November 5, 1998
Mr. Bob Lindquist
WHCA Partners
Two Prudential Plaza
Suite 5050
1800 North Stetson Avenue
Chicago, IL 60601
Re: Letter of Intent - Chem-Con/Chem-Met Acquisitions
Dear Bob:
1. Perma-Fix Environmental Services, Inc. ("PESI") has
completed an initial due diligence of Chemical Conservation
Corporation (Florida), Chemical Conservation of Georgia, Inc. and
Chem-Met Services, Inc. and is very interested in acquiring these
companies by merger or other means acceptable to PESI that
qualifies as a pooling of interest. It is the intent that PESI
would acquire 100% of the issued and outstanding capital stock of
the following companies through a merger with PESI or a
subsidiary of PESI or other means acceptable to PESI which
qualifies as a pooling of interest:
* Chemical Conservation Corporation (Florida)
and Chemical Conservation of Georgia, Inc.
(collectively "Chem-Con").
* Chem-Met Services, Inc. ("Chem-Met").
2. It is understood that all of the issued and outstanding
shares of capital stock of Chem-Con is owned by the Ann L.
Sullivan Trust ("ALS Trust"), and all of the issued and
outstanding shares of capital stock of Chem-Met is owned by the
Thomas P. Sullivan Trust ("TPS Trust"). No other person, firm,
entity, trust, corporation, partnership, limited liability
company or other enterprise has any options, warrants or other
rights to acquire any capital stock or assets of Chem-Con or
Chem-Met. Thomas P. Sullivan and Ann L. Sullivan (collectively
the "Sullivans"), are husband and wife. The ALS Trust and the
TPS Trust collectively called "Trusts".
3. Certain real estate located in Orlando, Florida, and all
improvements thereon are currently used by and associated with
Chemical Conservation Corporation (Florida) ("Orlando Real
Estate"), which Orlando Real Estate is owned by the ALS Trust.
Prior to the closing of the acquisition by PESI of Chem-Met and
Chem-Con and as a condition precedent to such closing, the owner
of the Orlando Real Estate shall convey title in and to the
Orlando Real Estate and all improvements thereon to Chemical
Conservation Corporation (Florida) in the form of a capital
contribution and by a general warranty deed, free and clear of
any and all liens, mortgages, encumbrances, security interest,
claims and rights of any other party, except for two mortgages
currently on the Orlando Real Estate owed to and held by SunTrust
Bank in the approximate amount of $121,000 and Commercial Carrier
in the approximate amount of $142,000 (collectively, the
Page 2
Letter to Bob Lindquist
November 5, 1998
"Orlando Mortgages"). Upon the transfer of title to the Orlando
Real Estate to Chemical Conservation Corporation (Florida),
Chemical Conservation Corporation (Florida) will assume the
Orlando Mortgages. The Orlando Mortgages shall be current and
without default and no event shall have occurred under the
Orlando Mortgages which would, with the passage of time, result
in a default.
4. It is understood and agreed that each of the above
transactions are subject to and conditioned upon the closing of
the acquisition by PESI of Chem-Con and Chem-Met, and that no
transaction may be closed individually. It is the intent that
one definitive agreement will be executed for the merger of Chem-
Con and Chem-Met into PESI or a subsidiary of PESI. All such
merger documents will be drafted by PESI and presented to the
shareholders of Chem-Met and Chem-Con for review. This letter
and the letters of intent regarding PESI's acquisition of Chem-
Con and Chem-Met attached hereto are subject to the terms hereof
and the terms and conditions set forth in such separate letters
attached hereto.
5. It is understood and agreed that prior to closing of the
transactions with PESI as contemplated by this letter and the
letters attached hereto relating to PESI's acquisition of Chem-
Met and Chem-Con, the Quanta Corporation's ("Quanta") sale
transaction, as is currently pending, will be completed. The
proposed Quanta sale will be for certain assets (excluding the
warehouse facility located on and the 10 acre tract ("the Real
Estate") owned by a third party, adjacent to Chem-Met) and
certain liabilities, in the manner previously disclosed to PESI.
