CONVERSION TECHNOLOGIES INTERNATIONAL, INC.

                           PLACEMENT AGENCY AGREEMENT
                           --------------------------


                                                      


_________________
_________________
_________________

Dear Sirs:

     Conversion  Technologies  International,  Inc., a Delaware corporation (the
"Company"), hereby confirms its agreement to retain _______________________ (the
"Placement  Agent") on an exclusive  basis to  introduce  the Company to, and to
procure  subscriptions  from,  certain  "accredited  investors"  (as  defined in
Regulation  D under the  Securities  Act of 1933,  as  amended)  as  prospective
purchasers  of a minimum of thirty  (30) Units (the  "Minimum  Offering")  and a
maximum of fifty (50) Units (the "Maximum Offering"), with an option in favor of
the  Placement  Agent to offer up to an  additional  thirty  (30) Units to cover
over-allotments  at a purchase  price of  $100,000  per Unit,  with each  "Unit"
consisting of 10,000 shares of Premium  Preferred  Stock,  stated value $10.00
per share,  of the Company (the  "Preferred  Stock").  The Preferred Stock shall
have the terms set forth in the Term Sheet (as defined below).

     The sale to such purchasers (the "Offering") will be made through a private
placement by the Placement Agent (or its designated selected dealers) on a "best
efforts" basis pursuant to the Confidential Term Sheet dated August 8, 1997, and
all  supplements,  amendments and exhibits  thereto,  all of which constitute an
integral part thereof (the "Term Sheet"),  and separate purchase  agreements and
related  documents (the  "Subscription  Agreements")  in accordance with Section
4(2) of the  Securities  Act of 1933,  as amended (the  "Securities  Act"),  and
Regulation D promulgated thereunder.

     The  Term  Sheet,  the  Subscription   Agreements,   the  exhibits  to  the
Subscription  Agreements,   the  Certificate  of  Designation  relating  to  the
Preferred Stock (the  "Certificate of  Designation"),  the Escrow Agreement (the
"Escrow  Agreement"),  the Financial  Advisory  Agreement (as defined in Section
4(k) below),  the Placement Warrants (as defined in Section 3(d) below) and this
Placement Agency Agreement are collectively  referred to herein as the "Offering
Documents."

     The Company,  at its sole cost,  shall 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.

     Each prospective  investor  subscribing to purchase Units shall be required
to deliver, among other things, a Subscription Agreement,  which shall include a
Confidential Investor  Questionnaire  ("Questionnaire").  The Company shall make
available  to each  prospective  purchaser  at a  reasonable  time  prior to the
purchase of the Units the  opportunity  to ask questions of and receive  answers
from the Company  concerning  the terms and  conditions  of the Offering and the
opportunity to obtain additional information necessary to verify the accuracy of
the  documents  delivered  in  connection  with the purchase of the Units to the
extent it  possesses  such  


                                      -1-
<PAGE>

information or can acquire it without unreasonable effort or expense.  After the
Offering  Documents  have  been  reviewed  by  investors,  and they have had the
opportunity  to address all  inquiries  to the  Company,  separate  Subscription
Agreements shall be completed by each prospective  investor.  The Company,  with
the  consent  of the  Placement  Agent  and the  Placement  Agent,  in its  sole
discretion,  shall have the right to reject  subscriptions  in whole or in part.
The Company shall evidence its acceptance of a subscription by  countersigning a
copy of the  applicable  Subscription  Agreement  and  returning the same to the
Placement Agent.

     Capitalized  terms used in this Agreement,  unless otherwise defined herein
or unless the context otherwise indicates, shall have the same meanings provided
in the Offering Documents.

     1. Appointment of Placement Agent.
        ------------------------------

     (a) The Placement Agent is hereby  appointed  exclusive  placement agent of
the Company (subject to the Placement Agent's right to have Selected Dealers, as
defined in Section 1(c) hereof, participate in the Offering) during the Offering
Period  herein  specified  for the purposes of assisting  the Company in finding
qualified  subscribers  pursuant  to the  Offering  described  in  the  Offering
Documents.  The Placement  Agent shall not be deemed an agent of the Company for
any other  purpose.  The Offering  Period shall  commence on August 8, 1997 (the
"Commencement Date"). Upon receipt of the Minimum Offering amount, the Placement
Agent  may  conduct a closing  (the  "Initial  Closing  Date")  and may  conduct
subsequent  closings on an interim basis until the Maximum  Offering amount (and
any  over-allotment  amount) has been reached (the "Final Closing  Date").  Each
such closing may be referred to herein as a "Closing". The Offering Period shall
terminate  at 11:59 p.m.  New York City Time on  October 8, 1997,  subject to an
extension,  at the option of the Placement  Agent,  for an additional sixty (60)
days.

     (b) Subject to the  performance by the Company of all of its obligations to
be performed  under this Agreement and to the  completeness  and accuracy of all
representations  and warranties of the Company contained in this Agreement,  the
Placement Agent hereby accepts such agency and agrees to use its best efforts to
assist the Company in finding  qualified  subscribers  pursuant to the  Offering
described in the Offering  Documents.  It is understood that the Placement Agent
has no commitment to sell the Units.  The Placement  Agent's agency hereunder is
not terminable by the Company except upon termination of the Offering Period.

     (c) The  Placement  Agent may engage other  persons,  selected by it in its
discretion,  that are members of the National Association of Securities Dealers,
Inc.  ("NASD")  or who are  located  outside  the  United  States  and that have
executed a  Selected  Dealers  Agreement  (each such  person  being  hereinafter
referred  to as a  "Selected  Dealer")  and the  Placement  Agent may allow such
persons  such part of the  compensation  and payment of expenses  payable to the
Placement Agent hereunder as the Placement Agent shall determine.

     (d)  Subscriptions  for  Units  shall  be  evidenced  by the  execution  by
qualified  subscribers of a Subscription  Agreement.  No Subscription  Agreement
shall be  effective  unless and until it is  accepted  by the  Company.  Until a
Closing is held, all  subscription  funds received shall be held as described in
the Subscription  Agreement.  The Placement Agent shall not have any independent
obligation to verify the accuracy or completeness  of any information  contained
in any Subscription  Agreement or the  authenticity,  sufficiency or validity of
any check delivered by any prospective  investor in payment for Units, nor shall
the Placement Agent incur any liability with respect to any such check.


                                      -2-
<PAGE>

     2.  Representations and Warranties of the Company.  The Company represents,
         ---------------------------------------------
warrants and covenants to the Placement Agent and each Selected Dealer,  if any,
as follows:

     (a)  Securities  Law  Compliance.   The  Offering  Documents  as  of  their
          ---------------------------
respective dates do, and as of the date of the Term Sheet and each Closing shall
describe the material aspects of an investment in the Company and conform in all
respects  with  the  requirements  of  Section  4(2) of the  Securities  Act and
Regulation  D  promulgated  thereunder  and with the  requirements  of all other
published rules and  regulations of the Securities and Exchange  Commission (the
"Commission") currently in effect relating to "private offerings" to "accredited
investors" of the type contemplated by the Company. The Offering Documents shall
not as of the  date of the  Term  Sheet  and  each  Closing  contain  an  untrue
statement  of a material  fact or omit to state any material  fact  necessary in
order to make the statements  therein, in light of the circumstances under which
they were made, not misleading,  provided,  however,  that no  representation is
made with  respect to  information  relating  to the  Placement  Agent  which is
provided  in writing by the  Placement  Agent to the  Company  specifically  for
inclusion in the Offering  Documents.  If at any time prior to the completion of
the Offering or other  termination  of this Agreement any event shall occur as a
result of which it might become  necessary to amend or  supplement  the Offering
Documents so that they do not include any untrue  statement of any material fact
or omit to state any material  fact  necessary  in order to make the  statements
therein,  in the light of the circumstances then existing,  not misleading,  the
Company will promptly  notify the Placement  Agent and will supply the Placement
Agent (or the  prospective  purchasers  designated by the Placement  Agent) with
amendments or supplements  correcting  such  statement or omission.  The Company
will  also  provide  the  Placement  Agent  for  delivery  to all  offerees  and
purchasers and their  representatives,  if any, any  information,  documents and
instruments which the Placement Agent and the Company's counsel  reasonably deem
necessary to comply with applicable state and federal law.

     The Company  acknowledges that the Placement Agent (i) has not supplied any
information  for  inclusion in the  Offering  Documents  other than  information
relating  to the  Placement  Agent  furnished  in writing to the  Company by the
Placement Agent specifically for inclusion in the Offering  Documents;  (ii) has
no obligation to  independently  verify any of the  information  in the Offering
Documents;  and (iii) has no responsibility  for the accuracy or completeness of
the Offering  Documents,  except for the  information  relating to the Placement
Agent  furnished in writing by the Placement  Agent to the Company  specifically
for inclusion in the Offering Documents.

     (b) Organization.  Each of the Company and Dunkirk  International Glass and
         ------------
Ceramics  Corporation  and  Advanced  Particle   Technologies,   Inc.  (each,  a
"Subsidiary"  and  collectively,  the  "Subsidiaries")  is  a  corporation  duly
incorporated,  validly  existing  and in good  standing  under  the  laws of the
jurisdiction  of its  incorporation  and has all requisite  corporate  power and
authority to own and lease its properties,  to carry on its respective  business
as currently  conducted and as proposed to be conducted,  to execute and deliver
this Agreement and to carry out the transactions contemplated by this Agreement,
as  appropriate  and is duly  licensed or  qualified to do business as a foreign
corporation  in each  jurisdiction  in which  the  conduct  of its  business  or
ownership or leasing of its  properties  requires it to be so qualified,  except
where the failure to be so qualified would not have a material adverse effect on
the business, financial condition or prospects of the Company.

