Document:

Exhibit 4.1 - Restated Certificate of Incorporation, as amended

State of Delaware

Office of the Secretary of State 

Page 1

     I, EDWARD J. FREEL,
SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED ARE
TRUE AND CORRECT COPIES OF ALL DOCUMENTS FILED FROM AND INCLUDING THE RESTATED
CERTIFICATE OF "PERMA-FIX ENVIRONMENTAL SERVICES, INC." AS RECEIVED AND FILED IN
THIS OFFICE.
    THE FOLLOWING DOCUMENTS HAVE BEEN
CERTIFIED:

    RESTATED CERTIFICATE, FILED THE TWENTY-SIXTH
DAY OF NOVEMBER, A.D. 1991, AT 10 O'CLOCK A.M.

    CERTIFICATE OF AMENDMENT, CHANGING ITS NAME
FROM "NATIONAL ENVIRONMENTAL INDUSTRIES, LTD." TO "PERMA-FIX ENVIRONMENTAL
SERVICES, INC.", FILED THE SEVENTEENTH DAY OF DECEMBER, A.D. 1991, AT 4:30
O'CLOCK A.M.

    CERTIFICATE OF AMENDMENT, FILED THE FOURTH
DAY OF SEPTEMBER, A.D. 1992, AT 11:30 O'CLOCK A.M.

    CERTIFICATE OF DESIGNATION, FILED THE SIXTH
DAY OF FEBRUARY, A.D. 1996, AT 4 O'CLOCK P.M.

    CERTIFICATE OF DESIGNATION, FILED THE
TWENTIETH DAY OF FEBRUARY, A.D. 1996, AT 10:45 O'CLOCK A.M.

    CERTIFICATE OF DESIGNATION, FILED THE
NINETEENTH DAY OF JULY, A.D. 1996, AT 12:30 O'CLOCK P.M.

    CERTIFICATE OF DESIGNATION, FILED THE
SIXTEENTH DAY OF DECEMBER, A.D. 1996, AT 4:30 O'CLOCK P.M.

    CERTIFICATE OF AMENDMENT, FILED THE SIXTH DAY
OF JANUARY, A.D. 1997, AT 4:30 O'CLOCK P.M.

    CERTIFICATE OF DESIGNATION, FILED  THE
ELEVENTH DAY OF JUNE, A.D. 1997, AT 11 O'CLOCK A.M.

    CERTIFICATE OF DESIGNATION, FILED THE
FOURTEENTH DAY OF JULY, A.D. 1997, AT 11:15 O'CLOCK A.M.

    CERTIFICATE OF DESIGNATION, FILED THE
THIRTEENTH DAY OF NOVEMBER, A.D. 1997, AT 1:30 O'CLOCK P.M.

    CERTIFICATE OF DESIGNATION FILED THE
THIRTEENTH DAY OF NOVEMBER, A.D. 1997, AT 1:31 O'CLOCK P.M.

    CERTIFICATE OF DESIGNATION, FILED THE
TWENTH-SIXTH DAY OF NOVEMBER, A.D. 1997, AT 10 O'CLOCK A.M.

    CERTIFICATE OF DESIGNATION, FILED THE TENTH
DAY OF JULY, A.D. 1998, AT 12 O'CLOCK P.M.

    CERTIFICATE OF DESIGNATION, FILED THE
SIXTEENTH DAY OF JULY, A.D. 1998, AT 1:30 O'CLOCK P.M.

    CERTIFICATE OF DESIGNATION, FILED THE
SIXTEENTH DAY OF JULY, A.D. 1998, AT 1:31 O'CLOCK P.M.

    CERTIFICATE OF DESIGNATION, FILED THE
SIXTEENTH DAY OF JULY, A.D. 1998, AT 1:32 O'CLOCK P.M.

    CERTIFICATE OF DESIGNATION, FILED THE
FIFTEENTH DAY OF JULY, A.D. 1999, AT 12:30 O'CLOCK P.M.

    CERTIFICATE OF DESIGNATION,FILED THE
FIFTEENTH DAY OF JULY, A.D. 1999, AT 12:31 O'CLOCK P.M.

    CERTIFICATE OF DESIGANTION, FILED THE
FIFTEENTH DAY OF JULY, A.D. 1999, AT 12:32 O'CLOCK P.M.

    CERTIFICATE OF DESIGNATION, FILED THE
FIFTEENTH DAY OF JULY, A.D. 1999, AT 12:33 O'CLOCK P.M.

    CERTIFICATE OF DESIGNATION, FILED THE TENTH
DAY OF AUGUST, A.D. 1999, AT 12:30 O'CLOCK P.M.

    CERTIFICATE OF DESIGNATION, FILED THE TENTH DAY OF AUGUST,
A.D. 1999, AT 12:31 O'CLOCK P.M.

    CERTIFICATE OF DESIGNATION, FILED THE TENTH DAY OF AUGUST,
A.D. 1999, AT 12:32 O'CLOCK P.M.

    CERTIFICATE OF DESIGNATION, FILED THE TENTH DAY OF AUGUST,
A.D. 1999, AT 12:33 O'CLOCK P.M.

THE CERTIFICATE OF RESTATED CERTIFICATE OF "NATIONAL
ENVIRONMENTAL INDUSTRIES, LTD." FILED IN THIS OFFICE ON THE TWENTY- SIXTH DAY OF
NOVEMBER, A.D. 1991 AT 10 O'CLOCK
A.M.

                                                                                           /s/
Edward J.
Freel                                     
                                                                                    Edward
J. Freel, Secretary of State

 

2249849 
8100X                                                         AUTHENTICATION: 
0642864

001433866                                                                                          DATE:  08-28-00
 

 

RESTATED CERTIFICATE OF INCORPORATION

OF

NATIONAL ENVIRONMENTAL INDUSTRIES, LTD.

          1.  The
present name of the corporation (hereinafter called the
"Corporation") is National Environmental Industries, Ltd.,
and the date of filing the original certificate of incorporation of the Corporation with the Secretary of State of
the State of Delaware is December 19,
1990.

          2.  The
certificate of incorporation of the Corporation is hereby
amended by striking out Articles FOURTH through NINTH thereof and by substituting in lieu thereof new Articles FOURTH
through NINTH as set forth in the Restated Certificate of
Incorporation hereinafter provided
for.

          3.  The
provisions of the certificate of incorporation as heretofore
amended and/or supplemented, and as herein amended, are
hereby restated and integrated into the single instrument which is hereinafter set forth, and which is entitled Restated Certificate of Incorporation of National Environmental Industries,
Ltd. without any further amendment other than the amendment
certified herein and without any discrepancy between the

 

 

 

provisions of the certificate of
incorporation as heretofore amended and supplemented and the
provisions of the said single instrument hereinafter set
forth.

          4.  The
amendment and restatement of the certificate of incorporation herein certified have been duly adopted by the stockholders in accordance with the provisions of Sections 228,
242 and 245 of the General Corporation Law of the State of
Delaware.  Prompt written notice of the adoption of the
amendment and of the restatement of the certificate of
incorporation herein certified has been given to those
stockholders who have not consented in writing thereto, as
provided in Section 228 of the General Corporation Law of
the State of Delaware.

           5.  The
certificate of incorporation of the Corporation, as amended
and restated herein, shall at the effective time of this Restated Certificate of Incorporation, read as follows:

"Restated Certificate of
Incorporation
of
National Environmental Industries, Ltd.

                   FIRST:
The name of the Corporation is National Environmental
Industries, Ltd.

                   SECOND:
The address of the Corporation's registered office in the
State of Delaware is 32 Loockerman Square, Suite L-100, City of Dover, County of
Dover. The name of its registered agent at such address is
The Prentice-Hall Corporation System, Inc.

 

2

 

                     THIRD:
The purpose of the Corporation is to engage in any lawful
act or activity for which a corporation may be organized under the laws of the General Corproation Law of the State of
Delaware.

                     FOURTH:
The total number of shares of capital stock which the Corporation shall have
authority to issue is Twenty-Two Million (22,000,000) shares, of which Twenty
Million (20,000,000) shares shall be Common Stock, par value
$.001 per share, and Two Million (2,000,000) shares shall be
Preferred Stock, $.001 par value per share.

                      The
Preferred Stock may be issued from time to time in one or more series. The Board
of Directors is hereby expressly authorized to provide, by resolution or
resolutions duly adopted by it prior to issuance, for the creation of each such
series and to fix the designation and the powers, preferences, rights,
qualifications, limitations and restrictions relating to the shares of each such
series. The authority of the Board of Directors with respect to each such series
of Preferred Stock shall include, but not be limited to, determining the
following:

                       (a)
the designation of such series, the number of shares to constitute such series
and the stated value if different from the par value thereof; 

                      (b)
whether the shares of such series shall have voting rights, in addition to any
voting rights provided by law, and, if so, the terms of such voting rights,
which may be general or limited;

 

3

 

                     (c)
the dividends, if any, payable on such series, whether any such dividends shall
be cumulative, and, if so, from what dates, the conditions and dates upon which
such dividends shall be payable, and the preference or relation which such
dividends shall bear to the dividends payable on any shares of stock of any
other class or any other series of Preferred Stock;

                     (d)
whether the shares of such series shall be subject to redemption by the
Corporation, and, if so, the times, prices and other conditions of such
redemption; 

                     (e)
the amount or amounts payable upon shares of such series
upon, and the rights of the holders of such series in, the
voluntary or involuntary liquidation, dissolution or winding
up, or upon any distribution of the assets of the Corporation;

                     (f)
whether the shares of such series shall be subject to the operation of a
retirement or sinking fund and, if so, the extent to and manner in which any
such retirement or sinking fund shall be applied to the purchase or redemption
of the shares of such series for retirement or other corporate purposes and the
terms and provisions relating to the operation thereof;

 

4

 

                    (g)
whether the shares of such series shall be convertible into, or exchangeable
for, shares of stock of any other class or any other series of Preferred Stock
or any other securities and, if so, the price or prices or the rate or rates of
conversion or exchange and the method, if any, of adjusting the same, and any
other terms and conditions of conversion or exchange;

                    (h)
the limitations and restrictions, if any, to be effective while any shares of
such series are outstanding upon the payment of dividends or the making of other
distributions on, and upon the purchase, redemption or other acquisition by the
Corporation of, the Common Stock or shares of stock of any other class or any
other series of Preferred Stock;

                    (i)
the conditions or restrictions, if any, upon the creation of indebtedness of the
Corporation or upon the issue of any additional stock, including additional
shares of such series or of any other series of Preferred Stock or of any other
class; and

                   (j)
any other powers, preferences and relative participating, optional and other
special rights, and any qualifications, limitations and restrictions
thereof.

                    The
powers, preferences and relative, participating, optional and other special
rights of each series of Preferred Stock, and the qualifications, limitations or
restrictions thereof, 

 

5

 

if any, may differ from those of any and all other series at any
time outstanding. All shares of any one series of Preferred Stock shall be
identical in all respects with all other shares of such series, except that
shares of any one series issued at different times may differ as to the dates
from which dividends thereof shall be cumulative.

                      FIFTH:
Unless required by law or determined by the chairman of the meeting to be
advisable, the vote by stockholders on any matter, including the election of
directors, need not be by written ballot.

                      SIXTH:
The Corporation reserves the right to increase or decrease its authorized
capital stock, or any class or series thereof, and to reclassify the same, and
to amend, alter, change or repeal any provision contained in the Certificate of
Incorporation under which the Corporation is organized or in any amendment
thereto, in the manner now or hereafter prescribed by law, and all rights
conferred upon stockholders in said Certificate of Incorporation or any
amendment thereto are granted subject to the aforementioned
reservation.

                     SEVENTH:
The Board of Directors shall have the power at any time, and from time to time,
to adopt, amend and repeal any and all By-Laws of the Corporation.

                    EIGHTH:
All persons who the Corporation is empowered to indemnify pursuant to the
provisions of Section 145 of the General Corporation Law of the State of
Delaware (or any similar provision or provisions

 

6

 

of applicable law at the time in effect), shall be indemnified
by the Corporation to the full extent permitted thereby. The foregoing right of
indemnification shall not be deemed to be exclusive of any other rights to which
those seeking indemnification maybe entitled under any by-law, agreement, vote
of stockholders or disinterested directors, or otherwise. No repeal or amendment
of this Article EIGHTH shall adversely affect any rights of any person pursuant
to this Article Eighth which existed at the time of such repeal or amendment
with respect to acts or omissions occurring prior to such repeal or
amendment.

                    NINTH:
No director of the Corporation shall be personally liable to the Corporation or
its stockholders for any monetary damages for breaches of fiduciary duty as a
director, provided that this provisions shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders; (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(iii) under Section 174 of the General Corporation Law of the State of Delaware;
or (iv) for any transaction from which the director derived an improper personal
benefit. No repeal or amendment of this Article NINTH shall adversely affect any
rights of any person pursuant to this

 

7

 

Article NINTH which existed at the time of such repeal or
amendment with respect to acts or omissions occurring prior
to such repeal or amendment."

       IN WITNESS WHEREOF, we
have signed this Certificate this 22nd day of November,
1991.

                                                                                                     /s/
Louis
Centofanti                        
                                                                                                              President

ATTEST:

    /s/ Carol A.
Dixon             
Secretary

 

 

 

 

 

 

 

 

8

 

CERTIFICATE OF AMENDMENT
TO THE
RESTATED
CERTIFICATE OF INCORPORATION
OF
NATIONAL ENVIRONMENTAL INDUSTRIES,
LTD.

          It
is hereby certified that:

          1.  The
name of the corporation (hereinafter called the "Corporation") is National
Environmental Industries, Ltd.

          2.  The
Restated Certificate of Incorporation is hereby amended by striking out Article
FIRST thereof and by substituting in lieu of said Article
FIRST the following new Article:

               "FIRST:
The name of the Corporation is Perma-Fix Environmental Services,
Inc."

          3.  The
amendment of the Certificate of Incorporation herein certified has been duly
adopted in accordance with the provisions of Sections 228 and 242 of the General
Corporation Law of the State of Delaware. Prompt written notice of the adoption
of the amendment herein certified has been given to those stockholders who have
not consented in writing thereto, as provided in Section 228 of the General
Corporation Law of the State of Delaware.

           IN
WITNESS WHEREOF, we have signed this Certificate this 16th day of December,
1991.

                                                                                                /s/
Louis
Centofanti                           
                                                                                            Louis
Centofanti, President

ATTEST:

/s/
Mark
Zwecker                             
Mark
Zwecker, Secretary

 

CERTIFICATE OF AMENDMENT
TO
RESTATED
CERTIFICATE OF INCORPORATION, AS AMENDED
OF
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.

 

          Perma-Fix
Environmental Services, Inc., a Delaware corporation (the
"Corporation"), does hereby certify:

          That the
amendment set forth below to the Corporation's Restated Certificate of
Incorporation, as amended, was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware and written
notice thereof has been given as provided in Section 228 thereof:

          I)
The first paragraph of Article FOURTH of the Corporation's
Restated Certificate of Incorporation, as amended, is hereby
deleted and replaced in its entirety by the following:

                           Fourth:
The total number of shares of capital stock that the
Corporation shall
have 
                           authority
to issue is 22,000,000 shares of which 20,000,000
shares of the par
value 
                           of
$.001 per share shall be designated Common Stock ("Common
Stock"), and 
                           2,000,000
shares of the par value of $.001 per share shall be
designated
Preferred 
                           Stock.

                          As
of September 4, 1992 (the "Effective Time"), each share of Common Stock
issued 
                          and
outstanding immediately prior to the Effective Time shall automatically be
changed 
                          and
converted, without any action on the part of the holder thereof, into
1/3.0236956 
                          of
a share of Common Stock and, in connection with fractional interests in shares
of 
                          Common
Stock of the Corporation, each holder whose aggregate holdings of
shares 
                          of
Common stock prior to the Effective Time amounted to less than 3.0236956,
or 
                          to
a number not evenly divisible by 3.0236956 shares of Common Stock shall
be 

 

 

 

                          entitled
to receive for such fractional interest, and at such time, any such
fractional 
                          interest
in shares of Common Stock of the Corporation shall be converted into
the 
                          right
to receive, upon surrender of the stock certificates formerly
representing 
                          shares
of Common Stock of the Corporation, one whole share of Common Stock.

          IN
WITNESS whereof, Perma-Fix Environmental Services, Inc. has
caused this Certificate to be signed and attested to by its
duly authorized officers as of this first day of September, 1992.

                                                                    Perma-Fix
Environmental Services, Inc.

                                                                    By: /s/ Louis
Centofanti                             
                                                                          Dr. Louis F.
Centofanti
                                                                          President

ATTEST:

By: /s/ Mark
Zwecker                         
      Secretary

981311720
 
 

 

CERTIFICATE OF DESIGNATIONS
OF SERIES I CLASS A
PREFERRED STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC.

     Perma-Fix Environmental Services,
Inc. (the "Corporation"), a corporation organized and existing under the General
Corporation Law of the State of Delaware, does hereby certify:

     That, pursuant to authority
conferred upon by the Board of Directors by the
Corporation's Certificate of Incorporation, as amended, and
pursuant to the provisions of Section 151 of the Delaware
Corporation Law, said Board of Directors, acting by unanimous written consent in lieu of a meeting dated February 2,
1996, hereby adopted the terms of the Series I Class A
Preferred Stock, which resolutions are set forth on the
attached page.

Dated: February 2, 1996

                                                          PERMA-FIX
ENVIRONMENTAL SERVICES, INC.

                                                           By /s/ Louis F.
Centofanti                                                
                                                                Dr.
Louis F.
Centofanti
                                                                Chairman of the Board

ATTEST:

/s/ Mark A.
Zwecker                   
Mark A. Zwecker, Secretary
 
 

 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(the
"Corporation")

RESOLUTION OF THE BOARD OF DIRECTORS

FIXING THE
NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,
RESTRICTIONS AND CONDITIONS
ATTACHING TO THE SERIES I CLASS A
PREFERRED STOCK

WHEREAS,

A.  The Corporation's share capital includes Preferred
Stock, par value $.001 per share ("Preferred
Stock"),
      which Preferred Stock may be issued in one or more series with the directors of the Corporation (the
      "Board") being
entitled by resolution to fix the number of shares in each
series and to designate the 
      rights, designations,
preferences, and relative, participating, optional or other
special rights, privileges,
      restrictions and conditions attaching to the shares of each such series; and

B.  It is in the best interests of the
Corporation for the Board to create a new series from the
Preferred 
      Stock designated
as the Series I Class A Preferred Stock, par value
$.001. 

NOW, THEREFORE, BE IT RESOLVED,
THAT:

      The Series I Class A
Preferred Stock, par value $.001 (the "Series I Class A
Preferred Stock") of the
      Corporation
shall consist of 1,100 shares and no more and shall be
designated as the Series I Class
A
      Preferred Stock and in addition to
the preferences, rights, privileges, restrictions and
conditions 
      attaching to all the Series I
Class A Preferred Stock as a series, the rights, privileges,
restrictions 
      and conditions
attaching to the Series I Class A Preferred Stock shall be
as follows:

Part 1 - Voting and Preemptive Rights.

1.1  Except as otherwise provided herein, in the
Certificate of Incorporation (the "Articles") or the General Corporation Law of
the State of Delaware (the "GCL"), each holder of Series I Class A Preferred
Stock, by virtue of his ownership thereof, shall be entitled to cast that number
of votes per share thereof on each matter submitted to the Corporation's
shareholders for voting which equals the number of votes which could be cast by
such holder of the number of shares of the Corporation's Common Stock, par value
$.001 per share (the "Common Shares") into which such shares of Series I Class A
Preferred Stock would be converted into pursuant to Part 5 hereof immediately
prior to the record date of such vote. The outstanding Series I Class A
Preferred Stock and the Common Shares of the Corporation shall vote together as
a single class, except as otherwise expressly required by the GCL or Part 7
hereof. The Series I Class A Preferred Stock shall not have cumulative voting
rights.

 

 

1.2  The Series I Class A Preferred Stock shall not
give its holders any preemptive rights to acquire any other securities issued by
the Corporation at any time in the future.

Part 2 - Liquidation Rights.

2.1  If the Corporation shall be voluntarily or
involuntarily liquidated, dissolved or wound up at any time when any Series I
Class A Preferred Stock shall be outstanding, the holders of the then
outstanding Series I Class A Preferred Stock shall have a preference in
distribution of the Corporation's property available for distribution to the
holders of the Common Shares equal to $1,000 consideration per outstanding share
of Series I Class A Preferred Stock, together with an amount equal to all unpaid
dividends accrued thereon, if any, to the date of payment of such distribution,
whether or not declared by the Board; provided, however, that the
merger of the Corporation with any corporation or corporations in which the
Corporation is not the survivor, or the sale or transfer by the Corporation of
all or substantially all of its property, or any reduction by at least seventy
percent (70%) of the then issued and outstanding Common Shares of the
Corporation, shall be deemed to be a liquidation of the Corporation within the
meaning of any of the provisions of this Part 2.

2.2  Subject to the provisions of Part 6 hereof, all
amounts to be paid as preferential distributions to the holders of Series I
Class A Preferred Stock, as provided in this Part 2, shall be paid or set apart
for payment before the payment or setting apart for payment of any amount for,
or the distribution of any of the Corporation's property to the holders of
Common Shares, whether now or hereafter authorized, in connection with such
liquidation, dissolution or winding up.

Part 3 - Dividends.

3.1  Holders of record of Series I Class A Preferred
Stock, out of funds legally available therefor and to the extent permitted by
law, shall be entitled to receive dividends on their Series I Class A Preferred
Stock, which dividends shall accrue at the rate per share of five percent (5%)
per annum of consideration paid for each share of Series I Class A Preferred
Stock ($50.00 per share per year for each full year) commencing on the date of
the issuance thereof, payable, at the option of the Corporation, (i) in cash, or
(ii) by the issuance of that number of whole Common Shares computed by dividing
the amount of the dividend by the market price applicable to such
dividend.

3.2  For the purposes of this Part 3 and Part 4
hereof, "market price" means the average of the daily closing prices of Common
Shares for a period of five (5) consecutive trading days ending on the date on
which any dividend becomes payable or of any notice of redemption as the case
may be. The closing price for each trading day shall be (i) for any period
during which the Common Shares shall be listed for trading on a national
securities exchange, the last reported bid price per share of Common Shares as
reported by the primary stock exchange, or the Nasdaq Stock Market, if the
Common Shares are quoted on the Nasdaq Stock Market, or (ii) if last sales price
information is not available, the average closing bid price of Common Shares as
reported

 

-2-

 

by the Nasdaq Stock Market, or if not so listed or reported,
then as reported by National Quotation Bureau, Incorporated, or (iii) in the
event neither clause (i) nor (ii) is applicable, the average of the closing bid
and asked prices as furnished by any member of the National Association of
Securities Dealers, Inc., selected from time to time by the Corporation for that
purpose.

3.3  Dividends on Series I Class A Preferred Stock
shall be cumulative, and no dividends or other distributions
shall be paid or declared and set aside for payment on the
Common Shares until full cumulative dividends on all
outstanding Series I Class A Preferred Stock shall have been paid or declared
and set aside for payment.

3.4  Dividends shall be payable in arrears, at the
rate of $12.50 per share for each full calendar quarter on each February 28, May
31, August 31, and November 30 of each calendar year, to the holders of record
of the Series I Class A Preferred Stock as they appear in the securities
register of the Corporation on such record dates not more than sixty (60) nor
less than ten (10) days preceding the payment date thereof, as shall be fixed by
the Board; provided, however, that the initial dividend for the Series I Class A
Preferred Stock shall accrue for the period commencing on the date of the
issuance thereof to and including December 31, 1995.

3.5  If, in any quarter, insufficient funds are
available to pay such dividends as are then due and payable with respect to the
Series I Class A Preferred Stock and all other classes and series of the capital
stock of the Corporation ranking in parity therewith (or such payment is
otherwise prohibited by provisions of the GCL, such funds as are legally
available to pay such dividends shall be paid or Common Shares will be issued as
stock dividends to the holders of Series I Class A Preferred Stock and to the
holders of any other series of Class A Preferred Stock then outstanding as
provided in Part 6 hereof, in accordance with the rights of each such holder,
and the balance of accrued but undeclared and/or unpaid dividends, if any, shall
be declared and paid on the next succeeding dividend date to the extent that
funds are then legally available for such purpose.

Part 4 - Redemption.

4.1  At any time, and from time to time, on and after
one hundred twenty (120) days from the date of the issuance of any Series I
Class A Preferred Stock, if the average of the closing bid prices for the Common
Shares for five (5) consecutive trading days shall be in excess of $1.50, the
Corporation may, at its sole option, but shall not be obligated to, redeem, in
whole or in part, the then outstanding Series I Class A Preferred Stock at a
price per share of U. S. $1,000 each (the "Redemption Price") (such price to be
adjusted proportionately in the event of any change of the Series I Class A
Shares into a different number of Shares).

4.2  Thirty (30) days prior to any date stipulated by
the Corporation for the redemption of Series I Class A Preferred Stock (the
"Redemption Date"), written notice (the "Redemption Notice") shall be mailed to
each holder of record on such notice date of the Series I Class A Preferred
Stock. The Redemption Notice shall

 

-3-

 

state: (i) the Redemption Date of such Shares, (ii) the number
of Series I Class A Preferred Stock to be redeemed from the holder to whom the
Redemption Notice is addressed, (iii) instructions for surrender to the
Corporation, in the manner and at the place designated of a share certificate or
share certificates representing the number of Series I Class A Preferred Stock
to be redeemed from such holder, and (iv) instructions as to how to specify to
the Corporation the number of Series I Class A Preferred Stock to be redeemed as
provided in this Part 4, and the number of shares to be converted into Common
Shares as provided in Part 5 hereof.

4.3  Upon receipt of the Redemption Notice, any
Eligible Holder (as defined in Section 5.2 hereof) shall have the option, at its
sole election, to specify what portion of its Series I Class A Preferred Stock
called for redemption in the Redemption Notice shall be redeemed as provided in
this Part 4 or converted into Common Shares in the manner provided in Part 5
hereof, except that, notwithstanding any provision of such Part 5 to the
contrary, any Eligible Holder shall have the right to convert into Common Shares
that number of Series I Class A Preferred Stock called for redemption in the
Redemption Notice.

4.4  On or before the Redemption Date in respect of
any Series I Class A Preferred Stock, each holder of such shares shall surrender
the required certificate or certificates representing such shares to the
Corporation in the manner and at the place designated in the Redemption Notice,
and upon the Redemption Date, the Redemption Price for such shares shall be made
payable, in the manner provided in Section 5.5 hereof, to the order of the
person whose name appears on such certificate or certificates as the owner
thereof, and each surrendered share certificate shall be canceled and retired.
If a share certificate is surrendered and all the shares evidenced thereby are
not being redeemed (as described below), the Corporation shall cause the Series
I Class A Shares which are not being redeemed to be registered in the names of
the persons whose names appear as the owners on the respective surrendered share
certificates and deliver such certificate to such person.

4.5  On the Redemption Date in respect of any Series I
Class A Shares or prior thereto, the Corporation shall deposit with any bank or
trust company having a capital and surplus of at least U. S. $50,000,000, as a
trust fund, a sum equal to the aggregate Redemption Price of all such shares
called from redemption (less the aggregate Redemption Price for those Series I
Class A Shares in respect of which the Corporation has received notice from the
Eligible Holder thereof of its election to convert Series I Class A Shares in to
Common Shares), with irrevocable instructions and authority to the bank or trust
company to pay, on or after the Redemption Date, the Redemption Price to the
respective holders upon the surrender of their share certificates. The deposit
shall constitute full payment for the shares to their holders, and from and
after the date of the deposit the redeemed share shall be deemed to be no longer
outstanding, and holders thereof shall cease to be shareholders with respect to
such shares and shall have no rights with respect thereto except the rights to
receive from the bank or trust company payments of the Redemption price of the
shares, without interest, upon surrender of their certificates thereof. Any
funds so deposited and unclaimed at the end of one year following the Redemption
Date shall be released or repaid to the Corporation, after which the former
holders of shares

 

-4-

 

called for redemption shall be entitled to receive payment of
the Redemption Price in respect of their shares only from the
Corporation.

Part 5 - Conversion.

5.1  For the purposes of conversion of the Series I
Class A Preferred Stock shall be valued at $1,000 per share
("Value"), and, if converted, the Series I Class A Preferred
Stock shall be converted into such number of Common Shares
(the "Conversion Shares") as is obtained by dividing the
aggregate Value of the shares of Series I Class A Preferred
Stock being so converted, together with all accrued but
unpaid dividends thereon, by the "Average Stock Price" per share of the
Conversion Shares (the "Conversion Price"), subject to adjustment pursuant to
the provisions of this Part 5. For purposes of this Part 5, the "Average Stock
Price" means the lesser of (x) seventy percent (70%) of the average daily
closing bid prices of the Common Shares for the period of five (5) consecutive
trading days immediately preceding the date of subscription by the Holder or (y)
seventy percent (70%) of the daily average closing bid prices of Common Shares
for the period of five (5) consecutive trading days immediately preceding the
date of the conversion of the Series I Class A Preferred Stock in respect of
which such Average Stock Price is determined. The closing price for each trading
day shall be determined as provided in the last sentence of Section
3.2. 

5.2  Any holder of Series I Class A Preferred Stock
(an "Eligible Holder") may at any time commencing forty-five (45) days after the
issuance of any Series I Class A Preferred Stock convert up to one hundred
percent (100%) of his holdings of Series I Class A Preferred Stock in accordance
with this Part 5.

5.3  The conversion right granted by Section 5.2
hereof may be exercised only by an Eligible Holder of Series I Class A Preferred
Stock, in whole or in part, by the surrender of the share certificate or share
certificates representing the Series I Class A Preferred Stock to be converted
at the principal office of the Corporation (or at such other place as the
Corporation may designate in a written notice sent to the holder by first class
mail, postage prepaid, at its address shown on the books of the Corporation)
against delivery of that number of whole Common Shares as shall be computed by
dividing (1) the aggregate Value of the Series I Class A Preferred Stock so
surrendered for conversion plus any accrued but unpaid dividends thereon, if
any, by (2) the Conversion Price in effect at the date of the conversion. At the
time of conversion of a share of the Series I Class A Preferred Stock, the
Corporation shall pay in cash to the holder thereof an amount equal to all
unpaid dividends, if any, accrued thereon to the date of conversion, or, at the
Corporation's option, issue that number of whole Common Shares which is equal to
the product of dividing the amount of such unpaid dividends by the Average Stock
Price whether or not declared by the Board. Each Series I Class A Preferred
Stock share certificate surrendered for conversion shall be endorsed by its
holder. In the event of any exercise of the conversion right of the Series I
Class A Preferred Stock granted herein (i) share certificate representing the
Common Shares purchased by virtue of such exercise shall be delivered to such
holder within three (3) days of notice of conversion, and (ii) unless the Series
I Class A Preferred Stock has been fully converted, a new share certificate
representing the Series I Class A Preferred Stock not so converted, if any,
shall also be delivered to

 

-5-

 

such holder within three (3) days of notice of conversion. Any
Eligible Holder may exercise its right to convert the Series I Class A Preferred
Stock by telecopying an executed and completed Notice of Conversion to the
Corporation, and within seventy-two (72) hours thereafter, delivering the
original Notice of Conversion and the certificate representing the Series I
Class A Preferred Stock to the Corporation by express courier. Each date on
which a Notice of Conversion is telecopied to and received by the Corporation in
accordance with the provisions hereof shall be deemed a conversion date. The
Corporation will transmit the Common Shares certificates issuable upon
conversion of any Series I Class A Preferred Stock (together with the
certificates representing the Series I Class A Preferred Stock not so converted)
to the Eligible Holder via express courier within three (3) business days after
the conversion date if the Corporation has received the original Notice of
Conversion and the Series I Class A Shares certificates being so converted by
such date.

5.4  All Common Shares which may be issued upon
conversion of Series I Class A Preferred Stock will, upon issuance, be duly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issue thereof. At all times that any Series I Class A
Preferred Stock is outstanding, the Corporation shall have authorized, and shall
have reserved for the purpose of issuance upon such conversion, a sufficient
number of Common Shares to provide for the conversion into Common Shares of all
Series I Class A Preferred Stock then outstanding at the then effective
Conversion Price. Without limiting the generality of the foregoing, if, at any
time, the Conversion Price is decreased, the number of Common Shares authorized
and reserved for issuance upon the conversion of the Series I Class A Preferred
Stock shall be proportionately increased. 

5.5  The number of Common Shares issued upon
conversion of Series I Class A Preferred Stock and the Conversion Price shall be
subject to adjustment from time to time upon the happening of certain events, as
follows:

     5.5.1  Change of
Designation of the Common Shares or the rights, privileges, restrictions and
conditions
      in respect of the Common Shares or
division of the Common Shares into series. In the case of
any
      amendment to the Articles to change the
designation of the Common Shares or the rights,
privileges,
      restrictions or conditions in
respect of the Common Shares or division of the Common Shares into
series
      the rights of the holders of the Series
I Class A Preferred Stock shall be adjusted so as to provide
that
      upon conversion thereof, the holder of
the Series I Class A Preferred Stock being converted shall
procure,
      in lieu of each Common Share
theretofore issuable upon such conversion, the kind and amount of
shares,
      other securities, money and property
receivable upon such designation, change or division by the holder
of
      one Common Share issuable upon such
conversion had conversion occurred immediately prior to
such
      designation, change or division. The
Series I Class A Preferred Stock shall be deemed thereafter
to
      provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments

 

-6-

 

      provided for in this Part 5.
The provisions of this subsection 5.5.1 shall apply in the same manner
to
      successive reclassifications, changes,
consolidations, and mergers.

      5.5.2  If the
Corporation, at any time while any of the Series I Class A Preferred Stock is
outstanding, 
      shall amend the
Articles so as to change the Common Shares into a different number of shares,
the
      Conversion Price shall be proportionately
reduced, in case of such change increasing the
number 
      of Common Shares, as of the
effective date of such increase, or if the Corporation shall take a
record
      of holders of its Common Shares for the
purpose of such increase, as of such record date,
whichever 
      is earlier, or the
Conversion Price shall be proportionately increased, in the case of such
change 
      decreasing the number of
Common Shares, as of the effective date of such decrease or, if
the 
      Corporation shall take a record
of holders of its Common Stock for the purpose of such
decrease, 
      as of such record date,
whichever is earlier.

      5.5.3 If the Corporation, at
any time while any of the Series I Class A Preferred Stock is
outstanding, 
      shall pay a dividend
payable in Common Shares (except for any dividends of Common
Shares 
      payable pursuant to Part 3
hereof), the Conversion Price shall be adjusted, as of the date
the 
      Corporation shall take a record
of the holders of its Common Shares for the purposes of
receiving 
      such dividend (or if no
such record is taken, as of the date of payment of such dividend), to
that 
      price determined by
multiplying the Conversion Price therefor in effect by a fraction (1) the
numerator 
      of which shall be the
total number of Common Shares outstanding immediately prior to such
dividend, 
      and (2) the denominator
of which shall be the total number of Common Shares
outstanding 
      immediately after such
dividend (plus in the event that the Corporation paid cash for fractional
shares, 
      the number of additional
shares which would have been outstanding had the Corporation
issued 
      fractional shares in
connection with said dividend). 

5.6  Whenever the Conversion Price shall be adjusted
pursuant to Section 5.5 hereof, the Corporation shall make a certificate signed
by its President, or a Vice President and by its Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary, setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which the
Board of Directors made any determination hereunder), and the Conversion Price
after giving effect to such adjustment, and shall cause copies of such
certificates to be mailed (by first class mail, postage prepaid) to each holder
of the Series I Class A Preferred Stock at its address shown
on the books of the Corporation. The Corporation shall make
such certificate and mail it to each such holder promptly
after each adjustment.

5.7  No fractional Common Shares shall be issued in
connection with any conversion of Series I Class A Preferred Stock, but in lieu
of such fractional shares, the Corporation shall make a cash payment therefor
equal in amount to the product of the applicable fraction multiplied by the
Conversion Price then in effect.

 

-7-

 

5.8  No Series I Class A Preferred Stock which has
been converted into Common Shares shall be reissued by the Corporation;
provided, however, that each such share shall be restored to the status of
authorized but unissued Preferred Stock without designation as to series and may
thereafter be issued as a series of Preferred Stock not designated as Series I
Class A Preferred Stock.

Part 6 - Parity with Other Shares of Class A Preferred
Shares.

6.1  If any cumulative dividends or accounts payable
or return of capital in respect of Series I Class A Preferred Stock are not paid
in full, the owners of all series of outstanding Preferred Stock shall
participate rateably in respect of accumulated dividends and return of
capital.

Part 7 - Amendment.

7.1  In addition to any requirement for a series vote
pursuant to the GCL in respect of any amendment to the Corporation's Certificate
of Incorporation that adversely affects the rights, privileges, restrictions and
conditions of the Series I Class A Preferred Stock, the rights, privileges,
restrictions and conditions attaching to the Series I Class A Preferred Stock
may be amended by an amendment to the Corporation's Certificate of Incorporation
so as to affect such adversely only if the Corporation has obtained the
affirmative vote at a duly called and held series meeting of the holders of the
Series I Class A Preferred Stock or written consent by the holders of a majority
of the Series I Class A Preferred Stock then outstanding. Notwithstanding the
above, the number of authorized shares of such class or classes of stock may be
increased or decreased (but not below the number of shares thereof outstanding)
by the affirmative vote of the holders of a majority of the stock of the
Corporation entitled to vote thereon, voting as a single class, irrespective of
this Section 7.1.
 
 

 

 

 

 

-8-

 

CERTIFICATE OF DESIGNATIONS
OF SERIES 2 CLASS B
CONVERTIBLE PREFERRED STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES,
INC.

      Perma-Fix Environmental
Services, Inc. (the "Corporation"), a corporation organized
and existing under the General Corporation Law of the State
of Delaware, does hereby certify:

     That, pursuant to authority
conferred upon by the Board of Directors by the Corporation's Restated
Certificate of Incorporation, as amended, and pursuant to the provisions of
Section 151 of the Delaware Corporation Law, the Board of Directors of the
Corporation has adopted resolutions, a copy of which is attached hereto,
establishing and providing for the issuance of a series of Preferred Stock
designated as Series 2 Class B Convertible Preferred Stock and has established
and fixed the voting powers, designations, preferences and relative
participating, optional and other special rights and qualifications, limitations
and restrictions of such Series 2 Class B Convertible Preferred Stock as set
forth in the attached resolutions.

Dated: February 16, 1996

                                                         PERMA-FIX
ENVIRONMENTAL SERVICES, INC.

                                                          By /s/ Louis F.
Centofanti                                                 
                                                              Dr. Louis F.
Centofanti
                                                              Chairman of the Board

ATTEST:

/s/ Mark A.
Zwecker                    
Mark
A. Zwecker, Secretary

 

 

 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(the
"Corporation")

RESOLUTION OF THE BOARD OF DIRECTORS

FIXING THE
NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,
RESTRICTIONS AND CONDITIONS
ATTACHING TO THE
SERIES 2 CLASS B CONVERTIBLE PREFERRED
STOCK

WHEREAS,

A.  The Corporation's share capital includes Preferred
Stock, par value $.001 per share ("Preferred
Stock"),
      which Preferred Stock may be issued
in one or more series with the directors of the Corporation
(the
      "Board") being entitled by resolution to
fix the number of shares in each series and to designate
the 
      rights, designations,
preferences, and relative, participating, optional or other special rights,
privileges,
      restrictions and conditions
attaching to the shares of each such series; and

B.  It is in the best interests of the Corporation for
the Board to create a new series from the
Preferred 
      Stock designated as the
Series 2 Class B Convertible Preferred Stock, par value $.001.

NOW, THEREFORE, BE IT RESOLVED, THAT:

     The Series 2 Class B Convertible
Preferred Stock, par value $.001 (the "Series 2 Class B
Preferred
     Stock") of the Corporation shall
consist of 2,500 shares and no more and shall be designated as
the 
     Series 2 Class B Preferred Stock and
in addition to the preferences, rights, privileges,
restrictions 
     and conditions attaching to
all the Series 2 Class B Preferred Stock as a series, the
rights, 
     privileges, restrictions and
conditions attaching to the Series 2 Class B Preferred Stock shall
be 
     as follows:

Part 1 - Voting and Preemptive Rights.

1.1  Except as otherwise provided herein, in the
Corporation's Certificate of Incorporation (the "Articles") or the General
Corporation Law of the State of Delaware (the "GCL"), each holder of Series 2
Class B Preferred Stock, by virtue of his ownership thereof, shall be entitled
to cast that number of votes per share thereof on each matter submitted to the
Corporation's shareholders for voting which equals the number of votes which
could be cast by such holder of the number of shares of the Corporation's Common
Stock, par value $.001 per share (the "Common Shares") into which such shares of
Series 2 Class B Preferred Stock would be entitled to be converted into pursuant
to Part 5 hereof on the record date of such vote. The outstanding Series 2 Class
B Preferred Stock, the Common Shares of the Corporation and any other series of
Preferred Stock of the Corporation having voting rights shall vote together as a
single class, except as otherwise expressly required by the GCL or Part 7
hereof. The Series 2 Class B Preferred Stock shall not have cumulative voting
rights.

 

 

1.2  The Series 2 Class B Preferred Stock shall not
give its holders any preemptive rights to acquire any other securities issued by
the Corporation at any time in the future.

Part 2 - Liquidation Rights.

2.1  If the Corporation shall be voluntarily or
involuntarily liquidated, dissolved or wound up at any time when any Series 2
Class B Preferred Stock shall be outstanding, the holders of the then
outstanding Series 2 Class B Preferred Stock shall have a preference in
distribution of the Corporation's property available for distribution to the
holders of the Common Shares equal to $1,000 consideration per outstanding share
of Series 2 Class B Preferred Stock, together with an amount equal to all unpaid
dividends accrued thereon, if any, to the date of payment of such distribution,
whether or not declared by the Board; provided, however, that the merger of the
Corporation with any corporation or corporations in which the Corporation is not
the survivor, or the sale or transfer by the Corporation of all or substantially
all of its property, or a reduction by at least seventy percent (70%) of the
then issued and outstanding Common Shares of the Corporation, shall be deemed to
be a liquidation of the Corporation within the meaning of any of the provisions
of this Part 2.

2.2  Subject to the provisions of Part 6 hereof, all
amounts to be paid as preferential distributions to the holders of Series 2
Class B Preferred Stock, as provided in this Part 2, shall be paid or set apart
for payment before the payment or setting apart for payment of any amount for,
or the distribution of any of the Corporation's property to the holders of
Common Shares, whether now or hereafter authorized, in connection with such
liquidation, dissolution or winding up.

2.3  After the payment to the holders of the shares of
the Series 2 Class B Preferred Stock of the full preferential amounts provided
for in this Part 2, the holders of the Series 2 Class B Preferred Stock as such
shall have no right or claim to any of the remaining assets of the
Corporation.

2.4  In the event that the assets of the Corporation
available for distribution to the holders of shares of the Series 2 Class B
Preferred Stock upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, shall be insufficient to pay in
full all amounts to which such holders are entitled pursuant to this Part 2, no
such distribution shall be made on account of any shares of any other class or
series of Preferred Stock ranking on a parity with the shares of this Series 2
Class B Preferred Stock upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares of
this Series 2 Class B Preferred Stock and shares of such other class or series
ranking on a parity with the shares of this Series 2 Class B Preferred Stock,
ratably, in proportion to the full distributable amounts for which holders of
all such parity shares are respectively entitled upon such dissolution,
liquidation or winding up.

 

-2-

 

Part 3 - Dividends.

3.1  Holders of record of Series 2 Class B Preferred
Stock, out of funds legally available therefor and to the extent permitted by
law, shall be entitled to receive dividends on their Series 2 Class B Preferred
Stock, which dividends shall accrue at the rate per share of five percent (5%)
per annum of consideration paid for each share of Series 2 Class B Preferred
Stock ($50.00 per share per year for each full year) commencing on the date of
the issuance thereof, payable, at the option of the Corporation, (i) in cash, or
(ii) by the issuance of that number of whole Common Shares computed by dividing
the amount of the dividend by the market price applicable to such
dividend.

3.2  For the purposes of this Part 3 and Part 4
hereof, "market price" means the average of the daily closing prices of Common
Shares for a period of five (5) consecutive trading days ending on the date on
which any dividend becomes payable or of any notice of redemption as the case
may be. The closing price for each trading day shall be (i) for any period
during which the Common Shares shall be listed for trading on a national
securities exchange, the last reported bid price per share of Common Shares as
reported by the primary stock exchange, or the Nasdaq Stock Market, if the
Common Shares are quoted on the Nasdaq Stock Market, or (ii) if last sales price
information is not available, the average closing bid price of Common Shares as
reported by the Nasdaq Stock Market, or if not so listed or reported, then as
reported by National Quotation Bureau, Incorporated, or (iii) in the event
neither clause (i) nor (ii) is applicable, the average of the closing bid and
asked prices as furnished by any member of the National Association of
Securities Dealers, Inc., selected from time to time by the Corporation for that
purpose.

3.3  Dividends on Series 2 Class B Preferred Stock
shall be cumulative, and no dividends or other distributions
shall be paid or declared and set aside for payment on the
Common Shares until full cumulative dividends on all
outstanding Series 2 Class B Preferred Stock shall have been
paid or declared and set aside for payment.

3.4  Dividends shall be payable in arrears, at the
rate of $12.50 per share for each full calendar quarter on
each February 28, May 31, August 31, and November 30 of each
calendar year, to the holders of record of the Series 2
Class B Preferred Stock as they appear in the securities
register of the Corporation on such record dates not more
than sixty (60) nor less than ten (10) days preceding the
payment date thereof, as shall be fixed by the Board; provided, however, that the initial dividend for the Series 2
Class B Preferred Stock shall accrue for the period
commencing on the date of the issuance thereof.

3.5  If, in any quarter, insufficient funds are
available to pay such dividends as are then due and payable with respect to the
Series 2 Class B Preferred Stock and all other classes and series of the capital
stock of the Corporation ranking in parity therewith (or such payment is
otherwise prohibited by provisions of the GCL, such funds as are legally
available to pay such dividends shall be paid or Common Shares will be issued as
stock dividends to the holders of Series 2 Class B Preferred Stock and to the
holders of any other series of

 

-3-

 

Class B Preferred Stock then outstanding as provided in Part 6
hereof, in accordance with the rights of each such holder, and the balance of
accrued but undeclared and/or unpaid dividends, if any, shall be declared and
paid on the next succeeding dividend date to the extent that funds are then
legally available for such purpose.

Part 4 - Redemption.

4.1  At any time, and from time to time, on and after
one hundred twenty (120) days from the date of the issuance of any Series 2
Class B Preferred Stock, if the average of the closing bid prices for the Common
Shares for five (5) consecutive trading days shall be in excess of $1.50 per
share, the Corporation may, at its sole option, but shall not be obligated to,
redeem, in whole or in part, the then outstanding Series 2 Class B Preferred
Stock at a price per share of U. S. $1,000 each (the "Redemption Price") (such
price to be adjusted proportionately in the event of any change of the Series 2
Class B Preferred Stock into a different number of shares of Series 2 Class B
Preferred Stock).

4.2  Thirty (30) days prior to any date stipulated by
the Corporation for the redemption of Series 2 Class B Preferred Stock (the
"Redemption Date"), written notice (the "Redemption Notice") shall be mailed to
each holder of record on such notice date of the Series 2 Class B Preferred
Stock. The Redemption Notice shall state: (i) the Redemption Date of such
shares, (ii) the number of Series 2 Class B Preferred Stock to be redeemed from
the holder to whom the Redemption Notice is addressed, (iii) instructions for
surrender to the Corporation, in the manner and at the place designated of a
share certificate or share certificates representing the number of Series 2
Class B Preferred Stock to be redeemed from such holder, and (iv) instructions
as to how to specify to the Corporation the number of Series 2 Class B Preferred
Stock to be redeemed as provided in this Part 4, and the number of shares to be
converted into Common Shares as provided in Part 5 hereof.

4.3  Upon receipt of the Redemption Notice, any
Eligible Holder (as defined in Section 5.2 hereof) shall have the option, at its
sole election, to specify what portion of its Series 2 Class B Preferred Stock
called for redemption in the Redemption Notice shall be redeemed as provided in
this Part 4 or converted into Common Shares in the manner provided in Part 5
hereof, except that, notwithstanding any provision of such Part 5 to the
contrary, any Eligible Holder shall have the right to convert into Common Shares
that number of Series 2 Class B Preferred Stock called for redemption in the
Redemption Notice.

4.4  On or before the Redemption Date in respect of
any Series 2 Class B Preferred Stock, each holder of such shares shall surrender
the required certificate or certificates representing such shares to the
Corporation in the manner and at the place designated in the Redemption Notice,
and upon the Redemption Date, the Redemption Price for such shares shall be made
payable, in the manner provided in Section 4.5 hereof, to the order of the
person whose name appears on such certificate or certificates as the owner
thereof, and each surrendered share certificate shall be canceled and retired.
If a share certificate is surrendered and all the shares evidenced thereby are
not being redeemed (as described below), the Corporation shall cause the Series
2

 

-4-

 

Class B Preferred Stock which are not being redeemed to be
registered in the names of the persons whose names appear as the owners on the
respective surrendered share certificates and deliver such certificate to such
person.

4.5  On the Redemption Date in respect of any Series 2
Class B Preferred Stock or prior thereto, the Corporation
shall deposit with any bank or trust company having a capital and surplus of at
least U. S. $50,000,000, as a trust fund, a sum equal to the aggregate
Redemption Price of all such shares called from redemption (less the aggregate
Redemption Price for those Series 2 Class B Preferred Stock in respect of which
the Corporation has received notice from the Eligible Holder thereof of its
election to convert Series 2 Class B Preferred Stock in to Common Shares), with
irrevocable instructions and authority to the bank or trust company to pay, on
or after the Redemption Date, the Redemption Price to the respective holders
upon the surrender of their share certificates. The deposit shall constitute
full payment for the shares to their holders, and from and after the date of the
deposit the redeemed share shall be deemed to be no longer outstanding, and
holders thereof shall cease to be shareholders with respect to such shares and
shall have no rights with respect thereto except the rights to receive from the
bank or trust company payments of the Redemption price of the shares, without
interest, upon surrender of their certificates thereof. Any funds so deposited
and unclaimed at the end of one year following the Redemption Date shall be
released or repaid to the Corporation, after which the former holders of shares
called for redemption shall be entitled to receive payment of the Redemption
Price in respect of their shares only from the Corporation.

Part 5 - Conversion.

5.1 For the purposes of conversion of the Series 2 Class B
Preferred Stock shall be valued at $1,000 per share ("Value"), and, if
converted, the Series 2 Class B Preferred Stock shall be converted into such
number of Common Shares (the "Conversion Shares") as is obtained by dividing the
aggregate Value of the shares of Series 2 Class B Preferred Stock being so
converted, together with all accrued but unpaid dividends thereon, by the
"Average Stock Price" per share of the Conversion Shares (the "Conversion
Price"), subject to adjustment pursuant to the provisions of this Part 5. For
purposes of this Part 5, the "Average Stock Price" means the lesser of (x)
seventy percent (70%) of the average daily closing bid prices of the Common
Shares for a period of five (5) consecutive trading days immediately preceding
the date of subscription by the Holder or (y) seventy percent (70%) of the
average daily closing bid prices of Common Shares for the period of five (5)
consecutive trading days immediately preceding the date of the conversion of the
Series 2 Class B Preferred Stock in respect of which such Average Stock Price is
determined. The closing price for each trading day shall be determined as
provided in the last sentence of Section 3.2.

5.2  Any holder of Series 2 Class B Preferred Stock
(an "Eligible Holder") may at any time commencing forty-five (45) days after the
issuance of any Series 2 Class B Preferred Stock convert up to one hundred
percent (100%) of his holdings of Series 2 Class B Preferred Stock in accordance
with this Part 5.

 

-5-

 

5.3  The conversion right granted by Section 5.2
hereof may be exercised only by an Eligible Holder of Series 2 Class B Preferred
Stock, in whole or in part, by the surrender of the share certificate or share
certificates representing the Series 2 Class B Preferred Stock to be converted
at the principal office of the Corporation (or at such other place as the
Corporation may designate in a written notice sent to the holder by first class
mail, postage prepaid, at its address shown on the books of the Corporation)
against delivery of that number of whole Common Shares as
shall be computed by dividing (1) the aggregate Value of the Series 2 Class B Preferred Stock so surrendered for conversion
plus any accrued but unpaid dividends thereon, if any, by
(2) the Conversion Price in effect at the date of the
conversion. At the time of conversion of a share of the
Series 2 Class B Preferred Stock, the Corporation shall pay in cash to the
holder thereof an amount equal to all unpaid dividends, if any, accrued thereon
to the date of conversion, or, at the Corporation's option, issue that number of
whole Common Shares which is equal to the product of dividing the amount of such
unpaid dividends by the Average Stock Price whether or not declared by the
Board. Each Series 2 Class B Preferred Stock share certificate surrendered for
conversion shall be endorsed by its holder. In the event of any exercise of the
conversion right of the Series 2 Class B Preferred Stock granted herein (i)
share certificate representing the Common Shares purchased by virtue of such
exercise shall be delivered to such holder within three (3) days of notice of
conversion, and (ii) unless the Series 2 Class B Preferred Stock has been fully
converted, a new share certificate representing the Series 2 Class B Preferred
Stock not so converted, if any, shall also be delivered to such holder within
three (3) days of notice of conversion. Any Eligible Holder may exercise its
right to convert the Series 2 Class B Preferred Stock by telecopying an executed
and completed Notice of Conversion to the Corporation, and within seventy-two
(72) hours thereafter, delivering the original Notice of Conversion and the
certificate representing the Series 2 Class B Preferred Stock to the Corporation
by express courier. Each date on which a Notice of Conversion is telecopied to
and received by the Corporation in accordance with the provisions hereof shall
be deemed a conversion date. The Corporation will transmit the Common Shares
certificates issuable upon conversion of any Series 2 Class B Preferred Stock
(together with the certificates representing the Series 2 Class B Preferred
Stock not so converted) to the Eligible Holder via express courier within three
(3) business days after the conversion date if the Corporation has received the
original Notice of Conversion and the Series 2 Class B Shares certificates being
so converted by such date.

5.4  All Common Shares which may be issued upon
conversion of Series 2 Class B Preferred Stock will, upon issuance, be duly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issue thereof. At all times that any Series 2 Class B
Preferred Stock is outstanding, the Corporation shall have authorized, and shall
have reserved for the purpose of issuance upon such conversion, a sufficient
number of Common Shares to provide for the conversion into Common Shares of all
Series 2 Class B Preferred Stock then outstanding at the then effective
Conversion Price. Without limiting the generality of the foregoing, if, at any
time, the Conversion Price is decreased, the number of Common Shares authorized
and reserved for issuance upon the conversion of the Series 2 Class B Preferred
Stock shall be proportionately increased.

 

-6-

 

5.5  The number of Common Shares issued upon
conversion of Series 2 Class B Preferred Stock and the Conversion Price shall be
subject to adjustment from time to time upon the happening of certain events, as
follows:

     5.5.1 In the case of any amendment
to the Articles to change the designation of the Common
Shares 
     or the rights, privileges,
restrictions or conditions in respect of the Common Shares or division of
the
     Common Shares into series the rights of the
holders of the Series 2 Class B Preferred Stock shall
be
     adjusted so as to provide that upon
conversion thereof, the holder of the Series 2 Class B
Preferred 
     Stock being converted shall
procure, in lieu of each Common Share theretofore issuable upon
such
     conversion, the kind and amount of shares,
other securities, money and property receivable upon
such
     designation, change or division by the
holder of one Common Share issuable upon such
conversion 
     had conversion occurred
immediately prior to such designation, change or division. The Series
2 
     Class B Preferred Stock shall be deemed
thereafter to provide for adjustments which shall be
as 
     nearly equivalent as may be
practicable to the adjustments provided for in this Part 5. The
provisions 
     of this subsection 5.5.1 shall
apply in the same manner to successive reclassifications,
changes,
     consolidations, and
mergers. 

     5.5.2 If the Corporation, at any
time while any of the Series 2 Class B Preferred Stock is
outstanding, 
     shall amend the Articles so
as to change the Common Shares into a different number of shares,
the
     Conversion Price shall be proportionately
reduced, in case of such change increasing the number
of
     Common Shares, as of the effective date of
such increase, or if the Corporation shall take a record
of
     holders of its Common Shares for the purpose
of such increase, as of such record date, whichever
is
     earlier, or the Conversion Price shall be
proportionately increased, in the case of such
change 
     decreasing the number of Common
Shares, as of the effective date of such decrease or, if
the 
     Corporation shall take a record of
holders of its Common Stock for the purpose of such
decrease, 
     as of such record date,
whichever is earlier.

     5.5.3 If the Corporation, at any
time while any of the Series 2 Class B Preferred Stock is
outstanding, 
     shall pay a dividend payable
in Common Shares (except for any dividends of Common
Shares 
     payable pursuant to Part 3
hereof), the Conversion Price shall be adjusted, as of the date
the 
     Corporation shall take a record of
the holders of its Common Shares for the purposes of
receiving 
     such dividend (or if no such
record is taken, as of the date of payment of such dividend), to that
price
     determined by multiplying the Conversion
Price therefor in effect by a fraction (1) the numerator
of 
     which shall be the total number of
Common Shares outstanding immediately prior to such
dividend, 
     and (2) the denominator of
which shall be the total number of Common Shares
outstanding 
     immediately after such
dividend (plus in the event that the Corporation paid cash for fractional
shares, 
     the number of additional shares
which would have been outstanding had the Corporation
issued 
     fractional shares in connection
with said dividend).

5.6  Whenever the Conversion Price shall be adjusted
pursuant to Section 5.5 hereof, the Corporation shall make a certificate signed
by its President, or a Vice President and by its Treasurer, Assistant
Treasurer,

 

-7-

 

Secretary or Assistant Secretary, setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board of Directors made any determination hereunder), and the
Conversion Price after giving effect to such adjustment, and shall cause copies
of such certificates to be mailed (by first class mail, postage prepaid) to each
holder of the Series 2 Class B Preferred Stock at its address shown on the books
of the Corporation. The Corporation shall make such certificate and mail it to
each such holder promptly after each adjustment.  

5.7  No fractional Common Shares shall be issued in
connection with any conversion of Series 2 Class B Preferred Stock, but in lieu
of such fractional shares, the Corporation shall make a cash payment therefor
equal in amount to the product of the applicable fraction multiplied by the
Conversion Price then in effect.

5.8 No Series 2 Class B Preferred Stock which has been converted
into Common Shares shall be reissued by the Corporation; provided, however, that
each such share shall be restored to the status of authorized but unissued
Preferred Stock without designation as to series and may thereafter be issued as
a series of Preferred Stock not designated as Series 2 Class B Preferred
Stock.

Part 6 - Parity with Other Shares of Series 2 Class B
Preferred Stock and
Priority.

6.1  If any cumulative dividends or accounts payable
or return of capital in respect of Series 2 Class B Preferred Stock are not paid
in full, the owners of all series of outstanding Preferred Stock shall
participate rateably in respect of accumulated dividends and return of
capital.

6.2  For purposes of this resolution, any stock of any
class or series of the Corporation shall be deemed to rank: 

     6.2.1 Prior or senior to the
shares of this Series 2 Class B Preferred Stock either as to dividends
or 
     upon liquidation, if the holders of
such class or classes shall be entitled to the receipt of
dividends 
     or of amounts distributable
upon dissolution, liquidation or winding up of the Corporation,
whether 
     voluntary or involuntary, as the
case may be, in preference or priority to the holders of shares
of 
     this Series 2 Class B Preferred
Stock;

     6.2.2 On a parity with, or equal
to, shares of this Series 2 Class B Preferred Stock, either as
to 
     dividends or upon liquidation, whether
or not the dividend rates, dividend payment dates,
or 
     redemption or liquidation prices per
share or sinking fund provisions, if any, are different from
those 
     of this Series 2 Class B Preferred
Stock, if the holders of such stock are entitled to the receipt
of 
     dividends or of amounts distributable
upon dissolution, liquidation or winding up of the
Corporation,
     whether voluntary or involuntary,
in proportion to their respective dividend rates or
liquidation 
     prices, without preference or
priority, one over the other, as between the holders of such stock
and 

 

-8-

 

     over the other, as between the
holders of such stock and the holders of shares of this Series
2 
     Class B Preferred Stock;
and,

     6.2.3 Junior to shares of this
Series 2 Class B Preferred Stock, either as to dividends or
upon 
     liquidation, if such class or series
shall be Common Shares or if the holders of shares of this
Series 
     2 Class B Preferred Stock shall be
entitled to receipt of dividends or of amounts
distributable 
     upon dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary, 
     as the case may be, in
preference or priority to the holders of shares of such class or
series.

Part 7 - Amendment.

7.1  In addition to any requirement for a series vote
pursuant to the GCL in respect of any amendment to the
Articles that adversely affects the rights, privileges,
restrictions and conditions of the Series 2 Class B
Preferred Stock, the rights, privileges, restrictions and
conditions attaching to the Series 2 Class B Preferred Stock
may be amended by an amendment to the Corporation's Certificate of Incorporation so as to affect such adversely only if the
Corporation has obtained the affirmative vote at a duly called and held series
meeting of the holders of the Series 2 Class B Preferred Stock or written
consent by the holders of a majority of the Series 2 Class B Preferred Stock
then outstanding. Notwithstanding the above, the number of authorized shares of
such class or classes of stock may be increased or decreased (but not below the
number of shares thereof outstanding) by the affirmative vote of the holders of
a majority of the stock of the Corporation entitled to vote thereon, voting
together as a single class, irrespective of this Section 7.1.

 

 

 

 

-9-

 

 

CERTIFICATE OF DESIGNATIONS
OF SERIES 3 CLASS
C CONVERTIBLE PREFERRED STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES,
INC.

     Perma-Fix Environmental Services,
Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of
Delaware, does hereby certify:

     That, pursuant to authority
conferred upon by the Board of Directors by the Corporation's Restated
Certificate of Incorporation, as amended, and pursuant to the provisions of
Section 151 of the Delaware Corporation Law, the Board of Directors of the
Corporation has adopted resolutions, a copy of which is attached hereto,
establishing and providing for the issuance of a series of Preferred Stock
designated as Series 3 Class C Convertible Preferred Stock and has established
and fixed the voting powers, designations, preferences and relative
participating, optional and other special rights and qualifications, limitations
and restrictions of such Series 3 Class C Convertible Preferred Stock as set
forth in the attached resolutions.

Dated: July 17, 1996

                                                        PERMA-FIX
ENVIRONMENTAL SERVICES, INC.

                                                         By
/s/ Louis F.
Centofanti                                             
                                                              Dr.
Louis F.
Centofanti
                                                              Chairman
of the Board
ATTEST:

/s/ Richard T.
Kelecy                   
Richard
T. Kelecy, Secretary

 

 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(the
"Corporation")

RESOLUTION OF THE BOARD OF
DIRECTORS

FIXING THE NUMBER AND DESIGNATING THE RIGHTS,
PRIVILEGES,
RESTRICTIONS AND CONDITIONS ATTACHING TO THE
SERIES 3 CLASS C
CONVERTIBLE PREFERRED STOCK

WHEREAS,

A.  The Corporation's share capital includes Preferred
Stock, par value $.001 per share
("Preferred 
      Stock"), which
Preferred Stock may be issued in one or more series by the Board of
Directors 
      of the Corporation (the
"Board") being entitled by resolution to fix the number of shares in
each 
      series and to designate the
rights, designations, preferences, and relative, participating,
optional 
      or other special rights,
privileges, restrictions and conditions attaching to the shares of each
such 
      series; and

B.  It is in the best interests of the Corporation for
the Board to create a new series from the
Preferred
     Stock designated as the Series 3
Class C Convertible Preferred Stock, par value $.001.

NOW, THEREFORE, BE IT RESOLVED, THAT:

     The Series 3 Class C Convertible
Preferred Stock, par value $.001 (the "Series 3 Class C
Preferred
     Stock") of the Corporation shall consist of 5,500 shares and no more and shall be designated as the 
     Series
3 Class C Convertible Preferred Stock, and the preferences,
rights, privileges, restrictions 
     and conditions
attaching to the Series 3 Class C Preferred Stock shall be
as follows:

Part 1 - Voting and Preemptive Rights.

1.1  Voting Rights. Except as otherwise
provided herein, in the Corporation's Certificate of Incorporation (the
"Articles") or the General Corporation Law of the State of Delaware (the "GCL"),
the holders of the Series 3 Class C Preferred Stock shall have no voting rights
whatsoever. To the extent that under the GCL the vote of the holders of the
Series 3 Class C Preferred Stock, voting separately as a class or series as
applicable, is required to authorize a given action of the Corporation, the
affirmative vote or consent of the holders of at least a majority of the shares
of the Series 3 Class C Preferred Stock represented at a duly held meeting at
which a quorum is present or by written consent of a majority of the shares of
Series 3 Class C Preferred Stock (except as otherwise may be required under the
GCL) shall constitute the approval of such action by the series. To the extent
that under the GCL the holders of the Series 3 Class C Preferred Stock are
entitled to vote on a matter with holders of Corporation's Common Stock and/or
any other class or series of the Corporation's voting securities, the Series 3
Class C Preferred Stock, the Corporation's Common Stock and all other
classes

 

 

or series of the Corporation's voting securities shall vote
together as one class, with each share of Series 3 Class C Preferred Stock
entitled to a number of votes equal to the number of shares of the Corporation's
Common Stock into which it is then convertible using the record date for the
taking of such vote of stockholders as the date as of which the Conversion Price
(as defined in Section 4.2 hereof) is calculated and conversion is effected.
Holders of the Series 3 Class C Preferred Stock shall be entitled to notice of
(and copies of proxy materials and other information sent to stockholders) for
all shareholder meetings or written consents with respect to which they would be
entitled to vote, which notice would be provided pursuant to the Corporation's
bylaws and applicable statutes.

1.2  No Preemptive Rights. The Series 3
Class C Preferred Stock shall not give its holders any preemptive rights to
acquire any other securities issued by the Corporation at any time in the
future.

Part 2 - Liquidation Rights.

2.1 Liquidation. If the Corporation shall be
voluntarily or involuntarily liquidated, dissolved or wound up at any time when
any shares of the Series 3 Class C Preferred Stock shall be outstanding, the holders of the then outstanding Series 3 Class C
Preferred Stock shall have a preference in distribution of the Corporation's
property available for distribution to the holders of the Corporation's Common
Stock equal to $1,000 consideration per outstanding share of Series 3 Class C
Preferred Stock, plus an amount equal to all unpaid dividends accrued thereon to
the date of payment of such distribution ("Liquidation Preference"), whether or
not declared by the Board.

2.2 Payment of Liquidation Preferences. Subject to
the provisions of Part 6 hereof, all amounts to be paid as Liquidation
Preference to the holders of Series 3 Class C Preferred Stock, as provided in
this Part 2, shall be paid or set apart for payment before the payment or
setting apart for payment of any amount for, or the distribution of any of the
Corporation's property to the holders of the Corporation's Common Stock, whether
now or hereafter authorized, in connection with such liquidation, dissolution or
winding up.

2.3 No Rights After Payment. After the payment to
the holders of the shares of the Series 3 Class C Preferred Stock of the full
Liquidation Preference amounts provided for in this Part 2, the holders of the
Series 3 Class C Preferred Stock as such shall have no right or claim to any of
the remaining assets of the Corporation.

2.4 Assets Insufficient to Pay Full Liquidation
Preference. In the event that the assets of the Corporation available
for distribution to the holders of shares of the Series 3 Class C Preferred
Stock upon any dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, shall be insufficient to pay in full all
amounts to which such holders are entitled pursuant to this Part 2, no such
distribution shall be made on account of any shares of any other class or series
of Preferred Stock ranking on a parity with the shares of this Series 3 Class C
Preferred Stock upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares of
this Series 3 Class C Preferred Stock and shares of such other class or series
ranking on a parity with the shares of this Series 3 Class C Preferred Stock,
ratably, in proportion to the full distributable amounts for which holders of
all such parity shares are respectively entitled upon such dissolution,
liquidation or winding up.

 

-2-

 

Part 3 - Dividends.

3.1 The holders of the Series 3 Class C Preferred Stock
are entitled to receive if, when and as declared by the
Board out of funds legally available therefor, cumulative
dividends, payable in cash or Common Stock of the
Corporation, par value $.001 per share (the "Common Stock"),
at the Corporation's election, at the rate of six percent
(6%) per annum of the Liquidation Value of the Series 3
Class C Preferred Stock. The Liquidation Value of the Series 3 Class C Preferred
Stock shall be $1,000.00 per share (the "Dividend Rate"). The dividend is
payable semi-annually within seven (7) business days after each of December 31
and June 30 of each year, commencing December 31, 1996 (each, a "Dividend
Declaration Date"). Dividends shall be paid only with respect to shares of
Series 3 Class C Preferred Stock actually issued and outstanding on a Dividend
Declaration Date and to holders of record as of the Dividend Declaration Date.
Dividends shall accrue from the first day of the semi-annual period in which
such dividend may be payable, except with respect to the first semi-annual
dividend which shall accrue from the date of issuance of the Series 3 Class C
Preferred Stock. In the event that the Corporation elects to pay dividends in
Common Stock of the Corporation, each holder of the Series 3 Class C Preferred
Stock shall receive shares of Common Stock of the Corporation equal to the
quotient of (i) the Dividend Rate in effect on the applicable Dividend
Declaration Date dividend by (ii) the average of the closing bid quotation of
the Common Stock as reported on the over-the-counter market, or the closing sale
price if listed on a national securities exchange, for the five (5) trading days
immediately prior to the Dividend Declaration Date (the "Stock Dividend Price").
Dividends on the Series 3 Class C Preferred Stock shall be cumulative, and no
dividends or other distributions shall be paid or declared or set aside for
payment on the Common Stock until all accrued and unpaid dividends on all
outstanding shares of Series 3 Class C Preferred Stock shall have been paid or
declared and set aside for payment.

Part 4 - Conversion. The holders of the Series 3
Class C Preferred Stock shall have rights to convert the shares of Series 3
Class C Preferred Stock into shares of the Corporation's Common Stock, par value
$.001 per share ("Common Stock"), as follows (the "Conversion
Rights"):

4.1 Right to Convert. The Series 3 Class C
Preferred Stock shall be convertible into shares of Common Stock, as
follows:

     4.1.1  Up to one
thousand eight hundred thirty-three (1,833) shares of Series 3 Class C
Preferred 
               Stock
may be converted at the Conversion Price (as that term is defined in Section 4.2
below) 
               at
any time on or after October 1, 1996;

 

-3-

 

     4.1.2  Up to one
thousand eight hundred thirty-three (1,833) shares of Series 3 Class C
Preferred 
               Stock
may be converted at the Conversion Price at any time on or after November 1,
1996; and,

     4.1.3  Up to one
thousand eight hundred thirty-four (1,834) shares of Series 3 Class C
Preferred 
               Stock
may be converted at the Conversion Price on or after December 1,
1996.

4.2  Conversion Price. As used herein, the
term Conversion Price shall be the product of (i) the average closing bid
quotation of the Common Stock as reported on the over-the-counter market, or the
closing sale price if listed on a national securities exchange, for the five (5)
trading days immediately preceding the date of the Conversion Notice referred to
in Section 4.3 below multiplied by (ii) seventy-five percent (75%).
Notwithstanding the foregoing, the Conversion Price shall not be (i) less than a
minimum of $.75 per share ("Minimum Conversion Price") or (ii) more than a
maximum of $1.50 per share ("Maximum Conversion Price"). If, after July 1, 1996,
the Corporation sustains a net loss, on a consolidated basis, in each of two (2)
consecutive quarters, as determined under generally accepted accounting
principles, the Minimum Conversion Price shall be reduced $.25 a share, but
there shall be no change to, or reduction of, the Maximum Conversion Price. For
the purpose of determining whether the Corporation has had a net loss in each of
two (2) consecutive quarters, at no time shall a quarter that has already been
considered in such determination be considered in any subsequent determination
(as an example the third quarter of 1996 in which there is a net profit and the
fourth quarter of 1996 in which there is a net loss shall be considered as two
consecutive quarters, and, as a result, the fourth quarter of 1996 shall not be
considered along with the first quarter of 1997 as two (2) consecutive quarters,
but the first quarter of 1997 must be considered with the second quarter of 1997
for the purposes of such determination). For the purposes of this Section 4.2, a
"quarter" is a three (3) month period ending on March 31, June 30, September 30,
and December 31. If any of the outstanding shares of Series 3 Class C Preferred
Stock are converted, in whole or in part, into Common Stock pursuant to the
terms of this Part 4, the number of shares of whole Common Stock to be issued to
the holder as a result of such conversion shall be determined by dividing (a)
the aggregate Liquidation Value of the Series 3 Class C Preferred Stock
so surrendered for conversion by (b) the Conversion Price in
effect at the date of the conversion. At the time of
conversion of shares of the Series 3 Class C Preferred Stock, the Corporation
shall pay in cash to the holder thereof an amount equal to all unpaid and
accrued dividends, if any, accrued thereon to the date of conversion, or, at the
Corporation's option, in lieu of paying cash for the accrued and unpaid
dividends, issue that number of shares of whole Common Stock which is equal to
the product of dividing the amount of such unpaid and accrued dividends to the
date of conversion on the shares of Series 3 Class C Preferred Stock so
converted by the Conversion Price in effect at the date of
conversion.

4.3  Mechanics of Conversion. Any holder
of the Series 3 Class C Preferred Stock who wishes to exercise its Conversion
Rights pursuant to Section 4.1 of this Part 4 must, if such shares are not being
held in escrow by the Corporation's attorneys, surrender the certificate
therefor at the principal executive office of the

 

-4-

 

Corporation, and give written notice, which may be via facsimile
transmission, to the Corporation at such office that it elects to convert the
same (the "Conversion Notice"). In the event that the shares of Series 3 Class C
Preferred Stock are being held in escrow by the Corporation's attorneys, no
delivery of the certificates shall be required. No Conversion Notice with
respect to any shares of Series 3 Class C Preferred Stock can be given prior to
the time such shares of Series 3 Class C Preferred Stock are eligible for
conversion in accordance with the provision of Section 4.1 above.  Any such
premature Conversion Notice shall automatically be null and void. The
Corporation shall, within five (5) business days after receipt of an appropriate
and timely Conversion Notice (and certificate, if necessary), issue to such
holder of Series 3 Class C Preferred Stock or its agent a certificate for the
number of shares of Common Stock to which he shall be entitled; it being
expressly agreed that until and unless the holder delivers written notice to the
Corporation to the contrary, all shares of Common Stock issuable upon conversion
of the Series 3 Class C Preferred Stock hereunder are to be delivered by the
Corporation to a party designated in writing by the holder in the Conversion
Notice for the account of the holder and such shall be deemed valid delivery to
the holder of such shares of Common Stock. Such conversion shall be deemed to
have been made only after both the certificate for the shares of Series 3 Class
C Preferred Stock to be converted have been surrendered and the Conversion
Notice is received by the Corporation (or in the event that no surrender of the
Certificate is required, then only upon the receipt by the Corporation of the
Conversion Notice) (the "Conversion Documents"), and the person or entity whose
name is noted on the certificate evidencing such shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder of
such shares of Common Stock at and after such time. In the event that the
Conversion Notice is sent via facsimile transmission, the Corporation shall be
deemed to have received such Conversion Notice on the first business day on
which such facsimile Conversion Notice is actually received. If the Corporation
fails to deliver to the holder or its agent the certificate representing the
shares of Common Stock that the holder is entitled to receive as a result of
such conversion within five (5) business days after receipt by the Corporation
from the holder of an appropriate and timely Conversion Notice and certificates
pursuant to the terms of this Section 4.3, the Corporation shall pay to the
holder U.S. $1,000 for each day that the Corporation is late in delivering such
certificate to the holder or its agent.

4.4  Adjustments to Conversion Price for Stock
Dividends and for Combinations or Subdivisions of Common Stock. If the
Corporation at any time or from time to time while shares of Series 3 Class C
Preferred Stock are issued and outstanding shall declare or pay, without
consideration, any dividend on the Common Stock payable in Common Stock, or
shall effect a subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by stock split, reclassification or
otherwise than by payment of a dividend in Common Stock or in any right to
acquire Common Stock), or if the outstanding shares of Common Stock shall be
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares of Common Stock, then the Conversion Price in effect immediately
before such event shall, concurrently with the effectiveness of such event, be
proportionately decreased or increased, as appropriate. If the Corporation shall
declare or pay, without consideration, any dividend on the Common Stock payable
in any right to acquire Common stock for no consideration, then the Corporation
shall be deemed to have made a

 

-5-

 

dividend payable in Common Stock in an amount of shares equal to
the maximum number of shares issuable upon exercise of such rights to acquire
Common Stock.

