Document:

Exhibit 10.22 - Kennerman Warrant (7-30-2001)

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT (A) UNDER COVER OF A REGISTRATION STATEMENT UNDER SUCH ACT AND QUALIFICATION UNDER APPLICBLE STATE SECURITIES LAWS WHICH ARE EFFECTIVE AND CURRENT WITH RESPECT TO THIS WARRANT OR SUCH SHARES OF COMMON STOCK, AS THE CASE MAY BE, OR (B) PURSUANT TO THE WRITTEN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO PERMA-FIX ENVIRONMENTAL SERVICES, INC. TO THE EFFECT THAT REGISTRATION AND QUALIFICATION ARE NOT REQUIRED UNDER APPLICABLE FEDERAL OR STATE SECUIRITES LAWS.

	
Warrant No. PPA0101
	
15,750 Shares

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

WARRANT TO PURCHASE COMMON STOCK

VOID AFTER 5:00 P.M., EASTERN STANDARD TIME

ON

JULY 30, 2006

          PERMA-FIX ENVIRONMENTAL SERVICES, INC., a Delaware corporation (the "Company"), hereby grants to Kennerman Associates and its permissible successors and assigns (the "Warrant Holder" or "Holder"), for value received, the right to purchase from the Company at any time commencing after the date upon which notice is received by the Holder that the shareholder of the Company have approved the exercise of the Warrants at the Per Share Exercise Price (the "Notice Date") until 5:30 p.m., Eastern Standard Time on July 30, 2006, up to an aggregate of fifteen thousand seven hundred fifty (15,750) shares  of the Company's common stock, par value $.001 per share (the "Common Stock") at an exercise price equal to $1.75 per share (the "Per Share Exercise Price"), subject to adjustment as provided below.  This warrant and all warrants of like tenor which may be issued by the Company in exchange or substitution for, or upon the transfer or partial exercise of, this warrant are collectively referred to as the "Warrant."  The shares of Common Stock issued upon the exercise of the Warrant are collectively referred to as the "Shares" or "Warrant Shares."

1.     Background.  On July 30, 2001, the Company completed a private placement (the "Offering") of a minimum of 1.5 million and a maximum of 4.4 million units ("Units"), each Unit consisting of one share of Common Stock, and one warrant to purchase on share of Common Stock as described in the Confidential Private Placement Memorandum, dated April 6, 2001, as amended by Amendment No. 1 to the Confidential Private Placement Memorandum dated June 15, 2001 (the "Offering Memorandum").  The initial Holder of the Warrant acted as a placement agent and assisted the Company in the placement of a portion of the Units.  Pursuant to the terms of the Offering, the Company has granted this Warrant to the initial Holder as partial consideration for the Holder's services to the Company as placement agent.
 

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2.     Exercise of Warrant.  This Warrant may be exercised at any time commencing after the Notice Date and ending on July 30, 2006, at 5:00 p.m., Eastern Standard Time (the "Expiration Date"), subject to paragraph 8 below. Upon presentation and surrender of this Warrant, with the Election to Purchase or Assign form (the "Purchase Form") duly executed and completed, at the principal office of the Company at 1940 Northwest 67th Place, Gainesville, Florida 32653-1649, together with cash or a cashier's or certified check payable to the Company in the amount of the Per Share Exercise Price, as may be adjusted as prescribed in paragraph 16 of the Agreement, multiplied by the number of Warrant Shares being purchased (the "Aggregate Exercise Price"), either the Company, or the Company's transfer agent, as the case may be, will deliver to the Warrant Holder hereof, shares of Common Stock which, in the aggregate, represent the number of Warrant Shares being purchased. All or less than all of the Warrants may be exercised and, in case of the exercise of less than all, the Company, upon surrender hereof, will deliver to the Warrant Holder a new Warrant or Warrants of like tenor and dated the date hereof entitling said Warrant Holder to purchase the number of Warrant Shares represented by this Warrant which have not been exercised or surrendered.
3.     Exchange and Transfer.  This Warrant, at any time prior to the exercise hereof, upon presentation and surrender to the Company, may be exchanged, alone or with other Warrants of like tenor registered in the name of the same Warrant Holder, for another Warrant of like tenor in the name of such Warrant Holder exercisable for the aggregate number of Warrant Shares represented by the Warrant(s) surrendered.

4.     Rights and Obligations of Holder of this Warrant.  The Holder of this Warrant will not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or in equity; provided, however, that if any Warrant representing shares of Common Stock or other securities is issued to the Holder hereof upon exercise of some or all of the Warrants evidenced by this Warrant, such Holder will, for all purposes, be deemed to have become the Holder of record of such Common Stock on the date on which this Warrant, together with a duly executed Purchase Form, was surrendered and payment of the Aggregate Exercise Price was made pursuant to the terms hereof, irrespective of the date of delivery of such share Warrant. The rights of the Holder of this Warrant are limited to those expressed herein and the Holder of this Warrant, by acceptance hereof, consents and agrees to be bound by, and to comply with, all of the provisions of this Warrant, including, without limitation, all of the obligations imposed upon the Warrant Holder contained in this Warrant. In addition, the Warrant Holder of this Warrant, by accepting the same, agrees that the Company may deem and treat the person in whose name this Warrant is registered on the books of the Company as the absolute, true and lawful owner for all purposes whatsoever, and the Company will not be affected by any notice to the contrary.

5.     Issuance of Shares.  As soon as practicable after full or partial exercise of this Warrant, the Company, at its expense, including, without limitation, any tax which may be payable in respect of the issuance thereof, will cause to be issued in the name of, and delivered to, the Holder of this Warrant, a certificate or certificates for the number of fully paid and nonassessable shares of Common Stock to which that Holder will be entitled upon such exercise.   If the total Warrant Shares to be issued upon the exercise of this Warrant would result in the issuance of a fractional share of Common Stock, the Company will not be required to issue a fractional share, but rather the resulting fractional interest will be adjusted by payment in an amount, in cash, equal to the current market value of such fractional interest. The Warrant and the certificates representing the Warrant Shares will be executed on behalf of the Company by the manual or facsimile

 

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signature of the then Chairman or Vice Chairman of the Board of Directors or President or Vice President of the Company. All such certificates for Warrant Shares will bear a restrictive legend substantially in the form of the legend set forth in paragraph 6 of this Warrant.

6.     Restriction on Transfer of Warrants or Warrant Shares.  By acceptance of this Agreement, the Holder represents and warrants that this Warrant is being acquired, and all Warrant Shares to be purchased upon the exercise of this Warrant will be acquired, by the Holder solely for the account of the Holder and not with a view to the fractionalization and distribution thereof. The Holder, by acceptance of this Warrant, agrees that (a) no public distribution of Warrants or Warrant Shares will be made in violation of the provisions of the Act and the Rules and Regulations promulgated thereunder and (b) during such period as delivery of a prospectus with respect to Warrants or Warrant Shares may be required by the Act, no public distribution of Warrants or Warrant Shares will be made in a manner or on terms different from those set forth in, or without delivery of, a prospectus then meeting the requirements of Section 10 of the Act and in compliance with all applicable state securities laws.  The Holder and each permitted transferee of the Holder further agrees that if any transfer or other distribution of any of the Warrants or Warrant Shares is proposed to be made by them other than by delivery of a prospectus meeting the requirements of Section 10 of the Act, such action will be taken only after receipt by the Company of an opinion of its counsel, or an opinion of counsel reasonably satisfactory to the Company, to the effect that the proposed transfer or other distribution will not be in violation of the Act or applicable state law.  As a condition to the transfer of the Warrants, any transferee of the Warrants must deliver to the Company a written agreement to accept and be bound by all of the terms and conditions contained in this Warrant. Any Warrant Shares issued upon exercise of this Warrant will bear substantially the following legend:                    These securities have not been registered under the Securities Act of 1933, as 

                    amended (the "Act"), or qualified under applicable state securities laws, and are 

                    restricted securities within the meaning of the Act.  Such securities may not be 

                    sold or transferred, except pursuant to a registration statement under such Act 

                    and qualification under applicable state securities laws which are effective and 

                    current with respect to such securities or pursuant to an opinion of counsel 

                    reasonably satisfactory to the issuer of such securities that registration and 

                    qualification are not required under applicable federal or state securities laws 

                    or an exemption is available therefrom.  
7.     Warrant Holder Not Shareholder.  This Warrant will not be deemed to confer upon the Holder any right to vote the Warrant Shares or to consent to, or receive notice as a shareholder of the Company as such, because of this Warrant, in respect of any matters whatsoever, or any other rights or liabilities as a shareholder.
8.     Taxes.  The Company will pay
all taxes attributable to the initial issuance of Warrant Shares upon exercise
of this Warrant.  The Company will not, however, be required to pay any tax
which may be payable in respect to any transfer involved in any issue of
Warrants or in the issue of any Warrants of Warrant Shares in the name other
than that of the Holder upon the exercise of any Warrant, as the case may be.

9.    Mutilated or Missing Warrants.  If any Warrant is mutilated, lost, stolen or destroyed, the Company may, on such terms as to indemnity or otherwise as they it in its discretion impose (which will, in the case of a mutilated Warrant, include the surrender thereof), and upon receipt of evidence satisfactory to the Company of such mutilation, loss, theft or destruction, issue a substitute Warrant, respectively, of like denomination or
 

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tenor as the Warrant so mutilated, lost, stolen or destroyed. Applicants for substitute Warrants will comply with such other reasonable regulations and pay any reasonable charges as the Company may prescribe.

10.   Subsequent Issue of Warrants.  Subsequent to their original issuance, no Warrants will be reissued except (a) such Warrants issued upon transfer thereof in accordance with paragraph 6 hereof, (b) such Warrants issued upon any combination, split-up or exchange of Warrants pursuant to paragraph 13 hereof, (c) such Warrants issued in replacement of mutilated, destroyed, lost or stolen Warrants pursuant to paragraph 9 hereof, (d) Warrants issued upon the partial exercise of Warrants pursuant to paragraph 2 hereof, and (e) Warrants issued to reflect any adjustment or change in the Exercise Price or the number or kind of shares purchasable thereunder pursuant to paragraph 13 hereof.
11.  Reservation of Shares.  For the purpose of enabling the Company to satisfy all obligations to issue Warrant Shares upon exercise of this Warrant, the Company will at all times reserve and keep available free from preemptive rights, out of the aggregate of its authorized but unissued shares, the full number of Shares which may be issued upon the exercise of this Warrant. The Company covenants all shares which will be so issuable upon exercise of this Warrant, will upon issue be fully paid and nonassessable by the Company and free from all taxes, liens, charges and security interests with respect to the issue thereof.

