EXHIBIT 10.8

                          SECURITIES PURCHASE AGREEMENT


     SECURITIES  PURCHASE  AGREEMENT  dated as of the 21st day of  March,  1997,
between EARTH SCIENCES,  INC., a Colorado  corporation with principal  executive
offices located at 910 12th Street, Golden, Colorado 80401 (the "Company"),  and
the undersigned ("Buyer").

                              W I T N E S S E T H:

     WHEREAS,  Buyer  desires to  purchase  from the  Company,  and the  Company
desires  to issue  and sell to the  Buyer,  upon the terms  and  subject  to the
conditions of this Agreement,  the Company's 4% Convertible Debentures due March
31, 1999 (the "Debentures")  which, upon the terms and subject to the conditions
of the  Debentures,  will be  convertible  into shares of the  Company's  common
stock, $.01 par value (the "Common Stock", and together with the Debentures, the
"Securities");

     NOW THEREFORE,  in  consideration  of the premises and the mutual covenants
contained  herein,  the parties  hereto,  intending to be legally bound,  hereby
agree as follows:

     1. PURCHASE AND SALE OF DEBENTURES

     a. Transaction.  Buyer hereby agrees to purchase from the Company,  and the
Company  hereby  agrees to issue  and sell to the  Buyer,  $2,510,000  aggregate
principal amount of the Debentures  having the terms and conditions and being in
the form attached hereto as Annex I.

     b. Purchase Price;  Form of Payment.  The purchase price for the Debentures
to be purchased by Buyer hereunder  shall be $2,510,000 (the "Purchase  Price").
Buyer shall pay the Purchase  Price by wire  transfer of  immediately  available
funds to the escrow agent (the "Escrow  Agent")  identified  in the Joint Escrow
Instructions  attached  hereto as Annex II (the  "Joint  Escrow  Instructions").
Simultaneously  against receipt by the Escrow Agent of the Purchase  Price,  the
Company  shall  deliver  one  or  more  duly  authorized,  issued  and  executed
certificates (I/N/O Buyer) evidencing the Debentures, to the Escrow Agent or its
designated depository. By executing and delivering this Agreement, the Buyer and
the Company each hereby agrees to observe the terms and  conditions of the Joint
Escrow  Instructions,  all of which are  incorporated  herein by reference as if
fully set forth herein.


                                        

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     c. Method of Payment.  Payment into escrow of the  Purchase  Price shall be
made by wire transfer of immediately available funds to:

J.P. Morgan Services, Inc.
500 Stanton Christiana
Newark, Delaware 19713-2107
ABA# 021000238
SWIFT# MGTCUS33
For the Account of:  Weil, Gotshal & Manges LLP Special
Account
Account# 158-37-474
Reference# 73601.0001

Simultaneously  with the  execution of this  Agreement,  the Buyer shall deposit
with the Escrow Agent the Purchase  Price and the Company shall deposit with the
Escrow Agent the Debentures.

     2. BUYER'S REPRESENTATIONS,  WARRANTIES; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION.

     Buyer  represents and warrants to and covenants and agrees with the Company
as follows:

     a. Buyer is  purchasing  the  Debentures  (and the  shares of Common  Stock
issuable upon conversion  thereof) for its own account,  for investment purposes
only and not with a view  towards  or in  connection  with  the  public  sale or
distribution thereof in violation of the Securities Act of 1933, as amended (the
"Securities Act").

     b. Buyer is (i) an "accredited  investor" within the meaning of Rule 501 of
Regulation D under the Securities Act, (ii) experienced in making investments of
the kind  contemplated  by this  Agreement,  (iii)  capable,  by  reason  of its
business and financial  experience,  of evaluating the relative merits and risks
of an  investment  in the  Securities,  and (iv) able to afford  the loss of its
investment in the Securities.

     c. Buyer  understands  that the  Debentures  (and the Common Stock issuable
upon  conversion  thereof) are being offered and sold by the Company in reliance
on an exemption  from the  registration  requirements  of the Securities Act and
equivalent state securities and "blue sky" laws, and that the Company is relying
upon the  accuracy of, and Buyer's  compliance  with,  Buyer's  representations,
warranties   and  covenants  set  forth  in  this  Agreement  to  determine  the
availability  of such  exemption  and the  eligibility  of Buyer to purchase the
Debentures;


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     d.  Buyer has been  furnished  with or  provided  access  to all  materials
relating to the  business,  financial  position  and results  operations  of the
Company,  and all  other  materials  requested  by Buyer to enable it to make an
informed investment decision with respect to the Debentures.

     e.  Buyer  acknowledges  that it has  been  furnished  with  copies  of the
Company's  Annual  Report on Form 10-KSB for the fiscal year ended  December 31,
1995,  the Company's  Quarterly  Reports on Form 10-QSB for the fiscal  quarters
ended March 31, 1996,  June 30, 1996 and September 30, 1996,  respectively,  and
all  other  reports  and  documents  heretofore  filed by the  Company  with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Act and the  Securities  Exchange Act of 1934, as amended (the  "Exchange  Act")
since December 31, 1995 (collectively the "Commission Filings").

     f.  Buyer  acknowledges  that  in  making  its  decision  to  purchase  the
Debentures it has (i) relied upon independent  investigations made by it and its
professional  advisors,  (ii) visited the Company's  principal executive offices
and been given access and the  opportunity  to examine all material  agreements,
books and  records of the Company and all  documents  relating to the  Company's
private placement of the Debentures,  and (iii) been given an opportunity to ask
questions  of and to receive  answers  from the  Company's  executive  officers,
directors and  management  personnel  concerning the terms and conditions of the
private placement of the Debentures by the Company.

     g.  Buyer  understands  that  the  Securities  have not  been  approved  or
disapproved  by the Commission or any state  securities  commission and that the
foregoing  authorities  have  not  reviewed  any  documents  or  instruments  in
connection  with  the  offer  and  sale to it of the  Securities  and  have  not
confirmed  or  determined  the  adequacy or accuracy  of any such  documents  or
instruments.

     h.  This  Agreement  has been duly and  validly  authorized,  executed  and
delivered  by the  Buyer  and is a valid  and  binding  agreement  of the  Buyer
enforceable  against  it in  accordance  with its terms,  subject to  applicable
bankruptcy,  insolvency, fraudulent conveyance,  reorganization,  moratorium and
similar laws affecting creditors' rights and remedies generally.

     i. Neither Buyer nor its  affiliates  nor any person acting on its or their
behalf has the intention of entering,  or will enter into, prior to the Closing,
any put option,  short  position or other  similar  instrument  or position with
respect to the Common Stock and neither Buyer nor any of its  affiliates nor any
person acting on its or their behalf will use at any time shares of Common Stock

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<PAGE>

acquired  pursuant to this Agreement or the Debentures to settle any put option,
short  position  or other  similar  instrument  or  position  that may have been
entered into prior to the execution of this Agreement.

