SECURITY AGREEMENT

            SECURITY AGREEMENT, dated as of May 8, 1998, among CONVERSION
TECHNOLOGIES INTERNATIONAL, INC., a Delaware Corporation (the "Company"),
DUNKIRK INTERNATIONAL GLASS AND CERAMICS CORPORATION, a Delaware Corporation
("Dunkirk"), ADVANCED PARTICLE TECHNOLOGIES, INC., a Delaware Corporation
("APT", together with Dunkirk, the "Subsidiaries") (collectively, with the
Company, "Debtors"), and PARAMOUNT CAPITAL ASSET MANAGEMENT, INC., (the "Secured
Party"), solely as agent for the holders (the "Holders") of the Company's Senior
Secured Notes (the "Notes") and not in its individual capacity.

            WHEREAS, The Holders have each extended credit or will extend credit
to the Company represented by separate Notes in an aggregate principal amount of
up to One Million Two Hundred Thousand Dollars ($1,200,000).

            WHEREAS, The Holders have entered into a Senior Secured Line of
Credit Agreement (the "Line of Credit") pursuant to which, among other things,
the Secured Party has been appointed to act as agent under this Agreement for
the benefit of all Holders to secure the obligations of the Debtors to the
Holders under their respective Notes.

            WHEREAS, In consideration of the extension of credit to the Company
under the Notes, the Debtors wishes to grant a security interest in certain
collateral to the Secured Party for the benefit of all Holders.

            NOW, THEREFORE, the parties hereto, intending legally to be bound,
do hereby agree as follows (terms used and not defined herein shall have the
meanings as defined in the Delaware Uniform Commercial Code (the "Delaware
UCC"), the New York General Obligations Law (the "New York UCC") and the Florida
Uniform Commercial Code (the "Florida UCC")):

            1. Grant of a Security Interest. Debtors hereby grant to the Secured
Party for the benefit of all Holders a security interest in the Collateral (as
defined in Section 2).

            2. Collateral. The collateral covered by this Agreement consists of
all property of the following types, wherever located and whether now owned or
hereafter owned or acquired by the Debtors, whether or not affixed to realty, in
all Proceeds and Products thereof in any form, in all parts, accessories,
attachments, special tools, additions, replacements, substitutions and
accessions thereto or therefor, and in all increases or profits received
therefrom, including, without limitation, all of the shares of stock of Dunkirk
and APT, all property described in any schedule from time to time delivered by
the Debtors to the Secured Party: Inventory and Receivables of the Company and
the Subsidiaries now owned and hereafter owned or acquired (all of the
foregoing, including such proceeds, being collectively referred to as the
"Collateral").
<PAGE>

            3. The Debtors' Obligations Secured Hereby. The Debtors' obligations
(the "Obligations") to the Secured Party secured hereby for the benefit of the
Holders are the payment of the principal sum and interest evidenced by the
Notes, and performance and discharge of each and every obligation of the Company
and the Subsidiaries, as the case may be, under this Agreement, the Line of
Credit, the Warrants (as defined in the Line of Credit), the Subsidiary
Guarantee and the Notes.

            4. Debtors Representations and Warranties. Debtors represent and
warrant and, so long as this Security Agreement is in effect, shall be deemed
continuously to represent and warrant, that:

                  (a) Debtors are the sole legal and beneficial owner of the
Collateral free and clear of any liens, security interests, claims, options,
adverse interests, or other encumbrances, except for the security interests
created by this Agreement.

                  (b) Debtors have all necessary corporate power and authority
and have taken all corporate action necessary to execute, deliver and perform
this Agreement and the Notes and to encumber and grant a security interest in
the Collateral.

                  (c) There is no effective financing statement or other
instrument similar in effect covering all or any part of the Collateral on file
in any recording office except as (i) may have been filed in favor of the
Secured Party or (ii) as set forth on Schedule I hereto.