12.  Registration Rights.

       12.1  Registration.  The Company hereby agrees to use reasonable efforts to file a Form S-3

                Registration Statement or such other suitable registration statement acceptable to the 

                Company
(the "Registration Statement") with the Securities and Exchange Commission 

                ("SEC") within 150 days following the completion of the Offering to register the 

                Common Stock issuable upon exercise of this Warrant (the "Registrable Securities") 

                under the Act, and the Company will use reasonable efforts to cause such registration 

                to become effective within 90 days following the filing of the Registration Statement 

                with the SEC and to remain effective for six months after the effective date of the 

                Registration Statement; provided that the Company will not file any such Registration 

                Statement within 60 days following the last Closing. The Company will in connection 

                therewith use reasonable efforts to also register and qualify the Registrable Securities 

                under the Blue Sky laws of such jurisdictions as the Company
reasonably determines 

                are necessary.  The obligation of the Company under this paragraph 12.1 will be 

                limited to one registration statement. The Company will pay the expenses described 

                in paragraph 12.2 for the Registration Statement filed pursuant to this paragraph 12.1, 

                except for underwriting discounts and commissions and legal fees of the Holder, 

                which shall be borne by such Holder.

        12.2  Registration Procedures. To effect the registration of Registrable Securities under the Act

                 pursuant to the provisions of paragraph 12.1 of this Agreement, the Company will:

                 12.2.1.  Prepare and file with the SEC the Registration Statement with respect to the 

                              Registrable Securities within 150 days following the completion of the Offering, 

                              and use reasonable efforts to cause such registration statement to become 

                              effective within 90 days following its filing (but not less than 60 days after the 

                              completion of the Offering) and cause the same to remain effective for six 

                              months following its effective date;

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                12.2.2.  Prepare and file with the SEC such amendments to the Registration Statement 

                             and supplements to the prospectus contained therein and post-effective 

                             amendments thereto as may be necessary to keep the Registration Statement 

                             effective for a period of six months;

                12.2.3.  Furnish to the Holder participating in such registration such reasonable number 

                             of copies of the Registration Statement, preliminary prospectus, final prospectus

                            
and such other documents as may reasonably requested by such Holder;

                12.2.4.  Use reasonable efforts to register or qualify the securities covered by the 

                             Registration Statement under such state securities or Blue Sky laws of such 

                             jurisdictions as the Company may reasonably determine as necessary within 

                             30 days following the original filing of the Registration Statement, except that 

                             the Company will not for any purpose be required to execute a general consent 

                             as to service of process or to qualify to do business as a foreign corporation in 

                             any jurisdiction wherein it is not so qualified to do business; provided that the 

                             Company will execute a Form U-2 Consent to Service of Process where 

                             required by the Blue Sky laws of a particular state;

                12.2.5  Notify the Holder promptly when the Registration Statement has become 

                            effective or when supplements thereto are filed;

               12.2.6.  Notify the Holder promptly of any material requests by the SEC related to the

                           
Registration Statement's effectiveness;

               12.2.7.  Prepare and file with the SEC, promptly upon the request of any Holder, any 

                            amendments or supplements to such Registration Statement or prospectus which, 

                            in the opinion of counsel for such Holder (and concurred in by counsel for the 

                            Company), is required under the Act or the rules and regulations thereunder in 

                            connection with the distribution of Common Stock by such Holder; and

              12.2.8.  Advise such Holder, promptly after it will receive notice or obtain knowledge 

                           thereof, of the issuance of any stop order by the SEC suspending the effectiveness 

                           of such Registration Statement or the initiation or threatening of any proceeding for 

                           that purpose and promptly use its reasonable efforts to prevent the issuance of 

                           any stop order or to obtain its withdrawal if such stop order should be issued.

     12.3  Expenses.

              12.3.1.  With respect to the registration pursuant to paragraph 12.1 hereof, all fees, costs 

                            and expenses of and incidental to such registration and public offering (as specified 

                            in paragraph 12.3.2 below) in connection therewith will be borne by the Company,

                           
provided, however, that any Holder participating in such registration will bear their 

                            pro rata share of the underwriting discount and commissions, if  any, and transfer 

                            taxes.

              12.3.2.  The fees, costs and expenses of registration to be borne by the Company as 

                           provided in paragraph 12.3.1 are the following: all registration, filing, and NASD 

                           fees, printing expenses, fees and disbursements of counsel and accountants for 

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                           the Company, and all legal fees and disbursements and other expenses of complying 

                           with state securities or Blue Sky laws of any jurisdictions in which the securities to 

                           be offered are to be registered or qualified (except as provided in 12.3.1 above). 

                           Fees and disbursements of counsel and accountants for the selling Holder and any 

                           other expenses incurred by the selling Holder not expressly included above will be 

                           borne by the selling Holder.

     12.4.  Indemnification.

              12.4.1.  The Company will indemnify and hold harmless each Holder of Registrable 

                           Securities
which are included in the Registration Statement pursuant to the 

                           provisions of
paragraph 12.1 hereof, its directors and officers, and any 

                           underwriter (as defined in the Act) for such Holder and each person, if any, 

                           who controls such Holder or such
underwriter within the meaning of the Act, 

                           from and against, and will reimburse such
Holder and each such underwriter 

                           and controlling person with respect to, any and all loss, damage, liability, cost 

                           and expense to which such Holder or any such underwriter or
controlling 

                           person may become subject under the Act or otherwise, insofar as such 

                           losses, damages, liabilities, costs or expenses are caused by any untrue 

                           statement or alleged untrue statement of any material fact contained in such

                           Registration Statement, any prospectus contained therein or any amendment 

                           or supplement thereto, or arise out of or are based upon the omission or 

                           alleged omission to state therein a material fact required to be stated therein 

                           or necessary to make the statements therein, in light of the circumstances in 

                           which they were made, not misleading; provided, however, that the 

                           Company will not be liable in any such case to the extent that any such loss, 

                           damage, liability, cost or expenses 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 such Holder, such 

                           underwriter or such controlling person in writing specifically for use in the 

                           preparation thereof.

              12.4.2.  Each Holder of Registrable Securities included in a registration pursuant to the 

                           provisions of paragraph 12.1 hereof will indemnify and hold harmless the 

                           Company, its directors and officers, any controlling person and any underwriter 

                           from and against, and will reimburse the Company, its directors and officers, 

                           any controlling person and any underwriter with respect to, any and all loss, 

                           damage, liability, cost or expense to which the Company or any controlling 

                           person and/or any underwriter may become subject under the Act or otherwise, 

                           insofar as such losses, damages, liabilities, costs or expenses are caused by 

                           any untrue statement or alleged untrue statement of any material fact contained 

                           in such Registration Statement, any prospectus contained therein or any 

                           amendment or supplement thereto, or arise out of or are based upon the 

                           omission or alleged omission to state therein a material fact required to be 

                           stated therein or necessary to make the statements therein, in light of the 

                           circumstances in which they were made, not misleading, in each case to the 

                           extent, but only to the extent, that such untrue statement or alleged untrue 

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                           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 such 

                           Holder specifically for use in the preparation thereof.

              12.4.3.  Promptly after receipt by an indemnified party of notice of the commencement of 

                           any action involving the subject matter of the foregoing indemnity provisions, such

                           indemnified party will, if a claim thereof is to be made against the indemnifying 

                           party
pursuant to the provisions of said paragraph 12.4.1 or 12.4.2, as the case 

                           may be,
promptly notify the indemnifying party of the commencement thereof; 

                           but the omission to so notify the indemnifying party will not relieve it from any 

                           liability which it may have to any indemnified party otherwise than hereunder. 

                           In case such action is brought against any indemnified party and it notifies the 

                           indemnifying party of the commencement thereof, the indemnifying party will 

                           have the right to participate in, and, to the extent that it may wish, jointly with 

                           any other indemnifying party similarly notified, to assume the defense thereof; 

                           or, if there is a conflict of
interest which would prevent counsel for the 

                           indemnifying party from also representing the indemnified party, the indemnified 

                           parties, as a whole, have the right to select one separate counsel to participate 

                           in the defense of such action on behalf of such indemnified parties. After notice 

                           from the indemnifying parties to such indemnified party of their election so to 

                           assume the defense thereof, the indemnifying parties will not be liable to such 

                           indemnified parties pursuant to the provisions of said paragraph 12.4.1 or 

                           12.4.2 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 will have employed counsel in 

                           accordance with the provisions of the preceding sentence, (b) the indemnifying 

                           parties will not have employed counsel 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, in writing, the employment of counsel 

                           for the indemnified party at the expense of the indemnifying
parties.

         12.5.     Form S-3.  The Company represents and Warrants that the Company is, as of the 

                      effective date of this Agreement, eligible to use Form S-3 to register its securities 

                  
   for sale in a secondary offering of the Company's securities for the account of selling

                      shareholders; provided any shareholder offering the Company's securities under a 

                      Form S-3 registration statement must satisfy applicable prospectus delivery 

                      requirements and other requirements of the Act.

13.     Adjustments of Number and Kind of Shares
Purchasable and Exercise Price.  The number and kind of securities or
other property purchasable upon exercise of a Warrant will be subject to
adjustment from time to time upon the occurrence, after the date hereof, of any
of the following events.

         13.1     Distributions; Dividends; Subdivisions; Combinations.   If the Company (a) pays a 

                     dividend in, or makes a distribution of, shares of capital stock on its outstanding 

                     Common Stock; (b) subdivide its outstanding shares of Common Stock into a greater

                     number of shares; or (c) combines its outstanding shares of Common Stock into a 

 

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                     smaller number of shares, then the total number of shares of Common Stock 

                     purchasable upon the exercise of each Warrant outstanding immediately prior to such 

                     event will be adjusted so that the Holder of any Warrant will be entitled, upon proper

                     exercise of the Warrants, to receive at the same aggregate Exercise Price the number 

                     of
shares of capital stock (of one or more classes) which the  Holder would have 

                     owned or
have been entitled to receive immediately following the happening of any 

                     of the events
described above had such Warrant been exercised in full immediately 

                     prior to the record
date with respect to such event. Any adjustment made pursuant 

                     to this paragraph 12.1 will,
in the case of a stock dividend or distribution, become 

                     effective as of the applicable
record date and, in the case of a subdivision or 

                     combination, be made as of the effective date of the event. If, as a result of an 

                     adjustment made pursuant to this
paragraph, the Holder of any Warrant becomes 

                     entitled, upon proper exercise of the
Warrants, to receive shares of two or more 

                     classes of capital stock of the Company, the Board of Directors of the Company 

                     (whose determination will be conclusive and will be evidenced by a Board 

                     resolution) will determine the allocation of the adjusted
Exercise Price between or 

                     among shares of such classes of capital stock.

