Hudson Technologies, Inc. (HDSN, NASDAQ)
Industry: Specialty Chemicals
Annual report, fiscal year 2015


Morningstar \( ^{®} \)  Document Research \( ^{SM} \) 

FORM10-K

HUDSON TECHNOLOGIES INC /NY-HDSN

Filed: March 11, 2016 (period: December 31, 2015)

Annual report with a comprehensive overview of the company



# UNITED STATES
Securities and Exchange Commission
Washington, D.C. 20549

Form 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

OR

☐ TRANSITION REPORT PURSUANT TO 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.

(Exact name of registrant as specified in its charter)

New York
(State or Other Jurisdiction of Incorporation or Organization)

13-3641539
(I.R.S. Employer Identification No.)

P.O. Box 1541
One Blue Hill Plaza
Pearl River, New York
(Address of Principal Executive Offices)

Registrant’s telephone number, including area code

10965
(Zip Code)

(845) 735-6000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Name of each Exchange on which Registered

Common stock, $.01 par value

The NASDAQ Stock Market LLC (NASDAQ Capital Market)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act ☐ Yes ☑ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act ☐ Yes ☑ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ( \( §232.405 \)  of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ (Do not check if a smaller reporting company)

Smaller reporting company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☑ No

The aggregate market value of registrant’s common stock held by non-affiliates at June 30, 2015 was approximately $91,785,154. As of March 2, 2016 there were 32,848,617 shares of the registrant’s common stock outstanding.

Documents incorporated by reference: None






## Hudson Technologies, Inc.

Index

<table><tr><td>Part</td><td>Item</td><td>Page</td></tr><tr><td rowspan="5">Part I.</td><td>Item 1 -</td><td>3</td></tr><tr><td>Item 1A -</td><td>8</td></tr><tr><td>Item 1B -</td><td>11</td></tr><tr><td>Item 2 -</td><td>11</td></tr><tr><td>Item 3 -</td><td>12</td></tr><tr><td rowspan="2">Part II.</td><td>Item 4 -</td><td>12</td></tr><tr><td>Item 5 -</td><td>13</td></tr><tr><td rowspan="7">Part III.</td><td>Item 6 -</td><td>13</td></tr><tr><td>Item 7 -</td><td>13</td></tr><tr><td>Item 8 -</td><td>20</td></tr><tr><td>Item 9 -</td><td>20</td></tr><tr><td>Item 9A -</td><td>20</td></tr><tr><td>Item 9B -</td><td>23</td></tr><tr><td>Item 10 -</td><td>23</td></tr><tr><td rowspan="5">Part IV.</td><td>Item 11 -</td><td>25</td></tr><tr><td>Item 12 -</td><td>30</td></tr><tr><td>Item 13 -</td><td>32</td></tr><tr><td>Item 14 -</td><td>32</td></tr><tr><td>Item 15 -</td><td>34</td></tr><tr><td colspan="2">Signatures</td><td>57</td></tr></table>



## Part I

## Item 1. Business

## General

Hudson Technologies, Inc., incorporated under the laws of New York on January 11, 1991, is a refrigerant services company providing innovative solutions to recurring problems within the refrigeration industry. The Company's operations consist of one reportable segment. The Company's products and services are primarily used in commercial air conditioning, industrial processing and refrigeration systems, and include refrigerant and industrial gas sales, refrigerant management services consisting primarily of reclamation of refrigerants and RefrigerantSide \( ^{\circledR} \)  Services performed at a customer's site, consisting of system decontamination to remove moisture, oils and other contaminants. In addition, the Company's SmartEnergy OPS \( ^{TM} \)  service is a web-based real time continuous monitoring service applicable to a facility's refrigeration systems and other energy systems. The Company's Chiller Chemistry \( ^{\circledR} \)  and Chill Smart \( ^{\circledR} \)  services are also predictive and diagnostic service offerings. As a component of the Company's products and services, the Company also participates in the generation of carbon offset projects. The Company operates principally through its wholly-owned subsidiary, Hudson Technologies Company. Unless the context requires otherwise, references to the "Company", "Hudson", "we", "us", "our", or similar pronouns refer to Hudson Technologies, Inc. and its subsidiaries.

The Company's executive offices are located at One Blue Hill Plaza, Pearl River, New York and its telephone number is (845) 735-6000.

## Industry Background

The Company participates in an industry that is highly regulated, and changes in the regulations affecting our business could affect our operating results. Currently the Company purchases virgin, hydro chlorofluorocarbon (“HCFC”) and hydro fluoro carbon (“HFC”) refrigerants and reclaimable, primarily HCFC, HFC and chlorofluorocarbon (“CFC”) refrigerants from suppliers and its customers. Effective January 1, 1996, the Clean Air Act, as amended (the “Act”) prohibited the production of virgin CFC refrigerants and limited the production of virgin HCFC refrigerants. Effective January 2004, the Act further limited the production of virgin HCFC refrigerants and federal regulations were enacted which established production and consumption allowances for HCFC refrigerants and which imposed limitations on the importation of certain virgin HCFC refrigerants. Under the Act, production of certain virgin HCFC refrigerants is scheduled to be phased out during the period 2010 through 2020, and production of all virgin HCFC refrigerants is scheduled to be phased out by 2030. In April 2013, the Environmental Protection Agency (“EPA”) published a final rule providing for the production or importation of 63 million and 51 million pounds of HCFC-22 in 2013 and 2014, respectively. In October 2014, the EPA published a final rule providing further reductions in the production and consumption allowances for virgin HCFC refrigerants for the years 2015 through 2019 (the “Final Rule”). In the Final Rule, the EPA has established a linear annual phase down schedule for the production or importation of virgin HCFC-22 that started at approximately 22 million pounds in 2015 and reduces by approximately 4.5 million pounds each year and ends at zero in 2020.

HFC refrigerants are used as substitutes for CFC and HCFC refrigerants in certain applications. As a result of the increasing restrictions and limitations on the production and use of CFC and HCFC refrigerants, various segments of the air conditioning and refrigeration industry have been replacing or modifying equipment that utilize CFC and HCFC refrigerants and have been transitioning to equipment that utilize HFC refrigerants and hydrofluoro-olefins ("HFO"). HFC refrigerants are not ozone depleting chemicals and are not currently regulated under the Act. However, certain HFC refrigerants are highly weighted greenhouse gases that are believed to contribute to global warming and climate change and, as a result, are now subject to various state and federal regulations relating to the sale, use and emissions of HFC refrigerants. In addition, federal legislation has been proposed that, if enacted, would impose limitations on the production and importation of certain virgin HFC refrigerants. The Company expects that HFC refrigerants eventually will be replaced by HFOs or other types of products with lower global warming potentials.

The Act, and the federal regulations enacted under authority of the Act, have mandated and/or promoted responsible use practices in the air conditioning and refrigeration industry, which are intended to minimize the release of refrigerants into the atmosphere and encourage the recovery and re-use of refrigerants. The Act prohibits the venting of CFC, HFC and HCFC refrigerants, and prohibits and/or phases down the production of CFC and HCFC refrigerants.

The Act also mandates the recovery of CFC and HCFC refrigerants and also promotes and encourages re-use and reclamation of CFC and HCFC refrigerants. Under the Act, owners, operators and companies servicing cooling equipment utilizing CFC and HCFC refrigerants are responsible for the integrity of the systems regardless of the refrigerant being used. In November 2015, the EPA published a proposed rule that, if enacted, will extend these requirements to HFCs and to certain other refrigerants that are approved by the EPA as alternatives for CFC and HCFC refrigerants.



## Products and Services

From its inception, the Company has sold refrigerants, and has provided refrigerant reclamation and refrigerant management services that are designed to recover and reuse refrigerants, thereby protecting the environment from release to the atmosphere and the corresponding ozone depletion and global warming impact. The reclamation process allows the refrigerant to be re-used thereby eliminating the need to destroy or manufacture additional refrigerant and eliminating the corresponding impact to the environment associated with the destruction and manufacturing. The Company believes it is the largest refrigerant reclaimer in the United States. Additionally, the Company has created alternative solutions to reactive and preventative maintenance procedures that are performed on commercial and industrial refrigeration systems. These services, known as RefrigerantSide \( ^{®} \)  Services, complement the Company's refrigerant sales and refrigerant reclamation and management services. The Company has also developed SmartEnergy OPS \( ^{TM} \)  that identify inefficiencies in the operation of air conditioning and refrigeration systems and assists companies to improve the energy efficiency of their systems and save operating costs and improve system reliability. In addition, the Company is pursuing potential opportunities for the creation and monetization of verified emission reductions.

## Refrigerant and Industrial Gas Sales

The Company sells reclaimed and virgin (new) refrigerants to a variety of customers in various segments of the air conditioning and refrigeration industry, and sells industrial gases to a variety of industry segments. The Company continues to sell reclaimed CFC based refrigerants, which are no longer manufactured. Virgin, non-CFC refrigerants, including HCFC and HFC refrigerants, are purchased by the Company from several suppliers and resold by the Company, typically at wholesale. Additionally, the Company regularly purchases used or contaminated refrigerants, some of which are CFC based, from many different sources, which refrigerants are then reclaimed using the Company's high speed proprietary reclamation equipment, its proprietary Zugibeast \( ^{®} \)  system, and then are resold by the Company.

## Refrigerant Management Services

The Company provides a complete offering of refrigerant management services, which primarily include reclamation of refrigerants, laboratory testing through the Company's laboratory, which has been certified by the Air Conditioning, Heating and Refrigeration Institute ("AHRI"), and banking (storage) services tailored to individual customer requirements. Hudson also separates "crossed" (i.e. commingled) refrigerants and provides re-usable cylinder refurbishment and hydrostatic testing services.

## RefrigerantSide \( ^{®} \)  Services

The Company provides decontamination and recovery services that are performed at a customer's site through the use of portable, high volume, high-speed proprietary equipment, including the patented Zugibeast \( ^{®} \)  system. Certain of these RefrigerantSide \( ^{®} \)  Services, which encompass system decontamination, and refrigerant recovery and reclamation are also proprietary and are covered by process patents.

In addition to the decontamination and recovery services previously described, the Company also provides predictive and diagnostic services for its customers. The Company offers diagnostic services that are intended to predict potential problems in air conditioning and refrigeration systems before they occur. The Company's Chiller Chemistry \( ^{®} \)  offering integrates several fluid tests of an operating system and the corresponding laboratory results into an engineering report providing its customers with an understanding of the current condition of the fluids, the cause for any abnormal findings and the potential consequences if the abnormal findings are not remediated. Fluid Chemistry \( ^{®} \) , an abbreviated version of the Company's Chiller Chemistry \( ^{®} \)  offering, is designed to quickly identify systems that require further examination.

The Company has also been awarded several US patents for its SmartEnergy OPS \( ^{TM} \) , which is a system for measuring, modifying and improving the efficiency of energy systems, including air conditioning and refrigeration systems, in industrial and commercial applications. This service is a web-based real time continuous monitoring service applicable to a facility's chiller plant systems. The SmartEnergy OPS \( ^{TM} \)  offering enables customers to monitor and improve their chiller plant performance and proactively identify and correct system inefficiencies. SmartEnergy OPS \( ^{TM} \)  is able to identify specific inefficiencies in the operation of chiller plant systems and, when used with Hudson's RefrigerantSide \( ^{®} \)  Services, can increase the efficiency of the operating systems thereby reducing energy usage and costs. Improving the system efficiency reduces power consumption thereby directly reducing  \( CO_{2} \)  emissions at the power plants or onsite. Lastly, the Company's ChillSmart \( ^{®} \)  offering, which combines the system optimization with the Company's Chiller Chemistry \( ^{®} \)  offering, provides a snapshot of a packaged chiller's operating efficiency and health. ChillSmart \( ^{®} \)  provides a very effective predictive maintenance tool and helps our customers to identify the operating chillers that cause higher operating costs.

The Company’s engineers who developed and support Smart Energy OPS \( ^{TM} \)  are recognized as Energy Experts and Qualified Best Practices Specialists by the United States Department of Energy (“DOE”) in the areas of Steam and Process Heating under the DOE “Best Practices” program, and are the Lead International Energy Experts for steam, chillers and refrigeration systems for the United Nations Industrial Development Organization (“UNIDO”). The Company’s staff have trained more than 4,000 industrial plant personnel in the US and internationally, and have developed and are currently delivering training curriculums in 12 different countries. The Company’s staff have completed more than 200 industrial ESAs in the US and internationally.



## Carbon Offset Projects

CFC refrigerants are ozone depleting substances and are also highly weighted greenhouse gases that contribute to global warming and climate change. The destruction of CFC refrigerants may be eligible for verified emission reductions that can be converted and monetized into carbon offset credits that may be traded in the emerging carbon offset markets. The Company is pursuing opportunities to acquire CFC refrigerants and is developing relationships within the emerging environmental markets in order to develop opportunities for the creation and monetization of verified emission reductions from the destruction of CFC refrigerants.

In October 2015, the American Carbon Registry (“ACR”) established a methodology to provide, among other things, a quantification framework for the creation of carbon offset credits for the use of certified reclaimed HFC refrigerants. The Company is pursuing opportunities to acquire HFC refrigerants and is developing relationships within the emerging environmental markets in order to develop opportunities for the creation and monetization of verified emission reductions from the reclamation of HFC refrigerants.

## Hudson's Network

Hudson operates from a network of facilities located in:

Pearl River, New York —Company headquarters and administrative offices
Nashville, Tennessee —Administrative offices

Champaign, Illinois —Reclamation and separation of refrigerants and cylinder refurbishment center; RefrigerantSide® Service depot

Nashville, Tennessee —Reclamation and separation of refrigerants and cylinder refurbishment center

Ontario, California —Reclamation and cylinder refurbishment center

Catano, Puerto Rico —Reclamation center and RefrigerantSide \( ^{®} \)  Service depot

Auburn, Washington —RefrigerantSide \( ^{®} \)  Service depot

Baton Rouge, Louisiana —RefrigerantSide \( ^{®} \)  Service depot

Charlotte, North Carolina —RefrigerantSide \( ^{®} \)  Service depot

Escondido, California —RefrigerantSide \( ^{®} \)  Service depot

Stony Point, New York —RefrigerantSide \( ^{®} \)  Service depot

Tulsa, Oklahoma —Energy and Carbon Services

Hampstead, New Hampshire —Telemarketing office

Pottsboro, Texas —Telemarketing office

## Strategic Alliances

The Company believes that the international market for refrigerant reclamation, sales and services is equal in size to the United States market for those sales and services. The Company has Alliances in Europe and South Africa, and over time, the Company expects to introduce its technology and offerings to several other markets around the world.

## Suppliers

The Company's financial performance and its ability to sell refrigerants is in part dependent on its ability to obtain sufficient quantities of virgin, non-CFC based refrigerants, and of reclaimable CFC and non-CFC based refrigerants from manufacturers, wholesalers, distributors, bulk gas brokers and from other sources within the air conditioning, refrigeration and automotive aftermarket industries, and on corresponding demand for refrigerants. The Company's refrigerant sales include CFC based refrigerants, which are no longer manufactured. Additionally, the Company's refrigerant sales include non-CFC based refrigerants, including HCFC and HFC refrigerants, which are the most-widely used refrigerants. Effective January 1, 1996, the Act limited the production of virgin HCFC refrigerants, which production was further limited in January 2004. Federal regulations enacted in January 2004 established production and consumption allowances for HCFCs and imposed limitations on the importation of certain virgin HCFC refrigerants. Under the Act, production of certain virgin HCFC refrigerants is scheduled to be phased out during the period 2010 through 2020 and production of all virgin HCFC refrigerants is scheduled to be phased out by 2030. In October 2014, the EPA published the Final Rule providing further reductions in the production and consumption allowances for virgin HCFC refrigerants for the years 2015 through 2019. In the Final Rule, the EPA has established a linear annual phase down schedule for the production or importation of virgin HCFC-22 that will start at approximately 22 million pounds in 2015 and reduce by approximately 4.5 million pounds each year and end at zero in 2020.



## 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, 2015, two customers each accounted for 10% or more of the Company’s revenues and, in the aggregate these two customers accounted for 33% of the Company’s revenues. At December 31, 2015, there were no outstanding receivables from these customers.

For the year ended December 31, 2014, two customers each accounted for 10% or more of the Company’s revenues and, in the aggregate these two customers accounted for 25% of the Company’s revenues. At December 31, 2014, there were $688,000 in outstanding receivables from these customers.

## 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 the internet through the Company's website (www.hudsontech.com). Information on the Company's website is not part of this report.

The Company's sales personnel are compensated on a combination of a base salary and commission. The Company's executive officers devote significant time and effort to customer relationships.

## Competition

The Company competes primarily on the basis of the performance of its proprietary high volume, high-speed equipment used in its operations, the breadth of services offered by the Company, including proprietary RefrigerantSide \( ^{\circledR} \)  Services and other on-site services, and price, particularly with respect to refrigerant sales.

The Company competes with numerous regional and national companies that market reclaimed and virgin refrigerants and provide refrigerant reclamation services. Certain of these competitors possess greater financial, marketing, distribution and other resources for the sale and distribution of refrigerants than the Company and, in some instances, serve a more extensive geographic area than the Company.

Hudson's RefrigerantSide \( ^{\circledR} \)  Services provide new and innovative solutions to certain problems within the refrigeration industry and, as such, the demand and market acceptance for these services are subject to uncertainty. Competition for these services primarily consists of traditional methods of solving the industry's problems. The Company's marketing strategy is to educate the marketplace that its alternative solutions are available and that RefrigerantSide \( ^{\circledR} \)  Services are superior to traditional methods.

## Insurance

The Company carries insurance coverage that it 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 $11,000,000 per occurrence and $12,000,000 in the aggregate. The Company attempts to operate in a professional and prudent manner and to reduce potential liability risks through specific risk management efforts, including ongoing employee training.

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 held 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 $10,000,000 per occurrence, and $10,000,000 annual aggregate, for events occurring subsequent to November 1996.

## Government Regulation

The business of refrigerant sales, 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 EPA, the United States Occupational Safety and Health Administration ("OSHA") and the United States Department of Transportation ("DOT").



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, virgin refrigerants in accordance with standards established by AHRI prior to resale to a person other than the owner of the equipment from which it was recovered. The EPA administers a certification program pursuant to which applicants certify to reclaim refrigerants in compliance with AHRI standards. The Company is one of only three certified refrigerant testing laboratories in the United States under AHRI's laboratory certification program, which is a voluntary program that certifies the ability of a laboratory to test refrigerant in accordance with the AHRI 700 standard.

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 may also be subject to regulations adopted by the EPA which impose certain reporting requirements arising out of the importation of certain HCFCs, and arising out of the importation, purchase, production, use and/or emissions of certain greenhouse gases, including HFCs.

The Company is also subject to regulations adopted by the DOT which classify most refrigerants handled by the Company as hazardous materials or substances and imposes requirements for handling, packaging, labeling and transporting refrigerants and which regulate the use and operation of the Company’s commercial motor vehicles used in the Company’s business.

The Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), requires facilities that treat, store or dispose of hazardous wastes to 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, as amended, requires the annual reporting by the Company of Emergency and Hazardous Chemical Inventories (Tier II reports) to the various states in which the Company operates and requires the Company to file annual Toxic Chemical Release Inventory Forms with the EPA.

The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), 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 that 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, as amended mandates requirements for a 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 is also subject to regulations adopted by the California Air Resources Board which impose certain reporting requirements arising out of the reclamation and sale of refrigerants that takes place within the State of California.

The Company believes that it is in material compliance with all applicable regulations material to its business operations.

## Quality Assurance & Environmental Compliance

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



## Employees

On December 31, 2015, the Company had 133 full and 3 part 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 several U.S. and foreign patents, as well as pending patent applications, related to certain RefrigerantSide \( ^{®} \)  Services and supporting systems developed by the Company for systems and processes for measuring and improving the efficiency of refrigeration systems, and for certain refrigerant recycling and reclamation technologies. These patents will expire between February 2017 and April 2032.

The Company believes that patent protection is important to its business. 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 or processes 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 or processes, 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 1A. Risk Factors

There are many important factors, including those discussed below (and above as described under “Patents and Proprietary Information”), that have affected, and in the future could affect Hudson’s business including, but not limited to, the factors discussed below, which should be reviewed carefully together with the other information contained in this report. Some of the factors are beyond Hudson’s control and future trends are difficult to predict.

## Our existing and future debt obligations could impair our liquidity and financial condition.

Our existing credit facility, which currently expires in June 2018, is secured by substantially all of our assets and contains formulas that limit the amount of our borrowings under the facility. Moreover, the terms of our credit facility also include negative covenants that, among other things, may limit our ability to incur additional indebtedness. If we violate any loan covenants and do not obtain a waiver from our lender, our indebtedness under the credit facility would become immediately due and payable, and the lender could foreclose on its security, which could materially adversely affect our business and future financial condition and could require us to curtail or otherwise cease our existing operations.

## We may need additional financing to satisfy our future capital requirements, which may not be readily available to us.

Our capital requirements may be significant in the future. In the future, we may incur additional expenses in the development and implementation of our operations. Due to fluctuations in the price, demand and availability of new refrigerants, our existing credit facility that expires in June 2018 may not in the future be sufficient to provide all of the capital that we need to acquire and manage our inventories of new refrigerant. As a result, we may be required to seek additional equity or debt financing in order to develop our RefrigerantSide \( ^{®} \)  Services business, our refrigerant sales business and our other businesses. We have no current arrangements with respect to, or sources of, additional financing other than our existing credit facility. There can be no assurance that we will be able to obtain any additional financing on terms acceptable to us or at all. Our inability to obtain financing, if and when needed, could materially adversely affect our business and future financial condition and could require us to curtail or otherwise cease our existing operations.



## Adverse weather or economic downturn could adversely impact our financial results

Our business could be negatively impacted by adverse weather or economic downturns. Weather is a significant factor in determining market demand for the refrigerants sold by us, and to a lesser extent, our RefrigerantSide \( ^{\circledR} \)  Services. Unusually cool temperatures in the spring and summer tend to depress demand for, and price of, refrigerants we sell. Protracted periods of cooler than normal spring and summer weather could result in a substantial reduction in our sales which could adversely affect our financial position as well as our results of operations. An economic downturn could cause customers to postpone or cancel purchases of the Company's products or services. Either or both of these conditions could have severe negative implications to our business that may exacerbate many of the risk factors we identified in this report but not limited, to the following:

## Liquidity

These conditions could reduce our liquidity and this could have a negative impact on our financial condition and results of operations.

## Demand

These conditions could lower the demand and/or price for our product and services, which would have a negative impact on our results of operations.

## The nature of our business exposes us to potential liability.

The refrigerant recovery and reclamation industry involves potentially significant risks of statutory and common law liability for environmental damage and personal injury. We, and in certain instances, our officers, directors and employees, may be subject to claims arising from our 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. We may be strictly liable for damages, which could be substantial, regardless of whether we exercised due care and complied with all relevant laws and regulations. Our current insurance coverage may not be sufficient to cover potential claims, and adequate levels of insurance coverage may not be available in the future at a reasonable cost. A partially or completely uninsured claim against us, if successful and of sufficient magnitude would have a material adverse effect on our business and financial condition.

## Our business and financial condition is substantially dependent on the sale and continued environmental regulation of refrigerants.

Our business and prospects are largely dependent upon continued regulation of the use and disposition of refrigerants. Changes in government regulations relating to the emission of refrigerants into the atmosphere could have a material adverse effect on us. Failure by government authorities to otherwise continue to enforce existing regulations or significant relaxation of regulatory requirements could also adversely affect demand for our services and products.

## Our business is subject to significant regulatory compliance burdens.

The refrigerant reclamation and management business is subject to extensive, stringent and frequently changing federal, state and local laws and substantial regulation under these laws by governmental agencies, including the EPA, the OSHA and DOT. Although we believe that we are in material compliance with all applicable regulations material to our business operations, amendments to existing statutes and regulations or adoption of new statutes and regulations which affect the marketing and sale of refrigerant could require us to continually alter our methods of operation and/or discontinue the sale of certain of our products resulting in costs to us that could be substantial. We may not be able, for financial or other reasons, to comply with applicable laws, regulations and permit requirements, particularly as we seek to enter into new geographic markets. Our failure to comply with applicable laws, rules or regulations or permit requirements could subject us to civil remedies, including substantial fines, penalties and injunctions, as well as possible criminal sanctions, which would, if of significant magnitude, materially adversely impact our operations and future financial condition.

A number of factors could negatively impact the price and/or availability of refrigerants, which would, in turn, adversely affect our business and financial condition.

Refrigerant sales continue to represent a significant portion of our revenues. Therefore, our business is substantially dependent on the availability of both new and used refrigerants in large quantities, which may be affected by several factors including, without limitation: (i) commercial production and consumption limitations imposed by the Act and legislative limitations and ban on HCFC refrigerants; (ii) the ban on production of CFC based refrigerants under the Act; (iii) the proposed legislation which, if enacted, could impose limitations on production and consumption of HFC refrigerants; (iv) introduction of new refrigerants and air conditioning and refrigeration equipment; (v) price competition resulting from additional market entrants; (vi) changes in government regulation on the use and production of refrigerants; and (vii) reduction in demand for refrigerants. We do not maintain firm agreements with any of our suppliers of refrigerants and we do not hold allowances permitting us to purchase and import HCFC refrigerants from abroad. Sufficient amounts of new and/or used refrigerants may not be available to us in the future, particularly as a result of the further phase down of HCFC production, or may not be available on commercially reasonable terms. Additionally, we may be subject to price fluctuations, periodic delays or shortages of new and/or used refrigerants. Our failure to obtain and resell sufficient quantities of virgin refrigerants on commercially reasonable terms, or at all, or to obtain, reclaim and resell sufficient quantities of used refrigerants would have a material adverse effect on our operating margins and results of operations.



## As a result of competition, and the strength of some of our competitors in the market, we may not be able to compete effectively.

The markets for our services and products are highly competitive. We compete with numerous regional and national companies which provide refrigerant recovery and reclamation services, as well as companies which market and deal in new and reclaimed alternative refrigerants, including certain of our suppliers, some of which possess greater financial, marketing, distribution and other resources than us. We also compete with numerous manufacturers of refrigerant recovery and reclamation equipment. Certain of these competitors have established reputations for success in the service of air conditioning and refrigeration systems. We may not be able to compete successfully, particularly as we seek to enter into new markets.

## Issues relating to potential global warming and climate change could have an impact on our business.

Refrigerants are considered to be strong greenhouse gases that are believed to contribute to global warming and climate change and are now subject to various state and federal regulations relating to the sale, use and emissions of refrigerants. In addition, federal legislation has been proposed that, if enacted, would impose limitations on the production and importation of certain virgin HFC refrigerants, and current and future global warming and climate change or related legislation and/or regulations may impose additional compliance burdens on us and on our customers and suppliers which could potentially result in increased administrative costs, decreased demand in the marketplace for our products, and/or increased costs for our supplies and products.

## The loss of key management personnel would adversely impact our business.

Our success is largely dependent upon the efforts of our Chief Executive Officer and Chairman. The loss of his services would have a material adverse effect on our business and prospects.

We have the ability to designate an issue preferred stock, which may have rights, preferences and privileges greater than Hudson's common stock and which could impede a subsequent change in control of us.

Our Certificate of Incorporation authorizes our Board of Directors to issue up to 5,000,000 shares of “blank check” preferred stock and to fix the rights, preferences, privileges and restrictions, including voting rights, of these shares, without further shareholder approval. The rights of the holders of our common stock will be subject to, and may be adversely affected by, the rights of holders of any additional preferred stock that may be issued by us in the future. Our ability to issue preferred stock without shareholder approval could have the effect of making it more difficult for a third party to acquire a majority of our voting stock, thereby delaying, deferring or preventing a change in control of us.

If our common stock were delisted from NASDAQ it would be subject to “penny stock” rules which could negatively impact its liquidity and our shareholders’ ability to sell their shares.

Our common stock is currently listed on the NASDAQ Capital Market. We must comply with numerous NASDAQ Marketplace rules in order to continue the listing of our common stock on NASDAQ. There can be no assurance that we can continue to meet the rules required to maintain the NASDAQ listing of our common stock. If we are unable to maintain our listing on NASDAQ, the market liquidity of our common stock may be severely limited.

## Our management has significant control over our affairs.

Currently, our officers and directors collectively own approximately 20% of our outstanding common stock. Accordingly, our officers and directors are in a position to significantly affect major corporate transactions and the election of our directors. There is no provision for cumulative voting for our directors.

## We may fail to successfully integrate any acquisitions made by us into our operations.

As part of our business strategy, we may look for opportunities to grow by acquiring other product lines, technologies or facilities that complement or expand our existing business. We may be unable to identify suitable acquisition candidates or negotiate acceptable terms. In addition, we may not be able to successfully integrate any assets, liabilities, customers, systems or management personnel we may acquire into our operations and we may not be able to realize related revenue synergies and cost savings within expected time frames. There can be no assurance that we will be able to successfully integrate any prior or future acquisition.



## Item 1B. Unresolved Staff Comments

## Not Applicable

## Item 2. Properties

The Company's headquarters are located in a 4,200 square foot office facility located in a multi-tenant building in Pearl River, New York. The building is leased from an unaffiliated third party at an annual rental of $93,000 pursuant to an agreement expiring in August 2018.

The Company’s Trousdale, Tennessee facility is a 2,600 square foot office facility in a multi-tenant building leased from an unaffiliated third party at an annual rental of $36,000 pursuant to an agreement expiring in March 2016.

The Company's Champaign, Illinois facility is located in a 48,000 square foot building, which was purchased by the Company in May 2005 for $999,999. On June 1, 2012, the Company entered into a mortgage note with Busey Bank for $855,000. The note bears interest at the fixed rate of 4% per annum, amortizing over 60 months and maturing on June 1, 2017. The mortgage note is secured by the Company's land and building located in Champaign, Illinois. As of December 31, 2015, the Company has $260,000 outstanding under this mortgage and the annual real estate taxes on this facility are approximately $46,000.

The Company has established a second facility in Champaign, Illinois, which is a 103,000 square foot facility located in an approximately 130,000 square foot building. The building is leased from an unaffiliated third party at an annual rental of $457,000, pursuant to an arrangement expiring in December 2017.

The Company’s Nashville, Tennessee facility is a 33,000 square foot office facility leased from an unaffiliated third party at an annual rental of $162,000 pursuant to an agreement expiring March 2018.

The Company’s Ontario, California facility is a 20,000 square foot facility leased from an unaffiliated third party at an annual rental of $87,000 pursuant to an agreement expiring in December 2018.

The Company’s Catano, Puerto Rico facility is a 15,000 square foot facility leased from an unaffiliated third party at an annual rental of $151,000 pursuant to an agreement expiring in November 2020.

The Company's Auburn, Washington depot facility is a 3,000 square foot facility located in a multi-tenant building leased from an unaffiliated third party at an annual rental of $51,000 pursuant to an agreement expiring August 2018.

The Company’s Baton Rouge, Louisiana depot facility is a 1,800 square foot facility located in a multi-tenant building leased from an unaffiliated third party at an annual rental of $15,000 pursuant to an agreement expiring in April 2017.

The Company’s Charlotte, North Carolina depot facility is an 8,500 square foot facility located in a multi-tenant building leased from an unaffiliated third party at an annual rental of $64,000 pursuant to an agreement expiring in March 2016.

The Company’s Escondido, California depot facility is a 6,000 square foot facility leased from an unaffiliated third party at an annual rental of $36,000 pursuant to a month to month rental agreement.

