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================================================================================

                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-KSB

 [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                                      1934

                   For the fiscal year ended December 31, 2000

                                       OR

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                                    OF 1934

           For the transition period from ____________ to ____________

                         Commission file number 1-13412

                              ---------------------

                            Hudson Technologies, Inc.
                            -------------------------
           (Name of small business issuer as specified in its charter)

         New York                                      13-3641539
(State or other jurisdiction of                        (IRS Employer
 incorporation or organization)                        Identification No.)

275 North Middletown Road
Pearl River, New York                                  10965
(address of principal executive offices)               (ZIP Code)

         Issuer's telephone number, including area code: (845) 735-6000

                Securities registered under Section 12(b) of the
                     Securities Exchange Act of 1934: None

                Securities registered under Section 12(g) of the
                        Securities Exchange Act of 1934:

                          Common Stock, $0.01 par value
                          -----------------------------

Check  whether  the issuer:  (1) has filed all  reports  required to be filed by
Section 13 or 15 (d) of the  Exchange Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements  for the past 90 days.
Yes _X_ No__.

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not  contained in this form and no disclosure  will be contained,  to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB _X_.

The  Issuer's  revenues  for the  fiscal  year  ended  December  31,  2000  were
$15,455,000

The aggregate  market value of the Issuer's Common Stock held by  non-affiliates
as of March 13, 2001 was approximately $11,770,000.  As of March 13, 2001, there
were 5,088,820 shares of the Issuer's Common Stock outstanding.

                    Documents incorporated by reference: None
================================================================================

<PAGE>

                            Hudson Technologies, Inc.

                                      Index


   Part                              Item                                   Page
   ---                               ----                                   ----

Part I.       Item 1 - Description of Business                                 3
              Item 2 - Description of Properties                               7
              Item 3 - Legal Proceedings                                       8
              Item 4 - Submission of Matters to a Vote of Security Holders     9

Part II.      Item 5 - Market for the Common Equity and Related
                       Stockholder Matters                                    10
              Item 6 - Management's Discussion and Analysis of Financial
                       Condition and Results of Operations                    11
              Item 7 - Financial Statements                                   15
              Item 8 - Changes in and Disagreements with Accountants          15
                       on Accounting and Financial Disclosure

Part III.     Item 9 - Directors, Executive Officers, Promoters and Control
                       Persons; Compliance  with Section 16(a) of the
                       Exchange Act                                           16
              Item 10 - Executive Compensation                                18
              Item 11 - Security Ownership of Certain Beneficial Owners
                        and Management                                        21
              Item 12 - Certain Relationships and Related Transactions        23
              Item 13 - Exhibits and Reports on Form 8-K                      24

              Signatures                                                      26

              Financial Statements                                            27



                                       2
<PAGE>

                                     Part I
                                     ------

Item 1.  Description of Business

General

Hudson  Technologies,  Inc.,  incorporated under the laws of New York on January
11,  1991,  together  with  its  subsidiaries  (collectively,  "Hudson"  or  the
"Company"),  primarily (i) sells refrigerants,  (ii) provides RefrigerantSide(R)
Services performed at a customer's site, consisting of system decontamination to
remove moisture,  oils and other  contaminants  and (iii) provides  recovery and
reclamation of the refrigerants used in commercial air conditioning,  industrial
processing and  refrigeration  systems.  The Company operates through its wholly
owned subsidiary Hudson Technologies Company.

The Company's  Executive Offices are located at 275 North Middletown Road, Pearl
River, New York and its telephone number is (845) 735-6000.

Industry background

The production and use of refrigerants containing  chlorofluorocarbons  ("CFCs")
and hydrochlorofluorocarbons ("HCFCs"), the most commonly used refrigerants, are
subject  to  extensive  and  changing  regulation  under  the Clean Air Act (the
"Act").  The Act, which was amended during 1990 in response to evidence  linking
the use of CFCs to damage to the earth's  ozone layer,  prohibits  any person in
the  course  of   maintaining,   servicing,   repairing  and  disposing  of  air
conditioning or refrigeration  equipment, to knowingly vent or otherwise release
or dispose of ozone depleting substances used as refrigerants.  That prohibition
also applies to substitute,  non-ozone depleting  refrigerants.  The Act further
requires  the  recovery of  refrigerants  used in  residential,  commercial  and
industrial air conditioning and refrigeration systems.

In addition, the Act prohibited production of CFC refrigerants effective January
1, 1996 and  limits the  production  of  refrigerants  containing  HCFCs,  which
production is scheduled to be phased out by the year 2030.

Owners,  operators and companies servicing cooling equipment are responsible for
the integrity of their systems  regardless of the refrigerant being used and for
the responsible management of their refrigerant.

Products and Services

RefrigerantSide(R) Services

The Company  provides  services that are performed at a customer's  site through
the use of portable, high volume,  high-speed proprietary reclamation equipment,
including  its  patented  Zugibeast(R)  reclamation  machine.  Certain  of these
RefrigerantSide(R)   Services,  which  encompass  system  decontamination,   and
refrigerant  recovery and  reclamation  are also  proprietary and are covered by
certain  process  patents.   The  Company  also  provides  complete  refrigerant
management  services,  which include  testing and banking  services  tailored to
individual  customer   requirements.   Hudson  also  separates  "crossed"  (i.e.
commingled)  refrigerants and provides re-usable cylinder repair and hydrostatic
testing services.

Refrigerant Sales

The  Company  sells  reclaimed  and virgin  (new)  refrigerants  to a variety of
customers  in  various  segments  of  the  air  conditioning  and  refrigeration
industry.  Virgin  refrigerants are primarily purchased by the Company from E.I.
DuPont de Nemours  and Company  ("DuPont")  as part of the  Company's  strategic
alliance  with  DuPont  (see  "Strategic  Alliance"  below),  and  resold by the
Company,  typically at wholesale.  In addition,  the Company regularly purchases
used  or  contaminated   refrigerants   from  many  different   sources,   which
refrigerants  are then  reclaimed,  using the Company's high volume  proprietary
reclamation equipment, and resold by the Company.

Hudson's Network

Hudson operates from a network of facilities located in:
Baltimore, Maryland                 --RefrigerantSide(R) Service depot
Baton Rouge, Louisiana              --RefrigerantSide(R) Service depot
Boston, Massachusetts               --RefrigerantSide(R) Service depot
Charlotte, North Carolina           --Reclamation center and RefrigerantSide(R)
                                      Service depot
Chicago, Illinois                   --RefrigerantSide(R)Service depot


                                       3
<PAGE>

Fort Myers, Florida                 --Engineering center
Hillburn, New York                  --RefrigerantSide(R)Service depot
Houston, Texas                      --RefrigerantSide(R)Service depot
Plainview, New York                 --RefrigerantSide(R)Service depot
Punta Gorda, Florida                --Refrigerant separation and reclamation
                                      center and RefrigerantSide(R)Service depot
Rantoul, Illinois                   --Reclamation and cylinder refurbishment
                                      center and RefrigerantSide(R)Service depot
Seattle, Washington                 --RefrigerantSide(R)Service depot

Strategic Alliance

In January  1997,  the Company  entered into an Industrial  Property  Management
Segment  Marketer  Appointment  and  Agreement  and  Refrigeration   Reclamation
Services  Agreement  with  DuPont,  pursuant to which the  Company (i)  provides
recovery,  reclamation,  separation,  packaging and testing services directly to
DuPont for marketing through DuPont's  Authorized  Distributor  Network and (ii)
markets  DuPont's  SUVA(TM)  refrigerant  products to selected  market  segments
together with the Company's reclamation and refrigerant management services.

In  addition,  in  January  1997,  the  Company  entered  into a Stock  Purchase
Agreement with DuPont and DuPont Chemical and Energy  Operations,  Inc. ("DCEO")
pursuant to which the Company  issued to DCEO 500,000  shares of Common Stock in
consideration  of $3,500,000 in cash.  Concurrently,  the parties entered into a
Standstill Agreement,  Shareholders' Agreement and Registration Agreement which,
among other  things,  provide  that (i) subject to certain  exceptions,  neither
DuPont nor any  corporation  or entity  controlled  by DuPont will,  directly or
indirectly,  acquire any shares of any class of capital  stock of the Company if
the effect of such acquisition  would be to increase  DuPont's  aggregate voting
power in the election of  directors  to greater  than 20% of the total  combined
voting power in the election of directors; (ii) at DuPont's request, the Company
will  cause two  persons  designated  by DCEO and  DuPont to be  elected  to the
Company's Board of Directors;  and (iii) subject to certain  exceptions,  DuPont
will have a five-year  right of first refusal to purchase shares of Common Stock
sold by the Company's principal shareholders. The Company also granted to DuPont
certain demand and "piggy-back"  registration rights with respect to the shares.
The Standstill Agreement, Shareholders Agreement and the demand and "piggy-back"
registration  rights  under the  Registration  Rights  Agreement  terminated  on
January 29, 2002.

Suppliers

The  Company's  financial  performance  is in part  dependent  on its ability to
obtain  sufficient  quantities  of  virgin  and  reclaimable  refrigerants  from
manufacturers,  wholesalers,  distributors,  bulk gas  brokers  and  from  other
sources within the air conditioning and refrigeration and automotive aftermarket
industries, and on corresponding demand for refrigerants. To the extent that the
Company is unable to obtain sufficient quantities of refrigerants in the future,
or resell  refrigerants  at a profit,  the  Company's  financial  condition  and
results of operations would be materially adversely affected.

Customers

The Company  provides its services to commercial,  industrial  and  governmental
customers, as well as to refrigerant wholesalers,  distributors, contractors and
to  refrigeration  equipment  manufacturers.  Agreements  with larger  customers
generally provide for standardized pricing for specified services.

For the year ended  December 31, 2000,  one  customer  accounted  for 13% of the
Company's revenues. For the year ended December 31, 1999, one customer accounted
for 17% of the Company's revenues. The loss of a principal customer or a decline
in the economic prospects and purchases of the Company's products or services by
any  such  customer  would  have a  material  adverse  effect  on the  Company's
financial position and results of operations.

Marketing

Marketing programs are conducted through the efforts of the Company's  executive
officers,  Company sales  personnel,  and third parties.  Hudson employs various
marketing methods,  including direct mailings,  technical  bulletins,  in-person
solicitation,   print   advertising,   response  to   quotation   requests   and
participation in trade shows.

The Company's  sales  personnel  are  compensated  on a commission  basis with a
guaranteed  minimum draw. The Company's  executive  officers devote  significant
time and effort to customer relationships.


                                       4
<PAGE>

Competition

The  Company  competes  primarily  on the basis of price,  breadth  of  services
offered  (including  proprietary  RefrigerantSide(R)  Services and other on-site
services), and performance of its proprietary high volume,  high-speed equipment
used in its operations.

The Company competes with numerous regional companies, which provide refrigerant
recovery and/or reclamation  services,  as well as companies marketing reclaimed
and new  alternative  refrigerants.  Certain of such  competitors,  may  possess
greater financial, marketing,  distribution and other resources for the sale and
distribution  of refrigerants  than the Company and, in some instances,  provide
services or products over a more extensive geographic area than the Company.

The refrigerant recovery and reclamation industry is relatively new and emerging
competition  from existing  competitors  and new market  entrants is expected to
increase. Demand and market acceptance for Hudson's RefrigerantSide(R) Services,
and for the Company's  refrigerant  management products and services are subject
to a high degree of uncertainty. There can be no assurance that the Company will
be able to  compete  successfully  or  penetrate  this  market as  rapidly as it
anticipates.

Insurance

The Company  carries  insurance  coverage the Company  considers  sufficient  to
protect the Company's  assets and operations.  The Company  currently  maintains
general commercial  liability insurance and excess liability coverage for claims
up to $7,000,000 per occurrence and $7,000,000 in the aggregate. There can be no
assurance that such insurance  will be sufficient to cover  potential  claims or
that an  adequate  level  of  coverage  will be  available  in the  future  at a
reasonable  cost. The Company  attempts to operate in a professional and prudent
manner  and to reduce its  liability  risks  through  specific  risk  management
efforts,  including employee training.  Nevertheless,  a partially or completely
uninsured claim against the Company, if successful and of sufficient  magnitude,
would have a material adverse effect on the Company.

The refrigerant industry involves potentially significant risks of statutory and
common law liability for environmental  damage and personal injury. The Company,
and in certain instances, its officers,  directors and employees, may be subject
to claims arising from the Company's on-site or off-site services, including the
improper release,  spillage, misuse or mishandling of refrigerants classified as
hazardous or non-hazardous  substances or materials. The Company may be strictly
liable  for  damages,  which  could be  substantial,  regardless  of  whether it
exercised due care and complied with all relevant laws and regulations.

Hudson   maintains   environmental   impairment   insurance  of  $1,000,000  per
occurrence,  and $2,000,000 annual aggregate for events occurring  subsequent to
November  1996.  There can be no assurance that the Company will not face claims
resulting in  substantial  liability  for which the Company is  uninsured,  that
hazardous  substances  or  materials  are  not or  will  not be  present  at the
Company's  facilities,  or  that  the  Company  will  not  incur  liability  for
environmental impairment or personal injury.

Government Regulation

The business of refrigerant  reclamation and management is subject to extensive,
stringent and frequently changing federal,  state and local laws and substantial
regulation   under  these  laws  by   governmental   agencies,   including   the
Environmental  Protection Agency ("EPA"),  the United States Occupational Safety
and Health Administration and the United States Department of Transportation.

Among other things,  these  regulatory  authorities  impose  requirements  which
regulate  the  handling,  packaging,  labeling,  transportation  and disposal of
hazardous and non-hazardous  materials and the health and safety of workers, and
require the Company  and, in certain  instances,  its  employees,  to obtain and
maintain licenses in connection with its operations.  This extensive  regulatory
framework imposes significant compliance burdens and risks on the Company.

Hudson and its  customers  are subject to the  requirements  of the Act, and the
regulations  promulgated  thereunder by the EPA,  which make it unlawful for any
person in the course of maintaining,  servicing, repairing, and disposing of air
conditioning or refrigeration  equipment, to knowingly vent or otherwise release
or dispose of ozone depleting substances,  and non-ozone depleting  substitutes,
used as refrigerants.

Pursuant  to the  Act,  reclaimed  refrigerant  must  satisfy  the  same  purity
standards  as newly  manufactured  refrigerants  in  accordance  with  standards
established by the Air Conditioning and Refrigeration Institute ("ARI") prior to


                                       5
<PAGE>

resale to a person  other  than the  owner of the  equipment  from  which it was
recovered.  The ARI and the EPA administer  certification  programs  pursuant to
which  applicants are certified to reclaim  refrigerants  in compliance with ARI
standards.  Under  such  programs,  the ARI  issues  a  certification  for  each
refrigerant and conducts  periodic  inspections and quality testing of reclaimed
refrigerants.

The Company has obtained ARI  certification for most refrigerants at each of its
reclamation facilities,  and is certified by the EPA. The Company is required to
submit  periodic  reports to the ARI and pay annual  fees based on the number of
pounds of  reclaimed  refrigerants.  Certification  by the ARI is not  currently
required to engage in the refrigerant management business.

During February 1996, the EPA published proposed regulations, which, if enacted,
would require participation in third-party certification programs similar to the
ARI program.  Such proposed regulations would also require laboratories designed
to test  refrigerant  purity  to  undergo  a  certification  process.  Extensive
comments to these  proposed  regulations  were  received by the EPA.  The EPA is
still considering  these comments and no further or additional  regulations have
been proposed or published.

In addition,  the EPA has established a mandatory  certification program for air
conditioning and refrigeration  technicians.  Hudson's  technicians have applied
for or obtained such certification.

The  Company  is  subject  to   regulations   adopted  by  the   Department   of
Transportation  which  classify  most  refrigerants  handled  by the  Company as
hazardous   materials  or  substances  and  impose  requirements  for  handling,
packaging, labeling and transporting refrigerants.

The  Resource  Conservation  and  Recovery Act of 1976  ("RCRA")  requires  that
facilities that treat,  store or dispose of hazardous wastes comply with certain
operating  standards.  Before  transportation  and disposal of hazardous  wastes
off-site,  generators  of such  waste must  package  and label  their  shipments
consistent  with detailed  regulations  and prepare a manifest  identifying  the
material and stating its destination. The transporter must deliver the hazardous
waste in  accordance  with the manifest to a facility with an  appropriate  RCRA
permit.  Under RCRA,  impurities  removed from  refrigerants  consisting of oils
mixed with water and other contaminants are not presumed to be hazardous waste.

The  Emergency  Planning and  Community  Right-to-Know  Act of 1986 requires the
annual  reporting of  Emergency  and  Hazardous  Chemical  Inventories  (Tier II
reports) to the various states in which the Company  operates and to file annual
Toxic Chemical Release Inventory Forms with the EPA.

The  Comprehensive  Environmental  Response,  Compensation  and Liability Act of
1980,  establishes  liability for clean-up  costs and  environmental  damages to
current  and former  facility  owners  and  operators,  as well as  persons  who
transport  or arrange for  transportation  of hazardous  substances.  Almost all
states have similar  statutes  regulating  the handling and storage of hazardous
substances, hazardous wastes and non-hazardous wastes. Many such statutes impose
requirements,  which are more  stringent  than their federal  counterparts.  The
Company  could be subject to  substantial  liability  under  these  statutes  to
private parties and government  entities,  in some instances  without any fault,
for  fines,  remediation  costs  and  environmental  damage,  as a result of the
mishandling,  release,  or existence of any  hazardous  substances at any of its
facilities.

The  Occupational  Safety and Health Act of 1970 mandates  requirements for safe
work place for employees and special procedures and measures for the handling of
certain  hazardous and toxic substances.  State laws, in certain  circumstances,
mandate additional measures for facilities handling specified materials.

The Company  believes  that it is in  substantial  compliance  with all material
regulations relating to its material business operations.  However, there can be
no  assurance  that Hudson  will be able to  continue to comply with  applicable
laws,  regulations and licensing  requirements.  Failure to comply could subject
the Company to civil remedies,  substantial  fines,  penalties,  injunction,  or
criminal sanctions.

Quality Assurance & Environmental Compliance

The  Company  utilizes  in-house  quality  and  regulatory   compliance  control
procedures.  Hudson maintains its own analytical testing  laboratories to assure
that  reclaimed  refrigerants  comply  with ARI  purity  standards  and  employs
portable  testing  equipment when performing  on-site services to verify certain
quality  specifications.  The Company employs three persons engaged full-time in
quality  control  and  to  monitor  the  Company's   operations  for  regulatory
compliance.


                                       6
<PAGE>

Employees

The Company has approximately 104 full time employees including air conditioning
and refrigeration  technicians,  chemists,  engineers,  sales and administrative
personnel.

None of the Company's employees are represented by a union. The Company believes
that its employee relations are good.

Patents and Proprietary Information

The  Company  holds a  United  States  patent  relating  to  various  high-speed
equipment  components  and a process to reclaim  refrigerants,  and a registered
trademark  for its  "Zugibeast(R)".  The patent  expires in  January  2012.  The
Company  believes  that patent  protection  is important to its business and has
received a notice of allowance for an additional  United States patent  relating
to a high speed refrigerant  recovery  process.  There can be no assurance as to
the breadth or degree of  protection  that patents may afford the Company,  that
any patent  applications  will result in issued patents or that patents will not
be  circumvented or  invalidated.  Technological  development in the refrigerant
industry may result in extensive  patent filings and a rapid rate of issuance of
new patents.  Although the Company  believes  that its existing  patents and the
Company's  equipment  do not and will not  infringe  upon  existing  patents  or
violate proprietary rights of others, it is possible that the Company's existing
patent  rights  may not be valid or that  infringement  of  existing  or  future
patents or violations of  proprietary  rights of others may occur.  In the event
the  Company's  equipment  infringe or are alleged to infringe  patents or other
proprietary  rights of others,  the Company may be required to modify the design
of its  equipment,  obtain a license  or defend a possible  patent  infringement
action.  There can be no assurance  that the Company will have the  financial or
other  resources  necessary  to  enforce  or  defend  a patent  infringement  or
proprietary  rights  violation action or that the Company will not become liable
for damages.

The Company also relies on trade secrets and proprietary  know-how,  and employs
various methods to protect its technology.  However, such methods may not afford
complete  protection  and  there  can  be no  assurance  that  others  will  not
independently  develop such know-how or obtain access to the Company's know-how,
concepts,  ideas and  documentation.  Failure to protect its trade secrets could
have a material adverse effect on the Company.

Item 2.  Description of Properties

The Company's  Baltimore,  Maryland  depot facility is located in a 2,700 square
foot  building  leased  from an  unaffiliated  third  party at an annual rent of
approximately $25,600 pursuant to an agreement expiring in August 2002.

The Company's Baton Rouge,  Louisiana facility is located in a 3,800 square foot
building  leased  from an  unaffiliated  third  party  at an  annual  rental  of
approximately $18,000 pursuant to an agreement expiring in July 2002.

The Company's Haverhill  (Boston),  Massachusetts depot facility is located in a
3,000 square foot building leased from an unaffiliated  third party at an annual
rent of $13,200 pursuant to a month to month rental agreement.

The Company's  Charlotte,  North Carolina facility is located in a 12,000 square
foot  building  leased  from an  unaffiliated  third  party at an annual rent of
approximately $42,000 pursuant to a month to month rental agreement.

The Company's  Villa Park  (Chicago),  Illinois  depot  facility is located in a
3,500 square foot building leased from an unaffiliated  third party at an annual
rent of approximately $23,000 pursuant to an agreement expiring in August 2002.

In  March  1995,  the  Company  purchased,  for  $950,000,  a  facility  in  Ft.
Lauderdale,   Florida,   consisting   of  a  32,000   square  foot  building  on
approximately  1.7 acres with rail and port access.  The property was  mortgaged
during 1996 for $700,000.  Annual real estate taxes are  approximately  $24,000.
The Company has  principally  ceased its  operations  at this  facility  and has
entered into a three year lease of the entire  facility at the current  level of
$13,781 per month to an unaffiliated third party. On March 22, 2001, the Company
completed the sale of the property to an unaffiliated third party. After payment
of the then outstanding mortgage balance and transactional expenses, the Company
received net proceeds of approximately $300,000 from the sale of the property.

The  Company's Ft. Myers,  Florida  engineering  facility is located in a 15,000
square foot building leased from an  unaffiliated  third party at an annual rent
of $57,240 pursuant to an agreement expiring in July 2001.

The Company's  Hillburn facility is located in approximately  21,000 square feet
of leased industrial space at Hillburn, New York. The building is leased from an
unaffiliated  third party at an annual rental of approximately  $94,000 pursuant
to an agreement expiring in May 2004.


                                       7
<PAGE>

The Company's Houston, Texas depot facility, which consists of 5,000 square feet
located in a larger building,  is leased from an unaffiliated  third party at an
annual rent of $25,200 pursuant to an agreement which expires in June 2001.

The Company's  headquarters  are located in  approximately  5,400 square feet of
leased commercial space at Pearl River, New York. The building is leased from an
unaffiliated  third party pursuant to a three year agreement at an annual rental
of approximately $95,000 through January 2002.

The Company's  Plainview,  New York depot  facility is located in a 2,000 square
foot  building  leased  from an  unaffiliated  third  party at an annual rent of
approximately $16,920 pursuant to an agreement expiring in July 2002.

The Company's Punta Gorda,  Florida  separation  facility is located in a 15,000
square foot building leased from an  unaffiliated  third party at an annual rent
of $60,000 pursuant to an agreement expiring in April 2001.

The  Company's  Rantoul,  Illinois  facility is located in a 29,000  square foot
building  leased  from an  unaffiliated  third  party  at an  annual  rental  of
approximately $78,000 pursuant to an agreement expiring in September 2002.

The Company's  Seattle,  Washington  depot facility is located in a 3,000 square
foot  building  leased  from an  unaffiliated  third  party at an annual rent of
approximately $16,200 pursuant to an agreement expiring in March 2001.

The Company  typically  enters into  short-term  leases for its  facilities  and
whenever possible extends the expiration date of such leases.

Item 3. Legal Proceedings

In June  1998,  United  Water of New York Inc.  ("United")  commenced  an action
against  the  Company in the  Supreme  Court of the State of New York,  Rockland
County,  seeking damages in the amount of $1.2 million allegedly  sustained as a
result of the prior  contamination  of certain of United's  wells  within  close
proximity  to the  Company's  Hillburn,  New York  facility,  which wells showed
elevated     levels     of     refrigerant      contamination,      specifically
Trichlorofluoromethane  (R-11) and  Dichlorodifluoromethane  (R-12). In December
1998,  United  served an amended  complaint  asserting  a claim  pursuant to the
Resource  Conservation  and  Recovery  Act,  42  U.S.C.ss.6901,  et.  seq.  seq.
("RCRA").

On April 1, 1999, the Company reported a release at the Company's Hillburn,  New
York facility of approximately  7,800 lbs. of R-11, as a result of a failed hose
connection to one of the Company's outdoor storage tanks allowing liquid R-11 to
discharge from the tank into the concrete  secondary  containment  area in which
the  subject  tank was  located.  An amount of the R-11  escaped  the  secondary
containment  area through an open drain from the secondary  containment area for
removing  accumulated  rainwater  and  entered the  ground.  In April 1999,  the
Company was advised by United that one of its wells  within  close  proximity to
the Company's facility showed elevated levels of R-11 in excess of 200 ppb.

Between  April  1999 and May  1999,  with  the  approval  of the New York  State
Department of Environmental  Conservation  ("DEC"),  the Company constructed and
put into operation a remediation system at the Company's facility to remove R-11
levels in the groundwater under and around the Company's  facility.  The cost of
this remediation system was $100,000.

In July 1999,  United  amended its  complaint in the Rockland  County  action to
allege facts relating to, and to seek damages allegedly resulting from the April
1, 1999 R-11 release.

In June 2000,  the Rockland  County  Supreme Court  approved a settlement of the
Rockland County action  commenced by United.  Under the Settlement,  the Company
paid to United the sum of $1,000,000 upon Court approval of the settlement,  and
has agreed to make monthly  payments in the amount of $5,000 for a minimum of 18
months following the settlement.  The proceeds of the settlement are required to
be used to fund the  construction  and operation by United of a new  remediation
tower,  as  well  as  for  the  continuation  of  temporary   remedial  measures
implemented by United and that have  successfully  contained the spread of R-11.
The  remediation  tower is  expected  to be  completed  by March 31, 2001 and is
designed  to treat all of United's  impacted  wells and restore the water to New
York State  drinking  water  standards  for supply to the  public.  The  Company
carries  $1,000,000  of pollution  liability  insurance  per  occurrence  and in
connection with the settlement  exhausted all insurance proceeds available under
all applicable policies.

In June 2000,  the Company signed an Order on Consent with the DEC regarding all
past  contamination  of the United well field.  Under the Order on Consent,  the
Company  agreed to pay a $10,000  penalty  relating to the April 1, 1999 release
and agreed to continue operating the remediation system installed by the Company
at its Hillburn facility in May 1999 until remaining  groundwater  contamination
has been effectively abated.


                                       8
<PAGE>

In May 2000, the Company's  Hillburn facility was nominated by the United States
Environmental  Protection Agency ("EPA") for listing on the National  Priorities
List ("NPL"), pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA").  The Company  believes that the agreements  reached
with the DEC and United Water, together with the reduced levels of contamination
present  in  the  United  Water  wells,   make  such  listing   unnecessary  and
counterproductive.  Hudson  submitted  opposition  to  the  listing  within  the
sixty-day  comment  period.  To date, no final decision has been made by the EPA
regarding the proposed listing.

There can be no  assurance  that the effects of the April 1, 1999 R-11  release,
will not spread  beyond the United  Water well  system and impact the Village of
Suffern's  wells, or that the ultimate outcome of such a spread of contamination
will not have a material adverse effect on the Company's financial condition and
results of operations.  There is also no assurance that the Company's opposition
to the EPA's listing will be successful,  or that the ultimate outcome of such a
listing  will not have a  material  adverse  effect on the  Company's  financial
condition and results of operations.

Item 4. Submission of Matters to a Vote of Security Holders.

Not Applicable.


                                       9
<PAGE>

                                     Part II


Item 5.  Market for the Common Equity and Related Stockholder Matters

The Company's Common Stock traded from November 1, 1994 to September 20, 1995 on
the NASDAQ Small-Cap  Market under the symbol `HDSN'.  Since September 20, 1995,
the Common Stock has traded on the NASDAQ National  Market.  The following table
sets forth, for the periods  indicated the range of the high and low sale prices
for the Common Stock as reported by NASDAQ.

                                                      High             Low
------------------------------------------------- --------------- --------------
1999
------------------------------------------------- --------------- --------------
o   First Quarter                                   $  2 1/2         $  1 1/2
------------------------------------------------- --------------- --------------
o   Second Quarter                                  $  3 5/8         $  1 3/4
------------------------------------------------- --------------- --------------
o   Third Quarter                                   $  2 5/8         $  1 1/2
------------------------------------------------- --------------- --------------
o   Fourth Quarter                                  $  4 7/16        $  1 1/4
------------------------------------------------- --------------- --------------

2000
------------------------------------------------- --------------- --------------
o   First Quarter                                   $  2 3/4         $  1 1/2
------------------------------------------------- --------------- --------------
o   Second Quarter                                  $  2 3/4         $  1 3/4
------------------------------------------------- --------------- --------------
o   Third Quarter                                   $  3 3/4         $  1 5/8
------------------------------------------------- --------------- --------------
o   Fourth Quarter                                  $  3 11/16       $  1 7/16
------------------------------------------------- --------------- --------------

The number of record holders of the Company's Common Stock was approximately 250
as of March 13,  2001.  The Company  believes  that there are in excess of 4,000
beneficial owners of its Common Stock.

To date,  the Company has not declared or paid any cash  dividends on its Common
Stock. The payment of dividends,  if any, in the future is within the discretion
of the Board of  Directors  and will depend  upon the  Company's  earnings,  its
capital  requirements and financial condition,  borrowing  covenants,  and other
relevant factors. The Company presently intends to retain all earnings,  if any,
to finance the Company's operations and development of its business and does not
expect to  declare  or pay any cash  dividends  in the  foreseeable  future.  In
addition,  the Company has entered into a credit facility with CIT  Group/Credit
Finance Group, Inc. ("CIT") which,  among other things,  restricts the Company's
ability to declare or pay any  dividends on its capital  stock.  The Company has
obtained a waiver  from CIT to permit the payment of  dividends  on its Series A
Preferred Stock. The Series A Preferred Stock carries a dividend rate of 7%. The
Company will pay dividends,  in arrears,  on the Series A Preferred Stock,  semi
annually, either in cash or additional shares, at the Company's option (see Item
6  "Management's  Discussion and Analysis of Financial  Condition and Results of
Operations" - Liquidity).


                                       10
<PAGE>

Item 6. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

Safe Harbor Statement Under The Private Securities Litigation Reform Act of 1995

Certain  statements  contained in this section and elsewhere in this Form 10-KSB
constitute  "forward-looking  statements"  within  the  meaning  of the  Private
Securities  Litigation  Reform  Act of  1995.  Such  forward-looking  statements
involve a number of known and unknown  risks,  uncertainties  and other  factors
which may cause the actual  results,  performance or achievements of the Company
to be materially different from any future results,  performance or achievements
expressed or implied by such forward-looking  statements.  Such factors include,
but are not limited  to,  changes in the  markets  for  refrigerants  (including
unfavorable market conditions  adversely affecting the demand for, and the price
of  refrigerants),  regulatory and economic factors,  seasonality,  competition,
litigation,  the  nature of  supplier  or  customer  arrangements  which  become
available to the Company in the future,  adverse  weather  conditions,  possible
technological obsolescence of existing products and services, possible reduction
in the carrying value of long-lived assets,  estimates of the useful life of its
assets,  potential  environmental  liability,  customer  concentration and other
risks detailed in the Company's other periodic reports filed with the Securities
and Exchange Commission.  The words "believe",  "expect",  "anticipate",  "may",
"plan", and similar expressions identify forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date the statement was made.

Overview

Sales of  refrigerants  continue  to  represent  a  significant  portion  of the
Company's  revenues.  The Company believes that, in the  refrigeration  industry
overall,  there will be a trend  towards  lower sales  prices,  volume and gross
profit  margins  on  refrigerant  sales in the  foreseeable  future,  which will
continue to have an adverse effect on the Company's operating results.

The Company has changed its business  focus from sales of  refrigerants  towards
service  revenues  through  the  development  of a  service  offering  known  as
RefrigerantSide(R)  Services.  These new services are offered in addition to the
Company's traditional refrigerant management services, consisting principally of
recovery and  reclamation of refrigerants  used in commercial air  conditioning,
industrial  processing  and  refrigeration  systems.  Pursuant to this change in
business focus, the Company is currently  implementing a strategic business plan
which  provides for the creation of a network of service  depots and the exiting
of  certain  operations  which may not  support  the  growth of  service  sales.
Consistent with its plan, the Company has experienced a reduction in refrigerant
sales which were primarily targeted to the automotive aftermarket industry.

During  1999 and 2001 the  Company  completed  sales of its  Series A  Preferred
Stock.  The net  proceeds  of these sales were used and are being used to expand
the Company's  service offering through a network of service depots that provide
a full range of the Company's on site RefrigerantSide(R) Services and to provide
working  capital.  Management  believes  that  its  RefrigerantSide(R)  Services
represent the Company's long term growth potential.  However,  while the Company
believes it will experience an increase in revenues from its  RefrigerantSide(R)
Services, in the short term, such an increase will not be sufficient to offset a
substantial  reduction in refrigerant  revenue. The Company expects that it will
incur  additional  expenses and losses  during the year related to the continued
development of its depot network.

The change in business focus towards revenues generated from service may cause a
material  reduction  in  revenues  derived  from  the sale of  refrigerants.  In
addition,  to the extent  that the Company is unable to obtain  refrigerants  on
commercially   reasonable   terms  or   experiences  a  decline  in  demand  for
refrigerants,  the Company could realize  reductions in refrigerant  processing,
and possible loss of revenues which would have a material  adverse effect on its
operating results.

Results of Operations

Year ended December 31, 2000 as compared to year ended December 31, 1999

Revenues for 2000 were  $15,455,000,  a decrease of  $2,454,000  or 14% from the
$17,909,000 reported during the comparable 1999 period. The decrease in revenues
was primarily  attributable to a decrease in refrigerant  sales offset, in part,
by  an  increase  in  RefrigerantSide(R)   Services  revenue.  The  decrease  in
refrigerant  revenue  is  related  to a  decrease  in the  sales of  refrigerant
primarily   to  the   automotive   aftermarket   industry.   The   increase   in
RefrigerantSide(R)  Service revenues  reflects growth through the development of
the Company's depot network.

Cost of sales for 2000 was $10,397,000, a decrease of $3,724,000 or 26% from the
$14,121,000  reported during the comparable  1999 period  primarily due to lower
costs of certain  refrigerants  purchased  by the Company and a lower  volume of
refrigerant  revenues.  As a  percentage  of  sales,  cost of sales  were 67% of
revenues for 2000, a decrease from


                                       11
<PAGE>

the 79% reported for the comparable  1999 period.  The decrease in cost of sales
as a percentage  of revenues was primarily  attributable  to the increase in the
sale  price of  certain  refrigerants  and the  increase  in  RefrigerantSide(R)
Service revenues.

Operating  expenses for 2000 were $7,465,000,  an increase of $70,000 or 1% from
the  $7,395,000  reported  during the comparable  1999 period.  The increase was
primarily  attributable to an increase in selling  expenses  associated with the
expansion of the Company's  RefrigerantSide(R) Service offering offset, in part,
by a decrease in rental and depreciation and amortization expense.

Other income (expense) for 2000 was $11,000, compared to the $(348,000) reported
during the comparable  1999 period.  Other income  (expense)  includes  interest
expense of $501,000  and  $454,000  for 2000 and 1999,  respectively,  offset by
other  income of $512,000  and  $106,000  for 2000 and 1999,  respectively.  The
increase  in  interest  expense  is  primarily  attributed  to  an  increase  in
borrowings  and  interest  rates  during 2000 as compared to 1999.  Other income
primarily relates to lease rental income, interest income and gain from the sale
of the balance of the  Company's  ownership  interest in  Environmental  Support
Solutions, Inc. ("ESS").

No income taxes for the years ended December 31, 2000 and 1999 were  recognized.
The Company  recognized a reserve allowance against the deferred tax benefit for
the 2000 and 1999 losses.  The tax benefits  associated  with the  Company's net
operating loss carry forwards would be recognized to the extent that the Company
recognizes  net  income  in  future  periods.  A portion  of the  Company's  net
operating loss carry forwards are subject to annual  limitations  (see Note 4 to
the Notes to the Consolidated Financial Statements).

Net loss for 2000 was  $2,396,000 a decrease of $1,559,000  from the  $3,955,000
net loss reported during the comparable  1999 period.  The reduction in net loss
was primarily attributable to an increase in the gross profit margins on certain
refrigerant sales and an increase in RefrigerantSide(R) Service revenues.

Liquidity and Capital Resources

At December 31, 2000, the Company had a working capital deficit of approximately
$456,000,  a decrease of  $2,133,000  from the working  capital of $1,677,000 at
December 31, 1999. The reduction in working capital is primarily attributable to
the net losses  incurred during the year ended December 31, 2000. On a pro forma
basis, the Company had working capital of $2,469,000.  The increase in pro forma
working capital was due to the February 16, 2001 sale of the Company's  Series A
Preferred  Stock with net  proceeds  of  $2,925,000.  A principal  component  of
current assets is inventory.  At December 31, 2000, the Company had  inventories
of $1,901,000, a decrease of $579,000 or 23% from the $2,480,000 at December 31,
1999. The Company's  ability to sell and replace its inventory on a timely basis
and the  prices at which it can be sold are  subject,  among  other  things,  to
current market  conditions  and the nature of supplier or customer  arrangements
(see "Seasonality and Fluctuations in Operating Results").  In recent years, the
Company has financed its working  capital  requirements  through cash flows from
operations, the issuance of debt and equity securities and bank borrowings.

Net cash used by operating  activities for the year ended December 31, 2000, was
$727,000  compared with net cash used by operating  activities of $3,442,000 for
the comparable 1999 period. Net cash used by operating  activities was primarily
attributable  to the increase in trade  receivables  and by the net loss for the
2000  period  offset by a decrease  in  inventories  and an increase in accounts
payable and accrued expenses.

Net cash used by investing  activities for the year ended December 31, 2000, was
$853,000  compared with net cash used by investing  activities of $1,822,000 for
the prior  comparable  1999 period.  The net cash usage  primarily  consisted of
equipment  additions  primarily  associated  with the expansion of the Company's
depot network.

Net cash used by financing  activities for the year ended December 31, 2000, was
$40,000  compared with net cash  provided by financing  activities of $6,971,000
for the  comparable  1999  period.  The net cash  used by  financing  activities
primarily consisted of repayment of long term debt for the 2000 period.

At December 31, 2000, the Company had cash and equivalents of $863,000.

During 1996,  the Company  mortgaged  its  property and building  located in Ft.
Lauderdale  with  Turnberry  Savings  Bank,  NA. The  mortgage of  $644,000,  at
December 31, 2000,  bore interest at the rate of 10.125% and was repayable  over
20 years through January 2017. The Company had principally ceased its operations
at this facility and had entered into a three year lease of the entire  facility
at the current  level of $13,781 per month to an  unaffiliated  third party.  On
March  22,  2001,  the  Company  completed  the  sale  of  the  property  to  an
unaffiliated third party. After payment of the then oustanding  mortgage balance
and transactional  expenses,  the Company received net proceeds of approximately
$300,000 from the sale of the property.


                                       12
<PAGE>

During January 1997, in connection with the execution of various agreements with
DuPont,  the Company  obtained  additional  equity funds of  $3,500,000  from an
affiliate of DuPont. The proceeds were primarily utilized to retire debt.

The Company has  entered  into a credit  facility  with CIT which  provides  for
borrowings to the Company of up to  $6,500,000.  The facility  requires  minimum
borrowings of $1,250,000.  The facility  provides for a revolving line of credit
and a six-year term loan and expires in April 2003. Advances under the revolving
line of credit are limited to (i) 80% of eligible trade accounts  receivable and
(ii) 50% of eligible  inventory (which inventory amount shall not exceed 200% of
eligible trade accounts receivable or $3,250,000).  As of December 31, 2000, the
Company had  availability  under its revolving  line of credit of  approximately
$577,000.  Advances  available  to the Company  under the term loan are based on
existing fixed asset valuations and future advances under the term loan up to an
additional $1,000,000 are based on future capital expenditures. During 1999, the
Company  received  advances of  $166,000  based on capital  expenditures.  As of
December 31, 2000, the Company has approximately  $675,000 outstanding under its
term loans and $1,734,000  outstanding  under its revolving line of credit.  The
facility  bears  interest at the prime rate plus 1.5%, 11% at December 31, 2000,
and  substantially  all of the Company's  assets are pledged as  collateral  for
obligations to CIT. In addition, among other things, the agreements restrict the
Company's  ability to declare or pay any  dividends  on its capital  stock.  The
Company has obtained a waiver from CIT to permit the payment of dividends on its
Series A  Preferred  Stock.

In connection  with the loan  agreements,  the Company issued to CIT warrants to
purchase 30,000 shares of the Company's  common stock at an exercise price equal
to 110% of the  then  fair  market  value  of the  stock,  which  on the date of
issuance was $4.33 per share, and which expires April 29, 2001. The value of the
warrants were not deemed to be material.

Effective  March 19, 1999, the Company sold 75% of its stock ownership in ESS to
one of ESS's founders.  The consideration for the Company's sale of its interest
was  $100,000 in cash and a six year 6% interest  bearing  note in the amount of
$380,000.  The Company  will  recognize  as income the  portion of the  proceeds
associated with the net receivables  upon the receipt of cash. This sale did not
have a  material  effect on the  Company's  financial  condition  or  results of
operation.  Effective  October  11,  1999,  the  Company  sold to three of ESS's
employees an additional 5.4% ownership in ESS. The Company received $37,940 from
the sale of this  additional ESS stock.  Effective  April 18, 2000, ESS redeemed
the balance of the Company's stock  ownership in ESS. The Company  received cash
in the amount of $188,000 from the redemption.

The Company  continues to evaluate  opportunities  to rationalize  its operating
facilities  based on its emphasis on the  expansion of its service  sales.  As a
result, the Company may discontinue  certain operations which it believes do not
support the growth of service  sales and, in doing so, may incur future  charges
to exit certain operations.

On March 30, 1999, the Company completed the sale of 65,000 shares of its Series
A Preferred  Stock,  with a liquidation  value of $100 per share,  to Fleming US
Discovery  Fund III,  L.P. and Fleming US Discovery  Offshore Fund III, L.P. The
gross  proceeds from the sale of the Series A Preferred  Stock were  $6,500,000.
The Series A Preferred  Stock  converts to Common  Stock at a rate of $2.375 per
share, which was 27% above the closing market price of Common Stock on March 29,
1999.

On February 16, 2001,  the Company  completed  the sale of 30,000  shares of its
Series A Preferred Stock, with a liquidation value of $100 per share, to Fleming
US Discovery Fund III, L.P. and Fleming US Discovery Offshore Fund III, L.P. The
gross  proceeds from the sale of the Series A Preferred  Stock were  $3,000,000.
The Series A Preferred  Stock  converts to Common  Stock at a rate of $2.375 per
share,  which was 23% above the closing market price of Common Stock on February
15, 2001.

The Series A Preferred Stock has voting rights on an as-if converted  basis. The
number  of votes  applicable  to the  Series A  Preferred  Stock is equal to the
number of shares of Common Stock into which the Series A Preferred Stock is then
convertible.  However,  the holders of the Series A Preferred Stock will provide
the Chief Executive Officer and the Secretary of the Company a proxy to vote all
shares currently owned and subsequently acquired above 29% of the votes entitled
to be cast by all  shareholders  of the Company.  The Preferred  Stock carries a
dividend rate of 7%. The conversion rate may be subject to certain  antidilution
provisions. The Company has used and will use the net proceeds from the issuance
of the  Series A  Preferred  Stock to  expand  its  RefrigerantSide(R)  Services
business and for working capital purposes.

The Company pays dividends,  in arrears,  on the Series A Preferred Stock,  semi
annually,  either in cash or  additional  shares,  at the Company's  option.  On
September  30, 2000,  the Company  declared  and paid,  in-kind,  the  dividends
outstanding on the Series A Preferred Stock. The Company issued a total of 2,483
additional  shares  of its  Series  A


                                       13
<PAGE>

Preferred Stock in satisfaction of the dividends due. The Company may redeem the
Series A  Preferred  Stock on March 31,  2004 either in cash or shares of Common
Stock valued at 90% of the average  trading price of the Common Stock for the 30
days  preceding  March 31, 2004. In addition,  after March 30, 2001, the Company
may call the Series A Preferred Stock if the market price of its Common Stock is
equal to or greater than 250% of the  conversion  price and the Common Stock has
traded with an average  daily volume in excess of 20,000  shares for a period of
thirty consecutive days.

The Company has provided certain  registration,  preemptive and tag along rights
to the  holders of the Series A  Preferred  Stock.  The  holders of the Series A
Preferred Stock,  voting as a separate class,  have the right to elect up to two
members to the Company's Board of Directors or at their option,  to designate up
to two advisors to the  Company's  Board of Directors who will have the right to
attend and observe  meetings of the Board of Directors.  Currently,  the holders
have  elected two members to the Board of  Directors,  Messers.  Robert Burr and
Robert Zech.

The Company believes that its anticipated  cash flow from  operations,  together
with the proceeds from the sale of its Preferred Stock, and its credit facility,
will be sufficient to satisfy the Company's  working  capital  requirements  and
proposed expansion of its service business for the foreseeable future.  However,
any  unanticipated  expenses or lack of  expected  revenues  from the  Company's
depots or additional expansion or acquisition costs that may arise in the future
would affect the Company's future capital needs. There can be no assurances that
the  Company's  proposed or future plans will be  successful,  and as such,  the
Company may have future capital needs.

Inflation

Inflation  has  not   historically  had  a  material  impact  on  the  Company's
operations.

Reliance on Suppliers and Customers

The  Company's  financial  performance  is in part  dependent  on its ability to
obtain  sufficient  quantities  of  virgin  and  reclaimable  refrigerants  from
manufacturers,  wholesalers,  distributors,  bulk gas  brokers,  and from  other
sources within the air conditioning and refrigeration and automotive aftermarket
industries, and on corresponding demand for refrigerants. To the extent that the
Company is unable to obtain sufficient quantities of refrigerants in the future,
or resell reclaimed  refrigerants at a profit, the Company's financial condition
and results of operations would be materially adversely affected.  The loss of a
principal customer would have a material adverse effect on the Company.

During the year ended December 31, 2000,  one customer  accounted for 13% of the
Company's  revenues.  During the year ended  December  31,  1999,  one  customer
accounted for 17% of the Company's revenues. The loss of a principal customer or
a decline in the economic  prospects and purchases of the Company's  products or
services  by any such  customer  would  have a  material  adverse  effect on the
Company's financial position and results of operations.

Seasonality and Fluctuations in Operating Results

The  Company's  operating  results  vary  from  period  to period as a result of
weather   conditions,   requirements  of  potential   customers,   non-recurring
refrigerant and service sales,  availability  and price of refrigerant  products
(virgin or  reclaimable),  changes in reclamation  technology  and  regulations,
timing in introduction and/or retrofit or replacement of CFC-based refrigeration
equipment  by  domestic  users of  refrigerants,  the rate of  expansion  of the
Company's  operations,   and  by  other  factors.  The  Company's  business  has
historically  been seasonal in nature with peak sales of refrigerants  occurring
in the first half of each year.  During past  years,  the  seasonal  decrease in
sales of refrigerants  have resulted in additional losses during the second half
of the year. Delays in securing adequate supplies of refrigerants at peak demand
periods, lack of refrigerant demand,  increased expenses,  declining refrigerant
prices and a loss of a principal  customer could result in  significant  losses.
There can be no assurance  that the foregoing  factors will not occur and result
in a material adverse effect on the Company's financial position and significant
losses. With respect to the Company's  RefrigerantSide(R) Services, to date, the
Company has not  identified  any seasonal  pattern.  However,  the Company could
experience a seasonal element to this portion of its business in the future.

Recent Accounting Pronouncements

In December 1999, the  Securities and Exchange  Commission  ("SEC") issued Staff
Accounting  Bulletin  No. 101 ("SAB  101"),  "Revenue  Recognition  in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting  principals to revenue recognition in financial  statements.
SAB 101 was adopted in 2000 and had no material impact on the Company's  revenue
recognition policy.


                                       14
<PAGE>

Item 7. Financial Statements.

The financial  statements  appear in a separate section of this report following
Part III.

Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

None


                                       15
<PAGE>

                                    Part III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act


The  following  table sets forth  information  with respect to the directors and
officers of the Company:


         Name                Age                     Position
------------------------ ---------- --------------------------------------------
Kevin J. Zugibe              37     Chairman of the Board; President and Chief
                                    Executive Officer
------------------------ ---------- --------------------------------------------
Thomas P. Zugibe             48     Executive Vice President and Director

------------------------ ---------- --------------------------------------------
Stephen P. Mandracchia       41     Executive Vice President, Secretary and
                                    Director
------------------------ ---------- --------------------------------------------
Brian F. Coleman             39     Vice President and Chief Financial Officer
------------------------ ---------- --------------------------------------------
Walter A. Phillips           48     Vice President Marketing and Strategic
                                    Planning
------------------------ ---------- --------------------------------------------
Vincent Abbatecola           54     Director
------------------------ ---------- --------------------------------------------
Robert L. Burr               50     Director
------------------------ ---------- --------------------------------------------
Dominic J. Monetta           59     Director
------------------------ ---------- --------------------------------------------
Otto C. Morch                67     Director
------------------------ ---------- --------------------------------------------
Harry C. Schell              66     Director
------------------------ ---------- --------------------------------------------
Robert M. Zech               35     Director
------------------------ ---------- --------------------------------------------

Kevin T.  Zugibe,  P.E.  is a founder of the  Company  and has been a  director,
President  and Chief  Executive  Officer of the Company  since its  inception in
1991.  Since May 1994,  Mr.  Zugibe has  devoted his full  business  time to the
Company's affairs. From May 1987 to May 1994, Mr. Zugibe was employed as a power
engineer  with Orange and  Rockland  Utilities,  Inc.  Mr.  Zugibe is a licensed
professional  engineer,  and from  December 1990 to May 1994, he was a member of
Kevin J. Zugibe & Associates,  a professional  engineering firm. Kevin J. Zugibe
and Thomas P. Zugibe are brothers.

Thomas P. Zugibe has been a Vice President of the Company since its inception in
1991 and a director since April 1995.  Mr. Zugibe is responsible  for overseeing
the day to day operations of the Company. He has been engaged in the practice of
law in the State of New York  since 1980 and is on  extended  leave from the law
firm of Ferraro, Zugibe, and Albrecht, Garnerville, New York.

Stephen P.  Mandracchia  has been a Vice  President of the Company since January
1993 and Secretary of the Company since April 1995. Mr.  Mandracchia served as a
director  from June 1994 until  August  1996 and was  reelected  to the Board of
Directors  in  August  1999.  Mr.  Mandracchia  is  responsible  for  corporate,
administrative and regulatory legal affairs of the Company.  Mr. Mandracchia was
a member of the law firm of Martin, Vandewalle,  Donohue, Mandracchia & McGahan,
Great Neck, New York until December 31, 1995 (having been  affiliated  with such
firm since August 1983).  Stephen P.  Mandracchia is the brother in-law of Kevin
J. Zugibe and Thomas P. Zugibe.

Brian F.  Coleman has been Vice  President  and Chief  Financial  Officer of the
Company since May 1997.  Prior to joining the Company,  Mr. Coleman was employed
by and since July 1995,  was a partner  with BDO  Seidman,  LLP,  the  Company's
independent auditors.

Walter A. Phillips has been Vice  President of Marketing and Strategic  Planning
of the Company since October 1996.  Prior to joining the Company,  Mr.  Phillips
was employed in various sales and marketing roles with York International.

Vincent P.  Abbatecola  has been a director of the Company since June 1994.  Mr.
Abbatecola is the owner of Abbey Ice & Spring Water Company,  Spring Valley, New
York, where he has been employed since May 1971.

Robert L. Burr has been a Director of the Company  since August  1999.  Mr. Burr
has been a Director of J.P. Morgan Chase & Co. since 1995. Mr. Burr is a Partner
of Fleming US Discovery Partners, L.P., a private equity sponsor affiliated with
J.P.  Morgan  Chase & Co.  Fleming US  Discovery  Partners,  L.P. is the general
partner of Fleming US  Discovery  Funds III,  L.P.  and  Flemming  US  Discovery
Offshore Fund III, L.P. From 1992 to 1995,  Mr. Burr was head of Private  Equity
at Kidder,  Peabody & Co.,  Inc.  Previously,  Mr. Burr  served as the  Managing
General Partner of Morgan Stanley Ventures and General Partner of Morgan Stanley
Venture Capital Fund I, L.P. and was a corporate  lending officer with Citibank,
N.A. Mr. Burr serves on the Board of Directors of Caliber Learning, Inc.

Dominic J.  Monetta has been a director of the Company  since April 1996.  Since
August 1993, Mr. Monetta has been the President of Resource Alternatives,  Inc.,
a  corporate   development  firm   concentrating   on  solving   management  and
technological   problems  facing  chief  executive  officers  and  their  senior
executives.  From December 1991 to May 1993,  Mr. Monetta served as the Director
of Defense Research and Engineering for Research and Advanced Technology for the


                                       16
<PAGE>

United  States  Department  of  Defense.  From June 1989 to December  1991,  Mr.
Monetta served as the Director of the Office of New  Production  Reactors of the
United States Department of Energy.

Otto C. Morch has been a director of the Company since March 1996. Mr. Morch was
a Senior Vice  President,  of Commercial  Banking at Provident  Bank and retired
from that position in December 1997.

Harry C. Schell has been a director of the Company since August 1998. Mr. Schell
is the former chairman and chief executive  officer of BICC Cables  Corporation,
and has  served on the board of  directors  of the BICC Group  (London),  Phelps
Dodge  Industries,  the National  Electrical  Manufacturers  Association and the
United Way of Rockland (New York).

Robert M. Zech has been a Director of the Company since June 1999.  Mr. Zech has
been  employed by J.P.  Morgan Chase & Co. since 1996.  Mr. Zech is a Partner at
Fleming US Discovery  Partners,  L.P., a private equity sponsor  affiliated with
J.P.  Morgan  Chase & Co.  Fleming US  Discovery  Partners,  L.P. is the General
Partner  of Fleming  US  Discovery  Funds III,  L.P.  and  Fleming US  Discovery
Offshore Fund III, L.P. From 1994 to 1996, Mr. Zech was an Associate with Cramer
Rosenthal  McGlynn Inc.,  an investment  management  firm.  Previously  Mr. Zech
served as an Associate with Wolfensohn & Co., a mergers & acquisitions  advisory
firm,  and was a Financial  Analyst at leveraged  buyout  sponsor  Merrill Lynch
Capital Partners, Inc. and in the investment banking division of Merrill Lynch &
Co.

The Company has established a Compensation  /Stock Option Committee of the Board
of Directors,  which is responsible  for  recommending  the  compensation of the
Company's  executive  officers and for the administration of the Company's Stock
Option Plans. The members of the Committee are Messrs.  Abbatecola,  Burr, Morch
and Schell.  The Company also has an Audit  Committee of the Board of Directors,
which supervises the audit and financial  procedures of the Company. The members
of the Audit Committee are Messrs. Abbatecola,  Morch and Zech. The Company also
has an Executive  Committee of the Board of  Directors,  which is  authorized to
exercise  the powers of the board of directors  in the general  supervision  and
control of the  business  affairs of the Company  during the  intervals  between
meetings  of the board.  The  members of the  Executive  Committee  are  Messrs.
Schell,  Zech and  Kevin J.  Zugibe.  The  Company's  Occupational,  Safety  And
Environmental  Protection Committee is responsible for satisfying the Board that
the Company's  Environmental,  Health and Safety policies,  plans and procedures
are  adequate.  The  members  of  the  Occupational,  Safety  and  Environmental
Protection Committee are Messrs. Mandracchia, Monetta and Thomas P. Zugibe.

The By-laws of the Company  provide  that the Board of Directors is divided into
two  classes.  Each class is to have a term of two years,  with the term of each
class expiring in successive years, and is to consist, as nearly as possible, of
one-half of the number of directors  constituting  the entire Board. The By-laws
provide  that the number of  directors  shall be fixed by the Board of Directors
but in any event,  shall be no less than seven (7)  (subject  to  decrease  by a
resolution  adopted by the  shareholders).  In 1999,  the Board of Directors was
increased to nine members.  At the Company's  August 24, 2000 Annual  Meeting of
the  Shareholders,  Messrs.  Monetta,  Schell,  Zech and Kevin J.  Zugibe,  were
elected as directors  to terms of office that will expire at the Annual  Meeting
of  Shareholders  to be  held  in  the  year  2002.  Messrs.  Abbatecola,  Burr,
Mandracchia,  Morch and Thomas P. Zugibe are currently  serving as directors and
whose terms of office  expire at the Annual  Meeting of the  Shareholders  to be
held in the year 2001.

Compliance with Section 16(a) of the Securities Exchange Act

Section  16(a) of the  Securities  Exchange Act of 1934  requires the  Company's
officers and directors, and persons who own more than 10 percent of a registered
class of the  Company's  equity  securities,  to file reports of  ownership  and
changes in  ownership  with the  Securities  and  Exchange  Commission  ("SEC").
Officers,  directors,  and greater than 10 percent  stockholders are required by
SEC  regulation  to furnish the Company  with copies of all Section  16(a) forms
they file.

Based solely on the Company's review of the copies of such forms received by the
Company,  the Company  believes that during the year ended December 31, 2000 all
filing requirements applicable to its officers,  directors,  and greater than 10
percent beneficial stockholders were complied with.


                                       17
<PAGE>

Item 10. Executive Compensation

The following table discloses, for the years indicated, the compensation for the
Company's  Chief Executive  Officer and each executive  officer that earned over
$100,000 during the year ended December 31, 2000 (the "Named Executives").

<TABLE>
<CAPTION>
Summary Compensation
Table                                                                                           Long Term Compensation
                                                                                                        Awards
                                                                      Annual Compensation(1)    ----------------------
                                                                      ----------------------     Securities Underlying
             Name                         Position            Year        Salary         Bonus           Options
             ----                         --------            ----        ------         -----           -------

<S>                             <C>                           <C>         <C>              <C>       <C>
Kevin J. Zugibe                 Chairman of the Board,        2000        $ 80,981         --        140,000 shares
                                President and Chief           1999        $136,279         --          1,000 shares
                                Executive
                                Officer                       1998        $134,800         --        40,000 shares

Thomas P. Zugibe                Executive Vice President      2000        $110,338         --       102,500 shares
                                                              1999        $104,800         --         1,000 shares
                                                              1998        $104,800         --        25,000 shares

Stephen P. Mandracchia          Executive Vice President      2000        $113,415         --        77,500 shares
                                and Secretary                 1999        $108,124         --         1,000 shares
                                                              1998        $104,800         --        25,000 shares

Walter A. Phillips              Vice President Marketing and  2000        $161,077         --        37,500 shares
                                Strategic Planning            1999        $160,781         --         1,000 shares
                                                              1998        $148,312         --        10,000 shares

Brian F.  Coleman               Vice President and Chief      2000        $151,047         --        37,500 shares
                                Financial Officer             1999        $138,124         --         1,000 shares
                                                              1998        $124,900         --        25,000 shares
</TABLE>

--------------------------
(1) The value of personal  benefits  furnished  to the Named  Executives  during
1998, 1999 and 2000 did not exceed 10% of their respective annual compensation.


