REGISTRATION RIGHTS AGREEMENT

     THIS  REGISTRATION  RIGHTS  AGREEMENT,  dated as of August 10th, 1998 (this
"Agreement"),  is made by and  between  IDM  ENVIRONMENTAL  CORP.,  a New Jersey
corporation (the  "Company"),  and the entity named on the signature page hereto
(the "Initial Investor").

                              W I T N E S S E T H:

     WHEREAS,  upon the terms and subject to the  conditions  of the  Securities
Purchase Agreement,  dated as of August 10th, 1998, between the Initial Investor
and the Company (the  "Securities  Purchase  Agreement";  capitalized  terms not
otherwise  defined  herein  shall  have  the  meanings  ascribed  to them in the
Securities Purchase Agreement),  the Company has agreed to issue and sell to the
Initial Investor $1,500,000  liquidation  preference of 6% Convertible Preferred
Stock,  par value $1.00 per share, of the Company (the "Preferred  Stock," which
term,  as used herein  shall have the meaning  ascribed to it in the  Securities
Purchase Agreement); and

     WHEREAS,  the Preferred  Stock is  convertible  into shares of Common Stock
(the "Conversion Shares") upon the terms and subject to the conditions contained
in the Certificate of Designations; and

     WHEREAS,  to induce  the  Initial  Investor  to  execute  and  deliver  the
Securities  Purchase  Agreement,  the  Company  has  agreed to  provide  certain
registration rights under the Securities Act of 1933, as amended,  and the rules
and regulations thereunder, or any similar successor statute (collectively,  the
"Securities Act"), with respect to the Conversion Shares;

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
contained  herein and other good and  valuable  consideration,  the  receipt and
sufficiency  of which are  hereby  acknowledged,  the  Company  and the  Initial
Investor hereby agree as follows:

          1. Definitions.  As used in this Agreement,  the following terms shall
     have the following meanings:

          (a) "Investor" means the Initial Investor and any permitted transferee
     or assignee who agrees to become bound by the  provisions of this Agreement
     in accordance with Section 9 hereof.

          (b) "Potential  Material  Event" means any of the  following:  (i) the
     possession by the Company of material  information  not ripe for disclosure
     in a registration statement,  which shall be evidenced by determinations in
     good faith by the Board of Directors of the Company that disclosure of such
     information  in the  registration  statement  would be  detrimental  to the
     business and affairs of the Company;  or (ii) any  material  engagement  or
     activity by the Company which would, in the good faith determination of the
     Board of Directors of the Company, be adversely affected by disclosure in a
     registration   statement  at  such  time,  which   determination  shall  be
     accompanied by a good faith  determination by the Board of Directors of the
     Company that the  registration  statement  would be  materially  misleading
     absent the inclusion of such information.


<PAGE>

          (c)  "Register,"   "Registered,"   and   "Registration"   refer  to  a
     registration  effected by preparing and filing a Registration  Statement or
     Statements in compliance  with the  Securities Act and pursuant to Rule 415
     under the  Securities  Act or any  successor  rule  providing  for offering
     securities  on a continuous  basis ("Rule  415"),  and the  declaration  or
     ordering of  effectiveness  of such  Registration  Statement  by the United
     States Securities and Exchange Commission (the "SEC").
 
          (d) "Registrable Securities" means the Conversion Shares.

          (e)  "Registration  Statement"  means a registration  statement of the
     Company under the Securities Act.
 
          2. Registration.

          (a)  Mandatory  Registration.  The Company shall prepare and file with
     the SEC, as soon as  possible  after the  Closing  Date,  but no later than
     thirty  (30)  days  following  the  Closing  Date,  either  a  Registration
     Statement  on Form S-3 or an  amendment  to any such  pending  Registration
     Statement  registering  for resale by the Investor  all of the  Registrable
     Securities,  but in no event less than the aggregate  number of shares into
     (i) which the Preferred Stock would be convertible at the time of filing of
     the Form S-3 (assuming for such purposes that all shares of Preferred Stock
     had been eligible to be converted, and had been converted,  into Conversion
     Shares in accordance with their terms,  whether or not such  eligibility or
     conversion  had  in  fact  occurred  as of  such  date).  The  Registration
     Statement or amended Registration Statement shall state that, in accordance
     with  Rule 416 and 457  under  the  Securities  Act,  it also  covers  such
     indeterminate  number of  additional  shares of Common  Stock as may become
     issuable upon  conversion of the Preferred  Stock resulting from adjustment
     in the  Conversion  Price,  or to  prevent  dilution  resulting  from stock
     splits,  or stock dividends.  The Company will use commercially  reasonable
     efforts to cause such Registration  Statement to be declared  effective the
     earlier  of (a)  five  (5)  days  after  notice  by the SEC  that it may be
     declared  effective,  or (b) ninety (90) days after the Closing Date. If at
     any time the  number of shares of Common  Stock  into  which the  Preferred
     Stock may be  converted  exceeds the  aggregate  number of shares of Common
     Stock then  registered,  the Company  shall,  within ten (10) business days
     after receipt of a written  notice from any Investor,  either (i) amend the
     Registration  Statement  filed by the  Company  pursuant  to the  preceding
     sentence, if such Registration Statement has not been declared effective by
     the SEC at that time, to register all shares of Common Stock into which the
     Preferred  Stock may  currently or in the future be  converted,  or (ii) if
     such Registration  Statement has been declared effective by the SEC at that
     time, file with the SEC an additional  Registration  Statement on Form S-3,
     as may be  appropriate,  to register  the shares of Common Stock into which
     the Preferred Stock may currently or in the future be converted that exceed
     the  aggregate  number of shares of Common Stock already  registered.  Such
     Registration  Statement  shall  not  include  any  shares  other  than  the
     Registrable  Securities  and the  shares  specifically  listed on Exhibit 1
     without the consent of the Investor.