4.5.  Adjustments for Reclassification and
Reorganization. If the Common Stock issuable upon conversion of the
Series 3 Class C Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares provided for in Section 4.4 hereof), the Conversion Price
then in effect shall, concurrently with the effectiveness of such reorganization
or reclassification, be proportionately adjusted so that the Series 3 Class C
Preferred Stock shall be convertible into, in lieu of the number of shares of
Common Stock which the holders of Series 3 Class C Preferred Stock would
otherwise have been entitled to receive, a number of shares of such other class
or classes of stock equivalent to the number of shares of Common Stock that
would have been subject to receipt by the holders upon conversion of the Series
3 Class C Preferred Stock immediately before that change.

4.6  Common Stock Duly Issued. All
Common Stock which may be issued upon conversion of Series 3 Class C Preferred
Stock will, upon issuance, be duly issued, fully paid and nonassessable and free
from all taxes, liens, and charges with respect to the issue thereof.

4.7  Notice of Adjustments. Upon the
occurrence of each adjustment or readjustment of any Conversion Price pursuant
to this Part 4, the Corporation, at its expense, within a reasonable period of
time, shall compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each holder of Series 3 Class C Preferred
Stock a notice setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment is based.

4.8  Issue Taxes. The Corporation shall
pay any and all issue and other taxes that may be payable in
respect of any issue or delivery of shares of Common Stock
on conversion of the Series 3 Class C Preferred Stock
pursuant thereto; provided, however, that the Corporation shall not be obligated
to pay any transfer taxes resulting from any transfer requested by any holder of
Series 3 Class C Preferred Stock in connection with such conversion.

4.9  Reservation of Stock Issuable Upon
Conversion. The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of the shares of the Series 3 Class C
Preferred Stock, such number of its shares of Common Stock as shall, from time
to time, be sufficient to effect the conversion of all outstanding shares of the
Series 3 Class C Preferred stock, and, if at any time, the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of the Series 3 Class C Preferred
Stock, the Corporation will take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes, including, without limitation,
engaging in reasonable efforts to obtain the requisite stockholder approval of
any necessary amendment to its Certificate of Incorporation.

 

-6-

 

4.10  Fractional Shares. No fractional
share shall be issued upon the conversion of any share or shares of Series 3
Class C Preferred Stock. All shares of Common Stock (including fractions
thereof) issuable upon conversion of more than one share of Series 3 Class C
Preferred Stock by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of a fractional share of Common Stock, such fractional
share shall be rounded up to the nearest whole share.

4.11 Notices. Any notices required by the
provisions of this Part 4 to be given to the holders of shares of Series 3 Class
C Preferred Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his address appearing
on the books of the Corporation.

4.12 Business Day. As used herein, the term
"business day" shall mean any day other than a Saturday, Sunday or a day when
the federal and state banks located in the State of New York are required or
permitted to close.

Part 5 - Redemption.

5.1 Redemption During First 180 Days. At any time,
and from time to time, during the first one hundred eighty (180) days from the
date of issuance of the Series 3 Class C Preferred Stock, the Corporation may,
at its sole option, but shall not be obligated to, redeem, in whole or in part,
the then outstanding Series 3 Class C Preferred Stock at a price per share of U.
S. $1,300.00 each ("First Six Months Redemption Price"). The Company may
exercise such redemption by giving the holder of the Series 3 Class C Preferred
Stock written notice of such redemption at any time during such 180-day
period.

5.2  Other Rights of Redemption by the
Corporation. At any time, and from time to time, after one hundred
eighty (180) days from the date of the issuance of any Series 3 Class C
Preferred Stock, if the average of the closing bid price of the Common Stock for
ten (10) consecutive days shall be in excess of $2.50 per share, the Corporation
may, at its sole option, but shall not be obligated to, redeem, in whole or in
part, the then outstanding Series 3 Class C Preferred Stock at a price per share
of U. S. $1,000 each (the "Redemption Price") (such price to be adjusted
proportionately in the event of any change of the Series 3 Class C Preferred
Stock into a different number of shares of Series 3 Class C Preferred
Stock).

5.3 Mechanics of Redemption. Thirty (30) days
prior to any date stipulated by the Corporation for the
redemption of Series 3 Class C Preferred Stock (the "Redemption Date"), written
notice (the "Redemption Notice") shall be mailed to each holder of record on
such notice date of the Series 3 Class C Preferred Stock. The Redemption Notice
shall state: (i) the Redemption Date of such shares, (ii) the number of Series 3
Class C Preferred Stock to be redeemed from the holder to whom the Redemption
Notice is addressed, (iii) instructions for surrender to the Corporation, in the
manner and at the place designated, of a share certificate or share certificates
representing the number of Series 3 Class C Preferred Stock to be redeemed from
such

 

-7-

 

holder, and (iv) instructions as to how to specify to the
Corporation the number of Series 3 Class C Preferred Stock to be redeemed as
provided in this Part 5 and, if the Redemption Notice is mailed to the Holder
after the first one hundred eighty (180) days from the date of issuance of the
Series 3 Class C Preferred Stock, the number of shares to be converted into
Common Stock as provided in Part 4 hereof.

5.4 Rights of Conversion Upon Redemption. If the
redemption occurs pursuant to Section 5.1 hereof, the Holder of the Series 3
Class C Preferred Stock shall not have the right to convert those outstanding
shares of Series 3 Class C Preferred Stock that the Company is redeeming after
receipt of the Redemption Notice. If the redemption occurs pursuant to Section
5.2 hereof, then, upon receipt of the Redemption Notice, any holder of Series 3
Class C Preferred Stock shall have the option, at its sole election, to specify
what portion of its Series 3 Class C Preferred Stock called for redemption in
the Redemption Notice shall be redeemed as provided in this Part 5 or converted
into Common Stock in the manner provided in Part 4 hereof, except that,
notwithstanding any provision of such Part 4 to the contrary, such holder shall
have the right to convert into Common Stock that number of Series 3 Class C
Preferred Stock called for redemption in the Redemption Notice.

5.5  Surrender of Certificates. On or
before the Redemption Date in respect of any Series 3 Class C Preferred Stock,
each holder of such shares shall surrender the required certificate or
certificates representing such shares to the Corporation in the manner and at
the place designated in the Redemption Notice, and upon the Redemption Date, the
Redemption Price for such shares shall be made payable, in the manner provided
in Section 5.5 hereof, to the order of the person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered share
certificate shall be canceled and retired. If a share certificate is surrendered
and all the shares evidenced thereby are not being redeemed (as described
below), the Corporation shall cause the Series 3 Class C Preferred Stock which
are not being redeemed to be registered in the names of the persons or entity
whose names appear as the owners on the respective surrendered share
certificates and deliver such certificate to such person.

5.6  Payment. On the
Redemption Date in respect of any Series 3 Class C Preferred Stock or prior
thereto, the Corporation shall deposit with any bank or trust company having a
capital and surplus of at least U. S. $50,000,000, as a trust fund, a sum equal
to the aggregate First Six Months Redemption Price or the Redemption Price,
whichever is applicable, of all such shares called from redemption (less the
aggregate Redemption Price for those Series 3 Class C Preferred Stock in respect
of which the Corporation has received notice from the holder thereof of its
election to convert Series 3 Class C Preferred Stock into Common Stock), with
irrevocable instructions and authority to the bank or trust company to pay, on
or after the Redemption Date, the First Six Months Redemption Price or the
Redemption Price, whichever is applicable, to the respective holders upon the
surrender of their share certificates. The deposit shall constitute full payment
for the shares to their holders, and from and after the date of the deposit the
redeemed shares shall be deemed to be no longer outstanding, and holders thereof
shall cease to be shareholders with respect to such shares and shall have no
rights with respect thereto except the rights to receive from the bank or trust
company payments of the

 

-8-

 

First Six Months Redemption Price or the Redemption Price,
whichever is applicable, of the shares, without interest, upon surrender of
their certificates thereof. Any funds so deposited and unclaimed at the end of
one year following the Redemption Date shall be released or repaid to the
Corporation, after which the former holders of shares called for redemption
shall be entitled to receive payment of the First Six Months Redemption Price or
the Redemption Price, whichever is applicable, in respect of their shares only
from the Corporation.

Part 6 - Parity with Other Shares of Series 3 Class C
Preferred Stock and Priority.

6.1  Rateable Participation. If any
cumulative dividends or return of capital in respect of Series 3 Class C
Preferred Stock are not paid in full, the owners of all series of outstanding
Preferred Stock shall participate rateably in respect of accumulated dividends
and return of capital.

6.2  Ranking. For purposes of this
resolution, any stock of any class or series of the Corporation shall be deemed
to rank:

      6.2.1  Prior or
senior to the shares of this Series 3 Class C Preferred Stock either as to
dividends 
                or
upon liquidation, if the holders of such class or classes shall be entitled to
the receipt
of 
                dividends
or of amounts distributable upon dissolution, liquidation or winding up of
the 
                Corporation,
whether voluntary or involuntary, as the case may be, in preference or
priority 
                to
the holders of shares of this Series 3 Class C Preferred Stock;

     6.2.2  On a parity with,
or equal to, shares of this Series 3 Class C Preferred Stock, either as
to 
               dividends
or upon liquidation, whether or not the dividend rates, dividend payment dates,
or
               redemption
or liquidation prices per share or sinking fund provisions, if any, are
different
from 
               those
of this Series 3 Class C Preferred Stock, if the holders of such stock are
entitled to
the 
               receipt
of dividends or of amounts distributable upon dissolution, liquidation or
winding up of
the
               Corporation,
whether voluntary or involuntary, in proportion to their respective dividend
rates
or
               liquidation
prices, without preference or priority, one over the other, as between the
holders
of 
               such
stock and over the other, as between the holders of such stock and the holders
of
shares 
               of
this Series 3 Class C Preferred Stock; and,

     6.2.3  Junior to shares
of this Series 3 Class C Preferred Stock, either as to dividends or
upon 
               liquidation,
if such class or series shall be Common Stock or if the holders of shares of
this 
               Series
3 Class C Preferred Stock shall be entitled to receipt of dividends or of
amounts 
               distributable
upon dissolution, liquidation or winding up of the Corporation, whether
voluntary
               or
involuntary, as the case may be, in preference or priority to the holders of
shares of
such 
               class
or series.

 

 

-9-

 

Part 7 - Amendment and Reissue.

7.1  Amendment. If any proposed
amendment to the Corporation's Certificate of Incorporation would alter or
change the powers, preferences or special rights of the Series 3 Class C
Preferred Stock so as to affect such adversely, then the Corporation must obtain
the affirmative vote of such amendment to the Certificate of Incorporation at a
duly called and held series meeting of the holders of the Series 3 Class C
Preferred Stock or written consent by the holders of a majority of the Series 3
Class C Preferred Stock then outstanding. Notwithstanding the above, the number
of authorized shares of any class or classes of stock may be increased or
decreased (but not below the number of shares thereof outstanding) by the
affirmative vote of the holders of a majority of the stock of the Corporation
entitled to vote thereon, voting together as a single class, irrespective of
this Section 7.1 or the requirements of Section 242 of the GCL.

7.2  Authorized. Any shares of Series 3
Class C Preferred Stock acquired by the Corporation by
reason of purchase, conversion, redemption or otherwise
shall be retired and shall become authorized but unissued
shares of Preferred Stock, which may be reissued as part of
a new series of Preferred Stock hereafter created.
 
 

 

 

 

 

-10-

 

CERTIFICATE OF ELIMINATION
OF
SERIES I
CLASS A PREFERRED STOCK
AND
SERIES 2 CLASS B CONVERTIBLE PREFERRED
STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES,
INC.
____________________________________________

     PERMA-FIX ENVIRONMENTAL
SERVICES, INC., a corporation organized and existing under
the Delaware General Corporation Law of the State of
Delaware (hereinafter called the "Corporation"), hereby
certifies the following: 

     1.  That the Certificate
of Designations of Series I Class A Preferred Stock of the
Corporation (the "Series I Preferred") was filed on February
6, 1996 (the "Series I Certificate of Designations").

     2.  That
all outstanding shares of the Series I Preferred have been converted into shares
of common stock of the Company pursuant to the terms and conditions of the
Series I Certificate of Designations.

     3.  That no shares of
Series I Preferred remain
outstanding.

     4.  That all shares
of the Series I Preferred which have been converted have the status of
authorized and unissued shares of the Preferred Stock of the Corporation without
designation as to series, until such shares are once more designated as part of
a particular series by the Board of Directors.

     5. That on September 19, 1996, the
Board of Directors of the company duly adopted the following
resolution:

          RESOLVED,
that no authorized shares of Series I Class A Preferred
Stock remain
outstanding
         
and no shares of Series I Class A Preferred Stock will be issued subject to the Certificate
of 
          Designation
previously filed with respect to the Series I Class A
Preferred Stock.

     6.  That the Certificate
of Designations of the Series 2 Class B Convertible Preferred Stock of the
Corporation (the "Series 2 Preferred") was filed on February 20, 1996 (the
"Series 2 Certificate of Designations").

     7.  That all outstanding
shares of the Series 2 Preferred have been converted into shares of common stock
of the Company pursuant to the terms and conditions of the Series 2 Certificate
of Designations.

 

 

 

     8. That no shares of Series 2
Preferred remain outstanding.

     9.  That all shares of
the Series 2 Preferred which have been converted have the
status of authorized and unissued shares of the Preferred
Stock of the Corporation without designation as to series,
until such shares are once more designated as part of a particular series by the Board of Directors.

     10.  That on September 19,
1996, the Board of Directors of the company duly adopted the
following resolution:

          RESOLVED,
that no authorized shares of Series 2 Class B Preferred
Stock remain
outstanding
          and no shares of Series 2 Class B Convertible Preferred Stock will be issued subject to the 
          Certificate
of Designation previously filed with respect to the Series 2
Class B Convertible 
          Preferred
Stock.

     11.  That pursuant to
the provisions of Section 151(g) of the Delaware General
Corporation Law, upon the effective date of the filing of
this Certificate, this Certificate will have the effect of
eliminating from the Restated Certificate of Incorporation only those matters set forth in the Restated Certificate of Incorporation with respect to the Series I Class A Preferred Stock
and the Series 2 Class B Convertible Preferred Stock.

     IN WITNESS WHEREOF, this
Certificate of Elimination has been executed this 4th day of December, 1996, by
the President of the Company.

                                                                             PERMA-FIX
ENVIRONMENTAL
ATTEST:                                                              SERVICES,
INC.

/s/
Richard T. Kelecy
                                            By
/s/ Louis
Centofanti                              
Richard
T. Kelecy,
Secretary                                      Dr.
Louis F.
Centofanti,
                                                                                   President

 

 

 

 

-2-

 

 

CERTIFICATE OF AMENDMENT
OF
RESTATED
CERTIFICATE OF INCORPORATION
OF
PERMA-FIX ENVIRONMENTAL SERVICES,
INC.
___________________________________________

     Perma-Fix Environmental Services,
Inc., a Delaware corporation (the "Corporation"), for
purposes of amending its Restated Certificate of
Incorporation, as amended ("Restated Certificate of
Incorporation"), as provided by Section 242 of the Delaware
General Corporation Law, does hereby certify: 

     1.  The amendment set
forth below to the Corporation's Restated Certificate of
Incorporation was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of
the State of Delaware:

          The
first paragraph of Article Fourth of the Corporation's
Restated Certificate of Incorporation is hereby deleted and
replaced in its entirety by the following:

          The
total number of shares of capital stock that the Corporation shall have
authority to
issue
          is
52,000,000, of which 50,000,000 shall be designated as common stock of the par
value 
          of
$.001 per share ("Common Stock") and 2,000,000 shall be designated as preferred
stock
          of the par
value of $.001 per share ("Preferred Stock").

     2.  Only the first
paragraph of Article Fourth is amended by this Amendment,
and the remainder of Article Fourth shall remain in full
force and effect. No other provision, paragraph or article of the Restated Certificate of Incorporation is amended or changed by
this Amendment. The Restated Certificate of Incorporation,
as expressly amended by paragraph 1 of this Amendment, shall
be in full force and effect.

     3.  At a meeting of the
Board of Directors held on the 19th day of September, 1996,
a resolution was duly adopted setting forth the foregoing
proposed amendment to the first paragraph of Article Fourth
of the Restated Certificate of Incorporation, declaring such amendment to be advisable and setting the next Annual Meeting of
Stockholders for consideration thereof.
     4.  Thereafter, pursuant to said
resolution of its Board of Directors, the Annual Meeting of
Stockholders was duly called and held on December 12, 1996,
at which meeting the necessary number of shares as required
by statute were voted in favor of such amendment.
 

 

 

     IN WITNESS whereof, Perma-Fix
Environmental Services, Inc. has caused this Certificate to
be signed and attested to by its duly authorized officers as
of this 16th day of December, 1996.

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

                                                                                         By:
/s/Louis F.
Centofanti                       
                                                                                                Dr. Louis F.
Centofanti
                                                                                                President
and
                                                                                                Chief Executive Officer

ATTEST:

/s/ Richard T.
Kelecy                       
Richard
T. Kelecy,
Secretary

 

 

 

 

-2-

 

CERTIFICATE OF DESIGNATIONS
OF SERIES 4 CLASS
D CONVERTIBLE PREFERRED STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES,
INC.

     Perma-Fix Environmental Services,
Inc. (the "Corporation"), a corporation organized and existing under the General
Corporation Law of the State of Delaware, does hereby
certify:

     That, pursuant to authority
conferred upon by the Board of Directors by the Corporation's Restated
Certificate of Incorporation, as amended, and pursuant to the provisions of
Section 151 of the Delaware Corporation Law, the Board of Directors of the
Corporation has adopted resolutions, a copy of which is attached hereto,
establishing and providing for the issuance of a series of Preferred Stock
designated as Series 4 Class D Convertible Preferred Stock and has established
and fixed the voting powers, designations, preferences and relative
participating, optional and other special rights and qualifications, limitations
and restrictions of such Series 4 Class D Convertible Preferred Stock as set
forth in the attached resolutions.

Dated: June 9,
1997                                                   PERMA-FIX
ENVIRONMENTAL
                                                                                  SERVICES, INC.

                                                                                  By
/s/ Louis
Centofanti                              
                                                                                        Dr.
Louis F.
Centofanti
                                                                                        Chairman of the Board

ATTEST:

/s/ Richard T.
Kelecy                            
Richard
T. Kelecy, Secretary

 

 

 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(the
"Corporation")

RESOLUTION OF THE BOARD OF DIRECTORS

FIXING THE
NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,
RESTRICTIONS AND CONDITIONS
ATTACHING TO THE
SERIES 4 CLASS C CONVERTIBLE PREFERRED
STOCK

      WHEREAS, the
Corporation's capital includes preferred stock, par value
$.001 per share ("Preferred Stock"), which Preferred Stock
may be issued in one or more series by resolutions adopted by the directors, and with the directors being entitled by resolution
to fix the number of shares in each series and to designate
the rights, designations, preferences and relative,
participating, optional or other special rights and
privileges, restrictions and conditions attaching to the
shares of each such series;

     WHEREAS, it is in the best
interests of the Corporation for the Board to create a new
series from the Preferred Stock designated as the Series 4
Class D Convertible Preferred Stock, par value $.001 per
share ("Series 4 Class D Preferred
Stock");

     NOW, THEREFORE, BE IT
RESOLVED, that the Series 4 Class D Convertible Preferred Stock, par value
$.001 (the "Series 4 Class D Preferred Stock") of the Corporation shall consist
of two thousand five hundred (2,500) shares and no more and shall be designated
as the Series 4 Class D Convertible Preferred Stock, and the preferences,
rights, privileges, restrictions and conditions attaching to the Series 4 Class
D Preferred Stock shall be as follows:

Part 1 - Voting and Preemptive Rights.

1.1  Voting Rights. Except as otherwise
provided in Part 7 hereof or under the General Corporation
Law of the State of Delaware (the "GCL"), the holders of the
Series 4 Class D Preferred Stock shall have no voting rights
whatsoever. To the extent that under Part 7 hereof or the GCL the vote of the
holders of the Series 4 Class D Preferred Stock, voting separately as a class or
series as applicable, is required to authorize a given action of the
Corporation, the affirmative vote or consent of the holders of at least a
majority of the shares of the Series 4 Class D Preferred Stock represented at a
duly held meeting at which a quorum is present or by written consent of a
majority of the shares of Series 4 Class D Preferred Stock (except as otherwise
may be required under the GCL) shall constitute the approval of such action by
the series. To the extent that under the GCL or Part 7 hereof, the holders of
the Series 4 Class D Preferred Stock are entitled to vote on a matter, each
share of the Series 4 Class D Preferred Stock shall be entitled one (1) vote for
each outstanding share of Series 4 Class D Preferred Stock. Holders of the
Series 4 Class D Preferred Stock shall be entitled to notice of (and copies of
proxy materials and other information sent to stockholders) for all shareholder
meetings or

 

-2-

 

written consents with respect to which they would be entitled to
vote, which notice would be provided pursuant to the Corporation's bylaws and
applicable statutes.

1.2  No Preemptive Rights. The Series 4
Class D Preferred Stock shall not give its holders any
preemptive rights to acquire any other securities issued by
the Corporation at any time in the future.

Part 2 - Liquidation Rights.

2.1  Liquidation. If the Corporation
shall be voluntarily or involuntarily liquidated, dissolved
or wound up at any time when any shares of the Series 4
Class D Preferred Stock shall be outstanding, the holders of
the then outstanding Series 4 Class D Preferred Stock shall
have a preference in distribution of the Corporation's
property available for distribution to the holders of the
Corporation's Common Stock equal to $1,000 consideration per outstanding share of Series 4 Class D Preferred Stock, plus an
amount equal to all unpaid dividends accrued thereon to the date
of payment of such distribution ("Liquidation Preference"),
whether or not declared by the Board.

2.2  Payment of Liquidation Preferences.
Subject to the provisions of Part 6 hereof, all amounts to
be paid as Liquidation Preference to the holders of Series 4
Class D Preferred Stock, as provided in this Part 2, shall
be paid or set apart for payment before the payment or
setting apart for payment of any amount for, or the distribution of any of the Corporation's property to the holders
of the Corporation's Common Stock, whether now or
hereafter authorized, in connection with such liquidation,
dissolution or winding up.

2.3 No Rights After Payment. After the payment to
the holders of the shares of the Series 4 Class D Preferred
Stock of the full Liquidation Preference amounts provided
for in this Part 2, the holders of the Series 4 Class D
Preferred Stock as such shall have no right or claim to any
of the remaining assets of the Corporation.

2.4  Assets Insufficient to Pay Full Liquidation
Preference. In the event that the assets of the Corporation available
for distribution to the holders of shares of the Series 4 Class D Preferred
Stock upon any dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, shall be insufficient to pay in full all
amounts to which such holders are entitled pursuant to this Part 2, no such
distribution shall be made on account of any shares of any other class or series
of Preferred Stock ranking on a parity with the shares of this Series 4 Class D
Preferred Stock upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares of
this Series 4 Class D Preferred Stock and shares of such other class or series
ranking on a parity with the shares of this Series 4 Class D Preferred Stock,
ratably, in proportion to the full distributable amounts for which holders of
all such parity shares are respectively entitled upon such dissolution,
liquidation or winding up.

 

-3-

 

Part 3 - Dividends.

3.1  The holders of the Series 4 Class D Preferred
Stock are entitled to receive if, when and as declared by the Board out of funds
legally available therefor, cumulative dividends, payable in cash or Common
Stock of the Corporation, par value $.001 per share (the "Common Stock"), or any
combination thereof, at the Corporation's election, at the rate of four percent
(4%) per annum of the Liquidation Value (as defined below) of each issued and
outstanding share of Series 4 Class D Preferred Stock (the "Dividend Rate"). The
Liquidation Value of the Series 4 Class D Preferred Stock shall be $1,000 per
outstanding share of the Series 4 Class D Preferred Stock (the "Liquidation
Value"). The dividend is payable semi-annually within seven (7) business days
after each of December 31 and June 30 of each year, commencing December 31, 1997
(each, a "Dividend Declaration Date"). Dividends shall be paid only with respect
to shares of Series 4 Class D Preferred Stock actually issued and outstanding on
a Dividend Declaration Date and to holders of record of the Series 4 Class D
Preferred Stock as of the Dividend Declaration Date. Dividends shall accrue from
the first day of the semi-annual period in which such dividend may be payable,
except with respect to the first semi-annual dividend which shall accrue from
the date of issuance of the Series 4 Class D Preferred Stock. In the event that
the Corporation elects to pay the accrued dividends due as of a Dividend
Declaration Date on an outstanding share of the Series 4 Class D Preferred Stock
in Common Stock of the Corporation, the holder of such share shall receive that
number of shares of Common Stock of the Corporation equal to the product of (a)
the quotient of (i) the Dividend Rate divided by (ii) the average of the closing
bid quotation of the Corporation's Common Stock as reported on the National
Association of Securities Dealers Automated Quotation system ("NASDAQ"), or the
average closing sale price if listed on a national securities exchange, for the
five (5) trading days immediately prior to the Dividend Declaration Date (the
"Stock Dividend Price"), times (b) a fraction, the numerator of which is the
number of days elapsed during the period for which the dividend is to be paid,
and the denominator of which is 365. Dividends on the Series 4 Class D Preferred
Stock shall be cumulative, and no dividends or other distributions shall be paid
or declared or set aside for payment on the Corporation's Common Stock until all
accrued and unpaid dividends on all outstanding shares of Series 4 Class D
Preferred Stock shall have been paid or declared and set aside for
payment.

Part 4 - Conversion. The holders of the Series 4
Class D Preferred Stock shall have rights to convert the shares of Series 4
Class D Preferred Stock into shares of the Corporation's Common Stock, par value
$.001 per share ("Common Stock"), as follows (the "Conversion
Rights"):

4.1  Right to Convert. The Series 4
Class D Preferred Stock shall be convertible into shares of
Common Stock, as follows: 

     4.1.1  Up to one
thousand two hundred fifty (1,250) shares of Series 4 Class
D Preferred Stock
may 
                be
converted at the Conversion Price (as that term is defined in Section 4.2 below) at any
time 
                on
or after October 5, 1997; and,

 

-4-

 

     4.1.2  Up to an
additional one thousand two hundred fifty (1,250) shares of
Series 4 Class
D 
               Preferred
Stock may be converted at the Conversion Price at any
time on or after November
5,
               1997.

4.2  Conversion Price. Subject to the
terms hereof, as used herein, the term Conversion Price per
outstanding share of Series 4 Class D Preferred Stock shall
be the product of the lesser of (i) the average closing bid
quotation of the Common Stock as reported on the
over-the-counter market, or the closing sale price if listed
on a national securities exchange, for the five (5) trading
days immediately preceding the date of the Conversion Notice
referred to in Section 4.3 below multiplied by eighty
percent (80%) or (ii) U.S. $1.6875. Notwithstanding the
foregoing, the Conversion Price shall not be less than a
minimum of $.75 per share ("Minimum Conversion Price"),
which Minimum Conversion Price shall be eliminated from and
after September 6, 1998. If any of the outstanding shares of
Series 4 Class D Preferred Stock are converted, in whole or
in part, into Common Stock pursuant to the terms of this
Part 4, the number of shares of whole Common Stock to be issued to the holder as a result of such conversion shall be determined by dividing (a) the aggregate Liquidation Value of
the Series 4 Class D Preferred Stock so surrendered for
conversion by (b) the Conversion Price in effect at the date
of the conversion. At the time of conversion of shares of
the Series 4 Class D Preferred Stock, the Corporation shall
pay in cash to the holder thereof an amount equal to all
unpaid and accrued dividends, if any, accrued thereon to the
date of conversion, or, at the Corporation's option, in lieu
of paying cash for the accrued and unpaid dividends, issue
that number of shares of whole Common Stock which is equal
to the quotient of the amount of such unpaid and accrued
dividends to the date of conversion on the shares of Series
4 Class D Preferred Stock so converted divided by the Stock
Dividend Price, as defined in Section 3.1 hereof, in effect
at the date of conversion.

4.3 Mechanics of Conversion. Any holder of the
Series 4 Class D Preferred Stock who wishes to exercise its Conversion Rights
pursuant to Section 4.1 of this Part 4 must, if such shares are not being held
in escrow by the Corporation's attorneys, surrender the certificate therefor at
the principal executive office of the Corporation, and give written notice,
which may be via facsimile transmission, to the Corporation at such office that
it elects to convert the same (the "Conversion Notice"). In the event that the
shares of Series 4 Class D Preferred Stock are being held in escrow by the
Corporation's attorneys, no delivery of the certificates shall be required. No
Conversion Notice with respect to any shares of Series 4 Class D Preferred Stock
can be given prior to the time such shares of Series 4 Class D Preferred Stock
are eligible for conversion in accordance with the provision
of Section 4.1 above, except as provided in Section 4.4. Any such premature
Conversion Notice shall automatically be null and void. The Corporation shall,
within five (5) business days after receipt of an appropriate and timely
Conversion Notice (and certificate, if necessary), issue to such holder of
Series 4 Class D Preferred Stock or its agent a certificate for the number of
shares of Common Stock to which he shall be entitled; it being expressly agreed
that until and unless the holder delivers written notice to the Corporation
to

 

-5-

 

the contrary, all shares of Common Stock issuable upon
conversion of the Series 4 Class D Preferred Stock hereunder are to be delivered
by the Corporation to a party designated in writing by the holder in the
Conversion Notice for the account of the holder and such shall be deemed valid
delivery to the holder of such shares of Common Stock. Such conversion shall be
deemed to have been made only after both the certificate for the shares of
Series 4 Class D Preferred Stock to be converted have been surrendered and the
Conversion Notice is received by the Corporation (or in the event that no
surrender of the Certificate is required, then only upon the receipt by the
Corporation of the Conversion Notice) (the "Conversion Documents"), and the
person or entity whose name is noted on the certificate evidencing such shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder of such shares of Common Stock at and after such time. In
the event that the Conversion Notice is sent via facsimile transmission, the
Corporation shall be deemed to have received such Conversion Notice on the first
business day on which such facsimile Conversion Notice is actually received. If
the Corporation fails to deliver to the holder or its agent the certificate
representing the shares of Common Stock that the holder is entitled to receive
as a result of such conversion within seven (7) business days after receipt by
the Corporation from the holder of an appropriate and timely Conversion Notice
and certificates pursuant to the terms of this Section 4.3 ("Seven (7) Business
Day Period"), then, upon the written demand of RBB Bank Aktiengesellschaft ("RBB
Bank"), the holder of the Series 4 Class D Preferred Stock, for payment of the
penalty described below in this Section 4.3, which demand must be received by
the Corporation no later than ten (10) calendar days after the expiration of
such Seven (7) Business Day Period, the Corporation shall pay to RBB Bank the
following penalty for each business day after the Seven (7) Business Day Period
until the Corporation delivers to the holder or its agent the certificate
representing the shares of Common Stock that the holder is entitled to receive
as a result of such conversion: business day eight (8) -
U.S. $1,000; business day nine (9) - U.S. $2,000, and each business day
thereafter an amount equal to the penalty due on the
immediately preceding business day times two (2) until the
Corporation delivers to the holder or its agent the
certificate representing the shares of Common Stock that the
holder is entitled to receive as a result of such
conversion.

4.4  Merger or Consolidation. In case of
either (a) any merger or consolidation to which the
Corporation is a party (collectively, the "Merger"), other
than a Merger in which the Corporation is the surviving or
continuing corporation, or (b) any sale or conveyance to
another corporation of all, or substantially all, of the
assets of the Corporation (collectively, the "Sale"), and
such Merger or Sale becomes effective (x) while any shares
of Series 4 Class D Preferred Stock are outstanding and
prior to the date that the Corporation's Registration
Statement covering up to 1,482,000 shares of Common Stock
issuable upon the conversion of the Series 4 Class D
Preferred Stock is declared effective by the U. S.
Securities and Exchange Commission or (y) prior to the end
of the restriction periods in Section 4.1, then, in such event, the Corporation or such successor corporation, as the case may be, shall make appropriate provision so that the holder of each share of Series 4

 

-6-

 

Class D Preferred Stock then outstanding
shall have the right to convert such share of Series 4 Class
D Preferred Stock into the kind and amount of shares of
stock or other securities and property receivable upon such Merger or Sale by a
holder of the number of shares of Common Stock into which
such shares of Series 4 Class D Preferred Stock could have
been converted into immediately prior to such Merger or
Sale, subject to adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided
for in this Part 4.

4.4  Adjustments to Conversion Price for
Stock  Dividends and for Combinations or Subdivisions of
Common Stock. If the Corporation at any time or from time to time while shares
of Series 4 Class D Preferred Stock are issued and outstanding shall declare or
pay, without consideration, any dividend on the Common Stock payable in Common
Stock, or shall effect a subdivision of the outstanding shares of Common Stock
into a greater number of shares of Common Stock (by stock split,
reclassification or otherwise than by payment of a dividend in Common Stock or
in any right to acquire Common Stock), or if the outstanding shares of Common
Stock shall be combined or consolidated, by reclassification or otherwise, into
a lesser number of shares of Common Stock, then the Conversion Price in effect
immediately before such event shall, concurrently with the effectiveness of such
event, be proportionately decreased or increased, as appropriate.

4.5.  Adjustments for Reclassification and
Reorganization. If the Common Stock issuable upon conversion of the
Series 4 Class D Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares provided for in Section 4.4 hereof), the Conversion Price
then in effect shall, concurrently with the effectiveness of such reorganization
or reclassification, be proportionately adjusted so that the Series 4 Class D
Preferred Stock shall be convertible into, in lieu of the number of shares of
Common Stock which the holders of Series 4 Class D Preferred Stock would
otherwise have been entitled to receive, a number of shares of such other class
or classes of stock equivalent to the number of shares of Common Stock that
would have been subject to receipt by the holders upon conversion of the Series
4 Class D Preferred Stock immediately before that change.
4.6  Common Stock Duly Issued. All Common Stock
which may be issued upon conversion of Series 4 Class D
Preferred Stock will, upon issuance, be duly issued, fully
paid and nonassessable and free from all taxes, liens, and
charges with respect to the issue thereof.
4.7  Notice of Adjustments. Upon the
occurrence of each adjustment or readjustment of any Conversion Price pursuant
to this Part 4, the Corporation, at its expense, within a reasonable period of
time, shall compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each holder of Series 4 Class D Preferred
Stock a notice setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment is based.

 

-7-

 

4.8  Issue Taxes. The Corporation shall
pay any and all issue and other taxes that may be payable in
respect of any issue or delivery of shares of Common Stock
on conversion of the Series 4 Class D Preferred Stock
pursuant thereto; provided, however, that the Corporation
shall not be obligated to pay any transfer taxes resulting
from any transfer requested by any holder of Series 4 Class
D Preferred Stock in connection with such
conversion.

4.9  Reservation of Stock Issuable Upon
Conversion. The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of the shares of the Series 4 Class D
Preferred Stock, such number of its shares of Common Stock as shall, from time
to time, be sufficient to effect the conversion of all outstanding shares of the
Series 4 Class D Preferred stock, and, if at any time, the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of the Series 4 Class D Preferred
Stock, the Corporation will take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes, including, without limitation,
engaging in reasonable efforts to obtain the requisite stockholder approval of
any necessary amendment to its Certificate of Incorporation.

4.10  Fractional Shares. No fractional
shares shall be issued upon the conversion of any share or
shares of Series 4 Class D Preferred Stock. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share of
Series 4 Class D Preferred Stock by a holder thereof shall be aggregated for
purposes of determining whether the conversion would result in the issuance of
any fractional share. If, after the aforementioned aggregation, the conversion
would result in the issuance of a fractional share of Common Stock, such
fractional share shall be rounded up to the nearest whole share.

4.11  Notices. Any notices required by
the provisions of this Part 4 to be given to the holders of
shares of Series 4 Class D Preferred Stock shall be deemed
given if deposited in the United States mail, postage
prepaid, and addressed to each holder of record at his
address appearing on the books of the Corporation.

4.12  Business Day. As used herein, the
term "business day" shall mean any day other than a
Saturday, Sunday or a day when the federal and state banks
located in the State of New York are required or is
permitted to close.

Part 5 - Redemption.

5.1  Redemption at Corporation's Option. Except as
otherwise provided in this Section 5.1, at any time, and
from time to time, after the expiration of one (1) year from
the date of the first issuance of the Series 4 Class
D

 

-8-

 

Preferred Stock, the Corporation may, at its
sole option, but shall not be obligated to, redeem, in whole
or in part, at any time, and from time to time, the then
outstanding Series 4 Class D Preferred Stock at the
following cash redemption prices per share (the "Redemption
Price") if redeemed during the following periods: (a) within
four (4) years from the date of the first issuance of Series
4 Class D Preferred Stock - $1,300 per share, if at any time
during such four (4) year period the average of the closing
bid price of the Common Stock for ten (10) consecutive
trading days shall be in excess of Four U.S. Dollars ($4.00)
per share, and (b) after four (4) years from the date of the
first issuance of Series 4 Class D Preferred Stock - $1,000
per share.

5.3  Mechanics of Redemption. Thirty
(30) days prior to any date stipulated by the Corporation for the redemption of
Series 4 Class D Preferred Stock (the "Redemption Date"), written notice (the
"Redemption Notice") shall be mailed to each holder of record on such notice
date of the Series 4 Class D Preferred Stock. The Redemption Notice shall state:
(i) the Redemption Date of such shares, (ii) the number of Series 4 Class D
Preferred Stock to be redeemed from the holder to whom the Redemption Notice is
addressed, (iii) instructions for surrender to the Corporation, in the manner
and at the place designated, of a share certificate or share certificates
representing the number of Series 4 Class D Preferred Stock to be redeemed from
such holder, and (iv) instructions as to how to specify to the Corporation the
number of Series 4 Class D Preferred Stock to be redeemed as provided in this
Part 5 and, if the Redemption Notice is mailed to the Holder after the first one
hundred eighty (180) days from the date of issuance of the Series 4 Class D
Preferred Stock, the number of shares to be converted into Common Stock as
provided in Part 4 hereof.

5.4  Rights of Conversion Upon
Redemption. If the redemption occurs after the first
one hundred eighty (180) days after the first issuance of Series 4 Class D
Preferred Stock, then, upon receipt of the Redemption Notice, any holder of
Series 4 Class D Preferred Stock shall have the option, at its sole election, to
specify what portion of its Series 4 Class D Preferred Stock called for
redemption in the Redemption Notice shall be redeemed as provided in this Part 5
or converted into Common Stock in the manner provided in Part 4 hereof, except
that, notwithstanding any provision of such Part 4 to the contrary, such holder
shall have the right to convert into Common Stock that number of Series 4 Class
D Preferred Stock called for redemption in the Redemption Notice.

5.5  Surrender of Certificates. On or
before the Redemption Date in respect of any Series 4 Class D Preferred Stock,
each holder of such shares shall surrender the required certificate or
certificates representing such shares to the Corporation in the manner and at
the place designated in the Redemption Notice, and upon the Redemption Date, the
Redemption Price for such shares shall be made payable, in the manner provided
in Section 5.6 hereof, to the order of the person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered share
certificate shall be canceled and retired. If a share certificate is

 

-9-

 

surrendered and all the shares evidenced thereby are not being
redeemed (as described below), the Corporation shall cause the Series 4 Class D
Preferred Stock which are not being redeemed to be registered in the names of
the persons or entity whose names appear as the owners on the respective
surrendered share certificates and deliver such certificate to such
person.

5.6  Payment.  On the
Redemption Date in respect of any Series 4 Class D Preferred
Stock or prior thereto, the Corporation shall deposit with any bank or trust
company having a capital and surplus of at least U. S. $50,000,000, as a trust
fund, a sum equal to the aggregate Redemption Price of all such shares called
from redemption (less the aggregate Redemption Price for those Series 4 Class D
Preferred Stock in respect of which the Corporation has received notice from the
holder thereof of its election to convert Series 4 Class D Preferred Stock into
Common Stock), with irrevocable instructions and authority to the bank or trust
company to pay, on or after the Redemption Date, the Redemption Price to the
respective holders upon the surrender of their share certificates. The deposit
shall constitute full payment for the shares to their holders, and from and
after the date of the deposit the redeemed shares shall be deemed to be no
longer outstanding, and holders thereof shall cease to be shareholders with
respect to such shares and shall have no rights with respect thereto except the
rights to receive from the bank or trust company payments of the Redemption
Price of the shares, without interest, upon surrender of their certificates
thereof. Any funds so deposited and unclaimed at the end of one year following
the Redemption Date shall be released or repaid to the Corporation, after which
the former holders of shares called for redemption shall be entitled to receive
payment of the Redemption Price in respect of their shares only from the
Corporation. 

Part 6 - Parity with Other Shares of Series 4 Class D
Preferred Stock and Priority.

6.1  Rateable Participation. If any
cumulative dividends or return of capital in respect of Series 4 Class D
Preferred Stock are not paid in full, the owners of all series of outstanding
Preferred Stock shall participate rateably in respect of accumulated dividends
and return of capital.

6.2  Ranking.  For purposes of
this resolution, any stock of any class or series of the Corporation shall be
deemed to rank:      

     6.2.1  Prior or senior
to the shares of this Series 4 Class D Preferred Stock either as to dividends
or 
               upon
liquidation, if the holders of such class or classes shall be entitled to the
receipt of
dividends
              
or of amounts distributable upon dissolution, liquidation or winding up of the
Corporation, 
               whether
voluntary or involuntary, as the case may be, in preference or priority to the
holders 
               of
shares of this Series 4 Class D Preferred Stock;

 

-10-

 
     6.2.2  On a
parity with, or equal to, shares of this Series 4 Class D
Preferred Stock, either as to dividends
              
or upon liquidation, whether or not the dividend rates, dividend payment dates,
or redemption
or
               
liquidation prices per share or sinking fund provisions, if any, are different
from those of
this 
                Series
4 Class C Preferred Stock, if the holders of such stock are entitled to the
receipt
of 
                dividends
or of amounts distributable upon dissolution, liquidation or winding up of
the 
                Corporation,
whether voluntary or involuntary, in proportion to their respective dividend
rates
               
or liquidation prices, without preference or priority, one over the other, as
between the holders 
                of
such stock and over the other, as between the holders of such stock and
the holders of
shares 
                of
this Series 4 Class D Preferred Stock; and,
6.2.3 Junior to shares of this Series 4 Class D Preferred Stock,
either as to dividends or upon liquidation, if such class or series shall be
Common Stock or if the holders of shares of this Series 4 Class D Preferred
Stock shall be entitled to receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, whether voluntary or
involuntary, as the case may be, in preference or priority to the holders of
shares of such class or series.

Part 7 - Amendment and Reissue.

7.1  Amendment. If any proposed amendment to
the Corporation's Certificate of Incorporation (the
"Articles") would alter or change the powers, preferences or
special rights of the Series 4 Class D Preferred Stock so as to affect such
adversely, then the Corporation must obtain the affirmative vote of such
amendment to the Articles at a duly called and held series
meeting of the holders of the Series 4 Class D Preferred Stock or written consent by the holders of a majority of the Series 4 Class D
Preferred Stock then outstanding. Notwithstanding the above
or the provisions of the GCL, the number of authorized shares of any class or
classes of stock of the Corporation may be increased or
decreased (but not below the number of shares thereof outstanding) by the affirmative vote of the holders of a majority of the stock of the
Corporation entitled to vote thereon, voting together as a
single class, irrespective of the provisions of this Section 7.1 or Section 242
of the GCL.

7.2  Authorized. Any shares of Series 4
Class D Preferred Stock acquired by the Corporation by reason of purchase,
conversion, redemption or otherwise shall be retired and shall become authorized
but unissued shares of Preferred Stock, which may be reissued as part of a new
series of Preferred Stock hereafter created. 

 

-11

CERTIFICATE OF DESIGNATIONS
OF SERIES 5 CLASS
E CONVERTIBLE PREFERRED STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES,
INC.

     Perma-Fix Environmental Services,
Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of
Delaware, does hereby certify:

     That, pursuant to authority
conferred upon by the Board of Directors by the
Corporation's Restated Certificate of Incorporation, as
amended, and pursuant to the provisions of Section 151 of
the Delaware Corporation Law, the Board of Directors of the
Corporation has adopted resolutions, a copy of which is attached hereto, establishing and providing for the issuance of a
series of Preferred Stock designated as Series 5 Class E
Convertible Preferred Stock and has established and fixed
the voting powers, designations, preferences and
relative participating, optional and other special rights
and qualifications, limitations and restrictions of such
Series 5 Class E Convertible Preferred Stock as set forth in
the attached resolutions.

Dated: July 3,
1997                                         PERMA-FIX
ENVIRONMENTAL
                                                                      SERVICES, INC.

                                                                       By
/s/ Louis
Centofanti                                           
                                                                             Dr. Louis F.
Centofanti
                                                                             Chairman
of the Board
ATTEST:

/s/
Richard T.
Kelecy                             
Richard T. Kelecy, Secretary

 

 

 

PERMA-FIX ENVIRONMENTAL SERVICES,
INC.
(the "Corporation")

RESOLUTION OF THE
BOARD OF DIRECTORS

FIXING THE NUMBER AND DESIGNATING THE RIGHTS,
PRIVILEGES,
RESTRICTIONS AND CONDITIONS ATTACHING TO THE
SERIES 5 CLASS E
CONVERTIBLE PREFERRED STOCK

     WHEREAS, the Corporation's
capital includes preferred stock, par value $.001 per share
("Preferred Stock"), which Preferred Stock may be issued in
one or more series by resolutions adopted by the directors,
and with the directors being entitled by resolution to fix
the number of shares in each series and to designate the rights, designations, preferences and relative, participating,
optional or other special rights and privileges, and qualifications, limitations or restrictions attaching to the
shares of each such series;

     WHEREAS, it is in the best
interests of the Corporation for the Board to create a new series from the
Preferred Stock designated as the Series 5 Class E Convertible Preferred Stock,
par value $.001 per share ("Series 5 Class E Preferred Stock"); 

     NOW, THEREFORE, BE IT
RESOLVED, that the Series 5 Class E Convertible Preferred Stock, par value
$.001 (the "Series 5 Class E Preferred Stock") of the Corporation shall consist
of three hundred fifty (350) shares and no more and shall be designated as the
Series 5 Class E Convertible Preferred Stock, and the preferences, rights,
privileges, restrictions and conditions attaching to the Series 5 Class E
Preferred Stock shall be as follows:

Part 1 - Voting and Preemptive Rights.

1.1  Voting Rights. Except as otherwise
provided in Section 242(b)(2) of the General Corporation Law
of the State of Delaware (the "GCL"), the holders of the
Series 5 Class E Preferred Stock shall have no voting rights
whatsoever. To the extent that under Section 242(b)(2) of
the GCL the vote of the holders of the Series 5 Class E
Preferred Stock, voting separately as a class or series as
applicable, is required to authorize a given action of the Corporation, the affirmative vote or consent of the holders of at
least a majority of the shares of the Series 5 Class E
Preferred Stock represented at a duly held meeting at which
a quorum is present or by written consent of a majority of
the shares of Series 5 Class E Preferred Stock (except as otherwise may be
required under the GCL) shall constitute the approval of such action by the
series. To the extent that under Section 242(b)(2) of the GCL the holders of the
Series 5 Class E Preferred Stock are entitled to vote on a matter, each share of
the Series 5 Class E Preferred Stock shall be entitled one (1) vote for each
outstanding share of Series 5 Class E Preferred Stock. Holders of the Series 5
Class E Preferred Stock shall be entitled to

 

-2-

 

notice of (and copies of proxy materials and other information
sent to stockholders) for all shareholder meetings or written consents with
respect to which they would be entitled to vote, which notice would be provided
pursuant to the Corporation's bylaws and applicable statutes. If the holders of
the Series 5 Class E Preferred Stock are required to vote under Section
242(b)(2) of the GCL as a result of the number of authorized shares of any such
class or classes of stock being increased or decreased, the number of authorized
shares of any of such class or classes of stock may be increased or decreased
(but not below the number of shares thereof then outstanding) by the affirmative
vote of the holders of a majority of the stock of the Corporation entitled to
vote thereon, irrespective of the provisions of Section 242(b)(2) of the
GCL.

1.2  No Preemptive Rights. The Series 5
Class E Preferred Stock shall not give its holders any
preemptive rights to acquire any other securities issued by
the Corporation at any time in the future.

Part 2 - Liquidation Rights.

2.1  Liquidation. If the Corporation
shall be voluntarily or involuntarily liquidated, dissolved
or wound up at any time when any shares of the Series 5
Class E Preferred Stock shall be outstanding, the holders of
the then outstanding Series 5 Class E Preferred Stock shall
be entitled to receive out of the assets of the Corporation
available for distribution to shareholders an amount equal
to $1,000 consideration per outstanding share of Series 5
Class E Preferred Stock, and no more, plus an amount equal to all unpaid dividends accrued thereon to the date of payment of
such distribution ("Liquidation Preference"), whether or not
declared by the Board of Directors, before any payment shall
be made or any assets distributed to the holders of the
Corporation's Common Stock.

2.2  Payment of Liquidation Preferences.
Subject to the provisions of Part 6 hereof, all amounts to
be paid as Liquidation Preference to the holders of Series 5
Class E Preferred Stock, as provided in this Part 2, shall
be paid or set apart for payment before the payment or
setting apart for payment of any amount for, or the distribution of any of the Corporation's property to the holders
of the Corporation's Common Stock, whether now or
hereafter authorized, in connection with such liquidation,
dissolution or winding up.

2.3  No Rights After Payment. After the
payment to the holders of the shares of the Series 5 Class E
Preferred Stock of the full Liquidation Preference amounts
provided for in this Part 2, the holders of the Series 5
Class E Preferred Stock as such shall have no right or claim
to any of the remaining assets of the Corporation.

2.4  Assets Insufficient to Pay Full Liquidation
Preference. In the event that the assets of the
Corporation available for distribution to the holders of shares of the Series 5
Class E Preferred Stock upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, shall be insufficient to pay in
full all amounts to which such holders are entitled pursuant to this Part 2, no
such distribution shall be made on account of any shares of any other class or
series of Preferred Stock ranking on a parity with the shares of this Series 5
Class E Preferred Stock upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares of
this Series 5 Class E Preferred Stock and shares of such other class or series
ranking on a parity with the shares of this Series 5 Class E Preferred Stock,
ratably, in proportion to the full distributable amounts for which holders of
all such parity shares are respectively entitled upon such dissolution,
liquidation or winding up.

 

-3-

 

Part 3 - Dividends.

3.1  The holders of the Series 5 Class E Preferred
Stock are entitled to receive if, when and as declared by the Board of Directors
of the Corporation (the "Board") out of funds legally available therefor,
cumulative annual dividends, payable in cash or Common Stock of the Corporation,
par value $.001 per share (the "Common Stock"), or any combination thereof, at
the Corporation's election, at the rate of four percent (4%) per annum of the
Liquidation Value (as defined below) of each issued and outstanding share of
Series 5 Class E Preferred Stock (the "Dividend Rate"). The Liquidation Value of
the Series 5 Class E Preferred Stock shall be $1,000 per outstanding share of
the Series 5 Class E Preferred Stock (the "Liquidation Value"). The dividend is
payable semi-annually within seven (7) business days after each of December 31
and June 30 of each year, commencing December 31, 1997 (each, a "Dividend
Declaration Date"). Dividends shall be paid only with respect to shares of
Series 5 Class E Preferred Stock actually issued and outstanding on a Dividend
Declaration Date and to holders of record of the Series 5 Class E Preferred
Stock as of the Dividend Declaration Date. Dividends shall accrue from the first
day of the semi-annual period in which such dividend may be payable, except with
respect to the first semi-annual dividend which shall accrue from the date of
issuance of the Series 5 Class E Preferred Stock. In the event that the
Corporation elects to pay the accrued dividends due as of a Dividend Declaration
Date on an outstanding share of the Series 5 Class E Preferred Stock in Common
Stock of the Corporation, the holder of such share shall receive that number of
shares of Common Stock of the Corporation equal to the product of (a) the
quotient of (i) the Dividend Rate divided by (ii) the average of the closing bid
quotation of the Corporation's Common Stock as reported on the National
Association of Securities Dealers Automated Quotation system ("NASDAQ"), or the
average closing sale price if listed on a national securities exchange,
for the five (5) trading days immediately prior to the
Dividend Declaration Date (the "Stock Dividend Price"),
times (b) a fraction, the numerator of which is the number
of days elapsed during the period for which the dividend is
to be paid, and the denominator of which is 365. Dividends
on the Series 5 Class E Preferred Stock shall be cumulative,
and no dividends or other distributions shall be paid or
declared or set aside for payment on the Corporation's
Common Stock until all accrued and unpaid dividends on all
outstanding shares of Series 5 Class E Preferred Stock shall
have been paid or declared and set aside for payment.

 

-4-

 

Part 4 - Conversion. The holders of the Series 5
Class E Preferred Stock shall have rights to convert the
shares of Series 5 Class E Preferred Stock into shares of
the Corporation's Common Stock, as follows (the "Conversion
Rights"):

4.1 Right to Convert. The Series 5 Class E
Preferred Stock shall be convertible into shares of Common
Stock, as follows:

      4.1.1  Up to one
hundred seventy-five (175) shares of Series 5 Class E
Preferred Stock may
be 
                converted
at the Conversion Price (as that term is defined in Section 4.2 below) at any
time 
                on
or after November 3, 1997; and,

     4.1.2  Up to an
additional one hundred seventy-five (175) shares of Series 5 Class E Preferred
Stock
                may
be converted at the Conversion Price at any time on or after December 3,
1997.

4.2  Conversion Price. Subject to the
terms hereof, as used herein, the term Conversion Price per
outstanding share of Series 5 Class E Preferred Stock shall
be the product of the lesser of (i) the average closing bid
quotation of the Common Stock as reported on the over-the-counter market, or the
closing sale price if listed on a national securities exchange, for the five (5)
trading days immediately preceding the date of the Conversion Notice referred to
in Section 4.3 below multiplied by eighty percent (80%) or (ii) U.S. $1.6875.
Notwithstanding the foregoing, the Conversion Price shall not be less than a
minimum of $.75 per share ("Minimum Conversion Price"), which Minimum Conversion
Price shall be eliminated from and after September 6, 1998. If any of the
outstanding shares of Series 5 Class E Preferred Stock are converted, in whole
or in part, into Common Stock pursuant to the terms of this Part 4, the number
of shares of whole Common Stock to be issued to the holder as a result of such
conversion shall be determined by dividing (a) the aggregate Liquidation Value
of the Series 5 Class E Preferred Stock so surrendered for conversion by (b) the
Conversion Price in effect at the date of the conversion. At the time of
conversion of shares of the Series 5 Class E Preferred Stock, the Corporation
shall pay in cash to the holder thereof an amount equal to all unpaid and
accrued dividends, if any, accrued thereon to the date of conversion, or, at the
Corporation's option, in lieu of paying cash for the accrued and unpaid
dividends, issue that number of shares of whole Common Stock which is equal to
the quotient of the amount of such unpaid and accrued dividends to the date of
conversion on the shares of Series 5 Class E Preferred Stock so converted
divided by the Stock Dividend Price, as defined in Section 3.1 hereof, in effect
at the date of conversion.

4.3  Mechanics of Conversion. Any holder
of the Series 5 Class E Preferred Stock who wishes to exercise its Conversion
Rights pursuant to Section 4.1 of this Part 4 must surrender the certificate
therefor at the principal executive office of the Corporation, and give written
notice, which may be via facsimile transmission,

 

-5-

 

to the Corporation at such office that it elects to convert the
same (the "Conversion Notice"). No Conversion Notice with respect to any shares
of Series 5 Class E Preferred Stock can be given prior to the time such shares
of Series 5 Class E Preferred Stock are eligible for conversion in accordance
with the provision of Section 4.1 above, except as provided in Section 4.4. Any
such premature Conversion Notice shall automatically be null and void. The
Corporation shall, within seven (7) business days after receipt of an
appropriate and timely Conversion Notice (and certificate, if necessary), issue
to such holder of Series 5 Class E Preferred Stock or its agent a certificate
for the number of shares of Common Stock to which he shall be entitled; it being
expressly agreed that until and unless the holder delivers written notice to the
Corporation to the contrary, all shares of Common Stock issuable upon conversion
of the Series 5 Class E Preferred Stock hereunder are to be delivered by the
Corporation to a party designated in writing by the holder in the Conversion
Notice for the account of the holder and such shall be deemed valid delivery to
the holder of such shares of Common Stock. Such conversion shall be deemed to
have been made only after both the certificate for the shares of Series 5 Class
E Preferred Stock to be converted have been surrendered and the Conversion
Notice is received by the Corporation (the "Conversion Documents"), and the
person or entity whose name is noted on the certificate evidencing such shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder of such shares of Common Stock at and after such time. In
the event that the Conversion Notice is sent via facsimile transmission, the
Corporation shall be deemed to have received such Conversion Notice on the first
business day on which such facsimile Conversion Notice is actually
received.

4.4  Merger or
Consolidation.  In case of either (a) any merger or
consolidation to which the Corporation is a party (collectively, the "Merger"), other than a Merger in which the
Corporation is the surviving or continuing corporation, or
(b) any sale or conveyance to another corporation of all,
or substantially all, of the assets of the
Corporation (collectively, the "Sale"), and such Merger or
Sale becomes effective (x) while any shares of Series 5
Class E Preferred Stock are outstanding and prior to the
date that the Corporation's Registration Statement covering
up to 200,000 shares of Common Stock issuable upon the
conversion of the Series 5 Class E Preferred Stock is
declared effective by the U. S. Securities and Exchange
Commission or (y) prior to the end of the restriction
periods in Section 4.1, then, in such event, the Corporation
or such successor corporation, as the case may be, shall
make appropriate provision so that the holder of each share
of Series 5 Class E Preferred Stock then outstanding shall
have the right to convert such share of Series 5 Class E
Preferred Stock into the kind and amount of shares of stock
or other securities and property receivable upon such Merger
or Sale by a holder of the number of shares of Common Stock
into which such shares of Series 5 Class E Preferred Stock
could have been converted into immediately prior to such
Merger or Sale, subject to adjustments which shall be as
nearly equivalent as may be practicable to the adjustments
provided for in this Part 4.

 

-6-

 

4.4  Adjustments to Conversion Price for Stock
Dividends and for Combinations or Subdivisions
of Common Stock. If the Corporation at any time or
from time to time while shares of Series 5 Class E Preferred Stock are issued
and outstanding shall declare or pay, without consideration, any dividend on the
Common Stock payable in Common Stock, or shall effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of Common
Stock (by stock split, reclassification or otherwise than by payment of a
dividend in Common Stock or in any right to acquire Common Stock), or if the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
then the Conversion Price in effect immediately before such event shall,
concurrently with the effectiveness of such event, be proportionately decreased
or increased, as appropriate.
4.5.  Adjustments for Reclassification and
Reorganization. If the Common Stock issuable upon conversion of the
Series 5 Class E Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares provided for in Section 4.4 hereof), the Conversion Price
then in effect shall, concurrently with the effectiveness of such reorganization
or reclassification, be proportionately adjusted so that the Series 5 Class E
Preferred Stock shall be convertible into, in lieu of the number of shares of
Common Stock which the holders of Series 5 Class E Preferred Stock would
otherwise have been entitled to receive, a number of shares of such other class
or classes of stock equivalent to the number of shares of Common Stock that
would have been subject to receipt by the holders upon conversion of the Series
5 Class E Preferred Stock immediately before that change.
4.6  Common Stock Duly Issued. All
Common Stock which may be issued upon conversion of Series 5 Class E Preferred
Stock will, upon issuance, be duly issued, fully paid and nonassessable and free
from all taxes, liens, and charges with respect to the issue thereof.

4.7  Notice of Adjustments. Upon the
occurrence of each adjustment or readjustment of any Conversion Price pursuant
to this Part 4, the Corporation, at its expense, within a reasonable period of
time, shall compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each holder of Series 5 Class E Preferred
Stock a notice setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment is based.

4.8  Issue Taxes. The Corporation shall
pay any and all issue and other taxes that may be payable in respect of any
issue or delivery of shares of Common Stock on conversion of the Series 5 Class
E Preferred Stock pursuant thereto; provided, however, that the Corporation
shall not be obligated to pay any transfer taxes resulting from any transfer
requested by any holder of Series 5 Class E Preferred Stock in connection with
such conversion.

 

-7-

 

4.9  Reservation of Stock Issuable Upon
Conversion. The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of the shares of the Series 5 Class E
Preferred Stock, such number of its shares of Common Stock as shall, from time
to time, be sufficient to effect the conversion of all outstanding shares of the
Series 5 Class E Preferred stock, and, if at any time, the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of the Series 5 Class E Preferred
Stock, the Corporation will take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes, including, without limitation,
engaging in reasonable efforts to obtain the requisite stockholder approval of
any necessary amendment to its Certificate of Incorporation.

4.10  Fractional Shares. No fractional
shares shall be issued upon the conversion of any share or
shares of Series 5 Class E Preferred Stock. All shares of
Common Stock (including fractions thereof) issuable upon
conversion of more than one share of Series 5 Class E
Preferred Stock by a holder thereof shall be aggregated for
purposes of determining whether the conversion would result
in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in
the issuance of a fractional share of Common Stock, such
fractional share shall be rounded up to the nearest whole
share.

4.11 Notices. Any notices required by the
provisions of this Part 4 to be given to the holders of
shares of Series 5 Class E Preferred Stock shall be deemed
given if deposited in the United States mail, postage
prepaid, and addressed to each holder of record at his
address appearing on the books of the Corporation.

4.12  Business Day. As used herein, the
term "business day" shall mean any day other than a
Saturday, Sunday or a day when the federal and state banks
located in the State of New York are required or is
permitted to close.

Part 5 - Redemption.

5.1  Redemption at Corporation's Option.
Except as otherwise provided in this Section 5.1, at any time, and from time to
time, after the expiration of one (1) year from the date of the first issuance
of the Series 5 Class E Preferred Stock, the Corporation may, at its sole
option, but shall not be obligated to, redeem, in whole or in part, at any time,
and from time to time, the then outstanding Series 5 Class E Preferred Stock at
the following cash redemption prices per share (the "Redemption Price") if
redeemed during the following periods: (a) within four (4) years from the date
of the first issuance of Series 5 Class E Preferred Stock - $1,300 per share, if
at any time during such four (4) year period the average of the closing bid
price of the Common Stock for ten (10) consecutive trading days shall be in
excess of Four U.S. Dollars ($4.00) per share, and (b) after four (4) years from
the date of the first issuance of Series 5 Class E Preferred Stock - $1,000 per
share.

 

-8-

 

5.3  Mechanics of Redemption. Thirty
(30) days prior to any date stipulated by the Corporation
for the redemption of Series 5 Class E Preferred Stock (the
"Redemption Date"), written notice (the "Redemption Notice")
shall be mailed to each holder of record on such notice date
of the Series 5 Class E Preferred Stock. The Redemption
Notice shall state: (i) the Redemption Date of such shares, (ii) the number of
Series 5 Class E Preferred Stock to be redeemed from the holder to whom the
Redemption Notice is addressed, (iii) instructions for surrender to the
Corporation, in the manner and at the place designated, of a share certificate
or share certificates representing the number of Series 5 Class E Preferred
Stock to be redeemed from such holder, and (iv) instructions as to how to
specify to the Corporation the number of Series 5 Class E Preferred Stock to be
redeemed as provided in this Part 5.

5.4  Rights of Conversion Upon
Redemption. If the redemption occurs after the first one hundred eighty
(180) days after the first issuance of Series 5 Class E Preferred Stock, then,
upon receipt of the Redemption Notice, any holder of Series 5 Class E Preferred
Stock shall have the option, at its sole election, to specify what portion of
its Series 5 Class E Preferred Stock called for redemption in the Redemption
Notice shall be redeemed as provided in this Part 5 or converted into Common
Stock in the manner provided in Part 4 hereof.

5.5 Surrender of Certificates. On or before the
Redemption Date in respect of any Series 5 Class E Preferred
Stock, each holder of such shares shall surrender the required certificate or
certificates representing such shares to the Corporation in the manner and at
the place designated in the Redemption Notice, and upon the Redemption Date, the
Redemption Price for such shares shall be made payable, in the manner provided
in Section 5.6 hereof, to the order of the person whose name appears on such
certificate or certificates as the owner thereof. If a share certificate is
surrendered and all the shares evidenced thereby are not being redeemed (as
described below), the Corporation shall cause the Series 5 Class E Preferred
Stock which are not being redeemed to be registered in the names of the persons
or entity whose names appear as the owners on the respective surrendered share
certificates and deliver such certificate to such person.

5.6  Payment. On the Redemption Date in
respect of any Series 5 Class E Preferred Stock or prior
thereto, the Corporation shall deposit with any bank or trust company having a
capital and surplus of at least U. S. $50,000,000, as a trust fund, a sum equal
to the aggregate Redemption Price of all such shares called from redemption
(less the aggregate Redemption Price for those Series 5 Class E Preferred Stock
in respect of which the Corporation has received notice from the holder thereof
of its election to convert Series 5 Class E

 

-9-

 

Preferred Stock into Common Stock), with irrevocable
instructions and authority to the bank or trust company to pay, on or after the
Redemption Date, the Redemption Price to the respective holders upon the
surrender of their share certificates. The deposit shall constitute full payment
for the shares to their holders, and from and after the date of the deposit the
redeemed shares shall be deemed to be no longer outstanding, and holders thereof
shall cease to be shareholders with respect to such shares and shall have no
rights with respect thereto except the rights to receive from the bank or trust
company payments of the Redemption Price of the shares, without interest, upon
surrender of their certificates thereof. Any funds so deposited and unclaimed at
the end of one year following the Redemption Date shall be released or repaid to
the Corporation, after which the former holders of shares called for redemption
shall be entitled to receive payment of the Redemption Price in respect of their
shares only from the Corporation.

Part 6 - Parity with Other Shares of Series 5 Class E
Preferred Stock and Priority.

6.1  Rateable Participation. If any
cumulative dividends or return of capital in respect of Series 5 Class E
Preferred Stock are not paid in full, the owners of all series of outstanding
Preferred Stock shall participate rateably in respect of accumulated dividends
and return of capital.

6.2  Ranking. For purposes of this
resolution, any stock of any class or series of the Corporation shall be deemed
to rank:

     6.2.1  Prior or senior
to the shares of this Series 5 Class E Preferred Stock either as to
dividends
               or
upon liquidation, if the holders of such class or classes
shall be entitled to the receipt
of 
               dividends
or of amounts distributable upon dissolution, liquidation or winding up of
the 
               Corporation,
whether voluntary or involuntary, as the case may be, in preference or
priority 
               to
the holders of shares of this Series 5 Class E Preferred Stock;

     6.2.2  On a parity with,
or equal to, shares of this Series 5 Class E Preferred Stock, either as
to 
               dividends
or upon liquidation, whether or not the dividend rates, dividend payment
dates, 
               or
redemption or liquidation prices per share or sinking fund provisions, if any,
are
different 
               from
those of this Series 5 Class E Preferred Stock, if the holders of such stock are
entitled 
               to
the receipt of dividends or of amounts distributable upon dissolution,
liquidation or
winding 
               up
of the Corporation, whether voluntary or involuntary, in proportion to their
respective 
               dividend
rates or liquidation prices, without preference or priority, one over the other,
as 
               between
the holders of such stock and over the other, as between the holders of such
stock 
               and
the holders of shares of this Series 5 Class E Preferred Stock; and,

 

-10-

 

     6.2.3  Junior to shares
of this Series 5 Class E Preferred Stock, either as to dividends or
upon 
               liquidation,
if such class or series shall be Common Stock or if the holders of shares of
this 
               Series
5 Class E Preferred Stock shall be entitled to receipt of dividends or of
amounts 
               distributable
upon dissolution, liquidation or winding up of the Corporation, whether
voluntary
               or
involuntary, as the case may be, in preference or priority to the holders of
shares of
such 
               class
or series.

Part 7 - Reissue.

7.1  Authorized. Any shares of Series 5
Class E Preferred Stock acquired by the Corporation by reason of purchase,
conversion, redemption or otherwise shall be retired and shall become authorized
but unissued shares of Preferred Stock, which may be reissued as part of a new
series of Preferred Stock hereafter created.

 

 

 

 

 

 

 

-11-

 

CERTIFICATE OF DESIGNATIONS
OF SERIES 6 CLASS
F CONVERTIBLE PREFERRED STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES,
INC.

     Perma-Fix Environmental Services,
Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of
Delaware, does hereby certify:

     That, pursuant to authority
conferred upon by the Board of Directors by the
Corporation's Restated Certificate of Incorporation, as
amended, and pursuant to the provisions of Section 151 of
the Delaware Corporation Law, the Board of Directors of the
Corporation has adopted resolutions, a copy of which is attached hereto, establishing and providing for the issuance of a
series of Preferred Stock designated as Series 6 Class F
Convertible Preferred Stock and has established and fixed
the voting powers, designations, preferences and
relative participating, optional and other special rights
and qualifications, limitations and restrictions of such
Series 6 Class F Convertible Preferred Stock as set forth in
the attached resolutions.

Dated: November 12,
1997

                                                                                     PERMA-FIX
ENVIRONMENTAL
                                                                                     SERVICES,
INC.

                                                                                     By /s/ Louis
Centofanti                          
                                                                                           Dr. Louis F. Centofanti
                                                                                           Chairman
of the Board

ATTEST:

/s/ Richard T.
Kelecy                            
Richard
T. Kelecy, Secretary

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(the
"Corporation")

RESOLUTION OF THE BOARD OF DIRECTORS

FIXING THE
NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,
RESTRICTIONS AND CONDITIONS
ATTACHING TO THE
SERIES 6 CLASS F CONVERTIBLE PREFERRED
STOCK

     WHEREAS, the Corporation's
capital includes preferred stock, par value $.001 per share
("Preferred Stock"), which Preferred Stock may be issued in
one or more series by resolutions adopted by the directors,
and with the directors being entitled by resolution to fix
the number of shares in each series and to designate the rights, designations, preferences and relative, participating,
optional or other special rights and privileges, restrictions
and conditions attaching to the shares of each such
series;
     WHEREAS, it
is in the best interests of the Corporation for the Board to
create a new series from the Preferred Stock designated as
the Series 6 Class F Convertible Preferred Stock, par value
$.001 per share (the "Series 6 Class F Preferred
Stock");

     NOW,
THEREFORE, BE IT RESOLVED, that the Series 6 Class F Preferred Stock shall consist of two thousand five hundred (2,500)
shares and no more and shall be designated as the Series 6 Class
F Convertible Preferred Stock, and the preferences,
rights, privileges, restrictions and conditions attaching to
the Series 6 Class F Preferred Stock shall be as
follows:
Part 1 - Voting and Preemptive Rights.

1.1  Voting Rights.  Except as
otherwise provided in Part 7 hereof or under the General
Corporation Law of the State of Delaware (the "GCL"), the
holders of the Series 6 Class F Preferred Stock shall have
no voting rights whatsoever. To the extent that under Part 7
hereof or the GCL the vote of the holders of the Series 6
Class F Preferred Stock, voting separately as a class or
series as applicable, is required to authorize a given
action of the Corporation, the affirmative vote or consent
of the holders of at least a majority of the shares of
the Series 6 Class F Preferred Stock represented at a
duly held meeting at which a quorum is present or by
written consent of a majority of the shares of Series 6
Class F Preferred Stock (except as otherwise may be
required under the GCL) shall constitute the approval of
such action by the series. To the extent that under the GCL or Part 7 hereof, the holders of the Series 6 Class F Preferred Stock are entitled to vote on a matter, each share of the Series 6 Class F Preferred Stock shall be entitled one (1) vote for each outstanding share of Series 6 Class F Preferred Stock. Holders of the Series 6 Class F Preferred Stock shall be entitled to notice of (and copies of proxy materials and other information sent to stockholders) for all shareholder meetings or

 

-1-

 

written consents with respect to which they would be entitled
to vote, which notice would be provided pursuant to
the Corporation's bylaws and applicable statutes.

1.2  No Preemptive Rights. The Series 6
Class F Preferred Stock shall not give its holders any
preemptive rights to acquire any other securities issued by
the Corporation at any time in the future.

Part 2 - Liquidation Rights.

2.1  Liquidation.  If the
Corporation shall be voluntarily or involuntarily
liquidated, dissolved or wound up at any time when any
shares of the Series 6 Class F Preferred Stock shall be
outstanding, the holders of the then outstanding Series 6
Class F Preferred Stock shall have a preference in
distribution of the Corporation's property available for
distribution to the holders of the Corporation's Common
Stock equal to $1,000 consideration per outstanding share of
Series 6 Class F Preferred Stock, plus an amount equal to
all unpaid dividends accrued thereon to the date of payment
of such distribution ("Liquidation Preference"), whether or
not declared by the Board.

2.2  Payment of Liquidation Preferences.
Subject to the provisions of Part 6 hereof, all amounts to be paid as
Liquidation Preference to the holders of Series 6 Class F Preferred Stock, as
provided in this Part 2, shall be paid or set apart for payment before the
payment or setting apart for payment of any amount for, or the distribution of
any of the Corporation's property to the holders of the Corporation's Common
Stock, whether now or hereafter authorized, in connection with such liquidation,
dissolution or winding up.

2.3  No Rights After Payment. After the
payment to the holders of the shares of the Series 6 Class F Preferred Stock of
the full Liquidation Preference amounts provided for in this Part 2, the holders
of the Series 6 Class F Preferred Stock as such shall have no right or claim to
any of the remaining assets of the Corporation.

2.4  Assets Insufficient to Pay Full Liquidation
Preference. In the event that the assets of the Corporation available
for distribution to the holders of shares of the Series 6 Class F Preferred
Stock upon any dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, shall be insufficient to pay in full all
amounts to which such holders are entitled pursuant to this Part 2, no such
distribution shall be made on account of any shares of any other class or series
of Preferred Stock ranking on a parity with the shares of this Series 6 Class F
Preferred Stock upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares of
this Series 6 Class F Preferred Stock and shares of such other class or series
ranking on a parity with the shares of this Series 6 Class F Preferred
Stock,

 

-2-

 

ratably, in proportion to the full distributable amounts for
which holders of all such parity shares are respectively entitled upon such
dissolution, liquidation or winding up.

Part 3 - Dividends. The holders of the Series 6
Class F Preferred Stock are entitled to receive if, when and
as declared by the Board out of funds legally
available therefor, cumulative dividends, payable in cash or
Common Stock of the Corporation, par value $.001 per share
(the "Common Stock"), or any combination thereof, at
the Corporation's election, at the rate of four percent
(4%) per annum of the Liquidation Value (as defined below)
of each issued and outstanding share of Series 6 Class
F Preferred Stock (the "Dividend Rate"). The
Liquidation Value of the Series 6 Class F Preferred Stock
shall be $1,000 per outstanding share of the Series 6 Class
F Preferred Stock (the "Liquidation Value"). The
dividend is payable semi-annually within seven (7) business
days after each of December 31 and June 30 of each
year, commencing December 31, 1997 (each, a "Dividend
Declaration Date"). Dividends shall be paid only with respect to shares of Series 6 Class F Preferred Stock actually issued and outstanding on a Dividend Declaration Date and to holders of record of the Series 6 Class F Preferred Stock as of the Dividend Declaration Date. Dividends shall accrue from the first day of the semi-annual period in
which such dividend may be payable, except with respect to
the first semi-annual dividend which shall accrue from
September 16, 1997. In the event that the Corporation elects
to pay the accrued dividends due as of a Dividend
Declaration Date on an outstanding share of the Series 6
Class F Preferred Stock in Common Stock of the Corporation,
the holder of such share shall receive that number of shares
of Common Stock of the Corporation equal to the product of
(a) the quotient of (i) the Dividend Rate divided by (ii)
the average of the closing bid quotation of the
Corporation's Common Stock as reported on the National
Association of Securities Dealers Automated Quotation system
("NASDAQ"), or the average closing sale price if listed on a
national securities exchange, for the five (5) trading
days immediately prior to the Dividend Declaration Date
(the "Stock Dividend Price"), times (b) a fraction,
the numerator of which is the number of days elapsed
during the period for which the dividend is to be paid, and
the denominator of which is 365. Dividends on the Series
6 Class F Preferred Stock shall be cumulative, and no
dividends or other distributions shall be paid or declared or set aside for payment on the Corporation's Common Stock until all accrued and unpaid dividends on all outstanding shares of Series 6 Class F Preferred Stock shall have been paid or declared and set aside for payment.

Part 4 - Conversion. The holders of the Series 6
Class F Preferred Stock shall have rights to convert the
shares of Series 6 Class F Preferred Stock into shares of the Corporation's
Common Stock, par value $.001 per share ("Common Stock"), as follows (the
"Conversion Rights"):

4.1  Right to Convert. The Series 6
Class F Preferred Stock shall be convertible into shares of Common Stock, as
follows: 

-3-

     4.1.1  Up to one
thousand two hundred fifty (1,250) shares of Series 6 Class
F Preferred Stock may 
                be
converted at the Conversion Price (as that term is defined
in Section 4.2 below) at any time 
                on
or after October 5, 1997; and, 

     4.1.2  Up to an
additional one thousand two hundred fifty (1,250) shares of Series 6 Class F
Preferred
               Stock
may be converted at the Conversion Price at any time on or after November 5,
1997.

