CERTIFICATE OF DESIGNATION

                                       OF

                      SERIES B CONVERTIBLE PREFERRED STOCK

                                       OF

                   CONVERSION TECHNOLOGIES INTERNATIONAL, INC.

                         Pursuant to Section 151 of the

                General Corporation Law of the State of Delaware

      CONVERSION TECHNOLOGIES INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), does
hereby certify that, pursuant to the authority conferred on the Board of
Directors of the Corporation by the Amended and Restated Certificate of
Incorporation, as amended to date (the "Certificate of Incorporation"), of the
Corporation and in accordance with Section 151 of the General Corporation Law of
the Stale of Delaware, the Board of Directors of the Corporation adopted the
following resolution establishing a series of 5,000,000 shares of Preferred
Stock of the Corporation designated as "Series B Convertible Preferred Stock":

            RESOLVED, that pursuant to the authority conferred on the Board of
      Directors of this Corporation by the Certificate of Incorporation, a
      series of Preferred Stock, par value $.00l per share, of the Corporation
      is hereby established and created, and that the designation and number of
      shares thereof and the voting and other powers, preferences and relative,
      participating, optional or other rights of the shares of such series and
      the qualifications, limitations and restrictions thereof are as follows:

                      Series B Convertible Preferred Stock

      1. Designation and Amount, and Definitions.

      (a) There shall be a series of Preferred Stock designated as "Series B
Convertible Preferred Stock" and the number of shares constituting such series
shall be 5,000,000, subject to adjustment as provided herein. Such series is
referred to herein as the "Series B Preferred Stock". Such number of shares may
be increased prior to the Final Closing Date (as defined below) or decreased by
resolution of the Board of Directors of the Corporation; provided however, that
no decrease shall reduce the number of shares of Series B Preferred Stock to
fewer than the number of shares then issued and outstanding.

      (b) As used in this Certificate of Designation, the following terms shall
have the following meanings, unless thc context otherwise requires:

            (i) "Market Price shall mean the average Closing Bid Price (as
            defined below), for the thirty (30) consecutive trading days (as
            defined below), ending

<PAGE>

            with the trading day prior to the date as of which the Market Price
            is being determined, provided that if the prices referred to in the
            definition of Closing Bid Price cannot be determined for such
            period, "Market Price" shall mean Fair Market Value (as defined
            below).

            (ii) "Fair Market Value" of any asset (including any security) means
            the fair market value thereof as mutually determined by the
            Corporation and the holders of a majority of the Series B Preferred
            Stock then outstanding.

            (iii) "Stock Market" shall mean, with respect to any security, the
            principal national securities exchange on which such security is
            listed or admitted to trading or, if such security is not listed or
            admitted to trading on any national securities exchange, The Nasdaq
            National Market System or The Nasdaq SmallCap Market (collectively,
            "Nasdaq") or, if such security is not quoted on Nasdaq, the OTC
            Bulletin Board or, if such security is not quoted an the OTC
            Bulletin Board, the over-the-counter market as furnished by any NASD
            member firm selected from time to time by the Corporation for that
            purpose.

            (iv) The "Closing Bid Price" of any security, for each trading day,
            shall mean the price at which such security was last exchanged on
            the Stock Market during such trading day or, if there were no
            transactions on such trading day, the average of the reported
            closing bid and asked prices, regular way, of such security on the
            Stock Market on such trading day.

            (v) A "trading day" shall mean a day on which the Stock Market is
            open for the transaction of business.

      2. Dividends and Distributions.

      (a) Commencing on the Final Closing Date (as defined below), the holders
of the Series B Preferred Stock shall be entitled to receive cumulative
dividends on each share of Series B Preferred Stock, payable in cash, or at the
option of the Company, in kind, at the rate of 10% per annum (computed on the
basis of a 360-day year of twelve 30 day months) of the Dividend Base Amount (as
defined below), payable semi-annually in arrears. If the Company elects to pay
in kind, such dividends shall be paid in additional duly authorized, fully paid
and non assessable shares of Series B Preferred Stock. Such dividends shall
accrue and accumulate whether or not they have been declared and whether or not
there are profits, surplus or other funds of the Corporation legally available
for the payment of dividends. The "Dividend Base Amount" shall be $0.60 (subject
to appropriate adjustment to reflect any stock split, combination,
reclassification or reorganization of the Series B Preferred Stock).

      (b) In addition to the foregoing, subject to the prior and superior rights
of the holders of any shares of any series or class of capital stock ranking
prior and superior to the shares of Series B Preferred Stock with respect to
dividends, the holders of shares of Series B Preferred Stock shall be entitled
to receive, as, when and if declared by the Board of Directors of the
Corporation, out of assets legally available for that purpose, dividends or
distributions in cash. stock or otherwise.


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<PAGE>

      (c) The Corporation shall not declare any dividend or distribution on any
Junior Stock (as defined below), unless the Corporation shall have paid all
accrued cumulative dividends on the Series B Preferred Stock pursuant to
Subsection 2(a), if any, and shall, concurrently with the declaration of such
dividend or distribution on the Junior Stock, declare a like dividend or
distribution, as the case may be, on the Series B Preferred Stock in an amount
per share equal to (x) the amount of the dividend or distribution per share of
the Company's common stock, $.00025 par value per share (the "Common Stock"),
multiplied by (y) the effective Conversion Rate at the time of such dividend or
distribution.

      (d) Any dividend or distribution (other than that referenced in Subsection
2(a)) payable to the holders of the Series B Preferred Stock pursuant to this
Section 2 shall be paid to such holders at the same time as the dividend or
distribution on the Junior Stock or any other capital stock of the Corporation
by which it is measured is paid.

