State of Delaware
Office of the Secretary of State
________________________________
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 OF THE TENTH DAY OF JULY, A.D. 1998, AT 12 O'CLOCK
P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE
NEW CASTLE COUNTY RECORDER OF DEEDS.
/s/ Edward J. Freel
___________________________________
Edward J. Freel, Secretary of State
2249849 8100 AUTHENTICATION: 9189453
981268436 DATE: 07-10-98
CERTIFICATE OF DESIGNATIONS
OF RIGHTS AND PREFERENCES OF THE
SERIES 10 CLASS J CONVERTIBLE PREFERRED STOCK OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
We, being respectively the President and Secretary of Perma-Fix
Environmental Services, Inc. a corporation organized and existing
under the laws of the State of Delaware (hereinafter the
"Corporation"), DO HEREBY CERTIFY:
FIRST:
That pursuant to authority expressly granted and vested in the
Board of Directors of said Corporation under Section 151 of the
Delaware General Corporation Law (the "GCL"), and the provisions of
the Corporation's Restated Certificate of Incorporation, said Board
of Directors, on June 30th, 1998 (the "Closing Date"), adopted the
following resolution setting forth the designations, powers,
preferences and rights of its Series 10 Class J Convertible
Preferred Stock (the "Certificate of Designations").
RESOLVED: That the designations, powers, preferences and rights of
the Series 10 Class J Convertible Preferred Stock be, and they
hereby are, as set forth below:
1. Number of Shares of Common Stock of Series 10 Class J
Convertible Preferred Stock
The Corporation hereby authorizes the issuance of 3,000 (three
thousand,) shares of Series 10 Class J Convertible Preferred Stock
par value $.001 per share (the "Preferred Stock"). This Preferred
Stock shall pay an annual dividend based on a 365 day calendar year
of 4% of the Liquidation Value (as defined in Section 3 hereof)
("Dividend Rate"), payable semiannually within ten (10) business
days after each subsequent June 30th and December 31st (each a
"Dividend Declaration Date"), and shall be payable in cash or
shares of the Corporation's par value $.001 per share common stock
(Common Stock) at the Corporation's option. The first Dividend
Declaration Date shall be December 31st, 1998.
In the event that the Corporation elects to pay the accrued
dividends due as of a Dividend Declaration Date on the outstanding
shares of Preferred Stock in Common Stock of the Corporation, the
Holder of each share of Preferred Stock shall receive that number
of shares of Common Stock equal to the product of (a) the quotient
of (i) the Dividend Rate divided by (ii) the average of' the
closing bid quotation of the Corporation's Common Stock as reported
on the National Association of Securities Dealers Automated
Quotation system ("NASDAQ"), or if the Common Stock is not listed
for trading on the NASDAQ but is listed for trading on a national
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securities exchange, the average closing bid price of the Common
Stock as quoted on such national exchange, for the five (5) trading
days immediately prior to the Dividend Declaration Date (the "Stock
Dividend Price"), times (b) a fraction, the numerator of which is
the number of days elapsed during the period for which the dividend
is to be paid, and the denominator of which is 365. Dividends on
the Preferred Stock shall be cumulative, and no dividends or other
distributions shall be paid or declared or set aside for payment on
the Corporation's Common Stock until all accrued and unpaid
dividends on all outstanding shares of Preferred Stock shall have
been paid or declared and set aside for payment.
2. Voting.
(a) Except as provided under Section 242 of the GCL, holders of
Preferred Stock (the "Holders") shall not have the right to vote
on any matter. Notwithstanding the provisions of Section 242 of
the GCL or Section 4 hereof, the number of authorized shares of any
class or classes of stock of the Corporation may be increased or
decreased (but not below the number of shares thereof outstanding)
by the affirmative vote of the holders of a majority of the stock
of the Corporation entitled to vote thereon, voting together as a
single class, irrespective of the provisions of Section 242 of the
GCL.