4.2  Conversion Price. Subject to the
terms hereof, as used herein, the Conversion Price per outstanding share of
Series 6 Class F Preferred Stock shall be $1.8125, except that, in the event the
average closing bid price per share of the Common Stock for 20 of any 30
consecutive trading days after March 1, 1998 shall be less than $2.50 as
reported on the over-the-counter market, or the closing sale price if listed on
a national securities exchange, the Conversion Price shall thereafter be the
product of the lesser of (i) the average closing bid quotation of the Common
Stock as reported on the over-the-counter market, or the closing sale price if
listed on a national securities exchange, for the five trading days immediately
preceding the date of the Conversion Notice referred to in Section 4.3 below
multiplied by eighty percent (80%) or (ii) $1.8125. Notwithstanding the
foregoing, the Conversion Price shall not be less than a minimum of $.75 per
share ("Minimum Conversion Price"), which Minimum Conversion Price shall be
eliminated from and after September 6, 1998. If any of the outstanding shares of
Series 6 Class F Preferred Stock are converted, in whole or in part, into Common
Stock pursuant to the terms of this Part 4, the number of shares of whole Common
Stock to be issued to the holder as a result of such conversion shall be
determined by dividing (a) the aggregate Liquidation Value of the Series 6 Class
F Preferred Stock so surrendered for conversion by (b) the Conversion Price as
of such conversion. At the time of conversion of shares of the Series 6 Class F
Preferred Stock, the Corporation shall pay in cash to the holder thereof an
amount equal to all unpaid and accrued dividends, if any, accrued thereon to the
date of conversion, or, at the Corporation's option, in lieu of paying cash for
the accrued and unpaid dividends, issue that number of whole shares of Common
Stock which is equal to the quotient of the amount of such unpaid and accrued
dividends to the date of conversion on the shares of Series 6 Class F Preferred
Stock so converted divided by the Stock Dividend Price, as defined in Part 3
hereof, in effect at the date of conversion.

4.3  Mechanics of Conversion. Any holder
of the Series 6 Class F Preferred Stock who wishes to exercise its Conversion
Rights pursuant to Section 4.1 of this Part 4 must, if such shares are not being
held in escrow by the Corporation's attorneys, surrender the certificate
therefor at the principal executive office of the Corporation, and give written
notice, which may be via facsimile transmission, to the Corporation at such
office that it elects to convert the same (the "Conversion Notice"). In the
event that the shares of Series 6 Class F

 

-4-

 

Preferred Stock are being held in escrow by the Corporation's
attorneys, no delivery of the certificates shall be required. No Conversion
Notice with respect to any shares of Series 6 Class F Preferred Stock can be
given prior to the time such shares of Series 6 Class F Preferred Stock are
eligible for conversion in accordance with the provision of Section 4.1 above,
except as provided in Section 4.4. Any such premature Conversion Notice shall
automatically be null and void. The Corporation shall, within five (5) business
days after receipt of an appropriate and timely Conversion Notice (and
certificate, if necessary), issue to such holder of Series 6 Class F Preferred
Stock or its agent a certificate for the number of shares of Common Stock to
which he shall be entitled; it being expressly agreed that until and unless the
holder delivers written notice to the Corporation to the contrary, all shares of
Common Stock issuable upon conversion of the Series 6 Class F Preferred Stock
hereunder are to be delivered by the Corporation to a party designated in
writing by the holder in the Conversion Notice for the account of the holder and
such shall be deemed valid delivery to the holder of such shares of Common
Stock. Such conversion shall be deemed to have been made only after both the
certificate for the shares of Series 6 Class F Preferred Stock to be converted
have been surrendered and the Conversion Notice is received by the Corporation
(or in the event that no surrender of the Certificate is required, then only
upon the receipt by the Corporation of the Conversion Notice) (the "Conversion
Documents"), and the person or entity whose name is noted on the certificate
evidencing such shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder of such shares of Common Stock at
and after such time. In the event that the Conversion Notice is sent via
facsimile transmission, the Corporation shall be deemed to have received such
Conversion Notice on the first business day on which such facsimile Conversion
Notice is actually received. If the Corporation fails to deliver to the holder
or its agent the certificate representing the shares of Common Stock that the
holder is entitled to receive as a result of such conversion within seven (7)
business days after receipt by the Corporation from the holder of an appropriate
and timely Conversion Notice and certificates pursuant to the terms of this
Section 4.3 ("Seven (7) Business Day Period"), then, upon the written demand of
RBB Bank Aktiengesellschaft ("RBB Bank"), the holder of the Series 6 Class F
Preferred Stock, for payment of the penalty described below in this Section 4.3,
which demand must be received by the Corporation no later than ten (10) calendar
days after the expiration of such Seven (7) Business Day Period, the Corporation
shall pay to RBB Bank the following penalty for each business day after the
Seven (7) Business Day Period until the Corporation delivers to the holder or
its agent the certificate representing the shares of Common Stock that the
holder is entitled to receive as a result of such conversion: business day eight
(8) - U.S. $1,000; business day nine (9) - U.S. $2,000, and each business day
thereafter an amount equal to the penalty due on the immediately preceding
business day times two (2) until the Corporation delivers to the holder or its
agent the certificate representing the shares of Common Stock that the holder is
entitled to receive as a result of such conversion.

 

-5-

 

4.4  Merger or
Consolidation.  In case of either (a) any merger or
consolidation to which the Corporation is a party (collectively, the "Merger"),
other than a Merger in which the Corporation is the surviving or continuing
corporation, or (b) any sale or conveyance to another corporation of all, or
substantially all, of the assets of the Corporation (collectively, the "Sale"),
and such Merger or Sale becomes effective (x) while any shares of Series 6 Class
F Preferred Stock are outstanding and prior to the date that the Corporation's
Registration Statement covering up to 1,379,500 shares of Common Stock issuable
upon the conversion of the Series 6 Class F Preferred Stock is declared
effective by the U. S. Securities and Exchange Commission or (y) prior to the
end of the restriction periods in Section 4.1, then, in such event, the
Corporation or such successor corporation, as the case may be, shall make
appropriate provision so that the holder of each share of Series 6 Class F
Preferred Stock then outstanding shall have the right to convert such share of
Series 6 Class F Preferred Stock into the kind and amount of shares of stock or
other securities and property receivable upon such Merger or Sale by a holder of
the number of shares of Common Stock into which such shares of Series 6 Class F
Preferred Stock could have been converted into immediately prior to such Merger
or Sale, subject to adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Part 4.

4.5  Adjustments to Conversion Price for Stock
Dividends and for Combinations or Subdivisions of Common
Stock.  If the Corporation at any time or from time to time while
shares of Series 6 Class F Preferred Stock are issued and outstanding shall
declare or pay, without consideration any dividend on the Common Stock payable
in Common Stock, or shall effect a subdivision of the outstanding shares of
Common Stock into a greater number of shares of Common Stock (by stock split,
reclassification or otherwise than by payment of a dividend in Common Stock or
in any right to acquire Common Stock), or if the outstanding shares of Common
Stock shall be combined or consolidated, by reclassification or otherwise, into
a lesser number of shares of Common Stock, then the Conversion Price in effect
immediately before such event shall, concurrently with the effectiveness of such
event, be proportionately decreased or increased, as appropriate.

4.6  Adjustments for Reclassification and
Reorganization. If the Common Stock issuable upon conversion of the
Series 6 Class F Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares provided for in Section 4.4 hereof), the Conversion Price
shall, concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted so that the Series 6 Class F
Preferred Stock shall be convertible into, in lieu of the number of shares of
Common Stock which the holders of Series 6 Class F Preferred Stock would
otherwise have been entitled to

 

-6-

 

receive, a number of shares of such other class or classes of
stock equivalent to the number of shares of Common Stock that would have been
subject to receipt by the holders upon conversion of the Series 6 Class F
Preferred Stock immediately before that change.

4.7  Common Stock Duly Issued. All
Common Stock which may be issued upon conversion of Series 6
Class F Preferred Stock will, upon issuance, be duly
issued, fully paid and nonassessable and free from all
taxes, liens, and charges with respect to the issue
thereof.

4.8  Notice of Adjustments. Upon the
occurrence of each adjustment or readjustment of any Conversion Price pursuant
to this Part 4, the Corporation, at its expense, within a reasonable period of
time, shall compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each holder of Series 6 Class F Preferred
Stock a notice setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment is based.

4.9 Issue Taxes. The Corporation shall pay any and
all issue and other taxes that may be payable in respect
of any issue or delivery of shares of Common Stock on
conversion of the Series 6 Class F Preferred Stock pursuant thereto; provided, however, that the Corporation shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder of Series 6 Class F Preferred Stock in connection with such conversion.

4.10 Reservation of Stock Issuable Upon
Conversion. The Corporation shall at all times
reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series 6 Class
F Preferred Stock, such number of its shares of Common Stock
as shall, from time to time, be sufficient to effect the
conversion of all outstanding shares of the Series 6 Class F
Preferred stock, and, if at any time, the number of
authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding
shares of the Series 6 Class F Preferred Stock, the
Corporation will take such corporate action as may be
necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient
for such purposes, including, without limitation, engaging
in reasonable efforts to obtain the requisite
stockholder approval of any necessary amendment to its
Certificate of Incorporation.

4.11  Fractional Shares. No fractional
shares shall be issued upon the conversion of any share or
shares of Series 6 Class F Preferred Stock. All shares of
Common Stock (including fractions thereof) issuable
upon conversion of more than one share of Series 6 Class
F Preferred Stock by a holder thereof shall be
aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional
share. If, after

 

-7-

 

the aforementioned aggregation, the conversion would result in the issuance of a fractional share of Common Stock, such fractional share shall be rounded up to the nearest whole share.

4.12  Notices. Any notices required by
the provisions of this Part 4 to be given to the holders of
shares of Series 6 Class F Preferred Stock shall be deemed
given if deposited in the United States mail, postage
prepaid, and addressed to each holder of record at his
address appearing on the books of the
Corporation.

4.13  Business Day. As used herein, the
term "business day" shall mean any day other than a
Saturday, Sunday or a day when the federal and state banks
located in the State of New York are required or is
permitted to close.

Part 5 - Redemption.

5.1  Redemption at Corporation's Option.
Except as otherwise provided in this Section 5.1, at any time, and from time to
time, after the expiration of one (1) year from June 9, 1997, the Corporation
may, at its sole option, but shall not be obligated to, redeem, in whole or in
part, at any time, and from time to time, the then outstanding Series 6 Class F
Preferred Stock at the following cash redemption prices per share (the
"Redemption Price") if redeemed during the following periods: (a) within four
years from June 9, 1997 - $1,300 per share, if at any time during such four year
period the average of the closing bid price of the Common Stock for ten
consecutive trading days shall be in excess of Four Dollars ($4.00) per share,
and (b) after four years from June 9, 1997 - $1,000 per share.

5.2  Mechanics of Redemption. Thirty
days prior to any date stipulated by the Corporation for the redemption of
Series 6 Class F Preferred Stock (the "Redemption Date"), written notice (the
"Redemption Notice") shall be mailed to each holder of record on such notice
date of the Series 6 Class F Preferred Stock. The Redemption Notice shall state:
(i) the Redemption Date of such shares, (ii) the number of Series 6 Class F
Preferred Stock to be redeemed from the holder to whom the Redemption Notice is
addressed, (iii) instructions for surrender to the Corporation, in the manner
and at the place designated, of a share certificate or share certificates
representing the number of Series 6 Class F Preferred Stock to be redeemed from
such holder, and (iv) instructions as to how to specify to the Corporation the
number of Series 6 Class F Preferred Stock to be redeemed as provided in this
Part 5 and, if the Redemption Notice is mailed to the Holder after the first 180
days from the date of issuance of the Series 6 Class F Preferred Stock, the
number of shares to be converted into Common Stock as provided in Part 4
hereof.

5.3  Rights of Conversion Upon
Redemption.  If the redemption occurs after the first 180 days
after the first issuance of Series 6 Class F Preferred Stock, then, upon receipt
of the Redemption Notice, any holder of

 

-8-

 

Series 6 Class F Preferred Stock shall have the option, at its
sole election, to specify what portion of its Series 6 Class F Preferred Stock
called for redemption in the Redemption Notice shall be redeemed as provided in
this Part 5 or converted into Common Stock in the manner provided in Part 4
hereof, except that, notwithstanding any provision of such Part 4 to the
contrary, such holder shall have the right to convert into Common Stock that
number of Series 6 Class F Preferred Stock called for redemption in the
Redemption Notice.

5.4  Surrender of
Certificates.  On or before the Redemption Date in respect of
any Series 6 Class F Preferred Stock, each holder of such shares shall surrender
the required certificate or certificates representing such shares to the
Corporation in the manner and at the place designated in the Redemption Notice,
and upon the Redemption Date, the Redemption Price for such shares shall be made
payable, in the manner provided in Section 5.6 hereof, to the order of the
person whose name appears on such certificate or certificates as the owner
thereof, and each surrendered share certificate shall be canceled and retired.
If a share certificate is surrendered and all the shares evidenced thereby are
not being redeemed (as described below), the Corporation shall cause the Series
6 Class F Preferred Stock which are not being redeemed to be registered in the
names of the persons or entity whose names appear as the owners on the
respective surrendered share certificates and deliver such certificate to such
person.

5.5  Payment. On the Redemption Date in
respect of any Series 6 Class F Preferred Stock or prior thereto, the
Corporation shall deposit with any bank or trust company having a capital and
surplus of at least $50,000,000, as a trust fund, a sum equal to the aggregate
Redemption Price of all such shares called from redemption (less the aggregate
Redemption Price for those Series 6 Class F Preferred Stock in respect of which
the Corporation has received notice from the holder thereof of its election to
convert Series 6 Class F Preferred Stock into Common Stock), with irrevocable
instructions and authority to the bank or trust company to pay, on or after the
Redemption Date, the Redemption Price to the respective holders upon the
surrender of their share certificates. The deposit shall constitute full payment
for the shares to their holders, and from and after the date of the deposit the
redeemed shares shall be deemed to be no longer outstanding, and holders thereof
shall cease to be shareholders with respect to such shares and shall have no
rights with respect thereto except the rights to receive from the bank or trust
company payments of the Redemption Price of the shares, without interest, upon
surrender of their certificates thereof. Any funds so deposited and unclaimed at
the end of one year following the Redemption Date shall be released or repaid to
the Corporation, after which the former holders of shares called for redemption
shall be entitled to receive payment of the Redemption Price in respect of their
shares only from the Corporation.

 

-9-

 

Part 6 - Parity with Other Shares of Series 6 Class F
Preferred Stock and Priority.

6.1  Rateable Participation. If any
cumulative dividends or return of capital in respect of
Series 6 Class F Preferred Stock are not paid in full, the
owners of all series of outstanding Preferred Stock shall
participate rateably in respect of accumulated dividends and
return of capital.

6.2  Ranking. For purposes of this
resolution, any stock of any class or series of the Corporation shall be deemed
to rank:

     6.2.1  Prior or senior
to the shares of this Series 6 Class F Preferred Stock either as to dividends
or 
               upon
liquidation, if the holders of such class or classes shall be entitled to the
receipt
of 
               dividends
or of amounts distributable upon dissolution, liquidation or winding up of
the 
               Corporation,
whether voluntary or involuntary, as the case may be, in preference or
priority
               to
the holders of shares of this Series 6 Class F Preferred Stock;

     6.2.2  On a parity with,
or equal to, shares of this Series 6 Class F Preferred Stock, either as
to 
               dividends
or upon liquidation, whether or not the dividend rates, dividend payment dates,
or
              
redemption or liquidation prices per share or sinking fund provisions, if any,
are different
from 
               those
of this Series 6 Class F Preferred Stock, if the holders of such stock are
entitled to
the 
               receipt
of dividends or of amounts distributable upon dissolution, liquidation or
winding
up 
               of
the Corporation, whether voluntary or involuntary, in proportion to their
respective
dividend 
               rates
or liquidation prices, without preference or priority, one over the other, as
between
the 
               holders
of such stock and over the other, as between the holders of such stock and
the 
               holders
of shares of this Series 6 Class F Preferred Stock; and, 

     6.2.3 Junior to shares of this
Series 6 Class F Preferred Stock, either as to dividends or
upon 
              liquidation,
if such class or series shall be Common Stock or if the holders of shares of
this 
              Series
6 Class F Preferred Stock shall be entitled to receipt of dividends or of
amounts 
              distributable
upon dissolution, liquidation or winding up of the Corporation,
whether 
              voluntary
or involuntary, as the case may be, in preference or priority to the holders of
shares 
              of
such class or series.

 

-10-

 

Part 7 - Amendment and Reissue.

7.1  Amendment.  If any
proposed amendment to the Corporation's Certificate of
Incorporation (the "Articles") would alter or change the
powers, preferences or special rights of the Series 6 Class
F Preferred Stock so as to affect such adversely, then the
Corporation must obtain the affirmative vote of such
amendment to the Articles at a duly called and held series
meeting of the holders of the Series 6 Class F Preferred
Stock or written consent by the holders of a majority of
the Series 6 Class F Preferred Stock then
outstanding. Notwithstanding the above or the provisions of
the GCL, the number of authorized shares of any class or
classes of stock of the Corporation may be increased or
decreased (but not below the number of shares thereof
outstanding) by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote
thereon, voting together as a single class, irrespective of
the provisions of this Section 7.1 or Section 242 of the
GCL.

7.2  Authorized. Any shares of Series 6
Class F Preferred Stock acquired by the Corporation by
reason of purchase, conversion, redemption or otherwise
shall be retired and shall become authorized but unissued
shares of Preferred Stock, which may be reissued as part of
a new series of Preferred Stock hereafter
created.
 
 

 

 

 

 

 

 

-11-

 

CERTIFICATE OF DESIGNATIONS
OF SERIES 7 CLASS
G CONVERTIBLE PREFERRED STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES,
INC.

     Perma-Fix Environmental Services,
Inc. (the "Corporation"), a corporation organized and existing under the General
Corporation Law of the State of Delaware, does hereby certify:

     That, pursuant to authority
conferred upon by the Board of Directors by the Corporation's Restated
Certificate of Incorporation, as amended, and pursuant to the provisions of
Section 151 of the Delaware Corporation Law, the Board of Directors of the
Corporation has adopted resolutions, a copy of which is attached hereto,
establishing and providing for the issuance of a series of Preferred Stock
designated as Series 7 Class G Convertible Preferred Stock and has established
and fixed the voting powers, designations, preferences and relative
participating, optional and other special rights and qualifications, limitations
and restrictions of such Series 7 Class G Convertible Preferred Stock as set
forth in the attached resolutions.

Dated: November 12, 1997

                                                                     PERMA-FIX
ENVIRONMENTAL
                                                                     SERVICES, INC.

                                                                     By
/s/ Louis F.
Centofanti                                     
                                                                         Dr.
Louis F.
Centofanti
                                                                         Chairman of the Board
ATTEST:

/s/ Richard T.
Kelecy                          
Richard
T. Kelecy, Secretary

 

 

 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(the
"Corporation")

RESOLUTION OF THE BOARD OF DIRECTORS

FIXING THE
NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,
RESTRICTIONS AND CONDITIONS
ATTACHING TO THE
SERIES 7 CLASS G CONVERTIBLE PREFERRED
STOCK

     WHEREAS, the Corporation's
capital includes preferred stock, par value $.001 per share
("Preferred Stock"), which Preferred Stock may be issued in
one or more series by resolutions adopted by the directors,
and with the directors being entitled by resolution to fix
the number of shares in each series and to designate the rights, designations, preferences and relative, participating,
optional or other special rights and privileges, restrictions
and conditions attaching to the shares of each such
series;

     WHEREAS, it is in the best
interests of the Corporation for the Board to create a new
series from the Preferred Stock designated as the Series 7
Class G Convertible Preferred Stock, par value $.001 per
share (the "Series 7 Class G Preferred Stock");

     NOW, THEREFORE, BE IT
RESOLVED, that the Series 7 Class G Preferred Stock
shall consist of three hundred (350) shares and no more and
shall be designated as the Series 7 Class G Convertible Preferred Stock, and the preferences, rights, privileges, restrictions and conditions attaching to the Series 7 Class G
Preferred Stock shall be as follows:

Part 1 - Voting and Preemptive Rights.

1.1  Voting Rights.  Except as
otherwise provided in Section 242(b)(2) of the General Corporation Law of the
State of Delaware (the "GCL"), the holders of the Series 7 Class G Preferred
Stock shall have no voting rights whatsoever. To the extent that under Section
242(b)(2) of the GCL the vote of the holders of the Series 7 Class G Preferred
Stock, voting separately as a class or series as applicable, is required to
authorize a given action of the Corporation, the affirmative vote or consent of
the holders of at least a majority of the shares of the Series 7 Class G
Preferred Stock represented at a duly held meeting at which a quorum is present
or by written consent of a majority of the shares of Series 7 Class G Preferred
Stock (except as otherwise may be required under the GCL) shall constitute the
approval of such action by the series. To the extent that under Section
242(b)(2) of the GCL the holders of the Series 7 Class G Preferred Stock are
entitled to vote on a matter, each share of the Series 7 Class G Preferred Stock
shall be entitled one (1) vote for each outstanding share of Series 7 Class G
Preferred Stock. Holders of the Series 7 Class G Preferred Stock shall be
entitled to notice of (and copies of proxy materials and other information sent
to stockholders) for all shareholder meetings or written consents with respect
to which they would be entitled to vote, which notice would be provided pursuant
to the Corporation's bylaws and applicable statutes. If the holders of the
Series 7 Class G Preferred Stock are required to vote under Section 242(b)(2) of
the GCL as a result of the number of authorized shares of any such class or
classes of stock being increased or decreased, the number of authorized shares
of any of such class or classes of stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the stock of the Corporation entitled to vote
thereon, irrespective of the provisions of Section 242(b)(2) of the
GCL. 

 

-1-

 

1.2  No Preemptive Rights. The Series 7
Class G Preferred Stock shall not give its holders any
preemptive rights to acquire any other securities issued by
the Corporation at any time in the future.

Part 2 - Liquidation Rights.

2.1  Liquidation. If the Corporation
shall be voluntarily or involuntarily liquidated, dissolved
or wound up at any time when any shares of the Series 7
Class G Preferred Stock shall be outstanding, the holders of
the then outstanding Series 7 Class G Preferred Stock shall
be entitled to receive out of the assets of the Corporation
available for distribution to shareholders an amount equal
to $1,000 consideration per outstanding share of Series 7
Class G Preferred Stock, and no more, plus an amount equal to all unpaid dividends accrued thereon to the date of payment of
such distribution ("Liquidation Preference"), whether or not
declared by the Board of Directors, before any payment shall
be made or any assets distributed to the holders of the
Corporation's Common Stock.

2.2  Payment of Liquidation Preferences.
Subject to the provisions of Part 6 hereof, all amounts to
be paid as Liquidation Preference to the holders of Series 7
Class G Preferred Stock, as provided in this Part 2, shall
be paid or set apart for payment before the payment or
setting apart for payment of any amount for, or the distribution of any of the Corporation's property to the holders
of the Corporation's Common Stock, whether now or
hereafter authorized, in connection with such liquidation,
dissolution or winding up.

2.3  No Rights After Payment. After the
payment to the holders of the shares of the Series 7 Class G
Preferred Stock of the full Liquidation Preference amounts
provided for in this Part 2, the holders of the Series 7
Class G Preferred Stock as such shall have no right or claim
to any of the remaining assets of the Corporation.

2.4  Assets Insufficient to Pay Full Liquidation
Preference. In the event that the assets of the
Corporation available for distribution to the holders of
shares of the Series 7 Class G Preferred Stock upon any
dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, shall be insufficient to
pay in full all amounts to which such holders are entitled
pursuant to this Part 2, no such distribution shall be made
on account of any shares of any other class or series of Preferred Stock ranking on a parity with the shares of this Series
7 Class G Preferred Stock upon such dissolution, liquidation
or winding up unless proportionate distributive amounts
shall be paid on account of the shares of this Series 7
Class G Preferred Stock and shares of such other class or
series ranking on a parity with the shares of this Series 7
Class G Preferred Stock, ratably, in proportion to the full
distributable amounts for which holders of all such parity
shares are respectively entitled upon such dissolution,
liquidation or winding up.

Part 3 - Dividends.

3.1 The holders of the Series 7 Class G Preferred Stock are
entitled to receive if, when and as declared by the Board of Directors of the
Corporation (the "Board") out of funds legally available therefor, cumulative
annual

 

-2-

 

dividends, payable in cash or Common Stock of the Corporation,
par value $.001 per share (the "Common Stock"), or any combination thereof, at
the Corporation's election, at the rate of four percent (4%) per annum of the
Liquidation Value (as defined below) of each issued and outstanding share of
Series 7 Class G Preferred Stock (the "Dividend Rate"). The Liquidation Value of
the Series 7 Class G Preferred Stock shall be $1,000 per outstanding share of
the Series 7 Class G Preferred Stock (the "Liquidation Value"). The dividend is
payable semi-annually within seven (7) business days after each of December
31and June 30 of each year, commencing December 31, 1997 (each, a "Dividend
Declaration Date"). Dividends shall be paid only with respect to shares of
Series 7 Class G Preferred Stock actually issued and outstanding on a Dividend
Declaration Date and to holders of record of the Series 7 Class G Preferred
Stock as of the Dividend Declaration Date. Dividends shall accrue from the first
day of the semi-annual period in which such dividend may be payable, except with
respect to the first semi-annual dividend which shall accrue from the date of
issuance of the Series 7 Class G Preferred Stock. In the event that the
Corporation elects to pay the accrued dividends due as of a Dividend Declaration
Date on an outstanding share of the Series 7 Class G Preferred Stock in Common
Stock of the Corporation, the holder of such share shall receive that number of
shares of Common Stock of the Corporation equal to the product of (a) the
quotient of (i) the Dividend Rate divided by (ii) the average of the closing bid
quotation of the Corporation's Common Stock as reported on the National
Association of Securities Dealers Automated Quotation system ("NASDAQ"), or the
average closing sale price if listed on a national securities exchange, for the
five (5) trading days immediately prior to the Dividend Declaration Date (the
"Stock Dividend Price"), times (b) a fraction, the numerator of which is the
number of days elapsed during the period for which the dividend is to be paid,
and the denominator of which is 365. Dividends on the Series 7 Class G Preferred
Stock shall be cumulative, and no dividends or other distributions shall be paid
or declared or set aside for payment on the Corporation's Common Stock until all
accrued and unpaid dividends on all outstanding shares of Series 7 Class G
Preferred Stock shall have been paid or declared and set aside for
payment. 

Part 4 - Conversion. The holders of the Series 7
Class G Preferred Stock shall have rights to convert the shares of Series 7
Class G Preferred Stock into shares of the Corporation's Common Stock, as
follows (the "Conversion Rights"):

4.1  Right to Convert. The Series 7
Class G Preferred Stock shall be convertible into shares of
Common Stock, as follows:

      4.1.1  Up to one
hundred seventy-five (175) shares of Series 7 Class G
Preferred Stock may be converted at the Conversion Price (as
that term is defined in Section 4.2 below) at any time on or
after November 3, 1997; and,

 

-3-

 

     4.1.2 Up to an additional one
hundred seventy-five (175) shares of Series 7 Class G
Preferred Stock may be converted at the Conversion Price at
any time on or after December 3, 1997.

4.2  Conversion Price. Subject to the
terms hereof, as used herein, the Conversion Price per
outstanding share of Series 7 Class G Preferred Stock shall
be $1.8125 except that, in the event the average closing bid
price per share of the Common Stock for 20 of any 30
consecutive trading days (a "30 Day Period") after March 1,
1998 shall be less than $2.50 as reported on the
over-the-counter market, or the closing sale price if listed
on a national securities exchange and if the holders of the
Series 7 Class G Preferred Stock have engaged in no sales of
Common Stock of the Company during, and for 30 trading days
prior to, the applicable 30 Day Period, the Conversion Price
shall thereafter be the product of the lesser of (i) the
average closing bid quotation of the Common Stock as
reported on the over-the-counter market, or the closing sale
price if listed on a national securities exchange, for the
five trading days immediately preceding the date of the Conversion Notice referred to in Section 4.3 below multiplied
by eighty percent (80%) or (ii) $1.8125. Notwithstanding the
foregoing, the Conversion Price shall not be less than a
minimum of $.75 per share ("Minimum Conversion Price"),
which Minimum Conversion Price shall be eliminated from and
after September 6, 1998. If any of the outstanding shares of
Series 7 Class G Preferred Stock are converted, in whole or
in part, into Common Stock pursuant to the terms of this
Part 4, the number of shares of whole Common Stock to be
issued to the holder as a result of such conversion shall be
determined by dividing (a) the aggregate Liquidation Value
of the Series 7 Class G Preferred Stock so surrendered for
conversion by (b) the Conversion Price as of such
conversion. At the time of conversion of shares of the
Series 7 Class G Preferred Stock, the Corporation shall pay
in cash to the holder thereof an amount equal to all unpaid
and accrued dividends, if any, accrued thereon to the date
of conversion, or, at the Corporation's option, in lieu of
paying cash for the accrued and unpaid dividends, issue that
number of whole shares of Common Stock which is equal to the
quotient of the amount of such unpaid and accrued dividends
to the date of conversion on the shares of Series 7 Class G
Preferred Stock so converted divided by the Stock Dividend
Price, as defined in Part 3 hereof, in effect at the date of
conversion.

4.5 Adjustments for Reclassification and
Reorganization. If the Common Stock issuable upon conversion of the
Series 7 Class G Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares provided for in Section 4.4 hereof), the Conversion Price
then in effect shall, concurrently with the effectiveness of such reorganization
or reclassification, be proportionately adjusted so that the Series 7 Class G
Preferred Stock shall be convertible into, in lieu of the number of shares of
Common Stock which the holders of Series 7 Class G Preferred Stock would
otherwise have been entitled to receive, a number of shares of such other class
or classes of stock equivalent to the number of shares of Common Stock that
would have been subject to receipt by the holders upon conversion of the Series
7 Class G Preferred Stock immediately before that change.

-4-

 

4.6   Common Stock Duly
Issued. All Common Stock which
may be issued upon conversion of Series 7 Class G Preferred Stock will, upon issuance, be duly issued, fully paid and
nonassessable and free from all taxes, liens, and charges
with respect to the issue thereof.

4.7    Notice of Adjustments. Upon the occurrence of each
adjustment or readjustment of any Conversion Price pursuant to this
Part 4, the Corporation, at its expense, within a reasonable
period of time, shall compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish
to each holder of Series 7 Class G Preferred Stock a
notice setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment is
based.

4.8    Issue Taxes. The Corporation shall pay any and all issue
and other taxes that may be payable in respect of any issue
or delivery of shares of Common Stock on conversion of the
Series 7 Class G Preferred Stock pursuant thereto; provided,
however, that the Corporation shall not be obligated to pay
any transfer taxes resulting from any transfer requested by
any holder of Series 7 Class G Preferred Stock in connection
with such conversion.

4.9    Reservation of Stock Issuable Upon
Conversion.
The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the conversion of the shares
of the Series 7 Class G Preferred Stock, such number of
its shares of Common Stock as shall, from time to time,
be sufficient to effect the conversion of all outstanding
shares of the Series 7 Class G Preferred stock, and, if at any
time, the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of all
then outstanding shares of the Series 7 Class G Preferred
Stock, the Corporation will take such corporate action as may
be necessary to increase its authorized but unissued shares
of Common Stock to such number of shares as shall be
sufficient for such purposes, including, without limitation, engaging
in reasonable efforts to obtain the requisite
stockholder approval of any necessary amendment to its Certificate
of Incorporation.

4.10    Fractional Shares. No fractional shares shall be issued
upon the conversion of any share or shares of Series 7 Class
G Preferred Stock. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than
one share of Series 7 Class G Preferred Stock by a holder
thereof shall be aggregated for purposes of determining whether
the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of a fractional
share of Common Stock, such fractional share shall be rounded up
to the nearest whole share.

4.11   Notices. Any notices required by the provisions of this
Part 4 to be given to the holders of shares of Series 7 Class
G Preferred Stock shall be deemed given if deposited in
the United States mail, postage prepaid, and addressed to
each holder of record at his address appearing on the books of
the Corporation.

-5-

 

 

4.12    Business Day. As used herein, the term "business day"
shall mean any day other than a Saturday, Sunday or a day when
the federal and state banks located in the State of New York
are required or is permitted to close.

Part 5 - Redemption.

5.1    Redemption at Corporation's Option. Except as
otherwise provided in this Section 5.1, at any time, and from time
to time, after the expiration of one (1) year from the date
of the first issuance of the Series 7 Class G Preferred
Stock, the Corporation may, at its sole option, but shall not
be obligated to, redeem, in whole or in part, at any time,
and from time to time, the then outstanding Series 7 Class
G Preferred Stock at the following cash redemption prices
per share (the "Redemption Price") if redeemed during the
following periods: (a) within four (4) years from the date
of the first issuance of Series 7 Class G Preferred Stock
- $1,300 per share, if at any time during such four (4)
year period the average of the closing bid price of the
Common Stock for ten (10) consecutive trading days shall be in
excess of Four U.S. Dollars ($4.00) per share, and (b) after four
(4) years from the date of the first issuance of Series 7 Class
G Preferred Stock - $1,000 per share.

5.3    Mechanics of Redemption. Thirty (30) days prior to any
date stipulated by the Corporation for the redemption of Series
7 Class G Preferred Stock (the "Redemption Date"),
written notice (the "Redemption Notice") shall be mailed to
each holder of record on such notice date of the Series 7 Class
G Preferred Stock. The Redemption Notice shall state: (i)
the Redemption Date of such shares, (ii) the number of Series
7 Class G Preferred Stock to be redeemed from the holder to
whom the Redemption Notice is addressed, (iii) instructions
for surrender to the Corporation, in the manner and at the
place designated, of a share certificate or share
certificates representing the number of Series 7 Class G Preferred Stock
to be redeemed from such holder, and (iv) instructions as to
how to specify to the Corporation the number of Series 7 Class
G Preferred Stock to be redeemed as provided in this Part
5.

5.4    Rights of Conversion Upon Redemption. If the
redemption occurs after the first one hundred eighty (180) days after
the first issuance of Series 7 Class G Preferred Stock, then,
upon receipt of the Redemption Notice, any holder of Series 7
Class G Preferred Stock shall have the option, at its sole
election, to specify what portion of its Series 7 Class G
Preferred Stock called for redemption in the Redemption Notice shall
be redeemed as provided in this Part 5 or converted into
Common Stock in the manner provided in Part 4 hereof, except
that, notwithstanding any provision of such Part 4 to the
contrary,

-6-
 
such holder shall have the right to convert into Common
Stock that number of Series 7 Class G Preferred Stock called
for redemption in the Redemption Notice.

5.5    Surrender of Certificates. On or before the Redemption
Date in respect of any Series 7 Class G Preferred Stock,
each holder of such shares shall surrender the required
certificate or certificates representing such shares to the Corporation
in the manner and at the place designated in the
Redemption Notice, and upon the Redemption Date, the Redemption Price
for such shares shall be made payable, in the manner provided
in Section 5.6 hereof, to the order of the person whose
name appears on such certificate or certificates as the
owner thereof. If a share certificate is surrendered and all
the shares evidenced thereby are not being redeemed (as
described below), the Corporation shall cause the Series 7 Class
G Preferred Stock which are not being redeemed to be
registered in the names of the persons or entity whose names appear
as the owners on the respective surrendered share
certificates and deliver such certificate to such person.

5.6   Payment. On the Redemption Date in respect of any Series
7 Class G Preferred Stock or prior thereto, the
Corporation shall deposit with any bank or trust company having a
capital and surplus of at least U. S. $50,000,000, as a trust fund,
a sum equal to the aggregate Redemption Price of all such
shares called from redemption (less the aggregate Redemption
Price for those Series 7 Class G Preferred Stock in respect of
which the Corporation has received notice from the holder thereof
of its election to convert Series 7 Class G Preferred Stock
into Common Stock), with irrevocable instructions and authority
to the bank or trust company to pay, on or after the
Redemption Date, the Redemption Price to the respective holders upon
the surrender of their share certificates. The deposit
shall constitute full payment for the shares to their holders,
and from and after the date of the deposit the redeemed
shares shall be deemed to be no longer outstanding, and
holders thereof shall cease to be shareholders with respect to
such shares and shall have no rights with respect thereto
except the rights to receive from the bank or trust company
payments of the Redemption Price of the shares, without interest,
upon surrender of their certificates thereof. Any funds so
deposited and unclaimed at the end of one year following
the Redemption Date shall be released or repaid to the
Corporation, after which the former holders of shares
called for redemption shall be entitled to receive payment of
the Redemption Price in respect of their shares only from
the Corporation.

Part 6 - Parity with Other Shares of Series 7 Class G
Preferred Stock and Priority.

6.1    Rateable Participation. If any cumulative dividends or
return of capital in respect of Series 7 Class G Preferred Stock
are not paid in full, the owners of all series of
outstanding Preferred Stock shall participate rateably in respect
of accumulated dividends and return of capital.

-7-

6.2   Ranking. For purposes of this resolution, any stock of
any class or series of the Corporation shall be deemed to
rank: 

        6.2.1  Prior or senior to the shares of this Series 7
Class G Preferred Stock either as to dividends 

                  or upon liquidation, if the holders of such
class or classes shall be entitled to the receipt of

                 
dividends or of amounts distributable upon dissolution, liquidation or
winding up of the

                
 Corporation, whether voluntary or involuntary, as the case may be,
in preference or 

                  priority to the holders of
shares of this Series 7 Class G Preferred Stock;

       6.2.2  On a parity with, or equal to, shares of this
Series 7 Class G Preferred Stock, either as to

                  dividends or upon liquidation, whether or not
the dividend rates, dividend payment dates, 

                  or
redemption or liquidation prices per share or sinking fund provisions, if any, are 

                  different
from those of this Series 7 Class G Preferred Stock, if the holders of such 

                  stock are
entitled to the receipt of dividends or of amounts distributable upon 

                  dissolution,
liquidation or winding up of the Corporation, whether voluntary or 

                  involuntary, in
proportion to their respective dividend rates or liquidation prices, 

                  without preference or
priority, one over the other, as between the holders of such 

                  stock and over the other, as
between the holders of such stock and the holders of 

                  shares of this Series 7 Class G
Preferred Stock; and,

        6.2.3  Junior to shares of this Series 7 Class G
Preferred Stock, either as to dividends or upon

                 
liquidation, if such class or series shall be Common Stock or if the holders of
shares of this 

                  Series 7 Class G Preferred
tock shall be entitled to receipt of dividends or of amounts

                 
distributable upon dissolution, liquidation or winding up of the
Corporation, whether 

                  voluntary or involuntary,
as the case may be, in preference or priority to the holders of 

                  shares of such class or
series.

Part 7 - Amendment and Reissue.
7.1  
 Amendment. If any proposed amendment to the
Corporation's Certificate of Incorporation (the "Articles") would
alter or change the powers, preferences or special rights of
the Series 7 Class G Preferred Stock so as to affect such
adversely, then the Corporation must obtain the
affirmative vote of such amendment to the Articles at a duly called
and held series meeting of the holders of the Series 7 Class
G Preferred Stock then outstanding. Notwithstanding the
above or the provisions of the GCL, the number of authorized
shares of any class or classes of stock of the Corporation may
be increased or decreased (but not below the number of
shares thereof outstanding) by the affirmative vote of the holders of a majority

-8-
 
of the stock of the Corporation entitled
to vote thereon, voting together as a single class,
irrespective of the provisions of this Section 7.1 or Section 242 of
the GCL.

7.2  Authorized. Any shares of Series 7 Class G
Preferred Stock acquired by the Corporation by reason of
purchase, conversion, redemption or otherwise shall be retired
and shall become authorized but unissued shares of
Preferred Stock, which may be reissued as part of a new series
of Preferred Stock hereafter created.

 

 

 

 

 

 

 

-9-

 

STATE OF DELAWARE

SECRETARY OF STATE

DIVISION OF CORPORATIONS

FILED 10:00 A.M. 11/26/1997

971405163 -- 2249849

CERTIFICATE OF ELIMINATION

OF

SERIES 4 CLASS D CONVERTIBLE PREFERRED STOCK

AND

SERIES 5 CLASS E CONVERTIBLE PREFERRED STOCK

OF

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

____________________________________________

           PERMA-FIX ENVIRONMENTAL SERVICES, INC., a corporation
organized and existing under the General Corporation Law of
the State of Delaware (hereinafter called the "Corporation"),
hereby certifies the following:

          1.  That the Certificate of Designations of Series 4 Class
D Convertible Preferred Stock of the Corporation (the "Series
4 Preferred") was filed on June 11, 1997 (the "Series 4
Certificate of Designations").

          2.
 That all outstanding shares of the Series 4
Preferred have been delivered to the Company and exchanged upon
agreement with the holder thereof pursuant to the terms and conditions of
a certain Exchange Agreement between the Company and RBB
Bank Aktiengesellschaft, dated effective as of September 16,
1997.

           3.  That no shares of Series 4 Preferred remain
outstanding.

           4.  That all shares of the Series 4 Preferred which have
been exchanged have the status of authorized and unissued shares of
the Preferred Stock of the Corporation without designation as
to series, until such shares are once more designated as part of
a particular series by the Board of Directors.

           5.  That effective September 16, 1997, the Board of
Directors of the Company duly adopted the following
resolutions:

                 RESOLVED, that upon completion of the exchange
with the holder

                
of the Series 4 Class D Convertible Preferred Stock, no authorized

                 shares of Series 4 Class D Convertible
Preferred Stock will remain 

                 outstanding and no shares of Series 4 Class D Convertible
Preferred 

                 Stock will be issued subject to the
Certificate of Designations previously 

                 filed
with respect to the Series 4 Class D Convertible Preferred Stock.

                 FURTHER RESOLVED, that upon completion of the
exchange, the 

                 officers of the Company are
hereby authorized and directed, for and on

                 behalf of the Company, to execute and deliver
an appropriate Certificate 

 

 

                 of Elimination to
the Secretary of State of Delaware regarding

                 the Series 4 Class D Convertible Preferred
Stock.

          6.   That the Certificate of Designations of the Series
5 Class E Convertible Preferred Stock of the Corporation (the
"Series 5 Preferred") was filed on July 14, 1997 (the "Series 5
Certificate of Designations").

          7.   That all outstanding shares of the Series 5
Preferred have been delivered to the Company and exchanged upon
agreement with the holder thereof pursuant to the terms and conditions of
a certain Exchange Agreement between the Company and The
Infinity Fund, L.P., dated effective as of September 16,
1997.

          8.
  That no shares of Series 5 Preferred remain
outstanding.

          9.   That all shares of the Series 5 Preferred which have
been exchanged have the status of authorized and unissued shares of
the Preferred Stock of the Corporation without designation as
to series, until such shares are once more designated as part of
a particular series by the Board of Directors.

          10.  That effective September 16, 1997, the Board of
Directors of the Company duly adopted the following
resolutions:

                  RESOLVED, that upon completion of the exchange
with the holder 

                  of the Series 5 Class E
Convertible Preferred Stock, no authorized

                  shares of Series 5 Class E Convertible
Preferred Stock will remain 

                  outstanding and no
shares of Series 5 Class E Convertible Preferred 

                  Stock will be issued subject to the
Certificate of Designations previously 

                  filed
with respect to the Series 5 Class E Convertible Preferred Stock.

                   FURTHER RESOLVED, that upon completion of the
exchange, the 

                  officers of the Company are
hereby authorized and directed, for and on 

                  behalf of
the Company, to execute and deliver an appropriate Certificate 

                  of Elimination to
the Secretary of State of Delaware regarding the Series 

                  5 Class E Convertible Preferred
Stock.

          11.  That pursuant to the provisions of Section 151(g) of
the Delaware General Corporation Law, upon the effective date of
the filing of this Certificate, this Certificate will have the
effect of eliminating from the Restated Certificate of Incorporation
only those matters set forth in the Restated Certificate
of Incorporation with respect to the Series 4 Class D
Convertible Preferred Stock and the Series 5 Class E Convertible
Preferred Stock.

 

-2-

 

           IN WITNESS WHEREOF, this Certificate of Elimination has
been executed this 20th day of November, 1997, by the President of
the Company.

                                                                                PERMA-FIX ENVIRONMENTAL

ATTEST:                                                                 SERVICES, INC.

  /s/ Richard T. Kelecy
                                              By /s/ Louis Centofanti                          

  Richard T. Kelecy, Secretary                                        Dr. Louis F.
Centofanti,

                                                                                      President
(SEAL)
 
 

 

 

 

 

 

-3-
 
STATE OF
DELAWARE      

SECRETARY OF STATE      

DIVISION OF CORPORATIONS

FILED 12:00 PM 07/10/1998  

981268436 -- 2249849        

CERTIFICATE OF DESIGNATIONS

OF RIGHTS AND PREFERENCES OF THE

SERIES 10 CLASS J CONVERTIBLE PREFERRED STOCK
OF

PERMA-FIX ENVIRONMENTAL SERVICES,
INC.

We, being respectively the President and Secretary of Perma-Fix Environmental Services, Inc. a corporation organized and
existing under the laws of the State of Delaware (hereinafter
the "Corporation"), DO HEREBY CERTIFY:

FIRST:

That pursuant to authority expressly granted and vested in
the Board of Directors of said Corporation under Section 151 of
the Delaware General Corporation Law (the "GCL"), and the provisions
of the Corporation's Restated Certificate of Incorporation, said
Board of Directors, on June 30th, 1998 (the "Closing Date"), adopted
the following resolution setting forth the designations,
powers, preferences and rights of its Series 10 Class J
Convertible Preferred Stock (the "Certificate of
Designations").

RESOLVED: That the designations, powers, preferences and rights
of the Series 10 Class J Convertible Preferred Stock be, and
they hereby are, as set forth below:

1.  Number of Shares of Common Stock of Series 10 Class
J Convertible Preferred Stock

The Corporation hereby authorizes the issuance of up to
3,000 (three thousand,) shares of Series 10 Class J Convertible
Preferred Stock par value $.001 per share (the "Preferred Stock").
This Preferred Stock shall pay an annual dividend based on a 365
day calendar year of 4% of the Liquidation Value (as defined in
Section 3 hereof) ("Dividend Rate"), payable semiannually within ten
(10) business days after each subsequent June 30th and December
31st (each a "Dividend Declaration Date"), and shall be payable in
cash or shares of the Corporation's par value $.001 per share
common stock (Common Stock) at the Corporation's option. The
first Dividend Declaration Date shall be December 31st,
1998.

In the event that the Corporation elects to pay the
accrued dividends due as of a Dividend Declaration Date on the
outstanding shares of Preferred Stock in Common Stock of the Corporation,
the Holder of each share of Preferred Stock shall receive that
number of shares of Common Stock equal to the product of (a) the
quotient of (i) the Dividend Rate divided by (ii) the average of'
the closing bid quotation of the Corporation's Common Stock as
reported on the National Association of Securities Dealers
Automated Quotation system ("NASDAQ"), or if the Common Stock is not
listed for trading on a national

     ;1
 
securities exchange, the average closing bid price of the
Common Stock as quoted on such national exchange, for the five (5)
trading days immediately prior to the Dividend Declaration Date (the
"Stock Dividend Price"), times (b) a fraction, the numerator of which
is the number of days elapsed during the period for which the
dividend is to be paid, and the denominator of which is 365. Dividends
on the Preferred Stock shall be cumulative, and no dividends or
other distributions shall be paid or declared or set aside for payment
on the Corporation's Common Stock until all accrued and
unpaid dividends on all outstanding shares of Preferred Stock shall
have been paid or declared and set aside for payment.

2. Voting.

(a)     Except as provided under Section 242 of the GCL, holders
of Preferred Stock (the "Holders") shall not have the right to
vote on any matter. Notwithstanding the provisions of Section 242
of the GCL or Section 4 hereof, the number of authorized shares of
any class or classes of stock of the Corporation may be increased
or decreased (but not below the number of shares thereof
outstanding) by the affirmative vote of the holders of a majority of the
stock of the Corporation entitled to vote thereon, voting together as
a single class, irrespective of the provisions of Section 242 of
the GCL.

3. Liquidation.

In the event of a voluntary or involuntary
dissolution, liquidation, or winding up of the Corporation, the Holders
of Preferred Stock shall be entitled to receive out of the assets
of the Corporation legally available for distribution to holders
of its capital stock, before any payment or distribution shall be
made to holders of shares of Common Stock or any other class of
stock ranking junior to the Preferred Stock, an amount per share
of Preferred Stock equal to $1,000 (the "Liquidation Value") plus
any accrued and unpaid dividends on the Preferred Stock. If upon
such liquidation, dissolution, or winding up of the Corporation,
whether voluntary or involuntary, the assets to be distributed among
the Holders of Preferred Stock shall be insufficient to permit
payment to the Holders of Preferred Stock of the amount distributable
as aforesaid, then the entire assets of the Corporation to be
so distributed shall be distributed ratably among the Holders
of Preferred Stock and shares of such other classes or series
ranking on a parity with the shares of this Preferred Stock in
proportion to the full distributable amounts for which holders of all
such parity shares are entitled upon such distribution, liquidation,
or winding up. Upon any such liquidation, dissolution or winding
up of the Corporation, after the Holders of Preferred Stock
shall have been paid in full the amounts to which they shall be
entitled, the remaining net assets of the Corporation may be distributed
to the holders of stock ranking on liquidation junior to the
Preferred Stock and the Holders of the Preferred Stock shall have no right
or claim to any of the remaining assets of the Corporation.
Written notice of such liquidation, dissolution or winding up, stating
a payment date, the amount of the liquidation payments and the
place

 
     ;2
 
where said liquidation payments shall be payable, shall be given
by mail, postage prepaid or by telex or facsimile to non-U.S.
residents, not less than 10 days prior to the payment date
stated therein, to the Holders of record of Preferred Stock, such
notice to be addressed to each such Holder at its address as shown by
the records of the Corporation. For purposes hereof the shares
of Common Stock, shall rank on liquidation junior to the
Preferred Stock.

4. Restrictions.

The Corporation will not amend or modify the terms of its
Restated Certificate of Incorporation so as to adversely alter or change
the Preferred Stock at any time when shares of Preferred Stock
are outstanding, without the approval of the Holders of at least
a majority of the then outstanding shares of Preferred Stock given
in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a series, except where the vote or
written consent of the Holders of a greater number of shares of
Common Stock of the Corporation is required by law or by the
Corporation's Certificate of Incorporation, as amended.

5. Optional Conversion.

The Holders of shares of Preferred Stock shall have the
following conversion rights to convert the shares of Preferred Stock
into shares of Common Stock of the Corporation:

(a)     Conversion Dates, The Holder of any share or shares
of Preferred Stock may convert cumulatively any of such
Preferred Stock at any time subsequent to 180 days after the Closing
Date. 

(b)     Right to Convert; Conversion Price. Subject to the
terms hereof, as used herein, the term Conversion Price per
outstanding share of Preferred Stock shall be One Dollar and 875/1000
($1.875); except that after the expiration of one hundred and eighty
(180) days after the Closing Date if the average of the closing bid
price per share of Common Stock quoted on the NASDAQ (or the closing
bid price of the Common Stock as quoted on the national
securities exchange if the Common Stock is not listed for trading on
the NASDAQ but is listed for trading on a national securities
exchange) for the five (5) trading days immediately prior to the
particular date of each Conversion Notice (as defined below) is less than
Two Dollars and 34/100 ($2.34), then the Conversion Price for
that particular conversion shall be eighty percent (80%) of the
average of the closing bid price of the Common Stock on the NASDAQ (or
if the Common Stock is not listed for trading on the NASDAQ but
is listed for trading on a national securities exchange then
eighty percent (80%) of the average of the closing bid price of the
Common Stock on the national securities exchange) for the five (5)
trading days immediately prior to the particular date of the
Conversion Notice. If any of the outstanding shares of Preferred Stock
are converted, in whole or in part, into Common Stock pursuant to
the terms of this Section 5(b), the number of shares of whole
Common Stock to be issued to the Holder as a result of such
conversion shall be determined

     ;3

 

by dividing (a) the aggregate Stated Value
of the Preferred Stock so surrendered for conversion by (b)
the Conversion Price in effect on the date of that
particular Conversion Notice relating to such conversion. At the time
of conversion of shares of the Preferred Stock, the Corporation
shall pay in cash to the holder thereof an amount equal to all unpaid
and accrued dividends, if any, accrued thereon on the shares
of Preferred so converted to the date of the Conversion
Notice relating to such conversion, or, at the Corporation's option,
in lieu of paying cash for the accrued and unpaid dividends,
issue that number of shares of whole Common Stock which is equal to
the quotient of the amount of such unpaid and accrued dividends to
the date of the Conversion Notice relating to such conversion of
the shares of Preferred Stock so converted divided by the
Stock Dividend Price, in effect at the date of the Conversion
Notice relating to such conversion.

(c)      Conversion Notice. The right of conversion shall be
exercised by the Holder thereof by telecopying or faxing an executed
and completed written notice signed by an authorized representative
of the Holder, ("Conversion Notice") to the Corporation that
the Holder elects to convert a specified number of shares of
Preferred Stock representing a specified Stated Value thereof into shares
of Common Stock and by delivering by express courier the
certificate or certificates of Preferred Stock being converted to
the Corporation at its principal office (or such other office or
agency of the Corporation as the Corporation may designate by notice
in writing to the Holders of the Preferred Stock). The business
date indicated on a Conversion Notice which is telecopied to
and received by the Corporation in accordance with the
provisions hereof shall be deemed a Conversion Date. The Conversion
Notice shall include therein the Stated Value of shares of Preferred
Stock to be converted, and a calculation (a) of the Stock Dividend
Price, (b) the Conversion Price, and (c) the number of Shares of
Common Stock to be issued in connection with such conversion.
The Corporation shall have the right to review the
calculations included in the Conversion Notice, and shall provide notice of
any discrepancy or dispute therewith within three (3) business days
of the receipt thereof. The Holder shall deliver to the
Corporation an original Conversion Notice and the original Preferred to
be converted within three (3) business days from the date of
the Conversion Notice.

(d)     Issuance of Certificates - Time Conversion
Effected.  Promptly, but in no event more than six (6) business days,
after the receipt by facsimile of the Conversion Notice referred to
in Subparagraph (5)(c); and provided within the six (6) business
days the Corporation receives the certificate or certificates for
the shares of Preferred Stock to be converted, the Corporation
shall issue and deliver, or cause to be issued and delivered, to
the Holder, registered in the name of the Holder, a certificate
or certificates for the number of whole shares of Common Stock
into which such shares of Preferred Stock are converted.
Such conversion shall be deemed to have been effected as of the close
of business on the date on which the telecopy or facsimile
Conversion Notice shall have been received by the Corporation, and the
rights of the Holder of such share or shares of Preferred Stock
shall cease, at such time, and the Holder or Holders shall be deemed
to have become the Holder or Holders of record of the shares of
Common Stock represented thereby.

 
     ;4
 
In the event that the shares of Common Stock issuable
upon conversion of the Preferred, is not delivered within six
(6) business days of the date the Company receives the
Conversion Notice, the Company shall pay to the Buyer, by wire transfer,
as liquidated damages for such failure and not as a penalty, for
each $100,000 of Preferred sought to be converted, $500 for each of
the first five (5) calendar days and $1,000 per calendar day
thereafter that the shares of Common Stock are not delivered, which
liquidated damages shall begin to run from the seventh (7th) business
day after the Conversion Date. Any and all payments required
pursuant to this paragraph shall be payable only in cash.
Notwithstanding the above, liquidated damages shall not exceed $2,000.00 per
day.  In addition to the liquidated damages set forth herein, in
the event the Company fails to deliver the shares of Common
Stock within six (6) business days after the Conversion date, the
Company agrees to issue the larger number of shares of Common Stock
derived from (i) the original Conversion Notice, or (ii) utilizing the
five lowest closing bid prices of the Company's shares of Common
Stock beginning on the Conversion Date and ending on the day the
shares of Common Stock are delivered. The Company understands that
a delay in the issuance of the shares of Common Stock could result
in economic loss to the Holder. Nothing contained herein, or in
the Preferred shall limit the Holder's rights to pursue actual
damages for the Company's failure to issue and deliver shares of
Common Stock to the Holder in accordance with the terms of the
Certificate of Designations, and this Agreement.

(e)      Fractional Shares of Common Stock. No fractional shares
of Common Stock shall be issued upon conversion of any Preferred
Stock into shares of Common Stock. All fractional shares of Common
Stock shall be aggregated and then rounded down to the nearest
whole share of Common Stock. In case the number of shares of
Preferred Stock represented by the certificate or certificates
surrendered pursuant to Subparagraph 5(b) exceeds the number of shares
of Common Stock converted, the Corporation shall, upon
such conversion, execute and deliver to the Holder, at the expense
of the Corporation, a new certificate or certificates for the
number of shares of Preferred Stock represented by the certificate
or certificates surrendered which are not to be
converted.

(f)      Merger or Consolidation. In case of either (a) any merger
or consolidation to which the Corporation is a party
(collectively, the "Merger"), other than a Merger in which the Corporation is
the surviving or continuing corporation, or (b) any sale or
conveyance to another corporation of all, or substantially all, of the
assets of the Corporation (collectively, the "Sale"), and such Merger
or Sale becomes effective (x) while any shares of Preferred Stock
are outstanding and prior to the date that the
Corporation's Registration Statement covering all the shares of Common
Stock issuable upon the conversion of the Preferred Stock is
declared effective by the U.S. Securities and Exchange
Commission ("Commission"), the Corporation or such successor corporation
as the case may be, shall make appropriate provision so that
the Holder of each share of Preferred Stock then outstanding shall
have the right to convert such share of Preferred Stock into the
kind and amount of shares of stock or other securities and
property receivable upon such Merger or Sale by a holder of the number
of shares of Common Stock into which such shares of Preferred
Stock could have been converted into immediately prior to such Merger
or

     ;5
 
Sale, subject to adjustments which shall be as nearly equivalent
as may be practicable to the adjustments provided for in this
Section 5.

In the event of a Merger or Sale, where the Corporation is not
the surviving Corporation, the Holder shall have the right to
redeem all of the outstanding shares of Preferred Stock at 120% of
the Liquidation Value of each share of Preferred Stock then
outstanding plus all accrued and unpaid dividends (the "Redemption
Amount"). The Corporation shall pay this Redemption Amount in cash within
ten (10) business days of receipt by the Corporation of notice from
the Holder, and receipt by the Corporation of all outstanding shares
of Preferred Stock duly endorsed by the Holder to the
Corporation.

(g)     Adjustments to Conversion Price for Stock Dividends and
for Combinations or Subdivisions of Common
Stock. If the
Corporation at any time or from time to time while shares of Preferred
Stock are issued and outstanding shall declare or pay, any dividend
on the Common Stock payable in Common Stock, or shall effect
a subdivision of the outstanding shares of Common Stock into
a greater number of shares of Common Stock (by stock
split, reclassification or otherwise than by payment of a dividend
in Common Stock), or if the outstanding shares of Common Stock
shall be combined or consolidated, by reclassification or otherwise,
into a lesser number of shares of Common Stock, then the
Conversion Price in effect immediately before such event shall,
concurrently with the effectiveness of such event, be proportionately
decreased or increased, as appropriate.

(h)     Adjustments for Reclassification and
Reorganization.
If the Common Stock issuable upon conversion of the Preferred
Stock shall be changed into the same or a different number of shares
of Common Stock of any other class or classes of stock, whether
by capital reorganization, reclassification or otherwise (other
than a subdivision or combination or shares of Common Stock provided
for in Section 5(g) hereof), the Conversion Price then in effect
shall, concurrently with the effectiveness of such reorganization
or reclassification, be proportionately adjusted so that the
Preferred Stock shall be convertible into, in lieu of the number of shares
of Common Stock which the holders of Preferred Stock would
otherwise have been entitled to receive, a number of shares of Common
Stock of such other class or classes of stock equivalent to the number
of shares of Common Stock that would have been subject to receipt
by the holders upon conversion of the Preferred Stock
immediately before that change.

6. Assignment.

Subject to all applicable restrictions on transfer, the
rights and obligations of the Corporation and the Holder of
the Preferred Stock shall be binding upon and benefit the
successors, assigns, heirs, administrators, and transferees of the
parties.

 
     ;6
 
7. Shares of Common Stock to be Reserved.

The Corporation, upon the effective date of this Certificate
of Designations, has a sufficient number of shares of Common
Stock available to reserve for issuance upon the conversion of
all outstanding shares of Preferred Stock, pursuant to the terms
and conditions set forth in Section 5, and exercise of the Warrants
as defined in Section 11. The Corporation will at all times
reserve and keep available out of its authorized shares of Common
Stock, solely for the purpose of issuance upon the conversion of
Preferred Stock, and exercise of the Warrants, as herein provided,
such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of Preferred Stock,
and exercise of the Warrants. The Corporation covenants that
all shares of Common Stock which shall be so issued shall be duly
and validly issued, fully paid and non assessable. The
Corporation will take such action as may be required, if the total number
of shares of Common Stock issued and issuable after such action
upon conversion of the Preferred Stock, and exercise of the
Warrants would exceed the total number of shares of Common Stock
then authorized by the Corporation's Certificate of Incorporation,
as amended, or would exceed 19.99% of the shares of Common Stock
then outstanding if required by law or the Rules and Regulations
of NASDAQ or the National Securities Exchange applicable to
the Corporation to take such action as a result of exceeding
such 19.99%, in order to increase the number of shares of Common
Stock to permit the Corporation to issue the number of shares of
Common Stock required to effect conversion of the Preferred, and
exercise of the Warrants, to a number sufficient to permit conversion of
the Preferred Stock, and exercise of the Warrants, including,
without limitation, engaging in reasonable efforts to obtain the
requisite stockholder approval of any necessary amendment to
the Corporation's Restated Certificate of Incorporation, and to
obtain shareholders approval in order to effect conversion of
the Preferred Stock, and exercise of the Warrants, if required by
lawor the rules or regulations of the NASDAQ or National
Securities Exchange applicable to the Corporation.

7(a) Shareholder Approval. In connection with the issuance to
the Holder of the shares of Preferred Stock, pursuant to
this Certificate of Designations, the Corporation is also issuing
(i) certain warrants ("RBB Warrants") to the Holder pursuant to
the terms of that certain Private Securities Subscription
Agreement dated June 30th, 1998 (the "Agreement"), providing for the
purchase of up to 150,000 shares of Common Stock at an exercise price
of $2.50 per share and (ii) certain warrants (collectively,
the "Liviakis Warrants") to Liviakis Financial Communication,
Inc. ("Liviakis") and Robert B. Prag providing for the purchase of up
to an aggregate of 2,500,000 shares of Common Stock at an
exercise price of $1.875 per share pursuant to the terms of that
Placement and Consulting Agreement dated June 30th, 1998, between
Liviakis and the Corporation.

If (i) the aggregate number of shares of Common Stock issued by
the Corporation as a result of any or all of the following:
(a) conversion of the Preferred Stock, (b) payment of dividends
accrued on the Preferred Stock (c) exercise of the RBB Warrants, and
(d) exercise of the Liviakis Warrants exceeds 2,388,347 shares
of Common Stock (which equals 19.9% of the outstanding shares
of 

     ;7

 
Common Stock of the Corporation as of the date of this
Certificate of Designations) and (ii) the Holder has converted or elects
to convert any of the then outstanding shares of Preferred
Stock pursuant to the terms of this Section 5 at a Conversion Price
less than $1.875 ($1.875 the market value per share of Common Stock
as quoted on the NASDAQ as of the close of business on June
30th, 1998) pursuant to the terms of Section 5(b) hereof, other than
if the Conversion Price is less than $1.875 solely as a result of
the anti-dilution provisions of Section 5(g) and (h) hereof,
then, notwithstanding anything in Section 5 to the contrary,
the Corporation shall not issue any shares of Common Stock as a
result of receipt of a Conversion Notice unless and until the
Corporation shall have obtained approval of its shareholders entitled to
vote on the transactions in accordance with subparagraphs
(25)(H)(i)d, (iv) and (v) of Rule 4310 of the NASDAQ Marketplace
Rules ("Shareholder Approval").

If Shareholder Approval is required as set forth in the
above paragraph, the Corporation shall take all necessary steps to
obtain such Shareholder Approval upon receipt of the Conversion
Notice triggering the need for Shareholder Approval ("Current
Conversion Notice"). If the Corporation has not received from the Holder
a Current Conversion Notice, the Holder, subsequent to January
1st, 1999 may, if the Corporation's shares of Common Stock
trade, subsequent to January 1st, 1999, at a five (5) day average
closing bid price below Two Dollars and 34/00 ($2.34), upon written
notice to the Corporation, require the Corporation to obtain
Shareholder Approval ("Holder's Notice"). The Holder and the
Corporation's officers and directors covenant to vote all shares of Common
Stock over which they have voting control in favour of
Shareholder Approval. If the Corporation does not obtain Shareholder
Approval within ninety (90) days of the earlier of the Corporation's
receipt of (i) the Current Conversion Notice or (ii) the Holder's
Notice, and the Holder has not breached its covenant to vote all shares
of Common Stock over which they have voting control in favour
of Shareholder Approval, the Corporation shall pay in cash to
the Holder liquidated damages, in an amount of 4% per month of
the Liquidation Value of each share of Preferred Stock
then outstanding, commencing on the 91st day of the
Corporation's receipt of the Holder's Current Conversion Notice, and
continuing every thirty (30) days pro-rata until such time the
Corporation receives Shareholder Approval.

8.   No Reissuance of Series 10 Class J Convertible
Preferred Stock.

Shares of Preferred Stock which are converted into shares of
Common Stock as provided herein shall be retired and shall
become authorized but unissued shares of Preferred Stock, which may
be reissued as part of a new series of Preferred stock
hereafter created.

9.   Closing of Books.

The Corporation will at no time close its transfer books
against the transfer of any Preferred Stock or of any shares of
Common Stock issued or issuable upon the conversion of any shares
of

     ;8
 
Common Stock of Preferred Stock in any manner which interferes
with the timely conversion of such Preferred Stock, except as
may otherwise be required to comply with applicable securities
laws.

10. No Preemptive Rights.

The Preferred Stock shall not give its holders any
preemptive rights to acquire any other securities issued by the
Corporation at any time in the future.

11. Definition of Shares.

As used in this Certificate of Designations, the term "shares
of Common Stock" shall mean and include the Corporation's
authorized common stock, par value $.001, as constituted on the date of
filing of these terms of the Preferred Stock, or in case of
any reorganization, reclassification, or stock split of the
outstanding shares of Common Stock thereof, the stock, securities or
assets provided for hereof. The term "Warrants" as used herein shall
have the same meaning as defined in Section 1 of the Private
Securities Subscription Agreement, dated June 30th 1998, between the
Company and RBB Bank Aktiengesellschaft.

The said determination of the designations, preferences
and relative, participating, optional or other rights, and
the qualifications, limitations or restrictions thereof, relating
to the Preferred Stock was duly made by the Board of
Directors pursuant to the provisions of the Corporation's
Restated Certificate of Incorporation and in accordance with the
provisions of the Delaware General Corporation Law.

IN WITNESS HEREOF, this Certificate of Designations has
been signed by:

Dr. Louis F. Centofanti, President on this 30th day of
June, 1998.

/s/ Louis Centofanti                                                                       

President, Perma-Fix Environmental Services,
Inc.

Richard Kelecy, Secretary on this 30th day of June,
1998

/s/ Richard T. Kelecy                                                                     

Secretary, Perma-Fix Environmental Services,
Inc.
 

 

     ;9
STATE
OF DELAWARE   

SECRETARY OF STATE   

DIVISION OF CORPORATIONS

FILED 01:30 PM 07/16/1998  

981277755 -- 2249849      

CERTIFICATE OF ELIMINATION

OF

SERIES 6 CLASS F CONVERTIBLE PREFERRED STOCK

AND

SERIES 7 CLASS G CONVERTIBLE PREFERRED STOCK

OF

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

____________________________________________

          PERMA-FIX ENVIRONMENTAL SERVICES, INC., a corporation
organized and existing under the General Corporation Law of
the State of Delaware (hereinafter called the "Corporation"),
hereby certifies the following:
          1.    That the Certificate of Designations of Series 6 Class
F Convertible Preferred Stock of the Corporation (the "Series
6 Preferred") was filed with the Delaware Secretary of State
on November 13, 1997 (the "Series 6 Certificate of
Designations").

          2.
    That all outstanding shares of the Series 6
Preferred have been delivered to the Company and exchanged upon
agreement with the holder thereof pursuant to the terms and conditions of
a certain Second RBB Exchange Agreement between the Company and
RBB Bank Aktiengesellschaft, dated effective as of February 28,
1998.

          3.
     That no shares of Series 6 Preferred remain
outstanding.

          4.
     That all shares of the Series 6 Preferred which have
been exchanged have the status of authorized and unissued shares of
the Preferred Stock of the Corporation without designation as
to series, until such shares are once more designated as part of
a particular series by the Board of Directors.

          5.
    That effective February 28, 1998, the Board of
Directors of the Company duly adopted the following
resolutions:

                   RESOLVED, that upon completion of the exchange
with the holder of 

                   the Series 6 Class F
Convertible Preferred Stock, no authorized shares 

                   of Series 6 Class F Convertible
Preferred Stock will remain outstanding 

                   and no
shares of Series 6 Class F Convertible Preferred Stock will be 

                   issued subject to the
Certificate of Designations previously filed with 

                   respect to the Series 6 Class F
Convertible Preferred Stock.

                   FURTHER RESOLVED, that upon completion of the
exchange, the 

                   officers of the Company are
hereby authorized and directed, for and on 

                   behalf of the Company, to execute and deliver
an appropriate Certificate 

 

 

                   of Elimination to
the Secretary of State of Delaware regarding the Series 6 

                   Class F Convertible Preferred
Stock.

          6.    That the Certificate of Designations of the Series
7 Class G Convertible Preferred Stock of the Corporation (the
"Series 7 Preferred") was filed on November 13, 1997 (the "Series
7 Certificate of Designations").

          7.
    That all outstanding shares of the Series 7
Preferred have been delivered to the Company and exchanged upon
agreement with the holder thereof pursuant to the terms and conditions of
a certain Exchange Agreement between the Company and The
Infinity Fund, L.P., dated effective as of February 28,
1998.

          8.
    That no shares of Series 7 Preferred remain
outstanding.

          9.     That all shares of the Series 7 Preferred which have
been exchanged have the status of authorized and unissued shares of
the Preferred Stock of the Corporation without designation as
to series, until such shares are once more designated as part of
a particular series by the Board of Directors.

          10.
  That effective February 28, 1998, the Board of
Directors of the Company duly adopted the following
resolutions:

                   RESOLVED, that upon completion of the exchange
with the holder 

                   of the Series 7 Class G
Convertible Preferred Stock, no authorized shares 

                   of Series 7 Class G Convertible
Preferred Stock will remain outstanding 

                   and no
shares of Series 7 Class G Convertible Preferred Stock will be issued 

                   subject to the
Certificate of Designations previously filed with respect to the 

                   Series 7 Class G
Convertible Preferred Stock.

                    FURTHER RESOLVED, that upon completion of the
exchange, the officers 

                    of the Company are
hereby authorized and directed, for and on behalf of the 

                    Company, to execute and deliver
an appropriate Certificate of Elimination to 

                    the Secretary of State of Delaware regarding
the Series 7 Class G Convertible 

                    Preferred
Stock.

          11.    That pursuant to the provisions of Section 151(g) of
the Delaware General Corporation Law, upon the effective date of
the filing of this Certificate, this Certificate will have the
effect of eliminating from the Restated Certificate of Incorporation
only those matters set forth in the Restated Certificate
of Incorporation with respect to the Series 6 Class F
Convertible  Preferred Stock and the Series 7 Class G Convertible
Preferred Stock.

 
-2-
 
          IN WITNESS WHEREOF, this Certificate of Elimination has
been executed this 30th day of April, 1998, by the President of
the Company.

                                                                             PERMA-FIX ENVIRONMENTAL

ATTEST:                                                              SERVICES, INC.

/s/ Richard T. Kelecy                                              By  /s/ Louis Centofanti                                     

Richard T. Kelecy, Secretary                                        Dr. Louis F.
Centofanti,

                                                                                     President
(SEAL)
 
 

 

 

 

 

 

-3-
 
STATE OF DELAWARE    

SECRETARY OF STATE    

DIVISION OF CORPORATIONS

FILED 01:31 PM 07/16/1998

981277757 -- 2249849    

 

CERTIFICATE OF DESIGNATIONS

OF SERIES 8 CLASS H CONVERTIBLE PREFERRED STOCK

OF

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

 

         Perma-Fix Environmental Services, Inc. (the "Corporation"),
a corporation organized and existing under the General
Corporation Law of the State of Delaware, does hereby
certify:

          That, pursuant to authority conferred upon by the Board
of Directors by the Corporation's Restated Certificate
of Incorporation, as amended, and pursuant to the provisions
of Section 151 of the Delaware Corporation Law, the Board of
Directors of the Corporation has adopted resolutions, a copy of which
is attached hereto, establishing and providing for the issuance of
a series of Preferred Stock designated as Series 8 Class
H Convertible Preferred Stock and has established and fixed
the voting powers, designations, preferences and relative
participating, optional and other special rights and qualifications, limitations and restrictions of such Series 8
Class H Convertible Preferred Stock as set forth in the
attached resolutions.

Dated: April 30, 1998

                                                                                           PERMA-FIX ENVIRONMENTAL

                                                                                           SERVICES, INC.

                                                                                           By /s/ Louis Centofanti                           

                                                                                                 Dr. Louis F. Centofanti

                                                                                                 Chairman of the Board
ATTEST:

/s/ Richard T. Kelecy                               

Richard T. Kelecy, Secretary
 

 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

(the "Corporation")

RESOLUTION OF THE BOARD OF DIRECTORS

FIXING THE NUMBER AND DESIGNATING THE RIGHTS,
PRIVILEGES,

RESTRICTIONS AND CONDITIONS ATTACHING TO THE

SERIES 8 CLASS H CONVERTIBLE PREFERRED STOCK

          WHEREAS, the Corporation's capital includes preferred
stock, par value $.001 per share ("Preferred Stock"), which
Preferred Stock may be issued in one or more series by resolutions adopted
by the directors, and with the directors being entitled by
resolution to fix the number of shares in each series and to designate
the rights, designations, preferences and relative,
participating, optional or other special rights and privileges, restrictions
and conditions attaching to the shares of each such
series;

          WHEREAS, it is in the best interests of the Corporation
for the Board to create a new series from the Preferred
Stock designated as the Series 8 Class H Convertible Preferred Stock,
par value $.001 per share (the "Series 8 Class H Preferred
Stock");

          NOW, THEREFORE, BE IT
RESOLVED, that the Series 8 Class
H Preferred Stock shall consist of two thousand five hundred
(2,500) shares and no more and shall be designated as the Series 8 Class
H Convertible Preferred Stock, and the preferences,
rights, privileges, restrictions and conditions attaching to the Series
8 Class H Preferred Stock shall be as follows:

 Part 1 - Voting and Preemptive Rights.

1.1     Voting Rights. Except as otherwise provided in
Part 7 hereof or under Section 242(b)(2) of the General
Corporation Law of the State of Delaware (the "GCL"),
the holders of the Series 8 Class H Preferred Stock shall
have no voting rights whatsoever. To the extent that under Section 242(b)(2) of the GCL or Part 7 hereof,
the holders of the Series 8 Class H Preferred Stock are
entitled to vote on a matter, each share of the Series
8 Class H Preferred Stock shall be entitled one (1)
vote for each outstanding share of Series 8 Class H
Preferred Stock. Holders of the Series 8 Class H Preferred
Stock shall be entitled to notice of (and copies of proxy
materials and other information sent to stockholders)
for all shareholder meetings or written consents with
respect to which they would be entitled to vote, which notice
would be provided pursuant to the Corporation's
bylaws and applicable statutes.

1.2     No Preemptive Rights. The Series 8 Class H
Preferred Stock shall not give its holders any
preemptive rights to acquire any other securities issued by the
Corporation at any time in the future. 

 

-1-
 
Part 2 - Liquidation Rights.

2.1     Liquidation. If the Corporation shall be
voluntarily or involuntarily liquidated, dissolved or wound up at any time when any shares of the Series 8
Class H Preferred Stock shall be outstanding, the
holders of the then outstanding Series 8 Class H Preferred
Stock shall have a preference in distribution of the Corporation's property available for distribution to
the holders of the Corporation's Common Stock equal to
$1,000 consideration per outstanding share of Series 8 Class
H Preferred Stock, plus an amount equal to all unpaid
dividends accrued thereon to the date of payment of
such distribution ("Liquidation Preference"), whether or
not declared by the Board.