     (c) Capitalization. The authorized, issued and outstanding capital stock of
         --------------
the Company prior to the consummation of the transactions contemplated hereby is
as set forth in the Offering Document.  All issued and outstanding shares of the
Company  are  validly  issued,  fully 


                                      -3-
<PAGE>

paid and  nonassessable  and have not been issued in violation of the preemptive
rights of any stockholder of the Company. The Preferred Stock, when issued, will
have the rights,  preferences and privileges  substantially  as set forth in the
Form of Certificate of Designation  attached as Exhibit B to the Term Sheet. All
prior sales of  securities of the Company were either  registered  under the Act
and, except as set forth in Schedule 2(c),  applicable  state securities laws or
exempt from such registration,  and no security holder has any rescission rights
with  respect  thereto.  Except  as set  forth in the Term  Sheet,  there are no
outstanding options, warrants,  agreements,  convertible securities,  preemptive
rights or other  rights to  subscribe  for or to purchase  any shares of capital
stock of the  Company.  Except as set forth in the Term  Sheet and as  otherwise
required by law,  there are no  restrictions  upon the voting or transfer of any
shares of the Company's  capital stock pursuant to the Company's  Certificate of
Incorporation,  By-Laws or other  governing  documents or any agreement or other
instruments to which the Company is a party or by which the Company is bound.

     (d)  Warrants,   Preemptive  Rights,   Etc.  Except  as  set  forth  in  or
          -------------------------------------
contemplated  by the Term Sheet,  there are not,  nor will there be  immediately
after any Closing, any outstanding warrants,  options,  agreements,  convertible
securities, rights of first refusal, rights of first offer, preemptive rights or
other rights to subscribe  for or to purchase or other  commitments  pursuant to
which  the  Company  is, or may  become,  obligated  to issue any  shares of its
capital  stock or other  securities  of the Company and this  Offering  will not
cause any anti-dilution  adjustments to such securities or commitments except as
reflected in the Term Sheet.

     (e)  Subsidiaries  and  Investments.  Except with respect to a wholly-owned
          ------------------------------
subsidiary of the Company, CTI ACQSUB-II,  Inc., which presently holds no assets
and which was formed in  connection  with a  previously  proposed  merger of the
Company,  and other than as  disclosed  in the Term Sheet,  the Company does not
own,  directly  or  indirectly,  capital  stock or  other  equity  ownership  or
proprietary interests in any other corporation, association, trust, partnership,
joint venture or other entity.

     (f)  Financial  Statements.  The  financial  information  contained  in the
          ---------------------
Offering Documents is accurate in all material respects. The Company's financial
statements have been prepared in conformity with generally  accepted  accounting
principles  consistently applied and show all material liabilities,  absolute or
contingent,  of the Company and the Subsidiaries required to be recorded thereon
and present  fairly the  financial  position  and results of  operations  of the
Company and the Subsidiaries as of the dates and for the periods indicated.

     (g) Absence of Changes.  Since the date hereof,  except as has been or will
         ------------------
be  reflected  in the Term Sheet prior to  Closing,  neither the Company nor the
Subsidiaries has incurred any liabilities or obligations,  direct or contingent,
other than those which were incurred in the ordinary course of business, nor has
the Company or the Subsidiaries  entered into any transaction  which is material
to the business of the Company or the  Subsidiaries,  and there has not been any
change in the capital  stock of, or any  incurrence  of  long-term  debt by, the
Company or the  Subsidiaries,  or any  issuance  of  options,  warrants or other
rights to purchase the capital stock of the Company or the Subsidiaries,  or any
adverse change or any development  involving a prospective adverse change in the
condition (financial or otherwise), net worth, results of operations,  business,
key personnel or properties which would be material to the business or financial
condition  of the Company or the  Subsidiaries,  and neither the Company nor the
Subsidiaries has become a party to, and neither the business nor the property of
the  Company  or the  Subsidiaries  has become the  subject  of, any  litigation
whether or not in the ordinary course of business.


                                      -4-
<PAGE>

     (h) Title.  Except as set forth on Schedule  2(h),  each of the Company and
         -----
the Subsidiaries  has good and marketable  title to all tangible  properties and
assets  owned by it,  free and  clear of all  liens,  charges,  encumbrances  or
restrictions,  except such as are not  materially  significant  or  important in
relation to the Company's or the Subsidiary's  respective  business;  all of the
material leases and subleases under which the Company is the lessor or sublessor
of  properties  or assets or under  which the Company or the  Subsidiaries  hold
properties  or assets as lessee or sublessee  are in full force and effect,  and
neither the Company nor either of the Subsidiaries is in default in any material
respect with respect to any of the terms or  provisions of any of such leases or
subleases,  and no material  claim has been asserted by anyone adverse to rights
of the Company or the  Subsidiaries  as lessor,  sublessor,  lessee or sublessee
under  any  of  the  leases  or  subleases  mentioned  above,  or  affecting  or
questioning the right of the Company or the Subsidiaries to continued possession
of the leased or subleased  premises or assets under any such lease or sublease.
Each of the  Company  and the  Subsidiaries  owns or  leases  all such  tangible
properties  as are necessary to its  respective  operations as now conducted and
proposed to be conducted and, except to the extent  described in the Term Sheet,
neither the Company nor the Subsidiaries  presently  anticipate the need for any
capital expenditures.

     (i) Proprietary Rights. Except as has been or will be reflected in the Term
         ------------------
Sheet prior to each Closing,  each of the Company and the  Subsidiaries  owns or
possesses   adequate  and  enforceable   rights  to  use  all  patents,   patent
applications,   trademarks,   service  marks,  trade  names,   corporate  names,
copyrights,   trade  secrets,  processes,  mask  works,  licenses,   inventions,
formulations,  technology  and know-how and other  intangible  property  used or
proposed  to be  used  in  the  conduct  of  its  business  as  described  in or
contemplated by the Term Sheet (the "Proprietary Rights"). Except as has been or
will be reflected in the Term Sheet prior to each  Closing,  the Company and the
Subsidiaries  or the  entities  from whom the  Company or the  Subsidiaries  has
acquired  rights has taken all necessary  action to protect all of the Company's
and the Subsidiary's  Proprietary Rights. Except as set forth in the Term Sheet,
neither the Company nor the  Subsidiaries  has received any notice of, and there
are not any facts known to the Company or the  Subsidiaries  which  indicate the
existence of, (i) any infringement or misappropriation by any third party of any
of the  Proprietary  Rights or (ii) any claim by a third  party  contesting  the
validity of any of the  Proprietary  Rights;  the Company has not  received  any
notice of any infringement,  misappropriation or violation by the Company or the
Subsidiaries or any of its employees of any proprietary rights of third parties,
and,  to the  best of the  Company's  knowledge,  neither  the  Company  nor the
Subsidiaries  nor  any  of  its  employees  has  infringed,  misappropriated  or
otherwise violated any Proprietary Rights of any third parties; and, to the best
of the Company's knowledge, no infringement,  illicit copying,  misappropriation
or violation of any intellectual property rights of any third party has occurred
or will occur with respect to any products  currently  being sold by the Company
or the Subsidiaries or with respect to any products  currently under development
by the  Company  or the  Subsidiaries  or with  respect  to the  conduct  of the
Company's or either of the  Subsidiary's  businesses as currently  contemplated.
Except as described in the Term Sheet,  the Company is not aware that any of its
employees are obligated  under any contract  (including  licenses,  covenants or
commitments  of any  nature) or other  agreement,  or  subject to any  judgment,
decree or order of any court or administrative agency, that would interfere with
the use of the  employee's  best efforts to promote the interests of the Company
or  the   Subsidiaries  or  that  would  conflict  with  the  Company's  or  the
Subsidiary's  businesses as currently  conducted or as proposed to be conducted.
To the best of the  Company's  knowledge,  neither the execution nor delivery of
this  Agreement,  nor  the  carrying  on of  the  Company's  or  either  of  the
Subsidiary's  businesses  by the  employees  of the  Company  or  either  of the
Subsidiaries,  nor the conduct of the  Company's  or either of the  Subsidiary's
businesses, as currently conducted or as proposed to be conducted, will conflict
with or  result  in 


                                      -5-
<PAGE>

a breach of the terms,  conditions  or  provisions  of, or  constitute a default
under, any contract, covenant or instrument under which any such employee is now
obligated.

     (j) Litigation.  Except as set forth in the Term Sheet, there is no action,
         ----------
suit,  claim or proceeding at law or in equity,  or to the Company's  knowledge,
investigation or customer complaint,  by or before any arbitrator,  governmental
instrumentality or other agency now pending or, to the knowledge of the Company,
threatened  against the Company or the  Subsidiaries (or basis therefor known to
the Company which the Company  believes will result in the  foregoing).  Neither
the  Company  nor the  Subsidiaries  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 which would  materially  adversely affect the Company's or either of the
Subsidiary's businesses, prospects or financial condition.

     (k)  NonDefaults,  NonContravention.  Except as set forth on Schedule 2(k),
          ------------------------------
neither the Company nor the  Subsidiaries  is in violation of or default  under,
nor will the  execution  and  delivery of this  Agreement or any of the Offering
Documents,  or consummation of the transactions  contemplated  herein or therein
result  in a  violation  of or  constitute  a  default  in  the  performance  or
observance of any obligation (i) under its Certificate of Incorporation,  or its
By-Laws, or any indenture,  mortgage, contract, material purchase order or other
agreement  or  instrument  to which the Company is a party or by which it or 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 is no  existing  condition,  event or act which
constitutes,  nor  which  after  notice,  the  lapse  of  time  or  both,  could
constitute, a default under any of the foregoing.

     (l) Taxes.  Each of the Company and the Subsidiaries has filed all Federal,
         -----
state,  local and foreign tax returns  which are  required to be filed by it and
all such  returns are true and  correct in all  material  respects.  Each of the
Company and the  Subsidiaries has paid all taxes due pursuant to such returns or
pursuant to any assessments  received by it or which it is obligated to withhold
from amounts owing to any employee, creditor or third party. Each of the Company
and the Subsidiaries has properly accrued all taxes required to be accrued.  The
tax returns of the Company and the  Subsidiaries  have never been audited by any
state,  local or Federal  authorities.  Each of the Company and the Subsidiaries
has 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.

