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PERMA-FIX
ENVIRONMENTAL SERVICES, INC.
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July 25, 2000
Mr. Gary Dixon
Congress Financial Corporation (Florida)
777 Brickell Avenue, Suite 808
Miami, FL 33131
Re: Acquisition of 80% Equity Interest in M&EC
Dear Gary:
Pursuant to our discussion, please find enclosed a copy of the
letter of intent for the purchase by Perma-Fix Environmental
Services, Inc. of an 80% equity interest in East Tennessee
Materials and Energy Corporation ("M&EC"). This represents a
very strategic acquisition of a unique mixed waste facility,
which is located directly on a Department of Energy ("DOE") site
and holds three Broad Spectrum contracts. The combination of the
Gainesville mixed waste facility, DSSI, and now M&EC places Perma-
Fix in a commanding position to capture a large portion of the
mixed waste market. As you may recall, M&EC is in a start-up
mode, currently designing and building the processing equipment,
after having spent a great deal of time and money obtaining the
RAD license and RCRA permits, leasing and preparing the facility
within the K-1200 DOE building and putting a structure in place
to be able to begin processing. Attached for your reference is
the current financial model, as is being used by Ryan, Beck and
Larkspur Capital, and an initial draft of a June 30, 2000
proforma balance sheet.
As a condition of the letter of intent and in an effort to meet
the conditions of the Broad Spectrum contracts for waste
processing deadlines, Perma-Fix agreed to loan M&EC $50,000 at
the date of signing the letter of intent and certain additional
funds over the next several months, as required to complete the
start-up. A portion of the `use of funds' from the equity
offering was specifically for the purpose of building the
equipment, $2.0 million in the initial models, which has now been
expanded for an additional $4.0 million of start-up and working
capital funds, both of which are to now be funded from the
proposed $25.0 million of equity/sub-debt offering. All funds
loaned by PESI to M&EC will be documented on a promissory note
and security agreement to be repaid over a proposed three-year
period, with interest only (at prime plus 1 3/4%) during the first
year. As discussed, a portion of the $750,000 RBB Bank bridge
loan was intended to fund such M&EC acquisition activities.
1940 N.W. 67TH PLACE, SUITE A * GAINESVILLE, FL 32653 *
TEL. (352) 373-4200 * FAX (352) 373-0040
<PAGE>
Pursuant to the terms of our loan and security agreement with
Congress Financial, we would like to request your approval and
consent to loan to M&EC the initial $50,000, as contained in the
letter of intent, and certain additional funds as deemed
appropriate by management so as to initiate processing under the
Broad Spectrum contract.
Please advise if you have any questions or concerns on the above.
Sincerely,
/s/ Richard T. Kelecy
Richard T. Kelecy
Chief Financial Officer
Approval and Consent:
/s/ Gary Dixon VP
_________________________
Gary Dixon
7/31/00
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Date
RTK/sm
cc: Dr. Louis F. Centofanti
Enclosure(s)
