================================================================
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 September 30, 1997
_______________________
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)
(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
______ ______
<PAGE>
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 November 17, 1997
_____ ________________________________
Common Stock, $.001 Par Value 11,612,787
_____________________________ __________
(excluding 920,000 shares
held as treasury stock)
_________________________
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<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
INDEX
Page No.
________
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
September 30, 1997 and
December 31, 1996 . . . . . . . . . 3
Consolidated Statements of
Operations - Three Months and
Nine Months Ended September 30,
1997 and 1996. . . . . . . . . . . . 5
Consolidated Statements of Cash
Flows-Nine Months Ended September 30,
1997 and 1996. . . . . . . . . . . 6
Consolidated Statements of Stockholders'
Equity - Nine Months ended
September 30, 1997 and . . . . . . 7
Notes to Consolidated Financial
Statements . . . . . . . . . . . . . 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations. . . . . . . . . . . . . 16
PART II OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . 24
Item 2. Changes in Securities . . . . . . . . . . 24
Item 3. Default Upon Senior Securities. . . . . . 27
Item 6. Exhibits and Reports on Form 8-K . . . . . 28
<PAGE>
<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
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, 1996, as amended by Form
10-K/A filed on October 16, 1997.
The results of operations for the nine months ended September
30, 1997 are not necessarily indicative of results to be expected
for the fiscal year ending December 31, 1997.
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<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
September 30,
(Amounts in Thousands, 1997 December 31,
Except for Share Amounts) (Unaudited) 1996
___________________________________________________________________
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 110 $ 45
Restricted cash equivalents
and investments 532 448
Accounts receivable, net of
allowance for doubtful accounts
of $342 and $383, respectively 5,063 5,549
Inventories 81 107
Prepaid expenses 837 549
Other receivables 388 545
_________ ________
Total current assets 7,011 7,243
Property and equipment:
Buildings and land 5,648 4,894
Equipment 7,953 6,429
Vehicles 1,240 1,421
Leasehold improvements 13 289
Office furniture and equipment 1,149 1,136
Construction in progress 2,117 3,028
_________ ________
18,120 17,197
Less accumulated depreciation (5,707) (4,593)
_________ ________
Net property and equipment 12,413 12,604
Intangibles and other assets:
Permits, net of accumulated amorti-
zation of $771 and $598,
respectively 3,811 3,949
Goodwill, net of accumulated amorti-
zation of $544 and $435,
respectively 4,737 4,846
Covenant not to compete, net of
accumulated amortization of $391
and $383, respectively - 9
Other assets 401 385
________ ________
Total assets $ 28,373 $ 29,036
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
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<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS, CONTINUED
September 30,
(Amounts in Thousands, 1997 December 31,
Except for Share Amounts) (Unaudited) 1996
___________________________________________________________________
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,739 $ 3,677
Accrued expenses 2,839 2,860
Revolving loan and term note
facility (see Note 2) 3,166 500
Equipment financing agreement 631 646
Current portion of long-term debt 354 333
_________ _______
Total current liabilities 9,729 8,016
Long-term debt, less current portion
(see Note 2) 750 4,881
Environmental accruals 1,878 2,460
Accrued closure costs 1,133 1,094
_________ _______
Total long-term liabilities 3,761 8,435
Commitments and contingencies
(see Note 3) - -
Stockholders' equity:
Preferred stock, $.001 par value;
2,000,000 shares authorized,
6,850 and 5,500 shares issued
and outstanding, respectively - -
Common stock, $.001 par value;
50,000,000 shares authorized,
12,383,405 and 10,399,947 shares
issued, respectively, including
920,000 shares held as
treasury stock 12 10
Redeemable warrants 140 140
Additional paid-in capital 32,255 28,495
Accumulated deficit (15,754) (14,290)
________ _______
16,653 14,355
Less common stock in treasury at
cost; 920,000 shares issued
and outstanding (1,770) (1,770)
________
Total stockholders' equity 14,883 12,585
________ _______
Total liabilities and
stockholders' equity $ 28,373 $ 29,036
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
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<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
September 30,
(Amounts in Thousands, __________________________
Except for Share Amounts) 1997 1996
___________________________________________________________________
<S> <C> <C>
Net revenues $ 7,246 $ 7,734
Cost of goods sold 5,066 5,195
________ ________
Gross profit 2,180 2,539
Selling, general and administrative
expenses 1,472 1,751
Depreciation and amortization 528 515
Income (loss) from operations 180 273
Other income (expense):
Interest income 14 13
Interest expense (145) (163)
Other 108 32
________ ________
Net income (loss) $ 157 $ 155
Preferred stock dividends 99 64
________ _________
Net income (loss) applicable
to Common Stock $ 58 $ 91
======== =========
Net income (loss) per share $ .01 $ .01
======== ========
Weighted average number of common
shares outstanding 11,090 9,306
======== ========
</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)
Nine Months Ended
September 30,
(Amounts in Thousands, __________________________
Except for Share Amounts) 1997 1996
___________________________________________________________________
<S> <C> <C>
Net revenues $ 20,882 $ 23,484
Cost of goods sold 15,410 16,593
________ ________
Gross profit 5,472 6,891
Selling, general and administrative
expenses 4,649 5,175
Depreciation and amortization 1,605 1,692
Income (loss) from operations (782) 24
Other income (expense):
Interest income 38 53
Interest expense (517) (641)
Other 59 320
________ ________
Net income (loss) $ (1,202) $ (244)
Preferred stock dividends 262 74
________ ________
Net income (loss) applicable
to common stock $ (1,464) $ (318)
======== ========
Net income (loss) per share $ (.14) $ (.04)
======== ========
Weighted average number of common
shares outstanding 10,340 8,552
========= =========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
-5-
<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
__________________________
(Amounts in Thousands) 1997 1996
___________________________________________________________________
<S> <C> <C>
Cash flows from operating activities:
Net loss applicable to common
stock $ (1,464) $ (318)
Adjustments to reconcile net loss
Applicable to common stock to
cash used in operations:
Depreciation and amortization 1,605 1,692
Provision for bad debt and other
reserves 52 14
Loss (Gain) on sale of plant,
property and equipment 4 (37)
Changes in assets and liabilities:
Accounts receivable 435 (356)
Prepaid expenses, inventories and
other assets 607 (299)
Accounts payable and accrued expenses (1,858) (1,763)
________ ________
Net cash used in operations (619) (1,067)
Cash flows from investing activities:
Purchases of property and equipment,
net (899) (1,417)
Proceeds from disposition of
property and equipment 52 1,211
Change in restricted cash, net (102) (72)
________ _________
Net cash used in investing
activities (949) (278)
Cash flows from financing activities:
Repayments of revolving loan and
term note facility (1,096) (2,315)
Principal repayments on long-term debt (651) (1,227)
Proceeds from issuance of stock 3,380 6,538
Purchase of treasury stock - (1,769)
________ ________
Net cash provided by financing
activities 1,633 1,227
Increase (Decrease) in cash and cash
equivalents 65 (118)
Cash and cash equivalents at beginning
of period 45 201
________ ________
Cash and cash equivalents at end
of period $ 110 $ 83
======== ========
________________________________________________________________
Supplemental disclosure:
Interest paid $ 530 $ 684
======== ========
Income taxes paid $ - $ -
======== ========
Non cash investing and financing
activities:
Insurance financing $ 746 $ 832
Issuance of stock for payment of
dividends 314 -
Long-term debt incurred for purchase
of property and equipment 287 70
Issuance of stock for services 68 69
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-6-
<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(For the nine months ended September 30, 1997)
Preferred Stock Common Stock
Amounts in Thousands, _________________ _________________
Except for Share Amounts Shares Amount Shares Amount
____________________________________________________________________________
<S> <C> <C> <C> <C>
Balance at December 31,
1996 5,500 $ - 10,399,947 $ 10
====== ====== ========== ======
Net Loss - - - -
Issuance of common stock for
preferred stock dividend - - - -
Preferred stock dividend - - 178,781 -
Issuance of stock for cash
and services - - 122,889 -
Exercise of warrants - - 642,814 1
Conversion of Series 3 pre-
ferred stock to common
stock (1,500) - 1,027,974 1
Option Exercise - - 11,000 -
Issuance of preferred
stock for cash 2,850 - - -
_______ _______ __________ _______
6,850 $ - 12,383,405 $ 12
======= ======= ========== =======
Common
Additional Stock
Redeemable Paid-In Accumulated Held in
Warrants Capital Deficit Treasury
_________________________________________________________
<S> <S> <S> <S>
$ 140 $ 28,495 $ (14,290) $ (1,770)
======== ========= ========== =========
- - (1,202) -
- (262) -
- - (262) -
- 314 - -
- 88 - -
- 832 - -
- (1) - -
- 11 - -
- 2,516 - -
________ ________ __________ __________
$ 140 $ 32,255 $ (15,754) $(1,770)
======== ======== ========== ==========
</TABLE>
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<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
(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, 1996, as amended by Form
10-K/A filed on October 16, 1997.
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.
Earnings (loss) per common share is computed by dividing net
income, after deducting the preferred stock dividends, by the
weighted average number of common shares outstanding during each
period. Primary and fully diluted earnings per share were not
presented since the effects of common stock equivalents and other
dilutive securities on earnings per share are either antidilutive
or are not material.
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128
"Earnings Per Share" ("SFAS 128"). SFAS 128 establishes new
standards for computing and presenting earnings per share ("EPS").
Specifically, SFAS 128 replaces the presentation of primary EPS
with a presentation of basic EPS, requires dual presentation of
basic and diluted EPS on the face of the income statement for all
entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS
computation. SFAS 128 is effective for financial statements issued
for periods ending after December 15, 1997, earlier application is
not permitted. EPS for the three and nine months ended September
30, 1997 and 1996 computed under SFAS 128 would not be materially
different than previously computed.
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," ("FAS 130") and No. 131, "Disclosure about
Segments of an Enterprise and Related Information," ("FAS 131").
FAS 130 establishes standards for reporting and displaying
comprehensive income, its components and accumulated balances. FAS
131 establishes standards for the way that public companies report
information about operating segments in annual financial statements
and requires reporting of selected information about operating
segments in interim financial statements issued to the public.
Both FAS 130 and FAS 131 are effective for periods beginning after
December 15, 1997. The Company has not determined the impact that
the adoption of these new accounting standards will have on its
future financial statements and disclosures.
-8-
<PAGE>
2. Long-Term Debt
______________
Long-term debt consists of the following at September 30, 1997
and December 31, 1996 (in thousands):
September 30, December 31,
1997 1996
___________ ____________
Long-term debt and notes payable:
Revolving loan and term note
facility $ 3,166 $ 4,262
Equipment financing agreement 796 1,257
Various mortgage, promissory
and notes payable 939 841
_________ _________
4,901 6,360
Less current portion:
Revolving loan and term note
facility 3,166 500
Equipment financing agreement 631 646
Various mortgage, promissory
and notes payable 354 333
_________ _________
Long-term debt, less
current portion $ 750 $ 4,881
========= =========
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 ("Heller Agreement") with Heller Financial, Inc.
("Heller"). The Heller 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 balloon payment in the amount of
$826,000 due on January 31, 1998. The Heller 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 Heller Agreement. The termination date on the
revolving loan facility is also January 31, 1998.
As noted above, the Heller Agreement has a scheduled
termination date of January 31, 1998. The Company is currently
negotiating with Heller for the renewal of the Heller Agreement and
has received proposals from two other potential lenders to replace
Heller, one of which has provided a commitment, although no
assurance can be given that such a renewal or new credit facility
will be obtained. Since this scheduled termination date is less
than twelve months from September 30, 1997, the Company has
reclassified as a current liability $2,666,000 outstanding under
the Heller Agreement, consistent with Generally Accepted Accounting
Principles, that would otherwise be classified as long-term debt.
As of September 30, 1997, the Company was in default of, among
other things, the "Minimum EBITDA", "Capital Expenditure Limit" and
"Fixed Charge Coverage" financial covenants of the Heller
Agreement. The financial covenant defaults were principally a
result of the facility disruption and resulting net loss incurred
by the Perma-Fix of Memphis, Inc. ("PFM") facility due to an
explosion and fire in January 1997 (see Note 5) and additional
capital spending in conjunction with the equity raised during 1997.
The Company is currently negotiating with Heller for a waiver of
these defaults.
Pursuant to the Sixth Amendment to the Heller Agreement, the
Company was obligated to raise an additional $700,000 on or before
August 15, 1997, of which $150,000 was to be received by June 15,
1997. During the second quarter of 1997 and July, 1997, the Company
fully satisfied this covenant obligation, having raised
approximately $3,632,000 principally through insurance proceeds
with regard to the vandalism at the Perma-Fix of Ft. Lauderdale,
Inc. ("PFL") facility in 1996 and from the issuance of the 2,500
shares of newly-created Series 4 Class D Convertible Preferred
Stock, and 350 shares of newly-created Series 5 Class E Convertible
Preferred Stock, as further discussed in Note 4.
Pursuant to the initial Heller Agreement, the term loan bears
interest at a floating rate equal to the base rate (prime) plus 1
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<PAGE>
3/4% per annum. The revolving loan bears interest at a floating
rate equal to the base rate (prime) plus 1 1/2% per annum. The
loans also contain certain closing, management and unused line fees
payable throughout the term. In conjunction with the Third and
Sixth Amendments, applicable interest rates were amended, whereby
the term loan was increased to the base rate plus 2 1/4% and the
revolving loan was increased to the base rate plus 2%. Both the
revolving loan and term loan were prime based loans at
September 30, 1997, bearing interest at a rate of 10.50% and
10.75%, respectively.
As of September 30, 1997, the borrowings under the revolving
loan facility total $2,173,000, a decrease of $706,000 from the
December 31, 1996 balance of $2,879,000, with additional borrowing
availability of $1,271,000. The balance on the term loan totaled
$993,000, as compared to $1,383,000 at December 31, 1996. Total
indebtedness under the Heller Agreement as of September 30, 1997
was $3,166,000, a decrease of $1,096,000 from the December 31, 1996
balance of $4,262,000.
During October 1994, the Company entered into a $1,000,000
equipment financing agreement ("Ally Agreement") with Ally Capital
Corporation ("Ally"). During 1995, the Company negotiated an
increase in the total lease line and subsequently utilized
$1,553,000 of this credit facility to purchase new capital
equipment. The Ally 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%. 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%. The
outstanding balance on the Ally Agreement at September 30, 1997 is
$796,000, as compared to $1,257,000 at December 31, 1996. As of
September 30, 1997, the Company was in default of the "Minimum
EBITDA", "Capital Expenditure Limit" and "Fixed Charge Coverage"
financial covenants of the Ally Agreement. This default was
principally a result of the facility disruption and resulting net
loss incurred by the Perma-Fix of Memphis, Inc. ("PFM") facility
due to an explosion and fire in January 1997 (see Note 5) and the
additional capital spending in conjunction with the equity raised
during 1997. The Company is currently negotiating with Ally for a
waiver of this default and has received proposals from two other
potential lenders to replace Ally. Based upon the Company's
discussions with Ally, the nature and reason for said default and
the significant collateral position securing the Ally Agreement,
the Company has chosen not to reclassify the long-term balance of
$165,000 at September 30, 1997 as a current liability.
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 September 1994, Perma-Fix of Memphis, Inc. ("PFM"),
formerly American Resource Recovery Corporation ("ARR") and a
subsidiary of the Company, was sued by Community First Bank
("Community First") to collect a note in the principal sum of
$341,000 that was allegedly made by ARR to CTC Industrial Services,
Inc. ("CTC") in February 1987 (the "Note"), and which was allegedly
pledged by CTC to Community First in December 1988 to secure
certain loans to CTC. This lawsuit styled Community First Bank v.
American Resource Recovery Corporation, was instituted on
September 14, 1994, and is pending in the Circuit Court, Shelby
County, Tennessee. The Company was not aware of either the Note or
its pledge to Community First at the time of the Company's
acquisition of PFM in December 1993. The Company vigorously
defended itself in connection therewith and filed a third party
complaint against Billie Kay Dowdy, who was the sole shareholder of
PFM immediately prior to the acquisition of PFM by the Company,
alleging that Ms. Dowdy was required to defend and indemnify the
Company and PFM from and against this action under the terms of the
agreement relating to the Company's acquisition of PFM. This
matter was settled on August 29, 1997. PFM and Dowdy each agreed
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<PAGE>
to pay the plaintiff $45,000 in exchange for a full and complete
release and a dismissal of the above matter.
In May 1995, PFM, a subsidiary of the Company, became aware
that the U.S. District Attorney for the Western District of
Tennessee and the Department of Justice were investigating certain
prior activities of W.R. Drum Company, its successor, First
Southern Container Company, and any other facility owned or
operated in whole or in part by Johnnie Williams. PFM used W.R.
Drum Company to dispose of certain of its used drums. In May 1995,
PFM received a Grand Jury Subpoena which demanded the production of
any documents in the possession of PFM pertaining to W.R. Drum
Company, First Southern Container Company, or any other facility
owned or operated, and holder in part, by Johnnie Williams. PFM
complied with the Grand Jury Subpoena. Thereafter, in September of
1995, PFM received another Grand Jury Subpoena for documents from
the Grand Jury investigating W.R. Drum Company, First Southern
Container Company, and/or Johnnie Williams. PFM complied with the
Grand Jury Subpoena. In December 1995, representative of the
Department of Justice advised PFM that it was also currently a
subject of the investigation involving W.R. Drum Company, First
Southern Container Company, and/or Johnnie Williams. Since that
time, however, PFM has had no contact with representatives of
either the United States District Attorney's office for the Western
District of Tennessee or the Department of Justice, and is not
aware of why it is also a subject of such investigation. On
October 31, 1997, the United States Environmental Protection
Agency ("EPA") has requested information from PFM regarding
business conducted with W. R. Drum Company. PFM intends to comply
with the EPA's request for information, and is not aware of any
concerns that the EPA has with PFM in this matter. In accordance
with certain provisions of the Agreement and Plan of Merger
relating to the prior acquisition of PFM, on or about January 2,
1996, PFM notified Ms. Billie K. Dowdy of the foregoing, and
advised Ms. Dowdy that the Company and PFM would look to Ms. Dowdy
to indemnify, defend and hold the Company and PFM harmless from any
liability, loss, damage or expense incurred or suffered as a result
of, or in connection with, this matter.
On January 27, 1997, an explosion and resulting tank fire
occurred at PFM's facility in Memphis, Tennessee, a hazardous waste
storage, processing and blending facility. See Note 5 "Facility
Disruption". As a result of the fire and explosion, the Tennessee
Department of Environment and Conservation ("TDEC") issued an order
dated April 23, 1997 ("TDEC Order") which alleges that the facility
violated certain hazardous waste rules and regulations promulgated
by the TDEC and ordered that the facility, among other things,
cease blending operations, the facility's permit to construct a
new hazardous waste tank storage area, which has not yet been
constructed, is to be revoked, and implement certain actions and
assessed a penalty of approximately $144,000. PFM has responded
to such order and asserted that the TDEC issued the order against
the wrong party, that PFM did not violate any rules and regulations
promulgated by the TDEC, the actions taken by the TDEC were contrary
to applicable rules and regulations and the TDEC is not entitled to such
penalties. The Company intends for PFM to vigorously defend itself
in connection with this matter.
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 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.
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<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
pollution control coverage.
The Company also carries specific pollution liability
insurance for operations involved in the Waste Management Services
segment. The Company believes that this coverage, combined with
its various other insurance policies, is adequate to insure the
Company against the various types of risks encountered.
4. Stock Issuance
______________
In June, 1997, the Company sold to RBB Bank Aktlengesellschaft
("RBB Bank") in a private placement under Rule 506 of Regulation D
under the Securities Act of 1933, as amended, 2,500 shares of a
new series of Preferred Stock ("Series 4 Preferred") pursuant to
the terms of a Subscription and Purchase Agreement, dated June 9,
1997, between the Company and RBB Bank ("Subscription Agreement"),
for a total of $2.5 million, less commissions of $200,000. The
Series 4 Preferred has a liquidation preference over the Company's
common stock, par value $.001 per share ("Common Stock"), equal to
$1,000 consideration per outstanding share of Series 4 Preferred
(the "Liquidation Value"), plus an amount equal to all unpaid
dividends accrued thereon. The Series 4 Preferred accrues dividends
on a cumulative basis at a rate of four percent (4%) per annum of
the Liquidation Value ("Dividend Rate"), and is payable semi-
annually when and as declared by the Board of Directors. No
dividends or other distributions may be paid or declared or set
aside for payment on the Company's Common Stock until all accrued
and unpaid dividends on all outstanding shares of Series 4
Preferred have been paid or set aside for payment. Dividends may be
paid, at the option of the Company, in the form of cash or Common
Stock of the Company. If the Company pays dividends in Common
Stock, such is payable in the number of shares of Common Stock
equal to the product of (a) the quotient of (i) the Dividend Rate
divided by (ii) the average of the closing bid quotation of the
Common Stock as reported on the NASDAQ for the five trading days
immediate prior to the date the dividend is declared, times (b) a
fraction, the numerator of which is the number of days elapsed
during the period for which the dividend is to be paid and the
denominator of which is 365.
The holder of the Series 4 Preferred may convert into Common
Stock up to 1,250 shares of the Series 4 Preferred on and after
October 5, 1997, and the remaining 1,250 shares of the Series 4
Preferred on and after November 5, 1997. The conversion price per
share is the lesser of (a) the product of the average closing bid
quotation for the five (5) trading days immediately preceding the
conversion date multiplied by eighty percent (80%) or (b) $1.6875.
The minimum conversion price is $.75, which minimum will be
eliminated from and after September 6, 1998. The Company will have
the option to redeem the shares of Series 4 Preferred (a) between
June 11, 1998, and June 11, 2001, at a redemption price of $1,300
per share if at any time the average closing bid price of the
Common Stock for ten consecutive trading days is in excess of
$4.00, and (b) after June 11, 2001, at a redemption price of $1,000
per share. The holder of the Series 4 Preferred will have the
option to convert the Series 4 Preferred prior to redemption by the
Company.
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<PAGE>
As part of the sale of the Series 4 Preferred, the Company
also issued to RBB Bank two Common Stock purchase warrants
(collectively, the "Warrants ") entitling RBB Bank to purchase,
after December 31, 1997 and until June 9, 2000, an aggregate of up
to 375,000 shares of Common Stock, subject to certain anti-dilution
provisions, with 187,500 shares exercisable at a price equal to
$2.10 per share and 187,500 shares exercisable at a price equal to
$2.50 per share. A certain number of shares of Common Stock
issuable on the conversion of the Series 4 Preferred and on the
exercise of the Warrants are subject to certain registration rights
pursuant to the Subscription Agreement.
Effective as of September 16, 1997, the Company entered into
an Exchange Agreement with RBB Bank ("RBB Exchange Agreement")
which provided that the 2,500 shares of Series 4 Preferred and the
RBB Series 4 Warrants were tendered to the Company in exchange for
(i) 2,500 shares of a newly created Series 6 Class F Convertible
Preferred Stock, par value $.001 per share ("Series 6 Preferred"),
(ii) two warrants each to purchase 187,500 shares of Common Stock
exercisable at $1.8125 per share, and (iii) one warrant to purchase
281,250 shares of Common Stock exercisable at $2.125 per share
(collectively, the "RBB Series 6 Warrants"). The RBB Series 6
Warrants are for a term of three (3) years and may be exercised at
any time after December 31, 1997, and until June 9, 2000. The
Company received no proceeds as a result of the RBB Exchange
Agreement.
The conversion price of the Series 6 Preferred shall be
$1.8125 per share, unless the closing bid quotation of the Common
Stock is lower than $2.50 in twenty (20) out of any thirty (30)
consecutive trading days after March 1, 1998, in which case, the
conversion price per share shall be the lesser of (A) the product
of the average closing bid quotation for the five (5) trading days
immediately preceding the conversion date multiplied by eighty
percent (80%) or (B) $1.8125 with the minimum conversion price
being $.75, which minimum will be eliminated from and after
September 6, 1998. The remaining terms of the Series 6 Preferred
are substantially the same as the terms of the Series 4 Preferred.
The exchange being completed as of the date of this report.
On or about July 14, 1997, the Company issued to the Infinity
Fund. L.P. ("Infinity"), 350 shares of newly-created Series 5 Class
E Convertible Preferred Stock, par value $.001 per share ("Series
5 Preferred"), at a price of $1,000 per share, for an aggregate
sales price of $350,000. The sale to Infinity was made in a private
placement under Rule 506 of Regulation D under the Securities Acts
of 1933, as amended, pursuant to the terms of a Subscription and
Purchase Agreement, dated July 7, 1997, between the Company and
Infinity ("Infinity Subscription Agreement"). The Company utilized
the proceeds received on the sale of Series 5 Preferred for the
payment of debt and general working capital.
The Series 5 Preferred has a liquidation preference over the
Company's Common Stock, par value $.001 per share ("Common Stock"),
equal to $1,000 consideration per outstanding share of Series 5
Preferred (the "Liquidation Value"), plus an amount equal to all
unpaid dividends accrued thereon. The Series 5 Preferred accrues
dividends on a cumulative basis at a rate of four percent (4%) per
annum of the Liquidation Value ("Dividend Rate"). Dividends are
payable semi-annually when and as declared by the Board of
Directors. No dividends or other distributions may be paid or
declared or set aside for payment on the Company's Common Stock
until all accrued and unpaid dividends on all outstanding shares of
Series 5 Preferred have been paid or set aside for payment.
Dividends may be paid, at the option of the Company, in the form of
cash or Common Stock of the Company. If the Company pays dividends
in Common Stock, such is payable in the number of shares of Common
Stock equal to the product of (a) the quotient of (i) the Dividend
Rate divided by (ii) the average of the closing bid quotation of
the Common Stock as reported on the NASDAQ for the five trading
days immediately prior to the date the dividend is declared,
multiplied by (b) a fraction, the numerator of which is the number
of days elapsed during the period for which the dividend is to be
paid and the denominator of which is 365.
The holder of the Series 5 Preferred may convert into Common
Stock up to 175 shares of the Series 5 Preferred on and after
November 3, 1997, and the remaining 175 shares of the Series 5
Preferred on and after December 3, 1997. The conversion price per
share is the lesser of (a) the product of the average closing bid
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<PAGE>
quotation for the five trading days immediately preceding the
conversion date multiplied by 80% or (b) $1.6875. The minimum
conversion price is $.75, which minimum will be eliminated from and
after September 6, 1998. The Company will have the option to
redeem the shares of Series 5 Preferred (a) between July 14, 1998,
and July 13, 2001, at a redemption price of $1,300 per share if at
any time the average closing bid price of the Common Stock for ten
consecutive trading days is in excess of $4.00, and (b) after July
13, 2001, at a redemption price of $1,000 per share. The holder of
the Series 5 Preferred will have the option to convert the Series
5 Preferred prior to redemption by the Company. A certain number
of shares of Common Stock issuable upon conversion of the Series 5
Preferred are subject to certain registration rights pursuant to
the Infinity Subscription Agreement.
Effective as of September 16, 1997, the Company entered into
an Exchange Agreement with Infinity ("Infinity Fund Exchange
Agreement") which provided that the 350 shares of Series 5
Preferred were tendered to the Company in exchange for (i) 350
shares of a newly created Series 7 Class G Preferred Stock, par
value $.001 per share ("Series 7 Preferred"), and (ii) one Warrant
to purchase up to 35,000 shares of Common Stock exercisable at
$1.8125 per share ("Series 7 Warrant"). The Series 7 Warrant is
for a term of three (3) years and may be exercised at any time
after December 31, 1997, and until July 7, 2000. The Company
received no proceeds as a result of the Infinity Fund Exchange
Agreement.
The conversion price of the Series 7 Preferred shall be
$1.8125 per share, unless the closing bid quotation of the Common
Stock is lower than $2.50 per share in twenty (20) out of any
thirty (30) consecutive trading days after March 1, 1998, in which
case, the conversion price per share shall be the lesser of (i) the
product of the average closing bid quotation for the five (5)
trading days immediately preceding the conversion date multiplied
by eighty percent (80%) or (ii) $1.8125, with the minimum
conversion price being $.75, which minimum will be eliminated from
and after September 6, 1998. The remaining terms of the Series 7
Preferred are substantially the same as the terms of the Series 5
Preferred.
On June 30, 1997, the Company entered into a Stock Purchase
Agreement ("Centofanti Agreement") with Dr. Louis F. Centofanti,
under which the Company agreed to sell, and Dr. Centofanti agreed
to purchase 24,381 shares of the Company's Common Stock. The
purchase price was $1.6406 per share representing 75% of the
$2.1875 closing bid price of the Common Stock as quoted on the
NASDAQ on the date that Dr. Centofanti notified the Company of his
desire to purchase such shares. Pursuant to the terms of the
Centofanti Agreement, Dr. Centofanti was to pay the Company the
aggregate purchase price of $40,000 for the 24,381 shares of Common
Stock. Dr. Centofanti purchased 12,190 shares during July for
$20,000. The Centofanti Agreement was amended during October,
1997, to reduce the number of shares of Common Stock that Dr.
Centofanti was to acquire under the Centofanti Agreement to the
12,190 shares already acquired by Dr. Centofanti under the
Centofanti Agreement, upon consideration of the certain recent
accounting pronouncements related to stock based compensation. The
sale of the shares pursuant to the Centofanti Agreement and its
subsequent amendment dated October 7, 1997, for the sale of 12,190
shares were authorized by the Company's Board of Directors.
On July 30, 1997, the Company entered into a Stock Purchase
Agreement ("Gorlin Agreement") with Mr. Steve Gorlin, a Director of
the Company, whereby the Company agreed to sell and, and Mr. Gorlin
agreed to purchase, 200,000 shares of the Company's Common Stock.
The purchase price was $2.125 per share representing the closing
bid price of the Common Stock as quoted on the NASDAQ on July 30,
1997. Pursuant to the terms of the Gorlin Agreement, Mr. Gorlin
agreed to pay the Company the aggregate purchase price of $425,000
for the 200,000 shares of Common Stock. In order to induce Mr.
Gorlin to enter into the amendment to the Gorlin Agreement, and to
purchase the Common Stock on the terms and subject to the
conditions thereof, PESI agreed to issue a three (3) year Warrant
to Mr. Gorlin for the purchase of 100,000 shares of Common Stock
at $2.40 per share. Under the Gorlin Agreement, Mr. Gorlin agreed
to tender $425,000 during August, 1997, however, pursuant to an
amendment to the Gorlin Agreement, which was entered into on
October 7, 1997, the payment schedule was modified such that Mr.
Gorlin agreed to tender the $425,000 on or before November 30,
1997.
