================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
_______________________
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
______ ______
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 July 31, 1998
_____ ________________________________
Common Stock, $.001 Par Value 12,138,837
_____________________________ __________
(excluding 920,000 shares
held as treasury stock)
_________________________
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<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
INDEX
Page No.
________
PART I FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets -
June 30, 1998 and December 31, 1997. . . 2
Consolidated Statements of Operations -
Three Months and Six Months Ended
June 30, 1998 and 1997 . . . . . . . . . 4
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1998
and 1997 . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial
Statements . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . 15
PART II OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . 22
Item 2. Changes in Securities and Use of
Proceeds . . . . . . . . . . . . . . . . 22
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . 28
Item 5. Other Information. . . . . . . . . . . . . 29
Item 6. Exhibits and Reports on Form 8-K . . . . . 30
</TABLE>
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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, 1997.
The results of operations for the six months ended June 30,
1998, are not necessarily indicative of results to be expected for
the fiscal year ending December 31, 1998.
1
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<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
June 30,
(Amounts in Thousands, 1998 December 31,
Except for Share Amounts) (Unaudited) 1997
___________________________________________________________________
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 508 $ 314
Restricted cash equivalents
and investments 329 321
Accounts receivable, net of
allowance for doubtful accounts
of $311 and $374, respectively 5,141 5,282
Preferred Stock receivable 2,768 -
Insurance claim receivable - 1,475
Inventories 140 119
Prepaid expenses 1,013 567
Other receivables 48 70
Assets of discontinued operations 459 587
_________ ________
Total current assets 10,406 8,735
Property and equipment:
Buildings and land 5,552 5,533
Equipment 8,205 7,689
Vehicles 1,242 1,202
Leasehold improvements 16 16
Office furniture and equipment 960 1,056
Construction in progress 1,610 1,052
_________ ________
17,585 16,548
Less accumulated depreciation (6,000) (5,564)
_________ ________
Net property and equipment 11,585 10,984
Intangibles and other assets:
Permits, net of accumulated amorti-
zation of $954 and $831,
respectively 3,725 3,725
Goodwill, net of accumulated amorti-
zation of $661 and $580,
respectively 4,788 4,701
Other assets 430 425
________ ________
Total assets $ 30,934 $ 28,570
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS, CONTINUED
June 30,
(Amounts in Thousands, 1998 December 31,
Except for Share Amounts) (Unaudited) 1997
___________________________________________________________________
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,021 $ 2,263
Accrued expenses 3,141 3,380
Revolving loan and term note
facility 625 614
Current portion of long-term debt 310 254
Current liabilities of discontinued
operations 911 1,470
_________ _______
Total current liabilities 7,008 7,981
Environmental accruals 441 525
Accrued closure costs 847 831
Long-term debt, less current portion 4,455 3,997
Long-term liabilities of discontinued
operations 3,035 3,042
_________ _______
Total long-term liabilities 8,778 8,395
Commitments and contingencies
(see Note 4) - -
Stockholders' equity:
Preferred Stock, $.001 par value;
2,000,000 shares authorized,
9,850 and 6,850 shares issued
and outstanding, respectively - -
Common Stock, $.001 par value;
50,000,000 shares authorized,
12,921,746 and 12,540,487 shares
issued, including 920,000
shares held as treasury stock 13 12
Redeemable warrants 140 140
Additional paid-in capital 37,680 34,363
Accumulated deficit (20,915) (20,551)
________ _______
16,918 13,964
Less Common Stock in treasury at
cost; 920,000 shares issued
and outstanding (1,770) (1,770)
________ _______
Total stockholders' equity 15,148 12,194
________ _______
Total liabilities and
stockholders' equity $ 30,934 $ 28,570
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
3
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<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
June 30,
(Amounts in Thousands, __________________________
Except for Share Amounts) 1998 1997*
___________________________________________________________________
<S> <C> <C>
Net revenues $ 7,678 $ 6,697
Cost of goods sold 5,238 4,554
________ ________
Gross profit 2,440 2,143
Selling, general and administrative
expenses 1,679 1,434
Depreciation and amortization 527 497
________ ________
Income (loss) from operations 234 212
Other income (expense):
Interest income 9 11
Interest expense (142) (129)
Other 115 (20)
________ ________
Net income (loss) from
continuing operations 216 74
Discontinued operations:
Loss from operations - (517)
________ _________
Net income (loss) 216 (443)
Preferred Stock dividends 89 82
________ _________
Net income (loss) applicable
to Common Stock $ 127 $ (525)
======== =========
_________________________________________
Basic and fully diluted income
(loss) per share:
Continuing operations $ 0.1 $ -
Discontinued operations - (.05)
________ ________
Net income (loss) per share $ .01 $ (.05)
======== ========
Weighted average number of common
shares outstanding 11,965 10,195
======== ========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended
June 30,
(Amounts in Thousands, __________________________
Except for Share Amounts) 1998 1997*
___________________________________________________________________
<S> <C> <C>
Net revenues $ 14,236 $12,447
Cost of goods sold 10,025 8,862
________ ________
Gross profit 4,201 3,585
Selling, general and administrative
expenses 3,234 2,725
Depreciation and amortization 1,035 997
________ ________
Income (loss) from operations (68) (137)
Other income (expense):
Interest income 17 20
Interest expense (269) (260)
Other 132 (29)
________ ________
Net income (loss) from
continuing operations (188) 406)
Discontinued operations:
Loss from operations - (953)
________ _________
Net income (loss) (188) (1,359)
Preferred Stock dividends 176 163
________ _________
Net income (loss) applicable
to Common Stock $ (364) $ (1,522)
======== =========
_________________________________________
Basic and fully diluted income
(loss) per share:
Continuing operations $ (0.3) $ (.05)
Discontinued operations - (.10)
________ ________
Net income (loss) per share $ (.03) $ (.15)
======== ========
Weighted average number of common
shares outstanding 11,836 9,958
======== ========
<FN>
*Amounts have been restated from that previously reported to
reflect the discontinued operations at Perma-Fix of Memphis, Inc.
(See Note 2).
</FN>
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
4
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<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
(Amounts in Thousands, _______________________
Except for Share Amounts) 1998 1997*
___________________________________________________________________
<S> <C> <C>
Cash flows from operating activities:
Net loss from continuing
operations $ (188) $ (406)
Adjustments to reconcile net loss
to cash provided by (used in)
operations:
Depreciation and amortization 1,035 997
Provision for bad debt and other
reserves 19 26
Gain on sale of plant, property
and equipment - (4)
Changes in assets and liabilities,
net of effects from business
acquisitions:
Accounts receivable 136 165
Prepaid expenses, inventories and
other assets 930 629
Accounts payable and accrued expenses (461) (946)
________ ________
Net cash provided by continuing
operations 1,471 461
________ ________
Net cash used by discontinued operations (417) (812)
________ ________
Cash flows from investing activities:
Purchases of property and equipment,
net (1,027) (343)
Proceeds from sale of plant,
property and equipment - 40
Change in restricted cash, net (16) (20)
Net cash used by discontinued
operations - (33)
________ _________
Net cash used in investing
activities (1,043) (356)
Cash flows from financing activities:
Borrowings (repayments) of
revolving loan and term note
facility 262 (1,405)
Principal repayments on long-term debt (113) (695)
Proceeds from issuance of stock 55 2,916
Net cash used by discontinued
operations (30) (4)
________ ________
Net cash provided by
financing activities 174 812
Increase in cash and cash equivalents 185 105
Cash and cash equivalents at beginning
of period including discontinued
operations of $12, and $8,
respectively 326 45
________ ________
Cash and cash equivalents at end
of period, including discontinued
operations of $3, and $28,
respectively $ 511 $ 150
======== ========
________________________________________________________________
Supplemental disclosure:
Interest paid $ 351 $ 386
Non cash investing and financing
activities:
Issuance of Common Stock for services 218 60
Long-term debt incurred for purchase
of property 330 287
Issuance of stock for payment of
dividends 183 156
<FN>
*Amounts have been restated from that previously reported to
reflect the discontinued operations at Perma-Fix of Memphis, Inc.
(see Note 2).
</FN>
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
5
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<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(For the six months ended June 30, 1998)
Preferred Stock Common Stock
Amounts in Thousands, _________________ ____________________
Except for Share Amounts Shares Amount Shares Amount
___________________________________________________________________________
<S> <C> <C> <C> <C>
Balance at December 31, 1997 6,850 $ - 12,540,487 $ 12
Net Loss - - - -
Issuance of Common Stock for
Preferred Stock dividend - - 85,216 1
Issuance of Preferred Stock 3,000 - - -
Issuance of Common Stock
for acquisition - - 108,207 -
Issuance of stock for cash
and services - - 146,836 -
Exercise of warrants - - 40,000 -
Option Exercise - - 1,000 -
_______ ________ __________ ________
Balance at June 30, 1998 9,850 $ - 12,921,746 $ 13
======= ========= ========== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Common
Additional Stock
Redeemable Paid-In Accumulated Held in
Warrants Capital Deficit Treasury
______________________________________________________
<S> <C> <C> <C> <C>
$ 140 $ 34,363 $ (20,551) $ (1,770)
- - (364) -
- 183 - -
- 2,653 - -
- 207 - -
- 234 - -
- 39 - -
- 1 - -
________ ________ __________ __________
$ 140 $ 37,680 $ (20,915) $ (1,770)
======== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
6
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<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
(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, 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.
Basic income (loss) per share is computed by dividing net
income, after deducting Preferred Stock dividends, by the weighted
average number of common shares outstanding during each period.
Fully diluted income per share is computed by dividing net
income, before deduction of Preferred Stock dividends, by the
weighted average number of common shares and potentially common
shares outstanding during each period. The weighted average number
of common and potentially common shares outstanding for the quarter
ended June 30, 1998, was 18,021,614. The incremental shares that
would have been outstanding under certain warrants and options for
all other periods have not been included since their effects would
be antidilutive, and as a result, fully diluted and basic loss per
share are the same.
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 and requires dual presentation of
basic and diluted EPS on the face of the income statement for all
entities with complex capital structures SFAS 128 also 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 was adopted effective December 31, 1997.
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. FAS 130 has no effect on the Company's
financial statements. FAS 131 is effective for the Company's
financial statements and is discussed in Note 5.
2. Discontinued Operations
_______________________
On January 27, 1997, an explosion and resulting tank fire
occurred at the Company's subsidiary, Perma-Fix of Memphis, Inc.
("PFM"), 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. During the remainder of 1997,
PFM continued to accept waste for processing and disposal, but
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 resulted in higher costs to PFM than if PFM were able to
7
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store and process such waste at PFM, its Memphis, Tennessee,
facility, along with the additional handling and transportation
costs associated with these activities. As a result of the
significant disruption and the cost to rebuild and operate this
segment, the Company made a strategic decision, in February 1998,
to discontinue its fuel blending operations at PFM. The fuel
blending operations represented the principal line of business for
PFM prior to this event, which included a separate class of
customers, and its discontinuance has required PFM to attempt to
develop new markets and customers. PFM currently provides, on a
limited basis, off-site waste storage and transfer services.
Accordingly, during the fourth quarter of 1997, the Company
recorded a loss on disposal of discontinued operations of
$3,053,000, which included $1,272,000 for impairment of certain
assets and $1,781,000 for the establishment of certain closure
liabilities.
The net loss from discontinued PFM operations for the six
months ended June 30, 1998, was $227,000 and was recorded against
the accrued closure cost estimate on the balance sheet. The net
loss for the six months ended June 30, 1997, was $953,000 and is
shown separately in the Consolidated Statements of Operations. The
Company has restated the 1997 operating results to reflect this
discontinued operations. The results of the discontinued PFM
operations do not reflect management fees charged by the Company,
but do include interest expense of $41,000 and $109,000 during the
six months ended June 30, 1998 and 1997, respectively, specifically
identified to such operations as a result of such operations
incurring debt under the Company's revolving and term loan credit
facility. During March of 1998, the Company received a settlement
in the amount of $1,475,000 from its insurance carrier for the
business interruption claim which was recorded as an insurance
claim receivable at December 31, 1997. This settlement was
recognized as a gain in 1997 and thereby reduced the net loss
recorded for the discontinued PFM operations in 1997.
Revenues of the discontinued PFM operations were $532,000 for
the six months ended June 30, 1998, and $1,189,000 for the six
months ended June 30, 1997. These revenues are not included in
revenues as reported in the Consolidated Statements of Operation.
<TABLE>
<CAPTION>
Net assets and liabilities of the discontinued PFM operations at
the six months ended June 30, 1998, and December 31, 1997, in
thousands of dollars, consisted of the following:
June 30, December 31,
1998 1997
____________ ___________
<S> <C> <C>
Assets of discontinued operations:
Cash and cash equivalents $ 3 $ 12
Restricted cash equivalents and investments 214 214
Accounts receivable, net of allowance
for doubtful accounts $103 and $105,
respectively 211 333
Prepaid expenses and other assets 31 28
___________ ___________
$ 459 $ 587
=========== ===========
Current liabilities of discontinued operations:
Accounts payable $ 188 $ 277
Accrued expenses 151 259
Accrued environmental costs 496 835
Current portion of long-term debt 76 99
__________ __________
$ 911 $ 1,470
========== ==========
Long-term liabilities of discontinued operations:
Long-term debt, less current portion $ 10 $ 17
Accrued environmental and closure costs 3,025 3,025
_________ ________
$ 3,035 $ 3,042
========= ========
</TABLE>
The accrued environmental and closure costs, as related to
PFM, total $3,025,000 at June 30, 1998, which includes the
Company's current closure cost estimate of approximately $700,000
for the complete cessation of operations and closure of the
facility ("RCRA Closure") based upon guidelines of the Resource
Conservation and Recording Act of 1976, as amended ("RCRA"). A
majority of this liability relates to the discontinued fuel
blending and tank farm operations and will be recognized over the
8
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next three years. Also included in this accrual is the Company's
estimate of the cost to complete groundwater remediation at the
site of approximately $970,000, the future operating losses as the
Company discontinues its fuel blending operations and certain other
contingent liabilities.
3. Long-Term Debt
______________
<TABLE>
<CAPTION>
Long-term debt consists of the following at June 30, 1998, and
December 31, 1997 (in thousands):
June 30, December 31,
1998 1997
_________ ___________
<S> <C> <C>
Revolving loan facility dated
January 15, 1998, collateral-
ized by eligible accounts
receivables, subject to monthly
borrowing base calculation,
variable interest paid monthly
at prime rate plus 1 3/4. $ 2,186 $ 1,664
Term loan agreement dated January 15,
1998, payable in monthly principal
installments of $52, balance due
in January 2001, variable interest
paid monthly at prime rate plus
1 3/4. 2,240 2,500
Mortgage note agreement payable in
quarterly installments of $15,
plus accrued interest at 10%.
Balance due October 1998 secured
by real property. 31 61
Various capital lease and promissory
note obligations, payable 1998 to
2002, interest at rates ranging
from 8.0% to 15.9%. 933 640
________ _______
5,390 4,865
Less current portion of revolving
loan and term note facility 625 614
Less current portion of long-term debt 310 254
________ ________
$ 4,455 $ 3,997
======== ========
</TABLE>
On January 15, 1998, the Company, as parent and guarantor,
and all direct and indirect subsidiaries of the Company, as co-
borrowers and cross-guarantors, entered into a Loan and Security
Agreement ("Agreement") with Congress Financial Corporation
(Florida) as lender ("Congress"). The Agreement provides for a
term loan in the amount of $2,500,000, which requires principal
repayments based on a four-year level principal amortization over
a term of 36 months, with monthly principal payments of $52,000.
Payments commenced on February 1, 1998, with a final balloon
payment in the amount of approximately $573,000 due on January 14,
2001. The Agreement also provides for a revolving loan facility in
the amount of $4,500,000. At any point in time the aggregate
available borrowings under the facility are subject to the maximum
credit availability as determined through a monthly borrowing base
calculation, as updated for certain information on a weekly basis,
equal to 80% of eligible accounts receivable accounts of the
Company as defined in the Agreement. The termination date on the
revolving loan facility is also the third anniversary of the
closing date. The Company incurred approximately $237,000 in
financing fees relative to the solicitation and closing of this
loan agreement (principally commitment, legal and closing fees)
which are being amortized over the term of the Agreement.
Pursuant to the Agreement, the term loan and revolving loan
both bear interest at a floating rate equal to the prime rate plus
1 3/4%. The Agreement also provides for a one time rate adjustment
of 1/4%, subject to the company meeting certain 1998 performance
objectives. The loans also contain certain closing, management and
unused line fees payable throughout the term. The loans are
subject to a 3.0% prepayment fee in the first year, 1.5% in the
second and 1.0% in the third year of the Agreement.
As security for the payment and performance of the Agreement,
the Company granted a first security interest in all accounts
receivable, inventory, general intangibles, equipment and other
assets of the Company and subsidiaries, as well as the mortgage on
two (2) of the Company's facilities. The Agreement contains
affirmative covenants including, but not limited to, certain
9
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financial statement disclosures and certifications, management
reports, maintenance of insurance and collateral. The Agreement
also contains an adjusted net worth financial covenant, as defined
in the Agreement, of $3,000,000.
The proceeds of the Agreement were utilized to repay in full
on January 15, 1998, the outstanding balance of the Heller
Financial, Inc. ("Heller") which was comprised of a revolving loan
and security agreement, loan and term loan, and to repay and buyout
all assets under the Ally Capital Corporation ("Ally") equipment
financing agreements. As of December 31, 1997, the borrowings
under the Heller revolving loan facility totaled $2,652,000 with
borrowing availability of approximately $762,000. The balance of
the revolving loan on January 15, 1998, as repaid pursuant to the
Congress agreement was $2,289,000. The balance under the Heller
term loan at December 31, 1997, was $867,000. The Company
subsequently made a term loan payment of $41,000 on January 2,
1998, resulting in a balance of $826,000, as repaid pursuant to the
Congress Agreement. As of December 31, 1997, the outstanding
balance on the Ally Equipment Financing Agreement was $624,000 and
represents the principal balance repaid pursuant to the Congress
Agreement. In conjunction with the above debt repayments, the
Company also repaid a small mortgage, paid certain fees, taxes and
expenses, resulting in an initial Congress term loan of $2,500,000
and revolving loan balance of $1,705,000 as of the date of closing,
the Company had borrowing availability under the Congress Agreement
of approximately $1,500,000. The Company recorded the December 31,
1997, Heller and Ally debt balances as though the Congress
transaction had been closed as of December 31, 1997. As of June
30, 1998, the borrowings under the Congress revolving loan facility
totaled $2,186,000 with borrowing availability of approximately
$1,069,000. The balance under the Congress term loan at June 30,
1998, was $2,240,000.
During June 1998, the Company entered into a master security
agreement and secured promissory note in the amount of
approximately $317,000 for the purchase and financing of certain
capital equipment at the Perma-Fix of Florida, Inc. facility. The
term of the promissory note is for sixty (60) months, at a rate of
11.58% per annum and monthly installments of approximately $7,000.
As further discussed in Note 2, the long-term debt associated
with the discontinued PFM operation is excluded from the above and
is recorded in the Liabilities of Discontinued Operations total.
The PFM debt obligations total $86,000, of which $76,000 is
current.
4. 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
In the normal course of conducting its business, the Company
is involved in various litigation. There has been no material
changes in legal proceedings from those disclosed previously in the
Company's Form 10-K for year ended December 31, 1997. The Company
is not a party to any litigation or governmental proceeding which
its management believes could result in any judgements 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 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.
10
<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.
Discontinued Operations
As previously discussed, the Company made the strategic
decision in February 1998 to discontinue its fuel blending
operations at the PFM facility. The Company has, based upon the
best estimates available, recognized accrued environmental and
closure costs in the aggregate amount of $3,521,000. This
liability includes principally, the RCRA closure liability, the
groundwater remediation liability, the potential additional site
investigation and remedial activity which may arise as PFM proceeds
with its closure activities and the Company's best estimate of the
future operating losses as the Company discontinues its fuel
blending operations and other contingent liabilities.
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 $2 million
per occurrence and $4 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.
5. Business Segment Information
____________________________
The Company provides services through two business segments.
The Waste Management Services segment, which provides on-and-off-
site treatment, storage, processing and disposal of hazardous and
non-hazardous industrial and commercial, mixed waste, and
wastewater through its five treatment, storage and disposal
facilities ("TSD facilities"); Perma-Fix Treatment Services, Inc.
("PFTS"), Perma-Fix of Dayton, Inc. ("PFD"), Perma-Fix of Ft.
Lauderdale, Inc. ("PFFL"), Perma-Fix of Florida, Inc. ("PFF") and
PFM. The Company has discontinued all fuel blending activities at
its PFM facility, the principal business segment for this
subsidiary prior to the January 1997 fire and explosion. PFM
currently provides, on a limited basis, an off-site waste storage
and transfer facility and continues to explore other new markets
for utilization of this facility. The Company also provides
through this segment: (i) on-site waste treatment services to
convert certain types of characteristic hazardous wastes into non-
hazardous waste, through its Perma-Fix, Inc. subsidiary; and (ii)
the supply and management of non-hazardous and hazardous waste to
be used by cement plants as a substitute fuel or raw material
source.
The Company also provides services through the Consulting
Engineering Services segment. The Company provides environmental
engineering and regulatory compliance consulting services through
Schreiber, Yonley & Associates in St. Louis, Missouri, and Mintech,
Inc. in Tulsa, Oklahoma. These engineering groups provide
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.
The accounting policies of the segments are the same as those
described in the summary of significant accounting policies. The
Company evaluates performance based on profit or loss from
continuing operations.
11
<PAGE>
The Company accounts for inter-company sales as a reduction of
"cost of goods sold" and therefore such inter-company sales are not
included in the consolidated revenue total.
The Company's segments are not dependent upon a single
customer, or a few customers, and the loss of any one or more of
which would not have a material adverse effect on the Company's
segment. During the six months ended June 30, 1998 and 1997, the
Company did not make sales to any single customer that in the
aggregate amount represented more than ten percent (10%) of the
Company's segment revenues.
<TABLE>
<CAPTION>
The table below shows certain financial information by the
Company's segments for six months ended June 30, 1998 and 1997 and
excludes the results of operations of the discontinued operations.
Income (loss) from operations includes revenues less operating
costs and expenses. Marketing, general and administrative expenses
of the corporate headquarters have not been allocated to the
segments. Identifiable assets are those used in the operations of
each business segment, including intangible assets and discontinued
operations. Corporate assets are principally cash, cash
equivalents and certain other assets.
Waste Consulting Corporate
Management Engineering and
(Dollars in thousands) Services Services Other Consolidated
_______________________________________________________________________________
<S> <C> <C> <C> <C>
1998
Net revenues from
external customers $12,047 $ 2,179 $ - $ 14,226
Inter-company revenues 158 235 - 393
Interest income 17 - - 17
Interest expense 225 27 17 269
Depreciation and
amortization 986 41 8 1,035
Income (Loss) from con-
tinuing operations 468 88 (744) (188)
Identifiable assets 11,302 1,882 17,750 30,934
Capital expenditures, net 1,353 4 - 1,357
1997
Net revenues from
external customers $10,000 $ 2,447 $ - $ 12,447
Inter-company revenues 684 205 - 889
Interest income 19 - 1 20
Interest expense 214 20 26 260
Depreciation and
amortization 927 59 11 997
Income (Loss) from con-
tinuing operations 260 17 (683) (406)
Identifiable assets 14,114 2,410 12,046 28,570
Capital expenditures, net 609 21 - 630
</TABLE>
6. Stock Issuance
______________
Effective April 1, 1998, the Company entered into an asset
purchase agreement to acquire substantially all of the assets and
certain liabilities of Action Environmental Corp. ("Action") of
Miami, Florida. Action has provided oil filter collection and
processing services to approximately 700 customers in South
Florida. The assets of Action were acquired through a combination
of stock issuance and the assumption of certain liabilities. The
acquisition was accounted for using the purchase method effective
April 1, 1998, and, accordingly, the assets and liabilities as of
this date and the statement of operations from the effective date
have been included in the accompanying consolidated financial
statements. The acquisition of Action resulted in the issuance of
108,000 shares of the Company's Common Stock reflecting a total
purchase price of $207,000.
Effective April 21, 1998, the Company issued Bernhardt C.
Warren, the Company's Vice President of Nuclear Services and
executive officer, 94,697 shares of the Company's Common Stock in
payment of accrued bonus and commission pursuant to an employment
agreement dated April 7, 1998. Under the employment agreement, the
Company also agreed to pay Mr. Warren an annual salary of $87,000
12
<PAGE>
and $167,500 in cash paid over twenty four monthly installments, in
payment of an additional amount due for accrued bonus. The
employment agreement is for a term of two years.
On or about June 30, 1998, the Company issued to RBB Bank
Aktiengesellschaft, located in Graz, Austria ("RBB Bank"), 3,000
shares of newly-created Series 10 Class J Convertible Preferred
Stock, par value $.001 per share ("Series 10 Preferred"), at a
price of $1,000 per share, for an aggregate sales price of
$3,000,000. The sale to RBB Bank was made in a private placement
under Section 4(2) of the Securities Act of 1933, as amended (the
"Act") and/or Rule 506 of Regulation D under the Act, pursuant to
the terms of a Subscription and Purchase Agreement, dated June 30,
1998 between the Company and RBB Bank ("Subscription Agreement").
The net proceeds of $2,768,000 from this private placement, after
the deduction for certain fees and expenses, was received by the
Company on July 14, 1998, and has been recorded as a Preferred
Stock Receivable at June 30, 1998. The Company also accrued at
June 30, 1998, approximately $115,000 for certain additional
closing, legal and related expenses. The Series 10 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 10 Preferred (the "Liquidation Value"),
plus an amount equal to all unpaid and accrued dividends thereon.
The Series 10 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 within ten (10)
business days after each subsequent June 30 and December 31 (each
a "Dividend Declaration Date"), and shall be payable in cash or
shares of the Company's Common Stock at the Company's option. The
first Dividend Declaration Date shall be December 31, 1998. 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 10
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 10 Preferred may convert into Common
Stock any or all of the Series 10 Preferred on and after 180 days
after June 30, 1998. The conversion price per outstanding share of
Preferred Stock ("Conversion Price") is $1.875; except that if the
average of the closing bid price per share of Common Stock quoted
on the NASDAQ (or the closing bid price of the Common Stock as
quoted on the national securities exchange if the Common Stock is
not listed for trading on the NASDAQ but is listed for trading on
a national securities exchange) for the five (5) trading days
immediately prior to the particular date on which the holder
notified the Company of a conversion ("Conversion Date") is less
than $2.34, then the Conversion Price for that particular
conversion shall be eighty percent (80 %) of the average of the
closing bid price of the Common Stock on the NASDAQ (or if the
Common Stock is not listed for trading on the NASDAQ but is listed
for trading on a national securities exchange then eighty percent
(80%) of the average of the closing bid price of the Common Stock
on the national securities exchange) for the five (5) trading days
immediately prior to the particular Conversion Date. As of
June 30, 1998, the closing price of Common Stock on the NASDAQ was
$1.875 per share.
As part of the of the sale of the Series 10 Preferred, the
Company also issued to RBB Bank (a) a warrant entitling the holder
to purchase up to an aggregate of 150,000 shares of Common Stock at
an exercise price of $2.50 per share of Common Stock expiring three
(3) years after June 30, 1998 and (b) a warrant entitling the
holder to purchase up to an aggregate of 200,000 shares of Common
Stock at an exercise price of $1.875 per share of Common Stock and
expiring three (3) years after June 30, 1998. Collectively, these
warrants are referred to herein as the "RBB Warrants." The Common
Stock issuable upon the conversion of the Series 10 Preferred and
upon the exercise of the RBB Warrants is subject to certain
registration rights pursuant to the Subscription Agreement.
13
<PAGE>
The Company intends to utilize the proceeds received on the
sale of Series 10 Preferred for working capital and/or to reduce
the outstanding balance of its credit facilities, subject to the
Company reborrowing under such credit facilities.