                  (d) This Agreement creates a valid security interest of the
Secured Party in the Collateral securing payment of the Obligations. Upon the
filing of the financing statements and the other instruments similar in effect
under Section 5(b) or the taking of any other action necessary to perfect, the
Secured Party will have valid and perfected first priority liens on and security
interests in the Collateral.

                  (e) No consent, authorization, approval or other action by,
and no notice to or filing with, any governmental authority, regulatory body,
lessor, franchise or other person or entity is required for the grant by Debtors
of the security interest granted hereby or for the execution, delivery or
performance of this Agreement by Debtors or for the perfection or exercise by
the Secured Party of its rights and remedies hereunder, except filings of
financing documents or as otherwise set forth on Schedule I hereto.

                  (f) Debtors do not transact any part of their businesses under
any trade names, division names, assumed names or other names, except for the
names set forth in the preamble or on Schedule I hereto; Debtors' business
addresses and chief executive offices are as set forth on Schedule I hereto; and
Debtors' records concerning the Collateral are kept at such address.

                  (g) Each Account, General Intangible and Chattel Paper
constituting Collateral is genuine and enforceable in accordance with its terms
against the party obligated to pay it (the "Account Debtor"), and no Account
Debtor has any defense, setoff, claim or


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<PAGE>

counterclaim against Debtors which can be asserted against the Secured Party,
whether in any proceeding to enforce the Collateral or otherwise.

                  (h) Debtors will promptly deliver to the Secured Party a
schedule of all Accounts, General Intangibles and Chattel Paper, and will
provide updated schedules thereof from time to time as the Secured Party may
reasonably request, but not more frequently than monthly. The amounts
represented on such schedules by Debtors to the Secured Party as owing by each
Account Debtor or by all Account Debtors are and will be the correct amounts
actually and unconditionally owing by such Account Debtor or Account Debtors
individually and in the aggregate, except for normal cash discounts where
applicable.

                  (i) Each Instrument and each Document constituting Collateral
is genuine and in all respects what it purports to be.

                  (j) Any Collateral which is a Fixture is affixed to real
property at Debtor's addresses specified on Schedule II hereto.

            5. Debtors' Covenants. Debtors agree and covenant for themselves,
their successors and assigns that:

                  (a) The Collateral will be used solely for business purposes
of Debtors and will remain in the possession or under the control of Debtors
(sale or replacement in the ordinary course excepted) and will not be used for
any unlawful purpose. The Collateral will not be misused, abused, wasted or
allowed to deteriorate (ordinary wear and tear excepted). Debtors will keep the
Collateral, as appropriate and applicable, in good condition and repair
(ordinary wear and tear excepted), and will clean, shelter, and otherwise deal
with the Collateral in all such ways as are considered good practice by owners
of like property.

                  (b) Debtors have executed and will promptly file with the
appropriate governmental authorities, or deliver to the Secured Party for
filing, UCC-1 Financing Statements with respect to the Collateral. Debtors
shall, at no cost to the Secured Party, promptly execute, acknowledge and
deliver all such other documents as the Secured Party reasonably deems necessary
to (i) create, perfect and continue the security interest in the Collateral
contemplated hereby, (ii) preserve and protect the rights and remedies
contemplated hereby. Debtors will pay all costs of title searches and filing of
financing statements, assignments and other documents in all public offices
reasonably requested by the Secured Party, and will not, without the prior
written consent of the Secured Party, file or authorize or permit to be filed in
any public office any financing statement naming Debtors as debtors and not
naming the Secured Party, as agent for the Holders, as secured party, except
with respect to other secured indebtedness permitted by the terms of the Notes.

                  (c) Debtors will defend the Collateral against the claims and
demands of all other parties, including, without limitation, defenses, setoffs,
claims and counterclaims asserted by any Account Debtor against Debtors or the
Secured Party, except, as to Inventory, purchasers and lessees in the ordinary
course of Debtors' businesses; will keep the Collateral free


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<PAGE>

from all security interests or other encumbrances, except the Security Interest;
and will not sell, transfer, lease, assign, deliver or otherwise dispose of any
Collateral or any interest therein without the prior written consent of the
Secured Party, except that Debtors may sell or lease Inventory in the ordinary
course of Debtors' businesses and sell, lease or replace equipment in the
ordinary course of business.

