EVERCEL, INC.

                            Shares of Preferred Stock
                       and Common Stock Purchase Warrants


                             SALES AGENCY AGREEMENT



December 16, 1999

Burnham Securities Inc.
1325 Avenue of the Americas, 17th Floor
New York, New York 10019

Ladies and Gentlemen:

         Evercel,  Inc., a Delaware  corporation  (the  "Company"),  proposes to
offer for sale in a private  offering (the  "Offering")  pursuant to Rule 506 of
Regulation D ("Regulation  D") under the Securities Act of 1933, as amended (the
"Act"), up to (i) 264,000 shares (each a "Primary Share") of Series A Cumulative
Convertible  Preferred Stock, par value $0.01 per share (the "Series A Preferred
Stock") and (ii) up to 132,000  shares  (each an  "Overcall  Share" and together
with  a  Primary  Share,  a  "Share")  of  the  Company's  Series  B  Cumulative
Convertible  Preferred Stock, par value $0.01 per share (the "Series B Preferred
Stock" and,  together with the Series A Preferred Stock, the "Preferred  Stock")
pursuant  to Section  2(b)  hereof,  together  with  warrants  (the  "Warrants,"
together with the Preferred Stock are hereinafter  sometimes  referred to as the
"Securities") to purchase shares of the Company's  common stock,  $.01 par value
per share (the "Common  Stock").  The Preferred Stock is convertible into shares
of Common Stock (the  "Conversion  Shares.") The Offering will be made solely to
"accredited  investors"  as defined  in  Regulation  D. This is to  confirm  our
agreement   concerning  your  acting  as  our  exclusive  placement  agent  (the
"Placement Agent") in connection with the Offering.

         1.       Appointment of Placement Agent.
                  ------------------------------
<PAGE>

                  On the basis of the representations  and warranties  contained
herein,  and subject to the terms and conditions  set forth herein,  the Company
hereby appoints you as its Placement Agent and grants to you the exclusive right
to offer, as its agent, the Securities  pursuant to the terms of this Agreement.
On the  basis  of such  representations  and  warranties,  and  subject  to such
conditions,  you  hereby  accept  such  appointment  and  agree to use your best
efforts to secure subscriptions to purchase up to 264,000 Shares pursuant to the
terms of this  Agreement.  The agency  created  hereby is not  terminable by the
Company  except upon  termination  of the Offering  contemplated  hereby or upon
expiration  of the Offering  Period (as defined  below) in  accordance  with the
terms of this Agreement.

         2.       Terms of the Offering.
                  ---------------------

                  (a)  The  Primary   Shares   shall  be  offered  for  sale  to
prospective  investors  in this  Offering  (the  "Prospective  Investors")  at a
purchase  price  of  $25.00  per  share  (the  "Offering  Price").  The  minimum
investment by a  Prospective  Investor  shall be $12,5000  (500 Shares),  unless
otherwise agreed to by the Company and the Placement Agent. Officers,  directors
and  employees  of the  Company,  and the  Placement  Agent  and  its  officers,
directors and employees may purchase  Shares on the same terms and conditions as
other  investors.  All  references  herein  to  subscriptions  from  Prospective
Investors shall be deemed to include such Shares.

                  (b)  In  addition,  upon  the  basis  of  the  warranties  and
representations and other terms and conditions herein set forth, at the purchase
price per share set forth in paragraph (a) of this Section 2, the Company has an
option to sell the Overcall  Shares to the  Prospective  Investors who purchased
securities  at the  Closing or at any  Additional  Closing.  The  option  hereby
granted will expire on August 31, 2000 and may be exercised once, in whole or in
part, upon notice by the Company to the Placement Agent setting forth the number
of Overcall Shares as to which the Company is then calling and the time and date
of payment and delivery for such Overcall Shares.

                  (c) The  Offering  with  respect to the Primary  Shares  shall
commence on the date hereof (the  "Commencement  Date") and shall expire at 5:00
P.M., New York time, on December 20, 1999, unless extended from time to time for
up to an  aggregate  of 90 days  by  mutual  agreement  of the  Company  and the
Placement Agent. Such period, as the same may be so extended,  shall hereinafter
be referred to as the "Offering Period."

                  (d)  Each   Prospective   Investor  who  desires  to  purchase
Securities  shall be  required to deliver to the  Placement  Agent one copy of a
subscription  agreement,  including  the  investor  questionnaire  and the other
written  materials  required by the subscription  instructions  attached to such
subscription agreement (collectively,  a "Subscription Agreement"),  and payment
in the  amount  necessary  to  purchase  the number of Shares  such  Prospective
Investor desires to purchase.  The Placement Agent shall not have any obligation
to  independently  verify  the  accuracy  or  completeness  of  any  information
contained in any  Subscription  Agreement or the  authenticity,  sufficiency  or
validity  of any check or other form of  payment  delivered  by any  Prospective
Investor in payment for the Securities.
<PAGE>

                  (e) The Company has  established  a Special  Account  entitled
"Evercel,  Inc. - Escrow Account" (the "Special  Account").  The Placement Agent
shall deliver each check received from a Prospective Investor for deposit in the
Special  Account  and  shall  deliver  the  executed  copy  of the  Subscription
Agreement  received from such Prospective  Investor to the Company.  The Company
shall notify the Placement  Agent promptly of the acceptance or rejection of any
subscription.  The  Company  shall have the right,  in its sole  discretion,  to
reject any subscription;  provided, however, that in the event the Company shall
reject a subscription by a Prospective Investor meeting the investor suitability
requirements  specified  in the  Subscription  Agreement  and who has  delivered
payment and completed and executed a Subscription  Agreement and whose ownership
interest  in the  Company  will not be  detrimental  to the  Company's  business
interest in the reasonable judgment of the Company (a "Qualified Subscription"),
the Company shall pay you a fee and issue you warrants in respect  thereof in an
amount  equal to the  sales  commissions  and  Placement  Agent's  Warrants  (as
hereinafter defined) you would have otherwise received pursuant to Sections 4(a)
and 4(b) from the sale of such Shares to such Prospective Investor.

                  (f) If  Subscriptions to purchase a minimum of 200,000 Primary
Shares are not received from  Prospective  Investors  prior to the expiration of
the  Offering  Period and  accepted by the Company,  unless  otherwise  mutually
agreed by the Placement  Agent and the Company,  the Offering shall be canceled,
all funds  received by the Company shall be refunded in full,  without  interest
and this Agreement and the agency created hereby shall be terminated without any
further obligation on the part of either party, except as provided in Sections 7
and 10 hereof.

                  (g) You may  engage  other  persons  that are  members  of the
National  Association  of  Securities  Dealers,   Inc.  ("NASD")  or  registered
representatives  of such members to assist you in the Offering (each such person
being  hereinafter  referred to as a "Selected  Dealer")  and you may allow such
persons  such part of the  compensation  and payment of expenses  payable to you
hereunder  as you shall  determine.  Each  Selected  Dealer shall be required to
agree  in  writing  to  comply  with  the   provisions   of,  and  to  make  the
representations,  warranties and covenants  contained in, Sections 5(b) and 6(b)
by executing the form of Selected  Dealer  Agreement  attached hereto as Exhibit
III. On or prior to the Closing (as defined  below),  the Placement  Agent shall
deliver a copy of each executed  Selected  Dealer  Agreement to the Company.  By
executing  this  Agreement,  the Company hereby agrees to make, and is deemed to
make, the  representations and warranties to, and covenants and agreements with,
each  Selected  Dealer  (including  an agreement to  indemnify  under  Section 9
hereof) who has executed the Selected  Dealer  Agreement as is contained in this
Agreement.

