Document:

EXHIBIT 10.32

                                    SUBLEASE

     THIS SUBLEASE (the "Sublease") is entered into as of the date set forth in
Section 3.1(c) below, by and between the Shanghai TaiSi Science and Technology
Ltd., Corporation ("TaiSi"), a company organized under the laws of the PRC, and
TCSI Corporation ("TCSI"), a company organized under the laws of the USA.

                               W I T N E S S E T H

     1.   SUBLEASE GRANT.

     1.1 TaiSi has leased certain space located at 1277 Beijing Road, Shanghai,
PRC in accordance with a lease agreement ( the "Overlease"). TaiSi shall
sublease a portion of that certain space to TCSI for the purpose of, among other
things, setting up a Representative Office in Shanghai (the "Office").

     1.2 In consideration of the obligation of TCSI to pay rent as herein
provided and in consideration of the other terms, covenants and conditions
hereof, TaiSi hereby subleases to TCSI and TCSI hereby hires from TaiSi, upon
and subject to the provisions of this Sublease and the Overlease, the Office.

     3.   SUBLEASE SUMMARY AND DEFINITIONS.

     3.1 As between TaiSi and TCSI, the Sublease provisions and definitions set
forth in this Section 3.1 shall replace inconsistent terms in the Overlease. All
other terms and conditions shall remain the same. If there is any conflict
between the Overlease and this Sublease, the latter shall control.

(a)  TCSI's Notice Name                    TCSI CORPORATION
     and Address:                          1080 Marina Village Parkway
                                           Alameda, CA  94501 (USA)
                                           Attn:  Ellen Ahearn, Vice President

(b)  TCSI's State of Incorporation:        Nevada, USA

(c)  Sublease Date:                        The last date below

(d)  Unincorporated Provisions             Those provisions that do not apply to
     of the Overlease:                     the Office, including but not limited
                                           to: TCSI does not pay to the
                                           Overlandlord any tax, electricity
                                           fee, water fee, building management
                                           fee, or similar, and which shall be
                                           the responsibility of TaiSi.

(e)  Office:                               Suite 906 consisting of approximately
                                           224 square feet.

(f)  Sublease Commencement Date:           One year commencing on the last date
                                           below.

(g)  Sublease Expiration Date:             The anniversary of the last date
                                           below; provided, not less than 15
                                           days before the expiration date,
                                           and each anniversary thereafter,
                                           TCSI may extend for an

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<PAGE>

                                           additional year, or on a monthly
                                           basis as may be mutually agreed
                                           between the parties.

(h)  Monthly Rent:                         The equivalent of $2000 (two
                                           thousand US Dollars) per month
                                           including local taxes (if any),
                                           monthly rent, building maintenance,
                                           hydro, utilities and such other
                                           fees.

(i)  Security Deposit:                     First and last month's rent.

(j)  Payment:                              All amounts payable by TCSI shall be
                                           without previous demand or notice
                                           therefor by TaiSi.

     4.   MISCELLANEOUS

     4.1 TaiSi has obtained from the local authorities all approvals required to
sublease to a foreign representative office, or equivalent.

     4.2. This Sublease may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.

     4.3. This Sublease shall not be binding upon TCSI unless and until it is
signed by TaiSi and delivered to TCSI.

     4.4. This Sublease constitutes the entire agreement between the parties on
the subject matter herein and all representations and understandings have been
merged herein.

     IN WITNESS WHEREOF, the parties have hereunto set their hands and seals of
the day and year first above written.

SHANGHAI TAISI SCIENCE AND                  TCSI CORPORATION
TECHNOLOGY LTD., CORPORATION

By /s/ Xiaoyan Shi                          By /s/ Ellen Ahearn
   ------------------------------              ------------------------------
Name Xiaoyan Shi                            Name Ellen Ahearn
     ----------------------------                ----------------------------
Date February 7, 2001                       Date February 7, 2001
     ----------------------------                ----------------------------

                                       2================================================================================

                            STOCK PURCHASE AGREEMENT

                                      dated

                                February 16, 2001

                                     between

                            HUDSON TECHNOLOGIES, INC.

                                       and

                       FLEMING US DISCOVERY FUND III, L.P.