     The Company granted  options,  which,  except as otherwise set forth below,
vest 50% upon the date of grant  and 50% on the first  anniversary  of the grant
date, to the Named Executives during the fiscal year ended December 31, 2000, as
shown in the following table:

              Summary of Stock Options Granted to Named Executives
<TABLE>
<CAPTION>
                                                                   % of Total
                                                     Number of     Options
                                                     Securities    Granted to
                                                     Underlying    Employees
                                                     Options       in Fiscal
                                                     Granted       year            Exercise or       Expiration
         Name                    Position               Shares       Percent       Base price ($/sh)    Date
         ----                    --------               ------       -------       -----------------    ----

<S>                     <C>                            <C>             <C>           <C>             <C>
Kevin J. Zugibe         Chairman, President and        140,000(1)      24%           $2.375          08/03/2005
                        Chief Executive Officer

Thomas P. Zugibe        Executive Vice President       102,500(1)      17%           $2.375          08/03/2005

Stephen P.              Executive Vice President        77,500(1)      13%           $2.375          08/03/2005
Mandracchia

Walter A. Phillips      Vice President of               37,500          6%           $2.375          08/03/2005
                        Marketing and Strategic
                        Operations

Brian F. Coleman        Vice President and Chief        37,500          6%           $2.375          08/03/2005
                        Financial Officer
</TABLE>

-----------
(1) Of these  options,  40,000 vest on August 3, 2000 and the  balance  vest 50%
upon the date of grant and 50% on the anniversary of the grant date.


                                       18
<PAGE>

                 Aggregated Fiscal Year End Option Values Table

     The  following  table  sets  forth  information  concerning  the  value  of
unexercised  stock options held by the Named Executives at December 31, 2000. No
options  were  exercised  by the Named  Executives  during the fiscal year ended
December 31, 2000.
<TABLE>
<CAPTION>
                                                                    Number of Securities
                                                                         Underlying                 (1) Value of
                                                                    Unexercised Options         In-the-money Options
                                  Shares                            At December 31, 2000        At December 31, 2000
                                  ------                         ---------------------------    --------------------
       Name                     Acquired on    Value Realized    Exercisable   Unexercisable   Exercisable  Unexercisable
       ----                     -----------    --------------    -----------   -------------   -----------  -------------
                                 Exercise
                                 --------
<S>                                 <C>              <C>          <C>               <C>              <C>         <C>
Kevin J. Zugibe                     --               --           181,000           58,000           0           0
Chairman; President and
Chief Executive Officer

Thomas P. Zugibe                    --               --           137,250           31,250           0           0
Executive Vice
President

Stephen P. Mandracchia              --               --           124,750           18,750           0           0
Executive Vice President
And Secretary

Walter  A. Phillips                 --               --            66,750           18,750           0           0
Vice  President  of Marketing
& Strategic Planning

Brian F. Coleman                    --               --            86,750           18,750           0           0
Vice President and Chief
Financial Officer

</TABLE>

-----------------------
(1) Year-end values of unexercised  in-the-money  options represent the positive
spread between the exercise price of such options and the year-end  market value
of the Common Stock of $1.563.


Compensation of Directors

Non-employee directors receive an annual fee of $3,000 and receive reimbursement
for  out-of-pocket  expenses  incurred,  and an attendance fee of $500 and $250,
respectively,  for  attendance  at meetings of the Board of Directors  and Board
committee  meetings.  In  addition,  commencing  in  August  1998,  non-employee
directors receive 5,000 nonqualified stock options per year of service under the
Company's Stock Option Plans.

To date,  the Company has  granted to Harry C.  Schell  nonqualified  options to
purchase  30,000 shares of Common Stock at exercise prices ranging from $2.38 to
$3.00 per share.  Such options  vested and are fully  exercisable as of December
31, 2000. The Company has also granted to each of Dominic J. Monetta, Otto Morch
and Vincent Abbatecola, nonqualified options to purchase 15,000 shares of Common
Stock at exercise  prices  ranging  from $2.38 to $3.00 per share.  Such options
vested and are fully  exercisable  as of December  31,  2000.  In  addition,  in
connection with the appointment of two of their nominees as members of the Board
of Directors, the Company has granted to Fleming US Discovery Fund III, L.P. and
Fleming US Discovery  Offshore Fund III, L.P.  nonqualified  options to purchase
17,236 and 2,764 shares of common stock at an exercise price of $2.38 per share.
All such options  issued to the  directors are vested and fully  exercisable  at
December 31, 2000.

Employment Agreements

The Company  has  entered  into a two-year  employment  agreement  with Kevin J.
Zugibe,  which  expires  in May  2003  and is  automatically  renewable  for two
successive  terms.  Pursuant to the agreement,  effective  February 1, 2000, Mr.
Zugibe is receiving an annual base salary of $130,000  with such  increases  and
bonuses as the Board may  determine.  The Board of Directors and Mr. Zugibe have
agreed to reduce the cash compensation and issue additional stock options to Mr.
Zugibe in satisfaction of his annual base salary. The Company is the beneficiary
of a  "key-man"  insurance  policy on the life of Mr.  Zugibe  in the  amount of
$1,000,000.


                                       19
<PAGE>

Stock Option Plan

1994 Stock Option Plan

The Company has adopted an Employee  Stock  Option Plan (the  "Plan")  effective
October 31, 1994 pursuant to which 725,000  shares of Common Stock are currently
reserved for  issuance  upon the  exercise of options  designated  as either (i)
options  intended to  constitute  incentive  stock  options  ("ISOs")  under the
Internal  Revenue Code of 1986,  as amended (the "Code"),  or (ii)  nonqualified
options.  ISOs may be granted  under the Plan to  employees  and officers of the
Company. Non-qualified options may be granted to consultants, directors (whether
or not  they  are  employees),  employees  or  officers  of the  Company.  Stock
appreciation rights may also be issued in tandem with stock options.

The Plan is intended to qualify under Rule 16b-3 under the  Securities  Exchange
Act of 1934, as amended (the "Exchange  Act") and is administered by a committee
of the Board of Directors, which currently consists of Messrs. Abbatecola, Burr,
Morch and Schell. The committee,  within the limitations of the Plan, determines
the persons to whom options will be granted,  the number of shares to be covered
by each  option,  whether the  options  granted  are  intended  to be ISOs,  the
duration and rate of exercise of each option,  the exercise  price per share and
the manner of exercise and the time, manner and form of payment upon exercise of
an option. Unless sooner terminated, the Plan will expire on December 31, 2004.

ISOs  granted  under the Plan may not be  granted  at a price less than the fair
market  value of the Common  Stock on the date of grant (or 110% of fair  market
value in the case of  persons  holding  10% or more of the  voting  stock of the
Company).  The  aggregate  fair market value of shares for which ISOs granted to
any  employee are  exercisable  for the first time by such  employee  during any
calendar  year  (under all stock  option  plans of the  Company)  may not exceed
$100,000.  Non-qualified  options granted under the Plan may not be granted at a
price  less  than 85% of the  market  value of the  Common  Stock on the date of
grant.  Options  granted under the Plan will expire not more than ten years from
the date of grant (five years in the case of ISOs granted to persons holding 10%
or more of the voting stock of the Company).  All options granted under the Plan
are not transferable during an optionee's lifetime but are transferable at death
by will or by the laws of descent and distribution. In general, upon termination
of employment of an optionee,  all options  granted to such person which are not
exercisable  on the  date of such  termination  immediately  terminate,  and any
options  that  are  exercisable  terminate  90  days  following  termination  of
employment.

As of December 31, 2000, options to purchase 356,266 shares of Common Stock were
issued under the Plan.  During  2000,  the Company  granted  options to purchase
40,000  shares each to Kevin J.  Zugibe,  Stephen P.  Mandracchia  and Thomas P.
Zugibe  exercisable  at  $2.375  per  share.  Such  options  vest and are  fully
exercisable  as of August 3, 2000 (see Note 11 to the Notes to the  Consolidated
Financial Statements).

1997 Stock Option Plan

The Company has adopted the 1997 Stock Option Plan (the "1997  Plan"),  pursuant
to which  2,000,000  shares of Common Stock are currently  reserved for issuance
upon the exercise of options  designated  as either (i) ISOs under the Code,  or
(ii) nonqualified  options. ISOs may be granted under the 1997 Plan to employees
and officers of the Company. Nonqualified options may be granted to consultants,
directors  (whether  or not they are  employees),  employees  or officers of the
Company.  Stock  appreciation  rights  may also be issued in tandem  with  stock
options.

The 1997 Plan is intended to qualify under Rule 16b-3 under the Exchange Act and
is  administered  by a  committee  of the Board of  Directors,  which  currently
consists of Messrs.  Abbatecola,  Burr, Morch and Schell. The committee,  within
the limitations of the 1997 Plan, determines the persons to whom options will be
granted, the number of shares to be covered by each option,  whether the options
granted  are  intended  to be ISOs,  the  duration  and rate of exercise of each
option,  the  exercise  price per share and the manner of exercise and the time,
manner and form of payment upon exercise of an option. Unless sooner terminated,
the 1997 Plan will expire on June 11, 2007.

ISOs  granted  under the 1997 Plan may not be  granted  at a price less than the
fair  market  value of the  Common  Stock on the date of grant  (or 110% of fair
market  value in the case of persons  holding 10% or more of the voting stock of
the Company).  The aggregate  fair market value of shares for which ISOs granted
to any employee are  exercisable  for the first time by such employee during any
calendar  year  (under all stock  option  plans of the  Company)  may not exceed
$100,000. Nonqualified options granted under the 1997 Plan may not be granted at
a price less than the par value of the Common Stock.  Options  granted under the
1997 Plan will expire not more than ten years from the date of grant (five years
in the case of ISOs  granted to persons  holding 10% or more of the voting stock
of the Company).  Except as otherwise  provided by the committee with respect to
Nonqualified   options,  all  options  granted  under  the  1997  Plan  are  not
transferable during an optionee's lifetime but are transferable at death by


                                       20
<PAGE>

will or by the laws of descent and distribution. In general, upon termination of
employment  of an  optionee,  all options  granted to such person  which are not
exercisable  on the  date of such  termination  immediately  terminate,  and any
options  that  are  exercisable  terminate  90  days  following  termination  of
employment.

As of December 31, 2000, the Company had granted  options to purchase  1,241,816
shares of Common  Stock under the 1997 Plan.  During 1998,  the Company  granted
non-qualified  options to  purchase  40,000,  25,000,  and  25,000  shares at an
exercise price of $3.00 per share to Kevin J. Zugibe, Stephen P. Mandracchia and
Thomas P.  Zugibe,  respectively.  Such options  vested on August 31,  1998.  In
addition  during  1998,  the Company also  granted  options to purchase  420,666
shares to certain  officers,  directors  and  employees,  exercisable  at prices
ranging from $2.50 to $4.375 per share. During 1999, the Company granted options
to purchase  1,000,  1,000 and 1,000  shares at an  exercise  price of $2.00 per
share  to Kevin  J.  Zugibe,  Stephen  P.  Mandracchia  and  Thomas  P.  Zugibe,
respectively.  Such options  vested and are fully  exercisable as of November 3,
2000; November 3, 1999 and November 3, 1999, respectively.  In addition,  during
1999,  the Company also granted  options to purchase  153,500  shares to certain
officers, directors and employees,  exercisable at prices ranging from $1.781 to
$2.63 per share.  During 2000, the Company granted  options to purchase  100,000
shares at an  exercise  price of  $2.375  per  share to Kevin J.  Zugibe,  which
options  vest at a rate of 50% upon  issuance  and 50% on the first  anniversary
date,  and which  become  exercisable  as follows:  14,500 on 8/4/00,  27,500 on
11/3/00,  14,500 on  8/4/01,  27,000 on  11/3/01,  14,500 on 8/4/02 and 2,000 on
11/2/02.  During 2000, the Company granted options to purchase 37,500 and 62,500
shares at an exercise  price of $2.375 per share to Stephen P.  Mandracchia  and
Thomas P. Zugibe, respectively. Such options vest at a rate of 50% upon issuance
and 50% on the first  anniversary  date. In addition,  during 2000,  the Company
also granted options to purchase 269,250 shares to certain  officers,  directors
and employees, exercisable at prices ranging from $2.375 to $2.78 per share (see
Note 11 to the Notes to the Consolidated Financial Statements).

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

The  following  table  sets  forth  information  as of March 13,  2001  based on
information  obtained  from  the  persons  named  below,  with  respect  to  the
beneficial  ownership of the Company's  Common Stock by (i) each person known by
the  Company  to be the  beneficial  owner  of  more  than  5% of the  Company's
outstanding Common Stock, (ii) the Named Executives,  (iii) each director of the
Company,  and (iv) all  directors  and  executive  officers  of the Company as a
group:

<TABLE>
<CAPTION>
                                                          Amount and
                                                           Nature of           Percentage of
                                                          Beneficial           Common Shares
     Name and Address of Beneficial Owner (1)            Ownership (2)             Owned
     ----------------------------------------            -------------             -----
<S>                                                        <C>                     <C>
     Kevin J. Zugibe                                         418,728  (3)           7.9%
     Thomas P. Zugibe                                        376,918  (4)           7.2%
     Stephen P. Mandracchia                                  358,978  (5)           6.9%
     Walter A. Phillips                                       66,750  (6)            *
     Brian F. Coleman                                         89,750  (7)            *
     Vincent P. Abbatecola                                    20,000  (8)            *
     Robert L. Burr                                                0  (12)           *
     Dominic J. Monetta                                       25,000  (8)            *
     Otto C. Morch                                            15,600  (8)            *
     Harry C. Schell                                          59,000  (9)            *
     Robert M. Zech                                                0  (12)           *
     DuPont Chemical and Energy
     Operations, Inc.                                        500,000  (10)          9.8%
     Fleming Funds                                         3,059,789  (11)         37.5%
     All directors and executive officers as a group
     (11 persons)                                          1,430,724  (13)         24.8%

* = Less than 1%
----------
</TABLE>

(1) Unless otherwise indicated,  the address of each of the persons listed above
is the address of the Company,  275 North Middletown Road, Pearl River, New York
10965.

(2) A person is  deemed to be the  beneficial  owner of  securities  that can be
acquired  by such person  within 60 days from March 13,  2001.  Each  beneficial
owner's percentage ownership is determined by assuming that options and warrants
that are held by such  person  (but not held by any other  person) and which are
exercisable  within 60 days  from  March 13,  2001


                                       21
<PAGE>

have been  exercised.  Unless  otherwise  noted,  the Company  believes that all
persons named in the table have sole voting and investment power with respect to
all shares of Common stock beneficially owned by them.

(3) Includes (i) 40,000  shares which may be purchased at $4.47 per share;  (ii)
40,000  shares which may be purchased  at $3.00 per share;  (iii) 18,000  shares
which may be  purchased  at $3.85 per  share;  (iv)  1,000  shares  which may be
purchased at $2.00 per share;  (v) 40,000 shares that may be purchased at $2.375
per share;  and (vi) 42,000  shares  which may be  purchased at $2.375 per share
under immediately exercisable options. Does not give effect to any voting rights
held by Mr.  Zugibe as a result of the Company's  agreement  with the holders of
the Series A Preferred Stock as discussed in (11) below.

(4) Includes (i) 25,000  shares which may be purchased at $4.47 per share;  (ii)
15,000  shares which may be  purchased  at $3.85 per share (iii)  25,000  shares
which may be  purchased  at $3.00 per  share;  (iv)  1,000  shares  which may be
purchased at $2.00 per share; (v) 40,000 shares which may be purchased at $2.375
per share;  and (vi) 31,250  shares  which may be  purchased at $2.375 per share
under immediately exercisable options.

(5) Includes (i) 25,000  shares which may be purchased at $4.47 per share;  (ii)
15,000  shares which may be  purchased  at $3.85 per share (iii)  25,000  shares
which may be  purchased  at $3.00 per  share;  (iv)  1,000  shares  which may be
purchased at $2.00 per share; (v) 40,000 shares which may be purchased at $2.375
per share;  and (vi) 18,750  shares  which may be  purchased at $2.375 per share
under immediately exercisable options. Does not give effect to any voting rights
held by Mr. Mandracchia as a result of the Company's  agreement with the holders
of the Series A Preferred Stock as discussed in (11) below.

(6)  Represents  (i) 15,000  shares  which may be purchased at $5.625 per share;
(ii) 10,000  shares  which may be  purchased  at $4.06 per share;  (iii)  12,000
shares which may be purchased at $3.50 per share;  (iv) 10,000  shares which may
be  purchased  at $3.06 per share;  (v) 1,000  shares  which may be purchased at
$1.78 per share;  and (vi) 18,750  shares  which may be  purchased at $2.375 per
share under immediately exercisable options.

(7) Represents (i) 30,000 shares which may be purchased at $4.06 per share; (ii)
12,000  shares which may be purchased  at $3.50 per share;  (iii) 25,000  shares
which may be  purchased  at $2.50 per  share;  (iv)  1,000  shares  which may be
purchased  at $1.78 per share;  and (v) 18,750  shares which may be purchased at
$2.375 per share under immediately exercisable options.

(8) Includes  5,000  shares  which may be  purchased  at $3.00 per share;  5,000
shares which may be purchased at $2.375 per share; and 5,000 shares which may be
purchased at $2.785 per share under immediately exercisable options.

(9) Includes  10,000  shares  which may be purchased at $3.00 per share;  10,000
shares which may be purchased at $2.375 per share;  and 10,000  shares which may
be purchased at $2.785 per share under immediately exercisable options.

(10)  According  to a  Schedule  13D  filed  with the  Securities  and  Exchange
Commission, DuPont Chemical and Energy Operations, Inc. ("DCEO") and E.I. DuPont
de Nemours  and  Company  claim  shared  voting and  dispositive  power over the
shares.  DCEO's  address is DuPont  Building,  Room 8045,  1007  Market  Street,
Wilmington, DE 19898.

(11) Fleming US Discovery Fund III, L.P. and Fleming US Discovery  Offshore Fund
III, L.P., and their general partner,  Fleming US Discovery  Partners,  L.P. and
its general partner, Fleming US Discovery Partners LLC, collectively referred to
as ("Flemings Funds") are affiliates.  The beneficial  ownership of the Flemings
Funds assumes the  conversion of Series A Preferred  Stock owned by the Flemings
Funds (which  constitutes  all of the outstanding  Series A Preferred  Stock) to
Common Stock at a conversion rate of $2.375 per share.  The holders of shares of
Series A Preferred  Stock vote  together  with the  holders of the Common  Stock
based  upon the  number  of  shares  of common  stock  into  which the  Series A
Preferred  Stock is then  convertible.  The  Flemings  Funds has provided to the
Chief Executive Officer and Secretary of the Company a Proxy to vote that number
of voting shares held by the Flemings  Funds which exceed 29% of the then voting
shares.  Also includes 10,000 shares which may be purchased at $2.375 per share;
and 10,000  shares which may be purchased at $2.785 per share under  immediately
exercisable  options. The address of all the Flemings Funds is c/o J.P. Morgan &
Chase Co., 1211 Avenue of the Americas,  38th Floor,  New York,  New York 10036,
except for the Fleming US Discovery Offshore Fund III, L.P. whose address is c/o
Bank of Bermuda LTD., 6 Front Street, Hamilton HM11 Bermuda.

(12) Messers. Burr and Zech have been appointed directors by the Flemings Funds.
Their share ownership  excludes all shares of Common Stock beneficially owned by
the Flemings Funds.


                                       22
<PAGE>

(13) Includes  exercisable  options to purchase  671,500  shares of Common Stock
owned by the  directors  and  officers  as a group.  Excludes  3,059,789  shares
beneficially owned by the Flemings Funds.

Kevin J. Zugibe, Thomas P. Zugibe and Stephen P. Mandracchia may be deemed to be
"parents" of the Company as such term is used under the Securities Act of 1933.

Item 12. Certain Relationships and Related Transactions

In the regular course of its business,  the Company purchases  refrigerants from
and  sells   refrigerants   to  DuPont  and  performs   recovery,   reclamation,
RefrigerantSide(R)  Services and other services (see  "Description of Business -
Strategic Alliance).


                                       23
<PAGE>

Item 13. Exhibits and Reports on Form 8-K.
 (a)     Exhibits
3.1      Certificate of Incorporation and Amendment. (1)
3.2      Amendment to Certificate of Incorporation, dated July 20,1994. (1)
3.3      Amendment to Certificate of Incorporation, dated October 26, 1994. (1)
3.4      By-Laws. (1)
3.5      Certificate  of Amendment of the  Certificate  of  Incorporation  dated
         March 16, 1999. (12)
3.6      Certificate of Correction of the  Certificate of Amendment  dated March
         25, 1999. (12)
3.7      Certificate  of Amendment of the  Certificate  of  Incorporation  dated
         March 29, 1999. (12)
3.8      Certificate  of Amendment of the  Certificate  of  Incorporation  dated
         February 16, 2001.
10.1     Lease Agreement between the Company and Ramapo Land Co., Inc. (1)
10.2     Consulting Agreement with J.W. Barclay & Co., Inc. (1)
10.3     1994 Stock Option Plan of the Company. (1) (*)
10.4     Employment Agreement with Kevin J. Zugibe. (1) (*)
10.5     Assignment of patent rights from Kevin J. Zugibe to Registrant. (1)
10.6     Agreement   dated  August  12,  1994  between  the  Company  and  PAACO
         International, Inc. (1)
10.7     Agreement  between  the  Company  and  James T.  and Joan  Cook for the
         purchase of premises 3200 S.E. 14th Avenue,  Ft.  Lauderdale,  Florida.
         (1)
10.8     Agreement dated as of December 12, 1994, by and between the Company and
         James Spencer d/b/a CFC Reclamation. (2)
10.9     Employment agreement,  dated December 12, 1994, between the Company and
         James Spencer. (2)
10.10    Agreement,  dated July 25,  1995,  between the Company and  Refrigerant
         Reclamation Corporation of America. (3)
10.11    Employment Agreements with Thomas P. Zugibe, Stephen P. Mandracchia and
         Stephen J. Cole-Hatchard. (4) (*)
10.12    Contract  of Sale with  ESS,  Stephen  Spain,  Robert  Johnson  and the
         Company dated April 23, 1996. (5)
10.13    Agreement dated June 14, 1996 between Environmental Support, Solutions,
         Inc. and E-Soft, Inc. (7)
10.14    Agreement dated July 24, 1996 between the Company and GRR Co., Inc. (7)
10.15    Agreements  dated June 18, 1996 and September 30, 1996 between  Cameron
         Capital and the Company. (7)
10.16    Employment  agreement,  dated October 1, 1996,  between the Company and
         Walter Phillips. (7) (*)
10.17    Agreement  dated  February 4, 1997  between  Wilson Art,  Inc.  and the
         Company for the purchase of 100 Brenner Drive, Congers, New York. (7)
10.18    Employment  agreement,  dated April 16,  1997,  between the Company and
         Brian Coleman. (8) (*)
10.19    Agreements dated January 29, 1997 between E.I. DuPont de Nemours, DCEO,
         and the Company. (6)
10.20    Loan and security  agreements  and warrant  agreements  dated April 29,
         1998 between the Company and CIT Group/Credit Financing Group, Inc. (9)
10.21    Stock   Purchase   Agreement,   Registration   Rights   Agreement   and
         Stockholders  Agreement  dated March 30,  1999  between the Company and
         Fleming US Discovery  Fund III, L.P. and Fleming US Discovery  Offshore
         Fund III, L.P. (10)
10.22    Contract  of  Sale,   dated  March  19,  1999,   for  75%  interest  in
         Environmental Support Solutions, Inc. (11)
10.23    1997 Stock Option Plan of the Company, as amended. (13) (*)
10.24    Stock Purchase  Agreements  dated February 16, 2001 between the Company
         and  Fleming US  Discovery  Fund III,  L.P.  and  Fleming US  Discovery
         Offshore Fund III, L.P.
10.25    First  Amendment to  Registration  Rights  Agreement dated February 16,
         2001  between the Company and Fleming US Discovery  Fund III,  L.P. and
         Fleming US Discovery Offshore Fund III, L.P.
10.26    First  Amendment  to  Stockholders  Agreement  dated  February 16, 2001
         between the Company and Fleming US Discovery Fund III, L.P. and Fleming
         US Discovery Offshore Fund III, L.P. 23.1 Consent of BDO Seidman, LLP.
21.      Subsidiaries of the Registrant
23.1     Consent of BDO Seidman, LLP

          -------------------------
(1)      Incorporated  by reference  to the  comparable  exhibit  filed with the
         Company's Registration Statement on Form SB-2 (No. 33-80279-NY).
(2)      Incorporated  by reference  to the  comparable  exhibit  filed with the
         Company's Report on Form 8-K dated December 12, 1994.
(3)      Incorporated  by reference  to the  comparable  exhibit  filed with the
         Company's Report on Form 10-QSB for the quarter ended June 30, 1995.
(4)      Incorporated  by reference  to the  comparable  exhibit  filed with the
         Company's  Annual Report on Form 10-KSB for the year ended December 31,
         1995.
(5)      Incorporated  by reference  to the  comparable  exhibit  filed with the
         Company's Report on Form 8-K dated April 29, 1996.
(6)      Incorporated  by reference  to the  comparable  exhibit  filed with the
         Company Report in Form 8-K dated January 29, 1997.


                                       24
<PAGE>

(7)      Incorporated  by reference  to the  comparable  exhibit  filed with the
         Company's  Annual Report on Form 10-KSB for the year ended December 31,
         1996.
(8)      Incorporated  by reference  to the  comparable  exhibit  filed with the
         Company's  Annual Report on Form 10-KSB for the year ended December 31,
         1997.
(9)      Incorporated  by reference  to the  comparable  exhibit  filed with the
         Company's Report on Form 10-QSB for the quarter ended March 31, 1998.
(10)     Incorporated  by reference  to the  comparable  exhibit  filed with the
         Company's Report on Form 10-KSB for the year ended December 31, 1998.
(11)     Incorporated  by reference  to the  comparable  exhibit  filed with the
         Company's Report on Form 10-QSB for the quarter ended March 31, 1999.
(12)     Incorporated  by reference  to the  comparable  exhibit  filed with the
         Company's Report on Form 10-QSB for the quarter ended June 30, 1999.
(13)     Incorporated  by reference  to the  comparable  exhibit  filed with the
         Company's  Report on Form 10-KSB for the year ended  December 31, 1999.

 (*)     Denotes Management Compensation Plan, agreement or arrangement.

 (b)     Reports on Form 8-K:
         During the quarter  ended  December 31, 2000, no report on Form 8-K was
         filed.


                                       25
<PAGE>

                                   SIGNATURES
In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

HUDSON TECHNOLOGIES, INC.

By:      /s/ Kevin J. Zugibe
         --------------------
         Kevin J. Zugibe, President

Date:    March 29, 2001

In  accordance  with the Exchange  Act, this report has been signed below by the
following persons,  on behalf of the Registrant and in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>
      Signature                       Title                                    Date
      ---------                       -----                                    ----
<S>                             <C>                                         <C>
/s/ Kevin J. Zugibe             Chairman of the Board; President            March 29, 2001
-------------------             and ChiefExecutive Officer
Kevin J. Zugibe                 (Principal Executive Officer)

/s/ Thomas P. Zugibe            Executive Vice President and Director       March 29, 2001
--------------------
Thomas P. Zugibe

/s/ Stephen P. Mandracchia      Executive Vice President;                   March 29, 2001
--------------------------      Secretary and Director
Stephen P. Mandracchia

/s/ Brian F. Coleman            Vice President and Chief Financial          March 29, 2001
--------------------            Officer (Principal Financial and
Brian F. Coleman                Accounting Officer)

/s/ Harry C. Schell             Director                                    March 29, 2001
-------------------
Harry C. Schell

/s/ Vincent Abbatecola          Director                                    March 29, 2001
----------------------
Vincent Abbatecola

/s/ Otto C. Morch               Director                                    March 29, 2001
-----------------
Otto C. Morch

/s/ Dominic J. Monetta          Director                                    March 29, 2001
----------------------
Dominic J. Monetta

/s/ Robert L. Burr              Director                                    March 29, 2001
------------------
Robert L. Burr

/s/ Robert M. Zech              Director                                    March 29, 2001
------------------
Robert M. Zech
</TABLE>


                                       26
<PAGE>

                            Hudson Technologies, Inc.
                        Consolidated Financial Statements



                                    Contents
--------------------------------------------------------------------------------

Report of Independent Certified Accountants                                  28
Audited Consolidated Financial Statements:
o   Consolidated Balance Sheet                                               29
o   Consolidated Statements of Operations                                    30
o   Consolidated Statements of  Stockholders' Equity                         31
o   Consolidated Statements of  Cash Flows                                   32
o   Notes to the Consolidated Financial Statements                           33


                                       27
<PAGE>

Report of Independent Certified Accountants

To Stockholders and Board of Directors

Hudson Technologies, Inc.
Pearl River, New York

      We have  audited the  accompanying  consolidated  balance  sheet of Hudson
Technologies,  Inc.  and  subsidiaries  as of December  31, 2000 and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
each of the two years in the period ended  December 31,  2000.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.
      We conducted our audits in accordance  with auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.  An audit includes examining, on
a test basis,  evidence  supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.
      In our opinion,  the consolidated  financial  statements referred to above
present  fairly,  in all material  respects,  the  financial  position of Hudson
Technologies,  Inc. and subsidiaries as of December 31, 2000, and the results of
their  operations  and their  cash flows for each of the two years in the period
ended  December 31, 2000 in  conformity  with  accounting  principles  generally
accepted in the United States of America.


                                                            /s/ BDO Seidman, LLP
    Valhalla, New York
    February 19, 2001


                                       28
<PAGE>

                   Hudson Technologies, Inc. and subsidiaries
                           Consolidated Balance Sheet
         (Amounts in thousands, except for share and par value amounts)

<TABLE>
<CAPTION>
                                                                                           December 31, 2000
                                                                                           -----------------
                                                                                     Actual               Proforma
                                                                                     ------               --------
<S>                                                                                   <C>                 <C>
Assets  (Note 8)                                                                    (Note 8)              (Note 9 (v))
     Current assets:
          Cash and cash equivalents                                                   $    863            $  3,788
          Trade accounts receivable - net (Note 5)                                       2,588               2,588
          Inventories (Note 6)                                                           1,901               1,901
          Prepaid expenses and other current assets                                        197                 197
                                                                                      --------            --------
               Total current assets                                                      5,549               8,474

     Property, plant and equipment, less accumulated depreciation (Note 7)               5,342               5,342
     Other assets                                                                          105                 105
                                                                                      --------            --------
               Total Assets                                                           $ 10,996            $ 13,921
                                                                                      ========            ========

     Liabilities and Stockholders' Equity
     Current liabilities:
         Accounts payable and accrued expenses                                        $  3,836            $  3,836
         Short-term debt (Note 8)                                                        2,169               2,169
                                                                                      --------            --------
                Total current liabilities                                                6,005               6,005
     Deferred income                                                                         6                   6
     Long-term debt, less current maturities (Note 8)                                    1,887               1,887
                                                                                      --------            --------
                Total Liabilities                                                        7,898               7,898
                                                                                      --------            --------

     Commitments and contingencies (Note 10)

     Stockholders'  equity  (Notes  9 and 11):
       Preferred  stock  shares  authorized 5,000,000:
           Series A Convertible  Preferred  stock,  $.01 par value ($100
           liquidation preference value); shares authorized 150,000; issued
           and outstanding 72,195 and 102,195                                            7,219              10,219
         Common stock, $0.01 par value; shares authorized 20,000,000;
            issued outstanding 5,088,820                                                    51                  51
         Additional paid-in capital                                                     21,133              21,058
         Accumulated deficit                                                           (25,305)            (25,305)
                                                                                      --------            --------
                Total Stockholders' Equity                                               3,098               6,023
                                                                                      --------            --------

      Total Liabilities and Stockholders' Equity                                      $ 10,996            $ 13,921
                                                                                      ========            ========
</TABLE>

See accompanying Notes to the Consolidated Financial Statements.


                                       29
<PAGE>

                   Hudson Technologies, Inc. and subsidiaries
                      Consolidated Statements of Operations
         (Amounts in thousands, except for share and per share amounts)
<TABLE>
<CAPTION>

                                                               For the year ended December 31,
                                                               -------------------------------
                                                                  2000                  1999
                                                                  ----                  ----
<S>                                                          <C>                    <C>
     Revenues                                                $    15,455            $    17,909
     Cost of sales                                                10,397                 14,121
                                                             -----------            -----------
     Gross Profit                                                  5,058                  3,788
                                                             -----------            -----------

     Operating expenses:
          Selling and marketing                                    2,126                  1,823
          General and administrative                               4,049                  4,223
          Depreciation and amortization                            1,290                  1,349
                                                             -----------            -----------
               Total operating expenses                            7,465                  7,395
                                                             -----------            -----------

     Operating loss                                               (2,407)                (3,607)
                                                             -----------            -----------

     Other income (expense):
          Interest expense                                          (501)                  (454)
          Other income (Note 2 and 3)                                512                    106
                                                             -----------            -----------
               Total other income (expense)                           11                   (348)
                                                             -----------            -----------


     Loss before income taxes                                     (2,396)                (3,955)

     Income taxes (Note 4)                                            --                     --
                                                             -----------            -----------

     Net loss                                                     (2,396)                (3,955)

     Preferred stock dividends                                      (497)                  (349)
                                                             -----------            -----------

     Available for common shareholders                       $    (2,893)           $    (4,304)
                                                             ===========            ===========

  ---------------------------------
     Net loss per common share - basic and diluted           $      (.57)           $      (.85)
                                                             ===========            ===========
     Weighted average number of shares
       outstanding (Note 1)                                    5,088,570              5,085,820
                                                             ===========            ===========
</TABLE>

See accompanying Notes to the Consolidated Financial Statements.


                                       30
<PAGE>

                   Hudson Technologies, Inc. and subsidiaries
                 Consolidated Statements of Stockholders' Equity
                (Amounts in thousands, except for share amounts)
<TABLE>
<CAPTION>

                                     Preferred Stock             Common Stock          Additional
                                     ---------------             ------------          Paid-in      Accumulated
                                   Shares       Amount        Shares       Amount      Capital         Deficit         Total
                                   ------       ------        ------       ------      -------         -------         -----
<S>                                <C>          <C>          <C>             <C>       <C>             <C>             <C>
Balance at
December 31, 1998                      --          $--       5,085,820       $51       $ 22,545        $(18,954)       $ 3,642

Issuance of Series A
  Preferred Stock - Net            65,000        6,500              --        --           (700)             --          5,800
Dividends paid in-kind on
  Series A Preferred Stock          2,314          231              --        --           (231)             --             --
Net Loss                               --           --              --        --             --          (3,955)        (3,955)
                                   ------       ------       ---------       ---       --------        --------        -------

Balance at
December 31, 1999                  67,314        6,731       5,085,820        51         21,614         (22,909)         5,487

Issuance of Common Stock for
services                               --           --           3,000        --              7              --              7
Dividends paid in-kind on
  Series A Preferred Stock          4,881          488              --        --           (488)             --             --
Net Loss                               --           --              --        --             --          (2,396)        (2,396)
                                   ------       ------       ---------       ---       --------        --------        -------

Balance at
December 31, 2000                  72,195       $7,219       5,088,820       $51       $ 21,133        $(25,305)       $ 3,098
                                   ======       ======       =========       ===       ========        ========        =======
</TABLE>
See accompanying Notes to the Consolidated Financial Statements.


                                       31
<PAGE>

                   Hudson Technologies, Inc. and subsidiaries
                      Consolidated Statements of Cash Flows
                Increase (Decrease) in Cash and Cash Equivalents
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                              For the year ended December 31,
                                                              -------------------------------
                                                                  2000               1999
                                                                  ----               ----
<S>                                                               <C>                <C>
Cash flows from operating activities:
Net loss                                                          $(2,396)           $(3,955)
Adjustments to reconcile net loss
   to cash used by operating activities:
     Depreciation and amortization                                  1,290              1,349
     Allowance for doubtful accounts                                   20                 41
     Common stock issued for services                                   7                 --
     Changes in assets and liabilities:
        Trade accounts receivable                                    (691)              (883)
        Inventories                                                   580                804
        Prepaid expenses and other current assets                       5                  6
        Other assets                                                   13                 91
        Accounts payable and accrued expenses                         461               (876)
        Deferred income                                               (16)               (19)
                                                                  -------            -------
          Cash used by operating activities                          (727)            (3,442)
                                                                  -------            -------
Cash flows from investing activities:
Additions to property, plant, and equipment                          (853)            (1,822)
                                                                  -------            -------
          Cash used by investing activities                          (853)            (1,822)
                                                                  -------            -------
Cash flows from financing activities:
Proceeds from issuance of preferred stock - net                        --              5,800
Proceeds of short-term debt - net                                     234                737
Proceeds from long-term debt                                          529              1,064
Repayment of  long-term debt                                         (803)              (630)
                                                                  -------            -------
          Cash  provided (used) by financing activities               (40)             6,971
                                                                  -------            -------
    Increase (decrease) in cash and cash equivalents               (1,620)             1,707
    Cash and equivalents at beginning of period                     2,483                776
                                                                  -------            -------
          Cash and equivalents at end of period                     $ 863             $2,483
                                                                  =======            =======
---------------------------------------------------------
Supplemental disclosure of cash flow information:
     Cash paid during period for interest                            $501               $454
</TABLE>

See accompanying Notes to the Consolidated Financial Statements.


                                       32
<PAGE>

                   Hudson Technologies, Inc. and subsidiaries
                 Notes to the Consolidated Financial Statements

Note 1-  Summary of Significant Accounting Policies

Business

Hudson  Technologies,  Inc.,  incorporated under the laws of New York on January
11,  1991,  together  with  its  subsidiaries  (collectively,  "Hudson"  or  the
"Company"),   primarily  sells  refrigerants  and  provides   RefrigerantSide(R)
Services performed at a customer's site, consisting of system decontamination to
remove moisture and oils and other  contaminants and recovery and reclamation of
the refrigerants used in commercial air conditioning and refrigeration  systems.
The Company  operates as a single  segment  through its wholly owned  subsidiary
Hudson Technologies Company.

Consolidation

The consolidated  financial  statements  represent all companies of which Hudson
directly or indirectly has majority ownership or otherwise controls. Significant
intercompany  accounts and  transactions  have been  eliminated.  The  Company's
consolidated   financial   statements   include  the  accounts  of  wholly-owned
subsidiaries Hudson Holdings,  Inc. and Hudson Technologies  Company.  Effective
March 19, 1999, the Company sold 75% of its ownership  interest in Environmental
Support  Solutions,  Inc.  ("ESS") and as of that date,  no longer  includes the
results of that operation in the consolidated results of the Company. On October
11, 1999 and April 18, 2000 the Company sold its remaining ownership interest in
ESS.

Fair value of financial instruments

The  carrying   values  of  financial   instruments   including  trade  accounts
receivable,  and accounts  payable  approximate fair value at December 31, 2000,
because of the  relatively  short  maturity of these  instruments.  The carrying
value of short-and  long-term debt  approximates  fair value,  based upon quoted
market rates of similar debt issues, as of December 31, 2000.

Credit risk

Financial  instruments,  which potentially subject the Company to concentrations
of credit risk,  consist  principally  of temporary cash  investments  and trade
accounts  receivable.  The Company  maintains its temporary cash  investments in
highly-rated  financial  institutions.  The Company's trade accounts receivables
are due from companies  throughout the U.S. The Company  reviews each customer's
credit history before extending credit.

The Company  establishes  an allowance  for doubtful  accounts  based on factors
associated with the credit risk of specific  accounts,  historical  trends,  and
other information.

During the year ended December 31, 2000,  one customer  accounted for 13% of the
Company's  revenues.  During the year ended  December  31,  1999,  one  customer
accounted for 17% of the Company's revenues. The loss of a principal customer or
a decline in the economic  prospects and purchases of the Company's  products or
services  by any such  customer  would have an adverse  effect on the  Company's
financial position and results of operations.

Cash and cash equivalents

Temporary  investments  with  original  maturities  of  ninety  days or less are
included in cash and cash equivalents.

Inventories

Inventories,  consisting  primarily of reclaimed  refrigerant products available
for sale,  are stated at the lower of cost, on a first-in  first-out  basis,  or
market.

Property, plant, and equipment

Property,  plant,  and  equipment  are  stated  at  cost;  including  internally
manufactured   equipment.   The  cost  to  complete   equipment  that  is  under
construction  is  not  considered  to be  material  to the  Company's  financial
position.  Provision  for  depreciation  is recorded  (for  financial  reporting
purposes) using the straight-line method over the useful lives of the


                                       33
<PAGE>

respective assets. Leasehold improvements are amortized on a straight-line basis
over the shorter of economic life or terms of the respective leases.

Due to the specialized nature of the Company's business, it is possible that the
Company's estimates of equipment useful life periods may change in the future.

Revenues and cost of sales

Revenues are recorded upon completion of service or product  shipment or passage
of title to customers in accordance  with  contractual  terms.  Cost of sales is
recorded based on the cost of products shipped or services performed and related
direct operating costs of the Company's facilities.

Income taxes

The Company  utilizes the assets and  liability  method for  recording  deferred
income  taxes,  which  provides for the  establishment  of deferred tax asset or
liability accounts based on the difference  between tax and financial  reporting
bases of certain assets and liabilities.

The Company  recognized a reserve allowance against the deferred tax benefit for
the  current  and prior  period  losses.  The tax  benefit  associated  with the
Company's net operating  loss carry  forwards  would be recognized to the extent
that the Company recognized net income in future periods.

Loss per common and equivalent shares

Loss per common share, Basic, is calculated based on the net loss for the period
less  dividends  on the  outstanding  Series A  Preferred  Stock,  $497,000  and
$349,000 for the years ended December 31, 2000 and 1999,  respectively,  divided
by the  weighted  average  number of shares  outstanding.  If  dilutive,  common
equivalent  shares (common shares  assuming  exercise of options and warrants or
conversion  of  Preferred   Stock)  utilizing  the  treasury  stock  method  are
considered in the presentation of dilutive earnings per share.  Diluted loss per
share was not presented since the effect was not dilutive.

Estimates and Risks

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  reported  amounts of certain assets and  liabilities,  the disclosure of
contingent  assets and  liabilities,  and the results of  operations  during the
reporting period. Actual results could differ from these estimates.

The Company  participates  in an industry that is highly  regulated,  changes in
which could affect operating results. Currently the Company purchases virgin and
reclaimable  refrigerants  from  domestic  suppliers and its  customers.  To the
extent  that the  Company  is  unable  to obtain  refrigerants  on  commercially
reasonable  terms or  experiences  a decline  in demand  for  refrigerants,  the
Company could realize reductions in refrigerant  processing and possible loss of
revenues, which would have a material adverse affect on operating results.

The Company is subject to various legal  proceedings.  The Company  assesses the
merit and potential  liability  associated with each of these  proceedings.  The
Company estimates potential liability,  if any, related to these matters. To the
extent that these  estimates are not accurate,  or  circumstances  change in the
future,  the  Company  could  realize  liabilities  which  would have a material
adverse affect on operating results and its financial position.

Impairment of long-lived assets and long-lived assets to be disposed of

The Company reviews long-lived assets for impairment  whenever events or changes
in  circumstances  indicate  that the  carrying  amount  of an asset  may not be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison  of the  carrying  amount of the  assets to the future net cash flows
expected  to be  generated  by the asset.  If such assets are  considered  to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying  amount or fair value less
the cost to sell.


                                       34
<PAGE>

Recent accounting pronouncements

In December 1999, the  Securities and Exchange  Commission  ("SEC") issued Staff
Accounting  Bulletin  No. 101 ("SAB  101"),  "Revenue  Recognition  in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting  principals to revenue recognition in financial  statements.
SAB 101 was adopted in 2000 and had no material impact on the Company's  revenue
recognition policy.

Note 2 - Dispositions

Effective  March 19, 1999, the Company sold 75% of its stock ownership in ESS to
one of its founders.  The  consideration  for the Company's sale of its interest
was $100,000 in cash and a six year note in the amount of $380,000.  The Company
recognized a valuation  allowance for 100% of the note  receivable.  The Company
will  recognize as income the portion of the proceeds  associated  with the note
receivable upon the receipt of cash. This sale did not have a material effect on
the Company's  financial  condition or results of operations.  Effective October
11,  1999,  the Company  sold to three of ESS's  employees  an  additional  5.4%
ownership in ESS. The Company  received  $37,940 from the sale of the additional
ESS stock.  Effective  April 18, 2000, ESS redeemed the balance of the Company's
stock ownership in ESS. The Company received cash in the amount of $188,000 from
the redemption and such amount was included as other income as of that date.

Note 3 - Other income

For the year  ended  December  31,  2000,  other  income of  $512,000  consisted
primarily of $157,000 of lease rental income from the  Company's Ft.  Lauderdale
facility, see Note 10 to the Notes to the Consolidated  Financial Statements,  a
$188,000 gain from the sale of the balance of the Company's  ownership  interest
in ESS and  $100,000 of interest  income.  For the year ended  December 31, 1999
other income of $106,000  consisted  primarily  of lease rental  income from the
Company's Ft. Lauderdale facility and interest income.

Note 4 - Income taxes

During  the years  ended  December  31,  2000 and 1999,  there was no income tax
expense recognized due to the Company's net losses.

Reconciliation  of the Company's actual tax rate to the U.S.  Federal  statutory
rate is as follows:

        Year ended December 31,
         (in percents)                     2000       1999
                                           ----       ----
     Income tax rates
      - Statutory U.S. Federal rate       (34%)       (34%)
      - States, net U.S. benefits          (4%)        (4%)
      - Valuation allowance                38%         38%
                                          ---         ---
     Total                                - %         - %
                                          ===         ===

As of December  31,  2000,  the Company has net  operating  loss  carryforwards,
("NOL's") of  approximately  $23,000,000  expiring 2007 through 2015 for which a
100%  valuation   allowance  has  been   recognized.   Refrigerant   Reclamation
Corporation  of America  ("RRCA"),  acquired  during 1995 as a subsidiary of the
Company,  has  available  NOL's  expiring  2007  through  2010 of  approximately
$4,488,000 subject to annual limitations of approximately $367,000.

Elements of deferred income tax assets (liabilities) are as follows:

                  December 31,
                  (in thousands)                    2000
                                                    ----
     Deferred tax assets (liabilities)
      - Depreciation & amortization                 $ (8)
      - Reserves for doubtful accounts                62
      - NOL                                        8,900
      - Other                                        (54)
                                                 -------
     Subtotal                                      8,900
      - NOL valuation allowance                   (8,900)
                                                 -------
     Total                                       $    --
                                                 =======


                                       35
<PAGE>

Note 5- Trade accounts receivable - net

At December 31, 2000, trade accounts receivable are net of reserves for doubtful
accounts of $154,000.

Note 6 - Inventories

Inventories consisted of the following:

          December 31,                         2000
          (in thousands)                       ----
          Refrigerant and cylinders           $1,507
          Packaged refrigerants                  394
                                              ------
          Total                               $1,901
                                              ======

Note 7 - Property, plant, and equipment

Elements of property, plant, and equipment are as follows:

           December 31,                                         2000
           (in thousands)                                       ----
           Property, plant, & equipment
           - Land                                           $    335
           - Buildings & improvements                            776
           - Equipment                                         6,719
           - Equipment under capital lease                       315
           - Vehicles                                          1,224
           - Furniture & fixtures                                178
           - Leasehold improvements                              516
           - Equipment under construction                        588
                                                            --------
          Subtotal                                            10,651
          Accumulated depreciation & amortization             (5,309)
                                                            --------
           Total                                            $  5,342
                                                            ========

The Company's Ft. Lauderdale land, building,  and improvements,  with a net book
value of  approximately  $945,000,  are currently being leased to a third party.
The Company intends to sell this property in the foreseeable future.

Note 8 - Short-term and long-term debt

Elements of short-term and long-term debt are as follows:

          December 31,                              2000
          (in thousands)                            ----
          Short-term & long-term debt
          Short-term debt:
           - Bank credit line                    $ 1,734
           - Long-term debt: current                 435
                                                 -------
          Subtotal                                 2,169
                                                 -------
          Long-term debt:
           - Bank credit line                        880
           - Mortgage payable                        644
           - Capital lease obligations               129
           - Vehicle loans                           669
           - Less: current maturities               (435)
                                                 -------
          Subtotal                                 1,887
                                                 -------
          Total                                  $ 4,056
                                                 =======


                                       36
<PAGE>

Bank credit line

The Company entered into a credit facility with CIT Group/Credit  Finance Group,
Inc.  ("CIT") which  provides for borrowings to the Company of up to $6,500,000.
The facility  requires minimum  borrowings of $1,250,000.  The facility provides
for a  revolving  line of credit and a six-year  term loan and  expires in April
2003.  Advances  under the  revolving  line of credit are  limited to (i) 80% of
eligible trade accounts  receivable  and (ii) 50% of eligible  inventory  (which
inventory amount shall not exceed 200% of eligible trade accounts  receivable or
$3,250,000).  As of December 31, 2000,  the Company had  availability  under its
revolving line of credit of approximately $577,000.  Advances,  available to the
Company,  under the term loan are based on existing  fixed asset  valuations and
future advances under the term loan up to an additional  $1,000,000 are based on
future  capital  expenditures.  During 1999,  the Company  received  advances of
$166,000 based on capital expenditures. As of December 31, 2000, the Company had
approximately   $675,000   outstanding  under  its  term  loans  and  $1,734,000
outstanding  under its revolving line of credit.  The facility bears interest at
the prime rate plus 1.5%, 11% at December 31, 2000, and substantially all of the
Company's  assets are pledged as collateral for obligations to CIT. In addition,
among other things, the agreements  restrict the Company's ability to declare or
pay any dividends on its capital  stock.  The Company has obtained a waiver from
CIT to  permit  the  payment  of  dividends  on its  Series A  Preferred  Stock.

During 2000, the Company  entered into a separate term loan with an affiliate of
CIT. The term loan is secured by a specific  asset and bears  interest at a rate
of 10% per annum. At December 31, 2000 the outstanding  balance was $205,000 and
is payable in 59 equal  monthly  installments  of $2,850 with a final payment of
$131,419 due in June 2005.

Mortgage payable

During 1996,  the Company  mortgaged  its  property and building  located in Ft.
Lauderdale,  Florida with Turnberry  Savings Bank, NA. The mortgage of $644,000,
at December 31, 2000 bears interest at the rate of 10.125% and is repayable over
20 years through January 2017.

Vehicle Loans

During 1999, the Company  entered into various  vehicle loans.  The vehicles are
primarily used in connection with the Company's on-site services.  The loans are
payable in 60 monthly  payments  through  October 2004 and bear interest at 9.0%
through 9.98%.

Related Party Loan

In February  1999, a former  director  made an unsecured  loan in the  aggregate
principal  amount of $365,000 to the  Company.  The loan was repaid on April 16,
1999 and bore interest at 12% per annum.

Scheduled maturities of the Company's debts and capital lease obligations are as
follows:

                 Debts and capital lease obligations
                 -----------------------------------
                 Years ended December 31,                          Amount
                 ------------------------                          ------
                 (in thousands)
                  - 2001                                           $2,169
                  - 2002                                              458
                  - 2003                                              462
                  - 2004                                              240
                  - 2005                                              188
                  - Thereafter                                        539
                                                                   ------
                 Total                                             $4,056
                                                                   ======


                                       37
<PAGE>

The Company rents certain  equipment with a net book value of about $182,000 for
leases which have been  classified as capital leases.  Scheduled  future minimum
lease payments under capital leases net of interest are as follows:

                 Scheduled capital lease obligation payments
                 -------------------------------------------
                 Years ended December 31,                          Amount
                 ------------------------                          ------
                 (in thousands)
                  - 2001                                              $48
                  - 2002                                               50
                  - 2003                                               31
                                                                     ----
                 Total                                               $129
                                                                     ====

Average  short-term debt for the year ended December 31, 2000 totaled $1,575,000
with a weighted average interest rate of approximately 10.7%.

Note 9 - Stockholders' equity

(i) In September 1996 and October 1997, in connection with the then  outstanding
convertible debentures,  the Company issued warrants to purchase an aggregate of
16,071 and 66,000 shares of the Company's  Common Stock at an exercise  price of
$18.00 and $10.00, respectively, per share. These warrants expire through August
6, 2002.

(ii) On January 29, 1997, the Company  entered into a Stock  Purchase  Agreement
with E.I.  DuPont de Nemours  and Company  ("DuPont")  and DuPont  Chemical  and
Energy  Operations,  Inc.  ("DCEO") pursuant to which the Company issued to DCEO
500,000  shares  of  Common  Stock  in  consideration  of  $3,500,000  in  cash.
Simultaneous  with the execution of the Stock  Purchase  Agreement,  the parties
entered into a Standstill  Agreement,  Shareholders'  Agreement and Registration
Agreement.

The Standstill Agreement provides,  subject to certain exceptions,  that neither
DuPont nor any  corporation  or entity  controlled  by DuPont will,  directly or
indirectly,  acquire any shares of any class of capital  stock of the Company if
the effect of such acquisition  would be to increase  DuPont's  aggregate voting
power to greater than 20% of the total  combined  voting  power  relating to any
election of directors.  The Standstill  Agreement also provides that the Company
will  cause two  persons  designated  by DCEO and  DuPont to be  elected  to the
Company's Board of Directors.

The Shareholders' Agreement provides that, subject to certain exceptions, DuPont
shall have a right of first  refusal  to  purchase  any  shares of Common  Stock
intended to be sold by the Company's principal shareholders.

Pursuant to the  Registration  Agreement,  the Company granted to DuPont certain
demand  and  "piggy-back"   registration   rights.  The  Standstill   Agreement,
Shareholders Agreement and the demand and "piggy-back" registration rights under
the Registration Rights Agreement terminate on January 29, 2002.

(iii) On April 28, 1998, in connection  with the loan  agreements  with CIT, the
Company issued to CIT warrants to purchase 30,000 shares of the Company's common
stock at an exercise  price  equal to 110% of the then fair market  value of the
stock,  which on the date of  issuance  was  $4.33 per  share.  The value of the
warrants  were not deemed to be material and which expire on April 29, 2001.  In
addition,  among other things, the agreements  restrict the Company's ability to
declare or pay any  dividends on its capital  stock.  The Company has obtained a
waiver  from CIT to permit the  payment of  dividends  on its Series A Preferred
Stock.

(iv) On March 30, 1999,  the Company  completed the sale of 65,000 shares of its
Series A Preferred Stock, with a liquidation value of $100 per share, to Fleming
US Discovery Fund III, L.P. and Fleming US Discovery Offshore Fund III, L.P. The
gross  proceeds from the sale of the Series A Preferred  Stock were  $6,500,000.
The Series A Preferred  Stock  converts to Common  Stock at a rate of $2.375 per
share, which was 27% above the closing market price of Common Stock on March 29,
1999.

(v) On February 16, 2001, the Company completed the sale of 30,000 shares of its
Series A Preferred Stock, with a liquidation value of $100 per share, to Fleming
US Discovery Fund III, L.P. and Fleming US Discovery Offshore Fund III, L.P. The
gross  proceeds from the sale of the Series A Preferred  Stock were  $3,000,000.
The Series A Preferred  Stock  converts to Common  Stock at a rate of $2.375 per
share,  which was 23% above the closing market price of Common Stock on February
15, 2001. As of December 31, 2000, the net proceeds of $2,925,000  from the sale
of the Series A Preferred Stock has been reflected in the proforma balance sheet
as if the proceeds were received as of that date.


                                       38
<PAGE>

The Series A Preferred Stock has voting rights on an as-if converted  basis. The
number  of votes  applicable  to the  Series A  Preferred  Stock is equal to the
number of shares of Common Stock into which the Series A Preferred Stock is then
convertible.  However,  the holders of the Series A Preferred Stock will provide
the Chief Executive Officer and the Secretary of the Company a proxy to vote all
shares currently owned and subsequently acquired above 29% of the votes entitled
to be cast by all  shareholders  of the Company.  The Preferred  Stock carries a
dividend  rate  of  7%,  which  will  increase  to  16%,  if the  stock  remains
outstanding,  on or after March 31, 2004. The conversion  rate may be subject to
certain  antidilution  provisions.  The  Company  has  used and will use the net
proceeds  from the  issuance  of the  Series A  Preferred  Stock to  expand  its
RefrigerantSide(R) Services business and for working capital purposes.

The Company pays dividends,  in arrears,  on the Series A Preferred Stock,  semi
annually,  either in cash or  additional  shares,  at the Company's  option.  On
September  30, 2000,  the Company  declared  and paid,  in-kind,  the  dividends
outstanding on the Series A Preferred Stock.  During the year ended December 31,
2000, the Company issued an aggregate of 4,881 additional shares of its Series A
Preferred Stock in satisfaction of the dividends due. The Company may redeem the
Series A  Preferred  Stock on March 31,  2004 either in cash or shares of Common
Stock valued at 90% of the average  trading price of the Common Stock for the 30
days  preceding  March 31, 2004. In addition,  after March 30, 2001, the Company
may call the Series A Preferred Stock if the market price of its Common Stock is
equal to or greater than 250% of the  conversion  price and the Common Stock has
traded with an average  daily volume in excess of 20,000  shares for a period of
thirty consecutive days.

The Company has provided certain  registration,  preemptive and tag along rights
to the  holders of the Series A  Preferred  Stock.  The  holders of the Series A
Preferred Stock,  voting as a separate class,  have the right to elect up to two
members to the Company's Board of Directors or at their option,  to designate up
to two advisors to the  Company's  Board of Directors who will have the right to
attend and observe  meetings of the Board of Directors.  Currently,  the holders
have elected two members to the Board of Directors.

(vi) The  Company  engaged an advisor to  facilitate  the  Company's  efforts in
connection  with the March 30,  1999 sale of the Series A  Preferred  Stock.  In
addition to the advisor fees, the Company issued to the advisor, warrants, which
expire on March 30, 2004, to purchase  136,482  shares of the  Company's  Common
Stock at an exercise  price per share of $2.73.  The value of the warrants  were
not deemed to be material.

Note 10 - Commitments and contingencies

Rents, operating leases and contingent income

Hudson utilizes leased  facilities and operates  equipment under  non-cancelable
operating leases through December 31, 2005. In addition,  the Company leases its
owned Ft. Lauderdale facility to a third party.

Properties

The Company's  Baltimore,  Maryland  depot facility is located in a 2,700 square
foot  building  leased  from an  unaffiliated  third  party at an annual rent of
approximately $25,600 pursuant to an agreement expiring in August 2002.

The Company's Baton Rouge,  Louisiana facility is located in a 3,800 square foot
building  leased  from an  unaffiliated  third  party  at an  annual  rental  of
approximately $18,000 pursuant to an agreement expiring in July 2002.

The Company's Haverhill  (Boston),  Massachusetts depot facility is located in a
3,000 square foot building leased from an unaffiliated  third party at an annual
rent of $13,200 pursuant to a month to month rental agreement.

The Company's  Charlotte,  North Carolina facility is located in a 12,000 square
foot  building  leased  from an  unaffiliated  third  party at an annual rent of
approximately $42,000 pursuant to a month to month rental agreement.

The Company's  Villa Park  (Chicago),  Illinois  depot  facility is located in a
3,500 square foot building leased from an unaffiliated  third party at an annual
rent of approximately $23,000 pursuant to an agreement expiring in August 2002.

In  March  1995,  the  Company  purchased,  for  $950,000,  a  facility  in  Ft.
Lauderdale,   Florida,   consisting   of  a  32,000   square  foot  building  on
approximately  1.7 acres with rail and port access.  The property was  mortgaged
during 1996 for $700,000.  Annual real estate taxes are  approximately  $24,000.
The Company has  principally  ceased its  operations  at this  facility  and has
entered into a three year lease of the entire  facility at the current  level of
$13,781 per month to an  unaffiliated  third party.  The Company intends to sell
this property in the foreseeable future.


                                       39
<PAGE>

The  Company's Ft. Myers,  Florida  engineering  facility is located in a 15,000
square foot building leased from an  unaffiliated  third party at an annual rent
of $57,240 pursuant to an agreement expiring in July 2001.

The Company's  Hillburn facility is located in approximately  21,000 square feet
of leased industrial space at Hillburn, New York. The building is leased from an
unaffiliated  third party at an annual rental of approximately  $94,000 pursuant
to an agreement expiring in May 2004.

