IMSCO Technologies, Inc.
                                40 Bayfield Drive
                             North Andover, MA 01845


                                                                   July 31, 1998




Sands Brothers & Co., Ltd.
90 Park Avenue
New York, New York 10016

Gentlemen:

         The    undersigned,    IMSCO    Technologies,    Inc.,    a    Delaware
corporation (together with any of its  subsidiaries,  affiliates,  successors or
assigns  the  "Company"),  proposes  to offer  for sale to  certain  "accredited
investors",  through  Sands  Brothers & Co.,  Ltd.,  as placement  agent ("Sands
Brothers" or the "Placement  Agent") in an "all-or-none"  private  placement,  a
minimum of $500,000 (the  "Minimum  Amount") and a maximum of  $10,000,000  (the
"Maximum  Amount") of (a) the  Company's  capital stock  (whether  Common Stock,
Preferred Stock or any combination thereof) (collectively, the "Capital Stock"),
at a price to be mutually agreed upon and (b) capital lease,  operating lease or
equipment  lease  financing on behalf of the Company or any form of  commercial,
institutional  or bank debt financing  transactions  (hereinafter,  collectively
"Other  Financing").  The  Securities  (as  hereinafter  defined)  to be offered
pursuant to the Offering Documents (as hereinafter  defined) and Other Financing
transactions   to  be  consummated   are  sometimes   hereinafter   referred  to
collectively as the "Financing" or the "Offering".

         The closing (the  "Closing") of the Financing shall not occur until the
Company has, in any  combination,  received and accepted  subscriptions  for the
purchase of  Securities  and/or  consummated  Other  Financing  transactions  in
amounts equal to the Minimum Amount.





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<PAGE>




         The Securities  will be offered  pursuant to those terms and conditions
acceptable  to  you  and  your  counsel  as  reflected  in  the  final  form  of
Confidential  Private  Placement  Memorandum  of the Company  and/or "long form"
subscription  agreement for  institutional  investors  only  (together  with the
exhibits and any supplements thereto, the "Memorandum").  The Securities will be
offered  pursuant to the Memorandum in accordance  with Regulation D promulgated
under the Securities Act of 1933, as amended (the "Securities Act").

         Each   prospective   investor   subscribing   to  purchase   Securities
("Subscriber")  will be required to deliver,  among other things, a subscription
agreement ("Subscription Agreement") and an investment suitability questionnaire
("Questionnaire")  in the forms to be  provided,  representing  and  warranting,
among other things,  that such  Subscriber is an  "accredited  investor" as such
term is defined in Regulation D.

         The Memorandum and the form of proposed Subscription  Agreement between
the  Company  and  each  Subscriber  and  the  exhibits  which  are  part of the
Memorandum  (including,  without  limitation,  the Registration Rights Agreement
between  the  Company  and  each of the  Subscribers  with  respect  to  certain
registration   rights  under  the  Securities  Act  (the  "Registration   Rights
Agreement")) and/or  the   Subscription   Agreement   are   referred  to  herein
collectively as the "Offering Documents."

         The  Securities  will be offered  for minimum  subscription  amounts of
$100,000 on a "best efforts",  basis,  exclusively by Sands Brothers;  PROVIDED,
HOWEVER,  that the Company  and the  Placement  Agent may, in their  discretion,
accept subscriptions for a lesser amount from a Subscriber.

         The  Company  will  prepare  and  deliver  to  the  Placement  Agent  a
reasonable  number of copies of the  Offering  Documents  in form and  substance
satisfactory  to the Placement Agent and its counsel,  which Offering  Documents
shall include reviewed financial statements for such periods as may be required.

         Capitalized  terms used herein,  unless otherwise defined or unless the
context  otherwise  indicates,  shall  have the same  meanings  provided  in the
Memorandum.





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<PAGE>




         1. APPOINTMENT OF PLACEMENT  AGENT. You are hereby appointed  exclusive
Placement Agent of the Company during the offering period herein  specified (the
"Offering Period") for the purposes of assisting the Company on a "best efforts"
basis in finding  qualified  Subscribers  for the purchase of Securities  and to
identify  potential  sources to engage in Other Financing  transactions with the
Company in connection  with the Offering.  The Offering Period shall commence on
the date of delivery and  acceptance  by the Placement  Agent of the  Memorandum
("Commencement  Date") and shall  continue until the earlier to occur of (i) the
sale of the Minimum Amount;  or (ii) 90 days from the Commencement  Date (as the
same may be extended by the Placement Agent for an additional 60 days or another
period  to be  determined  by  mutual  consent  of the  Placement  Agent and the
Company).  If the  Minimum  Amount is not sold prior to the end of the  Offering
Period,  the Offering will be terminated and all finds received from Subscribers
and held in a special  non-interest  bearing escrow  account (the  "Account") at
Republic  National  Bank,  New York,  New York (the  "Bank")  will be  returned,
without deduction or accrued interest thereon. You hereby accept such agency and
agree to assist the Company in finding qualified Subscribers for the purchase of
Securities in connection with the Offering and to identify  potential sources to
engage in Other Financing  transactions  with the Company in connection with the
Offering.  Your agency  hereunder is not  terminable by the Company  except upon
termination of the Offering.

         As  part  of the  Placement  Agent's  exclusive  representation  of the
Company  with  respect to the  Offering,  the  Placement  Agent shall assist the
Company in identifying  potential  investors and sources of Other  Financing and
shall on behalf of the  Company,  contact  such  potential  investors  and other
potential  investors as the Company may  designate.  In addition,  the Placement
Agent shall assist the Company in  structuring,  negotiating  and  effecting the
Offering.  The  Company  agrees  that,  during  the  course  of  the  engagement
hereunder,  neither it, nor any of its  management,  nor any of its  affiliates,
shall initiate any  discussions  with third parties with respect to the Offering
and to the extent any of such persons receives an inquiry from any third parties
concerning the Offering or any other financing related to the Company, they will
promptly identify to the Placement Agent the name of such person and the date of
such initial contact.




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<PAGE>





         2.   REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.   The  Company
represents and warrants as follows:

              (a)  SECURITIES  LAW  COMPLIANCE.  The  Offering  Documents,  upon
delivery,  will conform in all respects with the  requirements of the Securities
Act and  Regulation D promulgated  thereunder and with the  requirements  of all
other  published  rules and  regulations  of the United  States  Securities  and
Exchange Commission (the "Commission")  currently in effect relating to "private
offerings"  and/or  "accredited  investors"  of  the  type  contemplated  by the
Company.  The  Offering  Documents  will not  contain an untrue  statement  of a
material  fact or omit to state a material  fact  necessary in order to make the
statements  therein,  in the light of the  circumstances  under  which they were
made, not misleading. The Offering Documents will not be amended or supplemented
and no amendment or supplement thereto will be made without the prior consent of
the Placement Agent.

              (b) ORGANIZATION. The Company, and each of the companies under its
control  (each a  "Subsidiary",  and  collectively,  the  "Subsidiaries"),  is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation  and has all requisite  corporate power and
authority to own and lease its properties, to carry on its business as currently
conducted  and as proposed to be conducted.  The Company and each  Subsidiary is
duly  qualified  to do  business  in the  states or  jurisdictions  set forth on
Schedule 2(b). Except as set forth in Schedule 2(b), there is no jurisdiction in
which the conduct of the  Company's  or  Subsidiary's  business or  ownership or
leasing of its  properties  requires  it to be  qualified  to do  business  as a
foreign corporation,  except where such qualifications have been obtained or the
failure  to be so  qualified  would not have a  material  adverse  effect on the
business,  financial  condition or prospects of the Company or such  Subsidiary.
The Company has all  requisite  power and  authority to execute and deliver this
Agreement and to carry out the transactions contemplated by this Agreement.

              (c) CAPITALIZATION.

                    (i) The authorized,  issued and outstanding capital stock of
the Company prior to the consummation of the Closing of



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<PAGE>




the transactions  contemplated by the Offering is set forth on Schedule 2 (c)(i)
hereto. Each such share is validly paid, fully paid and nonassessable. Except as
set forth on Schedule 2 (c)(i),  there are no other  classes of capital stock or
other securities authorized by the Company.

                    (ii) The authorized, issued and outstanding capital stock of
the Company  immediately  upon the  consummation  of the Closing shall be as set
forth on Schedule 2 (c)(ii)  hereto,  such  Schedule to be  recalibrated  by the
Company to reflect the sale of Securities at the Closing.

                    (iii)  The  Company  has  no   obligation   (contingent   or
otherwise) to pay any dividend or make any other  distribution in respect of any
of its  capital  stock.  The Company is not a party to and there exist no voting
trusts or agreements,  stockholders'  agreements,  pledge  agreements,  buy-sell
agreements, rights of first refusal or proxies relating to any securities of the
Company (whether or not the Company is a party thereto).  All of the outstanding
securities of the Company were issued, in all material  respects,  in compliance
with all  applicable  federal  and state  securities  laws.  The  Company has no
obligation (contingent or otherwise) to repurchase,  redeem or otherwise acquire
any shares of its capital stock.

                    (iv)  The   stockholders   of  record  and  the  holders  of
subscriptions,  warrants, options, preemptive rights, convertible securities and
other rights  (contingent or otherwise) to purchase or otherwise  acquire equity
securities  of the  Company,  and the number of shares of  capital  stock of the
Company  and the number of such  subscriptions,  warrants,  options,  preemptive
rights,  convertible  securities  and other such rights held by each, are as set
forth in  Schedule  2(c)(iv)  hereto.  The  designations,  powers,  preferences,
rights, privileges,  qualifications,  limitations and restrictions in respect of
each class and series of  authorized  capital  stock of the  Company  are as set
forth in the Certificate of  Incorporation  and all such  designations,  powers,
preferences,  rights, privileges,  qualifications,  limitations and restrictions
are valid,  binding and  enforceable  in  accordance  with all  applicable  laws
(subject,  as to  enforcement,  to the  discretion  of the  courts  in  awarding
equitable  relief  and to  applicable  bankruptcy,  reorganization,  insolvency,
moratorium and similar laws affecting the rights of creditors generally). Except
as



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<PAGE>




disclosed  in Schedule 2 (c)(iv),  no person owns of record,  or is known to the
Company to own  beneficially,  any share of  capital  stock of the  Company;  no
subscription, warrant, option, preemptive right, convertible security, agreement
or other right (contingent or otherwise) to purchase or otherwise acquire equity
securities  of the  Company  is  authorized  or  outstanding;  and  there  is no
commitment by the Company to issue  shares,  subscriptions,  warrants,  options,
preemptive rights,  convertible securities or other such rights or to distribute
to holders of any of its equity securities any evidence of indebtedness or asset
other than the  Placement  Agent  Warrants and the  Investment  Banking (each as
hereinafter  defined and  collectively  the "Sands  Warrants").  An  appropriate
number of shares of the Common Stock have been  reserved  for issuance  upon the
conversion or exercise, as the case may be, of any of the securities referred to
in this Section.  All of the outstanding  securities of the Company were issued,
in all material  respects,  in compliance with all applicable  federal and state
securities  laws.  The Company has no  obligation  (contingent  or otherwise) to
repurchase, redeem or otherwise acquire any shares of its capital stock.