<PAGE>

         3.       Closing.
                  -------

                  (a) Subject to the  conditions  set forth in Section 8 hereof,
if Qualified  Subscriptions to purchase a minimum of 200,000 Primary Shares have
been  received and cleared prior to the  expiration  of the Offering  Period and
accepted by the Company,  the closing under this Agreement (the "Closing") shall
be held at the offices of Fulbright & Jaworski  L.L.P.,  666 Fifth  Avenue,  New
York,  New  York,  at 10:00  A.M.,  New York  time,  on the third  business  day
following  the date upon which the  Placement  Agent  receives  notice  from the
Company that  subscriptions  to purchase a minimum  200,000  Primary Shares have
been so accepted or at such other  place,  time,  and/or date as the Company and
the  Placement  Agent shall agree upon (the "Closing  Time").  The Company shall
provide  the  notice   required  by  the  preceding   sentence  as  promptly  as
practicable.  The date upon which the initial Closing is held shall  hereinafter
be referred to as the "Initial Closing Date."

                  (b)  Subject to the  conditions  set forth in Section 8 hereof
and with the consent of both the Company and the Placement Agent, if, subsequent
to the Initial Closing Date and prior to the expiration of the Offering  Period,
additional   subscriptions   to  purchase   Primary  Shares  are  received  from
Prospective  Investors,  which subscriptions are accepted by the Company, one or
more additional  closings under this Agreement  (each, an "Additional  Closing")
shall be held at the offices of Fulbright & Jaworski  L.L.P.,  666 Fifth Avenue,
New York,  New York,  at 10:00 A.M.,  New York time,  on the fifth  business day
following  the date upon which the  Placement  Agent  receives  notice  from the
Company that additional  subscriptions  have been so accepted,  or at such other
place, time or date as the Company and the Placement Agent shall agree upon. The
Company shall notify the Placement Agent as promptly as practicable  whether any
additional subscriptions so received have been accepted. The date upon which any
Additional  Closing is held shall  hereinafter  be referred to as an "Additional
Closing Date."

                  (c) If the Company  elects to exercise its option  pursuant to
Section 2(b) hereof, the closing (the "Overcall  Closing") of all or part of the
Overcall Shares shall be held at the offices of Fulbright & Jaworski L.L.P., 666
Fifth Avenue, New York, New York, at 10:00 A.M., New York time, on the fifteenth
business day following the date upon which the Placement  Agent receives  notice
from the Company of such exercise,  or at such other place,  time or date as the
Company  and the  Placement  Agent  shall  agree  upon.  The date upon which the
Overcall  Closing is held shall  hereinafter  be  referred  to as the  "Overcall
Closing  Date." The latest  Closing Date is sometimes  referred to herein as the
"Final Closing Date."

                  (d) At the Closing, Additional Closing or Overcall Closing, as
the case may be, the  Company  shall pay to the  Placement  Agent from the funds
deposited in the Special Account in payment for  Securities,  the amount payable
to  the   Placement   Agent   pursuant  to  Section  4(a)  of  this   Agreement.
Notwithstanding  the  foregoing,  if any portion of the  proceeds  raised in the
Offering  are not paid to the  Company  at the  Closing,  Additional  Closing or
Overcall  Closing,  as the case may be, then the  placement fee relating to such
deferred  proceeds  shall  only be  paid by the  Company  upon  receipt  of such
deferred proceeds.  Promptly after the Initial Closing Date,  Additional Closing
Date or Overcall  Closing Date, as the case may be, the Company shall deliver to
the purchasers of Securities  certificates  representing the Shares and Warrants
to which  they are  entitled,  in the forms  attached  hereto  as  Exhibit I and
Exhibit II, respectively.

         4.       Compensation.
                  ------------
<PAGE>

                  (a) You shall be entitled,  as compensation  for your services
as  Placement  Agent  under  this  Agreement,  to an  amount  equal to 7% of the
aggregate gross proceeds  received by the Company from the sale of Securities to
Prospective  Investors,  payable by the  Company on the  Initial  Closing  Date,
Additional  Closing  Date or  Overcall  Closing  Date,  as the case may be, with
respect to the  Securities  sold on such date to investors;  provided,  however,
that any  subscription  meeting the requirements set forth in Section 2(d) shall
be deemed  to have  been  accepted  for  purposes  of  determining  whether  the
Placement Agent is entitled to its  compensation  pursuant to this Section 4(a).
In addition,  the Company shall pay the Placement Agent an amount equal to 4% of
the  aggregate  gross  proceeds to the Company  upon the  exercise of any of the
Warrants.

                  (b) As additional  compensation for your services as Placement
Agent under this  Agreement,  you and/or your designees shall become entitled to
receive,  on each of the Initial Closing Date, and each Additional  Closing Date
and Overcall Closing Date, if any, warrants (collectively,  the "Placement Agent
Warrants") to purchase shares of the Company's  Common Stock, in an amount equal
to 7% of the number of shares of Common Stock  issuable  upon the  conversion of
the Shares  sold by the  Company in the  Offering  on such  Closing  Date.  Each
Placement Agent Warrant will entitle the holder thereof, until the date which is
five (5) years  after the  Initial  Closing  Date,  Additional  Closing  Date or
Overcall Closing Date, as the case may be, to purchase one share of Common Stock
(such shares of Common Stock  issuable upon the exercise of the Placement  Agent
Warrants are hereinafter  referred to as the "Placement  Agent Warrant  Shares")
and shall contain the same terms and  conditions  as the  Warrants.  The Company
shall be obligated,  under certain  circumstances  set forth in the Registration
Rights  Agreement  made by the Company for the benefit of the  purchasers of the
Securities and the Placement Agent and its designees (the  "Registration  Rights
Agreement"),  to file a registration  statement under the Act to permit the sale
in the public  trading  market of the  Placement  Agent  Warrant  Shares and the
shares of Common Stock  issuable  upon  exercise of the Warrants  (the  "Warrant
Shares") by the holders  thereof.  The Placement Agent Warrants and the Warrants
shall be substantially in the form attached hereto as Exhibit II.