The Company’s Stony Point, New York depot facility is an 18,000 square foot facility located in a multi-tenant building leased from an unaffiliated third party at an annual rental of $117,000 pursuant to an agreement expiring in June 2016.

The Company’s Tulsa, Oklahoma energy and carbon services facility is located in a 2,304 square foot office facility located in a multi-tenant building leased from an unaffiliated third party at an annual rental of $27,000 which includes our share of operating expenses. This lease expires December 2017.

The Company’s Hampstead, New Hampshire telemarketing facility is located in a 1,600 square foot office facility located in a multi-tenant building leased from an unaffiliated third party at an annual rental of $28,000 pursuant to an agreement expiring in August 2017.

The Company’s Pottsboro, Texas telemarketing facility is located in a 1,000 square foot office facility located in a multi-tenant building leased from an unaffiliated third party at an annual rental of $9,600 pursuant to an agreement expiring in August 2017.

In addition to the above leases, the Company from time to time utilizes public warehouse space on a month to month basis. The Company typically enters into short-term leases for its facilities and whenever possible extends the expiration date of such leases. The Company believes that its insurance policies are adequate to protect the Company’s property.



## Item 3. Legal Proceedings

On April 1, 1999, the Company reported a release of approximately 7,800 lbs. of R-11 refrigerant (the "1999 Release"), at its former leased facility in Hillburn, NY (the "Hillburn Facility"), which the Company vacated in June 2006.

Since September 2000, last modified in March 2013, the Company signed an Order on Consent with the New York State Department of Environmental Conservation (“DEC”) whereby the Company agreed to operate a remediation system to reduce R-11 refrigerant levels in the groundwater under and around the Hillburn Facility and agreed to perform periodic testing at the Hillburn Facility until remaining groundwater contamination has been effectively abated. The Company accrued, as an expense in its consolidated financial statements, the costs that the Company believes it will incur in connection with its compliance with the Order of Consent through December 31, 2018. There can be no assurance that additional testing will not be required or that the Company will not incur additional costs and such costs in excess of the Company’s estimate may have a material adverse effect on the Company financial condition or results of operations. The Company has exhausted all insurance proceeds available for the 1999 Release under all applicable policies.

In May 2000 the Hillburn facility, as a result of the 1999 release, was nominated by EPA for listing on the National Priorities List (“NPL”) pursuant to CERCLA. In September 2003, the EPA advised the Company that it had no current plans to finalize the process for listing of the Hillburn facility on the NPL.

During the year ended December 31, 2014 the Company incurred $53,000 in additional remediation costs in connection with the matters above. There were no costs incurred during the year ended December 31, 2015. There can be no assurance that the ultimate outcome of the 1999 Release will not have a material adverse effect on the Company's financial condition and results of operations. There can be no assurance that the EPA will not change its current plans and seek to finalize the process of listing the Hillburn Facility on the NPL, 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. Mine Safety Disclosures

Not Applicable



## Part II

## Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company's common stock trades on the NASDAQ Capital Market under the symbol "HDSN". 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.

<table><tr><td></td><td>High</td><td>Low</td></tr><tr><td>2014</td><td></td><td></td></tr><tr><td>- First Quarter</td><td>$ 4.00</td><td>$ 2.68</td></tr><tr><td>- Second Quarter</td><td>$ 3.40</td><td>$ 2.55</td></tr><tr><td>- Third Quarter</td><td>$ 3.59</td><td>$ 2.60</td></tr><tr><td>- Fourth Quarter</td><td>$ 4.80</td><td>$ 2.86</td></tr><tr><td>2015</td><td></td><td></td></tr><tr><td>- First Quarter</td><td>$ 4.56</td><td>$ 3.35</td></tr><tr><td>- Second Quarter</td><td>$ 4.75</td><td>$ 3.40</td></tr><tr><td>- Third Quarter</td><td>$ 3.58</td><td>$ 2.45</td></tr><tr><td>- Fourth Quarter</td><td>$ 3.56</td><td>$ 2.69</td></tr></table>

The number of record holders of the Company's common stock was approximately 176 as of March 1, 2016. The Company believes that there are in excess of 2,900 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 on its common stock in the foreseeable future. In addition, the Company has a credit facility with PNC Bank National Association ("PNC") that, among other things, restricts the Company's ability to declare or pay any cash dividends on its capital stock.

## Item 6. Selected Financial Data

## Not Applicable

## Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements, contained in this section and elsewhere in this Form 10-K, 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 laws and regulations affecting the industry, changes in the demand and price for refrigerants (including unfavorable market conditions adversely affecting the demand for, and the price of refrigerants), the Company’s ability to source refrigerants, regulatory and economic factors, seasonality, competition, litigation, the nature of supplier or customer arrangements that 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, the ability to obtain financing, any delays or interruptions in bringing products and services to market, the timely availability of any requisite permits and authorizations from governmental entities and third parties as well as factors relating to doing business outside the United States, including changes in the laws, regulations, policies, and political, financial and economic conditions, including inflation, interest and currency exchange rates, of countries in which the Company may seek to conduct business, the Company’s ability to successfully integrate any assets it acquires from third parties into its operations, and other risks detailed in the this report and in the Company’s other subsequent filings with the Securities and Exchange Commission (“SEC”). The words “believe”, “expect”, “anticipate”, “may”, “plan”, “should” 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.



## Critical Accounting Policies

The Company's discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Several of the Company's accounting policies involve significant judgments, uncertainties and estimations. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. To the extent that actual results differ from management's judgments and estimates, there could be a material adverse effect on the Company. On a continuous basis, the Company evaluates its estimates, including, but not limited to, those estimates related to its allowance for doubtful accounts, inventory reserves, and valuation allowance for the deferred tax assets relating to its net operating loss carry forwards ("NOLs") and commitments and contingencies. With respect to accounts receivable, the Company estimates the necessary allowance for doubtful accounts based on both historical and anticipated trends of payment history and the ability of the customer to fulfill its obligations. For inventory, the Company evaluates both current and anticipated sales prices of its products to determine if a write down of inventory to net realizable value is necessary. In determining the Company's valuation allowance for its deferred tax assets, the Company assesses its ability to generate taxable income in the future. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in business combinations accounted for under the purchase method of accounting. The Company tests for any impairment of goodwill annually. Intangibles with determinable lives are amortized over the estimated useful lives of the assets currently ranging from 2 to 10 years. The Company reviews these useful lives annually to determine that they reflect future realizable value. The Company utilizes both internal and external sources to evaluate potential current and future liabilities for various commitments and contingencies. In the event that the assumptions or conditions change in the future, the estimates could differ from the original estimates.

## Overview

Sales of refrigerants continue to represent a significant portion of the Company’s revenues. The Company’s refrigerant sales are primarily HCFC and HFC based refrigerants and to a lesser extent CFC based refrigerants that are no longer manufactured. Currently the Company purchases virgin HCFC and HFC refrigerants and reclaimable HCFC, HFC and CFC refrigerants from suppliers and its customers. Effective January 1, 1996, the Clean Air Act (the “Act”) prohibited the production of virgin CFC refrigerants and limited the production of virgin HCFC refrigerants, which production was further limited in January 2004. Federal regulations enacted in January 2004 established production and consumption allowances for HCFCs and imposed limitations on the importation of certain virgin HCFC refrigerants. Under the Act, production of certain virgin HCFC refrigerants is scheduled to be phased out during the period 2010 through 2020, and production of all virgin HCFC refrigerants is scheduled to be phased out by 2030. In April 2013 the EPA published a final rule providing for the production or importation of 63 million and 51 million pounds of HCFC-22 in 2013 and 2014, respectively. In October 2014, the EPA published the Final Rule providing further reductions in the production and consumption allowances for virgin HCFC refrigerants for the years 2015 through 2019. In the Final Rule, the EPA has established a linear annual phase down schedule for the production or importation of virgin HCFC-22 that started at approximately 22 million pounds in 2015 and is being reduced by approximately 4.5 million pounds each year and ends at zero in 2020.

The Company has created and developed a service offering known as RefrigerantSide \( ^{\circledR} \)  Services. RefrigerantSide \( ^{\circledR} \)  Services are sold to contractors and end-users whose refrigeration systems are used in commercial air conditioning and industrial processing. These services are offered in addition to refrigerant sales and the Company's traditional refrigerant management services, which consist primarily of reclamation of refrigerants. The Company has created a network of service depots that provide a full range of the Company's RefrigerantSide \( ^{\circledR} \)  Services to facilitate the growth and development of its service offerings.

The Company focuses its sales and marketing efforts for its RefrigerantSide \( ^{\circledR} \)  Services on customers who the Company believes most readily appreciate and understand the value that is provided by its RefrigerantSide \( ^{\circledR} \)  Services offering. In pursuing its sales and marketing strategy, the Company offers its RefrigerantSide \( ^{\circledR} \)  Services to customers in the following industries: petrochemical, pharmaceutical, industrial power, manufacturing, commercial facility and property management and maritime. The Company may incur additional expenses as it further develops and markets its RefrigerantSide \( ^{\circledR} \)  Services offering.



## Results of Operations

Year ended December 31, 2015 as compared to the year ended December 31, 2014

Revenues for the year ended December 31, 2015 were $79,722,000, an increase of $23,912,000 or 43% from the $55,810,000 reported during the comparable 2014 period. The increase in revenues was attributable to an increase in refrigerant revenues of $24,694,000 offset in part by a decrease in RefrigerantSide® Services revenues of $782,000. The increase in refrigerant revenue is related to both an increase in the selling price per pound of certain refrigerants sold, which accounted for an increase in revenues of $17,374,000, as well as an increase in the number of pounds of certain refrigerants sold, which accounted for an increase in revenues of $7,320,000. The decrease in RefrigerantSide® Services was primarily attributable to a decrease in the price of jobs completed when compared to the same period in 2014.

Cost of sales for the year ended December 31, 2015 was $61,233,000 or 77% of sales. Cost of sales for year ended December 31, 2014 was $49,364,000, or 88% of sales. The decrease in the cost of sales percentage, from 88% in 2014 to 77% in 2015, is related to the increase in the selling price per pound of refrigerants, as described in the revenue discussion above.

Operating expenses for the year ended December 31, 2015 were $10,308,000, an increase of $2,877,000 from the $7,431,000 reported during the comparable 2014 period. The increase in operating expenses is primarily attributable to payroll expenses of $2,400,000 of which approximately $1,100,000 is associated with payroll for the recent acquisitions completed in late 2014 and early 2015 as well as approximately $500,000 of amortization of intangibles associated with these same recent acquisitions.

Other income (expense) for the year ended December 31, 2015 was ($474,000), compared to the ($641,000) reported during the comparable 2014 period. Other income (expense) consists of interest expense of $776,000 and $641,000 for the comparable 2015 and 2014 periods, respectively. The increase in interest expense is due to increased borrowing on the PNC credit facility. Additionally, other income (expense) includes other income of $302,000 in 2015 related to the 2015 acquisition earn out that was less than the total amount that had been recorded as part of the purchase price accounting for the acquisition of a supplier of refrigerants and compressed gases.

Income tax expense for the year ended December 31, 2015 was $2,944,000 compared to an income tax benefit of $906,000 reported during the comparable 2014 period. For 2015 the income tax expense of $2,944,000 was for federal and state income tax at statutory rates applied to the pre-tax income. For 2014 the income tax benefit of $906,000 was for federal and state income tax at statutory rates applied to the pre-tax loss, as well as state income tax refunds for 2013 that had not been accrued in 2013.

Net income for the year ended December 31, 2015 was $4,763,000, an increase of $5,483,000 from $720,000 net loss reported during the comparable 2014 period, primarily due to the increase in revenue and gross profit partially offset by increases in operating expenses, interest expense and income tax expense.

## Liquidity and Capital Resources

At December 31, 2015, the Company had working capital, which represents current assets less current liabilities of $38,509,000, an increase of $6,395,000 from the working capital of $32,114,000 at December 31, 2014. The increase in working capital is primarily attributable to the net income for 2015.

Inventory and trade receivables are principal components of current assets. At December 31, 2015, the Company had inventories of $61,897,000, an increase of $24,880,000 from $37,017,000 at December 31, 2014. The increase in the inventory balance is primarily due to the increase in the cost of refrigerants, as well as the timing and availability of inventory purchases and the sale of refrigerants. 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 and the Company's ability to source CFC based refrigerants (which are no longer being produced), HCFC refrigerants (which are currently being phased down leading to a full phase out of virgin production), or non-CFC based refrigerants. At December 31, 2015, the Company had trade receivables, net of allowance for doubtful accounts, of $4,414,000, an increase of $446,000 from $3,968,000 at December 31, 2014. The Company's trade receivables are concentrated with various wholesalers, brokers, contractors and end-users within the refrigeration industry that are primarily located in the continental United States.

The Company has historically 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, 2015, was $10,503,000 compared with net cash provided by operating activities of $1,701,000 for the comparable 2014 period. Net cash used by operating activities for the 2015 period was primarily attributable to an increase in inventory partially offset by net income, the utilization of the deferred tax assets, as well as increases in accounts payable and accrued expenses.

Net cash used by investing activities for the year ended December 31, 2015, was $3,325,000 compared with net cash used by investing activities of $8,031,000 for the comparable 2014 period. The net cash used by investing activities for the 2015 period was primarily related to the January 2015 acquisition as well as investment in general purpose equipment for the Company's production facilities. The net cash used by investing activities for the 2014 period was primarily related to the acquisition of Polar Technologies, as well as investment in general purpose equipment for the Company's Champaign, Illinois facility.

Net cash provided by financing activities for the year ended December 31, 2015, was $14,151,000 compared with net cash provided by financing activities of $6,596,000 for the comparable 2014 period. The net cash provided by financing activities for the 2015 period was primarily due to increased borrowings on the PNC credit facility.

At December 31, 2015, the Company had cash and cash equivalents of $1,258,000. The Company continues to assess its capital expenditure needs. The Company may, to the extent necessary, continue to utilize its cash balances to purchase equipment primarily for its operations. The Company estimates that the total capital expenditures for 2016 will be approximately $1,750,000.

The following is a summary of the Company's significant contractual cash obligations for the periods indicated that existed as of December 31, 2015 (in 000's):

<table><tr><td rowspan="2">Long and short term debt and capital lease obligations:</td><td colspan="7">Twelve Month Period Ended December 31,</td></tr><tr><td>2016</td><td>2017</td><td>2018</td><td>2019</td><td>2020</td><td>Total</td><td></td></tr><tr><td>Principal</td><td>$ 20,573</td><td>$ 184</td><td>$ 4,077</td><td>$ 30</td><td>$ 2</td><td>$ 24,866</td><td></td></tr><tr><td>Estimated interest (1)</td><td>750</td><td>737</td><td>368</td><td>0</td><td>0</td><td>1,855</td><td></td></tr><tr><td>Operating leases</td><td>1,297</td><td>1,085</td><td>421</td><td>165</td><td>150</td><td>3,118</td><td></td></tr><tr><td>Acquisition earn out /License payable</td><td>1,568</td><td>333</td><td>0</td><td>0</td><td>0</td><td>1,901</td><td></td></tr><tr><td>Total contractual cash obligations</td><td>$ 24,188</td><td>$ 2,339</td><td>$ 4,866</td><td>$ 195</td><td>$ 152</td><td>$ 31,740</td><td></td></tr></table>

(1) The estimated future interest payments on all debt other than revolving debt are based on the respective interest rates applied to the declining principal balances on each of the notes.

On June 22, 2012, a subsidiary of Hudson entered into a Revolving Credit, Term Loan and Security Agreement (the "PNC Facility") with PNC Bank, National Association, as agent ("Agent" or "PNC"), and such other lenders as may thereafter become a party to the PNC Facility. Under the terms of the PNC Facility, as amended by the First Amendment to the PNC Facility, dated February 15, 2013, Hudson may borrow up to a maximum of $40,000,000 consisting of a term loan in the principal amount of $4,000,000 and revolving loans in a maximum amount up to $36,000,000. Amounts borrowed under the PNC Facility may be used by Hudson for working capital needs and to reimburse drawings under letters of credit. Fees and expenses relating to the creation of the PNC Facility of approximately $38,000 are being amortized over the life of the loan. At December 31, 2015, total borrowings under the PNC Facility were approximately $24,227,000, and there was approximately $15,773,000 available to borrow under the revolving line of credit. The effective interest rate under the PNC Facility was 3.75% at December 31, 2015.

Interest on loans under the PNC Facility is payable in arrears on the first day of each month with respect to loans bearing interest at the domestic rate (as set forth in the PNC Facility) and at the end of each interest period with respect to loans bearing interest at the Eurodollar Rate (as defined in the PNC Facility) or, for Eurodollar Rate Loans (as defined in the PNC Facility) with an interest period in excess of three months, at the earlier of (a) each three months from the commencement of such Eurodollar Rate Loan or (b) the end of the interest period. Interest charges with respect to loans are computed on the actual principal amount of loans outstanding during the month at a rate per annum equal to (A) with respect to Domestic Rate Loans (as defined in the PNC Facility), the sum of the Alternate Base Rate (as defined in the PNC Facility) plus one half of one percent (.50%) and (B) with respect to Eurodollar Rate Loans, the sum of the Eurodollar Rate plus two and one quarter of one percent (2.25%).

Hudson granted to PNC, for itself, and as agent for such other lenders as may thereafter become a lender under the PNC Facility, a security interest in Hudson’s receivables, intellectual property, general intangibles, inventory and certain other assets.



The PNC Facility contains certain financial and non-financial covenants relating to Hudson, including limitations on Hudson’s ability to pay dividends on common stock or preferred stock, and also includes certain events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts, impairments to guarantees and a change of control. The PNC Facility contains a financial covenant to maintain at all times a Fixed Charge Coverage Ratio of not less than 1.10 to 1.00, tested quarterly on a rolling twelve month basis. Fixed Charge Coverage Ratio is defined in the PNC Facility, with respect to any fiscal period, as the ratio of (a) EBITDA of Hudson for such period, minus unifnanced capital expenditures (as defined in the PNC Facility) made by Hudson during such period, minus the aggregate amount of cash taxes paid by Hudson during such period, minus the aggregate amount of dividends and distributions made by Hudson during such period, minus the aggregate amount of payments made with cash by Hudson to satisfy soil sampling and reclamation related to environmental cleanup at the Company’s former Hillbum, NY facility during such period (to the extent not already included in the calculation of EBITDA as determined by the Agent) to (b) the aggregate amount of all principal payments due and/or made, except principal payments related to outstanding revolving advances with regard to all funded debt (as defined in the PNC Facility) of Hudson during such period, plus the aggregate interest expense of Hudson during such period. EBITDA as defined in the PNC Facility shall mean for any period the sum of (i) earnings before interest and taxes for such period plus (ii) depreciation expenses for such period, plus (iii) amortization expenses for such period, plus (iv) non-cash charges.

On October 25, 2013, the Company entered into the Second Amendment to the PNC facility (the “Second PNC Amendment”) which, among other things, waived the requirement to comply with the minimum fixed charge coverage ratio covenant of 1.10 to 1.00 for the fiscal quarter ended September 30, 2013, under the PNC Facility, and suspended the minimum fixed charge ratio covenant until the quarterly period ended March 31, 2015.

On July 2, 2014, the Company entered into the Third Amendment to the PNC Facility (the “Third PNC Amendment”) which, among other things, extended the term of PNC Facility. Pursuant to the Third PNC Amendment, which was effective June 30, 2014, the Termination Date of the PNC Facility (as defined in the PNC Facility) has been extended to June 30, 2018.

On July 1, 2015, the Company entered into the Fourth Amendment to the PNC Facility (the “Fourth PNC Amendment”). The Fourth PNC Amendment redefined the “Revolving Interest Rate” as well as the “Term Loan Rate” (as defined in the PNC Facility) as follows:

“Revolving Interest Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate (as defined in the PNC Facility) plus one half of one percent (.50%) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and one quarter of one percent (2.25%) with respect to the Eurodollar Rate Loans.

“Term Loan Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus one half of one percent (.50%) with respect to the Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and one quarter of one percent (2.25%) with respect to Eurodollar Rate Loans.

The Company was in compliance with all covenants, as amended, under the PNC Facility as of December 31, 2015. The Company’s ability to comply with these covenants in future quarters may be affected by events beyond the Company’s control, including general economic conditions, weather conditions, regulations and refrigerant pricing. Although we expect to remain in compliance with all covenants in the PNC Facility, as amended, depending on our future operating performance and general economic conditions, we cannot make any assurance that we will continue to be in compliance.

The commitments under the PNC Facility will expire and the full outstanding principal amount of the loans, together with accrued and unpaid interest, are due and payable in full on June 30, 2018, unless the commitments are terminated for any reason or the outstanding principal amount of the loans are accelerated sooner following an event of default.

On June 6, 2014 the Company entered into an Underwriting Agreement with an investment banking firm for itself and as representative for two other investment banking firms (collectively, the “Underwriters”), in connection with an underwritten offering (the “Offering”) of 6,000,000 shares of the Company’s common stock, par value $0.01 per share (the “Firm Shares”). Pursuant to the Underwriting Agreement, the Company agreed to sell to the Underwriters, and the Underwriters agreed to purchase from the Company, an aggregate of 6,000,000 shares of common stock at a price of $2.3375 per share, and the price to the public was $2.50 per share. Pursuant to the Underwriting Agreement, the Company also granted the Underwriters a 30 day option to purchase up to 900,000 additional shares of its common stock to cover over-allotments, if any. The Company also agreed to reimburse certain expenses incurred by the Underwriters in the Offering.

The closing of the Offering was held on June 11, 2014, at which time the Company sold 6,900,000 shares of its common stock to the Underwriters (including 900,000 shares to cover over-allotments) at a price of $2.3375 per share, and received gross proceeds of $16,128,750. The Underwriters received reimbursement of expenses of $150,000, and the Company also incurred approximately $400,000 of additional expenses in connection with the Offering.

The Company believes that it will be able to satisfy its working capital requirements for the foreseeable future from anticipated cash flows from operations and available funds under the PNC Facility. In addition, the proceeds from the Offering may be used for working capital and general corporate purposes which may include, among other things, funding additional acquisitions, although we have no present commitments or agreements with respect to any such transactions. Any unanticipated expenses, including, but not limited to, an increase in the cost of refrigerants purchased by the Company, an increase in operating expenses or failure to achieve expected revenues from the Company's RefrigerantSide® Services and/or refrigerant sales or additional expansion or acquisition costs that may arise in the future would adversely affect the Company's future capital needs. There can be no assurance that the Company's proposed or future plans will be successful, and as such, the Company may require additional capital sooner than anticipated, which capital may not be available on acceptable terms, or at all.



## Inflation

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

## Reliance on Suppliers and Customers

The Company participates in an industry that is highly regulated, and changes in the regulations affecting our business could affect our operating results. Currently the Company purchases virgin HCFC and HFC refrigerants and reclaimable, primarily HCFC and CFC, refrigerants from suppliers and its customers. Under the Act the phase-down of future production of certain virgin HCFC refrigerants commenced in 2010 and is scheduled to be fully phased out by the year 2020, and production of all virgin HCFC refrigerants is scheduled to be phased out by the year 2030. To the extent that the Company is unable to source sufficient quantities of refrigerants or is unable to obtain refrigerants on commercially reasonable terms or experiences a decline in demand and/or price for refrigerants sold by it, the Company could realize reductions in revenue from refrigerant sales, which could have a material adverse effect on the Company's operating results and financial position.

For the year ended December 31, 2015, two customers each accounted for 10% or more of the Company’s revenues and, in the aggregate these two customers accounted for 33% of the Company’s revenues. At December 31, 2015, there were no outstanding receivables from these customers.

For the year ended December 31, 2014, two customers each accounted for 10% or more of the Company’s revenues and, in the aggregate these two customers accounted for 25% of the Company’s revenues. At December 31, 2014, there were $688,000 in outstanding receivables from these customers.

The loss of a principal customer or a decline in the economic prospects of and/or a reduction in purchases of the Company's products or services by any such customer could have a material adverse effect on the Company's operating results and financial position.

## Seasonality and Weather Conditions 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 refrigeration equipment, the rate of expansion of the Company's operations, and by other factors. The Company's business is 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 has resulted in losses particularly in the fourth quarter of the year. In addition, to the extent that there is unseasonably cool weather throughout the spring and summer months, which would adversely affect the demand for refrigerants, there would be a corresponding negative impact on the Company. Delays or inability 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. The Company believes that to a lesser extent there is a similar seasonal element to RefrigerantSide \( ^{\circledR} \)  Service revenues as refrigerant sales. The Company is continuing to assess its RefrigerantSide \( ^{\circledR} \)  Service revenues seasonal trend.

## Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a customer. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple-element arrangements. For a public entity, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is not permitted. An entity should apply the amendments in ASU 2014-09 either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. The Company is currently evaluating the effects of ASU 2014-09 and therefore cannot estimate the effects, if any, on historical or future revenue recognition at this time.



In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs.” ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For public business entities, the amendments in ASU 2015-03 are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted for financial statements that have not been previously issued. An entity should apply the new guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted, and the effect of the change on the financial statement line items (that is, debt issuance cost asset and the debt liability). The adoption of ASU 2015-03 will have no impact on the Company’s results of operations and an immaterial impact on the consolidated Balance Sheets.

In September 2015, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, or ASU 2015-16. This amendment requires the acquirer in a business combination to recognize in the reporting period in which adjustment amounts are determined, any adjustments to provisional amounts that are identified during the measurement period, calculated as if the accounting had been completed at the acquisition date. Prior to the issuance of ASU 2015-16, an acquirer was required to restate prior period financial statements as of the acquisition date for adjustments to provisional amounts. The amendments in ASU 2015-16 are to be applied prospectively upon adoption. The Company adopted ASU 2015-16 in the fourth quarter of 2015. The adoption of the provisions of ASU 2015-16 did not have a material impact on its results of operations or financial position.

In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740) - Balance Sheet Classification of Deferred Taxes.” ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in ASU 2015-17 apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected. For public business entities, the amendments in ASU 2015-17 are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period.

Under ASU 2016-02, a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term.

For finance leases, a lessee is required to do the following: 1. Recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position; 2. Recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income; and 3. Classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows.

For operating leases, a lessee is required to do the following: 1. Recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position; 2. Recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and 3. Classify all cash payments within operating activities in the statement of cash flows.

In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. An entity that elects to apply the practical expedients will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP.

For public entities, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendments in this Update is permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its consolidated financial statements.



## Item 7A. Quantitative and Qualitative Disclosures about Market Risk

## Interest Rate Sensitivity

We are exposed to market risk from fluctuations in interest rates on the PNC Facility. The PNC Facility is a $40,000,000 secured facility. Interest on loans under the PNC Facility is payable in arrears on the first day of each month with respect to loans bearing interest at the domestic rate (as set forth in the PNC Facility) and at the end of each interest period with respect to loans bearing interest at the Eurodollar rate (as set forth in the PNC Facility) or, for Eurodollar rate loans with an interest period in excess of three months, at the earlier of (a) each three months from the commencement of such Eurodollar rate loan or (b) the end if he interest period. As of December 31, 2015 interest charges with respect to loans are computed on the actual principal amount of loans outstanding during the month at a rate per annum equal to (A) with respect to Domestic Rate Loans (as defined in the PNC Facility), the sum of the Alternate Base Rate (as defined in the PNC Facility) plus one half of one percent (.50%) and (B) with respect to Eurodollar Rate Loans, the sum of the Eurodollar Rate plus two and one quarter of one percent (2.25%). The outstanding balance on the PNC Facility as of December 31, 2015 was $24,227,000. Future interest rate changes on our borrowing under the PNC Facility may have an impact on our consolidated results of operations.

## Refrigerant Market

We are also exposed to market risk from fluctuations in the demand, price and availability of refrigerants. To the extent that the Company is unable to source sufficient quantities of refrigerants or is unable to obtain refrigerants on commercially reasonable terms, or experiences a decline in demand and/or price for refrigerants sold by the Company, the Company could realize reductions in revenue from refrigerant sales or write downs of inventory, which could have a material adverse effect on our consolidated results of operations.

## Item 8. Financial Statements and Supplementary Data

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

## Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

## Not Applicable

## Item 9A. Controls and Procedures

## Disclosure Controls and Procedures

The Company, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Because of the inherent limitations in all control systems, any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Furthermore, the Company’s controls and procedures can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control and misstatements due to error or fraud may occur and not be detected on a timely basis.

## Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended December 31, 2015 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.



## Management’s Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company as defined in Rule 13a-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements and the reliability of financial reporting.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

The Company’s Chief Executive Officer and Chief Financial Officer have assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015. In making this assessment, the Company’s Chief Executive Officer and Chief Financial Officer have used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013). Based on our assessment, the Company’s Chief Executive Officer and Chief Financial Officer believe that, as of December 31, 2015, the Company’s internal control over financial reporting is effective based on those criteria.

BDO USA, LLP, the independent registered public accounting firm which audits our financial statements, has audited our internal control over financial reporting as of December 31, 2015 and has expressed an unqualified opinion thereon.



## Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Hudson Technologies, Inc.
Pearl River, NY

We have audited Hudson Technologies Inc.'s and Subsidiaries internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Hudson Technologies Inc.'s and Subsidiaries management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Hudson Technologies Inc. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Hudson Technologies Inc. and Subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended and our report dated March 11, 2016 expressed an unqualified opinion thereon.

Stamford, CT
March 11, 2016



## Part III

## Item 10. Directors, Executive Officers and Corporate Governance

The information presented below provides information each director and executive officer has given us about his age, all positions he holds, his principal occupation and his business experience for at least the past five years. In addition to the information presented below regarding each director's specific experience, qualifications, attributes and skills that led our Board to the conclusion that he should serve as a director, we also believe that all of our directors have a reputation for integrity, honesty and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment to service to the Company and our Board.

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

<table><tr><td>Name</td><td>Age</td><td>Position</td></tr><tr><td>Kevin J. Zugibe</td><td>52</td><td>Chairman of the Board and Chief Executive Officer</td></tr><tr><td>Brian F. Coleman</td><td>54</td><td>President and Chief Operating Officer, Director</td></tr><tr><td>James R. Buscemi</td><td>62</td><td>Chief Financial Officer</td></tr><tr><td>Charles F. Harkins, Jr.</td><td>54</td><td>Vice President Sales</td></tr><tr><td>Stephen P. Mandracchia</td><td>56</td><td>Vice President Legal and Regulatory and Secretary</td></tr><tr><td>Vincent P. Abbatecola</td><td>69</td><td>Director</td></tr><tr><td>Dominic J. Monetta</td><td>74</td><td>Director</td></tr><tr><td>Otto C. Morch</td><td>82</td><td>Director</td></tr><tr><td>Richard Parrillo</td><td>62</td><td>Director</td></tr><tr><td>Eric A. Prouty</td><td>45</td><td>Director</td></tr></table>

Kevin J. Zugibe, P.E., a founder of the Company, has been Chairman of the Board and Chief Executive Officer of the Company since its inception in 1991. From May 1987 to May 1994, Mr. Zugibe was employed as a power engineer with Orange and Rockland Utilities, Inc., a major public utility, where he was responsible for all HVAC applications. 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. We believe Mr. Zugibe's qualifications to sit on our Board of Directors include his 27 years of experience in the air conditioning and refrigeration industry including as our founder, our Chairman and Chief Executive Officer for 25 years. Mr. Zugibe is the brother-in-law of Stephen P. Mandracchia.