         13.2.    Consolidation; Merger.  If the Company consolidates with, or merges into, another

                     corporation (other than a consolidation or merger which does not result in any

                     reclassification or change of the outstanding Common Stock), or in case of any sale or

                     conveyance to another corporation of the property of the Company as an entirety or

                     substantially as an entirety, the corporation formed by such consolidation or merger 

                     or the corporation which will have acquired such assets, as the case may be, will 

                     execute and deliver to the  Holder a supplemental warrant agreement providing that 

                     the  Holder will, with respect to each Warrant then outstanding and held by the 

                     Holder, have the right thereafter (until the expiration of such Warrant) to receive, 

                     upon exercise of such Warrant, solely the kind and amount of shares of stock and 

                     other securities and property (or cash) receivable upon such consolidation, merger, 

                     sale or transfer by a holder of the number of shares of Common Stock of the 

                     Company for which such Warrant might have been exercised immediately prior to 

                     such consolidation, merger, sale or transfer. Such supplemental warrant agreement 

                     will provide for adjustments which will be as nearly equivalent as may be practicable 

                     to the adjustments provided in this paragraph. The provision of this paragraph will 

                     similarly apply to successive consolidations, mergers, sales or transfers.

        13.3.     Reorganization; Reclassification.  If any capital reorganization or a reclassification of 

                     the Common Stock (except as provided in paragraphs 12.1 and 12.2 above), will be

                    
effected, then, as a condition of such reorganization or reclassification, lawful and 

                     adequate provision will be made whereby the Holder, upon exercise of Warrants, 

                     will thereafter have the right to purchase and receive, upon the basis and upon the 

                     terms and conditions specified herein and in the Warrants and, in substitution for 

                     the Common Stock to which the Holder would have become entitled upon 

                     exercise immediately prior to such reorganization or reclassification, the shares 

                     (of any class or classes) or other securities or property of the Company (or cash) 

                     that the Holder would have been entitled to receive at the same aggregate Exercise 

                     Price upon such reorganization or reclassification if the Warrants had been exercised

                     immediately prior to the record date with respect to such event; and in any such case,

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                        appropriate provision (as determined by the Board of Directors of the Company, 

                        whose determination will be conclusive and will be evidenced by a certified Board 

                        resolution filed with the Warrant Agent) will be made for the application of this 

                        paragraph with respect to the rights and interests thereafter of the  Holder (including 

                        but not limited to the allocation of the Exercise Price between or among shares 

                        of classes of capital stock), to the end that this paragraph (including the adjustments 

                        of the number of shares of Common Stock or other securities purchasable and 

                        the Exercise Price of the Warrants) will thereafter be reflected, as nearly as 

                        reasonably practicable, in all subsequent exercises of the Warrants for any shares 

                        or securities or other property (or cash) thereafter deliverable upon the exercise of 

                        the Warrants.

           13.4.     Certification of Adjustment.  Whenever the number of shares of Common Stock or 

                       other securities purchasable upon exercise of a Warrant is adjusted as provided in 

                       this paragraph, the Company will provide the Holder a Warrant signed by the 

                       Chairman of the Board or the President or a Vice President of the Company setting 

                       forth the number and kind of securities or other property purchasable upon exercise 

                       of a Warrant, as so adjusted, stating that such adjustments in the number or kind 

                       of shares or other securities or property conform to the requirements of this 

                       paragraph, and setting forth a brief statement of the facts accounting for such 

                       adjustments.

          13.5.     Change of Warrant.  Irrespective of any adjustments in the number or kind of shares 

                       issuable upon exercise of this Warrant, the Warrants theretofore or thereafter issued 

                       may continue to express the same price and number and kind of shares as are stated 

                       in the similar Warrants initially issuable pursuant to this Warrant.

         13.6.     Certification.  The Company may retain a firm of independent public accountants of 

                      recognized standing, which may be the firm regularly retained by the Company, 

                      selected by the Board of Directors of the Company or the Executive Committee 

                      of the Board, to make any computation required under this paragraph, and a 

                      Warrant signed by such firm will, in the absence of fraud or gross negligence, be 

                      conclusive evidence of the
correctness of any computation made under this 

                      paragraph.

         13.7.     "Common Stock".   For the purpose of this paragraph, the term "Common Stock" will 

                      mean (a) the Common Stock or (b) any other class of stock resulting from successive 

                      changes or reclassifications of such Common Stock consisting solely of changes in par 

                      value, or from par value to no par value, or from no par value to par value. If, at any 

                      time as a result of an adjustment made pursuant to this paragraph, the Holder of any 

                      Warrant thereafter surrendered for exercise will become entitled to receive any shares 

                      of capital stock of the Company other than shares of Common Stock, thereafter the 

                      number of such other shares so receivable upon exercise of any Warrant will be subject 

                      to adjustment from time to time in a manner and on terms as nearly equivalent as 

                      practicable to the provisions with respect to the Common Stock contained in this 

                      paragraph, and all other provisions of this Warrant, with respect to the Common Stock, 

                      will apply on like terms to any such other shares.

        13.8.     Reduction of Exercise Price.  The Company may, from time to time and to the extent 

                     permitted by law, reduce the exercise price of the Warrant by any amount for a period 

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                     of not less than 20 days. If the Company so reduces the exercise price of the Warrant, 

                     it will give not less than 15 days notice of such decrease, which notice may be in the 

                     form of a press release, and will take such other steps as may be required under 

                     applicable law in connection with any offers or sales of securities at the reduced price.

        13.9.     No Adjustment of Exercise Price in Certain Cases.  No adjustment of the exercise price 

                     will be made if the amount of the adjustment is less than two cents per Warrant Share,

                    
provided, however, that in such case any adjustment that would otherwise be required 

                     then to be made will be carried forward and will be made at the time of, and together 

                     with, the next subsequent adjustment which, together with any adjustment so carried 

                    forward, will amount to at least two cents per Warrant Share.

14.     Reduction of Exercise Price Below Par Value.  Before taking any action that would cause an adjustment pursuant to paragraph 10 of this Warrant reducing the portion of the exercise price required to purchase one share of capital stock below the then par value (if any) of a share of such capital stock, the Company will use its best efforts to take any corporate action which, in the opinion of its counsel, may be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of such capital stock.

15.     No Fractional Warrants.  The Company will not be required to issue fractions of Warrants upon the reissue of Warrants or any adjustments as described in paragraph 14, or otherwise; but the Company in lieu of issuing any such fractional interest, will adjust the fractional interest by payment to the Registered Holder an amount, in cash, equal to the current market value of any such fraction or interest.

16.     Agreement of Holder.  Every Holder by accepting the same consents and agrees with the Company, and with every other holder of a Warrant, respectively, that (a) the Warrant is transferable on the registry books of the Company only upon the terms and conditions set forth in this Warrant; and (b) the Company may deem and treat the person in whose name the Warrant is registered as the absolute owner of the Warrant (notwithstanding any notation of ownership or other writing thereon made by anyone other than the Company) for all purposes whatsoever, and the Company will not be affected by any notice to the contrary.

17.     Holder's Representations and Warranties.  The Holder hereby acknowledges, represents and warrants to, and agrees with, the Company and its affiliates as follows:

        17.1.    Investment Intent.  The Holder is acquiring the Warrant, and will acquire the Warrant 

                    Shares, for the Holder's own account as principal, and not as nominee or agent, for 

                    investment purposes only, and not with a view to, or for, resale, distribution or 

                    fractionalization thereof, in whole or in part, and no other person has a direct or indirect

                    beneficial interest in the Warrant or the Warrant Shares.  Further, the Holder does not 

                    have any contract, undertaking, agreement or arrangement with any person to sell, 

                    transfer or grant participation to such person or to any third person, with respect to 

                    this Warrant or the Warrant Shares.

       17.2.     Authority.  The Holder has full power and authority to enter into this Agreement, the 

                    execution and delivery of this Agreement has been duly authorized, if applicable, and 

                    this Agreement constitutes a valid and legally binding obligation of the undersigned.

       17.3.     Investment Representations.  The Holder acknowledges the Holder's understanding 

                    that the issuance of the Warrant and the Warrant Shares is intended to be exempt 

10

                    from registration under the Act by virtue of Section 4(2) and/or the provisions of 

                    Regulation D promulgated thereunder. In furtherance thereof, the Holder represents 

                    and warrants to, and agrees with, the Company and its affiliates as follows:

                    (a)     The Holder realizes that the basis for the exemption may not be present if,

                   
notwithstanding such representations, the Holder has in mind merely acquiring this 

                    Warrant or the Warrant Shares for a fixed or determinable period in
the

                    
future.  The Holder does not have any such intention.

                    (b)     The Holder has the financial ability to bear the economic risk of the Holder's 

                    investment, has adequate means for providing for current needs and personal 

                    contingencies and has no need for liquidity with respect to an investment in the Company.

                    (c)     The Holder has such knowledge and experience in financial and business matters 

                    as to be capable of evaluating the merits and risks of the investment in the Warrants and the

                   
Warrant Shares.  If other than an individual, the Holder also represents it has not been 

                    organized as a trust for the purpose of acquiring the Warrants or the Warrant Shares.

18.     Notices.  All notices, requests, consents, and other communications hereunder will be in writing
and will be deemed to have been duly made and sent when delivered or mailed by registered or certified mail,
return-receipt requested:

                If to the Company:                       Perma-Fix Environmental Services, Inc.

                                                                    1940 Northwest 67th Place

                                                                    Gainesville, Florida  32653

                                                                    Attention: Dr. Louis F. Centofanti

               With a copy to:                             Irwin H. Steinhorn, Esq.