         5.       Representations and Warranties.
                  ------------------------------

                  (a)      Representations  and  Warranties of the Company.
The Company  represents  and warrants to, and agrees with,
the Placement Agent that:

                           (i)      Organization,   Etc.   The   Company is  a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full  corporate  power and authority to conduct
its  business  as it is now being  conducted  and to own,  operate  or lease the
properties  and assets it currently  owns,  operates or holds under  lease.  The
Company is duly  qualified or licensed to do business and is in good standing as
a foreign  corporation in each jurisdiction  where the character of its business
or the nature of its properties makes such qualification or licensing necessary,
except where the failure to so qualify or be licensed  would not have a material
adverse effect
<PAGE>

                           (ii)     Capitalization.  The SEC Reports (as defined
below)  set  forth the  capitalization  of the  Company.  There are no shares of
Common Stock held as treasury shares.  The  designations,  powers,  preferences,
rights,  qualifications,  limitations and  restrictions in respect of each class
and series of  authorized  capital  stock of the Company are as set forth in the
Company's  Certificate  of  Incorporation,  and all such  designations,  powers,
preferences,  rights,  qualifications,  limitations and  restrictions are valid,
binding  and  enforceable  and in  accordance  with  all  applicable  laws.  All
outstanding shares of capital stock of the Company have been duly authorized and
validly  issued and are fully paid and  non-assessable.  All of the  outstanding
securities of the Company were issued in compliance with all applicable  Federal
and state securities  laws. None of such outstanding  securities has been issued
in  violation  of any  preemptive  rights,  rights of first  refusal  or similar
rights.  Except  as set  forth  in the SEC  Reports,  there  are no  outstanding
options,   warrants,   convertible  securities,   calls,  rights,   commitments,
preemptive  rights  or  agreements  or  instruments  or  understandings  of  any
character  to which the  Company  is a party or by which the  Company  is bound,
obligating  the  Company  to  issue,  deliver  or sell,  or cause to be  issued,
delivered or sold,  contingently or otherwise,  additional shares of its capital
stock or any securities or obligations convertible into or exchangeable for such
shares or to grant, extend or enter into any such option,  warrant,  convertible
security, call, right, commitment,  preemptive right or agreement.  There are no
outstanding obligations, contingent or other, of the Company to purchase, redeem
or otherwise acquire any shares of its capital stock.  There are no voting trust
agreements or other contracts, agreements,  arrangements,  commitments, plans or
understandings  restricting or otherwise  relating to voting,  dividend or other
rights with respect to the capital stock of the Company.

                           (iii)    No   Prior  Sales.   The   Company  has not,
directly or indirectly, solicited any offer to buy or offered to sell any shares
of Series A Preferred  Stock or any other  securities of the Company  during the
six-month  period ending on the date hereof except for the  securities as may be
described in the SEC Reports,  and has no present intention to solicit any offer
to buy or to offer to sell any Series A Preferred Stock or any other  securities
of the Company other than pursuant to this  Agreement or as described in the SEC
Reports.

                           (iv)     Authorization. The Company has all requisite
corporate  power and authority to enter into this  Agreement,  the  Subscription
Agreement and the Registration Rights Agreement (collectively,  the "Transaction
Documents"),  to  carry  out  its  obligations  under  each  of the  Transaction
Documents and to consummate the  transactions  contemplated  hereby and thereby.
The  execution  and  delivery  of  this  Agreement,   the  consummation  of  the
transactions  contemplated  hereby,  the  performance  by  the  Company  of  its
obligations  hereunder and  thereunder  (other than its  obligations to register
shares of Common Stock under the  Securities  Act  pursuant to the  Registration
Rights  Agreement)  and  the  authorization,   designation,  reservation,  sale,
issuance and delivery of the Shares, the Conversion  Shares,  the Warrants,  the
Placement  Agent  Warrants,  the Warrant Shares and the Placement  Agent Warrant
Shares have been duly authorized by all necessary  corporate  action on the part
of the  Company.  This  Agreement  has been,  and each of the  other  agreements
contemplated hereby, when executed and delivered by the Company, will have been,
duly executed and delivered by the Company and constitute  the legal,  valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms  (except  as the  enforceability  thereof  may be  limited by any
applicable  bankruptcy,  insolvency or other laws  affecting  creditors'  rights
generally  or by general  principles  of  equity,  regardless  of  whether  such
enforceability  is considered in equity or at law).  The Shares,  the Conversion
Shares, the Warrants,  the Placement Agent Warrants,  the Warrant Shares and the
Placement  Agent Warrant  Shares have been duly  authorized  and, when issued in
accordance with this Agreement, the Shares, the Warrants and the Placement Agent
Warrants will be validly issued, fully paid and nonassessable,  with no personal
liability attaching to the ownership thereof. The Conversion Shares, the Warrant
Shares and the  Placement  Agent  Warrant  Shares  have been duly  reserved  for
issuance.  Neither the issuance, sale nor delivery of the Shares, the Conversion
Shares,  the Warrants,  the Placement Agent Warrants,  the Warrant Shares or the
Placement   Agent  Warrant  Shares  is  subject  to  any  preemptive   right  of
stockholders  of the Company or to any right of first  refusal or other right in
favor of any person which has not been waived in writing.
<PAGE>

                           (v)      No Violation.  The execution and delivery of
this  Agreement and each other  Transaction  Document by the Company do not, and
the  consummation  by the Company of the  transactions  contemplated  hereby and
thereby and compliance  with the terms hereof and thereof will not, (a) conflict
with, or result in any violation of or default or loss of any benefit under, any
provision of the Company's Certificate of Incorporation or By-laws; (b) conflict
with, or result in any violation of or default or loss of any benefit under, any
permit, concession,  grant, franchise, law, rule or regulation, or any judgment,
decree or order of any court or other governmental  agency or instrumentality to
which the Company is a party or to which any of its  property  is  subject;  (c)
conflict  with,  or result in a breach or violation of or default or loss of any
benefit  under,  or  accelerate  the  performance  required by, the terms of any
agreement,  contract,  indenture or other  instrument  to which the Company is a
party or to which any of its  property is subject,  or  constitute  a default or
loss of any right thereunder or an event which, with the lapse of time or notice
or both,  might  result in a  default  or loss of any  right  thereunder  or the
creation of any Security  Interest  upon any of the assets or  properties of the
Company; or (d) result in any suspension,  revocation, impairment, forfeiture or
nonrenewal of any license.

                           (vi)     Financial  Statements and Other Information.
(a) The Company has  previously  furnished to the Placement  Agent the Company's
Quarterly  Reports on Form 10-QSB for the quarters ended January 31, 1999, April
30, 1999 and July 31, 1999,  which contain the audited and  unaudited  financial
statements of the Company (the "Financial Statements").  These statements fairly
present  the  financial  condition  of the  Company as of the  respective  dates
thereof and the results of the  operations  of the Company for such  periods and
have been prepared in accordance with generally accepted  accounting  principles
consistently  applied,  except that any such unaudited statements may omit notes
and may be subject to year-end adjustment.



<PAGE>


                  (b) Since July 31,  1999,  (i) the business of the Company has
been  conducted  in the  ordinary  course of business and (ii) there has been no
material  adverse  change.  As  of  the  date  hereof,  there  are  no  material
liabilities  of the Company  which  would be  required  to be provided  for in a
balance  sheet of the Company as of July 31, 1999  prepared in  accordance  with
generally  accepted  accounting  principles  consistently  applied,  other  than
liabilities provided for in the financial statements referred to in subparagraph
(a) above and liabilities incurred after July 31, 1999 in the ordinary course of
business.

                  (c)  There  are  no  material   liabilities,   contingent   or
otherwise,  of the  Company  that  have  not  been  disclosed  in the  financial
statements  referred to in subparagraph (a) above or otherwise  disclosed in the
Company's public filings with the Securities and Exchange Commission.

