Document:

EXHIBIT 4.1

                          SECURITIES PURCHASE AGREEMENT

      This Securities Purchase Agreement (this "AGREEMENT") is dated as of March
16, 2004, among Perma-Fix Environmental  Services,  Inc., a Delaware corporation
(the  "COMPANY"),  and each purchaser  identified on the signature  pages hereto
(each,  including its successors and assigns, a "PURCHASER" and collectively the
"Purchasers"); and

      WHEREAS,  subject to the terms and  conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below),  and Rule
506  promulgated  thereunder,  the  Company  desires  to issue  and sell to each
Purchaser,  and each Purchaser,  severally and not jointly,  desires to purchase
from the Company in the  aggregate,  up to $15,000,000 of shares of Common Stock
and Warrants on the Closing Date.

      NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement,  and for  other  good and  valuable  consideration  the  receipt  and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

      1.1  DEFINITIONS.  In  addition  to the terms  defined  elsewhere  in this
Agreement,  for all purposes of this  Agreement,  the  following  terms have the
meanings indicated in this Section 1.1:

            "2003 FORM 10-K" means the Company's  Annual Report on Form 10-K for
      the fiscal year ended December 31, 2003, as filed with the Commission.

            "ACTION"  shall have the  meaning  ascribed  to such term in Section
      3.1(j).

            "AFFILIATE"  means any Person that,  directly or indirectly  through
      one or more  intermediaries,  controls  or is  controlled  by or is  under
      common control with a Person as such terms are used in and construed under
      Rule 144.  With respect to a  Purchaser,  any  investment  fund or managed
      account that is managed on a  discretionary  basis by the same  investment
      manager  as such  Purchaser  will be  deemed  to be an  Affiliate  of such
      Purchaser.

            "CLOSING"  means the closing of the  purchase and sale of the Common
      Stock and the Warrants pursuant to Section 2.1.

            "CLOSING  DATE" means the  Trading  Day when all of the  Transaction
      Documents  have been  executed  and  delivered by the  applicable  parties
      thereto, and all conditions  precedent to (i) the Purchasers'  obligations
      to pay the  Subscription  Amount  and (ii) the  Company's  obligations  to
      deliver the Securities have been satisfied or waived.

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            "CLOSING  PRICE" means on any particular  date (a) the last reported
      closing  bid price per share of Common  Stock on such date on the  Trading
      Market (as reported by Bloomberg  L.P. at 4:15 PM (New York time),  or (b)
      if there is no such price on such date,  then the closing bid price on the
      Trading  Market on the date  nearest  preceding  such date (as reported by
      Bloomberg  L.P.  at 4:15 PM (New York time) for the  closing bid price for
      regular  session  trading on such day),  or (c) if the Common Stock is not
      then  listed or quoted on a Trading  Market  and if prices  for the Common
      Stock are then quoted on the OTC Bulletin Board,  the closing bid price of
      the Common Stock for such date (or the nearest  preceding date) on the OTC
      Bulletin  Board (as reported by Bloomberg L.P. at 4:15 PM (New York time),
      (d) if the Common Stock is not then listed or quoted on the Trading Market
      and if prices for the Common Stock are then  reported in the "pink sheets"
      published by the Pink Sheets LLC (formerly the National  Quotation  Bureau
      Incorporated  (or a  similar  organization  or  agency  succeeding  to its
      functions of reporting prices), the most recent bid price per share of the
      Common  Stock so  reported,  or (e) if the shares of Common  Stock are not
      then  publicly  traded the fair market value of a share of Common Stock as
      determined by a qualified  independent appraiser selected in good faith by
      the Purchasers of a majority in interest of the Shares then outstanding.

            "COMMISSION" means the Securities and Exchange Commission.

            "COMMON  STOCK" means the common  stock of the  Company,  $0.001 par
      value per share,  and any  securities  into which  such  common  stock may
      hereafter be reclassified.

            "COMMON STOCK  EQUIVALENTS"  means any  securities of the Company or
      the Subsidiaries  which would entitle the holder thereof to acquire at any
      time Common  Stock,  including  without  limitation,  any debt,  preferred
      stock, rights,  options,  warrants or other instrument that is at any time
      convertible  into or  exchangeable  for, or otherwise  entitles the holder
      thereof to receive, Common Stock.

            "COMPANY COUNSEL" means Conner & Winters, P.C.

            "DISCLOSURE SCHEDULES" means the disclosure schedules of the Company
      delivered concurrently herewith.

            "EFFECTIVE DATE" means the date that the  Registration  Statement is
      first declared effective by the Commission.

            "ESCROW  AGENT"  shall  have the  meaning  set  forth in the  Escrow
      Agreement.

            "ESCROW  AGREEMENT" shall mean the Escrow Agreement in substantially
      the form of EXHIBIT D hereto executed and delivered contemporaneously with
      this Agreement.

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            "EXCHANGE  ACT"  means  the  Securities  Exchange  Act of  1934,  as
      amended.

            "EXEMPT  ISSUANCE"  means the issuance of (a) shares of Common Stock
      or options to  employees,  bona fide  consultants,  bona fide  prospective
      employees,  officers or directors of the Company  pursuant to any stock or
      option plan duly adopted by a majority of the non-employee  members of the
      Board of  Directors  of the  Company  or a  majority  of the  members of a
      committee of  non-employee  directors  established for such purpose or (b)
      securities   upon  the  exercise  of  or  conversion  of  any  convertible
      securities, options or warrants issued and outstanding on the date of this
      Agreement,  provided that such  securities have not been amended since the
      date of this Agreement.

            "FORCE  MAJEURE"  shall mean any unusual  event  arising from causes
      reasonably  beyond the control of the Company that could not be reasonably
      anticipated  that causes a delay in or  prevents  the  performance  of any
      obligation  under this  Agreement or the agreements  contemplated  hereby,
      including  but  not  limited  to:  acts  of  God;  fire;  war;  terrorism;
      insurrection;  civil  disturbance;  explosion;  adverse weather conditions
      that could not be reasonably anticipated; unusual delay in transportation;
      strikes or other  labor  disputes;  restraint  by court  order or order of
      public  authority but  specifically not including any event resulting from
      the  failure  of the  Commission  or  Company's  transfer  agent to act or
      perform any function.

            "FW"  means  Feldman  Weinstein  LLP  with  offices  located  at 420
      Lexington Avenue, Suite 2620, New York, New York 10170-0002.

            "INTELLECTUAL  PROPERTY  RIGHTS" shall have the meaning  ascribed to
      such term in Section 3.1(o).

            "LIENS" means a lien, charge, security interest,  encumbrance, right
      of first refusal, preemptive right or other restriction.

            "MATERIAL  ADVERSE  EFFECT" shall have the meaning  ascribed to such
      term in Section 3.1(b).

            "MATERIAL  PERMITS" shall have the meaning  ascribed to such term in
      Section 3.1(m).

            "PER SHARE PURCHASE  PRICE" equals $2.25,  subject to adjustment for
      reverse and forward stock splits, stock dividends,  stock combinations and
      other similar  transactions  of the Common Stock that occur after the date
      of this Agreement.

            "PERSON"  means an individual or  corporation,  partnership,  trust,
      incorporated  or  unincorporated   association,   joint  venture,  limited
      liability  company,  joint  stock  company,  government  (or an  agency or
      subdivision thereof) or other entity of any kind.

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            "PROCEEDING"  means  an  action,   claim,  suit,   investigation  or
      proceeding  (including,  without  limitation,  an investigation or partial
      proceeding, such as a deposition), whether commenced or threatened.

            "REGISTRATION   RIGHTS  AGREEMENT"  means  the  Registration  Rights
      Agreement,  dated as of the date of this Agreement,  among the Company and
      each Purchaser, in the form of EXHIBIT A hereto.

            "REGISTRATION  STATEMENT" means a registration statement meeting the
      requirements set forth in the  Registration  Rights Agreement and covering
      the resale by the Purchasers of the Shares and the Warrant Shares.

            "REQUIRED APPROVALS" shall have the meaning ascribed to such term in
      Section 3.1(e).

            "RULE 144" means Rule 144 promulgated by the Commission  pursuant to
      the Securities  Act, as such Rule may be amended from time to time, or any
      similar rule or  regulation  hereafter  adopted by the  Commission  having
      substantially the same effect as such Rule.

            "SEC  REPORTS"  shall  have the  meaning  ascribed  to such  term in
      Section 3.1(h).

            "SECURITIES" means the Shares, the Warrants and the Warrant Shares.

            "SECURITIES ACT" means the Securities Act of 1933, as amended.

            "SHARES" means the shares of Common Stock issued or issuable to each
      Purchaser pursuant to this Agreement.

            "SUBSCRIPTION  AMOUNT" means, as to each Purchaser,  the amounts set
      forth below such Purchaser's signature block on the signature page hereto,
      in United States dollars and in immediately available funds.

            "SUBSIDIARY" shall mean the subsidiaries of the Company, if any, set
      forth on SCHEDULE 3.1(A).

            "TRADING  DAY" means a day on which the Common  Stock is traded on a
      Trading Market.

            "TRADING  MARKET" means the following  markets or exchanges on which
      the Common  Stock is listed or quoted for trading on the date in question:
      the Nasdaq  SmallCap  Market,  the American Stock  Exchange,  the New York
      Stock Exchange, the Nasdaq National Market or the OTC Bulletin Board.

            "TRANSACTION  DOCUMENTS"  means this  Agreement,  the Warrants,  the
      Escrow  Agreement  and the  Registration  Rights  Agreement  and any other
      documents  or  agreements  executed in  connection  with the  transactions
      contemplated hereunder.

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            "WARRANTS" means the Common Stock Purchase Warrants,  in the form of
      EXHIBIT B, issuable to the Purchasers at the Closing, which warrants shall
      be exercisable immediately upon issuance for a term of 3 years and have an
      exercise price equal to $2.92 per share.

            "WARRANT  SHARES"  means the shares of Common  Stock  issuable  upon
      exercise of the Warrants.

                                   ARTICLE II.
                               PURCHASE AND SALE

      2.1 CLOSING.  On the Closing Date,  each Purchaser shall purchase from the
Company,  severally and not jointly with the other  Purchasers,  and the Company
shall  issue and sell to each  Purchaser,  (a) a number of Shares  equal to such
Purchaser's  Subscription Amount divided by the Per Share Purchase Price and (b)
the  Warrants as  determined  pursuant  to Section  2.2(a)(iii).  The  aggregate
Subscription Amounts for Shares sold hereunder shall be up to $15,000,000.  Upon
satisfaction of the conditions set forth in Section 2.2, the Closing shall occur
at the offices of the Escrow Agent or such other  location as the parties  shall
mutually agree.

      2.2 CLOSING CONDITIONS; DELIVERIES.

            (a) On the Closing  Date,  the Company  shall deliver or cause to be
      delivered  to  the  Escrow  Agent  with  respect  to  each  Purchaser  the
      following:

                  (i) this Agreement duly executed by the Company;

                  (ii) a number of Shares equal to such Purchaser's Subscription
            Amount  divided by the Per Share  Purchase  Price  registered in the
            name of such Purchaser;

                  (iii) a  Warrant,  registered  in the name of such  Purchaser,
            pursuant to which such Purchaser  shall have the right to acquire up
            to the number of shares of Common  Stock  equal to 35% of the Shares
            to be issued to such Purchaser at the Closing;

                  (iv) the  Registration  Rights  Agreement duly executed by the
            Company;

                  (v) the Escrow Agreement duly executed by the Company; and

                  (vi) a  legal  opinion  of  Company  Counsel,  in the  form of
            EXHIBIT C attached hereto.

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            (b) On the Closing Date, each Purchaser shall deliver or cause to be
      delivered to the Escrow Agent the following:

                  (i) this Agreement duly executed by such Purchaser;

                  (ii) such Purchaser's  Subscription Amount by wire transfer to
            the account of the Escrow Agent;

                  (iii) the Escrow  Agreement  duly executed by such  Purchaser;
            and

                  (iv) the  Registration  Rights Agreement duly executed by such
            Purchaser.

            (c) All  representations and warranties of the other party contained
      herein  shall  remain  true and  correct  as of the  Closing  Date and all
      covenants  of the other  party shall have been  performed  if due prior to
      such date.

            (d) From the date hereof to the Closing Date,  trading in the Common
      Stock  shall not have been  suspended  by the  Commission  (except for any
      suspension of trading of limited duration agreed to by the Company,  which
      suspension  shall be terminated  prior to the  Closing),  and, at any time
      prior to the Closing Date, trading in securities  generally as reported by
      Bloomberg  Financial Markets shall not have been suspended or limited,  or
      minimum prices shall not have been  established on securities whose trades
      are  reported  by such  service,  or on any  Trading  Market,  nor shall a
      banking  moratorium  have been declared either by the United States or New
      York State authorities nor shall there have occurred any material outbreak
      or escalation of hostilities or other national or  international  calamity
      of such magnitude in its effect on, or any material adverse change in, any
      financial  market which, in each case, in the reasonable  judgment of each
      Purchaser, makes it impracticable or inadvisable to purchase the Shares at
      the Closing.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

      3.1  REPRESENTATIONS  AND  WARRANTIES OF THE COMPANY.  Except as set forth
under the  corresponding  section of the Disclosure  Schedules which  Disclosure
Schedules  shall  be  deemed  a  part  hereof,  the  Company  hereby  makes  the
representations and warranties set forth below to each Purchaser:

            (a) SUBSIDIARIES. All of the direct and indirect subsidiaries of the
      Company are set forth on SCHEDULE  3.1(A).  The Company owns,  directly or
      indirectly,  all of the capital  stock or other  equity  interests of each
      Subsidiary free and clear of any Liens, and all the issued and outstanding
      shares of capital  stock of each  Subsidiary  are  validly  issued and are
      fully paid,  non-assessable  and free of preemptive  and similar rights to
      subscribe for or purchase securities.  If the Company has no subsidiaries,
      then references in the Transaction  Documents to the Subsidiaries  will be
      disregarded.

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            (b)  ORGANIZATION  AND  QUALIFICATION.  Each of the  Company and the
      Subsidiaries  is an  entity  duly  incorporated  or  otherwise  organized,
      validly  existing and in good standing under the laws of the  jurisdiction
      of its  incorporation or organization (as applicable),  with the requisite
      power and authority to own and use its  properties and assets and to carry
      on its  business  as  currently  conducted.  Neither  the  Company nor any
      Subsidiary  is in  violation  or default of any of the  provisions  of its
      respective  certificate  or  articles  of  incorporation,  bylaws or other
      organizational  or  charter  documents.   Each  of  the  Company  and  the
      Subsidiaries is duly qualified to conduct business and is in good standing
      as a foreign corporation or other entity in each jurisdiction in which the
      nature  of the  business  conducted  or  property  owned by it makes  such
      qualification necessary, except where the failure to be so qualified or in
      good  standing,  as the case may be,  would  have (i) a  material  adverse
      effect on the  legality,  validity or  enforceability  of any  Transaction
      Document,  or (ii) a material adverse effect on the results of operations,
      assets, business,  prospects or financial condition of the Company and the
      Subsidiaries,  taken as a whole,  (any of (i) or (ii), a "MATERIAL ADVERSE
      EFFECT") and no Proceeding  has been  instituted in any such  jurisdiction
      revoking,  limiting or curtailing  or seeking to revoke,  limit or curtail
      such power and authority or qualification.

            (c)  AUTHORIZATION;  ENFORCEMENT.  The  Company  has  the  requisite
      corporate  power  and  authority  to  enter  into  and to  consummate  the
      transactions  contemplated  by  each  of  the  Transaction  Documents  and
      otherwise  to carry out its  obligations  thereunder.  The  execution  and
      delivery  of each of the  Transaction  Documents  by the  Company  and the
      consummation by it of the transactions contemplated thereby have been duly
      authorized  by all  necessary  action  on the part of the  Company  and no
      further  action is required by the Company in connection  therewith  other
      than in connection with the Required Approvals.  Each Transaction Document
      has been (or upon  delivery  will have been) duly  executed by the Company
      and, when delivered in accordance  with the terms hereof,  will constitute
      the valid and binding  obligation of the Company  enforceable  against the
      Company in  accordance  with its terms except (i) as limited by applicable
      bankruptcy,  insolvency,  reorganization,  moratorium  and  other  laws of
      general application  affecting  enforcement of creditors' rights generally
      and (ii) as limited  by laws  relating  to the  availability  of  specific
      performance, injunctive relief or other equitable remedies.

