================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
_______________________
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _________
Commission File No. 1-11596
______________
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 58-1954497
(State or other jurisdiction (IRS Employer
of incorporation or organization Identification Number)
1940 N.W. 67th Place, Gainesville, FL 32653
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number)
(352) 373-4200
(Registrant's telephone number)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
______ ______
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the close of the latest
practical date.
Class Outstanding at August 13, 1996
_____ _____________________________
Common Stock, $.001 Par Value 9,289,845 (excluding
_____________________________ 920,000 shares held
as treasury stock)
___________________
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<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
INDEX
Page No.
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
June 30, 1996 and December 31,
and December 31, 1995 . . . . . . . 4
Consolidated Statements of
Operations - Three Months and
Six Months Ended June 30, 1996
and 1995. . . . . . . . . . . . . . 6
Consolidated Statements of Cash
Flows - Six Months Ended June 30,
1996 and 1995 . . . . . . . . . . . 7
Notes to Consolidated Financial
Statements. . . . . . . . . . . . . 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . 13
PART II OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . 20
Item 5. Other Events . . . . . . . . . . . . . . 20
Item 6. Exhibits . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
PART I, ITEM 1
The consolidated financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
such rules and regulations, although the Company believes the
disclosures which are made are adequate to make the information
presented not misleading. Further, the consolidated financial
statements reflect, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to
present fairly the financial position and results of operations as
of and for the periods indicated.
It is suggested that these consolidated financial statements
be read in conjunction with the consolidated financial statements
and the notes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995.
The results of operations for the six months ended June 30,
1996 are not necessarily indicative of results to be expected for
the fiscal year ending December 31, 1996.
<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
June 30,
(Amounts in Thousands, 1996 December 31,
Except for Share Amounts) (Unaudited) 1995
___________________________________________________________________
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 172 $ 201
Restricted cash 406 380
Accounts receivable, net of
allowance for doubtful accounts
of $392 5,489 5,031
Inventories 106 183
Prepaid expense 818 414
Other receivables 141 134
_________ ________
Total current assets 7,132 6,343
Property and equipment:
Building and land 5,037 6,055
Equipment 5,813 5,874
Vehicles 1,372 1,589
Leasehold improvements 143 143
Office furniture and equipment 1,217 1,252
Construction in progress 2,297 1,435
_________ ________
15,879 16,348
Less accumulated depreciation (3,909) (3,378)
_________ ________
Net property and equipment 11,970 12,970
Other assets:
Permits, net of accumulated amorti-
zation of $483 and $366,
respectively 3,993 4,036
Goodwill, net of accumulated amorti-
zation of $362 and $289, respectively 4,919 4,992
Covenant not to compete, net of accum-
ulated amortization of $343 and $304,
respectively 48 87
Other assets 417 445
________ ________
Total assets $ 28,479 $ 28,873
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS, CONTINUED
June 30,
(Amounts in Thousands, 1996 December 31,
Except for Share Amounts) (Unaudited) 1995
___________________________________________________________________
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,433 $ 5,402
Accrued expenses 3,352 2,951
Revolving loan and term note facility 500 5,259
Equipment financing agreement 608 1,778
Current portion of long-term debt 279 325
_________ _______
Total current liabilities 9,172 15,715
Long-term debt 5,746 1,116
Environmental accruals 3,327 3,063
Accrued closure costs 1,068 1,041
_________ _______
Total long-term liabilities 10,141 5,220
Commitments and contingencies (Note 3) - -
Stockholders' equity:
Preferred stock, $.001 par value;
2,000,000 shares authorized,
708 and 0 shares issued and
outstanding, respectively - -
Common stock, $.001 par value;
20,000,000 shares authorized,
9,289,845 and 7,872,384 shares
issued and outstanding, respec-
tively 9 8
Redeemable warrants 269 269
Additional paid-in capital 23,183 21,546
Accumulated deficit (14,295) (13,885)
________ _______
Total stockholders' equity 9,166 7,938
________ _______
Total liabilities and
stockholders' equity $ 28,479 $ 28,873
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
June 30,
(Amounts in Thousands, __________________________
Except for Share Amounts) 1996 1995
___________________________________________________________________
<S> <C> <C>
Net revenues $ 8,178 $ 9,381
Cost of goods sold 5,634 7,123
________ ________
Gross profit 2,544 2,258
Selling, general and administrative 1,682 2,400
Depreciation and amortization 558 587
Nonrecurring charges - 705
________ ________
Income (loss) from operations 304 (1,434)
Other income (expense):
Interest income 20 14
Interest expense (227) (241)
Other 85 (36)
________ ________
Net income (loss) $ 182 $ (1,697)
======== ========
Net income (loss) per share $ .02 $ (.25)
======== ========
Weighted average number of common
and common equivalent shares
outstanding 8,470 6,825
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended
June 30,
(Amounts in Thousands, __________________________
Except for Share Amounts) 1996 1995
___________________________________________________________________
<S> <C> <C>
Net revenues $ 15,750 $ 18,004
Cost of goods sold 11,398 13,761
________ ________
Gross profit 4,352 4,243
Selling, general and administrative 3,424 4,099
Depreciation and amortization 1,177 1,143
Nonrecurring charges - 705
________ ________
Income (loss) from operations (249) (1,704)
Other income (expense):
Interest income 40 24
Interest expense (489) (439)
Other 288 45
________ ________
Net income (loss) $ (410) $ (2,074)
======== ========
Net income (loss) per share $ (.05) $ (.30)
======== ========
Weighted average number of common
common equivalent shares out-
standing 8,171 6,811
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
June 30,
(Amounts in Thousands, __________________________
Except for Share Amounts) 1996 1995
___________________________________________________________________
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (592) $ (2,074)
Adjustments to reconcile net loss
to cash used in operations:
Depreciation and amortization 619 1,143
Divestiture reserve - 450
Provision for bad debt and other
reserves 12 -
Gain on sale of plant, property
and equipment (126) 10
Changes in assets and liabilities:
Accounts receivable (127) (135)
Prepaid expenses, inventories and
other receivables (638) (815)
Accounts payable and accrued expenses 468 (55)
________ ________
Net cash used in operations (384) (816)
Cash flows from investing activities:
Purchases of property and equipment,
net (593) (951)
Proceeds from sale of property and
equipment 1,196 -
Change in restricted cash, net (33) (299)
Other investing (27) (289)
________ _________
Net cash provided by (used in)
investing activities 576 (1,240)
Cash flows from financing activities:
Borrowings (repayments) from revolving
loan and term note (877) 2,060
Borrowings on long-term debt 57 102
Principal repayments on long-term debt (793) (262)
Proceeds from issuance of stock 1,307 -
________ ________
Net cash provided by financing
activities (306) 1,900
Decrease in cash and cash equivalents (114) (156)
Cash and cash equivalents at beginning
of period (793) (262)
________ ________
Cash and cash equivalents at end
of period $ 87 $ 334
======== ========
________________________________________________________________
Supplemental disclosure:
Interest paid $ 263 $ 183
======== ========
Income taxes paid $ - $ -
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
Reference is made herein to the notes to consolidated
financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995.
1. Summary of Significant Accounting Policies
__________________________________________
The Company's accounting policies are as set forth in the
notes to consolidated financial statements referred to above.
Certain amounts in prior years' consolidated financial
statements have been reclassified to conform to current period
financial statement presentations.
As discussed in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995, net loss per share has been
presented using the weighted average number of common and common
equivalent shares outstanding. Net loss per share has been
restated, in accordance with Accounting Principles Board Opinion
No. 15, for the period ended March 31, 1995, to reflect the
issuance of contingent shares to Quadrex in November of 1995.
Fully diluted net income per share has not been presented as
it is not materially different from the primary net income per
share or has been determined to be anti-dilutive for certain other
periods.
<PAGE>
<TABLE>
<CAPTION>
2. Long-Term Debt
______________
Long-term debt consists of the following at June 30, 1996 and
December 31, 1995 (in thousands):
June 30, December 31,
1996 1995
_________ _________
<S> <C> <C>
Long-term debt and notes payable:
Revolving loan and term note
facility $ 4,864 $ 5,259
Equipment financing agreement 1,553 1,778
Various mortgage, promissory
and notes payable 716 1,441
_________ _________
7,133 8,478
Less current portion:
Revolving loan and term note
facility 500 5,259
Equipment financing agreement 608 1,778
Various mortgage, promissory
and notes payable 279 325
_________ _________
$ 5,746 $ 1,116
========= =========
</TABLE>
On January 27, 1995, the Company, as parent and guarantor, and
all direct and indirect subsidiaries of the Company, as co-
borrowers and cross-guarantors, entered into a Loan and Security
Agreement ("Agreement") with Heller Financial, Inc. ("Heller").
The Agreement provides for a term loan in the amount of $2,500,000,
which requires principal repayments based on a five-year level
principal amortization over a term of 36 months, with monthly
principal payments of $42,000. Payments commenced on February 28,
1995, with a final adjusted balloon payment in the amount of
$846,000 due on January 31, 1998. The Agreement also provides for
a revolving loan facility in the amount of $7,000,000. At any
point in time the aggregate available borrowings under the facility
are reduced by any amounts outstanding under the term loan and are
also subject to the maximum credit availability as determined
through a monthly borrowing base calculation, equal to 80% of
eligible accounts receivable accounts of the Company as defined in
the Agreement. The termination date on the revolving loan facility
is also the third anniversary of the closing date.
As previously disclosed, during the second quarter of 1995,
the Company became in violation of certain of the restrictive
financial ratio covenants of the Agreement. During the second
quarter of 1996, the Company negotiated and subsequently entered
into an amendment ("Third Amendment") to the Loan and Security
Agreement, whereby, among other things, Heller waived the existing
events of default, amended the financial covenants and amended
<PAGE>
certain other provisions of the Loan Agreement as set forth
therein. Applicable interest rate provisions were also amended,
whereby the term loan shall bear interest at a rate of interest per
annum equal to the base rate plus 2 1/4%, and the revolving loan
shall bear interest equal to the base rate plus 2%. The Amendment
also contains a performance price adjustment which provides that
upon the occurrence of an "equity infusion" (see Note 5),
applicable interest rates on the loans shall be reduced, in each
instance by 1/2% per annum. Also, during the second quarter of
1996, Heller extended to the Company an overformula line in an
amount not to exceed $250,000, for a period ending the earliest of
90 days after the date of first advance or September 30, 1996.
Pursuant to the above discussed Amendment, said overformula line
terminated upon the Company's receipt of the equity infusion.
As disclosed at December 31, 1995, Heller had agreed to
forebear from exercising any rights and remedies under the
Agreement as a result of these previous defaults and continued to
make normal advances under the revolving loan facility. However,
in compliance with generally accepted accounting principles, the
Company, at December 31, 1995, reclassified as a current liability
$3,882,000 outstanding under the Agreement that would otherwise
have been classified as long-term debt. As a result of the above
discussed Amendment, $4,364,000 has been reclassified as long-term
debt at June 30, 1996.
Pursuant to the initial agreement, the term loan bears
interest at a floating rate equal to the base rate (prime) plus 1
3/4% per annum The revolving loan bears interest at a floating
rate equal to the base rate (prime) plus 1 1/4% per annum. The
loans also contain certain closing, management and unused line fees
payable throughout the term. As discussed above, in conjunction
with the loan amendment, applicable interest rates were amended.
However, a default rate was applied due to the financial covenant
default discussed above, effective August 21, 1995 through the date
of amendment, and therefore the Heller obligations bore interest at
the above noted effective rate plus 2.0%. Both the revolving loan
and term loan were prime based loans at June 30, 1996, bearing
interest at a rate of 11.50% and 12.00%, respectively.
As of June 30, 1996, the borrowings under the revolving loan
facility total $3,226,000, an increase of $50,000 from the December
31, 1995 balance of $3,176,000, with borrowing availability of
$227,000, excluding the $250,000 overformula line as discussed
above. The balance on the term loan totalled $1,638,000, as
compared to $2,083,000 at December 31, 1995. Total indebtedness
under the Heller Agreement as of June 30, 1996 was $4,864,000, a
reduction of $395,000 from the December 31, 1995 balance of
$5,259,000.
<PAGE>
During October 1994, the Company entered into a $1,000,000
equipment financing agreement with Ally Capital Corporation
("Ally"), which provides lease commitments for the financing of
certain equipment through June 1995. During 1995, the Company
negotiated an increase in the total lease commitment to $1,600,000.
The agreement provides for an initial term of 42 months, which may
be extended to 48, and bears interest at a fixed interest rate of
11.3%. As of December 31, 1995, the Company had utilized
$1,496,000 of this credit facility to purchase capital equipment
and subsequently drew down an additional $57,000 in January 1996,
bringing the total financing under this agreement to $1,553,000.
In conjunction with a 1994 acquisition, the Company also assumed
$679,000 of debt obligations with Ally Capital Corporation, which
had terms expiring from September 1997 through August 1998, at a
rate ranging from 10.2% to 13.05%. As previously disclosed, at
December 31, 1995, the Company was not in compliance with the
minimum tangible net worth covenant of this agreement and Ally had
waived compliance with this covenant and no acceleration was
demanded by the lender. However, in compliance with generally
accepted accounting principles, the Company, at December 31, 1995,
reclassified as a current liability $1,103,000 outstanding under
the agreement, which would otherwise have been classified as long-
term debt. During the second quarter of 1996, the Company
negotiated and subsequently entered into an amendment to the
equipment financing agreement, whereby, among other things, Ally
waived the existing event of default and amended the required covenants.
The outstanding balance on this equipment financing agreement at June 30,
1996 is $1,553,000, as compared to $1,778,000 at December 31, 1995. As a
result of the above discussed amendment, $945,000 has been classified as
long-term debt at June 30, 1996.
3. Commitments and Contingencies
_____________________________
Hazardous Waste
In connection with the Company's waste management services,
the Company handles both hazardous and non-hazardous waste which it
transports to its own or other facilities for destruction or
disposal. As a result of disposing of hazardous substances, in the
event any cleanup is required, the Company could be a potentially
responsible party for the costs of the cleanup notwithstanding any
absence of fault on the part of the Company.
Legal
During 1995, certain subsidiaries of the Company were sued by
Chief Supply Corporation ("Chief Supply") in three (3) causes of
action pending in the United States District Court, Northern
District of Oklahoma, in cases styled Chief Supply Corporation v.
Perma-Fix of Dayton, Inc.; Chief Supply Corporation v. Perma-Fix of
Florida, Inc.; and Chief Supply Corporation v. Perma-Fix of
Memphis, Inc. Chief Supply was alleging that the subsidiaries owe
to Chief Supply an aggregate of approximately $292,000 (the
<PAGE>
"Oklahoma Litigation"). Perma-Fix of Memphis, Inc. asserted a
counterclaim for receivables due from Chief Supply for services
rendered by two subsidiaries of the Company of approximately
$134,000. In addition, these subsidiaries have asserted certain
defenses regarding the performance of services by Chief Supply.
Reservoir Capital Corporation ("Reservoir") alleged that
substantially the same receivables for which Chief Supply has sued
the subsidiaries of the Company were factored and assigned by Chief
Supply to Reservoir, and in March 1996, Reservoir brought suit
against the same subsidiaries of the Company sued by Chief Supply
for collection of substantially the same receivables Chief Supply
sued the subsidiaries of the Company, plus exemplary damages. The
suit brought by Reservoir is styled Reservoir Capital Corporation
v. Perma-Fix of Dayton, Inc., et al., pending in the United States
District Court, Southern District of Ohio (the "Ohio Litigation").
During the second quarter of 1996, the parties settled the Oklahoma
Litigation and the Ohio Litigation, and, in connection therewith,
the subsidiaries of the Company have agreed to pay Chief in the
Oklahoma Litigation $200,000 over an eighteen (18) month period and
Reservoir has dismissed the Ohio Litigation. All or any portion of
this monthly settlement payment may, at the sole discretion of the
Company, take the form of credits issued to the Company by Chief as
a result of waste that the Company delivers to Chief for treatment.
In December 1995, Essex Waste Management, Inc. ("Essex") sued
the Company and certain subsidiaries of the Company alleging an
aggregate of approximately $358,000 was due to it by the Company
and certain subsidiaries of the Company for services rendered by
Essex for these subsidiaries or which were used by a subsidiary of
the Company. During the second quarter of 1996, the parties agreed
to a settlement in this matter in which the Company has agreed to
pay to Essex $180,000 over a thirty-six (36) month period. In
addition to cash payments, the Company shall provide $120,000 of
credit to Essex for disposal services, subject to certain
conditions and restrictions.
In addition to the above matters and in the normal course of
conducting its business, the Company is involved in various other
litigation. The Company is not a party to any litigation or
governmental proceeding which its management believes could result
in any judgments or fines against it that would have a material
adverse affect on the Company's financial position, liquidity or
results of operations.
Permits
The Company is subject to various regulatory requirements,
including the procurement of requisite licenses and permits at
certain of its treatment, storage and/or disposal facilities.
These licenses and permits are subject to periodic renewal without
which the Company's operations would be adversely affected. The
Company anticipates that, once a license or permit is issued with
respect to a facility, the license or permit will be renewed at the
end of its term if the facility's operations are in compliance with
the applicable regulatory requirements.
<PAGE>
Accrued Closure Costs and Environmental Liabilities
The Company maintains closure cost funds to insure the proper
decommissioning of its RCRA facilities upon cessation of
operations. Additionally, in the course of owning and operating
on-site treatment, storage and disposal facilities, the Company is
subject to corrective action proceedings to restore soil and/or
groundwater to its original state. These activities are governed
by federal, state and local regulations and the Company maintains
the appropriate accruals for restoration. The Company has recorded
accrued liabilities for estimated closure costs and identified
environmental remediation costs.
Insurance
The business of the Company exposes it to various risks,
including claims for causing damage to property or injuries to
persons or claims alleging negligence or professional errors or
omissions in the performance of its services, which claims could be
substantial. The Company carries general liability insurance which
provides coverage in the aggregate amount of $2 million and an
additional $6 million excess umbrella policy and carries $1 million
per occurrence and $2 million annual aggregate of errors and
omissions/professional liability insurance coverage, which includes
tank removal and pollution control coverage.
The Company also carries specific pollution legal liability
insurance for operations involved in the waste management services
segment for property damages or bodily injuries occurring off-site
of the Company's facilities due to release of contaminates from the
Company's facilities, with such insurance providing coverages
ranging from a $2 million annual aggregate to $8 million annual
aggregate, for certain facilities.
4. Stock Issuance
______________
As previously disclosed, the Company issued, during February
1996, 1,100 shares of newly created Series 1 Class A Preferred
Stock ("Series 1 Preferred") at a price of $1,000 per share, for an
aggregate sales price of $1,100,000, and paid a placement fee of
$176,000. During February 1996, the Company also issued 330 shares
of newly created Series 2 Class B Convertible Preferred Stock
("Series 2 Preferred") at a price of $1,000 per share, for an
aggregate sales price of $330,000, and paid a placement fee of
$33,000. The Series 1 Preferred and Series 2 Preferred accrued
dividends on a cumulative basis at a rate per share of five percent
(5%) per annum payable quarterly, at the option of the Company, in
either cash or by the issuance of shares of common stock. All
dividends on the Series 1 Preferred and Series 2 Preferred were
paid in common stock. The Series 1 Preferred and Series 2
Preferred were convertible, at any time, commencing forty-five (45)
<PAGE>
days after issuance into shares of the Company's common stock at a
conversion price equal to the aggregate value of the shares of the
Preferred Stock being converted, together with all accrued but
unpaid dividends thereon, divided by the "Average Stock Price" per
share (the "Conversion Price"). The Average Stock Price means the
lesser of (i) seventy percent (70%) of the average daily closing
bid prices of the common stock for the period of five (5)
consecutive trading days immediately preceding the date of
subscription by the holder or (ii) seventy percent (70%) of the
average daily closing bid prices of the common stock for a period
of five (5) consecutive trading days immediately preceding the date
of conversion of the Preferred Stock. During the second quarter of
1996, a total of 722 shares of the Series 1 Preferred were
converted into approximately 1,035,000 shares of the Company's
common stock and the associated accrued dividends were paid in the
form of approximately 15,000 shares of the Company's common stock.
Pursuant to a subscription and purchase agreement for the issuance
of Series 3 Class C Convertible Preferred Stock, the remaining 378
shares of the Series 1 Preferred and the 330 shares of the Series
2 Preferred were converted during July 1996 into 920,000 shares of
the Company's common stock. By terms of the subscription
agreement, the 920,000 shares of common stock were purchased by the
Company at a purchase price of $1,770,000. See Note 5 for
additional information on this subscription agreement. As a result
of such conversions, the Series 1 Preferred and the Series 2
Preferred are no longer outstanding.
The Company issued, during the second quarter of 1996, 133,333
shares of common stock pursuant to a first quarter stock purchase
agreement between the Company and Dr. Louis F. Centofanti, Chairman
of the Board and Chief Executive Officer of the Company. The
Company also entered into a second stock purchase agreement with
Dr. Centofanti, whereby the Company agreed to sell 76,190 shares of
its common stock for the purchase price of $100,000.
5. Subsequent Event
________________
On July 17, 1996, the Company issued 5,500 shares of newly-
created Series 3 Class C Convertible Preferred Stock ("Series 3
Preferred") at a price of $1,000 per share, for an aggregate sales
price of $5,500,000, and paid placement and closing fees as a
result of such transaction of approximately $360,000. As part of
the sale of the Series 3 Preferred, the Company also issued two (2)
common stock purchase warrants entitling the Subscriber to
purchase, after December 31, 1996, until July 18, 2001, an
aggregate of up to 2,000,000 shares of common stock, with 1,000,000
shares exercisable at an exercise price equal to $2.00 per share
and 1,000,000 shares exercisable at an exercise price equal to
$3.50 per share. The Series 3 Preferred accrues dividends on a
cumulative basis at a rate of six percent (6%) per annum, and is
payable semi-annually when and as declared by the Board of
Directors. Dividends shall be paid, at the option of the Company,
<PAGE>
in the form of cash or common stock of the Company. The holder of
the Series 3 Preferred may convert into common stock of the Company
up to (i) 1,833 shares on and after October 1, 1996, (ii) 1,833
shares on and after November 1, 1996, and (iii) the balance on and
after December 1, 1996. The conversion price shall be the product
of (i) the average closing bid quotation for the five (5) trading
days immediately preceding the conversion date multiplied by (ii)
seventy-five percent (75%). The conversion price shall be a
minimum of $.75 per share (which minimum price may be reduced upon
the occurrence of certain limited events) or a maximum of $1.50 per
share. The common stock issuable on the conversion of the Series
3 Preferred is subject to certain registration rights pursuant to
the subscription agreement. The subscription agreement also
provides that the Company utilize $1,770,000 of the net proceeds to
purchase from the Subscriber 920,000 shares of the Company's common
stock owned by the Subscriber. As discussed in Note 4 above, the
Subscriber had previously acquired from the Company 1,100 shares of
Series 1 Class A Preferred Stock, par value $.001 per share
("Series 1 Preferred"), and 330 shares of Series 2 Class B
Convertible Preferred Stock, par value $.001 per share ("Series 2
Preferred"). As of the date of the subscription agreement, the
Subscriber had converted 722 shares of such Series 1 Preferred into
common stock pursuant to the terms of such Series 1 Preferred and
had not converted into common stock any shares of Series 2
Preferred. The Subscriber was the owner of record and beneficially
owned all of the issued and outstanding shares of Series 1
Preferred and Series 2 Preferred, which totalled 378 shares of
Series 1 Preferred and 330 shares of Series 2 Preferred. At the
closing, the Subscriber converted all of the outstanding shares of
Series 1 Preferred and Series 2 Preferred into common stock of the
Company (920,000 shares) pursuant to the terms, provisions,
restrictions and conditions of the Series 1 Preferred and Series 2
Preferred, which were in turn purchased by the Company.
<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART I, ITEM 2
Results of Operations
The table below should be used when reviewing management's
discussion and analysis for the three and six months ended June 30,
1996 and 1995 (in thousands):
Three Months Ended
June 30,
_________________________________
<C> <S> <S> <S> <S>
Consolidated 1996 % 1995 %
____________ _______ _____ _______ _____
Net Revenues $ 8,178 100.0 $ 9,381 100.0
Cost of Goods Sold 5,634 68.9 7,123 75.9
______ _____ ______ _____
Gross Profit 2,544 31.1 2,258 24.1
Selling, General and
Administrative 1,682 20.6 2,400 25.6
Depreciation/Amortization 558 6.8 587 6.3
Nonrecurring Charges - - 705 7.5
______ _____ ______ ______
Income (loss) from
Operations $ 304 3.7 $(1,434) (15.3)
====== ===== ====== ======
Interest Expense 227 2.8 241 2.6
Six Months Ended
June 30,
_________________________________
Consolidated 1996 % 1995 %
____________ _______ _____ _______ _____
Net Revenues $15,750 100.0 $18,004 100.0
Cost of Goods Sold 11,398 72.4 13,761 76.4
______ _____ ______ _____
Gross Profit 4,352 27.6 4,243 23.6
Selling, General and
Administrative 3,424 21.7 4,099 22.8
Depreciation/Amortization 1,177 7.5 1,143 6.3
Nonrecurring Charges - - 705 3.9
______ _____ ______ ______
Income (loss) from
Operations $ (249) (1.6) $(1,704) (9.5)
====== ====== ====== ======
Interest Expense 489 3.1 439 2.4
</TABLE>
<PAGE>
Summary -- Quarter Ended June 30, 1996 and 1995
_______________________________________________
Consolidated net revenues decreased to $8,178,000 from
$9,381,000 for the three month period ended June 30, 1996, as
compared to 1995. This 12.8% decrease, or $1,203,000, reflects
reduced revenues within both the waste management and consulting
engineering segments of $1,166,000 and $37,000, respectively. As
reflected, the most significant decrease was within the waste
management segment and is a result of the impact of the various
restructuring programs initiated during 1995, which resulted in the
consolidation and closure of certain offices, the divestiture of a
subsidiary and the disruption resulting from a major capital
expansion at one facility, in conjunction with the Company's
continued focus on select markets. Consolidated revenues for the
six months ended June 30, 1996 and 1995 were $15,750,000 and
$18,004,000, respectively, reflecting a $2,254,000 decrease. This
decrease is a direct result of the above discussed restructuring
program, again focused on the closure or divestiture of
unprofitable operations during 1995 and early 1996. Also, as a
result of industry and weather related issues during the first
quarter, revenues were negatively impacted beyond normal
seasonality for this typically down period.
Costs of goods sold decreased to $5,634,000 from $7,123,000
for the quarter ended June 30, 1996. The $1,489,000 decrease is
primarily attributable to the reduced revenue during the second
quarter of 1996, as discussed above, and the cost benefit
associated with the various restructuring programs and the closure
or divestiture of non-performing entities. As a percent of
revenue, costs of goods sold decreased to 68.9% in the second
quarter of 1996, compared to 75.9% in the corresponding second
quarter of 1995. This consolidated decrease in cost of goods sold
as a percent of revenue reflects improvements in both the waste
management and consulting engineering segments, resulting from the
continued emphasis on cost containment across all Company segments.
Consolidated cost of goods sold for the six months ended June 30,
1996 was $11,398,000, a reduction of $2,363,000 from the 1995 total
of $13,761,000. Cost of goods sold as a percent of revenue also
decreased for the six month period of 1996 to 72.4% from a
percentage of 76.4% for 1995. The Company continued to see
improvements in the consolidated gross profit as a percentage of
net revenues, with the first quarter of 1996 improving by
approximately one (1) percentage point to 23.9% (a typically low
quarter) and the second quarter reflecting an improvement of seven
(7) percentage points, to 31.1%, which again reflects the impact of
the restructuring and cost savings programs.
Selling, general and administrative expenses decreased to
$1,682,000 from $2,400,000 for the quarter ended June 30, 1996. As
a percent of revenue, selling, general and administrative expenses
decreased to 20.6% for the quarter ended June 30, 1996 compared to
25.6% for the same period in 1995. This decrease of $718,000
<PAGE>
reflects (i) the direct cost or overhead reduction resulting from
the closure or divestiture of certain operations, which reflects a
reduction of approximately $300,000 for the second quarter, (ii)
the reduced corporate overhead resulting from the restructuring
program and significant downsizing of the corporate costs,
finalized during the first quarter of 1996, which reflects a
reduction of approximately $348,000 for the second quarter, and
(iii) the overall corporate focus on cost reductions and
efficiencies at all levels. Selling, general and administrative
expenses also decreased for the six months ended June 30, 1996 to
$3,424,000 from $4,099,000 for the same period of 1995. This
decrease of $675,000 reflects again the above discussed second
quarter reductions and improvements partially offset by the first
quarter increase in sales and marketing costs incurred by the
Company as it strengthens and expands its efforts in this area. As
a percent of sales, selling, general and administrative costs
improved from 22.8% in 1995 to 21.7% in 1996, with significant
improvement demonstrated during the second quarter.
Interest expense was $227,000 for the quarter ended June 30,
1996, as compared to $241,000 for the same period of 1995. The
decrease in interest expense of $14,000 for the second quarter is
principally a result of the reduced interest expense associated
with the revolving loan and term note facility, reflecting lower
average loan balances partially offset by increased interest rates
resulting from the default interest rate (see Note 2 of the Notes
to Consolidated Financial Statements). This decrease was partially
offset by the additional interest expense resulting from new
equipment financing agreements entered into with Ally Capital
Corporation throughout 1995 and early 1996. Interest expense for
the six months ended June 30, 1996 totaled $489,000, as compared to
$439,000 for the same period of 1995. This increase of $50,000 is
principally a result of the additional equipment financing entered
into with Ally Capital Corporation and other lease financing groups
throughout 1995.
During the second quarter of 1995, the Company recorded
several one-time, nonrecurring charges totaling $705,000 for
certain unrelated events. Of this amount, $450,000 represented a
divestiture reserve as related to the sale of the Company's wholly-
owned subsidiary, Re-Tech Systems, Inc., a post-consumer plastics
recycling company. This sale transaction was closed effective
March 15, 1996. The Company also recorded during the second
quarter of 1995 one-time charges totaling $255,000 as related to
various restructuring programs, which included a one-time charge of
$180,000 to provide for costs, principally severance and lease
termination fees, associated with the restructuring of the Perma-
Fix, Inc. service center group. This program entailed primarily
the consolidation of offices in conjunction with the implementation
of a regional service center concept and the closure of seven (7)
of nine (9) offices. A one-time charge of $75,000 was also
recorded to provide for consolidation costs, principally severance,
<PAGE>
associated with the restructuring of the Southeast Region, which is
comprised of Perma-Fix of Florida, Inc. and Perma-Fix of Ft.
Lauderdale, Inc.
Other income for the quarter ended June 30, 1996 was $85,000,
as compared to expense of $36,000 for the quarter ended June 30,
1995. Other income for the six months ended June 30, 1996 was
$288,000 as compared to $45,000 for the same period of 1995. This
increase of $243,000 was principally a result of the gain on the
sale of certain nonproductive assets within the waste management
services segment.
