TERMINATION AGREEMENT
                              ---------------------


     This Agreement is made and entered into as of this 30th day of June,  1997,
among  CONVERSION  TECHNOLOGIES   INTERNATIONAL,   INC.,   ("Conversion"),   CTI
ACQSUB-II, INC. ("Sub") and OCTAGON, INC. ("Octagon").

                                R E C I T A L S:

     A. On November  18,  1996,  Octagon,  Conversion  and Sub  entered  into an
Agreement  and  Plan of  Reorganization  (as  heretofore  amended,  the  "Merger
Agreement"),  pursuant to which Octagon was to be merged with and into Sub, with
Octagon continuing as a wholly-owned subsidiary of Conversion (the "Merger").

     B. The parties  desire to terminate  the Merger  Agreement on the terms and
conditions set forth herein.  

     NOW, THEREFORE, in consideration of the mutual promises and covenants among
the parties,  the sufficiency of which is hereby acknowledged,  Conversion,  Sub
and Octagon hereby agree as follows:

                                    AGREEMENT

     1. Termination of Merger  Agreement.  The parties agree that (i) the Merger
        --------------------------------
Agreement is hereby  terminated  by the mutual  consent of  Conversion,  Sub and
Octagon,  (ii) the Merger  Agreement  shall be of no further  force and (iii) no
party hereto,  nor any of its stockholders,  directors,  officers or affiliates,
shall have any liability in connection  therewith;  provided,  however, that the
                                                    --------   -------
Confidentiality  Agreements dated June 6, 1996 and June 28, 1996 between Octagon
and Conversion shall remain in full force and effect. 

<PAGE>

     2. Mutual General Releases and Indemnity. (a) Conversion,  inclusive of its
        -------------------------------------
stockholders,  directors,  officers,  employees,  affiliates and agents,  hereby
remises,  releases and forever discharges Octagon and Octagon's past and present
affiliates  and  subsidiaries  and  their  stockholders,   directors,  officers,
employees  and  agents  and  each  of  their  heirs,   assigns,   executors  and
administrators  (the "Octagon  Releasees") from all claims,  actions,  causes of
action,  suits,  rights,  debts, dues, sums of money,  accounts,  bonds,  bills,
covenants,  contracts,  controversies,   omissions,  judgments,  executions  and
demands  whatsoever  in law,  admiralty  or equity,  which  against  the Octagon
Releasees  Conversion  ever  had,  now  has or  which  Conversion,  Conversion's
affiliates, anyone claiming in a derivative capacity on behalf of Conversion and
the  predecessors,  successors  and assigns of any of them now or hereafter can,
shall or may have, whether known or unknown, foreseen or unforeseen,  liquidated
or  unliquidated  and whether  based upon facts now known or unknown,  direct or
derivative, for, upon or by reason of any matter, cause or thing whatsoever from
the beginning of time to the day of this Agreement,  including,  but not limited
to, any and all rights and claims arising under the Merger Agreement (all of the
foregoing being referred to as the "Conversion Released Claims"), excepting only
all obligations of Octagon provided for or expressly reserved in this Agreement.
Conversion  hereby agrees to indemnify  and hold harmless the Octagon  Releasees
and each of them from and  against  any and all  liabilities,  losses,  damages,
expenses,  fees (including,  without limitation,  reasonable attorneys' fees and
disbursements),  settlements,  awards or costs of any kind  assessed  against or
incurred by them or any of them  arising from the  assertion  of any  Conversion
Released Claim by or on behalf of Conversion or any of Conversion's  affiliates,
stockholders,  directors,  officers,  


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<PAGE>

employees and agents and each of their  predecessors,  successors and assigns or
anyone who is  entitled  to make a claim in a  derivative  capacity on behalf of
Conversion.