     3. COMPANY'S REPRESENTATIONS

     The Company represents and warrants to Buyer that:

     a. Capitalization. (i) The authorized capital stock of the Company consists
of 25,000,000  shares of Common Stock, of which 8,577,951 shares are outstanding
on the date  hereof;  all of the issued and  outstanding  shares of Common Stock
have  been  duly   authorized   and  validly  issued  and  are  fully  paid  and
non-assessable.  The Common Stock issuable upon conversion of the Debentures has
been duly and validly  authorized and reserved for issuance by the Company,  and
when  issued  by the  Company  upon  conversion  of,  or as  dividends  on,  the
Debentures,  will be duly and validly issued,  fully paid and non-assessable and
will not subject the holder  thereof to  personal  liability  by reason of being
such holder.  There are no  preemptive,  subscription,  "call" or other  similar
rights to  acquire  the Common  Stock  (including  Common  Stock  issuable  upon
conversion  of the  Debentures)  that have been issued or granted to any person,
except as disclosed in the Commission Filings or otherwise  previously disclosed
in writing to Buyer.

     (ii) Except as disclosed in the  Commission  Filings,  the Company does not
own or control,  directly or indirectly,  any interest in any other corporation,
partnership,  limited liability company,  unincorporated  business organization,
association,  trust  or  other  business  entity.  Except  as  disclosed  in the
Commission  Filings,  the Company owns 100% of the outstanding shares of capital
stock of each of its subsidiaries, free and clear of any and all liens, pledges,
encumbrances,  charges, agreements,  security interests,  mortgages or claims of
any kind whatsoever.

     b. Organization; Reporting Company Status. (i) The Company is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
State  of  Colorado  and is  duly  qualified  as a  foreign  corporation  in all
jurisdictions  in which the failure to so qualify would have a material  adverse
effect  on  the  business,   properties,   prospects,  condition  (financial  or
otherwise) or results of operations of the Company and its  subsidiaries,  taken
as a whole, or on the  consummation of any of the  transactions  contemplated by
this Agreement (a "Material Adverse Effect"). Each of the Company's subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of its respective  jurisdiction of incorporation and is duly qualified as a
foreign  corporation  in all  jurisdictions  in which the  failure to so qualify
would have a Material Adverse Effect.

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     (ii) The Company has  registered the Common Stock pursuant to Section 12 of
the  Exchange  Act and has timely  filed with the  Commission  all  reports  and
information  required to be filed by it pursuant  to all  reporting  obligations
under  Section  13(a) or  15(d),  as  applicable,  of the  Exchange  Act for the
24-month  period  immediately  preceding  the date  hereof.  The Common Stock is
listed  and traded on the  National  Association  of  Securities  Dealers,  Inc.
Automated  Quotation  ("NASDAQ")  Small  Capitalization  Market  System  and the
Company has not received any notice regarding,  and to its knowledge there is no
threat,  of the termination or  discontinuance  of the eligibility of the Common
Stock for such listing.

     c.  Authorized  Shares.  The Company has duly and  validly  authorized  and
reserved  for  issuance  shares of Common  Stock  sufficient  in number  for the
conversion,  in full, of the  Debentures  (assuming for purposes of this Section
3.c. a conversion price of $.75).

     d. Terms of  Debentures.  The  Debentures  when issued to Buyer pursuant to
this Agreement shall be in the form of Annex I attached hereto.

     e. Authority;  Validity and  Enforceability.  The Company has the requisite
corporate power and authority to enter into this Agreement and the  Registration
Rights  Agreement of even date herewith between the Company and Buyer, a copy of
which is annexed hereto as Annex III (the  "Registration  Rights Agreement") and
to perform  all of its  obligations  hereunder  and  thereunder  (including  the
issuance,  sale and  delivery to Buyer of the  Debentures  and the Common  Stock
issuable upon conversion  thereof).  The execution,  delivery and performance by
the Company of this Agreement and the  Registration  Rights  Agreement,  and the
consummation by the Company of the transactions contemplated hereby and thereby,
has been duly  authorized by all necessary  corporate  action on the part of the
Company.  Each of this Agreement and the Registration  Rights Agreement has been
duly and validly  executed and delivered by the Company and  constitutes a valid
and binding agreement of the Company  enforceable  against it in accordance with
its terms, subject to applicable bankruptcy,  insolvency, fraudulent conveyance,
reorganization,  moratorium  and similar laws  affecting  creditors'  rights and
remedies  generally.  The Debentures  have been duly and validly  authorized for
issuance by the Company and, when executed and delivered by the Company, will be
valid  and  binding  obligations  of  the  Company  enforceable  against  it  in
accordance  with their  terms,  subject to  applicable  bankruptcy,  insolvency,
fraudulent  conveyance,  reorganization,  moratorium  and similar laws affecting
creditors' rights and remedies generally.

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<PAGE>

     f.  Non-contravention.  The  execution  and delivery by the Company of this
Agreement and the Registration Rights Agreement,  the issuance of the Debentures
(and the Common Stock issuable upon conversion thereof), and the consummation by
the Company of the other transactions  contemplated  hereby and thereby,  do not
and will not  conflict  with or result in a breach by the  Company of any of the
terms or provisions of, or constitute a default (or an event which, with notice,
lapse of time or both,  would  constitute  a default)  under,  the  articles  of
incorporation  or by-laws of the Company,  or any indenture,  mortgage,  deed of
trust or other  material  agreement or instrument to which the Company or any of
its  subsidiaries  is a  party  or by  which  its or  any  of its  subsidiaries'
properties or assets are bound, or any law, rule, regulation,  decree,  judgment
or order of any court or public or governmental  authority  having  jurisdiction
over the Company or any of its  subsidiaries or any of its or its  subsidiaries'
properties or assets,  except such  conflict,  breach or default which would not
have a Material Adverse Effect.

     g. Approvals. No authorization,  approval or consent of any court or public
or  governmental  authority  is  required  to be obtained by the Company for the
issuance  and  sale of the  Debentures  (and  the  Common  Stock  issuable  upon
conversion  thereof) to Buyer as  contemplated  by this  Agreement,  except such
authorizations,  approvals  and consents  that have been obtained by the Company
prior to the date hereof.

     h. Commission Filings. None of the Commission Filings contained at the time
they were filed any untrue  statement of a material fact or omitted to state any
material fact required to be stated  therein or necessary to make the statements
made  therein,  in light of the  circumstances  under which they were made,  not
misleading.

     i. Absence of Certain Changes.  Since the Balance Sheet Date (as defined in
Section  3.m.),  there has not occurred any change,  event or  development,  and
there has not existed  any  condition  having or  reasonably  likely to have,  a
Material Adverse Effect.

     j. Full  Disclosure.  There is no fact  known to the  Company  (other  than
general economic or industry  conditions known to the public generally) that has
not been fully  disclosed in writing to the Buyer that (i)  reasonably  could be
expected to have a Material  Adverse Effect or (ii) reasonably could be expected
to  materially  and  adversely  affect the ability of the Company to perform its
obligations pursuant to this Agreement or the Registration Rights Agreement.


