-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CnTXJLr6ncYnr0FiiG3R7brhxdDJJjYT0NdsYb1wnxngLLxslECD8rXHuwamVQfC LVQJsDVYNWtBbwP6Y0kNYQ== 0000948600-96-000046.txt : 19960918 0000948600-96-000046.hdr.sgml : 19960918 ACCESSION NUMBER: 0000948600-96-000046 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960819 SROS: BSE SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PERMA FIX ENVIRONMENTAL SERVICES INC CENTRAL INDEX KEY: 0000891532 STANDARD INDUSTRIAL CLASSIFICATION: 4955 IRS NUMBER: 581954497 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11596 FILM NUMBER: 96617427 BUSINESS ADDRESS: STREET 1: 1940 NORTHWEST 67TH PLACE STREET 2: SUITE A CITY: GAINESVILLE STATE: FL ZIP: 32653 BUSINESS PHONE: 3523951351 MAIL ADDRESS: STREET 1: 1940 NW 67TH PL STREET 2: SUITE A CITY: GAINESVILLE STATE: FL ZIP: 32653 10-Q 1 ================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ______________________ Form 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 _______________________ or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to _________ Commission File No. 1-11596 ______________ PERMA-FIX ENVIRONMENTAL SERVICES, INC. (Exact name of registrant as specified in its charter) Delaware 58-1954497 (State or other jurisdiction (IRS Employer of incorporation or organization Identification Number) 1940 N.W. 67th Place, Gainesville, FL 32653 (Address of principal executive offices) (Zip Code) (Registrant's telephone number) (352) 373-4200 (Registrant's telephone number) N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ______ ______ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the latest practical date. Class Outstanding at August 13, 1996 _____ _____________________________ Common Stock, $.001 Par Value 9,289,845 (excluding _____________________________ 920,000 shares held as treasury stock) ___________________ =================================================================
PERMA-FIX ENVIRONMENTAL SERVICES, INC. INDEX Page No. PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - June 30, 1996 and December 31, and December 31, 1995 . . . . . . . 4 Consolidated Statements of Operations - Three Months and Six Months Ended June 30, 1996 and 1995. . . . . . . . . . . . . . 6 Consolidated Statements of Cash Flows - Six Months Ended June 30, 1996 and 1995 . . . . . . . . . . . 7 Notes to Consolidated Financial Statements. . . . . . . . . . . . . 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . 13 PART II OTHER INFORMATION Item 1. Legal Proceedings. . . . . . . . . . . . 20 Item 5. Other Events . . . . . . . . . . . . . . 20 Item 6. Exhibits . . . . . . . . . . . . . . . . 21
PERMA-FIX ENVIRONMENTAL SERVICES, INC. CONSOLIDATED FINANCIAL STATEMENTS (unaudited) PART I, ITEM 1 The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures which are made are adequate to make the information presented not misleading. Further, the consolidated financial statements reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position and results of operations as of and for the periods indicated. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. The results of operations for the six months ended June 30, 1996 are not necessarily indicative of results to be expected for the fiscal year ending December 31, 1996.
PERMA-FIX ENVIRONMENTAL SERVICES, INC. CONSOLIDATED BALANCE SHEETS June 30, (Amounts in Thousands, 1996 December 31, Except for Share Amounts) (Unaudited) 1995 ___________________________________________________________________ ASSETS Current assets: Cash and cash equivalents $ 172 $ 201 Restricted cash 406 380 Accounts receivable, net of allowance for doubtful accounts of $392 5,489 5,031 Inventories 106 183 Prepaid expense 818 414 Other receivables 141 134 _________ ________ Total current assets 7,132 6,343 Property and equipment: Building and land 5,037 6,055 Equipment 5,813 5,874 Vehicles 1,372 1,589 Leasehold improvements 143 143 Office furniture and equipment 1,217 1,252 Construction in progress 2,297 1,435 _________ ________ 15,879 16,348 Less accumulated depreciation (3,909) (3,378) _________ ________ Net property and equipment 11,970 12,970 Other assets: Permits, net of accumulated amorti- zation of $483 and $366, respectively 3,993 4,036 Goodwill, net of accumulated amorti- zation of $362 and $289, respectively 4,919 4,992 Covenant not to compete, net of accum- ulated amortization of $343 and $304, respectively 48 87 Other assets 417 445 ________ ________ Total assets $ 28,479 $ 28,873 ======== ========
The accompanying notes are an integral part of these consolidated financial statements.
PERMA-FIX ENVIRONMENTAL SERVICES, INC. CONSOLIDATED BALANCE SHEETS, CONTINUED June 30, (Amounts in Thousands, 1996 December 31, Except for Share Amounts) (Unaudited) 1995 ___________________________________________________________________ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,433 $ 5,402 Accrued expenses 3,352 2,951 Revolving loan and term note facility 500 5,259 Equipment financing agreement 608 1,778 Current portion of long-term debt 279 325 _________ _______ Total current liabilities 9,172 15,715 Long-term debt 5,746 1,116 Environmental accruals 3,327 3,063 Accrued closure costs 1,068 1,041 _________ _______ Total long-term liabilities 10,141 5,220 Commitments and contingencies (Note 3) - - Stockholders' equity: Preferred stock, $.001 par value; 2,000,000 shares authorized, 708 and 0 shares issued and outstanding, respectively - - Common stock, $.001 par value; 20,000,000 shares authorized, 9,289,845 and 7,872,384 shares issued and outstanding, respec- tively 9 8 Redeemable warrants 269 269 Additional paid-in capital 23,183 21,546 Accumulated deficit (14,295) (13,885) ________ _______ Total stockholders' equity 9,166 7,938 ________ _______ Total liabilities and stockholders' equity $ 28,479 $ 28,873 ======== ========
The accompanying notes are an integral part of these consolidated financial statements.
PERMA-FIX ENVIRONMENTAL SERVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, (Amounts in Thousands, __________________________ Except for Share Amounts) 1996 1995 ___________________________________________________________________ Net revenues $ 8,178 $ 9,381 Cost of goods sold 5,634 7,123 ________ ________ Gross profit 2,544 2,258 Selling, general and administrative 1,682 2,400 Depreciation and amortization 558 587 Nonrecurring charges - 705 ________ ________ Income (loss) from operations 304 (1,434) Other income (expense): Interest income 20 14 Interest expense (227) (241) Other 85 (36) ________ ________ Net income (loss) $ 182 $ (1,697) ======== ======== Net income (loss) per share $ .02 $ (.25) ======== ======== Weighted average number of common and common equivalent shares outstanding 8,470 6,825 ======== ========
The accompanying notes are an integral part of these consolidated financial statements.
PERMA-FIX ENVIRONMENTAL SERVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Six Months Ended June 30, (Amounts in Thousands, __________________________ Except for Share Amounts) 1996 1995 ___________________________________________________________________ Net revenues $ 15,750 $ 18,004 Cost of goods sold 11,398 13,761 ________ ________ Gross profit 4,352 4,243 Selling, general and administrative 3,424 4,099 Depreciation and amortization 1,177 1,143 Nonrecurring charges - 705 ________ ________ Income (loss) from operations (249) (1,704) Other income (expense): Interest income 40 24 Interest expense (489) (439) Other 288 45 ________ ________ Net income (loss) $ (410) $ (2,074) ======== ======== Net income (loss) per share $ (.05) $ (.30) ======== ======== Weighted average number of common common equivalent shares out- standing 8,171 6,811 ======== ========
The accompanying notes are an integral part of these consolidated financial statements.
PERMA-FIX ENVIRONMENTAL SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended June 30, (Amounts in Thousands, __________________________ Except for Share Amounts) 1996 1995 ___________________________________________________________________ Cash flows from operating activities: Net loss $ (592) $ (2,074) Adjustments to reconcile net loss to cash used in operations: Depreciation and amortization 619 1,143 Divestiture reserve - 450 Provision for bad debt and other reserves 12 - Gain on sale of plant, property and equipment (126) 10 Changes in assets and liabilities: Accounts receivable (127) (135) Prepaid expenses, inventories and other receivables (638) (815) Accounts payable and accrued expenses 468 (55) ________ ________ Net cash used in operations (384) (816) Cash flows from investing activities: Purchases of property and equipment, net (593) (951) Proceeds from sale of property and equipment 1,196 - Change in restricted cash, net (33) (299) Other investing (27) (289) ________ _________ Net cash provided by (used in) investing activities 576 (1,240) Cash flows from financing activities: Borrowings (repayments) from revolving loan and term note (877) 2,060 Borrowings on long-term debt 57 102 Principal repayments on long-term debt (793) (262) Proceeds from issuance of stock 1,307 - ________ ________ Net cash provided by financing activities (306) 1,900 Decrease in cash and cash equivalents (114) (156) Cash and cash equivalents at beginning of period (793) (262) ________ ________ Cash and cash equivalents at end of period $ 87 $ 334 ======== ======== ________________________________________________________________ Supplemental disclosure: Interest paid $ 263 $ 183 ======== ======== Income taxes paid $ - $ - ======== ========
The accompanying notes are an integral part of these consolidated financial statements. PERMA-FIX ENVIRONMENTAL SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1996 (Unaudited) Reference is made herein to the notes to consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. 1. Summary of Significant Accounting Policies __________________________________________ The Company's accounting policies are as set forth in the notes to consolidated financial statements referred to above. Certain amounts in prior years' consolidated financial statements have been reclassified to conform to current period financial statement presentations. As discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 1995, net loss per share has been presented using the weighted average number of common and common equivalent shares outstanding. Net loss per share has been restated, in accordance with Accounting Principles Board Opinion No. 15, for the period ended March 31, 1995, to reflect the issuance of contingent shares to Quadrex in November of 1995. Fully diluted net income per share has not been presented as it is not materially different from the primary net income per share or has been determined to be anti-dilutive for certain other periods.
2. Long-Term Debt ______________ Long-term debt consists of the following at June 30, 1996 and December 31, 1995 (in thousands): June 30, December 31, 1996 1995 _________ _________ Long-term debt and notes payable: Revolving loan and term note facility $ 4,864 $ 5,259 Equipment financing agreement 1,553 1,778 Various mortgage, promissory and notes payable 716 1,441 _________ _________ 7,133 8,478 Less current portion: Revolving loan and term note facility 500 5,259 Equipment financing agreement 608 1,778 Various mortgage, promissory and notes payable 279 325 _________ _________ $ 5,746 $ 1,116 ========= =========
On January 27, 1995, the Company, as parent and guarantor, and all direct and indirect subsidiaries of the Company, as co- borrowers and cross-guarantors, entered into a Loan and Security Agreement ("Agreement") with Heller Financial, Inc. ("Heller"). The Agreement provides for a term loan in the amount of $2,500,000, which requires principal repayments based on a five-year level principal amortization over a term of 36 months, with monthly principal payments of $42,000. Payments commenced on February 28, 1995, with a final adjusted balloon payment in the amount of $846,000 due on January 31, 1998. The Agreement also provides for a revolving loan facility in the amount of $7,000,000. At any point in time the aggregate available borrowings under the facility are reduced by any amounts outstanding under the term loan and are also subject to the maximum credit availability as determined through a monthly borrowing base calculation, equal to 80% of eligible accounts receivable accounts of the Company as defined in the Agreement. The termination date on the revolving loan facility is also the third anniversary of the closing date. As previously disclosed, during the second quarter of 1995, the Company became in violation of certain of the restrictive financial ratio covenants of the Agreement. During the second quarter of 1996, the Company negotiated and subsequently entered into an amendment ("Third Amendment") to the Loan and Security Agreement, whereby, among other things, Heller waived the existing events of default, amended the financial covenants and amended certain other provisions of the Loan Agreement as set forth therein. Applicable interest rate provisions were also amended, whereby the term loan shall bear interest at a rate of interest per annum equal to the base rate plus 2 1/4%, and the revolving loan shall bear interest equal to the base rate plus 2%. The Amendment also contains a performance price adjustment which provides that upon the occurrence of an "equity infusion" (see Note 5), applicable interest rates on the loans shall be reduced, in each instance by 1/2% per annum. Also, during the second quarter of 1996, Heller extended to the Company an overformula line in an amount not to exceed $250,000, for a period ending the earliest of 90 days after the date of first advance or September 30, 1996. Pursuant to the above discussed Amendment, said overformula line terminated upon the Company's receipt of the equity infusion. As disclosed at December 31, 1995, Heller had agreed to forebear from exercising any rights and remedies under the Agreement as a result of these previous defaults and continued to make normal advances under the revolving loan facility. However, in compliance with generally accepted accounting principles, the Company, at December 31, 1995, reclassified as a current liability $3,882,000 outstanding under the Agreement that would otherwise have been classified as long-term debt. As a result of the above discussed Amendment, $4,364,000 has been reclassified as long-term debt at June 30, 1996. Pursuant to the initial agreement, the term loan bears interest at a floating rate equal to the base rate (prime) plus 1 3/4% per annum The revolving loan bears interest at a floating rate equal to the base rate (prime) plus 1 1/4% per annum. The loans also contain certain closing, management and unused line fees payable throughout the term. As discussed above, in conjunction with the loan amendment, applicable interest rates were amended. However, a default rate was applied due to the financial covenant default discussed above, effective August 21, 1995 through the date of amendment, and therefore the Heller obligations bore interest at the above noted effective rate plus 2.0%. Both the revolving loan and term loan were prime based loans at June 30, 1996, bearing interest at a rate of 11.50% and 12.00%, respectively. As of June 30, 1996, the borrowings under the revolving loan facility total $3,226,000, an increase of $50,000 from the December 31, 1995 balance of $3,176,000, with borrowing availability of $227,000, excluding the $250,000 overformula line as discussed above. The balance on the term loan totalled $1,638,000, as compared to $2,083,000 at December 31, 1995. Total indebtedness under the Heller Agreement as of June 30, 1996 was $4,864,000, a reduction of $395,000 from the December 31, 1995 balance of $5,259,000. During October 1994, the Company entered into a $1,000,000 equipment financing agreement with Ally Capital Corporation ("Ally"), which provides lease commitments for the financing of certain equipment through June 1995. During 1995, the Company negotiated an increase in the total lease commitment to $1,600,000. The agreement provides for an initial term of 42 months, which may be extended to 48, and bears interest at a fixed interest rate of 11.3%. As of December 31, 1995, the Company had utilized $1,496,000 of this credit facility to purchase capital equipment and subsequently drew down an additional $57,000 in January 1996, bringing the total financing under this agreement to $1,553,000. In conjunction with a 1994 acquisition, the Company also assumed $679,000 of debt obligations with Ally Capital Corporation, which had terms expiring from September 1997 through August 1998, at a rate ranging from 10.2% to 13.05%. As previously disclosed, at December 31, 1995, the Company was not in compliance with the minimum tangible net worth covenant of this agreement and Ally had waived compliance with this covenant and no acceleration was demanded by the lender. However, in compliance with generally accepted accounting principles, the Company, at December 31, 1995, reclassified as a current liability $1,103,000 outstanding under the agreement, which would otherwise have been classified as long- term debt. During the second quarter of 1996, the Company negotiated and subsequently entered into an amendment to the equipment financing agreement, whereby, among other things, Ally waived the existing event of default and amended the required covenants. The outstanding balance on this equipment financing agreement at June 30, 1996 is $1,553,000, as compared to $1,778,000 at December 31, 1995. As a result of the above discussed amendment, $945,000 has been classified as long-term debt at June 30, 1996. 3. Commitments and Contingencies _____________________________ Hazardous Waste In connection with the Company's waste management services, the Company handles both hazardous and non-hazardous waste which it transports to its own or other facilities for destruction or disposal. As a result of disposing of hazardous substances, in the event any cleanup is required, the Company could be a potentially responsible party for the costs of the cleanup notwithstanding any absence of fault on the part of the Company. Legal During 1995, certain subsidiaries of the Company were sued by Chief Supply Corporation ("Chief Supply") in three (3) causes of action pending in the United States District Court, Northern District of Oklahoma, in cases styled Chief Supply Corporation v. Perma-Fix of Dayton, Inc.; Chief Supply Corporation v. Perma-Fix of Florida, Inc.; and Chief Supply Corporation v. Perma-Fix of Memphis, Inc. Chief Supply was alleging that the subsidiaries owe to Chief Supply an aggregate of approximately $292,000 (the "Oklahoma Litigation"). Perma-Fix of Memphis, Inc. asserted a counterclaim for receivables due from Chief Supply for services rendered by two subsidiaries of the Company of approximately $134,000. In addition, these subsidiaries have asserted certain defenses regarding the performance of services by Chief Supply. Reservoir Capital Corporation ("Reservoir") alleged that substantially the same receivables for which Chief Supply has sued the subsidiaries of the Company were factored and assigned by Chief Supply to Reservoir, and in March 1996, Reservoir brought suit against the same subsidiaries of the Company sued by Chief Supply for collection of substantially the same receivables Chief Supply sued the subsidiaries of the Company, plus exemplary damages. The suit brought by Reservoir is styled Reservoir Capital Corporation v. Perma-Fix of Dayton, Inc., et al., pending in the United States District Court, Southern District of Ohio (the "Ohio Litigation"). During the second quarter of 1996, the parties settled the Oklahoma Litigation and the Ohio Litigation, and, in connection therewith, the subsidiaries of the Company have agreed to pay Chief in the Oklahoma Litigation $200,000 over an eighteen (18) month period and Reservoir has dismissed the Ohio Litigation. All or any portion of this monthly settlement payment may, at the sole discretion of the Company, take the form of credits issued to the Company by Chief as a result of waste that the Company delivers to Chief for treatment. In December 1995, Essex Waste Management, Inc. ("Essex") sued the Company and certain subsidiaries of the Company alleging an aggregate of approximately $358,000 was due to it by the Company and certain subsidiaries of the Company for services rendered by Essex for these subsidiaries or which were used by a subsidiary of the Company. During the second quarter of 1996, the parties agreed to a settlement in this matter in which the Company has agreed to pay to Essex $180,000 over a thirty-six (36) month period. In addition to cash payments, the Company shall provide $120,000 of credit to Essex for disposal services, subject to certain conditions and restrictions. In addition to the above matters and in the normal course of conducting its business, the Company is involved in various other litigation. The Company is not a party to any litigation or governmental proceeding which its management believes could result in any judgments or fines against it that would have a material adverse affect on the Company's financial position, liquidity or results of operations. Permits The Company is subject to various regulatory requirements, including the procurement of requisite licenses and permits at certain of its treatment, storage and/or disposal facilities. These licenses and permits are subject to periodic renewal without which the Company's operations would be adversely affected. The Company anticipates that, once a license or permit is issued with respect to a facility, the license or permit will be renewed at the end of its term if the facility's operations are in compliance with the applicable regulatory requirements. Accrued Closure Costs and Environmental Liabilities The Company maintains closure cost funds to insure the proper decommissioning of its RCRA facilities upon cessation of operations. Additionally, in the course of owning and operating on-site treatment, storage and disposal facilities, the Company is subject to corrective action proceedings to restore soil and/or groundwater to its original state. These activities are governed by federal, state and local regulations and the Company maintains the appropriate accruals for restoration. The Company has recorded accrued liabilities for estimated closure costs and identified environmental remediation costs. Insurance The business of the Company exposes it to various risks, including claims for causing damage to property or injuries to persons or claims alleging negligence or professional errors or omissions in the performance of its services, which claims could be substantial. The Company carries general liability insurance which provides coverage in the aggregate amount of $2 million and an additional $6 million excess umbrella policy and carries $1 million per occurrence and $2 million annual aggregate of errors and omissions/professional liability insurance coverage, which includes tank removal and pollution control coverage. The Company also carries specific pollution legal liability insurance for operations involved in the waste management services segment for property damages or bodily injuries occurring off-site of the Company's facilities due to release of contaminates from the Company's facilities, with such insurance providing coverages ranging from a $2 million annual aggregate to $8 million annual aggregate, for certain facilities. 4. Stock Issuance ______________ As previously disclosed, the Company issued, during February 1996, 1,100 shares of newly created Series 1 Class A Preferred Stock ("Series 1 Preferred") at a price of $1,000 per share, for an aggregate sales price of $1,100,000, and paid a placement fee of $176,000. During February 1996, the Company also issued 330 shares of newly created Series 2 Class B Convertible Preferred Stock ("Series 2 Preferred") at a price of $1,000 per share, for an aggregate sales price of $330,000, and paid a placement fee of $33,000. The Series 1 Preferred and Series 2 Preferred accrued dividends on a cumulative basis at a rate per share of five percent (5%) per annum payable quarterly, at the option of the Company, in either cash or by the issuance of shares of common stock. All dividends on the Series 1 Preferred and Series 2 Preferred were paid in common stock. The Series 1 Preferred and Series 2 Preferred were convertible, at any time, commencing forty-five (45) days after issuance into shares of the Company's common stock at a conversion price equal to the aggregate value of the shares of the Preferred Stock being converted, together with all accrued but unpaid dividends thereon, divided by the "Average Stock Price" per share (the "Conversion Price"). The Average Stock Price means the lesser of (i) seventy percent (70%) of the average daily closing bid prices of the common stock for the period of five (5) consecutive trading days immediately preceding the date of subscription by the holder or (ii) seventy percent (70%) of the average daily closing bid prices of the common stock for a period of five (5) consecutive trading days immediately preceding the date of conversion of the Preferred Stock. During the second quarter of 1996, a total of 722 shares of the Series 1 Preferred were converted into approximately 1,035,000 shares of the Company's common stock and the associated accrued dividends were paid in the form of approximately 15,000 shares of the Company's common stock. Pursuant to a subscription and purchase agreement for the issuance of Series 3 Class C Convertible Preferred Stock, the remaining 378 shares of the Series 1 Preferred and the 330 shares of the Series 2 Preferred were converted during July 1996 into 920,000 shares of the Company's common stock. By terms of the subscription agreement, the 920,000 shares of common stock were purchased by the Company at a purchase price of $1,770,000. See Note 5 for additional information on this subscription agreement. As a result of such conversions, the Series 1 Preferred and the Series 2 Preferred are no longer outstanding. The Company issued, during the second quarter of 1996, 133,333 shares of common stock pursuant to a first quarter stock purchase agreement between the Company and Dr. Louis F. Centofanti, Chairman of the Board and Chief Executive Officer of the Company. The Company also entered into a second stock purchase agreement with Dr. Centofanti, whereby the Company agreed to sell 76,190 shares of its common stock for the purchase price of $100,000. 5. Subsequent Event ________________ On July 17, 1996, the Company issued 5,500 shares of newly- created Series 3 Class C Convertible Preferred Stock ("Series 3 Preferred") at a price of $1,000 per share, for an aggregate sales price of $5,500,000, and paid placement and closing fees as a result of such transaction of approximately $360,000. As part of the sale of the Series 3 Preferred, the Company also issued two (2) common stock purchase warrants entitling the Subscriber to purchase, after December 31, 1996, until July 18, 2001, an aggregate of up to 2,000,000 shares of common stock, with 1,000,000 shares exercisable at an exercise price equal to $2.00 per share and 1,000,000 shares exercisable at an exercise price equal to $3.50 per share. The Series 3 Preferred accrues dividends on a cumulative basis at a rate of six percent (6%) per annum, and is payable semi-annually when and as declared by the Board of Directors. Dividends shall be paid, at the option of the Company, in the form of cash or common stock of the Company. The holder of the Series 3 Preferred may convert into common stock of the Company up to (i) 1,833 shares on and after October 1, 1996, (ii) 1,833 shares on and after November 1, 1996, and (iii) the balance on and after December 1, 1996. The conversion price shall be the product of (i) the average closing bid quotation for the five (5) trading days immediately preceding the conversion date multiplied by (ii) seventy-five percent (75%). The conversion price shall be a minimum of $.75 per share (which minimum price may be reduced upon the occurrence of certain limited events) or a maximum of $1.50 per share. The common stock issuable on the conversion of the Series 3 Preferred is subject to certain registration rights pursuant to the subscription agreement. The subscription agreement also provides that the Company utilize $1,770,000 of the net proceeds to purchase from the Subscriber 920,000 shares of the Company's common stock owned by the Subscriber. As discussed in Note 4 above, the Subscriber had previously acquired from the Company 1,100 shares of Series 1 Class A Preferred Stock, par value $.001 per share ("Series 1 Preferred"), and 330 shares of Series 2 Class B Convertible Preferred Stock, par value $.001 per share ("Series 2 Preferred"). As of the date of the subscription agreement, the Subscriber had converted 722 shares of such Series 1 Preferred into common stock pursuant to the terms of such Series 1 Preferred and had not converted into common stock any shares of Series 2 Preferred. The Subscriber was the owner of record and beneficially owned all of the issued and outstanding shares of Series 1 Preferred and Series 2 Preferred, which totalled 378 shares of Series 1 Preferred and 330 shares of Series 2 Preferred. At the closing, the Subscriber converted all of the outstanding shares of Series 1 Preferred and Series 2 Preferred into common stock of the Company (920,000 shares) pursuant to the terms, provisions, restrictions and conditions of the Series 1 Preferred and Series 2 Preferred, which were in turn purchased by the Company.
PERMA-FIX ENVIRONMENTAL SERVICES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART I, ITEM 2 Results of Operations The table below should be used when reviewing management's discussion and analysis for the three and six months ended June 30, 1996 and 1995 (in thousands): Three Months Ended June 30, _________________________________ Consolidated 1996 % 1995 % ____________ _______ _____ _______ _____ Net Revenues $ 8,178 100.0 $ 9,381 100.0 Cost of Goods Sold 5,634 68.9 7,123 75.9 ______ _____ ______ _____ Gross Profit 2,544 31.1 2,258 24.1 Selling, General and Administrative 1,682 20.6 2,400 25.6 Depreciation/Amortization 558 6.8 587 6.3 Nonrecurring Charges - - 705 7.5 ______ _____ ______ ______ Income (loss) from Operations $ 304 3.7 $(1,434) (15.3) ====== ===== ====== ====== Interest Expense 227 2.8 241 2.6 Six Months Ended June 30, _________________________________ Consolidated 1996 % 1995 % ____________ _______ _____ _______ _____ Net Revenues $15,750 100.0 $18,004 100.0 Cost of Goods Sold 11,398 72.4 13,761 76.4 ______ _____ ______ _____ Gross Profit 4,352 27.6 4,243 23.6 Selling, General and Administrative 3,424 21.7 4,099 22.8 Depreciation/Amortization 1,177 7.5 1,143 6.3 Nonrecurring Charges - - 705 3.9 ______ _____ ______ ______ Income (loss) from Operations $ (249) (1.6) $(1,704) (9.5) ====== ====== ====== ====== Interest Expense 489 3.1 439 2.4
Summary -- Quarter Ended June 30, 1996 and 1995 _______________________________________________ Consolidated net revenues decreased to $8,178,000 from $9,381,000 for the three month period ended June 30, 1996, as compared to 1995. This 12.8% decrease, or $1,203,000, reflects reduced revenues within both the waste management and consulting engineering segments of $1,166,000 and $37,000, respectively. As reflected, the most significant decrease was within the waste management segment and is a result of the impact of the various restructuring programs initiated during 1995, which resulted in the consolidation and closure of certain offices, the divestiture of a subsidiary and the disruption resulting from a major capital expansion at one facility, in conjunction with the Company's continued focus on select markets. Consolidated revenues for the six months ended June 30, 1996 and 1995 were $15,750,000 and $18,004,000, respectively, reflecting a $2,254,000 decrease. This decrease is a direct result of the above discussed restructuring program, again focused on the closure or divestiture of unprofitable operations during 1995 and early 1996. Also, as a result of industry and weather related issues during the first quarter, revenues were negatively impacted beyond normal seasonality for this typically down period. Costs of goods sold decreased to $5,634,000 from $7,123,000 for the quarter ended June 30, 1996. The $1,489,000 decrease is primarily attributable to the reduced revenue during the second quarter of 1996, as discussed above, and the cost benefit associated with the various restructuring programs and the closure or divestiture of non-performing entities. As a percent of revenue, costs of goods sold decreased to 68.9% in the second quarter of 1996, compared to 75.9% in the corresponding second quarter of 1995. This consolidated decrease in cost of goods sold as a percent of revenue reflects improvements in both the waste management and consulting engineering segments, resulting from the continued emphasis on cost containment across all Company segments. Consolidated cost of goods sold for the six months ended June 30, 1996 was $11,398,000, a reduction of $2,363,000 from the 1995 total of $13,761,000. Cost of goods sold as a percent of revenue also decreased for the six month period of 1996 to 72.4% from a percentage of 76.4% for 1995. The Company continued to see improvements in the consolidated gross profit as a percentage of net revenues, with the first quarter of 1996 improving by approximately one (1) percentage point to 23.9% (a typically low quarter) and the second quarter reflecting an improvement of seven (7) percentage points, to 31.1%, which again reflects the impact of the restructuring and cost savings programs. Selling, general and administrative expenses decreased to $1,682,000 from $2,400,000 for the quarter ended June 30, 1996. As a percent of revenue, selling, general and administrative expenses decreased to 20.6% for the quarter ended June 30, 1996 compared to 25.6% for the same period in 1995. This decrease of $718,000 reflects (i) the direct cost or overhead reduction resulting from the closure or divestiture of certain operations, which reflects a reduction of approximately $300,000 for the second quarter, (ii) the reduced corporate overhead resulting from the restructuring program and significant downsizing of the corporate costs, finalized during the first quarter of 1996, which reflects a reduction of approximately $348,000 for the second quarter, and (iii) the overall corporate focus on cost reductions and efficiencies at all levels. Selling, general and administrative expenses also decreased for the six months ended June 30, 1996 to $3,424,000 from $4,099,000 for the same period of 1995. This decrease of $675,000 reflects again the above discussed second quarter reductions and improvements partially offset by the first quarter increase in sales and marketing costs incurred by the Company as it strengthens and expands its efforts in this area. As a percent of sales, selling, general and administrative costs improved from 22.8% in 1995 to 21.7% in 1996, with significant improvement demonstrated during the second quarter. Interest expense was $227,000 for the quarter ended June 30, 1996, as compared to $241,000 for the same period of 1995. The decrease in interest expense of $14,000 for the second quarter is principally a result of the reduced interest expense associated with the revolving loan and term note facility, reflecting lower average loan balances partially offset by increased interest rates resulting from the default interest rate (see Note 2 of the Notes to Consolidated Financial Statements). This decrease was partially offset by the additional interest expense resulting from new equipment financing agreements entered into with Ally Capital Corporation throughout 1995 and early 1996. Interest expense for the six months ended June 30, 1996 totaled $489,000, as compared to $439,000 for the same period of 1995. This increase of $50,000 is principally a result of the additional equipment financing entered into with Ally Capital Corporation and other lease financing groups throughout 1995. During the second quarter of 1995, the Company recorded several one-time, nonrecurring charges totaling $705,000 for certain unrelated events. Of this amount, $450,000 represented a divestiture reserve as related to the sale of the Company's wholly- owned subsidiary, Re-Tech Systems, Inc., a post-consumer plastics recycling company. This sale transaction was closed effective March 15, 1996. The Company also recorded during the second quarter of 1995 one-time charges totaling $255,000 as related to various restructuring programs, which included a one-time charge of $180,000 to provide for costs, principally severance and lease termination fees, associated with the restructuring of the Perma- Fix, Inc. service center group. This program entailed primarily the consolidation of offices in conjunction with the implementation of a regional service center concept and the closure of seven (7) of nine (9) offices. A one-time charge of $75,000 was also recorded to provide for consolidation costs, principally severance, associated with the restructuring of the Southeast Region, which is comprised of Perma-Fix of Florida, Inc. and Perma-Fix of Ft. Lauderdale, Inc. Other income for the quarter ended June 30, 1996 was $85,000, as compared to expense of $36,000 for the quarter ended June 30, 1995. Other income for the six months ended June 30, 1996 was $288,000 as compared to $45,000 for the same period of 1995. This increase of $243,000 was principally a result of the gain on the sale of certain nonproductive assets within the waste management services segment.