<TABLE>
<CAPTION>
The table below reflects activity for the three and six months
ended June 30, 1996 and 1995, which should be used in conjunction
with the management's discussion and analysis by segment (in
thousands):
Waste Management Consulting
Services Engineering
Three Months Ended ___________________________ ____________________________
June 30, 1996 % 1995 % 1996 % 1995 %
__________________ ______ _____ ______ _____ ______ _____ ______ _____
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Revenues $6,675 100.0 $7,841 100.0 $1,503 100.0 $1,540 100.0
Cost of Goods Sold 4,555 68.2 5,960 76.0 1,079 71.8 1,163 75.5
______ _____ ______ _____ ______ _____ ______ _____
Gross Profit $2,120 31.8 $1,881 24.0 $ 424 28.2 $ 377 24.5
====== ===== ====== ===== ====== ===== ====== =====
Waste Management Consulting
Services Engineering
Six Months Ended ___________________________ ____________________________
June 30, 1996 % 1995 % 1996 % 1995 %
__________________ ______ _____ ______ _____ ______ _____ ______ _____
Net Revenues $13,071 100.0 $14,881 100.0 $2,679 100.0 $3,123 100.0
Cost of Goods Sold 9,417 72.0 11,285 75.8 1,981 73.9 2,476 79.3
______ _____ ______ _____ ______ _____ ______ _____
Gross Profit $3,654 28.0 $ 3,596 24.2 $ 698 26.1 647 20.7
====== ===== ====== ===== ====== ===== ====== =====
</TABLE>
Waste Management Services -- Quarter Ended June 30, 1996 and 1995
_________________________________________________________________
The waste management services segment is engaged in on- and
off-site treatment, storage, disposal and blending of a wide
variety of by-products and industrial and hazardous wastes. This
segment competes for materials and services with numerous regional
and national competitors to provide comprehensive and cost-
effective waste management services to a wide variety of customers
in the Midwest, Southeast and Southwest regions of the country. In
1996, the Company operated and maintained facilities or businesses
in the waste by-product brokerage, on-site treatment and
stabilization, and off-site blending, treatment and disposal
industries.
<PAGE>
During 1995, the Company initiated a re-engineering of the
waste management services segment, which included the detail review
of all operations and modification of its approach to soliciting
new customers while maintaining its existing customer base and, at
the same time, expanding its marketing efforts. In re-engineering
the waste management services segment, the Company made two key
decisions during 1995. The first was the elimination of a majority
of its service center locations. In June of 1995, the Company
closed seven (7) of nine (9) service centers, leaving its
Albuquerque office operating due to its continued profitability and
the future prospects thereof, and to operate its Tulsa, Oklahoma
service center as part of other waste management operations of the
Company. The second decision was to exit the toll grinding of
post-consumer and industrial plastics and resins, performed through
its wholly-owned subsidiary, Re-Tech Systems, Inc. in Houston,
Texas. The decision to sell this business entity was a continued
effort to focus the Company on consulting engineering and off-site
environmental services, both of which demonstrate higher gross
margins than toll grinding.
Effective March 15, 1996, the Company completed the sale of
Re-Tech Systems, Inc. The sale transaction included all real and
personal property of the subsidiary, for a total consideration of
$970,000. Net cash proceeds to the Company were approximately
$320,000, after the repayment of a mortgage obligation of $582,000
and certain other closing and real estate costs. In conjunction
with this transaction, the Company also made a prepayment of
$50,000 to Heller Financial, Inc. for application to the term loan.
As previously disclosed, the Company recorded during the second
quarter of 1995, a nonrecurring charge of $450,000 for the
estimated loss on the sale of this subsidiary, which was recorded
as an asset reduction. However, the Company recognized, during the
first quarter of 1996, a small gain on this sale after the asset
write-down. The Company sold total assets of approximately
$1,346,000, while retaining certain assets totalling approximately
$94,000 and certain liabilities totalling approximately $48,000.
Waste management services' revenue was $6,675,000 for the
quarter ended June 30, 1996. During the same period in 1995, waste
management services' revenue was $7,841,000. This decrease of
$1,166,000, or 14.9%, is principally a result of the above
discussed re-engineering program, in conjunction with the closing
of the service center locations, the disruption of one facility
currently undergoing major capital expansion, and the impact of the
sale of Re-Tech. The closed service center locations reflected
approximately $1,229,000 of this decrease, which was partially
offset by additional revenue through the expansion of existing
service centers and the receipt of new contracts, such as the waste
treatment project at the U.S. Department of Energy's Fernald, Ohio
facility. This contract generated approximately $167,000 of
additional revenue during the second quarter of 1996. Offsetting
this increase was the sale of Re-Tech, which resulted in a
<PAGE>
reduction of approximately $152,000 during the quarter. The
Company also experienced reduced revenue levels at its Ft.
Lauderdale, Florida facility as the Company finalizes a major
capital expansion project. Revenues for the six months ended
June 30, 1996 were $13,071,000, as compared to $14,881,000 for the
same period of 1995. This decrease of $1,810,000 is again
attributable to the above discussed issues, with the closed service
centers reflecting approximately $2,031,000 of this decrease,
partially offset by the receipt of new contracts at favorable
pricing/margins. Also, during the first six months of 1996, the
waste management segment continued to experience downward pressure
on prices due to the market imbalance of excess supply over
industry demand, principally within the off-site blending,
treatment and disposal facilities. These market conditions
contributed to the reduced revenue within certain areas of this
segment and, as a result, the Company continues to focus its
marketing efforts at higher margin services for these facilities.
Cost of goods sold decreased to $4,555,000 from $5,960,000 for
the quarter ended June 30, 1996 and 1995, respectively. This
decrease of $1,405,000, or 23.6%, in cost of goods sold reflects
the corresponding direct and indirect costs related to the above
discussed revenue reduction, and the savings resulting from various
cost containment programs initiated during 1995. The Company
continued during the quarter to closely monitor and reduce all
possible operating costs. These reductions, however, were
partially offset by the temporary increase in operating costs
incurred at its Ft. Lauderdale, Florida facility, as the Company
finalizes this facility's expansion. As a percent of revenue, the
cost of goods sold for waste management services decreased from
76.0% of revenue for the quarter ended June 30, 1995 to 68.2% of
revenue for the quarter ended June 30, 1996, again reflecting the
impact of the restructuring and cost reduction programs. Cost of
goods sold also decreased $1,868,000 for the six month period ended
June 30, 1996 to $9,417,000, from a total of $11,285,000 for the
same period of 1995. As a percent of revenue, the cost of goods
sold decreased from 75.8% for the six months ended June 30, 1995 to
72.0% for the six months of 1996.
Consulting Engineering Services -- Quarter Ended June 30, 1996 and
1995
_________________________________________________________________
The Company's consulting engineering segment provides a wide
variety of environmental related consulting and engineering
services to industry and government. Through the Company's wholly-
owned subsidiaries in Tulsa, Oklahoma and St. Louis, Missouri, this
segment provides oversight management of environmental restoration
projects, air and soil sampling and compliance reporting, surface
and subsurface water treatment design for removal of pollutants,
and various compliance and training activities. This segment, like
many other engineering firms within the pollution control industry,
<PAGE>
is maturing rapidly, experiencing downward pricing pressure and
competitive conditions.
Net revenues for the consulting engineering segment decreased
to $1,503,000 for the quarter ended June 30, 1996 as compared to
$1,540,000 for the quarter ended June 30, 1995. This 1996 second
quarter revenue total reflects the anticipated improvement from the
first quarter of the year, with only a slight decrease ($37,000)
from the second quarter of 1995. Net revenues, however, for the
six months ended June 30, 1996 were $2,679,000 as compared to
$3,123,000 for the six months of 1995. This decrease of $444,000,
or 14.2% occurred principally during the first quarter and
reflects, among other changes, the above discussed competitive
nature of the industry, weather related issues that delayed the
start-up of certain contracts, and the corresponding loss of
certain other contracts. Also, during 1995, the Company closed its
Canton, Ohio office of Schreiber, Grana and Yonley, Inc., which
resulted in approximately $87,000 of this revenue reduction. The
Company has also, however, partially offset this reduction by the
receipt of several new contracts/relationships and the expansion of
its product base into new services to be provided to current and
prospective customers. The Company continues to focus the
consulting engineering segment on those services which it can
provide the best value to its customers and greatest margin to the
Company.
Cost of goods sold decreased $72,000 to $1,079,000 from
$1,163,000 for the quarter ended June 30, 1996 and 1995,
respectively. This decrease of 6.2% reflects not only the impact
of reduced revenues for the quarter, but also the overall reduction
of operating cost. Also, with this improved utilization and
aggressive cost containment program, the consulting engineering
segment's cost of goods sold decreased from 75.5% of net revenues
to 71.8% of net revenues for the quarter ended June 30, 1995 and
1996, respectively. Cost of goods sold for the six months ended
June 30, 1996 were $1,981,000 as compared to $2,476,000 for the
same period of 1995. This decrease of $495,000 or 20% reflects, as
discussed above, the impact of reduced revenue and cost containment
efforts. These results reflect a gross margin level of 26.1% for
the six months of 1996, an improvement over the 20.7% for 1995.
Liquidity and Capital Resources of the Company
______________________________________________
At June 30, 1996, the Company had cash and cash equivalents of
$172,000. This cash and cash equivalents total reflects a decrease
of $29,000 from December 31, 1995, as a result of net cash used in
operations of $420,000, cash provided by investing activities of
$138,000 and cash provided by financing activities of $253,000.
Accounts receivable, net of allowances, totalled $5,489,000, an
increase of $458,000 over the December 31, 1995 balance of
$5,031,000, which reflects the increased revenue levels as the
Company emerges from its traditionally slow first quarter into the
stronger summer months.
<PAGE>
As of June 30, 1996, the borrowings under the Company's
revolving loan facility totalled $3,226,000, an increase of $50,000
from the December 31, 1995 balance of $3,176,000, with a related
borrowing availability of $227,000, excluding the $250,000
overformula line, as discussed below. The balance on the term loan
totalled $1,638,000, as compared to $2,083,000 at December 31,
1995. Total indebtedness under the Heller Agreement as of June 30,
1996 was $4,864,000, a reduction of $395,000 from the December 31,
1995 balance of $5,259,000.
As previously disclosed, during the second quarter of 1995,
the Company became in violation of certain of the restrictive
financial ratio covenants under the Agreement with Heller. During
the second quarter of 1996, the Company negotiated and subsequently
entered into an amendment ("Third Amendment") to the Loan and
Security Agreement with Heller, whereby, among other things, Heller
waived the existing events of default, amended the financial
covenants and amended certain other provisions of the Loan
Agreement as set forth therein. Under the Third Amendment,
applicable interest rate provisions were also amended, whereby the
term loan shall bear a floating rate of interest per annum equal to
the base rate plus 2 1/4%, and the revolving loan shall bear a
floating rate of interest per annum equal to the base rate plus 2%.
The Third Amendment also contains a performance price adjustment
which provides that upon the occurrence of the "equity infusion"
from the sale of the Series 3 Preferred, as discussed below,
applicable interest rates on the loans shall be reduced, in each
instance, by 1/2% per annum. Also, during the second quarter of
1996, Heller extended to the Company an overformula line in an
amount not to exceed $250,000, for a period ending the earliest of
90 days after the date of first advance or September 30, 1996.
Pursuant to the above discussed Third Amendment, said overformula
line terminated upon the Company's receipt of an equity infusion.
See Note 2 of the Notes to Consolidated Financial Statements in
Item 1.
As previously disclosed, Heller had agreed to forebear from
exercising any rights and remedies under the Agreement as a result
of these previous defaults and continued to make normal advances
under the revolving loan facility. However, in compliance with
generally accepted accounting principles, the Company, at
December 31, 1995, reclassified as a current liability $3,882,000
outstanding under the Agreement that would otherwise have been
classified as long-term debt. As a result of the above discussed
amendment, $4,364,000 has been classified as long-term debt at
June 30, 1996.
<PAGE>
Pursuant to the initial agreement, the term loan bears
interest at a floating rate equal to the base rate (prime) plus 1
3/4% per annum The revolving loan bears interest at a floating
rate equal to the base rate (prime) plus 1 1/4% per annum. The
loans also contain certain closing, management and unused line fees
payable throughout the term. As discussed above, in conjunction
with the Third Amendment, applicable interest rates were amended.
However, during the period that the Agreement was in default, a
default rate of interest was applied effective August 21, 1995
through the date of the Third Amendment, and therefore the Heller
obligations bore interest at the above noted effective rate plus
2.0%. Both the revolving loan and term loan were prime based loans
at June 30, 1996, bearing interest at a rate of 11.50% and 12.00%,
respectively.
Also, as previously disclosed, during 1995, the Company became
in violation of the tangible net worth covenant under the equipment
financing agreement with Ally Capital Corporation ("Ally"). During
the second quarter of 1996, the Company negotiated and subsequently
entered into an amendment to the equipment financing agreement,
whereby, among other things, Ally waived the existing event of
default and amended the minimum tangible net worth covenant. As
previously disclosed, at December 31, 1995, Ally had waived
compliance with the minimum tangible net worth covenant and no
acceleration was demanded by the lender. However, in compliance
with generally accepted accounting principles, the Company, at
December 31, 1995, reclassified as a current liability $1,103,000
outstanding under the agreement, which would otherwise have been
classified as long-term debt. The outstanding balance on this
equipment financing agreement at June 30, 1996 is $1,553,000, as
compared to $1,778,000 at December 31, 1995. As a result of the
above discussed amendment, $945,000 has been classified as long-
term debt and $608,000 as current at June 30, 1996.
As of June 30, 1996, total consolidated accounts payable for
the Company was $4,433,000, a reduction of $969,000 from the
December 31, 1995 balance of $5,402,000. This June 1996 balance
also reflects a reduction of $310,000 in the balance of payables in
excess of ninety (90) days, to a total of $2,171,000.
For 1996, the Company has budgeted capital expenditures of
$1,250,000 for improving operations and maintaining Resource
Conservation Recovery Act ("RCRA") permit compliance. All of these
expenditures are materially necessary to maintain compliance with
federal, state or local permit standards. As of June 30, 1996, the
Company's net purchases of new capital equipment totalled
approximately $1,025,000, which was principally funded by the
proceeds from the issuance of Preferred Stock, as discussed below,
with the exception of $57,000, which was financed through the
equipment financing agreement with Ally. At this time, the Company
anticipates financing the remainder of these expenditures by a
combination of lease financing and/or utilization of the equity
raised in July 1996, as discussed below and in Note 5 of the Notes
to Consolidated Financial Statements in Item 1.
<PAGE>
At June 30, 1996, the Company had $7,133,000 in aggregate
principal amounts of outstanding debt, as compared to $8,478,000 at
December 31, 1995. This decrease in outstanding debt of $1,345,000
during the first six months of 1996 reflects the net repayment of
the revolving loan and term note facility of $395,000, the
scheduled principal repayments on long-term debt of $424,000,
including the equipment finance agreement payments to Ally, and the
repayment of $582,000 on a mortgage obligation in conjunction with
the Re-Tech sale, as discussed below.
The working capital deficit position at June 30, 1996 was
$2,040,000, as compared to a deficit position of $9,372,000 at
December 31, 1995. The December deficit position includes the
reclassification of certain long-term debt to current. Prior to
this reclassification, the December deficit position was
$3,399,000, which reflects an improvement in this position of
$1,359,000 during the six months of 1996.
As previously disclosed, the Company issued, during February
1996, 1,100 shares of newly created Series 1 Preferred at a price
of $1,000 per share, for an aggregate sales price of $1,100,000,
and paid a placement fee of $176,000. The Company also issued 330
shares of newly created Series 2 Preferred at a price of $1,000 per
share, for an aggregate sales price of $330,000, and paid a
placement fee of $33,000. The Series 1 Preferred and Series 2
Preferred accrued dividends on a cumulative basis at a rate per
share of five percent (5%) per annum and were payable quarterly, at
the option of the Company in either cash or by the issuance of
shares of common stock. The Company paid all accrued dividends on
the Series 1 Preferred and the Series 2 Preferred in common stock.
The Preferred Stock was convertible, at any time, commencing forty-
five (45) days after issuance into shares of the Company's common
stock at a conversion price equal to the aggregate value of the
shares of the Preferred Stock being converted, together with all
accrued but unpaid dividends thereon, divided by the "Average Stock
Price" per share (the "Conversion Price"). The Average Stock Price
was defined as the lesser of (i) seventy percent (70%) of the
average daily closing bid prices of the common stock for the period
of five (5) consecutive trading days immediately preceding the date
of subscription by the holder or (ii) seventy percent (70%) of the
average daily closing bid prices of the common stock for a period
of five (5) consecutive trading days immediately preceding the date
of such conversion of the Preferred Stock. During the second
quarter of 1996, a total of 722 shares of the Series 1 Preferred
were converted into approximately 1,035,000 shares of the Company's
common stock and the associated accrued dividends were paid in the
form of approximately 15,000 shares of the Company's common stock.
Pursuant to a subscription and purchase agreement for the issuance
of Series 3 Class C Convertible Preferred Stock, as discussed
<PAGE>
below, the remaining 378 shares of the Series 1 Preferred and the
330 shares of the Series 2 Preferred were converted during July
1996 into 920,000 shares of the Company's common stock, which
included the accrued and unpaid dividends thereon, and the Company
purchased the 920,000 shares for $1,770,000. See below in
"Liquidity and Capital Resources of the Company."
The Company issued, during the second quarter of 1996, 133,333
shares of common stock pursuant to a first quarter stock purchase
agreement between the Company and Dr. Louis F. Centofanti, Chairman
of the Board and Chief Executive Officer of the Company. The
Company also entered into a second stock purchase agreement with
Dr. Centofanti, whereby the Company agreed to sell 76,190 shares of
its common stock for the purchase price of $100,000.
On July 17, 1996, the Company issued 5,500 shares of newly-
created Series 3 Class C Convertible Preferred Stock ("Series 3
Preferred") at a price of $1,000 per share, for an aggregate sales
price of $5,500,000, and paid placement and closing fees of
approximately $360,000. As part of the consideration for the
issuance of the Series 3 Preferred, the Company also issued two (2)
common stock purchase warrants entitling the Subscriber to
purchase, after December 31, 1996, until July 18, 2001, an
aggregate of up to 2,000,000 shares of common stock, with 1,000,000
shares exercisable at an exercise price equal to $2.00 per share
and the other 1,000,000 shares of common stock exercisable at an
exercise price equal to $3.50 per share. Dividends on the Series
3 Preferred are paid when and as declared by the Board of Directors
at a rate of six percent (6%) per annum and are payable semi-
annually. Dividends are cumulative and shall be paid, at the
option of the Company, in the form of cash or common stock of the
Company. It is the present intent of the Company to pay such
dividends, if any, in common stock of the Company. The shares of
the Series 3 Preferred may be converted into shares of common
stock. See Note 5 of Notes to Consolidated Financial Statements
and Item 5 "Other Events" of Part II hereof. The Company received
from the sale of the Series 3 Preferred net proceeds of
approximately $5,100,000. Pursuant to the terms of the
Subscription Agreement with the Subscriber, the Company has
purchased from the Subscriber from the net proceeds 920,000 shares
of common stock of the Company that the Subscriber received upon
conversion of the balance of the outstanding shares of Series 1
Preferred and Series 2 Preferred for $1,770,000. It is the intent
of the Company to use approximately $1,650,000 of the net proceeds
for capital improvements at its various facilities and the balance
of the net proceeds to reduce outstanding trade payables and for
general working capital.
Effective March 15, 1996, the Company completed the sale of
Re-Tech Systems, Inc., its plastics recycling subsidiary in
Houston, Texas. The sale transaction included all real and
personal property of the subsidiary, for a total consideration of
<PAGE>
$970,000. Net cash proceeds to the Company were approximately
$320,000, after the repayment of a mortgage obligation of $582,000
and certain other closing and real estate costs. In conjunction
with this transaction, the Company also made a prepayment of
$50,000 to Heller Financial, Inc. for application to the term loan.
As previously disclosed, the Company recorded during 1995, a
nonrecurring charge (recorded as an asset reduction) of $450,000
for the estimated loss on the sale of this subsidiary, which, based
upon closing balances, the Company recognized a small gain on this
sale after the asset write-down. The Company sold total assets of
approximately $1,346,000, while retaining certain assets totalling
approximately $94,000 and certain liabilities totalling
approximately $48,000. In addition to the above asset sale, the
Company also sold certain non-productive assets during the quarter,
principally at closed service center locations and at the Perma-Fix
of Dayton, Inc. facility. Proceeds from these asset sales total
approximately $320,000.
In summary, the Company has taken a number of steps to improve
its operations and liquidity as discussed above, including the
equity subsequently raised in July 1996, and it expects the
resulting liquidity position to be adequate to continue to fund its
operating and capital needs. However, if the Company is unable to
continue to improve its operations and to sustain profitability in
the foreseeable future, such may have a material adverse effect on
the Company's liquidity position and on the Company. This is a
forward-looking statement and is subject to certain factors that
could cause actual results to differ materially from those in the
forward-looking statement, including, but not limited to, the
Company's ability to maintain profitability or, if the Company is
not able to maintain profitability, whether the Company is able to
raise additional liquidity in the form of additional equity or
debt.
<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
PART II - Other Information
Item 1. Legal Proceedings
_________________
During 1995, certain subsidiaries of the Company were sued by
Chief Supply Corporation ("Chief Supply") in three (3) causes of
action pending in the United States District Court, Northern
District of Oklahoma, in cases styled Chief Supply Corporation v.
Perma-Fix of Dayton, Inc.; Chief Supply Corporation v. Perma-Fix of
Florida, Inc.; and Chief Supply Corporation v. Perma-Fix of
Memphis, Inc. Chief Supply was alleging that the subsidiaries owe
to Chief Supply an aggregate of approximately $292,000 (the
"Oklahoma Litigation"). Perma-Fix of Memphis, Inc. has asserted a
counterclaim for receivables due from Chief Supply for services
rendered by two subsidiaries of the Company of approximately
$134,000. In addition, these subsidiaries have asserted certain
defenses regarding the performance of services by Chief Supply.
Reservoir Capital Corporation ("Reservoir") alleged that
substantially the same receivables for which Chief Supply had sued
the subsidiaries of the Company were factored and assigned by Chief
Supply to Reservoir, and in March 1996, Reservoir brought suit
against the same subsidiaries of the Company sued by Chief Supply
for collection of substantially the same receivables Chief Supply
sued the subsidiaries of the Company, plus exemplary damages. The
suit brought by Reservoir is styled Reservoir Capital Corporation
v. Perma-Fix of Dayton, Inc., et al., pending in the United States
District Court, Southern District of Ohio (the "Ohio Litigation").
During the second quarter of 1996, the parties settled the Oklahoma
Litigation and the Ohio Litigation, and, in connection therewith,
the subsidiaries of the Company have agreed to pay Chief in the
Oklahoma Litigation $200,000 over an eighteen (18) month period and
Reservoir has dismissed the Ohio Litigation. All or any portion of
this monthly settlement payment may, at the sole discretion of the
Company, take the form of credits issued to the Company by Chief as
a result of waste that the Company delivers to Chief for treatment.
In December 1995, Essex Waste Management, Inc. ("Essex") sued
the Company and certain subsidiaries of the Company alleging an
aggregate of approximately $357,512 was due to it by the Company
and certain subsidiaries of the Company for services rendered by
Essex for these subsidiaries or which were used by a subsidiary of
the Company. During the second quarter of 1996, the parties
settled this matter in which the Company has agreed to pay to Essex
$180,000 over a thirty-six (36) month period. In addition to cash
payments, the Company shall provide $120,000 of credit to Essex for
disposal services, subject to certain conditions and restrictions.
<PAGE>
Item 5. Other Events
____________
During July 1996, the Company sold in a private placement
under Section 4(2) and/or Regulation D under the Securities Act of
1933, as amended, to a subscriber ("Subscriber") 5,500 shares of a
newly created Series 3 Class C Convertible Preferred Stock, par
value $.001 per share ("Series 3 Preferred"), for $1,000 per share,
and, in connection therewith, granted to the Subscriber warrants to
purchase up to 2,000,000 shares of the Company's common stock after
December 31, 1996, with 1,000,000 shares of common stock
exercisable at $2.00 per share and 1,000,000 shares of common stock
exercisable at $3.50 per share. The warrants are for a term of
five (5) years. The Series 3 Preferred is not entitled to any
voting rights, except as required by law. Dividends on the Series
3 Preferred accrue at a rate of six percent (6%) per annum, payable
semi-annually as and when declared by the Board of Directors, and
such dividends are cumulative. Dividends shall be paid, at the
option of the Company, in the form of cash or common stock of the
Company. The holder of the Series 3 Preferred may convert into
common stock of the Company up to (i) 1,833 shares on or after
October 1, 1996, (ii) 1,833 shares on or after November 1, 1996,
and (iii) the balance on or after December 1, 1996. The conversion
price shall be the product of (i) the average closing bid quotation
for the five (5) trading days immediately preceding the conversion
date multiplied by (ii) seventy-five percent (75%). The conversion
price shall be a minimum of $.75 per share (which minimum price may
be reduced upon the occurrence of certain limited events) or a
maximum of $1.50 per share. Subject to the closing bid price of
the Company's common stock at the time of conversion and certain
other conditions which could increase the number of shares to be
issued upon conversion, the Series 3 Preferred, if all were
converted, could be converted into between 3.7 million and 7.3
million shares of common stock. The common stock issuable on the
conversion of the Series 3 Preferred is subject to certain
registration rights pursuant to the Subscription Agreement. From
the net proceeds (approximately $5,100,000) received by the Company
from the sale of the Series 3 Preferred, the Company purchased from
the Subscriber 920,000 shares of common stock of the Company
acquired by the Subscriber upon conversion of the Company's Series
1 Class A Preferred Stock and Series 2 Class B Convertible
Preferred Stock for $1,770,000. See Note 5 of Notes to
Consolidated Financial Statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operation--Liquidity
and Capital Resources of the Company."
During July 1996, the Company entered into an amendment to its
Loan and Security Agreement ("Agreement") with Heller Financial,
Inc. ("Heller"), in which Heller, among other things, waived the
Company's defaults thereunder. In addition, during August 1996,
the Company entered into an amendment to the agreement with its
equipment lender, in which the equipment lender, among other
things, waived the Company's default thereunder. See Note 2 to
<PAGE>
Notes to Consolidated Financial Statements and "Management's
Discussion and Analysis of Financial Condition and Results of
Operation--Liquidity and Capital Resources of the Company."
Item 6. Exhibits and Reports on Form 8-K
________________________________
(a) Exhibits
________
Exhibit 3.(i) - Restated Certificate of Incorporation and
all Certificates of Designations.
Exhibit 4.1 - Third Amendment to Loan and Security
Agreement with Heller Financial, Inc.
Exhibit 4.2 - Letter agreement with Heller Financial,
Inc. dated June 19, 1996.
Exhibit 4.3 - Amendment to Ally Capital Corporation
Corporation Lease Agreement, dated
August 16, 1996.
Exhibit 4.4 - Subscription and Purchase Agreement,
dated July 17, 1996, between the Company
and RBB Bank Aktiengesellschaft.
Exhibit 4.5 - Certificate of Designations relating to
Series 3 Preferred, attached as part of
Exhibit 3.1 hereof and incorporated
herein by reference.
Exhibit 4.6 - Form of Certificate for Series 3
Preferred.
Exhibit 10.1 - Common Stock Purchase Warrant Certif-
icate, dated July 19, 1996, granted to
RBB Bank Aktiengesellschaft.
Exhibit 10.2 - Common Stock Purchase Warrant Certif-
icate, dated July 19, 1996, between the
Company and RBB Bank Aktiengesellschaft.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K
___________________
A current report on Form 8-K (Item 5 - Other Event) was
filed on February 28, 1996 reporting that on February 9,
1996, the Company issued 1,100 shares of its newly
created Series 1 Class A Preferred Stock at a price of
$1,000 per share, for an aggregate sales price of
$1,100,000.
<PAGE>
A current report on Form 8-K (Item 5 - Other Events) was
filed on March 11, 1996 reporting that on February 22,
1996, the Company issued 330 shares of its newly created
Series 2 Class B Preferred Stock at a price of $1,000 per
share, for an aggregate sales price of $330,000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
Date: August 19, 1996 By: /s/ Dr. Louis F. Centofanti
____________________________
Dr. Louis F. Centofanti
Chairman of the Board
Chief Executive Officer
By: /s/ Richard T. Kelecy
____________________________
Richard T. Kelecy
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Page No.
________
Exhibit 3.(i)Restated Certificate of Incorporation and
all Certificates of Designations. . . . . . 36
Exhibit 4.1 Third Amendment to Loan and Security Agree-
ment with Heller Financial, Inc. . . . . . 82
Exhibit 4.2 Letter agreement with Heller Financial, Inc.
dated June 19, 1996 . . . . . . . . . . . . 96
Exhibit 4.3 Amendment to Ally Capital Corporation Lease
Agreement dated August 16, 1996 . . . . . . 103
Exhibit 4.4 Subscription and Purchase Agreement, dated
July 17, 1996, between the Company and
RBB Bank Aktiengesellschaft . . . . . . . . 106
Exhibit 4.5 Certificate of Designations relating to Series
3 Preferred, attached as part of Exhibit 3.1
hereof and incorporated herein by reference. -
Exhibit 4.6 Form of Certificate for Series 3 Preferred . . 128
Exhibit 10.1 Common Stock Purchase Warrant Certificate,
dated July 19, 1996, granted to RBB Bank
Aktiengesellschaft . . . . . . . . . . . . . 130
Exhibit 10.2 Common Stock Purchase Warrant Certificate,
dated July 19, 1996, between the Company and
RBB Bank Aktiengesellschaft. . . . . . . . . 137
Exhibit 27 Financial Data Schedule. . . . . . . . . . . . 144
State of Delaware
Office of the Secretary of State Page 1
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF THE CERTIFICATE OF RESTATED CERTIFICATE OF INCORPORATION OF
"NATIONAL ENVIRONMENTAL INDUSTRIES, LTD." FILED IN THIS OFFICE ON
THE TWENTY-SIXTH DAY OF NOVEMBER, A.D. 1991 AT 10 O'CLOCK A.M.
* * * * * * * *
/s/ William T. Quillen
_______________________________
William T. Quillen,
Secretary of State
Authentication: 3909777
Date: 05/24/1993
931445217
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
NATIONAL ENVIRONMENTAL INDUSTRIES, LTD.
1. The present name of the corporation (hereinafter
called the "Corporation") is National Environmental Industries,
Ltd., and the date of filing the original certificate of
incorporation of the Corporation with the Secretary of State of the
State of Delaware is December 19, 1990.
2. The certificate of incorporation of the Corporation
is hereby amended by striking out Articles FOURTH through NINTH
thereof and by substituting in lieu thereof new Articles FOURTH
through NINTH as set forth in the Restated Certificate of
Incorporation hereinafter provided for.
3. The provisions of the certificate of incorporation
as heretofore amended and/or supplemented, and as herein amended,
are hereby restated and integrated into the single instrument which
is hereinafter set forth, and which is entitled Restated
Certificate of Incorporation of National Environmental Industries,
Ltd. without any further amendment other than the amendment
certified herein and without any discrepancy between the provisions
of the certificate of incorporation as heretofore amended and
supplemented and the provisions of the said single instrument
hereinafter set forth.
4. The amendment and restatement of the certificate of
incorporation herein certified have been duly adopted by the
stockholders in accordance with the provisions of Sections 228, 242
and 245 of the General Corporation Law of the State of Delaware.
Prompt written notice of the adoption of the amendment and of the
restatement of the certificate of incorporation herein certified
has been given to those stockholders who have not consented in
writing thereto, as provided in Section 228 of the General
Corporation Law of the State of Delaware.
5. The certificate of incorporation of the Corporation,
as amended and restated herein, shall at the effective time of this
Restated Certificate of Incorporation, read as follows:
"Restated Certificate of Incorporation
of
National Environmental Industries, Ltd.
FIRST: The name of the Corporation is National
Environmental Industries, Ltd.
SECOND: The address of the Corporation's registered
office in the State of Delaware is 32 Loockerman Square, Suite L-
100, City of Dover, County of Dover. The name of its registered
agent at such address is The Prentice-Hall Corporation System, Inc.
<PAGE>
THIRD: The purpose of the Corporation is to engage in
any lawful act or activity for which a corporation may be organized
under the laws of the General Corproation Law of the State of
Delaware.
FOURTH: The total number of shares of capital stock
which the Corporation shall have authority to issue is Twenty-Two
Million (22,000,000) shares, of which Twenty Million (20,000,000)
shares shall be Common Stock, par value $.001 per share, and Two
Million (2,000,000) shares shall be Preferred Stock, $.001 par
value per share.