                                                                    Conner & Winters, A Professional Corporation

                                                                    One Leadership Square

                                                                    211 N. Robinson, Suite 1700

                                                                    Oklahoma City, Oklahoma  73102

               If to the Holder:                            Kennerman Associates

                                                                    480 Broadway, Suite 310

                                                                    Saratoga Springs, NY  12866

                                                                    Attention: Christopher Grosso

21.     Governing Law.  This Warrant and all rights and obligations hereunder will be deemed to be made under, and governed by, the laws of the State of Delaware without giving effect to such State's conflict of laws provisions.  The Holder hereby irrevocably consents to the venue and jurisdiction of the federal courts located in Wilmington, Delaware.
22.     Successors and Assigns.  This Warrant will be binding upon and will inure to the benefit of the parties hereto and their respective successors and assigns.

23.     Headings.  The descriptive headings of the paragraphs of this Warrant have been inserted for reference only and will not be a part of this Warrant.

11

24.     Supplements and Amendments.  The Company may from time to time supplement or amend this Agreement without the approval of the Holder in order to cure any ambiguity or to correct or supplement any provision contained herein which may be defective or inconsistent with any other provision herein, or to make any other provisions in regard to matters or questions arising hereunder which the Company may deem necessary or desirable, provided that such supplements or amendments do not substantially alter the rights and obligations of the Holder.

25.     Termination.  This Agreement will terminate at the close of business on the Expiration Date or such earlier date upon which this Warrant has been exercised in its entirety; provided, however, that if exercise of the Warrants is suspended pursuant to the terms of this Warrant and such suspension continues past the Expiration Date, this Agreement will terminate at the close of business on the business day immediately following the expiration of such suspension.

26.     Benefits of this Agreement.  Nothing in this Agreement will be construed to give any person or corporation other than the Company and the Holder any legal or equitable right, remedy or claim under this Agreement; but this Agreement will be for the sole and exclusive benefit of the Company and the Holder.

27.     Counterparts.  This Agreement may be executed in any number of counterparts, each of such counterparts will for all purposes be deemed to be an original and all such counterparts will together constitute but one and the same instrument.

28.     Integration.  As of the date hereof, this Agreement contains the entire and only agreement, understanding, representation, condition, warranty or covenant between the parties hereto with respect to the matters herein, supersedes any and all other agreements between the parties hereto relating to such matters, and may be modified or amended only by a written agreement signed by both parties hereto.

          IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, manually or by one of its officers thereunto duly authorized.

Dated as of July 30, 2001.
                                                           PERMA-FIX ENVIRONMENTAL SERVICES, INC., a 

                                                           Delaware corporation

                                                            By:                                                                             

                                                                  Dr. Louis F.
Centofanti,

                                                                  President and Chief Executive Officer

                                                            (the "Company")

                                                            Kennerman Associates, a Pennsylvania Partnership

                                                            By:                                                                            

                                                                 Christopher
Grosso, ______________________

                                                            (the
"Holder") 

12

 

FORM OF ELECTION TO PURCHASE OR ASSIGN

Election to Purchase

           The undersigned hereby irrevocably elects to exercise the right, represented by the foregoing Warrant, to receive _____________ shares of the Common Stock.  In payment of such shares, the undersigned herewith:

_____   tenders payment for such shares to the order of Perma-Fix Environmental Services, Inc. 

             in the amount of $________________ in accordance with the terms of the Warrant 

             Agreement.

Dated: _______________                                       Signature __________________________

                                                                                Address ___________________________

 

Assignment

           FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _______________________ the foregoing Warrants and all rights evidenced thereby, and does irrevocably constitute and appoint _________________, attorney, to transfer said Warrants on the books of Perma-Fix Environmental Services, Inc.

 Dated: _______________                                      Signature __________________________

                                                                                Address ____________________________

 

Partial Assignment

           FOR VALUE RECEIVED, the undersigned hereby assigns and transfers _________________ Warrants and all rights evidenced under such part of the foregoing Warrants unto _____________________________________ and does irrevocably constitute and appoint __________________, attorney, to transfer said Warrants on the books of Perma-Fix Environmental Services, Inc.

Dated: _______________                                        Signature __________________________

                                                                                 Address ____________________________

13Exhibit 10.23 - AMI Warrant Certificate (7-31-2001)

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT
(i) UNDER COVER OF A REGISTRATION STATEMENT UNDER THE ACT WHICH IS
EFFECTIVE AND CURRENT WITH RESPECT TO THIS WARRANT OR SUCH SHARES OF
COMMON STOCK, AS THE CASE MAY BE, OR (ii) PURSUANT TO THE WRITTEN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY TO THE
EFFECT THAT REGISTRATION UNDER SUCH ACT IS NOT REQUIRED WITH RESPECT
TO SUCH SALE OR TRANSFER.

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Common Stock Purchase Warrant Certificate

No. 07-31-01A

    Dated: July 31, 2001

Seven Hundred Twelve Thousand Seventy-Three (712,073) Warrants 

to Purchase Seven Hundred Twelve Thousand Seventy-Three (712,073)

Shares of Perma-Fix Environmental Services, Inc.

Common Stock, $.001 Par Value Per Share

VOID AFTER 5:00 P.M., UNITED STATES EASTERN STANDARD TIME

on

July 31, 2008 

 

           PERMA-FIX ENVIRONMENTAL SERVICES, INC., a Delaware corporation (the "Company"),
for value received, hereby certifies that Associated Mezzanine Investors-PESI, L.P., a Delaware limited
partnership or registered assigns, is entitled to purchase from the Company seven hundred twelve
thousand seventy-three (712,073) duly authorized, validly issued, fully paid and nonassessable shares
of Common Stock, par value $.001 per share, of the Company (the "Common Stock") at the purchase
price per share of $1.50, at any time or from time to time on or after  July 31, 2001 and prior to 3 P.M.,
New York City time, on July 31, 2008, all subject to the terms, conditions and adjustments set forth
below in this Warrant.

           This Warrant is one of the Common Stock Purchase Warrants (the "Warrants", such term to
include all Warrants issued in substitution therefor) originally issued in connection with the issue and
sale by the Company of $5,625,000 aggregate principal amount of its 13.50% Notes due 2006 (together
with all notes issued in substitution therefor, the "Notes"), pursuant to the Note and Warrant Purchase
Agreement (the

 

 

"Purchase Agreement"), dated as of July 31, 2001, between the Company and the
institutional investors named therein.  The Warrants originally so issued evidence rights to purchase an
aggregate of 1,281,731 shares of Common Stock, subject to adjustment as provided herein.  Certain
capitalized terms used in this Warrant are defined in section 14.

          1.  Exercise of Warrant

                    1.1.  Manner of Exercise.  This Warrant may be exercised by the holder hereof, in whole
or in part, during normal business hours on any Business Day by surrender of this Warrant, with the
form of subscription at the end hereof (or a reasonable facsimile thereof) duly executed by such holder,
to the Company at its principal office (or, if such exercise shall be in connection with an underwritten
Public Offering of shares of Common Stock (or Other Securities) subject to this Warrant, at the location
at which the Company shall have agreed to deliver the shares of Common Stock (or Other Securities)
subject to such offering), accompanied by payment, in cash or by certified or official bank check payable
to the order of the Company or by the application of Notes in the manner provided in section 1.5 or by
surrender of Warrants in the manner provided in section 1.6 (or by any combination of such methods),
in the amount obtained by multiplying (a) the number of shares of Common Stock (without giving effect
to any adjustment therein) designated in such form of subscription by (b) $1.50 and such holder shall
thereupon be entitled to receive the number of duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock (or Other Securities) determined as provided in sections 2
through 4.

                    1.2.  When Exercise Deemed Effected.  Each exercise of this Warrant shall be deemed
to have been effected immediately prior to the close of business on the Business Day on which this
Warrant shall have been surrendered to the Company as provided in section 1.1, and at such time the
person or persons in whose name or names any certificate or certificates for shares of Common Stock
(or Other Securities) shall be issuable upon such exercise as provided in section 1.3 shall be deemed to
have become the holder or holders of record thereof.

                    1.3.  Delivery of Stock Certificates, etc. As soon as practicable after the exercise of this
Warrant, in whole or in part, pursuant to the terms hereof, and in any event within ten Business Days
thereafter (unless such exercise shall be in connection with an underwritten Public Offering of shares
of Common Stock (or Other Securities) subject to this Warrant, in which event concurrently with such
exercise), the Company at its expense (including the payment by it of any applicable taxes other than
transfer taxes) will cause to be issued in the name of and delivered to the holder hereof or, subject to
section 8, as such holder (upon payment by such holder of any applicable transfer taxes) may direct,

                           (a)  a certificate or certificates for the number of duly authorized, validly issued, 

                     fully paid and nonassessable shares of Common Stock (or Other Securities) to which 

                     such holder shall
be entitled upon such exercise plus, in lieu of any fractional share 

                     to which such holder would
otherwise be entitled, cash in an amount equal to the 

                     same fraction of the Market Price per share
of such Common Stock (or Other 

                     Securities) on the Business Day next preceding the date of
such exercise, and

                           (b)  in case such exercise is in part only, a new Warrant or Warrants of like tenor, 

                      calling
in the aggregate on the face or faces thereof for the number of shares of 

 

-2-

 

                      Common
Stock equal
(without giving effect to any adjustment therein) to the number

                     
of such shares called for on the
face of this Warrant minus the number of such shares

                     
designated by the holder upon such
exercise as provided in section 1.1.

                    1.4.  Company to Reaffirm Obligations.  The Company will, at the time of or at any time
after each exercise of this Warrant, upon the request of the holder hereof or of any shares of Common
Stock (or Other Securities) issued upon such exercise, acknowledge in writing its continuing obligation
to afford to such holder all rights (including, without limitation, any right of registration of any shares
of Common Stock (or Other Securities) issuable upon exercise of this Warrant pursuant to section 9) to
which such holder shall continue to be entitled after such exercise in accordance with the terms of this
Warrant, provided that if any such holder shall fail to make any such request, the failure shall not affect
the continuing obligation of the Company to afford such rights to such holder.