2.2     Payment of Liquidation
Preferences. Subject to
the provisions of Part 6 hereof, all amounts to be paid
as Liquidation Preference to the holders of Series 8
Class H Preferred Stock, as provided in this Part 2, shall
be paid or set apart for payment before the payment or
setting apart for payment of any amount for, or the distribution of any of the Corporation's property to
the holders of the Corporation's Common Stock, whether now
or hereafter authorized, in connection with such liquidation, dissolution or winding up.

2.3     No Rights After Payment. After the payment to the
holders of the shares of the Series 8 Class H
Preferred Stock of the full Liquidation Preference amounts
provided for in this Part 2, the holders of the Series 8 Class
H Preferred Stock as such shall have no right or claim
to any of the remaining assets of the Corporation.

2.4     Assets Insufficient to Pay Full Liquidation
Preference. In the event that the assets of the
Corporation available for distribution to the holders
of shares of the Series 8 Class H Preferred Stock upon
any dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, shall
be insufficient to pay in full all amounts to which such
holders are entitled pursuant to this Part 2, no such distribution shall be made on account of any shares
of any other class or series of Preferred Stock ranking
on a parity with the shares of this Series 8 Class H Preferred Stock upon such dissolution, liquidation or
winding up unless proportionate distributive amounts shall be paid on account of the shares of this Series
8 Class H Preferred Stock and shares of such other class
or series ranking on a parity with the shares of this
Series 8 Class H Preferred Stock, ratably, in proportion to
the full distributable amounts for which holders of all
such parity shares are respectively entitled upon such
dissolution, liquidation or winding up.

Part 3 - Dividends. The holders of the Series 8 Class
H Preferred Stock are entitled to receive if, when and
as declared by the Board out of funds legally available
therefor, cumulative dividends, payable in cash or
Common Stock of the Corporation, par value $.001 per share
(the "Common Stock"), or any combination thereof, at the
Corporation's election, at the rate of four percent
(4%)

 

-2-
 
per annum of the Liquidation Value (as defined below)
of each issued and outstanding share of Series 8 Class H
Preferred Stock (the "Dividend Rate"). The
Liquidation Value of the Series 8 Class H Preferred Stock shall
be $1,000 per outstanding share of the Series 8 Class H
Preferred Stock (the "Liquidation Value"). The
dividend is payable semi-annually within seven (7) business
days after each of December 31 and June 30 of each year,
commencing June 30, 1998 (each, a "Dividend
Declaration Date"). Dividends shall be paid only with respect to
shares of Series 8 Class H Preferred Stock actually issued and outstanding on a Dividend Declaration Date
and to holders of record of the Series 8 Class H
Preferred Stock as of the Dividend Declaration Date. Dividends
shall accrue from the first day of the semi-annual
period in which such dividend may be payable, except with
respect to the first semi-annual dividend which shall accrue from March 1, 1998. In the event that the
Corporation elects to pay the accrued dividends due as
of a Dividend Declaration Date on an outstanding share
of the Series 8 Class H Preferred Stock in Common Stock
of the Corporation, the holder of such share shall
receive that number of shares of Common Stock of the
Corporation equal to the product of (a) the quotient of (i) the
Dividend Rate divided by (ii) the average of the
closing bid quotation of the Corporation's Common Stock as
reported on the National Association of Securities Dealers Automated Quotation system ("NASDAQ"), or the
average closing sale price if listed on a national securities exchange, for the five (5) trading days
immediately prior to the Dividend Declaration Date
(the "Stock Dividend Price"), times (b) a fraction, the
numerator of which is the number of days elapsed
during the period for which the dividend is to be paid and
the denominator of which is 365. Dividends on the Series
8 Class H Preferred Stock shall be cumulative, and no
dividends or other distributions shall be paid or declared or set aside for payment on the
Corporation's Common Stock until all accrued and unpaid dividends
on all outstanding shares of Series 8 Class H Preferred
Stock shall have been paid or declared and set aside
for payment.

Part 4 - Conversion. The holders of the Series 8
Class H Preferred Stock shall have rights to convert the
shares of Series 8 Class H Preferred Stock into shares of
the Corporation's Common Stock, par value $.001 per share
("Common Stock"), as follows (the "Conversion
Rights"):

4.1     Right to Convert. The Series 8 Class H Preferred
Stock shall be convertible into shares of Common Stock
at any time.

4.2     Conversion Price. Subject to the terms hereof, as
used herein, the Conversion Price per outstanding
share of Series 8 Class H Preferred Stock shall be $1.8125,
except that, in the event the average closing bid
price per share of the Common Stock as reported on the
over-the-counter market, or the closing sale price if
listed on a national securities exchange, for the five (5)
trading days prior to the particular date of
conversion shall be less than $2.265, the Conversion Price for
only such particular conversion shall be the product of
the average closing bid quotation of the Common Stock
as

 

-3-
 
reported on the over-the-counter market, or the
closing sale price if listed on a national securities
exchange, for the five (5) trading days immediately preceding
the date of the Conversion Notice referred to in Section
4.3 below in connection with such conversion multiplied
by eighty percent (80%). Notwithstanding the foregoing,
the Conversion Price shall not be less than a minimum of
$.75 per share ("Minimum Conversion Price"), which Minimum
Conversion Price shall be eliminated from and after September 6, 1998. If any of the outstanding shares
of Series 8 Class H Preferred Stock are converted, in
whole or in part, into Common Stock pursuant to the terms
of this Part 4, the number of shares of whole Common
Stock to be issued to the holder as a result of such
conversion shall be determined by dividing (a) the aggregate
Liquidation Value of the Series 8 Class H Preferred
Stock so surrendered for conversion by (b) the Conversion
Price as of such conversion. At the time of conversion of
shares of the Series 8 Class H Preferred Stock, the Corporation shall pay in cash to the holder thereof
an amount equal to all unpaid and accrued dividends, if
any, accrued thereon to the date of conversion, or, at the
Corporation's option, in lieu of paying cash for the accrued and unpaid dividends, issue that number of
whole shares of Common Stock which is equal to the quotient
of the amount of such unpaid and accrued dividends to
the date of conversion on the shares of Series 8 Class H
Preferred Stock so converted divided by the Stock Dividend Price, as defined in Part 3 hereof, in effect
at the date of conversion.

4.3     Mechanics of Conversion. Any holder of the Series
8 Class H Preferred Stock who wishes to exercise its Conversion Rights pursuant to Section 4.1 of this Part
4 must, if such shares are not being held in escrow by
the Corporation's attorneys, surrender the certificate
therefor at the principal executive office of the Corporation, and give written notice, which may be
via facsimile transmission, to the Corporation at such
office that it elects to convert the same (the "Conversion
Notice"). In the event that the shares of Series 8
Class H Preferred Stock are being held in escrow by the
Corporation's attorneys, no delivery of the
certificates shall be required. The Corporation shall, within five
(5) business days after receipt of an appropriate and timely Conversion Notice (and certificate, if
necessary), issue to such holder of Series 8 Class H Preferred
Stock or its agent a certificate for the number of shares
of Common Stock to which he shall be entitled; it being
expressly agreed that until and unless the holder delivers written notice to the Corporation to the
contrary, all shares of Common Stock issuable upon conversion of the Series 8 Class H Preferred Stock
hereunder are to be delivered by the Corporation to a party designated in writing by the holder in the
Conversion Notice for the account of the holder and
such shall be deemed valid delivery to the holder of such
shares of Common Stock. Such conversion shall be
deemed to have been made only after both the certificate for
the shares of Series 8 Class H Preferred Stock to be converted have been surrendered and the Conversion
Notice is received by the Corporation (or in the event that
no surrender of the Certificate is required, then only
upon the receipt by the Corporation of the Conversion
Notice)

 
-4-
 
(the "Conversion Documents"), and the person or
entity whose name is noted on the certificate evidencing
such shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder
of such shares of Common Stock at and after such time.
In the event that the Conversion Notice is sent via facsimile transmission, the Corporation shall be
deemed to have received such Conversion Notice on the first
business day on which such facsimile Conversion Notice
is actually received. If the Corporation fails to
deliver to the holder or its agent the certificate
representing the shares of Common Stock that the holder is entitled
to receive as a result of such conversion of the Series
8 Class H Preferred Stock within seven (7) business
days after receipt by the Corporation from the holder of
an appropriate and timely Conversion Notice and
certificates pursuant to the terms of this Section 4.3 ("Seven (7)
Business Day Period"), then, upon the written demand
of RBB Bank Aktiengesellschaft ("RBB Bank"), the holder
of the Series 8 Class H Preferred Stock, for payment of
the penalty described below in this Section 4.3, which
demand must be received by the Corporation no later than ten
(10) calendar days after the expiration of such Seven
(7) Business Day Period, the Corporation shall pay to RBB
Bank the following penalty for each business day
after the Seven (7) Business Day Period until the
Corporation delivers to the holder or its agent the certificate
representing the shares of Common Stock that the
holder is entitled to receive as a result of such
conversion: business day eight (8) - U.S. $1,000; business day
nine (9) - U.S. $2,000, and each business day thereafter
an amount equal to the penalty due on the immediately
preceding business day times two (2) until the Corporation delivers to the holder or its agent the
certificate representing the shares of Common Stock
that the holder is entitled to receive as a result of such
conversion.

4.4     Merger or Consolidation. In case of either (a)
any merger or consolidation to which the Corporation is a
party (collectively, the "Merger"), other than a
Merger in which the Corporation is the surviving or
continuing corporation, or (b) any sale or conveyance to another
corporation of all, or substantially all, of the
assets of the Corporation (collectively, the "Sale"), and
such Merger or Sale becomes effective (x) while any shares
of Series 8 Class H Preferred Stock are outstanding and
prior to the date that the Corporation's Registration Statement covering up to 1,379,311 shares of Common
Stock issuable upon the conversion of the Series 8 Class H
Preferred Stock is declared effective by the U. S. Securities and Exchange Commission or (y) prior to
the end of the restriction periods in Section 4.1, then,
in such event, the Corporation or such successor corporation, as the case may be, shall make
appropriate provision so that the holder of each share of Series
8 Class H Preferred Stock then outstanding shall have
the right to convert such share of Series 8 Class H
Preferred Stock into the kind and amount of shares of stock or
other securities and property receivable upon such
Merger or Sale by a holder of the number of shares of Common
Stock into which such shares of Series 8 Class H Preferred Stock could have been converted into

 
-5-
 
immediately prior to such Merger or Sale, subject to adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this
Part 4.

4.5     Adjustments to Conversion Price for Stock
Dividends and for Combinations or Subdivisions of Common
Stock.
If the Corporation at any time or from time to time
while shares of Series 8 Class H Preferred Stock are issued
and outstanding shall declare or pay, without
consideration, any dividend on the Common Stock payable in Common
Stock, or shall effect a subdivision of the outstanding
shares of Common Stock into a greater number of shares of
Common Stock (by stock split, reclassification or otherwise
than by payment of a dividend in Common Stock or in any
right to acquire Common Stock), or if the outstanding shares
of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number
of shares of Common Stock, then the Conversion Price in
effect immediately before such event shall,
concurrently with the effectiveness of such event, be
proportionately decreased or increased, as appropriate.

 

4.6     Adjustments for Reclassification and
Reorganization. If the Common Stock issuable upon conversion of the
Series 8 Class H Preferred Stock shall be changed
into the same or a different number of shares of any other
class or classes of stock, whether by capital reorganization, reclassification or otherwise (other
than a subdivision or combination of shares provided for
in Section 4.4 hereof), the Conversion Price shall, concurrently with the effectiveness of such
reorganization or reclassification, be
proportionately adjusted so that the Series 8 Class H Preferred Stock
shall be convertible into, in lieu of the number of shares of Common Stock which the holders of Series 8
Class H Preferred Stock would otherwise have been entitled to receive, a number of shares of such other
class or classes of stock equivalent to the number of shares of Common Stock that would have been subject
to receipt by the holders upon conversion of the Series
8 Class H Preferred Stock immediately before that
change.

4.7     Common Stock Duly Issued. All Common Stock which
may be issued upon conversion of Series 8 Class H Preferred Stock will, upon issuance, be duly issued,
fully paid and nonassessable and free from all taxes, liens, and charges with respect to the issue
thereof.

4.8      Notice of Adjustments. Upon the occurrence of
each adjustment or readjustment of any Conversion Price
pursuant to this Part 4, the Corporation, at its
expense, within a reasonable period of time, shall compute
such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of
Series 8 Class H Preferred Stock a notice setting forth such
adjustment or readjustment and showing in detail the facts upon which such adjustment is based.

 
-6-
 
4.9     Issue Taxes. The Corporation shall pay any and
all issue and other taxes that may be payable in respect
of any issue or delivery of shares of Common Stock on
conversion of the Series 8 Class H Preferred Stock pursuant thereto; provided, however, that the
Corporation shall not be obligated to pay any transfer taxes
resulting from any transfer requested by any holder
of Series 8 Class H Preferred Stock in connection with
such conversion.

4.10     Reservation of Stock Issuable Upon
Conversion.
The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the
conversion of the shares of the Series 8 Class H Preferred
Stock, such number of its shares of Common Stock as shall,
from time to time, be sufficient to effect the conversion
of all outstanding shares of the Series 8 Class H
Preferred stock, and, if at any time, the number of authorized
but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding
shares of the Series 8 Class H Preferred Stock, the
Corporation will take such corporate action as may be necessary
to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient
for such purposes, including, without limitation, engaging
in reasonable efforts to obtain the requisite
stockholder approval of any necessary amendment to its Certificate
of Incorporation.

4.11     Fractional Shares. No fractional shares shall be
issued upon the conversion of any share or shares of Series 8 Class H Preferred Stock. All shares of
Common Stock (including fractions thereof) issuable upon
conversion of more than one share of Series 8 Class H Preferred Stock by a holder thereof shall be
aggregated for purposes of determining whether the conversion
would result in the issuance of any fractional share. If,
after the aforementioned aggregation, the conversion would result in the issuance of a fractional share of
Common Stock, such fractional share shall be rounded
up to the nearest whole share.

4.12     Notices. Any notices required by the provisions
of this Part 4 to be given to the holders of shares of
Series 8 Class H Preferred Stock shall be deemed given
if deposited in the United States mail, postage prepaid,
and addressed to each holder of record at his address
appearing on the books of the Corporation.

4.13     Business Day. As used herein, the term "business
day" shall mean any day other than a Saturday, Sunday
or a day when the federal and state banks located in the
State of New York are required or is permitted to
close.

Part 5 - Redemption.

5.1     Redemption at Corporation's
Option. Except as otherwise provided in this Section 5.1, at any time,
and from time to time, after the expiration of one (1)
year from June 9, 1997, the Corporation may, at its sole
option, but shall not be obligated to, redeem, in
whole

 
-7-

or in part, at any time, and from time to time, the
then outstanding Series 8 Class H Preferred Stock at the
following cash redemption prices per share (the "Redemption Price") if redeemed during the following
periods: (a) within four years from June 9, 1997 -
$1,300 per share, if at any time during such four year
period the average of the closing bid price of the Common
Stock for ten consecutive trading days shall be in excess
of Four Dollars ($4.00) per share, and (b) after four
years from June 9, 1997 - $1,000 per share.

5.2     Mechanics of Redemption. Thirty days prior to any
date stipulated by the Corporation for the redemption
of Series 8 Class H Preferred Stock (the "Redemption
Date"), written notice (the "Redemption Notice") shall be
mailed to each holder of record on such notice date of the
Series 8 Class H Preferred Stock. The Redemption
Notice shall state: (i) the Redemption Date of such shares,
(ii) the number of Series 8 Class H Preferred Stock to be
redeemed from the holder to whom the Redemption Notice
is addressed, (iii) instructions for surrender to the
Corporation, in the manner and at the place
designated, of a share certificate or share certificates
representing the number of Series 8 Class H Preferred Stock to be
redeemed from such holder, and (iv) instructions as
to how to specify to the Corporation the number of Series
8 Class H Preferred Stock to be redeemed as provided in
this Part 5 and, if the Redemption Notice is mailed
to the Holder after the first 180 days from the date of
issuance of the Series 8 Class H Preferred Stock, the number of shares to be converted into Common Stock as
provided in Part 4 hereof.

5.3    Rights of Conversion Upon
Redemption. If the redemption occurs after the first 180 days after the
first issuance of Series 8 Class H Preferred Stock,
then, upon receipt of the Redemption Notice, any holder of
Series 8 Class H Preferred Stock shall have the
option, at its sole election, to specify what portion of its
Series 8 Class H Preferred Stock called for redemption
in the Redemption Notice shall be redeemed as provided
in this Part 5 or converted into Common Stock in the
manner provided in Part 4 hereof, except that,
notwithstanding any provision of such Part 4 to the contrary, such
holder shall have the right to convert into Common Stock
that number of Series 8 Class H Preferred Stock called for
redemption in the Redemption Notice.

5.4    Surrender of Certificates. On or before the
Redemption Date in respect of any Series 8 Class H Preferred Stock, each holder of such shares shall
surrender the required certificate or certificates representing such shares to the Corporation in the
manner and at the place designated in the Redemption Notice,
and upon the Redemption Date, the Redemption Price for
such shares shall be made payable, in the manner provided
in Section 5.6 hereof, to the order of the person whose
name appears on such certificate or certificates as the
owner thereof, and each surrendered share certificate shall
be canceled and retired. If a share certificate is surrendered and all the shares evidenced thereby are
not

 
-8-
 
being redeemed (as described below), the Corporation shall cause the Series 8 Class H Preferred Stock
which are not being redeemed to be registered in the names
of the persons or entity whose names appear as the owners
on the respective surrendered share certificates and
deliver such certificate to such person.

5.5     Payment. On the Redemption Date in respect of any
Series 8 Class H Preferred Stock or prior thereto,
the Corporation shall deposit with any bank or trust
company having a capital and surplus of at least $50,000,000,
as a trust fund, a sum equal to the aggregate Redemption
Price of all such shares called from redemption (less
the aggregate Redemption Price for those Series 8 Class H
Preferred Stock in respect of which the Corporation
has received notice from the holder thereof of its
election to convert Series 8 Class H Preferred Stock into
Common Stock), with irrevocable instructions and authority
to the bank or trust company to pay, on or after the Redemption Date, the Redemption Price to the
respective holders upon the surrender of their share
certificates.  The deposit shall constitute full payment for the
shares to their holders, and from and after the date of the
deposit the redeemed shares shall be deemed to be no longer outstanding, and holders thereof shall cease to
be shareholders with respect to such shares and shall
have no rights with respect thereto except the rights to
receive from the bank or trust company payments of
the Redemption Price of the shares, without interest,
upon surrender of their certificates thereof. Any funds so
deposited and unclaimed at the end of one year
following the Redemption Date shall be released or repaid to
the Corporation, after which the former holders of shares
called for redemption shall be entitled to receive payment of the Redemption Price in respect of their
shares only from the Corporation.

Part 6 - Parity with Other Shares of Series 8 Class H
Preferred Stock and Priority.

6.1     Rateable Participation. If any cumulative
dividends or return of capital in respect of Series 8 Class H
Preferred Stock are not paid in full, the owners of
all series of outstanding Preferred Stock shall
participate rateably in respect of accumulated dividends and
return of capital.

6.2     Ranking. For purposes of this resolution, any
stock of any class or series of the Corporation shall be
deemed to rank:

           6.2.1  Prior or senior to the shares of this
Series 8 Class H Preferred Stock either as to dividends or upon liquidation, if
the holders of such class or classes shall be entitled to the receipt of
dividends or of amounts distributable upon dissolution, liquidation or winding
up of the Corporation, whether voluntary or involuntary, as the case may be, in
preference or priority to the holders of shares of this Series 8 Class H Preferred
Stock;

 

-9-

         6.2.2  On a parity with, or equal to, shares of
this Series 8 Class H Preferred Stock, either as to dividends or upon
liquidation, whether or not the dividend rates, dividend payment dates, or
redemption or liquidation prices per share or sinking fund provisions, if any,
are different from those of this Series 8 Class H Preferred Stock, if the holders
of such stock are entitled to the receipt of dividends or of amounts distributable
upon dissolution, liquidation or winding up of the Corporation, whether voluntary
or involuntary, in proportion to their respective dividend rates or liquidation
prices, without preference or priority, one over the other, as between the
holders of such stock and over the other, as between the holders of such stock and
the holders of shares of this Series 8 Class H Preferred Stock; and,

        6.2.3  Junior to shares of this Series 8 Class H
Preferred Stock, either as to dividends or upon liquidation, if such class or
series shall be Common Stock or if the holders of shares of this Series 8 Class
H Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, as the case may be, in
preference or priority to the holders of shares of such class or series.

 
 

 

 

 

 

-10-
 
Part 7 - Amendment and Reissue.

7.1   Amendment. If any proposed amendment to the
Corporation's Certificate of Incorporation (the "Articles") would alter or change the powers,
preferences or special rights of the Series 8 Class H Preferred
Stock so as to affect such adversely, then the Corporation
must obtain the affirmative vote of such amendment to the
Articles at a duly called and held series meeting of
the holders of the Series 8 Class H Preferred Stock or
written consent by the holders of a majority of the Series 8 Class H Preferred Stock then outstanding. 
Notwithstanding the above or the provisions of
Section 242(b)(2) of the GCL, the number of authorized shares
of any class or classes of stock of the Corporation may
be increased or decreased (but not below the number of
shares thereof outstanding) by the affirmative vote
of the holders of a majority of the stock of the
Corporation entitled to vote thereon, voting together as a single
class, irrespective of the provisions of this Section
7.1 or Section 242(b)(2) of the GCL.

7.2    Authorized. Any shares of Series 8 Class H
Preferred Stock acquired by the Corporation by reason
of purchase, conversion, redemption or otherwise shall
be retired and shall become authorized but unissued
shares of Preferred Stock, which may be reissued as part of
a new series of Preferred Stock hereafter created.

 
 

 

 

 

 

-11-
 
CERTIFICATE OF DESIGNATIONS

OF SERIES 9 CLASS I CONVERTIBLE PREFERRED STOCK

OF

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

          Perma-Fix Environmental Services, Inc. (the "Corporation"),
a corporation organized and existing under the General
Corporation Law of the State of Delaware, does hereby
certify:

          That, pursuant to authority conferred upon by the Board
of Directors by the Corporation's Restated Certificate
of Incorporation, as amended, and pursuant to the provisions
of Section 151 of the Delaware Corporation Law, the Board of
Directors of the Corporation has adopted resolutions, a copy of which
is attached hereto, establishing and providing for the issuance of
a series of Preferred Stock designated as Series 9 Class
I Convertible Preferred Stock and has established and fixed
the voting powers, designations, preferences and relative
participating, optional and other special rights and qualifications, limitations and restrictions of such Series 9
Class I Convertible Preferred Stock as set forth in the
attached resolutions.

Dated: April 30, 1998

                                                                                  PERMA-FIX ENVIRONMENTAL

                                                                                  SERVICES, INC.

                                                                                   By
 /s/ Louis Centofanti                                 

                                                                                        Dr. Louis F. Centofanti

                                                                                        Chairman of the Board
ATTEST:

/s/ Richard T. Kelecy                                  

Richard T. Kelecy, Secretary
 

 

STATE OF DELAWARE    

SECRETARY OF STATE     

DIVISION OF CORPORATIONS

FILED 01:32 PM 07/16/1998  

981277758 -- 2249849        

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

(the "Corporation")

RESOLUTION OF THE BOARD OF DIRECTORS

FIXING THE NUMBER AND DESIGNATING THE RIGHTS,
PRIVILEGES,

RESTRICTIONS AND CONDITIONS ATTACHING TO THE

SERIES 9 CLASS I CONVERTIBLE PREFERRED STOCK

          WHEREAS, the Corporation's capital includes preferred
stock, par value $.001 per share ("Preferred Stock"), which
Preferred Stock may be issued in one or more series by resolutions adopted
by the directors, and with the directors being entitled by
resolution to fix the number of shares in each series and to designate
the rights, designations, preferences and relative,
participating, optional or other special rights and privileges, restrictions
and conditions attaching to the shares of each such
series;

          WHEREAS, it is in the best interests of the Corporation
for the Board to create a new series from the Preferred
Stock designated as the Series 9 Class I Convertible Preferred Stock,
par value $.001 per share (the "Series 9 Class I Preferred
Stock");

          NOW, THEREFORE, BE IT
RESOLVED, that the Series 9 Class
I Preferred Stock shall consist of three hundred (350) shares and
no more and shall be designated as the Series 9 Class I
Convertible Preferred Stock, and the preferences, rights,
privileges, restrictions and conditions attaching to the Series 9 Class
I Preferred Stock shall be as follows:

Part 1 - Voting and Preemptive Rights.

1.1     Voting Rights.  Except as otherwise provided in Part 7
hereof  or under Section 242(b)(2) of the General Corporation Law of
the State of Delaware (the "GCL"), the holders of the Series 9 Class
I Preferred Stock shall have no voting rights whatsoever. To
the extent that under Section 242(b)(2) of the GCL or Part 7
hereof, the holders of the Series 9 Class I Preferred Stock are entitled
to vote on a matter, each share of the Series 9 Class I
Preferred Stock shall be entitled one (1) vote for each outstanding share
of Series 9 Class I Preferred Stock. Holders of the Series 9 Class
I Preferred Stock shall be entitled to notice of (and copies of
proxy materials and other information sent to stockholders) for
all shareholder meetings or written consents with respect to which
they would be entitled to vote, which notice would be provided
pursuant to the Corporation's bylaws and applicable statutes. If
the holders of the Series 9 Class I Preferred Stock are required
to vote under Section 242(b)(2) of the GCL as a result of the
number of authorized shares of any such class or classes of stock
being increased or decreased, the number of authorized shares of any
of such class or classes of stock may be increased or decreased
(but not below the number of shares thereof then outstanding) by
the affirmative vote of the holders of a majority of the stock of
the Corporation entitled to vote thereon, irrespective of
the provisions of Section 242(b)(2) of the GCL.

 
-1-
 
1.2     No Preemptive Rights. The Series 9 Class I Preferred
Stock shall not give its holders any preemptive rights to acquire
any other securities issued by the Corporation at any time in
the future.

Part 2 - Liquidation Rights.

2.1     Liquidation. If the Corporation shall be voluntarily
or involuntarily liquidated, dissolved or wound up at any time
when any shares of the Series 9 Class I Preferred Stock shall
be outstanding, the holders of the then outstanding Series 9 Class
I Preferred Stock shall be entitled to receive out of the assets
of the Corporation available for distribution to shareholders
an amount equal to $1,000 consideration per outstanding share
of Series 9 Class I Preferred Stock, and no more, plus an amount
equal to all unpaid dividends accrued thereon to the date of payment
of such distribution ("Liquidation Preference"), whether or
not declared by the Board of Directors, before any payment shall
be made or any assets distributed to the holders of the
Corporation's Common Stock.

2.2     Payment of Liquidation
Preferences. Subject to the
provisions of Part 6 hereof, all amounts to be paid as Liquidation
Preference to the holders of Series 9 Class I Preferred Stock, as provided
in this Part 2, shall be paid or set apart for payment before
the payment or setting apart for payment of any amount for, or
the distribution of any of the Corporation's property to the holders
of the Corporation's Common Stock, whether now or
hereafter authorized, in connection with such liquidation, dissolution
or winding up.

2.3     No Rights After Payment. After the payment to the holders
of the shares of the Series 9 Class I Preferred Stock of the
full Liquidation Preference amounts provided for in this Part 2,
the holders of the Series 9 Class I Preferred Stock as such shall
have no right or claim to any of the remaining assets of
the Corporation. 

2.4     Assets Insufficient to Pay Full Liquidation
Preference.
In the event that the assets of the Corporation available
for distribution to the holders of shares of the Series 9 Class
I Preferred Stock upon any dissolution, liquidation or winding up
of the Corporation, whether voluntary or involuntary, shall
be insufficient to pay in full all amounts to which such holders
are entitled pursuant to this Part 2, no such distribution shall
be made on account of any shares of any other class or series
of Preferred Stock ranking on a parity with the shares of this
Series 9 Class I Preferred Stock upon such dissolution, liquidation
or winding up unless proportionate distributive amounts shall be
paid on account of the shares of this Series 9 Class I Preferred
Stock and shares of such other class or series ranking on a parity
with the shares of this Series 9 Class I Preferred Stock, ratably,
in proportion to the full distributable amounts for which holders
of all such parity shares are respectively entitled upon
such dissolution, liquidation or winding up.

Part 3 - Dividends.

3.1     The holders of the Series 9 Class I Preferred Stock
are entitled to receive if, when and as declared by the Board
of Directors of the Corporation (the "Board") out of funds
legally

 
-2-
 
available therefor, cumulative annual dividends, payable in cash
or Common Stock of the Corporation, par value $.001 per share
(the "Common Stock"), or any combination thereof, at the
Corporation's election, at the rate of four percent (4%) per annum of
the Liquidation Value (as defined below) of each issued and outstanding
share of Series 9 Class I Preferred Stock (the "Dividend
Rate"). The Liquidation Value of the Series 9 Class I Preferred Stock
shall be $1,000 per outstanding share of the Series 9 Class I
Preferred Stock (the "Liquidation Value"). The dividend is payable
semi-annually within seven (7) business days after each of December
31 and June 30 of each year, commencing June 30, 1998 (each,
a "Dividend Declaration Date"). Dividends shall be paid only
with respect to shares of Series 9 Class I Preferred Stock
actually issued and outstanding on a Dividend Declaration Date and
to holders of record of the Series 9 Class I Preferred Stock as of
the Dividend Declaration Date. Dividends shall accrue from the
first day of the semi-annual period in which such dividend may
be payable, except with respect to the first semi-annual
dividend which shall accrue from March 1, 1998. In the event that
the Corporation elects to pay the accrued dividends due as of
a Dividend Declaration Date on an outstanding share of the Series
9 Class I Preferred Stock in Common Stock of the Corporation,
the holder of such share shall receive that number of shares of
Common Stock of the Corporation equal to the product of (a) the
quotient of (i) the Dividend Rate divided by (ii) the average of the
closing bid quotation of the Corporation's Common Stock as reported on
the National Association of Securities Dealers Automated
Quotation system ("NASDAQ"), or the average closing sale price if listed
on a national securities exchange, for the five (5) trading
days immediately prior to the Dividend Declaration Date (the
"Stock Dividend Price"), times (b) a fraction, the numerator of which
is the number of days elapsed during the period for which the
dividend is to be paid and the denominator of which is 365. Dividends
on the Series 9 Class I Preferred Stock shall be cumulative, and
no dividends or other distributions shall be paid or declared or
set aside for payment on the Corporation's Common Stock until
all accrued and unpaid dividends on all outstanding shares of Series
9 Class I Preferred Stock shall have been paid or declared and
set aside for payment.

Part 4 - Conversion. The holders of the Series 9 Class I
Preferred Stock shall have rights to convert the shares of Series 9 Class
I Preferred Stock into shares of the Corporation's Common Stock,
as follows (the "Conversion Rights"):

4.1     Right to Convert. The Series 9 Class I Preferred Stock
shall be convertible into shares of Common Stock at any
time.

4.2     Conversion Price. Subject to the terms hereof, as
used herein, the Conversion Price per outstanding share of
Series 9 Class I Preferred Stock shall be $1.8125, except that,
in the event the average closing bid price per share of
the Common Stock as reported on the over-the-counter market,
or the closing sale price if listed on a national
securities exchange, for the five (5) trading days prior to the
particular date of conversion shall be less than $2.265,
the Conversion Price for only such particular conversion shall
be the product of the average closing bid quotation of the
Common Stock as reported on the over-the-counter market, or
the closing sale price if listed on a national securities
exchange, for the five (5) trading days immediately
preceding the date of the Conversion Notice referred to in Section
4.3 below in connection with such conversion multiplied by
eighty

 
-3-
 
percent (80%). Notwithstanding the foregoing, the
Conversion Price shall not be less than a minimum of $.75 per
share ("Minimum Conversion Price"), which Minimum Conversion
Price shall be eliminated from and after September 6, 1998. If
any of the outstanding shares of Series 9 Class I Preferred
Stock are converted, in whole or in part, into Common Stock
pursuant to the terms of this Part 4, the number of shares of
whole Common Stock to be issued to the holder as a result of
such conversion shall be determined by dividing (a) the
aggregate Liquidation Value of the Series 9 Class I Preferred Stock
so surrendered for conversion by (b) the Conversion Price as
of such conversion. At the time of conversion of shares of
the Series 9 Class I Preferred Stock, the Corporation shall pay
in cash to the holder thereof an amount equal to all unpaid
and accrued dividends, if any, accrued thereon to the date
of conversion, or, at the Corporation's option, in lieu of
paying cash for the accrued and unpaid dividends, issue that
number of whole shares of Common Stock which is equal to the
quotient of the amount of such unpaid and accrued dividends to the
date of conversion on the shares of Series 9 Class I
Preferred Stock so converted divided by the Stock Dividend Price,
as defined in Part 3 hereof, in effect at the date of
conversion.

4.3     Mechanics of Conversion. Any holder of the Series 9 Class
I Preferred Stock who wishes to exercise its Conversion
Rights pursuant to Section 4.1 of this Part 4 must surrender
the certificate therefor at the principal executive office of
the Corporation, and give written notice, which may be
via facsimile transmission, to the Corporation at such office
that it elects to convert the same (the "Conversion Notice").
The Corporation shall, within seven (7) business days
after receipt of an appropriate and timely Conversion Notice
(and certificate, if necessary), issue to such holder of Series
9 Class I Preferred Stock or its agent a certificate for
the number of shares of Common Stock to which he shall be
entitled; it being expressly agreed that until and unless
the holder delivers written notice to the Corporation to
the contrary, all shares of Common Stock issuable upon
conversion of the Series 9 Class I Preferred Stock hereunder are to
be delivered by the Corporation to a party designated in
writing by the holder in the Conversion Notice for the account of
the holder and such shall be deemed valid delivery to the
holder of such shares of Common Stock. Such conversion shall
be deemed to have been made only after both the certificate
for the shares of Series 9 Class I Preferred Stock to be
converted have been surrendered and the Conversion Notice is received
by the Corporation (the "Conversion Documents"), and the
person or entity whose name is noted on the certificate
evidencing such shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of
such shares of Common Stock at and after such time. In the
event that the Conversion Notice is sent via facsimile
transmission, the Corporation shall be deemed to have received such
Conversion Notice on the first business day on which
such facsimile Conversion Notice is actually
received.

4.4     Merger or Consolidation. In case of either (a) any merger
or consolidation to which the Corporation is a party (collectively, the "Merger"), other than a Merger in which
the Corporation is the surviving or continuing corporation, or
(b) any sale or conveyance to another corporation of all,
or substantially all, of the assets of the
Corporation

 

-4-
 
(collectively, the "Sale"), and such Merger or Sale
becomes effective (x) while any shares of Series 9 Class I
Preferred Stock are outstanding and prior to the date that the
Corporation's Registration Statement covering up to
200,000 shares of Common Stock issuable upon the conversion of
the Series 9 Class I Preferred Stock is declared effective by
the U. S. Securities and Exchange Commission or (y) prior to
the end of the restriction periods in Section 4.1, then, in
such event, the Corporation or such successor corporation, as
the case may be, shall make appropriate provision so that
the holder of each share of Series 9 Class I Preferred Stock
then outstanding shall have the right to convert such share
of Series 9 Class I Preferred Stock into the kind and amount
of shares of stock or other securities and property
receivable upon such Merger or Sale by a holder of the number of
shares of Common Stock into which such shares of Series 9 Class
I Preferred Stock could have been converted into
immediately prior to such Merger or Sale, subject to adjustments
which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Part 4.

4.5    Adjustments to Conversion Price for Stock Dividends and
for Combinations or Subdivisions of Common
Stock. If the Corporation at any time or from time to time while shares
of Series 9 Class I Preferred Stock are issued and
outstanding shall declare or pay, without consideration, any dividend
on the Common Stock payable in Common Stock, or shall effect
a subdivision of the outstanding shares of Common Stock into
a greater number of shares of Common Stock (by stock
split, reclassification or otherwise than by payment of a dividend
in Common Stock or in any right to acquire Common Stock), or
if the outstanding shares of Common Stock shall be combined
or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common Stock, then the Conversion Price
in effect immediately before such event shall, concurrently
with the effectiveness of such event, be proportionately
decreased or increased, as appropriate.

4.6     Adjustments for Reclassification and
Reorganization. If
the Common Stock issuable upon conversion of the Series 9 Class
I Preferred Stock shall be changed into the same or a
different number of shares of any other class or classes of
stock, whether by capital reorganization, reclassification
or otherwise (other than a subdivision or combination of
shares provided for in Section 4.4 hereof), the Conversion Price
then in effect shall, concurrently with the effectiveness of
such reorganization or reclassification, be
proportionately adjusted so that the Series 9 Class I Preferred Stock shall
be convertible into, in lieu of the number of shares of
Common Stock which the holders of Series 9 Class I Preferred
Stock would otherwise have been entitled to receive, a number
of shares of such other class or classes of stock equivalent
to the number of shares of Common Stock that would have
been subject to receipt by the holders upon conversion of
the Series 9 Class I Preferred Stock immediately before
that change.

4.7     Common Stock Duly Issued. All Common Stock which may
be issued upon conversion of Series 9 Class I Preferred
Stock will, upon issuance, be duly issued, fully paid and
nonassessable and free from all taxes, liens, and charges
with respect to the issue thereof.

 

-5-
 
4.8     Notice of Adjustments. Upon the occurrence of each
adjustment or readjustment of any Conversion Price pursuant to this
Part 4, the Corporation, at its expense, within a reasonable
period of time, shall compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish
to each holder of Series 9 Class I Preferred Stock a
notice setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment is
based.

4.9     Issue Taxes. The Corporation shall pay any and all issue
and other taxes that may be payable in respect of any issue
or delivery of shares of Common Stock on conversion of the
Series 9 Class I Preferred Stock pursuant thereto; provided,
however, that the Corporation shall not be obligated to pay
any transfer taxes resulting from any transfer requested by
any holder of Series 9 Class I Preferred Stock in connection
with such conversion.

4.10     Reservation of Stock Issuable Upon
Conversion.
The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the conversion of the shares
of the Series 9 Class I Preferred Stock, such number of
its shares of Common Stock as shall, from time to time,
be sufficient to effect the conversion of all outstanding
shares of the Series 9 Class I Preferred stock, and, if at any
time, the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of all
then outstanding shares of the Series 9 Class I Preferred
Stock, the Corporation will take such corporate action as may
be necessary to increase its authorized but unissued shares
of Common Stock to such number of shares as shall be
sufficient for such purposes, including, without limitation, engaging
in reasonable efforts to obtain the requisite
stockholder approval of any necessary amendment to its Certificate
of Incorporation.

4.11     Fractional Shares. No fractional shares shall be issued
upon the conversion of any share or shares of Series 9 Class
I Preferred Stock. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than
one share of Series 9 Class I Preferred Stock by a holder
thereof shall be aggregated for purposes of determining whether
the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of a fractional share
of Common Stock, such fractional share shall be rounded up
to the nearest whole share.

4.12     Notices. Any notices required by the provisions of this
Part 4 to be given to the holders of shares of Series 9 Class
I Preferred Stock shall be deemed given if deposited in
the United States mail, postage prepaid, and addressed to
each holder of record at his address appearing on the books of
the Corporation.

4.13     Business Day. As used herein, the term "business day"
shall mean any day other than a Saturday, Sunday or a day when
the federal and state banks located in the State of New York
are required or is permitted to close.

 
-6-
 
Part 5 - Redemption.

5.1    Redemption at Corporation's Option. Except as
otherwise provided in this Section 5.1, at any time, and from time
to time, after the expiration of one (1) year from the date
of the first issuance of the Series 9 Class I Preferred
Stock, the Corporation may, at its sole option, but shall not
be obligated to, redeem, in whole or in part, at any time,
and from time to time, the then outstanding Series 9 Class
I Preferred Stock at the following cash redemption prices
per share (the "Redemption Price") if redeemed during
the following periods: (a) within four (4) years from the date
of the first issuance of Series 9 Class I Preferred Stock
- $1,300 per share, if at any time during such four (4)
year period the average of the closing bid price of the
Common Stock for ten (10) consecutive trading days shall be in
excess of Four U.S. Dollars ($4.00) per share, and (b) after four
(4) years from the date of the first issuance of Series 9 Class
I Preferred Stock - $1,000 per share.

5.2    Mechanics of Redemption. Thirty (30) days prior to any
date stipulated by the Corporation for the redemption of Series
9 Class I Preferred Stock (the "Redemption Date"),
written notice (the "Redemption Notice") shall be mailed to
each holder of record on such notice date of the Series 9 Class
I Preferred Stock. The Redemption Notice shall state: (i)
the Redemption Date of such shares, (ii) the number of Series
9 Class I Preferred Stock to be redeemed from the holder to
whom the Redemption Notice is addressed, (iii) instructions
for surrender to the Corporation, in the manner and at the
place designated, of a share certificate or share
certificates representing the number of Series 9 Class I Preferred Stock
to be redeemed from such holder, and (iv) instructions as to
how to specify to the Corporation the number of Series 9 Class
I Preferred Stock to be redeemed as provided in this Part
5.

5.3    Rights of Conversion Upon Redemption. If the
redemption occurs after the first one hundred eighty (180) days after
the first issuance of Series 9 Class I Preferred Stock, then,
upon receipt of the Redemption Notice, any holder of Series 9
Class I Preferred Stock shall have the option, at its sole
election, to specify what portion of its Series 9 Class I
Preferred Stock called for redemption in the Redemption Notice shall
be redeemed as provided in this Part 5 or converted into
Common Stock in the manner provided in Part 4 hereof.

5.4    Surrender of Certificates. On or before the Redemption
Date in respect of any Series 9 Class I Preferred Stock,
each holder of such shares shall surrender the required
certificate or certificates representing such shares to the Corporation
in the manner and at the place designated in the
Redemption Notice, and upon the Redemption Date, the Redemption Price
for such shares shall be made payable, in the manner provided
in Section 5.6 hereof, to the order of the person whose
name appears on such certificate or certificates as the
owner thereof. If a share certificate is surrendered and all
the shares evidenced thereby are not being redeemed (as
described below), the Corporation shall cause the Series 9 Class
I Preferred Stock which are not being redeemed to be
registered in the names of the persons or entity whose names appear
as the owners on the respective surrendered share
certificates and deliver such certificate to such person.

-7-

5.5    Payment. On the Redemption Date in respect of any Series
9 Class I Preferred Stock or prior thereto, the
Corporation shall deposit with any bank or trust company having a
capital and surplus of at least U. S. $50,000,000, as a trust fund,
a sum equal to the aggregate Redemption Price of all such
shares called from redemption (less the aggregate Redemption
Price for those Series 9 Class I Preferred Stock in respect of
which the Corporation has received notice from the holder thereof
of its election to convert Series 9 Class I Preferred Stock
into Common Stock), with irrevocable instructions and authority
to the bank or trust company to pay, on or after the
Redemption Date, the Redemption Price to the respective holders upon
the surrender of their share certificates. The deposit
shall constitute full payment for the shares to their holders,
and from and after the date of the deposit the redeemed
shares shall be deemed to be no longer outstanding, and
holders thereof shall cease to be shareholders with respect to
such shares and shall have no rights with respect thereto
except the rights to receive from the bank or trust company
payments of the Redemption Price of the shares, without interest,
upon surrender of their certificates thereof. Any funds
so deposited and unclaimed at the end of one year following
the Redemption Date shall be released or repaid to the Corporation, after which the former holders of shares
called for redemption shall be entitled to receive payment of
the Redemption Price in respect of their shares only from
the Corporation.

Part 6 - Parity with Other Shares of Series 9 Class I
Preferred Stock and Priority.

6.1    Rateable Participation. If any cumulative dividends or
return of capital in respect of Series 9 Class I Preferred Stock
are not paid in full, the owners of all series of
outstanding Preferred Stock shall participate rateably in respect
of accumulated dividends and return of capital.

6.2    Ranking. For purposes of this resolution, any stock of
any class or series of the Corporation shall be deemed to
rank:

          6.2.1  Prior or senior to the shares of this Series 9
Class I Preferred Stock either as to dividends

                    or upon liquidation, if the holders of such
class or classes shall be entitled to the receipt of

                    dividends or of amounts
distributable upon dissolution, liquidation or winding up of the

                   
Corporation, whether voluntary or involuntary, as the case may be, in preference or 

                    priority to the holders of
shares of this Series 9 Class I Preferred Stock;

          6.2.2  On a parity with, or equal to, shares of this
Series 9 Class I Preferred Stock, either as to

                     dividends or upon liquidation, whether or not
the dividend rates, dividend payment dates, 

                     or
redemption or liquidation prices per share or sinking fund provisions, if any, are 

                     different
from those of this Series 9 Class I Preferred Stock, if the holders of such stock 

                      are
entitled to the receipt of dividends or of amounts distributable upon dissolution, 

                      liquidation or winding up of the Corporation,
whether voluntary or involuntary, in 

                      proportion to their respective dividend rates

-8-
 
                      or liquidation prices, without preference or
priority, one over the other, as between 

                      the
holders of such stock and over the other, as between the holders of such stock 

                      and the
holders of shares of this Series 9 Class I Preferred Stock; and,

           6.2.3  Junior to shares of this Series 9 Class I
Preferred Stock, either as to dividends or upon

                    
liquidation, if such class or series shall be Common Stock or if the holders of shares 

                     of this Series 9 Class I Preferred
Stock shall be entitled to receipt of dividends or of 

                     amounts distributable upon
dissolution, liquidation or winding up of the Corporation, 

                     whether voluntary or involuntary,
as the case may be, in preference or priority to the 

                     holders of shares of such class or
series.

Part 7 - Reissue.

7.1     Authorized. Any shares of Series 9 Class I
Preferred Stock acquired by the Corporation by reason of
purchase, conversion, redemption or otherwise shall be retired
and shall become authorized but unissued shares of
Preferred Stock, which may be reissued as part of a new series
of Preferred Stock hereafter created.

 

 

 

 

 

 

 

 

-9-
 
STATE OF DELAWARE   

SECRETARY OF STATE   

DIVISION OF CORPORATIONS

FILED 12:30 PM 07/15/1999  

991291288 -- 2249849        

CERTIFICATE OF DESIGNATIONS

OF SERIES 11 CLASS K CONVERTIBLE PREFERRED STOCK

OF

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

          Perma-Fix Environmental Services, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify:
           That, pursuant to authority conferred upon by the Board of Directors by the
Corporation's Restated Certificate of Incorporation, as amended, and pursuant to
the provisions of Section 151 of the Delaware Corporation Law, the Board of
Directors of the Corporation has adopted resolutions, a copy of which is
attached hereto, establishing and providing for the issuance of a series of
Preferred Stock designated as Series 11 Class K Convertible Preferred Stock and
has established and fixed the voting powers, designations, preferences and
relative participating, optional and other special rights and qualifications,
limitations and restrictions of such Series 11 Class K Convertible Preferred
Stock as set forth in the attached resolutions.

Dated: July 15, 1999                                    PERMA-FIX ENVIRONMENTAL SERVICES, INC.

                                                                     By /s/ Louis Centofanti                                                

                                                                           Dr. Louis F. Centofanti

                                                                           Chairman of the Board

ATTEST:

/s/ Richard T. Kelecy                            

Richard T. Kelecy, Secretary

 

 

 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

(the "Corporation")

RESOLUTION OF THE BOARD OF DIRECTORS

FIXING THE NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,

RESTRICTIONS AND CONDITIONS ATTACHING TO THE

SERIES 11 CLASS K CONVERTIBLE PREFERRED STOCK

WHEREAS,

A.    The Corporation's share capital includes Preferred Stock, par value $.001
per share 

        ("Preferred Stock"), which Preferred Stock may be issued in one or
more series by the 

        Board of Directors of the Corporation (the "Board") being
entitled by resolution to fix the 

        number of shares in each series and to
designate the rights, designations, preferences, and 

        relative, participating,
optional or other special rights, privileges, restrictions and conditions 

        attaching to the shares of each such series; and

B.    It is in the best interests of the Corporation for the Board to create a
new series from the 

       Preferred Stock designated as the Series 11 Class K
Convertible Preferred Stock, par value $.001.

NOW, THEREFORE, BE IT RESOLVED, THAT:

The Series 11 Class K Convertible Preferred Stock, par value $.001 (the
"Series 11 Class K Preferred Stock") of the Corporation shall consist of 1,769
shares and no more and shall be designated as the Series 11 Class K Convertible
Preferred Stock, and the preferences, rights, privileges, restrictions and
conditions attaching to the Series 11 Class K Preferred Stock shall be as
follows:

Part 1 - Voting and Preemptive Rights.

1.1    Voting Rights. Except as otherwise provided
herein, in the Corporation's Certificate of Incorporation (the "Articles") or
the General Corporation Law of the State of Delaware (the "GCL"), the holders of
the Series 11 Class K Preferred Stock shall have no voting rights whatsoever. To
the extent that under the GCL the vote of the holders of the Series 11 Class K
Preferred Stock, voting separately as a class or series as applicable, is
required to authorize a given action of the Corporation, the affirmative vote or
consent of the holders of at least a majority of the shares of the Series 11
Class K Preferred Stock represented at a duly held meeting at which a quorum is
present or by written consent of a majority of the shares of Series 11 Class K
Preferred Stock (except as otherwise may be required under the GCL) shall
constitute the approval  
 

-2-

 
 of such action by the series. To the extent that under the GCL the holders of the
Series 11 Class K Preferred Stock are entitled to vote on a matter with holders
of Corporation's Common Stock and/or any other class or series of the
Corporation's voting securities, the Series 11 Class K Preferred Stock, the
Corporation's Common Stock and all other classes or series of the Corporation's
voting securities shall vote together as one class, with each share of Series 11
Class K Preferred Stock entitled to a number of votes equal to the number of
shares of the Corporation's Common Stock into which it is then convertible using
the record date for the taking of such vote of stockholders as the date as of
which the Conversion Price (as defined in Section 4.2 hereof) is calculated and
conversion is effected. Holders of the Series 11 Class K Preferred Stock shall
be entitled to notice of (and copies of proxy materials and other information
sent to stockholders) for all shareholder meetings or written consents with
respect to which they would be entitled to vote, which notice would be provided
pursuant to the Corporation's bylaws and applicable statutes.

1.2    No Preemptive Rights. The Series 11 Class K
Preferred Stock shall not give its holders any preemptive rights to acquire any
other securities issued by the Corporation at any time in the future.

Part 2 - Liquidation Rights.

2.1    Liquidation. If the Corporation shall be
voluntarily or involuntarily liquidated, dissolved or wound up at any time when
any shares of the Series 11 Class K Preferred Stock shall be outstanding, the
holders of the then outstanding Series 11 Class K Preferred Stock shall have a
preference in distribution of the Corporation's property available for
distribution to the holders of the Corporation's Common Stock equal to $1,000
consideration per outstanding share of Series 11 Class K Preferred Stock, plus
an amount equal to all unpaid dividends accrued thereon to the date of payment
of such distribution ("Liquidation Preference"), whether or not declared by the
Board.

2.2    Payment of Liquidation Preferences. Subject to
the provisions of Part 6 hereof, all amounts to be paid as Liquidation
Preference to the holders of Series 11 Class K Preferred Stock, as provided in
this Part 2, shall be paid or set apart for payment before the payment or
setting apart for payment of any amount for, or the distribution of any of the
Corporation's property to the holders of the Corporation's Common Stock, whether
now or hereafter authorized, in connection with such liquidation, dissolution or
winding up.

2.3    No Rights After Payment. After the payment to the
holders of the shares of the Series 11 Class K Preferred Stock of the full
Liquidation Preference amounts provided for in this Part 2, the holders of the
Series 11 Class K Preferred Stock as such shall have no right or claim to any of
the remaining assets of the Corporation.

2.4    Assets Insufficient to Pay Full Liquidation
Preference. In the event that the assets of the Corporation
available for distribution to the holders of shares of the Series 11 Class K
Preferred Stock upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, shall be 

  

-3-

insufficient to pay in full all amounts to which such holders are entitled
pursuant to this Part 2, no such distribution shall be made on account of any
shares of any other class or series of Preferred Stock ranking on a parity with
the shares of this Series 11 Class K Preferred Stock upon such dissolution,
liquidation or winding up unless proportionate distributive amounts shall be
paid on account of the shares of this Series 11 Class K Preferred Stock and
shares of such other class or series ranking on a parity with the shares of this
Series 11 Class K Preferred Stock, ratably, in proportion to the full
distributable amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or winding up.

Part 3 - Dividends.

3.1    The holders of the Series 11 Class K Preferred Stock are entitled to
receive if, when and as declared by the Board out of funds legally available
therefor, cumulative dividends, payable in cash or Common Stock of the
Corporation, par value $.001 per share (the "Common Stock"), at the
Corporation's election, at the rate of six percent (6%) per annum of the
Liquidation Value of the Series 11 Class K Preferred Stock. The Liquidation
Value of the Series 11 Class K Preferred Stock shall be $1,000.00 per share (the
"Dividend Rate"). The dividend is payable semi-annually within seven (7)
business days after each of December 31 and June 30 of each year, commencing
December 31, 1996 (each, a "Dividend Declaration Date"). Dividends shall be paid
only with respect to shares of Series 11 Class K Preferred Stock actually issued
and outstanding on a Dividend Declaration Date and to holders of record as of
the Dividend Declaration Date. Dividends shall accrue from the first day of the
semi-annual period in which such dividend may be payable, except with respect to
the first semi-annual dividend which shall accrue from the date of issuance of
the Series 11 Class K Preferred Stock. In the event that the Corporation elects
to pay dividends in Common Stock of the Corporation, each holder of the Series
11 Class K Preferred Stock shall receive shares of Common Stock of the
Corporation equal to the quotient of (i) the Dividend Rate in effect on the
applicable Dividend Declaration Date dividend by (ii) the average of the closing
bid quotation of the Common Stock as reported on the over-the-counter market, or
the closing sale price if listed on a national securities exchange, for the five
(5) trading days immediately prior to the Dividend Declaration Date (the "Stock
Dividend Price"). Dividends on the Series 11 Class K Preferred Stock shall be
cumulative, and no dividends or other distributions shall be paid or declared or
set aside for payment on the Common Stock until all accrued and unpaid dividends
on all outstanding shares of Series 11 Class K Preferred Stock shall have been
paid or declared and set aside for payment.

Part 4 - Conversion. The holders of the Series 11
Class K Preferred Stock shall have rights to convert the shares of Series 11
Class K Preferred Stock into shares of the Corporation's Common Stock, par value
$.001 per share ("Common Stock"), as follows (the "Conversion Rights"):

4.1    No Right to Convert. The Series 11 Class K Preferred shall not be
convertible into shares of Common Stock until after July 15, 2000.
 

-4-

4.2    Right to Convert. The Series 11 Class K Preferred
Stock may be convertible into shares of Common Stock at any time on or after
July 15, 2000.

4.3    Conversion Price. As used herein, the term
Conversion Price shall be the product of (i) the average closing bid quotation
of the Common Stock as reported on the over-the-counter market, or the closing
sale price if listed on a national securities exchange, for the five (5) trading
days immediately preceding the date of the Conversion Notice referred to in
Section 4.3 below multiplied by (ii) seventy-five percent (75%), subject to the
provisions of this Section 4.3. Notwithstanding the foregoing, the Conversion
Price shall not be (i) less than a minimum of $1.50 per share for a period of
twenty-four (24) months from the date of issuance of the Series 11 Class K
Preferred Stock, or, after twenty-four (24) months from the date of issuance of
the Series 11 Class K Preferred Stock, a minimum of $.50 per share (as
applicable, the "Minimum Conversion Price") or (ii) more than a maximum of $1.50
per share ( "Maximum Conversion Price"). If, after July 1, 1996, the Corporation
sustains a net loss, on a consolidated basis, in each of two (2) consecutive
quarters, as determined under generally accepted accounting principles, the
Minimum Conversion Price shall be reduced $.25 a share, but there shall be no
change to, or reduction of, the Maximum Conversion Price. For the purpose of
determining whether the Corporation has had a net loss in each of two (2)
consecutive quarters, at no time shall a quarter that has already been
considered in such determination be considered in any subsequent determination
(as an example the third quarter of 1996 in which there is a net profit and the
fourth quarter of 1996 in which there is a net loss shall be considered as two
consecutive quarters, and, as a result, the fourth quarter of 1996 shall not be
considered along with the first quarter of 1997 as two (2) consecutive quarters,
but the first quarter of 1997 must be considered with the second quarter of 1997
for the purposes of such determination). For the purposes of this Section 4.2, a
"quarter" is a three (3) month period ending on March 31, June 30, September 30,
and December 31. If any of the outstanding shares of Series 11 Class K Preferred
Stock are converted, in whole or in part, into Common Stock pursuant to the
terms of this Part 4, the number of shares of whole Common Stock to be issued to
the holder as a result of such conversion shall be determined by dividing (a)
the aggregate Liquidation Value of the Series 11 Class K Preferred Stock so
surrendered for conversion by (b) the Conversion Price in effect at the date of
the conversion. At the time of conversion of shares of the Series 11 Class K
Preferred Stock, the Corporation shall pay in cash to the holder thereof an
amount equal to all unpaid and accrued dividends, if any, accrued thereon to the
date of conversion, or, at the Corporation's option, in lieu of paying cash for
the accrued and unpaid dividends, issue that number of shares of whole Common
Stock which is equal to the product of dividing the amount of such unpaid and
accrued dividends to the date of conversion on the shares of Series 11 Class K
Preferred Stock so converted by the Conversion Price in effect at the date of
conversion.

4.4    Mechanics of Conversion. Any holder of the Series
11 Class K Preferred Stock who wishes to exercise its Conversion Rights pursuant
to Section 4.1 of this Part 4 must, if such shares are not being held in escrow
by the Corporation's attorneys, surrender the certificate therefor at the
principal executive office of the Corporation, and give written notice, which
may be via facsimile transmission, to the Corporation at such  
 

-5-

 
 office that it
elects to convert the same (the "Conversion Notice"). In the event that the shares of Series 11 Class K
Preferred Stock are being held in escrow by the Corporation's attorneys, no
delivery of the certificates shall be required. No Conversion Notice with
respect to any shares of Series 11 Class K Preferred Stock can be given prior to
the time such shares of Series 11 Class K Preferred Stock are eligible for
conversion in accordance with the provision of Section 4.1 above. Any such
premature Conversion Notice shall automatically be null and void. The
Corporation shall, within five (5) business days after receipt of an appropriate
and timely Conversion Notice (and certificate, if necessary), issue to such
holder of Series 11 Class K Preferred Stock or its agent a certificate for the
number of shares of Common Stock to which he shall be entitled; it being
expressly agreed that until and unless the holder delivers written notice to the
Corporation to the contrary, all shares of Common Stock issuable upon conversion
of the Series 11 Class K Preferred Stock hereunder are to be delivered by the
Corporation to a party designated in writing by the holder in the Conversion
Notice for the account of the holder and such shall be deemed valid delivery to
the holder of such shares of Common Stock. Such conversion shall be deemed to
have been made only after both the certificate for the shares of Series 11 Class
K Preferred Stock to be converted have been surrendered and the Conversion
Notice is received by the Corporation (or in the event that no surrender of the
Certificate is required, then only upon the receipt by the Corporation of the
Conversion Notice) (the "Conversion Documents"), and the person or entity whose
name is noted on the certificate evidencing such shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder of
such shares of Common Stock at and after such time. In the event that the
Conversion Notice is sent via facsimile transmission, the Corporation shall be
deemed to have received such Conversion Notice on the first business day on
which such facsimile Conversion Notice is actually received. If the Corporation
fails to deliver to the holder or its agent the certificate representing the
shares of Common Stock that the holder is entitled to receive as a result of
such conversion within five (5) business days after receipt by the Corporation
from the holder of an appropriate and timely Conversion Notice and certificates
pursuant to the terms of this Section 4.3, the Corporation shall pay to the
holder U.S. $1,000 for each day that the Corporation is late in delivering such
certificate to the holder or its agent.

4.5    Adjustments to Conversion Price for Stock Dividends and for
Combinations or Subdivisions of Common Stock. If the Corporation at
any time or from time to time while shares of Series 11 Class K Preferred Stock
are issued and outstanding shall declare or pay, without consideration, any
dividend on the Common Stock payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by stock split, reclassification or otherwise than by
payment of a dividend in Common Stock or in any right to acquire Common Stock),
or if the outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or otherwise, into a lesser number of shares of Common
Stock, then the Conversion Price in effect immediately before such event shall,
concurrently with the effectiveness of such event, be proportionately decreased
or increased, as appropriate. If the Corporation shall declare or pay, without
consideration, any dividend on the Common Stock payable in any right to acquire
Common stock for no consideration, then the Corporation  
 

-6-

 
 shall be deemed to have made a dividend payable in Common Stock in an amount of
shares equal to the maximum number of shares issuable upon exercise of such
rights to acquire Common Stock.

4.6.    Adjustments for Reclassification and
Reorganization. If the Common Stock issuable upon conversion of the
Series 11 Class K Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares provided for in Section 4.4 hereof), the Conversion Price
then in effect shall, concurrently with the effectiveness of such reorganization
or reclassification, be proportionately adjusted so that the Series 11 Class K
Preferred Stock shall be convertible into, in lieu of the number of shares of
Common Stock which the holders of Series 11 Class K Preferred Stock would
otherwise have been entitled to receive, a number of shares of such other class
or classes of stock equivalent to the number of shares of Common Stock that
would have been subject to receipt by the holders upon conversion of the Series
11 Class K Preferred Stock immediately before that change.

4.7    Common Stock Duly Issued. All Common Stock which
may be issued upon conversion of Series 11 Class K Preferred Stock will, upon
issuance, be duly issued, fully paid and nonassessable and free from all taxes,
liens, and charges with respect to the issue thereof.

4.8    Notice of Adjustments. Upon the occurrence of
each adjustment or readjustment of any Conversion Price pursuant to this Part 4,
the Corporation, at its expense, within a reasonable period of time, shall
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of Series 11 Class K Preferred Stock a notice
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment is based.

4.9    Issue Taxes. The Corporation shall pay any and
all issue and other taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of the Series 11 Class K
Preferred Stock pursuant thereto; provided, however, that the Corporation
shall not be obligated to pay any transfer taxes resulting from any transfer
requested by any holder of Series 11 Class K Preferred Stock in connection with
such conversion.

4.10   Reservation of Stock Issuable Upon Conversion.
The Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series 11 Class K Preferred Stock,
such number of its shares of Common Stock as shall, from time to time, be
sufficient to effect the conversion of all outstanding shares of the Series 11
Class K Preferred stock, and, if at any time, the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of the Series 11 Class K Preferred Stock, the
Corporation will take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes, including, without limitation, engaging in
reasonable efforts to obtain the requisite stockholder approval of any necessary
amendment to its Certificate of Incorporation.
 

-7-

 
4.11   Fractional Shares. No fractional share shall be
issued upon the conversion of any share or shares of Series 11 Class K Preferred
Stock. All shares of Common Stock (including fractions thereof) issuable upon
conversion of more than one share of Series 11 Class K Preferred Stock by a
holder thereof shall be aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fractional share of Common Stock, such fractional share shall be rounded up to
the nearest whole share.

4.12    Notices. Any notices required by the provisions
of this Part 4 to be given to the holders of shares of Series 11 Class K
Preferred Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his address appearing
on the books of the Corporation.

4.13    Business Day. As used herein, the term "business
day" shall mean any day other than a Saturday, Sunday or a day when the federal
and state banks located in the State of New York are required or permitted to
close.

Part 5 - Redemption.

5.1    Redemption at Corporation's Option. Except as
otherwise provided in this Section 5.1, at any time, and from time to time, the
Corporation may, at its sole option, but shall not be obligated to, redeem, in
whole or in part, at any time, and from time to time, the then outstanding
Series 11 Class K Preferred Stock at the following cash redemption prices if
redeemed during the following periods: (i) within one year
from July 15, 1999 - $1,100 per share, and (ii) after one year
from July 15, 1999 - $1,200 per share (as applicable, the
redemption price of $1,100 or $1,200 is referred to herein as the "Redemption
Price").

5.2    Mechanics of Redemption. Prior to any date
stipulated by the Corporation for the redemption of Series 11 Class K Preferred
Stock (the "Redemption Date"), written notice (the "Redemption Notice") shall be
mailed to each holder of record on such notice date of the Series 11 Class K
Preferred Stock. The Redemption Notice shall state: (i) the Redemption Date of
such shares, (ii) the number of Series 11 Class K Preferred Stock to be redeemed
from the holder to whom the Redemption Notice is addressed, (iii) instructions
for surrender to the Corporation, in the manner and at the place designated, of
a share certificate or share certificates representing the number of Series 11
Class K Preferred Stock to be redeemed from such holder, and (iv) instructions
as to how to specify to the Corporation the number of Series 11 Class K
Preferred Stock to be redeemed as provided in this Part 5 and, if the Redemption
Notice is mailed to the Holder after the first year from the date of issuance of
the Series 11 Class K Preferred Stock, the number of shares to be converted into
Common Stock as provided in Part 4 hereof.

5.3    Mechanics of Redemption. Prior to any date
stipulated by the Corporation for the redemption of Series 11 Class K Preferred
Stock (the "Redemption Date"), written notice (the "Redemption Notice") shall be
mailed to each holder of record on such notice date of the Series 11 Class K
Preferred Stock. The 

 

-8-

 
 Redemption Notice shall state: (i) the Redemption Date of such shares, (ii) the number
of Series 11 Class K Preferred Stock to be redeemed from the holder to whom the
Redemption Notice is addressed, (iii) instructions for surrender to the
Corporation, in the manner and at the place designated, of a share certificate
or share certificates representing the number of Series 11 Class K Preferred
Stock to be redeemed from such holder, and (iv) instructions as to how to
specify to the Corporation the number of Series 11 Class K Preferred Stock to be
redeemed as provided in this Part 5 and, if the Redemption Notice is mailed to
the Holder after the first year from the date of issuance of the Series 11 Class
K Preferred Stock, the number of shares to be converted into Common Stock as
provided in Part 4 hereof.

5.4   Rights of Conversion Upon Redemption. If the
redemption occurs during the first 12 months after the issuance of the Series 11
Class K Preferred Stock, the holder may not convert any redeemed shares. If the
redemption occurs pursuant to Section 5.1 hereof, the Holder of the Series 11
Class K Preferred Stock shall not have the right to convert those outstanding
shares of Series 11 Class K Preferred Stock that the Company is redeeming after
receipt of the Redemption Notice. If the redemption occurs pursuant to Section
5.2 hereof, then, upon receipt of the Redemption Notice, any holder of Series 11
Class K Preferred Stock shall have the next five business days during which it
may exercise the option, at its sole election, to specify what portion of its
Series 11 Class K Preferred Stock called for redemption in the Redemption Notice
shall be redeemed as provided in this Part 5 or converted into Common Stock in
the manner provided in Part 4 hereof, except that, notwithstanding any provision
of such Part 4 to the contrary, after one year from the date of first issuance
of the Series 11 Class K Preferred Stock, such holder shall have the right to
convert into Common Stock that number of Series 11 Class K Preferred Stock
called for redemption in the Redemption Notice.

5.5   Surrender of Certificates. On or before the
Redemption Date in respect of any Series 11 Class K Preferred Stock, each holder
of such shares shall surrender the required certificate or certificates
representing such shares to the Corporation in the manner and at the place
designated in the Redemption Notice, and upon the Redemption Date, the
Redemption Price for such shares shall be made payable, in the manner provided
in Section 5.5 hereof, to the order of the person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered share
certificate shall be canceled and retired. If a share certificate is surrendered
and all the shares evidenced thereby are not being redeemed (as described
below), the Corporation shall cause the Series 11 Class K Preferred Stock which
are not being redeemed to be registered in the names of the persons or entity
whose names appear as the owners on the respective surrendered share
certificates and deliver such certificate to such person.

5.6    Payment. On the Redemption Date in respect of any
Series 11 Class K Preferred Stock or prior thereto, the Corporation shall
deposit with any bank or trust company having a capital and surplus of at least
U. S. $50,000,000, as a trust fund, a sum equal to the aggregate First Year
Redemption Price or the Redemption Price, whichever is applicable, of all such
shares called from redemption (less the aggregate Redemption Price for those
Series 11 Class K Preferred Stock in respect of which the Corporation has
received notice from the
 

-9-

 
holder thereof of its election to convert Series 11 Class K Preferred Stock
into Common Stock), with irrevocable instructions and authority to the bank or
trust company to pay, on or after the Redemption Date, the First Year Redemption
Price or the Redemption Price, whichever is applicable, to the respective
holders upon the surrender of their share certificates. The deposit shall
constitute full payment for the shares to their holders, and from and after the
date of the deposit the redeemed shares shall be deemed to be no longer
outstanding, and holders thereof shall cease to be shareholders with respect to
such shares and shall have no rights with respect thereto except the rights to
receive from the bank or trust company payments of the First Year Redemption
Price or the Redemption Price, whichever is applicable, of the shares, without
interest, upon surrender of their certificates thereof. Any funds so deposited
and unclaimed at the end of one year following the Redemption Date shall be
released or repaid to the Corporation, after which the former holders of shares
called for redemption shall be entitled to receive payment of the First Year
Redemption Price or the Redemption Price, whichever is applicable, in respect of
their shares only from the Corporation.

Part 6 - Parity with Other Shares of Series 11 Class K Preferred
Stock and Priority.

6.1    Rateable Participation. If any cumulative
dividends or return of capital in respect of Series 11 Class K Preferred Stock
are not paid in full, the owners of all series of outstanding Preferred Stock
shall participate rateably in respect of accumulated dividends and return of
capital.

6.2    Ranking. For purposes of this resolution, any
stock of any class or series of the Corporation shall be deemed to rank:

         6.2.1  Prior or senior to the shares of this Series 11 Class K Preferred Stock
either as to 

                   dividends or upon liquidation, if the holders of such class or
classes shall be entitled 

                   to the receipt of dividends or of amounts
distributable upon dissolution, liquidation 

                   or winding up of the Corporation,
whether voluntary or involuntary, as the case 

                   may be, in preference or priority
to the holders of shares of this Series 11 Class 

                   K Preferred Stock;

        6.2.2  On a parity with, or equal to, shares of this Series 11 Class K
Preferred Stock, either 

                   as to dividends or upon liquidation, whether or not the
dividend rates, dividend 

                   payment dates, or redemption or liquidation prices per
share or sinking fund 

                   provisions, if any, are different from those of this
Series 3 Class C Preferred Stock, 

                   if the holders of such stock are entitled to
the receipt of dividends or of amounts 

                  distributable upon dissolution,
liquidation or winding up of the Corporation, whether 

                   voluntary or involuntary,
in proportion to their respective dividend rates or liquidation 

                   prices, without
preference or priority, one over the other, as between the holders of 

                   such stock
and over the other, as between the holders of such stock and the holders 

                   of
shares of this Series 11 Class K Preferred Stock; and,
 

-10-

 
        6.2.3  Junior to shares of this Series 11 Class K Preferred Stock, either as
to dividends or 

                  upon liquidation, if such class or series shall be Common Stock
or if the holders of 

                  shares of this Series 11 Class K Preferred Stock shall be
entitled to receipt of 

                  dividends or of amounts distributable upon dissolution,
liquidation or winding up of 

                   the Corporation, whether voluntary or involuntary,
as the case may be, in preference 

                   or priority to the holders of shares of such
class or series.

Part 7 - Amendment and Reissue.

7.1   Amendment. If any proposed amendment to the
Corporation's Certificate of Incorporation would alter or change the powers,
preferences or special rights of the Series 11 Class K Preferred Stock so as to
affect such adversely, then the Corporation must obtain the affirmative vote of
such amendment to the Certificate of Incorporation at a duly called and held
series meeting of the holders of the Series 11 Class K Preferred Stock or
written consent by the holders of a majority of the Series 11 Class K Preferred
Stock then outstanding. Notwithstanding the above, the number of authorized
shares of any class or classes of stock may be increased or decreased (but not
below the number of shares thereof outstanding) by the affirmative vote of the
holders of a majority of the stock of the Corporation entitled to vote thereon,
voting together as a single class, irrespective of this Section 7.1 or the
requirements of Section 242 of the GCL.

7.2   Authorized. Any shares of Series 11 Class K
Preferred Stock acquired by the Corporation by reason of purchase, conversion,
redemption or otherwise shall be retired and shall become authorized but
unissued shares of Preferred Stock, which may be reissued as part of a new
series of Preferred Stock hereafter created.
 
 

 

 

 

 

-11-

STATE OF DELAWARE   

SECRETARY OF STATE   

DIVISION OF CORPORATIONS

FILED 12:31 PM -- 07/15/1999 

991291289 -- 2249849     

CERTIFICATE OF DESIGNATIONS

OF SERIES 12 CLASS L CONVERTIBLE PREFERRED STOCK

OF

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

          Perma-Fix Environmental Services, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify:

           That, pursuant to authority conferred upon by the Board of Directors by the
Corporation's Restated Certificate of Incorporation, as amended, and pursuant to
the provisions of Section 151 of the Delaware Corporation Law, the Board of
Directors of the Corporation has adopted resolutions, a copy of which is
attached hereto, establishing and providing for the issuance of a series of
Preferred Stock designated as Series 12 Class L Convertible Preferred Stock and
has established and fixed the voting powers, designations, preferences and
relative participating, optional and other special rights and qualifications,
limitations and restrictions of such Series 12 Class L Convertible Preferred
Stock as set forth in the attached resolutions.

Dated: July 15, 1999

                                                              PERMA-FIX ENVIRONMENTAL SERVICES, INC.

                                                               By /s/ Louis Centofanti                                               

                                                                     Dr. Louis F. Centofanti

                                                                     Chairman of the Board
ATTEST:

/s/ Richard T. Kelecy                          

Richard T. Kelecy, Secretary
 

 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

(the "Corporation")

RESOLUTION OF THE BOARD OF DIRECTORS

FIXING THE NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,

RESTRICTIONS AND CONDITIONS ATTACHING TO THE

SERIES 12 CLASS L CONVERTIBLE PREFERRED STOCK

          WHEREAS, the Corporation's capital includes preferred stock,
par value $.001 per share ("Preferred Stock"), which Preferred Stock may be
issued in one or more series by resolutions adopted by the directors, and with
the directors being entitled by resolution to fix the number of shares in each
series and to designate the rights, designations, preferences and relative,
participating, optional or other special rights and privileges, restrictions and
conditions attaching to the shares of each such series;

          WHEREAS, it is in the best interests of the Corporation for
the Board to create a new series from the Preferred Stock designated as the
Series 12 Class L Convertible Preferred Stock, par value $.001 per share (the
"Series 12 Class L Preferred Stock");

          NOW, THEREFORE, BE IT RESOLVED, that the Series 12 Class L
Preferred Stock shall consist of nine hundred sixteen (916) shares and no more
and shall be designated as the Series 12 Class L Convertible Preferred Stock,
and the preferences, rights, privileges, restrictions and conditions attaching
to the Series 12 Class L Preferred Stock shall be as follows:

Part 1 - Voting and Preemptive Rights.

1.1    Voting Rights. Except as otherwise provided in
Part 7 hereof or under Section 242(b)(2) of the General Corporation Law of the
State of Delaware (the "GCL"), the holders of the Series 12 Class L Preferred
Stock shall have no voting rights whatsoever. To the extent that under Section
242(b)(2) of the GCL or Part 7 hereof, the holders of the Series 12 Class L
Preferred Stock are entitled to vote on a matter, each share of the Series 12
Class L Preferred Stock shall be entitled one (1) vote for each outstanding
share of Series 12 Class L Preferred Stock. Holders of the Series 12 Class L
Preferred Stock shall be entitled to notice of (and copies of proxy materials
and other information sent to stockholders) for all shareholder meetings or
written consents with respect to which they would be entitled to vote, which
notice would be provided pursuant to the Corporation's bylaws and applicable
statutes.

1.2    No Preemptive Rights. The Series 12 Class L
Preferred Stock shall not give its holders any preemptive rights to acquire any
other securities issued by the Corporation at any time in the future.
 

-1-

Part 2 - Liquidation Rights.

2.1    Liquidation. If the Corporation shall be
voluntarily or involuntarily liquidated, dissolved or wound up at any time when
any shares of the Series 12 Class L Preferred Stock shall be outstanding, the
holders of the then outstanding Series 12 Class L Preferred Stock shall have a
preference in distribution of the Corporation's property available for
distribution to the holders of the Corporation's Common Stock equal to $1,000
consideration per outstanding share of Series 12 Class L Preferred Stock, plus
an amount equal to all unpaid dividends accrued thereon to the date of payment
of such distribution ("Liquidation Preference"), whether or not declared by the
Board.

2.2    Payment of Liquidation Preferences. Subject to
the provisions of Part 6 hereof, all amounts to be paid as Liquidation
Preference to the holders of Series 12 Class L Preferred Stock, as provided in
this Part 2, shall be paid or set apart for payment before the payment or
setting apart for payment of any amount for, or the distribution of any of the
Corporation's property to the holders of the Corporation's Common Stock, whether
now or hereafter authorized, in connection with such liquidation, dissolution or
winding up.