In addition to the 2,200,000 shares of Common Stock which have
been reserved for issuance upon conversion of the Series 10
Preferred and in payment of dividends accrued thereon, and the
350,000 shares of Common Stock issuable upon exercise of the RBB
Warrants, RBB Bank may also be considered to be the beneficial
owner of approximately 7,958,687 shares of the Company's Common
Stock consisting of (a) 931,786 shares of Common Stock held
directly by RBB Bank; (b) 4,051,335 shares of Common Stock issuable
upon conversion of 6,500 shares of other series of convertible
Preferred Stock previously issued by the Company to RBB Bank,
subject to variation depending upon, among other things, the market
price per share of Common Stock at the time of conversion and
various terms and conditions of the Preferred; (c) 319,316 shares
of Common Stock which may be issued in payment of dividends accrued
on such 6,500 shares of Convertible Preferred Stock; and, (d)
2,656,250 shares of Common Stock that RBB Bank has the right to
acquire upon exercise of various warrants previously issued by the
Company to RBB Bank, consisting of (i) warrants entitling the
holder to purchase up to an aggregate of 1,000,000 shares of Common
Stock at an exercise price of $2.00 per share of Common Stock; (ii)
warrants entitling the holder to purchase up to an aggregate of
1,000,000 shares of Common Stock at an exercise price of $3.50 per
share of Common Stock; (iii) warrants entitling the holder to
purchase up to an aggregate of 375,000 shares of Common Stock at an
exercise price of $1.875 per share of Common Stock; and, (iv)
warrants entitling the holder to purchase up to an aggregate of
281,250 shares of Common Stock at an exercise price of $2.125 per
share of Common Stock. If RBB Bank were to obtain 10,158,687 shares
of Common Stock through exercise of all of its warrants and
conversion of all of its Preferred Stock into Common Stock it would
hold approximately 47.9% of the outstanding Common Stock of the
Company based upon 12,001,746 shares of Common Stock issued and
outstanding as of May 11, 1998 (excluding 920,000 shares held as
Treasury Stock). The foregoing estimate assumes that no other
shares of Common Stock are issued by the Company, no other warrants
or options granted by the Company and currently outstanding are
exercised, the Company does not acquire additional shares of Common
Stock as Treasury Stock and RBB Bank does not dispose of any shares
of Common Stock.
In connection with the placement of Series 10 Preferred to RBB
Bank, the Company paid fees (excluding legal and accounting) of
$210,000 and issued to (a) Liviakis Financial Communications, Inc.
("Liviakis") for assistance with the placement of the Series 10
Preferred, warrants entitling the holder to purchase up to an
aggregate of 1,875,000 shares of Common Stock, subject to certain
anti-dilution provisions, at an exercise price of $1.875 per share
of Common Stock which warrants may be exercised after January 15,
1999, and which expire after four (4) years; (b) Robert B. Prag,
an executive officer of Liviakis for assistance with the placement
of the Series 10 Preferred, warrants entitling the holder to
purchase up to an aggregate of 625,000 shares of Common Stock,
subject to certain anti-dilution provisions, at an exercise price
of $1.875 per share of Common Stock, which warrants may be
exercised after January 15, 1999, and which expire after four (4)
years; (c) JW Genesis Financial Corporation for assistance with the
placement of the Series 10 Preferred, warrants entitling the holder
to purchase up to an aggregate of 150,000 shares of Common Stock,
subject to certain anti-dilution provisions, at an exercise price
of $1.875 per share of Common Stock, which warrants expire after
three (3) years; and (d) Fontenoy Investments for assistance with
the placement of the Series 10 Preferred, warrants entitling the
holder to purchase up to an aggregate of 350,000 shares of Common
Stock, subject to certain anti-dilution provisions, at an exercise
price of $1.875 per share of Common Stock, which warrants expire
after three (3) years. Under the terms of each warrant, the holder
is entitled to certain registration rights with respect to the
shares of Common Stock issuable on the exercise of each warrant.
14
<PAGE>
<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 with this report 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 report 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 results 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,
among other things, (i) anticipated financial performance, (ii)
ability to comply with the Company's general working capital
requirements, (iii) ability to generate sufficient cash flow from
operations to fund all costs of operations and remediation of
certain formerly leased property in Dayton, Ohio, and the Company's
facility in Memphis, Tennessee, (iv) 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 report, including, but not limited to,
(i) general economic conditions, (ii) inability to maintain
profitability, (iii) material reduction in revenues, (iv) inability
to collect in a timely manner a material amount of receivables, (v)
increased competitive pressures, (vi) the inability to maintain and
obtain required permits and approvals to conduct operations, (vii)
the inability to develop new and existing technologies in the
conduct of operations, (viii) overcapacity in the environmental
industry, (ix) discovery of additional contamination or expanded
contamination at a certain Dayton, Ohio, property formerly leased
by the Company or the Company's facility at Memphis, Tennessee,
which would result in a material increase in remediation
expenditures, (x) changes in federal, state and local laws and
regulations, especially environmental regulations, or
interpretation of such, (xi) potential increases in equipment,
maintenance, operating or labor costs, (xii) management retention
and development, (xiii) the requirement to use internally generated
funds for purposes not presently anticipated, and (xiv) inability
to settle on reasonable terms certain claims made by the federal
government against a certain subsidiary of the Company that is a
potentially responsible party for clean up costs incurred by the
government in remediating certain sites owned and operated by
others. The Company undertakes no obligations to update publicly
any forward-looking statement, whether as a result of new
information, future events or otherwise.
15
<PAGE>
<TABLE>
<CAPTION>
Results of Operations
The table below should be used when reviewing management's
discussion and analysis for the six months ended June 30, 1998 and
1997:
Three Months Ended
June 30,
_________________________________
Consolidated 1998 % 1997 %
____________ _______ _____ _______ _____
<S> <C> <C> <C> <C>
Net Revenues $ 7,678 100.0 $ 6,697 100.0
Cost of Goods Sold 5,238 68.2 4,554 68.0
______ _____ ______ _____
Gross Profit 2,440 31.8 2,143 32.0
Selling, General &
Administrative 1,679 21.9 1,434 21.4
Depreciation/Amortization 527 6.9 497 7.4
______ _____ ______ _____
Income (Loss) from
from Operations $ 234 3.0 $ 212 3.2
====== ===== ====== =====
Loss from discontinued
Operations $ - - $ (517) (7.7)
Interest Expense (142) (1.8) (129) (1.9)
Preferred Stock Dividends (89) (1.1) (82) (1.1)
====== ====== ====== =====
<PAGE>
Six Months Ended
June 30,
_________________________________
1998 % 1997 %
_______ _____ _______ _____
<S> <C> <C> <C> <C>
$14,226 100.0 $12,447 100.0
10,025 70.4 8,862 74.9
______ _____ ______ _____
4,201 29.6 3,585 25.1
3,234 22.7 2,725 22.5
1,035 7.3 997 8.7
______ _____ ______ _____
$ (68) ( .4) $ (137) (1.1)
====== ===== ====== =====
$ - - $ (953) (7.7)
(127) (1.9) (260) (2.1)
(87) (1.2) (163) (1.3)
====== ===== ====== =====
<FN>
* Amounts have been restated from that previously reported
to reflect the discontinued operations at PFM (see Note
2).
</FN>
</TABLE>
Summary Three and Six Months Ended June 30, 1998 and 1997
___________________________________________________________
The Company provides services through two business segments.
The Waste Management Services segment is engaged in on-and off-site
treatment, storage, disposal and processing of a wide variety of
by-products and industrial, hazardous and mixed hazardous and low
level radioactive wastes. This segment competes for materials and
services with numerous regional and national competitors to provide
comprehensive and cost-effective Waste Management Services to a
wide variety of customers in the Midwest, Southeast and Southwest
regions of the country. The Company operates and maintains
facilities and businesses in the waste by-product brokerage, on-
site treatment and stabilization, and off-site blending, treatment
and disposal industries. The Company's Consulting Engineering
segment provides a wide variety of environmental related consulting
and engineering services to industry and government. Through the
Company's wholly-owned subsidiaries in Tulsa, Oklahoma and St.
Louis, Missouri, the Consulting Engineering segment provides
oversight management of environmental restoration projects, air and
soil sampling, compliance reporting, surface and subsurface water
treatment design for removal of pollutants, and various compliance
and training activities.
Consolidated net revenues increased $981,000 for the quarter
ended June 30, 1998, as compared to the quarter ended June 30,
1997. This increase of 14.7% is attributable to the Waste
Management Services segment which experienced an increase in
revenues of $1,057,000, partially offset by a decrease in revenues
from the Consulting Engineering segment. The increase within the
Waste Management Services segment is attributable to the growth in
the wastewater and mixed waste markets. The most significant
increases occurred at the PFF facility, which recognized a $305,000
increase resulting principally from the completion of various mixed
waste contracts, the PFTS facility, which recognized a $298,000
increase due to the increased processing capacities at this
facility, and the PFFL facility, which recognized a $71,000
increase resulting principally from increased fuel oil sales and
the acquisition of Action Environmental. Consolidated net revenues
increased to $14,226,000 from $12,447,000 for the six months ended
June 30, 1998, as compared to the same six months ended in 1997.
This increase of $1,779,000, or 14.3%, is attributable to the Waste
16
<PAGE>
Management Services segment which experienced an increase in
revenues of $2,047,000, partially offset by a decrease in revenues
from the Consulting Engineering segment. This increase within the
Waste Management Services segment is attributable to the increased
marketing efforts throughout the segments and the growth in the
wastewater and mixed waste markets. The most significant increases
occurred at PFF's facility, which recognized a $639,000 increase
resulting principally from the award and completion of various
mixed waste contracts, and PFTS's facility, which recognized a
$577,000 increase resulting principally from the increased
wastewater demand and processing capabilities at this facility.
This increase in the Waste Management Services segment was
partially offset by a reduction of $268,000 in the Consulting
Engineering segment. This Consulting Engineering reduction is
principally a result of a seasonal decrease in market demand, which
typically occurs during the first quarter of each year, and
appeared more dramatic in 1998, along with the completion of
several larger contracts in 1997, which were not duplicated in
1998.
Cost of goods sold for the Company increased $684,000, or
15%, for the quarter ended June 30, 1998, as compared to the
quarter ended June 30, 1997. This consolidated increase in cost of
goods sold reflects principally the increased operating, disposal
and transportation costs, corresponding to the increased revenues
as discussed above, as well as additional costs associated with
research and development which have not begun to generate revenue
at this time. The resulting gross profit for the quarter ended
June 30, 1998, increased $297,000 to $2,440,000, which as a
percentage of revenue is 31.8%, reflecting a decrease over the 1997
percentage of revenue of 32.0%. Cost of goods sold for the Company
increased $1,163,000 or 13.1% for the six months ended June 30,
1998, as compared to the six months ended June 30, 1997. This
consolidated increase in cost of goods sold reflects principally
the increased operating, disposal and transportation costs,
corresponding to the increased revenues as discussed above. The
resulting gross profit for the six months ended June 30, 1998,
increased $616,000 to $4,201,000, which as a percentage of revenue
is 29.6%, reflecting an increase over the 1997 percentage of
revenue of 28.8%.
Selling, general and administrative expenses increased
$245,000 or 17.1% for the quarter ended June 30, 1998, as compared
to the quarter ended June 30, 1997. As a percentage of revenue,
selling general and administrative expense also increased to 21.9%
for the quarter ended June 30, 1998, compared to 21.4% for the same
period in 1997. The increase reflects the increased expenses
associated with the Company's research and development efforts.
Selling, general and administrative expenses increased $509,000, or
18.7%, for the six months ended June 30, 1998, as compared to the
six months ended June 30, 1997. As a percentage of revenue,
selling, general and administrative expense also increased to 22.7%
for the six months ended June 30, 1998, compared to 21.9% for the
same period in 1997. The increase reflects the increased expenses
associated with the Company's additional sales and marketing
efforts as it continues to refocus its business segments into new
environmental markets, such as nuclear and mixed waste, and the
additional administrative overhead associated with the Company's
research and development efforts. The Company has expensed in the
current period all research and development costs associated with
the development of various technologies which the Company
aggressively pursued during the first six months of 1998.
Depreciation and amortization expense for the quarter ended
June 30, 1998, reflects an increase of $30,000 as compared to the
same quarter ended June 30, 1997. This increase is attributable to
a depreciation expense increase of $17,000 due to capital
improvements being introduced at the Company's transportation,
storage and disposal ("TSD") facilities to improve efficiencies.
Amortization expense reflects a total increase of $13,000 for the
quarter ended June 30, 1998, as compared to the same quarter 1997
due to the increased amortization, resulting from new capitalized
permitting costs. Depreciation and amortization expense for the
six months ended June 30, 1998, reflects an increase of $38,000 as
compared to the six months ended June 30, 1997. This increase is
attributable to a depreciation expense increase of $29,000 due to
the capital improvements being introduced at the Company's TSD
facilities to improve efficiencies. Amortization expense reflects
a total increase of $12,000 for the six months ended June 30, 1998,
as compared to the six months ended June 30, 1997, due to the
increased amortization, resulting from new capitalized permitting
costs.
17
<PAGE>
Interest expense increased $13,000 for the quarter ended
June 30, 1998, as compared to the corresponding period of 1997.
The increase in interest expense reflects the increased borrowing
levels on the Congress Financial Corporation revolving and term
note due to the increase in capital improvements. Interest expense
increased $9,000 from the six months ended June 30, 1998, as
compared to the corresponding period of 1997. The increase in
interest expense reflects the increased borrowing levels on the
Congress Financial Corporation revolving and term note. During the
six months ended June 30, 1998, Preferred Stock dividends totaling
$176,000 incurred in conjunction with the Series 3 Class C, Series
8 Class H and Series 9 Class I Convertible Preferred Stock. As a
result of the issuance of the Series 6 Class F and Series 7 Class
G Convertible Preferred Stock during 1997, partially offset by
various conversions of the Series 3 Class C Convertible Preferred
Stock during the second quarter of 1997, dividends increased by
$13,000 for the six months ended June 30, 1998, as compared to the
six months ended June 30, 1997.
Discontinued Operations
On January 27, 1997, an explosion and resulting tank fire
occurred at the PFM facility, a hazardous waste storage, processing
and blending facility, 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. During the remainder of 1997, PFM continued to
accept waste for processing and disposal, but 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 resulted 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. As a result of the significant disruption and the cost
to rebuild and operate this segment, the Company made a strategic
decision, in February 1998, to discontinue its fuel blending
operations at PFM. The fuel blending operations represented the
principal line of business for PFM prior to this event, which
included a separate class of customers, and its discontinuance has
required PFM to attempt to develop new markets and customers,
through the utilization of the facility as a storage facility under
its RCRA permit and as a transfer facility. Accordingly, during
the fourth quarter of 1997, the Company recorded a loss on disposal
of discontinued operations of $3,053,000, which included $1,272,000
for impairment of certain assets and $1,781,000 for the
establishment of certain closure liabilities.
The net loss from discontinued PFM operations for the six
months ended June 30, 1998, was $227,000 and was recorded against
the accrued closure cost estimate on the balance sheet. The net
loss for the six months ended June 30, 1997, was $953,000 and is
shown separately in the Consolidated Statements of Operations. The
Company has restated the 1997 operating results to reflect this
discontinued operations. The results of the discontinued PFM operations
do not reflect management fees charged by the Company, but do include
interest expense of $41,000 and $109,000 during the six months ended June
30, 1998 and 1997, respectively, specifically identified to such
operations as a result of such operations actual incurred debt under the
Corporation's revolving and term loan credit facility. During March of
1998, the Company received a settlement in the amount of $1,475,000 from
its insurance carrier for the business interruption claim. This
settlement was recognized as a gain in 1997 and thereby reducing the net
loss recorded for the discontinued PFM operations in 1997. Revenues of
the discontinued PFM operations were $532,000 for the six months ended
June 30, 1998, and $1,189,000 for the six months ended June 30, 1997.
These revenues are not included in revenues as reported in the
Consolidated Statements of Operation.
Liquidity and Capital Resources of the Company
At June 30, 1998, the Company had cash and cash equivalents of
$511,000, including $3,000 from discontinued operations. This cash
and cash equivalents total reflects an increase of $361,000 from
June 30, 1997, as a result of net cash provided by continuing
operations of $1,471,000 (principally from the PFM insurance
settlement of $1,475,000), offset by cash used by discontinued
operation of $417,000, cash used in investing activities of
$1,043,000 (principally purchases of equipment, net totaling
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$1,027,000) and cash provided by financing activities of $174,000
(principally borrowing on the revolving loan and term note
facility). Accounts receivable, net of allowances for continuing
operations, totaled $5,141,000, a decrease of $141,000 over the
December 31, 1997, balance of $5,282,000, which principally
reflects the impact of increased collections during the second
quarter of 1998.
On January 15, 1998, the Company, as parent and guarantor,
and all direct and indirect subsidiaries of the Company, as co-
borrowers and cross-guarantors, entered into a Loan and Security
Agreement ("Agreement") with Congress Financial Corporation
(Florida) as lender ("Congress"). The Agreement provides for a
term loan in the amount of $2,500,000, which requires principal
repayments based on a four-year level principal amortization over
a term of 36 months, with monthly principal payments of $52,000.
Payments commenced on February 1, 1998, with a final balloon
payment in the amount of approximately $573,000 due on January 14,
2001. The Agreement also provides for a revolving loan facility in
the amount of $4,500,000. At any point in time the aggregate
available borrowings under the facility are subject to the maximum
credit availability as determined through a monthly borrowing base
calculation, as updated for certain information on a weekly basis,
equal to 80% of eligible accounts receivable accounts of the
Company as defined in the Agreement. The termination date on the
revolving loan facility is also the third anniversary of the
closing date. The Company incurred approximately $237,000 in
financing fees relative to the solicitation and closing of this
loan agreement (principally commitment, legal and closing fees)
which are being amortized over the term of the Agreement.
Pursuant to the Agreement, the term loan and revolving loan
both bear interest at a floating rate equal to the prime rate plus
1 3/4%. The Agreement also provides for a one time rate adjustment
of 1/4%, subject to the company meeting certain 1998 performance
objectives. The loans also contain certain closing, management and
unused line fees payable throughout the term. The loans are
subject to a 3.0% prepayment fee in the first year, 1.5% in the
second and 1.0% in the third year of the Agreement.
As security for the payment and performance of the Agreement,
the Company granted a first security interest in all accounts
receivable, inventory, general intangibles, equipment and other
assets of the Company and its subsidiaries, as well as the
mortgage on two (2) facilities owned by subsidiaries of the
Company. The Agreement contains affirmative covenants including,
but not limited to, certain financial statement disclosures and
certifications, management reports, maintenance of insurance and
collateral. The Agreement also contains an Adjusted Net Worth
financial covenant, as defined in the Agreement, of $3,000,000.
Under the Agreement, the Company, and its subsidiaries are limited
to granting liens on their equipment, including capitalized leases,
(other than liens on the equipment to which Congress has a security
interest) in an amount not to exceed $2,500,000 in the aggregate at
any time outstanding.
The proceeds of the Agreement were utilized to repay in full
on January 15, 1998, the outstanding balance of $3,115,000 under
the Heller Financial, Inc. ("Heller") Loan and Security Agreement
which was comprised of a revolving loan and term loan, and to repay
the outstanding balance of $624,000 under the Ally Capital
Corporation ("Ally") Equipment Financing Agreements. The Company
had borrowing availability under the Congress Agreement of
approximately $1,500,000 as of the date of closing, based on 80% of
eligible accounts receivable accounts. The Company recorded the
December 31, 1997, Heller and Ally debt balances as though the
Congress transaction had been closed as of December 31, 1997. As
a result of this transaction, and the repayment of the Heller and
Ally debt, the combined monthly debt payments were reduced from
approximately $104,000 per month to $52,000 per month. As of
June 30, 1998, the borrowings under the Congress revolving loan
facility totaled $2,186,000, with borrowing availability of
approximately $1,069,000 based on the amount of outstanding
eligible accounts receivable as of June 30, 1998. The balance
under the Congress term loan at June 30, 1998, was $2,240,000.
At June 30, 1998, the Company had $5,390,000 in aggregate
principal amounts of outstanding debt, related to continuing
operations, as compared to $4,865,000 at December 31, 1997. This
increase in outstanding debt of $525,000 principally reflects the
increased borrowings under the Company's revolving credit facility
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($522,000) and the new equipment financing at the Perma-Fix of
Florida, Inc. facility ($317,000), partially offset by the
scheduled principal repayments.
As of June 30, 1998, the Company had $86,000 in aggregate
principal amounts of outstanding debt related to PFM discontinued
operations, of which $76,000 is classified as current.
As of June 30, 1998, total consolidated accounts payable for
continuing operations of the Company was $2,021,000, a reduction
of $242,000 from the December 31, 1997, balance of $2,263,000.
The Company's net purchases of new capital equipment for
continuing operations for the six month period ended June 30, 1998,
totaled approximately $1,357,000, including $330,000 of financed
purchases. These expenditures were for expansion and improvements
to the operations principally within the Waste Management segment.
These capital expenditures were principally funded by the
$1,475,000 PFM insurance settlement and utilization of the
Company's revolving credit facility. The Company has budgeted
capital expenditures of $1,950,000 for 1998, which includes
completion of certain current projects, as well as other
identified capital and permit compliance purchases. The Company
anticipates funding the remainder of these capital expenditures by
a combination of lease financing with lenders other than the
equipment financing arrangement discussed above, proceeds from the
Series 10 Preferred Stock, and/or internally generated funds.
On or about June 30,1998, the Company issued 3,000 shares of
newly created Series 10 Class J Convertible Preferred Stock
("Series 10 Preferred"), as further discussed in Note 6 to
Consolidated Financial Statements and Item 2 "Changes in Securities
and Use of Proceeds." The Company received net proceeds of
$2,768,000 (after deduction of the payment of $210,000 for broker's
commission and certain other closing costs, but prior to the
Company's legal fees and other costs in connection with the sale of
the Series 10 Preferred and the registration of the Common Stock
issuable upon conversion of such Preferred Stock) for the sale of
the Series 10 Preferred. These net proceeds were received by the
Company on July 14, 1998, and have been recorded as a Preferred
Stock receivable at June 30,1998. Each share of Series 10
Preferred sold for $1,000 per share and has a liquidation value of
$1,000 per share. The Company utilized the proceeds received on
the sale of Series 10 Preferred for working capital and/or to
reduce the outstanding balance of its revolving credit facility,
subject to the Company reborrowing under such credit facility.
After taking into account the reduction of the outstanding balance
of the Company's revolving credit facility by the amount of the net
proceeds received by the Company as a result of the Series 10
Preferred transaction, the Company's borrowing availability under
its revolving credit facility as of July 31, 1998, based on its
then outstanding eligible accounts receivable and loan balance of
approximately $21,000, was approximately $3,514,000.
With the issuance of the Series 10 Preferred, the Company has
outstanding 9,830 shares of Preferred Stock, with each share having
a liquidation preference of $1,000 ("Liquidation Value"). Annual
dividends on each outstanding series of Preferred Stock ranges from
4% to 6% of the Liquidation Value. Dividends on the Preferred
Stock are cumulative, and are payable, if and when declared by the
Company's Board of Directors, on a semi-annual basis. Dividends on
the outstanding Preferred Stock may be paid at the option of the
Company, if declared by the Board of Directors, in cash or in the
shares of the Company's Common Stock as described under Note 6 of
the Consolidated Financial Statements and Item 2 of Part II hereof.
The accrued dividends for the period from January 1, 1998, through
June 30, 1998, on the then outstanding shares of the Company's
Preferred Stock in the amount of approximately $176,000 were paid
in July 1998, by the Company issuing 90,609 shares of the
Company's Common Stock. It is the present intention of the Company
to pay any dividends declared by the Company's Board of Directors
on its outstanding shares of Preferred Stock in Common Stock of the
Company.
The working capital position of the Company at June 30, 1998,
was $3,398,000, as compared to a position of $754,000 at
December 31, 1997, which reflects a increase in this position of
$2,644,000 during this first six months of 1998. This increased
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working capital position is principally a result of the equity
raised as of June 30, 1998. In contrast to the above, the Company
reduced its current liabilities during the first six months of 1998
by approximately $973,000.
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. 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.
The Company routinely uses third party disposal companies, who
ultimately destroy landfill residual materials generated at its
facilities or at a client's site. The Company, compared to its
competitors, disposes of significantly less hazardous or industrial
by-products from its operations due to rendering material non-
hazardous, discharging treated wastewaters to publicly-owned
treatment works and/or processing wastes into saleable products.
In the past, numerous third party disposal sites have improperly
managed wastes and consequently require remedial action;
consequently, any party utilizing these sites 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 ("PRP") at a remedial action site,
which could have a material adverse effect on the Company.
In addition to budgeted capital expenditures of $1,950,000 for
1998 at the TSD facilities of the Company, which are necessary to
maintain permit compliance and improve operations, the Company has
also budgeted for 1998 an additional $1,045,000 in environmental
expenditures to comply with federal, state and local regulations in
connection with remediation of two locations. One location owned
by PFM and the other location leased by a predecessor of another
subsidiary of the Company. The Company has estimated the
expenditures for 1998 to be approximately $210,000 at the site
leased by a predecessor of the Company and $835,000 at the PFM
location. Additional funds will be required for the next five to
ten years to properly investigate and remediate these sites. The
Company expects to fund these expenses to remediate these two sites
from funds generated internally.
In addition, the Company's subsidiary, PFM, has been notified
by the United States Environmental Protection Agency ("EPA") that
it believes that PFM is a PRP regarding the remediation of a drum
reconditioning facility in Memphis, Tennessee, owned by others
("Drum Site"), primarily as a result of activities by PFM prior to
the date that the Company acquired PFM in December 1993. The EPA
has advised PFM that it has spent approximately $1.4 million to
remediate the Drum Site, and that the EPA has sent PRP letters to
approximately 50 other PRPs regarding the Drum Site in addition to
PFM. The EPA has further advised that it believes that PFM
supplied a substantial amount of drums to the Drum Site. The
Company is currently negotiating with the EPA regarding the
possibility of settling the EPA's claims against PFM as to the Drum
Site. There are no assurances that PFM will be able to settle such
claims and, if PFM is unable to settle such claims by the EPA, and
PFM is determined to be liable for all or a substantial portion of
the remediation costs incurred by the EPA at the Drum Site, such
could have a material adverse effect on the Company.
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PERMA-FIX ENVIRONMENTAL SERVICES, INC.
PART II - Other Information
Item 1. Legal Proceedings
_________________
There are no additional material 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 year ended
December 31, 1997. As previously disclosed in such Form 10-K, the
Company received correspondence dated January 15, 1998 ("PRP
Letter"), from the United States Environmental Protection Agency
("EPA") that it believes that PFM, a wholly owned subsidiary of the
Company is a potentially responsible party ("PRP"), as defined
under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), regarding the remediation of the
W. & R. Drum, Inc. ("Drum") site in Memphis, Tennessee, ("Drum
Site"), primarily as a result of acts by a predecessor of PFM prior
to the time PFM was acquired by the Company. In addition, the EPA
has advised PFM that it has sent PRP letters to approximately 50
other PRPs as to the Drum Site. The PRP Letter estimated the
remediation costs incurred by the EPA for the Drum Site to be
approximately $1,400,000 as of November 30, 1997. The EPA has
orally informed the Company that such remediation has been
substantially completed as of such date, and that the EPA believes
that PFM supplied a substantial amount of the drums at the Drum
Site. During the second quarter of 1998, PFM and certain other
PRPs began negotiating with the EPA regarding a potential
settlement of the EPA's claims regarding the Drum Site and such
negotiations are currently continuing. If PFM cannot reach a
settlement which PFM believes is reasonable, it will continue to
vigorously defend against the EPA's demand regarding remediation
costs of the Drum Site. If PFM is determined to be liable for a
substantial portion of the remediation cost incurred by the EPA at
the Drum Site, such could have a material adverse effect on the
Company.
Item 2. Changes in Securities and Use of Proceeds
_________________________________________
(c) During the quarter ended June 30, 1998, 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) Pursuant to the terms of a Private Securities Subscription
Agreement, dated as of June 30, 1998 ("Subscription Agreement"),
the Company issued to RBB Bank Aktiengesellschaft, located in Graz,
Austria ("RBB Bank"), 3,000 shares of newly-created Series 10 Class
J Convertible Preferred Stock, par value $.001 per share ("Series
10 Preferred"), at a price of $1,000 per share, for an aggregate
sales price of $3,000,000. The Company received net proceeds of
approximately $2,768,000 from the sale of the Series 10 Preferred
after deducting certain commissions and expenses. Pursuant to the
terms of the Subscription Agreement, the Company granted to RBB
Bank the RBB Series 10 Warrants (as defined and discussed below).
The sale to RBB Bank of the Series 10 Preferred and the granting of
the RBB Series 10 Warrants as described below were made in a
private placement under Section 4(2) of the Securities Act and/or
Rule 506 of Regulation D as promulgated under the Securities Act.
In the Subscription Agreement, RBB Bank represents inter alia,
(i) it is an "accredited investor" as such term is defined in Rule
501 as promulgated under the Securities Act; (ii) the placement was
not made in connection with any general solicitation or
advertising; (iii) RBB Bank alone, or together with its purchaser
representative is a sophisticated investor; and (iv) RBB Bank's
acquisition under the Subscription Agreement is for its own account
and not with a view to resale or distribution of any part thereof.