The table below reflects activity for the three and six months ended June 30, 1996 and 1995, which should be used in conjunction with the management's discussion and analysis by segment (in thousands): Waste Management Consulting Services Engineering Three Months Ended ___________________________ ____________________________ June 30, 1996 % 1995 % 1996 % 1995 % __________________ ______ _____ ______ _____ ______ _____ ______ _____ Net Revenues $6,675 100.0 $7,841 100.0 $1,503 100.0 $1,540 100.0 Cost of Goods Sold 4,555 68.2 5,960 76.0 1,079 71.8 1,163 75.5 ______ _____ ______ _____ ______ _____ ______ _____ Gross Profit $2,120 31.8 $1,881 24.0 $ 424 28.2 $ 377 24.5 ====== ===== ====== ===== ====== ===== ====== ===== Waste Management Consulting Services Engineering Six Months Ended ___________________________ ____________________________ June 30, 1996 % 1995 % 1996 % 1995 % __________________ ______ _____ ______ _____ ______ _____ ______ _____ Net Revenues $13,071 100.0 $14,881 100.0 $2,679 100.0 $3,123 100.0 Cost of Goods Sold 9,417 72.0 11,285 75.8 1,981 73.9 2,476 79.3 ______ _____ ______ _____ ______ _____ ______ _____ Gross Profit $3,654 28.0 $ 3,596 24.2 $ 698 26.1 647 20.7 ====== ===== ====== ===== ====== ===== ====== =====
Waste Management Services -- Quarter Ended June 30, 1996 and 1995 _________________________________________________________________ The waste management services segment is engaged in on- and off-site treatment, storage, disposal and blending of a wide variety of by-products and industrial and hazardous wastes. This segment competes for materials and services with numerous regional and national competitors to provide comprehensive and cost- effective waste management services to a wide variety of customers in the Midwest, Southeast and Southwest regions of the country. In 1996, the Company operated and maintained facilities or businesses in the waste by-product brokerage, on-site treatment and stabilization, and off-site blending, treatment and disposal industries. During 1995, the Company initiated a re-engineering of the waste management services segment, which included the detail review of all operations and modification of its approach to soliciting new customers while maintaining its existing customer base and, at the same time, expanding its marketing efforts. In re-engineering the waste management services segment, the Company made two key decisions during 1995. The first was the elimination of a majority of its service center locations. In June of 1995, the Company closed seven (7) of nine (9) service centers, leaving its Albuquerque office operating due to its continued profitability and the future prospects thereof, and to operate its Tulsa, Oklahoma service center as part of other waste management operations of the Company. The second decision was to exit the toll grinding of post-consumer and industrial plastics and resins, performed through its wholly-owned subsidiary, Re-Tech Systems, Inc. in Houston, Texas. The decision to sell this business entity was a continued effort to focus the Company on consulting engineering and off-site environmental services, both of which demonstrate higher gross margins than toll grinding. Effective March 15, 1996, the Company completed the sale of Re-Tech Systems, Inc. The sale transaction included all real and personal property of the subsidiary, for a total consideration of $970,000. Net cash proceeds to the Company were approximately $320,000, after the repayment of a mortgage obligation of $582,000 and certain other closing and real estate costs. In conjunction with this transaction, the Company also made a prepayment of $50,000 to Heller Financial, Inc. for application to the term loan. As previously disclosed, the Company recorded during the second quarter of 1995, a nonrecurring charge of $450,000 for the estimated loss on the sale of this subsidiary, which was recorded as an asset reduction. However, the Company recognized, during the first quarter of 1996, a small gain on this sale after the asset write-down. The Company sold total assets of approximately $1,346,000, while retaining certain assets totalling approximately $94,000 and certain liabilities totalling approximately $48,000. Waste management services' revenue was $6,675,000 for the quarter ended June 30, 1996. During the same period in 1995, waste management services' revenue was $7,841,000. This decrease of $1,166,000, or 14.9%, is principally a result of the above discussed re-engineering program, in conjunction with the closing of the service center locations, the disruption of one facility currently undergoing major capital expansion, and the impact of the sale of Re-Tech. The closed service center locations reflected approximately $1,229,000 of this decrease, which was partially offset by additional revenue through the expansion of existing service centers and the receipt of new contracts, such as the waste treatment project at the U.S. Department of Energy's Fernald, Ohio facility. This contract generated approximately $167,000 of additional revenue during the second quarter of 1996. Offsetting this increase was the sale of Re-Tech, which resulted in a reduction of approximately $152,000 during the quarter. The Company also experienced reduced revenue levels at its Ft. Lauderdale, Florida facility as the Company finalizes a major capital expansion project. Revenues for the six months ended June 30, 1996 were $13,071,000, as compared to $14,881,000 for the same period of 1995. This decrease of $1,810,000 is again attributable to the above discussed issues, with the closed service centers reflecting approximately $2,031,000 of this decrease, partially offset by the receipt of new contracts at favorable pricing/margins. Also, during the first six months of 1996, the waste management segment continued to experience downward pressure on prices due to the market imbalance of excess supply over industry demand, principally within the off-site blending, treatment and disposal facilities. These market conditions contributed to the reduced revenue within certain areas of this segment and, as a result, the Company continues to focus its marketing efforts at higher margin services for these facilities. Cost of goods sold decreased to $4,555,000 from $5,960,000 for the quarter ended June 30, 1996 and 1995, respectively. This decrease of $1,405,000, or 23.6%, in cost of goods sold reflects the corresponding direct and indirect costs related to the above discussed revenue reduction, and the savings resulting from various cost containment programs initiated during 1995. The Company continued during the quarter to closely monitor and reduce all possible operating costs. These reductions, however, were partially offset by the temporary increase in operating costs incurred at its Ft. Lauderdale, Florida facility, as the Company finalizes this facility's expansion. As a percent of revenue, the cost of goods sold for waste management services decreased from 76.0% of revenue for the quarter ended June 30, 1995 to 68.2% of revenue for the quarter ended June 30, 1996, again reflecting the impact of the restructuring and cost reduction programs. Cost of goods sold also decreased $1,868,000 for the six month period ended June 30, 1996 to $9,417,000, from a total of $11,285,000 for the same period of 1995. As a percent of revenue, the cost of goods sold decreased from 75.8% for the six months ended June 30, 1995 to 72.0% for the six months of 1996. Consulting Engineering Services -- Quarter Ended June 30, 1996 and 1995 _________________________________________________________________ The Company's consulting engineering segment provides a wide variety of environmental related consulting and engineering services to industry and government. Through the Company's wholly- owned subsidiaries in Tulsa, Oklahoma and St. Louis, Missouri, this segment provides oversight management of environmental restoration projects, air and soil sampling and compliance reporting, surface and subsurface water treatment design for removal of pollutants, and various compliance and training activities. This segment, like many other engineering firms within the pollution control industry, is maturing rapidly, experiencing downward pricing pressure and competitive conditions. Net revenues for the consulting engineering segment decreased to $1,503,000 for the quarter ended June 30, 1996 as compared to $1,540,000 for the quarter ended June 30, 1995. This 1996 second quarter revenue total reflects the anticipated improvement from the first quarter of the year, with only a slight decrease ($37,000) from the second quarter of 1995. Net revenues, however, for the six months ended June 30, 1996 were $2,679,000 as compared to $3,123,000 for the six months of 1995. This decrease of $444,000, or 14.2% occurred principally during the first quarter and reflects, among other changes, the above discussed competitive nature of the industry, weather related issues that delayed the start-up of certain contracts, and the corresponding loss of certain other contracts. Also, during 1995, the Company closed its Canton, Ohio office of Schreiber, Grana and Yonley, Inc., which resulted in approximately $87,000 of this revenue reduction. The Company has also, however, partially offset this reduction by the receipt of several new contracts/relationships and the expansion of its product base into new services to be provided to current and prospective customers. The Company continues to focus the consulting engineering segment on those services which it can provide the best value to its customers and greatest margin to the Company. Cost of goods sold decreased $72,000 to $1,079,000 from $1,163,000 for the quarter ended June 30, 1996 and 1995, respectively. This decrease of 6.2% reflects not only the impact of reduced revenues for the quarter, but also the overall reduction of operating cost. Also, with this improved utilization and aggressive cost containment program, the consulting engineering segment's cost of goods sold decreased from 75.5% of net revenues to 71.8% of net revenues for the quarter ended June 30, 1995 and 1996, respectively. Cost of goods sold for the six months ended June 30, 1996 were $1,981,000 as compared to $2,476,000 for the same period of 1995. This decrease of $495,000 or 20% reflects, as discussed above, the impact of reduced revenue and cost containment efforts. These results reflect a gross margin level of 26.1% for the six months of 1996, an improvement over the 20.7% for 1995. Liquidity and Capital Resources of the Company ______________________________________________ At June 30, 1996, the Company had cash and cash equivalents of $172,000. This cash and cash equivalents total reflects a decrease of $29,000 from December 31, 1995, as a result of net cash used in operations of $420,000, cash provided by investing activities of $138,000 and cash provided by financing activities of $253,000. Accounts receivable, net of allowances, totalled $5,489,000, an increase of $458,000 over the December 31, 1995 balance of $5,031,000, which reflects the increased revenue levels as the Company emerges from its traditionally slow first quarter into the stronger summer months. As of June 30, 1996, the borrowings under the Company's revolving loan facility totalled $3,226,000, an increase of $50,000 from the December 31, 1995 balance of $3,176,000, with a related borrowing availability of $227,000, excluding the $250,000 overformula line, as discussed below. The balance on the term loan totalled $1,638,000, as compared to $2,083,000 at December 31, 1995. Total indebtedness under the Heller Agreement as of June 30, 1996 was $4,864,000, a reduction of $395,000 from the December 31, 1995 balance of $5,259,000. As previously disclosed, during the second quarter of 1995, the Company became in violation of certain of the restrictive financial ratio covenants under the Agreement with Heller. During the second quarter of 1996, the Company negotiated and subsequently entered into an amendment ("Third Amendment") to the Loan and Security Agreement with Heller, whereby, among other things, Heller waived the existing events of default, amended the financial covenants and amended certain other provisions of the Loan Agreement as set forth therein. Under the Third Amendment, applicable interest rate provisions were also amended, whereby the term loan shall bear a floating rate of interest per annum equal to the base rate plus 2 1/4%, and the revolving loan shall bear a floating rate of interest per annum equal to the base rate plus 2%. The Third Amendment also contains a performance price adjustment which provides that upon the occurrence of the "equity infusion" from the sale of the Series 3 Preferred, as discussed below, applicable interest rates on the loans shall be reduced, in each instance, by 1/2% per annum. Also, during the second quarter of 1996, Heller extended to the Company an overformula line in an amount not to exceed $250,000, for a period ending the earliest of 90 days after the date of first advance or September 30, 1996. Pursuant to the above discussed Third Amendment, said overformula line terminated upon the Company's receipt of an equity infusion. See Note 2 of the Notes to Consolidated Financial Statements in Item 1. As previously disclosed, Heller had agreed to forebear from exercising any rights and remedies under the Agreement as a result of these previous defaults and continued to make normal advances under the revolving loan facility. However, in compliance with generally accepted accounting principles, the Company, at December 31, 1995, reclassified as a current liability $3,882,000 outstanding under the Agreement that would otherwise have been classified as long-term debt. As a result of the above discussed amendment, $4,364,000 has been classified as long-term debt at June 30, 1996. Pursuant to the initial agreement, the term loan bears interest at a floating rate equal to the base rate (prime) plus 1 3/4% per annum The revolving loan bears interest at a floating rate equal to the base rate (prime) plus 1 1/4% per annum. The loans also contain certain closing, management and unused line fees payable throughout the term. As discussed above, in conjunction with the Third Amendment, applicable interest rates were amended. However, during the period that the Agreement was in default, a default rate of interest was applied effective August 21, 1995 through the date of the Third Amendment, and therefore the Heller obligations bore interest at the above noted effective rate plus 2.0%. Both the revolving loan and term loan were prime based loans at June 30, 1996, bearing interest at a rate of 11.50% and 12.00%, respectively. Also, as previously disclosed, during 1995, the Company became in violation of the tangible net worth covenant under the equipment financing agreement with Ally Capital Corporation ("Ally"). During the second quarter of 1996, the Company negotiated and subsequently entered into an amendment to the equipment financing agreement, whereby, among other things, Ally waived the existing event of default and amended the minimum tangible net worth covenant. As previously disclosed, at December 31, 1995, Ally had waived compliance with the minimum tangible net worth covenant and no acceleration was demanded by the lender. However, in compliance with generally accepted accounting principles, the Company, at December 31, 1995, reclassified as a current liability $1,103,000 outstanding under the agreement, which would otherwise have been classified as long-term debt. The outstanding balance on this equipment financing agreement at June 30, 1996 is $1,553,000, as compared to $1,778,000 at December 31, 1995. As a result of the above discussed amendment, $945,000 has been classified as long- term debt and $608,000 as current at June 30, 1996. As of June 30, 1996, total consolidated accounts payable for the Company was $4,433,000, a reduction of $969,000 from the December 31, 1995 balance of $5,402,000. This June 1996 balance also reflects a reduction of $310,000 in the balance of payables in excess of ninety (90) days, to a total of $2,171,000. For 1996, the Company has budgeted capital expenditures of $1,250,000 for improving operations and maintaining Resource Conservation Recovery Act ("RCRA") permit compliance. All of these expenditures are materially necessary to maintain compliance with federal, state or local permit standards. As of June 30, 1996, the Company's net purchases of new capital equipment totalled approximately $1,025,000, which was principally funded by the proceeds from the issuance of Preferred Stock, as discussed below, with the exception of $57,000, which was financed through the equipment financing agreement with Ally. At this time, the Company anticipates financing the remainder of these expenditures by a combination of lease financing and/or utilization of the equity raised in July 1996, as discussed below and in Note 5 of the Notes to Consolidated Financial Statements in Item 1. At June 30, 1996, the Company had $7,133,000 in aggregate principal amounts of outstanding debt, as compared to $8,478,000 at December 31, 1995. This decrease in outstanding debt of $1,345,000 during the first six months of 1996 reflects the net repayment of the revolving loan and term note facility of $395,000, the scheduled principal repayments on long-term debt of $424,000, including the equipment finance agreement payments to Ally, and the repayment of $582,000 on a mortgage obligation in conjunction with the Re-Tech sale, as discussed below. The working capital deficit position at June 30, 1996 was $2,040,000, as compared to a deficit position of $9,372,000 at December 31, 1995. The December deficit position includes the reclassification of certain long-term debt to current. Prior to this reclassification, the December deficit position was $3,399,000, which reflects an improvement in this position of $1,359,000 during the six months of 1996. As previously disclosed, the Company issued, during February 1996, 1,100 shares of newly created Series 1 Preferred at a price of $1,000 per share, for an aggregate sales price of $1,100,000, and paid a placement fee of $176,000. The Company also issued 330 shares of newly created Series 2 Preferred at a price of $1,000 per share, for an aggregate sales price of $330,000, and paid a placement fee of $33,000. The Series 1 Preferred and Series 2 Preferred accrued dividends on a cumulative basis at a rate per share of five percent (5%) per annum and were payable quarterly, at the option of the Company in either cash or by the issuance of shares of common stock. The Company paid all accrued dividends on the Series 1 Preferred and the Series 2 Preferred in common stock. The Preferred Stock was convertible, at any time, commencing forty- five (45) days after issuance into shares of the Company's common stock at a conversion price equal to the aggregate value of the shares of the Preferred Stock being converted, together with all accrued but unpaid dividends thereon, divided by the "Average Stock Price" per share (the "Conversion Price"). The Average Stock Price was defined as the lesser of (i) seventy percent (70%) of the average daily closing bid prices of the common stock for the period of five (5) consecutive trading days immediately preceding the date of subscription by the holder or (ii) seventy percent (70%) of the average daily closing bid prices of the common stock for a period of five (5) consecutive trading days immediately preceding the date of such conversion of the Preferred Stock. During the second quarter of 1996, a total of 722 shares of the Series 1 Preferred were converted into approximately 1,035,000 shares of the Company's common stock and the associated accrued dividends were paid in the form of approximately 15,000 shares of the Company's common stock. Pursuant to a subscription and purchase agreement for the issuance of Series 3 Class C Convertible Preferred Stock, as discussed below, the remaining 378 shares of the Series 1 Preferred and the 330 shares of the Series 2 Preferred were converted during July 1996 into 920,000 shares of the Company's common stock, which included the accrued and unpaid dividends thereon, and the Company purchased the 920,000 shares for $1,770,000. See below in "Liquidity and Capital Resources of the Company." The Company issued, during the second quarter of 1996, 133,333 shares of common stock pursuant to a first quarter stock purchase agreement between the Company and Dr. Louis F. Centofanti, Chairman of the Board and Chief Executive Officer of the Company. The Company also entered into a second stock purchase agreement with Dr. Centofanti, whereby the Company agreed to sell 76,190 shares of its common stock for the purchase price of $100,000. On July 17, 1996, the Company issued 5,500 shares of newly- created Series 3 Class C Convertible Preferred Stock ("Series 3 Preferred") at a price of $1,000 per share, for an aggregate sales price of $5,500,000, and paid placement and closing fees of approximately $360,000. As part of the consideration for the issuance of the Series 3 Preferred, the Company also issued two (2) common stock purchase warrants entitling the Subscriber to purchase, after December 31, 1996, until July 18, 2001, an aggregate of up to 2,000,000 shares of common stock, with 1,000,000 shares exercisable at an exercise price equal to $2.00 per share and the other 1,000,000 shares of common stock exercisable at an exercise price equal to $3.50 per share. Dividends on the Series 3 Preferred are paid when and as declared by the Board of Directors at a rate of six percent (6%) per annum and are payable semi- annually. Dividends are cumulative and shall be paid, at the option of the Company, in the form of cash or common stock of the Company. It is the present intent of the Company to pay such dividends, if any, in common stock of the Company. The shares of the Series 3 Preferred may be converted into shares of common stock. See Note 5 of Notes to Consolidated Financial Statements and Item 5 "Other Events" of Part II hereof. The Company received from the sale of the Series 3 Preferred net proceeds of approximately $5,100,000. Pursuant to the terms of the Subscription Agreement with the Subscriber, the Company has purchased from the Subscriber from the net proceeds 920,000 shares of common stock of the Company that the Subscriber received upon conversion of the balance of the outstanding shares of Series 1 Preferred and Series 2 Preferred for $1,770,000. It is the intent of the Company to use approximately $1,650,000 of the net proceeds for capital improvements at its various facilities and the balance of the net proceeds to reduce outstanding trade payables and for general working capital. Effective March 15, 1996, the Company completed the sale of Re-Tech Systems, Inc., its plastics recycling subsidiary in Houston, Texas. The sale transaction included all real and personal property of the subsidiary, for a total consideration of $970,000. Net cash proceeds to the Company were approximately $320,000, after the repayment of a mortgage obligation of $582,000 and certain other closing and real estate costs. In conjunction with this transaction, the Company also made a prepayment of $50,000 to Heller Financial, Inc. for application to the term loan. As previously disclosed, the Company recorded during 1995, a nonrecurring charge (recorded as an asset reduction) of $450,000 for the estimated loss on the sale of this subsidiary, which, based upon closing balances, the Company recognized a small gain on this sale after the asset write-down. The Company sold total assets of approximately $1,346,000, while retaining certain assets totalling approximately $94,000 and certain liabilities totalling approximately $48,000. In addition to the above asset sale, the Company also sold certain non-productive assets during the quarter, principally at closed service center locations and at the Perma-Fix of Dayton, Inc. facility. Proceeds from these asset sales total approximately $320,000. In summary, the Company has taken a number of steps to improve its operations and liquidity as discussed above, including the equity subsequently raised in July 1996, and it expects the resulting liquidity position to be adequate to continue to fund its operating and capital needs. However, if the Company is unable to continue to improve its operations and to sustain profitability in the foreseeable future, such may have a material adverse effect on the Company's liquidity position and on the Company. This is a forward-looking statement and is subject to certain factors that could cause actual results to differ materially from those in the forward-looking statement, including, but not limited to, the Company's ability to maintain profitability or, if the Company is not able to maintain profitability, whether the Company is able to raise additional liquidity in the form of additional equity or debt. PERMA-FIX ENVIRONMENTAL SERVICES, INC. PART II - Other Information Item 1. Legal Proceedings _________________ During 1995, certain subsidiaries of the Company were sued by Chief Supply Corporation ("Chief Supply") in three (3) causes of action pending in the United States District Court, Northern District of Oklahoma, in cases styled Chief Supply Corporation v. Perma-Fix of Dayton, Inc.; Chief Supply Corporation v. Perma-Fix of Florida, Inc.; and Chief Supply Corporation v. Perma-Fix of Memphis, Inc. Chief Supply was alleging that the subsidiaries owe to Chief Supply an aggregate of approximately $292,000 (the "Oklahoma Litigation"). Perma-Fix of Memphis, Inc. has asserted a counterclaim for receivables due from Chief Supply for services rendered by two subsidiaries of the Company of approximately $134,000. In addition, these subsidiaries have asserted certain defenses regarding the performance of services by Chief Supply. Reservoir Capital Corporation ("Reservoir") alleged that substantially the same receivables for which Chief Supply had sued the subsidiaries of the Company were factored and assigned by Chief Supply to Reservoir, and in March 1996, Reservoir brought suit against the same subsidiaries of the Company sued by Chief Supply for collection of substantially the same receivables Chief Supply sued the subsidiaries of the Company, plus exemplary damages. The suit brought by Reservoir is styled Reservoir Capital Corporation v. Perma-Fix of Dayton, Inc., et al., pending in the United States District Court, Southern District of Ohio (the "Ohio Litigation"). During the second quarter of 1996, the parties settled the Oklahoma Litigation and the Ohio Litigation, and, in connection therewith, the subsidiaries of the Company have agreed to pay Chief in the Oklahoma Litigation $200,000 over an eighteen (18) month period and Reservoir has dismissed the Ohio Litigation. All or any portion of this monthly settlement payment may, at the sole discretion of the Company, take the form of credits issued to the Company by Chief as a result of waste that the Company delivers to Chief for treatment. In December 1995, Essex Waste Management, Inc. ("Essex") sued the Company and certain subsidiaries of the Company alleging an aggregate of approximately $357,512 was due to it by the Company and certain subsidiaries of the Company for services rendered by Essex for these subsidiaries or which were used by a subsidiary of the Company. During the second quarter of 1996, the parties settled this matter in which the Company has agreed to pay to Essex $180,000 over a thirty-six (36) month period. In addition to cash payments, the Company shall provide $120,000 of credit to Essex for disposal services, subject to certain conditions and restrictions. Item 5. Other Events ____________ During July 1996, the Company sold in a private placement under Section 4(2) and/or Regulation D under the Securities Act of 1933, as amended, to a subscriber ("Subscriber") 5,500 shares of a newly created Series 3 Class C Convertible Preferred Stock, par value $.001 per share ("Series 3 Preferred"), for $1,000 per share, and, in connection therewith, granted to the Subscriber warrants to purchase up to 2,000,000 shares of the Company's common stock after December 31, 1996, with 1,000,000 shares of common stock exercisable at $2.00 per share and 1,000,000 shares of common stock exercisable at $3.50 per share. The warrants are for a term of five (5) years. The Series 3 Preferred is not entitled to any voting rights, except as required by law. Dividends on the Series 3 Preferred accrue at a rate of six percent (6%) per annum, payable semi-annually as and when declared by the Board of Directors, and such dividends are cumulative. Dividends shall be paid, at the option of the Company, in the form of cash or common stock of the Company. The holder of the Series 3 Preferred may convert into common stock of the Company up to (i) 1,833 shares on or after October 1, 1996, (ii) 1,833 shares on or after November 1, 1996, and (iii) the balance on or after December 1, 1996. The conversion price shall be the product of (i) the average closing bid quotation for the five (5) trading days immediately preceding the conversion date multiplied by (ii) seventy-five percent (75%). The conversion price shall be a minimum of $.75 per share (which minimum price may be reduced upon the occurrence of certain limited events) or a maximum of $1.50 per share. Subject to the closing bid price of the Company's common stock at the time of conversion and certain other conditions which could increase the number of shares to be issued upon conversion, the Series 3 Preferred, if all were converted, could be converted into between 3.7 million and 7.3 million shares of common stock. The common stock issuable on the conversion of the Series 3 Preferred is subject to certain registration rights pursuant to the Subscription Agreement. From the net proceeds (approximately $5,100,000) received by the Company from the sale of the Series 3 Preferred, the Company purchased from the Subscriber 920,000 shares of common stock of the Company acquired by the Subscriber upon conversion of the Company's Series 1 Class A Preferred Stock and Series 2 Class B Convertible Preferred Stock for $1,770,000. See Note 5 of Notes to Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operation--Liquidity and Capital Resources of the Company." During July 1996, the Company entered into an amendment to its Loan and Security Agreement ("Agreement") with Heller Financial, Inc. ("Heller"), in which Heller, among other things, waived the Company's defaults thereunder. In addition, during August 1996, the Company entered into an amendment to the agreement with its equipment lender, in which the equipment lender, among other things, waived the Company's default thereunder. See Note 2 to Notes to Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operation--Liquidity and Capital Resources of the Company." Item 6. Exhibits and Reports on Form 8-K ________________________________ (a) Exhibits ________ Exhibit 3.(i) - Restated Certificate of Incorporation and all Certificates of Designations. Exhibit 4.1 - Third Amendment to Loan and Security Agreement with Heller Financial, Inc. Exhibit 4.2 - Letter agreement with Heller Financial, Inc. dated June 19, 1996. Exhibit 4.3 - Amendment to Ally Capital Corporation Corporation Lease Agreement, dated August 16, 1996. Exhibit 4.4 - Subscription and Purchase Agreement, dated July 17, 1996, between the Company and RBB Bank Aktiengesellschaft. Exhibit 4.5 - Certificate of Designations relating to Series 3 Preferred, attached as part of Exhibit 3.1 hereof and incorporated herein by reference. Exhibit 4.6 - Form of Certificate for Series 3 Preferred. Exhibit 10.1 - Common Stock Purchase Warrant Certif- icate, dated July 19, 1996, granted to RBB Bank Aktiengesellschaft. Exhibit 10.2 - Common Stock Purchase Warrant Certif- icate, dated July 19, 1996, between the Company and RBB Bank Aktiengesellschaft. Exhibit 27 - Financial Data Schedule. (b) Reports on Form 8-K ___________________ A current report on Form 8-K (Item 5 - Other Event) was filed on February 28, 1996 reporting that on February 9, 1996, the Company issued 1,100 shares of its newly created Series 1 Class A Preferred Stock at a price of $1,000 per share, for an aggregate sales price of $1,100,000. A current report on Form 8-K (Item 5 - Other Events) was filed on March 11, 1996 reporting that on February 22, 1996, the Company issued 330 shares of its newly created Series 2 Class B Preferred Stock at a price of $1,000 per share, for an aggregate sales price of $330,000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PERMA-FIX ENVIRONMENTAL SERVICES, INC. Date: August 19, 1996 By: /s/ Dr. Louis F. Centofanti ____________________________ Dr. Louis F. Centofanti Chairman of the Board Chief Executive Officer By: /s/ Richard T. Kelecy ____________________________ Richard T. Kelecy Chief Financial Officer EXHIBIT INDEX Page No. ________ Exhibit 3.(i)Restated Certificate of Incorporation and all Certificates of Designations. . . . . . 36 Exhibit 4.1 Third Amendment to Loan and Security Agree- ment with Heller Financial, Inc. . . . . . 82 Exhibit 4.2 Letter agreement with Heller Financial, Inc. dated June 19, 1996 . . . . . . . . . . . . 96 Exhibit 4.3 Amendment to Ally Capital Corporation Lease Agreement dated August 16, 1996 . . . . . . 103 Exhibit 4.4 Subscription and Purchase Agreement, dated July 17, 1996, between the Company and RBB Bank Aktiengesellschaft . . . . . . . . 106 Exhibit 4.5 Certificate of Designations relating to Series 3 Preferred, attached as part of Exhibit 3.1 hereof and incorporated herein by reference. - Exhibit 4.6 Form of Certificate for Series 3 Preferred . . 128 Exhibit 10.1 Common Stock Purchase Warrant Certificate, dated July 19, 1996, granted to RBB Bank Aktiengesellschaft . . . . . . . . . . . . . 130 Exhibit 10.2 Common Stock Purchase Warrant Certificate, dated July 19, 1996, between the Company and RBB Bank Aktiengesellschaft. . . . . . . . . 137 Exhibit 27 Financial Data Schedule. . . . . . . . . . . . 144 EX-3.(I) 2 State of Delaware Office of the Secretary of State Page 1 I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF RESTATED CERTIFICATE OF INCORPORATION OF "NATIONAL ENVIRONMENTAL INDUSTRIES, LTD." FILED IN THIS OFFICE ON THE TWENTY-SIXTH DAY OF NOVEMBER, A.D. 1991 AT 10 O'CLOCK A.M. * * * * * * * * /s/ William T. Quillen _______________________________ William T. Quillen, Secretary of State Authentication: 3909777 Date: 05/24/1993 931445217 RESTATED CERTIFICATE OF INCORPORATION OF NATIONAL ENVIRONMENTAL INDUSTRIES, LTD. 1. The present name of the corporation (hereinafter called the "Corporation") is National Environmental Industries, Ltd., and the date of filing the original certificate of incorporation of the Corporation with the Secretary of State of the State of Delaware is December 19, 1990. 2. The certificate of incorporation of the Corporation is hereby amended by striking out Articles FOURTH through NINTH thereof and by substituting in lieu thereof new Articles FOURTH through NINTH as set forth in the Restated Certificate of Incorporation hereinafter provided for. 3. The provisions of the certificate of incorporation as heretofore amended and/or supplemented, and as herein amended, are hereby restated and integrated into the single instrument which is hereinafter set forth, and which is entitled Restated Certificate of Incorporation of National Environmental Industries, Ltd. without any further amendment other than the amendment certified herein and without any discrepancy between the provisions of the certificate of incorporation as heretofore amended and supplemented and the provisions of the said single instrument hereinafter set forth. 