3. Liquidation.
In the event of a voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation, the Holders of
Preferred Stock shall be entitled to receive out of the assets of
the Corporation legally available for distribution to holders of
its capital stock, before any payment or distribution shall be made
to holders of shares of Common Stock or any other class of stock
ranking junior to the Preferred Stock, an amount per share of
Preferred Stock equal to $1,000 (the "Liquidation Value") plus any
accrued and unpaid dividends on the Preferred Stock. If upon such
liquidation, dissolution, or winding up of the Corporation, whether
voluntary or involuntary, the assets to be distributed among the
Holders of Preferred Stock shall be insufficient to permit payment
to the Holders of Preferred Stock of the amount distributable as
aforesaid, then the entire assets of the Corporation to be so
distributed shall be distributed ratably among the Holders of
Preferred Stock and shares of such other classes or series ranking
on a parity with the shares of this Preferred Stock in proportion
to the full distributable amounts for which holders of all such
parity shares are entitled upon such distribution, liquidation, or
winding up. Upon any such liquidation, dissolution or winding up
of the Corporation, after the Holders of Preferred Stock shall
have been paid in full the amounts to which they shall be entitled,
the remaining net assets of the Corporation may be distributed to
the holders of stock ranking on liquidation junior to the Preferred
Stock and the Holders of the Preferred Stock shall have no right or
claim to any of the remaining assets of the Corporation. Written
notice of such liquidation, dissolution or winding up, stating a
payment date, the amount of the liquidation payments and the place
;2
where said liquidation payments shall be payable, shall be given by
mail, postage prepaid or by telex or facsimile to non-U.S.
residents, not less than 10 days prior to the payment date stated
therein, to the Holders of record of Preferred Stock, such notice
to be addressed to each such Holder at its address as shown by the
records of the Corporation. For purposes hereof the shares of
Common Stock, shall rank on liquidation junior to the Preferred
Stock.
4. Restrictions.
The Corporation will not amend or modify the terms of its Restated
Certificate of Incorporation so as to adversely alter or change the
Preferred Stock at any time when shares of Preferred Stock are
outstanding, without the approval of the Holders of at least a
majority of the then outstanding shares of Preferred Stock given in
writing or by vote at a meeting, consenting or voting (as the case
may be) separately as a series, except where the vote or written
consent of the Holders of a greater number of shares of Common
Stock of the Corporation is required by law or by the Corporation's
Certificate of Incorporation, as amended.
5. Optional Conversion.
The Holders of shares of Preferred Stock shall have the following
conversion rights to convert the shares of Preferred Stock into
shares of Common Stock of the Corporation:
(a) Conversion Dates, The Holder of any share or shares of
Preferred Stock may convert cumulatively any of such Preferred
Stock at any time subsequent to 180 days after the Closing Date.
(b) Right to Convert; Conversion Price. Subject to the terms
hereof, as used herein, the term Conversion Price per outstanding
share of Preferred Stock shall be One Dollar and 875/1000 ($1.875);
except that after the expiration of one hundred and eighty (180)
days after the Closing Date if the average of the closing bid price
per share of Common Stock quoted on the NASDAQ (or the closing bid
price of the Common Stock as quoted on the national securities
exchange if the Common Stock is not listed for trading on the
NASDAQ but is listed for trading on a national securities exchange)
for the five (5) trading days immediately prior to the particular
date of each Conversion Notice (as defined below) is less than Two
Dollars and 34/100 ($2.34), then the Conversion Price for that
particular conversion shall be eighty percent (80%) of the average
of the closing bid price of the Common Stock on the NASDAQ (or if
the Common Stock is not listed for trading on the NASDAQ but is
listed for trading on a national securities exchange then eighty
percent (80%) of the average of the closing bid price of the Common
Stock on the national securities exchange) for the five (5) trading
days immediately prior to the particular date of the Conversion
Notice. If any of the outstanding shares of Preferred Stock are
converted, in whole or in part, into Common Stock pursuant to the
terms of this Section 5(b), the number of shares of whole Common
Stock to be issued to the Holder as a result of such conversion
;3
shall be determined by dividing (a) the aggregate Stated Value of
the Preferred Stock so surrendered for conversion by (b) the
Conversion Price in effect on the date of that particular
Conversion Notice relating to such conversion. At the time of
conversion of shares of the Preferred Stock, the Corporation shall
pay in cash to the holder thereof an amount equal to all unpaid and
accrued dividends, if any, accrued thereon on the shares of
Preferred so converted to the date of the Conversion Notice
relating to such conversion, or, at the Corporation's option, in
lieu of paying cash for the accrued and unpaid dividends, issue
that number of shares of whole Common Stock which is equal to the
quotient of the amount of such unpaid and accrued dividends to the
date of the Conversion Notice relating to such conversion of the
shares of Preferred Stock so converted divided by the Stock
Dividend Price, in effect at the date of the Conversion Notice
relating to such conversion.