2.3    No Rights After Payment. After the payment to the
holders of the shares of the Series 12 Class L Preferred Stock of the full
Liquidation Preference amounts provided for in this Part 2, the holders of the
Series 12 Class L Preferred Stock as such shall have no right or claim to any of
the remaining assets of the Corporation.

2.4    Assets Insufficient to Pay Full Liquidation
Preference. In the event that the assets of the Corporation
available for distribution to the holders of shares of the Series 12 Class L
Preferred Stock upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, shall be insufficient to pay in
full all amounts to which such holders are entitled pursuant to this Part 2, no
such distribution shall be made on account of any shares of any other class or
series of Preferred Stock ranking on a parity with the shares of this Series 12
Class L Preferred Stock upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares of
this Series 12 Class L Preferred Stock and shares of such other class or series
ranking on a parity with the shares of this Series 12 Class L Preferred Stock,
ratably, in proportion to the full distributable amounts for which holders of
all such parity shares are respectively entitled upon such dissolution,
liquidation or winding up.

Part 3 - Dividends. The holders of the Series 12
Class L Preferred Stock are entitled to receive if, when and as declared by the
Board out of funds legally available therefor, cumulative dividends, payable in
cash or Common Stock of the Corporation, par value $.001 per share (the "Common
Stock"), or any combination thereof, at the Corporation's election, at the rate
of four percent (4%)
 

-2-

per annum of the Liquidation Value (as defined below) of each issued and
outstanding share of Series 12 Class L Preferred Stock (the "Dividend Rate").
The Liquidation Value of the Series 12 Class L Preferred Stock shall be $1,000
per outstanding share of the Series 12 Class L Preferred Stock (the "Liquidation
Value"). The dividend is payable semi-annually within seven (7) business days
after each of December 31 and June 30 of each year, commencing June 30, 1998
(each, a "Dividend Declaration Date"). Dividends shall be paid only with respect
to shares of Series 12 Class L Preferred Stock actually issued and outstanding
on a Dividend Declaration Date and to holders of record of the Series 12 Class L
Preferred Stock as of the Dividend Declaration Date. Dividends shall accrue from
the first day of the semi-annual period in which such dividend may be payable,
except with respect to the first semi-annual dividend which shall accrue from
March 1, 1998. In the event that the Corporation elects to pay the accrued
dividends due as of a Dividend Declaration Date on an outstanding share of the
Series 12 Class L Preferred Stock in Common Stock of the Corporation, the holder
of such share shall receive that number of shares of Common Stock of the
Corporation equal to the product of (a) the quotient of (i) the Dividend Rate
divided by (ii) the average of the closing bid quotation of the Corporation's
Common Stock as reported on the National Association of Securities Dealers
Automated Quotation system ("NASDAQ"), or the average closing sale price if
listed on a national securities exchange, for the five (5) trading days
immediately prior to the Dividend Declaration Date (the "Stock Dividend Price"),
times (b) a fraction, the numerator of which is the number of days elapsed
during the period for which the dividend is to be paid and the denominator of
which is 365. Dividends on the Series 12 Class L Preferred Stock shall be
cumulative, and no dividends or other distributions shall be paid or declared or
set aside for payment on the Corporation's Common Stock until all accrued and
unpaid dividends on all outstanding shares of Series 12 Class L Preferred Stock
shall have been paid or declared and set aside for payment.

Part 4 - Conversion. The holders of the Series 12
Class L Preferred Stock shall have rights to convert the shares of Series 12
Class L Preferred Stock into shares of the Corporation's Common Stock, par value
$.001 per share ("Common Stock"), as follows (the "Conversion Rights"):

4.1    No Right to Convert. The Series 12 Class L
Preferred shall not be convertible into shares of Common Stock until after July
15, 2000.

4.2    Right to Convert. The Series 12
Class L Preferred Stock may be convertible into shares of Common Stock at any
time after July 15, 2000.

4.3    Conversion Price. Subject to the terms hereof, as
used herein, the Conversion Price per outstanding share of Series 12 Class L
Preferred Stock shall be $1.8125, except that, in the event the average closing
bid price per share of the Common Stock as reported on the
over-the-counter
 

-3-

market, or the closing sale price if listed on a national securities
exchange, for the five (5) trading days prior to the particular date of
conversion shall be less than $2.265, the Conversion Price for only such
particular conversion shall be the product of the average closing bid quotation
of the Common Stock as reported on the over-the-counter market, or the closing
sale price if listed on a national securities exchange, for the five (5) trading
days immediately preceding the date of the Conversion Notice referred to in
Section 4.3 below in connection with such conversion multiplied by eighty
percent (80%), subject to the provisions of this Section 4.3. Notwithstanding
the foregoing, the Conversion Price shall not be less than a minimum of $1.50
per share ("Minimum Conversion Price") for a period of twenty-four (24) months
from the date of issuance of the Series 12 Class L Preferred Stock. If any of
the outstanding shares of Series 12 Class L Preferred Stock are converted, in
whole or in part, into Common Stock pursuant to the terms of this Part 4, the
number of shares of whole Common Stock to be issued to the holder as a result of
such conversion shall be determined by dividing (a) the aggregate Liquidation
Value of the Series 12 Class L Preferred Stock so surrendered for conversion by
(b) the Conversion Price as of such conversion. At the time of conversion of
shares of the Series 12 Class L Preferred Stock, the Corporation shall pay in
cash to the holder thereof an amount equal to all unpaid and accrued dividends,
if any, accrued thereon to the date of conversion, or, at the Corporation's
option, in lieu of paying cash for the accrued and unpaid dividends, issue that
number of whole shares of Common Stock which is equal to the quotient of the
amount of such unpaid and accrued dividends to the date of conversion on the
shares of Series 12 Class L Preferred Stock so converted divided by the Stock
Dividend Price, as defined in Part 3 hereof, in effect at the date of
conversion.

4.3    Mechanics of Conversion. Any holder of the Series
12 Class L Preferred Stock who wishes to exercise its Conversion Rights pursuant
to Section 4.1 of this Part 4 must, if such shares are not being held in escrow
by the Corporation's attorneys, surrender the certificate therefor at the
principal executive office of the Corporation, and give written notice, which
may be via facsimile transmission, to the Corporation at such office that it
elects to convert the same (the "Conversion Notice"). In the event that the
shares of Series 12 Class L Preferred Stock are being held in escrow by the
Corporation's attorneys, no delivery of the certificates shall be required. The
Corporation shall, within five (5) business days after receipt of an appropriate
and timely Conversion Notice (and certificate, if necessary), issue to such
holder of Series 12 Class L Preferred Stock or its agent a certificate for the
number of shares of Common Stock to which he shall be entitled; it being
expressly agreed that until and unless the holder delivers written notice to the
Corporation to the contrary, all shares of Common Stock issuable upon conversion
of the Series 12 Class L Preferred Stock hereunder are to be delivered by the
Corporation to a party designated in writing by the holder in the Conversion
Notice for the account of the holder and such shall be deemed valid delivery to
the holder of such shares of Common Stock. Such conversion shall be deemed to
have been

 

-4-

made only after both the certificate for the shares of Series 12 Class L
Preferred Stock to be converted have been surrendered and the Conversion Notice
is received by the Corporation (or in the event that no surrender of the
Certificate is required, then only upon the receipt by the Corporation of the
Conversion Notice) (the "Conversion Documents"), and the person or entity whose
name is noted on the certificate evidencing such shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder of
such shares of Common Stock at and after such time. In the event that the
Conversion Notice is sent via facsimile transmission, the Corporation shall be
deemed to have received such Conversion Notice on the first business day on
which such facsimile Conversion Notice is actually received. If the Corporation
fails to deliver to the holder or its agent the certificate representing the
shares of Common Stock that the holder is entitled to receive as a result of
such conversion of the Series 12 Class L Preferred Stock within seven (7)
business days after receipt by the Corporation from the holder of an appropriate
and timely Conversion Notice and certificates pursuant to the terms of this
Section 4.3 ("Seven (7) Business Day Period"), then, upon the written demand of
RBB Bank Aktiengesellschaft ("RBB Bank"), the holder of the Series 12 Class L
Preferred Stock, for payment of the penalty described below in this Section 4.3,
which demand must be received by the Corporation no later than ten (10) calendar
days after the expiration of such Seven (7) Business Day Period, the Corporation
shall pay to RBB Bank the following penalty for each business day after the
Seven (7) Business Day Period until the Corporation delivers to the holder or
its agent the certificate representing the shares of Common Stock that the
holder is entitled to receive as a result of such conversion: business day eight
(8) - U.S. $1,000; business day nine (9) - U.S. $2,000, and each business day
thereafter an amount equal to the penalty due on the immediately preceding
business day times two (2) until the Corporation delivers to the holder or its
agent the certificate representing the shares of Common Stock that the holder is
entitled to receive as a result of such conversion. 

4.4    Merger or Consolidation. In case of either (a)
any merger or consolidation to which the Corporation is a party (collectively,
the "Merger"), other than a Merger in which the Corporation is the surviving or
continuing corporation, or (b) any sale or conveyance to another corporation of
all, or substantially all, of the assets of the Corporation (collectively, the
"Sale"), and such Merger or Sale becomes effective (x) while any shares of
Series 12 Class L Preferred Stock are outstanding and prior to the date that the
Corporation's Registration Statement covering up to 1,379,311 shares of Common
Stock issuable upon the conversion of the Series 12 Class L Preferred Stock is
declared effective by the U. S. Securities and Exchange Commission or (y) prior
to the end of the restriction periods in Section 4.1, then, in such event, the
Corporation or such successor corporation, as the case may be, shall make
appropriate provision so that the holder of each share of Series 12 Class L
Preferred Stock then outstanding shall have the right to convert such share
of
 

-5-

Series 12 Class L Preferred Stock into the kind and amount of shares of stock
or other securities and property receivable upon such Merger or Sale by a holder
of the number of shares of Common Stock into which such shares of Series 12
Class L Preferred Stock could have been converted into immediately prior to such
Merger or Sale, subject to adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Part 4.

4.5    Adjustments to Conversion Price for Stock Dividends and for
Combinations or Subdivisions of Common Stock. If the Corporation at
any time or from time to time while shares of Series 12 Class L Preferred Stock
are issued and outstanding shall declare or pay, without consideration, any
dividend on the Common Stock payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by stock split, reclassification or otherwise than by
payment of a dividend in Common Stock or in any right to acquire Common Stock),
or if the outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or otherwise, into a lesser number of shares of Common
Stock, then the Conversion Price in effect immediately before such event shall,
concurrently with the effectiveness of such event, be proportionately decreased
or increased, as appropriate.

4.6   Adjustments for Reclassification and
Reorganization. If the Common Stock issuable upon conversion of the
Series 12 Class L Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares provided for in Section 4.4 hereof), the Conversion Price
shall, concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted so that the Series 12 Class L
Preferred Stock shall be convertible into, in lieu of the number of shares of
Common Stock which the holders of Series 12 Class L Preferred Stock would
otherwise have been entitled to receive, a number of shares of such other class
or classes of stock equivalent to the number of shares of Common Stock that
would have been subject to receipt by the holders upon conversion of the Series
12 Class L Preferred Stock immediately before that change.

4.7   Common Stock Duly Issued. All Common Stock which
may be issued upon conversion of Series 12 Class L Preferred Stock will, upon
issuance, be duly issued, fully paid and nonassessable and free from all taxes,
liens, and charges with respect to the issue thereof.

4.8   Notice of Adjustments. Upon the occurrence of
each adjustment or readjustment of any Conversion Price pursuant to this Part 4,
the Corporation, at its expense, within a reasonable period of time, shall
compute such adjustment or readjustment in accordance with the terms hereof
and

 

-6-

prepare and furnish to each holder of Series 12 Class L Preferred Stock a
notice setting forth such adjustment or readjustment and showing in detail the
facts upon which such adjustment is based.

4.9   Issue Taxes. The Corporation shall pay any and
all issue and other taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of the Series 12 Class L
Preferred Stock pursuant thereto; provided, however, that the Corporation
shall not be obligated to pay any transfer taxes resulting from any transfer
requested by any holder of Series 12 Class L Preferred Stock in connection with
such conversion.

4.10  Reservation of Stock Issuable Upon Conversion.
The Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series 12 Class L Preferred Stock,
such number of its shares of Common Stock as shall, from time to time, be
sufficient to effect the conversion of all outstanding shares of the Series 12
Class L Preferred stock, and, if at any time, the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of the Series 12 Class L Preferred Stock, the
Corporation will take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes, including, without limitation, engaging in
reasonable efforts to obtain the requisite stockholder approval of any necessary
amendment to its Certificate of Incorporation.

4.11  Fractional Shares. No fractional shares shall be
issued upon the conversion of any share or shares of Series 12 Class L Preferred
Stock. All shares of Common Stock (including fractions thereof) issuable upon
conversion of more than one share of Series 12 Class L Preferred Stock by a
holder thereof shall be aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fractional share of Common Stock, such fractional share shall be rounded up to
the nearest whole share.

4.12  Notices. Any notices required by the provisions
of this Part 4 to be given to the holders of shares of Series 12 Class L
Preferred Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his address appearing
on the books of the Corporation.

4.13  Business Day. As used herein, the term "business
day" shall mean any day other than a Saturday, Sunday or a day when the federal
and state banks located in the State of New York are required or is permitted to
close.
 

-7-

Part 5 - Redemption.

5.1  Redemption at Corporation's Option. Except as
otherwise provided in this Section 5.1, at any time, and from time to time, the
Corporation may, at its sole option, but shall not be obligated to, redeem, in
whole or in part, at any time, and from time to time, (i) for a period of 120
days from the date of issuance of the Series 12 Class L Preferred Stock up to an
aggregate of 300 shares of the Series 12 Class L Preferred Stock at the cash
redemption price of $1,000 per share, and (ii) the then outstanding Series 12
Class L Preferred Stock at the following cash redemption prices if redeemed
during the following periods: (a) within one year from
July 15, 1999 - $1,100 per share, except as otherwise provided in (i)
above and (b) after one year from July 15, 1999 - $1,200 per
share (as applicable, the redemption price of $1,000, $1,100 or $1,200 is
referred to herein as the "Redemption Price").

5.2  Mechanics of Redemption. Prior to any date
stipulated by the Corporation for the redemption of Series 12 Class L Preferred
Stock (the "Redemption Date"), written notice (the "Redemption Notice") shall be
mailed to each holder of record on such notice date of the Series 12 Class L
Preferred Stock. The Redemption Notice shall state: (i) the Redemption Date of
such shares, (ii) the number of Series 12 Class L Preferred Stock to be redeemed
from the holder to whom the Redemption Notice is addressed, (iii) instructions
for surrender to the Corporation, in the manner and at the place designated, of
a share certificate or share certificates representing the number of Series 12
Class L Preferred Stock to be redeemed from such holder, and (iv) instructions
as to how to specify to the Corporation the number of Series 12 Class L
Preferred Stock to be redeemed as provided in this Part 5 and, if the Redemption
Notice is mailed to the Holder after the first year from the date of issuance of
the Series 12 Class L Preferred Stock, the number of shares to be converted into
Common Stock as provided in Part 4 hereof.

5.3  Rights of Conversion Upon Redemption. If the
redemption occurs during the first 12 months after the issuance of the Series 12
Class L Preferred Stock, the holder may not convert any redeemed shares. If the
redemption occurs after the first twelve months after the first issuance of
Series 12 Class L Preferred Stock, then, upon receipt of the Redemption Notice,
any holder of Series 12 Class L Preferred Stock shall have five business days
during which it may exercise the option, at its sole election, to specify what
portion of its Series 12 Class L Preferred Stock called for redemption in the
Redemption Notice shall be redeemed as provided in this Part 5 or converted into
Common Stock in the manner provided in Part 4 hereof, except that,
notwithstanding any provision of such Part 4 to the contrary, after one year
from the date of first issuance of the Series 12 Class L Preferred Stock, such
holder shall have the right to convert into Common Stock that number of Series
12 Class L Preferred Stock called for redemption in the Redemption
Notice.
 

-8-

5.4  Surrender of Certificates. On or before the
Redemption Date in respect of any Series 12 Class L Preferred Stock, each holder
of such shares shall surrender the required certificate or certificates
representing such shares to the Corporation in the manner and at the place
designated in the Redemption Notice, and upon the Redemption Date, the
Redemption Price for such shares shall be made payable, in the manner provided
in Section 5.6 hereof, to the order of the person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered share
certificate shall be canceled and retired. If a share certificate is surrendered
and all the shares evidenced thereby are not being redeemed (as described
below), the Corporation shall cause the Series 12 Class L Preferred Stock which
are not being redeemed to be registered in the names of the persons or entity
whose names appear as the owners on the respective surrendered share
certificates and deliver such certificate to such person.

5.5  Payment. On the Redemption Date in respect of any
Series 12 Class L Preferred Stock or prior thereto, the Corporation shall
deposit with any bank or trust company having a capital and surplus of at least
$50,000,000, as a trust fund, a sum equal to the aggregate Redemption Price of
all such shares called from redemption (less the aggregate Redemption Price for
those Series 12 Class L Preferred Stock in respect of which the Corporation has
received notice from the holder thereof of its election to convert Series 12
Class L Preferred Stock into Common Stock), with irrevocable instructions and
authority to the bank or trust company to pay, on or after the Redemption Date,
the Redemption Price to the respective holders upon the surrender of their share
certificates. The deposit shall constitute full payment for the shares to their
holders, and from and after the date of the deposit the redeemed shares shall be
deemed to be no longer outstanding, and holders thereof shall cease to be
shareholders with respect to such shares and shall have no rights with respect
thereto except the rights to receive from the bank or trust company payments of
the Redemption Price of the shares, without interest, upon surrender of their
certificates thereof. Any funds so deposited and unclaimed at the end of one
year following the Redemption Date shall be released or repaid to the
Corporation, after which the former holders of shares called for redemption
shall be entitled to receive payment of the Redemption Price in respect of their
shares only from the Corporation.

Part 6 - Parity with Other Shares of Series 12 Class L Preferred
Stock and Priority.

6.1   Rateable Participation. If any cumulative
dividends or return of capital in respect of Series 12 Class L Preferred Stock
are not paid in full, the owners of all series of outstanding Preferred Stock
shall participate rateably in respect of accumulated dividends and return of
capital.
 

-9-

6.2  Ranking. For purposes of this resolution, any
stock of any class or series of the Corporation shall be deemed to rank:

        6.2.1  Prior or senior to the shares of this Series 12 Class L Preferred Stock
either as to 

                  dividends or upon liquidation, if the holders of such class or
classes shall be entitled 

                  to the receipt of dividends or of amounts
distributable upon dissolution, liquidation 

                  or winding up of the Corporation,
whether voluntary or involuntary, as the case 

                  may be, in preference or priority
to the holders of shares of this Series 12 Class L 

                  Preferred Stock;

       6.2.2  On a parity with, or equal to, shares of this Series 12 Class L
Preferred Stock, either 

                 as to dividends or upon liquidation, whether or not the
dividend rates, dividend payment 

                 dates, or redemption or liquidation prices per
share or sinking fund provisions, if any, 

                 are different from those of this
Series 12 Class L Preferred Stock, if the holders of such 

                 stock are entitled to
the receipt of dividends or of amounts distributable upon 

                 dissolution,
liquidation or winding up of the Corporation, whether voluntary or involuntary, 

                  in proportion to their respective dividend rates or liquidation prices, without
preference 

                  or priority, one over the other, as between the holders of such stock
and over the other, 

                  as between the holders of such stock and the holders of
shares of this Series 12 Class 

                  L Preferred Stock; and,

        6.2.3  Junior to shares of this Series 12 Class L Preferred Stock, either as
to dividends or 

                  upon liquidation, if such class or series shall be Common Stock
or if the holders of shares 

                  of this Series 12 Class L Preferred Stock shall be
entitled to receipt of dividends or of 

                  amounts distributable upon dissolution,
liquidation or winding up of the Corporation, 

                  whether voluntary or involuntary,
as the case may be, in preference or priority to the 

                   holders of shares of such
class or series.

Part 7 - Amendment and Reissue.

7.1    Amendment. If any proposed amendment to the
Corporation's Certificate of Incorporation (the "Articles") would alter or
change the powers, preferences or special rights of the Series 12 Class L
Preferred Stock so as to affect such adversely, then the Corporation must obtain
the affirmative vote of such amendment to the Articles at a duly called and held
series meeting of the holders of the Series 12 Class L Preferred Stock or
written consent by the holders of a majority of the Series 12 Class L Preferred
Stock then outstanding. Notwithstanding the above or the provisions of Section
242(b)(2) of the GCL, the number 
 

-10-

of authorized shares of any class or classes of stock of the Corporation may be
increased or decreased (but not below the number of shares thereof outstanding)
by the affirmative vote of the holders of a majority of the stock of the
Corporation entitled to vote thereon, voting together as a single class,
irrespective of the provisions of this Section 7.1 or Section 242(b)(2) of the
GCL.

7.2    Authorized. Any shares of Series 12 Class L
Preferred Stock acquired by the Corporation by reason of purchase, conversion,
redemption or otherwise shall be retired and shall become authorized but
unissued shares of Preferred Stock, which may be reissued as part of a new
series of Preferred Stock hereafter created.

 
 

 

 

 

 

 

 

-11-

STATE OF DELAWARE   

SECRETARY OF STATE   

DIVISION OF CORPORATIONS

FILED 12:32 PM 07/15/1999  

991291291 -- 2249849      

CERTIFICATE OF DESIGNATIONS

OF SERIES 13 CLASS M CONVERTIBLE PREFERRED STOCK

OF

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

          Perma-Fix Environmental Services, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify:

           That, pursuant to authority conferred upon by the Board of Directors by the
Corporation's Restated Certificate of Incorporation, as amended, and pursuant to
the provisions of Section 151 of the Delaware Corporation Law, the Board of
Directors of the Corporation has adopted resolutions, a copy of which is
attached hereto, establishing and providing for the issuance of a series of
Preferred Stock designated as Series 13 Class M Convertible Preferred Stock and
has established and fixed the voting powers, designations, preferences and
relative participating, optional and other special rights and qualifications,
limitations and restrictions of such Series 13 Class M Convertible Preferred
Stock as set forth in the attached resolutions.

Dated: July 15, 1999

                                                       PERMA-FIX ENVIRONMENTAL SERVICES, INC.

                                                        By
 /s/ Louis F. Centofanti                                             

                                                              Dr. Louis F. Centofanti

                                                              Chairman of the Board
ATTEST:

/s/ Richard T. Kelecy                        

Richard T. Kelecy, Secretary
 

 

 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

(the "Corporation")

RESOLUTION OF THE BOARD OF DIRECTORS

FIXING THE NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,

RESTRICTIONS AND CONDITIONS ATTACHING TO THE

SERIES 13 CLASS M CONVERTIBLE PREFERRED STOCK
RE: DESIGNATION OF SERIES 13 CLASS M PREFERRED STOCK.

RESOLVED: That the designations, powers, preferences and
rights of the Series 13 Class M Convertible Preferred Stock be, and they hereby
are, as set forth below:
1.  Number of Shares of Common Stock of Series 13
Class M Convertible Preferred Stock 

The Corporation hereby authorizes the issuance of up to two thousand two
hundred fifty-two (2,252) shares of Series 13 Class M Convertible Preferred
Stock par value $.001 per share (the "Preferred Stock"). This Preferred Stock
shall pay an annual dividend based on a 365 day calendar year of 4% of the
Liquidation Value (as defined in Section 3 hereof) ("Dividend Rate"), payable
semiannually within ten (10) business days after each subsequent June 30th and
December 31st (each a "Dividend Declaration Date"), and shall be payable in cash
or shares of the Corporation's par value $.001 per share common stock (Common
Stock) at the Corporation's option. The first Dividend Declaration Date shall be
December 31st, 1998.

In the event that the Corporation elects to pay the accrued dividends due as
of a Dividend Declaration Date on the outstanding shares of Preferred Stock in
Common Stock of the Corporation, the Holder of each share of Preferred Stock
shall receive that number of shares of Common Stock equal to the product of (a)
the quotient of (i) the Dividend Rate divided by (ii) the average of' the
closing bid quotation of the Corporation's Common Stock as reported on the
National Association of Securities Dealers Automated Quotation system
("NASDAQ"), or if the Common Stock is not listed for trading on the NASDAQ but
is listed for trading on a national securities exchange, the average closing bid
price of the Common Stock as quoted on such national exchange, for the five (5)
trading days immediately prior to the Dividend Declaration Date (the "Stock
Dividend Price"), times (b) a fraction, the numerator of which is the number of
days elapsed during the period for which the dividend is to be paid, and the
denominator of which is 365. Dividends on the Preferred Stock shall be
cumulative, and no dividends or other distributions shall be paid or declared or
set aside for payment on the Corporation's Common Stock until all accrued and
unpaid dividends on all outstanding shares of Preferred Stock shall have been
paid or declared and set aside for payment.
 

-1-

2. Voting.

Except as provided under Section 242 of the GCL, holders of Preferred Stock
(the "Holders") shall not have the right to vote on any matter. Notwithstanding
the provisions of Section 242 of the GCL or Section 4 hereof, the number of
authorized shares of any class or classes of stock of the Corporation may be
increased or decreased (but not below the number of shares thereof outstanding)
by the affirmative vote of the holders of a majority of the stock of the
Corporation entitled to vote thereon, voting together as a single class,
irrespective of the provisions of Section 242 of the GCL.

3.  Liquidation.

In the event of a voluntary or involuntary dissolution, liquidation, or
winding up of the Corporation, the Holders of Preferred Stock shall be entitled
to receive out of the assets of the Corporation legally available for
distribution to holders of its capital stock, before any payment or distribution
shall be made to holders of shares of Common Stock or any other class of stock
ranking junior to the Preferred Stock, an amount per share of Preferred Stock
equal to $1,000 (the "Liquidation Value") plus any accrued and unpaid dividends
on the Preferred Stock. If upon such liquidation, dissolution, or winding up of
the Corporation, whether voluntary or involuntary, the assets to be distributed
among the Holders of Preferred Stock shall be insufficient to permit payment to
the Holders of Preferred Stock of the amount distributable as aforesaid, then
the entire assets of the Corporation to be so distributed shall be distributed
ratably among the Holders of Preferred Stock and shares of such other classes or
series ranking on a parity with the shares of this Preferred Stock in proportion
to the full distributable amounts for which holders of all such parity shares
are entitled upon such distribution, liquidation, or winding up. Upon any such
liquidation, dissolution or winding up of the Corporation, after the Holders of
Preferred Stock shall have been paid in full the amounts to which they shall be
entitled, the remaining net assets of the Corporation may be distributed to the
holders of stock ranking on liquidation junior to the Preferred Stock and the
Holders of the Preferred Stock shall have no right or claim to any of the
remaining assets of the Corporation. Written notice of such liquidation,
dissolution or winding up, stating a payment date, the amount of the liquidation
payments and the place where said liquidation payments shall be payable, shall
be given by mail, postage prepaid or by telex or facsimile to non-U.S.
residents, not less than 10 days prior to the payment date stated therein, to
the Holders of record of Preferred Stock, such notice to be addressed to each
such Holder at its address as shown by the records of the Corporation. For
purposes hereof the shares of Common Stock, shall rank on liquidation junior to
the Preferred Stock.

4. Restrictions.

The Corporation will not amend or modify the terms of its Restated
Certificate of Incorporation so as to adversely alter or change the Preferred
Stock at any time when shares of Preferred Stock are outstanding, without the
approval of the Holders of at least a majority of the then outstanding shares of
Preferred Stock given in writing or
 

-2-

by vote at a meeting, consenting or voting (as the case may be) separately as
a series, except where the vote or written consent of the Holders of a greater
number of shares of Common Stock of the Corporation is required by law or by the
Corporation's Certificate of Incorporation, as amended.

5. Optional Conversion.

The Holders of shares of Preferred Stock shall have the following conversion
rights to convert the shares of Preferred Stock into shares of Common Stock of
the Corporation:

(a)    No Right to Convert. The Preferred Stock shall not be
convertible into shares of Common Stock until after July 15, 2000.

(b)    Conversion Dates. The Preferred Stock may be convertible
into shares of Common Stock at any time after July 15, 2000.

(c)    Right to Convert; Conversion Price. Subject to the terms
hereof, as used herein, the term Conversion Price per outstanding share of
Preferred Stock shall be One Dollar and 875/100 ($1.875); except that after the
expiration of one hundred and eighty (180) days after the Closing Date if the
average of the closing bid price per share of Common Stock quoted on the NASDAQ
(or the closing bid price of the Common Stock as quoted on the national
securities exchange if the Common Stock is not listed for trading on the NASDAQ
but is listed for trading on a national securities exchange) for the five (5)
trading days immediately prior to the particular date of each Conversion Notice
(as defined below) is less than Two Dollars and 34/100 ($2.34), then the
Conversion Price for that particular conversion shall be eighty percent (80%) of
the average of the closing bid price of the Common Stock on the NASDAQ (or if
the Common Stock is not listed for trading on the NASDAQ but is listed for
trading on a national securities exchange then eighty percent (80%) of the
average of the closing bid price of the Common Stock on the national securities
exchange) for the five (5) trading days immediately prior to the particular date
of the Conversion Notice. Notwithstanding the foregoing, the Conversion Price
shall not be less than a minimum of $1.50 per share ("Minimum Conversion Price")
for a period of twenty-four (24) months from the date of issuance of the
Preferred Stock. 

          If any of the outstanding shares of Preferred Stock are converted, in whole
or in part, into Common Stock pursuant to the terms of this Section 5(b), the
number of shares of whole Common Stock to be issued to the Holder as a result of
such conversion shall be determined by dividing (a) the aggregate Stated Value
of the Preferred Stock so surrendered for conversion by (b) the Conversion Price
in effect on the date of that particular Conversion Notice relating to such
conversion. At the time of conversion of shares of the Preferred Stock, the
Corporation shall pay in cash to the holder thereof an amount equal to all
unpaid and accrued dividends, if any, accrued thereon on the shares of Preferred
so converted to the date of the Conversion Notice relating to such conversion,
or, at the Corporation's option, in lieu of paying cash for the accrued and
unpaid dividends, issue that number of shares of whole Common Stock which is
equal to the quotient of the amount of such unpaid and accrued dividends to the
date of the Conversion Notice 
 

-3-

relating to such conversion of the shares of Preferred Stock so converted
divided by the Stock Dividend Price, in effect at the date of the Conversion
Notice relating to such conversion.

(c)  Conversion Notice. The right of conversion shall be
exercised by the Holder thereof by telecopying or faxing an executed and
completed written notice signed by an authorized representative of the Holder,
("Conversion Notice") to the Corporation that the Holder elects to convert a
specified number of shares of Preferred Stock representing a specified Stated
Value thereof into shares of Common Stock and by delivering by express courier
the certificate or certificates of Preferred Stock being converted to the
Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to the Holders
of the Preferred Stock). The business date indicated on a Conversion Notice
which is telecopied to and received by the Corporation in accordance with the
provisions hereof shall be deemed a Conversion Date. The Conversion Notice shall
include therein the Stated Value of shares of Preferred Stock to be converted,
and a calculation (a) of the Stock Dividend Price, (b) the Conversion Price, and
(c) the number of Shares of Common Stock to be issued in connection with such
conversion. The Corporation shall have the right to review the calculations
included in the Conversion Notice, and shall provide notice of any discrepancy
or dispute therewith within three (3) business days of the receipt thereof. The
Holder shall deliver to the Corporation an original Conversion Notice and the
original Preferred to be converted within three (3) business days from the date
of the Conversion Notice.

(d)  Issuance of Certificates - Time Conversion Effected.
Promptly, but in no event more than six (6) business days,
after the receipt by facsimile of the Conversion Notice referred to in
Subparagraph (5)(c); and provided within the six (6) business days the
Corporation receives the certificate or certificates for the shares of Preferred
Stock to be converted, the Corporation shall issue and deliver, or cause to be
issued and delivered, to the Holder, registered in the name of the Holder, a
certificate or certificates for the number of whole shares of Common Stock into
which such shares of Preferred Stock are converted. Such conversion shall be
deemed to have been effected as of the close of business on the date on which
the telecopy or facsimile Conversion Notice shall have been received by the
Corporation, and the rights of the Holder of such share or shares of Preferred
Stock shall cease, at such time, and the Holder or Holders shall be deemed to
have become the Holder or Holders of record of the shares of Common Stock
represented thereby. 

In the event that the shares of Common Stock issuable upon conversion of the
Preferred, is not delivered within six (6) business days of the date the Company
receives the Conversion Notice, the Company shall pay to the Buyer, by wire
transfer, as liquidated damages for such failure and not as a penalty, for each
$100,000 of Preferred sought to be converted, $500 for each of the first five
(5) calendar days and $1,000 per calendar day thereafter that the shares of
Common Stock are not delivered, which liquidated damages shall begin to run from
the seventh (7th) business day after the Conversion Date. Any and all payments
required pursuant to this paragraph shall be payable only in cash.
Notwithstanding the above, liquidated damages shall not exceed $2,000.00 per
day. In addition to the liquidated damages set forth herein, in the event the
Company fails to deliver the shares of Common Stock within six (6) business days
after the Conversion date, the
 

-4-

Company agrees to issue the larger number of shares of Common Stock derived
from (i) the original Conversion Notice, or (ii) utilizing the five lowest
closing bid prices of the Company's shares of Common Stock beginning on the
Conversion Date and ending on the day the shares of Common Stock are delivered.
The Company understands that a delay in the issuance of the shares of Common
Stock could result in economic loss to the Holder. Nothing contained herein, or
in the Preferred shall limit the Holder's rights to pursue actual damages for
the Company's failure to issue and deliver shares of Common Stock to the Holder
in accordance with the terms of the Certificate of Designations, and this
Agreement. 

(e)  Fractional Shares of Common Stock. No fractional shares
of Common Stock shall be issued upon conversion of any Preferred Stock into
shares of Common Stock. All fractional shares of Common Stock shall be
aggregated and then rounded down to the nearest whole share of Common Stock. In
case the number of shares of Preferred Stock represented by the certificate or
certificates surrendered pursuant to Subparagraph 5(b) exceeds the number of
shares of Common Stock converted, the Corporation shall, upon such conversion,
execute and deliver to the Holder, at the expense of the Corporation, a new
certificate or certificates for the number of shares of Preferred Stock
represented by the certificate or certificates surrendered which are not to be
converted.

(f)  Merger or Consolidation. In case of either (a) any
merger or consolidation to which the Corporation is a party (collectively, the
"Merger"), other than a Merger in which the Corporation is the surviving or
continuing corporation, or (b) any sale or conveyance to another corporation of
all, or substantially all, of the assets of the Corporation (collectively, the
"Sale"), and such Merger or Sale becomes effective (x) while any shares of
Preferred Stock are outstanding and prior to the date that the Corporation's
Registration Statement covering all the shares of Common Stock issuable upon the
conversion of the Preferred Stock is declared effective by the U.S. Securities
and Exchange Commission ("Commission"), the Corporation or such successor
corporation as the case may be, shall make appropriate provision so that the
Holder of each share of Preferred Stock then outstanding shall have the right to
convert such share of Preferred Stock into the kind and amount of shares of
stock or other securities and property receivable upon such Merger or Sale by a
holder of the number of shares of Common Stock into which such shares of
Preferred Stock could have been converted into immediately prior to such Merger
or Sale, subject to adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 5.

In the event of a Merger or Sale, where the Corporation is not the surviving
Corporation, the Holder shall have the right to redeem all of the outstanding
shares of Preferred Stock at 120% of the Liquidation Value of each share of
Preferred Stock then outstanding plus all accrued and unpaid dividends (the
"Redemption Amount"). The Corporation shall pay this Redemption Amount in cash
within ten (10) business days of receipt by the Corporation of notice from the
Holder, and receipt by the Corporation of all outstanding shares of Preferred
Stock duly endorsed by the Holder to the Corporation.

-5-

(g)  Adjustments to Conversion Price for Stock Dividends and for Combinations
or Subdivisions of Common Stock. If the Corporation at any time or from time to
time while shares of Preferred Stock are issued and outstanding shall declare or
pay, any dividend on the Common Stock payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by stock split, reclassification or otherwise than by
payment of a dividend in Common Stock), or if the outstanding shares of Common
Stock shall be combined or consolidated, by reclassification or otherwise, into
a lesser number of shares of Common Stock, then the Conversion Price in effect
immediately before such event shall, concurrently with the effectiveness of such
event, be proportionately decreased or increased, as appropriate.

(h)  Adjustments for Reclassification and Reorganization. If
the Common Stock issuable upon conversion of the Preferred Stock shall be
changed into the same or a different number of shares of Common Stock of any
other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination or shares
of Common Stock provided for in Section 5(g) hereof), the Conversion Price then
in effect shall, concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted so that the Preferred Stock shall
be convertible into, in lieu of the number of shares of Common Stock which the
holders of Preferred Stock would otherwise have been entitled to receive, a
number of shares of Common Stock of such other class or classes of stock
equivalent to the number of shares of Common Stock that would have been subject
to receipt by the holders upon conversion of the Preferred Stock immediately
before that change.

6 Redemption.

(a)  Redemption at Corporation's Option. Except as otherwise
provided in this Section 6, at any time, and from time to time, the Corporation
may, at its sole option, but shall not be obligated to, redeem, in whole or in
part, at any time, and from time to time (i) for a period of 120 days from the
date of issuance of the Preferred Stock up to an aggregate of 450 shares of
Series 13 Class M Preferred Stock at the cash redemption price of $1,000 per
share and (ii) the then outstanding Series 13 Class M Preferred Stock at the
following cash redemption prices if redeemed during the following periods:
(a) within one year from July 15, 1999 -
$1,100 per share, except as otherwise provided in (i) above, and (b) after one
year from July 15, 1999 - $1,200 per share (as applicable, the
redemption price of $1,000, $1,100 or $1,200 is referred to herein as the
"Redemption Price").

(b)  Mechanics of Redemption. Prior to any date stipulated by
the Corporation for the redemption of Series 13 Class M Preferred Stock (the
"Redemption Date"), written notice (the "Redemption Notice") shall be mailed to
each holder of record on such notice date of the Series 13 Class M Preferred
Stock. The Redemption Notice shall state: (i) the Redemption Date of such
shares, (ii) the number of Series 13 Class M Preferred Stock to be redeemed from
the holder to whom the Redemption Notice is addressed, (iii) instructions for
surrender to the Corporation, in the manner and at the place designated, of a
share certificate or share certificates representing the number of Series 13
Class M Preferred Stock to be redeemed from such holder, and (iv)

-6-

instructions as to how to specify to the Corporation the number of Series 13
Class M Preferred Stock to be redeemed as provided in this Part 6 and, if the
Redemption Notice is mailed to the Holder after the first year from the date of
issuance of the Series 13 Class M Preferred Stock, the number of shares to be
converted into Common Stock as provided in Part 5 hereof.

(c)  Rights of Conversion Upon Redemption. If the redemption
occurs during the first 12 months after the issuance of the Preferred Stock, the
holder may not convert any redeemed shares. If the redemption occurs after the
first year after the first issuance of Series 13 Class M Preferred Stock, then,
upon receipt of the Redemption Notice, any holder of Series 13 Class M Preferred
Stock shall have five business days during which it may exercise the option, at
its sole election, to specify what portion of its Series 13 Class M Preferred
Stock called for redemption in the Redemption Notice shall be redeemed as
provided in this Part 6 or converted into Common Stock in the manner provided in
Part 5 hereof, except that, notwithstanding any provision of such Part 5 to the
contrary, after one year from the date of first issuance of the Preferred Stock,
such holder shall have the right to convert into Common Stock that number of
Series 13 Class M Preferred Stock called for redemption in the Redemption
Notice.

(d)  Surrender of Certificates. On or before the Redemption
Date in respect of any Series 13 Class M Preferred Stock, each holder of such
shares shall surrender the required certificate or certificates representing
such shares to the Corporation in the manner and at the place designated in the
Redemption Notice, and upon the Redemption Date, the Redemption Price for such
shares shall be made payable, in the manner provided hereof, to the order of the
person whose name appears on such certificate or certificates as the owner
thereof, and each surrendered share certificate shall be canceled and retired.
If a share certificate is surrendered and all the shares evidenced thereby are
not being redeemed (as described below), the Corporation shall cause the Series
13 Class M Preferred Stock which are not being redeemed to be registered in the
names of the persons or entity whose names appear as the owners on the
respective surrendered share certificates and deliver such certificate to such
person.

(e)  Payment. On the Redemption Date in respect of any Series
13 Class M Preferred Stock or prior thereto, the Corporation shall deposit with
any bank or trust company having a capital and surplus of at least $50,000,000,
as a trust fund, a sum equal to the aggregate Redemption Price of all such
shares called from redemption (less the aggregate Redemption Price for those
Series 13 Class M Preferred Stock in respect of which the Corporation has
received notice from the holder thereof of its election to convert Series 13
Class M Preferred Stock into Common Stock), with irrevocable instructions and
authority to the bank or trust company to pay, on or after the Redemption Date,
the Redemption Price to the respective holders upon the surrender of their share
certificates. The deposit shall constitute full payment for the shares to their
holders, and from and after the date of the deposit the redeemed shares shall be
deemed to be no longer outstanding, and holders thereof shall cease to be
shareholders with respect to such shares and shall have no rights with respect
thereto except the rights to receive from the bank or trust company payments of
the Redemption Price of the shares, without interest, upon surrender of their
certificates thereof. Any funds so deposited and unclaimed at the end of one
year following the Redemption Date shall be released or repaid

-7-

to the Corporation, after which the former holders of shares called for
redemption shall be entitled to receive payment of the Redemption Price in
respect of their shares only from the Corporation.

7. Assignment. 

Subject to all applicable restrictions on transfer, the rights and
obligations of the Corporation and the Holder of the Preferred Stock shall be
binding upon and benefit the successors, assigns, heirs, administrators, and
transferees of the parties.

8. Shares of Common Stock to be
Reserved.

The Corporation, upon the effective date of this Certificate of Designations,
has a sufficient number of shares of Common Stock available to reserve for
issuance upon the conversion of all outstanding shares of Preferred Stock,
pursuant to the terms and conditions set forth in Section 5, and exercise of the
Warrants as defined in Section 12. The Corporation will at all times reserve and
keep available out of its authorized shares of Common Stock, solely for the
purpose of issuance upon the conversion of Preferred Stock, and exercise of the
Warrants, as herein provided, such number of shares of Common Stock as shall
then be issuable upon the conversion of all outstanding shares of Preferred
Stock, and exercise of the Warrants. The Corporation covenants that all shares
of Common Stock which shall be so issued shall be duly and validly issued, fully
paid and non assessable. The Corporation will take such action as may be
required, if the total number of shares of Common Stock issued and issuable
after such action upon conversion of the Preferred Stock, and exercise of the
Warrants would exceed the total number of shares of Common Stock then authorized
by the Corporation's Certificate of Incorporation, as amended, or would exceed
19.99% of the shares of Common Stock then outstanding if required by law or the
Rules and Regulations of NASDAQ or the National Securities Exchange applicable
to the Corporation to take such action as a result of exceeding such 19.99%, in
order to increase the number of shares of Common Stock to permit the Corporation
to issue the number of shares of Common Stock required to effect conversion of
the Preferred, and exercise of the Warrants, to a number sufficient to permit
conversion of the Preferred Stock, and exercise of the Warrants, including,
without limitation, engaging in reasonable efforts to obtain the requisite
stockholder approval of any necessary amendment to the Corporation's Restated
Certificate of Incorporation, and to obtain shareholders approval in order to
effect conversion of the Preferred Stock, and exercise of the Warrants, if
required by law or the rules or regulations of the NASDAQ or National Securities
Exchange applicable to the Corporation.

8(a)  Shareholder Approval. In connection
with the issuance to the Holder of the shares of Preferred Stock, pursuant to
this Certificate of Designations, the Corporation is also issuing (i) certain
warrants ("RBB Warrants") to the Holder pursuant to the terms of that certain
Private Securities Subscription Agreement dated June 30, 1998 (the "Agreement"),
providing for the purchase of up to 150,000 shares of Common Stock at an
exercise price of $2.50 per share and (ii) certain warrants (collectively, the
"Liviakis Warrants") to Liviakis Financial Communication, Inc. ("Liviakis") and
Robert B. Prag providing for the
 

-8-

purchase of up to an aggregate of 2,500,000 shares of Common Stock at an
exercise price of $1.875 per share pursuant to the terms of that Liviakis
Agreement dated June 30, 1998, between Liviakis and the Corporation.

If (i) the aggregate number of shares of Common Stock issued by the
Corporation as a result of any or all of the following: (a) conversion of the
Preferred Stock, (b) payment of dividends accrued on the Preferred Stock (c)
exercise of the RBB Warrants, and (d) exercise of the Liviakis Warrants exceeds
2,388,347 shares of Common Stock (which equals 19.9% of the outstanding shares
of Common Stock of the Corporation as of the date of this Certificate of
Designations) and (ii) the Holder has converted or elects to convert any of the
then outstanding shares of Preferred Stock pursuant to the terms of Section 5 at
a Conversion Price less than $ 1.875 ($1.875 being the market value per share of
Common Stock as quoted on the NASDAQ as of the close of business on June 30,
1998) pursuant to the terms of Section 5(b) hereof, other than if the Conversion
Price is less than $ 1.875 solely as a result of the anti-dilution provisions of
Section 5(g) and (h) hereof, then, notwithstanding anything in Section 5 to the
contrary, the Corporation shall not issue any shares of Common Stock as a result
of receipt of a Conversion Notice unless and until the Corporation shall have
obtained approval of its shareholders entitled to vote on the transactions in
accordance with subparagraphs (25)(H)(i)d, (iv) and (v) of Rule 4310 of the
NASDAQ Marketplace Rules ("Shareholder Approval").

If Shareholder Approval is required as set forth in the above paragraph, the
Corporation shall take all necessary steps to obtain such Shareholder Approval
upon receipt of the Conversion Notice triggering the need for Shareholder
Approval ("Current Conversion Notice"). If the Corporation has not received from
the Holder a Current Conversion Notice, the Holder, subsequent to January 1st,
1999 may, if the Corporation's shares of Common Stock trade, subsequent to
January 1st, 1999, at a five (5) day average closing bid price below Two Dollars
and 34/00 ($2.34), upon written notice to the Corporation, require the
Corporation to obtain Shareholder Approval ("Holder's Notice"). The Holder and
the Corporation's officers and directors covenant to vote all shares of Common
Stock over which they have voting control in favor of Shareholder Approval. If
the Corporation does not obtain Shareholder Approval within ninety (90) days of
the earlier of the Corporation's receipt of (i) the Current Conversion Notice or
(ii) the Holder's Notice, and the Holder has not breached its covenant to vote
all shares of Common Stock over which they have voting control in favor of
Shareholder Approval, the Corporation shall pay in cash to the Holder
liquidated damages, in an amount of 4% per month of the Liquidation Value of
each share of Preferred Stock then outstanding, commencing on the 91st day of
the Corporation's receipt of the Holder's Current Conversion Notice, and
continuing every thirty (30) days pro-rata until such time the Corporation
receives Shareholder Approval.

9.    No Reissuance of Series 13 Class M Convertible
Preferred Stock.

Shares of Preferred Stock which are converted into shares of Common Stock as
provided herein shall be retired and shall become authorized but unissued shares
of Preferred Stock, which may be reissued as part of a new series of Preferred
stock hereafter created.
 

-9-

10.  Closing of Books.

The Corporation will at no time close its transfer books against the transfer
of any Preferred Stock or of any shares of Common Stock issued or issuable upon
the conversion of any shares of Common Stock of Preferred Stock in
any manner which interferes with the timely conversion of such
Preferred Stock, except as may otherwise be required to comply with applicable
securities laws.

11.  No Preemptive Rights.

The Preferred Stock shall not give its holders any preemptive rights to
acquire any other securities issued by the Corporation at any time in the
future.

12.  Definition of Shares.

As used in this Certificate of Designations, the term "shares of Common
Stock" shall mean and include the Corporation's authorized common stock, par
value $.001, as constituted on the date of filing of these terms of the
Preferred Stock, or in case of any reorganization, reclassification, or stock
split of the outstanding shares of Common Stock thereof, the stock, securities
or assets provided for hereof. The term "Warrants" as used herein shall have the
same meaning as defined in Section 1 of the Private Securities Subscription
Agreement, dated June 30, 1998, between the Company and RBB Bank
Aktiengesellschaft.

The said determination of the designations, preferences and relative,
participating, optional or other rights, and the qualifications, limitations or
restrictions thereof, relating to the Preferred Stock was duly made by the Board
of Directors pursuant to the provisions of the Corporation's Restated
Certificate of Incorporation and in accordance with the provisions of the
Delaware General Corporation Law.
 
 

 

 

 

-10-

STATE OF DELAWARE    

SECRETARY OF STATE    

DIVISION OF CORPORATIONS

FILED 12:33 PM -- 07/15/1999

991291292 -- 2249849      

CERTIFICATE OF ELIMINATION

OF

SERIES 3 CLASS C CONVERTIBLE PREFERRED STOCK

AND

SERIES 8 CLASS H CONVERTIBLE PREFERRED STOCK

AND

SERIES 10 CLASS J CONVERTIBLE PREFERRED STOCK

OF

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

____________________________________________

          PERMA-FIX ENVIRONMENTAL SERVICES, INC., a corporation organized and existing
under the General Corporation Law of the State of Delaware (hereinafter called
the "Corporation"), hereby certifies the following:

      1.     That the Certificate of Designations of Series 3 Class C Convertible
Preferred Stock, par value $.001 per share, of the Corporation (the "Series 3
Preferred") was filed with the Delaware Secretary of State on July 19, 1996 (the
"Series 3 Certificate of Designations").

     2.     That all outstanding shares of the Series 3 Preferred have been delivered
to the Company and exchanged pursuant to an agreement with the holder thereof in
accordance with the terms and conditions of a certain Exchange Agreement between
the Company and RBB Bank Aktiengesellschaft, dated as of July 15, 1999.

     3.     That no shares of Series 3 Preferred remain outstanding.

      4.    That all shares of the Series 3 Preferred which have been exchanged have
the status of authorized and unissued shares of the Preferred Stock of the
Corporation without designation as to series, until such shares are once more
designated as part of a particular series by the Board of Directors.

     5.     That effective July 15, 1999, the Board of Directors of the Company duly
adopted the following resolutions:

              RESOLVED, that upon completion of the exchange with the holder of the Series
3

              Class C Convertible Preferred Stock, no authorized shares of Series 3 Class C 

              Convertible Preferred Stock will remain outstanding and no shares of Series 3 

              Class C Convertible Preferred Stock will be issued subject to the Certificate of 

              Designations previously filed with respect to the Series 3 Class C Convertible 

              Preferred Stock.

              FURTHER RESOLVED, that upon completion of the exchange, the officers of the 

              Company are hereby authorized and directed, for and on behalf of the Company, to 

              execute and deliver an appropriate Certificate of Elimination to the Secretary
of State 

              of Delaware regarding the Series 3 Class C Convertible Preferred
Stock.

     6.     That the Certificate of Designations of the Series 8 Class H Convertible
Preferred Stock, par value $.001 per share, of the Corporation (the "Series 8
Preferred") was filed on July 16, 1998 (the "Series 8 Certificate of
Designations").

     7.     That all outstanding shares of the Series 8 Preferred have been delivered
to the Company and exchanged pursuant to an agreement with the holder thereof in
accordance with the terms and conditions of a certain Exchange Agreement between
the Company and RBB Bank, dated as of July 15, 1999.

     8.     That no shares of Series 8 Preferred remain outstanding.

     9.     That all shares of the Series 8 Preferred which have been exchanged have
the status of authorized and unissued shares of the Preferred Stock of the
Corporation without designation as to series, until such shares are once more
designated as part of a particular series by the Board of Directors.

     10.    That effective July 15, 1999, the Board of Directors of the Company duly
adopted the following resolutions:

               RESOLVED, that upon completion of the exchange with the holder of the Series
8 

               Class H Convertible Preferred Stock, no authorized shares of Series 8 Class H 

               Convertible Preferred Stock will remain outstanding and no shares of Series 8 

               Class H Convertible Preferred Stock will be issued subject to the Certificate of 

               Designations previously filed with respect to the Series 8 Class H Convertible 

               Preferred Stock.

               FURTHER RESOLVED, that upon completion of the exchange, the officers of the 

              Company are hereby authorized and directed, for and on behalf of the Company, to 

              execute and deliver an appropriate Certificate of Elimination to the Secretary
of State 

              of Delaware regarding the Series 8 Class H Convertible Preferred Stock.

     11.    That the Certificate of Designations of the Series 10 Class J Convertible
Preferred Stock, par value $.001 per share, of the Corporation (the "Series 10
Preferred") was filed on July 10, 1998 (the "Series 10 Certificate of
Designations").

     12.     That all outstanding shares of the Series 10 Preferred have been
delivered to the Company and exchanged pursuant to an agreement
 

-2-

with the holder thereof in accordance to the terms and conditions of a
certain Exchange Agreement between the Company and RBB Bank, dated as of July
15, 1999.

      13.    That no shares of Series 10 Preferred remain outstanding.

      14.    That all shares of the Series 10 Preferred which have been exchanged have
the status of authorized and unissued shares of the Preferred Stock of the
Corporation without designation as to series, until such shares are once more
designated as part of a particular series by the Board of Directors.

      15.    That effective July 15, 1999, the Board of Directors of the Company duly
adopted the following resolutions:

                RESOLVED, that upon completion of the exchange with the holder of the Series
10 

                Class J Convertible Preferred Stock, no authorized shares of Series 10 Class
J 

                Convertible Preferred Stock will remain outstanding and no shares of Series 10 

                Class J Convertible Preferred Stock will be issued subject to the Certificate of 

                Designations previously filed with respect to the Series 10 Class J Convertible 

                Preferred Stock.

                FURTHER RESOLVED, that upon completion of the exchange, the officers of the 

                Company are hereby authorized and directed, for and on behalf of the Company, to 

                execute and deliver an appropriate Certificate of Elimination to the Secretary
of State 

                of Delaware regarding the Series 10 Class J Convertible Preferred
Stock. 

     16.    That pursuant to the provisions of Section 151(g) of the Delaware General
Corporation Law, upon the effective date of the filing of this Certificate, this
Certificate will have the effect of eliminating from the Restated Certificate of
Incorporation only those matters set forth in the Restated Certificate of
Incorporation with respect to the Series 3 Class C Convertible Preferred Stock,
the Series 8 Class H Convertible Preferred Stock, and the Series 10 Class J
Convertible Preferred Stock

          IN WITNESS WHEREOF, this Certificate of Elimination has been executed this
15th day of July, 1999, by the President of the Company.

                                                                                PERMA-FIX ENVIRONMENTAL

ATTEST:                                                                 SERVICES, INC.

/s/ Richard T. Kelecy                                                 By
 /s/ Louis Centofanti                           

Richard T. Kelecy, Secretary                                          Dr. Louis F. Centofanti, President
(SEAL)
 

-3-

STATE OF DELAWARE    

SECRETARY OF STATE    

DIVISION OF CORPORATIONS

FILED 12:30 PM -- 08/10/1999

991331578 -- 2249849     

CERTIFICATE OF DESIGNATIONS

OF SERIES 14 CLASS N CONVERTIBLE PREFERRED STOCK

OF

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

          Perma-Fix Environmental Services, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify:

          That, pursuant to authority conferred upon by the Board of Directors by the
Corporation's Restated Certificate of Incorporation, as amended, and pursuant to
the provisions of Section 151 of the Delaware Corporation Law, the Board of
Directors of the Corporation has adopted resolutions, a copy of which is
attached hereto, establishing and providing for the issuance of a series of
Preferred Stock designated as Series 14 Class N Convertible Preferred Stock and
has established and fixed the voting powers, designations, preferences and
relative participating, optional and other special rights and qualifications,
limitations and restrictions of such Series 14 Class N Convertible Preferred
Stock as set forth in the attached resolutions.

Dated: August 10, 1999                                            PERMA-FIX ENVIRONMENTAL

                                                                                 SERVICES, INC. 

                                                                                  By /s/ Louis Centofanti                               

                                                                                        Dr. Louis F. Centofanti

                                                                                        Chairman of the Board
ATTEST:

/s/ Richard T. Kelecy                         

Richard T. Kelecy, Secretary
 

 

 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

(the "Corporation")

RESOLUTION OF THE BOARD OF DIRECTORS

FIXING THE NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,

RESTRICTIONS AND CONDITIONS ATTACHING TO THE

SERIES 14 CLASS N CONVERTIBLE PREFERRED STOCK

WHEREAS,

A.    The Corporation's share capital includes Preferred Stock, par value $.001
per share 

        ("Preferred Stock"), which Preferred Stock may be issued in one or
more series by the 

         Board of Directors of the Corporation (the "Board") being
entitled by resolution to fix the 

         number of shares in each series and to
designate the rights, designations, preferences, and 

         relative, participating,
optional or other special rights, privileges, restrictions and conditions 

         attaching to the shares of each such series; and

B.    It is in the best interests of the Corporation for the Board to create a
new series from the 

        Preferred Stock designated as the Series 14 Class N
Convertible Preferred Stock, par value $.001.

NOW, THEREFORE, BE IT RESOLVED, THAT:

The Series 14 Class N Convertible Preferred Stock, par value $.001 (the
"Series 14 Class N Preferred Stock") of the Corporation shall consist of 1,769
shares and no more and shall be designated as the Series 14 Class N Convertible
Preferred Stock, and the preferences, rights, privileges, restrictions and
conditions attaching to the Series 14 Class N Preferred Stock shall be as
follows:

Part 1 - Voting and Preemptive Rights.

1.1    Voting Rights. Except as otherwise provided
herein, in the Corporation's Certificate of Incorporation (the "Articles") or
the General Corporation Law of the State of Delaware (the "GCL"), the holders of
the Series 14 Class N Preferred Stock shall have no voting rights whatsoever. To
the extent that under the GCL the vote of the holders of the Series 14 Class N
Preferred Stock, voting separately as a class or series as applicable, is
required to authorize a given action of the Corporation, the affirmative vote or
consent of the holders of at least a majority of the shares of the Series 14
Class N Preferred Stock represented at a duly held meeting at which a quorum is
present or by written consent of a majority of the shares of Series 14 Class N
Preferred Stock (except as otherwise may be required under the GCL) shall
constitute the approval of such action by the series. To the extent that under
the GCL the holders of the Series 14 Class N

-2-

Preferred Stock are entitled to vote on a matter with holders of
Corporation's Common Stock and/or any other class or series of the Corporation's
voting securities, the Series 14 Class N Preferred Stock, the Corporation's
Common Stock and all other classes or series of the Corporation's voting
securities shall vote together as one class, with each share of Series 14 Class
N Preferred Stock entitled to a number of votes equal to the number of shares of
the Corporation's Common Stock into which it is then convertible using the
record date for the taking of such vote of stockholders as the date as of which
the Conversion Price (as defined in Section 4.3 hereof) is calculated and
conversion is effected. Holders of the Series 14 Class N Preferred Stock shall
be entitled to notice of (and copies of proxy materials and other information
sent to stockholders) for all shareholder meetings or written consents with
respect to which they would be entitled to vote, which notice would be provided
pursuant to the Corporation's bylaws and applicable statutes.

1.2    No Preemptive Rights. The Series 14 Class N
Preferred Stock shall not give its holders any preemptive rights to acquire any
other securities issued by the Corporation at any time in the future.

Part 2 - Liquidation Rights.

2.1    Liquidation. If the Corporation shall be
voluntarily or involuntarily liquidated, dissolved or wound up at any time when
any shares of the Series 14 Class N Preferred Stock shall be outstanding, the
holders of the then outstanding Series 14 Class N Preferred Stock shall have a
preference in distribution of the Corporation's property available for
distribution to the holders of the Corporation's Common Stock equal to $1,000
consideration per outstanding share of Series 14 Class N Preferred Stock, plus
an amount equal to all unpaid dividends accrued thereon to the date of payment
of such distribution ("Liquidation Preference"), whether or not declared by the
Board.

2.2    Payment of Liquidation Preferences. Subject to
the provisions of Part 6 hereof, all amounts to be paid as Liquidation
Preference to the holders of Series 14 Class N Preferred Stock, as provided in
this Part 2, shall be paid or set apart for payment before the payment or
setting apart for payment of any amount for, or the distribution of any of the
Corporation's property to the holders of the Corporation's Common Stock, whether
now or hereafter authorized, in connection with such liquidation, dissolution or
winding up.

2.3    No Rights After Payment. After the payment to the
holders of the shares of the Series 14 Class N Preferred Stock of the full
Liquidation Preference amounts provided for in this Part 2, the holders of the
Series 14 Class N Preferred Stock as such shall have no right or claim to any of
the remaining assets of the Corporation.

2.4    Assets Insufficient to Pay Full Liquidation
Preference. In the event that the assets of the Corporation
available for distribution to the holders of shares of the Series 14 Class N
Preferred Stock upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, shall be insufficient to pay in
full all

-3-

amounts to which such holders are entitled pursuant to this Part 2, no such
distribution shall be made on account of any shares of any other class or series
of Preferred Stock ranking on a parity with the shares of this Series 14 Class N
Preferred Stock upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares of
this Series 14 Class N Preferred Stock and shares of such other class or series
ranking on a parity with the shares of this Series 14 Class N Preferred Stock,
ratably, in proportion to the full distributable amounts for which holders of
all such parity shares are respectively entitled upon such dissolution,
liquidation or winding up.

Part 3 - Dividends.

3.1    The holders of the Series 14 Class N Preferred Stock are entitled to
receive if, when and as declared by the Board out of funds legally available
therefor, cumulative dividends, payable in cash or Common Stock of the
Corporation, par value $.001 per share (the "Common Stock"), at the
Corporation's election, at the rate of six percent (6%) per annum of the
Liquidation Value of the Series 14 Class N Preferred Stock. The Liquidation
Value of the Series 14 Class N Preferred Stock shall be $1,000.00 per share (the
"Dividend Rate"). The dividend is payable semi-annually within seven (7)
business days after each of December 31 and June 30 of each year, commencing
December 31, 1999 (each, a "Dividend Declaration Date"). Dividends shall be paid
only with respect to shares of Series 14 Class N Preferred Stock actually issued
and outstanding on a Dividend Declaration Date and to holders of record as of
the Dividend Declaration Date. Dividends shall accrue from the first day of the
semi-annual period in which such dividend may be payable, except with respect to
the first semi-annual dividend which shall accrue from August 3, 1999. In the
event that the Corporation elects to pay dividends in Common Stock of the
Corporation, each holder of the Series 14 Class N Preferred Stock shall receive
shares of Common Stock of the Corporation equal to the quotient of (i) the
Dividend Rate in effect on the applicable Dividend Declaration Date dividend by
(ii) the average of the closing bid quotation of the Common Stock as reported on
the over-the-counter market, or the closing sale price if listed on a national
securities exchange, for the five (5) trading days immediately prior to the
Dividend Declaration Date (the "Stock Dividend Price"). Dividends on the Series
14 Class N Preferred Stock shall be cumulative, and no dividends or other
distributions shall be paid or declared or set aside for payment on the Common
Stock until all accrued and unpaid dividends on all outstanding shares of Series
14 Class N Preferred Stock shall have been paid or declared and set aside for
payment.

Part 4 - Conversion. The holders of the Series 14
Class N Preferred Stock shall have rights to convert the shares of Series 14
Class N Preferred Stock into shares of the Corporation's Common Stock, par value
$.001 per share ("Common Stock"), as follows (the "Conversion Rights"):

4.1    No Right to Convert. The Series 14 Class N Preferred shall not be
convertible into shares of Common Stock until after April 20, 2000.

-4-

4.2    Right to Convert. The Series 14 Class N Preferred
Stock may be convertible into shares of Common Stock at any time on or after
April 20, 2000.

4.3    Conversion Price. As used herein, the term
Conversion Price shall be the product of (i) the average closing bid quotation
of the Common Stock as reported on the over-the-counter market, or the closing
sale price if listed on a national securities exchange, for the five (5) trading
days immediately preceding the date of the Conversion Notice referred to in
Section 4.4 below multiplied by (ii) seventy-five percent (75%), subject to the
provisions of this Section 4.3. Notwithstanding the foregoing, the Conversion
Price shall not be (i) less than a minimum of $1.50 per share for a period of
twenty-four (24) months from April 20, 1999, or, after twenty-four (24) months
from April 20, 1999, a minimum of $.50 per share (as applicable, the "Minimum
Conversion Price") or (ii) more than a maximum of $1.50 per share ( "Maximum
Conversion Price"). If, after July 1, 1996, the Corporation sustains a net loss,
on a consolidated basis, in each of two (2) consecutive quarters, as determined
under generally accepted accounting principles, the Minimum Conversion Price
shall be reduced $.25 a share, but there shall be no change to, or reduction of,
the Maximum Conversion Price. For the purpose of determining whether the
Corporation has had a net loss in each of two (2) consecutive quarters, at no
time shall a quarter that has already been considered in such determination be
considered in any subsequent determination (as an example the third quarter of
1996 in which there is a net profit and the fourth quarter of 1996 in which
there is a net loss shall be considered as two consecutive quarters, and, as a
result, the fourth quarter of 1996 shall not be considered along with the first
quarter of 1997 as two (2) consecutive quarters, but the first quarter of 1997
must be considered with the second quarter of 1997 for the purposes of such
determination). For the purposes of this Section 4.3, a "quarter" is a three (3)
month period ending on March 31, June 30, September 30, and December 31. If any
of the outstanding shares of Series 14 Class N Preferred Stock are converted, in
whole or in part, into Common Stock pursuant to the terms of this Part 4, the
number of shares of whole Common Stock to be issued to the holder as a result of
such conversion shall be determined by dividing (a) the aggregate Liquidation
Value of the Series 14 Class N Preferred Stock so surrendered for conversion by
(b) the Conversion Price in effect at the date of the conversion. At the time of
conversion of shares of the Series 14 Class N Preferred Stock, the Corporation
shall pay in cash to the holder thereof an amount equal to all unpaid and
accrued dividends, if any, accrued thereon to the date of conversion, or, at the
Corporation's option, in lieu of paying cash for the accrued and unpaid
dividends, issue that number of shares of whole Common Stock which is equal to
the product of dividing the amount of such unpaid and accrued dividends to the
date of conversion on the shares of Series 14 Class N Preferred Stock so
converted by the Conversion Price in effect at the date of conversion.

4.4    Mechanics of Conversion. Any holder of the Series
14 Class N Preferred Stock who wishes to exercise its Conversion Rights pursuant
to the terms of this Part 4 must, if such shares are not being held in escrow by
the Corporation's attorneys, surrender the certificate therefor at the principal
executive office of the Corporation, and give written notice, which may be via
facsimile transmission, to the Corporation at such office that it elects to
convert the same (the "Conversion Notice"). In the event that the shares of
Series 14 Class

-5-

N Preferred Stock are being held in escrow by the Corporation's attorneys, no
delivery of the certificates shall be required. No Conversion Notice with
respect to any shares of Series 14 Class N Preferred Stock can be given prior to
the time such shares of Series 14 Class N Preferred Stock are eligible for
conversion in accordance with the provision of Section 4.1 above. Any such
premature Conversion Notice shall automatically be null and void. The
Corporation shall, within five (5) business days after receipt of an appropriate
and timely Conversion Notice (and certificate, if necessary), issue to such
holder of Series 14 Class N Preferred Stock or its agent a certificate for the
number of shares of Common Stock to which he shall be entitled; it being
expressly agreed that until and unless the holder delivers written notice to the
Corporation to the contrary, all shares of Common Stock issuable upon conversion
of the Series 14 Class N Preferred Stock hereunder are to be delivered by the
Corporation to a party designated in writing by the holder in the Conversion
Notice for the account of the holder and such shall be deemed valid delivery to
the holder of such shares of Common Stock. Such conversion shall be deemed to
have been made only after both the certificate for the shares of Series 14 Class
N Preferred Stock to be converted have been surrendered and the Conversion
Notice is received by the Corporation (or in the event that no surrender of the
Certificate is required, then only upon the receipt by the Corporation of the
Conversion Notice) (the "Conversion Documents"), and the person or entity whose
name is noted on the certificate evidencing such shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder of
such shares of Common Stock at and after such time. In the event that the
Conversion Notice is sent via facsimile transmission, the Corporation shall be
deemed to have received such Conversion Notice on the first business day on
which such facsimile Conversion Notice is actually received. If the Corporation
fails to deliver to the holder or its agent the certificate representing the
shares of Common Stock that the holder is entitled to receive as a result of
such conversion within five (5) business days after receipt by the Corporation
from the holder of an appropriate and timely Conversion Notice and certificates
pursuant to the terms of this Section 4.4, the Corporation shall pay to the
holder U.S. $1,000 for each day that the Corporation is late in delivering such
certificate to the holder or its agent.

4.5   Adjustments to Conversion Price for Stock Dividends and for
Combinations or Subdivisions of Common Stock. If the Corporation at
any time or from time to time while shares of Series 14 Class N Preferred Stock
are issued and outstanding shall declare or pay, without consideration, any
dividend on the Common Stock payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by stock split, reclassification or otherwise than by
payment of a dividend in Common Stock or in any right to acquire Common Stock),
or if the outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or otherwise, into a lesser number of shares of Common
Stock, then the Conversion Price in effect immediately before such event shall,
concurrently with the effectiveness of such event, be proportionately decreased
or increased, as appropriate. If the Corporation shall declare or pay, without
consideration, any dividend on the Common Stock payable in any right to acquire
Common stock for no consideration, then the Corporation shall be deemed to have
made a dividend payable in Common Stock in an amount of shares equal to the
maximum number of shares issuable upon exercise of such rights to acquire Common
Stock.

-6-

4.6.   Adjustments for Reclassification and
Reorganization. If the Common Stock issuable upon conversion of the
Series 14 Class N Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares provided for in Section 4.5 hereof), the Conversion Price
then in effect shall, concurrently with the effectiveness of such reorganization
or reclassification, be proportionately adjusted so that the Series 14 Class N
Preferred Stock shall be convertible into, in lieu of the number of shares of
Common Stock which the holders of Series 14 Class N Preferred Stock would
otherwise have been entitled to receive, a number of shares of such other class
or classes of stock equivalent to the number of shares of Common Stock that
would have been subject to receipt by the holders upon conversion of the Series
14 Class N Preferred Stock immediately before that change.

4.7   Common Stock Duly Issued. All Common Stock which
may be issued upon conversion of Series 14 Class N Preferred Stock will, upon
issuance, be duly issued, fully paid and nonassessable and free from all taxes,
liens, and charges with respect to the issue thereof.

4.8    Notice of Adjustments. Upon the occurrence of
each adjustment or readjustment of any Conversion Price pursuant to this Part 4,
the Corporation, at its expense, within a reasonable period of time, shall
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of Series 14 Class N Preferred Stock a notice
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment is based.

4.9    Issue Taxes. The Corporation shall pay any and
all issue and other taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of the Series 14 Class N
Preferred Stock pursuant thereto; provided, however, that the Corporation
shall not be obligated to pay any transfer taxes resulting from any transfer
requested by any holder of Series 14 Class N Preferred Stock in connection with
such conversion.

4.10    Reservation of Stock Issuable Upon Conversion.
The Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series 14 Class N Preferred Stock,
such number of its shares of Common Stock as shall, from time to time, be
sufficient to effect the conversion of all outstanding shares of the Series 14
Class N Preferred stock, and, if at any time, the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of the Series 14 Class N Preferred Stock, the
Corporation will take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes, including, without limitation, engaging in
reasonable efforts to obtain the requisite stockholder approval of any necessary
amendment to its Certificate of Incorporation.

4.11    Fractional Shares. No fractional share shall be
issued upon the conversion of any share or shares of Series 14 Class N Preferred
Stock. 

-7-

ll shares of Common Stock (including fractions thereof) issuable upon
conversion of more than one share of Series 14 Class N Preferred Stock by a
holder thereof shall be aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fractional share of Common Stock, such fractional share shall be rounded up to
the nearest whole share.

4.12    Notices. Any notices required by the provisions
of this Part 4 to be given to the holders of shares of Series 14 Class N
Preferred Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his address appearing
on the books of the Corporation.

4.13    Business Day. As used herein, the term "business
day" shall mean any day other than a Saturday, Sunday or a day when the federal
and state banks located in the State of New York are required or permitted to
close.

Part 5 - Redemption.

5.1    Redemption at Corporation's Option. Except as
otherwise provided in this Section 5.1, at any time, and from time to time, the
Corporation may, at its sole option, but shall not be obligated to, redeem, in
whole or in part, at any time, and from time to time, the then outstanding
Series 14 Class N Preferred Stock at the following cash redemption prices if
redeemed during the following periods: (i) within twelve (12)
months from April 20, 1999 - $1,100 per share, and (ii) after
twelve (12) months from April 20, 1999 - $1,200 per share (as
applicable, the redemption price of $1,100 or $1,200 is referred to herein as
the "Redemption Price").

5.2   Mechanics of Redemption. Prior to any date
stipulated by the Corporation for the redemption of Series 14 Class N Preferred
Stock (the "Redemption Date"), written notice (the "Redemption Notice") shall be
mailed to each holder of record on such notice date of the Series 14 Class N
Preferred Stock. The Redemption Notice shall state: (i) the Redemption Date of
such shares, (ii) the number of Series 14 Class N Preferred Stock to be redeemed
from the holder to whom the Redemption Notice is addressed, (iii) instructions
for surrender to the Corporation, in the manner and at the place designated, of
a share certificate or share certificates representing the number of Series 14
Class N Preferred Stock to be redeemed from such holder, and (iv) instructions
as to how to specify to the Corporation the number of Series 14 Class N
Preferred Stock to be redeemed as provided in this Part 5 and, if the Redemption
Notice is mailed to the Holder after the first twelve (12) months from April 20,
1999, the number of shares to be converted into Common Stock as provided in Part
4 hereof.

5.3   Mechanics of Redemption. Prior to any date
stipulated by the Corporation for the redemption of Series 14 Class N Preferred
Stock (the "Redemption Date"), written notice (the "Redemption Notice") shall be
mailed to each holder of record on such notice date of the Series 14 Class N
Preferred Stock. The Redemption Notice shall state: (i) the Redemption Date of
such shares, (ii) the number of Series 14 Class N

-8-

Preferred Stock to be redeemed from the holder to whom the Redemption Notice
is addressed, (iii) instructions for surrender to the Corporation, in the manner
and at the place designated, of a share certificate or share certificates
representing the number of Series 14 Class N Preferred Stock to be redeemed from
such holder, and (iv) instructions as to how to specify to the Corporation the
number of Series 14 Class N Preferred Stock to be redeemed as provided in this
Part 5 and, if the Redemption Notice is mailed to the Holder after the first 12
months from April 20, 1999, the number of shares to be converted into Common
Stock as provided in Part 4 hereof.

5.4   Rights of Conversion Upon Redemption. If the
redemption occurs during the first 12 months after April 20, 1999, the holder
may not convert any redeemed shares. If the redemption occurs pursuant to
Section 5.1 (i) hereof, the Holder of the Series 14 Class N Preferred Stock
shall not have the right to convert those outstanding shares of Series 14 Class
N Preferred Stock that the Company is redeeming after receipt of the Redemption
Notice. If the redemption occurs pursuant to Section 5.1 (ii) hereof, then, upon
receipt of the Redemption Notice, any holder of Series 14 Class N Preferred
Stock shall have the next five business days during which it may exercise the
option, at its sole election, to specify what portion of its Series 14 Class N
Preferred Stock called for redemption in the Redemption Notice shall be redeemed
as provided in this Part 5 or converted into Common Stock in the manner provided
in Part 4 hereof, except that, notwithstanding any provision of such Part 4 to
the contrary, after twelve (12) months from April, 20, 1999, such holder shall
have the right to convert into Common Stock that number of Series 14 Class N
Preferred Stock called for redemption in the Redemption Notice.

5.5   Surrender of Certificates. On or before the
Redemption Date in respect of any Series 14 Class N Preferred Stock, each holder
of such shares shall surrender the required certificate or certificates
representing such shares to the Corporation in the manner and at the place
designated in the Redemption Notice, and upon the Redemption Date, the
Redemption Price for such shares shall be made payable, in the manner provided
in Section 5.6 hereof, to the order of the person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered share
certificate shall be canceled and retired. If a share certificate is surrendered
and all the shares evidenced thereby are not being redeemed (as described
below), the Corporation shall cause the Series 14 Class N Preferred Stock which
are not being redeemed to be registered in the names of the persons or entity
whose names appear as the owners on the respective surrendered share
certificates and deliver such certificate to such person.

