DEBT-FOR-STOCK EXCHANGE AGREEMENT

     THIS DEBT-FOR-STOCK EXCHANGE AGREEMENT (the "Agreement") is effective as of
the 9th day of July 2001, by and between PERMA-FIX ENVIRONMENTAL SERVICES, INC.,
a Delaware corporation, having offices at 1940 Northwest 67th Place,
Gainesville, Florida 32653 (the "Company"), AND CAPITAL BANK -- GRAWE GRUPPE AG
(f/k/a as RBB BANK AKTIENGESELLSCHAFT), organized under the laws of Austria, and
having its principal offices at Burgring 16, 8101 Graz, Austria (the "Lender").

W I T N E S S E T H:

     WHEREAS, the Lender, as agent for certain of its investors, has advanced to
the Company a loan in the original principal amount of $3,000,000 pursuant to
the loan agreement, dated August 29, 2000, between the Lender and the Company,
as amended December 19, 2000, and clarified January 12, 2001 (the "$3 Million
Loan");

     

WHEREAS, the Lender has advised the Company that it is prohibited by Austrian
law from disclosing the identities of its investors;

     WHEREAS, the $3 Million Loan is evidenced by the Unsecured Promissory Note,
dated August 29, 2000, in the original principal amount of $3,000,000 (the A $3
Million Note");

     WHEREAS, the unpaid principal amount of the $3 Million Note, together with
all accrued and unpaid interest thereon, is due and payable on July 1, 2001;

     WHEREAS, as of the date of this Agreement, the unpaid principal amount of
the $3 Million Note is $3,000,000 and the accrued and unpaid interest due
thereon is $218,958.90;

     WHEREAS, the terms of the $3 Million Loan provide that if the $3 Million
Loan is not paid by certain dates, the Company will issue to the Lender a
certain number of shares of the Company

=s common stock, par value $.001 per share (the "Common Stock") (all of the
foregoing payments are collectively, the "Additional Payments");

     WHEREAS, the Company and the Lender have agreed that the Company, in full
and complete payment of the $3 Million Loan and the $3 Million Note, including,
but not limited to, all accrued and unpaid interest due thereon and any and all
Additional Payments due and payable to the Lender, will issue to the Lender
1,893,505 shares of Common Stock and a warrant to purchase up to 1,839,405
shares of Common Stock at an exercise price of $1.75 per share of Common Stock,
with such warrant being in the form of Exhibit A attached hereto (the
"Warrant"), in exchange for the $3 Million Loan, the $3 Million Note and any and
all Additional Payments due and payable to the Lender (the "Exchange"), subject
to and in accordance with the terms and conditions described in this Agreement;

 

 

 

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     WHEREAS, upon the issuance by the Company of the 1,893,505 shares of Common
Stock and the Warrant to the Lender in connection with the Exchange in full and
complete payment of the $3 Million Loan and the $3 Million Note, including, but
not limited to, the accrued interest due thereon, and any and all Additional
Payments, the $3 Million Loan and the $3 Million Note shall terminate and be
null and void in all respects and the Company shall have no obligations to pay
any Additional Payments due thereunder;

     WHEREAS, warrants granted by the Company to the Lender that are issued and
outstanding as of the date of this Agreement are not effected by this Agreement
and shall remain issued and outstanding pursuant to the terms, provisions, and
conditions of the respective warrants;

     WHEREAS, the Common Stock is listed for trading on the Boston Stock
Exchange and the National Association of Securities Dealers Automated Quotation
SmallCap Market ("NASDAQ"), 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 90 days;

      WHEREAS, the Lender is an "accredited investor," as such term is defined
in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as
amended (the "Securities Act") and the Lender received all information as
required under Rule 502 of Regulation D;

     WHEREAS, the Lender is not a "U.S. Person," as such term is defined in
Regulation S promulgated under the Securities Act; and

     WHEREAS, in reliance upon the representations made by the Lender in this
Agreement, the transactions contemplated by this Agreement are such that the
offer and exchange of securities by the Company hereunder will be exempt from
registration under applicable federal (U. S.) securities laws since this is a
private placement and intended to be a nonpublic offering pursuant to Sections
4(2) of the Securities Act and/or Regulation D promulgated under the Securities
Act.

     NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, and agreements set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

 

1.  Exchange.  In full and complete satisfaction of the $3 Million Loan, the $3
Million Note and any and all Additional Payment due and owing, and in full and
complete release of any and all obligations of the Company under the $3 Million
Loan, the $3 Million Note, and any and all Additional Payments due thereunder,
at Closing, the Lender will deliver the $3 Million Note to the Company in
exchange for 1,893,505 shares of Common Stock and the Warrant subject to and
pursuant to the terms and conditions set forth in this Agreement (the
"Exchange").

     1.1  $3 Million Note Paid in Full.  Simultaneously with the issuance of the
1,893,505 shares 
          

  of Common Stock and the Warrant pursuant to this Section 1, the Lender will
mark 

 

 

2

 

            "Paid in Full" on the face of the $3 Million Note. If the $3 Million
Note is not so marked 
            by the Lender at the time of delivery of the shares of Common Stock
and the Warrant, 
            the Lender hereby authorizes and directs the Company to so mark the
$3 Million Note 
            immediately upon issuance to the Lender of such shares of Common
Stock and Warrant 
            pursuant to Section 1.

     1.2  Delivery of Shares. At the Closing, the Company will deliver, or cause
to be delivered to
            the Lender, a certificate or certificates representing the 1,893,505
shares of Common 
            Stock and the Warrant issued in the name of the Lender, with such
shares of Common 
            Stock to be in such denominations as Lender requests in writing.

     1.3  Satisfaction and Release. As of the Closing (as defined in paragraph 4
below), (a) the $3 
            Million Loan and the $3 Million Note shall be deemed canceled, paid
in full, 
            and satisfied in all respects, including, but not limited to, all
principal and accrued 
            interest due in connection therewith, (b) all obligations of the
Company to Lender under 
            the $3 Million Loan and the $3 Million Note shall terminate and be
null and void, and 
            (c) Lender will be deemed to waive all rights to the Additional
Payments, and the 
            Company will have no obligation to make any Additional Payment which
has not been 
            made prior to the Closing. From and after the Closing, the Lender
releases, acquits 
            and forever discharges the Company, and all of its
respective subsidiaries, affiliates, 
            agents, employees, officers, and directors, as well as their
respective heirs, 
            successors, legal and personal representatives, and assigns of any
and all of them, 
            from and against any and all claims, liabilities, losses, damages,
cause or causes of 
            action of any kind or character whatsoever, whether liquidated,
unliquidated or disputed, 
            asserted or assertable, known or unknown, in contract or in tort, at
law or in equity, 
            which the Lender might now or hereafter have arising out of, or in
connection with, or 
            relating to, the $3 Million Note and $3 Million Loan, including, but
not limited to, all 
            obligations of the Company under the $3 Million Loan for the payment
of any 
            Additional Payments.

2.  Reporting Company.  The Company is a reporting company under the Exchange
Act and has filed with the United States Securities and Exchange Commission (the
"SEC") all reports required to be filed by the Company under Section 13 or 15(d)
of the Exchange Act. The Lender has had the opportunity to review, and has
reviewed, all such reports and information which the Lender deemed material to
an investment decision regarding the purchase of the Common Stock.

3.  No Effect on Warrants Issued and Outstanding as of the Date of this
Agreement. Nothing contained in this Agreement shall have any effect on any of
the warrants granted by the Company to the Lender to purchase Common Stock that
are issued and outstanding as of the date of this Agreement, except that the
warrants issued to the Lender in connection with the $3 Million Loan shall
terminate and be null and void in all respects.

 

 

 

 

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4.  Closing. The consummation of this Agreement (the "Closing") will occur two
(2) business days after the date that the Company gives written notification to
the Lender that the NASDAQ has no objection to listing the shares of Common
Stock issuable as part of the Exchange and issuable upon exercise of the Warrant
issued in connection with the Exchange or at such other time as designated by
the parties in writing (the "Closing Date"). The consummation of this Agreement
by the parties hereto is conditioned upon and subject to the NASDAQ not
objecting to the listing of the shares of the Company's Common Stock issuable
pursuant to this Agreement and issuable upon the exercise of the Warrant.

5.  Additional Agreements of the Company. In consideration for the Lender
entering into this Agreement and the Exchange contemplated by this Agreement,
the Company agrees that upon the Closing, the Company will pay to the Lender a
closing fee of $325,000.00 (the "Closing Fee"), payable by delivery to the
Lender of (a) the sum of $75,000.00 cash and (b) the number of shares of Common
Stock equal to the quotient of $250,000 divided by the last closing bid price of
the Common Stock as quoted on the NASDAQ on June 26, 2001.