Brian F. Coleman has been a Director of the Company since December 2007, and President and Chief Operating Officer of the Company since August 2001 and served as Chief Financial Officer of the Company from May 1997 until December 2002. From June 1987 to May 1997, Mr. Coleman was employed by, and since July 1995, was a partner with BDO USA, LLP, the Company's independent registered public accounting firm. We believe Mr. Coleman's qualifications to sit on our Board of Directors include his prior financial and accounting experience obtained as a partner with BDO USA, LLP, and his 18 years of experience in the air conditioning and refrigeration industry including as our President and Chief Operating Officer.

James R. Buscemi has been Chief Financial Officer of the Company since December 2002 and served as Corporate Controller from June 1998 until December 2002. Prior to joining the Company, Mr. Buscemi held various financial positions within Avnet, Inc, including Chief Financial Officer of Avnet's electric motors and component part subsidiary, Brownell Electro, Inc.

Charles F. Harkins, Jr. has been Vice President of Sales of the Company since December 2003. Mr. Harkins has served in a variety of capacities since joining the Company in 1992. Prior to joining the Company, Mr. Harkins served in the U.S. Army for 13 years attaining the rank of Staff Sergeant; he is a graduate of the U.S. Army Engineering School and the U.S. Army Chemical School.

Stephen P. Mandracchia, a founder of the Company, has been Vice President Legal and Regulatory of the Company since August 2003 and has been Secretary of the Company since April 1995. Mr. Mandracchia has served in a variety of capacities with the Company since 1993. Mr. Mandracchia was a member of the law firm of Martin, Vandewalle, Donohue, Mandracchia & McCahan, Great Neck, New York until December 31, 1995 (having been affiliated with such firm since August 1983). Mr. Mandracchia is the brother-in-law of Mr. Zugibe.



Vincent P. Abbatecola has been a Director of the Company since June 1994. Mr. Abbatecola is Vice President of Abbey Ice & Spring Water Company, Spring Valley, New York, where he has been employed since May 1971. He was formerly the Chairman of the International Packaged Ice Association and a trustee of Nyack Hospital. Mr. Abbatecola serves on the Rockland Board of Governors, the United Hospice of Rockland Board and the St. Thomas Aquinas College President's Council. We believe that Mr. Abbatecola's qualifications to sit on our Board include his business experience obtained as Vice President of Abbey Ice and Spring Water Company, his 21 years of experience in the air conditioning and refrigeration industry by virtue of his service on our Board including as Chairman of the Company's Audit Committee for 20 years.

Dominic J. Monetta, DPA has been a Director of the Company since April 1996. Dr. Monetta has since August 1993, been the President of Resource Alternatives, Inc., a corporate development firm concentrating on resolving technically oriented managerial issues facing chief executive officers and their senior executives. From December 1991 to May 1993, Dr. Monetta served as the Director of Defense Research and Engineering for Research and Advanced Technology, United States Department of Defense. From June 1989 to December 1991, Dr. Monetta served as the Director of the Office of New Production Reactors, United States Department of Energy. Dr. Monetta's qualifications to sit on our board include his chemical engineering and other management experience obtained as a senior executive for the US Departments of Energy and Defense. Dr. Monetta has 19 years of experience in the air conditioning and refrigeration industry by virtue of his service on our Board and includes his membership on the Company's Audit Committee for the last 8 years and Occupational, Safety and Environmental Protection Committee for the last 14 years.

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 Savings Bank, F.A. for more than five years until his retirement in December 1997. We believe that Mr. Morch's qualifications to sit on our Board include his financial and other experience obtained as a Senior Vice President at Provident Savings Bank, F.A., his 20 years of experience in the air conditioning and refrigeration industry by virtue of his service on our Board including his membership on the Company's Audit Committee for 20 years.

Richard Parrillo has been a director of the Company since September 2014. He has, since 2007, been the Managing Member and principal of Tank Wash USA, LLC, an industrial tank cleaning and inspection company, serving the petro-chemical, refrigeration and related services industries. Between 2000 and 2007, Mr. Parrillo was the Managing Member of Brite Clean, LLC. Between 1999 and 2007, Mr. Parrillo was the Managing Member of Matlack Leasing Corporation, and he served as Vice President of Matlack Leasing Corporation, a subsidiary of Matlack Systems, Inc. and predecessor of Matlack Leasing LLC, from 1995 to 1999. From 1990 to 1995, Mr. Parrillo served as North American Sales Manager for Eurotainer USA, Inc. We believe that Mr. Parrillo's qualifications to sit on the board include his more than 26 years of business experience in the petrochemical and related service industries, both domestically and internationally, as well as his experience in the areas of mergers, acquisitions, management and sales, having negotiated, acquired and managed 13 related companies over the past 26 years.

Eric A. Prouty has been a director of the Company since September 2014. He has, since January 2012, been an independent consultant providing business development consulting services and has provided such services to Hudson at various times since May 2012. Mr. Prouty has more than 20 years experience as an equity research analyst in the asset management and investment banking industry and was one of the first analysts on Wall Street to focus exclusively on companies in the clean tech/sustainability market. From March 2006 through November 2011, Mr. Prouty served as an equity research analyst for Canaccord Genuity, formerly known as Canaccord Adams, a global investment banking firm. Between February 2001 and March 2006 Mr. Prouty served as an equity research analyst for Adams Harkness. While at Adams Harkness (predecessor to Canaccord Genuity) Mr. Prouty served on the firm's Board of Directors from 2004 until the sale of the company to Canaccord in early 2006. Mr. Prouty also served as Director of Research from 2004 until 2007 managing a 40 person research department. Between March 2000 and February 2001, Mr. Prouty served as an equity research analyst for the investment banking firm of Robertson Stephens. From November 1996 through March 2000, Mr. Prouty served as an equity research analyst for the investment banking firm of First Albany. We believe that Mr. Prouty's qualifications to sit on the board include his more than 20 years of experience as an equity research analyst in the investment banking field.

Hudson has established a Compensation Committee of the Board of Directors, which is responsible for, among other things, assisting the Board in overseeing Hudson's executive compensation strategy and reviewing and approving the compensation of our executive officers and for the administration of Hudson's employee benefit plans. The Compensation Committee is also responsible for reviewing and approving the compensation of the Company's directors. The executive officers do not determine executive or director compensation but provide information and recommendations to the Compensation Committee upon its request. The Compensation Committee has delegated authority to the Company's Chief Executive Officer to grant stock options under the Company's 2008 and 2014 stock incentive plans to employees who are not executive officers of up to a maximum of 10,000 shares per employee and up to an aggregate of 50,000 shares per year. The members of the Compensation Committee are Messrs. Abbatecola, Monetta, Morch and Parrillo, each of whom (i) is an "independent" director as defined under the rules of NASDAQ and (ii) qualifies as "outside" directors within the meaning of Internal Revenue Code Section 162(m) and as "non-employee" directors within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended.

Hudson has an Audit Committee of the Board of Directors, which supervises the audit and financial procedures of Hudson and is responsible for selection of the Company's independent registered public accountants. The members of the Audit Committee are Messrs. Abbatecola, Monetta, Morch and Parrillo, each of whom is an "independent" director as defined under the rules of NASDAQ. The Audit Committee does not have a member that qualifies as a "financial expert" under the federal securities laws. Each of the members of the Audit Committee has been active in the business community and has broad and diverse backgrounds, and financial experience. Two of the current members have served on Hudson's Audit Committee and have overseen the financial review by Hudson's independent auditors for 12 years. Hudson believes that the current members of the Audit Committee are able to fully and faithfully perform the functions of the Audit Committee and that Hudson does not need to install a "financial expert" on the Audit Committee.



The By-laws of Hudson 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 for the number of directors to be fixed by the Board of Directors but in any event, shall be no less than five (5) (subject to decrease by a resolution adopted by the shareholders). In July 2014 the Board of Directors approved an increase in the total number of directors from five to seven. At Hudson’s August 26, 2015 Annual Meeting of the Shareholders, Messrs. Abbatecola, Coleman and Morch were elected as directors to terms of office that will expire at the Annual Meeting of Shareholders to be held in the year 2017. Messrs. Monetta, Parrillo, Prouty and Zugibe are currently serving as directors and their terms of office expire at the Annual Meeting of Shareholders to be held in the year 2016.

## Section 16(a) Beneficial Ownership Reporting Compliance

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

Based solely on Hudson’s review of copies of such forms received by Hudson, and on representations made to us, we believe that during the year ended December 31, 2015, all filing requirements applicable to all officers, directors and greater than 10% beneficial shareholders were timely complied with.

## Code of Conduct and Ethics

We have adopted a written code of conduct and ethics that applies to all directors, and employees, including Hudson’s principal executive officer, principal financial officer, principal accounting officer or controller and any persons performing similar functions. We will provide a copy of its code of ethics to any person without charge upon written request addressed to Hudson Technologies, Inc., One Blue Hill Plaza, PO Box 1541, Pearl River, New York 10965, Attention: Stephen P. Mandrackhia.

## Item 11. Executive Compensation

The following table discloses, for the years indicated, the compensation for our Chief Executive Officer and for our two most highly compensated executive officers, other than the Chief Executive Officer, who were serving as executive officers at the end of the year ended December 31, 2015 and whose total compensation during the year ended December 31, 2015 exceeded $100,000 (the “Named Executives”).

SUMMARY COMPENSATION TABLE

<table><tr><td>Name and Principal Position</td><td>Year</td><td>Salary ($)</td><td>Stock Awards ($)</td><td>Option Awards ($) (1)</td><td>Non-Equity Incentive Plan Compensation ($) (2)</td><td>All Other Compensation ($) (3)</td><td>Total ($)</td></tr><tr><td>Kevin J. Zugibe, Chairman, Chief Executive Officer (4)</td><td>2015</td><td>$ 384,000</td><td>$ 0</td><td>$ 0</td><td>$ 260,000</td><td>$ 0</td><td>$ 644,000</td></tr><tr><td></td><td>2014</td><td>$ 288,500</td><td>$ 0</td><td>$ 189,556</td><td>$ 0</td><td>$ 0</td><td>$ 478,056</td></tr><tr><td>Brian F. Coleman, President, Chief Operating Officer, Director (4)</td><td>2015</td><td>$ 250,000</td><td>$ 0</td><td>$ 0</td><td>$ 195,000</td><td>$ 9,600</td><td>$ 454,600</td></tr><tr><td></td><td>2014</td><td>$ 212,500</td><td>$ 0</td><td>$ 136,000</td><td>$ 0</td><td>$ 9,623</td><td>$ 358,123</td></tr><tr><td>Charles F. Harkins, Jr., Vice President Sales</td><td>2015</td><td>$ 213,500</td><td>$ 0</td><td>$ 0</td><td>$ 175,000</td><td>$ 8,400</td><td>$ 396,900</td></tr><tr><td></td><td>2014</td><td>$ 191,000</td><td>$ 0</td><td>$ 108,800</td><td>$ 0</td><td>$ 8,371</td><td>$ 308,171</td></tr></table>

(1) We utilize the grant date fair value using the Black-Scholes method as described in Note 10 to the Notes to the Consolidated Financial Statements.
(2) Amount was earned in 2015 and will be paid in 2016.

(3) Represents payments of annual premiums for long term care insurance purchased for the benefit of the executive officers and, where applicable, the executive officer’s spouse.

(4) Messrs. Coleman and Zugibe did not receive any compensation for services as a director during the years ended December 31, 2015 and 2014.



## Narrative Disclosure to Summary Compensation Table

## Employment, Termination, Change of Control and other Agreements

Kevin J. Zugibe. In March, 2016 we entered into a Second Amended and Restated Employment Agreement with Kevin J. Zugibe, which currently expires in March 2018 and is automatically renewable for successive two year terms unless either party gives notice of termination at least ninety days prior to the expiration date of the then current term. Pursuant to the agreement, Mr. Zugibe is receiving an annual base salary of $384,000 with such increases and bonuses as our Board of Directors may determine. The agreement provides, in the event of Mr. Zugibe's disability, for the continuation of at least 75% of Mr. Zugibe's salary for up to one hundred twenty days after the commencement of his disability. Mr. Zugibe is also entitled to take up to five weeks of vacation, excluding paid holidays.

As part of the agreement, Mr. Zugibe has agreed to certain covenants and restrictions, which include an agreement that Mr. Zugibe will not compete with us in the United States for a period of twenty-four months after his termination for any reason. The agreement also provides that, in the event of his involuntary separation from Hudson without cause, or in the event of his voluntary separation for a good reason as enumerated in the agreement, Mr. Zugibe will receive severance payment, in the form of the continuation of his annual base salary and benefits for a period of twenty-four months, and payment over a twenty four month period of an amount equivalent to 100% of the highest bonus paid to Mr. Zugibe in the three years prior to his termination. The agreement also provides that in the event of his involuntary separation from Hudson without cause, or in the event of his voluntary separation for a good reason as enumerated in the agreement, we will assign to Mr. Zugibe any life insurance policy we hold insuring the life of Mr. Zugibe. We are the beneficiary of a "key-man" insurance policy on the life of Mr. Zugibe in the amount of $1,000,000.

Brian F. Coleman. In March 2016, we entered into an agreement with Brian F. Coleman, pursuant to which, Mr. Coleman has agreed to certain covenants and restrictions, which include an agreement that Mr. Coleman will not compete with us in the United States for a period of eighteen months after his termination for any reason. The agreement provides, in the event of his disability, for the continuation of at least 75% of his salary for up to one hundred twenty days after the commencement of his disability. The agreement also provides that, in the event of his involuntary separation without cause, or in the event of his voluntary separation for a good reason as enumerated in the agreement, Mr. Coleman will receive severance payments, in the form of the continuation of his annual base salary and benefits for a period of eighteen months, and payment over an eighteen month period of an amount equivalent to 100% of the highest bonus paid to Mr. Coleman in the three years prior to his termination.

Charles F. Harkins. On October 10, 2006, we entered into an agreement with Charles F. Harkins, pursuant to which, as amended and supplemented, Mr. Harkins has agreed to certain covenants and restrictions, which include an agreement that Mr. Harkins will not compete with us in the United States for a period of eighteen months after his termination for any reason. The agreement provides, in the event of his disability, for the continuation of at least 75% of his salary for up to one hundred twenty days after the commencement of his disability. The agreement also provides that in the event of his involuntary separation without cause, or in the event of his voluntary separation for a good reason as enumerated in the agreement, Mr. Harkins will receive severance payments, in the form of the continuation of his annual base salary and benefits for a period of eighteen months, and a lump sum payment equivalent to the highest bonus paid to him in the three years prior to his termination, pro-rated to the date of his termination.

In December 2015, the Company established an annual bonus program for the payment of cash and/or equity awards to some or all of the executive officers based upon the Company's annual earnings and potentially other financial and personal metrics. The amount of the aggregate pool to be established each year will be determined by the Independent Board Members on or about the end of each fiscal year, commencing with fiscal year 2015, based upon the Company achieving earnings in excess of a pre-determined level for each fiscal year (the "Benchmark"). In the event the Company's earnings exceed the Benchmark for the applicable fiscal year, some or all of the executive officers may receive bonuses in the form of cash, stock options, stock or some combination thereof. The independent members of the Board of Directors will determine the amount, if any, of the awards to be received by the Chief Executive Officer ("CEO") and the President/Chief Operating Officer ("COO") and whether the awards will be made in cash, stock options or stock, or some combination thereof, which determination will be made, based upon the overall financial results of the Company during the applicable fiscal year as well as on the personal performance of the CEO and COO during the applicable fiscal year. The CEO and the COO will determine the amount, if any, of the awards to be received to all other executive officers, and whether the awards will be made in cash, stock options or stock, or some combination thereof, which determination will be made based upon the overall financial results of the Company during the applicable fiscal year as well as on the personal performance of each of the executive officers during the applicable fiscal year.



The following table discloses the outstanding option awards held by the Named Executives as of December 31, 2015. There are no unexercisable options held by the Named Executives. No stock awards have been issued to the Named Executives.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

<table><tr><td>Name</td><td>Number of Securities Underlying Unexercised Options (#) Exercisable</td><td>Option Exercise Price ($)</td><td>Option Expiration Date</td></tr><tr><td>Kevin J. Zugibe, Chairman, Chief Executive Officer</td><td></td><td></td><td></td></tr><tr><td></td><td>35,000</td><td>1.40</td><td>3/31/2016</td></tr><tr><td></td><td>9,300</td><td>1.02</td><td>10/10/2016</td></tr><tr><td></td><td>28,145</td><td>3.55</td><td>10/1/2017</td></tr><tr><td></td><td>251,855</td><td>3.23</td><td>10/1/2017</td></tr><tr><td></td><td>195,000</td><td>0.85</td><td>11/20/2017</td></tr><tr><td></td><td>78,000</td><td>1.26</td><td>12/17/2019</td></tr><tr><td>Brian F. Coleman, President, Chief Operating Officer, Director</td><td></td><td></td><td></td></tr><tr><td></td><td>32,500</td><td>1.40</td><td>3/31/2016</td></tr><tr><td></td><td>8,100</td><td>1.02</td><td>10/10/2016</td></tr><tr><td></td><td>30,960</td><td>3.23</td><td>10/1/2017</td></tr><tr><td></td><td>169,040</td><td>3.23</td><td>10/1/2017</td></tr><tr><td></td><td>180,000</td><td>0.85</td><td>11/20/2017</td></tr><tr><td></td><td>75,000</td><td>1.26</td><td>12/17/2019</td></tr><tr><td>Charles F. Harkins, Jr, Vice President Sales</td><td></td><td></td><td></td></tr><tr><td></td><td>30,960</td><td>3.23</td><td>10/1/2017</td></tr><tr><td></td><td>129,040</td><td>3.23</td><td>10/1/2017</td></tr></table>

The following table provides information with respect to options exercised by the Named Executives during 2015.

OPTION EXERCISES DURING 2015

<table><tr><td>Name</td><td>Date of Grant of Exercised Options</td><td>Number of Shares purchased upon Exercise of Options</td><td>Date of Exercise</td><td>Exercise Price</td></tr><tr><td>Kevin J. Zugibe, Chairman, Chief Executive Officer</td><td></td><td></td><td></td><td></td></tr><tr><td></td><td>7/8/05</td><td>18,750</td><td>5/8/15</td><td>0.83</td></tr><tr><td></td><td>9/30/05</td><td>18,750</td><td>5/8/15</td><td>2.15</td></tr><tr><td></td><td>12/29/05</td><td>123,750</td><td>12/9/15</td><td>1.76</td></tr><tr><td>Brian F. Coleman, President Chief Operating Officer, Director</td><td></td><td></td><td></td><td></td></tr><tr><td></td><td>7/8/05</td><td>12,500</td><td>3/16/15</td><td>0.83</td></tr><tr><td></td><td>9/30/05</td><td>12,500</td><td>3/16/15</td><td>2.15</td></tr><tr><td></td><td>12/29/05</td><td>12,500</td><td>3/16/15</td><td>1.76</td></tr><tr><td></td><td>12/29/05</td><td>67,300</td><td>9/8/15</td><td>1.76</td></tr><tr><td></td><td>12/29/05</td><td>2,700</td><td>12/16/15</td><td>1.76</td></tr><tr><td>Charles F. Harkins, Jr. Vice President Sales</td><td></td><td></td><td></td><td></td></tr><tr><td></td><td>12/29/05</td><td>50,016</td><td>5/4/15</td><td>1.76</td></tr><tr><td></td><td>3/31/06</td><td>23,125</td><td>5/4/15</td><td>1.40</td></tr></table>



## Stock Option Plans

## 1997 Stock Option Plan

We adopted the 1997 Stock Option Plan (the “1997 Plan”) effective June 11, 1997 pursuant to which 2,000,000 shares of our common stock were reserved for issuance upon the exercise of options designated as either (i) ISOs under the Code, or (ii) nonqualified options. ISOs could be granted under the 1997 Plan to our employees and officers. Non-qualified options could be granted to consultants, directors (whether or not they are employees), our employees or officers. Stock appreciation rights could also be issued in tandem with stock options. Effective June 11, 2007 our ability to grant options under the 1997 Plan expired.

As of December 31, 2015, we had options to purchase 17,400 shares of our common stock outstanding under the 1997 Plan.

## 2004 Stock Incentive Plan

We have adopted the 2004 Stock Incentive Plan (the “2004 Plan”), pursuant to which 2,500,000 shares of our common stock were reserved for issuance upon the exercise of options, designated as either (i) ISOs, under the Code or (ii) non-qualified options, or for issuance upon the granting of restricted stock, deferred stock or other stock-based awards. ISOs could be granted under the 2004 Plan to employees and officers of Hudson. Non-qualified options, restricted stock, deferred stock or other stock-based awards could be granted to consultants, directors (whether or not they are employees), employees or officers of Hudson. Stock appreciation rights could also be issued in tandem with stock options. The ability to grant options or other awards under the 2004 Plan expired on September 10, 2014.

As of December 31, 2015, we had options outstanding to purchase 1,108,486 shares of common stock under the 2004 Plan.

## 2008 Stock Incentive Plan

We have adopted the 2008 Stock Incentive Plan (the “2008 Plan”), pursuant to which 3,000,000 shares of our common stock are currently reserved for issuance upon the exercise of options, designated as either (i) ISOs, under the Code or (ii) non-qualified options, or for issuance upon the granting of restricted stock, deferred stock or other stock-based awards. ISOs may be granted under the 2008 Plan to employees and officers of Hudson. Non-qualified options, restricted stock, deferred stock or other stock-based awards may be granted to consultants, directors (whether or not they are employees), employees or officers of Hudson. Stock appreciation rights may also be issued in tandem with stock options.

The 2008 Plan is intended to qualify under Rule 16b-3 under the Exchange Act and is administered by our Compensation Committee of the Board of Directors. The Committee, within the limitations of the 2008 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. In the case of restricted stock, deferred stock or other stock-based awards, the Committee, within the limitations of the 2008 Plan, determines the persons to whom awards will be granted, the number of shares of stock subject to the award, and the restrictions on issuance and transfer of such shares. Unless the 2008 Plan is sooner terminated, the ability to grant options or other awards under the 2008 Plan will expire on June 19, 2018.

ISOs granted under the 2008 Plan may not be granted at a price less than the fair market value of our common stock on the date of grant (or 110% of fair market value in the case of ISO's granted to a 10% shareholder). In the case of ISOs, 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 of our stock option plans) may not exceed $100,000. Non-qualified options granted under the 2008 Plan may not be granted at a price less than the fair market value of our common stock. Options granted under the 2008 Plan will expire not more than ten years from the date of grant (five years in the case of ISOs granted to a 10% shareholder). Except as otherwise provided by the Committee with respect to non-qualified options, all options, restricted stock, deferred stock or other stock-based awards granted under the 2008 Plan are not transferable during a grantee's lifetime but are transferable at death by will or by the laws of descent and distribution. In general, upon termination of employment of a grantee, all options, restricted stock, deferred stock or other stock-based awards 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, 2015, we had options outstanding to purchase 1,507,703 shares of common stock and 1,439,023 shares are reserved for future issuances under the 2008 Plan.



We have adopted the 2014 Stock Incentive Plan (the "2014 Plan"), pursuant to which 3,000,000 shares of our common stock are currently reserved for issuance upon the exercise of options, designated as either (i) ISOs, under the Code or (ii) non-qualified options, or for issuance upon the granting of restricted stock, deferred stock or other stock-based awards. ISOs may be granted under the 2014 Plan to employees and officers of Hudson. Non-qualified options, restricted stock, deferred stock or other stock-based awards may be granted to consultants, directors (whether or not they are employees), employees or officers of Hudson. Stock appreciation rights may also be issued in tandem with stock options.

The 2014 Plan is intended to qualify under Rule 16b-3 under the Exchange Act and is administered by our Compensation Committee of the Board of Directors. The Committee, within the limitations of the 2014 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. In the case of restricted stock, deferred stock or other stock-based awards, the Committee, within the limitations of the 2014 Plan, determines the persons to whom awards will be granted, the number of shares of stock subject to the award, and the restrictions on issuance and transfer of such shares. Unless the 2014 Plan is sooner terminated, the ability to grant options or other awards under the 2014 Plan will expire on September 17, 2024.

ISOs granted under the 2014 Plan may not be granted at a price less than the fair market value of our common stock on the date of grant (or 110% of fair market value in the case of ISO's granted to a 10% shareholder). In the case of ISOs, 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 of our stock option plans) may not exceed $100,000. Non-qualified options granted under the 2014 Plan may not be granted at a price less than the fair market value of our common stock. Options granted under the 2014 Plan will expire not more than ten years from the date of grant (five years in the case of ISOs granted to a 10% shareholder). Except as otherwise provided by the Committee with respect to non-qualified options, all options, restricted stock, deferred stock or other stock-based awards granted under the 2014 Plan are not transferable during a grantee's lifetime but are transferable at death by will or by the laws of descent and distribution. In general, upon termination of employment of a grantee, all options, restricted stock, deferred stock or other stock-based awards 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, 2015, no options have been issued under the 2014 Plan and 3,000,000 shares are reserved for future issuances under the 2014 Plan.

## Director Compensation

Effective January 1, 2015 non-employee directors receive an annual fee of $40,000 per year, to be paid in a combination of cash and equity compensation in the form of stock options or stock grants provided that no more than $30,000 will be paid in the form of cash. An additional $5,000 per year is paid to non-employee directors serving as the chairman of the Company's Audit, Compensation and Safety and Environmental Protection Committees. Non-employee directors also receive reimbursement for out-of-pocket expenses incurred for attendance at meetings of the Board of Directors and Board committee meetings. In 2015 Messrs. Abbatecola, Monetta and Morch each received a total annual fee of $45,000 plus reimbursement for out-of-pocket expenses incurred for attendance at meetings of the Board of Directors and Board committee meetings, and Messrs. Parrillo and Prouyt each received a total annual fee of $40,000 plus reimbursement for out-of-pocket expenses incurred for attendance at meetings of the Board of Directors and Board committee meetings. The following table discloses the compensation of the non-employee directors who served as our directors during the year ended December 31, 2015.



DIRECTOR COMPENSATION

<table><tr><td>Name</td><td>Fees earned or paid in cash</td><td>Stock Awards</td><td>Option Awards (1)</td><td>Non-Equity Incentive Plan Compensation</td><td>Nonqualified Deferred Compensation Earnings</td><td>All Other Compensation</td><td>Total</td></tr><tr><td>Vincent P. Abbatecola (2)</td><td>$ 25,000</td><td>$ 10,000</td><td>$ 10,000</td><td>$ 0</td><td>$ 0</td><td>$ 0</td><td>$ 45,000</td></tr><tr><td>Dominic J. Monetta (2)</td><td>$ 35,000</td><td>$ 0</td><td>$ 10,000</td><td>$ 0</td><td>$ 0</td><td>$ 0</td><td>$ 45,000</td></tr><tr><td>Otto C. Morch (2)</td><td>$ 25,000</td><td>$ 0</td><td>$ 20,000</td><td>$ 0</td><td>$ 0</td><td>$ 0</td><td>$ 45,000</td></tr><tr><td>Richard Parrillo (2)</td><td>$ 20,000</td><td>$ 0</td><td>$ 20,000</td><td>$ 0</td><td>$ 0</td><td>$ 0</td><td>$ 40,000</td></tr><tr><td>Eric A. Prouty (2)</td><td>$ 20,000</td><td>$ 20,000</td><td>$ 0</td><td>$ 0</td><td>$ 0</td><td>$ 48,000 (3)</td><td>$ 88,000</td></tr></table>

(1) We utilize the grant date fair value using the Black-Scholes method as described in Note 9 to the Notes to the Consolidated Financial Statements.
(2) As of December 31, 2015, Mr. Abbatecola has options to purchase 177,083 shares of common stock outstanding, Mr. Morch has options to purchase 151,168 shares of common stock outstanding, Dr. Monetta has options to purchase 137,083 shares of common stock outstanding, Mr. Parrillo has options to purchase 54,769 shares of common stock outstanding, and Mr. Prouty has options to purchase 26,600 shares of common stock outstanding.
(3) Consists of consulting fees paid to Mr. Prouty.

## Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information as of March 9, 2016 based on information obtained from the persons named below, with respect to the beneficial ownership of Hudson’s common stock by (i) each person known by Hudson to be the beneficial owner of more than 5% of Hudson’s outstanding common stock, (ii) the Named Executives, (iii) each director of Hudson, and (iv) all of our directors and executive officers as a group:

BENEFICIAL OWNERSHIP TABLE

<table><tr><td>Title of Class</td><td>Name of Beneficial Owner</td><td>Amount and Nature of Beneficial Ownership (1)</td><td>Percent of Class</td></tr><tr><td>Common Stock</td><td>Kevin J. Zugibe</td><td>4,589,793(2)</td><td>13.7%</td></tr><tr><td>Common Stock</td><td>Brian F. Coleman</td><td>955,767(3)</td><td>2.9%</td></tr><tr><td>Common Stock</td><td>Charles F. Harkins</td><td>160,000(4)</td><td>*</td></tr><tr><td>Common Stock</td><td>James R. Buscemi</td><td>366,775(5)</td><td>1.1%</td></tr><tr><td>Common Stock</td><td>Stephen P. Mandracchia</td><td>1,811,661(6)</td><td>5.5%</td></tr><tr><td>Common Stock</td><td>Vincent P. Abbatecola</td><td>234,447(7)</td><td>*</td></tr><tr><td>Common Stock</td><td>Dominic J. Monetta</td><td>241,433(8)</td><td>*</td></tr><tr><td>Common Stock</td><td>Otto C. Morch</td><td>192,571(9)</td><td>*</td></tr><tr><td>Common Stock</td><td>Richard Parrillo</td><td>154,769(10)</td><td>*</td></tr><tr><td>Common Stock</td><td>Eric A. Prouty</td><td>53,157(11)</td><td>*</td></tr><tr><td>Common Stock</td><td>William Blair Investment Management, LLC</td><td>3,041,164(15)</td><td>9.3%</td></tr><tr><td>Common Stock</td><td>Heartland Advisors, Inc.</td><td>2,500,000(13)</td><td>7.6%</td></tr><tr><td>Common Stock</td><td>Northern Rights Capital Management, LP.</td><td>2,602,150(14)</td><td>7.8%</td></tr><tr><td>Common Stock</td><td>Perritt Capital Management, Inc.</td><td>1,682,750(12)</td><td>5.1%</td></tr><tr><td>Common Stock</td><td>All directors and executive officers as a group (Ten Persons)</td><td>8,760,373(16)</td><td>24.9%</td></tr></table>

 \( ^{*} \)  = Less than 1%

(1) A person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days from March 9, 2016. 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 9, 2016 have been exercised. Unless otherwise noted, Hudson believes that all persons named in the table have sole voting and investment power with respect to all shares of our common stock beneficially owned by them. The address for each beneficial owner, unless otherwise noted, is c/o Hudson Technologies, Inc. at: PO Box 1541, One Blue Hill Plaza, Pearl River, New York 10965.

(2) Includes (i) 35,000 shares which may be purchased at $1.40 per share; (ii) 9,300 shares which may be purchased at $1.02 per share; (iii) 195,000 shares that may be purchased at $0.85 per share; (iv) 78,000 shares which may be purchased at $1.26 per share; (v) 28,145 shares that may be purchased at $3.55 per share; and (vi) 251,855 shares that may be purchased at $3.23 per share, under immediately exercisable options.



(3) Includes (i) 32,500 shares which may be purchased at $1.40 per share; (ii) 8,100 shares which may be purchased at $1.02 per share; (iii) 180,000 shares which may be purchased at $0.85 per share; (iv) 75,000 shares which may be purchased at $1.26 per share; (v) 30,960 shares that may be purchased at $3.23 per share; and (vi) 169,040 shares that may be purchased at $3.23 per share, under immediately exercisable options.