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<PAGE>


          (b) Payments by the Company.
 
          (i) If the Registration  Statement covering the Registrable Securities
     is not filed in proper  form  with the SEC on or  before  thirty  (30) days
     after the Closing Date (the "Required Filing Date"), then the Company shall
     pay the Initial Investor a late filing penalty  (collectively  "Late Filing
     Penalties"), (A) on the first day after the Required Filing Date, an amount
     equal to three (3%)  percent  of the  purchase  price  paid by the  Initial
     Investor for all  Preferred  Stock  (purchased  pursuant to the  Securities
     Purchase  Agreement) which is then outstanding (the "Purchase Price"),  and
     (B) on each subsequent monthly  anniversary of the Required Filing Date, if
     the  Registration  Statement has not been filed in proper form on or before
     such date, an amount equal to two (2%) percent of the Purchase Price.

          (ii) If the Registration Statement covering the Registrable Securities
     is not  effective  within the earlier of (A) five (5) days after  notice by
     the  SEC  that  it may be  declared  effective,  or (B)  ninety  (90)  days
     following  the  Closing  Date (the  "Required  Effective  Date"),  then the
     Company  shall pay the  Initial  Investor  a late  effective  date  penalty
     (collectively  "Late  Effective  Date  Penalties")  (sometimes  Late Filing
     Penalties  and Late  Effective  Penalties are  collectively  referred to as
     "Late Penalties"),  (I) on the first day after the Required Effective Date,
     an amount equal to three (3%) percent of the Purchase  Price,  (II) on each
     subsequent  monthly  anniversary  of the Required  Effective  Date,  if the
     Registration  Statement has not been  declared  effective on or before such
     date, an amount equal to two (2%) percent of the Purchase Price.

          (iii) By way of  illustration  and not in limitation of the foregoing,
     assuming a Closing  Date of August 3 (X) if the  Registration  Statement is
     timely filed but is not declared effective until January 15, 1999 (assuming
     for the purpose of this  example that the SEC has not  previously  provided
     notice that it may be declared  effective),  the aggregate  Late  Effective
     Date Penalty  will equal seven (7%)  percent of the  Purchase  Price (3% on
     November 2, the 91st day after the Closing Date,  plus 2% on December 1 and
     January  1), or (Y) if the  Registration  is filed on October 10 and is not
     declared  effective  until  November 15  (assuming  for the purpose of this
     example  that the SEC has not  previously  provided  notice  that it may be
     declared effective), the aggregate Late Filing Penalty will equal five (5%)
     percent of the  Purchase  Price (3% on  September 3, the 31st day after the
     Closing Date,  plus 2% on October 2), and the aggregate Late Effective Date
     Penalty will equal three (3%) percent of the Purchase Price (3% on November
     2, the 91st day after the Closing Date).

          (iv)  Additionally,  if (A) the  Registration  Statement  is not filed
     within sixty (60) days from the Closing Date or (B) the Required  Effective
     Date is greater than one hundred  fifty (150) days after the Closing  Date,
     or (C) the  effectiveness of the  Registration  Statement is not maintained
     during the Registration  Period as hereinafter  defined,  Purchaser may, at
     its  option,  require the  Company to redeem the  Preferred  Stock in full,
     within three (3) days, in cash, in accordance  with Section  4(i)(y) of the
     Securities Purchase Agreement.

          (v) Late  Penalties  will be payable to the Investor by the Company in
     cash or other immediately  available funds on the date such Late Penalty is
     incurred.



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<PAGE>

          (vi) The parties acknowledge that the damages which may be incurred by
     the  Investor if the  Registration  Statement  is not filed by the Required
     Filing  Date  or if  the  Registration  Statement  has  not  been  declared
     effective by the Required  Registration Date may be difficult to ascertain.
     The parties agree that the Late Penalties  represent a reasonable  estimate
     on the part of the parties, as of the date of this Agreement, of the amount
     of such damages.  The payment of the Late  Penalties to the Investor  shall
     not limit the Investor's  other rights and remedies  hereunder or under any
     other document entered into in connection herewith.