                           (vii)    SEC Reports. The Company has filed all proxy
statements,  reports  and other  documents  required to be filed by it under the
Securities  Exchange Act. The Company has  furnished  the  Placement  Agent with
copies of its (i)  Quarterly  Reports  on Form  10-QSB  for the  quarters  ended
January  31,  1999,  April 30,  1999 and July 31,  1999,  (ii) Form 8-K filed on
October 13, 1999 and (iii) press releases dated August 10, August 12,  September
9 and November 1, 1999 (collectively, the "SEC Reports"). Each SEC Report was in
substantial  compliance with the requirements of its respective form and none of
the SEC Reports,  nor the financial  statements (and the notes thereto) included
in the SEC Reports, as of their respective dates, contained any untrue statement
of a material  fact or omitted to state a material  fact  required  to be stated
therein  or  necessary  to  make  the  statements   therein,  in  light  of  the
circumstances under which they were made, not misleading.

                           (viii)   Litigation.  There  is    no  action,  suit,
investigation,  arbitration  or proceeding  pending or, to the best knowledge of
the  Company,  threatened  against  or  affecting  the  Company,  or  any of its
properties or rights  (including  without  limitation no charge of patent and/or
trademark  infringement),  by or before any governmental entity, or any basis in
fact therefor  known to the Company,  against or involving the Company or any of
its  officers,  directors  or  employees  (in their  capacity as such),  assets,
business or products, whether at law or in equity. The Company is not subject to
any outstanding  injunction,  judgment,  order,  decree,  ruling or charge which
could reasonably be expected to have a material adverse effect.

                           (ix)     Compliance  with  Laws.   The    Company has
complied in all material  respects with all applicable  laws  (including  rules,
regulations, codes, plans, injunctions,  judgments, orders, decrees, rulings and
charges  thereunder)  of any  governmental  entity  relating to or affecting the
operation,  conduct or ownership  of its  property or  business,  and no action,
suit, proceeding,  hearing,  investigation,  charge, complaint, claim, demand or
notice has been filed or  commenced  or, to the best  knowledge  of the Company,
threatened  against it alleging  any  failure so to comply.  Neither the Company
nor, to the best  knowledge  of the  Company,  any of its  directors,  officers,
consultants  or  employees  (in their  capacity  as such),  is in default in any
material respect with respect to any order, writ,  injunction or decree known to
or served upon the Company of any governmental entity.

                        (x)      Environmental  Compliance.  The Company has not
generated, used, transported,  treated, stored, released or disposed of, and has
not suffered or permitted anyone else to generate, use, transport, treat, store,
release or dispose of any hazardous  substance in violation of any environmental
laws; (ii) there has not been any generation,  use,  transportation,  treatment,
storage,  release or  disposal of any  hazardous  substance  resulting  from the
conduct of the Company or the use of any property or facility by the Company or,
to the best of the  Company's  knowledge,  any nearby or adjacent  properties or
facilities,  which has  created or could  reasonably  be  expected to create any
material  liability on the part of the Company under the  environmental  laws or
that  would  require  reporting  to  or  notification  by  the  Company  to  any
governmental  entity; and (iii) any hazardous substance handled or dealt with in
any way in connection with the business of the Company, whether before or during
the ownership of the Company, has been and is being handled or dealt with in all
respects in compliance  with the  environmental  laws in effect at the time such
activities were being conducted, except where such violation, liability, failure
to report or failure to comply would not have a material adverse effect.
<PAGE>

                           (xi)     Registration   Rights.  Except  as  provided
for in the Registration  Rights Agreement or the SEC Reports,  upon consummation
of the transactions  contemplated hereby the Company is not under any obligation
to register under the Securities Act any of its currently outstanding securities
or any of its securities which may hereafter be issued.

                           (xii) Private Offering.   No   form   of    general
solicitation   or  general   advertising   was  used  by  the   Company  or  its
representatives in connection with the offer or sale of the Securities. Based in
part  on the  representations  of  the  Placement  Agent  contained  herein,  no
registration of the Securities  pursuant to the provisions of the Securities Act
or any state  securities or "blue sky" laws will be required by the offer,  sale
or  issuance of the  Securities  pursuant to this  Agreement.  The  transactions
contemplated hereunder,  including the issuance and sale of the Securities,  are
exempt from  registration  under the  provisions of the  Securities  Act and any
state "blue sky" laws.

                  (b)     Representations and Warranties of the Placement Agent.
 The Placement Agent hereby  represents and warrants to, and  agrees  with,  the
 Company as follows:

                           (i)      This Agreement  have  been duly  authorized,
executed and delivered by the Placement Agent, are the legal,  valid and binding
obligations of the Placement Agent and are enforceable as to the Placement Agent
in accordance  with their  respective  terms (subject to applicable  bankruptcy,
insolvency  and other laws  affecting the  enforceability  of creditors'  rights
generally and to general equitable principles).

                           (ii)     The  Placement  Agent will not offer or sell
the Securities to any investor which the Placement Agent did not have reasonable
grounds to believe and did not believe, was an "accredited investor."

                           (iii)    The  Placement  Agent  will   not  offer  or
sell the  Securities  by means of any form of  general  solicitation  or general
advertising, including, without limitation, the following:

                                    (1)     any  advertisement,  article, notice
or other  communication  published in any  newspaper, magazine or similar medium
or broadcast over television or radio; and
<PAGE>

                                    (2)     any seminar   or    meeting    whose
attendees have been invited by any general solicitation  or general advertising.

                           (iv)     The  Placement  Agent is a  member   in good
standing  of the NASD or is a  registered  representative  thereof,  is licensed
under the Exchange Act, and, if required, under the laws of all jurisdictions in
which it will offer the Securities.

                           (v)      Neither the Placement Agent nor any partner,
officer or director of the Placement Agent:

                                    (1)     Is    currently    subject   to  any
administrative  order or judgment in any state  which  prohibits  the use of any
exemption  from  registration  in  connection  with  the  purchase  or  sale  of
securities;

                                    (2)     Is  subject  to any  order, judgment
or  decree  of any  court or  regulatory  authority  of  competent  jurisdiction
temporarily  or  preliminarily  restraining  or enjoining,  or is subject to any
order,  judgment or decree of any court or  regulatory  authority  of  competent
jurisdiction,  entered  within the last five years  permanently  restraining  or
enjoining,  such person from engaging in or  continuing  any conduct or practice
(including  making use of any exemption) in connection with the purchase or sale
of any security or  commodity  or involving  the making of any false filing with
any state  relating to any security or offering or arising out of the conduct of
the business of an underwriter,  broker, dealer, municipal securities dealer, or
investment  adviser;  or which  restrains or enjoins such person from activities
subject to federal  or state  statutes  designed  to protect  consumers  against
unlawful or deceptive  practices involving  insurance,  commodities or commodity
futures,  real estate,  franchise,  business  opportunities,  consumer goods, or
other goods and services;

                                    (3)    Has been convicted of, or has pleaded
nolo  contendere  to, within the past ten years,  any felony or  misdemeanor  in
connection with the purchase or sale of any security or commodity, involving the
making of a false filing  relating to any  security or offering;  arising out of
the  conduct  of the  business  of an  underwriter,  broker,  dealer,  municipal
securities  dealer,  or  investment   adviser;   or  involving  fraud,   deceit,
racketeering, or intentional wrongdoing, including, without limitation, forgery,
embezzlement,  obtaining money under false pretenses,  larceny, or conspiracy to
defraud;

