Document:

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                                                                    EXHIBIT 10.3

                            ASSET PURCHASE AGREEMENT

                                 BY AND BETWEEN

                               JLM TERMINALS, INC.

                                       AND

                           CTI OF NORTH CAROLINA, INC.

                                 OCTOBER 1, 2001

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                                TABLE OF CONTENTS

                                                                            Page

RECITALS          --------------------------------------------------------     8

AGREEMENT                  -----------------------------------------------     8

ARTICLE I:   DEFINITIONS; INTERPRETATION  --------------------------------     8

         1.1      Definitions       --------------------------------------     8
         1.2      Interpretation    --------------------------------------    12

ARTICLE II:       TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES ----------    12

         2.1      Transfer of Assets -------------------------------------    12
         2.2      Excluded Assets   --------------------------------------    13
         2.3      Assumption of Liabilities ------------------------------    15
         2.4      Excluded Liabilities      ------------------------------    16
         2.5      Purchase Price    --------------------------------------    16
         2.6      Closing Procedure         ------------------------------    16
         2.7      Allocation of Purchase Price       ---------------------    16
         2.8      Prorations        --------------------------------------    17
         2.9      Inventory         --------------------------------------    17

ARTICLE III:      REPRESENTATIONS AND WARRANTIES OF SELLER ---------------    17

         3.1      Organization; Capitalization       ---------------------    17
         3.2      No Violation or Conflict; Consents ---------------------    17
         3.3      Authorization     --------------------------------------    18
         3.4      Assets   -----------------------------------------------    18
         3.5      Compliance with Law   ----------------------------------    18
         3.6      Litigation        --------------------------------------    18
         3.7      Employees and Employee Benefits    ---------------------    19
         3.8      Employment Matters        ------------------------------    19
         3.9      Environmental Matters     ------------------------------    19
         3.10     No Broker         --------------------------------------    20
         3.11     Material Facts    --------------------------------------    20

ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF BUYER ----------------------    20

         4.1      Organization      --------------------------------------    20
         4.2      Authorization     --------------------------------------    20

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         4.3      Noncontravention          ------------------------------    21
         4.4      No Broker         --------------------------------------    21

ARTICLE V:        COVENANTS      -----------------------------------------    21

         5.1      Access to Information      -----------------------------    21
         5.2      Further Assurances; Consents       ---------------------    21
         5.3      Publicity         --------------------------------------    22
         5.4      Confidentiality     ------------------------------------    22
         5.5      Employment of Seller's Employees   ---------------------    22
         5.6      Employee Obligations      ------------------------------    23
         5.7      Covenant Not to Compete   ------------------------------    23
         5.8      Cooperation       --------------------------------------    23

ARTICLE VI: CONDITIONS PRECEDENT TO CONSUMMATION OF THE
         CLOSING           -----------------------------------------------    23
         6.1      Condition Precedent to Each Party's Obligations
                    to Close      ----------------------------------------    23
         6.2      Conditions Precedent to Obligations of Buyer -----------    24
         6.3      Conditions Precedent to Obligations of Seller ----------    25

ARTICLE VII: SURVIVAL; INDEMNIFICATION  ----------------------------------    26

         7.1      Limitation on and Survival of Representations and
                    Warranties  ------------------------------------------    26
         7.2      Indemnification by Seller ------------------------------    27
         7.3      Indemnification by Buyer  ------------------------------    28
         7.4      Limitation of Liability   ------------------------------    30
         7.5      Exclusive Remedy ---------------------------------------    30

ARTICLE VIII:   TERMINATION  ---------------------------------------------    30

         8.1      Termination --------------------------------------------    30
         8.2      Effect of Termination ----------------------------------    31
         8.3      Extension; Waiver --------------------------------------    31
         8.4      Damage or Destruction Prior to Closing -----------------    31
         8.5      Condemnation Prior to Closing   ------------------------    31

ARTICLE IX: MISCELLANEOUS ------------------------------------------------    32

         9.1      Entire Agreement ---------------------------------------    32
         9.2      Expenses          --------------------------------------    32
         9.3      Governing Law     --------------------------------------    32
         9.4      Assignment        --------------------------------------    32

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         9.5      Notices  -----------------------------------------------    32
         9.6      Counterparts; Headings    ------------------------------    33
         9.7      Specific Performance      ------------------------------    33
         9.8      Severability      --------------------------------------    33
         9.9      No Reliance       --------------------------------------    33
         9.10     Amendment         --------------------------------------    34

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                                    SCHEDULES

         Schedule 2.1(a)       Real Property

         Schedule 2.1(c)       Equipment

         Schedule 2.1(d)       Real Property Leases

         Schedule 2.1(e)       Personal Property Leases

         Schedule 2.1(f)       Licenses, Contracts and Service Agreements

         Schedule 2.1(g)       Customer List

         Schedule 2.2          Non-Assignable Permits

                        o      DSP Permit
                        o      Air Permits
                        o      Title V Air Permit and Air Permit Application
                               with all supporting documentation
                        o      NPDES Permit for Stormwater Discharge - Rescinded
                        o      Certification of Water & Sewer Availability
                        o      Zoning Verification
                        o      Fire Department Permit
                        o      DOT Hazardous Materials Certification

         Schedule 2.9          Denaturant Inventory

         Schedule 3.2          Required Consents

         Schedule 3.4          Permitted Liens

         Schedule 3.5          Permits

         Schedule 3.6          Litigation

         Schedule 3.9          Environmental Matters

                        o      all technical reports in JLM's
                               possession, not subject to a court
                               order preventing such disclosure,
                               including but not limited to:

                                 Corrective Action Plan, December 1992 including

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                               all subsequent revisions made through reports or
                                  correspondence

                               Phase I Environmental Site Assessment, May 2001
                               Hazardous Waste Certificates and Manifests

                        o      All releases of Hazardous substances

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                                    EXHIBITS

         Exhibit A                  Form of Deed

         Exhibit B                  Form of Bill of Sale

         Exhibit C                  Form of Assignment and Assumption Agreement

         Exhibit D                  Allocation of Purchase Price

         Exhibit E                  Covenant Not to Compete

         Exhibit F                  Employee List

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                            ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this "Agreement") is made as of October 1, 2001,
by and among CTI of North Carolina, Inc., a Delaware corporation ("Buyer") and
JLM Terminals, Inc., a North Carolina corporation ("Seller").

                                    RECITALS

A. Seller owns and operates a bulk liquids terminal business located in
Wilmington, North Carolina (the "Facility");

B. Seller desires to sell and assign to Buyer, and Buyer desires to purchase
from Seller, on the terms and subject to the conditions set forth in this
Agreement, the Assets of Seller that are currently used by Seller in connection
with the Facility.

                                    AGREEMENT

The parties, in consideration of the premises and of the mutual representations,
warranties, covenants, conditions and agreements set forth herein, and intending
to be bound, agree as set forth below:

                                    ARTICLE I

                           DEFINITIONS; INTERPRETATION

1.1   DEFINITIONS. When used in this Agreement, the following terms shall have
      the meanings specified:

      (a)   ACCOUNTS RECEIVABLE. "Accounts Receivable" shall mean

            (i)   all trade accounts receivable and other rights to payment from
                  customers of Seller and the full benefit of all security for
                  such accounts or rights to payment, including all trade
                  accounts receivable representing amounts receivable in respect
                  of goods shipped or products sold or services rendered to
                  customers of Seller;

            (ii)  all other accounts or notes receivable of Seller and the full
                  benefit of all security for such accounts or notes; and

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            (iii) any claim, remedy or other right related to any of the
                  foregoing.

      (b)   ACTION. "Action" shall mean any action, claim, suit, litigation,
            arbitration, or governmental investigation.

      (c)   AGREEMENT. "Agreement" shall mean this Agreement, together with the
            Exhibits and Schedules attached hereto, as the same may be amended
            from time to time in accordance with the terms hereof.

      (d)   ASSETS. "Assets" shall have the meaning given in SECTION 2.1.

      (e)   ASSUMED LIABILITIES. "Assumed Liabilities" shall have the meaning
            given in SECTION 2.3.

      (f)   BUYER. "Buyer" shall mean CTI of North Carolina, Inc., a Delaware
            corporation.

      (g)   BUYER CLAIM. "Buyer Claim" shall mean a claim for indemnification by
            Buyer pursuant to SECTION 7.2.

      (h)   CLOSING. "Closing" shall mean the conference held at 10:00 a.m.,
            local time, on the Closing Date, at the offices of Ellis, Painter,
            Ratterree & Bart, LLP, 10th Floor, 2 E. Bryan Street, Savannah,
            Georgia 31401.

      (i)   CLOSING DATE. "Closing Date" shall mean not later than the first
            business day occurring on or after sixty (60) days from the date of
            this Agreement, and the parties will use their best efforts to close
            within thirty (30) days from the date of this Agreement.

      (j)   CODE. "Code" shall mean the Internal Revenue Code of 1986, as
            amended.

      (k)   CONTRACT. "Contract" means collectively those agreements identified
            in Schedules 2.1(d), 2.1(e) and 2.1(f).

      (l)   ENVIRONMENTAL, HEALTH AND SAFETY LIABILITIES. "Environmental, Health
            and Safety Liabilities" shall mean any cost, damages, expense,
            liability, obligation or other responsibility arising from or under
            any Environmental Law, including those consisting of or relating to:

            (i)   any environmental, health or safety matter or condition
                  (including on-site or off-site contamination, occupational
                  safety and health and regulation of any chemical substance or
                  product);

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            (ii)  any fine, penalty, judgment, award, settlement, legal or
                  administrative proceeding, damages, loss, claim, demand or
                  response, remedial or inspection cost or expense arising under
                  any Environmental Law;

            (iii) financial responsibility under any Environmental Law for
                  cleanup costs or corrective action, including any cleanup,
                  removal, containment or other remediation or response actions
                  ("Cleanup") required by any Environmental Law (whether or not
                  such Cleanup has been required or requested by any
                  Governmental Authority or any other Person) and for any
                  natural resource damages; or

            (iv)  any other compliance, corrective or remedial measure required
                  under any Environmental Law.

      (m)   ENVIRONMENTAL LAWS. "Environmental Laws" shall mean all material
            federal, state or local statutes, laws, codes, rules, regulations,
            ordinances, orders, standards, permits, licenses or requirements
            (including consent decrees, judicial decisions and administrative
            orders), presently in force, as amended or reauthorized, pertaining
            to the protection, preservation, conservation or regulation of the
            environment, including without limitation, the Comprehensive
            Environmental Response, Compensation and Liability Act, 42 U.S.C.
            Section 9601 et seq. ("CERCLA"), the Resource Conservation and
            Recovery Act of 1976, 42 U.S.C. Section 6901 et seq., the Emergency
            Planning and Community Right to Know Act, 42 U.S.C. Section 11001 et
            seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Federal
            Water Pollution Control Act, 33 U.S.C. Section 1251 et seq., the
            Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., and
            the Safe Drinking Water Act, 42 U.S.C. Section 300F et seq.

      (n)   ERISA. "ERISA" shall mean the Employee Retirement Income Security
            Act of 1974, as amended.

      (o)   GOVERNMENTAL AUTHORITY. "Governmental Authority" shall mean any
            federal, state, provincial, municipal or other governmental
            department, commission, board, bureau, agency or instrumentality, or
            any court, in each case whether of the United States, any of its
            possessions or territories, or of any foreign nation.

      (p)   HEALTH AND SAFETY LAWS. " Health and Safety Laws" shall mean all
            material federal, state or local statutes, laws, codes, rules,
            regulations, ordinances, orders, standards, permits, licenses or
            requirements (including consent decrees, judicial decisions and
            administrative orders), presently in force, as amended or
            reauthorized, pertaining to or imposing requirements relating to
            public or employee health and safety, including without limitation,
            the Occupational Health Act, 29 U.S.C. Section 651 et seq.

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      (q)   KNOWLEDGE OF SELLER. "Knowledge of Seller" shall mean the actual
            knowledge, after due inquiry, of the following officers or employees
            of Seller: Scott McDonald, Wilf Kimball, and Walt Tarpley.

      (r)   LAWS. "Laws" shall mean any federal, state, local or other law or
            governmental requirement of any kind, and the rules, regulations and
            orders promulgated thereunder, all of the foregoing as in effect on
            the date hereof.

      (s)   LIENS. "Liens" shall mean any and all liens, encumbrances,
            mortgages, charges, claims, restrictions, pledges, security
            interests and impositions.

      (t)   LISTED EMPLOYEE. "Listed Employee" shall have the meaning given in
            SECTION 5.5.

      (u)   LOSSES. "Losses" shall have the meaning given in SECTION 7.2(A).

      (v)   MAXIMUM INDEMNITY AMOUNT. "Maximum Indemnity Amount" shall have the
            meaning given in SECTION 7.4.

      (w)   PERMITTED LIENS. "Permitted Liens" shall mean (i) liens for Taxes
            not yet due and payable, (ii) title defects that do not interfere
            with the existing use of Seller's assets and do not affect the
            insurability of title or the marketability thereof, including
            mechanics liens, materialmen liens and other inchoate liens, and
            (iii) those liens, encumbrances, mortgages, charges, claims,
            restrictions, pledges, security interests, impositions and other
            matters that are listed on SCHEDULE 3.4 attached hereto.

      (x)   PERMITS. "Permits" shall mean all written permits, licenses and
            governmental authorizations, registrations and approvals required,
            as of the date hereof, for the operation of the Facility identified
            on SCHEDULE 3.5.

      (y)   PERSON. "Person" shall mean an individual, partnership, corporation,
            business trust, limited liability company, limited liability
            partnership, joint stock company, trust, unincorporated association,
            joint venture or other entity or a Governmental Authority.

      (z)   PURCHASE PRICE. "Purchase Price" shall mean the amount specified in
            SECTION 2.5 hereof.

      (aa)  REQUIRED CONSENTS. "Required Consents" shall mean those consents
            required from parties to the Contracts and Permits that are
            necessary or required in order to give effect to the transactions
            contemplated herein and that are specifically identified on SCHEDULE
            3.2 attached hereto.