          (vii)  Notwithstanding  the  foregoing,  the  amounts  payable  by the
     Company  pursuant to this provision  shall not be payable to the extent any
     delay in the effectiveness of the Registration  Statement occurs because of
     an act of, or a failure to act or to act timely by the Initial  Investor or
     its  counsel  if the  Company  timely  forwards  to  counsel  any  required
     documents  or in the event all of the  Registrable  Securities  may be sold
     pursuant to Rule 144 or another available exemption under the Act.

          3. Obligations of the Company.  In connection with the registration of
     the Registrable Securities, the Company shall do each of the following.

          (a) Prepare  promptly,  and file with the SEC by the  Required  Filing
     Date, a Registration  Statement with respect to not less than the number of
     Registrable  Securities  provided in Section 2(a) above, and thereafter use
     commercially  reasonable  efforts  to  cause  each  Registration  Statement
     relating to  Registrable  Securities  to become  effective  by the Required
     Effective Date and keep the Registration  Statement  effective at all times
     until the earliest (the "Registration  Period") of (i) the date that is two
     (2) years after the Closing Date, (ii) the date when the Investors may sell
     all Registrable  Securities  under Rule 144 or (iii) the date the Investors
     no  longer  own  any  of the  Registrable  Securities,  which  Registration
     Statement (including any amendments or supplements thereto and prospectuses
     contained  therein)  shall not contain any untrue  statement  of a material
     fact or omit to state a  material  fact  required  to be stated  therein or
     necessary to make the statements  therein, in light of the circumstances in
     which they were made, not misleading;

          (b)  Prepare  and  file  with  the  SEC  such  amendments   (including
     post-effective  amendments) and supplements to the  Registration  Statement
     and the prospectus  used in connection with the  Registration  Statement as
     may be necessary to keep the Registration effective at all times during the
     Registration Period, and, during the Registration  Period,  comply with the
     provisions of the  Securities  Act with respect to the  disposition  of all
     Registrable Securities of the Company covered by the Registration Statement
     until such time as all of such Registrable Securities have been disposed of
     in accordance  with the intended  methods of  disposition  by the seller or
     sellers thereof as set forth in the Registration Statement;

          (c) The Company  shall permit a single firm of counsel  designated  by
     the  Initial  Investors  to  review  the  Registration  Statement  and  all
     amendments  and  supplements  thereto a reasonable  period of time (but not
     less than three (3) business  days) prior to their filing with the SEC, and
     not file any document in a form to which such counsel reasonably objects.



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<PAGE>


          (d) Notify the Holders of  Registrable  Securities  to be sold,  their
     counsel and any  managing  underwriters  immediately  (and,  in the case of
     (i)(A)  below,  not less than five (5) days prior to such  filing)  and (if
     requested by any such Person)  confirm such notice in writing no later than
     one (1) Business  Day  following  the day (i)(A) when a  Prospectus  or any
     Prospectus  supplement  or  post-effective  amendment  to the  Registration
     Statement  is proposed  to be filed;  (B)  whenever  the SEC  notifies  the
     Company  whether there will be a "review" of such  Registration  Statement;
     (C)  whenever  the  Company  receives  (or  representatives  of the Company
     receive on its behalf) any oral or written comments from the SEC in respect
     of a  Registration  Statement  (copies  or,  in the case of oral  comments,
     summaries of such  comments  shall be promptly  furnished by the Company to
     the  Holders);  and (D) with respect to the  Registration  Statement or any
     post-effective  amendment,  when the same has become effective; (ii) of any
     request by the SEC or any other Federal or state governmental authority for
     amendments or  supplements to the  Registration  Statement or Prospectus or
     for  additional  information;  (iii) of the issuance by the SEC of any stop
     order suspending the effectiveness of the Registration  Statement  covering
     any  or  all  of  the  Registrable  Securities  or  the  initiation  of any
     Proceedings   for   that   purpose;   (iv)  if  at  any  time  any  of  the
     representations  or  warranties  of the Company  contained in any agreement
     (including any  underwriting  agreement)  contemplated  hereby ceases to be
     true and  correct  in all  material  respects;  (v) of the  receipt  by the
     Company  of  any  notification  with  respect  to  the  suspension  of  the
     qualification  or exemption from  qualification  of any of the  Registrable
     Securities for sale in any  jurisdiction,  or the initiation or threatening
     of any Proceeding for such purpose; and (vi) of the occurrence of any event
     that to the best  knowledge of the Company makes any statement  made in the
     Registration Statement or Prospectus or any document incorporated or deemed
     to be incorporated  therein by reference  untrue in any material respect or
     that requires any revisions to the  Registration  Statement,  Prospectus or
     other documents so that, in the case of the  Registration  Statement or the
     Prospectus, as the case may be, it will not contain any untrue statement of
     a material  fact or omit to state any material  fact  required to be stated
     therein  or  necessary  to make  the  statements  therein,  in light of the
     circumstances under which they were made, not misleading.  In addition, the
     Company  shall  furnish the Holders  with  copies of all  intended  written
     responses to the comments  contemplated  in clause (C) of this Section 3(d)
     not  later  than one (1)  Business  Day in  advance  of the  filing of such
     responses  with the SEC so that the Holders shall have the  opportunity  to
     comment thereon. 