The Company's Houston, Texas depot facility, which consists of 5,000 square feet
located in a larger building,  is leased from an unaffiliated  third party at an
annual rent of $25,200 pursuant to an agreement which expires in June 2001.

The Company's  headquarters  are located in  approximately  5,400 square feet of
leased commercial space at Pearl River, New York. The building is leased from an
unaffiliated  third party pursuant to a three year agreement at an annual rental
of approximately $95,000 through January 2002.

The Company's  Plainview,  New York depot  facility is located in a 2,000 square
foot  building  leased  from an  unaffiliated  third  party at an annual rent of
approximately $16,920 pursuant to an agreement expiring in July 2002.

The Company's Punta Gorda,  Florida  separation  facility is located in a 15,000
square foot building leased from an  unaffiliated  third party at an annual rent
of $60,000 pursuant to an agreement expiring in April 2001.

The  Company's  Rantoul,  Illinois  facility is located in a 29,000  square foot
building  leased  from an  unaffiliated  third  party  at an  annual  rental  of
approximately $78,000 pursuant to an agreement expiring in September 2002.

The Company's  Seattle,  Washington  depot facility is located in a 3,000 square
foot  building  leased  from an  unaffiliated  third  party at an annual rent of
approximately $16,200 pursuant to an agreement expiring in March 2001.

The Company rents properties and various equipment under operating leases.  Rent
expense,  net of sublease  rental income,  for the years ended December 31, 2000
and 1999 totaled approximately $790,000 and $1,054,000, respectively.

Future commitments under operating leases, are summarized as follows:

                 Rent expense
                 ------------
                 Years ended December 31,           Amount
                 ------------------------           ------
                 (in thousands)
                 - 2001                             $ 635
                 - 2002                               253
                 - 2003                               121
                 - 2004                                48
                 - 2005                                 3
                                                   ------
                 Total                             $1,060
                                                   ======

Legal Proceedings

In June  1998,  United  Water of New York Inc.  ("United")  commenced  an action
against  the  Company in the  Supreme  Court of the State of New York,  Rockland
County,  seeking damages in the amount of $1.2 million allegedly  sustained as a
result of the prior  contamination  of certain of United's  wells  within  close
proximity  to the  Company's  Hillburn,  New York  facility,  which wells showed
elevated     levels     of     refrigerant      contamination,      specifically
Trichlorofluoromethane  (R-11) and  Dichlorodifluoromethane  (R-12). In December
1998,  United  served an amended  complaint  asserting  a claim  pursuant to the
Resource  Conservation  and  Recovery  Act,  42  U.S.C.ss.6901,  et.  seq.  seq.
("RCRA").


On April 1, 1999, the Company reported a release at the Company's Hillburn,  New
York facility of approximately  7,800 lbs. of R-11, as a result of a failed hose
connection to one of the Company's outdoor storage tanks allowing liquid R-11 to
discharge from the tank into the concrete  secondary  containment  area in which
the  subject  tank was  located.  An amount of the R-11  escaped  the  secondary
containment  area through an open drain from the secondary  containment area for
removing  accumulated  rainwater  and  entered the  ground.  In April 1999,  the
Company was advised by United that one of its wells  within  close  proximity to
the Company's facility showed elevated levels of R-11 in excess of 200 ppb.

Between  April  1999 and May  1999,  with  the  approval  of the New York  State
Department of Environmental  Conservation  ("DEC"),  the Company constructed and
put into operation a remediation system at the Company's facility to remove R-11
levels in the groundwater under and around the Company's  facility.  The cost of
this remediation system was $100,000.


                                       40
<PAGE>

In July 1999,  United  amended its  complaint in the Rockland  County  action to
allege facts relating to, and to seek damages allegedly resulting from the April
1, 1999 R-11 release.

In June 2000,  the Rockland  County  Supreme Court  approved a settlement of the
Rockland County action  commenced by United.  Under the Settlement,  the Company
paid to United the sum of $1,000,000 upon Court approval of the settlement,  and
has agreed to make monthly  payments in the amount of $5,000 for a minimum of 18
months following the settlement.  The proceeds of the settlement are required to
be used to fund the  construction  and operation by United of a new  remediation
tower,  as  well  as  for  the  continuation  of  temporary   remedial  measures
implemented by United and that have  successfully  contained the spread of R-11.
The  remediation  tower is  expected  to be  completed  by March 31, 2001 and is
designed  to treat all of United's  impacted  wells and restore the water to New
York State  drinking  water  standards  for supply to the  public.  The  Company
carries  $1,000,000  of pollution  liability  insurance  per  occurrence  and in
connection with the settlement  exhausted all insurance proceeds available under
all applicable policies.

In connection with the above mentioned proceedings,  the Company has accrued for
all current and anticipated costs, net of the insurance proceeds which have been
paid by the carrier.

In June 2000,  the Company signed an Order on Consent with the DEC regarding all
past  contamination  of the United well field.  Under the Order on Consent,  the
Company  agreed to pay a $10,000  penalty  relating to the April 1, 1999 release
and agreed to continue operating the remediation system installed by the Company
at its Hillburn facility in May 1999 until remaining  groundwater  contamination
has been effectively abated.

In May 2000, the Company's  Hillburn facility was nominated by the United States
Environmental  Protection Agency ("EPA") for listing on the National  Priorities
List ("NPL"), pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA").  The Company  believes that the agreements  reached
with the DEC and United Water, together with the reduced levels of contamination
present  in  the  United  Water  wells,   make  such  listing   unnecessary  and
counterproductive.  Hudson  submitted  opposition  to  the  listing  within  the
sixty-day  comment  period.  To date, no final decision has been made by the EPA
regarding the proposed listing.

There can be no  assurance  that the effects of the April 1, 1999 R-11  release,
will not spread  beyond the United  Water well  system and impact the Village of
Suffern's  wells, or that the ultimate outcome of such a spread of contamination
will not have a material adverse effect on the Company's financial condition and
results of operations.  There is also no assurance that the Company's opposition
to the EPA's listing will be successful,  or that the ultimate outcome of such a
listing  will not have a  material  adverse  effect on the  Company's  financial
condition and results of operations.

Note 11 - Stock Option Plan

Effective  October 31, 1994,  the Company  adopted an Employee Stock Option Plan
("Plan")  pursuant to which  725,000  shares of common  stock are  reserved  for
issuance upon the exercise of options  designated as either (i) options intended
to constitute  incentive stock options  ("ISOs") under the Internal Revenue Code
of 1986, as amended, or (ii) nonqualified options. ISOs may be granted under the
Plan to  employees  and officers of the  Company.  Non-qualified  options may be
granted to consultants, directors (whether or not they are employees), employees
or  officers of the  Company.  Stock  appreciation  rights may also be issued in
tandem with stock  options.  Unless sooner  terminated,  the Plan will expire on
December 31, 2004.

ISOs  granted  under the Plan may not be  granted  at a price less than the fair
market  value of the Common  Stock on the date of grant (or 110% of fair  market
value in the case of  persons  holding  10% or more of the  voting  stock of the
Company).  Non-qualified  options granted under the Plan may not be granted at a
price  less  than 85% of the  market  value of the  Common  Stock on the date of
grant.  Options  granted  under the Plan expire not more than ten years from the
date of grant (five years in the case of ISOs granted to persons  holding 10% or
more of the voting stock of the Company).

Effective July 25, 1997, and as amended on August 19, 1999, the Company  adopted
its 1997 Employee  Stock Option Plan ("1997 Plan")  pursuant to which  2,000,000
shares of common stock are  reserved  for issuance  upon the exercise of options
designated as either (i) options intended to constitute  incentive stock options
("ISOs")  under  the  Internal  Revenue  Code  of  1986,  as  amended,  or  (ii)
nonqualified  options.  ISOs may be granted under the 1997 Plan to employees and
officers of the Company.  Non-qualified  options may be granted to  consultants,
directors  (whether  or not they are  employees),  employees  or officers of the
Company.  Stock  appreciation  rights  may also be issued in tandem  with  stock
options. Unless sooner terminated, the 1997 Plan will expire on June 11, 2007.


                                       41
<PAGE>

ISOs  granted  under the 1997 Plan may not be  granted  at a price less than the
fair  market  value of the  Common  Stock on the date of grant  (or 110% of fair
market  value in the case of persons  holding 10% or more of the voting stock of
the  Company).  Non-qualified  options  granted  under  the 1997 Plan may not be
granted at a price  less than the par value of the  Common  Stock on the date of
grant.  Options  granted under the 1997 Plan expire not more than ten years from
the date of grant (five years in the case of ISOs granted to persons holding 10%
or more of the voting stock of the Company).

All stock options have been granted to employees and  non-employees  at exercise
prices equal to or in excess of the market value on the date of the grant.

The Company applies APB Opinion 25,  "Accounting for Stock Issued to Employees",
and related Interpretations in accounting for its stock option plan by recording
as  compensation  expense the excess of the fair market  value over the exercise
price per  share as of the date of grant.  Under APB  Opinion  25,  because  the
exercise  price of the Company's  employee stock options equals the market price
of the  underlying  stock  on the date of the  grant,  no  compensation  cost is
recognized.

SFAS No. 123 requires the Company to provide pro forma information regarding net
loss and net loss per  share as if  compensation  cost for the  Company's  stock
option plan had been  determined in accordance  with the fair value based method
prescribed  in SFAS No. 123. The Company  estimates the fair value of each stock
option at the grant date by using the  Black-Scholes  option-pricing  model with
the following weighted-average assumptions used for grants since 1995.


                 Years ended December 31,             2000           1999
                                                      ----           ----
                 Assumptions
                 -----------
                    Dividend Yield                     0 %            0 %
                    Risk free interest rate          5.9 %          5.3 %
                    Expected volatility               60 %         46.5 %
                    Expected lives                       5              5

Under the  accounting  provisions of FASB  Statement 123, the Company's net loss
and net loss per  share  would  have  been  adjusted  to the pro  forma  amounts
indicated below:


                 Years ended  December 31,          2000           1999
                                                    ----           ----
                 Pro forma results
                 -----------------
                 (In thousands, except per share amounts)
                 Net loss available for common shareholders:
                    As reported                   $(2,893)       $(3,955)
                    Pro forma                     $(3,791)       $(4,723)
                 Loss per common
                 share-basic and diluted
                    As reported                   $  (.57)       $  (.85)
                    Pro forma                     $  (.75)       $ (1.00)

A summary of the status of the  Company's  stock  option plan as of December 31,
2000 and 1999 and  changes  for the  years  ending on those  dates is  presented
below:

                                                                Weighted Average
                Stock Option Plan Grants             Shares       Exercise Price
                ------------------------
                Outstanding at December 31, 1998     1,374,642        $ 5.08
                --------------------------------
                o  Granted                             226,500        $ 2.24
                o  Forfeited                          (566,610)       $ 5.23
                                                     ---------
                Outstanding at December 31, 1999     1,034,532        $ 4.37
                --------------------------------
                o  Granted                             589,250        $ 2.41
                o  Forfeited                           (25,700)       $ 7.17
                                                     ---------
                Outstanding at December 31, 2000     1,598,082        $ 3.60
                                                     =========        ======


                                       42
<PAGE>

Data summarizing year-end options exercisable and weighted average fair-value of
options  granted  during the years  ended  December  31,  2000 and 1999 is shown
below:


                Options Exercisable
                -------------------

                                                 Year  ended       Year  ended
                                                December 31,      December 31,
                                                        2000              1999
           Options exercisable at year-end         1,385,582           925,532
                                                   ---------           -------


           Weighted average exercise price             $3.64             $4.07
                                                       -----             -----

           Weighted average fair value of
           options granted during the year             $1.13              $.83
                                                       -----              ----


                        Options Exercisable at December 31, 2000

                                                       Weighted-average
                                     Number                Exercise
           Range of Prices           Outstanding             Price
           --------------------      -----------             -----
           $1 to $4                   1,107,916             $ 2.81
           $4 to $10                    167,666             $ 4.62
           $10 to $16                   110,000             $10.50
                                     ----------
           $1 to $16                  1,385,582             $ 3.64
                                     ==========

The following table summarizes  information  about stock options  outstanding at
December 31, 2000:

                        Options Outstanding At December 31, 2000

                                            Weighted-average      Weighted-
                                                   Remaining        average
           Range of               Number         Contractual       Exercise
           Prices            Outstanding                Life          Price
           ------            -----------                ----          -----
           $1 to $4            1,277,750           4.0 years          $2.73
           $4 to $10             185,332           2.0 years          $4.56
           $10 to $16            135,000           1.0 years         $10.50
                               ---------
           $1 to $16           1,598,082           3.5 years          $3.60
                               =========

During the initial  phase-in  period of SFAS 123,  the effects on the  pro-forma
results are not likely to be  representative of the effects on pro-forma results
in future  years since  options vest over several  years and  additional  awards
could be made each year.

                                       43

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.8
<SEQUENCE>2
<FILENAME>d25204_ex3-8.txt
<DESCRIPTION>CERTIFICATE OF AMENDMENT
<TEXT>


                                   Exhibit 3.8
                                   -----------






                            CERTIFICATE OF AMENDMENT
                                     OF THE
                          CERTIFICATE OF INCORPORATION
                                       OF
                            HUDSON TECHNOLOGIES, INC.









                       -----------------------------------
                                February 16, 2001
                       -----------------------------------





<PAGE>



                            CERTIFICATE OF AMENDMENT
                                     OF THE
                          CERTIFICATE OF INCORPORATION
                                       OF
                           HUDSON TECHNOLOGIES, INC.

               under Section 805 of the Business Corporation Law
                         ------------------------------

     The  undersigned,  being the  Chairman  and  Chief  Executive  Officer  and
Secretary, respectively, of Hudson Technologies, Inc. (the "Corporation") hereby
certify that:

     A. The name of the Corporation is HUDSON TECHNOLOGIES, INC. The Corporation
was formed under the name REFRIGERANT RECLAMATION INDUSTRIES, INC.

     B. The Certificate of Incorporation  was filed with the Department of State
on January 10, 1991.

     C. On March  30,  1999,  the Board of  Directors  of the  Corporation  duly
adopted resolutions in order to designate  seventy-five thousand (75,000) shares
as Series A Preferred Stock.

     D. On February 15, 2001,  the Board of  Directors of the  Corporation  duly
adopted  resolutions  in order to increase  the number of shares  designated  as
Series  A  Preferred  Stock  (as  set  forth  in  the  resolution   below)  from
seventy-five thousand (75,000) to one hundred fifty thousand (150,000).

     E. The  resolution  contained  herein  has not been  modified,  altered  or
amended and is presently in full force and effect.

     F.  To  effectuate  the  foregoing,  Paragraph  (5) of the  Certificate  of
Incorporation,  which refers to the  authorized  shares of the  Corporation,  is
hereby amended by adding the following to the end of said Paragraph (5):

     RESOLVED,  that pursuant to the authority  expressly vested in the Board of
Directors of the Corporation by Paragraph 5 of the Certificate of  Incorporation
of the  Corporation,  the Board of  Directors  hereby fixes and  determines  the
voting   rights,   designations,   preferences,   qualifications,    privileges,
limitations,  restrictions,  options,  conversion  rights  and other  special or
relative rights of the foregoing  series of the preferred  stock, par value $.01
per share,  which shall be designated as Series A  Convertible  Preferred  Stock
(the "Series A Preferred Stock").

<PAGE>

     1.  Designation.  One hundred fifty thousand  (150,000) shares of preferred
stock, par value $.01 per share, of the Corporation are hereby  constituted as a
series of the preferred  stock  designated  as "Series A  Convertible  Preferred
Stock";  provided,  however, that the Corporation shall issue any such shares in
excess of  ninety-five  thousand  (95,000) only to pay dividends on the Series A
Preferred Stock as provided in Section 2(a)(i).

     2. Dividends.

     (a) Dividends on Series A Preferred Stock. The Corporation  shall pay, when
and as declared by the Corporation's  Board of Directors,  to the holders of the
Series A Preferred Stock, out of the assets of the Corporation legally available
therefor,  dividends at the times,  in the amounts and with such  priorities  as
follows:

          (i) Dividend  Rate.  Dividends  on shares of Series A Preferred  Stock
will be payable in  arrears  in cash or, at the  option of the  Corporation,  in
additional  shares of Series A Preferred Stock, at a rate per annum equal to (x)
until March 31, 2004,  7.00% of the Preferred  Liquidation  Value thereof on the
Dividend  Payment  Date and (y) on and  after  March  31,  2004,  16.00%  of the
Preferred Liquidation Value thereof on the Dividend Payment Date. Dividends will
be calculated on the basis of a 360-day year.

          (ii) Accrual of Dividends.

          (A)  Dividends on each share of Series A Preferred  Stock shall accrue
     cumulatively  on a daily basis from the Issue Date to the date on which the
     redemption or  conversion  of such share of Series A Preferred  Stock shall
     have been  effected,  whether or not such  dividends have been declared and
     whether or not there shall be (at the time such dividends  became or become
     payable  or any  other  time)  profits,  surpluses  or  other  funds of the
     Corporation legally available for the payment of dividends.

          (B) To the extent not paid on any Dividend Payment Date for any reason
     other than the  Corporation's  compliance  with Section  2(b)  hereof,  all
     dividends  which have accrued on any share of Series A Preferred Stock then
     outstanding  during the period from and including  the  preceding  Dividend
     Payment  Date (or  from and  including  the  Issue  Date in the case of the
     initial  Dividend  Payment Date) to (but excluding)  such Dividend  Payment
     Date  shall  be  added  on such  Dividend  Payment  Date  to the  Preferred
     Liquidation  Value of such  share of  Series A  Preferred  Stock  (so that,
     without  limitation,  dividends shall  thereafter  accrue in respect of the
     amount of such  accrued  but  unpaid  dividends)  and  shall  remain a part
     thereof until (but only until) such dividends are paid.

          (iii)  Payment  Dates.  Full  cumulative  dividends  on the  Series  A
Preferred Stock shall be payable semi-annually, on March 31 and September 30, in
each year (each, a "Dividend  Payment Date"). If any Dividend Payment Date shall
be on a day other than a Business Day,  then the Dividend  Payment Date shall be
on the next  succeeding  Business  Day. An amount  equal to the full  cumulative
dividends shall also be payable,  in  satisfaction of such dividend  obligation,
upon  liquidation  as provided  under Section 3 hereof,  and upon  redemption as
provided  under  Section 6 hereof.  The Board of Directors may fix a record date
for the  determination of holders


                                       2
<PAGE>

of shares  of Series A  Preferred  Stock  entitled  to  receive  payment  of the
dividends  payable  pursuant to this  Section 2, which  record date shall not be
more than 60 days prior to the Dividend Payment Date.

          (iv)  Amounts  Payable.  The amount of  dividends  payable on Series A
Preferred  Stock on each  Dividend  Payment  Date  shall be the full  cumulative
dividends  which are unpaid  through and including  such Dividend  Payment Date.
Dividends  which are not paid for any reason  whatsoever  on a Dividend  Payment
Date shall cumulate until paid and shall be payable on the next Dividend Payment
Date on which payment can lawfully be made (or upon liquidation or redemption as
provided  herein).  Holders  of shares of Series A  Preferred  Stock  called for
redemption  on a  redemption  date  falling  between  the close of business on a
dividend  payment  record date and the opening of business on the  corresponding
Dividend  Payment Date shall, in lieu of receiving such dividend  payment on the
Dividend  Payment Date fixed therefor,  receive an amount equal to such dividend
payment  (consisting  of  all  accumulated  and  unpaid  dividends  through  the
redemption  date) on the date fixed for  redemption.  If for whatever reason all
payments  have not been made  with  respect  to any share of Series A  Preferred
Stock as required by Section 3 on a  distribution  date or all payments have not
been made with  respect to any share of Series A Preferred  Stock as required by
Section 6 on a  redemption  date (other than  because of a failure by the holder
thereof to tender such shares for payment on such date),  then,  notwithstanding
any other  provision  hereof,  dividends  shall  continue to  accumulate on such
outstanding shares until paid.

          (v) Compliance with Section 2(b).  Notwithstanding any other provision
hereof, any dividend not paid by the Corporation under this Section 2(a) because
of the Corporation's  compliance with Section 2(b) will be deemed paid under the
provision of this Certificate of Amendment.

     (b) Dividends on Common Stock. In the event that (i) the Corporation  shall
at any time or from time to time declare, order, pay or make a dividend or other
distribution  (whether in cash,  securities,  rights to purchase  securities  or
other property) on its Common Stock and (ii) such dividend or other distribution
exceeds on a per share of Common Stock  equivalent basis the amount payable on a
share of Series A  Preferred  Stock on the  Dividend  Payment  Date  immediately
following the  declaration of such dividend or other  distribution on the Common
Stock, the holders of the Series A Preferred Stock shall receive, in lieu of the
dividend  payable  under Section 2(a) on such  Dividend  Payment Date,  from the
Corporation,  with  respect to each share of Series A Preferred  Stock  held,  a
dividend or distribution that is the same dividend or distribution that would be
received  by a holder of the  number of shares of Common  Stock  into which such
share of Series A Preferred  Stock is convertible  pursuant to the provisions of
Section 5 hereof on the record date for such dividend or distribution.  Any such
dividend or distribution shall be declared,  ordered, paid or made on the Series
A Preferred  Stock at the same time such dividend or  distribution  is declared,
ordered, paid or made on the Common Stock.

     (c) Limitation on Dividends,  Repurchases and  Redemptions.  So long as any
shares of Series A Preferred Stock shall be outstanding,  the Corporation  shall
not  declare or pay or set apart for  payment  any  dividends  or make any other
distributions on any Junior Securities,  whether in cash, securities,  rights to
purchase  securities or other property  (other than  dividends or  distributions
payable  in  shares  of the  class  or  series  upon  which  such  dividends  or
distributions  are declared or paid),  nor shall the  Corporation  or any of its
Subsidiaries purchase, redeem or otherwise acquire for any consideration or make
payment on account of the purchase, redemption or other retirement of any Parity
Securities or Junior Securities,  nor shall any monies be paid or made available
for a sinking


                                       3
<PAGE>

fund  for  the  purchase  or  redemption  of any  Parity  Securities  or  Junior
Securities,  unless with respect to all of the  foregoing all dividends or other
distributions  to which the holders of Series A Preferred  Stock shall have been
entitled,  pursuant to Sections  2(a) and 2(b)  hereof,  shall have been paid or
declared and a sum of money has been set apart for the full payment thereof.

     (d) Pro Rata  Payments.  In the event that full  dividends  are not paid or
made  available to the holders of all  outstanding  shares of Series A Preferred
Stock and of any Parity  Securities and funds available for payment of dividends
shall be  insufficient to permit payment in full to holders of all such stock of
the full preferential  amounts to which they are then entitled,  then the entire
amount available for payment of dividends shall be distributed ratably among all
such  holders  of Series A  Preferred  Stock  and of any  Parity  Securities  in
proportion  to the full  amount to which they would  otherwise  be  respectively
entitled.

     3. Preference on Liquidation.

     (a) Liquidation  Preference for Series A Preferred Stock. In the event that
the Corporation  shall  liquidate,  dissolve or wind up, whether  voluntarily or
involuntarily,  no distribution shall be made to the holders of shares of Common
Stock or other  Junior  Securities  (and no  monies  shall be set apart for such
purpose) unless prior thereto, the holders of shares of Series A Preferred Stock
shall have  received  an amount per share equal to the greater of (i) the sum of
(x) the Liquidation  Value,  plus (y) all declared but unpaid dividends  thereon
through the date of  distribution,  (ii) ratable  distributions  determined with
respect to the holders of Series A Preferred Stock and Common Stock on the basis
of the number of shares of Common Stock into which such Series A Preferred Stock
could be converted  pursuant to the  provisions of Section 5 hereof  immediately
prior to such  distribution  and (iii) the Payment Amount,  on a per share basis
(the greater of (i), (ii) and (iii) above is herein referred to as the "Series A
Liquidation Preference").

     (b) Pro Rata Payments. If, upon any such liquidation,  dissolution or other
winding up of the  affairs  of the  Corporation,  the assets of the  Corporation
shall be  insufficient to permit the payment in full of the Series A Liquidation
Preference for each share of Series A Preferred  Stock then  outstanding and the
full  liquidating  payments  on all  Parity  Securities,  then the assets of the
Corporation remaining shall be ratably distributed among the holders of Series A
Preferred  Stock and of any Parity  Securities in proportion to the full amounts
to which they would  otherwise be  respectively  entitled if all amounts thereon
were paid in full.

     (c)  Sale  Not a  Liquidation.  Neither  the  voluntary  sale,  conveyance,
exchange  or  transfer  (for  cash,   shares  of  stock,   securities  or  other
consideration)  of all or  substantially  all  the  property  or  assets  of the
Corporation nor the consolidation,  merger or other business  combination of the
Corporation  with or into  one or more  corporations  shall  be  deemed  to be a
liquidation,  dissolution  or  winding-up,  voluntary  or  involuntary,  of  the
Corporation.

     (d) Notice of Liquidation.  Written notice of any liquidation,  dissolution
or winding up of the Corporation, stating the payment date or dates when and the
place or places  where  amounts  distributable  in such  circumstances  shall be
payable,  shall be given by first class  mail,  postage  prepaid,  not less than
thirty (30) days prior to any payment date specified therein,  to the holders of
record of the Series D Preferred  Stock at their  respective  addresses as shall
appear on the records of the Corporation.


                                       4
<PAGE>

     4. Voting.

     (a) General. In addition to any voting rights provided in the Corporation's
Certificate of  Incorporation or by law, the Series A Preferred Stock shall vote
together  with the Common  Stock as a single class on all actions to be voted on
by the stockholders of the  Corporation.  Each share of Series A Preferred Stock
shall entitle the holder  thereof to such number of votes per share on each such
action as shall equal the number of shares of Common Stock (including  fractions
of a  share)  into  which  each  share  of  Series  A  Preferred  Stock  is then
convertible; provided, however, that each holder of Series A Preferred Stock and
Conversion  Shares (as defined  below in the  definition  of "Fleming  Holders")
hereby irrevocably  constitutes Kevin J. Zugibe and Stephen P. Mandracchia,  and
each of them, as such holder's proxy, with full power of substitution in each of
them,  in the name,  place and stead of such holder,  to vote at all meetings of
the  stockholders  of the  Corporation  (other  than  with  respect  to  matters
requiring a separate class vote of holders of the Series A Preferred Stock) that
number of voting  shares of the  Corporation  of all classes,  including any now
owned or hereafter  acquired shares held by such holder and its  Affiliates,  in
the aggregate,  as shall exceed twenty-nine  percent (29%) of the votes entitled
to be cast by all  stockholders of the Corporation (as contemplated in the first
sentence of this Section 4(a)). Each such proxy is coupled with an interest. The
holders  of  Series  A  Preferred  Stock  shall be  entitled  to  notice  of any
stockholder's meeting in accordance with the By-Laws of the Corporation.

     (b) Board of  Directors.  The  Corporation  shall not,  without the written
consent or affirmative  vote of the holders  representing at least a majority of
the shares of Series A Preferred Stock then outstanding,  given in writing or by
vote at a meeting,  consenting  or voting (as the case may be)  separately  as a
class,  increase  the  maximum  number of  directors  constituting  the Board of
Directors to a number in excess of nine (9).

     (c)  Election of  Directors.  So long as the Fleming  Holders hold at least
thirty-five  percent (35%) of the shares of Series A Preferred Stock  originally
issued on March 30, 1999, the Fleming  Holders (or if no such shares are held by
a Fleming Holder, any transferee of shares of Series A Preferred Stock consented
to by the Corporation  (which consent shall not be  unreasonably  withheld) (the
"Permitted Preferred Transferee)), shall be entitled, but not required, to elect
up to two (2) directors of the Corporation.  So long as the Fleming Holders hold
at least twenty percent (20%), but less than thirty-five  (35%) percent,  of the
shares of Series A Preferred  Stock  originally  issued on March 30,  1999,  the
Fleming  Holders  (or if no such  shares  are  held  by a  Fleming  Holder,  any
Permitted Preferred Transferee"),  shall be entitled, but not required, to elect
one (1) director of the Corporation.  A director elected in accordance with this
Section 4 is referred to as a "Preferred Director".

     Holders  of at least a  majority  of the  outstanding  shares  of  Series A
Preferred  Stock shall exercise their right,  as described  above, to elect each
Preferred  Director by written notice to the  Corporation of the identity of the
person nominated to serve as Preferred Director,  and requesting the Corporation
to call a meeting of the  holders of Series A  Preferred  Stock to act upon such
nomination.   Each  such  nomination   shall  be  subject  to  approval  by  the
Corporation,  such approval not to be unreasonably withheld.  Promptly upon such
request,  the holders of Series A  Preferred  Stock,  consenting  or voting as a
class (as the case may be),  shall be entitled to elect a Preferred  Director at
any meeting (or in a written  consent in lieu  thereof)  held for the purpose of
electing  directors  until such time as  holders  of at least a majority  of the
outstanding  shares of Series A Preferred  Stock shall


                                       5
<PAGE>

notify the  Corporation  in writing  that they no longer wish to exercise  their
right to elect a Preferred Director.

     At any  meeting  (or in a written  consent  in lieu  thereof)  held for the
purpose of electing  directors,  (x) the  presence in person or by proxy (or the
written consent) of the holders  representing a majority of the shares of Series
A Preferred Stock then  outstanding  shall constitute a quorum of such class for
the  election of a Preferred  Director;  and (y) the absence of the  presence in
person or by proxy (or written consent) of the holders  representing less than a
majority  of the shares of Common  Stock then  outstanding  shall not affect the
right of a quorum of holders of Series A  Preferred  Stock to elect a  Preferred
Director.  Any  Preferred  Director may be removed with or without cause by, and
shall not be removed  except  by, the  holders  representing  a majority  of the
shares of Series A  Preferred  Stock then  outstanding,  present in person or by
proxy and voting at a meeting  of  stockholders,  or of the  holders of Series A
Preferred  Stock called for that purpose,  or by written  consent  signed by the
holders  representing a majority of the shares of Series A Preferred  Stock then
outstanding.

     A vacancy in the  directorship to be held by a Preferred  Director shall be
filled only by vote or written  consent of the holders of the Series A Preferred
Stock as provided above.  Unless otherwise  required by the laws of the State of
New York, any holder or holders of at least a majority of the outstanding shares
of Series A  Preferred  Stock  shall  have the  right to call a  meeting  of the
holders  of Series A  Preferred  Stock of the  Corporation  for the  purpose  of
electing a Preferred Director and filling vacancies of Preferred Directors.

     5. Conversion. The holders of shares of Series A Preferred Stock shall have
the right to  convert  all or a  portion  of such  shares  into  fully  paid and
nonassessable  shares of Common Stock or any capital  stock or other  securities
into which such  Common  Stock shall have been  changed or any capital  stock or
other securities resulting from a reclassification thereof as follows:

     (a) Right to Convert. Subject to and upon compliance with the provisions of
this  Section 5, a holder of shares of Series A  Preferred  Stock shall have the
right, at the option of such holder,  at any time, to convert any or all of such
shares into the number of fully paid and  nonassessable  shares of Common  Stock
(calculated  as to each  conversion  rounded  down to the  nearest  1/100th of a
share) obtained by dividing (i) the aggregate Liquidation Value of the shares to
be converted, plus all declared but unpaid dividends thereon through the date of
conversion  (unless  the holder of shares of Series A  Preferred  Stock being so
converted  shall have  elected to receive any such  dividends  in respect of the
shares being converted subsequent to conversion),  by (ii) the Conversion Price,
and by  surrender  of such  shares,  such  surrender  to be  made in the  manner
provided in  paragraph  (b) of this Section 5. The Common  Stock  issuable  upon
conversion  of the shares of Series A Preferred  Stock,  when such Common  Stock
shall be issued in accordance  with the terms hereof,  is hereby  declared to be
and shall be duly  authorized,  validly  issued,  fully  paid and  nonassessable
Common Stock held by the holders thereof.

     (b) Mechanics of Conversion.  Each holder of Series A Preferred  Stock that
desires to convert the same into  shares of Common  Stock  shall  surrender  the
certificate or certificates therefor,  duly endorsed, at the principal office of
the  Corporation  or of any transfer  agent for the Series A Preferred  Stock or
Common Stock,  accompanied by written notice to the Corporation that such holder
elects to convert the same and stating  therein the number of shares of Series A
Preferred Stock being converted and whether all declared and unpaid dividends in
respect of such shares shall be included in the calculation set forth in Section
5(a) hereof, and setting forth the name or names


                                       6
<PAGE>

in which such holder wishes the certificate or certificates for shares of Common
Stock to be issued if such name or names  shall be  different  from that of such
holder. Thereupon, the Corporation shall issue and deliver at such office on the
fifth  succeeding  Business  Day after  receipt of such  certificate  and notice
(unless such conversion is in connection with an underwritten public offering of
Common Stock, in which event  concurrently  with such conversion) to such holder
or on such holder's  written order,  (i) a certificate or  certificates  for the
number of validly  issued,  fully paid and  nonassessable  full shares of Common
Stock to which such holder is entitled  and (ii) if less than the full number of
shares of Series A Preferred Stock  evidenced by the surrendered  certificate or
certificates being converted, a new certificate or certificates,  of like tenor,
for  the  number  of  shares  evidenced  by  such  surrendered   certificate  or
certificates less the number of shares converted.

     Each conversion shall be deemed to have been effected  immediately prior to
the  close  of  business  on the  date of such  surrender  of the  shares  to be
converted  (except that if such conversion is in connection with an underwritten
public offering of Common Stock,  then such  conversion  shall be deemed to have
been effected upon such  surrender) so that the rights of the holder  thereof as
to the shares being  converted shall cease at such time except for (x) the right
to receive  shares of Common  Stock and (y) if the holder of the shares being so
converted shall have elected to receive dividends subsequent to such conversion,
all accrued and unpaid dividends in accordance herewith, and the person entitled
to receive the shares of Common Stock  issuable  upon such  conversion  shall be
treated for all purposes as the record  holder of such shares of Common Stock at
such time.

     (c) Conditional Conversion.  Notwithstanding any other provision hereof, if
conversion of any shares of Series A Preferred Stock is to be made in connection
with a public offering of Common Stock or any  transaction  described in Section
5(d)(vii) hereof,  the conversion of any shares of Series A Preferred Stock may,
at the election of the holder thereof,  be conditioned  upon the consummation of
the public offering or such transaction, in which case such conversion shall not
be deemed to be  effective  until the  consummation  of such public  offering or
transaction.

     (d)  Adjustment of the  Conversion  Price.  The  Conversion  Price shall be
adjusted from time to time as follows:

          (i) Adjustment for Stock Splits and  Combinations.  If the Corporation
     at any  time  or from  time to time  after  the  Issue  Date,  pays a stock
     dividend  in  shares of its  Common  Stock,  issues  any  convertible  debt
     securities, effects a subdivision of the outstanding Common Stock, combines
     the  outstanding  shares of Common  Stock,  issues by  reclassification  of
     shares of its Common Stock any shares of capital stock of the  Corporation,
     makes a  distribution  of any of its  assets  (other  than  cash  dividends
     payable  out of earnings or  retained  earnings in the  ordinary  course of
     business)  then,  in  each  such  case,  the  Conversion  Price  in  effect
     immediately  prior to such event  shall be  adjusted so that each holder of
     shares of Series A  Preferred  Stock  shall have the right to  convert  its
     shares  of Series A  Preferred  Stock  into the  number of shares of Common
     Stock which it would have owned after the event had such shares of Series A
     Preferred  Stock been  converted  immediately  before the happening of such
     event.  Any adjustment  under this Section  5(d)(i) shall become  effective
     retroactively  immediately  after the record date in the case of a dividend
     and distribution and shall become effective immediately after the effective
     date   in  the   case   of  a   issuance,   subdivision,   combination   or
     reclassification. If the Corporation pays a stock dividend in shares of its
     Common Stock and the holders of the Series A Preferred  Stock received such
     stock dividend


                                       7
<PAGE>

     pursuant to Section 2(b) hereof, the Conversion Price shall not be adjusted
     for such stock dividend under this Section 5(d)(i).

          (ii) Issuance of Additional  Shares of Stock. If the Corporation shall
     (except as hereinafter  provided) issue or sell Additional  Shares of Stock
     in exchange for  consideration  in an amount per Additional  Share of Stock
     less than the Conversion Price in effect immediately prior to such issuance
     or sale of Additional  Shares of Stock, then the Conversion Price as to the
     Common  Stock  into  which  the  Series A  Preferred  Stock is  convertible
     immediately  prior to such  adjustment  shall  be  adjusted  to  equal  the
     consideration  paid per Additional  Share of Stock.  The provisions of this
     Section  5(d)(ii)  shall not apply to any issuance of Additional  Shares of
     Common Stock for which an adjustment is provided  under Section  5(d)(i) or
     which are dividends or distributions  received by the holders of the Series
     A Preferred Stock pursuant to Section 2(b) hereof.

          (iii) (A) Issuance of Warrants or Other Rights. If at any time (i) the
     Corporation  shall in any manner  (whether  directly or by  assumption in a
     merger in which the Corporation is the surviving corporation) issue or sell
     any warrants or other rights to  subscribe  for or purchase any  Additional
     Shares of Stock or any Convertible Securities, whether or not the rights to
     exchange  or  convert  thereunder  are  immediately  exercisable,  and  the
     consideration   received  for  such   warrants  or  other  rights  or  such
     Convertible  Securities  shall be less than the Conversion  Price in effect
     immediately  prior to the time of such issue or sale,  then the  Conversion
     Price  shall be  adjusted  as  provided  in  Section  5(d)(ii).  No further
     adjustments of the Conversion  Price shall be made upon the actual issue of
     such Common Stock or of such Convertible Securities,  upon exercise of such
     warrants or other rights or upon the actual issue of such Common Stock upon
     such conversion or exchange of such Convertible Securities.

          (B) Issuance of Convertible Securities. If at any time the Corporation
     shall in any manner (whether directly or by assumption in a merger in which
     the  Corporation  is  the  surviving   corporation)   issue  or  sell,  any
     Convertible Securities, whether or not the rights to convert thereunder are
     immediately   exercisable,   and  the   consideration   received  for  such
     Convertible  Securities  shall be less than the Conversion  Price in effect
     immediately  prior to the time of such issue or sale,  then the  Conversion
     Price shall be adjusted as provided in Section  5(d)(ii).  No adjustment of
     the Conversion Price shall be made under this Section 5(d)(iii)(B) upon the
     issuance of any  Convertible  Securities  which are issued  pursuant to the
     exercise of any warrants or other subscription or purchase rights therefor,
     if any such adjustment shall previously have been made upon the issuance of
     such warrants or other rights pursuant to Section 5(d)(iii)(A).  No further
     adjustments of the Conversion  Price shall be made upon the actual issue of
     such Common Stock upon  conversion of such  Convertible  Securities and, if
     any issue or sale of such  Convertible  Securities is made upon exercise of
     any  warrant  or  other  right to  subscribe  for or to  purchase  any such
     Convertible  Securities for which  adjustments of the Conversion Price have
     been or are to be made  pursuant to other  provisions of this Section 5(d),
     no further  adjustments of the Conversion  Price shall be made by reason of
     such issue or sale.

          (iv) Superseding Adjustments.  If, at any time after any adjustment of
     the Conversion  Price at which the Series A Preferred  Stock is convertible
     shall  have been made  pursuant  to  Section  5(d)(iii)  as a result of any
     issuance of warrants, rights or Convertible Securities,


                                       8
<PAGE>

               (A) such  warrants  or  rights,  or the  right of  conversion  or
          exchange in such other Convertible  Securities,  shall expire, and all
          or a portion of such warrants or rights, or the right of conversion or
          exchange  with  respect to all or a portion of such other  Convertible
          Securities, as the case may be, shall not have been exercised, or

               (B) the  consideration  per share for which Additional  Shares of
          Stock are issuable  pursuant to such warrants or rights,  or the terms
          of such other Convertible Securities, shall be increased (to an amount
          greater than that which  triggered the  adjustment  of the  Conversion
          Price  pursuant to Section  5(d)(iii))  solely by virtue of provisions
          therein contained for an automatic  increase in such consideration per
          share upon the occurrence of a specified date or event,

     then such  previous  adjustment  shall be  rescinded  and  annulled and the
     Additional  Shares of Stock which were deemed to have been issued by virtue
     of the computation  made in connection with the adjustment so rescinded and
     annulled  shall no longer  be deemed to have been  issued by virtue of such
     computation. Thereupon, a recomputation shall be made of the effect of such
     warrants or rights or other Convertible Securities on the basis of

               (C)  treating the number of  Additional  Shares of Stock or other
          property,  if any, theretofore actually issued or issuable pursuant to
          the previous exercise of any such warrants or rights or any such right
          of conversion or exchange,  as having been issued on the date or dates
          of any such exercise and for the  consideration  actually received and
          receivable therefor, and

               (D)  treating  any such  warrants  or  rights  or any such  other
          Convertible  Securities  which then remain  outstanding as having been
          granted or issued  immediately  after the time of such increase of the
          consideration  per share for which Additional Shares of Stock or other
          property  are  issuable   under  such  warrants  or  rights  or  other
          Convertible Securities;

     whereupon a new  adjustment of the  Conversion  Price at which the Series A
     Preferred Stock is convertible  shall be made,  which new adjustment  shall
     supersede the previous adjustment so rescinded and annulled.

          (v) Antidilution Adjustments Under Other Securities.  Without limiting
     any  other  rights  available  hereunder  to the  holders  of the  Series A
     Preferred  Stock,  if there is an  antidilution  adjustment  (i)  under any
     Convertible Securities, whether issued prior to or after the Issue Date, or
     (ii) under any rights, options or warrants to purchase Additional Shares of
     Stock,  whether  issued  prior to or after the Issue Date which,  in either
     case, results in a reduction in the exercise or purchase price with respect
     to such  security  or rights or  results  in an  increase  in the number of
     Additional  Shares of Stock  obtainable  under such  Convertible  Security,
     right,  option  or  warrant,  then  an  adjustment  shall  be  made  to the
     Conversion  Price hereunder.  Any such adjustment  pursuant to this Section
     5(d)(v) shall be by whichever of the following  methods  results in a lower
     Conversion  Price:  (A) a reduction  in the  Conversion  Price equal to the
     percentage  reduction  in such  exercise or purchase  price with respect to


                                       9

<PAGE>

     such Convertible  Security,  right, option or warrant or (B) a reduction in
     the Conversion  Price which will result in the same percentage  increase in
     the number of shares of Common Stock available  hereunder as the percentage
     increase in the number of Additional  Shares of Stock  available under such
     Convertible  Security,  right, option or warrant. Any such adjustment under
     this  Section  5(d)(v)  shall  only be made if it would  result  in a lower
     Conversion Price than that which would be determined  pursuant to any other
     antidilution  adjustment  otherwise  required  hereunder as a result of the
     event or circumstance  which  triggered the adjustment to such  Convertible
     Security,  right, option or warrant,  and if an adjustment is made pursuant
     to this  Section  5(d)(v),  such other  antidilution  adjustment  otherwise
     required  hereunder  shall  not be  made  as a  result  of  such  event  or
     circumstance.

          (vi) Other  Provisions  Applicable to Adjustments  under this Section.
     The following  provisions shall be applicable to making  adjustments to the
     shares  of  Common  Stock  into  which  the  Series  A  Preferred  Stock is
     convertible and the Conversion  Price at which the Series A Preferred Stock
     is convertible provided for in this Section 5(d):

               (A)  Computation  of  Consideration.   To  the  extent  that  any
          Additional  Shares  of  Stock  or any  Convertible  Securities  or any
          warrants or other rights to subscribe  for or purchase any  Additional
          Shares of Stock or any Convertible Securities shall be issued for cash
          consideration,  the consideration received by the Corporation therefor
          shall be the amount of the cash received by the Corporation  therefor,
          or, if such Additional  Shares of Stock or Convertible  Securities are
          offered by the Corporation for subscription,  the subscription  price,
          or, if such Additional  Shares of Stock or Convertible  Securities are
          sold  to  underwriters  or  dealers  for  public  offering  without  a
          subscription  offering,  the public  offering  price (in any such case
          subtracting  any amounts paid or  receivable  for accrued  interest or
          accrued dividends and any compensation,  discounts or expenses paid or
          incurred  by  the  Corporation  for  and in the  underwriting  of,  or
          otherwise in connection with, the issuance thereof, to the extent such
          amounts  shall exceed in any such case five percent (5%) of the amount
          of cash received, subscription price or public offering price). To the
          extent  that such  issuance  shall be for a  consideration  other than
          cash, then except as herein otherwise expressly  provided,  the amount
          of such  consideration  shall be deemed  to be the fair  value of such
          consideration at the time of such issuance as determined in good faith
          by the Board of Directors of the  Corporation.  In case any Additional
          Shares of Stock or any Convertible Securities or any warrants or other
          rights to subscribe for or purchase such Additional Shares of Stock or
          Convertible  Securities  shall be issued in connection with any merger
          in  which  the  Corporation  issues  any  securities,  the  amount  of
          consideration  therefor  shall  be  deemed  to be the fair  value,  as
          determined in good faith by the Board of Directors of the Corporation,
          of  such  portion  of the  assets  and  business  of the  nonsurviving
          corporation  as  such  Board  in  good  faith  shall  determine  to be
          attributable   to  such  Additional   Shares  of  Stock,   Convertible
          Securities,  warrants  or  other  rights,  as the  case  may  be.  The
          consideration  for any Additional Shares of Stock issuable pursuant to
          any  warrants or other  rights to  subscribe  for or purchase the same
          shall be the  consideration  received by the  Corporation  for issuing
          such  warrants  or  other  rights  plus the  additional  consideration
          payable to the  Corporation  upon  exercise of such  warrants or other
          rights.  The consideration for any Additional Shares of Stock issuable
          pursuant  to the  terms  of any  Convertible  Securities  shall be the
          consideration  received by the  Corporation  for  issuing  warrants or
          other rights to subscribe for or


                                       10

<PAGE>

          purchase such Convertible  Securities,  plus the consideration paid or
          payable  to the  Corporation  in respect  of the  subscription  for or
          purchase  of  such   Convertible   Securities,   plus  the  additional
          consideration, if any, payable to the Corporation upon the exercise of
          the right of conversion or exchange in such Convertible Securities. In
          case of the issuance at any time of any Additional  Shares of Stock or
          Convertible  Securities  in payment or  satisfaction  of any dividends
          upon any class of stock other than Common Stock, the Corporation shall
          be  deemed to have  received  for such  Additional  Shares of Stock or
          Convertible  Securities  a  consideration  equal to the amount of such
          dividend so paid or satisfied.

               (B) When Adjustments to Be Made. The adjustments required by this
          Section  5(d)  shall  be  made  whenever  and as  often  as any  event
          requiring an adjustment shall occur, except that any adjustment of the
          Conversion  Price that would  otherwise  be required  may be postponed
          (except in the case of a subdivision  or  combination of shares of the
          Common  Stock,  as  provided  for in Section  5(d)(i))  up to, but not
          beyond,  the date of exercise if such  adjustment  either by itself or
          with other  adjustments  not previously made amount to a change in the
          Conversion  Price of less than $.05.  Any  adjustment  representing  a
          change of less than such minimum amount (except as aforesaid) which is
          postponed   shall  be  carried  forward  and  made  as  soon  as  such
          adjustment,  together with other adjustments  required by this Section
          5(d) and not previously made, would result in a minimum  adjustment or
          on the date of  conversion.  For the  purpose of any  adjustment,  any
          event shall be deemed to have occurred at the close of business on the
          date of its occurrence.

               (C) Fractional  Interests.  In computing  adjustments  under this
          Section 5(d),  fractional interests in the Common Stock shall be taken
          into account to the nearest 1/100th of a share.

               (D) Challenge to Good Faith Determination.  Whenever the Board of
          Directors of the Corporation shall be required to make a determination
          in good faith of the fair value of any item under this  Section  5(d),
          such  determination  may be challenged in good faith by (1) any holder
          of thirty  percent (30%) or more of Series A Preferred  Stock or (2) a
          Designated  Entity, and any dispute shall be resolved by an investment
          banking firm of recognized  national  standing jointly selected by the
          Corporation  and such holder or  Designated  Entity.  The fees of such
          investment  banker shall be borne by such holder or Designated  Entity
          unless the  Corporation's  calculation is determined to be understated
          by five percent (5%) or more.

          (vii) Reorganization,  Reclassification,  Merger or Consolidation.  If
     the Corporation  shall at any time reorganize or reclassify the outstanding
     shares of Common  Stock  (other than a change in par value,  or from no par
     value to par value,  or from par value to no par value, or as a result of a
     subdivision  or  combination)  or  consolidate  with or merge into  another
     corporation (where the Corporation is not the continuing  corporation after
     such merger or  consolidation),  the  holders of Series A  Preferred  Stock
     shall  thereafter  be entitled to receive upon  conversion  of the Series A
     Preferred  Stock in whole or in part, the same kind and number of shares of
     stock and other securities, cash or other property (and upon the same terms
     and with the same rights) as would have been  distributed  to a holder upon
     such  reorganization,  reclassification,  consolidation  or merger had such
     holder  converted its


                                       11
<PAGE>

     Series  A  Preferred  Stock  immediately  prior  to  such   reorganization,
     reclassification,   consolidation   or  merger   (subject   to   subsequent
     adjustments  under Section 5(d)  hereof).  The  Conversion  Price upon such
     conversion  shall be the Conversion Price that would otherwise be in effect
     pursuant  to the  terms  hereof.  Notwithstanding  anything  herein  to the
     contrary,   the  Corporation  will  not  effect  any  such  reorganization,
     reclassification,  merger or consolidation unless prior to the consummation
     thereof,  the  corporation  which may be  required  to  deliver  any stock,
     securities  or other assets upon the  conversion  of the Series A Preferred
     Stock shall agree by an instrument in writing to deliver such stock,  cash,
     securities or other assets to the holders of the Series A Preferred  Stock.
     A sale,  transfer or lease of all or substantially all of the assets of the
     Corporation   to  another   person   shall  be  deemed  a   reorganization,
     reclassification, consolidation or merger for the foregoing purposes.

          (viii) Exceptions to Adjustment of Conversion  Price.  Anything herein
     to the  contrary  notwithstanding,  the  Corporation  shall  not  make  any
     adjustment  of the  Conversion  Price in the case of  Additional  Shares of
     Stock.

          (ix) Chief Financial  Officer's  Opinion.  Upon each adjustment of the
     Conversion  Price, and in the event of any change in the rights of a holder
     of Series A  Preferred  Stock by reason of other  events  herein set forth,
     then and in each such case, the Corporation will promptly obtain an opinion
     of the chief  financial  officer of the  Corporation,  stating the adjusted
     Conversion  Price,  or  specifying  the other  shares of the Common  Stock,
     securities or assets and the amount thereof  receivable as a result of such
     change in rights,  and  setting  forth in  reasonable  detail the method of
     calculation  and the facts  upon  which  such  calculation  is  based.  The
     Corporation  will  promptly  mail a copy of such  opinion to the holders of
     Series A Preferred  Stock.  If a holder of thirty  percent (30%) or more of
     Series A  Preferred  Stock  or a  Designated  Entity  disagrees  with  such
     calculation,  the  Corporation  agrees to  obtain  within  forty-five  (45)
     Business  Days  an  opinion  of a  firm  of  independent  certified  public
     accountants selected by the Corporation's Board of Directors and acceptable
     to such holder to review such  calculation  and the opinion of such firm of
     independent  certified public accountants shall be final and binding on the
     parties  and  shall  be  conclusive  evidence  of  the  correctness  of the
     computation  with respect to any such  adjustment of the Conversion  Price.
     The fees of such  accountants  shall be borne by such holder or  Designated
     Entity  unless  the  calculation  of the  chief  financial  officer  of the
     Corporation is determined to be understated by five percent (5%) or more.

          (x) Corporation to Prevent Dilution.  In case at any time or from time
     to time  conditions  arise by reason of  action  taken by the  Corporation,
     which in the good faith  opinion of its Board of Directors or a majority of
     the holders of the Series A Preferred  Stock are not adequately  covered by
     the  provisions  of this  Section  5(d),  and which  might  materially  and
     adversely  affect  the  exercise  rights  of the  holders  of the  Series A
     Preferred  Stock,  the Board of Directors of the Corporation  shall appoint
     such firm of  independent  certified  public  accountants  acceptable  to a
     majority of the holders of the Series A Preferred  Stock,  which shall give
     their opinion upon the adjustment,  if any, on a basis  consistent with the
     standards  established  in the  other  provisions  of  this  Section  5(d),
     necessary with respect to the Conversion Price, so as to preserve,  without
     dilution  (other than as  specifically  contemplated  by the Certificate of
     Incorporation),  the  exercise  rights  of  the  holders  of the  Series  A
     Preferred  Stock.  Upon receipt of such opinion,  the Board of Directors of
     the Corporation shall forthwith make the adjustments described therein.


                                       12

<PAGE>

     (e)  No  Impairment.   The  Corporation  will  not,  by  amendment  of  its
Certificate of  Incorporation or through any  reorganization,  recapitalization,
transfer  of  assets,  consolidation,  merger,  dissolution,  issue  or  sale of
securities or any other voluntary action,  avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed  hereunder by the
Corporation,  but will at all times in good faith  assist in the carrying out of
all the  provisions  of Section 5 hereof and in the taking of all such action as
may be necessary or appropriate in order to protect the conversion rights of the
holders of the Series A Preferred Stock against impairment.

     (f) No Fractional Share  Adjustments.  No fractional shares shall be issued
upon  conversion of the Series A Preferred  Stock. If more than one share of the
Series A Preferred Stock is to be converted at one time by the same stockholder,
the number of full shares issuable upon such conversion shall be computed on the
basis of the  aggregate  amount of the  shares to be  converted.  Instead of any
fractional  shares of Common  Stock  which  would  otherwise  be  issuable  upon
conversion of any shares of Series A Preferred Stock, the Corporation will pay a
cash adjustment in respect of such fractional interest in an amount equal to the
same  fraction  of the  Market  Price per share of Common  Stock at the close of
business on the day of conversion  which such shares of Series A Preferred Stock
would be convertible into on such date.

     (g) Shares to be Reserved.  The Corporation  shall at all times reserve and
keep available, out of its authorized and unissued stock, solely for the purpose
of effecting  the  conversion  of the Series A Preferred  Stock,  such number of
shares of Common  Stock as shall from time to time be  sufficient  to effect the
conversion of all of the Series A Preferred Stock from time to time outstanding.
The  Corporation  shall from time to time,  in  accordance  with the laws of the
State of New York,  increase the authorized  number of shares of Common Stock if
at any time the number of shares of authorized  but unissued  Common Stock shall
be  insufficient  to permit the  conversion  in full of the  Series A  Preferred
Stock.

     (h) Taxes and Charges.  The Corporation will pay any and all issue or other
taxes that may be payable in respect of any  issuance  or  delivery of shares of
Common Stock on  conversion  of the Series A Preferred  Stock.  The  Corporation
shall not,  however,  be required to pay any tax which may be payable in respect
of any  transfer  involved in the issuance or delivery of Common Stock in a name
other  than  that of the  Series A  Preferred  Stock,  and no such  issuance  or
delivery shall be made unless and until the Person  requesting such issuance has
paid to the  Corporation  the  amount  of such  tax or has  established,  to the
satisfaction of the Corporation, that such tax has been paid.

     (i) Accrued Dividends.  Upon conversion of any shares of Series A Preferred
Stock,  the holder  thereof  shall be entitled to receive any accrued but unpaid
dividends  in respect of the shares of Series A Preferred  Stock so converted to
the date of such conversion.

     (j) Closing of Books.  The  Corporation  will at no time close its transfer
books  against the transfer of any shares of Series A Preferred  Stock or of any
shares of Common Stock issued or issuable  upon the  conversion of any shares of
Series A  Preferred  Stock  in any  manner  which  interferes  with  the  timely
conversion of such shares of Series A Preferred Stock.


                                       13
<PAGE>

     6. Redemption

     (a)  Redemption  Price.  Any  redemption  of the Series A  Preferred  Stock
pursuant to Section 6(b) shall be at a price per share equal to the  Liquidation
Value plus all declared but unpaid dividends thereon through the redemption date
(the  "Mandatory  Redemption  Price").  Any redemption of the Series A Preferred
Stock pursuant to Section 6(d) shall be at a price per share equal to the Series
A  Liquidation  Preference,  except  that,  for purposes of  calculation  of the
redemption  price under this  Section  6(a),  clause (ii) of the  definition  of
Series A  Liquidation  Preference  in Section 3(a) hereof shall  provide for the
amount per share such holders  would have received if such holders had converted
their shares of Series A Preferred Stock into shares of Common Stock immediately
prior to the Fundamental Change (the "Optional Redemption Price"). The Mandatory
Redemption Price shall be paid, at the election of the  Corporation,  in cash or
shares of Common Stock which have been registered under a registration statement
under the Securities Act of 1933, as amended,  which  registration  statement is
effective,  provided,  that, for purposes of calculating the number of shares of
Common  Stock to be received by each  holder of Series A Preferred  Stock,  each
such share of Common Stock shall be valued at 90% of the Market Price.

     (b) Redemption at the Corporation's Option. Subject to Section 6(a) hereof,
the  Corporation  may, it its option,  redeem all, but not less than all, of the
then outstanding shares of Series A Preferred Stock at the Mandatory  Redemption
Price on March 31, 2004.

     (c) Procedures for Redemption at the Corporation's Option. In the event the
Corporation  shall redeem shares of Series A Preferred Stock pursuant to Section
6(b),  the  Corporation  shall give written  notice of such  redemption by first
class  mail,  postage  prepaid,  mailed not less than  thirty (30) nor more than
ninety (90) days prior to the  redemption  date, to each holder of record of the
shares to be redeemed, at such holder's address as the same appears on the stock
records of the  Corporation.  Each such notice shall state:  (i) the  redemption
date;  (ii) the  number of shares of Series A  Preferred  Stock to be  redeemed;
(iii) the Mandatory  Redemption Price or Optional  Redemption Price, as the case
may be; (iv) the place or places  where  certificates  for such shares are to be
surrendered for payment of the Mandatory Redemption Price or Optional Redemption
Price, as the case may be; (v) that payment will be made upon  presentation  and
surrender of such Series A Preferred  Stock;  (vi) the then  current  Conversion
Price;  (vii) that  dividends on the shares to be redeemed shall cease to accrue
following such redemption  date;  (viii) that such  redemption is mandatory,  if
pursuant  to  Section  6(b);  and (ix) that  dividends,  if any,  accrued to and
including  the date  fixed  for  redemption  will be paid as  specified  in such
notice.  Notice having been mailed as aforesaid,  from and after the  redemption
date, unless the Corporation shall be in default in the payment of the Mandatory
Redemption Price or Optional Redemption Price, as the case may be (including any
accrued and unpaid  dividends to (and including) the date fixed for redemption),
(A)  dividends  on the  shares of the  Series A  Preferred  Stock so called  for
redemption  shall  cease to accrue,  (B) such  shares  shall be deemed no longer
outstanding  and (C) all rights of the holders  thereof as  stockholders  of the
Corporation  (except the right to receive  from the  Corporation  (i) any moneys
payable upon redemption without interest thereon and (ii) any shares of Series A
Preferred Stock and Common Stock pursuant to Section 6(a) hereof) shall cease.

     Upon surrender in accordance with such notice of the  certificates  for any
such shares so redeemed  (properly  endorsed or assigned  for  transfer,  if the
Board of Directors shall so require and the notice shall so state),  such shares
shall be redeemed by the  Corporation  at the  applicable  Mandatory  Redemption
Price.


                                       14
<PAGE>

     Notwithstanding  the  foregoing,  if notice of  redemption  has been  given
pursuant to this Section 6 and any holder of shares of Series A Preferred  Stock
shall,  prior to the close of business on the third (3rd) Business Day preceding
the redemption date, give written notice to the Corporation  pursuant to Section
5(b) hereof of the conversion of any or all of the shares to be redeemed held by
such holder  (accompanied by a certificate or certificates for such shares, duly
endorsed or assigned to the Corporation),  then the conversion of such shares to
be redeemed shall become effective as provided in Section 5 hereof.