      (e) All dividends or distributions declared upon the Series B Preferred
Stock shall be declared pro rata per share.

      (f) Any reference to "distribution" contained in this Section 2 shall not
be deemed to include any distribution made in connection with or in lieu of any
Liquidation Event (as defined be low).

      (g) "Junior Stock" shall mean the Common Stock and any shares of preferred
stock of any series or class of the Corporation, whether presently outstanding
or hereafter issued, which are junior to the shares of Series B Preferred Stock
with respect to (i) the distribution of assets on any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, (ii) dividends or
(iii) voting. Junior Stock shall not include the Company's Series A Convertible
Preferred Stock. The Company's Series Convertible A Preferred Stock (the `Series
A Preferred Stock") shall be deemed to be on parity with the shares of Series B
Preferred Stock with respect to (i) the distribution of assets on any voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, (ii)
dividends and (iii) voting.

      3. Liquidation Preference.

      (a) In the event of a (i) liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, (ii) a sale or other disposition
of all or substantially all of the assets of the Corporation or (iii) any
consolidation, merger, combination, reorganization or other transaction in which
the Corporation is not the surviving entity or shares of Common Stock
constituting in excess of 50% of the voting power of the Corporation are
exchanged for or changed into stock or securities of another entity, cash and/or
any other property (a "Merger Transaction") (items (i), (ii) and (iii) of this
sentence being collectively referred to as a "Liquidation Event"), after payment
or provision for payment of debts and other liabilities of the Corporation, the
holders of the Series B Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders, whether such assets are capital, surplus or earnings, before any
payment or declaration and setting apart for payment of any amount shall be made
in respect of any Junior Stock, an amount equal to $0.81 per share plus an
amount equal to all declared and/or accrued unpaid dividends thereon; provided,
however, in the case of a Merger Transaction, such amount per share may be paid
in


                                       3
<PAGE>

cash, property (valued as provided in Subsection 3(b)) and/or securities (valued
as provided in Subsection 3(b)) of the entity surviving such Merger Transaction.
If upon any Liquidation Event, whether voluntary or involuntary, the assets to
be distributed to the holders of the Series B Preferred Stock shall be
insufficient to permit the payment to such stockholders of the full preferential
amounts aforesaid, then all of the assets of the Corporation to be distributed
shall be so distributed ratably to the holders of the Series B Preferred Stock
on the basis of the number of shares of Series B Preferred Stock held. A
consolidation or merger of the Corporation with or into another corporation,
other than in a transaction described in this Subsection 3(a) above, shall not
be considered a liquidation, dissolution or winding up of the Corporation or a
sale or other disposition of all or substantially all of the assets of the
Corporation and accordingly the Corporation shall make appropriate provision to
ensure that the terms of this Certificate of Designation survive any such
transaction. All shares of Series B Preferred Stock shall rank as to payment
upon the occurrence of any Liquidation Event senior to the Common Stock as
provided herein, on parity with the Series A Preferred Stock and, unless the
terms of such series shall provide otherwise, senior to all other series of the
Corporation's preferred stock.

      (b) Any securities or other property to be delivered to the holders of the
Series B Preferred Stock pursuant to Subsection 3(a) hereof shall be valued as
follows:

            (i) In the case of securities not subject to an investment letter or
            other similar restriction on free marketability:

            (A)   If traded on the Stock Market, the value shall be deemed to be
                  the Market Price of such securities as of the third day prior
                  to the date of valuation.

            (B)   If not traded an the Stock Market, the value shall be the Fair
                  Market Value of such securities.

            (ii) In the case of securities for which there is an active public
            market but which are subject to an investment letter or other
            restrictions on free marketability, the value shall be the Fair
            Market Value thereof, determined by discounting appropriately the
            Market Price thereof.

            (iii) In the case of all other securities and property, the value
            shall be the Fair Market Value thereof.

If the holders of a majority of the Series B Preferred Stock and the Corporation
are unable to reach agreement on any valuation matter, such valuation shall be
submitted to and determined by a nationally recognized independent investment
bank selected by the Board of Directors of the Corporation and the holders of a
majority of the Series B Preferred Stock then outstanding (or, if such selection
cannot be agreed upon promptly, or in any event within ten days, then such
valuation shall be made by a nationally recognized independent investment
banking firm selected by the American Arbitration Association in New York City
in accordance with its rules), the costs of which valuation shall be paid for by
the Corporation.

      4. Conversion.


                                       4
<PAGE>

      (a) Right of Conversion. The shares of Series B Preferred Stock shall be
convertible, in whole or in part, at the option of the holder thereof and upon
notice to the Corporation as set forth in Subsection 4(b) below, into fully paid
and nonassessable shares of Common Stock and such other securities and property
as hereinafter provided. The initial conversion price per share of Common Stock
shall be $.03 (the "Conversion Price") and shall be subject to adjustment as
provided herein. The rate at which each share of Series B Preferred Stock is
convertible at any time into Common Stock (the "Conversion Rate") shall be
determined by dividing the then existing Conversion Price into $0.60.

      (b) Conversion Procedures. Any holder of shares of Series B Preferred
Stock desiring to convert such shares into Common Stock shall surrender the
certificate or certificates evidencing such shares of Series B Preferred Stock
at the office of the transfer agent for the Series B Preferred Stock, which
certificate or certificates, if the Corporation shall so require, shall be duly
endorsed to the Corporation or in blank, or accompanied by proper instruments of
transfer to the Corporation or in blank, accompanied by irrevocable written
notice to the Corporation that the holder elects so to convert such shares of
Series B Preferred Stock and specifying the name or names (with address) in
which a certificate or certificates evidencing shares of Common Stock are to be
issued. The Corporation need not deem a notice of conversion to be received
unless the holder complies with all the provisions hereof. The Corporation will
instruct the transfer agent (which may be the Corporation) to make a notation of
the date that a notice of conversion is received, which date shall be deemed to
be the date of receipt for purposes hereof.