Prior to closing of the transactions contemplated by this letter
and the letters attached hereto, but after the sale of Quanta
assets, Quanta will be merged into Chem-Met and the then combined
officer's note receivable in the sum of approximately $1,064,000
payable to Chem-Met will be exchanged with the third party owner
of the Real Estate, for title to the Real Estate, with such Real
Estate being transferred to Chem-Met by a general warranty deed
free and clear of any liens, encumbrances, claims, mortgages,
security interest or rights of any other party. It is understood
and agreed that the final terms and conditions of the Quanta sale
cannot, as a condition of closing, violate or break the
accounting requirements for this pooling transaction. It is
also understood that the combined value of the Real Estate will
approximate the recorded amount of the officer note receivable
($1,064,000 at June 30, 1998).
6. In addition to the indemnification provisions to be
contained in the definitive merger agreement relating to PESI's
acquisition of Chem-Met and Chem-Con, PESI will be indemnified by
the Sullivans and the Trusts, jointly and severally, for any and
all federal or state income tax liability which Chem-Con, Chem-
Met and/or Quanta may be liable to pay for any reason whatsoever
for any and all periods prior to the date of closing of the
acquisition of Chem-Con and Chem-Met by PESI. PESI will also be
indemnified for all other liabilities as related to Quanta
operations. To be negotiated are the number of shares of Common
Stock issuable by PESI in connection with the acquisition of
Chem-Met and Chem-Con that are to be held in escrow and the terms
of such escrow in connection with the indemnification of PESI
relating to any tax liability of Chem-Met, Chem-Con and Quanta
discussed in this paragraph.
7. The Sullivans and the Trusts shall bear all of the expenses
and legal fees incurred by them, following the date of acceptance
of this letter and PESI shall bear its own expenses incurred by
Page 3
Letter to Bob Lindquist
November 5, 1998
it in connection with the transactions contemplated by this
letter and the attachments. The shareholders of Chem-Con and
Chem-Met shall be responsible for any brokerage fees associated
with the transactions contemplated by this letter and the
attachments.
8. The closing of the acquisition of Chem-Con and Chem-Met by
PESI are subject to the terms and conditions of this letter and
those separate letters of intent relating to PESI's acquisition
of Chem-Con and Chem-Met, both dated as of the date of this
letter and attached hereto. In addition to all other conditions
precedents, consummation of the transactions contemplated in this
letter and the letters attached hereto is subject to the parties
negotiating, completing and executing a definitive merger
agreement in a form and substance acceptable to the parties
hereto and compliance with all of the terms and provisions of the
definitive merger agreement and this letter and the letters
attached hereto.
9. From the date of this letter until the earlier of (i)
February 28, 1998, or (ii) execution of the definitive merger
agreement relating to PESI's acquisition of Chem-Con and Chem-
Met, neither the Sullivans, the Trusts, Chem-Con, Chem-Met nor
any of their respective shareholders, directors, officers,
employees, or agents will, directly or indirectly, solicit,
initiate or encourage any acquisition proposal (as defined below)
as to Chem-Con and/or Chem-Met or any of the stock or assets of
Chem-Con and/or Chem-Met, whether by sale, lease or otherwise,
nor will Chem-Con or Chem-Met nor any of their respective
shareholders, directors, officers, employees or agents
participate, directly or indirectly, in any negotiations with any
person or party other than PESI with respect to an acquisition
proposal of Chem-Con and/or Chem-Met or any stock or assets of
Chem-Con and/or Chem-Met, whether by sale, lease or otherwise.
The Sullivans will promptly notify PESI of the person or party
making any inquiry or proposal relating to an acquisition
proposal pursuant to which a person or entity other than PESI
would (i) acquire or participate in a merger of other business
combination involving Chem-Con or Chem-Met or (ii) acquire assets
of Chem-Con or Chem-Met or (iii) acquire any stock from any of
Chem-Con, Chem-Met, the Sullivans or the Trusts or acquire any of
the outstanding common stock of Chem-Con or Chem-Met.