     (d)  Redemption at Option of Holder Upon a Fundamental  Change.  Subject to
Section 6(a) hereof,  if a Fundamental  Change  occurs,  each holder of Series A
Preferred  Stock shall have the right,  at the holder's  option,  to require the
Corporation to repurchase all of such holder's Series A Preferred  Stock, or any
portion thereof, on the date (the "Repurchase Date") selected by the Corporation
that is not less than ten (10) nor more than  twenty  (20) days  after the Final
Surrender Date, at a price per share equal to the Optional Redemption Price. The
Corporation  agrees that it will not  complete  any  Fundamental  Change  unless
proper  provision  has been made to satisfy its  obligations  under this Section
6(d).

     (e)  Notice of  Fundamental  Change.  Within  thirty  (30)  days  after the
occurrence of a Fundamental Change, the Corporation shall mail to all holders of
record of the Series A Preferred Stock a notice in the manner and containing the
information  set out in Section 6(c),  except that, for purposes of this Section
6(e), such notice shall also describe the occurrence of such Fundamental  Change
and the repurchase right arising as a result thereof. To exercise the repurchase
right,  a holder of Series A Preferred  Stock must  surrender,  on or before the
date which is, subject to any contrary  requirements  of applicable  law, thirty
(30) days  after the date of mailing of the  notice  from the  Corporation  (the
"Final Surrender  Date"),  the certificates  representing the Series A Preferred
Stock with  respect to which the right is being  exercised,  duly  endorsed  for
transfer to the Corporation, together with a written notice of election.

     (f)  Election  Irrevocable.  An  election by a holder of Series A Preferred
Stock to have the  Corporation  repurchase  shares of Series A  Preferred  Stock
pursuant to Section  6(d) shall become  irrevocable  at the close of business on
the relevant Repurchase Date.

     7. Shares to be Retired.  Any share of Series A Preferred Stock  converted,
redeemed,  repurchased or otherwise acquired by the Corporation shall be retired
and  cancelled  and  shall  upon  cancellation  be  restored  to the  status  of
authorized but unissued shares of preferred stock,  subject to reissuance by the
Board of Directors as shares of preferred  stock of one or more other series but
not as shares of Series A Preferred Stock.

     8. Preemptive Rights.

     (a) Except (i) for issuances of pro rata dividends to all holders of Common
Stock, (ii) stock issued to employees,  officers or directors in connection with
management options or incentive plans approved by the Board of Directors,  (iii)
stock issued in connection with any merger,  acquisition or business combination
or (iv) stock issued for  consideration  amounting to less than  $500,000 in any
single transaction where the purchase price is not less than the then applicable
Conversion  Price,  provided that the aggregate amount of all such  transactions
shall not exceed  $1,000,000,  the holders of the Series A Preferred  Stock,  in
order to  enable  such  holders  to  maintain


                                       15
<PAGE>

their  fully  diluted  percentage  ownership  of  the  Corporation,  shall  have
preemptive  rights,  as  hereinafter  set forth,  to purchase any capital stock,
including  any warrants or securities  convertible  into capital  stock,  of the
Corporation hereafter issued by the Corporation so that a holder of the Series A
Preferred  Stock shall  hereafter be entitled to acquire a percentage of capital
stock which is hereafter  issued equal to the same  percentage of the issued and
outstanding  Common Stock of the  Corporation as is held (directly or obtainable
upon  conversion  of the Series A  Preferred  Stock) by such  holder of Series A
Preferred Stock  immediately  prior to the date on which the capital stock is to
be issued. As used herein,  "issue" (and variations  thereof) includes sales and
transfers by the Corporation of treasury shares.

     (b) The  Corporation  shall,  before issuing any  additional  capital stock
(other than the  exceptions  referred to in Section 8(a)  hereof),  give written
notice thereof to the holders of the Series A Preferred Stock. Such notice shall
specify  what  type of  instrument  the  Corporation  intends  to issue  and the
consideration which the Corporation intends to receive therefor. For a period of
twenty  (20) days  following  receipt by the  holders of the Series A  Preferred
Stock of such  notice,  the  Corporation  shall be  deemed  to have  irrevocably
offered  to sell to the  holders of the Series A  Preferred  Stock a  sufficient
number of shares  of such  capital  stock so that the  holders  of the  Series A
Preferred Stock, if such holders elect to acquire such shares as hereinafter set
forth,  shall be capable of acquiring the same  percentage of such shares as the
percentage  of Common Stock  beneficially  owned  (directly or  obtainable  upon
conversion of the Series A Preferred Stock) by such holders immediately prior to
the proposed issuance.  In the event any such offer is accepted,  in whole or in
part, by the holders of the Series A Preferred Stock, the Corporation shall sell
such shares to holders of the Series A Preferred Stock for the consideration and
on the precise  terms set forth in the  Corporation's  notice  (given  under the
first two sentences of this paragraph). In the event that one or more holders of
the Series A Preferred  Stock  elects not to, or fails to,  exercise  its rights
under this Section 8(b) within the twenty (20) day period,  then the Corporation
may issue the  remaining  shares of capital  stock to third persons but only for
the same  consideration set forth in the  Corporation's  notice (given under the
first two sentences of this  paragraph)  and no later than sixty (60) days after
the expiration of such twenty (20) day period.  The closing for such transaction
shall take place as proposed by the  Corporation  with  respect to the shares of
capital  stock  proposed to be issued,  at which closing the  Corporation  shall
deliver  certificates for the shares of capital stock in the respective names of
the holders of the Series A Preferred Stock against receipt of the consideration
therefor.

     (c)  Notwithstanding  any other provision hereof, (i) the preemptive rights
granted to holders of Series A Preferred Stock by this Section 8 shall terminate
with  respect  to a share of Series A  Preferred  Stock upon the  conversion  or
redemption  of such share of Series A  Preferred  Stock in  accordance  with the
provisions  hereof  and  (ii)  the  holders  of  Series A  Preferred  Stock  and
Conversion Shares shall not increase the fully diluted  percentage  ownership of
the  Corporation  beyond such level as exists  immediately  following  the Issue
Date,  whether by operation of the provisions of Section 2 or 5 hereof,  through
an  open  market  purchase  or  otherwise,  except  where  the  Corporation  (a)
determines to pay dividends in additional  shares of Series A Preferred Stock as
permitted by Section 2(a)(i),  (b) is in financial distress and chooses to issue
securities to such holders,  (c) repurchases  outstanding  shares of its capital
stock or takes other corporate action having a similar effect or (d) pursuant to
Section  5(d),  has issued or sold  Additional  Shares of Stock in exchange  for
consideration  in an  amount  per  Additional  Share  of  Stock  less  than  the
Conversion Price in effect immediately prior to such issuance or sale.


                                       16
<PAGE>

     9. Call

     (a) Call at the  Corporation's  Option.  Subject to the other provisions of
this Section 9, on any date after March 30, 2001, the Corporation shall have the
right to  purchase  all (but not less than all)  outstanding  shares of Series A
Preferred Stock (the "Call"), provided,  however, that (i) the Market Price of a
share of Common Stock is equal to, or greater  than,  an amount equal to 250% of
the then applicable  Conversion  Price and (ii) the Common Stock has traded,  on
the  principal  market for the Common  Stock,  with an average  daily  volume in
excess of 20,000  shares for a period of 30  consecutive  days ending on the day
immediately  prior to such date.  Any  purchase of the Series A Preferred  Stock
pursuant  to this  Section  9(a)  shall  be at a price  per  share  of  Series A
Preferred Stock equal to the Mandatory Redemption Price.

     (b)  Procedures for Call at the  Corporation's  Option.  The  Corporation's
right to Call the Series A Preferred  Stock  pursuant  to Section  9(a) shall be
conditioned  upon the Corporation  giving notice (the "Call  Notice"),  by first
class mail,  postage prepaid,  of the exercise of the Call to the holders of the
Series A  Preferred  Stock not less than twenty five (25) days prior to the date
of the exercise of the Call (the "Call Date"). Each Call Notice shall state: (i)
the Call Date; (ii) the Mandatory  Redemption  Price;  (iii) the place or places
where  certificates  for such  shares are to be  surrendered  for payment of the
Mandatory Redemption Price; (iv) that payment will be made upon presentation and
surrender  of such Series A Preferred  Stock;  (v) the then  current  Conversion
Price  and the date on which  the  right to  convert  such  shares  of  Series A
Preferred  Stock will expire;  (vi) that dividends on the shares to be purchased
shall  cease to  accrue  following  such  Call  Date;  (vii)  that  such Call is
mandatory;  and (viii) that dividends, if any, accrued to and including the Call
Date will be paid as  specified  in such  notice.  Notice  having been mailed as
aforesaid,  from and after the Call  Date,  unless the  Corporation  shall be in
default in the payment of the Mandatory  Redemption Price (including any accrued
and unpaid  dividends to (and  including)  the Call Date),  (A) dividends on the
shares of the Series A Preferred  Stock  shall cease to accrue,  (B) such shares
shall be deemed no longer  outstanding and (C) all rights of the holders thereof
as  stockholders  of the  Corporation  (except  the  right to  receive  from the
Corporation  (i) any moneys  payable upon exercise of the Call without  interest
thereon and (ii) any shares of Common Stock  pursuant to Section 5 hereof) shall
cease.

     Upon surrender in accordance with the Call Notice of the  certificates  for
any such shares so purchased (properly endorsed or assigned for transfer, if the
Board of Directors  shall so require and the Call Notice  shall so state),  such
shares  shall  be  purchased  by the  Corporation  at the  applicable  Mandatory
Redemption Price.

     Notwithstanding  the foregoing,  if the Call Notice has been given pursuant
to this  Section 9 and any holder of shares of Series A Preferred  Stock  shall,
prior to the close of business on the twentieth (20th) day after receipt of such
Call Notice,  give written  notice to the  Corporation  pursuant to Section 5(b)
hereof of the  conversion  of any or all of the shares to be  purchased  held by
such holder  (accompanied by a certificate or certificates for such shares, duly
endorsed or assigned to the Corporation), then (i) the conversion of such shares
to be purchased shall become  effective as provided in Section 5 hereof and (ii)
the Corporation's right to Call such shares to be purchased shall terminate.

     10  Definitions.  As used  herein,  the  following  terms  shall  have  the
respective meanings set forth below:


                                       17
<PAGE>

          "Additional  Shares of Stock"  means all shares of Common Stock issued
     by the Corporation  after the Issue Date, other than (i) Common Stock to be
     issued upon conversion of the Series A Preferred Stock, (ii) 500,000 shares
     of Common Stock  reserved for issuance under future stock option plans that
     may be approved and (iii)  1,857,664  shares of Common Stock reserved or to
     be  reserved  for  issuance  under stock  options,  stock  option  plans or
     warrants in effect as of the date of the resolution  pursuant to which this
     Certificate of Amendment has been adopted.

          "Affiliate",  when used with respect to any Person,  means (i) if such
     Person is a  corporation,  any  officer or director  thereof  (other than a
     director  elected  pursuant to Section 4 hereof)  and any Person  which is,
     directly or indirectly,  the beneficial  owner (by itself or as part of any
     group) of more than five percent  (5%) of any class of any equity  security
     (within the meaning of the  Securities  Exchange  Act of 1934,  as amended)
     thereof,  and,  if such  beneficial  owner is a  partnership,  any  general
     partner thereof,  or if such beneficial owner is a corporation,  any Person
     controlling,  controlled  by or under common  control with such  beneficial
     owner,  or any  officer  or  director  of such  beneficial  owner or of any
     corporation occupying any such control relationship, (ii) if such Person is
     a partnership,  any general or limited partner thereof, and (iii) any other
     Person which,  directly or  indirectly,  controls or is controlled by or is
     under common  control with such  Person.  For purposes of this  definition,
     "control" (including the correlative terms  "controlling",  "controlled by"
     and "under common control  with"),  with respect to any Person,  shall mean
     possession,  directly  or  indirectly,  of the power to direct or cause the
     direction of the  management and policies of such Person,  whether  through
     the ownership of voting securities or by contract or otherwise.

          "Business Day" means any day other than a Saturday,  Sunday or any day
     on which  banks in the State of New York are  authorized  or  obligated  to
     close.

          "Call" shall have the meaning set forth in Section 9(a).

          "Call Date" shall have the meaning set forth in Section 9(b).

          "Call Notice" shall have the meaning set forth in Section 9(b).

          "Common Stock" means the  Corporation's  Common Stock,  par value $.01
     per share,  and shall also  include  any  common  stock of the  Corporation
     hereafter  authorized and any capital stock of the Corporation of any other
     class hereafter authorized which is not preferred as to dividends or assets
     over any  other  class of  capital  stock of the  Corporation  or which has
     ordinary voting power for the election of directors of the Corporation.

          "Conversion  Price"  means  the  Conversion  Price per share of Common
     Stock into  which the  Series A  Preferred  Stock is  convertible,  as such
     Conversion Price may be adjusted pursuant to Section 5 hereof.  The initial
     Conversion Price will be $2.375.


                                       18
<PAGE>

          "Convertible  Securities"  means evidences of indebtedness,  shares of
     preferred  stock  or  other   securities  which  are  convertible  into  or
     exchangeable,  with or without payment of additional  consideration in cash
     or property, for Additional Shares of Stock, either immediately or upon the
     occurrence of a specified date or a specified event,  other than the Series
     A Preferred Stock.

          "Designated Entity" means, in connection with the rights of any Person
     holding less than thirty percent (30%), in the aggregate, of the Shares and
     Conversion  Shares (as such terms are defined  below in the  definition  of
     "Fleming Holders"), (i) as long as any Shares or Conversion Shares are held
     by any  Person  identified  in  clause  (i) or  (ii) of the  definition  of
     "Fleming Holders",  Fleming Capital Management,  320 Park Avenue, New York,
     NY 10022,  Attention:  Robert  L. Burr and (ii) if no Shares or  Conversion
     Shares  are  held  by a  Person  identified  in  clause  (i) or (ii) of the
     definition of "Fleming  Holders",  the entity  designated by the Transferee
     holding the largest number of such shares,  provided,  that such Transferee
     owns thirty  percent  (30%) or more,  in the  aggregate,  of the Shares and
     Conversion  Shares (in which case such  Transferee  shall provide notice to
     the  Corporation  of such  entity).  For so long as no Shares or Conversion
     Shares  are held by any  Person  identified  in  clause  (i) or (ii) of the
     definition of "Fleming Holders" and no Person holds thirty percent (30%) or
     more, in the aggregate, of the Shares and Conversion Shares, there shall be
     no  Designated  Entity.  For  purposes of this  definition  of  "Designated
     Entity," the  calculation of a Person's  percentage  holdings of Conversion
     Shares shall be determined  based upon the number of Shares from which such
     Conversion Shares derived.

          "Final  Surrender  Date"  shall have the  meaning set forth in Section
     6(e).

          "Fleming  Funds" means Fleming US Discovery Fund III, L.P. and Fleming
     US Discovery Offshore Fund III, L.P.

          "Fleming  Holders"  means (i) the Fleming  Funds,  (ii) any Affiliate,
     officer or  employee  of an  Affiliate  or  investment  fund  managed by an
     Affiliate  of the  Fleming  Funds to which the Fleming  Funds may  transfer
     record  and/or  beneficial  ownership  of any shares of Series A  Preferred
     Stock (the  "Shares") or any shares of Common Stock  obtained or obtainable
     upon  conversion  of the Shares  (the  "Conversion  Shares")  and (iii) any
     transferee of Shares or Conversion Shares from a Person named in clause (i)
     or (ii)  hereof  (provided  that such  transferee  is  consented  to by the
     Corporation,  such consent not to be unreasonably  withheld),  other than a
     transferee of Shares or Conversion  Shares sold in either a public offering
     pursuant to a registration  statement  under the Securities Act or pursuant
     to Rule 144 under the Securities Act. The "Conversion Shares" shall include
     any capital  stock or other  securities  into which  Conversion  Shares are
     changed  and any  capital  stock  or  other  securities  resulting  from or
     comprising a  reclassification,  combination or subdivision  of, or a stock
     dividend on, any Conversion Shares.

          "Fundamental Change" means any of the following events:

               (i) the  sale  (or  functional  equivalent  of a sale)  of all or
          substantially all of the assets of the Corporation;


                                       19
<PAGE>

               (ii) any event  (A)  which  results  in the  registration  of the
          Corporation's  Common Stock under the Securities Exchange Act of 1934,
          as amended, to be no longer required; (B) requiring the Corporation to
          make a filing under  Section 13(e) of the  Securities  Exchange Act of
          1934, as amended; (C) reducing substantially or eliminating the public
          market for shares of Common Stock of the Corporation; or (D) causing a
          delisting  of the  Corporation's  Common  Stock from the Nasdaq  Stock
          Market,  except  if such  delisting  is a result  of the  transactions
          contemplated  by the Stock  Purchase  Agreements,  in which  event the
          Company  shall use its best  efforts to cause its  Common  Stock to be
          relisted on the NASDAQ Stock Market;

               (iii) any consolidation of the Corporation with, or merger of the
          Corporation into, any other person,  any merger of another person into
          the  Corporation  or any  other  business  combination  involving  the
          Corporation  which results in the holders of the  Corporation's  stock
          immediately  prior to giving effect to such transaction  owning shares
          of capital  stock of the  surviving  corporation  in such  transaction
          representing (x) fifty percent (50%) or less of the total voting power
          of all shares of capital stock of such surviving  corporation entitled
          to vote  generally in the  election of directors or (y) fifty  percent
          (50%)  or  less  of the  total  value  of all  capital  stock  of such
          surviving corporation; or

               (iv) the  commencement  by the  Corporation  of a voluntary  case
          under the Federal  bankruptcy laws or any other applicable  Federal or
          state  bankruptcy,  insolvency  or  similar  law;  the  consent by the
          Corporation to the entry of an order for relief in an involuntary case
          under  such  law  or to the  appointment  of a  receiver,  liquidator,
          assignee, custodian, trustee, sequestrator (or other similar official)
          of the  Corporation or of any  substantial  part of its property;  any
          assignment by the  Corporation  for the benefit of its creditors;  any
          admission by the  Corporation  in writing of its  inability to pay its
          debts generally as they become due; the entry of a decree or order for
          relief in respect of the Corporation by a court having jurisdiction in
          the premises in an involuntary  case under Federal  bankruptcy laws or
          any  other  applicable  Federal  or state  bankruptcy,  insolvency  or
          similar law appointing a receiver,  liquidator,  assignee,  custodian,
          trustee,  sequestrator (or other similar  official) of the Corporation
          or of any substantial part of its property, or ordering the winding up
          or  liquidation  of its affairs,  and on account of any such event the
          Corporation shall liquidate,  dissolve or wind up; or the liquidation,
          dissolution  or  winding  up  of  the  Corporation   under  any  other
          circumstances.

               "Issue Date" means, as to any share of Series A Preferred  Stock,
          the date of original issuance thereof by the Corporation.

               "Junior  Securities" mean the Common Stock and any other class of
          capital stock or series of preferred stock existing on the date hereof
          or  hereafter  created by the  Corporation  which  does not  expressly
          provide  that it ranks  senior  to or pari  passu


                                       20
<PAGE>

          with  the   Series  A   Preferred   Stock  as  to   dividends,   other
          distributions, liquidation preference or otherwise.

               "Liquidation  Value"  means  $100 per share  with  respect to the
          Series A Preferred Stock.

               "Mandatory  Redemption Price" shall have the meaning set forth in
          Section 6(a).

               "Market  Price"  means,  as  to  any  security  on  the  date  of
          determination  thereof,  the  average  of the  closing  prices of such
          security's sales on all principal United States  securities  exchanges
          on which such  security may at the time be listed,  or, if there shall
          have been no sales on any such  exchange on any day,  the last trading
          price of such security on such day, or if such there is no such price,
          the average of the bid and asked prices at the end of such day, on the
          Nasdaq Stock Market, in each such case averaged for a period of thirty
          (30) consecutive  calendar days prior to the day when the Market Price
          is being determined.  Notwithstanding  the foregoing,  with respect to
          the issuance of any  security by the  Corporation  in an  underwritten
          public  offering,  the Market  Price  shall be the per share  purchase
          price paid by the  underwriters.  If at any time such  security is not
          listed on any  exchange or the Nasdaq Stock  Market,  the Market Price
          shall  be  deemed  to be  the  fair  value  thereof  determined  by an
          investment banking firm of nationally  recognized standing selected by
          the Board of Directors of the Corporation and acceptable to holders of
          a majority  of the Series A  Preferred  Stock,  as of the most  recent
          practicable  date when the  determination  is to be made,  taking into
          account the value of the  Corporation as a going concern,  and without
          taking into  account  any lack of  liquidity  of such  security or any
          discount for a minority interest.

               "Optional  Redemption  Price" shall have the meaning set forth in
          Section 6(a).

               "Parity  Securities" mean any class of capital stock or series of
          preferred  stock  existing on the date hereof or hereafter  created by
          the  Corporation,  with  the  prior  written  consent  of the  Fleming
          Holders,  which  expressly  provides that it ranks pari passu with the
          Series  A  Preferred  Stock  as  to  dividends,  other  distributions,
          liquidation preference or otherwise.

               "Payment  Amount"  means such amount as is necessary to cause the
          net present value to equal zero as of any date of all Cash Inflows and
          all Cash Outflows (each as defined below) with respect to the Series A
          Preferred Stock being repurchased pursuant to Section 6 or held on the
          date of the  distribution  pursuant  to Section 3, as the case may be,
          when  calculated with an annual  interest rate  (compounded  annually)
          equal to twelve percent (12%). "Cash Inflows" as used herein means all
          cash payments,  including the Payment Amount,  received by the holders
          of the Series A  Preferred  Stock as a dividend or  distribution  with
          respect  to,  or as  consideration  for the  sale  of,  such  Series A
          Preferred   Stock   (whether  such  payments  are  received  from  the


                                       21
<PAGE>

          Corporation or any other Person). "Cash Outflows" as used herein means
          the sum of all  cash  payments  made by the  holders  of the  Series A
          Preferred  Stock to the Corporation to acquire such Series A Preferred
          Stock.  (For the  avoidance of doubt,  Cash Inflows and Cash  Outflows
          with  respect  to any Series A  Preferred  Stock not  included  in the
          Series A  Preferred  Stock  being  repurchased  pursuant  to Section 6
          hereof as part of the transaction for which the Payment Amount is then
          being  calculated  shall not be included in the Cash  Inflows and Cash
          Outflows  used to make such  calculation  (for  purposes  of Section 6
          only), and only the Cash Inflows and Cash Outflows with respect to the
          Series A Preferred Stock which are then being repurchased  pursuant to
          Section 6 hereof in the  transaction  for which the Payment  Amount is
          then  being  calculated  shall  be used in the Cash  Inflows  and Cash
          Outflows  used to make such  calculation  (for  purposes  of Section 6
          only).)

               "Permitted Preferred Transferee" shall have the meaning set forth
          in Section 4(c).

               "Person  or  "person"  shall  mean  an  individual,  partnership,
          corporation,   trust,  unincorporated  organization,   joint  venture,
          government  or agency,  political  subdivision  thereof,  or any other
          entity of any kind.

               "Preferred  Director"  or  "Preferred  Directors"  shall have the
          meaning set forth in Section 4(c).

               "Preferred  Liquidation  Value",  with  respect  to any  share of
          Series A Preferred  Stock as of a  particular  date,  means the sum of
          $100 plus an amount equal to any accrued and unpaid  dividends on such
          share of Series A Preferred  Stock added to the Preferred  Liquidation
          Value  of such  share  of  Series A  Preferred  Stock on any  Dividend
          Payment Date pursuant to Section 2(a)(ii)(B) and not thereafter paid.

               "Repurchase  Date"  shall have the  meaning  set forth in Section
          6(d).

               "Securities  Act"  shall  mean the  Securities  Act of  1933,  as
          amended.

               "Series A  Liquidation  Preference"  shall have the  meaning  set
          forth in Section 3(a).

               "Series A  Preferred  Stock"  shall have the meaning set forth in
          the resolution paragraph in the preamble.

               "Stock  Purchase  Agreements"  mean  (i)  each of the  two  Stock
          Purchase  Agreements  dated as March 30, 1999 between the  Corporation
          and the purchaser listed on the signature page of each such Agreement,
          and  (ii)  each of the  two  Stock  Purchase  Agreements  dated  as of
          February 16, 2001 between the Corporation and the purchaser  listed on
          the signature page of each such Agreement,


                                       22
<PAGE>

               "Subsidiary",  with respect to any Person, means any corporation,
          association or other entity of which more than 50% of the total voting
          power of shares of stock or other equity interests  (without regard to
          the  occurrence  of  any  contingency)  to  vote  in the  election  of
          directors,  managers or  trustees  thereof is, at the time as of which
          any  determination  is being made,  owned or  controlled,  directly or
          indirectly,  by such  Person  or one or more of its  Subsidiaries,  or
          both. The term "Subsidiary" or "Subsidiaries" when used herein without
          reference to any particular Person, means a Subsidiary or Subsidiaries
          of the Corporation.

               "Transferees"  shall mean any  transferee  (except  for a Fleming
          Holder) of Shares or  Conversion  Shares  (as such  terms are  defined
          within the  definition of "Fleming  Holders")  from a Fleming  Holder.
          Transferees  shall not include a  transferee  of Shares or  Conversion
          Shares sold in either a public  offering  pursuant  to a  registration
          statement  under the  Securities Act or pursuant to Rule 144 under the
          Securities Act.

     11.  Notices.  Except as may otherwise be provided for herein,  all notices
referred to herein  shall be in  writing,  and all  notices  hereunder  shall be
deemed to have been given and received (i) upon receipt, in the case of a notice
of conversion given to the Corporation as contemplated in Section 5(b) hereof or
in the  case of a notice  of  redemption  at the  holder's  option  given to the
Corporation as contemplated in Section 6(d) hereof,  or (ii) in all other cases,
upon the earlier of (x) receipt of such notice,  (y) three  Business  Days after
the mailing of such notice if sent by registered mail (unless  first-class  mail
shall be  specifically  permitted for such notice under the terms hereof) or (z)
the Business Day following sending such notice by overnight courier, in any case
with postage or delivery charges prepaid,  addressed: if to the Corporation,  to
its offices at 275 North  Middletown  Road,  Pearl River,  NY 10965,  Attention:
Stephen  P.  Mandracchia,  or to an  agent  of  the  Corporation  designated  as
permitted  by the  Certificate  of  Incorporation,  or, if to any  holder of the
Series A  Preferred  Stock,  to such holder at the address of such holder of the
Series A Preferred Stock as listed in the stock record books of the Corporation,
or to such other address as the Corporation or holder, as the case may be, shall
have designated by notice similarly given.


                  [remainder of page intentionally left blank]


                                       23
<PAGE>

         IN WITNESS  WHEREOF,  we have  hereunto  executed this  Certificate  of
Amendment  and do affirm the  foregoing  as true under the  penalties of perjury
this 16th day of February, 2001.

                             HUDSON TECHNOLOGIES, INC.


                             By: /s/ Kevin J. Zugibe
                                 ----------------------------------
                                 Name:  Kevin J. Zugibe
                                 Title: Chairman and Chief Executive Officer





                              By: /s/ Stephen P. Mandracchia
                                 ----------------------------------
                                  Name:  Stephen P. Mandracchia
                                  Title: Secretary

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.24
<SEQUENCE>3
<FILENAME>d25204_ex10-24.txt
<DESCRIPTION>STOCK PURCHASE AGREEMENT
<TEXT>

================================================================================




                            STOCK PURCHASE AGREEMENT

                                      dated

                                February 16, 2001


                                     between


                            HUDSON TECHNOLOGIES, INC.

                                       and

                       FLEMING US DISCOVERY FUND III, L.P.




================================================================================

<PAGE>


                                TABLE OF CONTENTS


SECTION 1.       SALE AND PURCHASE OF PREFERRED STOCK..........................1

SECTION 2.       CLOSING.......................................................2

SECTION 3.       DEFINITIONS...................................................2

SECTION 4.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY................13
         4.1.    Corporate Existence, Power and Authority.....................14
         4.2.    Capital Stock................................................14
         4.3.    Subsidiaries.................................................16
         4.4.    Business.....................................................16
         4.5.    No Defaults or Conflicts.....................................16
         4.6.    Disclosure Materials; Other Information......................16
         4.7.    Litigation...................................................17
         4.8.    Taxes........................................................18
         4.9.    ERISA........................................................18
         4.10.   Legal Compliance.............................................20
         4.11.   Outstanding Securities.......................................20
         4.12.   Permits, Licenses and Approvals; Intellectual Property and
                 Other Rights..................... ...........................20
         4.13.   Key Employees................................................21
         4.14.   Properties...................................................21
         4.15.   Suppliers and Customers......................................21
         4.16.   Environmental Compliance.....................................21
         4.17.   No Burdensome Agreements.....................................22
         4.18.   Offering of Shares...........................................22
         4.19.   SEC Reports..................................................23
         4.20.   Indebtedness.................................................23
         4.21.   Use of Proceeds..............................................24
         4.22.   Other Names..................................................24
         4.23.   Brokers......................................................24

SECTION 5.       REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..............25
         5.1.    Corporate Power and Authority................................25
         5.2.    Investment Intent............................................25
         5.3.    Brokers......................................................25
         5.4.    Ownership of Common Stock....................................26

                                      -i-
<PAGE>

SECTION 6.       RESTRICTIONS ON TRANSFER.....................................26

SECTION 7.       INFORMATION AS TO THE COMPANY................................26
         7.1.    Financial Information........................................26
         7.2.    Communication with Accountants...............................29
         7.3.    Inspection...................................................29
         7.4.    Notices......................................................29

SECTION 8.       AFFIRMATIVE COVENANTS........................................31
         8.1.    Maintenance of Existence, Properties and Franchises;
                 Compliance with Law; Taxes; Insurance........................31
         8.2.    Office for Payment, Exchange and Registration; Location
                 of Office; Notice of Change of Name or Office................32
         8.3.    Fiscal Year..................................................32
         8.4.    Environmental Matters........................................32
         8.5.    Reservation of Shares........................................33
         8.6.    Securities Exchange Act Registration.........................33
         8.7.    Delivery of Information for Rule 144A Transactions...........34
         8.8.    Senior Securities............................................34
         8.9.    Further Assurances...........................................34
         8.10.   Stockholder Approval.........................................34
         8.11.   Shares Paid as Dividends.....................................35

SECTION 9.       NEGATIVE COVENANTS...........................................35
         9.1.    No Dilution or Impairment; No Changes in Capital Stock.......35
         9.2.    Indebtedness.................................................36
         9.3.    Consolidation, Merger and Sale...............................36
         9.4.    No Change in Business........................................36
         9.5.    Restricted Payments; Investments.............................36
         9.6.    Sale of Substantial Portion of Assets........................37
         9.7.    Obligations to Affiliates....................................37
         9.8.    Transactions with Affiliates.................................38
         9.9.    Liens........................................................38
         9.10.   Private Placement Status.....................................38
         9.11.   Maintenance of Public Market.................................39
         9.12.   Actions Prior to the Closing Date............................39

SECTION 10.      CONDITIONS TO PURCHASER'S OBLIGATIONS........................39
         10.1.   Certificate of Amendment; Stockholders' Agreement;
                 Registration Rights Agreement................................40
         10.2.   Certificates for Shares......................................39

                                      -ii-
<PAGE>

         10.3.   Senior Status................................................40
         10.4.   Accuracy of Representations and Warranties...................40
         10.5.   Compliance with Agreements...................................40
         10.6.   Officers' Certificates.......................................40
         10.7.   Proceedings..................................................41
         10.8.   Legality; Governmental and Other Authorization...............41
         10.9.   No Material Adverse Change...................................41
         10.10.  Opinion of Counsel...........................................41
         10.11.  Purchases of Shares..........................................41
         10.12.  Consents.....................................................42
         10.13.  Other Documents and Opinions.................................42

SECTION 11.      BREACH OF REPRESENTATIONS, WARRANTIES
                 AND COVENANTS................................................42

SECTION 12.      SPECIFIC PERFORMANCE.........................................43

SECTION 13.      EXPENSES.....................................................43

SECTION 14.      DIRECT PAYMENTS..............................................45

SECTION 15.      AMENDMENTS AND WAIVERS.......................................45

SECTION 16.      EXCHANGE OF SHARES; CANCELLATION OF SURRENDERED SHARES;
                 REPLACEMENT......................... ........................45

SECTION 17.      NOTICES......................................................46

SECTION 18.      MISCELLANEOUS................................................46


                                     -iii-
<PAGE>

                                 Exhibit 10.24

                            STOCK PURCHASE AGREEMENT


     This STOCK  PURCHASE  AGREEMENT  is dated as of February  16, 2001  between
Hudson  Technologies,  Inc., a New York  corporation  (the  "Company"),  and the
Purchaser listed on the signature page of this Agreement (the "Purchaser").


                              W I T N E S S E T H:
                              -------------------


     WHEREAS,  the Company  desires to issue and sell to the Purchaser,  and the
Purchaser desires to purchase from the Company, shares of the Company's Series A
Convertible Preferred Stock, par value $.01 per share (the "Series A Convertible
Preferred Stock"), upon the terms and provisions hereinafter set forth;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth  herein and for other good and  valuable  consideration,  the  receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:


SECTION 1. SALE AND PURCHASE OF PREFERRED STOCK

     (a) The Company agrees to sell to the Purchaser  and,  subject to the terms
and conditions hereof and in reliance upon the representations and warranties of
the Company  contained herein or made pursuant  hereto,  the Purchaser agrees to
purchase from the Company at the Closing  provided for in Section 2 hereof,  the
number of shares of Series A Convertible  Preferred Stock set forth opposite the
Purchaser's  name on  Schedule  1 hereto.  The  shares  of Series A  Convertible
Preferred  Stock being acquired under this Agreement and by the other  Purchaser
under  the  other  Stock  Purchase   Agreement  (as  hereinafter   defined)  are
collectively  referred  to  herein  as  the  "Shares",   containing  rights  and
privileges  as more  fully  set forth in the  Certificate  of  Amendment  of the
Certificate  of  Incorporation  of the  Company in the form  attached  hereto as
Exhibit A (the "Certificate of Amendment").

     (b) The aggregate purchase price to be paid to the Company by the Purchaser
for the Shares to be purchased by the Purchaser pursuant to this Agreement shall
be the amount set forth opposite the Purchaser's  name on Schedule 1 hereto.  No
further payment shall be required from the Purchaser for the Shares.

     (c) The Shares are being sold to the purchasers listed on Schedule 1 hereto
(the "Purchasers") pursuant to this Agreement and the other Series A Convertible
Preferred Stock



<PAGE>

Purchase Agreement (both of such agreements  collectively,  as from time to time
assigned,  supplemented  or amended or as the terms  thereof may be waived,  the
"Stock Purchase Agreements").  Both Stock Purchase Agreements shall be dated the
date hereof and shall be identical except as to the identities of the respective
Purchasers.  The sale of Shares to each  Purchaser  under  each  Stock  Purchase
Agreement is to be a separate  sale,  and no Purchaser  shall have any liability
under any Stock Purchase  Agreement  other than the Stock Purchase  Agreement to
which it is a party.

     (d) The Company will use the proceeds  realized from the sale of the Shares
to fund capital expenditures, fees and expenses of the transactions contemplated
hereby and for working capital purposes.


SECTION 2. CLOSING

     (a) Subject to the terms and conditions hereof, the closing of the purchase
and sale of the Shares to be purchased by the  Purchaser  will be deemed to have
taken place at the offices of Morgan,  Lewis & Bockius LLP, 101 Park Avenue, New
York,  New York at 9:00 A.M.,  New York City time, on February 16, 2001, or such
other  time and  date as shall be  mutually  agreed  to by the  Company  and the
Purchaser  (the  "Closing")  (such time and date are herein  referred  to as the
"Closing Date").

     (b)  Subject to the terms and  conditions  hereof,  at the  Closing (i) the
Company  will  deliver  to  the  Purchaser  a  certificate   registered  in  the
Purchaser's name (or the name of its nominee, if any, as specified on Schedule 1
hereto)  evidencing the number of Shares set forth opposite the Purchaser's name
on Schedule 1 and (ii) upon the Purchaser's receipt thereof,  the Purchaser will
deliver to the Company a certified or official bank check (or wire  transfer) in
an amount equal to the  aggregate  purchase  price (as specified in Section 1(b)
hereof) for the Shares to be purchased by the Purchaser  payable to the order of
the Company in federal or other immediately available funds.


SECTION 3. DEFINITIONS

     (a) For purposes of this Agreement,  the following  definitions shall apply
(such definitions to be equally applicable to both the singular and plural forms
of the terms defined):

          "Affiliate",  when used with respect to any Person,  means (i) if such
     Person is a  corporation,  any  officer or director  thereof  (other than a
     director elected pursuant to Section 4 of the Certificate of Amendment) and
     any Person  which is,  directly or  indirectly,  the  beneficial  owner (by
     itself or as part of any group) of more than five percent (5%) of any class
     of any equity security (within the meaning of the Securities  Exchange Act)
     thereof,  and,  if such  beneficial  owner is a  partnership,  any  general
     partner thereof,  or if such beneficial owner is a corporation,  any Person
     controlling,


                                       2
<PAGE>

     controlled by or under common control with such  beneficial  owner,  or any
     officer  or  director  of  such  beneficial  owner  or of  any  corporation
     occupying  any  such  control  relationship,  (ii)  if  such  Person  is  a
     partnership,  any general or limited partner  thereof,  and (iii) any other
     Person which,  directly or  indirectly,  controls or is controlled by or is
     under common  control with such  Person.  For purposes of this  definition,
     "control" (including the correlative terms  "controlling",  "controlled by"
     and "under common control  with"),  with respect to any Person,  shall mean
     possession,  directly  or  indirectly,  of the power to direct or cause the
     direction of the  management and policies of such Person,  whether  through
     the ownership of voting securities or by contract or otherwise. The holding
     of Shares (or of Conversion Shares obtained upon conversion of Shares), and
     the rights under any Stock Purchase  Agreement or under the  Certificate of
     Amendment, the Stockholders' Agreement or the Registration Rights Agreement
     (or  the  exercise  of any  such  rights,  including,  without  limitation,
     nominating  a director  to the Board (or Board  committee)  of the  Company
     and/or  sending an observer to Board (or Board  committee)  meetings of the
     Company),  shall not cause a Purchaser to be deemed to be an "Affiliate" of
     the Company.

          "Agreement"  means  this  Stock  Purchase  Agreement   (together  with
     exhibits and  schedules)  as from time to time  assigned,  supplemented  or
     amended or as the terms hereof may be waived.

          "Benefit Plan" means any Plan, existing at the Closing, established or
     to which  contributions  have at any time been made by the Company,  or any
     predecessor  of any of the foregoing,  or under which any employee,  former
     employee or director of the Company or any beneficiary  thereof is covered,
     is eligible for coverage or has benefit rights.

          "Board" or "Board of Directors" means with respect to any Person which
     is a corporation,  a business trust or other entity, the board of directors
     or  other  group,   however   designated,   which  is  charged  with  legal
     responsibility  for the management of such Person, or any committee of such
     board of directors or group,  however  designated,  which is  authorized to
     exercise  the  power of such  board or group in  respect  of the  matter in
     question.

          "Business Day" means any day other than a Saturday,  Sunday or any day
     on which banks in the location of the office of the Company provided for in
     Section 17 hereof are authorized or obligated to close.

          "Capitalized  Lease"  means any lease to which the Company is party as
     lessee, or by which it is bound,  under which it leases any property (real,
     personal or mixed) from any lessor other than the Company, and which either
     is  required  to be  capitalized  in  accordance  with  generally  accepted
     accounting principles  consistently applied, or, even if not so required to
     be  capitalized,  shall have (or have had), at the time first entered into,
     an  initial  term of  greater


                                       3
<PAGE>

     than three (3) years  (including  leases of shorter  duration  which are or
     were  extendible to a total term greater than three (3) years at the option
     of the  lessor).  The value of  Capitalized  Leases,  as of the time of any
     determination  thereof,  shall  mean  the sum of the then  present  values,
     determined as hereinafter  provided, of future obligations of lessees under
     then existing  Capitalized  Leases. To compute the value of any Capitalized
     Lease, the following methods shall be used, as applicable:

          (i)  values of leases  required to be capitalized  in accordance  with
               generally  accepted  accounting  principles  shall be computed in
               accordance with such principles; and

          (ii) values of other  leases (and values of  contracts  or other items
               which this  Agreement  provides  are to be valued as if they were
               Capitalized Leases) shall be computed by discounting, to the date
               of  determination,  at an assumed  interest rate of eight percent
               (8%) per annum, the minimum amount of future rental payments that
               will be due under the  related  documentation,  including  rental
               payments that may be due during extensions which are at the other
               party's option, but excluding any amounts in respect of insurance
               on, taxes on and/or maintenance of the properties subject to such
               leases  (provided that such amounts are owed and paid only to the
               extent actually incurred).

          "Certificate  of Amendment"  has the meaning set forth in Section 1(a)
     hereof.

          "Closing" has the meaning set forth in Section 2(a) hereof.

          "Closing Date" has the meaning set forth in Section 2(a) hereof.

          "Code" means the Internal  Revenue Code of 1986,  as amended from time
     to time, and the regulations and interpretations thereunder.

          "Commission"  means the  Securities  and Exchange  Commission  and any
     other similar or successor agency of the federal  government  administering
     the Securities Act or the Securities Exchange Act.

          "Common  Stock" means the Company's  Common Stock,  par value $.01 per
     share,  and shall also  include any common  stock of the Company  hereafter
     authorized  and  any  capital  stock  of the  Company  of any  other  class
     hereafter  authorized which is not preferred as to dividends or assets over
     any other  class of  capital  stock of the  Company  or which has  ordinary
     voting power for the election of directors of the Company.


                                       4
<PAGE>

          "Company" means Hudson Technologies, Inc., a New York corporation, its
     successors and assigns.

          "Consolidated"  or  "consolidated",  when used with  reference  to any
     financial  term in this  Agreement,  means the aggregate for the Company of
     the amounts signified by such term for all such Persons,  with intercompany
     items  eliminated,  and, with respect to net worth,  after  eliminating the
     portion of net worth properly  attributable to minority interests,  if any,
     in the  capital  of any  such  Person  (other  than in the  capital  of the
     Company) and otherwise as determined in accordance with generally  accepted
     accounting  principles  consistently applied (except as otherwise expressly
     provided herein).

          "Conversion  Share" or  "Conversion  Shares"  means the  shares of the
     Company's Common Stock obtained or obtainable upon conversion of Shares and
     shall  also  include  any  capital  stock or other  securities  into  which
     Conversion  Shares are changed and any  capital  stock or other  securities
     resulting from or comprising a reclassification, combination or subdivision
     of, or a stock  dividend on, any Conversion  Shares.  In the event that any
     Conversion  Shares  are sold  either  in a public  offering  pursuant  to a
     registration  statement  under the Securities Act or pursuant to a Rule 144
     Transaction,  then the transferees of such  Conversion  Shares shall not be
     entitled  to any  benefits  under  this  Agreement  with  respect  to  such
     Conversion  Shares and such Conversion Shares shall no longer be considered
     to be "Conversion Shares".

          "Designated Entity" means, in connection with the rights of any Person
     holding less than thirty percent (30%), in the aggregate,  of the Threshold
     Shares and the Threshold  Conversion  Shares,  (i) as long as any Shares or
     Conversion  Shares are held by any Person  identified in clause (i) or (ii)
     of the definition of "Fleming  Holders",  Fleming Capital  Management,  320
     Park Avenue, New York, NY 10022,  Attention:  Robert L. Burr and (ii) if no
     Shares or Conversion  Shares are held by a Person  identified in clause (i)
     or (ii) of the definition of "Fleming  Holders",  the entity  designated by
     the Transferee  holding the largest number of such shares,  provided,  that
     such Transferee owns thirty percent (30%) or more, in the aggregate, of the
     Threshold  Shares and the Threshold  Conversion  Shares (in which case such
     Transferee shall provide notice to the Corporation of such entity).  For so
     long as no Shares or Conversion Shares are held by any Person identified in
     clause (i) or (ii) of the  definition  of "Fleming  Holders"  and no Person
     holds thirty  percent  (30%) or more,  in the  aggregate,  of the Threshold
     Shares and the Threshold  Conversion  Shares,  there shall be no Designated
     Entity.  For  purposes  of this  definition  of  "Designated  Entity,"  the
     calculation of a Person's percentage holdings of Conversion Shares shall be
     determined  based  upon the number of Shares  from  which  such  Conversion
     Shares derived.

          "Disclosure  Material"  has the meaning  specified  in Section  4.6(a)
     hereof.


                                       5
<PAGE>

          "Environmental Laws" means all federal,  state, local, foreign,  civil
     and criminal  laws,  statutes,  ordinances,  orders,  codes,  Environmental
     Permits,  rules,  policies and  regulations  and common law relating to the
     protection of the environment and human health or relating to the handling,
     use,  generation,   treatment,  storage,   transportation  or  disposal  of
     Hazardous Materials, including but not limited to the Resource Conservation
     and Recovery Act of 1976, 42 U.S.C.ss.  6901 et seq.; the Toxic  Substances
     Control Act, 15 U.S.C?ss.  2601 et seq.;  the  Comprehensive  Environmental
     Response, Compensation and Liability Act of 1980, 42 U.S.C?ss.9601 et seq.;
     the Federal Water  Pollution  Control Act, 33  U.S.C?ss.1251  et seq.;  the
     Clean  Air  Act,  42  U.S.C.ss.  7401  et  seq.;  the  Hazardous  Materials
     Transportation Act, 49 U.S.C.ss.  1801 et seq.; the Occupational Safety and
     Health  Act,  29  U.S.C.ss.651;  the  Federal  Insecticide,  Fungicide  and
     Rodenticide  Act, 7  U.S.C.ss.136y  et seq.;  and the Oil  Pollution Act of
     1990, 33  U.S.C.ss.2701  et seq., all as may be amended or superseded  from
     time to time.


          "Environmental  Lien" has the  meaning  set forth in  Section  4.16(d)
     hereof.

          "Environmental  Permits"  means  all  permits,  licenses,   approvals,
     authorizations or consents required by any Governmental Authority under any
     applicable  Environmental  Law and  includes  any and all  orders,  consent
     orders or  binding  agreements  issued or  entered  into by a  Governmental
     Authority under any applicable Environmental Law.

          "ERISA"  means  Employee  Retirement  Income  Security Act of 1974, as
     amended.

          "ERISA  Affiliate"  means each "person" (as defined in Section 3(9) of
     ERISA) which is under "common control" with the Company (within the meaning
     of Section 414(b), (c), (m) or (o) of the Code).

          "First  Amendment to Registration  Rights  Agreement"  means the First
     Amendment to Registration  Rights  Agreement,  dated as of the Closing Date
     among the Company and each of the Purchasers.

          "First Amendment to Stockholders  Agreement" means the First Amendment
     to  Stockholders'  Agreement,  dated  as of the  Closing  Date,  among  the
     Company, the Purchasers and certain other stockholders of the Company.

          "Fleming  Funds" means Fleming US Discovery Fund III, L.P. and Fleming
     US Discovery Offshore Fund III, L.P.

          "Fleming  Holders"  means (i) the Fleming  Funds,  (ii) any Affiliate,
     officer or  employee  of an  Affiliate  or  investment  fund  managed by an
     Affiliate  of the  Fleming  Funds to which the Fleming  Funds may  transfer
     record and/or  beneficial  ownership of the Shares or the Conversion


                                       6
<PAGE>

     Shares  and (iii) any  transferee  of Shares or  Conversion  Shares  from a
     Person named in clause (i) or (ii) hereof (provided that such transferee is
     consented to by the Company, such consent not to be unreasonably  withheld)
     other than a  transferee  of Shares or  Conversion  Shares sold in either a
     public offering  pursuant to a registration  statement under the Securities
     Act or pursuant to a Rule 144 Transaction.

          "Governmental   Authority"   means  any  federal,   state,   or  local
     governmental agency or authority  (including  regulatory  authority) having
     jurisdiction   over  the  Company  or  any  of  its  respective  assets  or
     businesses.

          "Guaranty"  means (i) any  guaranty or  endorsement  of the payment or
     performance   of,  or  any   contingent   obligation  in  respect  of,  any
     indebtedness  or other  obligation  of any  other  Person,  (ii) any  other
     arrangement  whereby  credit  is  extended  to  one  obligor  (directly  or
     indirectly)  on the basis of any promise or  undertaking  of another Person
     (a) to pay the indebtedness of such obligor,  (b) to purchase an obligation
     owed by such obligor, (c) to purchase or lease assets (or to provide funds,
     goods or services)  under  circumstances  that would enable such obligor to
     discharge  one or more of its  obligations  or (d) to maintain the capital,
     working capital,  solvency or general financial  condition of such obligor,
     in each case  whether or not such  arrangement  is disclosed in the balance
     sheet of such other  Person or is  referred  to in a footnote  thereto  and
     (iii) any  liability as a general  partner of a  partnership  in respect of
     indebtedness or other obligations of such partnership;  provided,  however,
     that the term "Guaranty"  shall not include (1) endorsements for collection
     or deposit in the  ordinary  course of business or (2)  obligations  of the
     Company  which  would  constitute   Guaranties  solely  by  virtue  of  the
     continuing  liability  of  a  Person  which  has  sold  assets  subject  to
     liabilities for the liabilities  which were assumed by the Person acquiring
     the  assets,  unless  such  liability  is  required  to be  carried  on the
     consolidated  balance sheet of the Company.  The amount of any Guaranty and
     the  amount  of  indebtedness  resulting  from such  Guaranty  shall be the
     maximum amount of the guarantor's  potential  obligation in respect of such
     Guaranty.

          "Hazardous  Materials"  means any petroleum,  petroleum  hydrocarbons,
     petroleum waste or petroleum products,  underground storage tanks, asbestos
     or  asbestos-containing  materials,  pesticides,  lead and  lead-containing
     materials,  urea  formaldehyde  insulation  and  polychlorinated  biphenyls
     (PCBs),   ionizing  and   non-ionizing   radiation   including   radon  and
     electromagnetic   frequency  radiation;   and  any  chemicals,   materials,
     substances  or  wastes  in any  amount  or  concentration  which are now or
     hereafter   "hazardous    substances,"   "hazardous   wastes,"   "hazardous
     materials,"  "extremely hazardous wastes,"  "restricted  hazardous wastes,"
     "toxic  substances,"  "toxic pollutants" or words of similar import,  under
     any Environmental Law.


                                       7
<PAGE>

          "Indebtedness"  of any Person means,  without  duplication,  as of any
     date  as  of  which  the  amount  thereof  is  to be  determined,  (i)  all
     obligations  of such Person to repay  money  borrowed  (including,  without
     limitation,  all notes payable and drafts accepted representing  extensions
     of  credit,  all  obligations  under  letters of  credit,  all  obligations
     evidenced by bonds, debentures,  notes or other similar instruments and all
     obligations  upon which interest  charges are customarily  paid),  (ii) all
     Capitalized  Leases in respect of which such  Person is liable as lessee or
     as the guarantor of the lessee,  (iii) all monetary  obligations  which are
     secured by any Lien  existing on property  owned by such Person  whether or
     not the  obligations  secured thereby have been incurred or assumed by such
     Person,  (iv) all  conditional  sales contracts and similar title retention
     debt instruments under which such Person is obligated to make payments, (v)
     all Guaranties by such Person and (vi) all contractual obligations (whether
     absolute  or  contingent)  of such  Person  to  repurchase  goods  sold and
     distributed.  "Indebtedness"  shall  not  include,  however,  any  unfunded
     obligations in any employee  pension  benefit plan (as defined in ERISA) of
     the Company.

          "Investment"  means, with respect to any Person, (i) any loan, advance
     or  extension  of credit by such  Person to, and any  contributions  to the
     capital of, any other Person,  (ii) any Guaranty by such Person,  (iii) any
     interest in any capital stock,  equity interest or other  securities of any
     other  Person,  (iv) any transfer or sale of property of such Person to any
     other Person other than upon full  payment,  in cash,  or not less than the
     agreed sale price or the fair value of such  property,  whichever is higher
     and (v) any  commitment or option to make an Investment  if, in the case of
     an option,  the  consideration  therefor  exceeds  $50,000,  and any of the
     foregoing  under  clauses (i) through (v) shall be considered an Investment
     whether such  Investment is acquired by purchase,  exchange,  merger or any
     other method; provided, that the term "Investment" (1) shall not include an
     Investment in the Company, (2) shall not include current trade and customer
     accounts receivable and allowances, provided they relate to goods furnished
     in the  ordinary  course of business and are given in  accordance  with the
     customary  practices  of the  Company,  (3)  shall  not  include  temporary
     investments  of excess  cash of the  Company in any of the  following:  (A)
     investment  grade  obligations  maturing  within one year of their issuance
     which as to principal and interest  constitute  direct  obligations  of, or
     obligations  guaranteed  by, the United States of America,  (B)  negotiable
     certificates  of deposit of banks or trust  companies  which are  organized
     under the laws of the United  States of America  or any state  thereof  and
     which have  capital and surplus of at least  $500,000,000,  (C)  commercial
     paper which is rated not less than prime-one or A-1 or their equivalents by
     Moody's Investor  Service,  Inc. or Standard & Poor's  Corporation or their
     successors,  (D) any repurchase agreement secured by any one or more of the
     foregoing  and (E) money  market  funds  primarily  investing in any of the
     foregoing  securities  and  sponsored  by  or  affiliated  with  nationally
     recognized  brokerage  or  investment  advisory  firms,  and (4)  shall not
     include  Investments  of the  Company  existing  on  the  date  hereof  and
     disclosed on Schedule 3 hereto.


                                       8
<PAGE>

          "Lien" means any mortgage, pledge, hypothecation,  assignment, deposit
     arrangement,   encumbrance,  lien  (statutory  or  other),  or  preference,
     priority  or  other  security  interest  of any kind or  nature  whatsoever
     (including,  without  limitation,  any  conditional  sale  or  other  title
     retention  agreement,  any financing  lease having  substantially  the same
     effect as any of the foregoing,  any assignment or other  conveyance of any
     right to receive  income and any  assignment of  receivables  with recourse
     against the assignor),  any filing of a financing statement as debtor under
     the Uniform  Commercial  Code or any similar  statute and any  agreement to
     give or make any of the foregoing.

          "Outside  Directors"  means those  directors on the Company's Board of
     Directors at any time who are not  otherwise  Affiliates  of or employed by
     the Company.

          "Outstanding" or  "outstanding"  means (a) when used with reference to
     the Shares or the Conversion  Shares as of a particular time, all Shares or
     Conversion  Shares  theretofore duly issued except (i) Shares or Conversion
     Shares  theretofore  reported as lost,  stolen,  mutilated  or destroyed or
     surrendered for transfer,  exchange or replacement, in respect of which new
     or replacement Shares or Conversion Shares have been issued by the Company,
     (ii) Shares or Conversion Shares  theretofore  cancelled by the Company and
     (iii) Shares or  Conversion  Shares  registered  in the name of, as well as
     Shares or Conversion Shares owned  beneficially by, the Company,  or any of
     its Affiliates.  For purposes of the preceding sentence,  in no event shall
     "Affiliates"  include (x) the persons which are identified as  "Purchasers"
     on Schedule 1 hereto or (y) any Affiliates of any such persons.

          "Pension Plan" means any "employee pension benefit plan" as defined in
     Section 3(2) of ERISA.

          "Person" or "person"  means an individual,  corporation,  partnership,
     firm,  association,  joint  venture,  trust,  unincorporated  organization,
     government,  governmental  body,  agency,  political  subdivision  or other
     entity.

          "Plan" means any bonus, incentive compensation, deferred compensation,
     pension, profit sharing,  retirement,  stock purchase,  stock option, stock
     ownership,  stock  appreciation  rights,  phantom stock,  leave of absence,
     layoff, vacation, day or dependent care, legal services,  cafeteria,  life,
     health,  accident,  disability,  workmen's compensation or other insurance,
     severance,  separation or other employee benefit plan, practice,  policy or
     arrangement  of any kind,  whether  written  or oral,  or  whether  for the
     benefit of a single individual or more than one individual  including,  but
     not limited to, any  "employee  benefit plan" within the meaning of Section
     3(3) of ERISA.


                                       9
<PAGE>

          "Preferred   Stock"  means  any  class  of  the  capital  stock  of  a
     corporation  (whether  or not  convertible  into  any  other  class of such
     capital  stock) which has any right,  whether  absolute or  contingent,  to
     receive dividends or other  distributions of the assets of such corporation
     (including,  without  limitation,  amounts  payable  in  the  event  of the
     voluntary or  involuntary  liquidation,  dissolution  or winding-up of such
     corporation), which right is superior to the rights of another class of the
     capital stock of such  corporation.  "Preferred  Stock"  includes,  without
     limitation, the Series A Convertible Preferred Stock.

          "Purchaser"  means the  person  who  accepts  and  agrees to the terms
     hereof  as  indicated  by such  person's  signature  (as  "the  undersigned
     Purchaser")  on the  execution  page of this  Agreement,  together with its
     successors and assigns.

          "Purchasers"  has the  meaning  set  forth  in  Section  1(c)  hereof,
     together with their respective successors and assigns.

          "Registration   Rights   Agreement"  means  the  Registration   Rights
     Agreement,  dated as of March 30,  1999,  among the Company and each of the
     Purchasers,  as  amended  by the First  Amendment  to  Registration  Rights
     Agreement,  dated as of the Closing Date, among the Company and each of the
     Purchasers.

          "Restricted  Payment"  means (i) every payment in connection  with the
     redemption,  purchase,  retirement or other  acquisition by or on behalf of
     the  Company  of any  shares of the  Company's  capital  stock (as  defined
     below),  whether  or not  owned by the  Company,  (ii) any  prepayments  or
     repayments made on  Indebtedness of the Company,  (iii) every payment to or
     on behalf of any  Affiliate of the Company on account of or with respect to
     any  lease  arrangements,  and (iv)  every  payment  by or on behalf of the
     Company  (whether as repayment or prepayment of principal or as interest or
     otherwise) on or with respect to (A) any obligation to repay money borrowed
     owing to any Affiliate of the Company or (B) any obligation, to any Person,
     of any  Affiliate  of the  Company or to any other  holder of shares of the
     Company's capital stock (as defined below), which obligation is assumed, or
     is the subject of a Guaranty, by the Company;  provided,  however, that the
     term "Restricted  Payment" shall not apply to (1) any payment in respect of
     capital stock of the Company to the extent payable in shares of the capital
     stock of the Company,  (2) any regularly scheduled  prepayment or repayment
     of Indebtedness, provided that such Indebtedness being prepaid or repaid is
     not at the  time of such  prepayment  or  repayment  or at any  prior  time
     thereto  owing to an  Affiliate  of the Company,  provided  that  regularly
     scheduled  payments or  prepayments  pursuant to the Affiliate Loan are not
     "Restricted   Payments",   (3)  payments  to  DuPont  Chemical  and  Energy
     Operations,  Inc.  and E.I.  DuPont de Nemours and Company in the  ordinary
     course of business,  consistent  with past practice,  and not in connection
     with  any  financing  or  extraordinary   corporate


                                       10
<PAGE>

     transaction   are  not   "Restricted   Payments",   or  (4)  any  payments,
     distributions  or other  transfers  or  actions  on or with  respect to the
     Shares or the Conversion  Shares or to the Purchasers (or holders of Shares
     or the Conversion Shares) under the Stock Purchase Agreements. For purposes
     of this  definition,  "capital stock" shall also include warrants and other
     rights and  options  to  acquire  shares of  capital  stock  (whether  upon
     exercise, conversion, exchange or otherwise).

          "Rule 144" means (i) Rule 144 under the Securities Act as such Rule is
     in effect from time to time and (ii) any successor rule, regulation or law,
     as in effect from time to time.

          "Rule 144A" means (i) Rule 144A under the  Securities Act as such Rule
     is in effect from time to time and (ii) any successor  rule,  regulation or
     law, as in effect from time to time.

          "Rule 144  Transaction"  means a  transfer  of  Conversion  Shares (A)
     complying  with  Rule  144 as such  Rule is in  effect  on the date of such
     transfer  (but not  including  a sale  other  than  pursuant  to  "brokers'
     transactions"  as defined in clauses (1) and (2) of  paragraph  (g) of such
     Rule as in  effect on the date  hereof)  and (B)  occurring  at a time when
     Conversion  Shares are registered  pursuant to Section 12 of the Securities
     Exchange Act.