4. The amendment and restatement of the certificate of incorporation herein certified have been duly adopted by the stockholders in accordance with the provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware. Prompt written notice of the adoption of the amendment and of the restatement of the certificate of incorporation herein certified has been given to those stockholders who have not consented in writing thereto, as provided in Section 228 of the General Corporation Law of the State of Delaware. 5. The certificate of incorporation of the Corporation, as amended and restated herein, shall at the effective time of this Restated Certificate of Incorporation, read as follows: "Restated Certificate of Incorporation of National Environmental Industries, Ltd. FIRST: The name of the Corporation is National Environmental Industries, Ltd. SECOND: The address of the Corporation's registered office in the State of Delaware is 32 Loockerman Square, Suite L- 100, City of Dover, County of Dover. The name of its registered agent at such address is The Prentice-Hall Corporation System, Inc. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the laws of the General Corproation Law of the State of Delaware. FOURTH: The total number of shares of capital stock which the Corporation shall have authority to issue is Twenty-Two Million (22,000,000) shares, of which Twenty Million (20,000,000) shares shall be Common Stock, par value $.001 per share, and Two Million (2,000,000) shares shall be Preferred Stock, $.001 par value per share. The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby expressly authorized to provide, by resolution or resolutions duly adopted by it prior to issuance, for the creation of each such series and to fix the designation and the powers, preferences, rights, qualifications, limitations and restrictions relating to the shares of each such series. The authority of the Board of Directors with respect to each such series of Preferred Stock shall include, but not be limited to, determining the following: (a) the designation of such series, the number of shares to constitute such series and the stated value if different from the par value thereof; (b) whether the shares of such series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights, which may be general or limited; (c) the dividends, if any, payable on such series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, and the preference or relation which such dividends shall bear to the dividends payable on any shares of stock of any other class or any other series of Preferred Stock; (d) whether the shares of such series shall be subject to redemption by the Corporation, and, if so, the times, prices and other conditions of such redemption; (e) the amount or amounts payable upon shares of such series upon, and the rights of the holders of such series in, the voluntary or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets of the Corporation; (f) whether the shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such series for retirement or other corporate purposes and the terms and provisions relating to the operation thereof; (g) whether the shares of such series shall be convertible into, or exchangeable for, shares of stock of any other class or any other series of Preferred Stock or any other securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange; (h) the limitations and restrictions, if any, to be effective while any shares of such series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Corporation of, the Common Stock or shares of stock of any other class or any other series of Preferred Stock; (i) the conditions or restrictions, if any, upon the creation of indebtedness of the Corporation or upon the issue of any additional stock, including additional shares of such series or of any other series of Preferred Stock or of any other class; and (j) any other powers, preferences and relative participating, optional and other special rights, and any qualifications, limitations and restrictions thereof. The powers, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. All shares of any one series of Preferred Stock shall be identical in all respects with all other shares of such series, except that shares of any one series issued at different times may differ as to the dates from which dividends thereof shall be cumulative. FIFTH: Unless required by law or determined by the chairman of the meeting to be advisable, the vote by stockholders on any matter, including the election of directors, need not be by written ballot. SIXTH: The Corporation reserves the right to increase or decrease its authorized capital stock, or any class or series thereof, and to reclassify the same, and to amend, alter, change or repeal any provision contained in the Certificate of Incorporation under which the Corporation is organized or in any amendment thereto, in the manner now or hereafter prescribed by law, and all rights conferred upon stockholders in said Certificate of Incorporation or any amendment thereto are granted subject to the aforementioned reservation. SEVENTH: The Board of Directors shall have the power at any time, and from time to time, to adopt, amend and repeal any and all By-Laws of the Corporation. EIGHTH: All persons who the Corporation is empowered to indemnify pursuant to the provisions of Section 145 of the General Corporation Law of the State of Delaware (or any similar provision or provisions of applicable law at the time in effect), shall be indemnified by the Corporation to the full extent permitted thereby. The foregoing right of indemnification shall not be deemed to be exclusive of any other rights to which those seeking indemnification maybe entitled under any by-law, agreement, vote of stockholders or disinterested directors, or otherwise. No repeal or amendment of this Article EIGHTH shall adversely affect any rights of any person pursuant to this Article Eighth which existed at the time of such repeal or amendment with respect to acts or omissions occurring prior to such repeal or amendment. NINTH: No director of the Corporation shall be personally liable to the Corporation or its stockholders for any monetary damages for breaches of fiduciary duty as a director, provided that this provisions shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the General Corporation Law of the State of Delaware; or (iv) for any transaction from which the director derived an improper personal benefit. No repeal or amendment of this Article NINTH shall adversely affect any rights of any person pursuant to this Article NINTH which existed at the time of such repeal or amendment with respect to acts or omissions occurring prior to such repeal or amendment." IN WITNESS WHEREOF, we have signed this Certificate this 22nd day of November, 1991. /s/ Louis Centofanti ____________________________________ ATTEST: /s/ Carol A. Dixon ______________________ Secretary State of Delaware Office of the Secretary of State Page 1 I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "NATIONAL ENVIRONMENTAL INDUSTRIES, LTD." FILED IN THIS OFFICE ON THE SEVENTEENTH DAY OF DECEMBER, A.D. 1991, AT 4:30 O'CLOCK P.M. * * * * * * * * /s/ William T. Quillen _______________________________ William T. Quillen, Secretary of State Authentication: 3909774 Date: 05/24/1993 931445217 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 State of Delaware Office of the Secretary of State Page 1 I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "PERMA-FIX ENVIRONMENTAL SERVICES, INC." FILED IN THIS OFFICE ON THE FOURTH DAY OF SEPTEMBER, A.D. 1992, AT 11:30 O'CLOCK A.M. A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO KENT COUNTY RECORDER OF DEEDS FOR RECORDING. * * * * * * * * /s/ William T. Quillen _______________________________ William T. Quillen, Secretary of State Authentication: 3909773 Date: 05/24/1993 931445217 CERTIFICATE OF AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED OF PERMA-FIX ENVIRONMENTAL SERVICES, INC. Perma-Fix Environmental Services, Inc., a Delaware corporation (the "Corporation"), does hereby certify: That the amendment set forth below to the Corporation's Restated Certificate of Incorporation, as amended, was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware and written notice thereof has been given as provided in Section 228 thereof: I) The first paragraph of Article FOURTH of the Corporation's Restated Certificate of Incorporation, as amended, is hereby deleted and replaced in its entirety by the following: Fourth: The total number of shares of capital stock that the Corporation shall have authority to issue is 22,000,000 shares of which 20,000,000 shares of the par value of $.001 per share shall be designated Common Stock ("Common Stock"), and 2,000,000 shares of the par value of $.001 per share shall be designated Preferred Stock. As of September 4, 1992 (the "Effective Time"), each share of Common Stock issued and outstanding immediately prior to the Effective Time shall automatically be changed and converted, without any action on the part of the holder thereof, into 1/3.0236956 of a share of Common Stock and, in connection with fractional interests in shares of Common Stock of the Corporation, each holder whose aggregate holdings of shares of Common stock prior to the Effective Time amounted to less than 3.0236956, or to a number not evenly divisible by 3.0236956 shares of Common Stock shall be entitled to receive for such fractional interest, and at such time, any such fractional interest in shares of Common Stock of the Corporation shall be converted into the right to receive, upon surrender of the stock certificates formerly representing shares of Common Stock of the Corporation, one whole share of Common Stock. IN WITNESS whereof, Perma-Fix Environmental Services, Inc. has caused this Certificate to be signed and attested to by its duly authorized officers as of this first day of September, 1992. Perma-Fix Environmental Services, Inc. By: /s/ Louis Centofanti _____________________________________ ATTEST: By: /s/ Mark Zwecker ___________________ State of Delaware Office of the Secretary of State Page 1 I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF DESIGNATION OF "PERMA-FIX ENVIRONMENTAL SERVICES, INC." FILED IN THIS OFFICE ON THE SIXTH DAY OF FEBRUARY, A.D. 1996 AT 4 O'CLOCK P.M. A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING. /s/ Edward J. Freel _______________________________ Edward J. Freel, Secretary of State Authentication: 7818327 Date: 02/07/1996 960035778 CERTIFICATE OF DESIGNATIONS OF SERIES I CLASS A PREFERRED STOCK OF PERMA-FIX ENVIRONMENTAL SERVICES, INC. Perma-Fix Environmental Services, Inc. (the "Corporation"), a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify: That, pursuant to authority conferred upon by the Board of Directors by the Corporation's Certificate of Incorporation, as amended, and pursuant to the provisions of Section 151 of the Delaware Corporation Law, said Board of Directors, acting by unanimous written consent in lieu of a meeting dated February 2, 1996, hereby adopted the terms of the Series I Class A Preferred Stock, which resolutions are set forth on the attached page. Dated: February 2, 1996 PERMA-FIX ENVIRONMENTAL SERVICES, INC. By /s/ Louis F. Centofanti _____________________________________ Dr. Louis F. Centofanti Chairman of the Board ATTEST: /s/ Mark A. Zwecker __________________________ Mark A. Zwecker, Secretary ISTE:\N-P\PESI\CERT.DES PERMA-FIX ENVIRONMENTAL SERVICES, INC. (the "Corporation") RESOLUTION OF THE BOARD OF DIRECTORS FIXING THE NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS ATTACHING TO THE SERIES I CLASS A PREFERRED STOCK WHEREAS, A. The Corporation's share capital includes Preferred Stock, par value $.001 per share ("Preferred Stock"), which Preferred Stock may be issued in one or more series with the directors of the Corporation (the "Board") being entitled by resolution to fix the number of shares in each series and to designate the rights, designations, preferences, and relative, participating, optional or other special rights, privileges, restrictions and conditions attaching to the shares of each such series; and B. It is in the best interests of the Corporation for the Board to create a new series from the Preferred Stock designated as the Series I Class A Preferred Stock, par value $.001. NOW, THEREFORE, BE IT RESOLVED, THAT: The Series I Class A Preferred Stock, par value $.001 (the "Series I Class A Preferred Stock") of the Corporation shall consist of 1,100 shares and no more and shall be designated as the Series I Class A Preferred Stock and in addition to the preferences, rights, privileges, restrictions and conditions attaching to all the Series I Class A Preferred Stock as a series, the rights, privileges, restrictions and conditions attaching to the Series I Class A Preferred Stock shall be as follows: Part 1 - Voting and Preemptive Rights. 1.1 Except as otherwise provided herein, in the Certificate of Incorporation (the "Articles") or the General Corporation Law of the State of Delaware (the "GCL"), each holder of Series I Class A Preferred Stock, by virtue of his ownership thereof, shall be entitled to cast that number of votes per share thereof on each matter submitted to the Corporation's shareholders for voting which equals the number of votes which could be cast by such holder of the number of shares of the Corporation's Common Stock, par value $.001 per share (the "Common Shares") into which such shares of Series I Class A Preferred Stock would be converted into pursuant to Part 5 hereof immediately prior to the record date of such vote. The outstanding Series I Class A Preferred Stock and the Common Shares of the Corporation shall vote together as a single class, except as otherwise expressly required by the GCL or Part 7 hereof. The Series I Class A Preferred Stock shall not have cumulative voting rights. 1.2 The Series I Class A Preferred Stock shall not give its holders any preemptive rights to acquire any other securities issued by the Corporation at any time in the future. Part 2 - Liquidation Rights. 2.1 If the Corporation shall be voluntarily or involuntarily liquidated, dissolved or wound up at any time when any Series I Class A Preferred Stock shall be outstanding, the holders of the then outstanding Series I Class A Preferred Stock shall have a preference in distribution of the Corporation's property available for distribution to the holders of the Common Shares equal to $1,000 consideration per outstanding share of Series I Class A Preferred Stock, together with an amount equal to all unpaid dividends accrued thereon, if any, to the date of payment of such distribution, whether or not declared by the Board; provided, however, that the merger of the Corporation with any corporation or corporations in which the Corporation is not the survivor, or the sale or transfer by the Corporation of all or substantially all of its property, or any reduction by at least seventy percent (70%) of the then issued and outstanding Common Shares of the Corporation, shall be deemed to be a liquidation of the Corporation within the meaning of any of the provisions of this Part 2. 2.2 Subject to the provisions of Part 6 hereof, all amounts to be paid as preferential distributions to the holders of Series I Class A Preferred Stock, as provided in this Part 2, shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution of any of the Corporation's property to the holders of Common Shares, whether now or hereafter authorized, in connection with such liquidation, dissolution or winding up. Part 3 - Dividends. 3.1 Holders of record of Series I Class A Preferred Stock, out of funds legally available therefor and to the extent permitted by law, shall be entitled to receive dividends on their Series I Class A Preferred Stock, which dividends shall accrue at the rate per share of five percent (5%) per annum of consideration paid for each share of Series I Class A Preferred Stock ($50.00 per share per year for each full year) commencing on the date of the issuance thereof, payable, at the option of the Corporation, (i) in cash, or (ii) by the issuance of that number of whole Common Shares computed by dividing the amount of the dividend by the market price applicable to such dividend. 3.2 For the purposes of this Part 3 and Part 4 hereof, "market price" means the average of the daily closing prices of Common Shares for a period of five (5) consecutive trading days ending on the date on which any dividend becomes payable or of any notice of redemption as the case may be. The closing price for each trading day shall be (i) for any period during which the Common Shares shall be listed for trading on a national securities exchange, the last reported bid price per share of Common Shares as reported by the primary stock exchange, or the Nasdaq Stock Market, if the Common Shares are quoted on the Nasdaq Stock Market, or (ii) if last sales price information is not available, the average closing bid price of Common Shares as reported by the Nasdaq Stock Market, or if not so listed or reported, then as reported by National Quotation Bureau, Incorporated, or (iii) in the event neither clause (i) nor (ii) is applicable, the average of the closing bid and asked prices as furnished by any member of the National Association of Securities Dealers, Inc., selected from time to time by the Corporation for that purpose. 3.3 Dividends on Series I Class A Preferred Stock shall be cumulative, and no dividends or other distributions shall be paid or declared and set aside for payment on the Common Shares until full cumulative dividends on all outstanding Series I Class A Preferred Stock shall have been paid or declared and set aside for payment. 3.4 Dividends shall be payable in arrears, at the rate of $12.50 per share for each full calendar quarter on each February 28, May 31, August 31, and November 30 of each calendar year, to the holders of record of the Series I Class A Preferred Stock as they appear in the securities register of the Corporation on such record dates not more than sixty (60) nor less than ten (10) days preceding the payment date thereof, as shall be fixed by the Board; provided, however, that the initial dividend for the Series I Class A Preferred Stock shall accrue for the period commencing on the date of the issuance thereof to and including December 31, 1995. 3.5 If, in any quarter, insufficient funds are available to pay such dividends as are then due and payable with respect to the Series I Class A Preferred Stock and all other classes and series of the capital stock of the Corporation ranking in parity therewith (or such payment is otherwise prohibited by provisions of the GCL, such funds as are legally available to pay such dividends shall be paid or Common Shares will be issued as stock dividends to the holders of Series I Class A Preferred Stock and to the holders of any other series of Class A Preferred Stock then outstanding as provided in Part 6 hereof, in accordance with the rights of each such holder, and the balance of accrued but undeclared and/or unpaid dividends, if any, shall be declared and paid on the next succeeding dividend date to the extent that funds are then legally available for such purpose. Part 4 - Redemption. 4.1 At any time, and from time to time, on and after one hundred twenty (120) days from the date of the issuance of any Series I Class A Preferred Stock, if the average of the closing bid prices for the Common Shares for five (5) consecutive trading days shall be in excess of $1.50, the Corporation may, at its sole option, but shall not be obligated to, redeem, in whole or in part, the then outstanding Series I Class A Preferred Stock at a price per share of U. S. $1,000 each (the "Redemption Price") (such price to be adjusted proportionately in the event of any change of the Series I Class A Shares into a different number of Shares). 4.2 Thirty (30) days prior to any date stipulated by the Corporation for the redemption of Series I Class A Preferred Stock (the "Redemption Date"), written notice (the "Redemption Notice") shall be mailed to each holder of record on such notice date of the Series I Class A Preferred Stock. The Redemption Notice shall state: (i) the Redemption Date of such Shares, (ii) the number of Series I Class A Preferred Stock to be redeemed from the holder to whom the Redemption Notice is addressed, (iii) instructions for surrender to the Corporation, in the manner and at the place designated of a share certificate or share certificates representing the number of Series I Class A Preferred Stock to be redeemed from such holder, and (iv) instructions as to how to specify to the Corporation the number of Series I Class A Preferred Stock to be redeemed as provided in this Part 4, and the number of shares to be converted into Common Shares as provided in Part 5 hereof. 4.3 Upon receipt of the Redemption Notice, any Eligible Holder (as defined in Section 5.2 hereof) shall have the option, at its sole election, to specify what portion of its Series I Class A Preferred Stock called for redemption in the Redemption Notice shall be redeemed as provided in this Part 4 or converted into Common Shares in the manner provided in Part 5 hereof, except that, notwithstanding any provision of such Part 5 to the contrary, any Eligible Holder shall have the right to convert into Common Shares that number of Series I Class A Preferred Stock called for redemption in the Redemption Notice. 4.4 On or before the Redemption Date in respect of any Series I Class A Preferred Stock, each holder of such shares shall surrender the required certificate or certificates representing such shares to the Corporation in the manner and at the place designated in the Redemption Notice, and upon the Redemption Date, the Redemption Price for such shares shall be made payable, in the manner provided in Section 5.5 hereof, to the order of the person whose name appears on such certificate or certificates as the owner thereof, and each surrendered share certificate shall be canceled and retired. If a share certificate is surrendered and all the shares evidenced thereby are not being redeemed (as described below), the Corporation shall cause the Series I Class A Shares which are not being redeemed to be registered in the names of the persons whose names appear as the owners on the respective surrendered share certificates and deliver such certificate to such person. 4.5 On the Redemption Date in respect of any Series I Class A Shares or prior thereto, the Corporation shall deposit with any bank or trust company having a capital and surplus of at least U. S. $50,000,000, as a trust fund, a sum equal to the aggregate Redemption Price of all such shares called from redemption (less the aggregate Redemption Price for those Series I Class A Shares in respect of which the Corporation has received notice from the Eligible Holder thereof of its election to convert Series I Class A Shares in to Common Shares), with irrevocable instructions and authority to the bank or trust company to pay, on or after the Redemption Date, the Redemption Price to the respective holders upon the surrender of their share certificates. The deposit shall constitute full payment for the shares to their holders, and from and after the date of the deposit the redeemed share shall be deemed to be no longer outstanding, and holders thereof shall cease to be shareholders with respect to such shares and shall have no rights with respect thereto except the rights to receive from the bank or trust company payments of the Redemption price of the shares, without interest, upon surrender of their certificates thereof. Any funds so deposited and unclaimed at the end of one year following the Redemption Date shall be released or repaid to the Corporation, after which the former holders of shares called for redemption shall be entitled to receive payment of the Redemption Price in respect of their shares only from the Corporation. Part 5 - Conversion. 5.1 For the purposes of conversion of the Series I Class A Preferred Stock shall be valued at $1,000 per share ("Value"), and, if converted, the Series I Class A Preferred Stock shall be converted into such number of Common Shares (the "Conversion Shares") as is obtained by dividing the aggregate Value of the shares of Series I Class A Preferred Stock being so converted, together with all accrued but unpaid dividends thereon, by the "Average Stock Price" per share of the Conversion Shares (the "Conversion Price"), subject to adjustment pursuant to the provisions of this Part 5. For purposes of this Part 5, the "Average Stock Price" means the lesser of (x) seventy percent (70%) of the average daily closing bid prices of the Common Shares for the period of five (5) consecutive trading days immediately preceding the date of subscription by the Holder or (y) seventy percent (70%) of the daily average closing bid prices of Common Shares for the period of five (5) consecutive trading days immediately preceding the date of the conversion of the Series I Class A Preferred Stock in respect of which such Average Stock Price is determined. The closing price for each trading day shall be determined as provided in the last sentence of Section 3.2. 5.2 Any holder of Series I Class A Preferred Stock (an "Eligible Holder") may at any time commencing forty-five (45) days after the issuance of any Series I Class A Preferred Stock convert up to one hundred percent (100%) of his holdings of Series I Class A Preferred Stock in accordance with this Part 5. 5.3 The conversion right granted by Section 5.2 hereof may be exercised only by an Eligible Holder of Series I Class A Preferred Stock, in whole or in part, by the surrender of the share certificate or share certificates representing the Series I Class A Preferred Stock to be converted at the principal office of the Corporation (or at such other place as the Corporation may designate in a written notice sent to the holder by first class mail, postage prepaid, at its address shown on the books of the Corporation) against delivery of that number of whole Common Shares as shall be computed by dividing (1) the aggregate Value of the Series I Class A Preferred Stock so surrendered for conversion plus any accrued but unpaid dividends thereon, if any, by (2) the Conversion Price in effect at the date of the conversion. At the time of conversion of a share of the Series I Class A Preferred Stock, the Corporation shall pay in cash to the holder thereof an amount equal to all unpaid dividends, if any, accrued thereon to the date of conversion, or, at the Corporation's option, issue that number of whole Common Shares which is equal to the product of dividing the amount of such unpaid dividends by the Average Stock Price whether or not declared by the Board. Each Series I Class A Preferred Stock share certificate surrendered for conversion shall be endorsed by its holder. In the event of any exercise of the conversion right of the Series I Class A Preferred Stock granted herein (i) share certificate representing the Common Shares purchased by virtue of such exercise shall be delivered to such holder within three (3) days of notice of conversion, and (ii) unless the Series I Class A Preferred Stock has been fully converted, a new share certificate representing the Series I Class A Preferred Stock not so converted, if any, shall also be delivered to such holder within three (3) days of notice of conversion. Any Eligible Holder may exercise its right to convert the Series I Class A Preferred Stock by telecopying an executed and completed Notice of Conversion to the Corporation, and within seventy-two (72) hours thereafter, delivering the original Notice of Conversion and the certificate representing the Series I Class A Preferred Stock to the Corporation by express courier. Each date on which a Notice of Conversion is telecopied to and received by the Corporation in accordance with the provisions hereof shall be deemed a conversion date. The Corporation will transmit the Common Shares certificates issuable upon conversion of any Series I Class A Preferred Stock (together with the certificates representing the Series I Class A Preferred Stock not so converted) to the Eligible Holder via express courier within three (3) business days after the conversion date if the Corporation has received the original Notice of Conversion and the Series I Class A Shares certificates being so converted by such date. 5.4 All Common Shares which may be issued upon conversion of Series I Class A Preferred Stock will, upon issuance, be duly issued, fully paid and nonassessable and free from all taxes, liens, and charges with respect to the issue thereof. At all times that any Series I Class A Preferred Stock is outstanding, the Corporation shall have authorized, and shall have reserved for the purpose of issuance upon such conversion, a sufficient number of Common Shares to provide for the conversion into Common Shares of all Series I Class A Preferred Stock then outstanding at the then effective Conversion Price. Without limiting the generality of the foregoing, if, at any time, the Conversion Price is decreased, the number of Common Shares authorized and reserved for issuance upon the conversion of the Series I Class A Preferred Stock shall be proportionately increased. 5.5 The number of Common Shares issued upon conversion of Series I Class A Preferred Stock and the Conversion Price shall be subject to adjustment from time to time upon the happening of certain events, as follows: 5.5.1 Change of Designation of the Common Shares or the rights, privileges, restrictions and conditions in respect of the Common Shares or division of the Common Shares into series. In the case of any amendment to the Articles to change the designation of the Common Shares or the rights, privileges, restrictions or conditions in respect of the Common Shares or division of the Common Shares into series the rights of the holders of the Series I Class A Preferred Stock shall be adjusted so as to provide that upon conversion thereof, the holder of the Series I Class A Preferred Stock being converted shall procure, in lieu of each Common Share theretofore issuable upon such conversion, the kind and amount of shares, other securities, money and property receivable upon such designation, change or division by the holder of one Common Share issuable upon such conversion had conversion occurred immediately prior to such designation, change or division. The Series I Class A Preferred Stock shall be deemed thereafter to provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Part 5. The provisions of this subsection 5.5.1 shall apply in the same manner to successive reclassifications, changes, consolidations, and mergers. 5.5.2 If the Corporation, at any time while any of the Series I Class A Preferred Stock is outstanding, shall amend the Articles so as to change the Common Shares into a different number of shares, the Conversion Price shall be proportionately reduced, in case of such change increasing the number of Common Shares, as of the effective date of such increase, or if the Corporation shall take a record of holders of its Common Shares for the purpose of such increase, as of such record date, whichever is earlier, or the Conversion Price shall be proportionately increased, in the case of such change decreasing the number of Common Shares, as of the effective date of such decrease or, if the Corporation shall take a record of holders of its Common Stock for the purpose of such decrease, as of such record date, whichever is earlier. 5.5.3 If the Corporation, at any time while any of the Series I Class A Preferred Stock is outstanding, shall pay a dividend payable in Common Shares (except for any dividends of Common Shares payable pursuant to Part 3 hereof), the Conversion Price shall be adjusted, as of the date the Corporation shall take a record of the holders of its Common Shares for the purposes of receiving such dividend (or if no such record is taken, as of the date of payment of such dividend), to that price determined by multiplying the Conversion Price therefor in effect by a fraction (1) the numerator of which shall be the total number of Common Shares outstanding immediately prior to such dividend, and (2) the denominator of which shall be the total number of Common Shares outstanding immediately after such dividend (plus in the event that the Corporation paid cash for fractional shares, the number of additional shares which would have been outstanding had the Corporation issued fractional shares in connection with said dividend). 5.6 Whenever the Conversion Price shall be adjusted pursuant to Section 5.5 hereof, the Corporation shall make a certificate signed by its President, or a Vice President and by its Treasurer, Assistant Treasurer, Secretary or Assistant Secretary, setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors made any determination hereunder), and the Conversion Price after giving effect to such adjustment, and shall cause copies of such certificates to be mailed (by first class mail, postage prepaid) to each holder of the Series I Class A Preferred Stock at its address shown on the books of the Corporation. The Corporation shall make such certificate and mail it to each such holder promptly after each adjustment. 5.7 No fractional Common Shares shall be issued in connection with any conversion of Series I Class A Preferred Stock, but in lieu of such fractional shares, the Corporation shall make a cash payment therefor equal in amount to the product of the applicable fraction multiplied by the Conversion Price then in effect. 5.8 No Series I Class A Preferred Stock which has been converted into Common Shares shall be reissued by the Corporation; provided, however, that each such share shall be restored to the status of authorized but unissued Preferred Stock without designation as to series and may thereafter be issued as a series of Preferred Stock not designated as Series I Class A Preferred Stock. Part 6 - Parity with Other Shares of Class A Preferred Shares. 6.1 If any cumulative dividends or accounts payable or return of capital in respect of Series I Class A Preferred Stock are not paid in full, the owners of all series of outstanding Preferred Stock shall participate rateably in respect of accumulated dividends and return of capital. Part 7 - Amendment. 