(4) Includes (i) 30,960 shares that may be purchased at $3.23 per share; and (ii) 129,040 shares that may be purchased at $3.23 per share, under immediately exercisable options.

(5) Includes (i) 16,625 shares which may be purchased at $1.40 per share; (ii) 100,000 shares that may be purchased at $0.85 per share; and (iii) 48,000 shares which may be purchased at $1.26 per share; (iv) 30,960 shares that may be purchased at $3.23 per share; and (v) 74,040 shares that may be purchased at $3.23 per share, under immediately exercisable options.

(6) Includes (i) 1,080,661 shares held of record in the name of Mr. Mandracchia's wife, Theresa Mandracchia, over which Mr. Mandracchia has sole voting power and shared dispositive power, and (ii) the following shares which may be purchased by Mr. Mandracchia upon the exercise of options previously granted to him: (a) 125,000 shares that may be purchased at $0.85 per share; (b) 58,000 shares which may be purchased at $1.26 per share; (c) 28,145 shares that may be purchased at $3.55; and (d) 76,855 shares which may be purchased at $3.23 per share, under immediately exercisable options.

(7) Includes (i) 40,000 shares which may be purchased at $0.85 per share; (ii) 40,000 shares which may be purchased at $1.21 per share; (iii) 25,000 shares that may be purchased at $1.31 per share; (iv) 10,281 shares which may be purchased at $3.27 per share; (v) 21,118 shares which may be purchased at $1.88 per share; (vi) 26,600 shares that may be purchased at $3.23 per share; and (vii) 14,084 shares that may be purchased at $3.05 per share under immediately exercisable options.

(8) Includes (i) 40,000 shares which may be purchased at $1.21 per share; (ii) 25,000 shares which may be purchased at $1.31 per share; (iii) 10,281 shares which may be purchased at $3.27 per share; a (iv) 21,118 shares which may be purchased at $1.88 per share; (v) 26,600 shares that may be purchased at $3.23 per share; and (vi) 14,084 shares that may be purchased at $3.05 per share under immediately exercisable options.

(9) Includes (ii) 40,000 shares which may be purchased at $ 1.21 per share; (ii) 25,000 shares which may be purchased at $1.31 per share; (iii) 10,281 shares which may be purchased at $3.27 per share; (iv) 21,118 shares which may be purchased at $1.88 per share; (v) 26,600 shares that may be purchased at $3.23 per share; and (vi) 28,169 shares that may be purchased at $3.05 per share, under immediately exercisable options.

(10) Includes (i) 26,600 shares that may be purchased at $3.23 per share; and (ii) 28,169 shares that may be purchased at $3.05 per share, under immediately exercisable options.

(11) Includes (i) 26,600 shares that may be purchased at $3.23 per share under immediately exercisable options.

(12) Represents aggregate amount of beneficially owned common stock as last reported in a Schedule 13G/A filed by Perritt Capital Management, Inc., and Perritt Funds, Inc. on February 4, 2016. The address of Perritt Capital Management, Inc. is 300 South Wacker Drive, Suite 2880, Chicago, Illinois 60606.

(13) Represents aggregate amount of beneficially owned common stock as reported in a Schedule 13G/A filed by Heartland Advisors, Inc. and William J. Nasgovitz on February 5, 2016. The address of Heartland Advisors, Inc. is 789 North Water Street, Milwaukee, WI 53202.

(14) Represents aggregate amount of beneficially owned common stock as reported in a Schedule 13G/A filed by Northern Right Capital Management, L.P., Northern Right Capital (QP), L.P., Becker Drapkin Partners SLV, Ltd., BC Advisors, LLC, Steven R. Becker and Matthew A. Drapkin on February 12, 2016. The address of Becker Drapkin Management L.P. is 500 Crescent Court, Suite 230, Dallas, TX 75201.

(15) Represents aggregate amount of beneficially owned common stock as reported in a Schedule 13G filed by William Blair Investment Management, LLC on February 9, 2016. The address of William Blair Investment Management, LLC is 224 W. Adams St., Chicago, IL 60606.

(16) Includes options to purchase 2,357,228 shares of common stock which may be purchased under immediately exercisable options.



## Equity Compensation Plan

The following table provides certain information with respect to all of Hudson’s equity compensation plans as of December 31, 2015.

<table><tr><td>Plan Category</td><td>Number of securities to be issued upon exercise of outstanding options (a)</td><td>Weighted-average exercise price of outstanding options (b)</td><td>Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)</td></tr><tr><td>Equity compensation plans approved by security holders</td><td>2,633,589</td><td>$ 2.06</td><td>4,439,023</td></tr></table>

## Item 13. Certain Relationships and Related Transactions, and Director Independence

Our Board of Directors is comprised of seven members, of which four directors are independent as defined under NASDAQ Marketplace rules. The independent members of the Board are Messrs. Abbatecola, Monetta, Morch, and Parrillo. Messrs. Coleman, Prouty and Zugibe are not independent as defined under NASDAQ Marketplace rules.

During 2015 and 2014, Mr. Prouty provided consulting services to the Company and received compensation of 48,000 and $95,000 in 2015 and 2014, respectively, from the Company for those services. The Company may from time to time utilize Mr. Prouty for additional consulting services and on such occasions will provide compensation to Mr. Prouty for those services.

The independent members of our Board of Directors determine the compensation of our executive officers. The Board of Directors has established a Compensation Committee, which is responsible for recommending to the independent directors the compensation of our executive officers and for the administration of our employee benefit plans. The members of such committee are Messrs. Abbatecola, Monetta, Morch and Parrillo.

In September 2007, the Board established a Nominating Committee consisting of Messrs. Abbatecola, Monetta and Zugibe, and which is responsible for recommending to the independent directors nominees for election to the Board. Mr. Zugibe is not an independent director under NASDAQ Marketplace rules. Nominations to the Board are made by vote of the independent directors of the Board.

The members of our Audit Committee of our Board of Directors are Messrs. Abbatecola, Monetta, Morch and Parrillo, all of whom are independent as defined under NASDAQ Marketplace rules.

## Review, approval or ratification of transactions with related persons

Each year, all of our directors and officers are asked to disclose the existence of family relationships and other related transactions in Director and Officer Questionnaires. Our Audit Committee is responsible for reviewing and approving or ratifying related-person transactions. A related person is any executive officer, director or more than 5% stockholder, or any immediate family member of the foregoing persons, or entity owned or controlled by such person. In addition, pursuant to our Code of Business Conduct and Ethics, all of our employees and directors are required to bring any conflict of interest to the attention of one of the Company’s executive officers or directors. In determining whether to approve or ratify a related party transaction, the Audit Committee will consider, among other factors it deems appropriate, whether the related party transaction is on terms no less favorable to us than terms generally available to us from an unaffiliated third-party under the same or similar circumstances, and the extent of the related party’s interest in the transaction. Any transaction which is deemed to be a related party transaction requires the approval, initially by a majority of the non-interested Audit Committee members and finally by a majority of the non-interested Board members. There are no other written procedures governing any review of related person transactions.

## Item 14. Principal Accountant Fees and Services

Audit Fees. The aggregate fees billed by BDO USA, LLP for professional services rendered for the audits and reviews of the Company's financial statements for the years ended December 31, 2015 and 2014 totaled $391,000 and $277,000, respectively.

Audit-Related Fees. In 2015 and 2014, the aggregate fees billed by BDO USA, LLP for assurance and related services that are reasonably related to the performance of the audit or review of the Company's financial statements were $10,000 and 20,000, respectively. The fees in 2015 and 2014 were related to the due diligence process with respect to the Company's recent acquisitions.

Tax Fees. In 2015 and 2014 the aggregate fees billed by BDO USA, LLP for professional services rendered for tax advice totaled $39,000 and 36,000, respectively.



All Other Fees. In 2015 and 2014, all other fees billed by BDO USA LLP for professional services rendered other than the services described in the paragraphs caption “Audit Fees”, “Audit Related Fees” and “Tax Fees” were $14,000 and 5,000, respectively. The fees in 2015 and 2014 were for consulting fees relating to acquisitions.

The Audit Committee has established its pre-approval policies and procedures, pursuant to which the Audit Committee approved the foregoing audit services provided by BDO USA, LLP in 2015. Consistent with the Audit Committee's responsibility for engaging the Company's independent auditors, all audit and permitted non-audit services require pre-approval by the Audit Committee. The full Audit Committee approves proposed services and fee estimates for these services. The Audit Committee chairperson or their designee has been designated by the Audit Committee to approve any services arising during the year that were not pre-approved by the Audit Committee. Services approved by the Audit Committee chairperson are communicated to the full Audit Committee at its next regular meeting and the Audit Committee reviews services and fees for the fiscal year at each such meeting. Pursuant to these procedures, the Audit Committee approved the foregoing audit services provided by BDO USA, LLP.



## Part IV

## Item 15. Exhibits and Financial Statement Schedules

(A)(1) Financial Statements
The consolidated financial statements of Hudson Technologies, Inc. appear after Item 15 of this report
(A)(2) Financial Statement Schedules
None
(A)(3) 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 Certificate of Amendment of the Certificate of Incorporation dated March 16, 1999. (2)
3.5 Certificate of Correction of the Certificate of Amendment dated March 25, 1999. (2)
3.6 Certificate of Amendment of the Certificate of Incorporation dated March 29, 1999. (2)
3.7 Certificate of Amendment of the Certificate of Incorporation dated February 16, 2001. (4)
3.8 Certificate of Amendment of the Certificate of Incorporation dated March 20, 2002. (5)
3.9 Amendment to Certificate of Incorporation dated January 3, 2003. (6)
3.10 Amended and Restated By-Laws adopted July 29, 2011. (15)
3.11 Certificate of Amendment of the Certificate of Incorporation dated September 15, 2015. (26)
10.1 Assignment of patent rights from Kevin J. Zugibe to Registrant. (1)
10.2 1997 Stock Option Plan of the Company, as amended. (3)*
10.3 2004 Stock Incentive Plan. (10)*
10.4 Form of Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with full vesting upon issuance. (7)
10.5 Form of Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with options vesting in equal quarterly installments over two year period. (7)
10.6 Form of Non-Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with full vesting upon issuance. (7)
10.7 Commercial Mortgage, dated May 27, 2005, between Hudson Technologies Company and Busey Bank. (8)
10.8 Commercial Installment Mortgage Note, dated May 27, 2005, between Hudson Technologies Company and Busey Bank.  (8)
10.9 Amended and Restated Employment Agreement with Kevin J. Zugibe, as amended. (12)*
10.10 Agreement with Brian F. Coleman, as amended. (12)*
10.11 Agreement with James R. Buscemi, as amended. (12)*
10.12 Agreement with Charles F. Harkins, as amended. (12)*
10.13 Agreement with Stephen P. Mandracchia, as amended. (12)*
10.14 2008 Stock Incentive Plan. (11)*
10.15 Form of Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issuance. (12)*
10.16 Form of Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with options vesting in equal installments over two year period. (12)*
10.17 Form of Non-Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issuance. (12)*
10.18 Form of Non-Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with options vesting in equal installments over two year period. (12)*
10.19 Warrant, dated August 5, 2009, for 73,500 shares of Common Stock issued to Roth Capital Partners, LLC. (19)
10.20 First Amendment to Amended and Restated Employment Agreement with Kevin J. Zugibe, dated December 30, 2008. (12)*
10.21 Form of Warrant issued in the 2010 Offering. (13)
10.22 Warrant Repurchase Agreement dated March 4, 2011 between the Company and Sonar Partners Fund, L.P. (14)
10.23 Warrant Repurchase Agreement dated March 4, 2011 between the Company and Sonar Overseas Fund, Ltd. (14)
10.24 Form of Agreement and Consent, to amend warrants issued in connection with the 2010 Offering, dated March 7, 2011. (14)
10.25 Revolving Credit, Term Loan and Security Agreement, dated June 22, 2012, between Hudson Technologies Company as borrower and PNC Bank, National Association as lender and agent (16)
10.26 $23,000,000 Revolving Credit Note, dated June 22, 2012, by Hudson Technologies Company as borrower in favor of PNC (16)
10.27 $4,000,000 Term Note, dated June 22, 2012, by Hudson Technologies Company as borrower in favor of PNC. (16)
10.28 Guaranty & Suretyship Agreement, dated June 22, 2012, made by Hudson Holdings, Inc. as guarantor on behalf of Hudson Technologies Company. (16)



10.29 Guaranty & Suretyship Agreement, dated June 22, 2012, made by the Company as guarantor on behalf of Hudson Technologies Company. (16)
10.30 Patent, Trademarks, and Copyrights Security Agreement, dated June 22, 2012, between the Company and PNC. (16)
10.31 Patent, Trademarks, and Copyrights Security Agreement, dated June 22, 2012, between Hudson Technologies Company and PNC. (16)
10.32 Long Term Care Insurance Plan Summary. (17)*
10.33 First Amendment to Revolving Credit, Term Loan, and Security Agreement between Hudson Technologies Company and PNC dated February 15, 2013. (18)
10.34 $36,000,000 Amended and Restated Revolving Credit Note, dated February 15, 2013, by Hudson Technologies Company as borrower in favor of PNC. (18)
10.35 Guarantors' Ratification dated February 15, 2013, by the Company and Hudson Holdings, Inc. (18)
10.36 Second Amendment to Revolving Credit, Term Loan and Security Agreement Between Hudson Technologies Company and PNC Bank, National Association dated October 25, 2013 (20)
10.37 Guarantors' Ratification dated October 25, 2013 by Hudson Technologies, Inc. and Hudson Holdings, Inc. (20)
10.38 Amendment No. 1 to the Hudson Technologies, Inc. 2004 Stock Incentive Plan adopted October 22, 2013. (21)*
10.39 Amendment No. 1 to the Hudson Technologies, Inc. 2008 Stock Incentive Plan adopted October 22, 2013. (21)*
10.40 Underwriting Agreement between William Blair & Company, L.L.C., for itself and as representative of the several underwriters, and Hudson Technologies, Inc., dated June 6, 2014 (22)
10.41 Third Amendment to Revolving Credit, Term Loan and Security Agreement Between Hudson Technologies Company and PNC Bank, National Association, dated July 2, 2014 (23)
10.42 Guarantor's Ratification, dated July 1, 2014, by Hudson Technologies, Inc. and Hudson Holdings, Inc. (23)
10.43 2014 Stock Incentive Plan (24)*
10.44 Form of Incentive Stock Option Agreement under the 2014 Stock Incentive Plan with full vesting upon issuance. (25)
10.45 Form of Incentive Stock Option Agreement under the 2014 Stock Incentive Plan with options vesting in equal installments over two year period. (25)*
10.46 Form of Non-Incentive Stock Option Agreement under the 2014 Stock Incentive Plan with full vesting upon issuance. (25)*
10.47 Form of Non-Incentive Stock Option Agreement under the 2014 Stock Incentive Plan with options vesting in equal installments over two year period. (25)*
10.48 Form of Incentive Barrier Stock Option Agreement under the 2014 Stock Incentive Plan with full vesting upon issuance. (25)*
10.49 Form of Non-Incentive Barrier Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issuance. (25)*
10.50 Form of Incentive Barrier Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issue. (25)*
10.51 Form of Non-Incentive Barrier Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issuance. (25)*
10.52 Fourth Amendment to Revolving Credit, Term Loan and Security Agreement Between Hudson Technologies Company and PNC Bank, National Association, dated July 1, 2015 (27)
10.53 Guarantor's Ratification, dated July 1, 2015, by Hudson Technologies, Inc. and Hudson Holdings, Inc. (27)
10.54 Second Amended and Restated Employment Agreement with Kevin J. Zugibe (28)*
10.55 Amended and Restated Agreement with Brian Coleman (28)*
14 Code of Business Conduct and Ethics. (9)
21 Subsidiaries of the Company. (28)
23.1 Consent of BDO USA, LLP. (28)
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (28)
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (28)
32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002. (28)
32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002. (28)
101 Interactive data file pursuant to Rule 405 of Regulation S-T.(28)

(3) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for the year ended December 31, 1999.
(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, 2000.



(5) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for the year ended December 31, 2001.
(6) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for the year ended December 31, 2002.
(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, 2004.
(8) Incorporated by reference to the comparable exhibit filed with the Company's Quarterly Report on Form 10-QSB for the quarter ended June 30, 2005.
(9) Incorporated by reference to the comparable exhibit filed with the Company's Current Report on Form 8-K, for the event dated March 3, 2005, and filed May 31, 2005.
(10) Incorporated by reference to Appendix B to the Company's Definitive Proxy Statement on Schedule 14A filed August 18, 2004.
(11) Incorporated by reference to Appendix I to the Company's Definitive Proxy Statement on Schedule 14A filed July 29, 2008.
(12) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2008.
(13) Incorporated by reference to the comparable exhibit filed with the Company's Current Report on Form 8-K for the event dated July 1, 2010 and filed July 2, 2010.
(14) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2010.
(15) Incorporated by reference to the comparable exhibit filed with the Company's Quarterly Report on Form-10-Q for the quarter ended June 30, 2011.
(16) Incorporated by reference to the comparable exhibit filed with the Company's Report on Form 8-K for the event dated June 22, 2012 and filed June 28, 2012.
(17) Incorporated by reference to the comparable exhibit filed with the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.
(18) Incorporated by reference to the comparable exhibit filed with the Company's Current Report on Form 8-K for the event dated February 15, 2013 and filed February 20, 2013.
(19) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2009.
(20) Incorporated by reference to the comparable exhibit filed with the Company's Current Report on Form 8-K for the event dated October 25, 2013 and filed October 31, 2013.
(21) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2013.
(22) Incorporated by reference to the comparable exhibit filed with the Company's Current Report on Form 8-K filed on June 6, 2014.
(23) Incorporated by reference to the comparable exhibit filed with the Company's Current Report on Form 8-K filed on July 7, 2014.
(24) Incorporated by reference to Appendix B to the Company's Definitive Proxy Statement on Schedule 14A filed August 12, 2014.
(25) Incorporated by reference to the comparable exhibit filed with the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.
(26) Incorporated by reference to the comparable exhibit filed with the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.
(27) Incorporated by reference to the comparable exhibit filed with the Company's Current Report on Form 8-K for the event dated July 7, 2015 and filed July 8, 2015.
(28) Filed herewith
(*) Denotes Management Compensation Plan, agreement or arrangement.



## Hudson Technologies, Inc.
Consolidated Financial Statements

## Contents

Report of Independent Registered Public Accounting Firm 38
Audited Consolidated Financial Statements:
Consolidated Balance Sheets 39
Consolidated Statements of Operations 40
Consolidated Statements of Stockholders' Equity 41
Consolidated Statements of Cash Flows 42
Notes to the Consolidated Financial Statements 43



## Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Hudson Technologies, Inc.

Pearl River, NY

We have audited the accompanying consolidated balance sheets of Hudson Technologies, Inc. and Subsidiaries as of December 31, 2015 and 2014 and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended. These consolidated 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. 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 at December 31, 2015 and 2014, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Hudson Technologies, Inc.'s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 11, 2016 expressed an unqualified opinion thereon.

/s/ BDO USA, LLP

Stamford, CT

March 11, 2016



## Hudson Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
(Amounts in thousands, except for share and par value amounts)

<table><tr><td rowspan="2"></td><td colspan="3">December 31,</td></tr><tr><td>2015</td><td>2014</td><td></td></tr><tr><td>Assets</td><td></td><td></td><td></td></tr><tr><td>Current assets:</td><td></td><td></td><td></td></tr><tr><td>Cash and cash equivalents</td><td>$ 1,258</td><td>$ 935</td><td></td></tr><tr><td>Trade accounts receivable - net</td><td>4,414</td><td>3,968</td><td></td></tr><tr><td>Inventories</td><td>61,897</td><td>37,017</td><td></td></tr><tr><td>Deferred tax asset</td><td>376</td><td>397</td><td></td></tr><tr><td>Prepaid expenses and other current assets</td><td>1,524</td><td>1,011</td><td></td></tr><tr><td>Total current assets</td><td>69,469</td><td>43,328</td><td></td></tr><tr><td></td><td></td><td></td><td></td></tr><tr><td>Property, plant and equipment, less accumulated depreciation</td><td>7,536</td><td>7,887</td><td></td></tr><tr><td>Other assets</td><td>76</td><td>102</td><td></td></tr><tr><td>Deferred tax asset</td><td>3,287</td><td>6,031</td><td></td></tr><tr><td>Goodwill</td><td>856</td><td>265</td><td></td></tr><tr><td>Intangible assets, less accumulated amortization</td><td>3,787</td><td>2,322</td><td></td></tr><tr><td>Total Assets</td><td>$ 85,011</td><td>$ 59,935</td><td></td></tr><tr><td>Liabilities and Stockholders&#x27; Equity</td><td></td><td></td><td></td></tr><tr><td>Current liabilities:</td><td></td><td></td><td></td></tr><tr><td>Trade accounts payable</td><td>$ 5,792</td><td>$ 2,529</td><td></td></tr><tr><td>Accrued expenses and other current liabilities</td><td>3,018</td><td>1,981</td><td></td></tr><tr><td>Accrued payroll</td><td>1,577</td><td>384</td><td></td></tr><tr><td>Short-term debt and current maturities of long-term debt</td><td>20,573</td><td>6,320</td><td></td></tr><tr><td>Total current liabilities</td><td>30,960</td><td>11,214</td><td></td></tr><tr><td>Other liabilities</td><td>333</td><td>333</td><td></td></tr><tr><td>Long-term debt, less current maturities</td><td>4,293</td><td>4,389</td><td></td></tr><tr><td>Total Liabilities</td><td>35,586</td><td>15,936</td><td></td></tr><tr><td>Commitments and contingencies</td><td></td><td></td><td></td></tr><tr><td>Stockholders&#x27; equity:</td><td></td><td></td><td></td></tr><tr><td>Preferred stock, shares authorized 5,000,000:</td><td></td><td></td><td></td></tr><tr><td>Series A Convertible preferred stock, $0.01 par value ($100 liquidation preference value);</td><td></td><td></td><td></td></tr><tr><td>shares authorized 150,000; none issued or outstanding</td><td>0</td><td>0</td><td></td></tr><tr><td>Common stock, $0.01 par value; shares authorized 100,000,000, and 50,000,000;</td><td></td><td></td><td></td></tr><tr><td>issued and outstanding 32,804,617 and 32,312,276</td><td>328</td><td>323</td><td></td></tr><tr><td>Additional paid-in capital</td><td>62,163</td><td>61,505</td><td></td></tr><tr><td>Accumulated deficit</td><td>(13,066)</td><td>(17,829)</td><td></td></tr><tr><td>Total Stockholders&#x27; Equity</td><td>49,425</td><td>43,999</td><td></td></tr><tr><td>Total Liabilities and Stockholders&#x27; Equity</td><td>$ 85,011</td><td>$ 59,935</td><td></td></tr></table>

See Accompanying Notes to the Consolidated Financial Statements.



## Hudson Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
(Amounts in thousands, except for share and per share amounts)

<table><tr><td rowspan="2"></td><td colspan="2">For the years ended December 31,</td></tr><tr><td>2015</td><td>2014</td></tr><tr><td>Revenues</td><td>$     79,722</td><td>$     55,810</td></tr><tr><td>Cost of sales</td><td>61,233</td><td>49,364</td></tr><tr><td>Gross profit</td><td>18,489</td><td>6,446</td></tr><tr><td>Operating expenses:</td><td></td><td></td></tr><tr><td>Selling and marketing</td><td>4,179</td><td>2,723</td></tr><tr><td>General and administrative</td><td>6,129</td><td>4,708</td></tr><tr><td>Total operating expenses</td><td>10,308</td><td>7,431</td></tr><tr><td>Operating Income (loss)</td><td>8,181</td><td>(985)</td></tr><tr><td>Other income (expense):</td><td></td><td></td></tr><tr><td>Interest expense</td><td>(776)</td><td>(641)</td></tr><tr><td>Other income</td><td>302</td><td>0</td></tr><tr><td>Total other income (expense)</td><td>(474)</td><td>(641)</td></tr><tr><td>Income (loss) before income taxes</td><td>7,707</td><td>(1,626)</td></tr><tr><td>Income tax expense (benefit)</td><td>2,944</td><td>(906)</td></tr><tr><td>Net income (loss)</td><td>$     4,763</td><td>$      (720)</td></tr><tr><td>Net income (loss) per common share - Basic</td><td>$     0.15</td><td>$      (0.02)</td></tr><tr><td>Net income (loss) per common share - Diluted</td><td>$     0.14</td><td>$      (0.02)</td></tr><tr><td>Weighted average number of shares outstanding - Basic</td><td>32,546,840</td><td>29,122,746</td></tr><tr><td>Weighted average number of shares outstanding - Diluted</td><td>33,936,099</td><td>29,122,746</td></tr></table>

See Accompanying Notes to the Consolidated Financial Statements.



Hudson Technologies, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
(Amounts in thousands, except for share amounts)

<table><tr><td rowspan="2"></td><td colspan="2">Common Stock</td><td>Additional</td><td colspan="2">Accumulated</td><td rowspan="2">Total</td></tr><tr><td>Shares</td><td>Amount</td><td>Paid-in Capital</td><td>Deficit</td><td></td></tr><tr><td>Balance at January 1, 2014</td><td>25,070,386</td><td>$ 251</td><td>$ 44,944</td><td>($ 17,109)</td><td>$ 28,086</td><td></td></tr><tr><td>Sale of common stock</td><td>6,900,000</td><td>69</td><td>15,547</td><td>0</td><td>15,616</td><td></td></tr><tr><td>Issuance of common stock upon exercise of stock options</td><td>341,890</td><td>3</td><td>306</td><td>0</td><td>309</td><td></td></tr><tr><td>Value of share-based arrangements</td><td>0</td><td>0</td><td>708</td><td>0</td><td>708</td><td></td></tr><tr><td>Net loss</td><td>0</td><td>0</td><td>0</td><td>(720)</td><td>(720)</td><td></td></tr><tr><td>Balance at December 31, 2014</td><td>32,312,276</td><td>$ 323</td><td>$ 61,505</td><td>($ 17,829)</td><td>$ 43,999</td><td></td></tr><tr><td>Issuance of common stock upon exercise of stock options and warrants</td><td>482,506</td><td>5</td><td>455</td><td>0</td><td>460</td><td></td></tr><tr><td>Issuance of common stock for services</td><td>9,835</td><td>0</td><td>30</td><td>0</td><td>30</td><td></td></tr><tr><td>Value of share-based arrangements</td><td>0</td><td>0</td><td>173</td><td>0</td><td>173</td><td></td></tr><tr><td>Net income</td><td>0</td><td>0</td><td>0</td><td>4,763</td><td>4,763</td><td></td></tr><tr><td>Balance at December 31, 2015</td><td>32,804,617</td><td>$ 328</td><td>$ 62,163</td><td>($ 13,066)</td><td>$ 49,425</td><td></td></tr></table>

See Accompanying Notes to the Consolidated Financial Statements.



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

<table><tr><td rowspan="2"></td><td colspan="2">For the years ended December 31,</td></tr><tr><td>2015</td><td>2014</td></tr><tr><td>Cash flows from operating activities:</td><td></td><td></td></tr><tr><td>Net income (loss)</td><td>$ 4,763</td><td>$ (720)</td></tr><tr><td>Adjustments to reconcile net income (loss) to cash provided (used) by operating activities:</td><td></td><td></td></tr><tr><td>Depreciation and amortization</td><td>2,072</td><td>979</td></tr><tr><td>Allowance for doubtful accounts</td><td>99</td><td>31</td></tr><tr><td>Amortization of deferred finance cost</td><td>75</td><td>112</td></tr><tr><td>Value of share-based payment arrangements</td><td>203</td><td>708</td></tr><tr><td>Deferred tax expense (benefit)</td><td>2,768</td><td>(857)</td></tr><tr><td>Other non cash (income) expenses</td><td>(302)</td><td>414</td></tr><tr><td>Changes in assets and liabilities (net of acquisitions):</td><td></td><td></td></tr><tr><td>Trade accounts receivable</td><td>(545)</td><td>(293)</td></tr><tr><td>Inventories</td><td>(23,430)</td><td>(1,150)</td></tr><tr><td>Prepaid and other assets</td><td>(465)</td><td>(548)</td></tr><tr><td>Income taxes receivable</td><td>0</td><td>2,709</td></tr><tr><td>Accounts payable and accrued expenses</td><td>4,259</td><td>316</td></tr><tr><td>Cash provided (used) by operating activities</td><td>(10,503)</td><td>1,701</td></tr><tr><td>Cash flows from investing activities:</td><td></td><td></td></tr><tr><td>Payments for acquisitions</td><td>(2,424)</td><td>(7,368)</td></tr><tr><td>Additions to patents</td><td>(12)</td><td>(10)</td></tr><tr><td>Additions to property, plant and equipment</td><td>(889)</td><td>(716)</td></tr><tr><td>Investment in affiliates</td><td>0</td><td>63</td></tr><tr><td>Cash used by investing activities</td><td>(3,325)</td><td>(8,031)</td></tr><tr><td>Cash flows from financing activities:</td><td></td><td></td></tr><tr><td>Proceeds from issuance of common stock</td><td>460</td><td>15,925</td></tr><tr><td>Borrowing from (repayments of) of short-term debt - net</td><td>14,172</td><td>(9,024)</td></tr><tr><td>Proceeds from long-term debt</td><td>292</td><td>0</td></tr><tr><td>Repayment of long-term debt</td><td>(328)</td><td>(305)</td></tr><tr><td>Payment of deferred acquisition cost</td><td>(445)</td><td>0</td></tr><tr><td>Net cash provided by financing activities</td><td>14,151</td><td>6,596</td></tr><tr><td>Increase in cash and cash equivalents Cash and cash equivalents at beginning of period</td><td>323</td><td>266</td></tr><tr><td></td><td>935</td><td>669</td></tr><tr><td>Cash and cash equivalents at end of period</td><td>$ 1,258</td><td>$ 935</td></tr><tr><td>Supplemental disclosure of cash flow information:</td><td></td><td></td></tr><tr><td>Cash paid during period for interest</td><td>$ 701</td><td>$ 529</td></tr><tr><td>Non cash investing activity:</td><td></td><td></td></tr><tr><td>Deferred acquisition cost</td><td>$ 1,902</td><td>$ 667</td></tr><tr><td colspan="3">See Accompanying Notes to the Consolidated Financial Statements</td></tr></table>



# 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, is a refrigerant services company providing innovative solutions to recurring problems within the refrigeration industry. The Company's operations consist of one reportable segment. The Company's products and services are primarily used in commercial air conditioning, industrial processing and refrigeration systems, and include refrigerant and industrial gas sales, refrigerant management services consisting primarily of reclamation of refrigerants and RefrigerantSide \( ^{\circledR} \)  Services performed at a customer's site, consisting of system decontamination to remove moisture, oils and other contaminants. In addition, the Company's SmartEnergy OPS \( ^{TM} \)  service is a web-based real time continuous monitoring service applicable to a facility's refrigeration systems and other energy systems. The Company's Chiller Chemistry \( ^{\circledR} \)  and Chill Smart \( ^{\circledR} \)  services are also predictive and diagnostic service offerings. As a component of the Company's products and services, the Company also participates in the generation of carbon offset projects. The Company operates principally through its wholly-owned subsidiary, Hudson Technologies Company. Unless the context requires otherwise, references to the "Company", "Hudson", "we", "us", "our", or similar pronouns refer to Hudson Technologies, Inc. and its subsidiaries.