5.6    Payment. On the Redemption Date in respect of any
Series 14 Class N Preferred Stock or prior thereto, the Corporation shall
deposit with any bank or trust company having a capital and surplus of at least
U. S. $50,000,000, as a trust fund, a sum equal to the aggregate First Year
Redemption Price or the Redemption Price, whichever is applicable, of all such
shares called from redemption (less the aggregate Redemption Price for those
Series 14 Class N Preferred Stock in respect of which the Corporation has
received notice from the holder thereof of its election to convert Series 14
Class N Preferred Stock into Common Stock), with irrevocable instructions and
authority to the bank or trust company to pay, on or after the Redemption Date,
the Redemption Price to the respective holders upon the surrender of their share
certificates. The deposit shall constitute full payment for the shares

-9-

to their holders, and from and after the date of the deposit the redeemed
shares shall be deemed to be no longer outstanding, and holders thereof shall
cease to be shareholders with respect to such shares and shall have no rights
with respect thereto except the rights to receive from the bank or trust company
payments of the First Year Redemption Price or the Redemption Price, whichever
is applicable, of the shares, without interest, upon surrender of their
certificates thereof. Any funds so deposited and unclaimed at the end of one
year following the Redemption Date shall be released or repaid to the
Corporation, after which the former holders of shares called for redemption
shall be entitled to receive payment of the First Year Redemption Price or the
Redemption Price, whichever is applicable, in respect of their shares only from
the Corporation.

Part 6 - Parity with Other Shares of Series 14 Class N Preferred
Stock and Priority.

6.1    Rateable Participation. If any cumulative
dividends or return of capital in respect of Series 14 Class N Preferred Stock
are not paid in full, the owners of all series of outstanding Preferred Stock
shall participate rateably in respect of accumulated dividends and return of
capital.

6.2    Ranking. For purposes of this resolution, any
stock of any class or series of the Corporation shall be deemed to rank:

          6.2.1    Prior or senior to the shares of this Series 14 Class N Preferred Stock
either as to 

                      dividends or upon liquidation, if the holders of such class or
classes shall be entitled 

                      to the receipt of dividends or of amounts
distributable upon dissolution, liquidation 

                      or winding up of the Corporation,
whether voluntary or involuntary, as the case 

                      may be, in preference or priority
to the holders of shares of this Series 14 Class N 

                      Preferred Stock;

          6.2.2   On a parity with, or equal to, shares of this Series 14 Class N
Preferred Stock, either 

                      as to dividends or upon liquidation, whether or not the
dividend rates, dividend 

                      payment dates, or redemption or liquidation prices per
share or sinking fund 

                      provisions, if any, are different from those of this
Series 14 Class N Preferred Stock, 

                      if the
holders of such stock are entitled to
the receipt of dividends or of amounts 

                      distributable upon dissolution,
liquidation or winding up of the Corporation, whether 

                      voluntary or involuntary,
in proportion to their respective dividend rates or liquidation 

                       prices, without
preference or priority, one over the other, as between the holders 

                      of such stock
and over the other, as between the holders of such stock and the 

                       holders of
shares of this Series 14 Class N Preferred Stock; and,

          6.2.3  Junior to shares of this Series 14 Class N Preferred Stock, either as
to dividends or 

                    upon liquidation, if such class or series shall be Common Stock
or if the holders of 

                    shares of this Series 14 Class N Preferred Stock shall be
entitled to receipt of dividends 

                    or of amounts distributable upon dissolution,
liquidation or winding up of the 

                    Corporation, whether voluntary or

-10-

involuntary, as the case may be, in preference or priority to the holders of
shares of such class or series.

Part 7 - Amendment and Reissue.

7.1    Amendment. If any proposed amendment to the
Corporation's Certificate of Incorporation would alter or change the powers,
preferences or special rights of the Series 14 Class N Preferred Stock so as to
affect such adversely, then the Corporation must obtain the affirmative vote of
such amendment to the Certificate of Incorporation at a duly called and held
series meeting of the holders of the Series 14 Class N Preferred Stock or
written consent by the holders of a majority of the Series 14 Class N Preferred
Stock then outstanding. Notwithstanding the above, the number of authorized
shares of any class or classes of stock may be increased or decreased (but not
below the number of shares thereof outstanding) by the affirmative vote of the
holders of a majority of the stock of the Corporation entitled to vote thereon,
voting together as a single class, irrespective of this Section 7.1 or the
requirements of Section 242 of the GCL.

7.2   Authorized. Any shares of Series 14 Class N
Preferred Stock acquired by the Corporation by reason of purchase, conversion,
redemption or otherwise shall be retired and shall become authorized but
unissued shares of Preferred Stock, which may be reissued as part of a new
series of Preferred Stock hereafter created.
 
 

 

 

 

-11-
 

CERTIFICATE OF DESIGNATIONS

OF SERIES 15 CLASS O CONVERTIBLE PREFERRED STOCK

OF

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

          Perma-Fix Environmental Services, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify:

          That, pursuant to authority conferred upon by the Board of Directors by the
Corporation's Restated Certificate of Incorporation, as amended, and pursuant to
the provisions of Section 151 of the Delaware Corporation Law, the Board of
Directors of the Corporation has adopted resolutions, a copy of which is
attached hereto, establishing and providing for the issuance of a series of
Preferred Stock designated as Series 15 Class O Convertible Preferred Stock and
has established and fixed the voting powers, designations, preferences and
relative participating, optional and other special rights and qualifications,
limitations and restrictions of such Series 15 Class O Convertible Preferred
Stock as set forth in the attached resolutions.

Dated: August 10, 1999

                                                                     PERMA-FIX ENVIRONMENTAL SERVICES, INC.

                                                                      By /s/ Louis Centofanti                                          

                                                                           Dr. Louis F. Centofanti

                                                                           Chairman of the Board
ATTEST:

/s/ Richard T. Kelecy                             

Richard T. Kelecy, Secretary
 

STATE OF DELAAWARE    

SECRETARY OF STATE    

DIVISION OF CORPORATIONS

FILED 12:31 PM -- 08/10/1999

991331579 -- 22498949    

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

(the "Corporation")

RESOLUTION OF THE BOARD OF DIRECTORS

FIXING THE NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,

RESTRICTIONS AND CONDITIONS ATTACHING TO THE

SERIES 15 CLASS O CONVERTIBLE PREFERRED STOCK

           WHEREAS, the Corporation's capital includes preferred stock,
par value $.001 per share ("Preferred Stock"), which Preferred Stock may be
issued in one or more series by resolutions adopted by the directors, and with
the directors being entitled by resolution to fix the number of shares in each
series and to designate the rights, designations, preferences and relative,
participating, optional or other special rights and privileges, restrictions and
conditions attaching to the shares of each such series;

          WHEREAS, it is in the best interests of the Corporation for
the Board to create a new series from the Preferred Stock designated as the
Series 15 Class O Convertible Preferred Stock, par value $.001 per share (the
"Series 15 Class O Preferred Stock");

          NOW, THEREFORE, BE IT RESOLVED, that the Series 15 Class O
Preferred Stock shall consist of six hundred sixteen (616) shares and no more
and shall be designated as the Series 15 Class O Convertible Preferred Stock,
and the preferences, rights, privileges, restrictions and conditions attaching
to the Series 15 Class O Preferred Stock shall be as follows:

Part 1 - Voting and Preemptive Rights.

1.1    Voting Rights. Except as otherwise provided in
Part 7 hereof or under Section 242(b)(2) of the General Corporation Law of the
State of Delaware (the "GCL"), the holders of the Series 15 Class O Preferred
Stock shall have no voting rights whatsoever. To the extent that under Section
242(b)(2) of the GCL or Part 7 hereof, the holders of the Series 15 Class O
Preferred Stock are entitled to vote on a matter, each share of the Series 15
Class O Preferred Stock shall be entitled one (1) vote for each outstanding
share of Series 15 Class O Preferred Stock. Holders of the Series 15 Class O
Preferred Stock shall be entitled to notice of (and copies of proxy materials
and other information sent to stockholders) for all shareholder meetings or
written consents with respect to which they would be entitled to vote, which
notice would be provided pursuant to the Corporation's bylaws and applicable
statutes.

1.2    No Preemptive Rights. The Series 15 Class O
Preferred Stock shall not give its holders any preemptive rights to acquire any
other securities issued by the Corporation at any time in the future.

-1-

Part 2 - Liquidation Rights.

2.1    Liquidation. If the Corporation shall be
voluntarily or involuntarily liquidated, dissolved or wound up at any time when
any shares of the Series 15 Class O Preferred Stock shall be outstanding, the
holders of the then outstanding Series 15 Class O Preferred Stock shall have a
preference in distribution of the Corporation's property available for
distribution to the holders of the Corporation's Common Stock equal to $1,000
consideration per outstanding share of Series 15 Class O Preferred Stock, plus
an amount equal to all unpaid dividends accrued thereon to the date of payment
of such distribution ("Liquidation Preference"), whether or not declared by the
Board.

2.2    Payment of Liquidation Preferences. Subject to
the provisions of Part 6 hereof, all amounts to be paid as Liquidation
Preference to the holders of Series 15 Class O Preferred Stock, as provided in
this Part 2, shall be paid or set apart for payment before the payment or
setting apart for payment of any amount for, or the distribution of any of the
Corporation's property to the holders of the Corporation's Common Stock, whether
now or hereafter authorized, in connection with such liquidation, dissolution or
winding up.

2.3    No Rights After Payment. After the payment to the
holders of the shares of the Series 15 Class O Preferred Stock of the full
Liquidation Preference amounts provided for in this Part 2, the holders of the
Series 15 Class O Preferred Stock as such shall have no right or claim to any of
the remaining assets of the Corporation.

2.4   Assets Insufficient to Pay Full Liquidation
Preference. In the event that the assets of the Corporation
available for distribution to the holders of shares of the Series 15 Class O
Preferred Stock upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, shall be insufficient to pay in
full all amounts to which such holders are entitled pursuant to this Part 2, no
such distribution shall be made on account of any shares of any other class or
series of Preferred Stock ranking on a parity with the shares of this Series 15
Class O Preferred Stock upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares of
this Series 15 Class O Preferred Stock and shares of such other class or series
ranking on a parity with the shares of this Series 15 Class O Preferred Stock,
ratably, in proportion to the full distributable amounts for which holders of
all such parity shares are respectively entitled upon such dissolution,
liquidation or winding up.

Part 3 - Dividends. The holders of the Series 15
Class O Preferred Stock are entitled to receive if, when and as declared by the
Board out of funds legally available therefor, cumulative dividends, payable in
cash or Common Stock of the Corporation, par value $.001 per share (the "Common
Stock"), or any combination thereof, at the Corporation's election, at the rate
of four percent (4%) per

-2-

annum of the Liquidation Value (as defined below) of each issued and
outstanding share of Series 15 Class O Preferred Stock (the "Dividend Rate").
The Liquidation Value of the Series 15 Class O Preferred Stock shall be $1,000
per outstanding share of the Series 15 Class O Preferred Stock (the "Liquidation
Value"). The dividend is payable semi-annually within seven (7) business days
after each of December 31 and June 30 of each year, commencing December 31, 1999
(each, a "Dividend Declaration Date"). Dividends shall be paid only with respect
to shares of Series 15 Class O Preferred Stock actually issued and outstanding
on a Dividend Declaration Date and to holders of record of the Series 15 Class O
Preferred Stock as of the Dividend Declaration Date. Dividends shall accrue from
the first day of the semi-annual period in which such dividend may be payable,
except with respect to the first semi-annual dividend which shall accrue from
August 3, 1999. In the event that the Corporation elects to pay the accrued
dividends due as of a Dividend Declaration Date on an outstanding share of the
Series 15 Class O Preferred Stock in Common Stock of the Corporation, the holder
of such share shall receive that number of shares of Common Stock of the
Corporation equal to the product of (a) the quotient of (i) the Dividend Rate
divided by (ii) the average of the closing bid quotation of the Corporation's
Common Stock as reported on the National Association of Securities Dealers
Automated Quotation system ("NASDAQ"), or the average closing sale price if
listed on a national securities exchange, for the five (5) trading days
immediately prior to the Dividend Declaration Date (the "Stock Dividend Price"),
times (b) a fraction, the numerator of which is the number of days elapsed
during the period for which the dividend is to be paid and the denominator of
which is 365. Dividends on the Series 15 Class O Preferred Stock shall be
cumulative, and no dividends or other distributions shall be paid or declared or
set aside for payment on the Corporation's Common Stock until all accrued and
unpaid dividends on all outstanding shares of Series 15 Class O Preferred Stock
shall have been paid or declared and set aside for payment.

Part 4 - Conversion. The holders of the Series 15
Class O Preferred Stock shall have rights to convert the shares of Series 15
Class O Preferred Stock into shares of the Corporation's Common Stock, par value
$.001 per share ("Common Stock"), as follows (the "Conversion Rights"):

4.1    No Right to Convert. The Series 15 Class O
Preferred shall not be convertible into shares of Common Stock until after April
20, 2000.

4.2    Right to Convert. The Series 15
Class O Preferred Stock may be convertible into shares of Common Stock at any
time after April 20, 2000.

4.3    Conversion Price. Subject to the terms hereof, as
used herein, the Conversion Price per outstanding share of Series 15 Class O
Preferred Stock shall be $1.8125, except that, in the event the average closing
bid price per share of the Common Stock as reported on the over-the-counter
market, or

-3-

the closing sale price if listed on a national securities exchange, for the
five (5) trading days prior to the particular date of conversion shall be less
than $2.265, the Conversion Price for only such particular conversion shall be
the product of the average closing bid quotation of the Common Stock as reported
on the over-the-counter market, or the closing sale price if listed on a
national securities exchange, for the five (5) trading days immediately
preceding the date of the Conversion Notice referred to in Section 4.4 below in
connection with such conversion multiplied by eighty percent (80%), subject to
the provisions of this Section 4.2. Notwithstanding the foregoing, the
Conversion Price shall not be less than a minimum of $1.50 per share ("Minimum
Conversion Price") for a period of twenty-four (24) months from April 20, 1999.
If any of the outstanding shares of Series 15 Class O Preferred Stock are
converted, in whole or in part, into Common Stock pursuant to the terms of this
Part 4, the number of shares of whole Common Stock to be issued to the holder as
a result of such conversion shall be determined by dividing (a) the aggregate
Liquidation Value of the Series 15 Class O Preferred Stock so surrendered for
conversion by (b) the Conversion Price as of such conversion. At the time of
conversion of shares of the Series 15 Class O Preferred Stock, the Corporation
shall pay in cash to the holder thereof an amount equal to all unpaid and
accrued dividends, if any, accrued thereon to the date of conversion, or, at the
Corporation's option, in lieu of paying cash for the accrued and unpaid
dividends, issue that number of whole shares of Common Stock which is equal to
the quotient of the amount of such unpaid and accrued dividends to the date of
conversion on the shares of Series 15 Class O Preferred Stock so converted
divided by the Stock Dividend Price, as defined in Part 3 hereof, in effect at
the date of conversion.

4.4    Mechanics of Conversion. Any holder of the Series
15 Class O Preferred Stock who wishes to exercise its Conversion Rights pursuant
to the terms of this Part 4 must, if such shares are not being held in escrow by
the Corporation's attorneys, surrender the certificate therefor at the principal
executive office of the Corporation, and give written notice, which may be via
facsimile transmission, to the Corporation at such office that it elects to
convert the same (the "Conversion Notice"). In the event that the shares of
Series 15 Class O Preferred Stock are being held in escrow by the Corporation's
attorneys, no delivery of the certificates shall be required. The Corporation
shall, within five (5) business days after receipt of an appropriate and timely
Conversion Notice (and certificate, if necessary), issue to such holder of
Series 15 Class O Preferred Stock or its agent a certificate for the number of
shares of Common Stock to which he shall be entitled; it being expressly agreed
that until and unless the holder delivers written notice to the Corporation to
the contrary, all shares of Common Stock issuable upon conversion of the Series
15 Class O Preferred Stock hereunder are to be delivered by the Corporation to a
party designated in writing by the holder in the Conversion Notice for the
account of the holder and such shall be deemed valid delivery to the holder of
such shares of Common Stock. Such conversion shall be deemed to have been made
only after both the certificate for the shares of

-4-

Series 15 Class O Preferred Stock to be converted have been surrendered and
the Conversion Notice is received by the Corporation (or in the event that no
surrender of the Certificate is required, then only upon the receipt by the
Corporation of the Conversion Notice) (the "Conversion Documents"), and the
person or entity whose name is noted on the certificate evidencing such shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder of such shares of Common Stock at and after such time. In
the event that the Conversion Notice is sent via facsimile transmission, the
Corporation shall be deemed to have received such Conversion Notice on the first
business day on which such facsimile Conversion Notice is actually received. If
the Corporation fails to deliver to the holder or its agent the certificate
representing the shares of Common Stock that the holder is entitled to receive
as a result of such conversion of the Series 15 Class O Preferred Stock within
seven (7) business days after receipt by the Corporation from the holder of an
appropriate and timely Conversion Notice and certificates pursuant to the terms
of this Section 4.4 ("Seven (7) Business Day Period"), then, upon the written
demand of RBB Bank Aktiengesellschaft ("RBB Bank"), the holder of the Series 15
Class O Preferred Stock, for payment of the penalty described below in this
Section 4.4, which demand must be received by the Corporation no later than ten
(10) calendar days after the expiration of such Seven (7) Business Day Period,
the Corporation shall pay to RBB Bank the following penalty for each business
day after the Seven (7) Business Day Period until the Corporation delivers to
the holder or its agent the certificate representing the shares of Common Stock
that the holder is entitled to receive as a result of such conversion: business
day eight (8) - U.S. $1,000; business day nine (9) - U.S. $2,000, and each
business day thereafter an amount equal to the penalty due on the immediately
preceding business day times two (2) until the Corporation delivers to the
holder or its agent the certificate representing the shares of Common Stock that
the holder is entitled to receive as a result of such conversion. 

4.5    Merger or Consolidation. In case of either (a)
any merger or consolidation to which the Corporation is a party (collectively,
the "Merger"), other than a Merger in which the Corporation is the surviving or
continuing corporation, or (b) any sale or conveyance to another corporation of
all, or substantially all, of the assets of the Corporation (collectively, the
"Sale"), and such Merger or Sale becomes effective (x) while any shares of
Series 15 Class O Preferred Stock are outstanding and prior to the date that the
Corporation's Registration Statement covering up to 1,379,311 shares of Common
Stock issuable upon the conversion of the Series 15 Class O Preferred Stock is
declared effective by the U. S. Securities and Exchange Commission or (y) prior
to the end of the restriction periods in Section 4.3, then, in such event, the
Corporation or such successor corporation, as the case may be, shall make
appropriate provision so that the holder of each share of Series 15 Class O
Preferred Stock then outstanding shall have the right to convert such share of
Series 15 Class O Preferred Stock into the kind and amount of shares of stock or
other securities and property receivable upon such Merger or Sale by a holder of
the number

-5-

of shares of Common Stock into which such shares of Series 15 Class O
Preferred Stock could have been converted into immediately prior to such Merger
or Sale, subject to adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Part 4.

4.6    Adjustments to Conversion Price for Stock Dividends and for
Combinations or Subdivisions of Common Stock. If the Corporation at
any time or from time to time while shares of Series 15 Class O Preferred Stock
are issued and outstanding shall declare or pay, without consideration, any
dividend on the Common Stock payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by stock split, reclassification or otherwise than by
payment of a dividend in Common Stock or in any right to acquire Common Stock),
or if the outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or otherwise, into a lesser number of shares of Common
Stock, then the Conversion Price in effect immediately before such event shall,
concurrently with the effectiveness of such event, be proportionately decreased
or increased, as appropriate.

4.7   Adjustments for Reclassification and
Reorganization. If the Common Stock issuable upon conversion of the
Series 15 Class O Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares provided for in Section 4.6 hereof), the Conversion Price
shall, concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted so that the Series 15 Class O
Preferred Stock shall be convertible into, in lieu of the number of shares of
Common Stock which the holders of Series 15 Class O Preferred Stock would
otherwise have been entitled to receive, a number of shares of such other class
or classes of stock equivalent to the number of shares of Common Stock that
would have been subject to receipt by the holders upon conversion of the Series
15 Class O Preferred Stock immediately before that change.

4.8    Common Stock Duly Issued. All Common Stock which
may be issued upon conversion of Series 15 Class O Preferred Stock will, upon
issuance, be duly issued, fully paid and nonassessable and free from all taxes,
liens, and charges with respect to the issue thereof.

4.9    Notice of Adjustments. Upon the occurrence of
each adjustment or readjustment of any Conversion Price pursuant to this Part 4,
the Corporation, at its expense, within a reasonable period of time, shall
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of Series 15 Class O Preferred
 

-6-

Stock a notice setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment is based.

4.10    Issue Taxes. The Corporation shall pay any and
all issue and other taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of the Series 15 Class O
Preferred Stock pursuant thereto; provided, however, that the Corporation
shall not be obligated to pay any transfer taxes resulting from any transfer
requested by any holder of Series 15 Class O Preferred Stock in connection with
such conversion.

4.11    Reservation of Stock Issuable Upon Conversion.
The Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series 15 Class O Preferred Stock,
such number of its shares of Common Stock as shall, from time to time, be
sufficient to effect the conversion of all outstanding shares of the Series 15
Class O Preferred stock, and, if at any time, the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of the Series 15 Class O Preferred Stock, the
Corporation will take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes, including, without limitation, engaging in
reasonable efforts to obtain the requisite stockholder approval of any necessary
amendment to its Certificate of Incorporation.

4.12   Fractional Shares. No fractional shares shall be
issued upon the conversion of any share or shares of Series 15 Class O Preferred
Stock. All shares of Common Stock (including fractions thereof) issuable upon
conversion of more than one share of Series 15 Class O Preferred Stock by a
holder thereof shall be aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fractional share of Common Stock, such fractional share shall be rounded up to
the nearest whole share.

4.13    Notices. Any notices required by the provisions
of this Part 4 to be given to the holders of shares of Series 15 Class O
Preferred Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his address appearing
on the books of the Corporation.

4.14    Business Day. As used herein, the term "business
day" shall mean any day other than a Saturday, Sunday or a day when the federal
and state banks located in the State of New York are required or is permitted to
close.

-7-

Part 5 - Redemption.

5.1    Redemption at Corporation's Option. Except as
otherwise provided in this Section 5.1, at any time, and from time to time, the
Corporation may, at its sole option, but shall not be obligated to, redeem, in
whole or in part, at any time, and from time to time, the then outstanding
Series 15 Class O Preferred Stock at the following cash redemption prices if
redeemed during the following periods: (i) within twelve (12)
months from April 20, 1999 - $1,100 per share and (ii) after
twelve (12) months from April 20, 1999 - $1,200 per share (as
applicable, the redemption price of $1,100 or $1,200 is referred to herein as
the "Redemption Price").

5.2   Mechanics of Redemption. Prior to any date
stipulated by the Corporation for the redemption of Series 15 Class O Preferred
Stock (the "Redemption Date"), written notice (the "Redemption Notice") shall be
mailed to each holder of record on such notice date of the Series 15 Class O
Preferred Stock. The Redemption Notice shall state: (i) the Redemption Date of
such shares, (ii) the number of Series 15 Class O Preferred Stock to be redeemed
from the holder to whom the Redemption Notice is addressed, (iii) instructions
for surrender to the Corporation, in the manner and at the place designated, of
a share certificate or share certificates representing the number of Series 15
Class O Preferred Stock to be redeemed from such holder, and (iv) instructions
as to how to specify to the Corporation the number of Series 15 Class O
Preferred Stock to be redeemed as provided in this Part 5 and, if the Redemption
Notice is mailed to the Holder after the first twelve (12) months from April 20,
1999, the number of shares to be converted into Common Stock as provided in Part
4 hereof.

5.3    Rights of Conversion Upon Redemption. If the
redemption occurs during the first twelve (12) months after April 20, 1999, the
holder may not convert any redeemed shares. If the redemption occurs after the
first twelve (12) months after April 20, 1999, then, upon receipt of the
Redemption Notice, any holder of Series 15 Class O Preferred Stock shall have
five business days during which it may exercise the option, at its sole
election, to specify what portion of its Series 15 Class O Preferred Stock
called for redemption in the Redemption Notice shall be redeemed as provided in
this Part 5 or converted into Common Stock in the manner provided in Part 4
hereof, except that, notwithstanding any provision of such Part 4 to the
contrary, after twelve (12) months from April 20, 1999, such holder shall have
the right to convert into Common Stock that number of Series 15 Class O
Preferred Stock called for redemption in the Redemption Notice.

5.4    Surrender of Certificates. On or before the
Redemption Date in respect of any Series 15 Class O Preferred Stock, each holder
of such shares shall surrender the required certificate or certificates
representing such shares to the Corporation in the manner and at the place
designated in the

-8-

Redemption Notice, and upon the Redemption Date, the Redemption Price for
such shares shall be made payable, in the manner provided in Section 5.5 hereof,
to the order of the person whose name appears on such certificate or
certificates as the owner thereof, and each surrendered share certificate shall
be canceled and retired. If a share certificate is surrendered and all the
shares evidenced thereby are not being redeemed (as described below), the
Corporation shall cause the Series 15 Class O Preferred Stock which are not
being redeemed to be registered in the names of the persons or entity whose
names appear as the owners on the respective surrendered share certificates and
deliver such certificate to such person.

5.5    Payment. On the Redemption Date in respect of any
Series 15 Class O Preferred Stock or prior thereto, the Corporation shall
deposit with any bank or trust company having a capital and surplus of at least
$50,000,000, as a trust fund, a sum equal to the aggregate Redemption Price of
all such shares called from redemption (less the aggregate Redemption Price for
those Series 15 Class O Preferred Stock in respect of which the Corporation has
received notice from the holder thereof of its election to convert Series 15
Class O Preferred Stock into Common Stock), with irrevocable instructions and
authority to the bank or trust company to pay, on or after the Redemption Date,
the Redemption Price to the respective holders upon the surrender of their share
certificates. The deposit shall constitute full payment for the shares to their
holders, and from and after the date of the deposit the redeemed shares shall be
deemed to be no longer outstanding, and holders thereof shall cease to be
shareholders with respect to such shares and shall have no rights with respect
thereto except the rights to receive from the bank or trust company payments of
the Redemption Price of the shares, without interest, upon surrender of their
certificates thereof. Any funds so deposited and unclaimed at the end of one
year following the Redemption Date shall be released or repaid to the
Corporation, after which the former holders of shares called for redemption
shall be entitled to receive payment of the Redemption Price in respect of their
shares only from the Corporation.

Part 6 - Parity with Other Shares of Series 15 Class O Preferred
Stock and Priority.

6.1    Rateable Participation. If any cumulative
dividends or return of capital in respect of Series 15 Class O Preferred Stock
are not paid in full, the owners of all series of outstanding Preferred Stock
shall participate rateably in respect of accumulated dividends and return of
capital.

6.2    Ranking. For purposes of this resolution, any
stock of any class or series of the Corporation shall be deemed to rank:

        6.2.1    Prior or senior to the shares of this Series 15 Class O Preferred Stock
either as to 

                    dividends or upon liquidation, if the holders

-9-

                    of such class or classes shall be entitled to the receipt of dividends or of
amounts 

                    distributable upon dissolution, liquidation or winding up of the
Corporation, whether 

                    voluntary or involuntary, as the case may be, in preference
or priority to the holders 

                    of shares of this Series 15 Class O Preferred
Stock;

         6.2.2  On a parity with, or equal to, shares of this Series 15 Class O
Preferred Stock, either 

                   as to dividends or upon liquidation, whether or not the
dividend rates, dividend payment 

                   dates, or redemption or liquidation prices per
share or sinking fund provisions, if any, 

                   are different from those of this
Series 15 Class O Preferred Stock, if the holders of such 

                   stock are entitled to
the receipt of dividends or of amounts distributable upon dissolution,

                  
liquidation or winding up of the Corporation, whether voluntary or involuntary,
in 

                   proportion to their respective dividend rates or liquidation prices, without
preference or 

                   priority, one over the other, as between the holders of such stock
and over the other, as

                  
between the holders of such stock and the holders of
shares of this Series 15 Class O 

                   Preferred Stock; and,

         6.2.3  Junior to shares of this Series 15 Class O Preferred Stock, either as
to dividends or 

                   upon liquidation, if such class or series shall be Common Stock
or if the holders of 

                   shares of this Series 15 Class O Preferred Stock shall be
entitled to receipt of 

                   dividends or of amounts distributable upon dissolution,
liquidation or winding up of 

                   the Corporation, whether voluntary or involuntary,
as the case may be, in preference 

                   or priority to the holders of shares of such
class or series.

Part 7 - Amendment and Reissue.

7.1    Amendment. If any proposed amendment to the
Corporation's Certificate of Incorporation (the "Articles") would alter or
change the powers, preferences or special rights of the Series 15 Class O
Preferred Stock so as to affect such adversely, then the Corporation must obtain
the affirmative vote of such amendment to the Articles at a duly called and held
series meeting of the holders of the Series 15 Class O Preferred Stock or
written consent by the holders of a majority of the Series 15 Class O Preferred
Stock then outstanding. Notwithstanding the above or the provisions of Section
242(b)(2) of the GCL, the number of authorized shares of any class or classes of
stock of the Corporation may be increased or decreased (but not below the number
of shares thereof outstanding) by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote thereon, voting
together as a single class, irrespective of the provisions of this Section 7.1
or Section 242(b)(2) of the GCL.

-10-

7.2    Authorized. Any shares of Series 15 Class O
Preferred Stock acquired by the Corporation by reason of purchase, conversion,
redemption or otherwise shall be retired and shall become authorized but
unissued shares of Preferred Stock, which may be reissued as part of a new
series of Preferred Stock hereafter created.

 

 

 

 

 

 

 

 

 

 

 

-11-

CERTIFICATE OF DESIGNATIONS

OF SERIES 16 CLASS P CONVERTIBLE PREFERRED STOCK

OF

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

          Perma-Fix Environmental Services, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify:

          That, pursuant to authority conferred upon by the Board of Directors by the
Corporation's Restated Certificate of Incorporation, as amended, and pursuant to
the provisions of Section 151 of the Delaware Corporation Law, the Board of
Directors of the Corporation has adopted resolutions, a copy of which is
attached hereto, establishing and providing for the issuance of a series of
Preferred Stock designated as Series 16 Class P Convertible Preferred Stock and
has established and fixed the voting powers, designations, preferences and
relative participating, optional and other special rights and qualifications,
limitations and restrictions of such Series 16 Class P Convertible Preferred
Stock as set forth in the attached resolutions.

Dated: August 10, 1999

                                                                  PERMA-FIX ENVIRONMENTAL SERVICES, INC.

                                                                  By
 /s/ Louis Centofanti                                            

                                                                        Dr.
Louis F. Centofanti

                                                                        Chairman of the Board

ATTEST:

/s/ Richard T. Kelecy                         

Richard T. Kelecy, Secretary

 

STATE OF
DELAWARE     

SECRETARY OF STATE     

DIVISION OF CORPORATIONS

FILED 12:32 PM -- 08/10/1999

991331580 -- 2249849      

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

(the "Corporation")

RESOLUTION OF THE BOARD OF DIRECTORS

FIXING THE NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,

RESTRICTIONS AND CONDITIONS ATTACHING TO THE

SERIES 16 CLASS P CONVERTIBLE PREFERRED STOCK
RE: DESIGNATION OF SERIES 16 CLASS P PREFERRED STOCK.

RESOLVED: That the designations, powers, preferences and
rights of the Series 16 Class P Convertible Preferred Stock be, and they hereby
are, as set forth below:

1.    Number of Shares of Common Stock of Series 16
Class P Convertible Preferred Stock 

The Corporation hereby authorizes the issuance of up to one thousand eight
hundred two (1,802) shares of Series 16 Class P Convertible Preferred Stock par
value $.001 per share (the "Preferred Stock"). This Preferred Stock shall pay an
annual dividend based on a 365 day calendar year of 4% of the Liquidation Value
(as defined in Section 3 hereof) ("Dividend Rate"), payable semiannually within
ten (10) business days after each subsequent June 30th and December 31st (each a
"Dividend Declaration Date"), and shall be payable in cash or shares of the
Corporation's par value $.001 per share common stock (Common Stock) at the
Corporation's option. The first Dividend Declaration Date shall be December
31st, 1999.

In the event that the Corporation elects to pay the accrued dividends due as
of a Dividend Declaration Date on the outstanding shares of Preferred Stock in
Common Stock of the Corporation, the Holder of each share of Preferred Stock
shall receive that number of shares of Common Stock equal to the product of (a)
the quotient of (i) the Dividend Rate divided by (ii) the average of' the
closing bid quotation of the Corporation's Common Stock as reported on the
National Association of Securities Dealers Automated Quotation system
("NASDAQ"), or if the Common Stock is not listed for trading on the NASDAQ but
is listed for trading on a national securities exchange, the average closing bid
price of the Common Stock as quoted on such national exchange, for the five (5)
trading days immediately prior to the Dividend Declaration Date (the "Stock
Dividend Price"), times (b) a fraction, the numerator of which is the number of
days elapsed during the period for which the dividend is to be paid, and the
denominator of which is 365. Dividends on the Preferred Stock shall be
cumulative, and no dividends or other distributions shall be paid or declared or
set aside for payment on the Corporation's Common Stock until all accrued and
unpaid dividends on all outstanding shares of Preferred Stock shall have been
paid or declared and set aside for payment.

-1-

2. Voting.

Except as provided under Section 242 of the GCL, holders of Preferred Stock
(the "Holders") shall not have the right to vote on any matter. Notwithstanding
the provisions of Section 242 of the GCL or Section 4 hereof, the number of
authorized shares of any class or classes of stock of the Corporation may be
increased or decreased (but not below the number of shares thereof outstanding)
by the affirmative vote of the holders of a majority of the stock of the
Corporation entitled to vote thereon, voting together as a single class,
irrespective of the provisions of Section 242 of the GCL.

3. Liquidation.

In the event of a voluntary or involuntary dissolution, liquidation, or
winding up of the Corporation, the Holders of Preferred Stock shall be entitled
to receive out of the assets of the Corporation legally available for
distribution to holders of its capital stock, before any payment or distribution
shall be made to holders of shares of Common Stock or any other class of stock
ranking junior to the Preferred Stock, an amount per share of Preferred Stock
equal to $1,000 (the "Liquidation Value") plus any accrued and unpaid dividends
on the Preferred Stock. If upon such liquidation, dissolution, or winding up of
the Corporation, whether voluntary or involuntary, the assets to be distributed
among the Holders of Preferred Stock shall be insufficient to permit payment to
the Holders of Preferred Stock of the amount distributable as aforesaid, then
the entire assets of the Corporation to be so distributed shall be distributed
ratably among the Holders of Preferred Stock and shares of such other classes or
series ranking on a parity with the shares of this Preferred Stock in proportion
to the full distributable amounts for which holders of all such parity shares
are entitled upon such distribution, liquidation, or winding up. Upon any such
liquidation, dissolution or winding up of the Corporation, after the Holders of
Preferred Stock shall have been paid in full the amounts to which they shall be
entitled, the remaining net assets of the Corporation may be distributed to the
holders of stock ranking on liquidation junior to the Preferred Stock and the
Holders of the Preferred Stock shall have no right or claim to any of the
remaining assets of the Corporation. Written notice of such liquidation,
dissolution or winding up, stating a payment date, the amount of the liquidation
payments and the place where said liquidation payments shall be payable, shall
be given by mail, postage prepaid or by telex or facsimile to non-U.S.
residents, not less than 10 days prior to the payment date stated therein, to
the Holders of record of Preferred Stock, such notice to be addressed to each
such Holder at its address as shown by the records of the Corporation. For
purposes hereof the shares of Common Stock, shall rank on liquidation junior to
the Preferred Stock.

4. Restrictions.

The Corporation will not amend or modify the terms of its Restated
Certificate of Incorporation so as to adversely alter or change the Preferred
Stock at any time when shares of Preferred Stock are outstanding, without the
approval of the Holders of at least a majority of the then outstanding shares of
Preferred Stock given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a series, except where
the vote or written consent of the

-2-

Holders of a greater number of shares of Common Stock of the Corporation is
required by law or by the Corporation's Certificate of Incorporation, as
amended.

5.  Optional Conversion.

The Holders of shares of Preferred Stock shall have the following conversion
rights to convert the shares of Preferred Stock into shares of Common Stock of
the Corporation:

(a)    No Right to Convert. The Preferred Stock shall not be
convertible into shares of Common Stock until after April 20, 2000.

(b)   Conversion Dates. The Preferred Stock may be convertible
into shares of Common Stock at any time after April 20, 2000.

(c)    Right to Convert; Conversion Price. Subject to the terms
hereof, as used herein, the term Conversion Price per outstanding share of
Preferred Stock shall be One Dollar and 875/100 ($1.875); except that after the
expiration of one hundred and eighty (180) days after the Closing Date if the
average of the closing bid price per share of Common Stock quoted on the NASDAQ
(or the closing bid price of the Common Stock as quoted on the national
securities exchange if the Common Stock is not listed for trading on the NASDAQ
but is listed for trading on a national securities exchange) for the five (5)
trading days immediately prior to the particular date of each Conversion Notice
(as defined below) is less than Two Dollars and 34/100 ($2.34), then the
Conversion Price for that particular conversion shall be eighty percent (80%) of
the average of the closing bid price of the Common Stock on the NASDAQ (or if
the Common Stock is not listed for trading on the NASDAQ but is listed for
trading on a national securities exchange then eighty percent (80%) of the
average of the closing bid price of the Common Stock on the national securities
exchange) for the five (5) trading days immediately prior to the particular date
of the Conversion Notice. Notwithstanding the foregoing, the Conversion Price
shall not be less than a minimum of $1.50 per share ("Minimum Conversion Price")
for a period of twenty-four (24) months from April 20, 1999. 

          If any of the outstanding shares of Preferred Stock are converted, in whole
or in part, into Common Stock pursuant to the terms of this Section 5(c), the
number of shares of whole Common Stock to be issued to the Holder as a result of
such conversion shall be determined by dividing (a) the aggregate Stated Value
of the Preferred Stock so surrendered for conversion by (b) the Conversion Price
in effect on the date of that particular Conversion Notice relating to such
conversion. At the time of conversion of shares of the Preferred Stock, the
Corporation shall pay in cash to the holder thereof an amount equal to all
unpaid and accrued dividends, if any, accrued thereon on the shares of Preferred
so converted to the date of the Conversion Notice relating to such conversion,
or, at the Corporation's option, in lieu of paying cash for the accrued and
unpaid dividends, issue that number of shares of whole Common Stock which is
equal to the quotient of the amount of such unpaid and accrued dividends to the
date of the Conversion Notice relating to such conversion of the shares of
Preferred Stock so converted divided by the Stock Dividend Price, in effect at
the date of the Conversion Notice relating to such conversion.

-3-

(d)    Conversion Notice. The right of conversion shall be
exercised by the Holder thereof by telecopying or faxing an executed and
completed written notice signed by an authorized representative of the Holder,
("Conversion Notice") to the Corporation that the Holder elects to convert a
specified number of shares of Preferred Stock representing a specified Stated
Value thereof into shares of Common Stock and by delivering by express courier
the certificate or certificates of Preferred Stock being converted to the
Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to the Holders
of the Preferred Stock). The business date indicated on a Conversion Notice
which is telecopied to and received by the Corporation in accordance with the
provisions hereof shall be deemed a Conversion Date. The Conversion Notice shall
include therein the Stated Value of shares of Preferred Stock to be converted,
and a calculation (a) of the Stock Dividend Price, (b) the Conversion Price, and
(c) the number of Shares of Common Stock to be issued in connection with such
conversion. The Corporation shall have the right to review the calculations
included in the Conversion Notice, and shall provide notice of any discrepancy
or dispute therewith within three (3) business days of the receipt thereof. The
Holder shall deliver to the Corporation an original Conversion Notice and the
original Preferred to be converted within three (3) business days from the date
of the Conversion Notice.

(e)    Issuance of Certificates - Time Conversion Effected.
Promptly, but in no event more than six (6) business days,
after the receipt by facsimile of the Conversion Notice referred to in
Subparagraph (5)(c); and provided within the six (6) business days the
Corporation receives the certificate or certificates for the shares of Preferred
Stock to be converted, the Corporation shall issue and deliver, or cause to be
issued and delivered, to the Holder, registered in the name of the Holder, a
certificate or certificates for the number of whole shares of Common Stock into
which such shares of Preferred Stock are converted. Such conversion shall be
deemed to have been effected as of the close of business on the date on which
the telecopy or facsimile Conversion Notice shall have been received by the
Corporation, and the rights of the Holder of such share or shares of Preferred
Stock shall cease, at such time, and the Holder or Holders shall be deemed to
have become the Holder or Holders of record of the shares of Common Stock
represented thereby. 

In the event that the shares of Common Stock issuable upon conversion of the
Preferred, are not delivered within six (6) business days of the date the
Corporation receives the Conversion Notice, the Corporation shall pay to the
Holder, by wire transfer, as liquidated damages for such failure and not as a
penalty, for each $100,000 of Preferred sought to be converted, $500 for each of
the first five (5) calendar days and $1,000 per calendar day thereafter that the
shares of Common Stock are not delivered, which liquidated damages shall begin
to run from the seventh (7th) business day after the Conversion Date. Any and
all payments required pursuant to this paragraph shall be payable only in cash.
Notwithstanding the above, liquidated damages shall not exceed $2,000.00 per
day. In addition to the liquidated damages set forth herein, in the event the
Corporation fails to deliver the shares of Common Stock within six (6) business
days after the Conversion date, the Corporation agrees to issue the larger
number of shares of Common Stock derived from (i) the original Conversion
Notice, or (ii) utilizing the five lowest closing bid prices of the
Corporation's shares of Common Stock beginning on the Conversion Date and ending
on the day the shares of Common Stock are delivered. The Corporation

-4-

understands that a delay in the issuance of the shares of Common Stock could
result in economic loss to the Holder. Nothing contained herein, or in the
Preferred shall limit the Holder's rights to pursue actual damages for the
Corporation's failure to issue and deliver shares of Common Stock to the Holder
in accordance with the terms of the Certificate of Designations, and this
Agreement. 

(f)  Fractional Shares of Common Stock. No fractional shares
of Common Stock shall be issued upon conversion of any Preferred Stock into
shares of Common Stock. All fractional shares of Common Stock shall be
aggregated and then rounded down to the nearest whole share of Common Stock. In
case the number of shares of Preferred Stock represented by the certificate or
certificates surrendered pursuant to Subparagraph 5(d) exceeds the number of
shares of Common Stock converted, the Corporation shall, upon such conversion,
execute and deliver to the Holder, at the expense of the Corporation, a new
certificate or certificates for the number of shares of Preferred Stock
represented by the certificate or certificates surrendered which are not to be
converted.

(g)  Merger or Consolidation. In case of either (a) any
merger or consolidation to which the Corporation is a party (collectively, the
"Merger"), other than a Merger in which the Corporation is the surviving or
continuing corporation, or (b) any sale or conveyance to another corporation of
all, or substantially all, of the assets of the Corporation (collectively, the
"Sale"), and such Merger or Sale becomes effective while any shares of Preferred
Stock are outstanding and prior to the date that the Corporation's Registration
Statement covering all the shares of Common Stock issuable upon the conversion
of the Preferred Stock is declared effective by the U.S. Securities and Exchange
Commission ("Commission"), the Corporation or such successor corporation as the
case may be, shall make appropriate provision so that the Holder of each share
of Preferred Stock then outstanding shall have the right to convert such share
of Preferred Stock into the kind and amount of shares of stock or other
securities and property receivable upon such Merger or Sale by a holder of the
number of shares of Common Stock into which such shares of Preferred Stock could
have been converted into immediately prior to such Merger or Sale, subject to
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 5.

In the event of a Merger or Sale, where the Corporation is not the surviving
Corporation, the Holder shall have the right to redeem all of the outstanding
shares of Preferred Stock at 120% of the Liquidation Value of each share of
Preferred Stock then outstanding plus all accrued and unpaid dividends (the
"Redemption Amount"). The Corporation shall pay this Redemption Amount in cash
within ten (10) business days of receipt by the Corporation of notice from the
Holder, and receipt by the Corporation of all outstanding shares of Preferred
Stock duly endorsed by the Holder to the Corporation.

(h)  Adjustments to Conversion Price for Stock
Dividends and for Combinations or Subdivisions of Common Stock. If the
Corporation at any time or from time to time while shares of Preferred Stock are
issued and outstanding shall declare or pay, any dividend on the Common Stock
payable in Common Stock, or shall effect a subdivision of the outstanding shares
of Common Stock into a greater number of shares of Common Stock (by stock split,
reclassification or otherwise than by payment of a dividend in Common Stock), or
if the outstanding shares of

-5-

Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, then the Conversion
Price in effect immediately before such event shall, concurrently with the
effectiveness of such event, be proportionately decreased or increased, as
appropriate.

(i)  Adjustments for Reclassification and Reorganization. If
the Common Stock issuable upon conversion of the Preferred Stock shall be
changed into the same or a different number of shares of Common Stock of any
other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination or shares
of Common Stock provided for in Section 5(h) hereof), the Conversion Price then
in effect shall, concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted so that the Preferred Stock shall
be convertible into, in lieu of the number of shares of Common Stock which the
holders of Preferred Stock would otherwise have been entitled to receive, a
number of shares of Common Stock of such other class or classes of stock
equivalent to the number of shares of Common Stock that would have been subject
to receipt by the holders upon conversion of the Preferred Stock immediately
before that change.

6 Redemption.

(a)  Redemption at Corporation's Option. Except as otherwise
provided in this Section 6, at any time, and from time to time, the Corporation
may, at its sole option, but shall not be obligated to, redeem, in whole or in
part, at any time, and from time to time the then outstanding Series 16 Class P
Preferred Stock at the following cash redemption prices if redeemed during the
following periods: (i) within twelve (12) months from
April 20, 1999 - $1,100 per share, and (ii) after twelve (12) months
from April 20, 1999 - $1,200 per share (as applicable, the
redemption price of $1,100 or $1,200 is referred to herein as the "Redemption
Price").

(b)  Mechanics of Redemption. Prior to any date stipulated by
the Corporation for the redemption of Series 16 Class P Preferred Stock (the
"Redemption Date"), written notice (the "Redemption Notice") shall be mailed to
each holder of record on such notice date of the Series 16 Class P Preferred
Stock. The Redemption Notice shall state: (i) the Redemption Date of such
shares, (ii) the number of Series 16 Class P Preferred Stock to be redeemed from
the holder to whom the Redemption Notice is addressed, (iii) instructions for
surrender to the Corporation, in the manner and at the place designated, of a
share certificate or share certificates representing the number of Series 16
Class P Preferred Stock to be redeemed from such holder, and (iv) instructions
as to how to specify to the Corporation the number of Series 16 Class P
Preferred Stock to be redeemed as provided in this Part 6 and, if the Redemption
Notice is mailed to the Holder after the first twelve (12) months from April 20,
1999, the number of shares to be converted into Common Stock as provided in Part
5 hereof.

(c)  Rights of Conversion Upon Redemption. If the redemption
occurs during the first twelve (12) months after April 20, 1999, the holder may
not convert any redeemed shares. If the redemption occurs after the first twelve
(12) months after April 20, 1999, then, upon receipt of the Redemption Notice,
any holder of Series 16 Class P Preferred Stock shall have five business days
during which it may exercise the

-6-
 

option, at its sole election, to specify what portion of its Series 16 Class
P Preferred Stock called for redemption in the Redemption Notice shall be
redeemed as provided in this Part 6 or converted into Common Stock in the manner
provided in Part 5 hereof, except that, notwithstanding any provision of such
Part 5 to the contrary, after twelve (12) months from April 20, 1999, such
holder shall have the right to convert into Common Stock that number of Series
16 Class P Preferred Stock called for redemption in the Redemption Notice.

(d)  Surrender of Certificates. On or before the Redemption
Date in respect of any Series 16 Class P Preferred Stock, each holder of such
shares shall surrender the required certificate or certificates representing
such shares to the Corporation in the manner and at the place designated in the
Redemption Notice, and upon the Redemption Date, the Redemption Price for such
shares shall be made payable, in the manner provided hereof, to the order of the
person whose name appears on such certificate or certificates as the owner
thereof, and each surrendered share certificate shall be canceled and retired.
If a share certificate is surrendered and all the shares evidenced thereby are
not being redeemed (as described below), the Corporation shall cause the Series
16 Class P Preferred Stock which are not being redeemed to be registered in the
names of the persons or entity whose names appear as the owners on the
respective surrendered share certificates and deliver such certificate to such
person.

(e)  Payment. On the Redemption Date in respect of any Series
16 Class P Preferred Stock or prior thereto, the Corporation shall deposit with
any bank or trust company having a capital and surplus of at least $50,000,000,
as a trust fund, a sum equal to the aggregate Redemption Price of all such
shares called from redemption (less the aggregate Redemption Price for those
Series 16 Class P Preferred Stock in respect of which the Corporation has
received notice from the holder thereof of its election to convert Series 16
Class P Preferred Stock into Common Stock), with irrevocable instructions and
authority to the bank or trust company to pay, on or after the Redemption Date,
the Redemption Price to the respective holders upon the surrender of their share
certificates. The deposit shall constitute full payment for the shares to their
holders, and from and after the date of the deposit the redeemed shares shall be
deemed to be no longer outstanding, and holders thereof shall cease to be
shareholders with respect to such shares and shall have no rights with respect
thereto except the rights to receive from the bank or trust company payments of
the Redemption Price of the shares, without interest, upon surrender of their
certificates thereof. Any funds so deposited and unclaimed at the end of one
year following the Redemption Date shall be released or repaid to the
Corporation, after which the former holders of shares called for redemption
shall be entitled to receive payment of the Redemption Price in respect of their
shares only from the Corporation.

7.  Assignment. 

Subject to all applicable restrictions on transfer, the rights and
obligations of the Corporation and the Holder of the Preferred Stock shall be
binding upon and benefit the successors, assigns, heirs, administrators, and
transferees of the parties.

-7-

8.  Shares of Common Stock to be Reserved.

The Corporation, upon the effective date of this Certificate of Designations,
has a sufficient number of shares of Common Stock available to reserve for
issuance upon the conversion of all outstanding shares of Preferred Stock,
pursuant to the terms and conditions set forth in Section 5, and exercise of the
Warrants as defined in Section 12. The Corporation will at all times reserve and
keep available out of its authorized shares of Common Stock, solely for the
purpose of issuance upon the conversion of Preferred Stock, and exercise of the
Warrants, as herein provided, such number of shares of Common Stock as shall
then be issuable upon the conversion of all outstanding shares of Preferred
Stock, and exercise of the Warrants. The Corporation covenants that all shares
of Common Stock which shall be so issued shall be duly and validly issued, fully
paid and non assessable. The Corporation will take such action as may be
required, if the total number of shares of Common Stock issued and issuable
after such action upon conversion of the Preferred Stock, and exercise of the
Warrants would exceed the total number of shares of Common Stock then authorized
by the Corporation's Certificate of Incorporation, as amended, or would exceed
19.99% of the shares of Common Stock then outstanding if required by law or the
Rules and Regulations of NASDAQ or the National Securities Exchange applicable
to the Corporation to take such action as a result of exceeding such 19.99%, in
order to increase the number of shares of Common Stock to permit the Corporation
to issue the number of shares of Common Stock required to effect conversion of
the Preferred, and exercise of the Warrants, to a number sufficient to permit
conversion of the Preferred Stock, and exercise of the Warrants, including,
without limitation, engaging in reasonable efforts to obtain the requisite
stockholder approval of any necessary amendment to the Corporation's Restated
Certificate of Incorporation, and to obtain shareholders approval in order to
effect conversion of the Preferred Stock, and exercise of the Warrants, if
required by law or the rules or regulations of the NASDAQ or National Securities
Exchange applicable to the Corporation.

8(a)  Shareholder Approval. In connection
with the issuance to the Holder of the shares of Preferred Stock, pursuant to
this Certificate of Designations, the Corporation is also issuing (i) certain
warrants ("RBB Warrants") to the Holder pursuant to the terms of that certain
Private Securities Subscription Agreement dated June 30, 1998 (the "Agreement"),
providing for the purchase of up to 150,000 shares of Common Stock at an
exercise price of $2.50 per share and (ii) certain warrants (collectively, the
"Liviakis Warrants") to Liviakis Financial Communication, Inc. ("Liviakis") and
Robert B. Prag providing for the purchase of up to an aggregate of 2,500,000
shares of Common Stock at an exercise price of $1.875 per share pursuant to the
terms of that Liviakis Agreement dated June 30, 1998, between Liviakis and the
Corporation.

If (i) the aggregate number of shares of Common Stock issued by the
Corporation as a result of any or all of the following: (a) conversion of the
Preferred Stock, (b) payment of dividends accrued on the Preferred Stock (c)
exercise of the RBB Warrants, and (d) exercise of the Liviakis Warrants exceeds
2,388,347 shares of Common Stock (which equals 19.9% of the outstanding shares
of Common Stock of the Corporation as of the date of this Certificate of
Designations) and (ii) the Holder has converted or elects to convert any of the
then outstanding shares of Preferred Stock pursuant to the terms of Section 5 at
a Conversion Price less than $ 1.875 ($1.875 being the market

-8-

value per share of Common Stock as quoted on the NASDAQ as of the close of
business on June 30, 1998) pursuant to the terms of Section 5(c) hereof, other
than if the Conversion Price is less than $ 1.875 solely as a result of the
anti-dilution provisions of Section 5(h) and (i) hereof, then, notwithstanding
anything in Section 5 to the contrary, the Corporation shall not issue any
shares of Common Stock as a result of receipt of a Conversion Notice unless and
until the Corporation shall have obtained approval of its shareholders entitled
to vote on the transactions in accordance with subparagraphs (25)(H)(i)d, (iv)
and (v) of Rule 4310 of the NASDAQ Marketplace Rules ("Shareholder
Approval").

If Shareholder Approval is required as set forth in the above paragraph, the
Corporation shall take all necessary steps to obtain such Shareholder Approval
upon receipt of the Conversion Notice triggering the need for Shareholder
Approval ("Current Conversion Notice"). If the Corporation has not received from
the Holder a Current Conversion Notice, the Holder, subsequent to January 1st,
1999 may, if the Corporation's shares of Common Stock trade, subsequent to
January 1st, 1999, at a five (5) day average closing bid price below Two Dollars
and 34/00 ($2.34), upon written notice to the Corporation, require the
Corporation to obtain Shareholder Approval ("Holder's Notice"). The Holder and
the Corporation's officers and directors covenant to vote all shares of Common
Stock over which they have voting control in favor of Shareholder Approval. If
the Corporation does not obtain Shareholder Approval within ninety (90) days of
the earlier of the Corporation's receipt of (i) the Current Conversion Notice or
(ii) the Holder's Notice, and the Holder has not breached its covenant to vote
all shares of Common Stock over which they have voting control in favor of
Shareholder Approval, the Corporation shall pay in cash to the Holder
liquidated damages, in an amount of 4% per month of the Liquidation Value of
each share of Preferred Stock then outstanding, commencing on the 91st day of
the Corporation's receipt of the Holder's Current Conversion Notice, and
continuing every thirty (30) days pro-rata until such time the Corporation
receives Shareholder Approval.

9.  No Reissuance of Series 16 Class P Convertible
Preferred Stock.

Shares of Preferred Stock which are converted into shares of Common Stock as
provided herein shall be retired and shall become authorized but unissued shares
of Preferred Stock, which may be reissued as part of a new series of Preferred
stock hereafter created.

10.  Closing of Books.

The Corporation will at no time close its transfer books against the transfer
of any Preferred Stock or of any shares of Common Stock issued or issuable upon
the conversion of any shares of Common Stock of Preferred Stock in
any manner which interferes with the timely conversion of such
Preferred Stock, except as may otherwise be required to comply with applicable
securities laws.
 

-9-

11.  No Preemptive Rights.

The Preferred Stock shall not give its holders any preemptive rights to
acquire any other securities issued by the Corporation at any time in the
future.

12.  Definition of Shares.

As used in this Certificate of Designations, the term "shares of Common
Stock" shall mean and include the Corporation's authorized common stock, par
value $.001, as constituted on the date of filing of these terms of the
Preferred Stock, or in case of any reorganization, reclassification, or stock
split of the outstanding shares of Common Stock thereof, the stock, securities
or assets provided for hereof. The term "Warrants" as used herein shall have the
same meaning as defined in Section 1 of the Private Securities Subscription
Agreement, dated June 30, 1998, between the Company and RBB Bank
Aktiengesellschaft.

The said determination of the designations, preferences and relative,
participating, optional or other rights, and the qualifications, limitations or
restrictions thereof, relating to the Preferred Stock was duly made by the Board
of Directors pursuant to the provisions of the Corporation's Restated
Certificate of Incorporation and in accordance with the provisions of the
Delaware General Corporation Law.
 
 

 

 

 

 

-10-

CERTIFICATE OF ELIMINATION

OF

SERIES 11 CLASS K CONVERTIBLE PREFERRED STOCK

AND

SERIES 12 CLASS L CONVERTIBLE PREFERRED STOCK

AND

SERIES 13 CLASS M CONVERTIBLE PREFERRED STOCK

OF

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

____________________________________________

     PERMA-FIX ENVIRONMENTAL SERVICES, INC., a
corporation organized and existing under the General Corporation Law of the
State of Delaware (hereinafter called the "Corporation"), hereby
certifies the following:

      1.      That the
Certificate of Designations of Series 11 Class K Convertible Preferred Stock,
par value $.001 per share, of the Corporation (the "Series 11
Preferred") was filed with the Delaware Secretary of State on July 15, 1999
(the "Series 11 Certificate of Designations").

      2.     That all
outstanding shares of the Series 11 Preferred have been delivered to the Company
and exchanged pursuant to an agreement with the holder thereof in accordance
with the terms and conditions of a certain Exchange Agreement between the
Company and RBB Bank Aktiengesellschaft, dated as of August  3, 1999.

      3.      That no
shares of Series 11 Preferred remain outstanding.

      4.      That all
shares of the Series 11 Preferred which have been exchanged have the status of
authorized and unissued shares of the Preferred Stock of the Corporation without
designation as to series, until such shares are once more designated as part of
a particular series by the Board of Directors.

      5.      That
effective August 3, 1999, the Board of Directors of the Company duly adopted the
following resolutions:

              
RESOLVED, that upon completion of the exchange with the holder of the Series 11 

              
Class K Convertible Preferred Stock, no authorized shares of Series 11 Class K 

              Convertible
Preferred Stock will remain outstanding and no shares of Series 11 Class K

              
Convertible Preferred Stock will be issued subject to the Certificate of
Designations 

              
previously filed with respect to the Series 11 Class K Convertible Preferred
Stock.

              
FURTHER RESOLVED, that upon completion of the exchange, the officers of the 

              
Company are hereby authorized and directed, for and on behalf of the Company, to 

    STATE OF DELAWARE

    SECRETARY OF STATE

DIVISION OF CORPORATIONS

FILED 12:33 PM 08/10/1999

    991331581 -- 2249849

 

              
execute and deliver an appropriate Certificate of Elimination to the Secretary
of State 

              
of Delaware regarding the Series 11 Class K Convertible Preferred Stock.

      6.      That the
Certificate of Designations of the Series 12 Class L Convertible Preferred
Stock, par value $.001 per share, of the Corporation (the "Series 12
Preferred") was filed on July 15, 1999 (the "Series 12 Certificate of
Designations").

      7.      That all
outstanding shares of the Series 12 Preferred have been delivered to the Company
and exchanged pursuant to an agreement with the holder thereof in accordance
with the terms and conditions of a certain Exchange Agreement between the
Company and RBB Bank, dated as of August 3, 1999.

      8.      That no
shares of Series 12 Preferred remain outstanding.

      9.      That all
shares of the Series 12 Preferred which have been exchanged have the status of
authorized and unissued shares of the Preferred Stock of the Corporation without
designation as to series, until such shares are once more designated as part of
a particular series by the Board of Directors.

      10.     That effective
August 3, 1999, the Board of Directors of the Company duly adopted the following
resolutions:

               
RESOLVED, that upon completion of the exchange with the holder of the Series 12 

               
Class L Convertible Preferred Stock, no authorized shares of Series 12 Class L 

               
Convertible Preferred Stock will remain outstanding and no shares of Series 12 

               
Class L Convertible Preferred Stock will be issued subject to the Certificate of 

               
Designations previously filed with respect to the Series 12 Class L Convertible 

               
Preferred Stock.

              
FURTHER RESOLVED, that upon completion of the exchange, the officers of the 

              
Company are hereby authorized and directed, for and on behalf of the Company, to 

              
execute and deliver an appropriate Certificate of Elimination to the Secretary
of State 

              
of Delaware regarding the Series 12 Class L Convertible Preferred Stock.

      11.     That the
Certificate of Designations of the Series 13 Class M Convertible Preferred
Stock, par value $.001 per share, of the Corporation (the "Series 13
Preferred") was filed on July 15, 1999 (the "Series 13 Certificate of
Designations").

      12.     That all
outstanding shares of the Series 13 Preferred have been delivered to the Company
and exchanged pursuant to an agreement with the holder thereof in accordance to
the terms and conditions of a certain Exchange Agreement between the Company and
RBB Bank, dated as of August 3, 1999.

-2-

 

      13.     That no shares of
Series 13 Preferred remain outstanding.

      14.     That all shares of
the Series 13 Preferred which have been exchanged have the status of authorized
and unissued shares of the Preferred Stock of the Corporation without
designation as to series, until such shares are once more designated as part of
a particular series by the Board of Directors.

      15.     That effective
August 3, 1999, the Board of Directors of the Company duly adopted the following
resolutions:

               
RESOLVED, that upon completion of the exchange with the holder of the Series 13 

               
Class M Convertible Preferred Stock, no authorized shares of Series 13 Class M 

               
Convertible Preferred Stock will remain outstanding and no shares of Series 13 

               
Class M Convertible Preferred Stock will be issued subject to the Certificate of 

               
Designations previously filed with respect to the Series 13 Class M Convertible 

               
Preferred Stock.

               
FURTHER RESOLVED, that upon completion of the exchange, the officers of the 

               
Company are hereby authorized and directed, for and on behalf of the Company, to 

               
execute and deliver an appropriate Certificate of Elimination to the Secretary
of State 

               
of Delaware regarding the Series 13 Class M Convertible Preferred Stock.

      16.     That pursuant to
the provisions of Section 151(g) of the Delaware General Corporation Law, upon the
effective date of the filing of this Certificate, this Certificate will have the
effect of eliminating from the Restated Certificate of Incorporation only those
matters set forth in the Restated Certificate of Incorporation with respect to
the Series 11 Class K Convertible Preferred Stock, the Series 12 Class L
Convertible Preferred Stock, and the Series 13 Class M Convertible Preferred
Stock

      IN WITNESS WHEREOF, this Certificate of
Elimination has been executed this 10th day of August, 1999, by the President of
the Company.

                                                                                      PERMA-FIX
ENVIRONMENTAL

ATTEST:                                                                       
SERVICES, INC.

/s/ Richard T. Kelecy                                                     
By  /s/ Louis Centofanti                               

Richard T. Kelecy, Secretary                                               
Dr. Louis F. Centofanti, President
(SEAL)

 

 

-3-

 

Page 1

State of Delaware

Office of the Secretary of State

________________________________

 

     I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF
THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF THE CERTIFICATE OF DESIGNATION OF "PERMA-FIX ENVIRONMENTAL SERVICES,
INC.," FILED IN THIS OFFICE ON THE FOURTEENTH DAY OF JUNE, A.D. 2001, AT 10
O'CLOCK A.M.

     A FILED COPY OF THIS CERTIFICATE HAS BEEN
FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS.

 

 

 

 

 

 

 

                                                                                                /s/
Harriet Smith
Windsor                            

                                                                                                Harriet
Smith Windsor, Secretary of State

2249849 
8100                                                               AUTHENTICATION: 
1188603

010285655                                                                                             DATE: 
06-14-01

 
STATE OF
DELAWARE    

SECRETARY OF STATE    

DIVISION OF CORPORATIONS

FILED 10:00 AM 06/14/2001  

010285655 -- 2249849      

CERTIFICATE OF DESIGNATIONS
OF SERIES 17 CLASS Q CONVERTIBLE
PREFERRED STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES, INC.

          Perma-Fix Environmental Services, Inc. (the
"Corporation"), a corporation organized and existing under the General
Corporation Law of the State of Delaware, does hereby certify:

          That, pursuant to authority conferred upon by
the Board of Directors by the Corporation's Restated Certificate of
Incorporation, as amended, and pursuant to the provisions of Section 151 of the
Delaware Corporation Law, the Board of Directors of the Corporation has adopted
resolutions, a copy of which is attached hereto, establishing and providing for
the issuance of a series of Preferred Stock designated as Series 17 Class Q
Convertible Preferred Stock and has established and fixed the voting powers,
designations, preferences and relative participating, optional and other special
rights and qualifications, limitations and restrictions of such Series 17 Class
Q Convertible Preferred Stock as set forth in the attached
resolutions.

Dated: May 25, 2001.
                                                        PERMA-FIX
ENVIRONMENTAL SERVICES, INC.

                                                         By 
/s/ Louis Centofanti                                                       

                                                               Dr. Louis F.
Centofanti
                                                               Chairman of the Board

ATTEST:

/s/ Richard
T. Kelecy                                 
Richard T.
Kelecy, Secretary
 

 

 

 

PERMA-FIX ENVIRONMENTAL SERVICES,
INC.

(the "Corporation")

RESOLUTION OF THE BOARD OF
DIRECTORS

FIXING THE NUMBER AND DESIGNATING THE RIGHTS,
PRIVILEGES,
RESTRICTIONS AND CONDITIONS ATTACHING TO THE
SERIES 17 CLASS Q
CONVERTIBLE PREFERRED STOCK

RE: DESIGNATION OF SERIES 17
CLASS Q CONVERTIBLE PREFERRED STOCK.

RESOLVED: That the designations,
powers, preferences and rights of the Series 17 Class Q Convertible Preferred
Stock be, and they hereby are, as set forth below:
1.  Designation, Number of Shares of Preferred
Stock of Series 17 Class Q
Convertible 
     Preferred Stock and
Dividends. 
The
Corporation hereby authorizes the issuance of up to two thousand five hundred
(2,500) shares of Series 17 Class Q Convertible Preferred Stock, par value $.001
per share (the "Preferred Stock"). The holders of the Preferred Stock
(individually, the "Holder," and collectively, the "Holders") are entitled to
receive if, when and as declared by the Board of Directors of the Corporation
(the"Board") out of funds legally available therefore, cumulative dividends at
an annual dividend rate, based on a 365 day calendar year, of 5% of the
Liquidation Value (as defined in Section 3 hereof) ("Dividend Rate") for each
share of the Preferred Stock then issued and outstanding as of the acceptable
declaration of such dividend, payable semiannually within ten (10) business days
after each subsequent June 30th and December 31st (each a "Dividend Declaration
Date"), and shall be payable in cash or shares of the Corporation's common
stock, par value $.001 per share ("Common Stock"), at the Corporation's option.
The first Dividend Declaration Date shall be December 31st, 2001. Dividends
shall be paid only with respect to the shares of Preferred Stock actually issued
and outstanding on the Dividend Declaration Date and to Holders of record on the
Dividend Declaration Date. Dividends shall accrue from the first day of the
semi-annual dividend period in which such dividend may be payable, except with
respect to the first semi-annual dividend which shall accrue from the date of
the issuance of the Preferred Stock.

In the event that the Board elects to pay the accrued
dividends due as of a Dividend Declaration Date on the outstanding shares of
Preferred Stock in Common Stock of the Corporation, the Holder of each share of
Preferred Stock shall receive that number of shares of Common Stock equal to the
product of (a) the quotient of (i) the Dividend Rate divided by (ii) the average
of the average closing bid quotation of the Corporation's Common Stock as
reported on the National Association of Securities Dealers Automated

 

-1-

 

Quotation
system ("NASDAQ"), or if the Common Stock is not listed for trading on the
NASDAQ but is listed for trading on a national securities exchange, the average
closing price of the Common Stock as quoted on such national exchange, for the
five (5) trading days immediately prior to the Dividend Declaration Date (the
"Stock Dividend Price"), times (b) a fraction, the numerator of which is the
number of days elapsed during the period for which the dividend is to be paid,
and the denominator of which is 365. Dividends on the Preferred Stock shall be
cumulative, and no dividends or other distributions shall be paid or declared or
set aside for payment on the Corporation's Common Stock until all accrued and
unpaid dividends on all outstanding shares of Preferred Stock shall have been
paid or declared and set aside for payment.

2.  Voting.

Except as provided under Section 242(2) of the Delaware
General Corporation Law ("GCL"), the Preferred Stock shall not have any voting
rights and the Holders of the Preferred Stock shall not have the right to vote
on any matter. Notwithstanding the provisions of Section 242 of the GCL, the
number of authorized shares of any class or classes of stock of the Corporation
may be increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the stock
of the Corporation entitled to vote thereon, voting together as a single class,
irrespective of the provisions of Section 242 of the GCL.

3.  Liquidation.

In the event of a voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation, the Holders of the Preferred
Stock shall be entitled to receive out of the assets of the Corporation legally
available for distribution to holders of its capital stock, before any payment
or distribution shall be made to holders of shares of Common Stock or any other
class of stock ranking junior to the Preferred Stock, an amount per share of the
Preferred Stock equal to $1,000 (the "Liquidation Value"), plus any accrued and
unpaid dividends on the Preferred Stock. If upon such liquidation, dissolution,
or winding up of the Corporation, whether voluntary or involuntary, the assets
to be distributed among the Holders of the Preferred Stock shall be insufficient
to permit payment to the Holders of the Preferred Stock of the amount
distributable as aforesaid, then the entire assets of the Corporation to be so
distributed shall be distributed ratably among the Holders of the Preferred
Stock and shares of such other classes or series ranking on a parity with the
shares of the Preferred Stock in proportion to the full distributable amounts
for which holders of all such parity shares are entitled upon such distribution,
liquidation, or winding up. Upon any such liquidation, dissolution or winding up
of the Corporation, after the Holders of Preferred Stock shall have been paid in
full the amounts to which they shall be entitled, the remaining net assets of
the Corporation may be distributed to the holders of stock ranking on
liquidation junior to the Preferred Stock and the Holders of the Preferred Stock
shall have no right or claim to any of the remaining assets of the Corporation.
Written notice of such liquidation, dissolution or winding up, stating a payment
date, the amount of the liquidation payments and the place where said
liquidation payments shall be payable, shall be given by mail, postage

-2-

 

prepaid
or by telex or facsimile to non-U.S. residents, not less than 10 days prior to
the payment date stated therein, to the Holders of record of the Preferred
Stock, such notice to be addressed to each such Holder at its address as shown
by the records of the Corporation. For purposes hereof, the shares of Common
Stock shall rank on liquidation junior to the Preferred Stock.

4.  Optional Conversion.

The Holders of shares of Preferred Stock shall have the
following conversion rights to convert the shares of Preferred Stock into shares
of Common Stock of the Corporation as follows:

(a)  Intentionally left
blank.

(b)  Right to Convert; Conversion
Price. Subject to the terms hereof, as used herein, the term Conversion
Price per outstanding share of Preferred Stock shall be One Dollar and 50/100
($1.50). If any of the outstanding shares of Preferred Stock are converted, in
whole or in part, into Common Stock pursuant to the terms of this Section 4, the
number of shares of whole Common Stock to be issued as a result of such
conversion shall be determined by dividing (a) the aggregate Liquidation Value
of the Preferred Stock so surrendered for conversion by (b) the Conversion Price
in effect on the date of that particular Conversion Notice relating to such
conversion. At the time of conversion of shares of the Preferred Stock, the
Corporation shall pay in cash to the Holder thereof an amount equal to all
unpaid and accrued dividends, if any, accrued thereon on the shares of the
Preferred Stock so converted to the date of the Conversion Notice relating to
the shares of Preferred Stock so converted under such conversion, or, at the
Corporation's option, in lieu of paying cash for the accrued and unpaid
dividends, issue that number of shares of whole Common Stock which is equal to
the quotient of the amount of such unpaid and accrued dividends to the date of
the Conversion Notice relating to such conversion of the shares of Preferred
Stock so converted divided by the Stock Dividend Price in effect at the date of
the Conversion Notice relating to such conversion.

(c)  Conversion Notice. The right of
conversion shall be exercised by the Holder thereof by telecopying or faxing an
executed and completed written notice signed by an authorized representative of
the Holder ("Conversion Notice"), to the Corporation that the Holder elects to
convert a specified number of shares of Preferred Stock representing a specified
Liquidation Value thereof into shares of Common Stock and by delivering by
express courier the certificate or certificates of Preferred Stock being
converted to the Corporation at its principal office (or such other office or
agency of the Corporation as the Corporation may designate by notice in writing
to the Holders of the Preferred Stock). The business date indicated on a
Conversion Notice which is telecopied to and received by the Corporation in
accordance with the provisions hereof shall be deemed a Conversion Date. The
Conversion Notice shall include therein the Liquidation Value of the shares of
Preferred Stock to be converted, and a calculation (a) of the Stock Dividend
Price, (b) the Conversion Price, and (c) the number of shares of Common Stock to
be issued in connection with such conversion. The Corporation shall have the
right to review the calculations included in the Conversion Notice, and shall
provide notice of any discrepancy or dispute therewith within five (5) business
days of the

-3-

 

receipt thereof. The Holder shall deliver to the Corporation an
original Conversion Notice and the original Preferred to be converted within
three (3) business days from the date of the Conversion Notice.

(d)  Issuance of Certificates - Time Conversion
Effected. Promptly, but in no event more than fifteen
(15) business days, after the receipt by facsimile of the Conversion Notice
referred to in Section 4(c); and provided within the ten (10) business days the
Corporation receives the certificate or certificates for the shares of Preferred
Stock to be converted, the Corporation shall issue and deliver, or cause to be
issued and delivered, to the Holder, registered in the name of the Holder, a
certificate or certificates for the number of whole shares of Common Stock into
which such shares of Preferred Stock are converted. Such conversion shall be
deemed to have been effected as of the close of business on the date on which
the telecopy or facsimile Conversion Notice shall have been received by the
Corporation, and the rights of the Holder of such share or shares of Preferred
Stock shall cease at such time, and the Holder or Holders shall be deemed to
have become the holder or holders of record of the shares of Common Stock
represented thereby. 

(e)  Fractional Shares of Common Stock.
No fractional shares of Common Stock shall be issued upon conversion of any
Preferred Stock into shares of Common Stock. All fractional shares of Common
Stock shall be aggregated and then rounded down to the nearest whole share of
Common Stock. In case the number of shares of Preferred Stock represented by the
certificate or certificates surrendered pursuant to this Section 4(e) exceeds
the number of shares of Common Stock converted, the Corporation shall, upon such
conversion, execute and deliver to the Holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Preferred Stock represented by the certificate or certificates surrendered which
are not to be converted.

(f)  Merger or Consolidation. In case
of either (a) any merger or consolidation to which the Corporation is a party
(collectively, the "Merger"), other than a Merger in which the Corporation is
the surviving or continuing corporation, or (b) any sale or conveyance to
another corporation of all, or substantially all, of the assets of the
Corporation (collectively, the "Sale"), and such Merger or Sale becomes
effective while any shares of Preferred Stock are outstanding and prior to the
date that the Corporation's Registration Statement covering all the Conversion
Shares is declared effective by the U. S. Securities and Exchange Commission
("SEC"), the Corporation or such successor corporation as the case may be, shall
make appropriate provision so that the Holder of each share of Preferred Stock
then outstanding shall have the right to convert such share of Preferred Stock
into the kind and amount of shares of stock or other securities and property
receivable upon such Merger or Sale by a holder of the number of shares of
Common Stock into which such shares of Preferred Stock could have been converted
into immediately prior to such Merger or Sale, subject to adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section 4.

(g)  Adjustments to Conversion Price for Stock
Dividends and for Combinations or Subdivisions of Common Stock. If the
Corporation, at any time or from time to time while shares of Preferred Stock
are issued and outstanding, shall declare or pay, any dividend on the Common
Stock payable in Common Stock, or shall effect a subdivision of the outstanding
shares of Common Stock into a greater number of

-4-

 

shares of Common Stock (by stock
split, reclassification or otherwise than by payment of a dividend in Common
Stock), or if the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Common Stock, then the Conversion Price in effect immediately before such
event shall, concurrently with the effectiveness of such event, be
proportionately decreased or increased, as appropriate.

(h)  Adjustments for Reclassification and
Reorganization. If the Common Stock issuable upon conversion of the
Preferred Stock shall be changed into the same or a different number of shares
of common stock of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination or shares of Common Stock provided for in Section 5(g) hereof), the
Conversion Price then in effect shall, concurrently with the effectiveness of
such reorganization or reclassification, be proportionately adjusted so that the
Preferred Stock shall be convertible into, in lieu of the number of shares of
Common Stock which the Holders of Preferred Stock would otherwise have been
entitled to receive, a number of shares of common stock of such other class or
classes of stock equivalent to the number of shares of Common Stock that would
have been subject to receipt by the Holders upon conversion of the Preferred
Stock immediately before that change.