      (bb)  SELLER. "Seller" shall mean JLM Terminals, Inc., a North Carolina
            corporation.

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      (cc)  SELLER CLAIM. "Seller Claim" shall mean a claim to indemnification
            by Seller pursuant to SECTION 7.3.

      (dd)  TAX RETURNS. "Tax Returns" shall mean any report, return,
            information statement, payee statement or other information required
            to be provided to any Governmental Authority, with respect to Taxes,
            including any return of an affiliated, combined or unitary group.

      (ee)  TAXES. "Taxes" shall mean any and all taxes, levies, imposts,
            duties, assessments, charges and withholdings imposed or required to
            be collected by or paid over to any Governmental Authority,
            including any interest, penalties, fines, assessments or additions
            imposed in respect of the foregoing, or in respect of any failure to
            comply with any requirement regarding Tax Returns.

1.2   INTERPRETATION. Unless the context requires otherwise, all words used in
      this Agreement in the singular number shall extend to and include the
      plural, all words in the plural number shall extend to and include the
      singular and all words in any gender shall extend to and include all
      genders.

                                   ARTICLE II

                  TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES

2.1   TRANSFER OF ASSETS. On the terms and subject to the conditions set forth
      in this Agreement, Seller shall, at the Closing, sell, transfer and assign
      to Buyer, and Buyer shall purchase and acquire from Seller, as of the
      Closing Date, the following assets of Seller directly related to, or
      necessarily used in conjunction with, the Facility (collectively, except
      for the excluded assets set forth in Section 2.2 hereof, the "Assets"):

      (a)   the real property owned by Seller and more fully described on
            SCHEDULE 2.1(a) attached hereto, together with all easements and
            appurtenances, subject to the Permitted Liens;

      (b)   all tanks, pipes, facilities and fixtures located on or appurtenant
            to the Facility which are either owned, leased, subleased or rented
            and therefore assignable by Seller;

      (c)   the equipment, machinery, vehicles, furniture, fixtures, furnishings
            and leasehold improvements owned by Seller and used by Seller in the
            operation of the Facility, as set forth on SCHEDULE 2.1(c) attached
            hereto;

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      (d)   Seller's interest in the real property leases to which Seller is a
            party that are used in connection with the Facility, which leases
            are set forth in SCHEDULE 2.1(d) attached hereto;

      (e)   Seller's interest in the personal property leases to which Seller is
            a party that are used in connection with the operation of the
            Facility, which leases are set forth in SCHEDULE 2.1(e) attached
            hereto;

      (f)   Seller's interest in all licenses, contracts, service agreements and
            other agreements with respect to the operation of the Facility to
            which Seller is a party that are identified in SCHEDULE 2.1(f)
            attached hereto;

      (g)   A list of the names and addresses of all customers of Seller who
            have used or leased Seller's tanks since January 1, 1999, as set
            forth in SCHEDULE 2.1(g) attached hereto.

      (h)   all of Seller's books, records and other documents and information
            relating to the Assets, including blueprints, technical records and
            manuals, maintenance records, capital improvement and replacement
            records and the like;

      (i)   all Permits with respect to the Facility, to the extent they are
            assignable;

      (j)   goodwill and other related intangible assets used by Seller
            exclusively in the conduct of the Facility; and

      (k)   all rights to recovery by Seller related to any Environmental
            Liabilities at the Facility after the Closing Date.

The parties hereto expressly agree that Buyer is not assuming any of the
liabilities, obligations or undertakings relating to the Assets, except for
those liabilities and obligations specifically assumed by Buyer in SECTION 2.3
hereof.

2.2   EXCLUDED ASSETS.

      (a)   Notwithstanding the terms of SECTION 2.1 hereof, the following
            assets shall be retained by Seller and shall not be sold,
            transferred or assigned to Buyer in connection with the purchase of
            the Assets:

            (i)   all cash, cash equivalents and Accounts Receivable;

            (ii)  such licenses, Permits or other certificates of authority
                  which, by their terms, are nonassignable including, but not
                  limited to, those identified in SCHEDULE 2.2; provided,
                  however, Seller will allow Buyer to (i) operate under its
                  Distilled Spirits Permit and bond (the "DSP Permit") after the
                  Closing Date

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                  until such time as there is a simultaneous transfer but in no
                  event beyond six (6) months after the Closing Date, (ii)
                  operate under the existing air permits for the Facility (the
                  "Air Permits") after the Closing Date until the same are
                  transferred to Buyer but in no event beyond six (6) months
                  after the Closing Date; and (iii) operate under the existing
                  NPDES permits for the Facility (the "NPDES Permits") after the
                  Closing Date until the same are transferred to Buyer but in no
                  event beyond six (6) months after the Closing Date.
                  Simultaneous with the signing of this Agreement Buyer agrees
                  that it will have made application for all applicable Permits
                  as defined by this Section. Buyer further agrees to indemnify
                  Seller for any violations of these Permits after the Closing
                  Date on all bonds associated with and maintained by Seller in
                  association with these Permits. If any application by Buyer
                  for any applicable Permit is denied for any reason, Seller
                  shall not be responsible to maintain any current Permit unless
                  mutually agreed by the parties. Buyer will be responsible as
                  of the Closing Date for all reporting due under any applicable
                  Permits and shall indemnify Seller for Buyer's failure to do
                  so.

            (iii) all insurance policies of Seller obtained in connection with
                  the Facility and all rights of Seller (including rights to
                  receive dividends) under or arising out of such insurance
                  policies;

            (iv)  any and all rights to recovery by Seller arising out of
                  litigation or any other proceeding with respect to the
                  adjacent Southern Metals facility that commences or is pending
                  prior to the Closing Date (excluding recovery rights related
                  to any Environmental Liability at the Facility), it being
                  understood that Seller may seek to recover all Seller's legal
                  fees, Seller's fees associated with any and all assessment of
                  the possible Southern Metals contamination, and any possible
                  fees which may be incurred by Seller associated with continued
                  Southern Metals litigation), and Buyer shall be entitled to
                  retain any such fees or expenses it may recover if it becomes
                  a party to such litigation.

            (v)   all rights of Seller relating to deposits and prepaid
                  expenses, claims for refunds and rights to offset in respect
                  thereof, including all claims for refund of Taxes and other
                  governmental charges of whatever nature.

      (b)   Seller is not selling and Buyer is not buying any of Seller's
            accounts receivable. If Buyer receives any funds intended by the
            payor to pay an account receivable of Seller, Buyer shall remit
            those funds to Seller within five (5) business days. If Seller
            receives any funds intended by the payor to pay an account
            receivable of Buyer, Seller shall remit those funds to Buyer within
            five (5) business days.

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2.3   ASSUMPTION OF LIABILITIES.

      (a)   Buyer shall assume, pay, perform in accordance with their terms or
            otherwise satisfy only the following liabilities of Seller
            (collectively, the "Assumed Liabilities"):

            (i)   All obligations under each of the agreements identified in
                  SCHEDULES 2.1(d), 2.1(e) AND 2.1(f) which arise from
                  transactions occurring on or after the Closing Date;

            (ii)  All Environmental Liabilities arising out of future operation
                  of the Facility after the closing or future leasing, ownership
                  or operation of real property in connection with the operation
                  of the Facility.

      (b)   ENVIRONMENTAL, HEALTH AND SAFETY LIABILITIES. Buyer shall not
            assume, or be responsible for, the claims of any person or entity
            related to any Environmental, Health or Safety Liability which is
            based in whole or in part on any event(s) occurring at, or on
            property near or adjacent to, the Facility at anytime prior to the
            Closing Date except:

            (i)   Buyer will be responsible for the cost of any cleanup costs or
                  corrective action, including fines, cleanup, removal,
                  containment or other remediation or response actions
                  ("Cleanup") at the Facility required by any Environmental Law,
                  but until three (3) years after the Closing Date, Buyer does
                  not assume any liability for any Cleanup of property near, or
                  adjacent to, the Facility, which Cleanup is occasioned by
                  events occurring prior to the Closing Date, however, Buyer
                  further agrees for themselves, their successors, heirs,
                  assigns, or for anyone who may lease, sublease or rent from
                  them, any properties Buyer now currently owns, leases,
                  subleases, has had assigned to them, or rented by them, not to
                  hold Seller liable.

            (ii)  If any compliance, corrective or remedial measure under any
                  Environmental Law (occasioned by events occurring prior to the
                  Closing Date) is required, or proposed, by any governmental or
                  regulatory agency at the Facility, Seller will reimburse Buyer
                  up to Seventy-Five Thousand ($75,000) Dollars (the
                  "Contribution"), of the costs incurred by Buyer in
                  investigating and assessing the Cleanup. Said Contribution
                  shall be paid as Buyer incurs costs in investigating and
                  assessing any cleanup.

      (c)   CLAIM AGAINST SOUTHERN METALS. At Closing, and except as specified
            in Section 2.2(a)(iv) hereof, Seller will assign and transfer to
            Buyer, as owner of the Facility, all rights of Seller against
            Southern Metals, Inc. for the release of hazardous materials onto
            the Facility from property owned by Southern Metals adjacent to the
            Facility. In the meantime, Seller agrees (i) not to settle the
            pending litigation with Southern Metals without the written consent
            of Buyer, and (ii) if settled by Seller

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            prior to closing, to assign to Buyer all proceeds except amounts
            paid to Seller for its legal fees or assessment costs associated
            with the Southern Metals contamination.

2.4.  EXCLUDED LIABILITIES. Other than as set forth in SECTION 2.3 hereof,
      Seller shall retain, and Buyer shall not assume, and nothing contained in
      this Agreement shall be construed as an assumption by Buyer of, any
      liabilities, obligations or undertakings of Seller (related to the
      Facility, Assets, Seller's employees not expressly retained by Buyer, or
      otherwise) of any nature whatsoever, whether accrued, absolute, fixed or
      contingent, known or unknown due or to become due, unliquidated or
      otherwise. Seller shall be responsible for all of the liabilities,
      obligations and undertakings of Seller not expressly assumed by Buyer
      pursuant to SECTION 2.3 hereof.

2.5.  PURCHASE PRICE. The total aggregate purchase price for the Assets (the
      "Purchase Price") will be the sum of $6,250,000.00, to be paid by Buyer to
      Seller at the Closing, as the same may be adjusted in accordance with
      SECTIONS 2.8 AND 2.9.

2.6   CLOSING PROCEDURE. At the Closing, each party shall deliver to the party
      entitled to receipt thereof the documents required to be delivered
      pursuant to Article VI hereof and such other documents, instruments and
      materials (or complete and accurate copies thereof, where appropriate) as
      may be reasonably required in order to effectuate the intent and
      provisions of this Agreement, and all such documents, instruments and
      materials shall be satisfactory in form and substance to counsel for the
      receiving party. The conveyance, transfer, assignment and delivery of the
      Assets shall be effected by Seller's execution and delivery to Buyer of
      (i) Special Warranty Deed in the form attached as EXHIBIT A (the "Deed");
      (ii) a bill of sale substantially in the form attached hereto as EXHIBIT B
      (the "Bill of Sale"); and (iii) such other instruments of conveyance,
      transfer, assignment and delivery as Buyer shall reasonably request to
      cause Seller to transfer, convey, assign and deliver the Assets to Buyer.
      The assignment and assumption of the Assumed Liabilities to Buyer shall be
      effected by Seller's and Buyer's execution of an assignment and assumption
      agreement substantially in the form attached hereto as EXHIBIT C (the
      "Assignment and Assumption Agreement").

2.7   ALLOCATION OF PURCHASE PRICE. Buyer and Seller have mutually agreed to
      allocate the Purchase Price among the Assets in the manner set forth in
      EXHIBIT D, which exhibit shall be updated as of the Closing Date in such a
      manner as determined by Buyer and Seller after taking into account the
      applicable treasury regulations ("Treasury Regulations") promulgated under
      the Code, and the fair market value of such items. Buyer shall prepare for
      filing all Tax Returns that may be required with respect to the
      transaction provided for herein pursuant to Section 1060 of the Code, any
      Treasury Regulations promulgated thereunder, any other similar provisions
      of the Code and any other similar or applicable foreign, state or local
      tax law or regulation. Seller shall provide information that may be
      reasonably required by Buyer for the purpose of preparing such Tax
      Returns.

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2.8   PRORATIONS. All (i) real estate taxes, for the year 2001 and other
      expenses of the Facility which the parties mutually agree are capable of
      proration, shall be prorated on the basis of a 365 day year through the
      day preceding the day of Closing. If Closing is extended by mutual
      agreement, all adjustments shall be made as of the day prior to the
      extended date. Any post-closing adjustments for real estate taxes which
      shall be made within ten (10) days after written demand therefore is made
      by either party hereto to the other party with a copy of the actual tax
      bill(s) attached. Notwithstanding anything to the contrary contained in
      this Agreement, the provisions of this SECTION 2.8 shall survive Closing.
      Seller shall be responsible for the transfer tax associated with the
      recordation of the Deed. Buyer shall be responsible for the cost of any
      title insurance, survey and any other due diligence testing requested by
      Buyer.

2.9   INVENTORY. Purchaser agrees to buy all of Seller's good and merchantable
      denaturant inventory existing at the Facility as of the Closing Date at
      Seller's cost in the quantities set forth in SCHEDULE 2.9.

                                   ARTICLE III

                    REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer as follows:

3.1   ORGANIZATION; CAPITALIZATION. Seller is duly organized, validly existing
      and in good standing under the laws of the State of North Carolina. Seller
      has full corporate power and authority to conduct its business as it is
      now being conducted and to own its properties and to lease those
      properties leased by it.