(c) Conversion Notice. The right of conversion shall be exercised
by the Holder thereof by telecopying or faxing an executed and
completed written notice signed by an authorized representative of
the Holder, ("Conversion Notice") to the Corporation that the
Holder elects to convert a specified number of shares of Preferred
Stock representing a specified Stated Value thereof into shares of
Common Stock and by delivering by express courier the certificate
or certificates of Preferred Stock being converted to the
Corporation at its principal office (or such other office or agency
of the Corporation as the Corporation may designate by notice in
writing to the Holders of the Preferred Stock). The business date
indicated on a Conversion Notice which is telecopied to and
received by the Corporation in accordance with the provisions
hereof shall be deemed a Conversion Date. The Conversion Notice
shall include therein the Stated Value of shares of Preferred Stock
to be converted, and a calculation (a) of the Stock Dividend Price,
(b) the Conversion Price, and (c) the number of Shares of Common
Stock to be issued in connection with such conversion. The
Corporation shall have the right to review the calculations
included in the Conversion Notice, and shall provide notice of any
discrepancy or dispute therewith within three (3) business days of
the receipt thereof. The Holder shall deliver to the Corporation
an original Conversion Notice and the original Preferred to be
converted within three (3) business days from the date of the
Conversion Notice.
(d) Issuance of Certificates - Time Conversion Effected.
Promptly, but in no event more than six (6) business days, after
the receipt by facsimile of the Conversion Notice referred to in
Subparagraph (5)(c); and provided within the six (6) business days
the Corporation receives the certificate or certificates for the
shares of Preferred Stock to be converted, the Corporation shall
issue and deliver, or cause to be issued and delivered, to the
Holder, registered in the name of the Holder, a certificate or
certificates for the number of whole shares of Common Stock into
which such shares of Preferred Stock are converted. Such
conversion shall be deemed to have been effected as of the close of
business on the date on which the telecopy or facsimile Conversion
Notice shall have been received by the Corporation, and the rights
of the Holder of such share or shares of Preferred Stock shall
cease, at such time, and the Holder or Holders shall be deemed to
have become the Holder or Holders of record of the shares of Common
Stock represented thereby.
;4
In the event that the shares of Common Stock issuable upon
conversion of the Preferred, is not delivered within six (6)
business days of the date the Company receives the Conversion
Notice, the Company shall pay to the Buyer, by wire transfer, as
liquidated damages for such failure and not as a penalty, for each
$100,000 of Preferred sought to be converted, $500 for each of the
first five (5) calendar days and $1,000 per calendar day thereafter
that the shares of Common Stock are not delivered, which liquidated
damages shall begin to run from the seventh (7th) business day
after the Conversion Date. Any and all payments required pursuant
to this paragraph shall be payable only in cash. Notwithstanding
the above, liquidated damages shall not exceed $2,000.00 per day.