6.  Representations, Warranties, and Covenants of Lender. The Lender hereby
represents, warrants, and covenants to the Company as follows:

     6.1  Investment Intent. The Lender represents and warrants that the shares
of Common Stock 
            issuable in connection with the Exchange and the underlying Common
Stock issuable 
            upon exercise of the Warrant (the "Warrant Shares"), will be,
acquired by the Lender 
            for, and on behalf of, itself and as agent for the account of
certain of its investors, all 
            of whom are accredited investors (as defined in Rule 501 of
Regulation D promulgated 
            under the Securities Act), and the Lender agrees that, and
represents that such investors 
            are, acquiring the Common Stock and the Warrant Shares for
investment purposes 
            only and not with a view toward the distribution or resale to
others. The Lender 
            acknowledges, understands, and appreciates that the Common Stock
issuable 
            hereunder, and the Warrant shares (herewith the "Securities"), have
not been 
            registered under the Securities Act by reason of a claimed exemption
under the 
            provisions of the Securities Act which depends, in large part, upon
the Lender's 
            representations as to investment intention, investor status, and
related and other 
            matters set forth herein. Lender understands that, in the view of
the SEC, among 
            other things, a purchase now with an intent to distribute or resell
would represent a 
            purchase and acquisition with an intent inconsistent with its
representation to the 
            Company, and the SEC might regard such a transfer as a deferred sale
for which 
            the registration exemption is not available. The Lender has advised
the Company 
            that it is prohibited by Austrian law from disclosing the identities
of its investors.

     6.2  Certain Risk. The Lender, for and on behalf of itself and as agent for
its investors, 
            recognizes that the acquisition of the Common Stock and the Warrant
Shares 
            involves a high degree of risk (a) as more fully described in the
"Risk Factors" 
            set forth in the Confidential Private Placement Memorandum, dated
April 6, 2001, 

 

 

 

4

 

            as amended by Amendment No. 1, dated June 15, 2001 (together, the
"Memorandum"), 
            issued by the Company in connection with a private placement, and
the Lender has 
            reviewed in detail the "Risk Factors" contained in the Memorandum;
(b) the Company 
            has sustained losses for the year ended December 31, 2000, and the
first quarter of 
            2001, from operations; (c) that the Company has a substantial
accumulated deficit; 
            (d) 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 Common Stock; (e) the Lender may not be able to liquidate its
investment in the 
            Common Stock; (f) in the event of a disposition, the Lender could
sustain the loss of 
            his entire investment; (g) 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, (h) while 
            the Common Stock is presently quoted and traded on the Boston Stock
Exchange 
            and the NASDAQ and (i) while the Lender is a beneficiary of certain
registration 
            rights provided herein, the Common Stock subscribed for under this
Agreement 
            and the Warrant Shares (i) are not registered under applicable
federal (U. S.) or 
            state securities laws, and thus may not be sold, conveyed, assigned
or transferred 
            unless registered under such laws or unless an exemption
from registration is available 
            under such laws, as more fully described herein, and (ii) no
assurance that the 
            Common Stock of the Company will continue to be quoted, traded or
listed for 
            trading or quotation on the Boston Stock Exchange or the Nasdaq
SmallCap 
            Market or on any other organized market or quotation system.

     6.3  Prior Investment Experience. The Lender acknowledges that it is, and
each of its 
            investors are, "accredited investors" (as that term is defined in
Rule 501 promulgated 
            under the Securities Act), and the Lender and each of its investors
have, prior 
            investment experience, including investment in non-listed and
non-registered securities, 
            or employed the services of an investment advisor, attorney or
accountant to read all 
            of the documents furnished or made available by the Company to it
and to evaluate 
            the merits and risks of such an investment on its behalf, and that
it recognizes the 
            highly speculative nature of this investment.

     6.4  No Review by the SEC. The Lender hereby acknowledges that this
offering of the 
            Common Stock has not been reviewed by the SEC because this private
placement is 
            intended to be a nonpublic offering pursuant to Section 4(2) of the
Securities Act 
            and/or Regulation D promulgated under the Securities Act.