     (m)  Compliance  With Laws,  Licenses,  Etc.  Each of the  Company  and the
          --------------------------------------
Subsidiaries is in compliance with all federal,  state, local or foreign,  laws,
ordinances,  regulations and orders applicable to its respective  business,  the
violation  of, or  noncompliance  with which,  would have a  materially  adverse
effect on the  business,  financial  condition,  prospects or  operations of the
Company or the  Subsidiaries.  Each of the Company and the  Subsidiaries has all
governmental   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 its respective business as currently conducted and the use of its properties,
except where the failure to be licensed would not have a material adverse effect
on the  business  of the  Company  or  either of the  Subsidiaries.  Each of the
Company's  and the  Subsidiary's  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 or, to the best  knowledge  of the Company,  threatened  to revoke or
limit any thereof.


                                      -6-
<PAGE>

     (n) Authorization of Documents and Units.  Each of the Offering  Documents,
         ------------------------------------
has been, or prior to any Closing will be duly and validly authorized,  executed
and delivered by the Company and the execution,  delivery and performance by the
Company of the Offering  Documents  has been duly  authorized  by all  requisite
corporate  action  by  the  Company  and  when  delivered,  constitute  or  will
constitute the legal, valid and binding obligations of the Company,  enforceable
in accordance  with their  respective  terms,  subject to the  availability  and
enforceability of equitable remedies and to applicable bankruptcy and other laws
relating to the rights of creditors  generally and except as the  enforcement of
the rights to  indemnification  and  contribution  hereunder and under any other
Offering  Documents may be limited by federal or state securities laws or public
policy.  Subject  to  the  filing  prior  to the  Initial  Closing  Date  of the
Certificate of Designation,  the Company has full power and lawful  authority to
authorize,  issue and sell the Units to be sold to the Purchasers. No consent is
required  by the Company or either of the  Subsidiaries  from any third party to
perform  any of its  obligations  under this  Agreement  or any of the  Offering
Documents.

     (o)  Exemption  from  Registration.   Assuming  (i)  the  accuracy  of  the
          -----------------------------
information   provided  by  the  respective   Purchasers  in  the   Subscription
Agreements, and (ii) the timely filing of a Form D by the Company, the offer and
sale of the Units and the  granting of the  Placement  Warrants  pursuant to the
terms of this  Agreement are exempt from the  registration  requirements  of the
Securities  Act  and the  rules  and  regulations  promulgated  thereunder  (the
"Regulations").  The  Company  is not  disqualified  from  the  exemption  under
Regulation D by virtue of the disqualifications contained in Rule 505(b)(2)(iii)
or Rule 507  promulgated  thereunder  and the  securities  underlying the Units.
There  exist  no fact or set of facts  which  might  cause  the  Offering  to be
integrated with any other offering of the Company's securities.

     (p) Registration Rights. Except as set forth in the Term Sheet or Section 5
         -------------------
of the Subscription Agreements,  no person has any right to cause the Company to
effect  the  registration  under the  Securities  Act of any  securities  of the
Company.

     (q)  Brokers.  Neither  the  Company  nor any of its  officers,  directors,
          -------
employees or  stockholders  has employed any broker or finder in connection with
the transactions contemplated by this Agreement other than the Placement Agent.

     (r) Title to Preferred Stock. When certificates  representing the Preferred
         ------------------------
Stock shall have been duly  delivered to the  Purchasers  and payment shall have
been made for the Units, the several  Purchasers shall have good and valid title
to the Preferred  Stock,  and upon conversion of such Preferred Stock (including
the Preferred Stock issuable upon exercise of the Placement  Warrants),  subject
to the filing of an amended  Certificate of Incorporation  increasing the number
of authorized  shares of the Company's  Common Stock as contemplated by the Term
Sheet,  will have good and valid title to the Common  Stock  issuable  upon such
conversion (the "Conversion Shares"), in each case, free and clear of all liens,
encumbrances and adverse claims,  whatsoever  (except as arising from applicable
Federal and state  securities  laws), and the Company shall have paid all taxes,
if  any,  in  respect  of  the  original  issuance  thereof.  When  certificates
representing  the  Placement  Warrants  shall  have been duly  delivered  to the
Placement  Agent, the Placement Agent or its designees shall have good and valid
title to the Placement  Warrants,  and upon exercise of such Placement Warrants,
will  have  good and  valid  title to the  Preferred  Stock  issuable  upon such
exercise,  and upon  conversion of the Preferred Stock issuable upon exercise of
such Placement Warrants, will have good and valid title to the Common Stock into
which such  Preferred  Stock is converted,  in each case,  free and clear of all
liens,  encumbrances  and adverse  claims,  whatsoever  (except as arising  from
applicable  Federal and 



                                      -7-
<PAGE>

state  securities  laws),  and the Company shall have paid all taxes, if any, in
respect of the original issuance thereof.

     (s) Non-Affiliated Directors. The Company's Board of Directors has not less
         ------------------------
than two directors who are independent from, and unaffiliated  with,  management
of the Company.

     (t)  Accuracy of Reports.  All reports  required to be filed by the Company
          -------------------
and the  Subsidiaries  under the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"), have been duly filed with the Commission,  complied at the
time  of  filing  in all  material  respects  with  the  requirements  of  their
respective  forms and,  except to the extent  updated or  superseded by the Term
Sheet or any  subsequently  filed  report,  were  complete  and  correct  in all
material  respects as of the dates at which the information  was furnished,  and
contained  (as of such dates) no untrue  statement of a material fact or omitted
to state a material  fact  necessary in order to make the  statements  contained
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.

     (u)  Authorized  Shares.  The  Company  shall (i) use its best  efforts  to
          ------------------
increase  the  authorized  shares of Common Stock of the Company to a minimum of
40,000,000  and in any case a number of shares  sufficient  for the  purpose  of
conversion  of all the  Preferred  Stock  sold in or  related  to this  Offering
including  without  limitation,  (x) the Common Stock  underlying  the Placement
Warrants and (y) the Common Stock  underlying the Preferred Stock resulting from
dividends  paid  on  the  Preferred  Stock  (or  such  other  amounts  as may be
authorized by the Board of Directors) within 90 days following the Final Closing
Date  but in any  event  shall  effect  such  increase  no  later  than 180 days
following the Final Closing Date and (ii) at all times after the date upon which
such  Common  Stock  is  authorized,  reserve  and  keep  available  out  of its
authorized  but  unissued  shares of Common  Stock  solely  for the  purpose  of
effecting the conversion of the shares of Preferred Stock, such number of shares
of  Common  Stock  as  shall  from  time to time be  sufficient  to  effect  the
conversion  of all  outstanding  shares of the Preferred  Stock.  If at any time
Placement  Agent elects to convert any of its shares of Preferred  Stock and the
Company does not have  authorized and reserved for issuance a sufficient  number
of shares of Common Stock to permit conversion in full of all outstanding shares
of Preferred  Stock,  then the Placement Agent shall be entitled to receive upon
conversion of its Preferred  Stock only that number of shares of Common Stock as
equals the  Placement  Agent's  Pro Rata  Percentage  of the number of shares of
Common Stock  authorized and reserved for issuance upon  conversion of Preferred
Stock.

     For  purposes of the previous  sentence,  the  Placement  Agent's "Pro Rata
Percentage"  on any date equals the number of shares of Preferred  Stock held of
record by the  Placement  Agent on such date  divided by the number of shares of
Preferred Stock held of record by all holders of Preferred Stock on such date.

     In addition to the foregoing, if after 180 days following the Final Closing
Date the Company has failed to  authorize  and  reserve a  sufficient  number of
shares of Common Stock to permit conversion in full of all outstanding shares of
Preferred Stock, the Company shall,  for no additional  consideration,  issue to
the Placement Agent  additional  shares of Preferred Stock equal to 0.25% of the
shares of Preferred Stock then held by Placement  Agent,  exclusive of shares of
Preferred  Stock issued  pursuant to this Section 2(u), for each day the Company
lacks  sufficient  authorized  and  reserved  shares of  Common  Stock to permit
conversion in full of all outstanding shares of Preferred Stock.


                                      -8-
<PAGE>

     3. Closing; Placement and Fees.
        ---------------------------

     (a) Closing.  Provided that the Placement Agent has received  subscriptions
         ------- 
for the Minimum Offering amount, the Placement Agent may conduct, in its
sole discretion,  closings (the date of each a "Closing Date") at the offices of
the Placement Agent until the Final Closing Date. On each Closing Date,  payment
for the Units  issued and sold by the  Company  shall be made to the  Company in
immediately  available  funds against  delivery of  certificates  evidencing the
Preferred Stock comprising such Units.