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<PAGE>

     k. Absence of  Litigation.  There is no action,  suit,  claim,  proceeding,
inquiry or investigation pending or, to the Company's knowledge,  threatened, by
or before any court or public or  governmental  authority  which,  if determined
adversely  to the  Company  or any of its  subsidiaries,  would  have a Material
Adverse Effect.

     l.  Absence of Events of Default.  No "Event of Default" (as defined in any
agreement or  instrument  to which the Company or any of its  subsidiaries  is a
party) and no event which, with notice,  lapse of time or both, would constitute
an Event of Default (as so defined), has occurred and is continuing, which could
have a Material Adverse Effect.

     m. Financial Statements;  No Undisclosed Liabilities.  Seller has delivered
to Buyer true and complete copies of its (i) audited  consolidated balance sheet
as at December  31,  1995 and the related  audited  consolidated  statements  of
operations  and cash flows for the fiscal  years  ended  December  31,  1995 and
December 31, 1994 and (ii) unaudited consolidated balance sheets as at March 31,
1996,  June 30,  1996 and  September  30,  1996,  respectively,  and the related
unaudited  consolidated   statements  of  operations  and  cash  flows  for  the
three-month  periods ended March 31, 1996, June 30, 1996 and September 30, 1996,
respectively,  including  in all such  cases the  related  notes  and  schedules
thereto (collectively,  the "Financial Statements"), and all management letters,
if any,  from the  Company's  independent  auditors  relating  to the  dates and
periods covered by the Financial Statements. Each of the Financial Statements is
complete and correct in all material  respects,  has been prepared in accordance
with United States General Accepted Accounting  Principles ("GAAP") (subject, in
the case of the interim Financial Statements, to normal year-end adjustments and
the absence of  footnotes)  and in conformity  with the  practices  consistently
applied by the Company without modification of the accounting principles used in
the preparation thereof, and fairly presents the financial position,  results of
operations and cash flows of the Company and its consolidated subsidiaries as at
the dates and for the  periods  indicated.  For  purposes  hereof,  the  audited
consolidated  balance sheet of the Company and its  subsidiaries  as at December
31, 1995 is hereinafter referred to as the "Balance Sheet" and December 31, 1995
is hereinafter  referred to as the "Balance Sheet Date". Neither the Company nor
any of its subsidiaries has any indebtedness,  obligations or liabilities of any
kind (whether accrued, absolute,  contingent or otherwise, and whether due or to
become due) that would have been required to be reflected  in,  reserved

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against or otherwise  described in the Balance  Sheet or in the notes thereto in
accordance  with GAAP,  which was not fully  reflected in,  reserved  against or
otherwise  described  in the  Balance  Sheet  or the  notes  thereto  or was not
incurred in the ordinary  course of business  consistent with the Company's past
practices since the Balance Sheet Date.

     n. Compliance with Laws; Permits.  The Company and each of its subsidiaries
is in  compliance  with all laws,  rules,  regulations,  codes,  ordinances  and
statutes  (collectively  "Laws")  applicable  to it or to  the  conduct  of  its
business, except for such non-compliance which would not have a Material Adverse
Effect.  The  Company  and  each  of its  subsidiaries  possesses  all  permits,
approvals,  authorizations,  licenses, certificates and consents from all public
and governmental authorities which are necessary to conduct its business, except
for those the absence of which would not have a Material Adverse Effect.

     o.  Related  Party  Transactions.  Except  as set  forth in the  Commission
Filings, neither the Company nor any of its officers,  directors or "Affiliates"
(as such term is defined in Rule 12b-2 under the Exchange  Act) has borrowed any
moneys from or has outstanding any indebtedness or other similar  obligations to
the  Company.  Neither  the  Company  nor  any of  its  officers,  directors  or
Affiliates (i) owns any direct or indirect  interest of any kind in, or controls
or is a director,  officer,  partner, member or employee of, or consultant to or
lender to or borrower  from, or has the right to  participate in the profits of,
any person or entity which is (x) a competitor,  supplier,  customer,  landlord,
tenant,  creditor  or  debtor of the  Company  or any of its  subsidiaries,  (y)
engaged  in a  business  related to the  business  of the  Company or any of its
subsidiaries,  or (z) a participant  in any  transaction to which the Company or
any of  its  subsidiaries  is a  party  or  (ii)  is a  party  to any  contract,
agreement,  commitment  or  other  arrangement  with the  Company  or any of its
subsidiaries.

     p.  Insurance.  The  Company  maintains  property  and  casualty,   general
liability,  workers'  compensation,  environmental  hazard,  personal injury and
other similar types of insurance with financially  sound and reputable  insurers
that  is  adequate,   consistent  with  industry  standards  and  the  Company's
historical claims experience,  to cover all loss contingencies  which forseeably
may arise in the conduct of the  business  of the Company and its  subsidiaries.
The Company has not received notice from, and has no knowledge of any threat by,
any insurer (that has issued any  insurance  policy to the Company or any of its
subsidiaries)  that such  insurer  intends  to deny  coverage  under or  cancel,
discontinue or not renew any insurance policy presently in force.

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     q. Securities Law Matters.  Based, in part,  upon the  representations  and
warranties  of Buyer  set forth in  Section 2 hereof,  the offer and sale by the
Company  of the  Debentures  (and the  Common  Stock  issuable  upon  conversion
thereof)  is  exempt  from  (i)  the   registration   and  prospectus   delivery
requirements  of the  Securities  Act  and  the  rules  and  regulations  of the
Commission thereunder and (ii) the registration and/or qualification  provisions
of all applicable  state  securities and "blue sky" laws. Other than pursuant to
an effective  registration  statement  under the Securities Act, the Company has
not  issued,  offered  or sold the  Debentures  or any  shares of  Common  Stock
(including for this purpose any securities of the same or a similar class as the
Debentures or Common Stock, or any securities  convertible  into or exchangeable
or exercisable for the Debentures or Common Stock or any such other  securities)
within the six-month period next preceding the date hereof,  except as disclosed
in the Commission Filings or otherwise previously disclosed in writing to Buyer,
and the Company shall not directly or indirectly  take, and shall not permit any
of its  directors,  officers or Affiliates  directly or indirectly to take,  any
action  (including,  without  limitation,  any offering or sale to any person or
entity of the Debentures or shares of Common Stock),  so as to make  unavailable
the exemption from Securities Act registration  being relied upon by the Company
for the offer and sale to Buyer of the Debentures (and the Common Stock issuable
upon conversion  thereof) as contemplated by this Agreement.  No form of general
solicitation or advertising has been used or authorized by the Company or any of
its officers,  directors or  Affiliates in connection  with the offer or sale of
the  Debentures  (and the Common  Stock  issuable  upon  conversion  thereof) as
contemplated  by this Agreement or any other agreement to which the Company is a
party.

     r. Environmental Matters. (i) The operations of the Company and each of its
subsidiaries  are in compliance with all applicable  Environmental  Laws and all
permits issued pursuant to Environmental Laws or otherwise;

     (ii)  to its  knowledge,  the  Company  and  each of its  subsidiaries  has
obtained all permits required under all applicable  Environmental Laws necessary
to operate its business;

     (iii) neither the Company nor any of its subsidiaries is the subject of any
outstanding  written order of or agreement  with any  governmental  authority or
person  respecting (i)  Environmental  Laws,  (ii) Remedial  Action or (iii) any
Release or threatened Release of Hazardous Materials;


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     (iv)  neither the  Company nor any of its  subsidiaries  has  received  any
written  communication  alleging  either or both that the  Company or any of its
subsidiaries may be in violation of any  Environmental  Law or any permit issued
pursuant to Environmental Law, or may have any liability under any Environmental
Law;

     (v)  neither  the  Company  nor any of its  subsidiaries  has  any  current
contingent  liability in connection with any Release of any Hazardous  Materials
into the indoor or outdoor environment (whether on-site or off-site);

     (vi)  except  as set  forth in the  Commission  Filings,  to the  Company's
knowledge, there are no investigations of the business, operations, or currently
or previously  owned,  operated or leased  property of the Company or any of its
subsidiaries  pending or  threatened  which could lead to the  imposition of any
liability pursuant to any Environmental Law;

     (vii)  to the  Company's  knowledge,  there  is not  located  at any of the
properties of the Company or any of its subsidiaries any (A) underground storage
tanks,   (B)   asbestos-containing   material   or  (C)   equipment   containing
polychlorinated biphenyls; and,

     (viii)  the  Company  has  provided  to Buyer all  environmentally  related
audits, studies, reports, analyses, and results of investigations that have been
performed with respect to the currently or previously owned,  leased or operated
properties of the Company or any of its subsidiaries.