10. The Sullivans and the Trusts shall cause Chem-Con and Chem-
Met to allow PESI, through its employees or agents to examine the
business, properties and personnel of Chem-Con and Chem-Met as
PESI may deem necessary or advisable. During normal business
hours and upon reasonable notice, PESI and its agents shall have
full access to the premises and to all the properties, books,
contracts, commitments and records of Chem-Con and Chem-Met and
Chem-Con and Chem-Met shall furnish to PESI such financial and
operating data and other information with respect to the
business, properties and personnel of Chem-Con and Chem-Met as
PESI may from time to time reasonably request.
11. This letter and the attachments hereto shall be construed
and governed by the laws of the State of Florida.
12. As you appreciate, this letter and the letters attached
hereto relating to PESI's acquisition of Chem-Con and Chem-Met
are merely an expression of our mutual intent with respect to
Page 4
Letter to Bob Lindquist
November 5, 1998
certain terms of a proposed transaction regarding PESI's
acquisition of Chem-Met and Chem-Con and except as set forth in
paragraphs 7, 9, 10 and 11 is not intended as an offer or any
type of commitment by PESI, or any acceptance or commitment by
you and any obligation on the part of you or us will be dependent
upon the execution and delivery of mutually negotiated definitive
merger agreement.
If this proposal is agreeable to the parties involved, please
have the Sullivans and the Trust sign in the space indicated
below and return an executed copy to me at your convenience.
Sincerely,
/s/Dr. Louis F. Centofanti
_________________________________
Dr. Louis F. Centofanti, Chairman
Agreed and Accepted this 6th day of November, 1998.
/s/Thomas P. Sullivan
_________________________________
Thomas P. Sullivan
/s/Ann L. Sullivan
_________________________________
Ann L. Sullivan
/s/Thomas P. Sullivan
__________________________________
Trustee of the Thomas P. Sullivan Trust
/s/Ann L. Sullivan
__________________________________
Trustee of the Ann L. Sullivan Trust
November 5, 1998
Mr. Bob Lindquist
WHCA Partners
Two Prudential Plaza
Suite 5050
1800 North Stetson Avenue
Chicago, IL 60601
Re: Letter of Intent -
Chemical Conservation Corporation (Florida) and Chemical
Conservation of Georgia, Inc.
Dear Bob:
Please be advised that Perma-Fix Environmental Services, Inc.
("PESI") has completed an initial due diligence of Chemical
Conservation Corporation (Florida) and Chemical Conservation of
Georgia, Inc. (collectively referred to as "Chem-Con") and is
very interested in acquiring Chem-Con by means of a merger or
other means acceptable to PESI, with such qualifying as a pooling
of interest. We would be interested in acquiring 100% of the
capital stock of the following companies:
* Chemical Conservation Corporation (Florida)
* Chemical Conservation Corporation of Georgia, Inc.
Certain real estate located in Orlando, Florida and all
improvements thereon are currently used by and associated with
Chemical Conservation Corporation (Florida) ("Orlando Real
Estate"), which Orlando Real Estate is owned by the ALS Trust.
Prior to the closing of the acquisition by PESI of Chem-Con and
as a condition precedent to such closing, the owner of the
Orlando Real Estate shall convey title in and to the Orlando Real
Estate and all improvements thereon to Chemical Conservation
Corporation (Florida) in the form of a capital contribution by a
general warranty deed, with the Orlando Real Estate being free
and clear of any and all liens, mortgages, encumbrances, security
interest, claims and rights of any other party, except for two
mortgages currently on the Orlando Real Estate owed to and held
by Sun Trust Bank in the approximate amount of $121,000 and
Commercial Carrier in the approximate amount of $142,000
(collectively, the "Orlando Mortgages"). Upon the transfer of
title to the Orlando Real Estate to Chemical Conservation
Corporation (Florida), Chemical Conservation Corporation
(Florida) will assume the Orlando Mortgages. The Orlando
Mortgages shall be current and without default and no event shall
have occurred under the Orlando Mortgages which would, with the
passage of time, result in a default.