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

<PAGE>

                                TABLE OF CONTENTS

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

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

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

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

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

                                      -i-
<PAGE>

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

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

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

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

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

                                      -ii-
<PAGE>

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

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

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

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

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

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

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

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

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

                                     -iii-
<PAGE>

                                 Exhibit 10.24

                            STOCK PURCHASE AGREEMENT

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

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

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

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

SECTION 1. SALE AND PURCHASE OF PREFERRED STOCK

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

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

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

<PAGE>

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

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

SECTION 2. CLOSING

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

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

SECTION 3. DEFINITIONS

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

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

                                       2
<PAGE>

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

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

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

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

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

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

                                       3
<PAGE>

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

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

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

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

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

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

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

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

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

                                       4
<PAGE>

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

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

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

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

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

                                       5
<PAGE>

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

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

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

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

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

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

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

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

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

                                       6
<PAGE>

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

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

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

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

                                       7
<PAGE>

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

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

                                       8
<PAGE>

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

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

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

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

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

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

                                       9
<PAGE>

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

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

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

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

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

                                       10
<PAGE>

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

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

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

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

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

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

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

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

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

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

                                       11
<PAGE>

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

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

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

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

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

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

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

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

                                       12
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

                                       13
<PAGE>

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

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

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

     4.1. Corporate Existence, Power and Authority.

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

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

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

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

                                       14
<PAGE>

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

     4.2. Capital Stock.

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

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

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

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

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

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

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

                                       15
<PAGE>

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

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

     4.3. Subsidiaries.

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

     4.4. Business.

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

     4.5. No Defaults or Conflicts.

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

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

                                       16
<PAGE>

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

     4.6. Disclosure Materials; Other Information.

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

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

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

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

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

                                       17
<PAGE>

     4.7. Litigation.

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

     4.8. Taxes.

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

     4.9. ERISA.

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

                                       18
<PAGE>

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

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

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

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

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

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

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

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

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

                                       19
<PAGE>

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

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

     4.10. Legal Compliance.

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

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

     4.11. Outstanding Securities.

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

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

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

                                       20
<PAGE>

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

     4.13. Key Employees.

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

     4.14. Properties.

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

     4.15. Suppliers and Customers.

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

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

                                       21
<PAGE>

     4.16. Environmental Compliance.

     Except as disclosed on Schedule 4.16 hereto:

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

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

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

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

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

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

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

                                       22
<PAGE>

     4.17. No Burdensome Agreements.

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

     4.18. Offering of Shares.

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

     4.19. SEC Reports.

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

     4.20. Indebtedness.

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

                                       23
<PAGE>

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

     4.21. Use of Proceeds.

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

     4.22. Other Names.

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

     4.23. Brokers.

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

                                       24
<PAGE>

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     The Purchaser represents and warrants to the Company as follows:

     5.1. Corporate Power and Authority.

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

     5.2. Investment Intent.

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

     5.3. Brokers.

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

                                       25
<PAGE>

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

     5.4 Ownership of Common Stock.

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

SECTION 6. RESTRICTIONS ON TRANSFER

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

SECTION 7. INFORMATION AS TO THE COMPANY

     The Company covenants and agrees as follows:

     7.1. Financial Information.

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

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

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

                                       26
<PAGE>

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

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

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

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

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

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

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

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

                                       27
<PAGE>

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

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

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

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

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

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

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

                                       28
<PAGE>

     7.2. Communication with Accountants.

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

     7.3. Inspection.

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

     7.4. Notices.

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

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

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

                                       29
<PAGE>

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

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

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

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

                                       30
<PAGE>

SECTION 8. AFFIRMATIVE COVENANTS

     The Company covenants and agrees as follows:

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

     The Company will:

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

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

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

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

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

                                       31
<PAGE>

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

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

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

     8.3. Fiscal Year.

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

     8.4. Environmental Matters.

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

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

                                       32
<PAGE>

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

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

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

     8.5. Reservation of Shares.

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

     8.6. Securities Exchange Act Registration.

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

                                       33
<PAGE>

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

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

     8.7. Delivery of Information for Rule 144A Transactions.

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

     8.8. Senior Securities.

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

     8.9. Further Assurances.

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

     8.10. Stockholder Approval.

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

                                       34
<PAGE>

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

     8.11. Shares Paid as Dividends.

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

SECTION 9. NEGATIVE COVENANTS

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

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

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

                                       35
<PAGE>

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

     9.2. Indebtedness.

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

     9.3. Consolidation, Merger and Sale.

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

     9.4. No Change in Business

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

     9.5. Restricted Payments; Investments.

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

                                       36
<PAGE>

     9.6. Sale of Substantial Portion of Assets.

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

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

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

     9.7. Obligations to Affiliates.

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

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

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

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

                                       37
<PAGE>

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

     9.8. Transactions with Affiliates.

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

     9.9. Liens.

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

     9.10. Private Placement Status.

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

                                       38
<PAGE>

     9.11. Maintenance of Public Market.

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

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

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

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

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

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

     9.12. Actions Prior to the Closing Date.

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

SECTION 10. CONDITIONS TO PURCHASER'S OBLIGATIONS

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

                                       39
<PAGE>

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

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

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

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

     10.2. Certificates for Shares.

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

     10.3. Senior Status.

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

     10.4. Accuracy of Representations and Warranties.

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

     10.5. Compliance with Agreements.

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

                                       40
<PAGE>

     10.6. Officers' Certificates.

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

     10.7. Proceedings.

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

     10.8. Legality; Governmental and Other Authorization.

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

     10.9. No Material Adverse Change.

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

     10.10. Opinion of Counsel.

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

                                       41
<PAGE>

     10.11. Purchases of Shares.

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

     10.12. Consents.

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

     10.13. Other Documents and Opinions.

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

SECTION 11. BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS

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

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

                                       42
<PAGE>

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

SECTION 12. SPECIFIC PERFORMANCE

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

SECTION 13. EXPENSES

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

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

                                       43
<PAGE>

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

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

                                       44
<PAGE>

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

SECTION 14. DIRECT PAYMENTS

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

SECTION 15. AMENDMENTS AND WAIVERS

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

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

                                       45
<PAGE>

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

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

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

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

SECTION 17. NOTICES

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

                                       46
<PAGE>

SECTION 18. MISCELLANEOUS

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

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

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

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

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

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

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

                                       47
<PAGE>

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

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

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

                                       48
<PAGE>

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

                  [remainder of page intentionally left blank]

                                       49
<PAGE>

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

                              HUDSON TECHNOLOGIES, INC.

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

Accepted  and Agreed to as of the date first  above  written by the  undersigned
Purchaser:

FLEMING US DISCOVERY FUND III, L.P.

By: FLEMING US DISCOVERY
       PARTNERS, L.P.,
    its general partner

    By:  FLEMING US DISCOVERY, LLC,
         its general partner

         By: /s/ Robert L. Burr
            -----------------------------------
                  Robert L. Burr, member
<PAGE>

                                                                      Schedule 1
                                                                    to the Stock
                                                              Purchase Agreement

<TABLE>
<CAPTION>
                                Social Security or Taxpayer      Number of Shares at   Share Purchase
      Name of Purchaser            Identification Number              Closing              Price
      -----------------            ---------------------              -------              -----
<S>                                    <C>                              <C>              <C>
Fleming US Discovery Fund              13-3907673                       25,855           $2,585,500
III, L.P.

Fleming US Discovery                   13-3936603                       4,145              $414,500
Offshore Fund III, L.P.
</TABLE>

(a)  address for communications:

     Fleming Capital Management
     320 Park Avenue
     New York, NY  10022
     Fax:  (212) 508-3928
     Attention: Robert L. Burr
                Robert M. Zech

(b)  address for payments by
     wire transfer:

     Fleming US Discovery Fund III, L.P.     Fleming US Discovery Offshore
                                             Fund III, L.P.

     Chase Manhattan Bank                    Citibank, N.A.
     ABA # 021000021                         ABA # 021000089 /
     CITIUS33A/C # 10921671                  Chips UID# 0008 /
                                             Swift Code -
                                             A/C: The Bank of Bermuda Limited,
                                             Hamilton, Bermuda

     A/C: Robert Fleming Inc.                Chips UID# 005584
     A/C # 400-704129                        Swift Code: BBDA BM HM
     A/C: Fleming US Discovery               A/C # 0246769
          Fund III, L.P.                     A/C: Fleming US Discovery Offshore
                                                  Fund III, L.P.