          "SEC Reports" has the meaning set forth in Section 4.19 hereof.

          "Securities Act" means the Securities Act of 1933, as amended, and the
     rules, regulations and interpretations thereunder.

          "Securities  Exchange Act" means the Securities  Exchange Act of 1934,
     as amended, and the rules, regulations and interpretations thereunder.

          "Series A Convertible  Preferred  Stock" means the Company's  Series A
     Convertible  Preferred  Stock,  par  value  $.01 per  share,  which has the
     rights, powers and privileges as more fully set forth in the Certificate of
     Amendment.

          "Shares"  has the meaning  set forth in Section  1(a)  hereof.  In the
     event that any Shares are sold  either in a public  offering  pursuant to a
     registration statement under Section 5 of the Securities Act or pursuant to
     a Rule 144  Transaction,  then the  transferees of such Shares shall not be
     entitled to any benefits  under this  Agreement with respect to such Shares
     and such Shares shall no longer be  considered  to be "Shares" for purposes
     of any consent or waiver provision of this Agreement.

          "Stock Purchase  Agreements" has the meaning set forth in Section 1(c)
     hereof.


                                       11
<PAGE>

          "Stockholders' Agreement" means the Stockholders' Agreement,  dated as
     of March 30, 1999,  among the Company,  the  Purchasers  and certain  other
     stockholders  of  the  Company,  as  amended  by  the  First  Amendment  to
     Stockholders'  Agreement,  dated as of the Closing Date, among the Company,
     the Purchasers and certain other stockholders of the Company.

          "Subsidiary",  with  respect  to any  Person,  means any  corporation,
     association  or other  entity of which  more  than 50% of the total  voting
     power of shares of stock or other equity  interests  (without regard to the
     occurrence  of any  contingency)  to vote  in the  election  of  directors,
     managers or trustees thereof is, at the time as of which any  determination
     is being made, owned or controlled,  directly or indirectly, by such Person
     or one or more of its  Subsidiaries,  or  both.  The term  "Subsidiary"  or
     "Subsidiaries" when used herein without reference to any particular Person,
     means a Subsidiary or Subsidiaries of the Company.

          "Tax" or "Taxes"  means all  federal,  state,  local or foreign net or
     gross income, gross receipts,  net proceeds,  sales, use, ad valorem, value
     added, franchise, bank shares, withholding,  payroll,  employment,  excise,
     property,  alternative  or add-on  minimum,  environmental  or other taxes,
     assessments,  duties,  fees,  levies or other  governmental  charges of any
     nature  whatsoever,  whether  disputed or not,  together with any interest,
     penalties, additions to tax or additional amounts with respect thereto.

          "Tax Returns" means any returns,  reports or statements (including any
     information returns) required to be filed for purposes of a particular Tax.

          "Taxing Authority" means any governmental agency, board, bureau, body,
     department  or  authority  of any  United  States  federal,  state or local
     jurisdiction, or any foreign jurisdiction, having or purporting to exercise
     jurisdiction with respect to any Tax.

          "Threshold  Conversion  Shares" means the aggregate of the  Conversion
     Shares  and  the  Conversion  Shares  as  defined  in  the  Stock  Purchase
     Agreements, dated as of March 30, 1999, between the Company and each of the
     Fleming Funds, (the "1999 Stock Purchase Agreements").

          "Threshold  Shares"  means  the  aggregate  of the  shares of Series A
     Convertible   Preferred   Stock  issued  pursuant  to  the  Stock  Purchase
     Agreements  and the shares of Series A Convertible  Preferred  Stock issued
     pursuant to the 1999 Stock Purchase Agreements,  plus any dividends paid in
     additional shares of Series A Convertible  Preferred Stock, as adjusted for
     any subdivisions or combinations.

          "Transferees"  shall mean any transferee (except for a Fleming Holder)
     of Shares or Conversion Shares from a Fleming Holder. Transferees shall not
     include a transferee of


                                       12
<PAGE>

     Shares or Conversion  Shares sold in either a public offering pursuant to a
     registration  statement  under the Securities Act or pursuant to a Rule 144
     Transaction.

     (b) For all  purposes  of this  Agreement,  except as  otherwise  expressly
provided or unless the context otherwise requires:

          (i) the words  "herein",  "hereof" and  "hereunder" and other words of
     similar import refer to this Agreement as a whole and not to any particular
     Section or other subdivision;

          (ii) all  accounting  terms  not  otherwise  defined  herein  have the
     meanings assigned to them in accordance with generally accepted  accounting
     principles consistently applied (except as otherwise provided herein);

          (iii) all computations  provided for herein,  if any, shall be made in
     accordance  with  generally  accepted  accounting  principles  consistently
     applied (except as otherwise provided herein);

          (iv) any uses of the  masculine,  feminine or neuter gender shall also
     be deemed to include any other gender, as appropriate;

          (v) all references herein to actions by the Company, such as "create",
     "sell", "transfer",  "dispose of", etc., mean such action whether voluntary
     or involuntary, by operation of law or otherwise;

          (vi) the exhibits and  schedules to this  Agreement  shall be deemed a
     part of this Agreement;

          (vii)  each  of the  representations  and  warranties  of the  Company
     contained in Section 4 hereof is separate and is not limited,  qualified or
     modified  by  the  existence,   wording  or   satisfaction   of  any  other
     representation or warranty of the Company in Section 4 hereof or otherwise;

          (viii) each of the covenants of the Company contained in Sections 7, 8
     and 9 hereof or otherwise  contained in any Stock Purchase  Agreement,  the
     Certificate of Amendment,  the Stockholders'  Agreement or the Registration
     Rights  Agreement  is  separate  and is not  limited  or  satisfied  by the
     existence,  wording or satisfaction of any other covenant of the Company in
     Section 7, 8 or 9 hereof or otherwise; and

          (ix)  all  references  herein  (in  covenants  or  otherwise)  to  any
     action(s)  which are to be taken (or which are prohibited from being taken)
     by any Person or the Company shall


                                       13
<PAGE>

     apply to such  Person  or the  Company,  as the case may be,  whether  such
     action is taken directly or indirectly.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company  represents  and warrants to the Purchaser as follows as of the
date hereof and as of the Closing Date:

     4.1. Corporate Existence, Power and Authority.

     (a) The Company is a corporation  duly organized,  validly  existing and in
good standing under the laws of its jurisdiction of  incorporation.  The Company
is  duly  qualified,  licensed  and  authorized  to do  business  and is in good
standing  in each  jurisdiction  in which it owns or leases any  property  or in
which the conduct of its  business  requires it to so qualify or be so licensed,
except for such jurisdictions  where the failure to so qualify or be so licensed
would not have a material  adverse effect on the Company's  assets,  properties,
liabilities,  business, affairs, results of operations,  condition (financial or
otherwise) or prospects.

     (b) No proceeding  has been  commenced  looking  toward the  dissolution or
merger of the  Company or the  amendment  of its  certificate  of  incorporation
(other than the  Certificate of  Amendment).  The Company is not in violation in
any respect of its certificate of incorporation or by-laws.

     (c) The Company has all requisite  corporate  power and authority to own or
to hold  under  lease  and to  operate  the  properties  it owns or holds and to
conduct its business as now being conducted.

     (d) The Company has all requisite corporate power and authority to execute,
deliver, enter into, consummate the transactions contemplated by and perform its
obligations  under  (i)  the  Stock  Purchase  Agreements,   including,  without
limitation,  the issuance by the Company of the Shares and the Conversion Shares
as contemplated herein and therein and in the Certificate of Amendment, (ii) the
First  Amendment to  Stockholders'  Agreement  and (iii) the First  Amendment to
Registration  Rights Agreement.  The execution,  delivery and performance of the
Stock Purchase  Agreements,  the First Amendment to Stockholders'  Agreement and
the First Amendment to Registration  Rights Agreement by the Company (including,
without limitation, the issuance by the Company of the Shares and the Conversion
Shares as  contemplated  herein and therein and in the Certificate of Amendment)
have been duly  authorized by all required  corporate  actions.  The Company has
duly executed and delivered the Stock Purchase  Agreements,  the First Amendment
to  Stockholders'  Agreement  and the First  Amendment  to  Registration  Rights
Agreement.  The Stock Purchase Agreements,  the First Amendment to Stockholders'
Agreement and the First Amendment to Registration  Rights  Agreement  constitute
the  legal,  valid  and  binding  obligations  of  the  Company


                                       14
<PAGE>

enforceable in accordance with their  respective  terms,  subject to bankruptcy,
insolvency,  reorganization,  moratorium  and other similar laws relating to the
rights of creditors generally.

     4.2. Capital Stock.

     (a) Schedule 6(a) hereto  correctly and completely lists (i) the authorized
capital stock of the Company (Common Stock and Preferred Stock), (ii) the number
of  designated  shares of  Preferred  Stock in each series or class after giving
effect to the  Certificate  of Amendment  and (iii) on the Closing  Date,  after
giving  effect to the  issuance  of Shares  contemplated  by the Stock  Purchase
Agreements,  the number of shares  outstanding  in each series or class.  All of
such  outstanding  shares are, or on the Closing Date will be, duly  authorized,
validly issued and outstanding, fully paid and non-assessable. The shares of the
Company's  Common Stock  issuable  upon  conversion  of the Series A Convertible
Preferred  Stock will be, when issued in accordance with the terms of the Series
A Convertible  Preferred Stock, duly authorized,  validly issued, fully paid and
non-assessable.  Except as provided in the Certificate of Amendment, none of the
shares of the Company's  capital stock which will be  outstanding at the Closing
(i) were or will be subject to preemptive rights when issued or (ii) provide the
holders  thereof with any  preemptive  rights with  respect to any  issuances of
capital stock.

     (b) Schedule  6(b) hereto  correctly  and  completely  lists the number and
purpose for which such shares of the  Company's  Common  Stock are  reserved for
issuance by the Company.

     (c)  Except as  referred  to in  Schedule  6(b),  there are no  outstanding
options,  warrants,  subscriptions,  rights,  convertible  securities  or  other
agreements or plans under which the Company may become obligated to issue,  sell
or transfer shares of its capital stock or other securities.

     (d)  Except as  disclosed  on  Exhibit  B hereto,  there are and will be no
outstanding  registration  rights  with  respect  to any  capital  stock  of the
Company,  which (in either case) will be outstanding on the Closing Date, or any
capital stock referred to in Section 4.2(b) or 4.2(c).

     (e)  Except  as  disclosed  on  Exhibit  B  hereto,  there  are  no  voting
agreements,  voting trusts,  proxies or other agreements or understandings  with
respect to the voting of any capital stock of the Company.

     (f) Except as  disclosed  on Exhibit B hereto,  there are no  anti-dilution
protections  or other  adjustment  provisions  in existence  with respect to any
capital stock of the Company or any capital stock  referred to in Section 4.2(b)
or 4.2(c).

     (g) The  Certificate  of Amendment  has been duly adopted by the  Company's
Board of Directors  and,  when filed with the Secretary of State of the State of
New York, will be fully  effective as an amendment to the Company's  certificate
of incorporation. Upon filing of the


                                       15
<PAGE>

Certificate  of Amendment  with the  Secretary of State of New York,  the Shares
will have all of the rights,  priorities and terms set forth in the  Certificate
of Amendment.

     (h) Those  Persons  who own,  directly or  indirectly,  more than 5% of the
Company's  outstanding  Common Stock are as follows:  DuPont Chemical and Energy
Operations, Inc.

     4.3. Subsidiaries.

     The Company has no Subsidiaries other than Hudson Holdings, Inc. and Hudson
Technologies Company. The Company's subsidiary,  Hudson Holdings,  Inc., holds a
promissory  note from  Environmental  Support  Solutions,  Inc.  ("ESS")  in the
original principal amount of $380,000, which is secured by ESS Stock Certificate
No. 5 for 1,000 shares issued in the name of Robert Johnson,  a guarantor of the
said  note.  The  Company  has no  Investments  in any other  Person,  except as
described in the preceding sentences.

     4.4. Business.

     The  Company  sells  refrigerants  and  provides   refrigerant   management
services,  consisting  primarily of recovery and reclamation of the refrigerants
used in  commercial  air  conditioning  and  refrigeration  systems,  as well as
RefrigerantSide(R)  services, through which the Company performs decontamination
to remove  moisture,  oils and other  contaminants in such systems.  The Company
neither  currently  engages in, nor has any  intention of engaging in, any other
business.

     4.5. No Defaults or Conflicts.

     (a) The Company is not in violation or default in any material respect (and
is not in default in any material respect regarding any Indebtedness)  under any
indenture,  agreement or instrument to which it is a party or by which it or its
properties may be bound. The Company is not in default under any material order,
writ,  injunction,  judgment  or  decree  of any  court  or  other  Governmental
Authority or arbitrator(s) having jurisdiction over the Company.

     (b) The  execution,  delivery and  performance  by the Company of the Stock
Purchase  Agreements,  the First  Amendment to  Stockholders'  Agreement and the
First Amendment to  Registration  Rights  Agreement and any of the  transactions
contemplated hereby or thereby (including,  without limitation,  the issuance of
the Shares and the Conversion  Shares as contemplated  herein and therein and in
the Certificate of Amendment and the adoption of the Certificate of Amendment as
an amendment to the Company's  certificate of incorporation) do not and will not
(i)  violate  or  conflict  with,  with or  without  the giving of notice or the
passage of time or both, any provision of (A) the  certificate of  incorporation
or by-laws of the Company or (B) any material law, rule,  regulation or order of
any Governmental Authority, or any material judgment, writ, injunction,  decree,
award or


                                       16
<PAGE>

other  action of any court,  Governmental  Authority  or  arbitrator(s),  or any
agreement, indenture or other instrument applicable to the Company or any of its
properties,  (ii) result in the  creation of any Lien upon any of the  Company's
properties,  assets or revenues,  (iii) require the consent,  waiver,  approval,
order or authorization of, or declaration, registration, qualification or filing
with, any Person (whether or not a Governmental Authority and including, without
limitation, any shareholder approval), or (iv) cause antidilution clauses of any
outstanding  securities  to  become  operative  or give  rise to any  preemptive
rights.

     4.6. Disclosure Materials; Other Information.

     (a) The Company has  previously  furnished to the  Purchaser  the materials
described  on Schedule 4 hereto  (the  "Disclosure  Material").  The audited and
unaudited  financial  statements  referred  to or  contained  in  the  materials
referred to on Schedule 4 fairly present the consolidated financial condition of
the Company as of the respective dates thereof and the  consolidated  results of
the  operations  of the  Company  for such  periods  and have been  prepared  in
accordance with generally accepted accounting  principles  consistently applied,
except that any such  unaudited  statements may omit notes and may be subject to
year-end adjustment.

     (b) Since September 30, 2000, except as disclosed on Exhibit B hereto,  (i)
the business of the Company has been  conducted in the ordinary  course and (ii)
there  has  been  no  material   adverse  change  in  the  assets,   properties,
liabilities,  business, affairs, results of operations,  condition (financial or
otherwise)  or  prospects  of the  Company on a  consolidated  basis.  As of the
Closing Date and as of the date hereof, there are no material liabilities of the
Company  which would be required to be provided  for in a  consolidated  balance
sheet of the  Company  as of  either  such  date  prepared  in  accordance  with
generally  accepted  accounting  principles  consistently  applied,  other  than
liabilities  provided  for in the  financial  statements  referred to in Section
4.6(a).  Since  September  30,  2000,  no amount or  property  has  directly  or
indirectly  been declared,  ordered,  paid, made or set aside for any Restricted
Payment nor has any such action been agreed to.

     (c) There are no material  liabilities,  contingent  or  otherwise,  of the
Company that have not been disclosed in the financial  statements referred to in
Section 4.6(a) or otherwise disclosed in the Disclosure Material.

     (d)  None of the  Disclosure  Material  contained  or  contains  a false or
misleading  statement  of a material  fact or omits to state any  material  fact
necessary in order to make the statements made in such Disclosure  Material,  in
light of the circumstances under which they were made, not misleading.

     (e) There is no fact known to the  Company  which is not in the  Disclosure
Material and which  materially  and  adversely  affects,  or in the future might
materially and adversely affect, the assets, properties,  liabilities, business,
affairs, results of operations,  condition (financial or otherwise) or prospects
of the Company on a consolidated basis.


                                       17
<PAGE>

     4.7. Litigation.

     Except  as  disclosed  on  Exhibit  B  hereto,  there is no  action,  suit,
proceeding,  investigation or claim pending or, to the knowledge of the Company,
threatened in law, equity or otherwise before any court,  Governmental Authority
or arbitrator which (i) questions the validity of the Stock Purchase Agreements,
the Certificate of Amendment,  the First Amendment to  Stockholders'  Agreement,
the  First  Amendment  to  Registration  Rights  Agreement,  the  Shares  or the
Conversion Shares or any action taken or to be taken pursuant hereto or thereto,
(ii) might adversely affect the right, title or interest of any Purchaser to the
Shares or the  Conversion  Shares or (iii)  might  result in a material  adverse
change in the assets,  properties,  liabilities,  business,  affairs, results of
operations,  condition (financial or otherwise) or prospects of the Company on a
consolidated basis.

     4.8. Taxes.

     The Company has duly and timely filed all Tax Returns  required to be filed
by it,  and each such Tax  Return  correctly  and  completely  reflects  the Tax
liability and all other information  required to be reported thereon.  Except as
set  forth on  Exhibit  B, the  Company  has paid or caused to be paid all Taxes
(whether or not  reflected  on such Tax Returns)  that are due and payable.  The
provision  for Taxes due by the Company in the most recent  financial  statement
included in the Disclosure  Material is sufficient  for all unpaid Taxes,  being
current  Taxes not yet due and  payable,  of the  Company,  as of the end of the
period covered by such  financial  statement,  and as of the Closing Date,  such
provision, as adjusted for the passage of time through the Closing Date, will be
sufficient for the  then-accrued and unpaid Taxes not yet due and payable of the
Company.  There is no dispute concerning any Tax liability of the Company either
threatened,  claimed or raised by any Taxing Authority, and the Company does not
expect any Taxing Authority to assess  additional Taxes against or in respect of
it for any past period.  The Company has  withheld and paid,  or, if not yet due
for payment, set aside in accounts for such purposes, all Taxes required to have
been  withheld  in  connection  with  amounts  paid or  owing  to any  employee,
creditor,  independent  contractor  or other  third  party.  The  Company has no
liability  for Taxes of any Person  other than the  Company as a  transferee  or
successor,  by contract or otherwise.  There are no applicable  Taxes payable by
the Company in connection  with the execution and delivery of the Stock Purchase
Agreements,  the  First  Amendment  to  Stockholders'  Agreement  or  the  First
Amendment to Registration Rights Agreement or the issuance by the Company of the
Shares or the Conversion Shares.

     4.9. ERISA.

     (a)  All  Benefit  Plans  are  listed  in  Exhibit  B,  and  copies  of all
documentation  relating  to such  Benefit  Plans  have  been  delivered  or made
available to the Purchasers  (including copies of written Benefit Plans, written
descriptions of oral Benefit Plans, summary plan descriptions, trust agreements,
the  three  most  recent  annual  returns,  employee  communications,   and  IRS
determination letters).


                                       18
<PAGE>

     (b) Each Benefit Plan has at all times been maintained and  administered in
all material  respects in accordance with its terms and with the requirements of
all applicable law, including ERISA and the Code, and each Benefit Plan intended
to qualify under Section  401(a) of the Code has at all times since its adoption
been so qualified, and each trust which forms a part of any such plan has at all
times since its adoption been tax-exempt under Section 501(a) of the Code.

     (c) No Benefit  Plan has  incurred  any  "accumulated  funding  deficiency"
within the meaning of Section  302 of ERISA or Section 412 of the Code,  and the
"amount  of  unfunded  benefit   liabilities"  within  the  meaning  of  Section
4001(a)(18)  of ERISA does not exceed  zero with  respect  to any  Benefit  Plan
subject to Title IV of ERISA.

     (d) No "reportable event" (within the meaning of Section 4043 of ERISA) has
occurred  with  respect to any Benefit Plan or any Plan  maintained  by an ERISA
Affiliate since the effective date of said Section 4043.

     (e) No Benefit Plan is a  multiemployer  plan within the meaning of Section
3(37) of ERISA.

     (f) No direct,  contingent  or secondary  liability has been incurred or is
expected to be incurred by the Company under Title IV of ERISA to any party with
respect to any Benefit  Plan,  or with  respect to any other Plan  presently  or
heretofore maintained or contributed to by any ERISA Affiliate.

     (g) Neither the Company nor any ERISA  Affiliate has incurred any liability
for any tax  imposed  under  Section  4971  through  4980B  of the Code or civil
liability under Section 502(i) or (l) of ERISA.

     (h) No benefit under any Benefit Plan, including,  without limitation,  any
severance or parachute payment plan or agreement,  will be established or become
accelerated,  vested or payable by reason of any transaction  contemplated under
this Agreement.

     (i) No Benefit Plan provides  health or death benefit  coverage  beyond the
termination  of an  employee's  employment,  except  as  required  by  Part 6 of
Subtitle  B of Title I of ERISA or  Section  4980B of the Code or any State laws
requiring continuation of benefits coverage following termination of employment.

     (j) No suit,  action or other  litigation  (excluding  claims for  benefits
incurred in the ordinary course of plan  activities) has been brought or, to the
knowledge of the Company, threatened against or with respect to any Benefit Plan
and  there  are no  facts  or  circumstances  known to the  Company  that  could
reasonably  be  expected  to  give  rise  to any  such  suit,  action  or  other
litigation.


                                       19
<PAGE>

     (k) All  contributions to Benefit Plans that were required to be made under
such Benefit Plans have been made,  and all benefits  accrued under any unfunded
Benefit  Plan have been  paid,  accrued  or  otherwise  adequately  reserved  in
accordance with generally accepted accounting principles,  all of which accruals
under unfunded  Benefit Plans are as disclosed in Exhibit B, and the Company has
performed all material  obligations  required to be performed  under all Benefit
Plans.

     (l)  The  execution,   delivery  and  performance  of  the  Stock  Purchase
Agreements,  the  First  Amendment  to  Stockholders'  Agreement  and the  First
Amendment  to  Registration   Rights  Agreement  and  the  consummation  of  the
transactions contemplated hereby and thereby (including, without limitation, the
offer,  issuance and sale by the Company,  and the purchase by the  Purchaser of
the  Shares  and  the  Conversion  Shares)  will  not  involve  any  "prohibited
transaction" within the meaning of ERISA or the Code.

     4.10. Legal Compliance.

     (a) The Company has complied with all applicable laws, rules,  regulations,
orders, licenses,  judgments, writs, injunctions,  decrees or demands, except to
the extent that failure to so comply would not materially  adversely  affect the
assets,  properties,  liabilities,  business,  affairs,  results of  operations,
condition (financial or otherwise) or prospects of the Company on a consolidated
basis.

     (b) There are no material adverse orders, judgments,  writs, injunctions or
decrees of any court or  administrative  body,  domestic or  foreign,  or of any
other  Governmental  Authority,  domestic  or foreign,  outstanding  against the
Company.

     4.11. Outstanding Securities.

     All securities (as defined in the Securities  Act) of the Company have been
offered,  issued,  sold  and  delivered  in  compliance  with,  or  pursuant  to
exemptions  from,  all  applicable  federal  and state  laws,  and the rules and
regulations  of federal and state  regulatory  bodies  governing  the  offering,
issuance, sale and delivery of securities.

     4.12.  Permits,  Licenses and  Approvals;  Intellectual  Property and Other
Rights.

     Except as listed on Schedule  4.12, the Company owns or possesses and holds
free from  burdensome  restrictions  or  material  conflicts  with the rights of
others  all  franchises,   licenses,  permits,  consents,  approvals  and  other
authority  (governmental  or otherwise),  patents,  patent  rights,  trademarks,
trademark rights,  trade names,  trade name rights and copyrights (each of which
is listed on Exhibit B hereto),  and all rights and  privileges  with respect to
any of the  foregoing,  as are  necessary for the conduct of its business as now
being  conducted and as proposed to be  conducted.  To the best of the Company's
knowledge,  the Company is not in default in any material  respect  under any of
such franchises,  licenses, permits, consents, approvals or other authority. The
rights of (and


                                       20
<PAGE>

use by) the Company with respect to such or any other  patents,  patent  rights,
trademarks,  trademark rights,  trade names,  trade name rights or copyrights do
not  conflict  with or  infringe  any rights of others in a manner  which  might
materially and adversely affect the assets, properties,  liabilities,  business,
affairs, results of operations,  condition (financial or otherwise) or prospects
of the  Company  on a  consolidated  basis,  and no such  claim of  conflict  or
infringement has been asserted by any Person.

     4.13. Key Employees.

     The Company has good  relationships  with its employees and has not had and
does not expect any substantial labor problems.  The Company has no knowledge as
to any  intentions  of any key  employee or any group of  employees to leave the
employ of the Company. Except as set forth on Exhibit B hereto, the employees of
the Company are not and have never been  represented by any labor union,  and no
collective  bargaining  agreement is binding and in force against the Company or
currently being negotiated by the Company.

     4.14. Properties.

     The  Company has good and  marketable  title to its real  property,  all of
which is disclosed on Exhibit B hereto, and good and marketable title to each of
its other  properties.  Certain real property used by the Company in the conduct
of its business is held under lease (as identified on Exhibit B hereto), and the
Company is not aware of any pending or threatened  claim or action by any lessor
of any such property to terminate any such lease.  All such leases are valid and
in full  force and  effect,  and none of such  leases is in  default.  Except as
disclosed on Schedule 5, none of the  properties  owned or leased by the Company
is subject to any Liens which could  materially and adversely affect the assets,
properties,  liabilities,  business,  affairs, results of operations,  condition
(financial or otherwise) or prospects of the Company on a consolidated basis.

     4.15. Suppliers and Customers.

     (a) The  Company  has no reason to believe  that it does not have  adequate
sources of supply for its business as currently  conducted and as proposed to be
conducted.  The Company has good  relationships with all of its material sources
of supply of goods and services  and does not  anticipate  any material  problem
with any such material sources of supply.

     (b) The  Company has no  knowledge  that the  customer  base of the Company
might materially decrease.


                                       21
<PAGE>

     4.16. Environmental Compliance.

     Except as disclosed on Schedule 4.16 hereto:

     (a) the Company has not  received any verbal or written  notice,  citation,
subpoena,  summons,  complaint or other correspondence or communication from any
person with respect to the  presence of any  Hazardous  Material at, on,  about,
under,  emanating to or from or affecting  any of the real  property  (including
improvements)  currently or formerly owned, leased,  operated or occupied by the
Company or any predecessors thereof;

     (b) there has been no  intentional  or  unintentional,  gradual  or sudden,
release,  disposal or discharge  upon,  into,  beneath or from the real property
(including  improvements)  currently  or  formerly  owned,  leased,  operated or
occupied  by the  Company  or any  predecessors  thereof  that has  caused or is
causing soil or groundwater  contamination which under applicable  Environmental
Laws could require  investigation  or  remediation or could  otherwise  create a
material liability or obligation on the part of the Company;

     (c) the Company is in material compliance with all applicable Environmental
Laws and the terms and conditions of all Environmental Permits;

     (d) to the best knowledge of the Company after  reasonable  inquiry,  there
are no Liens arising under or pursuant to any Environmental Law  ("Environmental
Liens") relating to any real property (including improvements thereon) currently
owned by the Company;

     (e)  there  are no (i)  underground  storage  tanks,  (ii)  polychlorinated
biphenyl containing equipment or (iii) asbestos-containing materials at any site
currently owned, leased, operated or occupied by the Company;

     (f) the Company has not transported or arranged for the treatment, storage,
handling,  disposal or transportation of any Hazardous  Material to any location
which  could  reasonably  be expected  to result in  material  liability  to the
Company; and

     (g) no real property  currently or previously  owned,  leased,  operated or
occupied by the Company or any predecessors  thereof is currently  listed, or to
the knowledge of the Company,  proposed to be listed on the National  Priorities
List,  the  Comprehensive  Environmental  Response,  Compensation  and Liability
Information System or on any similar state list of sites requiring investigation
or cleanup.


                                       22
<PAGE>

     4.17. No Burdensome Agreements.

     To the best of the knowledge of the Company, (i) the Company is not a party
to, or bound by (nor are any of its  properties  affected  by), any  commitment,
contract or agreement, any term of which materially adversely affects, or in the
future would reasonably be expected to materially  adversely affect, the assets,
properties,  business,  affairs, results of operations,  condition (financial or
otherwise)  or  prospects  of the Company on a  consolidated  basis and (ii) the
Company is not a party to any  contract or agreement  with any  Affiliate of the
Company,  the terms of which are less  favorable to the Company than those which
might have been  obtained,  at the time such  contract or agreement  was entered
into, from a person who was not such an Affiliate.

     4.18. Offering of Shares.

     Neither the Company  nor, to the  Company's  knowledge,  any agent or other
Person  acting on its  behalf,  directly or  indirectly,  (i) offered any of the
Shares  or any  similar  security  of the  Company  (A) by any  form of  general
solicitation  or general  advertising  (within the meaning of Regulation D under
the  Securities  Act) or (B) for sale to or solicited  offers to buy any thereof
from,  or otherwise  approached  or negotiated  with respect  thereto with,  any
person  other  than  the   Purchasers   and  not  more  than  fifty  (50)  other
institutional  investors  each of which the Company  reasonably  believed was an
"accredited  investor"  within the meaning of Regulation D under the  Securities
Act or (ii) has done or caused to be done (or has  omitted  to do or to cause to
be done) any act which act (or which  omission)  would  result in  bringing  the
issuance  or sale of the  Shares  within  the  provisions  of  Section  5 of the
Securities Act or the filing,  notification or reporting provisions of any state
securities laws.

     4.19. SEC Reports.

     The Company  has filed all proxy  statements,  reports and other  documents
required to be filed by it under the  Securities  Exchange  Act. The Company has
furnished the Purchaser  with copies of (i) its Annual Report on Form 10-KSB for
the fiscal year ended  December 31,  1999,  (ii) its  Quarterly  Reports on Form
10-QSB for the fiscal quarters ended March 31, 2000, June 30, 2000 and September
30, 2000 and (iii) its Proxy  Statement dated July 25, 2000  (collectively,  the
"SEC  Reports").  Each  SEC  Report  was  in  substantial  compliance  with  the
requirements  of its  respective  form  and  none  of the SEC  Reports,  nor the
financial  statements (and the notes thereto) included in the SEC Reports, as of
their  respective  dates,  contained any untrue  statement of a material fact or
omitted to state a material fact  necessary to make the statements  therein,  in
light of the circumstances under which they were made, not misleading.

     4.20. Indebtedness.

     Schedule  2 hereto  sets forth (i) the  amount of all  Indebtedness  of the
Company outstanding on such Closing Date, which,  individually,  exceeds $50,000
as of December 31, 2000,


                                       23
<PAGE>

(ii) any Lien with respect to such  Indebtedness and (iii) a description of each
instrument  or  agreement  governing  such  Indebtedness.  The  Company has made
available to the  Purchaser a complete and correct copy of each such  instrument
or agreement (including all amendments,  supplements or modifications  thereto).
No material default exists with respect to or under any such Indebtedness or any
material  instrument or agreement  relating thereto and no event or circumstance
exists  with  respect  thereto  that (with  notice or the lapse of time or both)
could give rise to such a default.

     4.21. Use of Proceeds.

     The Company will use the proceeds  realized  from the sale of the Shares to
fund capital  expenditures,  fees and expenses of the transactions  contemplated
hereby and for working  capital  purposes.  No portion of such  proceeds will be
used for the purpose,  whether immediate,  incidental or ultimate, of purchasing
or carrying, within the meaning of Regulation U of the Board of Governors of the
Federal  Reserve  System,  as amended from time to time,  any "margin  stock" as
defined in said  Regulation  U, or for the  purpose of  purchasing,  carrying or
trading  in  securities  within  the  meaning  of  Regulation  T of the Board of
Governors of the Federal  Reserve  System,  as amended from time to time, or for
the  purpose  of  reducing  or  retiring  any  indebtedness  which  both (i) was
originally  incurred to purchase any such margin stock or other  securities  and
(ii)  was  directly  or  indirectly  secured  by  such  margin  stock  or  other
securities.  None of the assets of the Company includes any such "margin stock."
The Company has no present intention of acquiring any such "margin stock."

     4.22. Other Names.

     The business  previously or presently conducted by the Company has not been
conducted under any corporate,  trade or fictitious name, other than those names
listed on Exhibit B hereto.

     4.23. Brokers.

     No broker,  finder or  investment  banker or other party is entitled to any
brokerage,  finder's or other similar fee or  commission in connection  with the
Stock Purchase Agreement,  the First Amendment to Stockholders'  Agreement,  the
First Amendment to Registration Rights Agreement or the Certificate of Amendment
or  any  of  the  transactions   contemplated  hereby  or  thereby,  based  upon
arrangements made by or on behalf of the Company or any of its Affiliates.


                                       24
<PAGE>

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     The Purchaser represents and warrants to the Company as follows:

     5.1. Corporate Power and Authority.

     The  Purchaser  has all  requisite  power,  authority  and  legal  right to
execute,  deliver,  enter into, consummate the transactions  contemplated by and
perform  its  obligations   under  this   Agreement,   the  First  Amendment  to
Stockholders'   Agreement  and  the  First  Amendment  to  Registration   Rights
Agreement. The execution,  delivery and performance of this Agreement, the First
Amendment to  Stockholders'  Agreement and the First  Amendment to  Registration
Rights  Agreement by the  Purchaser  have been duly  authorized  by all required
corporate and other actions.  The Purchaser has duly executed and delivered this
Agreement,  the  First  Amendment  to  Stockholders'  Agreement  and  the  First
Amendment  to  Registration  Rights  Agreement,  and this  Agreement,  the First
Amendment to  Stockholders'  Agreement and the First  Amendment to  Registration
Rights  Agreement  constitute  the legal,  valid and binding  obligations of the
Purchaser  enforceable against the Purchaser in accordance with their respective
terms, subject to bankruptcy, insolvency,  reorganization,  moratorium and other
similar laws relating to the rights of creditors generally.

     5.2. Investment Intent.

     The  Purchaser is capable of evaluating  the risk of its  investment in the
Shares  being  purchased  by it,  is  able  to bear  the  economic  risk of such
investment  and has had  access to  material  information  with  respect  to the
Company necessary for it to make an informed investment decision.  The Purchaser
is  purchasing  the  Shares  to be  purchased  by it for  its  own  account  for
investment and not with a present view to any distribution  thereof in violation
of applicable  securities  laws;  provided,  however,  that,  upon notice to the
Company,  the Purchaser may transfer record and/or  beneficial  ownership of the
Shares or the Conversion Shares to one or more Affiliates, officers or employees
of Affiliates or investment funds managed by Affiliates of the Purchaser, in all
cases in compliance  with federal  securities  laws.  It is understood  that the
disposition of the Purchaser's Shares or Conversion Shares shall at all times be
within the Purchaser's  control. If the Purchaser should in the future decide to
dispose of any of its Shares or Conversion  Shares, it is understood that it may
do so only in compliance with the Securities Act,  applicable  securities  laws,
this  Agreement  and the  right of first  offer  set  forth in  Section 5 of the
Stockholders' Agreement. The Purchaser is an "accredited investor" as defined in
Rule 501(a) under the Securities Act.

     5.3. Brokers.

     No broker,  finder or  investment  banker or other party is entitled to any
brokerage,  finder's or other similar fee or  commission in connection  with the
Stock Purchase Agreement,  the


                                       25
<PAGE>

First Amendment to Stockholders'  Agreement, the First Amendment to Registration
Rights  Agreement or the  Certificate  of  Amendment or any of the  transactions
contemplated hereby or thereby,  based upon arrangements made by or on behalf of
the Purchaser or any of its Affiliates.

     5.4 Ownership of Common Stock.

     The  Purchaser  currently  does not own any shares of Common Stock and will
not acquire any  additional  shares of Common  Stock in the public  market.  Any
future  ownership by the Purchaser of shares of Common Stock shall be subject to
the limitations set forth in Section 4(a) of the Certificate of Amendment.

SECTION 6. RESTRICTIONS ON TRANSFER

     The  Purchaser  agrees  that it will not sell or  otherwise  dispose of any
Shares or Conversion  Shares  unless such Shares or Conversion  Shares have been
registered  under the  Securities  Act and,  to the extent  required,  under any
applicable state  securities  laws, or pursuant to an applicable  exemption from
such   registration   requirements.   The  Company  may  endorse  on  all  Share
certificates a legend stating or referring to such transfer restrictions and may
place a stop order with the Company's transfer agent for the Shares.

SECTION 7. INFORMATION AS TO THE COMPANY

     The Company covenants and agrees as follows:

     7.1. Financial Information.

     (a) The  Company  will  maintain  a system of  accounting  established  and
administered in accordance with sound business  practices to permit  preparation
of  financial  statements  in  accordance  with  generally  accepted  accounting
principles consistently applied.

     (b) So long as any of the  Shares  remain  outstanding,  the  Company  will
deliver  to (x) each  holder of thirty  percent  (30%) or more of the  Threshold
Shares and (y) a Designated Entity, the following:

          (i) as soon as  practicable  but not later than five (5) Business Days
after their issuance,  and in any event within  ninety-five  (95) days after the
close of each fiscal year of the Company,  (A) a  consolidated  balance sheet of
the Company as of the end of such fiscal year and (B) consolidated statements of
operations,  stockholders'  equity and cash flows of the Company for such fiscal
year,  in each case for  statements  set forth in clause  (B)  setting  forth in
comparative  form the  corresponding  figures for the preceding fiscal year, all
such balance  sheets and  statements  to be in  reasonable  detail and certified
without  qualification by BDO Seidman,  LLP or any "Big Five"


                                       26
<PAGE>

independent  public accounting firm selected by the Audit Committee of the Board
of Directors of the Company and approved by the shareholders of the Company, and
such  statements  shall be accompanied by a management  analysis of any material
differences  between the  results  for such  fiscal  year and the  corresponding
figures for the preceding year;

          (ii) as soon as practicable,  copies (A) of all financial  statements,
proxy material or reports sent to the Company's stockholders,  (B) of any public
press releases and (C) of all reports or registration  statements filed with the
Commission pursuant to the Securities Act or the Securities Exchange Act;

          (iii) as soon as  practicable  and in any event within fifty (50) days
after the close of each of the first three (3) fiscal  quarters of the  Company,
(A) a  consolidated  balance  sheet of the  Company as of the end of such fiscal
quarter,  (B) consolidated  statements of operations,  stockholders'  equity and
cash flows of the  Company for the portion of the fiscal year ended with the end
of such  quarter,  in each case in  reasonable  detail,  certified  by the Chief
Financial  Officer,  Chief  Executive  Officer or  President  of the Company and
setting forth in comparative form the  corresponding  figures for the comparable
period one year prior thereto (subject to normal year-end adjustments), together
with a management analysis of any material  differences between such results and
the  corresponding  figures for such prior period and (C) a  certificate  of the
Chief Financial  Officer,  Chief  Executive  Officer or President of the Company
certifying the Company's  compliance  with the covenants  contained in Section 9
(other than Section 9.12) of this Agreement;

          (iv) as soon as  practicable  and  without  duplication  of any of the
above items,  any other materials  furnished to the Company's Board of Directors
or to holders of the Company's capital stock or Indebtedness, including, without
limitation,   any   compliance   certificates   furnished  in  respect  of  such
Indebtedness; and

          (v) as soon as practicable,  such other  information as may reasonably
be requested by a holder of Shares.

     (c) The  Company  will  deliver to each  member of the  Company's  Board of
Directors  and each  observer  to the  Company's  Board of  Directors  appointed
pursuant to Section 2(a) of the Stockholders'  Agreement, as soon as practicable
(and in the case of (iii),  prior to the end of each  fiscal  year) and  without
duplication of any of the items listed below, the following:

          (i)  copies  of any  annual,  special  or  interim  audit  reports  or
management  or comment  letters  with  respect to the Company or its  operations
submitted to the Company by independent public accountants;

          (ii) copies of summary financial  information  prepared on a quarterly
basis  regarding  the  Company  on a  consolidated  basis  as  presented  to the
Company's  Board  of  Directors  and any  other  summary  financial  information
otherwise prepared;


                                       27
<PAGE>

          (iii)  copies of the  annual  budget  and  business  plan for the next
fiscal year;

          (iv)  copies  of all  formal  communications,  from  time to time,  to
directors of the Company (including without limitation all information furnished
to such directors in connection with such communications), and copies of minutes
of meetings of the Company's Board of Directors (and of any executive committees
thereof);

          (v) notice of default under any material agreement,  contract or other
instrument to which the Company is a party or by which it is bound;

          (vi) notice of any action or  proceeding  which has been  commenced or
threatened against the Company and which, if adversely  determined,  would have,
individually  or in the  aggregate,  a material  adverse  effect on the  assets,
properties,  liabilities,  business,  affairs, results of operations,  condition
(financial or otherwise)  or prospects of the Company on a  consolidated  basis;
and

          (vii) copies of all filings made with the Commission.

     (d) All such financial  statements referred to in this Section 7.1 shall be
prepared  in  accordance   with   generally   accepted   accounting   principles
consistently  applied (except for any change in accounting  principles specified
in the accompanying certificate and except that any interim financial statements
may omit notes and may be subject to normal year-end adjustments).

     (e) Without  limiting  the  foregoing  provisions  of this Section 7.1, the
Company  agrees that,  if requested in writing by any holder of Shares,  it will
not deliver to such holder  (until  otherwise  instructed  by a holder of thirty
percent (30%) or more of the Threshold Shares) (x) any non-public information or
non-public  materials  regarding the Company (whether  described in this Section
7.1 or  otherwise)  and (y) any  information  (whether or not included in clause
(x)) which such holder  specifies that it does not want to receive.  The Company
shall comply with any such request with respect to each such  Purchaser  and any
subsequent  holders of Shares  acquired  directly or indirectly  (through one or
more  transfers)  from such Purchaser,  until  instructed  otherwise by the then
holder of such Shares.


                                       28
<PAGE>

     7.2. Communication with Accountants.

     The Company  hereby  authorizes  (a) each holder of thirty percent (30%) or
more of the  aggregate  of the  Threshold  Shares and the  Threshold  Conversion
Shares and (b) a Designated Entity, to communicate directly with the independent
certified public  accountants for the Company and authorizes such accountants to
disclose  to each such  holder any and all  financial  statements  and any other
information  of any  kind  that  they  may  have  with  respect  to the  assets,
properties,  liabilities,  business,  affairs, results of operations,  condition
(financial or otherwise) or prospects of the Company,  provided,  that each such
holder has  delivered  to the Company a  confidentiality  agreement  in form and
substance  reasonably  acceptable  to the Company.  The Company  shall deliver a
letter  addressed  to such  accountants  instructing  them to  comply  with  the
provisions of this Section 7.2. For purposes of Section 7.2(a),  the calculation
of a Person's percentage holdings of Conversion Shares shall be determined based
upon the number of Shares from which such Conversion Shares derived.

     7.3. Inspection.

     The Company will permit (a) each holder of thirty  percent (30%) or more of
the shares of the aggregate of the Threshold Shares and the Threshold Conversion
Shares, (b) any authorized  representative of a holder referred to in clause (a)
and (c) a Designated  Entity to visit and inspect any of the  properties  of the
Company,  to examine the  Company's  books and  records and to discuss  with the
Company's  officers the Company's books and records and the assets,  properties,
liabilities,  business, affairs, results of operations,  condition (financial or
otherwise)  or  prospects of the Company,  all at such  reasonable  times and as
often  as  may  be  reasonably  requested,  provided,  that  each  such  holder,
representative   or   Designated   Entity  has   delivered   to  the  Company  a
confidentiality  agreement in form and  substance  reasonably  acceptable to the
Company.  For  purposes  of  Section  7.3(a),  the  calculation  of  a  Person's
percentage  holdings of  Conversion  Shares shall be  determined  based upon the
number of Shares from which such Conversion Shares derived.

     7.4. Notices.

     The Company  will give notice to all  holders of Shares  promptly  after it
learns  (other than by notice from all of such  holders) of the existence of any
of the following:

     (a) any default under any Indebtedness (or under any indenture, mortgage or
other  agreement  relating  to any  Indebtedness)  which  Indebtedness  is in an
aggregate  principal  amount  exceeding  $100,000 (or the equivalent  thereof in
other currencies) in respect of which the Company is liable;

     (b) any action or proceeding which has been commenced or threatened against
the Company and which, if adversely determined,  would have,  individually or in
the aggregate, a material adverse effect on the assets, properties, liabilities,
business, affairs, results of operations,  condition (financial or otherwise) or
prospects of the Company on a  consolidated  basis or the ability of the


                                       29
<PAGE>

Company to perform its  obligations  under the Stock  Purchase  Agreements,  the
Stockholders' Agreement, the Registration Rights Agreement or the Certificate of
Amendment;

     (c) any dispute  which may exist  between the Company and any  Governmental
Authority  which may,  individually  or in the aggregate,  materially  adversely
affect the normal business operations of the Company or the assets,  properties,
liabilities,  business, affairs, results of operations,  condition (financial or
otherwise) or prospects of the Company on a consolidated basis or the ability of
the Company to perform its obligations under the Stock Purchase Agreements,  the
First Amendment to Stockholders'  Agreement, the First Amendment to Registration
Rights Agreement or the Certificate of Amendment; and

     (d) if any (i)  "reportable  event" (as such term is  described  in Section
4043(c) of ERISA) has occurred; or (ii) "accumulated funding deficiency" (within
the meaning of Section  412(a) of the Code) has been  incurred with respect to a
Pension Plan  maintained  or  contributed  to (or required to be  maintained  or
contributed  to) by the  Company or any ERISA  Affiliate  that is subject to the
funding  requirements of ERISA and the Code or an application may be or has been
made to the  Secretary  of the  Treasury  for a waiver  or  modification  of the
minimum funding  standard  (including any required  installment  payments) or an
extension of any amortization period under Section 412 of the Code, in each case
with  respect  to such a Pension  Plan;  or (iii)  Pension  Plan  maintained  or
contributed to (or required to be maintained or  contributed  to) by the Company
or any ERISA Affiliate has been terminated,  reorganized, petitioned or declared
insolvent  under  Title  IV  of  ERISA;  or  (iv)  Pension  Plan  maintained  or
contributed to (or required to be maintained or  contributed  to) by the Company
or any ERISA Affiliate has an unfunded  current  liability giving rise to a lien
under  ERISA or the Code;  or (v)  proceeding  has been  instituted  pursuant to
Section  515 of ERISA to collect a  delinquent  contribution  to a Pension  Plan
maintained or contributed to (or required to be maintained or contributed to) by
the  Company  or any  ERISA  Affiliate;  or (vi)  of the  Company  or its  ERISA
Affiliates  will  or may  incur  any  liability  (including  any  contingent  or
secondary  liability) to or on account of the  termination or withdrawal  from a
Pension Plan  maintained  or  contributed  to (or required to be  maintained  or
contributed  to) by the  Company or any ERISA  Affiliate;  or (vii)  "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) in connection  with an "employee  benefit plan" (as defined in Section
3(3) of ERISA),  maintained or  contributed  to (or required to be maintained or
contributed to) by the Company or any ERISA Affiliate has occurred.

Such  notice (i) with  respect to (a),  shall  specify  the nature and period of
existence of any such  default and what the Company  proposes to do with respect
thereto and (ii) with  respect to (b), (c) or (d),  shall  specify the nature of
any such matter referred to in such clause,  what action the Company proposes to
take with respect thereto and what action any other relevant Person is taking or
proposes to take with respect thereto.

                                       30
<PAGE>

SECTION 8. AFFIRMATIVE COVENANTS

     The Company covenants and agrees as follows:

     8.1. Maintenance of Existence,  Properties and Franchises;  Compliance with
          Law; Taxes; Insurance.

     The Company will:

     (a) maintain its corporate  existence,  rights and other franchises in full
force and effect;

     (b)  maintain  its  tangible  assets  in good  repair,  working  order  and
condition so far as necessary or  advantageous  to the proper carrying on of its
business;

     (c) comply with all applicable laws and with all applicable orders,  rules,
rulings,  certificates,   licenses,  regulations,   demands,  judgments,  writs,
injunctions and decrees,  provided,  that such compliance shall not be necessary
so long as (i) the  applicability  or  validity  of any such law,  order,  rule,
ruling, certificate,  license, regulation, demand, judgment, writ, injunction or
decree  shall be  contested in good faith by  appropriate  proceedings  and (ii)
failure to so comply  will not have a  material  adverse  effect on the  assets,
properties,  liabilities,  business,  affairs, results of operations,  condition
(financial or otherwise) or prospects of the Company on a consolidated basis;

     (d) pay promptly when due all Taxes imposed upon its properties,  assets or
income and all claims or indebtedness (including, without limitation,  vendor's,
workmen's  and like claims)  which might become a Lien upon such  properties  or
assets; provided, that payment of any such Tax shall not be necessary so long as
(i) the  applicability  or validity  thereof shall be contested in good faith by
appropriate  proceedings  and  a  reserve,  if  appropriate,   shall  have  been
established  with respect thereto and (ii) failure to make such payment will not
have a material adverse effect on the assets, properties, liabilities, business,
affairs, results of operations,  condition (financial or otherwise) or prospects
of the Company on a consolidated basis; and

                  (e)  keep  adequately   insured,   by  financially  sound  and
reputable  insurers of nationally  recognized  stature,  all its properties of a
character  customarily insured by entities similarly  situated,  against loss or
damage of the kinds and in amounts  customarily insured against by such entities
and with such deductibles or coinsurance as is customary.


                                       31
<PAGE>

     8.2.  Office for Payment,  Exchange and  Registration;  Location of Office;
           Notice of Change of Name or Office.

     (a) So long as any of the Shares is outstanding,  the Company will maintain
an office or agency  where  Shares may be presented  for  redemption,  exchange,
conversion  or  registration  of transfer as  provided in this  Agreement.  Such
office or agency  initially  shall be the  office of the  Company  specified  in
Section 17 hereof, subject to Section 8.2(b).

     (b) The Company shall give each holder of Shares at least twenty (20) days'
prior  written  notice of any  change in (i) the name of the  Company as then in
effect  or (ii)  the  location  of the  office  of the  Company  required  to be
maintained under this Section 8.2.

     8.3. Fiscal Year.

     The fiscal year of the Company for tax,  accounting  and any other purposes
shall end on December 31 of each calendar year.

     8.4. Environmental Matters.

     (a) The Company shall keep and maintain any property either owned,  leased,
operated or occupied by the Company free and clear of any  Environmental  Liens,
and the  Company  shall  keep  all  such  property  free of  Hazardous  Material
contamination and in compliance with all applicable  Environmental  Laws and the
terms and conditions of any Environmental Permits;  provided,  however, that the
Company shall have the right at its cost and expense,  and acting in good faith,
to contest,  object or appeal by appropriate  legal  proceedings the validity of
any  Environmental  Lien.  The contest,  objection or appeal with respect to the
validity of an  Environmental  Lien shall  suspend the  Company's  obligation to
eliminate  such   Environmental  Lien  under  this  paragraph  pending  a  final
determination  by  appropriate  administrative  or  judicial  authority  of  the
legality, enforceability or status of such Environmental Lien, provided that the
following conditions are satisfied:  (i) contemporaneously with the commencement
of such  proceedings,  the Company  shall give  written  notice  thereof to each
holder of Shares or Conversion Shares; and (ii) if under applicable law any real
property or  improvements  thereon are subject to sale or forfeiture for failure
to satisfy the  Environmental  Lien prior to a final  determination of the legal
proceedings, the Company must successfully move to stay such sale, forfeiture or
foreclosure  pending final  determination of the Company's action; and (iii) the
Company  must,  if  requested,  furnish to the  holders of Shares or  Conversion
Shares a good and sufficient  bond,  surety,  letter of credit or other security
satisfactory  to such holders  equal to the amount  (including  any interest and
penalty) secured by the Environmental Lien.

     (b) The Company will, by administrative  or judicial  process,  enforce the
obligations  of  any  other  Person  who  is  potentially  liable  for  damages,
contribution or other relief in


                                       32
<PAGE>

connection with any violation of Environmental Laws, including,  but not limited
to, asbestos  abatement,  Hazardous Material  remediation or off-site or on-site
disposal.

     (c) The Company will defend,  indemnify  and hold  harmless  each  current,
former and future holder of Shares or Conversion  Shares, and each such holder's
employees, officers, directors, stockholders,  partners, agents, representatives
and assigns,  from and against any liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments,  suits and claims,  joint or  several,  and any
costs,  disbursements and expenses  (including  attorneys' fees and expenses and
costs of investigation) of whatever kind or nature, known or unknown, contingent
or  otherwise,  arising  out of or in any  way  related  to  (i)  the  presence,
disposal,  release,  removal,  discharge,   storage  or  transportation  of  any
Hazardous  Material upon,  into, from or affecting any real property  (including
improvements)  currently or formerly owned, leased,  operated or occupied by the
Company; (ii) any judicial or administrative action, suit or proceeding,  actual
or  threatened,  relating to Hazardous  Material upon, in, from or affecting any
real property  (including  improvements)  currently or formerly  owned,  leased,
operated or occupied by the Company;  (iii) any  violation of any  Environmental
Law by the Company or any of its agents,  tenants,  subtenants or invitees; (iv)
the imposition of any  Environmental  Lien for the recovery of costs expended in
the  investigation,  study or remediation of any environmental  liability of (or
asserted  against) the Company;  and (v) any liability arising out of or related
to the  off-site  transportation,  shipment,  disposal,  treatment,  handling or
disposal of Hazardous  Materials.  This Section  8.4(c) and Section 8.4(d) shall
survive any payment,  conversion  or transfer of Shares and any  termination  of
this Agreement.

     (d) To the extent  that the Company is strictly  liable  without  regard to
fault under any Environmental  Law, the Company's  obligations to the holders of
Shares or Conversion Shares under any of the  indemnification  provisions of the
Stock Purchase  Agreements shall likewise be strict without regard to fault with
respect to the violation of any Environmental Law which results in any liability
to any of the indemnified persons referred to in Section 8.4(c).

     8.5. Reservation of Shares.

     There have been reserved, and the Company shall at all times keep reserved,
free from  preemptive  rights,  out of its  authorized  Common Stock a number of
shares of Common Stock  sufficient to provide for the exercise of the conversion
rights provided in Section 5 of the Certificate of Amendment.

     8.6. Securities Exchange Act Registration.

     (a)  The  Company  will  maintain   effective  a   registration   statement
(containing  such  information and documents as the Commission shall specify and
otherwise  complying with the Securities  Exchange Act),  under Section 12(b) or
Section  12(g),  whichever is applicable,  of the Securities  Exchange Act, with
respect to the Common  Stock of the  Company,  and the Company will file on time
such  information,  documents  and  reports  as the  Commission  may  require or
prescribe for


                                       33
<PAGE>

companies  whose stock has been  registered  pursuant to such  Section  12(b) or
Section 12(g), whichever is applicable.

     (b) The  Company  will,  upon the  request of any  holder of  Shares,  make
whatever  other  filings  with  the  Commission,  or  otherwise  make  generally
available to the public such financial and other information, as any such holder
may deem reasonably  necessary or desirable in order to enable such holder to be
permitted to sell Shares pursuant to the provisions of Rule 144.

     8.7. Delivery of Information for Rule 144A Transactions.

     If a holder of Shares proposes to transfer any such Shares pursuant to Rule
144A under the  Securities  Act (as in effect  from time to time),  the  Company
agrees  to  provide  (upon  the  request  of  such  holder  or  the  prospective
transferee) to such holder and (if requested) to the prospective  transferee any
financial or other  information  concerning  the Company which is required to be
delivered by such holder to any transferee of such Shares  pursuant to such Rule
144A.

     8.8. Senior Securities.

     The Company  shall  maintain the senior  status of the Series A Convertible
Preferred  Stock such that it shall rank senior in all  respects,  including the
payment on liquidation  and  redemption,  to all other equity  securities of the
Company.

     8.9. Further Assurances.

     The  Company  will  from  time to time,  upon the  request  of the  Fleming
Holders,  promptly  and  duly  execute  and  deliver  any and all  such  further
instruments  and documents as the Fleming  Holders may reasonably deem necessary
or desirable to obtain the full benefits of (i) the  obligations  of the Company
under this Agreement and (ii) the other rights and powers herein  granted.  Upon
the  instructions  from time to time of the Fleming  Holders,  the Company shall
execute and cause to be filed any document or filing presented to the Company in
proper  form for  signing or filing,  in each case as the  Fleming  Holders  may
reasonably  deem  necessary or desirable in light of the  Company's  obligations
under this  Agreement,  and the Company shall pay or cause to be paid any filing
or other fees in connection therewith.

     8.10. Stockholder Approval.

     The transactions contemplated hereby have been structured by the parties to
comply with the requirements for stockholder approval of the NASDAQ Stock Market
and so that further  stockholder  action  shall not be  required.  If such rules
require such  stockholder  approval,  the Company  shall use its best efforts to
obtain such stockholder  approval. In the event the Company fails to obtain such
stockholder approval, the terms of the transactions contemplated hereby shall be
restructured  so that they (i)  satisfy  the  requirements  of the NASDAQ  Stock
Market and (ii) provide


                                       34
<PAGE>

the  holders of Series A  Convertible  Preferred  Stock  with the same  economic
benefit they would have received had such stockholder approval been obtained.

     8.11. Shares Paid as Dividends.

     If the Company shall pay to the holders of Series A  Convertible  Preferred
Stock  additional  shares of Series A Convertible  Preferred Stock as a dividend
pursuant to Section 2 of the Certificate of Amendment,  such additional  shares,
on the date of such payment, will be duly authorized, validly issued, fully paid
and non-assessable.

SECTION 9. NEGATIVE COVENANTS

     The Company  covenants and agrees that without the prior written consent of
the Fleming Holders:

     9.1. No Dilution or Impairment; No Changes in Capital Stock.

     The Company will not, by amendment of its certificate of  incorporation  or
through  any  consolidation,   merger,   reorganization,   transfer  of  assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the  observance  or  performance  of any of the terms of the Stock
Purchase  Agreements,  the  Certificate of Amendment,  the  Registration  Rights
Agreement or the Stockholders'  Agreement. The Company will at all times in good
faith  assist in the  carrying  out of all such terms,  and in the taking of all
such action,  as may be necessary or  appropriate in order to protect the rights
of the  holders  of Shares (as such  rights are set forth in the Stock  Purchase
Agreements,  the Certificate of Amendment, the Registration Rights Agreement and
the  Stockholders'  Agreement)  against  dilution or other  impairment.  Without
limiting the  generality  of the  foregoing,  the Company (a) will not issue any
shares or class or series of equity or equity-linked  security,  which is senior
to, or pari passu with, the Series A Convertible  Preferred Stock as to dividend
payments  or amounts  payable in the event of  liquidation  or winding up of the
Company,  (b) will not  enter  into any  agreement  or  instrument  which  would
restrict or otherwise  materially adversely affect the ability of the Company to
perform its obligations under the Stock Purchase  Agreements,  the Stockholders'
Agreement,  the  Registration  Rights Agreement or the Certificate of Amendment,
(c) will not amend its  certificate  of  incorporation  or by-laws in any manner
which  would  impair or reduce the  rights of the  Preferred  Stock,  including,
without  limitation,  an  amendment  which  would  alter or change  the  powers,
privileges or preferences  of the holders of the Series A Convertible  Preferred
Stock  (including,  without  limitation,  changing the  Certificate of Amendment
after any Shares  have been  called  for  redemption),  (d) except as  otherwise
provided  in the  Certificate  of  Amendment,  will not  redeem,  repurchase  or
otherwise acquire any shares of capital stock of the Company or any other rights
or options to subscribe  for or purchase any capital stock of the Company or any
other  securities  convertible  into or  exchangeable  for capital  stock of the
Company,  (e) will not permit the par value or the determined or stated value of
any  shares of Common  Stock  receivable  upon the  conversion  of the


                                       35
<PAGE>

Shares to exceed the amount payable therefor upon such conversion, (f) will take
all such action as may be necessary or appropriate in order that the Company may
at all  times  validly  and  legally  issue  duly  authorized,  fully  paid  and
nonassessable  shares of the Common Stock free from all Taxes, Liens and charges
with respect to the issue  thereof,  upon the conversion of the Shares from time
to time  outstanding,  (g)  will  not  take  any  action  which  results  in any
adjustment of the current conversion price under the Certificate of Amendment if
the total  number of shares of the Common Stock (or other  securities)  issuable
after the action upon the conversion of all of the then outstanding Shares would
exceed the total  number of shares of Common  Stock (or other  securities)  then
authorized by the Company's  certificate of incorporation  and available for the
purpose of issuance  upon such  conversion,  provided,  that  nothing  contained
herein  shall  require  the  Company to make an ultra  vires  issuance of Common
Stock,  (h) will not have any  authorized  Common  Stock (and will not issue any
Common Stock) other than its existing  authorized  Common Stock,  $.01 par value
per share, and (i) will not amend its certificate of incorporation to change any
terms of its Common Stock.