In preparing the accompanying consolidated financial statements, and in accordance with ASC855-10 “Subsequent Events”, the Company’s management has evaluated subsequent events through the date that the financial statements were filed.

In the opinion of management, all estimates and adjustments considered necessary for a fair presentation have been included and all such adjustments were normal and recurring.

## 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. The Company does not present a statement of comprehensive income as its comprehensive income is the same as its net income.

## Fair Value of Financial Instruments

The carrying values of financial instruments including trade accounts receivable and accounts payable approximate fair value at December 31, 2015 and December 31, 2014, because of the relatively short maturity of these instruments. The carrying value of short and long-term debt approximates fair value, due to the variable rate nature of the debt, as of December 31, 2015 and December 31, 2014.

## 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 and, at times, the balances exceed FDIC insurance coverage. The Company's trade accounts receivable are primarily due from companies throughout the United States. 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. The carrying value of the Company’s accounts receivable is reduced by the established allowance for doubtful accounts. The allowance for doubtful accounts includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve for the remaining accounts receivable balances. The Company adjusts its reserves based on factors that affect the collectability of the accounts receivable balances.

For the year ended December 31, 2015, two customers each accounted for 10% or more of the Company’s revenues and, in the aggregate these two customers accounted for 33% of the Company’s revenues. At December 31, 2015, there were no outstanding receivables from these customers.

For the year ended December 31, 2014, two customers each accounted for 10% or more of the Company’s revenues and, in the aggregate these two customers accounted for 25% of the Company’s revenues. At December 31, 2014, there were $688,000 in outstanding receivables from these customers.



The loss of a principal customer or a decline in the economic prospects of and/or a reduction in purchases of the Company's products or services by any such customer could have a material adverse effect on the Company's operating results and financial position.

## 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 refrigerant products available for sale, are stated at the lower of cost, on a first-in first-out basis, or market. Where the market price of inventory is less than the related cost, the Company may be required to write down its inventory through a lower of cost or market adjustment, the impact of which would be reflected in cost of sales on the Consolidated Statements of Operations. Any such adjustment would be based on management's judgment regarding future demand and market conditions and analysis of historical experience.

## 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 respective assets. Leasehold improvements are amortized on a straight-line basis over the shorter of economic life or terms of the respective leases. Costs of maintenance and repairs are charged to expense when incurred.

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.

## Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in business combinations accounted for under the purchase method of accounting. The Company performed the annual goodwill impairment assessment using a qualitative approach to determine whether it is more likely than not that the fair value of goodwill is less than its carrying value. In performing the qualitative assessment, we identify and consider the significance of relevant key factors, events, and circumstances that affect the fair value of our goodwill. These factors include external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as our actual and planned financial performance. If the results of the qualitative assessment conclude that it is not more likely than not that the fair value of goodwill exceeds its carrying value, additional quantitative impairment testing is performed.

## Revenues and Cost of Sales

Revenues are recorded upon completion of service or product shipment and passage of title to customers in accordance with contractual terms. The Company evaluates each sale to ensure collectability. In addition, each sale is based on an arrangement with the customer and the sales price to the customer is fixed. License fees are recognized over the period of the license based on the respective performance measurements associated with the license. Royalty revenues are recognized when earned. 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. To the extent that the Company charges its customers shipping fees, such amounts are included as a component of revenue and the corresponding costs are included as a component of cost of sales.

The Company’s revenues are derived from refrigerant and reclamation sales and RefrigerantSide \( ^{®} \)  Services, including license and royalty revenues. The revenues for each of these lines are as follows:

<table><tr><td>Years Ended December 31,</td><td>2015</td><td>2014</td></tr><tr><td>(in thousands)</td><td></td><td></td></tr><tr><td>Refrigerant and reclamation sales</td><td>$     75,154</td><td>$     50,460</td></tr><tr><td>RefrigerantSide \( ^{®} \)  Services</td><td>4,568</td><td>5,350</td></tr><tr><td>Total</td><td>$     79,722</td><td>$     55,810</td></tr></table>

## Income Taxes

The Company utilizes the asset 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 tax benefit associated with the Company's net operating loss carry forwards ("NOLs") is recognized to the extent that the Company is expected to recognize future taxable income. The Company assesses the recoverability of its deferred tax assets based on its expectation that it will recognize future taxable income and adjusts its valuation allowance accordingly. As of December 31, 2015 and 2014, the net deferred tax asset was $3,663,000 and $6,428,000, respectively.



Certain states either do not allow or limit NOLs and as such the Company will be liable for certain state taxes. To the extent that the Company utilizes its NOLs, it will not pay tax on such income but may be subject to the federal alternative minimum tax. In addition, to the extent that the Company's net income, if any, exceeds the annual NOL limitation it will pay income taxes based on existing statutory rates. Moreover, as a result of a "change in control", as defined by the Internal Revenue Service, the Company's ability to utilize its existing NOLs is subject to certain annual limitations. Approximately $6,750,000 of the Company's $9,000,000 of NOLs are subject to annual limitations of $1,300,000.

As a result of an Internal Revenue Service audit, the 2013 and prior federal tax years have been closed. The Company operates in many states throughout the United States and, as of December 31, 2015, the various states' statutes of limitations remain open for tax years subsequent to 2009. The Company recognizes interest and penalties, if any, relating to income taxes as a component of the provision for income taxes.

The Company evaluates uncertain tax positions, if any, by determining if it is more likely than not to be sustained upon examination by the taxing authorities. As of December 31, 2015 and 2014, the Company had no uncertain tax positions.

## Income per Common and Equivalent Shares

If dilutive, common equivalent shares (common shares assuming exercise of options and warrants) utilizing the treasury stock method are considered in the presentation of diluted earnings per share. The reconciliation of shares used to determine net income per share is as follows (dollars in thousands):

<table><tr><td rowspan="2"></td><td colspan="3">Years ended December 31,</td></tr><tr><td>2015</td><td>2014</td><td></td></tr><tr><td>Net income (loss)</td><td>$ 4,763</td><td>$ (720)</td><td></td></tr><tr><td>Weighted average number of shares - basic</td><td>32,546,840</td><td>29,122,746</td><td></td></tr><tr><td>Shares underlying warrants</td><td>300,846</td><td>0</td><td></td></tr><tr><td>Shares underlying options</td><td>1,088,413</td><td>0</td><td></td></tr><tr><td>Weighted average number of shares outstanding - diluted</td><td>33,936,099</td><td>29,122,746</td><td></td></tr></table>

During the years ended December 31, 2015 and 2014, certain options and warrants aggregating 106,290 and 4,449,624 shares, respectively, have been excluded from the calculation of diluted shares, due to the fact that their effect would be anti-dilutive.

## Estimates and Risks

The preparation of financial statements in conformity with generally accepted accounting principles in the United States 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 utilizes both internal and external sources to evaluate potential current and future liabilities for various commitments and contingencies. In the event that the assumptions or conditions change in the future, the estimates could differ from the original estimates.

Several of the Company's accounting policies involve significant judgments, uncertainties and estimations. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. To the extent that actual results differ from management's judgments and estimates, there could be a material adverse effect on the Company. On a continuous basis, the Company evaluates its estimates, including, but not limited to, those estimates related to its allowance for doubtful accounts, inventory reserves, and valuation allowance for the deferred tax assets relating to its NOLs and commitments and contingencies. With respect to accounts receivable, the Company estimates the necessary allowance for doubtful accounts based on both historical and anticipated trends of payment history and the ability of the customer to fulfill its obligations. For inventory, the Company evaluates both current and anticipated sales prices of its products to determine if a write down of inventory to net realizable value is necessary. In determining the Company's valuation allowance for its deferred tax assets, the Company assesses its ability to generate taxable income in the future.



The Company participates in an industry that is highly regulated, and changes in the regulations affecting our business could affect our operating results. Currently the Company purchases virgin hydrochlorofluorocarbon (“HCFC”), and hydrofluorocarbon (“HFC”) refrigerants and reclaimable, primarily HCFC, HFC and chlorofluorocarbon (“CFC”), refrigerants from suppliers and its customers. Effective January 1, 1996, the Clean Air Act (the “Act”) prohibited the production of virgin CFC refrigerants and limited the production of virgin HCFC refrigerants. Effective January 2004, the Act further limited the production of virgin HCFC refrigerants and federal regulations were enacted which established production and consumption allowances for HCFC refrigerants which imposed limitations on the importation of certain virgin HCFC refrigerants. Under the Act, production of certain virgin HCFC refrigerants is scheduled to be phased out during the period 2010 through 2020, and production of all virgin HCFC refrigerants is scheduled to be phased out by 2030. In April 2013, the Environmental Protection Agency (“EPA”) published a final rule providing for the production or importation of 63 million and 51 million pounds of HCFC-22 in 2013 and 2014, respectively. In October 2014, the EPA published a final rule providing further reductions in the production and consumption allowances for virgin HCFC refrigerants for the years 2015 through 2019 (the “Final Rule”). In the Final Rule, the EPA has established a linear draw down for the production or importation of virgin HCFC-22 that started at approximately 22 million pounds in 2015 and reduces by approximately 4.5 million pounds each year and ends at zero in 2020.

To the extent that the Company is unable to source sufficient quantities of refrigerants or is unable to obtain refrigerants on commercially reasonable terms or experiences a decline in demand and/or price for refrigerants sold by the Company, the Company could realize reductions in revenue from refrigerant sales, which could have a material adverse effect on its operating results and its financial position.

The Company is subject to various legal proceedings. The Company assesses the merit and potential liability associated with each of these proceedings. In addition, 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 could have a material adverse effect on its operating results and its financial position.

## Impairment of Long-lived Assets

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.

## Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a customer. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple-element arrangements. For a public entity, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is not permitted. An entity should apply the amendments in ASU 2014-09 either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. The Company is currently evaluating the effects of ASU 2014-09 and therefore cannot estimate the effects, if any, on historical or future revenue recognition at this time.

In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs.” ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For public business entities, the amendments in ASU 2015-03 are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted for financial statements that have not been previously issued. An entity should apply the new guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted, and the effect of the change on the financial statement line items (that is, debt issuance cost asset and the debt liability). The adoption of ASU 2015-03 will have no impact on the Company’s results of operations and an immaterial impact on the Company’s Balance Sheets.



In September 2015, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, or ASU 2015-16. This amendment requires the acquirer in a business combination to recognize in the reporting period in which adjustment amounts are determined, any adjustments to provisional amounts that are identified during the measurement period, calculated as if the accounting had been completed at the acquisition date. Prior to the issuance of ASU 2015-16, an acquirer was required to restate prior period financial statements as of the acquisition date for adjustments to provisional amounts. The amendments in ASU 2015-16 are to be applied prospectively upon adoption. The Company adopted ASU 2015-16 in the fourth quarter of 2015. The adoption of the provisions of ASU 2015-16 did not have a material impact on its results of operations or financial position.

In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740) - Balance Sheet Classification of Deferred Taxes.” ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in ASU 2015-17 apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected. For public business entities, the amendments in ASU 2015-17 are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period.

Under ASU 2016-02, a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term.

For finance leases, a lessee is required to do the following: 1. Recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position; 2. Recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income; and 3. Classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows.

For operating leases, a lessee is required to do the following: 1. Recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position; 2. Recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and 3. Classify all cash payments within operating activities in the statement of cash flows.

In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. An entity that elects to apply the practical expedients will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP.

For public entities, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendments in this Update is permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its consolidated financial statements.



## Note 2 - Income taxes

Income tax expense (benefit) for the years ended December 31, 2015 and 2014 was $2,944,000 and ($906,000), respectively. The income tax expense (benefit) for each of the years ended December 31, 2015 and 2014 were for federal and state income tax at statutory rates applied to the pre-tax income (loss) for each of the periods.

The following summarizes the (benefit) / provision for income taxes:

<table><tr><td>Years Ended December 31,</td><td>2015</td><td>2014</td></tr><tr><td>(in thousands)</td><td></td><td></td></tr><tr><td>Current:</td><td></td><td></td></tr><tr><td>Federal</td><td>$ 174</td><td>$ 0</td></tr><tr><td>State and local</td><td>2</td><td>(49)</td></tr><tr><td></td><td>176</td><td>(49)</td></tr><tr><td>Deferred:</td><td></td><td></td></tr><tr><td>Federal</td><td>2,460</td><td>(767)</td></tr><tr><td>State and local</td><td>308</td><td>(90)</td></tr><tr><td></td><td>2,768</td><td>(857)</td></tr><tr><td>Expense (benefit) for income taxes</td><td>$ 2,944</td><td>$ (906)</td></tr></table>

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

<table><tr><td>Years ended December 31,</td><td>2015</td><td>2014</td></tr><tr><td>Income tax rates</td><td></td><td></td></tr><tr><td>- Statutory U.S. federal rate</td><td>34%</td><td>34%</td></tr><tr><td>- States, net U.S. benefits</td><td>4%</td><td>4%</td></tr><tr><td>- Tax benefit from prior year</td><td>0%</td><td>18%</td></tr><tr><td>Total</td><td>38%</td><td>56%</td></tr></table>

As of December 31, 2015, the Company had NOL's of approximately $9,000,000 expiring through 2034. Approximately $6,750,000 of the Company's $9,000,000 of NOL's are subject to annual limitations of $1,300,000.

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

<table><tr><td>December 31,</td><td>2015</td><td>2014</td></tr><tr><td>(in thousands)</td><td></td><td></td></tr><tr><td>Deferred tax assets (liabilities)</td><td></td><td></td></tr><tr><td>- Depreciation &amp; amortization</td><td>$ (412)</td><td>$ (428)</td></tr><tr><td>- Reserves for doubtful accounts</td><td>127</td><td>92</td></tr><tr><td>- Inventory reserve</td><td>250</td><td>305</td></tr><tr><td>- Non qualified stock options</td><td>108</td><td>215</td></tr><tr><td>- NOL</td><td>3,430</td><td>6,244</td></tr><tr><td>- AMT credit carryforward</td><td>160</td><td>0</td></tr><tr><td>Total</td><td>$ 3,663</td><td>$ 6,428</td></tr></table>

The Company considered its projected future taxable income, and associated annual limitations, in determining the amount of deferred tax assets to recognize. The Company believes that given the extended time period that it may recognize its deferred tax assets, it is more likely than not it will realize the benefit of these assets prior to their expiration.

## Note 3 - Trade accounts receivable - net

At December 31, 2015 and 2014, trade accounts receivable are net of reserves for doubtful accounts of $335,000 and $244,000, respectively.



## Note 4- Inventories

Inventories consist of the following:

<table><tr><td>December 31,</td><td>2015</td><td>2014</td></tr><tr><td>(in thousands)</td><td></td><td></td></tr><tr><td>Refrigerant and cylinders</td><td>$ 11,167</td><td>$ 8,152</td></tr><tr><td>Packaged refrigerants</td><td>50,730</td><td>28,865</td></tr><tr><td>Total</td><td>$ 61,897</td><td>$ 37,017</td></tr></table>

## Note 5 - Property, plant and equipment

Elements of property, plant and equipment are as follows:

<table><tr><td>December 31,</td><td>2015</td><td>2014</td><td>Estimated Lives</td></tr><tr><td>(in thousands)</td><td></td><td></td><td></td></tr><tr><td>Property, plant and equipment</td><td></td><td></td><td></td></tr><tr><td>- Land</td><td>$ 535</td><td>$ 535</td><td></td></tr><tr><td>- Buildings</td><td>830</td><td>830</td><td>39 years</td></tr><tr><td>- Building improvements</td><td>810</td><td>776</td><td>39 years</td></tr><tr><td>- Equipment</td><td>13,206</td><td>12,429</td><td>3-7 years</td></tr><tr><td>- Equipment under capital lease</td><td>234</td><td>100</td><td>5-7 years</td></tr><tr><td>- Vehicles</td><td>1,311</td><td>1,281</td><td>5 years</td></tr><tr><td>- Lab and computer equipment, software</td><td>2,499</td><td>2,377</td><td>3-5 years</td></tr><tr><td>- Furniture &amp; fixtures</td><td>276</td><td>265</td><td>7-8 years</td></tr><tr><td>- Leasehold improvements</td><td>110</td><td>90</td><td>3 years</td></tr><tr><td>- Equipment under construction</td><td>491</td><td>225</td><td></td></tr><tr><td>Subtotal</td><td>20,302</td><td>18,908</td><td></td></tr><tr><td>Accumulated depreciation</td><td>12,766</td><td>11,021</td><td></td></tr><tr><td>Total</td><td>$ 7,536</td><td>$ 7,887</td><td>-</td></tr></table>

Depreciation expense for the years ended December 31, 2015 and 2014 was $1,560,000 and $900,000, respectively.

## Note 6 – Goodwill and intangible assets

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in business combinations accounted for under the purchase method of accounting. The Company performed the annual goodwill impairment assessment using a qualitative approach to determine whether it is more likely than not that the fair value of goodwill is less than its carrying value. In performing the qualitative assessment, we identify and consider the significance of relevant key factors, events, and circumstances that affect the fair value of our goodwill. These factors include external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as our actual and planned financial performance. If the results of the qualitative assessment conclude that it is not more likely than not that the fair value of goodwill exceeds its carrying value, additional quantitative impairment testing is performed.

The impairment test was performed at the operating segment level as the acquired businesses have been fully integrated into our existing structure. Based on the results of the impairment assessment performed, we concluded that it is more likely than not that the fair value of our goodwill significantly exceeds the carrying value.

At December 31, 2015 the Company had $856,000 of goodwill, of which $435,000 is attributable to the acquisition of Polar Technologies, LLC and $421,000 is attributable to the acquisition of a supplier of refrigerants and compressed gases.



The Company’s other intangible assets consist of the following:

<table><tr><td rowspan="2">December 31, (in thousands)</td><td rowspan="2">Amortization Period (in years)</td><td colspan="4">2015</td><td colspan="4">2014</td></tr><tr><td>Gross Carrying Amount</td><td>Accumulated Amortization</td><td>Net</td><td></td><td>Gross Carrying Amount</td><td>Accumulated Amortization</td><td>Net</td><td></td></tr><tr><td>Intangible Assets with determinable lives</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Patents</td><td>5</td><td>$ 387</td><td>$ 352</td><td>$ 35</td><td>$ 374</td><td>$ 332</td><td>$ 42</td><td></td><td></td></tr><tr><td>Covenant Not to Compete</td><td>6 - 10</td><td>1,270</td><td>171</td><td>1,099</td><td>1,000</td><td>16</td><td>984</td><td></td><td></td></tr><tr><td>Customer Relationships</td><td>3 - 10</td><td>2,000</td><td>236</td><td>1,764</td><td>227</td><td>13</td><td>214</td><td></td><td></td></tr><tr><td>Trade Name</td><td>2</td><td>30</td><td>24</td><td>6</td><td>108</td><td>9</td><td>99</td><td></td><td></td></tr><tr><td>Licenses</td><td>10</td><td>1,000</td><td>117</td><td>883</td><td>1,000</td><td>17</td><td>983</td><td></td><td></td></tr><tr><td>Totals identifiable intangible assets</td><td></td><td>$ 4,687</td><td>$ 900</td><td>$ 3,787</td><td>$ 2,709</td><td>$ 387</td><td>$ 2,322</td><td></td><td></td></tr></table>

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. No impairments were recognized for the years ended December 31, 2015 and December 31, 2014.

The amortization of intangible assets for the years ended December 31, 2015 and December 31, 2014 was $512,000 and $79,000 respectively. Future estimated amortization expense is as follows: 2016 - $503,000, 2017 - $478,000, 2018 - $444,000, 2019 - $444,000, 2020 - $444,000 and thereafter - $1,474,000.

## Note 7 - Short-term and long-term debt

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

<table><tr><td>December 31,</td><td>2015</td><td>2014</td></tr><tr><td>(in thousands)</td><td></td><td></td></tr><tr><td>Short-term &amp; long-term debt</td><td></td><td></td></tr><tr><td>Short-term debt:</td><td></td><td></td></tr><tr><td>- Bank credit line</td><td>$ 20,227</td><td>$ 6,056</td></tr><tr><td>- Long-term debt: current</td><td>346</td><td>264</td></tr><tr><td>Subtotal</td><td>20,573</td><td>6,320</td></tr><tr><td>Long-term debt:</td><td></td><td></td></tr><tr><td>- Bank credit line</td><td>4,000</td><td>4,000</td></tr><tr><td>- Building and land mortgage</td><td>260</td><td>437</td></tr><tr><td>- Vehicle and equipment loans</td><td>145</td><td>172</td></tr><tr><td>- Capital lease obligations</td><td>234</td><td>44</td></tr><tr><td>- Less: current maturities</td><td>(346)</td><td>(264)</td></tr><tr><td>Subtotal</td><td>4,293</td><td>4,389</td></tr><tr><td>Total short-term &amp; long-term debt</td><td>$ 24,866</td><td>$ 10,709</td></tr></table>

## Bank Credit Line

On June 22, 2012, a subsidiary of Hudson entered into a Revolving Credit, Term Loan and Security Agreement (the "PNC Facility") with PNC Bank, National Association, as agent ("Agent" or "PNC"), and such other lenders as may thereafter become a party to the PNC Facility. Under the terms of the PNC Facility, as amended by the First Amendment to the PNC Facility, dated February 15, 2013, Hudson may borrow up to a maximum of $40,000,000 consisting of a term loan in the principal amount of $4,000,000 and revolving loans in a maximum amount up to $36,000,000. Amounts borrowed under the PNC Facility may be used by Hudson for working capital needs and to reimburse drawings under letters of credit. Fees and expenses relating to the creation of the PNC Facility of approximately $38,000 are being amortized over the life of the loan. At December 31, 2015, total borrowings under the PNC Facility were approximately $24,227,000, and there was approximately $15,773,000 available to borrow under the revolving line of credit. The effective interest rate under the PNC Facility was 3.75% at December 31, 2015.

Interest on loans under the PNC Facility is payable in arrears on the first day of each month with respect to loans bearing interest at the domestic rate (as set forth in the PNC Facility) and at the end of each interest period with respect to loans bearing interest at the Eurodollar Rate (as defined in the PNC Facility) or, for Eurodollar Rate Loans (as defined in the PNC Facility) with an interest period in excess of three months, at the earlier of (a) each three months from the commencement of such Eurodollar Rate Loan or (b) the end of the interest period. Interest charges with respect to loans are computed on the actual principal amount of loans outstanding during the month at a rate per annum equal to (A) with respect to Domestic Rate Loans (as defined in the PNC Facility), the sum of the Alternate Base Rate (as defined in the PNC Facility) plus one half of one percent (.50%) and (B) with respect to Eurodollar Rate Loans, the sum of the Eurodollar Rate plus two and one quarter of one percent (2.25%).



Hudson granted to PNC, for itself, and as agent for such other lenders as may thereafter become a lender under the PNC Facility, a security interest in Hudson’s receivables, intellectual property, general intangibles, inventory and certain other assets.

The PNC Facility contains certain financial and non-financial covenants relating to Hudson, including limitations on Hudson’s ability to pay dividends on common stock or preferred stock, and also includes certain events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts, impairments to guarantees and a change of control. The PNC Facility contains a financial covenant to maintain at all times a Fixed Charge Coverage Ratio of not less than 1.10 to 1.00, tested quarterly on a rolling twelve month basis. Fixed Charge Coverage Ratio is defined in the PNC Facility, with respect to any fiscal period, as the ratio of (a) EBITDA of Hudson for such period, minus unifinanced capital expenditures (as defined in the PNC Facility) made by Hudson during such period, minus the aggregate amount of cash taxes paid by Hudson during such period, minus the aggregate amount of dividends and distributions made by Hudson during such period, minus the aggregate amount of payments made with cash by Hudson to satisfy soil sampling and reclamation related to environmental cleanup at the Company’s former Hillburn, NY facility during such period (to the extent not already included in the calculation of EBITDA as determined by the Agent) to (b) the aggregate amount of all principal payments due and/or made, except principal payments related to outstanding revolving advances with regard to all funded debt (as defined in the PNC Facility) of Hudson during such period, plus the aggregate interest expense of Hudson during such period. EBITDA as defined in the PNC Facility shall mean for any period the sum of (i) earnings before interest and taxes for such period plus (ii) depreciation expenses for such period, plus (iii) amortization expenses for such period, plus (iv) non-cash charges.

On October 25, 2013, the Company entered into the Second Amendment to the PNC Facility (the “Second PNC Amendment”) which, among other things, waived the requirement to comply with the minimum fixed charge coverage ratio covenant of 1.10 to 1.00 for the fiscal quarter ended September 30, 2013, under the PNC Facility, and suspended the minimum fixed charge ratio covenant until the quarterly period ended March 31, 2015.

On July 2, 2014, the Company entered into the Third Amendment to the PNC Facility (the "Third PNC Amendment") which, among other things, extended the term of PNC Facility. Pursuant to the Third PNC Amendment, which was effective June 30, 2014, the Termination Date of the PNC Facility (as defined in the PNC Facility) has been extended to June 30, 2018.

On July 1, 2015, the Company entered into the Fourth Amendment to the PNC Facility (the "Fourth PNC Amendment"). The Fourth PNC Amendment redefined the "Revolving Interest Rate" as well as the "Term Loan Rate" (as defined in the PNC Facility) as follows:

“Revolving Interest Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate (as defined in the PNC Facility) plus one half of one percent (.50%) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and one quarter of one percent (2.25%) with respect to the Eurodollar Rate Loans.

“Term Loan Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus one half of one percent (.50%) with respect to the Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and one quarter of one percent (2.25%) with respect to Eurodollar Rate Loans.

The Company was in compliance with all covenants, as amended, under the PNC Facility as of December 31, 2015. The Company’s ability to comply with these covenants in future quarters may be affected by events beyond the Company’s control, including general economic conditions, weather conditions, regulations and refrigerant pricing. Although we expect to remain in compliance with all covenants in the PNC Facility, as amended, depending on our future operating performance and general economic conditions, we cannot make any assurance that we will continue to be in compliance.

The commitments under the PNC Facility will expire and the full outstanding principal amount of the loans, together with accrued and unpaid interest, are due and payable in full on June 30, 2018, unless the commitments are terminated for any reason or the outstanding principal amount of the loans are accelerated sooner following an event of default.

## Building and Land Mortgage

On June 1, 2012, the Company entered into a mortgage note with Busey Bank for $855,000. The note bears interest at the fixed rate of 4% per annum, amortizing over 60 months and maturing on June 1, 2017. The mortgage note is secured by the Company's land and building located in Champaign, Illinois. At December 31, 2015 the principal balance of this mortgage note was $260,000.



## Vehicle and Equipment Loans

The Company has entered into various vehicle and equipment loans. These loans are payable in 60 monthly payments through March 2020 and bear interest ranging from 2.9% to 6.7%.

Scheduled maturities of the Company's long-term debt and capital lease obligations are as follows:

<table><tr><td>Years ended December 31,</td><td>Amount</td></tr><tr><td>(in thousands)</td><td></td></tr><tr><td>-2017</td><td>184</td></tr><tr><td>-2018</td><td>4,077</td></tr><tr><td>-2019</td><td>30</td></tr><tr><td>-2020</td><td>2</td></tr><tr><td>Total</td><td>$ 4,293</td></tr></table>

## Capital Lease Obligations

The Company rents certain equipment with a net book value of approximately $296,000 at December 31, 2015 under leases which have been classified as capital leases. Scheduled future minimum lease payments under capital leases net of interest are as follows:

<table><tr><td>Years ended December 31,</td><td>Amount</td></tr><tr><td>(in thousands)</td><td></td></tr><tr><td>-2016</td><td>$ 85</td></tr><tr><td>-2017</td><td>75</td></tr><tr><td>-2018</td><td>75</td></tr><tr><td>-2019</td><td>25</td></tr><tr><td>Subtotal</td><td>260</td></tr><tr><td>Less interest expense</td><td>(26)</td></tr><tr><td>Total</td><td>$ 234</td></tr></table>

## Note 8 - Stockholders' equity

On July 7, 2010, the Company sold 2,737,500 units, with the aggregate units consisting of 2,737,500 shares of the Company's common stock and warrants to purchase 1,368,750 shares, at a price of $2.00 per unit in a registered direct offering (the "2010 Offering"). The warrants issued as part of the 2010 Offering have an exercise price of $2.60 per share and are exercisable for a five-year period, which commenced on January 7, 2011. The net proceeds pursuant to the 2010 Offering were approximately $4,900,000. The value of the aggregate number of warrants issued pursuant to the 2010 Offering was approximately $1,300,000 and such amount was charged as a component of stockholders' equity to additional paid-in capital.

Effective as of March 4, 2011, the Company re-purchased warrants to purchase 150,000 shares of the Company’s common stock, at a price of $0.60 per share, which warrants were issued in connection with the 2010 Offering.

On March 7, 2011, the remaining 1,218,750 warrants issued in connection with the 2010 Offering were amended upon consent of the holders of more than two-thirds of the remaining warrants, to among other things, extend the expiration date of the warrants to July 7, 2016.

On June 6, 2014 the Company entered into an Underwriting Agreement with an investment banking firm for itself and as representative for two other investment banking firms (collectively, the "Underwriters"), in connection with an underwritten offering (the "Offering") of 6,000,000 shares of the Company's common stock, par value $0.01 per share (the "Firm Shares"). Pursuant to the Underwriting Agreement, the Company agreed to sell to the Underwriters, and the Underwriters agreed to purchase from the Company, an aggregate of 6,000,000 shares of common stock at a price of $2.3375 per share, and the price to the public was $2.50 per share. Pursuant to the Underwriting Agreement, the Company also granted the Underwriters a 30-day option to purchase up to 900,000 additional shares of its common stock to cover over-allotments, if any. The Company also agreed to reimburse certain expenses incurred by the Underwriters in the Offering.

The closing of the Offering was held on June 11, 2014, at which time, the Company sold 6,900,000 shares of its common stock to the Underwriters (including 900,000 shares to cover over-allotments) at a price of $2.3375 per share, and received gross proceeds of $16,128,750. The Underwriters received reimbursement of expenses of $150,000, and the Company also incurred approximately $400,000 of additional expenses in connection with the Offering.



In January 2016, 44,000 warrants issued in connection with the 2010 offering were exercised at $2.60 per share.

## Note 9 - Commitments and contingencies

Rents and operating leases

Hudson utilizes leased facilities and operates equipment under non-cancelable operating leases through August 31, 2018 as follows:

## Properties

<table><tr><td>Location</td><td>Annual Rent</td><td>Lease Expiration Date</td></tr><tr><td>Auburn, Washington</td><td>$ 51,000</td><td>8/2018</td></tr><tr><td>Baton Rouge, Louisiana</td><td>$ 15,000</td><td>4/2017</td></tr><tr><td>Trousdale, Tennessee</td><td>$ 36,000</td><td>3/2016</td></tr><tr><td>Champaign, Illinois</td><td>$ 457,000</td><td>12/2017</td></tr><tr><td>Charlotte, North Carolina</td><td>$ 63,000</td><td>3/2016</td></tr><tr><td>Escondido, California</td><td>$ 36,000</td><td>Month to Month</td></tr><tr><td>Hampstead, New Hampshire</td><td>$ 28,000</td><td>8/2017</td></tr><tr><td>Nashville, Tennessee</td><td>$ 162,000</td><td>3/2018</td></tr><tr><td>Ontario, California</td><td>$ 87,000</td><td>12/2018</td></tr><tr><td>Pearl River, New York</td><td>$ 93,000</td><td>8/2018</td></tr><tr><td>Pottsboro, Texas</td><td>$ 9,600</td><td>8/2017</td></tr><tr><td>San Juan, Puerto Rico</td><td>$ 151,000</td><td>11/2020</td></tr><tr><td>Stony Point, New York</td><td>$ 117,000</td><td>6/2016</td></tr><tr><td>Tulsa, Oklahoma</td><td>$ 27,000</td><td>12/2017</td></tr></table>

The Company rents properties and various equipment under operating leases. Rent expense for the years ended December 31, 2015 and 2014 totaled approximately $1,215,000 and $830,000, respectively. In addition to the properties above, the Company does at times utilize public warehouse space on a month to month basis. The Company typically enters into short-term leases for the facilities and wherever possible extends the expiration date of such leases.