7.1 In addition to any requirement for a series vote pursuant to the GCL in respect of any amendment to the Corporation's Certificate of Incorporation that adversely affects the rights, privileges, restrictions and conditions of the Series I Class A Preferred Stock, the rights, privileges, restrictions and conditions attaching to the Series I Class A Preferred Stock may be amended by an amendment to the Corporation's Certificate of Incorporation so as to affect such adversely only if the Corporation has obtained the affirmative vote at a duly called and held series meeting of the holders of the Series I Class A Preferred Stock or written consent by the holders of a majority of the Series I Class A Preferred Stock then outstanding. Notwithstanding the above, the number of authorized shares of such class or classes of stock may be increased or decreased (but not below the number of shares thereof outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote thereon, voting as a single class, irrespective of this Section 7.1. ISTE:\N-P\PESI\RESOLUT.S1P State of Delaware Office of the Secretary of State Page 1 I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF DESIGNATION OF "PERMA-FIX ENVIRONMENTAL SERVICES, INC." FILED IN THIS OFFICE ON THE TWENTIETH DAY OF FEBRUARY, A.D. 1996, AT 10:45 O'CLOCK A.M. A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING. /s/ Edward J. Freel _______________________________ Edward J. Freel, Secretary of State Authentication: 7832562 Date: 02/20/1996 960047351 CERTIFICATE OF DESIGNATIONS OF SERIES 2 CLASS B CONVERTIBLE PREFERRED STOCK OF PERMA-FIX ENVIRONMENTAL SERVICES, INC. Perma-Fix Environmental Services, Inc. (the "Corporation"), a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify: That, pursuant to authority conferred upon by the Board of Directors by the Corporation's Restated Certificate of Incorporation, as amended, and pursuant to the provisions of Section 151 of the Delaware Corporation Law, the Board of Directors of the Corporation has adopted resolutions, a copy of which is attached hereto, establishing and providing for the issuance of a series of Preferred Stock designated as Series 2 Class B Convertible Preferred Stock and has established and fixed the voting powers, designations, preferences and relative participating, optional and other special rights and qualifications, limitations and restrictions of such Series 2 Class B Convertible Preferred Stock as set forth in the attached resolutions. Dated: February 16, 1996 PERMA-FIX ENVIRONMENTAL SERVICES, INC. By /s/ Louis F. Centofanti ____________________________________ Dr. Louis F. Centofanti Chairman of the Board ATTEST: /s/ Mark A. Zwecker __________________________ Mark A. Zwecker, Secretary ISTE:\N-P\PESI\CERT-DES.S2B PERMA-FIX ENVIRONMENTAL SERVICES, INC. (the "Corporation") RESOLUTION OF THE BOARD OF DIRECTORS FIXING THE NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS ATTACHING TO THE SERIES 2 CLASS B CONVERTIBLE PREFERRED STOCK WHEREAS, A. The Corporation's share capital includes Preferred Stock, par value $.001 per share ("Preferred Stock"), which Preferred Stock may be issued in one or more series with the directors of the Corporation (the "Board") being entitled by resolution to fix the number of shares in each series and to designate the rights, designations, preferences, and relative, participating, optional or other special rights, privileges, restrictions and conditions attaching to the shares of each such series; and B. It is in the best interests of the Corporation for the Board to create a new series from the Preferred Stock designated as the Series 2 Class B Convertible Preferred Stock, par value $.001. NOW, THEREFORE, BE IT RESOLVED, THAT: The Series 2 Class B Convertible Preferred Stock, par value $.001 (the "Series 2 Class B Preferred Stock") of the Corporation shall consist of 2,500 shares and no more and shall be designated as the Series 2 Class B Preferred Stock and in addition to the preferences, rights, privileges, restrictions and conditions attaching to all the Series 2 Class B Preferred Stock as a series, the rights, privileges, restrictions and conditions attaching to the Series 2 Class B Preferred Stock shall be as follows: Part 1 - Voting and Preemptive Rights. 1.1 Except as otherwise provided herein, in the Corporation's Certificate of Incorporation (the "Articles") or the General Corporation Law of the State of Delaware (the "GCL"), each holder of Series 2 Class B Preferred Stock, by virtue of his ownership thereof, shall be entitled to cast that number of votes per share thereof on each matter submitted to the Corporation's shareholders for voting which equals the number of votes which could be cast by such holder of the number of shares of the Corporation's Common Stock, par value $.001 per share (the "Common Shares") into which such shares of Series 2 Class B Preferred Stock would be entitled to be converted into pursuant to Part 5 hereof on the record date of such vote. The outstanding Series 2 Class B Preferred Stock, the Common Shares of the Corporation and any other series of Preferred Stock of the Corporation having voting rights shall vote together as a single class, except as otherwise expressly required by the GCL or Part 7 hereof. The Series 2 Class B Preferred Stock shall not have cumulative voting rights. 1.2 The Series 2 Class B Preferred Stock shall not give its holders any preemptive rights to acquire any other securities issued by the Corporation at any time in the future. Part 2 - Liquidation Rights. 2.1 If the Corporation shall be voluntarily or involuntarily liquidated, dissolved or wound up at any time when any Series 2 Class B Preferred Stock shall be outstanding, the holders of the then outstanding Series 2 Class B Preferred Stock shall have a preference in distribution of the Corporation's property available for distribution to the holders of the Common Shares equal to $1,000 consideration per outstanding share of Series 2 Class B Preferred Stock, together with an amount equal to all unpaid dividends accrued thereon, if any, to the date of payment of such distribution, whether or not declared by the Board; provided, however, that the merger of the Corporation with any corporation or corporations in which the Corporation is not the survivor, or the sale or transfer by the Corporation of all or substantially all of its property, or a reduction by at least seventy percent (70%) of the then issued and outstanding Common Shares of the Corporation, shall be deemed to be a liquidation of the Corporation within the meaning of any of the provisions of this Part 2. 2.2 Subject to the provisions of Part 6 hereof, all amounts to be paid as preferential distributions to the holders of Series 2 Class B Preferred Stock, as provided in this Part 2, shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution of any of the Corporation's property to the holders of Common Shares, whether now or hereafter authorized, in connection with such liquidation, dissolution or winding up. 2.3 After the payment to the holders of the shares of the Series 2 Class B Preferred Stock of the full preferential amounts provided for in this Part 2, the holders of the Series 2 Class B Preferred Stock as such shall have no right or claim to any of the remaining assets of the Corporation. 2.4 In the event that the assets of the Corporation available for distribution to the holders of shares of the Series 2 Class B Preferred Stock upon any dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to this Part 2, no such distribution shall be made on account of any shares of any other class or series of Preferred Stock ranking on a parity with the shares of this Series 2 Class B Preferred Stock upon such dissolution, liquidation or winding up unless proportionate distributive amounts shall be paid on account of the shares of this Series 2 Class B Preferred Stock and shares of such other class or series ranking on a parity with the shares of this Series 2 Class B Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such dissolution, liquidation or winding up. Part 3 - Dividends. 3.1 Holders of record of Series 2 Class B Preferred Stock, out of funds legally available therefor and to the extent permitted by law, shall be entitled to receive dividends on their Series 2 Class B Preferred Stock, which dividends shall accrue at the rate per share of five percent (5%) per annum of consideration paid for each share of Series 2 Class B Preferred Stock ($50.00 per share per year for each full year) commencing on the date of the issuance thereof, payable, at the option of the Corporation, (i) in cash, or (ii) by the issuance of that number of whole Common Shares computed by dividing the amount of the dividend by the market price applicable to such dividend. 3.2 For the purposes of this Part 3 and Part 4 hereof, "market price" means the average of the daily closing prices of Common Shares for a period of five (5) consecutive trading days ending on the date on which any dividend becomes payable or of any notice of redemption as the case may be. The closing price for each trading day shall be (i) for any period during which the Common Shares shall be listed for trading on a national securities exchange, the last reported bid price per share of Common Shares as reported by the primary stock exchange, or the Nasdaq Stock Market, if the Common Shares are quoted on the Nasdaq Stock Market, or (ii) if last sales price information is not available, the average closing bid price of Common Shares as reported by the Nasdaq Stock Market, or if not so listed or reported, then as reported by National Quotation Bureau, Incorporated, or (iii) in the event neither clause (i) nor (ii) is applicable, the average of the closing bid and asked prices as furnished by any member of the National Association of Securities Dealers, Inc., selected from time to time by the Corporation for that purpose. 3.3 Dividends on Series 2 Class B Preferred Stock shall be cumulative, and no dividends or other distributions shall be paid or declared and set aside for payment on the Common Shares until full cumulative dividends on all outstanding Series 2 Class B Preferred Stock shall have been paid or declared and set aside for payment. 3.4 Dividends shall be payable in arrears, at the rate of $12.50 per share for each full calendar quarter on each February 28, May 31, August 31, and November 30 of each calendar year, to the holders of record of the Series 2 Class B Preferred Stock as they appear in the securities register of the Corporation on such record dates not more than sixty (60) nor less than ten (10) days preceding the payment date thereof, as shall be fixed by the Board; provided, however, that the initial dividend for the Series 2 Class B Preferred Stock shall accrue for the period commencing on the date of the issuance thereof. 3.5 If, in any quarter, insufficient funds are available to pay such dividends as are then due and payable with respect to the Series 2 Class B Preferred Stock and all other classes and series of the capital stock of the Corporation ranking in parity therewith (or such payment is otherwise prohibited by provisions of the GCL, such funds as are legally available to pay such dividends shall be paid or Common Shares will be issued as stock dividends to the holders of Series 2 Class B Preferred Stock and to the holders of any other series of Class B Preferred Stock then outstanding as provided in Part 6 hereof, in accordance with the rights of each such holder, and the balance of accrued but undeclared and/or unpaid dividends, if any, shall be declared and paid on the next succeeding dividend date to the extent that funds are then legally available for such purpose. Part 4 - Redemption. 4.1 At any time, and from time to time, on and after one hundred twenty (120) days from the date of the issuance of any Series 2 Class B Preferred Stock, if the average of the closing bid prices for the Common Shares for five (5) consecutive trading days shall be in excess of $1.50 per share, the Corporation may, at its sole option, but shall not be obligated to, redeem, in whole or in part, the then outstanding Series 2 Class B Preferred Stock at a price per share of U. S. $1,000 each (the "Redemption Price") (such price to be adjusted proportionately in the event of any change of the Series 2 Class B Preferred Stock into a different number of shares of Series 2 Class B Preferred Stock). 4.2 Thirty (30) days prior to any date stipulated by the Corporation for the redemption of Series 2 Class B Preferred Stock (the "Redemption Date"), written notice (the "Redemption Notice") shall be mailed to each holder of record on such notice date of the Series 2 Class B Preferred Stock. The Redemption Notice shall state: (i) the Redemption Date of such shares, (ii) the number of Series 2 Class B Preferred Stock to be redeemed from the holder to whom the Redemption Notice is addressed, (iii) instructions for surrender to the Corporation, in the manner and at the place designated of a share certificate or share certificates representing the number of Series 2 Class B Preferred Stock to be redeemed from such holder, and (iv) instructions as to how to specify to the Corporation the number of Series 2 Class B Preferred Stock to be redeemed as provided in this Part 4, and the number of shares to be converted into Common Shares as provided in Part 5 hereof. 4.3 Upon receipt of the Redemption Notice, any Eligible Holder (as defined in Section 5.2 hereof) shall have the option, at its sole election, to specify what portion of its Series 2 Class B Preferred Stock called for redemption in the Redemption Notice shall be redeemed as provided in this Part 4 or converted into Common Shares in the manner provided in Part 5 hereof, except that, notwithstanding any provision of such Part 5 to the contrary, any Eligible Holder shall have the right to convert into Common Shares that number of Series 2 Class B Preferred Stock called for redemption in the Redemption Notice. 4.4 On or before the Redemption Date in respect of any Series 2 Class B Preferred Stock, each holder of such shares shall surrender the required certificate or certificates representing such shares to the Corporation in the manner and at the place designated in the Redemption Notice, and upon the Redemption Date, the Redemption Price for such shares shall be made payable, in the manner provided in Section 4.5 hereof, to the order of the person whose name appears on such certificate or certificates as the owner thereof, and each surrendered share certificate shall be canceled and retired. If a share certificate is surrendered and all the shares evidenced thereby are not being redeemed (as described below), the Corporation shall cause the Series 2 Class B Preferred Stock which are not being redeemed to be registered in the names of the persons whose names appear as the owners on the respective surrendered share certificates and deliver such certificate to such person. 4.5 On the Redemption Date in respect of any Series 2 Class B Preferred Stock or prior thereto, the Corporation shall deposit with any bank or trust company having a capital and surplus of at least U. S. $50,000,000, as a trust fund, a sum equal to the aggregate Redemption Price of all such shares called from redemption (less the aggregate Redemption Price for those Series 2 Class B Preferred Stock in respect of which the Corporation has received notice from the Eligible Holder thereof of its election to convert Series 2 Class B Preferred Stock in to Common Shares), with irrevocable instructions and authority to the bank or trust company to pay, on or after the Redemption Date, the Redemption Price to the respective holders upon the surrender of their share certificates. The deposit shall constitute full payment for the shares to their holders, and from and after the date of the deposit the redeemed share shall be deemed to be no longer outstanding, and holders thereof shall cease to be shareholders with respect to such shares and shall have no rights with respect thereto except the rights to receive from the bank or trust company payments of the Redemption price of the shares, without interest, upon surrender of their certificates thereof. Any funds so deposited and unclaimed at the end of one year following the Redemption Date shall be released or repaid to the Corporation, after which the former holders of shares called for redemption shall be entitled to receive payment of the Redemption Price in respect of their shares only from the Corporation. Part 5 - Conversion. 5.1 For the purposes of conversion of the Series 2 Class B Preferred Stock shall be valued at $1,000 per share ("Value"), and, if converted, the Series 2 Class B Preferred Stock shall be converted into such number of Common Shares (the "Conversion Shares") as is obtained by dividing the aggregate Value of the shares of Series 2 Class B Preferred Stock being so converted, together with all accrued but unpaid dividends thereon, by the "Average Stock Price" per share of the Conversion Shares (the "Conversion Price"), subject to adjustment pursuant to the provisions of this Part 5. For purposes of this Part 5, the "Average Stock Price" means the lesser of (x) seventy percent (70%) of the average daily closing bid prices of the Common Shares for a period of five (5) consecutive trading days immediately preceding the date of subscription by the Holder or (y) seventy percent (70%) of the average daily closing bid prices of Common Shares for the period of five (5) consecutive trading days immediately preceding the date of the conversion of the Series 2 Class B Preferred Stock in respect of which such Average Stock Price is determined. The closing price for each trading day shall be determined as provided in the last sentence of Section 3.2. 5.2 Any holder of Series 2 Class B Preferred Stock (an "Eligible Holder") may at any time commencing forty-five (45) days after the issuance of any Series 2 Class B Preferred Stock convert up to one hundred percent (100%) of his holdings of Series 2 Class B Preferred Stock in accordance with this Part 5. 5.3 The conversion right granted by Section 5.2 hereof may be exercised only by an Eligible Holder of Series 2 Class B Preferred Stock, in whole or in part, by the surrender of the share certificate or share certificates representing the Series 2 Class B Preferred Stock to be converted at the principal office of the Corporation (or at such other place as the Corporation may designate in a written notice sent to the holder by first class mail, postage prepaid, at its address shown on the books of the Corporation) against delivery of that number of whole Common Shares as shall be computed by dividing (1) the aggregate Value of the Series 2 Class B Preferred Stock so surrendered for conversion plus any accrued but unpaid dividends thereon, if any, by (2) the Conversion Price in effect at the date of the conversion. At the time of conversion of a share of the Series 2 Class B Preferred Stock, the Corporation shall pay in cash to the holder thereof an amount equal to all unpaid dividends, if any, accrued thereon to the date of conversion, or, at the Corporation's option, issue that number of whole Common Shares which is equal to the product of dividing the amount of such unpaid dividends by the Average Stock Price whether or not declared by the Board. Each Series 2 Class B Preferred Stock share certificate surrendered for conversion shall be endorsed by its holder. In the event of any exercise of the conversion right of the Series 2 Class B Preferred Stock granted herein (i) share certificate representing the Common Shares purchased by virtue of such exercise shall be delivered to such holder within three (3) days of notice of conversion, and (ii) unless the Series 2 Class B Preferred Stock has been fully converted, a new share certificate representing the Series 2 Class B Preferred Stock not so converted, if any, shall also be delivered to such holder within three (3) days of notice of conversion. Any Eligible Holder may exercise its right to convert the Series 2 Class B Preferred Stock by telecopying an executed and completed Notice of Conversion to the Corporation, and within seventy-two (72) hours thereafter, delivering the original Notice of Conversion and the certificate representing the Series 2 Class B Preferred Stock to the Corporation by express courier. Each date on which a Notice of Conversion is telecopied to and received by the Corporation in accordance with the provisions hereof shall be deemed a conversion date. The Corporation will transmit the Common Shares certificates issuable upon conversion of any Series 2 Class B Preferred Stock (together with the certificates representing the Series 2 Class B Preferred Stock not so converted) to the Eligible Holder via express courier within three (3) business days after the conversion date if the Corporation has received the original Notice of Conversion and the Series 2 Class B Shares certificates being so converted by such date. 5.4 All Common Shares which may be issued upon conversion of Series 2 Class B Preferred Stock will, upon issuance, be duly issued, fully paid and nonassessable and free from all taxes, liens, and charges with respect to the issue thereof. At all times that any Series 2 Class B Preferred Stock is outstanding, the Corporation shall have authorized, and shall have reserved for the purpose of issuance upon such conversion, a sufficient number of Common Shares to provide for the conversion into Common Shares of all Series 2 Class B Preferred Stock then outstanding at the then effective Conversion Price. Without limiting the generality of the foregoing, if, at any time, the Conversion Price is decreased, the number of Common Shares authorized and reserved for issuance upon the conversion of the Series 2 Class B Preferred Stock shall be proportionately increased. 5.5 The number of Common Shares issued upon conversion of Series 2 Class B Preferred Stock and the Conversion Price shall be subject to adjustment from time to time upon the happening of certain events, as follows: 5.5.1 In the case of any amendment to the Articles to change the designation of the Common Shares or the rights, privileges, restrictions or conditions in respect of the Common Shares or division of the Common Shares into series the rights of the holders of the Series 2 Class B Preferred Stock shall be adjusted so as to provide that upon conversion thereof, the holder of the Series 2 Class B Preferred Stock being converted shall procure, in lieu of each Common Share theretofore issuable upon such conversion, the kind and amount of shares, other securities, money and property receivable upon such designation, change or division by the holder of one Common Share issuable upon such conversion had conversion occurred immediately prior to such designation, change or division. The Series 2 Class B Preferred Stock shall be deemed thereafter to provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Part 5. The provisions of this subsection 5.5.1 shall apply in the same manner to successive reclassifications, changes, consolidations, and mergers. 5.5.2 If the Corporation, at any time while any of the Series 2 Class B Preferred Stock is outstanding, shall amend the Articles so as to change the Common Shares into a different number of shares, the Conversion Price shall be proportionately reduced, in case of such change increasing the number of Common Shares, as of the effective date of such increase, or if the Corporation shall take a record of holders of its Common Shares for the purpose of such increase, as of such record date, whichever is earlier, or the Conversion Price shall be proportionately increased, in the case of such change decreasing the number of Common Shares, as of the effective date of such decrease or, if the Corporation shall take a record of holders of its Common Stock for the purpose of such decrease, as of such record date, whichever is earlier. 5.5.3 If the Corporation, at any time while any of the Series 2 Class B Preferred Stock is outstanding, shall pay a dividend payable in Common Shares (except for any dividends of Common Shares payable pursuant to Part 3 hereof), the Conversion Price shall be adjusted, as of the date the Corporation shall take a record of the holders of its Common Shares for the purposes of receiving such dividend (or if no such record is taken, as of the date of payment of such dividend), to that price determined by multiplying the Conversion Price therefor in effect by a fraction (1) the numerator of which shall be the total number of Common Shares outstanding immediately prior to such dividend, and (2) the denominator of which shall be the total number of Common Shares outstanding immediately after such dividend (plus in the event that the Corporation paid cash for fractional shares, the number of additional shares which would have been outstanding had the Corporation issued fractional shares in connection with said dividend). 5.6 Whenever the Conversion Price shall be adjusted pursuant to Section 5.5 hereof, the Corporation shall make a certificate signed by its President, or a Vice President and by its Treasurer, Assistant Treasurer, Secretary or Assistant Secretary, setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors made any determination hereunder), and the Conversion Price after giving effect to such adjustment, and shall cause copies of such certificates to be mailed (by first class mail, postage prepaid) to each holder of the Series 2 Class B Preferred Stock at its address shown on the books of the Corporation. The Corporation shall make such certificate and mail it to each such holder promptly after each adjustment. 5.7 No fractional Common Shares shall be issued in connection with any conversion of Series 2 Class B Preferred Stock, but in lieu of such fractional shares, the Corporation shall make a cash payment therefor equal in amount to the product of the applicable fraction multiplied by the Conversion Price then in effect. 5.8 No Series 2 Class B Preferred Stock which has been converted into Common Shares shall be reissued by the Corporation; provided, however, that each such share shall be restored to the status of authorized but unissued Preferred Stock without designation as to series and may thereafter be issued as a series of Preferred Stock not designated as Series 2 Class B Preferred Stock. Part 6 - Parity with Other Shares of Series 2 Class B Preferred Stock and Priority. 6.1 If any cumulative dividends or accounts payable or return of capital in respect of Series 2 Class B Preferred Stock are not paid in full, the owners of all series of outstanding Preferred Stock shall participate rateably in respect of accumulated dividends and return of capital. 6.2 For purposes of this resolution, any stock of any class or series of the Corporation shall be deemed to rank: 6.2.1 Prior or senior to the shares of this Series 2 Class B Preferred Stock either as to dividends or upon liquidation, if the holders of such class or classes shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, as the case may be, in preference or priority to the holders of shares of this Series 2 Class B Preferred Stock; 6.2.2 On a parity with, or equal to, shares of this Series 2 Class B Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates, or redemption or liquidation prices per share or sinking fund provisions, if any, are different from those of this Series 2 Class B Preferred Stock, if the holders of such stock are entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, in proportion to their respective dividend rates or liquidation prices, without preference or priority, one over the other, as between the holders of such stock and over the other, as between the holders of such stock and the holders of shares of this Series 2 Class B Preferred Stock; and, 6.2.3 Junior to shares of this Series 2 Class B Preferred Stock, either as to dividends or upon liquidation, if such class or series shall be Common Shares or if the holders of shares of this Series 2 Class B Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, as the case may be, in preference or priority to the holders of shares of such class or series. Part 7 - Amendment. 7.1 In addition to any requirement for a series vote pursuant to the GCL in respect of any amendment to the Articles that adversely affects the rights, privileges, restrictions and conditions of the Series 2 Class B Preferred Stock, the rights, privileges, restrictions and conditions attaching to the Series 2 Class B Preferred Stock may be amended by an amendment to the Corporation's Certificate of Incorporation so as to affect such adversely only if the Corporation has obtained the affirmative vote at a duly called and held series meeting of the holders of the Series 2 Class B Preferred Stock or written consent by the holders of a majority of the Series 2 Class B Preferred Stock then outstanding. Notwithstanding the above, the number of authorized shares of such class or classes of stock may be increased or decreased (but not below the number of shares thereof outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote thereon, voting together as a single class, irrespective of this Section 7.1. ISTE:\N-P\PESI\RESOLUT.S2B State of Delaware Office of the Secretary of State Page 1 I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF DESIGNATION OF "PERMA-FIX ENVIRONMENTAL SERVICES, INC." FILED IN THIS OFFICE ON THE NINETEENTH DAY OF JULY, A.D. 1996, AT 12:30 O'CLOCK P.M. A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING. /s/ Edward J. Freel _______________________________ Edward J. Freel, Secretary of State Authentication: 8033738 2249849 8100 Date: 07-19-96 960210746 CERTIFICATE OF DESIGNATIONS OF SERIES 3 CLASS C CONVERTIBLE PREFERRED STOCK OF PERMA-FIX ENVIRONMENTAL SERVICES, INC. Perma-Fix Environmental Services, Inc. (the "Corporation"), a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify: That, pursuant to authority conferred upon by the Board of Directors by the Corporation's Restated Certificate of Incorporation, as amended, and pursuant to the provisions of Section 151 of the Delaware Corporation Law, the Board of Directors of the Corporation has adopted resolutions, a copy of which is attached hereto, establishing and providing for the issuance of a series of Preferred Stock designated as Series 3 Class C Convertible Preferred Stock and has established and fixed the voting powers, designations, preferences and relative participating, optional and other special rights and qualifications, limitations and restrictions of such Series 3 Class C Convertible Preferred Stock as set forth in the attached resolutions. Dated: July 17, 1996 PERMA-FIX ENVIRONMENTAL SERVICES, INC. By /s/ Louis F. Centofanti _____________________________________ Dr. Louis F. Centofanti Chairman of the Board ATTEST: /s/ Richard T. Kelecy ____________________________ Richard T. Kelecy, Secretary ISTE:\N-P\PESI\REG-D\CERT-DES.S3C PERMA-FIX ENVIRONMENTAL SERVICES, INC. (the "Corporation") RESOLUTION OF THE BOARD OF DIRECTORS FIXING THE NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS ATTACHING TO THE SERIES 3 CLASS C CONVERTIBLE PREFERRED STOCK WHEREAS, A. The Corporation's share capital includes Preferred Stock, par value $.001 per share ("Preferred Stock"), which Preferred Stock may be issued in one or more series by the Board of Directors of the Corporation (the "Board") being entitled by resolution to fix the number of shares in each series and to designate the rights, designations, preferences, and relative, participating, optional or other special rights, privileges, restrictions and conditions attaching to the shares of each such series; and B. It is in the best interests of the Corporation for the Board to create a new series from the Preferred Stock designated as the Series 3 Class C Convertible Preferred Stock, par value $.001. NOW, THEREFORE, BE IT RESOLVED, THAT: The Series 3 Class C Convertible Preferred Stock, par value $.001 (the "Series 3 Class C Preferred Stock") of the Corporation shall consist of 5,500 shares and no more and shall be designated as the Series 3 Class C Convertible Preferred Stock, and the preferences, rights, privileges, restrictions and conditions attaching to the Series 3 Class C Preferred Stock shall be as follows: Part 1 - Voting and Preemptive Rights. 1.1 Voting Rights. Except as otherwise provided herein, in the Corporation's Certificate of Incorporation (the "Articles") or the General Corporation Law of the State of Delaware (the "GCL"), the holders of the Series 3 Class C Preferred Stock shall have no voting rights whatsoever. To the extent that under the GCL the vote of the holders of the Series 3 Class C Preferred Stock, voting separately as a class or series as applicable, is required to authorize a given action of the Corporation, the affirmative vote or consent of the holders of at least a majority of the shares of the Series 3 Class C Preferred Stock represented at a duly held meeting at which a quorum is present or by written consent of a majority of the shares of Series 3 Class C Preferred Stock (except as otherwise may be required under the GCL) shall constitute the approval of such action by the series. To the extent that under the GCL the holders of the Series 3 Class C Preferred Stock are entitled to vote on a matter with holders of Corporation's Common Stock and/or any other class or series of the Corporation's voting securities, the Series 3 Class C Preferred Stock, the Corporation's Common Stock and all other classes or series of the Corporation's voting securities shall vote together as one class, with each share of Series 3 Class C Preferred Stock entitled to a number of votes equal to the number of shares of the Corporation's Common Stock into which it is then convertible using the record date for the taking of such vote of stockholders as the date as of which the Conversion Price (as defined in Section 4.2 hereof) is calculated and conversion is effected. Holders of the Series 3 Class C Preferred Stock shall be entitled to notice of (and copies of proxy materials and other information sent to stockholders) for all shareholder meetings or written consents with respect to which they would be entitled to vote, which notice would be provided pursuant to the Corporation's bylaws and applicable statutes. 1.2 No Preemptive Rights. The Series 3 Class C Preferred Stock shall not give its holders any preemptive rights to acquire any other securities issued by the Corporation at any time in the future. Part 2 - Liquidation Rights. 2.1 Liquidation. If the Corporation shall be voluntarily or involuntarily liquidated, dissolved or wound up at any time when any shares of the Series 3 Class C Preferred Stock shall be outstanding, the holders of the then outstanding Series 3 Class C Preferred Stock shall have a preference in distribution of the Corporation's property available for distribution to the holders of the Corporation's Common Stock equal to $1,000 consideration per outstanding share of Series 3 Class C Preferred Stock, plus an amount equal to all unpaid dividends accrued thereon to the date of payment of such distribution ("Liquidation Preference"), whether or not declared by the Board. 2.2 Payment of Liquidation Preferences. Subject to the provisions of Part 6 hereof, all amounts to be paid as Liquidation Preference to the holders of Series 3 Class C Preferred Stock, as provided in this Part 2, shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution of any of the Corporation's property to the holders of the Corporation's Common Stock, whether now or hereafter authorized, in connection with such liquidation, dissolution or winding up. 2.3 No Rights After Payment. After the payment to the holders of the shares of the Series 3 Class C Preferred Stock of the full Liquidation Preference amounts provided for in this Part 2, the holders of the Series 3 Class C Preferred Stock as such shall have no right or claim to any of the remaining assets of the Corporation. 2.4 Assets Insufficient to Pay Full Liquidation Preference. In the event that the assets of the Corporation available for distribution to the holders of shares of the Series 3 Class C Preferred Stock upon any dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to this Part 2, no such distribution shall be made on account of any shares of any other class or series of Preferred Stock ranking on a parity with the shares of this Series 3 Class C Preferred Stock upon such dissolution, liquidation or winding up unless proportionate distributive amounts shall be paid on account of the shares of this Series 3 Class C Preferred Stock and shares of such other class or series ranking on a parity with the shares of this Series 3 Class C Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such dissolution, liquidation or winding up. Part 3 - Dividends. 