     (b) Conditions to Placement  Agent's  Obligations.  The  obligations of the
         ---------------------------------------------
Placement Agent hereunder are subject to the accuracy of the representations and
warranties of the Company herein  contained as of the date hereof and as of each
Closing Date, to the performance by the Company of its obligations hereunder and
to the following additional conditions:

     (i) Due Qualification or Exemption.  (A) The Offering  contemplated by this
         ------------------------------
Agreement  will  become  qualified  or be exempt  from  qualification  under the
securities laws of the several states pursuant to paragraph 3(c) below not later
than the Closing Date, subject to any filings to be made thereafter,  and (B) at
the Closing Date, no stop order suspending the sale of the Units shall have been
issued,  and no  proceeding  for that  purpose  shall  have  been  initiated  or
threatened;

     (ii)  No  Material  Misstatements.   Neither  the  Blue  Sky  qualification
           ---------------------------
materials,  the  Offering  Documents,  nor the Term  Sheet,  nor any  supplement
thereto,  will contain an untrue statement of a fact which in the opinion of the
Placement  Agent is material,  or omit to state a fact,  which in the opinion of
the Placement Agent is material and is required to be stated therein,  or is, in
the opinion of the Placement Agent, necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;

     (iii) Compliance with  Agreements.  The Company will have complied with all
           ---------------------------
agreements and satisfied all conditions on its part to be performed or satisfied
hereunder and under the Subscription Agreements at or prior to each Closing;

     (iv)  Corporate  Action.  The Company will have taken all corporate  action
           -----------------
necessary  to permit  the  valid  execution,  delivery  and  performance  of the
Offering Documents by the Company,  including without limitation,  obtaining the
approval of the  Company's  board of directors for the execution and delivery of
the Offering Documents, the increase in authorized shares of Common Stock of the
Company,  the  performance by the Company of its  obligations  hereunder and the
Offering contemplated hereby;

     (v) Opinions of Counsel to the Company.  The Placement  Agent shall receive
         ----------------------------------
the opinion of Buchanan Ingersoll,  counsel to the Company (stating that each of
the Purchasers may rely thereon as though addressed directly to such Purchaser),
dated as of each Closing Date, substantially to the effect that:

     (A) Each of the Company and the  Subsidiaries is duly  incorporated  and is
validly  existing  and  in  corporate  good  standing  under  the  laws  of  its
jurisdiction of incorporation,  has all requisite  corporate power and authority
necessary to own or hold its properties and conduct its business as described in
the Term Sheet and is duly  qualified  or  licensed  to do business as a foreign
corporation and is in good standing in each  jurisdiction in which the nature of
the business conducted,  or as proposed to be conducted in the Term Sheet, by 


                                      -9-
<PAGE>

it or the properties owned,  leased or operated by it, makes such  qualification
or  licensing  necessary  and where the failure to be so  qualified  or licensed
would have a material adverse effect upon the business,  prospects and financial
condition of the Company.  To such counsel's  knowledge,  except with respect to
the Subsidiaries,  the Company does not own, directly or indirectly, any capital
stock  or  other  equity  ownership  or  proprietary   interests  in  any  other
corporation, association, trust, partnership, joint venture or other entity;

     (B) the  execution,  delivery  and  performance  of  each  of the  Offering
Documents  to which the  Company is a  signatory,  and the  issuance  of (I) the
Preferred  Stock and the Placement  Warrants,  (II) the Preferred Stock issuable
upon  exercise  of the  Placement  Warrants  and  (III)  the  Conversion  Shares
(including the Conversion  Shares  underlying the Preferred  Stock issuable upon
exercise of the Placement Warrants),  have been duly authorized,  subject to the
filing of an  amended  Certificate  of  Incorporation  increasing  the number of
authorized  shares of the  Company's  Common Stock as  contemplated  by the Term
Sheet, by all necessary corporate action on the part of the Company. Each of the
Offering  Documents to which the Company is a signatory  has been duly  executed
and  delivered  by the  Company  and  constitutes  a legal,  valid  and  binding
obligation of the Company  enforceable in accordance  with its terms,  except as
such  enforceability  may  be  limited  by  applicable  bankruptcy,  insolvency,
reorganization, moratorium, fraudulent conveyance, receivership or other laws of
general  application  relating to or  affecting  generally  the  enforcement  of
creditors'  rights and the  application  of equitable  principles in any action,
legal or  equitable,  and except as rights to indemnity or  contribution  may be
limited by applicable law;

     (C) the authorized,  issued and outstanding capital stock of the Company as
of the date hereof (before  giving effect to the  transactions  contemplated  by
this Agreement) is as set forth in the Term Sheet. To such counsel's  knowledge,
there are no outstanding warrants, options, agreements,  convertible securities,
preemptive rights or other commitments  pursuant to which the Company is, or may
become,  obligated to issue any shares of its capital stock or other  securities
of the  Company  other  than as set forth in the Term  Sheet.  All of the issued
shares of capital stock of the Company have been duly and validly authorized and
issued,  are  fully  paid and  nonassessable  and to the best of such  counsel's
knowledge,  have not been issued in  violation of the  preemptive  rights of any
security holder;

     (D)  assuming  (x)  the  accuracy  of  the  information   provided  by  the
Subscribers  in the  Subscription  Documents,  (y) the  timely  filing  with the
Commission  and  any  applicable  state  securities  authority  of a  Form D and
amendments thereto containing  accurate and complete  information,  the issuance
and sale of the Units is exempt from  registration  under the Securities Act and
Rule 506 of Regulation D promulgated thereunder;

     (E) neither  the  execution  and  delivery of the  Offering  Documents  nor
compliance  with the  terms  hereof  or  thereof,  nor the  consummation  of the
transactions  herein or therein  contemplated,  has,  nor will,  conflict  with,
result  in a breach  of,  or  constitute  a default  under  the  Certificate  of
Incorporation  or By-laws of the Company or either of the  Subsidiaries,  or any
material  contract,  instrument  or document  known to such  counsel,  after due
inquiry,  to which the Company or either of the  Subsidiaries  is a party, or by
which it or any of its  properties  is bound or, to the best  knowledge  of such
counsel,  violate any applicable order or decree of any  governmental  agency or
court having  jurisdiction over the Company or either of the Subsidiaries or any
of its properties or business;

     (F)  except  as  disclosed  in the  Term  Sheet,  to  such  counsel's  best
knowledge,  there are no claims, actions,  suits,  investigations or proceedings
before 


                                      -10-
<PAGE>

or by any arbitrator, court, governmental authority or instrumentality pending
or  threatened  against  the  Company or either of the  Subsidiaries.  Except as
disclosed in the Term Sheet,  to such counsel's  knowledge,  neither the Company
nor either of the  Subsidiaries  is a party or subject to the  provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality;

     (G) upon the issuance of the Units,  the  Preferred  Stock  (including  the
shares of Preferred Stock issuable upon exercise of the Placement Warrants), the
Placement  Warrants  and the  Conversion  Shares,  subject  to the  filing of an
amended Certificate of Incorporation  increasing the number of authorized shares
of the Company's Common Stock as contemplated by the Term Sheet,  (including the
Conversion  Shares  underlying  the  Preferred  Stock  issuable upon exercise of
Placement  Warrants),  each of the  purchasers  or the  Placement  Agent and its
designees, as the case may be, shall acquire such securities,  free and clear of
all pledges,  liens, claims,  encumbrances,  preemptive rights,  rights of first
offer or right of first refusal and restrictions known to such counsel after due
inquiry,  except for the  transfer  restrictions  set forth in the  Subscription
Agreements  and any action  taken to  encumber  such  securities  by the holders
thereof;

     (H) the Placement  Warrants,  when issued in  accordance  with the terms of
this  Agreement  and/or  the  Subscription  Agreement,  as  applicable,  for the
consideration  expressed  therein,  will  have  been  validly  issued  and  will
constitute  legal,  valid and binding  obligations  of the  Company  enforceable
against the Company in accordance with their  respective  terms,  except as such
enforceability   may  be   limited   by   applicable   bankruptcy,   insolvency,
reorganization,  moratorium  or other laws of general  application  relating  or
affecting  generally the enforcement of creditors' rights and the application of
equitable principles in any action,  legal or equitable.  The Preferred Stock to
be issued as of the date of such  opinion,  when issued in  accordance  with the
terms of this Agreement and the  Subscription  Agreements for the  consideration
expressed  therein,  will have been validly issued and such Preferred Stock will
be fully paid and  nonassessable.  The Preferred Stock issuable upon exercise of
the Placement Warrants, when issued in accordance with the terms thereof for the
consideration  expressed  therein,  will have been duly issued;  such  Preferred
Stock will be fully paid and  nonassessable  and the provisions of the Preferred
Stock  Certificate  of  Designation  will  constitute  legal,  valid and binding
obligations of the Company  enforceable  against the Company in accordance  with
their  terms,  except  as  such  enforceability  may be  limited  by  applicable
bankruptcy,  insolvency,  reorganization,  moratorium  or other  laws of general
application relating or affecting generally the enforcement of creditors' rights
and the application of equitable  principles in any action,  legal or equitable.
Except as set forth in the Term Sheet,  the  Conversion  Shares  (including  the
Conversion  Shares  underlying the Preferred Stock issuable upon exercise of the
Placement  Warrants),  subject  to  the  filing  of an  amended  Certificate  of
Incorporation increasing the number of authorized shares of the Company's Common
Stock as contemplated by the Term Sheet,  have been duly authorized and reserved
for issuance  and,  when issued in  accordance  with the terms of the  Preferred
Stock, will have been validly issued and will be fully paid and nonassessable.

     (I) the Company's By-laws and/or Certificate of Incorporation, as in effect
as of the date of such opinion,  contain  provisions  indemnifying all directors
against  liability and absolving all directors from liability to the Company and
its  stockholders to the maximum extent permitted under the laws of the State of
Delaware.

     Such counsel shall state,  in opining on any matter stated to be subject to
the knowledge of such counsel,  that such counsel has made appropriate inquiries
of


                                      -11-
<PAGE>

officers of the Company and the Subsidiaries  with respect to the subject matter
of such  opinion  and has  reviewed  all  documents  the  existence  of which is
disclosed by such inquiries or of which such counsel  otherwise is aware of as a
result of its representation of the Company.

     In addition, such counsel shall state that in the course of the preparation
of the Offering Documents,  which involved, among other things,  discussions and
inquiries  concerning  the  various  legal  matters  and the  review of  certain
corporate   records,   documents  and  proceedings,   counsel   participated  in
conferences with certain officers and other  representatives  of the Company and
the  Placement  Agent during which the  contents of the Offering  Documents  and
related matters were discussed. Such counsel shall advise the Placement Agent in
the form of an  opinion of counsel  that such  counsel  has no reason to believe
that, as of each Closing Date,  the Term Sheet or any document  incorporated  by
reference  therein contained any untrue statement of a material fact relating to
the Company or omitted to state a material fact relating to the Company required
to be stated therein or necessary to make the statements  therein not misleading
in the light of the circumstances under which they were made.

     (vi)  Opinions of  Environmental  and Patent  Counsel.  If requested by the
           -----------------------------------------------
Placement Agent, the Placement Agent shall receive the opinions of environmental
counsel  and  patent  counsel  to the  Company  (which  such  counsel  shall  be
satisfactory to the Placement Agent in its sole  discretion),  dated the Closing
Date in the form and substance satisfactory to counsel for the Placement Agent.