                                    (4)     Is currently  subject  to  any state
administrative  enforcement order or judgment entered by that state's securities
administrator  within  the  past  five  years  or  is  subject  to  any  state's
administrative  enforcement  order or  judgment,  entered  within  the past five
years, in which fraud or deceit,  including,  without limitation,  making untrue
statements of material  facts and omitting to state material  facts,  was found;
or, if such an order or judgment was entered,  the person  subject to such order
or judgment is licensed or registered to conduct securities-related  business in
the state in which the administrative order or judgment was entered against such
person;
<PAGE>

                                    (5)     Is    suspended   or  expelled  from
membership  in, or  suspended  or barred  from  association  with a member of an
exchange  registered as a national  securities exchange pursuant to Section 6 of
the Exchange Act, an association registered as a national securities association
under  Section 15A of the  Exchange  Act, or a Canadian  securities  exchange or
association  for any act or omission to act  constituting  conduct  inconsistent
with just and equitable principles of trade;

                                    (6)     Is  subject to a    United    States
Postal  Service false  representation  order entered under section 3005 of title
39,  United  States  Code,  within  the past  five  years;  or is  subject  to a
restraining order or preliminary  injunction entered under section 3007 of title
39, United States Code, with respect to conduct alleged to have violated section
3005 of title 39, United States Code; or

                                    (7)     Has been  the  underwriter  or named
as the underwriter of any securities  covered by any  registration  statement or
offering circular which is the subject of any pending  proceeding or examination
under the Act or is the  subject  of any  refusal  order or stop  order  entered
thereunder or under any state's laws within the past five years.

         6.       Covenants.

                  (a)      Covenants of the Company.  The Company covenants   to
the Placement Agent that it will:

                           (i)      Notify you immediately,  and confirm    such
notice  promptly in writing,  (A) when any event shall have occurred  during the
period  commencing on the date hereof and ending on the later of the  expiration
of the Offering  Period and the Final Closing Date, as a result of which the SEC
Reports would  include any untrue  statement of a material fact or omit to state
any material fact necessary to make the statements  therein not misleading,  all
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 an  exemption  from  the  registration  or  qualification  of the
Securities in any  jurisdiction.  The Company will use  commercially  reasonable
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,  will use  commercially  reasonable
efforts to obtain the lifting thereof as promptly as possible.

                           (ii)     Not,   directly   or    indirectly,  solicit
any offer to buy from,  or offer to sell to any  person  any  Securities  except
through the Placement Agent.

                          (iii)    Not solicit any  offer  to  buy or  offer to
sell  the  Securities  by any  form  of  general  solicitation  or  advertising,
including,  without  limitation,  any  advertisement,  article,  notice or other
communication  published  in  any  newspaper,  magazine  or  similar  medium  or
broadcast  over  television or radio or any seminar or meeting  whose  attendees
have been invited by any general solicitation or advertising.
<PAGE>

                           (iv)     Use  commercially   reasonable    efforts to
qualify or register the Securities for offering and sale under,  or establish an
exemption from such qualification or registration under, the securities or "blue
sky" laws of such jurisdictions as you may reasonably request.  The Company will
not  consummate any sale of Securities in any  jurisdiction  or in any manner in
which such sale may not be lawfully made.

                           (v)      At all times  during  the period  commencing
on the date  hereof and ending on the later of the  expiration  of the  Offering
Period and the Final Closing Date,  provide to each Prospective  Investor or his
or her purchaser representative, if any, on request, such reasonable information
(in addition to that contained in the SEC Reports) concerning the Offering,  the
Company and any other  relevant  matters as it possesses or can acquire  without
unreasonable effort or expense and extend to each Prospective Investor or his or
her purchaser  representative,  if any, the opportunity to ask questions of, and
receive  answers from,  the Company  concerning  the terms and conditions of the
Offering  and the  business of the  Company  and to obtain any other  additional
information,  to the  extent it  possesses  the same or can  acquire  it without
unreasonable  effort or  expense,  as such  Prospective  Investor  or  purchaser
representative  may  consider   reasonably   necessary  in  making  an  informed
investment  decision  or in order to  verify  the  accuracy  of the  information
furnished to such Prospective Investor or purchaser representative,  as the case
may be, subject to receipt of a  confidentiality  agreement if the Company deems
it  appropriate;  provided,  however,  that the  Company  shall not  accept  any
subscription to purchase Securities from a Prospective Investor who has not been
provided with all information  requested by such Prospective Investor or who has
not received  answers to all questions asked by such Prospective  Investor.  Any
additional written information provided to a Prospective Investor by the Company
will not  contain  any untrue  statement  of a material  fact or omit to state a
material fact necessary to make the statements therein not misleading. Copies of
any such written information will promptly be given to the Placement Agent.

                           (vi)     Before   accepting   any    subscription  to
purchase Securities from, or making any sale to, any Prospective Investor,  have
reasonable  grounds  to  believe  and does  believe  that  (A) such  Prospective
Investor  is  an   "accredited   investor"  and  meets  all  other   suitability
requirements  for  investing  in the  Securities  set forth in the  Subscription
Agreement,  and (B) all  representations  made and furnished by such Prospective
Investor  in the  Subscription  Agreement  and  related  documents  are true and
correct in all material respects.

                           (vii)    Notify  you  promptly   of the acceptance or
rejection of any subscription.

                           (viii)   File five copies  of  a  Notice  of Sales of
Securities  on  Form  D  with  the  Securities  and  Exchange   Commission  (the
"Commission")  within the time  required by such Rule and file a final notice on
Form D with the  Commission  within the time required by such Rule.  The Company
shall file  promptly  such  amendments to such Notices 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 you and your  counsel  with copies of all such  filings  promptly
after any such filing is made.
<PAGE>

                           (ix)     Place  the  following   legend    on     all
certificates representing the Shares sold pursuant to this Offering, as well as,
to the extent applicable,  the Conversion Shares,  Warrants, the Placement Agent
Warrants, the Warrant Shares and the Placement Agent Warrant Shares:

                                    "The securities  represented hereby have not
                           been registered  under the Securities Act of 1933, as
                           amended, or any state securities laws and neither the
                           securities  nor any interest  therein may be offered,
                           sold,  transferred,  pledged or otherwise disposed of
                           except   pursuant   to  an   effective   registration
                           statement under such act or such laws or an exemption
                           from  registration  under  said  act and  such  laws,
                           which,  in the  opinion  of counsel  for the  holder,
                           which counsel and opinion are reasonably satisfactory
                           to counsel for the company, is available";

                           (x)      Not,  directly or indirectly,  engage in any
act or activity  which may jeopardize the status of the Offering and sale of the
Securities as exempt transactions under the Act or under the securities or "blue
sky"  laws of any  jurisdiction  in which  the  Offering  may be  made.  Without
limiting the generality of the foregoing, and notwithstanding anything contained
herein to the contrary,  the Company shall not, during the six months  following
completion of the Offering,  (A) directly or indirectly,  engage in any offering
of securities  which would result in integration with the Offering in the manner
prescribed  by Rule  502(a)  of  Regulation  D and  applicable  releases  of the
Commission  and thereby  jeopardize  the status of the  Offering and sale of the
Securities  as  exempt  transactions  under  Regulation  D or (B)  engage in any
offering of securities,  without the opinion of counsel reasonably  satisfactory
to the Placement  Agent,  to the effect that such  offering  would not result in
integration  with this Offering,  or if integration  would so result,  that such
integration  would  not  jeopardize  the  status of this  Offering  as an exempt
transaction  under  Regulation D. The Company  agrees to indemnify the Placement
Agent and/or any controlling person, director,  officer, employee,  affiliate or
agent of the Placement Agent and hold them harmless against any losses,  claims,
damages,  expenses or liabilities to which the Placement Agent and/or such other
indemnified parties may become subject, which are related to or arise out of the
breach of the covenant contained in this Section 6(a)(x).