The Preferred Stock may be issued from time to time in
one or more series. The Board of Directors is hereby expressly
authorized to provide, by resolution or resolutions duly adopted by
it prior to issuance, for the creation of each such series and to
fix the designation and the powers, preferences, rights,
qualifications, limitations and restrictions relating to the shares
of each such series. The authority of the Board of Directors with
respect to each such series of Preferred Stock shall include, but
not be limited to, determining the following:
(a) the designation of such series, the number of shares
to constitute such series and the stated value if different
from the par value thereof;
(b) whether the shares of such series shall have voting
rights, in addition to any voting rights provided by law, and,
if so, the terms of such voting rights, which may be general
or limited;
(c) the dividends, if any, payable on such series,
whether any such dividends shall be cumulative, and, if so,
from what dates, the conditions and dates upon which such
dividends shall be payable, and the preference or relation
which such dividends shall bear to the dividends payable on
any shares of stock of any other class or any other series of
Preferred Stock;
(d) whether the shares of such series shall be subject
to redemption by the Corporation, and, if so, the times,
prices and other conditions of such redemption;
(e) the amount or amounts payable upon shares of such
series upon, and the rights of the holders of such series in,
the voluntary or involuntary liquidation, dissolution or
winding up, or upon any distribution of the assets of the
Corporation;
(f) whether the shares of such series shall be subject
to the operation of a retirement or sinking fund and, if so,
the extent to and manner in which any such retirement or
sinking fund shall be applied to the purchase or redemption of
the shares of such series for retirement or other corporate
<PAGE>
purposes and the terms and provisions relating to the
operation thereof;
(g) whether the shares of such series shall be
convertible into, or exchangeable for, shares of stock of any
other class or any other series of Preferred Stock or any
other securities and, if so, the price or prices or the rate
or rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions of
conversion or exchange;
(h) the limitations and restrictions, if any, to be
effective while any shares of such series are outstanding upon
the payment of dividends or the making of other distributions
on, and upon the purchase, redemption or other acquisition by
the Corporation of, the Common Stock or shares of stock of any
other class or any other series of Preferred Stock;
(i) the conditions or restrictions, if any, upon the
creation of indebtedness of the Corporation or upon the issue
of any additional stock, including additional shares of such
series or of any other series of Preferred Stock or of any
other class; and
(j) any other powers, preferences and relative
participating, optional and other special rights, and any
qualifications, limitations and restrictions thereof.
The powers, preferences and relative, participating,
optional and other special rights of each series of Preferred
Stock, and the qualifications, limitations or restrictions thereof,
if any, may differ from those of any and all other series at any
time outstanding. All shares of any one series of Preferred Stock
shall be identical in all respects with all other shares of such
series, except that shares of any one series issued at different
times may differ as to the dates from which dividends thereof shall
be cumulative.
FIFTH: Unless required by law or determined by the
chairman of the meeting to be advisable, the vote by stockholders
on any matter, including the election of directors, need not be by
written ballot.
SIXTH: The Corporation reserves the right to increase or
decrease its authorized capital stock, or any class or series
thereof, and to reclassify the same, and to amend, alter, change or
repeal any provision contained in the Certificate of Incorporation
under which the Corporation is organized or in any amendment
thereto, in the manner now or hereafter prescribed by law, and all
rights conferred upon stockholders in said Certificate of
Incorporation or any amendment thereto are granted subject to the
aforementioned reservation.
<PAGE>
SEVENTH: The Board of Directors shall have the power at
any time, and from time to time, to adopt, amend and repeal any and
all By-Laws of the Corporation.
EIGHTH: All persons who the Corporation is empowered to
indemnify pursuant to the provisions of Section 145 of the General
Corporation Law of the State of Delaware (or any similar provision
or provisions of applicable law at the time in effect), shall be
indemnified by the Corporation to the full extent permitted
thereby. The foregoing right of indemnification shall not be
deemed to be exclusive of any other rights to which those seeking
indemnification maybe entitled under any by-law, agreement, vote of
stockholders or disinterested directors, or otherwise. No repeal
or amendment of this Article EIGHTH shall adversely affect any
rights of any person pursuant to this Article Eighth which existed
at the time of such repeal or amendment with respect to acts or
omissions occurring prior to such repeal or amendment.
NINTH: No director of the Corporation shall be
personally liable to the Corporation or its stockholders for any
monetary damages for breaches of fiduciary duty as a director,
provided that this provisions shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct
or a knowing violation of law; (iii) under Section 174 of the
General Corporation Law of the State of Delaware; or (iv) for any
transaction from which the director derived an improper personal
benefit. No repeal or amendment of this Article NINTH shall
adversely affect any rights of any person pursuant to this Article
NINTH which existed at the time of such repeal or amendment with
respect to acts or omissions occurring prior to such repeal or
amendment."
IN WITNESS WHEREOF, we have signed this Certificate this
22nd day of November, 1991.
/s/ Louis Centofanti
____________________________________
ATTEST:
/s/ Carol A. Dixon
______________________
Secretary
<PAGE>
State of Delaware
Office of the Secretary of State Page 1
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF THE CERTIFICATE OF AMENDMENT OF "NATIONAL ENVIRONMENTAL
INDUSTRIES, LTD." FILED IN THIS OFFICE ON THE SEVENTEENTH DAY OF
DECEMBER, A.D. 1991, AT 4:30 O'CLOCK P.M.
* * * * * * * *
/s/ William T. Quillen
_______________________________
William T. Quillen,
Secretary of State
Authentication: 3909774
Date: 05/24/1993
931445217
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
NATIONAL ENVIRONMENTAL INDUSTRIES, LTD.
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"Corporation") is National Environmental Industries, Ltd.
2. The Restated Certificate of Incorporation is hereby
amended by striking out Article FIRST thereof and by substituting
in lieu of said Article FIRST the following new Article:
"FIRST: The name of the Corporation is
Perma-Fix Environmental Services, Inc."
3. The amendment of the Certificate of Incorporation
herein certified has been duly adopted in accordance with the
provisions of Sections 228 and 242 of the General Corporation Law
of the State of Delaware. Prompt written notice of the adoption of
the amendment herein certified has been given to those stockholders
who have not consented in writing thereto, as provided in Section
228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, we have signed this Certificate this
16th day of December, 1991.
/s/ Louis Centofanti
______________________________
Louis Centofanti, President
ATTEST:
/s/ Mark Zwecker
_________________________
Mark Zwecker, Secretary
<PAGE>
State of Delaware
Office of the Secretary of State Page 1
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF THE CERTIFICATE OF AMENDMENT OF "PERMA-FIX ENVIRONMENTAL
SERVICES, INC." FILED IN THIS OFFICE ON THE FOURTH DAY OF
SEPTEMBER, A.D. 1992, AT 11:30 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO
KENT COUNTY RECORDER OF DEEDS FOR RECORDING.
* * * * * * * *
/s/ William T. Quillen
_______________________________
William T. Quillen,
Secretary of State
Authentication: 3909773
Date: 05/24/1993
931445217
<PAGE>
CERTIFICATE OF AMENDMENT
TO
RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED
OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
Perma-Fix Environmental Services, Inc., a Delaware
corporation (the "Corporation"), does hereby certify:
That the amendment set forth below to the Corporation's
Restated Certificate of Incorporation, as amended, was duly adopted
in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware and written notice thereof
has been given as provided in Section 228 thereof:
I) The first paragraph of Article FOURTH of the
Corporation's Restated Certificate of Incorporation, as amended, is
hereby deleted and replaced in its entirety by the following:
Fourth: The total number of shares of capital
stock that the Corporation shall have authority to
issue is 22,000,000 shares of which 20,000,000
shares of the par value of $.001 per share shall be
designated Common Stock ("Common Stock"), and
2,000,000 shares of the par value of $.001 per
share shall be designated Preferred Stock.
As of September 4, 1992 (the "Effective Time"),
each share of Common Stock issued and outstanding
immediately prior to the Effective Time shall
automatically be changed and converted, without any
action on the part of the holder thereof, into
1/3.0236956 of a share of Common Stock and, in
connection with fractional interests in shares of
Common Stock of the Corporation, each holder whose
aggregate holdings of shares of Common stock prior
to the Effective Time amounted to less than
3.0236956, or to a number not evenly divisible by
3.0236956 shares of Common Stock shall be entitled
to receive for such fractional interest, and at
such time, any such fractional interest in shares
of Common Stock of the Corporation shall be
converted into the right to receive, upon surrender
of the stock certificates formerly representing
shares of Common Stock of the Corporation, one
whole share of Common Stock.
<PAGE>
IN WITNESS whereof, Perma-Fix Environmental Services,
Inc. has caused this Certificate to be signed and attested to by
its duly authorized officers as of this first day of September,
1992.
Perma-Fix Environmental Services, Inc.
By: /s/ Louis Centofanti
_____________________________________
ATTEST:
By: /s/ Mark Zwecker
___________________
<PAGE>
State of Delaware
Office of the Secretary of State Page 1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF THE CERTIFICATE OF DESIGNATION OF "PERMA-FIX ENVIRONMENTAL
SERVICES, INC." FILED IN THIS OFFICE ON THE SIXTH DAY OF FEBRUARY,
A.D. 1996 AT 4 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE
NEW CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 7818327
Date: 02/07/1996
960035778
<PAGE>
CERTIFICATE OF DESIGNATIONS
OF SERIES I CLASS A PREFERRED STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
Perma-Fix Environmental Services, Inc. (the "Corporation"), a
corporation organized and existing under the General Corporation
Law of the State of Delaware, does hereby certify:
That, pursuant to authority conferred upon by the Board of
Directors by the Corporation's Certificate of Incorporation, as
amended, and pursuant to the provisions of Section 151 of the
Delaware Corporation Law, said Board of Directors, acting by
unanimous written consent in lieu of a meeting dated February 2,
1996, hereby adopted the terms of the Series I Class A Preferred
Stock, which resolutions are set forth on the attached page.
Dated: February 2, 1996
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
By /s/ Louis F. Centofanti
_____________________________________
Dr. Louis F. Centofanti
Chairman of the Board
ATTEST:
/s/ Mark A. Zwecker
__________________________
Mark A. Zwecker, Secretary
ISTE:\N-P\PESI\CERT.DES
<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(the "Corporation")
RESOLUTION OF THE BOARD OF DIRECTORS
FIXING THE NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,
RESTRICTIONS AND CONDITIONS ATTACHING TO THE SERIES I CLASS A
PREFERRED STOCK
WHEREAS,
A. The Corporation's share capital includes Preferred Stock, par
value $.001 per share ("Preferred Stock"), which Preferred
Stock may be issued in one or more series with the directors
of the Corporation (the "Board") being entitled by resolution
to fix the number of shares in each series and to designate
the rights, designations, preferences, and relative,
participating, optional or other special rights, privileges,
restrictions and conditions attaching to the shares of each
such series; and
B. It is in the best interests of the Corporation for the Board
to create a new series from the Preferred Stock designated as
the Series I Class A Preferred Stock, par value $.001.
NOW, THEREFORE, BE IT RESOLVED, THAT:
The Series I Class A Preferred Stock, par value $.001 (the
"Series I Class A Preferred Stock") of the Corporation shall
consist of 1,100 shares and no more and shall be designated as
the Series I Class A Preferred Stock and in addition to the
preferences, rights, privileges, restrictions and conditions
attaching to all the Series I Class A Preferred Stock as a
series, the rights, privileges, restrictions and conditions
attaching to the Series I Class A Preferred Stock shall be as
follows:
Part 1 - Voting and Preemptive Rights.
1.1 Except as otherwise provided herein, in the Certificate of
Incorporation (the "Articles") or the General Corporation Law of
the State of Delaware (the "GCL"), each holder of Series I Class A
Preferred Stock, by virtue of his ownership thereof, shall be
entitled to cast that number of votes per share thereof on each
matter submitted to the Corporation's shareholders for voting which
equals the number of votes which could be cast by such holder of
the number of shares of the Corporation's Common Stock, par value
$.001 per share (the "Common Shares") into which such shares of
Series I Class A Preferred Stock would be converted into pursuant
to Part 5 hereof immediately prior to the record date of such vote.
The outstanding Series I Class A Preferred Stock and the Common
Shares of the Corporation shall vote together as a single class,
except as otherwise expressly required by the GCL or Part 7 hereof.
<PAGE>
The Series I Class A Preferred Stock shall not have cumulative
voting rights.
1.2 The Series I Class A Preferred Stock shall not give its
holders any preemptive rights to acquire any other securities
issued by the Corporation at any time in the future.
Part 2 - Liquidation Rights.
2.1 If the Corporation shall be voluntarily or involuntarily
liquidated, dissolved or wound up at any time when any Series I
Class A Preferred Stock shall be outstanding, the holders of the
then outstanding Series I Class A Preferred Stock shall have a
preference in distribution of the Corporation's property available
for distribution to the holders of the Common Shares equal to
$1,000 consideration per outstanding share of Series I Class A
Preferred Stock, together with an amount equal to all unpaid
dividends accrued thereon, if any, to the date of payment of such
distribution, whether or not declared by the Board; provided,
however, that the merger of the Corporation with any corporation or
corporations in which the Corporation is not the survivor, or the
sale or transfer by the Corporation of all or substantially all of
its property, or any reduction by at least seventy percent (70%) of
the then issued and outstanding Common Shares of the Corporation,
shall be deemed to be a liquidation of the Corporation within the
meaning of any of the provisions of this Part 2.
2.2 Subject to the provisions of Part 6 hereof, all amounts to be
paid as preferential distributions to the holders of Series I Class
A Preferred Stock, as provided in this Part 2, shall be paid or set
apart for payment before the payment or setting apart for payment
of any amount for, or the distribution of any of the Corporation's
property to the holders of Common Shares, whether now or hereafter
authorized, in connection with such liquidation, dissolution or
winding up.
Part 3 - Dividends.
3.1 Holders of record of Series I Class A Preferred Stock, out of
funds legally available therefor and to the extent permitted by
law, shall be entitled to receive dividends on their Series I Class
A Preferred Stock, which dividends shall accrue at the rate per
share of five percent (5%) per annum of consideration paid for each
share of Series I Class A Preferred Stock ($50.00 per share per
year for each full year) commencing on the date of the issuance
thereof, payable, at the option of the Corporation, (i) in cash, or
(ii) by the issuance of that number of whole Common Shares computed
by dividing the amount of the dividend by the market price
applicable to such dividend.
3.2 For the purposes of this Part 3 and Part 4 hereof, "market
price" means the average of the daily closing prices of Common
Shares for a period of five (5) consecutive trading days ending on
the date on which any dividend becomes payable or of any notice of
<PAGE>
redemption as the case may be. The closing price for each trading
day shall be (i) for any period during which the Common Shares
shall be listed for trading on a national securities exchange, the
last reported bid price per share of Common Shares as reported by
the primary stock exchange, or the Nasdaq Stock Market, if the
Common Shares are quoted on the Nasdaq Stock Market, or (ii) if
last sales price information is not available, the average closing
bid price of Common Shares as reported by the Nasdaq Stock Market,
or if not so listed or reported, then as reported by National
Quotation Bureau, Incorporated, or (iii) in the event neither
clause (i) nor (ii) is applicable, the average of the closing bid
and asked prices as furnished by any member of the National
Association of Securities Dealers, Inc., selected from time to time
by the Corporation for that purpose.
3.3 Dividends on Series I Class A Preferred Stock shall be
cumulative, and no dividends or other distributions shall be paid
or declared and set aside for payment on the Common Shares until
full cumulative dividends on all outstanding Series I Class A
Preferred Stock shall have been paid or declared and set aside for
payment.
3.4 Dividends shall be payable in arrears, at the rate of $12.50
per share for each full calendar quarter on each February 28,
May 31, August 31, and November 30 of each calendar year, to the
holders of record of the Series I Class A Preferred Stock as they
appear in the securities register of the Corporation on such record
dates not more than sixty (60) nor less than ten (10) days
preceding the payment date thereof, as shall be fixed by the Board;
provided, however, that the initial dividend for the Series I Class
A Preferred Stock shall accrue for the period commencing on the
date of the issuance thereof to and including December 31, 1995.
3.5 If, in any quarter, insufficient funds are available to pay
such dividends as are then due and payable with respect to the
Series I Class A Preferred Stock and all other classes and series
of the capital stock of the Corporation ranking in parity therewith
(or such payment is otherwise prohibited by provisions of the GCL,
such funds as are legally available to pay such dividends shall be
paid or Common Shares will be issued as stock dividends to the
holders of Series I Class A Preferred Stock and to the holders of
any other series of Class A Preferred Stock then outstanding as
provided in Part 6 hereof, in accordance with the rights of each
such holder, and the balance of accrued but undeclared and/or
unpaid dividends, if any, shall be declared and paid on the next
succeeding dividend date to the extent that funds are then legally
available for such purpose.
Part 4 - Redemption.
4.1 At any time, and from time to time, on and after one hundred
twenty (120) days from the date of the issuance of any Series I
Class A Preferred Stock, if the average of the closing bid prices
for the Common Shares for five (5) consecutive trading days shall
<PAGE>
be in excess of $1.50, the Corporation may, at its sole option, but
shall not be obligated to, redeem, in whole or in part, the then
outstanding Series I Class A Preferred Stock at a price per share
of U. S. $1,000 each (the "Redemption Price") (such price to be
adjusted proportionately in the event of any change of the Series
I Class A Shares into a different number of Shares).
4.2 Thirty (30) days prior to any date stipulated by the
Corporation for the redemption of Series I Class A Preferred Stock
(the "Redemption Date"), written notice (the "Redemption Notice")
shall be mailed to each holder of record on such notice date of the
Series I Class A Preferred Stock. The Redemption Notice shall
state: (i) the Redemption Date of such Shares, (ii) the number of
Series I Class A Preferred Stock to be redeemed from the holder to
whom the Redemption Notice is addressed, (iii) instructions for
surrender to the Corporation, in the manner and at the place
designated of a share certificate or share certificates
representing the number of Series I Class A Preferred Stock to be
redeemed from such holder, and (iv) instructions as to how to
specify to the Corporation the number of Series I Class A Preferred
Stock to be redeemed as provided in this Part 4, and the number of
shares to be converted into Common Shares as provided in Part 5
hereof.
4.3 Upon receipt of the Redemption Notice, any Eligible Holder (as
defined in Section 5.2 hereof) shall have the option, at its sole
election, to specify what portion of its Series I Class A Preferred
Stock called for redemption in the Redemption Notice shall be
redeemed as provided in this Part 4 or converted into Common Shares
in the manner provided in Part 5 hereof, except that,
notwithstanding any provision of such Part 5 to the contrary, any
Eligible Holder shall have the right to convert into Common Shares
that number of Series I Class A Preferred Stock called for
redemption in the Redemption Notice.
4.4 On or before the Redemption Date in respect of any Series I
Class A Preferred Stock, each holder of such shares shall surrender
the required certificate or certificates representing such shares
to the Corporation in the manner and at the place designated in the
Redemption Notice, and upon the Redemption Date, the Redemption
Price for such shares shall be made payable, in the manner provided
in Section 5.5 hereof, to the order of the person whose name
appears on such certificate or certificates as the owner thereof,
and each surrendered share certificate shall be canceled and
retired. If a share certificate is surrendered and all the shares
evidenced thereby are not being redeemed (as described below), the
Corporation shall cause the Series I Class A Shares which are not
being redeemed to be registered in the names of the persons whose
names appear as the owners on the respective surrendered share
certificates and deliver such certificate to such person.
4.5 On the Redemption Date in respect of any Series I Class A
Shares or prior thereto, the Corporation shall deposit with any
bank or trust company having a capital and surplus of at least
<PAGE>
U. S. $50,000,000, as a trust fund, a sum equal to the aggregate
Redemption Price of all such shares called from redemption (less
the aggregate Redemption Price for those Series I Class A Shares in
respect of which the Corporation has received notice from the
Eligible Holder thereof of its election to convert Series I Class
A Shares in to Common Shares), with irrevocable instructions and
authority to the bank or trust company to pay, on or after the
Redemption Date, the Redemption Price to the respective holders
upon the surrender of their share certificates. The deposit shall
constitute full payment for the shares to their holders, and from
and after the date of the deposit the redeemed share shall be
deemed to be no longer outstanding, and holders thereof shall cease
to be shareholders with respect to such shares and shall have no
rights with respect thereto except the rights to receive from the
bank or trust company payments of the Redemption price of the
shares, without interest, upon surrender of their certificates
thereof. Any funds so deposited and unclaimed at the end of one
year following the Redemption Date shall be released or repaid to
the Corporation, after which the former holders of shares called
for redemption shall be entitled to receive payment of the
Redemption Price in respect of their shares only from the
Corporation.
Part 5 - Conversion.
5.1 For the purposes of conversion of the Series I Class A
Preferred Stock shall be valued at $1,000 per share ("Value"), and,
if converted, the Series I Class A Preferred Stock shall be
converted into such number of Common Shares (the "Conversion
Shares") as is obtained by dividing the aggregate Value of the
shares of Series I Class A Preferred Stock being so converted,
together with all accrued but unpaid dividends thereon, by the
"Average Stock Price" per share of the Conversion Shares (the
"Conversion Price"), subject to adjustment pursuant to the
provisions of this Part 5. For purposes of this Part 5, the
"Average Stock Price" means the lesser of (x) seventy percent
(70%) of the average daily closing bid prices of the Common Shares
for the period of five (5) consecutive trading days immediately
preceding the date of subscription by the Holder or (y) seventy
percent (70%) of the daily average closing bid prices of Common
Shares for the period of five (5) consecutive trading days
immediately preceding the date of the conversion of the Series I
Class A Preferred Stock in respect of which such Average Stock
Price is determined. The closing price for each trading day shall
be determined as provided in the last sentence of Section 3.2.
5.2 Any holder of Series I Class A Preferred Stock (an "Eligible
Holder") may at any time commencing forty-five (45) days after the
issuance of any Series I Class A Preferred Stock convert up to one
hundred percent (100%) of his holdings of Series I Class A
Preferred Stock in accordance with this Part 5.
<PAGE>
5.3 The conversion right granted by Section 5.2 hereof may be
exercised only by an Eligible Holder of Series I Class A Preferred
Stock, in whole or in part, by the surrender of the share
certificate or share certificates representing the Series I Class
A Preferred Stock to be converted at the principal office of the
Corporation (or at such other place as the Corporation may
designate in a written notice sent to the holder by first class
mail, postage prepaid, at its address shown on the books of the
Corporation) against delivery of that number of whole Common Shares
as shall be computed by dividing (1) the aggregate Value of the
Series I Class A Preferred Stock so surrendered for conversion plus
any accrued but unpaid dividends thereon, if any, by (2) the
Conversion Price in effect at the date of the conversion. At the
time of conversion of a share of the Series I Class A Preferred
Stock, the Corporation shall pay in cash to the holder thereof an
amount equal to all unpaid dividends, if any, accrued thereon to
the date of conversion, or, at the Corporation's option, issue that
number of whole Common Shares which is equal to the product of
dividing the amount of such unpaid dividends by the Average Stock
Price whether or not declared by the Board. Each Series I Class A
Preferred Stock share certificate surrendered for conversion shall
be endorsed by its holder. In the event of any exercise of the
conversion right of the Series I Class A Preferred Stock granted
herein (i) share certificate representing the Common Shares
purchased by virtue of such exercise shall be delivered to such
holder within three (3) days of notice of conversion, and (ii)
unless the Series I Class A Preferred Stock has been fully
converted, a new share certificate representing the Series I Class
A Preferred Stock not so converted, if any, shall also be delivered
to such holder within three (3) days of notice of conversion. Any
Eligible Holder may exercise its right to convert the Series I
Class A Preferred Stock by telecopying an executed and completed
Notice of Conversion to the Corporation, and within seventy-two
(72) hours thereafter, delivering the original Notice of Conversion
and the certificate representing the Series I Class A Preferred
Stock to the Corporation by express courier. Each date on which a
Notice of Conversion is telecopied to and received by the
Corporation in accordance with the provisions hereof shall be
deemed a conversion date. The Corporation will transmit the Common
Shares certificates issuable upon conversion of any Series I Class
A Preferred Stock (together with the certificates representing the
Series I Class A Preferred Stock not so converted) to the Eligible
Holder via express courier within three (3) business days after the
conversion date if the Corporation has received the original Notice
of Conversion and the Series I Class A Shares certificates being so
converted by such date.
5.4 All Common Shares which may be issued upon conversion of
Series I Class A Preferred Stock will, upon issuance, be duly
issued, fully paid and nonassessable and free from all taxes,
liens, and charges with respect to the issue thereof. At all times
that any Series I Class A Preferred Stock is outstanding, the
Corporation shall have authorized, and shall have reserved for the
purpose of issuance upon such conversion, a sufficient number of
Common Shares to provide for the conversion into Common Shares of
<PAGE>
all Series I Class A Preferred Stock then outstanding at the then
effective Conversion Price. Without limiting the generality of the
foregoing, if, at any time, the Conversion Price is decreased, the
number of Common Shares authorized and reserved for issuance upon
the conversion of the Series I Class A Preferred Stock shall be
proportionately increased.
5.5 The number of Common Shares issued upon conversion of Series
I Class A Preferred Stock and the Conversion Price shall be subject
to adjustment from time to time upon the happening of certain
events, as follows:
5.5.1 Change of Designation of the Common Shares or the
rights, privileges, restrictions and conditions in respect of
the Common Shares or division of the Common Shares into
series. In the case of any amendment to the Articles to
change the designation of the Common Shares or the rights,
privileges, restrictions or conditions in respect of the
Common Shares or division of the Common Shares into series the
rights of the holders of the Series I Class A Preferred Stock
shall be adjusted so as to provide that upon conversion
thereof, the holder of the Series I Class A Preferred Stock
being converted shall procure, in lieu of each Common Share
theretofore issuable upon such conversion, the kind and amount
of shares, other securities, money and property receivable
upon such designation, change or division by the holder of one
Common Share issuable upon such conversion had conversion
occurred immediately prior to such designation, change or
division. The Series I Class A Preferred Stock shall be
deemed thereafter to provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments
provided for in this Part 5. The provisions of this
subsection 5.5.1 shall apply in the same manner to successive
reclassifications, changes, consolidations, and mergers.
5.5.2 If the Corporation, at any time while any of the
Series I Class A Preferred Stock is outstanding, shall amend
the Articles so as to change the Common Shares into a
different number of shares, the Conversion Price shall be
proportionately reduced, in case of such change increasing the
number of Common Shares, as of the effective date of such
increase, or if the Corporation shall take a record of holders
of its Common Shares for the purpose of such increase, as of
such record date, whichever is earlier, or the Conversion
Price shall be proportionately increased, in the case of such
change decreasing the number of Common Shares, as of the
effective date of such decrease or, if the Corporation shall
take a record of holders of its Common Stock for the purpose
of such decrease, as of such record date, whichever is
earlier.
5.5.3 If the Corporation, at any time while any of the
Series I Class A Preferred Stock is outstanding, shall pay a
dividend payable in Common Shares (except for any dividends of
Common Shares payable pursuant to Part 3 hereof), the
<PAGE>
Conversion Price shall be adjusted, as of the date the
Corporation shall take a record of the holders of its Common
Shares for the purposes of receiving such dividend (or if no
such record is taken, as of the date of payment of such
dividend), to that price determined by multiplying the
Conversion Price therefor in effect by a fraction (1) the
numerator of which shall be the total number of Common Shares
outstanding immediately prior to such dividend, and (2) the
denominator of which shall be the total number of Common
Shares outstanding immediately after such dividend (plus in
the event that the Corporation paid cash for fractional
shares, the number of additional shares which would have been
outstanding had the Corporation issued fractional shares in
connection with said dividend).
5.6 Whenever the Conversion Price shall be adjusted pursuant to
Section 5.5 hereof, the Corporation shall make a certificate signed
by its President, or a Vice President and by its Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary, setting
forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the
Board of Directors made any determination hereunder), and the
Conversion Price after giving effect to such adjustment, and shall
cause copies of such certificates to be mailed (by first class
mail, postage prepaid) to each holder of the Series I Class A
Preferred Stock at its address shown on the books of the
Corporation. The Corporation shall make such certificate and mail
it to each such holder promptly after each adjustment.
5.7 No fractional Common Shares shall be issued in connection with
any conversion of Series I Class A Preferred Stock, but in lieu of
such fractional shares, the Corporation shall make a cash payment
therefor equal in amount to the product of the applicable fraction
multiplied by the Conversion Price then in effect.
5.8 No Series I Class A Preferred Stock which has been converted
into Common Shares shall be reissued by the Corporation; provided,
however, that each such share shall be restored to the status of
authorized but unissued Preferred Stock without designation as to
series and may thereafter be issued as a series of Preferred Stock
not designated as Series I Class A Preferred Stock.
Part 6 - Parity with Other Shares of Class A Preferred Shares.
6.1 If any cumulative dividends or accounts payable or return of
capital in respect of Series I Class A Preferred Stock are not paid
in full, the owners of all series of outstanding Preferred Stock
shall participate rateably in respect of accumulated dividends and
return of capital.
<PAGE>
Part 7 - Amendment.
7.1 In addition to any requirement for a series vote pursuant to
the GCL in respect of any amendment to the Corporation's
Certificate of Incorporation that adversely affects the rights,
privileges, restrictions and conditions of the Series I Class A
Preferred Stock, the rights, privileges, restrictions and
conditions attaching to the Series I Class A Preferred Stock may be
amended by an amendment to the Corporation's Certificate of
Incorporation so as to affect such adversely only if the
Corporation has obtained the affirmative vote at a duly called and
held series meeting of the holders of the Series I Class A
Preferred Stock or written consent by the holders of a majority of
the Series I Class A Preferred Stock then outstanding.
Notwithstanding the above, the number of authorized shares of such
class or classes of stock may be increased or decreased (but not
below the number of shares thereof outstanding) by the affirmative
vote of the holders of a majority of the stock of the Corporation
entitled to vote thereon, voting as a single class, irrespective of
this Section 7.1.
ISTE:\N-P\PESI\RESOLUT.S1P
<PAGE>
State of Delaware
Office of the Secretary of State Page 1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF THE CERTIFICATE OF DESIGNATION OF "PERMA-FIX ENVIRONMENTAL
SERVICES, INC." FILED IN THIS OFFICE ON THE TWENTIETH DAY OF
FEBRUARY, A.D. 1996, AT 10:45 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE
NEW CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 7832562
Date: 02/20/1996
960047351
<PAGE>
CERTIFICATE OF DESIGNATIONS
OF SERIES 2 CLASS B CONVERTIBLE PREFERRED STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
Perma-Fix Environmental Services, Inc. (the "Corporation"), a
corporation organized and existing under the General Corporation
Law of the State of Delaware, does hereby certify:
That, pursuant to authority conferred upon by the Board of
Directors by the Corporation's Restated Certificate of
Incorporation, as amended, and pursuant to the provisions of
Section 151 of the Delaware Corporation Law, the Board of Directors
of the Corporation has adopted resolutions, a copy of which is
attached hereto, establishing and providing for the issuance of a
series of Preferred Stock designated as Series 2 Class B
Convertible Preferred Stock and has established and fixed the
voting powers, designations, preferences and relative
participating, optional and other special rights and
qualifications, limitations and restrictions of such Series 2 Class
B Convertible Preferred Stock as set forth in the attached
resolutions.