                     1.5.  Payment by Application of the Notes Upon any exercise of this Warrant, the holder
hereof may, at its option, instruct the Company, by so specifying in the form of subscription submitted
therewith as provided in section 1.1, to apply to the payment required by section 1.1 all or any part of
the principal amount then unpaid and of the interest on such principal amount then accrued on any one
or more Notes at the time held by such holder, in which case the Company will accept the aggregate
amount of principal and accrued interest on such principal specified in such form of subscription in
satisfaction of a like amount of such payment.  In case less than the entire unpaid principal amount of
any Note shall be so specified, the principal amount so specified shall be credited, as of the date of such
exercise, against the installments of principal then remaining unpaid on such Note in the direct order of
their maturity dates.  Within ten Business Days after receipt of any such notice, the Company will pay
to the holder of the Notes submitting such form of subscription, in the manner provided in such Notes
and the Purchase Agreement, all unpaid interest accrued to the date of exercise of such Warrant on the
principal amount so specified in such form of subscription that is not applied to the payment required
by section 1.1 under this section 1.5.  In the event that the entire unpaid principal amount of any Note
is applied to the payment required by section 1.1 under this section 1.5, such Note shall be promptly
surrendered and canceled by the holder thereof in accordance with the provisions of section 15 of the
Purchase Agreement.

                    1.6.  Exercise by Surrender of Warrants (Cashless Exercise). Upon any exercise of this
Warrant, the holder hereof may, at its option, effect the payment required by section 1.1 in whole or in
part, by so specifying in the form of subscription submitted therewith as provided in section 1.1, by
surrendering this Warrant in exchange for the number of shares of Common Stock (prior to giving effect
to any adjustments made therein pursuant to sections 2 through 4) equal to the product of (a) the number
of shares of Common Stock designated in such form of subscription multiplied by (b) a fraction, the
numerator of which is the Current Market Price less $1.50 and the denominator of which is such Current
Market Price.

          2.  Adjustment of Common Stock Issuable Upon Exercise.

                    2.1.  Number of Shares; Warrant.  The number of shares of Common Stock which the
holder of this Warrant shall be entitled to receive upon each exercise hereof shall be determined by
multiplying the number of shares of Common Stock which would otherwise (but for the provisions of
this section 2) be issuable upon such exercise, as designated by the holder hereof pursuant to section 1.1,
by a fraction of

-3-

 

which (i) the numerator is $1.50 and (ii) the denominator is the Warrant Price in effect
on the date of such exercise.  The "Warrant Price" shall initially be $1.50 per share, shall be adjusted and
readjusted from time to time as provided in this section 2 and, as so adjusted or readjusted, shall remain
in effect until a further adjustment or readjustment thereof is required by this section 2.

		                    2.2.  Adjustment of Warrant Price	 

                                 2.2.1.  Issuance of Additional Shares of Common.  Except as otherwise provided
in, and subject to, the terms of this Warrant, in case the Company at any time or from time to time after
July 31, 2001 (the "Initial Date") shall issue or sell Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to section 2.3 or 2.4) without
consideration or for a consideration per share less than the Market Price in effect, in each case, on the
date of and immediately prior to such issue or sale, then, and in each such case, subject to section 2.7,
such Warrant Price shall be reduced, concurrently with such issue or sale, to a price (calculated to the
nearest .001 of a cent) determined by multiplying such Warrant Price by a fraction,

                            (a)  the numerator of which shall be (i) the number of shares of Common Stock

                   outstanding immediately prior to such issue or sale plus (ii) the number of shares of 

                   Common
Stock which the aggregate consideration received by the Company for 

                   the total number of such
Additional Shares of Common Stock so issued or sold 

                   would purchase at the Market Price, and

                            (b)  the denominator of which shall be the number of shares of Common Stock

                   outstanding immediately after such issue or sale,

provided that, for the purposes of this section 2.2.1, (x) immediately after any Additional Shares of
Common Stock are deemed to have been issued pursuant to section 2.3 or 2.4, such Additional Shares
shall be deemed to be outstanding, and (y) treasury shares shall not be deemed to be outstanding.

                                  2.2.2.  Extraordinary Dividends and Distributions.  Except as otherwise provided
in, and subject to the terms of, this Warrant, in case the Company at any time or from time to time after
the Initial Date shall declare, order, pay or make a dividend or other distribution (including, without
limitation, any distribution of other or additional stock or other securities or property or Options by way
of dividend or spin-off, reclassification, recapitalization or similar corporate rearrangement) on any
Common Stock, other than (a) a dividend payable in Additional Shares of Common Stock or in Options
for Common Stock or (b) a regular, periodic dividend payable in cash and declared out of the earned
surplus of the Company as at the date hereof as increased by any credits and decreased by any debits
made thereto after such date, then, and in each such case, except as provided in, and subject to the terms
of this Warrant, the Warrant Price in effect immediately prior to the close of business on the record date
fixed for the determination of holders of any class of securities entitled to receive such dividend or
distribution shall be reduced, effective as of the close of business on such record date, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such Warrant Price by a fraction,

                             (i)  the numerator of which shall be the Current Market Price in effect on such 

                    record
date
or, if the Common Stock trades on an ex-dividend basis, on the date 

                    prior to the
commencement
of ex-dividend trading, less the value of such dividend 

                    or distribution (as
determined in good
faith by the Board of Directors of the 

                    Company) applicable to one share
of Common Stock, and

-4-

 

                            (ii) the denominator of which shall be such Current Market Price.

                    2.3.  Treatment of Options and Convertible Securities. Except as otherwise provided in,
and subject to the terms of, this Warrant, in case the Company at any time or from time to time after the
Initial Date shall issue, sell, grant or assume any Options or Convertible Securities, then, and in each
such case, the maximum number of Additional Shares of Common Stock (as set forth in the instrument
relating thereto, without regard to, any provisions contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options
therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be issued for
purposes of section 2.2.1 as of the time of such issue, sale, grant or assumption, provided that such
Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to section 2.5) of such shares would be less than the Market Price in
effect, in each case, on the date of and immediately prior to such issue, sale, grant or assumption, as the
case may be, and provided, further, that in any such case in which Additional Shares of Common Stock
are deemed to be issued,

                              (a)  no further adjustment of the Warrant Price shall be made upon the subsequent 

                    issue
or sale of Additional Shares of Common Stock or Convertible Securities upon the

                   
exercise of
such Options or the conversion or exchange of such Convertible Securities;

                              (b)  if such Options or Convertible Securities by their terms provide, with the 

                    passage of
time or otherwise, for any increase in the consideration payable to the 

                   Company, or decrease in
the number of Additional Shares of Common Stock issuable, 

                   upon the exercise, conversion or
exchange thereof (by change of rate or otherwise), the

                   Warrant Price computed upon the original
issue, sale, grant or assumption thereof, and 

                   any subsequent adjustments based thereon, shall,
upon any such increase or decrease

                   becoming effective, be recomputed to reflect such increase
or decrease insofar as it 

                   affects such Options, or the rights of conversion or exchange under such
Convertible 

                   Securities, which are outstanding at such time;

                             (c)  upon the expiration of any such Options or of the rights of conversion or 

                   exchange
under any such Convertible Securities which shall not have been exercised (or 

                   upon purchase
by the Company and cancellation or retirement of any such Options 

                   which
shall not have been
exercised or of any such Convertible Securities the rights of

                   conversion or exchange under which
shall not have been exercised), the Warrant Price

                   computed upon the original issue, sale, grant
or assumption thereof, and any subsequent

                   adjustments based thereon, shall, upon such
expiration (or such cancellation or 

                   retirement, as the case may be), be recomputed as if:

                                     (i)  in the case of Options for Common Stock or of Convertible Securities, the 

                              only
Additional Shares of Common Stock issued or sold were the Additional 

                              Shares of
Common Stock, if any, actually issued or sold upon the exercise of 

                              such Options or the
conversion or exchange of such Convertible Securities 

                              and the consideration
received
therefor was (x) an amount equal to (A) the 

                              consideration actually received by the
Company for the issue, sale, grant 

                              or assumption of all such Options, whether or
not exercised, plus 

-5-

 

                              (B) the consideration actually received by the Company upon such
exercise, 

                              minus (C) the consideration paid by the Company for any purchase of

                              such
Options which were not exercised, or (y) an amount equal to (A) the

                             
consideration
actually received by the Company for the issue, sale, grant or 

                              assumption of all such
Convertible Securities which were actually converted or

                              exchanged, plus (B) the
additional consideration, if any, actually received by the

                             
Company upon such conversion
or exchange, minus (C) the consideration paid by 

                              the Company for any purchase of such
Convertible Securities the rights of 

                              conversion or exchange under which were not
exercised, and

                                    (ii)  in the case of Options for Convertible Securities, only the Convertible 

                             Securities, if any, actually issued or sold upon the exercise of such Options were 

                             issued
at the time of the issue, sale, grant or assumption of such Options, and the

                             consideration
received by the Company for the Additional Shares of Common 

                             Stock deemed to have
then been issued was an amount equal to (x) the 

                             consideration actually received by the
Company for the issue, sale, grant or 

                             assumption of all such Options, whether or not
exercised, plus (y) the 

                             consideration deemed to have been received by the Company
(pursuant to 

                             section 2.5) upon the issue or sale of the Convertible Securities with respect
to 

                             which such Options were actually exercised, minus (z) the consideration paid by 

                             the
Company for any purchase of such Options which were not exercised;

                            (d)  no readjustment pursuant to subdivision (b) or (c) above shall have the effect of

                  
increasing the Warrant Price by an amount in excess of the amount of the adjustment 

                   thereof
originally made in respect of the issue, sale, grant or assumption of such 

                   Options or Convertible
Securities; and 

                            (e)  in the case of any such Options which expire by their terms not more than 30 

                    days
after the date of issue, sale, grant or assumption thereof, no adjustment of the 

                    Warrant Price
shall
be made until the expiration or exercise of all such Options, 

                     whereupon such adjustment
shall
be made in the manner provided in subdivision 

                     (c) above.

                    In case at any time after the Initial Date the Company shall be required to increase the
number of Additional Shares of Common Stock subject to any Option or into which any Convertible
Securities (other than the Warrants) are convertible or exchangeable pursuant to the operation of anti-dilution provisions applicable thereto, such Additional Shares shall be deemed to be issued for purposes
of section 2.1 as of the time of such increase.

                   2.4.  Treatment of Stock Dividends, Stock Splits, etc. In case the Company at any time
or from time to time after the Initial Date shall declare or pay any dividend or other distribution on any
class of stock of the Company 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 reclassification or
otherwise than by payment of a dividend in Common Stock), then, and in each such case, Additional
Shares of Common Stock shall be deemed to have been issued (a) in the case of any such dividend,
immediately after the close of business on the record date for the determination of holders of any class
of securities entitled to receive such dividend, or (b) in the case of any such subdivision, at the close of
business on the day immediately prior to the day upon which such corporate action becomes effective.