     9.2. Indebtedness.

     So long as the Fleming  Holders hold at least 30% of the Threshold  Shares,
the Company will not (i) incur  Indebtedness,  excluding  any  Indebtedness  set
forth on Schedule 2 hereto,  in excess of $7.5  million in  aggregate  principal
amount; or (ii) enter into any agreement, amendment or modification with respect
to any  Indebtedness,  which agreement,  amendment or modification  restricts or
prohibits  (or was intended  primarily to restrict or prohibit) the Company from
making  any  payments  under,  or  otherwise  performing,   the  Stock  Purchase
Agreements.

     9.3. Consolidation, Merger and Sale.

     So long as the Fleming  Holders hold at least 30% of the Threshold  Shares,
the Company will not (and will not agree to): (a) wind up, liquidate or dissolve
its  affairs;  (b)  sell,  lease,  transfer  or  otherwise  dispose  of  all  or
substantially  all of its assets to any other Person;  or (c) effect a merger or
consolidation  if the Company is not the surviving  corporation from such merger
or consolidation.

     9.4. No Change in Business

     The Company will not change  substantially the character of its business as
conducted on the Closing Date as represented in Section 4.4 hereof and described
in the Disclosure Material.

     9.5. Restricted Payments; Investments.

     The  Company  will not declare or make or permit to be declared or made any
Restricted Payment or any Investment.


                                       36
<PAGE>

     9.6. Sale of Substantial Portion of Assets.

     After the Closing  Date,  the  Company  will not sell,  transfer,  lease or
otherwise  dispose of any assets to any Person (other than assets  consisting of
inventory  being  disposed of in the ordinary  course of business and other than
assets which are, contemporaneously with such disposition (or within ninety (90)
days thereafter),  being replaced with other substantially similar (or improved)
assets which are used by the Company for  substantially  the same purpose as the
assets being replaced) to the extent the aggregate assets so sold,  transferred,
leased or disposed of:

          (x)  during the twelve  (12) month  period  ending on the date of such
     sale, transfer,  lease or disposition (i) had an aggregate book value equal
     to  ten  percent  (10%)  or  more  of  the  aggregate  book  value  of  the
     consolidated  total  assets of the  Company  at the end of the most  recent
     fiscal quarter preceding such sale, transfer,  lease or disposition or (ii)
     accounted for ten percent (10%) or more of the consolidated revenues of the
     Company as shown on the  consolidated  income  statement of the Company for
     the most recent fiscal quarter or the then preceding fiscal year; or

          (y)  during  the  period  from the  Closing  Date  through  such sale,
     transfer, lease or disposition (i) had an aggregate book value equal to ten
     percent (10%) or more of the aggregate book value of the consolidated total
     assets  of the  Company  at  the  end of the  most  recent  fiscal  quarter
     preceding such sale,  transfer,  lease or disposition or (ii) accounted for
     ten percent (10%) or more of the consolidated  revenues of the Company over
     the Company's fiscal periods beginning after the Closing Date and ending at
     the end of the most  recent  fiscal  quarter  as shown on the  consolidated
     income statements of the Company for such periods.

     9.7. Obligations to Affiliates.

     The Company may not incur or permit to exist any of the following:

     (a) any  obligation of the Company to repay money borrowed owing to (i) any
Affiliate of the Company or (ii) any other holder of shares of the capital stock
of the Company; or

     (b)  any  obligation,  to  any  Person,  which  obligation  is  assumed  or
guaranteed by the Company and which is an obligation of (i) any Affiliate of the
Company or (ii) any other holder of shares of the capital stock of the Company.

This Section 9.7 shall not apply to (1) any obligations under the Stock Purchase
Agreements or with respect to the Shares, (2) any loans,  advances or Guarantees
referred  to in clause (1) of the  proviso  to the  definition  of  "Investment"
contained in Section 3 hereof, (3) Indebtedness identified on Schedule 2 hereto,
or (4) payments to DuPont Chemical and Energy  Operations,  Inc. and E.I. DuPont
de


                                       37
<PAGE>

Nemours and Company in the  ordinary  course of business,  consistent  with past
practice,  and not in connection with any financing or  extraordinary  corporate
transaction.

     9.8. Transactions with Affiliates.

     The Company will not, directly or indirectly, enter into any transaction or
agreement  (including,  without limitation,  the purchase,  sale,  distribution,
lease or exchange of any  property or the  rendering  of any  service)  with any
Affiliate of the Company,  unless such  transaction or agreement (a) is approved
by a majority of the Outside  Directors on the Board of Directors of the Company
(provided  that  this  Section  9.8(a)  shall not  apply to  payments  to DuPont
Chemical and Energy  Operations,  Inc. and E.I. DuPont de Nemours and Company in
the  ordinary  course of business,  consistent  with past  practice,  and not in
connection with any financing or extraordinary corporate  transaction),  and (b)
is on terms that are no less  favorable to the Company than those which might be
obtained  at the  time of such  transaction  from a  Person  who is not  such an
Affiliate;  provided,  however,  that this  Section  9.8 shall not limit,  or be
applicable to, (i) employment arrangements with (and general salary and benefits
compensation  for) any individual who is a full-time  employee of the Company if
such  arrangements  are  approved by a majority of the Outside  Directors on the
Board of  Directors  of the  Company;  and (ii) the  payment of  reasonable  and
customary  regular fees to directors of the Company who are not employees of the
Company.

     9.9. Liens.

     So long as the Fleming  Holders hold at least 30% of the Threshold  Shares,
the Company will not create or permit to exist any Liens upon or with respect to
any of its assets or income,  other than existing  liens set forth on Schedule 5
hereto, in excess of $7.5 million in the aggregate.

     9.10. Private Placement Status.

     Neither the Company nor any agent nor other Person  acting on the Company's
behalf  will do or cause to be done (or will  omit to do or to cause to be done)
any act which act (or which  omission)  would result in bringing the issuance or
sale of the Shares or the  Conversion  Shares within the provisions of Section 5
of the Securities Act or the filing,  notification or reporting  requirements of
any state  securities  law (other than in  accordance  with a  registration  and
qualification  of  Conversion   Shares  pursuant  to  the  Registration   Rights
Agreement).


                                       38
<PAGE>

     9.11. Maintenance of Public Market.

     The Company  will not proceed with a program of  acquisition  of its Common
Stock,  initiate a corporate  reorganization or  recapitalization or undertake a
consolidation or merger or authorize,  consent to or take any action which would
have the effect of:

     (a) removing the Company from  registration  with the Commission  under the
Securities Exchange Act with respect to the Company's Common Stock;

     (b)  requiring  the  Company to make a filing  under  Section  13(e) of the
Securities Exchange Act;

     (c) reducing  substantially  or eliminating the public market for shares of
Common Stock of the Company;

     (d) causing a delisting of the Company's  Common Stock as a National Market
Security on the NASDAQ Stock  Market  (unless such stock is delisted as a result
of being listed on a national securities exchange); or

     (e) if any shares of the Company's Common Stock are at any time listed on a
national exchange, causing a delisting of such stock from such exchange.

     9.12. Actions Prior to the Closing Date.

     From the date hereof  through the Closing  Date,  the Company will not, (a)
issue or agree to issue any capital stock or any securities  exercisable for, or
convertible  or  exchangeable  into,  capital stock or (b)  purchase,  redeem or
otherwise acquire any of its capital stock; provided, however, that this Section
9.12 shall not limit, or be applicable to, (i) the transactions  contemplated by
the Stock  Purchase  Agreements,  including  any  issuance  of capital  stock in
connection  with the  transactions  contemplated by Sections 9.1 and 9.11 hereof
and (ii) grants of options or issuances  of Common Stock to officers,  directors
or employees of the Company  pursuant to the current terms of the Company's 1994
and 1997 Stock Option Plans.

SECTION 10. CONDITIONS TO PURCHASER'S OBLIGATIONS

     The  Purchaser's  obligation  to purchase  Shares  hereunder  is subject to
satisfaction  of the  following  conditions  at the Closing (any of which may be
waived by the Purchaser):


                                       39
<PAGE>

     10.1.  Certificate  of  Amendment;  Stockholders'  Agreement;  Registration
Rights Agreement.

     (a) The  certificate of  incorporation  of the Company shall have been duly
amended by the filing of the  Certificate  of Amendment in the form of Exhibit A
hereto.

     (b) The Company,  the  Purchasers  and certain  other  stockholders  of the
Company shall have entered into the First Amendment to  Stockholders'  Agreement
substantially in the form of Exhibit C hereto.

     (c) The Company shall have entered into the First Amendment to Registration
Rights  Agreement  with the  Purchasers  substantially  in the form of Exhibit D
hereto.

     10.2. Certificates for Shares.

     The  Purchaser  shall  concurrently  receive  the  certificates  for Shares
contemplated by Section 2(b) hereof.

     10.3. Senior Status.

     The Company  shall have taken all of the necessary  actions,  including the
amendment  of  the  appropriate  existing  agreements,  so  that  the  Series  A
Convertible  Preferred  Stock shall rank senior in all  respects,  including the
payment on liquidation  and  redemption,  to all other equity  securities of the
Company.

     10.4. Accuracy of Representations and Warranties.

     The  representations  and warranties of the Company  contained herein or in
any  certificate  or document  delivered  pursuant  hereto  shall be correct and
complete  on and as of the  Closing  Date with the same effect as though made on
and as of the Closing Date (after giving effect to the transactions contemplated
by this Agreement).

     10.5. Compliance with Agreements.

     The Company shall have performed and complied in all material respects with
all  agreements,  covenants  and  conditions  contained  in the  Stock  Purchase
Agreements  and any other  document  contemplated  hereby or  thereby  which are
required  to be  performed  or  complied  with by the  Company  on or before the
Closing Date.


                                       40
<PAGE>

     10.6. Officers' Certificates.

     The Purchaser shall have received a certificate  dated the Closing Date and
signed by the President or Chief  Executive  Officer and by the Secretary or the
Treasurer of the Company,  to the effect that the  conditions of Sections  10.3,
10.4, 10.8 and 10.9 have been satisfied.

     10.7. Proceedings.

     All corporate and other  proceedings  in connection  with the  transactions
contemplated  by the  Stock  Purchase  Agreements,  and all  documents  incident
thereto, shall be in form and substance reasonably satisfactory to the Purchaser
and its counsel,  and the Purchaser  shall have  received all such  originals or
certified or other copies of such  documents as the Purchaser or its counsel may
reasonably request.

     10.8. Legality; Governmental and Other Authorization.

     The purchase of and payment for the Shares shall not be  prohibited  by any
law or governmental order, rule, ruling, regulation,  release, interpretation or
opinion  applicable  to the Purchaser and shall not subject the Purchaser to any
penalty,  tax,  liability or other onerous  condition.  Any necessary  consents,
approvals,  licenses,  permits,  orders and  authorizations of, and any filings,
registrations  or  qualifications  with,  any  Governmental  Authority  or other
Person,  with respect to the  transactions  contemplated  by the Stock  Purchase
Agreements  shall  have been  obtained  or made and  shall be in full  force and
effect.  The Company shall have delivered to the Purchaser,  upon its reasonable
request setting forth what is required,  factual certificates or other evidence,
in form and substance  satisfactory to the Purchaser and its counsel,  to enable
the Purchaser to establish compliance with this condition.

     10.9. No Material Adverse Change.

     Except  as set  forth in Item 4 of  Exhibit  B,  there  shall  have been no
material  adverse  change  in the  assets,  properties,  liabilities,  business,
affairs, results of operations,  condition (financial or otherwise) or prospects
of the Company on a consolidated basis since September 30, 2000.

     10.10. Opinion of Counsel.

     The Purchaser  shall have  received an opinion,  dated the Closing Date and
addressed to the Purchasers,  of Blank Rome Tenzer  Greenblatt LLP,  counsel for
the  Company,   which  opinion  shall  be  in  form  and  substance   reasonably
satisfactory to the Purchaser and its counsel and shall be in the form set forth
in Exhibit E hereto.


                                       41
<PAGE>

     10.11. Purchases of Shares.

     The sale and purchase of Shares by the Fleming Funds  pursuant to the Stock
Purchase  Agreements  between each of the Fleming Funds and the Company shall be
consummated  concurrently  for an  aggregate  purchase  price of not  less  than
$3,000,000.00.

     10.12. Consents.

     The Company shall have received all consents  required pursuant to the Loan
and Security  Agreement,  dated April 29, 1998,  between the Company and The CIT
Group/Credit Finance, Inc.

     10.13. Other Documents and Opinions.

     The Purchaser  shall have received  such other  documents and opinions,  in
form and  substance  reasonably  satisfactory  to the Purchaser and its counsel,
relating to matters incident to the  transactions  contemplated  hereby,  as the
Purchaser may reasonably request.

SECTION 11. BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS

     (a)  The  representations,  warranties,  covenants  and  agreements  of the
Company  and the  Purchaser  contained  in  this  Agreement,  the  Stockholders'
Agreement,  the Registration  Rights Agreement or in any document or certificate
delivered  pursuant  hereto or thereto or in  connection  herewith or  therewith
shall survive, and shall continue in effect following the execution and delivery
of the Stock Purchase Agreements,  the Stockholders' Agreement, the Registration
Rights Agreement,  the closings  hereunder and thereunder,  any investigation at
any time made by the  Purchaser  or on its  behalf or by any other  Person,  the
issuance,  sale and  delivery of the  Shares,  any  disposition  thereof and any
payment,  conversion or cancellation of the Shares; provided,  however, that the
representations  and  warranties  set  forth in  Section 4 (other  than  Section
4.2(a)) and Section 5 shall  survive  only until the second  anniversary  of the
Closing Date, and the provisions of Section 9 shall terminate upon conversion of
seventy  percent  (70%) or more of the Shares  pursuant  to the  Certificate  of
Amendment.  All  statements  contained  in any  certificate  or  other  document
delivered  by or on behalf  of the  Company  pursuant  hereto  shall  constitute
representations and warranties by the Company hereunder.

     (b) The Company  agrees to indemnify and hold the  Purchaser  harmless from
and against and will pay to the Purchaser  the full amount of any loss,  damage,
liability  or expense  (including  amounts  paid in  settlement  and  reasonable
attorneys'  fees and expenses) to the  Purchaser  resulting  either  directly or
indirectly  from any breach of the  representations,  warranties,  covenants  or
agreements of the Company  contained in any Stock  Purchase  Agreement or in the
Stockholders' Agreement, the Registration Rights Agreement or any other document
or certificate delivered pursuant hereto or thereto or in connection herewith or
therewith;  provided,  however,  that the


                                       42
<PAGE>

Company's  liability  under this  Section  11(b) with respect to breaches of its
representations  and  warranties  set forth in  Section 4 (other  than  Sections
4.2(a), 4.8, 4.9 and 4.16) shall not exceed the amount of the purchase price for
the  Shares  purchased  by  the  Purchaser  pursuant  to  this  Agreement,  plus
reasonable attorneys' fees and expenses incurred by the Purchaser.

SECTION 12. SPECIFIC PERFORMANCE

     The  parties  agree that  irreparable  damage will result in the event that
this  Agreement is not  specifically  enforced,  and the parties  agree that any
damages available at law for a breach of this Agreement would not be an adequate
remedy.  Therefore,  the  provisions  hereof and the  obligations of the parties
hereunder  shall be  enforceable  in a court of equity,  or other  tribunal with
jurisdiction,  by a decree of specific performance,  and appropriate  injunctive
relief may be applied for and granted in connection therewith. Such remedies and
all other remedies provided for in this Agreement shall,  however, be cumulative
and not exclusive and shall be in addition to any other  remedies  which a party
may have under this Agreement or otherwise.

SECTION 13. EXPENSES

     (a) Whether or not the  transactions  herein  contemplated are consummated,
the Company  shall pay (i) the costs,  fees and  expenses of the Company and its
counsel in connection  with the Stock Purchase  Agreements,  the  Certificate of
Amendment,  the Stockholders'  Agreement and the Registration  Rights Agreement,
other related  documentation  and the issuance of the Shares and the  Conversion
Shares and the  furnishing of all opinions by counsel for the Company,  (ii) the
costs,  fees and expenses of Morgan,  Lewis & Bockius LLP in connection with the
Stock  Purchase  Agreements,  the  Certificate of Amendment,  the  Stockholders'
Agreement and the Registration Rights Agreement, other related documentation and
the  transactions  contemplated  hereby and  thereby  (whether  or not a Closing
occurs  hereunder)  and if the Closing occurs the Company will make such payment
on the Closing Date;  provided,  however,  that such fees and expenses shall not
exceed $20,000 without the approval of the Company,  (iii) the fees and expenses
of  counsel  to  the  Purchasers  in  connection   with  any  amendments  to  or
modifications or waivers of any provisions of the Stock Purchase Agreements, the
Certificate of Amendment, the Stockholders' Agreement or the Registration Rights
Agreement,   other  related  documentation  or  in  connection  with  any  other
agreements between the Purchasers and the Company and (iv) the fees and expenses
(including  attorneys'  fees and expenses) of any holder of Shares or Conversion
Shares in enforcing  its rights  against the Company if the Company  defaults in
its obligations hereunder, under the Certificate of Amendment, the Stockholders'
Agreement or the Registration Rights Agreement.

     (b) In addition  to all other sums due  hereunder  or provided  for in this
Agreement,  the Company shall pay to the Purchaser or its agents,  respectively,
an  amount  sufficient  to  indemnify  such  persons  (net of any  Taxes  on any
indemnity  payments)  against  all  reasonable  costs  and  expenses  (including
reasonable  attorneys' fees and expenses and reasonable costs of  investigation)
and damages and liabilities  incurred by the Purchaser or its agents pursuant to
any investigation or proceeding


                                       43
<PAGE>

brought by any third party against any or all of the Company, the Purchasers, or
their  agents,  arising  out  of  or  in  connection  with  the  Stock  Purchase
Agreements,  the Stockholders'  Agreement,  the Registration Rights Agreement or
the purchase of the Shares (or any transactions  contemplated  hereby or thereby
or any other document or instrument  executed  herewith or therewith or pursuant
hereto  or  thereto),  whether  or not  the  transactions  contemplated  by this
Agreement  are  consummated,  which  investigation  or  proceeding  requires the
participation  of the  Purchaser or its agents or is commenced or filed  against
the  Purchaser  or its agents  because  of the Stock  Purchase  Agreements,  the
Stockholders'  Agreement,  the Registration  Rights Agreement or the purchase of
the Shares  (or any of the  transactions  contemplated  hereby or thereby or any
other document or instrument  executed  herewith or therewith or pursuant hereto
or thereto),  other than any  investigation or proceeding in which it is finally
determined that there was gross negligence or willful  misconduct on the part of
the  Purchaser or its agents which was not taken by them in reliance upon any of
the Company's representations,  warranties, covenants or agreements in the Stock
Purchase  Agreements,  the  Stockholders'  Agreement,  the  Registration  Rights
Agreement  or in any  other  documents  or  instruments  contemplated  hereby or
thereby or executed  herewith or  therewith or pursuant  hereto or thereto.  The
Company  shall  assume the  defense,  and shall have its counsel  represent  the
Purchaser  and such  agents,  in  connection  with  investigating,  defending or
preparing to defend any such action,  suit,  claim or proceeding  (including any
inquiry or investigation);  provided,  however, that the Purchaser,  or any such
agent,  shall have the right  (without  releasing  the  Company  from any of its
obligations  hereunder)  to employ its own  counsel and either to direct its own
defense or to participate in the Company's defense, but the fees and expenses of
such counsel shall be at the expense of such Person unless (i) the employment of
such counsel shall have been  authorized in writing by the Company in connection
with such defense,  (ii) the Company shall not have provided its counsel to take
charge of such defense or (iii) the  Purchaser,  or such agent of the Purchaser,
shall have  concluded  that there may be defenses  available to it or them which
are different from or additional to those available to the Company,  then in any
of such events  referred to in clauses (i),  (ii) or (iii) such counsel fees and
expenses  (but only for one counsel for the  Purchaser  and its agents) shall be
borne  by the  Company.  Any  settlement  of any  such  action,  suit,  claim or
proceeding  shall  require the consent of both the Company and such  indemnified
person (neither of which shall unreasonably withhold its consent).

     (c) The  Company  agrees to pay, or to cause to be paid,  all  documentary,
stamp and other  similar  Taxes  levied  under the laws of the United  States of
America,  any state or local  Taxing  Authority  thereof or therein or any other
applicable  jurisdiction  in connection with the issuance and sale of the Shares
and the  execution  and  delivery of the Stock  Purchase  Agreements,  the First
Amendment to Stockholders' Agreement, the First Amendment to Registration Rights
Agreement and any other documents or instruments  contemplated hereby or thereby
and  any  modification  of  the  Certificate  of  Amendment,  the  Stockholders'
Agreement, the Registration Rights Agreement or the Stock Purchase Agreements or
any such other  documents or  instruments  and will hold the Purchaser  harmless
without  limitation as to time against any and all  liabilities  with respect to
all such Taxes.


                                       44
<PAGE>

     (d) The  obligations of the Company under this Section 13 shall survive the
Closing hereunder and any termination of the Stock Purchase Agreements.

SECTION 14. DIRECT PAYMENTS

     As long as the Purchaser or any  institutional  holder which is a direct or
indirect  transferee (as a result of one or more  transfers)  from the Purchaser
shall be the  holder  of any  Shares,  the  Company  will  make  all  redemption
payments,  liquidation  payments and other distributions by wire transfer to the
Purchaser's  or such other  holder's (or its  nominee's)  account at any bank or
trust company, notwithstanding any contrary provision herein or in the Company's
certificate of incorporation with respect to the place of payment. The Purchaser
has provided an address on Schedule 1 hereto for payments by wire transfer,  and
such address may be changed for the Purchaser or any subsequent holder by notice
to the Company.  All such payments shall be made in U.S.  dollars and in federal
or other immediately available funds.

SECTION 15. AMENDMENTS AND WAIVERS

     (a) The terms and  provisions  of this  Agreement  may be amended,  waived,
modified or terminated only with the written  consent of the Persons  identified
in  clause  (i) and  (ii) of the  definition  of  "Fleming  Holders";  provided,
however,  that if no Shares or Conversion  Shares are held by such Persons,  the
written  consent of holders of two-thirds of  outstanding  Shares and Conversion
Shares  shall  be  required  for any such  amendment,  waiver,  modification  or
termination.

     (b) The Company  agrees that all  holders of Shares and  Conversion  Shares
shall be notified by the Company in advance of any proposed  amendment,  waiver,
modification  or  termination,  but failure to give such notice shall not in any
way  affect  the  validity  of  any  such  amendment,  waiver,  modification  or
termination.  In addition,  promptly after  obtaining the written consent of the
holders as herein provided,  the Company shall transmit a copy of any amendment,
waiver,  modification  or  termination  which has been adopted to all holders of
Shares and Conversion  Shares then  outstanding,  but failure to transmit copies
shall  not in any  way  affect  the  validity  of any  such  amendment,  waiver,
modification or termination.


                                       45
<PAGE>

SECTION 16. EXCHANGE OF SHARES; CANCELLATION OF SURRENDERED SHARES; REPLACEMENT

     (a)  Subject to Section 6 hereof,  at any time at the request of any holder
of Shares to the Company at its address  provided  under Section 17 hereof,  the
Company at its expense (except for any transfer tax arising out of the exchange)
will issue and deliver to or upon the order of the holder in exchange therefor a
new  certificate  or  certificates  in such amount or amounts as such holder may
request in the aggregate  representing the number of Shares  represented by such
surrendered  certificates,  and registered in the name of such holder or as such
holder may direct.

     (b) Any Share  certificate  which is converted  into  Conversion  Shares in
whole  or in  part  shall  be  cancelled  by  the  Company,  and  no  new  Share
certificates  shall be issued in lieu of any Shares  which  have been  converted
into Conversion  Shares.  The Company shall issue a new certificate with respect
to any  Shares  which  were  not  converted  into  Conversion  Shares  and  were
represented by a certificate which was converted in part.

     (c) Upon  receipt  of  evidence  satisfactory  to the  Company of the loss,
theft,  destruction or mutilation of any Share  certificate  and, in the case of
any such loss,  theft or  destruction,  upon delivery of an indemnity  agreement
reasonably  satisfactory  to  the  Company  (if  requested  by the  Company  and
unsecured in the case of the Purchaser or an  institutional  holder),  or in the
case of any such  mutilation,  upon surrender of such Share  certificate  (which
surrendered Share  certificate  shall be cancelled by the Company),  the Company
will issue a new Share  certificate of like tenor in lieu of such lost,  stolen,
destroyed or mutilated Share certificate,  as if the lost, stolen,  destroyed or
mutilated Share certificate were then surrendered for exchange.

SECTION 17. NOTICES

     All notices, requests, demands, consents and other communications hereunder
shall be in writing and shall be  delivered by hand or shall be sent by telex or
telecopy  (confirmed  by  registered,  certified or  overnight  mail or courier,
postage  and  delivery  charges  prepaid),  (i) if to  the  Company,  to  Hudson
Technologies,  Inc., 275 North  Middletown  Road,  Pearl River,  New York 10965,
Attention:  Stephen P. Mandracchia,  with a copy to Blank Rome Tenzer Greenblatt
LLP, 405 Lexington Avenue,  New York, NY 10174,  Attention:  Ethan Seer, Esq. or
(ii) if to the Purchaser,  at the address indicated on Schedule 1 hereto, with a
copy to Morgan,  Lewis & Bockius LLP, 101 Park Avenue,  New York, NY 10178-0060,
Attention:  David W. Pollak,  Esq., or at such other address as a party may from
time to time  designate  as its  address in  writing to the other  party to this
Agreement.  Whenever any notice is required to be given  hereunder,  such notice
shall be deemed given and such  requirement  satisfied  only when such notice is
delivered or, if sent by telex or telecopier, when received.


                                       46
<PAGE>

SECTION 18. MISCELLANEOUS

     (a)  The  Stock  Purchase  Agreements,  the  Stockholders'  Agreement,  the
Registration  Rights  Agreement  and,  upon  the  Closing,  the  Certificate  of
Amendment,  together with any further  agreements  entered into by the Purchaser
and the  Company at the  Closing,  contain  the  entire  agreement  between  the
Purchaser and the Company,  and supersede any prior oral or written  agreements,
commitments, terms or understandings regarding the subject matter hereof.

     (b) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such  prohibition  or  unenforceability   without   invalidating  the  remaining
provisions  hereof,  and  any  such  prohibition  or   unenforceability  in  any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other  jurisdiction.  To the extent  permitted  by  applicable  law, the parties
hereby  waive any  provision  of law  which  may  render  any  provision  hereof
prohibited or unenforceable in any respect.

     (c) This  Agreement  shall be binding  upon and inure to the benefit of the
parties hereto and their respective successors and assigns, whether so expressed
or not; provided,  that (a) the Company may not assign any of its rights, duties
or  obligations  under  this  Agreement,  except  with the  Purchaser's  written
consent,  and  (b)  the  Purchaser  may  assign  any of its  rights,  duties  or
obligations  under this  Agreement to a purchaser of its Shares,  provided  that
such purchaser is reasonably acceptable to the Company.

     (d) In addition to any  assignment  by operation of law, the  Purchaser may
assign, in whole or in part, any or all of its rights (and/or obligations) under
this  Agreement  to any  permitted  transferee  of any or all of its  Shares  or
Conversion Shares, and (unless such assignment expressly provides otherwise) any
such assignment shall not diminish the rights the Purchaser would otherwise have
under this  Agreement  or with  respect to any  remaining  Shares or  Conversion
Shares held by the Purchaser.

     (e) No course of  dealing  and no delay on the part of any party  hereto in
exercising any right, power, or remedy conferred by this Agreement shall operate
as a waiver  thereof or  otherwise  prejudice  such party's  rights,  powers and
remedies.  No single or partial exercise of any right, power or remedy conferred
by this Agreement  shall preclude any other or further  exercise  thereof or the
exercise of any other right, power or remedy.

     (f ) The headings and captions in this  Agreement  are for  convenience  of
reference only and shall not define,  limit or otherwise affect any of the terms
or provisions hereof.

     (g) This Agreement shall be governed by, and construed in accordance  with,
the laws of the State of New York (other  than any  conflict of laws rules which
might result in the application of the laws of any other jurisdiction).


                                       47
<PAGE>

     (h) This  Agreement  may be  executed  by the  parties  hereto in  separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument,
and all signatures need not appear on any one counterpart.

     (i) THE COMPANY HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE COUNTY OF NEW YORK,  STATE OF NEW YORK AND  IRREVOCABLY
AGREES THAT,  SUBJECT TO THE  PURCHASER'  SELECTION,  ALL ACTIONS OR PROCEEDINGS
RELATING TO THIS  AGREEMENT,  THE  CERTIFICATE OF AMENDMENT,  THE  STOCKHOLDERS'
AGREEMENT,  THE  REGISTRATION  RIGHTS  AGREEMENT,  THE SHARES OR THE  CONVERSION
SHARES MAY BE LITIGATED IN SUCH  COURTS.  THE COMPANY  ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,  THE NONEXCLUSIVE
JURISDICTION  OF THE  AFORESAID  COURTS  AND  WAIVES  ANY  DEFENSE  OF FORUM NON
CONVENIENS,  AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN  CONNECTION   WITH  THIS  AGREEMENT,   THE  CERTIFICATE  OF  AMENDMENT,   THE
STOCKHOLDERS'  AGREEMENT,  THE REGISTRATION RIGHTS AGREEMENT,  THE SHARES OR THE
CONVERSION  SHARES.  A COPY OF ANY SUCH  PROCESS  SO  SERVED  SHALL BE MAILED BY
REGISTERED MAIL TO THE COMPANY AT THE ADDRESS OF THE COMPANY PROVIDED  HEREUNDER
EXCEPT THAT UNLESS  OTHERWISE  PROVIDED BY  APPLICABLE  LAW, ANY FAILURE TO MAIL
SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. AS AN ALTERNATIVE
TO SERVICE OF  PROCESS  ON SUCH  AGENT  (WHETHER  OR NOT ANY SUCH AGENT HAS BEEN
APPOINTED),  THE  COMPANY  HEREBY  AGREES  THAT  SERVICE  UPON IT BY MAIL  SHALL
CONSTITUTE SUFFICIENT NOTICE AND SERVICE OF PROCESS. NOTHING HEREIN SHALL AFFECT
THE RIGHT TO SERVE  PROCESS IN ANY OTHER MANNER  PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT OF THE PURCHASER TO BRING  PROCEEDINGS OR OBTAIN OR ENFORCE  JUDGMENTS
AGAINST THE COMPANY IN THE COURTS OF ANY OTHER JURISDICTION.

     (j) THE COMPANY AND THE PURCHASER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION  BASED  UPON OR  ARISING  OUT OF THIS
AGREEMENT,  THE  CERTIFICATE  OF AMENDMENT,  THE  STOCKHOLDERS'  AGREEMENT,  THE
REGISTRATION  RIGHTS  AGREEMENT,  THE SHARES OR THE  CONVERSION  SHARES,  OR ANY
DEALINGS  BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS  TRANSACTION.  THE
COMPANY AND THE  PURCHASER  ALSO WAIVE ANY BOND OR SURETY OR SECURITY  UPON SUCH
BOND WHICH MIGHT, BUT FOR THIS WAIVER,  BE REQUIRED OF THE PURCHASER.  THE SCOPE
OF THIS WAIVER IS INTENDED TO BE  ALL-ENCOMPASSING  OF ANY AND ALL DISPUTES THAT
MAY BE  FILED IN ANY  COURT  AND  THAT  RELATE  TO THE  SUBJECT  MATTER  OF THIS
TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS,  AND ALL OTHER


                                       48
<PAGE>

COMMON LAW AND STATUTORY  CLAIMS.  THE COMPANY AND THE PURCHASER FURTHER WARRANT
AND  REPRESENT  THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL  COUNSEL,  AND
THAT EACH  KNOWINGLY  AND  VOLUNTARILY  WAIVES ITS JURY TRIAL  RIGHTS  FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING,  AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO (OR ASSIGNMENTS
OF) THIS AGREEMENT,  THE CERTIFICATE OF AMENDMENT,  THE STOCKHOLDERS' AGREEMENT,
THE REGISTRATION  RIGHTS AGREEMENT,  THE SHARES OR THE CONVERSION SHARES. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
(WITHOUT A JURY) BY THE COURT.

                  [remainder of page intentionally left blank]


                                       49
<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed as of the date first above written.


                              HUDSON TECHNOLOGIES, INC.


                              By /s/ Kevin J. Zugibe
                                ----------------------------------------------
                                Name:  Kevin J. Zugibe
                                Title:    Chairman and Chief Executive Officer


Accepted  and Agreed to as of the date first  above  written by the  undersigned
Purchaser:

FLEMING US DISCOVERY FUND III, L.P.

By: FLEMING US DISCOVERY
       PARTNERS, L.P.,
    its general partner

    By:  FLEMING US DISCOVERY, LLC,
         its general partner


         By: /s/ Robert L. Burr
            -----------------------------------
                  Robert L. Burr, member
<PAGE>

                                                                      Schedule 1
                                                                    to the Stock
                                                              Purchase Agreement


<TABLE>
<CAPTION>
                                Social Security or Taxpayer      Number of Shares at   Share Purchase
      Name of Purchaser            Identification Number              Closing              Price
      -----------------            ---------------------              -------              -----
<S>                                    <C>                              <C>              <C>
Fleming US Discovery Fund              13-3907673                       25,855           $2,585,500
III, L.P.

Fleming US Discovery                   13-3936603                       4,145              $414,500
Offshore Fund III, L.P.
</TABLE>


(a)  address for communications:

     Fleming Capital Management
     320 Park Avenue
     New York, NY  10022
     Fax:  (212) 508-3928
     Attention: Robert L. Burr
                Robert M. Zech


(b)  address for payments by
     wire transfer:

     Fleming US Discovery Fund III, L.P.     Fleming US Discovery Offshore
                                             Fund III, L.P.

     Chase Manhattan Bank                    Citibank, N.A.
     ABA # 021000021                         ABA # 021000089 /
     CITIUS33A/C # 10921671                  Chips UID# 0008 /
                                             Swift Code -
                                             A/C: The Bank of Bermuda Limited,
                                             Hamilton, Bermuda

     A/C: Robert Fleming Inc.                Chips UID# 005584
     A/C # 400-704129                        Swift Code: BBDA BM HM
     A/C: Fleming US Discovery               A/C # 0246769
          Fund III, L.P.                     A/C: Fleming US Discovery Offshore
                                                  Fund III, L.P.


<PAGE>

                                                                      Schedule 2
                                                                    to the Stock
                                                              Purchase Agreement


                                  Indebtedness


<PAGE>

                                                                      Schedule 3
                                                                    to the Stock
                                                              Purchase Agreement


                                   Investments


<PAGE>

                                                                      Schedule 4
                                                                    to the Stock
                                                              Purchase Agreement


                               Disclosure Material



<PAGE>

                                                                   Schedule 4.16
                                                                    to the Stock
                                                              Purchase Agreement

                            Environmental Compliance



<PAGE>

                                                                      Schedule 5
                                                                    to the Stock
                                                              Purchase Agreement


                                     Liens



<PAGE>

                                                                      Schedule 6
                                                                    to the Stock
                                                              Purchase Agreement


                                  Capital Stock



<PAGE>

                                                                       EXHIBIT A


                            CERTIFICATE OF AMENDMENT



<PAGE>


                                                                       EXHIBIT B


                               DISCLOSURE SCHEDULE



<PAGE>


                                                                       EXHIBIT C


                   FIRST AMENDMENT TO STOCKHOLDERS' AGREEMENT



<PAGE>


                                                                       EXHIBIT D


                FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT



<PAGE>


                                                                       EXHIBIT E


                       OPINION OF COUNSEL FOR THE COMPANY

<PAGE>



================================================================================




                            STOCK PURCHASE AGREEMENT

                                      dated

                                February 16, 2001


                                     between


                            HUDSON TECHNOLOGIES, INC.

                                       and

                  FLEMING US DISCOVERY OFFSHORE FUND III, L.P.




================================================================================


<PAGE>

                                                                            Page



                                TABLE OF CONTENTS


SECTION 1.      SALE AND PURCHASE OF PREFERRED STOCK...........................1

SECTION 2.      CLOSING........................................................2

SECTION 3.      DEFINITIONS....................................................2

SECTION 4.      REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................13
         4.1.   Corporate Existence, Power and Authority......................14
         4.2.   Capital Stock.................................................14
         4.3.   Subsidiaries..................................................16
         4.4.   Business......................................................16
         4.5.   No Defaults or Conflicts......................................16
         4.6.   Disclosure Materials; Other Information.......................16
         4.7.   Litigation....................................................17
         4.8.   Taxes.........................................................18
         4.9.   ERISA.........................................................18
         4.10.  Legal Compliance..............................................20
         4.11.  Outstanding Securities........................................20
         4.12.  Permits, Licenses and Approvals; Intellectual Property and
                Other Rights..................... ............................20
         4.13.  Key Employees.................................................21
         4.14.  Properties....................................................21
         4.15.  Suppliers and Customers.......................................21
         4.16.  Environmental Compliance......................................21
         4.17.  No Burdensome Agreements......................................22
         4.18.  Offering of Shares............................................22
         4.19.  SEC Reports...................................................23
         4.20.  Indebtedness..................................................23
         4.21.  Use of Proceeds...............................................24
         4.22.  Other Names...................................................24
         4.23.  Brokers.......................................................24

SECTION 5.      REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...............25
         5.1.   Corporate Power and Authority.................................25


                                      -i-
<PAGE>

         5.2.   Investment Intent.............................................25
         5.3.   Brokers.......................................................25
         5.4.   Ownership of Common Stock.....................................26

SECTION 6.      RESTRICTIONS ON TRANSFER......................................26

SECTION 7.      INFORMATION AS TO THE COMPANY.................................26
         7.1.   Financial Information.........................................26
         7.2.   Communication with Accountants................................29
         7.3.   Inspection....................................................29
         7.4.   Notices.......................................................29

SECTION 8.      AFFIRMATIVE COVENANTS.........................................31
         8.1.   Maintenance of Existence, Properties and Franchises;
                Compliance with Law; Taxes; Insurance.........................31
         8.2.   Office for Payment, Exchange and Registration; Location
                of Office; Notice of Change of Name or Office.................32
         8.3.   Fiscal Year...................................................32
         8.4.   Environmental Matters.........................................32
         8.5.   Reservation of Shares.........................................33
         8.6.   Securities Exchange Act Registration..........................33
         8.7.   Delivery of Information for Rule 144A Transactions............34
         8.8.   Senior Securities.............................................34
         8.9.   Further Assurances............................................34
         8.10.  Stockholder Approval..........................................34
         8.11.  Shares Paid as Dividends......................................35

SECTION 9.      NEGATIVE COVENANTS............................................35
         9.1.   No Dilution or Impairment; No Changes in Capital Stock........35
         9.2.   Indebtedness..................................................36
         9.3.   Consolidation, Merger and Sale................................36
         9.4.   No Change in Business.........................................36
         9.5.   Restricted Payments; Investments..............................36
         9.6.   Sale of Substantial Portion of Assets.........................37
         9.7.   Obligations to Affiliates.....................................37
         9.8.   Transactions with Affiliates..................................38
         9.9.   Liens.........................................................38
         9.10.  Private Placement Status......................................38
         9.11.  Maintenance of Public Market..................................39
         9.12.  Actions Prior to the Closing Date.............................39


                                      -ii-
<PAGE>

SECTION 10.     CONDITIONS TO PURCHASER'S OBLIGATIONS.........................39
         10.1.  Certificate of Amendment; Stockholders' Agreement;
                Registration Rights Agreement.................................40
         10.2.  Certificates for Shares.......................................39
         10.3.  Senior Status.................................................40
         10.4.  Accuracy of Representations and Warranties....................40
         10.5.  Compliance with Agreements....................................40
         10.6.  Officers' Certificates........................................40
         10.7.  Proceedings...................................................41
         10.8.  Legality; Governmental and Other Authorization................41
         10.9.  No Material Adverse Change....................................41
         10.10. Opinion of Counsel............................................41
         10.11. Purchases of Shares...........................................41
         10.12. Consents......................................................42
         10.13. Other Documents and Opinions..................................42

SECTION 11.     BREACH OF REPRESENTATIONS, WARRANTIES
                AND COVENANTS.................................................42

SECTION 12.     SPECIFIC PERFORMANCE..........................................43

SECTION 13.     EXPENSES......................................................43

SECTION 14.     DIRECT PAYMENTS...............................................45

SECTION 15.     AMENDMENTS AND WAIVERS........................................45

SECTION 16.     EXCHANGE OF SHARES; CANCELLATION OF SURRENDERED SHARES;
                REPLACEMENT......................... .........................45

SECTION 17.     NOTICES.......................................................46

SECTION 18.     MISCELLANEOUS.................................................46


                                      -iii-
<PAGE>

                            STOCK PURCHASE AGREEMENT


     This STOCK  PURCHASE  AGREEMENT  is dated as of February  16, 2001  between
Hudson  Technologies,  Inc., a New York  corporation  (the  "Company"),  and the
Purchaser listed on the signature page of this Agreement (the "Purchaser").


                              W I T N E S S E T H:
                              -------------------


     WHEREAS,  the Company  desires to issue and sell to the Purchaser,  and the
Purchaser desires to purchase from the Company, shares of the Company's Series A
Convertible Preferred Stock, par value $.01 per share (the "Series A Convertible
Preferred Stock"), upon the terms and provisions hereinafter set forth;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth  herein and for other good and  valuable  consideration,  the  receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:


SECTION 1. SALE AND PURCHASE OF PREFERRED STOCK

     (a) The Company agrees to sell to the Purchaser  and,  subject to the terms
and conditions hereof and in reliance upon the representations and warranties of
the Company  contained herein or made pursuant  hereto,  the Purchaser agrees to
purchase from the Company at the Closing  provided for in Section 2 hereof,  the
number of shares of Series A Convertible  Preferred Stock set forth opposite the
Purchaser's  name on  Schedule  1 hereto.  The  shares  of Series A  Convertible
Preferred  Stock being acquired under this Agreement and by the other  Purchaser
under  the  other  Stock  Purchase   Agreement  (as  hereinafter   defined)  are
collectively  referred  to  herein  as  the  "Shares",   containing  rights  and
privileges  as more  fully  set forth in the  Certificate  of  Amendment  of the
Certificate  of  Incorporation  of the  Company in the form  attached  hereto as
Exhibit A (the "Certificate of Amendment").

     (b) The aggregate purchase price to be paid to the Company by the Purchaser
for the Shares to be purchased by the Purchaser pursuant to this Agreement shall
be the amount set forth opposite the Purchaser's  name on Schedule 1 hereto.  No
further payment shall be required from the Purchaser for the Shares.

     (c) The Shares are being sold to the purchasers listed on Schedule 1 hereto
(the "Purchasers") pursuant to this Agreement and the other Series A Convertible
Preferred Stock Purchase  Agreement (both of such  agreements  collectively,  as
from time to time assigned,

<PAGE>

supplemented  or  amended  or as the terms  thereof  may be  waived,  the "Stock
Purchase  Agreements").  Both Stock Purchase  Agreements shall be dated the date
hereof and shall be  identical  except as to the  identities  of the  respective
Purchasers.  The sale of Shares to each  Purchaser  under  each  Stock  Purchase
Agreement is to be a separate  sale,  and no Purchaser  shall have any liability
under any Stock Purchase  Agreement  other than the Stock Purchase  Agreement to
which it is a party.

     (d) The Company will use the proceeds  realized from the sale of the Shares
to fund capital expenditures, fees and expenses of the transactions contemplated
hereby and for working capital purposes.

SECTION 2. CLOSING

     (a) Subject to the terms and conditions hereof, the closing of the purchase
and sale of the Shares to be purchased by the  Purchaser  will be deemed to have
taken place at the offices of Morgan,  Lewis & Bockius LLP, 101 Park Avenue, New
York,  New York at 9:00 A.M.,  New York City time, on February 16, 2001, or such
other  time and  date as shall be  mutually  agreed  to by the  Company  and the
Purchaser  (the  "Closing")  (such time and date are herein  referred  to as the
"Closing Date").

     (b)  Subject to the terms and  conditions  hereof,  at the  Closing (i) the
Company  will  deliver  to  the  Purchaser  a  certificate   registered  in  the
Purchaser's name (or the name of its nominee, if any, as specified on Schedule 1
hereto)  evidencing the number of Shares set forth opposite the Purchaser's name
on Schedule 1 and (ii) upon the Purchaser's receipt thereof,  the Purchaser will
deliver to the Company a certified or official bank check (or wire  transfer) in
an amount equal to the  aggregate  purchase  price (as specified in Section 1(b)
hereof) for the Shares to be purchased by the Purchaser  payable to the order of
the Company in federal or other immediately available funds.

SECTION 3. DEFINITIONS

     (a) For purposes of this Agreement,  the following  definitions shall apply
(such definitions to be equally applicable to both the singular and plural forms
of the terms defined):

          "Affiliate",  when used with respect to any Person,  means (i) if such
     Person is a  corporation,  any  officer or director  thereof  (other than a
     director elected pursuant to Section 4 of the Certificate of Amendment) and
     any Person  which is,  directly or  indirectly,  the  beneficial  owner (by
     itself or as part of any group) of more than five percent (5%) of any class
     of any equity security (within the meaning of the Securities  Exchange Act)
     thereof,  and,  if such  beneficial  owner is a  partnership,  any  general
     partner thereof,  or if such beneficial owner is a corporation,  any Person
     controlling,  controlled  by or under common  control with such  beneficial
     owner,  or any  officer  or


                                       2
<PAGE>

     director of such beneficial owner or of any corporation  occupying any such
     control relationship,  (ii) if such Person is a partnership, any general or
     limited  partner  thereof,  and (iii) any other Person  which,  directly or
     indirectly,  controls or is controlled  by or is under common  control with
     such Person.  For purposes of this  definition,  "control"  (including  the
     correlative terms "controlling",  "controlled by" and "under common control
     with"),  with  respect to any Person,  shall mean  possession,  directly or
     indirectly, of the power to direct or cause the direction of the management
     and  policies  of such  Person,  whether  through the  ownership  of voting
     securities  or by  contract  or  otherwise.  The  holding  of Shares (or of
     Conversion Shares obtained upon conversion of Shares), and the rights under
     any Stock Purchase  Agreement or under the  Certificate  of Amendment,  the
     Stockholders'  Agreement  or the  Registration  Rights  Agreement  (or  the
     exercise of any such rights,  including,  without limitation,  nominating a
     director to the Board (or Board committee) of the Company and/or sending an
     observer to Board (or Board committee) meetings of the Company),  shall not
     cause a Purchaser to be deemed to be an "Affiliate" of the Company.

          "Agreement"  means  this  Stock  Purchase  Agreement   (together  with
     exhibits and  schedules)  as from time to time  assigned,  supplemented  or
     amended or as the terms hereof may be waived.

          "Benefit Plan" means any Plan, existing at the Closing, established or
     to which  contributions  have at any time been made by the Company,  or any
     predecessor  of any of the foregoing,  or under which any employee,  former
     employee or director of the Company or any beneficiary  thereof is covered,
     is eligible for coverage or has benefit rights.

          "Board" or "Board of Directors" means with respect to any Person which
     is a corporation,  a business trust or other entity, the board of directors
     or  other  group,   however   designated,   which  is  charged  with  legal
     responsibility  for the management of such Person, or any committee of such
     board of directors or group,  however  designated,  which is  authorized to
     exercise  the  power of such  board or group in  respect  of the  matter in
     question.

          "Business Day" means any day other than a Saturday,  Sunday or any day
     on which banks in the location of the office of the Company provided for in
     Section 17 hereof are authorized or obligated to close.

          "Capitalized  Lease"  means any lease to which the Company is party as
     lessee, or by which it is bound,  under which it leases any property (real,
     personal or mixed) from any lessor other than the Company, and which either
     is  required  to be  capitalized  in  accordance  with  generally  accepted
     accounting principles  consistently applied, or, even if not so required to
     be  capitalized,  shall have (or have had), at the time first entered into,
     an  initial  term of  greater  than  three (3) years  (including  leases of
     shorter  duration which are or were extendible to a


                                       3
<PAGE>

     total term greater  than three (3) years at the option of the lessor).  The
     value of Capitalized  Leases, as of the time of any determination  thereof,
     shall mean the sum of the then present  values,  determined as  hereinafter
     provided,  of future obligations of lessees under then existing Capitalized
     Leases.  To  compute  the value of any  Capitalized  Lease,  the  following
     methods shall be used, as applicable:

          (i)  values of leases  required to be capitalized  in accordance  with
               generally  accepted  accounting  principles  shall be computed in
               accordance with such principles; and

          (ii) values of other  leases (and values of  contracts  or other items
               which this  Agreement  provides  are to be valued as if they were
               Capitalized Leases) shall be computed by discounting, to the date
               of  determination,  at an assumed  interest rate of eight percent
               (8%) per annum, the minimum amount of future rental payments that
               will be due under the  related  documentation,  including  rental
               payments that may be due during extensions which are at the other
               party's option, but excluding any amounts in respect of insurance
               on, taxes on and/or maintenance of the properties subject to such
               leases  (provided that such amounts are owed and paid only to the
               extent actually incurred).

          "Certificate  of Amendment"  has the meaning set forth in Section 1(a)
     hereof.

          "Closing" has the meaning set forth in Section 2(a) hereof.

          "Closing Date" has the meaning set forth in Section 2(a) hereof.

          "Code" means the Internal  Revenue Code of 1986,  as amended from time
     to time, and the regulations and interpretations thereunder.

          "Commission"  means the  Securities  and Exchange  Commission  and any
     other similar or successor agency of the federal  government  administering
     the Securities Act or the Securities Exchange Act.

          "Common  Stock" means the Company's  Common Stock,  par value $.01 per
     share,  and shall also  include any common  stock of the Company  hereafter
     authorized  and  any  capital  stock  of the  Company  of any  other  class
     hereafter  authorized which is not preferred as to dividends or assets over
     any other  class of  capital  stock of the  Company  or which has  ordinary
     voting power for the election of directors of the Company.

          "Company" means Hudson Technologies, Inc., a New York corporation, its
     successors and assigns.


                                       4
<PAGE>

          "Consolidated"  or  "consolidated",  when used with  reference  to any
     financial  term in this  Agreement,  means the aggregate for the Company of
     the amounts signified by such term for all such Persons,  with intercompany
     items  eliminated,  and, with respect to net worth,  after  eliminating the
     portion of net worth properly  attributable to minority interests,  if any,
     in the  capital  of any  such  Person  (other  than in the  capital  of the
     Company) and otherwise as determined in accordance with generally  accepted
     accounting  principles  consistently applied (except as otherwise expressly
     provided herein).

          "Conversion  Share" or  "Conversion  Shares"  means the  shares of the
     Company's Common Stock obtained or obtainable upon conversion of Shares and
     shall  also  include  any  capital  stock or other  securities  into  which
     Conversion  Shares are changed and any  capital  stock or other  securities
     resulting from or comprising a reclassification, combination or subdivision
     of, or a stock  dividend on, any Conversion  Shares.  In the event that any
     Conversion  Shares  are sold  either  in a public  offering  pursuant  to a
     registration  statement  under the Securities Act or pursuant to a Rule 144
     Transaction,  then the transferees of such  Conversion  Shares shall not be
     entitled  to any  benefits  under  this  Agreement  with  respect  to  such
     Conversion  Shares and such Conversion Shares shall no longer be considered
     to be "Conversion Shares".

          "Designated Entity" means, in connection with the rights of any Person
     holding less than thirty percent (30%), in the aggregate,  of the Threshold
     Shares and the Threshold  Conversion  Shares,  (i) as long as any Shares or
     Conversion  Shares are held by any Person  identified in clause (i) or (ii)
     of the definition of "Fleming  Holders",  Fleming Capital  Management,  320
     Park Avenue, New York, NY 10022,  Attention:  Robert L. Burr and (ii) if no
     Shares or Conversion  Shares are held by a Person  identified in clause (i)
     or (ii) of the definition of "Fleming  Holders",  the entity  designated by
     the Transferee  holding the largest number of such shares,  provided,  that
     such Transferee owns thirty percent (30%) or more, in the aggregate, of the
     Threshold  Shares and the Threshold  Conversion  Shares (in which case such
     Transferee shall provide notice to the Corporation of such entity).  For so
     long as no Shares or Conversion Shares are held by any Person identified in
     clause (i) or (ii) of the  definition  of "Fleming  Holders"  and no Person
     holds thirty  percent  (30%) or more,  in the  aggregate,  of the Threshold
     Shares and the Threshold  Conversion  Shares,  there shall be no Designated
     Entity.  For  purposes  of this  definition  of  "Designated  Entity,"  the
     calculation of a Person's percentage holdings of Conversion Shares shall be
     determined  based  upon the number of Shares  from  which  such  Conversion
     Shares derived.

          "Disclosure  Material"  has the meaning  specified  in Section  4.6(a)
     hereof.

          "Environmental Laws" means all federal,  state, local, foreign,  civil
     and criminal  laws,  statutes,  ordinances,  orders,  codes,  Environmental
     Permits,  rules,  policies and  regulations  and common law relating to the
     protection of the environment and human health or relating to the


                                       5
<PAGE>

     handling, use, generation,  treatment, storage,  transportation or disposal
     of  Hazardous  Materials,   including  but  not  limited  to  the  Resource
     Conservation and Recovery Act of 1976, 42 U.S.C.ss. 6901 et seq.; the Toxic
     Substances  Control  Act,  15  U.S.C?ss.  2601 et seq.;  the  Comprehensive
     Environmental  Response,   Compensation  and  Liability  Act  of  1980,  42
     U.S.C?ss.9601  et  seq.;  the  Federal  Water  Pollution  Control  Act,  33
     U.S.C?ss.1251  et seq.;  the Clean Air Act, 42 U.S.C.ss.  7401 et seq.; the
     Hazardous  Materials  Transportation  Act, 49 U.S.C.ss.  1801 et seq.;  the
     Occupational   Safety  and  Health  Act,  29   U.S.C.ss.651;   the  Federal
     Insecticide,  Fungicide and Rodenticide  Act, 7 U.S.C.ss.136y  et seq.; and
     the Oil  Pollution  Act of 1990, 33  U.S.C.ss.2701  et seq.,  all as may be
     amended or superseded from time to time.

          "Environmental  Lien" has the  meaning  set forth in  Section  4.16(d)
     hereof.

          "Environmental  Permits"  means  all  permits,  licenses,   approvals,
     authorizations or consents required by any Governmental Authority under any
     applicable  Environmental  Law and  includes  any and all  orders,  consent
     orders or  binding  agreements  issued or  entered  into by a  Governmental
     Authority under any applicable Environmental Law.

          "ERISA"  means  Employee  Retirement  Income  Security Act of 1974, as
     amended.

          "ERISA  Affiliate"  means each "person" (as defined in Section 3(9) of
     ERISA) which is under "common control" with the Company (within the meaning
     of Section 414(b), (c), (m) or (o) of the Code).

          "First  Amendment to Registration  Rights  Agreement"  means the First
     Amendment to Registration  Rights  Agreement,  dated as of the Closing Date
     among the Company and each of the Purchasers.

          "First Amendment to Stockholders  Agreement" means the First Amendment
     to  Stockholders'  Agreement,  dated  as of the  Closing  Date,  among  the
     Company, the Purchasers and certain other stockholders of the Company.

          "Fleming  Funds" means Fleming US Discovery Fund III, L.P. and Fleming
     US Discovery Offshore Fund III, L.P.

          "Fleming  Holders"  means (i) the Fleming  Funds,  (ii) any Affiliate,
     officer or  employee  of an  Affiliate  or  investment  fund  managed by an
     Affiliate  of the  Fleming  Funds to which the Fleming  Funds may  transfer
     record and/or  beneficial  ownership of the Shares or the Conversion Shares
     and (iii) any transferee of Shares or Conversion Shares from a Person named
     in clause (i) or (ii) hereof (provided that such transferee is consented to
     by the Company, such consent not to be unreasonably  withheld) other than a
     transferee of Shares or Conversion  Shares sold in either a public offering


                                       6
<PAGE>

     pursuant to a registration  statement  under the Securities Act or pursuant
     to a Rule 144 Transaction.

          "Governmental   Authority"   means  any  federal,   state,   or  local
     governmental agency or authority  (including  regulatory  authority) having
     jurisdiction   over  the  Company  or  any  of  its  respective  assets  or
     businesses.

          "Guaranty"  means (i) any  guaranty or  endorsement  of the payment or
     performance   of,  or  any   contingent   obligation  in  respect  of,  any
     indebtedness  or other  obligation  of any  other  Person,  (ii) any  other
     arrangement  whereby  credit  is  extended  to  one  obligor  (directly  or
     indirectly)  on the basis of any promise or  undertaking  of another Person
     (a) to pay the indebtedness of such obligor,  (b) to purchase an obligation
     owed by such obligor, (c) to purchase or lease assets (or to provide funds,
     goods or services)  under  circumstances  that would enable such obligor to
     discharge  one or more of its  obligations  or (d) to maintain the capital,
     working capital,  solvency or general financial  condition of such obligor,
     in each case  whether or not such  arrangement  is disclosed in the balance
     sheet of such other  Person or is  referred  to in a footnote  thereto  and
     (iii) any  liability as a general  partner of a  partnership  in respect of
     indebtedness or other obligations of such partnership;  provided,  however,
     that the term "Guaranty"  shall not include (1) endorsements for collection
     or deposit in the  ordinary  course of business or (2)  obligations  of the
     Company  which  would  constitute   Guaranties  solely  by  virtue  of  the
     continuing  liability  of  a  Person  which  has  sold  assets  subject  to
     liabilities for the liabilities  which were assumed by the Person acquiring
     the  assets,  unless  such  liability  is  required  to be  carried  on the
     consolidated  balance sheet of the Company.  The amount of any Guaranty and
     the  amount  of  indebtedness  resulting  from such  Guaranty  shall be the
     maximum amount of the guarantor's  potential  obligation in respect of such
     Guaranty.

          "Hazardous  Materials"  means any petroleum,  petroleum  hydrocarbons,
     petroleum waste or petroleum products,  underground storage tanks, asbestos
     or  asbestos-containing  materials,  pesticides,  lead and  lead-containing
     materials,  urea  formaldehyde  insulation  and  polychlorinated  biphenyls
     (PCBs),   ionizing  and   non-ionizing   radiation   including   radon  and
     electromagnetic   frequency  radiation;   and  any  chemicals,   materials,
     substances  or  wastes  in any  amount  or  concentration  which are now or
     hereafter   "hazardous    substances,"   "hazardous   wastes,"   "hazardous
     materials,"  "extremely hazardous wastes,"  "restricted  hazardous wastes,"
     "toxic  substances,"  "toxic pollutants" or words of similar import,  under
     any Environmental Law.