            The Corporation shall, as soon as practicable after such deposit of
certificates evidencing shares of Series B Preferred Stock accompanied by the
written notice and compliance with any other conditions herein contained,
deliver at such office of such transfer agent to the person for whose account
such shares of Series B Preferred Stock were so surrendered, or to the nominee
or nominees of such person, certificates evidencing the number of full shares of
Common Stock to which such person shall be entitled as aforesaid, together with
a cash payment for adjustment of any fraction of a share as hereinafter
provided. Subject to the following provisions of this paragraph, such conversion
shall be deemed to have been made as of the date of such surrender of the shares
of Series B Preferred Stock to be converted, and the person or persons entitled
to receive the Common Stock deliverable upon conversion of such Series B
Preferred Stock shall be treated for all purposes as the record holder or
holders of such Common Stock on such date; provided, however, that the
Corporation shall not be required to convert any shares of Series B Preferred
Stock while the stock transfer books of the Corporation are closed for any
purpose, but the surrender of Series B Preferred Stock for conversion during any
period while such books are so closed shall become effective for conversion
immediately upon the reopening of such books as if the surrender had been made
on the date of such reopening, and the conversion shall be at the conversion
rate in effect on such date. No adjustments in respect of any dividends on
shares surrendered for conversion or any dividend on the Common Stock issued
upon conversion shall be made upon the conversion of any shares of Series B
Preferred Stock.

            All notices of conversion shall be irrevocable; provided, however,
that if the Corporation has sent notice of an event pursuant to Subsection 4(g)
hereof, a holder of Series B Preferred Stock may, at its election, provide in
its notice of conversion that the conversion of its shares of Series B Preferred
Stock shall be contingent upon the occurrence of the record date or


                                       5
<PAGE>

effectiveness of such event (as specified by such holder), provided that such
notice of conversion is received by the Corporation prior to such record date or
effective date, as the case may be.

      (c) Adjustment of Conversion Rate and Conversion Price.

            (i) Except as otherwise provided herein, in the event the
            Corporation shall, at any time or from time to time after the
            original issue date of the Series B Preferred Stock, (1) sell or
            issue any shares of Common Stock for a consideration per share less
            than either (i) the Conversion Price in effect on the date of such
            sale or issuance or (ii) the Market Price of the Common Stack as of
            the date of the sale or issuance, (2) issue any shares of Common
            Stock as a stock dividend to the holders of Common Stock, or (3)
            subdivide or combine the outstanding shares of Common Stock into a
            greater or lesser number of shares (any such sale, issuance,
            subdivision or combination being herein called a "Change of
            Shares"), then, and thereafter upon each further Change of Shares,
            the Conversion Price in effect immediately prior to such Change of
            Shares shall be changed to a price (rounded to the nearest cent)
            determined by multiplying the Conversion Price in effect immediately
            prior thereto by a fraction, the numerator of which shall be the sum
            of the number of shares of Common Stock outstanding immediately
            prior to the sale or issuance of such additional shares or such
            subdivision or combination and the number of shares of Common Stock
            which the aggregate consideration, if any, received (determined as
            provided in subsection 4(c)(v)(E) below) for the issuance of such
            additional shares would purchase at the greater of (i) the
            Conversion Price in effect on the date of such issuance or (ii) the
            Market Price of the Common Stock as of such date, and the
            denominator of which shall be the number of shares of Common Stock
            outstanding immediately after the sale or issuance of such
            additional shares or such subdivision or combination. Such
            adjustment shall be made successively whenever such an issuance is
            made.

            (ii) In case of any reclassification, capital reorganization or
            other change of outstanding shares of Common Stock, or in case of
            any consolidation or merger of the Corporation with or into another
            entity (other than a consolidation or merger in which the
            Corporation is the continuing entity and which does not result in
            any reclassification, capital reorganization or other change of
            outstanding shares of Common Stock other than the number thereof),
            or in case of any sale or conveyance to another entity of the
            property of the Corporation as, or substantially as, an entirety
            (other than a sale/leaseback, mortgage or other financing
            transaction), the Corporation shall cause effective provision to be
            made so that each holder of a share of Series B Preferred Stock
            shall be entitled to receive, upon conversion of such share of
            Series B Preferred Stock, the kind and number of shares of stock or
            other securities or property (including cash) receivable upon such
            reclassification, capital reorganization or other change,
            consolidation, merger, sale or conveyance by a holder of the number
            of shares of Common Stock into which such share of Series B
            Preferred Stock was convertible immediately prior to such
            reclassification, capital reorganization or other change,
            consolidation, merger, sale or conveyance. Any such provision shall
            include provision for adjustments that shall be as nearly equivalent
            as may be practicable


                                       6
<PAGE>

            to the adjustments provided for in this Subsection 4(c). The
            Corporation shall not effect any such consolidation, merger or sale
            unless prior to, or simultaneously with, the consummation thereof
            the successor (if other than the Corporation) resulting from such
            consolidation or merger or the entity purchasing assets or other
            appropriate entity shall assume, by written instrument executed and
            delivered to the transfer agent for the Series B Preferred Stock
            (the "Transfer Agent"), the obligation to deliver to the holder of
            each share of Series B Preferred Stock such shares of stock,
            securities or assets as, in accordance with the foregoing
            provisions, such holders may be entitled to receive and the other
            obligations under this Agreement The foregoing provisions shall
            similarly apply to successive reclassifications. capital
            reorganizations and other changes of outstanding shares of Common
            Stock and to successive consolidations, mergers, sales or
            conveyances.