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            (d) NO CONFLICTS.  The  execution,  delivery and  performance of the
      Transaction  Documents by the Company, the issuance and sale of the Shares
      and the consummation by the Company of the other transactions contemplated
      thereby do not and will not (i) conflict  with or violate any provision of
      the   Company's   or  any   Subsidiary's   certificate   or   articles  of
      incorporation,  bylaws or other  organizational or charter  documents,  or
      (ii) conflict  with, or constitute a default (or an event that with notice
      or lapse of time or both  would  become a  default)  under,  result in the
      creation of any Lien upon any of the  properties  or assets of the Company
      or any Subsidiary, or give to others any rights of termination, amendment,
      acceleration  or cancellation  (with or without  notice,  lapse of time or
      both)  of,  any  agreement,  credit  facility,  debt or  other  instrument
      (evidencing  a  Company  or   Subsidiary   debt  or  otherwise)  or  other
      understanding  to which the  Company  or any  Subsidiary  is a party or by
      which any property or asset of the Company or any  Subsidiary  is bound or
      affected,  or (iii)  subject to the Required  Approvals,  conflict with or
      result in a  violation  of any law,  rule,  regulation,  order,  judgment,
      injunction,  decree  or other  restriction  of any  court or  governmental
      authority  to which the  Company or a  Subsidiary  is  subject  (including
      federal  and  state  securities  laws and  regulations),  or by which  any
      property or asset of the Company or a Subsidiary is bound or affected,  or
      (iv)  conflict  with or violate  the terms of any  agreement  by which the
      Company or any  Subsidiary  is bound or to which any  property or asset of
      the Company or any Subsidiary is bound or affected;  except in the case of
      each of clauses (ii) and (iii),  such as would not have or  reasonably  be
      expected to result in a Material Adverse Effect.

            (e) FILINGS,  CONSENTS AND APPROVALS. The Company is not required to
      obtain any consent, waiver, authorization or order of, give any notice to,
      or make any  filing or  registration  with,  any  court or other  federal,
      state, local or other governmental authority or other Person in connection
      with  the  execution,  delivery  and  performance  by the  Company  of the
      Transaction Documents, other than (i) filings required pursuant to Section
      4.4 of  this  Agreement,  (ii)  the  filing  with  the  Commission  of the
      Registration  Statement the  prospectus  contained  therein,  and pre- and
      post-effective supplements and amendments thereto, (iii) application(s) to
      each  applicable  Trading  Market and the Boston  Stock  Exchange  for the
      listing of the Shares and Warrant  Shares for trading  thereon in the time
      and  manner  required  thereby,  and  (iv) the  filing  of Form D with the
      Commission  and  such  filings  as are  required  based  on the  Company's
      determination   to  be  made  under   applicable   state  securities  laws
      (collectively, the "REQUIRED APPROVALS").

            (f)  ISSUANCE OF THE  SECURITIES.  The Shares and  Warrants are duly
      authorized   and,  when  issued  and  paid  for  in  accordance  with  the
      Transaction  Documents,  will be duly and validly  issued,  fully paid and
      nonassessable,  free and clear of all Liens  imposed by the Company  other
      than restrictions on transfer  provided for in the Transaction  Documents.
      The  Warrant  Shares,  when  issued  in  accordance  with the terms of the
      Transaction   Documents,   will  be   validly   issued,   fully  paid  and
      nonassessable,  free and clear of all Liens  imposed by the  Company.  The
      Company has reserved  from its duly  authorized  capital stock the maximum
      number of shares of Common Stock  issuable  pursuant to this Agreement and
      the Warrants.

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            (g)  CAPITALIZATION.   The  capitalization  of  the  Company  is  as
      described  in the  Company's  most recent  periodic  report filed with the
      Commission. The Company has not issued any capital stock since such filing
      other than  pursuant to the exercise of employee  stock  options under the
      Company's  stock option  plans,  the issuance of shares of Common Stock to
      employees  pursuant to the  Company's  employee  stock  purchase  plan and
      pursuant  to the  conversion  or  exercise  of  outstanding  Common  Stock
      Equivalents.  No Person has any right of first refusal,  preemptive right,
      right  of  participation,  or any  similar  right  to  participate  in the
      transactions contemplated by the Transaction Documents. Except as a result
      of the  purchase  and sale of the  Securities,  there  are no  outstanding
      options,  warrants, script rights to subscribe to, calls or commitments of
      any character whatsoever relating to, or securities, rights or obligations
      convertible  into or  exchangeable  for, or giving any Person any right to
      subscribe  for or  acquire,  any  shares of Common  Stock,  or  contracts,
      commitments,  understandings  or  arrangements by which the Company or any
      Subsidiary  is or may become  bound to issue  additional  shares of Common
      Stock, or securities or rights  convertible or exchangeable into shares of
      Common  Stock  other than  pursuant to the  Company's  stock plans and its
      outstanding Common Stock Equivalents. The issue and sale of the Securities
      will not  obligate  the Company to issue  shares of Common  Stock or other
      securities to any Person (other than the  Purchasers)  and will not result
      in a right of any holder of  Company  securities  to adjust the  exercise,
      conversion,  exchange  or reset price  under such  securities.  All of the
      outstanding  shares of capital  stock of the Company  are validly  issued,
      fully paid and  nonassessable,  have been  issued in  compliance  with all
      federal and state securities laws, and none of such outstanding shares was
      issued  in  violation  of any  preemptive  rights  or  similar  rights  to
      subscribe for or purchase securities. No further approval or authorization
      of any  stockholder,  the Board of  Directors  of the Company or others is
      required for the issuance and sale of the Shares,  other than the Required
      Approvals.   Except  as  disclosed  in  the  SEC  Reports,  there  are  no
      stockholders  agreements,  voting  agreements or other similar  agreements
      with  respect to the  Company's  capital  stock to which the  Company is a
      party or, to the  knowledge  of the  Company,  between or among any of the
      Company's stockholders.

            (h) SEC  REPORTS;  FINANCIAL  STATEMENTS.  The Company has filed all
      reports  required  to be  filed  by it under  the  Securities  Act and the
      Exchange Act,  including  pursuant to Section 13(a) or 15(d) thereof,  for
      the two years  preceding  the date hereof (or such  shorter  period as the
      Company was  required by law to file such  material),  including  the 2003
      Form 10-K (the foregoing materials,  including the exhibits thereto, being
      collectively referred to herein as the "SEC REPORTS") on a timely basis or
      has  received a valid  extension  of such time of filing and has filed any
      such SEC Reports  prior to the  expiration  of any such  extension.  As of
      their respective  dates, the SEC Reports complied in all material respects
      with the  requirements  of the Securities Act and the Exchange Act and the
      rules and regulations of the Commission promulgated  thereunder,  and none
      of the SEC  Reports,  when  filed,  contained  any untrue  statement  of a
      material  fact or omitted to state a material  fact  required to be stated
      therein or necessary in order to make the statements  therein, in light of
      the  circumstances  under  which  they  were  made,  not  misleading.  The
      financial  statements of the Company included in the SEC Reports comply in
      all material  respects with  applicable  accounting  requirements  and the
      rules and  regulations of the Commission with respect thereto as in effect
      at the time of filing.  Such  financial  statements  have been prepared in
      accordance with United States  generally  accepted  accounting  principles
      applied on a consistent basis during the periods involved ("GAAP"), except
      as may be otherwise  specified in such  financial  statements or the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes  required by GAAP, and fairly  present in all material  respects
      the financial position of the Company and its consolidated subsidiaries as
      of and for the dates thereof and the results of operations  and cash flows
      for the periods then ended,  subject, in the case of unaudited statements,
      to normal, immaterial, year-end audit adjustments.

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            (i) MATERIAL CHANGES. Since the date of the latest audited financial
      statements  included  within  the  SEC  Reports,  except  as  specifically
      disclosed in the SEC Reports,  (i) there has been no event,  occurrence or
      development  that would  result in a  Material  Adverse  Effect,  (ii) the
      Company has not incurred any liabilities  (contingent or otherwise)  other
      than (A) trade  payables  and accrued  expenses  incurred in the  ordinary
      course of business  consistent  with past practice and (B) liabilities not
      required to be reflected in the Company's financial statements pursuant to
      GAAP or  required to be  disclosed  in filings  made with the  Commission,
      (iii) the  Company  has not  altered  its method of  accounting,  (iv) the
      Company has not declared or made any dividend or  distribution  of cash or
      other  property to its  stockholders  or  purchased,  redeemed or made any
      agreements  to purchase or redeem any shares of its capital  stock and (v)
      the Company has not issued any equity securities to any officer,  director
      or Affiliate,  except  pursuant to existing  Company stock option plans or
      stock  purchase  plans.  The  Company  does not have  pending  before  the
      Commission any request for confidential treatment of information.

            (j)  LITIGATION.  There  is no  action,  suit,  inquiry,  notice  of
      violation, proceeding or investigation pending or, to the knowledge of the
      Company,  threatened  against or affecting the Company,  any Subsidiary or
      any of their  respective  properties  before or by any court,  arbitrator,
      governmental or administrative  agency or regulatory  authority  (federal,
      state,  county,  local or foreign)  (collectively,  an "ACTION") which (i)
      adversely  affects or challenges the legality,  validity or enforceability
      of any of the  Transaction  Documents or the Securities or (ii) would,  if
      there were an  unfavorable  decision,  have or  reasonably  be expected to
      result  in  a  Material  Adverse  Effect.  Neither  the  Company  nor  any
      Subsidiary,  nor any  director  or  officer  thereof,  is or has  been the
      subject of any Action involving a claim of violation of or liability under
      federal or state  securities  laws or a claim of breach of fiduciary duty.
      There has not been,  and to the  knowledge  of the  Company,  there is not
      pending or contemplated, any investigation by the Commission involving the
      Company or any current or former  director or officer of the Company.  The
      Commission  has not issued any stop order or other  order  suspending  the
      effectiveness  of any  registration  statement filed by the Company or any
      Subsidiary under the Exchange Act or the Securities Act.

            (k) LABOR  RELATIONS.  No material  labor dispute  exists or, to the
      knowledge of the Company, is imminent with respect to any of the employees
      of the Company which would result in a Material Adverse Effect.

                                       10
<PAGE>

            (l)  COMPLIANCE.  Neither the Company nor any  Subsidiary  (i) is in
      default  under or in violation of (and no event has occurred  that has not
      been waived that, with notice or lapse of time or both,  would result in a
      default by the Company or any  Subsidiary  under),  nor has the Company or
      any Subsidiary  received  notice of a claim that it is in default under or
      that it is in violation of, any indenture, loan or credit agreement or any
      other agreement or instrument to which it is a party or by which it or any
      of its  properties is bound  (whether or not such default or violation has
      been waived),  (ii) is in violation of any order of any court,  arbitrator
      or governmental body, or (iii) is or has been in violation of any statute,
      rule  or  regulation  of any  governmental  authority,  including  without
      limitation all foreign,  federal,  state and local laws  applicable to its
      business except in each case as would not have a Material Adverse Effect.

            (m) REGULATORY PERMITS. The Company and the Subsidiaries possess all
      certificates,   authorizations  and  permits  issued  by  the  appropriate
      federal,  state,  local or foreign  regulatory  authorities  necessary  to
      conduct  their  respective  businesses  as  described  in the SEC Reports,
      except  where  the  failure  to  possess  such  permits  would not have or
      reasonably be expected to result in a Material  Adverse Effect  ("MATERIAL
      PERMITS"),  and neither the Company nor any  Subsidiary  has  received any
      notice of proceedings  relating to the revocation or  modification  of any
      Material Permit.

            (n) TITLE TO ASSETS.  The Company and the Subsidiaries have good and
      marketable  title in fee simple to all real property owned by them that is
      material to the business of the Company and the  Subsidiaries and good and
      marketable  title in all personal  property owned by them that is material
      to the business of the Company and the Subsidiaries, in each case free and
      clear of all Liens, except for Liens as do not materially affect the value
      of such  property and do not  materially  interfere  with the use made and
      proposed to be made of such  property by the Company and the  Subsidiaries
      and Liens for the payment of federal, state or other taxes, the payment of
      which is neither  delinquent  nor subject to penalties.  Any real property
      and facilities  held under lease by the Company and the  Subsidiaries  are
      held by them under valid,  subsisting and enforceable  leases of which the
      Company and the Subsidiaries are in compliance.

            (o) PATENTS AND TRADEMARKS.  The Company and the Subsidiaries  have,
      or have  rights to use,  all  patents,  patent  applications,  trademarks,
      trademark applications,  service marks, trade names, copyrights,  licenses
      and other similar rights  necessary or material for use in connection with
      their respective  businesses as described in the SEC Reports and which the
      failure to so would  have a Material  Adverse  Effect  (collectively,  the
      "INTELLECTUAL  PROPERTY  RIGHTS").  Neither the Company nor any Subsidiary
      has received a written notice that the  Intellectual  Property Rights used
      by the Company or any Subsidiary  violates or infringes upon the rights of
      any  Person.  To the  knowledge  of the  Company,  all  such  Intellectual
      Property Rights are  enforceable and there is no existing  infringement by
      another Person of any of the Intellectual Property Rights of others.

                                       11
<PAGE>

            (p)  INSURANCE.  The  Company  and the  Subsidiaries  are insured by
      insurers of recognized  financial  responsibility  against such losses and
      risks and in such amounts as are prudent and  customary in the  businesses
      in which the  Company and the  Subsidiaries  are  engaged.  To the best of
      Company's  knowledge,  such insurance  contracts and policies are accurate
      and  complete.  Neither the Company nor any  Subsidiary  has any reason to
      believe that it will not be able to renew its existing  insurance coverage
      as and when such  coverage  expires  or to obtain  similar  coverage  from
      similar  insurers as may be necessary  to continue its business  without a
      significant increase in cost.

            (q) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES.  Except as set forth
      in the SEC  Reports,  none of the  executive  officers or directors of the
      Company is  presently a party to any  transaction  with the Company or any
      Subsidiary (other than for services as executive  officers and directors),
      including any contract,  agreement or other arrangement  providing for the
      furnishing of services to or by,  providing for rental of real or personal
      property  to or  from,  or  otherwise  requiring  payments  to or from any
      executive  officer or director or, to the  knowledge  of the Company,  any
      entity  in which any  executive  officer  or  director  has a  substantial
      interest or is an officer,  director,  trustee or partner, in each case in
      excess of $60,000 other than (i) for payment of salary or consulting  fees
      for services rendered,  (ii) reimbursement for expenses incurred on behalf
      of the  Company and (iii) for other  employee  benefits,  including  stock
      option agreements under any stock option plan of the Company.

            (r) SARBANES-OXLEY;  INTERNAL ACCOUNTING CONTROLS. The Company is in
      material  compliance with all provisions of the Sarbanes-Oxley Act of 2002
      which are  applicable  to it as of the Closing  Date.  Since  December 31,
      2003,  there have been no  significant  changes in the Company's  internal
      controls (as such term is defined in Item 307(b) of  Regulation  S-K under
      the Exchange  Act) or, to the Company's  knowledge,  in other factors that
      could significantly affect the Company's internal controls.

            (s) CERTAIN FEES. No brokerage or finder's fees or  commissions  are
      or will be payable  by the  Company to any  broker,  financial  advisor or
      consultant,  finder,  placement agent,  investment  banker,  bank or other
      Person with respect to the  transactions  contemplated  by this Agreement.
      The Purchasers  shall have no obligation  with respect to any fees or with
      respect to any claims made by or on behalf of other  Persons for fees of a
      type  contemplated  in this Section that may be due in connection with the
      transactions contemplated by this Agreement.

            (t) PRIVATE  PLACEMENT.  Assuming  the  accuracy  of the  Purchasers
      representations  and warranties set forth in Section 3.2, no  registration
      under  the  Securities  Act is  required  for the  offer  and  sale of the
      Securities by the Company to the Purchasers as contemplated hereby, except
      as required by the terms of the  Transaction  Documents.  The issuance and
      sale of the  Securities  hereunder  does  not  contravene  the  rules  and
      regulations of the Trading Market.

                                       12
<PAGE>

            (u) INVESTMENT COMPANY.  The Company is not, and is not an Affiliate
      of, and immediately  after receipt of payment for the Shares,  will not be
      or be an Affiliate of, an "investment  company"  within the meaning of the
      Investment Company Act of 1940, as amended.  The Company shall conduct its
      business in a manner so that it will not become  subject to the Investment
      Company Act.

            (v) REGISTRATION RIGHTS.  Except as set forth in SCHEDULE 3.1(V), no
      Person has any right to cause the Company to effect the registration under
      the Securities Act of any securities of the Company.

            (w) LISTING AND MAINTENANCE REQUIREMENTS. The Company's Common Stock
      is  registered  pursuant to Section  12(b) of the  Exchange  Act,  and the
      Company  has taken no action  designed  to, or which to its  knowledge  is
      likely to have the effect of,  terminating the  registration of the Common
      Stock under the Exchange Act nor has the Company received any notification
      that the Commission is contemplating  terminating such  registration.  The
      Company  has not, in the 12 months  preceding  the date  hereof,  received
      notice  from any Trading  Market on which the Common  Stock is or has been
      listed or quoted to the effect that the Company is not in compliance  with
      the  listing or  maintenance  requirements  of such  Trading  Market.  The
      Company  is,  and  has no  reason  to  believe  that  it  will  not in the
      foreseeable future continue to be, in compliance with all such listing and
      maintenance requirements.