The Series 10 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 10 Preferred (the "Series 10 Liquidation Value"), plus an
amount equal to all unpaid dividends accrued thereon. The Series
10 Preferred accrues dividends on a cumulative basis at a rate of
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<PAGE>
four percent (4%) per annum of the Series 10 Liquidation Value
("Dividend Rate"), and is payable semi-annually when and as
declared by the Board of Directors. Dividends, as declared by the
Board of Directors, may be paid at the option of the Company, in
cash or shares of Common Stock. No dividends or other
distributions may 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 10 Preferred have been paid or set
aside for payment. If the Company pays dividends in Common Stock,
such are 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, time (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 10 Preferred may convert into Common
Stock any or all of the Series 10 Preferred on and after 180 days
after June 30, 1998. The conversion price per outstanding share of
Preferred Stock ("Series 10 Conversion Price") is $1.875; except
that if the average of the closing bid price per share of Common
Stock quoted on the NASDAQ (or the closing bid price of the Common
Stock as quoted on the national securities exchange if the Common
Stock is not listed for trading on the NASDAQ but is listed for
trading on a national securities exchange) for the five (5) trading
days immediately prior to the particular date on which the holder
notified the Company of a conversion ("Series 10 Conversion Date")
is less than $2.34, then the Series 10 Conversion Price for that
particular conversion shall be eighty percent (80%) of the average
of the closing bid price of the Common Stock on the NASDAQ (or if
the Common Stock is not listed for trading on the NASDAQ but is
listed for trading on a national securities exchange then eighty
percent (80%) of the average of the closing bid price of the Common
Stock on the national securities exchange) for the five (5) trading
days immediately prior to the particular Series 10 Conversion Date.
As of June 30,1998, the closing price of Common Stock on the NASDAQ
was $1.875 per share.
As part of the sale of the Series 10 Preferred, the Company
also issued to RBB Bank two warrants: (a) one warrant entitling the
holder to purchase up to an aggregate of 150,000 shares of Common
Stock at an exercise price of $2.50 per share of Common Stock
expiring three (3) years after June 30, 1998 and (b) a second
warrant entitling the holder to purchase up to an aggregate of
200,000 shares of Common Stock at an exercise price of $1.875 per
share of Common Stock and expiring three (3) years after June 30,
1998. Collectively, these warrants are referred to herein as the
"RBB Series 10 Warrants." The shares of Common Stock issuable upon
the conversion of the Series 10 Preferred and upon the exercise of
the RBB Series 10 Warrants are subject to certain registration
rights pursuant to the Subscription Agreement.
The Company intends to utilize the net proceeds received on
the sale of Series 10 Preferred for working capital and/or to
reduce the outstanding balance of its credit facilities, subject to
the Company reborrowing under such credit facilities.
In connection with the placement of Series 10 Preferred with
RBB Bank, the Company paid commissions of $210,000 and issued to
(a) Liviakis Financial Communications, Inc. ("Liviakis") for
assistance with the placement of the Series 10 Preferred, warrants
entitling the holder to purchase up to an aggregate of 1,875,000
shares of Common Stock, subject to certain anti-dilution
provisions, at an exercise price of $1.875 per share of Common
Stock which warrants may be exercised after January 15, 1999, and
which expire after four (4) years; (b) Robert B. Prag, an executive
officer of Liviakis ("Prag"), for assistance with the placement of
the Series 10 Preferred, warrants entitling the holder to purchase
up to an aggregate of 625,000 shares of Common Stock, subject to
certain anti-dilution provisions, at an exercise price of $1.875
per share of Common Stock, which warrants may be exercised after
January 15, 1999, and which expire after four (4) years; (c) JW
Genesis Financial Corporation ("Genesis") for assistance with the
placement of the Series 10 Preferred, warrants entitling the holder
to purchase up to an aggregate of 150,000 shares of Common Stock,
subject to certain anti-dilution provisions, at an exercise price
of $1.875 per share of Common Stock, which warrants expire after
three (3) years; and (d) Fontenoy Investments ("Fontenoy") for
assistance with the placement of the Series 10 Preferred, warrants
entitling the holder to purchase up to an aggregate of 350,000
shares of Common Stock, subject to certain anti-dilution
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<PAGE>
provisions, at an exercise price of $1.875 per share of Common
Stock, which warrants expire after three (3) years. Under the
terms of each warrant, the holder is entitled to certain
registration rights with respect to the shares of Common Stock
issuable on the exercise of each warrant. The issuance of the
warrants to Liviakis, Prag, Genesis and Fontenoy was made in a
private placement under Section 4(2) of the Securities Act and/or
Rule 506 of Regulation D as promulgated under the Securities Act.
Under certain circumstances, the Company may not issue shares
of Common Stock upon conversion of the Series 10 Preferred and the
exercise of warrants granted in connection with the issuance of the
Series 10 Preferred ("Series 10 Warrants") without obtaining
shareholder approval as to such transactions. Shareholder approval
is required if (i) the aggregate number of shares of Common Stock
issued by the Company pursuant to the terms of the Series 10
Preferred and the Series 10 Warrants exceeds 2,388,347 shares of
Common Stock (which equals 19.9% of the outstanding shares of
Common Stock of the Company as of June 30, 1998) and (ii) RBB Bank
has converted or elects to convert any of the then outstanding
shares of Series 10 Preferred pursuant to the terms of the Series
10 Preferred at a conversion price of less than $1.875 ($1.875
being the market value per share of Common Stock as quoted on the
NASDAQ as of the close of business on June 30, 1998), other than if
the Conversion Price is less than $1.875 solely as a result of the
anti-dilution provisions of the Series 10 Preferred, then the
Company must obtain shareholder approval before the Company can
issue any additional shares of Common Stock pursuant to the terms
of the Series 10 Preferred and Series 10 Warrants. The requirement
for shareholder approval is set forth in subparagraphs
(25)(H)(i)d, (iv) and (v) of Rule 4310 of the NASDAQ Marketplace
Rules.
(ii) As previously disclosed, the Company issued to 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. As part of the sale of the Series 4 Preferred, the
Company also issued to RBB Bank two common stock purchase warrants
(collectively, the "RBB Series 4 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. The Series 4 Preferred is
convertible into Common Stock at a conversion price per share of
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. Further description of the terms of the Series
4 Preferred and the RBB Series 4 Warrants is incorporated herein by
reference from pages 41 and 42 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1997.
As previously disclosed in the Company's Form 10-K for the
year ended December 31, 1997, the Company entered into an Exchange
Agreement with RBB Bank, effective September 16, 1997, ("First 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 exchange was made in an exchange offer exempt from registration
pursuant to Section 4(2) of the Securities Act and/or Regulation D
as promulgated under the Securities Act. The terms of the Series
6 Preferred were the same as the terms of the Series 4 Preferred,
except for the conversion rights of the Series 6 Preferred. The
RBB Series 6 Warrants are for a term of three (3) years and may be
exercised at any time from December 31, 1997, until June 9, 2000.
The conversion price of the Series 6 Preferred is $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
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September 6, 1998. The remaining terms of the Series 6 Preferred
are substantially the same as the terms of the Series 4 Preferred.
Further description of the terms of the Series 6 Preferred and the
RBB Series 6 Warrants is incorporated herein by reference from page
42 of the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
Effective February 28, 1998, the Company entered into an
Exchange Agreement with RBB Bank (the "Second RBB Exchange
Agreement"), which provided that the 2,500 shares of Series 6
Preferred were tendered to the Company in exchange for 2,500 of a
newly-created Series 8 Class H Preferred Stock, par value $.001 per
share ("Series 8 Preferred"). The exchange was made in an exchange
offer exempt from registration pursuant to Section 3(a)(9) of the
Securities Act, and/or Section 4(2) of the Securities Act and/or
Regulation D as promulgated under the Securities Act. The Series
8 Preferred was issued to RBB Bank during July 1998.
The rights under the Series 8 Preferred are the same as the
rights under the Series 6 Preferred, except for the conversion
price. The Series 8 Preferred is convertible at $1.8125 per share,
except that, in the event the average closing bid price reported in
the over-the-counter market, or the closing sale price if listed on
a national securities exchange for the five (5) trading days prior
to a particular date of conversion, shall be less than $2.50, the
conversion price for only that particular conversion shall be the
average of the closing bid quotations 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 proceeding the date of such particular
conversion notice provided by the holder to the Company multiplied
by 80%. Notwithstanding the foregoing, the conversion price shall
not be less than a minimum of $.75 per share, which minimum shall
be eliminated from and after September 6, 1998.
The terms of the Series 8 Preferred has a liquidation
preference over the Company's Common Stock equal to $1,000
consideration per outstanding share of Series 8 Preferred (the
"Series 8 Liquidation Value"), plus an amount equal to all accrued
and unpaid dividends. The Series 8 Preferred accrues dividends on
a cumulative basis at a rate of four percent (4%) per annum of the
Series 8 Liquidation Value ("Series 8 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 8 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 Series 8
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, 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.
Except for the exchange of the Series 6 Preferred for the
Series 8 Preferred, the Second RBB Exchange Agreement does not
terminate the First RBB Exchange Agreement. In addition, the RBB
Series 6 Warrants were not affected by the Second RBB Exchange
Agreement. The Company paid to RBB Bank the dividends on the
Series 6 Preferred which accrued from the date of its issuance
through February 28, 1998, the effective date of the Second RBB
Exchange Agreement by issuing to RBB Bank 7,652 shares of Common
Stock in payment of such accrued dividends. By letter dated
July 14, 1998, RBB Bank agreed to waive certain penalties regarding
the Series 4 Preferred and Series 6 Preferred.
(iii) 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 Series 5 Preferred is
convertible into Common Stock at a conversion price per share of
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. Further description of the issuance of the Series 5
25
<PAGE>
Preferred is incorporated herein by reference from pages 42 and 43
of the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
Effective September 16, 1997, the Company entered into an
Exchange Agreement with Infinity ("First Infinity 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 ("Infinity Series 7 Warrant"). The Infinity
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 is $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. Further description of the issuance of the
Series 7 Preferred and the Infinity Series 7 Warrant is
incorporated herein by reference from page 43 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1997.
Effective February 28, 1998, the Company entered into an
Exchange Agreement with Infinity (the "Second Infinity Exchange
Agreement"), which provided that the 350 shares of Series 7
Preferred were tendered to the Company in exchange for 350 shares
of a newly-created Series 9 Class I Preferred Stock, par value
$.001 per share ("Series 9 Preferred"). The exchange was made as
an exchange offer pursuant to Section 3(a)(9) of the Securities
Act, and/or Section 4(2) of the Securities Act and/or Registration
D as promulgated under the Securities Act.
The rights of the Series 9 Preferred are the same as the
rights under the Series 7 Preferred, except for the conversion
price. The conversion price for the Series 9 Preferred is $1.8125
per share, 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 the five (5) trading days prior to a particular date of
conversion, shall be less than $2.50, the conversion price for only
such particular conversion shall be the average of the closing bid
quotations 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
proceeding the date of such particular conversion notice provided
by the holder to the Company multiplied by 80%. Notwithstanding
the foregoing, the conversion price shall not be less than a
minimum of $.75 per share, which minimum shall be eliminated from
and after September 8, 1998.
The Series 9 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 9 Preferred (the "Series 9 Liquidation Value"), plus an
amount equal to all unpaid dividends accrued thereon. The Series 9
Preferred accrues dividends on a cumulative basis at a rate of four
percent (4%) per annum of the Series 9 Liquidation Value ("Series
9 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 9 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 are payable in the
number of shares of Common Stock equal to the product of (a) the
quotient of (i) the Series 9 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.
26
<PAGE>
Except for the exchange of the Series 7 Preferred for the
Series 9 Preferred, the Second Infinity Exchange Agreement does not
terminate the First Infinity Exchange Agreement. In addition, the
Infinity Series 7 Warrants were not affected by the Second Infinity
Exchange Agreement. The Company has paid Infinity the dividends on
the Series 7 Preferred which accrued from the date of its issuance
through February 28, 1998, the effective date of the Second
Infinity Exchange Agreement, by issuing to Infinity 1,071 shares of
Common Stock in payment of such accrued dividends.
(iv) Pursuant to the terms of an Asset Purchase Agreement
(the "Action Agreement"), effective as of April 1, 1998, by and
among the Company's wholly-owned subsidiary Perma-Fix of Ft.
Lauderdale, Inc., a Florida corporation ("PFFL") and Action
Environmental Corp., a Florida corporation ("Action"), Lewis R.
Goodman ("Goodman"), and Evelio Costa ("Costa"), the Company
issued to Action 108,207 shares of Common Stock as consideration
for the purchase by PFFL of all or substantially all of the assets
of Action. The closing of the transaction occurred on April 15,
1998. The issuance of Common Stock pursuant to the Action
Agreement was a private placement under Section 4(2) of the
Securities Act and/or Rule 506 of Regulation D as promulgated under
the Securities Act. In connection with the transaction, Goodman
and Costa, the sole shareholders of Action ("Action Shareholders"),
provided documentation to the Company representing, inter alia, as
follows: (i) the Common Stock is being acquired for their own
account, and not on behalf of any other persons; (ii) the Action
Shareholders are acquiring the Common Stock to hold for investment,
and not with a view to the resale or distribution of all or any
part of the Common Stock, (iii) the Action Shareholders will not
sell or otherwise transfer the Common Stock unless, in the opinion
of counsel satisfactory to the Company, the transfer can be made
without violating the registration provisions of the Securities Act
and the rules and regulations promulgated thereunder; (iv) each
Action Shareholder is an "accredited investor" as defined in Rule
501 of Regulation D as promulgated under the Securities Act (v)
each Action Shareholder has such knowledge, sophistication and
experience in financial and business matters that he is capable of
evaluating the merits and risks of the acquisition of the Common
Stock, (vi) the Action Shareholders fully understand the nature,
scope and duration of the limitations on transfer of the Common
Stock as contained in the Asset Purchase Agreement, (vii) the
Action Shareholders can bear the economic risk of an investment in
the Common Stock and can afford a complete loss of such investment,
(viii) the Action Shareholders had an adequate opportunity to ask
questions and receive answers regarding the Company, and (ix) the
Action Shareholders understand that stop transfer instructions will
be given to the Company's transfer agent and the certificates for
any of the shares of Common Stock received under the Action
Agreement will bear a restrictive legend as to transferability.
The Company did not receive cash proceeds in consideration for the
shares of Common Stock issued to Action. However, under the terms
of the Action Agreement, the value of the consideration was
considered to be $207,400.
(v) On or about April 15, 1988, pursuant to the terms of a
certain Consulting Agreement ("Consulting Agreement") entered into
effective as of January 1, 1998, the Company issued 33,303 shares
of Common Stock in payment of accrued earnings of $23,850 to Alfred
C. Warrington IV, an outside, independent consultant to the
Company, as consideration for certain consulting services rendered
to the Company by Warrington from 1995 through the end of 1997.
The issuance of Common Stock pursuant to the Consulting Agreement
was a private placement under Section 4(2) of the Securities Act
and/or Rule 506 of Regulation D as promulgated under the Securities
Act. The Consulting Agreement provides that Warrington will be paid
$1,000 per month of service to the Company, payable, at the option
of Warrington (i) all in cash, (ii) sixty-five percent in shares of
Common Stock and thirty-five percent in cash, or (iii) all in
Common Stock. If Warrington elects to receive part or all of his
compensation in Common Stock, such will be valued at seventy-five
percent of its "Fair Market Value" (as defined in the Consulting
Agreement). Warrington elected to receive all of his accrued
compensation through the end of 1997 in Common Stock.
Warrington represented and warranted in the Consulting
Agreement, inter alia, as follows: (i) the Common Stock is being
acquired for Warrington's own account, and not on behalf of any
other persons; (ii) Warrington is acquiring the Common Stock to
hold for investment, and not with a view to the resale or
distribution of all or any part of the Common Stock; (iii)
Warrington will not sell or otherwise transfer the Common Stock in
the absence of an effective registration statement under the
27
<PAGE>
Securities Act, or an opinion of counsel satisfactory to the
Company, that the transfer can be made without violating the
registration provisions of the Securities Act and the rules and
regulations promulgated thereunder; (iv) Warrington is an
"accredited investor" as defined in Rule 501 of Regulation D as
promulgated under the Securities Act; (v) Warrington has such
knowledge, sophistication and experience in financial and business
matters that he is capable of evaluating the merits and risks of
the acquisition of the Common Stock; (vi) Warrington fully
understands the nature, scope and duration of the limitations on
transfer of the Common Stock as contained in the Consulting
Agreement, (vii) Warrington understands that a restrictive legend
as to transferability will be placed upon the certificates for any
of the shares of Common Stock received by Warrington under the
Consulting Agreement and that stop transfer instructions will be
given to the Company's transfer agent regarding such certificates.
(vi) Pursuant to the terms of an Employment Agreement
("Employment Agreement") entered into as of the 7th day of April
1998, the Company issued 94,697 shares of Common Stock to Bernhardt
C. Warren, the Vice President of Nuclear Services of the Company
and the Vice President and General Manager of Perma-Fix of Florida,
Inc., a wholly-owned subsidiary of the Company, as a component of
Warren's compensation. The Employment Agreement provides that
within 30 days of the date of execution of the Employment
Agreement, the Company was to deliver to Warren that number of
shares of Common Stock having a fair market value of $167,500 based
upon the average of the closing bid prices of the Common Stock for
the five trading days prior to the date of execution of the
Employment Agreement.
The issuance to Warren pursuant to the terms of the Employment
Agreement of 94,697 shares of Common Stock was made under Section
4(2) of the Securities Act and/or Rule 506 of Regulation D under
the Securities Act. Warren, an executive officer of the Company,
represents and warrants in the Employment Agreement, inter alia, as
follows: (i) the Common Stock is being acquired for Warren's own
account, and not on behalf of any other persons; (ii) Warren is
acquiring the Common Stock to hold for investment, and not with a
view to the resale or distribution of all or any part of the Common
Stock, (iii) Warren will not sell or otherwise transfer the Common
Stock in the absence of an effective registration statement under
the Securities Act and any applicable state securities laws, or an
opinion of counsel satisfactory to the Company, that the transfer
can be made without violating the registration provisions of the
Securities Act and the rules and regulations promulgated
thereunder; (iv) Warren has such knowledge, sophistication and
experience in financial and business matters that he is capable of
evaluating the merits and risks of the acquisition of the Common
Stock; (v) Warren fully understands the nature, scope and duration
of the limitations on transfer of the Common Stock as contained in
the Employment Agreement, (vi) Warren understands that a
restrictive legend as to transferability will be placed upon the
certificates for any of the shares of Common Stock received by
Warren under the Employment Agreement and that stop transfer
instructions will be given to the Company's transfer agent
regarding such certificates.
Item 4. Submission of Matters to a Vote of Security Holders
___________________________________________________
(a) On May 20, 1998, the Company's Annual Meeting of
Stockholders was held.
28
<PAGE>
<TABLE>
<CAPTION>
(c) A summary of the matters which were submitted to a vote
of the Company's common stockholders, along with a tabulation of
the results of such voting is as follows:
NUMBER OF SHARES VOTED
___________________________
AGAINST
FOR OR WITHHELD
____________ ___________
PROPOSALS
<S> <C> <C>
1. Election of Directors.
Dr. Louis F. Centofanti 7,595,478 38,772
Mark A. Zwecker 7,595,478 38,772
Steve Gorlin 7,595,478 38,772
Jon Colin 7,595,878 38,372
FOR AGAINST ABSTAIN
__________ _________ _________
<S> <C> <C> <C>
2. Ratification of Independent 7,577,838 17,450 38,962
Public Accountants
BDO Seidman, LLP.
3. Approval of Fourth 7,191,696 334,470 108,084
Amendment to Company's
1992 Outside Directors
Stock Option and
Incentive Plan.
Item 5. Other Information
_________________
As set forth in the Company's Proxy Statement for its 1998 Annual
Meeting of Stockholders, stockholder proposals submitted to the
Company pursuant to Rule 14a-8 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), for inclusion in the
Company's proxy materials for its 1999 Annual Meeting of
Stockholders must be received by the Company no later than December
21, 1998. Any stockholder proposal submitted with respect to the
Company's 1999 Annual Meeting of Stockholders which proposal is
received by the Company after March 6, 1999 will be considered
untimely for purposes of Rule 14a-4 and 14a-5 under the Exchange
Act and the Company may vote against such proposal using its
discretionary voting authority as authorized by proxy.
29
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Item 6. Exhibits and Reports on Form 8-K
_________________________________
(a) Exhibits
________
<S> <C>
3(i) Restated Certificate of Incorporation, as amended, and
all Certificates of Designations.
4.1 Private Securities Subscription Agreement, dated June 30,
1998, between the Company and RBB Bank Aktiengesellschaft
as incorporated by reference from Exhibit 4.1 to the
Company's Form 8-K dated June 30, 1998.
4.2 Certificate of Designations of Series 10 Class J
Convertible Preferred Stock, dated July 16, 1998, as
incorporated by reference from Exhibit 3(i) above.
4.3 Specimen copy of Certificate relating to the Series 10
Class J Convertible Preferred Stock as incorporated by
reference from Exhibit 4.3 to the Company's Form 8-K,
dated June 30, 1998.
4.4 Certificate of Designations of Series 8 Class H
Convertible Preferred Stock as incorporated by reference
from Exhibit 3(i) above.
4.5 Specimen copy of Certificate relating to the Series 8
Class H Convertible Preferred Stock.
4.6 Certificate of Designations of Series 9 Class I
Convertible Preferred Stock as incorporated by reference
from Exhibit 3(i) above.
4.7 Specimen copy of Certificate relating to the Series 9
Class I Convertible Preferred Stock.
10.1 Common Stock Purchase Warrant ($1.875) dated June 30,
1998, between the Company and RBB Bank Aktiengesellschaft
as incorporated by reference from Exhibit 4.4 to the
Company's Form 8-K, dated June 30, 1998.
10.2 Common Stock Purchase Warrant ($2.50) dated June 30,
1998, between the Company and RBB Bank Aktiengesellschaft
as incorporated by reference from Exhibit 4.5 to the
Company's Form 8-K, dated June 30, 1998.
10.3 Consulting Agreement dated effective June 30, 1998,
between the Company and Liviakis Financial
Communications, Inc. as incorporated by reference from
Exhibit 4.6 to the Company's Form 8-K, dated June 30,
1998.
10.4 Common Stock Purchase Warrant effective June 30, 1998,
between the Company and Liviakis Financial
Communications, Inc. as incorporated by reference from
Exhibit 4.7 to the Company's Form 8-K, dated June 30,
1998.
10.5 Common Stock Purchase Warrant effective June 30, 1998,
between the Company and Robert B. Prag as incorporated by
reference from Exhibit 4.8 to the Company's Form 8-K,
dated June 30, 1998.
30
<PAGE>
10.6 Exchange Agreement dated as of April 30, 1998, to be
considered effective as of February 28, 1998, between the
Company and RBB Bank Aktiengesellschaft.
10.7 Exchange Agreement dated as of April 30, 1998, to be
considered effective as of February 28, 1998, between the
Company and The Infinity Fund, L.P.
10.8 Common Stock Purchase Warrant effective June 30, 1998,
between the Company and JW Genesis Financial Corporation.
10.9 Common Stock Purchase Warrant effective June 30, 1998,
between the Company and Fontenoy Investments.
10.10 Employment Agreement, dated April 7, 1998, and
effective January 1, 1998, between the Company and
Bernhardt Warren incorporated by reference from
Exhibit 10.1 to the Company's Form 10-Q for the
quarter ended March 31, 1998.
10.11 Consulting Agreement, dated April 8, 1998, and
effective January 1, 1998, between the Company and
Alfred C. Warrington, IV.
10.12 Letter from RBB Bank to the Company, dated July 14,
1998.
27 Financial Data Sheet
99.1 Pages 41 through 43 from the Company's Annual Report on
Form 10-K for the year ended December 31, 1997.
</TABLE>
3. Report on Form 8-K
__________________
A current report on Form 8-K (Item 5 - Other Events), dated
June 30, 1998, reporting the issuance of (i) the newly-created
Series 10 Preferred Stock and the RBB Series 10 Warrants to RBB
Bank, (ii) the Liviakis Warrant to Liviakis, (iii) the Prag Warrant
to Prag, (iv) the Genesis Warrant to Genesis, and (v) the Fontenoy
Warrant to Fontenoy.
31
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
Date: August ___, 1998 By: /s/ Louis F. Centofanti
___________________________
Chairman of the Board
Chief Executive Officer
By: /s/ Richard T. Kelecy
__________________________
Richard T. Kelecy
Chief Financial Officer
32
<PAGE>
<TABLE>
<CAPTION>
<PAGE>
EXHIBIT INDEX
Exhibit Page
No. Description No.
______ ___________ ________
<S> <C> <C>
3(i) Restated Certificate of Incorporation,
as amended, and all Certificates of
Designations. 35
4.1 Private Securities Subscription Agreement,
dated June 30, 1998, between the Company
and RBB Bank Aktiengesellschaft as incor-
porated by reference from Exhibit 4.1 to
the Company's Form 8-K dated June 30, 1998. *
4.2 Certificate of Designations of Series 10
Class J Convertible Preferred Stock, dated
July 16, 1998, as incorporated by reference
from Exhibit 3(i) above. *
4.3 Specimen copy of Certificate relating to the
Series 10 Class J Convertible Preferred Stock
as incorporated by reference from Exhibit 4.3
to the Company's Form 8-K, dated June 30, 1998. *
4.4 Certificate of Designations of Series 8
Class H Convertible Preferred Stock as
incorporated by reference from Exhibit 3(i)
above. *
4.5 Specimen copy of Certificate relating to the
Series 8 Class H Convertible Preferred Stock. 178
4.6 Certificate of Designations of Series 9
Class I Convertible Preferred Stock as
incorporated by reference from Exhibit 3(i)
above. *
4.7 Specimen copy of Certificate relating to the
Series 9 Class I Convertible Preferred Stock. 179
10.1 Common Stock Purchase Warrant ($1.875) dated
June 30, 1998, between the Company and RBB
Bank Aktiengesellschaft as incorporated by
reference from Exhibit 4.4 to the Company's
Form 8-K, dated June 30, 1998. *
10.2 Common Stock Purchase Warrant ($2.50) dated
June 30, 1998, between the Company and RBB
Bank Aktiengesellschaft as incorporated by
reference from Exhibit 4.5 to the Company's
Form 8-K, dated June 30, 1998. *
10.3 Consulting Agreement dated effective June 30,
1998, between the Company and Liviakis Financial
Communications, Inc. as incorporated by
reference from Exhibit 4.6 to the Company's
Form 8-K, dated June 30, 1998. *
10.4 Common Stock Purchase Warrant effective June 30,
1998, between the Company and Liviakis Financial
Communications, Inc. as incorporated by
reference from Exhibit 4.7 to the Company's
Form 8-K, dated June 30, 1998. *
10.5 Common Stock Purchase Warrant effective June 30,
1998, between the Company and Robert B.
Prag as incorporated by reference from Exhibit 4.8
to the Company's Form 8-K, dated June 30, 1998. *
33
<PAGE>
10.6 Exchange Agreement dated as of April 30, 1998,
to be considered effective as of February 28,
1998, between the Company and RBB Bank
Aktiengesellschaft. 180
10.7 Exchange Agreement dated as of April 30, 1998,
to be considered effective as of February 28,
1998, between the Company and The Infinity Fund,
L.P. 200
10.8 Common Stock Purchase Warrant effective June 30,
1998, between the Company and JW Genesis
Financial Corporation. 221
10.9 Common Stock Purchase Warrant effective June 30,
1998, between the Company and Fontenoy Investments. 231
10.10 Employment Agreement, dated April 7, 1998, and
effective January 1, 1998, between the Company
and Bernhardt Warren incorporated by reference
from Exhibit 10.1 to the Company's Form 10-Q
for the quarter ended March 31, 1998. *
10.11 Consulting Agreement, dated April 8, 1998, and
effective January 1, 1998, between the Company
and Alfred C. Warrington, IV. 241
10.12 Letter from RBB Bank to the Company, dated
July 14, 1998. 248
27 Financial Data Sheet 249
99.1 Pages 41 through 43 from the Company's Annual
Report on Form 10-K for the year ended December 31,
1997. 250
*incorporated by reference
</TABLE>
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 RESTATED CERTIFICATE 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/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 9244151
2249849 8100 Date: 08-10-98
981311720
<PAGE>
<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.
<PAGE>
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.
2
<PAGE>
THIRD: The purpose of the Corporation is to engage in
any lawful act or activity for which a corporation may be organized
under the laws of the General Corproation Law of the State of
Delaware.