Future commitments under operating leases are summarized as follows:

<table><tr><td>Years ended December 31,</td><td>Amount</td></tr><tr><td>(in thousands)</td><td></td></tr><tr><td>-2016</td><td>$ 1,297</td></tr><tr><td>-2017</td><td>1,085</td></tr><tr><td>-2018</td><td>421</td></tr><tr><td>-2019</td><td>165</td></tr><tr><td>-2020</td><td>150</td></tr><tr><td>Total</td><td>$ 3,118</td></tr></table>

## Legal Proceedings

On April 1, 1999, the Company reported a release of approximately 7,800 lbs. of R-11 refrigerant (the “1999 Release”), at its former leased facility in Hillburn, NY (the “Hillburn Facility”), which the Company vacated in June 2006.

Since September 2000, last modified in March 2013, the Company signed an Order on Consent with the New York State Department of Environmental Conservation (“DEC”) whereby the Company agreed to operate a remediation system to reduce R-11 refrigerant levels in the groundwater under and around the Hillburn Facility and agreed to perform periodic testing at the Hillburn Facility until remaining groundwater contamination has been effectively abated. The Company accrued, as an expense in its consolidated financial statements, the costs that the Company believes it will incur in connection with its compliance with the Order of Consent through December 31, 2018. There can be no assurance that additional testing will not be required or that the Company will not incur additional costs and such costs in excess of the Company’s estimate may have a material adverse effect on the Company financial condition or results of operations. The Company has exhausted all insurance proceeds available for the 1999 Release under all applicable policies.

In May 2000, the Hillburn facility as a result of the 1999 release, was nominated by EPA for listing on the National Priorities List (“NPL”) pursuant to CERCLA. In September 2003, the EPA advised the Company that it had no current plans to finalize the process for listing of the Hillburn facility on the NPL.



During the year ended December 31, 2014 the Company incurred $53,000 in additional remediation costs in connection with the matters above. There were no costs incurred during the year ended December 31, 2015. There can be no assurance that the ultimate outcome of the 1999 Release will not have a material adverse effect on the Company's financial condition and results of operations. There can be no assurance that the EPA will not change its current plans and seek to finalize the process of listing the Hillburn Facility on the NPL, 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.

## Employment Agreement

The Company has entered into a two-year employment agreement with its Chief Executive Officer, Kevin J. Zugibe, which currently expires in October 2018 and is automatically renewable for successive two-year terms unless either party gives notice of termination at least ninety days prior to the then expiration date of the then current term. Pursuant to the agreement, Mr. Zugibe is receiving an annual base salary of $384,000 with such increases and bonuses as the Company's Board of Directors may determine. The Company is the beneficiary of a "key-man" insurance policy on the life of Mr. Zugibe in the amount of $1,000,000.

## Note 10 - Share-Based Compensation

Share-based compensation represents the cost related to share-based awards, typically stock options or stock grants, granted to employees, non-employees, officers and directors. Share-based compensation is measured at grant date, based on the estimated aggregate fair value of the award on the grant date, and such amount is charged to compensation expense on a straight-line basis (net of estimated forfeitures) over the requisite service period. For the years 2015 and 2014, the share-based compensation expense of $173,000 and $708,000, respectively, is reflected in general and administrative expenses in the consolidated Statements of Operations.

Share-based awards have historically been made as stock options, and recently during the third quarter 2015 as stock grants, issued pursuant to the terms of the Company’s stock option and stock incentive plans, (collectively, the “Plans”), described below. The Plans may be administered by the Board of Directors or the Compensation Committee of the Board or by another committee appointed by the Board from among its members as provided in the Plans. Presently, the Plans are administered by the Company’s Compensation Committee of the Board of Directors. As of December 31, 2015, the Plans authorized the issuance of stock options to purchase 6,000,000 shares of the Company’s common stock and, as of December 31, 2015 there were 4,439,023 shares of the Company’s common stock available for issuance for future stock option grants or other stock based awards.

Stock option awards, which allow the recipient to purchase shares of the Company’s common stock at a fixed price, are typically granted at an exercise price equal to the Company’s stock price at the date of grant. Typically, the Company’s stock option awards have vested from immediately to two years from the grant date and have had a contractual term ranging from three to ten years.

During the years 2015 and 2014, the Company issued options to purchase 164,506 shares and 1,055,500 shares, respectively. During the years 2015 and 2014, the Company issued stock grants of 9,835 shares and no shares, respectively. As of December 31, 2015 there was $15,000 of unrecognized compensation cost related to non-vested previously granted option awards.

Effective July 25, 1997, the Company adopted its 1997 Employee Stock Option Plan, which was amended on August 19, 1999, (“1997 Plan”) pursuant to which 2,000,000 shares of common stock were reserved for issuance upon the exercise of options designated as either (i) incentive stock options (“ISOs”) under the Internal Revenue Code of 1986, as amended (the “Code”), or (ii) nonqualified options. ISOs could be granted under the 1997 Plan to employees and officers of the Company. Non-qualified options could be granted to consultants, directors (whether or not they are employees), employees or officers of the Company. Stock appreciation rights could also be issued in tandem with stock options. Effective June 11, 2007, the Company’s ability to grant options or stock appreciation rights under the 1997 Plan expired.

Effective September 10, 2004, the Company adopted its 2004 Stock Incentive Plan (“2004 Plan”) pursuant to which 2,500,000 shares of common stock were reserved for issuance (i) upon the exercise of options, designated as either ISOs under the Code or nonqualified options, or (ii) as stock, deferred stock or other stock-based awards. ISOs could be granted under the 2004 Plan to employees and officers of the Company. Non-qualified options, stock, deferred stock or other stock-based awards could be granted to consultants, directors (whether or not they are employees), employees or officers of the Company. Stock appreciation rights could also be issued in tandem with stock options. Effective September 10, 2014, the Company’s ability to grant options or other awards under the 2004 Plan expired.

Effective August 27, 2008, the Company adopted its 2008 Stock Incentive Plan (“2008 Plan”) pursuant to which 3,000,000 shares of common stock were reserved for issuance (i) upon the exercise of options, designated as either ISOs under the Code or nonqualified options, or (ii) as stock, deferred stock or other stock-based awards. ISOs may be granted under the 2008 Plan to employees and officers of the Company. Non-qualified options, stock, deferred stock or other stock-based awards 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 the 2008 Plan is sooner terminated, the ability to grant options or other awards under the 2008 Plan will expire on August 27, 2018.



ISOs granted under the 2008 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). Nonqualified options granted under the 2008 Plan may not be granted at a price less than the fair market value of the common stock. Options granted under the 2008 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 September 17, 2014, the Company adopted its 2014 Stock Incentive Plan (“2014 Plan”) pursuant to which 3,000,000 shares of common stock were reserved for issuance (i) upon the exercise of options, designated as either ISOs under the Code or nonqualified options, or (ii) as stock, deferred stock or other stock-based awards. ISOs may be granted under the 2014 Plan to employees and officers of the Company. Non-qualified options, stock, deferred stock or other stock-based awards 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 the 2014 Plan is sooner terminated, the ability to grant options or other awards under the 2014 Plan will expire on September 17, 2024.

ISOs granted under the 2014 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). Nonqualified options granted under the 2014 Plan may not be granted at a price less than the fair market value of the common stock. Options granted under the 2014 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 determines the fair value of share based awards at the grant date by using the Black-Scholes option-pricing model, and is incorporating the simplified method to compute expected lives of share based awards with the following weighted-average assumptions:

<table><tr><td>Years ended</td><td>2015</td><td>2014</td></tr><tr><td>December 31,</td><td></td><td></td></tr><tr><td>Assumptions</td><td>0%</td><td>0%</td></tr><tr><td>Dividend yield</td><td>0.83%-1.03%</td><td>1.00%-1.69%</td></tr><tr><td>Risk free interest rate</td><td>49%-60%</td><td>59%-66%</td></tr><tr><td>Expected volatility</td><td>3 years</td><td>3-5 years</td></tr><tr><td>Expected lives</td><td></td><td></td></tr></table>

A summary of the activity for the Company's Plans for the indicated periods is presented below:

<table><tr><td>Stock Option Plan Totals</td><td>Shares</td><td>Weighted Average Exercise Price</td></tr><tr><td>Outstanding at December 31, 2013</td><td>2,517,911</td><td>1.33</td></tr><tr><td>-Exercised</td><td>(292,537)</td><td>1.03</td></tr><tr><td>-Granted</td><td>1,055,500</td><td>3.28</td></tr><tr><td>Outstanding at December 31, 2014</td><td>3,280,874</td><td>1.98</td></tr><tr><td>-Cancelled</td><td>(132,500)</td><td>3.72</td></tr><tr><td>-Exercised</td><td>(679,291)</td><td>1.65</td></tr><tr><td>-Granted</td><td>164,506</td><td>3.28</td></tr><tr><td>Outstanding at December 31, 2015</td><td>2,633,589</td><td>2.06</td></tr></table>

The following is the weighted average contractual life in years and the weighted average exercise price at December 31, 2015 of:

<table><tr><td></td><td>Number of Options</td><td>Weighted Average Remaining Contractual Life</td><td>Weighted Average Exercise Price</td></tr><tr><td>Options outstanding</td><td>2,633,589</td><td>2.8 years</td><td>2.06</td></tr><tr><td>Options vested</td><td>2,612,755</td><td>2.8 years</td><td>2.05</td></tr></table>



The following is the intrinsic value at December 31, 2015 of:

<table><tr><td>Options outstanding</td><td>$ 2,754,000</td></tr><tr><td>Options vested in 2015</td><td>$ 5,000</td></tr><tr><td>Options exercised in 2015</td><td>$ 1,309,000</td></tr></table>

The intrinsic value of options exercised during the year ended December 31, 2014 was $793,000.

## Note 11 - Acquisitions

On November 5, 2014 the Company purchased certain assets from Polar Technologies, LLC (“Polar”) related to its refrigerant reclamation business and facilities in Nashville, Tennessee; Ontario, California, and San Juan, Puerto Rico; hiring approximately thirty-two Polar employees associated with the business. The purchase price for this acquisition was $8,035,000. A portion of the purchase price is to be paid in the future pursuant to the purchase agreement. The preliminary asset allocation reflected in the December 31, 2014 financial statements was approximately $5,435,000 of tangible assets, approximately $2,335,000 of intangible assets, and approximately $265,000 of goodwill. The intangible assets will be amortized over a period of 2 to 10 years. The goodwill recognized as part of the acquisition, is deductible for tax purposes.

As of December 31, 2015 the valuation and allocation of the purchase price for Polar has been finalized resulting in an increase in tangible assets of $165,000, as well as an increase in goodwill of $170,000 and a decrease in intangible assets of $335,000. This final valuation has been reflected in the December 31, 2015 financial statements.

The results of the Polar operations are included in the Company’s consolidated statement of operations from the date of acquisition and are not material to the Company’s financial position or results of operations.

On January 16, 2015, the Company acquired certain assets of a supplier of refrigerants and compressed gases, and also hired three employees associated with the business. The purchase price for this acquisition was $2,424,000 cash paid at closing and the assumption of a liability of $20,000, and a maximum of an additional $3,000,000 earn-out. The preliminary asset allocation was approximately $1,606,000 of tangible assets, approximately $1,500,000 of intangible assets, and approximately $2,338,000 of goodwill.

As of December 31, 2015 the valuation and allocation of the purchase price for this acquisition has been finalized. As part of that process it has been determined that the earn-out payable that had been previously recorded at the maximum earn out of $3,000,000 per the purchase agreement was overstated by approximately $1,000,000. This adjustment to the earn-out payable resulted in lowering the purchase price from approximately $5,400,000 to approximately $4,400,000. The final valuation resulted in a reduction in goodwill by approximately $1,900,000, and increase in intangible assets of approximately $800,000 and an increase in current assets of approximately $100,000. This final valuation as well as the respective changes in the amortization of intangibles has been reflected in the December 31, 2015 financial statements.

The adjusted earn-out payable of approximately $2,000,000 consists of approximately $1,100,000 for the fiscal year ended December 31, 2015 and approximately $900,000 for the fiscal year ending December 31, 2016. For the fiscal year ended December 31, 2015 the actual earn-out was approximately $800,000 resulting in a year end adjustment to reduce the payable by approximately $300,000 which has been reflected in the December 31, 2015 Statements of Operations as Other Income. As of December 31, 2015 approximately $445,000 of the 2015 earn-out has been paid and the remaining balance of $371,000 is recorded as a current liability on the December 31, 2015 balance sheet.

The earn out payable for the fiscal year ending December 31, 2016 of approximately $900,000 has been recorded in other current liabilities on the December 31, 2015 balance sheet.

The intangible assets are being amortized over a period ranging from two to ten years. The goodwill recognized as part of the acquisition will be deductible for tax purposes. The transaction also provides for additional employee compensation for years 2017 through 2019, based on certain revenue performance. The total additional employee compensation, if any, cannot exceed $3,000,000.

The results of the acquired business operations are included in the Company’s consolidated Statements of Operations from the date of acquisition, and are not material to the Company’s financial position or results of operations.

## Pro Forma Information

Pro forma revenues and results of operations as if the businesses had been acquired on January 1, 2014 are not presented, as the acquisition is not material to our financial position or our results of operations.



## SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly 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, Chairman and Chief Executive Officer

Date: March 11, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934, 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><tr><td>Signature</td><td>Title</td><td>Date</td></tr><tr><td>/s/ Kevin J. Zugibe</td><td>Chairman of the Board and Chief Executive Officer (Principal Executive Officer)</td><td>March 11, 2016</td></tr><tr><td>Kevin J. Zugibe</td><td>Executive Officer)</td><td></td></tr><tr><td>/s/ James R. Buscemi</td><td>Chief Financial Officer (Principal Financial and Accounting Officer)</td><td>March 11, 2016</td></tr><tr><td>James R. Buscemi</td><td>Officer)</td><td></td></tr><tr><td>/s/ Vincent P. Abbatecola</td><td>Director</td><td>March 11, 2016</td></tr><tr><td>Vincent P. Abbatecola</td><td></td><td></td></tr><tr><td>/s/ Brian F. Coleman</td><td>Director and President and Chief Operating Officer</td><td>March 11, 2016</td></tr><tr><td>Brian F. Coleman</td><td></td><td></td></tr><tr><td>/s/ Dominic J. Monetta</td><td>Director</td><td>March 11, 2016</td></tr><tr><td>Dominic J. Monetta</td><td></td><td></td></tr><tr><td>/s/ Otto C. Morch</td><td>Director</td><td>March 11, 2016</td></tr><tr><td>Otto C. Morch</td><td></td><td></td></tr><tr><td>/s/ Richard Parrillo</td><td>Director</td><td>March 11, 2016</td></tr><tr><td>Richard Parrillo</td><td></td><td></td></tr><tr><td>/s/ Eric A. Prouty</td><td>Director</td><td>March 11, 2016</td></tr><tr><td>Eric A. Prouty</td><td></td><td></td></tr></table>



## Index to Exhibits

Exhibit Number | Description
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 | Certificate of Amendment of the Certificate of Incorporation dated March 16, 1999. (2)
3.5 | Certificate of Correction of the Certificate of Amendment dated March 25, 1999. (2)
3.6 | Certificate of Amendment of the Certificate of Incorporation dated March 29, 1999. (2)
3.7 | Certificate of Amendment of the Certificate of Incorporation dated February 16, 2001. (4)
3.8 | Certificate of Amendment of the Certificate of Incorporation of Hudson Technologies, Inc., dated March 20, 2002. (5)
3.9 | Amendment to Certificate of Incorporation dated January 3, 2003. (6)
3.10 | Amended and Restated By-Laws adopted July 29, 2011. (15)
3.11 | Certificate of Amendment of the Certificate of Incorporation dated September 15, 2015. (26)
10.1 | Assignment of patent rights from Kevin J. Zugibe to Registrant. (1)
10.2 | 1997 Stock Option Plan of the Company, as amended. (3)*
10.3 | 2004 Stock Incentive Plan. (10)*
10.4 | Form of Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with full vesting upon issuance. (7)
10.5 | Form of Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with options vesting in equal quarterly installments over two year period. (7)
10.6 | Form of Non-Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with full vesting upon issuance. (7)
10.7 | Commercial Mortgage, dated May 27, 2005, between Hudson Technologies Company and Busey Bank. (8)
10.8 | Commercial Installment Mortgage Note, dated May 27, 2005, between Hudson Technologies Company and Busey Bank.  (8)
10.9 | Amended and Restated Employment Agreement with Kevin J. Zugibe, as amended. (12)*
10.10 | Agreement with Brian F. Coleman, as amended. (12)*
10.11 | Agreement with James R. Buscemi, as amended. (12)*
10.12 | Agreement with Charles F. Harkins, as amended. (12)*
10.13 | Agreement with Stephen P. Mandracchia, as amended. (12)*
10.14 | 2008 Stock Incentive Plan. (11)*
10.15 | Form of Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issuance. (12)*
10.16 | Form of Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with options vesting in equal installments over two year period. (12)*
10.17 | Form of Non-Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issuance. (12)*
10.18 | Form of Non-Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with options vesting in equal installments over two year period. (12)*
10.19 | Warrant, dated August 5, 2009, for 73,500 shares of Common Stock issued to Roth Capital Partners, LLC. (19)
10.20 | First Amendment to Amended and Restated Employment Agreement with Kevin J. Zugibe, dated December 30, 2008. (12)*
10.21 | Form of Warrant issued in the 2010 Offering. (13)
10.22 | Warrant Repurchase Agreement dated March 4, 2011 between the Company and Sonar Partners Fund, L.P. (14)
10.23 | Warrant Repurchase Agreement dated March 4, 2011 between the Company and Sonar Overseas Fund, Ltd. (14)
10.24 | Form of Agreement and Consent, to amend warrants issued in connection with the 2010 Offering, dated March 7, 2011. (14)
10.25 | Revolving Credit, Term Loan and Security Agreement, dated June 22, 2012, between Hudson Technologies Company as borrower and PNC Bank, National Association as lender and agent (16)
10.26 | $23,000,000 Revolving Credit Note, dated June 22, 2012, by Hudson Technologies Company as borrower in favor of PNC (16)
10.27 | $4,000,000 Term Note, dated June 22.2012, by Hudson Technologies Company as borrower in favor of PNC. (16)
10.28 | Guaranty & Suretyship Agreement, dated June 22, 2012, made by Hudson Holdings, Inc. as guarantor on behalf of Hudson Technologies Company. (16)
10.29 | Guaranty & Suretyship Agreement, dated June 22, 2012, made by the Company as guarantor on behalf of Hudson Technologies Company. (16)



10.30 Patent, Trademarks, and Copyrights Security Agreement, dated June 22, 2012, between the Company and PNC. (16)
10.31 Patent, Trademarks, and Copyrights Security Agreement, dated June 22, 2012, between Hudson Technologies Company and PNC. (16)
10.32 Long Term Care Insurance Plan Summary. (17)*
10.33 First Amendment to Revolving Credit, Term Loan, and Security Agreement between Hudson Technologies Company and PNC dated February 15, 2013. (18)
10.34 $36,000,000 Amended and Restated Revolving Credit Note, dated February 15, 2013, by Hudson Technologies Company as borrower in favor of PNC. (18)
10.35 Guarantors' Ratification dated February 15, 2013, by the Company and Hudson Holdings, Inc. (18)
10.36 Second Amendment to Revolving Credit, Term Loan and Security Agreement Between Hudson Technologies Company and PNC Bank, National Association dated October 25, 2013 (20)
10.37 Guarantors' Ratification dated October 25, 2013 by Hudson Technologies, Inc. and Hudson Holdings, Inc. (20)
10.38 Amendment No. 1 to the Hudson Technologies, Inc. 2004 Stock Incentive Plan adopted October 22, 2013. (21)*
10.39 Amendment No. 1 to the Hudson Technologies, Inc. 2008 Stock Incentive Plan adopted October 22, 2013. (21)*
10.40 Underwriting Agreement between William Blair & Company, L.L.C., for itself and as representative of the several underwriters, and Hudson Technologies, Inc., dated June 6, 2014 (22)
10.41 Third Amendment to Revolving Credit, Term Loan and Security Agreement Between Hudson Technologies Company and PNC Bank, National Association, dated July 2, 2014 (23)
10.42 Guarantor's Ratification, dated July 1, 2014, by Hudson Technologies, Inc. and Hudson Holdings, Inc. (23)
10.43 2014 Stock Incentive Plan (24)*
10.44 Form of Incentive Stock Option Agreement under the 2014 Stock Incentive Plan with full vesting upon issuance. (25)
10.45 Form of Incentive Stock Option Agreement under the 2014 Stock Incentive Plan with options vesting in equal installments over two year period. (25)*
10.46 Form of Non-Incentive Stock Option Agreement under the 2014 Stock Incentive Plan with full vesting upon issuance. (25)*
10.47 Form of Non-Incentive Stock Option Agreement under the 2014 Stock Incentive Plan with options vesting in equal installments over two year period. (25)*
10.48 Form of Incentive Barrier Stock Option Agreement under the 2014 Stock Incentive Plan with full vesting upon issuance. (25)*
10.49 Form of Non-Incentive Barrier Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issuance. (25)*
10.50 Form of Incentive Barrier Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issue. (25)*
10.51 Form of Non-Incentive Barrier Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issue. (25)*
10.52 Fourth Amendment to Revolving Credit, Term Loan and Security Agreement Between Hudson Technologies Company and PNC Bank, National Association, dated July 1, 2015 (27)
10.53 Guarantor's Ratification, dated July 1, 2015, by Hudson Technologies, Inc. and Hudson Holdings, Inc. (27)
10.54 Second Amended and Restated Employment Agreement with Kevin J. Zugibe (28)*
10.55 Amended and Restated Agreement with Brian Coleman (28)*
14 Code of Business Conduct and Ethics. (9)
21 Subsidiaries of the Company. (28)
23.1 Consent of BDO USA, LLP. (28)
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (28)
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (28)
32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002. (28)
32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002. (28)
101 Interactive data file pursuant to Rule 405 of Regulation S-T. (28)
(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 Quarterly Report on Form 10-QSB for the quarter ended June 30, 1999.
(3) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for the year ended December 31, 1999.
(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, 2000.



(5) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for the year ended December 31, 2001.
(6) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for the year ended December 31, 2002.
(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, 2004.
(8) Incorporated by reference to the comparable exhibit filed with the Company's Quarterly Report on Form 10-QSB for the quarter ended June 30, 2005.
(9) Incorporated by reference to the comparable exhibit filed with the Company's Current Report on Form 8-K, for the event dated March 3, 2005, and filed May 31, 2005.
(10) Incorporated by reference to Appendix B to the Company's Definitive Proxy Statement on Schedule 14A filed August 18, 2004.
(11) Incorporated by reference to Appendix I to the Company's Definitive Proxy Statement on Schedule 14A filed July 29, 2008.
(12) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2008.
(13) Incorporated by reference to the comparable exhibit filed with the Company's Current Report on Form 8-K for the event dated July 1, 2010 and filed July 2, 2010.
(14) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2010.
(15) Incorporated by reference to the comparable exhibit filed with the Company's Quarterly Report on Form-10-Q for the quarter ended June 30, 2011.
(16) Incorporated by reference to the comparable exhibit filed with the Company's Report on Form 8-K for the event dated June 22, 2012 and filed June 28, 2012.
(17) Incorporated by reference to the comparable exhibit filed with the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.
(18) Incorporated by reference to the comparable exhibit filed with the Company's Current Report on Form 8-K for the event dated February 15, 2013 and filed February 20, 2013.
(19) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2009.
(20) Incorporated by reference to the comparable exhibit filed with the Company's Current Report on Form 8-K for the event dated October 25, 2013 and filed October 31, 2013.
(21) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2013.
(22) Incorporated by reference to the comparable exhibit filed with the Company's Current Report on Form 8-K filed on June 6, 2014.
(23) Incorporated by reference to the comparable exhibit filed with the Company's Current Report on Form 8-K filed on July 7, 2014.
(24) Incorporated by reference to Appendix B to the Company's Definitive Proxy Statement on Schedule 14A filed August 12, 2014.
(25) Incorporated by reference to the comparable exhibit filed with the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.
(26) Incorporated by reference to the comparable exhibit filed with the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.
(27) Incorporated by reference to the comparable exhibit filed with the Company's Current Report on Form 8-K for the event dated July 7, 2015 and filed July 8, 2015.
(28) Filed herewith
(*) Denotes Management Compensation Plan, agreement or arrangement.



# SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made as of the 9th day of March, 2016 by and between Hudson Technologies, Inc., PO Box 1541, One Blue Hill Plaza, Pearl River, New York 10965, Hudson Technologies of Tennessee, dba Hudson Technologies Company, PO Box 1541, One Blue Hill Plaza, Pearl River, New York 10965 (hereinafter Hudson Technologies, Inc. and Hudson Technologies of Tennessee, dba Hudson Technologies Company are collectively referred to herein as "Hudson") and Kevin J. Zugibe, residing at PO Box 754, Pearl River, New York 10965 ("Executive").

WHEREAS, the Executive is a named executive officer of Hudson and currently holds the title of Chief Executive Officer and Chairman of Hudson; and

WHEREAS, the Hudson Technologies of Tennessee, dba Hudson Technologies Company is a separate, wholly owned subsidiary of Hudson Technologies, Inc. and is made a party to this agreement for the purpose of implementing the terms of this agreement; and

WHEREAS, the Executive and Hudson previously entered into an Amended and Restated Employment Agreement, made as of October 10, 2006 (the "October 2006 Agreement"), as amended by Addendum to Employment Agreement, made as of December 30, 2008 (the "Addendum") (hereinafter the October 2006 Agreement and the Addendum are collectively referred to as the "Employment Agreement"); and

WHEREAS, Hudson and the Executive acknowledge that the Executive is one of the founders of Hudson and is a key Executive of Hudson, and that the Executive's talents, knowledge and services to Hudson are of a special, unique, and extraordinary character and are of particular and peculiar benefit and importance to Hudson; and

WHEREAS, Hudson and the Executive acknowledge that, because the Executive's duties and responsibilities will bring the Executive into contact with Hudson's confidential information, Hudson must ensure that its valuable confidential information, as well as its customer relationships, are protected and can be entrusted to the Executive; and

WHEREAS, Hudson desires to ensure that it will receive the continued dedication, loyalty and service of, and the availability of objective advice and counsel, from the Executive, as well as assurances that the Executive will continue to devote his best efforts to his employment with Hudson and that he will not solicit other executives or employees of Hudson; and

WHEREAS, Hudson and the Executive desire to amend and restate the Employment Agreement on the terms contained herein.



NOW, THEREFORE, in consideration of the continuation of the employment by Hudson of the Executive and the mutual covenants and conditions contained herein, and for other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed that the Employment Agreement is hereby amended and supplemented as follows:

1. AMENDMENT AND RESTATEMENT: This agreement hereby amends, restates and supercedes in its entirety the Employment Agreement and each and every provision contained therein.

2. EMPLOYMENT: Hudson agrees to employ Executive in an executive capacity, and Executive accepts employment upon the terms and conditions set forth herein. Executive expressly acknowledges that he was advised that a condition to Executive's entering into this agreement was the Executive's agreement to restrictions regarding Confidential Information, Intellectual Property, Non-Solicitation of Executives, and Covenants Not To Compete (all as set out in more detail below), and that the additional rights and benefits contained herein constitute new and adequate consideration for this Agreement. Executive understands that, subject to the provisions contained herein, from time to time he may be promoted, reassigned, or given different job titles and responsibilities at the sole discretion of Hudson, and that unless and until such time as a new agreement or amendment to this agreement is executed in writing by Hudson and Executive, this Agreement shall remain binding upon Executive regardless of the job title or position held by Executive.

3. TERM: Subject to the provisions for termination as provided herein, the term of this agreement shall be two (2) years. This agreement shall be automatically renewed for successive two (2) year terms unless either party gives notice of its intention not to renew no less than ninety (90) days prior to the expiration of the existing term.

4. COMPENSATION: As compensation for the services to be rendered by Executive, Hudson agrees to provide Executive with a base salary at the annual rate of Three Hundred Eighty Thousand, Three Hundred and 00/10 ($384,000.00) dollars. The Board of Compensation Committee shall meet at least annually for the purpose of determining Executive's annual base salary based upon the apparent value of his services. The payment of the above amounts shall constitute full satisfaction and discharge of Hudson's obligations under this agreement, but are without prejudice to Executive's rights under any Executive bonus or benefit plan heretofore or hereafter provided by Hudson.

Hudson may, but shall not be obligated to, pay to the Executive, in addition to his base salary, a cash bonus. Payment of any such bonus, and the amount of any such bonus shall be at the sole discretion of the Board of Directors.

5. DUTIES: Executive shall serve as Chief Executive Officer of Hudson, and shall assume such other duties as the Board of Directors may assign. The services to be performed by the Executive may be extended or curtailed from time to time at the direction of the board of directors.



Executive agrees that he will at all times faithfully, industriously and to the best of his ability, experience and talents, perform all of the duties that may be required of and from him pursuant to the express and implicit terms of this agreement, to the reasonable satisfaction of Hudson. Such duties shall be rendered at Hudson's headquarters currently located at Pearl River, New York and, except as otherwise provided herein, at such other place or places within or without the State of New York as Hudson shall in good faith require or as the interest, needs, business, or opportunities of Hudson shall require.

Executive shall devote full, normal and regular business time, attention, knowledge and skill to the business and interest of Hudson, and Hudson shall be entitled to all of the benefits, profits or other issue arising from or incident to all work, services and advice of Executive performed for Hudson. Executive agrees that while Executive is employed by Hudson, Executive shall not directly or indirectly in any capacity engage in any business other than Hudson's Business without Hudson's prior written consent, which consent will not be unreasonably withheld provided that such other business is (a) unrelated to the Business of Hudson, (b) will in no way interfere with the performance of Executive's duties to Hudson, (c) will not utilize Confidential Information or Intellectual Property of Hudson or of any Client of Hudson, (d) will be conducted at times other than when Executive is required to work for Hudson, and at places other than Hudson's business locations or those of Hudson's customers, and (e) will not involve Hudson, other Executives of Hudson, any Client of Hudson, or any supplier of Hudson, in the conduct or the financing of Executive's business, or as customers, suppliers, investors, partners, joint venturers, or otherwise. Under no circumstances shall Executive render any services that are competitive with any of Hudson's business, or that are for any other person, corporation or other entity that is engaged in any business competitive with or in the same business as any of Hudson's business. Notwithstanding the foregoing, Executive shall have the right to make investments in businesses which in engage in activities other than those engaged in by Hudson or its subsidiaries.

6 . EXPENSES: Executive is authorized to incur reasonable expenses on behalf of Hudson in performing his duties, including expenses for general administration of Hudson's office, travel, transportation, entertainment, gifts and similar items, which expenses shall be paid, or reimbursed to Executive, by Hudson, provided that the Executive furnishes to Hudson appropriate supporting documentation of such expenses. In addition Hudson will reimburse the Executive for all professional fees and expenses for professional organizations and continued education reasonably incurred by the Executive and reasonably related to the continued performance of his duties.