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<PAGE>
In consideration of certain investment banking services as
performed for the Company, a warrant was issued to J.W. Charles
Financial Services, Inc. ("Charles") during September 1996. This
warrant was subsequently assigned by Charles to certain partners,
officers or broker and, during July 1997, one of the assigned
warrants was exercised which resulted in the issuance of 155,000
shares of the Company's Common Stock and raised $232,000 in equity
or capital for the Company.
During the nine months ended September 30, 1997, a total of
1,500 shares of the RBB Bank Series 3 Preferred were converted into
1,027,974 shares of the Company's Common Stock and the associated
accrued dividends on the Series 3 Preferred were paid in the form
of 12,058 shares of the Company's Common Stock.
On September 24, 1997, Dionysus Limited, an Isle of Man
corporation ("Dionysus"), exercised 75,000 warrants to purchase the
Company's Common Stock at a purchase price of $1.50 per share or an
aggregate of $112,500. One certificate representing an aggregate
of 75,000 shares of Common Stock was issued on October 20, 1997
pursuant to such warrants.
5. Facility Disruption
___________________
On January 27, 1997, an explosion and resulting tank fire occurred
at the Perma-Fix of Memphis, Inc. ("PFM") facility, a hazardous waste
storage, processing and blending facility, located in Memphis, Tennessee,
which resulted in damage to certain hazardous waste storage tanks located
on the facility and caused certain limited contamination at the facility.
Such occurrence was caused by welding activity performed by employees of
an independent contractor at or near the facility's hazardous waste tank
farm contrary to instructions by PFM. The facility was non-operational
from the date of this event until May, 1997, at which time it began
limited operations. However, PFM has accepted and will continue to
accept waste for processing and disposal, but has arranged for other
facilities owned by the Company or subsidiaries of the Company or others
not affiliated with the Company to process such waste. The utilization
of other facilities to process such waste results in higher costs to PFM
than if PFM were able to store and process such waste at its Memphis,
Tennessee, TSD facility, along with the additional handling and
transportation costs associated with these activities. PFM is in the
process of repairing and/or removing the damaged storage tanks and any
contamination resulting from the occurrence. The extent of PFM's
activities at the facility is presently being evaluated by the Company.
See Note 3 for a discussion of certain proceedings pending against PFM
as a result of such fire and explosion.
Net revenues for PFM total $1,514,000 for the nine month period
ended September 30, 1997, reflecting a decrease of $1,386,000 from the
nine month period ended September 30, 1996 total of $2,900,000. During
this same period, the net loss for PFM totaled $1,417,000 for 1997, as
compared to $404,000 for 1996, an increased loss of $1,013,000 for the
nine month period. Net revenues for the quarter ended September 30, 1997
were $325,000, a reduction of $829,000 from the quarter ended September
30, 1996 total of $1,154,000. Correspondingly, the net loss for the
third quarter of 1997 totaled $376,000, as compared to $134,000 for the
third quarter of 1996, resulting in an increased loss of $242,000 for
this three month period. The Company and PFM have property and business
interruption insurance and have provided notice to its carriers of such
loss. The Company has settled its property and contents claim for
$522,000. The Company is in the process of negotiating with its
insurance carrier regarding the amount of business interruption insurance
that may be recoverable by PFM as a result thereof.
6. Subsequent Event
________________
Effective October 1, 1997, Dr. Centofanti entered into a three (3)
year Employment Agreement with the Company which provided for, among
other things, an annual salary of $110,000 and the issuance of Non-
Qualified Stock Options ("Non-Qualified Stock Options"). The Non-
Qualified Stock Options provide Dr. Centofanti with the right to purchase
an aggregate of 300,000 shares of Common Stock in the form of (i) after
one year 100,000 shares of Common Stock at a price of $2.25 per share,
(ii) after two years 100,000 shares of Common Stock at a price of $2.50
per share, and (iii) after three years 100,000 shares of Common Stock at
a price of $3.00 per share. The Non-Qualified Stock Options expire ten
years after the date of the Employment Agreement.
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<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART I, ITEM 2
Forward-Looking Statements
Certain statements contained within this "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" may be deemed "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended
(collectively, the "Private Securities Litigation Reform Act of
1995").
All statements in this "Management's Discussion and Analysis
of Financial Condition and Results of Operations" other than
statements of historical fact are forward-looking statements that
are subject to known and unknown risks, uncertainties and other
factors which could cause actual result and performance of the
Company to differ materially from such statements. The words
"believe", "expect", "anticipate", "intend", "will", and similar
expressions identify forward-looking statements. Forward-looking
statements contained herein relate to anticipated financial
performance, ability to comply with the Company's general working
capital requirements, ability to recover under certain insurance
policies, ability to reopen certain operations in Memphis,
Tennessee, the ability to retain or receive certain permits, the
successful resolution of certain actions instituted by the
Tennessee Department of Environment and Conservation against the
Memphis, Tennessee facility of the Company, the ability to be able
to continue to borrow under the Company's revolving line of credit,
the ability to become profitable, the ability to generate
sufficient cash flow from operations to fund all costs of
operations and remediation of the Company's leased property in
Dayton, Ohio and PFM's facility in Memphis, Tennessee, the ability
to remediate certain contaminated sites for projected amounts, and
all other statements which are not statements of historical fact.
While the Company believes the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance
such expectations will prove to have been correct. There are a
variety of factors which could cause future outcomes to differ
materially from those described in this Form 10-Q, including, but
not limited to, general economic conditions, material reduction in
revenues, inability to collect in a timely manner a material amount
of receivables, increased competitive pressures, overcapacity in
the environmental industry, ability to receive or retain certain
required permits to satisfactorily resolve certain pending orders
or issues or to reopen a certain facility or to move such facility
to another location, discovery of additional contamination or
expanded contamination at the Dayton, Ohio property or the PFM
facility at Memphis, Tennessee which would result in a material
increase in remediation expenditures, changes in federal, state
and local laws and regulations, especially environmental
regulations, or in interpretation of such, potential increases in
equipment, maintenance, operating or labor costs, management
retention and development, the requirement to use internally
generated funds for purposes not presently anticipated, the
inability to obtain waivers regarding existing defaults under
certain financial covenants contained in loan agreements that the
Company is a party to, the insurance carrier determines that
coverage is not available or is available in limited amounts or
contest the amount of the claim, or the Company is not able to
continue profitability or, if unable to continue profitability, is
unable to secure additional liquidity in the form of additional
equity or debt. The Company undertakes no obligation to update
publicly any forward-looking statement, whether as a result of new
information, future events or otherwise.
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<PAGE>
Results of Operations
The table below should be used when reviewing management's
discussion and analysis for the three and nine months ended
September 30, 1997 and 1996:
Three Months Ended
September 30,
_________________________________
Consolidated 1997 % 1996 %
____________ _______ _____ _______ _____
Net Revenues $ 7,246 100.0 $ 7,734 100.0
Cost of Goods Sold 5,066 69.9 5,195 67.2
______ _____ ______ _____
Gross Profit 2,180 30.1 2,539 32.8
Selling, General and
Administrative 1,472 20.3 1,751 22.6
Depreciation/Amortization 528 7.3 515 6.7
______ _____ ______ _____
Income (Loss) from
Operations $ 180 2.5 $ 273 3.5
====== ===== ====== =====
Interest Expense 145 2.0 163 2.1
====== ===== ======= =====
Preferred Stock Dividends $ 99 1.4 $ 64 0.8
====== ===== ====== =====
Nine Months Ended
September 30,
_________________________________
Consolidated 1997 % 1996 %
____________ _______ _____ _______ _____
Net Revenues $20,882 100.0 $23,484 100.0
Cost of Goods Sold 15,410 73.8 16,593 70.7
______ _____ ______ _____
Gross Profit 5,472 26.2 6,891 29.3
Selling, General and
Administrative 4,649 22.3 5,175 22.0
Depreciation/Amortization 1,605 7.7 1,692 7.2
______ _____ ______ ______
Income (Loss) from
Operations $ (782) (3.8) $ 24 (0.1)
====== ====== ====== ======
Interest Expense 517 2.5 641 2.7
====== ====== ====== ======
Preferred Stock Dividends $ 262 1.3 $ 74 0.3
====== ====== ====== ======
Summary -- Three and Nine Months Ended September 30, 1997 and 1996
_________________________________________________________________
The Company provides services through two business segments.
The Waste Management Services segment is engaged in on- and off-
site treatment, storage, disposal and blending of a wide variety of
industrial, hazardous, and mixed wastes and wastewaters. The
Company developed and owns several priority on-site and off-site
technologies for the treatment of nuclear mixed waste. 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
nationwide. The Company's Consulting Engineering segment of the
pollution control industry 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.
Consolidated net revenues decreased $488,000, or 6.3% for the
three months ended September 30, 1997 as compared to the three
months ended September 30, 1996. This decrease is attributable to
both the Consulting Engineering segment, which experienced a
reduction in revenues of $467,000, and a decrease of $21,000 in
revenues from the Waste Management segment. As reflected, the most
significant decrease was within the Consulting Engineering segment
and is partially a result of two one-time projects for 1996 which
totaled $396,000, not duplicated in 1997 and a significant
reduction in the Bartlesville, Oklahoma three year project that
reduced 1997 revenue by approximately $71,000 as compared to 1996.
Although the Waste Management segment experienced a decrease in
revenues of $21,000, the Memphis, Tennessee facility disruption
accounted for a decrease of $829,000 in the quarter ended September
30, 1997 as compared to the same period of 1996. Therefore,
despite the disruption, revenues within the wastewater and mix-
waste segments of the business increased approximately $808,000
during the third quarter of 1997, as compared with the same period
in 1996. Consolidated revenues for the nine months ended September
30, 1997 and 1996 decreased $2,602,000, an 11.1% change. This
decrease is primarily the result of the disruption at the Memphis,
Tennessee, facility, which resulted in a reduction in revenue of
$1,386,000 for the nine months ended September 30, 1997 as compared
to the same period ended September 30, 1996. As discussed above,
the Company also experienced a reduction in revenue due to the
Bartlesville, Oklahoma project nearing completion, reflecting a
decrease of $119,000, several engineering contracts not duplicated
in 1997, which resulted in a reduction of $580,000, and to the
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restructuring in the Perma-Fix, Inc. group as it transitions away
from lower margin field service projects and continues to pursue
new technologies and additional DOE contracts. During 1996, the
Company also completed the sale of its PermaCool technology, which
generated revenues of $689,000 for the nine months ended September
30, 1996, which were not duplicated during 1997.
The cost of goods sold decreased 2.5% or $129,000 for the
quarter ended September 30, 1997, as compared to the quarter ended
September 30, 1996. The decrease is primarily attributable to the
reduced revenue during the third quarter of 1997, which, as
discussed above, decreased 6.3%. However, as a percentage of
revenue, cost of goods sold increased to 69.9% in the third quarter
of 1997, compared to 67.2% in the corresponding third quarter of
1996. This consolidated increase in cost of goods sold as a
percentage of revenue reflects principally the impact of reduced
revenues, combined with the additional operating costs incurred at
the PFM facility resulting from the above-discussed disruption and
associated increased operating, disposal, and transportation costs
as a result of such disruption. Cost of goods sold for PFM was
approximately 77.3% for the third quarter of 1996, as compared to
134.5% for the third quarter of 1997. Consolidated cost of goods
sold for the nine months ended September 30, 1997, as compared to
the nine months ended September 30, 1996 decreased $1,183,000 or
7.1%. However, cost of goods sold as a percentageage of revenue
increased for the nine month period of 1997, as compared to the
same period of 1996 by 3.1% to 73.8%. This increase in cost of
goods sold as a percentage of revenue is principally due to the
reduced revenue and facility disruption, as discussed above, at the
PFM facility. Cost of goods sold for PFM was approximately 76.7%
for the nine months ended September 30, 1996, as compared to 126.8%
for the corresponding nine months of 1997.
Selling, general and administrative expenses decreased 15.9%
for the three months ended September 30, 1997 as compared to the
corresponding three months ended 1996. As a percentage of revenue,
selling, general and administrative expense also decreased to 20.3%
for the quarter ended September 30, 1997, compared to 22.6% for the
same period in 1996. The decrease of $279,000 reflects a reduction
in costs of $50,000 in the Consulting Engineering segment and a
$194,000 reduction in the Waste Management segment with the balance
being a reduction in corporate overhead. Consolidated selling,
general and administrative expenses decreased $526,000 or 10.2% for
the nine months ended September 30, 1997 as compared to the same
period in 1996. As a percentage of revenue, selling, general and
administrative expenses increased .3% for the nine months ended
September 30, 1997 as compared to the same period in 1996. The
Company's Waste Management segment decreased marketing expenses by
$334,000, while the Consulting Engineering segment decreased
administrative expense by $161,000 for the nine months ended
September 30, 1997, as compared to the corresponding period in
1996.
Depreciation and amortization expense for the quarter ended
September 30, 1997 reflects an increase of $13,000 or .6% of
revenue as compared to the quarter ended September 30, 1996 as a
result of the purchase of new assets, capitalized during the third
quarter of 1997. Amortization expense reflects a total decrease of
$20,000 from the quarter ended September 30, 1997 as compared to
1996, which is a direct result of the "Covenant Not to Compete"
having become fully amortized during the first quarter of 1997.
Consolidated depreciation and amortization expense for the nine
months ended September 30, 1997 reflects a total decrease of
$87,000 from the nine months ended September 30, 1996.
Amortization expense reflects a total decrease of $50,000 for the
nine months ended September 30, 1997 as compared to the same
period of 1996, which is a direct result of the fully amortized
covenant described above. Depreciation expense for this nine month
period of 1997 reflects a reduction of $37,000 in conjunction with
the sale of certain assets as a result of the Company's previous
restructuring programs and various other assets becoming fully
depreciated.
Interest expense decreased $18,000 from the quarter ended
September 30, 1997 as compared to the corresponding period of 1996.
The decrease in interest expense reflects the reduced borrowing
levels on the Heller Financial, Inc. revolving loan and term note.
Offsetting this reduced interest expense, during the third quarter
of 1997, was the Preferred Stock dividend totaling $99,000 incurred
in conjunction with the Series 3 Class C, Series 4 Class D and
Series 5 Class E Convertible Preferred Stock as issued in July
1996, June 1997, and July 1997, respectively. As a result of the
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<PAGE>
issuance of the Series 4 Class D and Series 5 Class E Preferred
Stock during 1997, dividends increased by $35,000 for the third
quarter of 1997 as compared to the same quarter of 1996. Interest
expense for the nine months ended September 30, 1997 decreased
$124,000, as compared to the same period of 1996. This decrease
also reflects the reduced borrowing levels on the Heller Financial,
Inc. revolving loan and term note. Offsetting this reduced
interest expense for the nine months ended September 30, 1997, was
the Preferred Stock dividend totaling $262,000 incurred in
conjunction with the Series 3 Class C, Series 4 Class D and Series
5 Class E Convertible Preferred Stock as issued in July 1996, June
1997, and July 1997, respectively. The dividend expense for the
nine months ended September 30, 1997 reflects an increase of
$188,000 as compared to the same period of 1996.
Facility Disruption
___________________
As previously discussed, on January 27, 1997, an explosion and
resulting tank fire occurred at PFM's facility, a hazardous waste
storage, processing and blending facility. See Note 5 "Facility
Disruption" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Liquidity and Capital
Resources" for further information and discussion of certain
forward-looking statements contained herein and certain cautionary
statements relating thereto.
As a result of the explosion and resulting tank fire at the
PFM facility, TDEC issued the TDEC Order, which alleges that the
facility violated certain hazardous waste rules and regulations
promulgated by the TDEC. The TDEC Order assessed a penalty against
PFM of approximately $144,000 and ordered, among other things, that
(a) the facility cease blending operations, (b) the facility's
permit to construct a new hazardous waste tank storage area, which
has not yet been constructed, be revoked, and (c) PFM implement
certain other actions. PFM has responded to the TDEC Order and
asserted that the TDEC Order was issued against the wrong party,
that PFM did not violate any rules and regulations and that the
TDEC is not entitled to such penalties. The Company intends for
PFM to vigorously defend itself in connection with this matter.
This paragraph contains forward-looking statements which are
subject to certain factors that could cause the actual results to
differ materially from anticipated results, including, but not
limited to, certain factors set forth in "Forward-Looking
Statements" of this "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Liquidity and Capital Resources of the Company
______________________________________________
At September 30, 1997, the Company had cash and cash
equivalents of $110,000. This cash and cash equivalents total
reflects an increase of $65,000 from December 31, 1996, as a result
of net cash used in operations of $619,000, cash used in investing
activities of $949,000 (principally purchases of equipment, net
totaling $899,000, partially offset by the proceeds from the sale
of property and equipment of $52,000) and cash provided by
financing activities of $1,633,000 (principally from the proceeds
from issuance of stock totaling $3,380,000, partially offset by
repayments of long-term debt and the revolving loan and term note
facility). Accounts receivable, net of allowances, totaled
$5,063,000, a decrease of $486,000 from the December 31, 1996
balance of $5,549,000, which reflects the reduced revenue levels
during the third quarter, and improved collection activities.
Under the Heller Agreement, as entered into in January 1995,
the Company was provided a term loan of $2,500,000 and a revolving
loan facility in the amount of $7,000,000. The term loan is for a
term of 36 months, payable in monthly installments of $42,000 and
a balloon payment for the balance on January 31, 1998. The
revolving loan facility is reduced by the outstanding unpaid
principal amount due on the term loan and is subject to the maximum
credit availability, determined through a monthly borrowing base
equal to 80% of the eligible accounts receivable (as defined in the
loan agreement) of the Company and its subsidiaries. The
termination date of the revolving loan facility is also January 31,
1998. See Note 2 to Notes to Consolidated Financial Statements.
As noted above, the Heller Agreement has a scheduled
termination date of January 31, 1998. The Company is currently
negotiating with Heller for the renewal of this Agreement and has
received proposals from two other potential lenders, one of which
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has provided a commitment, to replace the term and revolving loans
provided to the Company by Heller. There are no assurances that
such a renewal or new credit facility will be obtained. As a
result of this scheduled termination date, and in compliance with
Generally Accepted Accounting Principles, the Company has
reclassified as a current liability $2,666,000 outstanding under
the Heller Agreement that would otherwise be classified as long-
term debt. As of September 30, 1997, the Company was in default of,
among other things, the "Minimum EBITDA", "Capital Expenditure
Limit" and "Fixed Charge Coverage" financial covenants of the
Agreement. The financial covenant defaults are principally a
result of the facility disruption and resulting net loss incurred
by the Perma-Fix of Memphis, Inc. ("PFM") facility due to an
explosion and fire in January 1997 (see Note 5) and the additional
capital spending in conjunction with the equity raised during 1997.
The Company is currently negotiating with Heller for a waiver of
this default. Heller has tentatively agreed to forebear from
exercising any rights and remedies under the Heller Agreement as a
result of these defaults and continues to make normal advances
under the revolving loan facility.
As of September 30, 1997, the borrowings under the Company's
revolving loan facility with Heller totaled $2,173,000, a decrease
of $706,000 from the December 31, 1996 balance of $2,879,000, with
a related additional borrowing availability of $1,271,000, based
on 80% of the amount of eligible receivables of the Company as of
September 30, 1997. The balance on the term loan totaled $993,000,
as compared to $1,383,000 at December 31, 1996. Total indebtedness
under the Heller Agreement, as amended, as of September 30, 1997
was $3,166,000, a decrease of $1,096,000 from the December 31,
1996, balance of $4,262,000. See Note 2 to Notes to Consolidated
Financial Statements.
Pursuant to the Sixth Amendment, the Company was obligated to
raise an additional $700,000 on or before August 15, 1997, of which
$150,000 was to be received by June 15, 1997. During the second
quarter of 1997 and July, 1997, the Company fully satisfied this
covenant obligation, having raised approximately $3,632,000
principally through insurance proceeds with regard to the vandalism
at the Perma-Fix of Ft. Lauderdale, Inc. ("PFL") facility in 1996
and from the issuance of the 2,500 shares of newly-created Series
4 Class D Convertible Preferred Stock ("Series 4 Preferred"), and
the issuance of 350 shares of newly created Series 5 Class E
Convertible Preferred Stock ("Series 5 Preferred"), as further
discussed in Note 4 to Notes to Consolidated Financial Statements.
The Company received net proceeds of $2,650,000 (after
deduction of the payment of $200,000 for broker's commissions, but
prior to any legal fees and other costs in connection with the sale
of the Series 4 Preferred and the Series 5 Preferred, the exchange
of the Series 4 Preferred and Series 5 Preferred for the Series 6
Preferred and Series 7 Preferred, respectively, and for
registration of the Common Stock issuable upon conversion of Series
6 Preferred and Series 7 Preferred. Each share of Series 4
Preferred and Series 5 Preferred sold for $1,000 per share and has
a liquidation value of $1,000. The Company used the net proceeds to
reduce its revolving line of credit. The Company reborrowed a
significant portion of such funds for capital improvements at the
Company's various facilities, working capital and payment of trade
payables.
Ally Capital Corporation ("Ally") had previously provided the
Company with an equipment financing arrangement to finance the
purchase of capital equipment. As of September 30, 1997, the
Company's outstanding principal balance owing under this equipment
financing arrangement was $796,000. The Company has fully utilized
this equipment financing arrangement with Ally. As of September
30, 1997, the Company was in default of the "Minimum EBITDA",
"Capital Expenditure Limit" and "Fixed Charge Coverage" financial
covenants of the Agreement. The defaults are principally a result
of the facility disruption and resulting net loss incurred by the
Perma-Fix of Memphis, Inc. ("PFM") facility due to an explosion and
fire in January 1997 (see Note 5) and the additional capital
spending in conjunction with the equity raised during 1997. The
Company is currently negotiating with Ally for a waiver of these
defaults and has received proposals from two other potential
lenders to replace Ally. Based upon the Company's discussions with
Ally, the nature and reason for said default and the significant
collateral position securing this equipment financing agreement,
the Company has chosen not to reclassify the long-term balance of
$165,000 at September 30, 1997 as a current liability. See Note 2
to Notes to Consolidated Financial Statements.
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At September 30, 1997, the Company had $4,901,000 in aggregate
principal amounts of outstanding debt, as compared to $6,360,000 at
December 31, 1996. This decrease in outstanding debt of $1,459,000
during the nine month period ended September 30, 1997 is
principally a result of the repayment of the Heller revolving loan
facility as a result of the issuance of the Series 4 Preferred and
Series 5 Preferred. The total indebtedness under the Heller
Agreement decreased during the nine month period ended September
30, 1997 by $1,096,000.
As of September 30, 1997, total consolidated accounts payable
for the Company was $2,739,000, a decrease of $938,000 from the
December 31, 1996 balance of $3,677,000. This decrease is
principally a result of the proceeds from the Series 4 and Series
5 Preferred issued during June and July 1997.
The Company's net purchases of new capital equipment for the
nine month period ended September 30, 1997 totaled approximately
$899,000, excluding financed capital expenditures of $287,000.
These expenditures were for improvements to the operations,
including two (2) capital expansion projects and the construction
of certain mixed waste equipment within the Waste Management
Services segment, and other capital expenditures necessary to
maintain compliance with federal, state or local permit standards.
These capital expenditures were principally funded through the
operating cash flow of the Company, proceeds from the Series 4 and
Series 5 Preferred issued during June, and July 1997 and
utilization of the Heller revolving loan facility. The Company has
budgeted capital expenditures of $1,250,000 for 1997 (excluding any
expenditures at PFM due to the explosion and fire), which includes
completion of the two (2) above noted capital expansion projects
estimated to be approximately $200,000, as well as other identified
capital and permit compliance expenditures. The Company
anticipates funding these capital expenditures by a combination of
lease financing with lenders other than the equipment financing
arrangement discussed above, proceeds from the Series 4 Preferred
and Series 5 Preferred, and/or internally generated funds. As of
September 30, 1997, the Company's purchases of new capital
equipment totaled $1,185,000, of which approximately $287,000 was
financed. The Company's statements regarding its anticipated
ability to fund such capital expenditures are forward-looking
statements and are subject to certain factors that could cause
actual results to differ materially from such statements,
including, but not limited to, the factors discussed under
"Forward-Looking Statements" of this "Management's Discussion and
Analysis of Financial Conditions and Results of Operations."
The working capital deficit position at September 30, 1997 was
$2,718,000, as compared to a deficit position of $773,000 at
December 31, 1996. The September 30, 1997, deficit position
includes the reclassification of the Heller long-term debt to
current, as a result of the Heller Agreement's scheduled
termination date of January 31, 1998. In compliance with Generally
Accepted Accounting Principles, the Company has reclassified as a
current liability $2,666,000 outstanding under the Agreement that
would otherwise be classified as long-term debt. If the Company
would not have had to reclassify $2,666,000 of the debt due to
Heller under the Agreement, the September 1997 working capital
deficit position would have been $53,000, which would reflect an
improvement of $720,000 from the December deficit position. The
Company is currently negotiating with Heller for the renewal of
this Agreement and has received proposals from two other potential
lenders to replace Heller, although no assurance can be given that
such a renewal or new credit facility will be obtained.
As previously discussed, the Company's subsidiary, PFM,
sustained an explosion and fire at its TSD facility in Memphis,
Tennessee, on January 27, 1997, damaging certain hazardous waste
storage tanks and causing certain limited contamination at the
facility. The facility was non-operational until May 1997, at which
time it began limited operations. PFM is in the process of
repairing or removing the damaged tanks and removing or remediating
the contamination caused by the explosion and fire. During the
period subsequent to this explosion and fire, PFM has accepted and
will continue to accept waste for processing and disposal, but has
arranged for other facilities owned by the Company or subsidiaries
of the Company or others not affiliated with the Company to process
such waste. See "Management's Discussion and Analysis of Financial
Condition and Results of Operation--Facility Disruption." The
Company and PFM have property and business interruption insurance.
The Company has settled its property and contents claim for
$522,000. The Company is presently in the process of negotiating
with its insurance carrier regarding the amount of business
interruption insurance that may be recoverable by PFM as a result
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of such occurrence. Certain statements contained in this paragraph
are forward-looking statements and are subject to certain factors
that could cause actual results to differ materially from those set
forth above, including, but not limited to, certain factors set
forth under "Forward-Looking Statements" of this "Management's
Discussion and Analysis of Financial Condition and Results of
Operations."
In summary, the Company has taken a number of steps to improve
its operations and liquidity as discussed above, which during the
first nine months of 1997 was negatively impacted by the disruption
from the PFM explosion and fire. If the Company is unable to
continue to improve its operations and to continue profitability in
the foreseeable future, such would 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, certain
factors set forth in "Forward-Looking Statements" of this
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," the Company's ability to continue
profitability or, if the Company is not able to continue
profitability, whether the Company is able to raise additional
liquidity in the form of additional equity or debt.
Environmental Contingencies
The Company is engaged in the waste management services
segment of the pollution control industry. As a participant in the
on-site treatment, storage and disposal market and the off-site
treatment and services market, the Company is subject to rigorous
federal, state and local regulations. These regulations mandate
strict compliance and therefore are a cost and concern to the
Company. Because of the integral role of these regulations in
providing quality environmental services, the Company makes every
reasonable attempt to maintain complete compliance with these
regulations; however, even with a diligent commitment, the Company,
as with many of its competitors, may be required to pay fines for
violations or investigate and potentially remediate its waste
management facilities. See Note 3 to Notes to Consolidated
Financial Statements and "Facility Disruption."
The Company routinely uses third party disposal companies, who
ultimately destroy or secure landfill residual materials generated
at its facilities or at a client's site. The Company, compared to
certain of its competitors, disposes of significantly less
hazardous or industrial by-products from its operations due to
rendering material non-hazardous, discharging treated waste waters
to publicly-owned treatment works and/or recycling wastes into
saleable products. In the past, numerous third party disposal
sites have improperly managed wastes and consequently require
remedial action. As a result, any party utilizing these sites in
the past or present may be liable for some or all of the remedial
costs. Despite the Company's aggressive compliance and auditing
procedures for disposal of wastes, the Company could, in the
future, be notified that it is a potentially responsible party at
a remedial action site, which could have a material adverse effect
on the Company.
In addition to budgeted capital expenditures of $1,250,000 for
1997 at the Company's treatment, storage, and disposal facilities,
which are necessary to maintain permit compliance and improve
operations, as discussed above, excluding capital expenditures due
to the fire and explosion at the PFM facility, the Company has also
budgeted for 1997 an additional $350,000 in environmental
expenditures to comply with federal, state and local regulations in
connection with remediation of certain contaminates at two
locations of which approximately $165,000 has been spent during the
nine months ended September 30, 1997. The two locations where
these expenditures will be made are at a certain leased property in
Dayton, Ohio, a former RCRA storage facility operated by the former
owners of PFD and leased by a predecessor of PFD, and PFM's
facility in Memphis, Tennessee (excluding any capital expenditures
due to the previously discussed fire and explosion at PFM).
Additional funds will be required for the next five to fifteen
years to properly investigate and remediate these sites. The
Company has accrued $1,468,000 for estimated costs of remediating
these two sites (excluding any expenditures due to the fire and
explosion at PFM), which is projected to be the maximum exposure
and is expected to be performed over a period in excess of ten (10)
years. The Company expects to fund these expenses to remediate
these two sites from funds generated internally. This is a forward
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looking statement and is subject to numerous conditions. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations-- Forward Looking Statements".
Recent Accounting Pronouncement
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128
"Earnings Per Share" ("SFAS 128"). SFAS 128 establishes new
standards for computing and presenting earnings per share ("EPS").
Specifically, SFAS 128 replaces the presentation of primary EPS
with a presentation of basic EPS, requires dual presentation of
basic and diluted EPS on the face of the income statement for all
entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS
computation. SFAS 128 is effective for financial statements issued
for periods ending after December 15, 1997, earlier application is
not permitted. EPS for the three and nine months ended September
30, 1997 and 1996 computed under SFAS 128 would not be materially
different than previously computed.
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," ("FAS 130") and No. 131, "Disclosure about
Segments of an Enterprise and Related Information, " ("FAS 131").
FAS 130 Establishes standards for reporting and displaying
comprehensive income, its components and accumulated balances. FAS
131 establishes standards for the way that public companies report
information about operating segments in annual financial statements
and requires reporting of selected information about operating
segments in interim financial statements issued to the public.
Both FAS 130 and FAS 131 are effective for periods beginning after
December 15, 1997. The Company has not determined the impact that
the adoption of these new accounting standards will have on its
future financial statements and disclosures.
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PERMA-FIX ENVIRONMENTAL SERVICES, INC.
PART II - Other Information
Item 1. Legal Proceedings
_________________
There are no additional legal proceedings pending against the
Company and/or its subsidiaries not previously reported by the
Company in Item 3 of its Form 10-K for the fiscal year ended
December 31, 1996 or Part II, Item 1 of the Form 10-Q for the
quarters ended March 31, 1997 and June 30, 1997.