            (x)  APPLICATION  OF  TAKEOVER  PROTECTIONS.  Assuming  none  of the
      Purchasers,  individually or as a "group" as described in Section 13(d)(3)
      of the Securities  Act,  beneficially  own more than 4.99% of Common Stock
      for  purposes  of  this  representation,  the  Company  and its  Board  of
      Directors  have not and will not  adopt any  poison  pill  (including  any
      distribution  under a rights  agreement)  or other  similar  anti~takeover
      provision  under the Company's  Certificate of  Incorporation  (or similar
      charter documents) that would prohibit the Purchasers and the Company from
      fulfilling  their   obligations  or  exercising  their  rights  under  the
      Transaction Documents, including without limitation the Company's issuance
      of the Securities and the Purchasers' ownership of the Securities acquired
      under the terms of this Agreement.

            (y) DISCLOSURE.  The Company confirms that,  neither the Company nor
      any other Person  acting on its behalf has provided any of the  Purchasers
      or their agents or counsel with any information  that constitutes or might
      constitute material,  non-public information.  The Company understands and
      confirms that the  Purchasers  will rely on the foregoing  representations
      and covenants in effecting  transactions in securities of the Company. All
      disclosure provided to the Purchasers  regarding the Company, its business
      and the transactions  contemplated hereby, including the Schedules to this
      Agreement,  furnished  by or on behalf of the Company  with respect to the
      representations  and  warranties  made  herein are true and  correct  with
      respect to such  representations  and  warranties  and do not  contain any
      untrue  statement of a material  fact or omit to state any  material  fact
      necessary in order to make the  statements  made therein,  in light of the
      circumstances  under  which they were made,  not  misleading.  The Company
      acknowledges   and  agrees  that  no  Purchaser  makes  or  has  made  any
      representations   or   warranties   with   respect  to  the   transactions
      contemplated  hereby  other  than  those  specifically  set  forth  in the
      Transaction Documents.

                                       13
<PAGE>

            (z) NO INTEGRATED OFFERING. Assuming the accuracy of the Purchasers'
      representations  and  warranties  set forth in Section  3.2,  neither  the
      Company, nor any of its affiliates,  nor any Person acting on its or their
      behalf  has,  directly  or  indirectly,  made any  offers  or sales of any
      security or solicited any offers to buy any security,  under circumstances
      that would cause this offering of the  Securities  to be  integrated  with
      prior  offerings by the Company for purposes of the  Securities Act or any
      applicable shareholder approval provisions, including, without limitation,
      under the rules and  regulations  of any exchange or  automated  quotation
      system  on which  any of the  securities  of the  Company  are  listed  or
      designated.

            (aa) Intentionally Omitted.

            (bb) FORM S-3  ELIGIBILITY.  The Company is eligible to register the
      resale of its Common Stock by the  Purchasers  under Form S-3  promulgated
      under the Securities  Act and the Company  hereby  covenants and agrees to
      use its best efforts to maintain its eligibility to use Form S-3 until the
      Registration  Statement  covering the resale of the Shares shall have been
      filed with, and declared effective by, the Commission.

            (cc) TAXES.  Except for matters that would not,  individually  or in
      the  aggregate,  would  have or  reasonably  be  expected  to  result in a
      Material  Adverse  Effect,  the Company and each  Subsidiary has filed all
      necessary federal,  state and foreign income and franchise tax returns and
      has paid or accrued all taxes shown as due thereon, and the Company has no
      knowledge  of a tax  deficiency  which  has been  asserted  or  threatened
      against the Company or any Subsidiary.

            (dd) GENERAL SOLICITATION. Neither the Company nor any person acting
      on behalf of the Company has offered or sold any of the Shares by any form
      of general  solicitation or general  advertising.  The Company has offered
      the Shares for sale only to the Purchasers  and certain other  "accredited
      investors" within the meaning of Rule 501 under the Securities Act.

            (ee) FOREIGN  CORRUPT  PRACTICES.  Neither the  Company,  nor to the
      knowledge  of the Company,  any agent or other person  acting on behalf of
      the Company,  has (i) directly or  indirectly,  used any corrupt funds for
      unlawful  contributions,  gifts,  entertainment or other unlawful expenses
      related to foreign or domestic political activity,  (ii) made any unlawful
      payment to foreign or domestic government officials or employees or to any
      foreign or domestic  political  parties or campaigns from corporate funds,
      (iii) failed to disclose  fully any  contribution  made by the Company (or
      made by any  person  acting on its  behalf of which the  Company is aware)
      which is in violation of law, or (iv) violated in any material respect any
      provision of the Foreign Corrupt Practices Act of 1977, as amended.

                                       14
<PAGE>

            (ff)  ACCOUNTANTS.  The  Company's  accountants  are  set  forth  on
      SCHEDULE 3.1(FF) of the Disclosure  Schedule.  To the Company's knowledge,
      such accountants,  who the Company expects will express their opinion with
      respect to the financial statements to be included in the Company's Annual
      Report on Form 10-K for the year ended December 31, 2003, are  independent
      accountants as required by the Securities Act.

            (gg) ACKNOWLEDGMENT  REGARDING  PURCHASERS'  PURCHASE OF SHARES. The
      Company  acknowledges  and agrees that it has been  advised by each of the
      Purchasers that each of the Purchasers is acting solely in the capacity of
      an arm's length  purchaser with respect to the  Transaction  Documents and
      the transactions  contemplated  hereby.  The Company further  acknowledges
      that it has been  advised by each of the  Purchasers  that no Purchaser is
      acting as a  financial  advisor or  fiduciary  of the  Company  (or in any
      similar  capacity)  with respect to this  Agreement  and the  transactions
      contemplated  hereby and any advice given by any Purchaser or any of their
      respective representatives or agents in connection with this Agreement and
      the  transactions   contemplated   hereby  is  merely  incidental  to  the
      Purchasers' purchase of the Shares. The Company further represents to each
      Purchaser  that the  Company's  decision to enter into this  Agreement has
      been  based  solely  on the  independent  evaluation  of the  transactions
      contemplated   hereby  by  the   Company  and  its   representatives   and
      representations by each of the Purchasers contained in this Agreement.

      3.2  REPRESENTATIONS  AND  WARRANTIES OF THE  PURCHASERS.  Each  Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:

            (a)  ORGANIZATION;  AUTHORITY.  Such  Purchaser  is an  entity  duly
      organized,  validly  existing and in good  standing  under the laws of the
      jurisdiction of its organization with full right, corporate or partnership
      power and  authority  to enter  into and to  consummate  the  transactions
      contemplated by the  Transaction  Documents and otherwise to carry out its
      obligations  thereunder.  The execution,  delivery and performance by such
      Purchaser of the  transactions  contemplated  by this  Agreement have been
      duly  authorized by all necessary  corporate or similar action on the part
      of such Purchaser.  Each  Transaction  Document to which it is a party has
      been duly executed by such Purchaser, and when delivered by such Purchaser
      in accordance with the terms hereof, will constitute the valid and legally
      binding obligation of such Purchaser, enforceable against it in accordance
      with its terms, except (i) as limited by general equitable  principles and
      applicable bankruptcy,  insolvency,  reorganization,  moratorium and other
      laws of general  application  affecting  enforcement of creditors'  rights
      generally,  (ii)  as  limited  by laws  relating  to the  availability  of
      specific  performance,  injunctive relief or other equitable  remedies and
      (iii)  insofar  as  indemnification  and  contribution  provisions  may be
      limited by applicable law.

                                       15
<PAGE>

            (b)  INVESTMENT   INTENT.   Such  Purchaser   understands  that  the
      Securities are "restricted  securities" and have not been registered under
      the Securities Act or any applicable state securities law and is acquiring
      the  Securities as principal for its own account for  investment  purposes
      only  and  not  with  a view  to or for  distributing  or  reselling  such
      Securities or any part thereof,  has no present  intention of distributing
      any of such  Securities and has no arrangement or  understanding  with any
      other  persons   regarding  the  distribution  of  such  Securities  (this
      representation  and warranty not limiting such  Purchaser's  right to sell
      the  Securities  pursuant to the  Registration  Statement  or otherwise in
      compliance  with  applicable  federal  and state  securities  laws).  Such
      Purchaser is acquiring the Securities  hereunder in the ordinary course of
      its business. Such Purchaser does not have any agreement or understanding,
      directly  or  indirectly,  with  any  Person  to  distribute  any  of  the
      Securities.

            (c)  PURCHASER  STATUS.  At the time such  Purchaser was offered the
      Securities,  it was,  and at the date  hereof  it is,  and on each date on
      which it exercises any Warrants,  it will be an  "accredited  investor" as
      defined in Rule  501(a)(1),  (a)(2),  (a)(3),  (a)(7) or (a)(8)  under the
      Securities   Act  and  such  investors  has  total  assets  in  excess  of
      $5,000,000.  Such  Purchaser  is  not  required  to  be  registered  as  a
      broker-dealer under Section 15 of the Exchange Act.

            (d) EXPERIENCE OF SUCH PURCHASER.  Such  Purchaser,  either alone or
      together with its representatives,  has such knowledge, sophistication and
      experience  in  business  and  financial  matters  so as to be  capable of
      evaluating  the  merits  and risks of the  prospective  investment  in the
      Securities,  and has so evaluated the merits and risks of such investment.
      Such  Purchaser is able to bear the economic  risk of an investment in the
      Securities  and, at the present time, is able to afford a complete loss of
      such investment.

            (e) GENERAL  SOLICITATION.  Such  Purchaser  is not  purchasing  the
      Securities  as a result  of any  advertisement,  article,  notice or other
      communication   regarding  the  Securities  published  in  any  newspaper,
      magazine  or  similar  media  or  broadcast  over  television  or radio or
      presented  at any  seminar or any other  general  solicitation  or general
      advertisement.

            (f) REGISTRATION REQUIRED.  Such Purchaser hereby covenants with the
      Company  not to make any sale of the Shares  and  Warrant  Shares  without
      complying  with  the  provisions  hereof  and of the  Registration  Rights
      Agreement,   and  without  effectively  causing  the  prospectus  delivery
      requirement  under  the  Securities  Act  to  be  satisfied  (unless  such
      Purchaser is selling such Shares and Warrant  Shares in a transaction  not
      subject  to the  prospectus  delivery  requirement),  and  such  Purchaser
      acknowledges  that the  certificates  evidencing  the Shares  and  Warrant
      Shares will be  imprinted  with a legend  that  prohibits  their  transfer
      except in accordance therewith.

                                       16
<PAGE>

            (g) NO TAX OR LEGAL ADVICE. Such Purchaser  understands that nothing
      in this Agreement,  any other Transaction  Document or any other materials
      presented to such  Purchaser in  connection  with the purchase and sale of
      the Securities constitutes legal, tax or investment advice. Such Purchaser
      has consulted such legal,  tax and investment  advisors as it, in its sole
      discretion,  has deemed  necessary or appropriate  in connection  with its
      purchase of Securities.

            (h)  DISCLOSURE  OF  INFORMATION.  Such  Purchaser  believes  it has
      received all the  information it considers  necessary or  appropriate  for
      deciding  whether to  purchase  the Shares and  Warrants.  Such  Purchaser
      further  represents  that it has had an  opportunity  to ask questions and
      receive answers from the Company regarding the terms and conditions of the
      offering  of  the  Shares  and  Warrants  and  the  business,  properties,
      prospects  and  financial  condition of the Company.  Such  Purchaser  has
      reviewed the 2003 Form 10-K,  including,  without  limitation,  all of the
      Risk Factors set forth therein (the "RISK  FACTORS").  Each such Purchaser
      understands  and accepts all of the Risk Factors in  connection  with such
      Purchaser's investment in the Securities.  In addition, each Purchaser has
      reviewed  and is aware of the  information  set  forth in all SEC  Reports
      filed  with the SEC since  the  filing of the 2003  10-K.  The  foregoing,
      however,  does not limit or modify the  representations  and warranties of
      the Company in Section 3 of this  Agreement or the right of the Purchasers
      to rely thereon.

            (i) RECEIPT OF INFORMATION. The Purchasers confirm that, neither the
      Purchasers  nor any other Person  acting on their behalf has received from
      the Company or its agents or counsel with any information that constitutes
      or might  constitute  material,  non-public  information.  The  Purchasers
      understand  and  confirm  that  the  Company  will  rely on the  foregoing
      representations  and covenants in effecting  transactions in securities of
      the Purchasers.  The Purchasers acknowledge and agree that the Company has
      not  made  any   representations   or  warranties   with  respect  to  the
      transactions  contemplated  hereby other than those specifically set forth
      in the Transaction Documents.

            (j) RELIANCE OF SEC REPORTS.  In making the  investment  decision in
      connection with the purchase of the Securities, the Purchasers have relied
      only on the information set forth in the SEC Reports and have not incurred
      nor relied upon any information not contained in the SEC Reports.

            (k) OPEN SHORT POSITION. As of the date hereof, each Purchaser,  for
      itself only,  represents  and warrants  that neither it, nor any person or
      entity  acting at the  direction  of such  Purchaser,  holds an open short
      position in the Common Stock.

      The Company  acknowledges  and agrees that each Purchaser does not make or
has not made any  representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.

                                       17
<PAGE>

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

      4.1 TRANSFER RESTRICTIONS.

            (a) The Securities may only be disposed of in compliance  with state
      and federal securities laws. In connection with any transfer of Securities
      other than pursuant to an effective registration statement or Rule 144, to
      the Company or to an  Affiliate  of a Purchaser  or in  connection  with a
      pledge as contemplated  in Section 4.1(b)  (provided that such transfer is
      in  compliance  with the  Securities  Act),  the  Company  may require the
      transferor  thereof  to  provide  to the  Company  an  opinion  of counsel
      selected by the transferor and reasonably  acceptable to the Company,  the
      form and substance of which  opinion and shall be reasonably  satisfactory
      to the  Company,  to the  effect  that  such  transfer  does  not  require
      registration of such transferred Securities under the Securities Act. As a
      condition of transfer,  any such  transferee  shall agree in writing to be
      bound by the  terms of this  Agreement  and  shall  have the  rights  of a
      Purchaser under this Agreement and the Registration Rights Agreement.

            (b) The Purchasers  agree to the imprinting,  so long as is required
      by this  Section  4.1(b),  of a  legend  on any of the  Securities  in the
      following form:

            THESE  SECURITIES  HAVE NOT BEEN  REGISTERED WITH THE SECURITIES AND
            EXCHANGE  COMMISSION  OR THE  SECURITIES  COMMISSION OF ANY STATE IN
            RELIANCE UPON AN EXEMPTION  FROM  REGISTRATION  UNDER THE SECURITIES
            ACT OF 1933, AS AMENDED (THE "SECURITIES  ACT"),  AND,  ACCORDINGLY,
            MAY  NOT  BE  OFFERED  OR  SOLD  EXCEPT  PURSUANT  TO  AN  EFFECTIVE
            REGISTRATION  STATEMENT  UNDER THE  SECURITIES ACT OR PURSUANT TO AN
            AVAILABLE  EXEMPTION  FROM, OR IN A TRANSACTION  NOT SUBJECT TO, THE
            REGISTRATION  REQUIREMENTS  OF THE  SECURITIES ACT AND IN ACCORDANCE
            WITH  APPLICABLE  STATE  SECURITIES  LAWS  AS  EVIDENCED  BY A LEGAL
            OPINION OF COUNSEL TO THE  TRANSFEROR TO SUCH EFFECT,  THE SUBSTANCE
            OF WHICH  SHALL  BE  REASONABLY  ACCEPTABLE  TO THE  COMPANY.  THESE
            SECURITIES  MAY BE PLEDGED  IN  CONNECTION  WITH A BONA FIDE  MARGIN
            ACCOUNT  WITH  A  REGISTERED  BROKER-DEALER  OR  OTHER  LOAN  WITH A
            FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
            RULE 501(a) UNDER THE SECURITIES ACT.

                                       18
<PAGE>

            The Company  acknowledges  and agrees that a Purchaser may from time
      to time pledge pursuant to a bona fide margin  agreement with a registered
      broker-dealer  or  grant  a  security  interest  in  some  or  all  of the
      Securities to a financial  institution that is an "accredited investor" as
      defined in Rule 501(a) under the Securities Act and who agrees to be bound
      by the provisions of this Agreement and the Registration  Rights Agreement
      and, if required under the terms of such  arrangement,  such Purchaser may
      transfer pledged or secured Securities to the pledgees or secured parties.
      Such a pledge or transfer  would not be subject to approval of the Company
      and no legal  opinion of legal  counsel of the pledgee,  secured  party or
      pledgor  shall be required in  connection  therewith.  Further,  no notice
      shall be required of such pledge. At the appropriate  Purchaser's expense,
      the Company will execute and deliver such  reasonable  documentation  as a
      pledgee  or  secured  party  of  Securities  may  reasonably   request  in
      connection with a pledge or transfer of the Securities,  including, if the
      Securities are subject to registration pursuant to the Registration Rights
      Agreement,   the  preparation  and  filing  of  any  required   prospectus
      supplement  under  Rule  424(b)(3)  under  the  Securities  Act  or  other
      applicable provision of the Securities Act to appropriately amend the list
      of Selling Stockholders thereunder.