     For purposes of this Section 3.r.:

     "Environmental  Law" means any foreign,  federal,  state or local  statute,
regulation,  ordinance,  or rule of common law as now or  hereafter in effect in
any way relating to the protection of human health and safety or the environment
including,   without  limitation,  the  Comprehensive   Environmental  Response,
Compensation  and  Liability  Act (42 U.S.C.  ss. 9601 et seq.),  the  Hazardous
Materials  Transportation  Act (49 U.S.C.  App. ss. 1801 et seq.),  the Resource
Conservation  and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Clean Water Act
(33 U.S.C.  ss. 1251 et seq.),  the Clean Air Act (42 U.S.C.  ss. 7401 et seq.),
the Toxic  Substances  Control  Act (15 U.S.C.  ss.  2601 et seq.),  the Federal
Insecticide,  Fungicide, and Rodenticide Act (7 U.S.C. ss. 136 et seq.), and the
Occupational  Safety  and  Health  Act (29  U.S.C.  ss.  651 et  seq.),  and the
regulations promulgated pursuant thereto.


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     "Hazardous  Material"  means  any  substance,  material  or waste  which is
regulated by the United States, Canada or any of its provinces,  or any state or
local governmental  authority including,  without limitation,  petroleum and its
by-products,  asbestos,  and any  material  or  substance  which is defined as a
"hazardous  waste," "hazardous  substance,"  "hazardous  material,"  "restricted
hazardous waste," "industrial waste," "solid waste," "contaminant," "pollutant,"
"toxic waste" or toxic substance" under any provision of any Environmental Law;

     "Release" means any release, spill, filtration, emission, leaking, pumping,
injection, deposit, disposal, discharge,  dispersal, or leaching into the indoor
or outdoor environment, or into or out of any property;

     "Remedial  Action" means all actions to (x) clean up,  remove,  treat or in
any other way address  any  Hazardous  Material;  (y) prevent the Release of any
Hazardous Material so it does not endanger or threaten to endanger public health
or welfare or the indoor or outdoor  environment;  or (z)  perform  pre-remedial
studies and investigations or post- remedial monitoring and care.

     s. Labor Matters. Except as set forth on Schedule 3.s., neither the Company
nor any of its  subsidiaries  is party to any  labor  or  collective  bargaining
agreement  and  there are no labor or  collective  bargaining  agreements  which
pertain to employees of the Company or any of its subsidiaries.  No employees of
the Company or any of its subsidiaries are represented by any labor organization
and none of such employees has made a pending demand for recognition,  and there
are  no  representation   proceedings  or  petitions  seeking  a  representation
proceeding  presently pending or, to the Company's  knowledge,  threatened to be
brought  or  filed,  with the  National  Labor  Relations  Board or other  labor
relations tribunal. There is no organizing activity involving the Company or any
of its  subsidiaries  pending or to the Company's  knowledge,  threatened by any
labor  organization  or  group  of  employees  of  the  Company  or  any  of its
subsidiaries.  There are no (i) strikes, work stoppages,  slowdowns, lockouts or
arbitrations or (ii) material  grievances or other labor disputes pending or, to
the knowledge of the Company, threatened against or involving the company or any
of its subsidiaries.  There are no unfair labor practice charges,  grievances or
complaints  pending or, to the  knowledge  of the Company,  threatened  by or on
behalf of any employee or group of employees of the Company.

     t. ERISA Matters.  Each of the Company,  its  subsidiaries  and their ERISA
Affiliates  is in compliance  in all material  respects  with all  provisions of
ERISA applicable to it. No Reportable Event has occurred, been waived or exists

                                       11

<PAGE>


as to which the Company or any of its  subsidiaries  or any ERISA  Affiliate was
required to file a report with the Pension Benefits  Guaranty  Corporation,  and
the present value of all liabilities under all Plans (based on those assumptions
used to fund such Plans) did not, as of the most recent  annual  valuation  date
applicable  thereto,  exceed  the value of the  assets of all such  Plans in the
aggregate.  None of the Company or any of its  subsidiaries or ERISA  Affiliates
has incurred any Withdrawal  Liability  that could result in a Material  Adverse
Effect.  None of the Company or any of its  subsidiaries or ERISA Affiliates has
received any notification  that any  Multiemployer  Plan is in reorganization or
has  been  terminated   within  the  meaning  of  Title  IV  of  ERISA,  and  no
Multiemployer Plan is reasonably expected to be in reorganization or termination
where such  reorganization  or termination  has resulted or could  reasonably be
expected to result in increases to the contributions required to be made to such
Plan or otherwise.

     For purposes of this Section 3.t.:

     "ERISA" means the Employee  Retirement  Income Security Act of 1974, or any
successor statute,  together with the regulations thereunder, as the same may be
amended from time to time.

     "ERISA Affiliate" means any trade or business (whether or not incorporated)
that was, is or hereafter  may become,  a member of a group of which the Company
or any of its subsidiaries is a member and which is treated as a single employer
under ss. 414 of the Internal  Revenue Code of 1986,  as amended (the  "Internal
Revenue Code").

     "Multiemployer  Plan"  means a  multiemployer  plan as  defined  in Section
4001(a)(3) of ERISA to which the Company or any ERISA Affiliate  (other than one
considered an ERISA  Affiliate only pursuant to subsection (m) or (o) of ss. 414
of the  Internal  Revenue  Code) is making or  accruing  an  obligation  to make
contributions,  or has  within  any of the  preceding  five plan  years  made or
accrued an obligation to make contributions.

     "PBGC"  means the  Pension  Benefit  Guaranty  Corporation  referred to and
defined in ERISA or any successor thereto.

     "Plan" means any pension plan (other than a Multiemployer  Plan) subject to
the provision of Title IV of ERISA or ss. 412 of the Internal  Revenue Code that
is maintained for employees of the Company or any ERISA Affiliate.


                                       12

<PAGE>

     "Reportable Event" means any reportable event as defined in Section 4043(b)
of ERISA or the regulations issued thereunder with respect to a Plan (other than
a Plan  maintained by an ERISA  Affilare  that is considered an ERISA  Affiliate
only pursuant to subsection (m) or (o) of ss. 414 of the Internal Revenue Code.

     "Withdrawal  Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer  Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

     u. Tax Matters. (i) The Company and each of its subsidiaries have filed all
Tax Returns which they are required to file under  applicable  Laws,  except for
such Tax  Returns in respect of which the  failure to so file does not and could
not have a Material  Adverse Effect;  all such Tax Returns are true and accurate
and have been prepared in compliance  with all applicable  Laws; the Company and
each of its  subsidiaries  have paid all Taxes due and owing by them (whether or
not such Taxes are  required to be shown on a Tax Return) and have  withheld and
paid  over to the  appropriate  taxing  authorities  all  Taxes  which  they are
required to withhold  from amounts paid or owing to any  employee,  stockholder,
creditor or other third parties;  and since the Balance Sheet Date, the charges,
accruals  and  reserves  for Taxes with  respect to the Company  (including  any
provisions for deferred income taxes)  reflected on the books of the Company are
adequate to cover any Tax  liabilities  of the Company and its  subsidiaries  if
their current tax year were treated as ending on the date hereof.