     (vii) Comfort  Letter.  The Company  shall cause the Company's  independent
           ---------------
public accountants to address and deliver to the Company and the Placement Agent
a letter or letters  (which  letters  are  frequently  referred  to as  "Comfort
Letters")  dated as of each  Closing  Date and the  effective  date of the Shelf
Registration  Statement required to be filed in connection with the Subscription
Agreements.

     (viii)  Officer's  Certificate.   The  Placement  Agent  shall  receive  an
             ----------------------
Officer's  Certificate  substantially  in the form of  Exhibit  A  hereto  and a
Secretary's Certificate substantially in the form of Exhibit B hereto, signed by
the appropriate  parties and dated as of each Closing Date.  These  certificates
shall  state,  among  other  things,  that the  representations  and  warranties
contained  in Section 2 hereof are true and  accurate  in all  respects  at such
Closing Date with the same effect as though expressly made at such Closing Date.

     (ix) Escrow  Agreement.  The Placement Agent shall receive a copy of a duly
          -----------------
executed Escrow Agreement with Fleet National Bank.

     (x)  Transmittal  Letters.  The Placement Agent shall receive copies of all
          --------------------
letters from the Company to the investors  transmitting  the Preferred Stock and
shall receive a letter from the Company confirming transmittal of the securities
to the investors.

     (c) Blue Sky. A summary  blue sky  survey,  at the sole cost of the Company
         --------
(including,  without limitation,  the legal fees and disbursements in connection
therewith),  shall be prepared  by counsel to the  Placement  Agent  stating the
extent to which and the conditions  upon which offers and sales of the Units may
be made in certain jurisdictions. 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  set  forth  in  Section  2 of this
Agreement,  (iii) the  representations and 


                                      -12-
<PAGE>

warranties of the Placement  Agent and (iv) the  representations  of the Company
set  forth  in the  certificate  to be  delivered  at the  Closing  pursuant  to
paragraph (viii) of Section 3(b).

     (d) Placement Fees and Expenses.  (i)  Simultaneously  with payment for and
         ---------------------------
delivery of the Units at each Closing as provided in paragraph  3(a) above,  the
Company shall at such Closing pay to the Placement  Agent (i) a commission  (the
"Cash Commission") equal to nine percent (9%) of the aggregate purchase price of
the  Units  sold and (ii) a  non-accountable  expense  allowance  (the  "Expense
Allowance")  equal to four percent (4%) of the aggregate  purchase  price of the
Units sold.  The Company  shall also pay all  expenses  in  connection  with the
qualification  of the Units under the  securities or Blue Sky laws of the states
which the Placement Agent shall designate. In addition, upon each Closing of the
sale of the Units being  offered,  the Company will sell to the Placement  Agent
and/or its  designees,  for $.001 per warrant,  preferred  stock  warrants  (the
"Placement  Warrants")  to acquire a number of newly issued  shares of Preferred
Stock  equal to ten  percent  (10%) of the number of shares of  Preferred  Stock
issued in the Offering,  exercisable  for a period of ten (10) years  commencing
six  months  after the Final  Closing  Date at an  exercise  price  equal to one
hundred  ten  percent  (110%) of the initial  offering  price of the Units.  The
Company agrees with the Placement  Agent and its successors and assigns that the
Placement  Warrants  will not be subject to  redemption  by the Company nor will
they be  callable or  mandatorily  convertible  by the  Company.  The  Placement
Warrants cannot be transferred,  sold,  assigned or hypothecated  for six months
except  that they may be  assigned in whole or in part during such period to any
NASD  member  participating  in the  Offering  or any officer or employee of the
Placement Agent or any such NASD member.  The Placement  Warrants will contain a
cashless exercise feature and antidilution  provisions and the right to have the
Conversion  Shares issuable upon  conversion of the Preferred  Stock  underlying
such warrants included on the Shelf Registration Statement.

     (ii) The Cash Commission,  Expense Allowance and Placement  Warrants as set
forth in this Agreement shall be paid to the Placement Agent with respect to any
investment  by any investors  introduced  to the Company by the Placement  Agent
("Covered  Investors")  in the event that any such  Covered  Investor  purchases
securities  from the Company  during the twelve (12) months  following the Final
Closing Date of the Offering.

     (e) No Adverse Changes. There shall not have occurred, at any time prior to
         ------------------
the Closing,  (i) any domestic or  international  event, act or occurrence which
has disrupted,  or in the Placement Agent's  determination will in the immediate
future  disrupt,  the  securities  markets;  (ii) a general  suspension of, or a
general  limitation  on prices for,  trading in securities on the New York Stock
Exchange,  the American Stock Exchange,  the Nasdaq National Market,  the Nasdaq
SmallCap Market, or in the over-the-counter  market; (iii) any outbreak of major
hostilities  or other  national  or  international  calamity;  (iv) any  banking
moratorium declared by a state or federal authority; (v) any moratorium declared
in foreign exchange trading by major international banks or other persons;  (vi)
any material  interruption  in the mail service or other means of  communication
within the United  States;  (vii) any material  adverse  change in the business,
properties,  assets, results of operations,  financial condition or prospects of
the Company;  or (viii) any change in the market for securities in general or in
political,  financial,  or economic  conditions  which, in the Placement Agent's
reasonable judgment, makes it inadvisable to proceed with the offering, sale and
delivery of the Units.

     4. Covenants of the Company.
        -------------------------

     (a) Use of  Proceeds.  Except as set forth on  Schedule  4(a)  hereto,  the
         ----------------
Company shall not use any proceeds  from the Offering to repay any  indebtedness
of the  

                                      -13-
<PAGE>

Company,  including  but not limited to any  indebtedness  to current  executive
officers or  principal  stockholders  of the  Company,  but  excluding  accounts
payable to non-affiliates  incurred in the ordinary course,  including scheduled
repayments  of  principal  and  interest on existing  indebtedness  and lines of
credit secured by the receivables  and inventory of the Company,  and such other
indebtedness as shall be agreed upon in writing by the Company and the Placement
Agent.

     (b) Expenses of Offering.  The Company shall be  responsible  for and shall
         --------------------  
bear all expenses incurred in connection with the proposed
Offering,  including but not limited to, the costs of preparing and  duplicating
the Term Sheet and all exhibits  thereto;  the costs of preparing,  printing and
filing with the  Commission  the Shelf  Registration  Statement and  amendments,
post-effective  amendments and supplements thereto;  preparing,  duplicating and
delivering   exhibits  thereto  and  copies  of  the   preliminary,   final  and
supplemental  prospectus;  preparing,  duplicating and delivering  (including by
facsimile) all selling  documents,  including but not limited to the Term Sheet,
the Placement Agency Agreement,  Subscription  Agreements,  Placement  Warrants,
blue sky memorandum and stock and warrant  certificates;  blue sky fees,  filing
fees and legal fees and  disbursements of the Placement Agent's counsel and blue
sky counsel;  fees and disbursements of the transfer and warrant agent; the cost
of a total of two sets of bound closing  volumes for the Placement Agent and its
counsel; and the cost of three tombstone  advertisements,  at least one of which
shall appear in a national business newspaper and one of which shall appear in a
major New York newspaper (or, at the option of the Placement  Agent,  forty (40)
lucite deal mementos) (collectively, the "Company Expenses"). The Company agrees
to use a printer  designated  by the  Placement  Agent  and which is  reasonably
acceptable  to the  Company.  The  Company  shall pay to the  Placement  Agent a
non-accountable  expense  allowance  equal to 4% of the  total  proceeds  of the
Offering (the "Expense  Allowance"),  of which twenty thousand dollars ($20,000)
shall have been paid upon  execution of the Letter of Intent between the Company
and the Placement Agent and twenty thousand dollars  ($20,000) of which shall be
due and payable upon the date the Term Sheet is completed,  to cover the cost of
the  Placement  Agent's  mailing,  telephone,  telecopy,  travel,  due diligence
meetings  and other  similar  expenses  excluding  legal  fees of the  Placement
Agent's counsel and blue sky counsel (which fees shall be the  responsibility of
the Company as provided  above and any other items  designated  above as Company
Expenses).  Such prepaid  expense  allowances  shall be  non-refundable.  If the
proposed  financing is not completed  because the Company prevents it or because
of a breach by the  Company  of any  covenants,  representations  or  warranties
contained herein, then the Company shall pay to the Placement Agent a fee of one
hundred  thousand  dollars  ($100,000) (in addition to the Company  Expenses for
which the Company shall in all events remain liable).

     (c) Notification. The Company shall notify the Placement Agent immediately,
         ------------
and in  writing,  (A) when any event  shall  have  occurred  during  the  period
commencing  on the date  hereof  and  ending on the later of the  Closing or the
Final Closing Date as a result of which the Offering Documents would include any
untrue  statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements  therein not misleading
in light of the circumstances  under which they were made and (B) of the receipt
of any notification with respect to the modification,  rescission, withdrawal or
suspension of the  qualification  or registration  of the Units,  the Placements
Warrants  and the  Registrable  Capital  Stock (as  defined  herein),  or of any
exemption from such  registration or  qualification,  in any  jurisdiction.  The
Company  will  use  its  best  efforts  to  prevent  the  issuance  of any  such
modification,   rescission,   withdrawal   or   suspension   and,  if  any  such
modification, rescission, withdrawal or suspension is issued and you so request,
to obtain the lifting thereof as promptly as possible.


                                      -14-
<PAGE>

     (d) Blue Sky.  The Company  will use its best  efforts to qualify the Units
         --------
for  offering  and sale under  exemptions  from  qualification  or  registration
requirements  under the securities or "blue sky" laws of such  jurisdictions  as
the Placement Agent may reasonably request;  provided however,  that the Company
will not be obligated to qualify as a dealer in securities  in any  jurisdiction
in which it is not so  qualified.  The Company will not  consummate  any sale of
Units in any  jurisdiction  in which it is not so  qualified or in any manner in
which such sale may not be lawfully made.

