinuing  warranties and representations,  and shall survive the execution anddelivery of this Settlement  Agreement.  Such representations and warranties andeach of them form a  principal  inducement  for  EarthShell  entering  into thisSettlement Agreement. IDC hereby represents and warrants as follows: 

          a.     This  Settlement  Agreement has been duly executedand delivered by IDC and is the valid and binding agreement of IDC,  enforceableagainst IDC in accordance with its terms. IDC has the ability to enter into thisSettlement   Agreement  and  to  consummate   the   transactions   provided  forherein.

          b.     No  other  person is  required to consent to IDC'sexecution and delivery of this Settlement Agreement.

          c.     The  execution  and  delivery  of this  SettlementAgreement will not result in the breach of any contract, agreement,  commitment,indenture,  mortgage, pledge agreement, note, bond, license, or other instrumentor any obligation to which IDC is now a party, or by which any of the propertiesor assets of IDC may be bound or affected,  or  constitute a violation by IDC ofany law, rule or regulation,  of any administrative agency or governmental body,or any order, writ, injunction or decree of any court, administrative agency, orgovernmental body.

          d.     None  of the  representations or warranties of IDCunder this Settlement Agreement contains or will contain any untrue statement ofa material fact, or omits or will omit any fact necessary to make the statementsherein or therein not misleading.

          e.     IDC  is the sole  beneficial  owner of the  claimsreleased  pursuant to Section 2 and no other person or entity has any  ownershipor equitable interest therein.

     6.     Representations      and      Warranties     ofEarthShell. All of the representations and warranties made by EarthShell aredeemed to be continuing  warranties  and  representations  and shall survive theexecution of this Settlement Agreement.  Such representations and warranties andeach of them form a principal  inducement for IDC entering into this  SettlementAgreement. EarthShell hereby represents and warrants as follows: 

          a.     This   Agreement   has  been  duly   executed  anddelivered by EarthShell  and is the valid and binding  agreement of  EarthShell,enforceable against EarthShell in accordance with its terms.  EarthShell has theability  to  enter  into  this  Settlement   Agreement  and  to  consummate  thetransactions provided for herein.

          b.     No  other  person is  required  to  consent to theEarthShell's execution and delivery of this Settlement Agreement.

          c.     The  execution  and  delivery  of this  SettlementAgreement will not result in the breach of any contract, agreement,  commitment,indenture,  mortgage, pledge agreement, note, bond, license, or other instrumentor any  obligation to which  EarthShell  is now a party,  or by which any of theproperties  or assets of  EarthShell  may be bound or affected,  or constitute aviolation by EarthShell of any law, rule or  regulation,  of any  administrativeagency or  governmental  body, or any order,  writ,  injunction or decree of anycourt, administrative agency, or governmental body.

          d.     None  of  the  representations  or  warranties  ofEarthShell under this Settlement  Agreement  contains or will contain any untruestatement of a material  fact, or omits or will omit any fact  necessary to makethe statements herein or therein not misleading.

          e.     EarthShell  is the  sole  beneficial  owner of theclaims  released under Section 1 and no other person or entity has any ownershipor equitable interest therein.

     7.     Acknowledgment. Each of the Parties to thisSettlement  Agreement  represents  and warrants that it has carefully  read thisSettlement  Agreement,  that it fully  understands its final and binding effect,that it has had an  opportunity  to consult with an attorney of its own choosingprior to  signing  this  Settlement  Agreement,  that the  person  signing  thisSettlement  Agreement  on its behalf has the power and  authority to execute anddeliver this Settlement Agreement on behalf of the party whom he represents, andthat he is signing this Settlement Agreement voluntarily and without coercion orduress. 

     8.     Indemnity.  Each Party  hereto  does herebyagree to defend,  indemnify  and hold  harmless the other Party from and againstany  and  all  costs,  damages,  claims,   liabilities  or  expenses  (includingreasonable  attorneys’  fees), arising from or resulting from any breach ofthe Party’s representations,  warranties or covenants under this SettlementAgreement. 

     9.     Assistance  with Document Production.  Uponwritten request of EarthShell,  IDC shall assist EarthShell in the production ofdocuments  within the possession or control of IDC and shall provide  EarthShellaccess to such personnel as EarthShell shall reasonably  request (subject to thereasonable  availability of such personnel) to explain,  or respond to questionsregarding, the documentation requested by EarthShell.  In making such a request,EarthShell shall  (i) identify  specifically the documents or categories ofdocuments  being  requested,  and  (ii) deposit  the sum of $50,000.00 as aretainer with IDC to  compensate  it for the time and expense of complying  withsuch requests.  Production by IDC shall be within a reasonable  time  consistentwith IDC’s normal project assignments.  When document productions have beencompleted  and upon the  written  request  of  EarthShell,  IDC shall  return toEarthShell the unused portion of this retainer. 