7 . VACATIONS: Executive shall be entitled the number of paid vacation, sick days, personal days and holidays as are specified, established and set forth in Hudson's standard policies, provided, however, that Executive shall be entitled each calendar year to a vacation of no less than twenty (20) weekdays, no two of which need be consecutive. Hudson shall not be required to compensate Executive for vacation days, sick days or personal days not taken by the Executive in any given year, and the Executive cannot accrue and accumulate unused vacation days, sick days or personal days in subsequent years.



8. TERMINATION: The following payments and benefits (hereinafter "Severance Benefits") will be provided to the Executive by Hudson in the event of a Termination of Employment (as hereinafter defined) of the Executive:

A. Executive will continue to receive his annual base salary, based upon his annual base salary as of the date of his Termination of Employment (as hereinafter defined), for a period of twenty-four (24) months (the "Severance Period"), with payroll to be made every two weeks, or at such other frequency based upon Hudson's normal payroll practice. Hudson shall deduct from Executive's continuing payroll all normal tax withholdings and deductions which Hudson is required by law to make. The initial payment shall be made within the forty-five (45) day period following the Executive's Termination of Employment and the Executive shall have no right to designate the taxable year of payment.

B. Executive will also receive an amount equal to 100% of the highest bonus earned by the Executive in any calendar year within the three (3) calendar years immediately preceding the date of Termination of Employment (the "Bonus"), which amount shall be paid to Executive in equal payments throughout the Severance Period made every two weeks, or at such other frequency based upon Hudson's normal payroll practice. Hudson shall deduct from this bonus payment all normal tax withholdings and deductions which Hudson is required by law to make. The initial payment shall be made within the forty-five (45) day period following the Executive's Termination of Employment and the Executive shall have no right to designate the taxable year of payment.

C. Within the forty-five (45) day period following the Executive’s Termination of Employment, Hudson will pay to the Executive a lump sum payment for the Executive’s unused vacation for the year in which the Termination of Employment occurs, equal to the number of prorata unused vacation days on the date of Termination of Employment, as determined in accordance with Hudson’s standard vacation policy, multiplied by the Executive’s daily base salary on the date of Termination of Employment. Hudson shall deduct from this payment all normal tax withholdings and deductions which Hudson is required by law to make. The Executive shall have no right to designate the taxable year of payment.

D. The Executive's participation in life, health and dental insurance, disability insurance, and any other benefits (the "Benefits") provided by Hudson to the Executive as of the date of the Termination of Employment shall be continued, or essentially equivalent benefits provided by Hudson, for the entire Severance Period or until otherwise terminated by the Executive, on the same terms, conditions and costs as if the Executive continued in the employ of Hudson. To the extent Benefits include health and dental insurance, such Benefits shall be provided as COBRA continuation coverage, and not in addition to COBRA. Notwithstanding the foregoing, to the extent Benefit coverages provided to the Executive under this Section are taxable to the Executive, Hudson's obligation hereunder shall not exceed the applicable dollar amount under Section 402(g)(1)(B) of the Internal Revenue Code of 1986, as amended determined as of the year in which the Executive's "Separation of Service" occurs which is exempt under Treasury Reg. Section 1.409A-1(b)(9)(v)(D) (Limited Payment).



E. All stock options, stock appreciation rights, and any similar rights which the Executive holds on the date of Termination of Employment shall become fully vested and be exercisable on the date of Termination of Employment, and shall remain exercisable following the Termination of Employment until (i) expiration of the Severance Period, (ii) termination of Severance Benefits pursuant to paragraph "10" below, or (iii) expiration of the original term of the stock option, stock appreciation right or similar right, whichever first occurs. No extension of an exercise period under this Agreement shall extend to a date that would cause such stock option, stock appreciation right or similar right to be subject to Code Section 409A.

F. On the Executive’s last day of employment, Hudson will execute and deliver all documents necessary to assign to Executive ownership of any and all “Key Man” or other life insurance policies insuring the life of the Executive then in place and owned by Hudson (including, without limitation, the right to designate beneficiaries, terminate the policy and/or receive the full cash surrender value).

G. For purposes of this agreement, the following definitions will apply:

(i) A "Termination of Employment" shall take place in the event that the Executive's employment is terminated (a) by Hudson without Cause (as hereinafter defined) or (b) by the Executive following an event constituting Good Reason (as hereinafter defined).

(ii) "Cause" shall exist if the act(s) or conduct of the Executive make it unreasonable to require Hudson to continue to retain Executive in its employment, such as, but not limited to, (a) the Executive's willful and continued refusal to perform, or the Executive's willful and continued neglect of, the substantive duties of his position, (b) any willful act or omission by the Executive constituting dishonesty, fraud or other malfeasance, (c) material nonconformance with Hudson's standard business practices and policies, including but not limited to violation of Hudson's Code of Business Conduct and Ethics or Hudson's Substance Abuse Policy, (d) any act or omission by the Executive which has a material adverse effect upon the financial condition or business reputation of Hudson, (e) the Executive's conviction of a felony, or any crime involving moral turpitude, dishonesty or theft, under the laws of the United States or any state thereof or any other jurisdiction in which Hudson conducts business, (f) breach of the provisions of paragraphs "11" or "12" of this agreement, (g) the resignation of Executive other than pursuant to the occurrence of an event constituting Good Reason (as hereinafter defined).



(iii) "Good Reason" shall mean the occurrence of any of the following: (a) at any time within a twenty-four (24) month period two individuals are elected to Hudson's Board of Directors whose nominations were not approved by the then sitting members of the Board of Directors; (b) the Executive is assigned any duties or responsibilities, without his consent, that are materially inconsistent with his position, duties, responsibilities or status, (c) Hudson requires the Executive, without his consent, to be based at a location which is more than fifty (50) miles from Hudson's corporate headquarters, currently located at One Blue Hill Plaza, Pearl River, New York 10965, (d) except as provided in paragraph "8.J." below, the Executive's annual base salary is reduced, except to the extent that the annual base salaries of all Executive Officers (as defined below) are reduced due to the adverse financial condition of Hudson and further providing that the Executive's annual base salary may not be reduced to a level that is less than ninety (90%) percent of the Executive's annual base salary for the calendar year immediately prior to the Termination of Employment, (e) the Executive's benefits are reduced and such reduction results in a material reduction in the Executive's total compensation, except to the extent that such reductions are made by Hudson on a company-wide basis and affect all Executive Officers that participate in such benefits, (f) except as provided in paragraph "8.J." below, the Executive experiences in any year a reduction in bonus compensation or other incentive compensation, or a reduction in the ratio of the Executive's incentive compensation, bonus or other such payments to his base compensation, or a reduction in the method of calculation of the Executive's incentive compensation, bonus or other such payments if these benefits or payments are calculated other than as a percentage of base salary, except to the extent such reduction applies equally or proportionally, as the case may be, to all Executive Officers of Hudson. Good Reason shall not be deemed to exist unless the Executive's Termination of Employment for Good Reason occurs within ninety (90) days following the initial existence of one of the foregoing conditions, the Executive provides Hudson with written notice of the existence of such condition(s) within thirty (30) days after the initial existence of the condition(s), and Hudson fails to remedy the condition within thirty (30) days after its receipt of such notice. An isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by Hudson within ten (10) days after Hudson's receipt of notice thereof given by the Executive shall not constitute Good Reason.

(iv) "Executive Officer(s) shall mean the following: Hudson's Chief Executive Officer (currently Kevin J. Zugibe); Hudson's President and/or Chief Operating Officer (currently Executive); Hudson's Chief Financial Officer (currently James R. Buscemi); Hudson's Vice President Sales (currently Charles F. Harkins); Hudson's Vice President Legal & Regulatory (currently Stephen P. Mandracchia); and any other current or future officer of Hudson Technologies, Inc. that is subject to Section 16(a) of the Securities Exchange Act of 1934.

H. Hudson's obligation to pay the compensation and to make the arrangements provided in this paragraph "8" shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any offset, counterclaim, recoupment or other right which Hudson may have against the Executive or anyone else; provided, however, that as a condition to payment of amounts under this paragraph "8", within thirty (30) days of the Executive's Termination of Employment, the Executive shall have (i) executed and not revoked a general release and waiver, in form and substance reasonably satisfactory to Hudson and the Executive, of all claims relating to the Executive's employment by Hudson and the termination of such employment, including, without limitation, discrimination claims (including without limitation age discrimination), employment-related tort claims, contract claims and claims under this Agreement (other than claims with respect to benefits under any tax-qualified retirement plans or continuation of coverage or benefits solely as required under ERISA), and (ii) executed an agreement expressly acknowledging and reaffirming the covenants and restrictions contained in paragraphs "11" and "12" below, and the remedies available to Hudson under paragraph "13" below.



I. All amounts payable by Hudson pursuant to this paragraph "8" shall be paid without notice or demand. The Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made pursuant to this paragraph "8" and, except as provided in paragraph "13" below, the obtaining of any other employment shall not result in a reduction of Hudson's obligation to make the payments, benefits and arrangements required to be made under this paragraph "8".

J. Executive expressly acknowledges that the following shall not constitute "Good Reason" for purposes of this paragraph "8":

(i) Establishing a new or different bonus or incentive compensation plan(s) in any subsequent year based upon new or different criteria for calculating the applicability of, and the amount of any bonus or incentive compensation award due to the Executive, provided that any new or different bonus or incentive compensation plan, and any award under said plan, applies equally or proportionally, as the case may be, to all Executive Officers; except that Hudson may establish separate performance criteria and payment amounts for awards under such plan for each Named Executive that are reasonably achievable and reasonably related to such Executive's normal duties and responsibilities;

(ii) A reduction of the Executive's bonus compensation or other incentive compensation that (a) results from Hudson operating at a level of performance below Hudson's Budget, (b) results from the Executive's failure or inability to attain, in whole or in part, any or all of the performance criteria established for the Executive under the said plan, (c) results from application of the terms of such bonus or incentive compensation plan, or (d) is based upon the Executive's performance, or non-performance, of his normal duties and responsibilities during the period covered by the bonus or incentive compensation plan including, without limitation, due to the Executive's Disability (as defined herein);

(iii) A reduction of the Executive's annual base salary based upon the Executive's performance, or non-performance, of his normal duties and responsibilities, provided that the Executive's annual base salary may not be reduced to a level that is less than ninety (90%) percent of the Executive's annual base salary for the calendar year immediately prior to the Termination of Employment;



(iv) A reduction in the Executive's annual base salary pursuant to the provisions of paragraph "10" below.

9. TERMINATION FOR CAUSE: Hudson may at any time terminate the employment of the Executive for Cause (as defined in paragraph "8" above) upon five (5) days prior written notice to Executive. If Executive is terminated for cause, he shall be entitled to no Severance Benefits and shall be entitled to no bonus payment that might otherwise be owed to him even if he worked for the entire year. In the event of termination under this section, Hudson shall pay Executive all amounts which are then accrued but unpaid, including unpaid vacation as determined in accordance with Hudson's standard vacation policy, within thirty (30) days after the date of notice. Hudson shall have no further or additional liability to Executive.

1 0 . DISABILITY: A. If Executive is unable to perform his services by reason of illness, injury or incapacity (hereinafter "Disabled" or "Disability"), he will continue to receive his base salary and all benefits for a period of eight (8) weeks after the commencement of the Disability. If Executive is unable to perform his services by reason of his Disability for a period of more than eight (8) consecutive weeks, the Executive's annual base salary during the continued period of Disability shall be reduced by twenty-five (25%) percent. Executive's full compensation shall be reinstated upon his return to employment and the discharge of his full duties. Hudson shall have the right to reduce the amount paid to the Executive pursuant to this paragraph "10" by an amount equal to any disability payments or benefits actually received by Executive under or pursuant to any disability program or supplemental disability insurance plan(s) provided by Hudson at Hudson's expense.

B. Notwithstanding the foregoing, Hudson may terminate the employment of Executive at any time after Executive has been Disabled for a continuous period of more than 120 calendar days. Termination of the Executive after the said 120 calendar period shall not be deemed a Termination for Cause (as defined in paragraph "8" above") and shall entitle the Executive to receive the payments and benefits provided by Paragraph "8" upon Termination of Employment, except that, for purposes of such payments and benefits, the Severance Period shall be deemed to commence the date of the commencement of the Executive's Disability.

## 11. CONFIDENTIALITY:

## A. Employee expressly acknowledges and agrees as follows:

(i) Hudson expends a significant amount of funds annually on researching and developing solutions and proprietary techniques related to the products and services it offers or is seeking to offer, and has developed substantial confidential, proprietary, and trade secret information, and this confidential, proprietary, and trade secret information, if misused, disclosed, misappropriated or used by others, would result in irreparable harm to Hudson.



(ii) Hudson’s Confidential Information (as hereinafter defined) constitutes valuable commercial assets of Hudson and is not readily available to the general public or by any persons not employed by or otherwise not associated in a position of trust with Hudson. Hudson keeps its Confidential Information confidential (other than to the extent filings are required for patents) by, among other things, restricting access to only those who need the information to perform their Hudson job function and prohibiting the use or disclosure of Confidential Information to anyone not authorized to receive or use the Confidential Information.

(iii) Employee’s position with Hudson will continue to provide Employee with access to or knowledge of Hudson’s Confidential Information.

(iv) Hudson’s Confidential Information will become known to Employee only as a result of his/her employment with Hudson. To the extent that Employee was previously engaged, on his own or with others, in a business that provided the same or similar services as those provided by Hudson, Employee further acknowledges that such prior business knowledge and experience, and any familiarity with entities that are actual or potential customers for the business, shall not permit or allow Employee to contend that Hudson’s Confidential Information is not confidential or should not be protected from use or misappropriation.

## B. In light of the foregoing, Employee acknowledges and agrees as follows:

(i) All Confidential Information is the property of Hudson, and Employee shall not, without the express written consent of Hudson, directly or indirectly use, disseminate, disclose, or in any way reveal, either during Employee’s employment or at any time thereafter, all or any part of the Confidential Information, other than for the purposes authorized by Hudson, or only for the benefit of Hudson.

(ii) Hudson shall be the sole owner of, and Employee hereby assigns to Hudson, any and all property rights to all Intellectual Property (as hereinafter defined) made, conceived, originated, devised, discovered, invented, or developed before, during or after the term of Employee's employment with Hudson, whether or not Employee was involved either alone or with others, if it was in whole or in part developed during the course of Employee's employment or by Employee's use of any property of Hudson. This ownership provision does not apply to creations of the Employee which are made in the Employee's own time, without the use of any Hudson resources, and which do not relate in any way to Hudson's business. Employee agrees to cooperate fully and assist Hudson or its designee in the performance of any lawful acts that Hudson at its discretion deems necessary, and to execute and deliver without charge any documents reasonably required by Hudson, to secure any patent, copyright, trademark, and other protection for Intellectual Property and improvements thereon, and to assign to and vest in Hudson the entire interest therein in the United States and all foreign countries.



(iii) Upon request by Hudson at any time, or upon termination from employment with Hudson, whichever is sooner, Employee shall immediately deliver to Hudson any and all information and property of Hudson in whatever form it exists, including but not limited to all Confidential Information and all copies thereof or materials containing or derived from Confidential Information.

C. As used in this Agreement, “Confidential Information” means all information not publicly available (but including information that is publicly available as a result of a breach by Employee of paragraphs “11” and “12”) and not generally known or used by Hudson’s competitors, or in the industry, and which could be harmful to Hudson if disclosed to persons outside of Hudson and which includes, but is not limited to:

(i) Intellectual Property (as hereinafter defined);

(ii) Technical information, such as, but not limited to: Hudson’s plant organization and designs; product formulation, manufacturing, performance and processing data; and research and development results and plans;

(iii) Product information, such as, but not limited to: non-public details of Hudson’s products and services, including, but not limited to, its existing refrigerant, decontamination, reclamation and recovery products and services, as well as those being developed; specialized equipment and training; product plans, drawings and specifications; and performance capabilities, strengths and weaknesses;

(iv) Strategic information, such as, but not limited to: Hudson’s material costs; supplier and vendor information; overhead costs; pricing; profit margins; banking and financing information; and market penetration initiatives and strategies;

(v) Organizational information, such as, but not limited to: Hudson’s personnel and salary data; information concerning the utilization of facilities; merger, acquisition and expansion information; and equipment utilization information; Hudson manuals, policies and procedures;

(vi) Marketing and sales information, such as, but not limited to: Hudson’s licensing, marketing and sales techniques and data; customer lists; customer data, such as, but not limited to, their personnel, project, financial and account status, individual needs, historical purchases, contact information; product development and delivery schedules; market research and forecasts; and marketing and advertising plans, techniques and budgets; and

(vii) Advertising information, such as, but not limited to: Hudson’s overall marketing policies; the specific advertising programs and strategies utilized by Hudson; and the success or lack of success of those programs and strategies.



“Confidential Information” does not include general skills, experience or information that is generally available to the public, other than information which has become generally available as a result of Employee’s direct or indirect act or omission. “Confidential Information” also does not include information regarding Employee’s own pay and benefits, information as to the terms and conditions of employment, or information that is deemed not confidential under Section 7 of the National Labor Relations Act. Nothing in this Agreement should be construed as restricting the Employee’s right to engage in legally protected activities under applicable law, including participating in investigations conducted by any governmental agency or entity or making other disclosures that are protected under the whistleblower provisions of applicable law or regulation.

D. As used in this Agreement, “Intellectual Property” means all information concerning the evaluation, design, engineering, construction, marketing, and sales of the products and services provided by Hudson and which includes, but is not limited to: any and all patents, patents pending; trademarks, copyrights, and any and all applications for same issued to and/or applied for by Hudson; any and all technological (including software), educational, operational, and financial innovations, discoveries, inventions, designs, and formulae; tests; performance data; process or production methods; improvements to all such property; and all recorded material defining, describing, illustrating, or documenting in any fashion, all such property, whether written or not and whether stored in plain, code or other form; without regard to whether such property is patentable, copyrightable, or subject to trade/service mark protection, and without regard to whether a patent, copyright, or trademark or service mark has been sought or obtained.

## 12. NON-COMPETITION / NON-SOLICITATION:

## A. Employee expressly acknowledges and agrees as follows:

(i) Hudson compensates its employees, among other things, to develop and to pursue, on Hudson’s behalf, good relationships and goodwill with all customers and potential customers, whether developed by Employee or others within the Hudson organization;

(ii) Employee will be exposed to, acquire and develop knowledge of Confidential Information including, without limitation, Confidential Information related to Hudson’s customers, operations, and its suppliers;

(iii) Employee is able to be gainfully employed by other employers in a variety of other industries and businesses that are engaged in businesses that do not involve and are not competitive with any part of Hudson’s business.

B. In light of the foregoing, Employee agrees, that while Employee is employed by Hudson, and continuing until the expiration of the Covenant Period (as hereinafter defined):



(i) Employee shall not, within the Restricted Territory (as hereinafter defined), compete with Hudson, directly or indirectly, whether for Employee's own behalf or on behalf of or in conjunction with any other person, persons, company, partnership, corporation or business entity, whether for profit or not-for-profit, by being employed by, participating in, or otherwise being materially connected in the conduct of any business activity that involves providing products or services that are like or similar to, or competitive with, or would replace or be a substitute for, any one or more of the products and services provided by Hudson (hereinafter “Competitive Products”) if such employment, participation, or connection involves (a) responsibilities similar to responsibilities Employee had or performed for Hudson at any time during the last eighteen (18) months of Employee’s employment with Hudson; (b) supervision of employees or other personnel in the provision of Competitive Products; (c) development or implementation of strategies or methodologies related to the provision of Competitive Products; (d) marketing or sale of Competitive Products; or (e) responsibilities in which Employee would utilize or disclose Confidential Information.

(ii) Employee shall not compete with Hudson, directly or indirectly, whether for Employee’s own behalf or on behalf of or in conjunction with any other person, persons, company, partnership, corporation or business entity, whether for profit or not-for-profit, by calling upon, contacting, diverting, soliciting, or doing business for or with, any “Client” of Hudson (as hereinafter defined) for the purpose of offering or providing any Competitive Product.

(iii) Employee shall not directly or indirectly, without the prior written consent of Hudson, (a) induce, solicit, entice, or encourage any officer, director, employee or other individual to leave his or her employment with Hudson, (b) induce, solicit, entice, or encourage any officer, director, employee or other individual (or any way with the products and services of Hudson, or to violate the terms of any employment, non-competition, confidentiality or similar agreement with Hudson; or (c) employ, offer to employ, contract with, offer to contract with, or do business with any officer, director, employee or other individual who is employed by Hudson.

C. For purposes of this paragraph “12”, the Covenant Period shall be twenty-four (24) months after the Employee’s last day of employment with Hudson, regardless of the reason underlying the termination of Employee’s employment.

D. Employee acknowledges that many of Hudson’s services are remedial in nature and, as such, its customers may utilize Hudson’s services on an infrequent basis over an extended period of time, or following a protracted sales effort over an extended period of time. Employee also acknowledges that because of his position, he will likely have knowledge of Hudson’s customers through access to Confidential Information, whether or not located within the Restricted Territory (hereinafter defined). Accordingly, for purposes of this paragraph “12”, the term “Client” shall mean (a) any customer or potential customer of Hudson upon whom Employee, during the last eighteen (18) months of Employee’s employment with Hudson, called upon or with whom Employee had any contact, or as to whom Employee was involved in regard to planning, marketing, conducting, or overseeing an offer to sell products or perform services; (b) any customer as to whom Employee assisted in selling products or in providing services, or as to whom Employee was involved in regard to planning, marketing, conducting, or overseeing the offer to sell products or to perform services if the customer received any products or services from Hudson during the last eighteen (18) months of Employee’s employment with Hudson; (c) any potential customer of Hudson whose identity employee learned during the eighteen (18) months of Employee’s employment with Hudson or learned from Confidential Information at any time; or (f) any customer for whom Hudson has provided products or services to at any time during the thirty-six (36) months preceding the last day of the Employee’s employment with Hudson and whose identity as a Hudson customer Employee learned from Confidential Information at any time.



E. The Employee acknowledges that the nature of Hudson’s business is such that provides its products and services to customers throughout the United States of America and Puerto Rico. Accordingly, the “Restricted Territory” includes each and every state of the United States of America (including the District of Columbia) and Puerto Rico.

F. In order to assure Hudson of the full twenty-four (24) months of the covenant period within which to protect its goodwill and to prevent Employee from unfairly benefiting by violations of this paragraph “12”, the provisions and requirements of this paragraph “12” shall be extended for a period of time beyond the Covenant Period equal in length to the total length of time during which Employee is in violation of any one or more provisions of this Section.

G. In the event it is determined by a Court of competent jurisdiction that any provision or portion of a provision of this paragraph “12” is not enforceable under the law governing this Agreement, the unenforceable provision or portion thereof may be stricken, and the remainder of the provision and of this paragraph “12” shall be valid and fully enforceable, in all respects, as if the provision or portion of a provision deemed unenforceable had never been a part of the Agreement. Further, if any provision of this Agreement is found to be overbroad or unenforceable, the court or any other authority with competent jurisdiction is expressly authorized to conform the provision to the extent necessary to remedy any deficiency and render it valid and enforceable.

## 13. REMEDIES:

A. In the event that Executive breaches any term or provision of paragraphs "11" or "12" of this Agreement, Hudson shall be immediately, permanently and irreparably damaged and shall be entitled, in addition to, and without limiting Hudson's right to, any and all other legal and equitable remedies and damages, (i) to a temporary restraining order ex parte, to a preliminary injunction, and to a permanent injunction, to restrain Executive's actions or the actions of others acting on Executive's behalf, (ii) to terminate all future Severance Benefits through the remainder of the Severance Period, and (iii) to recover from the Executive all Severance Benefits actually paid to the Executive, including any costs or expenses actually incurred by Hudson in providing such Severance Benefits. Executive agrees that Executive will not be damaged by enforcement of this covenant as Executive can obtain many other types of gainful employment without violating the provisions of paragraphs "11" or "12", so that no bond shall be required, and if the Court requires a bond to be posted, it shall not exceed $500.00.



B. All of Executive's covenants and obligations under paragraphs "11" and "12" of this Agreement shall survive, and shall remain enforceable, for so long as Executive is employed and after termination of employment for any reason, and shall survive despite future promotions, raises, changes in position or compensation, demotions, and the execution of new agreements with Hudson, and shall inure to the benefit of Hudson's successors and assigns, unless Hudson executes in writing an agreement expressly terminating the covenants of paragraphs "11" and "12".

C. Hudson and Executive shall each bear and be responsible for their own attorneys' fees, expenses and disbursements incurred in any litigation brought by either party to enforce or interpret any provision contained in paragraphs "11" or "12" of this Agreement.

14. NOTICES: All notices required or permitted to be given under this agreement shall be sufficient if in writing and if sent by certified mail, return receipt requested, to the Executive at his residence, and to Hudson at its principal office located at PO Box 1541, One Blue Hill Plaza, Pearl River, New York 10965, attention President, or at such other address as any party specifies by giving proper notice.

15. SUCCESSORS AND ASSIGNS: This agreement shall be binding upon and shall inure to the benefit of the Executive and his estate. Neither this Agreement nor any rights hereunder shall be assignable by the Executive.

This Agreement shall be freely assignable by Hudson to, and shall inure to the benefit of, and be binding upon, any successor corporation or affiliate of a successor corporation, and all references in this agreement to Hudson shall include its subsidiaries and affiliates and any successors, affiliates of successors or assigns of Hudson. As used herein, the term "successor" shall mean any person, firm, corporation or business entity or affiliate thereof which at any time, whether by merger, purchase or otherwise, directly or indirectly acquires all or substantially all of the assets or the business of Hudson, including any entity that shall be the surviving corporation in a merger with Hudson.

16. INDEMNIFICATION: In the event that any litigation shall be brought to enforce or interpret any provision contained in paragraphs "8", "9", or "10" of this Agreement, then, provided that the Executive prevails to any extent, Hudson or any successor corporation shall reimburse or indemnify the Executive for the Executive's reasonable attorneys' fees, expenses and disbursements incurred in such litigation, including the costs of enforcement.

17. CHOICE OF LAW: This agreement shall be governed by and construed in accordance with the laws of the State of New York.



18. ENTIRE AGREEMENT: This agreement contains the entire agreement of the parties. It may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought.

19. WAIVER: The waiver of any breach of any provision of this agreement by either party shall not operate or be construed as a subsequent waiver by either party of any term or condition of this agreement.

20. HEADINGS: The headings in this agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this agreement.

21. SEVERABILITY: The parties intend and agree that each covenant and condition contained in this agreement shall be a separate and distinct covenant. If any provision of this agreement is found to be invalid, illegal, or unenforceable, the remaining provisions shall not be affected.

IN WITNESS THEREOF, the parties have executed this agreement as of the date written above.

Hudson Technologies, Inc.

By: /s/ Brian F. Coleman

Hudson Technologies of Tennessee dba
Hudson Technologies Company

By: /s/ Brian F. Coleman

/s/ Kevin J. Zugibe

Kevin J. Zugibe



## AMENDED AND RESTATED AGREEMENT

THIS AGREEMENT is made as of the 9th day of March, 2016 by and between Hudson Technologies, Inc., PO Box 1541, One Blue Hill Plaza, Pearl River, New York 10965, Hudson Technologies of Tennessee, dba Hudson Technologies Company, PO Box 1541, One Blue Hill Plaza, Pearl River, New York 10965 (hereinafter Hudson Technologies, Inc. and Hudson Technologies of Tennessee, dba Hudson Technologies Company are collectively referred to herein as "Hudson") and Brian F. Coleman, residing at 41 Mountainview Avenue, Pearl River, NY 10965 ("Executive").

WHEREAS, the Executive is named executive officer of Hudson and currently holds the title of President and Chief Operating Officer of Hudson; and

WHEREAS, Employee is also an employee of Hudson Technologies Company and currently holds the position of President and Chief Operating Officer, and is employed at Hudson’s Pearl River, New York headquarters facility; and

WHEREAS, Hudson Technologies, Inc. is the parent corporation of Hudson Technologies Company; and

WHEREAS, Hudson and the Executive entered into an certain Agreement dated October 10, 2006 (the “Agreement”), as amended by the First Amendment to Agreement, dated December 2008,

WHEREAS, Hudson and the Executive acknowledge that, because the Executive's duties and responsibilities will bring the Executive into contact with Hudson's confidential information, Hudson must ensure that its valuable confidential information, as well as its customer relationships, are protected and can be entrusted to the Executive; and

WHEREAS, Hudson and the Executive acknowledge that the Executive's talents, knowledge and services to Hudson are of a special, unique, and extraordinary character and are of particular and peculiar benefit and importance to Hudson; and

WHEREAS, Hudson desires to ensure that it will receive the continued dedication, loyalty and service of, and the availability of objective advice and counsel from, the Executive, as well as assurances that the Executive will continue to devote his best efforts to his employment with Hudson and that he will not solicit other executives or employees of Hudson or the Company, and

WHEREAS, Hudson and the Executive desire to amend and restate the Agreement on the terms contained herein.



NOW, THEREFORE, in consideration of the continuation of the employment by Hudson of the Executive, the payments, rights and benefits granted, and the mutual covenants and conditions contained herein, and for other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed:

1. TERMINATION: The following payments and benefits (hereinafter "Severance Benefits") will be provided to the Executive by Hudson in the event of a Termination of Employment (as hereinafter defined) of the Executive:

A. Executive will continue to receive his annual base salary, based upon his annual base salary as of the date of his Termination of Employment (as hereinafter defined), for a period of eighteen (18) months (the "Severance Period"), with payroll to be made every two weeks, or at such other frequency based upon Hudson's normal payroll practice. Hudson shall deduct from Executive's continuing payroll all normal tax withholdings and deductions which Hudson is required by law to make. The initial payment shall be made within the forty-five (45) day period following the Executive's Termination of Employment and the Executive shall have no right to designate the taxable year of payment.

B. Executive will also receive an amount equal to 100% of the highest bonus earned by the Executive in any calendar year within the three (3) calendar years immediately preceding the date of Termination of Employment (the "Bonus"), which amount shall be paid to Executive in equal payments throughout the Severance Period made every two weeks, or at such other frequency based upon Hudson's normal payroll practice. Hudson shall deduct from this bonus payment all normal tax withholdings and deductions which Hudson is required by law to make. The initial payment shall be made within the forty-five (45) day period following the Executive's Termination of Employment and the Executive shall have no right to designate the taxable year of payment.

C. Within the forty-five (45) day period following the Executive’s Termination of Employment, Hudson will pay to the Executive a lump sum payment for the Executive’s unused vacation for the year in which the Termination of Employment occurs, equal to the number of prorata unused vacation days on the date of Termination of Employment, as determined in accordance with Hudson’s standard vacation policy, multiplied by the Executive’s daily base salary on the date of Termination of Employment. Hudson shall deduct from this payment all normal tax withholdings and deductions which Hudson is required by law to make. The Executive shall have no right to designate the taxable year of payment.

D. The Executive's participation in life, health and dental insurance, disability insurance, and any other benefits (the "Benefits") provided by Hudson to the Executive as of the date of the Termination of Employment shall be continued, or essentially equivalent benefits provided by Hudson, for the entire Severance Period or until otherwise terminated by the Executive, on the same terms, conditions and costs as if the Executive continued in the employ of Hudson. To the extent Benefits include health and dental insurance, such Benefits shall be provided as COBRA continuation coverage, and not in addition to COBRA. Notwithstanding the foregoing, to the extent Benefit coverages provided to the Executive under this Section are taxable to the Executive, Hudson's obligation hereunder shall not exceed the applicable dollar amount under Section 402(g)(1) (B) of the Internal Revenue Code of 1986, as amended determined as of the year in which the Executive's "Separation of Service" occurs which is exempt under Treasury Reg. Section 1.409A-1(b)(9)(v)(D) (Limited Payment).