FOURTH: The total number of shares of capital stock
which the Corporation shall have authority to issue is Twenty-Two
Million (22,000,000) shares, of which Twenty Million (20,000,000)
shares shall be Common Stock, par value $.001 per share, and Two
Million (2,000,000) shares shall be Preferred Stock, $.001 par
value per share.
The Preferred Stock may be issued from time to time in
one or more series. The Board of Directors is hereby expressly
authorized to provide, by resolution or resolutions duly adopted by
it prior to issuance, for the creation of each such series and to
fix the designation and the powers, preferences, rights,
qualifications, limitations and restrictions relating to the shares
of each such series. The authority of the Board of Directors with
respect to each such series of Preferred Stock shall include, but
not be limited to, determining the following:
(a) the designation of such series, the number of shares
to constitute such series and the stated value if different
from the par value thereof;
(b) whether the shares of such series shall have voting
rights, in addition to any voting rights provided by law, and,
if so, the terms of such voting rights, which may be general
or limited;
3
<PAGE>
(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;
4
<PAGE>
(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,
5
<PAGE>
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
6
<PAGE>
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
7
<PAGE>
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
____________________________________
President
ATTEST:
/s/ Carol A. Dixon
______________________
Secretary
8
<PAGE>
<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 AMENDMENT OF "NATIONAL ENVIRONMENTAL
INDUSTRIES, LTD.," CHANGING ITS NAME FROM "NATIONAL ENVIRONMENTAL
INDUSTRIES, LTD." TO "PERMA-FIX ENVIRONMENTAL SERVICES, INC.,"FILED
IN THIS OFFICE ON THE SEVENTEENTH DAY OF DECEMBER, A.D. 1991, AT
4:30 O'CLOCK P.M.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 9244150
2249849 8100 Date: 08-10-98
981311720
<PAGE>
<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>
<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 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.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 9244149
2249849 8100 Date: 05/24/1993
981311720
<PAGE>
<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
<PAGE>
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.
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
_____________________________________
Dr. Louis F. Centofanti
President
ATTEST:
By: /s/ Mark Zwecker
___________________
Secretary
<PAGE>
<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.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 9244148
2249849 8100 Date: 08-10-98
981311720
<PAGE>
<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
<PAGE>
<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.
<PAGE>
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
-2-
<PAGE>
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
-3-
<PAGE>
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
-4-
<PAGE>
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
-5-
<PAGE>
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
-6-
<PAGE>
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.
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<PAGE>
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.
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.
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<PAGE>
<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.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
2249849 8100 Authentication: 9244147
Date: 08-10-98
981311720
<PAGE>
<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
<PAGE>
<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.
<PAGE>
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.
-2-
<PAGE>
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
-3-
<PAGE>
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
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<PAGE>
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-
<PAGE>
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.
-6-
<PAGE>
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,
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
<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.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 9244146
2249849 8100 Date: 08-10-98
<PAGE>
981311720
<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
<PAGE>
<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
<PAGE>
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
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<PAGE>
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;
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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
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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,
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<PAGE>
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.
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<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.
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<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 SIXTEENTH DAY OF
DECEMBER, A.D. 1996, AT 4:30 O'CLOCK P.M.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 9244145
2249849 8100 Date: 08-10-98
981311720
<PAGE>
<PAGE>
CERTIFICATE OF ELIMINATION
OF
SERIES I CLASS A PREFERRED STOCK
AND
SERIES 2 CLASS B CONVERTIBLE PREFERRED STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
____________________________________________
PERMA-FIX ENVIRONMENTAL SERVICES, INC., a corporation
organized and existing under the Delaware General Corporation Law
of the State of Delaware (hereinafter called the "Corporation"),
hereby certifies the following:
1. That the Certificate of Designations of Series I Class A
Preferred Stock of the Corporation (the "Series I Preferred") was
filed on February 6, 1996 (the "Series I Certificate of
Designations").
2. That all outstanding shares of the Series I Preferred
have been converted into shares of common stock of the Company
pursuant to the terms and conditions of the Series I Certificate of
Designations.
3. That no shares of Series I Preferred remain outstanding.
4. That all shares of the Series I Preferred which have been
converted have the status of authorized and unissued shares of the
Preferred Stock of the Corporation without designation as to
series, until such shares are once more designated as part of a
particular series by the Board of Directors.
5. That on September 19, 1996, the Board of Directors of the
company duly adopted the following resolution:
RESOLVED, that no authorized shares of Series
I Class A Preferred Stock remain outstanding
and no shares of Series I Class A Preferred
Stock will be issued subject to the
Certificate of Designation previously filed
with respect to the Series I Class A Preferred
Stock.
6. That the Certificate of Designations of the Series 2
Class B Convertible Preferred Stock of the Corporation (the "Series
2 Preferred") was filed on February 20, 1996 (the "Series 2
Certificate of Designations").
7. That all outstanding shares of the Series 2 Preferred
have been converted into shares of common stock of the Company
pursuant to the terms and conditions of the Series 2 Certificate of
Designations.
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8. That no shares of Series 2 Preferred remain outstanding.
9. That all shares of the Series 2 Preferred which have been
converted have the status of authorized and unissued shares of the
Preferred Stock of the Corporation without designation as to
series, until such shares are once more designated as part of a
particular series by the Board of Directors.
10. That on September 19, 1996, the Board of Directors of the
company duly adopted the following resolution:
RESOLVED, that no authorized shares of Series
2 Class B Preferred Stock remain outstanding
and no shares of Series 2 Class B Convertible
Preferred Stock will be issued subject to the
Certificate of Designation previously filed
with respect to the Series 2 Class B
Convertible Preferred Stock.
11. That pursuant to the provisions of Section 151(g) of the
Delaware General Corporation Law, upon the effective date of the
filing of this Certificate, this Certificate will have the effect
of eliminating from the Restated Certificate of Incorporation only
those matters set forth in the Restated Certificate of
Incorporation with respect to the Series I Class A Preferred Stock
and the Series 2 Class B Convertible Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Elimination has been
executed this 4th day of December, 1996, by the President of the
Company.
PERMA-FIX ENVIRONMENTAL
ATTEST: SERVICES, INC.
/s/ Richard T. Kelecy By /s/ Louis Centofanti
___________________________ ______________________________
Richard T. Kelecy, Secretary Dr. Louis F. Centofanti,
President
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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 AMENDMENT OF "PERMA-FIX ENVIRONMENTAL
SERVICES, INC.," FILED IN THIS OFFICE ON THE SIXTH DAY OF JANUARY,
A.D. 1997, AT 4:30 O'CLOCK P.M.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 9244144
2249849 8100 Date: 08-10-98
981311720
<PAGE>
<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
___________________________________________
Perma-Fix Environmental Services, Inc., a Delaware
corporation (the "Corporation"), for purposes of amending its
Restated Certificate of Incorporation, as amended ("Restated
Certificate of Incorporation"), as provided by Section 242 of the
Delaware General Corporation Law, does hereby certify:
1. The amendment set forth below to the Corporation's
Restated Certificate of Incorporation was duly adopted in
accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware:
The first paragraph of Article Fourth of the
Corporation's Restated Certificate of Incorporation is hereby
deleted and replaced in its entirety by the following:
The total number of shares of capital stock
that the Corporation shall have authority to
issue is 52,000,000, of which 50,000,000 shall
be designated as common stock of the par value
of $.001 per share ("Common Stock") and
2,000,000 shall be designated as preferred
stock of the par value of $.001 per share
("Preferred Stock").
2. Only the first paragraph of Article Fourth is amended by
this Amendment, and the remainder of Article Fourth shall remain in
full force and effect. No other provision, paragraph or article of
the Restated Certificate of Incorporation is amended or changed by
this Amendment. The Restated Certificate of Incorporation, as
expressly amended by paragraph 1 of this Amendment, shall be in
full force and effect.
3. At a meeting of the Board of Directors held on the 19th
day of September, 1996, a resolution was duly adopted setting forth
the foregoing proposed amendment to the first paragraph of Article
Fourth of the Restated Certificate of Incorporation, declaring such
amendment to be advisable and setting the next Annual Meeting of
Stockholders for consideration thereof.
4. Thereafter, pursuant to said resolution of its Board of
Directors, the Annual Meeting of Stockholders was duly called and
held on December 12, 1996, at which meeting the necessary number of
shares as required by statute were voted in favor of such
amendment.
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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 16th day of December, 1996.
Perma-Fix Environmental
Services, Inc.,
a Delaware corporation
By: /s/Louis F. Centofanti
_________________________
Dr. Louis F. Centofanti
President and
Chief Executive Officer
ATTEST:
/s/ Richard T. Kelecy
___________________________
Richard T. Kelecy,
Secretary
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<PAGE>
<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.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 0244143
2249849 8100 Date: 08-10-98
981311720
<PAGE>
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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.
By /s/ Louis Centofanti
___________________________
Dr. Louis F. Centofanti
Chairman of the Board
ATTEST:
/s/ Richard T. Kelecy
______________________________
Richard T. Kelecy, Secretary
<PAGE>
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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
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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.
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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,
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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
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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
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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.
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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
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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
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<PAGE>
(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;
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<PAGE>
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.
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<PAGE>
<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.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 9244142
2249849 8100 Date: 08-10-98
981311720
<PAGE>
<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>
<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
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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.
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<PAGE>
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
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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
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<PAGE>
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,
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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.
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<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 1:30 O'CLOCK P.M.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 9244141
2249849 8100 Date: 08-10-98
981311720
<PAGE>
<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>
<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
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<PAGE>
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
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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:
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<PAGE>
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
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<PAGE>
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.
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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
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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
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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,
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<PAGE>
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.
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<PAGE>
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.
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<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.
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<PAGE>
<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.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 9244140
2249849 8100 Date: 08-10-98
981311720
<PAGE>
<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>
<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.
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<PAGE>
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
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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,
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<PAGE>
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.
4.5 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.
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<PAGE>
4.6 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.
4.7 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 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.
4.8 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
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.
4.9 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 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.
4.10 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.
4.11 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
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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 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.
5.3 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.
5.4 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, except that,
notwithstanding any provision of such Part 4 to the contrary,
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such holder shall have the right to convert into Common Stock
that number of Series 7 Class G 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 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.
5.6 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.
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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 - 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 7 Class G 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 7 Class G
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
-8-
<PAGE>
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 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.
-9-
<PAGE>
<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 TWENTY-SIXTH DAY OF
NOVEMBER, A.D. 1997, AT 10 O'CLOCK A.M.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 9244139
2249849 8100 Date: 08-10-98
981311720
<PAGE>
<PAGE>
CERTIFICATE OF ELIMINATION
OF
SERIES 4 CLASS D CONVERTIBLE PREFERRED STOCK
AND
SERIES 5 CLASS E CONVERTIBLE PREFERRED STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
____________________________________________
PERMA-FIX ENVIRONMENTAL SERVICES, INC., a corporation
organized and existing under the General Corporation Law of the
State of Delaware (hereinafter called the "Corporation"), hereby
certifies the following:
1. That the Certificate of Designations of Series 4 Class D
Convertible Preferred Stock of the Corporation (the "Series 4
Preferred") was filed on June 11, 1997 (the "Series 4 Certificate
of Designations").
2. That all outstanding shares of the Series 4 Preferred
have been delivered to the Company and exchanged upon agreement
with the holder thereof pursuant to the terms and conditions of a
certain Exchange Agreement between the Company and RBB Bank
Aktiengesellschaft, dated effective as of September 16, 1997.
3. That no shares of Series 4 Preferred remain outstanding.
4. That all shares of the Series 4 Preferred which have been
exchanged have the status of authorized and unissued shares of the
Preferred Stock of the Corporation without designation as to
series, until such shares are once more designated as part of a
particular series by the Board of Directors.
5. That effective September 16, 1997, the Board of Directors
of the Company duly adopted the following resolutions:
RESOLVED, that upon completion of the exchange
with the holder of the Series 4 Class D
Convertible Preferred Stock, no authorized
shares of Series 4 Class D Convertible
Preferred Stock will remain outstanding and no
shares of Series 4 Class D Convertible
Preferred Stock will be issued subject to the
Certificate of Designations previously filed
with respect to the Series 4 Class D
Convertible Preferred Stock.
FURTHER RESOLVED, that upon completion of the
exchange, the officers of the Company are
hereby authorized and directed, for and on
behalf of the Company, to execute and deliver
an appropriate Certificate of Elimination to
<PAGE>
the Secretary of State of Delaware regarding
the Series 4 Class D Convertible Preferred
Stock.
6. That the Certificate of Designations of the Series 5
Class E Convertible Preferred Stock of the Corporation (the "Series
5 Preferred") was filed on July 14, 1997 (the "Series 5 Certificate
of Designations").
7. That all outstanding shares of the Series 5 Preferred
have been delivered to the Company and exchanged upon agreement
with the holder thereof pursuant to the terms and conditions of a
certain Exchange Agreement between the Company and The Infinity
Fund, L.P., dated effective as of September 16, 1997.
8. That no shares of Series 5 Preferred remain outstanding.
9. That all shares of the Series 5 Preferred which have been
exchanged have the status of authorized and unissued shares of the
Preferred Stock of the Corporation without designation as to
series, until such shares are once more designated as part of a
particular series by the Board of Directors.
10. That effective September 16, 1997, the Board of Directors
of the Company duly adopted the following resolutions:
RESOLVED, that upon completion of the exchange
with the holder of the Series 5 Class E
Convertible Preferred Stock, no authorized
shares of Series 5 Class E Convertible
Preferred Stock will remain outstanding and no
shares of Series 5 Class E Convertible
Preferred Stock will be issued subject to the
Certificate of Designations previously filed
with respect to the Series 5 Class E
Convertible Preferred Stock.
FURTHER RESOLVED, that upon completion of the
exchange, the officers of the Company are
hereby authorized and directed, for and on
behalf of the Company, to execute and deliver
an appropriate Certificate of Elimination to
the Secretary of State of Delaware regarding
the Series 5 Class E Convertible Preferred
Stock.
11. That pursuant to the provisions of Section 151(g) of the
Delaware General Corporation Law, upon the effective date of the
filing of this Certificate, this Certificate will have the effect
of eliminating from the Restated Certificate of Incorporation only
those matters set forth in the Restated Certificate of
Incorporation with respect to the Series 4 Class D Convertible
Preferred Stock and the Series 5 Class E Convertible Preferred
Stock.
-2-
<PAGE>
IN WITNESS WHEREOF, this Certificate of Elimination has been
executed this 20th day of November, 1997, by the President of the
Company.
PERMA-FIX ENVIRONMENTAL
ATTEST: SERVICES, INC.
/s/ Richard T. Kelecy By /s/ Louis Centofanti
____________________________ ____________________________
Richard T. Kelecy, Secretary Dr. Louis F. Centofanti,
President
(SEAL)
-3-
<PAGE>
<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 TENTH DAY OF JULY,
A.D. 1998, AT 12 O'CLOCK P.M.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 9244138
2249849 8100 Date: 08-10-98
981311720
<PAGE>
<PAGE>
CERTIFICATE OF DESIGNATIONS
OF RIGHTS AND PREFERENCES OF THE
SERIES 10 CLASS J CONVERTIBLE PREFERRED STOCK OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
We, being respectively the President and Secretary of Perma-Fix
Environmental Services, Inc. a corporation organized and existing
under the laws of the State of Delaware (hereinafter the
"Corporation"), DO HEREBY CERTIFY:
FIRST:
That pursuant to authority expressly granted and vested in the
Board of Directors of said Corporation under Section 151 of the
Delaware General Corporation Law (the "GCL"), and the provisions of
the Corporation's Restated Certificate of Incorporation, said Board
of Directors, on June 30th, 1998 (the "Closing Date"), adopted the
following resolution setting forth the designations, powers,
preferences and rights of its Series 10 Class J Convertible
Preferred Stock (the "Certificate of Designations").
RESOLVED: That the designations, powers, preferences and rights of
the Series 10 Class J Convertible Preferred Stock be, and they
hereby are, as set forth below:
1. Number of Shares of Common Stock of Series 10 Class J
Convertible Preferred Stock
The Corporation hereby authorizes the issuance of up to 3,000
(three thousand,) shares of Series 10 Class J Convertible Preferred
Stock par value $.001 per share (the "Preferred Stock"). This
Preferred Stock shall pay an annual dividend based on a 365 day
calendar year of 4% of the Liquidation Value (as defined in Section
3 hereof) ("Dividend Rate"), payable semiannually within ten (10)
business days after each subsequent June 30th and December 31st
(each a "Dividend Declaration Date"), and shall be payable in cash
or shares of the Corporation's par value $.001 per share common
stock (Common Stock) at the Corporation's option. The first
Dividend Declaration Date shall be December 31st, 1998.
In the event that the Corporation elects to pay the accrued
dividends due as of a Dividend Declaration Date on the outstanding
shares of Preferred Stock in Common Stock of the Corporation, the
Holder of each share of Preferred Stock shall receive that 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 Corporation's Common Stock as reported
on the National Association of Securities Dealers Automated
Quotation system ("NASDAQ"), or if the Common Stock is not listed
;1
<PAGE>
for trading on the NASDAQ but is listed for trading on a national
securities exchange, the average closing bid price of the Common
Stock as quoted on such national 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 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 Preferred Stock shall have
been paid or declared and set aside for payment.
2. Voting.
(a) Except as provided under Section 242 of the GCL, holders of
Preferred Stock (the "Holders") shall not have the right to vote
on any matter. Notwithstanding the provisions of Section 242 of
the GCL or Section 4 hereof, 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 Section 242 of the
GCL.
3. Liquidation.
In the event of a voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation, the Holders of
Preferred Stock shall be entitled to receive out of the assets of
the Corporation legally available for distribution to holders of
its capital stock, before any payment or distribution shall be made
to holders of shares of Common Stock or any other class of stock
ranking junior to the Preferred Stock, an amount per share of
Preferred Stock equal to $1,000 (the "Liquidation Value") plus any
accrued and unpaid dividends on the Preferred Stock. If upon such
liquidation, dissolution, or winding up of the Corporation, whether
voluntary or involuntary, the assets to be distributed among the
Holders of Preferred Stock shall be insufficient to permit payment
to the Holders of Preferred Stock of the amount distributable as
aforesaid, then the entire assets of the Corporation to be so
distributed shall be distributed ratably among the Holders of
Preferred Stock and shares of such other classes or series ranking
on a parity with the shares of this Preferred Stock in proportion
to the full distributable amounts for which holders of all such
parity shares are entitled upon such distribution, liquidation, or
winding up. Upon any such liquidation, dissolution or winding up
of the Corporation, after the Holders of Preferred Stock shall
have been paid in full the amounts to which they shall be entitled,
the remaining net assets of the Corporation may be distributed to
the holders of stock ranking on liquidation junior to the Preferred
Stock and the Holders of the Preferred Stock shall have no right or
claim to any of the remaining assets of the Corporation. Written
notice of such liquidation, dissolution or winding up, stating a
payment date, the amount of the liquidation payments and the place
;2
<PAGE>
where said liquidation payments shall be payable, shall be given by
mail, postage prepaid or by telex or facsimile to non-U.S.
residents, not less than 10 days prior to the payment date stated
therein, to the Holders of record of Preferred Stock, such notice
to be addressed to each such Holder at its address as shown by the
records of the Corporation. For purposes hereof the shares of
Common Stock, shall rank on liquidation junior to the Preferred
Stock.
4. Restrictions.
The Corporation will not amend or modify the terms of its Restated
Certificate of Incorporation so as to adversely alter or change the
Preferred Stock at any time when shares of Preferred Stock are
outstanding, without the approval of the Holders of at least a
majority of the then outstanding shares of Preferred Stock given in
writing or by vote at a meeting, consenting or voting (as the case
may be) separately as a series, except where the vote or written
consent of the Holders of a greater number of shares of Common
Stock of the Corporation is required by law or by the Corporation's
Certificate of Incorporation, as amended.
5. Optional Conversion.
The Holders of shares of Preferred Stock shall have the following
conversion rights to convert the shares of Preferred Stock into
shares of Common Stock of the Corporation:
(a) Conversion Dates, The Holder of any share or shares of
Preferred Stock may convert cumulatively any of such Preferred
Stock at any time subsequent to 180 days after the Closing Date.
(b) Right to Convert; Conversion Price. Subject to the terms
hereof, as used herein, the term Conversion Price per outstanding
share of Preferred Stock shall be One Dollar and 875/1000 ($1.875);
except that after the expiration of one hundred and eighty (180)
days after the Closing Date if the average of the closing bid price
per share of Common Stock quoted on the NASDAQ (or the closing bid
price of the Common Stock as quoted on the national securities
exchange if the Common Stock is not listed for trading on the
NASDAQ but is listed for trading on a national securities exchange)
for the five (5) trading days immediately prior to the particular
date of each Conversion Notice (as defined below) is less than Two
Dollars and 34/100 ($2.34), then the Conversion Price for that
particular conversion shall be eighty percent (80%) of the average
of the closing bid price of the Common Stock on the NASDAQ (or if
the Common Stock is not listed for trading on the NASDAQ but is
listed for trading on a national securities exchange then eighty
percent (80%) of the average of the closing bid price of the Common
Stock on the national securities exchange) for the five (5) trading
days immediately prior to the particular date of the Conversion
Notice. If any of the outstanding shares of Preferred Stock are
converted, in whole or in part, into Common Stock pursuant to the
terms of this Section 5(b), the number of shares of whole Common
Stock to be issued to the Holder as a result of such conversion
;3
<PAGE>
shall be determined by dividing (a) the aggregate Stated Value of
the Preferred Stock so surrendered for conversion by (b) the
Conversion Price in effect on the date of that particular
Conversion Notice relating to such conversion. At the time of
conversion of shares of the 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 on the shares of
Preferred so converted to the date of the Conversion Notice
relating to such 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 the Conversion Notice relating to such conversion of the
shares of Preferred Stock so converted divided by the Stock
Dividend Price, in effect at the date of the Conversion Notice
relating to such conversion.
(c) Conversion Notice. The right of conversion shall be exercised
by the Holder thereof by telecopying or faxing an executed and
completed written notice signed by an authorized representative of
the Holder, ("Conversion Notice") to the Corporation that the
Holder elects to convert a specified number of shares of Preferred
Stock representing a specified Stated Value thereof into shares of
Common Stock and by delivering by express courier the certificate
or certificates of Preferred Stock being converted to the
Corporation at its principal office (or such other office or agency
of the Corporation as the Corporation may designate by notice in
writing to the Holders of the Preferred Stock). The business date
indicated on a Conversion Notice which is telecopied to and
received by the Corporation in accordance with the provisions
hereof shall be deemed a Conversion Date. The Conversion Notice
shall include therein the Stated Value of shares of Preferred Stock
to be converted, and a calculation (a) of the Stock Dividend Price,
(b) the Conversion Price, and (c) the number of Shares of Common
Stock to be issued in connection with such conversion. The
Corporation shall have the right to review the calculations
included in the Conversion Notice, and shall provide notice of any
discrepancy or dispute therewith within three (3) business days of
the receipt thereof. The Holder shall deliver to the Corporation
an original Conversion Notice and the original Preferred to be
converted within three (3) business days from the date of the
Conversion Notice.
(d) Issuance of Certificates - Time Conversion Effected.
Promptly, but in no event more than six (6) business days, after
the receipt by facsimile of the Conversion Notice referred to in
Subparagraph (5)(c); and provided within the six (6) business days
the Corporation receives the certificate or certificates for the
shares of Preferred Stock to be converted, the Corporation shall
issue and deliver, or cause to be issued and delivered, to the
Holder, registered in the name of the Holder, a certificate or
certificates for the number of whole shares of Common Stock into
which such shares of Preferred Stock are converted. Such
conversion shall be deemed to have been effected as of the close of
business on the date on which the telecopy or facsimile Conversion
Notice shall have been received by the Corporation, and the rights
of the Holder of such share or shares of Preferred Stock shall
cease, at such time, and the Holder or Holders shall be deemed to
have become the Holder or Holders of record of the shares of Common
Stock represented thereby.
;4
<PAGE>
In the event that the shares of Common Stock issuable upon
conversion of the Preferred, is not delivered within six (6)
business days of the date the Company receives the Conversion
Notice, the Company shall pay to the Buyer, by wire transfer, as
liquidated damages for such failure and not as a penalty, for each
$100,000 of Preferred sought to be converted, $500 for each of the
first five (5) calendar days and $1,000 per calendar day thereafter
that the shares of Common Stock are not delivered, which liquidated
damages shall begin to run from the seventh (7th) business day
after the Conversion Date. Any and all payments required pursuant
to this paragraph shall be payable only in cash. Notwithstanding
the above, liquidated damages shall not exceed $2,000.00 per day.
In addition to the liquidated damages set forth herein, in the
event the Company fails to deliver the shares of Common Stock
within six (6) business days after the Conversion date, the Company
agrees to issue the larger number of shares of Common Stock derived
from (i) the original Conversion Notice, or (ii) utilizing the five
lowest closing bid prices of the Company's shares of Common Stock
beginning on the Conversion Date and ending on the day the shares
of Common Stock are delivered. The Company understands that a
delay in the issuance of the shares of Common Stock could result in
economic loss to the Holder. Nothing contained herein, or in the
Preferred shall limit the Holder's rights to pursue actual damages
for the Company's failure to issue and deliver shares of Common
Stock to the Holder in accordance with the terms of the Certificate
of Designations, and this Agreement.
(e) Fractional Shares of Common Stock. No fractional shares of
Common Stock shall be issued upon conversion of any Preferred Stock
into shares of Common Stock. All fractional shares of Common Stock
shall be aggregated and then rounded down to the nearest whole
share of Common Stock. In case the number of shares of Preferred
Stock represented by the certificate or certificates surrendered
pursuant to Subparagraph 5(b) exceeds the number of shares of
Common Stock converted, the Corporation shall, upon such
conversion, execute and deliver to the Holder, at the expense of
the Corporation, a new certificate or certificates for the number
of shares of Preferred Stock represented by the certificate or
certificates surrendered which are not to be converted.
(f) 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 Preferred Stock are
outstanding and prior to the date that the Corporation's
Registration Statement covering all the shares of Common Stock
issuable upon the conversion of the Preferred Stock is declared
effective by the U.S. Securities and Exchange Commission
("Commission"), the Corporation or such successor corporation as
the case may be, shall make appropriate provision so that the
Holder of each share of Preferred Stock then outstanding shall have
the right to convert such share of 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 Preferred Stock
could have been converted into immediately prior to such Merger or
;5
<PAGE>
Sale, subject to adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section
5.
In the event of a Merger or Sale, where the Corporation is not the
surviving Corporation, the Holder shall have the right to redeem
all of the outstanding shares of Preferred Stock at 120% of the
Liquidation Value of each share of Preferred Stock then outstanding
plus all accrued and unpaid dividends (the "Redemption Amount").
The Corporation shall pay this Redemption Amount in cash within ten
(10) business days of receipt by the Corporation of notice from the
Holder, and receipt by the Corporation of all outstanding shares of
Preferred Stock duly endorsed by the Holder to the Corporation.
(g) 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 Preferred Stock
are issued and outstanding shall declare or pay, 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 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.
(h) Adjustments for Reclassification and Reorganization. If
the Common Stock issuable upon conversion of the Preferred Stock
shall be changed into the same or a different number of shares of
Common Stock of any other class or classes of stock, whether by
capital reorganization, reclassification or otherwise (other than
a subdivision or combination or shares of Common Stock provided for
in Section 5(g) hereof), the Conversion Price then in effect shall,
concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted so that the Preferred
Stock shall be convertible into, in lieu of the number of shares of
Common Stock which the holders of Preferred Stock would otherwise
have been entitled to receive, a number of shares of Common Stock
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 Preferred Stock immediately
before that change.
6. Assignment.
Subject to all applicable restrictions on transfer, the rights
and obligations of the Corporation and the Holder of the
Preferred Stock shall be binding upon and benefit the successors,
assigns, heirs, administrators, and transferees of the parties.