     6.5  Not Registered. The Lender understands that the Common Stock and the
Warrant 
            Shares have not been registered under the Securities Act by reason
of a claimed 
            exemption under the provisions of the Securities Act which depends,
in part, upon the 
            Lender's and its investors' investment intention. In this
connection, the Lender 
            understands that it is the position of the SEC that the statutory
basis for such exemption 
            would not be present if its representation merely meant that its
present intention was 

 

 

5

 

            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.

     6.6  No Public Market. The Lender understands that although there is
presently a public 
            market for the Common Stock, including the Warrant Shares, Rule 144
promulgated 
            under the Securities Act requires, among other conditions, a
one-year holding period 
            following full payment of the consideration therefor prior to the
resale (in limited 
            amounts) of securities acquired in a nonpublic offering without
having to satisfy the 
            registration requirements under the Securities Act. The Lender
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 Rule 144 as one of the conditions of its
availability.  Except as otherwise 
            provided in paragraph 8 hereof, the Lender understands and hereby
acknowledges 
            that the Company is under no obligation to register the Common Stock
or the 
            Warrant Shares under the Securities Act. The Lender 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 Lender contained herein or any sale or distribution by
the Lender in 
            violation of the Securities Act or any applicable state securities
or "blue sky" laws 
            (collectively, "Securities Laws").

     6.7  Sophisticated Investor. That (a) the Lender and each of its investors
have adequate 
            means of providing for their current financial needs and possible
contingencies and 
            have no need for liquidity of the investment in the Common Stock;
(b) the Lender 
            and each of its investors are able to bear the economic risks
inherent in an investment 
            in the Common Stock, and that an important consideration bearing on
their ability to 
            bear the economic risk of the purchase of Common Stock is whether
the Lender 
            and each of its investors can afford a complete loss of the Lender's
investment in the 
            Common Stock, and the Lender represents and warrants that the Lender
can afford 
            such a complete loss; and (c) the Lender and each of its investors
have 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 Lender, on its own behalf and as agent for its
investors, is capable 
            of evaluating the merits, risks, and advisability of an investment
in the Common Stock.

     6.8  Tax Consequences. The Lender acknowledges that the Company has made
no 
            representation regarding the potential or actual tax consequences
for the Lender which 
            will result from entering into this Agreement and from consummation
of the Exchange. 
            The Lender acknowledges that it bears complete responsibility for
obtaining adequate 
            tax advice regarding this Agreement and the Exchange.

 

 

 

6

 

     6.9  SEC Filing. The Lender acknowledges that it has been previously
furnished with true 
            and complete copies of the following documents which have been filed
with the SEC 
            pursuant to Sections 13(a), 14(a), 14(c) or 15(d) of the Exchange
Act, and that such
            have been furnished to the Lender a reasonable time prior to the
date hereof: (a) Annual 
            Report on Form 10-K, for the year ended December 31, 2000 (the "Form
10-K"); 
            (b) Quarterly Report on Form 10-Q for the quarter ended March 31,
2001; (c) Current 
            Reports on Form 8-K, date of earliest event reported January 31,
2001, March 21, 
            2001, and April 6, 2001, and (d) the information contained in any
reports or documents 
            required to be filed by the Company under Sections 13(a), 14(a),
14(c) or 15(d) of the 
            Exchange Act since the distribution of the Form 10-K.

    6.10 Documents, Information and Access. The Lender's decision to acquire
for, and on its 
            own behalf, and on behalf of its investors, the Common Stock is not
based on any 
            promotional, marketing, or sales materials, and the Lender 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 Lender deems material to an
investment decision 
            with respect to the purchase of Common Stock hereunder.

    6.11 No Registration, Review or Approval. The Lender acknowledges and
understands 
            that the private offering and sale of securities pursuant to this
Agreement has not been 
            reviewed or approved by the SEC or by any state securities
commission, authority or 
            agency, and is not registered under the Securities Laws. The Lender
acknowledges, 
            understands, and agrees that the shares of Common Stock are being
exchanged 
            hereunder pursuant to a private placement exemption to the
registration provisions 
            of the Securities Act pursuant to Section 4(2) of such Securities
Act and/or 
            Regulation D promulgated under the Securities Act) and a similar
exemption to the 

            registration provisions of applicable state securities laws.