              (d) SUBSIDIARIES AND INVESTMENTS.  Except as set forth in Schedule
2(d)  hereto,  the Company  does not own,  directly or  indirectly,  any capital
stock,  or  other  equity  ownership  or  proprietary  interest,  in  any  other
corporation,  association,  trust,  partnership,  joint venture or other entity.
Each Subsidiary is wholly owned by the Company.

              (e) FINANCIAL  STATEMENTS.  The consolidated  balance sheet of the
Company as of  December  31,  1997 (the "1997  Balance  Sheet")  and the related
consolidated  statements of  operations,  shareholders  equity and statements of
cash flow for the fiscal year ended  December 31, 1997 audited by Moore  Stevens
LLP and the unaudited  consolidated  balance sheet (the "June Balance Sheet") of
the  Company as of June 30, 1998 (the  "Balance  Sheet  Date"),  and the related
unaudited  consolidated  statements  of  operations,   shareholders  equity  and
statements  of cash  flow for the  three  month  period  ending  June  30,  1998
(collectively,  the "Financial  Statements"),  have heretofore been delivered to
the Placement Agent. Except as may be otherwise indicated therein, the Financial
Statements have been prepared in conformity with Generally  Accepted  Accounting
Principles  consistently  applied and present fairly the financial  position and
results of operations



                                       6
<PAGE>




of the Company as of the dates and for the periods  indicated.  Except as may be
otherwise  indicated herein,  the Financial  Statements of the Company as of the
dates  indicated,  and for the periods then ended,  present fairly the financial
position and results of operations of the Company (and its  Subsidiaries)  as of
the dates and for the periods indicated.

              (f)  KEEPING OF RECORDS  AND BOOKS OF  ACCOUNT.  The  Company  has
maintained and shall continue to maintain adequate records and books of account,
in which complete  entries will be made in accordance  with  Generally  Accepted
Accounting   Principles,   consistently   applied,   reflecting   all  financial
transactions  of the Company  and in which,  for each  fiscal  year,  all proper
reserves for depreciation,  depletion,  obsolescence,  amortization,  taxes, bad
debts and other  purposes in  connection  with its business  shall be made.  The
records  and books of  account  of the  Company  are in good order and have been
properly maintained in all material respects.

              (g) ACCESS TO CORPORATE DOCUMENTS. The minute books of the Company
and of its  Subsidiaries  have been made  available to the  Placement  Agent and
contain a complete  summary of all  meetings  and actions of the  directors  and
stockholders of the Company or of its Subsidiaries, respectively, since the time
of their respective  incorporation  and reflect all transactions  referred to in
such minutes accurately in all respects.

              (h)  ABSENCE  OF  UNDISCLOSED  LIABILITIES.  The  Company  has  no
material   outstanding   claims,   liabilities,   obligations  or  indebtedness,
contingent or otherwise, whether asserted or unasserted,  except as set forth in
the  June  Balance  Sheet  or  referred  to in  any of the  notes  thereto.  All
liabilities  of the  Company and its  Subsidiaries  incurred  subsequent  to the
Balance Sheet Date have been incurred in the ordinary  course of business and do
not involve borrowings which individually exceed $50,000 and which do not exceed
$100,000  in the  aggregate.  Neither the  Company  nor its  Subsidiaries  is in
default in respect of the terms or conditions of any indebtedness.

              (i) ABSENCE OF CHANGES.  Since the Balance Sheet Date, the Company
and its Subsidiaries have operated in the ordinary course of business consistent
with past  practice.  Since the Balance  Sheet Date,  and except as set forth in
Schedule 2(i) hereto,



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<PAGE>




there has not occurred  (i) any change in the  financial  condition,  results of
operations,  assets,  liabilities  or business of the Company or any  Subsidiary
which,  in the  aggregate,  was  materially  adverse;  (ii)  to the  best of the
Company's  knowledge,  any other event or condition of any  character  which can
reasonably  be  expected  to  materially   and  adversely   affect  the  assets,
properties, financial condition, operating results or business of the Company or
of any Subsidiary (as such business is presently conducted and as it is proposed
to be conducted, as the same shall be described in the Memorandum); or (iii) any
commitment (contingent or otherwise) to do any of the foregoing.

              (j) ACCOUNTS  RECEIVABLE.  The accounts  receivable of the Company
reflected on the June Balance Sheet, and all accounts  receivable of the Company
arising  since the Balance Sheet Date,  are not subject to discount  (other than
discounts and allowances  provided by normal trade terms),  rebate or offset and
have arisen from bona fide transactions in the ordinary course of business.

              (k) TITLE TO PROPERTIES; ENCUMBRANCES.

                    (i) Except for properties  and assets  reflected in the June
Balance  Sheet or acquired  since the Balance Sheet Date which have been sold or
otherwise  disposed of in the ordinary  course of business  since such date, the
Company and each of its Subsidiaries has good, valid and marketable title to (A)
all of its properties and assets (personal, tangible and intangible), including,
without limitation,  all the properties and assets reflected in the June Balance
Sheet, except as indicated in the notes thereto;  and (B) all the properties and
assets purchased or otherwise acquired by the Company or by any Subsidiary since
the Balance Sheet Date; in each case clear of all encumbrances,  liens,  claims,
charges or other  restrictions  of whatever  kind or  character,  except for (1)
liens  reflected  in the June  Balance  Sheet and (2) liens for  current  taxes,
assessments  or  governmental  charges  or  levies on  property  not yet due and
delinquent.

                    (ii) The Company and its  Subsidiaries own no real property.
To the  best  of  the  Company's  knowledge  after  due  inquiry,  there  are no
condemnation,  environmental,  zoning or other land use regulation  proceedings,
either instituted or planned to be instituted,  which would adversely affect the
use or



                                       8
<PAGE>




operation of the Company's and its Subsidiaries; properties and assets for their
respective  intended uses and purposes or the value of such properties,  and the
Company and its Subsidiaries have not received notice of any special  assessment
proceedings which would affect such properties and assets.

              (l) CONDITION OF EQUIPMENT, MACHINERY AND FIXTURES. The equipment,
machinery  and  fixtures  utilized by the Company  and its  Subsidiaries  in the
conduct of their business are in good operating  condition and are fit for their
intended purpose.

              (m) LEASED  PROPERTY.  Each real  property and  personal  property
lease or sublease to which the Company or any of its  Subsidiaries is a party is
valid and binding and is in full force and effect;  all rent and other sums, and
charges  payable by the  Company or by each  Subsidiary  as lessee or  sublessee
thereunder,  are  current  through  the  last day of the  immediately  preceding
calendar  month;  no  notice  of  default  or  termination  under  any  lease is
outstanding; no termination event or condition or uncured default on the part of
the Company or any  Subsidiary,  or the  landlord,  exists under any lease;  the
Company  and  its  Subsidiaries  currently  occupy  or use the  premises  leased
pursuant to the real property leases; and no event has occurred and no condition
exists  which  with the  giving of  notice  or the lapse of time or both,  would
constitute  such a  default  or  termination  event or  condition.  Neither  the
Company,  nor its  Subsidiaries,  nor any of the  officers or  directors  of the
Company or of its Subsidiaries has any ownership, financial or other interest in
the landlord  under any real  property  lease.  Each lease was  negotiated on an
arm's-length basis.

              (n) INVENTORIES. All inventory reflected in the June Balance Sheet
of the Company and of its Subsidiaries and all inventory acquired by the Company
and by its Subsidiaries  subsequent to the Balance Sheet Date, were acquired and
have been  maintained in accordance with the regular  business  practices of the
relevant entity,  consists of items of quality and quantity  reasonably expected
to be useable or saleable in the  ordinary  course of business  consistent  with
past practice,  are valued in accordance with United States  Generally  Accepted
Accounting Principles,  and such inventory which is known or reasonably believed
to be  obsolete  or slow  moving has been  adequately  reserved  to reduce  such
inventory to net realizable value.



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<PAGE>




Subject to amounts reserved therefor on the Financial Statements,  the values at
which all inventories of the Company and of its Subsidiaries (collectively,  the
"Inventories")  are carried on the Financial  Statements  reflect the historical
inventory  valuation  policy of the Company and of its  Subsidiaries  of stating
such  Inventories.  at the lower of cost (determined on the first-in,  first-out
method) or market value and all Inventories are valued such that the Company and
its  Subsidiaries  will earn  its/their  customary  gross margins  thereon.  The
Company has good and marketable  title to the Inventories  free and clear of all
encumbrances.  The  Inventories do not consist of any items held on consignment.
The  Company is under no  obligation  or  liability  with  respect to  accepting
returns of items of Inventory or  merchandise in the possession of its customers
other than in the ordinary course of business consistent with past practice.  No
clearances or extraordinary sale of the Inventories has been conducted since the
Balance  Sheet  Date.  Neither  the  Company  or  any of  its  Subsidiaries  has
manufactured Inventory for sale which is not of a quality and quantity usable in
the  ordinary  course of business  consistent  with past  practice  and within a
reasonable period of time nor has the Company or any of its Subsidiaries changed
the price of any Inventory except (i) for reductions to reflect any reduction in
the  cost  thereof  to the  Company  or to any of  its  Subsidiaries;  (ii)  for
reductions  and  increases  responsive  to  normal  competitive  conditions  and
consistent with the Company's or the  Subsidiaries'  past sales  practices;  and
(iii) to reflect  any  increase  in the cost  thereof  to the  Company or to the
Subsidiaries.  The  Inventories  are in good and  merchantable  condition in all
material  respects,  are suitable and usable for the purposes for which they are
intended  and are in a  condition  such  that  they can be sold in the  ordinary
course of business consistent with past practice.