;6
<PAGE>
7. Shares of Common Stock to be Reserved.
The Corporation, upon the effective date of this Certificate of
Designations, has a sufficient number of shares of Common Stock
available to reserve for issuance upon the conversion of all
outstanding shares of Preferred Stock, pursuant to the terms and
conditions set forth in Section 5, and exercise of the Warrants as
defined in Section 11. The Corporation will at all times reserve
and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the conversion of Preferred
Stock, and exercise of the Warrants, as herein provided, such
number of shares of Common Stock as shall then be issuable upon the
conversion of all outstanding shares of Preferred Stock, and
exercise of the Warrants. The Corporation covenants that all
shares of Common Stock which shall be so issued shall be duly and
validly issued, fully paid and non assessable. The Corporation
will take such action as may be required, if the total number of
shares of Common Stock issued and issuable after such action upon
conversion of the Preferred Stock, and exercise of the Warrants
would exceed the total number of shares of Common Stock then
authorized by the Corporation's Certificate of Incorporation, as
amended, or would exceed 19.99% of the shares of Common Stock then
outstanding if required by law or the Rules and Regulations of
NASDAQ or the National Securities Exchange applicable to the
Corporation to take such action as a result of exceeding such
19.99%, in order to increase the number of shares of Common Stock
to permit the Corporation to issue the number of shares of Common
Stock required to effect conversion of the Preferred, and exercise
of the Warrants, to a number sufficient to permit conversion of the
Preferred Stock, and exercise of the Warrants, including, without
limitation, engaging in reasonable efforts to obtain the requisite
stockholder approval of any necessary amendment to the
Corporation's Restated Certificate of Incorporation, and to obtain
shareholders approval in order to effect conversion of the
Preferred Stock, and exercise of the Warrants, if required by law
or the rules or regulations of the NASDAQ or National Securities
Exchange applicable to the Corporation.
7(a) Shareholder Approval. In connection with the issuance to the
Holder of the shares of Preferred Stock, pursuant to this
Certificate of Designations, the Corporation is also issuing (i)
certain warrants ("RBB Warrants") to the Holder pursuant to the
terms of that certain Private Securities Subscription Agreement
dated June 30th, 1998 (the "Agreement"), providing for the purchase
of up to 150,000 shares of Common Stock at an exercise price of
$2.50 per share and (ii) certain warrants (collectively, the
"Liviakis Warrants") to Liviakis Financial Communication, Inc.
("Liviakis") and Robert B. Prag providing for the purchase of up to
an aggregate of 2,500,000 shares of Common Stock at an exercise
price of $1.875 per share pursuant to the terms of that Placement
and Consulting Agreement dated June 30th, 1998, between Liviakis
and the Corporation.
If (i) the aggregate number of shares of Common Stock issued by the
Corporation as a result of any or all of the following: (a)
conversion of the Preferred Stock, (b) payment of dividends accrued
on the Preferred Stock (c) exercise of the RBB Warrants, and (d)
exercise of the Liviakis Warrants exceeds 2,388,347 shares of
Common Stock (which equals 19.9% of the outstanding shares of
;7
<PAGE>
Common Stock of the Corporation as of the date of this Certificate
of Designations) and (ii) the Holder has converted or elects to
convert any of the then outstanding shares of Preferred Stock
pursuant to the terms of this Section 5 at a Conversion Price less
than $1.875 ($1.875 the market value per share of Common Stock as
quoted on the NASDAQ as of the close of business on June 30th,
1998) pursuant to the terms of Section 5(b) hereof, other than if
the Conversion Price is less than $1.875 solely as a result of the
anti-dilution provisions of Section 5(g) and (h) hereof, then,
notwithstanding anything in Section 5 to the contrary, the
Corporation shall not issue any shares of Common Stock as a result
of receipt of a Conversion Notice unless and until the Corporation
shall have obtained approval of its shareholders entitled to vote
on the transactions in accordance with subparagraphs (25)(H)(i)d,
(iv) and (v) of Rule 4310 of the NASDAQ Marketplace Rules
("Shareholder Approval").
If Shareholder Approval is required as set forth in the above
paragraph, the Corporation shall take all necessary steps to obtain
such Shareholder Approval upon receipt of the Conversion Notice
triggering the need for Shareholder Approval ("Current Conversion
Notice"). If the Corporation has not received from the Holder a
Current Conversion Notice, the Holder, subsequent to January 1st,
1999 may, if the Corporation's shares of Common Stock trade,
subsequent to January 1st, 1999, at a five (5) day average closing
bid price below Two Dollars and 34/00 ($2.34), upon written notice
to the Corporation, require the Corporation to obtain Shareholder
Approval ("Holder's Notice"). The Holder and the Corporation's
officers and directors covenant to vote all shares of Common Stock
over which they have voting control in favour of Shareholder
Approval. If the Corporation does not obtain Shareholder Approval
within ninety (90) days of the earlier of the Corporation's receipt
of (i) the Current Conversion Notice or (ii) the Holder's Notice,
and the Holder has not breached its covenant to vote all shares of
Common Stock over which they have voting control in favour of
Shareholder Approval, the Corporation shall pay in cash to the
Holder liquidated damages, in an amount of 4% per month of the
Liquidation Value of each share of Preferred Stock then
outstanding, commencing on the 91st day of the Corporation's
receipt of the Holder's Current Conversion Notice, and continuing
every thirty (30) days pro-rata until such time the Corporation
receives Shareholder Approval.
8. No Reissuance of Series 10 Class J Convertible Preferred
Stock.
Shares of Preferred Stock which are converted into shares of Common
Stock as provided herein 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.
9. Closing of Books.
The Corporation will at no time close its transfer books against
the transfer of any Preferred Stock or of any shares of Common
Stock issued or issuable upon the conversion of any shares of
;8
<PAGE>
Common Stock of Preferred Stock in any manner which interferes with
the timely conversion of such Preferred Stock, except as may
otherwise be required to comply with applicable securities laws.
10. No Preemptive Rights.
The 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.
11. Definition of Shares.
As used in this Certificate of Designations, the term "shares of
Common Stock" shall mean and include the Corporation's authorized
common stock, par value $.001, as constituted on the date of filing
of these terms of the Preferred Stock, or in case of any
reorganization, reclassification, or stock split of the outstanding
shares of Common Stock thereof, the stock, securities or assets
provided for hereof. The term "Warrants" as used herein shall have
the same meaning as defined in Section 1 of the Private Securities
Subscription Agreement, dated June 30th 1998, between the Company
and RBB Bank Aktiengesellschaft.
The said determination of the designations, preferences and
relative, participating, optional or other rights, and the
qualifications, limitations or restrictions thereof, relating to
the Preferred Stock was duly made by the Board of Directors
pursuant to the provisions of the Corporation's Restated
Certificate of Incorporation and in accordance with the provisions
of the Delaware General Corporation Law.
IN WITNESS HEREOF, this Certificate of Designations has been
signed by:
Dr. Louis F. Centofanti, President on this 30th day of June,
1998.
/s/ Louis Centofanti
__________________________________________________
President, Perma-Fix Environmental Services, Inc.
Richard Kelecy, Secretary on this 30th day of June, 1998
/s/ Richard T. Kelecy
_________________________________________________
Secretary, Perma-Fix Environmental Services, Inc.
;9
<PAGE>
<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 SIXTEENTH DAY OF JULY,
A.D. 1998, AT 1:30 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS.
/s/ Edward J. Freel
_____________________________
Edward J. Freel,
Secretary of State
Authentication: 9244137
2249849 8100 Date: 08-10-98
981311720
<PAGE>
<PAGE>
CERTIFICATE OF ELIMINATION
OF
SERIES 6 CLASS F CONVERTIBLE PREFERRED STOCK
AND
SERIES 7 CLASS G CONVERTIBLE PREFERRED STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
____________________________________________
PERMA-FIX ENVIRONMENTAL SERVICES, INC., a corporation
organized and existing under the General Corporation Law of the
State of Delaware (hereinafter called the "Corporation"), hereby
certifies the following:
1. That the Certificate of Designations of Series 6 Class F
Convertible Preferred Stock of the Corporation (the "Series 6
Preferred") was filed with the Delaware Secretary of State on
November 13, 1997 (the "Series 6 Certificate of Designations").
2. That all outstanding shares of the Series 6 Preferred
have been delivered to the Company and exchanged upon agreement
with the holder thereof pursuant to the terms and conditions of a
certain Second RBB Exchange Agreement between the Company and RBB
Bank Aktiengesellschaft, dated effective as of February 28, 1998.
3. That no shares of Series 6 Preferred remain outstanding.
4. That all shares of the Series 6 Preferred which have been
exchanged have the status of authorized and unissued shares of the
Preferred Stock of the Corporation without designation as to
series, until such shares are once more designated as part of a
particular series by the Board of Directors.
5. That effective February 28, 1998, the Board of Directors
of the Company duly adopted the following resolutions:
RESOLVED, that upon completion of the exchange
with the holder of the Series 6 Class F
Convertible Preferred Stock, no authorized
shares of Series 6 Class F Convertible
Preferred Stock will remain outstanding and no
shares of Series 6 Class F Convertible
Preferred Stock will be issued subject to the
Certificate of Designations previously filed
with respect to the Series 6 Class F
Convertible Preferred Stock.
FURTHER RESOLVED, that upon completion of the
exchange, the officers of the Company are
hereby authorized and directed, for and on
behalf of the Company, to execute and deliver
<PAGE>
an appropriate Certificate of Elimination to
the Secretary of State of Delaware regarding
the Series 6 Class F Convertible Preferred
Stock.
6. That the Certificate of Designations of the Series 7
Class G Convertible Preferred Stock of the Corporation (the "Series
7 Preferred") was filed on November 13, 1997 (the "Series 7
Certificate of Designations").
7. That all outstanding shares of the Series 7 Preferred
have been delivered to the Company and exchanged upon agreement
with the holder thereof pursuant to the terms and conditions of a
certain Exchange Agreement between the Company and The Infinity
Fund, L.P., dated effective as of February 28, 1998.
8. That no shares of Series 7 Preferred remain outstanding.
9. That all shares of the Series 7 Preferred which have been
exchanged have the status of authorized and unissued shares of the
Preferred Stock of the Corporation without designation as to
series, until such shares are once more designated as part of a
particular series by the Board of Directors.
10. That effective February 28, 1998, the Board of Directors
of the Company duly adopted the following resolutions:
RESOLVED, that upon completion of the exchange
with the holder of the Series 7 Class G
Convertible Preferred Stock, no authorized
shares of Series 7 Class G Convertible
Preferred Stock will remain outstanding and no
shares of Series 7 Class G Convertible
Preferred Stock will be issued subject to the
Certificate of Designations previously filed
with respect to the Series 7 Class G
Convertible Preferred Stock.
FURTHER RESOLVED, that upon completion of the
exchange, the officers of the Company are
hereby authorized and directed, for and on
behalf of the Company, to execute and deliver
an appropriate Certificate of Elimination to
the Secretary of State of Delaware regarding
the Series 7 Class G Convertible Preferred
Stock.
11. That pursuant to the provisions of Section 151(g) of the
Delaware General Corporation Law, upon the effective date of the
filing of this Certificate, this Certificate will have the effect
of eliminating from the Restated Certificate of Incorporation only
those matters set forth in the Restated Certificate of
Incorporation with respect to the Series 6 Class F Convertible
Preferred Stock and the Series 7 Class G Convertible Preferred
Stock.
-2-
<PAGE>
IN WITNESS WHEREOF, this Certificate of Elimination has been
executed this 30th day of April, 1998, by the President of the
Company.
PERMA-FIX ENVIRONMENTAL
ATTEST: SERVICES, INC.
/s/ Richard T. Kelecy By /s/ Louis Centofanti
____________________________ ___________________________
Richard T. Kelecy, Secretary Dr. Louis F. Centofanti,
President
(SEAL)
-3-
<PAGE>
<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 SIXTEENTH DAY OF JULY,
A.D. 1998, AT 1:31 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 9244136
2249849 8100 Date: 08-10-98
981311720
<PAGE>
<PAGE>
CERTIFICATE OF DESIGNATIONS
OF SERIES 8 CLASS H 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 8 Class H
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 8 Class
H Convertible Preferred Stock as set forth in the attached
resolutions.
Dated: April 30, 1998
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>
<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 8 CLASS H 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 8 Class H Convertible Preferred Stock, par
value $.001 per share (the "Series 8 Class H Preferred Stock");
NOW, THEREFORE, BE IT RESOLVED, that the Series 8 Class H
Preferred Stock shall consist of two thousand five hundred (2,500)
shares and no more and shall be designated as the Series 8 Class H
Convertible Preferred Stock, and the preferences, rights,
privileges, restrictions and conditions attaching to the Series 8
Class H 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 Section 242(b)(2) of the General
Corporation Law of the State of Delaware (the "GCL"), the
holders of the Series 8 Class H Preferred Stock shall
have no voting rights whatsoever. To the extent that
under Section 242(b)(2) of the GCL or Part 7 hereof, the
holders of the Series 8 Class H Preferred Stock are
entitled to vote on a matter, each share of the Series 8
Class H Preferred Stock shall be entitled one (1) vote
for each outstanding share of Series 8 Class H Preferred
Stock. Holders of the Series 8 Class H 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 8 Class H
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.
-1-
<PAGE>
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 8
Class H Preferred Stock shall be outstanding, the holders
of the then outstanding Series 8 Class H 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 8 Class H
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 8 Class
H 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 8 Class H Preferred
Stock of the full Liquidation Preference amounts provided
for in this Part 2, the holders of the Series 8 Class H
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 8 Class H 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 8 Class H
Preferred Stock upon such dissolution, liquidation or
winding up unless proportionate distributive amounts
shall be paid on account of the shares of this Series 8
Class H Preferred Stock and shares of such other class or
series ranking on a parity with the shares of this Series
8 Class H 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 8 Class H
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%)
-2-
<PAGE>
per annum of the Liquidation Value (as defined below) of
each issued and outstanding share of Series 8 Class H
Preferred Stock (the "Dividend Rate"). The Liquidation
Value of the Series 8 Class H Preferred Stock shall be
$1,000 per outstanding share of the Series 8 Class H
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 June 30, 1998 (each, a "Dividend Declaration
Date"). Dividends shall be paid only with respect to
shares of Series 8 Class H Preferred Stock actually
issued and outstanding on a Dividend Declaration Date and
to holders of record of the Series 8 Class H 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 March 1, 1998. 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 8 Class H 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 8
Class H 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 8 Class H Preferred
Stock shall have been paid or declared and set aside for
payment.
Part 4 - Conversion. The holders of the Series 8 Class
H Preferred Stock shall have rights to convert the shares
of Series 8 Class H 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 8 Class H Preferred
Stock shall be convertible into shares of Common Stock at
any time.
4.2 Conversion Price. Subject to the terms hereof, as
used herein, the Conversion Price per outstanding share
of Series 8 Class H Preferred Stock shall be $1.8125,
except that, in the event the average closing bid price
per share 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 prior to the particular date of conversion
shall be less than $2.265, the Conversion Price for only
such particular conversion shall be the product of the
average closing bid quotation of the Common Stock as
-3-
<PAGE>
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 in connection with such conversion multiplied by
eighty percent (80%). 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 8 Class H 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 8 Class H 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 8 Class H 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 8 Class H
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
8 Class H 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 8 Class
H Preferred Stock are being held in escrow by the
Corporation's attorneys, no delivery of the certificates
shall be required. 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 8 Class H 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 8 Class H 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 8 Class H 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)
-4-
<PAGE>
(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 of the Series 8
Class H Preferred Stock 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 8 Class H 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 8 Class H Preferred Stock are outstanding and
prior to the date that the Corporation's Registration
Statement covering up to 1,379,311 shares of Common Stock
issuable upon the conversion of the Series 8 Class H
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 8
Class H Preferred Stock then outstanding shall have the
right to convert such share of Series 8 Class H 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 8 Class H
Preferred Stock could have been converted into
-5-
<PAGE>
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 8 Class H 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 8 Class H 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 8 Class H Preferred Stock
shall be convertible into, in lieu of the number of
shares of Common Stock which the holders of Series 8
Class H 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 8
Class H Preferred Stock immediately before that change.
4.7 Common Stock Duly Issued. All Common Stock which
may be issued upon conversion of Series 8 Class H
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
8 Class H Preferred Stock a notice setting forth such
adjustment or readjustment and showing in detail the
facts upon which such adjustment is based.
-6-
<PAGE>
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 8 Class H 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 8 Class H 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 8 Class H 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 8 Class H 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 8 Class H 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 8 Class H Preferred Stock. All shares of Common
Stock (including fractions thereof) issuable upon
conversion of more than one share of Series 8 Class H
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 8 Class H 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
-7-
<PAGE>
or in part, at any time, and from time to time, the then
outstanding Series 8 Class H 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 8 Class H 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 8 Class H Preferred Stock. The Redemption Notice
shall state: (i) the Redemption Date of such shares, (ii)
the number of Series 8 Class H 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 8 Class H Preferred Stock to be
redeemed from such holder, and (iv) instructions as to
how to specify to the Corporation the number of Series 8
Class H 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 8 Class H 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 8 Class H Preferred Stock, then,
upon receipt of the Redemption Notice, any holder of
Series 8 Class H Preferred Stock shall have the option,
at its sole election, to specify what portion of its
Series 8 Class H 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 8 Class H 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 8 Class H
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
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<PAGE>
being redeemed (as described below), the Corporation
shall cause the Series 8 Class H 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 8 Class H 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 8 Class H
Preferred Stock in respect of which the Corporation has
received notice from the holder thereof of its election
to convert Series 8 Class H 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 8 Class H
Preferred Stock and Priority.
6.1 Rateable Participation. If any cumulative dividends
or return of capital in respect of Series 8 Class H
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 8 Class H 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 8 Class H Preferred
Stock;
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<PAGE>
6.2.2 On a parity with, or equal to, shares of
this Series 8 Class H 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 8
Class H 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 8
Class H Preferred Stock; and,
6.2.3 Junior to shares of this Series 8 Class H
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 8 Class
H 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.
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<PAGE>
<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 8 Class H 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 8 Class H Preferred Stock or
written consent by the holders of a majority of the
Series 8 Class H Preferred Stock then outstanding.
Notwithstanding the above or the provisions of Section
242(b)(2) 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(b)(2) of the GCL.
7.2 Authorized. Any shares of Series 8 Class H
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.
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<PAGE>
<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 SIXTEENTH DAY OF JULY,
A.D. 1998, AT 1:32 O'CLOCK P.M.
/s/ Edward J. Freel
_______________________________
Edward J. Freel,
Secretary of State
Authentication: 9244135
2249849 8100 Date: 08-10-98
981311720
<PAGE>
<PAGE>
CERTIFICATE OF DESIGNATIONS
OF SERIES 9 CLASS I 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 9 Class I
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 9 Class
I Convertible Preferred Stock as set forth in the attached
resolutions.
Dated: April 30, 1998
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>
<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 9 CLASS I 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 9 Class I Convertible Preferred Stock, par
value $.001 per share (the "Series 9 Class I Preferred Stock");
NOW, THEREFORE, BE IT RESOLVED, that the Series 9 Class I
Preferred Stock shall consist of three hundred (350) shares and no
more and shall be designated as the Series 9 Class I Convertible
Preferred Stock, and the preferences, rights, privileges,
restrictions and conditions attaching to the Series 9 Class I
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 Section 242(b)(2) of the General Corporation Law of the
State of Delaware (the "GCL"), the holders of the Series 9 Class I
Preferred Stock shall have no voting rights whatsoever. To the
extent that under Section 242(b)(2) of the GCL or Part 7 hereof,
the holders of the Series 9 Class I Preferred Stock are entitled to
vote on a matter, each share of the Series 9 Class I Preferred
Stock shall be entitled one (1) vote for each outstanding share of
Series 9 Class I Preferred Stock. Holders of the Series 9 Class I
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 9 Class I 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.
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<PAGE>
1.2 No Preemptive Rights. The Series 9 Class I 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 9 Class I Preferred Stock shall be
outstanding, the holders of the then outstanding Series 9 Class I
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 9 Class I 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 9 Class I 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 9 Class I Preferred Stock of the full
Liquidation Preference amounts provided for in this Part 2, the
holders of the Series 9 Class I 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 9 Class I
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
9 Class I Preferred Stock upon such dissolution, liquidation or
winding up unless proportionate distributive amounts shall be paid
on account of the shares of this Series 9 Class I Preferred Stock
and shares of such other class or series ranking on a parity with
the shares of this Series 9 Class I 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 9 Class I 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
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<PAGE>
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 9 Class I Preferred Stock (the "Dividend Rate").
The Liquidation Value of the Series 9 Class I Preferred Stock shall
be $1,000 per outstanding share of the Series 9 Class I 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 June 30, 1998 (each, a
"Dividend Declaration Date"). Dividends shall be paid only with
respect to shares of Series 9 Class I Preferred Stock actually
issued and outstanding on a Dividend Declaration Date and to
holders of record of the Series 9 Class I 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 March 1, 1998. 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 9
Class I 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 9 Class I 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 9
Class I Preferred Stock shall have been paid or declared and set
aside for payment.
Part 4 - Conversion. The holders of the Series 9 Class I Preferred
Stock shall have rights to convert the shares of Series 9 Class I
Preferred Stock into shares of the Corporation's Common Stock, as
follows (the "Conversion Rights"):
4.1 Right to Convert. The Series 9 Class I Preferred Stock shall
be convertible into shares of Common Stock at any time.
4.2 Conversion Price. Subject to the terms hereof, as used
herein, the Conversion Price per outstanding share of Series
9 Class I Preferred Stock shall be $1.8125, except that, in
the event the average closing bid price per share 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 prior to the
particular date of conversion shall be less than $2.265, the
Conversion Price for only such particular conversion shall be
the product of 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 in connection with such conversion multiplied by eighty
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<PAGE>
percent (80%). 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 9 Class I 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 9 Class I 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 9 Class I 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 9 Class I 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 9 Class I
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"). 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 9
Class I 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 9 Class I 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 9 Class I 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
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<PAGE>
(collectively, the "Sale"), and such Merger or Sale becomes
effective (x) while any shares of Series 9 Class I 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 9 Class I 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 9 Class I Preferred Stock then
outstanding shall have the right to convert such share of
Series 9 Class I 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 9 Class I
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 9 Class I 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 9 Class I
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 9 Class I Preferred Stock shall be
convertible into, in lieu of the number of shares of Common
Stock which the holders of Series 9 Class I 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 9 Class I Preferred Stock immediately before that
change.
4.7 Common Stock Duly Issued. All Common Stock which may be
issued upon conversion of Series 9 Class I 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.
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<PAGE>
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 9 Class I 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
9 Class I 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 9 Class I 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 9 Class I 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 9 Class I 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 9 Class I 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 9 Class I
Preferred Stock. All shares of Common Stock (including
fractions thereof) issuable upon conversion of more than one
share of Series 9 Class I 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 9 Class I
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.
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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 9 Class I 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 9 Class I
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 9 Class I 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 9 Class I
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 9
Class I 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 9 Class I
Preferred Stock. The Redemption Notice shall state: (i) the
Redemption Date of such shares, (ii) the number of Series 9
Class I 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 9 Class I Preferred Stock to
be redeemed from such holder, and (iv) instructions as to how
to specify to the Corporation the number of Series 9 Class I
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 9 Class I Preferred Stock, then, upon
receipt of the Redemption Notice, any holder of Series 9 Class
I Preferred Stock shall have the option, at its sole election,
to specify what portion of its Series 9 Class I 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 9 Class I 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 9 Class I
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.
-7-
<PAGE>
5.5 Payment. On the Redemption Date in respect of any Series 9
Class I 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 9 Class I Preferred Stock in respect of which
the Corporation has received notice from the holder thereof of
its election to convert Series 9 Class I 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 9 Class I Preferred
Stock and Priority.
6.1 Rateable Participation. If any cumulative dividends or return
of capital in respect of Series 9 Class I 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 9
Class I 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 9 Class I Preferred
Stock;
6.2.2 On a parity with, or equal to, shares of this
Series 9 Class I 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 9 Class I 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
-8-
<PAGE>
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 9 Class I
Preferred Stock; and,
6.2.3 Junior to shares of this Series 9 Class I
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 9 Class I 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 9 Class I 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.
-9-
SEE RESTRICTIVE LEGEND ON REVERSE SIDE
INCORPORATED UNDER THE LAWS OF
DELAWARE
No. **** Shares ****
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
SERIES 8 CLASS H CONVERTIBLE PREFERRED STOCK
Par Value $.001 Per Share
THIS CERTIFIES THAT - - S P E C I M E N - - is the owner of ****
*************** (******) shares of Series 8 Class H Convertible
Preferred Stock of
Perma-Fix Environmental Services, Inc.
transferable 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 ________,
1998.
_____________________________ ______________________________
Secretary President
SHARES $.001 EACH
<PAGE>
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS. THIS COMMON 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, THESE SHARES OF COMMON STOCK
ARE ALSO SUBJECT TO THE REGISTRATION RIGHTS SET FORTH IN THAT
CERTAIN EXCHANGE AGREEMENT BY AND BETWEEN THE HOLDER HEREOF AND THE
COMPANY, TO BE CONSIDERED EFFECTIVE AS OF FEBRUARY 28, 1998, A COPY
OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE.<PAGE>
*******************
CERTIFICATE
FOR
****
SHARES
of the
CAPITAL STOCK
of
Perma-Fix Environmental Services, Inc.
Series 8 Class H Convertible Preferred Stock
Par Value $.001 Per Share
ISSUED TO
**** S P E C I M E N ****
DATED
___________, 1998
********************
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 9 CLASS I CONVERTIBLE PREFERRED STOCK
Par Value $.001 Per Share
THIS CERTIFIES THAT - - S P E C I M E N - - is the owner of ****
*************** (******) shares of Series 9 Class I Convertible
Preferred Stock of
Perma-Fix Environmental Services, Inc.
transferable 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 ________,
1998.
_____________________________ ______________________________
Secretary President
SHARES $.001 EACH
<PAGE>
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS. THIS COMMON 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, THESE SHARES OF COMMON STOCK
ARE ALSO SUBJECT TO THE REGISTRATION RIGHTS SET FORTH IN THAT
CERTAIN EXCHANGE AGREEMENT BY AND BETWEEN THE HOLDER HEREOF AND THE
COMPANY, TO BE CONSIDERED EFFECTIVE AS OF FEBRUARY 28, 1998, A COPY
OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE.
<PAGE>
*******************
CERTIFICATE
FOR
****
SHARES
of the
CAPITAL STOCK
of
Perma-Fix Environmental Services, Inc.
Series 9 Class I Convertible Preferred Stock
Par Value $.001 Per Share
ISSUED TO
**** S P E C I M E N ****
DATED
___________, 1998
********************
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>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
1. Exchange and Subscription for Purchase of Securities. . . .3
1.1 Issuance of Common Stock and Warrants. . . . . . . . .3
1.1.1 Delivery . . . . . . . . . . . . . . . . . .3
1.1.2 Cancellation of Series 6 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 8 Preferred. . . . . . . . . . . .4
1.6 No Effect on Series 6 Warrants.. . . . . . . . . . . .5
2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.1 Closing. . . . . . . . . . . . . . . . . . . . . . . .5
3. Representations, Warranties and Covenants of Subscriber . .5
3.1 Investment Intent. . . . . . . . . . . . . . . . . . .5
3.2 Certain Risk . . . . . . . . . . . . . . . . . . . . .6
3.3 Prior Investment Experience. . . . . . . . . . . . . .6
3.4 No Review by the SEC . . . . . . . . . . . . . . . . .7
3.5 Not Registered . . . . . . . . . . . . . . . . . . . .7
3.6 No Public Market . . . . . . . . . . . . . . . . . . .7
3.7 Sophisticated Investor . . . . . . . . . . . . . . . .7
3.8 Tax Consequences . . . . . . . . . . . . . . . . . . .8
3.9 SEC Filing . . . . . . . . . . . . . . . . . . . . . .8
3.10 Documents, Information and Access. . . . . . . . . . .8
3.11 No Registration, Review or Approval. . . . . . . . . .8
3.12 Transfer Restrictions. . . . . . . . . . . . . . . . .9
3.13 No Short Sale. . . . . . . . . . . . . . . . . . . . .9
3.14 No Commission. . . . . . . . . . . . . . . . . . . . .9
3.15 Reliance . . . . . . . . . . . . . . . . . . . . . . .9
3.16 Accuracy or Representations and Warranties . . . . . 10
3.17 Indemnity. . . . . . . . . . . . . . . . . . . . . . 10
3.18 Survival . . . . . . . . . . . . . . . . . . . . . . 10
4. Representations, Warranties and Covenants of the Company. 10
4.1 Organization, Authority, Qualification . . . . . . . 10
4.2 Authorization. . . . . . . . . . . . . . . . . . . . 10
4.3 No Commission. . . . . . . . . . . . . . . . . . . . 11
4.4 Ownership of, and Title To, Securities . . . . . . . 11
-i-
<PAGE>
4.5 Exemption from Registration. . . . . . . . . . . . . 11
5. Registration Rights . . . . . . . . . . . . . . . . . . . 11
6. Indemnification.. . . . . . . . . . . . . . . . . . . . . 11
6.1 By the Company . . . . . . . . . . . . . . . . . . . 11
6.2 By the Subscriber. . . . . . . . . . . . . . . . . . 12
6.3 Procedure. . . . . . . . . . . . . . . . . . . . . . 12
7. Securities Legends and Notices. . . . . . . . . . . . . . 13
8. Miscellaneous.
8.1 Assignment and Power of Attorney. . . . . . . . . . .14
8.2 Amendment; Waiver . . . . . . . . . . . . . . . . . .15
8.3 Binding Effect; Assignment . . . . . . . . . . . . . 15
8.4 Governing Law; Litigation Costs. . . . . . . . . . . 15
8.5 Severability . . . . . . . . . . . . . . . . . . . . 15
8.6 Headings . . . . . . . . . . . . . . . . . . . . . . 15
8.7 Counterparts . . . . . . . . . . . . . . . . . . . . 15
8.8 Transfer Taxes . . . . . . . . . . . . . . . . . . . 16
8.9 Entire Agreement . . . . . . . . . . . . . . . . . . 16
8.10 Authority; Enforceability. . . . . . . . . . . . . . 16
8.11 Notices. . . . . . . . . . . . . . . . . . . . . . . 16
8.12 No Third Party Beneficiaries . . . . . . . . . . . . 17
8.13 Public Announcements . . . . . . . . . . . . . . . . 17
</TABLE>
Exhibit "A" Certificate of Designations
-ii-
<PAGE>
<PAGE>
THIS EXCHANGE AGREEMENT (the "Agreement") is entered on the
30th day of April 1998, but is considered to be effective as of the
28th day of February 1998, 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 Company and the Subscriber previously entered
into a certain Subscription and Purchase Agreement dated as of the
9th day of June, 1997 ("Subscription Agreement") under which (i)
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 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 previously entered
into a certain Exchange Agreement dated as of the 6th day of
November, 1997, but effective as of the 16th day of September, 1997
("First Exchange Agreement"), under which the Series 4 Preferred
and the June 1997 Warrants were delivered and tendered to the
Company in exchange (the "First Exchange") for (i) an aggregate of
2,500 shares of "Series 6 Class F Convertible Preferred Stock," par
value $.001 per share (the "Series 6 Preferred") and (ii) an
aggregate of 656,250 common stock purchase warrants (the "Series 6
Warrants"), each providing for the purchase of one share of the
Company's Common Stock, 375,000 of which are exercisable at $1.8125
per share and 281,250 of which are exercisable at $2.125 per share
(the Common Stock issuable upon the exercise of the Series 6
Warrants is referred to hereinafter as the "Warrant Shares");
WHEREAS, the Company and the Subscriber both desire to enter
into this Agreement, under which the Series 6 Preferred will be
delivered and tendered to the Company in exchange (the "Second
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 8 Class
H Convertible Preferred Stock" (the "Series 8 Preferred"), with the
Series 8 Preferred containing such terms, conditions,
restrictions and provisions as set forth in the Series 8 Preferred
Certificate of Designations, attached hereto as Exhibit "A,"
("Series 8 Preferred Certificate of Designations").