            (c) Certificates  evidencing the Shares and Warrant Shares shall not
      contain any legend (including the legend set forth in Section 4.1(b)), (i)
      while a  registration  statement  (including the  Registration  Statement)
      covering  the resale of such  security is effective  under the  Securities
      Act, or (ii) following any sale of such Shares or Warrant Shares  pursuant
      to Rule 144, or (iii) if such Shares or Warrant  Shares are  eligible  for
      sale under  Rule  144(k),  or (iv) if such  legend is not  required  under
      applicable   requirements  of  the  Securities  Act  (including   judicial
      interpretations and pronouncements issued by the Staff of the Commission).
      The  Company  shall  cause its  counsel  to issue a legal  opinion  to the
      Company's  transfer agent promptly after the Effective Date if required by
      the  Company's  transfer  agent  to  effect  the  removal  of  the  legend
      hereunder.  If all or any portion of a Warrant is exercised at a time when
      there is an  effective  registration  statement to cover the resale of the
      Warrant  Shares,  such Warrant Shares shall be issued free of all legends.
      The Company  agrees that  following the Effective  Date or at such time as
      such legend is no longer required under this Section  4.1(c),  it will, no
      later than seven (7) Trading Days following the delivery by a Purchaser to
      the Company or the Company's transfer agent of a certificate  representing
      Shares or Warrant  Shares,  as the case may be,  issued with a restrictive
      legend  (such date,  the "LEGEND  REMOVAL  DATE"),  deliver or cause to be
      delivered to such  Purchaser a certificate  representing  such  Securities
      that is free from all restrictive  and other legends.  The Company may not
      make any  notation on its  records or give  instructions  to any  transfer
      agent of the Company that enlarge the  restrictions  on transfer set forth
      in this Section.

            (d) In addition to such Purchaser's  other available  remedies,  the
      Company shall pay to a Purchaser,  in cash, as partial  liquidated damages
      and not as a penalty,  for each $1,000 of Shares or Warrant  Shares (based
      on the VWAP of the Common Stock on the date such  Securities are submitted
      to the  Company's  transfer  agent)  subject  to Section  4.1(c),  $10 per
      Trading Day (increasing to $20 per Trading Day five (5) Trading Days after
      such  damages  have begun to accrue) for each Trading Day after the Legend
      Removal Date until such  certificate  is delivered.  Nothing  herein shall
      limit such  Purchaser's  right to pursue actual  damages for the Company's
      failure to deliver certificates representing any Securities as required by
      the  Transaction  Documents,  and such  Purchaser  shall have the right to
      pursue all remedies available to it at law or in equity including, without
      limitation, a decree of specific performance and/or injunctive relief.

                                       19
<PAGE>

            (e)  Each  Purchaser,  severally  and not  jointly  with  the  other
      Purchasers,  agrees  that  the  removal  of the  restrictive  legend  from
      certificates  representing  Securities as set forth in this Section 4.1 is
      predicated upon the Company's reliance on each Purchaser's  representation
      that the  Purchaser  will  sell any  Securities  pursuant  to  either  the
      registration  requirements of the Securities Act, including any applicable
      prospectus delivery requirements, or an exemption therefrom.

            (f) Until the date that each  Purchaser  holds  less than 20% of the
      Shares initially purchased hereunder by such Purchaser,  the Company shall
      not undertake a reverse or forward stock split or  reclassification of the
      Common Stock without the prior written consent of the Purchasers holding a
      majority  in  interest  of  the  Shares.   Additionally,   each  Purchaser
      understands  and  acknowledges,  severally  and not jointly with the other
      Purchasers,  that the SEC  currently  takes the position  that coverage of
      short sales of shares of the Common  Stock  "against the box" prior to the
      Effective Date of the  Registration  Statement  with the Shares  purchased
      hereunder is a violation of Section 5 of the Securities  Act, as set forth
      in Item 65, Section 5 under Section A, of the Manual of Publicly Available
      Telephone  Interpretations,  dated  July 1997,  compiled  by the Office of
      Chief  Counsel,  Division  of  Corporation  Finance.   Accordingly,   each
      Purchaser  hereby  agrees  not to use any of the Shares to cover any short
      sales made prior to the Effective Date.

      4.2 FURNISHING OF INFORMATION.  As long as any Purchaser owns  Securities,
the Company  covenants to timely file (or obtain  extensions in respect  thereof
and file within the applicable grace period) all reports required to be filed by
the Company  after the date hereof  pursuant to the Exchange Act. As long as any
Purchaser  owns  Securities,  if the  Company is not  required  to file  reports
pursuant to the Exchange Act, it will prepare and furnish to the  Purchasers and
make publicly  available in accordance  with Rule 144(c) such  information as is
required for the Purchasers to sell the  Securities  under Rule 144. The Company
further  covenants  that it will  take  such  further  action  as any  holder of
Securities may reasonably request,  all to the extent required from time to time
to enable such Person to sell such  Securities  without  registration  under the
Securities Act within the limitation of the exemptions provided by Rule 144.

      4.3  INTEGRATION.  The Company  shall not sell,  offer for sale or solicit
offers to buy or  otherwise  negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the  Securities  in a manner that would  require the  registration  under the
Securities  Act of the sale of the Securities to the Purchasers or that would be
integrated  with the offer or sale of the  Securities  for purposes of the rules
and  regulations  of any Trading  Market such that it would require  shareholder
approval  prior to the  closing of such  other  transaction  unless  shareholder
approval is obtained before the closing of such subsequent transaction.

                                       20
<PAGE>

      4.4 SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall, by 8:30 a.m.
Eastern time on the Trading Day following the date hereof, issue a press release
or file a Current Report on Form 8-K, in each case reasonably  acceptable to HPC
Capital  Management  ("HPC")  disclosing the material terms of the  transactions
contemplated  hereby.  The Company and each  Purchaser  shall  consult with each
other in issuing  any other  press  releases  with  respect to the  transactions
contemplated  hereby,  and neither the Company nor any Purchaser shall issue any
such press release or otherwise make any such public statement without the prior
consent of the Company,  with respect to any press release of any Purchaser,  or
without the prior consent of each  Purchaser,  with respect to any press release
of the Company, which consent shall not unreasonably be withheld, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide  the  other  party  with  prior  notice  of  such  public  statement  or
communication.  Notwithstanding  the  foregoing,  the Company shall not publicly
disclose the name of any Purchaser,  or include the name of any Purchaser in any
filing with the Commission or any regulatory  agency or Trading Market,  without
the prior written consent of such  Purchaser,  except (i) as required by federal
securities law in connection with the registration statement contemplated by the
Registration Rights Agreement and (ii) to the extent such disclosure is required
by law or Trading  Market  regulations,  in which case the Company shall provide
the Purchasers  with prior notice of such  disclosure  permitted under subclause
(i) or (ii).

      4.5  SHAREHOLDERS  RIGHTS  PLAN.  Assuming  that  none  of the  Purchasers
beneficially,  individually or as a "group" as described in Section  13(d)(3) of
the  Securities  Act,  owns more than 4.99% of the Common  Stock for purposes of
this  Section  4.5,  no claim will be made or enforced by the Company or, to the
knowledge of the Company,  any other Person that any  Purchaser is an "Acquiring
Person" under any  shareholders  rights plan or similar plan or  arrangement  in
effect or  hereafter  adopted by the  Company,  or that any  Purchaser  could be
deemed to trigger the provisions of any such plan or  arrangement,  by virtue of
receiving Securities under the Transaction Documents.  The Company shall conduct
its  business in a manner so that it will not become  subject to the  Investment
Company Act.

      4.6 NON-PUBLIC INFORMATION.  The Company covenants and agrees that neither
it nor any other Person  acting on its behalf will provide any  Purchaser or its
agents or counsel with any  information  that the Company  believes  constitutes
material non-public information,  unless prior thereto such Purchaser shall have
executed  a written  agreement  regarding  the  confidentiality  and use of such
information.  The Company  understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.

      4.7 USE OF PROCEEDS.  Except as set forth on SCHEDULE 4.7 attached hereto,
the Company shall use the net proceeds from the sale of the Securities hereunder
for working capital  purposes and not for the satisfaction of any portion of the
Company's debt  (including  payment of trade payables in the ordinary  course of
the Company's  business and prior  practices),  to redeem any Company  equity or
equity-equivalent securities or to settle any outstanding litigation.

                                       21
<PAGE>

      4.8 Intentionally Omitted.

      4.9  INDEMNIFICATION  OF  PURCHASERS.  Subject to the  provisions  of this
Section  4.9,  the Company  will  indemnify  and hold the  Purchasers  and their
directors,  officers,  shareholders,  partners,  employees and agents  (each,  a
"PURCHASER PARTY") harmless from any and all liabilities,  obligations,  claims,
contingencies,  damages,  costs and expenses,  including all judgments,  amounts
paid in  settlements,  court costs and reasonable  attorneys'  fees and costs of
investigation (excluding any lost profits,  incidental or consequential damages)
that any such Purchaser  Party may suffer or incur as a result of or relating to
(a)  any  breach  of  any  of  the  representations,  warranties,  covenants  or
agreements  made by the Company in this  Agreement  or in the other  Transaction
Documents or (b) any action  instituted  against a Purchaser,  or any of them or
their  respective  Affiliates,  by any  stockholder of the Company who is not an
Affiliate  of  such  Purchaser,   with  respect  to  any  of  the   transactions
contemplated  by the Transaction  Documents  (unless such action is based upon a
breach of such  Purchaser's  representation,  warranties or covenants  under the
Transaction  Documents or any  agreements or  understandings  such Purchaser may
have with any such  stockholder  or any  violations by the Purchaser of state or
federal  securities  laws or any  conduct by such  Purchaser  which  constitutes
fraud, gross negligence, willful misconduct or malfeasance). If any action shall
be brought  against any  Purchaser  Party in respect of which  indemnity  may be
sought  pursuant to this  Agreement,  such Purchaser Party shall promptly notify
the  Company  in  writing,  and the  Company  shall have the right to assume the
defense thereof with counsel of its own choosing. Any Purchaser Party shall have
the right to employ  separate  counsel in any such action and participate in the
defense  thereof,  but the fees and  expenses  of such  counsel  shall be at the
expense of such  Purchaser  Party  except to the extent that (i) the  employment
thereof has been  specifically  authorized  by the Company in writing,  (ii) the
Company has failed after a reasonable  period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of
such separate  counsel,  a material  conflict on any material  issue between the
position of the Company and the position of such  Purchaser  Party.  The Company
will not be liable to any  Purchaser  Party  under  this  Agreement  (i) for any
settlement by an Purchaser  Party effected  without the Company's  prior written
consent,  which shall not be  unreasonably  withheld or delayed;  or (ii) to the
extent,  but only to the  extent  that a loss,  claim,  damage or  liability  is
attributable  to any  Purchaser  Party's  breach of any of the  representations,
warranties,  covenants or agreements made by the Purchasers in this Agreement or
in the other  Transaction  Documents.  A Purchaser Party shall have the right to
employ separate counsel in any such Proceeding and to participate in the defense
thereof,  but the fees and expenses of such  counsel  shall be at the expense of
such Purchaser  Party unless:  (1) the Company has agreed in writing to pay such
fees and  expenses;  (2) the Company  shall have  failed  promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Purchaser  Party in any such  Proceeding;  or (3) the named  parties to any such
Proceeding  (including any impleaded  parties) include both such Purchaser Party
and the Company, and such Purchaser Party shall reasonably believe, based on the
written  advice,  reasonably  acceptable  to the Company,  of its counsel that a
material  conflict of interest  is likely to exist if the same  counsel  were to
represent such Purchaser Party and the Company (in which case, if such Purchaser
Party notifies the Company in writing that it elects to employ separate  counsel
at the expense of the  Company,  the Company  shall not have the right to assume
the defense thereof and the reasonable fees and expenses of one separate counsel
for all Indemnified Parties shall be at the expense of the Company).

                                       22
<PAGE>

      4.10  RESERVATION OF COMMON STOCK. As of the date hereof,  the Company has
reserved  and the Company  shall  continue to reserve and keep  available at all
times, free of preemptive  rights, a sufficient number of shares of Common Stock
for the  purpose of  enabling  the  Company  to issue  Shares  pursuant  to this
Agreement and Warrant Shares pursuant to any exercise of the Warrants.

      4.11  LISTING  OF COMMON  STOCK.  The  Company  hereby  agrees to use best
efforts to maintain the listing of the Common Stock on a Trading Market,  and as
soon as  reasonably  practicable  following  the Closing (but not later than the
earlier of the Effective Date and the first  anniversary of the Closing Date) to
list all of the Shares and Warrant  Shares on such Trading  Market.  The Company
further  agrees,  if the Company  applies to have the Common Stock traded on any
other Trading Market,  it will include in such application all of the Shares and
Warrant Shares,  and will take such other action as is necessary to cause all of
the  Shares and  Warrant  Shares to be listed on such  other  Trading  Market as
promptly as possible.  The Company will take all action reasonably  necessary to
continue  the listing and  trading of its Common  Stock on a Trading  Market and
will  comply in all  respects  with the  Company's  reporting,  filing and other
obligations under the bylaws or rules of the Trading Market.

      4.12 EQUAL TREATMENT OF PURCHASERS.  No consideration  shall be offered or
paid to any  person  to amend or  consent  to a waiver  or  modification  of any
provision of any of the Transaction  Documents unless the same  consideration is
also  offered  to  all  of  the  parties  to  the  Transaction  Documents.   For
clarification  purposes,  this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated  separately by each Purchaser,  and
is intended to treat for the Company the  Purchasers as a class and shall not in
any way be  construed  as the  Purchasers  acting in  concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.

      4.13  PARTICIPATION  IN FUTURE  FINANCING.  From the date  hereof  until 6
months after the Effective Date, upon any financing by the Company of its Common
Stock or Common Stock  Equivalents  (a "SUBSEQUENT  FINANCING"),  each Purchaser
shall have the right to participate in up to 100% of such  Subsequent  Financing
(the "PARTICIPATION  MAXIMUM").  At least 5 Trading Days prior to the closing of
the Subsequent Financing,  the Company shall deliver to each Purchaser a written
notice of its intention to effect a Subsequent Financing  ("PRE-NOTICE"),  which
Pre-Notice  shall ask such  Purchaser  if it wants to review the details of such
financing (such additional notice, a "SUBSEQUENT  FINANCING  NOTICE").  Upon the
request  of a  Purchaser,  and only  upon a  request  by such  Purchaser,  for a
Subsequent  Financing  Notice,  the Company shall promptly,  but no later than 1
Trading Day after such request,  deliver a Subsequent  Financing  Notice to such
Purchaser.  The Subsequent  Financing Notice shall describe in reasonable detail
the proposed terms of such Subsequent Financing, the amount of proceeds intended
to be raised  thereunder,  the Person  with whom such  Subsequent  Financing  is
proposed to be effected,  and attached to which shall be a term sheet or similar
document  relating  thereto.  If by 6:30 p.m.  (New York City time) on the fifth
Trading  Day  after  all  of  the  Purchasers   have  received  the  Pre-Notice,
notifications  by the  Purchasers of their  willingness  to  participate  in the
Subsequent  Financing (or to cause their  designees to  participate)  is, in the
aggregate,  less than the total  amount of the  Subsequent  Financing,  then the
Company may effect the  remaining  portion of such  Subsequent  Financing on the
terms and to the Persons set forth in the Subsequent  Financing  Notice.  If the
Company  receives no notice from a Purchaser  as of such 5th Trading  Day,  such
Purchaser shall be deemed to have notified the Company that it does not elect to
participate.  The Company must provide the Purchasers  with a second  Subsequent
Financing Notice,  and the Purchasers will again have the right of participation
set forth above in this Section 4.13, if the Subsequent Financing subject to the
initial  Subsequent  Financing  Notice is not  consummated for any reason on the
terms set forth in such Subsequent Financing Notice within 60 Trading Days after
the date of the initial  Subsequent  Financing  Notice. In the event the Company
receives  responses to Subsequent  Financing Notices from Purchasers  seeking to
purchase more than the aggregate amount of the Subsequent  Financing,  each such
Purchaser  shall have the right to purchase  their Pro Rata  Portion (as defined
below) of the Participation  Maximum. "PRO RATA PORTION" is the ratio of (x) the
Subscription Amount of Securities purchased by a participating Purchaser and (y)
the sum of the aggregate  Subscription  Amount of all participating  Purchasers.
Notwithstanding  the foregoing,  this Section 4.13 shall not apply in respect of
an Exempt Issuance.

                                       23
<PAGE>

      4.14  SUBSEQUENT  EQUITY SALES.  From the date hereof until 3 months after
the Effective Date, neither the Company nor any Subsidiary shall issue shares of
Common Stock or Common Stock Equivalents;  PROVIDED, HOWEVER, the 3 month period
set forth in this  Section 4.14 shall be extended for the number of Trading Days
during such period in which (y) trading in the Common  Stock is suspended by any
Trading Market, or (z) following the Effective Date, the Registration  Statement
is not effective or the prospectus  included in the  Registration  Statement may
not be used by the Purchasers  for the resale of the Shares and Warrant  Shares.
Notwithstanding  the foregoing,  this Section 4.14 shall not apply in respect of
an Exempt  Issuance or issuances of Common Stock or Common Stock  Equivalents in
connection  with strategic  offerings or  acquisitions,  the primary  purpose of
which is not to raise capital.