     (ii) No claim has been made by a taxing  authority in a jurisdiction  where
either the Company or any of its  subsidiaries  does not file tax  returns  that
such  corporation is or may be subject to taxation by that  jurisdiction.  There
are no foreign, federal, state or local tax audits or administrative or judicial
proceedings pending or being conducted with respect to the Company or any of its
subsidiaries;  no  information  related to Tax matters has been requested by any
foreign,  federal,  state or  local  taxing  authority;  and no  written  notice
indicating  an intent to open an audit or other review has been  received by the
Company from any foreign, federal, state or local taxing authority. There are no
material  unresolved  questions or claims concerning the Company's or any of its
subsidiaries' Tax liability. Neither the Company nor any of its subsidiaries (A)
has  executed or entered  into a closing  agreement  pursuant to ss. 7121 of the
Internal  Revenue  Code or any  predecessor  provision  thereof  or any  similar
provision of state, local or foreign law; or (B) has agreed to or is required to
make any adjustments pursuant to ss. 481 (a) of the Internal Revenue Code or any
similar  provision  of  state,  local or  foreign  law by  reason of a change in

                                       13

<PAGE>

accounting method initiated by the Company or any of its subsidiaries or has any
knowledge that the IRS has proposed any such  adjustment or change in accounting
method,  or has any  application  pending with any taxing  authority  requesting
permission for any changes in accounting  methods that relate to the business or
operations  of the Company or any of its  subsidiaries.  Neither the Company nor
any of  its  subsidiaries  has  been  a  United  States  real  property  holding
corporation  within the meaning of ss.  897(c)(2) of the  Internal  Revenue Code
during the applicable period specified in ss.  897(c)(1)(A)(ii)  of the Internal
Revenue Code.

     (iii) Neither the Company nor any of its  subsidiaries has made an election
under ss. 341(f) of the Internal  Revenue  Code.  Neither the Company nor any of
its  subsidiaries  is  liable  for the  Taxes of  another  person  that is not a
subsidiary  of the Company  under (A) Treas.  Reg. ss.  1.1502-6 (or  comparable
provisions of state,  local or foreign  law),  (B) as a transferee or successor,
(C) by contract or  indemnity or (D)  otherwise.  Neither the Company nor any of
its  subsidiaries is a party to any tax sharing  agreement.  Neither the Company
nor any of its subsidiaries has made any payments, is obligated to make payments
or is a party to an agreement  that could  obligate it to make any payments that
would not be deductible under ss. 280G of the Internal Revenue Code.

     For purposes of this Section 3.u.:

     "IRS" means the United States Internal Revenue Service.

     "Tax" or "Taxes" means federal,  state,  county,  local,  foreign, or other
income, gross receipts, ad valorem, franchise,  profits, sales or use, transfer,
registration, excise, utility, environmental,  communications,  real or personal
property,   capital  stock,   license,   payroll,  wage  or  other  withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum,  estimated and other taxes of any kind whatsoever  (including,  without
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.

     "Tax Return" means any return, information report or filing with respect to
Taxes,  including  any  schedules  attached  thereto and including any amendment
thereof.

     v. No  Misrepresentation.  No  representation  or  warranty  of the Company
contained  in this  Agreement,  any  schedule,  annex or  exhibit  hereto or any
agreement,  instrument or certificate furnished by the Company to Buyer pursuant
to this Agreement,  contains any untrue statement of a material fact or omits to
state a material  fact  required to be stated  therein or  necessary to make the
statements therein, not misleading.


                                       14

<PAGE>

     4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

     a. Restrictive  Legend.  Buyer  acknowledges and agrees that, upon issuance
pursuant  to this  Agreement,  the  Debentures  (and any shares of Common  Stock
issued  in  conversion   thereof)  shall  have  endorsed  thereon  a  legend  in
substantially  the  following  form  (and a  stop-transfer  order  may be placed
against  transfer of the Debentures and the shares of Common Stock issuable upon
conversion thereon):

          "THESE   SECURITIES  HAVE  NOT  BEEN  REGISTERED  UNDER  THE
          SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"),
          OR THE SECURITIES  LAWS OF ANY STATE,  AND ARE BEING OFFERED
          AND SOLD  PURSUANT  TO AN  EXEMPTION  FROM THE  REGISTRATION
          REQUIREMENTS  OF THE  SECURITIES  ACT AND SUCH  LAWS.  THESE
          SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO
          AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
          OR PURSUANT TO AN AVAILABLE  EXEMPTION FROM THE REGISTRATION
          REQUIREMENTS OF THE SECURITIES ACT OR SUCH OTHER LAWS."


     b. Filings. The Company shall make all necessary filings in connection with
the sale of the Debentures to the Buyer as required by all applicable  Laws, and
shall provide a copy thereof to the Buyer promptly after such filing.

     c.  Reporting  Status.  So long as the Buyer  beneficially  owns any of the
Securities,  the Company shall file all reports  required to be filed by it with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act and shall not
terminate  its status as an issuer  required to file reports  under the Exchange
Act even if such act or the rules and  regulations  thereunder  would  otherwise
permit such termination.

     d. Use of Proceeds. The Company shall use the proceeds from the sale of the
Debentures  (excluding  amounts  paid by the Company for legal fees and finder's
fees  in  connection  with  such  sale)  for  the  construction,   retrofit  and
refurbishing of the Company's phosphate plants in Calgary, Alberta, and fees and
expenses payable to Corporate Relations Group Inc.

     e. Restrictions on Additional Financings;  Right of First Offer. Except for
the transactions previously disclosed in writing to Buyer, the Company shall not
conduct or enter into any agreement, commitment or arrangement providing for the

                                       15

<PAGE>

offer or sale of debt or equity  securities (or any securities  convertible into
or  exchangeable or exercisable  for debt or equity  securities)  with any third
party until the 241st day after the Closing  Date,  except that (i) with respect
to an  additional  amount of up to $1 million,  to the extent the Buyer does not
invest such funds in  securities  of the Company  within 30 days  following  the
Closing  Date on terms to be mutually  agreed upon,  the Company  shall have the
right to sell debt or  equity  securities  (or  securities  convertible  into or
exchangeable  or exercisable  for debt or equity  securities) to any third party
provided the Buyer is first offered the opportunity (which shall remain open for
a period of 30 days from the date the Buyer receives notice thereof) to purchase
such  additional  securities on terms and  conditions no less favorable to Buyer
than those  offered in writing by such third party  ("right of first  refusal"),
(ii)  commencing on the 131st day after the Closing Date, the Company shall have
the right to sell debt or equity  securities  to any third  party to the  extent
necessary  to raise an  additional  $2 million  provided  the Buyer is offered a
right of first  refusal (as  defined in clause (i) above)  with  respect to such
securities,  and (iii) for the 60-day  period  commencing on the 181st day after
the  Closing  Date,  the  Company  shall  have the  right to sell debt or equity
securities  to any third party (in  addition  to the amount  referred to in (ii)
above)  provided  the Buyer is offered a right of first  refusal  (as defined in
clause  (i) above)  with  respect  to such  securities.  In the event that Buyer
declines to participate  in any such right of first  refusal,  the Company shall
provide the Buyer with prompt  written  notice of the  consummation  of any such
transaction with a third party, specifying the material terms thereof; provided,
however,  the provisions of this Section 4.f. shall not apply to the issuance of
Company  securities  in  connection  with  a  merger,  consolidation,   business
combination, sale of all or substantially all of the Company's assets or similar
extra-ordinary  corporate  transaction  involving  the  Company  or  any  of its
subsidiaries.

     f. Listing.  Except to the extent the Company becomes  eligible to list its
Common  Stock on a national  securities  exchange or obtained  authorization  to
include the Common Stock for quotation on the NASDAQ National Market System, the
Company  shall  maintain  its  listing of the Common  Stock on the NASDAQ  Small
Capitalization Market System.

     g. Reserved  Conversion Shares. The Company at all times from and after the
date hereof  shall have a  sufficient  number of shares of Common Stock duly and
validly authorized and reserved for issuance to satisfy the conversion, in full,
of the  Debentures  (assuming  for purposes of this  Section  3.g., a conversion
price of $.75).