          (e) Furnish to each Investor whose Registrable Securities are included
     in the  Registration  Statement  and its legal  counsel  identified  to the
     Company, (i) promptly after the same is prepared and publicly  distributed,
     filed  with  the  SEC,  or  received  by the  Company,  one (1) copy of the
     Registration  Statement,  each  preliminary  Prospectus  (as defined in the
     Securities Act) and Prospectus,  and each amendment or supplement  thereto,
     and (ii) such  number of copies of a  Prospectus,  and all  amendments  and
     supplements  thereto  and  such  other  documents,  as  such  Investor  may
     reasonably   request  in  order  to  facilitate  the   disposition  of  the
     Registrable Securities owned by such Investor;

          (f) As promptly as  practicable  after  becoming  aware of such event,
     notify each Investor of the happening of any event of which the Company has
     knowledge, as a result of which the Prospectus included in the Registration
     Statement,  as then in effect,  includes an untrue  statement of a material
     fact or omits to state a material  fact  required  to be stated  therein or
     necessary to make the  statements  therein,  in light of the  circumstances
     under  which  they were  made,  not  misleading,  and use its best  efforts
     promptly to prepare a supplement or amendment to the Registration Statement
     or other  appropriate  filing with the SEC to correct such untrue statement
     or omission, and deliver a number of copies of such supplement or amendment
     to each Investor as such Investor may reasonably request;



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<PAGE>


          (g) As promptly as  practicable  after  becoming  aware of such event,
     notify each Investor who holds  Registrable  Securities  being sold (or, in
     the event of an underwritten  offering,  the managing  underwriters) of the
     issuance  by the SEC of any  notice of  effectiveness  or any stop order or
     other suspension of the effectiveness of the Registration  Statement at the
     earliest possible time;

          (h) Notwithstanding the foregoing, if at any time or from time to time
     after the date of effectiveness of the Registration Statement,  the Company
     notifies the Investors in writing of the existence of a Potential  Material
     Event, the Investors shall not offer or sell any Registrable Securities, or
     engage in any other  transaction  involving or relating to the  Registrable
     Securities,  from  the time of the  giving  of  notice  with  respect  to a
     Potential  Material Event until such Investor  receives written notice from
     the Company that such Potential Material Event either has been disclosed to
     the public or no longer constitutes a Potential  Material Event;  provided,
     however,  that the Company may not so suspend the right to such  holders of
     Registrable  Securities  for more  than two ten  (10)  day  periods  in the
     aggregate during any 12-month period ("Suspension  Period") with at least a
     ten (10) business day interval between such periods, during the periods the
     Registration Statement is required to be in effect;

          (i) Maintain  NASDAQ/National  Market  authorization and quotation for
     such  Registrable  Securities and,  without  limiting the generality of the
     foregoing,  to arrange for at least two market  makers to register with the
     National  Association  of Securities  Dealers,  Inc.  ("NASD") as such with
     respect to such Registrable Securities;

          (j)  Provide a  transfer  agent and  registrar,  which may be a single
     entity, for the Registrable Securities not later than the effective date of
     the Registration Statement;

          (k) Cooperate with the Investors who hold Registrable  Securities (or,
     subject to receipt by the Company of appropriate  notice and documentation,
     as may be required by the Securities Purchase Agreement, the Certificate of
     Designations or this Agreement,  securities  convertible  into  Registrable
     Securities) being offered to facilitate the timely preparation and delivery
     of certificates  for the Registrable  Securities to be offered  pursuant to
     the Registration Statement and enable such certificates for the Registrable
     Securities  to be in such  denominations  or amounts as the case may be, as
     the Investors may reasonably  request,  and, within three (3) business days
     after a Registration  Statement  which includes  Registrable  Securities is
     ordered  effective by the SEC, the Company shall  deliver,  and shall cause
     legal counsel selected by the Company to deliver, to the transfer agent for
     the Registrable  Securities (with copies to the Investors whose Registrable
     Securities  or  securities  convertible  into  Registrable  Securities  are
     included in such  Registration  Statement) an appropriate  instruction  and
     opinion  of  such  counsel;   provided,   however,  that  nothing  in  this
     subparagraph  (j) shall be deemed to waive any of the provisions  regarding
     the conditions or method of conversion of Preferred Stock into  Registrable
     Securities; and



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<PAGE>


          (l) Take all  other  reasonable  actions  necessary  to  expedite  and
     facilitate  disposition  by  the  Investor  of the  Registrable  Securities
     pursuant to the Registration Statement.