            (iii) If, at any time or from time to time, the Corporation shall
            issue or distribute to the holders of shares of Common Stock
            evidence of its indebtedness, any other securities of the
            Corporation or any cash, property or other assets (excluding an
            issuance or distribution governed by one of the preceding
            subsections of this Subsection 4(c) and also excluding cash
            dividends or cash distributions paid out of net profits legally
            available therefor in the full amount thereof (any such non-excluded
            event being herein called a "Special Dividend")), then in each case
            the holders of the Series B Preferred Stock shall be entitled to a
            proportionate share of any such Special Dividend as though they were
            the holders of the number of shares of Common Stock of the
            Corporation into which their shares of Series B Preferred Stock are
            convertible as of the record date fixed for the determination of the
            holders of Common Stock of the Corporation entitled to receive such
            Special Dividend.

            (iv) After each adjustment of the Conversion Price pursuant to this
            Subsection 4(c), the Corporation will promptly prepare a certificate
            signed by the Chief Executive Officer or President, and by the
            Treasurer or an Assistant Treasurer or the Secretary or an Assistant
            Secretary, of the Corporation setting forth: (i) the Conversion
            Price as so adjusted, (ii) the Conversion Rate corresponding to such
            Conversion Price and (iii) a brief statement of the facts accounting
            for such adjustment. The Corporation will promptly file such
            certificate with the Transfer Agent and cause a brief summary
            thereof to be sent by ordinary first class mail to each registered
            holder of Series B Preferred Stock at his or her last address as it
            shall appear on the registry books of the Transfer Agent. No failure
            to mail such notice nor any defect therein or in the mailing thereof
            shall affect the validity of such adjustment The affidavit of an
            officer of the Transfer Agent or the Secretary or an Assistant
            Secretary of the Corporation that such notice has been mailed shall,
            in the absence of fraud, be prima facie evidence of the fed stated
            therein. The Transfer Agent may rely on the information in thc
            certificate as true and correct and has no duty or obligation to
            independently verify the amounts or calculations set forth therein.


                                       7
<PAGE>

            (v) For purposes of Paragraph 4(c)(i), the following provisions (A)
            to (E) shall also be applicable:

            (A)   No adjustment of the Conversion Price shall be made unless
                  such adjustment would require an increase or decrease of at
                  least $.01 in such price; provided that any adjustments which
                  by reason of this Subparagraph 4(c)(v)(A) are not required to
                  be made shall be carried forward and shall be made at the time
                  of and together with the next subsequent adjustment which,
                  together with adjustments so carried forward, shall require an
                  increase or decrease of at least $.01 in the Conversion Price
                  then in effect hereunder.

            (B)   In case of (1) the sale by the Corporation (including as a
                  component of a unit) of any rights or warrants to subscribe
                  for or purchase, or any options for the purchase of, Common
                  Stock or any securities convertible into or exchangeable for
                  Common Stock (such securities convertible, exercisable or
                  exchangeable into Common Stock being herein called
                  "Convertible Securities"), or (2) the issuance by the
                  Corporation, without the receipt by the Corporation of any
                  consideration therefor, of any rights or warrants to subscribe
                  for or purchase, or any options for the purchase of, Common
                  Stock or Convertible Securities, whether or not such rights,
                  warrants or options, or the right to convert or exchange such
                  Convertible Securities, are immediately exercisable, and the
                  consideration per share for which Common Stock is issuable
                  upon the exercise of such rights, warrants or options or upon
                  the conversion or exchange of such Convertible Securities
                  (determined by dividing (x) the minimum aggregate
                  consideration, as set forth in the instrument relating thereto
                  (without regard to any antidilution or similar provisions
                  contained therein for a subsequent adjustment of such amount)
                  payable to the Corporation upon the exercise of such rights,
                  warrants or options, plus the consideration received by the
                  Corporation for the issuance or sale of such rights, warrants
                  or options, plus, in the case of such Convertible Securities,
                  the minimum aggregate amount, as set forth in the instrument
                  relating thereto without regard to any antidilution or similar
                  provisions contained therein for a subsequent adjustment of
                  such amount, of additional consideration, if any, other than
                  such Convertible Securities, payable upon the conversion or
                  exchange thereof, by (y) the total maximum number, as set
                  forth in the instrument relating thereto without regard to any
                  antidilution or similar provisions contained therein for a
                  subsequent adjustment of such amount, of shares of Common
                  Stock issuable upon the exercise of such rights, warrants or
                  options or upon the conversion or exchange of such Convertible
                  Securities issuable upon the exercise of such rights, warrants
                  or options) is less than either the Conversion Price or the
                  Market Price of the Common Stock as of the date of the
                  issuance or sale of such rights, warrants or options, then
                  such total maximum number of shares of Common Stock issuable
                  upon the exercise of such rights, warrants or options or upon
                  the conversion or exchange of such Convertible Securities (as
                  of the date of the issuance or sale of such


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<PAGE>

                  rights, warrants or options) shall be deemed to be "Common
                  Stock" for purposes of Paragraph 4(c)(i) hereof and shall be
                  deemed to have been sold for an amount equal to such
                  consideration per share and shall cause an adjustment to be
                  made in accordance with Paragraph 4(c)(i).