              (o) PATENTS,  TRADEMARKS AND COPYRIGHTS,  ETC. The Company and its
Subsidiaries  own or are  licensed or  otherwise  entitled  to use all  patents,
trademarks,  trade  names,  service  marks,  copyrights,  technology,  know-how,
processes and other intellectual property used in the conduct of its business as
currently  conducted  and as  proposed  to be  conducted.  The  Company  and its
Subsidiaries  have  received no notice of any claims,  have no  knowledge of any
threatened claims, and know of no facts which would form the basis of any claim,
asserted  by any  person,  to the effect  that the sale or use of any product or
process now used or



                                       10
<PAGE>




offered by the Company or any  Subsidiary  infringes on any patents or infringes
upon the use of any such  trademarks,  trade names,  service marks,  copyrights,
technology, know-how, processes or other intellectual property of another person
or challenges or questions the validity or  effectiveness of any such license or
agreement.  The sale and use of any such  products and  processes by the Company
and its Subsidiaries,  and the use of any such patents, trademarks, trade names,
service marks, copyrights, technology, know-how, processes or other intellectual
property by the Company and its Subsidiaries, does not infringe on the rights of
any person.

              (p) LITIGATION. There is no action, suit, investigation,  customer
complaint,  claim or proceeding at law or in equity by or before any arbitrator,
governmental  instrumentality  or other agency now pending or threatened against
or affecting  the Company or any  Subsidiary,  nor, to the best of the Company's
knowledge,  does there  exist any basis  therefor.  Neither  the Company nor any
Subsidiary is subject to any judgment,  order, writ, injunction or decree of any
federal, state, municipal or other governmental department,  commission,  board,
bureau,  agency or instrumentality,  domestic or foreign.  The Company agrees to
promptly  notify the Placement  Agent of the  commencement  of any litigation or
proceedings  against  the  Company  or any  Subsidiaries  or  any  of  its/their
respective  officers or directors in connection with the sale of the transaction
contemplated in the Offering Documents.

              (q)  NON-DEFAULTS;  NON-CONTRAVENTION.  Except  as  set  forth  in
Schedule 2(q) hereto,  neither the Company nor its Subsidiaries is in default in
the  performance or observance of any  obligation  (i) under its  Certificate of
Incorporation, as amended, or its By-laws, or any indenture, mortgage, contract,
purchase order or other  agreement or instrument to which the Company is a party
or by which it or any of its property is bound or affected; or (ii) with respect
to any order,  writ,  injunction  or decree of any court of any federal,  state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign and there exists no condition, event or act
which  constitutes,  nor which after  notice,  the lapse of time or both,  would
constitute, a default under any of the foregoing.

              (r) EMPLOYMENT OF OFFICERS, EMPLOYEES AND CONSULTANTS. To the best
of the Company's knowledge, no third party may assert



                                       11
<PAGE>




any valid claim against the Company or its Subsidiaries  with respect to the (i)
continued employment by, or association with, the Company or its Subsidiaries of
any of its present  officers,  employees or consultants;  or (ii) the use by the
Company  or its  Subsidiaries  of  any  information  which  the  Company  or its
Subsidiaries  would be  prohibited  from  using  under any prior  agreements  or
arrangements  or any laws  applicable  to unfair  competition,  trade secrets or
proprietary information.

              (s)  TAXES.  The  Company  and its  Subsidiaries  have  filed  all
federal,  state, local and foreign tax returns which are required to be filed by
them,  and all such returns are true and correct in all material  respects.  The
Company and its  Subsidiaries  have paid all taxes  pursuant to such  returns or
pursuant to any assessments received by them and have withheld all amounts which
they are obligated to withhold  from amounts owing to any employee,  creditor or
third party. The tax returns of the Company and of its  Subsidiaries  have never
been  audited by any state,  local or federal  authorities.  The Company and its
Subsidiaries have not waived any statute of limitations with respect to taxes or
agreed  to any  extension  of  time  with  respect  to  any  tax  assessment  or
deficiency. All tax elections have been made by the Company and its Subsidiaries
in accordance with generally accepted practices.  No deficiency  assessment with
respect to or proposed adjustment of the Company's and its Subsidiaries federal,
state,  county  or  local  taxes is  pending  or,  to the best of the  Company's
knowledge,  threatened.  There is no tax lien,  whether  imposed by any federal,
state,  county  or local  taxing  authority,  outstanding  against  the  assets,
properties  or  business  of the  Company or of its  Subsidiaries.  Neither  the
Company nor any of its Subsidiaries nor any of its/their  respective  present or
former  stockholders has ever filed an election  pursuant to Section 1362 of the
Internal Revenue Code of 1986, as amended (the "Code"),  that the Company or any
of its Subsidiaries be taxed as an S corporation.

              (t)  AGREEMENTS.  Except as set  forth in  Schedule  2(t)  hereto,
neither  the  Company  nor any  Subsidiary  is a party  to any  written  or oral
contract not made in the ordinary course of business and, whether or not made in
the ordinary course business,  neither the Company nor any Subsidiary is a party
to any written or oral contract,  agreement,  arrangement or understanding which
is material to the business of the Company or



                                       12
<PAGE>




to the business of any  Subsidiary  or which is material to, and which a prudent
investor would need to review in order to make an informed  investment  decision
with respect to the purchase of the Securities  offered pursuant to the Offering
Documents.  Each material  contract of the Company or of any of its Subsidiaries
is valid and  binding on the  Company or on such  Subsidiary,  and  neither  the
Company nor any of its  Subsidiaries  has received notice that any such contract
is not  binding on any party  thereto.  The Company  and its  Subsidiaries  have
performed in all material  respects all  obligations  to have been  performed on
such  contracts  through  the date  hereof,  and  neither  the  Company  nor any
Subsidiary is in default in any material  respect under any such contract.  Each
material  contract  of the  Company or of any of its  Subsidiaries  is valid and
binding  on the  Company or the  respective  Subsidiary  and the  Company or the
respective  Subsidiary  has not  received  notice that any such  contract is not
binding on any party  thereto.  The  Company  and each of its  Subsidiaries  has
performed in all material  respects all  obligations  to have been  performed on
such  contracts  through  the  date  hereof  and  the  Company  and  each of its
Subsidiaries is not in default in any material respect under any such contract.

              (u) COMPLIANCE WITH LAWS;  ENVIRONMENTAL MATTERS,  LICENSES,  ETC.
The Company and its Subsidiaries have received no notice of any violation of, or
noncompliance  with,  any federal,  state,  local or foreign  laws,  ordinances,
regulations  or  orders  (including,   without  limitation,  those  relating  to
environmental  protection,  occupational safety and health and other labor laws,
ERISA, federal drug laws, federal securities laws, equal employment opportunity,
consumer protection,  credit reporting,  "truth-in-lending,"  and warranties and
trade  practices)  applicable to its business or the business of any Subsidiary,
the violation of, or  noncompliance  with which,  would have a material  adverse
effect on the Company's business or operations,  or that of any Subsidiary,  and
the Company knows of no facts or set of  circumstances  which would give rise to
such a notice.  The Company and its  Subsidiaries  have all licenses and permits
and other  governmental  certificates,  authorizations and permits and approvals
(collectively, "Licenses") required by every federal, state and local government
or  regulatory  body for the  operation  of their  business and the use of their
properties.  The Licenses are in full force and effect and no violations  are or
have been recorded in respect of any License and no proceeding is pending



                                       13
<PAGE>




or threatened to revoke or limit any thereof.  The Company and its  Subsidiaries
have not received any written opinion or memorandum from legal counsel providing
that it/they has taken any action which has resulted in, or is reasonably likely
to result in, the Company or any of its  Subsidiaries  incurring  any  liability
which may be material to its/their  respective  business,  prospects,  financial
condition,  operations,  property or affairs.  The Company and its  Subsidiaries
shall  comply with all  applicable  laws,  rules,  regulations  and orders,  the
noncompliance with which could materially  adversely affect its/their respective
business or condition, financial or otherwise.

              (v) AUTHORIZATION OF AGREEMENT,  ETC. Each of this Agreement,  the
Offering Documents and all other agreements or documents required to be executed
and delivered by the Company in connection with the Offering  (collectively  the
"Ancillary  Documents")  has been or will be duly  executed and delivered by the
Company  and the  execution,  delivery  and  performance  by the Company of this
Agreement and the Ancillary  Documents has been duly authorized by all requisite
corporate action by the Company; and each constitutes,  or will constitute,  the
legal,  valid and binding  obligation of the Company,  enforceable in accordance
with  its  terms,  except  as  enforceability  may  be  limited  by  bankruptcy,
insolvency,   reorganization,   usury  or  other  similar  laws   affecting  the
enforcement  of  creditors'  rights  generally.  The  execution,   delivery  and
performance  of this  Agreement  and the  issuance,  sale  and  delivery  of the
Securities,  and the issuance and delivery of the Common Stock upon  exercise of
the Sands Warrants (the "Reserved  Shares"),  will not (i) violate any provision
of law or  statute  or any  order of any  court or other  agency  of  government
binding on the Company or its  Subsidiaries;  or (ii) conflict with or result in
any breach of any of the terms, conditions or provisions of, or constitute (with
due notice or lapse of time or both) a default under,  or result in the creation
of any lien, security interest, charge or encumbrance upon any of the properties
or  assets of the  Company  or of its  Subsidiaries  under  the  Certificate  of
Incorporation,  as amended,  or By-Laws of the Company or of its Subsidiaries or
any indenture,  mortgage,  lease  agreement or other  agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which it or any of
its property is bound or affected,  except for such conflict,  breach or default
as to which requisite waivers or consents shall



                                       14
<PAGE>




have been  obtained by the Company or by its  Subsidiaries  and delivered to the
Subscribers by the time of Closing.