3.2   NO VIOLATION OR CONFLICT; CONSENTS. Except as set forth on SCHEDULE 3.2,
      the execution, delivery and performance of this Agreement and all of the
      other documents and instruments contemplated hereby to which Seller case
      is a party do not and will not (a) conflict with, violate or breach any
      Laws, judgment, order or decree binding on Seller, the articles of
      incorporation or bylaws of Seller, or any material Contract to which
      Seller is a party or by which is bound, or (b) give any party to any
      material Contract to which Seller is a party or by which it is bound any
      right of termination, cancellation, acceleration or modification
      thereunder. Except for the Required Consents, prior to the Closing, no
      consent of any other Person, and no notice to, filing or registration
      with, or authorization, consent or approval of, any governmental,
      regulatory or self-regulatory agency is necessary or is required to be
      made or obtained by Seller in connection with the execution and delivery
      of this Agreement or the consummation of the transactions contemplated
      hereby.

                                      -17-

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3.3   AUTHORIZATION. Seller has all necessary right, power, capacity and
      authority to execute and deliver this Agreement, to consummate the
      transactions contemplated hereby and to perform its respective
      obligations hereunder, and no other actions on the part of Seller is
      necessary to authorize the execution, delivery and performance of this
      Agreement or the consummation of the transactions contemplated hereby.

3.4   ASSETS.

      (a)   Seller has good and merchantable title to, or sufficient leasehold
            interest in, all of the Assets, whether tangible or intangible,
            real, personal or mixed, free and clear of all liens or
            encumbrances, except for Permitted Liens shown on SCHEDULE 3.4
            attached hereto. Any such leasehold interest is pursuant to a lease
            that is, as to Seller and, to the Knowledge of Seller, the other
            parties to such lease, (i) valid, binding and enforceable in
            accordance with its terms (subject to any applicable bankruptcy,
            insolvency, reorganization, moratorium, or other laws affecting
            creditors' rights generally), and (ii) in full force and effect.

      (b)   Subject to ordinary wear and tear as is usual in this line of
            business, all Assets are in good operating condition and repair, the
            parties understand that all Assets have previously been inspected by
            Buyer and are sold where is.

      (c)   Seller shall provide Buyer with evidence of good and merchantable
            fee simple title to the real property described in Schedule 2.1(a)
            and shall have thirty (30) days from the date of signature of this
            Agreement to cure any defects which may exist. Any easements,
            restrictions or other encumbrances on the real property must not, in
            the reasonable opinion of Buyer's counsel, adversely affect the
            title to said property or Buyer's intended use thereof.

3.5   COMPLIANCE WITH LAW. To the Knowledge of Seller, except as reflected on
      SCHEDULE 3.5 attached hereto, Seller has obtained all Permits required
      under, and is in compliance with, all applicable Laws with respect to the
      Facility.

3.6   LITIGATION. To the Knowledge of Seller and except as disclosed in SCHEDULE
      3.6, there is no claim, legal action, suit, litigation, arbitration,
      dispute or investigation, judicial, administrative or otherwise, or any
      order, decree or judgment, now pending or in effect, or, threatened or
      contemplated, that, in the reasonable judgment of Seller, if adversely
      determined, would have a material adverse effect on the transactions
      contemplated by this Agreement.

                                      -18-
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3.7   EMPLOYEES AND EMPLOYEE BENEFITS.

      (a)   Buyer shall be under no obligation to hire any of Seller's employees
            at the Facility, but shall provide Seller with a list of all
            employees which it intends to hire simultaneously with signature of
            this Agreement and effective upon Closing. Seller shall remain
            solely and exclusively liable for all wages, severance payments if
            applicable, COBRA and similar benefits, and other amounts and
            benefits, if any, due to those employees that Buyer does not hire.
            Buyer shall not be legally obligated to offer employment to any of
            Seller's employees.

      (b)   Buyer agrees to hire those employees on the list so provided to the
            Seller, at their current wages and on the same terms and conditions
            as provided by the Buyer to its other employees of similar length of
            service and job responsibility. Buyer shall have no obligation to
            any of Seller's employees at the Facility it may hire with respect
            to any accrued sick leave, accrued vacation, bonus, incentive,
            pension, retirement, profit-sharing or other form of remuneration or
            employee benefit provided or promised by Seller.

3.8   EMPLOYMENT MATTERS. Seller is not party to, bound by, or negotiating in
      respect of any collective bargaining agreement or any other agreement with
      any labor union, association or other employee group, nor, to the
      Knowledge of Seller, is any employee of Seller represented by any labor
      union or similar association. No labor union or employee organization has
      been certified or recognized as the collective bargaining representative
      of any employees of Seller. To the Knowledge of Seller, there are no
      formal union organizing campaigns or representation proceedings in process
      or threatened with respect to any employees of Seller, nor, to the
      Knowledge of Seller, are there any existing or threatened labor strikes,
      work stoppages, organized slowdowns, unfair labor practice charges, or
      labor arbitration proceedings affecting any employee of Seller.

3.9   ENVIRONMENTAL MATTERS. To the Knowledge of Seller, except as set forth in
      SCHEDULE 3.9: (i) Seller is in compliance with all applicable
      Environmental Laws; (ii) Seller has not received a notice, report or
      information regarding any liabilities (whether accrued, absolute,
      contingent, unliquidated or otherwise) that have not been satisfied, or
      any corrective, investigatory or remedial obligations that have not been
      satisfied, arising under applicable Environmental Laws with respect to its
      past or present operations or properties; (iii) Seller has obtained, and
      have been in compliance with all terms and conditions of, all permits,
      licenses and other authorizations required pursuant to Environmental Laws
      for the conduct of the Facility, (iv) SCHEDULE 3.9, to the Knowledge of
      Seller, lists all releases of hazardous substances at the Facility. The
      term "hazardous substances," as used herein, shall mean substances deemed
      hazardous pursuant to CERCLA; (v) Seller and its attorneys have provided
      Buyer with copies of all notices, reports, studies and information in
      their possession related to the presence or release of hazardous
      substances at the Facility or any adjacent properties as that term is
      defined by CERCLA, and (vi) Seller and its attorneys have provided Buyer
      with copies of the Corrective Action Plan for Unocal Chemicals Division
      Carolina Terminal, and Buyer agrees to continue all requisite actions
      under the plan.

                                      -19-
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3.10  NO BROKER. Seller (i) has not had any dealings, negotiations or
      communications with or retained any broker or other intermediary in
      connection with the transactions contemplated by this Agreement or
      (ii) is not committed to any liability for any brokers' or finders' fees
      or any similar fees in connection with the transactions contemplated by
      this Agreement.

3.11  MATERIAL FACTS. To the best of Seller's knowledge neither this Agreement
      nor any Schedule or Exhibit attached hereto nor any document furnished by
      Seller to Buyer in connection with the consummation of the transactions
      contemplated hereby contains or will contain any untrue statement of a
      material fact or omits or will omit to state any material fact which is
      necessary to make the statements contained herein or therein not
      misleading.

                                   ARTICLE IV

                     REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller:

4.1   ORGANIZATION. Buyer is a corporation, duly incorporated, validly existing
      and in good standing under the laws of Delaware. Buyer is duly qualified
      as a foreign corporation in good standing in each jurisdiction in which
      the conduct of the Facility requires such qualification, except where the
      failure to be so qualified would not prevent, materially delay or affect
      consummation of the transactions contemplated hereby.

4.2   AUTHORIZATION. Buyer has full power and authority to execute, deliver and
      perform this Agreement and each agreement or instrument (to which it is a
      party) executed in connection herewith or delivered pursuant hereto and to
      consummate the transactions contemplated hereby. Buyer's execution,
      delivery and performance of this Agreement and all agreements and
      instruments executed in connection herewith or delivered pursuant hereto
      and the transactions contemplated hereby have been duly authorized by all
      requisite action. This Agreement and all agreements or instruments
      executed by Buyer in connection herewith or delivered by Buyer pursuant
      hereto have been or will be duly executed and delivered by Buyer, and this
      Agreement and all agreements and instruments executed by Buyer in
      connection herewith or delivered by Buyer pursuant hereto constitute and
      will constitute the legal, valid and binding obligations of Buyer,
      enforceable in accordance with their respective terms.

                                      -20-
<Page>

4.3   NONCONTRAVENTION. The execution, delivery and performance by Buyer of this
      Agreement and each agreement or instrument executed in connection herewith
      or delivered pursuant hereto and the consummation of the transactions
      contemplated herein will not, with or without the giving of notice or the
      passage of time, or both, (i) conflict with, or result in a violation or
      breach of, or a default, right to accelerate or loss of rights under, or
      result in the creation of any Lien under or pursuant to, any provision of
      Buyer's articles of incorporation or bylaws or any Laws, or any finding,
      order, judgment, writ, injunction or decree to which Buyer is a party or
      by which Buyer or its assets may be bound or affected; or (ii) require the
      approval, consent or authorization of, or prior notice to, filing with or
      registration with, any Governmental Authority, or any other Person.

4.4   NO BROKER. Buyer has not had any dealings, negotiations or communications
      with any broker or other intermediary in connection with the transactions
      contemplated by this Agreement and is not committed to any liability for
      any brokers' or finders' fees or any similar fees in connection with the
      transactions contemplated by this Agreement.

                                    ARTICLE V

                                    COVENANTS

5.1   ACCESS TO INFORMATION. Between the date hereof and the Closing Date, at
      Buyer's expense, Buyer and its authorized agents, officers and
      representatives shall have reasonable access to the Facility, books,
      records, contracts, information and documents of Seller to conduct such
      examinations and investigations of Seller as Buyer deems necessary;
      PROVIDED, HOWEVER, that such examinations and investigations: (a) shall be
      conducted during the normal business hours of Seller, (b) shall not
      unreasonably interfere with the operations and activities of Seller, and
      (c) shall be subject to the prior approval of Seller, if the information
      or documents requested are, in the opinion of Seller, of a nature that may
      compromise the competitive position of Seller. Seller shall cooperate in
      all reasonable respects with Buyer's examinations and investigations.

5.2   FURTHER ASSURANCES; CONSENTS. Each of the parties hereto hereby agrees to
      proceed diligently (a) to obtain any and all approvals of Governmental
      Authorities and third party consents, approvals, notations and
      authorizations required in connection with the consummation of the
      transactions contemplated by this Agreement, (b) to comply with all
      conditions and covenants applicable or related to it as contemplated by
      this Agreement and (c) to take all such commercially reasonable actions as
      are necessary or advisable in order to cause the consummation of the
      transactions contemplated hereby.

                                      -21-
<Page>

5.3   PUBLICITY. All general notices, releases, statements and communications to
      employees, suppliers, distributors and customers of Seller and to the
      general public and the press relating to the transactions covered by this
      Agreement shall be made only at such times and in such manner as may be
      agreed upon in advance by the parties; PROVIDED, HOWEVER, that any party
      hereto shall be entitled to make a public announcement of the foregoing
      if, in the opinion of its legal counsel, such announcement is required to
      comply with any Law and if it first gives prior written notice to the
      other parties hereto of its intention to make such public announcement.

5.4   CONFIDENTIALITY. Notwithstanding any other provision of this Agreement to
      the contrary, Buyer agrees that unless and until the transactions
      contemplated herein are consummated,

      Buyer shall remain subject to all of the terms and conditions of the
      Confidentiality Agreement, dated April 23, 2001, by and between Seller and
      Buyer, the terms of which Confidentiality Agreement are incorporated
      herein by reference; PROVIDED, HOWEVER, that the provisions of the
      Confidentiality Agreement shall be waived as and to the extent necessary
      to permit public announcements to the extent provided in SECTION 5.3
      hereof.

5.5   EMPLOYMENT OF SELLER'S EMPLOYEES.

      (a)   SCHEDULE F attached hereto contains a comprehensive list of all
            employees engaged at the Facility to whom Buyer intends to make
            offers of employment (the "Listed Employees"). On or prior to the
            Closing, Buyer shall make an offer of employment to each employee of
            Seller so listed by Buyer on the same terms and conditions as
            provided by the Buyer to its other employees of similar length of
            service and job responsibility. Any offers of employment will be
            conditioned on, and only effective upon, the Closing. Any employee
            employed by Buyer shall be an employee at will. Nothing contained in
            this Agreement, whether expressed or implied, shall confer upon any
            employee, or the legal representatives of any such person, any
            rights or remedies, including, without limitation, any right of
            employment, or any right of employment for any period of time, or of
            any nature or kind whatsoever under or by reason of this Agreement.

      (b)   In the event that a Listed Employee does not wish to be employed by
            Buyer, Buyer shall not assume, and Seller shall remain liable or
            otherwise responsible for, any employment or employee benefit
            obligation, or any wage, bonus, salary or other employee payment
            obligation arising with respect to such Listed Employee.

                                      -22-
<Page>

5.6   EMPLOYEE OBLIGATIONS.

      (a)   Seller shall provide written notice to the Buyer a minimum of five
            business days prior to the hiring, transfer, or dismissal of any
            Listed Employee.

      (b)   Seller, after the date of this Agreement, will not permit:

            (i)   any increase in the salary of a Listed Employee at the
                  Facility prior to a twelve (12) month period from the last
                  date that the Listed Employee received a raise; or

            (ii)  any increase in the salary of a Listed Employee on the annual
                  review of any such Listed Employee by more than five percent
                  (5%).

5.7   COVENANT NOT TO COMPETE. At the Closing Seller will execute a Covenant Not
      to Compete with Buyer in the bulk liquids terminal business for a period
      of two (2) years from the Closing within a fifty (50) mile radius of the
      Facility, in the form attached hereto as EXHIBIT E.

5.8   COOPERATION. Seller will cooperate with Buyer in good faith and with due
      diligence with respect to the following matters:

      (a)   TRANSITION WITH CUSTOMERS AND VENDORS. Seller and Buyer will take
            reasonably necessary steps to effect the smooth transition from
            Seller to Buyer of relations with customers and vendors at and after
            the Closing Date with the objective of vesting in Buyer (insofar as
            reasonably practicable) the economic benefit and customer
            relationships with all of Seller's customers and vendors of the
            Facility.

      (b)   CONDUCT OF BUSINESS. Before the closing, Seller will operate its
            business in the ordinary course, and will not intentionally make any
            changes or enter into any transactions outside of the ordinary
            course of business which would result in any material adverse impact
            on Buyer's use, enjoyment and business at the Facility after
            closing.