            (C)   In case of the sale or other issuance by the Corporation of
                  any Convertible Securities, whether or not the right of
                  conversion or exchange thereunder is immediately exercisable,
                  and the price per share for which Common Stock is issuable
                  upon the conversion or exchange of such Convertible Securities
                  (determined by dividing (x) the total amount of consideration
                  received by the Corporation for the sale of such Convertible
                  Securities, plus the minimum aggregate amount, as set forth in
                  the instrument relating thereto without regard to any
                  antidilution or similar provisions contained therein for a
                  subsequent adjustment of such amount, of additional
                  consideration, if any, other than such Convertible Securities,
                  payable upon the conversion or exchange thereof, by (y) the
                  total maximum number, as set forth in the instrument relating
                  thereto without regard to any antidilution or similar
                  provisions contained therein for a subsequent adjustment of
                  such amount, of shares of Common Stock issuable upon the
                  conversion or exchange of such Convertible Securities) is less
                  than either the Conversion Price or the Market Price of the
                  Common Stock as of the date of the sale of such Convertible
                  Securities, then such total maximum number of shares of Common
                  Stock issuable upon the conversion or exchange of such
                  Convertible Securities (as of the date of the sale of such
                  Convertible Securities) shall be deemed to be "Common Stock"
                  for purposes of Paragraph 4(c)(i) and shall be deemed to have
                  been sold for an amount equal to such consideration per share
                  and shall cause an adjustment to be made in accordance with
                  Paragraph 4(c)(i).

            (D)   In case the Corporation shall modify the rights of conversion,
                  exchange or exercise of any of the securities referred to in
                  Subparagraphs (B) or (C) of this Paragraph 4(c)(v) or any
                  other securities of the Corporation convertible, exchangeable
                  or exercisable for shares of Common Stock, for any reason
                  other than an event that would require adjustment to prevent
                  dilution, so that the consideration per share received by the
                  Corporation after such modification is less than either the
                  Conversion Price or the Market Price of the Common Stock as of
                  the date prior to such modification, then such securities, to
                  thc extent not theretofore exercised, converted or exchanged,
                  shall be deemed to have expired or terminated immediately
                  prior to the date of such modification and the Corporation
                  shall be deemed for purposes of calculating any adjustments
                  pursuant to this Subsection 4(c) to have issued such new
                  securities upon such new terms ante date of modification Such
                  adjustment shall become effective as of the date upon which
                  such modification shall take effect. On the expiration or
                  cancellation of any such right, warrant or option or the
                  termination or cancellation of any such right to convert or
                  exchange any such Convertible Securities, the Conversion Price
                  then in effect hereunder


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<PAGE>

                  shall forthwith be readjusted to such Conversion Price as
                  would have obtained (a) had the adjustments made upon the
                  issuance or sale of such rights, warrants, options or
                  Convertible Securities been made upon the basis of the
                  issuance of only the number of shares of Common Stock
                  theretofore actually delivered (and the total consideration
                  received therefor) upon the exercise of such rights, warrants
                  or options or upon the conversion or exchange of such
                  Convertible Securities and (b) had adjustments been made on
                  the basis of the Conversion Price as adjusted under clause (a)
                  for all transactions (which would have affected such adjusted
                  Conversion Price) made alter the issuance or sale of such
                  rights, warrants, options or Convertible Securities.

            (E)   In case of the sale of any shares of Common Stock, any
                  Convertible Securities, any rights or warrants to subscribe
                  for or purchase, or any options for the purchase of, Common
                  Stock or Convertible Securities, the consideration received by
                  the Corporation therefor shall be deemed to be the gross sales
                  price therefor without deducting therefrom any expense paid or
                  incurred by the Corporation or any underwriting discounts or
                  commissions or concessions paid or allowed by the Corporation
                  in connection therewith. In the event that any securities
                  shall be issued in connection with any other securities of the
                  Corporation, together comprising one integral transaction in
                  which no specific consideration is allocated among the
                  securities, then each of such securities shall be deemed to
                  have been issued for such consideration as the Board of
                  Directors of the Corporation determines in good faith;
                  provided, however, that if holders of more than 25% of the
                  then outstanding Series B Preferred Stock disagree with such
                  determination, the Corporation shall retain, at its own
                  expense, an independent investment banking firm for the
                  purpose of obtaining an appraisal.

            (vi) Notwithstanding any other provision hereof, no adjustment to
            the Conversion Price will be made:

            (A)   upon (i) the exercise of any of the options outstanding on the
                  date hereof under the Corporation's existing stock option
                  plans or (ii) the issuance or exercise of options which may
                  hereafter be granted with the approval of the Board of
                  Directors, or exercised, under any bona fide employee benefit
                  plan of the Corporation approved by the Board of Directors to
                  officers, directors, consultants or employees, but only with
                  respect to such options as are exercisable at prices no lower
                  than the Closing Bid Price (or, if the prices referenced in
                  the definition of Closing Bid Price cannot be determined, the
                  Fair Market Value) of the Common Stock as of thc date of grant
                  thereof; or

            (B)   Upon the sale of any shares of Common Stock, warrants to
                  purchase Common Stock or Convertible Securities in a firm
                  commitment underwritten public offering, including, without
                  limitation, shares sold


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<PAGE>

                  upon the exercise of any overallotment option granted to the
                  underwriters in connection with such offering; or

            (C)   Upon the issuance or sale of Common Stock or Convertible
                  Securities pursuant to the exercise of any rights, options or
                  warrants to receive, subscribe for or purchase, or any options
                  for the purchase of, Common Stock or Convertible Securities,
                  whether or not such rights, warrants or options were
                  outstanding on the date of the original sale of the Series B
                  Preferred Stock or were thereafter issued or sold, provided
                  that an adjustment was either made or not required to be made
                  in accordance with Paragraph 4(c)(i) in connection with the
                  issuance or sale of such securities or any modification of the
                  terms thereof; or

            (D)   Upon the issuance or sale of Common Stock upon conversion or
                  exchange of any Convertible Securities, provided that any
                  adjustments required to be made upon the issuance or sale of
                  such Convertible Securities or any modification of the terms
                  thereof were so made, and whether or not such Convertible
                  Securities were outstanding on the date of the original sale
                  of the Series B Preferred Stock or were thereafter issued or
                  sold.