     10.     Miscellaneous.

          a.     This  Settlement  Agreement  shall be construed inaccordance with the laws of the State of Maryland,  including questions relatingto conflicts of law.

          b.     This   Settlement   Agreement   is  the  full  andintegrated  understanding  among the Parties and is  intended to  supercede  anyprior or contemporaneous understandings or agreements.

          c.     All  notices,  requests, claims, demands and othercommunications  hereunder  shall be in writing  and shall be given (and shall bedeemed to have been duly given upon receipt) by delivery in person, by facsimileor by registered or certified mail, to each other Party as follows:

```

         If to EarthShell: EarthShell Corporation
                           800 Miramonte Drive
                           Santa Barbara, California 93109
                           Attention:  Scott Houston, Chief Financial Officer
                           Fax:  805-899-3517

         If to IDC:        IDC
                           2020 SW Fourth Avenue, 3rd Floor
                           Portland, Oregon 97201
                           Attention:  Mr. Dennis Carver
                           Fax:  503-224-1494
```

or to such other address orfacsimile number as the person to whom notice is given may have previouslyfurnished to the others in writing in the manner set forth above. 

          d.     The  descriptive  headings herein are inserted forconvenience  of  reference  only and are not intended to be part of or to affectthe meaning or interpretation of this Settlement Agreement.

          e.     Each  Party  and its  counsel  has  reviewed  thisSettlement Agreement and any rule of contract  interpretation to the effect thatambiguities or uncertainties are to be interpreted against the drafting party orthe party who caused it to exist shall not be employed in the  interpretation ofthis Settlement Agreement.

          f.     Each  Party shall each  promptly  sign and deliverall  additional  documents  and  instruments  and  perform  all acts  reasonablyrequested of the other Party  necessary to perform its obligations and carry outthe intent expressed in this Settlement Agreement.

          g.     The failure of any Party to insist upon the strictperformance of any of the terms or provisions of this Settlement  Agreement,  orto exercise any option,  right or remedy herein or therein contained,  shall notbe  construed  as a waiver or as a  relinquishment  for the future of such term,provision,  option,  right or remedy,  but the same shall continue and remain infull force and effect.  No waiver by any party or any term or  provision  hereofshall be deemed to have been made unless expressed in writing and signed by suchParty.

          h.     In  the event that any portion of this  SettlementAgreement  shall be declared  invalid by order or decree of judgment of a court,this  Settlement  Agreement  shall be  construed as if such portion had not beeninserted herein,  except when such  construction  would constitute a substantialdeviation.

          i.     Except as expressly set forth in Sections 1, 2 and4, or as otherwise  expressly  provided  herein,  the  agreements  and covenantsherein are made  specifically  for the benefit of the parties to this SettlementAgreement   and  no   rights   in   favor   of   third   parties   are   createdhereunder.

          j.     This  Settlement  Agreement may be executed in oneor more counterparts,  each of which shall be deemed to be an original,  but allof which shall constitute one and the same agreement.

     11.     Nothing  contained in this Settlement Agreement isintended to constitute a release or discharge of any of the following persons orentities,  none of whom shall be considered as third party beneficiaries to thisSettlement  Agreement:  Kercher  Industries,   Incorporated;   Best  EngineeringIncorporated;     Detroit    Tool;    SIFCO,    Inc.;    Nordson    Corporation;CBW Automation and Van Dam Machine Corporation. 

[SIGNATURE PAGE FOLLOWS]

        INWITNESS WHEREOF THE PARTIES CAUSE THIS SETTLEMENT AGREEMENT TO BE EXECUTED ANDMADE EFFECTIVE ON THE DAY, MONTH AND YEAR FIRST SET FORTH ABOVE. 

```

EARTHSHELL CORPORATION                  IDC CONSTRUCTION MANAGEMENT, INC.

By:       /s/ Simon K. Hodson           By:            /s/ Susan D. King
       ----------------------------             ------------------------

Name:     Simon K. Hodson               Name:          Susan D. King
       ----------------------------             --------------------

Title:    Chief Executive Officer       Title:         VP, CFO
       ----------------------------             --------------

Date:     02/07/01                      Date:          2/27/01
       ----------------------------             --------------

                                        CH2M HILL INDUSTRIAL DESIGN CORPORATION

                                        By:            /s/ Vernon E. Jackson
                                                ----------------------------

                                        Name:          Vernon E. Jackson
                                                ------------------------

                                        Title:         Vice President
                                                ---------------------

                                        Date:          2/26/01
                                                --------------
```