                           (xi)     Apply,  in all  material  respects,  the net
proceeds  from the sale of the  Securities  for the purposes of  automating  the
Danbury,  CT  manufacturing  facility,  working  capital and  general  corporate
purposes.


<PAGE>


                           (xii)    Not, during  the  period   commencing on the
date hereof and ending on the later of the expiration of the Offering Period and
the Final Closing Date,  unless  otherwise  legally  obligated,  issue any press
release or other  communication or hold any press conference with respect to the
Company, its financial condition, results of operations,  business,  properties,
assets or  liabilities,  or the Offering,  without your prior  written  consent,
which consent shall not be unreasonably withheld.

                           (xiii)   Comply  in all respects with its obligations
under the Transaction Documents.

                  (b)      Covenants of the Placement Agent. The Placement Agent
hereby covenants and agrees as follows:

                           (i)      The  Placement  Agent  will  not accept  the
subscription of any person unless immediately before accepting such subscription
the Placement Agent has reasonable  grounds to believe and does believe that (A)
such person is an  "accredited  investor" and (B) all  representations  made and
information  furnished by such person in the Subscription  Agreement and related
documents are true and correct in all material  respects.  The  Placement  Agent
agrees to notify the Company  promptly if the Placement Agent shall, at any time
during the period after  delivery of the  documents  furnished by such person to
the Company in connection  with a subscription  for  Securities and  immediately
before the sale of Securities to such person, no longer reasonably  believes one
or more of the foregoing matters with respect to such person.

                           (ii)     The  Placement Agent will solicit purchasers
of  Securities  in the United  States  only in the  jurisdictions  in which such
solicitation  may,  upon  the  advice  of  counsel,  be  made  under  applicable
securities or "blue sky" laws and in which the  Placement  Agent is qualified so
to act.

                           (iii)    The Placement Agent will render its services
in  connection  with  the  Offering  in  accordance  with  Regulation  D and all
applicable state and federal manner of sale and anti-fraud securities laws.

         7        Payment of Expenses.

                  (a)  Whether  or not  the  transactions  contemplated  by this
Agreement are consummated or this Agreement is terminated,  the Company will pay
all fees, charges and expenses incident to the performance by the Company of its
obligations  hereunder,  including,  without limitation,  all fees, charges, and
expenses in connection with (i) the preparation, printing, reproduction, filing,
distribution and mailing of the Subscription  Agreement,  Transaction  Documents
and all other documents relating to the offering, purchase, sale and delivery of
the Securities,  and any supplements or amendments  thereto,  including the fees
and expenses of counsel to the Company, and the cost of all copies thereof, (ii)
the issuance,  sale, transfer and delivery of the Shares, the Conversion Shares,
the Warrants, the Placement Agent Warrants, the Warrant Shares and the Placement
Agent Warrant Shares, including any transfer or other taxes payable thereon (not
including income related taxes of the recipient of such securities) and the fees
of any Transfer Agent or Registrar,  (iii) the  registration or qualification of
the  Securities or the securing of an exemption  therefrom  under state or "blue
sky" or securities laws, including,  without limitation,  filing fees payable in
the  jurisdictions  in which such  registration  or  qualification  or exemption
therefrom is sought and the costs of  preparing  preliminary,  supplemental  and
final "Blue Sky Surveys"  relating to the offer and sale of the Securities;  and
(iv) the filing fees, if any, payable to the Commission; (v) travel and roadshow
expenses,  all of  which  shall  be paid at each  Closing  of the  Offering,  as
applicable.

                  (b)  Whether  or not  the  transactions  contemplated  by this
Agreement are consummated or this Agreement is terminated, the Company will from
time to time promptly upon request  therefor  reimburse the Placement  Agent for
the cost of printing  and mailing the  offering  materials,  travel and roadshow
expenses and all other out-of-pocket expenses incurred by the Placement Agent in
connection with this Offering  (including,  without limitation and disbursements
as set forth below). Such expenses in excess of $25,000 shall be billed monthly,
as incurred.

                  (c) The Company  shall pay to or as directed by the  Placement
Agent on the Initial  Closing Date (and, to the extent of any  additional  legal
fees and expenses, on each Additional Closing Date or the Overcall Closing Date)
the  fees  and  disbursements  of  counsel  to the  Placement  Agent of up to an
aggregate of $25,000.

         8 Conditions of Placement Agent's  Obligations.  The obligations of the
Placement  Agent  pursuant to this  Agreement  (other than pursuant to Section 1
hereof) and the right of the Company to obtain on the Initial  Closing Date and,
if applicable,  each Additional  Closing Date and the Overcall Closing Date, the
funds  representing  Securities  purchased at such Closing,  as the case may be,
shall be subject to the performance by the Company of its obligations hereunder,
and to the satisfaction of the following additional conditions:

                  (a) On or prior to the Initial  Closing Date,  each Additional
Closing Date and the Overcall  Closing  Date,  as the case may be, the Placement
Agent shall have been furnished such information,  documents and certificates as
it may  reasonably  require for the purpose of enabling it to review the matters
referred  to  in  this  Section  8  and  in  order  to  evidence  the  accuracy,
completeness  or  satisfaction  of  any  of  the  representations,   warranties,
covenants,  agreements or conditions  herein  contained,  or as it may otherwise
reasonably request.

                  (b)  The   representations   and  warranties  of  the  Company
contained in this Agreement that are qualified with respect to materiality shall
be true and  correct in all  material  respects,  and such  representations  and
warranties  that are not so qualified  shall be true and correct in all respects
on each  Closing  Date,  as the case may be,  with the same effect as if made on
such Closing Date, and all covenants and agreements  contained in this Agreement
to be performed on the part of the Company and all conditions  contained in this
Agreement  to be  fulfilled  or complied  with by the Company at or prior to the
Initial Closing Date,  Additional  Closing Date or Overcall Closing Date, as the
case may be, shall have been duly performed,  fulfilled or complied with and the
Placement Agent shall have received a certificate to such effect, dated the such
Closing  Date,  as the case may be, from the chief  executive  officer and chief
financial officer of the Company.