WHEREAS, the First Exchange Agreement is not terminated except
Subscriber has no rights to subscribe for Series 6 Preferred or any
shares obtainable upon conversion of the Series 6 Preferred;
<PAGE>
WHEREAS, the terms, conditions, restrictions and provisions of
the Series 8 Preferred shall be the same as the terms, conditions,
restrictions and provisions of the Series 6 Preferred, except that
the Series 8 Preferred shall be convertible into Common Stock of
the Company ("Conversion Shares") based on a conversion price per
outstanding share of Series 8 Preferred of $1.8125 and except
further that in the event the average closing bid price of the
Common Stock of the Company as reported in the over-the-counter
market, or the closing sale price if listed on a national
securities exchange, for the five trading days prior to the
particular date of conversion is less than $2.265, the conversion
price for only that particular conversion shall be product of 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 the five trading days immediately
preceding the date of the conversion notice, times 80%;
WHEREAS, the Series 6 Warrants shall not be affected by this
Agreement and shall remain issued and outstanding pursuant to the
terms, provisions and conditions of the Series 6 Warrants;
WHEREAS, the Series 8 Preferred, and the Conversion Shares are
collectively referred to hereinafter as the "Securities;"
WHEREAS, the Company and the Subscriber each desire that the
Second Exchange and the execution of the Agreement act to fully and
completely terminate the Subscriber's rights under the Series 6
Preferred, and will act to fully and completely release all
obligations of the Company to the Subscriber under the Series 6
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"), market ,and the Company is
subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "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 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,
-2-
<PAGE>
WHEREAS, the Securities 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 termination of the Series 6 Preferred and the
Subscriber's rights, and the interest in and to the
Series 6 Preferred, and in full and complete release of
any and all obligations of the Company under the Series
6 Preferred and to the Subscriber under the Series 6
Preferred, at the Closing the Subscriber shall deliver
all of the issued and outstanding shares of the Series 6
Preferred to the Company in exchange for 2,500 shares of
Series 8 Preferred, containing such terms, conditions and
provisions as set forth in the Series 8 Preferred
Certificate of Designations, pursuant to the terms and
conditions set forth in this Agreement. Dividends on the
Series 6 Preferred shall cease to accrue as of the close
of business on February 28, 1998, and dividends on the
Series 8 Preferred shall begin to accrue on March 1,
1998.
1.1.1 Delivery. Upon receipt by the Company of the
canceled Series 6 Preferred 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 8
Preferred issued in the name of 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, written
evidence from the Secretary of State of the
State of Delaware that the Series 8 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.
1.1.2 Cancellation of Series 6 Preferred. At the
closing, the Series 6 Preferred shall be
terminated and rendered null and void in all
respects, and Conner & Winters is directed to
deliver to the Company the Series 6 Preferred
marked "Canceled."
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
-3-
<PAGE>
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. As of the Closing, the Series 6 Preferred
shall be fully terminated in all respects. From and
after the closing, the Subscriber 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 Series 6 Preferred.
1.3 Exchange. On the basis of the representations,
warranties, covenants and agreements, and subject to the
terms and conditions set forth herein, at the Closing,
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 Series 8
Preferred in exchange for the transfer of the Series 6
Preferred ("Purchase Price") from the Subscriber to the
Company.
1.4 Reporting Company. The Company is a reporting company
under the Exchange Act and has filed with the United
States 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 Series 8 Preferred.
1.5 Terms of the Series 8 Preferred. The Series 8 Preferred
shall contain and be subject to the terms, conditions,
preferences and restrictions set forth in the Series 8
Preferred Certificate of Designations attached hereto as
Exhibit "A," including, but not limited to, the right to
convert the Series 8 Preferred into Common Stock of the
Company based on a Conversion Price per outstanding share
of Series 8 Preferred of $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 the five (5) trading days prior to the
particular date of conversion shall be less than $2.265,
the Conversion Price for only such particular conversion
-4-
<PAGE>
shall be the product of 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
provided by the Subscriber to the Company multiplied by
eighty percent (80%). 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 8 Preferred are converted, in whole or in part,
into Common Stock pursuant to the terms set forth in the
Series 8 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 shares of Series
8 Preferred surrendered for conversion) of the Series 8
Preferred so surrendered for conversion by (b) the
Conversion Price as of such conversion. At the time of
conversion of shares of the Series 8 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 8 Preferred so converted divided by the Stock
Dividend Price, as defined in the Series 8 Preferred
Certificate of Designations, in effect at the date of
conversion.
1.6 No Effect on Series 6 Warrants. Nothing contained in
this Agreement shall have any effect on the Series 6
Warrants.
2. Closing.
2.1 Closing. The consummation of this Agreement (the
"Closing") will occur on at the time and on the date that
the 2,500 shares of Series 8 Preferred are delivered by
the Company to Conner & Winters (the "Closing Date").
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 shares of Series 8 Preferred are being,
and any underlying Conversion 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
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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 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 Series 8 Preferred involves a high degree
of risk in that (a) the Company has sustained losses
through December 31, 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 Series 8
Preferred; (d) an investor may not be able to liquidate
his investment; (e) transferability of the Series 8
Preferred is extremely limited; (f) in the event of a
disposition an investor could sustain the loss of his
entire investment; (g) the Series 8 Preferred 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 Series 8 Preferred subscribed
for and that are purchased under this Agreement and the
Conversion 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 Series 8 Preferred
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 Series 8 Preferred, 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
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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 Series 8 Preferred 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
Series 8 Preferred and the Conversion 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 8 Preferred. The
Subscriber understands that although there is presently
a public market for the Common Stock, including the
Conversion Shares, 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 Series 8 Preferred or
the Conversion 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
Series 8 Preferred; (b) the Subscriber is able to bear
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<PAGE>
the economic risks inherent in an investment in the
Series 8 Preferred and that an important consideration
bearing on its ability to bear the economic risk of the
purchase of Series 8 Preferred is whether the Subscriber
can afford a complete loss of the Subscriber's investment
in the Series 8 Preferred 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 Series 8 Preferred.
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 Second Exchange. The Subscriber
acknowledges that it bears complete responsibility for
obtaining adequate tax advice regarding the Agreement and
the Second 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, and that such have been furnished to the
Subscriber a reasonable time prior to the date hereof:
(i) Annual Report on Form 10-K for the year ended
December 31, 1997 (the "Form 10-K"); (ii) the Company's
Proxy Statement delivered to shareholders on or about
April 20, 1998; and (iii) the information contained in
any reports or documents required to be filed by the
Company under Sections 13(a), 14(a), 14(c) or 15(d) of
the Exchange Act since the distribution of the Form 10-K.
3.10 Documents, Information and Access. The Subscriber's
decision to purchase the Series 8 Preferred 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
Series 8 Preferred 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 of
Series 8 Preferred 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
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<PAGE>
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 Series 8 Preferred Securities purchased under this
Agreement or any Conversion Shares purchased under this
Agreement unless such 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 Series 8 Preferred
or Conversion Shares out of the Subscriber's name on
receipt of 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
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 No Commission. The Subscriber agrees and acknowledges
that no commission or other remuneration is being paid or
given directly or indirectly for soliciting the Second
Exchange.
3.15 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 Series 8 Preferred
to the Subscriber.
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<PAGE>
3.16 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.
3.17 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.
3.18 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, purchase, and conversion, if any, of the Series 8
Preferred, the sale of the Conversion Shares, the
exercise of the Series 6 Warrants, and the sale of 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 6 Preferred for the Series 8 Preferred, 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.
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<PAGE>
4.3 No Commission. The Company agrees and acknowledges that
no commission or other remuneration is being paid or
given directly or indirectly for soliciting the Second
Exchange.
4.4 Ownership of, and Title to, Securities. The Series 8
Preferred to be exchanged for the Series 6 Preferred by
the Subscriber are, and all Conversion 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 exchange of the Series 8 Preferred (and upon the
conversion of the Series 8 Preferred, in whole or in
part) pursuant to this Agreement, the Subscriber will own
and acquire title to the Series 8 Preferred (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 8 Preferred
Certificate of Designations).
4.5 Exemption from Registration. The offer and exchange of
securities with the Subscriber in accordance with the
terms and provisions of this Agreement is being affected
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 exchange the Series 6 Preferred for
the Series 8 Preferred, the Company hereby covenants and agrees to
grant to the Subscriber the registration rights with respect to the
Conversion Shares and the shares of Common Stock which may issue as
dividends on the Series 8 Preferred, as set forth in Section 5 of
the First Exchange Agreement regarding the shares of Common Stock
issuable upon conversion of the Series 6 Preferred and as dividends
thereon. The registration rights as set forth in Section 5 of the
First Exchange Agreement regarding the shares of Common Stock
issuable upon exercise of the Series 6 Warrants are not changed by
this Agreement.
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
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<PAGE>
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
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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 8 Preferred:
Series 8 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.
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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 FEBRUARY 28, 1998, A COPY OF WHICH
IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE.
Conversion Shares Legends
THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THIS
COMMON 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, THESE SHARES OF COMMON
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 AS OF FEBRUARY
28, 1998, 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 6 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 6 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
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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 6 Preferred Stock.
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 Series 6 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 Series 6 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 Series 6 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
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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
(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 to be sold.
8.9 Entire Agreement. This Agreement, along with the Series
6 Warrants and the Series 8 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
-16-
<PAGE>
<PAGE>
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
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 30th day of
April, 1998 but is considered effective as of the 28th day of
February, 1998.
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By /s/ Louis Centofanti
___________________________
Dr. Louis F. Centofanti
Chief Executive Officer
RBB BANK AKTIENGESELLSCHAFT
By /s/ Herbert Strauss
____________________________
Herbert Strauss
Headtrader
-17-
<PAGE>
<PAGE>
EXCHANGE AGREEMENT
exchanging
2,500 SHARES OF SERIES 6 CLASS F CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.001 PER SHARE
of
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(a Delaware corporation)
for
2,500 SHARES OF SERIES 8 CLASS H CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.001 PER SHARE
of
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(a Delaware corporation)
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
____
<S> <C> <C>
1. Subscription for Purchase of Securities . . . . . . . . . .3
1.1 Issuance of Common Stock and Warrants . . . . . . . . .3
1.1.1 Delivery . . . . . . . . . . . . . . . . . .3
1.1.2 Cancellation of Series 7 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 9 Preferred. . . . . . . . . . . .4
1.6 No Effect on Series 7 Warrants . . . . . . . . . . . .5
2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.1 Closing. . . . . . . . . . . . . . . . . . . . . . . .5
3. Representations, Warranties and Covenants of Subscriber . .5
3.1 Investment Intent. . . . . . . . . . . . . . . . . . .5
3.2 Certain Risk . . . . . . . . . . . . . . . . . . . . .6
3.3 Prior Investment Experience. . . . . . . . . . . . . .6
3.4 No Review by the SEC . . . . . . . . . . . . . . . . .7
3.5 Not Registered . . . . . . . . . . . . . . . . . . . .7
3.6 No Public Market . . . . . . . . . . . . . . . . . . .7
3.7 Sophisticated Investor . . . . . . . . . . . . . . . .7
3.8 Tax Consequences.. . . . . . . . . . . . . . . . . . .8
3.9 SEC Filing . . . . . . . . . . . . . . . . . . . . . .8
3.10 Documents, Information and Access. . . . . . . . . . .8
3.11 No Registration, Review or Approval. . . . . . . . . .8
3.12 Transfer Restrictions. . . . . . . . . . . . . . . . .9
3.13 No Short Sale. . . . . . . . . . . . . . . . . . . . .9
3.14 No Commission. . . . . . . . . . . . . . . . . . . . .9
3.15 Reliance . . . . . . . . . . . . . . . . . . . . . . 10
3.16 Accuracy or Representations and Warranties . . . . . 10
3.17 Indemnity. . . . . . . . . . . . . . . . . . . . . . 10
3.18 Survival . . . . . . . . . . . . . . . . . . . . . . 10
4. Representations, Warranties and Covenants of the Company. 10
4.1 Organization, Authority, Qualification . . . . . . . 10
4.2 Authorization. . . . . . . . . . . . . . . . . . . . 11
4.3 Commission . . . . . . . . . . . . . . . . . . . . . 11
4.4 Ownership of, and Title to, Securities . . . . . . . 11
i
<PAGE>
4.5 Exemption from Registration. . . . . . . . . . . . . 11
5. Registration Rights . . . . . . . . . . . . . . . . . . . 11
6. Indemnification.. . . . . . . . . . . . . . . . . . . . . 12
6.1 By the Company . . . . . . . . . . . . . . . . . . . 12
6.2 By the Subscriber. . . . . . . . . . . . . . . . . . 12
6.3 Procedure. . . . . . . . . . . . . . . . . . . . . . 13
7. Securities Legends and Notices. . . . . . . . . . . . . . 13
8. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 15
8.1 Assignment and Power of Attorney.. . . . . . . . . . 15
8.2 Amendment; Waiver. . . . . . . . . . . . . . . . . . 15
8.3 Binding Effect; Assignment . . . . . . . . . . . . . 15
8.4 Governing Law; Litigation Costs. . . . . . . . . . . 15
8.5 Severability . . . . . . . . . . . . . . . . . . . . 15
8.6 Headings . . . . . . . . . . . . . . . . . . . . . . 16
8.7 Counterparts . . . . . . . . . . . . . . . . . . . . 16
8.8 Transfer Taxes . . . . . . . . . . . . . . . . . . . 16
8.9 Entire Agreement . . . . . . . . . . . . . . . . . . 16
8.10 Authority; Enforceability. . . . . . . . . . . . . . 16
8.11 Notices. . . . . . . . . . . . . . . . . . . . . . . 16
8.12 No Third Party Beneficiaries . . . . . . . . . . . . 17
8.13 Public Announcements . . . . . . . . . . . . . . . . 17
Exhibit "A" - Certificate of Designations
ii
<PAGE>
<PAGE>
THIS EXCHANGE AGREEMENT (the "Agreement") is entered into on
the 30th day of April 1998, but is to be considered effective as of
the 28th day of February, 1998, 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 previously entered
into a certain Subscription and Purchase Agreement dated as of the
7th day of July, 1997 ("First Exchange 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 previously entered
into a certain Exchange Agreement dated effective as of the 16th
day of September, 1997, ("First Exchange Agreement"), under which
the 350 shares of Series 5 Preferred were delivered and tendered
to the Company in exchange (the "First Exchange") for (i) an
aggregate of 350 shares of "Series 7 Class F Convertible Preferred
Stock," par value $.001 per share (the "Series 7 Preferred") and
(ii) an aggregate of 35,000 common stock purchase warrants (the
"Series 7 Warrants"), each providing for the purchase of one share
of the Company's Common Stock, (the shares of Common Stock issuable
upon the exercise of the Series 7 Warrants are referred to
hereinafter as the "Warrant Shares");
WHEREAS, the Company and the Subscriber both desire to enter
into this Agreement, under which the Series 7 Preferred will be
delivered and tendered to the Company in exchange (the "Second
Exchange") for 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 9 Class
I Convertible Preferred Stock" (the "Series 9 Preferred"), with the
Series 9 Preferred containing such terms, conditions, restrictions
and provisions as set forth in the Series 9 Preferred Certificate
of Designations, attached hereto as Exhibit "A," ("Series 9
Preferred Certificate of Designations").
WHEREAS, the First Exchange Agreement is not terminated except
Subscriber has no rights to subscribe for Series 7 Preferred or any
shares obtainable upon conversion of the Series 7 Preferred;
WHEREAS, the terms, conditions, restrictions and provisions of
the Series 9 Preferred shall be the same as the terms, conditions,
restrictions and provisions of the Series 7 Preferred, except that
the Series 9 Preferred shall be convertible into Common Stock of
the Company ("Conversion Shares") based on a conversion price per
outstanding share of Series 9 Preferred of $1.8125 and except
further that in the event the average closing bid price of the
Common Stock of the Company as reported in the over-the-counter
market, or the closing sale price if listed on a national
1
<PAGE>
securities exchange, for the five trading days prior to the
particular date of conversion is less than $2.265, the conversion
price for only that particular conversion shall be product of 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 the five trading days immediately
preceding the date of the conversion notice, times 80%;
WHEREAS, the Series 7 Warrants shall not be affected by this
Agreement and shall remain issued and outstanding pursuant to the
terms, provisions and conditions of the Series 7 Warrants;
WHEREAS, the Series 9 Preferred, and the Conversion Shares are
collectively referred to hereinafter as the "Securities;"
WHEREAS, the Company and the Subscriber each desire that the
Second Exchange and the execution of the Agreement act to fully and
completely terminate the Subscriber's rights under the Series 7
Preferred and will act to fully and completely release all
obligations of the Company to the Subscriber under the Series 7
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"), market ,and the Company is
subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "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 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 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,
2
<PAGE>
receipt of which is hereby acknowledged, the parties hereto agree
as follows:
1. Subscription for Purchase of Securities.
1.1 Issuance of Common Stock and Warrants. In full and
complete termination of the Series 7 Preferred and the
Subscriber's rights, and the interest in and to the
Series 7 Preferred, and in full and complete release of
any and all obligations of the Company under the Series
7 Preferred and to the Subscriber under the Series 7
Preferred, at the Closing the Subscriber shall deliver
all of the issued and outstanding shares of the Series 7
Preferred to the Company in exchange for 350 shares of
Series 9 Preferred, containing such terms, conditions and
provisions as set forth in the Series 9 Preferred
Certificate of Designations, pursuant to the terms and
conditions set forth in this Agreement. Dividends on the
Series 7 Preferred shall cease to accrue as of the close
of business on February 28, 1998, and dividends on the
Series 9 Preferred shall begin to accrue on March 1,
1998.
1.1.1 Delivery. Upon receipt by the Company of the
Series 7 Preferred to be canceled, 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 9 Preferred issued in the
name of the Subscriber, in such denominations
as Subscriber requests in writing; and (b) to
the Subscriber, written evidence from the
Secretary of State of the State of Delaware
that the Series 9 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.
1.1.2 Cancellation of Series 7 Preferred. At the
Closing, the Series 7 Preferred shall be
terminated and rendered null and void in all
respects and the Subscriber shall deliver the
Series 7 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
3
<PAGE>
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. As of the Closing, the Series 7 Preferred
shall be fully terminated in all respects. From and
after the Closing, the Subscriber 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 Series 7 Preferred.
1.3 Exchange. On the basis of the representations,
warranties, covenants and agreements, and subject to the
terms and conditions set forth herein, at the Closing,
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 7 Preferred
("Purchase Price") from the Subscriber to the Company.
1.4 Reporting Company. 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 9 Preferred. The Series 9 Preferred
shall contain and be subject to the terms, conditions,
preferences and restrictions set forth in the Series 9
Preferred Certificate of Designations attached hereto as
Exhibit "A," including, but not limited to, the right to
convert the Series 9 Preferred into Common Stock of the
Company based on a Conversion Price per outstanding share
of Series 9 Preferred of $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 the five (5) trading days prior to the
particular date of conversion shall be less than $2.265,
the Conversion Price for only such particular conversion
shall be the product of 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
4
<PAGE>
provided by the Subscriber to the Company multiplied by
eighty percent (80%). 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 9 Preferred are converted, in whole or in part,
into Common Stock pursuant to the terms set forth in the
Series 9 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 shares of Series
9 Preferred surrendered for conversion) of the Series 9
Preferred so surrendered for conversion by (b) the
Conversion Price as of such conversion. At the time of
conversion of shares of the Series 9 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 9 Preferred so converted divided by the Stock
Dividend Price, as defined in the Series 9 Preferred
Certificate of Designations, in effect at the date of
conversion.
1.6 No Effect on Series 7 Warrants. Nothing contained in
this Agreement shall have any effect on the Series 7
Warrants.
2. Closing.
2.1 Closing. The consummation of this Agreement (the
"Closing") will occur at the time and on the date (the
"Closing Date") that the 350 shares of Series 7 Preferred
are delivered by the Subscriber to the Company.
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 shares of Series 9 Preferred 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
5
<PAGE>
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
December 31, 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 Series
9 Preferred 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 and 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.
6
<PAGE>
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 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 9 Preferred. 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 9
Preferred, 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
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
7
<PAGE>
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, and that such have been furnished to the
Subscriber a reasonable time prior to the date hereof:
(i) Annual Report on Form 10-K for the year ended
December 31, 1997 (the "Form 10-K"); (ii) the Company's
Proxy Statement delivered to shareholders on or about
April 20, 1998; and (iii) the information contained in
any reports or documents required to be filed by the
Company under Sections 13(a), 14(a), 14(c) or 15(d) of
the Exchange Act since the distribution of the Form 10-K.
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.
8
<PAGE>
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 No Commission. The Subscriber agrees and acknowledges
that no commission or other remuneration is being paid or
given directly or indirectly for soliciting the Second
Exchange.
9
<PAGE>
3.15 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.
3.16 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.
3.17 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.
3.18 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 9 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 7 Preferred for the Series 9 Preferred, 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.
10
<PAGE>
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 No Commission. The Company agrees and acknowledges that
no commission or other remuneration is being paid or
given directly or indirectly for soliciting the Second
Exchange.
4.4 Ownership of, and Title to, Securities. The shares of
Series 9 Preferred to be exchanged for the Series 7
Preferred 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 exchange of
the Series 9 Preferred (and upon the conversion of the
Series 9 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).
4.5 Exemption from Registration. The offer and exchange of
Series 9 Preferred 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 exchange the Series 7 Preferred for
the Series 9 Preferred, the Company hereby covenants and agrees to
grant to the Subscriber the registration rights with respect to the
Conversion Shares and the shares of Common Stock which may issue as
dividends on the Series 9 Preferred, as set forth in Section 5 of
the First Exchange Agreement regarding the shares of Common Stock
issuable upon conversion of the Series 7 Preferred and as dividends
thereon. The registration rights as set forth in Section 5 of the
First Exchange Agreement regarding the shares of Common Stock
issuable upon exercise of the Series 7 Warrants are not changed by
this Agreement.
11
<PAGE>
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.
12
<PAGE>
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 9 Preferred and Warrants:
Series 9 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
13
<PAGE>
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 AS OF FEBRUARY 28, 1998, A
COPY OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL
EXECUTIVE OFFICE.
Conversion Shares Legends
THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THIS
COMMON 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, THESE SHARES OF COMMON
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 AS OF FEBRUARY 28,
14
<PAGE>
1998, 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 7 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 7 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 7 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 Series 7 Warrants which is prohibited or
unenforceable in any jurisdiction shall, as to such
15
<PAGE>
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
(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 Series
7 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
16
<PAGE>
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
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.
IN WITNESS WHEREOF, the Company and the undersigned Subscriber
have each duly executed this Agreement on the 30th day of April,
1998 but is considered to be effective as of the 28th day of
February, 1998.
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By /s/ Louis Centofanti
__________________________
Dr. Louis F. Centofanti
Chief Executive Officer
THE INFINITY FUND, L.P.
By /s/ Barry M. Pearl
_____________________________
Name: Barry M. Pearl
________________________
Title: Director
_______________________
-18-
<PAGE>
EXCHANGE AGREEMENT
exchanging
350 SHARES OF SERIES 7 CLASS G CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.001 PER SHARE
of
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(a Delaware corporation)
for
350 SHARES OF SERIES 9 CLASS I CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.001 PER SHARE
of
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(a Delaware corporation)
</TABLE>
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED
EXCEPT (i) UNDER COVER OF A REGISTRATION STATEMENT UNDER THE ACT
WHICH IS EFFECTIVE AND CURRENT WITH RESPECT TO THIS WARRANT OR SUCH
SHARES OF COMMON STOCK, AS THE CASE MAY BE, OR (ii) PURSUANT TO THE
WRITTEN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY TO
THE EFFECT THAT REGISTRATION UNDER SUCH ACT IS NOT REQUIRED WITH
RESPECT TO SUCH SALE OR TRANSFER.
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
Warrant for the Purchase of Shares of Common Stock
No. JWG:06-30-98 150,000 shares of
Common Stock
FOR VALUE RECEIVED, PERMA-FIX ENVIRONMENTAL SERVICES, INC., a
Delaware corporation (the "Company"), hereby certifies that JW
GENESIS FINANCIAL CORPORATION ("JW Genesis"), or any permitted
assignee thereof (the "Holder"), is entitled to purchase from the
Company, at any time in whole, or from time to time in part, during
the period commencing from the date of this Warrant and ending at
5:00 p.m. Eastern Daylight Savings Time on June 30, 2001 (the
"Exercise Period"), up to one hundred fifty thousand (150,000)
fully paid and nonassessable shares of the Company's common stock,
par value $.001 per share ("Common Stock"), at a purchase price of
$1.875 per share; provided, however, that the number of shares of
Common Stock to be issued and delivered by the Company upon any
exercise of this Warrant and the purchase price to be paid for each
share shall be subject to adjustments from time to time as
hereinafter provided in this Warrant. This Warrant and all warrants
of like tenor which may be issued by the Company in exchange or
substitution for, or upon transfer or partial exercise of, this
Warrant are hereinafter collectively referred to as the "Warrants";
the shares of Common Stock issuable and issued upon exercise of the
Warrants are hereinafter collectively referred to as the "Warrant
Shares" and the price payable for each of the Warrant Shares upon
exercise is hereinafter referred to as the "Warrant Price".
Exercise of Warrant and Shareholder Approval
1.1 This Warrant may be exercised, as a whole at any one
time or in part from time to time, during the Exercise Period, by
the Holder by the surrender of this Warrant (with the subscription
form at the end hereof duly executed by the Holder) at the address
set forth in Section 8 hereof, together with payment in the manner
hereinafter set forth, of an amount equal to the Warrant Price in
effect at the date of such exercise multiplied by the total number
of Warrant Shares to be purchased upon such exercise. Payment for
Warrant Shares shall be made by a cashier's or certified check or
money order, payable in New York Clearing House funds, to the order
<PAGE>
of the Company. If this Warrant is exercised in part, such
exercise shall be for a whole number of Warrant Shares and the
Holder shall be entitled to receive a new Warrant covering the
number of Warrant Shares in respect of which this Warrant has not
been exercised. Upon any exercise and surrender of this Warrant,
the Company (a) will issue and deliver to the Holder a certificate
or certificates in the name of the Holder for the largest whole
number of Warrant Shares to which the Holder shall be entitled and,
if this Warrant is exercised in whole, in lieu of any fractional
Warrant Share to which the Holder otherwise might be entitled, cash
in an amount equal to the fair value of such fractional share
(determined in such reasonable manner as the Board of Directors of
the Company shall determine), and (b) will deliver to the Holder
such other securities and properties which the Holder may be
entitled to receive upon such exercise, or the proportionate part
thereof if this Warrant is exercised in part, pursuant to the
provisions of this Warrant.