     (b) Octagon, inclusive of its stockholders, directors, officers, employees,
affiliates  and  agents,   hereby  remises,   releases  and  forever  discharges
Conversion, CTI Acqsub-II, Inc. and Paramount Capital, Inc. and their respective
past and present affiliates and subsidiaries and their stockholders,  directors,
officers,  employees and agents and each of their heirs, assigns,  executors and
administrators (the "Conversion  Releasees") from all claims, actions, causes of
action,  suits,  rights,  debts, dues, sums of money,  accounts,  bonds,  bills,
covenants,  contracts,  controversies,   omissions,  judgments,  executions  and
demands  whatsoever in law,  admiralty or equity,  which against the  Conversion
Releasees  Octagon ever had,  now has or which  Octagon,  Octagon's  affiliates,
anyone  claiming  in  a  derivative  capacity  on  behalf  of  Octagon  and  the
predecessors,  successors and assigns of any of them now or hereafter can, shall
or may have,  whether known or unknown,  foreseen or  unforeseen,  liquidated or
unliquidated  and  whether  based  upon  facts now known or  unknown,  direct or
derivative, for, upon or by reason of any matter, cause or thing whatsoever from
the beginning of time to the day of this Agreement,  including,  but not limited
to, any and all rights and claims arising under the Merger Agreement (all of the
foregoing being referred to as the "Octagon  Released  Claims"),  excepting only
all  obligations  of  Conversion  provided  for or  expressly  reserved  in this
Agreement.  Paramount Capital,  Inc. shall be a third-party  beneficiary of this
Section  2(b).  Octagon  hereby  agrees  to  indemnify  and  hold  harmless  the
Conversion  Releasees and each of them from and against any and all liabilities,
losses,  damages,  expenses,  fees (including,  without  limitation,  reasonable
attorneys'  fees and  disbursements),  settlements,  awards or costs of any kind
assessed  against or incurred by them or any of them arising from the  assertion
of any  Octagon  Released  Claim by or 


                                      -3-
<PAGE>

on behalf of Octagon or any of Octagon's  affiliates,  stockholders,  directors,
officers,  employees and agents and each of their  predecessors,  successors and
assigns or anyone who is  entitled to make a claim in a  derivative  capacity on
behalf of Octagon.

     3. Fee for Octagon Past Services.  Conversion  acknowledges that during the
        -----------------------------
Executory Period (as defined in the Merger Agreement),  Octagon provided certain
services to Conversion,  including,  among other things, budget planning, budget
analysis,   market  research,  market  analysis,  sales  support  and  financial
planning.  Conversion  agrees that Octagon shall receive a credit of $558,680 in
respect of such  services,  which is deemed by Conversion and Octagon to be fair
and  adequate  consideration  therefor,  which  amount  shall be offset  against
amounts  owing by Octagon to  Conversion  pursuant  to Section 5 below.  Octagon
agrees that any and all work product  resulting  from such services is "work for
hire",  which is and  shall  remain  the  property  of  Conversion.

     4. Octagon Recruiting Fee. Conversion has expressed a desire to recruit the
        ----------------------
Octagon  executives  listed  below  and  Octagon  will  raise  no  objection  if
Conversion  hires such executives.  Accordingly,  Octagon shall be entitled to a
recruiting  fee,  to be paid  as an  offset  to  amounts  owing  by  Octagon  to
Conversion  pursuant  to  Section  5 below,  in an amount  equal to  twenty-five
percent  (25%) of the  annual  salaries  of the  following  individuals:

                                        Annual Salaries               Fee
                                        ---------------               ---

              1.  Ken Prudhomme       $  72,000 per annum       $   18,000

              2.  Richard Hughes      $  90,000 per annum           22,500

              3.  Jack Hays           $  125,000 per annum          31,250
                                                                    ------

                                    Total                       $   71,750


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<PAGE>

Notwithstanding  the  foregoing,  Octagon  will be  required  to  reimburse  the
recruiting fee of any of the foregoing  individuals who  voluntarily  terminates
his employment with Conversion  during the four-month  period following the date
hereof.