3.1 The holders of the Series 3 Class C Preferred Stock are entitled to receive if, when and as declared by the Board out of funds legally available therefor, cumulative dividends, payable in cash or Common Stock of the Corporation, par value $.001 per share (the "Common Stock"), at the Corporation's election, at the rate of six percent (6%) per annum of the Liquidation Value of the Series 3 Class C Preferred Stock. The Liquidation Value of the Series 3 Class C Preferred Stock shall be $1,000.00 per share (the "Dividend Rate"). The dividend is payable semi-annually within seven (7) business days after each of December 31 and June 30 of each year, commencing December 31, 1996 (each, a "Dividend Declaration Date"). Dividends shall be paid only with respect to shares of Series 3 Class C Preferred Stock actually issued and outstanding on a Dividend Declaration Date and to holders of record as of the Dividend Declaration Date. Dividends shall accrue from the first day of the semi-annual period in which such dividend may be payable, except with respect to the first semi-annual dividend which shall accrue from the date of issuance of the Series 3 Class C Preferred Stock. In the event that the Corporation elects to pay dividends in Common Stock of the Corporation, each holder of the Series 3 Class C Preferred Stock shall receive shares of Common Stock of the Corporation equal to the quotient of (i) the Dividend Rate in effect on the applicable Dividend Declaration Date dividend by (ii) the average of the closing bid quotation of the Common Stock as reported on the over-the-counter market, or the closing sale price if listed on a national securities exchange, for the five (5) trading days immediately prior to the Dividend Declaration Date (the "Stock Dividend Price"). Dividends on the Series 3 Class C Preferred Stock shall be cumulative, and no dividends or other distributions shall be paid or declared or set aside for payment on the Common Stock until all accrued and unpaid dividends on all outstanding shares of Series 3 Class C Preferred Stock shall have been paid or declared and set aside for payment. Part 4 - Conversion. The holders of the Series 3 Class C Preferred Stock shall have rights to convert the shares of Series 3 Class C Preferred Stock into shares of the Corporation's Common Stock, par value $.001 per share ("Common Stock"), as follows (the "Conversion Rights"): 4.1 Right to Convert. The Series 3 Class C Preferred Stock shall be convertible into shares of Common Stock, as follows: 4.1.1 Up to one thousand eight hundred thirty-three (1,833) shares of Series 3 Class C Preferred Stock may be converted at the Conversion Price (as that term is defined in Section 4.2 below) at any time on or after October 1, 1996; 4.1.2 Up to one thousand eight hundred thirty-three (1,833) shares of Series 3 Class C Preferred Stock may be converted at the Conversion Price at any time on or after November 1, 1996; and, 4.1.3 Up to one thousand eight hundred thirty-four (1,834) shares of Series 3 Class C Preferred Stock may be converted at the Conversion Price on or after December 1, 1996. 4.2 Conversion Price. As used herein, the term Conversion Price shall be the product of (i) the average closing bid quotation of the Common Stock as reported on the over-the-counter market, or the closing sale price if listed on a national securities exchange, for the five (5) trading days immediately preceding the date of the Conversion Notice referred to in Section 4.3 below multiplied by (ii) seventy-five percent (75%). Notwithstanding the foregoing, the Conversion Price shall not be (i) less than a minimum of $.75 per share ("Minimum Conversion Price") or (ii) more than a maximum of $1.50 per share ("Maximum Conversion Price"). If, after July 1, 1996, the Corporation sustains a net loss, on a consolidated basis, in each of two (2) consecutive quarters, as determined under generally accepted accounting principles, the Minimum Conversion Price shall be reduced $.25 a share, but there shall be no change to, or reduction of, the Maximum Conversion Price. For the purpose of determining whether the Corporation has had a net loss in each of two (2) consecutive quarters, at no time shall a quarter that has already been considered in such determination be considered in any subsequent determination (as an example the third quarter of 1996 in which there is a net profit and the fourth quarter of 1996 in which there is a net loss shall be considered as two consecutive quarters, and, as a result, the fourth quarter of 1996 shall not be considered along with the first quarter of 1997 as two (2) consecutive quarters, but the first quarter of 1997 must be considered with the second quarter of 1997 for the purposes of such determination). For the purposes of this Section 4.2, a "quarter" is a three (3) month period ending on March 31, June 30, September 30, and December 31. If any of the outstanding shares of Series 3 Class C Preferred Stock are converted, in whole or in part, into Common Stock pursuant to the terms of this Part 4, the number of shares of whole Common Stock to be issued to the holder as a result of such conversion shall be determined by dividing (a) the aggregate Liquidation Value of the Series 3 Class C Preferred Stock so surrendered for conversion by (b) the Conversion Price in effect at the date of the conversion. At the time of conversion of shares of the Series 3 Class C Preferred Stock, the Corporation shall pay in cash to the holder thereof an amount equal to all unpaid and accrued dividends, if any, accrued thereon to the date of conversion, or, at the Corporation's option, in lieu of paying cash for the accrued and unpaid dividends, issue that number of shares of whole Common Stock which is equal to the product of dividing the amount of such unpaid and accrued dividends to the date of conversion on the shares of Series 3 Class C Preferred Stock so converted by the Conversion Price in effect at the date of conversion. 4.3 Mechanics of Conversion. Any holder of the Series 3 Class C Preferred Stock who wishes to exercise its Conversion Rights pursuant to Section 4.1 of this Part 4 must, if such shares are not being held in escrow by the Corporation's attorneys, surrender the certificate therefor at the principal executive office of the Corporation, and give written notice, which may be via facsimile transmission, to the Corporation at such office that it elects to convert the same (the "Conversion Notice"). In the event that the shares of Series 3 Class C Preferred Stock are being held in escrow by the Corporation's attorneys, no delivery of the certificates shall be required. No Conversion Notice with respect to any shares of Series 3 Class C Preferred Stock can be given prior to the time such shares of Series 3 Class C Preferred Stock are eligible for conversion in accordance with the provision of Section 4.1 above. Any such premature Conversion Notice shall automatically be null and void. The Corporation shall, within five (5) business days after receipt of an appropriate and timely Conversion Notice (and certificate, if necessary), issue to such holder of Series 3 Class C Preferred Stock or its agent a certificate for the number of shares of Common Stock to which he shall be entitled; it being expressly agreed that until and unless the holder delivers written notice to the Corporation to the contrary, all shares of Common Stock issuable upon conversion of the Series 3 Class C Preferred Stock hereunder are to be delivered by the Corporation to a party designated in writing by the holder in the Conversion Notice for the account of the holder and such shall be deemed valid delivery to the holder of such shares of Common Stock. Such conversion shall be deemed to have been made only after both the certificate for the shares of Series 3 Class C Preferred Stock to be converted have been surrendered and the Conversion Notice is received by the Corporation (or in the event that no surrender of the Certificate is required, then only upon the receipt by the Corporation of the Conversion Notice) (the "Conversion Documents"), and the person or entity whose name is noted on the certificate evidencing such shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Common Stock at and after such time. In the event that the Conversion Notice is sent via facsimile transmission, the Corporation shall be deemed to have received such Conversion Notice on the first business day on which such facsimile Conversion Notice is actually received. If the Corporation fails to deliver to the holder or its agent the certificate representing the shares of Common Stock that the holder is entitled to receive as a result of such conversion within five (5) business days after receipt by the Corporation from the holder of an appropriate and timely Conversion Notice and certificates pursuant to the terms of this Section 4.3, the Corporation shall pay to the holder U.S. $1,000 for each day that the Corporation is late in delivering such certificate to the holder or its agent. 4.4 Adjustments to Conversion Price for Stock Dividends and for Combinations or Subdivisions of Common Stock. If the Corporation at any time or from time to time while shares of Series 3 Class C Preferred Stock are issued and outstanding shall declare or pay, without consideration, any dividend on the Common Stock payable in Common Stock, or shall effect a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by stock split, reclassification or otherwise than by payment of a dividend in Common Stock or in any right to acquire Common Stock), or if the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, then the Conversion Price in effect immediately before such event shall, concurrently with the effectiveness of such event, be proportionately decreased or increased, as appropriate. If the Corporation shall declare or pay, without consideration, any dividend on the Common Stock payable in any right to acquire Common stock for no consideration, then the Corporation shall be deemed to have made a dividend payable in Common Stock in an amount of shares equal to the maximum number of shares issuable upon exercise of such rights to acquire Common Stock. 4.5. Adjustments for Reclassification and Reorganization. If the Common Stock issuable upon conversion of the Series 3 Class C Preferred Stock shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares provided for in Section 4.4 hereof), the Conversion Price then in effect shall, concurrently with the effectiveness of such reorganization or reclassification, be proportionately adjusted so that the Series 3 Class C Preferred Stock shall be convertible into, in lieu of the number of shares of Common Stock which the holders of Series 3 Class C Preferred Stock would otherwise have been entitled to receive, a number of shares of such other class or classes of stock equivalent to the number of shares of Common Stock that would have been subject to receipt by the holders upon conversion of the Series 3 Class C Preferred Stock immediately before that change. 4.6 Common Stock Duly Issued. All Common Stock which may be issued upon conversion of Series 3 Class C Preferred Stock will, upon issuance, be duly issued, fully paid and nonassessable and free from all taxes, liens, and charges with respect to the issue thereof. 4.7 Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of any Conversion Price pursuant to this Part 4, the Corporation, at its expense, within a reasonable period of time, shall compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Series 3 Class C Preferred Stock a notice setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment is based. 4.8 Issue Taxes. The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of the Series 3 Class C Preferred Stock pursuant thereto; provided, however, that the Corporation shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder of Series 3 Class C Preferred Stock in connection with such conversion. 4.9 Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series 3 Class C Preferred Stock, such number of its shares of Common Stock as shall, from time to time, be sufficient to effect the conversion of all outstanding shares of the Series 3 Class C Preferred stock, and, if at any time, the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series 3 Class C Preferred Stock, the Corporation will take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in reasonable efforts to obtain the requisite stockholder approval of any necessary amendment to its Certificate of Incorporation. 4.10 Fractional Shares. No fractional share shall be issued upon the conversion of any share or shares of Series 3 Class C Preferred Stock. All shares of Common Stock (including fractions thereof) issuable upon conversion of more than one share of Series 3 Class C Preferred Stock by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the conversion would result in the issuance of a fractional share of Common Stock, such fractional share shall be rounded up to the nearest whole share. 4.11 Notices. Any notices required by the provisions of this Part 4 to be given to the holders of shares of Series 3 Class C Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at his address appearing on the books of the Corporation. 4.12 Business Day. As used herein, the term "business day" shall mean any day other than a Saturday, Sunday or a day when the federal and state banks located in the State of New York are required or permitted to close. Part 5 - Redemption. 5.1 Redemption During First 180 Days. At any time, and from time to time, during the first one hundred eighty (180) days from the date of issuance of the Series 3 Class C Preferred Stock, the Corporation may, at its sole option, but shall not be obligated to, redeem, in whole or in part, the then outstanding Series 3 Class C Preferred Stock at a price per share of U. S. $1,300.00 each ("First Six Months Redemption Price"). The Company may exercise such redemption by giving the holder of the Series 3 Class C Preferred Stock written notice of such redemption at any time during such 180-day period. 5.2 Other Rights of Redemption by the Corporation. At any time, and from time to time, after one hundred eighty (180) days from the date of the issuance of any Series 3 Class C Preferred Stock, if the average of the closing bid price of the Common Stock for ten (10) consecutive days shall be in excess of $2.50 per share, the Corporation may, at its sole option, but shall not be obligated to, redeem, in whole or in part, the then outstanding Series 3 Class C Preferred Stock at a price per share of U. S. $1,000 each (the "Redemption Price") (such price to be adjusted proportionately in the event of any change of the Series 3 Class C Preferred Stock into a different number of shares of Series 3 Class C Preferred Stock). 5.3 Mechanics of Redemption. Thirty (30) days prior to any date stipulated by the Corporation for the redemption of Series 3 Class C Preferred Stock (the "Redemption Date"), written notice (the "Redemption Notice") shall be mailed to each holder of record on such notice date of the Series 3 Class C Preferred Stock. The Redemption Notice shall state: (i) the Redemption Date of such shares, (ii) the number of Series 3 Class C Preferred Stock to be redeemed from the holder to whom the Redemption Notice is addressed, (iii) instructions for surrender to the Corporation, in the manner and at the place designated, of a share certificate or share certificates representing the number of Series 3 Class C Preferred Stock to be redeemed from such holder, and (iv) instructions as to how to specify to the Corporation the number of Series 3 Class C Preferred Stock to be redeemed as provided in this Part 5 and, if the Redemption Notice is mailed to the Holder after the first one hundred eighty (180) days from the date of issuance of the Series 3 Class C Preferred Stock, the number of shares to be converted into Common Stock as provided in Part 4 hereof. 5.4 Rights of Conversion Upon Redemption. If the redemption occurs pursuant to Section 5.1 hereof, the Holder of the Series 3 Class C Preferred Stock shall not have the right to convert those outstanding shares of Series 3 Class C Preferred Stock that the Company is redeeming after receipt of the Redemption Notice. If the redemption occurs pursuant to Section 5.2 hereof, then, upon receipt of the Redemption Notice, any holder of Series 3 Class C Preferred Stock shall have the option, at its sole election, to specify what portion of its Series 3 Class C Preferred Stock called for redemption in the Redemption Notice shall be redeemed as provided in this Part 5 or converted into Common Stock in the manner provided in Part 4 hereof, except that, notwithstanding any provision of such Part 4 to the contrary, such holder shall have the right to convert into Common Stock that number of Series 3 Class C Preferred Stock called for redemption in the Redemption Notice. 5.5 Surrender of Certificates. On or before the Redemption Date in respect of any Series 3 Class C Preferred Stock, each holder of such shares shall surrender the required certificate or certificates representing such shares to the Corporation in the manner and at the place designated in the Redemption Notice, and upon the Redemption Date, the Redemption Price for such shares shall be made payable, in the manner provided in Section 5.5 hereof, to the order of the person whose name appears on such certificate or certificates as the owner thereof, and each surrendered share certificate shall be canceled and retired. If a share certificate is surrendered and all the shares evidenced thereby are not being redeemed (as described below), the Corporation shall cause the Series 3 Class C Preferred Stock which are not being redeemed to be registered in the names of the persons or entity whose names appear as the owners on the respective surrendered share certificates and deliver such certificate to such person. 5.6 Payment. On the Redemption Date in respect of any Series 3 Class C Preferred Stock or prior thereto, the Corporation shall deposit with any bank or trust company having a capital and surplus of at least U. S. $50,000,000, as a trust fund, a sum equal to the aggregate First Six Months Redemption Price or the Redemption Price, whichever is applicable, of all such shares called from redemption (less the aggregate Redemption Price for those Series 3 Class C Preferred Stock in respect of which the Corporation has received notice from the holder thereof of its election to convert Series 3 Class C Preferred Stock into Common Stock), with irrevocable instructions and authority to the bank or trust company to pay, on or after the Redemption Date, the First Six Months Redemption Price or the Redemption Price, whichever is applicable, to the respective holders upon the surrender of their share certificates. The deposit shall constitute full payment for the shares to their holders, and from and after the date of the deposit the redeemed shares shall be deemed to be no longer outstanding, and holders thereof shall cease to be shareholders with respect to such shares and shall have no rights with respect thereto except the rights to receive from the bank or trust company payments of the First Six Months Redemption Price or the Redemption Price, whichever is applicable, of the shares, without interest, upon surrender of their certificates thereof. Any funds so deposited and unclaimed at the end of one year following the Redemption Date shall be released or repaid to the Corporation, after which the former holders of shares called for redemption shall be entitled to receive payment of the First Six Months Redemption Price or the Redemption Price, whichever is applicable, in respect of their shares only from the Corporation. Part 6 - Parity with Other Shares of Series 3 Class C Preferred Stock and Priority. 6.1 Rateable Participation. If any cumulative dividends or return of capital in respect of Series 3 Class C Preferred Stock are not paid in full, the owners of all series of outstanding Preferred Stock shall participate rateably in respect of accumulated dividends and return of capital. 6.2 Ranking. For purposes of this resolution, any stock of any class or series of the Corporation shall be deemed to rank: 6.2.1 Prior or senior to the shares of this Series 3 Class C Preferred Stock either as to dividends or upon liquidation, if the holders of such class or classes shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, as the case may be, in preference or priority to the holders of shares of this Series 3 Class C Preferred Stock; 6.2.2 On a parity with, or equal to, shares of this Series 3 Class C Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates, or redemption or liquidation prices per share or sinking fund provisions, if any, are different from those of this Series 3 Class C Preferred Stock, if the holders of such stock are entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, in proportion to their respective dividend rates or liquidation prices, without preference or priority, one over the other, as between the holders of such stock and over the other, as between the holders of such stock and the holders of shares of this Series 3 Class C Preferred Stock; and, 6.2.3 Junior to shares of this Series 3 Class C Preferred Stock, either as to dividends or upon liquidation, if such class or series shall be Common Stock or if the holders of shares of this Series 3 Class C Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, as the case may be, in preference or priority to the holders of shares of such class or series. Part 7 - Amendment and Reissue. 7.1 Amendment. If any proposed amendment to the Corporation's Certificate of Incorporation would alter or change the powers, preferences or special rights of the Series 3 Class C Preferred Stock so as to affect such adversely, then the Corporation must obtain the affirmative vote of such amendment to the Certificate of Incorporation at a duly called and held series meeting of the holders of the Series 3 Class C Preferred Stock or written consent by the holders of a majority of the Series 3 Class C Preferred Stock then outstanding. Notwithstanding the above, the number of authorized shares of any class or classes of stock may be increased or decreased (but not below the number of shares thereof outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote thereon, voting together as a single class, irrespective of this Section 7.1 or the requirements of Section 242 of the GCL. 7.2 Authorized. Any shares of Series 3 Class C Preferred Stock acquired by the Corporation by reason of purchase, conversion, redemption or otherwise shall be retired and shall become authorized but unissued shares of Preferred Stock, which may be reissued as part of a new series of Preferred Stock hereafter created. ISTE:\N-P\PESI\10Q\EXHIBIT3.1 EX-4 3 EXHIBIT 4.1 - THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT THIS THIRD AMENDMENT ("Amendment"), dated as of the 16th day of August, 1996, by and among PERMA-FIX ENVIRONMENTAL SERVICES, INC., a Delaware corporation ("Parent"), each of those direct and indirect subsidiaries of Parent whose names are inscribed on the signature pages to the "Loan Agreement" referenced below (collectively, the "Borrowers" or, individually, a "Borrower") and HELLER FINANCIAL, INC., a Delaware corporation ("Lender"); W I T N E S S E T H T H A T: WHEREAS, Parent, Borrowers and Lender are parties to a certain Loan and Security Agreement, dated as of January 27, 1995 (as amended to date, the "Loan Agreement"; capitalized terms used herein and not defined herein have the meanings assigned to them in the Loan Agreement), pursuant to which, subject to the terms and conditions set forth therein, Lenders have made and continue to make certain financial accommodations available to Borrowers; and WHEREAS, certain Events of Default have occurred and are continuing under the Loan Agreement as described on Exhibit A attached hereto (the "Existing Events of Default"); and WHEREAS, Parent and Borrowers have requested that Lender waive the Existing Events of Default, amend the financial covenants set forth in Section 6 of the Loan Agreement in certain respects, and amend certain other provisions of the Loan Agreement as set forth hereinbelow; and WHEREAS, Parent and Borrowers have further requested that Lender permit Parent to become a borrower under the Loan Agreement, such that, subject to all of the terms and conditions set forth therein, Parent may obtain Revolving Loans under the Loan Agreement; and WHEREAS, pursuant to Parent and Borrowers request and subject to all of the terms and conditions set forth herein, Lender is willing to waive the existing Events of Default, to amend the Loan Agreement in the manner hereinafter set forth and to permit Parent to become a borrower under the Loan Agreement for purposes of obtaining Revolving Loans; and WHEREAS, Parent, Borrowers and Lenders desire to enter into this Amendment in order to memorialize their mutual understandings in regard to the foregoing matters; NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Parent, Borrowers and Lender agree as follows: 1. Addition of Parent as a Borrower under the Loan Agreement and the other Loan Documents. Parent is hereby deemed to be a borrower under the Loan Agreement and the other Loan Documents, such that Parent may obtain Revolving Loans pursuant to Section 2.1(B) of the Loan Agreement against its Borrowing Base, but subject to all of the terms and conditions set forth in such Section 2.1(B) and elsewhere in the Loan Agreement including, without limitation, the requirement that the aggregate amount of all Revolving Loans to Parent and all other Borrowers shall not exceed the Maximum Revolving Loan Amount. In furtherance of the foregoing, (a) where the context so requires, each reference in the Loan Agreement and the other Loan Documents to a "Borrower" or "Borrowers" shall be deemed to be a reference to Parent as well as to the other Borrowers and (b) Parent hereby assumes and agrees to perform all obligations of a "Borrower" under the Loan Agreement and the other Loan Documents. Notwithstanding the foregoing, Parent shall continue to serve as agent for the Borrowers (including itself, as applicable) for all purposes presently provided in the Loan Agreement. In connection with the foregoing, each Borrower agrees that Parent shall be an "Other Borrower" for purposes of the Cross-Guaranty, and that the Obligations of Parent to Lender shall be guaranteed by each Borrower thereunder. 2. Amendments to Defined Terms. Section 1.1 of the Loan Agreement shall be amended by adding the following defined terms therein, in appropriate alphabetical order: "Third Offering" shall mean that certain Subscription and Purchase Agreement for 5,500 shares of Series 3 Class C Convertible Preferred Stock, par value $.00l per share, and 2,000,000 Warrants, each Warrant to Purchase One Share of Common Stock of Perma-Fix Environmental Services, Inc., dated July 17, 1996, which when executed by the parties thereto, will transfer all or a part of the Third Offering Shares and the Third Offering Warrants. "Third Offering Resolution" shall mean that certain Resolution of the Board of Directors of Parent Fixing the Number and Designating the Rights, Privileges, Restrictions and Conditions attaching to the Series 3 Class C Convertible Preferred Stock, adopted July 17, 1996, authorizing the Third Offering Shares. "Third Offering Shares" shall mean up to 5,500 shares of Series 3 Class C Convertible Preferred Stock of Parent authorized pursuant to the Third Offering Resolution. "Third Offering Warrants" shall mean, collectively, (a) the 1,000,000 Warrants to purchase 1,000,000 shares of common stock, $.001 par value per share, of Parent, at an exercise price equal to $2.00 per share, expiring on July 18, 2001 and (b) the 1,000,000 Warrants to purchase 1,000,000 shares of common stock, $.001 par value per share, of Parent, at an exercise price equal to $3.50 per share, expiring on July 18, 2001, each to be issued pursuant to the Third Offering. (b) Section 1.1 of the Loan Agreement shall be further amended by adding the following provision at the end of the definition of "Intangible Assets" therein: provided, however, that, for purposes of calculating Tangible Net Worth of Parent and its Subsidiaries, restricted funds shall be included as "Intangible Assets" only to the extent that the amount of such funds exceeds the amount thereof on June 30, 1996. 3. Amendments to Section 2.2 of the Loan Agreement. (a) Section 2.2 of the Loan Agreement is hereby amended by deleting clause (A) thereof in its entirety and substituting in lieu thereof the following revised clause (A): (A) Term Loan. The Term Loan shall bear interest on the unpaid principal balance thereof from time to time outstanding at a rate of interest per annum equal to the Base Rate plus two and one-fourth percent (2-1/4%). In connection with the foregoing, Borrowers acknowledge that from and after the date hereof, Borrowers shall no longer have the option to elect that the Term Loan bear interest at a rate based on the LIBOR Rate, and all provisions of the Loan Agreement pertaining to the LIBOR Rate shall be of no further force or effect. (b) Section 2.2 of the Loan Agreement is hereby further amended by changing the percentage "one and one-fourth percent (1-1/4%)" in clause (B) thereof to "two percent (2%)." (c) Section 2.2(C) of the Loan Agreement is hereby deleted in its entirety and the following Section 2.2(C) of the Loan Agreement is substituted in lieu thereof: (C) Performance Price Adjustments. Notwithstanding any other term of this Section 2.2, on the effective date of that certain Third Amendment to Loan and Security Agreement, dated as of August 16, 1996, among the parties to this Agreement, as provided in Section 11 thereof, the otherwise applicable interest rates payable on the Loans shall be reduced, in each instance, by one- half of one percent (1/2%) per annum; provided, however, that (i) no such interest rate time reduction shall be granted if at the time when such reduction would become effective as provided herein, any Default or Events of Default then exists; and (ii) the interest rate reduction shall be rescinded if at any time after it becomes effective any Default or Event of Default occurs (but without limitation of Lender s right to also charge interest at the default rate as provided in clause (D) below). 4. Amendments to Section 5.1 of the Loan Agreement. (a) Section 5.1(E) of the Loan Agreement is hereby deleted in its entirety and the following revised Section 5.1(E) is substituted in lieu thereof: (E) Borrowing Base Certificates, Registers and Journals. (1) On a weekly basis, within three (3) days after the end of each week (or more frequently if Lender shall so request), the Parent shall deliver to Lender a Borrowing Base Certificate updated to reflect weekly sales and collections of the Loan Parties, individually, and an assignment schedule of all Accounts created by each Loan Party in such month; and (2) on a monthly basis, within twenty (20) days after the end of each calendar month (or more frequently if Lender shall so request), the Parent shall deliver to Lender (x) an aged trial balance of all existing Accounts of each Loan Party; (y) a reconciliation report with respect to all disbursements and repayments of Loan proceeds in the preceding month and (z) an accounts payable aging for each Loan Party. (b) Section 5.1(M) of the Loan Agreement is hereby deleted in its entirety and the following revised Section 5.1(M) is substituted in lieu thereof: (M) Projections. As soon as available and in any event no later than September 30 of each Fiscal Year, Parent will deliver consolidated and consolidating Projections of Parent and its Subsidiaries for the forthcoming Fiscal Year, month- by-month. 5. Amendment to Section 5.3 of the Loan Agreement. Section 5.3 of the Loan Agreement is hereby amended by deleting the words and figure "Five Hundred Dollars ($500)" from the last sentence thereof and substituting in lieu thereof the words and figure "Six Hundred Fifty Dollars ($650)" and by deleting from such sentence the phrase "not to exceed, however, in aggregate amount, Twenty Thousand Dollars ($20,000) unless a Default or an Event of Default has occurred which is continuing". 6. Amendment to Section 6 of the Loan Agreement. Section 6 of the Loan Agreement is hereby deleted in its entirety and the following revised Section 6 is substituted in lieu thereof: SECTION 6 FINANCIAL COVENANTS Parent covenants and agrees that so long as any of the Commitments remain in effect and until payment in full of all Obligations, Parent shall comply with all covenants in this Section 6. 6.1 Tangible Net Worth. Parent shall maintain Tangible Net Worth of at least the amount set forth below at the end of each applicable period set forth below: Applicable Period Amount ________________________________ _________ As of 6/30/96 ($600,000) As of 9/30/96 ($100,000) As of 12/31/96 and as of $500,000 the end of each fiscal quarter of Borrower thereafter 6.2 Minimum EBITDA. Parent shall achieve an EBITDA of at least the amount set forth below for each applicable period set forth below: Applicable Period Amount _____________________________ __________ Six Months Ended 6/30/96 $ 900,000 Nine Months Ended 9/30/96 $1,700,000 Twelve Months Ended 12/31/96 $2,500,000 Twelve Months Ended 3/31/97 $3,000,000 and for each twelve month period ending on the last day of each fiscal quarter thereafter 6.3 Capital Expenditure Limits. The aggregate amount of all Capital Expenditures of Parent and its Subsidiaries (excluding trade-ins and excluding (a) Capital Expenditures in respect of replacement assets to the extent funded with casualty insurance proceeds and (b) Capital Expenditures financed pursuant to Capital Leases permitted pursuant to Section 7.1 hereof) will not exceed the amount set forth below for each applicable period set forth below: Applicable Period Amount ___________________________________ ___________ January 1, 1996 - December 31, 1996 $1,820,000 January 1, 1997 - January 31, 1998 $1,250,000 6.4 Fixed Charge Coverage. Parent shall not permit Fixed Charge Coverage for each applicable period set forth below to be less than the amount set forth below for such period (provided, however, that in computing Fixed Charge Coverage, Capital Expenditures pursuant to Capital Leases permitted pursuant to Section 7.1 hereof and Indebtedness paid by Perma-Fix, Inc. in connection with the sale of its Re-Tech division shall be excluded): Applicable Period Ratio Six Months Ended 6/30/96 .14:1 Seven Months Ended 7/31/96 .20:1 Eight Months Ended 8/31/96 .35:1 Nine Months Ended 9/31/96 .40:1 Ten Months Ended 10/31/96 .50:1 Eleven Months Ended 11/30/96 .55:1 Twelve Months Ended 12/31/96 .55:1 Twelve Months Ended 1/31/97 .75:1 Twelve Months Ended 2/28/97 .75:1 Twelve Months Ended 3/31/97 .75:1 Twelve Months Ended 4/30/97 .75:1 Twelve Months Ended 5/31/97 .75:1 Twelve Months Ended 6/30/97 .75:1 Twelve Months Ended 7/31/97 .75:1 Twelve Months Ended 8/31/97 .75:1 Twelve Months Ended 9/30/97 .75:1 Twelve Months Ended 10/31/97 .75:1 Twelve Months Ended 11/30/97 .75:1 Twelve Months Ended 12/31/97 1.00:1 6.5 Maximum Days Receivable. Parent will not permit (A) the product of (x) the aggregate dollar amount of the Accounts of all Loan Parties as at the end of any fiscal quarter, times (y) ninety (90), divided by (B) the Loan Parties net sales revenue in respect of such fiscal quarter, to exceed seventy-five (75). 6.6 Current Ratio. Borrower shall maintain at all times a ratio of "Current Assets" (as defined under GAAP) to trade payables of at least 1.3:1. 7. Amendment to Section 7.5 of the Loan Agreement. Section 7.5 of the Loan Agreement is hereby amended by adding a new clause (d) at the end of such Section to read as follows: (d) Parent may pay dividends to each holder of Third Offering Shares, in either cash or common stock, in an amount not in excess of $60 per share in each year, so long as no Default or Event of Default has occurred and is continuing or will result from the making of such payment, and, in the case of dividends to be paid in cash, on each day for a period of thirty (30) consecutive days prior to the making of such payment, Borrower has had "Excess Availability" (as defined below) of at least $500,000 and (e) Parent may purchase, using proceeds of the sale of the Third Offering Shares pursuant to the Third Offering, up to 920,000 shares of its common stock issued upon conversion of the Shares and the Second Offering Shares as provided in Section 7 of the Subscription and Purchase Agreement further described in the definition of "Third Offering" set forth in Section 1.1 hereof. For purposes hereof, "Excess Availability" shall mean, at any time, the Maximum Revolving Loan Amount minus the amount of the outstanding Revolving Loans. 