Dated: February 16, 1996
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
By /s/ Louis F. Centofanti
____________________________________
Dr. Louis F. Centofanti
Chairman of the Board
ATTEST:
/s/ Mark A. Zwecker
__________________________
Mark A. Zwecker, Secretary
ISTE:\N-P\PESI\CERT-DES.S2B
<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(the "Corporation")
RESOLUTION OF THE BOARD OF DIRECTORS
FIXING THE NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,
RESTRICTIONS AND CONDITIONS ATTACHING TO THE
SERIES 2 CLASS B CONVERTIBLE PREFERRED STOCK
WHEREAS,
A. The Corporation's share capital includes Preferred Stock, par
value $.001 per share ("Preferred Stock"), which Preferred
Stock may be issued in one or more series with the directors
of the Corporation (the "Board") being entitled by resolution
to fix the number of shares in each series and to designate
the rights, designations, preferences, and relative,
participating, optional or other special rights, privileges,
restrictions and conditions attaching to the shares of each
such series; and
B. It is in the best interests of the Corporation for the Board
to create a new series from the Preferred Stock designated as
the Series 2 Class B Convertible Preferred Stock, par value
$.001.
NOW, THEREFORE, BE IT RESOLVED, THAT:
The Series 2 Class B Convertible Preferred Stock, par value
$.001 (the "Series 2 Class B Preferred Stock") of the
Corporation shall consist of 2,500 shares and no more and
shall be designated as the Series 2 Class B Preferred Stock
and in addition to the preferences, rights, privileges,
restrictions and conditions attaching to all the Series 2
Class B Preferred Stock as a series, the rights, privileges,
restrictions and conditions attaching to the Series 2 Class B
Preferred Stock shall be as follows:
Part 1 - Voting and Preemptive Rights.
1.1 Except as otherwise provided herein, in the Corporation's
Certificate of Incorporation (the "Articles") or the General
Corporation Law of the State of Delaware (the "GCL"), each holder
of Series 2 Class B Preferred Stock, by virtue of his ownership
thereof, shall be entitled to cast that number of votes per share
thereof on each matter submitted to the Corporation's shareholders
for voting which equals the number of votes which could be cast by
such holder of the number of shares of the Corporation's Common
Stock, par value $.001 per share (the "Common Shares") into which
such shares of Series 2 Class B Preferred Stock would be entitled
to be converted into pursuant to Part 5 hereof on the record date
of such vote. The outstanding Series 2 Class B Preferred Stock,
the Common Shares of the Corporation and any other series of
<PAGE>
Preferred Stock of the Corporation having voting rights shall vote
together as a single class, except as otherwise expressly required
by the GCL or Part 7 hereof. The Series 2 Class B Preferred Stock
shall not have cumulative voting rights.
1.2 The Series 2 Class B Preferred Stock shall not give its
holders any preemptive rights to acquire any other securities
issued by the Corporation at any time in the future.
Part 2 - Liquidation Rights.
2.1 If the Corporation shall be voluntarily or involuntarily
liquidated, dissolved or wound up at any time when any Series 2
Class B Preferred Stock shall be outstanding, the holders of the
then outstanding Series 2 Class B Preferred Stock shall have a
preference in distribution of the Corporation's property available
for distribution to the holders of the Common Shares equal to
$1,000 consideration per outstanding share of Series 2 Class B
Preferred Stock, together with an amount equal to all unpaid
dividends accrued thereon, if any, to the date of payment of such
distribution, whether or not declared by the Board; provided,
however, that the merger of the Corporation with any corporation or
corporations in which the Corporation is not the survivor, or the
sale or transfer by the Corporation of all or substantially all of
its property, or a reduction by at least seventy percent (70%) of
the then issued and outstanding Common Shares of the Corporation,
shall be deemed to be a liquidation of the Corporation within the
meaning of any of the provisions of this Part 2.
2.2 Subject to the provisions of Part 6 hereof, all amounts to be
paid as preferential distributions to the holders of Series 2 Class
B Preferred Stock, as provided in this Part 2, shall be paid or set
apart for payment before the payment or setting apart for payment
of any amount for, or the distribution of any of the Corporation's
property to the holders of Common Shares, whether now or hereafter
authorized, in connection with such liquidation, dissolution or
winding up.
2.3 After the payment to the holders of the shares of the Series
2 Class B Preferred Stock of the full preferential amounts provided
for in this Part 2, the holders of the Series 2 Class B Preferred
Stock as such shall have no right or claim to any of the remaining
assets of the Corporation.
2.4 In the event that the assets of the Corporation available for
distribution to the holders of shares of the Series 2 Class B
Preferred Stock upon any dissolution, liquidation or winding up of
the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full all amounts to which such holders are
entitled pursuant to this Part 2, no such distribution shall be
made on account of any shares of any other class or series of
Preferred Stock ranking on a parity with the shares of this Series
2 Class B Preferred Stock upon such dissolution, liquidation or
winding up unless proportionate distributive amounts shall be paid
<PAGE>
on account of the shares of this Series 2 Class B Preferred Stock
and shares of such other class or series ranking on a parity with
the shares of this Series 2 Class B Preferred Stock, ratably, in
proportion to the full distributable amounts for which holders of
all such parity shares are respectively entitled upon such
dissolution, liquidation or winding up.
Part 3 - Dividends.
3.1 Holders of record of Series 2 Class B Preferred Stock, out of
funds legally available therefor and to the extent permitted by
law, shall be entitled to receive dividends on their Series 2 Class
B Preferred Stock, which dividends shall accrue at the rate per
share of five percent (5%) per annum of consideration paid for each
share of Series 2 Class B Preferred Stock ($50.00 per share per
year for each full year) commencing on the date of the issuance
thereof, payable, at the option of the Corporation, (i) in cash, or
(ii) by the issuance of that number of whole Common Shares computed
by dividing the amount of the dividend by the market price
applicable to such dividend.
3.2 For the purposes of this Part 3 and Part 4 hereof, "market
price" means the average of the daily closing prices of Common
Shares for a period of five (5) consecutive trading days ending on
the date on which any dividend becomes payable or of any notice of
redemption as the case may be. The closing price for each trading
day shall be (i) for any period during which the Common Shares
shall be listed for trading on a national securities exchange, the
last reported bid price per share of Common Shares as reported by
the primary stock exchange, or the Nasdaq Stock Market, if the
Common Shares are quoted on the Nasdaq Stock Market, or (ii) if
last sales price information is not available, the average closing
bid price of Common Shares as reported by the Nasdaq Stock Market,
or if not so listed or reported, then as reported by National
Quotation Bureau, Incorporated, or (iii) in the event neither
clause (i) nor (ii) is applicable, the average of the closing bid
and asked prices as furnished by any member of the National
Association of Securities Dealers, Inc., selected from time to time
by the Corporation for that purpose.
3.3 Dividends on Series 2 Class B Preferred Stock shall be
cumulative, and no dividends or other distributions shall be paid
or declared and set aside for payment on the Common Shares until
full cumulative dividends on all outstanding Series 2 Class B
Preferred Stock shall have been paid or declared and set aside for
payment.
3.4 Dividends shall be payable in arrears, at the rate of $12.50
per share for each full calendar quarter on each February 28,
May 31, August 31, and November 30 of each calendar year, to the
holders of record of the Series 2 Class B Preferred Stock as they
appear in the securities register of the Corporation on such record
dates not more than sixty (60) nor less than ten (10) days
preceding the payment date thereof, as shall be fixed by the Board;
provided, however, that the initial dividend for the Series 2 Class
B Preferred Stock shall accrue for the period commencing on the
date of the issuance thereof.
3.5 If, in any quarter, insufficient funds are available to pay
such dividends as are then due and payable with respect to the
Series 2 Class B Preferred Stock and all other classes and series
of the capital stock of the Corporation ranking in parity therewith
(or such payment is otherwise prohibited by provisions of the GCL,
such funds as are legally available to pay such dividends shall be
paid or Common Shares will be issued as stock dividends to the
holders of Series 2 Class B Preferred Stock and to the holders of
any other series of Class B Preferred Stock then outstanding as
provided in Part 6 hereof, in accordance with the rights of each
such holder, and the balance of accrued but undeclared and/or
unpaid dividends, if any, shall be declared and paid on the next
succeeding dividend date to the extent that funds are then legally
available for such purpose.
Part 4 - Redemption.
4.1 At any time, and from time to time, on and after one hundred
twenty (120) days from the date of the issuance of any Series 2
Class B Preferred Stock, if the average of the closing bid prices
for the Common Shares for five (5) consecutive trading days shall
be in excess of $1.50 per share, the Corporation may, at its sole
option, but shall not be obligated to, redeem, in whole or in part,
the then outstanding Series 2 Class B Preferred Stock at a price
per share of U. S. $1,000 each (the "Redemption Price") (such price
to be adjusted proportionately in the event of any change of the
Series 2 Class B Preferred Stock into a different number of shares
of Series 2 Class B Preferred Stock).
4.2 Thirty (30) days prior to any date stipulated by the
Corporation for the redemption of Series 2 Class B Preferred Stock
(the "Redemption Date"), written notice (the "Redemption Notice")
shall be mailed to each holder of record on such notice date of the
Series 2 Class B Preferred Stock. The Redemption Notice shall
state: (i) the Redemption Date of such shares, (ii) the number of
Series 2 Class B Preferred Stock to be redeemed from the holder to
whom the Redemption Notice is addressed, (iii) instructions for
surrender to the Corporation, in the manner and at the place
designated of a share certificate or share certificates
representing the number of Series 2 Class B Preferred Stock to be
redeemed from such holder, and (iv) instructions as to how to
specify to the Corporation the number of Series 2 Class B Preferred
Stock to be redeemed as provided in this Part 4, and the number of
shares to be converted into Common Shares as provided in Part 5
hereof.
4.3 Upon receipt of the Redemption Notice, any Eligible Holder (as
defined in Section 5.2 hereof) shall have the option, at its sole
election, to specify what portion of its Series 2 Class B Preferred
Stock called for redemption in the Redemption Notice shall be
<PAGE>
redeemed as provided in this Part 4 or converted into Common Shares
in the manner provided in Part 5 hereof, except that,
notwithstanding any provision of such Part 5 to the contrary, any
Eligible Holder shall have the right to convert into Common Shares
that number of Series 2 Class B Preferred Stock called for
redemption in the Redemption Notice.
4.4 On or before the Redemption Date in respect of any Series 2
Class B Preferred Stock, each holder of such shares shall surrender
the required certificate or certificates representing such shares
to the Corporation in the manner and at the place designated in the
Redemption Notice, and upon the Redemption Date, the Redemption
Price for such shares shall be made payable, in the manner provided
in Section 4.5 hereof, to the order of the person whose name
appears on such certificate or certificates as the owner thereof,
and each surrendered share certificate shall be canceled and
retired. If a share certificate is surrendered and all the shares
evidenced thereby are not being redeemed (as described below), the
Corporation shall cause the Series 2 Class B Preferred Stock which
are not being redeemed to be registered in the names of the persons
whose names appear as the owners on the respective surrendered
share certificates and deliver such certificate to such person.
4.5 On the Redemption Date in respect of any Series 2 Class B
Preferred Stock or prior thereto, the Corporation shall deposit
with any bank or trust company having a capital and surplus of at
least U. S. $50,000,000, as a trust fund, a sum equal to the
aggregate Redemption Price of all such shares called from
redemption (less the aggregate Redemption Price for those Series 2
Class B Preferred Stock in respect of which the Corporation has
received notice from the Eligible Holder thereof of its election to
convert Series 2 Class B Preferred Stock in to Common Shares), with
irrevocable instructions and authority to the bank or trust company
to pay, on or after the Redemption Date, the Redemption Price to
the respective holders upon the surrender of their share
certificates. The deposit shall constitute full payment for the
shares to their holders, and from and after the date of the deposit
the redeemed share shall be deemed to be no longer outstanding, and
holders thereof shall cease to be shareholders with respect to such
shares and shall have no rights with respect thereto except the
rights to receive from the bank or trust company payments of the
Redemption price of the shares, without interest, upon surrender of
their certificates thereof. Any funds so deposited and unclaimed
at the end of one year following the Redemption Date shall be
released or repaid to the Corporation, after which the former
holders of shares called for redemption shall be entitled to
receive payment of the Redemption Price in respect of their shares
only from the Corporation.
Part 5 - Conversion.
5.1 For the purposes of conversion of the Series 2 Class B
Preferred Stock shall be valued at $1,000 per share ("Value"), and,
if converted, the Series 2 Class B Preferred Stock shall be
<PAGE>
converted into such number of Common Shares (the "Conversion
Shares") as is obtained by dividing the aggregate Value of the
shares of Series 2 Class B Preferred Stock being so converted,
together with all accrued but unpaid dividends thereon, by the
"Average Stock Price" per share of the Conversion Shares (the
"Conversion Price"), subject to adjustment pursuant to the
provisions of this Part 5. For purposes of this Part 5, the
"Average Stock Price" means the lesser of (x) seventy percent (70%)
of the average daily closing bid prices of the Common Shares for a
period of five (5) consecutive trading days immediately preceding
the date of subscription by the Holder or (y) seventy percent (70%)
of the average daily closing bid prices of Common Shares for the
period of five (5) consecutive trading days immediately preceding
the date of the conversion of the Series 2 Class B Preferred Stock
in respect of which such Average Stock Price is determined. The
closing price for each trading day shall be determined as provided
in the last sentence of Section 3.2.
5.2 Any holder of Series 2 Class B Preferred Stock (an "Eligible
Holder") may at any time commencing forty-five (45) days after the
issuance of any Series 2 Class B Preferred Stock convert up to one
hundred percent (100%) of his holdings of Series 2 Class B
Preferred Stock in accordance with this Part 5.
5.3 The conversion right granted by Section 5.2 hereof may be
exercised only by an Eligible Holder of Series 2 Class B Preferred
Stock, in whole or in part, by the surrender of the share
certificate or share certificates representing the Series 2 Class
B Preferred Stock to be converted at the principal office of the
Corporation (or at such other place as the Corporation may
designate in a written notice sent to the holder by first class
mail, postage prepaid, at its address shown on the books of the
Corporation) against delivery of that number of whole Common Shares
as shall be computed by dividing (1) the aggregate Value of the
Series 2 Class B Preferred Stock so surrendered for conversion plus
any accrued but unpaid dividends thereon, if any, by (2) the
Conversion Price in effect at the date of the conversion. At the
time of conversion of a share of the Series 2 Class B Preferred
Stock, the Corporation shall pay in cash to the holder thereof an
amount equal to all unpaid dividends, if any, accrued thereon to
the date of conversion, or, at the Corporation's option, issue that
number of whole Common Shares which is equal to the product of
dividing the amount of such unpaid dividends by the Average Stock
Price whether or not declared by the Board. Each Series 2 Class B
Preferred Stock share certificate surrendered for conversion shall
be endorsed by its holder. In the event of any exercise of the
conversion right of the Series 2 Class B Preferred Stock granted
herein (i) share certificate representing the Common Shares
purchased by virtue of such exercise shall be delivered to such
holder within three (3) days of notice of conversion, and (ii)
unless the Series 2 Class B Preferred Stock has been fully
converted, a new share certificate representing the Series 2 Class
B Preferred Stock not so converted, if any, shall also be delivered
to such holder within three (3) days of notice of conversion. Any
<PAGE>
Eligible Holder may exercise its right to convert the Series 2
Class B Preferred Stock by telecopying an executed and completed
Notice of Conversion to the Corporation, and within seventy-two
(72) hours thereafter, delivering the original Notice of Conversion
and the certificate representing the Series 2 Class B Preferred
Stock to the Corporation by express courier. Each date on which a
Notice of Conversion is telecopied to and received by the
Corporation in accordance with the provisions hereof shall be
deemed a conversion date. The Corporation will transmit the Common
Shares certificates issuable upon conversion of any Series 2 Class
B Preferred Stock (together with the certificates representing the
Series 2 Class B Preferred Stock not so converted) to the Eligible
Holder via express courier within three (3) business days after the
conversion date if the Corporation has received the original Notice
of Conversion and the Series 2 Class B Shares certificates being so
converted by such date.
5.4 All Common Shares which may be issued upon conversion of
Series 2 Class B Preferred Stock will, upon issuance, be duly
issued, fully paid and nonassessable and free from all taxes,
liens, and charges with respect to the issue thereof. At all times
that any Series 2 Class B Preferred Stock is outstanding, the
Corporation shall have authorized, and shall have reserved for the
purpose of issuance upon such conversion, a sufficient number of
Common Shares to provide for the conversion into Common Shares of
all Series 2 Class B Preferred Stock then outstanding at the then
effective Conversion Price. Without limiting the generality of the
foregoing, if, at any time, the Conversion Price is decreased, the
number of Common Shares authorized and reserved for issuance upon
the conversion of the Series 2 Class B Preferred Stock shall be
proportionately increased.
5.5 The number of Common Shares issued upon conversion of Series
2 Class B Preferred Stock and the Conversion Price shall be subject
to adjustment from time to time upon the happening of certain
events, as follows:
5.5.1 In the case of any amendment to the Articles to
change the designation of the Common Shares or the rights,
privileges, restrictions or conditions in respect of the
Common Shares or division of the Common Shares into series the
rights of the holders of the Series 2 Class B Preferred Stock
shall be adjusted so as to provide that upon conversion
thereof, the holder of the Series 2 Class B Preferred Stock
being converted shall procure, in lieu of each Common Share
theretofore issuable upon such conversion, the kind and amount
of shares, other securities, money and property receivable
upon such designation, change or division by the holder of one
Common Share issuable upon such conversion had conversion
occurred immediately prior to such designation, change or
division. The Series 2 Class B Preferred Stock shall be
deemed thereafter to provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments
provided for in this Part 5. The provisions of this
subsection 5.5.1 shall apply in the same manner to successive
reclassifications, changes, consolidations, and mergers.
<PAGE>
5.5.2 If the Corporation, at any time while any of the
Series 2 Class B Preferred Stock is outstanding, shall amend
the Articles so as to change the Common Shares into a
different number of shares, the Conversion Price shall be
proportionately reduced, in case of such change increasing the
number of Common Shares, as of the effective date of such
increase, or if the Corporation shall take a record of holders
of its Common Shares for the purpose of such increase, as of
such record date, whichever is earlier, or the Conversion
Price shall be proportionately increased, in the case of such
change decreasing the number of Common Shares, as of the
effective date of such decrease or, if the Corporation shall
take a record of holders of its Common Stock for the purpose
of such decrease, as of such record date, whichever is
earlier.
5.5.3 If the Corporation, at any time while any of the
Series 2 Class B Preferred Stock is outstanding, shall pay a
dividend payable in Common Shares (except for any dividends of
Common Shares payable pursuant to Part 3 hereof), the
Conversion Price shall be adjusted, as of the date the
Corporation shall take a record of the holders of its Common
Shares for the purposes of receiving such dividend (or if no
such record is taken, as of the date of payment of such
dividend), to that price determined by multiplying the
Conversion Price therefor in effect by a fraction (1) the
numerator of which shall be the total number of Common Shares
outstanding immediately prior to such dividend, and (2) the
denominator of which shall be the total number of Common
Shares outstanding immediately after such dividend (plus in
the event that the Corporation paid cash for fractional
shares, the number of additional shares which would have been
outstanding had the Corporation issued fractional shares in
connection with said dividend).
5.6 Whenever the Conversion Price shall be adjusted pursuant to
Section 5.5 hereof, the Corporation shall make a certificate signed
by its President, or a Vice President and by its Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary, setting
forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the
Board of Directors made any determination hereunder), and the
Conversion Price after giving effect to such adjustment, and shall
cause copies of such certificates to be mailed (by first class
mail, postage prepaid) to each holder of the Series 2 Class B
Preferred Stock at its address shown on the books of the
Corporation. The Corporation shall make such certificate and mail
it to each such holder promptly after each adjustment.
<PAGE>
5.7 No fractional Common Shares shall be issued in connection with
any conversion of Series 2 Class B Preferred Stock, but in lieu of
such fractional shares, the Corporation shall make a cash payment
therefor equal in amount to the product of the applicable fraction
multiplied by the Conversion Price then in effect.
5.8 No Series 2 Class B Preferred Stock which has been converted
into Common Shares shall be reissued by the Corporation; provided,
however, that each such share shall be restored to the status of
authorized but unissued Preferred Stock without designation as to
series and may thereafter be issued as a series of Preferred Stock
not designated as Series 2 Class B Preferred Stock.
Part 6 - Parity with Other Shares of Series 2 Class B Preferred
Stock and Priority.
6.1 If any cumulative dividends or accounts payable or return of
capital in respect of Series 2 Class B Preferred Stock are not paid
in full, the owners of all series of outstanding Preferred Stock
shall participate rateably in respect of accumulated dividends and
return of capital.
6.2 For purposes of this resolution, any stock of any class or
series of the Corporation shall be deemed to rank:
6.2.1 Prior or senior to the shares of this Series 2 Class
B Preferred Stock either as to dividends or upon liquidation,
if the holders of such class or classes shall be entitled to
the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, as the case may be, in
preference or priority to the holders of shares of this Series
2 Class B Preferred Stock;
6.2.2 On a parity with, or equal to, shares of this Series
2 Class B Preferred Stock, either as to dividends or upon
liquidation, whether or not the dividend rates, dividend
payment dates, or redemption or liquidation prices per share
or sinking fund provisions, if any, are different from those
of this Series 2 Class B Preferred Stock, if the holders of
such stock are entitled to the receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding
up of the Corporation, whether voluntary or involuntary, in
proportion to their respective dividend rates or liquidation
prices, without preference or priority, one over the other, as
between the holders of such stock and over the other, as
between the holders of such stock and the holders of shares of
this Series 2 Class B Preferred Stock; and,
6.2.3 Junior to shares of this Series 2 Class B Preferred
Stock, either as to dividends or upon liquidation, if such
class or series shall be Common Shares or if the holders of
shares of this Series 2 Class B Preferred Stock shall be
entitled to receipt of dividends or of amounts distributable
<PAGE>
upon dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, as the case may
be, in preference or priority to the holders of shares of such
class or series.
Part 7 - Amendment.
7.1 In addition to any requirement for a series vote pursuant to
the GCL in respect of any amendment to the Articles that adversely
affects the rights, privileges, restrictions and conditions of the
Series 2 Class B Preferred Stock, the rights, privileges,
restrictions and conditions attaching to the Series 2 Class B
Preferred Stock may be amended by an amendment to the Corporation's
Certificate of Incorporation so as to affect such adversely only if
the Corporation has obtained the affirmative vote at a duly called
and held series meeting of the holders of the Series 2 Class B
Preferred Stock or written consent by the holders of a majority of
the Series 2 Class B Preferred Stock then outstanding.
Notwithstanding the above, the number of authorized shares of such
class or classes of stock may be increased or decreased (but not
below the number of shares thereof outstanding) by the affirmative
vote of the holders of a majority of the stock of the Corporation
entitled to vote thereon, voting together as a single class,
irrespective of this Section 7.1.
ISTE:\N-P\PESI\RESOLUT.S2B
<PAGE>
State of Delaware
Office of the Secretary of State Page 1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF THE CERTIFICATE OF DESIGNATION OF "PERMA-FIX ENVIRONMENTAL
SERVICES, INC." FILED IN THIS OFFICE ON THE NINETEENTH DAY OF JULY,
A.D. 1996, AT 12:30 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE
NEW CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 8033738
2249849 8100 Date: 07-19-96
960210746
<PAGE>
CERTIFICATE OF DESIGNATIONS
OF SERIES 3 CLASS C CONVERTIBLE PREFERRED STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
Perma-Fix Environmental Services, Inc. (the "Corporation"), a
corporation organized and existing under the General Corporation
Law of the State of Delaware, does hereby certify:
That, pursuant to authority conferred upon by the Board of
Directors by the Corporation's Restated Certificate of
Incorporation, as amended, and pursuant to the provisions of
Section 151 of the Delaware Corporation Law, the Board of Directors
of the Corporation has adopted resolutions, a copy of which is
attached hereto, establishing and providing for the issuance of a
series of Preferred Stock designated as Series 3 Class C
Convertible Preferred Stock and has established and fixed the
voting powers, designations, preferences and relative
participating, optional and other special rights and
qualifications, limitations and restrictions of such Series 3 Class
C Convertible Preferred Stock as set forth in the attached
resolutions.
Dated: July 17, 1996
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
By /s/ Louis F. Centofanti
_____________________________________
Dr. Louis F. Centofanti
Chairman of the Board
ATTEST:
/s/ Richard T. Kelecy
____________________________
Richard T. Kelecy, Secretary
ISTE:\N-P\PESI\REG-D\CERT-DES.S3C
<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(the "Corporation")
RESOLUTION OF THE BOARD OF DIRECTORS
FIXING THE NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,
RESTRICTIONS AND CONDITIONS ATTACHING TO THE
SERIES 3 CLASS C CONVERTIBLE PREFERRED STOCK
WHEREAS,
A. The Corporation's share capital includes Preferred Stock, par
value $.001 per share ("Preferred Stock"), which Preferred
Stock may be issued in one or more series by the Board of
Directors of the Corporation (the "Board") being entitled by
resolution to fix the number of shares in each series and to
designate the rights, designations, preferences, and relative,
participating, optional or other special rights, privileges,
restrictions and conditions attaching to the shares of each
such series; and
B. It is in the best interests of the Corporation for the Board
to create a new series from the Preferred Stock designated as
the Series 3 Class C Convertible Preferred Stock, par value
$.001.
NOW, THEREFORE, BE IT RESOLVED, THAT:
The Series 3 Class C Convertible Preferred Stock, par value
$.001 (the "Series 3 Class C Preferred Stock") of the
Corporation shall consist of 5,500 shares and no more and
shall be designated as the Series 3 Class C Convertible
Preferred Stock, and the preferences, rights, privileges,
restrictions and conditions attaching to the Series 3 Class C
Preferred Stock shall be as follows:
Part 1 - Voting and Preemptive Rights.
1.1 Voting Rights. Except as otherwise provided herein, in the
Corporation's Certificate of Incorporation (the "Articles") or the
General Corporation Law of the State of Delaware (the "GCL"), the
holders of the Series 3 Class C Preferred Stock shall have no
voting rights whatsoever. To the extent that under the GCL the
vote of the holders of the Series 3 Class C Preferred Stock, voting
separately as a class or series as applicable, is required to
authorize a given action of the Corporation, the affirmative vote
or consent of the holders of at least a majority of the shares of
the Series 3 Class C Preferred Stock represented at a duly held
meeting at which a quorum is present or by written consent of a
majority of the shares of Series 3 Class C Preferred Stock (except
as otherwise may be required under the GCL) shall constitute the
approval of such action by the series. To the extent that under
the GCL the holders of the Series 3 Class C Preferred Stock are
<PAGE>
entitled to vote on a matter with holders of Corporation's Common
Stock and/or any other class or series of the Corporation's voting
securities, the Series 3 Class C Preferred Stock, the Corporation's
Common Stock and all other classes or series of the Corporation's
voting securities shall vote together as one class, with each share
of Series 3 Class C Preferred Stock entitled to a number of votes
equal to the number of shares of the Corporation's Common Stock
into which it is then convertible using the record date for the
taking of such vote of stockholders as the date as of which the
Conversion Price (as defined in Section 4.2 hereof) is calculated
and conversion is effected. Holders of the Series 3 Class C
Preferred Stock shall be entitled to notice of (and copies of proxy
materials and other information sent to stockholders) for all
shareholder meetings or written consents with respect to which they
would be entitled to vote, which notice would be provided pursuant
to the Corporation's bylaws and applicable statutes.
1.2 No Preemptive Rights. The Series 3 Class C Preferred Stock
shall not give its holders any preemptive rights to acquire any
other securities issued by the Corporation at any time in the
future.
Part 2 - Liquidation Rights.
2.1 Liquidation. If the Corporation shall be voluntarily or
involuntarily liquidated, dissolved or wound up at any time when
any shares of the Series 3 Class C Preferred Stock shall be
outstanding, the holders of the then outstanding Series 3 Class C
Preferred Stock shall have a preference in distribution of the
Corporation's property available for distribution to the holders of
the Corporation's Common Stock equal to $1,000 consideration per
outstanding share of Series 3 Class C Preferred Stock, plus an
amount equal to all unpaid dividends accrued thereon to the date of
payment of such distribution ("Liquidation Preference"), whether or
not declared by the Board.
2.2 Payment of Liquidation Preferences. Subject to the provisions
of Part 6 hereof, all amounts to be paid as Liquidation Preference
to the holders of Series 3 Class C Preferred Stock, as provided in
this Part 2, shall be paid or set apart for payment before the
payment or setting apart for payment of any amount for, or the
distribution of any of the Corporation's property to the holders of
the Corporation's Common Stock, whether now or hereafter
authorized, in connection with such liquidation, dissolution or
winding up.
2.3 No Rights After Payment. After the payment to the holders of
the shares of the Series 3 Class C Preferred Stock of the full
Liquidation Preference amounts provided for in this Part 2, the
holders of the Series 3 Class C Preferred Stock as such shall have
no right or claim to any of the remaining assets of the
Corporation.
<PAGE>
2.4 Assets Insufficient to Pay Full Liquidation Preference. In
the event that the assets of the Corporation available for
distribution to the holders of shares of the Series 3 Class C
Preferred Stock upon any dissolution, liquidation or winding up of
the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full all amounts to which such holders are
entitled pursuant to this Part 2, no such distribution shall be
made on account of any shares of any other class or series of
Preferred Stock ranking on a parity with the shares of this Series
3 Class C Preferred Stock upon such dissolution, liquidation or
winding up unless proportionate distributive amounts shall be paid
on account of the shares of this Series 3 Class C Preferred Stock
and shares of such other class or series ranking on a parity with
the shares of this Series 3 Class C Preferred Stock, ratably, in
proportion to the full distributable amounts for which holders of
all such parity shares are respectively entitled upon such
dissolution, liquidation or winding up.
Part 3 - Dividends.
3.1 The holders of the Series 3 Class C Preferred Stock are
entitled to receive if, when and as declared by the Board out of
funds legally available therefor, cumulative dividends, payable in
cash or Common Stock of the Corporation, par value $.001 per share
(the "Common Stock"), at the Corporation's election, at the rate of
six percent (6%) per annum of the Liquidation Value of the Series
3 Class C Preferred Stock. The Liquidation Value of the Series 3
Class C Preferred Stock shall be $1,000.00 per share (the "Dividend
Rate"). The dividend is payable semi-annually within seven (7)
business days after each of December 31 and June 30 of each year,
commencing December 31, 1996 (each, a "Dividend Declaration Date").
Dividends shall be paid only with respect to shares of Series 3
Class C Preferred Stock actually issued and outstanding on a
Dividend Declaration Date and to holders of record as of the
Dividend Declaration Date. Dividends shall accrue from the first
day of the semi-annual period in which such dividend may be
payable, except with respect to the first semi-annual dividend
which shall accrue from the date of issuance of the Series 3 Class
C Preferred Stock. In the event that the Corporation elects to pay
dividends in Common Stock of the Corporation, each holder of the
Series 3 Class C Preferred Stock shall receive shares of Common
Stock of the Corporation equal to the quotient of (i) the Dividend
Rate in effect on the applicable Dividend Declaration Date dividend
by (ii) the average of the closing bid quotation of the Common
Stock as reported on the over-the-counter market, or the closing
sale price if listed on a national securities exchange, for the
five (5) trading days immediately prior to the Dividend Declaration
Date (the "Stock Dividend Price"). Dividends on the Series 3 Class
C Preferred Stock shall be cumulative, and no dividends or other
distributions shall be paid or declared or set aside for payment on
the Common Stock until all accrued and unpaid dividends on all
outstanding shares of Series 3 Class C Preferred Stock shall have
been paid or declared and set aside for payment.