     5. Offset of Note.  The parties  agree that the amounts owing by Conversion
        --------------
to Octagon  pursuant to Sections 3 and 4 above are hereby  satisfied  in full by
offsetting in full the aggregate of $630,430 of  indebtedness  due to Conversion
from Octagon  pursuant to the Loan and Security  Agreement  dated  September 19,
1996, between Conversion and Octagon. Such $630,430 aggregate amount consists of
(i) an aggregate of $255,000 in  outstanding  principal  and $18,788 in interest
accrued  through the date hereof due under the promissory  note of Octagon dated
September 20, 1996 and (ii) $350,000 in principal and $6,642 in interest accrued
through the date hereof due under the promissory note of Octagon dated March 26,
1997,  which amounts are hereby deemed paid in full and discharged.

     6.  Services by Octagon in Favor of  Conversion.  Conversion  has requested
         -------------------------------------------
that Octagon provide  certain  ongoing  services on a fixed fee basis in certain
areas,  including,  among others,  accounting,  human  resources and  regulatory
compliance  services.  Octagon has agreed to provide such services in the manner
and  for  the  sums  specified  immediately  below:

     (a)  Octagon  will  provide  Conversion  with  accounts  payable,  accounts
receivable,  payroll,  financial reporting,  treasury services and audit support
services  for a fixed  monthly fee equal to $13,500.  

     (b) Octagon will provide human resources  expertise to include benefit plan
administration, recruiting and general personnel support for a fixed monthly fee
equal  to  $3,200.  In  addition,  special,  time  intensive  services  (such as
development  of a 401(k) plan) shall be 


                                      -5-
<PAGE>

directed by Octagon's  Vice  President of Human  Resources at a rate of $175 per
hour;  provided that such services shall be agreed upon by Conversion in writing
in advance.  

     (c) Octagon will provide  Conversion  with regulatory  compliance  services
including  environmental  lobbying, EPA support and OSHA support on an as-needed
basis to be provided by John Kolojeski at the rate of $155.00 per hour, provided
that such services shall be agreed upon by Conversion in advance in writing.

     (d) In connection with the services provided pursuant to subparagraphs (a),
(b) and (c) above, Conversion shall also reimburse Octagon for reasonable actual
out-of-pocket  costs incurred in the rendering of such  services,  provided that
Conversion agrees to the incurrence of such expenses in writing in advance.

     (e) The rights and  obligations  of the parties under this Section 5 may be
terminated on not less than 30 days' prior written notice by either party to the
other party. 

     7.  Shared  Facilities   Arrangement.   Conversion  has  requested  to  use
         --------------------------------
facilities,  furniture  and office  equipment of Octagon in Octagon's  Altamonte
Springs,  Florida  office.  Octagon  has agreed to provide  such  facilities  to
Conversion  under the  following  terms:

     (a) Use of 3 to 4 offices in Octagon's facility including related fixtures,
furniture,  office  equipment,  telephone and computer  services.  Reimbursement
shall be based on a payment by  Conversion  equal to Octagon's  rental rate,  in
accordance  with its lease,  multiplied by the number of square feet occupied by
Conversion,  together  with a correlative  share of common area expenses  within
Octagon's space (i.e.,  such things as a  reimbursement  to Octagon for areas of
common use such as kitchen,  restrooms,  office  services  headquarters  and the
like) and Octagon's  external  common area charges as are required to be paid by
Octagon to it landlord under its lease.  Presently,  the parties agree that such
reimbursement  shall be an  aggregate  of


                                      -6-
<PAGE>

$7,500 per month.  In the event of a change of the rental rate,  internal common
area rate and external common area rate,  Conversion  shall be responsible for a
correlative  increase  in the  rates  predicated  upon the  increase  for all of
Octagon's  space  pursuant  to its lease;  provided  that such  change  shall be
effective  only upon 30 days prior  written  notice to  Conversion.  Such shared
facilities services may be cancelled by either party upon not less than 30 days'
advance written notice to the other party.  

     8. No Joint Venture,  Defacto Merger or Complicity.  Anything  contained in
        -----------------------------------------------
this  Agreement  notwithstanding,  the parties  expressly  disclaim  any form of
defacto  merger,  joint  venture  or  other  form of  joint  enterprise  between
Conversion  and Octagon.  Accordingly,  neither  Conversion nor Octagon shall be
liable  for the  debts,  liabilities  or  obligations  of the  other,  nor shall
Conversion  or Octagon  participate  in any way in the profits and losses of the
other.