          4.  Obligations of the Investors.  In connection with the registration
     of the  Registrable  Securities,  the  Investors  shall have the  following
     obligations:

          (a) It  shall  be a  condition  precedent  to the  obligations  of the
     Company to  complete  the  Registration  pursuant  to this  Agreement  with
     respect to the  Registrable  Securities of a particular  Investor that such
     Investor shall furnish to the Company such  information  regarding  itself,
     the  Registrable  Securities  held  by  it,  and  the  intended  method  of
     disposition  of  the  Registrable  Securities  held  by  it,  as  shall  be
     reasonably   required  to  effect  the  Registration  of  such  Registrable
     Securities  and  shall  execute  such  documents  in  connection  with such
     Registration as the Company may reasonably  request. At least five (5) days
     prior to the first anticipated  filing date of the Registration  Statement,
     the Company  shall  notify each  Investor  of the  information  the Company
     requires  from each such  Investor (the  "Requested  Information")  if such
     Investor  elects  to have  any of such  Investor's  Registrable  Securities
     included in the Registration  Statement.  If at least two (2) business days
     prior to the  filing  date  the  Company  has not  received  the  Requested
     Information  from an  Investor  (a  "Non-Responsive  Investor"),  then  the
     Company may file the Registration  Statement without including  Registrable
     Securities of such Non-Responsive Investor;

          (b) Each Investor,  by such  Investor's  acceptance of the Registrable
     Securities, agrees to cooperate with the Company as reasonably requested by
     the  Company  in  connection   with  the  preparation  and  filing  of  the
     Registration  Statement  hereunder,  unless such  Investor has notified the
     Company in  writing  of such  Investor's  election  to exclude  all of such
     Investor's Registrable Securities from the Registration Statement; and

          (c) Each  Investor  agrees  that,  upon receipt of any notice from the
     Company of the happening of any event of the kind described in Section 3(e)
     or 3(f), above, such Investor will immediately  discontinue  disposition of
     Registrable Securities pursuant to the Registration Statement covering such
     Registrable  Securities until such Investor's  receipt of the copies of the
     supplemented  or amended  Prospectus  contemplated  by Section 3(e) or 3(f)
     and, if so directed by the  Company,  such  Investor  shall  deliver to the
     Company (at the  expense of the  Company)  or destroy  (and  deliver to the
     Company  a  certificate  of  destruction)  all  copies  in such  Investor's
     possession,  of the Prospectus covering such Registrable Securities current
     at the time of receipt of such notice.

          5. Expenses of Registration.  (a) All reasonable  expenses (other than
     underwriting  discounts  and  commissions  of, and fees of counsel for, the
     Investor)   incurred  in   connection   with   Registrations,   filings  or
     qualifications  pursuant to Section 3, including,  without limitation,  all
     Registration,  listing,  and qualifications  fees,  printers and accounting
     fees, the fees and disbursements of counsel for the Company, shall be borne
     by the Company.


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<PAGE>


          (b) Neither the  Company  nor any of its  subsidiaries  has, as of the
     date hereof, nor shall the Company nor any of its subsidiaries, on or after
     the date of this  Agreement,  enter into any agreement  with respect to its
     securities  that conflicts with the rights granted to the Investors in this
     Agreement or otherwise conflicts with the provisions hereof.  Except as and
     to the extent  specifically  disclosed  in any of its filings with the SEC,
     neither the Company nor any of its subsidiaries has previously entered into
     any agreement  granting any Registration  rights with respect to any of its
     securities to any Person. Without limiting the generality of the foregoing,
     without the written consent of the Investors holding a majority of the then
     outstanding  Registrable  Securities,  the  Company  shall not grant to any
     person the right to request the Company to register any  securities  of the
     Company under the  Securities  Act unless the rights so granted are subject
     in all  respects  to the prior  rights in full of the  Investors  set forth
     herein,  and are  not  otherwise  in  conflict  or  inconsistent  with  the
     provisions of this Agreement.
 
          6.  Indemnification.  In the  event  any  Registrable  Securities  are
     included in a Registration Statement under this Agreement:

          (a) To the extent  permitted by law, the Company  will  indemnify  and
     hold  harmless  each Investor who holds such  Registrable  Securities,  the
     directors,  if any,  of  such  Investor,  the  officers,  if  any,  of such
     Investor, each person, if any, who controls any Investor within the meaning
     of the Securities  Act or the  Securities  Exchange Act of 1934, as amended
     (the  "Exchange  Act")  (each,  an  "Indemnified  Person"  or  "Indemnified
     Party"),  against  any losses,  claims,  damages,  liabilities  or expenses
     (joint or several) incurred  (collectively,  "Claims") to which any of them
     may become subject under the Securities Act, the Exchange Act or otherwise,
     insofar as such Claims (or actions or  proceedings,  whether  commenced  or
     threatened,  in respect  thereof) arise out of or are based upon any of the
     following   statements,   omissions  or  violations  in  the   Registration
     Statement,  or any  post-effective  amendment  thereof,  or any  Prospectus
     included therein: (i) any untrue statement or alleged untrue statement of a
     material fact contained in the Registration Statement or any post-effective
     amendment  thereof or the omission or alleged  omission to state  therein a
     material  fact  required  to be stated  therein  or  necessary  to make the
     statements  therein not  misleading,  (ii) any untrue  statement or alleged
     untrue  statement of a material fact contained in the final  Prospectus (as
     amended or  supplemented,  if the Company  files any  amendment  thereof or
     supplement  thereto  with the SEC) or the  omission or alleged  omission to
     state  therein any  material  fact  necessary to make the  statements  made
     therein,  in light of the circumstances  under which the statements therein
     were made,  not  misleading or (iii) any violation or alleged  violation by
     the Company of the Securities  Act, the Exchange Act, any state  securities
     law or any rule or regulation under the Securities Act, the Exchange Act or
     any state securities law (the matters in the foregoing  clauses (i) through
     (iii)  being,  collectively,  "Violations").  Subject to clause (b) of this
     Section 6, the Company  shall  reimburse  the  Investors,  promptly as such
     expenses are incurred and are due and payable,  for any legal fees or other
     reasonable  expenses  incurred by them in connection with  investigating or
     defending  any  such  Claim.   Notwithstanding  anything  to  the  contrary
     contained herein, the  indemnification  agreement contained in this Section
     6(a)  shall  not  (I)  apply  to a Claim  arising  out of or  based  upon a
     Violation which occurs in reliance upon and in conformity with  information
     furnished  in  writing to the  Company  by or on behalf of any  Indemnified
     Person  expressly  for  use  in  connection  with  the  preparation  of the
     Registration Statement or any such amendment thereof or supplement thereto,
     if such  prospectus  was timely made  available by the Company  pursuant to
     Section 3(c) hereof; (II) be available to the extent such Claim is based on
     a  failure  of the  Investor  to  deliver  or  cause  to be  delivered  the
     prospectus made available by the Company; or (III) apply to amounts paid in
     settlement of any Claim if such  settlement  is effected  without the prior
     written  consent of the Company,  which consent  shall not be  unreasonably
     withheld.  Each  Investor  will  indemnify  the Company  and its  officers,
     directors  and agents  against  any claims  arising  out of or based upon a
     Violation which occurs in reliance upon and in conformity with  information
     furnished  in writing  to the  Company,  by or on behalf of such  Investor,
     expressly for use in connection  with the  preparation of the  Registration
     Statement,  subject to such limitations and conditions as are applicable to
     the  Indemnification  provided  by the  Company  to this  Section  6.  Such
     indemnity  shall  remain  in  full  force  and  effect  regardless  of  any
     investigation  made by or on behalf  of the  Indemnified  Person  and shall
     survive  the  transfer  of the  Registrable  Securities  by  the  Investors
     pursuant to Section 9.



                                       8
<PAGE>


          (b) Promptly  after receipt by an  Indemnified  Person or  Indemnified
     Party  under  this  Section 6 of notice of the  commencement  of any action
     (including any governmental action), such Indemnified Person or Indemnified
     Party  shall,  if a Claim in  respect  thereof  is to be made  against  the
     Company  under this Section 6,  deliver to the Company a written  notice of
     the  commencement   thereof  and  the  Company  shall  have  the  right  to
     participate in, and, to the extent the Company so desires, jointly with any
     other person  similarly  noticed,  to assume control of the defense thereof
     with  counsel  mutually  satisfactory  to the Company  and the  Indemnified
     Person  or the  Indemnified  Party,  as the case  may be.  In case any such
     action is brought against any Indemnified  Person or Indemnified Party, and
     it notifies the Company of the  commencement  thereof,  the Company will be
     entitled to  participate  in, and, to the extent that it may wish,  jointly
     with any other  person  similarly  notified,  assume the  defense  thereof,
     subject to the  provisions  herein stated and after notice from the Company
     to such  Indemnified  Person or  Indemnified  Party of its  election  so to
     assume  the  defense  thereof,  the  Company  will  not be  liable  to such
     Indemnified  Person or Indemnified Party under this Section 6 for any legal
     or other reasonable  out-of-pocket  expenses  subsequently incurred by such
     Indemnified  Person or  Indemnified  Party in  connection  with the defense
     thereof other than reasonable  costs of  investigation,  unless the Company
     shall not pursue the action of its final conclusion. The Indemnified Person
     or Indemnified Party shall have the right to employ separate counsel in any
     such action and to  participate  in the defense  thereof,  but the fees and
     reasonable  out-of-pocket  expenses  of such  counsel  shall  not be at the
     expense of the Company if the Company has assumed the defense of the action
     with  counsel   reasonably   satisfactory  to  the  Indemnified  Person  or
     Indemnified  Party.  The failure to deliver  written  notice to the Company
     within a reasonable  time of the  commencement of any such action shall not
     relieve  the  Company  of  any  liability  to  the  Indemnified  Person  or
     Indemnified  Party  under  this  Section 6,  except to the extent  that the
     Company  is  prejudiced   in  its  ability  to  defend  such  action.   The
     indemnification  required  by  this  Section  6 shall  be made by  periodic
     payments of the amount  thereof during the course of the  investigation  or
     defense, as such expense,  loss, damage or liability is incurred and is due
     and payable.