In addition to the liquidated damages set forth herein, in the
event the Company fails to deliver the shares of Common Stock
within six (6) business days after the Conversion date, the Company
agrees to issue the larger number of shares of Common Stock derived
from (i) the original Conversion Notice, or (ii) utilizing the five
lowest closing bid prices of the Company's shares of Common Stock
beginning on the Conversion Date and ending on the day the shares
of Common Stock are delivered. The Company understands that a
delay in the issuance of the shares of Common Stock could result in
economic loss to the Holder. Nothing contained herein, or in the
Preferred shall limit the Holder's rights to pursue actual damages
for the Company's failure to issue and deliver shares of Common
Stock to the Holder in accordance with the terms of the Certificate
of Designations, and this Agreement.
(e) Fractional Shares of Common Stock. No fractional shares of
Common Stock shall be issued upon conversion of any Preferred Stock
into shares of Common Stock. All fractional shares of Common Stock
shall be aggregated and then rounded down to the nearest whole
share of Common Stock. In case the number of shares of Preferred
Stock represented by the certificate or certificates surrendered
pursuant to Subparagraph 5(b) exceeds the number of shares of
Common Stock converted, the Corporation shall, upon such
conversion, execute and deliver to the Holder, at the expense of
the Corporation, a new certificate or certificates for the number
of shares of Preferred Stock represented by the certificate or
certificates surrendered which are not to be converted.
(f) Merger or Consolidation. In case of either (a) any merger or
consolidation to which the Corporation is a party (collectively,
the "Merger"), other than a Merger in which the Corporation is the
surviving or continuing corporation, or (b) any sale or conveyance
to another corporation of all, or substantially all, of the assets
of the Corporation (collectively, the "Sale"), and such Merger or
Sale becomes effective (x) while any shares of Preferred Stock are
outstanding and prior to the date that the Corporation's
Registration Statement covering all the shares of Common Stock
issuable upon the conversion of the Preferred Stock is declared
effective by the U.S. Securities and Exchange Commission
("Commission"), the Corporation or such successor corporation as
the case may be, shall make appropriate provision so that the
Holder of each share of Preferred Stock then outstanding shall have
the right to convert such share of Preferred Stock into the kind
and amount of shares of stock or other securities and property
receivable upon such Merger or Sale by a holder of the number of
shares of Common Stock into which such shares of Preferred Stock
could have been converted into immediately prior to such Merger or
;5
Sale, subject to adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section
5.
In the event of a Merger or Sale, where the Corporation is not the
surviving Corporation, the Holder shall have the right to redeem
all of the outstanding shares of Preferred Stock at 120% of the
Liquidation Value of each share of Preferred Stock then outstanding
plus all accrued and unpaid dividends (the "Redemption Amount").
The Corporation shall pay this Redemption Amount in cash within ten
(10) business days of receipt by the Corporation of notice from the
Holder, and receipt by the Corporation of all outstanding shares of
Preferred Stock duly endorsed by the Holder to the Corporation.
(g) Adjustments to Conversion Price for Stock Dividends and for
Combinations or Subdivisions of Common Stock. If the Corporation
at any time or from time to time while shares of Preferred Stock
are issued and outstanding shall declare or pay, any dividend on
the Common Stock payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by stock split,
reclassification or otherwise than by payment of a dividend in
Common Stock), or if the outstanding shares of Common Stock shall
be combined or consolidated, by reclassification or otherwise, into
a lesser number of shares of Common Stock, then the Conversion
Price in effect immediately before such event shall, concurrently
with the effectiveness of such event, be proportionately decreased
or increased, as appropriate.
(h) Adjustments for Reclassification and Reorganization. If
the Common Stock issuable upon conversion of the Preferred Stock
shall be changed into the same or a different number of shares of
Common Stock of any other class or classes of stock, whether by
capital reorganization, reclassification or otherwise (other than
a subdivision or combination or shares of Common Stock provided for
in Section 5(g) hereof), the Conversion Price then in effect shall,
concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted so that the Preferred
Stock shall be convertible into, in lieu of the number of shares of
Common Stock which the holders of Preferred Stock would otherwise
have been entitled to receive, a number of shares of Common Stock
of such other class or classes of stock equivalent to the number of
shares of Common Stock that would have been subject to receipt by
the holders upon conversion of the Preferred Stock immediately
before that change.