8. Amendment to Section 7.6 of the Loan Agreement. Section 7.6 of the Loan Agreement is hereby amended by deleting the proviso at the end of such Section (beginning with the words "provided, however," and ending with the words "Second Offering Shares") and substituting in lieu thereof the following: "provided, however, that Parent may issue (i) the Shares pursuant to the Offering, (ii) the Second Offering Shares pursuant to the Second Offering, (iii) the Third Offering Shares pursuant to the Third Offering, (iv) the Third Offering Warrants pursuant to the Third Offering, (v) shares of common stock upon conversion of the Shares, (vi) shares of common stock upon conversion of the Second Offering Shares, (vii) shares of common stock upon conversion of the Third Offering Shares, (viii) shares of common stock upon the exercise of the Third Offering Warrants, (ix) shares of common stock to Louis Centofanti in reimbursement for certain expenses incurred by him in the amount of $13,971 on behalf of Borrowers and in exchange for certain cash equity contributions previously made by him to Parent, (x) 152,000 shares of common stock to Robert Foster as compensation for consulting services, 30,000 shares of common stock to Gary Myers as compensation for consulting services, 40,000 shares of common stock to Bobby Meeks as compensation for consulting services and 12,000 shares of common stock to David Cowerd as compensation for consulting services, and (xi) shares of common stock pursuant to its 1992 Outside Directors Stock Option Plan, its 1993 Nonqualified Stock Option Plan and its 1991 Performance Equity Plan. 9. Amendment to Section 8.1 of the Loan Agreement. Section 8.1(F) of the Loan Agreement is hereby amended by deleting the words and figure "twenty percent (20%)" in clause (3) thereof and substituting in lieu thereof the words and figure "five percent (5%)." 10. Waiver of Existing Events of Default. Lender hereby waives the Existing Events of Default; provided, however, that such waiver shall not be, or be deemed to be, a waiver of any other Defaults or Events of Default which may presently or hereafter exist. 11. Conditions Precedent. This Amendment shall not become effective unless and until each of the following conditions shall have been satisfied on or prior to August 5, 1996, as determined by Lender in its sole discretion: (a) The Loan Parties party thereto and Ally Capital shall have entered into an amendment to the Ally Capital Lease, in form and substance satisfactory to Lender, pursuant to which any tangible net worth covenant set forth therein shall be amended to correspond to the Tangible Net Worth covenant set forth in Section 5 hereof and any violations of the debt to net worth event of default set forth therein shall be waived. (b) Each of the Loan Parties shall have executed and delivered in favor of Lender such additional Loan Documents and amendments to existing Loan Documents as Lender shall deem to be necessary or appropriate in connection herewith. (c) Except for the Existing Events of Default, no Default or Event of Default shall have occurred and be continuing. (d) In consideration for the accommodations by Lender to the Loan Parties contemplated hereby the Loan Parties shall have paid to Lender a fee of $25,000, which fee shall be fully-earned on the date hereof and non-refundable, and shall be in addition to, and not in lieu of, all fees, interest and expenses payable by the Loan Parties under the Loan Agreement. (e) Since December 31, 1995, there shall have occurred no material adverse change in the business, operations, financial conditions, profits or prospect of any Loan Party or in the Collateral. (f) Parent shall have obtained an equity contribution of at least $3,300,000 in unrestricted cash pursuant to the Third Offering. 12. Miscellaneous. (a) Effect of Amendment. Except as set forth expressly herein, all terms of the Loan Agreement and the other Loan Documents shall be and remain in full force and effect and shall constitute the legal, valid, binding and enforceable obligations of Parent and Borrowers. Without limitation of the foregoing, Parent and each Borrower hereby ratify and reaffirm the Parent Guaranty or Cross- Guaranty, as applicable, to which it is party, after giving effect to this Amendment. To the extent that any terms and conditions in any of the Loan Documents shall contradict or be in conflict with any terms or conditions of the Loan Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified and amended accordingly to reflect the terms and conditions of the Loan Agreement as modified and amended hereby. Nothing contained herein shall be construed as a consent to any matter prohibited by the Loan Agreement (except as expressly provided herein), including, without limitation, any redemption by Parent of the Third Offering Shares. (b) Reaffirmation of Representations and Warranties. Parent and Borrower hereby notify and reaffirm each and every representation and warranty set forth in the Loan Agreement and the other Loan Documents effective as of the date hereof. (c) Ratification. Parent and each Borrower hereby restate, ratify and reaffirm each and every term and condition set forth in the Loan Agreement, as amended hereby, and the other Loan Documents effective as of the date hereof. (d) Estoppel. To induce Lenders and Agent to enter into this Amendment and to continue to make Revolving Loans to Borrowers under the Loan Agreement, Parent and each Borrower hereby acknowledge and agree that, as of the date hereof, there exists no Event of Default or Default and no right of offset, defense, counterclaim or objection in favor of Parent or any Borrower as against Lender with respect to the Obligations. (e) Waiver and Release. Parent and each Borrowers waive and affirmatively agree not to allege or otherwise pursue any or all defenses, affirmative defenses, counterclaims, claims, causes of action, set-offs, or other rights that any of them may have to contest (i) any provision of the Loan Agreement, this Amendment, or the other Loan Documents; (ii) the right of Lender to all proceeds from the Collateral; (iii) the ownership and security interest of Lender in any property (whether real or personal tangible or intangible), right or other interest, now or hereafter arising in connection with the Collateral; (iv) the conduct of Lender in administering this Amendment, the Loan Agreement, the other Loan Documents or otherwise. In consideration of the terms and conditions of this Amendment, the receipt and sufficiency of which consideration are hereby acknowledged by Parent and each Borrower, Parent and each Borrower hereby release Lender, its parent and affiliates, its agents, servants, employees, directors, attorneys, successors, and assigns from any and all liabilities, claims, actions, or causes of action accruing to Parent or any Borrower or their respective affiliates, arising out of or in any manner connected with this Amendment, the Loan Agreement, the other Loan Documents or Lender's activities, including, without limitation, all actions taken or not taken by Lender in connection with the administration of this Amendment, the Loan Agreement, the other Loan Documents or otherwise. (f) Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Illinois without regard to its conflicts of law rules. (g) Costs and Expenses. Parent and Borrowers agree to pay promptly on demand all reasonable costs and expenses of Lender in connection with the preparation, execution, delivery and enforcement of this Amendment, including, without limitation, the reasonable fees and out-of-pocket expenses of Lender's counsel. (h) Counterparts. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same agreement. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their proper and duly authorized officers as of the day and year first above written. "LENDER" HELLER FINANCIAL, INC., a Delaware corporation By /s/ Miles D. McManus _________________________ Miles D. McManus Senior Vice President "PARENT" AND "BORROWER" PERMA-FIX ENVIRONMENTAL SERVICES, INC., a Delaware corporation By /s/ Louis F. Centofanti _______________________________________ Name: Dr. Louis F. Centofanti ________________________________ Title: CEO _________________________________ "BORROWERS" INDUSTRIAL WASTE MANAGEMENT, INC., a Missouri corporation By /s/ Louis F. Centofanti _______________________________________ Name: Dr. Louis F. Centofanti ________________________________ Title: CEO _________________________________ PERMA-FIX, INC., an Oklahoma corporation By /s/ Louis F. Centofanti _______________________________________ Name: Dr. Louis F. Centofanti ________________________________ Title: CEO _________________________________ PERMA-FIX OF DAYTON, INC., an Ohio corporation By /s/ Louis F. Centofanti _______________________________________ Name: Dr. Louis F. Centofanti ________________________________ Title: CEO _________________________________ PERMA-FIX OF FLORIDA, INC., a Florida corporation By /s/ Louis F. Centofanti _______________________________________ Name: Dr. Louis F. Centofanti ________________________________ Title: CEO _________________________________ PERMA-FIX OF FORT LAUDERDALE, INC., a Florida corporation By /s/ Louis F. Centofanti _______________________________________ Name: Dr. Louis F. Centofanti ________________________________ Title: CEO _________________________________ PERMA-FIX OF MEMPHIS, INC., a Tennessee corporation By /s/ Louis F. Centofanti _______________________________________ Name: Dr. Louis F. Centofanti ________________________________ Title: CEO _________________________________ PERMA-FIX OF NEW MEXICO, INC., a New Mexico corporation By /s/ Louis F. Centofanti _______________________________________ Name: Dr. Louis F. Centofanti ________________________________ Title: CEO _________________________________ PERMA-FIX TREATMENT SERVICES, INC., an Oklahoma corporation By /s/ Louis F. Centofanti _______________________________________ Name: Dr. Louis F. Centofanti ________________________________ Title: CEO _________________________________ SCHREIBER, GRANA & YONLEY, INC., a Missouri corporation MINTECH, INC., an Oklahoma corporation By /s/ Louis F. Centofanti _______________________________________ Name: Dr. Louis F. Centofanti ________________________________ Title: CEO _________________________________ RECLAMATION SYSTEMS, INC., an Oklahoma corporation By /s/ Louis F. Centofanti _______________________________________ Name: Dr. Louis F. Centofanti ________________________________ Title: CEO _________________________________ EXHIBIT A EXISTING EVENTS OF DEFAULT 1. Event of Default under Section 8.1(C) of the Loan Agreement as a result of Parent s failure to deliver an accountant s report as to its and its Subsidiaries financial statements for the fiscal year ending December 31, 1995 without a going-concern qualification as required pursuant to Section 5.1(B) of the Loan Agreement. 2. Events of Default under Section 8.1(C) of the Loan Agreement as a result of Parent s failure to comply with the financial covenants set forth in Sections 6.1, 6.2, 6.3, 6.5 and 6.7 of the Loan Agreement for its Fiscal Year ending December 31, 1995 and its fiscal quarter ending March 31, 1996. EX-4 4 EXHIBIT 4.2 - LETTER AGREEMENT WITH HELLER FINANCIAL, INC., DATED JUNE 19, 1996 June 19, 1996 Perma-Fix Environmental Services, Inc. 1940 N.W. 67th Place Gainesville, FL 32653 Attention: Robert W. Foster, Jr. RE: LOAN AND SECURITY AGREEMENT DATED AS OF JANUARY 27, 1995 (THE LOAN AGREEMENT ), AS AMENDED, BETWEEN PERMA-FIX ENVIRONMENTAL SERVICES, INC., A DELAWARE CORPORATION ( PARENT ) AND EACH OF THOSE DIRECT AND INDIRECT SUBSIDIARIES OF PARENT WHOSE NAMES ARE INSCRIBED ON THE SIGNATURE PAGES OF THE LOAN AGREEMENT (COLLECTIVELY, WITH PARENT, BORROWERS OR INDIVIDUALLY, A BORROWER ) AND HELLER FINANCIAL, INC., A DELAWARE CORPORATION ( LENDER ) Gentlemen: Reference is made to the Loan Agreement. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Loan Agreement. This letter evidences the agreement of Lender and Borrower as follows: 1. Establishment of Overformula Line. (a) Lender shall make available to Borrower, during the Overformula Line Period (as defined below), a temporary overformula line of credit ( Overformula Line ) in the amount of the Overformula Line Amount (as defined below). As a result of the establishment of the Overformula Line, during the Overformula Line Period, the aggregate outstanding amount of Revolving Loans may exceed the Borrowing Base by an amount of up to the Overformula Line Amount, provided that in no event shall the aggregate outstanding amount of Revolving Loans at any time exceed the Revolving Loan Commitment amount. On the last day of the Overformula Line Period, the Overformula Line shall terminate, and Borrower shall pay to Lender, in immediately available funds, without demand or notice, all outstanding advances under the Overformula Line, together with all accrued but unpaid interest thereon. (b) As used herein, the term Overformula Line Period shall mean the period commencing on the date of the first advance to Borrower under the Overformula Line and ending on the earliest of (i) 90 days after the date of such first advance, (ii) September 30, 1996, (iii) the termination of the Revolving Loan Commitment pursuant to subsection 8.3 of the Loan Agreement, or (iv) the Termination Date. (c) As used herein, the term Overformula Line Amount means, at any time of determination thereof, $250,000. (d) The making of advances by Lender to Borrower under the Overformula Line shall be subject to all of the terms and conditions set forth in the Loan Agreement for the making of advances under the Revolving Loan, including, without limitation, satisfaction of the conditions set forth in subsection 3.1 of the Loan Agreement, with the exception of section 3.1(c) and 3.1(f). All advances under the Overformula Line shall constitute Obligations, shall bear interest at the same rate of interest applicable to all other advances under the Revolving Loan and shall be secured by Lender s security interest in the Collateral and by all other security interests, liens, mortgages, claims, and encumbrances now or from time to time hereafter granted by Borrower to Lender. 2. Overformula Line Fee. As consideration for Lender s establishment of the Overformula Line, Borrower shall pay to Lender on the last day of each month during which any advance of the Overformula Line is outstanding a fee in the amount of one percent (1%) per month of the average daily balance under the Overformula Line. This fee shall be in addition to all other fees that are due and payable under the Loan Agreement. 3. Conditions. The effectiveness of the Overformula Line and the obligation of Lender to make advances to Borrower thereunder are subject to satisfaction of the following: (a) Borrower shall have duly executed and delivered this letter agreement; (b) Louis Centafoni will provide a one hundred thousand dollar ($100,000) equity infusion in Borrowers prior to any advance under the Overformula Line. 4. Loan Agreement Representations. All of the representations set forth in the Loan Agreement are accurate in all material respects as of the date hereof. Please evidence your acknowledgment of and agreement to the terms and conditions of this letter by executing this letter in the place indicated below. Cordially, HELLER FINANCIAL, INC. By: ________________________ Its: _________________________ (SIGNATURES CONTINUED ON NEXT PAGE) Accepted and Agreed this 21st day of June, 1996. PERMA-FIX ENVIRONMENTAL SERVICES, INC., a Delaware corporation By: __________________________ Name: ________________________ Title: _________________________ Attest: ________________________ Name: ________________________ Title: _________________________ INDUSTRIAL WASTE MANAGEMENT, INC., a Missouri corporation By: __________________________ Name: ________________________ Title: _________________________ Attest: ________________________ Name: ________________________ Title: _________________________ PERMA-FIX, INC., an Oklahoma corporation By: __________________________ Name: ________________________ Title: _________________________ Attest: ________________________ Name: ________________________ Title: _________________________ (SIGNATURES CONTINUED ON NEXT PAGE) PERMA-FIX OF DAYTON, INC., a Ohio corporation By: __________________________ Name: ________________________ Title: _________________________ Attest: ________________________ Name: ________________________ Title: _________________________ PERMA-FIX OF FLORIDA, INC., a Florida corporation By: __________________________ Name: ________________________ Title: _________________________ Attest: ________________________ Name: ________________________ Title: _________________________ PERMA-FIX OF FORT LAUDERDALE, INC., a Florida corporation By: __________________________ Name: ________________________ Title: _________________________ Attest: ________________________ Name: ________________________ Title: _________________________ (SIGNATURES CONTINUED ON NEXT PAGE) PERMA-FIX OF MEMPHIS, INC., a Tennessee corporation By: __________________________ Name: ________________________ Title: _________________________ Attest: ________________________ Name: ________________________ Title: _________________________ PERMA-FIX OF NEW MEXICO, INC., a New Mexico corporation By: __________________________ Name: ________________________ Title: _________________________ Attest: ________________________ Name: ________________________ Title: _________________________ PERMA-FIX TREATMENT SERVICES, INC., an Oklahoma corporation By: __________________________ Name: ________________________ Title: _________________________ Attest: ________________________ Name: ________________________ Title: _________________________ (SIGNATURES CONTINUED ON NEXT PAGE) SCHREIBER, GRANA & YONLEY, INC., a Missouri corporation By: __________________________ Name: ________________________ Title: _________________________ Attest: ________________________ Name: ________________________ Title: _________________________ MINTECH, INC., an Oklahoma corporation By: __________________________ Name: ________________________ Title: _________________________ Attest: ________________________ Name: ________________________ Title: _________________________ RECLAMATION SERVICES, INC., an Oklahoma corporation By: __________________________ Name: ________________________ Title: _________________________ Attest: ________________________ Name: ________________________ Title: _________________________ EX-4 5 EXHIBIT 4.3 - FIRST AMENDMENT TO ALLY CAPITAL CORPORATION EQUIPMENT FINANCING AGREEMENT AMENDMENT TO LEASE AGREEMENT DATED August 16, 1996 _______________ This Amendment becomes a part of the Equipment Lease Agreement dated as of October 12, 1994, and the accompanying Rider No. 2, wherein Perma-Fix Environmental Services Inc., Perma-Fix of Memphis Inc., Perma-Fix of Ft. Lauderdale Inc., Perma-Fix of Dayton Inc., and Perma-Fix Treatment Services Inc. as Lessee and Ally Capital Corporation is Lessor. Paragraph No. 4 of the above referenced lease which contains a 3.0 million tangible net worth covenant require- ment is hereby deleted in its entirety and the covenants as contained in the attached "Exhibit A", are substituted in lieu thereof. All other conditions of the Equipment Lease Agreement remain the same. PERMA-FIX SERVICES INC. AND PERMA-FIX OF MEMPHIS INC. AND PERMA-FIX OF FT. LAUDERDALE INC. AND PERMA-FIX OF INC. AND PERMA-FIX TREATMENT SERVICES INC. CO-LESSEES ALLY CAPITAL CORPORATION PERMA-FIX ENVIRONMENTAL SERVICES, INC. By: By: ______________________ _____________________________ Name: Name: Richard T. Kelecy _________________ ________________________ Title: Title: Chief Financial Officer _________________ ________________________ PERMA-FIX OF MEMPHIS INC. By: _______________________________ Name: Richard T. Kelecy __________________________ Title: Chief Financial Officer __________________________ PERMA-FIX OF FT. LAUDERDALE INC. By: ______________________________ Name: Richard T. Kelecy __________________________ Title: Chief Financial Officer ________________________ PERMA-FIX OF DAYTON INC. By: ______________________________ Name: Richard T. Kelecy _________________________ Title: Chief Financial Officer PERMA-FIX TREATMENT SERVICES INC. By: ______________________________ Name: Richard T. Kelecy _________________________ Title: Chief Financial Officer ________________________ Exhibit "A" to Amendment to Lease Agreement Dated: August 16, 1996 _________________ FINANCIAL COVENANTS Section 1 Perma-Fix Environmental Services Inc. and its subsidiaries on a consolidated basis covenant and agree that until payment in full of all Obligations owed by Perma-Fix Environmental Services Inc. to Ally Capital are paid, Perma-Fix shall comply with all covenants in this Section 1. The terms used in this Exhibit "A" to amendment to lease agreement shall have the meanings as defined in the loan and security agreement dated as of January 27, 1995 among Perma-Fix Environmental Services Inc. and subsidiaries and Heller Financial Inc. as amended to the date of this amendment. 1.1 Tangible Net Worth __________________ Perma-Fix Environmental Services Inc. shall maintain Tangible Net Worth of at least the amount set forth below at the end of each applicable period set forth below: Applicable Period Amount _________________ ______ As of 6/30/96 ($600,000) As of 9/30/96 ($100,000) As of 12/31/96 and as of $500,000 the end of each fiscal quarter of Borrower thereafter 1.2 Minimum EBITDA ______________ Perma-Fix Environmental Services Inc. shall achieve an EBITDA of at least the amount set forth below for each applicable period set forth below: Applicable Period Amount _________________ ______ Six Months Ended 6/30/96 $ 900,000 Nine Months Ended 9/30/96 $1,700,000 Twelve Months Ended 12/31/96 $2,500,000 Twelve Months Ended 3/31/97 $3,000,000 and for each twelve month period ending on the last quarter day of each fiscal quarter thereafter 1.3 Capital Expenditure Limits __________________________ The aggregate amount of all Capital Expenditures of Perma- Fix Environmental Services Inc. and its Subsidiaries (excluding trade-ins and excluding (a) Capital Expenditures in respect of replacement assets to the extent funded with casualty insurance proceeds and (b) Capital Expenditures financed pursuant to Capital Leases permitted will not exceed the amount set forth below for each applicable period set forth below: Applicable Period Amount _________________ _______ January 1, 1996 - December 31, 1996 $1,820,000 January 1, 1997 - January 31, 1998 $1,250,000 1.4 Fixed Charge Coverage _____________________ Perma-Fix Environmental Services Inc. shall not permit Fixed Charge Coverage for each applicable period set forth below to be less than the amount set forth below for such period (provided, however, that in computing Fixed Charge Coverage, Capital Expenditures pursuant to Capital Leases permitted pursuant to Section 7.1 hereof and Indebtedness paid by Perma-Fix, Inc. in connection with the sale of its Re-Tech division shall be excluded): Applicable Period Ratio Six Months Ended 6/30/96 .14:1 Seven Months Ended 7/31/96 .20:1 Eight Months Ended 8/31/96 .35:1 Nine Months Ended 9/31/96 .40:1 Ten Months Ended 10/31/96 .50:1 Eleven Months Ended 11/30/96 .55:1 Twelve Months Ended 12/31/96 .55:1 Twelve Months Ended 1/31/97 .75:1 Twelve Months Ended 2/28/97 .75:1 Twelve Months Ended 3/31/97 .75:1 Twelve Months Ended 4/30/97 .75:1 Twelve Months Ended 5/31/97 .75:1 Twelve Months Ended 6/30/97 .75:1 Twelve Months Ended 7/31/97 .75:1 Twelve Months Ended 8/31/97 .75:1 Twelve Months Ended 9/30/97 .75:1 Twelve Months Ended 10/31/97 .75:1 Twelve Months Ended 11/30/97 .75:1 Twelve Months Ended 12/31/97 1.00:1 1.5 Maximum Days Receivable _______________________ Parent will not permit (A) the product of (x) the aggregate dollar amount of the Accounts of all Loan Parties as at the end of any fiscal quarter, times (y) ninety (90), divided by (B) the Loan Parties net sales revenue in respect of such fiscal quarter, to exceed seventy-five (75). 1.6 Current Ratio. _____________ Borrower shall maintain at all times a ratio of "Current Assets" (as defined under GAAP) to trade payables of at least 1.3:1. ISTE:\N-P\PESI\10Q\696\EXHIBIT4.3 EX-4 6 EXHIBIT 4.4 - SUBSCRIPTION AND PURCHASE AGREEMENT, DATED JULY 17, 1996, BETWEEN THE COMPANY AND RBB BANK AKTIENGESELLSCHAFT SUBSCRIPTION AND PURCHASE AGREEMENT FOR 5,500 SHARES OF SERIES 3 CLASS C CONVERTIBLE PREFERRED STOCK, PAR VALUE $.001 PER SHARE AND 2,000,000 WARRANTS, EACH WARRANT TO PURCHASE ONE SHARE OF COMMON STOCK OF PERMA-FIX ENVIRONMENTAL SERVICES, INC. (a Delaware corporation) SUBSCRIPTION AND PURCHASE AGREEMENT (the "Agreement") dated as of the 17th day of July, 1996, by and between PERMA-FIX ENVIRONMENTAL SERVICES, INC., a Delaware corporation, having offices at 1940 Northwest 67th Place, Gainesville, Florida 32606- 1649 (the "Company"), and RBB BANK AKTIENGESELLSCHAFT, organized under the laws of Austria, and having its principal offices at Burgring 16, 8101 Graz, Austria (the "Subscriber"). W I T N E S S E T H: WHEREAS, Subscriber and the Company have arranged for this Subscription and Purchase Agreement (the "Agreement") to provide for the subscription and, if such subscription as set forth in this Agreement is accepted by the Company, the purchase by the Subscriber, on the terms and subject to the conditions set forth in this Agreement, of (i) 5,500 shares of a convertible preferred stock, par value $.001 per share, to be designated by the Company's Board of Directors as "Series 3 Class C Convertible Preferred Stock" (hereinafter referred to as the "Series 3 Preferred Stock"), and (ii) an aggregate of 2,000,000 common stock purchase warrants, each common stock purchase warrant to purchase one share of the Company's common stock, par value $.001 per share (the "Common Stock") at those exercise prices hereinbelow set forth (a "Warrant" and collectively, the "Warrants"); and WHEREAS, the Series 3 Preferred Stock and the Warrants are collectively referred to herein from time to time as "Securities"; and WHEREAS, the Company's Common Stock is listed for trading on the Boston Stock Exchange and the Nasdaq SmallCap Market, and the Company is subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and has been subject to such filing requirements for the past ninety (90) days; and WHEREAS, the Subscriber is an "accredited investor" as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the "Act"); and WHEREAS, the Subscriber is not a "U. S. Person" as defined in Regulation S promulgated under the Securities Act of 1933, as amended (the "Act"); and WHEREAS, the Securities to be sold in accordance with this Agreement shall not be registered securities under federal or state securities laws or quoted or listed for trading on any securities exchange, organized market or quotation system at the time of acquisition hereunder; and WHEREAS, in order to induce the Subscriber to enter into this Agreement and to subscribe for and purchase the Securities on the terms and subject to the conditions hereof, the Company is granting certain registration rights hereunder with respect to the Common Stock issuable upon the conversion of the Series 3 Preferred Stock and the Common Stock issuable upon the exercise of the Warrants as hereinafter set forth; and WHEREAS, in reliance upon certain representations made by the Subscriber herein, the transactions contemplated by this Agreement are such that the offer and sale of Securities by the Company hereunder will be exempt from registration under applicable federal and state securities laws pursuant to exemptions made available under such laws. NOW, THEREFORE, for and in consideration of the premises, and the mutual representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. Subscription for Purchase of Securities. a. Sale and Purchase. On the basis of the representations, warranties, covenants and agreements, and subject to the terms and conditions set forth herein, upon the Closing hereof (as that term is defined in Section 2(a) below) the Company agrees to sell, transfer, convey and deliver to the Subscriber, and the Subscriber agrees to purchase, acquire and accept delivery from the Company, the Securities for an aggregate purchase price of United States ("U. S.") $5,500,000 (the "Purchase Price"). b. Reporting Company. Although the Securities, the shares of Common Stock issuable upon conversion of the Series 3 Preferred Stock (the "Conversion Shares") and the shares of Common Stock issuable upon exercise of the Warrants (the "Warrant Shares") shall not be registered upon the Closing under federal or state securities laws or any rules or regulations promulgated thereunder, the Company is a public reporting company and has filed or obtained an extension to file all reports required to be filed by Section 13 or 15(d) of the Exchange Act, since the Company was required to file such reports. Subscriber has had the opportunity to review, and has reviewed, all such reports and information which such Subscriber deemed material to an investment decision regarding the purchase of the Securities hereunder. c. Terms of the Series 3 Preferred Stock. The Series 3 Preferred Stock shall contain and be subject to the terms, conditions, preferences and restrictions set forth in the Certificate of Designations attached hereto as Exhibit "A". 2. Payment of Purchase Price; Delivery of Securities. a. Closing. The closing of the purchase of the Securities contemplated by this Agreement shall occur on or about July 19, 1996, at the offices of the Company or at such other mutually convenient time or at such other mutually convenient place as agreed upon by the parties (the "Closing"). b. Purchase Price and Payment. At the Closing, Subscriber shall deliver to the Company, in cash, by wire transfer, the Purchase Price in U. S. dollars and upon receipt by the Company of the Purchase Price, the Company shall cause to be delivered: i. to the Subscriber, written evidence from the Secretary of State of the State of Delaware that the Certificate of Designations has been filed in the Office of the Secretary of State of the State of Delaware on or before the date of Closing; ii. to Conner & Winters, a Professional Corporation, a certificate or certificates representing the shares of Series 3 Preferred Stock purchased by the Subscriber hereunder, in such denominations as Subscriber shall request, to be held in escrow by Conner & Winters, a Professional Corporation for the Subscriber; and iii. to the Subscriber, (A) a common stock purchase warrant entitling the Subscriber to purchase after December 31, 1996, until July 18, 2001, an aggregate of up to 1,000,000 Warrant Shares at an exercise price equal to $2.00 per share, substantially in the form of Exhibit "B" annexed hereto (sometimes hereinafter referred to as the "$2.00 Warrants"), and (B) a common stock purchase warrant entitling the Subscriber to purchase after December 31, 1996, until July 18, 2001, an aggregate of up to 1,000,000 Warrant Shares at an exercise price equal to $3.50 per share, substantially in the form of Exhibit "C" annexed hereto (sometimes hereinafter referred to as the "$3.50 Warrants"). c. Restrictive Legends. Subject to the provisions of Section 5 below, all certificates representing the Securities shall bear the restrictive legend substantially in the form set forth in Section 6 below which shall include, but not be limited to, a legend to the effect that the securities represented by such certificate have not been registered under the Securities Act of 1933, as amended (the "Act"), and unless there is an effective registration statement relating thereto, such securities may not be offered, sold, transferred, mortgaged, pledged or hypothecated without an exemption from registration and an opinion of counsel to the Company with respect thereto, or an opinion from counsel for the Subscriber, which opinion is satisfactory to the Company, to the effect that registration under the Act is not required in connection with such sale or transfer and the reasons therefor. The legend on all such certificates shall also make reference to the registration rights set forth in Section 5 hereof. 