                  (c) At the Initial  Closing  Date,  the Company  shall  accept
subscriptions  representing no less than 200,000 Primary Shares. At the Closing,
Additional  Closing  and  Overcall  Closing,  if any,  the  Company  shall  have
satisfied its obligations under Sections 4(a) and 7.
<PAGE>

                  (d) At the Closing and each  Additional  Closing and  Overcall
Closing,  if any, the Placement Agent shall have received the favorable opinions
of Robinson & Cole,  LLP,  counsel for the Company,  dated the date of delivery,
addressed to the Placement  Agent,  in form  satisfactory to the Placement Agent
and its counsel.

                  (e) On the Initial  Closing Date and each  Additional  Closing
Date and Overcall  Closing Date,  if any, all  corporate  and other  proceedings
taken or to be taken by the Company in connection  with the  issuance,  sale and
delivery of the  Securities  and the  transactions  contemplated  hereby and all
documents  incident  thereto shall be  satisfactory in form and substance to you
and your counsel.

                  (f) On the Initial  Closing Date and each  Additional  Closing
Date and Overcall Closing Date, if any, the Registration  Rights Agreement shall
have been duly  executed  and  delivered by the Company,  by the  purchasers  of
Securities,  and by the other  parties  thereto  and shall be in full  force and
effect.

                  (g) There  shall not have  occurred,  at any time prior to the
Initial Closing or, if applicable, an Additional Closing or Overcall Closing, as
the case may be, (i) any  domestic or  international  event,  act or  occurrence
which has materially disrupted,  or in your opinion will in the immediate future
materially disrupt,  the securities markets;  (ii) a general suspension of, or a
general limitation on prices for, trading in securities on a national securities
exchange or stock 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 or financial condition of
the  Company;  or (viii) any  material  change in the market for  securities  in
general  or in  political,  financial  or  economic  conditions  which,  in your
reasonable business judgment, makes it inadvisable to proceed with the offering,
sale and delivery of the Securities.

                  (h) On the Initial  Closing Date and each  Additional  Closing
Date and Overcall  Closing Date, if any, the Placement Agent shall have received
certificates,  each dated the such Closing  Date,  as the case may be, signed by
the chief executive officer and the chief financial  officer of the Company,  in
form and substance  satisfactory to the Placement Agent, to the effect that each
signer  (solely in his capacity as an officer of, and on behalf of, the Company)
of such certificate has carefully examined the SEC Reports and since the date of
the  latest  SEC  Report,  no event  has  occurred  as a  result  of which it is
necessary to amend or supplement  such documents in order to make the statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading in any material respect.

                  (i) On the Initial  Closing Date and each  Additional  Closing
Date and Overcall  Closing Date, if any, the Placement Agent shall have received
a  certificate,  dated  such  Closing  Date,  as the case may be,  signed by the
Secretary of the Company,  in form and substance  satisfactory  to the Placement
Agent,  certifying as to (i) the incumbency and the signatures of those officers
of the Company  executing the  Transaction  Documents and  certificates or other
documents  to be  executed  pursuant to the terms of such  agreements,  (ii) the
certificate  of  incorporation   and  by-laws  of  the  Company  and  (iii)  the
resolutions  of the  Board  of  Directors  of the  Company  (or  duly  appointed
committee  thereof)  authorizing  the execution and delivery of the  Transaction
Documents and the transactions contemplated hereby and thereby.
<PAGE>

                  Any certificate or other document signed by any officer of the
Company and delivered to you or to your counsel shall be deemed a representation
and warranty by the Company hereunder as to the statements made therein.  If any
condition  to your  obligations  hereunder  has not been  fulfilled  as and when
required to be so  fulfilled,  you may  terminate  this  Agreement or, if you so
elect,  in writing waive any such  conditions  which have not been  fulfilled or
extend the time for their fulfillment.  In the event that you elect to terminate
this Agreement,  you shall notify the Company of such election in writing.  Upon
such  termination,  neither party shall have any further liability or obligation
to the other except as provided in Section 10 hereof.

         9        Indemnification and Contribution.

                  (a) The Company agrees to indemnify the Placement Agent and/or
any controlling person, director,  officer, employee,  affiliate or agent of the
Placement  Agent and hold them  harmless  against any losses,  claims,  damages,
expenses  or  liabilities  to  which  the  Placement  Agent  and/or  such  other
indemnified parties may become subject, which are related to or arise out of (i)
actions taken or omitted to be taken (including any untrue written statements of
a material fact made or alleged to have been made or any  statements of material
fact  omitted or alleged to have been  omitted in  connection  with any  written
statement by the Company) by the Company, its affiliates,  directors,  employees
or agent,  or (ii) actions taken or omitted to be taken by the  Placement  Agent
and/or any controlling person, director,  officer, employee,  affiliate or agent
of the Placement Agent with the Company's  written consent or in conformity with
its written instructions except to the extent that such losses, claims, damages,
expenses  (including  reasonable  fees and  expenses of  counsel),  liabilities,
actions,  proceedings,  investigations  (formal and  informal) or inquiries  are
caused by gross  negligence or willful  misconduct or bad faith of the Placement
Agent and/or any controlling person, director,  officer, employee,  affiliate or
agent of the Placement  Agent;  and in case any action shall be brought  against
the Placement Agent and/or any other party indemnified hereunder with respect to
which  indemnity is available  against the Company,  the  Placement  Agent shall
promptly  notify the Company in writing and the Company shall assume the defense
thereof,  including the employment of counsel selected by the Company reasonably
satisfactory  to the Placement  Agent and payment of all fees and expenses.  The
Placement Agent and/or any party  indemnified  hereunder shall have the right to
retain separate  counsel,  but the fees and expenses of such counsel shall be at
the expense of the Placement Agent or such other indemnified  party, as the case
may be, unless (i) the expenses of such counsel have been  expressly  assumed in
writing by the Company, (ii) the Company has failed to assume the defense or the
employ  of  counsel  satisfactory  to the  Placement  Agent,  or (iii) the named
parties to any such action  (including any impleaded  parties)  include both (a)
the Placement Agent or any such other  indemnified  party and (b) the Company or
any controlling person, director,  officer, employee,  affiliate or agent of the
Company, and the Placement Agent or such other indemnified party shall have been
advised by legal counsel that there may be one or more legal defenses  available
to it which are different  from or additional to those  available to the Company
or the  Company's  agents (in which case the Company shall not have the right to
assume the defense of such action on behalf of the  Placement  Agent and/or such
other indemnified party); it being understood that if the Placement Agent elects
not to have the Company  defend any claim  pursuant to this  clause  (iii),  the
Placement  Agent shall give the Company  the  opportunity  to be defended by the
legal  counsel  selected  by the  Placement  Agent;  and,  it being  understood,
further,  that the Company shall not, in connection  with any one such action or
separate,  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
Placement  Agent and all such  other  indemnified  parties,  which firm shall be
designated in writing by the Placement  Agent.  For actions  brought against the
Placement  Agent or such  other  indemnified  party for which  the  Company  has
assumed  the  defense,  the Company  agrees that it will not,  without the prior
consent of the Placement Agent,  settle or compromise or consent to the entry of
any judgment in any pending or threatened claim,  action or proceeding  relating
to the matters  contemplated  by the Placement  Agent's  engagement  unless such
settlement,  compromise  or consent  includes  an  unconditional  release of the
Placement Agent and such indemnified  parties from all liability arising or that
may arise out of such claim.  In addition,  the Company agrees to reimburse such
indemnified person for all expenses  (including fees and expenses of counsel) as
they are incurred by such  indemnified  person (upon receipt by the Company from
such indemnified person of an undertaking by such indemnified person promptly to
repay to the Company and such reimbursement upon a final judicial  determination
that such indemnified person is not entitled to indemnification  pursuant to the
preceding  paragraphs) in connection with investigating,  preparing or defending
any such action or claim,  whether or not in connection with litigation in which
any  indemnified  person  is a named  party.  The  Company  will  reimburse  the
Placement Agent for all  out-of-pocket  expenses incurred by the Placement Agent
by reason of any of its personnel  being involved in any such action against the
Placement Agent, the Company or the Company's directors.