    6.12 Transfer Restrictions. The Lender will not, and will not allow any of
its investors to, 
            transfer any Common Stock exchanged under this Agreement or any
Warrant Shares 
            unless such are registered under the Securities Laws, or unless an
exemption is available 
            under such Securities Laws, and the Company may, if it chooses,
where an exemption 
            from registration is claimed by such Lender, condition any transfer
of Common Stock 
            or Warrant Shares out of the Lender's name on receipt of an opinion
of the Company's 
            counsel, to the effect that the proposed transfer is being effected
in accordance with, 
            and does not violate, an applicable exemption from registration
under the Securities 
            Laws, or an opinion of counsel to the Lender, which opinion is
satisfactory to the 
            Company, to the effect that registration under the Securities Act is
not required in 
            connection with such sale or transfer and the reasons therefor.

 

 

 

 

7

 

    6.13 Reliance. The Lender understands and acknowledges that the Company is
relying 
            upon all of the representations, warranties, covenants,
understandings, 
            acknowledgments, and agreements contained in this Agreement in
determining 
            whether to accept this subscription and to sell and issue the Common
Stock to 
            the Lender.

    6.14 Accuracy or Representations and Warranties. All of the representations,
warranties, 
            understandings, and acknowledgments that Lender has made herein are
true and 
            correct in all material respects as of the date of execution hereof.
The Lender will 
            perform and comply fully in all material respects with all covenants
and agreements 
            set forth herein, and the Lender covenants and agrees that until the
acceptance of this 
            Agreement by the Company, the Lender shall inform the Company
immediately in 
            writing of any changes in any of the representations or warranties
provided or 
            contained herein.

    6.15 Indemnity. The Lender 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 Lender of any representations,
warranties, 
            covenants or agreements made by Lender 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.

    6.16 Survival. The Lender 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 
            Conversion and Exchange of the Common Stock and the sale of the
Warrant Shares.

    6.17 Authority; Title. The Lender has full power and authority to tender,
sell, assign, 
            and transfer the $3 Million Loan and the $3 Million Note to the
Company pursuant 
            to the terms of this Agreement, and that, when accepted for
exchange, the Company 
            will acquire good, marketable, and unencumbered title to the $3
Million Loan and 
            the $3 Million Note, free and clear of all liens, restrictions,
charges and encumbrances, 
            and that the$3 Million Loan and the $3 Million Note are not subject
to any adverse 
            claims.

7.  Representations, Warranties and Covenants of the Company. In order to induce
Lender to enter into this Agreement and to consummate the Exchange, the Company
hereby represents, warrants, and covenants to Lender as follows:

      7.1  Organization, Authority, Qualification. The Company is a corporation
duly incorporated, 
             validly existing, and in good standing under the laws of the State
of Delaware. The 

 

 

8

 

             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.

     7.2  Authorization. The Company has full power and authority to execute and
deliver this 
            Agreement and to perform its obligations under and consummate the
transactions 
            contemplated by this Agreement. Upon the execution of this Agreement
by the Company 
            and delivery of the Securities, this Agreement shall have been duly
and validly executed 
            and delivered by the Company and shall constitute the legal, valid
and binding obligation 
            of the Company, enforceable against the Company in accordance with
its terms.

     7.3  Ownership of, and Title to, Securities. The shares of Common Stock to
be exchanged 
            in full and complete satisfaction and payment of all of the
Company's obligations under 
            the $3 Million Loan and the $3 Million Note pursuant to this
Agreement and all Warrant 
            Shares, when issued pursuant to the terms of the Warrant, will be,
duly authorized, 
            validly issued, fully paid, and nonassessable shares of the capital
stock of the Company, 
            free of personal liability. Upon consummation of the Exchange
pursuant to this Agree-
            ment (and upon exercise of the Warrant, in whole or in part), the
Lender will own and 
            acquire title to the Common Stock (and the Warrant 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 Warrants).

     7.4  Exemption from Registration. The Exchange in accordance with the terms
and pro-
            visions of this Agreement is being affected in accordance with the
Securities Act, 
            pursuant to the private placement exemption to the registration
provisions of the 
            Securities Act pursuant to Section 4(2) and/or Regulation D
promulgated under 
            the Securities Act, based on the representations, warranties, and
covenants made 
            by the Lender contained in this Agreement.

8. Registration Rights. To induce the Lender to enter into this Agreement and
the Exchange, the Company hereby covenants and agrees to grant to the Lender the
rights set forth in this paragraph 8 with respect to the registration of the
Common Stock to be issued under this Agreement and the Warrant Shares.