                                   ARTICLE VI

               CONDITIONS PRECEDENT TO CONSUMMATION OF THE CLOSING

6.1   CONDITION PRECEDENT TO EACH PARTY'S OBLIGATIONS TO CLOSE. The respective
      obligations of each party to consummate the transactions contemplated by
      this Agreement on the Closing Date are subject to the satisfaction or
      waiver at or prior to the Closing of the following conditions precedent:
      No order, decree or injunction shall have been enacted, entered,

                                      -23-
<Page>

      promulgated or enforced by any United States court of competent
      jurisdiction or any United States Governmental Authority that prohibits
      the consummation of the transactions contemplated by this Agreement;
      PROVIDED, HOWEVER, that the parties hereto shall use their reasonable best
      efforts to have any such order, decree or injunction vacated or reversed.

6.2   CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligation of Buyer to
      consummate the transactions contemplated by this Agreement on the Closing
      Date is subject to the satisfaction or waiver at or prior to the Closing
      of the following conditions precedent:

      (a)   the representations and warranties of Seller contained in ARTICLE
            III shall be true and correct in all material respects at and as of
            the Closing Date with the same force and effect as if those
            representations and warranties had been made at and as of such time
            (with such exceptions, if any, necessary to give effect to events or
            transactions expressly permitted herein);

      (b)   the Board of Directors of the Buyer and Buyer's lenders must have
            approved of this transaction not later than five (5) business days
            after the date of this Agreement;

      (c)   there shall have been obtained all consents, approvals and
            authorizations, there shall have been given all notices and there
            shall have been made all registrations and filings under all laws,
            statutes, rules, regulations, judgments, orders, injunctions,
            contracts or other instruments to which Seller is a party or by
            which it and/or any of its properties are bound or subject, in each
            case that are required to permit the consummation of the
            transactions contemplated by this Agreement without contravention,
            violation or breach by Seller of any of the terms thereof, except
            where the failure to obtain or make any such consent, approval,
            authorization, notice, registration or filing would not have a
            material adverse effect on the Facility, following the Closing;

      (d)   Seller shall have performed, in all material respects, all
            obligations and complied with all covenants contained herein that
            are necessary to be performed or complied with by each of them at or
            before Closing;

      (e)   Seller shall have delivered to Buyer all of the following:

            (i)   the Deed, Bill of Sale and such other instruments of
                  conveyance, transfer, assignment and delivery as Buyer shall
                  have reasonably requested pursuant to Section 2.6;

            (ii)  the Assignment and Assumption Agreement;

            (iii) a certificate from an authorized officer of Seller, dated as
                  of the Closing Date, certifying the satisfaction of the
                  conditions set forth in this SECTION 6.2;

                                      -24-
<Page>

            (iv)  copies of the third party and governmental consents and
                  approvals required by SCHEDULE 3.2;

            (v)   a copy of the Articles of Incorporation of Seller, certified
                  by the Secretary of State of the State of North Carolina , and
                  a Certificate of Good Standing from the Secretary of State of
                  the State of North Carolina evidencing the good standing of
                  Seller in North Carolina;

            (vi)  An affidavit in form acceptable to the Buyer's title insurance
                  company sufficient to remove any exception for mechanics' and
                  materialmen's liens and parties in possession and appropriate
                  lien waivers, if necessary;

            (vii) An affidavit certifying that the Seller is not a foreign
                  entity under the Foreign Investment in Real Property Act; and

            (viii) A settlement statement mutually agreeable to the parties
                  showing the Purchase Price and all prorations made at Closing
                  (the "Settlement Statement");

            (ix)  such other certificates, documents and instruments as Buyer
                  reasonably requests related to the transactions contemplated
                  hereby; and

      (f)   all actions, corporate or other, to be taken by Seller in connection
            with the transactions contemplated by this Agreement, and all
            documents incident thereto, shall be reasonably satisfactory in form
            and substance to Buyer and Buyer's counsel.

6.3   CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligations of Seller
      to consummate the transactions contemplated by this Agreement on the
      Closing Date are subject to the satisfaction or waiver at or prior to the
      Closing of the following conditions precedent:

      (a)   the representations and warranties of Buyer contained in ARTICLE IV
            shall be true and correct in all material respects at and as of the
            Closing Date with the same force and effect as if those
            representations and warranties had been made at and as of such time
            (with such exceptions, if any, necessary to give effect to events or
            transactions expressly permitted herein);

      (b)   Buyer shall have performed, in all material respects, all
            obligations and complied with all covenants contemplated herein that
            are necessary to be performed or complied with by it at or before
            Closing;

                                      -25-
<Page>

      (c)   Seller shall have obtained the written consent of its lender, GATX
            Capital Corporation, to the sale of the Assets not later than ten
            (10) business days after the date of this Agreement;

      (d)   there shall have been obtained all consents, approvals and
            authorizations, there shall have been given all notices and there
            shall have been made all registrations and filings under all laws,
            statutes, rules, regulations, judgments, orders, injunctions,
            contracts or other instruments to which Buyer is a party or by which
            it is bound or subject, in each case that are required to permit the
            consummation of the transactions contemplated by this Agreement
            without contravention, violation or breach by Buyer of any of the
            terms thereof;

      (e)   Buyer shall have delivered to Seller:

            (i)   the Purchase Price, payable to Seller, by wire transfer of
                  immediately available funds to the account designated by
                  Seller;

            (ii)  an executed copy of the Assignment and Assumption Agreement;

            (iii) a certificate from an authorized officer of Buyer, dated as of
                  the Closing Date, certifying the satisfaction of the
                  conditions set forth in this SECTION 6.3; and

            (iv)  a Settlement Statement mutually agreeable to the parties.

      (f)   all actions, corporate or other, to be taken by Buyer in connection
            with the transactions contemplated by this Agreement, and all
            documents incident thereto, shall be reasonably satisfactory in form
            and substance to Seller and its counsel.

                                   ARTICLE VII

                            SURVIVAL; INDEMNIFICATION

7.1   LIMITATION ON AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

      (a)   Buyer acknowledges and agrees that no representations or warranties
            have been made by Seller in connection with the transactions
            contemplated by this Agreement, except for those representations and
            warranties made in ARTICLE III hereof.

      (b)   Subject to paragraph (a) of this SECTION 7.1, all representations
            and warranties contained in this Agreement, or in any agreements or
            instruments executed in connection herewith or delivered pursuant
            hereto, shall survive the Closing for a period of three (3) years
            beginning on the Closing Date, but not longer. Such

                                      -26-
<Page>

            representations and warranties shall only be effective with respect
            to any breach or claim when notice of such breach or claim shall
            have been given in writing to the other party in breach or against
            whom indemnification is sought within such period. Any claim for
            indemnification for which notice has been given within the
            prescribed period may be prosecuted to conclusion notwithstanding
            the subsequent expiration of such period. No party to this Agreement
            shall be entitled to pursue any remedy for the breach of any
            representation or warranty to the extent such party was informed in
            writing of such breach prior to the Closing Date and such party
            proceeds with the Closing.

7.2   INDEMNIFICATION BY SELLER.

      (a)   Subject to the limitations set forth in SECTIONS 7.1 AND 7.4, Seller
            hereby agrees, to indemnify and hold Buyer harmless from and against
            any and all claims, demands, suits, proceedings, judgments, losses,
            liabilities, damages, costs and expenses (including, but not limited
            to, reasonable attorneys' fees) (collectively, "Losses") imposed
            upon or incurred by Buyer as a result of or in connection with any
            of the following:

            (i)   Any material inaccuracy or breach of a representation or
                  warranty made by Seller in ARTICLE III of this Agreement; or

            (ii)  The breach of, or default in the performance by Seller of, any
                  covenant, agreement or obligation to be performed by Seller
                  pursuant to this Agreement or any agreement or instrument
                  executed in connection herewith or pursuant hereto;

            (iii) The operation of the Facility prior to the Closing, except the
                  Environmental Liabilities and Health and Safety Liabilities
                  expressly assumed by Buyer herein.

      (b)   Promptly after receipt by Buyer of notice of an Action or other
            event giving rise to a Buyer Claim with respect to which Buyer is
            entitled to indemnification under this SECTION 7.2, Buyer shall
            notify (the "Buyer Claim Notice") Seller in writing of the
            commencement of such Action or the assertion of such Buyer Claim;
            PROVIDED, HOWEVER, that failure to give such notice shall not affect
            the right to indemnification hereunder except to the extent of
            actual prejudice to Seller. Seller shall have the option, and shall
            notify Buyer in writing within ten business days after the date of
            the Buyer Claim Notice of its election, either: (A) to participate
            (at Seller's expense) in the defense of such Action or Buyer Claim
            (in which case the defense of such Action or Buyer Claim shall be
            controlled by Buyer) or (B) to take charge of and control the
            defense of such Action or Buyer Claim (at Seller's expense). If
            Seller elects to control the defense, it will not compromise or
            settle the Action or Buyer

                                      -27-
<Page>

            Claim if (X) the amount to be paid in settlement exceeds the Maximum
            Indemnity Amount or (Y) the settlement does not include a provision
            releasing Buyer from all liabilities with respect thereto. If Seller
            fails to notify Buyer of its election within the applicable response
            period, then such party shall be deemed to have elected not to
            control the defense of such Action or Buyer Claim. If Seller elects
            to assume the defense of any Action or Buyer Claim, Buyer shall have
            the right to employ separate counsel and participate in the defense
            of such Action or Buyer Claim, but the fees and expenses of such
            counsel shall be at the expense of Buyer unless: (1) the named
            parties in such Action or Buyer Claim (including any impleaded
            parties) include both Buyer and an indemnifying party and Buyer
            shall have been advised by such counsel that there may be one or
            more legal defenses available to it that are different from or
            additional to those available to the indemnifying party, or (2)
            Buyer has reasonably determined that Losses that may be incurred may
            exceed either individually, or when aggregated with other Buyer
            Claims, the Maximum Indemnity Amount (in which case, the
            indemnifying party shall not have the right to control the defense
            of such Action or Buyer Claim on behalf of Buyer, it being
            understood, however, that the indemnifying party shall not, in
            connection with such Action or Buyer Claim, be liable for the fees
            and expenses of more than one separate firm of attorneys (in
            addition to any local counsel) and that all such fees and expenses
            shall be reimbursed as they are incurred).

      (c)   If Seller does not control the defense of any Action or Buyer Claim,
            then Buyer may settle such Action or Buyer Claim with the written
            consent of Seller (not to be unreasonably withheld).

7.3   INDEMNIFICATION BY BUYER.

      (a)   Subject to the limitations set forth in SECTIONS 7.1 AND 7.4, Buyer
            hereby agrees to indemnify and hold Seller harmless from and against
            any and all Losses imposed upon or incurred by Seller (any of such
            Losses by Seller, a "Seller Claim") as a result of or in connection
            with any of the following:

            (i)   Any material inaccuracy or breach of a representation or
                  warranty made by Buyer in this Agreement or in any agreement
                  or instrument executed in connection herewith or pursuant
                  hereto;

            (ii)  The breach of or default in the performance by Buyer of any
                  covenant, agreement or obligation to be performed by Buyer
                  pursuant to this Agreement or any agreement or instrument
                  executed in connection herewith or pursuant hereto; and

                                      -28-
<Page>

            (iii) The operation of the Facility after the date of Closing
                  including, but not limited to, operating under the DSP Permit,
                  the Air Permits and the NPDES Permits in Seller's name
                  pursuant to SECTION 2.2.

      (b)   Promptly after receipt by Seller of notice of the commencement of an
            Action or other event giving rise to a Seller Claim with respect to
            which Seller is entitled to indemnification, the party receiving
            such notice shall notify (the "Seller Claim Notice") Buyer in
            writing of the commencement of such Action or the assertion of such
            Seller Claim; PROVIDED, HOWEVER, that failure to give such notice
            shall not affect the right to indemnification hereunder except to
            the extent of actual prejudice to Buyer. Buyer shall have the
            option, and shall notify each indemnified party in writing within
            ten business days after the date of the Seller Claim of its
            election, either: (A) to participate (at its Buyer's expense) in the
            defense of the Action or Seller Claim (in which case the defense of
            such Action or Seller Claim shall be controlled by the indemnified
            party) or (B) to take charge of and control defense of such Action
            or Seller Claim (at its Buyer's expense). If Buyer fails to notify
            the indemnified party of its election within the applicable response
            period, then Buyer shall be deemed to have elected not to control
            the defense of such Action or Seller Claim. If Buyer elects to
            assume the defense of any Action or Seller Claim, each indemnified
            party shall have the right to employ separate counsel and
            participate in the defense of any such Action or Seller Claim, but
            the fees and expenses of such counsel shall be at the expense of the
            indemnified party unless: (1) the named parties in such Action or
            Seller Claim (including any impleaded parties) include both the
            indemnified party and Buyer and the indemnified party shall have
            been advised by such counsel that there may be one or more legal
            defenses available to it that are different from or additional to
            those available to Buyer, or (2) the indemnified party has
            reasonably determined that Losses that may be incurred may exceed
            either individually, or when aggregated with other Seller Claims,
            the Maximum Indemnity Amount (in which case, Buyer shall not have
            the right to assume the defense of such Action or Seller Claim on
            behalf of the indemnified party, it being understood, however,
            that Buyer shall not, in connection with such Action or Seller Claim
            be liable for the fees and expenses of more than one separate firm
            of attorneys (in additional to any local counsel) and that such fees
            and expenses shall be reimbursed as they are incurred).

      (c)   If Buyer does not control the defense of any Action or Seller Claim,
            then the indemnified party or parties may settle such Action or
            Seller Claim with the written consent of Buyer (not to be
            unreasonably withheld).