During September 1994, Perma-Fix of Memphis, Inc. ("PFM"),
formerly American Resource Recovery Corporation ("ARR") and a
subsidiary of the Company, was sued by Community First Bank
("Community First") to collect a note in the principal sum of
$341,000 that was allegedly made by ARR to CTC Industrial Services,
Inc. ("CTC") in February 1987 (the "Note"), and which was allegedly
pledged by CTC to Community First in December 1988 to secure
certain loans to CTC. This lawsuit styled Community First Bank v.
American Resource Recovery Corporation, was instituted on
September 14, 1994, and is pending in the Circuit Court, Shelby
County, Tennessee. The Company was not aware of either the Note or
its pledge to Community First at the time of the Company's
acquisition of PFM in December 1993. The Company vigorously
defended itself in connection therewith and filed a third party
complaint against Billie Kay Dowdy, who was the sole shareholder of
PFM immediately prior to the acquisition of PFM by the Company,
alleging that Ms. Dowdy was required to defend and indemnify the
Company and PFM from and against this action under the terms of the
agreement relating to the Company's acquisition of PFM. This
matter was settled on August 29, 1997. PFM and Dowdy each agreed
to pay the plaintiff $45,000 in exchange for a full and complete
release and a dismissal of the above matter.
Item 2. Changes in Securities
_____________________
(c) During the quarter ended September 30, 1997, the Company sold,
or entered into an agreement to sell, equity securities that were not
registered under the Securities Act of 1933, as amended ("Securities
Act"), as follows:
(i) On or about June 11, 1997, the Company issued to RBB Bank
Aktiengesellschaft, located in Graz, Austria ("RBB Bank"), 2,500
shares of newly-created Series 4 Class D Convertible Preferred
Stock, par value $.001 per share ("Series 4 Preferred"), at a price
of $1,000 per share, for an aggregate sales price of $2,500,000.
The sale to RBB Bank was made in a private placement under Rule 506
of Regulation D under the Securities Acts of 1933, as amended
("Securities Act"), pursuant to the terms of a Subscription and
Purchase Agreement, dated June 9, 1997, between the Company and RBB
Bank ("Subscription Agreement"). The Series 4 Preferred has a
liquidation preference over the Company's Common Stock equal to
$1,000 consideration per outstanding share of Series 4 Preferred
(the "Liquidation Value"), plus an amount equal to all accrued and
unpaid dividends. The Series 4 Preferred accrues dividends on a
cumulative basis at a rate of four percent (4%) per annum of the
Liquidation Value ("Dividend Rate"), and is payable semi-annually
when and as declared by the Board of Directors. No dividends or
other distributions may be paid or declared or set aside for
payment on the Company's Common Stock until all accrued and unpaid
dividends on all outstanding shares of Series 4 Preferred have been
paid or set aside for payment. Dividends may be paid, at the option
of the Company, in the form of cash or Common Stock of the Company.
If the Company pays dividends in Common Stock, such is payable in
the number of shares of Common Stock equal to the product of (a)
the quotient of (i) the Dividend Rate divided by (ii) the average
of the closing bid quotation of the Common Stock as reported on the
NASDAQ for the five trading days immediate prior to the date the
dividend is declared, times (b) a fraction, the numerator of which
is the number of days elapsed during the period for which the
dividend is to be paid and the denominator of which is 365.
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The holder of the Series 4 Preferred may convert into Common
Stock up to 1,250 shares of the Series 4 Preferred on and after
October 5, 1997, and the remaining 1,250 shares of the Series 4
Preferred on and after November 5, 1997. The conversion price per
share is the lesser of (a) the product of the average closing bid
quotation of the Common Stock as reported on the NASDAQ for the five
(5) trading days immediately preceding the conversion date
multiplied by eighty percent (80%) or (b) $1.6875. The minimum
conversion price is $.75, which minimum will be eliminated from and
after September 6, 1998. Subject to the closing bid price of the
Company's Common Stock at the time of the conversion and other
conditions which could increase the number of shares to be issued
upon conversion, the Series 4 Preferred, if all were converted,
could be converted into between 1,482,000 and 3,334,000 shares of
Common Stock, or more after the minimum conversion price is
eliminated or under certain other limited conditions. The Company
will have the option to redeem the shares of Series 4 Preferred (a)
between June 11, 1998, and June 11, 2001, at a redemption price of
$1,300 per share if at any time the average closing bid price of the
Common Stock for ten consecutive trading days is in excess of $4.00,
and (b) after June 11, 2001, at a redemption price of $1,000 per
share. The holder of the Series 4 Preferred will have the option to
convert the Series 4 Preferred prior to redemption by the Company.
As part of the sale of the Series 4 Preferred, the Company
also issued to RBB Bank two common stock purchase warrants
(collectively, the "Warrants") entitling RBB Bank to purchase, after
December 31, 1997 and until June 9, 2000, an aggregate of up to
375,000 shares of Common Stock, subject to certain anti-dilution
provisions, with 187,500 shares exercisable at a price equal to
$2.10 per share and 187,500 shares exercisable at a price equal to
$2.50 per share. 1,482,000 shares of Common Stock issuable on the
conversion of the Series 4 Preferred, 250,000 shares of Common Stock
issuable in payment of accrued dividends on the Series 4 Preferred
and the shares of Common Stock issuable on the exercise of the
Warrants are subject to certain registration rights pursuant to the
Subscription Agreement.
Effective September 16, 1997 the Company entered into an
Exchange Agreement with RBB Bank ("RBB Exchange Agreement") which
provided that the 2,500 shares of Series 4 Preferred and the RBB
Series 4 Warrants were tendered to the Company in exchange for (i)
2,500 shares of a newly created Series 6 Class F Preferred Stock,
par value $.001 per share ("Series 6 Preferred"), (ii) two warrants
each to purchase 187,500 shares of Common Stock exercisable at
$1.8125 per share, and (iii) one warrant to purchase 281,250 shares
of Common Stock exercisable at $2.125 per share (collectively, the
"RBB Series 6 Warrants"). The RBB Series 6 Warrants are for a term
of three (3) years and may be exercised at any time after
December 31, 1997, and until June 9, 2000.
The conversion price of the Series 6 Preferred shall be
$1.8125 per share, unless the closin bid quotation of the Common
Stock is lower than $2.50 in twenty (20) out of any thirty (30)
consecutive trading days after March 1, 1998, in which case, the
conversion price per share shall be the lesser of (A) the product
of the average closing bid quotation for the five (5) trading days
immediately preceding the conversion date multiplied by eighty
percent (80%) or (B) $1.8125 with the minimum conversion price
being $.75, which minimum will be eliminated from and after
September 6, 1998. The remaining terms of the Series 6 Preferred
are substantially the same as the terms of the Series 4 Preferred.
(ii) On or about July 14, 1997, the Company issued to the
Infinity Fund, L.P. ("Infinity"), 350 shares of newly-created
Series 5 Class E Convertible Preferred Stock, par value $.001 per
share ("Series 5 Preferred"), at a price of $1,000 per share, for
an aggregate sales price of $350,000. The sale to Infinity was made
in a private placement under Rule 506 of Regulation D under the
Securities Acts of 1933, as amended, pursuant to the terms of a
Subscription and Purchase Agreement, dated July 7, 1997, between
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the Company and Infinity ("Infinity Subscription Agreement"). The
Company intends to utilize the proceeds received on the sale of
Series 5 Preferred for the payment of debt and general working
capital.
The Series 5 Preferred has a liquidation preference over the
Company's Common Stock, par value $.001 per share ("Common
Stock"), equal to $1,000 consideration per outstanding share of
Series 5 Preferred (the "Liquidation Value"), plus an amount equal
to all unpaid dividends accrued thereon. The Series 5 Preferred
accrues dividends on a cumulative basis at a rate of four percent
(4%) per annum of the Liquidation Value ("Dividend Rate").
Dividends are payable semi-annually when and as declared by the
Board of Directors. No dividends or other distributions may be paid
or declared or set aside for payment on the Company's Common Stock
until all accrued and unpaid dividends on all outstanding shares of
Series 5 Preferred have been paid or set aside for payment.
Dividends may be paid, at the option of the Company, in the form of
cash or Common Stock of the Company. If the Company pays dividends
in Common Stock, such is payable in the number of shares of Common
Stock equal to the product of (a) the quotient of (i) the Dividend
Rate divided by (ii) the average of the closing bid quotation of
the Common Stock as reported on the NASDAQ for the five trading
days immediately prior to the date the dividend is declared,
multiplied by (b) a fraction, the numerator of which is the number
of days elapsed during the period for which the dividend is to be
paid and the denominator of which is 365.
The holder of the Series 5 Preferred may convert into Common Stock
up to 175 shares of the Series Preferred on and after November 3,
1997, and the remaining 175 shares of the Series 5 Preferred on and
after December 3, 1997. The conversion price per share is the
lesser of (a) the product of the average closing bid quotation for
the five trading days immediately preceding the conversion date
multiplied by 80% or (b) $1.6875. The minimum conversion price is
$.75, which minimum will be eliminated from and after September 6,
1998. The Company will have the option to redeem the shares of
Series 5 Preferred (a) between July 14, 1998, and July 13, 2001, at
a redemption price of $1,300 per share if at any time the average
closing bid price of the Common Stock for ten consecutive trading
days is in excess of $4.00, and (b) after July 13, 2001, at a
redemption price of $1,000 per share. The holder of the Series 5
Preferred will have the option to convert the Series 5 Preferred
prior to redemption by the Company. A certain number of shares of
Common Stock issuable upon conversion of the Series 5 Preferred is
subject to certain registration rights pursuant to the Infinity
Subscription Agreement.
Effective September 16, 1997, the Company entered into an
Exchange Agreement with Infinity ("Infinity Fund Exchange
Agreement") which provided that the 350 shares of Series 5
Preferred were tendered to the Company in exchange for (i) 350
shares of a newly created Series 7 Class G Preferred Stock, par
value $.001 per share ("Series 7 Preferred"), and (ii) one Warrant
to purchase up to 35,000 shares of Common Stock exercisable at
$1.8125 per share ("Series 7 Warrant"). The Infinity Fund Series
7 Warrant is for a term of three (3) years and may be exercised at
any time after December 31, 1997, and until July 7, 2000.
The conversion price of the Series 7 Preferred shall be $1.8125
per share, unless the closing bid quotation of the Common Stock is
lower than $2.50 per share in twenty (20) out of any thirty (30)
consecutive trading days after March 1, 1998, in which case, the
conversion price per share shall be the lesser of (i) the product
of the average closing bid quotation for the five (5) trading days
immediately preceding the conversion date multiplied by eighty
percent (80%) or (ii) $1.8125, with the minimum conversion price
being $.75, which minimum will be eliminated from and after
September 6, 1998. The remaining terms of the Series 7 Preferred
are substantially the same as the terms of the Series 5 Preferred.
(iii) On June 30, 1997, the Company entered into a Stock
Purchase Agreement ("Centofanti Agreement") with Dr. Louis F.
Centofanti, under which the Company agreed to sell, and
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Dr. Centofanti agreed to purchase 24,381 shares of the Company's
Common Stock. The purchase price was $1.6406 per share
representing 75% of the $2.1875 closing bid price of the Common
Stock as quoted on the NASDAQ on the date that Dr. Centofanti
notified the Company of his desire to purchase such shares.
Pursuant to the terms of the Centofanti Agreement, Dr. Centofanti
was to pay the Company the aggregate purchase price of $40,000 for
the 24,381 shares of Common Stock. Dr. Centofanti purchased 12,190
shares, during July for $20,000, and during October, the Agreement
was amended to reduce the number of shares of Common Stock that Dr.
Centofanti is to acquire under the Centofanti Agreement to the
12,190 shares already acquired by Dr. Centofanti under the
Centofanti Agreement, upon consideration of the certain recent
accounting pronouncements related to stock based compensation. The
sale of the shares pursuant to the Centofanti Agreement and its
subsequent amendment dated October 7, 1997, for the sale of 12,190
shares were authorized by the Company's Board of Directors.
(iv) On July 30, 1997, the Company entered into a Stock
Purchase Agreement ("Gorlin Agreement") with Mr. Steve Gorlin, a
Director of the Company, whereby the Company agreed to sell, and
Mr. Gorlin agreed to purchase, 200,000 shares of the Company's
Common Stock. The purchase price was $2.125 per share
representing the closing bid price of the Common Stock as quoted on
the NASDAQ on July 30, 1997. Pursuant to the terms of the Gorlin
Agreement, Mr. Gorlin agreed to pay the Company the aggregate
purchase price of $425,000 for the 200,000 shares of Common Stock.
In order to induce Mr. Gorlin to enter into the amendment to the
Gorlin Agreement, and to purchase the Common Stock on the terms and
subject to the conditions thereof, PESI agreed to issue a three (3)
year Warrant to Mr. Gorlin for the purchase of 100,000 shares of
Common Stock at $2.40 per share. Under the Gorlin Agreement, Mr.
Gorlin agreed to tender $425,000 during August, 1997, however,
pursuant to an amendment to the Gorlin Agreement, which was entered
into on October 7, 1997, the payment schedule was modified such
that Mr. Gorlin agreed to tender the $425,000 on or before November
30, 1997.
Item 3. Defaults Upon Senior Securities
_______________________________
Since the quarter ended September 30, 1997 and continuing through
the date of this report, the Company has not been in compliance with
certain financial covenants contained in the Company's loan agreement
with Heller Financial, Inc. ("Heller") relating to the Company's term
loan and revolving line of credit and the loan agreement with Ally
Capital Corporation ("Ally") relating to certain equipment financing.
Since September 30, 1997, the Company has been in default on the "Minimum
EBITDA", "Capital Expenditure Limit" and "Fixed Charge Coverage"
financial covenants contained in such loan agreements, principally a
result of the facility disruption and resulting net loss incurred by the
Perma-Fix of Memphis, Inc. ("PFM") facility due to an explosion and fire
in January 1997 and the additional capital spending in conjunction with
the equity raised during 1997. The Company is currently negotiating with
Heller and Ally for a waiver of such defaults, but there are no
assurances that the Company will receive such waivers. Neither Heller
nor Ally have accelerated payments of the loans as of the date of this
report as a result of such default, and Heller is continuing to make
advances to the Company under the revolving line of credit as of the date
of this report in accordance with the terms thereof. See Note 2 to Notes
to Consolidated Financial Statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations Liquidity and
Capital Resources of the Company."
-27-
Item 6. Exhibits and Reports on Form 8-K
________________________________
(a) Exhibits
________
3(i) Restated Certificate of Incorporation, as amended,
and all Certificates of Designations.
3(ii) Bylaws, as incorporated by reference to the
Company's Registration Statement, No. 33-51874.
4.1 Subscription and Purchase Agreement, dated June 9,
1997, between the Company and RBB Bank
Aktiengesellschaft is incorporated by reference
from Exhibit 4.1 to the Company's Form 8-K, dated
June 11, 1997.
4.2 Certificate of Designations of Series 4 Class D
Convertible Preferred Stock, dated June 9, 1997, is
incorporated by reference from Exhibit 4.2 to the
Company's Form 8-K, dated June 11, 1997.
4.3 Specimen copy of Certificate relating to the Series
4 Class D Convertible Preferred Stock is
incorporated by reference from Exhibit 4.3 to the
Company's Form 8-K, dated June 11, 1997.
4.4 Subscription and Purchase Agreement, dated July 7,
1997, between the Company and The Infinity Fund,
L.P. is incorporated by reference from Exhibit 4.1
to the Company's Form 8-K, dated July 7, 1997.
4.5 Certificate of Designations of Series 5 Class E
Convertible Preferred Stock, dated July 14, 1997,
is incorporated by reference from Exhibit 4.2 to
the Company's Form 8-K, dated July 7, 1997.
4.6 Specimen copy of Series 5 Class E Convertible
Preferred Stock certificate is incorporated by
reference from Exhibit 4.3 to the Company's Form 8-
K, dated July 7, 1997.
4.7 Certificate of Designations of Series 6 Class F
Convertible Preferred Stock, dated November 6,
1997, incorporated by reference from Exhibit 3 (i)
above.
4.8 Specimen copy of Series 6 Class F Convertible
Preferred Stock Certificate.
4.9 Certificate of Designations of Series 7 Class G
Convertible Preferred Stock, dated October 30,
1997, incorporated by reference from Exhibit 3 (i)
above.
4.10 Specimen copy of Series 7 Class G Convertible
Preferred Stock Certificate.
4.11 Exchange Agreement dated November 6, 1997, to be
considered effective as of September 16, 1997,
between the Company and RBB Bank.
4.12 Exchange Agreement dated as of October 31, 1997,
to be considered effective as of September 16,
1997, between the Company and the Infinity Fund,
L.P.
10.1 Common Stock Purchase Warrant ($2.10) dated June 9,
1997, between the Company and RBB Bank
Aktiengesellschaft is incorporated by reference
from Exhibit 4.4 to the Company's Form 8-K, dated
June 11, 1997.
-28-
<PAGE>
10.2 Common Stock Purchase Warrant ($2.50) dated June 9,
1997, between the Company and RBB Bank
Aktiengesellschaft is incorporated by reference
from Exhibit 4.5 to the Company's Form 8-K, dated
June 11, 1997.
10.3 Common Stock Purchase Warrant ($1.50) dated June 9,
1997, between the Company and J W Charles
Securities, Inc. is incorporated by reference from
Exhibit 4.6 to the Company's Form 8-K, dated
June 11, 1997.
10.4 Common Stock Purchase Warrant ($2.00) dated June 9,
1997, between the Company and J W Charles
Securities, Inc. is incorporated by reference from
Exhibit 4.7 to the company's Form 8-K, dated
June 11, 1997.
10.5 Stock Purchase Agreement, dated June 30, 1997,
between the Company and Dr. Louis F. Centofanti is
incorporated by reference from Exhibit 4.4 to the
Company's Form 8-K, dated July 7, 1997.
10.6 Amended Stock Purchase Agreement, dated October 7,
1997, between the Company and Dr. Louis F.
Centofanti.
10.7 Amended Stock Purchase Agreement, dated October 7,
1997, between the Company and Steve Gorlin.
10.8 Stock Purchase Agreement, dated July 31, 1997,
between the Company and Steve Gorlin.
10.9 Employment Agreement, dated October 1, 1997,
between the Company and Dr. Louis F. Centofanti.
27 Financial Data Schedule
(b) Reports on Form 8-K
___________________
A current report on Form 8-K (Item 5. Other Event) was
filed on July 25, 1997 reporting that on July 14, 1997,
the Company issued 350 shares of its newly created Series
5 Class E Preferred Stock at a price of $1,000 per share,
for an aggregate sales price of $350,000. It is also
reported that on June 30, 1997, the Company entered into
a Stock Purchase Agreement with Dr. Louis F. Centofanti
to purchase 24,381 shares of Common Stock at a purchase
price of $1.6406 per share, for an aggregate sales price
of $40,000.
-29-
<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: November 18, 1997 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
-30-
EXHIBIT INDEX
Page No.
________
Exhibit 3(i) Restated Certificate of Incorporation,
as amended, and all Certificates of
Designations......................... 33
Exhibit 3(ii) Bylaws, as incorporated by reference to
the Company's Registration Statement,
No. 33-51874........................... *
Exhibit 4.1 Subscription and Purchase Agreement,
dated June 9, 1997, between the
Company and RBB Bank Aktiengesellschaft
is incorporated by reference from
Exhibit 4.1 to the Company's Form 8-K,
dated June 11, 1997.................... *
Exhibit 4.2 Certificate of Designations of Series 4
Class D Convertible Preferred Stock,
dated June 9, 1997, is incorporated by
reference from Exhibit 4.2 to the
Company's Form 8-K, dated June 11, 1997.. *
Exhibit 4.3 Specimen copy of Certificate relating to
the Series 4 Class D Convertible
Preferred Stock is incorporated by reference
from Exhibit 4.3 to the Company's Form
8-K, dated June 11, 1997.................. *
Exhibit 4.4 Subscription and Purchase Agreement, dated
July 7, 1997, between the Company and The
Infinity Fund, L.P. is incorporated by reference
from Exhibit 4.1 to the Company's Form 8-K,
dated July 7, 1997......................... *
Exhibit 4.5 Certificate of Designations of Series 5 Class E
Convertible Preferred Stock, dated July 14, 1997,
is incorporated by reference from Exhibit 4.2 to
the Company's Form 8-K, dated July 7, 1997.... *
Exhibit 4.6 Specimen copy of Series 5 Class E Convertible
Preferred Stock certificate is incorporated by
reference from Exhibit 4.3 to the Company's Form
8-K dated July 7, 1997.......................... *
Exhibit 4.7 Certificate of Designations of Series 6 Class F
Convertible Preferred Stock, dated November 6,
1997, incorporated by reference from Exhibit 3(i)
herein.........................................
Exhibit 4.8 Specimen copy of Series 6 Class F Convertible
Preferred Stock Certificate . . . . . . . . . 142
Exhibit 4.9 Certificate of Designations of Series 7 Class G
Convertible Preferred Stock, dated October 30,
1997, incorporated by reference from
Exhibit 3 (i) herein..........................
Exhibit 4.10 Specimen copy of Series 7 Class G Convertible
Preferred Stock Certificate..................
Exhibit 4.11 Exchange Agreement dated November 6, 1997, to be
considered effective as of September 16, 1997,
between the Company and RBB Bank............... 144
Exhibit 4.12 Exchange Agreement dated as of October 31, 1997,
to be considered effective as of September 16,
1997, between the Company and the Infinity Fund,
L.P.............................................. 172
-31-
Exhibit 10.1 Common Stock Purchase Warrant ($2.10) dated June 9,
1997, between the Company and RBB Bank Atktiengellschaft
is incorporated by reference from Exhibit 4.4 to the
Company's Form 8-K, dated June 11, 1997........... *
Exhibit 10.2 Common Stock Purchase Warrant ($2.50) dated June 9,
1997, between the Company and RBB Bank Aktiengesellschaft
is incorporated by reference from Exhibit 4.5 to the
Company's Form 8-K, dated June 11, 1997............ *
Exhibit 10.3 Common Stock Purchase Warrant ($1.50) dated June 9, 1997,
between the Company and J W Charles Securities, Inc. is
incorporated by reference from Exhibit 4.6 to the
Company's Form 8-K, dated June 11, 1997.............. *
Exhibit 10.4 Common Stock Purchase Warrant ($2.00) dated June 9, 1997,
between the Company and J W Charles Securities, Inc. is
incorporated by reference from Exhibit 4.7 to the
Company's Form 8-K, dated June 11, 1997................ *
Exhibit 10.5 Stock Purchase Agreement, dated June 30, 1997, between
the Company and Dr. Louis F. Centofanti is incorporated
by reference from Exhibit 4.4 to the Company's Form 8-K,
dated June 7, 1997..................................... *
Exhibit 10.6 Amended Stock Purchase Agreement, dated October 7, 1997,
between the Company and Dr. Louis F. Centofanti......... 203
Exhibit 10.7 Amended Stock Purchase Agreement, dated October 7, 1997,
between the Company and Steve Gorlin.................... 209
Exhibit 10.8 Stock Purchase Agreement, dated July 31, 1997, between
the Company and Steve Gorlin........................... 216
Exhibit 10.9 Employment Agreement, dated October 1, 1997, between the
Company and Dr. Louis F. Centofanti..................... 223
Exhibit 27 Financial Data Schedule.................................. 240
*incorporated by reference
-32-
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.
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
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.
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.
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
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
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 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.
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
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
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
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
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
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
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
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.
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.
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
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
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.
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.
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, 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
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.
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.
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.
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
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.
<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 ELEVENTH DAY OF JUNE,
A.D. 1997, AT 11 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: 8505805
2249849 8100 Date: 06-11-97
971190682
<PAGE>
CERTIFICATE OF DESIGNATIONS
OF SERIES 4 CLASS D 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 4 Class D
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 4 Class
D Convertible Preferred Stock as set forth in the attached
resolutions.
Dated: June 9, 1997 PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
/s/ Louis F. Centofanti
By___________________________________
Dr. Louis F. Centofanti
Chairman of the Board
ATTEST:
/s/ Richard T. Kelecy
______________________________
Richard T. Kelecy, Secretary
<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 4 CLASS C CONVERTIBLE PREFERRED STOCK
WHEREAS, the Corporation's capital includes preferred stock,
par value $.001 per share ("Preferred Stock"), which Preferred
Stock may be issued in one or more series by resolutions adopted by
the directors, and with the directors 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 and privileges, restrictions and
conditions attaching to the shares of each such series;
WHEREAS, 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 4 Class D Convertible Preferred Stock, par
value $.001 per share ("Series 4 Class D Preferred Stock");
NOW, THEREFORE, BE IT RESOLVED, that the Series 4 Class D
Convertible Preferred Stock, par value $.001 (the "Series 4 Class
D Preferred Stock") of the Corporation shall consist of two
thousand five hundred (2,500) shares and no more and shall be
designated as the Series 4 Class D Convertible Preferred Stock, and
the preferences, rights, privileges, restrictions and conditions
attaching to the Series 4 Class D Preferred Stock shall be as
follows:
Part 1 - Voting and Preemptive Rights.
1.1 Voting Rights. Except as otherwise provided in Part 7 hereof
or under the General Corporation Law of the State of Delaware (the
"GCL"), the holders of the Series 4 Class D Preferred Stock shall
have no voting rights whatsoever. To the extent that under Part 7
hereof or the GCL the vote of the holders of the Series 4 Class D
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 4 Class D 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
4 Class D 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 or Part 7 hereof, the
holders of the Series 4 Class D Preferred Stock are entitled to
vote on a matter, each share of the Series 4 Class D Preferred
Stock shall be entitled one (1) vote for each outstanding share of
Series 4 Class D Preferred Stock. Holders of the Series 4 Class D
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 4 Class D 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 4 Class D Preferred Stock shall be
outstanding, the holders of the then outstanding Series 4 Class D
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 4 Class D 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 4 Class D 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 4 Class D Preferred Stock of the full
Liquidation Preference amounts provided for in this Part 2, the
holders of the Series 4 Class D Preferred Stock as such shall have
no right or claim to any of the remaining assets of the
Corporation.
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 4 Class D
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
4 Class D Preferred Stock upon such dissolution, liquidation or
winding up unless proportionate distributive amounts shall be paid
on account of the shares of this Series 4 Class D Preferred Stock
and shares of such other class or series ranking on a parity with
the shares of this Series 4 Class D 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 4 Class D 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"), or any combination thereof, at the
Corporation's election, at the rate of four percent (4%) per annum
of the Liquidation Value (as defined below) of each issued and
outstanding share of Series 4 Class D Preferred Stock (the
"Dividend Rate"). The Liquidation Value of the Series 4 Class D
Preferred Stock shall be $1,000 per outstanding share of the Series
4 Class D Preferred Stock (the "Liquidation Value"). 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,
1997 (each, a "Dividend Declaration Date"). Dividends shall be
paid only with respect to shares of Series 4 Class D Preferred
Stock actually issued and outstanding on a Dividend Declaration
Date and to holders of record of the Series 4 Class D Preferred
Stock 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
4 Class D Preferred Stock. In the event that the Corporation
elects to pay the accrued dividends due as of a Dividend
Declaration Date on an outstanding share of the Series 4 Class D
Preferred Stock in Common Stock of the Corporation, the holder of
such share shall receive that number of shares of Common Stock of
the Corporation equal to the product of (a) the quotient of (i) the
Dividend Rate divided by (ii) the average of the closing bid
quotation of the Corporation's Common Stock as reported on the
National Association of Securities Dealers Automated Quotation
system ("NASDAQ"), or the average 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"), times (b) a fraction, the numerator of which is
the number of days elapsed during the period for which the dividend
is to be paid, and the denominator of which is 365. Dividends on
the Series 4 Class D Preferred Stock shall be cumulative, and no
dividends or other distributions shall be paid or declared or set
aside for payment on the Corporation's Common Stock until all
accrued and unpaid dividends on all outstanding shares of Series 4
Class D Preferred Stock shall have been paid or declared and set
aside for payment.
Part 4 - Conversion. The holders of the Series 4 Class D Preferred
Stock shall have rights to convert the shares of Series 4 Class D
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 4 Class D Preferred Stock shall
be convertible into shares of Common Stock, as follows:
4.1.1 Up to one thousand two hundred fifty (1,250) shares
of Series 4 Class D 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 5, 1997; and,
4.1.2 Up to an additional one thousand two hundred fifty
(1,250) shares of Series 4 Class D Preferred Stock
may be converted at the Conversion Price at any
time on or after November 5, 1997.
4.2 Conversion Price. Subject to the terms hereof, as used
herein, the term Conversion Price per outstanding share of
Series 4 Class D Preferred Stock shall be the product of the
lesser 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 eighty percent (80%) or (ii) U.S. $1.6875.
Notwithstanding the foregoing, the Conversion Price shall not
be less than a minimum of $.75 per share ("Minimum Conversion
Price"), which Minimum Conversion Price shall be eliminated
from and after September 6, 1998. If any of the outstanding
shares of Series 4 Class D Preferred Stock are converted, in
whole or in part, 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 4 Class D 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 4 Class D 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 quotient
of the amount of such unpaid and accrued dividends to the date
of conversion on the shares of Series 4 Class D Preferred
Stock so converted divided by the Stock Dividend Price, as
defined in Section 3.1 hereof, in effect at the date of
conversion.
4.3 Mechanics of Conversion. Any holder of the Series 4 Class D
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 4 Class D
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 4
Class D Preferred Stock can be given prior to the time such
shares of Series 4 Class D Preferred Stock are eligible for
conversion in accordance with the provision of Section 4.1
above, except as provided in Section 4.4. 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 4
Class D 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 4 Class D 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 4 Class D 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 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 seven (7) 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 ("Seven (7) Business
Day Period"), then, upon the written demand of RBB Bank
Aktiengesellschaft ("RBB Bank"), the holder of the Series 4
Class D Preferred Stock, for payment of the penalty described
below in this Section 4.3, which demand must be received by
the Corporation no later than ten (10) calendar days after the
expiration of such Seven (7) Business Day Period, the
Corporation shall pay to RBB Bank the following penalty for
each business day after the Seven (7) Business Day Period
until the Corporation delivers 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:
business day eight (8) - U.S. $1,000; business day nine (9) -
U.S. $2,000, and each business day thereafter an amount equal
to the penalty due on the immediately preceding business day
times two (2) until the Corporation delivers 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.