<PAGE>

                                                                      Schedule 2
                                                                    to the Stock
                                                              Purchase Agreement

                                  Indebtedness

<PAGE>

                                                                      Schedule 3
                                                                    to the Stock
                                                              Purchase Agreement

                                   Investments

<PAGE>

                                                                      Schedule 4
                                                                    to the Stock
                                                              Purchase Agreement

                               Disclosure Material

<PAGE>

                                                                   Schedule 4.16
                                                                    to the Stock
                                                              Purchase Agreement

                            Environmental Compliance

<PAGE>

                                                                      Schedule 5
                                                                    to the Stock
                                                              Purchase Agreement

                                     Liens

<PAGE>

                                                                      Schedule 6
                                                                    to the Stock
                                                              Purchase Agreement

                                  Capital Stock

<PAGE>

                                                                       EXHIBIT A

                            CERTIFICATE OF AMENDMENT

<PAGE>

                                                                       EXHIBIT B

                               DISCLOSURE SCHEDULE

<PAGE>

                                                                       EXHIBIT C

                   FIRST AMENDMENT TO STOCKHOLDERS' AGREEMENT

<PAGE>

                                                                       EXHIBIT D

                FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT

<PAGE>

                                                                       EXHIBIT E

                       OPINION OF COUNSEL FOR THE COMPANY

<PAGE>

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

                            STOCK PURCHASE AGREEMENT

                                      dated

                                February 16, 2001

                                     between

                            HUDSON TECHNOLOGIES, INC.

                                       and

                  FLEMING US DISCOVERY OFFSHORE FUND III, L.P.

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

<PAGE>

                                                                            Page

                                TABLE OF CONTENTS

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

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

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

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

SECTION 5.      REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...............25
         5.1.   Corporate Power and Authority.................................25

                                      -i-
<PAGE>

         5.2.   Investment Intent.............................................25
         5.3.   Brokers.......................................................25
         5.4.   Ownership of Common Stock.....................................26

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

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

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

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

                                      -ii-
<PAGE>

SECTION 10.     CONDITIONS TO PURCHASER'S OBLIGATIONS.........................39
         10.1.  Certificate of Amendment; Stockholders' Agreement;
                Registration Rights Agreement.................................40
         10.2.  Certificates for Shares.......................................39
         10.3.  Senior Status.................................................40
         10.4.  Accuracy of Representations and Warranties....................40
         10.5.  Compliance with Agreements....................................40
         10.6.  Officers' Certificates........................................40
         10.7.  Proceedings...................................................41
         10.8.  Legality; Governmental and Other Authorization................41
         10.9.  No Material Adverse Change....................................41
         10.10. Opinion of Counsel............................................41
         10.11. Purchases of Shares...........................................41
         10.12. Consents......................................................42
         10.13. Other Documents and Opinions..................................42

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

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

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

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

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

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

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

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

                                      -iii-
<PAGE>

                            STOCK PURCHASE AGREEMENT

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

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

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

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

SECTION 1. SALE AND PURCHASE OF PREFERRED STOCK

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

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

     (c) The Shares are being sold to the purchasers listed on Schedule 1 hereto
(the "Purchasers") pursuant to this Agreement and the other Series A Convertible
Preferred Stock Purchase  Agreement (both of such  agreements  collectively,  as
from time to time assigned,

<PAGE>

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

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

SECTION 2. CLOSING

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

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

SECTION 3. DEFINITIONS

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

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

                                       2
<PAGE>

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

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

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

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

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

          "Capitalized  Lease"  means any lease to which the Company is party as
     lessee, or by which it is bound,  under which it leases any property (real,
     personal or mixed) from any lessor other than the Company, and which either
     is  required  to be  capitalized  in  accordance  with  generally  accepted
     accounting principles  consistently applied, or, even if not so required to
     be  capitalized,  shall have (or have had), at the time first entered into,
     an  initial  term of  greater  than  three (3) years  (including  leases of
     shorter  duration which are or were extendible to a

                                       3
<PAGE>

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

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

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

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

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

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

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

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

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

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

                                       4
<PAGE>

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

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

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

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

          "Environmental Laws" means all federal,  state, local, foreign,  civil
     and criminal  laws,  statutes,  ordinances,  orders,  codes,  Environmental
     Permits,  rules,  policies and  regulations  and common law relating to the
     protection of the environment and human health or relating to the

                                       5
<PAGE>

     handling, use, generation,  treatment, storage,  transportation or disposal
     of  Hazardous  Materials,   including  but  not  limited  to  the  Resource
     Conservation and Recovery Act of 1976, 42 U.S.C.ss. 6901 et seq.; the Toxic
     Substances  Control  Act,  15  U.S.C?ss.  2601 et seq.;  the  Comprehensive
     Environmental  Response,   Compensation  and  Liability  Act  of  1980,  42
     U.S.C?ss.9601  et  seq.;  the  Federal  Water  Pollution  Control  Act,  33
     U.S.C?ss.1251  et seq.;  the Clean Air Act, 42 U.S.C.ss.  7401 et seq.; the
     Hazardous  Materials  Transportation  Act, 49 U.S.C.ss.  1801 et seq.;  the
     Occupational   Safety  and  Health  Act,  29   U.S.C.ss.651;   the  Federal
     Insecticide,  Fungicide and Rodenticide  Act, 7 U.S.C.ss.136y  et seq.; and
     the Oil  Pollution  Act of 1990, 33  U.S.C.ss.2701  et seq.,  all as may be
     amended or superseded from time to time.