                                      -29-
<Page>

7.4   LIMITATION OF LIABILITY. Notwithstanding the foregoing, (i) Seller shall
      not be obligated to indemnify Buyer, and Buyer shall not be obligated to
      indemnify Seller pursuant to this ARTICLE VII unless and until the amount
      of all Losses incurred by Buyer, or by Seller, as the case may be, exceeds
      Ten Thousand Dollars ($10,000.00) in the aggregate (the "Basket"),

      in which event the party seeking indemnity may recover all Losses incurred
      in excess of the Basket from the first dollar above the Basket, and (ii)
      the maximum liability of Seller together for Losses under SECTION 7.2 and
      Buyer's maximum liability for Losses under SECTION 7.3 shall be, in each
      case limited to actual damages, not to exceed Six Million Two Hundred
      Fifty Thousand Dollars ($6,250,000.00) (the "Maximum Indemnity Amount").

7.5   EXCLUSIVE REMEDY. After the Closing, the parties' sole monetary recourse
      against each other for any Loss or claim of Losses arising out of or
      relating to this Agreement shall be expressly limited to the provisions of
      this ARTICLE VII, provided, however, that nothing in this Section 7.5
      shall prevent a party from seeking injunctive relief or other equitable
      remedies as may be appropriate.

                                  ARTICLE VIII

                                   TERMINATION

8.1   TERMINATION. This Agreement may be terminated and the transactions
      contemplated by this Agreement may be abandoned at any time, prior to the
      Closing only as follows:

      (a)   by mutual written consent of Buyer and Seller;

      (b)   by Buyer or Seller if the Closing Date shall not have occurred on or
            before January 1, 2002 (provided that the right to terminate this
            Agreement under this SECTION 8.1(b) shall not be available to any
            party whose failure (or, in the case of Seller, its failure) to
            fulfill any obligation under this Agreement has been the cause of,
            or has resulted in, the failure of the Closing Date to occur on or
            before such date); or

      (c)   by Buyer or Seller, if any court of competent jurisdiction in the
            United States or other United States governmental body shall have
            issued an order, decree or ruling or taken any other action
            restraining, enjoining or otherwise prohibiting the transactions
            contemplated hereby and such order, decree, ruling or other action
            shall have become final and nonappealable.

                                      -30-
<Page>

8.2.  EFFECT OF TERMINATION. If this Agreement is terminated pursuant to SECTION
      8.1 and the transactions contemplated by this Agreement are not
      consummated, all further obligations of the parties under or pursuant to
      this Agreement shall terminate without further liability of either party
      to the other; PROVIDED, HOWEVER, the obligations contained in this SECTION
      8.2, SECTION 5.4, SECTION 5.5, and SECTION 9.2 of this Agreement shall
      survive any such termination. Nothing contained in this SECTION 8.2 shall
      relieve any party from liability for any breach of this Agreement.

8.3   EXTENSION; WAIVER. At any time prior to the Closing, the parties may (a)
      extend the time for the performance of any of the obligations or other
      acts of the other parties hereto, (b) waive any inaccuracies in the
      representations and warranties contained herein or in any document,
      certificate or writing delivered pursuant hereto, or (c) waive compliance
      with any of the covenants, agreements or conditions contained herein. Any
      agreement on the part of any party to any such extension or waiver shall
      be valid only if set forth in an instrument in writing signed on behalf of
      such party.

8.4   DAMAGE OR DESTRUCTION PRIOR TO CLOSING. Seller shall bear the risk of all
      loss or damage to the Facility from all causes through the time of Closing
      and Seller shall maintain its current fire and extended insurance
      coverage. . If more than 5% of the Facility is damaged by fire or other
      casualty prior to Closing, then the Buyer shall have the right to either
      (i) terminate this Agreement or (ii) proceed to Closing without a
      reduction in Purchase Price and receive an assignment of all of Seller's
      right, title and interest in and to any insurance proceeds relating to
      such casualty. If less than 5% of the Facility is damaged by fire or other
      casualty prior to Closing, then the Purchaser, subject to the other terms
      of this Agreement, shall be obligated to proceed to Closing without a
      reduction in Purchase Price but shall receive an assignment of all of
      Seller's right, title and interest in and to any insurance proceeds
      relating to such casualty. Seller shall in no event be liable to Buyer for
      any damages, out-of-pocket expenses of other claims arising out of a fire
      or other casualty to the Facility.

8.5   CONDEMNATION PRIOR TO CLOSING. If, after the date hereof and prior to the
      Closing, all or any portion of the Facility is condemned or taken by
      eminent domain (or is the subject of a pending or contemplated
      condemnation proceeding or taking by eminent domain which has not been
      completed), Seller shall promptly give Buyer reasonably detailed notice of
      such condemnation or taking. Upon receipt of such notice, Buyer shall have
      thirty (30) days to elect to either (i) proceed to Closing without a
      reduction in the Purchase Price in which event Purchaser shall be entitled
      to any and all claims that Seller may have to condemnation awards or any
      and all causes of action with respect to such condemnation or taking of
      the Facility or (ii) terminate this Agreement.

                                      -31-
<Page>

                                   ARTICLE IX

                                  MISCELLANEOUS

9.1   ENTIRE AGREEMENT. Except as set forth in SECTION 5.5 hereof, this
      Agreement and the documents referred to herein and to be delivered
      pursuant hereto constitute the entire agreement between the parties
      pertaining to the subject matter hereof, and supersede all prior and
      contemporaneous agreements, understandings, negotiations and discussions
      of the parties, whether oral or written, and there are no warranties,
      representations or other agreements between the parties in connection with
      the subject matter hereof, except as specifically set forth herein or
      therein.

9.2   EXPENSES. Whether or not the transactions contemplated by this Agreement
      are consummated, each of the parties hereto shall pay the fees and
      expenses of their respective counsel, investment bankers, financial
      advisors, accountants and other experts and the other expenses incident to
      the negotiation and preparation of this Agreement and consummation of the
      transactions contemplated hereby, subject to SECTION 9.3 hereof.

9.3   GOVERNING LAW. This Agreement shall be construed and interpreted according
      to the laws of the State of North Carolina without regard to the conflicts
      of law rules thereof.

9.4   ASSIGNMENT. This Agreement and each party's respective rights hereunder
      may not be assigned at any time except as expressly set forth herein
      without the prior written consent of the other parties. In the event
      Seller liquidates or makes other distributions of cash or property to its
      parent company, JLM Industries, Inc., such that the net worth of the
      Seller is reduced to less than $6,250,000.00, then Seller agrees (i) to
      obtain from its parent company a written assumption of all Seller's
      indemnity and other obligations to Buyer under this Agreement and (ii) to
      supply Buyer with a copy of such assumption agreement. In the event Seller
      fails to obtain such assumption agreement, the Buyer, the Seller, and the
      Seller on behalf of its parent company, agree that all such obligations
      shall pass to, and be assumed by, its parent company by operation of law.
      Nothing contained in this clause shall prevent or place any limitations
      upon the Seller, other than that listed in (i) and (ii) above, as it
      relates to liquidation or the making of cash, property, or other
      distributions to its parent company, JLM Industries, Inc.

9.5   NOTICES. All communications, notices and disclosures required or permitted
      by this Agreement shall be in writing and shall be deemed to have been
      given when delivered personally or by messenger or by overnight delivery
      service, or when mailed by registered or certified United States mail,
      postage prepaid, return receipt requested, or when received via telecopy,
      telex or other electronic transmission, in all cases addressed to the
      person for whom it is intended at his address set forth below or to such
      other address as a party shall have designated by notice in writing to the
      other party in the manner provided by this SECTION 9.6:

                                      -32-
<Page>

         If to Seller:              JLM Industries, Inc.
                                    8675 Hidden River Parkway
                                    Tampa, Florida 33637
                                    Attention: Walter M. Tarpley
                                    Telecopy: 813/632-3315

         If to Buyer:               CTI of North Carolina, Inc.
                                    101 North Lathrop Avenue
                                    Savannah, Georgia 31402-0576
                                    Attention: William A. Baker
                                    Telecopy: 912/235-3881

         With a copy to:            Ellis, Painter, Ratterree & Bart, LLP
                                    2 E. Bryan Street, 10th Floor
                                    Savannah, Georgia 31401
                                    Attention: J. Wiley Ellis, Esq.
                                    Telecopy: 912/233-2281

9.6   COUNTERPARTS; HEADINGS. This Agreement may be executed in several
      counterparts, each of which shall be deemed an original, but such
      counterparts shall together constitute but one and the same Agreement. The
      Table of Contents and Article and Section headings in this Agreement are
      inserted for convenience of reference only and shall not constitute a part
      hereof.

9.7   SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage
      would occur in the event any of the provisions of this Agreement were not
      performed in accordance with the terms hereof and that the parties shall
      be entitled to specific performance of the terms hereof, in addition to
      any other remedy at law or equity.

9.8   SEVERABILITY. If any provision, clause or part of this Agreement, or the
      application thereof under certain circumstances, is held invalid, the
      remainder of this Agreement, or the application of such provision, clause
      or part under other circumstances, shall not be affected thereby.

9.9   NO RELIANCE. No third party is entitled to rely on any of the
      representations, warranties and agreements contained in this Agreement,
      and none of the parties hereto assumes any liability to any third party
      because of any reliance on the representations, warranties and agreements
      of any of the parties hereto contained in this Agreement.

9.10  AMENDMENT. This Agreement may not be amended except by an instrument in
      writing signed by all of the parties.

                                      -33-
<Page>

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the day and year first above written.

                                       JLM TERMINALS, INC.

                                       By: /s/ Scott L. Macdonald
                                           ___________________________________

                                       Name: Scott L. Macdonald
                                            __________________________________

                                       Title: President
                                             _________________________________

                                       CTI OF NORTH CAROLINA, INC.

                                       By: /s/ William A. Baker, Jr.
                                           ___________________________________

                                       Name: William A. Baker, Jr.
                                            __________________________________

                                       Title: Vice-President
                                             _________________________________

                                      -34-<PAGE>

                                                                    EXHIBIT 10.1

                                                                [EXECUTION COPY]

                            PARADIGM GENETICS, INC.

          5,097,727 Shares of Common Stock, $0.01 par value per share

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

                                         October 16, 2001

J.P. Morgan Securities Inc.
As Placement Agent
One Bush Street
San Francisco, CA  94104

Dear Sir or Madam:

          Paradigm Genetics, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell 5,097,727 shares (the "Shares") of common stock, par
value $0.01 per share (the "Common Stock"), to certain investors (collectively,
the "Investors").  The Company desires to engage you as its placement agent (the
"Placement Agent") in connection with such issuance and sale.  The Shares are
more fully described in the Registration Statement (as hereinafter defined).

          The Company hereby confirms as follows its agreements with the
Placement Agent.

          1. Agreement to Act as Placement Agent. On the basis of the
             -----------------------------------
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions of this Agreement, the Placement Agent
agrees to act as the Company's exclusive placement agent in connection with the
issuance and sale, on a best efforts basis, by the Company of the Shares to the
Investors. The Company shall pay to the Placement Agent 4.75% of the proceeds
received by the Company from the sale of the Shares as set forth on the cover
page of the Prospectus (as hereinafter defined).

          2. Delivery and Payment. Concurrently with the execution and delivery
             --------------------
of this Agreement, the Company, the Placement Agent, and Citibank N.A., as
escrow agent (the "Escrow Agent"), shall enter into an Escrow Agreement
substantially in the form of Exhibit A attached hereto (the "Escrow Agreement"),
pursuant to which an escrow account will be established, at the Company's
expense, for the benefit of the Investors (the "Escrow Account"). Prior to the
Closing Date (defined below), (i) each of the Investors will deposit an amount
equal to the price per Share as shown on the cover page of the Prospectus (as
hereinafter defined) multiplied by the number of Shares purchased by it in the
Escrow Account, and (ii) the Escrow Agent will notify the Company and the
Placement Agent in writing whether the Investors have deposited in the Escrow
Account funds in the amount equal to the proceeds of the sale of all of the
Shares offered hereby (the "Requisite Funds") into the Escrow Account. At 10:00
a.m., New York City time, on October 19, 2001, or at such other time on such
other date as may be agreed upon by the Company and the Placement Agent but in
no event prior to
<PAGE>

the date on which the Escrow Agent shall have received all of the Requisite
Funds (such date is hereinafter referred to as the "Closing Date"), the Escrow
Agent will release the Requisite Funds from the Escrow Account for collection by
the Company and the Placement Agent as provided in the Escrow Agreement and the
Company shall deliver the Shares to the Investors, which delivery may be made
through the facilities of the Depository Trust Company. The closing (the
"Closing") shall take place at the office of Stroock & Stroock & Lavan LLP, 180
Maiden Lane, New York, New York 10038. All actions taken at the Closing shall be
deemed to have occurred simultaneously.

          Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the Placement
Agent shall request by written notice to the Company.  The closing will be done
on a full-FAST basis through the Depository Trust Company.

          3. Representations and Warranties of the Company. The Company
             ---------------------------------------------
represents and warrants and covenants to the Placement Agent that:

             (a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a "shelf" registration statement on Form S-3
(Registration No. 333-70534), which has become effective, relating to the Common
Stock and certain other securities of the Company, under the Securities Act of
1933, as amended (the "Act"), and the rules and regulations (collectively
referred to as the "Rules and Regulations") of the Commission thereunder. The
Commission has not issued any order preventing or suspending the use of the
Prospectus or the Preliminary Prospectus (as defined below). The term
"Preliminary Prospectus" as used herein means a preliminary prospectus relating
to the Shares as contemplated by Rule 430 or Rule 430A ("Rule 430A") of the
Rules and Regulations included at any time as part of the registration
statement. Copies of such registration statement and amendments and of each
related Preliminary Prospectus have been delivered to the Placement Agent by
means of EDGAR. If such registration statement has become effective, a final
prospectus relating to the Shares containing information permitted to be omitted
at the time of effectiveness by Rule 430A will be filed by the Company with the
Commission in accordance with Rule 424(b) of the Rules and Regulations promptly
after execution and delivery of this Agreement. The term "Registration
Statement" means such registration statement, as amended, including the
Prospectus (which includes the prospectus supplement (the "Prospectus
Supplement") relating to the offering of the Shares), at the time it becomes or
became effective (the "Effective Date"), including all material incorporated by
reference therein and any information deemed to be included by Rule 430A. The
term "Prospectus" means the prospectus (including the Prospectus Supplement)
relating to the Shares as first filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations or, if no such filing is required, the form
of final prospectus relating to the Shares included in the Registration
Statement on the date it became effective, in either case, including all
material, if any, incorporated by reference therein.