4.4 Merger or Consolidation. In case of either (a) any merger or
consolidation to which the Corporation is a party
(collectively, the "Merger"), other than a Merger in which the
Corporation is the surviving or continuing corporation, or (b)
any sale or conveyance to another corporation of all, or
substantially all, of the assets of the Corporation
(collectively, the "Sale"), and such Merger or Sale becomes
effective (x) while any shares of Series 4 Class D Preferred
Stock are outstanding and prior to the date that the
Corporation's Registration Statement covering up to 1,482,000
shares of Common Stock issuable upon the conversion of the
Series 4 Class D Preferred Stock is declared effective by the
U. S. Securities and Exchange Commission or (y) prior to the
end of the restriction periods in Section 4.1, then, in such
event, the Corporation or such successor corporation, as the
case may be, shall make appropriate provision so that the
holder of each share of Series 4 Class D Preferred Stock then
outstanding shall have the right to convert such share of
Series 4 Class D Preferred Stock into the kind and amount of
shares of stock or other securities and property receivable
upon such Merger or Sale by a holder of the number of shares
of Common Stock into which such shares of Series 4 Class D
Preferred Stock could have been converted into immediately
prior to such Merger or Sale, subject to adjustments which
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Part 4.
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 4 Class D 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.
4.5. Adjustments for Reclassification and Reorganization. If the
Common Stock issuable upon conversion of the Series 4 Class D
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 4 Class D Preferred Stock shall be
convertible into, in lieu of the number of shares of Common
Stock which the holders of Series 4 Class D 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 4 Class D Preferred Stock immediately before that
change.
4.6 Common Stock Duly Issued. All Common Stock which may be
issued upon conversion of Series 4 Class D 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 4 Class D 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
4 Class D 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 4 Class D 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 4 Class D 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 4 Class D 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 4 Class D 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 shares shall be issued upon
the conversion of any share or shares of Series 4 Class D
Preferred Stock. All shares of Common Stock (including
fractions thereof) issuable upon conversion of more than one
share of Series 4 Class D 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.
4.11 Notices. Any notices required by the provisions of this Part
4 to be given to the holders of shares of Series 4 Class D
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 is permitted to close.
Part 5 - Redemption.
5.1 Redemption at Corporation's Option. Except as otherwise
provided in this Section 5.1, at any time, and from time to
time, after the expiration of one (1) year from the date of
the first issuance of the Series 4 Class D Preferred Stock,
the Corporation may, at its sole option, but shall not be
obligated to, redeem, in whole or in part, at any time, and
from time to time, the then outstanding Series 4 Class D
Preferred Stock at the following cash redemption prices per
share (the "Redemption Price") if redeemed during the
following periods: (a) within four (4) years from the date of
the first issuance of Series 4 Class D Preferred Stock -
$1,300 per share, if at any time during such four (4) year
period the average of the closing bid price of the Common
Stock for ten (10) consecutive trading days shall be in excess
of Four U.S. Dollars ($4.00) per share, and (b) after four (4)
years from the date of the first issuance of Series 4 Class D
Preferred Stock - $1,000 per share.
5.3 Mechanics of Redemption. Thirty (30) days prior to any date
stipulated by the Corporation for the redemption of Series 4
Class D 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 4 Class D
Preferred Stock. The Redemption Notice shall state: (i) the
Redemption Date of such shares, (ii) the number of Series 4
Class D 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 4 Class D Preferred Stock to
be redeemed from such holder, and (iv) instructions as to how
to specify to the Corporation the number of Series 4 Class D
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 4 Class D Preferred Stock, the number of shares
to be converted into Common Stock as provided in Part 4
hereof.
5.4 Rights of Conversion Upon Redemption. If the redemption
occurs after the first one hundred eighty (180) days after the
first issuance of Series 4 Class D Preferred Stock, then, upon
receipt of the Redemption Notice, any holder of Series 4 Class
D Preferred Stock shall have the option, at its sole election,
to specify what portion of its Series 4 Class D 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 4 Class D 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 4 Class D 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 5.6 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
4 Class D 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 4
Class D 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 4 Class D Preferred Stock in respect of which
the Corporation has received notice from the holder thereof of
its election to convert Series 4 Class D 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 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 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 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 6 - Parity with Other Shares of Series 4 Class D Preferred
Stock and Priority.
6.1 Rateable Participation. If any cumulative dividends or return
of capital in respect of Series 4 Class D 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 4
Class D 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 4 Class D Preferred
Stock;
6.2.2 On a parity with, or equal to, shares of this
Series 4 Class D 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 4 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 4 Class D
Preferred Stock; and,
6.2.3 Junior to shares of this Series 4 Class D
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 4 Class D 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.
Part 7 - Amendment and Reissue.
7.1 Amendment. If any proposed amendment to the
Corporation's Certificate of Incorporation (the
"Articles") would alter or change the powers, preferences
or special rights of the Series 4 Class D Preferred Stock
so as to affect such adversely, then the Corporation must
obtain the affirmative vote of such amendment to the
Articles at a duly called and held series meeting of the
holders of the Series 4 Class D Preferred Stock or
written consent by the holders of a majority of the
Series 4 Class D Preferred Stock then outstanding.
Notwithstanding the above or the provisions of the GCL,
the number of authorized shares of any class or classes
of stock of the Corporation 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 the
provisions of this Section 7.1 or Section 242 of the GCL.
7.2 Authorized. Any shares of Series 4 Class D 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.
<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 FOURTEENTH DAY OF JULY,
A.D. 1997, AT 11:15 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: 8556371
2249849 8100 Date: 07-14-97
971232152
<PAGE>
CERTIFICATE OF DESIGNATIONS
OF SERIES 5 CLASS E 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 5 Class E
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 5 Class
E Convertible Preferred Stock as set forth in the attached
resolutions.
Dated: July 3, 1997 PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By /s/ Louis Centofanti
_________________________________
Dr. Louis F. Centofanti
Chairman of the Board
ATTEST:
/s/ Richard T. Kelecy
______________________________
Richard T. Kelecy, Secretary
<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 5 CLASS E CONVERTIBLE PREFERRED STOCK
WHEREAS, the Corporation's capital includes preferred stock,
par value $.001 per share ("Preferred Stock"), which Preferred
Stock may be issued in one or more series by resolutions adopted by
the directors, and with the directors 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 and privileges, and
qualifications, limitations or restrictions attaching to the shares
of each such series;
WHEREAS, 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 5 Class E Convertible Preferred Stock, par
value $.001 per share ("Series 5 Class E Preferred Stock");
NOW, THEREFORE, BE IT RESOLVED, that the Series 5 Class E
Convertible Preferred Stock, par value $.001 (the "Series 5 Class
E Preferred Stock") of the Corporation shall consist of three
hundred fifty (350) shares and no more and shall be designated as
the Series 5 Class E Convertible Preferred Stock, and the
preferences, rights, privileges, restrictions and conditions
attaching to the Series 5 Class E Preferred Stock shall be as
follows:
Part 1 - Voting and Preemptive Rights.
1.1 Voting Rights. Except as otherwise provided in Section
242(b)(2) of the General Corporation Law of the State of Delaware
(the "GCL"), the holders of the Series 5 Class E Preferred Stock
shall have no voting rights whatsoever. To the extent that under
Section 242(b)(2) of the GCL the vote of the holders of the Series
5 Class E 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 5 Class E 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
5 Class E 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 Section 242(b)(2) of the GCL the
holders of the Series 5 Class E Preferred Stock are entitled to
vote on a matter, each share of the Series 5 Class E Preferred
Stock shall be entitled one (1) vote for each outstanding share of
Series 5 Class E Preferred Stock. Holders of the Series 5 Class E
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. If the
holders of the Series 5 Class E Preferred Stock are required to
vote under Section 242(b)(2) of the GCL as a result of the number
of authorized shares of any such class or classes of stock being
increased or decreased, the number of authorized shares of any of
such class or classes of stock may be increased or decreased (but
not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the stock of the
Corporation entitled to vote thereon, irrespective of the
provisions of Section 242(b)(2) of the GCL.
1.2 No Preemptive Rights. The Series 5 Class E 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 5 Class E Preferred Stock shall be
outstanding, the holders of the then outstanding Series 5 Class E
Preferred Stock shall be entitled to receive out of the assets of
the Corporation available for distribution to shareholders an
amount equal to $1,000 consideration per outstanding share of
Series 5 Class E Preferred Stock, and no more, 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 of Directors, before any payment shall be
made or any assets distributed to the holders of the Corporation's
Common Stock.
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 5 Class E 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 5 Class E Preferred Stock of the full
Liquidation Preference amounts provided for in this Part 2, the
holders of the Series 5 Class E Preferred Stock as such shall have
no right or claim to any of the remaining assets of the
Corporation.
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 5 Class E
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
5 Class E Preferred Stock upon such dissolution, liquidation or
winding up unless proportionate distributive amounts shall be paid
on account of the shares of this Series 5 Class E Preferred Stock
and shares of such other class or series ranking on a parity with
the shares of this Series 5 Class E 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 5 Class E Preferred Stock are
entitled to receive if, when and as declared by the Board of
Directors of the Corporation (the "Board") out of funds legally
available therefor, cumulative annual dividends, payable in cash or
Common Stock of the Corporation, par value $.001 per share (the
"Common Stock"), or any combination thereof, at the Corporation's
election, at the rate of four percent (4%) per annum of the
Liquidation Value (as defined below) of each issued and outstanding
share of Series 5 Class E Preferred Stock (the "Dividend Rate").
The Liquidation Value of the Series 5 Class E Preferred Stock shall
be $1,000 per outstanding share of the Series 5 Class E Preferred
Stock (the "Liquidation Value"). 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, 1997 (each, a
"Dividend Declaration Date"). Dividends shall be paid only with
respect to shares of Series 5 Class E Preferred Stock actually
issued and outstanding on a Dividend Declaration Date and to
holders of record of the Series 5 Class E Preferred Stock 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 5 Class
E Preferred Stock. In the event that the Corporation elects to pay
the accrued dividends due as of a Dividend Declaration Date on an
outstanding share of the Series 5 Class E Preferred Stock in Common
Stock of the Corporation, the holder of such share shall receive
that number of shares of Common Stock of the Corporation equal to
the product of (a) the quotient of (i) the Dividend Rate divided by
(ii) the average of the closing bid quotation of the Corporation's
Common Stock as reported on the National Association of Securities
Dealers Automated Quotation system ("NASDAQ"), or the average
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"), times (b) a
fraction, the numerator of which is the number of days elapsed
during the period for which the dividend is to be paid, and the
denominator of which is 365. Dividends on the Series 5 Class E
Preferred Stock shall be cumulative, and no dividends or other
distributions shall be paid or declared or set aside for payment on
the Corporation's Common Stock until all accrued and unpaid
dividends on all outstanding shares of Series 5 Class E Preferred
Stock shall have been paid or declared and set aside for payment.
Part 4 - Conversion. The holders of the Series 5 Class E Preferred
Stock shall have rights to convert the shares of Series 5 Class E
Preferred Stock into shares of the Corporation's Common Stock, as
follows (the "Conversion Rights"):
4.1 Right to Convert. The Series 5 Class E Preferred Stock shall
be convertible into shares of Common Stock, as follows:
4.1.1 Up to one hundred seventy-five (175) shares of
Series 5 Class E 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 November
3, 1997; and,
4.1.2 Up to an additional one hundred seventy-five (175)
shares of Series 5 Class E Preferred Stock may be
converted at the Conversion Price at any time on or
after December 3, 1997.
4.2 Conversion Price. Subject to the terms hereof, as used
herein, the term Conversion Price per outstanding share of
Series 5 Class E Preferred Stock shall be the product of the
lesser 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 eighty percent (80%) or (ii) U.S. $1.6875.
Notwithstanding the foregoing, the Conversion Price shall not
be less than a minimum of $.75 per share ("Minimum Conversion
Price"), which Minimum Conversion Price shall be eliminated
from and after September 6, 1998. If any of the outstanding
shares of Series 5 Class E Preferred Stock are converted, in
whole or in part, 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 5 Class E 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 5 Class E 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 quotient
of the amount of such unpaid and accrued dividends to the date
of conversion on the shares of Series 5 Class E Preferred
Stock so converted divided by the Stock Dividend Price, as
defined in Section 3.1 hereof, in effect at the date of
conversion.
4.3 Mechanics of Conversion. Any holder of the Series 5 Class E
Preferred Stock who wishes to exercise its Conversion Rights
pursuant to Section 4.1 of this Part 4 must 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"). No
Conversion Notice with respect to any shares of Series 5 Class
E Preferred Stock can be given prior to the time such shares
of Series 5 Class E Preferred Stock are eligible for
conversion in accordance with the provision of Section 4.1
above, except as provided in Section 4.4. Any such premature
Conversion Notice shall automatically be null and void. The
Corporation shall, within seven (7) business days after
receipt of an appropriate and timely Conversion Notice (and
certificate, if necessary), issue to such holder of Series 5
Class E 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 5 Class E 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 5 Class E Preferred Stock to be converted
have been surrendered and the Conversion Notice is received by
the Corporation (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 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.
4.4 Merger or Consolidation. In case of either (a) any merger or
consolidation to which the Corporation is a party
(collectively, the "Merger"), other than a Merger in which the
Corporation is the surviving or continuing corporation, or (b)
any sale or conveyance to another corporation of all, or
substantially all, of the assets of the Corporation
(collectively, the "Sale"), and such Merger or Sale becomes
effective (x) while any shares of Series 5 Class E Preferred
Stock are outstanding and prior to the date that the
Corporation's Registration Statement covering up to 200,000
shares of Common Stock issuable upon the conversion of the
Series 5 Class E Preferred Stock is declared effective by the
U. S. Securities and Exchange Commission or (y) prior to the
end of the restriction periods in Section 4.1, then, in such
event, the Corporation or such successor corporation, as the
case may be, shall make appropriate provision so that the
holder of each share of Series 5 Class E Preferred Stock then
outstanding shall have the right to convert such share of
Series 5 Class E Preferred Stock into the kind and amount of
shares of stock or other securities and property receivable
upon such Merger or Sale by a holder of the number of shares
of Common Stock into which such shares of Series 5 Class E
Preferred Stock could have been converted into immediately
prior to such Merger or Sale, subject to adjustments which
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Part 4.
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 5 Class E 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.
4.5. Adjustments for Reclassification and Reorganization. If the
Common Stock issuable upon conversion of the Series 5 Class E
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 5 Class E Preferred Stock shall be
convertible into, in lieu of the number of shares of Common
Stock which the holders of Series 5 Class E 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 5 Class E Preferred Stock immediately before that
change.
4.6 Common Stock Duly Issued. All Common Stock which may be
issued upon conversion of Series 5 Class E 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 5 Class E 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
5 Class E 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 5 Class E 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 5 Class E 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 5 Class E 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 5 Class E 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 shares shall be issued upon
the conversion of any share or shares of Series 5 Class E
Preferred Stock. All shares of Common Stock (including
fractions thereof) issuable upon conversion of more than one
share of Series 5 Class E 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.
4.11 Notices. Any notices required by the provisions of this Part
4 to be given to the holders of shares of Series 5 Class E
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 is permitted to close.
Part 5 - Redemption.
5.1 Redemption at Corporation's Option. Except as otherwise
provided in this Section 5.1, at any time, and from time to
time, after the expiration of one (1) year from the date of
the first issuance of the Series 5 Class E Preferred Stock,
the Corporation may, at its sole option, but shall not be
obligated to, redeem, in whole or in part, at any time, and
from time to time, the then outstanding Series 5 Class E
Preferred Stock at the following cash redemption prices per
share (the "Redemption Price") if redeemed during the
following periods: (a) within four (4) years from the date of
the first issuance of Series 5 Class E Preferred Stock -
$1,300 per share, if at any time during such four (4) year
period the average of the closing bid price of the Common
Stock for ten (10) consecutive trading days shall be in excess
of Four U.S. Dollars ($4.00) per share, and (b) after four (4)
years from the date of the first issuance of Series 5 Class E
Preferred Stock - $1,000 per share.
5.3 Mechanics of Redemption. Thirty (30) days prior to any date
stipulated by the Corporation for the redemption of Series 5
Class E 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 5 Class E
Preferred Stock. The Redemption Notice shall state: (i) the
Redemption Date of such shares, (ii) the number of Series 5
Class E 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 5 Class E Preferred Stock to
be redeemed from such holder, and (iv) instructions as to how
to specify to the Corporation the number of Series 5 Class E
Preferred Stock to be redeemed as provided in this Part 5.
5.4 Rights of Conversion Upon Redemption. If the redemption
occurs after the first one hundred eighty (180) days after the
first issuance of Series 5 Class E Preferred Stock, then, upon
receipt of the Redemption Notice, any holder of Series 5 Class
E Preferred Stock shall have the option, at its sole election,
to specify what portion of its Series 5 Class E 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.
5.5 Surrender of Certificates. On or before the Redemption Date
in respect of any Series 5 Class E 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 5.6 hereof, to the order of the person whose name
appears on such certificate or certificates as the owner
thereof. 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 5 Class E
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 5
Class E 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 5 Class E Preferred Stock in respect of which
the Corporation has received notice from the holder thereof of
its election to convert Series 5 Class E 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 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 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 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 6 - Parity with Other Shares of Series 5 Class E Preferred
Stock and Priority.
6.1 Rateable Participation. If any cumulative dividends or return
of capital in respect of Series 5 Class E 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 5
Class E 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 5 Class E Preferred
Stock;
6.2.2 On a parity with, or equal to, shares of this
Series 5 Class E 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 5 Class E 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 5 Class E
Preferred Stock; and,
6.2.3 Junior to shares of this Series 5 Class E
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 5 Class E 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.
Part 7 - Reissue.
7.1 Authorized. Any shares of Series 5 Class E 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.
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 THIRTEENTH DAY OF
NOVEMBER, A.D. 1997, AT 1:30 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: 8755483
2249849 8100 Date: 11-13-97
971387107
<PAGE>
CERTIFICATE OF DESIGNATIONS
OF SERIES 6 CLASS F 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 6 Class F
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 6 Class
F Convertible Preferred Stock as set forth in the attached
resolutions.
Dated: November 12, 1997
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By /s/ Louis Centofanti
______________________________
Dr. Louis F. Centofanti
Chairman of the Board
ATTEST:
/s/ Richard T. Kelecy
______________________________
Richard T. Kelecy, Secretary
<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 6 CLASS F CONVERTIBLE PREFERRED STOCK
WHEREAS, the Corporation's capital includes preferred stock,
par value $.001 per share ("Preferred Stock"), which Preferred
Stock may be issued in one or more series by resolutions adopted by
the directors, and with the directors 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 and privileges, restrictions and
conditions attaching to the shares of each such series;
WHEREAS, 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 6 Class F Convertible Preferred Stock, par
value $.001 per share (the "Series 6 Class F Preferred Stock");
NOW, THEREFORE, BE IT RESOLVED, that the Series 6 Class F
Preferred Stock shall consist of two thousand five hundred (2,500)
shares and no more and shall be designated as the Series 6 Class F
Convertible Preferred Stock, and the preferences, rights,
privileges, restrictions and conditions attaching to the Series 6
Class F Preferred Stock shall be as follows:
Part 1 - Voting and Preemptive Rights.
1.1 Voting Rights. Except as otherwise provided in Part
7 hereof or under the General Corporation Law of the
State of Delaware (the "GCL"), the holders of the Series
6 Class F Preferred Stock shall have no voting rights
whatsoever. To the extent that under Part 7 hereof or
the GCL the vote of the holders of the Series 6 Class F
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 6 Class F 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 6 Class F
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
or Part 7 hereof, the holders of the Series 6 Class F
Preferred Stock are entitled to vote on a matter, each
share of the Series 6 Class F Preferred Stock shall be
entitled one (1) vote for each outstanding share of
Series 6 Class F Preferred Stock. Holders of the Series
6 Class F 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 6 Class F
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 6
Class F Preferred Stock shall be outstanding, the holders
of the then outstanding Series 6 Class F 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 6 Class F
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 6 Class
F 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 6 Class F Preferred
Stock of the full Liquidation Preference amounts provided
for in this Part 2, the holders of the Series 6 Class F
Preferred Stock as such shall have no right or claim to
any of the remaining assets of the Corporation.
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 6 Class F 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 6 Class F
Preferred Stock upon such dissolution, liquidation or
winding up unless proportionate distributive amounts
shall be paid on account of the shares of this Series 6
Class F Preferred Stock and shares of such other class or
series ranking on a parity with the shares of this Series
6 Class F 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. The holders of the Series 6 Class F
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"), or any combination thereof, at the
Corporation's election, at the rate of four percent (4%)
per annum of the Liquidation Value (as defined below) of
each issued and outstanding share of Series 6 Class F
Preferred Stock (the "Dividend Rate"). The Liquidation
Value of the Series 6 Class F Preferred Stock shall be
$1,000 per outstanding share of the Series 6 Class F
Preferred Stock (the "Liquidation Value"). 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, 1997 (each, a "Dividend
Declaration Date"). Dividends shall be paid only with
respect to shares of Series 6 Class F Preferred Stock
actually issued and outstanding on a Dividend Declaration
Date and to holders of record of the Series 6 Class F
Preferred Stock 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 September 16, 1997. In the event
that the Corporation elects to pay the accrued dividends
due as of a Dividend Declaration Date on an outstanding
share of the Series 6 Class F Preferred Stock in Common
Stock of the Corporation, the holder of such share shall
receive that number of shares of Common Stock of the
Corporation equal to the product of (a) the quotient of
(i) the Dividend Rate divided by (ii) the average of the
closing bid quotation of the Corporation's Common Stock
as reported on the National Association of Securities
Dealers Automated Quotation system ("NASDAQ"), or the
average 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"), times (b) a fraction, the
numerator of which is the number of days elapsed during
the period for which the dividend is to be paid, and the
denominator of which is 365. Dividends on the Series 6
Class F Preferred Stock shall be cumulative, and no
dividends or other distributions shall be paid or
declared or set aside for payment on the Corporation's
Common Stock until all accrued and unpaid dividends on
all outstanding shares of Series 6 Class F Preferred
Stock shall have been paid or declared and set aside for
payment.
Part 4 - Conversion. The holders of the Series 6 Class
F Preferred Stock shall have rights to convert the shares
of Series 6 Class F 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 6 Class F Preferred
Stock shall be convertible into shares of Common Stock,
as follows:
4.1.1 Up to one thousand two hundred fifty (1,250)
shares of Series 6 Class F 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 5, 1997; and,
4.1.2 Up to an additional one thousand two hundred
fifty (1,250) shares of Series 6 Class F
Preferred Stock may be converted at the
Conversion Price at any time on or after
November 5, 1997.
4.2 Conversion Price. Subject to the terms hereof, as
used herein, the Conversion Price per outstanding share
of Series 6 Class F Preferred Stock shall be $1.8125,
except that, in the event the average closing bid price
per share of the Common Stock for 20 of any 30
consecutive trading days after March 1, 1998 shall be
less than $2.50 as reported on the over-the-counter
market, or the closing sale price if listed on a national
securities exchange, the Conversion Price shall
thereafter be the product of the lesser 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 trading days immediately preceding the date
of the Conversion Notice referred to in Section 4.3 below
multiplied by eighty percent (80%) or (ii) $1.8125.
Notwithstanding the foregoing, the Conversion Price shall
not be less than a minimum of $.75 per share ("Minimum
Conversion Price"), which Minimum Conversion Price shall
be eliminated from and after September 6, 1998. If any
of the outstanding shares of Series 6 Class F Preferred
Stock are converted, in whole or in part, 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 6 Class F Preferred Stock so surrendered for
conversion by (b) the Conversion Price as of such
conversion. At the time of conversion of shares of the
Series 6 Class F 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 whole shares of Common
Stock which is equal to the quotient of the amount of
such unpaid and accrued dividends to the date of
conversion on the shares of Series 6 Class F Preferred
Stock so converted divided by the Stock Dividend Price,
as defined in Part 3 hereof, in effect at the date of
conversion.
4.3 Mechanics of Conversion. Any holder of the Series
6 Class F 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 6 Class
F 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 6 Class F Preferred Stock can be
given prior to the time such shares of Series 6 Class F
Preferred Stock are eligible for conversion in accordance
with the provision of Section 4.1 above, except as
provided in Section 4.4. 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 6 Class F 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 6 Class F
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 6 Class F 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
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 seven (7) 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 ("Seven (7)
Business Day Period"), then, upon the written demand of
RBB Bank Aktiengesellschaft ("RBB Bank"), the holder of
the Series 6 Class F Preferred Stock, for payment of the
penalty described below in this Section 4.3, which demand
must be received by the Corporation no later than ten
(10) calendar days after the expiration of such Seven (7)
Business Day Period, the Corporation shall pay to RBB
Bank the following penalty for each business day after
the Seven (7) Business Day Period until the Corporation
delivers 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:
business day eight (8) - U.S. $1,000; business day nine
(9) - U.S. $2,000, and each business day thereafter an
amount equal to the penalty due on the immediately
preceding business day times two (2) until the
Corporation delivers 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.
4.4 Merger or Consolidation. In case of either (a) any
merger or consolidation to which the Corporation is a
party (collectively, the "Merger"), other than a Merger
in which the Corporation is the surviving or continuing
corporation, or (b) any sale or conveyance to another
corporation of all, or substantially all, of the assets
of the Corporation (collectively, the "Sale"), and such
Merger or Sale becomes effective (x) while any shares of
Series 6 Class F Preferred Stock are outstanding and
prior to the date that the Corporation's Registration
Statement covering up to 1,379,500 shares of Common Stock
issuable upon the conversion of the Series 6 Class F
Preferred Stock is declared effective by the U. S.
Securities and Exchange Commission or (y) prior to the
end of the restriction periods in Section 4.1, then, in
such event, the Corporation or such successor
corporation, as the case may be, shall make appropriate
provision so that the holder of each share of Series 6
Class F Preferred Stock then outstanding shall have the
right to convert such share of Series 6 Class F Preferred
Stock into the kind and amount of shares of stock or
other securities and property receivable upon such Merger
or Sale by a holder of the number of shares of Common
Stock into which such shares of Series 6 Class F
Preferred Stock could have been converted into
immediately prior to such Merger or Sale, subject to
adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Part
4.
4.5 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 6 Class F 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.
4.6 Adjustments for Reclassification and Reorganization.
If the Common Stock issuable upon conversion of the
Series 6 Class F 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 shall,
concurrently with the effectiveness of such
reorganization or reclassification, be proportionately
adjusted so that the Series 6 Class F Preferred Stock
shall be convertible into, in lieu of the number of
shares of Common Stock which the holders of Series 6
Class F 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 6
Class F Preferred Stock immediately before that change.
4.7 Common Stock Duly Issued. All Common Stock which
may be issued upon conversion of Series 6 Class F
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.
4.8 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
6 Class F Preferred Stock a notice setting forth such
adjustment or readjustment and showing in detail the
facts upon which such adjustment is based.
4.9 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 6 Class F 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 6 Class F Preferred Stock in connection with such
conversion.
4.10 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 6 Class F 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 6 Class F 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 6 Class F 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.
4.11 Fractional Shares. No fractional shares shall be
issued upon the conversion of any share or shares of
Series 6 Class F Preferred Stock. All shares of Common
Stock (including fractions thereof) issuable upon
conversion of more than one share of Series 6 Class F
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.
4.12 Notices. Any notices required by the provisions of
this Part 4 to be given to the holders of shares of
Series 6 Class F 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.
4.13 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 is permitted to close.
Part 5 - Redemption.
5.1 Redemption at Corporation's Option. Except as
otherwise provided in this Section 5.1, at any time, and
from time to time, after the expiration of one (1) year
from June 9, 1997, the Corporation may, at its sole
option, but shall not be obligated to, redeem, in whole
or in part, at any time, and from time to time, the then
outstanding Series 6 Class F Preferred Stock at the
following cash redemption prices per share (the
"Redemption Price") if redeemed during the following
periods: (a) within four years from June 9, 1997 - $1,300
per share, if at any time during such four year period
the average of the closing bid price of the Common Stock
for ten consecutive trading days shall be in excess of
Four Dollars ($4.00) per share, and (b) after four years
from June 9, 1997 - $1,000 per share.
5.2 Mechanics of Redemption. Thirty days prior to any
date stipulated by the Corporation for the redemption of
Series 6 Class F 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 6 Class F Preferred Stock. The Redemption Notice
shall state: (i) the Redemption Date of such shares, (ii)
the number of Series 6 Class F 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 6 Class F Preferred Stock to be
redeemed from such holder, and (iv) instructions as to
how to specify to the Corporation the number of Series 6
Class F Preferred Stock to be redeemed as provided in
this Part 5 and, if the Redemption Notice is mailed to
the Holder after the first 180 days from the date of
issuance of the Series 6 Class F Preferred Stock, the
number of shares to be converted into Common Stock as
provided in Part 4 hereof.
5.3 Rights of Conversion Upon Redemption. If the
redemption occurs after the first 180 days after the
first issuance of Series 6 Class F Preferred Stock, then,
upon receipt of the Redemption Notice, any holder of
Series 6 Class F Preferred Stock shall have the option,
at its sole election, to specify what portion of its
Series 6 Class F 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 6 Class F Preferred Stock called for
redemption in the Redemption Notice.
5.4 Surrender of Certificates. On or before the
Redemption Date in respect of any Series 6 Class F
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 5.6 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 6 Class F 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.
5.5 Payment. On the Redemption Date in respect of any
Series 6 Class F Preferred Stock or prior thereto, the
Corporation shall deposit with any bank or trust company
having a capital and surplus of at least $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 6 Class F
Preferred Stock in respect of which the Corporation has
received notice from the holder thereof of its election
to convert Series 6 Class F 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 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 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
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 6 - Parity with Other Shares of Series 6 Class F
Preferred Stock and Priority.
6.1 Rateable Participation. If any cumulative dividends
or return of capital in respect of Series 6 Class F
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 6 Class F 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 6 Class F Preferred
Stock;
6.2.2 On a parity with, or equal to, shares of
this Series 6 Class F 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 6
Class F 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 6
Class F Preferred Stock; and,
6.2.3 Junior to shares of this Series 6 Class F
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 6 Class
F 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 (the
"Articles") would alter or change the powers, preferences
or special rights of the Series 6 Class F Preferred Stock
so as to affect such adversely, then the Corporation must
obtain the affirmative vote of such amendment to the
Articles at a duly called and held series meeting of the
holders of the Series 6 Class F Preferred Stock or
written consent by the holders of a majority of the
Series 6 Class F Preferred Stock then outstanding.
Notwithstanding the above or the provisions of the GCL,
the number of authorized shares of any class or classes
of stock of the Corporation 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 the
provisions of this Section 7.1 or Section 242 of the GCL.
7.2 Authorized. Any shares of Series 6 Class F
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.
<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 THIRTEENTH DAY OF
NOVEMBER, A.D. 1997, AT 1:31 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: 8755553
2249849 8100 Date: 11-13-97
971387113
<PAGE>
CERTIFICATE OF DESIGNATIONS
OF SERIES 7 CLASS G 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 7 Class G
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 7 Class
G Convertible Preferred Stock as set forth in the attached
resolutions.