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

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

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

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

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

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

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

          "Fleming  Holders"  means (i) the Fleming  Funds,  (ii) any Affiliate,
     officer or  employee  of an  Affiliate  or  investment  fund  managed by an
     Affiliate  of the  Fleming  Funds to which the Fleming  Funds may  transfer
     record and/or  beneficial  ownership of the Shares or the Conversion Shares
     and (iii) any transferee of Shares or Conversion Shares from a Person named
     in clause (i) or (ii) hereof (provided that such transferee is consented to
     by the Company, such consent not to be unreasonably  withheld) other than a
     transferee of Shares or Conversion  Shares sold in either a public offering

                                       6
<PAGE>

     pursuant to a registration  statement  under the Securities Act or pursuant
     to a Rule 144 Transaction.

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

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

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

          "Indebtedness"  of any Person means,  without  duplication,  as of any
     date  as  of  which  the  amount  thereof  is  to be  determined,  (i)  all
     obligations  of such Person to repay  money  borrowed  (including,  without
     limitation,  all notes payable and drafts accepted representing  extensions
     of  credit, all

                                       7
<PAGE>

     all  obligations  under  letters of credit,  all  obligations  evidenced by
     bonds,  debentures,  notes or other similar instruments and all obligations
     upon which interest  charges are  customarily  paid),  (ii) all Capitalized
     Leases  in  respect  of which  such  Person  is  liable as lessee or as the
     guarantor of the lessee,  (iii) all monetary  obligations which are secured
     by any Lien  existing on property  owned by such Person  whether or not the
     obligations  secured  thereby have been incurred or assumed by such Person,
     (iv) all  conditional  sales  contracts  and similar title  retention  debt
     instruments under which such Person is obligated to make payments,  (v) all
     Guaranties  by such Person and (vi) all  contractual  obligations  (whether
     absolute  or  contingent)  of such  Person  to  repurchase  goods  sold and
     distributed.  "Indebtedness"  shall  not  include,  however,  any  unfunded
     obligations in any employee  pension  benefit plan (as defined in ERISA) of
     the Company.

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

          "Lien" means any mortgage, pledge, hypothecation,  assignment, deposit
     arrangement,   encumbrance,  lien  (statutory  or  other),  or  preference,
     priority  or  other  security  interest  of any kind or  nature  whatsoever
     (including,  without  limitation,  any  conditional  sale  or  other  title
     retention  agreement,  any financing  lease having  substantially  the same
     effect as any of the foregoing,  any assignment or other

                                       8
<PAGE>

     conveyance of any right to receive income and any assignment of receivables
     with recourse against the assignor), any filing of a financing statement as
     debtor  under the Uniform  Commercial  Code or any similar  statute and any
     agreement to give or make any of the foregoing.

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

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

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

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

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

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

                                       9
<PAGE>

     corporation), which right is superior to the rights of another class of the
     capital stock of such  corporation.  "Preferred  Stock"  includes,  without
     limitation, the Series A Convertible Preferred Stock.