          7. Contribution.  To the extent any  indemnification by the Company is
     prohibited  or  limited  by law,  the  Company  agrees to make the  maximum
     contribution  with  respect to any amounts for which it would  otherwise be
     liable under Section 6 to the fullest  extent  permitted by law;  provided,
     however,  that (a) no contribution shall be made under  circumstances where
     the Company would not have been liable for indemnification  under the fault
     standards set forth in Section 6; (b) no seller of  Registrable  Securities
     guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
     of the Securities Act) shall be entitled to contribution from any seller of
     Registrable   Securities   who  was   not   guilty   of   such   fraudulent
     misrepresentation;  and  (c)  contribution  by any  seller  of  Registrable
     Securities  shall be  limited  in  amount  to the net  amount  of  proceeds
     received by such seller from the sale of such Registrable Securities.



                                       9
<PAGE>


          8. Reports under Exchange Act. With a view to making  available to the
     Investors the benefits of Rule 144 promulgated  under the Securities Act or
     any other similar rule or regulation of the SEC that may at any time permit
     the  Investors  to sell  securities  of the  Company to the public  without
     registration ("Rule 144"), the Company agrees to:

          (a) make and keep  public  information  available,  as those terms are
     understood and defined in Rule 144;
 
          (b) use its best  efforts to file with the SEC in a timely  manner all
     reports and other  documents  required of the Company under the  Securities
     Act and the Exchange Act; and

          (c) furnish to each Investor so long as such Investor owns Registrable
     Securities,  promptly upon request,  (i) a written statement by the Company
     that it has  complied  with the  reporting  requirements  of Rule 144,  the
     Securities  Act and the Exchange Act, (ii) a copy of the most recent annual
     or quarterly  report of the Company and such other reports and documents so
     filed by the Company and (iii) such other  information as may be reasonably
     requested to permit the Investors to sell such securities  pursuant to Rule
     144 without registration.

          9.  Assignment  of the  Registration  Rights.  The  rights to have the
     Company register Registrable Securities pursuant to this Agreement shall be
     automatically   assigned  by  the  Investors  to  any   transferee  of  the
     Registrable Securities (or all or any portion of any Preferred Stock of the
     Company which is convertible into such  securities)  permitted or allowable
     by the terms of the Securities Purchase Agreement only if: (a) the Investor
     agrees in writing  with the  transferee  or assignee to assign such rights,
     and a copy  of  such  agreement  is  furnished  to  the  Company  within  a
     reasonable  time  after  such  assignment,  (b) the  Company  is,  within a
     reasonable  time after such transfer or assignment,  furnished with written
     notice of (i) the name and address of such  transferee or assignee and (ii)
     the  securities  with respect to which such  registration  rights are being
     transferred  or  assigned,  (c)  immediately  following  such  transfer  or
     assignment the further  disposition of such securities by the transferee or
     assignee  is  restricted  under the  Securities  Act and  applicable  state
     securities  laws,  and (d) at or before the time the Company  received  the
     written notice  contemplated  by clause (b) of this sentence the transferee
     or assignee  agrees in writing  with or in favor of the Company to be bound
     by all of the  provisions  contained  herein,  a copy  of  which  shall  be
     provided to the Company.  The copies  referred to in clauses (a) and (d) of
     the  immediately  preceding  sentence  may be  redacted  to delete  certain
     financial and other details of the transaction between the Investor and the
     transferee  if the same is included  in the  document to be provided to the
     Company.  In the  event of any  delay in  filing  or  effectiveness  of the
     Registration  Statement as a result of such  assignment,  the Company shall
     not be liable for any damages  arising from such delay, or the payments set
     forth in Section 2(b) hereof.



                                       10
<PAGE>

          10. Amendment of Registration  Rights. Any provision of this Agreement
     may be amended and the observance  thereof may be waived (either  generally
     or in a particular  instance and either  retroactively  or  prospectively),
     only with the  written  consent of the Company  and  Investors  who hold an
     eighty (80%) percent interest of the Registrable Securities.  Any amendment
     or waiver effected in accordance with this Section 10 shall be binding upon
     each Investor and the Company.

          11. Miscellaneous.

          (a) A  person  or  entity  is  deemed  to be a holder  of  Registrable
     Securities  whenever such person or entity owns of record such  Registrable
     Securities.  If the Company receives conflicting  instructions,  notices or
     elections  from two or more  persons or entities  with  respect to the same
     Registrable   Securities,   the  Company   shall  act  upon  the  basis  of
     instructions, notice or election received from the registered owner of such
     Registrable Securities.