     9.  Applicable  Law. The rights of all parties  hereunder shall be governed
         ---------------
and decided exclusively by the laws of the State of Delaware.

     10.  Definitions of Terminology  and  Construction.  The parties agree that
          ---------------------------------------------
wherever used in this Agreement, unless the context clearly indicates a contrary
intent  or  unless  otherwise  specifically  provided  therein,   references  to
Conversion,  Octagon and Paramount  Capital,  Inc. shall include their officers,
directors,  employees,  agents,  stockholders,  representatives,  successors and
assigns of the parties  hereof,  and all those holding under either of them. The
pronouns used herein shall  include,  when  appropriate,  either gender and both
singular and plural, and the grammatical construction of sentences shall conform
thereto.

     11. Notices.  In the event of the need to provide notice by either party to
         -------
the  other,  such  notice  shall be given in  writing  and  shall be  personally
delivered or mailed by first class,


                                      -7-
<PAGE>

registered, or certified mail, return receipt requested, postage prepaid, or via
telecopy to the parties at the addresses shown below: 

          (a)     If to Conversion:

                  Attn:  Eckardt C. Beck
                  82 Bethany Road
                  Hazlet, New Jersey 07730
                  Telecopy:  (908) 888-3930
                  Telephone:  (908) 888-7828

                  with a copy to:

                  Perry A. Pappas, Esq.
                  Buchanan Ingersoll
                  500 College Road East
                  Princeton, New Jersey 08540
                  Telepcopy:  (609) 520-0360
                  Telephone:  (609) 987-6800

            (b)   If to Octagon:
                  
                  Attn:  William L. Amt
                  317 South North Lake Boulevard, Suite 1024
                  Altamonte Springs, Florida 32701
                  Telecopy:  407-834-4592
                  Telephone:  407-834-9993

                  with a copy to:

                  Michael J. Sullivan, Esq.
                  Greenberg, Taurig, Hoffman, Lipoff, Rosen & Quental. P.A.
                  1111 N. Orange Avenue
                  Suite 2050
                  Orlando, Florida 32801
                  Telecopy:  (407) 420-5989
                  Telephone:  (407) 418-2376

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<PAGE>

     12. Entire  Agreement.  This Agreement  contains the entire agreement among
         -----------------
the parties  hereto with respect to the subject matter hereof and supersedes all
prior  agreements  and  understandings  between the parties with respect to such
subject  matter.  

     13.  Severability.  In the event that any provision of this Agreement would
          ------------
be held  unenforceable  in any  jurisdiction,  such  provision  shall be  deemed
ineffective  as to such  jurisdiction  without  invalidating  or  causing  to be
unenforceable  the remaining  provisions of this Agreement.

     14. Benefits. This Agreement shall be binding upon and inure to the benefit
         --------
of the parties hereto and their  respective  successors  and assigns;  provided,
however,  that the  services  to be  provided  by Octagon  hereunder  may not be
assigned to another party without the prior written  consent of Conversion.

     15. Counterparts.  This Agreement may be signed in counterparts,  with each
         ------------
counterpart to have the force of an original  instrument,  but all  counterparts
constituting but one agreement.



                                      -9-
<PAGE>

      IN  WITNESS  WHEREOF,  Conversion,  Sub  and  Octagon  have  executed  and
delivered this Agreement on the date first set forth above.
                                          

                                          CONVERSION TECHNOLOGIES
                                            INTERNATIONAL, INC.


                                          By: /s/ Eckardt C. Beck
                                             --------------------------------
                                                Eckardt C. Beck, Chairman


                                          CTI ACQSUB-II, INC.


                                          By: /s/ Eckardt C. Beck
                                             --------------------------------
                                                Eckardt C. Beck, President


                                          OCTAGON, INC.


                                          By: /s/ William L. Amt
                                             --------------------------------
                                                William L. Amt, President