<PAGE>
Part 4 - Conversion. The holders of the Series 3 Class C Preferred
Stock shall have rights to convert the shares of Series 3 Class C
Preferred Stock into shares of the Corporation's Common Stock, par
value $.001 per share ("Common Stock"), as follows (the "Conversion
Rights"):
4.1 Right to Convert. The Series 3 Class C Preferred Stock shall
be convertible into shares of Common Stock, as follows:
4.1.1 Up to one thousand eight hundred thirty-three
(1,833) shares of Series 3 Class C Preferred Stock
may be converted at the Conversion Price (as that
term is defined in Section 4.2 below) at any time
on or after October 1, 1996;
4.1.2 Up to one thousand eight hundred thirty-three
(1,833) shares of Series 3 Class C Preferred Stock
may be converted at the Conversion Price at any
time on or after November 1, 1996; and,
4.1.3 Up to one thousand eight hundred thirty-four
(1,834) shares of Series 3 Class C Preferred Stock
may be converted at the Conversion Price on or
after December 1, 1996.
4.2 Conversion Price. As used herein, the term Conversion Price
shall be the product of (i) the average closing bid quotation of
the Common Stock as reported on the over-the-counter market, or the
closing sale price if listed on a national securities exchange, for
the five (5) trading days immediately preceding the date of the
Conversion Notice referred to in Section 4.3 below multiplied by
(ii) seventy-five percent (75%). Notwithstanding the foregoing,
the Conversion Price shall not be (i) less than a minimum of $.75
per share ("Minimum Conversion Price") or (ii) more than a maximum
of $1.50 per share ("Maximum Conversion Price"). If, after July 1,
1996, the Corporation sustains a net loss, on a consolidated basis,
in each of two (2) consecutive quarters, as determined under
generally accepted accounting principles, the Minimum Conversion
Price shall be reduced $.25 a share, but there shall be no change
to, or reduction of, the Maximum Conversion Price. For the purpose
of determining whether the Corporation has had a net loss in each
of two (2) consecutive quarters, at no time shall a quarter that
has already been considered in such determination be considered in
any subsequent determination (as an example the third quarter of
1996 in which there is a net profit and the fourth quarter of 1996
in which there is a net loss shall be considered as two consecutive
quarters, and, as a result, the fourth quarter of 1996 shall not be
considered along with the first quarter of 1997 as two (2)
consecutive quarters, but the first quarter of 1997 must be
considered with the second quarter of 1997 for the purposes of such
determination). For the purposes of this Section 4.2, a "quarter"
is a three (3) month period ending on March 31, June 30,
September 30, and December 31. If any of the outstanding shares of
Series 3 Class C Preferred Stock are converted, in whole or in part,
<PAGE>
into Common Stock pursuant to the terms of this Part 4, the number of
shares of whole Common Stock to be issued to the holder as a result
of such conversion shall be determined by dividing (a) the
aggregate Liquidation Value of the Series 3 Class C Preferred Stock
so surrendered for conversion by (b) the Conversion Price in effect
at the date of the conversion. At the time of conversion of shares
of the Series 3 Class C Preferred Stock, the Corporation shall pay
in cash to the holder thereof an amount equal to all unpaid and
accrued dividends, if any, accrued thereon to the date of
conversion, or, at the Corporation's option, in lieu of paying cash
for the accrued and unpaid dividends, issue that number of shares
of whole Common Stock which is equal to the product of dividing the
amount of such unpaid and accrued dividends to the date of
conversion on the shares of Series 3 Class C Preferred Stock so
converted by the Conversion Price in effect at the date of
conversion.
4.3 Mechanics of Conversion. Any holder of the Series 3 Class C
Preferred Stock who wishes to exercise its Conversion Rights
pursuant to Section 4.1 of this Part 4 must, if such shares are not
being held in escrow by the Corporation's attorneys, surrender the
certificate therefor at the principal executive office of the
Corporation, and give written notice, which may be via facsimile
transmission, to the Corporation at such office that it elects to
convert the same (the "Conversion Notice"). In the event that the
shares of Series 3 Class C Preferred Stock are being held in escrow
by the Corporation's attorneys, no delivery of the certificates
shall be required. No Conversion Notice with respect to any shares
of Series 3 Class C Preferred Stock can be given prior to the time
such shares of Series 3 Class C Preferred Stock are eligible for
conversion in accordance with the provision of Section 4.1 above.
Any such premature Conversion Notice shall automatically be null
and void. The Corporation shall, within five (5) business days
after receipt of an appropriate and timely Conversion Notice (and
certificate, if necessary), issue to such holder of Series 3 Class
C Preferred Stock or its agent a certificate for the number of
shares of Common Stock to which he shall be entitled; it being
expressly agreed that until and unless the holder delivers written
notice to the Corporation to the contrary, all shares of Common
Stock issuable upon conversion of the Series 3 Class C Preferred
Stock hereunder are to be delivered by the Corporation to a party
designated in writing by the holder in the Conversion Notice for
the account of the holder and such shall be deemed valid delivery
to the holder of such shares of Common Stock. Such conversion
shall be deemed to have been made only after both the certificate
for the shares of Series 3 Class C Preferred Stock to be converted
have been surrendered and the Conversion Notice is received by the
Corporation (or in the event that no surrender of the Certificate
is required, then only upon the receipt by the Corporation of the
Conversion Notice) (the "Conversion Documents"), and the person or
entity whose name is noted on the certificate evidencing such
shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder of such shares of
Common Stock at and after such time. In the event that the
<PAGE>
Conversion Notice is sent via facsimile transmission, the
Corporation shall be deemed to have received such Conversion Notice
on the first business day on which such facsimile Conversion Notice
is actually received. If the Corporation fails to deliver to the
holder or its agent the certificate representing the shares of
Common Stock that the holder is entitled to receive as a result of
such conversion within five (5) business days after receipt by the
Corporation from the holder of an appropriate and timely Conversion
Notice and certificates pursuant to the terms of this Section 4.3,
the Corporation shall pay to the holder U.S. $1,000 for each day
that the Corporation is late in delivering such certificate to the
holder or its agent.
4.4 Adjustments to Conversion Price for Stock Dividends and for
Combinations or Subdivisions of Common Stock. If the Corporation
at any time or from time to time while shares of Series 3 Class C
Preferred Stock are issued and outstanding shall declare or pay,
without consideration, any dividend on the Common Stock payable in
Common Stock, or shall effect a subdivision of the outstanding
shares of Common Stock into a greater number of shares of Common
Stock (by stock split, reclassification or otherwise than by
payment of a dividend in Common Stock or in any right to acquire
Common Stock), or if the outstanding shares of Common Stock shall
be combined or consolidated, by reclassification or otherwise, into
a lesser number of shares of Common Stock, then the Conversion
Price in effect immediately before such event shall, concurrently
with the effectiveness of such event, be proportionately decreased
or increased, as appropriate. If the Corporation shall declare or
pay, without consideration, any dividend on the Common Stock
payable in any right to acquire Common stock for no consideration,
then the Corporation shall be deemed to have made a dividend
payable in Common Stock in an amount of shares equal to the maximum
number of shares issuable upon exercise of such rights to acquire
Common Stock.
4.5. Adjustments for Reclassification and Reorganization. If the
Common Stock issuable upon conversion of the Series 3 Class C
Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by
capital reorganization, reclassification or otherwise (other than
a subdivision or combination of shares provided for in Section 4.4
hereof), the Conversion Price then in effect shall, concurrently
with the effectiveness of such reorganization or reclassification,
be proportionately adjusted so that the Series 3 Class C Preferred
Stock shall be convertible into, in lieu of the number of shares of
Common Stock which the holders of Series 3 Class C Preferred Stock
would otherwise have been entitled to receive, a number of shares
of such other class or classes of stock equivalent to the number of
shares of Common Stock that would have been subject to receipt by
the holders upon conversion of the Series 3 Class C Preferred Stock
immediately before that change.
<PAGE>
4.6 Common Stock Duly Issued. All Common Stock which may be
issued upon conversion of Series 3 Class C Preferred Stock will,
upon issuance, be duly issued, fully paid and nonassessable and
free from all taxes, liens, and charges with respect to the issue
thereof.
4.7 Notice of Adjustments. Upon the occurrence of each adjustment
or readjustment of any Conversion Price pursuant to this Part 4,
the Corporation, at its expense, within a reasonable period of
time, shall compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of
Series 3 Class C Preferred Stock a notice setting forth such
adjustment or readjustment and showing in detail the facts upon
which such adjustment is based.
4.8 Issue Taxes. The Corporation shall pay any and all issue and
other taxes that may be payable in respect of any issue or delivery
of shares of Common Stock on conversion of the Series 3 Class C
Preferred Stock pursuant thereto; provided, however, that the
Corporation shall not be obligated to pay any transfer taxes
resulting from any transfer requested by any holder of Series 3
Class C Preferred Stock in connection with such conversion.
4.9 Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the
purpose of effecting the conversion of the shares of the Series 3
Class C Preferred Stock, such number of its shares of Common Stock
as shall, from time to time, be sufficient to effect the conversion
of all outstanding shares of the Series 3 Class C Preferred stock,
and, if at any time, the number of authorized but unissued shares
of Common Stock shall not be sufficient to effect the conversion of
all then outstanding shares of the Series 3 Class C Preferred
Stock, the Corporation will take such corporate action as may be
necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such
purposes, including, without limitation, engaging in reasonable
efforts to obtain the requisite stockholder approval of any
necessary amendment to its Certificate of Incorporation.
4.10 Fractional Shares. No fractional share shall be issued upon
the conversion of any share or shares of Series 3 Class C Preferred
Stock. All shares of Common Stock (including fractions thereof)
issuable upon conversion of more than one share of Series 3 Class
C Preferred Stock by a holder thereof shall be aggregated for
purposes of determining whether the conversion would result in the
issuance of any fractional share. If, after the aforementioned
aggregation, the conversion would result in the issuance of a
fractional share of Common Stock, such fractional share shall be
rounded up to the nearest whole share.
<PAGE>
4.11 Notices. Any notices required by the provisions of this Part
4 to be given to the holders of shares of Series 3 Class C
Preferred Stock shall be deemed given if deposited in the United
States mail, postage prepaid, and addressed to each holder of
record at his address appearing on the books of the Corporation.
4.12 Business Day. As used herein, the term "business day" shall
mean any day other than a Saturday, Sunday or a day when the
federal and state banks located in the State of New York are
required or permitted to close.
Part 5 - Redemption.
5.1 Redemption During First 180 Days. At any time, and from time
to time, during the first one hundred eighty (180) days from the
date of issuance of the Series 3 Class C Preferred Stock, the
Corporation may, at its sole option, but shall not be obligated to,
redeem, in whole or in part, the then outstanding Series 3 Class C
Preferred Stock at a price per share of U. S. $1,300.00 each
("First Six Months Redemption Price"). The Company may exercise
such redemption by giving the holder of the Series 3 Class C
Preferred Stock written notice of such redemption at any time
during such 180-day period.
5.2 Other Rights of Redemption by the Corporation. At any time,
and from time to time, after one hundred eighty (180) days from the
date of the issuance of any Series 3 Class C Preferred Stock, if
the average of the closing bid price of the Common Stock for ten
(10) consecutive days shall be in excess of $2.50 per share, the
Corporation may, at its sole option, but shall not be obligated to,
redeem, in whole or in part, the then outstanding Series 3 Class C
Preferred Stock at a price per share of U. S. $1,000 each (the
"Redemption Price") (such price to be adjusted proportionately in
the event of any change of the Series 3 Class C Preferred Stock
into a different number of shares of Series 3 Class C Preferred
Stock).
5.3 Mechanics of Redemption. Thirty (30) days prior to any date
stipulated by the Corporation for the redemption of Series 3 Class
C Preferred Stock (the "Redemption Date"), written notice (the
"Redemption Notice") shall be mailed to each holder of record on
such notice date of the Series 3 Class C Preferred Stock. The
Redemption Notice shall state: (i) the Redemption Date of such
shares, (ii) the number of Series 3 Class C Preferred Stock to be
redeemed from the holder to whom the Redemption Notice is
addressed, (iii) instructions for surrender to the Corporation, in
the manner and at the place designated, of a share certificate or
share certificates representing the number of Series 3 Class C
Preferred Stock to be redeemed from such holder, and (iv)
instructions as to how to specify to the Corporation the number of
Series 3 Class C Preferred Stock to be redeemed as provided in this
Part 5 and, if the Redemption Notice is mailed to the Holder after
the first one hundred eighty (180) days from the date of issuance
of the Series 3 Class C Preferred Stock, the number of shares to be
converted into Common Stock as provided in Part 4 hereof.
<PAGE>
5.4 Rights of Conversion Upon Redemption. If the redemption
occurs pursuant to Section 5.1 hereof, the Holder of the Series 3
Class C Preferred Stock shall not have the right to convert those
outstanding shares of Series 3 Class C Preferred Stock that the
Company is redeeming after receipt of the Redemption Notice. If
the redemption occurs pursuant to Section 5.2 hereof, then, upon
receipt of the Redemption Notice, any holder of Series 3 Class C
Preferred Stock shall have the option, at its sole election, to
specify what portion of its Series 3 Class C Preferred Stock called
for redemption in the Redemption Notice shall be redeemed as
provided in this Part 5 or converted into Common Stock in the
manner provided in Part 4 hereof, except that, notwithstanding any
provision of such Part 4 to the contrary, such holder shall have
the right to convert into Common Stock that number of Series 3
Class C Preferred Stock called for redemption in the Redemption
Notice.
5.5 Surrender of Certificates. On or before the Redemption Date
in respect of any Series 3 Class C Preferred Stock, each holder of
such shares shall surrender the required certificate or
certificates representing such shares to the Corporation in the
manner and at the place designated in the Redemption Notice, and
upon the Redemption Date, the Redemption Price for such shares
shall be made payable, in the manner provided in Section 5.5
hereof, to the order of the person whose name appears on such
certificate or certificates as the owner thereof, and each
surrendered share certificate shall be canceled and retired. If a
share certificate is surrendered and all the shares evidenced
thereby are not being redeemed (as described below), the
Corporation shall cause the Series 3 Class C Preferred Stock which
are not being redeemed to be registered in the names of the persons
or entity whose names appear as the owners on the respective
surrendered share certificates and deliver such certificate to such
person.
5.6 Payment. On the Redemption Date in respect of any Series 3
Class C Preferred Stock or prior thereto, the Corporation shall
deposit with any bank or trust company having a capital and surplus
of at least U. S. $50,000,000, as a trust fund, a sum equal to the
aggregate First Six Months Redemption Price or the Redemption
Price, whichever is applicable, of all such shares called from
redemption (less the aggregate Redemption Price for those Series 3
Class C Preferred Stock in respect of which the Corporation has
received notice from the holder thereof of its election to convert
Series 3 Class C Preferred Stock into Common Stock), with
irrevocable instructions and authority to the bank or trust company
to pay, on or after the Redemption Date, the First Six Months
Redemption Price or the Redemption Price, whichever is applicable,
to the respective holders upon the surrender of their share
certificates. The deposit shall constitute full payment for the
shares to their holders, and from and after the date of the deposit
the redeemed shares shall be deemed to be no longer outstanding,
and holders thereof shall cease to be shareholders with respect to
such shares and shall have no rights with respect thereto except
the rights to receive from the bank or trust company payments of
the First Six Months Redemption Price or the Redemption Price,
whichever is applicable, of the shares, without interest, upon
surrender of their certificates thereof. Any funds so deposited
<PAGE>
and unclaimed at the end of one year following the Redemption Date
shall be released or repaid to the Corporation, after which the
former holders of shares called for redemption shall be entitled to
receive payment of the First Six Months Redemption Price or the
Redemption Price, whichever is applicable, in respect of their
shares only from the Corporation.
Part 6 - Parity with Other Shares of Series 3 Class C Preferred
Stock and Priority.
6.1 Rateable Participation. If any cumulative dividends or return
of capital in respect of Series 3 Class C Preferred Stock are not
paid in full, the owners of all series of outstanding Preferred
Stock shall participate rateably in respect of accumulated
dividends and return of capital.
6.2 Ranking. For purposes of this resolution, any stock of any
class or series of the Corporation shall be deemed to rank:
6.2.1 Prior or senior to the shares of this Series 3 Class
C Preferred Stock either as to dividends or upon liquidation,
if the holders of such class or classes shall be entitled to
the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, as the case may be, in
preference or priority to the holders of shares of this Series
3 Class C Preferred Stock;
6.2.2 On a parity with, or equal to, shares of this Series
3 Class C Preferred Stock, either as to dividends or upon
liquidation, whether or not the dividend rates, dividend
payment dates, or redemption or liquidation prices per share
or sinking fund provisions, if any, are different from those
of this Series 3 Class C Preferred Stock, if the holders of
such stock are entitled to the receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding
up of the Corporation, whether voluntary or involuntary, in
proportion to their respective dividend rates or liquidation
prices, without preference or priority, one over the other, as
between the holders of such stock and over the other, as
between the holders of such stock and the holders of shares of
this Series 3 Class C Preferred Stock; and,
6.2.3 Junior to shares of this Series 3 Class C Preferred
Stock, either as to dividends or upon liquidation, if such
class or series shall be Common Stock or if the holders of
shares of this Series 3 Class C Preferred Stock shall be
entitled to receipt of dividends or of amounts distributable
upon dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, as the case may
be, in preference or priority to the holders of shares of such
class or series.
<PAGE>
Part 7 - Amendment and Reissue.
7.1 Amendment. If any proposed amendment to the Corporation's
Certificate of Incorporation would alter or change the powers,
preferences or special rights of the Series 3 Class C Preferred
Stock so as to affect such adversely, then the Corporation must
obtain the affirmative vote of such amendment to the Certificate of
Incorporation at a duly called and held series meeting of the
holders of the Series 3 Class C Preferred Stock or written consent
by the holders of a majority of the Series 3 Class C Preferred
Stock then outstanding. Notwithstanding the above, the number of
authorized shares of any class or classes of stock may be increased
or decreased (but not below the number of shares thereof
outstanding) by the affirmative vote of the holders of a majority
of the stock of the Corporation entitled to vote thereon, voting
together as a single class, irrespective of this Section 7.1 or the
requirements of Section 242 of the GCL.
7.2 Authorized. Any shares of Series 3 Class C Preferred Stock
acquired by the Corporation by reason of purchase, conversion,
redemption or otherwise shall be retired and shall become
authorized but unissued shares of Preferred Stock, which may be
reissued as part of a new series of Preferred Stock hereafter
created.
ISTE:\N-P\PESI\10Q\EXHIBIT3.1
THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT ("Amendment"), dated as of the 16th
day of August, 1996, by and among PERMA-FIX ENVIRONMENTAL SERVICES,
INC., a Delaware corporation ("Parent"), each of those direct and
indirect subsidiaries of Parent whose names are inscribed on the
signature pages to the "Loan Agreement" referenced below
(collectively, the "Borrowers" or, individually, a "Borrower") and
HELLER FINANCIAL, INC., a Delaware corporation ("Lender");
W I T N E S S E T H T H A T:
WHEREAS, Parent, Borrowers and Lender are parties to a
certain Loan and Security Agreement, dated as of January 27, 1995
(as amended to date, the "Loan Agreement"; capitalized terms used
herein and not defined herein have the meanings assigned to them in
the Loan Agreement), pursuant to which, subject to the terms and
conditions set forth therein, Lenders have made and continue to make
certain financial accommodations available to Borrowers; and
WHEREAS, certain Events of Default have occurred and are
continuing under the Loan Agreement as described on Exhibit A
attached hereto (the "Existing Events of Default"); and
WHEREAS, Parent and Borrowers have requested that Lender
waive the Existing Events of Default, amend the financial covenants
set forth in Section 6 of the Loan Agreement in certain respects,
and amend certain other provisions of the Loan Agreement as set
forth hereinbelow; and
WHEREAS, Parent and Borrowers have further requested that
Lender permit Parent to become a borrower under the Loan Agreement,
such that, subject to all of the terms and conditions set forth
therein, Parent may obtain Revolving Loans under the Loan Agreement;
and
WHEREAS, pursuant to Parent and Borrowers request and
subject to all of the terms and conditions set forth herein, Lender
is willing to waive the existing Events of Default, to amend the
Loan Agreement in the manner hereinafter set forth and to permit
Parent to become a borrower under the Loan Agreement for purposes
of obtaining Revolving Loans; and
WHEREAS, Parent, Borrowers and Lenders desire to enter
into this Amendment in order to memorialize their mutual
understandings in regard to the foregoing matters;
NOW, THEREFORE, in consideration of the foregoing premises
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Parent, Borrowers and
Lender agree as follows:
<PAGE>
1. Addition of Parent as a Borrower under the Loan
Agreement and the other Loan Documents. Parent is hereby deemed to
be a borrower under the Loan Agreement and the other Loan Documents,
such that Parent may obtain Revolving Loans pursuant to
Section 2.1(B) of the Loan Agreement against its Borrowing Base, but
subject to all of the terms and conditions set forth in such
Section 2.1(B) and elsewhere in the Loan Agreement including,
without limitation, the requirement that the aggregate amount of all
Revolving Loans to Parent and all other Borrowers shall not exceed
the Maximum Revolving Loan Amount. In furtherance of the foregoing,
(a) where the context so requires, each reference in the Loan
Agreement and the other Loan Documents to a "Borrower" or
"Borrowers" shall be deemed to be a reference to Parent as well as
to the other Borrowers and (b) Parent hereby assumes and agrees to
perform all obligations of a "Borrower" under the Loan Agreement and
the other Loan Documents. Notwithstanding the foregoing, Parent
shall continue to serve as agent for the Borrowers (including
itself, as applicable) for all purposes presently provided in the
Loan Agreement. In connection with the foregoing, each Borrower
agrees that Parent shall be an "Other Borrower" for purposes of the
Cross-Guaranty, and that the Obligations of Parent to Lender shall
be guaranteed by each Borrower thereunder.
2. Amendments to Defined Terms.
Section 1.1 of the Loan Agreement shall be amended by
adding the following defined terms therein, in appropriate
alphabetical order:
"Third Offering" shall mean that certain
Subscription and Purchase Agreement for 5,500 shares
of Series 3 Class C Convertible Preferred Stock, par
value $.00l per share, and 2,000,000 Warrants, each
Warrant to Purchase One Share of Common Stock of
Perma-Fix Environmental Services, Inc., dated
July 17, 1996, which when executed by the parties
thereto, will transfer all or a part of the Third
Offering Shares and the Third Offering Warrants.
"Third Offering Resolution" shall mean that
certain Resolution of the Board of Directors of
Parent Fixing the Number and Designating the Rights,
Privileges, Restrictions and Conditions attaching to
the Series 3 Class C Convertible Preferred Stock,
adopted July 17, 1996, authorizing the Third
Offering Shares.
"Third Offering Shares" shall mean up to 5,500
shares of Series 3 Class C Convertible Preferred
Stock of Parent authorized pursuant to the Third
Offering Resolution.
<PAGE>
"Third Offering Warrants" shall mean,
collectively, (a) the 1,000,000 Warrants to purchase
1,000,000 shares of common stock, $.001 par value
per share, of Parent, at an exercise price equal to
$2.00 per share, expiring on July 18, 2001 and
(b) the 1,000,000 Warrants to purchase 1,000,000
shares of common stock, $.001 par value per share,
of Parent, at an exercise price equal to $3.50 per
share, expiring on July 18, 2001, each to be issued
pursuant to the Third Offering.
(b) Section 1.1 of the Loan Agreement shall be
further amended by adding the following provision at the end of the
definition of "Intangible Assets" therein:
provided, however, that, for purposes of calculating
Tangible Net Worth of Parent and its Subsidiaries,
restricted funds shall be included as "Intangible
Assets" only to the extent that the amount of such
funds exceeds the amount thereof on June 30, 1996.
3. Amendments to Section 2.2 of the Loan Agreement.
(a) Section 2.2 of the Loan Agreement is hereby
amended by deleting clause (A) thereof in its entirety and
substituting in lieu thereof the following revised clause (A):
(A) Term Loan. The Term Loan shall bear interest
on the unpaid principal balance thereof from time to
time outstanding at a rate of interest per annum
equal to the Base Rate plus two and one-fourth
percent (2-1/4%).
In connection with the foregoing, Borrowers acknowledge that
from and after the date hereof, Borrowers shall no longer have
the option to elect that the Term Loan bear interest at a rate
based on the LIBOR Rate, and all provisions of the Loan
Agreement pertaining to the LIBOR Rate shall be of no further
force or effect.
(b) Section 2.2 of the Loan Agreement is hereby
further amended by changing the percentage "one and one-fourth
percent (1-1/4%)" in clause (B) thereof to "two percent (2%)."
(c) Section 2.2(C) of the Loan Agreement is hereby
deleted in its entirety and the following Section 2.2(C) of
the Loan Agreement is substituted in lieu thereof:
(C) Performance Price Adjustments.
Notwithstanding any other term of this Section 2.2,
on the effective date of that certain Third
Amendment to Loan and Security Agreement, dated as
of August 16, 1996, among the parties to this
Agreement, as provided in Section 11 thereof, the
otherwise applicable interest rates payable on the
Loans shall be reduced, in each instance, by one-
half of one percent (1/2%) per annum; provided,
however, that (i) no such interest rate time
reduction shall be granted if at the time when such
reduction would become effective as provided herein,
any Default or Events of Default then exists; and
<PAGE>
(ii) the interest rate reduction shall be rescinded
if at any time after it becomes effective any
Default or Event of Default occurs (but without
limitation of Lender s right to also charge interest
at the default rate as provided in clause (D)
below).
4. Amendments to Section 5.1 of the Loan Agreement.
(a) Section 5.1(E) of the Loan Agreement is hereby
deleted in its entirety and the following revised
Section 5.1(E) is substituted in lieu thereof:
(E) Borrowing Base Certificates, Registers and
Journals. (1) On a weekly basis, within three (3)
days after the end of each week (or more frequently
if Lender shall so request), the Parent shall
deliver to Lender a Borrowing Base Certificate
updated to reflect weekly sales and collections of
the Loan Parties, individually, and an assignment
schedule of all Accounts created by each Loan Party
in such month; and (2) on a monthly basis, within
twenty (20) days after the end of each calendar
month (or more frequently if Lender shall so
request), the Parent shall deliver to Lender (x) an
aged trial balance of all existing Accounts of each
Loan Party; (y) a reconciliation report with
respect to all disbursements and repayments of Loan
proceeds in the preceding month and (z) an accounts
payable aging for each Loan Party.
(b) Section 5.1(M) of the Loan Agreement is hereby
deleted in its entirety and the following revised
Section 5.1(M) is substituted in lieu thereof:
(M) Projections. As soon as available and in
any event no later than September 30 of each Fiscal
Year, Parent will deliver consolidated and
consolidating Projections of Parent and its
Subsidiaries for the forthcoming Fiscal Year, month-
by-month.
5. Amendment to Section 5.3 of the Loan Agreement.
Section 5.3 of the Loan Agreement is hereby amended by deleting the
words and figure "Five Hundred Dollars ($500)" from the last
sentence thereof and substituting in lieu thereof the words and
figure "Six Hundred Fifty Dollars ($650)" and by deleting from such
sentence the phrase "not to exceed, however, in aggregate amount,
Twenty Thousand Dollars ($20,000) unless a Default or an Event of
Default has occurred which is continuing".
<PAGE>
6. Amendment to Section 6 of the Loan Agreement.
Section 6 of the Loan Agreement is hereby deleted in its entirety
and the following revised Section 6 is substituted in lieu thereof:
SECTION 6
FINANCIAL COVENANTS
Parent covenants and agrees that so long as any of the
Commitments remain in effect and until payment in full of all
Obligations, Parent shall comply with all covenants in this
Section 6.
6.1 Tangible Net Worth.
Parent shall maintain Tangible Net Worth of at least the amount
set forth below at the end of each applicable period set forth
below:
Applicable Period Amount
________________________________ _________
As of 6/30/96 ($600,000)
As of 9/30/96 ($100,000)
As of 12/31/96 and as of $500,000
the end of each fiscal quarter
of Borrower thereafter
6.2 Minimum EBITDA.
Parent shall achieve an EBITDA of at least the amount set forth
below for each applicable period set forth below:
Applicable Period Amount
_____________________________ __________
Six Months Ended 6/30/96 $ 900,000
Nine Months Ended 9/30/96 $1,700,000
Twelve Months Ended 12/31/96 $2,500,000
Twelve Months Ended 3/31/97 $3,000,000
and for each twelve month
period ending on the last
day of each fiscal quarter
thereafter
6.3 Capital Expenditure Limits.
The aggregate amount of all Capital Expenditures of Parent and
its Subsidiaries (excluding trade-ins and excluding (a) Capital
Expenditures in respect of replacement assets to the extent funded
with casualty insurance proceeds and (b) Capital Expenditures
financed pursuant to Capital Leases permitted pursuant to
Section 7.1 hereof) will not exceed the amount set forth below for
each applicable period set forth below:
<PAGE>
Applicable Period Amount
___________________________________ ___________
January 1, 1996 - December 31, 1996 $1,820,000
January 1, 1997 - January 31, 1998 $1,250,000
<PAGE>
6.4 Fixed Charge Coverage.
Parent shall not permit Fixed Charge Coverage for each
applicable period set forth below to be less than the amount set
forth below for such period (provided, however, that in computing
Fixed Charge Coverage, Capital Expenditures pursuant to Capital
Leases permitted pursuant to Section 7.1 hereof and Indebtedness
paid by Perma-Fix, Inc. in connection with the sale of its Re-Tech
division shall be excluded):
Applicable Period Ratio
Six Months Ended 6/30/96 .14:1
Seven Months Ended 7/31/96 .20:1
Eight Months Ended 8/31/96 .35:1
Nine Months Ended 9/31/96 .40:1
Ten Months Ended 10/31/96 .50:1
Eleven Months Ended 11/30/96 .55:1
Twelve Months Ended 12/31/96 .55:1
Twelve Months Ended 1/31/97 .75:1
Twelve Months Ended 2/28/97 .75:1
Twelve Months Ended 3/31/97 .75:1
Twelve Months Ended 4/30/97 .75:1
Twelve Months Ended 5/31/97 .75:1
Twelve Months Ended 6/30/97 .75:1
Twelve Months Ended 7/31/97 .75:1
Twelve Months Ended 8/31/97 .75:1
Twelve Months Ended 9/30/97 .75:1
Twelve Months Ended 10/31/97 .75:1
Twelve Months Ended 11/30/97 .75:1
Twelve Months Ended 12/31/97 1.00:1
6.5 Maximum Days Receivable.
Parent will not permit (A) the product of (x) the aggregate
dollar amount of the Accounts of all Loan Parties as at the end of
any fiscal quarter, times (y) ninety (90), divided by (B) the Loan
Parties net sales revenue in respect of such fiscal quarter, to
exceed seventy-five (75).
6.6 Current Ratio.
Borrower shall maintain at all times a ratio of "Current
Assets" (as defined under GAAP) to trade payables of at least 1.3:1.
<PAGE>
7. Amendment to Section 7.5 of the Loan Agreement.
Section 7.5 of the Loan Agreement is hereby amended by adding a new
clause (d) at the end of such Section to read as follows:
(d) Parent may pay dividends to each holder of
Third Offering Shares, in either cash or common
stock, in an amount not in excess of $60 per share
in each year, so long as no Default or Event of
Default has occurred and is continuing or will
result from the making of such payment, and, in the
case of dividends to be paid in cash, on each day
for a period of thirty (30) consecutive days prior
to the making of such payment, Borrower has had
"Excess Availability" (as defined below) of at least
$500,000 and (e) Parent may purchase, using proceeds
of the sale of the Third Offering Shares pursuant to
the Third Offering, up to 920,000 shares of its
common stock issued upon conversion of the Shares
and the Second Offering Shares as provided in
Section 7 of the Subscription and Purchase Agreement
further described in the definition of "Third
Offering" set forth in Section 1.1 hereof. For
purposes hereof, "Excess Availability" shall mean,
at any time, the Maximum Revolving Loan Amount minus
the amount of the outstanding Revolving Loans.