            Subparagraph 4(c)(v)(D) shall nevertheless apply to any modification
            of the rights of conversion, exchange or exercise of any of the
            securities referred to in Subparagraph (A) or, to the extent
            effected with respect to less than all of the outstanding Series B
            Preferred Stock, as the case may be, (C) of this Paragraph 4(c)(vi).

            (vii) As used in this Subsection 4(c), the term "Common Stock" shall
            mean and include the Corporation's Common Stock authorized on the
            date of the original issue of the Series B Convertible Preferred
            Stock and shall also include any capital stock of any class of the
            Corporation thereafter authorized which shall not be limited to a
            fixed sum or percentage in respect of the rights of the holders
            thereof to participate in dividends and in the distribution of
            assets upon the voluntary liquidation, dissolution or winding up of
            the Corporation; provided, however, that the shares issuable upon
            conversion of the Series B Preferred Stock shall include only shares
            of such class designated in the Corporation's Certificate of
            Incorporation as Common Stock on the date of the original issue of
            the Series B Convertible Preferred Stock or (i) in the case of any
            reclassification, change, consolidation, merger, sale or conveyance
            of the character referred to in Paragraph 4(c)(ii) hereof, the
            stock, securities or property provided for in such section or (ii)
            in the case of any reclassification or change in the outstanding
            shares of Common Stock issuable upon conversion of the Series B
            Preferred Stock as a result of a subdivision or combination or
            consisting of a change in par value, or from par value to no par
            value, or from no par value to par value, such shares of Common
            Stock as so reclassified or changed.

            (viii) Any determination as to whether an adjustment in the
            Conversion Price in effect hereunder is required pursuant to
            Subsection 4(c), or as to the amount of


                                       11
<PAGE>

            any such adjustment, if required, shall be binding upon the holders
            of the Series B Preferred Stock and the Corporation if made in good
            faith by agreement of the Corporation and the holders of a majority
            of the Preferred Stock then outstanding. If the holders of a
            majority of the Preferred Stock then outstanding and the Corporation
            shall disagree as to any adjustment, then the issue shall be
            submitted to and determined by an arbitration panel of the American
            Arbitration Association in New York City in accordance with its
            rules, the cost of which arbitration shall be paid for by the
            Corporation.

      (d) No Fractional Shares. No fractional shares or scrip representing
fractional shares of Common Stock shall be issued upon conversion of Series B
Preferred Stock. If more than one certificate evidencing shares of Series B
Preferred Stock shall be surrendered for conversion at one time by the same
holder, the number of Bill shares issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Series B Preferred
Stock so surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of any shares of Series B Preferred
Stock, the Corporation shall pay a cash adjustment in respect of such fractional
interest in an amount equal to the same fraction of the Market Price of the
Common Stock as of the close of business on the day of conversion.

      (e) Grant of Rights, Warrants or Options in Lieu of Adjustment. If and
whenever the Corporation shall grant to the holders of Common Stock, as such,
rights or warrants to subscribe for or to purchase, or any options for the
purchase of, Common Stock or securities convertible into or exchangeable for or
carrying a right, warrant or option to purchase Common Stock, the Company may at
its option elect concurrently therewith to grant, to each holder (as of the
record date for such transaction) of Series B Preferred Stock then outstanding,
the rights, warrants or options to which each such holder would have been
entitled if, on the record date used to determine the stockholders entitled to
the rights, warrants or options being granted by the Company, such holder were
the holder of record of the number of whole shares of Common Stock then issuable
upon conversion of his or her Series B Preferred Stock. If the Company shall so
elect under this Subsection 4(e), then such grant by the Company to the holders
of the Series B Preferred Stock shall be in lieu of any adjustment which
otherwise may be called for pursuant to Subsection 4(c).

      (f) Reservation of Shares; Transfer Taxes; Etc. The Corporation shall at
all times reserve and keep available, out of its authorized and unissued shares
of Common Stock, solely for the purpose of effecting thc conversion of the
Series B Preferred Stock, such number of shares of its Common Stock free of
preemptive rights as shall be sufficient to effect the conversion of all shares
of Series B Preferred Stock from time to time outstanding. The Corporation shall
use its best efforts from time to time, in accordance with thc laws of the State
of Delaware, to increase the authorized number of shares of Common Stock if at
any time the number of shares of authorized, unissued and unreserved Common
Stock shall not be sufficient to permit the conversion of all the
then-outstanding shares of Series B Preferred Stock.

            The Corporation shall pay any and all issue or other taxes that may
be payable in respect of any issue or delivery of shares of Common Stock on
conversion of the Series B Preferred Stock. The Corporation shall not, however,
be required to pay any tax which may be payable in respect of any transfer
involved in the issue or delivery of Common Stock (or other


                                       12
<PAGE>

securities or assets) in a name other than that in which the shares of Series B
Preferred Stock so converted were registered, and no such issue or delivery
shall be made unless and until the person requesting such issue has paid to the
Corporation the amount of such, tax or has established, to the satisfaction of
the Corporation, that such tax has been paid.