The following offer is based on the ability to acquire Chem-Con
on terms that qualify as a pooling of interest. It would be our
intention to expedite the closing and final due diligence
process, with a proposed closing to occur by February 28, 1999,
subject to shareholder approval and satisfaction of the other
Page 2
Letter to Bob Lindquist
November 5, 1998
conditions specified herein, in the letter of intent dated as of
the date hereof and addressed to Bob Lindquist styled "Re: Letter
of Intent - Chem-Met Services, Inc. and the letter of intent
dated as of the date hereof and addressed to Bob Lindquist styled
"Letter of Intent - Chem-Con/Chem-Met Acquisitions." The
consideration to be paid for Chem-Con is as follows:
* $6.5 million in PESI Common Stock for Chem-Con, with
the number of shares of PESI Common Stock to be issued
determined by dividing $6.5 million by the average
closing price per share of PESI Common Stock as quoted
on the NASDAQ for the five (5) trading days immediately
preceding the date of closing.
PESI would, at the closing of the acquisition of Chem-Con by
PESI, enter into a four year consulting agreement with Tom
Sullivan, based on terms satisfactory to PESI and Mr. Sullivan
and at the rate of $400,000 in the first year and $300,000 per
year thereafter for the remaining three years.
Environmental Liability Issues:
This offer is conditioned on the assumption that the cost
relating to the Valdosta Ground Remediation does not exceed
$1,800,000, which would be assumed and paid by Chem-Con.
However, this transaction is also contingent upon PESI's ability
to obtain an insurance policy on the Valdosta Ground Remediation
liability on terms satisfactory to PESI prior to closing of the
PESI acquisition of Chem-Con and based upon the agreed upon and
documented costs. We will require the assistance of Chem-Con in
this documentation and support process.
This offer is also subject to satisfaction of the following:
* No material adverse change in financial position
of Chem-Con from the June 30, 1998, financial
statements;
* State/EPA approval of permit transfers, where
appropriate;
* Completion of audited financial statements of
Chem-Con and Chem-Met Services, Inc. ("Chem-Met")
for the twelve month periods ended September 30,
1996, 1997 and 1998, meeting the requirements of
Regulation S-X for inclusion in a Form S-1
Registration Statement pursuant to the Securities
Act of 1933, as amended. PESI would pay for this
audit, unless the audit finds that the combined
income of Chem-Con and Chem-Met is 20% less than
that represented, prior to the appropriate
reversal of officer notes receivable and those
adjustments as previously discussed, which
adjustments PESI has estimated as described in the
Exhibit A attached hereto. Prior to the audit
described above, Chem-Met and Chem-Con will make
certain adjustments to their financial statements
as previously discussed with PESI and estimated in
Exhibit A attached hereto;
* Completion by PESI of a final financial and
environmental due diligence;
Page 3
Letter to Bob Lindquist
November 5, 1998
* PESI obtaining the appropriate insurance policy
insuring the predetermined liability for
remediation of Valdosta;
* Tom Sullivan would have the right to appoint a
board member as long as stock held represented an
agreed upon percentage for a period to be
negotiated;
* Completion and execution of a definitive merger
agreement in which PESI would acquire Chem-Con and
Chem-Met which qualifies as a pooling of interest
and is acceptable to respective Board of Directors
of PESI, Chem-Con and Chem-Met;
* Completion of proxy material relating to the
acquisition of Chem-Met and Chem-Con in
accordance with the requirements of the Securities
Exchange Act of 1934, as amended and receipt of
PESI shareholder approval;
* No public announcement without prior approval by
both parties except as required by law;
* Completion of the acquisition of Chem-Met;
* Listing of the shares of Common Stock to be issued
hereunder on the Boston Stock Exchange and NASDAQ;
* Such other terms as reasonably requested by the
parties.