     8.1  Registration. Subject to the terms of this paragraph 8, the Company
agrees that after the 
            Closing, it shall use its reasonable efforts to prepare and file
with the SEC a registration 
            statement on Form S-3 or equivalent form (the "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 Securities Act, so as
to permit a public 
            offering and sale by the Lender of the Common Stock acquired by
Lender upon 

 

 

 

9

 

            consummation of the Exchange and the Warrant Shares (together, the
"Registrable 
            Securities"). The Company shall use its reasonable efforts to cause
such Registration
            Statement to become effective within 180 days after the Closing. In
connection with 
            the offering of such Registrable Securities registered pursuant to
this Section 8, the 
            Company shall take such reasonable actions, as it deems necessary,
to qualify the 
            Registrable Securities 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 such shares of the
Registrable Securities 
            covered by such Registration Statement; provided, however,  that the
Company 
            shall not be required (a) to qualify generally to do business in any
jurisdiction where 
            it would not otherwise be required to qualify but for this
subparagraph (b) to subject 
            itself to taxation in any such jurisdiction, or (c) to consent to
general service of 
            process in any such jurisdiction.

     8.2  Current Registration Statement. Once effective, the Company shall use
its reasonable 
            efforts to cause such Registration Statement filed hereunder to
remain effective until the 
            earlier of: all of the shares of Common Stock received by the Lender
under this Agree-
            ment and issueable upon exercise of the Warrant are sold or
transferred by the Lender 
            or the Company and the Lender receives an opinion from counsel for
the Company that 
            the Lender may sell all such shares of Common Stock under Rule 144
promulgated 
            under the Securities Act (or equivalent exception from registration)
without limitation as 
            to the amount of such shares of Common Stock that may be sold. The
Lender shall 
            promptly provide all such information and materials and take all
such action as may be 
            required 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.

     8.3  Other Provisions. In connection with the offering of any Registrable
Securities registered 
            pursuant to this paragraph 8, the Company shall furnish to the
Lender such number of 
            copies of any final prospectus as it may reasonably request to
effect the offering and 
            sale of the Registrable Securities to be offered and sold under such
Registration 
            Statement. In connection with any offering of Registrable Securities
registered pursuant 
            to this paragraph 8, the Company shall (a) furnish to the
underwriters (if any), at the 
            Company's expense, unlegended certificates representing ownership of
the Registrable 
            Securities sold under such Registration Statement in such
denominations as requested 
            and (b) instruct any transfer agent and registrar of the Registrable
Securities sold under 
            such Registration Statement to release immediately any stop transfer
order, and to 
            remove any restrictive legend, with respect to such Registrable
Securities included in 
            any registration becoming effective pursuant to this Agreement upon
the sale of such 
            shares by the Lender.

     8.4  Costs. Subject to the immediately following sentence, the Company
shall in all 
            events pay, and be responsible for, all filing fees, costs and
disbursements of counsel, 
            accountants, and other consultants representing the Company in
connection the 

 

10

 

            Registration Statement relating to the Registrable Securities under
this paragraph 8. 
            Notwithstanding anything set forth herein to the contrary, Lender
shall pay, and be 
            responsible for, any and all underwriting discounts and commissions
in connection 
            with the sale of the Registrable Securities pursuant hereto or the
Registration 
            Statement and all fees of its legal counsel and other advisors
retained by the Lender 
            in connection with reviewing such Registration Statement.

     8.5  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 
            its obligations under this paragraph 8 in the same manner and to the
same extent that 
            the Company would be required to perform if no such succession had
taken place.

9.  Indemnification.

     9.1  By the Company. Subject to the terms of this paragraph 9, the Company
will indemnify 
            and hold harmless the Lender, its directors, officers, and any
underwriter (as defined 
            in the Securities Act) for the Lender and each person, if any, who
controls the Lender 
            or such underwriter within the meaning of the Act, from and against,
and will reimburse 
            the Lender and each such underwriter and controlling person with
respect to, any and 
            all loss, damage, liability, cost, and expense to which such holder
or any such 
            underwriter or controlling person may become subject under the Act
or otherwise, 
            insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue 
            statement or alleged untrue statement of any material fact contained
in the Registration 
            Statement filed with the SEC in connection with the
Registrable Securities, 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 Lender, such underwriter or such
controlling person in 
            writing specifically for use in the preparation thereof.