      (g) Prior Notice of Certain Events. In case:

            (i) the Corporation shall declare any dividend (or any other
            distribution); or

            (ii) the Corporation shall authorize the granting to the holders of
            Common Stock of rights or warrants to subscribe for or purchase any
            shares of stock of any class or of any other rights or warrants; or

            (iii) of any reclassification of Common Stock (other than a
            subdivision or combination of the outstanding Common Stock, or a
            change in par value, or from par value to no par value, or from no
            par value to par value); or

            (iv) of any consolidation or merger (including, without limitation,
            a Merger Transaction) to which the Corporation is a party and for
            which approval of any stockholders of the Corporation shall be
            required, or of the sale or transfer of all or substantially all of
            the assets of the Corporation or of any compulsory share exchange
            whereby the Common Stock is converted into other securities, cash or
            other property; or

            (v) of the voluntary or involuntary dissolution, liquidation or
            winding up of the Corporation (including, without limitation, a
            Liquidation Event);

            then the Corporation shall cause to be filed with the Transfer
Agent, and shall cause to be mailed to the holders of record of the Series B
Preferred Stock, at their last addresses as they shall appear upon the stock
transfer books of the Corporation, at least 20 days prior to the applicable
record date hereinafter specified, a notice stating (x) the date on which a
record (if any) is to be taken for the purpose of such dividend, distribution or
granting of rights or warrants or, if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined and a description of the
cash, securities or other property to be received by such holders upon such
dividend, distribution or granting of rights or warrants or (y) the date on
which such reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding up or other Liquidation Event is
expected to become effective, the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such exchange,
dissolution, liquidation or winding up or other Liquidation Event and the
consideration, including securities or other property, to be received by such
holders upon such exchange; provided however, that no failure to mail such
notice or any defect therein or in the mailing thereof shall affect the validity
of the corporate action required to be specified in such notice.

      (h) Other Changes in Conversion Rate. The Corporation from time to time
may increase the Conversion Rate by any amount for any period of time if the
period is at least 20 days and if the increase is irrevocable during the period.
Whenever the Conversion Rate is so


                                       13
<PAGE>

increased, the Corporation shall mail to holders of record of the Series B
Preferred Stock a notice of the increase at least 15 days before the date the
increased Conversion Rate takes effect, and such notice shall state the
increased Conversion Rate and the period it will be in effect.

            The Corporation may make such increases in the Conversion Rate, in
addition to those required or allowed by this Section 4, as shall bc determined
by it, as evidenced by a resolution of the Board of Directors, to be advisable
in order to avoid or diminish any income tax to holders of Common Stock
resulting from any dividend or distribution of stock or issuance of rights or
warrants to purchase or subscribe for stock or from any event treated as such
for income tax purposes.

            Notwithstanding anything to the contrary herein, in no case shall
the Conversion Price be adjusted to an amount less than $.00025 per share, the
current par value of the Common Stock into which the Series B Preferred Stock is
convertible.

      (i) Ambiguities/Errors. The holders of a majority of the Series B
Preferred Stock outstanding and the Corporation shall have the power to resolve
by agreement any ambiguity or correct any error in the provisions relating to
the convertibility of the Series B Preferred Stock, and their actions in so
doing shall be final and conclusive. If the holders of a majority of the Series
B Preferred Stock then outstanding and the Corporation shall disagree as to any
ambiguity or correction of any error in the provisions relating to the
convertibility of the Series B Preferred Stock then the issue shall be submitted
to and determined by an arbitration panel of the American Arbitration
Association in New York City in accordance with its rules, the cost of which
arbitration shall be paid for by the Corporation.

      5. Mandatory Conversion. At any time on or after the ________ Date, the
Corporation, at its option, may cause the Series B Preferred Stock to be
converted in whole, or in part, on a pro rata basis, into fully paid and
nonassessable shares of Common Stock at the then effective Conversion Rate and
such other securities and property as herein provided if the closing bid price
of the Common Stock shall have exceeded 200% of the then applicable Conversion
Price for at least 20 trading days in any 30 consecutive trading day period
ending three (3) days prior to the date of notice of conversion. Any shares of
Series B Preferred Stock so convened shall be treated as having been surrendered
by the holder thereof far conversion pursuant to Section 4 on the date of such
mandatory conversion (unless previously converted at the option of the holder).

            No greater than 60 nor fewer than 20 days prior to the date of any
such mandatory conversion, notice by first class mail, postage prepaid, shall be
given to the holders of record of the Series B Preferred Stock to be convened,
addressed to such holders at their last addresses as shown on the stock transfer
books of the Corporation. Each such notice shall specify the date fixed for
conversion, the place or places for surrender of shares of Series B Preferred
Stock, and the then effective Conversion Rate pursuant to Section 4.

            Any notice which is mailed as herein provided shall be conclusively
presumed to have been duly given by the Corporation on the date deposited in the
mail, whether or not the holder of the Series B Preferred Stock receives such
notice; and failure properly to give such notice by mail, or any defect in such
notice, to the holders of the shares to be converted shall not


                                       14
<PAGE>

affect the validity of the proceedings for the conversion of any other shares of
Series B Preferred Stock. On or after the date fixed for conversion as stated in
such notice, each holder of shares called to be converted shall surrender the
certificate evidencing such shares to the Corporation at the place designated in
such notice for conversion. Notwithstanding that the certificates evidencing any
shares properly called for conversion shall not have been surrendered, the
shares shall no longer be deemed outstanding and all rights whatsoever with
respect to the shares so called for conversion (except the right of the holders
to convert such shares upon surrender of their certificates therefor) shall
terminate.