             (b) When the Registration Statement became effective, as of the
date hereof, and at all times subsequent thereto to and including the Closing
Date (as defined in Section 2), and during the thirty-day period following the
Closing Date, the Registration

                                       2
<PAGE>

Statement (and any post-effective amendment thereto) and the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment or supplement to the Registration Statement or the Prospectus)
contained and will contain all statements which are required to be stated
therein in accordance with the Act and the Rules and Regulations, complied and
will comply in all material respects with the Act and the Rules and Regulations,
and did not and will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein (in the light of the circumstances under which they were
made, in the case of the Prospectus) not misleading, and no event will have
occurred which should have been set forth in an amendment or supplement to the
Registration Statement or the Prospectus which has not then been set forth in
such an amendment or supplement; each Preliminary Prospectus, as of the date
filed with the Commission, did not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; except that no representation or
warranty is made in this Section 3(b) with respect to statements or omissions
made in reliance upon and in conformity with (i) written information furnished
to the Company expressly for inclusion in any Preliminary Prospectus, the
Registration Statement, or the Prospectus, or any amendment or supplement
thereto, as stated in Section 7(b) hereof with respect to the Placement Agent or
any Investor by or on behalf of the Placement Agent or (ii) Schedule 13Ds or
Schedule 13Gs filed by any Investor. The Company has not distributed any
offering material in connection with the offering or sale of the Common Stock,
other than the Registration Statement, the Preliminary Prospectus and the
Prospectus.

             (c) The Company is, and at the Closing Date will be, duly
organized, validly existing and in good standing under the laws of Delaware. The
Company has no subsidiaries. The Company has, and at the Closing Date will have,
full power and authority to conduct all the activities conducted by it, to own
or lease all the assets owned or leased by it and to conduct its business as
described in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, in the most recent Preliminary Prospectus). The
Company is, and at the Closing Date will be, duly licensed or qualified to do
business and in good standing as a foreign organization in all jurisdictions in
which the nature of the activities conducted by it or the character of the
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified will not have a material
adverse effect on the ability of the Company to carry on its business as
presently conducted. Except as disclosed in the Registration Statement and on
Schedule 3(c) to this Agreement, the Company does not own, and at the Closing
Date will not own, directly or indirectly, any shares of stock or any other
equity or long-term debt securities of any corporation or have any equity
interest in any firm, partnership, joint venture, association or other entity,
other than any ordinary course investment by the Company of working capital.
Complete and correct copies of the articles or certificate of incorporation and
of the bylaws of the Company and all amendments thereto have been delivered to
the Placement Agent by EDGAR, and no changes therein will be made subsequent to
the date hereof and prior to the Closing Date.

             (d) The issued and outstanding shares of capital stock of the
Company have been validly issued, are fully paid and nonassessable and, other
than as set forth in the Registration Statement, are not subject to any
preemptive or similar rights. Except as set

                                       3
<PAGE>

forth in the Registration Statement and the Prospectus such shares are not
subject to any preemptive or similar rights. The Company has an authorized,
issued and outstanding capitalization as set forth in the Prospectus as of the
dates referred to therein. The description of the securities of the Company in
the Registration Statement and the Prospectus is, and at the Closing Date will
be, complete and accurate in all respects. Except as set forth in the
Registration Statement and the Prospectus, as of the date referred to therein,
the Company did not have outstanding any options to purchase, or any rights or
warrants to subscribe for, or any securities or obligations convertible into, or
exchangeable for, or any contracts or commitments to issue or sell, any shares
of capital stock or other securities.

             (e) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized and validly executed and delivered by the
Company and is a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, subject to the effect of
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and equitable principles of general applicability. The Escrow
Agreement has been duly authorized and validly executed and delivered by the
Company and is a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, subject to the effect of
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and equitable principles of general applicability.

             (f) The issuance and sale of the Shares have been duly authorized
by the Company, and the Shares, when issued and paid for in accordance with this
Agreement, will be duly and validly issued, fully paid and nonassessable and
will not be subject to preemptive or similar rights. The holders of the Shares
will not be subject to personal liability by reason of being such holders. The
Shares, when issued, will conform in all material respects to the description
thereof set forth in the Prospectus.

             (g) The financial statements and the related notes included in the
Registration Statement and the Prospectus present fairly, in all material
respects, the financial condition of the Company as of the dates thereof and the
results of its operations and cash flows at the dates and for the periods
covered thereby in conformity with generally accepted accounting principles
("GAAP") (subject, in the case of unaudited financial statements, to the absence
of footnotes and normal year-end adjustments). No other financial statements or
schedules of the Company or any other entity are required by the Act or the
Rules and Regulations to be included in the Registration Statement or the
Prospectus. PricewaterhouseCoopers LLP (the "Accountants"), who have reported on
such financial statements and schedules, are independent accountants with
respect to the Company as required by the Act and the Rules and Regulations. The
financial statements of the Company and the related notes and schedules included
in the Registration Statement and the Prospectus have been prepared in
conformity with the requirements of the Act and the Rules and Regulations and
present fairly in all material respects the information shown therein.

             (h) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to

                                       4
<PAGE>

permit preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

             (i) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Date, except as set forth in or contemplated by the Registration Statement and
the Prospectus, (i) there has not been and will not have been any change in the
capitalization of the Company other than non-material changes in the ordinary
course of business, or any material adverse change in the business, properties,
business prospects, condition (financial or otherwise) or results of operations
of the Company arising for any reason whatsoever (except for ongoing losses in
connection with operations), (ii) the Company has not incurred nor will it incur
any material liabilities or obligations, direct or contingent, nor has the
Company entered into nor will it enter into any material transactions other than
pursuant to this Agreement, the Registration Statement and the transactions
referred to herein and therein and (iii) the Company has not and will not have
paid or declared any dividends or other distributions of any kind on any class
of its capital stock.

             (j) Any real property and buildings held under lease to the Company
are held or leased by the Company under valid, binding and enforceable leases
conforming to the description thereof set forth in or incorporated by reference
into the Registration Statement and the Prospectus, with such exceptions as do
not materially interfere with the use made and proposed to be made of such
property and buildings by the Company.

             (k) The Company is not, nor upon completion of the transactions
contemplated herein will it be, an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act").

             (l) Except as set forth or referred to in the Registration
Statement and the Prospectus, there are no actions, suits or proceedings
pending, or to the Company's knowledge, threatened against or affecting the
Company or any of its officers in their capacity as such, before or by any
Federal or state court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, which is reasonably expected by
management of the Company to materially adversely affect the business,
properties, prospects, condition (financial or otherwise) or results of
operations of the Company.

             (m) The Company has, and at the Closing Date will have, (i) all
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to carry on its business as presently conducted except
where the failure to have such governmental licenses, permits, consents, orders,
approvals and other authorizations would not have a material adverse effect on
the business, properties, prospects, condition (financial or otherwise) or
results of operation of the Company, (ii) complied with all laws, regulations
and orders applicable to either it or its business, except where the failure to
so comply would not

                                       5
<PAGE>

have a material adverse effect on the business, properties, prospects, condition
(financial or otherwise) or results of operations of the Company, and (iii)
performed all its obligations required to be performed, and is not, and at the
Closing Date will not be, to the Company's best knowledge, in default, under any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement, lease, contract or other agreement or
instrument (collectively, a "contract or other agreement") to which it is a
party or by which its property is bound or affected, except as otherwise set
forth in the Registration Statement and the Prospectus and except where such
default would not have a material adverse effect on the business, properties,
prospects, condition (financial or otherwise) or results of operations of the
Company, and, to the Company's best knowledge, no other party under any material
contract or other agreement to which it is a party is in default in any respect
thereunder. The Company is not in violation of any provision of its
organizational or governing documents.

             (n) The Company has all corporate power and authority to enter into
this Agreement and the Escrow Agreement, and to carry out the provisions and
conditions hereof and thereof, and all consents, authorizations, approvals and
orders required in connection herewith and therewith have been obtained, except
such as have been obtained, such as may be required under state securities or
Blue Sky Laws or the by-laws and rules of the National Association of Securities
Dealers, Inc. (the "NASD").

             (o) Neither (i) the issuance, offering and sale of the Shares
pursuant hereto, nor (ii) the compliance by the Company with the other
provisions hereof require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as have been
obtained, such as may be required under state securities or Blue Sky laws or the
bylaws and rules of the NASD and, if the Registration Statement is not effective
under the Act as of the time of execution hereof, such as may be required (and
shall be obtained as provided in this Agreement) under the Act.

             (p) Neither the execution of this Agreement or the Escrow
Agreement, nor the issuance, offering or sale of the Shares, nor the
consummation of any of the transactions contemplated herein or in the Escrow
Agreement, nor the compliance by the Company with the terms and provisions
hereof or thereof will conflict with, or will result in a breach of, any of the
terms and provisions of, or has constituted or will constitute a default under,
or has resulted in or will result in the creation or imposition of any lien,
charge or encumbrance, except for such liens as would not individually or in the
aggregate have a material adverse effect on the business, properties, prospects,
condition (financial or otherwise) or results of operation of the Company upon
any property or assets of the Company pursuant to the terms of any contract or
other agreement to which the Company may be bound or to which any of the
property or assets of the Company is subject, except such conflicts, breaches or
defaults as may have been waived; nor will such action result in any violation
of the provisions of the Company's organizational or governing documents, or any
statute or any order, rule or regulation applicable to the Company or of any
court or of any federal, state or other regulatory authority or other government
body having jurisdiction over the Company.

             (q) There is no document or contract of a character required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the

                                       6
<PAGE>

Registration Statement that is not described or filed as required. All such
contracts to which the Company is a party have been duly authorized, executed
and delivered by the Company, constitute valid and binding agreements of the
Company, and are enforceable against the Company in accordance with the terms
thereof, subject to the effect of applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally and equitable principles of general
applicability.

             (r) No statement, representation or warranty made by the Company in
this Agreement or made in any certificate or document required by this Agreement
or the Escrow Agreement to be delivered to the Placement Agent, the Investors or
the Escrow Agent was or will be, when made, inaccurate, untrue or incorrect in
any material respect.

             (s) The Company and its directors, officers or, to the knowledge of
the Company, controlling persons have not taken, directly or indirectly, any
action intended, or which might reasonably be expected, to cause or result,
under the Act or otherwise, in, or which has constituted, stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Common Stock.

             (t) No holder of securities of the Company has rights to the
registration of any securities of the Company as a result of the filing of the
Registration Statement, other than rights which are not exercisable due to the
Placement Agent's determination to include only securities sold directly from
the Company, except for such rights as have been waived or those other rights
which have been disclosed to the Placement Agent.

             (u)  The Common Stock is currently listed on the Nasdaq National
Market (the "NNM").

             (v)  The Company is not involved in any material labor dispute nor
is any such dispute known by the Company to be threatened.

             (w) Except as set forth in the Registration Statement and the
Prospectus, the business and operations of the Company have been and are being
conducted in material compliance with all applicable laws, ordinances, rules,
regulations, licenses, permits, approvals, plans, authorizations or requirements
relating to occupational safety and health, or pollution, or protection of
health or the environment (including, without limitation, those relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic substances, materials or wastes into ambient
air, surface water, groundwater or land, or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of chemical substances, pollutants, contaminants or hazardous or toxic
substances, materials or wastes, whether solid, gaseous or liquid in nature) of
any governmental department, commission, board, bureau, agency or
instrumentality of the United States, any state or political subdivision
thereof, or any foreign jurisdiction, and all applicable judicial or
administrative agency or regulatory decrees, awards, judgments and orders
relating thereto, except where the failure to be in such compliance will not,
individually or in the aggregate, have a material adverse effect on the ability
of the Company to carry on its business as presently conducted; and the Company
has not received any notice from any governmental instrumentality or any third
party alleging any material violation thereof or liability thereunder

                                       7
<PAGE>

(including, without limitation, liability for costs of investigating or
remediating sites containing hazardous substances and/or damages to natural
resources).

             (x) Except as disclosed in or specifically contemplated by the
Registration Statement, (i) the Company owns or has obtained valid and
enforceable licenses or options for the material inventions, patent
applications, patents, trademarks (both registered and unregistered),
tradenames, copyrights and trade secrets necessary for the conduct of the
Company's business as currently conducted and as the Registration Statement
indicates the Company contemplates conducting (collectively, the "Intellectual
Property"); and (ii) to the Company's knowledge (for each of the following
subsections (a) through (e)): (a) there are no third parties who have any
ownership rights to any Intellectual Property that is owned by, or has been
licensed to, the Company for the products and services described in the
Registration Statement that would preclude the Company from conducting its
businesses as currently conducted and as the Registration Statement indicates
the Company contemplates conducting, except for the ownership rights of the
owners of the Intellectual Property licensed or optioned by the Company; (b)
there are currently no sales of any products that would constitute an
infringement by third parties of any Intellectual Property owned, licensed or
optioned by the Company; (c) there is no pending or threatened action, suit,
proceeding or claim by others challenging the rights of the Company in or to any
Intellectual Property owned, licensed or optioned by the Company; (d) there is
no pending or threatened action, suit, proceeding or claim by others challenging
the validity or scope of any Intellectual Property owned, licensed or optioned
by the Company, other than non-material claims; and (e) there is no pending or
threatened action, suit, proceeding or claim by others that the Company infringe
or otherwise violate any patent, trademark, copyright, trade secret or other
proprietary right of others, other than non-material claims.