                                       16

<PAGE>
     5. TRANSFER AGENT INSTRUCTIONS.

     a. The Company  undertakes  and agrees that no  instruction  other than the
instructions  referred  to  in  this  Section  5  and  customary  stop  transfer
instructions  prior to the registration and sale of the Common Stock pursuant to
an effective Securities Act registration statement will be given to its transfer
agent for the Common Stock and that the Common Stock issuable upon conversion of
the Debentures  otherwise shall be freely  transferable on the books and records
of the Company as and to the extent provided in this Agreement, the Registration
Rights  Agreement and  applicable  law.  Nothing  contained in this Section 5.a.
shall  affect in any way Buyer's  obligations  and  agreement to comply with all
applicable  securities  laws upon resale of such Common Stock.  If, at any time,
Buyer provides the Company with an opinion of counsel reasonably satisfactory to
the Company that registration of the resale by Buyer of such Common Stock is not
required under the Securities Act and that the removal of restrictive legends is
permitted  under  applicable  law, the Company shall permit the transfer of such
Common Stock and, promptly instruct the Company's transfer agent to issue one or
more  certificates  for Common Stock without any  restrictive  legends  endorsed
thereon.

     b. The Company  shall  permit  Buyer to  exercise  its right to convert the
Debentures by telecopying an executed and completed  Notice of Conversion to the
Company and  delivering to the Company by express  courier  within five business
days  thereafter,  the original  Notice of Conversion and the  Debentures  being
converted.  Each  date on which a Notice  of  Conversion  is  telecopied  to and
received by the Company in accordance with the provisions hereof shall be deemed
a Conversion  Date. The Company shall transmit the  certificates  evidencing the
shares of Common Stock issuable upon conversion of any Debentures (together with
certificates  evidencing  any principal  amount of the  Debentures  not being so
converted) to Buyer via express  courier,  by electronic  transfer or otherwise,
within five business days after receipt by the Company of the original Notice of
Conversion and the Debentures to be converted (the "Delivery Date").

     c. The Company  understands  that a delay in the  issuance of the shares of
Common  Stock upon such  conversion  beyond the  Delivery  Date could  result in
economic  loss to Buyer.  As  compensation  to Buyer for such loss (and not as a
penalty),  the Company  agrees to pay to Buyer for late issuance of Common Stock
upon conversion in accordance with the following  schedule (where "No.  Business
Days" is  defined  as the  number of  business  days  beyond  five (5) days from
Delivery Date):



                                       17

<PAGE>

                                       Compensation For Each
                                       $20,000 Principal
                                       Amount of Debentures
         No. Business Days             Not Converted Timely
         -----------------             --------------------

                    1                          $25
                    2                          $50
                    3                          $75
                    4                          $100
                    5                          $125
                    6                          $150
                    7                          $175
                    8                          $200
                    9                          $225
                   10                          $250
         more than 10                          $250 + $100 for each
                                               Business Day Late
                                               beyond 10 days

The Company shall pay to Buyer the compensation  described above by the transfer
of immediately  available funds upon Buyer's demand.  Nothing herein shall limit
Buyer's  right to pursue actual  damages for the Company's  failure to issue and
deliver  Common Stock to Buyer,  and in addition to any other remedies which may
be available to Buyer,  in the event the Company  fails for any reason to effect
delivery of such shares of Common  Stock  within  five  business  days after the
relevant  Delivery Date,  Buyer shall be entitled to rescind the relevant Notice
of Conversion by delivering a notice to such effect to the Company whereupon the
Company and Buyer shall each be restored to their respective  original positions
immediately prior to delivery of such Notice of Conversion.

For  purposes  of this  Section  5.c.,  an act of God shall  excuse the delay in
issuance of shares of Common Stock upon  conversion  beyond the Delivery Date in
the event that acts of war or terrorism,  or some other  catastrophic  event not
encountered  in  business   renders  the  Company's  or  its  transfer   agent's
performance  impossible.  Such delay in issuance of shares shall be excused only
for so long as the act of God in fact renders  performance  impossible but in no
event longer than seven (7) business days.

     6. DELIVERY INSTRUCTIONS.

     The  Debentures  shall be  delivered  by the  Company to the  Escrow  Agent
pursuant  to Section  1(b) hereof on a  "delivery-against-payment  basis" at the
Closing.

     7. CLOSING DATE.

     The date and time of the issuance and sale of the Debentures  (the "Closing
Date")  shall be the date hereof or such other as shall be mutually  agreed upon

                                       18

<PAGE>

in writing.  The issuance and sale of the Debentures  shall occur on the Closing
Date  at the  offices  of the  Escrow  Agent.  Notwithstanding  anything  to the
contrary  contained herein,  the Escrow Agent shall not be authorized to release
to the Company the Purchase Price and to Buyer the certificate(s)  (I/N/O Buyer)
evidencing  the  Debentures  being  purchased by Buyer unless the conditions set
forth in Section 8(c) and 9(g) hereof have been satisfied.

     8. CONDITIONS TO THE COMPANY'S OBLIGATIONS.

     The Buyer understands that the Company's  obligation to sell the Debentures
on the Closing Date to Buyer pursuant to this Agreement is conditioned upon:

     a. Delivery by Buyer to the Escrow Agent of the Purchase Price;

     b. The accuracy on the Closing Date of the  representations  and warranties
of Buyer  contained in this Agreement as if made on the Closing Date (except for
representations  and warranties  which, by their express terms,  speak as of and
relate to a specified  date, in which case such accuracy shall be measured as of
such specified date) and the performance by Buyer in all material respects on or
before the Closing Date of all covenants and  agreements of Buyer required to be
performed by it pursuant to this Agreement on or before the Closing Date;

     c. There shall not be in effect any Law or order, ruling,  judgment or writ
of any court or public  or  governmental  authority  restraining,  enjoining  or
otherwise prohibiting any of the transactions contemplated by this Agreement.