If this proposal is agreeable to the parties involved, please
have Thomas P. Sullivan, Ann L. Sullivan, the Thomas P. Sullivan
Trust and the Ann L. Sullivan Trust sign in the space indicated
below and return to me an executed copy of this letter at your
convenience.
Sincerely,
/s/Dr. Louis F. Centofanti
_________________________________
Dr. Louis F. Centofanti, Chairman
Agreed and Accepted this 6th day of November, 1998.
/s/Thomas P. Sullivan
_________________________________
Thomas P. Sullivan
/s/Ann L. Sullivan
__________________________________
Ann L. Sullivan
/s/Thomas P. Sullivan
___________________________________
Trustee of the Thomas P. Sullivan Trust
/s/Ann L. Sullivan
____________________________________
Trustee of the Ann L. Sullivan Trust
Chem-Con-ChemMet Adjusting Entries Exhibit A
Pooling Entries
Description Amount
________________________________________________________________
P & L Impact
Increase Allowance for Doubtful Accounts 200,000
Increase Four County Reserve 220,000
Establish Accrued Expenses 600,000
Establish Valdosta Remediation Reserve 1,800,000
Establish Accrued Closure Costs 635,802
_________
TOTAL EXPENSES 3,455,802
=========
November 5, 1998
Mr. Bob Lindquist
WHCA Partners
Two Prudential Plaza
Suite 5050
1800 North Stetson Avenue
Chicago, IL 60601
Re: Letter of Intent -
Chem-Met Services, Inc.
Dear Bob:
Please be advised that Perma-Fix Environmental Services, Inc.
("PESI") has completed an initial due diligence of Chem-Met
Services, Inc. ("Chem-Met") and is very interested in acquiring
Chem-Met. We would be interested in acquiring 100% of the
capital stock of Chem-Met by means of a merger or other means
acceptable to PESI, with such qualifying as a pooling of
interest.
The following offer is based on the ability to acquire Chem-Met
in a pooling of interest. It would be our intention to expedite
the closing and due diligence process, with a proposed closing to
occur by February 28, 1999, subject to shareholder approval and
satisfaction of the other conditions specified herein, in the
separate letter of intent dated as of the date hereof addressed
to Bob Lindquist involving the acquisition of Chemical
Conservation Corporation (Florida) and Chemical Conservation of
Georgia, Inc. (collectively, "Chem-Con") by PESI styled "Re:
Letter of Intent - Chemical Conservation Corporation (Florida)
and Chemical Conservation of Georgia, Inc. ("Chem-Con Letter")
and the letter dated as of the date hereof addressed to Bob
Lindquist relating to the proposed acquisition by PESI of Chem-
Met and Chem-Con styled "Letter of Intent-Chem-Con/Chem-Met
Acquisitions" ("Chem-Met - Chem-Con Letter"). PESI would be
willing to pay the following consideration for Chem-Met:
* $900,000 in PESI Common Stock for Chem-Met, with the
number of shares of PESI Common Stock to be issued
determined by dividing $900,000 by the average closing
price per share of PESI Common Stock over the 5 trading
days as quoted on the NASDAQ immediately prior to the
date of closing of PESI's acquisition of Chem-Met and
Chem-Con. As discussed, our analysis has placed a
value of $1.8 million on Chem-Met, less the approximate
$900,000 PRP liability in connection with the Four
County Landfill Superfund Site.
Page 2
Letter o Bob Lindquist
November 5, 1998
Environmental Liability Issues:
This offer is based on and subject to the assumption that the
following balance sheet issues and their respective costs would
be assumed or paid by Chem-Met and the liability of Chem-Met for
such shall not exceed the following amounts:
* Chem-Fix Settlement Agreement, not to exceed
$360,000;
* Four County Landfill PRP liability, not to
exceed $900,000; and
* Chem-Met Area 4 Remediation, not to exceed $2,000,000.
However, this transaction is also contingent upon PESI's
obtaining an insurance policy on the Chem-Met Area 4 Remediation
liability prior to closing upon terms satisfactory to PESI and
based upon the agreed upon and documented costs. We will
required the assistance of Chem-Met in this documentation and
support process.