             (y) The Company has filed all necessary federal, state and foreign
income and franchise tax returns and has paid or accrued all taxes shown as due
thereon, and the Company has no knowledge of any tax deficiency which has been
or might be asserted or threatened against it which could have a material
adverse effect on the business, properties, prospects, condition (financial or
otherwise) or results of operations of the Company.

             (z) On the Closing Date, all stock transfer or other taxes (other
than income taxes) which are required to be paid in connection with the sale and
transfer of the Shares to be sold hereunder will be, or will have been, fully
paid or provided for by the Company and all laws imposing such taxes will be or
will have been fully complied with.

             (aa) The Company maintains insurance of the types and in the
amounts that the Company reasonably believes is adequate for its business,
including, but not limited to, insurance covering all real and personal property
owned or leased by the Company against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against by similarly situated
companies, all of which insurance is in full force and effect.

             (bb) The Company has not at any time since its incorporation,
directly or indirectly, (i) made any unlawful contribution to any candidate for
public office, or failed to disclose fully any contribution in violation of law,
or (ii) made any payment to any federal or

                                       8
<PAGE>

state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof.

          4. Agreements of the Company. The Company covenants and agrees with
             -------------------------
the Placement Agent as follows:

             (a) The Company will not, during such period as the Prospectus
would be required by law to be delivered in connection with sales of the Shares
by an underwriter or dealer in connection with the offering contemplated by this
Agreement, file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Placement Agent within a reasonable period of time prior to the filing thereof
and the Placement Agent shall not have objected thereto in good faith.

             (b) The Company will notify the Placement Agent promptly, and will
confirm such advice in writing, (1) when any post-effective amendment to the
Registration Statement becomes effective, but only during the period mentioned
in Section 4(a), (2) of any request by the securities or other governmental
authority (including, without limitation, the Commission) of any jurisdiction
for amendments or supplements to the Registration Statement or the Prospectus or
for additional information, but only during the period mentioned in Section
4(a), (3) of the issuance by any securities or other governmental authority
(including, without limitation, the Commission) of any jurisdiction of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose or the threat thereof, but only
during the period mentioned in Section 4(a), (4) of the happening of any event
during the period mentioned in Section 4(a) that in the judgment of the Company
makes any statement made in the Registration Statement or the Prospectus untrue
or that requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances in which they are made, not misleading and (5) of receipt by the
Company or any representative or attorney of the Company of any other
communication from the securities or other governmental authority (including,
without limitation, the Commission) of any jurisdiction relating to any of the
Registration Statement, any Preliminary Prospectus or the Prospectus in
connection with the offering contemplated hereby. If at any time any securities
or other governmental authority (including, without limitation, the Commission)
of any jurisdiction shall issue any order suspending the effectiveness of the
Registration Statement in connection with the offering contemplated hereby, the
Company will make every reasonable effort to obtain the withdrawal of such order
at the earliest possible moment. If the Company has omitted any information from
the Registration Statement, pursuant to Rule 430A, it will use its best efforts
to comply with the provisions of and make all requisite filings with the
Commission pursuant to said Rule 430A and to notify the Placement Agent promptly
of all such filings.

             (c) If, at any time when a Prospectus relating to the Shares is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus, as then amended or supplemented, would, in the reasonable
judgment of counsel to the Company or counsel to the Placement Agent, include
any untrue statement of a material fact or omit to

                                       9
<PAGE>

state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or the
Registration Statement, as then amended or supplemented, would, in the
reasonable judgment of counsel to the Company or counsel to the Placement Agent,
include any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading, or if for any other
reason it is necessary, in the reasonable judgment of counsel to the Company or
counsel to the Placement Agent, at any time to amend or supplement the
Prospectus or the Registration Statement to comply with the Act or the Rules and
Regulations, the Company will promptly notify the Placement Agent and, subject
to Section 4(a) hereof, will promptly prepare and file with the Commission, at
the Company's expense, an amendment to the Registration Statement or an
amendment or supplement to the Prospectus that corrects such statement or
omission or effects such compliance and will deliver to the Placement Agent,
without charge, such number of copies thereof as the Placement Agent may
reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Placement Agent.

             (d) The Company will furnish to the Placement Agent and its
counsel, without charge, (i) one signed copy of the registration statement
described in Section 3(a) hereof, including financial statements and schedules,
and all exhibits thereto and (ii) so long as a prospectus relating to the Shares
is required to be delivered under the Act, as many copies of each Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto as the
Placement Agent may reasonably request.

             (e)  The Company will comply with all the undertakings contained
in the Registration Statement.

             (f) Prior to the sale of the Shares to the Investors, the Company
will cooperate with the Placement Agent and its counsel in connection with the
registration or qualification of the Shares for offer and sale under the state
securities or Blue Sky laws of such jurisdictions as the Placement Agent may
request; provided, that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to general service of process in any jurisdiction
where it is not now so subject.

             (g) The Company will make generally available to holders of its
securities, as soon as may be practicable, but in no event later than the last
day of the fifteenth full calendar month following the calendar quarter in which
the Effective Date falls, a consolidated earnings statement (which need not be
audited but shall be in reasonable detail) for a period of 12 months ended
commencing after the Effective Date, and satisfying the provisions of Section
11(a) of the Act (including Rule 158 of the Rules and Regulations).

             (h) The Company will not at any time, directly or indirectly, take
any action intended, or which might reasonably be expected, to cause or result
in, or which will constitute, stabilization of the price of the Shares to
facilitate the sale or resale of any of the Shares.

                                       10
<PAGE>

             (i) The Company will apply the net proceeds from the offering and
sale of the Shares in the manner set forth in the Prospectus under the caption
"Use of Proceeds."

          5. Expenses. Whether or not the transactions contemplated by this
             --------
Agreement are consummated or this Agreement is terminated, the Company will pay
all costs and expenses incident to the performance of the obligations of the
Company under this Agreement, including but not limited to costs and expenses of
or relating to (1) the preparation, printing and filing of the Registration
Statement (including each pre- and post-effective amendment thereto) and
exhibits thereto, each Preliminary Prospectus, the Prospectus and any amendment
or supplement to the Prospectus, including all fees, disbursements and other
charges of counsel to the Company, (2) the preparation and delivery of
certificates representing the Shares, (3) furnishing (including costs of
shipping and mailing) such copies of the Registration Statement (including all
pre- and post-effective amendments thereto), the Prospectus and any Preliminary
Prospectus, and all amendments and supplements to the Prospectus, as may be
requested for use in connection with the direct placement of the Shares, (4) the
listing of the Common Stock on the NMS, (5) any filings required to be made by
the Placement Agent with the NASD, and the fees, disbursements and other charges
of counsel for the Placement Agent in connection therewith, (6) the registration
or qualification of the Shares for offer and sale under the securities or Blue
Sky laws of such jurisdictions designated pursuant to Section 4(f), including
the reasonable fees, disbursements and other charges of counsel to the Placement
Agent in connection therewith and the preparation and printing of preliminary,
supplemental and final Blue Sky memoranda, (7) fees, disbursements and other
charges of counsel to the Company and (8) the fees of the Escrow Agent. The
Company shall reimburse the Placement Agent, upon request for all reasonable
out-of-pocket costs and expenses.

          6. Conditions of the Obligations of the Placement Agent. The
             ----------------------------------------------------
obligations of the Placement Agent hereunder are subject to the following
conditions:

             (a) Notification that the Registration Statement has become
effective shall be received by the Placement Agent not later than 5:00 p.m., New
York City time, on the date of this Agreement or at such later date and time as
shall be consented to in writing by the Placement Agent and all filings required
by Rule 424 of the Rules and Regulations and Rule 430A shall have been made.

             (b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued, and no proceedings for that
purpose shall be pending or threatened by any securities or other governmental
authority (including, without limitation, the Commission), (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by any securities or other
governmental authority (including, without limitation, the Commission), (iii)
any request for additional information on the part of the staff of any
securities or other governmental authority (including, without limitation, the
Commission) shall have been complied with to the satisfaction of the staff of
the Commission

                                       11
<PAGE>

or such authorities and (iv) after the date hereof no amendment or supplement to
the Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to the Placement Agent and the Placement Agent did
not object thereto in good faith, and the Placement Agent shall have received
certificates of the Company, dated the Closing Date and signed by the President
and Chief Executive Officer or the Chairman of the Board of Directors of the
Company, and the Chief Financial Officer of the Company, to the effect of
clauses (i), (ii) and (iii).

             (c) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results of
operations of the Company, whether or not arising from transactions in the
ordinary course of business, in each case other than as set forth in or
contemplated by the Registration Statement and the Prospectus, and other than
ongoing losses in connection with operations, and (ii) the Company shall not
have sustained any material loss or interference with its business or properties
from fire, explosion, flood or other casualty, whether or not covered by
insurance, or from any labor dispute or any court or legislative or other
governmental action, order or decree, which is not set forth in the Registration
Statement and the Prospectus, if in the judgment of the Placement Agent any such
development makes it impracticable or inadvisable to consummate the sale and
delivery of the Shares to Investors at the public offering price.

             (d) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
officers or directors in their capacities as such, before or by any Federal,
state or local court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, which litigation or proceeding is
reasonably expected by management to materially and adversely affect the
business, properties, business prospects, condition (financial or otherwise) or
results of operations of the Company.

             (e) Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects at the
Closing Date, as if made on such date, and all covenants and agreements herein
contained to be performed on the part of the Company and all conditions herein
contained to be fulfilled or complied with by the Company at or prior to the
Closing Date shall have been duly performed, fulfilled or complied with in all
material respects.

             (f) The Placement Agent shall have received an opinion, dated the
Closing Date (or such other date as may be set forth in a representation or
warranty), of Mintz Levin, Cohn, Ferris, Glovsky and Popeo, P.C., as counsel to
the Company, in form and substance reasonably satisfactory to the Placement
Agent.

             (g) The Placement Agent shall have received an opinion, dated the
Closing Date, of the Company's general counsel, in form and substance
satisfactory to the

                                       12
<PAGE>

Placement Agent as to certain intellectual property matters referenced in the
Registration Statement.

             (h) Concurrently with the execution and delivery of this Agreement,
or, if the Company elects to rely on Rule 430A, on the date of the Prospectus,
the Accountants shall have furnished to the Placement Agent a letter, dated the
date of its delivery (the "Original Letter"), addressed to the Placement Agent
and in form and substance satisfactory to the Placement Agent and
PricewaterhouseCoopers LLC, confirming that (i) they are independent public
accountants with respect to the Company within the meaning of the Act and the
Rules and Regulations; (ii) in their opinion, the financial statements and any
supplementary financial information included in the Registration Statement and
examined by them comply as to form in all material respects with the applicable
accounting requirements of the Act and the Rules and Regulations; (iii) on the
basis of procedures, not constituting an examination in accordance with
generally accepted auditing standards, set forth in detail in the Original
Letter, a reading of the latest available interim financial statements of the
Company, inspections of the minute books of the Company since the latest audited
financial statements included in the Prospectus, inquiries of officials of the
Company responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in the Original Letter to a date
not more than five days prior to the date of the Original Letter, nothing came
to their attention that caused them to believe that: (A) as of a specified date
not more than five days prior to the date of the Original Letter, there have
been any changes in the capital stock of the Company or any increase in the
long-term debt of the Company, or any decreases in net current assets or net
assets or other items specified by the Placement Agent, or any increases in any
items specified by the Placement Agent, in each case as compared with amounts
shown in the latest balance sheet included in the Prospectus, except in each
case for changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in the Original Letter; and (B) for
the period from the date of the latest financial statements included in the
Prospectus to the specified date referred to in Clause (A), there were any
decreases in revenues or the total or per share amounts of net income or other
items specified by the Placement Agent, or any increases in any items specified
by the Placement Agent, in each case as compared with the comparable period of
the preceding year and with any other period of corresponding length specified
by the Placement Agent, except in each case for decreases or increases which the
Prospectus discloses have occurred or may occur or which are described in the
Original Letter; and (iv) in addition to the examination referred to in their
reports included in the Prospectus and the procedures referred to in clause
(iii) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Placement Agent, which are derived from the general
accounting, financial or other records of the Company, as the case may be, which
appear in the Prospectus or in Part II of, or in exhibits or schedules to, the
Registration Statement, and have compared such amounts, percentages and
financial information with such accounting, financial and other records and have
found them to be in agreement. At the Closing Date, the Accountants shall have
furnished to the Placement Agent a letter, dated the date of its delivery, which
shall confirm, on the basis of a review in accordance with the procedures set
forth in the Original Letter, that nothing has come to their attention during
the period from the date of the Original Letter referred to in the prior
sentence to a date (specified in the letter) not more than five days prior

                                       13
<PAGE>

to the Closing Date which would require any change in the Original Letter if it
were required to be dated and delivered at the Closing Date.

             (i) At the Closing Date, there shall be furnished to the Placement
Agent a certificate, dated the date of its delivery, signed by each of 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 to each of such
person's knowledge:

                (i) Each signer of such certificate has carefully examined the
     Registration Statement and the Prospectus and (A) as of the date of such
     certificate, (x) the Registration Statement does not contain any untrue
     statement of a material fact or omit to state a material fact required to
     be stated therein or necessary in order to make the statements therein not
     misleading and (y) the Prospectus does not contain any untrue statement of
     a material fact or omit to state a material fact required to be stated
     therein or necessary in order to make the statements therein, in light of
     the circumstances under which they were made, not misleading and (B) since
     the Effective Date no event has occurred as a result of which it is
     necessary to amend or supplement the Prospectus in order to make the
     statements therein not untrue or misleading in any material respect.

                (ii) Each of the representations and warranties of the Company
     contained in this Agreement were, when originally made, and are, at the
     time such certificate is delivered, true and correct in all material
     respects.

                (iii) Each of the covenants (not waived by the Placement Agent)
     required herein to be performed by the Company on or prior to the date of
     such certificate has been duly, timely and fully performed and each
     condition herein required to be complied with by the Company on or prior to
     the delivery of such certificate has been duly, timely and fully complied
     with.