          (b) Notices  required or permitted to be given  hereunder  shall be in
     writing  and shall be  deemed  to be  sufficiently  given  when  personally
     delivered (by hand, by courier,  by telephone line facsimile  transmission,
     receipt  confirmed,  or other  means)  or sent by  certified  mail,  return
     receipt requested,  properly addressed and with proper postage pre-paid (i)
     if to the Company,  IDM ENVIRONMENTAL  CORP., 396 Whitehead  Avenue,  South
     River, New Jersey 08882 ATTN: Michael B. Killeen,  Chief Financial Officer,
     Telecopier No.: (732)  390-9545;  (ii) if to the Initial  Investor,  at the
     address set forth under its name in the Securities Purchase Agreement, with
     a copy to Michael  Rosenblum,  Esq., 1875 Century Park East, Suite 700, Los
     Angeles,  California,  Telecopier No.: (310) 286-3010;  and (iii) if to any
     other  Investor,  at such address as such  Investor  shall have provided in
     writing  to the  Company,  or at such  other  address  as each  such  party
     furnishes by notice given in accordance with this Section 11(b),  and shall
     be effective,  when personally delivered, upon receipt and, when so sent by
     registered or certified mail, four (4) calendar days after deposit with the
     United States Postal Service.

          (c)  Failure of any party to exercise  any right or remedy  under this
     Agreement or  otherwise,  or delay by a party in  exercising  such right or
     remedy, shall not operate as a waiver thereof.

          (d) This Agreement  shall be governed by and interpreted in accordance
     with the  laws of the  State  of New  Jersey  for  contracts  to be  wholly
     performed in such state and without giving effect to the principles thereof
     regarding  the  conflict  of  laws.  Each of the  parties  consents  to the
     jurisdiction  of the federal courts whose  districts  encompass any part of
     the City of New York or the state  courts of the State of New York  sitting
     in the City of New York in connection  with any dispute  arising under this
     Agreement and hereby waives,  to the maximum  extent  permitted by law, any
     objection,  including any objection  based on forum non  coveniens,  to the
     bringing of any such proceeding in such jurisdictions.


                                       11
<PAGE>


          (e)  If  any  provision  of  this   Agreement   shall  be  invalid  or
     unenforceable  in any  jurisdiction,  such  invalidity or  unenforceability
     shall not affect the validity or  enforceability  of the  remainder of this
     Agreement or the validity or  enforceability of this Agreement in any other
     jurisdiction.

          (f) Subject to the  requirements of Section 9  hereof,  this Agreement
     shall  inure to the  benefit  of and be  binding  upon the  successors  and
     assigns of each of the parties hereto.

          (g) All pronouns and any  variations  thereof refer to the  masculine,
     feminine or neuter, singular or plural, as the context may require.

          (h) The headings in this  Agreement are for  convenience  of reference
     only and shall not limit or otherwise affect the meaning thereof.

          (i) This Agreement may be executed in one or more  counterparts,  each
     of which shall be deemed an original but all of which shall  constitute one
     and the same agreement.  This Agreement,  once executed by a party,  may be
     delivered  to  the  other  party  hereto  by   telephone   line   facsimile
     transmission of a copy of this Agreement bearing the signature of the party
     so delivering this Agreement.

          (j) The  Company  acknowledges  that any  failure  by the  Company  to
     perform its  obligations  under  Section 3(a) hereof,  or any delay in such
     performance  could result in loss to the Investors,  and the Company agrees
     that, in addition to any other  liability the Company may have by reason of
     such failure or delay,  the Company shall be liable for all direct  damages
     caused by any such failure or delay, unless the same is the result of force
     majeure.  Neither party shall be liable for consequential damages. 

          (k) This Agreement  constitutes the entire agreement among the parties
     hereto  with  respect  to  the  subject   matter   hereof.   There  are  no
     restrictions,  promises,  warranties or undertakings,  other than those set
     forth or referred to herein. This Agreement supersedes all prior agreements
     and  understandings  among the parties  hereto with  respect to the subject
     matter  hereof.  This  Agreement  may be amended only by an  instrument  in
     writing signed by the party to be charged with enforcement thereof.


                                       12
<PAGE>


     IN WITNESS  WHEREOF,  the parties  have caused  this  Agreement  to be duly
executed by their  respective  officers  thereunto duly authorized as of the day
and year first above written.

                                  IDM ENVIRONMENTAL CORP.


 
                                  By: /s/ Joel Freedman
                                     -----------------------------------
                                      Joel A. Freedman

                                  Title:  President
                                        --------------------------------
 
 
                                   THE ISOSCELES FUND LIMITED


 
                                   By:
                                      ----------------------------------
                                   Name:Intercaribbean Services (Bahamas) Ltd.
                                   Title: Director

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