     (e)  Registration   Statement   Filing.   The  Company  will,  as  soon  as
          ---------------------------------
practicable, but not later than 30 days after the Final Closing Date, (i) file a
shelf registration  statement (the "Shelf Registration  Statement") with respect
to (i) the  Conversion  Shares and (ii) the shares of Common Stock issuable upon
conversion of the Preferred Stock underlying the Placement  Warrants (as defined
in paragraph 3(d)) (together,  the "Registrable Capital Stock") with the SEC and
use its  best  efforts  to  have  such  Shelf  Registration  Statement  declared
effective by the SEC prior to the date which is 75 days after the Final  Closing
Date (subject to penalties for failure to effect such  registration  in the time
frames required as set forth in the  Subscription  Agreement) and (b) cause such
Shelf Registration  Statement to remain effective until such date as the holders
of the  securities  have  completed  the  distribution  described  in the  Shelf
Registration Statement or at such time that such shares are no longer, by reason
of Rule 144(k) under the Securities Act,  required to be registered for the sale
thereof by such holders.  If requested by the Placement Agent, and in accordance
with applicable  securities laws, the Shelf  Registration  Statement shall cover
the  direct  sale of such  Registrable  Capital  Stock  to the  holders  of such
securities.  The  Registrable  Capital  Stock  will be  subject  to a  staggered
"lock-up" as may be deemed advisable by the Placement Agent.

     (f) Form D Filing.  The Company shall file five copies of a Notice of Sales
         -------------
of  Securities  on Form D with the  Commission  no later  than 15 days after the
first  Closing Date.  The Company  shall file  promptly such  amendments to such
Notice on Form D as shall become necessary and shall also comply with any filing
requirement imposed by the laws of any state or jurisdiction in which offers and
sales are made. The Company shall furnish the Placement Agent with copies of all
such filings.

     (g) Press Releases,  Etc.  Except as otherwise  required by applicable law,
         ---------------------
the  Company  shall not,  during the period  commencing  on the date  hereof and
ending  thirty days after the Final  Closing  Date,  issue any press  release or
other   communication,   make  any  written  or  oral  statement  to  any  media
organization  or  publication  or hold any  press  conference,  presentation  or
seminar,  or engage in any other  publicity  with  respect to the  Company,  its
financial condition,  results of operations,  business,  properties,  assets, or
liabilities, or the Offering, without the prior written consent of the Placement
Agent.  Upon the request of the Placement  Agent,  the Company shall make a Rule
135(c) (under the Securities Act of 1933, as amended)  announcement prior to the
commencement of the Offering.

     (h) Public Documents. Following the Final Closing Date of the Offering, the
         ----------------
Company will furnish to the Placement  Agent: (i) as soon as practicable (but in
the case of the annual  report of the  Company to its  stockholders,  within 120
days  after the end of each  fiscal  year of the  Company)  one copy of: (A) its
annual report to its stockholders  (which annual report shall contain  financial
statements audited in accordance with generally accepted  accounting  principles
in the United  States of America by a firm of certified  public  accountants  of
recognized  standing),  (B) if not included in substance in its annual report to
stockholders,  its  annual  report  on Form  10-KSB,  (C) each of its  quarterly
reports to its  stockholders,  and if not included in 

                                      -15-
<PAGE>

substance in its quarterly reports to stockholders, its quarterly report on Form
10-QSB,  (D) each of its current reports on Form 8-K, and (E) a copy of the full
Shelf Registration Statement, (the foregoing, in each case, excluding exhibits);
and (ii) upon reasonable request,  all exhibits excluded by the parenthetical to
the immediately  preceding clause  4(h)(i)(E) and all other  information that is
generally  available  to the public.  In addition,  the Company upon  reasonable
request will meet with the Placement Agent or its representatives to discuss all
information relevant for disclosure in any Shelf Registration Statement covering
shares  purchased by Purchasers  from the Company and offered by them for resale
and will cooperate in any reasonable  investigation  undertaken by the Placement
Agent for the  purpose of  confirming  the  accuracy  of the Shelf  Registration
Statement, including the production of information at the Company's offices.

     (i)  Restrictions on Securities.  During the eighteen (18) months following
          --------------------------
the Closing of the Offering,  the Company  shall not,  without the prior written
consent of the Placement Agent,  offer or sell any of its securities in reliance
on Regulation S of the Securities Act. During the 18-month period  following the
date hereof,  (i) the  Placement  Agent shall have the right of first refusal to
act as  placement  agent for the offering of any  securities  of the Company and
(ii) the Company  will not extend the  expiration  date or decrease the exercise
price of any options, warrants, convertible securities or other similar security
purchase rights without the prior written consent of the Placement Agent.

     (j) Listing. The Company will take all action necessary to promptly file an
         -------
Application  for Listing of Additional  Shares with the New York Stock Exchange,
the American Stock  Exchange,  the Nasdaq National  Market,  the Nasdaq SmallCap
Market, or the OTC Electronic Bulletin Board, as applicable,  in accordance with
Regulation M under the Exchange  Act and/or take any other  necessary  action to
enable the Common Stock into which the Preferred Stock is convertible (including
the Common Stock issuable upon conversion of the Preferred Stock  underlying the
Placement Warrants) to trade thereon.

     (k) Financial Advisory Agreement.  Upon the Final Closing Date, the Company
         ----------------------------
and the  Placement  Agent will enter into an  engagement  agreement  in form and
substance   satisfactory  to  the  Placement  Agent  (the  "Financial   Advisory
Agreement")  whereby the  Placement  Agent will act as the  Company's  financial
advisor.   Such  engagement  will  provide  that  the  Placement  Agent  receive
out-of-pocket expenses and standard success fees.

     (l) No  Offerings.  Pending  completion or  termination  of the Offering in
         -------------
accordance with the terms of this Agreement, the Company agrees that it will not
enter into an agreement  (whether  binding or not) or  negotiate  with any other
person or entity relating to a possible public or private  offering or placement
of its  securities  (other  than in  connection  with a  corporate  partnership,
strategic alliance or government funding).

     (m) No  Statements.  The  Company  shall not use the name of the  Placement
         --------------
Agent or any officer,  director,  employee or  shareholder  thereof  without the
express written consent of the Placement Agent and such person.

     (n) Company Insiders.  Officers, directors or principal stockholders of the
         ----------------
Company may invest in the  Offering.  Any such  investments  will be included in
calculating whether the 30 Units have been sold in the Minimum Offering, whether
the 50 Units have been sold in the  Maximum  Offering,  and whether the 30 Units
have been sold pursuant to the over-allotment.

                                      -16-
<PAGE>

     (o) Placement Agent Insiders. Certain affiliates of the Placement Agent may
         ------------------------
purchase  Units in the Offering.  Affiliates of the Placement  Agent will invest
net of cash commissions and expenses.  Accordingly, the Placement Agent will not
receive a commission on the Units  purchased by its  affiliates  and the Company
will  receive net proceeds  equivalent  to the net  proceeds  received  from the
purchase  of Units by persons  not  affiliated  with the  Placement  Agent.  The
aggregate offering price of any such investments will be included in calculating
whether  the 30 Units have been sold in the  Minimum  Offering,  whether  the 50
Units have been sold in the Maximum Offering, and whether the 30 Units have been
sold pursuant to the over-allotment option.

     5. Indemnification.
        ---------------

     (a) The Company  agrees to indemnify and hold harmless the Placement  Agent
and each Selected  Dealer,  if any, and their respective  partners,  affiliates,
shareholders, directors, officers, agents, advisors, representatives, employees,
counsel and  controlling  persons  within the meaning of the  Securities  Act (a
"Indemnified Party") against any and all losses,  liabilities,  claims,  damages
and expenses  whatsoever (and all actions in respect thereof),  and to reimburse
such  Indemnified  Party  for  legal  fees  and  related  expenses  as  incurred
(including,  but not limited  to, the costs of giving  testimony  or  furnishing
documents in response to a subpoena or  otherwise,  the costs of  investigating,
preparing, pursuing or defending any such action or claim whether or not pending
or threatened and whether or not the Placement Agent or any Indemnified Party is
a party  thereto),  insofar  as such  losses,  liabilities,  claims,  damages or
expenses arise out of, relate to, are incurred in connection  with or are in any
way a result of (i) the  engagement  of the  Placement  Agent  pursuant  to this
Agreement and in connection with the transactions contemplated by this Agreement
and the other Offering Documents (the "Engagement"), including any modifications
or future additions to such engagement and related  activities prior to the date
hereof,  (ii) any act by the Placement Agent or any  Indemnified  Party taken in
connection with the Engagement, (iii) a breach of any representation,  warranty,
covenant or  agreement  of the Company  contained  in this  Agreement,  (iv) the
employment by the Company of any device,  scheme or artifice to defraud,  or the
engaging  by the  Company  in any act,  practice  or  course of  business  which
operates or would operate as a fraud or deceit,  or any conspiracy  with respect
thereto,  in connection with the sale of the Units, or (v) any untrue  statement
or  alleged  untrue  statement  of a material  fact  contained  in the  Offering
Documents  or the  omission or alleged  omission  therefrom  of a material  fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading,  provided, however, that the Company
will not be  liable in any such case if and to the  extent  that any such  loss,
claim,  damage,  liability  or expense  arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information  furnished by any such Indemnified  Party in writing
specifically for use in the Offering Documents.

     (b) The Company  agrees to indemnify and hold harmless a Indemnified  Party
to the same extent as the foregoing  indemnity,  and subject to the  limitations
set forth  therein,  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 Exchange Act or the securities or Blue Sky
laws of any state on account of violations of the representations, warranties or
agreements set forth in Section 2 hereof.