                (iv) No stop order suspending the effectiveness of the
     Registration Statement or of any part thereof has been issued and no
     proceedings for that purpose have been instituted or are contemplated by
     the Commission.

                (v) Subsequent to the date of the most recent financial
     statements in the Prospectus, there has been no material adverse change in
     the financial position or results of operations of the Company, except as
     set forth in or contemplated by the Prospectus and except for ongoing
     losses in connection with ongoing operations.

             (j) The Shares shall be qualified for sale in such states as the
Placement Agent may reasonably request, each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing
Date; provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to taxation or general service of process in any
jurisdiction where it is not now so subject.

             (k) The Company shall have furnished to the Placement Agent such
certificates, in addition to those specifically mentioned herein, as the
Placement Agent may

                                       14
<PAGE>

have reasonably requested as to the accuracy and completeness at the Closing
Date of any statement in the Registration Statement or the Prospectus, as to the
accuracy at the Closing Date of the representations and warranties of the
Company as to the performance by the Company of its obligations hereunder, or as
to the fulfillment of the conditions concurrent and precedent to the obligations
hereunder of the Placement Agent.

          7.  Indemnification.
              ---------------

             (a) The Company shall indemnify and hold harmless the Placement
Agent, the directors, officers, employees and agents of the Placement Agent and
each person, if any, who controls the Placement Agent within the meaning of
Section 15 of the Act or Section 20 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), from and against any and all losses, claims,
liabilities, expenses and damages, joint or several, (including any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which it, or any of them, may become subject under the Act
or other Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, liabilities, expenses or damages
arise out of or are based on (i) any untrue statement or alleged untrue
statement made by the Company in Section 3 of this Agreement, (ii) any untrue
statement or alleged untrue statement of any material fact contained in (A) any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus and (B)
any application or other document, or any amendment or supplement thereto,
executed by the Company based upon written information furnished by or on behalf
of the Company filed in any jurisdiction in order to qualify the Shares under
the securities or Blue Sky laws thereof or filed with the Commission or any
securities association or securities exchange (each, an "Application") or (iii)
the omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any supplement to the Registration
Statement or the Prospectus or any Application a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that
the Company will not be liable to the extent that such loss, claim, liability,
expense or damage arises from the sale of the Shares in the public offering to
any person and is based solely (i) on an untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information relating to the Placement Agent furnished in writing to the Company
by the Placement Agent expressly for inclusion in the Registration Statement,
any Preliminary Prospectus or the Prospectus or (ii) statements included in a
Schedule 13D or Schedule 13G filed by a third party, and provided further, that
such indemnity with respect to any Preliminary Prospectus shall not inure to the
benefit of any Placement Agent (or any person controlling such Placement Agent)
from whom the person asserting any such loss, claim, damage, liability or action
purchased Shares which are the subject thereof to the extent that any such loss,
claim, damage or liability (i) results from the fact that such Placement Agent
failed to send or give a copy of the Prospectus (as amended or supplemented) to
such person at or prior to the confirmation of the sale of such Shares to such
person in any case where such delivery is required by the Act and (ii) arises
out of or is based upon an untrue statement or omission of a material fact
contained in such Preliminary Prospectus that was corrected in the Prospectus
(or any amendment or supplement thereto), unless such failure to deliver the
Prospectus (as amended or

                                       15
<PAGE>

supplemented) was the result of noncompliance by the Company with Section 4(c).
This indemnity agreement will be in addition to any liability that the Company
may otherwise have. The Company will not, without the prior written consent of
the Placement Agent (which will not be unreasonably withheld), settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not such Placement Agent or any person who controls
such Placement Agent within the meaning of Section 15 of the Act or Section 20
of the Exchange Act is a party to each claim, action, suit or proceeding),
unless such settlement, compromise or consent includes an unconditional release
of the Placement Agent and each such controlling person from all liability
arising out of such claim, action, suit or proceeding.

             (b) The Placement Agent will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, each director of the
Company and each officer of the Company who signs the Registration Statement to
the same extent as the foregoing indemnity from the Company to the Placement
Agent, but only insofar as losses, claims, liabilities, expenses or damages
arise out of or are based on any untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
relating to the Placement Agent furnished in writing to the Company by the
Placement Agent expressly for use in the Registration Statement, any Preliminary
Prospectus or the Prospectus. This indemnity agreement will be in addition to
any liability that the Placement Agent might otherwise have. The Company
acknowledges that, for all purposes under this Agreement, the statements set
forth (i) under the heading "Plan of Distribution", (ii) on the cover page and
(iii) on the back cover in any Preliminary Prospectus and the Prospectus
constitute the only information relating to the Placement Agent furnished in
writing to the Company by the Placement Agent expressly for inclusion in the
Registration Statement, any Preliminary Prospectus or the Prospectus.

            (c) Any party that proposes to assert the right to be indemnified
under this Section 7 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 7, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 7 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel reasonably satisfactory to the indemnified party, and
after notice from the indemnifying party to the indemnified party of its
election to assume the defense, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses except as provided below and
except for the reasonable costs of investigation subsequently incurred by the
indemnified party in connection with the defense. The indemnified party will
have the right to employ its own

                                       16
<PAGE>

counsel in any such action, but the fees, expenses and other charges of such
counsel will be at the expense of such indemnified party unless (1) the
employment of counsel by the indemnified party has been authorized in writing by
the indemnifying party, (2) the indemnified party has reasonably concluded
(based on advice of counsel) that a conflict exists (based on advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party that would prevent the counsel selected by the indemnifying party from
representing the indemnified party (in which case the indemnifying party will
not have the right to direct the defense of such action on behalf of the
indemnified party) or (3) the indemnifying party has not in fact employed
counsel to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. The indemnifying party will reimburse all such fees, disbursements and
other charges promptly as they are incurred. The Company will not, without the
prior written consent of the Placement Agent (which consent will not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification has been sought hereunder (whether or not the
Placement Agent or any person who controls the Placement Agent within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act is a party to
such claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of the Placement Agent and each such
controlling person from all liability arising out of such claim, action, suit or
proceeding. An indemnifying party will not be liable for any settlement of any
action or claim effected without its written consent (which consent will not be
unreasonably withheld).

             (d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 7 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or the Placement Agent,
the Company and the Placement Agent will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Company from persons other than the
Placement Agent such as persons who control the Company within the meaning of
the Act or the Exchange Act, officers of the Company who signed the Registration
Statement and directors of the Company, who also may be liable for contribution)
to which the Company and the Placement Agent may be subject in such proportion
as shall be appropriate to reflect the relative benefits received by the Company
on the one hand and the Placement Agent on the other. The relative benefits
received by the Company on the one hand and the Placement Agent on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting Company expenses) received by the Company as set
forth in the table on the cover page of the Prospectus bear to the fee received
by the Placement Agent hereunder. If, but only if, the allocation provided by
the foregoing sentence is not permitted by applicable law, the allocation of
contribution shall be made in such proportion as is appropriate to reflect not
only

                                       17
<PAGE>

the relative benefits referred to in the foregoing sentence but also the
relative fault of the Company, on the one hand, and the Placement Agent on the
other, with respect to the statements or omissions which resulted in such loss,
claim, liability, expense or damage, or action in respect thereof, as well as
any other relevant equitable considerations with respect to such offering. Such
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the Placement
Agent, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Placement Agent agree that it would not be just and
equitable if contributions pursuant to this Section 7(d) were to be determined
by pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, liability,
expense or damage, or action in respect thereof, referred to above in this
Section 7(d) shall be deemed to include, for purpose of this Section 7(d), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), the Placement Agent shall
not be required to contribute any amount in excess of the fee received by it,
and no person found guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) will be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 7(d), any person who controls a party to this Agreement within the
meaning of the Act or the Exchange Act will have the same rights to contribution
as that party, and each officer of the Company who signed the Registration
Statement will have the same rights to contribution as the Company, subject in
each case to the provisions hereof. Any party entitled to contribution, promptly
after receipt of notice of commencement of any action against such party in
respect of which a claim for contribution may be made under this Section 7(d),
will notify any such party or parties from whom contribution may be sought, but
the omission so to notify will not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have under
this Section 7(d). No party will be liable for contribution with respect to any
action or claim settled without its written consent (which consent will not be
unreasonably withheld).

          8.  Termination.
              -----------

             (a) The obligations of the Placement Agent under this Agreement may
be terminated at any time prior to the Closing Date, by notice to the Company
from the Placement Agent, without liability on the part of the Placement Agent
to the Company if, prior to delivery and payment for the Shares, in the sole
judgment of the Placement Agent (i) trading in the Common Stock of the Company
shall have been suspended by the Commission or by the NNM, (ii) trading in
securities generally on the NNM shall have been suspended or limited or minimum
or maximum prices shall have been generally established on any of such
exchanges, or additional material governmental restrictions, not in force on the
date of this Agreement, shall have been imposed upon trading in securities
generally by any of such exchanges or by order of the Commission or any court or
other governmental authority, (iii) a general banking moratorium shall have been
declared by Federal or New York State authorities, or (iv) any material adverse
change in the financial or securities markets in the United States or any
outbreak or material escalation of hostilities or declaration by the United
States of a national

                                       18
<PAGE>

emergency or war or other calamity or crisis shall have occurred, the effect of
any of which is such as to make it, in the sole judgment of the Placement Agent,
impracticable or inadvisable to market the Shares on the terms and in the manner
contemplated by the Prospectus.

             (b) The obligations of the parties under this Agreement shall be
automatically terminated in the event that notice is given to the Escrow Agent
as determination prior to the close of business on the date scheduled for
receipt of the Requisite Funds, that the Requisite Funds have not been deposited
by the Investors into the Escrow Account by the close of business on the Closing
Date.

             (c) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to Section 8(b) and other than a
termination of the Placement Agent's Engagement pursuant to Section 9(a), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Placement Agent set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by you, reimburse you for all reasonable out-of-
pocket expenses incurred in connection herewith.

          9.  Engagement Period.
              -----------------

             (a) Pursuant to a letter dated September 24, 2001 (the "Letter"),
the Company agreed to engage (the "Engagement") the Placement Agent as placement
agent in the event that the Company decided to proceed with certain types of
financings, including one such as the offering contemplated hereby. The Letter
provides that upon termination of the Engagement, the Placement Agent shall
provide the Company with a written list of persons contacted during the
Engagement with which the Placement Agent has had meaningful discussions about
the offering. Such list shall exclude (i) investors who have previously invested
in private placements of the Company (and affiliates of such investors), (ii)
investors with whom the Company has entered into, or in the future enters into,
collaborations or other strategic transactions (and affiliates of such
investors), and (iii) parties purchasing stock pursuant to the exercise of
options or currently outstanding warrants. The Letter further provides that if
any person so listed and contacted by the Placement Agent during the terms of
the Engagement purchases from the Company securities during the six month period
following termination of the Engagement, the Company shall pay the Placement
Agent, upon the closing of each such sale, a cash fee equal to the amount that
would have been payable had the Engagement not been terminated. The Company and
the Placement Agent hereby agree that if the Closing occurs, the Engagement will
terminate pursuant to Section 6 of the Letter immediately after the Closing. By
way of clarification, the "tail" provided for in this Section 9(a) restates and
is not in addition to the "tail" provided for in the Letter, and the fees and
expenses provided for in this Agreement are in accordance with and not in
addition to those provided for in the Letter.

             (b) In connection with the offering contemplated hereby, the
Placement Agent, for the benefit of the Company, has obtained oral agreements
from each investor it has contacted in connection with the contemplated offering
to the effect that such

                                       19
<PAGE>

investor agreed to keep confidential all information concerning a possible
offering. The Placement Agent understands that the federal securities laws
impose restrictions on trading based on information regarding this offering.

          10. Notices. Notice given pursuant to any of the provisions of this
              -------
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, 104 Alexandria
Drive, Research Triangle Park, NC 27709, Attention: Chief Executive Officer and
General Counsel or (b) if to the Placement Agent, at the office of J.P. Morgan
Securities Inc., One Bush Street, San Francisco, CA 94104, Attention: Jim Zanze.
Any such notice shall be effective only upon receipt. Any notice under Section 7
may be made by facsimile or telephone, but if so made shall be subsequently
confirmed in writing.

          11. Survival. The respective representations, warranties, agreements,
              --------
covenants, indemnities and other statements of the Company and the Placement
Agent set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement shall remain in full force and effect, regardless of
(i) any investigation made by or on behalf of the Company, any of its officers
or directors, the Placement Agent or any controlling person referred to in
Section 7 hereof and (ii) delivery of and payment for the Shares. The respective
agreements, covenants, indemnities and other statements set forth in Sections 5,
7 and 9 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.

          12. Successors. This Agreement shall inure to the benefit of and shall
              ----------
be binding upon the Placement Agent, the Company and their respective successors
and legal representatives, and nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the
indemnification and contribution contained in Sections 7(a) and (d) of this
Agreement shall also be for the benefit of the directors, officers, employees
and agents of the Placement Agent and any person or persons who control the
Placement Agent within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnification and contribution contained in Sections
7(b) and (d) of this Agreement shall also be for the benefit of the directors of
the Company, the officers of the Company who have signed the Registration
Statement and any person or persons who control the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act. No Investor shall be
deemed a successor because of such purchase.

          13. APPLICABLE LAW. THE VALIDITY AND INTERPRETATIONS OF THIS
              --------------
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.

                                       20
<PAGE>

          14. Counterparts. This Agreement may be executed in two or more
              ------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

          15. Entire Agreement. This Agreement constitutes the entire
              ----------------
understanding between the parties hereto as to the matters covered hereby and
supersedes all prior understandings, written or oral, relating to such subject
matter.

                                       21
<PAGE>

          Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Placement Agent.

                                     Very truly yours,

                                     PARADIGM GENETICS, INC.

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

Confirmed as of the date first
above mentioned:

J.P. MORGAN SECURITIES INC.

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

                                       22
<PAGE>

                                   EXHIBIT A

                                ESCROW AGREEMENT

                                       23

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