Dated: November 12, 1997
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
<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 7 CLASS G CONVERTIBLE PREFERRED STOCK
WHEREAS, the Corporation's capital includes preferred stock,
par value $.001 per share ("Preferred Stock"), which Preferred
Stock may be issued in one or more series by resolutions adopted by
the directors, and with the directors 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 and privileges, restrictions and
conditions attaching to the shares of each such series;
WHEREAS, 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 7 Class G Convertible Preferred Stock, par
value $.001 per share (the "Series 7 Class G Preferred Stock");
NOW, THEREFORE, BE IT RESOLVED, that the Series 7 Class G
Preferred Stock shall consist of three hundred (350) shares and no
more and shall be designated as the Series 7 Class G Convertible
Preferred Stock, and the preferences, rights, privileges,
restrictions and conditions attaching to the Series 7 Class G
Preferred Stock shall be as follows:
Part 1 - Voting and Preemptive Rights.
1.1 Voting Rights. Except as otherwise provided in Section
242(b)(2) of the General Corporation Law of the State of Delaware
(the "GCL"), the holders of the Series 7 Class G Preferred Stock
shall have no voting rights whatsoever. To the extent that under
Section 242(b)(2) of the GCL the vote of the holders of the Series
7 Class G 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 7 Class G 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
7 Class G 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 Section 242(b)(2) of the GCL the
holders of the Series 7 Class G Preferred Stock are entitled to
vote on a matter, each share of the Series 7 Class G Preferred
Stock shall be entitled one (1) vote for each outstanding share of
Series 7 Class G Preferred Stock. Holders of the Series 7 Class G
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. If the
holders of the Series 7 Class G Preferred Stock are required to
vote under Section 242(b)(2) of the GCL as a result of the number
of authorized shares of any such class or classes of stock being
increased or decreased, the number of authorized shares of any of
such class or classes of stock may be increased or decreased (but
not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the stock of the
Corporation entitled to vote thereon, irrespective of the
provisions of Section 242(b)(2) of the GCL.
1.2 No Preemptive Rights. The Series 7 Class G 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 7 Class G Preferred Stock shall be
outstanding, the holders of the then outstanding Series 7 Class G
Preferred Stock shall be entitled to receive out of the assets of
the Corporation available for distribution to shareholders an
amount equal to $1,000 consideration per outstanding share of
Series 7 Class G Preferred Stock, and no more, 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 of Directors, before any payment shall be
made or any assets distributed to the holders of the Corporation's
Common Stock.
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 7 Class G 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 7 Class G Preferred Stock of the full
Liquidation Preference amounts provided for in this Part 2, the
holders of the Series 7 Class G Preferred Stock as such shall have
no right or claim to any of the remaining assets of the
Corporation.
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 7 Class G
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
7 Class G Preferred Stock upon such dissolution, liquidation or
winding up unless proportionate distributive amounts shall be paid
on account of the shares of this Series 7 Class G Preferred Stock
and shares of such other class or series ranking on a parity with
the shares of this Series 7 Class G 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 7 Class G Preferred Stock are
entitled to receive if, when and as declared by the Board of
Directors of the Corporation (the "Board") out of funds legally
available therefor, cumulative annual dividends, payable in cash or
Common Stock of the Corporation, par value $.001 per share (the
"Common Stock"), or any combination thereof, at the Corporation's
election, at the rate of four percent (4%) per annum of the
Liquidation Value (as defined below) of each issued and outstanding
share of Series 7 Class G Preferred Stock (the "Dividend Rate").
The Liquidation Value of the Series 7 Class G Preferred Stock shall
be $1,000 per outstanding share of the Series 7 Class G Preferred
Stock (the "Liquidation Value"). 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, 1997 (each, a
"Dividend Declaration Date"). Dividends shall be paid only with
respect to shares of Series 7 Class G Preferred Stock actually
issued and outstanding on a Dividend Declaration Date and to
holders of record of the Series 7 Class G Preferred Stock 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 7 Class
G Preferred Stock. In the event that the Corporation elects to pay
the accrued dividends due as of a Dividend Declaration Date on an
outstanding share of the Series 7 Class G Preferred Stock in Common
Stock of the Corporation, the holder of such share shall receive
that number of shares of Common Stock of the Corporation equal to
the product of (a) the quotient of (i) the Dividend Rate divided by
(ii) the average of the closing bid quotation of the Corporation's
Common Stock as reported on the National Association of Securities
Dealers Automated Quotation system ("NASDAQ"), or the average
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"), times (b) a
fraction, the numerator of which is the number of days elapsed
during the period for which the dividend is to be paid, and the
denominator of which is 365. Dividends on the Series 7 Class G
Preferred Stock shall be cumulative, and no dividends or other
distributions shall be paid or declared or set aside for payment on
the Corporation's Common Stock until all accrued and unpaid
dividends on all outstanding shares of Series 7 Class G Preferred
Stock shall have been paid or declared and set aside for payment.
Part 4 - Conversion. The holders of the Series 7 Class G Preferred
Stock shall have rights to convert the shares of Series 7 Class G
Preferred Stock into shares of the Corporation's Common Stock, as
follows (the "Conversion Rights"):
4.1 Right to Convert. The Series 7 Class G Preferred Stock shall
be convertible into shares of Common Stock, as follows:
4.1.1 Up to one hundred seventy-five (175) shares of
Series 7 Class G 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 November
3, 1997; and,
4.1.2 Up to an additional one hundred seventy-five (175)
shares of Series 7 Class G Preferred Stock may be
converted at the Conversion Price at any time on or
after December 3, 1997.
4.2 Conversion Price. Subject to the terms hereof, as used
herein, the Conversion Price per outstanding share of Series
7 Class G Preferred Stock shall be $1.8125 except that, in the
event the average closing bid price per share of the Common
Stock for 20 of any 30 consecutive trading days (a "30 Day
Period") after March 1, 1998 shall be less than $2.50 as
reported on the over-the-counter market, or the closing sale
price if listed on a national securities exchange and if the
holders of the Series 7 Class G Preferred Stock have engaged
in no sales of Common Stock of the Company during, and for 30
trading days prior to, the applicable 30 Day Period, the
Conversion Price shall thereafter be the product of the lesser
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 trading days immediately preceding the date of the
Conversion Notice referred to in Section 4.3 below multiplied
by eighty percent (80%) or (ii) $1.8125. Notwithstanding the
foregoing, the Conversion Price shall not be less than a
minimum of $.75 per share ("Minimum Conversion Price"), which
Minimum Conversion Price shall be eliminated from and after
September 6, 1998. If any of the outstanding shares of Series
7 Class G Preferred Stock are converted, in whole or in part,
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 7
Class G Preferred Stock so surrendered for conversion by (b)
the Conversion Price as of such conversion. At the time of
conversion of shares of the Series 7 Class G 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 whole shares of
Common Stock which is equal to the quotient of the amount of
such unpaid and accrued dividends to the date of conversion on
the shares of Series 7 Class G Preferred Stock so converted
divided by the Stock Dividend Price, as defined in Part 3
hereof, in effect at the date of conversion.
4.3 Mechanics of Conversion. Any holder of the Series 7 Class G
Preferred Stock who wishes to exercise its Conversion Rights
pursuant to Section 4.1 of this Part 4 must 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"). No
Conversion Notice with respect to any shares of Series 7 Class
G Preferred Stock can be given prior to the time such shares
of Series 7 Class G Preferred Stock are eligible for
conversion in accordance with the provision of Section 4.1
above, except as provided in Section 4.4. Any such premature
Conversion Notice shall automatically be null and void. The
Corporation shall, within seven (7) business days after
receipt of an appropriate and timely Conversion Notice (and
certificate, if necessary), issue to such holder of Series 7
Class G 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 7 Class G 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 7 Class G Preferred Stock to be converted
have been surrendered and the Conversion Notice is received by
the Corporation (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 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.
4.4 Merger or Consolidation. In case of either (a) any merger or
consolidation to which the Corporation is a party
(collectively, the "Merger"), other than a Merger in which the
Corporation is the surviving or continuing corporation, or (b)
any sale or conveyance to another corporation of all, or
substantially all, of the assets of the Corporation
(collectively, the "Sale"), and such Merger or Sale becomes
effective (x) while any shares of Series 7 Class G Preferred
Stock are outstanding and prior to the date that the
Corporation's Registration Statement covering up to 200,000
shares of Common Stock issuable upon the conversion of the
Series 7 Class G Preferred Stock is declared effective by the
U. S. Securities and Exchange Commission or (y) prior to the
end of the restriction periods in Section 4.1, then, in such
event, the Corporation or such successor corporation, as the
case may be, shall make appropriate provision so that the
holder of each share of Series 7 Class G Preferred Stock then
outstanding shall have the right to convert such share of
Series 7 Class G Preferred Stock into the kind and amount of
shares of stock or other securities and property receivable
upon such Merger or Sale by a holder of the number of shares
of Common Stock into which such shares of Series 7 Class G
Preferred Stock could have been converted into immediately
prior to such Merger or Sale, subject to adjustments which
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Part 4.
4.5 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 7 Class G 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.
4.6 Adjustments for Reclassification and Reorganization. If the
Common Stock issuable upon conversion of the Series 7 Class G
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 7 Class G Preferred Stock shall be
convertible into, in lieu of the number of shares of Common
Stock which the holders of Series 7 Class G 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 7 Class G Preferred Stock immediately before that
change.
4.7 Common Stock Duly Issued. All Common Stock which may be
issued upon conversion of Series 7 Class G 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.
4.8 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 7 Class G Preferred Stock a notice
setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment is based.
4.9 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
7 Class G 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 7 Class G Preferred Stock in connection with
such conversion.
4.10 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 7 Class G 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 7 Class G 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 7 Class G 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.
4.11 Fractional Shares. No fractional shares shall be issued upon
the conversion of any share or shares of Series 7 Class G
Preferred Stock. All shares of Common Stock (including
fractions thereof) issuable upon conversion of more than one
share of Series 7 Class G 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.
4.12 Notices. Any notices required by the provisions of this Part
4 to be given to the holders of shares of Series 7 Class G
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.
4.13 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 is permitted to close.
Part 5 - Redemption.
5.1 Redemption at Corporation's Option. Except as otherwise
provided in this Section 5.1, at any time, and from time to
time, after the expiration of one (1) year from the date of
the first issuance of the Series 7 Class G Preferred Stock,
the Corporation may, at its sole option, but shall not be
obligated to, redeem, in whole or in part, at any time, and
from time to time, the then outstanding Series 7 Class G
Preferred Stock at the following cash redemption prices per
share (the "Redemption Price") if redeemed during the
following periods: (a) within four (4) years from the date of
the first issuance of Series 7 Class G Preferred Stock -
$1,300 per share, if at any time during such four (4) year
period the average of the closing bid price of the Common
Stock for ten (10) consecutive trading days shall be in excess
of Four U.S. Dollars ($4.00) per share, and (b) after four (4)
years from the date of the first issuance of Series 7 Class G
Preferred Stock - $1,000 per share.
5.2 Mechanics of Redemption. Thirty (30) days prior to any date
stipulated by the Corporation for the redemption of Series 7
Class G 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 7 Class G
Preferred Stock. The Redemption Notice shall state: (i) the
Redemption Date of such shares, (ii) the number of Series 7
Class G 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 7 Class G Preferred Stock to
be redeemed from such holder, and (iv) instructions as to how
to specify to the Corporation the number of Series 7 Class G
Preferred Stock to be redeemed as provided in this Part 5.
5.3 Rights of Conversion Upon Redemption. If the redemption
occurs after the first one hundred eighty (180) days after the
first issuance of Series 7 Class G Preferred Stock, then, upon
receipt of the Redemption Notice, any holder of Series 7 Class
G Preferred Stock shall have the option, at its sole election,
to specify what portion of its Series 7 Class G 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.
5.4 Surrender of Certificates. On or before the Redemption Date
in respect of any Series 7 Class G 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 5.6 hereof, to the order of the person whose name
appears on such certificate or certificates as the owner
thereof. 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 7 Class G
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.
5.5 Payment. On the Redemption Date in respect of any Series 7
Class G 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 7 Class G Preferred Stock in respect of which
the Corporation has received notice from the holder thereof of
its election to convert Series 7 Class G 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 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 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 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 6 - Parity with Other Shares of Series 7 Class G Preferred
Stock and Priority.
6.1 Rateable Participation. If any cumulative dividends or return
of capital in respect of Series 7 Class G 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 7
Class G 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 7 Class G Preferred
Stock;
6.2.2 On a parity with, or equal to, shares of this
Series 7 Class G 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 7 Class G 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 7 Class G
Preferred Stock; and,
6.2.3 Junior to shares of this Series 7 Class G
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 7 Class G 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.
Part 7 - Reissue.
7.1 Authorized. Any shares of Series 7 Class G 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
SEE RESTRICTIVE LEGEND ON REVERSE SIDE
INCORPORATED UNDER THE LAWS OF
DELAWARE
No. - * - Shares ***
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
SERIES 6 CLASS F CONVERTIBLE PREFERRED STOCK
Par Value $.001 Per Share
THIS CERTIFIES THAT ****SPECIMEN**** is the owner of ********
(****) shares of Series 6 Class F 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 ___ day of November,
1997.
__________________________ __________________________
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 OF THIS PREFERRED STOCK ARE ALSO SUBJECT
TO THE REGISTRATION RIGHTS SET FORTH IN THAT CERTAIN EXCHANGE
AGREEMENT BY AND BETWEEN THE HOLDER HEREOF AND THE COMPANY, DATED
EFFECTIVE AS OF SEPTEMBER 16, 1997, 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 6 CLASS F CONVERTIBLE PREFERRED STOCK AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES
AND/OR RIGHTS.
*******************
CERTIFICATE
FOR
*****
SHARES
of the
CAPITAL STOCK
of
Perma-Fix Environmental Services, Inc.
Series 6 Class F Convertible Preferred Stock
Par Value $.001 Per Share
ISSUED TO
*****SPECIMEN******
DATED
November ___, 1997
*******************
<PAGE>
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 ________________________________________
SEE RESTRICTIVE LEGEND ON REVERSE SIDE
INCORPORATED UNDER THE LAWS OF
DELAWARE
No. - * - Shares ***
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
SERIES 7 CLASS G CONVERTIBLE PREFERRED STOCK
Par Value $.001 Per Share
THIS CERTIFIES THAT ****SPECIMEN**** is the owner of ********
(****) shares of Series 7 Class G 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 ___ day of November,
1997.
__________________________ __________________________
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 OF THIS PREFERRED STOCK ARE ALSO SUBJECT
TO THE REGISTRATION RIGHTS SET FORTH IN THAT CERTAIN EXCHANGE
AGREEMENT BY AND BETWEEN THE HOLDER HEREOF AND THE COMPANY, DATED
EFFECTIVE AS OF SEPTEMBER 16, 1997, 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 7 CLASS G CONVERTIBLE PREFERRED STOCK AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES
AND/OR RIGHTS.
*******************
CERTIFICATE
FOR
*****
SHARES
of the
CAPITAL STOCK
of
Perma-Fix Environmental Services, Inc.
Series 7 Class G Convertible Preferred Stock
Par Value $.001 Per Share
ISSUED TO
*****SPECIMEN******
DATED
November ___, 1997
*******************
<PAGE>
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 ________________________________________
TABLE OF CONTENTS
Page
1. Exchange and Subscription for Purchase of Securities. . . 3
1.1 Issuance of Common Stock and Warrants. . . . . . . . 3
1.1.1 Delivery . . . . . . . . . . . . . . . . . 4
1.1.2 Cancellation of Series 4 Preferred and
June 1997 Warrants . . . . . . . . . . . . 4
1.1.3 Restrictive Legends. . . . . . . . . . . . 4
1.2 Discharge. . . . . . . . . . . . . . . . . . . . . . 5
1.3 Exchange . . . . . . . . . . . . . . . . . . . . . . 5
1.4 Reporting Company. . . . . . . . . . . . . . . . . . 5
1.5 Terms of the Series 6 Preferred. . . . . . . . . . . 6
1.6 Terms of the Warrants. . . . . . . . . . . . . . . . 7
2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Closing. . . . . . . . . . . . . . . . . . . . . . . 7
3. Representations, Warranties and Covenants of Subscriber
3.1 Investment Intent. . . . . . . . . . . . . . . . . . 7
3.2 Certain Risk . . . . . . . . . . . . . . . . . . . . 7
3.3 Prior Investment Experience. . . . . . . . . . . . . 8
3.4 No Review by the SEC . . . . . . . . . . . . . . . . 8
3.5 Not Registered . . . . . . . . . . . . . . . . . . . 8
3.6 No Public Market . . . . . . . . . . . . . . . . . . 9
3.7 Sophisticated Investor . . . . . . . . . . . . . . . 9
3.8 Tax Consequences . . . . . . . . . . . . . . . . . . 9
3.9 SEC Filing . . . . . . . . . . . . . . . . . . . . . 10
3.10 Documents, Information and Access. . . . . . . . . . 10
3.11 No Registration, Review or Approval. . . . . . . . . 10
3.12 Transfer Restrictions. . . . . . . . . . . . . . . . 10
3.13 No Short Sale. . . . . . . . . . . . . . . . . . . . 11
3.14 Reliance . . . . . . . . . . . . . . . . . . . . . . 11
3.15 Accuracy or Representations and Warranties . . . . . 11
3.16 Indemnity. . . . . . . . . . . . . . . . . . . . . . 12
3.17 Survival . . . . . . . . . . . . . . . . . . . . . . 12
4. Representations, Warranties and Covenants of the Company
4.1 Organization, Authority, Qualification . . . . . . . 12
4.2 Authorization. . . . . . . . . . . . . . . . . . . . 12
4.3 Ownership of, and Title to, Securities . . . . . . . 12
4.4 Exemption from Registration. . . . . . . . . . . . . 13
5. Registration Rights . . . . . . . . . . . . . . . . . . . 13
5.1 Registration . . . . . . . . . . . . . . . . . . . . 13
5.2 Current Registration Statement . . . . . . . . . . . 14
5.3 0.1% Penalty . . . . . . . . . . . . . . . . . . . . 14
5.4 2.0% Penalty.. . . . . . . . . . . . . . . . . . . . 14
5.5 Other Provisions . . . . . . . . . . . . . . . . . . 15
5.6 Costs. . . . . . . . . . . . . . . . . . . . . . . . 15
5.7 Successors . . . . . . . . . . . . . . . . . . . . . 15
6. Indemnification.. . . . . . . . . . . . . . . . . . . . . 16
6.1 By the Company . . . . . . . . . . . . . . . . . . . 16
6.2 By the Subscriber. . . . . . . . . . . . . . . . . . 16
6.3 Procedure. . . . . . . . . . . . . . . . . . . . . . 17
7. Securities Legends and Notices. . . . . . . . . . . . . . 17
8. Miscellaneous.
8.1 Assignment and Power of Attorney . . . . . . . . . . 19
8.2 Amendment; Waiver. . . . . . . . . . . . . . . . . . 19
8.3 Binding Effect; Assignment . . . . . . . . . . . . . 19
8.4 Governing Law; Litigation Costs. . . . . . . . . . . 19
8.5 Severability . . . . . . . . . . . . . . . . . . . . 20
8.6 Headings . . . . . . . . . . . . . . . . . . . . . . 20
8.7 Counterparts . . . . . . . . . . . . . . . . . . . . 20
8.8 Transfer Taxes . . . . . . . . . . . . . . . . . . . 20
8.9 Entire Agreement . . . . . . . . . . . . . . . . . . 20
8.10 Authority; Enforceability. . . . . . . . . . . . . . 21
8.11 Notices. . . . . . . . . . . . . . . . . . . . . . . 21
8.12 No Third Party Beneficiaries . . . . . . . . . . . . 21
8.13 Public Announcements . . . . . . . . . . . . . . . . 22
Exhibit "A" - Certificate of Designations
Exhibit "B" - Common Stock Purchase Warrant
<PAGE>
THIS EXCHANGE AGREEMENT (the "Agreement") is effective as of
the 16th day of September, 1997, by and between PERMA-FIX
ENVIRONMENTAL SERVICES, INC., a Delaware corporation, having
offices at 1940 Northwest 67th Place, Gainesville, Florida 32653
(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, the Subscriber and the Company have previously
entered into a certain Subscription and Purchase Agreement dated as
of the 9th day of June, 1997 ("Previous Agreement") under which
2,500 shares of "Series 4 Class D Convertible Preferred Stock," par
value $.001 per share (the "Series 4 Preferred"), and (ii) an
aggregate of 375,000 common stock purchase warrants ("June 1997
Warrants") were issued to the Subscriber in the form of one common
stock purchase warrant dated June 9, 1997, providing for the
purchase of 187,500 shares of the Company's common stock, par value
$.001 per share (the "Common Stock"), at an exercise price of $2.10
per share, and one common stock warrant dated June 9, 1997,
providing for the purchase of 187,500 shares of Common Stock at an
exercise price of $2.50 per share (collectively, the "June 1997
Warrants");
WHEREAS, the Company and the Subscriber both desire to enter
into this Agreement, under which the Series 4 Preferred and the
June 1997 Warrants will be delivered and tendered to the Company in
exchange (the "Exchange") for (i) an aggregate of 2,500 shares of
a new series of convertible preferred stock, par value $.001 per
share, to be designated by the Company's Board of Directors as
"Series 6 Class F Convertible Preferred Stock" (the "Series 6
Preferred"), with such Series 6 Preferred containing such terms,
conditions, restrictions and provisions as set forth in the Series
6 Preferred Certificate of Designations, attached hereto as Exhibit
"A," ("Series 6 Preferred Certificate of Designations"), and (ii)
an aggregate of 656,250 common stock purchase warrants
(individually, a "Warrant" and collectively, the "Warrants"), with
each common stock purchase warrant providing for the purchase of
one share of the Company's Common Stock, at the exercise prices set
forth herein (the Series 6 Preferred and the Warrants are
collectively referred to herein from time to time as the
"Securities");
WHEREAS, the Company and the Subscriber each desire that the
Exchange and the execution of the Agreement act to fully and
completely terminate the Subscriber's rights under the Previous
Agreement, the Series 4 Preferred and the June 1997 Warrants and
will act to fully and completely release all obligations of the
Company to the Subscriber under the Previous Agreement, the Series
4 Preferred and the June 1997 Warrants;
WHEREAS, the Common Stock is listed for trading on the Boston
Stock Exchange and the National Association of Securities Dealers
Automated Quotation system ("NASDAQ"), 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 "Exchange Act")
and has been subject to such filing requirements for the past
ninety (90) days;
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 "Securities Act");
WHEREAS, the Subscriber is not a "U. S. Person," as such term
is defined in Regulation S promulgated under the Securities Act;
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 under the Agreement with respect to the
Common Stock issuable upon the conversion of the Series 6 Preferred
and the Common Stock issuable upon the exercise of the Warrants;
WHEREAS, in reliance upon the representations made by the
Subscriber in this Agreement, the transactions contemplated by this
Agreement are such that the offer and exchange of securities by the
Company hereunder will be exempt from registration under applicable
federal (U. S.) securities laws since this is an exchange offer
pursuant to Section 3(a)(9) of the Securities Act, and it is a
private placement and intended to be a nonpublic offering pursuant
to Sections 4(2) and/or 3(b) of the Securities Act and/or
Regulation D promulgated under the Securities Act; and,
WHEREAS, the Securities to be sold in accordance with this
Agreement will not be quoted or listed for trading on any
securities exchange, organized market or quotation system at the
time of acquisition hereunder.
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. Exchange and Subscription for Purchase of Securities.
1.1 Issuance of Common Stock and Warrants. In full and
complete satisfaction of the Previous Agreement, the
Series 4 Preferred and the June 1997 Warrants and in full
and complete termination of the Subscriber's rights under
the Previous Agreement, the Series 4 Preferred and the
June 1997 Warrants and in full and complete release of
all obligations of the Company to the Subscriber under
the Previous Agreement, the Series 4 Preferred and the
June 1997 Warrants, the Subscriber hereby delivers the
Series 4 Preferred and the June 1997 Warrants to the
Company in exchange for 2,500 shares of Series 6
Preferred and the Warrants to purchase up to 656,250
shares of Common Stock upon the terms and conditions set
forth in this Agreement and the Warrants, with such
Warrants containing the terms and conditions as stated
herein. Dividends on the Series 4 Preferred shall cease
to accrue as of the close of business on September 15,
1997, and dividends on the Series 6 Preferred shall begin
to accrue on September 16, 1997.
1.1.1 Delivery. Upon receipt by the Company of the
canceled Series 4 Preferred and the June 1997
Warrants duly assigned to the Company, the
Company shall deliver or cause to be
delivered: (a) to Conner & Winters, A
Professional Corporation ("Conner & Winters"),
a certificate or certificates representing the
2,500 shares of Series 6 Preferred received by
the Subscriber, in such denominations as
Subscriber requests in writing, to be held in
escrow by Conner & Winters, for the
Subscriber; and (b) to the Subscriber, (i)
written evidence from the Secretary of State
of the State of Delaware that the Series 6
Preferred Certificate of Designations has been
filed in the Office of the Secretary of State
of the State of Delaware on or before the
Closing Date; (ii) a Warrant, dated the
Closing Date, entitling the Subscriber to
purchase after December 31, 1997, an aggregate
of up to 187,500 Warrant Shares at an exercise
price equal to $1.8125 per share ("Warrant
RBB-9-97-1"); (iii) a Warrant, dated the
Closing Date, entitling the Subscriber to
purchase after December 31, 1997, an aggregate
of up to 187,500 Warrant Shares at an exercise
price equal to $1.8125 per share ("Warrant
RBB-9-97-2"), and (iv) a Warrant dated the
Closing Date, also entitling the Subscriber to
purchase after December 31, 1997, an aggregate
of 281,250 Warrant Shares at an exercise price
equal to $2.125 per share ("Warrant RBB-9-97-
3"). If at any time the Warrant Shares are
covered by an effective registration statement
filed with the SEC and the average closing bid
price of the Common Stock for ten (10)
consecutive trading days shall be in excess of
$3.50 with respect to the Warrant RBB-9-97-1
or in excess of $4.00 with respect to the
Warrant RBB-9-97-2 or in excess of $6.00 with
respect to the Warrant RBB-9-97-3, then the
Company shall have the option to redeem the
Warrants so effected for an amount equal to
one cent ($0.01) per Warrant Share covered by
the Warrants so effected after giving the
holder of the Warrants so effected thirty (30)
days written notice prior to any date
stipulated by the Company as to the redemption
date of such Warrants. Each Warrant will have
an expiration date of June 9, 2000.
1.1.2 Cancellation of Series 4 Preferred and June
1997 Warrants. The Previous Agreement, Series
4 Preferred and June 1997 Warrants are hereby
terminated and rendered null and void in all
respects. Conner & Winters is directed to
deliver to the Company the Series 4 Preferred
marked "Canceled." The Subscriber shall
deliver the June 1997 Warrants to the Company.
1.1.3 Restrictive Legends. Subscriber agrees that,
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
7 below which shall include, but not be
limited to, a legend to the effect that (a)
the Securities represented by such certificate
have not been registered under the Securities
Act, and (b) unless there is an effective
registration statement relating to the
Securities, the 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 Securities Act is
not required in connection with such sale or
transfer and the reasons therefor. The legend
on all such certificates shall make reference
to the registration rights set forth in
Section 5 hereof.
1.2 Discharge. The Previous Agreement, Series 4 Preferred,
and June 1997 Warrants are hereby fully terminated in all
respects. The Subscriber hereby releases, acquits and
forever discharges the Company, and all of its respective
subsidiaries, affiliates, agents, employees, officers,
and directors, as well as their respective heirs, suc-
cessors, legal and personal representatives, and assigns
of any and all of them, from and against any and all
claims, liabilities, losses, damages, cause or causes of
action of any kind or character whatsoever, whether
liquidated, unliquidated or disputed, asserted or
assertable, known or unknown, in contract or in tort, at
law or in equity, which the Subscriber might now or
hereafter have arising out of or in connection with or
relating to the Previous Agreement, the Series 4
Preferred and the June 1997 Warrants.
1.3 Exchange. On the basis of the representations,
warranties, covenants and agreements, and subject to the
terms and conditions set forth herein, on the Closing
Date, the Company agrees to exchange and deliver to the
Subscriber, and the Subscriber agrees to accept in such
exchange the delivery from the Company, of the Securities
in exchange for the transfer of the Series 4 Preferred
and the June 1997 Warrants ("Purchase Price") from the
Subscriber to the Company.
1.4 Reporting Company. Although the Securities, the shares
of Common Stock issuable upon conversion of the Series 6
Preferred (the "Conversion Shares") and the shares of
Common Stock issuable upon exercise of the Warrants (the
"Warrant Shares") shall not be registered as of the
Closing Date under federal or state securities laws or
any rules or regulations promulgated thereunder, the
Company is a reporting company under the Exchange Act and
has filed with the Securities and Exchange Commission
(the "SEC") all reports required to be filed by the
Company under Section 13 or 15(d) of the Exchange Act.
The Subscriber has had the opportunity to review, and has
reviewed, all such reports and information which the
Subscriber deemed material to an investment decision
regarding the purchase of the Securities.
1.5 Terms of the Series 6 Preferred. The Series 6 Preferred
shall contain and be subject to the terms, conditions,
preferences and restrictions set forth in the Series 6
Preferred Certificate of Designations attached hereto as
Exhibit "A," including, but not limited to Section 4.2
thereof, the right to convert the Series 6 Preferred into
Common Stock of the Company based on a Conversion Price
per outstanding share of Series 6 Preferred of the
Company is $1.8125, except that, in the event the average
closing bid price of the Common Stock as reported in the
over-the-counter market, or the closing sale price if
listed on a national securities exchange, for twenty (20)
of any thirty (30) consecutive trading days after March
1, 1998 shall be less than $2.50, the Conversion Price
shall thereafter be the product of the lesser 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 trading days immediately preceding the date
of the conversion notice, provided by the Subscriber to
the Company multiplied by eighty percent (80%) or (ii)
$1.8125. Notwithstanding the foregoing, the Conversion
Price shall not be less than a minimum of $.75 per share
("Minimum Conversion Price"), which Minimum Conversion
Price shall be eliminated from and after September 6,
1998. If any of the outstanding shares of Series 6
Preferred are converted, in whole or in part, into Common
Stock pursuant to the terms set forth in the Series 6
Preferred Certificate of Designations, the number of
shares of whole Common Stock to be issued to the
Subscriber as a result of such conversion shall be
determined by dividing (a) the aggregate Liquidation
Value (being $1,000 times the number of Series 6
Preferred surrendered for conversion) of the Series 6
Preferred so surrendered for conversion by (b) the
Conversion Price as of such conversion. At the time of
conversion of shares of the Series 6 Preferred, the
Company 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
Company's option, in lieu of paying cash for the accrued
and unpaid dividends, issue that number of whole shares
of Common Stock of the Company which is equal to the
quotient of the amount of such unpaid and accrued
dividends to the date of conversion on the shares of
Series 6 Preferred so converted divided by the Stock
Dividend Price, as defined in the Series 6 Preferred
Certificate of Designations, in effect at the date of
conversion.