                  (b) The Placement  Agent agrees to indemnify and hold harmless
the  Company  and/or  any  controlling  person,  director,   officer,  employee,
affiliate or agent of the Company to the same extent as the  indemnity  from the
Company to the Placement Agent set forth in paragraph (a) hereof,  but only with
respect to statements or omissions made in reliance upon and in conformity  with
written  information  furnished to the Company by the Placement  Agent expressly
for  use  in  the   Subscription   Agreement;   provided,   however,   that  any
indemnification  or  contribution  by the Placement  Agent  hereunder  shall not
exceed the amount of  compensation  received by the Placement  Agent pursuant to
Section 4 hereof.  If any action shall be brought against the Company and/or any
other party  indemnified  hereunder with respect to which indemnity is available
against the Placement  Agent pursuant to this paragraph (b), the Placement Agent
shall have the rights and duties  given to the Company by  paragraph  (a) above,
and the  Company  and/or any other  indemnified  party shall have the rights and
duties given to the Placement Agent by paragraph (a) above.


<PAGE>

                  (c) The  Company  and the  Placement  Agent  agree that if any
indemnification or reimbursement  sought pursuant to the preceding  paragraph is
finally judicially  determined to be unavailable  (except by reason of the gross
negligence   or  willful   misconduct   or  bad  faith  of  the  party   seeking
indemnification  or its controlling  persons,  directors,  officers,  employees,
affiliates  or agents,  as the case may be),  then the Company and the Placement
Agent shall  contribute to the  liabilities  for which such  indemnification  or
reimbursement  is held  unavailable  in such  proportion  as is  appropriate  to
reflect  (a) the  relative  benefits  to the  Company  on the one hand,  and the
Placement  Agent on the other hand, in connection  with the transaction to which
such  indemnification  or reimbursement  relates,  (b) the relative fault of the
parties, and (c) other equitable considerations  (provided,  however, that in no
event  shall the amount to be  contributed  by the  Placement  Agent  exceed the
amount of the fees actually received by the Placement Agent hereunder).

                  (d) The reimbursement,  indemnity and contribution obligations
of the Company and the Placement Agent under the preceding  paragraphs  shall be
in lieu of any right that the Placement Agent or the Company and/or any of their
respective controlling persons, directors,  officers,  employees,  affiliates or
agents may otherwise have, and shall be binding upon and inure to the benefit of
any successors, assigns, heirs, and personal representatives of the Company, the
Placement Agent or such other persons.

         10   Representations   and   Agreements   to  Survive   Delivery.   All
representations,   warranties,   covenants  and  agreements  contained  in  this
Agreement  shall be  deemed to be  representations,  warranties,  covenants  and
agreements  at the Initial  Closing  Date and, if  applicable,  each  Additional
Closing Date and Overcall  Closing Date, and such  representations,  warranties,
covenants and agreements,  including the indemnity and  contribution  agreements
contained  in  Section 9, shall  remain  operative  and in full force and effect
regardless of any  investigation  made by or on behalf of the Placement Agent or
any  indemnified  person,  or by or on behalf of the  Company  or any  person or
entity which is entitled to be  indemnified  under  Section 9, and shall survive
termination  of  this  Agreement  or the  issuance,  sale  and  delivery  of the
Securities.   In  addition,   notwithstanding  any  election  hereunder  or  any
termination  of this  Agreement,  and whether or not the terms of this Agreement
are  otherwise  carried  out, the  provisions  of Sections 7, 9, 10 and 12 shall
survive  termination  of this  Agreement and shall not be affected in any way by
such election or termination or failure to carry out the terms of this Agreement
or any part thereof.

         11       Notices.  All   communications    hereunder,  except as may be
otherwise  specifically provided herein, shall be in writing and, if sent to the
Placement  Agent,  shall be mailed,  or faxed and  confirmed  by letter,  to its
address set forth above,  with a copy to Merrill M. Kraines,  Esq.,  Fulbright &
Jaworski L.L.P.,  666 Fifth Avenue,  New York, New York 10103, or if sent to the
Company,  shall be mailed, or faxed and confirmed by letter, to Evercel, Inc., 2
Lee Mac Avenue, Danbury, CT 06810, Attention:  President, with a copy to Richard
A.  Krantz,  Esq.,  Robinson  & Cole,  LLP,  695  East  Main  Street,  Stamford,
Connecticut  06904. All notices hereunder shall be effective upon receipt by the
party to which it is addressed.
<PAGE>

         12       Assignment.  This Agreement shall not be assigned by any party
hereto without the prior written consent of the other parties hereto.

         13       Parties.  This Agreement shall inure solely to the benefit of,
and shall be binding upon,  the Placement  Agent and the Company and the persons
and  entities  referred to in Section 9 who are entitled to  indemnification  or
contribution, and their respective successors, legal representatives and assigns
(which shall not include any purchaser,  as such, of  Securities),  and no other
person shall have or be construed to have any legal or equitable  right,  remedy
or claim under or in respect of or by virtue of this  Agreement or any provision
herein contained.

         14  Construction.  This Agreement shall be construed in accordance with
the laws of the State of New York,  without  giving effect to its  principles of
conflict of laws.

         15 Entire  Agreement.  This  Agreement and the letter  agreement  dated
October 20, 1999 between the Company and the  Placement  Agent (the  "Engagement
Letter")  constitute and contain the entire agreement between the parties hereto
and  supersede any and all prior  agreements,  arrangements  and  understandings
between such parties  relating to the subject matter  hereof.  To the extent any
provision  of  this  Agreement  directly  conflicts  with  a  provision  of  the
Engagement Letter, the provisions of this Agreement shall control.

         16 Counterparts.  This Agreement may be executed in counterparts,  each
of which shall  constitute  an original and all of which,  when taken  together,
shall constitute one agreement.



<PAGE>


         If the foregoing  correctly  sets forth the  understanding  between us,
please so indicate in the space provided below for that purpose,  whereupon this
letter shall constitute a binding agreement between us.

                                  Very truly yours,

                                  EVERCEL, INC.



                                  By:__________________________________
                                     Name:
                                     Title:


Accepted as of the date first above written.
New York, New York

BURNHAM SECURITIES INC.



By:____________________________________
Name:
Title:


<PAGE>


                                    EXHIBITS




I.     -   Form of Certificate of Designations

II.    -   Form of Warrant

III.   -   Form of Selected Dealer Agreement