     9. CONDITIONS TO BUYER'S OBLIGATIONS.

     The Company  understands that Buyer's obligation to purchase the Debentures
on the Closing Date pursuant to this Agreement is conditioned upon:

     a. Delivery by the Company to the Escrow Agent of one or more  certificates
(I/N/O Buyer)  evidencing  the  Debentures to be purchased by Buyer  pursuant to
this Agreement;

     b. The accuracy on the Closing Date of the  representations  and warranties
of the  Company  contained  in this  Agreement  as if made on the  Closing  Date
(except for  representations and warranties which, by their express terms, speak
as of and  relate to a  specified  date,  in which case such  accuracy  shall be
measured as of such specified date) and the  performance  by the Company in all

                                       19

<PAGE>

material  respects on or before the Closing Date of all covenants and agreements
of the Company  required to be performed by it pursuant to this  Agreement on or
before the Closing Date;

     c. Buyer having  received an opinion of counsel for the Company,  dated the
Closing Date, in form, scope and substance reasonably satisfactory to the Buyer,
to the effect set forth in Annex III attached hereto.

     d. There not having  occurred (i) any general  suspension of trading in, or
limitation  on  prices  listed  for,  the  Common  Stock  on  the  NASDAQ  Small
Capitalization  Market System,  (ii) the declaration of a banking  moratorium or
any suspension of payments in respect of banks in the United  States,  (iii) the
commencement  of a war,  armed  hostilities or other  international  or national
calamity  directly  or  indirectly  involving  the  United  States or any of its
territories,  protectorates or possessions, or (iv) in the case of the foregoing
existing at the date of this  Agreement,  a material  acceleration  or worsening
thereof.

     e. There not having occurred any event or  development,  and there being in
existence no condition,  having or which  reasonably and forseeably could have a
Material Adverse Effect.

     f. The Company shall have delivered to Buyer (by bank or certified check or
wire  transfer  of  immediately  available  funds to an  account  (or  accounts)
specified by Buyer to the Company)  reimbursement of Buyer's out-of-pocket costs
and expenses  incurred in connection with the transactions  contemplated by this
Agreement  (including the  reasonable  fees and  disbursements  of Buyer's legal
counsel),  upon  submission by Buyer to the Company of  appropriate  documentary
evidence of such out-of-pocket costs and expenses.

     g. There shall not be in effect any Law or order, ruling,  judgment or writ
of any court or public  or  governmental  authority  restraining,  enjoining  or
otherwise prohibiting any of the transactions contemplated by this Agreement.

     10. TERMINATION.

     a. Termination by Mutual Written Consent.  This Agreement may be terminated
and the transactions contemplated hereby may be abandoned, for any reason and at
any time prior to the Closing Date, by the mutual written consent of the Company
and Buyer.


                                       20

<PAGE>

     b.  Termination  by the Company or Buyer.  This Agreement may be terminated
and the  transactions  contemplated  hereby  may be  abandoned  by action of the
Company or Buyer if (i) the Closing  shall not have occurred at or prior to 5:00
p.m., New York City time, on March 31, 1997; provided,  however,  that the right
to  terminate  this  Agreement  pursuant to this Section  10.a.(i)  shall not be
available  to any party whose  failure to fulfill any of its  obligations  under
this  Agreement  has been the cause of or resulted in the failure of the Closing
to occur  at or  before  such  time and  date or (ii)  any  court or  public  or
governmental authority shall have issued an order, ruling,  judgment or writ, or
there  shall  be  in  effect  any  Law,  restraining,   enjoining  or  otherwise
prohibiting  the  consummation of any of the  transactions  contemplated by this
Agreement.

     c.  Termination  by  Buyer.  This  Agreement  may  be  terminated  and  the
transactions  contemplated hereby may be abandoned by Buyer at any time prior to
the Closing Date, if (i) the Company shall have failed to comply in any material
respect with any of its  covenants or  agreements  contained in this  Agreement,
(ii)  there  shall  have  been a  breach  by the  Company  with  respect  to any
representation  or warranty made by it in this  Agreement,  or (iii) there shall
have  occurred  any event or  development,  or there shall be in  existence  any
condition, having or reasonably and forseeably likely to have a Material Adverse
Effect.

     d.  Termination  by the Company.  This  Agreement may be terminated and the
transactions  contemplated  hereby may be  abandoned  by the Company at any time
prior to the  Closing  Date,  if (i) Buyer  shall  have  failed to comply in any
material  respect  with any of its  covenants  or  agreements  contained in this
Agreement  or (ii) there  shall have been a breach by Buyer with  respect to any
representation or warranty made by it in this Agreement.

     11. SURVIVAL; INDEMNIFICATION.

     a.  The  representations,  warranties  and  covenants  made  by each of the
Company and Buyer in this Agreement, the annexes,  schedules and exhibits hereto
and in each instrument,  agreement and certificate entered into and delivered by
them pursuant to this Agreement,  shall survive the Closing and the consummation
of the transactions  contemplated  hereby. In the event of a breach or violation
of any of such representations,  warranties or covenants, the party to whom such
representations,  warranties  or covenants  have been made shall have all rights
and remedies for such breach or violation  available to it under the  provisions
of this Agreement or otherwise, whether at law or in equity, irrespective of any
investigation  made by or on  behalf  of such  party on or prior to the  Closing
Date.

                                       21

<PAGE>

     b. Indemnification of Buyer by the Company.

     The Company  hereby agrees to indemnify  and hold  harmless the Buyer,  its
Affiliates  and their  respective  officers,  directors,  partners  and  members
(collectively,  the "Buyer  Indemnitees"),  from and against any and all losses,
claims,   damages,   judgments,   penalties,    liabilities   and   deficiencies
(collectively,  "Losses"), and agrees to reimburse the Buyer Indemnitees for all
out-of-pocket  expenses  (including the fees and expenses of legal counsel),  in
each case  promptly  as  incurred  by the Buyer  Indemnitees  and to the  extent
arising out of or in connection with:

                  (i) any  misrepresentation,  omission of fact or breach of any
         of the  Company's  representations  or  warranties  contained  in  this
         Agreement, the annexes, schedules or exhibits hereto or any instrument,
         agreement  or  certificate  entered  into or  delivered  by the Company
         pursuant to this Agreement; or

                  (ii) any  failure by the  Company  to perform in any  material
         respect any of its covenants,  agreements,  undertakings or obligations
         set forth in this Agreement, the annexes,  schedules or exhibits hereto
         or any instrument,  agreement or certificate  entered into or delivered
         by the Company pursuant to this Agreement.

     c. Indemnification of the Company by Buyer.

     Buyer  hereby  agrees to  indemnify  and hold  harmless  the  Company,  its
Affiliates  and their  respective  officers,  directors,  partners  and  members
(collectively, the "Company Indemnitees"),  from and against any and all Losses,
and agrees to reimburse the Company  Indemnitees for all out-of-pocket  expenses
(including  the fees and expenses of legal  counsel),  in each case  promptly as
incurred  by the  Company  Indemnitees  and to the extent  arising  out of or in
connection with:

                  (i) any misrepresentation,  omission of fact, or breach of any
         of Buyer's  representations or warranties  contained in this Agreement,
         the annexes, schedules or exhibits hereto or any instrument,  agreement
         or  certificate  entered into or  delivered  by Buyer  pursuant to this
         Agreement; or

                  (ii) any failure by Buyer to perform in any  material  respect
         any of its covenants, agreements, undertakings or obligations set forth
         in this Agreement or any instrument,  certificate or agreement  entered
         into or delivered by Buyer pursuant to this Agreement.