      4.15 DELIVER OF SECURITIES  AFTER CLOSING.  The Company shall deliver,  or
cause to be  delivered,  the  respective  Shares and Warrants  purchased by each
Purchaser to such Purchaser within 5 Trading Days of the Closing Date.

                                   ARTICLE V.
                                  MISCELLANEOUS

      5.1 FEES AND EXPENSES.  Except as otherwise  set forth in this  Agreement,
each party shall pay the fees and expenses of its advisers, counsel, accountants
and  other  experts,  if any,  and all other  expenses  incurred  by such  party
incident to the negotiation, preparation, execution, delivery and performance of
this  Agreement.  The  Company  shall pay all stamp and other  taxes and  duties
levied in connection with the sale of the Securities, if any.

                                       24
<PAGE>

      5.2  ENTIRE  AGREEMENT.  The  Transaction  Documents,  together  with  the
exhibits and schedules thereto,  contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

      5.3 NOTICES.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of  transmission,  if
such notice or  communication is delivered via facsimile at the facsimile number
set forth on the signature  pages  attached  hereto prior to 6:30 p.m. (New York
City  time)  on a  Trading  Day,  (b) the next  Trading  Day  after  the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading
Day, (c) the second  Trading Day following the date of mailing,  if sent by U.S.
nationally  recognized  overnight courier service, or (d) upon actual receipt by
the party to whom such  notice is  required  to be given.  The  address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

      5.4 AMENDMENTS;  WAIVERS.  No provision of this Agreement may be waived or
amended except in a written instrument  signed, in the case of an amendment,  by
the Company and each Purchaser or, in the case of a waiver, by the party against
whom  enforcement  of any such waiver is sought.  No waiver of any default  with
respect to any provision,  condition or  requirement of this Agreement  shall be
deemed to be a  continuing  waiver in the  future or a waiver of any  subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise  any right  hereunder in
any manner impair the exercise of any such right.

      5.5  CONSTRUCTION.  The headings herein are for  convenience  only, do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent,  and no
rules of strict construction will be applied against any party.

      5.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties and their  successors and permitted  assigns.  The
Company may not assign this  Agreement  or any rights or  obligations  hereunder
without the prior written  consent of each  Purchaser.  Any Purchaser may assign
any or all of its  rights  under  this  Agreement  to any  Person  to whom  such
Purchaser  assigns or transfers  any  Securities,  provided (a) such  transferee
agrees in writing to be bound,  with respect to the transferred  Securities,  by
the provisions  hereof that apply to the  "Purchasers,"  and (b) such transferee
provide the  representations  and  warranties,  as of the date of transfer,  set
forth in Section 3.2, and (c) such Purchaser  delivers to the Company an opinion
of counsel  reasonably  satisfactory  to the Company,  that such transfer is not
subject to, or made pursuant to an exemption from, the registration requirements
of the Securities Act and applicable state securities laws.

                                       25
<PAGE>

      5.7 NO  THIRD-PARTY  BENEFICIARIES.  This  Agreement  is intended  for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.9.

      5.8 GOVERNING LAW. All questions  concerning the  construction,  validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance  with the internal laws of the State of
New York,  without  regard to the  principles of conflicts of law thereof.  Each
party hereby irrevocably submits to the exclusive  jurisdiction of the state and
federal  courts  sitting in the City of New York,  borough of Manhattan  for the
adjudication  of any dispute  hereunder  or in  connection  herewith or with any
transaction  contemplated  hereby or discussed herein (including with respect to
the enforcement of any of the  Transaction  Documents),  and hereby  irrevocably
waives,  and agrees not to assert in any suit,  action or proceeding,  any claim
that it is not personally  subject to the  jurisdiction of any such court,  that
such suit,  action or  proceeding  is  improper or  inconvenient  venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents  to process  being  served in any such suit,  action or  proceeding  by
mailing a copy thereof via  registered or certified  mail or overnight  delivery
(with  evidence of  delivery) to such party at the address in effect for notices
to it under this  Agreement and agrees that such service shall  constitute  good
and sufficient  service of process and notice thereof.  Nothing contained herein
shall be  deemed to limit in any way any right to serve  process  in any  manner
permitted  by law. The parties  hereby  waive all rights to a trial by jury.  If
either party shall commence an action or proceeding to enforce any provisions of
the  Transaction  Documents,  then  the  prevailing  party  in  such  action  or
proceeding  shall be reimbursed by the other party for its  attorneys'  fees and
other  costs and  expenses  incurred  with the  investigation,  preparation  and
prosecution of such action or proceeding.

      5.9 SURVIVAL.  The representations and warranties herein shall survive the
Closing and delivery of the Shares and Warrant Shares.

      5.10   EXECUTION.   This   Agreement  may  be  executed  in  two  or  more
counterparts,  all of which when taken  together shall be considered one and the
same agreement and shall become effective when  counterparts have been signed by
each party and  delivered  to the other  party,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission,  such  signature  shall create a valid and
binding  obligation of the party executing (or on whose behalf such signature is
executed)  with the same force and effect as if such  facsimile  signature  page
were an original thereof.

      5.11  SEVERABILITY.  If any  provision  of  this  Agreement  is held to be
invalid or unenforceable in any respect,  the validity and enforceability of the
remaining  terms  and  provisions  of  this  Agreement  shall  not in any way be
affected or impaired  thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor,  and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

                                       26
<PAGE>

      5.12  RESCISSION AND  WITHDRAWAL  RIGHT.  Notwithstanding  anything to the
contrary  contained in (and  without  limiting  any similar  provisions  of) the
Transaction  Documents,  whenever  any  Purchaser  exercises a right,  election,
demand or option  under a  Transaction  Document and the Company does not timely
perform its related  obligations within the periods therein provided,  then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice,  demand or election in whole
or in part without prejudice to its future actions and rights.

      5.13   REPLACEMENT  OF  SECURITIES.   If  any  certificate  or  instrument
evidencing any Securities is mutilated,  lost, stolen or destroyed,  the Company
shall  issue or cause to be issued in  exchange  and  substitution  for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument,  but only upon receipt of evidence reasonably satisfactory to the
Company  of such  loss,  theft  or  destruction  and  customary  and  reasonable
indemnity,  if requested.  The  applicants  for a new  certificate or instrument
under  such  circumstances  shall  also  pay any  reasonable  third-party  costs
associated with the issuance of such replacement Securities.

      5.14  REMEDIES.  In  addition to being  entitled  to  exercise  all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchasers  and the Company will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations  described in the  foregoing  sentence and hereby agrees to waive in
any action for specific  performance  of any such  obligation the defense that a
remedy at law would be adequate.

      5.15 PAYMENT SET ASIDE.  To the extent that the Company makes a payment or
payments to any Purchaser  pursuant to any  Transaction  Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such  enforcement  or exercise or any part thereof are  subsequently
invalidated,  declared to be fraudulent or  preferential,  set aside,  recovered
from, disgorged by or are required to be refunded,  repaid or otherwise restored
to the  Company,  a  trustee,  receiver  or  any  other  person  under  any  law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable  cause of action),  then to the extent of any such  restoration
the  obligation  or part thereof  originally  intended to be satisfied  shall be
revived and  continued  in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

                                       27
<PAGE>

      5.16  INDEPENDENT  NATURE  OF  PURCHASERS'  OBLIGATIONS  AND  RIGHTS.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the  obligations of any other  Purchaser,  and no Purchaser  shall be
responsible  in any way for the  performance  of the  obligations  of any  other
Purchaser under any Transaction  Document.  Nothing  contained  herein or in any
Transaction  Document,  and no action taken by any Purchaser  pursuant  thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint  venture  or any other kind of entity,  or create a  presumption  that the
Purchasers  are in any way acting in concert or as a group with  respect to such
obligations or the transactions  contemplated by the Transaction Document.  Each
Purchaser  shall be  entitled to  independently  protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other  Transaction  Documents,  and it shall not be necessary  for any other
Purchaser  to be  joined  as an  additional  party  in any  proceeding  for such
purpose.  Each Purchaser has been  represented by its own separate legal counsel
in their review and  negotiation of the  Transaction  Documents.  For reasons of
administrative  convenience only,  Purchasers and their respective  counsel have
chosen to communicate  with the Company through FW. FW does not represent all of
the  Purchasers  but  only  HPC,  who  has  acted  as  placement  agent  to  the
transaction.  The Company has  elected to provide all  Purchasers  with the same
terms and  Transaction  Documents  for the  convenience  of the  Company and not
because it was required or requested to do so by the Purchasers.

      5.17  LIQUIDATED  DAMAGES.  The Company's  obligations  to pay any partial
liquidated  damages or other amounts owing under the Transaction  Documents is a
continuing  obligation of the Company and shall not  terminate  until all unpaid
partial liquidated damages and other amounts have been paid  notwithstanding the
fact that the instrument or security  pursuant to which such partial  liquidated
damages  or  other  amounts  are due  and  payable  shall  have  been  canceled.
Notwithstanding any provision herein or in the agreements  contemplated  hereby,
the  Company  shall not be subject  to  liquidated  damages  or other  penalties
arising from the Company's failure to timely deliver certificates or opinions of
counsel pursuant to this Agreement or the agreements contemplated hereby if such
failure  results from Force Majeure,  PROVIDED,  HOWEVER,  the Company shall use
best efforts to remedy or overcome such failures as promptly as possible.

                            (Signature Page Follows)

                                       28
<PAGE>

IN WITNESS  WHEREOF,  the parties  hereto have caused this  Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

PERMA-FIX ENVIRONMENTAL SERVICES, INC.             ADDRESS FOR NOTICE:
                                                   ------------------

By: /S/ LOUIS CENTOFANTI
    ---------------------------
     Name: Louis Centofanti
     Title: Chairman of the Board
            Chief Executive Officer

With a copy to (which shall not constitute notice):

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]

                                       29
<PAGE>

        [PURCHASER SIGNATURE PAGES TO PESI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

ALEXANDRA GLOBAL MASTER FUND LTD.
By: ALEXANDRA INVESTMENT MANAGEMENT, LLC,
As Investment Advisor

By: /S/ M. FILIMONOV
    ---------------------------------
Name: Mikhail Filimonov
Title: Chairman and Chief Executive Officer

Address for Notice of Investing Entity:

c/o Alexandra Investment Management, LLC
767 Third Avenue, 39th Floor
New York, NY  10017

Subscription Amount:  $1,687,500
Shares:  750,000
Warrant Shares:  262,500
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

        [PURCHASER SIGNATURE PAGES TO PESI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Investing Entity: ALPHA CAPITAL AG
                          ---------------------------------
Signature of Authorized Signatory of Investing Entity: /S/ K. ACKERMAN
                                                       -------------------------
Name of Authorized Signatory: Konrad Ackerman
Title of Authorized Signatory:  Director
Email Address of Authorized Entity:
                                   ---------------------------------

Address for Notice of Investing Entity:

Address for Delivery of Securities for Investing Entity (if not same as above):

Subscription Amount: $350,000
Shares:  155,556
Warrant Shares: 54,444
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

        [PURCHASER SIGNATURE PAGES TO PESI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Investing Entity: Baystar Capital II, L.P.
Signature of Authorized Signatory of Investing Entity: /s/ Steve Derby
Name of Authorized Signatory:  Steve Derby
Title of Authorized Signatory:  Managing Member
Email Address of Authorized Entity:
                                   ---------------------------------

Address for Notice of Investing Entity:
c/o Baystar Capital Management, LLC
53 Forest Avenue, Suite 203
Old Greenwich, CT  06870

Address for Delivery of Securities for Investing Entity (if not same as above):

Subscription Amount: $405,000
Shares:  180,000
Warrant Shares: 63,000
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

        [PURCHASER SIGNATURE PAGES TO PESI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Investing Entity: Bristol Investment Fund, Ltd.
Signature of Authorized Signatory of Investing Entity: /s/ Paul Kessler
Name of Authorized Signatory:  Paul Kessler
Title of Authorized Signatory:  Director
Email Address of Authorized Entity:
                                   ---------------------------------

Address for Notice of Investing Entity:

Bristol Capital Advisors, LLC
6363 Sunset Boulevard, Fifth Floor
Hollywood, California  90028
Attention: Amy Wang, Esq.

Address for Delivery of Securities for Investing Entity (if not same as above):

Subscription Amount: $400,000
Shares: 177,778
Warrant Shares: 62,222
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

        [PURCHASER SIGNATURE PAGES TO PESI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Investing Entity: CRESCENT INTERNATIONAL LTD
Signature of Authorized Signatory
  of Investing Entity:                  /s/ Mel Craw            /s/ Maxi Brezzi
Name of Authorized Signatory:           Mel Craw               Maxi Brezzi
Title of Authorized Signatory:          Authorized Signatory
Email Address of Authorized Entity:
                                   ---------------------------------

Address for Notice of Investing Entity:

Crescent  International Ltd
C/o GreenLight (Switzerland) SA
84, av. Louis-Casai
CH 1216 COINTRIN, Geneva Switzerland

Address for Delivery of Securities for Investing Entity (if not same as above):

Crescent  International Ltd
C/o GreenLight (Switzerland) SA
84, av. Louis-Casai
CH 1216 COINTRIN, Geneva Switzerland

Subscription Amount: $675,000
Shares:  300,000
Warrant Shares: 105,000
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

        [PURCHASER SIGNATURE PAGES TO PESI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Investing Entity: Crestview Capital Master, LLC
Signature of Authorized Signatory of Investing Entity:  /s/ Stewart R. Flink
Name of Authorized Signatory:    Stewart R. Flink
Title of Authorized Signatory: Manager
Email Address of Authorized Entity:
                                   ---------------------------------

Address for Notice of Investing Entity:

95 Revere Drive, Suite A
Northbrook, Illinois  60062

Address for Delivery of Securities for Investing Entity (if not same as above):

Subscription Amount: $1,500,003
Shares: 666,668
Warrant Shares: 233,334
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

        [PURCHASER SIGNATURE PAGES TO PESI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Investing Entity: Geduld Capital Partners LP
Signature of Authorized Signatory of Investing Entity: /s/ Steven Geduld
Name of Authorized Signatory: Steven Geduld
Title of Authorized Signatory:  President
Email Address of Authorized Entity:
                                   ---------------------------------

Address for Notice of Investing Entity:

19495 Biscayne Blvd. Suite 608
Aventura, Fl.  33180

Address for Delivery of Securities for Investing Entity (if not same as above):

Grace Financial Group
350 Old Country Rd. Suite 102
Garden City, NY  11530

Subscription Amount: $168,750
Shares: 75,000
Warrant Shares: 26,250
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

        [PURCHASER SIGNATURE PAGES TO PESI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Investing Entity: Gruber & McBaine International
Signature of Authorized Signatory of Investing Entity:  /s/ Jon D. Gruber
Name of Authorized Signatory: Gruber & McBaine Capital Mgmt
Title of Authorized Signatory: Investment Advisor
Email Address of Authorized Entity:
                                   ---------------------------------

Address for Notice of Investing Entity:

c/o Gruber & McBaine Capital Mgmt
50 Osgood Pl - PH
San Fransisco, CA  94133

Address for Delivery of Securities for Investing Entity (if not same as above):

Subscription Amount: $249,999.75
Shares: 111,111
Warrant Shares: 38,889
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

        [PURCHASER SIGNATURE PAGES TO PESI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Investing Entity: Irwin Geduld Revocable Trust
Signature of Authorized Signatory of Investing Entity: /s/ Irwin Geduld
Name of Authorized Signatory: Irwin Geduld
Title of Authorized Signatory:
                              ---------------------------------
Email Address of Authorized Entity:
                                   ---------------------------------

Address for Notice of Investing Entity:

19495 Biscayne Blvd. Suite 608
Aventura, Fl.  33180

Address for Delivery of Securities for Investing Entity (if not same as above):

Grace Financial Group
350 Old Country Rd. Suite 102
Garden City, NY  11530

Subscription Amount: $112,500
Shares: 50,000
Warrant Shares: 17,500
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

        [PURCHASER SIGNATURE PAGES TO PESI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Investing Entity: J. Patterson McBaine
Signature of Authorized Signatory of Investing Entity: /s/ J. Patterson McBaine
Name of Authorized Signatory:
Title of Authorized Signatory:  Self
Email Address of Authorized Entity:
                                   ---------------------------------

Address for Notice of Investing Entity:

c/o Gruber & McBaine Capital Mgmt
50 Osgood Pl - PH
San Fransisco, CA  94133

Address for Delivery of Securities for Investing Entity (if not same as above):

Subscription Amount: $99,999
Shares: 44,444
Warrant Shares: 15,555
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

        [PURCHASER SIGNATURE PAGES TO PESI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Investing Entity: Jon D. Gruber & Linda W. Gruber
Signature of Authorized Signatory
  of Investing Entity:                /s/ Jon D. Gruber    /s/ Linda W. Gruber
Name of Authorized Signatory:
Title of Authorized Signatory:  Self
Email Address of Authorized Entity:
                                   ---------------------------------

Address for Notice of Investing Entity:

c/o Gruber & McBaine Capital Mgmt
50 Osgood Pl - PH
San Fransisco, CA  94133

Address for Delivery of Securities for Investing Entity (if not same as above):