      6. Voting Rights.

      (a) General. Except as otherwise provided herein, in the Certificate of
Incorporation, the By-laws, or by law the holders of shares of Series B
Preferred Stock, the holders of shares of Common Stock and the holders of any
other class or series of shares entitled to vote with the Common Stock shall
vote together as one class on all matters submitted to a vote of stockholders of
the Corporation. In any such vote, each share of Series B Preferred Stock shall
entitle the bolder thereof to cast the number of votes equal to the number of
votes which could be cast in such vote by a holder of the Common Stock into
which such share of Series B Preferred Stock is convertible on the record date
for such vote, or if no record date has been established, on the date such vote
is taken. Any shares of Series B Preferred Stock held by the Corporation or any
entity controlled by the Corporation shall not have voting rights hereunder and
shall not be counted in determining the presence of a quorum.

      (b) Class Voting Rights. In addition to any vote specified in Section
6(a), so long as 50% of the shares of Series B Preferred Stock shall be
outstanding, the affirmative vote or consent of the holders or at least 66.67%
of all outstanding Series B Preferred Stock voting separately as a class shall
be necessary to permit or effect any one or more of the following: (i) the
amendment, alteration or repeal of any provision of the Certificate of
Incorporation, or the Bylaws of the Corporation so as adversely to affect the
relative rights, preferences, qualifications, limitations or restrictions of the
Series B Preferred Stock, (ii) the authorization or issuance, or increase of the
authorized amount of, any security ranking prior to, or on a parity with, the
Series B Preferred Stock (A) upon a Liquidation Event or (B) with respect to the
payment of any dividends or distributions or (C) with respect to voting rights,
(iii) the amendment, alteration or repeal of any provision of or the rights,
preferences, or privileges of the Series B Preferred Stock, (iv) any
liquidation, dissolution or sale of all or substantially all of the assets of
the Corporation, (v) the incurrence of indebtedness in excess of $100,000 in the
aggregate (other than non-recourse equipment lease lines secured solely by the
purchased equipment and indebtedness incurred for working capital purposes
secured solely by the receivables and inventory of the Corporation) or (vi) the
repurchase of any of the securities of the Corporation (other than repurchases
from employees of the Corporation of restricted securities issued pursuant to
employee benefit plans approved by the Corporation's Board of Directors in
connection with termination of employment at prices no greater than the prices
paid by any such employees for such restricted securities). The vote as
contemplated herein shall specifically not be required for (x) issuances of
Common Stock, (y) the authorization, issuance or increase in the amount of the
Series B Preferred Stock prior to the Final Closing Date or (z) any
consolidation or merger of the Corporation with or into another corporation in
which the Corporation is not the


                                       15
<PAGE>

surviving entity, a sale or transfer of all or past of the Corporation's assets
for cash, securities or other property, or a compulsory share exchange.

      7. Outstanding Shares. For purposes of this Certificate of Designation,
all issued shares of Series B Preferred Stack shall be deemed outstanding except
(i) from the date, or the deemed date, of surrender of' certificates evidencing
shares of Series B Preferred Stock, all shares of Series B Preferred Stock
converted into Common Stock, (ii) from the date of registration of transfer, all
shares of Series B Preferred Stock held of record by the Corporation or any
subsidiary of the Corporation and (iii) any and all shares of Series B Preferred
Stock held in escrow prior to delivery of such stock by the Corporation to the
initial beneficial owners thereof.

      8. Status of Acquired Shares. Shares of Series B Preferred Stock received
upon conversion pursuant to Section 4 or Section 5 or otherwise acquired by thc
Corporation will be restored to the status of authorized but unissued shares of
Preferred Stock, without designation as to class, and may thereafter be issued,
but not as shares of Series B Preferred Stock.

      9. Preemptive Rights. The Series A Preferred Stock is not entitled to any
preemptive or subscription rights in respect of any securities of thc
Corporation.

      10. No Amendment or Impairment. The Corporation shall not amend its
Certificate of Incorporation or participate in any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in
carrying out all such action as may be reasonably necessary or appropriate in
order to protect the rights of the holders of the Series B Preferred Stock
against impairment.

      11. Severability of Provisions. Whenever possible, each provision hereof
shall be interpreted in a manner as to be effective and valid under applicable
law, but if any provision hereof is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating or otherwise adversely affecting
the remaining provisions hereof. If a court of competent jurisdiction should
determine that a provision hereof would be valid or enforceable if a period of
time were extended or shortened or a particular percentage were increased or
decreased, then such court may make such change as shall be necessary to render
the provision in question effective and valid under applicable law.

                                  * * * * * * *


                                       16
<PAGE>

      IN WITNESS WHEREOF, Conversion Technologies International, Inc. has caused
this certificate to be signed on its behalf by _______________, its
____________, this ___ day of ________, 1999.

                                CONVERSION TECHNOLOGIES INTERNATIONAL, INC.


                                By: ________________________________________
                                    Name:
                                    Title: President and Chief Executive Officer

ATTEST:

____________________________

<PAGE>

                                State of Delaware

                        Office of the Secretary of State

                        --------------------------------

      I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"CONVERSION TECHNOLOGIES INTERNATIONAL, INC.", FILED IN THIS OFFICE ON THE SIXTH
DAY OF DECEMBER, A.D. 1995, AT 4 O'CLOCK P.M.

      A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.

                              [ SEAL ]    ______________________________________
                                          Edward J. Freel, Secretary of 'State

                                          AUTHENTICATION:   7738877

234150   8100                                   DATE:       12-06-95