                 2.5.  Computation of Consideration. For the purposes of this section 2:

                            (a)  The consideration for the issue or sale of any Additional Shares of Common 

                  Stock
or for the issue, sale, grant or assumption of any Options or Convertible Securities,

                  irrespective
of the accounting treatment of such consideration, shall 

-6-

 

                                   (i)  insofar as it consists of cash, be computed at the amount of cash received 

                  by
the Company, without deducting any expenses paid or incurred by the Company or 

                  any
commissions or compensation paid or concessions or discounts allowed to 

                  underwriters,
dealers or others performing similar services and any accrued interest or 

                  dividends in connection with such issue or sale,

                                  (ii) insofar as it consists of consideration (including securities) other than cash, 

                   be computed at the Fair Value thereof at the time of such issue or sale, without deducting 

                   any expenses paid or incurred by the Company for any commissions or compensation 

                   paid or concessions or discounts allowed to underwriters, dealers or others performing 

                   similar services and any accrued interest or dividends in connection with such issue 

                   or
sale, and

                                  (iii) in case Additional Shares of Common Stock are issued or sold or 

                   Convertible Securities are issued, sold, granted or assumed together with other stock or

                  
securities or other assets of the Company for a consideration which covers both, be the

                   proportion of such consideration so received, computed as provided in subdivisions (i) 

                   and (ii) above, allocable to such Additional Shares of Common Stock or Convertible 

                   Securities, as the case may be, all as determined in good faith by the Board of Directors 

                   of the Company.

                          (b)  All Options issued, sold, granted or assumed together with other stock or 

                   securities or other assets of the Company for a consideration which covers both, all 

                   Additional Shares of
Common Stock, Options or Convertible Securities issued in 

                   payment of any dividend or
other
distribution on any class of stock of the Company 

                   and all Additional Shares of Common
Stock
issued to effect a subdivision of the 

                   outstanding shares of Common Stock into a greater
number
of shares of Common 

                   Stock (by reclassification or otherwise than by payment of a
dividend in
Common 

                   Stock) shall be deemed to have been issued without consideration.

                         (c) Additional Shares of Common Stock deemed to have been issued for 

                    consideration
pursuant to section 2.3, relating to Options and Convertible Securities, 

                    shall be deemed to have
been issued for a consideration per share determined by 

                    dividing

                                 (i) the
total amount, if any, received and receivable by the Company as 

                   consideration for
the issue, sale, grant or assumption of the Options or Convertible 

                   Securities in question, plus the aggregate amount of additional consideration (as set 

                   forth
in the instruments relating thereto, without regard to any provision contained 

                   therein for
a subsequent adjustment of such consideration) payable to the 

                   Company upon the
exercise of such Options or the conversion or exchange of 

                   such Convertible Securities
or, in the case of Options for Convertible Securities, 

                   the exercise of such Options for
Convertible Securities and the conversion or 

                   exchange of such Convertible Securities,
in each case computing such 

                   consideration as provided in the foregoing subdivision (a),
by

                                 (ii)  the number of shares of
Common Stock (as set forth in the instruments 

                   relating thereto, without regard to any
provision contained therein for a subsequent 

-7-

 

                   adjustment of such number) issuable upon
the exercise of such Options or the 

                   conversion
or exchange of such Convertible Securities.

                        (d)  Additional Shares of Common Stock issued or deemed to have been issued 

                   pursuant
to the operation of anti-dilution provisions applicable to Convertible Securities 

                   (other than the
Warrants), Options or other securities of the Company (either as a result 

                   of the adjustments
provided for by the Warrants or otherwise) shall be deemed to have 

                   been issued without
consideration.

                    2.6.  Adjustments for Combinations, etc.
2.6 Adjustments for Combinations, etc. In case
the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Warrant Price in effect immediately
prior to such combination or consolidation shall, concurrently with the effectiveness of such combination
or consolidation, be proportionately increased.

                   2.7.  Minimum Adjustment of Warrant Price. If the amount of any adjustment of the
Warrant Price required pursuant to this section 2 would be less than one one-hundredth (.01) of a cent,
such amount shall be carried forward and adjustment with respect thereto made at the time of and
together with any subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate at least one one-hundredth (.01) of a cent.

          3.  Consolidation, Merger, Sale of Assets, Reorganization, etc. In case the Company, after the
Initial Date, (a) shall consolidate with or merge into any other Person and shall not be the continuing or
surviving corporation of such consolidation or merger, or (b) shall permit any other Person to
consolidate with or merge into the Company and the Company shall be the continuing or surviving
Person but, in connection with such consolidation or merger, Common Stock or Other Securities shall
be changed into or exchanged for cash, stock or other securities of any other Person or any other
property, or (c) shall transfer all or substantially all of its properties and assets to any other Person, or
(d) shall effect a capital reorganization or reclassification of Common Stock or Other Securities (other
than a capital reorganization or reclassification resulting in the issue of Additional Shares of Common
Stock for which adjustment in the Warrant Price is provided in section 2.2.1 or 2.2.2), then, and in the
case of each such transaction, the Company shall give written notice thereof to each holder of any
Warrant not less than 30 days prior to the consummation thereof and proper provision shall be made so
that, upon the basis and the terms and in the manner provided in this section 3, the holder of this
Warrant, upon the consummation of such transaction, shall be entitled to receive, at the aggregate
Warrant Price in effect at the time of such consummation for all Common Stock (or Other Securities)
issuable upon such exercise immediately prior to such consummation, in lieu of the Common Stock (or
Other Securities) issuable upon such exercise prior to such consummation, the amount of cash, securities
or other property to which such holder would actually have been entitled as a shareholder upon such
consummation if such holder had exercised this Warrant immediately prior thereto, subject to
adjustments (subsequent to such consummation) as nearly equivalent as possible to the adjustments
provided for in section 2 and this section 3, provided that if a purchase, tender or exchange offer shall
have been made to and accepted by the holders of Common Stock under circumstances in which, upon
completion of such purchase, tender or exchange offer, the maker thereof, together with members of any
group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) of which such maker is a part,
and together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under the
Exchange Act) and any

-8-

 

members of any such group of which any such affiliate or associate is a part,
own beneficially (within the meaning of Rule 13d-3 under the Exchange Act) more than 50% of the
outstanding shares of Common Stock, and if the holder of this Warrant so designates in such notice
given to the Company, the holder of this Warrant shall be entitled to receive the amount of cash,
securities or other property to which such holder would actually have been entitled as a shareholder if
the holder of this Warrant had exercised this Warrant prior to the expiration of such purchase, tender or
exchange offer, accepted such offer and all of the Common Stock held by such holder had been
purchased pursuant to such purchase, tender or exchange offer, subject to adjustments (from and after
the consummation of such purchase, tender or exchange offer) as nearly equivalent as possible to the
adjustments provided for in section 2 and this section 3.

          4.  Other Dilutive Events .  In case any event shall occur as to which the provisions of section
2 or section 3 are not strictly applicable but the failure to make any adjustment would not fairly protect
the purchase rights represented by this Warrant in accordance with the essential intent and principles of
such sections, then, in each such case, the Company shall appoint a firm of independent public
accountants of recognized national standing (which may be the regular auditors of the Company), which
shall give their opinion upon the adjustment, if any, on a basis consistent with the essential intent and
principles established in sections 2 and 3, necessary to preserve, without dilution, the purchase rights
represented by this Warrant.  Upon receipt of such opinion the Company will promptly mail a copy
thereof to the holder of this Warrant and shall make the adjustments described therein.

          5.  No Dilution or Impairment .  The Company will not, by amendment of its certificate of
incorporation or through any consolidation, merger, reorganization, transfer of assets, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms.  Without limiting the generality of the foregoing, the Company (a) will not permit the par value
of any shares of stock receivable upon the exercise of this Warrant to exceed the amount payable therefor
upon such exercise, (b) will take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of stock upon the exercise
of all of the Warrants from time to time outstanding, (c) will not take any action which results in any
adjustment of the Warrant Price if the total number of shares of Common Stock (or Other Securities)
issuable after the action upon the exercise of all of the Warrants would exceed the total number of shares
of Common Stock (or other Securities) then authorized by the Company's certificate of incorporation
and available for the purpose of issue upon such exercise and, (d) will not issue any capital stock of any
class which has the right to more than one vote per share.

          6.  Accountants' Report as to Adjustments .  In each case of any adjustment or readjustment in
the shares of Common Stock (or Other Securities) issuable upon the exercise of the Warrants, the
Company at its expense will promptly compute such adjustment or readjustment in accordance with the
terms of the Warrants and, if requested in writing to do so by any holder of a Warrant, will cause
independent public accountants of recognized national standing selected by the Company (which may
be the regular auditors of the Company) to verify such computation.  The Company or, if so requested,
the Company's independent public accountants, will prepare a report setting forth such adjustment or
readjustment and showing in reasonable detail the method of calculation thereof and the facts upon
which such adjustment or readjustment is based, including without limitation a statement of (a) the
consideration received or to be received by the

-9-

 

Company for any Additional Shares of Common Stock
issued or sold or deemed to have been issued, (b) the number of shares of Common Stock outstanding
or deemed to be outstanding, and (c) the Warrant Price in effect immediately prior to such issue or sale
and as adjusted and readjusted (if required by section 2) on account thereof.  The Company will
forthwith mail a copy of each such report to each holder of a Warrant and will, upon the written request
at any time of any holder of a Warrant, furnish to such holder a like report setting forth the Warrant Price
at the time in effect and showing in reasonable detail how it was calculated.  The Company will also
keep copies of all such reports at its principal office and will cause the same to be available for
inspection at such office during normal business hours by any holder of a Warrant or any prospective
purchaser of a Warrant designated by the holder thereof.

          7.  Notices of Corporate Action.  In the event of

                    (a)  any taking by the Company of a record of the holders of any class of securities for 

          the purpose of determining the holders thereof who are entitled to receive any dividend (other 

          than a regular periodic dividend payable in cash out of earned surplus) or other distribution, 

          or
any right to subscribe for, purchase or otherwise acquire any shares of stock of any class 

          or any
other securities or property, or to receive any other right, or

                   (b)  any capital reorganization of the Company, any reclassification or recapitalization 

          of the capital stock of the Company or any consolidation or merger involving the Company 

          and
any other Person or any transfer of all or substantially all the assets of the Company to 

          any other Person, or

                   (c)  any voluntary or involuntary dissolution, liquidation or winding-up of the Company, 

the Company will mail to each holder of a Warrant a notice specifying (i) the date or expected
date on
which any such record is to be taken for the purpose of such dividend, distribution or
right, and the
amount and character of such dividend, distribution or right, and (ii) the date or
expected date on which
any such reorganization, reclassification, recapitalization, consolidation, merger, transfer, dissolution,
liquidation or winding-up is to take place and the time, if any such time is to be fixed, as of which the
holders of record of Common Stock (or Other Securities) shall be entitled to exchange their shares of
Common Stock (or Other Securities) for the securities or other property deliverable upon such
reorganization, reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation
or winding-up.  Such notice shall be mailed at least 20 days prior to the date therein specified, in the case
of any date referred to in the foregoing subdivision (i), and at least 90 days prior to the date therein
specified, in the case of the date referred to in the foregoing subdivision (ii).