              (w) AUTHORIZATION OF SECURITIES AND SANDS WARRANTS.  The issuance,
sale and  delivery  of the  Securities  and the  Sands  Warrants  have been duly
authorized by all requisite corporate action of the Company, and when so issued,
sold and delivered,  (i) the shares of Common Stock and Reserved  Shares will be
validly  issued and  outstanding,  duly executed and  delivered,  fully paid and
nonassessable,  free and  clear of all  liens,  charges,  claims,  encumbrances,
restrictions  or preemptive  or any other  similar  rights and the Company shall
have paid all taxes, if any, in respect of the issuance thereof;  (ii) the Sands
Warrants  will be validly  issued and  outstanding,  duly  executed,  issued and
delivered,  fully paid and nonassessable,  free and clear of all liens, charges,
claims, encumbrances, restrictions or preemptive or any other similar rights and
the  Company  shall have paid all  taxes,  if any,  in  respect of the  issuance
thereof;  and (iii) neither the shares of Common Stock,  nor the Sands  Warrants
will be subject to preemptive or any other similar rights of the shareholders of
the Company or others  which rights shall not have been waived prior to the time
of acceptance by the Company of the first Subscriber's  Subscription  Agreement.
The  offer  and  sale  of  the  Securities  is  exempt  from  the   registration
requirements  of the  Securities Act and the rules and  regulations  promulgated
thereunder and the Securities  will be issued in compliance  with all applicable
federal securities laws.

              (ww)  AUTHORIZATION  OF RESERVED  SHARES.  The issuance,  sale and
delivery by the Company of the Reserved  Shares have been duly authorized by all
requisite  corporate  action of the Company,  and the Reserved  Shares have been
duly reserved for issuance upon exercise of all or any of the Securities and the
Sands Warrants and when so issued, sold and delivered,  the Reserved Shares will
be validly issued and outstanding,  duly executed,  issued and delivered,  fully
paid  and  nonassessable,   free  and  clear  of  all  liens,  charges,  claims,
encumbrances,  restrictions  or preemptive  or any other similar  rights and the
Company  shall have paid all taxes,  if any, in respect of the issuance  thereof
and the  Reserved  Shares  will not be  subject to any  preemptive  or any other
similar rights of the  shareholders  of the Company or others which rights shall
not have been waived prior to the time of



                                       15
<PAGE>




acceptance by the Company of the first Subscriber's Subscription Agreement.

              (x)  RELATED  TRANSACTIONS.   Except  as  set  forth  on  Schedule
2(x)hereto, no current or former shareholder,  director,  officer or employee of
the Company,  nor any affiliate of any such person,  is presently,  or since the
inception of the Company has been,  directly or indirectly,  through his, her or
its  affiliation  with any other person or entity,  a party to any loan from the
Company or from any of its Subsidiaries.

              (y) REGISTRATION  RIGHTS.  Except as may exist with respect to the
holders of the  Securities and the Sands  Warrants,  (i) no person or entity has
any right to cause the Company to effect the  registration  under the Securities
Act of any  securities  of the  Company  and (ii) no person or entity  holds any
anti-dilution  or "piggy  back"  rights with  respect to any  securities  of the
Company.

              (z) SALARIES AND BONUSES. Schedule 2(z) hereto contains a true and
complete  list of all current  officers,  directors and employees of the Company
and of its  Subsidiaries  who received during the fiscal year ended December 31,
1997  remuneration from the Company or from any of its Subsidiaries in excess of
$50,000,  together  with the  current  aggregate  base salary rate for each such
person.

              (AA) INSURANCE. All insurable assets and properties of the Company
and its  Subsidiaries  are  insured,  for the  benefit  of the  Company  and its
Subsidiaries,  against all risks usually  insured  against by persons  owning or
operating  similar  properties  in the  localities  where  such  properties  are
located,  through insurance  policies all of which are in full force and effect.
The Company and each  Subsidiary  are insured,  for their  benefit,  against all
claims  relating  to their  services  to the same  extent that the risks of such
claims are usually insured against by persons providing  similar services.  Each
of the insurance policies referred to in this Section is issued by an insurer of
recognized  responsibility,  and neither the  Company nor its  Subsidiaries  has
received  any notice or threat of the  cancellation  or  nonrenewal  of any such
policy.  The  Company  will make  available  to the  Placement  Agent,  upon its
request, a list of all insurance



                                       16
<PAGE>




coverage carried by the Company or its  Subsidiaries,  the carrier and the terms
and amount of coverage.

              (BB) EMPLOYEE BENEFIT PLANS.

                (i)  WELFARE  PLANS.  Each  welfare  plan of the Company and its
        Subsidiaries  is in compliance  with the applicable  provisions of ERISA
        and the Internal  Revenue Code of 1986,  as amended  (the  "Code").  The
        Company  and  each  Subsidiary  have  no  contingent,  future  or  other
        obligations  or  liabilities  under or with  respect to any welfare plan
        which  provides for the  continuation  of benefits at the expense of the
        Company or any  Subsidiary  after  retirement  or other  termination  of
        employment.

                (ii) PENSION PLANS. Each pension plan of the Company and of each
        Subsidiary is in compliance with the applicable  provisions of ERISA and
        the Code including,  without limitation,  any applicable minimum funding
        requirements. There have been no reportable events within the meaning of
        Section 4043 of ERISA with respect to any pension  plan. In the event of
        the  termination of all pension plans,  the Company and each  Subsidiary
        would have no liability under Sections 4062, 4063 or 4064 of ERISA.

                (iii) EFFECT OF TRANSACTIONS. The execution and delivery of this
        Agreement  by the  Company  and  the  consummation  of the  transactions
        contemplated  hereby will not involve any prohibited  transactions  with
        respect to the Company or any of its Subsidiaries  within the meaning of
        ERISA.

              (CC)   BROKERS.   The  Company  has  not,  nor  have  any  of  its
Subsidiaries, or any of its/their respective officers,  directors,  employees or
shareholders,  employed any broker or finder in connection with the transactions
contemplated by this Agreement, other than Sands Brothers.

              (DD) NO MATERIAL CHANGES.  Since the Balance Sheet Date, there has
not been any change in the condition,  financial or otherwise, of the Company or
of any of its  Subsidiaries,  which  could  adversely  affect the ability of the
Company or the ability of any of its  Subsidiaries  to conduct its operations to
be



                                       17
<PAGE>




described  in the  Offering  Documents  and  neither  the Company nor any of its
Subsidiaries  have incurred any material  liabilities or obligations,  direct or
contingent,  not in the ordinary  course of business  since such  Balance  Sheet
Date.

              (EE)  ISSUANCE  OF OTHER  SECURITIES.  Except as set forth in this
Agreement, there are no preemptive or other rights to subscribe for or purchase,
or any restriction upon the voting or transfer of, any shares of Common Stock or
any other  securities of the Company,  under the Certificate of Incorporation or
ByLaws, or any agreement or other outstanding instrument to which the Company or
any of its Subsidiaries is a party or by which it/they is bound.  Except for the
Securities and the Sands Warrants or as set forth in this Agreement, neither the
Company  nor  any of its  Subsidiaries  has  outstanding  any  option,  warrant,
convertible  security,  or other right  permitting or requiring it to issue,  or
others to purchase or convert any obligation into, shares of Common Stock or any
other  securities  of the  Company,  and  neither  the  Company  nor  any of its
Subsidiaries has agreed to issue or sell any shares of Common Stock or any other
securities of the Company.

              (FF) NO CONSENTS.  No permit,  consent,  approval,  authorization,
order or  filing  with any  court  or  governmental  authority  is  required  to
consummate the  transactions  contemplated  by this  Agreement,  except that the
offer and sale of the Securities in certain  jurisdictions may be subject to the
provisions of the securities or Blue Sky laws of such jurisdictions.

              (GG) INFORMATION.  The Company and its Subsidiaries  shall provide
the holders of the Securities  with the  information,  if any,  specified in the
Memorandum.

              (HH) RESTRICTIVE  AGREEMENTS  PROHIBITED.  Neither the Company nor
any of its Subsidiaries shall become a party to any agreement which by its terms
restricts the Company's performance of this Agreement.

              (II)   CHANGE  IN  NATURE  OF   BUSINESS.   The  Company  and  its
Subsidiaries  shall not, without the prior approval of a majority of their Board
of Directors, make any material change in the



                                       18
<PAGE>




nature of its/their respective  businesses as the same shall be set forth in the
Memorandum.

              (JJ) CORPORATE  EXISTENCE.  The Company and its Subsidiaries shall
maintain  their  corporate  existence,  rights and  franchises in full force and
effect.

              (KK)  TITLE TO  SECURITIES.  When  certificates  representing  the
Securities shall have been duly delivered to the Subscribers,  payment therefore
will become due, and to the extent such payment  shall have been made  therefor,
the several  Subscribers  shall have good and marketable title to the Securities
free and clear of all liens, encumbrances and claims whatsoever, and the Company
shall have paid all taxes, if any, in respect of the issuance thereof.

              (LL) EMPLOYEE RELATIONS.  Each of the Company and its Subsidiaries
has generally  enjoyed a satisfactory  employer-employee  relationship  with its
employees and is in compliance with all federal,  state, local, and foreign laws
and  regulations  respecting  employment  and  employment  practices,  terms and
conditions   of   employment   and  wages  and  hours.   There  are  no  pending
investigations  involving  the  Company or any of its  Subsidiaries  by the U.S.
Department  of  Labor,  or any other  governmental  agency  responsible  for the
enforcement  of such federal,  state,  local,  or foreign laws and  regulations.
There is no unfair labor practice charge or complaint against the Company or its
Subsidiaries  pending before the National Labor  Relations  Board or any strike,
picketing,  boycott, dispute, slowdown or stoppage pending or threatened against
or involving the Company or its  Subsidiaries,  or any predecessor  entity,  and
none has  ever  occurred.  No  representation  question  exists  respecting  the
employees  of the Company or the  employees of any of its  Subsidiaries,  and no
collective  bargaining  agreement or  modification  thereof is  currently  being
negotiated  by the Company or its  Subsidiaries.  No  grievance  or  arbitration
proceeding  is pending  under any  expired  or  existing  collective  bargaining
agreements of the Company or any of its Subsidiaries.  No labor dispute with the
employees of the Company or its Subsidiaries exists, or, is imminent.