                  (d) Debtors will, at the Secured Party's request, mark any and
all books and records to indicate the Security Interest.

                  (e) Debtors will deliver to the Secured Party, upon demand,
all Documents and all Chattel Paper (duly endorsed to Secured Party)
constituting, representing or relating to the Collateral or any part thereof,
and any schedules, invoices, shipping documents, delivery receipts, purchase
orders, contacts or other documents representing or relating to the Collateral
or any part thereof.

                  (f) Debtors will notify the Secured Party promptly in writing
of any change in Debtors' business addresses or chief executive offices, any
change in the address at which records concerning the Collateral are kept and
any change in Debtor's name, identity or corporate or other structure.

                  (g) Debtors will prevent the Collateral or any part thereof
from being or becoming an accession to other goods not covered by this Security
Agreement.

                  (h) Debtors shall pay all out-of-pocket expenses, including
reasonable attorneys' fees and costs, incurred by the Secured Party after or in
reasonable anticipation of the occurrence of an Event of Default in the
preservation, realization, enforcement or exercise of any of the Secured Party's
rights under this Agreement.

                  (i) Any and all Collateral described or referred to in the
granting clauses hereof which is hereafter acquired shall, and without any
further conveyance, assignment or act on the part of Debtors or the Secured
Party, become and be subject to the security interests herein granted as fully
and completely as though specifically described herein, but nothing in this
Section 5(i) shall be deemed to modify or change the obligations of Debtors
under Section 5(b) hereof.

                  (j) Upon request of the Secured Party, forthwith execute and
deliver or cause to be executed and delivered to the Secured Party, in due form
for filing or recording (and pay the cost of filing or recording the same in all
public offices deemed necessary by the Secured Party), such assignments,
security agreements, pledge agreements, consents, waivers, financing statements,
stock or bond powers, and other documents, and do such other acts and things,
all as the Secured Party may from time to time request, to establish and
maintain to the satisfaction of the Secured Party valid perfected liens in all
Collateral (free of all other liens, claims, and rights of third parties
whatsoever, except for Liens, claims, and rights permitted by this Security
Agreement or as set forth on the Schedules hereto).


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<PAGE>

            6. Certain Provisions Concerning Collateral.

                  (a) After the occurrence of an Event of Default (as defined
below), the Secured Party may notify all or any Account Debtors of the security
interest created hereby and may also direct such Account Debtors to make all
payments on Collateral to the Secured Party. All payments on and from Collateral
received by the Secured Party directly or from Debtors shall be applied to the
Obligations in accordance with Section 9. The Secured Party may demand of
Debtors in writing, before or after notification to Account Debtors and without
waiving in any manner the security interest created hereby, that any payments on
and from the Collateral received by Debtors: (i) shall be held by Debtors in
trust for the Secured Party in the same medium in which received; (ii) shall not
be commingled with any assets of Debtors; and (iii) shall be delivered to
Secured Party in the form received, properly endorsed to permit collection, not
later than the next business day following the day of their receipt; and Debtors
shall comply with such demand. Debtors shall also promptly notify the Secured
Party of the return to or repossession by Debtors of Goods underlying any
Collateral, other than returns or repossession in the ordinary course of
Debtors' businesses, and shall hold the same in trust for the Secured Party and
shall dispose of the same as Secured Party directs.

                  (b) If any Collateral consists of investment securities,
Debtors have delivered and will continue to deliver such securities to the
Secured Party to be held as Collateral and, after an Event of Default,
authorizes the Secured Party to transfer the same or any part thereof into its
own name or that of its nominee so that the Secured Party or its nominee may
appear of record as the sole owner thereof. Upon demand, Debtors shall deliver
promptly to the Secured Party copies of all notices, statements or other
communications received by them or their nominees as owner of such securities.