	          8.  Restrictions on Transfer

               8.1.  Restrictive Legends.  Except as otherwise permitted by this section 8, each Warrant
originally issued pursuant to the Purchase Agreement and each Warrant issued upon direct or indirect
transfer or in substitution for any Warrant pursuant to section 13 shall be stamped or otherwise imprinted
with a legend in substantially the following form:

                       "This Warrant and any shares acquired upon the exercise of this Warrant have not been

          registered under the Securities Act of 1933 and may not be transferred in the absence of such

          registration or an exemption therefrom under such Act."

-10-

 

Except as otherwise permitted by this section 8, each certificate for Common Stock (or Other Securities)
issued upon the exercise of any Warrant and each certificate issued upon the direct or indirect transfer
of any such Common Stock (or Other Securities) shall be stamped or otherwise imprinted with a legend
in substantially the following form:

                        "The shares represented by this certificate have not been registered under the 

           Securities Act of 1933 and may not be transferred in the absence of such registration 

           or an exemption therefrom under such Act. Such shares are also subject to certain 

           restrictions on transferability
imposed by Common Stock Purchase Warrants expiring 

           July 31, 2008, a copy of which is on file
at the offices of the Company."

                     8.2.  Notice of Proposed Transfer; Opinions of Counsel.  Prior to any transfer of any
Restricted Securities which are not registered under an effective registration statement under the
Securities Act (other than a transfer pursuant to Rule 144 or any comparable rule under such Act), the
holder thereof will give written notice to the Company of such holder's intention to effect such transfer
and to comply in all other respects with this section 8.2.  Each such notice (a) shall describe the manner
and circumstances of the proposed transfer in sufficient detail to enable counsel to render the opinions
referred to below, and (b) shall designate counsel for the holder giving such notice (which counsel shall
be reasonably acceptable to the Company).  The holder giving such notice will submit a copy thereof
to the counsel designated in such notice.  The following provisions shall then apply:

                             (i)  If in the opinion of counsel for the holder the proposed transfer may be 

          effected without registration, which opinion must be reasonably acceptable to counsel for 

          the Company, such holder shall thereupon be entitled to transfer such Restricted 

          Securities in accordance with the terms of the notice delivered by such holder to the 

          Company.  Each Warrant or certificate, if any, issued upon or in connection with such 

          transfer shall bear the appropriate restrictive legend set forth in section 8.1 unless, in 

          the opinion of such counsel, which opinion must be reasonably acceptable to counsel 

          for the Company, such legend is no longer required to insure
compliance with the 

          Securities Act.  No transfer of Restricted Securities shall be made by the holder 

          thereof and no legend may be removed from any certificates evidencing Restricted 

          Securities unless the Company receives an opinion from its counsel indicating that the 

          opinion of counsel received by the holder is reasonably acceptable to it and consistent 

          with applicable law.

                          (ii)  If the opinion of such counsel for the holder is not to the effect that the proposed

          transfer may legally be effected without registration of such Restricted Securities under the 

          Securities Act, such holder shall not be entitled to transfer such Restricted Securities (other 

          than in a transfer pursuant to Rule 144 or any comparable rule under the Securities Act) until 

          the conditions specified in subdivision (i) above shall be satisfied or until registration of such 

          Restricted Securities under the Securities Act has become effective.

Notwithstanding the foregoing provisions of this section 8.2, the holder of any Restricted Securities shall
be permitted to transfer any such Restricted Securities pursuant to Rule 144A under the Securities Act,
provided that each transferee agrees in writing to be bound by all the restrictions on transfer of such
Restricted Securities contained in this section 8.2 and the terms of this Warrant.

-11-

 

                     8.3.  Termination of Restrictions.  The restrictions imposed by this section 8 upon the
transferability of Restricted Securities shall cease and terminate as to any particular Restricted Securities
(a) when such securities shall have been effectively registered under the Securities Act and disposed of
in accordance with the registration statement covering such Restricted Securities, (b) when, in the
opinions of both counsel for the holder thereof and counsel for the Company, such restrictions are no
longer required in order to insure compliance with the Securities Act, or (c) when such securities have
been beneficially owned, by a person who has not been an affiliate of the Company for at least three
months, for a period of at least two years, all as determined under Rule 144 under the Securities Act.
Whenever such restrictions shall terminate as to any Restricted Securities, as soon as practicable
thereafter and in any event within ten Business Days, the holder thereof shall be entitled to receive from
the Company, without expense (other than transfer taxes, if any), new securities of like tenor not bearing
the applicable legend set forth in section 8.1 hereof.

	          9.  Registration under Securities Act, etc.  The holders of Registrable Securities shall have the
rights with respect to the registration thereof set forth in the Registration Rights Agreement.

          10. Availability of Information. The Company will cooperate with each holder of any Restricted
Securities in supplying such information as may be necessary for such holder to complete and file any
information reporting forms presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any Restricted Securities.  The
Company will furnish to each holder of any Warrants, promptly upon their becoming available, copies
of all financial statements, reports, notices and proxy statements sent or made available generally by the
Company to its stockholders, and copies of all regular and periodic reports and all registration statements
and prospectuses filed by the Company with any securities exchange or with the commission.

          11. Reservation of Stock, etc. The Company will at all times reserve and keep available, solely
for issuance and delivery upon exercise of the Warrants, the number of shares of Common Stock (or
Other Securities) from time to time issuable upon exercise of all Warrants at the time outstanding.  All
shares of Common Stock (or Other Securities) shall be duly authorized and, when issued upon such
exercise, shall be validly issued and, in the case of shares, fully paid and nonassessable with no liability
on the part of the holders thereof.

          12. Listing on Securities Exchange. The Company will list on each national securities exchange
on which any Common Stock may at any time be listed, subject to official notice of issuance upon
exercise of the Warrants, and will maintain such listing of, all shares of Common Stock from time to
time issuable upon exercise of the Warrants.  The Company will also so list on each national securities
exchange, and will maintain such listing of, any other securities if at the time any securities of the same
class shall be listed on such national securities exchange by the Company.

          13. Ownership, Transfer and Substitution of Warrants

                   13.1.  Ownership of Warrants.  The Company may treat the person in whose name any
Warrant is registered on the register kept at the principal office of the Company as the owner and holder
thereof for all purposes, notwithstanding any notice to the contrary, except that, if and when any Warrant
is properly assigned in blank, the Company may (but shall not be obligated to) treat the bearer thereof
as the owner of

-12-

 

such Warrant for all purposes, notwithstanding any notice to the contrary.  Subject to
section 8, a Warrant, properly assigned, may be exercised by a new holder without first having a new
Warrant issued.

                   13.2.  Transfer and Exchange of Warrants Upon the surrender of any Warrant, properly
endorsed, for registration of transfer or for exchange at the principal office of the Company, the
Company at its expense will (subject to compliance with section 8, if applicable) execute and deliver
to or upon the order of the holder thereof a new Warrant or Warrants of like tenor, in the name of such
holder or as such holder (upon payment by such holder of any applicable transfer taxes) may direct,
calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called
for on the face or faces of the Warrant or Warrants so surrendered.

                  13.3.  Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction of any Warrant held by a Person other than any institutional investor, upon delivery
of indemnity reasonably satisfactory to the Company in form and amount or, in the case of any such
mutilation, upon surrender of such Warrant for cancellation at the principal office of the Company, the
Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.

          14.  Definitions. As used herein, unless the context otherwise requires, the following terms have
the following respective meanings:

                     Additional Shares of Common Stock:  all shares (including treasury shares) of Common
Stock issued or sold (or, pursuant to section 2.3 or 2.4, deemed to be issued) by the Company after the
Initial Date hereof, whether or not subsequently reacquired or retired by the Company, other than (a)
shares of Common Stock issued upon the exercise of Warrants, (b) shares of Common Stock issued upon
the exercise, conversion or exchange of any Excluded Securities.

                     AMI-PESI:  Associated Mezzanine Investors-PESI, L.P., a limited partnership organized
and existing under the laws of the State of Delaware.

                     Bridge East:  Bridge East Capital, L.P., a limited partnership organized and existing under
the laws of the Cayman Islands.

                     Business Day:  any day other than a Saturday or a Sunday or a day on which commercial
banking institutions in the City of New York are authorized by law to be closed, provided that, in
determining the period within which certificates or Warrants are to be issued and delivered pursuant to
section 1.3 at a time when shares of Common Stock (or Other Securities) are listed or admitted to trading
on any national securities exchange or in the over-the-counter market and in determining the Market
Price of any securities listed or admitted to trading on any national securities exchange or in the over-the-counter market, "Business Day" shall mean any day when the principal exchange in which securities
are then listed or admitted to trading is open for trading or, if such securities are traded in the over-the-counter market in the United States, such market is open for trading, and provided, further, that any
reference to "days" (unless Business Days are specified) shall mean calendar days.

                      Closing Date:  the meaning specified in section 10.3.

-13-

 

                      Commission:  the Securities and Exchange Commission or any other Federal agency at
the time administering the Securities Act or the Exchange Act, whichever is the relevant statute for the
particular purpose.

                       Common Stock:  the Company's Common Stock, par value $.001 per share, as constituted
on the date hereof, any stock into which such Common Stock shall have been changed or any stock
resulting from any reclassification of such Common Stock, and all other stock of any class or classes
(however designated) of the Company the holders of which have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference.

                       Company:  Perma-Fix Environmental Services, Inc., a Delaware corporation.

                       Convertible Securities:  any evidences of indebtedness, shares of stock (other than
Common Stock) or other securities directly or indirectly convertible into or exchangeable for Additional
Shares of Common Stock.