              (MM) FOREIGN  CORRUPT  PRACTICES  ACT.  None of the  Company,  its
Subsidiaries nor to their knowledge any of their respective officers, employees,
agents or any other person acting on behalf



                                       19
<PAGE>




of the Company or any of its Subsidiaries has, directly or indirectly,  given or
agreed to give any  money,  gift or similar  benefit  (other  than  legal  price
concessions  to customers in the ordinary  course of business) to any  customer,
supplier,  employee or agent of a customer or supplier,  or official or employee
of any  governmental  agency  (domestic  or foreign) or  instrumentality  of any
government  (domestic or foreign) or any political party or candidate for office
(domestic  or foreign) or other  person who was,  is, or may be in a position to
help or  hinder  the  business  of the  Company  or the  business  of any of its
Subsidiaries  (or to assist the Company or any of its Subsidiaries in connection
with any actual or proposed  transaction) which (a) might subject the Company or
any of its  Subsidiaries,  or any other such person, to any damage or penalty in
any civil,  criminal or  governmental  litigation  or  proceeding  (domestic  or
foreign); (b) if not given in the past, might have had a material adverse effect
on  the  assets,  business  or  operations  of  the  Company  or of  any  of its
Subsidiaries;  or (c) if not continued in the future, might adversely affect the
assets,   business,   operations   or  prospects  of  the  Company  and  of  its
Subsidiaries,  taken  as  a  whole.  The  Company  believes  that  its  and  its
Subsidiaries'  international  accounting  controls are  sufficient  to cause the
Company and its Subsidiaries to comply with the Foreign Corrupt Practices Act of
1977, as amended.

              (NN)  AFFILIATIONS.  Except as set forth in Schedule 2(NN) hereto,
no officer,  director  or  shareholder  of the  Company or officer,  director or
shareholder of any of its  Subsidiaries,  or any  "affiliate" or "associate" (as
these terms are defined in Rule 405 promulgated under the Rules and Regulations)
of any such person or entity or of the Company or its  Subsidiaries,  has or has
had, either directly or indirectly (i) an interest in any person or entity which
(A) furnishes or sells  services or products  which are furnished or sold or are
proposed  to be  furnished  or sold by the Company or its  Subsidiaries;  or (B)
purchases  from or sells or furnishes to the Company or any of its  Subsidiaries
any  goods or  services;  or (ii) a  beneficiary  interest  in any  contract  or
agreement to which the Company or any of its Subsidiaries is a party or by which
it may be bound or affected. Except as set forth in Schedule 2(OO) hereto, there
are no existing  agreements,  arrangements,  understandings or transactions,  or
proposed agreements,  arrangements,  understandings or transactions,  between or
among the Company or



                                       20
<PAGE>




any of its Subsidiaries,  and any officer, director, or principal stockholder of
the Company or any of its  Subsidiaries,  or any  affiliate  or associate of any
such person or entity.

              (OO)  CORPORATE  REPRESENTATIONS.  Any  certificate  signed by any
officer of the Company or by an officer of any of the Company's Subsidiaries and
delivered to the Placement Agent or to the Placement Agent's counsel pursuant to
this Agreement, shall be deemed a representation and warranty by the Company and
by any of its  Subsidiaries  to the  Placement  Agent as to the matters  covered
thereby.

              (PP) ESCROW ARRANGEMENTS. Pursuant to paragraph 3(e)(i) hereof, if
the Closing does not take place before the  termination of the Offering  Period,
the  Company  will  instruct  the Bank to return  the  funds to the  Subscribers
without any deduction or interest thereon.

              (QQ) CONFIDENTIAL  ARRANGEMENTS.  The Company and its Subsidiaries
agree to take reasonable precautions in protecting the confidentiality,  privacy
and security of the  business  contacts  identified  by the  Placement  Agent by
taking  appropriate  administrative  and managerial action, and to use its/their
respective  best efforts to prevent  disclosure of such property  information to
any all persons and  entities.  The Company and each of its  Subsidiaries  agree
that, without the expressed written consent of the Placement Agent, it/they will
not initiate,  respond or otherwise abide any contract with any person, company,
institution,  professional  association,  nor other  entity to which it has been
introduced or with whom it has become acquainted in the course of doing business
with the other party.  The Company and each of its  Subsidiaries  agrees to hold
completely confidential the name, address,  telephone,  telex, facsimile number,
account or other  business  number of such contact as may be  introduced  by the
Placement  Agent.  The above  restrictions  apply to any  subsequent  follow up,
repeated or  extended  or  renegotiation  transactions  related to the  Offering
regardless of the results of the Offering.

              (RR)  DISCLOSURE.  Neither this Agreement nor any other  document,
certificate  or written  statement to be furnished to the  Subscribers  by or on
behalf of the Company in connection with the transactions  contemplated  hereby,
including the Offering



                                       21
<PAGE>




Documents,  contains or will contain any untrue  statement of a material fact or
omits  or will  omit to state a  material  fact  necessary  in order to make the
statements  contained herein and therein not misleading.  There is no fact known
to the  Company  which  adversely  affects  the  business  operations,  affairs,
prospects,   conditions,   properties  or  assets  of  the  Company  or  of  its
Subsidiaries (hereinafter "Material Facts") which has not been set forth in this
Agreement.  To the extent Material Facts become known to the Company  subsequent
to the date hereof, such facts will be set forth in the Memorandum and/or in the
other documents,  certificates or statements  furnished to the Subscribers by or
on behalf of the Company pursuant hereto.

         3.  REPRESENTATIONS,  WARRANTIES AND COVENANTS OF THE PLACEMENT  AGENT.
The Placement Agent represents, warrants and covenants as follows:

              (a) AUTHORIZATION OF AGREEMENT,  ETC. This Agreement has been duly
and validly authorized,  executed and delivered by or on behalf of the Placement
Agent.

              (b) COMPLIANCE  WITH THE SECURITIES  ACT. The Placement Agent will
not knowingly take any action which will result in the Securities  being offered
or sold in a manner which does not comply with the  provisions  of  Regulation D
under the Securities Act.

              (c) COMPLIANCE WITH OFFERING  DOCUMENTS.  The Placement Agent will
offer the Securities in accordance with the Offering  Documents and will deliver
the Offering  Documents to each Subscriber before accepting a signed copy of the
Subscription Agreement or payment for any Securities.

              (d) COMPLIANCE  WITH LAWS OF  JURISDICTIONS.  The Placement  Agent
will offer the Securities only in those  jurisdictions  in which it is permitted
to sell  the  Securities  pursuant  to the  laws of said  jurisdiction,  and the
Placement  Agent may arrange for the Securities to be offered by a broker/dealer
or  offshore  or domestic  facilitator(s),  in which event the Company  shall be
responsible  for  fees of such  facilitator(s)  up to  three  (3%) of the  gross
offering proceeds of investors arranged by such facilitator(s).





                                       22
<PAGE>




              (e) ESCROW ARRANGEMENTS.

                   (i) The Placement Agent will promptly  deposit funds received
from  Subscribers  in the Account with the Bank and hold the funds in accordance
with the terms of this Agreement and hold the Offering Documents for the benefit
of the  Subscribers  and the  Company.  The Bank shall  release  funds from such
Account only upon receipt of instruction executed by each of the Placement Agent
and the Company.  If the Closing does not take place before the  termination  of
the Offering  Period,  the Placement  Agent will instruct the Bank to return the
funds to the Subscribers without any deduction or interest thereon.

                   (ii) In the event the  Placement  Agent has  deposited  funds
from any  Subscriber  into the Account and the  Company  exercises  its right to
reject such  Subscriber's  funds, in whole or in part, the Placement Agent shall
be entitled  to payment by the  Company of a sum equal to the fees and  expenses
due by the terms of this  Agreement  and  entitled to issuance by the Company of
the  Placement  Agent  Warrants  that the  Placement  Agent would have  received
pursuant to sub-paragraphs 4(d) and 4(e) of this Agreement, respectively.

         4. CLOSING; PLACEMENT AND FEES.

              (a) CLOSING. The initial Closing of the Financing shall take place
at the offices of the Placement Agent, 90 Park Avenue, New York, New York 10016,
at a time and date agreed upon between the Placement  Agent and the Company upon
the (i) receipt of  Subscription  Agreements  and related  documents in form and
substance  satisfactory to the Company and the Placement Agent and (ii) delivery
of  documentation  evidencing the  consummation of Other Financing  transactions
which,  in the cases of (i) or (ii)  individually,  or in the  aggregate (in any
combination),  are  equal to or are in  excess  of the  Minimum  Amount.  At the
initial and  subsequent  Closing(s),  payment for the  Securities  shall be made
against delivery of certificates  representing the Securities sold. All proceeds
received  from the sale of the  Securities  sold after the initial  Closing date
will continue to be deposited in the Account  maintained with the Bank until the
occurrence of additional Closing(s).

              (b) PROCEDURES AT CLOSING. At each Closing:




                                       23
<PAGE>





                   (i)  The  Placement   Agent  on  behalf  of  itself  and  the
Subscribers  shall receive the opinion of [ ] ("Company  Counsel"),  in form and
substance acceptable to the Placement Agent.