1.2 In connection with the transactions pursuant to which the
Company is issuing this Warrant, the Company is also issuing (i) to
RBB Bank Aktiengesellschaft ("RBB Bank") certain shares of a new
series of Preferred Stock designated as Series 10 Class J
Convertible Preferred Stock ("Preferred Stock"), which Preferred
Stock is convertible into the Company's Common Stock pursuant to
the terms thereof, and certain warrants to RBB Bank for the
purchase by RBB Bank of up to 350,000 shares of Common Stock ("RBB
Warrants") pursuant to the terms of that certain Private Securities
Subscription Agreement, dated June 30, 1998 between the Company and
RBB Bank ("RBB Subscription Agreement"), and (ii) a certain warrant
to Robert B. Prag ("Prag Warrant") providing for the purchase of up
to an aggregate of 625,000 shares of Common Stock pursuant to the
terms of that certain Placement and Consulting Agreement, dated
June 30, 1998 between the Corporation and the Holder ("Liviakis
Consulting Agreement"), (iii) a certain warrant to Liviakis
Financial Communications, Inc. ("Liviakis Warrant") providing for
the purchase of up to an aggregate of 1,875,000 shares of Common
Stock pursuant to the terms of the Liviakis Consulting Agreement,
and (iv) a certain warrant to Fontenoy Investments ("Fontenoy
Warrant") providing for the purchase of up to an aggregate of
350,000 shares of Common Stock.
If (i) the aggregate number of shares of Common Stock issued
by the Company as a result of (a) conversion of the Preferred
Stock, (b) payment of dividends accrued on the Preferred Stock, (c)
exercise of the RBB Warrants, (d) exercise of this Warrant, (e)
exercise of the Prag Warrant, (f) exercise of the Liviakis Warrant,
and (g) exercise of the Fontenoy Warrant exceeds 2,388,347 shares
of Common Stock (which equals 19.9% of the outstanding shares of
Common Stock of the Company as of the date of this Warrant), (ii)
RBB Bank has converted or elects to convert any of the then
outstanding shares of Preferred Stock pursuant to the terms of the
Preferred Stock at a Conversion Price (as defined in the terms of
the Preferred Stock) less than $1.875 ($1.875 being the market
value per share of Common Stock as quoted on the NASDAQ as of the
close of business on June 30, 1998), other than if the Conversion
Price is less than $1.875 solely as a result of the anti-dilution
provisions of the Preferred Stock, then, notwithstanding anything
in this Warrant to the contrary, thereafter the Company shall not
issue any shares of Common Stock as a result of the exercise of
this Warrant unless and until the Company shall have obtained
approval of its shareholders entitled to vote on the transactions
referenced to in the RBB Subscription Agreement and the Liviakis
-2-
<PAGE>
Consulting Agreement pursuant to requirements of subparagraphs
(25)(H)(i)d, and (iv) and (v) of Rule 4310 of the NASDAQ
Marketplace Rules ("Shareholder Approval").
If Shareholder Approval is required as set forth in the above
paragraph, the Company shall take all practical steps to obtain
such Shareholder Approval within ninety (90) days of the event
triggering the need for Shareholder Approval (the "90 Day Period").
The Holder shall, and the Company shall use its best efforts to
cause its officers and directors to, vote all shares of Common
Stock of the Company over which they have voting control in favor
of such Shareholder Approval. If the Company is required to obtain
such Shareholder Approval within the 90 Day Period, then, the
Company agrees that the Exercise Period shall be extended for that
number of additional days equal to the number of days in the period
of time beginning with the day after the expiration of the 90 Day
Period and ending as of the day such Shareholder Approval is
obtained.
In addition, if the Company is required to obtain such
Shareholder Approval within the 90 Day Period but is unable to
obtain such Shareholder Approval within such 90 Day Period and
thereafter the Holder notifies the Company in writing of its
intention to exercise this Warrant for all or a portion of the
Warrant Shares pursuant to the requirements of this Warrant
("Notification of Intention") before such Shareholder Approval is
obtained, with such Notification of Intention specifying the exact
number of Warrant Shares that the Holder intends to purchase
("Warrant Shares to be Purchased") pursuant to the requirements of
this Warrant, then the Company shall have an additional sixty (60)
days ("Additional 60 Days") from receipt by the Company from the
Holder of such Notification of Intention. If the Company has not
obtained the Shareholder Approval within the Additional 60 Days,
then the Holder shall have the option to terminate this Warrant as
to the Warrant Shares to be Purchased, and, in the event of such
termination, the Company shall pay to the Holder an amount
("Payment Amount") determined by subtracting from (a) an amount
determined by multiplying the fair market value (as defined below)
per share of Common Stock by the number of Warrant Shares to be
Purchased, (b) the Aggregate Exercise Price of the Warrant Shares
to be Purchased. If the Holder elects to terminate this Warrant as
to the Warrant Shares to be Purchased for the Payment Amount
pursuant to the terms of this paragraph ("Election"), the Holder
shall deliver to the Company written notice ("Election Notice") of
the Election, and the Company shall have fifteen (15) days from
receipt of such Election Notice to pay the Payment Amount to the
Holder either in cash or by delivering to the Holder the Company's
promissory note payable to the order of the Holder in the principal
amount of the Payment Amount. If the Company elects to pay the
Payment Amount by delivery to the Holder such promissory note, such
promissory note shall be in the principal amount of the Payment
Amount and shall bear an annual rate of interest equal to the prime
rate announced from time to time by the Chase Manhattan Bank plus
1%, with the principal payable in thirty-six (36) equal monthly
installments plus accrued and unpaid interest, and the first
monthly installment beginning the first full month after issuance
of such promissory note. Such promissory note shall be in form
reasonably satisfactory to the Holder. For the purpose of this
paragraph, "fair market value" per share of the Company's Common
Stock shall be the average closing price of a share of the
Company's Common Stock as reported on the National Association of
-3-
<PAGE>
Securities Dealers Automated Quotation System ("NASDAQ"), or if the
Common Stock is not listed on the NASDAQ but is listed for trading
on a national securities exchange the average closing price of a
share of Common Stock as reported on such national securities
exchange, for the five (5) trading days immediately prior to the
Company's receipt of the Election Notice from the Holder.
Notwithstanding anything herein to the contrary, this Warrant as to
the Warrant Shares to be Purchased shall terminate in all respects
as of the date of receipt by the Company of the Holder's Election
Notice.
2. Reservation of Warrant Shares.
2.1 The Company covenants and agrees that all Warrant Shares
which may be acquired by the Holder under this Warrant
will, when issued and upon delivery, be duly and validly
authorized and issued, fully paid and nonassessable, and
free from all restrictions on the sale or transfer
thereof, except such restrictions as may be imposed under
applicable federal and state securities laws and
applicable exchange on which the Common Stock may be
listed, and free and clear of all preemptive rights.
2.2 The Company covenants and agrees that it will, at all
times, reserve and keep available an authorized number of
shares of its Common Stock and other applicable securities
sufficient to permit the exercise in full of this Warrant;
and, if at the time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the
exercise of this Warrant, the Company will take such
corporate action at its next annual meeting of stockholders
as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall
be sufficient for such purpose, including, without limitation,
engaging in reasonable efforts to obtain the requisite
stockholder approval of any necessary amendment to its
Certificate of Incorporation.
3. Protection Against Dilution.
3.1 If, at any time or from time to time after the date of
this Warrant, the Company shall distribute pro rata to
all of the holders of its then outstanding shares of
Common Stock (a) securities, other than shares of Common
Stock or stock options, or (b) property, other than cash,
without payment therefor, then, and in each such case,
the Holder, upon the exercise of this Warrant, shall be
entitled to receive the securities and property which the
Holder would hold on the date of such exercise if, on the
date of this Warrant, the Holder had been the holder of
record of the number of shares of the Common Stock
subscribed for upon such exercise and, during the period
from the date of this Warrant to and including the date
of such exercise, had retained such shares and the
securities and properties receivable by the Holder during
such period.
-4-
<PAGE>
3.2 If, at any time or from time to time after the date of
this Warrant, the Company shall (a) pay a dividend on its
Common Stock in shares of Common Stock, (b) subdivide its
outstanding shares of Common Stock into a greater number
of shares, (c) combine its outstanding shares of Common
Stock into a smaller number of shares, or (d) issue by
reclassification of its Common Stock any shares of any
other class of capital stock of the Company, the number
of Warrant Shares and the Warrant Price in effect
immediately prior to such event shall be adjusted so
that, upon exercise of this Warrant, the Holder shall be
entitled to purchase under this Warrant, without
additional consideration therefor, the number of shares
of Common Stock or other capital stock of the Company
which he would have owned or been entitled to purchase
immediately following the happening of any of the events
described above in this subsection 3.2 had this Warrant
been exercised and the Holder become the holder of record
of the Warrant Shares purchased upon such exercise
immediately prior to the record date fixed for the
determination of stockholders entitled to receive such
dividend or distribution or the effective date of such
subdivision, combination or reclassification at a Warrant
Price equal to the aggregate consideration which the
Holder would have had to pay for such Warrant Shares
immediately prior to such event divided by the number of
Warrant Shares the Holder is entitled to receive
immediately after such event. An adjustment made
pursuant to this subsection 3.2 shall become effective
immediately after the record date in the case of a
dividend or distribution and shall become effective
immediately after the effective date in the case of a
subdivision, combination or reclassification. If, as a
result of an adjustment made pursuant to this subsection
3.2, the Holder of this Warrant thereafter surrendered
for exercise shall become entitled to receive shares of
two or more classes of capital stock or shares of Common
Stock and any other class of capital stock of the
company, the Board of Directors (whose determination
shall be conclusive and shall be described in a written
notice to all holders of the Warrants promptly after such
adjustment) shall determine the allocation of the
adjusted Warrant Price between or among shares of such
classes of capital stock or shares of Common Stock and
such other class of capital stock.
3.3 In case of any consolidation or merger to which the
Company is a party, other than a merger or consolidation
in which the Company is the continuing or surviving
corporation, or in case of any sale or conveyance to
another entity of all or substantially all of the
property of the Company as an entirety or substantially
as an entirety, the Holder of this Warrant shall have the
right thereafter, upon exercise of this Warrant, to
receive the kind and amount of securities, cash or other
property which he would have owned or been entitled to
receive immediately after such consolidation, merger,
sale or conveyance had this Warrant been exercised
immediately prior to the effective date of such
consolidation, merger, sale or conveyance and in any such
case, if necessary, appropriate adjustment shall be made
in the application thereafter of the provisions of this
-5-
<PAGE>
Section 3 with respect to the rights and interests of the
Holder of this Warrant to the end that the provisions of
this Section 3 thereafter shall be correspondingly
applicable, as nearly as may reasonably be, to such
securities and other property. Notice of any such
consolidation, merger, sale or conveyance, and of said
provisions so proposed to be made, shall be mailed to the
Holder not less than thirty (30) days prior to such
event. A sale of all, or substantially all, of the
assets of the Company for a consideration consisting
primarily of securities shall be deemed a consolidation
or merger for the foregoing purposes.
4. Fully Paid Stock; Taxes. The Company agrees that the shares
of the Common Stock represented by each and every certificate for
Warrant Shares delivered upon the exercise of this Warrant shall,
at the time of such delivery, be validly issued and outstanding,
fully paid and nonassessable, and not subject to preemptive rights,
and the Company will take all such actions as may be necessary to
assure that the par value or stated value, if any, per share of the
Common Stock is at all times equal to or less than the Warrant
Price. The Company further covenants and agrees that it will pay,
when due and payable, any and all federal and state stamp, original
issue or similar taxes which may be payable in respect of the
issuance of any Warrant Share or certificate therefor.
5. Investment Representation and Transferability.
5.1 By acceptance hereof, the Holder represents and warrants
that this Warrant is being acquired, and all Warrant
Shares to be purchased upon the exercise of this Warrant
will be acquired, by the Holder solely for the account of
such Holder, and not with a view to the fractionalization
and distribution thereof, and will not be sold or
transferred except in accordance with the applicable
provisions of the Act and the rules and regulations of
the Commission promulgated thereunder. The Holder
covenants and agrees that this Warrant and the Warrant
Shares will not be sold or transferred except under cover
of a Registration Statement under the Act which the
Commission has declared effective and the applicable
state securities laws and which is current with respect
to such Warrant and the Warrant Shares or pursuant to an
opinion of counsel reasonably satisfactory to the Company
that registration under the Act and the applicable state
securities laws is not required in connection with such
sale or transfer. Any Warrant Shares issued upon
exercise of this Warrant shall bear the following legend:
The securities represented by this certificate
have not been registered under the Securities
Act of 1933, as amended, and are restricted
securities within the meaning thereof. Such
securities may not be sold or transferred
except pursuant to a Registration Statement
under such Act and applicable state securities
laws which is effective and current with
respect to such securities or pursuant to an
opinion of counsel reasonably satisfactory to
-6-
<PAGE>
the issuer of such securities that such sale
or transfer is exempt from the registration
requirements of such Act.
5.2 The Holder agrees that the Company may refuse to permit
the sale, transfer or disposition of this Warrant or any
of the Warrant Shares unless there is in effect a
Registration Statement under the Act and any applicable
state securities law covering such transfer or the Holder
furnishes an opinion of counsel, reasonably satisfactory
to counsel for the Company, to the effect that such
registration is not required.
5.3 The Holder understands that under the Act, this Warrant
and the Warrant Shares must be held indefinitely unless
they are subsequently registered under the Act or unless
an exemption from such registration is available with
respect to any proposed transfer or disposition of the
Warrant or the Warrant Shares.
6. Loss, etc. of Warrant. Upon receipt of evidence satisfactory
to the Company of the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to the
Company, if lost, stolen or destroyed, and upon surrender and
cancellation of this Warrant, if mutilated, and upon reimbursement
of the Company's reasonable incidental expenses, the Company shall
execute and deliver to the Holder a new Warrant of like date, tenor
and denomination.
7. Warrant Holder Not Shareholder. This Warrant shall not be
deemed to confer upon the Holder any right to vote or to consent to
or receive notice as a shareholder of the Company, as such, in
respect of any matters whatsoever, or any other rights or
liabilities as a shareholder, prior to the exercise hereof.
8. 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 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 (a) on the business day actually received if given by hand or
by fax, (b) on the business day immediately subsequent to mailing,
if sent by U.S. Express Mail service or private overnight mail
service, or (c) five (5) business days following the mailing
thereof, if mailed by certified or registered mail, postage
prepaid, return receipt requested, and all such notices shall be
sent to the following addresses (or to such other address or
addresses as a party may have advised the other in the manner
provided in this Section 8) to:
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<PAGE>
If to the Company: Perma-Fix Environmental
Services, Inc.
1940 Northwest 67th Place
Gainesville, Florida 32606-1649
Attention: Dr. Louis F. Centofanti
Chief Executive Officer
Fax No.: (352) 373-0040
If to the Holder: JW Genesis Financial Corporation
980 North Federal Highway, Suite 310
Boca Raton, Florida 33432
Attention: Mr. Joel Marks
Vice Chairman
Fax No.: (561) 338-2827
9. Headings. The headings of this Warrant have been inserted as
a matter of convenience and shall not affect the construction
hereof.
10. Applicable Law. This Warrant shall be governed by, and
construed in accordance with, the laws of the State of Delaware,
without giving effect to the principles of conflicts of law
thereof.
-8-
<PAGE>
IN WITNESS WHEREOF, this Warrant has been signed by the
parties hereto this 30th day of June, 1998.
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By /s/ Louis Centofanti
__________________________
Dr. Louis F. Centofanti
Chief Executive Officer
(the "Company")
JW GENESIS FINANCIAL
CORPORATION
By
___________________________
Mr. Joel Marks
Vice Chairman
(the "Holder")
tsb warrants/11-12-97
-9-
<PAGE>
<PAGE>
SUBSCRIPTION
The undersigned, ________________________, pursuant to the
provisions of the foregoing Warrant, hereby agrees to subscribe for
and purchase ____________________ shares of the Common Stock of
PERMA-FIX ENVIRONMENTAL SERVICES, INC., covered by said Warrant,
and makes payment therefor in full at the price per share provided
by said Warrant pursuant to the terms of said Warrant.
Dated:____________________ Signature_______________________
Address_______________________
ASSIGNMENT
FOR VALUE RECEIVED, _________________________________ hereby
sells, assigns and transfers unto _________________________________
the foregoing Warrant and all rights evidenced thereby, and does
irrevocably constitute and appoint _________________________,
attorney, to transfer said Warrant on the books of PERMA-FIX
ENVIRONMENTAL SERVICES, INC.
Dated:____________________ Signature_______________________
Address_________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________________________ hereby
sells, assigns and transfers unto _________________________________
the right to purchase _________ shares of the Common Stock of
PERMA-FIX ENVIRONMENTAL SERVICES, INC. by the foregoing Warrant and
all rights evidenced thereby, and does irrevocably constitute and
appoint _________________________, attorney, to transfer that part
of said Warrant on the books of PERMA-FIX ENVIRONMENTAL SERVICES,
INC.
Dated:____________________ Signature_______________________
Address_________________________
-10-
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED
EXCEPT (i) UNDER COVER OF A REGISTRATION STATEMENT UNDER THE ACT
WHICH IS EFFECTIVE AND CURRENT WITH RESPECT TO THIS WARRANT OR SUCH
SHARES OF COMMON STOCK, AS THE CASE MAY BE, OR (ii) PURSUANT TO THE
WRITTEN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY TO
THE EFFECT THAT REGISTRATION UNDER SUCH ACT IS NOT REQUIRED WITH
RESPECT TO SUCH SALE OR TRANSFER.
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
Warrant for the Purchase of Shares of Common Stock
No. FON:06-30-98 350,000 shares of
Common Stock
FOR VALUE RECEIVED, PERMA-FIX ENVIRONMENTAL SERVICES, INC., a
Delaware corporation (the "Company"), hereby certifies that
FONTENOY INVESTMENTS ("Fontenoy"), or any permitted assignee
thereof (the "Holder"), is entitled to purchase from the Company,
at any time in whole, or from time to time in part, during the
period commencing from the date of this Warrant and ending at 5:00
p.m. Eastern Daylight Savings Time on June 30, 2001 (the "Exercise
Period"), up to three hundred fifty thousand (350,000) fully paid
and nonassessable shares of the Company's common stock, par value
$.001 per share ("Common Stock"), at a purchase price of $1.875 per
share; provided, however, that the number of shares of Common Stock
to be issued and delivered by the Company upon any exercise of this
Warrant and the purchase price to be paid for each share shall be
subject to adjustments from time to time as hereinafter provided in
this Warrant. This Warrant and all warrants of like tenor which may
be issued by the Company in exchange or substitution for, or upon
transfer or partial exercise of, this Warrant are hereinafter
collectively referred to as the "Warrants"; the shares of Common
Stock issuable and issued upon exercise of the Warrants are
hereinafter collectively referred to as the "Warrant Shares" and
the price payable for each of the Warrant Shares upon exercise is
hereinafter referred to as the "Warrant Price".
1. Exercise of Warrant and Shareholder Approval
1.1 This Warrant may be exercised, as a whole at any one
time or in part from time to time, during the Exercise Period, by
the Holder by the surrender of this Warrant (with the subscription
form at the end hereof duly executed by the Holder) at the address
set forth in Section 8 hereof, together with payment in the manner
hereinafter set forth, of an amount equal to the Warrant Price in
effect at the date of such exercise multiplied by the total number
of Warrant Shares to be purchased upon such exercise. Payment for
Warrant Shares shall be made by a cashier's or certified check or
money order, payable in New York Clearing House funds, to the order
<PAGE>
of the Company. If this Warrant is exercised in part, such
exercise shall be for a whole number of Warrant Shares and the
Holder shall be entitled to receive a new Warrant covering the
number of Warrant Shares in respect of which this Warrant has not
been exercised. Upon any exercise and surrender of this Warrant,
the Company (a) will issue and deliver to the Holder a certificate
or certificates in the name of the Holder for the largest whole
number of Warrant Shares to which the Holder shall be entitled and,
if this Warrant is exercised in whole, in lieu of any fractional
Warrant Share to which the Holder otherwise might be entitled, cash
in an amount equal to the fair value of such fractional share
(determined in such reasonable manner as the Board of Directors of
the Company shall determine), and (b) will deliver to the Holder
such other securities and properties which the Holder may be
entitled to receive upon such exercise, or the proportionate part
thereof if this Warrant is exercised in part, pursuant to the
provisions of this Warrant.
1.2 In connection with the transactions pursuant to which the
Company is issuing this Warrant, the Company is also issuing (i) to
RBB Bank Aktiengesellschaft ("RBB Bank") certain shares of a new
series of Preferred Stock designated as Series 10 Class J
Convertible Preferred Stock ("Preferred Stock"), which Preferred
Stock is convertible into the Company's Common Stock pursuant to
the terms thereof, and certain warrants to RBB Bank for the
purchase by RBB Bank of up to 350,000 shares of Common Stock ("RBB
Warrants") pursuant to the terms of that certain Private Securities
Subscription Agreement, dated June 30, 1998 between the Company and
RBB Bank ("RBB Subscription Agreement"), (ii) a certain warrant to
Robert B. Prag ("Prag Warrant") providing for the purchase of up to
an aggregate of 625,000 shares of Common Stock pursuant to the
terms of that certain Placement and Consulting Agreement, dated
June 30, 1998 between the Corporation and the Holder ("Liviakis
Consulting Agreement"), (iii) a certain warrant to Liviakis
Financial Communications, Inc. ("Liviakis Warrant") providing for
the purchase of up to an aggregate of 1,875,000 shares of Common
Stock pursuant to the terms of the Liviakis Consulting Agreement,
and (iv) a certain warrant to JW Genesis Financial Corporation
("Genesis Warrant") providing for the purchase of up to an
aggregate of 150,000 shares of Common Stock.
If (i) the aggregate number of shares of Common Stock issued
by the Company as a result of (a) conversion of the Preferred
Stock, (b) payment of dividends accrued on the Preferred Stock, (c)
exercise of the RBB Warrants, (d) exercise of this Warrant, (e)
exercise of the Prag Warrant, (f) exercise of the Liviakis Warrant,
and (g) exercise of the Genesis Warrant exceeds 2,388,347 shares of
Common Stock (which equals 19.9% of the outstanding shares of
Common Stock of the Company as of the date of this Warrant) and
(ii) RBB Bank has converted or elects to convert any of the then
outstanding shares of Preferred Stock pursuant to the terms of the
Preferred Stock at a Conversion Price (as defined in the terms of
the Preferred Stock) less than $1.875 ($1.875 being the market
value per share of Common Stock as quoted on the NASDAQ as of the
close of business on June 30, 1998), other than if the Conversion
Price is less than $1.875 solely as a result of the anti-dilution
provisions of the Preferred Stock, then, notwithstanding anything
in this Warrant to the contrary, thereafter the Company shall not
issue any shares of Common Stock as a result of the exercise of
this Warrant unless and until the Company shall have obtained
approval of its shareholders entitled to vote on the transactions
referenced to in the RBB Subscription Agreement and the Liviakis
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<PAGE>
Consulting Agreement pursuant to requirements of subparagraphs
(25)(H)(i)d, and (iv) and (v) of Rule 4310 of the NASDAQ
Marketplace Rules ("Shareholder Approval").
If Shareholder Approval is required as set forth in the above
paragraph, the Company shall take all practical steps to obtain
such Shareholder Approval within ninety (90) days of the event
triggering the need for Shareholder Approval (the "90 Day Period").
The Holder shall, and the Company shall use its best efforts to
cause its officers and directors to, vote all shares of Common
Stock of the Company over which they have voting control in favor
of such Shareholder Approval. If the Company is required to obtain
such Shareholder Approval within the 90 Day Period, then, the
Company agrees that the Exercise Period shall be extended for that
number of additional days equal to the number of days in the period
of time beginning with the day after the expiration of the 90 Day
Period and ending as of the day such Shareholder Approval is
obtained.
In addition, if the Company is required to obtain such
Shareholder Approval within the 90 Day Period but is unable to
obtain such Shareholder Approval within such 90 Day Period and
thereafter the Holder notifies the Company in writing of its
intention to exercise this Warrant for all or a portion of the
Warrant Shares pursuant to the requirements of this Warrant
("Notification of Intention") before such Shareholder Approval is
obtained, with such Notification of Intention specifying the exact
number of Warrant Shares that the Holder intends to purchase
("Warrant Shares to be Purchased") pursuant to the requirements of
this Warrant, then the Company shall have an additional sixty (60)
days ("Additional 60 Days") from receipt by the Company from the
Holder of such Notification of Intention. If the Company has not
obtained the Shareholder Approval within the Additional 60 Days,
then the Holder shall have the option to terminate this Warrant as
to the Warrant Shares to be Purchased, and, in the event of such
termination, the Company shall pay to the Holder an amount
("Payment Amount") determined by subtracting from (a) an amount
determined by multiplying the fair market value (as defined below)
per share of Common Stock by the number of Warrant Shares to be
Purchased, (b) the Aggregate Exercise Price of the Warrant Shares
to be Purchased. If the Holder elects to terminate this Warrant as
to the Warrant Shares to be Purchased for the Payment Amount
pursuant to the terms of this paragraph ("Election"), the Holder
shall deliver to the Company written notice ("Election Notice") of
the Election, and the Company shall have fifteen (15) days from
receipt of such Election Notice to pay the Payment Amount to the
Holder either in cash or by delivering to the Holder the Company's
promissory note payable to the order of the Holder in the principal
amount of the Payment Amount. If the Company elects to pay the
Payment Amount by delivery to the Holder such promissory note, such
promissory note shall be in the principal amount of the Payment
Amount and shall bear an annual rate of interest equal to the prime
rate announced from time to time by the Chase Manhattan Bank plus
1%, with the principal payable in thirty-six (36) equal monthly
installments plus accrued and unpaid interest, and the first
monthly installment beginning the first full month after issuance
of such promissory note. Such promissory note shall be in form
reasonably satisfactory to the Holder. For the purpose of this
paragraph, "fair market value" per share of the Company's Common
Stock shall be the average closing price of a share of the
Company's Common Stock as reported on the National Association of
-3-
<PAGE>
Securities Dealers Automated Quotation System ("NASDAQ"), or if the
Common Stock is not listed on the NASDAQ but is listed for trading
on a national securities exchange the average closing price of a
share of Common Stock as reported on such national securities
exchange, for the five (5) trading days immediately prior to the
Company's receipt of the Election Notice from the Holder.
Notwithstanding anything herein to the contrary, this Warrant as to
the Warrant Shares to be Purchased shall terminate in all respects
as of the date of receipt by the Company of the Holder's Election
Notice.
2. Reservation of Warrant Shares.
2.1 The Company covenants and agrees that all Warrant Shares
which may be acquired by the Holder under this Warrant
will, when issued and upon delivery, be duly and validly
authorized and issued, fully paid and nonassessable, and
free from all restrictions on the sale or transfer
thereof, except such restrictions as may be imposed under
applicable federal and state securities laws and
applicable exchange on which the Common Stock may be
listed, and free and clear of all preemptive rights.
2.2 The Company covenants and agrees that it will, at all
times, reserve and keep available an authorized number of
shares of its Common Stock and other applicable
securities sufficient to permit the exercise in full of
this Warrant; and, if at the time the number of
authorized but unissued shares of Common Stock shall not
be sufficient to effect the exercise of this Warrant, the
Company will take such corporate action at its next
annual meeting of stockholders as may be necessary to
increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for
such purpose, including, without limitation, engaging in
reasonable efforts to obtain the requisite stockholder
approval of any necessary amendment to its Certificate of
Incorporation.
3. Protection Against Dilution.
3.1 If, at any time or from time to time after the date of
this Warrant, the Company shall distribute pro rata to
all of the holders of its then outstanding shares of
Common Stock (a) securities, other than shares of Common
Stock or stock options, or (b) property, other than cash,
without payment therefor, then, and in each such case,
the Holder, upon the exercise of this Warrant, shall be
entitled to receive the securities and property which the
Holder would hold on the date of such exercise if, on the
date of this Warrant, the Holder had been the holder of
record of the number of shares of the Common Stock
subscribed for upon such exercise and, during the period
from the date of this Warrant to and including the date
of such exercise, had retained such shares and the
securities and properties receivable by the Holder during
such period.