                       Current Market Price:  on any date specified herein, (a) with respect to Common Stock
or to Voting Common Stock (or equivalent equity interests) of the Company, (i) the average daily
Market Price during the period of the most recent 20 consecutive Business Days ending on such date,
or (ii) if shares of Common Stock or such Voting Common Stock (or equivalent equity interests), as the
case may be, are not then listed or admitted to trading on any national securities exchange and if the
closing bid and asked prices thereof are not then quoted or published in the over-the-counter market, the
Market Price on such date; and (b) with respect to any other securities, the Market Price on such date.

                        Exchange Act:  the Securities Exchange Act of 1934, or any similar Federal statute, and
the rules and regulations of the commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934 shall include a reference to the
comparable section, if any, of any such similar Federal statute.

                       Excluded Securities:  the Options and Convertible Securities listed on the Schedule I
hereto. 

                       Fair Value:  with respect to any securities or other property, the Fair Value thereof as of
a date which is within 15 days of the date as of which the determination is to be made (a) determined
by an agreement between the Company and the Requisite Holders of Warrants or (b) if the Company
and the Requisite Holders of Warrants fail to agree, determined jointly by an independent investment
banking firm retained by the Company and by an independent investment banking firm retained by the
Requisite Holders of Warrants, either of which firms may be an independent investment banking firm
regularly retained by the Company or any such holder or (c) if the firms so retained by the Company and
by such holders shall be unable to reach a joint determination within 15 Business Days of the retention
of the last firm so retained, determined by another independent investment banking firm which is not
a regular investment banking firm of the Company or any such holder chosen by the first two such firms.

                       Initial Date:  the meaning specified in section 2.2.

-14-

 

                       Market Price:  on any date specified herein, (a) with respect to Common Stock or Voting
Common Stock (or equivalent equity interests) of the Company, the amount per share equal to (i) the
last sale price of shares of such security, regular way, on such date or, if no such sale takes place on such
date, the average of the closing bid and asked prices thereof on such date, in each case as officially
reported on the principal national securities exchange on which the same are then listed or admitted to
trading, or (ii) if no shares of such security are then listed or admitted to trading on any national
securities exchange but such security is designated as a national market system security by the NASD,
the last trading price of such security on such date, or if such security is not so designated, the average
of the reported closing bid and asked prices thereof on such date as shown by the NASD automated
quotation system or, if no shares thereof are then quoted in such system, as published by the National
Quotation Bureau, Incorporated or any successor organization, and in either case as reported by any
member firm of the New York Stock Exchange selected by the Company, or (iii) if no shares of such
security are then listed or admitted to trading on any national exchange or designated as a national
market system security and if no closing bid and asked prices thereof are then so quoted or published
in the over-the-counter market, the higher of (x) the book value thereof as determined by agreement
between the Company and the Requisite Holders of Warrants, or if the Company and the Requisite
Holders of Warrants fail to agree, by any firm of independent public accountants of recognized standing
selected by the Board of Directors of the Company, as of the last day of any month ending within 60
days preceding the date as of which the determination is to be made or (y) the fair value thereof
determined in good faith by the Board of Directors of the issuer thereof as of a date which is within 15
days of the date as of which the determination is to be made; and (b) with respect to any other securities,
the fair value thereof determined in good faith by the Board of Directors of the Company as of a date
which is within 15 days of the date as of which the determination is to be made.

                        NASD:  the National Association of Securities Dealers.

                        Notes:  the meaning specified in the opening paragraphs of this Warrant.

                        Options:  rights, options or warrants to subscribe for, purchase or otherwise acquire either
Additional Shares of Common Stock or Convertible securities.

                       Other Securities:  any stock (other than Common Stock) and other securities of the
Company or any other Person (corporate or otherwise) which the holders of the Warrants at any time
shall be entitled to receive, or shall have received, upon the exercise of the Warrants, in lieu of or in
addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange
for or in replacement of Common Stock or Other Securities pursuant to section 3 or otherwise.

                       Person:  an individual, a partnership, an association, a joint venture, a corporation, a
limited liability company, a business, a trust, an unincorporated organization or a government or any
department, agency or subdivision thereof.

                        Public Offering:  any offering of Common Stock to the public pursuant to an effective
registration statement under the Securities Act.

                        Purchase Agreement:  the meaning specified in the opening paragraphs of this Warrant.

-15-

 

                        Registrable Securities:  (a) any shares of Common Stock or Other Securities issued or
issuable upon exercise of the Warrants and (b) any securities issued or issuable with respect to any
Common Stock or Other Securities referred to in subdivision (a) by way of stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise.  As to any particular Registrable Securities, once issued such securities shall
cease to be Registrable Securities when (x) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (y) they shall have been distributed to the
public pursuant to Rule 144 (or any successor provision) under the Securities Act, or (z) they shall have
ceased to be outstanding.

                         Registration Rights Agreement:  the Registration Rights Agreement, dated as of July 31,
2001, executed and delivered by the Company, AMI-PESI and Bridge East, substantially in the form
of Exhibit E to the Purchase Agreement, as may be amended from time to time.

                         Requisite Holders of Warrants:  the holders of at least 60% of all the Warrants at the time
outstanding determined on the basis of the number of shares of Common Stock or Other Securities
deliverable upon exercise thereof.

                         Restricted Securities:  (a)  any Warrants bearing the applicable legend set forth in section
8.1, (b) any shares of Common Stock (or Other Securities) which have been issued upon the exercise
of Warrants and which are evidenced by a certificate or certificates bearing the applicable legend set
forth in such section, and (c) unless the context otherwise requires, any shares of Common Stock (or
Other Securities) which are at the time issuable upon the exercise of Warrants and which, when so
issued, will be evidenced by a certificate or certificates bearing the applicable legend set forth in such
section.

                        Securities Act:  the Securities Act of 1933, or any similar Federal statute, and the rules
and regulations of the Commission thereunder, all as the same shall be in effect at the time.  Reference
to a particular section of the Securities Act of 1933 shall include a reference to the comparable section,
if any, of any such similar Federal statute.

                       Subsidiary:  any corporation, association or other business entity at least 50% (by number
of votes) of the Voting Common Stock of which is at the time owned by the Company or by one or more
Subsidiaries or by the Company and one or more Subsidiaries.

                        Transfer:  unless the context otherwise requires, any sale, assignment, pledge or other
disposition of any security, or of any interest therein, which could constitute a "sale" as that term is
defined in section 2(3) of the Securities Act.

                        Voting Common Stock:  with respect to any corporation, association or other business
entity, stock of any class or classes (or equivalent interest) , if the holders of the stock of such class or
classes (or equivalent interests) are ordinarily, in the absence of contingencies, entitled to vote for the
election of a majority of the directors (or persons performing similar functions) of such corporation,
association or business entity, even if the right so to vote has been suspended by the happening of such
a contingency.

-16-

                        Warrant Price:  the meaning specified in section 2.1.

                        Warrants:  the meaning specified in the opening paragraphs of this Warrant.

	          15.  Remedies.  The Company stipulates that the remedies at law of the holder of this Warrant
in the event of any default or threatened default by the Company in the performance of or compliance
with any of the terms of this Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the specific performance of
any agreement contained herein or by an injunction against a violation of any of the terms hereof or
otherwise.

          16.  No Rights or Liabilities as Stockholder .  Nothing contained in this Warrant shall be
construed as conferring upon the holder hereof any rights as a stockholder of the Company or as
imposing any liabilities on such holder to purchase any securities or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors or stockholders of the Company or
otherwise.

          17.  Notices. All notices and other communications under this Agreement shall be in writing and
shall be delivered by hand, facsimile transmission or courier service, or mailed by registered or certified
mail, return receipt requested, addressed (a) if to any holder of any Warrant or any holder of any
Common Stock (or Other Securities), at the registered address of such holder as set forth in the register
kept at the principal office of the Company, or (b) if to the Company, to the attention of its Chief
Financial Officer, at its principal office, provided that the exercise of any Warrant shall be effected in
the manner provided in section 1.

          18.  Miscellaneous .  This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.  The agreements of the Company contained in this
Warrant, other than those applicable solely to the Warrants and the holders thereof, shall inure to the
benefit of and be enforceable by any holder or holders at the time of any Common Stock (or Other
Securities) issued upon the exercise of Warrants, whether so expressed or not.  This Warrant shall be
construed and enforced in accordance with and governed by the laws of the State of New York (except
with respect to such matters as are governed by the corporate law of the State of Delaware).  The section
headings in this Warrant are for purposes of convenience only and shall not constitute a part hereof.

	          19.  Expiration .  The right to exercise this Warrant shall expire at 3 P.M., New York City time,
on July 31, 2008.

		                                                               PERMA-FIX ENVIRONMENTAL SERVICES, INC.

                                                               By   /s/
Louis Centofanti                                                  

                                                               Dr. Louis F. Centofanti

                                                               Chief Executive Officer

                                                               (the "Company")
-17-

 

SUBSCRIPTION

           The undersigned, ________________________, pursuant to the provisions of the attached
Warrant, hereby irrevocably elects to subscribe for and purchase ____________________ shares of the
Common Stock of PERMA-FIX ENVIRONMENTAL SERVICES, INC., covered by said Warrant, and
hereby tenders payment by delivery of $________________in cash or by certified or official bank check
for the exercise price per share required under the Warrant which accompanies this notice.
Dated:______________________________________

Signature:___________________________________

Address:____________________________________

Tax Identification or

Social Security Number________________________	

						

ASSIGNMENT

	          FOR VALUE RECEIVED, _________________________________ hereby sells, assigns and
transfers unto _________________________________ the foregoing Warrant and all rights evidenced
thereby, and does irrevocably constitute and appoint _________________________, attorney, to transfer
said Warrant on the books of PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Dated:______________________________________

Signature:___________________________________

Address:____________________________________

Tax Identification or

Social Security Number________________________

	

PARTIAL ASSIGNMENT

	          FOR VALUE RECEIVED, _________________________________ hereby sells, assigns and
transfers unto _________________________________ the right to purchase _________ shares of the
Common Stock of PERMA-FIX ENVIRONMENTAL SERVICES, INC. by the foregoing Warrant and
all rights evidenced thereby, and does irrevocably constitute and appoint _________________________,
attorney, to transfer that part of said Warrant on the books of PERMA-FIX ENVIRONMENTAL
SERVICES, INC.

Dated:______________________________________

Signature:___________________________________

Address:____________________________________

Tax Identification or

Social Security Number________________________

 

-18-

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