                  (c) Until the occurrence of an Event of Default, Debtors
reserve the right to receive all income from or interest on the Collateral. Upon
the occurrence of an Event of Default, Debtors will not demand or receive any
income from or interest on such Collateral and, if Debtors receive any such
income or interest without any demand by it, the same shall be held by Debtors
in trust for the Secured Party in the same medium in which received, shall not
be commingled with any assets of Debtors and shall be delivered to the Secured
Party in the form received, properly endorsed to permit collection, not later
than the next business day following the day of its receipt. The Secured Party
may apply the net cash receipts from such income or interest to payment of the
Obligations, provided that the Secured Party shall account for and pay over to
Debtors any such income or interest remaining after payment in full of the
Obligations.

                  (d) Whether or not an Event of Default has occurred, Debtors
authorize the Secured Party to (i) receive any increase in or profits on the
Collateral (other than Inventory, in the case where no Event of Default has
occurred) (including, without limitation, any stock issued as a result of any
stock split or dividend, any capital distributions and the like), and to hold
the same as part of the Collateral, (ii) receive any payment or distribution on
the Collateral upon redemption by, or dissolution and liquidation of, the issuer
thereof, (iii) surrender such Collateral or any part thereof in exchange
therefor, and (iv) hold the net cash receipts from any such payment or
distribution described in clause (ii) hereof as part of the Collateral. If
Debtors


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<PAGE>

receive any such increase, profits, payments or distributions, Debtors will
receive and deliver same promptly to the Secured Party on the same terms and
conditions set forth in Section 6(b) hereof respecting income or interest, to be
held by the Secured Party as part of the Collateral.

            7. Events of Default. The occurrence of any "Events of Default"
under the Line of Credit shall constitute an "Event of Default" under this
Security Agreement.

            8. Remedies on Default. (a) Upon the occurrence of an Event of
Default the Secured Party may, by notice to Debtors (or automatically in the
case of an Event of Default pursuant to Section 5 of the Note not requiring
notice), declare the aggregate unpaid principal balance of all the Notes,
together with all unpaid accrued interest thereon, to be immediately due and
payable and thereupon all such amounts shall be and become immediately due and
payable to the Secured Party for the benefit of the Holders. Upon such
acceleration, the Secured Party, for the benefit of the Holders, shall have all
rights, privileges, powers and remedies provided a secured party under the
Delaware UCC, the New York UCC and the Florida UCC and any other applicable law.
Upon the existence or occurrence of an Event of Default, the Secured Party may
require Debtors to assemble the Collateral and make it available to the Secured
Party at a place or places designated by the Secured Party, and the Secured
Party may use and operate the Collateral.

                  (b) Without in any way requiring notice to be given in the
following time and manner, Debtors agree that any notice by the Secured Party of
sale, disposition or other intended action hereunder or in connection herewith,
whether required by the Delaware UCC, the New York UCC, the Florida UCC or
otherwise, shall constitute reasonable notice to Debtors if such notice is
mailed by regular or certified mail postage prepaid, at least seven (7) business
days prior to such action, to Debtors' addresses specified in Schedule I hereto
or to any other addresses which Debtors have specified in writing to the Secured
Party as the address to which notices hereunder shall be given to Debtors.

                  (c) After an Event of Default, the Secured Party may demand,
collect and sue on any of the Accounts, Chattel Paper, Instruments and General
Intangibles (in either Debtor's or the Secured Party's name at the latter's
option); may enforce, compromise, settle or discharge such Collateral without
discharging the Obligations or any part thereof; and may indorse Debtors' name
on any and all checks, commercial paper, and any other Instruments pertaining to
or constituting Collateral.