     (c) Promptly after receipt by a person entitled to indemnification pursuant
to subsection (a) or (b) (an  "indemnified  party") of this Section of notice of
the  commencement  of any action,  the  indemnified  party  will,  if a claim in
respect  thereof is to be made  against a person  



                                      -17-
<PAGE>

granting indemnification (an "indemnifying party") under this Section, notify in
writing the indemnifying party of the commencement  thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability which it
may have to the indemnified party otherwise than under this Section. In case any
such  action is brought  against  an  indemnified  party,  and it  notifies  the
indemnifying party of the commencement  thereof,  the indemnifying party will be
entitled to  participate  in, and, to the extent that it may wish,  jointly with
any other indemnifying party similarly notified,  to assume the defense thereof,
subject to the provisions herein stated, with counsel reasonably satisfactory to
the  indemnified  party,  and after  notice from the  indemnifying  party to the
indemnified  party  of its  election  so to  assume  the  defense  thereof,  the
indemnifying  party will not be liable to the indemnified party for any legal or
other expenses subsequently incurred by the indemnified party in connection with
the defense thereof other than reasonable costs of investigation incurred at the
request of the indemnifying party. The indemnified party shall have the right to
employ  separate  counsel in any such action and to  participate  in the defense
thereof,  but the fees and expenses of such counsel  shall not be at the expense
of the indemnifying  party if the indemnifying  party has assumed the defense of
the action  with  counsel  reasonably  satisfactory  to the  indemnified  party;
provided  that the fees and expenses of such counsel  shall be at the expense of
the  indemnifying  party  if  (i)  the  employment  of  such  counsel  has  been
specifically  authorized in writing by the indemnifying  party or (ii) the named
parties to any such action  (including any impleaded  parties)  include both the
indemnified party or parties and the indemnifying  party and, in the judgment of
the  indemnified  party,  it is  advisable  for the  indemnified  parties  to be
represented by separate counsel,  in which case the indemnifying party shall not
have the right to assume the defense of such action on behalf of the indemnified
party or parties,  it being  understood,  however,  that the indemnifying  party
shall not, in connection with any one such action or separate but  substantially
similar or  related  actions in the same  jurisdiction  arising  out of the same
general  allegations or  circumstances,  be liable for the  reasonable  fees and
expenses of more than one separate firm of attorneys for the  indemnified  party
or parties.  No  settlement,  compromise,  consent to entry of judgment or other
termination of any action  (collectively,  "Terminations") in respect of which a
Indemnified  Party  may  seek  indemnification  hereunder  (whether  or not  any
Indemnified  Party is a party  thereto)  shall be made without the prior written
consent of the Indemnified Party, which such consent may be withheld at the sole
discretion of such  Indemnified  Party,  provided,  however,  that the foregoing
requirement  of prior written  consent for  Terminations  shall not apply to the
Placement  Agent who may agree to such  Terminations  without the prior  written
consent of any Indemnified Party.

     (e) Notwithstanding any of the provisions of this Agreement,  the aggregate
indemnification  or contribution of the Placement Agent for or on account of any
losses, claims, damages,  liabilities or actions under this Section 5, Section 6
or any other  applicable  section of this  Agreement,  shall not exceed the Cash
Commissions actually paid to the Placement Agent. The indemnity and contribution
agreements  by the Company  contained  in  subsections  (a), (b) and (c) of this
Section 5 and Section 6, and the  covenants,  representations  and warranties of
the Company set forth in Sections 1, 2, 3 and 4 shall  remain  operative  and in
full force and effect regardless of (i) any investigation  made by the Placement
Agent,  on the  Placement  Agent's  behalf or by or on behalf of any  person who
controls the Placement  Agent,  (ii)  acceptance of any of the Units and payment
therefor  or (iii) any  termination  of this  Agreement,  and shall  survive the
delivery of the Units, and any successor of the Placement Agent or of any person
who controls the Placement  Agent,  as the case may be, shall be entitled to the
benefit of such respective indemnity and contribution agreements.  The indemnity
and contribution agreements by the Company contained in subsections (a), (b) and
(c) of this Section 5 and Section 6 shall be in addition to any liability  which
the Company may otherwise have.

                                      -18-
<PAGE>

     6. Contribution.
        ------------

     (a) To provide for just and equitable  contribution,  if (i) an indemnified
party makes a claim for indemnification pursuant to Section 5 but it is found in
a final  judicial  determination,  by a court  of  competent  jurisdiction,  not
subject to further appeal, that such indemnification may not be enforced in such
case, even though this Agreement  expressly provides for indemnification in such
case, or (ii) any indemnified or indemnifying party seeks contribution under the
Securities Act, the Exchange Act or otherwise,  then the Company  (including for
this purpose any  contribution  made by or on behalf of any  officer,  director,
employee or agent for the Company, or any controlling person of the Company), on
the one hand, and the Placement  Agent and any Selected  Dealers  (including for
this purpose any contribution by or on behalf of an indemnified  party),  on the
other hand, shall  contribute to the losses,  liabilities,  claims,  damages and
expenses  whatsoever to which any of them may be subject, in such proportions as
are appropriate to reflect the relative benefits received by the Company, on the
one hand, and the Placement Agent and the Selected  Dealers,  on the other hand;
provided,  however, that if applicable law does not permit such allocation, then
other  relevant  equitable  considerations  such as the  relative  fault  of the
Company and the Placement Agent and the Selected  Dealers in connection with the
facts which resulted in such losses, liabilities,  claims, damages, and expenses
shall also be  considered.  In no case shall the  Placement  Agent or a Selected
Dealer be responsible for a portion of the contribution  obligation in excess of
the  compensation  received by it  pursuant to Section 3 hereof or the  Selected
Dealer  Agreement,  as the  case  may  be.  No  person  guilty  of a  fraudulent
misrepresentation  shall be entitled to contribution  from any person who is not
guilty of such  fraudulent  misrepresentation.  For  purposes of this Section 6,
each  person,  if any, who controls  the  Placement  Agent or a Selected  Dealer
within the meaning of Section 15 of the  Securities  Act or Section 20(a) of the
Exchange Act and each officer, director, stockholder,  employee and agent of the
Placement Agent or a Selected Dealer, shall have the same rights to contribution
as the  Placement  Agent or the Selected  Dealer,  and each  person,  if any who
controls the Company  within the meaning of Section 15 of the  Securities Act or
Section 20(a) of the Exchange Act and each officer, director, employee and agent
of the  Company,  shall have the same  rights to  contribution  as the  Company,
subject  in each case to the  provisions  of this  Section 6.  Anything  in this
Section  6 to the  contrary  notwithstanding,  no  party  shall  be  liable  for
contribution  with  respect to the  settlement  of any claim or action  effected
without its written  consent.  This Section 6 is intended to supersede any right
to contribution under the Securities Act, the Exchange Act or otherwise.

     7. Miscellaneous.
        -------------

     (a) Survival.  Any termination of the Offering without any Closing shall be
         --------
without obligation on the part of any party except that the provisions regarding
fees and expenses  contained in Section 4(b),  the  indemnification  provided in
Section 5 hereof and the contribution provided in Section 6 hereof shall survive
any termination and shall survive any Closing.

     (b) Representations,  Warranties and Covenants to Survive Delivery.  Except
         --------------------------------------------------------------
as  provided  in  Section  7(a),  the  respective  representations,  warranties,
indemnities,  agreements,  covenants and other statements of the Company and the
Placement Agent as of the date hereof shall survive  execution of this Agreement
and delivery of the Units and the termination of this Agreement.

     (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,  

                                      -19-
<PAGE>

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 without  regard to conflict of
law provisions.

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

     (f) Notices.  Any communications  specifically  required hereunder to be in
         ------- 
writing,  if sent to the Placement Agent, will be mailed,delivered and confirmed
to it at  [___________________________________________________________]  and  if
sent to the Company,  will be mailed,  delivered or telegraphed and confirmed to
it at Conversion Technologies International,  Inc., 3452 Lake Lynda Drive, Suite
280, Orlando, Florida 32817 Attn: President.

     (g) Termination.  Subject to the general survival  provisions  contained in
         -----------
Sections 7(a) and 7(b),  this  Agreement may be terminated by either party prior
to any Closing upon written notice to the other party.

     (h) Entire  Agreement.  This Agreement  constitutes the entire agreement of
         -----------------
the parties with respect to the matters herein referred and supersedes all prior
agreements  and  understandings,  written and oral,  between  the  parties  with
respect to the subject matter hereof. Neither this Agreement nor any term hereof
may be  changed,  waived or  terminated  orally,  but only by an  instrument  in
writing signed by the party against which  enforcement of the change,  waiver or
termination is sought.

     (i) Nothing  contained  herein or otherwise  shall be construed to create a
partnership or joint venture between you and the Company.

     (j) The headings and captions of the various subdivisions of this Agreement
are for  convenience  of reference only and shall in no way modify or affect the
meaning or construction of any of the terms or provisions hereof.


                                      -20-
<PAGE>

     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,

                                          CONVERSION TECHNOLOGIES
                                          INTERNATIONAL, INC.


                                          By: /s/ Eckardt C. Beck
                                             -----------------------------------
                                          Name:  Eckardt C. Beck
                                          Title: Acting President


Agreed to by:

PLACEMENT AGENT


By: 
   -------------------------------
Name:  
Title: 


                                      -21-
<PAGE>


                                                                       EXHIBIT A


                 CONVERSION TECHNOLOGIES INTERNATIONAL, INC.

                              OFFICERS' CERTIFICATE
                              ---------------------

                                          August __, 1997

     I, _____________,  certify that I am the ____________________ of Conversion
Technologies  International,  Inc., a Delaware corporation (the "Company"),  and
that,  as such, I am  authorized  to execute this  certificate  on behalf of the
Company.  All  capitalized  terms used herein but not otherwise  defined  herein
shall the meanings  ascribed to such terms in the Agency  Agreement  (as defined
below).  Reference  is made  herein  to the  closing  held on [ ] (the  "Closing
Date").  I do hereby certify that I have carefully  examined all of the Offering
Documents (as defined in the  Placement  Agency  Agreement  dated as of April 1,
1997 between the Company and the Placement Agent(the "Agency  Agreement")),  and
do hereby further certify that:

     1. All of the  representations  and warranties of the Company  contained in
the subscription agreements (the "Subscription  Agreements") between the Company
and the purchasers  (the  "Purchasers")  of the Units of Preferred  Stock of the
Company  contemplated by the Company's  Confidential Term Sheet, dated August 8,
1997 (as  supplemented,  the "Term  Sheet") are true and correct in all material
respects on the Closing Date with the same force and effect as if made on and as
of the Closing Date,  and the Company has performed all covenants and agreements
and has satisfied all conditions in the Subscription  Agreements to be performed
or satisfied on its part before the Closing Date in all material respects.