                   (ii) At the Closing, the Placement Agent will have received a
signed  letter  from [ ],  confirming  that such firm is an  independent  public
accountant  within the  meaning of the  Securities  Act and  stating  that:  (i)
insofar as reported on by such firm, in their opinion,  the financial statements
of the Company included in the Memorandum  (including,  without limitation,  the
Financial  Statements)  comply  as to form in all  material  respects  with  the
applicable  accounting  requirements of the Securities Act; (ii) on the basis of
procedures and inquiries  (not  constituting  an examination in accordance  with
generally  accepted  auditing  standards)  consisting  of a reading  of the last
available  financial  statements  of the  Company,  inquiries of officers of the
Company  responsible for financial and accounting matters as to the transactions
and events subsequent to the Balance Sheet Date, and a reading of the minutes of
meetings  of the  shareholders,  the Board of  Directors  of the Company and any
committees  of the Board of  Directors,  as set forth in the minute books of the
Company,  nothing has come to their attention  which,  in their judgment,  would
indicate  that (A) during the period from the Balance  Sheet Date to a specified
date not more  than five (5)  business  days  prior to the date of such  letter,
there have been any material  decreases  in net current  assets or net assets as
compared with amounts shown in such Financial  Statements or material  decreases
in net sales or in total or per share net loss compared  with the  corresponding
period in the preceding  year or any change in the  capitalization  or long-term
debt of the  Company or of any of its  Subsidiaries,  except in all cases as set
forth  in or  contemplated  by the  Memorandum;  and (B) the  unaudited  interim
financial  statements of the Company,  if any, appearing in the Memorandum,  are
not presented in conformity with Generally  Accepted  Accounting  Principles and
Practices  on a  basis  substantially  consistent  with  the  audited  financial
statements  included in the  Memorandum;  and (iii) they have compared  specific
dollar amounts,  numbers of shares,  numerical data, percentages of revenues and
earnings, and other financial information pertaining to the Company set forth in
the  Memorandum  (with  respect  to  all  dollar  amounts,  numbers  of  shares,
percentages and other



                                       24
<PAGE>




financial  information  contained  in the  Memorandum,  to the extent  that such
amounts,  numbers,  percentages  and information may be derived from the general
accounting  records of the Company,  and excluding  any  questions  requiring an
interpretation  by legal counsel) with the results obtained from the application
of  specified  readings,  inquiries  and  other  appropriate  procedures  (which
procedures  do not  constitute  an  examination  in  accordance  with  generally
accepted  auditing  standards) set forth in the letter,  and found them to be in
agreement.

                   (iii)  Counsel for the  Placement  Agent and Company  Counsel
shall receive  certificates from the Company,  signed by the President or a Vice
President  thereof,  certifying  (A) that  the  representations  and  warranties
contained in Section 2 hereof are true and accurate at the Closing with the same
effect as though expressly made at the Closing; and (B) that attached thereto is
(1) a true and correct copy of  resolutions  adopted by the  Company's  Board of
Directors  authorizing  (i) the  execution,  delivery  and  performance  of this
Agreement and the Ancillary  Documents,  and (ii) the issuance of the Securities
and the  Sands  Warrants  and  certifying  that such  resolutions  have not been
modified,  rescinded or amended and are in full force and effect; and (2) a true
and correct copy of a resolution adopted by the Company's Board of Directors and
by each of the Company's Subsidiaries,  authorizing the execution,  delivery and
performance of each document to which it is a party,  and that such  resolutions
have not been modified, rescinded or amended and are in full force and effect.

                   (iv) There shall be  delivered  on behalf of each  Subscriber
one copy of the Subscription Agreement signed by each Subscriber and one copy of
the Questionnaire signed by each Subscriber.

                   (v) The Placement  Agent shall have received  certificates of
good standing of the Company,  dated as of a recent date,  from the Secretary of
State of the jurisdiction of its incorporation and certificates of good standing
of each  of the  Company's  Subsidiaries,  dated  as of a  recent  date,  by the
Secretary of State of the jurisdictions of incorporation of the Subsidiaries.




                                       25
<PAGE>





                   (vi) At the Closing the  Placement  Agent shall  instruct the
Bank to pay to the Company out of the funds on deposit in the  Account,  as such
funds are received from Subscribers whose Subscriptions have been accepted.

              (c) BLUE SKY. Where  appropriate,  counsel for the Placement Agent
shall  prepare a summary  blue sky  survey  stating  the extent to which and the
conditions  upon which offers and sales of the Securities may be made in certain
jurisdictions.   Blue  Sky  applications  shall  be  made  in  such  states  and
jurisdictions  as shall be requested by the  Placement  Agent.  It is understood
that such  survey may be based on or rely upon (i) the  representations  of each
Subscriber set forth in the Subscription Agreement delivered by such Subscriber;
(ii) the  representations,  warranties  and agreements of the Company and of its
Subsidiaries set forth herein;  (iii) the  representations and warranties of the
Placement Agent set forth herein;  and (iv) the  representations  of the Company
and of its  Subsidiaries  set forth in the  certificate  to be  delivered at the
Closing pursuant to paragraph 4(b)(iii) hereof.

              (d) PLACEMENT FEE AND EXPENSES.

                   (i) At each  Closing,  the Company shall pay to the Placement
Agent a commission equal to ten (10%) percent of the aggregate  proceeds derived
from the  Financing.  In addition,  the Company shall pay the Placement  Agent a
non-accountable  and  non-refundable  expense  allowance,  equal to  three  (3%)
percent of the aggregate  proceeds derived from the Financing.  Prior to or from
the  proceeds  of the  Closing,  the  Company  shall pay all  Placement  Agent's
expenses in connection with the proposed  Offering,  including,  but not limited
to,  reasonable  counsel  expenses  and fees of  counsel to the  Company  and of
counsel to the Placement Agent,  disbursements and fees,  reasonable  accountant
expenses,  disbursements  and fees,  filing  fees,  business  and  investigatory
expenses,  printing  costs,  postage and mailing  expenses  with  respect to the
transmission  of the Offering and  Ancillary  Documents,  registrar and transfer
agent fees,  issue and transfer taxes, if any, and counsel fees of the Placement
Agent  in  connection  with  the  qualification  of  the  Securities  under  the
securities  or blue sky laws of the  states  which  the  Placement  Agent  shall
designate.  The  Company  also  shall  pay for the costs of  placing  "tombstone
advertisements" in any publications which



                                       26
<PAGE>




may be selected by the  Placement  Agent,  all costs and expenses in  connection
with the establishment and maintenance of the Account referred to in paragraph 1
of this Agreement,  and all other costs and expenses incident to the performance
of its obligations  hereunder which are not otherwise  specifically provided for
in this paragraph 4(d), including the cost of transaction memorabilia determined
at the reasonable discretion of the Placement Agent.

              (e)  ISSUANCE OF  PLACEMENT  AGENT  WARRANTS.  At each  Closing as
provided in paragraph 4(a) above, the Company shall issue to the Placement Agent
or its  designee(s),  warrants to purchase up to 100,000  shares of Common Stock
for each $1 million (or portion thereof)  raised,  at an exercise price of $1.50
per share (the "Placement Agent  Warrants").  The Placement Agent Warrants shall
be exercisable  for five (5) years,  commencing upon the date of their issuance.
The Placement  Agent Warrants shall be in the form attached hereto as Exhibit B,
and will be governed by the terms of the Warrant  Agreement  attached  hereto as
Exhibit A. The certificates representing the Placement Agent Warrants will be in
such  denominations  and such names as the Placement  Agent may request prior to
each closing.

              (f)  PLACEMENT  AGENT'S  DECISION  NOT  TO  PROCEED,  ETC.  If the
Placement Agent decides not to proceed with the Offering  because of a breach by
the Company or by its Subsidiaries of its/their representations,  warranties, or
covenants in this Agreement, or as a result of adverse changes in the affairs of
the Company or of its Subsidiaries, the Company shall pay Sands Brothers the sum
of One Hundred and Fifty Thousand ($150,000) Dollars.

         5. COVENANTS OF THE COMPANY.

              (a) AMENDMENTS AND SUPPLEMENTS.  The Company  covenants and agrees
that,  until  the  Offering  contemplated  by the  Offering  Documents  has been
completed  or  terminated,  if  there  shall  occur  any  event  relating  to or
affecting,  among other things,  the Company,  any of its  Subsidiaries,  or the
proposed operations of the Company or of any of its Subsidiaries as described in
the Offering Documents,  as a result of which it is necessary, in the opinion of
the Placement Agent and its counsel or Company  Counsel,  to amend or supplement
the Offering  Documents in order that the Offering Documents will not contain an
untrue statement



                                       27
<PAGE>




of a material fact or omit to state a material  fact  necessary in order to make
the statements  therein, in the light of the circumstances under which they were
made, not misleading,  the Company shall immediately  prepare and furnish to the
Placement Agent a reasonable number of copies of an appropriate  amendment of or
supplement to the Offering Documents,  in form and substance satisfactory to the
Placement Agent and its counsel.

              (b) USE OF  PROCEEDS.  The net  proceeds  of the  Offering  of the
Securities  will  be  used  by the  Company,  as  more  fully  described  in the
Memorandum, for the purposes to be set forth in the Memorandum.

              (c) EXPENSES OF OFFERING.  The Company shall be  responsible  for,
and shall bear all expenses directly and necessarily incurred in connection with
the proposed financing,  including,  but not limited to, the costs of preparing,
printing  and  filing  the  Offering  and  Ancillary  Documents  to be  used  in
connection  with  the  Offering  contemplated  hereby  and  all  amendments  and
supplements thereto; preparing, printing and delivering exhibits to the Offering
and Ancillary Documents;  preparing, printing and delivering all Placement Agent
and selling  documents,  including,  but not limited to, this  Agreement and the
blue sky memorandum, the Share certificates,  blue sky fees, filing fees and the
fees and  disbursements of the Placement  Agent's counsel and the other fees and
expenses set forth above.  As promptly as  practicable  after the final  Closing
date, the Company shall prepare, at its own expense,  hard cover "bound volumes"
relating to the Offering  and will  distribute  such volumes to the  individuals
designated by counsel to the Placement Agent.

              (d) RESERVATION OF COMMON STOCK. The Company will reserve and keep
available the maximum  number of its  authorized  but unissued  Reserved  Shares
which are issuable upon exercise of the Sands Warrants.

              (e) NO SENIOR  SECURITIES.  In the event any  Securities  are sold
hereunder,  the Company  shall not,  without the approval of the holder(s) of at
least a majority-in-interest of such shares then outstanding, by vote or written
consent, authorize, issue or enter into any agreement providing for the issuance
(contingent   or  otherwise)  of  any  equity   securities  (or  any  securities
convertible into or exchangeable for any equity securities) that



                                       28
<PAGE>




are senior to or on a parity with the  Securities as to dividends or liquidation
rights.

