Empire Development Letterhead
                          -----------------------------


                                          July 22, 1997


Mr. Eckardt C Beck
Dunkirk International Glass & Ceramics Corp.
181 Stegelske Avenue
P.O. Box 1202
Dunkirk, New York 14048

      Re:   Key Bank Note #5        -     $1,450,978.98
            Key Bank Note #3        -        436,892.17
            JDA Loan No. 01-9303050 -        347,287.72
            JDA Loan No. 69-9406010 -         74,237.84

Dear Mr. Beck:

This is to confirm that in the event Key Bank declares a default with respect to
the above referenced Key Bank Notes,  Empire State  Development  Corporation/JDA
("ESDC") will execute  Option B, under its Loan  Guarantee to Key Bank and among
other things,  assume the Notes and make regularly  scheduled payments on behalf
of Dunkirk and per further request from Dunkirk  concerning the above referenced
JDA  Project  Loans,   "ESDC"  hereby  commits  to  payment   modifications   in
consideration of the following terms and conditions:

1.    Reduction of Key Bank Note #5 by application of approximately  $436,892.17
      in Escrow Account Funds to current outstanding principal loan balance.

2.    Monthly payment  deferral of principal and interest  payments for the debt
      obligations  due  to Key  Bank  (Notes  #5 & #3)  through  January,  1998.
      Regularly  scheduled  payments of Principal  and Interest will continue to
      accrue  and will be due at the end of the  current  maturity  date of each
      Note.

3.    Borrower to provide access to facilities to allow third-party  consultants
      to conduct  collateral  appraisals  for the  benefit  of "ESDC".  (This to
      include M&E Appraisal and Real Estate Appraisal.) Cost of appraisals to be
      the   responsibility   of  Dunkirk   International   Glass  and   Ceramics
      Corporation.  Borrower will also forward copies of all environmental  site
      reports, at Borrower's expense.

4.    Reaffirmation  of all  existing  corporate  and  personal  guarantees  and
      indemnifications  and  receipt  of  updated  financial  statements  and/or
      federal tax returns.  Borrower will use best reasonable  efforts to obtain
      reaffirmation of all personal guarantees and indemnifications with respect
      to loans.

5.    Certified  Corporate  Resolution  that Mr.  Chris  Beck  will  remain as
      Chairman  of the  Board  and  serve as  Borrower's  chief  environmental
      officer  for  at  least  3  years.  In  such  capacity,  Mr.  Beck  will
      communicate  with  "ESDC" on a  regular  basis,  at least  once a month,
      regarding the progress of the Company,  including  progress  reports and
      company prepared  
<PAGE>

     financial  reports on sales and reduction in inventory and work-in progress
     materials.  "ESDC" will retain the right to engage a third-party consultant
     to inspect  Borrower's  facility,  the fees and  expenses  of whom shall be
     borne by Dunkirk,  provide that any such third-party  inspections shall not
     occur more than once during any quarter. The departure of Mr. Beck from the
     borrower's  employment,  management  function or oversight of environmental
     concerns, shall be deemed by "ESDC" an act of default by the Borrower.

Except as modified  herein,  all other terms,  and  conditions of the promissory
notes and other loan documents continue to remain in full force and effect.

If you understand and agreed to the terms and conditions set forth above, please
indicate your consent by signing and returning one copy of this agreement.

                                          Very truly yours,

                                          /s/ Wendell Harris

                                          Wendell Harris
                                          Assistant Vice President

Agreed to and Accepted this
29th day of July, 1997


Dunkirk International Glass and Ceramic Corporation


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


Conversion Technologies International, Inc.


By:   /s/Eckardt C. Beck
   ---------------------------------
      Eckardt C. Beck
      Acting President and Chairman


      /s/ Gerald P. Balcar
------------------------------------
      Gerald P. Balcar


      /s/Margaret A. Gwynne
------------------------------------
      Margaret A. Gwynne