     2. The Term Sheet does not contain any untrue  statement of a material fact
or omit to state any fact required to be stated in order to make the  statements
therein not misleading as of the Closing Date. Since the date of the Term Sheet,
no event has occurred  concerning which  information is required to be contained
in an amended or supplemented  Term Sheet  concerning  which such information is
not contained herein.

     3. All of the  representations  and warranties of the Company  contained in
the Agency  Agreement  are true and  correct  in all  material  respects  on the
Closing Date, and the Company has performed all covenants and agreements and has
satisfied all conditions  contained in the Agency  Agreement to be performed and
satisfied on its part at or prior to the Closing Date in all material respects.

     4. All of the  representations and warranties of the Company contained each
of the other Offering Documents are true and correct in all material respects on
the Closing Date, and the Company has performed all covenants and agreements and
has  satisfied  all  conditions  contained  in  such  Offering  Documents  to be
performed  and  satisfied  on its part at or prior  to the  Closing  Date in all
material respects.

     5.  Since  the  date  of the  most  recent  financial  statements  and  the
information  included  in the Term  Sheet,  there has been no  material  adverse
change in the condition (financial or other), earnings, business,  properties or
prospects of the Company and the Subsidiaries  taken as a whole,  whether or not
arising  from  transactions  in the ordinary  course of business,  nor has


<PAGE>

there  occurred any material  event  required to be set forth in the Term Sheet,
including,  without  limitation,  in accordance  with Section 2(g) of the Agency
Agreement.

     6. There is no litigation  pending or, to our  knowledge,  threatened by or
against the Company or the Subsidiaries, except as disclosed in the Term Sheet.

     7. The Company will promptly  take all action  necessary to list all shares
of Common Stock issuable upon conversion of the Preferred  Stock  (including the
shares  of  Common  Stock  issuable  upon  conversion  of  the  Preferred  Stock
underlying the Placement Warrants) on the Nasdaq SmallCap Market.

     8.  Since  August  1,  1997,  the  Company  has not  offered  to sell to or
solicited  any  offers to buy from any  person  shares of  capital  stock of the
Company,  except in connection with the Offering  contemplated by the Term Sheet
or shares issued upon exercise of stock  options  outstanding  prior to the date
hereof.

     IN WITNESS  WHEREOF,  I have  executed this  certificate  on this __ day of
August, 1997.



                                         -------------------------------------
                                         Name:
                                         Title:


<PAGE>


                                                                       EXHIBIT B


                 CONVERSION TECHNOLOGIES INTERNATIONAL, INC.

                             SECRETARY'S CERTIFICATE
                             -----------------------

                                          August [ ], 1997

     I, Jack D. Hays,  Jr.,  certify that I am the duly  elected,  qualified and
acting  Secretary of  Conversion  Technologies  International,  Inc., a Delaware
corporation (the  "Company"),  and as such, I am duly authorized to execute this
Certificate  on behalf of the  Company,  and that I am  familiar  with the facts
certified  below.  All capitalized  terms used herein but not otherwise  defined
herein shall the meanings  ascribed to such terms in the Agency  Agreement dated
as of April 1, 1997  between  the Company and the  Placement  Agent(the  "Agency
Agreement").  Reference  is made herein to the  closing  held on August __, 1997
(the "Closing Date"). In connection with the offering and sale of up to 50 units
(the "Units") each consisting of 10,000 shares of the Premium  Preferred StockJ,
stated  value  $10.00 per share (the  "Preferred  Stock")  of the  Company  (the
"Preferred Stock"), for which Paramount Capital, Inc. ("Paramount") has acted as
placement agent, I do hereby further certify as follows:

     1. Attached hereto as Exhibit A is a true, correct and complete copy of the
Company's Certificate of Incorporation,  as amended,  which is in full force and
effect and,  except as set forth in  Paragraphs  2 and 5 below,  no amendment to
such  certificate has been approved by the Board of Directors or stockholders of
the Company or filed with the Delaware  Secretary of State since  [____].  As of
the Closing Date, the Company is duly  incorporated  and in good standing in its
state of incorporation  and has paid all fees and taxes due and payable by it on
or prior to the Closing Date necessary for the  maintenance or  continuation  of
its corporate  existence.  As of the Closing Date,  there are no  proceedings or
actions  contemplated  by the  Company,  relating  to the  merger,  liquidation,
consolidation,  or sale of all or substantially all of the assets or business of
the Company or which would otherwise threaten or impair the Company's  corporate
existence.

     2. Attached hereto as Exhibit B is a true, correct and complete copy of the
Certificate  of  Designation  of the Company's  Series A  Convertible  Preferred
Stock, as filed with the Delaware  Secretary of State on [ ] and as in effect on
the Closing Date.

     3. Attached hereto as Exhibit C is a true, correct and complete copy of the
Bylaws of the  Company,  as in full force and effect on the Closing  Date and at
all times from [___] through the Closing Date.

     4. As of the Closing  Date,  each of the Offering  Documents is in the form
authorized by the board of directors of the Company  pursuant to the resolutions
set forth in Exhibit D.

     5.  Attached  hereto as Exhibit D is a true,  correct and complete  copy of
resolutions  duly adopted at a meeting of the Company's  board of directors duly
called and held on August 6, 1997, which resolutions, (a) authorize the issuance
and  sale of the  Units  and the  Placement  Warrants  in  accordance  with  the
requirements  of Delaware  law, (b)  authorize  the 


<PAGE>

amendment  to  the  Company's   Certificate  of  Incorporation   increasing  the
authorized  shares of Common Stock of the Company,  (c) are the only resolutions
adopted by the board of directors of the Company or any  committee  thereof with
respect  to the  offering  and sale of the Units and the  transactions  relating
thereto and (d) which have not been  revoked,  modified and amended or rescinded
and are in full force and effect on the Closing Date.

     6. Attached hereto as Exhibit E are true, correct and complete specimens of
the  certificates  representing  the  Preferred  Stock  heretofore  approved and
adopted  by the board of  directors  of the  Company.  Each of the  certificates
representing  Preferred  Stock  delivered  on the  Closing  Date  to each of the
Purchasers  pursuant to the  Subscription  Agreements  has been  executed by the
genuine or  facsimile  signature  of  officers of the Company who have been duly
elected or  appointed,  qualified  and acting as such  officers on the date such
certificates were executed and delivered, all in accordance with the Certificate
and Bylaws of the Company and the requirements of applicable law.

     7. Attached hereto as Exhibit F is a true, correct and complete copy of the
form of  Placement  Warrants  heretofore  approved  and  adopted by the Board of
Directors of the Company.  Each of the Placement  Warrants delivered on the date
hereof to each of the holders pursuant to the Agency Agreement has been executed
by the genuine or  facsimile  signature of officers of the Company who have been
duly elected or  appointed,  qualified  and acting as such  officers on the date
such  certificates  were  executed and  delivered,  all in  accordance  with the
Certificate and Bylaws of the Company and the requirements of applicable law.

     8. The minute books and records of the Company, relating to all proceedings
of the stockholders,  the Board of Directors of the Company and the Compensation
Committee  and the Audit  Committee  of such Board have been made  available  to
Placement Agent, and, in such form, are the original minute books and records of
the Company.  There have been no material  changes,  alterations or additions in
such minutes or records since their examination by Placement Agent.

     9. Each person who, as an officer or director of the Company, signed any of
the Offering Documents or any other document in connection with the offering and
sale of the Preferred  Stock,  the Placement  Warrants and the closing  relating
thereto was duly elected or  appointed,  qualified and acting as such officer or
director at the  respective  times of the signing and  delivery  thereof and was
duly  authorized  to sign  such  document  on  behalf  of the  Company,  and the
signature  of each such person  appearing  on each such  document is the genuine
signature of such officer,  director or person duly appointed for the purpose of
executing such documents under valid powers of attorney, and each individual who
signed such signature pages, personally or by an attorney-in-fact, was then duly
elected, qualified and acting as an officer or director of the Company as stated
therein.

     10. The  following  persons are, and have been at all times since August 1,
1997,  duly  qualified  and acting  officers  of the  Company,  duly  elected or
appointed to the offices set forth  opposite  their  respective  names,  and the
signature  opposite  the name of each such officer is his or her, or a facsimile
of his or her,  authentic  signature,  and the seal  affixed  hereto is the duly
adopted seal of the Company:

<PAGE>


      Name                    Office                        Signature
      ----                    ------                        ---------

Eckhardt C. Beck        Chairman of the Board              /s/ Eckhardt C. Beck

William L. Amt          President and CEO                  /s/ William L. Amt

Jack D. Hays, Jr.       Executive Vice President -
                        Operations and Marketing
                        and Secretary                      /s/ Jack D. Hays, Jr.



     This certificate is made for the benefit of, and may be relied upon by, the
Placement Agent, and each of the Purchasers.

     IN  WITNESS  WHEREOF,  I have  hereunto  set  forth my hand  this __ day of
__________, 1997.


[SEAL]                                    -----------------------------
                                          Name: Jack D. Hays, Jr.
                                          Title:  Secretary


     I,               , President and Chief Executive Officer of the Company, do
        -------------
hereby certify that Jack D. Hays, Jr. whose genuine signature appears above, is,
and has been at all times  since ______, 1997,  the duly  elected or  appointed,
qualified and acting Secretary of the Company.

     IN WITNESS  WHEREOF,  I have hereunto set forth my hand this [ ]th day of  
[], 1997.


                                                --------------------------------
                                                Name:
                                                Title: President