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

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

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

          "Restricted  Payment"  means (i) every payment in connection  with the
     redemption,  purchase,  retirement or other  acquisition by or on behalf of
     the  Company  of any  shares of the  Company's  capital  stock (as  defined
     below),  whether  or not  owned by the  Company,  (ii) any  prepayments  or
     repayments made on  Indebtedness of the Company,  (iii) every payment to or
     on behalf of any  Affiliate of the Company on account of or with respect to
     any  lease  arrangements,  and (iv)  every  payment  by or on behalf of the
     Company  (whether as repayment or prepayment of principal or as interest or
     otherwise) on or with respect to (A) any obligation to repay money borrowed
     owing to any Affiliate of the Company or (B) any obligation, to any Person,
     of any  Affiliate  of the  Company or to any other  holder of shares of the
     Company's capital stock (as defined below), which obligation is assumed, or
     is the subject of a Guaranty, by the Company;  provided,  however, that the
     term "Restricted  Payment" shall not apply to (1) any payment in respect of
     capital stock of the Company to the extent payable in shares of the capital
     stock of the Company,  (2) any regularly scheduled  prepayment or repayment
     of Indebtedness, provided that such Indebtedness being prepaid or repaid is
     not at the  time of such  prepayment  or  repayment  or at any  prior  time
     thereto  owing to an  Affiliate  of the Company,  provided  that  regularly
     scheduled  payments or  prepayments  pursuant to the Affiliate Loan are not
     "Restricted   Payments",   (3)  payments  to  DuPont  Chemical  and  Energy
     Operations,  Inc.  and E.I.  DuPont de Nemours and Company in the  ordinary
     course of business,  consistent  with past practice,  and not in connection
     with  any  financing  or  extraordinary   corporate   transaction  are  not
     "Restricted  Payments",  or  (4)  any  payments,   distributions  or  other
     transfers  or  actions on or with  respect to the Shares or the  Conversion
     Shares or to the Purchasers (or holders of Shares or the Conversion Shares)
     under the Stock  Purchase  Agreements.  For  purposes  of this  definition,
     "capital stock" shall also include

                                       10
<PAGE>

     warrants  and other rights and options to acquire  shares of capital  stock
     (whether upon exercise, conversion, exchange or otherwise).

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

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

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

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

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

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

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

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

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

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

                                       11
<PAGE>

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

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

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

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

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

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

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

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

                                       12
<PAGE>

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

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

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

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

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

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

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

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

          (ix)  all  references  herein  (in  covenants  or  otherwise)  to  any
     action(s)  which are to be taken (or which are prohibited from being taken)
     by any Person or the Company shall apply to such Person or the Company,  as
     the case may be, whether such action is taken directly or indirectly.

                                       13
<PAGE>

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

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

     4.1. Corporate Existence, Power and Authority.

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

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

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

     (d) The Company has all requisite corporate power and authority to execute,
deliver, enter into, consummate the transactions contemplated by and perform its
obligations  under  (i)  the  Stock  Purchase  Agreements,   including,  without
limitation,  the issuance by the Company of the Shares and the Conversion Shares
as contemplated herein and therein and in the Certificate of Amendment, (ii) the
First  Amendment to  Stockholders'  Agreement  and (iii) the First  Amendment to
Registration  Rights Agreement.  The execution,  delivery and performance of the
Stock Purchase  Agreements,  the First Amendment to Stockholders'  Agreement and
the First Amendment to Registration  Rights Agreement by the Company (including,
without limitation, the issuance by the Company of the Shares and the Conversion
Shares as  contemplated  herein and therein and in the Certificate of Amendment)
have been duly  authorized by all required  corporate  actions.  The Company has
duly executed and delivered the Stock Purchase  Agreements,  the First Amendment
to  Stockholders'  Agreement  and the First  Amendment  to  Registration  Rights
Agreement.  The Stock Purchase Agreements,  the First Amendment to Stockholders'
Agreement and the First Amendment to Registration  Rights  Agreement  constitute
the  legal,  valid  and  binding  obligations  of  the  Company  enforceable  in
accordance  with their  respective  terms,  subject to  bankruptcy,  insolvency,
reorganization,  moratorium  and other  similar  laws  relating to the rights of
creditors generally.

                                       14
<PAGE>

     4.2. Capital Stock.

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

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

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

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

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

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

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

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

                                       15
<PAGE>

     4.3. Subsidiaries.

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

     4.4. Business.

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

     4.5. No Defaults or Conflicts.

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

     (b) The  execution,  delivery and  performance  by the Company of the Stock
Purchase  Agreements,  the First  Amendment to  Stockholders'  Agreement and the
First Amendment to  Registration  Rights  Agreement and any of the  transactions
contemplated hereby or thereby (including,  without limitation,  the issuance of
the Shares and the Conversion  Shares as contemplated  herein and therein and in
the Certificate of Amendment and the adoption of the Certificate of Amendment as
an amendment to the Company's  certificate of incorporation) do not and will not
(i)  violate  or  conflict  with,  with or  without  the giving of notice or the
passage of time or both, any provision of (A) the  certificate of  incorporation
or by-laws of the Company or (B) any material law, rule,  regulation or order of
any Governmental Authority, or any material judgment, writ, injunction,  decree,
award or other action of any court, Governmental Authority or arbitrator(s),  or
any agreement, indenture or other instrument applicable to the Company or any of
its  properties,  (ii)  result  in the  creation  of any  Lien  upon  any of the
Company's  properties,  assets or revenues,  (iii) require the consent,  waiver,
approval, order or authorization of, or declaration, registration, qualification
or  filing  with,  any  Person  (whether  or not a  Governmental  Authority  and
including,   without  limitation,  any  shareholder

                                       16
<PAGE>

approval),  or (iv) cause antidilution clauses of any outstanding  securities to
become operative or give rise to any preemptive rights.