(i)  Other Adjustments to Conversion
Price. Except as provided in subsection 4(j), if, after the Closing
Date and during the period that any of the Preferred Stock is issued and
outstanding, the Corporation shall sell (a) any shares of Common Stock for a
consideration per share less than the Conversion Price in effect immediately
prior to such sale, or (b) any rights, warrants or other securities entitling
the holders thereof to convert such securities into Common Stock at a price per
share (determined by dividing (i) the total amount, if any, received or
receivable by the Corporation in consideration of the sale of such rights,
warrants or other securities plus the total amount, if any, payable to the
Corporation upon exercise or conversion thereof by (ii) the number of additional
shares of Common Stock issuable upon exercise or conversion of such securities)
which is less than the Conversion Price in effect on the date of such sale, the
Conversion Price shall be adjusted as of the date of such sale to the amount per
share received and to be received by the Corporation in connection with such
sale, conversion and exercise as determined above. The Holders may, if approved
by the Holders of record representing a majority of the then issued and
outstanding shares of Preferred Stock, waive their rights to any adjustment to
the Conversion Price in connection with a particular sale covered by this
Section 4(i), and, in the event of such waiver, no adjustment to the Conversion
Price shall be made under this Section 4(i) as a result of such sale.

(j)  No Adjustments.
No adjustment in the Conversion Price shall be required in the case of (i) the
grant by the Corporation of stock options to employees of the Corporation under
a Stock Option Plan approved by the stockholders of the Company or (ii) the
issuance of shares of Common Stock upon the exercise of stock options (a)
referred to in clause (i) hereof and (b) granted by the Corporation which grant
had triggered an adjustment in the Conversion Price.

 

-5-

 

5.  Redemption.

(a)  Redemption at Corporation's
Option. Except as otherwise provided in this Section 5, at any time,
and from time to time, the Corporation may, at its sole option, but shall not be
obligated to, redeem, in whole or in part, at any time, and from time to time
the then outstanding Preferred Stock at the following cash redemption prices if
redeemed during the following periods: (i) within twelve (12)
months from June 1, 2001 - $1,100 per share, and (ii) after June 1, 2002 -
$1,200 per share (as applicable, the redemption price of $1,100 or $1,200 is
referred to herein as the "Redemption Price").

(b)  Mechanics of Redemption. Prior to
any date stipulated by the Corporation for the redemption of Preferred Stock
(the "Redemption Date"), written notice (the "Redemption Notice") shall be
mailed to each Holder of record on such notice date of the Preferred Stock. The
Redemption Notice shall state: (i) the Redemption Date of such shares, (ii) the
number of Preferred Stock to be redeemed from the holder to whom the Redemption
Notice is addressed, (iii) instructions for surrender to the Corporation, in the
manner and at the place designated, of a share certificate or share certificates
representing the number of Preferred Stock to be redeemed from such Holder, and
(iv) instructions as to how to specify to the Corporation the number of
Preferred Stock to be redeemed as provided in this Section 5.

(c)  Rights of Conversion Upon
Redemption. If the redemption occurs, then, upon receipt of the
Redemption Notice, any Holder of Preferred Stock shall have five business days
during which it may exercise the option, at its sole election, to specify what
portion of its Preferred Stock called for redemption in the Redemption Notice
shall be redeemed as provided in this Section 5 or converted into Common Stock
in the manner provided in Section 4 hereof.

(d)  Surrender of Certificates. On or
before the Redemption Date in respect of any Preferred Stock, each holder of
such shares shall surrender the required certificate or certificates
representing such shares to the Corporation in the manner and at the place
designated in the Redemption Notice, and upon the Redemption Date, the
Redemption Price for such shares shall be made payable, in the manner provided
hereof, to the order of the person whose name appears on such certificate or
certificates as the owner thereof, and each surrendered share certificate shall
be canceled and retired. If a share certificate is surrendered and all the
shares evidenced thereby are not being redeemed (as described below), the
Corporation shall cause the Preferred Stock which are not being redeemed to be
registered in the names of the persons or entity whose names appear as the
owners on the respective surrendered share certificates and deliver such
certificate to such person.

(e)  Payment. On the Redemption Date in
respect of any Preferred Stock or prior thereto, the Corporation shall deposit
with any bank or trust company having a capital and surplus of at least
$50,000,000, as a trust fund, a sum equal to the aggregate Redemption Price of
all such shares called from redemption (less the aggregate Redemption Price for
those Preferred Stock in respect of which the Corporation has received notice
from the holder thereof of its election to convert Preferred Stock into Common
Stock), with irrevocable instructions and authority to the bank or trust company
to pay, on or after the Redemption Date,

 

-6-

 

the Redemption Price to the respective
holders upon the surrender of their share certificates. The deposit shall
constitute full payment for the shares to their holders, and from and after the
date of the deposit the redeemed shares shall be deemed to be no longer
outstanding, and holders thereof shall cease to be shareholders with respect to
such shares and shall have no rights with respect thereto except the rights to
receive from the bank or trust company payments of the Redemption Price of the
shares, without interest, upon surrender of their certificates thereof. Any
funds so deposited and unclaimed at the end of one year following the Redemption
Date shall be released or repaid to the Corporation, after which the former
holders of shares called for redemption shall be entitled to receive payment of
the Redemption Price in respect of their shares only from the
Corporation.

6.  Assignment. 

Subject to all applicable restrictions on transfer, the
rights and obligations of the Corporation and the Holder of the Preferred Stock
shall be binding upon and benefit the successors, assigns, heirs,
administrators, and transferees of the parties.

7.  Shares of Common Stock to be
Reserved.

The Corporation, upon the effective date of this
Certificate of Designations, has a sufficient number of shares of Common Stock
available to reserve for issuance upon the conversion of all outstanding shares
of Preferred Stock, pursuant to the terms and conditions set forth in Section 4.
The Corporation will at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
conversion of Preferred Stock, as herein provided, such number of shares of
Common Stock as shall then be issuable upon the conversion of all outstanding
shares of Preferred Stock. The Corporation covenants that all shares of Common
Stock which shall be so issued shall be duly and validly issued, fully paid and
non assessable. The Corporation will take such action as may be required, if the
total number of shares of Common Stock issued and issuable after such action
upon conversion of the Preferred Stock would exceed the total number of shares
of Common Stock then authorized by the Corporation's Certificate of
Incorporation, as amended, in order to increase the number of shares of Common
Stock to permit the Corporation to issue the number of shares of Common Stock
required to effect conversion of the Preferred Stock, and exercise of the
Warrants, to a number sufficient to permit conversion of the Preferred
Stock.

8.  No Reissuance of Preferred
Stock.

Shares of Preferred Stock which are converted into
shares of Common Stock as provided herein shall be retired and shall become
authorized but unissued shares of Preferred Stock, which may be reissued as part
of a new series of preferred stock hereafter created.

 

 

-7-

 

 

9.  Closing of Books.

The Corporation will at no time close its transfer
books against the transfer of any Preferred Stock or of any shares of Common
Stock issued or issuable upon the conversion of any shares of Common Stock of
Preferred Stock in any manner which interferes with the timely
conversion of such Preferred Stock, except as may otherwise be required to
comply with applicable securities laws.

10.  No Preemptive Rights.

The Preferred Stock shall not give its holders any
preemptive rights to acquire any other securities issued by the Corporation at
any time in the future.

11.  Definition of Shares.

As used in this Certificate of Designations, the term
"shares of Common Stock" shall mean and include the Corporation's authorized
common stock, par value $.001, as constituted on the date of filing of these
terms of the Preferred Stock, or in case of any reorganization,
reclassification, or stock split of the outstanding shares of Common Stock
thereof, the stock, securities or assets provided for hereof. 

The said determination of the designations, preferences
and relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof, relating to the Preferred Stock was duly
made by the Board of Directors pursuant to the provisions of the Corporation's
Restated Certificate of Incorporation and in accordance with the provisions of
the Delaware General Corporation Law.

 

 

 

 

-8-

 

State of Delaware

Office of the Secretary of State 

Page 1

I,
HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF

DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY

OF THE CERTIFICATE OF DESIGNATION OF "PERMA-FIX
ENVIRONMENTAL

SERVICES, INC.," FILED IN THIS OFFICE ON THE FOURTEENTH DAY OF
JUNE,

A.D. 2001, AT 10:01 O'CLOCK A.M.

A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO
THE

NEW CASTLE COUNTY RECORDER OF DEEDS.
 

 

 

 

 

                                                                 s/
Harriet Smith
Windsor                                      
                                                                  Harriett Smith
Windsor, Secretary of State

                                                                                Authentication: 1188613

2249849 8100
                                                                                                       Date: 06-14-01

010285660
 
 

CERTIFICATE OF ELIMINATION

OF
SERIES 14 CLASS N CONVERTIBLE PREFERRED STOCK
AND
SERIES 15
CLASS O CONVERTIBLE PREFERRED STOCK
AND
SERIES 16 CLASS P CONVERTIBLE
PREFERRED STOCK
OF
PERMA-FIX ENVIRONMENTAL SERVICES,
INC.
____________________________________________ 

     PERMA-FIX ENVIRONMENTAL SERVICES,
INC., a corporation organized and existing under the General Corporation Law of
the State of Delaware (hereinafter called the "Corporation"), hereby certifies
the following:

     1.   That the Certificate of Designations of Series 14
Class N Convertible Preferred Stock, par value $.001 per share, of the
Corporation (the "Series 14 Preferred") was filed with the Delaware Secretary of
State on August 10, 1999 (the "Series 14 Certificate of
Designations").

     2.    That a portion of the outstanding shares of the
Series 14 Preferred have been converted into common stock of the Corporation and
all of the remaining balance have been delivered to the Company and exchanged
pursuant to an agreement with the holder thereof in accordance with the terms
and conditions of a certain Conversion and Exchange Agreement between the
Company and RBB Bank Aktiengesellschaft, dated as of May 25, 2001 ("Exchange
Agreement").

     3.     That no shares of Series 14 Preferred remain
outstanding.

     4.     That all shares of the Series 14 Preferred which
have been exchanged have the status of authorized and unissued shares of the
preferred stock of the Corporation without designation as to series, until such
shares are once more designated as part of a particular series by the Board of
Directors.

     5.     That effective May 25, 2001, the Board of Directors
of the Company duly adopted the following resolutions:

              RESOLVED, that upon completion of the conversion and
exchange with the holder of the 

              Series 14 Class N Convertible Preferred Stock,
no authorized shares of Series 14 

              Class N Convertible Preferred Stock will
remain outstanding and no shares of Series 14 

              Class N Convertible Preferred
Stock will be issued subject to the Certificate of 

              Designations previously filed
with respect to the Series 14 Class N Convertible Preferred 

              Stock.

 

 

              FURTHER RESOLVED, that upon completion of the exchange,
the officers of the 

              Company are hereby authorized and directed, for and on
behalf of the Company, to execute 

              and deliver an appropriate Certificate of
Elimination to the Secretary of State of Delaware

              regarding the Series 14 Class
N Convertible Preferred Stock. 

     6.     That the Certificate of Designations of the Series
15 Class O Convertible Preferred Stock, par value $.001 per share, of the
Corporation (the "Series 15 Preferred") was filed on August 10, 1999 (the
"Series 15 Certificate of Designations").

     7.     That all outstanding shares of the Series 15
Preferred have been delivered to the Company and exchanged pursuant to the
Exchange Agreement.

     8.     That no shares of Series 15 Preferred remain
outstanding.

     9.     That all shares of the Series 15 Preferred which
have been exchanged have the status of authorized and unissued shares of the
Preferred Stock of the Corporation without designation as to series, until such
shares are once more designated as part of a particular series by the Board of
Directors.

     10.    That effective May 25, 2001, the Board of Directors
of the Company duly adopted the following resolutions:

               RESOLVED, that upon completion of the exchange with the
holder of the Series 15 

               Class O Convertible Preferred Stock no authorized shares
of Series 15 Class O 

               Convertible Preferred Stock will remain outstanding and no
shares of Series 15 

               Class O Convertible Preferred Stock will be issued subject
to the Certificate of 

  
            Designations previously filed with respect to the Series
15 Class O Convertible 

               Preferred Stock.

               FURTHER RESOLVED, that upon completion of the exchange,
the officers of the 

               Company are hereby authorized and directed, for and on
behalf of the Company, to 

               execute and deliver an appropriate Certificate of
Elimination to the Secretary of State 

               of Delaware regarding the Series 15 Class
O Convertible Preferred Stock. 

     11.     That the Certificate of Designations of the Series
16 Class P Convertible Preferred Stock, par value $.001 per share, of the
Corporation (the "Series 16 Preferred") was filed on August 10, 1999 (the
"Series 16 Certificate of Designations").

     12.     That all outstanding shares of the Series 16
Preferred have been delivered to the Company and exchanged pursuant to the
Exchange Agreement.

-2-

 

     13.     That no shares of Series 16 Preferred remain
outstanding.

     14.     That all shares of the Series 16 Preferred which
have been exchanged have the status of authorized and unissued shares of the
Preferred Stock of the Corporation without designation as to series, until such
shares are once more designated as part of a particular series by the Board of
Directors.

     15.     That effective May 25, 2001, the Board of Directors
of the Company duly adopted the following resolutions:

               RESOLVED, that upon completion of the exchange with the
holder of the Series 16 

               Class P Convertible Preferred Stock, no authorized
shares of Series 16 Class P 

               Convertible Preferred Stock will remain outstanding
and no shares of Series 16 

               Class P Convertible Preferred Stock will be issued
subject to the Certificate of 

               Designations previously filed with respect to the
Series 16 Class P Convertible 

               Preferred Stock.

               FURTHER RESOLVED, that upon completion of the exchange,
the officers of the 

               Company are hereby authorized and directed, for and on
behalf of the Company, to 

               execute and deliver an appropriate Certificate of
Elimination to the Secretary of State 

               of Delaware regarding the Series 16 Class
P Convertible Preferred Stock. 

     16.     That pursuant to the provisions of Section 151(g)
of the Delaware General Corporation Law, upon the effective date of the filing
of this Certificate, this Certificate will have the effect of eliminating from
the Restated Certificate of Incorporation only those matters set forth in the
Restated Certificate of Incorporation with respect to the Series 14 Class N
Convertible Preferred Stock, the Series 15 Class O Convertible Preferred Stock,
and the Series 16 Class P Convertible Preferred Stock

     IN WITNESS WHEREOF, this Certificate of Elimination has
been executed this 25th day of May, 2001, by the President of the
Company.

                                                                                        PERMA-FIX
ENVIRONMENTAL
ATTEST:                                                                         SERVICES,
INC.

/s/ Richard T.
Kelecy                                                        By:  /s/
Louis
Centofanti                              
Richard T. Kelecy, Secretary
                                                 Dr.
Louis F. Centofanti, President
(SEAL)
 
-3-<PAGE>

                                                                     Exhibit 4.1

                          INSIGHT HEALTH SERVICES CORP.

                    9-7/8% SENIOR SUBORDINATED NOTES DUE 2011

                                    INDENTURE

                          Dated as of October 30, 2001

                    STATE STREET BANK AND TRUST COMPANY, N.A.

                                     TRUSTEE
<PAGE>
                             CROSS-REFERENCE TABLE*

<TABLE>
<CAPTION>
TRUST INDENTURE
 ACT SECTION                                                 INDENTURE SECTION

<S>                                                          <C>
310(a)(1).........................................................7.10
   (a)(2).........................................................7.10
   (a)(3).........................................................N.A.
   (a)(4).........................................................N.A.
   (a)(5).........................................................7.10
   (b)............................................................7.10
   (c)............................................................N.A.
311(a)............................................................7.11
   (b)............................................................7.11
   (c)............................................................N.A.
312(a)............................................................2.06
   (b)............................................................13.03
   (c)............................................................13.03
313(a)............................................................7.06, 13.03
   (b)(1).........................................................N.A.
   (b)(2).........................................................7.06, 7.07
   (c)............................................................7.06, 13.02
   (d)............................................................7.06
314(a)............................................................7.06, 13.05
   (b)............................................................N.A.
   (c)(1).........................................................N.A.
   (c)(2).........................................................N.A.
   (c)(3).........................................................N.A.
   (d)............................................................N.A.
   (e)............................................................13.05
   (f)............................................................N.A.
315(a)............................................................N.A.
   (b)............................................................N.A.
   (c)............................................................N.A.
   (d)............................................................N.A.
   (e)............................................................N.A.
316(a)(last sentence).............................................N.A.
   (a)(1)(A)......................................................N.A.
   (a)(1)(B)......................................................N.A.
   (a)(2).........................................................N.A.
   (b)............................................................N.A.
   (c)............................................................13.13
</TABLE>

N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
<TABLE>
<S>                                                               <C>
317(a)(1).........................................................N.A.
   (a)(2).........................................................N.A.
   (b)............................................................N.A.
318(a)............................................................N.A.
   (b)............................................................N.A.
   (c)............................................................13.01
</TABLE>
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           Page

<S>                                                                        <C>
CROSS-REFERENCE TABLE.......................................................i

                                   ARTICLE ONE
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section 1.01   Definitions..................................................1
Section 1.02   Other Definitions...........................................20
Section 1.03   Incorporation by Reference of Trust Indenture Act...........21
Section 1.04   Rules of Construction.......................................22

                                   ARTICLE TWO
                                    THE NOTES

Section 2.01   Form and Dating.............................................22
Section 2.02   Execution and Authentication................................24
Section 2.03   Methods of Receiving Payments on the Notes..................24
Section 2.04   Registrar and Paying Agent..................................25
Section 2.05   Paying Agent to Hold Money in Trust.........................25
Section 2.06   Holder Lists................................................25
Section 2.07   Transfer and Exchange.......................................26
Section 2.08   Replacement Notes...........................................39
Section 2.09   Outstanding Notes...........................................39
Section 2.10   Treasury Notes..............................................40
Section 2.11   Temporary Notes.............................................40
Section 2.12   Cancellation................................................40
Section 2.13   Defaulted Interest..........................................40
Section 2.14   CUSIP Numbers...............................................41

                                  ARTICLE THREE
                           REDEMPTION AND PREPAYMENT;
                           SATISFACTION AND DISCHARGE

Section 3.01   Notices to Trustee..........................................41
Section 3.02   Selection of Notes to Be Redeemed...........................41
Section 3.03   Notice of Redemption........................................42
Section 3.04   Effect of Notice of Redemption..............................43
Section 3.05   Deposit of Redemption Price.................................43
Section 3.06   Notes Redeemed in Part......................................43
Section 3.07   Optional Redemption.........................................44
Section 3.08   Mandatory Redemption........................................44
Section 3.09   Repurchase Offers...........................................44
Section 3.10   Application of Trust Money..................................46
</TABLE>

                                       i
<PAGE>
<TABLE>
<CAPTION>
                                  ARTICLE FOUR
                                    COVENANTS

<S>                                                                       <C>
Section 4.01   Payment of Notes............................................47
Section 4.02   Maintenance of Office or Agency.............................47
Section 4.03   Reports.....................................................48
Section 4.04   Compliance Certificate......................................48
Section 4.05   Taxes.......................................................49
Section 4.06   Stay, Extension and Usury Laws..............................49
Section 4.07   Restricted Payments.........................................49
Section 4.08   Dividend and Other Payment Restrictions Affecting Restricted
                  Subsidiaries.............................................54
Section 4.09   Incurrence of Indebtedness and Issuance of Disqualified
                  Stock....................................................55
Section 4.10   Asset Sales.................................................58
Section 4.11   Transactions with Affiliates................................59
Section 4.12   Liens.......................................................60
Section 4.13   Corporate Existence.........................................61
Section 4.14   Limitation on Layering Debt.................................61
Section 4.15   Offer to Repurchase upon a Change of Control................61
Section 4.16   Limitation on Issuances and Sales of Capital Stock of
                  Restricted Subsidiaries..................................63
Section 4.17   Designation of Restricted and Unrestricted Subsidiaries.....63
Section 4.18   Payments for Consent........................................64
Section 4.19   Limitations on Issuances of Guarantees of Indebtedness......64
Section 4.20   Additional Guarantees.......................................65

                                  ARTICLE FIVE
                                   SUCCESSORS

Section 5.01   Merger, Consolidation or Sale of Assets.....................65

                                   ARTICLE SIX
                              DEFAULTS AND REMEDIES

Section 6.01   Events of Default...........................................67
Section 6.02   Acceleration................................................68
Section 6.03   Other Remedies..............................................69
Section 6.04   Waiver of Past Defaults.....................................69
Section 6.05   Control by Majority.........................................70
Section 6.06   Limitation on Suits.........................................70
Section 6.07   Rights of Holders of Notes to Receive Payment...............71
Section 6.08   Collection Suit by Trustee..................................71
Section 6.09   Trustee May File Proofs of Claim............................71
Section 6.10   Priorities..................................................72
Section 6.11   Undertaking for Costs.......................................72
</TABLE>

                                       ii
<PAGE>
<TABLE>
<CAPTION>
                                  ARTICLE SEVEN
                                     TRUSTEE

<S>                                                                       <C>
Section 7.01   Duties of Trustee...........................................72
Section 7.02   Certain Rights of Trustee...................................74
Section 7.03   Individual Rights of Trustee................................74
Section 7.04   Trustee's Disclaimer........................................75
Section 7.05   Notice of Defaults..........................................75
Section 7.06   Reports by Trustee to Holders of the Notes..................75
Section 7.07   Compensation and Indemnity..................................75
Section 7.08   Replacement of Trustee......................................76
Section 7.09   Successor Trustee by Merger, Etc............................77
Section 7.10   Eligibility; Disqualification...............................77
Section 7.11   Preferential Collection of Claims Against Company...........78

                                  ARTICLE EIGHT
                       DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01   Option to Effect Legal Defeasance or Covenant Defeasance....78
Section 8.02   Legal Defeasance and Discharge..............................78
Section 8.03   Covenant Defeasance.........................................79
Section 8.04   Conditions to Legal or Covenant Defeasance..................79
Section 8.05   Deposited Money and U.S. Government Obligations to Be Held in
                  Trust; Other Miscellaneous Provisions....................80
Section 8.06   Repayment to the Company....................................81
Section 8.07   Reinstatement...............................................81

                                  ARTICLE NINE
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01   Without Consent of Holders of Notes.........................82
Section 9.02   With Consent of Holders of Notes............................83
Section 9.03   Compliance with Trust Indenture Act.........................85
Section 9.04   Revocation and Effect of Consents...........................85
Section 9.05   Notation on or Exchange of Notes............................85
Section 9.06   Trustee to Sign Amendments, Etc.............................85

                                   ARTICLE TEN
                                  SUBORDINATION

Section 10.01  Agreement to Subordinate....................................86
Section 10.02  Liquidation; Dissolution; Bankruptcy........................86
Section 10.03  Default on Designated Senior Indebtedness...................86
Section 10.04  Acceleration of Securities..................................87
Section 10.05  When Distribution Must Be Paid Over.........................87
Section 10.06  Notice by the Company.......................................88
Section 10.07  Subrogation.................................................88
</TABLE>

                                       ii
<PAGE>
<TABLE>
<S>                                                                       <C>
Section 10.08  Relative Rights.............................................88
Section 10.09  Subordination May Not Be Impaired by the Company............89
Section 10.10  Distribution or Notice to Representative....................89
Section 10.11  Rights of Trustee and Paying Agent..........................89
Section 10.12  Authorization to Effect Subordination.......................89

                                 ARTICLE ELEVEN
                                   GUARANTEES

Section 11.01  Guarantee...................................................90
Section 11.02  Subordination of Guarantee..................................91
Section 11.03  Limitation on Guarantor Liability...........................91
Section 11.04  Execution and Delivery of Guarantee.........................92
Section 11.05  Releases of Guarantors......................................92

                                 ARTICLE TWELVE
                           SATISFACTION AND DISCHARGE

Section 12.01  Satisfaction and Discharge..................................93
Section 12.02  Deposited Money and U.S. Government Obligations to Be Held
                  in Trust; Other Miscellaneous Provisions.................94
Section 12.03  Repayment to the Company....................................94

                                ARTICLE THIRTEEN
                                  MISCELLANEOUS

Section 13.01  Trust Indenture Act Controls................................95
Section 13.02  Notices.....................................................95
Section 13.03  Communication by Holders of Notes with Other Holders of
                  Notes....................................................96
Section 13.04  Certificate and Opinion as to Conditions Precedent..........96
Section 13.05  Statements Required in Certificate or Opinion...............97
Section 13.06  Rules by Trustee and Agents.................................97
Section 13.07  No Personal Liability of Directors, Officers, Employees and
                  Stockholders.............................................97
Section 13.08  Governing Law...............................................98
Section 13.09  Consent to Jurisdiction.....................................98
Section 13.10  No Adverse Interpretation of Other Agreements...............98
Section 13.11  Successors..................................................98
Section 13.12  Severability................................................99
Section 13.13  Counterpart Originals.......................................99
Section 13.14  Acts of Holders.............................................99
Section 13.15  Benefit of Indenture.......................................100
Section 13.16  Table of Contents, Headings, Etc...........................101
Section 13.17  Trustee Not Fiduciary for Holders of Senior Indebtedness...101
</TABLE>

                                       iv
<PAGE>
<TABLE>
<CAPTION>
                                    EXHIBITS

<S>         <C>
Exhibit A1  FORM OF NOTE

Exhibit A2  FORM OF REGULATION S TEMPORARY GLOBAL NOTE

Exhibit B   FORM OF CERTIFICATE OF TRANSFER

Exhibit C   FORM OF CERTIFICATE OF EXCHANGE

Exhibit D   FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Exhibit E   FORM OF NOTATION OF GUARANTEE

Exhibit F   FORM OF SUPPLEMENTAL INDENTURE

SCHEDULE I     EXISTING INDEBTEDNESS

SCHEDULE II    AGREEMENTS EXCLUDED FROM TRANSACTIONS WITH AFFILIATES
               COVENANT
</TABLE>

                                       v
<PAGE>
            INDENTURE dated as of October 30, 2001 among InSight Health
Services Corp., a Delaware corporation (the "COMPANY"), InSight Health
Services Holdings Corp., a Delaware Corporation, (the "PARENT"),  the
Subsidiary Guarantors (as defined below) and State Street Bank and Trust
Company, N.A., a national banking association, as trustee.

            The Company, the Parent the Subsidiary Guarantors and the Trustee
(as defined below) agree as follows for the benefit of each other and for the
equal and ratable benefit of the Holders (as defined below) of the 9-7/8% Senior
Subordinated Notes due 2011:

                                  ARTICLE ONE
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section 1.01      Definitions.

                  "144A GLOBAL NOTE" means a global note substantially in the
form of Exhibit A1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of, and registered in the name
of, the Depositary or its nominee that shall be issued in a denomination equal
to the outstanding principal amount at maturity of the Notes sold in reliance on
Rule 144A.

                  "ACQUIRED INDEBTEDNESS" means Indebtedness of a Person (a)
existing at the time such Person is merged with or into the Company or a
Subsidiary or becomes a Subsidiary or (b) assumed in connection with the
acquisition of assets from such Person.

                  "ADDITIONAL NOTES" means up to $100 million aggregate
principal amount of Notes (other than the Notes issued on the date hereof)
issued under this Indenture in accordance with Sections 2.02 and 4.09 hereof.

                  "AFFILIATE" means, with respect to any specified person, (a)
any other person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified person or (b) any other
person that owns, directly or indirectly, 10% or more of such specified person's
Capital Stock or any executive officer or director of any such specified person
or other person. For the purposes of this definition, "control," when used with
respect to any specified person, means the power to direct the management and
policies of such person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

                  "AGENT" means any Registrar, Paying Agent or co-registrar.

                  "AGENT BANK" means Bank of America, N.A. and its successors
under the Credit Agreement, in its capacity as administrative agent.

                  "APPLICABLE PROCEDURES" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Clearstream that apply to such
transfer or exchange.
<PAGE>
                  "ASSET SALE" means (i) the sale, lease, conveyance or other
disposition of any assets (including, without limitation, by way of merger,
consolidation or similar arrangement) (collectively, a "transfer") by the
Company or any Restricted Subsidiary other than in the ordinary course of
business and (ii) the issue or sale by the Company or any of its Restricted
Subsidiaries of Shares of Capital Stock of any of the Company's Restricted
Subsidiaries (which will be deemed to include the sale, grant or conveyance of
any interest in the income, profits or proceeds therefrom), in the case of
either clause (i) or (ii), whether in a single transaction or a series of
related transactions (x) that have a fair market value in excess of $2 million
or (y) for Net Cash Proceeds in excess of $2 million. For the purposes of this
definition, the term "Asset Sale" does not include (a) any transfer of
properties or assets (i) that is governed by Sections 4.07, 4.16 (to the extent
of paragraph (a) thereof) or 5.01 hereof, (ii) between or among the Company and
its Restricted Subsidiaries pursuant to transactions that do not violate any
other provision of this Indenture or (iii) representing obsolete or permanently
retired equipment and facilities or (b) the sale or exchange of equipment in
connection with the purchase or other acquisition of other equipment, in each
case used in the business of the Company or its Restricted Subsidiaries as it
was in existence on the Reference Date or any business determined by the Board
of the Company in its good faith judgment to be reasonably related thereto.
Notwithstanding anything to the contrary set forth above, a disposition of
Receivables and Related Assets other than pursuant to a Receivables Program
contemplated under the provisions described in Section 4.09(c)(xiii) shall be
deemed to be an Asset Sale.

                  "BANKRUPTCY LAW" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.

                  "BANKS" means the banks and other financial institutions that
from time to time are lenders under the Credit Agreement.

                  "BENEFICIAL OWNER" has the meaning assigned to such term in
Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms "BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" shall have a
corresponding meaning.

                  "BOARD" means the Company's Board of Directors or the Parent's
Board of Directors, as applicable.

                  "BOARD RESOLUTION" means, with respect to a Board, a copy of a
resolution certified by the Secretary or an Assistant Secretary of the Company
or the Parent, as the case may be, to have been duly adopted by such Board and
to be in full force and effect on the date of such certification, and delivered
to the Trustee.

                  "BROKER-DEALER" has the meaning set forth in the Registration
Rights Agreement.

                  "BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York are
authorized or obligated by law

                                       2
<PAGE>
or executive order to close. If a payment date is not a Business Day, payment
may be made on the next succeeding day that is a Business Day, and no interest
shall accrue on such payment for the intervening period.

                  "CAPITALIZED LEASE OBLIGATION" means, with respect to any
Person, any lease of any property (whether real, personal or mixed) by that
Person as lessee which, in accordance with GAAP, is required to be accounted for
as a capital lease on the balance sheet of that Person.

                  "CAPITAL STOCK" of any Person means any and all shares,
interests, partnership interests, participations, rights in or other equivalents
(however designated) of such Person's equity interest (however designated),
whether now outstanding or issued after the Closing Date.

                  "CASH EQUIVALENTS" means, at any date, (a) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having maturities of not more than
twelve months from the date of acquisition, (b) U.S. dollar denominated time
deposits and certificates of deposit of (i) any lender under the Credit
Agreement, (ii) any domestic commercial bank of recognized standing having
capital and surplus in excess of $500,000,000 or (iii) any bank whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent thereof or
from Moody's is at least P-1 or the equivalent thereof (any such bank being an
"Approved Lender"), in each case with maturities of not more than 270 days from
the date of acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any variable
rate notes issued by, or guaranteed by, any domestic corporation rated A-1 (or
the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or
better by Moody's and maturing within twelve months of the date of acquisition,
(d) repurchase agreements entered into by any Person with a bank or trust
company (including any of the lenders under the Credit Agreement) or recognized
securities dealer having capital and surplus in excess of $500,000,000 for
direct obligations issued by or fully guaranteed by the United States in which
such Person shall have a perfected first priority security interest (subject to
no other Liens) and having, on the date of purchase thereof, a fair market value
of at least 100% of the amount of the repurchase obligations and (e)
Investments, classified in accordance with GAAP as current assets, in money
market investment programs registered under the Investment Company Act of 1940,
as amended, which are administered by reputable financial institutions having
capital of at least $500,000,000 and the portfolios of which are limited to
Investments of the character described in the foregoing subdivisions (a) through
(d).

                  "CHANGE OF CONTROL means the occurrence of any of the
following:

                  (a) the consummation of any transaction (including, without
         limitation, any merger or consolidation) (i) prior to a Public Equity
         Offering by the Company or the Parent, the result of which is that the
         Principals and their Related Parties become the "beneficial owner" (as
         such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange
         Act) of less than 50% of the Voting Stock of the Company or the Parent,
         as the case may be (measured by voting power rather than the number of
         shares), or (ii) after a Public Equity Offering of the Company or the
         Parent, any "person" or "group" (as such terms are used in Section
         13(d) and 14(d) of the Exchange Act), other than the Principals

                                       3
<PAGE>
         and their Related Parties, become the beneficial owner (as defined
         above), directly or indirectly, of 35% or more of the Voting Stock of
         the Company or the Parent, as the case may be, and such person is or
         becomes, directly or indirectly, the beneficial owner of a greater
         percentage of the voting power of the Voting Stock of the Company or
         the Parent, as the case may be, calculated on a fully diluted basis,
         than the percentage beneficially owned by the Principals and their
         Related Parties;

                  (b) the direct or indirect sale, transfer, conveyance or other
         disposition (other than by way of merger or consolidation), in one or a
         series of related transactions, of all or substantially all of the
         properties or assets of the Company and its Subsidiaries or the Parent
         and its Subsidiaries, in each case, taken as a whole, to any "person"
         (as the term is defined in Section 13(d)(3) of the Exchange Act) other
         than the Principals or Related Parties of the Principals;

                  (c) the first day on which a majority of the members of the
         Board of the Company or the Parent are not Continuing Directors; or

                  (d) the Company or the Parent is liquidated or dissolved or
         adopts a plan of liquidation or dissolution, other than in a
         transaction that complies with the provisions described under Section
         5.01 hereof.

                  "CLEARSTREAM" means Clearstream Banking, societe anonyme,
Luxembourg.

                  "CLOSING DATE" means the date on which the $225 million in
aggregate principal amount of the Notes were originally issued under this
Indenture.

                  "COMMON STOCK" means, with respect to any Person, any and all
shares, interests, participations and other equivalents (however designated,
whether voting or non-voting) of such Person's Common Stock, whether now
outstanding or issued after the date of this Indenture, and includes, without
limitation, all series and classes of such Common Stock.

                  "COMPANY" means InSight Health Services Corp., a Delaware
corporation.

                  "COMPANY REQUEST" or "COMPANY ORDER" means a written request
or order signed in the name of the Company by its Chairman, its President, any
Vice President, its Treasurer or an Assistant Treasurer, and delivered to the
Trustee.

                  "CONSOLIDATED EBITDA" means, for any period, the sum of,
without duplication, Consolidated Net Income for such period, plus (or, in the
case of clause (d) below, plus or minus) the following items to the extent
included in computing Consolidated Net Income for such period: (a) Fixed Charges
for such period, plus (b) the provision for federal, state, local and foreign
income taxes of the Company and its Restricted Subsidiaries for such period,
plus (c) the aggregate depreciation and amortization expense of the Company and
its Restricted Subsidiaries for such period, plus (d) any other non-cash charges
for such period, and minus non-cash items increasing Consolidated Net Income for
such period, other than non-cash charges or items increasing Consolidated Net
Income resulting from changes in prepaid assets or accrued liabilities in the
ordinary course of business, plus (e) Minority Interest; provided that fixed
charges, income tax expense, depreciation and amortization expense and non-cash
charges of a

                                       4
<PAGE>
Restricted Subsidiary will be included in Consolidated EBITDA only to the extent
(and in the same proportion) that the net income of such Subsidiary was included
in calculating Consolidated Net Income for such period.

                  "CONSOLIDATED NET INCOME" means, for any period, the net
income (or net loss) of the Company and its Restricted Subsidiaries for such
period as determined on a consolidated basis in accordance with GAAP, adjusted
to the extent included in calculating such net income or loss by excluding (a)
any net after-tax extraordinary or nonrecurring gains or losses (less all fees
and expenses relating thereto), (b) any net after-tax gains or losses (less all
fees and expenses relating thereto) attributable to Asset Sales or discontinued
operations, (c) the portion of net income (or loss) of any Person (other than
the Company or a Restricted Subsidiary), including Unrestricted Subsidiaries, in
which the Company or any Restricted Subsidiary has an ownership interest, except
to the extent of the amount of dividends or other distributions actually paid to
the Company or any Restricted Subsidiary in cash during such period, (d) the net
income (or loss) of any Person combined with the Company or any Restricted
Subsidiary on a "pooling of interests" basis attributable to any period prior to
the date of combination, (e) the net income (but not the net loss) of any
Restricted Subsidiary to the extent that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary is at the date of
determination restricted, directly or indirectly, except to the extent that such
net income is actually paid to the Company or a Restricted Subsidiary thereof by
loans, advances, intercompany transfers, principal repayments or otherwise and
(f) the cumulative effect of a change in accounting principles.

                  "CONSOLIDATED TANGIBLE ASSETS" means, as of the date of
determination, the total assets, less goodwill and other intangibles, shown on
the balance sheet of the Company and its Restricted Subsidiaries as of the most
recent date for which such a balance sheet is available, determined on a
consolidated basis in accordance with GAAP.

                  "CONTINUING DIRECTORS" means, as of the date of determination,
any member of the Board of the Company or the Parent, as the case may be, who:

                  (a) was a member of such Board on the Reference Date;

                  (b) was nominated for election or elected to such Board with
         the approval of the majority of the Continuing Directors who were
         members of such Board at the time of such nomination or election; or

                  (c) was nominated by one or more of the Principals and the
         Related Parties.

                  "CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the
address of the Trustee specified in Section 13.02 hereof or such other address
as to which the Trustee may give notice to the Company.

                  "CREDIT AGREEMENT" means the credit agreement, dated as of the
Reference Date, among the Company, the Parent, the Subsidiary Guarantors, the
lenders named therein, Bank of America, N.A., as administrative agent, First
Union National Bank, as syndication agent, and The CIT Group/Business Credit,
Inc., as documentation agent, providing for up to $225 million in term loan
borrowings and $50 million of revolving credit borrowings, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection

                                       5
<PAGE>
therewith, as such credit agreement (and related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith) may be
amended, restated, supplemented, refinanced, extended or otherwise modified from
time to time.

                  "CUSTODIAN" means the Trustee, as custodian with respect to
the Notes in global form, or any successor entity thereto.

                  "DEFAULT" means any event that is, or after notice or the
passage of time or both, would be, an Event of Default.

                  "DEFINITIVE NOTE" means a certificated Note registered in the
name of the Holder thereof and issued in accordance with Section 2.07 hereof,
substantially in the form of Exhibit A1 hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.

                  "DEPOSITARY" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.04
hereof as the Depositary with respect to the Notes, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.

                  "DESIGNATED NONCASH CONSIDERATION" means the fair market value
of noncash consideration received by the Company or one of its Restricted
Subsidiaries in connection with an Asset Sale that is so designated as
Designated Noncash Consideration pursuant to an officer's certificate, setting
forth the basis of such valuation, executed by the principal executive officer
and the principal financial officer of the Company, less the amount of cash or
Cash Equivalents received in connection with a sale of such Designated Noncash
Consideration.

                  "DESIGNATED SENIOR INDEBTEDNESS" means (i) so long as the
Senior Bank Debt is outstanding, the Senior Bank Debt and (ii) thereafter, any
other Senior Indebtedness permitted under this Indenture the principal amount of
which is $25 million or more and that has been specifically designated by the
Company, in the instrument creating or evidencing such Senior Indebtedness or in
an officers' certificate delivered to the Trustee, as "Designated Senior
Indebtedness."

                  "DISINTERESTED DIRECTOR" means, with respect to any
transaction or series of transactions in respect of which the Board is required
to deliver a resolution of the Board, to make a finding or otherwise take action
under this Indenture, a member of the Board who does not have any material
direct or indirect financial interest in or with respect to such transaction or
series of transactions.

                  "DISQUALIFIED STOCK" means any class or series of Capital
Stock that, either by its terms, by the terms of any security into which it is
convertible or exchangeable or by contract or otherwise (i) is or upon the
happening of an event or passage of time would be, required to be redeemed prior
to the final Stated Maturity of the Notes, (ii) is redeemable at the option of
the holder thereof, at any time prior to such final Stated Maturity or (iii) at
the option of the holder thereof is convertible into or exchangeable for debt
securities at any time prior to such final Stated Maturity; provided that any
Capital Stock that would constitute Disqualified Stock solely as a result of the
provisions therein giving holders thereof the right to cause the issuer thereof
to

                                       6
<PAGE>
repurchase or redeem such Capital Stock upon the occurrence of an "asset sale"
or "change of control" occurring prior to the Stated Maturity of the Notes will
not constitute Disqualified Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are no more favorable to the holders
of such Capital Stock than the provisions contained in Sections 4.10 and 4.15
hereof, and such Capital Stock specifically provides that the issuer will not
repurchase or redeem any such stock pursuant to such provisions prior to the
Company's repurchase of such Notes as are required to be repurchased pursuant to
the provisions contained in Sections 4.10 and 4.15 hereof.

                  "EQUITY INTERESTS" means Capital Stock and all warrants,
options and other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).

                  "EQUITY OFFERING" means a public or private offering of
Capital Stock (other than Disqualified Stock) of the Parent or the Company.

                  "EQUITY SPONSORS" means J.W. Childs Associates, L.P., J.W.
Childs Equity Partners II, L.P., The Halifax Group, L.L.C. and Halifax Capital
Partners, L.P.

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, including the rules and regulations of the SEC promulgated thereunder.

                  "EXCHANGE NOTES" means the Notes issued in the Exchange Offer
in accordance with Section 2.07(f) hereof.

                  "EXCHANGE OFFER" has the meaning set forth in the Registration
Rights Agreement.

                  "EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning set
forth in the Registration Rights Agreement.

                  "EXISTING INDEBTEDNESS" means the Indebtedness of the Company
and its Restricted Subsidiaries (other than Indebtedness under the Credit
Agreement) that was outstanding on the Reference Date and listed on Schedule I
to this Indenture, until such amounts are repaid.

                  "EXISTING NOTES" means the 9-5/8% Senior Subordinated Notes
Due 2008 of the Company.

                  "FACILITY" means any premises, together with the diagnostic
imaging and treatment equipment installed therein, used by the Company in the
conduct of the business of providing diagnostic imaging and information,
treatment and related management services.

                  "FIXED CHARGE COVERAGE RATIO" means, for any period, the ratio
of Consolidated EBITDA for such period to Fixed Charges for such period.

                  "FIXED CHARGES" means, for any period, without duplication,
the sum of (a) the amount that, in conformity with GAAP, would be set forth
opposite the caption "interest

                                       7
<PAGE>
expense" (or any like caption) on a consolidated statement of operations of the
Company and its Restricted Subsidiaries for such period, including, without
limitation, (i) amortization of original issue discount, (ii) the net cost of
interest rate contracts (including, amortization of discounts), (iii) the
interest portion of any deferred payment obligation, (iv) amortization of debt
issuance costs, and (v) the interest component of Capitalized Lease Obligations,
plus (b) all dividends and distributions paid (whether or not in cash) on
Preferred Stock and Disqualified Stock by the Company or any Restricted
Subsidiary (to any Person other than the Company or any of its Restricted
Subsidiaries), other than dividends on Equity Interests payable solely in
Qualified Equity Interests of the Company, computed on a tax effected basis,
plus (c) all interest on any Indebtedness of any Person guaranteed by the
Company or any of its Restricted Subsidiaries or secured by a lien on the assets
of the Company or any of its Restricted Subsidiaries; provided that Fixed
Charges will not include (i) any gain or loss from extinguishment of debt,
including the write-off of debt issuance costs, and (ii) the fixed charges of a
Restricted Subsidiary to the extent (and in the same proportion) that the net
income of such Subsidiary was excluded in calculating Consolidated Net Income
pursuant to clause (e) of the definition thereof for such period.

                  "FOREIGN SUBSIDIARY" means a Restricted Subsidiary that is
incorporated in a jurisdiction other than the United States or a state thereof
or the District of Columbia and that has no material operations or assets in the
United States.

                  "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" means
generally accepted accounting principles in the United States, consistently
applied, that are in effect on the Closing Date.

                  "GLOBAL NOTE LEGEND" means the legend set forth in Section
2.07(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.

                  "GLOBAL NOTES" means, individually and collectively, each of
the Restricted Global Notes and the Unrestricted Global Notes, substantially in
the form of Exhibit A1 or A2 hereto, as appropriate, issued in accordance with
Section 2.01, 2.07(b)(iv), 2.07(d)(ii) or 2.07(f) of this Indenture.

                  "GUARANTEE" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.

                  "GUARANTEE" means a Guarantee of the Notes pursuant to the
Indenture.

                  "GUARANTORS" means: (1) the Parent; (2) the Subsidiary
Guarantors; and (3) any other Subsidiary that executes a Guarantee in accordance
with the provisions hereof; and their respective successors and assigns.

                  "HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person entered into in the ordinary course of business under
(i) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements and other similar financial agreements or arrangements
designed to protect such Person against, or manage the

                                       8
<PAGE>
exposure of such Person to, fluctuations in interest rates, and (ii) forward
exchange agreements, currency swap, currency option and other similar financial
agreements or arrangements designed to protect such Person against, or manage
the exposure of such Person to, fluctuations in foreign currency exchange rates.

                  "HOLDER" means a Person in whose name a Note is registered.

                  "IAI GLOBAL NOTE" means the global Note substantially in the
form of Exhibit A1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee that will be issued in a denomination equal to
the outstanding principal amount of the Notes sold to Institutional Accredited
Investors.

                  "INDEBTEDNESS" means (without duplication), with respect to
any Person, whether recourse is to all or a portion of the assets of such Person
and whether or not contingent, (a) every obligation of such Person for money
borrowed, (b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (d) every obligation of such
Person issued or assumed as the deferred purchase price of property or services,
(e) the attributable value of every Capitalized Lease Obligation of such Person,
(f) all Disqualified Stock of such Person valued at its maximum fixed repurchase
price, plus accrued and unpaid dividends thereon, (g) all obligations of such
Person under or in respect of Hedging Obligations, and (h) every obligation of
the type referred to in clauses (a) through (g) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has guaranteed. For purposes of this definition, the "maximum fixed repurchase
price" of any Disqualified Stock that does not have a fixed repurchase price
will be calculated in accordance with the terms of such Disqualified Stock as if
such Disqualified Stock were purchased on any date on which Indebtedness is
required to be determined pursuant to this Indenture, and if such price is based
upon, or measured by, the fair market value of such Disqualified Stock, such
fair market value will be determined in good faith by the board of directors of
the issuer of such Disqualified Stock. Notwithstanding the foregoing, trade
accounts payable and accrued liabilities arising in the ordinary course of
business and any liability for federal, state or local taxes or other taxes owed
by such Person will not be considered Indebtedness for purposes of this
definition.

                  "INDENTURE" means this Indenture, as amended or supplemented
from time to time.

                  "INDIRECT PARTICIPANT" means a Person who holds a beneficial
interest in a Global Note through a Participant.

                  "INITIAL PURCHASERS" means each of Banc of America Securities
LLC and First Union Securities, Inc. as initial purchasers under the Purchase
Agreement dated October 25, 2001, among the Company, the Guarantors, Banc of
America Securities LLC and First Union Securities, Inc.

                                       9
<PAGE>
                  "INSTITUTIONAL ACCREDITED INVESTOR" means an institution that
is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act, who are not also QIBs.

                  "INVESTMENT" in any Person means, (i) directly or indirectly,
any advance, loan or other extension of credit (including, without limitation,
by way of guarantee or similar arrangement) or capital contribution to such
Person, the purchase or other acquisition of any stock, bonds, notes, debentures
or other securities issued by such Person, the acquisition (by purchase or
otherwise) of all or substantially all of the business or assets of such Person,
or the making of any investment in such Person, (ii) the designation of any
Restricted Subsidiary as an Unrestricted Subsidiary and (iii) the fair market
value of the Capital Stock (or any other Investment), held by the Company or any
of its Restricted Subsidiaries, of (or in) any Person that has ceased to be a
Restricted Subsidiary. Investments exclude endorsements for deposit or
collection in the ordinary course of business and extensions of trade credit on
commercially reasonable terms in accordance with normal trade practices.

                  "LETTER OF TRANSMITTAL" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.

                  "LIEN" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation, assignment for
security, claim, or preference or priority or other encumbrance upon, or with
respect to, any property of any kind, real or personal, movable or immovable,
now owned or hereafter acquired. A Person will be deemed to own subject to a
Lien any property that such Person has acquired or holds subject to the interest
of a vendor or lessor under any conditional sale agreement, capital lease or
other title retention agreement.

                  "LIQUIDATED DAMAGES" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.

                  "MINORITY INTEREST" means, with respect to any Person,
interests in income of such Person's Subsidiaries held by Persons other than
such Person or another Subsidiary of such Person, as reflected on such Person's
consolidated financial statements.

                  "MOODY'S" means Moody's Investors Service and any successor
thereof.

                  "NET CASH PROCEEDS" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or Cash Equivalents, including payments in
respect of deferred payment obligations when received in the form of, or stock
or other assets when disposed for, cash or Cash Equivalents (except to the
extent that such obligations are financed or sold with recourse to the Company
or any Restricted Subsidiary), net of (a) brokerage commissions and other fees
and expenses (including fees and expenses of legal counsel and investment banks)
related to such Asset Sale, (b) provisions for all taxes payable as a result of
such Asset Sale, (c) payments made to retire Indebtedness where such
Indebtedness is secured by the assets that are the subject of such Asset Sale,
(d) amounts required to be paid to any Person (other than the Company or any
Restricted Subsidiary) owning a beneficial interest in the assets that are
subject to the Asset Sale

                                       10
<PAGE>
and (e) appropriate amounts to be provided by the Company or any Restricted
Subsidiary, as the case may be, as a reserve required in accordance with GAAP
against any liabilities associated with such Asset Sale and retained by the
seller after such Asset Sale, including pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale.

                  "NON-PAYMENT EVENT OF DEFAULT" means any event (other than a
Payment Event of Default) the occurrence of which entitles one or more Persons
to accelerate the maturity of any Designated Senior Indebtedness.

                  "NON-RECOURSE INDEBTEDNESS" means Indebtedness of a Person (i)
as to which neither the Company nor any of its Restricted Subsidiaries (other
than such Person), (a) provides any guarantee or credit support of any kind
(including any undertaking, guarantee, indemnity, agreement or instrument that
would constitute Indebtedness) or (b) is directly or indirectly liable (as a
guarantor or otherwise), and (ii) the obligees of which will have recourse for
repayment of the principal of and interest on such Indebtedness and any fees,
indemnities, expense reimbursements or other amount of whatsoever nature accrued
or payable in connection with such Indebtedness solely against the assets of
such Person and not against any of the assets of the Company or its Restricted
Subsidiaries (other than such Person).

                  "NON-U.S. PERSON" means a Person who is not a U.S. Person.

                  "NOTES" means the 9-7/8% Senior Subordinated Notes due 2011 of
the Company issued on the date hereof and the Exchange Notes. The Notes and the
Additional Notes, if any, shall be treated as a single class for all purposes
under this Indenture.

                  "OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

                  "OFFERING" means the offering of the Notes by the Company.

                  "OFFICER" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice-President of such Person.

                  "OFFICERS' CERTIFICATE" means a certificate signed on behalf
of the Company by at least two Officers of the Company, one of whom must be the
principal executive officer, the principal financial officer, the treasurer or
the principal accounting officer of the Company, that meets the requirements of
Section 13.05 hereof.

                  "OPINION OF COUNSEL" means an opinion from legal counsel who
is reasonably acceptable to the Trustee, that meets the requirements of Section
13.05 hereof.

                  "PARENT" means InSight Health Services Holdings Corp., a
Delaware corporation and its successors.

                                       11
<PAGE>
                  "PARI PASSU INDEBTEDNESS" means (a) with respect to the Notes,
Indebtedness that ranks pari passu in right of payment to the Notes and (b) with
respect to any Guarantee, Indebtedness that ranks pari passu in right of payment
to such Guarantee.

                  "PARTICIPANT" means, with respect to the Depositary, Euroclear
or Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and with respect to DTC, shall include Euroclear and
Clearstream).

                  "PERMITTED BUSINESS" means the business conducted by the
Company, its Restricted Subsidiaries and Permitted Joint Ventures as of the
Reference Date and any and all diagnostic imaging and information businesses
that in the good faith judgment of the Board of the Company are reasonably
related thereto.

                  "PERMITTED INDEBTEDNESS" has the meaning set forth in Section
4.09(c) hereof.

                  "PERMITTED INVESTMENTS" means any of the following:

                  (a) Investments in (i) United States dollars (including such
dollars as are held as overnight bank deposits and demand deposits with banks),
(ii) securities with a maturity of one year or less issued or directly and fully
guaranteed or insured by the United States or any agency or instrumentality
thereof (provided that the full faith and credit of the United States is pledged
in support thereof); (iii) certificates of deposit, Euro-dollar time deposits or
acceptances with a maturity of one year or less of any financial institution
that is a member of the Federal Reserve System having combined capital and
surplus of not less than $500,000,000; (iv) any shares of money market mutual or
similar funds having assets in excess of $500,000,000; (v) repurchase
obligations with a term not exceeding seven days for underlying securities of
the types described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in clause (iii)
above; and (vi) commercial paper with a maturity of one year or less issued by a
corporation that is not an Affiliate of the Company and is organized under the
laws of any state of the United States or the District of Columbia and having a
rating (A) from Moody's of at least P-1 or (B) from S&P of at least A-1;

                  (b) Investments by the Company or any Restricted Subsidiary in
another Person, if as a result of such Investment (i) such other Person becomes
a Restricted Subsidiary or (ii) such other Person is merged or consolidated with
or into, or transfers or conveys all or substantially all of its assets to, the
Company or a Restricted Subsidiary;

                  (c) Investments by the Company or a Restricted Subsidiary in
the Company or a Restricted Subsidiary;

                  (d) Investments that were in existence on the Reference Date;

                  (e) promissory notes or other evidence of Indebtedness
received as a result of Asset Sales permitted under Section 4.10 hereof;

                  (f) loans or advances to officers, directors and employees of
the Company or any of its Restricted Subsidiaries made (i) in the ordinary
course of business in an amount not to exceed $5 million in the aggregate at any
one time outstanding or (ii) in connection with the

                                       12
<PAGE>
purchase by such Persons of Equity Interests of the Parent so long as the cash
proceeds of such purchase received by the Parent are contemporaneously remitted
by the Parent to the Company as a capital contribution;

                  (g) any Investment by the Company or any Restricted Subsidiary
of the Company in Permitted Joint Ventures made after the Reference Date, having
an aggregate fair market value, when taken together with all other Investments
made pursuant to this clause (g) that are at the time outstanding, not exceeding
the greater of (i) $30 million and (ii) 10% of the Consolidated Tangible Assets
of the Company as of the last day of the most recent full fiscal quarter ending
immediately prior to the date of such Investment (with the fair market value of
each Investment being measured at the time made and without giving effect to
subsequent changes in value);

                  (h) any Investment by the Company or any Restricted Subsidiary
in a trust, limited liability company, special purpose entity or other similar
entity in connection with a Receivables Program; provided that (A) such
Investment is made by a Receivables Subsidiary and (B) the only assets
transferred to such trust, limited liability company, special purpose entity or
other similar entity consist of Receivables and Related Assets of such
Receivables Subsidiary; and

                  (i) other Investments that do not exceed $20 million in the
aggregate at any one time outstanding.

                  "PERMITTED JOINT VENTURE" means any joint venture, partnership
or other Person designated by the Board of the Company, (i) at least 20% of
whose Capital Stock with voting power under ordinary circumstances to elect
directors (or Persons having similar or corresponding powers and
responsibilities) is at the time owned (beneficially or directly) by the Company
and/or by one or more Restricted Subsidiaries of the Company and if the Company
owns more than 50% of the Capital Stock of the Permitted Joint Venture, such
Permitted Joint Venture is either a Restricted Subsidiary of the Company or has
been designated as an Unrestricted Subsidiary of the Company in accordance with
the provisions of Section 4.17 hereof, (ii) (x) if it is an Unrestricted
Subsidiary, all Indebtedness of such Person is Non-Recourse Indebtedness or (y)
if it is a Person other than an Unrestricted Subsidiary, either all Indebtedness
of such Person is Non-Recourse Indebtedness or the only Indebtedness of such
Person that is not Non-Recourse Indebtedness is Indebtedness as to which any
guarantee provided by the Company or a Restricted Subsidiary complies with the
provisions of Sections 4.07 and 4.09 hereof, and (iii) which is engaged in a
Permitted Business; provided, that each of Berwyn Magnetic Resonance Center,
LLC, Garfield Imaging Center, Ltd., Tom's River Imaging Associates, L.P., St.
John's Regional Imaging Center, LLC, Dublin Diagnostic Imaging, LLC, Connecticut
Lithotripsy, LLC, Northern Indiana Oncology Center of Porter Memorial Hospital,
LLC, Lockport MRI, LLC, Wilkes-Barre Imaging, LLC, Sun Coast Imaging Center,
LLC, Granada Hills Open MRI, LLC, Daniel Freeman MRI, LLC, InSight-Premier
Health, LLC, Southern Connecticut Imaging Centers, LLC, Parkway Imaging Center,
LLC, Metabolic Imaging of Kentucky, LLC, Maine Molecular Imaging, LLC, Greater
Waterbury Imaging Center, L.P. and Central Maine Magnetic Imaging Associates
shall be deemed to be a Permitted Joint Venture. Any such designation (other
than with respect to the Persons identified in the preceding sentence) shall be
evidenced to the Trustee by promptly filing with the Trustee a copy of the

                                       13
<PAGE>
resolution giving effect to such designation and an officer's certificate
certifying that such designation complied with the foregoing provisions.

                  "PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that: (i) the principal amount of such Permitted Refinancing
Indebtedness does not exceed the principal amount of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded plus accrued
interest plus the lesser of the amount of any premium required to be paid in
connection with such refinancings pursuant to the terms of such indebtedness or
the amount of any premium reasonably determined by the Company as necessary to
accomplish such refinancing (in each case plus the amount of reasonable expenses
incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness
has a Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of, the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; (iii) if the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded is subordinated in
right of payment to the Notes, such Permitted Refinancing Indebtedness has a
final maturity date not earlier than the final maturity date of, and is
subordinated in right of payment to, the Notes on terms at least as favorable to
the Holders of Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and (iv) such Permitted Refinancing Indebtedness shall not include
Indebtedness of a Restricted Subsidiary that refinances Indebtedness of the
Company or Indebtedness of a Restricted Subsidiary that is not a Subsidiary
Guarantor that refinances Indebtedness of a Subsidiary Guarantor.

                  "PERSON" means any individual, corporation, limited or general
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, limited liability company or government or any
agency or political subdivision thereof.

                  "PREFERRED STOCK" means, with respect to any Person, any and
all shares, interests, partnership interests, participation, rights in or other
equivalents (however designated) of such Person's preferred or preference stock,
whether now outstanding or issued after the Closing Date, and including, without
limitation, all classes and series of preferred or preference stock of such
Person.

                  "PRINCIPALS" means the Equity Sponsors and their respective
Affiliates.

                  "PRIVATE PLACEMENT LEGEND" means the legend set forth in
Section 2.07(g)(i) to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.

                  "PUBLIC EQUITY OFFERING" means an offer and sale of Capital
Stock (other than Disqualified Stock) of the Company or the Parent pursuant to a
registration statement that has been declared effective by the SEC pursuant to
the Securities Act (other than a registration statement on Form S-8 or otherwise
relating to equity securities issuable under any employee benefit plan of the
Company).

                                       14
<PAGE>
                  "PURCHASE MONEY OBLIGATIONS" of any Person means any
obligations of such Person to any seller or any other Person incurred or assumed
to finance the construction and/or acquisition of real or personal property to
be used in the business of such Person or any of its Subsidiaries in an amount
that is not more than 100% of the cost of such property, and incurred within 90
days after the date of such construction or acquisition (excluding accounts
payable to trade creditors incurred in the ordinary course of business);
provided that any Lien on such Indebtedness shall not extend to any property
other than the property so acquired or constructed.

                  "QIB" means a "qualified institutional buyer" as defined in
Rule 144A.

                  "QUALIFIED EQUITY INTEREST" means any Qualified Stock and all
warrants, options or other rights to acquire Qualified Stock (but excluding any
debt security that is convertible into or exchangeable for Capital Stock).

                  "QUALIFIED STOCK" of any Person means any and all Capital
Stock of such Person, other than Disqualified Stock.

                  "RECEIVABLES AND RELATED ASSETS" means accounts receivable,
instruments, chattel paper, health care insurance receivables, obligations,
general intangibles and other similar assets, including interest in merchandise
or goods, the sale or lease of which give rise to the foregoing, related
contractual rights, guarantees, insurance proceeds, collections, other related
assets and proceeds of all the foregoing.

                  "RECEIVABLES PROGRAM" means, with respect to any Person, any
securitization program pursuant to which such Person pledges, sells or otherwise
transfers or encumbers its Receivables and Related Assets, including a trust,
limited liability company, special purpose entity or other similar entity.

                  "RECEIVABLES SUBSIDIARY" means a Wholly Owned Subsidiary (i)
created for the purpose of financing Receivables and Related Assets created in
the ordinary course of business of the Company and its Subsidiaries and (ii) the
sole assets of which consist of Receivables and Related Assets of the Company
and its Subsidiaries and Permitted Investments.

                  "REFERENCE DATE" means October 17, 2001.

                  "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the Closing Date, by and among the Company, the
Guarantors and the other parties named on the signature pages thereof, as such
agreement may be amended, modified or supplemented from time to time.

                  "REGULATION S" means Regulation S promulgated under the
Securities Act.

                  "REGULATION S GLOBAL NOTE" means a Regulation S Temporary
Global Note or a Regulation S Permanent Global Note, as appropriate.

                  "REGULATION S PERMANENT GLOBAL NOTE" means a permanent global
Note in the form of Exhibit A1 hereto bearing the Global Note Legend and the
Private Placement Legend and deposited with or on behalf of and registered in
the name of the Depositary or its nominee,

                                       15
<PAGE>
issued in a denomination equal to the outstanding principal amount at maturity
of the Regulation S Temporary Global Note upon expiration of the Restricted
Period.

                  "REGULATION S TEMPORARY GLOBAL NOTE" means a temporary global
Note in the form of Exhibit A2 hereto bearing the Global Note Legend, the
Private Placement Legend and the Temporary Regulation S Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount at
maturity of the Notes initially sold in reliance on Rule 903 of Regulation S.

                  "RELATED PARTY" means:

                  (a) any controlling stockholder, partner, member, 80% (or
more) owned Subsidiary, or immediate family member (in the case of an
individual) of any Principal; or

                  (b) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of any one or more Principals
and/or such other Persons referred to in the immediately preceding clause.

                  "REPRESENTATIVE" means the trustee, agent or representative
for any Senior Indebtedness.

                  "RESPONSIBLE OFFICER," when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.

                  "RESTRICTED DEFINITIVE NOTE" means a Definitive Note bearing
the Private Placement Legend.

                  "RESTRICTED GLOBAL NOTE" means a Global Note bearing the
Private Placement Legend.

                  "RESTRICTED INVESTMENT" means an Investment other than a
Permitted Investment.

                  "RESTRICTED PERIOD" means the 40-day restricted period as
defined in Regulation S.

                  "RESTRICTED SUBSIDIARY" of a Person means any Subsidiary other
than an Unrestricted Subsidiary. Notwithstanding anything to the contrary herein
or in the Notes, Toms River Imaging Associates, L.P. shall be deemed to be a
Restricted Subsidiary of the Company for purposes of this Indenture and the
Notes so long as the Company and the Guarantors, directly or indirectly, own at
least 50% of the Voting Stock thereof.

                  "RULE 144" means Rule 144 promulgated under the Securities
Act.

                                       16
<PAGE>
                  "RULE 144A" means Rule 144A promulgated under the Securities
Act.

                  "RULE 903" means Rule 903 promulgated under the Securities
Act.

                  "RULE 904" means Rule 904 promulgated the Securities Act.

                  "SALE AND LEASEBACK TRANSACTION" means any transaction or
series of related transactions pursuant to which the Company or a Restricted
Subsidiary sells or transfers any property or asset in connection with the
leasing, or the resale against installment payments, of such property or asset
to the seller or transferor.

                  "SEC" means the Securities and Exchange Commission.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations thereunder.

                  "SENIOR BANK DEBT" means the Obligations outstanding under the
Credit Agreement.

                  "SENIOR INDEBTEDNESS" " means (i) the Senior Bank Debt and any
Hedging Obligations owing by the Company or any Guarantor to any lender which is
a party to the Credit Agreement (or to any Affiliate of any such lender), (ii)
any other Indebtedness permitted to be incurred by the Company or any Restricted
Subsidiary under the terms of this Indenture and (iii) any Indebtedness of the
Parent, unless, in the case of clauses (ii) and (iii), the instrument under
which such Indebtedness is incurred expressly provides that it is subordinated
in right of payment to any Indebtedness for money borrowed. Notwithstanding
anything to the contrary in the foregoing, Senior Indebtedness will not include
(i) Indebtedness evidenced by the Notes or the Guarantees, (ii) Indebtedness of
the Company or any Guarantor that is expressly subordinated in right of payment
to any Senior Indebtedness of the Company or such Guarantor or the Notes or such
Guarantor's Guarantee, (iii) Indebtedness of the Company that by operation of
law is subordinate to any general unsecured obligations of the Company, (iv)
Indebtedness of the Company or any Guarantor to the extent incurred in violation
of this Indenture, (v) any liability for federal, state or local taxes or other
taxes, owed or owing by the Company or the Parent, (vi) trade account payables
owed or owing by the Company or any Guarantor, (vii) amounts owed by the Company
or any Guarantor for compensation to employees or for services rendered to the
Company or such Guarantor, (viii) Indebtedness of the Company to any Restricted
Subsidiary or any other Affiliate of the Company, (ix) Disqualified Stock of the
Company or any Guarantor and (x) Indebtedness which when incurred and without
respect to any election under Section 1111(b) of Title 11 of the United States
Code is without recourse to the Company or any Restricted Subsidiary.

                  "SHELF REGISTRATION STATEMENT" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.

                  "SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary of
the Company that, together with its Subsidiaries, (a) for the most recent fiscal
year of the Company, accounted for more than 10% of the consolidated net
revenues of the Company and its Subsidiaries, (b) as of the end of such fiscal
year, was the owner of more than 10% of the consolidated assets of the

                                       17
<PAGE>
Company and its Restricted Subsidiaries, in the case of either (a) or (b), as
set forth on the most recently available consolidated financial statements of
the Company for such fiscal year or (c) was organized or acquired after the
beginning of such fiscal year and would have been a Significant Subsidiary if it
had been owned during such entire fiscal year.

                  "S&P" means Standard & Poor's Ratings Group and any successor
thereof.

                  "STATED MATURITY" means, when used with respect to any Note or
any installment of interest thereon, the date specified in such Note as the
fixed date on which the principal of such Note or such installment of interest
is due and payable and, when used with respect to any other Indebtedness, means
the date specified in the instrument governing such Indebtedness as the fixed
date on which the principal of such Indebtedness or any installment of interest
thereon is due and payable.

                  "SUBORDINATED INDEBTEDNESS" means Indebtedness of the Company
or a Guarantor that is subordinated in right of payment to the Notes or the
Guarantee issued by such Guarantor, as the case may be.

                  "SUBSIDIARY" means any Person a majority of the equity
ownership or Voting Stock of which is at the time owned, directly or indirectly,
by the Company and/or one or more other Subsidiaries of the Company.
Notwithstanding anything to the contrary herein or in the Notes, Toms River
Imaging Associates, L.P. shall be deemed to be a Subsidiary of the Company for
purposes of this Indenture and the Notes so long as the Company and the
Guarantors, directly or indirectly, own at least 50% of the Voting Stock
thereof.

                  "SUBSIDIARY GUARANTORS" means, collectively, all Wholly Owned
Restricted Subsidiaries that are incorporated in the United States or a State
thereof or the District of Columbia.

                  "TEMPORARY REGULATION S LEGEND" means the legend set forth in
Section 2.07(h) hereof, which is required to be placed on the Regulation S
Temporary Global Note.

                  "TRANSACTIONS" means, collectively, (i) the merger of InSight
Health Services Acquisition Corp. ("ACQUISITION CORP.") with and into the
Company pursuant to an Agreement and Plan of Merger, dated as of June 29, 2001,
among Acquisition Corp., the Parent and the Company, as amended, and the payment
of the purchase price thereunder, (ii) the initial funding under the Credit
Agreement, (iii) the equity contribution by the Equity Sponsors or their
Affiliates of $98,125,216 to the Parent, (iv) the rollover of options having a
net value of $1,874,784 by certain members of the Company's senior management
into options of the Parent, (v) the repurchase by Acquisition Corp. of all of
the Existing Notes and payment of accrued interest and tender premium thereon
and (vi) the repayment of then outstanding senior debt of the Company, in each
case as such transactions occurred on the Reference Date.

                  "TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act
of 1939, as amended (15 U.S.C. Sections 77aaa - 77bbbb), as in effect on
the date on which this Indenture is qualified under the TIA.

                                       18
<PAGE>
                  "TRUSTEE" means State Street Bank and Trust Company, N.A.,
until a successor replaces it in accordance with the applicable provisions of
this Indenture and thereafter means the successor serving hereunder.

                  "UNRESTRICTED DEFINITIVE NOTE" means one or more Definitive
Notes that do not bear and are not required to bear the Private Placement
Legend.

                  "UNRESTRICTED GLOBAL NOTE" means a permanent Global Note
substantially in the form of Exhibit A1 attached hereto that bears the Global
Note Legend and that has the "Schedule of Exchanges of Interests in the Global
Note" attached thereto, and that is deposited with or on behalf of and
registered in the name of the Depositary, representing a series of Notes that do
not bear the Private Placement Legend.

                  "UNRESTRICTED SUBSIDIARY" means (a) any Subsidiary that is
designated by the Board of the Company as an Unrestricted Subsidiary in
accordance with Section 4.17 hereof and (b) any Subsidiary of an Unrestricted
Subsidiary.

                  "U.S. GOVERNMENT OBLIGATIONS" means (i) securities that are
(a) direct obligations of the United States of America for the payment of which
the full faith and credit of the United States of America is pledged or (b)
obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case, are not callable or redeemable at the
option of the issuer thereof; and (ii) depositary receipts issued by a bank (as
defined in Section 3(a)(2) of the Securities Act) as custodian with respect to
any U.S. Government Obligation which is specified in clause (i) above and held
by such bank for the account of the holder of such depositary receipt, or with
respect to any specific payment of principal or interest on any U.S. Government
Obligation which is so specified and held, provided that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal or interest of the U.S. Government Obligation evidenced by such
depositary receipt.

                  "U.S. PERSON" means a U.S. person as defined in Rule 902(o)
under the Securities Act.

                  "VOTING STOCK" means any class or classes of Capital Stock
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the board of directors,
managers or trustees of any Person (irrespective of whether or not, at the time,
stock of any other class or classes has, or might have, voting power by reason
of the happening of any contingency).

                  "WEIGHTED AVERAGE LIFE TO MATURITY" means, as of the date of
determination with respect to any Indebtedness or Disqualified Stock, the
quotient obtained by dividing (a) the sum of the products of (i) the number of
years from the date of determination to the date or dates of each successive
scheduled principal or liquidation value payment of such Indebtedness or

                                       19

<PAGE>
Disqualified Stock, respectively, multiplied by (ii) the amount of each such
principal or liquidation value payment by (b) the sum of all such principal or
liquidation value payments.

                  "WHOLLY OWNED RESTRICTED SUBSIDIARY" means any Restricted
Subsidiary, all of the outstanding Voting Stock (other than directors'
qualifying shares or shares of foreign Restricted Subsidiaries required to be
owned by foreign nationals pursuant to applicable law) of which is owned,
directly or indirectly, by the Company.

                  "WHOLLY OWNED SUBSIDIARY" means any Subsidiary, all of the
outstanding Voting Stock (other than directors' qualifying shares or shares of
foreign Subsidiaries required to be owned by foreign nationals pursuant to
applicable law) of which is owned, directly or indirectly, by the Company.

Section 1.02 Other Definitions.

<TABLE>
<CAPTION>
                                                                             DEFINED
                                                                               IN
TERM                                                                         SECTION
<S>                                                                          <C>
"AUTHENTICATION ORDER" ................................................        2.02
"CHANGE OF CONTROL OFFER" .............................................        4.15
"CHANGE OF CONTROL PAYMENT" ...........................................        4.15
"CHANGE OF CONTROL PAYMENT DATE" ......................................        4.15
"COVENANT DEFEASANCE" .................................................        8.03
"DTC" .................................................................        2.01
"EVENT OF DEFAULT" ....................................................        6.01
"EXCESS PROCEEDS" .....................................................        4.10
"EXCESS PROCEEDS OFFER" ...............................................        4.10
"INCUR" ...............................................................        4.09
"LEGAL DEFEASANCE" ....................................................        8.02
"OFFER AMOUNT" ........................................................        3.09
"OFFER PERIOD" ........................................................        3.09
"PAYING AGENT" ........................................................        2.04
"PAYMENT DEFAULT" .....................................................        6.01
"PURCHASE DATE" .......................................................        3.09
"REGISTRAR" ...........................................................        2.04
"RELATED JUDGMENT" ....................................................       13.09
"RELATED PROCEEDINGS" .................................................       13.09
"REPURCHASE OFFER" ....................................................        3.09
"RESALE RESTRICTION TERMINATION DATE" .................................        2.07
"RESTRICTED PAYMENTS" .................................................        4.07
"SPECIFIED COURTS" ....................................................       13.09
</TABLE>

                                       20
<PAGE>
Section 1.03 Incorporation by Reference of Trust Indenture Act.

                  Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.

                  The following TIA terms used in this Indenture have the
following meanings:

                  "INDENTURE SECURITIES" means the Notes;

                  "INDENTURE SECURITY HOLDER" means a Holder of a Note;

                  "INDENTURE TO BE QUALIFIED" means this Indenture;

                  "INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the
Trustee; and

                  "OBLIGOR" on the Notes means the Company and any successor
obligor upon the Notes.

                  All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.

Section 1.04 Rules of Construction.

                  (a) Unless the context otherwise requires:

                  (i) a term has the meaning assigned to it;

                  (ii) an accounting term not otherwise defined has the meaning
         assigned to it in accordance with GAAP;

                  (iii) "or" is not exclusive;

                  (iv) words in the singular include the plural, and in the
         plural include the singular;

                  (v) provisions apply to successive events and transactions;
         and

                  (vi) references to sections of or rules under the Securities
         Act shall be deemed to include substitute, replacement of successor
         sections or rules adopted by the SEC from time to time.

                                       21
<PAGE>
                                  ARTICLE TWO
                                    THE NOTES

Section 2.01 Form and Dating.

                  (a) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A1 or A2 hereto.
The Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its authentication.
The Notes shall be issued in registered, global form without interest coupons
and only shall be in minimum denominations of $1,000 and integral multiples of
$1,000 in excess thereof.

                  The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company, the Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Note conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and
be controlling.

                  (b) Global Notes. Notes issued in global form shall be
substantially in the form of Exhibit A1 or A2 attached hereto (including the
Global Note Legend thereon and the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Notes issued in definitive form shall be
substantially in the form of Exhibit A1 attached hereto (but without the Global
Note Legend thereon and without the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate principal amount of outstanding Notes from time to
time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee in accordance with instructions given by the Holder thereof as required
by Section 2.07 hereof.

                  (c) Temporary Global Notes. Notes offered and sold in reliance
on Regulation S shall be issued initially in the form of the Regulation S
Temporary Global Note, which shall be deposited on behalf of the purchasers of
the Notes represented thereby with the Trustee, as custodian for The Depository
Trust Company ("DTC") in New York, New York, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Clearstream, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The Restricted
Period shall be terminated upon the receipt by the Trustee of (i) a written
certificate from Euroclear and Clearstream certifying that they have received
certification of non-United States beneficial ownership of 100% of the aggregate
principal amount at maturity of the Regulation S Temporary Global Note (except
to the extent of any Beneficial Owners thereof who acquired an interest therein
during the Restricted Period pursuant to another exemption from registration
under the Securities Act and who shall take delivery of a beneficial ownership
interest in a 144A Global Note bearing a Private Placement Legend, all as
contemplated by Section 2.07(a)(ii) hereof), and (ii) an Officers' Certificate
from the Company. Following the termination of the Restricted

                                       22
<PAGE>
Period, beneficial interests in the Regulation S Temporary Global Note shall be
exchanged for beneficial interests in Regulation S Permanent Global Notes
pursuant to the Applicable Procedures. Simultaneously with the authentication of
Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation S
Temporary Global Note. The aggregate principal amount of the Regulation S
Temporary Global Note and the Regulation S Permanent Global Notes may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee, as the case may be, in connection
with transfers of interest as hereinafter provided.