Subscription Amount: $249,999.75
Shares:  111,111
Warrant Shares:  38,889
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

        [PURCHASER SIGNATURE PAGES TO PESI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Investing Entity: Lagunitas Partners LP
Signature of Authorized Signatory of Investing Entity: /s/ Jon D. Gruber
Name of Authorized Signatory: Gruber & McBaine Capital Mgmt
Title of Authorized Signatory: General Partner
Email Address of Authorized Entity:
                                   ---------------------------------

Address for Notice of Investing Entity:

c/o Gruber & McBaine Capital Mgmt
50 Osgood Pl - PH
San Fransisco, CA  94133

Address for Delivery of Securities for Investing Entity (if not same as above):

Subscription Amount: $600,000.75
Shares:  266,667
Warrant Shares:  93,333
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

        [PURCHASER SIGNATURE PAGES TO PESI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

OMICRON MASTER TRUST
By: Omicron Capital L.P., as advisor
By: Omicron Capital Inc., its general partner

By: /S/ BRUCE BERNSTEIN
Name: Bruce Bernstein
Title:   Managing Partner

Address for Notice of Investing Entity:

Registered Office          Omicron Master Trust
                           c/o Winchester Global Trust Company
                           Williams House
                           20 Reid Street
                           Hamilton HM 11
                           Bermuda

Mailing Address:           Omicron Capital, L.P.
                           810 Seventh Avenue, 39th Flr
                           New York, NY  10019

Subscription Amount: $500,000
Shares: 222,222
Warrant Shares: 77,778
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

        [PURCHASER SIGNATURE PAGES TO PESI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Investing Entity: PALISADES MASTER FUND, L.P.
Signature of Authorized Signatory
  of Investing Entity: /s/ Palisades Master Fund, L.P.
Name of Authorized Signatory: Discovery Management Limited
Title of Authorized Signatory: Authorized Signatory
Email Address of Authorized Entity:
                                   ------------------------------------

Address for Notice of Investing Entity:

200 Mansell Court East
Ste 550
Roswell, Ga  30076
Attn: Paul T. Mannion, Jr.

Address for Delivery of Securities for Investing Entity (if not same as above):

Subscription Amount: $3,037,500
Shares: 1,350,000
Warrant Shares: 472,500
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

        [PURCHASER SIGNATURE PAGES TO PESI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Investing Entity: Stonestreet LP
Signature of Authorized Signatory of Investing Entity: /s/ M. Finkelstein
Name of Authorized Signatory: Michael Finkelstein
Title of Authorized Signatory: President
Email Address of Authorized Entity:
                                   ------------------------------------

Address for Notice of Investing Entity:

260 Towne Centre Blvd
Suite 201
Markham, Ontario L3R8H8

Address for Delivery of Securities for Investing Entity (if not same as above):

c/o Canaccord Capital
320 Bay St. Suite 1300
Toronto, Ont. M5H4A6

Subscription Amount: $350,000
Shares: 155,556
Warrant Shares: 54,444
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]EXHIBIT 4.2

                                                                       EXHIBIT A

                          REGISTRATION RIGHTS AGREEMENT

            This  Registration  Rights Agreement (this  "AGREEMENT") is made and
entered  into  as of  March  16,  2004,  by and  among  Perma-Fix  Environmental
Services,  Inc., a Delaware  corporation  (the  "COMPANY"),  and the  purchasers
signatory  hereto (each such  purchaser,  a "PURCHASER"  and  collectively,  the
"PURCHASERS").

            This  Agreement  is  made  pursuant  to  the   Securities   Purchase
Agreement, dated as of the date hereof among the Company and the Purchasers (the
"PURCHASE AGREEMENT").

            The Company and the Purchasers hereby agree as follows:

      1.  DEFINITIONS.  This Agreement  shall be subject to, and the capitalized
terms used and not  otherwise  defined  herein that are defined in the  Purchase
Agreement  shall have the meanings given such terms in, the Purchase  Agreement.
As used in  this  Agreement,  the  following  terms  shall  have  the  following
meanings:

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

            "EFFECTIVENESS   DATE"  means,  with  respect  to  the  Registration
      Statement  required  to be filed  hereunder,  the earlier of (a) the 120th
      calendar day  following  the date of the Purchase  Agreement,  and (b) the
      seventh  (7th)  Trading  Day  following  the date on which the  Company is
      notified by the  Commission  that the  Registration  Statement will not be
      reviewed or is no longer subject to further review and comments.

            "EFFECTIVENESS  PERIOD"  shall have the meaning set forth in Section
      2(a).

            "EVENT" shall have the meaning set forth in Section 2(b).

            "EVENT DATE" shall have the meaning set forth in Section 2(b).

            "FILING  DATE"  means,  with respect to the  Registration  Statement
      required to be filed  hereunder,  the 45th calendar day following the date
      of the Purchase Agreement.

            "HOLDER" or "HOLDERS"  means the holder or holders,  as the case may
      be, from time to time of Registrable Securities.

            "INDEMNIFIED  PARTY"  shall  have the  meaning  set forth in Section
      5(c).

            "INDEMNIFYING  PARTY"  shall have the  meaning  set forth in Section
      5(c).

            "LOSSES" shall have the meaning set forth in Section 5(a).

                                      -1-
<PAGE>

            "PROCEEDING"  means  an  action,   claim,  suit,   investigation  or
      proceeding  (including,  without  limitation,  an investigation or partial
      proceeding, such as a deposition), whether commenced or threatened.

            "PROSPECTUS"  means  the  prospectus  included  in the  Registration
      Statement (including,  without limitation,  a prospectus that includes any
      information  previously  omitted  from a  prospectus  filed  as part of an
      effective  registration  statement in reliance upon Rule 430A  promulgated
      under the Securities  Act), as amended or  supplemented  by any prospectus
      supplement,  with  respect to the terms of the  offering of any portion of
      the Registrable Securities covered by the Registration Statement,  and all
      other   amendments   and   supplements   to  the   Prospectus,   including
      post-effective  amendments,  and all material incorporated by reference or
      deemed to be incorporated by reference in such Prospectus.

            "REGISTRABLE  SECURITIES"  means all of the Shares  and the  Warrant
      Shares,  together  with any shares of Common Stock issued or issuable upon
      any stock  split,  dividend  or other  distribution,  recapitalization  or
      similar event with respect to the foregoing.

            "REGISTRATION  STATEMENT" means the registration statements required
      to be filed hereunder, including (in each case) the Prospectus, amendments
      and  supplements to the  registration  statement or Prospectus,  including
      pre- and post-effective amendments, all exhibits thereto, and all material
      incorporated by reference or deemed to be incorporated by reference in the
      registration statement.

            "RULE 144(K)" means  paragraph  (k) of Rule 144  promulgated  by the
      Commission  pursuant  to the  Securities  Act, as such rule may be amended
      from time to time, or any similar rule or regulation  hereafter adopted by
      the Commission having substantially the same effect as such rule.

            "RULE 415" means Rule 415 promulgated by the Commission  pursuant to
      the Securities  Act, as such Rule may be amended from time to time, or any
      similar rule or  regulation  hereafter  adopted by the  Commission  having
      substantially the same purpose and effect as such Rule.

            "RULE 424" means Rule 424 promulgated by the Commission  pursuant to
      the Securities  Act, as such Rule may be amended from time to time, or any
      similar rule or  regulation  hereafter  adopted by the  Commission  having
      substantially the same purpose and effect as such Rule.

      2.    REGISTRATION.

            (a) On or prior to the Filing Date,  the Company  shall  prepare and
      file with the Commission the Registration Statement covering the resale of
      all  of the  Registrable  Securities  for  an  offering  to be  made  on a
      continuous basis pursuant to Rule 415. The Registration Statement required
      hereunder shall be on Form S-3 (except if the Company is not then eligible
      to register for resale the  Registrable  Securities  on Form S-3, in which
      case the Registration  shall be on another  appropriate form in accordance
      herewith).  The Registration  Statement  required  hereunder shall contain
      (except if otherwise  directed by the Holders)  substantially the "PLAN OF
      DISTRIBUTION"  attached  hereto as ANNEX A, as may be amended  pursuant to
      the comments from the Commission or as required under applicable rules and
      regulation  of the  Commission or the National  Association  of Securities
      Dealers,  Inc.  Subject to the terms of this Agreement,  the Company shall
      use its best  efforts to cause the  Registration  Statement to be declared
      effective  under the  Securities  Act as promptly  as  possible  after the
      filing thereof,  but in any event not later than the  Effectiveness  Date,
      and  shall  use its  best  efforts  to  keep  the  Registration  Statement
      continuously  effective  under the  Securities Act until the date when all
      Registrable  Securities  covered by the  Registration  Statement have been
      sold or may be sold without volume restrictions pursuant to Rule 144(k) as
      determined  by the  counsel to the Company  pursuant to a written  opinion
      letter to such effect,  addressed and acceptable to the Company's transfer
      agent and the affected Holders (the "EFFECTIVENESS PERIOD").

                                      -2-
<PAGE>

            (b) If: (i) a Registration Statement is not filed on or prior to the
      Filing  Date  (if the  Company  files  a  Registration  Statement  without
      affording the Holder the  opportunity to review and comment on the same as
      required  by  Section  3(a),  the  Company  shall  not be  deemed  to have
      satisfied  this clause  (i)),  or (ii) the Company  fails to file with the
      Commission  a  request  for  acceleration  in  accordance  with  Rule  461
      promulgated  under the  Securities  Act,  within seven Trading Days of the
      date that the Company is  notified  (orally or in  writing,  whichever  is
      earlier)  by the  Commission  that a  Registration  Statement  will not be
      "reviewed," or is not subject to further review,  or (iii)  [INTENTIONALLY
      OMITTED],  or (iv) a Registration  Statement filed or required to be filed
      hereunder is not declared  effective  by the  Commission  on or before the
      Effectiveness Date, or (v) if the Registrable  Securities are not eligible
      to be sold  pursuant to Rule  144(k),  after a  Registration  Statement is
      first declared  effective by the  Commission,  it ceases for any reason to
      remain continuously  effective as to all Registrable  Securities for which
      it is  required to be  effective,  or the  Holders  are not  permitted  to
      utilize the Prospectus therein to resell such Registrable Securities,  for
      in any  such  case  20  calendar  consecutive  days  but no  more  than an
      aggregate of 25 calendar  days during any 12 month period  (which need not
      be consecutive  Trading Days)(any such failure or breach being referred to
      as an  "EVENT,"  and for  purposes of clause (i) or (iv) the date on which
      such Event  occurs,  or for purposes of clause (ii) the date on which such
      five Trading Day period is  exceeded,  or for purposes of clause (iii) the
      date which such 20 calendar  days is  exceeded,  or for purposes of clause
      (v) the date on which such 20 or 25 calendar day period, as applicable, is
      exceeded being referred to as "EVENT DATE"), then in addition to any other
      rights the Holders may have hereunder or under applicable law: (x) on each
      such Event Date the Company shall pay to each Holder an amount in cash, as
      partial  liquidated  damages  and not as a  penalty,  equal to 1.0% of the
      aggregate  purchase  price paid by such Holder  pursuant  to the  Purchase
      Agreement for any Registrable Securities then held by such Holder; and (y)
      on each  monthly  anniversary  of each such Event Date (if the  applicable
      Event shall not have been cured by such date) until the  applicable  Event
      is  cured,  the  Company  shall pay to each  Holder an amount in cash,  as
      partial  liquidated  damages  and not as a  penalty,  equal to 1.5% of the
      aggregate  purchase  price paid by such Holder  pursuant  to the  Purchase
      Agreement for any Registrable  Securities then held by such Holder. If the
      Company  fails to pay any  partial  liquidated  damages  pursuant  to this
      Section in full within seven days after the date payable, the Company will
      pay  interest  thereon at a rate of 12% per annum (or such lesser  maximum
      amount  that is  permitted  to be paid by  applicable  law) to the Holder,
      accruing daily from the date such partial liquidated damages are due until
      such  amounts,  plus  all such  interest  thereon,  are paid in full.  The
      partial  liquidated  damages pursuant to the terms hereof shall apply on a
      daily  pro-rata  basis for any  portion of a month prior to the cure of an
      Event.

                                      -3-
<PAGE>

      3.    REGISTRATION PROCEDURES

            In connection with the Company's registration obligations hereunder,
the Company shall:

            (a) Not less  than  five  Trading  Days  prior to the  filing of the
      Registration  Statement  or any related  Prospectus  or any  amendment  or
      supplement  thereto,  the Company shall, (i) furnish to the Holders copies
      of  all  such  documents   proposed  to  be  filed  (including   documents
      incorporated or deemed  incorporated by reference to the extent  requested
      by such  Person)  which  documents  will be  subject to the review of such
      Holders,   and  (ii)  cause  its  officers  and  directors,   counsel  and
      independent  certified public  accountants to respond to such inquiries as
      shall be necessary,  in the  reasonable  opinion of respective  counsel to
      conduct a reasonable  investigation  within the meaning of the  Securities
      Act.  The Company  shall not file the  Registration  Statement or any such
      Prospectus or any amendments or  supplements  thereto to which the Holders
      of a majority of the Registrable  Securities  shall  reasonably  object in
      good faith,  provided  that the Company is notified of such  objection  in
      writing  no later  than 5  Trading  Days  after the  Holders  have been so
      furnished  copies of such  documents,  provided that such  objection  will
      extend the Filing  Date and the  Effectiveness  Date by the number of days
      from the date of such objection to the date such objection is withdrawn.

            (b) (i)  Prepare  and file  with  the  Commission  such  amendments,
      including post-effective amendments, to the Registration Statement and the
      Prospectus  used in  connection  therewith as may be necessary to keep the
      Registration   Statement  continuously  effective  as  to  the  applicable
      Registrable  Securities for the Effectiveness  Period and prepare and file
      with the Commission  such additional  Registration  Statements in order to
      register  for  resale  under  the  Securities  Act all of the  Registrable
      Securities;   (ii)  cause  the  related   Prospectus   to  be  amended  or
      supplemented by any required Prospectus supplement, and as so supplemented
      or amended to be filed  pursuant to Rule 424; (iii) respond as promptly as
      reasonably  possible to any comments  received  from the  Commission  with
      respect to the  Registration  Statement or any  amendment  thereto and, as
      promptly as reasonably  possible,  upon request,  provide the Holders true
      and  complete  copies  of all  correspondence  from and to the  Commission
      relating  to  the  Registration  Statement,  except  to  the  extent  such
      correspondence  may  contain  material  non-public  information;  and (iv)
      comply in all material  respects with the provisions of the Securities Act
      and the Exchange Act with respect to the  disposition  of all  Registrable
      Securities  covered by the  Registration  Statement  during the applicable
      period in  accordance  with the  intended  methods of  disposition  by the
      Holders thereof set forth in the  Registration  Statement as so amended or
      in such Prospectus as so supplemented.

                                      -4-
<PAGE>

            (c)  Notify  the  Holders of  Registrable  Securities  to be sold as
      promptly as  reasonably  possible  and (if  requested  by any such Person)
      confirm such notice in writing  promptly  following  the day (i)(A) when a
      Prospectus or any Prospectus supplement or post-effective amendment to the
      Registration  Statement is proposed to be filed;  (B) when the  Commission
      notifies the Company whether there will be a "review" of the  Registration
      Statement  and  whenever  the  Commission   comments  in  writing  on  the
      Registration  Statement  (the Company shall upon request  provide true and
      complete copies thereof and all written  responses  thereto to each of the
      Holders);  and (C)  with  respect  to the  Registration  Statement  or any
      post-effective  amendment, when the same has become effective; (ii) of any
      request  by the  Commission  or any other  Federal  or state  governmental
      authority during the period of effectiveness of the Registration Statement
      for amendments or supplements to the Registration  Statement or Prospectus
      or for additional information;  (iii) of the issuance by the Commission or
      any  other  federal  or state  governmental  authority  of any stop  order
      suspending the effectiveness of the Registration Statement covering any or
      all of the Registrable Securities or the initiation of any Proceedings for
      that purpose;  (iv) of the receipt by the Company of any notification with
      respect  to  the  suspension  of  the   qualification  or  exemption  from
      qualification  of  any of  the  Registrable  Securities  for  sale  in any
      jurisdiction,  or the initiation or threatening of any Proceeding for such
      purpose;  and (v) of the  occurrence  of any event or passage of time that
      makes the  financial  statements  included in the  Registration  Statement
      ineligible for inclusion therein or any statement made in the Registration
      Statement  or  Prospectus  or any  document  incorporated  or deemed to be
      incorporated  therein by reference  untrue in any material respect or that
      requires any revisions to the Registration Statement,  Prospectus or other
      documents  so  that,  in the  case of the  Registration  Statement  or the
      Prospectus,  as the case may be, it will not contain any untrue  statement
      of a  material  fact or omit to state any  material  fact  required  to be
      stated  therein or necessary to make the statements  therein,  in light of
      the circumstances under which they were made, not misleading.

            (d) Use  commercially  reasonable  efforts to avoid the issuance of,
      or, if  issued,  obtain the  withdrawal  of (i) any order  suspending  the
      effectiveness of the Registration Statement, or (ii) any suspension of the
      qualification (or exemption from  qualification) of any of the Registrable
      Securities  for  sale in any  jurisdiction,  at the  earliest  practicable
      moment.