          "Indebtedness"  of any Person means,  without  duplication,  as of any
     date  as  of  which  the  amount  thereof  is  to be  determined,  (i)  all
     obligations  of such Person to repay  money  borrowed  (including,  without
     limitation,  all notes payable and drafts accepted representing  extensions
     of  credit, all


                                       7
<PAGE>

     all  obligations  under  letters of credit,  all  obligations  evidenced by
     bonds,  debentures,  notes or other similar instruments and all obligations
     upon which interest  charges are  customarily  paid),  (ii) all Capitalized
     Leases  in  respect  of which  such  Person  is  liable as lessee or as the
     guarantor of the lessee,  (iii) all monetary  obligations which are secured
     by any Lien  existing on property  owned by such Person  whether or not the
     obligations  secured  thereby have been incurred or assumed by such Person,
     (iv) all  conditional  sales  contracts  and similar title  retention  debt
     instruments under which such Person is obligated to make payments,  (v) all
     Guaranties  by such Person and (vi) all  contractual  obligations  (whether
     absolute  or  contingent)  of such  Person  to  repurchase  goods  sold and
     distributed.  "Indebtedness"  shall  not  include,  however,  any  unfunded
     obligations in any employee  pension  benefit plan (as defined in ERISA) of
     the Company.

          "Investment"  means, with respect to any Person, (i) any loan, advance
     or  extension  of credit by such  Person to, and any  contributions  to the
     capital of, any other Person,  (ii) any Guaranty by such Person,  (iii) any
     interest in any capital stock,  equity interest or other  securities of any
     other  Person,  (iv) any transfer or sale of property of such Person to any
     other Person other than upon full  payment,  in cash,  or not less than the
     agreed sale price or the fair value of such  property,  whichever is higher
     and (v) any  commitment or option to make an Investment  if, in the case of
     an option,  the  consideration  therefor  exceeds  $50,000,  and any of the
     foregoing  under  clauses (i) through (v) shall be considered an Investment
     whether such  Investment is acquired by purchase,  exchange,  merger or any
     other method; provided, that the term "Investment" (1) shall not include an
     Investment in the Company, (2) shall not include current trade and customer
     accounts receivable and allowances, provided they relate to goods furnished
     in the  ordinary  course of business and are given in  accordance  with the
     customary  practices  of the  Company,  (3)  shall  not  include  temporary
     investments  of excess  cash of the  Company in any of the  following:  (A)
     investment  grade  obligations  maturing  within one year of their issuance
     which as to principal and interest  constitute  direct  obligations  of, or
     obligations  guaranteed  by, the United States of America,  (B)  negotiable
     certificates  of deposit of banks or trust  companies  which are  organized
     under the laws of the United  States of America  or any state  thereof  and
     which have  capital and surplus of at least  $500,000,000,  (C)  commercial
     paper which is rated not less than prime-one or A-1 or their equivalents by
     Moody's Investor  Service,  Inc. or Standard & Poor's  Corporation or their
     successors,  (D) any repurchase agreement secured by any one or more of the
     foregoing  and (E) money  market  funds  primarily  investing in any of the
     foregoing  securities  and  sponsored  by  or  affiliated  with  nationally
     recognized  brokerage  or  investment  advisory  firms,  and (4)  shall not
     include  Investments  of the  Company  existing  on  the  date  hereof  and
     disclosed on Schedule 3 hereto.

          "Lien" means any mortgage, pledge, hypothecation,  assignment, deposit
     arrangement,   encumbrance,  lien  (statutory  or  other),  or  preference,
     priority  or  other  security  interest  of any kind or  nature  whatsoever
     (including,  without  limitation,  any  conditional  sale  or  other  title
     retention  agreement,  any financing  lease having  substantially  the same
     effect as any of the foregoing,  any assignment or other


                                       8
<PAGE>

     conveyance of any right to receive income and any assignment of receivables
     with recourse against the assignor), any filing of a financing statement as
     debtor  under the Uniform  Commercial  Code or any similar  statute and any
     agreement to give or make any of the foregoing.

          "Outside  Directors"  means those  directors on the Company's Board of
     Directors at any time who are not  otherwise  Affiliates  of or employed by
     the Company.

          "Outstanding" or  "outstanding"  means (a) when used with reference to
     the Shares or the Conversion  Shares as of a particular time, all Shares or
     Conversion  Shares  theretofore duly issued except (i) Shares or Conversion
     Shares  theretofore  reported as lost,  stolen,  mutilated  or destroyed or
     surrendered for transfer,  exchange or replacement, in respect of which new
     or replacement Shares or Conversion Shares have been issued by the Company,
     (ii) Shares or Conversion Shares  theretofore  cancelled by the Company and
     (iii) Shares or  Conversion  Shares  registered  in the name of, as well as
     Shares or Conversion Shares owned  beneficially by, the Company,  or any of
     its Affiliates.  For purposes of the preceding sentence,  in no event shall
     "Affiliates"  include (x) the persons which are identified as  "Purchasers"
     on Schedule 1 hereto or (y) any Affiliates of any such persons.

          "Pension Plan" means any "employee pension benefit plan" as defined in
     Section 3(2) of ERISA.

          "Person" or "person"  means an individual,  corporation,  partnership,
     firm,  association,  joint  venture,  trust,  unincorporated  organization,
     government,  governmental  body,  agency,  political  subdivision  or other
     entity.

          "Plan" means any bonus, incentive compensation, deferred compensation,
     pension, profit sharing,  retirement,  stock purchase,  stock option, stock
     ownership,  stock  appreciation  rights,  phantom stock,  leave of absence,
     layoff, vacation, day or dependent care, legal services,  cafeteria,  life,
     health,  accident,  disability,  workmen's compensation or other insurance,
     severance,  separation or other employee benefit plan, practice,  policy or
     arrangement  of any kind,  whether  written  or oral,  or  whether  for the
     benefit of a single individual or more than one individual  including,  but
     not limited to, any  "employee  benefit plan" within the meaning of Section
     3(3) of ERISA.

          "Preferred   Stock"  means  any  class  of  the  capital  stock  of  a
     corporation  (whether  or not  convertible  into  any  other  class of such
     capital  stock) which has any right,  whether  absolute or  contingent,  to
     receive dividends or other  distributions of the assets of such corporation
     (including,  without  limitation,  amounts  payable  in  the  event  of the
     voluntary or  involuntary  liquidation,  dissolution  or winding-up of such


                                       9
<PAGE>

     corporation), which right is superior to the rights of another class of the
     capital stock of such  corporation.  "Preferred  Stock"  includes,  without
     limitation, the Series A Convertible Preferred Stock.

          "Purchaser"  means the  person  who  accepts  and  agrees to the terms
     hereof  as  indicated  by such  person's  signature  (as  "the  undersigned
     Purchaser")  on the  execution  page of this  Agreement,  together with its
     successors and assigns.

          "Purchasers"  has the  meaning  set  forth  in  Section  1(c)  hereof,
     together with their respective successors and assigns.

          "Registration   Rights   Agreement"  means  the  Registration   Rights
     Agreement,  dated as of March 30,  1999,  among the Company and each of the
     Purchasers,  as  amended  by the First  Amendment  to  Registration  Rights
     Agreement,  dated as of the Closing Date, among the Company and each of the
     Purchasers.

          "Restricted  Payment"  means (i) every payment in connection  with the
     redemption,  purchase,  retirement or other  acquisition by or on behalf of
     the  Company  of any  shares of the  Company's  capital  stock (as  defined
     below),  whether  or not  owned by the  Company,  (ii) any  prepayments  or
     repayments made on  Indebtedness of the Company,  (iii) every payment to or
     on behalf of any  Affiliate of the Company on account of or with respect to
     any  lease  arrangements,  and (iv)  every  payment  by or on behalf of the
     Company  (whether as repayment or prepayment of principal or as interest or
     otherwise) on or with respect to (A) any obligation to repay money borrowed
     owing to any Affiliate of the Company or (B) any obligation, to any Person,
     of any  Affiliate  of the  Company or to any other  holder of shares of the
     Company's capital stock (as defined below), which obligation is assumed, or
     is the subject of a Guaranty, by the Company;  provided,  however, that the
     term "Restricted  Payment" shall not apply to (1) any payment in respect of
     capital stock of the Company to the extent payable in shares of the capital
     stock of the Company,  (2) any regularly scheduled  prepayment or repayment
     of Indebtedness, provided that such Indebtedness being prepaid or repaid is
     not at the  time of such  prepayment  or  repayment  or at any  prior  time
     thereto  owing to an  Affiliate  of the Company,  provided  that  regularly
     scheduled  payments or  prepayments  pursuant to the Affiliate Loan are not
     "Restricted   Payments",   (3)  payments  to  DuPont  Chemical  and  Energy
     Operations,  Inc.  and E.I.  DuPont de Nemours and Company in the  ordinary
     course of business,  consistent  with past practice,  and not in connection
     with  any  financing  or  extraordinary   corporate   transaction  are  not
     "Restricted  Payments",  or  (4)  any  payments,   distributions  or  other
     transfers  or  actions on or with  respect to the Shares or the  Conversion
     Shares or to the Purchasers (or holders of Shares or the Conversion Shares)
     under the Stock  Purchase  Agreements.  For  purposes  of this  definition,
     "capital stock" shall also include


                                       10
<PAGE>

     warrants  and other rights and options to acquire  shares of capital  stock
     (whether upon exercise, conversion, exchange or otherwise).

          "Rule 144" means (i) Rule 144 under the Securities Act as such Rule is
     in effect from time to time and (ii) any successor rule, regulation or law,
     as in effect from time to time.

          "Rule 144A" means (i) Rule 144A under the  Securities Act as such Rule
     is in effect from time to time and (ii) any successor  rule,  regulation or
     law, as in effect from time to time.

          "Rule 144  Transaction"  means a  transfer  of  Conversion  Shares (A)
     complying  with  Rule  144 as such  Rule is in  effect  on the date of such
     transfer  (but not  including  a sale  other  than  pursuant  to  "brokers'
     transactions"  as defined in clauses (1) and (2) of  paragraph  (g) of such
     Rule as in  effect on the date  hereof)  and (B)  occurring  at a time when
     Conversion  Shares are registered  pursuant to Section 12 of the Securities
     Exchange Act.

          "SEC Reports" has the meaning set forth in Section 4.19 hereof.

          "Securities Act" means the Securities Act of 1933, as amended, and the
     rules, regulations and interpretations thereunder.

          "Securities  Exchange Act" means the Securities  Exchange Act of 1934,
     as amended, and the rules, regulations and interpretations thereunder.

          "Series A Convertible  Preferred  Stock" means the Company's  Series A
     Convertible  Preferred  Stock,  par  value  $.01 per  share,  which has the
     rights, powers and privileges as more fully set forth in the Certificate of
     Amendment.

          "Shares"  has the meaning  set forth in Section  1(a)  hereof.  In the
     event that any Shares are sold  either in a public  offering  pursuant to a
     registration statement under Section 5 of the Securities Act or pursuant to
     a Rule 144  Transaction,  then the  transferees of such Shares shall not be
     entitled to any benefits  under this  Agreement with respect to such Shares
     and such Shares shall no longer be  considered  to be "Shares" for purposes
     of any consent or waiver provision of this Agreement.

          "Stock Purchase  Agreements" has the meaning set forth in Section 1(c)
     hereof.

          "Stockholders' Agreement" means the Stockholders' Agreement,  dated as
     of March 30, 1999,  among the Company,  the  Purchasers  and certain  other
     stockholders  of  the  Company,  as  amended  by  the  First  Amendment  to
     Stockholders'  Agreement,  dated as of the Closing Date, among the Company,
     the Purchasers and certain other stockholders of the Company.


                                       11
<PAGE>

          "Subsidiary",  with  respect  to any  Person,  means any  corporation,
     association  or other  entity of which  more  than 50% of the total  voting
     power of shares of stock or other equity  interests  (without regard to the
     occurrence  of any  contingency)  to vote  in the  election  of  directors,
     managers or trustees thereof is, at the time as of which any  determination
     is being made, owned or controlled,  directly or indirectly, by such Person
     or one or more of its  Subsidiaries,  or  both.  The term  "Subsidiary"  or
     "Subsidiaries" when used herein without reference to any particular Person,
     means a Subsidiary or Subsidiaries of the Company.

          "Tax" or "Taxes"  means all  federal,  state,  local or foreign net or
     gross income, gross receipts,  net proceeds,  sales, use, ad valorem, value
     added, franchise, bank shares, withholding,  payroll,  employment,  excise,
     property,  alternative  or add-on  minimum,  environmental  or other taxes,
     assessments,  duties,  fees,  levies or other  governmental  charges of any
     nature  whatsoever,  whether  disputed or not,  together with any interest,
     penalties, additions to tax or additional amounts with respect thereto.

          "Tax Returns" means any returns,  reports or statements (including any
     information returns) required to be filed for purposes of a particular Tax.

          "Taxing Authority" means any governmental agency, board, bureau, body,
     department  or  authority  of any  United  States  federal,  state or local
     jurisdiction, or any foreign jurisdiction, having or purporting to exercise
     jurisdiction with respect to any Tax.

          "Threshold  Conversion  Shares" means the aggregate of the  Conversion
     Shares  and  the  Conversion  Shares  as  defined  in  the  Stock  Purchase
     Agreements, dated as of March 30, 1999, between the Company and each of the
     Fleming Funds, (the "1999 Stock Purchase Agreements").

          "Threshold  Shares"  means  the  aggregate  of the  shares of Series A
     Convertible   Preferred   Stock  issued  pursuant  to  the  Stock  Purchase
     Agreements  and the shares of Series A Convertible  Preferred  Stock issued
     pursuant to the 1999 Stock Purchase Agreements,  plus any dividends paid in
     additional shares of Series A Convertible  Preferred Stock, as adjusted for
     any subdivisions or combinations.

          "Transferees"  shall mean any transferee (except for a Fleming Holder)
     of Shares or Conversion Shares from a Fleming Holder. Transferees shall not
     include a transferee of Shares or Conversion Shares sold in either a public
     offering  pursuant to a registration  statement under the Securities Act or
     pursuant to a Rule 144 Transaction.

     (b) For all  purposes  of this  Agreement,  except as  otherwise  expressly
provided or unless the context otherwise requires:


                                       12
<PAGE>

          (i) the words  "herein",  "hereof" and  "hereunder" and other words of
     similar import refer to this Agreement as a whole and not to any particular
     Section or other subdivision;

          (ii) all  accounting  terms  not  otherwise  defined  herein  have the
     meanings assigned to them in accordance with generally accepted  accounting
     principles consistently applied (except as otherwise provided herein);

          (iii) all computations  provided for herein,  if any, shall be made in
     accordance  with  generally  accepted  accounting  principles  consistently
     applied (except as otherwise provided herein);

          (iv) any uses of the  masculine,  feminine or neuter gender shall also
     be deemed to include any other gender, as appropriate;

          (v) all references herein to actions by the Company, such as "create",
     "sell", "transfer",  "dispose of", etc., mean such action whether voluntary
     or involuntary, by operation of law or otherwise;

          (vi) the exhibits and  schedules to this  Agreement  shall be deemed a
     part of this Agreement;

          (vii)  each  of the  representations  and  warranties  of the  Company
     contained in Section 4 hereof is separate and is not limited,  qualified or
     modified  by  the  existence,   wording  or   satisfaction   of  any  other
     representation or warranty of the Company in Section 4 hereof or otherwise;

          (viii) each of the covenants of the Company contained in Sections 7, 8
     and 9 hereof or otherwise  contained in any Stock Purchase  Agreement,  the
     Certificate of Amendment,  the Stockholders'  Agreement or the Registration
     Rights  Agreement  is  separate  and is not  limited  or  satisfied  by the
     existence,  wording or satisfaction of any other covenant of the Company in
     Section 7, 8 or 9 hereof or otherwise; and

          (ix)  all  references  herein  (in  covenants  or  otherwise)  to  any
     action(s)  which are to be taken (or which are prohibited from being taken)
     by any Person or the Company shall apply to such Person or the Company,  as
     the case may be, whether such action is taken directly or indirectly.


                                       13
<PAGE>

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company  represents  and warrants to the Purchaser as follows as of the
date hereof and as of the Closing Date:

     4.1. Corporate Existence, Power and Authority.


     (a) The Company is a corporation  duly organized,  validly  existing and in
good standing under the laws of its jurisdiction of  incorporation.  The Company
is  duly  qualified,  licensed  and  authorized  to do  business  and is in good
standing  in each  jurisdiction  in which it owns or leases any  property  or in
which the conduct of its  business  requires it to so qualify or be so licensed,
except for such jurisdictions  where the failure to so qualify or be so licensed
would not have a material  adverse effect on the Company's  assets,  properties,
liabilities,  business, affairs, results of operations,  condition (financial or
otherwise) or prospects.

     (b) No proceeding  has been  commenced  looking  toward the  dissolution or
merger of the  Company or the  amendment  of its  certificate  of  incorporation
(other than the  Certificate of  Amendment).  The Company is not in violation in
any respect of its certificate of incorporation or by-laws.

     (c) The Company has all requisite  corporate  power and authority to own or
to hold  under  lease  and to  operate  the  properties  it owns or holds and to
conduct its business as now being conducted.

     (d) The Company has all requisite corporate power and authority to execute,
deliver, enter into, consummate the transactions contemplated by and perform its
obligations  under  (i)  the  Stock  Purchase  Agreements,   including,  without
limitation,  the issuance by the Company of the Shares and the Conversion Shares
as contemplated herein and therein and in the Certificate of Amendment, (ii) the
First  Amendment to  Stockholders'  Agreement  and (iii) the First  Amendment to
Registration  Rights Agreement.  The execution,  delivery and performance of the
Stock Purchase  Agreements,  the First Amendment to Stockholders'  Agreement and
the First Amendment to Registration  Rights Agreement by the Company (including,
without limitation, the issuance by the Company of the Shares and the Conversion
Shares as  contemplated  herein and therein and in the Certificate of Amendment)
have been duly  authorized by all required  corporate  actions.  The Company has
duly executed and delivered the Stock Purchase  Agreements,  the First Amendment
to  Stockholders'  Agreement  and the First  Amendment  to  Registration  Rights
Agreement.  The Stock Purchase Agreements,  the First Amendment to Stockholders'
Agreement and the First Amendment to Registration  Rights  Agreement  constitute
the  legal,  valid  and  binding  obligations  of  the  Company  enforceable  in
accordance  with their  respective  terms,  subject to  bankruptcy,  insolvency,
reorganization,  moratorium  and other  similar  laws  relating to the rights of
creditors generally.


                                       14
<PAGE>

     4.2. Capital Stock.

     (a) Schedule 6(a) hereto  correctly and completely lists (i) the authorized
capital stock of the Company (Common Stock and Preferred Stock), (ii) the number
of  designated  shares of  Preferred  Stock in each series or class after giving
effect to the  Certificate  of Amendment  and (iii) on the Closing  Date,  after
giving  effect to the  issuance  of Shares  contemplated  by the Stock  Purchase
Agreements,  the number of shares  outstanding  in each series or class.  All of
such  outstanding  shares are, or on the Closing Date will be, duly  authorized,
validly issued and outstanding, fully paid and non-assessable. The shares of the
Company's  Common Stock  issuable  upon  conversion  of the Series A Convertible
Preferred  Stock will be, when issued in accordance with the terms of the Series
A Convertible  Preferred Stock, duly authorized,  validly issued, fully paid and
non-assessable.  Except as provided in the Certificate of Amendment, none of the
shares of the Company's  capital stock which will be  outstanding at the Closing
(i) were or will be subject to preemptive rights when issued or (ii) provide the
holders  thereof with any  preemptive  rights with  respect to any  issuances of
capital stock.

     (b) Schedule  6(b) hereto  correctly  and  completely  lists the number and
purpose for which such shares of the  Company's  Common  Stock are  reserved for
issuance by the Company.

     (c)  Except as  referred  to in  Schedule  6(b),  there are no  outstanding
options,  warrants,  subscriptions,  rights,  convertible  securities  or  other
agreements or plans under which the Company may become obligated to issue,  sell
or transfer shares of its capital stock or other securities.

     (d)  Except as  disclosed  on  Exhibit  B hereto,  there are and will be no
outstanding  registration  rights  with  respect  to any  capital  stock  of the
Company,  which (in either case) will be outstanding on the Closing Date, or any
capital stock referred to in Section 4.2(b) or 4.2(c).

     (e)  Except  as  disclosed  on  Exhibit  B  hereto,  there  are  no  voting
agreements,  voting trusts,  proxies or other agreements or understandings  with
respect to the voting of any capital stock of the Company.

     (f) Except as  disclosed  on Exhibit B hereto,  there are no  anti-dilution
protections  or other  adjustment  provisions  in existence  with respect to any
capital stock of the Company or any capital stock  referred to in Section 4.2(b)
or 4.2(c).

     (g) The  Certificate  of Amendment  has been duly adopted by the  Company's
Board of Directors  and,  when filed with the Secretary of State of the State of
New York, will be fully  effective as an amendment to the Company's  certificate
of incorporation. Upon filing of the Certificate of Amendment with the Secretary
of State of New York,  the Shares  will have all of the rights,  priorities  and
terms set forth in the Certificate of Amendment.

     (h) Those  Persons  who own,  directly or  indirectly,  more than 5% of the
Company's  outstanding  Common Stock are as follows:  DuPont Chemical and Energy
Operations, Inc.


                                       15
<PAGE>

     4.3. Subsidiaries.

     The Company has no Subsidiaries other than Hudson Holdings, Inc. and Hudson
Technologies Company. The Company's subsidiary,  Hudson Holdings,  Inc., holds a
promissory  note from  Environmental  Support  Solutions,  Inc.  ("ESS")  in the
original principal amount of $380,000, which is secured by ESS Stock Certificate
No. 5 for 1,000 shares issued in the name of Robert Johnson,  a guarantor of the
said  note.  The  Company  has no  Investments  in any other  Person,  except as
described in the preceding sentences.

     4.4. Business.

     The  Company  sells  refrigerants  and  provides   refrigerant   management
services,  consisting  primarily of recovery and reclamation of the refrigerants
used in  commercial  air  conditioning  and  refrigeration  systems,  as well as
RefrigerantSide(R)  services, through which the Company performs decontamination
to remove  moisture,  oils and other  contaminants in such systems.  The Company
neither  currently  engages in, nor has any  intention of engaging in, any other
business.

     4.5. No Defaults or Conflicts.

     (a) The Company is not in violation or default in any material respect (and
is not in default in any material respect regarding any Indebtedness)  under any
indenture,  agreement or instrument to which it is a party or by which it or its
properties may be bound. The Company is not in default under any material order,
writ,  injunction,  judgment  or  decree  of any  court  or  other  Governmental
Authority or arbitrator(s) having jurisdiction over the Company.

     (b) The  execution,  delivery and  performance  by the Company of the Stock
Purchase  Agreements,  the First  Amendment to  Stockholders'  Agreement and the
First Amendment to  Registration  Rights  Agreement and any of the  transactions
contemplated hereby or thereby (including,  without limitation,  the issuance of
the Shares and the Conversion  Shares as contemplated  herein and therein and in
the Certificate of Amendment and the adoption of the Certificate of Amendment as
an amendment to the Company's  certificate of incorporation) do not and will not
(i)  violate  or  conflict  with,  with or  without  the giving of notice or the
passage of time or both, any provision of (A) the  certificate of  incorporation
or by-laws of the Company or (B) any material law, rule,  regulation or order of
any Governmental Authority, or any material judgment, writ, injunction,  decree,
award or other action of any court, Governmental Authority or arbitrator(s),  or
any agreement, indenture or other instrument applicable to the Company or any of
its  properties,  (ii)  result  in the  creation  of any  Lien  upon  any of the
Company's  properties,  assets or revenues,  (iii) require the consent,  waiver,
approval, order or authorization of, or declaration, registration, qualification
or  filing  with,  any  Person  (whether  or not a  Governmental  Authority  and
including,   without  limitation,  any  shareholder


                                       16
<PAGE>

approval),  or (iv) cause antidilution clauses of any outstanding  securities to
become operative or give rise to any preemptive rights.

     4.6. Disclosure Materials; Other Information.

     (a) The Company has  previously  furnished to the  Purchaser  the materials
described  on Schedule 4 hereto  (the  "Disclosure  Material").  The audited and
unaudited  financial  statements  referred  to or  contained  in  the  materials
referred to on Schedule 4 fairly present the consolidated financial condition of
the Company as of the respective dates thereof and the  consolidated  results of
the  operations  of the  Company  for such  periods  and have been  prepared  in
accordance with generally accepted accounting  principles  consistently applied,
except that any such  unaudited  statements may omit notes and may be subject to
year-end adjustment.

     (b) Since September 30, 2000, except as disclosed on Exhibit B hereto,  (i)
the business of the Company has been  conducted in the ordinary  course and (ii)
there  has  been  no  material   adverse  change  in  the  assets,   properties,
liabilities,  business, affairs, results of operations,  condition (financial or
otherwise)  or  prospects  of the  Company on a  consolidated  basis.  As of the
Closing Date and as of the date hereof, there are no material liabilities of the
Company  which would be required to be provided  for in a  consolidated  balance
sheet of the  Company  as of  either  such  date  prepared  in  accordance  with
generally  accepted  accounting  principles  consistently  applied,  other  than
liabilities  provided  for in the  financial  statements  referred to in Section
4.6(a).  Since  September  30,  2000,  no amount or  property  has  directly  or
indirectly  been declared,  ordered,  paid, made or set aside for any Restricted
Payment nor has any such action been agreed to.

     (c) There are no material  liabilities,  contingent  or  otherwise,  of the
Company that have not been disclosed in the financial  statements referred to in
Section 4.6(a) or otherwise disclosed in the Disclosure Material.

     (d)  None of the  Disclosure  Material  contained  or  contains  a false or
misleading  statement  of a material  fact or omits to state any  material  fact
necessary in order to make the statements made in such Disclosure  Material,  in
light of the circumstances under which they were made, not misleading.

     (e) There is no fact known to the  Company  which is not in the  Disclosure
Material and which  materially  and  adversely  affects,  or in the future might
materially and adversely affect, the assets, properties,  liabilities, business,
affairs, results of operations,  condition (financial or otherwise) or prospects
of the Company on a consolidated basis.


                                       17
<PAGE>

     4.7. Litigation.

     Except  as  disclosed  on  Exhibit  B  hereto,  there is no  action,  suit,
proceeding,  investigation or claim pending or, to the knowledge of the Company,
threatened in law, equity or otherwise before any court,  Governmental Authority
or arbitrator which (i) questions the validity of the Stock Purchase Agreements,
the Certificate of Amendment,  the First Amendment to  Stockholders'  Agreement,
the  First  Amendment  to  Registration  Rights  Agreement,  the  Shares  or the
Conversion Shares or any action taken or to be taken pursuant hereto or thereto,
(ii) might adversely affect the right, title or interest of any Purchaser to the
Shares or the  Conversion  Shares or (iii)  might  result in a material  adverse
change in the assets,  properties,  liabilities,  business,  affairs, results of
operations,  condition (financial or otherwise) or prospects of the Company on a
consolidated basis.

     4.8. Taxes.

     The Company has duly and timely filed all Tax Returns  required to be filed
by it,  and each such Tax  Return  correctly  and  completely  reflects  the Tax
liability and all other information  required to be reported thereon.  Except as
set  forth on  Exhibit  B, the  Company  has paid or caused to be paid all Taxes
(whether or not  reflected  on such Tax Returns)  that are due and payable.  The
provision  for Taxes due by the Company in the most recent  financial  statement
included in the Disclosure  Material is sufficient  for all unpaid Taxes,  being
current  Taxes not yet due and  payable,  of the  Company,  as of the end of the
period covered by such  financial  statement,  and as of the Closing Date,  such
provision, as adjusted for the passage of time through the Closing Date, will be
sufficient for the  then-accrued and unpaid Taxes not yet due and payable of the
Company.  There is no dispute concerning any Tax liability of the Company either
threatened,  claimed or raised by any Taxing Authority, and the Company does not
expect any Taxing Authority to assess  additional Taxes against or in respect of
it for any past period.  The Company has  withheld and paid,  or, if not yet due
for payment, set aside in accounts for such purposes, all Taxes required to have
been  withheld  in  connection  with  amounts  paid or  owing  to any  employee,
creditor,  independent  contractor  or other  third  party.  The  Company has no
liability  for Taxes of any Person  other than the  Company as a  transferee  or
successor,  by contract or otherwise.  There are no applicable  Taxes payable by
the Company in connection  with the execution and delivery of the Stock Purchase
Agreements,  the  First  Amendment  to  Stockholders'  Agreement  or  the  First
Amendment to Registration Rights Agreement or the issuance by the Company of the
Shares or the Conversion Shares.

     4.9. ERISA.

     (a)  All  Benefit  Plans  are  listed  in  Exhibit  B,  and  copies  of all
documentation  relating  to such  Benefit  Plans  have  been  delivered  or made
available to the Purchasers  (including copies of written Benefit Plans, written
descriptions of oral Benefit Plans, summary plan descriptions, trust agreements,
the  three  most  recent  annual  returns,  employee  communications,   and  IRS
determination letters).


                                       18
<PAGE>

     (b) Each Benefit Plan has at all times been maintained and  administered in
all material  respects in accordance with its terms and with the requirements of
all applicable law, including ERISA and the Code, and each Benefit Plan intended
to qualify under Section  401(a) of the Code has at all times since its adoption
been so qualified, and each trust which forms a part of any such plan has at all
times since its adoption been tax-exempt under Section 501(a) of the Code.

     (c) No Benefit  Plan has  incurred  any  "accumulated  funding  deficiency"
within the meaning of Section  302 of ERISA or Section 412 of the Code,  and the
"amount  of  unfunded  benefit   liabilities"  within  the  meaning  of  Section
4001(a)(18)  of ERISA does not exceed  zero with  respect  to any  Benefit  Plan
subject to Title IV of ERISA.

     (d) No "reportable event" (within the meaning of Section 4043 of ERISA) has
occurred  with  respect to any Benefit Plan or any Plan  maintained  by an ERISA
Affiliate since the effective date of said Section 4043.

     (e) No Benefit Plan is a  multiemployer  plan within the meaning of Section
3(37) of ERISA.

     (f) No direct,  contingent  or secondary  liability has been incurred or is
expected to be incurred by the Company under Title IV of ERISA to any party with
respect to any Benefit  Plan,  or with  respect to any other Plan  presently  or
heretofore maintained or contributed to by any ERISA Affiliate.

     (g) Neither the Company nor any ERISA  Affiliate has incurred any liability
for any tax  imposed  under  Section  4971  through  4980B  of the Code or civil
liability under Section 502(i) or (l) of ERISA.

     (h) No benefit under any Benefit Plan, including,  without limitation,  any
severance or parachute payment plan or agreement,  will be established or become
accelerated,  vested or payable by reason of any transaction  contemplated under
this Agreement.

     (i) No Benefit Plan provides  health or death benefit  coverage  beyond the
termination  of an  employee's  employment,  except  as  required  by  Part 6 of
Subtitle  B of Title I of ERISA or  Section  4980B of the Code or any State laws
requiring continuation of benefits coverage following termination of employment.

     (j) No suit,  action or other  litigation  (excluding  claims for  benefits
incurred in the ordinary course of plan  activities) has been brought or, to the
knowledge of the Company, threatened against or with respect to any Benefit Plan
and  there  are no  facts  or  circumstances  known to the  Company  that  could
reasonably  be  expected  to  give  rise  to any  such  suit,  action  or  other
litigation.


                                       19
<PAGE>

     (k) All  contributions to Benefit Plans that were required to be made under
such Benefit Plans have been made,  and all benefits  accrued under any unfunded
Benefit  Plan have been  paid,  accrued  or  otherwise  adequately  reserved  in
accordance with generally accepted accounting principles,  all of which accruals
under unfunded  Benefit Plans are as disclosed in Exhibit B, and the Company has
performed all material  obligations  required to be performed  under all Benefit
Plans.

     (l)  The  execution,   delivery  and  performance  of  the  Stock  Purchase
Agreements,  the  First  Amendment  to  Stockholders'  Agreement  and the  First
Amendment  to  Registration   Rights  Agreement  and  the  consummation  of  the
transactions contemplated hereby and thereby (including, without limitation, the
offer,  issuance and sale by the Company,  and the purchase by the  Purchaser of
the  Shares  and  the  Conversion  Shares)  will  not  involve  any  "prohibited
transaction" within the meaning of ERISA or the Code.

     4.10. Legal Compliance.

     (a) The Company has complied with all applicable laws, rules,  regulations,
orders, licenses,  judgments, writs, injunctions,  decrees or demands, except to
the extent that failure to so comply would not materially  adversely  affect the
assets,  properties,  liabilities,  business,  affairs,  results of  operations,
condition (financial or otherwise) or prospects of the Company on a consolidated
basis.

     (b) There are no material adverse orders, judgments,  writs, injunctions or
decrees of any court or  administrative  body,  domestic or  foreign,  or of any
other  Governmental  Authority,  domestic  or foreign,  outstanding  against the
Company.

     4.11. Outstanding Securities.

     All securities (as defined in the Securities  Act) of the Company have been
offered,  issued,  sold  and  delivered  in  compliance  with,  or  pursuant  to
exemptions  from,  all  applicable  federal  and state  laws,  and the rules and
regulations  of federal and state  regulatory  bodies  governing  the  offering,
issuance, sale and delivery of securities.

     4.12.  Permits,  Licenses and  Approvals;  Intellectual  Property and Other
Rights.

     Except as listed on Schedule  4.12, the Company owns or possesses and holds
free from  burdensome  restrictions  or  material  conflicts  with the rights of
others  all  franchises,   licenses,  permits,  consents,  approvals  and  other
authority  (governmental  or otherwise),  patents,  patent  rights,  trademarks,
trademark rights,  trade names,  trade name rights and copyrights (each of which
is listed on Exhibit B hereto),  and all rights and  privileges  with respect to
any of the  foregoing,  as are  necessary for the conduct of its business as now
being  conducted and as proposed to be  conducted.  To the best of the Company's
knowledge,  the Company is not in default in any material  respect  under any of
such franchises,  licenses, permits, consents, approvals or other authority. The
rights of (and


                                       20
<PAGE>

use by) the Company with respect to such or any other  patents,  patent  rights,
trademarks,  trademark rights,  trade names,  trade name rights or copyrights do
not  conflict  with or  infringe  any rights of others in a manner  which  might
materially and adversely affect the assets, properties,  liabilities,  business,
affairs, results of operations,  condition (financial or otherwise) or prospects
of the  Company  on a  consolidated  basis,  and no such  claim of  conflict  or
infringement has been asserted by any Person.

     4.13. Key Employees.

     The Company has good  relationships  with its employees and has not had and
does not expect any substantial labor problems.  The Company has no knowledge as
to any  intentions  of any key  employee or any group of  employees to leave the
employ of the Company. Except as set forth on Exhibit B hereto, the employees of
the Company are not and have never been  represented by any labor union,  and no
collective  bargaining  agreement is binding and in force against the Company or
currently being negotiated by the Company.

     4.14. Properties.

     The  Company has good and  marketable  title to its real  property,  all of
which is disclosed on Exhibit B hereto, and good and marketable title to each of
its other  properties.  Certain real property used by the Company in the conduct
of its business is held under lease (as identified on Exhibit B hereto), and the
Company is not aware of any pending or threatened  claim or action by any lessor
of any such property to terminate any such lease.  All such leases are valid and
in full  force and  effect,  and none of such  leases is in  default.  Except as
disclosed on Schedule 5, none of the  properties  owned or leased by the Company
is subject to any Liens which could  materially and adversely affect the assets,
properties,  liabilities,  business,  affairs, results of operations,  condition
(financial or otherwise) or prospects of the Company on a consolidated basis.

     4.15. Suppliers and Customers.

     (a) The  Company  has no reason to believe  that it does not have  adequate
sources of supply for its business as currently  conducted and as proposed to be
conducted.  The Company has good  relationships with all of its material sources
of supply of goods and services  and does not  anticipate  any material  problem
with any such material sources of supply.

     (b) The  Company has no  knowledge  that the  customer  base of the Company
might materially decrease.


                                       21
<PAGE>

     4.16. Environmental Compliance.

     Except as disclosed on Schedule 4.16 hereto:

     (a) the Company has not  received any verbal or written  notice,  citation,
subpoena,  summons,  complaint or other correspondence or communication from any
person with respect to the  presence of any  Hazardous  Material at, on,  about,
under,  emanating to or from or affecting  any of the real  property  (including
improvements)  currently or formerly owned, leased,  operated or occupied by the
Company or any predecessors thereof;

     (b) there has been no  intentional  or  unintentional,  gradual  or sudden,
release,  disposal or discharge  upon,  into,  beneath or from the real property
(including  improvements)  currently  or  formerly  owned,  leased,  operated or
occupied  by the  Company  or any  predecessors  thereof  that has  caused or is
causing soil or groundwater  contamination which under applicable  Environmental
Laws could require  investigation  or  remediation or could  otherwise  create a
material liability or obligation on the part of the Company;

     (c) the Company is in material compliance with all applicable Environmental
Laws and the terms and conditions of all Environmental Permits;

     (d) to the best knowledge of the Company after  reasonable  inquiry,  there
are no Liens arising under or pursuant to any Environmental Law  ("Environmental
Liens") relating to any real property (including improvements thereon) currently
owned by the Company;

     (e)  there  are no (i)  underground  storage  tanks,  (ii)  polychlorinated
biphenyl containing equipment or (iii) asbestos-containing materials at any site
currently owned, leased, operated or occupied by the Company;

     (f) the Company has not transported or arranged for the treatment, storage,
handling,  disposal or transportation of any Hazardous  Material to any location
which  could  reasonably  be expected  to result in  material  liability  to the
Company; and

     (g) no real property  currently or previously  owned,  leased,  operated or
occupied by the Company or any predecessors  thereof is currently  listed, or to
the knowledge of the Company,  proposed to be listed on the National  Priorities
List,  the  Comprehensive  Environmental  Response,  Compensation  and Liability
Information System or on any similar state list of sites requiring investigation
or cleanup.


                                       22
<PAGE>

     4.17. No Burdensome Agreements.

     To the best of the knowledge of the Company, (i) the Company is not a party
to, or bound by (nor are any of its  properties  affected  by), any  commitment,
contract or agreement, any term of which materially adversely affects, or in the
future would reasonably be expected to materially  adversely affect, the assets,
properties,  business,  affairs, results of operations,  condition (financial or
otherwise)  or  prospects  of the Company on a  consolidated  basis and (ii) the
Company is not a party to any  contract or agreement  with any  Affiliate of the
Company,  the terms of which are less  favorable to the Company than those which
might have been  obtained,  at the time such  contract or agreement  was entered
into, from a person who was not such an Affiliate.

     4.18. Offering of Shares.

     Neither the Company  nor, to the  Company's  knowledge,  any agent or other
Person  acting on its  behalf,  directly or  indirectly,  (i) offered any of the
Shares  or any  similar  security  of the  Company  (A) by any  form of  general
solicitation  or general  advertising  (within the meaning of Regulation D under
the  Securities  Act) or (B) for sale to or solicited  offers to buy any thereof
from,  or otherwise  approached  or negotiated  with respect  thereto with,  any
person  other  than  the   Purchasers   and  not  more  than  fifty  (50)  other
institutional  investors  each of which the Company  reasonably  believed was an
"accredited  investor"  within the meaning of Regulation D under the  Securities
Act or (ii) has done or caused to be done (or has  omitted  to do or to cause to
be done) any act which act (or which  omission)  would  result in  bringing  the
issuance  or sale of the  Shares  within  the  provisions  of  Section  5 of the
Securities Act or the filing,  notification or reporting provisions of any state
securities laws.

     4.19. SEC Reports.

     The Company  has filed all proxy  statements,  reports and other  documents
required to be filed by it under the  Securities  Exchange  Act. The Company has
furnished the Purchaser  with copies of (i) its Annual Report on Form 10-KSB for
the fiscal year ended  December 31,  1999,  (ii) its  Quarterly  Reports on Form
10-QSB for the fiscal quarters ended March 31, 2000, June 30, 2000 and September
30, 2000 and (iii) its Proxy  Statement dated July 25, 2000  (collectively,  the
"SEC  Reports").  Each  SEC  Report  was  in  substantial  compliance  with  the
requirements  of its  respective  form  and  none  of the SEC  Reports,  nor the
financial  statements (and the notes thereto) included in the SEC Reports, as of
their  respective  dates,  contained any untrue  statement of a material fact or
omitted to state a material fact  necessary to make the statements  therein,  in
light of the circumstances under which they were made, not misleading.

     4.20. Indebtedness.

     Schedule  2 hereto  sets forth (i) the  amount of all  Indebtedness  of the
Company outstanding on such Closing Date, which,  individually,  exceeds $50,000
as of December 31, 2000,


                                       23
<PAGE>

(ii) any Lien with respect to such  Indebtedness and (iii) a description of each
instrument  or  agreement  governing  such  Indebtedness.  The  Company has made
available to the  Purchaser a complete and correct copy of each such  instrument
or agreement (including all amendments,  supplements or modifications  thereto).
No material default exists with respect to or under any such Indebtedness or any
material  instrument or agreement  relating thereto and no event or circumstance
exists  with  respect  thereto  that (with  notice or the lapse of time or both)
could give rise to such a default.

     4.21. Use of Proceeds.

     The Company will use the proceeds  realized  from the sale of the Shares to
fund capital  expenditures,  fees and expenses of the transactions  contemplated
hereby and for working  capital  purposes.  No portion of such  proceeds will be
used for the purpose,  whether immediate,  incidental or ultimate, of purchasing
or carrying, within the meaning of Regulation U of the Board of Governors of the
Federal  Reserve  System,  as amended from time to time,  any "margin  stock" as
defined in said  Regulation  U, or for the  purpose of  purchasing,  carrying or
trading  in  securities  within  the  meaning  of  Regulation  T of the Board of
Governors of the Federal  Reserve  System,  as amended from time to time, or for
the  purpose  of  reducing  or  retiring  any  indebtedness  which  both (i) was
originally  incurred to purchase any such margin stock or other  securities  and
(ii)  was  directly  or  indirectly  secured  by  such  margin  stock  or  other
securities.  None of the assets of the Company includes any such "margin stock."
The Company has no present intention of acquiring any such "margin stock."

     4.22. Other Names.

     The business  previously or presently conducted by the Company has not been
conducted under any corporate,  trade or fictitious name, other than those names
listed on Exhibit B hereto.

     4.23. Brokers.

     No broker,  finder or  investment  banker or other party is entitled to any
brokerage,  finder's or other similar fee or  commission in connection  with the
Stock Purchase Agreement,  the First Amendment to Stockholders'  Agreement,  the
First Amendment to Registration Rights Agreement or the Certificate of Amendment
or  any  of  the  transactions   contemplated  hereby  or  thereby,  based  upon
arrangements made by or on behalf of the Company or any of its Affiliates.


                                       24
<PAGE>

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     The Purchaser represents and warrants to the Company as follows:

     5.1. Corporate Power and Authority.

     The  Purchaser  has all  requisite  power,  authority  and  legal  right to
execute,  deliver,  enter into, consummate the transactions  contemplated by and
perform  its  obligations   under  this   Agreement,   the  First  Amendment  to
Stockholders'   Agreement  and  the  First  Amendment  to  Registration   Rights
Agreement. The execution,  delivery and performance of this Agreement, the First
Amendment to  Stockholders'  Agreement and the First  Amendment to  Registration
Rights  Agreement by the  Purchaser  have been duly  authorized  by all required
corporate and other actions.  The Purchaser has duly executed and delivered this
Agreement,  the  First  Amendment  to  Stockholders'  Agreement  and  the  First
Amendment  to  Registration  Rights  Agreement,  and this  Agreement,  the First
Amendment to  Stockholders'  Agreement and the First  Amendment to  Registration
Rights  Agreement  constitute  the legal,  valid and binding  obligations of the
Purchaser  enforceable against the Purchaser in accordance with their respective
terms, subject to bankruptcy, insolvency,  reorganization,  moratorium and other
similar laws relating to the rights of creditors generally.

     5.2. Investment Intent.

     The  Purchaser is capable of evaluating  the risk of its  investment in the
Shares  being  purchased  by it,  is  able  to bear  the  economic  risk of such
investment  and has had  access to  material  information  with  respect  to the
Company necessary for it to make an informed investment decision.  The Purchaser
is  purchasing  the  Shares  to be  purchased  by it for  its  own  account  for
investment and not with a present view to any distribution  thereof in violation
of applicable  securities  laws;  provided,  however,  that,  upon notice to the
Company,  the Purchaser may transfer record and/or  beneficial  ownership of the
Shares or the Conversion Shares to one or more Affiliates, officers or employees
of Affiliates or investment funds managed by Affiliates of the Purchaser, in all
cases in compliance  with federal  securities  laws.  It is understood  that the
disposition of the Purchaser's Shares or Conversion Shares shall at all times be
within the Purchaser's  control. If the Purchaser should in the future decide to
dispose of any of its Shares or Conversion  Shares, it is understood that it may
do so only in compliance with the Securities Act,  applicable  securities  laws,
this  Agreement  and the  right of first  offer  set  forth in  Section 5 of the
Stockholders' Agreement. The Purchaser is an "accredited investor" as defined in
Rule 501(a) under the Securities Act.

     5.3. Brokers.

     No broker,  finder or  investment  banker or other party is entitled to any
brokerage,  finder's or other similar fee or  commission in connection  with the
Stock Purchase Agreement,  the


                                       25
<PAGE>

First Amendment to Stockholders'  Agreement, the First Amendment to Registration
Rights  Agreement or the  Certificate  of  Amendment or any of the  transactions
contemplated hereby or thereby,  based upon arrangements made by or on behalf of
the Purchaser or any of its Affiliates.

     5.4 Ownership of Common Stock.

     The  Purchaser  currently  does not own any shares of Common Stock and will
not acquire any  additional  shares of Common  Stock in the public  market.  Any
future  ownership by the Purchaser of shares of Common Stock shall be subject to
the limitations set forth in Section 4(a) of the Certificate of Amendment.

SECTION 6. RESTRICTIONS ON TRANSFER

     The  Purchaser  agrees  that it will not sell or  otherwise  dispose of any
Shares or Conversion  Shares  unless such Shares or Conversion  Shares have been
registered  under the  Securities  Act and,  to the extent  required,  under any
applicable state  securities  laws, or pursuant to an applicable  exemption from
such   registration   requirements.   The  Company  may  endorse  on  all  Share
certificates a legend stating or referring to such transfer restrictions and may
place a stop order with the Company's transfer agent for the Shares.

SECTION 7. INFORMATION AS TO THE COMPANY

     The Company covenants and agrees as follows:

     7.1. Financial Information.

     (a) The  Company  will  maintain  a system of  accounting  established  and
administered in accordance with sound business  practices to permit  preparation
of  financial  statements  in  accordance  with  generally  accepted  accounting
principles consistently applied.

     (b) So long as any of the  Shares  remain  outstanding,  the  Company  will
deliver  to (x) each  holder of thirty  percent  (30%) or more of the  Threshold
Shares and (y) a Designated Entity, the following:

          (i) as soon as  practicable  but not later than five (5) Business Days
after their issuance,  and in any event within  ninety-five  (95) days after the
close of each fiscal year of the Company,  (A) a  consolidated  balance sheet of
the Company as of the end of such fiscal year and (B) consolidated statements of
operations,  stockholders'  equity and cash flows of the Company for such fiscal
year,  in each case for  statements  set forth in clause  (B)  setting  forth in
comparative  form the  corresponding  figures for the preceding fiscal year, all
such balance  sheets and  statements  to be in  reasonable  detail and certified
without  qualification by BDO Seidman,  LLP or any "Big Five"


                                       26
<PAGE>

independent  public accounting firm selected by the Audit Committee of the Board
of Directors of the Company and approved by the shareholders of the Company, and
such  statements  shall be accompanied by a management  analysis of any material
differences  between the  results  for such  fiscal  year and the  corresponding
figures for the preceding year;

          (ii) as soon as practicable,  copies (A) of all financial  statements,
proxy material or reports sent to the Company's stockholders,  (B) of any public
press releases and (C) of all reports or registration  statements filed with the
Commission pursuant to the Securities Act or the Securities Exchange Act;

          (iii) as soon as  practicable  and in any event within fifty (50) days
after the close of each of the first three (3) fiscal  quarters of the  Company,
(A) a  consolidated  balance  sheet of the  Company as of the end of such fiscal
quarter,  (B) consolidated  statements of operations,  stockholders'  equity and
cash flows of the  Company for the portion of the fiscal year ended with the end
of such  quarter,  in each case in  reasonable  detail,  certified  by the Chief
Financial  Officer,  Chief  Executive  Officer or  President  of the Company and
setting forth in comparative form the  corresponding  figures for the comparable
period one year prior thereto (subject to normal year-end adjustments), together
with a management analysis of any material  differences between such results and
the  corresponding  figures for such prior period and (C) a  certificate  of the
Chief Financial  Officer,  Chief  Executive  Officer or President of the Company
certifying the Company's  compliance  with the covenants  contained in Section 9
(other than Section 9.12) of this Agreement;

          (iv) as soon as  practicable  and  without  duplication  of any of the
above items,  any other materials  furnished to the Company's Board of Directors
or to holders of the Company's capital stock or Indebtedness, including, without
limitation,   any   compliance   certificates   furnished  in  respect  of  such
Indebtedness; and

          (v) as soon as practicable,  such other  information as may reasonably
be requested by a holder of Shares.

     (c) The  Company  will  deliver to each  member of the  Company's  Board of
Directors  and each  observer  to the  Company's  Board of  Directors  appointed
pursuant to Section 2(a) of the Stockholders'  Agreement, as soon as practicable
(and in the case of (iii),  prior to the end of each  fiscal  year) and  without
duplication of any of the items listed below, the following:

          (i)  copies  of any  annual,  special  or  interim  audit  reports  or
management  or comment  letters  with  respect to the Company or its  operations
submitted to the Company by independent public accountants;

          (ii) copies of summary financial  information  prepared on a quarterly
basis  regarding  the  Company  on a  consolidated  basis  as  presented  to the
Company's  Board  of  Directors  and any  other  summary  financial  information
otherwise prepared;


                                       27
<PAGE>

          (iii)  copies of the  annual  budget  and  business  plan for the next
fiscal year;

          (iv)  copies  of all  formal  communications,  from  time to time,  to
directors of the Company (including without limitation all information furnished
to such directors in connection with such communications), and copies of minutes
of meetings of the Company's Board of Directors (and of any executive committees
thereof);

          (v) notice of default under any material agreement,  contract or other
instrument to which the Company is a party or by which it is bound;

          (vi) notice of any action or  proceeding  which has been  commenced or
threatened against the Company and which, if adversely  determined,  would have,
individually  or in the  aggregate,  a material  adverse  effect on the  assets,
properties,  liabilities,  business,  affairs, results of operations,  condition
(financial or otherwise)  or prospects of the Company on a  consolidated  basis;
and

          (vii) copies of all filings made with the Commission.

     (d) All such financial  statements referred to in this Section 7.1 shall be
prepared  in  accordance   with   generally   accepted   accounting   principles
consistently  applied (except for any change in accounting  principles specified
in the accompanying certificate and except that any interim financial statements
may omit notes and may be subject to normal year-end adjustments).

     (e) Without  limiting  the  foregoing  provisions  of this Section 7.1, the
Company  agrees that,  if requested in writing by any holder of Shares,  it will
not deliver to such holder  (until  otherwise  instructed  by a holder of thirty
percent (30%) or more of the Threshold Shares) (x) any non-public information or
non-public  materials  regarding the Company (whether  described in this Section
7.1 or  otherwise)  and (y) any  information  (whether or not included in clause
(x)) which such holder  specifies that it does not want to receive.  The Company
shall comply with any such request with respect to each such  Purchaser  and any
subsequent  holders of Shares  acquired  directly or indirectly  (through one or
more  transfers)  from such Purchaser,  until  instructed  otherwise by the then
holder of such Shares.


                                       28
<PAGE>

     7.2. Communication with Accountants.

     The Company  hereby  authorizes  (a) each holder of thirty percent (30%) or
more of the  aggregate  of the  Threshold  Shares and the  Threshold  Conversion
Shares and (b) a Designated Entity, to communicate directly with the independent
certified public  accountants for the Company and authorizes such accountants to
disclose  to each such  holder any and all  financial  statements  and any other
information  of any  kind  that  they  may  have  with  respect  to the  assets,
properties,  liabilities,  business,  affairs, results of operations,  condition
(financial or otherwise) or prospects of the Company,  provided,  that each such
holder has  delivered  to the Company a  confidentiality  agreement  in form and
substance  reasonably  acceptable  to the Company.  The Company  shall deliver a
letter  addressed  to such  accountants  instructing  them to  comply  with  the
provisions of this Section 7.2. For purposes of Section 7.2(a),  the calculation
of a Person's percentage holdings of Conversion Shares shall be determined based
upon the number of Shares from which such Conversion Shares derived.

     7.3. Inspection.

     The Company will permit (a) each holder of thirty  percent (30%) or more of
the shares of the aggregate of the Threshold Shares and the Threshold Conversion
Shares, (b) any authorized  representative of a holder referred to in clause (a)
and (c) a Designated  Entity to visit and inspect any of the  properties  of the
Company,  to examine the  Company's  books and  records and to discuss  with the
Company's  officers the Company's books and records and the assets,  properties,
liabilities,  business, affairs, results of operations,  condition (financial or
otherwise)  or  prospects of the Company,  all at such  reasonable  times and as
often  as  may  be  reasonably  requested,  provided,  that  each  such  holder,
representative   or   Designated   Entity  has   delivered   to  the  Company  a
confidentiality  agreement in form and  substance  reasonably  acceptable to the
Company.  For  purposes  of  Section  7.3(a),  the  calculation  of  a  Person's
percentage  holdings of  Conversion  Shares shall be  determined  based upon the
number of Shares from which such Conversion Shares derived.

     7.4. Notices.

     The Company  will give notice to all  holders of Shares  promptly  after it
learns  (other than by notice from all of such  holders) of the existence of any
of the following:

     (a) any default under any Indebtedness (or under any indenture, mortgage or
other  agreement  relating  to any  Indebtedness)  which  Indebtedness  is in an
aggregate  principal  amount  exceeding  $100,000 (or the equivalent  thereof in
other currencies) in respect of which the Company is liable;

     (b) any action or proceeding which has been commenced or threatened against
the Company and which, if adversely determined,  would have,  individually or in
the aggregate, a material adverse effect on the assets, properties, liabilities,
business, affairs, results of operations,  condition (financial or otherwise) or
prospects of the Company on a  consolidated  basis or the ability of the


                                       29
<PAGE>

Company to perform its  obligations  under the Stock  Purchase  Agreements,  the
Stockholders' Agreement, the Registration Rights Agreement or the Certificate of
Amendment;

     (c) any dispute  which may exist  between the Company and any  Governmental
Authority  which may,  individually  or in the aggregate,  materially  adversely
affect the normal business operations of the Company or the assets,  properties,
liabilities,  business, affairs, results of operations,  condition (financial or
otherwise) or prospects of the Company on a consolidated basis or the ability of
the Company to perform its obligations under the Stock Purchase Agreements,  the
First Amendment to Stockholders'  Agreement, the First Amendment to Registration
Rights Agreement or the Certificate of Amendment; and

     (d) if any (i)  "reportable  event" (as such term is  described  in Section
4043(c) of ERISA) has occurred; or (ii) "accumulated funding deficiency" (within
the meaning of Section  412(a) of the Code) has been  incurred with respect to a
Pension Plan  maintained  or  contributed  to (or required to be  maintained  or
contributed  to) by the  Company or any ERISA  Affiliate  that is subject to the
funding  requirements of ERISA and the Code or an application may be or has been
made to the  Secretary  of the  Treasury  for a waiver  or  modification  of the
minimum funding  standard  (including any required  installment  payments) or an
extension of any amortization period under Section 412 of the Code, in each case
with  respect  to such a Pension  Plan;  or (iii)  Pension  Plan  maintained  or
contributed to (or required to be maintained or  contributed  to) by the Company
or any ERISA Affiliate has been terminated,  reorganized, petitioned or declared
insolvent  under  Title  IV  of  ERISA;  or  (iv)  Pension  Plan  maintained  or
contributed to (or required to be maintained or  contributed  to) by the Company
or any ERISA Affiliate has an unfunded  current  liability giving rise to a lien
under  ERISA or the Code;  or (v)  proceeding  has been  instituted  pursuant to
Section  515 of ERISA to collect a  delinquent  contribution  to a Pension  Plan
maintained or contributed to (or required to be maintained or contributed to) by
the  Company  or any  ERISA  Affiliate;  or (vi)  of the  Company  or its  ERISA
Affiliates  will  or may  incur  any  liability  (including  any  contingent  or
secondary  liability) to or on account of the  termination or withdrawal  from a
Pension Plan  maintained  or  contributed  to (or required to be  maintained  or
contributed  to) by the  Company or any ERISA  Affiliate;  or (vii)  "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) in connection  with an "employee  benefit plan" (as defined in Section
3(3) of ERISA),  maintained or  contributed  to (or required to be maintained or
contributed to) by the Company or any ERISA Affiliate has occurred.

Such  notice (i) with  respect to (a),  shall  specify  the nature and period of
existence of any such  default and what the Company  proposes to do with respect
thereto and (ii) with  respect to (b), (c) or (d),  shall  specify the nature of
any such matter referred to in such clause,  what action the Company proposes to
take with respect thereto and what action any other relevant Person is taking or
proposes to take with respect thereto.


                                       30
<PAGE>

SECTION 8. AFFIRMATIVE COVENANTS

     The Company covenants and agrees as follows:

     8.1. Maintenance of Existence,  Properties and Franchises;  Compliance with
          Law; Taxes; Insurance.

     The Company will:

     (a) maintain its corporate  existence,  rights and other franchises in full
force and effect;

     (b)  maintain  its  tangible  assets  in good  repair,  working  order  and
condition so far as necessary or  advantageous  to the proper carrying on of its
business;

     (c) comply with all applicable laws and with all applicable orders,  rules,
rulings,  certificates,   licenses,  regulations,   demands,  judgments,  writs,
injunctions and decrees,  provided,  that such compliance shall not be necessary
so long as (i) the  applicability  or  validity  of any such law,  order,  rule,
ruling, certificate,  license, regulation, demand, judgment, writ, injunction or
decree  shall be  contested in good faith by  appropriate  proceedings  and (ii)
failure to so comply  will not have a  material  adverse  effect on the  assets,
properties,  liabilities,  business,  affairs, results of operations,  condition
(financial or otherwise) or prospects of the Company on a consolidated basis;

     (d) pay promptly when due all Taxes imposed upon its properties,  assets or
income and all claims or indebtedness (including, without limitation,  vendor's,
workmen's  and like claims)  which might become a Lien upon such  properties  or
assets; provided, that payment of any such Tax shall not be necessary so long as
(i) the  applicability  or validity  thereof shall be contested in good faith by
appropriate  proceedings  and  a  reserve,  if  appropriate,   shall  have  been
established  with respect thereto and (ii) failure to make such payment will not
have a material adverse effect on the assets, properties, liabilities, business,
affairs, results of operations,  condition (financial or otherwise) or prospects
of the Company on a consolidated basis; and

     (e) keep adequately insured, by financially sound and reputable insurers of
nationally  recognized  stature,  all its properties of a character  customarily
insured by entities similarly situated,  against loss or damage of the kinds and
in  amounts   customarily  insured  against  by  such  entities  and  with  such
deductibles or coinsurance as is customary.


                                       31
<PAGE>

     8.2.  Office for Payment,  Exchange and  Registration;  Location of Office;
           Notice of Change of Name or Office.

     (a) So long as any of the Shares is outstanding,  the Company will maintain
an office or agency  where  Shares may be presented  for  redemption,  exchange,
conversion  or  registration  of transfer as  provided in this  Agreement.  Such
office or agency  initially  shall be the  office of the  Company  specified  in
Section 17 hereof, subject to Section 8.2(b).

     (b) The Company shall give each holder of Shares at least twenty (20) days'
prior  written  notice of any  change in (i) the name of the  Company as then in
effect  or (ii)  the  location  of the  office  of the  Company  required  to be
maintained under this Section 8.2.