                                       22

<PAGE>

     d. Third  Party  Claims.  Promptly  after  receipt by either  party  hereto
seeking indemnification  pursuant to this Section 11 (an "Indemnified Party") of
written  notice  of any  investigation,  claim,  proceeding  or other  action in
respect  of which  indemnification  is  being  sought  (each,  a  "Claim"),  the
Indemnified  Party promptly shall notify the party against whom  indemnification
pursuant to this  Section 11 is being sought (the  "Indemnifying  Party") of the
commencement thereof; but the omission to so notify the Indemnifying Party shall
not relieve it from any liability that it otherwise may have to the  Indemnified
Party, except to the extent that the Indemnifying Party is materially prejudiced
and  forfeits  substantive  rights and  defenses by reason of such  failure.  In
connection  with any  Claim as to which  both  the  Indemnifying  Party  and the
Indemnified  Party are  parties,  the  Indemnifying  Party  shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying  Party, the Indemnified  Party shall have the right to
employ  separate  legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees,  out-of-pocket  costs
and expenses of such  separate  legal counsel to the  Indemnified  Party if (and
only if):  (x) the  Indemnifying  Party  shall  have  agreed  to pay such  fees,
out-of-pocket costs and expenses, (y) the Indemnified Party and the Indemnifying
Party  reasonably  shall have concluded that  representation  of the Indemnified
Party  by the  Indemnifying  Party  by  the  same  legal  counsel  would  not be
appropriate  due to actual or, as reasonably  determined by legal counsel to the
Indemnified Party,  potentially  differing interests between such parties in the
conduct  of the  defense  of such  Claim,  or if  there  may be  legal  defenses
available to the  Indemnified  Party that are in addition to or  disparate  from
those available to the Indemnifying  Party, or (z) the Indemnifying  Party shall
have failed to employ legal counsel  reasonably  satisfactory to the Indemnified
Party within a reasonable  period of time after  notice of the  commencement  of
such  Claim.  If  the  Indemnified  Party  employs  separate  legal  counsel  in
circumstances  other than as described  in clauses  (x),  (y) or (z) above,  the
fees, costs and expenses of such legal counsel shall be borne exclusively by the
Indemnified  Party.  Except as provided above, the Indemnifying Party shall not,
in connection  with any Claim in the same  jurisdiction,  be liable for the fees
and expenses of more than one firm of legal  counsel for the  Indemnified  Party
(together with appropriate  local counsel).  The  Indemnifying  Party shall not,
without the prior written consent of the Indemnified  Party (which consent shall
not unreasonably be withheld),  settle or compromise any Claim or consent to the
entry of any  judgment  that does not  include an  unconditional  release of the
Indemnified Party from all liabilities with respect to such Claim or judgment.


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<PAGE>

     e. Other Claims.

     In the event one party  hereunder  should have a claim for  indemnification
that does not involve a claim or demand  being  asserted by a third  party,  the
Indemnified   Party   promptly  shall  deliver  notice  of  such  claim  to  the
Indemnifying  Party. If the Indemnified  Party disputes the claim,  such dispute
shall  be  resolved  by  mutual  agreement  of the  Indemnified  Party  and  the
Indemnifying  Party or by binding  arbitration  conducted in accordance with the
procedures and rules of the American Arbitration Association.  Judgment upon any
award rendered by any arbitrators  may be entered in any court having  competent
jurisdiction thereof.

     12. GOVERNING LAW: MISCELLANEOUS.

     This Agreement  shall be governed by and interpreted in accordance with the
laws of the State of New York, without regard to the conflicts of law principles
of such state.  Each of the parties  consents to the jurisdiction of the federal
courts whose  districts  encompass any part of the City of New York or the state
courts of the State of New York  sitting  in the City of New York in  connection
with any dispute arising under this Agreement and hereby waives,  to the maximum
extent  permitted by law, any objection,  including any objection based on forum
non conveniens, to the bringing of any such proceeding in such jurisdictions.  A
facsimile  transmission  of this signed  Agreement shall be legal and binding on
all parties  hereto.  This Agreement may be signed in one or more  counterparts,
each of which shall be deemed an original.  The headings of this  Agreement  are
for  convenience  of  reference  and  shall  not form  part of,  or  affect  the
interpretation  of, this Agreement.  If any provision of this Agreement shall be
invalid   or   unenforceable   in   any   jurisdiction,   such   invalidity   or
unenforceability  shall  not  affect  the  validity  or  enforceability  of  the
remainder of this Agreement or the validity or  enforceability of this Agreement
in any other  jurisdiction.  This Agreement may be amended only by an instrument
in writing  signed by the party to be charged with  enforcement.  This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.

     13. NOTICES.  Any notice required or permitted  hereunder shall be given in
writing  (unless  otherwise  specified  herein) and shall be deemed  effectively
given upon personal  delivery or seven business days after deposit in the United
States  Postal  Service,  by (a) advance copy by fax, and (b) mailing by express
courier or registered or certified mail with postage and fees prepaid, addressed
to each of the other parties thereunto entitled at the following  addresses,  or
at such other  addresses as a party may  designate  by ten days advance  written
notice to each of the other parties hereto.

                                       24

<PAGE>

COMPANY:                   EARTH SCIENCES, INC.
                           910 12th Street
                           Golden, Colorado  80401
                           Attention: President
                           Telephone: (303) 292-6400
                           Fax: (303) 295-3040

                           with a copy to:

                           Parcel, Mauro, Hultin & Spaanstra
                           1801 California Street, Suite 3600
                           Denver, Colorado 80202
                           Attention: Scott Reid, Esq.
                           Telephone: (303) 292-6400
                           Fax: (303) 295-3040

BUYER:                     THE SHAAR FUND LTD.
                           Apartment 4F
                           62 King George Street
                           Jerusalem, Israel
                           Attention: Samuel Levinson
                           Telephone: 00-972-2-566-1144
                           Fax: 00-972-2-566-0424

ESCROW AGENT:              WEIL, GOTSHAL & MANGES LLP
                           767 Fifth Avenue
                           New York, New York  10153
                           Attention: Dennis J. Block, Esq.
                           Telephone: (212) 310-8000
                           Fax:              (212) 310-8007


     14.  CONFIDENTIALITY.  Each  of  the  Company  and  Buyer  agrees  to  keep
confidential  and not to  disclose  to or use for the benefit of any third party
the  terms  of this  Agreement  or any  other  information  which at any time is
communicated by the other party as being confidential  without the prior written
approval of the other party;  provided,  however,  that this provision shall not
apply to information  which,  at the time of disclosure,  is already part of the
public domain  (except by breach of this  Agreement)  and  information  which is
required to be disclosed by law.

     15.  ASSIGNMENT.  This  Agreement  shall not be assignable by either of the
parties  hereto prior to the Closing  without the prior  written  consent of the
other party,  and any attempted  assignment  contrary to the  provisions  hereby
shall be null and void; provided,  however, that Buyer may assign its rights and
obligations  hereunder,  in whole  or in part,  to any  affiliate  of Buyer  who
furnishes to the

                                       25

<PAGE>


Company the representations and warranties set forth in Section 2 hereof.






                                       26

<PAGE>


     IN WITNESS  WHEREOF,  the parties  hereto have duly  executed and delivered
this Agreement on the date first above written.

                                               EARTH SCIENCES, INC.


                                      By:      /s/ Mark H. McKinnies
                                              ---------------------------------
                                               Name:  Mark H. McKinnies
                                               Title: President


                                               THE SHAAR FUND LTD.


                                      By:      /s/ Jeremy Posen
                                              ---------------------------------
                                               Name:Jeremy Posen
                                               Title: Secretary


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