8. Amendment to Section 7.6 of the Loan Agreement.
Section 7.6 of the Loan Agreement is hereby amended by deleting the
proviso at the end of such Section (beginning with the words
"provided, however," and ending with the words "Second Offering
Shares") and substituting in lieu thereof the following:
"provided, however, that Parent may issue (i) the
Shares pursuant to the Offering, (ii) the Second
Offering Shares pursuant to the Second Offering,
(iii) the Third Offering Shares pursuant to the
Third Offering, (iv) the Third Offering Warrants
pursuant to the Third Offering, (v) shares of common
stock upon conversion of the Shares, (vi) shares of
common stock upon conversion of the Second Offering
Shares, (vii) shares of common stock upon conversion
of the Third Offering Shares, (viii) shares of
common stock upon the exercise of the Third Offering
Warrants, (ix) shares of common stock to Louis
Centofanti in reimbursement for certain expenses
incurred by him in the amount of $13,971 on behalf
of Borrowers and in exchange for certain cash equity
contributions previously made by him to Parent,
(x) 152,000 shares of common stock to Robert Foster
as compensation for consulting services, 30,000
shares of common stock to Gary Myers as compensation
for consulting services, 40,000 shares of common
<PAGE>
stock to Bobby Meeks as compensation for consulting
services and 12,000 shares of common stock to David
Cowerd as compensation for consulting services, and
(xi) shares of common stock pursuant to its 1992
Outside Directors Stock Option Plan, its 1993
Nonqualified Stock Option Plan and its 1991
Performance Equity Plan.
9. Amendment to Section 8.1 of the Loan Agreement.
Section 8.1(F) of the Loan Agreement is hereby amended by deleting
the words and figure "twenty percent (20%)" in clause (3) thereof
and substituting in lieu thereof the words and figure "five percent
(5%)."
10. Waiver of Existing Events of Default. Lender hereby
waives the Existing Events of Default; provided, however, that such
waiver shall not be, or be deemed to be, a waiver of any other
Defaults or Events of Default which may presently or hereafter
exist.
11. Conditions Precedent. This Amendment shall not
become effective unless and until each of the following conditions
shall have been satisfied on or prior to August 5, 1996, as
determined by Lender in its sole discretion:
(a) The Loan Parties party thereto and Ally
Capital shall have entered into an amendment to the Ally
Capital Lease, in form and substance satisfactory to Lender,
pursuant to which any tangible net worth covenant set forth
therein shall be amended to correspond to the Tangible Net
Worth covenant set forth in Section 5 hereof and any
violations of the debt to net worth event of default set
forth therein shall be waived.
(b) Each of the Loan Parties shall have executed
and delivered in favor of Lender such additional Loan
Documents and amendments to existing Loan Documents as Lender
shall deem to be necessary or appropriate in connection
herewith.
(c) Except for the Existing Events of Default, no
Default or Event of Default shall have occurred and be
continuing.
(d) In consideration for the accommodations by
Lender to the Loan Parties contemplated hereby the Loan
Parties shall have paid to Lender a fee of $25,000, which fee
shall be fully-earned on the date hereof and non-refundable,
and shall be in addition to, and not in lieu of, all fees,
interest and expenses payable by the Loan Parties under the
Loan Agreement.
<PAGE>
(e) Since December 31, 1995, there shall have
occurred no material adverse change in the business,
operations, financial conditions, profits or prospect of any
Loan Party or in the Collateral.
(f) Parent shall have obtained an equity
contribution of at least $3,300,000 in unrestricted cash pursuant
to the Third Offering.
12. Miscellaneous.
(a) Effect of Amendment. Except as set forth expressly
herein, all terms of the Loan Agreement and the other Loan Documents
shall be and remain in full force and effect and shall constitute
the legal, valid, binding and enforceable obligations of Parent and
Borrowers. Without limitation of the foregoing, Parent and each
Borrower hereby ratify and reaffirm the Parent Guaranty or Cross-
Guaranty, as applicable, to which it is party, after giving effect
to this Amendment. To the extent that any terms and conditions in
any of the Loan Documents shall contradict or be in conflict with
any terms or conditions of the Loan Agreement, after giving effect
to this Amendment, such terms and conditions are hereby deemed
modified and amended accordingly to reflect the terms and conditions
of the Loan Agreement as modified and amended hereby. Nothing
contained herein shall be construed as a consent to any matter
prohibited by the Loan Agreement (except as expressly provided
herein), including, without limitation, any redemption by Parent of
the Third Offering Shares.
(b) Reaffirmation of Representations and Warranties.
Parent and Borrower hereby notify and reaffirm each and every
representation and warranty set forth in the Loan Agreement and the
other Loan Documents effective as of the date hereof.
(c) Ratification. Parent and each Borrower hereby
restate, ratify and reaffirm each and every term and condition set
forth in the Loan Agreement, as amended hereby, and the other Loan
Documents effective as of the date hereof.
(d) Estoppel. To induce Lenders and Agent to enter into
this Amendment and to continue to make Revolving Loans to Borrowers
under the Loan Agreement, Parent and each Borrower hereby
acknowledge and agree that, as of the date hereof, there exists no
Event of Default or Default and no right of offset, defense,
counterclaim or objection in favor of Parent or any Borrower as
against Lender with respect to the Obligations.
(e) Waiver and Release. Parent and each Borrowers waive
and affirmatively agree not to allege or otherwise pursue any or all
defenses, affirmative defenses, counterclaims, claims, causes of
action, set-offs, or other rights that any of them may have to
contest (i) any provision of the Loan Agreement, this Amendment, or
<PAGE>
the other Loan Documents; (ii) the right of Lender to all proceeds
from the Collateral; (iii) the ownership and security interest of
Lender in any property (whether real or personal tangible or
intangible), right or other interest, now or hereafter arising in
connection with the Collateral; (iv) the conduct of Lender in
administering this Amendment, the Loan Agreement, the other Loan
Documents or otherwise. In consideration of the terms and
conditions of this Amendment, the receipt and sufficiency of which
consideration are hereby acknowledged by Parent and each Borrower,
Parent and each Borrower hereby release Lender, its parent and
affiliates, its agents, servants, employees, directors, attorneys,
successors, and assigns from any and all liabilities, claims,
actions, or causes of action accruing to Parent or any Borrower or
their respective affiliates, arising out of or in any manner
connected with this Amendment, the Loan Agreement, the other Loan
Documents or Lender's activities, including, without limitation, all
actions taken or not taken by Lender in connection with the
administration of this Amendment, the Loan Agreement, the other Loan
Documents or otherwise.
(f) Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of Illinois
without regard to its conflicts of law rules.
(g) Costs and Expenses. Parent and Borrowers agree to
pay promptly on demand all reasonable costs and expenses of Lender
in connection with the preparation, execution, delivery and
enforcement of this Amendment, including, without limitation, the
reasonable fees and out-of-pocket expenses of Lender's counsel.
(h) Counterparts. This Amendment may be executed by one
or more of the parties to this Amendment on any number of separate
counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their proper and duly authorized
officers as of the day and year first above written.
"LENDER"
HELLER FINANCIAL, INC., a
Delaware corporation
By /s/ Miles D. McManus
_________________________
Miles D. McManus
Senior Vice President
<PAGE>
"PARENT" AND "BORROWER"
PERMA-FIX ENVIRONMENTAL
SERVICES, INC., a Delaware
corporation
By /s/ Louis F. Centofanti
_______________________________________
Name: Dr. Louis F. Centofanti
________________________________
Title: CEO
_________________________________
"BORROWERS"
INDUSTRIAL WASTE MANAGEMENT,
INC., a Missouri corporation
By /s/ Louis F. Centofanti
_______________________________________
Name: Dr. Louis F. Centofanti
________________________________
Title: CEO
_________________________________
PERMA-FIX, INC., an Oklahoma
corporation
By /s/ Louis F. Centofanti
_______________________________________
Name: Dr. Louis F. Centofanti
________________________________
Title: CEO
_________________________________
PERMA-FIX OF DAYTON, INC.,
an Ohio corporation
By /s/ Louis F. Centofanti
_______________________________________
Name: Dr. Louis F. Centofanti
________________________________
Title: CEO
_________________________________
<PAGE>
PERMA-FIX OF FLORIDA, INC.,
a Florida corporation
By /s/ Louis F. Centofanti
_______________________________________
Name: Dr. Louis F. Centofanti
________________________________
Title: CEO
_________________________________
PERMA-FIX OF FORT LAUDERDALE,
INC., a Florida corporation
By /s/ Louis F. Centofanti
_______________________________________
Name: Dr. Louis F. Centofanti
________________________________
Title: CEO
_________________________________
PERMA-FIX OF MEMPHIS, INC.,
a Tennessee corporation
By /s/ Louis F. Centofanti
_______________________________________
Name: Dr. Louis F. Centofanti
________________________________
Title: CEO
_________________________________
PERMA-FIX OF NEW MEXICO, INC.,
a New Mexico corporation
By /s/ Louis F. Centofanti
_______________________________________
Name: Dr. Louis F. Centofanti
________________________________
Title: CEO
_________________________________
<PAGE>
PERMA-FIX TREATMENT SERVICES,
INC., an Oklahoma corporation
By /s/ Louis F. Centofanti
_______________________________________
Name: Dr. Louis F. Centofanti
________________________________
Title: CEO
_________________________________
SCHREIBER, GRANA & YONLEY,
INC., a Missouri corporation
MINTECH, INC., an Oklahoma
corporation
By /s/ Louis F. Centofanti
_______________________________________
Name: Dr. Louis F. Centofanti
________________________________
Title: CEO
_________________________________
RECLAMATION SYSTEMS, INC., an
Oklahoma corporation
By /s/ Louis F. Centofanti
_______________________________________
Name: Dr. Louis F. Centofanti
________________________________
Title: CEO
_________________________________
<PAGE>
EXHIBIT A
EXISTING EVENTS OF DEFAULT
1. Event of Default under Section 8.1(C) of the Loan Agreement
as a result of Parent s failure to deliver an accountant s
report as to its and its Subsidiaries financial statements
for the fiscal year ending December 31, 1995 without a
going-concern qualification as required pursuant to Section
5.1(B) of the Loan Agreement.
2. Events of Default under Section 8.1(C) of the Loan Agreement
as a result of Parent s failure to comply with the financial
covenants set forth in Sections 6.1, 6.2, 6.3, 6.5 and 6.7
of the Loan Agreement for its Fiscal Year ending
December 31, 1995 and its fiscal quarter ending March 31,
1996.
June 19, 1996
Perma-Fix Environmental Services, Inc.
1940 N.W. 67th Place
Gainesville, FL 32653
Attention: Robert W. Foster, Jr.
RE: LOAN AND SECURITY AGREEMENT DATED AS OF JANUARY 27, 1995
(THE LOAN AGREEMENT ), AS AMENDED, BETWEEN PERMA-FIX
ENVIRONMENTAL SERVICES, INC., A DELAWARE CORPORATION
( PARENT ) AND EACH OF THOSE DIRECT AND INDIRECT
SUBSIDIARIES OF PARENT WHOSE NAMES ARE INSCRIBED ON THE
SIGNATURE PAGES OF THE LOAN AGREEMENT (COLLECTIVELY, WITH
PARENT, BORROWERS OR INDIVIDUALLY, A BORROWER ) AND
HELLER FINANCIAL, INC., A DELAWARE CORPORATION ( LENDER )
Gentlemen:
Reference is made to the Loan Agreement. Capitalized terms
used but not defined herein shall have the meanings assigned
to such terms in the Loan Agreement.
This letter evidences the agreement of Lender and Borrower as
follows:
1. Establishment of Overformula Line. (a) Lender
shall make available to Borrower, during the Overformula Line
Period (as defined below), a temporary overformula line of
credit ( Overformula Line ) in the amount of the Overformula
Line Amount (as defined below). As a result of the
establishment of the Overformula Line, during the Overformula
Line Period, the aggregate outstanding amount of Revolving
Loans may exceed the Borrowing Base by an amount of up to the
Overformula Line Amount, provided that in no event shall the
aggregate outstanding amount of Revolving Loans at any time
exceed the Revolving Loan Commitment amount. On the last day
of the Overformula Line Period, the Overformula Line shall
terminate, and Borrower shall pay to Lender, in immediately
available funds, without demand or notice, all outstanding
<PAGE>
advances under the Overformula Line, together with all accrued
but unpaid interest thereon.
(b) As used herein, the term Overformula Line
Period shall mean the period commencing on the date of the
first advance to Borrower under the Overformula Line and
ending on the earliest of (i) 90 days after the date of such
first advance, (ii) September 30, 1996, (iii) the termination
of the Revolving Loan Commitment pursuant to subsection 8.3 of
the Loan Agreement, or (iv) the Termination Date.
(c) As used herein, the term Overformula Line
Amount means, at any time of determination thereof, $250,000.
(d) The making of advances by Lender to Borrower
under the Overformula Line shall be subject to all of the
terms and conditions set forth in the Loan Agreement for the
making of advances under the Revolving Loan, including,
without limitation, satisfaction of the conditions set forth
in subsection 3.1 of the Loan Agreement, with the exception of
section 3.1(c) and 3.1(f). All advances under the Overformula
Line shall constitute Obligations, shall bear interest at the
same rate of interest applicable to all other advances under
the Revolving Loan and shall be secured by Lender s security
interest in the Collateral and by all other security
interests, liens, mortgages, claims, and encumbrances now or
from time to time hereafter granted by Borrower to Lender.
2. Overformula Line Fee. As consideration for Lender s
establishment of the Overformula Line, Borrower shall pay to
Lender on the last day of each month during which any advance
of the Overformula Line is outstanding a fee in the amount of
one percent (1%) per month of the average daily balance under
the Overformula Line. This fee shall be in addition to all
other fees that are due and payable under the Loan Agreement.
3. Conditions. The effectiveness of the Overformula
Line and the obligation of Lender to make advances to Borrower
thereunder are subject to satisfaction of the following:
(a) Borrower shall have duly executed and delivered
this letter agreement;
(b) Louis Centafoni will provide a one hundred
thousand dollar ($100,000) equity infusion in Borrowers prior
to any advance under the Overformula Line.
<PAGE>
4. Loan Agreement Representations. All of the
representations set forth in the Loan Agreement are accurate
in all material respects as of the date hereof.
Please evidence your acknowledgment of and agreement to the
terms and conditions of this letter by executing this letter
in the place indicated below.
Cordially,
HELLER FINANCIAL, INC.
By: ________________________
Its: _________________________
(SIGNATURES CONTINUED ON NEXT PAGE)
<PAGE>
Accepted and Agreed this 21st day of June, 1996.
PERMA-FIX ENVIRONMENTAL SERVICES, INC.,
a Delaware corporation
By: __________________________
Name: ________________________
Title: _________________________
Attest: ________________________
Name: ________________________
Title: _________________________
INDUSTRIAL WASTE MANAGEMENT, INC.,
a Missouri corporation
By: __________________________
Name: ________________________
Title: _________________________
Attest: ________________________
Name: ________________________
Title: _________________________
PERMA-FIX, INC., an Oklahoma
corporation
By: __________________________
Name: ________________________
Title: _________________________
Attest: ________________________
Name: ________________________
Title: _________________________
(SIGNATURES CONTINUED ON NEXT PAGE)
<PAGE>
PERMA-FIX OF DAYTON, INC., a
Ohio corporation
By: __________________________
Name: ________________________
Title: _________________________
Attest: ________________________
Name: ________________________
Title: _________________________
PERMA-FIX OF FLORIDA, INC., a
Florida corporation
By: __________________________
Name: ________________________
Title: _________________________
Attest: ________________________
Name: ________________________
Title: _________________________
PERMA-FIX OF FORT LAUDERDALE,
INC., a Florida corporation
By: __________________________
Name: ________________________
Title: _________________________
Attest: ________________________
Name: ________________________
Title: _________________________
(SIGNATURES CONTINUED ON NEXT PAGE)
<PAGE>
PERMA-FIX OF MEMPHIS, INC.,
a Tennessee corporation
By: __________________________
Name: ________________________
Title: _________________________
Attest: ________________________
Name: ________________________
Title: _________________________
PERMA-FIX OF NEW MEXICO, INC.,
a New Mexico corporation
By: __________________________
Name: ________________________
Title: _________________________
Attest: ________________________
Name: ________________________
Title: _________________________
PERMA-FIX TREATMENT SERVICES, INC.,
an Oklahoma corporation
By: __________________________
Name: ________________________
Title: _________________________
Attest: ________________________
Name: ________________________
Title: _________________________
(SIGNATURES CONTINUED ON NEXT PAGE)
<PAGE>
SCHREIBER, GRANA & YONLEY, INC.,
a Missouri corporation
By: __________________________
Name: ________________________
Title: _________________________
Attest: ________________________
Name: ________________________
Title: _________________________
MINTECH, INC., an Oklahoma
corporation
By: __________________________
Name: ________________________
Title: _________________________
Attest: ________________________
Name: ________________________
Title: _________________________
RECLAMATION SERVICES, INC.,
an Oklahoma corporation
By: __________________________
Name: ________________________
Title: _________________________
Attest: ________________________
Name: ________________________
Title: _________________________
AMENDMENT TO LEASE AGREEMENT
DATED August 16, 1996
_______________
This Amendment becomes a part of the Equipment Lease Agreement dated
as of October 12, 1994, and the accompanying Rider No. 2, wherein
Perma-Fix Environmental Services Inc., Perma-Fix of Memphis Inc.,
Perma-Fix of Ft. Lauderdale Inc., Perma-Fix of Dayton Inc., and
Perma-Fix Treatment Services Inc. as Lessee and Ally Capital
Corporation is Lessor. Paragraph No. 4 of the above referenced lease
which contains a 3.0 million tangible net worth covenant require-
ment is hereby deleted in its entirety and the covenants as
contained in the attached "Exhibit A", are substituted in lieu
thereof. All other conditions of the Equipment Lease Agreement
remain the same.
PERMA-FIX SERVICES INC. AND
PERMA-FIX OF MEMPHIS INC.
AND PERMA-FIX OF FT. LAUDERDALE
INC. AND PERMA-FIX OF INC. AND
PERMA-FIX TREATMENT SERVICES
INC. CO-LESSEES
ALLY CAPITAL CORPORATION PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By: By:
______________________ _____________________________
Name: Name: Richard T. Kelecy
_________________ ________________________
Title: Title: Chief Financial Officer
_________________ ________________________
PERMA-FIX OF MEMPHIS INC.
By:
_______________________________
Name: Richard T. Kelecy
__________________________
Title: Chief Financial Officer
__________________________
PERMA-FIX OF FT. LAUDERDALE INC.
By:
______________________________
Name: Richard T. Kelecy
__________________________
Title: Chief Financial Officer
________________________
PERMA-FIX OF DAYTON INC.
By: ______________________________
Name: Richard T. Kelecy
_________________________
Title: Chief Financial Officer
PERMA-FIX TREATMENT SERVICES INC.
By:
______________________________
Name: Richard T. Kelecy
_________________________
Title: Chief Financial Officer
________________________
<PAGE>
Exhibit "A" to Amendment to Lease Agreement
Dated: August 16, 1996
_________________
FINANCIAL COVENANTS
Section 1
Perma-Fix Environmental Services Inc. and its subsidiaries on a
consolidated basis covenant and agree that until payment in full
of all Obligations owed by Perma-Fix Environmental Services Inc.
to Ally Capital are paid, Perma-Fix shall comply with all covenants
in this Section 1. The terms used in this Exhibit "A" to
amendment to lease agreement shall have the meanings as defined
in the loan and security agreement dated as of January 27, 1995
among Perma-Fix Environmental Services Inc. and subsidiaries
and Heller Financial Inc. as amended to the date of this amendment.
1.1 Tangible Net Worth
__________________
Perma-Fix Environmental Services Inc. shall maintain Tangible
Net Worth of at least the amount set forth below at the end of
each applicable period set forth below:
Applicable Period Amount
_________________ ______
As of 6/30/96 ($600,000)
As of 9/30/96 ($100,000)
As of 12/31/96 and as of $500,000
the end of each fiscal quarter
of Borrower thereafter
1.2 Minimum EBITDA
______________
Perma-Fix Environmental Services Inc. shall achieve an EBITDA of
at least the amount set forth below for each applicable period
set forth below:
Applicable Period Amount
_________________ ______
Six Months Ended 6/30/96 $ 900,000
Nine Months Ended 9/30/96 $1,700,000
Twelve Months Ended 12/31/96 $2,500,000
Twelve Months Ended 3/31/97 $3,000,000
and for each twelve month
period ending on the last
quarter day of each fiscal
quarter thereafter
1.3 Capital Expenditure Limits
__________________________
The aggregate amount of all Capital Expenditures of Perma-
Fix Environmental Services Inc. and its Subsidiaries (excluding
trade-ins and excluding (a) Capital Expenditures in respect of
<PAGE>
replacement assets to the extent funded with casualty insurance
proceeds and (b) Capital Expenditures financed pursuant to Capital
Leases permitted will not exceed the amount set forth below for
each applicable period set forth below:
Applicable Period Amount
_________________ _______
January 1, 1996 - December 31, 1996 $1,820,000
January 1, 1997 - January 31, 1998 $1,250,000
1.4 Fixed Charge Coverage
_____________________
Perma-Fix Environmental Services Inc. shall not permit Fixed Charge
Coverage for each applicable period set forth below to be less than
the amount set forth below for such period (provided, however, that
in computing Fixed Charge Coverage, Capital Expenditures pursuant
to Capital Leases permitted pursuant to Section 7.1 hereof and
Indebtedness paid by Perma-Fix, Inc. in connection with the sale of
its Re-Tech division shall be excluded):
Applicable Period Ratio
Six Months Ended 6/30/96 .14:1
Seven Months Ended 7/31/96 .20:1
Eight Months Ended 8/31/96 .35:1
Nine Months Ended 9/31/96 .40:1
Ten Months Ended 10/31/96 .50:1
Eleven Months Ended 11/30/96 .55:1
Twelve Months Ended 12/31/96 .55:1
Twelve Months Ended 1/31/97 .75:1
Twelve Months Ended 2/28/97 .75:1
Twelve Months Ended 3/31/97 .75:1
Twelve Months Ended 4/30/97 .75:1
Twelve Months Ended 5/31/97 .75:1
Twelve Months Ended 6/30/97 .75:1
Twelve Months Ended 7/31/97 .75:1
Twelve Months Ended 8/31/97 .75:1
Twelve Months Ended 9/30/97 .75:1
Twelve Months Ended 10/31/97 .75:1
Twelve Months Ended 11/30/97 .75:1
Twelve Months Ended 12/31/97 1.00:1
1.5 Maximum Days Receivable
_______________________
Parent will not permit (A) the product of (x) the aggregate
dollar amount of the Accounts of all Loan Parties as at the
end of any fiscal quarter, times (y) ninety (90), divided by
(B) the Loan Parties net sales revenue in respect of such
fiscal quarter, to exceed seventy-five (75).
<PAGE>
1.6 Current Ratio.
_____________
Borrower shall maintain at all times a ratio of "Current
Assets" (as defined under GAAP) to trade payables of at
least 1.3:1.
ISTE:\N-P\PESI\10Q\696\EXHIBIT4.3
SUBSCRIPTION AND PURCHASE AGREEMENT
FOR
5,500 SHARES OF SERIES 3 CLASS C CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.001 PER SHARE
AND
2,000,000 WARRANTS, EACH WARRANT TO PURCHASE
ONE SHARE OF COMMON STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(a Delaware corporation)
SUBSCRIPTION AND PURCHASE AGREEMENT (the "Agreement") dated as
of the 17th day of July, 1996, by and between PERMA-FIX
ENVIRONMENTAL SERVICES, INC., a Delaware corporation, having
offices at 1940 Northwest 67th Place, Gainesville, Florida 32606-
1649 (the "Company"), and RBB BANK AKTIENGESELLSCHAFT, organized
under the laws of Austria, and having its principal offices at
Burgring 16, 8101 Graz, Austria (the "Subscriber").
W I T N E S S E T H:
WHEREAS, Subscriber and the Company have arranged for this
Subscription and Purchase Agreement (the "Agreement") to provide
for the subscription and, if such subscription as set forth in this
Agreement is accepted by the Company, the purchase by the
Subscriber, on the terms and subject to the conditions set forth in
this Agreement, of (i) 5,500 shares of a convertible preferred
stock, par value $.001 per share, to be designated by the Company's
Board of Directors as "Series 3 Class C Convertible Preferred
Stock" (hereinafter referred to as the "Series 3 Preferred Stock"),
and (ii) an aggregate of 2,000,000 common stock purchase warrants,
each common stock purchase warrant to purchase one share of the
Company's common stock, par value $.001 per share (the "Common
Stock") at those exercise prices hereinbelow set forth (a "Warrant"
and collectively, the "Warrants"); and
WHEREAS, the Series 3 Preferred Stock and the Warrants are
collectively referred to herein from time to time as "Securities";
and
WHEREAS, the Company's Common Stock is listed for trading on
the Boston Stock Exchange and the Nasdaq SmallCap Market, and the
Company is subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the
<PAGE>
"Exchange Act") and has been subject to such filing requirements
for the past ninety (90) days; and
WHEREAS, the Subscriber is an "accredited investor" as such
term is defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended (the "Act"); and
WHEREAS, the Subscriber is not a "U. S. Person" as defined in
Regulation S promulgated under the Securities Act of 1933, as
amended (the "Act"); and
WHEREAS, the Securities to be sold in accordance with this
Agreement shall not be registered securities under federal or state
securities laws or quoted or listed for trading on any securities
exchange, organized market or quotation system at the time of
acquisition hereunder; and
WHEREAS, in order to induce the Subscriber to enter into this
Agreement and to subscribe for and purchase the Securities on the
terms and subject to the conditions hereof, the Company is granting
certain registration rights hereunder with respect to the Common
Stock issuable upon the conversion of the Series 3 Preferred Stock
and the Common Stock issuable upon the exercise of the Warrants as
hereinafter set forth; and
WHEREAS, in reliance upon certain representations made by the
Subscriber herein, the transactions contemplated by this Agreement
are such that the offer and sale of Securities by the Company
hereunder will be exempt from registration under applicable federal
and state securities laws pursuant to exemptions made available
under such laws.
NOW, THEREFORE, for and in consideration of the premises, and
the mutual representations, warranties, covenants and agreements
set forth herein, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties hereto agree
as follows:
1. Subscription for Purchase of Securities.
a. Sale and Purchase. On the basis of the
representations, warranties, covenants and agreements, and subject
to the terms and conditions set forth herein, upon the Closing
hereof (as that term is defined in Section 2(a) below) the Company
agrees to sell, transfer, convey and deliver to the Subscriber, and
the Subscriber agrees to purchase, acquire and accept delivery from
the Company, the Securities for an aggregate purchase price of
United States ("U. S.") $5,500,000 (the "Purchase Price").
b. Reporting Company. Although the Securities, the
shares of Common Stock issuable upon conversion of the Series 3
<PAGE>
Preferred Stock (the "Conversion Shares") and the shares of Common
Stock issuable upon exercise of the Warrants (the "Warrant Shares")
shall not be registered upon the Closing under federal or state
securities laws or any rules or regulations promulgated thereunder,
the Company is a public reporting company and has filed or obtained
an extension to file all reports required to be filed by Section 13
or 15(d) of the Exchange Act, since the Company was required to
file such reports. Subscriber has had the opportunity to review,
and has reviewed, all such reports and information which such
Subscriber deemed material to an investment decision regarding the
purchase of the Securities hereunder.
c. Terms of the Series 3 Preferred Stock. The Series
3 Preferred Stock shall contain and be subject to the terms,
conditions, preferences and restrictions set forth in the
Certificate of Designations attached hereto as Exhibit "A".
2. Payment of Purchase Price; Delivery of Securities.
a. Closing. The closing of the purchase of the
Securities contemplated by this Agreement shall occur on or about
July 19, 1996, at the offices of the Company or at such other
mutually convenient time or at such other mutually convenient place
as agreed upon by the parties (the "Closing").
b. Purchase Price and Payment. At the Closing,
Subscriber shall deliver to the Company, in cash, by wire transfer,
the Purchase Price in U. S. dollars and upon receipt by the Company
of the Purchase Price, the Company shall cause to be delivered:
i. to the Subscriber, written evidence from the
Secretary of State of the State of Delaware
that the Certificate of Designations has been
filed in the Office of the Secretary of State
of the State of Delaware on or before the date
of Closing;
ii. to Conner & Winters, a Professional
Corporation, a certificate or certificates
representing the shares of Series 3 Preferred
Stock purchased by the Subscriber hereunder,
in such denominations as Subscriber shall
request, to be held in escrow by Conner &
Winters, a Professional Corporation for the
Subscriber; and
iii. to the Subscriber, (A) a common stock purchase
warrant entitling the Subscriber to purchase
after December 31, 1996, until July 18, 2001,
an aggregate of up to 1,000,000 Warrant Shares
at an exercise price equal to $2.00 per share,
<PAGE>
substantially in the form of Exhibit "B"
annexed hereto (sometimes hereinafter referred
to as the "$2.00 Warrants"), and (B) a common
stock purchase warrant entitling the
Subscriber to purchase after December 31,
1996, until July 18, 2001, an aggregate of up
to 1,000,000 Warrant Shares at an exercise
price equal to $3.50 per share, substantially
in the form of Exhibit "C" annexed hereto
(sometimes hereinafter referred to as the
"$3.50 Warrants").
c. Restrictive Legends. Subject to the provisions of
Section 5 below, all certificates representing the Securities shall
bear the restrictive legend substantially in the form set forth in
Section 6 below which shall include, but not be limited to, a
legend to the effect that the securities represented by such
certificate have not been registered under the Securities Act of
1933, as amended (the "Act"), and unless there is an effective
registration statement relating thereto, such securities may not be
offered, sold, transferred, mortgaged, pledged or hypothecated
without an exemption from registration and an opinion of counsel to
the Company with respect thereto, or an opinion from counsel for
the Subscriber, which opinion is satisfactory to the Company, to
the effect that registration under the Act is not required in
connection with such sale or transfer and the reasons therefor.
The legend on all such certificates shall also make reference to
the registration rights set forth in Section 5 hereof.