     4.6. Disclosure Materials; Other Information.

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

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

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

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

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

                                       17
<PAGE>

     4.7. Litigation.

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

     4.8. Taxes.

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

     4.9. ERISA.

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

                                       18
<PAGE>

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

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

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

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

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

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

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

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

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

                                       19
<PAGE>

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

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

     4.10. Legal Compliance.

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

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

     4.11. Outstanding Securities.

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

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

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

                                       20
<PAGE>

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

     4.13. Key Employees.

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

     4.14. Properties.

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

     4.15. Suppliers and Customers.

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

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

                                       21
<PAGE>

     4.16. Environmental Compliance.

     Except as disclosed on Schedule 4.16 hereto:

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

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

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

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

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

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

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

                                       22
<PAGE>

     4.17. No Burdensome Agreements.

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

     4.18. Offering of Shares.

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

     4.19. SEC Reports.

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

     4.20. Indebtedness.

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

                                       23
<PAGE>

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

     4.21. Use of Proceeds.

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

     4.22. Other Names.

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

     4.23. Brokers.

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

                                       24
<PAGE>

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     The Purchaser represents and warrants to the Company as follows:

     5.1. Corporate Power and Authority.

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

     5.2. Investment Intent.

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

     5.3. Brokers.

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

                                       25
<PAGE>

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

     5.4 Ownership of Common Stock.

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

SECTION 6. RESTRICTIONS ON TRANSFER

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

SECTION 7. INFORMATION AS TO THE COMPANY

     The Company covenants and agrees as follows:

     7.1. Financial Information.

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

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

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

                                       26
<PAGE>

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

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

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

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

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

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

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

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

                                       27
<PAGE>

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

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

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

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

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

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

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

                                       28
<PAGE>

     7.2. Communication with Accountants.

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

     7.3. Inspection.

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

     7.4. Notices.

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

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

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

                                       29
<PAGE>

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

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

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

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

                                       30
<PAGE>

SECTION 8. AFFIRMATIVE COVENANTS

     The Company covenants and agrees as follows:

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

     The Company will:

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

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

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

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

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

                                       31
<PAGE>

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

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

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

     8.3. Fiscal Year.

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

     8.4. Environmental Matters.

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

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

                                       32
<PAGE>

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

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

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

     8.5. Reservation of Shares.

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

     8.6. Securities Exchange Act Registration.

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

                                       33
<PAGE>

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

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

     8.7. Delivery of Information for Rule 144A Transactions.

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

     8.8. Senior Securities.

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

     8.9. Further Assurances.

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

     8.10. Stockholder Approval.

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

                                       34
<PAGE>

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

     8.11. Shares Paid as Dividends.

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

SECTION 9. NEGATIVE COVENANTS

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

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

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

                                       35
<PAGE>

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

     9.2. Indebtedness.

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

     9.3. Consolidation, Merger and Sale.

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

     9.4. No Change in Business

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

     9.5. Restricted Payments; Investments.

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

                                       36
<PAGE>

     9.6. Sale of Substantial Portion of Assets.

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

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

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

     9.7. Obligations to Affiliates.

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

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

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

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

                                       37
<PAGE>

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

     9.8. Transactions with Affiliates.

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

     9.9. Liens.

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

     9.10. Private Placement Status.

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

                                       38
<PAGE>

     9.11. Maintenance of Public Market.

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

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

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

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

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

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

     9.12. Actions Prior to the Closing Date.

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

SECTION 10. CONDITIONS TO PURCHASER'S OBLIGATIONS

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

                                       39
<PAGE>

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

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

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

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

     10.2. Certificates for Shares.

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

     10.3. Senior Status.

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

     10.4. Accuracy of Representations and Warranties.

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

     10.5. Compliance with Agreements.

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

                                       40
<PAGE>

     10.6. Officers' Certificates.

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

     10.7. Proceedings.

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

     10.8. Legality; Governmental and Other Authorization.

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

     10.9. No Material Adverse Change.

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

     10.10. Opinion of Counsel.

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

                                       41
<PAGE>

     10.11. Purchases of Shares.

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

     10.12. Consents.

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

     10.13. Other Documents and Opinions.

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

SECTION 11. BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS

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

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

                                       42
<PAGE>

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

SECTION 12. SPECIFIC PERFORMANCE

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

SECTION 13. EXPENSES

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

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

                                       43
<PAGE>

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

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

                                       44
<PAGE>

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

SECTION 14. DIRECT PAYMENTS

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

SECTION 15. AMENDMENTS AND WAIVERS

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

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

                                       45
<PAGE>

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

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

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

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

SECTION 17. NOTICES

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

                                       46
<PAGE>

SECTION 18. MISCELLANEOUS

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

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

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

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

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

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

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

                                       47
<PAGE>

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

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

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

                                       48
<PAGE>

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

                  [remainder of page intentionally left blank]

                                       49
<PAGE>

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

                            HUDSON TECHNOLOGIES, INC.

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

Accepted and Agreed to as of the
date first above  written by the
undersigned Purchaser:

FLEMING US DISCOVERY OFFSHORE FUND III, L.P.

By:      FLEMING US DISCOVERY
            PARTNERS, L.P.,
         its general partner

         By: FLEMING US DISCOVERY, LLC,
             its general partner

             By: /s/ Robert L. Burr
                ---------------------------------------
                      Robert L. Burr, member

<PAGE>

                                                                      Schedule 1
                                                                    to the Stock
                                                              Purchase Agreement

<TABLE>
<CAPTION>
                             Social Security or Taxpayer      Number of Shares at      Share Purchase
      Name of Purchaser        Identification Number              Closing                 Price
      -----------------        ---------------------              -------                 -----
<S>                                  <C>                           <C>                 <C>
Fleming US Discovery                 13-3907673                    25,855              $2,585,500
Fund III, L.P.

Fleming US Discovery                 13-3936603                    4,145                $414,500
Offshore Fund III, L.P.
</TABLE>

(a)  address for communications:

     Fleming Capital Management
     320 Park Avenue
     New York, NY  10022
     Fax:  (212) 508-3928
     Attention:     Robert L. Burr
                    Robert M. Zech

(b)  address for payments by
     wire transfer:

     Fleming US Discovery Fund III, L.P.   Fleming US Discovery Offshore
                                           Fund III, L.P.

     Chase Manhattan Bank                  Citibank, N.A.
     ABA # 021000021                       ABA # 021000089 / Chips UID# 0008 /
     CITIUS33A/C # 10921671                Swift Code - A/C: The Bank of Bermuda
                                           Limited, Hamilton, Bermuda
     Bermuda
     A/C: Robert Fleming Inc.              Chips UID# 005584
     A/C # 400-704129                      Swift Code: BBDA BM HM
     A/C: Fleming US Discovery
          Fund III, L.P.                   A/C # 0246769
                                           A/C: Fleming US Discovery Offshore
                                                Fund III, L.P.

<PAGE>

                                                                      Schedule 2
                                                                    to the Stock
                                                              Purchase Agreement

                                  Indebtedness

<PAGE>

                                                                      Schedule 3
                                                                    to the Stock
                                                              Purchase Agreement

                                   Investments

<PAGE>

                                                                      Schedule 4
                                                                    to the Stock
                                                              Purchase Agreement

                               Disclosure Material

<PAGE>

                                                                   Schedule 4.16
                                                                    to the Stock
                                                              Purchase Agreement

                            Environmental Compliance

<PAGE>

                                                                      Schedule 5
                                                                    to the Stock
                                                              Purchase Agreement

                                      Liens

<PAGE>

                                                                      Schedule 6
                                                                    to the Stock
                                                              Purchase Agreement

                                  Capital Stock

<PAGE>

                                                                       EXHIBIT A

                            CERTIFICATE OF AMENDMENT

<PAGE>

                                                                       EXHIBIT B

                               DISCLOSURE SCHEDULE

<PAGE>

                                                                       EXHIBIT C

                   FIRST AMENDMENT TO STOCKHOLDERS' AGREEMENT

<PAGE>

                                                                       EXHIBIT D

                FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT

<PAGE>

                                                                       EXHIBIT E

                       OPINION OF COUNSEL FOR THE COMPANY

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