              (f) EARLY TERMINATION BY THE COMPANY. Anything contained herein to
the  contrary  notwithstanding,  in the event that,  following  the date of this
Agreement until the termination of the Offering  Period,  the Company desires to
terminate  this  Agreement for any reason (which for purposes of this  Agreement
shall include,  but not be limited to, Sands  Brothers being ready,  willing and
able to proceed with the transactions  contemplated  hereunder,  but the Company
being  unwilling to proceed for any reason),  Sands Brothers has the right,  but
not the obligation,  to agree to such early  termination upon the payment by the
Company to Sands  Brothers  of a sum equal to the  placement  fees and  expenses
(including  its  counsel  fees and  expenses)  and Sands  Warrants it would have
received  under  Sections 4(d) and 4(e)  hereunder  had the Maximum  Amount been
sold.

              (g)  NO  CLOSING.  Anything  set  forth  herein  to  the  contrary
notwithstanding,  in the event that,  for any reason other than (i)  termination
hereof by the Company in accordance with the terms of Section 5(f) above or (ii)
termination hereof by the Placement Agent in accordance with Section 4(f) above,
a  Closing  does not occur in  accordance  with the terms  provided  herein,  no
amounts shall be payable  further to Sands Brothers  hereunder,  except for that
contemplated by Section 3(e)(ii) hereof and the  reimbursement of the reasonable
out-of-pocket  expenses  (including  its counsel fees and expenses)  incurred by
Sands Brothers prior to the expiration date of the Offering Period.  In no event
shall Sands  Brothers be  responsible  for any of the Company's  fees,  costs or
expenses  and  the  Company  shall  pay all  expenses  of the  Offering  and the
preparation of the Offering and Ancillary Documents. The Company shall reimburse
Sands Brothers for any out-of-pocket  expenses  (including,  but not limited to,
reasonable  counsel  fees  and  expenses)  which  Sands  Brothers  may  incur in
connection with the enforcement of its rights hereunder.

              (h) RATIFICATION AND CONFIRMATION OF INVESTMENT BANKING AGREEMENT.
The Company  hereby  confirms  and  ratifies the  investment  banking  agreement
between the  Company and the  Placement  Agent  dated May 11,  1998,  as amended
("Investment  Banking  Agreement"),   including,  without  limitation,  (i)  the
retention of Sands Brothers as financial advisor to the Company



                                       29
<PAGE>




pursuant  to  Section  A  thereof,  (ii)  the  retention  of Sands  Brothers  in
connection with merger and acquisition activities pursuant to Section B thereof,
(iii) the granting of the right of first refusal to Sands  Brothers  pursuant to
Section C thereof, (iv) the granting of the right to designate a board member or
observer to the board of directors of the Company pursuant to Section D thereof,
(v) the issuance of warrants to purchase 600,000 shares of Common Stock to Sands
Brothers and its  designees  (the  "Investment  Banking  Warrants")  pursuant to
Section  E  thereof  and  (vi) the  expense  reimbursement  and  indemnification
provisions thereof.

              (i) FINANCING  SOURCES.  The Company will provide to the Placement
Agent a list of each of its  present  financing  sources,  with  such list to be
amended for a period of one year from the date of  termination  of the  Offering
if, and when,  the  Company  is  approached  by, or has any  contact  with,  any
potential financing sources ("Company Sources").

              (j)  PLACEMENT  AGENT  SOURCES.  For a period of one year from the
date of this  Agreement,  the Placement  Agent shall keep a list of the names of
all its sources of potential  financing  ("Placement Agent Sources" and together
with the Company  Sources  collectively,  the "Sources") for the Company,  which
list may be  furnished  to the  Company  and  amended  from  time to time by the
Placement Agent at its discretion.  The Company agrees, in the event it directly
or  indirectly  receives  financing  in any form or nature  whatsoever  from any
Source,  that it will fully  compensate the Placement  Agent under the terms and
conditions of this Agreement to the same extent as if the Placement Agent itself
had obtained such financing from such Source.

              (k) NO FINDER'S  FEE. The Company  represents  and warrants to the
Placement  Agent that it is not  obligated  to pay a finders'  fee to any one in
connection with the introduction of the Company to Sands Brothers.

         6. INDEMNIFICATION.

              (a) TERMS OF INDEMNIFICATION.  The Company agrees to indemnify and
hold harmless the  Placement  Agent and its agents,  stockholders,  officers and
directors,  and each  person,  if any,  who controls  the  Placement  Agent,  as
follows:




                                       30
<PAGE>





                (i)  against  any and all loss,  liability,  claim,  damage  and
        expense whatsoever arising out of any untrue statement or alleged untrue
        statement of a fact contained in the Offering  Documents or the omission
        or alleged  omission  therefrom of a fact necessary in order to make the
        statements  therein,  in the light of the circumstances under which they
        were made, not misleading,  unless such untrue statement or omission was
        made in the  Offering or  Ancillary  Documents  in reliance  upon and in
        conformity  with  information  furnished  in writing  to the  Company in
        connection therewith by the Placement Agent expressly for use therein;

                (ii)  against  any and all loss,  liability,  claim,  damage and
        expense  whatsoever  to the  extent  of the  aggregate  amount  paid  in
        settlement  of any  litigation,  commenced or  threatened,  or any claim
        whatsoever  based upon any such untrue statement or omission or any such
        alleged untrue statement or omission; and

                (iii)  against  any  and  all  expense  whatsoever  incurred  in
        investigating,  preparing or defending against any litigation, commenced
        or  threatened,  or any  claim  whatsoever  based  upon any such  untrue
        statement or omission, or any such alleged untrue statement or omission,
        to the extent that any such expense is not paid under clause (i) or (ii)
        above.

              (b)  INDEMNITY  UNDER  SECURITIES  LAWS.  The  Company  agrees  to
indemnify and hold harmless the Placement Agent and its agents, and each person,
if any, who controls the  Placement  Agent,  to the same extent as the foregoing
Indemnity,  against  any and all loss,  liability,  claim,  damage  and  expense
whatsoever directly arising out of the exercise by any person of any right under
the Securities Act or the  Securities  Exchange Act of 1934, as amended,  or the
securities  or blue  sky laws of any  state  on  account  of  violations  of the
representations, warranties or agreements set forth herein.

              (c) If any action is brought against the Placement Agent or any of
its officers, directors, stockholders,  employees, agents, advisors, consultants
and counsel or any controlling persons of



                                       31
<PAGE>




the Placement Agent (each, an "Indemnified Party" and collectively, "Indemnified
Parties"),  in respect of which  indemnity  may be sought  against  the  Company
pursuant  to  Sections  6(a) or 6(b) above,  each such  Indemnified  Party shall
promptly  notify  the  Company  (the  "Indemnifying  Party")  in  writing of the
institution  of such action (but the failure to so notify  shall not relieve the
Indemnifying  Party from any  liability  it may have under this Section 6 unless
such failure  results in the  imposition of a default  judgment  which cannot be
reopened) and the  Indemnifying  Party shall promptly assume the defense of such
action, including the employment of counsel reasonably satisfactory to each such
Indemnified  Party and payment of expenses.  Each such  Indemnified  Party shall
have the right to employ  its own  counsel  in any such  case,  but the fees and
expenses of such counsel shall be at the expense of each such Indemnified  Party
unless the  employment of such counsel shall have been  authorized in writing by
the  Indemnifying  Party in  connection  with the  defense of such action or the
Indemnifying  Party shall have not have  promptly  employed  counsel  reasonably
satisfactory  to each such  Indemnified  Party to have  charge of the defense of
such action or each such Indemnified Party shall have reasonably  concluded that
there  may be one or more  legal  defenses  available  to it or them or to other
Indemnified Parties which are different from or additional to those available to
one or more of the Indemnifying  Parties and it would be  inappropriate  for the
same  counsel to represent  both  parties due to actual or  potential  differing
interests  between them, in any of which events such fees and expenses  shall be
borne by the Indemnifying  Party and the  Indemnifying  Party shall not have the
right to direct the defense of such action on behalf of each Indemnified  Party.
Anything in this Section 6(c) to the contrary notwithstanding,  the Indemnifying
Party  shall  not be  liable  for any  settlement  of any such  claim or  action
effected  without its written  consent,  which consent shall not be unreasonably
withheld.  The Company  agrees to  promptly  notify the  Placement  Agent of the
commencement of any litigation or proceedings  against the Company or any of its
officers or  directors  in  connection  with the sale of the  Securities  or the
Memorandum.

              (d)  CONTRIBUTION.  In order  to  provide  for just and  equitable
contribution  in any case in which (i) an  indemnified  party  makes a claim for
indemnification  pursuant to this Section 6, but it is judicially determined (by
the entry of a final



                                       32
<PAGE>




judgment or decree by a court of competent  jurisdiction  and the  expiration of
time  to  appeal  or  the  denial  of  the  last  right  of  appeal)  that  such
indemnification may not be enforced in such case;  notwithstanding the fact that
the express  provisions  of this Section 6 provide for  indemnification  in such
case; or (ii) contribution  under the Securities Act may be required on the part
of any indemnified  party, then each indemnifying  party shall contribute to the
amount paid as a result of such losses, claims, damages, expenses or liabilities
(or actions in respect  thereof) (A) in such  proportion  as is  appropriate  to
reflect the relative benefits received by each of the contributing  parties,  on
the one  hand,  and the party to be  indemnified  on the  other  hand,  from the
Offering  of the  Securities;  or (B) if the  allocation  provided by clause (A)
above is not permitted by applicable  law, in such  proportion as is appropriate
to reflect not only the  relative  benefits  referred to in clause (i) above but
also the relative fault of each of the  contributing  parties,  on the one hand,
and the  party to be  indemnified  on the other  hand,  in  connection  with the
statements or omissions that resulted in such losses, claims, damages,  expenses
or liabilities,  as well as any other relevant equitable considerations.  In any
case where the Company is a  contributing  party and the Placement  Agent is the
indemnified  party,  the  relative  benefits  received by the Company on the one
hand, and the Placement  Agent, on the other,  shall be deemed to be in the same
proportion as the total net proceeds from the Offering of the Securities (before
deducting  expenses) bear to the total Placement Agent  commissions  received by
the  Placement  Agent  hereunder,  in each case as set forth in the table on the
cover page of the  Memorandum.  Relative  fault shall be determined by reference
to,  among other  things,  whether the untrue or alleged  untrue  statement of a
material  fact or the  omission  or alleged  omission  to state a material  fact
relates to information  supplied by the Company,  or by the Placement Agent, and
the parties' relative intent,  knowledge,  access to information and opportunity
to correct or prevent  such untrue  statement  or  omission.  The amount paid or
payable by an  indemnified  party as a result of the  losses,  claims,  damages,
expenses or  liabilities  (or actions in respect  thereof)  referred to above in
this  subsection  (c),  shall be deemed to include  any legal or other  expenses
reasonably  incurred by such indemnified party in connection with investigating,
preparing or defending any such action or claim.  Notwithstanding the provisions
of this subsection (c), the Placement Agent shall not be required to