3. Representations, Warranties and Covenants of Subscriber.
In connection with this Agreement, the Subscriber hereby
represents, warrants and covenants to the Company as follows:
a. Investment Intent. The Subscriber represents and
warrants that the Securities being purchased (and any underlying
Conversion Shares and Warrant Shares) are being purchased or
acquired solely for the Subscriber's own account, for investment
purposes only and not with a view toward the distribution or resale
to others. Subscriber acknowledges, understands and appreciates
that the Securities have not been registered under the Act by
reason of a claimed exemption under the provisions of such Act
which depends, in large part, upon Subscriber's representations as
to investment invention, investor status and related and other
matters set forth herein. Subscriber understands that, in the view
of the United States Securities and Exchange Commission (the
"SEC"), among other things, a purchase now with an intent to
distribute or resell would represent a purchase and acquisition
with an intent inconsistent with its representation to the Company,
and the SEC might regard such a transfer as a deferred sale for
which the registration exemption is not available. Subscriber
agrees and consents to the placement of a legend on the
<PAGE>
certificate(s) representing the Securities purchased and acquired
hereunder, stating that such Securities have not been registered
under the Act or applicable state securities laws.
b. Certain Risk. The Subscriber recognizes that the
purchase of the Securities involves a high degree of risk in that
(i) the Company has sustained losses through March 31, 1996, from
its operations, and may require substantial funds in addition to
the proceeds of this private placement; (ii) that the Company has
a substantial accumulated deficit; (iii) an investment in the
Company is highly speculative and only investors who can afford the
loss of their entire investment should consider investing in the
Company and the Securities; (iv) an investor may not be able to
liquidate his investment; (v) transferability of the Securities is
extremely limited; (vi) in the event of a disposition an investor
could sustain the loss of his entire investment; (vii) the
Securities represent non-voting equity securities, and the right to
convert into and purchase shares of voting equity securities in a
corporate entity that has an accumulated deficit; (viii) no return
on investment, whether through distributions, appreciation,
transferability or otherwise, and no performance by, through or of
the Company, has been promised, assured, represented or warranted
by the Company, or by any director, officer, employee, agent or
representative thereof; and, (ix) while the Common Stock is
presently quoted and traded on the Boston Stock Exchange and the
Nasdaq SmallCap Market and while the Subscriber is a beneficiary of
certain registration rights provided herein, the Securities
subscribed for and that may be purchased under this Agreement and
the Conversion Shares issuable upon conversion of the Series 3
Preferred Stock and the Warrant Shares issuable upon exercise of
the Warrants (x) are not registered under applicable federal or
state securities laws, and thus may not be sold, conveyed, assigned
or transferred unless registered under such laws or unless an
exemption from registration is available under such laws, as more
fully described below, and (y) are not quoted, traded or listed for
trading or quotation on the Nasdaq SmallCap Market, or any other
organized market or quotation system, and there is therefore no
present public or other market for such Securities or the
Conversion Shares or the Warrant Shares, nor can there be any
assurance that the Common Stock will continue to be quoted, traded
or listed for trading or quotation on the Boston Stock Exchange or
the Nasdaq SmallCap Market or on any other organized market or
quotation system.
c. Prior Investment Experience. The Subscriber
acknowledges that he has prior investment experience, including
investment in non-listed and non-registered securities, or has
employed the services of an investment advisor, attorney or
accountant to read all of the documents furnished or made available
by the Company to it and to evaluate the merits and risks of such
<PAGE>
an investment on its behalf, and that it recognizes the highly
speculative nature of this investment.
d. No Review by the SEC. The Subscriber hereby
acknowledges that this offering of the Securities has not been
reviewed by the SEC because this private placement is intended to
be a nonpublic offering pursuant to Sections 4(2) or 3(b) of the
Act and/or Regulation D promulgated under the Act.
e. Not Registered. The Subscriber understands that the
Securities, the Conversion Shares and the Warrant Shares have not
been registered under the Act by reason of a claimed exemption
under the provisions of the Act which depends, in part, upon his
investment intention. In this connection, the Subscriber
understands that it is the position of the SEC that the statutory
basis for such exemption would not be present if his representation
merely meant that his present intention was to hold such securities
for a short period, such as the capital gains period of tax
statutes, for a deferred sale, for a market rise, assuming that a
market develops, or for any other fixed period. The Subscriber
realizes that, in the view of the SEC, a purchase now with an
intent to resell would represent a purchase with an intent
inconsistent with his representation to the Company, and the SEC
might regard such a sale or disposition as a deferred sale to which
such exemptions are not available.
f. No Public Market. The Subscriber understands that
there is no public market for the Series 3 Preferred Stock or the
Warrants. The Subscriber understands that although there is
presently a public market for the Common Stock, including the
Common Stock issuable upon conversion of the Series 3 Preferred
Stock or exercise of the Warrants, Rule 144 (the "Rule")
promulgated under the Act requires, among other conditions, a two-
year holding period following full payment of the consideration
therefor prior to the resale (in limited amounts) of securities
acquired in a nonpublic offering without having to satisfy the
registration requirements under the Act. The Subscriber
understands that the Company makes no representation or warranty
regarding its fulfillment in the future of any reporting
requirements under the Exchange Act, or its dissemination to the
public of any current financial or other information concerning the
Company, as is required by the Rule as one of the conditions of its
availability. The Subscriber understands and hereby acknowledges
that the Company is under no obligation to register the Securities
or the Conversion Shares or the Warrant Shares under the Act, with
the exception that the Company is obligated to provide those
registration rights set forth in Section 5 hereof. The Subscriber
consents that the Company may, if it desires, permit the transfer
of the Securities or issuable upon exercise thereof out of its name
only when its request for transfer is accompanied by an opinion of
counsel reasonably satisfactory to the Company that neither the
<PAGE>
sale nor the proposed transfer results in a violation of the Act or
any applicable state "Blue Sky" laws (collectively, "Securities
Laws"). The Subscriber agrees to hold the Company and its
directors, officers and controlling persons and their respective
heirs, representatives, successors and assigns harmless and to
indemnify them against all liabilities, costs and expenses incurred
by them as a result of any misrepresentation made by the Subscriber
contained herein or any sale or distribution by the Subscriber in
violation of any Securities Laws.
g. Sophisticated Investor. That (i) the Subscriber has
adequate means of providing for the Subscriber's current financial
needs and possible contingencies and has no need for liquidity of
the Subscriber's investment in the Securities; (ii) the Subscriber
is able to bear the economic risks inherent in an investment in the
Securities and that an important consideration bearing on its
ability to bear the economic risk of the purchase of Securities is
whether the Subscriber can afford a complete loss of the
Subscriber's investment in the Securities and the Subscriber
represents and warrants that the Subscriber can afford such a
complete loss; and (iii) the Subscriber has such knowledge and
experience in business, financial, investment and banking matters
(including, but not limited to, investments in restricted, non-
listed and non-registered securities) that the Subscriber is
capable of evaluating the merits, risks and advisability of an
investment in the Securities.
h. SEC Filing. The Subscriber acknowledges that it has
been previously furnished with true and complete copies of the
following documents which have been filed with the SEC pursuant to
Sections 13(a), 14(a), 14(c) or 15(d) of the Exchange Act since
January 1, 1996, and that such have been furnished to the
Subscriber a reasonable time prior to the date hereof:
i. the Company's Form 10-K for the year ended
December 31, 1995;
ii. the Company's Form 10-Q for the quarter ended
March 31, 1996;
iii. the Company's Form 8-K, dated February 27,
1996; and,
iv. the Company's Form 8-K, dated March 8, 1996.
The Subscriber acknowledges having further received from the
Company the Company's unaudited consolidated financial statements
for the months of April and May, 1996.
i. Documents, Information and Access. That (i)
Subscriber's decision to purchase the Securities is not based on
<PAGE>
any promotional, marketing or sales materials, and (ii) Subscriber
and its representatives have been afforded, prior to purchase
thereof, the opportunity to ask questions of, and to receive
answers from, the Company and its management, and has had access to
all documents and information which Subscriber deems material to an
investment decision with respect to the purchase of Securities
hereunder.
j. No Registration, Review or Approval. The Subscriber
acknowledges and understands that the limited private offering and
sale of Securities pursuant to this Agreement has not been reviewed
or approved by the SEC or by any state securities commission,
authority or agency, and is not registered under the Act or under
the securities or "blue sky" laws, rules or regulations of any
state. The Subscriber acknowledges, understands and agrees that
the Shares are being offered and sold hereunder pursuant to (i) a
private placement exemption to the registration provisions of the
Act pursuant to Section 3(b) or Section 4(2) of such Act and
Regulation D promulgated under such Act) and (ii) a similar
exemption to the registration provisions of applicable state
securities laws.
k. Transfer Restrictions. That Subscriber will not
transfer any Securities purchased under this Agreement unless such
Securities are registered under the Act and under any applicable
state securities or "blue sky" laws (collectively, the "Securities
Laws"), or unless an exemption is available under such Securities
Laws, and the Company may, if it chooses, where an exemption from
registration is claimed by such Subscriber, condition any transfer
of Securities out of such Subscriber's name on an opinion of the
Company's counsel, to the effect that the proposed transfer is
being effected in accordance with, and does not violate, an
applicable exemption from registration under the Securities Laws,
or an opinion of counsel to the Subscriber, which opinion is
satisfactory to the Company, to the effect that registration under
the Act is not required in connection with such sale or transfer
and the reasons therefor.
l. No Short Sale. Subscriber expressly agrees that
until such time that it has sold all of the Securities and/or all
of the Conversion Shares and Warrant Shares that it shall not,
directly or indirectly, through an affiliate (as that term is
defined under Rule 405 promulgated under the Act) or by, with or
through an unrelated third party or entity, whether or not pursuant
to a written or oral understanding, agreement, arrangement scheme,
or artifice of nature whatsoever, engage in the short selling of
the Company's Common Stock or any other equity securities of the
Company, whether now existing or hereafter issued, or engage in any
other activity of any nature whatsoever that has the same effect as
a short sale, or is a de facto or de jure short sale, of the
Company's Common Stock or any other equity security of the Company,
whether now existing or hereafter issued, including, but not
limited to, the sale of any rights pursuant to any understanding,
agreement, arrangement, scheme or artifice of any nature
whatsoever, whether oral or in writing, relative to the Company's
Common Stock or any other equity securities of the Company whether
now existing or hereafter created.
m. Reliance. Subscriber understands and acknowledges that
the Company is relying upon all of the representations, warranties,
covenants, understandings, acknowledgements and agreements
contained in this Agreement in determining whether to accept this
subscription, sell and issue the Securities to the Subscriber.
n. Accuracy or Representations and Warranties. That all of
the representations, warranties, understandings and acknowledgments
that Subscriber has made herein are true and correct in all
material respects as of the date of execution hereof, and that
Subscriber will perform and comply fully in all material respects
with all covenants and agreements set forth herein, and Subscriber
covenants and agrees that until the acceptance of this Agreement by
the Company, Subscriber shall inform the Company immediately in
writing of any changes in any of the representations or warranties
provided or contained herein.
o. Indemnity. Subscriber hereby agrees to indemnify and
hold harmless the Company, and the Company's successors and
assigns, from, against and in all respects of any demands, claims,
actions or causes of action, assessments, liabilities, losses,
costs, damages, penalties, charges, fines or expenses (including,
without limitation, interest, penalties, and attorney and
accountants' fees, disbursements and expenses), arising out of or
relating to any breach by Subscriber of any representations,
warranty, covenant or agreement made by Subscriber in this
Agreement. Such right to indemnification shall be in addition to
any and all other rights of the Company under this Agreement or
otherwise, at law or in equity.
p. Survival. Subscriber expressly acknowledges and agrees
that all of its representations, warranties, agreements and
covenants set forth in this Agreement shall be of the essence
hereof and shall survive the execution, delivery and Closing of
this Agreement, the sale and purchase of the Securities, the
conversion of the Series 3 Preferred Stock, exercise of the
Warrants, and the sale of the Conversion Shares and the Warrant
Shares.
4. Representations, Warranties and Covenants of the Company.
In order to induce Subscriber to enter into this Agreement and to
purchase the Securities, the Company hereby represents, warrants
and covenants to Subscriber as follows:
<PAGE>
a. Organization, Authority, Qualification. The Company
is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. The Company has
full corporate power and authority to own and operate its
properties and assets and to conduct and carry on its business as
it is now being conducted and operated.
b. Authorization. The Company has full power and
authority to execute and deliver this Agreement and to perform its
obligations under and consummate the transactions contemplated by
this Agreement. Upon the execution of this Agreement by the
Company and delivery of the Securities, this Agreement shall have
been duly and validly executed and delivered by the Company and
shall constitute the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms. It is recognized that if all of the Company's presently
outstanding warrants are exercised, the Company may not have
sufficient shares of Common Stock duly authorized by its
Certificate of Incorporation to issue shares of Common Stock upon
the exercise of the Warrants by the Subscriber. As a result, the
Company represents and warrants that it will propose to its
shareholders at the Company's next annual meeting to increase, and
will use its reasonable efforts to have approved by its
shareholders, the number of authorized shares of Common Stock so
that the Company will have sufficient authorized shares of Common
Stock to issue upon the exercise of all of its outstanding warrants
and the Warrants.
c. Ownership of, and Title to, Securities; Exemption
from Registration.
i. The Securities to be purchased by the
Subscriber are, and all Conversion Shares and
Warrant Shares, when issued, will be, duly
authorized, validly issued, fully paid and
nonassessable shares of the capital stock of
the Company, free of personal liability. Upon
consummation of the purchase of the Securities
(and upon the exercise of the Warrants and
conversion of the Preferred Stock, in whole or
in part) pursuant to this Agreement, the
Subscriber will own and acquire title to the
Securities (and the Warrant Shares and the
Conversion Shares, as the case may be) free
and clear of any and all proxies, voting
trusts, pledges, options, restrictions, or
other legal or equitable encumbrance of any
nature whatsoever (other than the restrictions
on transfer due to securities laws or as
otherwise provided for in this Agreement or
the Certificate of Designation).
<PAGE>
ii. The Company represents and warrants that the
offer and sale of Securities to the Subscriber
in accordance with the terms and provisions of
this Agreement is being effected in accordance
with the Act pursuant to (i) a private
placement exemption to the registration
provisions of the Act pursuant to Section 3(b)
or 4(2) of such Act and Regulation D
promulgated under such Act.
d. Use of Proceeds from this Offering. The net
proceeds from the sale of the Series 3 Preferred Stock are
estimated to be approximately $5,187,500 after payment of placement
fees to brokers of $300,000 and legal fees and expenses of
approximately $12,500, but prior to any fees and expenses relating
to the registration of the Conversion Shares and the Warrant Shares
pursuant to the terms of Section 5 hereof. The Company intends to
utilize the net proceeds as follows: approximately $1,650,000 for
capital improvements at its various facilities, $1,770,000 to
purchase from the Subscriber 920,000 shares of the Company's Common
Stock owned by the Subscriber pursuant to Section 7 hereof, and the
balance to reduce outstanding trade payables and for general
working capital.
5. Registration Rights. In order to induce the Subscriber
to enter into this Agreement and purchase the Securities, the
Company hereby covenants and agrees to grant to the Subscriber the
rights set forth in this Section 5 with respect to the registration
of the Warrant Shares and the Conversion Shares.
a. Registration of Conversion Shares. Subject to the
terms of Section 5 hereof, the Company agrees that within forty-
five (45) days after the Closing hereof, it shall prepare and file
with the SEC, a registration statement and such other documents,
including a prospectus, as may be necessary in the opinion of
counsel for the Company in order to comply with the provisions of
the Act, so as to permit a public offering and sale of up to three
million six hundred sixty-six thousand (3,666,000) shares of Common
Stock issuable upon conversion of the Series 3 Preferred Stock,
plus shares of Common Stock, if any, issuable as payment of
dividends on the Series 3 Preferred Stock pursuant to the terms of
the Series 3 Preferred Stock. The Company shall use its reasonable
efforts to cause such registration statement to become effective at
the earliest possible date after filing. In connection with the
offering of such Common Stock registered pursuant to this Section
5, the Company shall take such actions as shall be reasonably
necessary to qualify the Common Stock covered by such registration
statement under such "blue sky" or other state securities laws for
offer and sale as shall be reasonably necessary to permit the
public offering and sale of shares of Common Stock covered by such
registration statement; provided, however, that the Company shall
<PAGE>
not be required (i) to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify
but for this subparagraph, (ii) to subject itself to taxation in
any such jurisdiction, or (iii) to consent to general service of
process in any such jurisdiction. It is expressly agreed that in
no event are any registration rights being granted to the Series 3
Preferred Stock itself, but only with respect to the underlying
Conversion Shares issuable upon exercise of the Series 3 Preferred
Stock.
b. Registration of Warrant Shares. The Company agrees
that, subject to the terms of Section 5 hereof, (i) on or before
December 1, 1996, that it shall prepare and file with the SEC a
registration statement and such other documents, including a
prospectus, as may be necessary, in the opinion of counsel for the
Company to comply with the provisions of the Act so as to permit a
public offering and sale of the Warrant Shares underlying the $2.00
Warrants and the $3.50 Warrants. The Company will use its
reasonable efforts to cause each of the aforementioned registration
statements covering the Warrant Shares to become effective at the
earliest possible date after the filing thereof. In connection
with the offering of any Warrant Shares registered pursuant to this
Section 5, the Company shall take such actions as shall be
necessary to qualify such "blue sky" under any applicable
securities laws for offer and sale as shall be reasonably necessary
to permit the public offering and sale of all the Subscriber's
Warrant Shares; provided, however, that the Company shall be
required (i) to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify
but for this subparagraph, (ii) to subject itself to taxation in
any such jurisdiction, or (iii) to consent to general service of
process in any such jurisdiction. It is expressly agreed that in
no event are any registration rights being granted with respect to
the Warrants themselves, but only with respect to the underlying
Warrant Shares issuable upon exercise of the Warrants.
c. Current Registration Statement. Once effective, the
Company shall use its reasonable efforts to cause any registration
statement filed hereunder to remain current and effective for a
period of one (1) year or until the shares of Common Stock covered
by such registration statement are sold by the Subscriber,
whichever is less. The Subscriber shall promptly provide all such
information and materials and take all such action as may be
required in order to permit the Company to comply with all
applicable requirements of the SEC and to obtain any desired
acceleration of the effective date of such registration statement.
d. Penalty. The Company expressly agrees that in the
event that it does not file with the SEC the registration statement
relative to the Conversion Shares referred to in Section 5(a) above
within sixty (60) days after the date of the Closing, or the
<PAGE>
Company does not file with the SEC a registration statement
relative to the Warrant Shares required to be filed in Section 5(b)
on or before December 1, 1996, in accordance with Section 5(b)
above, then, for each day thereafter until the Company files such
registration statement with the SEC, the Company agrees to pay to
the Subscriber a penalty of $1,000, payable in cash or Common Stock
of the Company at the Company's election. If the Company elects to
pay such penalty in Common Stock of the Company, the number of
shares of Common Stock to be issued per day to the Subscriber shall
be determined by dividing the $1,000 by the closing bid price of
the Company's Common Stock as reported on the over-the-counter
market for such day, or the closing sale price for such day if the
Company's Common Stock is listed on a national securities exchange.
e. Other Provisions. In connection with the offering
of any Conversion Shares and/or Warrant Shares registered pursuant
to this Section 5, the Company shall furnish to the Subscriber such
number of copies of any final prospectus as it may reasonably
request in order to effect the offering and sale of the Conversion
Shares and/or Warrant Shares to be offered and sold. In connection
with any offering of Conversion Shares and/or Warrant Shares
registered pursuant to this Section 5, the Company shall (x)
furnish to the underwriters (if any), at the Company's expense,
unlegended certificates representing ownership of the Conversion
Shares and/or Warrant Shares being sold in such denominations as
requested and (y) instruct any transfer agent and registrar of the
Preferred shares and/or Warrant Shares to release immediately any
stop transfer order, and to remove any restrictive legend, with
respect to Conversion Shares and/or Warrant Shares included in any
registration becoming effective pursuant to this Agreement.
f. Costs. Subject to the immediately following
sentence, the Company shall in all events pay and be responsible
for all fees, expenses, costs and disbursements associated with the
registration statement relating to the Conversion Shares and/or
Warrant Shares under this Section 5, including filing fees, fees,
costs and disbursements of any counsel, accountants and other
consultants representing the Company in connection therewith.
Notwithstanding anything set forth herein to the contrary,
Subscriber shall be responsible for any and all underwriting
discounts and commissions in connection with the sale of the
Conversion Shares and/or Warrant Shares pursuant hereto and all
fees of its legal counsel and other advisors retained in connection
with reviewing any registration statement.
g. Successors. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business, properties,
stock or assets of the Company, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent
<PAGE>
that the Company would be required to perform it if no such
succession had taken place.
h. Indemnification.
i. The Company will indemnify and hold harmless
the Subscriber, its directors and officers,
and any underwriter (as defined in the Act)
for the Subscriber and each person, if any,
who controls the Subscriber or such
underwriter within the meaning of the Act,
from and against, and will reimburse the
Subscriber and each such underwriter and
controlling person with respect to, any and
all loss, damage, liability, cost and expense
to which such holder or any such underwriter
or controlling person may become subject under
the Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses are
caused by any untrue statement or alleged
untrue statement of any material fact
contained in such registration statement, any
prospectus contained therein or any amendment
or supplement thereto, or arise out of, or are
based upon, the omission or alleged omission
to state therein a material fact required to
be stated therein or necessary to make the
statements therein, in light of the
circumstances in which they were made not
misleading; provided, however, that the
Company will not be liable in any such case to
the extent that any such loss, damage,
liability, cost or expense arises out of, or
is based upon, an untrue statement or alleged
untrue statement or omission or alleged
omission so made in conformity with
information furnished by the Subscriber, such
underwriter or such controlling person in
writing specifically for use in the
preparation thereof.
ii. The Subscriber will indemnify and hold
harmless the Company, its directors and
officers, any controlling person and any
underwriter from and against, and will
reimburse the Company, its directors and
officers, any controlling person and any
underwriter with respect to, any and all loss,
damage, liability, cost or expense to which
the Company or any controlling person and/or
any underwriter may become subject under the
<PAGE>
Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses are
caused by any untrue statement or alleged
untrue statement of any material fact
contained in such registration statement, any
prospectus contained therein or any amendment
or supplement thereto, or arise out of, or are
based upon, the omission or alleged omission
to state therein a material fact required to
be stated therein or necessary to make the
statements therein, in light of the
circumstances in which they were made, not
misleading, in each case to the extent, but
only to the extent, that such untrue statement
or alleged untrue statement or omission or
alleged omission was so made in reliance upon,
and in strict conformity with, written
information furnished by, or on behalf of, the
Subscriber specifically for use in the
preparation thereof.
iii. Promptly after receipt by an indemnified party
pursuant to the provisions of paragraph (i) or
(ii) of this Section 5(h) of notice of the
commencement of any action involving the
subject matter of the foregoing indemnity
provisions, such indemnified party will, if a
claim thereof is to be made against the
indemnifying party pursuant to the provisions
of said paragraph (i) or (ii), promptly notify
the indemnifying party of the commencement
thereof; but the omission to so notify the
indemnifying party will not relieve it from
any liability which it may have to any
indemnified party otherwise than hereunder.
In case such action is brought against any
indemnified party and it notifies the
indemnifying party of the commencement
thereof, the indemnifying party shall have the
right to participate in, and, to the extent
that it may wish, assume the defense thereof;
or, if there is a conflict of interest which
would prevent counsel for the indemnifying
party from also representing the indemnified
party, the indemnified parties have the right
to select only one (1) separate counsel to
participate in the defense of such action on
behalf of all such indemnified parties. After
notice from the indemnifying parties to such
indemnified party of the indemnifying parties'
election so to assume the defense thereof, the
<PAGE>
indemnifying parties will not be liable to
such indemnified parties pursuant to the
provisions of said paragraph (i) or (ii) for
any legal or other expense subsequently
incurred by such indemnified parties in
connection with the defense thereof, other
than reasonable costs of investigation, unless
(i) the indemnified parties shall have
employed counsel in accordance with the
provisions of the preceding sentence; (ii) the
indemnifying parties shall not have employed
counsel satisfactory to the indemnified
parties to represent the indemnified parties
within a reasonable time after the notice of
the commencement of the action or (iii) the
indemnifying party has authorized the
employment of counsel for the indemnified
party at the expense of the indemnifying
parties.
6. Securities Legends and Notices. Subscriber represents
and warrants that it has read, considered and understood that the
following legends, substantially in the form and substance set
forth below, shall be placed on all of the certificates
representing the Preferred Stock and Warrants:
(i) NEITHER THIS PREFERRED STOCK NOR ANY SHARES OF
COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS
PREFERRED STOCK HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THIS
PREFERRED STOCK AND THE COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS PREFERRED STOCK MAY NOT BE OFFERED,
SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AND
QUALIFICATION IN EFFECT WITH RESPECT THERETO UNDER THE
SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES
LAW OR WITHOUT THE PRIOR WRITTEN CONSENT OF PERMA-FIX
ENVIRONMENTAL SERVICES, INC. AND AN OPINION OF PERMA-FIX
ENVIRONMENTAL SERVICES, INC.'S COUNSEL, OR AN OPINION
FROM COUNSEL FOR THE HOLDER HEREOF, WHICH OPINION IS
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION AND
QUALIFICATION IS NOT REQUIRED UNDER APPLICABLE FEDERAL
AND STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM.
NOTWITHSTANDING THE FOREGOING, THE SHARES OF COMMON
STOCK ISSUABLE UPON CONVERSION ARE ALSO SUBJECT TO THE
REGISTRATION RIGHTS SET FORTH IN THAT CERTAIN
SUBSCRIPTION AND PURCHASE AGREEMENT BY AND BETWEEN THE
HOLDER HEREOF AND THE COMPANY, A COPY OF WHICH IS ON FILE
AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE.
<PAGE>
(ii) NEITHER THIS WARRANT NOR ANY SHARES OF COMMON
STOCK ISSUABLE UPON THE EXERCISE OF THIS WARRANT, HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR QUALIFIED UNDER
APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE
COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY
NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT
THERETO UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE
STATE SECURITIES LAW OR WITHOUT THE PRIOR WRITTEN CONSENT
OF PERMA-FIX ENVIRONMENTAL SERVICES, INC. AND AN OPINION
OF PERMA-FIX ENVIRONMENTAL SERVICES, INC.'S COUNSEL, OR
AN OPINION FROM COUNSEL FOR THE HOLDER HEREOF, WHICH
OPINION IS SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER
APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN
EXEMPTION THEREFROM.
NOTWITHSTANDING THE FOREGOING, THE SHARES ISSUABLE
UPON EXERCISE ARE SUBJECT TO THE REGISTRATION RIGHTS SET
FORTH IN THAT CERTAIN SUBSCRIPTION AND PURCHASE AGREEMENT
BETWEEN THE HOLDER HEREOF AND THE COMPANY, A COPY OF
WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE
OFFICE.
7. Purchase of Common Stock. The Subscriber has previously
acquired from the Company, pursuant to the terms of Regulation S
promulgated under the Act, the Company's Series 1 Class A Preferred
Stock, par value $.001 per share ("Series 1 Preferred"), and the
Company's Series 2 Class B Convertible Preferred Stock, par value
$.001 per share ("Series 2 Preferred"). The Subscriber initially
acquired from the Company 1,100 shares of Series 1 Preferred and
330 shares of Series 2 Preferred, and, as of the date hereof, the
Subscriber has converted 722 shares of such Series 1 Preferred into
Common Stock pursuant to the terms of such Series 1 Preferred and
has not converted into Common Stock any shares of Series 2
Preferred. As of the date of this Agreement, the Subscriber owns
of record and beneficially all of the issued and outstanding shares
of Series 1 Preferred and Series 2 Preferred, which is 378 shares
of Series 1 Preferred and 330 shares of Series 2 Preferred. At the
Closing the Subscriber shall convert all of the outstanding shares
of Series 1 Preferred and Series 2 Preferred into Common Stock of
the Company pursuant to the terms, provisions, restrictions and
conditions of the Series 1 Preferred and Series 2 Preferred. The
Company shall purchase from the Subscriber from the net proceeds
received by the Company from the sale of the Series 3 Preferred
Stock, and the Subscriber shall sell, transfer and assign to the
Company, free and clear of any and all liens, encumbrances, claims,
demands, security interests or restrictions, within ten (10)
<PAGE>
business days after the Closing, 920,000 shares of Common Stock
upon the following terms and conditions:
a. The Company shall purchase 920,000 shares of Common
Stock of the Company owned by the Subscriber for a total price for
all such 920,000 shares of Common Stock of $1,770,000 (the
"Purchase Price");
b. The Subscriber shall surrender to the Company or its
counsel the certificates representing the 920,000 shares of Common
Stock of the Company, duly endorsed by the Subscriber to the
Company. Within the said ten (10) business days after the Closing
and upon receipt of the certificates representing the 920,000
shares of Common Stock of the Company ownedby the Subscriber, duly
endorsed by the Subscriber to the Company and free and clear of any
and all liens, encumbrances, claims, demands, security interests or
restrictions, the Company shall deliver to ARN Amro New York, ABA
No.: 02609580, swift code ABNAU533, for ABN Amro Vienna acc. no.
673-U-012203-41 for further credit RBB Bank, acc. no. 222-27008,
the purchase price of $1,770,000.
8. Miscellaneous.
a. Amendment; Waiver. Neither this Agreement nor the
Warrants shall be changed, modified or amended in any respect
except by the mutual written agreement of the parties hereto. Any
provision of this Agreement or the Warrants may be waived in
writing by the party which is entitled to the benefits thereof. No
waiver of any provision of this Agreement or the Warrants shall be
deemed to, or shall constitute a waiver of, any other provision
hereof or thereof (whether or not similar), nor shall nay such
waiver constitute a continuing waiver.
b. Binding Effect; Assignment. Neither this Agreement
nor the Warrants, or any rights or obligations hereunder or
thereunder, are assignable by the Subscriber.
c. Governing Law; Litigation Costs. This Agreement and
its validity, construction and performance shall be governed in all
respects by the internal laws of the State of Delaware without
giving effect to such State's conflicts of laws provisions. Each
of the Company and the Subscriber expressly and irrevocably consent
to the jurisdiction and venue of the federal courts located in
Wilmington, Delaware. Each of the parties agrees that in the event
either party brings an action to enforce any of the provisions of
this Agreement or to recovery for an alleged breach of any of the
provisions of this Agreement, each party shall be responsible for
its own legal costs and disbursements during the pendency of any
such action; provided, however, that after any such action has been
reduced to a final, unappealable judgment, the prevailing party
shall be entitled to recover from the other party all reasonable,
<PAGE>
documented attorneys' fees and disbursements and court costs from
the other party.
d. Severability. Any term or provisions of this
Agreement or the Warrants which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction only, be
ineffective only to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof or thereof affecting the validity or enforceability of such
provision in any other jurisdiction.
e. Headings. The captions, headings and titles
preceding the text of each or any Section, subsection or paragraph
hereof are for convenience of reference only and shall not affect
the construction, meaning or interpretation of this Agreement or
the Warrants or any term or provisions hereof or thereof.
f. Counterparts. This Agreement may be executed in one
or more original or facsimile counterparts, each of which shall be
deemed an original and all of which shall be considered one and the
same agreement, binding on all of the parties hereto,
notwithstanding that all parties are not signatories to the same
counterpart. Upon delivery of an executed counterpart by the
undersigned Subscriber to the Company, which in turn is executed
and delivered by the Company, this Agreement shall be binding as
one original agreement between Subscriber and the Company.
g. Transfer Taxes. Each party hereto shall pay all
such sales, transfer, use, gross receipts, registration and similar
taxes arising out of, or in connection with, the transactions
contemplated by this Agreement and the Warrants (collectively, the
"Transfer Taxes") as are payable by such party under applicable
law, and the Company shall pay the cost of any documentary stock
transfer stamps, if any, to be affixed to the certificates
representing the Shares and any Warrant Shares to be sold.
h. Entire Agreement. This Agreement, along with the
Warrants and the Certificate of Designations, merges and supersedes
any and all prior agreements, understandings, discussions,
assurances, promises, representations or warranties among the
parties with respect to the subject matter hereof, and contains the
entire agreement among the parties with respect to the subject
matter set forth herein and therein.
i. No Brokers. Except with respect to J. W. Charles
Securities, Inc. and J. P. Carey Enterprises, Inc., each of the
parties hereto represents and warrants to the other than there are
no broker's, finder's or any other similar fees and commissions due
or payable with respect to the sale of the Securities by the
Company to the Subscriber and each of the parties hereby agrees to
indemnify and hold harmless the other with respect to such
<PAGE>
representation and warranty and any breach thereof. The Company
expressly acknowledges and agrees that it shall be solely
responsible for all fees and commissions payable to J. W. Charles
Securities, Inc. and J. P. Carey Enterprises, Inc., in connection
with the sale of the Securities by the Company to the Subscriber
pursuant to this Agreement.
j. Authority; Enforceability. The Subscriber is duly
authorized to enter into this Agreement and to perform all of its
obligations hereunder. Upon the execution and delivery of this
Agreement by the Subscriber, this Agreement shall be enforceable
against the Subscriber in accordance with its terms.
k. Notices. Except as otherwise specified herein to
the contrary, all notices, requests, demands and other
communications required or desired to be given hereunder shall only
be effective if given in writing, by hand or by fax, by certified
or registered mail, return receipt requested, postage prepaid, or
by U. S. Express Mail service, or by private overnight mail service
(e.g., Federal Express). Any such notice shall be deemed to have
been given (i) on the business day actually received if given by
hand or by fax, (ii) on the business day immediately subsequent to
mailing, if sent by U.S. Express Mail service or private overnight
mail service, or (iii) five (5) business days following the mailing
thereof, if mailed by certified or registered mail, postage
prepaid, return receipt requested, and all such notices shall be
sent to the following addresses (or to such other address or
addresses as a party may have advised the other in the manner
provided in this Section 9(k):
If to the Company: Dr. Louis F. Centofanti
Perma-Fix Environmental
Services, Inc.