     9.2  By the Lender. Subject to the terms of this paragraph 9, the Lender
will indemnify 
            and hold harmless the Company, its directors, officers, any
controlling person, and 
            any underwriter from and against, and will reimburse the Company,
its directors, 
            officers, any controlling person, and any underwriter with respect
to, any and all loss, 
            damage, liability, cost or expense to which the Company or any
controlling person 
            and/or any underwriter may become subject under the Securities Act
or otherwise, 
            insofar as such losses, damages, liabilities, costs or expenses are
caused by any 

 

 

 

11

 

            untrue statement or alleged untrue statement of any material fact
contained in a 
            Registration Statement filed with the SEC in connection to the
Registrable Securities, 
            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 Lender
specifically for use 
            in the preparation thereof.

    9.3  Procedure. Promptly after receipt by an indemnified party, pursuant to
the provisions of 
           paragraph 9.1 or 9.2, of notice of the commencement of any action
involving the subject 
           matter of the foregoing indemnity provisions, such indemnified party
will, if a claim 
           thereof is to be made against the indemnifying party pursuant to the
provisions of para-
           graph 9.1 or 9.2, promptly notify the indemnifying party of the
commencement thereof; 
           but the omission to so notify the indemnifying party will not relieve
the indemnifying 
           party from any liability which it may have to any indemnified party
otherwise than here-
           under. In case such action is brought against any indemnified party
and the indemnified 
           party notifies the indemnifying party of the commencement thereof,
the indemnifying 
           party shall have the right to participate in, and, to the extent that
it may wish, assume the 
           defense thereof. 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 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 paragraph 9.1 or 9.2 for any legal or
other expense 
           subsequently incurred by such indemnified parties in connection with
the defense 
           thereof, other than reasonable costs of investigation, unless (a) the
indemnified parties 
           shall have employed counsel in accordance with the provisions of the
preceding 
           sentence; (b) the indemnifying parties shall not have employed
counsel satisfactory 
           to the indemnified parties to represent the indemnified parties
within a reasonable 
           time after the notice of the commencement of the action or (c) the
indemnifying 
           party has authorized the employment of counsel for the indemnified
party at the 
           expense of the indemnifying parties.

10. Securities Legends and Notices. Lender represents and warrants that it has
read, considered and understood the following legends, and agrees that such
legends, substantially in the form and substance set forth below, shall be
placed on all of the certificates representing the Common Stock and the Warrant
Shares:

The shares of common stock represented by this certificate have not been
registered 
under the Securities Act of 1933, as amended (the "Securities Act") or qualified
under 

 

 

12

 

applicable state securities laws. This common stock may not be offered, sold,
pledged,
hypothecated or otherwise transferred in the absence of an effective
registration 
statement and qualification in effect with respect thereto under the Securities
Act and 
under any applicable state securities law or without the prior written consent
of 
Perma-Fix Environmental Services, Inc. and an opinion of Perma-Fix
Environmental 
Services, Inc.'s counsel, or an opinion from counsel for the holder hereof,
which 
opinion is satisfactory to the Company, that such registration and qualification
is 
not required under applicable federal and state securities laws or an exemption 
therefrom.

11.  Miscellaneous.

      11.1  Assignment and Power of Attorney. For purposes of affecting the
Exchange in accord-
               ance with the terms of this Agreement, at the Closing the Lender
does hereby irrevoc-
               ably make, constitute and appoint the Company as the true and
lawful agents and 
               attorneys-in-fact of the Lender ("Attorney-In-Fact") with full
power and authority 
               (except as provided below) to act hereunder individually, or
through duly appointed 
               successor attorneys-in-fact, in its sole discretion, all as
hereinafter provided, in the 
               name of, for, and on behalf of, the Lender, as fully as could the
Lender if present 
               and acting in person, with the cancellation of the $3 Million
Note.

      11.2  Amendment; Waiver. This Agreement shall not be changed, modified, or
amended 
               in any respect except by the mutual written agreement of the
parties hereto. Any 
               provision of this Agreement may be waived in writing by the party
which is entitled 
               to the benefits thereof. No waiver of any provision of this
Agreement 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.

      11.3  Binding Effect; Assignment. Neither this Agreement nor any rights or
obligations here-
               under or thereunder are assignable by the Lender.

      11.4  Governing Law; Litigation Costs. This Agreement and its validity,
construction, and 
               performance shall be governed in all respects by the internal
laws of the State of 
               Delaware without giving effect to such State's conflicts of laws
provisions. Each of the 
               Company and the Lender 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 recover 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.