            9. Payments After an Event of Default. All payments received and
amounts realized by the Secured Party pursuant to Section 8, including all such
payments and amounts received after the entire unpaid principal and interest
amount of the Notes has been declared due and payable, as well as all payments
or amounts then held or thereafter received by the Secured Party as part of the
Collateral while an Event of Default shall be continuing, shall be promptly
applied and distributed by the Secured Party in the following order of priority:

                  (a) first, to the payment of all costs and expenses, including
reasonable legal expenses and attorneys' fees, incurred or made hereunder by the
Secured Party, and/or by


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any other Holder or Holders, including any such costs and expenses of
foreclosure or suit, if any, and of any sale or the exercise of any other remedy
under Section 8, and of all taxes, assessments or liens superior to the lien
granted under this Security Agreement, except any taxes, assessments or other
superior lien subject to which any said sale under Section 8 hereof may have
been made; and

                  (b) second, to the payment to each Holder of the amount then
owing or unpaid on such Holder's Note, and in case the payments received and
amounts realized by the Secured Party shall be insufficient to pay in full the
whole amount so due, owing or unpaid upon all the Notes, then ratably, in the
proportion that the unpaid principal amount of each Note bears to the aggregate
unpaid principal amount of all Notes, and in the proportion that the amount of
interest accrued under each Note bears to the aggregate amount of interest
accrued under all the Notes, with application on each Note to be made first to
the unpaid interest thereon, and second, to the unpaid principal thereof, such
application to be made upon presentation of the Notes and the notation thereon
of the payment, if partially paid, or the surrender and cancellation thereof, if
fully paid; and

                  (c) third, to the payment of the balance or surplus, if any,
to Debtors, its successors and assigns, or to whomever may be lawfully entitled
to receive the same.

            10. Power of Attorney. Debtors hereby appoint the Secured Party the
attorney-in-fact of Debtors to prepare, sign and file or record, for Debtors in
Debtors' name, any financing statement and to take any other action reasonably
deemed by the Secured Party necessary or desirable to perfect and continue the
perfection of the security interest of the Secured Party hereunder, and to
perform any obligations of Debtors hereunder, at Debtors' expense, but without
obligation to do so. Such power of attorney is coupled with an interest and is
irrevocable so long as this Agreement is in effect.

            11. Secured Party's Right to Cure; Reimbursement. In the event
Debtors should fail to do any act as herein provided, the Secured Party may, but
without obligation to do so, with notice to Debtors, and without releasing
Debtors from any obligation hereof, make or do the same in such manner and to
such extent as the Secured Party may deem necessary to protect the Collateral,
including, without limitation, the defense of any action purporting to affect
the Collateral or the rights or powers of the Secured Party hereunder, at
Debtors' expense. Debtors shall reimburse the Secured Party for expenses
reasonably incurred under this Section 11.

            12. Miscellaneous. (a) This Agreement, together with the covenants
and warranties contained in it, shall inure to the benefit of the Secured Party,
the Holders and their respective successors, assigns, heirs and personal
representatives, and shall be binding upon Debtors, its successors and assigns.

                  (b) Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail or similar
overnight delivery or courier service or delivered against receipt to the party
to whom it is to be given (i) if to Debtors, at their


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<PAGE>

addresses set forth in Schedule I hereto to the attention of its President or
(ii) if to the Secured Party, at its address set forth in the preamble of this
Agreement, to the attention of its Chairman. Any notice or other communication
given by certified mail shall be deemed given at the time of certification
thereof, except for a notice changing a party's address which shall be deemed
given at the time of receipt thereof. Any notice given by other means permitted
by this Section 11(b) shall be deemed given at the time of receipt thereof.