1.6 Terms of the Warrants. The Warrants will be substantially
in the form attached hereto as Exhibit "B," subject to
the terms, and with the date and exercise price of such
Warrants to be as set forth herein.
2. Closing.
2.1 Closing. The consummation of this Agreement (the
"Closing") will occur on September 16, 1997 (the "Closing
Date"), 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.
3. Representations, Warranties and Covenants of Subscriber. The
Subscriber hereby represents, warrants and covenants to the Company
as follows:
3.1 Investment Intent. The Subscriber represents and
warrants that the Securities are being, and any
underlying Conversion Shares and Warrant Shares will be,
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. The
Subscriber acknowledges, understands and appreciates that
the Securities have not been registered under the
Securities Act by reason of a claimed exemption under the
provisions of the Securities Act which depends, in large
part, upon the 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.
3.2 Certain Risk. The Subscriber recognizes that the
purchase of the Securities involves a high degree of risk
in that (a) the Company has sustained losses through June
30, 1997, from its operations, and may require
substantial funds in addition to the proceeds of this
private placement; (b) that the Company has a substantial
accumulated deficit; (c) 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; (d) an investor may
not be able to liquidate his investment; (e)
transferability of the Securities is extremely limited;
(f) in the event of a disposition an investor could
sustain the loss of his entire investment; (g) 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; (h) 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, (i) 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 are purchased under this
Agreement, the Conversion Shares, and the Warrant Shares
(i) are not registered under applicable federal (U. S.)
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
herein, and (ii) the Securities subscribed for and that
are to be purchased under this Agreement are not quoted,
traded or listed for trading or quotation on the NASDAQ,
or any other organized market or quotation system, and
there is therefore no present public or other market for
the Securities, nor can there be any assurance that the
Common Stock of the Company 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.
3.3 Prior Investment Experience. The Subscriber acknowledges
that it 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 an investment on
its behalf, and that it recognizes the highly speculative
nature of this investment.
3.4 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 an exchange offer under Section 3(a)(9) of
the Securities Act and a nonpublic offering pursuant to
Sections 4(2) and/or 3(b) of the Securities Act and/or
Regulation D promulgated under the Securities Act.
3.5 Not Registered. The Subscriber understands that the
Securities, the Conversion Shares and the Warrant Shares
have not been registered under the Securities Act by
reason of a claimed exemption under the provisions of the
Securities Act which depends, in part, upon the
Subscriber's 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 its representation merely meant that its
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.
3.6 No Public Market. The Subscriber understands that there
is no public market for the Series 6 Preferred 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 6 Preferred or exercise of the Warrants, Rule
144 (the "Rule") promulgated under the Securities Act
requires, among other conditions, a one-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
Securities 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
Securities Act, except as set forth in Section 5 hereof.
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 the Securities Act or any applicable state
securities or "blue sky" laws (collectively, "Securities
Laws").
3.7 Sophisticated Investor. That (a) 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; (b) 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
(c) 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.
3.8 Tax Consequences. The Subscriber acknowledges that the
Company has made no representation regarding the
potential or actual tax consequences for the Subscriber
which will result from entering into the Agreement and
from consummation of the Exchange. The Subscriber
acknowledges that it bears complete responsibility for
obtaining adequate tax advice regarding the Agreement and
the Exchange.
3.9 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, 1997, and that such have
been furnished to the Subscriber a reasonable time prior
to the date hereof: (a) the Company's Form 10-K for the
year ended December 31, 1996, (b) the Company's Form 10-Q
for the quarter ended March 31, 1997, (c) the Company's
Form 10-Q for the quarter ended June 30, 1997, and (d)
the Company's Form 8-K, date of event reported: June 11,
1997, as amended by the Company's Form 8-K/A, dated June
25, 1997.
3.10 Documents, Information and Access. The Subscriber's
decision to purchase the Securities is not based on any
promotional, marketing or sales materials, and the
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.
3.11 No Registration, Review or Approval. The Subscriber
acknowledges and understands that the 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 Securities Laws. The Subscriber
acknowledges, understands and agrees that the Shares are
being offered and exchanged hereunder pursuant to (i) an
exchange offer exemption under Section 3(a)(9) of the
Securities Act and (ii) (x) a private placement exemption
to the registration provisions of the Securities Act
pursuant to Section 3(b) and/or Section 4(2) of such
Securities Act and/or Regulation D promulgated under the
Securities Act) and (y) a similar exemption to the
registration provisions of applicable state securities
laws.
3.12 Transfer Restrictions. The Subscriber will not transfer
any Securities purchased under this Agreement or any
Conversion Shares or Warrant Shares purchased under this
Agreement unless such Securities are registered under 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,
Conversion Shares or Warrant Shares out of the
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 Securities Act
is not required in connection with such sale or transfer
and the reasons therefor.
3.13 No Short Sale. The 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 Securities 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.
3.14 Reliance. The Subscriber understands and acknowledges
that the Company is relying upon all of the
representations, warranties, covenants, understandings,
acknowledgments and agreements contained in this
Agreement in determining whether to accept this
subscription and to sell and issue the Securities to the
Subscriber.
3.15 Accuracy or Representations and Warranties. 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. The Subscriber will perform and comply
fully in all material respects with all covenants and
agreements set forth herein, and the Subscriber covenants
and agrees that until the acceptance of this Agreement by
the Company, the Subscriber shall inform the Company
immediately in writing of any changes in any of the
representations or warranties provided or contained
herein.
3.16 Indemnity. The 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.
3.17 Survival. The 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 6 Preferred, 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
exchange the Series 4 Preferred and the June 1997 Warrants for the
Securities, the Company hereby represents, warrants and covenants
to Subscriber as follows:
4.1 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.
4.2 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.
4.3 Ownership of, and Title to, Securities. 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 Series 6
Preferred Certificate of Designations).
4.4 Exemption from Registration. The offer and exchange of
Securities to the Subscriber in accordance with the terms
and provisions of this Agreement is being effected in
accordance with the Securities Act, pursuant to an
exchange offer exemption to the registration provision of
the Securities Act pursuant to Section 3(a)(9) thereunder
and to a private placement exemption to the registration
provisions of the Act pursuant to Section 3(b) and/or
4(2) of such Act and/or Regulation D promulgated under
the Securities Act, based on the representations,
warranties and covenants made by the Subscriber contained
in this Agreement.
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.
5.1 Registration. Subject to the terms of Section 5 hereof,
the Company agrees that by October 27, 1997, it shall
prepare and file with the SEC, a registration statement
on Form S-3 or equivalent form (the "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 Securities Act, so as to permit a public offering and
sale by the Subscriber of up to 1,379,311 shares of
Common Stock issuable upon conversion of the Series 6
Preferred, plus up to 250,000 shares of Common Stock, if
any, issuable as payment of dividends on the Series 6
Preferred pursuant to the terms of the Series 6
Preferred, and 656,250 shares of Common Stock issuable
upon exercise of the Warrants. 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 not be required
(a) to qualify generally to do business in any
jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (b) to subject itself
to taxation in any such jurisdiction, or (c) 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 6
Preferred itself, but only with respect to the underlying
Conversion Shares issuable upon exercise of the Series 6
Preferred and the Warrant Shares issuable upon the
exercise of the Warrants.
5.2 Current Registration Statement. Once effective, the
Company shall use its reasonable efforts to cause such
Registration Statement filed hereunder to remain current
and effective for a period of three (3) years or until
the shares of Common Stock covered by such Registration
Statement are sold by the Subscriber, whichever is
sooner. 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.
5.3 0.1% Penalty. In the event the Registration Statement
referred to in Section 5.1 above is not declared
effective by the Commission before 5:00 p.m. Eastern
Daylight Savings Time on December 31, 1997 (or the next
business day if such day is a Saturday, Sunday or legal
holiday), the Company agrees that for each business day
thereafter which terminates without the Registration
Statement being declared effective by the Commission
before 5:00 p.m. Eastern Daylight Savings Time, it shall
pay to the Subscriber a penalty in an amount equal to
one-tenth of one percent (0.1%) of $2,500,000, payable in
cash in U. S. dollars. Once the Registration Statement
is declared effective, if the Registration Statement
becomes subsequently ineffective prior to the expiration
of three (3) years from the Closing Date or the shares of
Common Stock covered by the Registration Statement are
sold by the Subscriber, whichever occurs first, the
Company agrees to pay to the Subscriber the one tenth of
one percent (0.1%) penalty for each business day that the
Registration Statement is not effective, equal to the
product of the number of outstanding shares of Series 6
Preferred on each such day times One U. S. Dollar ($1.00)
5.4 2.0% Penalty. In the event the Registration Statement
referred to in Section 5.1 above is not declared
effective by the Commission before 5:00 p.m. Eastern
Daylight Savings Time on January 31, 1998 (or the next
business day of if such day is a Saturday, Sunday or
legal holiday), the Company agrees to pay to the
Subscriber a one-time penalty in an amount equal to two
percent (2%) of $2,500,000, payable in cash or Common
Stock of the Company at the Company's election. Once
declared effective, if the Registration Statement becomes
subsequently ineffective for a period of thirty (30)
consecutive calendar days, the Company agrees to pay to
the Subscriber a one-time penalty in an amount equal to
the product of (a) the number of shares of Series 6
Preferred outstanding on such thirtieth (30th) day times
(b) Twenty Dollars ($20.00). The penalties set forth in
this Section 5.4 shall be payable at the election of the
Company in cash or shares of the Company's Common Stock.
If the Company elects to deliver such payment in Common
Stock of the Company, the number of shares of Common
Stock to be issued to the Subscriber shall be determined
by dividing the dollar value of the penalty by the
average closing bid price of the Company's Common Stock
as reported on the NASDAQ for the preceding five (5)
trading days prior to the day on which the penalty is
imposed.
5.5 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 (a) furnish to the underwriters (if any),
at the Company's expense, unlegended certificates
representing ownership of the Conversion Shares and/or
Warrant Shares sold under such Registration Statement in
such denominations as requested and (b) instruct any
transfer agent and registrar of the Conversion 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 upon the sale of such shares by the
Subscriber.
5.6 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 the 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 and pay
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.
5.7 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 that
the Company would be required to perform it if no such
succession had taken place.
6. Indemnification.
6.1 By the Company. Subject to the terms of this Section 6,
the Company will indemnify and hold harmless the
Subscriber, its directors and officers, and any
underwriter (as defined in the Securities 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 the Registration Statement filed with the SEC pursuant
to Section 5, 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.
6.2 By the Subscriber. Subject to the terms of this Section
6, 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 Securities 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 filed with
the SEC pursuant to Section 5, 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.
6.3 Procedure. Promptly after receipt by an indemnified
party pursuant to the provisions of Section 6.1 or 6.2 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 Section 6.1 or 6.2, promptly notify the
indemnifying party of the commencement thereof; but the
omission to so notify the indemnifying party will not
relieve the indemnifying party 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 the indemnified party 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 indemnifying parties will not be
liable to such indemnified parties pursuant to the
provisions of said Section 6.1 or 6.2 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 (a) the
indemnified parties shall have employed counsel in
accordance with the provisions of the preceding sentence;
(b) 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 (c) the indemnifying party has authorized the
employment of counsel for the indemnified party at the
expense of the indemnifying parties.
7. Securities Legends and Notices. Subscriber represents and
warrants that it has read, considered and understood the following
legends, and agrees that such legends, substantially in the form
and substance set forth below, shall be placed on all of the
certificates representing the Series 6 Preferred and Warrants:
Series 6 Preferred Legends
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 EXCHANGE
AGREEMENT BY AND BETWEEN THE HOLDER HEREOF AND THE
COMPANY, DATED AS OF SEPTEMBER 16, 1997, A COPY OF WHICH
IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE.
Warrant Legends
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 EXCHANGE AGREEMENT BETWEEN THE HOLDER
HEREOF AND THE COMPANY, DATED AS OF SEPTEMBER 16, 1997,
A COPY OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL
EXECUTIVE OFFICE.
8. Miscellaneous.
8.1 Assignment and Power of Attorney. For purposes of
affecting the exchange of the Series 4 Preferred Stock
and the June 1997 Warrants in accordance with the terms
of this Agreement, the Subscriber does hereby assign all
of its right, title and interest in and to the Series 4
Preferred and the June 1997 Warrants to the Company and
irrevocably makes, constitutes and appoints the Company
as the true and lawful agents and attorneys-in-fact of
the Subscriber ("Attorney-In-Fact") with full power and
authority (except as provided below) to act hereunder
individually, or through duly appointed successor
attorneys-in-fact, in its sole discretion, all as
hereinafter provided, in the name of, for and on behalf
of the Subscriber, as fully as could the Subscriber if
present and acting in person, with respect to all matters
in connection with the transfer of the Series 4 Preferred
Stock and the June 1997 Warrants.
8.2 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.
8.3 Binding Effect; Assignment. Neither this Agreement nor
the Warrants, or any rights or obligations hereunder or
thereunder, are assignable by the Subscriber.
8.4 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, documented
attorneys' fees and disbursements and court costs from
the other party.
8.5 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.
8.6 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.
8.7 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.
8.8 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.
8.9 Entire Agreement. This Agreement, along with the
Warrants and the Series 6 Preferred 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.
8.10 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.
8.11 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
8.11:
If to the Company: Dr. Louis F. Centofanti
Perma-Fix Environmental
Services, Inc.
1940 Northwest 67th Place
Gainesville, Florida 32653
Fax No.: (352) 373-0040
with copies Irwin H. Steinhorn, Esquire
simultaneously Conner & Winters
by like means to: One Leadership Square, Suite 1700
211 North Robinson
Oklahoma City, Oklahoma 73102
Fax No.: (405) 232-2695
<PAGE>
If to the Herbert Strauss
Subscriber: RBB Bank Aktiengesellschaft
Burgring 16, 8010 Graz, Austria
Fax No.: 011-43-316-8072 ext. 392
8.12 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.
8.13 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.
IN WITNESS WHEREOF, the Company and the undersigned Subscriber
have each duly executed this Agreement on the 6th day of November,
1997 but is considered effective as of the 16th day of September,
1997.
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By______________________________
Dr. Louis F. Centofanti
Chief Executive Officer
RBB BANK AKTIENGESELLSCHAFT
By______________________________
Herbert Strauss
Headtrader
ISTE:\N-P\PESI\10Q\997\EXHIB4.11<PAGE>
EXCHANGE AGREEMENT
exchanging
2,500 SHARES OF SERIES 4 CLASS D CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.001 PER SHARE
and
375,000 WARRANTS, EACH WARRANT TO PURCHASE
ONE SHARE OF COMMON STOCK
of
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(a Delaware corporation)
for
2,500 SHARES OF SERIES 6 CLASS F CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.001 PER SHARE
and
656,250 WARRANTS, EACH WARRANT TO PURCHASE
ONE SHARE OF COMMON STOCK
of
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(a Delaware corporation)
TABLE OF CONTENTS
Page
1. Subscription for Purchase of Securities . . . . . . . . . 3
1.1.1 Delivery . . . . . . . . . . . . . . . . . 3
1.1.2 Cancellation of Series 5 Preferred. . 3
1.1.3 Restrictive Legends. . . . . . . . . . . . 3
1.2 Discharge. . . . . . . . . . . . . . . . . . . . . . 4
1.3 Exchange . . . . . . . . . . . . . . . . . . . . . . 4
1.4 Reporting Company. . . . . . . . . . . . . . . . . . 4
1.5 Terms of the Series 7 Preferred. . . . . . . . . . . 5
1.6 Terms of the Warrants. . . . . . . . . . . . . . . . 5
2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Closing. . . . . . . . . . . . . . . . . . . . . . . 6
3. Representations, Warranties and Covenants of Subscriber
3.1 Investment Intent. . . . . . . . . . . . . . . . . . 6
3.2 Certain Risk . . . . . . . . . . . . . . . . . . . . 6
3.3 Prior Investment Experience. . . . . . . . . . . . . 7
3.4 No Review by the SEC . . . . . . . . . . . . . . . . 7
3.5 Not Registered . . . . . . . . . . . . . . . . . . . 7
3.6 No Public Market . . . . . . . . . . . . . . . . . . 7
3.7 Sophisticated Investor . . . . . . . . . . . . . . . 8
3.8 Tax Consequences.. . . . . . . . . . . . . . . . . . 8
3.9 SEC Filing . . . . . . . . . . . . . . . . . . . . . 8
3.10 Documents, Information and Access. . . . . . . . . . 9
3.11 No Registration, Review or Approval. . . . . . . . . 9
3.12 Transfer Restrictions. . . . . . . . . . . . . . . . 9
3.13 No Short Sale. . . . . . . . . . . . . . . . . . . . 10
3.14 Reliance . . . . . . . . . . . . . . . . . . . . . . 10
3.15 Accuracy or Representations and Warranties . . . . . 10
3.16 Indemnity. . . . . . . . . . . . . . . . . . . . . . 10
3.17 Survival . . . . . . . . . . . . . . . . . . . . . . 11
4. Representations, Warranties and Covenants of the Company
4.1 Organization, Authority, Qualification . . . . . . . 11
4.2 Authorization. . . . . . . . . . . . . . . . . . . . 11
4.3 Ownership of, and Title to, Securities . . . . . . . 11
4.4 Exemption from Registration. . . . . . . . . . . . . 12
5. Registration Rights . . . . . . . . . . . . . . . . . . . 12
5.1 Registration . . . . . . . . . . . . . . . . . . . . 12
5.2 Current Registration Statement . . . . . . . . . . . 13
5.4 Costs. . . . . . . . . . . . . . . . . . . . . . . . 13
5.5 Successors . . . . . . . . . . . . . . . . . . . . . 14
6. Indemnification.. . . . . . . . . . . . . . . . . . . . . 14
6.1 By the Company . . . . . . . . . . . . . . . . . . . 14
6.2 By the Subscriber. . . . . . . . . . . . . . . . . . 14
6.3 Procedure. . . . . . . . . . . . . . . . . . . . . . 15
7. Securities Legends and Notices. . . . . . . . . . . . . . 15
8. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 17
8.1 Assignment and Power of Attorney.. . . . . . . . . . 17
8.2 Amendment; Waiver. . . . . . . . . . . . . . . . . . 18
8.3 Binding Effect; Assignment . . . . . . . . . . . . . 18
8.4 Governing Law; Litigation Costs. . . . . . . . . . . 18
8.5 Severability . . . . . . . . . . . . . . . . . . . . 18
8.6 Headings . . . . . . . . . . . . . . . . . . . . . . 18
8.7 Counterparts . . . . . . . . . . . . . . . . . . . . 18
8.8 Transfer Taxes . . . . . . . . . . . . . . . . . . . 19
8.9 Entire Agreement . . . . . . . . . . . . . . . . . . 19
8.10 Authority; Enforceability. . . . . . . . . . . . . . 19
8.11 Notices. . . . . . . . . . . . . . . . . . . . . . . 19
8.12 No Third Party Beneficiaries . . . . . . . . . . . . 20
8.13 Public Announcements . . . . . . . . . . . . . . . . 20
Exhibit "A" - Certificate of Designations
Exhibit "B" - Common Stock Purchase Warrant
<PAGE>
THIS EXCHANGE AGREEMENT (the "Agreement") is effective as of
the 16th day of September, 1997, by and between PERMA-FIX
ENVIRONMENTAL SERVICES, INC., a Delaware corporation, having
offices at 1940 Northwest 67th Place, Gainesville, Florida 32653
(the "Company"), and THE INFINITY FUND, L.P., a Georgia limited
partnership, and having its principal offices at 3 Piedmont Center,
Suite 210, Atlanta, Georgia 30305 (the "Subscriber").
W I T N E S S E T H:
WHEREAS, the Subscriber and the Company have previously
entered into a certain Subscription and Purchase Agreement dated as
of the 7th day of July, 1997 ("Previous Agreement") under which 350
shares of "Series 5 Class E Convertible Preferred Stock" (the
"Series 5 Preferred") were issued to the Subscriber in the form of
one Series 5 Preferred certificate;
WHEREAS, the Company and the Subscriber both desire to enter
into this Agreement, under which the Series 5 Preferred will be
delivered and tendered to the Company in exchange for (the
"Exchange") of (i) an aggregate of 350 shares of a new series of
convertible preferred stock, par value $.001 per share, to be
designated by the Company's Board of Directors as "Series 7 Class
G Convertible Preferred Stock" (the "Series 7 Preferred"), with
such Series 7 Preferred containing such terms, conditions,
restrictions and provisions as set forth in the Series 7 Preferred
Certificate of Designations ("Certificate of Designations")
attached hereto as Exhibit "A," and (ii) an aggregate of 35,000
common stock purchase warrants (a "Warrant" and collectively, the
"Warrants"), with each common stock purchase warrant providing for
the purchase of one share of the Company's Common Stock, at the
exercise prices set forth herein (the Series 7 Preferred and the
Warrants are collectively referred to herein from time to time as
the "Securities");
WHEREAS, the Company and the Subscriber each desire that the
Exchange and the execution of the Agreement act to fully and
completely terminate the Subscriber's rights under the Previous
Agreement and the Series 5 Preferred and will act to fully and
completely release all obligations of the Company to the Subscriber
under the Previous Agreement and the Series 5 Preferred;
WHEREAS, the Common Stock is listed for trading on the Boston
Stock Exchange and the National Association of Securities Dealers
Automated Quotation system ("NASDAQ"), 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 "Exchange Act")
and has been subject to such filing requirements for the past
ninety (90) days;
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 "Securities Act");
WHEREAS, the principal place of business of the Subscriber is
located in Atlanta, Georgia;
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 under the Agreement with respect to the
Common Stock issuable upon the conversion of the Series 7 Preferred
and the Common Stock issuable upon the exercise of the Warrants;
WHEREAS, in reliance upon the representations made by the
Subscriber in this Agreement, the transactions contemplated by this
Agreement are such that the exchange of securities by the Company
hereunder will be exempt from registration under applicable federal
(U.S.) and state securities laws since this is an exchange offer
pursuant to Section 3(a)(9) of the Securities Act, and it is a
private placement and intended to be a nonpublic offering pursuant
to Sections 4(2) and/or 3(b) of the Securities Act and/or
Regulation D promulgated under the Securities Act; and,
WHEREAS, the Securities to be sold in accordance with this
Agreement will not be quoted or listed for trading on any
securities exchange, organized market or quotation system at the
time of acquisition hereunder.
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:
<PAGE>
1. Subscription for Purchase of Securities.
1.1 Issuance of Common Stock and Warrants. In full and
complete satisfaction of the Previous Agreement and the
Series 5 Preferred and in full and complete termination
of the Subscriber's rights under the Previous Agreement
and the Series 5 Preferred and in full and complete
release of all obligations of the Company to the
Subscriber under the Previous Agreement and the Series 5
Preferred, the Subscriber hereby delivers the Series 5
Preferred to the Company in exchange for 350 shares of
Series 7 Preferred and the Warrants to purchase up to
35,000 shares of Common Stock upon the terms and
conditions set forth in this Agreement and the Warrants,
with such Warrants containing the terms and conditions as
stated herein.
1.1.1 Delivery. Upon receipt by the Company of the
Series 5 Preferred to be cancelled, the
Company shall cause to be delivered: (a) to
the Subscriber, c/o Bear Stearns & Co., 55
Water Street, Third Floor, Concourse Level,
South Building, New York, New York 10040-0082,
a certificate or certificates representing the
350 shares of Series 7 Preferred received by
the Subscriber, in such denominations as
Subscriber requests in writing; and (b) to the
Subscriber, (i) 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
Closing Date; (ii) a Warrant, dated the
Closing Date, entitling the Subscriber to
purchase after December 31, 1997, an aggregate
of up to 35,000 Warrant Shares at an exercise
price equal to $1.8125 per share ("Warrant").
If at any time the Warrant Shares are covered
by an effective registration statement filed
with the SEC and the average closing bid price
of the Common Stock for ten (10) consecutive
trading days shall be in excess of $7.00 with
respect to the Warrant, then the Company shall
have the option to redeem the Warrants for an
amount equal to one cent ($0.01) per Warrant
Share covered by the Warrants. Each Warrant
will have an expiration date of July 7, 2000.
1.1.2 Cancellation of Series 5 Preferred. The
Previous Agreement and Series 5 Preferred are
hereby terminated and rendered null and void
in all respects. The Subscriber shall deliver
the Series 5 Preferred to the Company for
cancellation.
1.1.3 Restrictive Legends. Subscriber agrees that,
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
7 below which shall include, but not be
limited to, a legend to the effect that (a)
the Securities represented by such certificate
have not been registered under the Securities
Act, and (b) unless there is an effective
registration statement relating to the
Securities, the 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 Securities Act is
not required in connection with such sale or
transfer and the reasons therefor. The legend
on all such certificates shall make reference
to the registration rights set forth in
Section 5 hereof.
1.2 Discharge. The Previous Agreement, and Series 5
Preferred are hereby fully terminated in all respects.
The Subscriber hereby releases, acquits and forever
discharges the Company, and all of its respective
subsidiaries, affiliates, agents, employees, officers,
and directors, as well as their respective heirs, suc-
cessors, legal and personal representatives, and assigns
of any and all of them, from and against any and all
claims, liabilities, losses, damages, cause or causes of
action of any kind or character whatsoever, whether
liquidated, unliquidated or disputed, asserted or
assertable, known or unknown, in contract or in tort, at
law or in equity, which the Subscriber might now or
hereafter have arising out of or in connection with or
relating to the Previous Agreement and the Series 5
Preferred.
1.3 Exchange. On the basis of the representations,
warranties, covenants and agreements, and subject to the
terms and conditions set forth herein, on the Closing
Date, the Company agrees to exchange and deliver to the
Subscriber, and the Subscriber agrees to accept in such
exchange the delivery from the Company, of the Securities
in exchange for the transfer of the Series 5 Preferred
("Purchase Price") from the Subscriber to the Company.
1.4 Reporting Company. Although the Securities, the shares
of Common Stock issuable upon conversion of the Series 7
Preferred (the "Conversion Shares") and the shares of
Common Stock issuable upon exercise of the Warrants (the
"Warrant Shares") shall not be registered as of the
Closing under federal or state securities laws or any
rules or regulations promulgated thereunder, the Company
is reporting company under the Exchange Act and has filed
with the Securities and Exchange Commission (the "SEC")
all reports required to be filed by the Company under
Section 13 or 15(d) of the Exchange Act. The Subscriber
has had the opportunity to review, and has reviewed, all
such reports and information which the Subscriber deemed
material to an investment decision regarding the purchase
of the Securities.
1.5 Terms of the Series 7 Preferred. The Series 7 Preferred
shall contain and be subject to the terms, conditions,
preferences and restrictions set forth in the Certificate
of Designations attached hereto as Exhibit "A,"
("Certificate of Designations"), including, but not
limited to Section 4.2 thereof, the right to convert the
Series 7 Preferred into Common Stock of the Company based
on a Conversion Price per outstanding share of Series 7
Preferred of $1.8125 except that, in the event the
average closing bid price per share of the Common Stock
for 20 of any 30 consecutive trading days (a "30 Day
Period") after March 1, 1998 shall be less than $2.50 as
reported on the over-the-counter market, or the closing
sale price if listed on a national securities exchange
and if the holders of the Series 7 Preferred have engaged
in no sales of Common Stock of the Company during, and
for 30 trading days prior to, the applicable 30 Day
Period, the Conversion Price shall thereafter be the
product of the lesser 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 trading
days immediately preceding the date of the conversion
notice, provided by the Subscriber to the Company
multiplied by eighty percent (80%) or (ii) $1.8125.
Notwithstanding the foregoing, the Conversion Price shall
not be less than a minimum of $.75 per share ("Minimum
Conversion Price"), which Minimum Conversion Price shall
be eliminated from and after September 6, 1998. If any
of the outstanding shares of Series 7 Preferred are
converted, in whole or in part, into Common Stock
pursuant to the terms set forth in the Series 7 Preferred
Certificate of Designations, 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 (being $1,000 times the
number of shares of Series 7 Preferred surrendered for
conversion) of the Series 7 Preferred so surrendered for
conversion by (b) the Conversion Price as of such
conversion. At the time of conversion of shares of the
Series 7 Preferred, the Company 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 Company's option, in lieu of
paying cash for the accrued and unpaid dividends, issue
that number of whole shares of Common Stock which is
equal to the quotient of the amount of such unpaid and
accrued dividends to the date of conversion on the shares
of Series 7 Preferred so converted divided by the Stock
Dividend Price, as defined in the Series 7 Preferred
Certificate of Designations, in effect at the date of
conversion.
1.6 Terms of the Warrants. The Warrants will be
substantially in the form attached hereto as Exhibit "B,"
subject to the terms, and with the date and exercise
price of such Warrants to be as set forth herein.
<PAGE>
2. Closing.
2.1 Closing. The consummation of this Agreement (the
"Closing") will occur on September 16, 1997 (the "Closing
Date"), 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.
3. Representations, Warranties and Covenants of Subscriber. The
Subscriber hereby represents, warrants and covenants to the Company
as follows:
3.1 Investment Intent. The Subscriber represents and
warrants that the Securities are being, and any
underlying Conversion Shares and Warrant Shares will be,
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. The
Subscriber acknowledges, understands and appreciates that
the Securities have not been registered under the
Securities Act by reason of a claimed exemption under the
provisions of the Securities Act which depends, in large
part, upon the 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.
3.2 Certain Risk. The Subscriber recognizes that the
purchase of the Securities involves a high degree of risk
in that (a) the Company has sustained losses through June
30, 1997, from its operations, and may require
substantial funds in addition to the proceeds of this
private placement; (b) that the Company has a substantial
accumulated deficit; (c) 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; (d) an investor may
not be able to liquidate his investment; (e)
transferability of the Securities is extremely limited;
(f) in the event of a disposition an investor could
sustain the loss of his entire investment; (g) 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; (h) 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, (i) 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 are purchased under this
Agreement, the Conversion Shares, and the Warrant Shares
(i) are not registered under applicable federal (U. S.)
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
herein, and (ii) the Securities subscribed for and that
are to be purchased under this Agreement are not quoted,
traded or listed for trading or quotation on the NASDAQ,
or any other organized market or quotation system, and
there is therefore no present public or other market for
the Securities, nor can there be any assurance that the
Common Stock of the Company 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.
3.3 Prior Investment Experience. The Subscriber acknowledges
that it 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 an investment on
its behalf, and that it recognizes the highly speculative
nature of this investment.
3.4 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 an exchange offer under Section 3(a)(9) of
the Securities Act and a nonpublic offering pursuant to
Sections 4(2) and/or 3(b) of the Securities Act and/or
Regulation D promulgated under the Securities Act.