                                       33
<PAGE>




contribute any amount in excess of the Placement Agent commissions applicable to
the  Securities  placed by the Placement  Agent  hereunder.  No person guilty of
fraudulent  misrepresentation  (within  the  meaning  of  Section  11(f)  of the
Securities  Act) shall be entitled to  contribution  from any person who was not
guilty of such  fraudulent  misrepresentation.  For  purposes of this Section 6,
each  person,  if any,  who  controls  the  Company  within  the  meaning of the
Securities Act, each officer of the Company who has signed the  Memorandum,  and
each director of the Company shall have the same rights to  contribution  as the
Company,  subject in each case to this  subsection  (c).  Any party  entitled to
contribution  will,  promptly  after  receipt of notice of  commencement  of any
action,  suit or  proceeding  against such party in respect to which a claim for
contribution  may be made against another party or parties under this subsection
(c), notify such party or parties from whom contribution may be sought,  but the
omission  so to notify  such party or  parties  shall not  relieve  the party or
parties from whom  contribution may be sought from any obligation it or they may
have  hereunder or otherwise  than under this  subsection  (c), or to the extent
that such party or parties were not  adversely  affected by such  omission.  The
contribution  agreement set forth above shall be in addition to any  liabilities
which any indemnifying party may have at common law or otherwise.

         7. MISCELLANEOUS.

              (a) GENERAL.  The Company shall supply Sands  Brothers'  with such
financial statements, contracts and other corporate records and documents as may
be requested of it. In addition,  Sands  Brothers shall be fully informed by the
Company  of any events  which  might  have a  material  affect on the  financial
condition  of the Company or of any of its  Subsidiaries.  If, in the opinion of
Sands  Brothers,  the  condition of the Company,  or the condition of any of its
Subsidiaries,  financial or otherwise, and its/their prospects are affected in a
material  and/or  adverse  manner and do no  fulfill  the  expectation  of Sands
Brothers,  it  shall  have the sole  discretion  to  review  and  determine  its
continued interest in the Offering.


              (b) REPRESENTATIONS, WARRANTIES AND COVENANTS TO SURVIVE DELIVERY.
The respective representations, warranties,



                                       34
<PAGE>




indemnities,  agreements,  covenants and other statements of the Company and its
Subsidiaries,   and   where   appropriate,    its/their   respective   principal
stockholders,  shall  survive  execution of this  Agreement  and delivery of the
Securities  and the  termination  of this  Agreement.  Notwithstanding  anything
provided herein to the contrary,  the provisions of Sections 4(d) and 4(e)hereof
shall survive the  termination  of the Offering  Period and shall remain in full
force and effect with respect to all Sources who invest, or commit to invest, in
the Company at any time during the twelve month period  commencing  the day that
the Offering  Period  terminates.  Additionally,  the  Placement  Agent shall be
entitled to also retain its non-accountable and non-refundable expense allowance
to the extent it has been paid prior to the date of termination.

              (c) NO OTHER  BENEFICIARIES.  This  Agreement  is intended for the
sole and exclusive benefit of the parties hereto and their respective successors
and controlling persons, and no other person, firm or corporation shall have any
third-party beneficiary or other rights hereunder.

              (d)  GOVERNING  LAW.  This  Agreement  shall  be  governed  by and
construed  in  accordance  with the law of the  State of New York.  The  parties
hereby  agree:  (i) in any legal  proceeding  brought  in  connection  with this
Agreement or the transactions  contemplated hereby, to irrevocably submit to the
nonexclusive  IN  PERSONAM  jurisdiction  of (A) any state or  federal  court of
competent  jurisdiction sitting in the State of New York, County of New York; or
(B) in the event that any party is a defendant in any legal  proceeding in which
it seeks to join  the  other as a third  party  defendant,  then,  any  state or
federal court in which such  proceeding has properly been brought,  and consents
to suit therein;  and (ii) to waive any objection they may now or hereafter have
to the venue of such  proceeding in any such court or that such  proceeding  was
brought in an inconvenient court.

              (e)   NOTICES.   All   notices,   requests,   demands   and  other
communications  which are required or may be given under this Agreement shall be
in  writing  and  shall  be  deemed  to have  been  duly  given  when  delivered
personally,  receipt  acknowledged,  or  five  (5)  days  after  being  sent  by
registered or certified mail,  return receipt  requested,  postage prepaid.  All
notices shall be made to the parties at the addresses  designated  above,  or at
such



                                       35
<PAGE>




other or different addresses which a party may subsequently  provide with notice
thereof, and to their respective legal counsel, as follows:

               (i)  If to the Placement Agent, to:

               Sands Brothers & Co., Ltd.
               90 Park Avenue
               New York, NY  10016
               Attn:  Mr. Mark G. Hollo
                      Managing Director

               - with a copy to -

               Littman Krooks Roth & Ball P.C.
               655 Third Avenue 20th floor
               New York, NY  10017
               Attn:  Mitchell C. Littman, Esq.

or to such other  person or address as the  Placement  Agent  shall  furnish the
Company in writing.

               (ii) If to the Company, to:

               IMSCO Technologies, Inc.
               162-06 92nd Street
               Howard Beach, NY 11414
               Attn:  Alexander T. Hoffmann,
                      Chief Executive Officer



               - with a copy to -

               [



                                        ]
               Attn: [             ].






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<PAGE>




or to such other person or address as the Company  shall  furnish the  Placement
Agent in writing.

              (f)  COUNTERPARTS.  This  Agreement may be signed in  counterparts
with the same effect as if both parties had signed one and the same instrument.

              (g)  REIMBURSEMENT.   Notwithstanding  the  non-occurrence  of  an
Closing,  or any  other  condition,  in no event  shall the  Placement  Agent be
responsible  for any of the  Company's  fees,  costs or expenses;  however,  the
Company  shall  reimburse  the Placement  Agent for any  out-of-pocket  expenses
(including,  but not limited to, reasonable  counsel fees and expense) which the
Placement  Agent may incur in  connection  with the  enforcement  of its  rights
hereunder.

              (h) FORM OF  SIGNATURE.  The  parties  hereto  agree  to  accept a
facsimile  transmission copy of their respective signatures as evidence of their
respective  actual  signatures to this Agreement;  PROVIDED  HOWEVER,  that each
party who produces a facsimile signature agrees, by the express terms hereof, to
place, immediately after transmission of his or her signature by fax, a true and
correct  original copy of his or her signature in overnight  mail to the address
of the other party.

              (i)  MODIFICATION.  This  Agreement  (i) may only be modified by a
written  instrument which is executed by both parties thereto,  (ii) constitutes
the entire  agreement  between the parties,  and (iii) shall be binding upon and
inure to the benefit of both parties hereto and their  respective  successor and
assignees.

              (j) NON-CIRCUMVENTION. Each of the Company and the Placement Agent
each agree that no effort shall be made to circumvent  the terms and  conditions
of this  Agreement or gain a fee,  commission,  remuneration,  consideration  or
benefit  whatsoever.  With  respect  to any  attempt  at  circumvention  of this
Agreement,  the injured  party is  entitled to seek any and all legal  remedies,
fees or  compensation  equal to those received or committed or agreed to be paid
pursuant to the terms of this  Agreement  as the same are due and payable to the
circumvented party under the terms of this Agreement.




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<PAGE>





              (k)  GOOD  FAITH.  Each of the  Company  and the  Placement  Agent
understand  that this Agreement is a reciprocal and mutual one and both warrant,
covenant,  and promise  that it will act in good faith  toward each other in the
performance of this Agreement and in other matters.

              (l) FURTHER  SERVICES.  The Placement Agent shall, if requested by
the  Company,  testify in, and shall  prepare and assist in the  preparation  of
testimony  for,  any  judicial or  administrative  proceeding  in respect of the
services performed by the Placement Agent hereunder.  With respect thereto,  the
Company shall pay, in addition to the fees and expenses payable to the Placement
Agent  hereunder,  for the time required to expend by the Placement Agent at its
standard hourly rates as then in effect, together with reasonable  out-of-pocket
expenses, but not limited to, fees and expenses of its legal counsel.

              (m) WAIVER OF BREACH.  The waiver by either the Placement Agent or
the Company of any  provision  of this  Agreement  shall not be  construed  as a
waiver of any subsequent breach hereof.

         If you find the  foregoing  is in  accordance  with our  understanding,
kindly sign and return to us a counterpart  hereof,  whereupon  this  instrument
along with all counterparts will become a binding agreement between us.

                                            Very truly yours,

                                            IMSCO Technologies, Inc.

                                            By: /s/ Alexander T. Hoffmann
                                               ---------------------------------
                                               Name:  Alexander T. Hoffmann
                                               Title: Chairman & CEO

Agreed:

SANDS BROTHERS & CO., LTD.


By: /s/ Mark G. Hollo
   -------------------------------
   Name:  Mark G. Hollo
   Title: Senior Managing Director




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<PAGE>





                                LIST OF SCHEDULES




SCHEDULE 2(b)  Organization

SCHEDULE 2(c)  Capitalization

SCHEDULE 2(d)  Subsidiaries and Investments

SCHEDULE 2(i)  Absence of Changes

SCHEDULE 2(q)  Non Defaults; Non Contravention

SCHEDULE 2(t)  Agreements

SCHEDULE 2(x)  Related Transactions

SCHEDULE 2(z)  Salaries and Bonuses

SCHEDULE 2(NN) Affiliations














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                                    EXHIBITS

Exhibit A - Placement Agent Warrant Agreement























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