6. Assignment.
Subject to all applicable restrictions on transfer, the rights
and obligations of the Corporation and the Holder of the
Preferred Stock shall be binding upon and benefit the successors,
assigns, heirs, administrators, and transferees of the parties.
;6
7. Shares of Common Stock to be Reserved.
The Corporation, upon the effective date of this Certificate of
Designations, has a sufficient number of shares of Common Stock
available to reserve for issuance upon the conversion of all
outstanding shares of Preferred Stock, pursuant to the terms and
conditions set forth in Section 5, and exercise of the Warrants as
defined in Section 11. The Corporation will at all times reserve
and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the conversion of Preferred
Stock, and exercise of the Warrants, as herein provided, such
number of shares of Common Stock as shall then be issuable upon the
conversion of all outstanding shares of Preferred Stock, and
exercise of the Warrants. The Corporation covenants that all
shares of Common Stock which shall be so issued shall be duly and
validly issued, fully paid and non assessable. The Corporation
will take such action as may be required, if the total number of
shares of Common Stock issued and issuable after such action upon
conversion of the Preferred Stock, and exercise of the Warrants
would exceed the total number of shares of Common Stock then
authorized by the Corporation's Certificate of Incorporation, as
amended, or would exceed 19.99% of the shares of Common Stock then
outstanding if required by law or the Rules and Regulations of
NASDAQ or the National Securities Exchange applicable to the
Corporation to take such action as a result of exceeding such
19.99%, in order to increase the number of shares of Common Stock
to permit the Corporation to issue the number of shares of Common
Stock required to effect conversion of the Preferred, and exercise
of the Warrants, to a number sufficient to permit conversion of the
Preferred Stock, and exercise of the Warrants, including, without
limitation, engaging in reasonable efforts to obtain the requisite
stockholder approval of any necessary amendment to the
Corporation's Restated Certificate of Incorporation, and to obtain
shareholders approval in order to effect conversion of the
Preferred Stock, and exercise of the Warrants, if required by law
or the rules or regulations of the NASDAQ or National Securities
Exchange applicable to the Corporation.
7(a) Shareholder Approval. In connection with the issuance to the
Holder of the shares of Preferred Stock, pursuant to this
Certificate of Designations, the Corporation is also issuing (i)
certain warrants ("RBB Warrants") to the Holder pursuant to the
terms of that certain Private Securities Subscription Agreement
dated June 30th, 1998 (the "Agreement"), providing for the purchase
of up to 150,000 shares of Common Stock at an exercise price of
$2.50 per share and (ii) certain warrants (collectively, the
"Liviakis Warrants") to Liviakis Financial Communication, Inc.
("Liviakis") and Robert B. Prag providing for the purchase of up to
an aggregate of 2,500,000 shares of Common Stock at an exercise
price of $1.875 per share pursuant to the terms of that Placement
and Consulting Agreement dated June 30th, 1998, between Liviakis
and the Corporation.
If (i) the aggregate number of shares of Common Stock issued by the
Corporation as a result of any or all of the following: (a)
conversion of the Preferred Stock, (b) payment of dividends accrued
on the Preferred Stock (c) exercise of the RBB Warrants, and (d)
exercise of the Liviakis Warrants exceeds 2,388,347 shares of
Common Stock (which equals 19.9% of the outstanding shares of
;7
Common Stock of the Corporation as of the date of this Certificate
of Designations) and (ii) the Holder has converted or elects to
convert any of the then outstanding shares of Preferred Stock
pursuant to the terms of this Section 5 at a Conversion Price less
than $1.875 ($1.875 the market value per share of Common Stock as
quoted on the NASDAQ as of the close of business on June 30th,
1998) pursuant to the terms of Section 5(b) hereof, other than if
the Conversion Price is less than $1.875 solely as a result of the
anti-dilution provisions of Section 5(g) and (h) hereof, then,
notwithstanding anything in Section 5 to the contrary, the
Corporation shall not issue any shares of Common Stock as a result
of receipt of a Conversion Notice unless and until the Corporation
shall have obtained approval of its shareholders entitled to vote
on the transactions in accordance with subparagraphs (25)(H)(i)d,
(iv) and (v) of Rule 4310 of the NASDAQ Marketplace Rules
("Shareholder Approval").