3.5 Not Registered. The Subscriber understands that the
Securities, the Conversion Shares and the Warrant Shares
have not been registered under the Securities Act by
reason of a claimed exemption under the provisions of the
Securities Act which depends, in part, upon the
Subscriber's 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 its representation merely meant that its
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.
3.6 No Public Market. The Subscriber understands that there
is no public market for the Series 7 Preferred 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 7 Preferred or exercise of the Warrants, Rule
144 (the "Rule") promulgated under the Securities Act
requires, among other conditions, a one-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
Securities 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
Securities Act, except as set forth in Section 5 hereof.
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 the Securities Act or any applicable state
securities or "blue sky" laws (collectively, "Securities
Laws").
3.7 Sophisticated Investor. That (a) the Subscriber is an
"accredited investor," as such term is defined in Rule
501 of Regulation D promulgated under the Securities Act,
and has total assets in excess of $5,000,000; (b) 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 (c) 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.
3.8 Tax Consequences. The Subscriber acknowledges that the
Company has made no representation regarding the
potential or actual tax consequences for the Subscriber
which will result from entering into the Agreement and
from consummation of the Exchange. The Subscriber
acknowledges that it bears complete responsiblity for
obtaining adequate tax advice regarding the Agreement and
the Exchange.
3.9 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, 1997, and that such have
been furnished to the Subscriber a reasonable time prior
to the date hereof: (a) the Company's Form 10-K for the
year ended December 31, 1996; (b) the Company's Form 10-Q
for the quarter ended March 31, 1997; (c) the Company's
Form 10-Q for the quarter ended June 30, 1997, and (d)
the Company's Form 8-K, date of event reported: June 11,
1997, as amended by the Company's Form 8-K/A, dated June
25, 1997.
3.10 Documents, Information and Access. The Subscriber's
decision to purchase the Securities is not based on any
promotional, marketing or sales materials, and the
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.
3.11 No Registration, Review or Approval. The Subscriber
acknowledges and understands that the 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 Securities Laws. The Subscriber
acknowledges, understands and agrees that the Shares are
being exchanged hereunder pursuant to (i) an exchange
offer exemption under Section 3(a)(9) of the Securities
Act and (ii) (x) a private placement exemption to the
registration provisions of the Securities Act pursuant to
Section 3(b) and/or Section 4(2) of such Securities Act
and/or Regulation D promulgated under the Securities Act)
and (y) a similar exemption to the registration
provisions of applicable state securities laws.
3.12 Transfer Restrictions. That Subscriber will not transfer
any Securities purchased under this Agreement or any
Conversion Shares or Warrant Shares purchased under this
Agreement unless such Series 7 Preferred, Conversion
Shares, or Warrant Shares, whichever is applicable, are
registered under 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, Conversion Shares or Warrant
Shares out of the 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
Securities Act is not required in connection with such
sale or transfer and the reasons therefor.
3.13 No Short Sale. The 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 Securities 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. The Subscriber agrees that it will
not engage, and will cause its affiliates not to engage,
in any activity designed to reduce the price of the
Company's Common Stock, as quoted on the Boston Stock
Exchange or the NASDAQ, in connection with the
Subscriber's conversion of any of the Series 7 Preferred.
The Subscriber agrees to refrain, and cause its
affiliates to refrain, from engaging in, or inducing
others to engage in, any activity relating to the Company
or Common Stock of the Company that is proscribed under
Regulation M promulgated under the Exchange Act.
3.14 Reliance. The 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 and to sell and issue the Securities to the
Subscriber.
3.15 Accuracy or Representations and Warranties. 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. The Subscriber will perform and comply
fully in all material respects with all covenants and
agreements set forth herein, and the Subscriber covenants
and agrees that until the acceptance of this Agreement by
the Company, the Subscriber shall inform the Company
immediately in writing of any changes in any of the
representations or warranties provided or contained
herein.
3.16 Indemnity. The 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.
3.17 Survival. The 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 7 Preferred, 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
exchange the Series 5 Preferred for the Securities, the Company
hereby represents, warrants and covenants to Subscriber as follows:
4.1 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.
4.2 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.
4.3 Ownership of, and Title to, Securities. 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 Series 7 Preferred, 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).
4.4 Exemption from Registration. The offer and exchange of
Securities to the Subscriber in accordance with the terms
and provisions of this Agreement is being effected in
accordance with the Securities Act, pursuant to an
exchange offer exemption to the registration provision of
the Securities Act pursuant to Section 3(a)(9) thereunder
and to a private placement exemption to the registration
provisions of the Act pursuant to Section 3(b) and/or
4(2) of such Act and/or Regulation D promulgated under
the Securities Act, based on the representations,
warranties and covenants made by the Subscriber contained
in this Agreement.
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.
5.1 Registration. Subject to the terms of Section 5 hereof,
the Company agrees that by October 27, 1997, it shall
prepare and file with the SEC, a registration statement
on Form S-3 or equivalent form (the "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 Securities Act, so as to permit a public offering and
sale by the Subscriber of up to 200,000 shares of Common
Stock issuable upon conversion of the Series 7 Preferred,
plus up to 36,000 shares of Common Stock, if any,
issuable as payment of dividends on the Series 7
Preferred Stock pursuant to the terms of the Series 7
Preferred, and 35,000 shares of Common Stock issuable
upon exercise of the Warrants. 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 reasonable actions as it deems necessary
to qualify the Common Stock issuable upon conversion of
the Series 7 Preferred, the Common Stock issuable as
payment of dividends on the Series 7 Preferred, and the
Common Stock issuable upon exercise of the Warrant,
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 such shares of Common Stock covered
by such Registration Statement; provided, however, that
the Company shall not be required (a) to qualify
generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this
subparagraph, (b) to subject itself to taxation in any
such jurisdiction, or (c) 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 7 Preferred itself, but only with
respect to up to 200,000 shares of the underlying
Conversion Shares issuable upon exercise of the Series 7
Preferred, up to 36,000 shares of Common Stock that the
Company may issue in payment of dividends on the Series
7 Preferred, and up to 35,000 shares of the Warrant
Shares issuable upon the exercise of the Warrants.
5.2 Current Registration Statement. Once effective, the
Company shall use its reasonable efforts to cause such
Registration Statement filed hereunder to remain current
and effective for a period of two (2) years or until the
Conversion Shares covered by such Registration Statement
are sold by the Subscriber, whichever is sooner. 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.
5.3 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 under such
Registration Statement. In connection with any offering
of Conversion Shares and/or Warrant Shares registered
pursuant to this Section 5, the Company shall (a) furnish
to the underwriters (if any), at the Company's expense,
unlegended certificates representing ownership of the
Conversion Shares and/or Warrant Shares sold under such
Registration Statement in such denominations as requested
and (b) instruct any transfer agent and registrar of the
Conversion Shares and/or Warrant Shares sold under such
Registration Statement to release immediately any stop
transfer order, and to remove any restrictive legend,
with respect to such Conversion Shares and/or Warrant
Shares included in any registration becoming effective
pursuant to this Agreement upon the sale of such shares
by the Subscriber.
5.4 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 the 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 and pay
any and all underwriting discounts and commissions in
connection with the sale of the Conversion Shares and/or
Warrant Shares pursuant hereto or the Registration
Statement and all fees of its legal counsel and other
advisors retained in connection with reviewing such
Registration Statement.
5.5 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 that
the Company would be required to perform it if no such
succession had taken place.
6. Indemnification.
6.1 By the Company. Subject to the terms of this Section 6,
the Company will indemnify and hold harmless the
Subscriber, its directors and officers, and any
underwriter (as defined in the Securities 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 the Registration Statement filed with the SEC pursuant
to Section 5, 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.
6.2 By the Subscriber. Subject to the terms of this Section
6, 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 Securities 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 filed with
the SEC pursuant to Section 5, 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.
6.3 Procedure. Promptly after receipt by an indemnified
party pursuant to the provisions of Section 6.1 or 6.2 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 Section 6.1 or 6.2, promptly notify the
indemnifying party of the commencement thereof; but the
omission to so notify the indemnifying party will not
relieve the indemnifying party 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 the indemnified party 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 indemnifying parties will not be
liable to such indemnified parties pursuant to the
provisions of said Section 6.1 or 6.2 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 (a) the
indemnified parties shall have employed counsel in
accordance with the provisions of the preceding sentence;
(b) 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 (c) the indemnifying party has authorized the
employment of counsel for the indemnified party at the
expense of the indemnifying parties.
7. Securities Legends and Notices. Subscriber represents and
warrants that it has read, considered and understood the following
legends, and agrees that such legends, substantially in the form
and substance set forth below, shall be placed on all of the
certificates representing the Series 7 Preferred and Warrants:
Series 7 Preferred Legends
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 OF THIS PREFERRED STOCK ARE ALSO
SUBJECT TO THE REGISTRATION RIGHTS SET FORTH IN THAT
CERTAIN EXCHANGE AGREEMENT BY AND BETWEEN THE HOLDER
HEREOF AND THE COMPANY, DATED SEPTEMBER 16, 1997, A COPY
OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE
OFFICE.
<PAGE>
Warrant Legends
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 EXCHANGE AGREEMENT BETWEEN THE HOLDER
HEREOF AND THE COMPANY, DATED SEPTEMBER 16, 1997, A COPY
OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE
OFFICE.
8. Miscellaneous.
8.1 Assignment and Power of Attorney. For purposes of
affecting the exchange of the Series 5 Preferred in
accordance with the terms of this Agreement, the
Subscriber does hereby assign all of its right, title and
interest in and to the Series 5 Preferred to the Company
and irrevocably makes, constitutes and appoints the
Company as the true and lawful agents and attorneys-in-
fact of the Subscriber ("Attorney-In-Fact") with full
power and authority (except as provided below) to act
hereunder individually, or through duly appointed
successor attorneys-in-fact, in its sole discretion, all
as hereinafter provided, in the name of, for and on
behalf of the Subscriber, as fully as could the
Subscriber if present and acting in person, with respect
to all matters in connection with the transfer of the
Series 5 Preferred.
8.2 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.
8.3 Binding Effect; Assignment. Neither this Agreement nor
the Warrants, or any rights or obligations hereunder or
thereunder, are assignable by the Subscriber.
8.4 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, documented
attorneys' fees and disbursements and court costs from
the other party.
8.5 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.
8.6 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.
8.7 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.
8.8 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.
8.9 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.
8.10 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.
8.11 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
<PAGE>
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 8.11:
If to the Company: Dr. Louis F. Centofanti
Perma-Fix Environmental
Services, Inc.
1940 Northwest 67th Place
Gainesville, Florida 32653
Fax No.: (352) 373-0040
with copies Irwin H. Steinhorn, Esquire
simultaneously by: Conner & Winters
like means to: One Leadership Square, Suite 1700
211 North Robinson
Oklahoma City, Oklahoma 73102
Fax No.: (405) 232-2695
If to the The Infinity Fund, L.P.
Subscriber: 3 Piedmont Center, Suite 210
Atlanta, Georgia 30305
Attention: Mr. Barry Pearl
Fax No.: (404) 231-1375
8.12 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.
8.13 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 on the ___ day of October,
1997 but is considered to be effective as of the 16th day of
September, 1997.
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By______________________________
Dr. Louis F. Centofanti
Chief Executive Officer
THE INFINITY FUND, L.P.
By___________________________
Name:_____________________
Title:____________________
N-P\PESI\10Q\EXHIB4.12<PAGE>
EXCHANGE AGREEMENT
exchanging
350 SHARES OF SERIES 5 CLASS E CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.001 PER SHARE
of
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(a Delaware corporation)
for
350 SHARES OF SERIES 7 CLASS G CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.001 PER SHARE
and
35,000 WARRANTS, EACH WARRANT TO PURCHASE
ONE SHARE OF COMMON STOCK
of
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(a Delaware corporation)
AMENDED STOCK PURCHASE AGREEMENT
THIS AMENDED STOCK PURCHASE AGREEMENT ("Amended Agreement") is
entered into this 7th day of October, 1997, and amends the Stock
Purchase Agreement ("Agreement") entered into on the 30th day of
June, 1997, by and between PERMA-FIX ENVIRONMENTAL SERVICES, INC.,
a Delaware corporation ("PESI"), and DR. LOUIS F. CENTOFANTI, an
individual ("Centofanti").
WITNESSETH:
WHEREAS, Centofanti is the Chairman of the Board and President
of PESI; and
WHEREAS, Centofanti and PESI have negotiated this Amended
Agreement in which Centofanti would acquire 12,190 shares of PESI
Common Stock for $20,000, which is an amendment to the original
purchase agreement which provided for the purchase of 24,381 shares
of PESI Common Stock for $40,000. The purchase will remain at
seventy-five percent (75%) of the closing bid price of each share
of PESI Common Stock as quoted on the NASDAQ on the original date
of the Agreement (June 30, 1997); and
WHEREAS, the closing bid price of the PESI Common Stock was
$2.1875, as reported on the NASDAQ as of June 30, 1997; and
WHEREAS, Centofanti desires to purchase Twelve Thousand One
Hundred Ninety (12,190) shares of PESI Common Stock, which is an
amendment to the original purchase agreement which provided for the
purchase of Twenty-Four Thousand Three Hundred Eighty One (24,381)
shares, par value $.001 per share, and PESI desires to sell to
Centofanti such shares of Common Stock, upon the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and
the respective covenants and agreements contained herein, the
parties hereto agree as follows:
1. Purchase and Sale.
1.1 Purchase of Shares. Subject to the terms and conditions
of this Amended Agreement, Centofanti hereby purchases
Twelve Thousand One Hundred Ninety (12,190) shares of
PESI Common Stock (the "Shares"), and PESI hereby issues
and delivers the Shares to Centofanti.
1.2 Purchase Price; Payment of Purchase Price. The per share
purchase price of the Shares shall be $1.6406, calculated
at seventy-five percent (75%) of $2.1875 (the closing bid
price of the Common Stock on June 30, 1997, as reported
on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ")). In consideration
for the Shares, Centofanti hereby tenders to the Company
Twenty Thousand Dollars ($20,000.00).
2. Representations and Warranties of Centofanti. Centofanti
represents and warrants as follows:
2.1 Purchase for Investment. Centofanti is acquiring, or
will acquire, the Shares to hold for investment, with no
present intention of dividing Centofanti's participation
with others or reselling or otherwise participating,
directly or indirectly, in a distribution thereof, and
not with a view to or for sale in connection with any
distribution thereof, except pursuant to a registration
statement under the Securities Act of 1933, as amended
(the "Securities Act"), and any applicable state
securities laws, or a transaction exempt from registra-
tion thereunder, and shall not make any sale, transfer or
other disposition of the Shares in violation of any
applicable state securities laws, including in each
instance any applicable rules and regulations promulgated
thereunder, or in violation of the Securities Act or the
rules and regulations promulgated thereunder by the
Securities and Exchange Commission (the "SEC").
2.2 No Registration. Centofanti acknowledges that the Shares
are not being registered under any state securities laws,
and are not being registered under the Securities Act on
the ground that this transaction is exempt from
registration under Section 3(b) and/or 4(2) of the
Securities Act, and that reliance by PESI on such
exemptions is predicated in part on Centofanti's
representations set forth herein.
2.3 Restricted Transfer. Centofanti agrees that PESI may
refuse to permit the sale, transfer or disposition of any
of the Shares received by Centofanti unless there is in
effect a registration statement under the Securities Act
and any applicable state securities law covering such
transfer or Centofanti furnishes an opinion of counsel or
other evidence, reasonably satisfactory to counsel for
PESI, to the effect that such registration is not
required.
2.4 Legend. Centofanti understands and agrees that stop
transfer instructions will be given to PESI's transfer
agent and that there will be placed on the certificate or
certificates for any of the Shares received by
Centofanti, any substitutions therefor and any
certificates for any additional shares which might be
distributed with respect to such Shares, a legend stating
in substance:
"The shares of stock evidenced by this
certificate have been acquired for investment
and have not been registered under the
Securities Act of 1933, as amended (the
"Securities Act"). These shares may not be
sold or transferred except pursuant to an
effective registration statement under the
Securities Act and any applicable state
securities laws unless there is furnished to
the issuer an opinion of counsel or other
evidence, reasonably satisfactory to the
issuer's counsel, to the effect that such
registration is not required."
2.5 Indefinite Holding Period. Centofanti understands that
under the Securities Act, the Shares received by
Centofanti must be held indefinitely unless they are
subsequently registered under the Securities Act or
unless an exemption from such registration is available
with respect to any proposed transfer or disposition of
such shares.
2.6 Rule 144 Compliance. Centofanti understands that PESI is
required to file periodic reports with the SEC and that
certain sales of the Shares received by Centofanti may be
exempt from registration under the Securities Act by
virtue of Rule 144 promulgated by the SEC under the
Securities Act, provided that such sales are made in
accordance with all of the terms and conditions of that
Rule including compliance with the required one-year
holding period. Centofanti further understands that if
Rule 144 is not available for sales of the Shares
received by Centofanti, such Shares may not be sold
without registration under the Securities Act or
compliance with some other exemption from such
registration, and that PESI has no obligation to register
the Shares received by Centofanti or take any other
action necessary in order to make compliance with an
exemption from registration available.
2.7 Sophisticated Investor. Centofanti, as President and
Chairman of the Board of PESI, possesses extensive
knowledge as to the business and operation of PESI and
has such knowledge and experience in financial and
business matters that he is capable of evaluating the
merits and risks of the acquisition of the Shares.
3. Representations and Warranties of PESI. PESI represents and
warrants as follows:
3.1 Organization and Standing. PESI is a corporation duly
organized, validly existing and in good standing under
the laws of the State of Delaware.
3.2 Power, Authority, and Validity. PESI has full right,
power and corporate authority to enter into this Amended
Agreement and to perform the transactions contemplated
hereby, and this Amended Agreement is valid and binding
upon and enforceable against PESI in accordance with its
terms. The execution, delivery and the performance of
this Amended Agreement by PESI has been duly and validly
authorized and approved by all requisite action on the
part of PESI and Buyer.
3.3 Status of PESI Common Stock. The PESI Common Stock to be
issued pursuant to this Amended Agreement, when so
issued, will be duly and validly authorized and issued,
fully paid and nonassessable.
4. Miscellaneous.
4.1 Notices. All notices, requests, demands, and other
communications under this Amended Agreement shall be in
writing and shall be deemed to have been duly given if
delivered or mailed, first-class postage prepaid, to the
following at the addresses indicated:
To PESI: Perma-Fix Environmental Services, Inc.
c/o Chief Financial Officer
1940 Northwest 67th Place
Gainesville, Florida 32653
To Centofanti: Dr. Louis F. Centofanti
Perma-Fix Environmental Services, Inc.
6075 Roswell, Suite 602
Atlanta, Georgia 30328
or to any other address that PESI or Centofanti shall
designate in writing.
4.2 Brokers. Each party represents and warrants that all
negotiations related to this Amended Agreement have been
carried on by the parties without the intervention of any
broker. Each party agrees to indemnify, and hold the
other party harmless against any claims for fees or
commissions employed or alleged to have been employed by
such party.
4.3 Amendment. This Amended Agreement shall not be amended,
altered or terminated except by a writing executed by
each party.
4.4 Governing Law. This Amended Agreement shall be governed
in all respects by the law of the State of Delaware.
4.5 Headings. The paragraph headings used in this Amended
Agreement are included solely for convenience, and shall
not in any way affect the meaning or interpretation of
this Agreement.
4.6 Entire Agreement. This Amended Agreement sets forth the
entire understanding of the parties; further, this
Amended Agreement shall supersede and/or replace any oral
or written agreements relating to this subject matter
entered into by the parties before the date of this
Amended Agreement.
4.7 Binding Effect. This Amended Agreement shall be binding
on and inure to the benefit of, and be enforceable by,
the respective heirs, legal representatives, successors,
and assigns of the parties pursuant to its terms.
PESI and Centofanti have executed this Amended Agreement as of
the 7th day of October, 1997.
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
By:_______________________________________
RICHARD T. KELECY
Chief Financial Officer
__________________________________________
DR. LOUIS F. CENTOFANTI, Individually
AMENDED STOCK PURCHASE AGREEMENT
THIS AMENDED STOCK PURCHASE AGREEMENT ("Amended Agreement") is
entered into this 7th day of October, 1997, and is an amendment to
the Stock Purchase Agreement ("Agreement") dated July 31, 1997,
by and between PERMA-FIX ENVIRONMENTAL SERVICES, INC., a Delaware
corporation ("PESI"), and STEVE GORLIN, an individual ("Gorlin").
WITNESSETH:
WHEREAS, Gorlin is a member of the Board of Directors of PESI;
and
WHEREAS, Gorlin and PESI have negotiated this Amended
Agreement in which Gorlin would acquire a total of 200,000 shares
of PESI Common Stock for $425,000.00, which is the closing bid
price of each share of PESI Common Stock as quoted on the NASDAQ on
July 30, 1997, the original date of the Agreement, as approved by
the Perma-Fix Environmental Services, Inc. Board of Directors, to
be purchased on or before November 30, 1997; and
WHEREAS, the closing bid price of the PESI Common Stock was
$2.125, as reported on the NASDAQ as of July 30, 1997; and
WHEREAS, Gorlin desires to purchase Two Hundred Thousand
(200,000) shares of PESI Common Stock, par value $.001 per share,
and PESI desires to sell to Gorlin such shares of Common Stock,
upon the terms and conditions set forth herein;
WHEREAS, in order to induce Gorlin to enter into this
Amended Agreement and to purchase the Common Stock on the terms
and subject to the conditions hereof, PESI will issue a Warrant
for the purchase of 100,000 shares of Common Stock at $2.40 per
share, as further defined herein.
NOW, THEREFORE, in consideration of the mutual promises and
the respective covenants and agreements contained herein, the
parties hereto agree as follows:
1. Purchase and Sale.
1.1 Purchase of Shares. Subject to the terms and conditions
of this Amended Agreement, Gorlin hereby agrees to
purchase Two Hundred Thousand (200,000) shares of PESI
Common Stock (the "Shares"), and as Gorlin pays for the
Common Stock to be purchased by him hereunder, PESI will
promptly instruct its transfer agent to issue to Gorlin
that number of shares of PESI Common Stock for which
Gorlin has paid for, pursuant to the terms of this
Amended Agreement.
1.2 Purchase Price; Payment of Purchase Price. The per share
purchase price of the Shares shall be $2.125, the closing
bid price of the Common Stock on July 30, 1997 (date of
Agreement), as reported on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ").
In consideration for the Shares, Gorlin will tender to
the Company Four Hundred Twenty-Five Thousand Dollars
($425,000.00) in the manner described in Section 1.3
below.
1.3 Purchase Period. The shares will be purchased on or
before November 30, 1997. In consideration for the
purchase of said shares, Gorlin will tender to the
Company $425,000.00.
1.4 Common Stock Purchase Warrant. Subject to the terms and
conditions of the Common Stock Purchase Warrant attached
hereto as Exhibit "A" ("Warrant"), PESI agrees to issue
to Gorlin such Warrant for the purchase of 100,000 shares
of Common Stock at an exercise price of $2.40 per common
share. PESI will issue to Gorlin the Warrant within five
(5) business days after Gorlin has paid PESI the full
$425,000.00.
2. Representations and Warranties of Gorlin. Gorlin represents
and warrants as follows:
2.1 Purchase for Investment. Gorlin is acquiring, or will
acquire, the Shares and the Warrant for investment, with
no present intention of dividing Gorlin's participation
with others or reselling or otherwise participating,
directly or indirectly, in a distribution thereof, and
not with a view to or for sale in connection with any
distribution thereof, except pursuant to a registration
statement under the Securities Act of 1933, as amended
(the "Securities Act"), and any applicable state
securities laws, or a transaction exempt from registra-
tion thereunder, and shall not make any sale, transfer or
other disposition of the Shares or the Warrant in
violation of any applicable state securities laws,
including in each instance any applicable rules and
regulations promulgated thereunder, or in violation of
the Securities Act or the rules and regulations
promulgated thereunder by the Securities and Exchange
Commission (the "SEC").
2.2 No Registration. Gorlin acknowledges that the Shares and
the Warrant are not being registered under any state
securities laws, and are not being registered under the
Securities Act on the ground that this transaction is
exempt from registration under Section 3(b) and/or 4(2)
of the Securities Act, and that reliance by PESI on such
exemptions is predicated in part on Gorlin's
representations set forth herein.
2.3 Restricted Transfer. Gorlin agrees that PESI may refuse
to permit the sale, transfer or disposition of any of the
Shares or the Warrant received by Gorlin unless there is
in effect a registration statement under the Securities
Act and any applicable state securities law covering such
transfer or Gorlin furnishes an opinion of counsel or
other evidence, reasonably satisfactory to counsel for
PESI, to the effect that such registration is not
required.
2.4 Legend. Gorlin understands and agrees that stop transfer
instructions will be given to PESI's transfer agent and
that there will be placed on the certificate or
certificates for any of the Shares received by Gorlin,
any substitutions therefor and any certificates for any
additional shares which might be distributed with respect
to such Shares, a legend stating in substance:
"The shares of stock evidenced by this
certificate have been acquired for investment
and have not been registered under the
Securities Act of 1933, as amended (the
"Securities Act"). These shares may not be
sold or transferred except pursuant to an
effective registration statement under the
Securities Act and any applicable state
securities laws unless there is furnished to
the issuer an opinion of counsel or other
evidence, reasonably satisfactory to the
issuer's counsel, to the effect that such
registration is not required."
2.5 Indefinite Holding Period. Gorlin understands that under
the Securities Act, the Shares received by Gorlin must be
held indefinitely unless they are subsequently registered
under the Securities Act or unless an exemption from such
registration is available with respect to any proposed
transfer or disposition of such shares.
2.6 Rule 144 Compliance. Gorlin understands that PESI is
required to file periodic reports with the SEC and that
certain sales of the Shares received by Gorlin may be
exempt from registration under the Securities Act by
virtue of Rule 144 promulgated by the SEC under the
Securities Act, provided that such sales are made in
accordance with all of the terms and conditions of that
Rule including compliance with the required one-year
holding period. Gorlin further understands that if Rule
144 is not available for sales of the Shares received by
Gorlin, such Shares may not be sold without registration
under the Securities Act or compliance with some other
exemption from such registration, and that PESI has no
obligation to register the Shares or the Warrant received
or to be received by Gorlin hereunder or take any other
action necessary in order to make compliance with an
exemption from registration available.
2.7 Sophisticated Investor. Gorlin, as a member of the Board
of Directors of PESI, possesses extensive knowledge as to
the business and operation of PESI and has such knowledge
and experience in financial and business matters that he
is capable of evaluating the merits and risks of the
acquisition of the Shares.
2.8 Recission Period Under Florida Act. The shares of Common
Stock to be issued hereunder are also being sold in
reliance upon an exemption contained in Section
517.061(11) of the Florida Securities and Investors
Protection Act ("Florida Act"). The shares of Common
Stock issuable under this Agreement may not be reoffered
for sale or resold in the State of Florida unless such
are registered or the transaction is exempt under the
Florida Act. Any sale of Common Stock made under this
Agreement and Section 517.061(11) of the Florida Act is
voidable at the option of Gorlin within three (3) days
after the first tender of consideration is made by Gorlin
to PESI or its agent hereunder.
3. Representations and Warranties of PESI. PESI represents and
warrants as follows:
3.1 Organization and Standing. PESI is a corporation duly
organized, validly existing and in good standing under
the laws of the State of Delaware.
3.2 Power, Authority, and Validity. PESI has full right,
power and corporate authority to enter into this Amended
Agreement and to perform the transactions contemplated
hereby, and this Amended Agreement is valid and binding
upon and enforceable against PESI in accordance with its
terms. The execution, delivery and the performance of
this Amended Agreement by PESI has been duly and validly
authorized and approved by all requisite action on the
part of PESI and Buyer.
3.3 Status of PESI Common Stock. The PESI Common Stock to be
issued pursuant to this Amended Agreement, when so
issued, will be duly and validly authorized and issued,
fully paid and nonassessable.
4. Miscellaneous.
4.1 Notices. All notices, requests, demands, and other
communications under this Amended Agreement shall be in
writing and shall be deemed to have been duly given if
delivered or mailed, first-class postage prepaid, to the
following at the addresses indicated:
To PESI: Perma-Fix Environmental Services, Inc.
c/o Chief Financial Officer
1940 Northwest 67th Place
Gainesville, Florida 32653
To Gorlin: Steve Gorlin
5115 New Peachtree Road, Suite 200
Chamblee, Georgia 30341
or to any other address that PESI or Gorlin shall
designate in writing.
4.2 Brokers. Each party represents and warrants that all
negotiations related to this Amended Agreement have been
carried on by the parties without the intervention of any
broker. Each party agrees to indemnify, and hold the
other party harmless against any claims for fees or
commissions employed or alleged to have been employed by
such party.
4.3 Amendment. This Amended Agreement shall not be amended,
altered or terminated except by a writing executed by
each party.
4.4 Governing Law. This Amended Agreement shall be governed
in all respects by the law of the State of Delaware.
4.5 Headings. The paragraph headings used in this Amended
Agreement are included solely for convenience, and shall
not in any way affect the meaning or interpretation of
this Agreement.
4.6 Entire Agreement. This Amended Agreement sets forth the
entire understanding of the parties; further, this
Amended Agreement shall supersede and/or replace any oral
or written agreements relating to this subject matter
entered into by the parties before the date of this
Amended Agreement.
4.7 Binding Effect. This Amended Agreement shall be binding
on and inure to the benefit of, and be enforceable by,
the respective heirs, legal representatives, successors,
and assigns of the parties pursuant to its terms.
PESI and Gorlin have executed this Amended Agreement as of the
7th day of October, 1997.
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By:______________________________ _________________________
RICHARD T. KELECY STEVE GORLIN,
Chief Financial Officer Individually
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is entered into
this 31st day of July, 1997, by and between PERMA-FIX ENVIRONMENTAL
SERVICES, INC., a Delaware corporation ("PESI"), and STEVE GORLIN,
an individual ("Gorlin").
WITNESSETH:
WHEREAS, Gorlin is a member of the Board of Directors of PESI;
and
WHEREAS, Gorlin and PESI have negotiated this Agreement in
which Gorlin would acquire a total of 200,000 shares of PESI Common
Stock for $425,000.00, which is the closing bid price of each share
of PESI Common Stock as quoted on the NASDAQ on July 30, 1997, the
date as approved by the Perma-Fix Environmental Services, Inc.
Board of Directors, to be equally divided into two (2) transactions
of $212,500.00 (100,000 shares) each; and
WHEREAS, the closing bid price of the PESI Common Stock was
$2.125, as reported on the NASDAQ as of July 30, 1997; and
WHEREAS, Gorlin desires to purchase Two Hundred Thousand
(200,000) shares of PESI Common Stock, par value $.001 per share,
and PESI desires to sell to Gorlin such shares of Common Stock,
upon the terms and conditions set forth herein;
WHEREAS, in order to induce Gorlin to enter into this
Agreement and to purchase the Common Stock on the terms and
subject to the conditions hereof, PESI will issue a Warrant for
the purchase of 100,000 shares of Common Stock at $2.40 per
share, as further defined herein.