3. Representations, Warranties and Covenants of Subscriber. In connection with this Agreement, the Subscriber hereby represents, warrants and covenants to the Company as follows: a. Investment Intent. The Subscriber represents and warrants that the Securities being purchased (and any underlying Conversion Shares and Warrant Shares) are being purchased or acquired solely for the Subscriber's own account, for investment purposes only and not with a view toward the distribution or resale to others. Subscriber acknowledges, understands and appreciates that the Securities have not been registered under the Act by reason of a claimed exemption under the provisions of such Act which depends, in large part, upon Subscriber's representations as to investment invention, investor status and related and other matters set forth herein. Subscriber understands that, in the view of the United States Securities and Exchange Commission (the "SEC"), among other things, a purchase now with an intent to distribute or resell would represent a purchase and acquisition with an intent inconsistent with its representation to the Company, and the SEC might regard such a transfer as a deferred sale for which the registration exemption is not available. Subscriber agrees and consents to the placement of a legend on the certificate(s) representing the Securities purchased and acquired hereunder, stating that such Securities have not been registered under the Act or applicable state securities laws. b. Certain Risk. The Subscriber recognizes that the purchase of the Securities involves a high degree of risk in that (i) the Company has sustained losses through March 31, 1996, from its operations, and may require substantial funds in addition to the proceeds of this private placement; (ii) that the Company has a substantial accumulated deficit; (iii) an investment in the Company is highly speculative and only investors who can afford the loss of their entire investment should consider investing in the Company and the Securities; (iv) an investor may not be able to liquidate his investment; (v) transferability of the Securities is extremely limited; (vi) in the event of a disposition an investor could sustain the loss of his entire investment; (vii) the Securities represent non-voting equity securities, and the right to convert into and purchase shares of voting equity securities in a corporate entity that has an accumulated deficit; (viii) no return on investment, whether through distributions, appreciation, transferability or otherwise, and no performance by, through or of the Company, has been promised, assured, represented or warranted by the Company, or by any director, officer, employee, agent or representative thereof; and, (ix) while the Common Stock is presently quoted and traded on the Boston Stock Exchange and the Nasdaq SmallCap Market and while the Subscriber is a beneficiary of certain registration rights provided herein, the Securities subscribed for and that may be purchased under this Agreement and the Conversion Shares issuable upon conversion of the Series 3 Preferred Stock and the Warrant Shares issuable upon exercise of the Warrants (x) are not registered under applicable federal or state securities laws, and thus may not be sold, conveyed, assigned or transferred unless registered under such laws or unless an exemption from registration is available under such laws, as more fully described below, and (y) are not quoted, traded or listed for trading or quotation on the Nasdaq SmallCap Market, or any other organized market or quotation system, and there is therefore no present public or other market for such Securities or the Conversion Shares or the Warrant Shares, nor can there be any assurance that the Common Stock will continue to be quoted, traded or listed for trading or quotation on the Boston Stock Exchange or the Nasdaq SmallCap Market or on any other organized market or quotation system. c. Prior Investment Experience. The Subscriber acknowledges that he has prior investment experience, including investment in non-listed and non-registered securities, or has employed the services of an investment advisor, attorney or accountant to read all of the documents furnished or made available by the Company to it and to evaluate the merits and risks of such an investment on its behalf, and that it recognizes the highly speculative nature of this investment. d. No Review by the SEC. The Subscriber hereby acknowledges that this offering of the Securities has not been reviewed by the SEC because this private placement is intended to be a nonpublic offering pursuant to Sections 4(2) or 3(b) of the Act and/or Regulation D promulgated under the Act. e. Not Registered. The Subscriber understands that the Securities, the Conversion Shares and the Warrant Shares have not been registered under the Act by reason of a claimed exemption under the provisions of the Act which depends, in part, upon his investment intention. In this connection, the Subscriber understands that it is the position of the SEC that the statutory basis for such exemption would not be present if his representation merely meant that his present intention was to hold such securities for a short period, such as the capital gains period of tax statutes, for a deferred sale, for a market rise, assuming that a market develops, or for any other fixed period. The Subscriber realizes that, in the view of the SEC, a purchase now with an intent to resell would represent a purchase with an intent inconsistent with his representation to the Company, and the SEC might regard such a sale or disposition as a deferred sale to which such exemptions are not available. f. No Public Market. The Subscriber understands that there is no public market for the Series 3 Preferred Stock or the Warrants. The Subscriber understands that although there is presently a public market for the Common Stock, including the Common Stock issuable upon conversion of the Series 3 Preferred Stock or exercise of the Warrants, Rule 144 (the "Rule") promulgated under the Act requires, among other conditions, a two- year holding period following full payment of the consideration therefor prior to the resale (in limited amounts) of securities acquired in a nonpublic offering without having to satisfy the registration requirements under the Act. The Subscriber understands that the Company makes no representation or warranty regarding its fulfillment in the future of any reporting requirements under the Exchange Act, or its dissemination to the public of any current financial or other information concerning the Company, as is required by the Rule as one of the conditions of its availability. The Subscriber understands and hereby acknowledges that the Company is under no obligation to register the Securities or the Conversion Shares or the Warrant Shares under the Act, with the exception that the Company is obligated to provide those registration rights set forth in Section 5 hereof. The Subscriber consents that the Company may, if it desires, permit the transfer of the Securities or issuable upon exercise thereof out of its name only when its request for transfer is accompanied by an opinion of counsel reasonably satisfactory to the Company that neither the sale nor the proposed transfer results in a violation of the Act or any applicable state "Blue Sky" laws (collectively, "Securities Laws"). The Subscriber agrees to hold the Company and its directors, officers and controlling persons and their respective heirs, representatives, successors and assigns harmless and to indemnify them against all liabilities, costs and expenses incurred by them as a result of any misrepresentation made by the Subscriber contained herein or any sale or distribution by the Subscriber in violation of any Securities Laws. g. Sophisticated Investor. That (i) the Subscriber has adequate means of providing for the Subscriber's current financial needs and possible contingencies and has no need for liquidity of the Subscriber's investment in the Securities; (ii) the Subscriber is able to bear the economic risks inherent in an investment in the Securities and that an important consideration bearing on its ability to bear the economic risk of the purchase of Securities is whether the Subscriber can afford a complete loss of the Subscriber's investment in the Securities and the Subscriber represents and warrants that the Subscriber can afford such a complete loss; and (iii) the Subscriber has such knowledge and experience in business, financial, investment and banking matters (including, but not limited to, investments in restricted, non- listed and non-registered securities) that the Subscriber is capable of evaluating the merits, risks and advisability of an investment in the Securities. h. SEC Filing. The Subscriber acknowledges that it has been previously furnished with true and complete copies of the following documents which have been filed with the SEC pursuant to Sections 13(a), 14(a), 14(c) or 15(d) of the Exchange Act since January 1, 1996, and that such have been furnished to the Subscriber a reasonable time prior to the date hereof: i. the Company's Form 10-K for the year ended December 31, 1995; ii. the Company's Form 10-Q for the quarter ended March 31, 1996; iii. the Company's Form 8-K, dated February 27, 1996; and, iv. the Company's Form 8-K, dated March 8, 1996. The Subscriber acknowledges having further received from the Company the Company's unaudited consolidated financial statements for the months of April and May, 1996. i. Documents, Information and Access. That (i) Subscriber's decision to purchase the Securities is not based on any promotional, marketing or sales materials, and (ii) Subscriber and its representatives have been afforded, prior to purchase thereof, the opportunity to ask questions of, and to receive answers from, the Company and its management, and has had access to all documents and information which Subscriber deems material to an investment decision with respect to the purchase of Securities hereunder. j. No Registration, Review or Approval. The Subscriber acknowledges and understands that the limited private offering and sale of Securities pursuant to this Agreement has not been reviewed or approved by the SEC or by any state securities commission, authority or agency, and is not registered under the Act or under the securities or "blue sky" laws, rules or regulations of any state. The Subscriber acknowledges, understands and agrees that the Shares are being offered and sold hereunder pursuant to (i) a private placement exemption to the registration provisions of the Act pursuant to Section 3(b) or Section 4(2) of such Act and Regulation D promulgated under such Act) and (ii) a similar exemption to the registration provisions of applicable state securities laws. k. Transfer Restrictions. That Subscriber will not transfer any Securities purchased under this Agreement unless such Securities are registered under the Act and under any applicable state securities or "blue sky" laws (collectively, the "Securities Laws"), or unless an exemption is available under such Securities Laws, and the Company may, if it chooses, where an exemption from registration is claimed by such Subscriber, condition any transfer of Securities out of such Subscriber's name on an opinion of the Company's counsel, to the effect that the proposed transfer is being effected in accordance with, and does not violate, an applicable exemption from registration under the Securities Laws, or an opinion of counsel to the Subscriber, which opinion is satisfactory to the Company, to the effect that registration under the Act is not required in connection with such sale or transfer and the reasons therefor. l. No Short Sale. Subscriber expressly agrees that until such time that it has sold all of the Securities and/or all of the Conversion Shares and Warrant Shares that it shall not, directly or indirectly, through an affiliate (as that term is defined under Rule 405 promulgated under the Act) or by, with or through an unrelated third party or entity, whether or not pursuant to a written or oral understanding, agreement, arrangement scheme, or artifice of nature whatsoever, engage in the short selling of the Company's Common Stock or any other equity securities of the Company, whether now existing or hereafter issued, or engage in any other activity of any nature whatsoever that has the same effect as a short sale, or is a de facto or de jure short sale, of the Company's Common Stock or any other equity security of the Company, whether now existing or hereafter issued, including, but not limited to, the sale of any rights pursuant to any understanding, agreement, arrangement, scheme or artifice of any nature whatsoever, whether oral or in writing, relative to the Company's Common Stock or any other equity securities of the Company whether now existing or hereafter created. m. Reliance. Subscriber understands and acknowledges that the Company is relying upon all of the representations, warranties, covenants, understandings, acknowledgements and agreements contained in this Agreement in determining whether to accept this subscription, sell and issue the Securities to the Subscriber. n. Accuracy or Representations and Warranties. That all of the representations, warranties, understandings and acknowledgments that Subscriber has made herein are true and correct in all material respects as of the date of execution hereof, and that Subscriber will perform and comply fully in all material respects with all covenants and agreements set forth herein, and Subscriber covenants and agrees that until the acceptance of this Agreement by the Company, Subscriber shall inform the Company immediately in writing of any changes in any of the representations or warranties provided or contained herein. o. Indemnity. Subscriber hereby agrees to indemnify and hold harmless the Company, and the Company's successors and assigns, from, against and in all respects of any demands, claims, actions or causes of action, assessments, liabilities, losses, costs, damages, penalties, charges, fines or expenses (including, without limitation, interest, penalties, and attorney and accountants' fees, disbursements and expenses), arising out of or relating to any breach by Subscriber of any representations, warranty, covenant or agreement made by Subscriber in this Agreement. Such right to indemnification shall be in addition to any and all other rights of the Company under this Agreement or otherwise, at law or in equity. p. Survival. Subscriber expressly acknowledges and agrees that all of its representations, warranties, agreements and covenants set forth in this Agreement shall be of the essence hereof and shall survive the execution, delivery and Closing of this Agreement, the sale and purchase of the Securities, the conversion of the Series 3 Preferred Stock, exercise of the Warrants, and the sale of the Conversion Shares and the Warrant Shares. 4. Representations, Warranties and Covenants of the Company. In order to induce Subscriber to enter into this Agreement and to purchase the Securities, the Company hereby represents, warrants and covenants to Subscriber as follows: a. Organization, Authority, Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. The Company has full corporate power and authority to own and operate its properties and assets and to conduct and carry on its business as it is now being conducted and operated. b. Authorization. The Company has full power and authority to execute and deliver this Agreement and to perform its obligations under and consummate the transactions contemplated by this Agreement. Upon the execution of this Agreement by the Company and delivery of the Securities, this Agreement shall have been duly and validly executed and delivered by the Company and shall constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. It is recognized that if all of the Company's presently outstanding warrants are exercised, the Company may not have sufficient shares of Common Stock duly authorized by its Certificate of Incorporation to issue shares of Common Stock upon the exercise of the Warrants by the Subscriber. As a result, the Company represents and warrants that it will propose to its shareholders at the Company's next annual meeting to increase, and will use its reasonable efforts to have approved by its shareholders, the number of authorized shares of Common Stock so that the Company will have sufficient authorized shares of Common Stock to issue upon the exercise of all of its outstanding warrants and the Warrants. c. Ownership of, and Title to, Securities; Exemption from Registration. i. The Securities to be purchased by the Subscriber are, and all Conversion Shares and Warrant Shares, when issued, will be, duly authorized, validly issued, fully paid and nonassessable shares of the capital stock of the Company, free of personal liability. Upon consummation of the purchase of the Securities (and upon the exercise of the Warrants and conversion of the Preferred Stock, in whole or in part) pursuant to this Agreement, the Subscriber will own and acquire title to the Securities (and the Warrant Shares and the Conversion Shares, as the case may be) free and clear of any and all proxies, voting trusts, pledges, options, restrictions, or other legal or equitable encumbrance of any nature whatsoever (other than the restrictions on transfer due to securities laws or as otherwise provided for in this Agreement or the Certificate of Designation). ii. The Company represents and warrants that the offer and sale of Securities to the Subscriber in accordance with the terms and provisions of this Agreement is being effected in accordance with the Act pursuant to (i) a private placement exemption to the registration provisions of the Act pursuant to Section 3(b) or 4(2) of such Act and Regulation D promulgated under such Act. d. Use of Proceeds from this Offering. The net proceeds from the sale of the Series 3 Preferred Stock are estimated to be approximately $5,187,500 after payment of placement fees to brokers of $300,000 and legal fees and expenses of approximately $12,500, but prior to any fees and expenses relating to the registration of the Conversion Shares and the Warrant Shares pursuant to the terms of Section 5 hereof. The Company intends to utilize the net proceeds as follows: approximately $1,650,000 for capital improvements at its various facilities, $1,770,000 to purchase from the Subscriber 920,000 shares of the Company's Common Stock owned by the Subscriber pursuant to Section 7 hereof, and the balance to reduce outstanding trade payables and for general working capital. 5. Registration Rights. In order to induce the Subscriber to enter into this Agreement and purchase the Securities, the Company hereby covenants and agrees to grant to the Subscriber the rights set forth in this Section 5 with respect to the registration of the Warrant Shares and the Conversion Shares. a. Registration of Conversion Shares. Subject to the terms of Section 5 hereof, the Company agrees that within forty- five (45) days after the Closing hereof, it shall prepare and file with the SEC, a registration statement and such other documents, including a prospectus, as may be necessary in the opinion of counsel for the Company in order to comply with the provisions of the Act, so as to permit a public offering and sale of up to three million six hundred sixty-six thousand (3,666,000) shares of Common Stock issuable upon conversion of the Series 3 Preferred Stock, plus shares of Common Stock, if any, issuable as payment of dividends on the Series 3 Preferred Stock pursuant to the terms of the Series 3 Preferred Stock. The Company shall use its reasonable efforts to cause such registration statement to become effective at the earliest possible date after filing. In connection with the offering of such Common Stock registered pursuant to this Section 5, the Company shall take such actions as shall be reasonably necessary to qualify the Common Stock covered by such registration statement under such "blue sky" or other state securities laws for offer and sale as shall be reasonably necessary to permit the public offering and sale of shares of Common Stock covered by such registration statement; provided, however, that the Company shall not be required (i) to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (ii) to subject itself to taxation in any such jurisdiction, or (iii) to consent to general service of process in any such jurisdiction. It is expressly agreed that in no event are any registration rights being granted to the Series 3 Preferred Stock itself, but only with respect to the underlying Conversion Shares issuable upon exercise of the Series 3 Preferred Stock. b. Registration of Warrant Shares. The Company agrees that, subject to the terms of Section 5 hereof, (i) on or before December 1, 1996, that it shall prepare and file with the SEC a registration statement and such other documents, including a prospectus, as may be necessary, in the opinion of counsel for the Company to comply with the provisions of the Act so as to permit a public offering and sale of the Warrant Shares underlying the $2.00 Warrants and the $3.50 Warrants. The Company will use its reasonable efforts to cause each of the aforementioned registration statements covering the Warrant Shares to become effective at the earliest possible date after the filing thereof. In connection with the offering of any Warrant Shares registered pursuant to this Section 5, the Company shall take such actions as shall be necessary to qualify such "blue sky" under any applicable securities laws for offer and sale as shall be reasonably necessary to permit the public offering and sale of all the Subscriber's Warrant Shares; provided, however, that the Company shall be required (i) to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (ii) to subject itself to taxation in any such jurisdiction, or (iii) to consent to general service of process in any such jurisdiction. It is expressly agreed that in no event are any registration rights being granted with respect to the Warrants themselves, but only with respect to the underlying Warrant Shares issuable upon exercise of the Warrants. c. Current Registration Statement. Once effective, the Company shall use its reasonable efforts to cause any registration statement filed hereunder to remain current and effective for a period of one (1) year or until the shares of Common Stock covered by such registration statement are sold by the Subscriber, whichever is less. The Subscriber shall promptly provide all such information and materials and take all such action as may be required in order to permit the Company to comply with all applicable requirements of the SEC and to obtain any desired acceleration of the effective date of such registration statement. d. Penalty. The Company expressly agrees that in the event that it does not file with the SEC the registration statement relative to the Conversion Shares referred to in Section 5(a) above within sixty (60) days after the date of the Closing, or the Company does not file with the SEC a registration statement relative to the Warrant Shares required to be filed in Section 5(b) on or before December 1, 1996, in accordance with Section 5(b) above, then, for each day thereafter until the Company files such registration statement with the SEC, the Company agrees to pay to the Subscriber a penalty of $1,000, payable in cash or Common Stock of the Company at the Company's election. If the Company elects to pay such penalty in Common Stock of the Company, the number of shares of Common Stock to be issued per day to the Subscriber shall be determined by dividing the $1,000 by the closing bid price of the Company's Common Stock as reported on the over-the-counter market for such day, or the closing sale price for such day if the Company's Common Stock is listed on a national securities exchange. e. Other Provisions. In connection with the offering of any Conversion Shares and/or Warrant Shares registered pursuant to this Section 5, the Company shall furnish to the Subscriber such number of copies of any final prospectus as it may reasonably request in order to effect the offering and sale of the Conversion Shares and/or Warrant Shares to be offered and sold. In connection with any offering of Conversion Shares and/or Warrant Shares registered pursuant to this Section 5, the Company shall (x) furnish to the underwriters (if any), at the Company's expense, unlegended certificates representing ownership of the Conversion Shares and/or Warrant Shares being sold in such denominations as requested and (y) instruct any transfer agent and registrar of the Preferred shares and/or Warrant Shares to release immediately any stop transfer order, and to remove any restrictive legend, with respect to Conversion Shares and/or Warrant Shares included in any registration becoming effective pursuant to this Agreement. f. Costs. Subject to the immediately following sentence, the Company shall in all events pay and be responsible for all fees, expenses, costs and disbursements associated with the registration statement relating to the Conversion Shares and/or Warrant Shares under this Section 5, including filing fees, fees, costs and disbursements of any counsel, accountants and other consultants representing the Company in connection therewith. Notwithstanding anything set forth herein to the contrary, Subscriber shall be responsible for any and all underwriting discounts and commissions in connection with the sale of the Conversion Shares and/or Warrant Shares pursuant hereto and all fees of its legal counsel and other advisors retained in connection with reviewing any registration statement. g. Successors. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business, properties, stock or assets of the Company, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. h. Indemnification. i. The Company will indemnify and hold harmless the Subscriber, its directors and officers, and any underwriter (as defined in the Act) for the Subscriber and each person, if any, who controls the Subscriber or such underwriter within the meaning of the Act, from and against, and will reimburse the Subscriber and each such underwriter and controlling person with respect to, any and all loss, damage, liability, cost and expense to which such holder or any such underwriter or controlling person may become subject under the Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue statement or alleged untrue statement of any material fact contained in such registration statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made not misleading; provided, however, that the Company will not be liable in any such case to the extent that any such loss, damage, liability, cost or expense arises out of, or is based upon, an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by the Subscriber, such underwriter or such controlling person in writing specifically for use in the preparation thereof. ii. The Subscriber will indemnify and hold harmless the Company, its directors and officers, any controlling person and any underwriter from and against, and will reimburse the Company, its directors and officers, any controlling person and any underwriter with respect to, any and all loss, damage, liability, cost or expense to which the Company or any controlling person and/or any underwriter may become subject under the Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue statement or alleged untrue statement of any material fact contained in such registration statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in reliance upon, and in strict conformity with, written information furnished by, or on behalf of, the Subscriber specifically for use in the preparation thereof. iii. Promptly after receipt by an indemnified party pursuant to the provisions of paragraph (i) or (ii) of this Section 5(h) of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions, such indemnified party will, if a claim thereof is to be made against the indemnifying party pursuant to the provisions of said paragraph (i) or (ii), promptly notify the indemnifying party of the commencement thereof; but the omission to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than hereunder. In case such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall have the right to participate in, and, to the extent that it may wish, assume the defense thereof; or, if there is a conflict of interest which would prevent counsel for the indemnifying party from also representing the indemnified party, the indemnified parties have the right to select only one (1) separate counsel to participate in the defense of such action on behalf of all such indemnified parties. After notice from the indemnifying parties to such indemnified party of the indemnifying parties' election so to assume the defense thereof, the indemnifying parties will not be liable to such indemnified parties pursuant to the provisions of said paragraph (i) or (ii) for any legal or other expense subsequently incurred by such indemnified parties in connection with the defense thereof, other than reasonable costs of investigation, unless (i) the indemnified parties shall have employed counsel in accordance with the provisions of the preceding sentence; (ii) the indemnifying parties shall not have employed counsel satisfactory to the indemnified parties to represent the indemnified parties within a reasonable time after the notice of the commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying parties. 6. Securities Legends and Notices. Subscriber represents and warrants that it has read, considered and understood that the following legends, substantially in the form and substance set forth below, shall be placed on all of the certificates representing the Preferred Stock and Warrants: (i) NEITHER THIS PREFERRED STOCK NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS PREFERRED STOCK HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THIS PREFERRED STOCK AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS PREFERRED STOCK MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT THERETO UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAW OR WITHOUT THE PRIOR WRITTEN CONSENT OF PERMA-FIX ENVIRONMENTAL SERVICES, INC. AND AN OPINION OF PERMA-FIX ENVIRONMENTAL SERVICES, INC.'S COUNSEL, OR AN OPINION FROM COUNSEL FOR THE HOLDER HEREOF, WHICH OPINION IS SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM. NOTWITHSTANDING THE FOREGOING, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION ARE ALSO SUBJECT TO THE REGISTRATION RIGHTS SET FORTH IN THAT CERTAIN SUBSCRIPTION AND PURCHASE AGREEMENT BY AND BETWEEN THE HOLDER HEREOF AND THE COMPANY, A COPY OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE. (ii) NEITHER THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS WARRANT, HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT THERETO UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAW OR WITHOUT THE PRIOR WRITTEN CONSENT OF PERMA-FIX ENVIRONMENTAL SERVICES, INC. AND AN OPINION OF PERMA-FIX ENVIRONMENTAL SERVICES, INC.'S COUNSEL, OR AN OPINION FROM COUNSEL FOR THE HOLDER HEREOF, WHICH OPINION IS SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM. NOTWITHSTANDING THE FOREGOING, THE SHARES ISSUABLE UPON EXERCISE ARE SUBJECT TO THE REGISTRATION RIGHTS SET FORTH IN THAT CERTAIN SUBSCRIPTION AND PURCHASE AGREEMENT BETWEEN THE HOLDER HEREOF AND THE COMPANY, A COPY OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE. 7. Purchase of Common Stock. The Subscriber has previously acquired from the Company, pursuant to the terms of Regulation S promulgated under the Act, the Company's Series 1 Class A Preferred Stock, par value $.001 per share ("Series 1 Preferred"), and the Company's Series 2 Class B Convertible Preferred Stock, par value $.001 per share ("Series 2 Preferred"). The Subscriber initially acquired from the Company 1,100 shares of Series 1 Preferred and 330 shares of Series 2 Preferred, and, as of the date hereof, the Subscriber has converted 722 shares of such Series 1 Preferred into Common Stock pursuant to the terms of such Series 1 Preferred and has not converted into Common Stock any shares of Series 2 Preferred. As of the date of this Agreement, the Subscriber owns of record and beneficially all of the issued and outstanding shares of Series 1 Preferred and Series 2 Preferred, which is 378 shares of Series 1 Preferred and 330 shares of Series 2 Preferred. At the Closing the Subscriber shall convert all of the outstanding shares of Series 1 Preferred and Series 2 Preferred into Common Stock of the Company pursuant to the terms, provisions, restrictions and conditions of the Series 1 Preferred and Series 2 Preferred. The Company shall purchase from the Subscriber from the net proceeds received by the Company from the sale of the Series 3 Preferred Stock, and the Subscriber shall sell, transfer and assign to the Company, free and clear of any and all liens, encumbrances, claims, demands, security interests or restrictions, within ten (10) business days after the Closing, 920,000 shares of Common Stock upon the following terms and conditions: a. The Company shall purchase 920,000 shares of Common Stock of the Company owned by the Subscriber for a total price for all such 920,000 shares of Common Stock of $1,770,000 (the "Purchase Price"); b. The Subscriber shall surrender to the Company or its counsel the certificates representing the 920,000 shares of Common Stock of the Company, duly endorsed by the Subscriber to the Company. Within the said ten (10) business days after the Closing and upon receipt of the certificates representing the 920,000 shares of Common Stock of the Company ownedby the Subscriber, duly endorsed by the Subscriber to the Company and free and clear of any and all liens, encumbrances, claims, demands, security interests or restrictions, the Company shall deliver to ARN Amro New York, ABA No.: 02609580, swift code ABNAU533, for ABN Amro Vienna acc. no. 673-U-012203-41 for further credit RBB Bank, acc. no. 222-27008, the purchase price of $1,770,000. 