1940 Northwest 67th Place
Gainesville, Florida 32606-1649
Fax No.: (352) 373-0040
with copies simultaneously Irwin H. Steinhorn, Esquire
by like means to: Conner & Winters
One Leadership Square, Suite 1700
211 North Robinson
Oklahoma City, Oklahoma 73102
Fax No.: (405) 232-2695
If to the Subscriber: Herbert Strauss
RBB Bank Aktiengesellschaft
Burgring 16, 8010 Graz, Austria
Fax No.: 011-43-316-8072 ext. 392
<PAGE>
l. No Third Party Beneficiaries. This Agreement and the
rights, benefits, privileges, interests, duties and obligations
contained or referred to herein shall be solely for the benefit of
the parties hereto and no third party shall have any rights or
benefits hereunder as a third party beneficiary or otherwise
hereunder.
m. Public Announcements. Neither Subscriber nor any
officer, director, stockholder, employee, affiliate or affiliated
person or entity of Subscriber, shall make or issue any press
releases or otherwise make any public statements or make any
disclosures to any third person or entity with respect to the
transactions contemplated herein and will not make or issue any
press releases or otherwise make any public statements of any
nature whatsoever with respect to the Company without the express
prior approval of the Company.
<PAGE>
IN WITNESS WHEREOF, the Company and the undersigned
Subscriber have each duly executed this Agreement as of this 17th
day of July, 1996.
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By /s/ Louis Centofanti
____________________________
Dr. Louis F. Centofanti
Chief Executive Officer
RBB BANK AKTIENGESELLSCHAFT
By /s/ Herbert Strauss
____________________________
Herbert Strauss
Title: Headtrader
ISTE:\N-P\PESI\10Q\696\EXHIBIT4.4
SEE RESTRICTIVE LEGEND ON REVERSE SIDE
INCORPORATED UNDER THE LAWS OF
DELAWARE
No. - 1 - Shares 5,500
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
SERIES 3 CLASS C CONVERTIBLE PREFERRED STOCK
Par Value $.001 Per Share
THIS CERTIFIES THAT RBB Bank Aktiengesellschaft is the owner of
Five Thousand Five Hundred (5,500) shares of Series 3 Class C
Convertible Preferred Stock of
Perma-Fix Environmental Services, Inc.
transferrable only on the books of the Corporation by the holder
hereof in person or by attorney upon surrender of this Certificate
properly endorsed.
In Witness Whereof, the said Corporation has caused this
Certificate to be signed by its duly authorized officers and to be
sealed with the Seal of the Corporation this 19th day of July,
1996.
/s/ Richard T. Kelecy /s/ Louis Centofanti
__________________________ __________________________
Secretary President
SHARES $.001 EACH
<PAGE>
NEITHER THIS PREFERRED STOCK NOR ANY SHARES OF COMMON STOCK
ISSUABLE UPON THE CONVERSION OF THIS PREFERRED STOCK HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR QUALIFIED UNDER APPLICABLE STATE SECURITIES
LAWS. THIS PREFERRED STOCK AND THE COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS PREFERRED STOCK MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT WITH
RESPECT THERETO UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE
STATE SECURITIES LAW OR WITHOUT THE PRIOR WRITTEN CONSENT OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC. AND AN OPINION OF PERMA-FIX
ENVIRONMENTAL SERVICES, INC.'S COUNSEL, OR AN OPINION FROM COUNSEL
FOR THE HOLDER HEREOF, WHICH OPINION IS SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED
UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN EXEMPTION
THEREFROM.
NOTWITHSTANDING THE FOREGOING, THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION ARE ALSO SUBJECT TO THE REGISTRATION
RIGHTS SET FORTH IN THAT CERTAIN SUBSCRIPTION AND PURCHASE
AGREEMENT BY AND BETWEEN THE HOLDER HEREOF AND THE COMPANY, A COPY
OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER
WHO SO REQUESTS, THE POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL, OR OTHER SPECIAL RIGHTS OF THE
SERIES 3 CLASS C CONVERTIBLE PREFERRED STOCK AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES
AND/OR RIGHTS.
*******************
CERTIFICATE
FOR
5,500
SHARES
of the
CAPITAL STOCK
of
Perma-Fix Environmental Services, Inc.
Series 3 Class C Convertible Preferred Stock
Par Value $.001 Per Share
ISSUED TO
RBB Bank Aktiengesellschaft
DATED
July 19, 1996
*******************
For Value Received, __________ hereby sell, assign and
transfer unto __________________________________________________
___________________ Shares of the Capital Stock represented by the
within Certificate, and do hereby irrevocably constitute and
appoint _________________________________________ to transfer the
said Stock on the books of the within named Corporation with full
power of substitution in the premises.
Dated __________________, 19______.
In presence of ________________________________________
NEITHER THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON
THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND
THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE
OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AND
QUALIFICATION IN EFFECT WITH RESPECT THERETO UNDER THE SECURITIES
ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC.'S COUNSEL THAT SUCH
REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER APPLICABLE
FEDERAL AND STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM.
NOTWITHSTANDING THE FOREGOING, THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO THE REGISTRATION
RIGHTS SET FORTH IN THAT CERTAIN SUBSCRIPTION AND PURCHASE
AGREEMENT BETWEEN THE HOLDER HEREOF AND THE COMPANY, A COPY OF
WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
Dated: July 19, 1996
One Million (1,000,000) Warrants
to Purchase One Million (1,000,000)
Shares of Perma-Fix Environmental Services, Inc.
Common Stock, $.001 Par Value Per Share
VOID AFTER 5:00 P.M., UNITED STATES EASTERN DAYLIGHT SAVINGS TIME
on
July 18, 2001
PERMA-FIX ENVIRONMENTAL SERVICES, INC., a Delaware corporation
(the "Company"), hereby certifies that RBB BANK AKTIENGESELLSCHAFT,
organized under the laws of Austria, and its permissible successors
and assigns (the "Warrant Holder" or "Holder"), for value received,
is entitled to purchase from the Company at any time after
December 31, 1996, until 5:00 p.m., Eastern Daylight Savings Time
on July 18, 2001, up to an aggregate of One Million (1,000,000)
shares (the "Shares" or "Warrant Shares") of the Company's common
stock, par value $.001 per share (the "Common Stock") at an
exercise price equal to U. S. $2.00 per share (the "Per Share
Exercise Price").
1. Exercise of Warrant. Upon presentation and surrender of
this Common Stock Purchase Warrant Certificate ("Warrant
Certificate" or "this Certificate"), with the attached Purchase
Form duly executed and completed, at the principal office of the
Company at 1940 Northwest 67th Place, Gainesville, Florida 32606-
<PAGE>
1649, together with cash or a cashier's or certified check payable
to the Company in the amount of the Per Share Exercise Price
multiplied by the number of Warrant Shares being purchased (the
"Aggregate Exercise Price"), the Company, or the Company's transfer
agent, as the case may be, shall deliver to the Warrant Holder
hereof, certificates of Common Stock which, in the aggregate,
represent the number of Warrant Shares being purchased. All or
less than all of the Warrants represented by this Certificate may
be exercised and, in case of the exercise of less than all, the
Company, upon surrender hereof, will deliver to the Warrant Holder
a new Warrant Certificate or Certificates of like tenor and dated
the date hereof entitling said Warrant Holder to purchase the
number of Warrant Shares represented by this Certificate which have
not been exercised and to receive the Registration Rights set forth
in Section 8 below (to the extent such rights have not already been
exercised) with respect to such Warrant Shares.
2. Exchange and Transfer. This Certificate, at any time
prior to the exercise hereof, upon presentation and surrender to
the Company, may be exchanged, alone or with other certificates of
like tenor registered in the name of the same Warrant Holder, for
another Certificate or Certificates of like tenor in the name of
such Warrant Holder exercisable for the aggregate number of Warrant
Shares as the Certificate or Certificates surrendered.
3. Rights and Obligations of Warrant Holder of this
Certificate. The Holder of this Certificate shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company,
either at law or in equity; provided, however, that in the event
any certificate representing shares of Common Stock or other
securities is issued to the Holder hereof upon exercise of some or
all of the Warrants evidenced by this Warrant Certificate, such
Holder shall, for all purposes, be deemed to have become the Holder
of record of such Common Stock on the date on which this
Certificate, together with a duly executed Purchase form, was
surrendered and payment of the Aggregate Exercise Price was made
pursuant to the terms hereof, irrespective of the date of delivery
of such share certificate. The rights of the Holder of this
Certificate are limited to those expressed herein and the Holder of
this Certificate, by his acceptance hereof, consents and agrees to
be bound by, and to comply with, all of the provisions of this
Certificate, including, without limitation, all of the obligations
imposed upon the Warrant Holder contained in this Warrant
Certificate. In addition, the Warrant Holder of this Certificate,
by accepting the same, agrees that the Company may deem and treat
the person in whose name this Certificate is registered on the
books of the Company as the absolute, true and lawful owner for all
purposes whatsoever, and the Company shall not be affected by any
notice to the contrary.
<PAGE>
4. Common Stock.
a. The Company covenants and agrees that all shares of
Common Stock which may be acquired by the Holder under this Warrant
Certificate will, when issued and upon delivery, be duly and
validly authorized and issued, fully paid and nonassessable, and
free from all stamp taxes, liens, and charges with respect to the
purchase thereof.
b. The Company covenants and agrees that it will, at
all times, reserve and keep available an authorized number of
shares of its Common Stock and other applicable securities
sufficient to permit the exercise in full of all outstanding
options, warrants and rights, including the Warrants; and, if at
the time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the exercise of all of the
Warrants covered by this Warrant Certificate, the Company will take
such corporate action at its next annual meeting of stockholders as
may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for
such purpose, including, without limitation, engaging in reasonable
efforts to obtain the requisite stockholder approval of any
necessary amendment to its Certificate of Incorporation.
5. Issuance of Certificates. As soon as possible after full
or partial exercise of this Warrant Certificate, the Company, at
its expense, will cause to be issued in the name of, and delivered
to, the Holder of this Warrant Certificate, a certificate or
certificates for the number of fully paid and nonassessable shares
of Common Stock to which that Holder shall be entitled on such
exercise. No fractional shares will be issued on exercise of this
Warrant. If on any exercise of this Warrant a fraction of a share
results, the Company will pay the cash value of that fractional
share, calculated on the basis of the Per Share Exercise Price.
All such certificates shall bear a restrictive legend to the effect
that, subject to the provisions of Section 7 below, the Shares
represented by such certificate have not been registered under the
Securities Act of 1933, as amended (the "Act"), or qualified under
any state securities laws and the Shares may not be sold or
transferred in the absence of such registration and qualification
or an exemption thereof, such legend to be substantially in the
form of the bold face language appearing on page 1 of this Warrant
Certificate.
6. Disposition of Warrants or Shares.
a. The Holder of this Warrant Certificate, by his
acceptance thereof, agrees that (i) no public distribution of
Warrants or Shares will be made in violation of the provisions of
the Securities Act of 1933, as amended, and the Rules and
Regulations promulgated thereunder (collectively, the "Act"), and
<PAGE>
(ii) during such period as delivery of a prospectus with respect to
Warrants or Shares may be required by the Act, no public
distribution of Warrants or Shares will be made in a manner or on
terms different from those set forth in, or without delivery of, a
prospectus then meeting the requirements of Section 10 of the Act
and in compliance with all applicable state securities laws. The
holder this Warrant Certificate and each transferee hereof further
agrees that if any distribution of any of the Warrants or Shares is
proposed to be made by them otherwise than by delivery of a
prospectus meeting the requirements of Section 10 of the Act, such
action shall be taken only after receipt by the Company of an
opinion of its counsel, to the effect that the proposed
distribution will not be in violation of the Act or of applicable
state law. Furthermore, it shall be a condition to the transfer of
the Warrants that any transferee thereof deliver to the Company his
or its written agreement to accept and be bound by all of the terms
and conditions contained in this Warrant Certificate.
b. By acceptance hereof, the Holder represents and
warrants that this Warrant Certificate is being acquired, and all
Warrant Shares to be purchased upon the exercise of this Warrant
Certificate will be acquired, by the Holder solely for the account
of the Holder and not with a view to the fractionalization and
distribution thereof, and will not be sold or transferred except in
accordance with the applicable provisions of the Act and the rules
and regulations promulgated thereunder, and the Holder agrees that
neither this Warrant Certificate nor any of the Warrant Shares may
be sold or transferred except under cover of a registration
statement under the Act which is effective and current with respect
to such Warrant Shares or pursuant to an opinion of counsel
reasonably satisfactory to the Company that registration under the
Act is not required in connection with such sale or transfer. Any
Warrant Shares issued upon exercise of this Warrant shall bear the
following legend:
The securities represented by this certificate
have not been registered under the Securities
Act of 1933 and are restricted securities
within the meaning thereof. Such securities
may not be sold or transferred, except
pursuant to a registration statement under
such Act which is effective and current with
respect to such securities or pursuant to an
opinion of counsel reasonably satisfactory to
the issuer of such securities that such sale
or transfer is exempt from the registration
requirements of such Act.
7. Warrant Holder Not Shareholder. This Warrant Certificate
shall not be deemed to confer upon the Holder any right to vote the
Warrant Shares or to consent to or receive notice as a shareholder
<PAGE>
of the Company as such, because of this Warrant Certificate, in
respect of any matters whatsoever, or any other rights or
liabilities as a shareholder.
8. Registration Rights. The Company agrees that the Warrant
Shares shall have those registration rights set forth in Section 5
of that certain Subscription and Purchase Agreement by and between
the Company and the Warrant Holder dated July 17, 1996 (the
"Subscription Agreement"). It is expressly acknowledged and agreed
that all references to Warrant Shares issuable upon the exercise of
this Warrant Certificate, in whole or in part, from time to time
and at any time.
9. Anti-Dilution.
a. If the Company at any time, or from time to time,
while this Warrant Certificate is outstanding shall declare or pay,
without consideration, any dividend on the Common Stock payable in
Common Stock, or shall effect a subdivision of the outstanding
shares of Common Stock into a greater number of shares of Common
Stock (by stock split, reclassification or otherwise than by
payment of a dividend in Common Stock or in any right to acquire
Common Stock), or if the outstanding shares of Common Stock shall
be combined or consolidated, by reclassification or otherwise, into
a lesser number of shares of Common Stock, then the number of
shares of Common Stock issuable upon the exercise of this Warrant
Certificate or the Exercise Price shall be appropriately adjusted
such that immediately after the happening of any such event, the
proportionate number of shares of Common Stock issuable immediately
prior to the happening of such event shall be the number of shares
of Common Stock issuable subsequent to the happening of such event.
b. In case of any consolidation or merger of the
Company in which the Company is not the surviving entity, or in
case of any sale or conveyance by the Company to another entity of
all or substantially all of the property of the Company as an
entirety or substantially as an entirety, the Holder shall have the
right thereafter, upon exercise of this Warrant, to receive the
kind and amount of securities, cash or other property which the
Holder would have owned or been entitled to receive immediately
after such consolidation, merger, sale or conveyance had this
Warrant been exercised in full immediately prior to the effective
date of such consolidation, merger, sale or conveyance, and in any
such case, if necessary, appropriate adjustment shall be made in
the application thereafter of the provisions of this Section 9 with
respect to the rights and interests of the Holder to the end that
the provisions of this Section 9 thereafter shall be
correspondingly applicable, as nearly as may be, to such securities
and other property.
<PAGE>
10. Notices. Except as otherwise specified herein to the
contrary, all notices, requests, demands and other communications
required or desired to be given hereunder shall only be effective
if given in writing, by hand, by certified or registered mail,
return receipt requested, postage prepaid, or by U. S. Express Mail
service, or by private overnight mail service (e.g., Federal
Express). Any such notice shall be deemed to have been given (a)
on the business day actually received if given by hand or by fax,
(b) on the business day immediately subsequent to mailing, if sent
by U.S. Express Mail service or private overnight mail service, or
(c) five (5) business days following the mailing thereof, if mailed
by certified or registered mail, postage prepaid, return receipt
requested, and all such notices shall be sent to the following
addresses (or to such other address or addresses as a party may
have advised the other in the manner provided in this Section 10):
If to the Company: Perma-Fix Environmental Services, Inc.
1940 Northwest 67th Place
Gainesville, Florida 32606-1649
Attention: Dr. Louis F. Centofanti
Chief Executive Officer
Fax No.: (352) 373-0040
with copies simultan- Conner & Winters
eoulsy by like means One Leadership Square, Suite 1700
to: 211 North Robinson
Oklahoma City, Oklahoma 73102
Attention: Irwin H. Steinhorn, Esquire
Fax No.: (405) 232-2695
If to the Subscriber: RBB Bank Aktiengesellschaft
Burgring 16, 8010 Graz, Austria
Attention: Herbert Strauss
Fax No.: 011-43-316-8072, ext. 392
11. Governing Law. This Warrant Certificate and all rights
and obligations hereunder shall be deemed to be made under and
governed by the laws of the State of Delaware without giving effect
to such State's conflict of laws provisions. The Holder hereby
irrevocably consents to the venue and jurisdiction of the federal
courts located in Wilmington, Delaware.
12. Successors and Assigns. This Warrant Certificate shall
be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
<PAGE>
13. Headings. The headings of various sections of this
Warrant Certificate have been inserted for reference only and shall
not be a part of this Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or by facsimile, by one
of its officers thereunto duly authorized.
Dated as of July 19, 1996.
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By /s/ Louis F. Centofanti
_________________________
Dr. Louis F. Centofanti
Chief Executive Officer
ISTE:\N-P\PESI\10Q\696\exhib10.1
NEITHER THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON
THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND
THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE
OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AND
QUALIFICATION IN EFFECT WITH RESPECT THERETO UNDER THE SECURITIES
ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC.'S COUNSEL THAT SUCH
REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER APPLICABLE
FEDERAL AND STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM.
NOTWITHSTANDING THE FOREGOING, THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO THE REGISTRATION
RIGHTS SET FORTH IN THAT CERTAIN SUBSCRIPTION AND PURCHASE
AGREEMENT BETWEEN THE HOLDER HEREOF AND THE COMPANY, A COPY OF
WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
Dated: July 19, 1996
One Million (1,000,000) Warrants
to Purchase One Million (1,000,000)
Shares of Perma-Fix Environmental Services, Inc.
Common Stock, $.001 Par Value Per Share
VOID AFTER 5:00 P.M., UNITED STATES EASTERN DAYLIGHT SAVINGS TIME
on
July 18, 2001
PERMA-FIX ENVIRONMENTAL SERVICES, INC., a Delaware corporation
(the "Company"), hereby certifies that RBB BANK AKTIENGESELLSCHAFT,
organized under the laws of Austria, and its permissible successors
and assigns (the "Warrant Holder" or "Holder"), for value received,
is entitled to purchase from the Company at any time after
December 31, 1998, until 5:00 p.m., Eastern Daylight Savings Time on
July 18, 2001, up to an aggregate of One Million (1,000,000) shares
(the "Shares" or "Warrant Shares") of the Company's common stock, par
value $.001 per share (the "Common Stock") at an exercise price
equal to U.S. $3.50 per share (the "Per Share Exercise Price").
1. Exercise of Warrant. Upon presentation and surrender of
this Common Stock Purchase Warrant Certificate ("Warrant
Certificate" or "this Certificate"), with the attached Purchase
Form duly executed and completed, at the principal office of the
Company at 1940 Northwest 67th Place, Gainesville, Florida 32606-
1649, together with cash or a cashier's or certified check payable
<PAGE>
to the Company in the amount of the Per Share Exercise Price
multiplied by the number of Warrant Shares being purchased (the
"Aggregate Exercise Price"), the Company, or the Company's transfer
agent, as the case may be, shall deliver to the Warrant Holder
hereof, certificates of Common Stock which, in the aggregate,
represent the number of Warrant Shares being purchased. All or
less than all of the Warrants represented by this Certificate may
be exercised and, in case of the exercise of less than all, the
Company, upon surrender hereof, will deliver to the Warrant Holder
a new Warrant Certificate or Certificates of like tenor and dated
the date hereof entitling said Warrant Holder to purchase the
number of Warrant Shares represented by this Certificate which have
not been exercised and to receive the Registration Rights set forth
in Section 8 below (to the extent such rights have not already been
exercised) with respect to such Warrant Shares.
2. Exchange and Transfer. This Certificate, at any time
prior to the exercise hereof, upon presentation and surrender to
the Company, may be exchanged, alone or with other certificates of
like tenor registered in the name of the same Warrant Holder, for
another Certificate or Certificates of like tenor in the name of
such Warrant Holder exercisable for the aggregate number of Warrant
Shares as the Certificate or Certificates surrendered.
3. Rights and Obligations of Warrant Holder of this
Certificate. The Holder of this Certificate shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company,
either at law or in equity; provided, however, that in the event
any certificate representing shares of Common Stock or other
securities is issued to the Holder hereof upon exercise of some or
all of the Warrants evidenced by this Warrant Certificate, such
Holder shall, for all purposes, be deemed to have become the Holder
of record of such Common Stock on the date on which this
Certificate, together with a duly executed Purchase form, was
surrendered and payment of the Aggregate Exercise Price was made
pursuant to the terms hereof, irrespective of the date of delivery
of such share certificate. The rights of the Holder of this
Certificate are limited to those expressed herein and the Holder of
this Certificate, by his acceptance hereof, consents and agrees to
be bound by, and to comply with, all of the provisions of this
Certificate, including, without limitation, all of the obligations
imposed upon the Warrant Holder contained in this Warrant
Certificate. In addition, the Warrant Holder of this Certificate,
by accepting the same, agrees that the Company may deem and treat
the person in whose name this Certificate is registered on the
books of the Company as the absolute, true and lawful owner for all
purposes whatsoever, and the Company shall not be affected by any
notice to the contrary.
<PAGE>
4. Common Stock.
a. The Company covenants and agrees that all shares of
Common Stock which may be acquired by the Holder under this Warrant
Certificate will, when issued and upon delivery, be duly and
validly authorized and issued, fully paid and nonassessable, and
free from all stamp taxes, liens, and charges with respect to the
purchase thereof.
b. The Company covenants and agrees that it will, at
all times, reserve and keep available an authorized number of
shares of its Common Stock and other applicable securities
sufficient to permit the exercise in full of all outstanding
options, warrants and rights, including the Warrants; and, if at
the time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the exercise of all of the
Warrants covered by this Warrant Certificate, the Company will take
such corporate action at its next annual meeting of stockholders as
may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for
such purpose, including, without limitation, engaging in reasonable
efforts to obtain the requisite stockholder approval of any
necessary amendment to its Certificate of Incorporation.
5. Issuance of Certificates. As soon as possible after full
or partial exercise of this Warrant Certificate, the Company, at
its expense, will cause to be issued in the name of, and delivered
to, the Holder of this Warrant Certificate, a certificate or
certificates for the number of fully paid and nonassessable shares
of Common Stock to which that Holder shall be entitled on such
exercise. No fractional shares will be issued on exercise of this
Warrant. If on any exercise of this Warrant a fraction of a share
results, the Company will pay the cash value of that fractional
share, calculated on the basis of the Per Share Exercise Price.
All such certificates shall bear a restrictive legend to the effect
that, subject to the provisions of Section 7 below, the Shares
represented by such certificate have not been registered under the
Securities Act of 1933, as amended (the "Act"), or qualified under
any state securities laws and the Shares may not be sold or
transferred in the absence of such registration and qualification
or an exemption thereof, such legend to be substantially in the
form of the bold face language appearing on page 1 of this Warrant
Certificate.
6. Disposition of Warrants or Shares.
a. The Holder of this Warrant Certificate, by his
acceptance thereof, agrees that (i) no public distribution of
Warrants or Shares will be made in violation of the provisions of
the Securities Act of 1933, as amended, and the Rules and
Regulations promulgated thereunder (collectively, the "Act"), and
<PAGE>
(ii) during such period as delivery of a prospectus with respect to
Warrants or Shares may be required by the Act, no public
distribution of Warrants or Shares will be made in a manner or on
terms different from those set forth in, or without delivery of, a
prospectus then meeting the requirements of Section 10 of the Act
and in compliance with all applicable state securities laws. The
holder this Warrant Certificate and each transferee hereof further
agrees that if any distribution of any of the Warrants or Shares is
proposed to be made by them otherwise than by delivery of a
prospectus meeting the requirements of Section 10 of the Act, such
action shall be taken only after receipt by the Company of an
opinion of its counsel, to the effect that the proposed
distribution will not be in violation of the Act or of applicable
state law. Furthermore, it shall be a condition to the transfer of
the Warrants that any transferee thereof deliver to the Company his
or its written agreement to accept and be bound by all of the terms
and conditions contained in this Warrant Certificate.
b. By acceptance hereof, the Holder represents and
warrants that this Warrant Certificate is being acquired, and all
Warrant Shares to be purchased upon the exercise of this Warrant
Certificate will be acquired, by the Holder solely for the account
of the Holder and not with a view to the fractionalization and
distribution thereof, and will not be sold or transferred except in
accordance with the applicable provisions of the Act and the rules
and regulations promulgated thereunder, and the Holder agrees that
neither this Warrant Certificate nor any of the Warrant Shares may
be sold or transferred except under cover of a registration
statement under the Act which is effective and current with respect
to such Warrant Shares or pursuant to an opinion of counsel
reasonably satisfactory to the Company that registration under the
Act is not required in connection with such sale or transfer. Any
Warrant Shares issued upon exercise of this Warrant shall bear the
following legend:
The securities represented by this certificate
have not been registered under the Securities
Act of 1933 and are restricted securities
within the meaning thereof. Such securities
may not be sold or transferred, except
pursuant to a registration statement under
such Act which is effective and current with
respect to such securities or pursuant to an
opinion of counsel reasonably satisfactory to
the issuer of such securities that such sale
or transfer is exempt from the registration
requirements of such Act.
7. Warrant Holder Not Shareholder. This Warrant Certificate
shall not be deemed to confer upon the Holder any right to vote the
Warrant Shares or to consent to or receive notice as a shareholder
<PAGE>
of the Company as such, because of this Warrant Certificate, in
respect of any matters whatsoever, or any other rights or
liabilities as a shareholder.
8. Registration Rights. The Company agrees that the Warrant
Shares shall have those registration rights set forth in Section 5
of that certain Subscription and Purchase Agreement by and between
the Company and the Warrant Holder dated July 17, 1996 (the
"Subscription Agreement"). It is expressly acknowledged and agreed
that all references to Warrant Shares issuable upon the exercise of
this Warrant Certificate, in whole or in part, from time to time
and at any time.
9. Anti-Dilution.
a. If the Company at any time, or from time to time,
while this Warrant Certificate is outstanding shall declare or pay,
without consideration, any dividend on the Common Stock payable in
Common Stock, or shall effect a subdivision of the outstanding
shares of Common Stock into a greater number of shares of Common
Stock (by stock split, reclassification or otherwise than by
payment of a dividend in Common Stock or in any right to acquire
Common Stock), or if the outstanding shares of Common Stock shall
be combined or consolidated, by reclassification or otherwise, into
a lesser number of shares of Common Stock, then the number of
shares of Common Stock issuable upon the exercise of this Warrant
Certificate or the Exercise Price shall be appropriately adjusted
such that immediately after the happening of any such event, the
proportionate number of shares of Common Stock issuable immediately
prior to the happening of such event shall be the number of shares
of Common Stock issuable subsequent to the happening of such event.
b. In case of any consolidation or merger of the
Company in which the Company is not the surviving entity, or in
case of any sale or conveyance by the Company to another entity of
all or substantially all of the property of the Company as an
entirety or substantially as an entirety, the Holder shall have the
right thereafter, upon exercise of this Warrant, to receive the
kind and amount of securities, cash or other property which the
Holder would have owned or been entitled to receive immediately
after such consolidation, merger, sale or conveyance had this
Warrant been exercised in full immediately prior to the effective
date of such consolidation, merger, sale or conveyance, and in any
such case, if necessary, appropriate adjustment shall be made in
the application thereafter of the provisions of this Section 9 with
respect to the rights and interests of the Holder to the end that
the provisions of this Section 9 thereafter shall be
correspondingly applicable, as nearly as may be, to such securities
and other property.
<PAGE>
10. Notices. Except as otherwise specified herein to the
contrary, all notices, requests, demands and other communications
required or desired to be given hereunder shall only be effective
if given in writing, by hand, by certified or registered mail,
return receipt requested, postage prepaid, or by U. S. Express Mail
service, or by private overnight mail service (e.g., Federal
Express). Any such notice shall be deemed to have been given (a)
on the business day actually received if given by hand or by fax,
(b) on the business day immediately subsequent to mailing, if sent
by U.S. Express Mail service or private overnight mail service, or
(c) five (5) business days following the mailing thereof, if mailed
by certified or registered mail, postage prepaid, return receipt
requested, and all such notices shall be sent to the following
addresses (or to such other address or addresses as a party may
have advised the other in the manner provided in this Section 10):
If to the Company: Perma-Fix Environmental Services, Inc.
1940 Northwest 67th Place
Gainesville, Florida 32606-1649
Attention: Dr. Louis F. Centofanti
Chief Executive Officer
Fax No.: (352) 373-0040
with copies simultan- Conner & Winters
eously by like means One Leadership Square, Suite 1700
to: 211 North Robinson
Oklahoma City, Oklahoma 73102
Attention: Irwin H. Steinhorn, Esquire
Fax No.: (405) 232-2695
If to the Subscriber: RBB Bank Aktiengesellschaft
Burgring 16, 8010 Graz, Austria
Attention: Herbert Strauss
Fax No.: 011-43-316-8072, ext. 392
11. Governing Law. This Warrant Certificate and all rights
and obligations hereunder shall be deemed to be made under and
governed by the laws of the State of Delaware without giving effect
to such State's conflict of laws provisions. The Holder hereby
irrevocably consents to the venue and jurisdiction of the federal
courts located in Wilmington, Delaware.
12. Successors and Assigns. This Warrant Certificate shall
be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
<PAGE>
13. Headings. The headings of various sections of this
Warrant Certificate have been inserted for reference only and shall
not be a part of this Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or by facsimile, by one
of its officers thereunto duly authorized.
Dated as of July 19, 1996.
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By /s/ Louis F. Centofanti
____________________________
Dr. Louis F. Centofanti
Chief Executive Officer
ISTE:\N-P\PESI\10Q\696\EXHIB10.2
<TABLE> <S> <C>
<ARTICLE> 5
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> $ 578,000
<SECURITIES> 0
<RECEIVABLES> 5,881,000
<ALLOWANCES> 392,000
<INVENTORY> 106,000
<CURRENT-ASSETS> 7,132,000
<PP&E> 15,879,000
<DEPRECIATION> 3,909,000
<TOTAL-ASSETS> 28,479,000
<CURRENT-LIABILITIES> 9,172,000
<BONDS> 5,746,000
0
0
<COMMON> 9,000
<OTHER-SE> 9,157,000
<TOTAL-LIABILITY-AND-EQUITY> 28,479,000
<SALES> 0
<TOTAL-REVENUES> 15,750,000
<CGS> 0
<TOTAL-COSTS> 11,398,000
<OTHER-EXPENSES> 1,177,000
<LOSS-PROVISION> 12,000
<INTEREST-EXPENSE> 489,000
<INCOME-PRETAX> (410,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (410,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (410,000)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