            (e) Furnish to each Holder,  without charge,  at least one conformed
      copy of the Registration  Statement and each amendment thereto,  including
      financial statements and schedules,  all documents  incorporated or deemed
      to be  incorporated  therein by reference to the extent  requested by such
      Person, and all exhibits to the extent requested by such Person (including
      those  previously  furnished or incorporated by reference)  promptly after
      the filing of such documents with the Commission.

            (f) Promptly deliver to each Holder,  without charge, as many copies
      of the Prospectus or Prospectuses  (including each form of prospectus) and
      each  amendment  or  supplement  thereto as such  Persons  may  reasonably
      request  in  connection   with  resales  by  the  Holder  of   Registrable
      Securities.  Subject to the terms of this  Agreement,  the Company  hereby
      consents to the use of such  Prospectus  and each  amendment or supplement
      thereto by each of the selling Holders in connection with the offering and
      sale of the  Registrable  Securities  covered by such  Prospectus  and any
      amendment  or  supplement  thereto,  except after the giving on any notice
      pursuant to Section 3(c).

                                      -5-
<PAGE>

            (g) Prior to any resale of Registrable  Securities by a Holder,  use
      its  commercially  reasonable  efforts to register or qualify or cooperate
      with  the  selling  Holders  in  connection   with  the   registration  or
      qualification  (or exemption from the  Registration or  qualification)  of
      such  Registrable  Securities  for the  resale  by the  Holder  under  the
      securities or Blue Sky laws of such jurisdictions within the United States
      as any Holder reasonably  requests in writing, to keep the Registration or
      qualification (or exemption  therefrom) effective during the Effectiveness
      Period  (unless the transfer of such  Registrable  Securities are eligible
      for an exception from such  Registration or  qualification)  and to do any
      and  all  other  acts  or  things  reasonably   necessary  to  enable  the
      disposition in such jurisdictions of the Registrable Securities covered by
      the  Registration  Statement;  PROVIDED,  that the  Company  shall  not be
      required to qualify generally to do business in any jurisdiction  where it
      is not then so  qualified,  subject the Company to any material tax in any
      such  jurisdiction  where  it is not  then so  subject  or file a  general
      consent to service of process in any such jurisdiction.

            (h) If  requested  by the  Holders,  cooperate  with the  Holders to
      facilitate   the  timely   preparation   and   delivery  of   certificates
      representing  Registrable  Securities  to  be  delivered  to a  transferee
      pursuant to the Registration Statement,  which certificates shall be free,
      to the extent  permitted by the  Purchase  Agreement,  of all  restrictive
      legends,  and  to  enable  such  Registrable  Securities  to  be  in  such
      denominations  and  registered  in such  names  as any  such  Holders  may
      request.

            (i)  Upon  the  occurrence  of any  event  contemplated  by  Section
      3(c)(v),  as promptly as  reasonably  possible,  prepare a  supplement  or
      amendment,  including  a  post-effective  amendment,  to the  Registration
      Statement  or a  supplement  to the  related  Prospectus  or any  document
      incorporated or deemed to be incorporated  therein by reference,  and file
      any other required document so that, as thereafter delivered,  neither the
      Registration   Statement  nor  such  Prospectus  will  contain  an  untrue
      statement of a material  fact or omit to state a material fact required to
      be stated therein or necessary to make the statements therein, in light of
      the  circumstances  under  which they were made,  not  misleading.  If the
      Company  notifies the Holders in accordance  with clauses (ii) through (v)
      of  Section  3(c)  above to suspend  the use of any  Prospectus  until the
      requisite  changes to such  Prospectus  have been made,  then the  Holders
      shall  suspend  use of such  Prospectus.  The  Company  will  use its best
      efforts  to  ensure  that  the use of the  Prospectus  may be  resumed  as
      promptly as is practicable.  The Company shall be entitled to exercise its
      right  under  this  Section  3(i)  to  suspend  the   availability   of  a
      Registration   Statement  and  Prospectus,   subject  to  the  payment  of
      liquidated damages pursuant to Section 2(b), for a period not to exceed 60
      days (which need not be consecutive days) in any 12 month period.

            (j) Comply in all material  respects with all  applicable  rules and
      regulations of the Commission.

                                      -6-
<PAGE>

            (k) The Company may require  each  selling  Holder to furnish to the
      Company a certified  statement  as to the number of shares of Common Stock
      beneficially owned by such Holder and, if required by the Commission,  the
      person  thereof that has voting and  dispositive  control over the Shares.
      During any  periods  that the  Company  is unable to meet its  obligations
      hereunder with respect to the  registration of the Registrable  Securities
      solely because any Holder fails to furnish such  information  within three
      Trading Days of the Company's  request,  any  liquidated  damages that are
      accruing at such time as to such Holder only shall be tolled and any Event
      that may otherwise  occur solely  because of such delay shall be suspended
      as to such  Holder  only,  until  such  information  is  delivered  to the
      Company.  If the Company is unable to meet its obligations  hereunder with
      respect to the registration of the Registrable Securities held by a Holder
      solely because such Holder fails to furnish such information  prior to the
      later of 3 Trading Days of the Company's  request for such information and
      the Trading Day prior to the date the Registration Statement is filed, the
      Company  may  exclude  such  Holder's  Registrable   Securities  from  the
      Registration  Statement  provided if such information is later provided by
      the  Holder,  the Company  shall use  commercially  reasonable  efforts to
      register such Registrable Securities on the earliest possible date.

      4.  REGISTRATION   EXPENSES.   All  fees  and  expenses  incident  to  the
performance  of or compliance  with this Agreement by the Company shall be borne
by the Company  whether or not any  Registrable  Securities are sold pursuant to
the Registration  Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including,  without  limitation,  fees and expenses (A) with respect to filings
required  to be made with the Trading  Market on which the Common  Stock is then
listed for trading,  and (B) in compliance with applicable  state  securities or
Blue Sky laws), (ii) printing expenses (including, without limitation,  expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the  printing of  prospectuses  is  reasonably  requested by the holders of a
majority of the Registrable Securities included in the Registration  Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance,  if the Company
so desires  such  insurance,  and (vi) fees and  expenses  of all other  Persons
retained by the Company in connection with the  consummation of the transactions
contemplated  by this Agreement.  In addition,  the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including,  without limitation,
all salaries and expenses of its  officers  and  employees  performing  legal or
accounting  duties),  the expense of any annual  audit and the fees and expenses
incurred in  connection  with the listing of the  Registrable  Securities on any
securities  exchange  as  required  hereunder.  In no event shall the Company be
responsible  for any  broker or  similar  commissions  or,  except to the extent
specifically provided for in the Transaction Documents,  any legal fees or other
costs of the Holders.

                                      -7-
<PAGE>

      5.    INDEMNIFICATION

            (a)   INDEMNIFICATION   BY   THE   COMPANY.   The   Company   shall,
      notwithstanding  any  termination  of this  Agreement,  indemnify and hold
      harmless  each Holder,  the officers,  directors,  agents and employees of
      each of them, each Person who controls any such Holder (within the meaning
      of Section 15 of the Securities Act or Section 20 of the Exchange Act) and
      the officers,  directors,  agents and  employees of each such  controlling
      Person,  to the fullest  extent  permitted  by  applicable  law,  from and
      against  any  and  all  losses,  claims,   damages,   liabilities,   costs
      (including,  without limitation,  reasonable attorneys' fees) and expenses
      (collectively,  "LOSSES"), as incurred,  arising out of or relating to any
      untrue or alleged  untrue  statement of a material  fact  contained in the
      Registration Statement, any Prospectus or any form of prospectus or in any
      amendment  or  supplement  thereto or in any  preliminary  prospectus,  or
      arising  out of or  relating  to any  omission  or alleged  omission  of a
      material  fact  required  to be stated  therein or  necessary  to make the
      statements therein (in the case of any Prospectus or form of prospectus or
      supplement  thereto,  in light of the circumstances  under which they were
      made) not misleading,  except to the extent, but only to the extent,  that
      (i) such untrue  statements or omissions are based solely upon information
      regarding  such Holder  furnished in writing to the Company by such Holder
      expressly for use therein,  or to the extent that such information relates
      to such  Holder  or such  Holder's  proposed  method  of  distribution  of
      Registrable  Securities and was reviewed and expressly approved in writing
      by such  Holder  expressly  for use in the  Registration  Statement,  such
      Prospectus  or such form of  Prospectus  or in any amendment or supplement
      thereto (it being  understood  that the Holder has approved Annex A hereto
      for this  purpose) or (ii) in the case of an occurrence of an event of the
      type  specified  in  Section  3(c)(ii)-(v),  the use by such  Holder of an
      outdated or  defective  Prospectus  after the Company  has  notified  such
      Holder in writing that the  Prospectus  is outdated or defective and prior
      to the receipt by such Holder of the Advice  contemplated in Section 6(d).
      The Company shall notify the Holders promptly of the  institution,  threat
      or assertion of any Proceeding of which the Company is aware in connection
      with the transactions contemplated by this Agreement.

            (b) INDEMNIFICATION BY HOLDERS. Each Holder shall, severally and not
      jointly, indemnify and hold harmless the Company, its directors, officers,
      agents and  employees,  each Person who controls  the Company  (within the
      meaning of Section 15 of the Securities Act and Section 20 of the Exchange
      Act), and the directors, officers, agents or employees of such controlling
      Persons,  to the fullest  extent  permitted by  applicable  law,  from and
      against all Losses,  as  incurred,  to the extent  arising out of or based
      solely  upon:  (x) such  Holder's  failure to comply  with the  prospectus
      delivery  requirements  of the Securities Act or (y) any untrue or alleged
      untrue  statement  of  a  material  fact  contained  in  any  Registration
      Statement, any Prospectus,  or any form of prospectus, or in any amendment
      or supplement thereto or in any preliminary prospectus,  or arising out of
      or  relating  to any  omission  or alleged  omission  of a  material  fact
      required to be stated therein or necessary to make the statements  therein
      not misleading (i) to the extent, but only to the extent, that such untrue
      statement  or omission is  contained  in any  information  so furnished in
      writing by such Holder to the Company  specifically  for  inclusion in the
      Registration  Statement or such  Prospectus or (ii) to the extent that (1)
      such untrue  statements  or omissions  are based  solely upon  information
      regarding  such Holder  furnished in writing to the Company by such Holder
      expressly for use therein,  or to the extent that such information relates
      to such  Holder  or such  Holder's  proposed  method  of  distribution  of
      Registrable  Securities and was reviewed and expressly approved in writing
      by such Holder expressly for use in the  Registration  Statement (it being
      understood  that the Holder has approved Annex A hereto for this purpose),
      such  Prospectus  or  such  form  of  Prospectus  or in any  amendment  or
      supplement  thereto or (2) in the case of an occurrence of an event of the
      type  specified  in  Section  3(c)(ii)-(v),  the use by such  Holder of an
      outdated or  defective  Prospectus  after the Company  has  notified  such
      Holder in writing that the  Prospectus  is outdated or defective and prior
      to the receipt by such Holder of the Advice  contemplated in Section 6(d).
      In no event shall the liability of any selling Holder hereunder be greater
      in amount  than the dollar  amount of the net  proceeds  received  by such
      Holder  upon the sale of the  Registrable  Securities  giving rise to such
      indemnification obligation.

                                      -8-
<PAGE>

            (c) CONDUCT OF INDEMNIFICATION  PROCEEDINGS. If any Proceeding shall
      be brought or asserted against any Person entitled to indemnity  hereunder
      (an "INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify the
      Person  from  whom  indemnity  is sought  (the  "INDEMNIFYING  PARTY")  in
      writing,  and the  Indemnifying  Party  shall have the right to assume the
      defense   thereof,   including  the   employment  of  counsel   reasonably
      satisfactory  to the  Indemnified  Party and the  payment  of all fees and
      expenses incurred in connection with defense thereof;  provided,  that the
      failure of any Indemnified Party to give such notice shall not relieve the
      Indemnifying  Party of its  obligations  or  liabilities  pursuant to this
      Agreement,  except  (and  only) to the  extent  that it  shall be  finally
      determined by a court of competent  jurisdiction  (which  determination is
      not  subject to appeal or further  review)  that such  failure  shall have
      prejudiced the Indemnifying Party.

            An Indemnified Party shall have the right to employ separate counsel
      in any such Proceeding and to participate in the defense thereof,  but the
      fees  and  expenses  of  such  counsel  shall  be at the  expense  of such
      Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed
      in writing to pay such fees and expenses; (2) the Indemnifying Party shall
      have  failed  promptly  to assume the  defense of such  Proceeding  and to
      employ counsel  reasonably  satisfactory to such Indemnified  Party in any
      such  Proceeding;  or  (3)  the  named  parties  to  any  such  Proceeding
      (including any impleaded  parties) include both such Indemnified Party and
      the  Indemnifying  Party,  and such  Indemnified  Party  shall  reasonably
      believe,  based  on  the  written  advice,  reasonably  acceptable  to the
      Company,  of their counsel that a material  conflict of interest is likely
      to exist if the same counsel were to represent such Indemnified  Party and
      the Indemnifying  Party (in which case, if such Indemnified Party notifies
      the  Indemnifying  Party in  writing  that it elects  to  employ  separate
      counsel at the expense of the Indemnifying  Party, the Indemnifying  Party
      shall not have the right to assume the defense  thereof and the reasonable
      fees and  expenses of one  separate  counsel for all  Indemnified  Parties
      shall be at the expense of the Indemnifying Party). The Indemnifying Party
      shall not be liable for any  settlement  of any such  Proceeding  effected
      without its  written  consent,  which  consent  shall not be  unreasonably
      withheld.  No Indemnifying Party shall,  without the prior written consent
      of the Indemnified Party,  effect any settlement of any pending Proceeding
      in  respect  of  which  any  Indemnified  Party is a  party,  unless  such
      settlement  includes an unconditional  release of such  Indemnified  Party
      from  all  liability  on  claims  that  are  the  subject  matter  of such
      Proceeding.

            Subject  to the terms of this  Agreement,  all  reasonable  fees and
      expenses of the Indemnified Party (including  reasonable fees and expenses
      to the extent  incurred in connection with  investigating  or preparing to
      defend such  Proceeding  in a manner not  inconsistent  with this Section)
      shall be paid to the Indemnified  Party,  as incurred,  within ten Trading
      Days of written notice thereof to the Indemnifying Party;  PROVIDED,  that
      the Indemnified Party shall promptly  reimburse the Indemnifying Party for
      that  portion of such fees and  expenses  applicable  to such  actions for
      which such Indemnified Party is not entitled to indemnification hereunder,
      determined based upon the relative faults of the parties.

                                      -9-
<PAGE>

            (d) CONTRIBUTION.  If a claim for indemnification under Section 5(a)
      or 5(b) is unavailable to an Indemnified Party (by reason of public policy
      or otherwise),  then each Indemnifying Party, in lieu of indemnifying such
      Indemnified  Party, shall contribute to the amount paid or payable by such
      Indemnified  Party as a result of such Losses,  in such  proportion  as is
      appropriate  to reflect the relative fault of the  Indemnifying  Party and
      Indemnified Party in connection with the actions,  statements or omissions
      that  resulted  in such  Losses  as well as any other  relevant  equitable
      considerations.   The  relative  fault  of  such  Indemnifying  Party  and
      Indemnified Party shall be determined by reference to, among other things,
      whether any action in  question,  including  any untrue or alleged  untrue
      statement of a material fact or omission or alleged omission of a material
      fact,  has been taken or made by, or relates to  information  supplied by,
      such  Indemnifying  Party or Indemnified  Party, and the parties' relative
      intent,  knowledge,  access to information  and  opportunity to correct or
      prevent such action,  statement or omission. The amount paid or payable by
      a party as a result of any Losses  shall be deemed to include,  subject to
      the limitations set forth in this Agreement,  any reasonable attorneys' or
      other  reasonable  fees or expenses  incurred by such party in  connection
      with any  Proceeding to the extent such party would have been  indemnified
      for such fees or  expenses  if the  indemnification  provided  for in this
      Section was available to such party in accordance with its terms.

            The parties  hereto agree that it would not be just and equitable if
      contribution  pursuant to this  Section 5(d) were  determined  by pro rata
      allocation  or by any other method of  allocation  that does not take into
      account  the  equitable  considerations  referred  to in  the  immediately
      preceding paragraph.  Notwithstanding the provisions of this Section 5(d),
      no Holder shall be required to contribute, in the aggregate, any amount in
      excess of the  amount  by which the  proceeds  actually  received  by such
      Holder  from  the  sale  of  the  Registrable  Securities  subject  to the
      Proceeding  exceeds  the  amount  of any  damages  that  such  Holder  has
      otherwise  been required to pay by reason of such untrue or alleged untrue
      statement or omission or alleged omission,  except in the case of fraud by
      such Holder.

            The indemnity and contribution  agreements contained in this Section
      are in addition to any liability that the Indemnifying Parties may have to
      the Indemnified Parties.