-4-
<PAGE>
3.2 If, at any time or from time to time after the date of
this Warrant, the Company shall (a) pay a dividend on its
Common Stock in shares of Common Stock, (b) subdivide its
outstanding shares of Common Stock into a greater number
of shares, (c) combine its outstanding shares of Common
Stock into a smaller number of shares, or (d) issue by
reclassification of its Common Stock any shares of any
other class of capital stock of the Company, the number
of Warrant Shares and the Warrant Price in effect
immediately prior to such event shall be adjusted so
that, upon exercise of this Warrant, the Holder shall be
entitled to purchase under this Warrant, without
additional consideration therefor, the number of shares
of Common Stock or other capital stock of the Company
which he would have owned or been entitled to purchase
immediately following the happening of any of the events
described above in this subsection 3.2 had this Warrant
been exercised and the Holder become the holder of record
of the Warrant Shares purchased upon such exercise
immediately prior to the record date fixed for the
determination of stockholders entitled to receive such
dividend or distribution or the effective date of such
subdivision, combination or reclassification at a Warrant
Price equal to the aggregate consideration which the
Holder would have had to pay for such Warrant Shares
immediately prior to such event divided by the number of
Warrant Shares the Holder is entitled to receive
immediately after such event. An adjustment made
pursuant to this subsection 3.2 shall become effective
immediately after the record date in the case of a
dividend or distribution and shall become effective
immediately after the effective date in the case of a
subdivision, combination or reclassification. If, as a
result of an adjustment made pursuant to this subsection
3.2, the Holder of this Warrant thereafter surrendered
for exercise shall become entitled to receive shares of
two or more classes of capital stock or shares of Common
Stock and any other class of capital stock of the
company, the Board of Directors (whose determination
shall be conclusive and shall be described in a written
notice to all holders of the Warrants promptly after such
adjustment) shall determine the allocation of the
adjusted Warrant Price between or among shares of such
classes of capital stock or shares of Common Stock and
such other class of capital stock.
3.3 In case of any consolidation or merger to which the
Company is a party, other than a merger or consolidation
in which the Company is the continuing or surviving
corporation, or in case of any sale or conveyance to
another entity of all or substantially all of the
property of the Company as an entirety or substantially
as an entirety, the Holder of this Warrant shall have the
right thereafter, upon exercise of this Warrant, to
receive the kind and amount of securities, cash or other
property which he would have owned or been entitled to
receive immediately after such consolidation, merger,
sale or conveyance had this Warrant been exercised
immediately prior to the effective date of such
consolidation, merger, sale or conveyance and in any such
case, if necessary, appropriate adjustment shall be made
in the application thereafter of the provisions of this
-5-
<PAGE>
Section 3 with respect to the rights and interests of the
Holder of this Warrant to the end that the provisions of
this Section 3 thereafter shall be correspondingly
applicable, as nearly as may reasonably be, to such
securities and other property. Notice of any such
consolidation, merger, sale or conveyance, and of said
provisions so proposed to be made, shall be mailed to the
Holder not less than thirty (30) days prior to such
event. A sale of all, or substantially all, of the
assets of the Company for a consideration consisting
primarily of securities shall be deemed a consolidation
or merger for the foregoing purposes.
4. Fully Paid Stock; Taxes. The Company agrees that the shares
of the Common Stock represented by each and every certificate for
Warrant Shares delivered upon the exercise of this Warrant shall,
at the time of such delivery, be validly issued and outstanding,
fully paid and nonassessable, and not subject to preemptive rights,
and the Company will take all such actions as may be necessary to
assure that the par value or stated value, if any, per share of the
Common Stock is at all times equal to or less than the Warrant
Price. The Company further covenants and agrees that it will pay,
when due and payable, any and all federal and state stamp, original
issue or similar taxes which may be payable in respect of the
issuance of any Warrant Share or certificate therefor.
5. Investment Representation and Transferability.
5.1 By acceptance hereof, the Holder represents and warrants
that this Warrant is being acquired, and all Warrant
Shares to be purchased upon the exercise of this Warrant
will be acquired, by the Holder solely for the account of
such Holder, and not with a view to the fractionalization
and distribution thereof, and will not be sold or
transferred except in accordance with the applicable
provisions of the Act and the rules and regulations of
the Commission promulgated thereunder. The Holder
covenants and agrees that this Warrant and the Warrant
Shares will not be sold or transferred except under cover
of a Registration Statement under the Act which the
Commission has declared effective and the applicable
state securities laws and which is current with respect
to such Warrant and the Warrant Shares or pursuant to an
opinion of counsel reasonably satisfactory to the Company
that registration under the Act and the applicable state
securities laws is not required in connection with such
sale or transfer. Any Warrant Shares issued upon
exercise of this Warrant shall bear the following legend:
The securities represented by this certificate
have not been registered under the Securities
Act of 1933, as amended, and are restricted
securities within the meaning thereof. Such
securities may not be sold or transferred
except pursuant to a Registration Statement
under such Act and applicable state securities
laws which is effective and current with
respect to such securities or pursuant to an
opinion of counsel reasonably satisfactory to
-6-
<PAGE>
the issuer of such securities that such sale
or transfer is exempt from the registration
requirements of such Act.
5.2 The Holder agrees that the Company may refuse to permit
the sale, transfer or disposition of this Warrant or any
of the Warrant Shares unless there is in effect a
Registration Statement under the Act and any applicable
state securities law covering such transfer or the Holder
furnishes an opinion of counsel, reasonably satisfactory
to counsel for the Company, to the effect that such
registration is not required.
5.3 The Holder understands that under the Act, this Warrant
and the Warrant Shares must be held indefinitely unless
they are subsequently registered under the Act or unless
an exemption from such registration is available with
respect to any proposed transfer or disposition of the
Warrant or the Warrant Shares.
6. Loss, etc. of Warrant. Upon receipt of evidence satisfactory
to the Company of the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to the
Company, if lost, stolen or destroyed, and upon surrender and
cancellation of this Warrant, if mutilated, and upon reimbursement
of the Company's reasonable incidental expenses, the Company shall
execute and deliver to the Holder a new Warrant of like date, tenor
and denomination.
7. Warrant Holder Not Shareholder. This Warrant shall not be
deemed to confer upon the Holder any right to vote or to consent to
or receive notice as a shareholder of the Company, as such, in
respect of any matters whatsoever, or any other rights or
liabilities as a shareholder, prior to the exercise hereof.
8. 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 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 (a) on the business day actually received if given by hand or
by fax, (b) on the business day immediately subsequent to mailing,
if sent by U.S. Express Mail service or private overnight mail
service, or (c) five (5) business days following the mailing
thereof, if mailed by certified or registered mail, postage
prepaid, return receipt requested, and all such notices shall be
sent to the following addresses (or to such other address or
addresses as a party may have advised the other in the manner
provided in this Section 8) to:
-7-
<PAGE>
If to the Company: Perma-Fix Environmental
Services, Inc.
1940 Northwest 67th Place
Gainesville, Florida 32606-1649
Attention: Dr. Louis F. Centofanti
Chief Executive Officer
Fax No.: (352) 373-0040
If to the Holder: Fontenoy Investments
P.O. Box 175
100 Market Street
Douglas, Isle of Man
IM99 ITT
Attention: Gordon Mundy
Managing Director
Fax No.: 011 44 1624 620588
9. Headings. The headings of this Warrant have been inserted as
a matter of convenience and shall not affect the construction
hereof.
10. Applicable Law. This Warrant shall be governed by, and
construed in accordance with, the laws of the State of Delaware,
without giving effect to the principles of conflicts of law
thereof.
-8-
<PAGE>
IN WITNESS WHEREOF, this Warrant has been signed by the
parties hereto this 30th day of June, 1998.
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By /s/ Louis Centofanti
_____________________________
Dr. Louis F. Centofanti
Chief Executive Officer
(the "Company")
FONTENOY INVESTMENTS
By
___________________________
Gordon Mundy
Managing Director
(the "Holder")
-9-
<PAGE>
SUBSCRIPTION
The undersigned, ________________________, pursuant to the
provisions of the foregoing Warrant, hereby agrees to subscribe for
and purchase ____________________ shares of the Common Stock of
PERMA-FIX ENVIRONMENTAL SERVICES, INC., covered by said Warrant,
and makes payment therefor in full at the price per share provided
by said Warrant pursuant to the terms of said Warrant.
Dated:____________________ Signature_______________________
Address_________________________
ASSIGNMENT
FOR VALUE RECEIVED, _________________________________ hereby
sells, assigns and transfers unto _________________________________
the foregoing Warrant and all rights evidenced thereby, and does
irrevocably constitute and appoint _________________________,
attorney, to transfer said Warrant on the books of PERMA-FIX
ENVIRONMENTAL SERVICES, INC.
Dated:____________________ Signature_______________________
Address________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________________________ hereby
sells, assigns and transfers unto _________________________________
the right to purchase _________ shares of the Common Stock of
PERMA-FIX ENVIRONMENTAL SERVICES, INC. by the foregoing Warrant and
all rights evidenced thereby, and does irrevocably constitute and
appoint _________________________, attorney, to transfer that part
of said Warrant on the books of PERMA-FIX ENVIRONMENTAL SERVICES,
INC.
Dated:____________________ Signature_______________________
Address________________________
-10-
CONSULTING AGREEMENT
________________________
THIS CONSULTING AGREEMENT (this "Agreement") is made this 8th
day of April, 1998, but shall be considered effective as of
January 1, 1998, by and between PERMA-FIX ENVIRONMENTAL SERVICES,
INC., a Delaware corporation (the "Company"), and ALFRED C.
WARRINGTON IV, an individual ("Warrington").
W I T N E S S E T H:
WHEREAS, Warrington has experience in financial matters;
WHEREAS, the Company wishes to engage Warrington as an
independent, outside consultant to the Company, and Warrington
desires to accept such engagement, pursuant to the terms and
conditions of this Agreement;
WHEREAS, in consideration for such engagement, the parties
desire to provide for the issuance of shares of the Company's
Common Stock, par value $.001 per share ("Common Stock"), on terms
and subject to the conditions hereinafter set forth; and,
WHEREAS, the parties do not intend that this Agreement qualify
under Section 401 of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties hereto, intending to be
legally bound, do hereby agree as follows:
1. Engagement of Warrington. The Company does hereby engage
Warrington, and Warrington does hereby accept such engagement,
as an outside, independent consultant to provide the following
consulting services for the Company:
1.1 Financial consulting to the Board of Directors, Chief
Executive Officer and Chief Financial Officer of the
Company; and
1.2 Such other financial consulting services to be performed
on behalf of the Company or subsidiaries of the Company
as reasonably requested by the Chairman of the Board or
Chief Executive Officer of the Company.
Provided, however, that Warrington shall render bona fide
consulting services to the Company under this Agreement.
2. Term. Warrington will provide the above consulting services
for the Company under this Agreement on a month-to-month basis
for an indefinite period of time from the date of this
Agreement (the "Term"). This Agreement is terminable by
either party hereto by giving the other party hereto thirty
days written notice of termination of this Agreement. At the
<PAGE>
end of such thirty day notice period, this Agreement shall
terminate, except for Section 4 hereof, which shall remain in
effect as indicated therein.
3. Compensation. In consideration of Warrington providing the
consulting services under this Agreement, the Company agrees
to pay to Warrington $1,000 for each month of service
hereunder ("Consulting Fee"). Such Consulting Fee will accrue
on a monthly basis, but, shall be payable on an annual basis
as described hereafter. At the Company's discretion, any
consulting fees earned by Warrington for work in past years
which are accrued and remain unpaid, may be considered to be
an additional part of the Consulting Fee to be paid
accordingly. At Warrington's option, the Consulting Fee is
payable by either: (i) paying Warrington sixty-five percent
(65%) of the Consulting Fee in Common Stock, with the balance
paid in cash or its equivalent; or (ii) paying Warrington one
hundred percent (100%) of the Consulting Fee in Common Stock;
or (iii) paying Warrington one hundred percent (100%) of the
Consulting Fee in cash or its equivalent. The number of
shares of Common Stock received by Warrington hereunder will
be determined by valuing the Common Stock at seventy-five
percent (75%) of its Fair Market Value as determined herein,
which Fair Market Value (as defined in this Section 3) is
determined on the date on which Warrington makes his election
as to the method of payment. Within ninety days of the end of
each calendar year during which this Agreement is in effect,
the Consulting Fee which accrued during the calendar year just
ended and which remains unpaid shall be paid to Warrington as
described herein.
3.1 Sixty-Five Percent Common Stock Election. If Warrington
elects to receive sixty-five percent (65%) of the
Consulting Fee in Common Stock: (i) Warrington will
receive the number of shares of Common Stock obtained by
dividing sixty-five percent (65%) of the accrued and
unpaid Consulting Fee by seventy-five percent (75%) of
the Fair Market Value of the Common Stock and (ii)
Warrington will receive thirty-five percent (35%) of the
accrued and unpaid Consulting Fee in cash or its
equivalent.
3.2 One Hundred Percent Common Stock Election. If Warrington
elects to receive one hundred percent (100%) of the
Consulting Fee in Common Stock, he will receive the
number of shares of Common Stock obtained by dividing the
accrued and unpaid Consulting Fee by seventy-five percent
(75%) of the Fair Market Value of the Common Stock.
3.3 One Hundred Percent Cash Election. If Warrington elects
to receive one hundred percent (100%) of the Consulting
Fee in cash or its equivalent, he will receive such.
3.4 Election Procedure. The Consulting Fee will be paid on
a annual basis within ninety days of the end of each
calendar year as described in Section 3 unless otherwise
specified by the Board of Directors of the Company.
-2-
<PAGE>
Warrington shall make an annual election as to the form
of his Consulting Fee for each year prior to the last day
of the applicable year unless otherwise approved by the
Company.
3.5 Fair Market Value. The Fair Market Value shall be the
closing bid price of the Common Stock on the NASDAQ Small
Cap on the date on which Warrington makes his election as
to the method of payment of the accrued Consulting Fee
or, in the event no such quotations are available for the
day in question, Fair Market Value shall be the closing
bid price of the Common Stock on the NASDAQ Small Cap on
the most recent trading day prior to such day. The
valuation date may be modified by the Board of Directors
of the Company.
4. Confidential Information. During the Term and for a period of
twelve (12) months following the termination of the Term, (i)
Warrington shall hold, in a fiduciary capacity for the benefit
of the Company and all subsidiaries of the Company, all secret
or confidential information, knowledge or data relating to the
Company and all subsidiaries of the Company or any of their
affiliated companies and their respective businesses, which
shall have been obtained by Warrington at any time and which
shall not be public knowledge (other than by acts of
Warrington or his representatives in violation of this
Agreement), including, without limitation, customer lists, bid
proposals, contracts, matters subject to litigation and
information regarding periods and environmental applications,
and (ii) Warrington shall not, without the prior written
consent of the Company, communicate or divulge any such
information, knowledge or data to anyone other than the
Company and those designated by it.
5. Other Restrictions and Legends.
5.1 Acquisition for Own Account; No Registration. Warrington
represents and warrants that the shares of Common Stock
acquired hereunder are being acquired 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, as amended (the "Act") and any
applicable state securities laws, or a transaction exempt
from registration thereunder, and shall not make any
sale, transfer or other disposition of the Common Stock
in violation of any applicable state securities laws,
including in each instance any applicable rules and
regulations promulgated thereunder, or in violation of
the Act or the rules and regulations promulgated
thereunder by the Securities and Exchange Commission (the
"SEC"). Warrington understands that these shares of
Common Stock have not been registered under the Act or
any state securities laws (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 and
applicable state securities law or is exempt from
registration thereunder. Warrington further understands
that the exemption from registration afforded by Rule 144
under the Act depends upon the satisfaction of various
-3-
<PAGE>
conditions and that, if applicable, Rule 144 affords the
basis for sale of such shares only in limited amounts.
5.2 Disposition of Shares. Warrington represents, covenants,
and agrees that he will not sell or otherwise dispose of
the shares of Common Stock acquired under this Agreement
in the absence of (a) an effective registration statement
under the Act and any applicable state securities laws,
or (b) an opinion acceptable in form and substance to the
Company from Warrington'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.
5.3 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.
5.4 Compliance with Law and Approval of Regulatory Bodies.
No shares will be issued 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 Common Stock may be listed.
5.5 Receipt of Company SEC Filings and Press Releases.
Warrington has received and had an opportunity to review
true and complete copies of the following documents which
have been filed by the Company with the Securities and
Exchange Commission ("SEC") (such documents are
hereinafter collectively referred to as the "SEC
Filings"): (i) Annual Report on Form 10-K for the year
ended December 31, 1996 (the "Form 10-K"); (ii) the
Company's quarterly report on Form 10-Q for the quarter
ended March 31, 1997; (iii) the Company's quarterly
report on Form 10-Q for the quarter ended June 30, 1997;
(iv) the Company's quarterly report on Form 10-Q for the
quarter ended September 30, 1997; (v) the Company's
current report on Form 8-K dated February 7, 1997; (vi)
the Company's current report on Form 8-K/A dated June 11,
-4-
<PAGE>
1997; (vii) the Company's current report on Form 8-K
dated July 7, 1997; (viii) the Company's current report
on Form 8-K dated January 7, 1998 and, (ix) any and all
other documents which have been filed by the Company pur-
suant to Sections 13(a), 14(a), 14(c), and 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act")
since January 1, 1997. In addition, Warrington has
received and has had an opportunity to review (i) all
information required pursuant to Rule 502(b)(2) of
Regulation D under the Act and (ii) all press releases of
the Company which have been issued since January 1, 1997.
5.6 Availability of SEC Filings Exhibits. Warrington hereby
acknowledges that the Company has provided to
Warrington, at a reasonable time prior to execution of
this Agreement, the following: (i) a list of the material
exhibits to the Company SEC Filings identifying the
contents of each material exhibit; (ii) such material
exhibits upon the written request of Warrington, and
(iii) the opportunity to ask questions and to receive
answers concerning the terms and conditions of this
Agreement and to obtain any additional information which
the Company possesses or can acquire without unreasonable
effort or expense that is necessary to verify the
accuracy of the information furnished pursuant to Section
5.5 and this Section 5.6 hereof.
5.7 Updating of Information. The Company warrants that it
shall provide Warrington with copies of all filings made
by the Company with the SEC pursuant to Sections 13(a),
14(a), 14(c), and 15(d) of the Exchange Act and with all
press releases of the Company from the date hereto to the
date of termination of this Agreement.
5.8 Investment Expertise and Accredited Investor. Warrington
represents and warrants that:
5.8.1 Warrington 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 Common Stock under this
Agreement
5.8.2 Warrington is an "accredited investor" as such
term is defined in Rule 501 of Regulation D as
promulgated under the Act, due to fact that
(a) Warrington is unmarried and has had an
individual income in excess of $200,000 in
each of the two most recent years and has a
reasonable expectation of reaching the same
income level in the current year and/or (b)
Warrington has an individual net worth in
excess of $1,000,000.
5.8.3 If Warrington's income level falls below
$200,000 a year or his individual net worth
falls below $1,000,000, he will immediately
inform the Company of such fact in writing.
-5-
<PAGE>
5.9 Blue Sky Laws. The Common Stock offered hereunder has not
been registered under any applicable state securities
laws and may not be sold or transferred except in
compliance with any applicable state securities laws.
6. Miscellaneous.
6.1 Assignment and Binding Effect. The respective rights and
obligations of the parties under this Agreement shall be
binding upon the parties hereto and their heirs,
executors, administrators, successors and permitted
assigns; provided, however, that the Company may not
assign its rights hereunder without the prior written
consent of Warrington.
6.2 Governing Law. This Agreement shall be governed as to
its validity, interpretation and effect by the laws of
the State of Delaware.
6.3 Entire Agreement; Amendments. This Agreement constitutes
the entire agreement and understanding of the Company and
Warrington with respect to the terms of Warrington's
consultancy relationship with the Company and supersedes
all prior discussions, understandings and agreements with
respect to such consultancy relationship. This Agreement
may not be amended unless by the mutual written consent
of all of the parties hereto.
6.4 Captions. All captions and headings used herein are for
convenient reference only and do not form part of this
Agreement.
6.5 Waiver. The waiver of a breach of any term or provision
of this Agreement shall not operate as, or be construed
to be, a waiver of any other or subsequent breach of this
Agreement.
6.6 Notices. Any notice or communication required or
permitted under this Agreement shall be made in writing
and shall be delivered by hand, or mailed by registered
or certified mail, return receipt requested, or first
class postage prepaid, addressed as follows:
if to Warrington, to: Alfred C. Warrington IV
c/o River Oaks Place
1201 McDuffie, Unit 137
Houston, Texas 77019
if to the Company to: Perma-Fix Environmental
Services, Inc.
1940 Northwest 67th Place
Suite A
Gainesville, Florida 32653
Attn: Dr. Louis F. Centofanti,
Chairman
-6-
<PAGE>
6.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute one and the
same Agreement.
6.8 Legal and Tax Effects. This Agreement is not qualified
under Section 401 of the Internal Revenue Code of 1986,
as amended. Warrington understands that the Company is
not provided any legal or tax advice regarding this
Agreement and that Warrington is to consult with his
legal and tax consultants regarding this Agreement.
6.9 Independent Contractor. Warrington is an independent
contractor and is not, in any manner, an employee or
agent of the Company or any subsidiary of the Company.
Warrington may not bind the Company or any subsidiary of
the Company in any manner whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed this
Consulting Agreement on the date first above written.
/s/ Alfred C. Warrington IV
________________________________
Alfred C. Warrington IV
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By: /s/ Louis Centofanti
_________________________
Dr. Louis F. Centofanti
Chairman of the Board and
Chief Executive Officer
-7-
PERMA-FIX
ENVIRONMENTAL SERVICES, INC.
July 14, 1998
VIA FACSIMILE #011-43-316-8072-392
Mr. Herbert Strauss
RBB Bank Aktiengellschaft
Burgring 16
8010 Graz
Austria
Re: Satisfaction of Penalties
Dear Herbert:
Confirming our agreement and pursuant to the Series 10 Class J
Convertible Preferred Stock transaction, PESI has issued certain
warrants to RBB Bank. The Common Stock purchase warrant for
200,000 shares of Common Stock was principally for the purpose of
and will satisfy any and all penalties which currently exist or
will accrue for the next 120 days relative to the Series 4 Class
D Convertible Preferred Stock transaction, which was subsequently
exchanged for Series 6 and then Series 8 Preferred Stock. It is
understood and agreed that, if the registration statement relative
to said Preferred Stock has not been filed and made effective by the
121st day from the date of this letter, such penalties as set forth
in the Exchange Agreement dated February 28, 1998, shall again
begin to accrue.
Please acknowledge your agreement with the above by signing in the
space provided.
Thank you again for your continued support and interest in our
Corporation.
Sincerely,
/s/ Lou Centofanti/pai
Dr. Louis F. Centofanti
President
cc: Richard T. Kelecy
Irwin H. Steinhorn
c164:pal
Acknowledgment:
/s/ Herbert Strauss
_________________________
Herbert Strauss
1940 N.W. 67TH PLACE, SUITE A, GAINESVILLE, FL 32653
TELE: (352) 373-4200 * FAX (352) 373-0040
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1998
<CASH> $ 508,000
<SECURITIES> 0
<RECEIVABLES> 5,141,000
<ALLOWANCES> 311,000
<INVENTORY> 140,000
<CURRENT-ASSETS> 10,406,000
<PP&E> 17,585,000
<DEPRECIATION> 6,000,000
<TOTAL-ASSETS> 30,934,000
<CURRENT-LIABILITIES> 7,008,000
<BONDS> 4,455,000
0
0
<COMMON> 13,000
<OTHER-SE> 15,135,000
<TOTAL-LIABILITY-AND-EQUITY> 30,934,000
<SALES> 0
<TOTAL-REVENUES> 14,226,000
<CGS> 0
<TOTAL-COSTS> 10,025,000
<OTHER-EXPENSES> 1,035,000
<LOSS-PROVISION> 19,000
<INTEREST-EXPENSE> 269,000
<INCOME-PRETAX> (364,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (364,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (364,000)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
owned by RBB Bank. As discussed above, RBB Bank had previously
acquired from the Company 1,100 shares of Series 1 Preferred and
330 shares of Series 2 Preferred and, as of the date of the
subscription agreement, was the owner of record and beneficially
owned all of the issued and outstanding shares of Series 1
Preferred and Series 2 Preferred, which totaled 378 shares of
Series 1 Preferred and 330 shares of Series 2 Preferred. Pursuant
to the terms of the subscription agreement relating to the Series
3 Preferred, RBB Bank converted all of the remaining outstanding
shares of Series 1 Preferred and Series 2 Preferred into Common
Stock of the Company (920,000 shares) pursuant to the terms,
provisions, restrictions and conditions of the Series 1 Preferred
and Series 2 Preferred, which were in turn purchased by the Company
pursuant to the terms of such subscription agreement. During 1997,
the holder of the Series 3 Preferred converted 1,500 shares of the
Series 3 Preferred into 1,027,974 shares of Common Stock of the
Company. As of the date of this report, no further shares have
been converted. During 1997, accrued dividends for the period July
17, 1996, through June 30, 1997, and dividends on converted shares,
in the combined total of approximately $314,000 were paid in the
form of 178,781 shares of Common Stock of the Company. The accrued
dividends for the period July 1, 1997, through December 31, 1997,
in the amount of approximately $121,000 were paid in January 1998,
in the form of 54,528 shares of Common Stock of the Company.
As further discussed in Note 3, the Securities and Exchange
Commission Staff (the "Staff") announced its position on accounting
for Preferred Stock which is convertible into Common Stock at a
discount from the market rate at the date of issuance, in March of
1997. The Staffs position is that a Preferred Stock dividend
should be recorded for the difference between the conversion price
and the quoted market price of Common Stock as determined at the
date of issuance. To comply with this position, the Company
recognized a dividend in 1996 of approximately $2,000,000 as
related to the above discussed Series 1 Class A, Series 2 Class B,
and Series 3 Class C Preferred Stock.
On or about June 11, 1997, the Company issued to 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 Sections 4(2) and/or 3(b) and/or Rule 506 of Regulation D
under the Securities Acts of 1933, as amended, 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, 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 shall
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) four percent
(4%) of $1,000 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 applicable dividend
declaration date, 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,
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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. A certain number of shares of Common Stock
issuable on the conversion of the Series 4 Preferred and on the
exercise of the Warrants is subject to certain registration rights
pursuant to the Subscription Agreement.
The Company paid fees (excluding legal and accounting) of
$200,000 to an investment banker in connection with the placement
of Series 4 Preferred to RBB Bank and issued to the investment
banking firm that handled the placement two (2) Common Stock
purchase warrants entitling the investment banking firm to purchase
an aggregate of up to 300,000 shares of Common Stock, subject to
certain anti-dilution provisions, with one warrant for a five year
term to purchase up to 200,000 shares at an exercise price of $2.00
per share and the second warrant for a three year term to purchase
up to 100,000 shares of Common Stock at an exercise price of $1.50
per share, subject to certain anti-dilution provisions. Under the
terms of each warrant, the investment banking firm is entitled to
certain registration rights with respect to the shares of Common
Stock issuable on the exercise of each warrant.
The Company negotiated 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 will be 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 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
will be substantially the same as the terms of the Series 4
Preferred. As of December 31, 1997, no shares of the Series 6
Preferred have been converted. The accrued dividends as of this
date, for the Series 4 and Series 6 Preferred, total approximately
$55,000, which were paid in January 1998, in the form of 27,377
shares of Common Stock of the Company.
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
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("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
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.
The Company negotiated an Exchange Agreement with Infinity
("Infinity Fund Exchange Agreement") which provided that the 350
shares of Series 5 Preferred will be 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 will be 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 will be substantially the same as the terms of the Series
5 Preferred. As of December 31, 1997, no shares of the Series 7
Preferred have been converted. The accrued dividends as of this
date, for the Series 5 and Series 7 Preferred, total approximately
$7,000, which were paid in January 1998, in the form of 3,311
shares of Common Stock of the Company.
In connection with the Preferred Stock issuances, the Company
recorded $352,000 of Preferred Stock dividends ($.03 per share)
during the year ended December 31, 1997, of which $314,000 was paid
during 1997 in the form of Common Stock and $38,000 was accrued for
at December 31, 1997. During the year ended December 31, 1996, the
Company recorded $2,145,000 of Preferred Stock dividends ($.24 per
share) of which $2,000,000 represented a convertible discount
feature as discussed in Note 3 and $145,000 was accrued at year-end
and subsequently paid in the form of Common Stock in January 1997.
43