This offer is also subject to satisfaction of the following:
* No material adverse change in financial condition
of Chem-Met/Chem-Con from the June 30, 1998,
financial statements of Chem-Met and Chem-Con;
* State/EPA approval of permit transfers, where
appropriate;
* Completion of audited financial statements of
Chem-Met and Chem-Con for the twelve month periods
ended September 30, 1996, 1997 and 1998, meeting
the requirements of Regulation S-X for inclusion
in a Form S-1 Registration Statement pursuant to
the Securities Act of 1933, as amended. PESI
would pay for this audit, unless the audit finds
that the combined income of Chem-Met and Chem-Con
is 20% less than that represented, prior to the
appropriate reversal of officer notes receivable
described in paragraphs 5 of the Chem-Met-Chem-Con
Letter and those certain adjustments as previously
discussed, which adjustments PESI has estimated as
described in the attached Exhibit A. Prior to the
audit described above, Chem-Met and Chem-Con will
make certain adjustments to their financial
statements as previously discussed with PESI and
estimated in Exhibit A attached hereto;
* Completion by PESI of a final financial and
environmental due diligence of Chem-Met and Chem-
Con;
* PESI obtaining the appropriate insurance policy,
insuring the predetermined liability for Chem-Met
Area 4 Remediation;
* The completion of an appropriate and definitive
settlement agreement on the Four County Landfill,
based upon liability of Chem-Met not to exceed
$900,000 and such settlement approved by an
appropriate government agency, all in a manner as
recently discussed and satisfactory to PESI;
* The completion of an appropriate settlement of the
Chem-Fix judgement in a manner satisfactory to
PESI, based upon a liability not to exceed
$360,000;
Page 3
Letter to Bob Lindquist
November 5, 1998
* Tom Sullivan would have the right to appoint a
board member as long as stock held represented an
agreed upon percentage for a period to be
determined;
* Completion of a definitive merger agreement, in
which PESI would acquire Chem-Met and Chem-Con in
a transaction qualifying as a pooling of interest,
and acceptable to the respective Board of
Directors of PESI, Chem-Met and Chem-Con and
satisfaction of the conditions precedent thereof;
* Completion of the required proxy material relating
to PESI's acquisition of Chem-Met and Chem-Con
pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, and receipt of
PESI shareholder approval;
* No public announcement without prior approval by
both parties except as required by law;
* Completion of the acquisition of Chem-Con by PESI;
* Listing of the shares of Common Stock to be issued
hereunder and in connection with the acquisition
of Chem-Con on the NASDAQ and Boston Stock
Exchange;
* Such other conditions precedent as reasonably
required by the parties.
If this proposal is agreeable to the parties involved, please
have Mr. Thomas P. Sullivan, Ann L. Sullivan, the Thomas P.
Sullivan Trust and the Ann L. Sullivan Trust sign in the space
indicated below and return an executed copy to me at your
convenience.
Sincerely,
/s/Dr. Louis F. Centofanti
________________________________
Dr. Louis F. Centofanti, Chairman
Agreed and Accepted this 6th day of November, 1998.
__________
/s/Thomas P. Sullivan
___________________________
Thomas P. Sullivan
/s/Ann L. Sullivan
____________________________
Ann L. Sullivan
/s/Thomas P. Sullivan
____________________________
Trustee of the Thomas P. Sullivan Trust
/s/Ann L. Sullivan
_____________________________
Trustee of the Ann L. Sullivan Trust
Chem-Con-ChemMet Adjusting Entries Exhibit A
Pooling Entries
Description Amount
_______________________________________________________________
P & L Impact
Increase Allowance for Doubtful Accounts 200,000
Establish Accrued Expenses 600,000
Increase Four County Reserve 220,000
Establish Valdosta Remediation Reserve 1,800,000
Establish Accrued Closure Costs 635,802
TOTAL EXPENSES 3,455,802
=========