E. All stock options, stock appreciation rights, and any similar rights which the Executive holds on the date of Termination of Employment shall become fully vested and be exercisable on the date of Termination of Employment, and shall remain exercisable following the Termination of Employment until (i) expiration of the Severance Period, (ii) termination of Severance Benefits pursuant to paragraph "6" below, or (iii) expiration of the original term of the stock option, stock appreciation right or similar right, whichever first occurs. No extension of an exercise period under this Agreement shall extend to a date that would cause such stock option, stock appreciation right or similar right to be subject to Code Section 409A.

F. For purposes of this agreement, the following definitions will apply:

(i) A "Termination of Employment" shall take place in the event that the Executive's employment is terminated (a) by Hudson without Cause (as hereinafter defined) or (b) by the Executive following an event constituting Good Reason (as hereinafter defined).

(ii) "Cause" shall exist if the act(s) or conduct of the Executive make it unreasonable to require Hudson to continue to retain Executive in its employment, such as, but not limited to, (a) the Executive's willful and continued refusal to perform, or the Executive's willful and continued neglect of, the substantive duties of his position, (b) any willful act or omission by the Executive constituting dishonesty, fraud or other malfeasance, (c) material nonconformance with Hudson's standard business practices and policies, including but not limited to violation of Hudson's Code of Business Conduct and Ethics or Hudson's Substance Abuse Policy, (d) any act or omission by the Executive which has a material adverse effect upon the financial condition or business reputation of Hudson, (e) the Executive's conviction of a felony, or any crime involving moral turpitude, dishonesty or theft, under the laws of the United States or any state thereof or any other jurisdiction in which Hudson conducts business, (f) breach of the provisions of paragraphs "4" or "5" of this agreement, (g) the resignation of Executive other than pursuant to the occurrence of an event constituting Good Reason (as hereinafter defined).



(iii) "Good Reason" shall mean the occurrence of any of the following: (a) at any time within a twenty-four (24) month period two individuals are elected to Hudson's Board of Directors whose nominations were not approved by the then sitting members of the Board of Directors; (b) the Executive is assigned any duties or responsibilities, without his consent, that are materially inconsistent with his position, duties, responsibilities or status, (c) Hudson requires the Executive, without his consent, to be based at a location which is more than fifty (50) miles from Hudson's corporate headquarters, currently located at One Blue Hill Plaza, Pearl River, New York 10965, (d) except as provided in paragraph "I.I." below, the Executive's annual base salary is reduced, except to the extent that the annual base salaries of all Executive Officers (as defined below) are reduced due to the adverse financial condition of Hudson and further providing that the Executive's annual base salary may not be reduced to a level that is less than ninety (90%) percent of the Executive's annual base salary for the calendar year immediately prior to the Termination of Employment, (e) the Executive's benefits are reduced and such reduction results in a material reduction in the Executive's total compensation, except to the extent that such reductions are made by Hudson on a company-wide basis and affect all Executive Officers that participate in such benefits, (f) except as provided in paragraph "I.I." below, the Executive experiences in any year a reduction in bonus compensation or other incentive compensation, or a reduction in the ratio of the Executive's incentive compensation, bonus or other such payments to his base compensation, or a reduction in the method of calculation of the Executive's incentive compensation, bonus or other such payments if these benefits or payments are calculated other than as a percentage of base salary, except to the extent such reduction applies equally or proportionally, as the case may be, to all Executive Officers of Hudson. Good Reason shall not be deemed to exist unless the Executive's Termination of Employment for Good Reason occurs within ninety (90) days following the initial existence of one of the foregoing conditions, the Executive provides Hudson with written notice of the existence of such condition(s) within thirty (30) days after the initial existence of the condition(s), and Hudson fails to remedy the condition within thirty (30) days after its receipt of such notice. An isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by Hudson within ten (10) days after Hudson's receipt of notice thereof given by the Executive shall not constitute Good Reason.

(iv) "Executive Officer(s) shall mean the following: Hudson's Chief Executive Officer (currently Kevin J. Zugibe); Hudson's President and/or Chief Operating Officer (currently Executive); Hudson's Chief Financial Officer (currently James R. Buscemi); Hudson's Vice President Sales (currently Charles F. Harkins); Hudson's Vice President Legal & Regulatory (currently Stephen P. Mandracchia); and any other current or future officer of Hudson Technologies, Inc. that is subject to Section 16(a) of the Securities Exchange Act of 1934.

G. Hudson's obligation to pay the compensation and to make the arrangements provided in this paragraph "I" shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any offset, counterclaim, recoupment or other right which Hudson may have against the Executive or anyone else; provided, however, that as a condition to payment of amounts under this paragraph "I", within thirty (30) days of the Executive's Termination of Employment, the Executive shall have (i) executed and not revoked a general release and waiver, in form and substance reasonably satisfactory to Hudson and the Executive, of all claims relating to the Executive's employment by Hudson and the termination of such employment, including, without limitation, discrimination claims (including without limitation age discrimination), employment-related tort claims, contract claims and claims under this Agreement (other than claims with respect to benefits under any tax-qualified retirement plans or continuation of coverage or benefits solely as required under ERISA), and (ii) executed an agreement expressly acknowledging and reaffirming the covenants and restrictions contained in paragraphs "4" and "5" below, and the remedies available to Hudson under paragraph "6" below.



H. All amounts payable by Hudson pursuant to this paragraph "I" shall be paid without notice or demand. The Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made pursuant to this paragraph "I" and, except as provided in paragraph "6" below, the obtaining of any other employment shall not result in a reduction of Hudson's obligation to make the payments, benefits and arrangements required to be made under this paragraph "I".

I. Executive expressly acknowledges that the following shall not constitute "Good Reason" for purposes of this paragraph "I":

(i) Establishing a new or different bonus or incentive compensation plan(s) in any subsequent year based upon new or different criteria for calculating the applicability of, and the amount of any bonus or incentive compensation award due to the Executive, provided that any new or different bonus or incentive compensation plan, and any award under said plan, applies equally or proportionally, as the case may be, to all Executive Officers; except that Hudson may establish separate performance criteria and payment amounts for awards under such plan for each Named Executive that are reasonably achievable and reasonably related to such Executive's normal duties and responsibilities;

(ii) A reduction of the Executive's bonus compensation or other incentive compensation that (a) results from Hudson operating at a level of performance below Hudson's Budget, (b) results from the Executive's failure or inability to attain, in whole or in part, any or all of the performance criteria established for the Executive under the said plan, (c) results from application of the terms of such bonus or incentive compensation plan, or (d) is based upon the Executive's performance, or non-performance, of his normal duties and responsibilities during the period covered by the bonus or incentive compensation plan including, without limitation, due to the Executive's Disability (as defined herein);

(iii) A reduction of the Executive's annual base salary based upon the Executive's performance, or non-performance, of his normal duties and responsibilities, provided that the Executive's annual base salary may not be reduced to a level that is less than ninety (90%) percent of the Executive's annual base salary for the calendar year immediately prior to the Termination of Employment;

(iv) A reduction in the Executive's annual base salary pursuant to the provisions of paragraph "3" below.



2. TERMINATION FOR CAUSE: Hudson may at any time terminate the employment of the Executive for Cause (as defined in paragraph "1" above) upon five (5) days prior written notice to Executive. If Executive is terminated for cause, he shall be entitled to no Severance Benefits and shall be entitled to no bonus payment that might otherwise be owed to him even if he worked for the entire year. In the event of termination under this section, Hudson shall pay Executive all amounts which are then accrued but unpaid, including unpaid vacation as determined in accordance with Hudson's standard vacation policy, within thirty (30) days after the date of notice. Hudson shall have no further or additional liability to Executive.

## 3. SICK LEAVE

A. If with or without reasonable accommodation Executive is physically or mentally unable to perform his duties, or is otherwise absent for medical reasons, Hudson shall continue to pay base salary and provide benefits to the Executive (“Sick Leave”). However, if a continuous period of Sick Leave exceeds eight (8) consecutive weeks, Hudson’s obligation with regard to base salary upon the expiration of the eight (8) consecutive weeks shall be limited to paying 75% of base salary. If the Executive returns to full service, his full base salary shall be reinstated to the pre-adjustment amount. As a condition to the receipt of the foregoing base salary and benefits, the Executive agrees that he shall provide Hudson such information as Hudson may reasonably request from time to time to permit Hudson to make a determination that the Executive is entitled to sick pay under this provision. Hudson shall reduce the amount paid to the Executive during such Sick Leave by an amount equal to any disability payments or benefits actually received by Executive under or pursuant to any disability program or supplemental disability insurance plan(s) provided by Hudson at Hudson’s expense unless such reduction results in a violation of Code Section 409A.

B. Notwithstanding the foregoing, Hudson may terminate the employment of Executive at any time after Executive’s continuous period of Sick Leave exceeds 120 calendar days. Termination of the Executive after the said 120 calendar period shall not be deemed a Termination for Cause (as defined in paragraph "1" above") and shall entitle the Executive to receive the payments and benefits provided by Paragraph "1" upon Termination of Employment based upon Executive’s full base salary, and for purposes of such payments and benefits, the Severance Period shall be deemed to commence as of the date of the Termination of Employment resulting under this paragraph “3.B.”.

C. Notwithstanding anything to the contrary contained herein, in the event that during the period the Executive is on Sick Leave, and prior to any Termination of Employment pursuant to paragraph “3.B.”, there is deemed a “Separation from Service” (as that term is defined in Section 409A of the Internal Revenue Code for purposes of a permissible event), Hudson and the Executive agree that such Separation of Service shall be treated as a Termination of Employment. Such Termination shall not be deemed a Termination for Cause (as defined in paragraph “1” above”) and shall entitle the Executive to receive the payments and benefits provided by Paragraph “1” upon Termination of Employment based upon Executive’s full base salary, provided that, for purposes of such payments and benefits, the Severance Period shall commence as of the date of the Separation from Service as described in this paragraph “3.C”, and shall be based upon Executive’s full base salary.



D. Notwithstanding anything to the contrary contained herein, in the event that during the period the Executive is on Sick Leave, and prior to any Termination of Employment pursuant to paragraph “3.B.” or any Separation from Service pursuant to paragraph “3.C.”, the Executive becomes “Disabled,” (as defined in Code Section 409A for purposes of a permissible payment event) Hudson and the Executive agree that the Executive’s Disability shall entitle the Executive to receive the payments and benefits provided by Paragraph "1" upon Termination of Employment based upon Executive’s full base salary and Bonus. For purposes of such payments and benefits, the Severance Period shall commence as of the date of the Disability as described in this paragraph “3.D”.

## 4. CONFIDENTIALITY:

## A. Employee expressly acknowledges and agrees as follows:

(i) Hudson expends a significant amount of funds annually on researching and developing solutions and proprietary techniques related to the products and services it offers or is seeking to offer, and has developed substantial confidential, proprietary, and trade secret information, and this confidential, proprietary, and trade secret information, if misused, disclosed, misappropriated or used by others, would result in irreparable harm to Hudson.

(ii) Hudson’s Confidential Information (as hereinafter defined) constitutes valuable commercial assets of Hudson and is not readily available to the general public or by any persons not employed by or otherwise not associated in a position of trust with Hudson. Hudson keeps its Confidential Information confidential (other than to the extent filings are required for patents) by, among other things, restricting access to only those who need the information to perform their Hudson job function and prohibiting the use or disclosure of Confidential Information to anyone not authorized to receive or use the Confidential Information.

(iii) Employee’s position with Hudson will continue to provide Employee with access to or knowledge of Hudson’s Confidential Information.

(iv) Hudson’s Confidential Information will become known to Employee only as a result of his/her employment with Hudson. To the extent that Employee was previously engaged, on his own or with others, in a business that provided the same or similar services as those provided by Hudson, Employee further acknowledges that such prior business knowledge and experience, and any familiarity with entities that are actual or potential customers for the business, shall not permit or allow Employee to contend that Hudson’s Confidential Information is not confidential or should not be protected from use or misappropriation.



## B. In light of the foregoing, Employee acknowledges and agrees as follows:

(i) All Confidential Information is the property of Hudson, and Employee shall not, without the express written consent of Hudson, directly or indirectly use, disseminate, disclose, or in any way reveal, either during Employee’s employment or at any time thereafter, all or any part of the Confidential Information, other than for the purposes authorized by Hudson, or only for the benefit of Hudson.

(ii) Hudson shall be the sole owner of, and Employee hereby assigns to Hudson, any and all property rights to all Intellectual Property (as hereinafter defined) made, conceived, originated, devised, discovered, invented, or developed before, during or after the term of Employee's employment with Hudson, whether or not Employee was involved either alone or with others, if it was in whole or in part developed during the course of Employee's employment or by Employee's use of any property of Hudson. This ownership provision does not apply to creations of the Employee which are made in the Employee's own time, without the use of any Hudson resources, and which do not relate in any way to Hudson's business. Employee agrees to cooperate fully and assist Hudson or its designee in the performance of any lawful acts that Hudson at its discretion deems necessary, and to execute and deliver without charge any documents reasonably required by Hudson, to secure any patent, copyright, trademark, and other protection for Intellectual Property and improvements thereon, and to assign to and vest in Hudson the entire interest therein in the United States and all foreign countries.

(iii) Upon request by Hudson at any time, or upon termination from employment with Hudson, whichever is sooner, Employee shall immediately deliver to Hudson any and all information and property of Hudson in whatever form it exists, including but not limited to all Confidential Information and all copies thereof or materials containing or derived from Confidential Information.

C. As used in this Agreement, “Confidential Information” means all information not publicly available (but including information that is publicly available as a result of a breach by Employee of paragraphs “4” and “5”) and not generally known or used by Hudson’s competitors, or in the industry, and which could be harmful to Hudson if disclosed to persons outside of Hudson and which includes, but is not limited to:

(i) Intellectual Property (as hereinafter defined);

(ii) Technical information, such as, but not limited to: Hudson’s plant organization and designs; product formulation, manufacturing, performance and processing data; and research and development results and plans;



(iii) Product information, such as, but not limited to: non-public details of Hudson’s products and services, including, but not limited to, its existing refrigerant, decontamination, reclamation and recovery products and services, as well as those being developed; specialized equipment and training; product plans, drawings and specifications; and performance capabilities, strengths and weaknesses;

(iv) Strategic information, such as, but not limited to: Hudson’s material costs; supplier and vendor information; overhead costs; pricing; profit margins; banking and financing information; and market penetration initiatives and strategies;

(v) Organizational information, such as, but not limited to: Hudson’s personnel and salary data; information concerning the utilization of facilities; merger, acquisition and expansion information; and equipment utilization information; Hudson manuals, policies and procedures;

(vi) Marketing and sales information, such as, but not limited to: Hudson’s licensing, marketing and sales techniques and data; customer lists; customer data, such as, but not limited to, their personnel, project, financial and account status, individual needs, historical purchases, contact information; product development and delivery schedules; market research and forecasts; and marketing and advertising plans, techniques and budgets; and

(vii) Advertising information, such as, but not limited to: Hudson’s overall marketing policies; the specific advertising programs and strategies utilized by Hudson; and the success or lack of success of those programs and strategies.

“Confidential Information” does not include general skills, experience or information that is generally available to the public, other than information which has become generally available as a result of Employee’s direct or indirect act or omission. “Confidential Information” also does not include information regarding Employee’s own pay and benefits, information as to the terms and conditions of employment, or information that is deemed not confidential under Section 7 of the National Labor Relations Act. Nothing in this Agreement should be construed as restricting the Employee’s right to engage in legally protected activities under applicable law, including participating in investigations conducted by any governmental agency or entity or making other disclosures that are protected under the whistleblower provisions of applicable law or regulation.

D. As used in this Agreement, “Intellectual Property” means all information concerning the evaluation, design, engineering, construction, marketing, and sales of the products and services provided by Hudson and which includes, but is not limited to: any and all patents, patents pending; trademarks, copyrights, and any and all applications for same issued to and/or applied for by Hudson; any and all technological (including software), educational, operational, and financial innovations, discoveries, inventions, designs, and formulae; tests; performance data; process or production methods; improvements to all such property; and all recorded material defining, describing, illustrating, or documenting in any fashion, all such property, whether written or not and whether stored in plain, code or other form; without regard to whether such property is patentable, copyrightable, or subject to trade/service mark protection, and without regard to whether a patent, copyright, or trademark or service mark has been sought or obtained.



## 5. NON-COMPETITION / NON-SOLICITATION:

## A. Employee expressly acknowledges and agrees as follows:

(i) Hudson compensates its employees, among other things, to develop and to pursue, on Hudson’s behalf, good relationships and goodwill with all customers and potential customers, whether developed by Employee or others within the Hudson organization;

(ii) Employee will be exposed to, acquire and develop knowledge of Confidential Information including, without limitation, Confidential Information related to Hudson’s customers, operations, and its suppliers;

(iii) Employee is able to be gainfully employed by other employers in a variety of other industries and businesses that are engaged in businesses that do not involve and are not competitive with any part of Hudson’s business.

B. In light of the foregoing, Employee agrees, that while Employee is employed by Hudson, and continuing until the expiration of the Covenant Period (as hereinafter defined):

(i) Employee shall not, within the Restricted Territory (as hereinafter defined), compete with Hudson, directly or indirectly, whether for Employee's own behalf or on behalf of or in conjunction with any other person, persons, company, partnership, corporation or business entity, whether for profit or not-for-profit, by being employed by, participating in, or otherwise being materially connected in the conduct of any business activity that involves providing products or services that are like or similar to, or competitive with, or would replace or be a substitute for, any one or more of the products and services provided by Hudson (hereinafter “Competitive Products”) if such employment, participation, or connection involves: (a) responsibilities similar to responsibilities Employee had or performed for Hudson at any time during the last eighteen (18) months of Employee’s employment with Hudson; (b) supervision of employees or other personnel in the provision of Competitive Products; (c) development or implementation of strategies or methodologies related to the provision of Competitive Products; (d) marketing or sale of Competitive Products; or (e) responsibilities in which Employee would utilize or disclose Confidential Information.

(ii) Employee shall not compete with Hudson, directly or indirectly, whether for Employee’s own behalf or on behalf of or in conjunction with any other person, persons, company, partnership, corporation or business entity, whether for profit or not-for-profit, by calling upon, contacting, diverting, soliciting, or doing business for or with, any “Client” of Hudson (as hereinafter defined) for the purpose of offering or providing any Competitive Product.



(iii) Employee shall not directly or indirectly, without the prior written consent of Hudson, (a) induce, solicit, entice, or encourage any officer, director, employee or other individual to leave his or her employment with Hudson, (b) induce, solicit, entice, or encourage any officer, director, employee or other individual, to compete in any way with the products and services of Hudson, or to violate the terms of any employment, non-competition, confidentiality or similar agreement with Hudson; or (c) employ, offer to employ, contract with, offer to contract with, or do business with any officer, director, employee or other individual who is employed by Hudson.

C. For purposes of this paragraph “5”, the Covenant Period shall be eighteen (18) months after the Employee’s last day of employment with Hudson, regardless of the reason underlying the termination of Employee’s employment.

D. Employee acknowledges that many of Hudson’s services are remedial in nature and, as such, its customers may utilize Hudson’s services on an infrequent basis over an extended period of time, or following a protracted sales effort over an extended period of time. Employee also acknowledges that because of his position, he will likely have knowledge of Hudson’s customers through access to Confidential Information, whether or not located within the Restricted Territory (hereinafter defined). Accordingly, for purposes of this paragraph “5”, the term “Client” shall mean (a) any customer or potential customer of Hudson upon whom Employee, during the last eighteen (18) months of Employee’s employment with Hudson, called upon or with whom Employee had any contact, or as to whom Employee was involved in regard to planning, marketing, conducting, or overseeing an offer to sell products or perform services; (b) any customer as to whom Employee assisted in selling products or in providing services, or as to whom Employee was involved in regard to planning, marketing, conducting, or overseeing the offer to sell products or to perform services if the customer received any products or services from Hudson during the last eighteen (18) months of Employee’s employment with Hudson; (c) any potential customer of Hudson whose identity Employee learned during the eighteen (18) months of Employee’s employment with Hudson or learned from Confidential Information at any time; or (d) any customer for whom Hudson has provided products or services to at any time during the thirty-six (36) months preceding the last day of the Employee’s employment with Hudson and whose identity as a Hudson customer Employee learned from Confidential Information at any time.

E. The Employee acknowledges that the nature of Hudson’s business is such that provides its products and services to customers throughout the United States of America and Puerto Rico. Accordingly, the “Restricted Territory” includes each and every state of the United States of America (including the District of Columbia) and Puerto Rico.



F. In order to assure Hudson of the full eighteen (18) months of the covenant period within which to protect its goodwill and to prevent Employee from unfairly benefiting by violations of this paragraph “5”, the provisions and requirements of this paragraph “5” shall be extended for a period of time beyond the Covenant Period equal in length to the total length of time during which Employee is in violation of any one or more provisions of this Section.

G. In the event it is determined by a Court of competent jurisdiction that any provision or portion of a provision of this paragraph “5” is not enforceable under the law governing this Agreement, the unenforceable provision or portion thereof may be stricken, and the remainder of the provision and of this paragraph “5” shall be valid and fully enforceable, in all respects, as if the provision or portion of a provision deemed unenforceable had never been a part of the Agreement. Further, if any provision of this Agreement is found to be overbroad or unenforceable, the court or any other authority with competent jurisdiction is expressly authorized to conform the provision to the extent necessary to remedy any deficiency and render it valid and enforceable.

## 6. REMEDIES:

A. In the event that Executive breaches any term or provision of paragraphs "4" or "5" of this Agreement, Hudson shall be immediately, permanently and irreparably damaged and shall be entitled, in addition to, and without limiting Hudson's right to, any and all other legal and equitable remedies and damages, (i) to a temporary restraining order ex parte, to a preliminary injunction, and to a permanent injunction, to restrain Executive's actions or the actions of others acting on Executive's behalf, (ii) to terminate all future Severance Benefits through the remainder of the Severance Period, and (iii) to recover from the Executive all Severance Benefits actually paid to the Executive, including any costs or expenses actually incurred by Hudson in providing such Severance Benefits. Executive agrees that Executive will not be damaged by enforcement of this covenant as Executive can obtain many other types of gainful employment without violating the provisions of paragraphs "4" or "5", so that no bond shall be required, and if the Court requires a bond to be posted, it shall not exceed $500.00.

B. All of Executive's covenants and obligations under paragraphs "4" and "5" of this Agreement shall survive, and shall remain enforceable, for so long as Executive is employed and after termination of employment for any reason, and shall survive despite future promotions, raises, changes in position or compensation, demotions, and the execution of new agreements with Hudson, and shall inure to the benefit of Hudson's successors and assigns, unless Hudson executes in writing an agreement expressly terminating the covenants of paragraphs "4" and "5".

C. Hudson and Executive shall each bear and be responsible for their own attorneys' fees, expenses and disbursements incurred in any litigation brought by either party to enforce or interpret any provision contained in paragraphs "4" or "5" of this Agreement.

7 . NOTICES: All notices required or permitted to be given under this agreement shall be sufficient if in writing and if sent by certified mail, return receipt requested, to the Executive at his residence, and to Hudson at its principal office located at PO Box 1541, One Blue Hill Plaza, Pearl River, New York 10965, attention Chief Executive Officer, or at such other address as any party specifies by giving proper notice.



8. SUCCESSORS: This agreement shall be binding upon and shall inure to the benefit of the Executive and his estate. Neither this Agreement nor any rights hereunder shall be assignable by the Employee.

This Agreement shall be freely assignable by Hudson to, and shall inure to the benefit of, and be binding upon, any successor corporation or affiliate of a successor corporation, and all references in this agreement to Hudson shall include its subsidiaries and affiliates and any successors, affiliates of successors or assigns of Hudson. As used herein, the term "successor" shall mean any person, firm, corporation or business entity or affiliate thereof which at any time, whether by merger, purchase or otherwise, directly or indirectly acquires all or substantially all of the assets or the business of Hudson, including any entity that shall be the surviving corporation in a merger with Hudson.

9. EMPLOYMENT AT WILL: CONSEQUENCES OF TERMINATION: Nothing herein shall be deemed to create an agreement for employment of Executive for any specified term or period of time. Hudson expressly agrees that at any time the Executive may resign or otherwise terminate his or her employment with Hudson, for any reason or for no reason, subject to the provisions contained herein. Likewise, the Executive expressly agrees that at any time Hudson may terminate the employment of the Executive for any reason or for no reason, subject to the provisions contained herein.

10. INDEMNIFICATION: In the event that any litigation shall be brought to enforce or interpret any provision contained in paragraphs "1", "2" or "3" of this Agreement, then, provided that the Executive prevails to any extent, Hudson shall reimburse or indemnify the Executive for the Executive's reasonable attorneys' fees, expenses and disbursements incurred in such litigation, including the costs of enforcement.

11. CONTROLLING LAW: This Agreement and all other issues regarding the employment of the Employee shall be governed by the laws of the State of New York, without reference to its conflicts of law principles.

12. ENTIRE AGREEMENT: This Agreement represents the entire agreement and understanding of the parties regarding the employment of the Executive, and all prior or contemporaneous agreements, representations, or understanding are expressly superseded by, and do not survive this Agreement. Executive has not relied upon any inducement, promise, representation, or assurance, other than those expressly set out herein. Except as expressly permitted herein, this Agreement may not be modified or amended except in writing signed by all parties hereto.



## 13. COMPLIANCE WITH CODE SECTION 409A:

A. It is the intention of Hudson and the Executive that the payments, benefits and rights to which the Executive could be entitled pursuant to this Agreement comply with Code Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), the Treasury regulations and other guidance promulgated or issued thereunder (“Section 409A”), to the extent that the requirements of Section 409A are applicable thereto, and after application of all available exemptions, including but not limited to, the “short-term deferral rule” and “involuntary separation pay plan exception” and the provisions of this Agreement shall be construed in a manner consistent with that intention. If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause the Executive to incur any additional tax or interest under Code Section 409A, Hudson shall, upon the specific request of the Executive, use its reasonable business efforts to in good faith reform such provision to comply with Code Section 409A; provided, that to the maximum extent practicable, the original intent and economic benefit to the Executive and Hudson of the applicable provision shall be maintained, but Hudson shall have no obligation to make any changes that could create any additional economic cost or loss of benefit to Hudson. Hudson shall not have any liability to the Executive with respect to tax obligations that result from the application of Code Section 409A and makes no representation with respect to the tax treatment of the payments and/or benefits provided under this Agreement. Any provision required for compliance with Section 409A that is omitted from this Agreement shall be incorporated herein by reference and shall apply retroactively, if necessary, and be deemed a part of this Agreement to the same extent as though expressly set forth herein.

B. With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expense eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Code Section 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect and (iii) such payments shall be made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred.

C. For purposes of applying the provisions of Section 409A to this Agreement, each separately identified amount to which the Executive is entitled under this Agreement shall be treated as a separate payment within the meaning of Section 409A. In addition, to the extent permissible under Section 409A, any series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

D. Neither Hudson nor the Executive, individually or in combination, may accelerate any payment or benefit that is subject to Section 409A, except in compliance with Section 409A and the provisions of this Agreement, and no amount that is subject to Section 409A shall be paid prior to the earliest date on which it may be paid without violating Section 409A.



E. If and to the extent required to comply with Section 409A, a Termination of Employment, as defined above, shall not be deemed to have occurred for purposes of this Agreement providing for the payment of any amounts or benefits upon or following a Termination of Employment unless such termination is also a “Separation from Service” within the meaning of Section 409A (excluding death) and, for purposes of any provision of this Agreement, references to Termination of Employment, “termination,” “termination of employment” or like terms shall mean “Separation from Service” (excluding death).

F. If the Executive is deemed on the date of termination of his employment to be a “specified employee,” within the meaning of that term under Code Section 409A(a)(2)(B) and using the identification methodology selected by Hudson from time to time, or if none, the default methodology, then with regard to any payment or the providing of any benefit subject to this Section, to the extent required to be delayed in compliance with Code Section 409A(a)(2)(B), and any other payment or the provision of any other benefit that is required to be delayed in compliance with Code Section 409A(a)(2)(B), such payment or benefit shall not be made or provided prior to the earlier of (i) the expiration of the six-month period measured from the date of the Executive’s Separation from Service or (ii) the date of the Executive’s death. In this regard, it is the intention and understanding of Hudson and the Executive that payments made following a Termination of Employment under Paragraph “1” shall be exempt under the “short-term deferral rule” and “involuntary separation pay plan exception”, and other applicable exceptions, from the requirements of Code Section 409A(a)(2)(B), and are not required and shall not be delayed. Absent such exception, on the first day of the seventh month following the date of Executive’s Separation from Service or, if earlier, on the date of his death, all payments delayed pursuant to this Section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein. The determination of whether the Executive is a “specified employee” shall be made by Hudson in good faith applying Section 409A.

IN WITNESS THEREOF, the parties have executed this agreement as of the date written above.

Hudson Technologies, Inc.

By: /s/ Kevin J. Zugibe

Hudson Technologies of Tennessee dba
Hudson Technologies Company

By: /s/ Kevin J., Zugibe

/s/ Brian F. Coleman

Brian F. Coleman



## Exhibit 21:

Subsidiaries of the Registrant

Hudson Technologies Company d/b/a Hudson Technologies of Tennessee incorporated in the State of Tennessee.

Hudson Holdings, Inc. incorporated in the State of Nevada.

Safety Hi-Tech USA, LLC, a Delaware limited liability company, of which Hudson Holdings, Inc. owns 50% of the equity.



## Exhibit 23.1:

## Consent of Independent Registered Public Accounting Firm

Hudson Technologies, Inc.
Pearl River, New York

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No.333-17133, No.333-38598, No.333-129057, No.333-164650 and No.333-202955) and Registration Statements on Form S-3 (No.333-182526, No.333-185490 and No.333-207969) of Hudson Technologies, Inc. of our reports dated March 11, 2016 relating to the consolidated financial statements and the effectiveness of Hudson Technologies Inc.'s internal control over financial reporting, which appear in this Form 10-K.

/s/ BDO USA, LLP

Stamford, CT

March 11, 2016



# Hudson Technologies, Inc.
Certification of Principal Executive Officer

I, Kevin J. Zugibe, certify that:

1. I have reviewed this annual report on Form 10-K of Hudson Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 11, 2016

/s/ Kevin J. Zugibe

Kevin J. Zugibe

Chief Executive Officer and

Chairman of the Board



# Hudson Technologies, Inc.
Certification of Principal Financial Officer

I, James R. Buscemi, certify that:

1. I have reviewed this annual report on Form 10-K of Hudson Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 11, 2016

/s/ James R. Buscemi

James R. Buscemi

Chief Financial Officer



# CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Hudson Technologies, Inc. (the "Company") on Form 10-K for the period ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"),

I, Kevin J. Zugibe, as Chief Executive Officer and Chairman of the Board of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Kevin J. Zugibe

Kevin J. Zugibe

Chief Executive Officer and

Chairman of the Board

March 11, 2016



# CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Hudson Technologies, Inc. (the "Company") on Form 10-K for the period ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James R. Buscemi, as Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James R. Buscemi

James R. Buscemi

Chief Financial Officer

March 11, 2016