 

 

 

13

 

      11.5  Severability. Any term or provision of this Agreement which is
prohibited or unenforce-
               able 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.

     11.6  Headings. The captions, headings, and titles preceding the text of
each or any section, 
              subsection, or paragraph hereof are for convenience of reference
only and shall not 
              affect the construction, meaning, or interpretation of this
Agreement or the Warrants 
              or any terms or provisions hereof or thereof.

     11.7  Counterparts. This Agreement may be executed in one or more original
or facsimile 
              counterparts, each of which shall be deemed an original and all of
which shall be 
              considered one and the same agreement, binding on all of the
parties hereto, not-
              withstanding that all parties are not signatories to the same
counterpart. Upon delivery 
              of an executed counterpart by the undersigned Lender to the
Company, which in 
              turn is executed and delivered by the Company, this Agreement
shall be binding as 
              one original agreement between Lender and the Company.

     11.8  Transfer Taxes. Each party hereto shall pay all such sales, transfer,
use, gross receipts, 
              registration, and similar taxes arising out of, or in connection
with, the transactions 
              contemplated by this Agreement (collectively, the "Transfer
Taxes") as are payable by 
              such party under applicable law, and the Company shall pay the
cost of any docu-
              mentary stock transfer stamps, if any, to be affixed to the
certificates representing the 
              Common Stock to be sold.

     11.9  Entire Agreement. This Agreement and the Common Stock 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.

    11.10 Authority; Enforceability. The Lender 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 Lender, this Agreement shall be enforceable
against the Lender in 
              accordance with its terms.

    11.11 Notices. Except as otherwise specified herein to the contrary, all
notices, requests, 
              demands, and other communications required or desired to be given
hereunder shall 
              only be effective if given in writing, by hand, by fax, by
certified or registered mail, 
              return-receipt requested, postage prepaid, by U. S. Express Mail
service, by private 
              overnight mail service (e.g., Federal Express) or by e-mail. Any
such notice shall be

 

 

 

14

 

              deemed to have been given (a) on the business day actually
received if given by hand, 
              by fax, or e-mail, (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 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 11.11:

              If to the Company:                Dr. Louis F. Centofanti
                                                                Perma-Fix
Environmental Services, Inc.
                                                        1940 Northwest 67th
Place
                                                        Gainesville, Florida
32653
                                                         Fax No.: (352) 373-0040
                                                         E-Mail:
loucento@bellsouth.net

            with copies simultaneously      Irwin H. Steinhorn, Esquire
             by like means to:                   Conner & Winters, A
Professional Corporation
                                                              One Leadership
Square, Suite 1700
                                                              211 North Robinson
                                                              Oklahoma City,
Oklahoma 73102
                                                              Fax No.: (405)
232-2695
                                                              E-Mail:
isteinhorn@cwlaw.com

             If to the Lender:                   Mr. Herbert Strauss
                                                              Capital Bank -
Grawe Gruppe AG
                                                              Burgring 16, 8010
Graz, Austria
                                                              Fax No.:
011-43-316-8072 ext. 392
                                                              E-Mail:
herbert.strauss@capitalbank.at

    11.12 No Third Party Beneficiaries. This Agreement and the rights, benefits,
privileges, 
              interests, duties, and obligations contained or referenced 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.
Nothing contained in 
              this paragraph 11.12 shall prohibit the Lender from entering into
this Agreement as 
              agent for, and on behalf of, certain of its investors.

    11.13 Public Announcements. Neither Lender nor any officer, director,
stockholder, 
              employee, affiliate, or affiliated person or entity of Lender,
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.

 

 

 

15

 

    11.14 Conflicts with Subscription Agreement. In the event of a conflict
between the terms 
             of the Subscription Agreement and the terms of this Agreement, this
Agreement shall 
             control in all respects.

     IN WITNESS WHEREOF, the Company and the undersigned Lender have each duly
executed this Agreement effective as of July 9, 2001.

                                                                     PERMA-FIX
ENVIRONMENTAL
                                         
                                   SERVICES, INC.

                                                                      By   /s/
Louis Centofanti                            
                                                                          Dr.
Louis F. Centofanti
                                         
                                          Chief Executive Officer

                                                                      CAPITAL
BANK - GRAWE GRUPP AG

                                                                       By   /s/
Herbert Strauss                           
                                         
                                 Herbert Strauss
                                         
                                            ;Headtrader

 

 

 

 

 

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