     8.3. Fiscal Year.

     The fiscal year of the Company for tax,  accounting  and any other purposes
shall end on December 31 of each calendar year.

     8.4. Environmental Matters.

     (a) The Company shall keep and maintain any property either owned,  leased,
operated or occupied by the Company free and clear of any  Environmental  Liens,
and the  Company  shall  keep  all  such  property  free of  Hazardous  Material
contamination and in compliance with all applicable  Environmental  Laws and the
terms and conditions of any Environmental Permits;  provided,  however, that the
Company shall have the right at its cost and expense,  and acting in good faith,
to contest,  object or appeal by appropriate  legal  proceedings the validity of
any  Environmental  Lien.  The contest,  objection or appeal with respect to the
validity of an  Environmental  Lien shall  suspend the  Company's  obligation to
eliminate  such   Environmental  Lien  under  this  paragraph  pending  a  final
determination  by  appropriate  administrative  or  judicial  authority  of  the
legality, enforceability or status of such Environmental Lien, provided that the
following conditions are satisfied:  (i) contemporaneously with the commencement
of such  proceedings,  the Company  shall give  written  notice  thereof to each
holder of Shares or Conversion Shares; and (ii) if under applicable law any real
property or  improvements  thereon are subject to sale or forfeiture for failure
to satisfy the  Environmental  Lien prior to a final  determination of the legal
proceedings, the Company must successfully move to stay such sale, forfeiture or
foreclosure  pending final  determination of the Company's action; and (iii) the
Company  must,  if  requested,  furnish to the  holders of Shares or  Conversion
Shares a good and sufficient  bond,  surety,  letter of credit or other security
satisfactory  to such holders  equal to the amount  (including  any interest and
penalty) secured by the Environmental Lien.

     (b) The Company will, by administrative  or judicial  process,  enforce the
obligations  of  any  other  Person  who  is  potentially  liable  for  damages,
contribution or other relief in


                                       32
<PAGE>

connection with any violation of Environmental Laws, including,  but not limited
to, asbestos  abatement,  Hazardous Material  remediation or off-site or on-site
disposal.

     (c) The Company will defend,  indemnify  and hold  harmless  each  current,
former and future holder of Shares or Conversion  Shares, and each such holder's
employees, officers, directors, stockholders,  partners, agents, representatives
and assigns,  from and against any liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments,  suits and claims,  joint or  several,  and any
costs,  disbursements and expenses  (including  attorneys' fees and expenses and
costs of investigation) of whatever kind or nature, known or unknown, contingent
or  otherwise,  arising  out of or in any  way  related  to  (i)  the  presence,
disposal,  release,  removal,  discharge,   storage  or  transportation  of  any
Hazardous  Material upon,  into, from or affecting any real property  (including
improvements)  currently or formerly owned, leased,  operated or occupied by the
Company; (ii) any judicial or administrative action, suit or proceeding,  actual
or  threatened,  relating to Hazardous  Material upon, in, from or affecting any
real property  (including  improvements)  currently or formerly  owned,  leased,
operated or occupied by the Company;  (iii) any  violation of any  Environmental
Law by the Company or any of its agents,  tenants,  subtenants or invitees; (iv)
the imposition of any  Environmental  Lien for the recovery of costs expended in
the  investigation,  study or remediation of any environmental  liability of (or
asserted  against) the Company;  and (v) any liability arising out of or related
to the  off-site  transportation,  shipment,  disposal,  treatment,  handling or
disposal of Hazardous  Materials.  This Section  8.4(c) and Section 8.4(d) shall
survive any payment,  conversion  or transfer of Shares and any  termination  of
this Agreement.

     (d) To the extent  that the Company is strictly  liable  without  regard to
fault under any Environmental  Law, the Company's  obligations to the holders of
Shares or Conversion Shares under any of the  indemnification  provisions of the
Stock Purchase  Agreements shall likewise be strict without regard to fault with
respect to the violation of any Environmental Law which results in any liability
to any of the indemnified persons referred to in Section 8.4(c).

     8.5. Reservation of Shares.

     There have been reserved, and the Company shall at all times keep reserved,
free from  preemptive  rights,  out of its  authorized  Common Stock a number of
shares of Common Stock  sufficient to provide for the exercise of the conversion
rights provided in Section 5 of the Certificate of Amendment.

     8.6. Securities Exchange Act Registration.

     (a)  The  Company  will  maintain   effective  a   registration   statement
(containing  such  information and documents as the Commission shall specify and
otherwise  complying with the Securities  Exchange Act),  under Section 12(b) or
Section  12(g),  whichever is applicable,  of the Securities  Exchange Act, with
respect to the Common  Stock of the  Company,  and the Company will file on time
such  information,  documents  and  reports  as the  Commission  may  require or
prescribe for


                                       33
<PAGE>

companies  whose stock has been  registered  pursuant to such  Section  12(b) or
Section 12(g), whichever is applicable.

     (b) The  Company  will,  upon the  request of any  holder of  Shares,  make
whatever  other  filings  with  the  Commission,  or  otherwise  make  generally
available to the public such financial and other information, as any such holder
may deem reasonably  necessary or desirable in order to enable such holder to be
permitted to sell Shares pursuant to the provisions of Rule 144.

     8.7. Delivery of Information for Rule 144A Transactions.

     If a holder of Shares proposes to transfer any such Shares pursuant to Rule
144A under the  Securities  Act (as in effect  from time to time),  the  Company
agrees  to  provide  (upon  the  request  of  such  holder  or  the  prospective
transferee) to such holder and (if requested) to the prospective  transferee any
financial or other  information  concerning  the Company which is required to be
delivered by such holder to any transferee of such Shares  pursuant to such Rule
144A.

     8.8. Senior Securities.

     The Company  shall  maintain the senior  status of the Series A Convertible
Preferred  Stock such that it shall rank senior in all  respects,  including the
payment on liquidation  and  redemption,  to all other equity  securities of the
Company.

     8.9. Further Assurances.

     The  Company  will  from  time to time,  upon the  request  of the  Fleming
Holders,  promptly  and  duly  execute  and  deliver  any and all  such  further
instruments  and documents as the Fleming  Holders may reasonably deem necessary
or desirable to obtain the full benefits of (i) the  obligations  of the Company
under this Agreement and (ii) the other rights and powers herein  granted.  Upon
the  instructions  from time to time of the Fleming  Holders,  the Company shall
execute and cause to be filed any document or filing presented to the Company in
proper  form for  signing or filing,  in each case as the  Fleming  Holders  may
reasonably  deem  necessary or desirable in light of the  Company's  obligations
under this  Agreement,  and the Company shall pay or cause to be paid any filing
or other fees in connection therewith.

     8.10. Stockholder Approval.

     The transactions contemplated hereby have been structured by the parties to
comply with the requirements for stockholder approval of the NASDAQ Stock Market
and so that further  stockholder  action  shall not be  required.  If such rules
require such  stockholder  approval,  the Company  shall use its best efforts to
obtain such stockholder  approval. In the event the Company fails to obtain such
stockholder approval, the terms of the transactions contemplated hereby shall be
restructured  so that they (i)  satisfy  the  requirements  of the NASDAQ  Stock
Market and (ii) provide


                                       34
<PAGE>

the  holders of Series A  Convertible  Preferred  Stock  with the same  economic
benefit they would have received had such stockholder approval been obtained.

     8.11. Shares Paid as Dividends.

     If the Company shall pay to the holders of Series A  Convertible  Preferred
Stock  additional  shares of Series A Convertible  Preferred Stock as a dividend
pursuant to Section 2 of the Certificate of Amendment,  such additional  shares,
on the date of such payment, will be duly authorized, validly issued, fully paid
and non-assessable.

SECTION 9. NEGATIVE COVENANTS

     The Company  covenants and agrees that without the prior written consent of
the Fleming Holders:

     9.1. No Dilution or Impairment; No Changes in Capital Stock.

     The Company will not, by amendment of its certificate of  incorporation  or
through  any  consolidation,   merger,   reorganization,   transfer  of  assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the  observance  or  performance  of any of the terms of the Stock
Purchase  Agreements,  the  Certificate of Amendment,  the  Registration  Rights
Agreement or the Stockholders'  Agreement. The Company will at all times in good
faith  assist in the  carrying  out of all such terms,  and in the taking of all
such action,  as may be necessary or  appropriate in order to protect the rights
of the  holders  of Shares (as such  rights are set forth in the Stock  Purchase
Agreements,  the Certificate of Amendment, the Registration Rights Agreement and
the  Stockholders'  Agreement)  against  dilution or other  impairment.  Without
limiting the  generality  of the  foregoing,  the Company (a) will not issue any
shares or class or series of equity or equity-linked  security,  which is senior
to, or pari passu with, the Series A Convertible  Preferred Stock as to dividend
payments  or amounts  payable in the event of  liquidation  or winding up of the
Company,  (b) will not  enter  into any  agreement  or  instrument  which  would
restrict or otherwise  materially adversely affect the ability of the Company to
perform its obligations under the Stock Purchase  Agreements,  the Stockholders'
Agreement,  the  Registration  Rights Agreement or the Certificate of Amendment,
(c) will not amend its  certificate  of  incorporation  or by-laws in any manner
which  would  impair or reduce the  rights of the  Preferred  Stock,  including,
without  limitation,  an  amendment  which  would  alter or change  the  powers,
privileges or preferences  of the holders of the Series A Convertible  Preferred
Stock  (including,  without  limitation,  changing the  Certificate of Amendment
after any Shares  have been  called  for  redemption),  (d) except as  otherwise
provided  in the  Certificate  of  Amendment,  will not  redeem,  repurchase  or
otherwise acquire any shares of capital stock of the Company or any other rights
or options to subscribe  for or purchase any capital stock of the Company or any
other  securities  convertible  into or  exchangeable  for capital  stock of the
Company,  (e) will not permit the par value or the determined or stated value of
any  shares of Common  Stock  receivable  upon the  conversion  of the


                                       35
<PAGE>

Shares to exceed the amount payable therefor upon such conversion, (f) will take
all such action as may be necessary or appropriate in order that the Company may
at all  times  validly  and  legally  issue  duly  authorized,  fully  paid  and
nonassessable  shares of the Common Stock free from all Taxes, Liens and charges
with respect to the issue  thereof,  upon the conversion of the Shares from time
to time  outstanding,  (g)  will  not  take  any  action  which  results  in any
adjustment of the current conversion price under the Certificate of Amendment if
the total  number of shares of the Common Stock (or other  securities)  issuable
after the action upon the conversion of all of the then outstanding Shares would
exceed the total  number of shares of Common  Stock (or other  securities)  then
authorized by the Company's  certificate of incorporation  and available for the
purpose of issuance  upon such  conversion,  provided,  that  nothing  contained
herein  shall  require  the  Company to make an ultra  vires  issuance of Common
Stock,  (h) will not have any  authorized  Common  Stock (and will not issue any
Common Stock) other than its existing  authorized  Common Stock,  $.01 par value
per share, and (i) will not amend its certificate of incorporation to change any
terms of its Common Stock.

     9.2. Indebtedness.

     So long as the Fleming  Holders hold at least 30% of the Threshold  Shares,
the Company will not (i) incur  Indebtedness,  excluding  any  Indebtedness  set
forth on Schedule 2 hereto,  in excess of $7.5  million in  aggregate  principal
amount; or (ii) enter into any agreement, amendment or modification with respect
to any  Indebtedness,  which agreement,  amendment or modification  restricts or
prohibits  (or was intended  primarily to restrict or prohibit) the Company from
making  any  payments  under,  or  otherwise  performing,   the  Stock  Purchase
Agreements.

     9.3. Consolidation, Merger and Sale.

     So long as the Fleming  Holders hold at least 30% of the Threshold  Shares,
the Company will not (and will not agree to): (a) wind up, liquidate or dissolve
its  affairs;  (b)  sell,  lease,  transfer  or  otherwise  dispose  of  all  or
substantially  all of its assets to any other Person;  or (c) effect a merger or
consolidation  if the Company is not the surviving  corporation from such merger
or consolidation.

     9.4. No Change in Business

     The Company will not change  substantially the character of its business as
conducted on the Closing Date as represented in Section 4.4 hereof and described
in the Disclosure Material.

     9.5. Restricted Payments; Investments.

     The  Company  will not declare or make or permit to be declared or made any
Restricted Payment or any Investment.


                                       36
<PAGE>

     9.6. Sale of Substantial Portion of Assets.

     After the Closing  Date,  the  Company  will not sell,  transfer,  lease or
otherwise  dispose of any assets to any Person (other than assets  consisting of
inventory  being  disposed of in the ordinary  course of business and other than
assets which are, contemporaneously with such disposition (or within ninety (90)
days thereafter),  being replaced with other substantially similar (or improved)
assets which are used by the Company for  substantially  the same purpose as the
assets being replaced) to the extent the aggregate assets so sold,  transferred,
leased or disposed of:

          (x)  during the twelve  (12) month  period  ending on the date of such
     sale, transfer,  lease or disposition (i) had an aggregate book value equal
     to  ten  percent  (10%)  or  more  of  the  aggregate  book  value  of  the
     consolidated  total  assets of the  Company  at the end of the most  recent
     fiscal quarter preceding such sale, transfer,  lease or disposition or (ii)
     accounted for ten percent (10%) or more of the consolidated revenues of the
     Company as shown on the  consolidated  income  statement of the Company for
     the most recent fiscal quarter or the then preceding fiscal year; or

          (y)  during  the  period  from the  Closing  Date  through  such sale,
     transfer, lease or disposition (i) had an aggregate book value equal to ten
     percent (10%) or more of the aggregate book value of the consolidated total
     assets  of the  Company  at  the  end of the  most  recent  fiscal  quarter
     preceding such sale,  transfer,  lease or disposition or (ii) accounted for
     ten percent (10%) or more of the consolidated  revenues of the Company over
     the Company's fiscal periods beginning after the Closing Date and ending at
     the end of the most  recent  fiscal  quarter  as shown on the  consolidated
     income statements of the Company for such periods.

     9.7. Obligations to Affiliates.

     The Company may not incur or permit to exist any of the following:

     (a) any  obligation of the Company to repay money borrowed owing to (i) any
Affiliate of the Company or (ii) any other holder of shares of the capital stock
of the Company; or

     (b)  any  obligation,  to  any  Person,  which  obligation  is  assumed  or
guaranteed by the Company and which is an obligation of (i) any Affiliate of the
Company or (ii) any other holder of shares of the capital stock of the Company.

This Section 9.7 shall not apply to (1) any obligations under the Stock Purchase
Agreements or with respect to the Shares, (2) any loans,  advances or Guarantees
referred  to in clause (1) of the  proviso  to the  definition  of  "Investment"
contained in Section 3 hereof, (3) Indebtedness identified on Schedule 2 hereto,
or (4) payments to DuPont Chemical and Energy  Operations,  Inc. and E.I. DuPont
de


                                       37
<PAGE>

Nemours and Company in the  ordinary  course of business,  consistent  with past
practice,  and not in connection with any financing or  extraordinary  corporate
transaction.

     9.8. Transactions with Affiliates.

     The Company will not, directly or indirectly, enter into any transaction or
agreement  (including,  without limitation,  the purchase,  sale,  distribution,
lease or exchange of any  property or the  rendering  of any  service)  with any
Affiliate of the Company,  unless such  transaction or agreement (a) is approved
by a majority of the Outside  Directors on the Board of Directors of the Company
(provided  that  this  Section  9.8(a)  shall not  apply to  payments  to DuPont
Chemical and Energy  Operations,  Inc. and E.I. DuPont de Nemours and Company in
the  ordinary  course of business,  consistent  with past  practice,  and not in
connection with any financing or extraordinary corporate  transaction),  and (b)
is on terms that are no less  favorable to the Company than those which might be
obtained  at the  time of such  transaction  from a  Person  who is not  such an
Affiliate;  provided,  however,  that this  Section  9.8 shall not limit,  or be
applicable to, (i) employment arrangements with (and general salary and benefits
compensation  for) any individual who is a full-time  employee of the Company if
such  arrangements  are  approved by a majority of the Outside  Directors on the
Board of  Directors  of the  Company;  and (ii) the  payment of  reasonable  and
customary  regular fees to directors of the Company who are not employees of the
Company.

     9.9. Liens.

     So long as the Fleming  Holders hold at least 30% of the Threshold  Shares,
the Company will not create or permit to exist any Liens upon or with respect to
any of its assets or income,  other than existing  liens set forth on Schedule 5
hereto, in excess of $7.5 million in the aggregate.

     9.10. Private Placement Status.

     Neither the Company nor any agent nor other Person  acting on the Company's
behalf  will do or cause to be done (or will  omit to do or to cause to be done)
any act which act (or which  omission)  would result in bringing the issuance or
sale of the Shares or the  Conversion  Shares within the provisions of Section 5
of the Securities Act or the filing,  notification or reporting  requirements of
any state  securities  law (other than in  accordance  with a  registration  and
qualification  of  Conversion   Shares  pursuant  to  the  Registration   Rights
Agreement).


                                       38
<PAGE>

     9.11. Maintenance of Public Market.

     The Company  will not proceed with a program of  acquisition  of its Common
Stock,  initiate a corporate  reorganization or  recapitalization or undertake a
consolidation or merger or authorize,  consent to or take any action which would
have the effect of:

     (a) removing the Company from  registration  with the Commission  under the
Securities Exchange Act with respect to the Company's Common Stock;

     (b)  requiring  the  Company to make a filing  under  Section  13(e) of the
Securities Exchange Act;

     (c) reducing  substantially  or eliminating the public market for shares of
Common Stock of the Company;

     (d) causing a delisting of the Company's  Common Stock as a National Market
Security on the NASDAQ Stock  Market  (unless such stock is delisted as a result
of being listed on a national securities exchange); or

     (e) if any shares of the Company's Common Stock are at any time listed on a
national exchange, causing a delisting of such stock from such exchange.

     9.12. Actions Prior to the Closing Date.

     From the date hereof  through the Closing  Date,  the Company will not, (a)
issue or agree to issue any capital stock or any securities  exercisable for, or
convertible  or  exchangeable  into,  capital stock or (b)  purchase,  redeem or
otherwise acquire any of its capital stock; provided, however, that this Section
9.12 shall not limit, or be applicable to, (i) the transactions  contemplated by
the Stock  Purchase  Agreements,  including  any  issuance  of capital  stock in
connection  with the  transactions  contemplated by Sections 9.1 and 9.11 hereof
and (ii) grants of options or issuances  of Common Stock to officers,  directors
or employees of the Company  pursuant to the current terms of the Company's 1994
and 1997 Stock Option Plans.

SECTION 10. CONDITIONS TO PURCHASER'S OBLIGATIONS

     The  Purchaser's  obligation  to purchase  Shares  hereunder  is subject to
satisfaction  of the  following  conditions  at the Closing (any of which may be
waived by the Purchaser):


                                       39
<PAGE>

     10.1.  Certificate  of  Amendment;  Stockholders'  Agreement;  Registration
            Rights Agreement.

     (a) The  certificate of  incorporation  of the Company shall have been duly
amended by the filing of the  Certificate  of Amendment in the form of Exhibit A
hereto.

     (b) The Company,  the  Purchasers  and certain  other  stockholders  of the
Company shall have entered into the First Amendment to  Stockholders'  Agreement
substantially in the form of Exhibit C hereto.

     (c) The Company shall have entered into the First Amendment to Registration
Rights  Agreement  with the  Purchasers  substantially  in the form of Exhibit D
hereto.

     10.2. Certificates for Shares.

     The  Purchaser  shall  concurrently  receive  the  certificates  for Shares
contemplated by Section 2(b) hereof.

     10.3. Senior Status.

     The Company  shall have taken all of the necessary  actions,  including the
amendment  of  the  appropriate  existing  agreements,  so  that  the  Series  A
Convertible  Preferred  Stock shall rank senior in all  respects,  including the
payment on liquidation  and  redemption,  to all other equity  securities of the
Company.

     10.4. Accuracy of Representations and Warranties.

     The  representations  and warranties of the Company  contained herein or in
any  certificate  or document  delivered  pursuant  hereto  shall be correct and
complete  on and as of the  Closing  Date with the same effect as though made on
and as of the Closing Date (after giving effect to the transactions contemplated
by this Agreement).

     10.5. Compliance with Agreements.

     The Company shall have performed and complied in all material respects with
all  agreements,  covenants  and  conditions  contained  in the  Stock  Purchase
Agreements  and any other  document  contemplated  hereby or  thereby  which are
required  to be  performed  or  complied  with by the  Company  on or before the
Closing Date.


                                       40
<PAGE>

     10.6. Officers' Certificates.

     The Purchaser shall have received a certificate  dated the Closing Date and
signed by the President or Chief  Executive  Officer and by the Secretary or the
Treasurer of the Company,  to the effect that the  conditions of Sections  10.3,
10.4, 10.8 and 10.9 have been satisfied.

     10.7. Proceedings.

     All corporate and other  proceedings  in connection  with the  transactions
contemplated  by the  Stock  Purchase  Agreements,  and all  documents  incident
thereto, shall be in form and substance reasonably satisfactory to the Purchaser
and its counsel,  and the Purchaser  shall have  received all such  originals or
certified or other copies of such  documents as the Purchaser or its counsel may
reasonably request.

     10.8. Legality; Governmental and Other Authorization.

     The purchase of and payment for the Shares shall not be  prohibited  by any
law or governmental order, rule, ruling, regulation,  release, interpretation or
opinion  applicable  to the Purchaser and shall not subject the Purchaser to any
penalty,  tax,  liability or other onerous  condition.  Any necessary  consents,
approvals,  licenses,  permits,  orders and  authorizations of, and any filings,
registrations  or  qualifications  with,  any  Governmental  Authority  or other
Person,  with respect to the  transactions  contemplated  by the Stock  Purchase
Agreements  shall  have been  obtained  or made and  shall be in full  force and
effect.  The Company shall have delivered to the Purchaser,  upon its reasonable
request setting forth what is required,  factual certificates or other evidence,
in form and substance  satisfactory to the Purchaser and its counsel,  to enable
the Purchaser to establish compliance with this condition.

     10.9. No Material Adverse Change.

     Except  as set  forth in Item 4 of  Exhibit  B,  there  shall  have been no
material  adverse  change  in the  assets,  properties,  liabilities,  business,
affairs, results of operations,  condition (financial or otherwise) or prospects
of the Company on a consolidated basis since September 30, 2000.

     10.10. Opinion of Counsel.

     The Purchaser  shall have  received an opinion,  dated the Closing Date and
addressed to the Purchasers,  of Blank Rome Tenzer  Greenblatt LLP,  counsel for
the  Company,   which  opinion  shall  be  in  form  and  substance   reasonably
satisfactory to the Purchaser and its counsel and shall be in the form set forth
in Exhibit E hereto.


                                       41
<PAGE>

     10.11. Purchases of Shares.

     The sale and purchase of Shares by the Fleming Funds  pursuant to the Stock
Purchase  Agreements  between each of the Fleming Funds and the Company shall be
consummated  concurrently  for an  aggregate  purchase  price of not  less  than
$3,000,000.00.

     10.12. Consents.

     The Company shall have received all consents  required pursuant to the Loan
and Security  Agreement,  dated April 29, 1998,  between the Company and The CIT
Group/Credit Finance, Inc.

     10.13. Other Documents and Opinions.

     The Purchaser  shall have received  such other  documents and opinions,  in
form and  substance  reasonably  satisfactory  to the Purchaser and its counsel,
relating to matters incident to the  transactions  contemplated  hereby,  as the
Purchaser may reasonably request.

SECTION 11. BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS

     (a)  The  representations,  warranties,  covenants  and  agreements  of the
Company  and the  Purchaser  contained  in  this  Agreement,  the  Stockholders'
Agreement,  the Registration  Rights Agreement or in any document or certificate
delivered  pursuant  hereto or thereto or in  connection  herewith or  therewith
shall survive, and shall continue in effect following the execution and delivery
of the Stock Purchase Agreements,  the Stockholders' Agreement, the Registration
Rights Agreement,  the closings  hereunder and thereunder,  any investigation at
any time made by the  Purchaser  or on its  behalf or by any other  Person,  the
issuance,  sale and  delivery of the  Shares,  any  disposition  thereof and any
payment,  conversion or cancellation of the Shares; provided,  however, that the
representations  and  warranties  set  forth in  Section 4 (other  than  Section
4.2(a)) and Section 5 shall  survive  only until the second  anniversary  of the
Closing Date, and the provisions of Section 9 shall terminate upon conversion of
seventy  percent  (70%) or more of the Shares  pursuant  to the  Certificate  of
Amendment.  All  statements  contained  in any  certificate  or  other  document
delivered  by or on behalf  of the  Company  pursuant  hereto  shall  constitute
representations and warranties by the Company hereunder.

     (b) The Company  agrees to indemnify and hold the  Purchaser  harmless from
and against and will pay to the Purchaser  the full amount of any loss,  damage,
liability  or expense  (including  amounts  paid in  settlement  and  reasonable
attorneys'  fees and expenses) to the  Purchaser  resulting  either  directly or
indirectly  from any breach of the  representations,  warranties,  covenants  or
agreements of the Company  contained in any Stock  Purchase  Agreement or in the
Stockholders' Agreement, the Registration Rights Agreement or any other document
or certificate delivered pursuant hereto or thereto or in connection herewith or
therewith;  provided,  however,  that the


                                       42
<PAGE>

Company's  liability  under this  Section  11(b) with respect to breaches of its
representations  and  warranties  set forth in  Section 4 (other  than  Sections
4.2(a), 4.8, 4.9 and 4.16) shall not exceed the amount of the purchase price for
the  Shares  purchased  by  the  Purchaser  pursuant  to  this  Agreement,  plus
reasonable attorneys' fees and expenses incurred by the Purchaser.

SECTION 12. SPECIFIC PERFORMANCE

     The  parties  agree that  irreparable  damage will result in the event that
this  Agreement is not  specifically  enforced,  and the parties  agree that any
damages available at law for a breach of this Agreement would not be an adequate
remedy.  Therefore,  the  provisions  hereof and the  obligations of the parties
hereunder  shall be  enforceable  in a court of equity,  or other  tribunal with
jurisdiction,  by a decree of specific performance,  and appropriate  injunctive
relief may be applied for and granted in connection therewith. Such remedies and
all other remedies provided for in this Agreement shall,  however, be cumulative
and not exclusive and shall be in addition to any other  remedies  which a party
may have under this Agreement or otherwise.

SECTION 13. EXPENSES

     (a) Whether or not the  transactions  herein  contemplated are consummated,
the Company  shall pay (i) the costs,  fees and  expenses of the Company and its
counsel in connection  with the Stock Purchase  Agreements,  the  Certificate of
Amendment,  the Stockholders'  Agreement and the Registration  Rights Agreement,
other related  documentation  and the issuance of the Shares and the  Conversion
Shares and the  furnishing of all opinions by counsel for the Company,  (ii) the
costs,  fees and expenses of Morgan,  Lewis & Bockius LLP in connection with the
Stock  Purchase  Agreements,  the  Certificate of Amendment,  the  Stockholders'
Agreement and the Registration Rights Agreement, other related documentation and
the  transactions  contemplated  hereby and  thereby  (whether  or not a Closing
occurs  hereunder)  and if the Closing occurs the Company will make such payment
on the Closing Date;  provided,  however,  that such fees and expenses shall not
exceed $20,000 without the approval of the Company,  (iii) the fees and expenses
of  counsel  to  the  Purchasers  in  connection   with  any  amendments  to  or
modifications or waivers of any provisions of the Stock Purchase Agreements, the
Certificate of Amendment, the Stockholders' Agreement or the Registration Rights
Agreement,   other  related  documentation  or  in  connection  with  any  other
agreements between the Purchasers and the Company and (iv) the fees and expenses
(including  attorneys'  fees and expenses) of any holder of Shares or Conversion
Shares in enforcing  its rights  against the Company if the Company  defaults in
its obligations hereunder, under the Certificate of Amendment, the Stockholders'
Agreement or the Registration Rights Agreement.

     (b) In addition  to all other sums due  hereunder  or provided  for in this
Agreement,  the Company shall pay to the Purchaser or its agents,  respectively,
an  amount  sufficient  to  indemnify  such  persons  (net of any  Taxes  on any
indemnity  payments)  against  all  reasonable  costs  and  expenses  (including
reasonable  attorneys' fees and expenses and reasonable costs of  investigation)
and damages and liabilities  incurred by the Purchaser or its agents pursuant to
any investigation or proceeding


                                       43
<PAGE>

brought by any third party against any or all of the Company, the Purchasers, or
their  agents,  arising  out  of  or  in  connection  with  the  Stock  Purchase
Agreements,  the Stockholders'  Agreement,  the Registration Rights Agreement or
the purchase of the Shares (or any transactions  contemplated  hereby or thereby
or any other document or instrument  executed  herewith or therewith or pursuant
hereto  or  thereto),  whether  or not  the  transactions  contemplated  by this
Agreement  are  consummated,  which  investigation  or  proceeding  requires the
participation  of the  Purchaser or its agents or is commenced or filed  against
the  Purchaser  or its agents  because  of the Stock  Purchase  Agreements,  the
Stockholders'  Agreement,  the Registration  Rights Agreement or the purchase of
the Shares  (or any of the  transactions  contemplated  hereby or thereby or any
other document or instrument  executed  herewith or therewith or pursuant hereto
or thereto),  other than any  investigation or proceeding in which it is finally
determined that there was gross negligence or willful  misconduct on the part of
the  Purchaser or its agents which was not taken by them in reliance upon any of
the Company's representations,  warranties, covenants or agreements in the Stock
Purchase  Agreements,  the  Stockholders'  Agreement,  the  Registration  Rights
Agreement  or in any  other  documents  or  instruments  contemplated  hereby or
thereby or executed  herewith or  therewith or pursuant  hereto or thereto.  The
Company  shall  assume the  defense,  and shall have its counsel  represent  the
Purchaser  and such  agents,  in  connection  with  investigating,  defending or
preparing to defend any such action,  suit,  claim or proceeding  (including any
inquiry or investigation);  provided,  however, that the Purchaser,  or any such
agent,  shall have the right  (without  releasing  the  Company  from any of its
obligations  hereunder)  to employ its own  counsel and either to direct its own
defense or to participate in the Company's defense, but the fees and expenses of
such counsel shall be at the expense of such Person unless (i) the employment of
such counsel shall have been  authorized in writing by the Company in connection
with such defense,  (ii) the Company shall not have provided its counsel to take
charge of such defense or (iii) the  Purchaser,  or such agent of the Purchaser,
shall have  concluded  that there may be defenses  available to it or them which
are different from or additional to those available to the Company,  then in any
of such events  referred to in clauses (i),  (ii) or (iii) such counsel fees and
expenses  (but only for one counsel for the  Purchaser  and its agents) shall be
borne  by the  Company.  Any  settlement  of any  such  action,  suit,  claim or
proceeding  shall  require the consent of both the Company and such  indemnified
person (neither of which shall unreasonably withhold its consent).

     (c) The  Company  agrees to pay, or to cause to be paid,  all  documentary,
stamp and other  similar  Taxes  levied  under the laws of the United  States of
America,  any state or local  Taxing  Authority  thereof or therein or any other
applicable  jurisdiction  in connection with the issuance and sale of the Shares
and the  execution  and  delivery of the Stock  Purchase  Agreements,  the First
Amendment to Stockholders' Agreement, the First Amendment to Registration Rights
Agreement and any other documents or instruments  contemplated hereby or thereby
and  any  modification  of  the  Certificate  of  Amendment,  the  Stockholders'
Agreement, the Registration Rights Agreement or the Stock Purchase Agreements or
any such other  documents or  instruments  and will hold the Purchaser  harmless
without  limitation as to time against any and all  liabilities  with respect to
all such Taxes.


                                       44
<PAGE>

     (d) The  obligations of the Company under this Section 13 shall survive the
Closing hereunder and any termination of the Stock Purchase Agreements.

SECTION 14. DIRECT PAYMENTS

     As long as the Purchaser or any  institutional  holder which is a direct or
indirect  transferee (as a result of one or more  transfers)  from the Purchaser
shall be the  holder  of any  Shares,  the  Company  will  make  all  redemption
payments,  liquidation  payments and other distributions by wire transfer to the
Purchaser's  or such other  holder's (or its  nominee's)  account at any bank or
trust company, notwithstanding any contrary provision herein or in the Company's
certificate of incorporation with respect to the place of payment. The Purchaser
has provided an address on Schedule 1 hereto for payments by wire transfer,  and
such address may be changed for the Purchaser or any subsequent holder by notice
to the Company.  All such payments shall be made in U.S.  dollars and in federal
or other immediately available funds.

SECTION 15. AMENDMENTS AND WAIVERS

     (a) The terms and  provisions  of this  Agreement  may be amended,  waived,
modified or terminated only with the written  consent of the Persons  identified
in  clause  (i) and  (ii) of the  definition  of  "Fleming  Holders";  provided,
however,  that if no Shares or Conversion  Shares are held by such Persons,  the
written  consent of holders of two-thirds of  outstanding  Shares and Conversion
Shares  shall  be  required  for any such  amendment,  waiver,  modification  or
termination.

     (b) The Company  agrees that all  holders of Shares and  Conversion  Shares
shall be notified by the Company in advance of any proposed  amendment,  waiver,
modification  or  termination,  but failure to give such notice shall not in any
way  affect  the  validity  of  any  such  amendment,  waiver,  modification  or
termination.  In addition,  promptly after  obtaining the written consent of the
holders as herein provided,  the Company shall transmit a copy of any amendment,
waiver,  modification  or  termination  which has been adopted to all holders of
Shares and Conversion  Shares then  outstanding,  but failure to transmit copies
shall  not in any  way  affect  the  validity  of any  such  amendment,  waiver,
modification or termination.


                                       45
<PAGE>

SECTION 16. EXCHANGE OF SHARES; CANCELLATION OF SURRENDERED SHARES; REPLACEMENT

     (a)  Subject to Section 6 hereof,  at any time at the request of any holder
of Shares to the Company at its address  provided  under Section 17 hereof,  the
Company at its expense (except for any transfer tax arising out of the exchange)
will issue and deliver to or upon the order of the holder in exchange therefor a
new  certificate  or  certificates  in such amount or amounts as such holder may
request in the aggregate  representing the number of Shares  represented by such
surrendered  certificates,  and registered in the name of such holder or as such
holder may direct.

     (b) Any Share  certificate  which is converted  into  Conversion  Shares in
whole  or in  part  shall  be  cancelled  by  the  Company,  and  no  new  Share
certificates  shall be issued in lieu of any Shares  which  have been  converted
into Conversion  Shares.  The Company shall issue a new certificate with respect
to any  Shares  which  were  not  converted  into  Conversion  Shares  and  were
represented by a certificate which was converted in part.

     (c) Upon  receipt  of  evidence  satisfactory  to the  Company of the loss,
theft,  destruction or mutilation of any Share  certificate  and, in the case of
any such loss,  theft or  destruction,  upon delivery of an indemnity  agreement
reasonably  satisfactory  to  the  Company  (if  requested  by the  Company  and
unsecured in the case of the Purchaser or an  institutional  holder),  or in the
case of any such  mutilation,  upon surrender of such Share  certificate  (which
surrendered Share  certificate  shall be cancelled by the Company),  the Company
will issue a new Share  certificate of like tenor in lieu of such lost,  stolen,
destroyed or mutilated Share certificate,  as if the lost, stolen,  destroyed or
mutilated Share certificate were then surrendered for exchange.

SECTION 17. NOTICES

     All notices, requests, demands, consents and other communications hereunder
shall be in writing and shall be  delivered by hand or shall be sent by telex or
telecopy  (confirmed  by  registered,  certified or  overnight  mail or courier,
postage  and  delivery  charges  prepaid),  (i) if to  the  Company,  to  Hudson
Technologies,  Inc., 275 North  Middletown  Road,  Pearl River,  New York 10965,
Attention:  Stephen P. Mandracchia,  with a copy to Blank Rome Tenzer Greenblatt
LLP, 405 Lexington Avenue,  New York, NY 10174,  Attention:  Ethan Seer, Esq. or
(ii) if to the Purchaser,  at the address indicated on Schedule 1 hereto, with a
copy to Morgan,  Lewis & Bockius LLP, 101 Park Avenue,  New York, NY 10178-0060,
Attention:  David W. Pollak,  Esq., or at such other address as a party may from
time to time  designate  as its  address in  writing to the other  party to this
Agreement.  Whenever any notice is required to be given  hereunder,  such notice
shall be deemed given and such  requirement  satisfied  only when such notice is
delivered or, if sent by telex or telecopier, when received.


                                       46
<PAGE>

SECTION 18. MISCELLANEOUS

     (a)  The  Stock  Purchase  Agreements,  the  Stockholders'  Agreement,  the
Registration  Rights  Agreement  and,  upon  the  Closing,  the  Certificate  of
Amendment,  together with any further  agreements  entered into by the Purchaser
and the  Company at the  Closing,  contain  the  entire  agreement  between  the
Purchaser and the Company,  and supersede any prior oral or written  agreements,
commitments, terms or understandings regarding the subject matter hereof.

     (b) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such  prohibition  or  unenforceability   without   invalidating  the  remaining
provisions  hereof,  and  any  such  prohibition  or   unenforceability  in  any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other  jurisdiction.  To the extent  permitted  by  applicable  law, the parties
hereby  waive any  provision  of law  which  may  render  any  provision  hereof
prohibited or unenforceable in any respect.

     (c) This  Agreement  shall be binding  upon and inure to the benefit of the
parties hereto and their respective successors and assigns, whether so expressed
or not; provided,  that (a) the Company may not assign any of its rights, duties
or  obligations  under  this  Agreement,  except  with the  Purchaser's  written
consent,  and  (b)  the  Purchaser  may  assign  any of its  rights,  duties  or
obligations  under this  Agreement to a purchaser of its Shares,  provided  that
such purchaser is reasonably acceptable to the Company.

     (d) In addition to any  assignment  by operation of law, the  Purchaser may
assign, in whole or in part, any or all of its rights (and/or obligations) under
this  Agreement  to any  permitted  transferee  of any or all of its  Shares  or
Conversion Shares, and (unless such assignment expressly provides otherwise) any
such assignment shall not diminish the rights the Purchaser would otherwise have
under this  Agreement  or with  respect to any  remaining  Shares or  Conversion
Shares held by the Purchaser.

     (e) No course of  dealing  and no delay on the part of any party  hereto in
exercising any right, power, or remedy conferred by this Agreement shall operate
as a waiver  thereof or  otherwise  prejudice  such party's  rights,  powers and
remedies.  No single or partial exercise of any right, power or remedy conferred
by this Agreement  shall preclude any other or further  exercise  thereof or the
exercise of any other right, power or remedy.

     (f) The headings  and captions in this  Agreement  are for  convenience  of
reference only and shall not define,  limit or otherwise affect any of the terms
or provisions hereof.

     (g) This Agreement shall be governed by, and construed in accordance  with,
the laws of the State of New York (other  than any  conflict of laws rules which
might result in the application of the laws of any other jurisdiction).


                                       47
<PAGE>

     (h) This  Agreement  may be  executed  by the  parties  hereto in  separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument,
and all signatures need not appear on any one counterpart.

     (i) THE COMPANY HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE COUNTY OF NEW YORK,  STATE OF NEW YORK AND  IRREVOCABLY
AGREES THAT,  SUBJECT TO THE  PURCHASER'  SELECTION,  ALL ACTIONS OR PROCEEDINGS
RELATING TO THIS  AGREEMENT,  THE  CERTIFICATE OF AMENDMENT,  THE  STOCKHOLDERS'
AGREEMENT,  THE  REGISTRATION  RIGHTS  AGREEMENT,  THE SHARES OR THE  CONVERSION
SHARES MAY BE LITIGATED IN SUCH  COURTS.  THE COMPANY  ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,  THE NONEXCLUSIVE
JURISDICTION  OF THE  AFORESAID  COURTS  AND  WAIVES  ANY  DEFENSE  OF FORUM NON
CONVENIENS,  AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN  CONNECTION   WITH  THIS  AGREEMENT,   THE  CERTIFICATE  OF  AMENDMENT,   THE
STOCKHOLDERS'  AGREEMENT,  THE REGISTRATION RIGHTS AGREEMENT,  THE SHARES OR THE
CONVERSION  SHARES.  A COPY OF ANY SUCH  PROCESS  SO  SERVED  SHALL BE MAILED BY
REGISTERED MAIL TO THE COMPANY AT THE ADDRESS OF THE COMPANY PROVIDED  HEREUNDER
EXCEPT THAT UNLESS  OTHERWISE  PROVIDED BY  APPLICABLE  LAW, ANY FAILURE TO MAIL
SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. AS AN ALTERNATIVE
TO SERVICE OF  PROCESS  ON SUCH  AGENT  (WHETHER  OR NOT ANY SUCH AGENT HAS BEEN
APPOINTED),  THE  COMPANY  HEREBY  AGREES  THAT  SERVICE  UPON IT BY MAIL  SHALL
CONSTITUTE SUFFICIENT NOTICE AND SERVICE OF PROCESS. NOTHING HEREIN SHALL AFFECT
THE RIGHT TO SERVE  PROCESS IN ANY OTHER MANNER  PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT OF THE PURCHASER TO BRING  PROCEEDINGS OR OBTAIN OR ENFORCE  JUDGMENTS
AGAINST THE COMPANY IN THE COURTS OF ANY OTHER JURISDICTION.

     (j) THE COMPANY AND THE PURCHASER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION  BASED  UPON OR  ARISING  OUT OF THIS
AGREEMENT,  THE  CERTIFICATE  OF AMENDMENT,  THE  STOCKHOLDERS'  AGREEMENT,  THE
REGISTRATION  RIGHTS  AGREEMENT,  THE SHARES OR THE  CONVERSION  SHARES,  OR ANY
DEALINGS  BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS  TRANSACTION.  THE
COMPANY AND THE  PURCHASER  ALSO WAIVE ANY BOND OR SURETY OR SECURITY  UPON SUCH
BOND WHICH MIGHT, BUT FOR THIS WAIVER,  BE REQUIRED OF THE PURCHASER.  THE SCOPE
OF THIS WAIVER IS INTENDED TO BE  ALL-ENCOMPASSING  OF ANY AND ALL DISPUTES THAT
MAY BE  FILED IN ANY  COURT  AND  THAT  RELATE  TO THE  SUBJECT  MATTER  OF THIS
TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS,  AND ALL OTHER


                                       48
<PAGE>

COMMON LAW AND STATUTORY  CLAIMS.  THE COMPANY AND THE PURCHASER FURTHER WARRANT
AND  REPRESENT  THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL  COUNSEL,  AND
THAT EACH  KNOWINGLY  AND  VOLUNTARILY  WAIVES ITS JURY TRIAL  RIGHTS  FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING,  AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO (OR ASSIGNMENTS
OF) THIS AGREEMENT,  THE CERTIFICATE OF AMENDMENT,  THE STOCKHOLDERS' AGREEMENT,
THE REGISTRATION  RIGHTS AGREEMENT,  THE SHARES OR THE CONVERSION SHARES. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
(WITHOUT A JURY) BY THE COURT.

                  [remainder of page intentionally left blank]


                                       49
<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed as of the date first above written.


                            HUDSON TECHNOLOGIES, INC.


                            By /s/ Kevin J. Zugibe
                              -----------------------------------------------
                              Name:  Kevin J. Zugibe
                              Title: Chairman and Chief Executive Officer


Accepted and Agreed to as of the
date first above  written by the
undersigned Purchaser:

FLEMING US DISCOVERY OFFSHORE FUND III, L.P.

By:      FLEMING US DISCOVERY
            PARTNERS, L.P.,
         its general partner

         By: FLEMING US DISCOVERY, LLC,
             its general partner


             By: /s/ Robert L. Burr
                ---------------------------------------
                      Robert L. Burr, member

<PAGE>

                                                                      Schedule 1
                                                                    to the Stock
                                                              Purchase Agreement


<TABLE>
<CAPTION>
                             Social Security or Taxpayer      Number of Shares at      Share Purchase
      Name of Purchaser        Identification Number              Closing                 Price
      -----------------        ---------------------              -------                 -----
<S>                                  <C>                           <C>                 <C>
Fleming US Discovery                 13-3907673                    25,855              $2,585,500
Fund III, L.P.

Fleming US Discovery                 13-3936603                    4,145                $414,500
Offshore Fund III, L.P.
</TABLE>


(a)  address for communications:

     Fleming Capital Management
     320 Park Avenue
     New York, NY  10022
     Fax:  (212) 508-3928
     Attention:     Robert L. Burr
                    Robert M. Zech


(b)  address for payments by
     wire transfer:

     Fleming US Discovery Fund III, L.P.   Fleming US Discovery Offshore
                                           Fund III, L.P.

     Chase Manhattan Bank                  Citibank, N.A.
     ABA # 021000021                       ABA # 021000089 / Chips UID# 0008 /
     CITIUS33A/C # 10921671                Swift Code - A/C: The Bank of Bermuda
                                           Limited, Hamilton, Bermuda
     Bermuda
     A/C: Robert Fleming Inc.              Chips UID# 005584
     A/C # 400-704129                      Swift Code: BBDA BM HM
     A/C: Fleming US Discovery
          Fund III, L.P.                   A/C # 0246769
                                           A/C: Fleming US Discovery Offshore
                                                Fund III, L.P.

<PAGE>

                                                                      Schedule 2
                                                                    to the Stock
                                                              Purchase Agreement


                                  Indebtedness


<PAGE>



                                                                      Schedule 3
                                                                    to the Stock
                                                              Purchase Agreement


                                   Investments



<PAGE>


                                                                      Schedule 4
                                                                    to the Stock
                                                              Purchase Agreement


                               Disclosure Material



<PAGE>


                                                                   Schedule 4.16
                                                                    to the Stock
                                                              Purchase Agreement

                            Environmental Compliance



<PAGE>


                                                                      Schedule 5
                                                                    to the Stock
                                                              Purchase Agreement


                                      Liens


<PAGE>



                                                                      Schedule 6
                                                                    to the Stock
                                                              Purchase Agreement


                                  Capital Stock



<PAGE>


                                                                       EXHIBIT A



                            CERTIFICATE OF AMENDMENT



<PAGE>


                                                                       EXHIBIT B

                               DISCLOSURE SCHEDULE



<PAGE>


                                                                       EXHIBIT C



                   FIRST AMENDMENT TO STOCKHOLDERS' AGREEMENT



<PAGE>


                                                                       EXHIBIT D


                FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT



<PAGE>


                                                                       EXHIBIT E


                       OPINION OF COUNSEL FOR THE COMPANY

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.25
<SEQUENCE>4
<FILENAME>d25204_ex10-25.txt
<DESCRIPTION>FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
<TEXT>

                                  Exhibit 10.25


                FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
                        effective as of February 16, 2001

     This First Amendment (this "Amendment"), effective as of February 16, 2001,
to  the  REGISTRATION  RIGHTS  AGREEMENT,  dated  as  of  March  30,  1999  (the
"Registration Rights Agreement"),  among Hudson  Technologies,  Inc., a New York
corporation (the "Company"),  Fleming US Discovery Fund III, L.P. and Fleming US
Discovery Offshore Fund III, L.P. (collectively, the "Fleming Funds").


                              W I T N E S S E T H:
                               - - - - - - - - - -

     WHEREAS,  the Company and the Fleming Funds are parties to the Registration
Rights Agreement;

     WHEREAS,  pursuant to the Stock Purchase Agreements,  dated as of March 30,
1999,  between the Company  and each of the Fleming  Funds (the "Stock  Purchase
Agreements"),  the Fleming Funds purchased 65,000 shares of the Company's Series
A Convertible Preferred Stock, par value $.01 per share (the "Series A Preferred
Stock");

     WHEREAS,  the Company and the Fleming  Funds  entered  into Stock  Purchase
Agreements,   dated  as  of  February   16,  2001  (the  "2001  Stock   Purchase
Agreements"), whereby the Fleming Funds purchased 30,000 shares of the Company's
Series A Convertible Preferred Stock, par value $.01 per share; and

     WHEREAS, pursuant to Section 11.4 of the Registration Rights Agreement, the
Company and the Fleming  Funds desire to (a) amend the first  WHEREAS  clause in
the Registration  Rights  Agreement to include the shares purchased  pursuant to
the 2001 Stock Purchase  Agreements,  (b) amend the second WHEREAS clause in the
Registration  Rights  Agreement  to  reflect  the  inclusion  of the 2001  Stock
Purchase Agreements and (c) amend the definition of "Stock Purchase  Agreements"
in the  Registration  Rights  Agreement  to  include  the  2001  Stock  Purchase
Agreements;

     NOW, THEREFORE,  in consideration of the foregoing and of the covenants and
agreements contained herein and for other good and valuable  consideration,  the
receipt of which is hereby  acknowledged,  the parties  hereto  hereby  agree as
follows:

     1. Capitalized  terms used but not otherwise  defined herein shall have the
respective meanings set forth in the Registration Rights Agreement.  Capitalized
terms  defined  in  this  Amendment  shall  be  deemed  to  be  defined  in  the
Registration  Rights  Agreement  with the meaning

<PAGE>

given to them herein. In the event of any inconsistency between the definitions,
terms or provisions of this Amendment and of the Registration  Rights Agreement,
this Amendment shall control.

     2. The first WHEREAS clause of the Registration  Rights Agreement is hereby
deleted and replaced in its entirety with the following:

     "WHEREAS,  pursuant to the terms of Stock Purchase Agreements,  dated as of
     March 30, 1999, and the Stock Purchase  Agreements,  dated as of February [
     ], 2001 (the "2001 Stock  Purchase  Agreements"),  the  Fleming  Funds have
     purchased 65,000 shares and 30,000 shares,  respectively,  of the Company's
     Series A Preferred Stock, par value $.01 per shares."

     3. The second WHEREAS clause of the Registration Rights Agreement is hereby
deleted and replaced in its entirety with the following:

     "WHEREAS,  (a) it was a condition of the  transactions  contemplated by the
     Stock  Purchase  Agreements  and (b) it is a condition to the  transactions
     contemplated  by the 2001 Stock Purchase  Agreements,  that the Company and
     Fleming enter into this Agreement  whereby the Company shall grant, and the
     Investors  shall obtain,  the rights  relating to the  registration  of the
     Registrable  Securities  under  the  Securities  Act,  as set forth in this
     Agreement;"

     4. The  definition of "Stock  Purchase  Agreements"  is hereby  deleted and
replaced in its entirety with the following:

     ""Stock  Purchase  Agreements"  means,  collectively,  the  separate  Stock
     Purchase  Agreements,  dated as of March 30, 1999,  between the Company and
     each of the Fleming Funds, and the 2001 Stock Purchase Agreements."

     5. Section  11.6(d)(ii) is hereby deleted and replaced in its entirety with
the following:

        "If to the Company, to:

        Hudson Technologies, Inc.
        275 North Middletown Road
        Pearl River, NY  10965
        Facsimile No.:  (914) 368-2540
        Attn:  Stephen P. Mandracchia


<PAGE>

        with a copy to:

        Blank Rome Tenzer Greenblatt LLP
        405 Lexington Avenue
        New York, NY  10174
        Facsimile No.:  (212) 885-5001
        Attn:  Ethan Seer, Esq.

     6. The Registration  Rights Agreement shall remain in full force and effect
in accordance with its terms, except as expressly amended hereby.

     7.  This  Amendment  may be  executed  in one or more  counterparts,  which
together will constitute a single agreement.

     8. This Amendment shall be governed by and construed in accordance with the
laws of the State of New York.

     9. This Amendment,  together with the Registration Rights Agreement and all
agreements or documents  herein or therein referred or incorporated by reference
contains  the entire  agreement  between the parties with respect to the subject
matter hereof and  supersedes any and all prior  agreements and  understandings,
oral or written, with respect to such subject matter.

                  [remainder of page intentionally left blank]

<PAGE>

     IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the
date first written above.


                                   HUDSON TECHNOLOGIES, INC.


                                   By: /s/ Kevin J. Zugibe
                                       ------------------------------
                                       Name:
                                       Title:


                                   FLEMING US DISCOVERY FUND III, L.P.

                                   By: FLEMING US DISCOVERY
                                        PARTNERS, L.P.,
                                       its general partner

                                       By: FLEMING US DISCOVERY, LLC, its
                                           general partner


                                           By: /s/ Robert L. Burr
                                              ---------------------------------
                                                    Robert L. Burr, member



                                   FLEMING US DISCOVERY OFFSHORE
                                      FUND III, L.P.

                                   By:   FLEMING US DISCOVERY
                                            PARTNERS, L.P.,
                                         its general partner

                                         By: FLEMING US DISCOVERY, LLC,
                                             its general partner


                                                By: /s/ Robert L. Burr
                                                   ----------------------------
                                                     Robert L. Burr, member

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.26
<SEQUENCE>5
<FILENAME>d25204_ex10-26.txt
<DESCRIPTION>FIRST AMENDMENT TO STOCKHOLDERS' AGREEMENT
<TEXT>

                                  Exhibit 10.26


                   FIRST AMENDMENT TO STOCKHOLDERS' AGREEMENT
                        effective as of February 16, 2001

     This First Amendment (this "Amendment"),  effective as of February 16, 2001
to the STOCKHOLDERS'  AGREEMENT,  dated as of March 30, 1999 (the "Stockholders'
Agreement"),  among  Hudson  Technologies,  Inc.,  a New York  corporation  (the
"Company"),  Kevin J. Zugibe  ("KJZ"),  Thomas P. Zugibe  ("TPZ") and Stephen P.
Mandracchia  ("Mandracchia" and,  collectively with KJZ and TPZ,  "Management"),
and Fleming US Discovery  Fund III, L.P. and Fleming US Discovery  Offshore Fund
III, L.P. (collectively, the "Fleming Funds").


                              W I T N E S S E T H:
                               - - - - - - - - - -

     WHEREAS,  the Company,  Management and the Fleming Funds are parties to the
Stockholders' Agreement;

     WHEREAS,  pursuant to the Stock Purchase Agreements,  dated as of March 30,
1999,  between the Company  and each of the Fleming  Funds (the "Stock  Purchase
Agreements"),  the Fleming Funds purchased 65,000 shares of the Company's Series
A Convertible Preferred Stock, par value $.01 per share (the "Series A Preferred
Stock");

     WHEREAS,  the Company and the Fleming  Funds  entered  into Stock  Purchase
Agreements,   dated  as  of  February   16,  2001  (the  "2001  Stock   Purchase
Agreements"), whereby the Fleming Funds purchased 30,000 shares of the Company's
Series A Convertible Preferred Stock, par value $.01 per share; and

     WHEREAS,  pursuant  to Section  6(a) of the  Stockholders'  Agreement,  the
Company,  Management  and the Fleming  Funds desire to amend the  definition  of
"Series A  Preferred  Stock" in the first  WHEREAS  clause of the  Stockholders'
Agreement to include the shares  purchased  pursuant to the 2001 Stock  Purchase
Agreements;

     NOW, THEREFORE,  in consideration of the foregoing and of the covenants and
agreements contained herein and for other good and valuable  consideration,  the
receipt of which is hereby  acknowledged,  the parties  hereto  hereby  agree as
follows:

     1. Capitalized  terms used but not otherwise  defined herein shall have the
respective meanings set forth in the Stockholders' Agreement.  Capitalized terms
defined in this  Amendment  shall be deemed to be  defined in the  Stockholders'
Agreement  with  the  meaning  given  to  them  herein.

<PAGE>

In the event of any inconsistency  between the definitions,  terms or provisions
of this  Amendment and of the  Stockholders'  Agreement,  this  Amendment  shall
control.

     2. The  first  WHEREAS  clause  of the  Stockholders'  Agreement  is hereby
deleted and replaced in its entirety with the following:

     "WHEREAS,  pursuant to the terms of Stock Purchase Agreements,  dated as of
     March 30,  1999  (the  "1999  Stock  Purchase  Agreements"),  and the Stock
     Purchase  Agreements,  dated as of  February  16,  2001  (the  "2001  Stock
     Purchase Agreements" and, together with the 1999 Stock Purchase Agreements,
     the "Stock Purchase  Agreements"),  the Fleming Funds have purchased 65,000
     shares and 30,000 shares, respectively, of the Company's Series A Preferred
     Stock, par value $.01 per shares (the "Series A Preferred Stock")."

     3. The  third  WHEREAS  clause  of the  Stockholders'  Agreement  is hereby
deleted and replaced in its entirety with the following:

     "WHEREAS,  it was a condition  precedent to the  Company's  and the Fleming
     Fund's respective  obligations to consummate the transactions  contemplated
     by the Stock Purchase Agreements that the parties hereto shall have entered
     into this Agreement; and"

     4. Section  6(d)(ii) of the  Stockholders  Agreement is hereby  deleted and
replaced in its entirety with the following:

             "If to the Company, to:

             Hudson Technologies, Inc.
             275 North Middletown Road
             Pearl River, NY  10965
             Facsimile No.:  (914) 368-2540
             Attn:  Stephen P. Mandracchia

             with a copy to:

             Blank Rome Tenzer Greenblatt LLP
             405 Lexington Avenue
             New York, NY  10174
             Facsimile No.:  (212) 885-5001
             Attn:  Ethan Seer, Esq."

<PAGE>

     5. The  Stockholders'  Agreement  shall  remain in full force and effect in
accordance with its terms, except as expressly amended hereby.

     6.  This  Amendment  may be  executed  in one or more  counterparts,  which
together will constitute a single agreement.

     7. This Amendment shall be governed by and construed in accordance with the
laws of the State of New York.

     8.  This  Amendment,  together  with the  Stockholders'  Agreement  and all
agreements or documents herein or therein referred or incorporated by reference,
contains  the entire  agreement  between the parties with respect to the subject
matter hereof and  supersedes any and all prior  agreements and  understandings,
oral or written, with respect to such subject matter.

                  [remainder of page intentionally left blank]


<PAGE>

     IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the
date first written above.


                                 HUDSON TECHNOLOGIES, INC.


                                 By: /s/ Kevin J. Zugibe
                                    ---------------------------
                                    Name:  Kevin J. Zugibe
                                    Title: Chairman and Chief Executive Officer


                                   /s/ Kevin J. Zugibe
                                   -----------------------------
                                     Kevin J. Zugibe


                                   /s/ Thomas P. Zugibe
                                   -----------------------------
                                     Thomas P. Zugibe


                                   /s/ Stephen P. Mandracchia
                                   -----------------------------
                                     Stephen P. Mandracchia


<PAGE>



                            FLEMING US DISCOVERY FUND III, L.P.

                            By: FLEMING US DISCOVERY
                                   PARTNERS, L.P.,
                                its general partner

                                By: FLEMING US DISCOVERY, LLC, its
                                    general partner


                                    By: /s/ Robert L. Burr
                                       ----------------------------------
                                         Robert L. Burr, member



                            FLEMING US DISCOVERY OFFSHORE
                               FUND III, L.P.

                            By: FLEMING US DISCOVERY
                                   PARTNERS, L.P.,
                                its general partner

                                By: FLEMING US DISCOVERY, LLC,
                                    its general partner


                                    By: /s/ Robert L. Burr
                                       ----------------------------------
                                         Robert L. Burr, member









</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>6
<FILENAME>d25204_ex21.txt
<DESCRIPTION>SUBSIDIARIES OF THE REGISTRANT
<TEXT>

Exhibit 21

                         Subsidiaries of the Registrant


Hudson Technologies Company incorporated in the State of Tennessee

Hudson Holdings, Inc. incorporated in the State of Nevada
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>7
<FILENAME>d25204_ex23-1.txt
<DESCRIPTION>CONSENT OF BDO SEIDMAN, LLP
<TEXT>

Exhibit 23.1:

               Consent of Independent Certified Public Accountants

Hudson Technologies, Inc.
Pearl River, New York

We  hereby  consent  to the  incorporation  by  reference  in  the  Registration
Statements  (No.  333-17133  and No.  333-38598) on Form S-8 of our report dated
February 19, 2001, relating to the consolidated  financial  statements of Hudson
Technologies,  Inc.  for the year  ended  December  31,  2000  appearing  in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2000.


                                                            /s/ BDO SEIDMAN, LLP

Valhalla, New York
March 29, 2001

</TEXT>
</DOCUMENT>
</SUBMISSION>