If Shareholder Approval is required as set forth in the above
paragraph, the Corporation shall take all necessary steps to obtain
such Shareholder Approval upon receipt of the Conversion Notice
triggering the need for Shareholder Approval ("Current Conversion
Notice"). If the Corporation has not received from the Holder a
Current Conversion Notice, the Holder, subsequent to January 1st,
1999 may, if the Corporation's shares of Common Stock trade,
subsequent to January 1st, 1999, at a five (5) day average closing
bid price below Two Dollars and 34/00 ($2.34), upon written notice
to the Corporation, require the Corporation to obtain Shareholder
Approval ("Holder's Notice"). The Holder and the Corporation's
officers and directors covenant to vote all shares of Common Stock
over which they have voting control in favour of Shareholder
Approval. If the Corporation does not obtain Shareholder Approval
within ninety (90) days of the earlier of the Corporation's receipt
of (i) the Current Conversion Notice or (ii) the Holder's Notice,
and the Holder has not breached its covenant to vote all shares of
Common Stock over which they have voting control in favour of
Shareholder Approval, the Corporation shall pay in cash to the
Holder liquidated damages, in an amount of 4% per month of the
Liquidation Value of each share of Preferred Stock then
outstanding, commencing on the 91st day of the Corporation's
receipt of the Holder's Current Conversion Notice, and continuing
every thirty (30) days pro-rata until such time the Corporation
receives Shareholder Approval.
8. No Reissuance of Series 10 Class J Convertible Preferred
Stock.
Shares of Preferred Stock which are converted into shares of Common
Stock as provided herein shall be retired and shall become
authorized but unissued shares of Preferred Stock, which may be
reissued as part of a new series of Preferred stock hereafter
created.
9. Closing of Books.
The Corporation will at no time close its transfer books against
the transfer of any Preferred Stock or of any shares of Common
Stock issued or issuable upon the conversion of any shares of
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Common Stock of Preferred Stock in any manner which interferes with
the timely conversion of such Preferred Stock, except as may
otherwise be required to comply with applicable securities laws.
10. No Preemptive Rights.
The Preferred Stock shall not give its holders any preemptive
rights to acquire any other securities issued by the Corporation
at any time in the future.
11. Definition of Shares.
As used in this Certificate of Designations, the term "shares of
Common Stock" shall mean and include the Corporation's authorized
common stock, par value $.001, as constituted on the date of filing
of these terms of the Preferred Stock, or in case of any
reorganization, reclassification, or stock split of the outstanding
shares of Common Stock thereof, the stock, securities or assets
provided for hereof. The term "Warrants" as used herein shall have
the same meaning as defined in Section 1 of the Private Securities
Subscription Agreement, dated June 30th 1998, between the Company
and RBB Bank Aktiengesellschaft.
The said determination of the designations, preferences and
relative, participating, optional or other rights, and the
qualifications, limitations or restrictions thereof, relating to
the Preferred Stock was duly made by the Board of Directors
pursuant to the provisions of the Corporation's Restated
Certificate of Incorporation and in accordance with the provisions
of the Delaware General Corporation Law.
IN WITNESS HEREOF, this Certificate of Designations has been
signed by:
Dr. Louis F. Centofanti, President on this 30th day of June,
1998.
/s/ Louis Centofanti
__________________________________________________
President, Perma-Fix Environmental Services, Inc.
Richard Kelecy, Secretary on this 30th day of June, 1998
/s/ Richard T. Kelecy
_________________________________________________
Secretary, Perma-Fix Environmental Services, Inc.