                  (c) This Agreement shall terminate on the satisfaction in full
of all of the Obligations and, on such termination, the Secured Party shall
release to Debtors the security interest granted in the Collateral hereunder;
provided, that if, after receipt of any payment of all or any part of the
Obligations, the Secured Party is for any reason compelled to surrender such
payment to any person or entity, because such payment is determined to be void
or voidable as a preference, impermissible setoff, or a diversion of trust
funds, or for any other reason, this Agreement shall continue in full force
notwithstanding any contrary action which may have been taken by the Secured
Party in reliance upon such payment, and any such contrary action so taken shall
be without prejudice to the Secured Party's rights under this Agreement and
shall be deemed to have been conditioned upon such payment having become final
and irrevocable.

                  (d) If any provision of this Agreement is invalid, illegal, or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.

                  (e) The headings in this Agreement are solely for convenience
of reference and shall be given no effect in the construction or interpretation
of this Agreement.

                  (f) This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

                  (g) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

                  (h) No course of dealing and no delay or omission on the part
of the Secured Party in exercising any right or remedy shall operate as a waiver
thereof or otherwise prejudice the Secured Party's rights, powers or remedies.
No right, power or remedy conferred by this Agreement upon the Secured Party
shall be exclusive of any other right, power or remedy referred to herein or now
or hereafter available at law, in equity, by statute or otherwise, and all such
remedies may be exercised singly or concurrently.

                  (i) This Agreement sets forth the entire understanding of the
parties with respect to the subject matter hereof, supersedes all existing
agreements among them concerning such subject matter, and may be modified only
by a written instrument duly executed by each party.


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<PAGE>

                  (j) Debtors irrevocably consent to the jurisdiction of the
courts of the State of New York and of any federal court located in such State
in connection with any action or proceeding arising out of or relating to this
Agreement, any document or instrument delivered pursuant to, in connection with
or simultaneously with this Agreement, or a breach of this Agreement or any such
document or instrument. In any such action or proceeding, Debtors waive personal
service of any summons, complaint or other process and agrees that service
thereof may be made in accordance with Section 12(b). Within 30 days after such
service, or such other time as may be mutually agreed upon in writing by the
attorneys for the parties to such action or proceeding, Debtors shall appear or
answer such summons, complaint, or other process.

                  (k) This Agreement may be amended, or any of its provisions
waived only by a written instrument executed by the Company and the Secured
Party.


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<PAGE>

      IN WITNESS WHEREOF, the parties have executed this Security Agreement on
the date set forth above.

PARAMOUNT CAPITAL ASSET                   ADVANCED PARTICLE     
MANAGEMENT, INC.                          TECHNOLOGIES, INC.    
                                                                
By: /s/ Lindsay A. Rosenwald              By: /s/ William Amt
    -----------------------------             -----------------------
Name:  Lindsay A. Rosenwald, M.D.         Name:  William Amt
Title: President                          Title: President      

CONVERSION TECHNOLOGIES                   DUNKIRK INTERNATIONAL GLASS
INTERNATIONAL, INC.                       AND CERAMICS CORPORATION   
                                                                     
By: /s/ William Hurt                      By: /s/ William Amt
    -----------------------------             -----------------------
Name:  William Hurt                       Name:  William Amt
Title: President                          Title: President           


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<PAGE>

                                   Schedule I

       Fixture Collateral Affixed to Financing Statements - Section 4(c)

                                      None

                Trade Names, Division Names, Etc - Section 4(f)

                      Business Addresses - Section 4 (f)

Conversion Technologies International, Inc. Advanced Particle Technologies, Inc.
3452 Lake Lynda Drive, Suite 280            7 San Bartola Drive                 
Orlando, Florida 32817                      St. Augustine, Florida 32086        

               Dunkirk International Glass & Ceramics Corporation
                              181 Stegelske Avenue
                                  Dunkirk, NY
                                     14048

                     Chief Executive Offices - Section 4(f)

                  Conversion Technologies International, Inc.
                        3452 Lake Lynda Drive, suite 280
                             Orlando, Florida 32817

                                   Schedule I
<PAGE>

                                  Schedule II

           Fixture Collateral Affixed to Real Property - Section 4(j)

                                      NONE

                                  Schedule II