8. Miscellaneous. a. Amendment; Waiver. Neither this Agreement nor the Warrants shall be changed, modified or amended in any respect except by the mutual written agreement of the parties hereto. Any provision of this Agreement or the Warrants may be waived in writing by the party which is entitled to the benefits thereof. No waiver of any provision of this Agreement or the Warrants shall be deemed to, or shall constitute a waiver of, any other provision hereof or thereof (whether or not similar), nor shall nay such waiver constitute a continuing waiver. b. Binding Effect; Assignment. Neither this Agreement nor the Warrants, or any rights or obligations hereunder or thereunder, are assignable by the Subscriber. c. Governing Law; Litigation Costs. This Agreement and its validity, construction and performance shall be governed in all respects by the internal laws of the State of Delaware without giving effect to such State's conflicts of laws provisions. Each of the Company and the Subscriber expressly and irrevocably consent to the jurisdiction and venue of the federal courts located in Wilmington, Delaware. Each of the parties agrees that in the event either party brings an action to enforce any of the provisions of this Agreement or to recovery for an alleged breach of any of the provisions of this Agreement, each party shall be responsible for its own legal costs and disbursements during the pendency of any such action; provided, however, that after any such action has been reduced to a final, unappealable judgment, the prevailing party shall be entitled to recover from the other party all reasonable, documented attorneys' fees and disbursements and court costs from the other party. d. Severability. Any term or provisions of this Agreement or the Warrants which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction only, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof affecting the validity or enforceability of such provision in any other jurisdiction. e. Headings. The captions, headings and titles preceding the text of each or any Section, subsection or paragraph hereof are for convenience of reference only and shall not affect the construction, meaning or interpretation of this Agreement or the Warrants or any term or provisions hereof or thereof. f. Counterparts. This Agreement may be executed in one or more original or facsimile counterparts, each of which shall be deemed an original and all of which shall be considered one and the same agreement, binding on all of the parties hereto, notwithstanding that all parties are not signatories to the same counterpart. Upon delivery of an executed counterpart by the undersigned Subscriber to the Company, which in turn is executed and delivered by the Company, this Agreement shall be binding as one original agreement between Subscriber and the Company. g. Transfer Taxes. Each party hereto shall pay all such sales, transfer, use, gross receipts, registration and similar taxes arising out of, or in connection with, the transactions contemplated by this Agreement and the Warrants (collectively, the "Transfer Taxes") as are payable by such party under applicable law, and the Company shall pay the cost of any documentary stock transfer stamps, if any, to be affixed to the certificates representing the Shares and any Warrant Shares to be sold. h. Entire Agreement. This Agreement, along with the Warrants and the Certificate of Designations, merges and supersedes any and all prior agreements, understandings, discussions, assurances, promises, representations or warranties among the parties with respect to the subject matter hereof, and contains the entire agreement among the parties with respect to the subject matter set forth herein and therein. i. No Brokers. Except with respect to J. W. Charles Securities, Inc. and J. P. Carey Enterprises, Inc., each of the parties hereto represents and warrants to the other than there are no broker's, finder's or any other similar fees and commissions due or payable with respect to the sale of the Securities by the Company to the Subscriber and each of the parties hereby agrees to indemnify and hold harmless the other with respect to such representation and warranty and any breach thereof. The Company expressly acknowledges and agrees that it shall be solely responsible for all fees and commissions payable to J. W. Charles Securities, Inc. and J. P. Carey Enterprises, Inc., in connection with the sale of the Securities by the Company to the Subscriber pursuant to this Agreement. j. Authority; Enforceability. The Subscriber is duly authorized to enter into this Agreement and to perform all of its obligations hereunder. Upon the execution and delivery of this Agreement by the Subscriber, this Agreement shall be enforceable against the Subscriber in accordance with its terms. k. Notices. Except as otherwise specified herein to the contrary, all notices, requests, demands and other communications required or desired to be given hereunder shall only be effective if given in writing, by hand or by fax, by certified or registered mail, return receipt requested, postage prepaid, or by U. S. Express Mail service, or by private overnight mail service (e.g., Federal Express). Any such notice shall be deemed to have been given (i) on the business day actually received if given by hand or by fax, (ii) on the business day immediately subsequent to mailing, if sent by U.S. Express Mail service or private overnight mail service, or (iii) five (5) business days following the mailing thereof, if mailed by certified or registered mail, postage prepaid, return receipt requested, and all such notices shall be sent to the following addresses (or to such other address or addresses as a party may have advised the other in the manner provided in this Section 9(k): If to the Company: Dr. Louis F. Centofanti Perma-Fix Environmental Services, Inc. 1940 Northwest 67th Place Gainesville, Florida 32606-1649 Fax No.: (352) 373-0040 with copies simultaneously Irwin H. Steinhorn, Esquire by like means to: Conner & Winters One Leadership Square, Suite 1700 211 North Robinson Oklahoma City, Oklahoma 73102 Fax No.: (405) 232-2695 If to the Subscriber: Herbert Strauss RBB Bank Aktiengesellschaft Burgring 16, 8010 Graz, Austria Fax No.: 011-43-316-8072 ext. 392 l. No Third Party Beneficiaries. This Agreement and the rights, benefits, privileges, interests, duties and obligations contained or referred to herein shall be solely for the benefit of the parties hereto and no third party shall have any rights or benefits hereunder as a third party beneficiary or otherwise hereunder. m. Public Announcements. Neither Subscriber nor any officer, director, stockholder, employee, affiliate or affiliated person or entity of Subscriber, shall make or issue any press releases or otherwise make any public statements or make any disclosures to any third person or entity with respect to the transactions contemplated herein and will not make or issue any press releases or otherwise make any public statements of any nature whatsoever with respect to the Company without the express prior approval of the Company. IN WITNESS WHEREOF, the Company and the undersigned Subscriber have each duly executed this Agreement as of this 17th day of July, 1996. PERMA-FIX ENVIRONMENTAL SERVICES, INC. By /s/ Louis Centofanti ____________________________ Dr. Louis F. Centofanti Chief Executive Officer RBB BANK AKTIENGESELLSCHAFT By /s/ Herbert Strauss ____________________________ Herbert Strauss Title: Headtrader ISTE:\N-P\PESI\10Q\696\EXHIBIT4.4 EX-4 7 EXHIBIT 4.6 - FORM OF CERTIFICATE FOR SERIES 3 PREFERRED SEE RESTRICTIVE LEGEND ON REVERSE SIDE INCORPORATED UNDER THE LAWS OF DELAWARE No. - 1 - Shares 5,500 PERMA-FIX ENVIRONMENTAL SERVICES, INC. SERIES 3 CLASS C CONVERTIBLE PREFERRED STOCK Par Value $.001 Per Share THIS CERTIFIES THAT RBB Bank Aktiengesellschaft is the owner of Five Thousand Five Hundred (5,500) shares of Series 3 Class C Convertible Preferred Stock of Perma-Fix Environmental Services, Inc. transferrable only on the books of the Corporation by the holder hereof in person or by attorney upon surrender of this Certificate properly endorsed. In Witness Whereof, the said Corporation has caused this Certificate to be signed by its duly authorized officers and to be sealed with the Seal of the Corporation this 19th day of July, 1996. /s/ Richard T. Kelecy /s/ Louis Centofanti __________________________ __________________________ Secretary President SHARES $.001 EACH NEITHER THIS PREFERRED STOCK NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS PREFERRED STOCK HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THIS PREFERRED STOCK AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS PREFERRED STOCK MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT THERETO UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAW OR WITHOUT THE PRIOR WRITTEN CONSENT OF PERMA-FIX ENVIRONMENTAL SERVICES, INC. AND AN OPINION OF PERMA-FIX ENVIRONMENTAL SERVICES, INC.'S COUNSEL, OR AN OPINION FROM COUNSEL FOR THE HOLDER HEREOF, WHICH OPINION IS SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM. NOTWITHSTANDING THE FOREGOING, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION ARE ALSO SUBJECT TO THE REGISTRATION RIGHTS SET FORTH IN THAT CERTAIN SUBSCRIPTION AND PURCHASE AGREEMENT BY AND BETWEEN THE HOLDER HEREOF AND THE COMPANY, A COPY OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE. THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS, THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL, OR OTHER SPECIAL RIGHTS OF THE SERIES 3 CLASS C CONVERTIBLE PREFERRED STOCK AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. ******************* CERTIFICATE FOR 5,500 SHARES of the CAPITAL STOCK of Perma-Fix Environmental Services, Inc. Series 3 Class C Convertible Preferred Stock Par Value $.001 Per Share ISSUED TO RBB Bank Aktiengesellschaft DATED July 19, 1996 ******************* For Value Received, __________ hereby sell, assign and transfer unto __________________________________________________ ___________________ Shares of the Capital Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint _________________________________________ to transfer the said Stock on the books of the within named Corporation with full power of substitution in the premises. Dated __________________, 19______. In presence of ________________________________________ EX-10 8 EXHIBIT 10.1 - COMMON STOCK PURCHASE WARRANT NEITHER THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT THERETO UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF PERMA-FIX ENVIRONMENTAL SERVICES, INC.'S COUNSEL THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM. NOTWITHSTANDING THE FOREGOING, THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO THE REGISTRATION RIGHTS SET FORTH IN THAT CERTAIN SUBSCRIPTION AND PURCHASE AGREEMENT BETWEEN THE HOLDER HEREOF AND THE COMPANY, A COPY OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE. COMMON STOCK PURCHASE WARRANT CERTIFICATE Dated: July 19, 1996 One Million (1,000,000) Warrants to Purchase One Million (1,000,000) Shares of Perma-Fix Environmental Services, Inc. Common Stock, $.001 Par Value Per Share VOID AFTER 5:00 P.M., UNITED STATES EASTERN DAYLIGHT SAVINGS TIME on July 18, 2001 PERMA-FIX ENVIRONMENTAL SERVICES, INC., a Delaware corporation (the "Company"), hereby certifies that RBB BANK AKTIENGESELLSCHAFT, organized under the laws of Austria, and its permissible successors and assigns (the "Warrant Holder" or "Holder"), for value received, is entitled to purchase from the Company at any time after December 31, 1996, until 5:00 p.m., Eastern Daylight Savings Time on July 18, 2001, up to an aggregate of One Million (1,000,000) shares (the "Shares" or "Warrant Shares") of the Company's common stock, par value $.001 per share (the "Common Stock") at an exercise price equal to U. S. $2.00 per share (the "Per Share Exercise Price"). 1. Exercise of Warrant. Upon presentation and surrender of this Common Stock Purchase Warrant Certificate ("Warrant Certificate" or "this Certificate"), with the attached Purchase Form duly executed and completed, at the principal office of the Company at 1940 Northwest 67th Place, Gainesville, Florida 32606- 1649, together with cash or a cashier's or certified check payable to the Company in the amount of the Per Share Exercise Price multiplied by the number of Warrant Shares being purchased (the "Aggregate Exercise Price"), the Company, or the Company's transfer agent, as the case may be, shall deliver to the Warrant Holder hereof, certificates of Common Stock which, in the aggregate, represent the number of Warrant Shares being purchased. All or less than all of the Warrants represented by this Certificate may be exercised and, in case of the exercise of less than all, the Company, upon surrender hereof, will deliver to the Warrant Holder a new Warrant Certificate or Certificates of like tenor and dated the date hereof entitling said Warrant Holder to purchase the number of Warrant Shares represented by this Certificate which have not been exercised and to receive the Registration Rights set forth in Section 8 below (to the extent such rights have not already been exercised) with respect to such Warrant Shares. 2. Exchange and Transfer. This Certificate, at any time prior to the exercise hereof, upon presentation and surrender to the Company, may be exchanged, alone or with other certificates of like tenor registered in the name of the same Warrant Holder, for another Certificate or Certificates of like tenor in the name of such Warrant Holder exercisable for the aggregate number of Warrant Shares as the Certificate or Certificates surrendered. 3. Rights and Obligations of Warrant Holder of this Certificate. The Holder of this Certificate shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or in equity; provided, however, that in the event any certificate representing shares of Common Stock or other securities is issued to the Holder hereof upon exercise of some or all of the Warrants evidenced by this Warrant Certificate, such Holder shall, for all purposes, be deemed to have become the Holder of record of such Common Stock on the date on which this Certificate, together with a duly executed Purchase form, was surrendered and payment of the Aggregate Exercise Price was made pursuant to the terms hereof, irrespective of the date of delivery of such share certificate. The rights of the Holder of this Certificate are limited to those expressed herein and the Holder of this Certificate, by his acceptance hereof, consents and agrees to be bound by, and to comply with, all of the provisions of this Certificate, including, without limitation, all of the obligations imposed upon the Warrant Holder contained in this Warrant Certificate. In addition, the Warrant Holder of this Certificate, by accepting the same, agrees that the Company may deem and treat the person in whose name this Certificate is registered on the books of the Company as the absolute, true and lawful owner for all purposes whatsoever, and the Company shall not be affected by any notice to the contrary. 4. Common Stock. a. The Company covenants and agrees that all shares of Common Stock which may be acquired by the Holder under this Warrant Certificate will, when issued and upon delivery, be duly and validly authorized and issued, fully paid and nonassessable, and free from all stamp taxes, liens, and charges with respect to the purchase thereof. b. The Company covenants and agrees that it will, at all times, reserve and keep available an authorized number of shares of its Common Stock and other applicable securities sufficient to permit the exercise in full of all outstanding options, warrants and rights, including the Warrants; and, if at the time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of all of the Warrants covered by this Warrant Certificate, the Company will take such corporate action at its next annual meeting of stockholders as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose, including, without limitation, engaging in reasonable efforts to obtain the requisite stockholder approval of any necessary amendment to its Certificate of Incorporation. 5. Issuance of Certificates. As soon as possible after full or partial exercise of this Warrant Certificate, the Company, at its expense, will cause to be issued in the name of, and delivered to, the Holder of this Warrant Certificate, a certificate or certificates for the number of fully paid and nonassessable shares of Common Stock to which that Holder shall be entitled on such exercise. No fractional shares will be issued on exercise of this Warrant. If on any exercise of this Warrant a fraction of a share results, the Company will pay the cash value of that fractional share, calculated on the basis of the Per Share Exercise Price. All such certificates shall bear a restrictive legend to the effect that, subject to the provisions of Section 7 below, the Shares represented by such certificate have not been registered under the Securities Act of 1933, as amended (the "Act"), or qualified under any state securities laws and the Shares may not be sold or transferred in the absence of such registration and qualification or an exemption thereof, such legend to be substantially in the form of the bold face language appearing on page 1 of this Warrant Certificate. 6. Disposition of Warrants or Shares. a. The Holder of this Warrant Certificate, by his acceptance thereof, agrees that (i) no public distribution of Warrants or Shares will be made in violation of the provisions of the Securities Act of 1933, as amended, and the Rules and Regulations promulgated thereunder (collectively, the "Act"), and (ii) during such period as delivery of a prospectus with respect to Warrants or Shares may be required by the Act, no public distribution of Warrants or Shares will be made in a manner or on terms different from those set forth in, or without delivery of, a prospectus then meeting the requirements of Section 10 of the Act and in compliance with all applicable state securities laws. The holder this Warrant Certificate and each transferee hereof further agrees that if any distribution of any of the Warrants or Shares is proposed to be made by them otherwise than by delivery of a prospectus meeting the requirements of Section 10 of the Act, such action shall be taken only after receipt by the Company of an opinion of its counsel, to the effect that the proposed distribution will not be in violation of the Act or of applicable state law. Furthermore, it shall be a condition to the transfer of the Warrants that any transferee thereof deliver to the Company his or its written agreement to accept and be bound by all of the terms and conditions contained in this Warrant Certificate. b. By acceptance hereof, the Holder represents and warrants that this Warrant Certificate is being acquired, and all Warrant Shares to be purchased upon the exercise of this Warrant Certificate will be acquired, by the Holder solely for the account of the Holder and not with a view to the fractionalization and distribution thereof, and will not be sold or transferred except in accordance with the applicable provisions of the Act and the rules and regulations promulgated thereunder, and the Holder agrees that neither this Warrant Certificate nor any of the Warrant Shares may be sold or transferred except under cover of a registration statement under the Act which is effective and current with respect to such Warrant Shares or pursuant to an opinion of counsel reasonably satisfactory to the Company that registration under the Act is not required in connection with such sale or transfer. Any Warrant Shares issued upon exercise of this Warrant shall bear the following legend: The securities represented by this certificate have not been registered under the Securities Act of 1933 and are restricted securities within the meaning thereof. Such securities may not be sold or transferred, except pursuant to a registration statement under such Act which is effective and current with respect to such securities or pursuant to an opinion of counsel reasonably satisfactory to the issuer of such securities that such sale or transfer is exempt from the registration requirements of such Act. 7. Warrant Holder Not Shareholder. This Warrant Certificate shall not be deemed to confer upon the Holder any right to vote the Warrant Shares or to consent to or receive notice as a shareholder of the Company as such, because of this Warrant Certificate, in respect of any matters whatsoever, or any other rights or liabilities as a shareholder. 8. Registration Rights. The Company agrees that the Warrant Shares shall have those registration rights set forth in Section 5 of that certain Subscription and Purchase Agreement by and between the Company and the Warrant Holder dated July 17, 1996 (the "Subscription Agreement"). It is expressly acknowledged and agreed that all references to Warrant Shares issuable upon the exercise of this Warrant Certificate, in whole or in part, from time to time and at any time. 9. Anti-Dilution. a. If the Company at any time, or from time to time, while this Warrant Certificate is outstanding shall declare or pay, without consideration, any dividend on the Common Stock payable in Common Stock, or shall effect a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by stock split, reclassification or otherwise than by payment of a dividend in Common Stock or in any right to acquire Common Stock), or if the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, then the number of shares of Common Stock issuable upon the exercise of this Warrant Certificate or the Exercise Price shall be appropriately adjusted such that immediately after the happening of any such event, the proportionate number of shares of Common Stock issuable immediately prior to the happening of such event shall be the number of shares of Common Stock issuable subsequent to the happening of such event. b. In case of any consolidation or merger of the Company in which the Company is not the surviving entity, or in case of any sale or conveyance by the Company to another entity of all or substantially all of the property of the Company as an entirety or substantially as an entirety, the Holder shall have the right thereafter, upon exercise of this Warrant, to receive the kind and amount of securities, cash or other property which the Holder would have owned or been entitled to receive immediately after such consolidation, merger, sale or conveyance had this Warrant been exercised in full immediately prior to the effective date of such consolidation, merger, sale or conveyance, and in any such case, if necessary, appropriate adjustment shall be made in the application thereafter of the provisions of this Section 9 with respect to the rights and interests of the Holder to the end that the provisions of this Section 9 thereafter shall be correspondingly applicable, as nearly as may be, to such securities and other property. 10. Notices. Except as otherwise specified herein to the contrary, all notices, requests, demands and other communications required or desired to be given hereunder shall only be effective if given in writing, by hand, by certified or registered mail, return receipt requested, postage prepaid, or by U. S. Express Mail service, or by private overnight mail service (e.g., Federal Express). Any such notice shall be deemed to have been given (a) on the business day actually received if given by hand or by fax, (b) on the business day immediately subsequent to mailing, if sent by U.S. Express Mail service or private overnight mail service, or (c) five (5) business days following the mailing thereof, if mailed by certified or registered mail, postage prepaid, return receipt requested, and all such notices shall be sent to the following addresses (or to such other address or addresses as a party may have advised the other in the manner provided in this Section 10): If to the Company: Perma-Fix Environmental Services, Inc. 1940 Northwest 67th Place Gainesville, Florida 32606-1649 Attention: Dr. Louis F. Centofanti Chief Executive Officer Fax No.: (352) 373-0040 with copies simultan- Conner & Winters eoulsy by like means One Leadership Square, Suite 1700 to: 211 North Robinson Oklahoma City, Oklahoma 73102 Attention: Irwin H. Steinhorn, Esquire Fax No.: (405) 232-2695 If to the Subscriber: RBB Bank Aktiengesellschaft Burgring 16, 8010 Graz, Austria Attention: Herbert Strauss Fax No.: 011-43-316-8072, ext. 392 11. Governing Law. This Warrant Certificate and all rights and obligations hereunder shall be deemed to be made under and governed by the laws of the State of Delaware without giving effect to such State's conflict of laws provisions. The Holder hereby irrevocably consents to the venue and jurisdiction of the federal courts located in Wilmington, Delaware. 12. Successors and Assigns. This Warrant Certificate shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. 13. Headings. The headings of various sections of this Warrant Certificate have been inserted for reference only and shall not be a part of this Agreement. IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed, manually or by facsimile, by one of its officers thereunto duly authorized. Dated as of July 19, 1996. PERMA-FIX ENVIRONMENTAL SERVICES, INC. By /s/ Louis F. Centofanti _________________________ Dr. Louis F. Centofanti Chief Executive Officer ISTE:\N-P\PESI\10Q\696\exhib10.1 EX-10 9 EXHIBIT 10.2 - COMMON STOCK PURCHASE WARRANT NEITHER THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT THERETO UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF PERMA-FIX ENVIRONMENTAL SERVICES, INC.'S COUNSEL THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM. NOTWITHSTANDING THE FOREGOING, THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO THE REGISTRATION RIGHTS SET FORTH IN THAT CERTAIN SUBSCRIPTION AND PURCHASE AGREEMENT BETWEEN THE HOLDER HEREOF AND THE COMPANY, A COPY OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE. COMMON STOCK PURCHASE WARRANT CERTIFICATE Dated: July 19, 1996 One Million (1,000,000) Warrants to Purchase One Million (1,000,000) Shares of Perma-Fix Environmental Services, Inc. Common Stock, $.001 Par Value Per Share VOID AFTER 5:00 P.M., UNITED STATES EASTERN DAYLIGHT SAVINGS TIME on July 18, 2001 PERMA-FIX ENVIRONMENTAL SERVICES, INC., a Delaware corporation (the "Company"), hereby certifies that RBB BANK AKTIENGESELLSCHAFT, organized under the laws of Austria, and its permissible successors and assigns (the "Warrant Holder" or "Holder"), for value received, is entitled to purchase from the Company at any time after December 31, 1998, until 5:00 p.m., Eastern Daylight Savings Time on July 18, 2001, up to an aggregate of One Million (1,000,000) shares (the "Shares" or "Warrant Shares") of the Company's common stock, par value $.001 per share (the "Common Stock") at an exercise price equal to U.S. $3.50 per share (the "Per Share Exercise Price"). 1. Exercise of Warrant. Upon presentation and surrender of this Common Stock Purchase Warrant Certificate ("Warrant Certificate" or "this Certificate"), with the attached Purchase Form duly executed and completed, at the principal office of the Company at 1940 Northwest 67th Place, Gainesville, Florida 32606- 1649, together with cash or a cashier's or certified check payable to the Company in the amount of the Per Share Exercise Price multiplied by the number of Warrant Shares being purchased (the "Aggregate Exercise Price"), the Company, or the Company's transfer agent, as the case may be, shall deliver to the Warrant Holder hereof, certificates of Common Stock which, in the aggregate, represent the number of Warrant Shares being purchased. All or less than all of the Warrants represented by this Certificate may be exercised and, in case of the exercise of less than all, the Company, upon surrender hereof, will deliver to the Warrant Holder a new Warrant Certificate or Certificates of like tenor and dated the date hereof entitling said Warrant Holder to purchase the number of Warrant Shares represented by this Certificate which have not been exercised and to receive the Registration Rights set forth in Section 8 below (to the extent such rights have not already been exercised) with respect to such Warrant Shares. 2. Exchange and Transfer. This Certificate, at any time prior to the exercise hereof, upon presentation and surrender to the Company, may be exchanged, alone or with other certificates of like tenor registered in the name of the same Warrant Holder, for another Certificate or Certificates of like tenor in the name of such Warrant Holder exercisable for the aggregate number of Warrant Shares as the Certificate or Certificates surrendered. 3. Rights and Obligations of Warrant Holder of this Certificate. The Holder of this Certificate shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or in equity; provided, however, that in the event any certificate representing shares of Common Stock or other securities is issued to the Holder hereof upon exercise of some or all of the Warrants evidenced by this Warrant Certificate, such Holder shall, for all purposes, be deemed to have become the Holder of record of such Common Stock on the date on which this Certificate, together with a duly executed Purchase form, was surrendered and payment of the Aggregate Exercise Price was made pursuant to the terms hereof, irrespective of the date of delivery of such share certificate. The rights of the Holder of this Certificate are limited to those expressed herein and the Holder of this Certificate, by his acceptance hereof, consents and agrees to be bound by, and to comply with, all of the provisions of this Certificate, including, without limitation, all of the obligations imposed upon the Warrant Holder contained in this Warrant Certificate. In addition, the Warrant Holder of this Certificate, by accepting the same, agrees that the Company may deem and treat the person in whose name this Certificate is registered on the books of the Company as the absolute, true and lawful owner for all purposes whatsoever, and the Company shall not be affected by any notice to the contrary. 4. Common Stock. a. The Company covenants and agrees that all shares of Common Stock which may be acquired by the Holder under this Warrant Certificate will, when issued and upon delivery, be duly and validly authorized and issued, fully paid and nonassessable, and free from all stamp taxes, liens, and charges with respect to the purchase thereof. b. The Company covenants and agrees that it will, at all times, reserve and keep available an authorized number of shares of its Common Stock and other applicable securities sufficient to permit the exercise in full of all outstanding options, warrants and rights, including the Warrants; and, if at the time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of all of the Warrants covered by this Warrant Certificate, the Company will take such corporate action at its next annual meeting of stockholders as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose, including, without limitation, engaging in reasonable efforts to obtain the requisite stockholder approval of any necessary amendment to its Certificate of Incorporation. 5. Issuance of Certificates. As soon as possible after full or partial exercise of this Warrant Certificate, the Company, at its expense, will cause to be issued in the name of, and delivered to, the Holder of this Warrant Certificate, a certificate or certificates for the number of fully paid and nonassessable shares of Common Stock to which that Holder shall be entitled on such exercise. No fractional shares will be issued on exercise of this Warrant. If on any exercise of this Warrant a fraction of a share results, the Company will pay the cash value of that fractional share, calculated on the basis of the Per Share Exercise Price. All such certificates shall bear a restrictive legend to the effect that, subject to the provisions of Section 7 below, the Shares represented by such certificate have not been registered under the Securities Act of 1933, as amended (the "Act"), or qualified under any state securities laws and the Shares may not be sold or transferred in the absence of such registration and qualification or an exemption thereof, such legend to be substantially in the form of the bold face language appearing on page 1 of this Warrant Certificate. 6. Disposition of Warrants or Shares. a. The Holder of this Warrant Certificate, by his acceptance thereof, agrees that (i) no public distribution of Warrants or Shares will be made in violation of the provisions of the Securities Act of 1933, as amended, and the Rules and Regulations promulgated thereunder (collectively, the "Act"), and (ii) during such period as delivery of a prospectus with respect to Warrants or Shares may be required by the Act, no public distribution of Warrants or Shares will be made in a manner or on terms different from those set forth in, or without delivery of, a prospectus then meeting the requirements of Section 10 of the Act and in compliance with all applicable state securities laws. The holder this Warrant Certificate and each transferee hereof further agrees that if any distribution of any of the Warrants or Shares is proposed to be made by them otherwise than by delivery of a prospectus meeting the requirements of Section 10 of the Act, such action shall be taken only after receipt by the Company of an opinion of its counsel, to the effect that the proposed distribution will not be in violation of the Act or of applicable state law. Furthermore, it shall be a condition to the transfer of the Warrants that any transferee thereof deliver to the Company his or its written agreement to accept and be bound by all of the terms and conditions contained in this Warrant Certificate. b. By acceptance hereof, the Holder represents and warrants that this Warrant Certificate is being acquired, and all Warrant Shares to be purchased upon the exercise of this Warrant Certificate will be acquired, by the Holder solely for the account of the Holder and not with a view to the fractionalization and distribution thereof, and will not be sold or transferred except in accordance with the applicable provisions of the Act and the rules and regulations promulgated thereunder, and the Holder agrees that neither this Warrant Certificate nor any of the Warrant Shares may be sold or transferred except under cover of a registration statement under the Act which is effective and current with respect to such Warrant Shares or pursuant to an opinion of counsel reasonably satisfactory to the Company that registration under the Act is not required in connection with such sale or transfer. Any Warrant Shares issued upon exercise of this Warrant shall bear the following legend: The securities represented by this certificate have not been registered under the Securities Act of 1933 and are restricted securities within the meaning thereof. Such securities may not be sold or transferred, except pursuant to a registration statement under such Act which is effective and current with respect to such securities or pursuant to an opinion of counsel reasonably satisfactory to the issuer of such securities that such sale or transfer is exempt from the registration requirements of such Act. 7. Warrant Holder Not Shareholder. This Warrant Certificate shall not be deemed to confer upon the Holder any right to vote the Warrant Shares or to consent to or receive notice as a shareholder of the Company as such, because of this Warrant Certificate, in respect of any matters whatsoever, or any other rights or liabilities as a shareholder. 8. Registration Rights. The Company agrees that the Warrant Shares shall have those registration rights set forth in Section 5 of that certain Subscription and Purchase Agreement by and between the Company and the Warrant Holder dated July 17, 1996 (the "Subscription Agreement"). It is expressly acknowledged and agreed that all references to Warrant Shares issuable upon the exercise of this Warrant Certificate, in whole or in part, from time to time and at any time. 9. Anti-Dilution. a. If the Company at any time, or from time to time, while this Warrant Certificate is outstanding shall declare or pay, without consideration, any dividend on the Common Stock payable in Common Stock, or shall effect a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by stock split, reclassification or otherwise than by payment of a dividend in Common Stock or in any right to acquire Common Stock), or if the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, then the number of shares of Common Stock issuable upon the exercise of this Warrant Certificate or the Exercise Price shall be appropriately adjusted such that immediately after the happening of any such event, the proportionate number of shares of Common Stock issuable immediately prior to the happening of such event shall be the number of shares of Common Stock issuable subsequent to the happening of such event. b. In case of any consolidation or merger of the Company in which the Company is not the surviving entity, or in case of any sale or conveyance by the Company to another entity of all or substantially all of the property of the Company as an entirety or substantially as an entirety, the Holder shall have the right thereafter, upon exercise of this Warrant, to receive the kind and amount of securities, cash or other property which the Holder would have owned or been entitled to receive immediately after such consolidation, merger, sale or conveyance had this Warrant been exercised in full immediately prior to the effective date of such consolidation, merger, sale or conveyance, and in any such case, if necessary, appropriate adjustment shall be made in the application thereafter of the provisions of this Section 9 with respect to the rights and interests of the Holder to the end that the provisions of this Section 9 thereafter shall be correspondingly applicable, as nearly as may be, to such securities and other property. 10. Notices. Except as otherwise specified herein to the contrary, all notices, requests, demands and other communications required or desired to be given hereunder shall only be effective if given in writing, by hand, by certified or registered mail, return receipt requested, postage prepaid, or by U. S. Express Mail service, or by private overnight mail service (e.g., Federal Express). Any such notice shall be deemed to have been given (a) on the business day actually received if given by hand or by fax, (b) on the business day immediately subsequent to mailing, if sent by U.S. Express Mail service or private overnight mail service, or (c) five (5) business days following the mailing thereof, if mailed by certified or registered mail, postage prepaid, return receipt requested, and all such notices shall be sent to the following addresses (or to such other address or addresses as a party may have advised the other in the manner provided in this Section 10): If to the Company: Perma-Fix Environmental Services, Inc. 1940 Northwest 67th Place Gainesville, Florida 32606-1649 Attention: Dr. Louis F. Centofanti Chief Executive Officer Fax No.: (352) 373-0040 with copies simultan- Conner & Winters eously by like means One Leadership Square, Suite 1700 to: 211 North Robinson Oklahoma City, Oklahoma 73102 Attention: Irwin H. Steinhorn, Esquire Fax No.: (405) 232-2695 If to the Subscriber: RBB Bank Aktiengesellschaft Burgring 16, 8010 Graz, Austria Attention: Herbert Strauss Fax No.: 011-43-316-8072, ext. 392 11. Governing Law. This Warrant Certificate and all rights and obligations hereunder shall be deemed to be made under and governed by the laws of the State of Delaware without giving effect to such State's conflict of laws provisions. The Holder hereby irrevocably consents to the venue and jurisdiction of the federal courts located in Wilmington, Delaware. 12. Successors and Assigns. This Warrant Certificate shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. 13. Headings. The headings of various sections of this Warrant Certificate have been inserted for reference only and shall not be a part of this Agreement. IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed, manually or by facsimile, by one of its officers thereunto duly authorized. Dated as of July 19, 1996. PERMA-FIX ENVIRONMENTAL SERVICES, INC. By /s/ Louis F. Centofanti ____________________________ Dr. Louis F. Centofanti Chief Executive Officer ISTE:\N-P\PESI\10Q\696\EXHIB10.2 EX-27 10 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1995 JUN-30-1996 $ 578,000 0 5,881,000 392,000 106,000 7,132,000 15,879,000 3,909,000 28,479,000 9,172,000 5,746,000 0 0 9,000 9,157,000 28,479,000 0 15,750,000 0 11,398,000 1,177,000 12,000 489,000 (410,000) 0 (410,000) 0 0 0 (410,000) (.05) (.05)
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