      6.    MISCELLANEOUS

            (a)  REMEDIES.  In the  event of a  breach  by the  Company  or by a
      Holder, of any of their  obligations under this Agreement,  each Holder or
      the Company, as the case may be, in addition to being entitled to exercise
      all rights granted by law and under this Agreement,  including recovery of
      damages, will be entitled to specific performance of its rights under this
      Agreement.  The Company and each Holder agree that monetary  damages would
      not provide  adequate  compensation for any losses incurred by reason of a
      breach by it of any of the provisions of this Agreement and hereby further
      agrees  that,  in the event of any  action  for  specific  performance  in
      respect of such  breach,  it shall waive the defense  that a remedy at law
      would be adequate.

                                      -10-
<PAGE>

            (b) NO PIGGYBACK ON  REGISTRATIONS.  Except as set forth on SCHEDULE
      6(B) attached hereto,  neither the Company nor any of its security holders
      (other  than the  Holders in such  capacity  pursuant  hereto) may include
      securities  of the  Company  in a  Registration  Statement  other than the
      Registrable Securities.  Subject to SCHEDULE 6(B), no Person has any right
      to cause the Company to effect the  registration  under the Securities Act
      of any  securities of the Company.  Subject to SCHEDULE  6(B), the Company
      shall not file any other registration  statement until after the Effective
      Date.

            (c) COMPLIANCE. Each Holder covenants and agrees that it will comply
      with  the  prospectus  delivery  requirements  of  the  Securities  Act as
      applicable  to it in  connection  with  sales  of  Registrable  Securities
      pursuant to the Registration Statement.

            (d) DISCONTINUED DISPOSITION.  Each Holder agrees by its acquisition
      of such  Registrable  Securities  that,  upon receipt of a notice from the
      Company of the  occurrence  of any event of the kind  described in Section
      3(c),  such  Holder  will  forthwith   discontinue   disposition  of  such
      Registrable   Securities  under  the  Registration  Statement  until  such
      Holder's  receipt  of the  copies of the  supplemented  Prospectus  and/or
      amended  Registration  Statement  or until it is advised  in writing  (the
      "ADVICE") by the Company that the use of the applicable  Prospectus may be
      resumed,  and, in either case,  has received  copies of any  additional or
      supplemental filings that are incorporated or deemed to be incorporated by
      reference in such Prospectus or Registration  Statement.  The Company will
      use its best  efforts  to  ensure  that the use of the  Prospectus  may be
      resumed as promptly as it practicable. The Company agrees and acknowledges
      that any periods  during which the Holder is required to  discontinue  the
      disposition of the  Registrable  Securities  hereunder shall be subject to
      the provisions of Section 2(b).

            (e)   PIGGY-BACK   REGISTRATIONS.   If  at  any  time   during   the
      Effectiveness  Period  there is not an  effective  Registration  Statement
      covering all of the Registrable Securities and the Company shall determine
      to prepare and file with the Commission a registration  statement relating
      to an  offering  for its own  account or the  account of others  under the
      Securities Act of any of its equity securities,  other than on Form S-4 or
      Form S-8 (each as  promulgated  under the  Securities  Act) or their  then
      equivalents   relating  to  equity  securities  to  be  issued  solely  in
      connection  with any  acquisition  of any  entity  or  business  or equity
      securities  issuable in connection with the stock option or other employee
      benefit plans, then the Company shall send to each Holder a written notice
      of such  determination  and, if within fifteen days after the date of such
      notice,  any such Holder  shall so request in writing,  the Company  shall
      include in such registration statement all or any part of such Registrable
      Securities as such Holder requests to be registered,  subject to customary
      underwriter  cutbacks  applicable to all holders of  registration  rights,
      which will provide that upon a cut-back of the  securities  to be included
      in such  registration  statement,  the  securities  held by all holders of
      registration  rights will be cut-back  before any securities to be sold by
      the Company are cut-back.

                                      -11-
<PAGE>

            (f)  AMENDMENTS  AND  WAIVERS.  The  provisions  of this  Agreement,
      including the provisions of this sentence, may not be amended, modified or
      supplemented,  and waivers or consents to departures  from the  provisions
      hereof may not be given, unless the same shall be in writing and signed by
      the  Company  and  each  Holder  of  the  then   outstanding   Registrable
      Securities.

            (g)  NOTICES.  Any  and  all  notices  or  other  communications  or
      deliveries required or permitted to be provided hereunder shall be made in
      accordance with the provisions of the Purchase Agreement.

            (h)  SUCCESSORS  AND  ASSIGNS.  This  Agreement  shall  inure to the
      benefit of and be binding upon the  successors  and  permitted  assigns of
      each of the parties and shall  inure to the benefit of each  Holder.  Each
      Holder may assign their  respective  rights hereunder in the manner and to
      the Persons as permitted under the Purchase Agreement.

            (i) EXECUTION AND  COUNTERPARTS.  This  Agreement may be executed in
      any number of counterparts, each of which when so executed shall be deemed
      to be an original and, all of which taken  together  shall  constitute one
      and the same  Agreement.  In the event that any  signature is delivered by
      facsimile  transmission,  such  signature  shall  create  a valid  binding
      obligation of the party  executing  (or on whose behalf such  signature is
      executed)  the same with the same  force and  effect as if such  facsimile
      signature were the original thereof.

            (j)  GOVERNING  LAW.  All  questions  concerning  the  construction,
      validity,  enforcement  and  interpretation  of this  Agreement  shall  be
      determined with the provisions of the Purchase Agreement.

            (k) CUMULATIVE REMEDIES. The remedies provided herein are cumulative
      and not exclusive of any remedies provided by law.

            (l) SEVERABILITY. If any term, provision, covenant or restriction of
      this Agreement is held by a court of competent jurisdiction to be invalid,
      illegal,  void or unenforceable,  the remainder of the terms,  provisions,
      covenants and restrictions set forth herein shall remain in full force and
      effect and shall in no way be affected,  impaired or invalidated,  and the
      parties hereto shall use their commercially reasonable efforts to find and
      employ an alternative  means to achieve the same or substantially the same
      result  as  that  contemplated  by  such  term,  provision,   covenant  or
      restriction.  It is hereby  stipulated and declared to be the intention of
      the parties that they would have executed the remaining terms, provisions,
      covenants  and  restrictions  without  including  any of such  that may be
      hereafter declared invalid, illegal, void or unenforceable.

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

                                      -12-
<PAGE>

            (n) INDEPENDENT  NATURE OF PURCHASERS'  OBLIGATIONS AND RIGHTS.  The
      obligations  of each Holder  hereunder  are several and not joint with the
      obligations  of any  other  Holder  hereunder,  and  no  Holder  shall  be
      responsible in any way for the performance of the obligations of any other
      Holder  hereunder.  Nothing  contained herein or in any other agreement or
      document  delivered  at any  closing,  and no action  taken by any  Holder
      pursuant hereto or thereto, shall be deemed to constitute the Holders as a
      partnership,  an association, a joint venture or any other kind of entity,
      or create a presumption  that the Holders are in any way acting in concert
      with respect to such obligations or the transactions  contemplated by this
      Agreement.  Each  Holder  shall be  entitled  to protect  and  enforce its
      rights,  including  without  limitation  the  rights  arising  out of this
      Agreement, and it shall not be necessary for any other Holder to be joined
      as an additional party in any proceeding for such purpose.

                            *************************

                                      -13-
<PAGE>

            IN WITNESS  WHEREOF,  the parties have  executed  this  Registration
Rights Agreement as of the date first written above.

                                PERMA-FIX ENVIRONMENTAL SERVICES, INC.

                                By: /S/ LOUIS CENTOFANTI
                                    ----------------------------
                                    Name: Louis Centofanti
                                    Title: Chairman of the Board
                                           Chief Executive Officer

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO PESI RRA]

ALEXANDRA GLOBAL MASTER FUND LTD.
By: ALEXANDRA INVESTMENT MANAGEMENT, LLC,
As Investment Advisor

By: /S/ M. FILIMONOV
    --------------------------------
Name: Mikhail Filimonov
Title: Chairman and Chief Executive Officer

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO PESI RRA]

Name of Investing Entity: ALPHA CAPITAL AG
                          --------------------------------
Signature of Authorized Signatory of Investing Entity: /S/ K. ACKERMAN
                                                      -------------------------
Name of Authorized Signatory: Konrad Ackerman
Title of Authorized Signatory:  Director

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO PESI RRA]

Name of Investing Entity: Baystar Capital II, L.P.
Signature of Authorized Signatory of Investing Entity: /s/ Steve Derby
Name of Authorized Signatory:  Steve Derby
Title of Authorized Signatory:  Managing Member

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO PESI RRA]

Name of Investing Entity: Bristol Investment Fund, Ltd.
Signature of Authorized Signatory of Investing Entity: /s/ Paul Kessler
Name of Authorized Signatory:  Paul Kessler
Title of Authorized Signatory:  Director

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO PESI RRA]

Name of Investing Entity: CRESCENT INTERNATIONAL LTD
Signature of Authorized Signatory
  of Investing Entity:                  /s/ Mel Craw    /s/ Maxi Brezzi
Name of Authorized Signatory:           Mel Craw        Maxi Brezzi
Title of Authorized Signatory:          Authorized Signatory

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO PESI RRA]

Name of Investing Entity: Crestview Capital Master, LLC
Signature of Authorized Signatory of Investing Entity:  /s/ Stewart R. Flink
Name of Authorized Signatory:    Stewart R. Flink
Title of Authorized Signatory: Manager

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO PESI RRA]

Name of Investing Entity: Geduld Capital Partners LP
Signature of Authorized Signatory of Investing Entity: /s/ Steven Geduld
Name of Authorized Signatory: Steven Geduld
Title of Authorized Signatory:  President

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO PESI RRA]

Name of Investing Entity: Gruber & McBaine International
Signature of Authorized Signatory of Investing Entity:  /s/ Jon D. Gruber
Name of Authorized Signatory: Gruber & McBaine Capital Mgmt
Title of Authorized Signatory: Investment Advisor

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO PESI RRA]

Name of Investing Entity: Irwin Geduld Revocable Trust
Signature of Authorized Signatory of Investing Entity: /s/ Irwin Geduld
Name of Authorized Signatory: Irwin Geduld
Title of Authorized Signatory: Trustee

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO PESI RRA]

Name of Investing Entity: J. Patterson McBaine
Signature of Authorized Signatory of Investing Entity: /s/ J. Patterson McBaine
Name of Authorized Signatory:
Title of Authorized Signatory:  Self

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO PESI RRA]

Name of Investing Entity: Jon D. Gruber & Linda W. Gruber
Signature of Authorized Signatory
  of Investing Entity:          /s/ Jon D. Gruber    /s/ Linda W. Gruber
Name of Authorized Signatory:
Title of Authorized Signatory:  Self

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO PESI RRA]

Name of Investing Entity: Lagunitas Partners LP
Signature of Authorized Signatory of Investing Entity: /s/ Jon D. Gruber
Name of Authorized Signatory: Gruber & McBaine Capital Mgmt
Title of Authorized Signatory: General Partner

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO PESI RRA]

OMICRON MASTER TRUST
By: Omicron Capital L.P., as advisor
By: Omicron Capital Inc., its general partner

By: /S/ BRUCE BERNSTEIN
    --------------------------------
Name: Bruce Bernstein
Title:   Managing Partner

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO PESI RRA]

Name of Investing Entity: PALISADES MASTER FUND, L.P.
Signature of Authorized Signatory
  of Investing Entity: /s/ Palisades Master Fund, L.P.
Name of Authorized Signatory: Discovery Management Limited
Title of Authorized Signatory: Authorized Signatory

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO PESI RRA]

Name of Investing Entity: Stonestreet LP

Signature of Authorized Signatory of Investing Entity: /s/ M. Finkelstein
Name of Authorized Signatory: Michael Finkelstein
Title of Authorized Signatory: President

                           [SIGNATURE PAGES CONTINUE]

<PAGE>

                                     ANNEX A

                              PLAN OF DISTRIBUTION

      The Selling Stockholders (the "SELLING  STOCKHOLDERS") of the common stock
("COMMON STOCK") of Perma-Fix  Environmental  Services, Inc. (the "COMPANY") and
any of their pledgees,  assignees and  successors-in-interest  may, from time to
time,  sell any or all of their  shares of Common  Stock on any stock  exchange,
market  or  trading  facility  on which the  shares  are  traded  or in  private
transactions.  These  sales may be at fixed or  negotiated  prices.  The Selling
Stockholders  may use any one or more  of the  following  methods  when  selling
shares:

      o     ordinary  brokerage  transactions  and  transactions  in  which  the
            broker-dealer solicits purchasers;

      o     block  trades in which the  broker-dealer  will  attempt to sell the
            shares as agent but may  position  and resell a portion of the block
            as principal to facilitate the transaction;

      o     purchases  by  a  broker-dealer  as  principal  and  resale  by  the
            broker-dealer for its account;

      o     an  exchange  distribution  in  accordance  with  the  rules  of the
            applicable exchange;

      o     privately negotiated transactions;

      o     settlement of short sales;

      o     broker-dealers  may agree with the  Selling  Stockholders  to sell a
            specified number of such shares at a stipulated price per share;

      o     a combination of any such methods of sale;

      o     through  the  writing or  settlement  of  options  or other  hedging
            transactions, whether through an options exchange or otherwise; or

      o     any other method permitted pursuant to applicable law.

      The Selling  Stockholders  may also sell  shares  under Rule 144 under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), if available,  rather
than under this prospectus.

      Broker-dealers  engaged by the Selling  Stockholders may arrange for other
brokers-dealers to participate in sales.  Broker-dealers may receive commissions
or discounts from the Selling  Stockholders  (or, if any  broker-dealer  acts as
agent  for the  purchaser  of  shares,  from the  purchaser)  in  amounts  to be
negotiated.  Each  Selling  Stockholder  does not expect these  commissions  and
discounts  relating  to its sales of shares to exceed what is  customary  in the
types of transactions involved.

<PAGE>

      In connection with the sale of our common stock or interests therein,  the
Selling  Stockholders may enter into hedging transactions with broker-dealers or
other  financial  institutions,  which may in turn  engage in short sales of the
common stock in the course of hedging the  positions  they  assume.  The Selling
Stockholders  may also sell shares of our common  stock short and deliver  these
securities  to close out their  short  positions,  or loan or pledge  the common
stock to  broker-dealers  that in turn may sell these  securities.  The  Selling
Stockholders   may  also  enter   into   option  or  other   transactions   with
broker-dealers  or other  financial  institutions or the creation of one or more
derivative  securities which require the delivery to such broker-dealer or other
financial  institution of shares offered by this  prospectus,  which shares such
broker-dealer  or  other  financial  institution  may  resell  pursuant  to this
prospectus (as supplemented or amended to reflect such transaction).

      The  Selling  Stockholders  and any  broker-dealers  or  agents  that  are
involved  in selling  the shares may be deemed to be  "underwriters"  within the
meaning of the Securities Act in connection with such sales. In such event,  any
commissions  received  by such  broker-dealers  or agents  and any profit on the
resale  of the  shares  purchased  by  them  may be  deemed  to be  underwriting
commissions or discounts under the Securities Act. Each Selling  Stockholder has
informed  the  Company  that it does not have any  agreement  or  understanding,
directly or indirectly, with any person to distribute the Common Stock.

      The Company is required to pay certain fees and  expenses  incurred by the
Company  incident to the  registration of the shares.  The Company has agreed to
indemnify the Selling Stockholders against certain losses,  claims,  damages and
liabilities, including liabilities under the Securities Act.

      Because Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities  Act, they will be subject to the prospectus  delivery
requirements of the Securities Act. In addition,  any securities covered by this
prospectus  which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather  than  under  this  prospectus.  Each  Selling
Stockholder  has  advised  us that they have not  entered  into any  agreements,
understandings or arrangements  with any underwriter or broker-dealer  regarding
the sale of the resale shares.  There is no underwriter or  coordinating  broker
acting in connection  with the proposed sale of the resale shares by the Selling
Stockholders.

      We agreed to keep this  prospectus  effective until the earlier of (i) the
date on which  the  shares  may be resold by the  Selling  Stockholders  without
registration  and  without  regard to any volume  limitations  by reason of Rule
144(k) under the  Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold  pursuant to the  prospectus  or Rule 144 under the
Securities  Act or any other rule of similar  effect.  The resale shares will be
sold only through  registered or licensed  brokers or dealers if required  under
applicable  state securities  laws. In addition,  in certain states,  the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable  state or an exemption  from the  registration  or  qualification
requirement is available and is complied with.

                                      -14-
<PAGE>

      Under applicable rules and regulations  under the Exchange Act, any person
engaged in the distribution of the resale shares may not  simultaneously  engage
in market making activities with respect to our common stock for a period of two
business days prior to the commencement of the  distribution.  In addition,  the
Selling  Stockholders  will be subject to applicable  provisions of the Exchange
Act and the rules and regulations thereunder,  including Regulation M, which may
limit the timing of  purchases  and sales of shares of our  common  stock by the
Selling Stockholders or any other person. We will make copies of this prospectus
available  to the Selling  Stockholders  and have  informed  them of the need to
deliver a copy of this  prospectus to each  purchaser at or prior to the time of
the sale.

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