NOW, THEREFORE, in consideration of the mutual promises and
the respective covenants and agreements contained herein, the
parties hereto agree as follows:
1. Purchase and Sale.
1.1 Purchase of Shares. Subject to the terms and conditions
of this Agreement, Gorlin hereby agrees to purchase Two
Hundred Thousand (200,000) shares of PESI Common Stock
(the "Shares"), and as Gorlin pays for the Common Stock
to be purchased by him hereunder, PESI will promptly
instruct its transfer agent to issue to Gorlin that
number of shares of PESI Common Stock for which Gorlin
has paid for pursuant to the terms of this Agreement.
1.2 Purchase Price; Payment of Purchase Price. The per share
purchase price of the Shares shall be $2.125, the closing
bid price of the Common Stock on July 30, 1997, as
reported on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ")). In
consideration for the Shares, Gorlin will tender to the
Company Four Hundred Twenty-Five Thousand Dollars
($425,000.00) in the manner described in Section 1.3
below.
1.3 Purchase Period. The shares will be purchased in two (2)
equal transactions of 100,000 shares each, with the first
to occur on or before August 15, 1997, and the second
transaction taking place on or before August 31, 1997.
In consideration for the purchase of said shares, Gorlin
will tender to the Company $212,500.00 for each such
transaction.
1.4 Common Stock Purchase Warrant. Subject to the terms and
conditions of the Common Stock Purchase Warrant attached
hereto as Exhibit "A" ("Warrant"), PESI agrees to issue
to Gorlin such Warrant for the purchase of 100,000 shares
of Common Stock at an exercise price of $2.40 per common
share. PESI will issue to Gorlin the Warrant within five
(5) business days after Gorlin has paid PESI the full
$425,000.00.
2. Representations and Warranties of Gorlin. Gorlin represents
and warrants as follows:
2.1 Purchase for Investment. Gorlin is acquiring, or will
acquire, the Shares and the Warrant for investment, with
no present intention of dividing Gorlin's participation
with others or reselling or otherwise participating,
directly or indirectly, in a distribution thereof, and
not with a view to or for sale in connection with any
distribution thereof, except pursuant to a registration
statement under the Securities Act of 1933, as amended
(the "Securities Act"), and any applicable state
securities laws, or a transaction exempt from registra-
tion thereunder, and shall not make any sale, transfer or
other disposition of the Shares or the Warrant in
violation of any applicable state securities laws,
including in each instance any applicable rules and
regulations promulgated thereunder, or in violation of
the Securities Act or the rules and regulations
promulgated thereunder by the Securities and Exchange
Commission (the "SEC").
2.2 No Registration. Gorlin acknowledges that the Shares and
the Warrant are not being registered under any state
securities laws, and are not being registered under the
Securities Act on the ground that this transaction is
exempt from registration under Section 3(b) and/or 4(2)
of the Securities Act, and that reliance by PESI on such
exemptions is predicated in part on Gorlin's
representations set forth herein.
2.3 Restricted Transfer. Gorlin agrees that PESI may refuse
to permit the sale, transfer or disposition of any of the
Shares or the Warrant received by Gorlin unless there is
in effect a registration statement under the Securities
Act and any applicable state securities law covering such
transfer or Gorlin furnishes an opinion of counsel or
other evidence, reasonably satisfactory to counsel for
PESI, to the effect that such registration is not
required.
2.4 Legend. Gorlin understands and agrees that stop transfer
instructions will be given to PESI's transfer agent and
that there will be placed on the certificate or
certificates for any of the Shares received by Gorlin,
any substitutions therefor and any certificates for any
additional shares which might be distributed with respect
to such Shares, a legend stating in substance:
"The shares of stock evidenced by this
certificate have been acquired for investment
and have not been registered under the
Securities Act of 1933, as amended (the
"Securities Act"). These shares may not be
sold or transferred except pursuant to an
effective registration statement under the
Securities Act and any applicable state
securities laws unless there is furnished to
the issuer an opinion of counsel or other
evidence, reasonably satisfactory to the
issuer's counsel, to the effect that such
registration is not required."
2.5 Indefinite Holding Period. Gorlin understands that under
the Securities Act, the Shares received by Gorlin must be
held indefinitely unless they are subsequently registered
under the Securities Act or unless an exemption from such
registration is available with respect to any proposed
transfer or disposition of such shares.
2.6 Rule 144 Compliance. Gorlin understands that PESI is
required to file periodic reports with the SEC and that
certain sales of the Shares received by Gorlin may be
exempt from registration under the Securities Act by
virtue of Rule 144 promulgated by the SEC under the
Securities Act, provided that such sales are made in
accordance with all of the terms and conditions of that
Rule including compliance with the required one-year
holding period. Gorlin further understands that if Rule
144 is not available for sales of the Shares received by
Gorlin, such Shares may not be sold without registration
under the Securities Act or compliance with some other
exemption from such registration, and that PESI has no
obligation to register the Shares or the Warrant received
or to be received by Gorlin hereunder or take any other
action necessary in order to make compliance with an
exemption from registration available.
2.7 Sophisticated Investor. Gorlin, as a member of the Board
of Directors of PESI, possesses extensive knowledge as to
the business and operation of PESI and has such knowledge
and experience in financial and business matters that he
is capable of evaluating the merits and risks of the
acquisition of the Shares.
2.8 Recission Period Under Florida Act. The shares of Common
Stock to be issued hereunder are also being sold in
reliance upon an exemption contained in Section
517.061(11) of the Florida Securities and Investors
Protection Act ("Florida Act"). The shares of Common
Stock issuable under this Agreement may not be reoffered
for sale or resold in the State of Florida unless such
are registered or the transaction is exempt under the
Florida Act. Any sale of Common Stock made under this
Agreement and Section 517.061(11) of the Florida Act is
voidable at the option of Gorlin within three (3) days
after the first tender of consideration is made by Gorlin
to PESI or its agent hereunder.
3. Representations and Warranties of PESI. PESI represents and
warrants as follows:
3.1 Organization and Standing. PESI is a corporation duly
organized, validly existing and in good standing under
the laws of the State of Delaware.
3.2 Power, Authority, and Validity. PESI has full right,
power and corporate authority to enter into this
Agreement and to perform the transactions contemplated
hereby, and this Agreement is valid and binding upon and
enforceable against PESI in accordance with its terms.
The execution, delivery and the performance of this
Agreement by PESI has been duly and validly authorized
and approved by all requisite action on the part of PESI
and Buyer.
3.3 Status of PESI Common Stock. The PESI Common Stock to be
issued pursuant to this Agreement, when so issued, will
be duly and validly authorized and issued, fully paid and
nonassessable.
4. Miscellaneous.
4.1 Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing
and shall be deemed to have been duly given if delivered
or mailed, first-class postage prepaid, to the following
at the addresses indicated:
To PESI: Perma-Fix Environmental Services, Inc.
c/o Chief Financial Officer
1940 Northwest 67th Place
Gainesville, Florida 32653
To Gorlin: Steve Gorlin
5115 New Peachtree Road, Suite 200
Chamblee, Georgia 30341
or to any other address that PESI or Gorlin shall
designate in writing.
4.2 Brokers. Each party represents and warrants that all
negotiations related to this Agreement have been carried
on by the parties without the intervention of any broker.
Each party agrees to indemnify, and hold the other party
harmless against any claims for fees or commissions
employed or alleged to have been employed by such party.
4.3 Amendment. This Agreement shall not be amended, altered
or terminated except by a writing executed by each party.
4.4 Governing Law. This Agreement shall be governed in all
respects by the law of the State of Delaware.
4.5 Headings. The paragraph headings used in this Agreement
are included solely for convenience, and shall not in any
way affect the meaning or interpretation of this
Agreement.
4.6 Entire Agreement. This Agreement sets forth the entire
understanding of the parties; further, this Agreement
shall supersede and/or replace any oral or written
Agreements relating to this subject matter entered into
by the parties before the date of this Agreement.
4.7 Binding Effect. This Agreement shall be binding on and
inure to the benefit of, and be enforceable by, the
respective heirs, legal representatives, successors, and
assigns of the parties pursuant to its terms.
PESI and Gorlin have executed this Agreement as of the 31st
day of July, 1997.
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
By: /s/ Richard T. Kelecy
____________________________________
RICHARD T. KELECY
Chief Financial Officer
/s/ Steve Gorlin
___________________________________
STEVE GORLIN, Individually
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of the 1st day of October, 1997, by and between PERMA-FIX
ENVIRONMENTAL SERVICES, INC., a Delaware corporation (the
"Company"), and DR. LOUIS F. CENTOFANTI (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company believes that the services, knowledge,
and contributions of the Executive to the Company are of critical
importance to the Company; and
WHEREAS, the Company wishes to ensure that the Executive will
continue to provide his services, knowledge, and contributions to
the Company.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations, and warranties set forth in this
Agreement, the Company and the Executive agree as follows:
1. Term. Unless sooner terminated pursuant to the terms hereof,
the term of this Agreement shall commence on the date hereof and
terminate three (3) years from the date hereof, subject to
extension by the mutual agreement of the parties (the "Term").
2. Position and Duties.
2.1 Position. The Company agrees to employ the Executive,
and the Executive agrees to such employment, as President
and Chief Executive Officer of the Company, or such other
position as the Executive indicates in writing as being
acceptable. The Executive's authority and duties,
including, but not limited to hierarchical standing in
the Company and reporting requirements within the
Company, shall be substantially similar in all material
respects with the most significant of those exercised by
the Executive during the 90-day period immediately
preceding the date of this Agreement.
2.2 Location. The Executive's duties and services shall be
performed in Atlanta, Georgia or any other office or
location satisfactory to the Executive.
2.3 Reasonable Attention. Excluding any periods of vacation
and sick leave to which the Executive is entitled, the
Executive agrees to faithfully perform the duties of his
office, and to devote reasonable attention and time to
the business and affairs of the Company, to the extent
consistent with Section 2.1 above.
<PAGE>
2.4 Other Activities. It shall not be a violation of this
Agreement for the Executive to (i) serve on corporate,
civic or charitable boards or committees, (ii) deliver
lectures, fulfill speaking engagements or teach at
educational institutes, (iii) manage personal
investments, and (iv) participate in other activities, so
long as such activities do not significantly interfere
with the performance of the Executive's responsibilities
as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that,
to the extent that any such activities have been
conducted by the Executive prior to the date of this
Agreement, the continued conduct of such activities, or
the conduct of activities similar in nature and scope
thereto subsequent to the date of this Agreement, shall
not be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
3. Compensation and Benefits.
3.1 Annual Base Salary. The Company shall pay to the
Executive an annual base salary of One Hundred Ten
Thousand Dollars ($110,000.00) per year ("Base Salary"),
payable to the Executive in equal semi-monthly
installments, less appropriate withholdings and
deductions in accordance with the Company's customary
payroll practices, subject to the adjustments listed
below.
3.1.1 Cost of Living Adjustment. Commencing October
1, 1998, and annually on each October 1 during
the Term of this Agreement, the Base Salary
shall be increased so that the Base Salary as
increased on October 1 bears the same ratio to
the Base Salary of the Executive on the
immediately preceding October 1 as the
Official Consumer Price Index published by the
Bureau of Labor Statistics, United States
Department of Labor for Urban Wage Earners and
Clerical Workers (1982-1984=100) for All
Items, United States City Average ("CPI"), in
effect on October 1 bears to the CPI on the
immediately preceding October 1, except that
no reductions in the Base Salary will be made
pursuant to this Section 3.1.1.
<PAGE>
3.1.2 Board Adjustment. Notwithstanding the
language of Section 3.1.1 above, the Base
Salary may be increased from time to time as
determined by the Board of Directors of the
Company (the "Board"), or the Compensation
Committee of the Board, in an amount greater
than provided for in Section 3.1.1 above.
3.2 Bonus. In addition to payment of the Base Salary, as
adjusted, the Company may pay to the Executive an annual
bonus to be determined by the Board or by the
Compensation Committee of the Board on an annual basis.
3.3 Benefits. The Executive shall be entitled to participate
in all employee benefit plans as are generally made
available to other employees of the Company, subject to
the terms and conditions of such benefits and plans and,
as such benefits and plans may be changed by the Company
from time to time. Such benefits in existence as of the
date hereof are as follows: (i) group medical insurance
coverage, (ii) group life insurance coverage and (iii)
certain stock option plans.
3.4 Expenses. The Company shall pay directly, or reimburse
the Executive, for any reasonable and necessary expenses
and costs incurred by the Executive in connection with,
or arising out of, the performance of the Executive's
duties hereunder, provided that such expenses and costs
shall be paid or reimbursed subject to such rules,
regulations, and policies of the Company as established
from time to time by the Company. In the event the
Executive incurs legal fees and expenses to enforce this
Agreement, the Company shall reimburse the Executive such
fees and expenses in full.
3.5 Fringe Benefits. During the term, the Executive shall be
entitled to all fringe benefits including, but not
limited to, vacation in accordance with the most
favorable plans, practices, programs and policies of the
Company during the 12-month period immediately preceding
the date of this Agreement, or, if more favorable to the
Executive, as in effect at any time thereafter with
respect to other employees of the Company.
4. Options.
4.1 Grant of Options and Option Prices. Subject to the terms
and conditions of this Section 4, the Company hereby
grants to the Executive as of the date of this Agreement,
and according to the terms and conditions hereunder, the
right, privilege and option to purchase 100,000 shares of
the Company's common stock, par value $.001 ("Common
Stock"), at an option price of $2.25 per share ("$2.25
Option"), 100,000 shares of Common Stock at an option
price of $2.50 per share ("$2.50 Option"), and 100,000
shares of Common Stock at an option price of $3.00 per
share ("$3.00 Option"). Collectively, the $2.25 Option,
$2.50 Option, and $3.00 Option are referred to herein as
the "Options."
4.2 Time of Exercise of Options.
4.2.1 $2.25 Option. Subject to the terms and
conditions contained in this Section 4, the
$2.25 Option herein granted may be exercised
by the Executive, in whole or in part, and
from time to time, at any time after the date
one year after the date of this Agreement
until the expiration of the date ten years
after the date of this Agreement.
4.2.2 $2.50 Option. Subject to the terms and
conditions contained in this Section 4, the
$2.50 Option herein granted may be exercised
by the Executive, in whole or in part, and
from time to time, at any time after the date
two years after the date of this Agreement
until the expiration of the date ten years
after the date of this Agreement.
4.2.3 $3.00 Option. Subject to the terms and
conditions contained in this Section 4, the
$3.00 Option herein granted may be exercised
by the Executive, in whole or in part, and
from time to time, at any time after the date
three years after the date of this Agreement
until the expiration of the date ten years
after the date of this Agreement.
4.2.4 Change of Control. Upon a change in control
(as defined below) of the Company, the Options
shall become immediately exercisable in full,
notwithstanding the vesting schedule provided
herein. A "change in control" shall be deemed
to have occurred upon any of the following
events: (i) consummation of any of the
following transactions: any merger,
recapitalization, or other business
combination of the Company pursuant to which
the Company is the non-surviving corporation,
unless the majority of the holders of Common
Stock immediately prior to such transaction
will own at least fifty-one percent (51%) of
the total voting power of the then outstanding
securities of the surviving corporation
immediately after such transaction; (ii) a
transaction in which any person, corporation
or other entity (A) shall purchase any Common
Stock pursuant to a tender offer or exchange
offer, without the prior consent of the Board
or (B) shall become after the date of this
Agreement the "beneficial owner" (as such term
is defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) of
securities of the Company representing twenty-
five percent (25%) or more of the total voting
power of the then outstanding securities of
the Company; or (iii) if, during any period of
two (2) consecutive years, individuals who, at
the beginning of such period, constituted the
entire Board and any new director whose
election by the Board, or nomination for
election by the Company's stockholders was
approved by a vote of at least two-thirds of
the directors then still in office who either
were directors at the beginning of the period
or whose election or nomination for election
by the stockholders was previously so
approved, cease for any reason to constitute a
majority thereof.
4.2.5 Acceleration of Vesting. The Board may, in
its sole discretion, accelerate the vesting of
all or any part of the Options and/or waive
any limitations or restrictions, if any, for
all or any part of the Options.
4.3 Method of Exercise and Payment of Exercise Price.
4.3.1 Subject to the terms of this Section 4, the
Options granted under this Agreement may be
exercised by written notice directed to the
Company at its principal place of business
setting forth the exact number of shares under
each of the $2.25 Option, the $2.50 Option and
the $3.00 Option, as applicable, that the
Executive is purchasing, which may not exceed
the number of shares that the Executive is
eligible to purchase under this Agreement, and
enclosing with such written notice a certified
or cashier's check or cash, or the equivalent
thereof acceptable to the Company, in payment
of the full option price for the number of
shares specified in such written notice and
shall comply with such other reasonable
requirements as the Board may establish.
Subject to the terms and conditions of this
Agreement, the Company shall make delivery of
such shares within a reasonable period of time
after the giving of such notice.
4.3.2 The Executive understands that, on the
exercise of the Options (or at the time a sale
of the stock acquired by such exercise at a
profit would no longer subject Executive to
suit under Section 16(b) of the Securities
Exchange Act of 1934, as amended), the excess
of the fair market value of the Common Stock
over its option price is taxable remuneration
to him subject to federal income tax
withholding by the Company. To facilitate
withholding by the Company, if required,
Executive hereby agrees that the
exercisability of the Options is conditional
on Executive agreeing to such arrangements and
taking such actions as the Company determines
are appropriate to insure that the amount
required to be withheld will be available for
payment in money by the Company as required
withholding.
4.4 Termination of Options. The Options granted herein, to
the extent not theretofore exercised, shall terminate
forthwith upon the tenth anniversary of the date of this
Agreement. Notwithstanding anything herein to the
contrary, termination of this Agreement for any reason
whatsoever shall not affect or terminate the Executive's
rights under Sections 4 and 9.
<PAGE>
4.5 Restrictions.
4.5.1 The Options granted herein are not
transferable by Executive, except by will or
laws of descent and distribution..
4.5.2 Executive shall have no right as a stockholder
with respect to any shares covered by the
Options until the date of issuance of a stock
certificate to him for such shares. No
adjustment shall be made for dividends or
other rights for which the record date is
prior to the date such stock certificate is
issued.
4.6 Stock Dividends, Reorganizations. If and to the extent
that the number of issued shares of Common Stock shall be
increased or reduced resulting from a subdivision or
consolidation of shares or the payment of a stock
dividend or any other increase or decrease in the number
of such shares of Common Stock of the Company effected
without receipt of consideration by the Company, the
number of shares of Common Stock subject to the Options
and the option price therefor shall be proportionately
adjusted.
If the Company is reorganized or consolidated or merged
with another corporation, in which the Company is the
non-surviving corporation, the Executive shall be
entitled to receive options covering shares of such
reorganized, consolidated or merged company in the same
proportion as optioned under this Agreement to Executive
prior to such reorganization, consolidation or merger, at
any equivalent price, and subject to the same terms and
conditions as contained herein. For purposes of the
preceding sentence, the excess of the aggregate fair
market value of the shares subject to the Options
immediately after the reorganization, consolidation or
merger over the aggregate option price of such shares
shall not be more than the excess of the aggregate fair
market value of all shares subject to the Options
immediately before such reorganization, consolidation or
merger over the aggregate option price of such shares,
and the new option or assumption of the Options shall not
give Executive additional benefits which he did not have
under the Options.
The grant of the Options shall not affect in any way the
right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its
capital or business structure or to merge or to
consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
4.7 Compliance with Law and Approval of Regulatory Bodies.
No shares will be issued, or, in the case of treasury
shares transferred, upon exercise of the Options granted
hereunder, except in compliance with all applicable
Federal and State laws and regulations and in compliance
with rules of stock exchanges on which the Company's
shares of Common Stock may be listed.
<PAGE>
4.8 Binding Effect and Amendments. This Agreement shall be
binding upon the heirs, executors, administrators and
successors of the parties hereto. This Agreement may not
be amended except in writing signed by all of the parties
hereto.
4.9 Other Restrictions and Legends.
4.9.1 Acquisition for Own Account; Registration. The
Executive represents and warrants that if he acquires any
of the shares under the Options he will acquire such
shares for his own account and for the purpose of
investment and not with a view to the sale or
distribution thereof, except for sales pursuant to an
effective registration statement under the Securities Act
of 1933 (the "Act") or pursuant to an exemption from
registration under the Act. The Executive understands
that these shares have not and will not have been
registered under the Act (the Company being under no
obligation to effect such registration) and that such
shares must be held indefinitely unless a subsequent
disposition thereof is registered under the Act or is
exempt from registration. The Executive further
understands that the exemption from registration afforded
by Rule 144 under the Act depends upon the satisfaction
of various conditions and that, if applicable, Rule 144
affords the basis for sale of such shares only in limited
amounts.
4.9.2 Disposition of Shares. The Executive
represents, covenants, and agrees that he will not sell
or otherwise dispose of the shares acquired under this
Agreement in the absence of (a) an effective registration
statement under the Act, (b) an opinion acceptable in
form and substance to the Company from Executive's
counsel satisfactory to the Company, or an opinion of
counsel to the Company, to the effect that no
registration is required for such disposition, or (c) a
"no-action" letter from the staff of the Securities &
Exchange Commission ("SEC") to the effect that such staff
will not recommend any action to the SEC if such a
disposition takes place without registration.
4.9.3 Restrictive Legend. The certificates
representing shares covered by this Agreement shall upon
issuance thereof have stamped or imprinted thereon or
affixed thereto a legend to the following effect:
THE REGISTERED HOLDER HEREOF HAS ACQUIRED
THE SHARES REPRESENTED BY THIS
CERTIFICATE FOR INVESTMENT AND NOT FOR
RESALE IN CONNECTION WITH A DISTRIBUTION
THEREOF. ACCORDINGLY, SUCH SHARES HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO A CURRENTLY EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR
OTHERWISE IN A TRANSACTION EXEMPT FROM
THE PROVISIONS OF SECTION 5 OF SAID ACT."
5. No Offset; Legal Fees and Expenses. The Company's obligation
to make the payments provided for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company
may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement. The Company agrees to pay, to the
full extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company or others of the
validity or enforceability of, or liability under, any provision of
this Agreement, plus in each case interest, compounded quarterly,
on the total unpaid amount determined to be payable under this
Agreement, such interest to be calculated at a rate equal to the
prime commercial lending rate as published in the Wall Street
Journal from time to time during the period of such nonpayment.
6. Confidential Information.
6.1 Confidentiality. During the term of this Agreement and
for 12 months following termination of this Agreement,
the Executive agrees to hold in a fiduciary capacity for
the benefit of the Company all secret or confidential
information, knowledge or data ("Confidential
Information") relating to the Company or any of its
affiliated companies, and their respective businesses,
which shall have been obtained by the Executive during
the Executive's employment by the Company or any of its
affiliated companies and which shall not be public
knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). After
termination of the Executive's employment with the
Company, the Executive shall not, without the prior
written consent of the Company, communicate or divulge
such Confidential Information to anyone other than the
Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section 6
constitute a basis for deferring or withholding any
amounts otherwise payable or issuable to the Executive
under this Agreement.
6.2 Exceptions. Notwithstanding the provisions of Sections
6.1 and 6.3 hereof, the Executive shall not be held
liable for disclosure of Confidential Information which
(i) was generally available to the public at the time of
its disclosure hereunder or becomes generally available
to the public subsequent to the time of disclosure
hereunder through means unrelated to the Executive's
disclosure hereunder; or (ii) is reasonably necessary to
perform the Executive's duties under this Agreement; or
(iii) is disclosed with the written approval of the
Company; or (iv) is required to be disclosed by law or by
any governmental authority or entity; or (v) is disclosed
as required by judicial or tribunal action after all
available legal remedies to maintain the Confidential
Information in secret shall have been exhausted; or (vi)
a party can demonstrate was already in its possession
prior to any disclosure thereof under this Agreement.
6.3 Equitable Relief. The Executive agrees that the remedy
at law for any breach or threatened breach of any
covenant contained in this Section 6 will be inadequate,
and that the Company, in addition to such other remedies
as may be available to it, in law or in equity, shall be
entitled to injunctive relief without bond or other
security.
7. Termination.
During the Term of this Agreement, the Executive's employment
and the Agreement may be terminated only for one of the following
reasons:
7.1 Death. Subject to Section 4.5.1, this Agreement and the
Term shall terminate automatically upon the Executive's
death.
7.2 Disability.
7.2.1 Definition. "Disability" of the Executive is
defined, for the purposes of this Agreement,
as physical or mental disability of the
Executive which after a continuous period of
at least 180 days is determined to be total
and permanent by a physician selected by the
Company and acceptable to the Executive or the
Executive's legal representative.
7.2.2 Application. The Company may terminate the
Agreement and the Term after establishing the
Executive's Disability as set forth in Section
7.2.1, and by giving written notice of its
intention to terminate the Executive's
employment with the Company ("Disability
Termination Notice"). In such a case, the
Executive's employment with the Company and
the Term shall terminate effective on the
earlier of the otherwise scheduled expiration
of the Term pursuant to Section 1 or on the
thirtieth (30th) day after receipt of the
Disability Termination Notice, provided that
the Executive has not resumed full-time
performance of his duties under this
Agreement.
7.3 Cause. The Company may terminate the Agreement and the
Term for "Cause," which for the purposes of this
Agreement is defined as (i) the ultimate conviction
(after all appeals have been decided) of the Executive of
a felony involving moral turpitude by a federal or state
court of competent jurisdiction; or (ii) willful, gross
misconduct or willful, gross neglect of duties by the
Executive if such has resulted in material damage to the
Company taken as a whole; provided that, (a) no action or
failure to act by the Executive will constitute a reason
for termination if the Executive believed in good faith
that such action or failure to act was in the Company's
best interests, and (b) failure of the Executive to
perform his duties hereunder due to a Disability shall
not be considered willful, gross misconduct or willful,
gross neglect of duties for any purpose.
7.4 Good Reason. The Executive may terminate the Agreement
for "Good Reason," which is defined for the purposes of
this Agreement as (i) the assignment to the Executive of
any duties inconsistent with the Executive's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities that
he has had during the 90 day period immediately preceding
the date of this Agreement; or (ii) any other action by
the Company which results in a diminishment in such
position, authority, duties or responsibilities, other
than an insubstantial and inadvertent action which is
remedied by the Company after receipt of notice thereof
by the Executive; or (iii) the Company's requiring the
Executive to be based at any office or location other
than that at which the Executive is based at the date of
this Agreement, except for travel reasonably required in
the performance of the Executive's responsibilities; or
(iv) any purported termination by the Company of the
Executive's employment with the Company otherwise than as
permitted by this Agreement, it being understood that any
such purported termination shall not be effective for any
purpose of this Agreement.
8. Notice of Termination.
8.1 By Company. The Company shall not be deemed to have
terminated this Agreement pursuant to the terms of
Section 7 hereof, unless and until there shall have been
delivered to the Executive a copy of a resolution
("Notice of Termination for Cause") duly adopted by the
affirmative vote of not less than three-fourths of the
entire Board of Directors of the Company at a meeting of
the Board called and held for such purpose (after
reasonable notice to the Executive and an opportunity for
the Executive, together, with the Executive's counsel, to
be heard before the Board), finding that in the good
faith opinion of the Board, the Executive should be
terminated pursuant to Section 7, and specifying the
particulars thereof in detail.
8.2 By Executive. The Executive shall not be deemed to have
terminated this Agreement pursuant to the terms of
Section 7 hereof, unless and until there shall have been
delivered by the Executive to the Company a "Notice of
Termination for Good Reason" which shall state the
specific termination provision relied upon, and
specifying the particulars thereof in detail.
9. Company Obligations Upon Termination. If, during the Term of
this Agreement, the Company shall terminate this Agreement other
than for Cause, or the Executive shall terminate this Agreement for
Good Reason, the Company shall pay to the Executive in a lump sum
in cash on the date of such termination an amount equal to the
amount which would have been paid to Executive under the Agreement
if this Agreement had remained in effect through the Term using the
Base Salary in effect at the time of delivery date of the Notice of
Termination for Cause or the Notice of Termination for Good Reason,
as applicable, and without making any adjustments to Base Salary
pursuant to Section 3.1.1. Options shall become vested and fully
exercisable for the full ten-year period.
10. Successors.
10.1 This Agreement shall inure to the benefit of and be
enforceable by the Executive and the Executive's legal
representatives.
10.2 This Agreement shall inure to the benefit of and be
binding upon the Company and its successors.
11. Miscellaneous.
11.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties
hereto or their respective successors and legal
representatives.
11.2 Notices. All notices and other communications hereunder
shall be in writing and shall be given by hand delivery
to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Dr. Louis F. Centofanti
315 Wilderlake Court
Atlanta, Georgia 30328
If to the Company:
Perma-Fix Environmental Services, Inc.
1940 Northwest 67th Place
Gainesville, Florida 32653
Attn: Chief Financial Officer
<PAGE>
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when
actually received by the addressee.
11.3 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity
or enforceability of any other provision of this
Agreement.
11.4 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject
matter hereof and supersedes any and all prior or
contemporaneous oral and prior written agreements and
understandings. There are no oral promises, conditions,
representations, understandings, interpretations or terms
of any kind as conditions or inducements to the execution
hereof or in effect among the parties. This Agreement
may not be amended, and no provision hereof shall be
waived, except by a writing signed by all the parties to
this Agreement, or, in the case of a waiver, by the party
waiving compliance therewith, which states that it is
intended to amend or waive a provision of this Agreement.
Any waiver of any rights or failure to act in a specific
instance shall relate only to such instance and shall not
be construed as an agreement to waive any rights or
failure to act in any other instance, whether or not
similar.
11.5 Modification. Should any provision of this Agreement be
unenforceable or prohibited by an applicable law, this
Agreement shall be considered divisible as to such
provision which shall be inoperative, and the remainder
of this Agreement shall be valid and binding as though
such provision were not included herein.
11.6 Counterparts. This Agreement may be executed in two or
more counterparts with the same effect as if the
signatures to all such counterparts were upon the same
instrument, and all such counterparts shall constitute
but one instrument.
11.7 Headings. All headings in this Agreement are for
convenience only and are not intended to affect the
meaning of any provision hereof.
IN WITNESS WHEREOF, the Executive has hereunto set his
hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in
its name on its behalf, all as of the day and year first above
written.
"EXECUTIVE"
_______________________________
Dr. Louis F. Centofanti
"COMPANY"
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By: __________________________
Title ________________________
ISTE:\N-P\PESI\10Q\997\EXHIB10.9
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0
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