                  (d) Euroclear and Clearstream Procedures Applicable. The
provisions of the "Operating Procedures of the Euroclear System" and "Terms and
Conditions Governing Use of Euroclear" and the "General Terms and Conditions of
Cedel Bank" and "Customer Handbook" of Clearstream shall be applicable to
transfers of beneficial interests in the Regulation S Temporary Global Note and
the Regulation S Permanent Global Notes that are held by Participants through
Euroclear or Clearstream.

Section 2.02 Execution and Authentication.

                  Two Officers of the Company shall sign the Notes for the
Company by manual or facsimile signature.

                  If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.

                  A Note shall not be valid until authenticated by the manual
signature of the Trustee. Such signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.

                  The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is unlimited.

                  The Trustee shall, upon a written order of the Company signed
by two Officers of the Company (an "AUTHENTICATION ORDER") delivered to the
Trustee from time to time, authenticate Notes for original issue up to the
aggregate principal amount of $325 million, of which $225 million will be issued
on the date of this Indenture. The aggregate principal amount of Notes
outstanding at any time may not exceed such amount except as provided in Section
2.08 hereof.

                  The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.

Section 2.03 Methods of Receiving Payments on the Notes.

                  If a Holder of Notes has given wire transfer instructions to
the Company at least 10 Business Days before payment is due, the Company shall
pay all principal, interest and

                                       23
<PAGE>
premium and Liquidated Damages, if any, on that Holder's Notes in accordance
with those instructions. All other payments on Notes shall be made at the office
or agency of the Paying Agent and Registrar within the City and State of New
York unless the Company elects to make interest payments by check mailed to the
Holders at their addresses set forth in the register of Holders. Payments of
interest to the Trustee as Paying Agent, if the Trustee then acts as Paying
Agent, with respect to any Interest Payment Date (as defined in the Notes) shall
be made by the Company in immediately available funds for receipt by the Trustee
one Business Day prior to the such Interest Payment Date (or in no event later
than 12:30 p.m. Eastern Time on such Interest Payment Date).

Section 2.04 Registrar and Paying Agent.

                  (a) The Company shall maintain an office or agency where Notes
may be presented for registration of transfer or for exchange ("REGISTRAR") and
an office or agency where Notes may be presented for payment ("PAYING AGENT").
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and the
term "Paying Agent" includes any additional paying agent. The Company may change
any Paying Agent or Registrar without prior notice to any Holder. The Company
shall notify the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The Company
or any of its Subsidiaries may act as Paying Agent or Registrar.

                  (b) The Company initially appoints DTC to act as Depositary
with respect to the Global Notes.

                  (c) The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Custodian with respect to the Global
Notes.

Section 2.05 Paying Agent to Hold Money in Trust.

                  The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent shall hold in trust for the
benefit of the Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium or Liquidated Damages, if any, or interest on the
Notes, and shall notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or one of its
Subsidiaries) shall have no further liability for the money. If the Company or
any of its Subsidiaries acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.

                                       24
<PAGE>
Section 2.06 Holder Lists.

                  The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a). If
the Trustee is not the Registrar, the Company shall furnish to the Trustee at
least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Holders of Notes and the Company shall otherwise comply with TIA Section 312(a).

Section 2.07 Transfer and Exchange.

                  (a) Transfer and Exchange of Global Notes. A Global Note may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global Notes
shall be exchanged by the Company for Definitive Notes if (i) the Company
delivers to the Trustee notice from the Depositary that it is unwilling or
unable to continue to act as Depositary or that it is no longer a clearing
agency registered under the Exchange Act and, in either case, a successor
Depositary is not appointed by the Company within 90 days after the date of such
notice from the Depositary; (ii) the Company in its sole discretion determines
that the Global Notes (in whole but not in part) should be exchanged for
Definitive Notes and delivers a written notice to such effect to the Trustee;
provided that in no event shall the Regulation S Temporary Global Note be
exchanged by the Company for Definitive Notes prior to (x) the expiration of the
Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act; or (iii)
there shall have occurred and be continuing a Default or Event of Default with
respect to the Notes. Upon the occurrence of any of the preceding events in (i),
(ii) or (iii) above, Definitive Notes shall be issued in such names as the
Depositary shall instruct the Trustee. Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.08 and 2.11 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Note or any portion thereof, pursuant to this Section 2.07 or Section 2.08 or
2.11 hereof, shall be authenticated and delivered in the form of, and shall be,
a Global Note. A Global Note may not be exchanged for another Note other than as
provided in this Section 2.07(a), however, beneficial interests in a Global Note
may be transferred and exchanged as provided in Section 2.07(b), (c) or (f)
hereof.

                  (b) Transfer and Exchange of Beneficial Interests in the
Global Notes. The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial interests
in the Restricted Global Notes shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:

                  (i) Transfer of Beneficial Interests in the Same Global Note.
         Beneficial interests in any Restricted Global Note may be transferred
         to Persons who take delivery

                                       25
<PAGE>
         thereof in the form of a beneficial interest in the same Restricted
         Global Note in accordance with the transfer restrictions set forth in
         the Private Placement Legend; provided, however, that prior to the
         expiration of the Restricted Period, transfers of beneficial interests
         in the Regulation S Temporary Global Note may not be made to a U.S.
         Person or for the account or benefit of a U.S. Person (other than an
         Initial Purchaser). Beneficial interests in any Unrestricted Global
         Note may be transferred to Persons who take delivery thereof in the
         form of a beneficial interest in an Unrestricted Global Note. No
         written orders or instructions shall be required to be delivered to the
         Registrar to effect the transfers described in this Section 2.07(b)(i).

                  (ii) All Other Transfers and Exchanges of Beneficial Interests
         in Global Notes. In connection with all transfers and exchanges of
         beneficial interests that are not subject to Section 2.07(b)(i) above,
         the transferor of such beneficial interest must deliver to the
         Registrar either (A) (1) a written order from a Participant or an
         Indirect Participant given to the Depositary in accordance with the
         Applicable Procedures directing the Depositary to credit or cause to be
         credited a beneficial interest in another Global Note in an amount
         equal to the beneficial interest to be transferred or exchanged and (2)
         instructions given in accordance with the Applicable Procedures
         containing information regarding the Participant account to be credited
         with such increase or (B) (1) a written order from a Participant or an
         Indirect Participant given to the Depositary in accordance with the
         Applicable Procedures directing the Depositary to cause to be issued a
         Definitive Note in an amount equal to the beneficial interest to be
         transferred or exchanged and (2) instructions given by the Depositary
         to the Registrar containing information regarding the Person in whose
         name such Definitive Note shall be registered to effect the transfer or
         exchange referred to in (1) above; provided that in no event shall
         Definitive Notes be issued upon the transfer or exchange of beneficial
         interests in the Regulation S Temporary Global Note prior to (x) the
         expiration of the Restricted Period and (y) the receipt by the
         Registrar of any certificates required pursuant to Rule 903 under the
         Securities Act. Upon consummation of an Exchange Offer by the Company
         in accordance with Section 2.07(f) hereof, the requirements of this
         Section 2.07(b)(ii) shall be deemed to have been satisfied upon receipt
         by the Registrar of the instructions contained in the Letter of
         Transmittal delivered by the Holder of such beneficial interests in the
         Restricted Global Notes. Upon satisfaction of all of the requirements
         for transfer or exchange of beneficial interests in Global Notes
         contained in this Indenture and the Notes or otherwise applicable under
         the Securities Act, the Trustee shall adjust the principal amount at
         maturity of the relevant Global Notes pursuant to Section 2.07(i)
         hereof.

                  (iii) Transfer of Beneficial Interests to Another Restricted
         Global Note. A beneficial interest in any Restricted Global Note may be
         transferred to a Person who takes delivery thereof in the form of a
         beneficial interest in another Restricted Global Note if the transfer
         complies with the requirements of Section 2.07(b)(ii) above and the
         Registrar receives the following:

                           (A) if the transferee shall take delivery in the form
                  of a beneficial interest in the 144A Global Note, then the
                  transferor must deliver a certificate in the form of Exhibit B
                  hereto, including the certifications in item (1) thereof; and

                                       26
<PAGE>
                           (B) if the transferee shall take delivery in the form
                  of a beneficial interest in the Regulation S Temporary Global
                  Note or Regulation S Permanent Global Note, then the
                  transferor must deliver a certificate in the form of Exhibit B
                  hereto, including the certifications in item (2) thereof.

                  (iv) Transfer and Exchange of Beneficial Interests in a
         Restricted Global Note for Beneficial Interests in the Unrestricted
         Global Note. A beneficial interest in any Restricted Global Note may be
         exchanged by any Holder thereof for a beneficial interest in an
         Unrestricted Global Note or transferred to a Person who takes delivery
         thereof in the form of a beneficial interest in an Unrestricted Global
         Note if the exchange or transfer complies with the requirements of
         Section 2.07(b)(ii) above and:

                           (A) such exchange or transfer is effected pursuant to
                  the Exchange Offer in accordance with the Registration Rights
                  Agreement and the Holder of the beneficial interest to be
                  transferred, in the case of an exchange, or the transferee, in
                  the case of a transfer, certifies in the applicable Letter of
                  Transmittal that it is not (1) a Broker-Dealer, (2) a Person
                  participating in the distribution of the Exchange Notes or (3)
                  a Person who is an affiliate (as defined in Rule 144) of the
                  Company;

                           (B) such transfer is effected pursuant to the Shelf
                  Registration Statement in accordance with the Registration
                  Rights Agreement;

                           (C) such transfer is effected by a Broker-Dealer
                  pursuant to the Exchange Offer Registration Statement in
                  accordance with the Registration Rights Agreement; or

                           (D) the Registrar receives the following:

                                    (1) if the Holder of such beneficial
                           interest in a Restricted Global Note proposes to
                           exchange such beneficial interest for a beneficial
                           interest in an Unrestricted Global Note, a
                           certificate from such Holder in the form of Exhibit C
                           hereto, including the certifications in item (1)(a)
                           thereof; or

                                    (2) if the Holder of such beneficial
                           interest in a Restricted Global Note proposes to
                           transfer such beneficial interest to a Person who
                           shall take delivery thereof in the form of a
                           beneficial interest in an Unrestricted Global Note, a
                           certificate from such Holder in the form of Exhibit B
                           hereto, including the certifications in item (4)
                           thereof;

                  and, in each such case set forth in this subparagraph (D), if
                  the Registrar so requests or if the Applicable Procedures so
                  require, an Opinion of Counsel in form reasonably acceptable
                  to the Registrar to the effect that such exchange or transfer
                  is in compliance with the Securities Act and that the
                  restrictions on transfer contained herein and in the Private
                  Placement Legend are no longer required in order to maintain
                  compliance with the Securities Act.

                                       27
<PAGE>
                  If any such transfer is effected pursuant to subparagraph (B)
or (D) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.

                  Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.

                  (c) Transfer or Exchange of Beneficial Interests for
         Definitive Notes.

                  (i) Beneficial Interests in Restricted Global Notes to
         Restricted Definitive Notes. If any Holder of a beneficial interest in
         a Restricted Global Note proposes to exchange such beneficial interest
         for a Restricted Definitive Note or to transfer such beneficial
         interest to a Person who takes delivery thereof in the form of a
         Restricted Definitive Note, then, upon receipt by the Registrar of the
         following documentation:

                           (A) if the Holder of such beneficial interest in a
                  Restricted Global Note proposes to exchange such beneficial
                  interest for a Restricted Definitive Note, a certificate from
                  such Holder in the form of Exhibit C hereto, including the
                  certifications in item (2)(a) thereof;

                           (B) if such beneficial interest is being transferred
                  to a QIB in accordance with Rule 144A under the Securities
                  Act, a certificate to the effect set forth in Exhibit B
                  hereto, including the certifications in item (1) thereof;

                           (C) if such beneficial interest is being transferred
                  to a Non-U.S. Person in an offshore transaction in accordance
                  with Rule 903 or Rule 904 under the Securities Act, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (2) thereof;

                           (D) if such beneficial interest is being transferred
                  pursuant to an exemption from the registration requirements of
                  the Securities Act in accordance with Rule 144 under the
                  Securities Act, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications in item (3)(a)
                  thereof;

                           (E) if such beneficial interest is being transferred
                  to an Institutional Accredited Investor in reliance on an
                  exemption from the registration requirements of the Securities
                  Act other than those listed in subparagraphs (B) through (D)
                  above, a certificate to the effect set forth in Exhibit B
                  hereto, including the certifications, certificates and Opinion
                  of Counsel required by item (3) thereof, if applicable;

                           (F) if such beneficial interest is being transferred
                  to the Company or any of its Subsidiaries, a certificate to
                  the effect set forth in Exhibit B hereto, including the
                  certifications in item (3)(b) thereof; or

                                       28
<PAGE>
                           (G) if such beneficial interest is being transferred
                  pursuant to an effective registration statement under the
                  Securities Act, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications in item (3)(c)
                  thereof,

         the Trustee shall cause the aggregate principal amount of the
         applicable Global Note to be reduced accordingly pursuant to Section
         2.07(i) hereof, and the Company shall execute and the Trustee shall
         authenticate and deliver to the Person designated in the instructions a
         Definitive Note in the appropriate principal amount. Any Definitive
         Note issued in exchange for a beneficial interest in a Restricted
         Global Note pursuant to this Section 2.07(c) shall be registered in
         such name or names and in such authorized denomination or denominations
         as the Holder of such beneficial interest shall instruct the Registrar
         through instructions from the Depositary and the Participant or
         Indirect Participant. The Trustee shall deliver such Definitive Notes
         to the Persons in whose names such Notes are so registered. Any
         Definitive Note issued in exchange for a beneficial interest in a
         Restricted Global Note pursuant to this Section 2.07(c)(i) shall bear
         the Private Placement Legend and shall be subject to all restrictions
         on transfer contained therein.

                  (ii) Beneficial Interests in Regulation S Temporary Global
         Note to Definitive Notes. Notwithstanding Sections 2.07(c)(i)(A) and
         (C) hereof, a beneficial interest in the Regulation S Temporary Global
         Note may not be exchanged for a Definitive Note or transferred to a
         Person who takes delivery thereof in the form of a Definitive Note
         prior to (x) the expiration of the Restricted Period and (y) the
         receipt by the Registrar of any certificates required pursuant to Rule
         903(b)(3)(ii)(B) under the Securities Act, except in the case of a
         transfer pursuant to an exemption from the registration requirements of
         the Securities Act other than Rule 903 or Rule 904.

                  (iii) Beneficial Interests in Restricted Global Notes to
         Unrestricted Definitive Notes. A Holder of a beneficial interest in a
         Restricted Global Note may exchange such beneficial interest for an
         Unrestricted Definitive Note or may transfer such beneficial interest
         to a Person who takes delivery thereof in the form of an Unrestricted
         Definitive Note only if:

                           (A) such exchange or transfer is effected pursuant to
                  the Exchange Offer in accordance with the Registration Rights
                  Agreement and the Holder of such beneficial interest, in the
                  case of an exchange, or the transferee, in the case of a
                  transfer, certifies in the applicable Letter of Transmittal
                  that it is not (1) a Broker-Dealer, (2) a Person participating
                  in the distribution of the Exchange Notes or (3) a Person who
                  is an affiliate (as defined in Rule 144) of the Company;

                           (B) such transfer is effected pursuant to the Shelf
                  Registration Statement in accordance with the Registration
                  Rights Agreement;

                           (C) such transfer is effected by a Broker-Dealer
                  pursuant to the Exchange Offer Registration Statement in
                  accordance with the Registration Rights Agreement; or

                                       29
<PAGE>
                           (D) the Registrar receives the following:

                                    (1) if the Holder of such beneficial
                           interest in a Restricted Global Note proposes to
                           exchange such beneficial interest for a Definitive
                           Note that does not bear the Private Placement Legend,
                           a certificate from such Holder in the form of Exhibit
                           C hereto, including the certifications in item (1)(b)
                           thereof; or

                                    (2) if the Holder of such beneficial
                           interest in a Restricted Global Note proposes to
                           transfer such beneficial interest to a Person who
                           shall take delivery thereof in the form of a
                           Definitive Note that does not bear the Private
                           Placement Legend, a certificate from such Holder in
                           the form of Exhibit B hereto, including the
                           certifications in item (4) thereof;

                  and, in each such case set forth in this subparagraph (D), if
                  the Registrar so requests or if the Applicable Procedures so
                  require, an Opinion of Counsel in form reasonably acceptable
                  to the Registrar to the effect that such exchange or transfer
                  is in compliance with the Securities Act and that the
                  restrictions on transfer contained herein and in the Private
                  Placement Legend are no longer required in order to maintain
                  compliance with the Securities Act.

                  (iv) Beneficial Interests in Unrestricted Global Notes to
         Unrestricted Definitive Notes. If any Holder of a beneficial interest
         in an Unrestricted Global Note proposes to exchange such beneficial
         interest for a Definitive Note or to transfer such beneficial interest
         to a Person who takes delivery thereof in the form of a Definitive
         Note, then, upon satisfaction of the conditions set forth in Section
         2.07(b)(ii) hereof, the Trustee shall cause the aggregate principal
         amount of the applicable Global Note to be reduced accordingly pursuant
         to Section 2.07(i) hereof, and the Company shall execute and the
         Trustee shall authenticate and deliver to the Person designated in the
         instructions a Definitive Note in the appropriate principal amount. Any
         Definitive Note issued in exchange for a beneficial interest pursuant
         to this Section 2.07(c)(iv) shall be registered in such name or names
         and in such authorized denomination or denominations as the Holder of
         such beneficial interest shall instruct the Registrar through
         instructions from the Depositary and the Participant or Indirect
         Participant. The Trustee shall deliver such Definitive Notes to the
         Persons in whose names such Notes are so registered. Any Definitive
         Note issued in exchange for a beneficial interest pursuant to this
         Section 2.07(c)(iv) shall not bear the Private Placement Legend.

                  (d) Transfer and Exchange of Definitive Notes for Beneficial
         Interests.

                  (i) Restricted Definitive Notes to Beneficial Interests in
         Restricted Global Notes. If any Holder of a Restricted Definitive Note
         proposes to exchange such Note for a beneficial interest in a
         Restricted Global Note or to transfer such Restricted Definitive Notes
         to a Person who takes delivery thereof in the form of a beneficial
         interest in a Restricted Global Note, then, upon receipt by the
         Registrar of the following documentation:

                                       30
<PAGE>
                           (A) if the Holder of such Restricted Definitive Note
                  proposes to exchange such Note for a beneficial interest in a
                  Restricted Global Note, a certificate from such Holder in the
                  form of Exhibit C hereto, including the certifications in item
                  (2)(b) thereof;

                           (B) if such Restricted Definitive Note is being
                  transferred to a QIB in accordance with Rule 144A under the
                  Securities Act, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications in item (1)
                  thereof;

                           (C) if such Restricted Definitive Note is being
                  transferred to a Non-U.S. Person in an offshore transaction in
                  accordance with Rule 903 or Rule 904 under the Securities Act,
                  a certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (2) thereof;

                           (D) if such Restricted Definitive Note is being
                  transferred pursuant to an exemption from the registration
                  requirements of the Securities Act in accordance with Rule 144
                  under the Securities Act, a certificate to the effect set
                  forth in Exhibit B hereto, including the certifications in
                  item (3)(a) thereof;

                           (E) if such Restricted Definitive Note is being
                  transferred to an Institutional Accredited Investor in
                  reliance on an exemption from the registration requirements of
                  the Securities Act other than those listed in subparagraphs
                  (B) through (D) above, a certificate to the effect set forth
                  in Exhibit B hereto, including the certifications,
                  certificates and Opinion of Counsel required by item (3)
                  thereof, if applicable;

                           (F) if such Restricted Definitive Note is being
                  transferred to the Company or any of its Subsidiaries, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (3)(b) thereof; or

                           (G) if such Restricted Definitive Note is being
                  transferred pursuant to an effective registration statement
                  under the Securities Act, a certificate to the effect set
                  forth in Exhibit B hereto, including the certifications in
                  item (3)(c) thereof,

         the Trustee shall cancel the Restricted Definitive Note, increase or
         cause to be increased the aggregate principal amount of, in the case of
         clause (A) above, the appropriate Restricted Global Note, in the case
         of clause (B) above, the 144A Global Note, and in the case of clause
         (C) above, the Regulation S Global Note and in all other cases the IAI
         Global Note.

                  (ii) Restricted Definitive Notes to Beneficial Interests in
         Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
         exchange such Note for a beneficial interest in an Unrestricted Global
         Note or transfer such Restricted Definitive Note to a Person who takes
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note only if:

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<PAGE>
                           (A) such exchange or transfer is effected pursuant to
                  the Exchange Offer in accordance with the Registration Rights
                  Agreement and the Holder, in the case of an exchange, or the
                  transferee, in the case of a transfer, certifies in the
                  applicable Letter of Transmittal that it is not (1) a
                  Broker-Dealer, (2) a Person participating in the distribution
                  of the Exchange Notes or (3) a Person who is an affiliate (as
                  defined in Rule 144) of the Company;

                           (B) such transfer is effected pursuant to the Shelf
                  Registration Statement in accordance with the Registration
                  Rights Agreement;

                           (C) such transfer is effected by a Broker-Dealer
                  pursuant to the Exchange Offer Registration Statement in
                  accordance with the Registration Rights Agreement; or

                           (D) the Registrar receives the following:

                                    (1) if the Holder of such Definitive Notes
                           proposes to exchange such Notes for a beneficial
                           interest in the Unrestricted Global Note, a
                           certificate from such Holder in the form of Exhibit C
                           hereto, including the certifications in item (1)(c)
                           thereof; or

                                    (2) if the Holder of such Definitive Notes
                           proposes to transfer such Notes to a Person who shall
                           take delivery thereof in the form of a beneficial
                           interest in the Unrestricted Global Note, a
                           certificate from such Holder in the form of Exhibit B
                           hereto, including the certifications in item (4)
                           thereof;

         and, in each such case set forth in this subparagraph (D), if the
         Registrar so requests or if the Applicable Procedures so require, an
         Opinion of Counsel in form reasonably acceptable to the Registrar to
         the effect that such exchange or transfer is in compliance with the
         Securities Act and that the restrictions on transfer contained herein
         and in the Private Placement Legend are no longer required in order to
         maintain compliance with the Securities Act.

                  Upon satisfaction of the conditions of any of the
         subparagraphs in this Section 2.07(d)(ii), the Trustee shall cancel the
         Definitive Notes and increase or cause to be increased the aggregate
         principal amount of the Unrestricted Global Note.

                  (iii) Unrestricted Definitive Notes to Beneficial Interests in
         Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
         may exchange such Note for a beneficial interest in an Unrestricted
         Global Note or transfer such Definitive Notes to a Person who takes
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note at any time. Upon receipt of a request for
         such an exchange or transfer, the Trustee shall cancel the applicable
         Unrestricted Definitive Note and increase or cause to be increased the
         aggregate principal amount of one of the Unrestricted Global Notes.

                  If any such exchange or transfer from a Definitive Note to a
         beneficial interest is effected pursuant to subparagraphs (ii)(B),
         (ii)(D) or (iii) above at a time when an

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<PAGE>
         Unrestricted Global Note has not yet been issued, the Company shall
         issue and, upon receipt of an Authentication Order in accordance with
         Section 2.02 hereof, the Trustee shall authenticate one or more
         Unrestricted Global Notes in an aggregate principal amount equal to the
         principal amount of Definitive Notes so transferred.

                  (e) Transfer and Exchange of Definitive Notes for Definitive
Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance
with the provisions of this Section 2.07(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.07(e).

                  (i) Restricted Definitive Notes to Restricted Definitive
         Notes. Any Restricted Definitive Note may be transferred to and
         registered in the name of Persons who take delivery thereof in the form
         of a Restricted Definitive Note if the Registrar receives the
         following:

                           (A) if the transfer shall be made pursuant to Rule
                  144A under the Securities Act, then the transferor must
                  deliver a certificate in the form of Exhibit B hereto,
                  including the certifications in item (1) thereof;

                           (B) if the transfer shall be made pursuant to Rule
                  903 or Rule 904, then the transferor must deliver a
                  certificate in the form of Exhibit B hereto, including the
                  certifications in item (2) thereof; and

                           (C) if the transfer shall be made pursuant to any
                  other exemption from the registration requirements of the
                  Securities Act, then the transferor must deliver a certificate
                  in the form of Exhibit B hereto, including the certifications,
                  certificates and Opinion of Counsel required by item (3)
                  thereof, if applicable.

                  (ii) Restricted Definitive Notes to Unrestricted Definitive
         Notes. Any Restricted Definitive Note may be exchanged by the Holder
         thereof for an Unrestricted Definitive Note or transferred to a Person
         or Persons who take delivery thereof in the form of an Unrestricted
         Definitive Note if:

                           (A) such exchange or transfer is effected pursuant to
                  the Exchange Offer in accordance with the Registration Rights
                  Agreement and the Holder, in the case of an exchange, or the
                  transferee, in the case of a transfer, certifies in the
                  applicable Letter of Transmittal that it is not (1) a
                  Broker-Dealer, (2) a Person participating in the distribution
                  of the Exchange Notes or (3) a Person who is an affiliate (as
                  defined in Rule 144) of the Company;

                           (B) any such transfer is effected pursuant to the
                  Shelf Registration Statement in accordance with the
                  Registration Rights Agreement;

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<PAGE>
                           (C) any such transfer is effected by a Broker-Dealer
                  pursuant to the Exchange Offer Registration Statement in
                  accordance with the Registration Rights Agreement; or

                           (D) the Registrar receives the following:

                                    (1) if the Holder of such Restricted
                           Definitive Notes proposes to exchange such Notes for
                           an Unrestricted Definitive Note, a certificate from
                           such Holder in the form of Exhibit C hereto,
                           including the certifications in item (1)(d) thereof;
                           or

                                    (2) if the Holder of such Restricted
                           Definitive Notes proposes to transfer such Notes to a
                           Person who shall take delivery thereof in the form of
                           an Unrestricted Definitive Note, a certificate from
                           such Holder in the form of Exhibit B hereto,
                           including the certifications in item (4) thereof;

                  and, in each such case set forth in this subparagraph (D), if
                  the Registrar so requests, an Opinion of Counsel in form
                  reasonably acceptable to the Company to the effect that such
                  exchange or transfer is in compliance with the Securities Act
                  and that the restrictions on transfer contained herein and in
                  the Private Placement Legend are no longer required in order
                  to maintain compliance with the Securities Act.

                  (iii) Unrestricted Definitive Notes to Unrestricted Definitive
         Notes. A Holder of Unrestricted Definitive Notes may transfer such
         Notes to a Person who takes delivery thereof in the form of an
         Unrestricted Definitive Note. Upon receipt of a request to register
         such a transfer, the Registrar shall register the Unrestricted
         Definitive Notes pursuant to the instructions from the Holder thereof.

                  (f) Exchange Offer. Upon the occurrence of the Exchange Offer
in accordance with the Registration Rights Agreement, the Company shall issue
and, upon receipt of an Authentication Order in accordance with Section 2.02,
the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
Broker-Dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount. Any Notes that remain outstanding
after the consummation of the Exchange Offer, and Exchange Notes issued in
connection with the Exchange Offer, shall be treated as a single class of
securities under this Indenture.

                                       34
<PAGE>
                  (g) Legends. The following legends shall appear on the face of
all Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.

                  (i) Private Placement Legend. Except as permitted below, each
         Global Note and each Definitive Note (and all Notes issued in exchange
         therefor or substitution thereof) shall bear the legend in
         substantially the following form:

                           THIS NOTE AND THE GUARANTEES ENDORSED HEREON HAVE NOT
                  BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
                  (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
                  THIS NOTE NOR THE GUARANTEES ENDORSED HEREON NOR ANY INTEREST
                  OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED,
                  TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
                  THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
                  EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
                  OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE AND THE
                  GUARANTEES ENDORSED HEREON BY ITS ACCEPTANCE HEREOF AGREES TO
                  OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
                  DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
                  CLOSING DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR
                  ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE AND
                  THE GUARANTEES ENDORSED HEREON (OR ANY PREDECESSOR OF THIS
                  NOTE AND THE GUARANTEES ENDORSED HEREON) (THE "RESALE
                  RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY, THE
                  PARENT OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE
                  REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO
                  LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
                  144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
                  REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
                  DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
                  THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
                  IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
                  144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS
                  THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
                  REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO
                  ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
                  OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE
                  TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I)
                  PURSUANT TO CLAUSE (D) PRIOR TO THE END OF THE 40-DAY
                  DISTRIBUTION COMPLIANCE PERIOD WITHIN THE MEANING OF
                  REGULATION S UNDER THE SECURITIES ACT OR PURSUANT TO CLAUSE
                  (E) PRIOR TO THE RESALE RESTRICTION TERMINATION DATE TO
                  REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,

                                       35
<PAGE>
                  CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
                  THEM, AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT
                  A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS NOTE
                  IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
                  THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER
                  THE RESALE RESTRICTION TERMINATION DATE.

         Notwithstanding the foregoing, any Global Note or Definitive Note
         issued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii),
         (d)(iii), (e)(ii), (e)(iii) or (f) of this Section 2.07 (and all Notes
         issued in exchange therefor or substitution thereof) shall not bear the
         Private Placement Legend.

                  (ii) Global Note Legend. Each Global Note shall bear a legend
         in substantially the following form:

                  THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
                  INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR
                  THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
                  TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT
                  (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE
                  REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS
                  GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT
                  TO SECTION 2.07(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE
                  MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
                  SECTION 2.12 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
                  TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
                  CONSENT OF THE COMPANY.

                  (h) Regulation S Temporary Global Note Legend. The Regulation
S Temporary Global Note shall bear a legend in substantially the following form:

                  THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL
                  NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE
                  FOR DEFINITIVE NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS
                  DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS
                  OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
                  TO RECEIVE PAYMENT OF INTEREST HEREON.

                  (i) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in a particular Global Note have been exchanged
for Definitive Notes or a particular Global Note has been redeemed, repurchased
or canceled in whole and not in part, each such Global Note shall be returned to
or retained and canceled by the Trustee in accordance with Section 2.12 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who shall take delivery thereof
in the

                                       36
<PAGE>
form of a beneficial interest in another Global Note or for Definitive Notes,
the principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note by the Trustee
or by the Depositary at the direction of the Trustee to reflect such reduction;
and if the beneficial interest is being exchanged for or transferred to a Person
who shall take delivery thereof in the form of a beneficial interest in another
Global Note, such other Global Note shall be increased accordingly and an
endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

                  (j) General Provisions Relating to Transfers and Exchanges.

                  (i) To permit registrations of transfers and exchanges, the
         Company shall execute and the Trustee shall authenticate Global Notes
         and Definitive Notes upon the Company's order or at the Registrar's
         request.

                  (ii) No service charge shall be made to a Holder of a
         beneficial interest in a Global Note or to a Holder of a Definitive
         Note for any registration of transfer or exchange, but the Company may
         require payment of a sum sufficient to cover any transfer tax or
         similar governmental charge payable in connection therewith (other than
         any such transfer taxes or similar governmental charge payable upon
         exchange or transfer pursuant to Sections 2.11, 3.06, 3.09, 4.10, 4.15
         and 9.05 hereof).

                  (iii) The Registrar shall not be required to register the
         transfer of or exchange any Note selected for redemption in whole or in
         part, except the unredeemed portion of any Note being redeemed in part.

                  (iv) All Global Notes and Definitive Notes issued upon any
         registration of transfer or exchange of Global Notes or Definitive
         Notes shall be the valid and legally binding obligations of the
         Company, evidencing the same debt, and entitled to the same benefits
         under this Indenture, as the Global Notes or Definitive Notes
         surrendered upon such registration of transfer or exchange.

                  (v) The Company shall not be required (A) to issue, to
         register the transfer of or to exchange any Notes during a period
         beginning at the opening of business 15 days before the day of any
         selection of Notes for redemption under Section 3.02 hereof and ending
         at the close of business on the day of selection, (B) to register the
         transfer of or to exchange any Note so selected for redemption in whole
         or in part, except the unredeemed portion of any Note being redeemed in
         part or (C) to register the transfer of or to exchange a Note between a
         record date and the next succeeding interest payment date.

                  (vi) Prior to due presentment for the registration of a
         transfer of any Note, the Trustee, any Agent and the Company may deem
         and treat the Person in whose name any Note is registered as the
         absolute owner of such Note for the purpose of receiving payment of
         principal of and interest on such Notes and for all other purposes, and
         none of the Trustee, any Agent or the Company shall be affected by
         notice to the contrary.

                  (vii) The Trustee shall authenticate Global Notes and
         Definitive Notes in accordance with the provisions of Section 2.02
         hereof.

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<PAGE>
                  (viii) All certifications, certificates and Opinions of
         Counsel required to be submitted to the Registrar pursuant to this
         Section 2.07 to effect a registration of transfer or exchange may be
         submitted by facsimile with the original to follow by first class mail.

Section 2.08 Replacement Notes.

                  (a) If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon receipt of an Authentication Order, shall authenticate a replacement Note
if the Trustee's requirements are met. If required by the Trustee or the
Company, an indemnity bond must be supplied by the Holder that is sufficient in
the judgment of the Trustee and the Company to protect the Company, the Trustee,
any Agent and any authenticating agent from any loss that any of them may suffer
if a Note is replaced. The Company may charge for its expenses in replacing a
Note.

                  (b) Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.

Section 2.09 Outstanding Notes.

                  (a) The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Note effected
by the Trustee in accordance with the provisions hereof, and those described in
this Section as not outstanding. Except as set forth in Section 2.10 hereof, a
Note does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.

                  (b) If a Note is replaced pursuant to Section 2.08 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a protected purchaser.

                  (c) If the principal amount of any Note is considered paid
under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases
to accrue.

                  (d) If the Paying Agent (other than the Company, a Subsidiary
or an Affiliate of any of the foregoing) holds, on a redemption date or maturity
date, money sufficient to pay Notes payable on that date, then on and after that
date such Notes shall be deemed to be no longer outstanding and shall cease to
accrue interest.

Section 2.10 Treasury Notes.

                  In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, shall
be considered as though not outstanding, except that for the

                                       38
<PAGE>
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Notes that the Trustee knows are so
owned shall be so disregarded.

Section 2.11 Temporary Notes.

                  (a) Until certificates representing Notes are ready for
delivery, the Company may prepare and the Trustee, upon receipt of an
Authentication Order, shall authenticate temporary Notes. Temporary Notes shall
be substantially in the form of Definitive Notes but may have variations that
the Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate Definitive Notes in exchange for temporary
Notes.

                  (b) Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.

Section 2.12 Cancellation.

                  The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall dispose of
canceled Notes in accordance with its procedures for the disposition of canceled
securities in effect as of the date of such disposition (subject to the record
retention requirement of the Exchange Act). Certification of the disposition of
all canceled Notes shall be delivered to the Company. The Company may not issue
new Notes to replace Notes that it has paid or that have been delivered to the
Trustee for cancellation.

Section 2.13 Defaulted Interest.

                  If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.

Section 2.14 CUSIP Numbers.

                  The Company in issuing the Notes may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice

                                       39
<PAGE>
of a redemption and that reliance may be placed only on the other identification
numbers printed on the Notes, and any such redemption shall not be affected by
any defect in or omission of such numbers. The Company shall promptly notify the
Trustee of any change in the "CUSIP" numbers.

                                 ARTICLE THREE
                           REDEMPTION AND PREPAYMENT;
                           SATISFACTION AND DISCHARGE

Section 3.01 Notices to Trustee.

                  If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.

Section 3.02 Selection of Notes to Be Redeemed.

                  (a) If less than all of the Notes are to be redeemed or
purchased in an offer to purchase at any time, the Trustee shall select the
Notes to be redeemed or purchased among the Holders of the Notes in compliance
with the requirements of the principal national securities exchange, if any, on
which the Notes are listed or, if the Notes are not so listed, on a pro rata
basis, by lot or in accordance with any other method the Trustee considers fair
and appropriate. In the event of partial redemption by lot, the particular Notes
to be redeemed shall be selected, unless otherwise provided herein, not less
than 30 nor more than 60 days prior to the redemption date by the Trustee from
the outstanding Notes not previously called for redemption.

                  (b) The Trustee shall promptly notify the Company in writing
of the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount at maturity thereof to be redeemed. No
Notes in amounts of $1,000 or less shall be redeemed in part. Notes and portions
of Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.

Section 3.03 Notice of Redemption.

                  (a) Subject to the provisions of Section 3.09 hereof, at least
30 days but not more than 60 days before a redemption date, the Company shall
mail or cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address.

                  The notice shall identify the Notes to be redeemed and shall
state:

                  (i) the redemption date;

                                       40
<PAGE>
                  (ii) the redemption price;

                  (iii) if any Note is being redeemed in part, the portion of
         the principal amount at maturity of such Note to be redeemed and that,
         after the redemption date upon surrender of such Note, a new Note or
         Notes in principal amount equal to the unredeemed portion of the
         original Note shall be issued in the name of the Holder thereof upon
         cancellation of the original Note;

                  (iv) the name and address of the Paying Agent;

                  (v) that Notes called for redemption must be surrendered to
         the Paying Agent to collect the redemption price and become due on the
         date fixed for redemption;

                  (vi) that, unless the Company defaults in making such
         redemption payment, interest, if any, on Notes called for redemption
         ceases to accrue on and after the redemption date;

                  (vii) the paragraph of the Notes and/or Section of this
         Indenture pursuant to which the Notes called for redemption are being
         redeemed; and

                  (viii) that no representation is made as to the correctness or
         accuracy of the CUSIP number, if any, listed in such notice or printed
         on the Notes.

                  (b) At the Company's request, the Trustee shall give the
notice of redemption in the Company's name and at its expense; provided,
however, that the Company shall have delivered to the Trustee, at least 45 days
prior to the redemption date, an Officers' Certificate requesting that the
Trustee give such notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph. The notice, if mailed in the
manner provided herein shall be presumed to have been given, whether or not the
Holder receives such notice.

Section 3.04 Effect of Notice of Redemption.

                  Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.

Section 3.05 Deposit of Redemption Price.

                  (a) One Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption price of and accrued interest and Liquidated Damages, if any, on
all Notes to be redeemed on that date. The Trustee or the Paying Agent shall
promptly return to the Company any money deposited with the Trustee or the
Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Notes to be redeemed.

                  (b) If the Company complies with the provisions of the
preceding paragraph, on and after the redemption date, interest shall cease to
accrue on the Notes or the portions of Notes called for redemption. If a Note is
redeemed on or after an interest record date but on or

                                       41
<PAGE>
prior to the related interest payment date, then any accrued and unpaid interest
shall be paid to the Holder in whose name such Note was registered at the close
of business on such record date. If any Note called for redemption shall not be
so paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest shall be paid on the unpaid
principal, from the redemption date until such principal is paid, and to the
extent lawful on any interest not paid on such unpaid principal, in each case at
the rate provided in the Notes and in Section 4.01 hereof.

Section 3.06 Notes Redeemed in Part.

                  Upon surrender of a Note that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder at the expense of
the Company a new Note equal in principal amount to the unredeemed portion of
the Note surrendered. No Notes in denominations of $1,000 or less shall be
redeemed in part.

Section 3.07 Optional Redemption.

                  (a) Except as set forth in clause (b) and (c) of this Section
3.07, the Company shall not have the option to redeem the Notes pursuant to this
Section 3.07 prior to November 1, 2006. Thereafter, the Company may redeem all
or a part of the Notes from time to time, upon not less than 30 days' (or, if
all of the Notes are then held by an Initial Purchaser and/or any of its
affiliates, 15 days) nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the applicable
redemption date, if redeemed during the twelve-month period beginning on
November 1 of the years indicated below (subject to the right of Holders on the
relevant record date to receive interest due on the related interest payment
date):

<TABLE>
<CAPTION>
         YEAR                                     PERCENTAGE
         ----                                     ----------
<S>                                          <C>
         2006                                104.938%
         2007                                103.292%
         2008                                101.646%
         2009 and thereafter                 100.000%
</TABLE>

                  (b) At any time prior to November 1, 2004, the Company may
redeem up to 35% of the aggregate principal amount of Notes originally issued
hereunder at a redemption price of 109.875% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of the initial Public Offerings;
provided that (A) at least 65% of the aggregate principal amount of the Notes
originally issued under this Indenture remains outstanding immediately after the
occurrence of such redemption, excluding Notes held by the Parent, the Company
and its Subsidiaries; and (B) the redemption must occur within 60 days of the
date of the closing of such initial Public Equity Offering.

                                       42
<PAGE>
                  (c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.

Section 3.08 Mandatory Redemption.

                  Except as set forth in Section 4.10 and 4.15 hereof, the
Company is not required to make mandatory redemption or sinking fund payments
with respect to the Notes.

Section 3.09 Repurchase Offers.

                  In the event that, pursuant to Sections 4.10 and 4.15 hereof,
the Company shall be required to commence an offer to all Holders to purchase
their respective Notes (a "REPURCHASE OFFER"), it shall follow the procedures
specified below.

                  The Repurchase Offer shall remain open for a period of not
less than 30 and not more than 60 Business Days following its commencement and
no longer, except to the extent that a longer period is required by applicable
law (the "OFFER PERIOD"). No later than five Business Days after the termination
of the Offer Period (the "PURCHASE DATE"), the Company shall purchase the
principal amount of Notes required to be purchased pursuant to Sections 4.10 and
4.15 hereof (the "OFFER AMOUNT") or, if less than the Offer Amount has been
tendered, all Notes tendered in response to the Repurchase Offer. Payment for
any Notes so purchased shall be made in the same manner as interest payments are
made.

                  If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Repurchase Offer.

                  Upon the commencement of a Repurchase Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders, with
a copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Repurchase
Offer. The Repurchase Offer shall be made to all Holders. The notice, which
shall govern the terms of the Repurchase Offer, shall state:

                  (i) that the Repurchase Offer is being made pursuant to
         Section 4.10 or Section 4.15 hereof, and the length of time the
         Repurchase Offer shall remain open;

                  (ii) the Offer Amount, the purchase price and the Purchase
         Date;

                  (iii) that any Note not tendered or accepted for payment shall
         continue to accrete or accrue interest and Liquidated Damages, if any;

                  (iv) that, unless the Company defaults in making such payment,
         any Note (or portion thereof) accepted for payment pursuant to the
         Repurchase Offer shall cease to accrete or accrue interest and
         Liquidated Damages, if any, after the Purchase Date;

                  (v) that Holders electing to have a Note purchased pursuant to
         a Repurchase Offer may elect to have Notes purchased in integral
         multiples of $1,000 only;

                                       43
<PAGE>
                  (vi) that Holders electing to have a Note purchased pursuant
         to any Repurchase Offer shall be required to surrender the Note, with
         the form entitled "Option of Holder to Elect Purchase" on the reverse
         of the Note completed, or transfer by book-entry transfer, to the
         Company, a depositary, if appointed by the Company, or a Paying Agent
         at the address specified in the notice at least three days before the
         Purchase Date;

                  (vii) that Holders shall be entitled to withdraw their
         election if the Company, the Depositary or the Paying Agent, as the
         case may be, receives, not later than the expiration of the Offer
         Period, a telegram, telex, facsimile transmission or letter setting
         forth the name of the Holder, the principal amount of the Note the
         Holder delivered for purchase and a statement that such Holder is
         withdrawing its election to have such Note purchased;

                  (viii) that, if the aggregate amount of Notes surrendered by
         Holders exceeds the Offer Amount, the Trustee shall select the Notes to
         be purchased pursuant to the terms of Section 3.02 hereof (with such
         adjustments as may be deemed appropriate by the Trustee so that only
         Notes in denominations of $1,000, or integral multiples thereof, shall
         be purchased); and

                  (ix) that Holders whose Notes were purchased only in part
         shall be issued new Notes equal in principal amount to the unpurchased
         portion of the Notes surrendered (or transferred by book-entry
         transfer).

                  On the Purchase Date, the Company shall, to the extent lawful,
accept for payment on a pro rata basis to the extent necessary, the Offer Amount
of Notes (or portions thereof) tendered pursuant to the Repurchase Offer, or if
less than the Offer Amount has been tendered, all Notes tendered, and shall
deliver to the Trustee an Officers' Certificate stating that such Notes (or
portions thereof) were accepted for payment by the Company in accordance with
the terms of this Section 3.09. The Company, the Depositary or the Paying Agent,
as the case may be, shall promptly (but in any case not later than five days
after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of Notes tendered by such Holder, as the case may
be, and accepted by the Company for purchase, and the Company shall promptly
issue a new Note. The Trustee, upon written request from the Company shall
authenticate and mail or deliver such new Note to such Holder, in a principal
amount at maturity equal to any unpurchased portion of the Note surrendered. Any
Note not so accepted shall be promptly mailed or delivered by the Company to the
respective Holder thereof. The Company shall publicly announce the results of
the Repurchase Offer on the Purchase Date.

                  The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act, and any other securities laws and regulations thereunder
to the extent such laws or regulations are applicable in connection with the
repurchase of the Notes pursuant to an Excess Proceeds Offer.

                  Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.

                                       44
<PAGE>
Section 3.10 Application of Trust Money.

                  All money deposited with the Trustee pursuant to Section 12.02
shall be held in trust and applied by it, in accordance with the provisions of
the Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money has been deposited
with the Trustee; but such money need not be segregated from other funds except
to the extent required by law.

                                  ARTICLE FOUR
                                    COVENANTS

Section 4.01 Payment of Notes.

                  (a) The Company shall pay or cause to be paid the principal
of, premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or one of its Subsidiaries, holds as of 1:00 p.m. Eastern Time on the due date
money deposited by the Company in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.

                  (b) The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1% per annum in excess of the then applicable interest rate on the
Notes to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest, and Liquidated Damages (without regard to any applicable grace period)
at the same rate to the extent lawful.

Section 4.02 Maintenance of Office or Agency.

                  (a) The Company shall maintain in the Borough of Manhattan,
The City of New York, an office or agency (which may be an office of the Trustee
or an agent of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.

                  (b) The Company may also from time to time designate one or
more other offices or agencies where the Notes may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain

                                       45
<PAGE>
an office or agency in the Borough of Manhattan, The City of New York for such
purposes. The Company shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.

                  (c) The Company hereby designates the Corporate Trust Office
of the Trustee as one such office or agency of the Company in accordance with
Section 2.04 of this Indenture.

Section 4.03 Reports.

                  (a) Whether or not the Company is required to file reports
with the SEC, so long as any Notes are outstanding, the Company will file with
the SEC, within the time periods specified in the SEC's rules and regulations,
all such annual reports, quarterly reports and other documents that the Company
would be required to file if it were subject to Section 13(a) or 15(d) under the
Exchange Act. The Company will also be required (i) to supply to the Trustee and
each Holder, or supply to the Trustee for forwarding to each such Holder,
without cost to such Holder, copies of such reports and other documents within
15 days after the date on which the Company files such reports and documents
with the SEC or the date on which the Company would be required to file such
reports and documents if the Company were so required and (ii) if filing such
reports and documents with the SEC is not accepted by the SEC or is prohibited
under the Exchange Act, to supply at the Company's cost copies of such reports
and documents to any prospective Holder promptly upon written request. In
addition, the Company has agreed that, for so long as any Notes remain
outstanding, it will furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information specified in Rule
144A(d)(4) under the Securities Act.

                  (b) Notwithstanding subsection (a) above, so long as the
Parent guarantees the Notes, the reports, information and other documents
required to be filed and provided as described above may be those of the Parent,
rather than the Company, so long as such filings (i) would satisfy the
requirements of the Exchange Act and the regulations promulgated thereunder and
(ii) disclose the Company's results of operations and financial condition in the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" section in at least such detail as would be required if the Company
were filing such report.

Section 4.04 Compliance Certificate.

                  (a) The Company and each Guarantor (to the extent that such
Guarantor is so required under the TIA) shall deliver to the Trustee, within 90
days after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge, the Company has kept, observed, performed and fulfilled
its obligations under this Indenture and is not in default in the performance or
observance of any of the material terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred and be
continuing, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action the Company is taking or proposes to take
with respect thereto) and that to the best of his or her

                                       46
<PAGE>
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.

                  (b) If required under Section 314(a) of the Trust Indenture
Act, the year-end financial statements delivered pursuant to Section 4.03(a)
above shall be accompanied by a written statement of the Company's independent
public accountants (which shall be a firm of established national reputation)
that in making the examination necessary for certification of such financial
statements, nothing has come to their attention that would lead them to believe
that the Company has violated any provisions of Article Four or Article Five
hereof or, if any such violation has occurred, specifying the nature and period
of existence thereof, it being understood that such accountants shall not be
liable directly or indirectly to any Person for any failure to obtain knowledge
of any such violation.

                  (c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.

Section 4.05 Taxes.

                  The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, any material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.

Section 4.06 Stay, Extension and Usury Laws.

                  The Company and each of the Guarantors covenant (to the extent
that it may lawfully do so) that it shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company and each of the Guarantors (to the extent that it may lawfully do so)
hereby expressly waive all benefit or advantage of any such law, and covenant
that they shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.

Section 4.07 Restricted Payments.

                  (a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, take any of the following actions:

                  (i) declare or pay any dividend on, or make any distribution
         to holders of, any shares of the Capital Stock of the Company or any
         Restricted Subsidiary, other than (i) dividends or distributions
         payable solely in Qualified Equity Interests or (ii) dividends or
         distributions by a Restricted Subsidiary payable to the Company or a
         Wholly Owned

                                       47
<PAGE>
         Restricted Subsidiary or to all holders of Capital Stock of such
         Restricted Subsidiary on a pro rata basis;

                  (ii) purchase, redeem or otherwise acquire or retire for
         value, directly or indirectly, any shares of Capital Stock, or any
         options, warrants or other rights to acquire such shares of Capital
         Stock, of the Company, any direct or indirect parent of the Company or
         any Subsidiary of the Company (other than a Wholly Owned Restricted
         Subsidiary);

                  (iii) make any principal payment on, or repurchase, redeem,
         defease or otherwise acquire or retire for value, prior to any
         scheduled principal payment, sinking fund payment or maturity, any
         Subordinated Indebtedness; and

                  (iv) make any Investment (other than a Permitted Investment)
         in any Person (such payments or other actions described in (but not
         excluded from) clauses (a) through (d) being referred to as "RESTRICTED
         PAYMENTS"), unless at the time of, and immediately after giving effect
         to, the proposed Restricted Payment:

                  (i) no Default or Event of Default has occurred and is
         continuing;

                  (ii) the Company would, at the time of such Restricted Payment
         and after giving pro forma effect thereto as if such Restricted Payment
         had been made at the beginning of the applicable four-quarter period,
         have been permitted to incur at least $1.00 of additional Indebtedness
         pursuant to the Fixed Charge Coverage Ratio test set forth in Section
         4.09(a); and

                  (iii) the aggregate amount of all Restricted Payments made
         after the Reference Date does not exceed the sum of:

                           (A) 50% of the aggregate Consolidated Net Income of
                  the Company during the period (taken as one accounting period)
                  from the first day of the Company's first fiscal quarter
                  commencing after the Closing Date to the last day of the
                  Company's most recently ended fiscal quarter for which
                  internal financial statements are available at the time of
                  such proposed Restricted Payment (or, if such aggregate
                  cumulative Consolidated Net Income is a loss, minus 100% of
                  such amount); plus

                           (B) 100% of the aggregate net cash proceeds received
                  by the Company after the Reference Date as a capital
                  contribution or from the issuance or sale (other than to a
                  Subsidiary) of either (1) Qualified Equity Interests of the
                  Company or (2) debt securities or Disqualified Stock that have
                  been converted into or exchanged for Qualified Stock of the
                  Company, together with the aggregate net cash proceeds
                  received by the Company at the time of such conversion or
                  exchange.

                  (b) Notwithstanding the foregoing, the Company and its
Restricted Subsidiaries may take the following actions, so long as no Default or
Event of Default has occurred and is continuing or would occur:

                                       48
<PAGE>
                  (i) the payment of any dividend within 60 days after the date
         of declaration thereof, if at the declaration date such payment would
         not have been prohibited by the foregoing provisions;

                  (ii) the repurchase, redemption or other acquisition or
         retirement for value of any shares of Capital Stock of the Company, in
         exchange for, or out of the net cash proceeds of a substantially
         concurrent issuance and sale (other than to a Subsidiary) of, Qualified
         Equity Interests of the Company or of the Parent, the proceeds of which
         are contributed to the Company as a capital contribution on a
         substantially concurrent basis;

                  (iii) the purchase, redemption, defeasance or other
         acquisition or retirement for value of any Subordinated Indebtedness in
         exchange for, or out of the net cash proceeds of a substantially
         concurrent issuance and sale (other than to a Subsidiary) of, shares of
         Qualified Equity Interests of the Company or of the Parent, the
         proceeds of which are contributed to the Company as a capital
         contribution on a substantially concurrent basis;

                  (iv) the purchase, redemption, defeasance or other acquisition
         or retirement for value of Subordinated Indebtedness in exchange for,
         or out of the net cash proceeds of a substantially concurrent issuance
         or sale (other than to a Subsidiary) of, Subordinated Indebtedness, so
         long as the Company or a Restricted Subsidiary would be permitted to
         refinance such original Subordinated Indebtedness with such new
         Subordinated Indebtedness pursuant to clause (iv) of the definition of
         Permitted Indebtedness;

                  (v) the repurchase of any Subordinated Indebtedness at a
         purchase price not greater than 101% of the principal amount of such
         Subordinated Indebtedness in the event of a Change of Control in
         accordance with provisions similar to Section 4.15 hereof; provided
         that prior to or simultaneously with such repurchase, the Company has
         made the Change of Control Offer as provided in Section 4.15 hereof
         with respect to the Notes and has repurchased all Notes validly
         tendered for payment in connection with such Change of Control Offer;

                  (vi) the purchase, redemption, acquisition, cancellation or
         other retirement for value of shares of Capital Stock of the Company,
         options on any such shares or related stock appreciation rights or
         similar securities, or any dividend, distribution or advance to the
         Parent for the purchase, redemption, acquisition, cancellation or other
         retirement for value of shares of Capital Stock of the Parent, options
         on any such shares or related stock appreciation rights or similar
         securities, in each case held by officers, directors or employees or
         former officers, directors or employees (or their estates or
         beneficiaries under their estates) of the Company, the Parent or any
         Subsidiary of the Company, as applicable, or by any employee benefit
         plan of the Company, the Parent or any Subsidiary of the Company, as
         applicable, upon death, disability, retirement or termination of
         employment or pursuant to the terms of any employee benefit plan or any
         other agreement under which such shares of stock or related rights were
         issued; provided that the aggregate amount of cash applied by the
         Company for such purchase, redemption, acquisition, cancellation or
         other retirement of such shares of Capital Stock of the Company or the
         Parent after the Reference Date does not exceed $7.5 million in the
         aggregate (excluding for purposes of calculating such amount the
         aggregate amount

                                       49
<PAGE>
         received by any Person in connection with such purchase, redemption,
         acquisition, cancellation or other retirement of such shares that is
         concurrently used to repay loans made to such Person by the Company
         pursuant to clause (f) of the definition of "Permitted Investment");

                  (vii) the payment of dividends or other distributions or the
         making of loans or advances to the Parent in amounts required for the
         Parent to pay franchise taxes and other fees required to maintain its
         existence and provide for all other customary operating costs of the
         Parent to the extent attributable to the ownership and operation of the
         Company and its Restricted Subsidiaries, including, without limitation,
         in respect of director fees and expenses, administrative, legal and
         accounting services provided by third parties and other customary costs
         and expenses including all costs and expenses with respect to filings
         with the SEC;

                  (viii) the payment of dividends or other distributions by the
         Company to the Parent in amounts required to pay the tax obligations of
         the Parent attributable to the Company and its Subsidiaries, determined
         as if the Company and its Subsidiaries had filed a separate
         consolidated, combined or unitary return for the relevant taxing
         jurisdiction; provided that (x) the amount of dividends paid pursuant
         to this clause (viii) to enable the Parent to pay Federal and state
         income taxes (and franchise taxes based on income) at any time shall
         not exceed the amount of such Federal and state income taxes (and
         franchise taxes based on income) actually owing by the Parent at such
         time to the respective tax authorities for the respective period and
         (y) any refunds received by the Parent attributable to the Company or
         any of its Restricted Subsidiaries shall promptly be remitted by the
         Parent to the Company through a contribution or purchase of common
         stock (other than Disqualified Stock) of the Company;

                  (ix) the payment of dividends or other distributions or the
         making of loans or advances to the Parent in amounts required for the
         Parent to pay to the Equity Sponsors an annual amount not to exceed
         $500,000 for payment of management consulting or financial advisory
         services provided to the Company or any of the Subsidiaries; and

                  (x) other Restricted Payments not to exceed $10 million at any
         one time outstanding.

                  (b) The actions described in clauses (v), (vi), (vii), (viii),
(ix) and (x) of Section 4.07(b) will be Restricted Payments that will be
permitted to be taken in accordance with this Section 4.07 but will reduce the
amount that would otherwise be available for Restricted Payments under clause
(iv)(iii) of Section 4.07(a) hereof and the actions described in clauses (i),
(ii), (iii) and (iv) of Section 4.07(b) will be Restricted Payments that will be
permitted to be taken in accordance with this Section 4.07 and will not reduce
the amount that would otherwise be available for Restricted Payments under
clause (iv)(iii) of Section 4.07(a) hereof.

                  For the purpose of making any calculations under this
Indenture (i) if a Restricted Subsidiary is designated an Unrestricted
Subsidiary, the Company will be deemed to have made an Investment in an amount
equal to the greater of the fair market value or net book value of the net
assets of such Restricted Subsidiary at the time of such designation as
determined by the

                                       50
<PAGE>
Board of the Company, and (ii) any property transferred to or from an
Unrestricted Subsidiary will be valued at fair market value at the time of such
transfer, as determined by the Board of the Company. The amount of all
Restricted Payments (other than cash) shall be the fair market value on the date
of the Restricted Payment of the asset(s) or securities proposed to be
transferred or issued by the Company or such Restricted Subsidiary, as the case
may be, pursuant to the Restricted Payment. The fair market value of any
non-cash Restricted Payment shall be determined by the Board of the Company
whose resolution with respect thereto shall be delivered to the Trustee, such
determination to be based upon an opinion or appraisal issued by an accounting,
appraisal or investment banking firm of national standing if such fair market
value exceeds $10 million. Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officers' Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required under this Section 4.07 were computed,
together with a copy of any fairness opinion or appraisal required by this
Indenture.

                  If the aggregate amount of all Restricted Payments calculated
under the foregoing provision includes an Investment in an Unrestricted
Subsidiary or other Person that thereafter becomes a Restricted Subsidiary, the
aggregate amount of all Restricted Payments calculated under the foregoing
provision will be reduced by the lesser of (x) the net asset value of such
Subsidiary at the time it becomes a Restricted Subsidiary and (y) the initial
amount of such Investment.

                  If an Investment resulted in the making of a Restricted
Payment, the aggregate amount of all Restricted Payments calculated under the
foregoing provision will be reduced by the amount of any net reduction in such
Investment (resulting from the payment of interest or dividends, loan repayment,
transfer of assets or otherwise, other than the redesignation of an Unrestricted
Subsidiary or other Person as a Restricted Subsidiary), to the extent such net
reduction is not included in the Company's Consolidated Net Income; provided
that the total amount by which the aggregate amount of all Restricted Payments
may be reduced may not exceed the lesser of (x) the cash proceeds received by
the Company and its Restricted Subsidiaries in connection with such net
reduction and (y) the initial amount of such Investment.

                  In computing the Consolidated Net Income of the Company for
purposes of Section 4.07(a)(iv)(iii)(A) hereof, (i) the Company may use audited
financial statements for the portions of the relevant period for which audited
financial statements are available on the date of determination and unaudited
financial statements and other current financial data based on the books and
records of the Company for the remaining portion of such period and (ii) the
Company will be permitted to rely in good faith on the financial statements and
other financial data derived from its books and records that are available on
the date of determination. If the Company makes a Restricted Payment that, at
the time of the making of such Restricted Payment, would in the good faith
determination of the Company be permitted under the requirements of this
Indenture, such Restricted Payment will be deemed to have been made in
compliance with this Indenture notwithstanding any subsequent adjustments made
in good faith to the Company's financial statements affecting Consolidated Net
Income of the Company for any period.

                                       51
<PAGE>
Section 4.08 Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.

                  (a) The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any Restricted Subsidiary to (i) pay dividends, in cash or
otherwise, or make any other distributions on or in respect of its Capital
Stock, (ii) pay any Indebtedness owed to the Company or any other Restricted
Subsidiary, (iii) make loans or advances to the Company or any other Restricted
Subsidiary or (iv) transfer any of its properties or assets to the Company or
any other Restricted Subsidiary.

                  (b) However, the preceding restrictions will not apply to
encumbrances or restrictions existing under or by reason of:

                  (i) any agreement (including the Credit Agreement) in effect
         on the Reference Date;

                  (ii) customary non-assignment provisions of any lease, license
         or other contract entered into in the ordinary course of business by
         the Company or any Restricted Subsidiary;

                  (iii) the refinancing or successive refinancing of
         Indebtedness incurred under the agreements (including the Credit
         Agreement) in effect on the Reference Date, so long as such
         encumbrances or restrictions are no more restrictive, taken as a whole,
         than those contained in such original agreement;

                  (iv) any agreement or other instrument of a Person acquired by
         the Company or any Restricted Subsidiary in existence at the time of
         such acquisition (but not created in contemplation thereof), which
         encumbrance or restriction is not applicable to any Person, or the
         properties or assets of any Person, other than the Person, or the
         property or assets of the Person, so acquired;

                  (v) purchase money obligations for acquired property permitted
         under Section 4.09 hereof that impose restrictions of the nature
         described in clause (iv) of Section 4.08(a) hereof on the property so
         acquired;

                  (vi) any agreement for the sale of a Restricted Subsidiary or
         an asset that restricts distributions by that Restricted Subsidiary or
         transfers of such asset pending its sale;

                  (vii) secured Indebtedness otherwise permitted to be incurred
         pursuant to Section 4.12 hereof that limits the right of the debtor to
         dispose of the assets securing such Indebtedness;

                  (viii) restrictions on cash or other deposits or net worth
         imposed by leases entered into in the ordinary course of business;

                  (ix) Non-Recourse Indebtedness of any Permitted Joint Venture
         permitted to be incurred under this Indenture;

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<PAGE>
                  (x) applicable law or regulation;

                  (xi) a Receivables Program with respect to a Receivables
         Subsidiary; and

                  (xii) customary provisions in joint venture, limited liability
         company operating, partnership, shareholder and other similar
         agreements entered into in the ordinary course of business reasonably
         consistent with past practice by the Company or any Restricted
         Subsidiary.

Section 4.09 Incurrence of Indebtedness and Issuance of Disqualified Stock.

                  (a) The Company will not, and will not permit any Restricted
Subsidiary to, create, issue, assume, guarantee or in any manner become directly
or indirectly liable for the payment of, or otherwise incur (collectively,
"INCUR"), any Indebtedness (including Acquired Indebtedness and the issuance of
Disqualified Stock), except that the Company and any Subsidiary Guarantors may
incur Indebtedness if, at the time of such event, the Fixed Charge Coverage
Ratio for the immediately preceding four full fiscal quarters for which internal
financial statements are available, taken as one accounting period, would have
been equal to at least 2.0 to 1.0.

                  (b) In making the foregoing calculation for any four-quarter
period that includes the Reference Date, pro forma effect will be given to the
Transactions, as if such transactions had occurred at the beginning of such
four-quarter period. In addition (but without duplication), in making the
foregoing calculation, pro forma effect will be given to:

                  (i) the incurrence of such Indebtedness and (if applicable)
         the application of the net proceeds therefrom, including to refinance
         other Indebtedness, as if such Indebtedness was incurred and the
         application of such proceeds occurred at the beginning of such
         four-quarter period;

                  (ii) the incurrence, repayment or retirement of any other
         Indebtedness by the Company or its Restricted Subsidiaries since the
         first day of such four-quarter period as if such Indebtedness was
         incurred, repaid or retired at the beginning of such four-quarter
         period; and

                  (iii) the acquisition (whether by purchase, merger or
         otherwise) or disposition (whether by sale, merger or otherwise) of any
         company, entity or business acquired or disposed of by the Company or
         its Restricted Subsidiaries, as the case may be, since the first day of
         such four-quarter period, as if such acquisition or disposition
         occurred at the beginning of such four-quarter period. In making a
         computation under the foregoing clause (i) or (ii), (A) the amount of
         Indebtedness under a revolving credit facility will be computed based
         on the average daily balance of such Indebtedness during such
         four-quarter period, (B) if such Indebtedness bears, at the option of
         the Company, a fixed or floating rate of interest, interest thereon
         will be computed by applying, at the option of the Company, either the
         fixed or floating rate, and (C) the amount of any Indebtedness that
         bears interest at a floating rate will be calculated as if the rate in
         effect on the date of determination had been the applicable rate for
         the entire period (taking into account any

                                       53
<PAGE>
         Hedging Obligations applicable to such Indebtedness if such Hedging
         Obligations have a remaining term at the date of determination in
         excess of 12 months).

                  (c) Notwithstanding the foregoing, the Company may, and may
         permit its Restricted Subsidiaries to, incur the following Indebtedness
         ("PERMITTED INDEBTEDNESS"):

                  (i) Indebtedness of the Company or any Subsidiary Guarantor
         under the Credit Agreement (and the incurrence by any Guarantor of
         guarantees thereof) in an aggregate principal amount at any one time
         outstanding not to exceed $375 million, less any amounts applied to the
         permanent reduction of such credit facilities pursuant to the
         provisions of Section 4.10 hereof;

                  (ii) Indebtedness represented by the Notes (other than the
         Additional Notes) and the Guarantees;

                  (iii) Existing Indebtedness;

                  (iv) the incurrence by the Company of Permitted Refinancing
         Indebtedness in exchange for, or the net cash proceeds of which are
         used to refund, refinance or replace, any Indebtedness that is
         permitted to be incurred under clause (ii) or (iii) above;

                  (v) Indebtedness owed by the Company to any Restricted
         Subsidiary or owed by any Restricted Subsidiary to the Company or a
         Restricted Subsidiary (provided that such Indebtedness is held by the
         Company or such Restricted Subsidiary); provided that:

                           (A) any Indebtedness of the Company or any Subsidiary
                  Guarantor owing to any such Restricted Subsidiary is unsecured
                  and subordinated in right of payment from and after such time
                  as the Notes shall become due and payable (whether at Stated
                  Maturity, acceleration, or otherwise) to the payment and
                  performance of the Company's obligations under the Notes or
                  the Subsidiary Guarantor's obligations under its Guarantee, as
                  the case may be; and

                           (B) (x) any subsequent issuance or transfer of Equity
                  Interests that results in any such Indebtedness being held by
                  a Person other than the Company or a Restricted Subsidiary
                  thereof and (y) any sale or other transfer of any such
                  Indebtedness to a Person that is not either the Company or a
                  Restricted Subsidiary thereof, shall be deemed, in each case,
                  to constitute an incurrence of such Indebtedness by the
                  Company or such Restricted Subsidiary, as the case may be,
                  that was not permitted by this clause (v);

                  (vi) Indebtedness of the Company or any Restricted Subsidiary
         under Hedging Obligations incurred in the ordinary course of business;

                  (vii) Indebtedness of the Company or any Restricted Subsidiary
         consisting of guarantees, indemnities or obligations in respect of
         purchase price adjustments in connection with the acquisition or
         disposition of assets, including, without limitation, shares of Capital
         Stock;

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<PAGE>
                  (viii) either (A) Capitalized Lease Obligations of the Company
         or any Restricted Subsidiary or (B) Indebtedness under purchase money
         mortgages or secured by purchase money security interests so long as
         (x) such Indebtedness is not secured by any property or assets of the
         Company or any Restricted Subsidiary other than the property and assets
         so acquired and (y) such Indebtedness is created within 90 days of the
         acquisition of the related property; provided that the aggregate amount
         of Indebtedness under clauses (A) and (B) does not exceed 15% of
         Consolidated Tangible Assets at any one time outstanding;

                  (ix) Guarantees by any Restricted Subsidiary made in
         accordance with the provisions of Section 4.19 hereof;

                  (x) Indebtedness arising from the honoring by a bank or other
         financial institution of a check, draft or similar instrument
         inadvertently (except in the case of daylight overdrafts) drawn against
         insufficient funds in the ordinary course of business; provided that
         such Indebtedness is extinguished within two business days of
         incurrence;

                  (xi) Indebtedness of the Company or any of its Restricted
         Subsidiaries represented by letters of credit for the account of the
         Company or such Restricted Subsidiary, as the case may be, in order to
         provide security for workers' compensation claims, payment obligations
         in connection with self-insurance or similar requirements in the
         ordinary course of business;

                  (xii) the incurrence of Non-Recourse Indebtedness by Permitted
         Joint Ventures that are Restricted Subsidiaries;

                  (xiii) Indebtedness incurred by a Receivables Subsidiary
         pursuant to a Receivables Program; provided that, after giving effect
         to any such incurrence of Indebtedness, the aggregate principal amount
         of all Indebtedness incurred under this clause (xiii) and then
         outstanding does not exceed $30 million; and

                  (xiv) Indebtedness of the Company, any Restricted Subsidiary
         or any Permitted Joint Venture not permitted by any other clause of
         this definition, in an aggregate principal amount not to exceed $30
         million at any one time outstanding.

                  (d) For purposes of determining compliance with this Section
4.09, in the event that any proposed Indebtedness meets the criteria of more
than one of the categories of Permitted Indebtedness described in clauses (i)
through (xiv) above, or is entitled to be incurred pursuant to Section 4.09(a)
hereof, the Company will be permitted to classify such item of Indebtedness on
the date of its incurrence, or later reclassify all or a portion of such item of
Indebtedness, in any manner that complies with this Section 4.09. Indebtedness
under the Credit Agreement incurred on the Reference Date shall be deemed to
have been incurred on the Reference Date in reliance on the exception provided
by clause (i) of the definition of Permitted Indebtedness.

                                       55
<PAGE>
Section 4.10 Asset Sales.

                  (a) The Company will not, and will not permit any Restricted
Subsidiary to, engage in any Asset Sale unless (i) the consideration received by
the Company or such Restricted Subsidiary for such Asset Sale is not less than
the fair market value of the assets sold evidenced by a resolution of the board
of directors of such entity set forth in an Officers' Certificate delivered to
the Trustee and (ii) the consideration received by the Company or the relevant
Restricted Subsidiary in respect of such Asset Sale consists of at least 75%
cash or Cash Equivalents (for purposes of this clause (ii), cash and Cash
Equivalents includes (1) any liabilities (as reflected in the Company's
consolidated balance sheet) of the Company or any Restricted Subsidiary (other
than contingent liabilities and liabilities that are by their terms subordinated
to the Notes or any Note Guarantee) that are assumed by any transferee of any
such assets or other property in such Asset Sale, and where the Company or the
relevant Restricted Subsidiary is released from any further liability in
connection therewith with respect to such liabilities, (2) any securities, notes
or other similar obligations received by the Company or any such Restricted
Subsidiary from such transferee that are converted within 180 days of the
consummation of the related Asset Sale by the Company or such Restricted
Subsidiary into cash and Cash Equivalents (to the extent of the net cash
proceeds or the Cash Equivalents (net of related costs) received upon such
conversion) and (3) any Designated Noncash Consideration received by the Company
or any such Restricted Subsidiary in the Asset Sale having an aggregate fair
market value, as determined by the Board of the Company, taken together with all
other Designated Noncash Consideration received pursuant to this clause that is
at that time outstanding, not to exceed the greater of:

                           (A) $10 million; and

                           (B) 15% of Consolidated Tangible Assets at the time
                  of the receipt of such Designated Noncash Consideration (with
                  the fair market value of each item of such Designated Noncash
                  Consideration being measured at the time received and without
                  giving effect to subsequent changes in value).

                  (b) If the Company or any Restricted Subsidiary engages in an
Asset Sale, the Company may, at its option, within 12 months after such Asset
Sale, (i) apply all or a portion of the Net Cash Proceeds to the permanent
reduction of amounts outstanding under the Credit Agreement (and to
correspondingly reduce the commitments, if any, with respect thereto) or to the
permanent repayment of other Senior Indebtedness of the Company or a Restricted
Subsidiary, provided that the repayment of any Indebtedness incurred under the
Credit Agreement in connection with the acquisition of any Facility with the
proceeds of any subsequent Sale and Leaseback Transaction relating to such
Facility shall not be required to result in the permanent reduction of the
amounts outstanding under the Credit Agreement or correspondingly permanently
reduce the commitments thereunder, or (ii) invest (or enter into a legally
binding agreement to invest) all or a portion of such Net Cash Proceeds in
properties and assets to replace the properties and assets that were the subject
of the Asset Sale or in properties and assets that will be used in the
businesses of the Company or its Restricted Subsidiaries, as the case may be,
existing on the Reference Date or in businesses the same, similar or reasonably
related thereto. If any such legally binding agreement to invest such Net Cash
Proceeds is terminated, the Company may, within 90 days of such termination or
within 12 months of such

                                       56
<PAGE>
Asset Sale, whichever is later, invest such Net Cash Proceeds as provided in
clause (i) or (ii) (without regard to the parenthetical contained in such clause
(ii)) above. Pending the final application of any such Net Cash Proceeds, the
Company may temporarily reduce revolving credit borrowings or otherwise invest
such Net Cash Proceeds in a manner that is not prohibited by this Indenture. The
amount of such Net Cash Proceeds not so used as set forth above in this
paragraph shall constitute "EXCESS PROCEEDS".

                  (c) When the aggregate amount of Excess Proceeds exceeds $10
million, the Company will, within 30 days thereafter, make an offer to purchase
(an "EXCESS PROCEEDS OFFER") from all Holders of Notes on a pro rata basis, in
accordance with the procedures set forth in this Indenture, the maximum
principal amount (expressed as a multiple of $1,000) of Notes that may be
purchased with the Excess Proceeds, at a purchase price in cash equal to 100% of
the principal amount thereof, plus accrued interest and Liquidated Damages, if
any, to the date such offer to purchase is consummated. To the extent that the
aggregate principal amount of Notes tendered pursuant to such offer to purchase
is less than the Excess Proceeds, the Company may use such deficiency for
general corporate purposes. If the aggregate principal amount of Notes validly
tendered and not withdrawn by holders thereof exceeds the Excess Proceeds, the
Notes to be purchased will be selected on a pro rata basis. Upon completion of
such offer to purchase, the amount of Excess Proceeds will be reset to zero.

Section 4.11 Transactions with Affiliates.

                  (a) The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, enter into or suffer to exist any
transaction with, or for the benefit of, any Affiliate of the Company
("Interested Persons"), unless (i) such transaction is on terms that are no less
favorable to the Company or such Restricted Subsidiary, as the case may be, than
those that could have been obtained in an arm's-length transaction with third
parties who are not Interested Persons and (ii) the Company delivers to the
Trustee (x) with respect to any transaction or series of related transactions
entered into after the Reference Date involving aggregate payments in excess of
$5 million, a resolution of the Company's Board set forth in an officers'
certificate certifying that such transaction or transactions complies with
clause (i) above and that such transaction or transactions have been approved by
the Board (including a majority of the Disinterested Directors) of the Company
and (y) with respect to a transaction or series of related transactions
involving aggregate payments equal to or greater than $10 million, a written
opinion as to the fairness to the Company or such Restricted Subsidiary of such
transaction or series of transactions from a financial point of view issued by
an accounting, appraisal or investment banking firm, in each case of national
standing.

                  (b) The foregoing Section 4.11(a) will not restrict:

                  (i) transactions among the Company and/or its Restricted
         Subsidiaries;

                  (ii) the Company from paying reasonable and customary regular
         compensation, indemnification, reimbursement and fees to officers of
         the Company or any Restricted Subsidiary and to directors of the
         Company or any Restricted Subsidiary who are not employees of the
         Company or any Restricted Subsidiary;

                                       57
<PAGE>
                  (iii) transactions permitted by Section 4.07;

                  (iv) advances to employees for moving, entertainment and
         travel expenses and similar expenditures in the ordinary course of
         business and consistent with past practice;

                  (v) any Receivables Program of the Company or a Restricted
         Subsidiary;

                  (vi) the agreements listed on Schedule II to this Indenture,
         in each case as in effect as of the Reference Date or any amendment
         thereto (so long as the amended agreement is not more disadvantageous
         to the Holders of the Notes in any material respect than such agreement
         immediately prior to such amendment) or any transaction contemplated
         thereby; and

                  (vii) sales of Equity Interests to Affiliates.

Section 4.12 Liens.

                  (a) The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist
any Lien securing Pari Passu Indebtedness or Subordinated Indebtedness of the
Company on or with respect to any of its property or assets, including any
shares of stock or Indebtedness of any Restricted Subsidiary, whether owned at
the Closing Date or thereafter acquired, or any income, profits or proceeds
therefrom, or assign or otherwise convey any right to receive income thereon,
unless:

                  (i) in the case of any Lien securing Subordinated
         Indebtedness, the Notes are secured by a Lien on such property, assets
         or proceeds that is senior in priority to such Lien; and

                  (ii) in the case of any Lien securing Pari Passu Indebtedness,
         the Notes are secured by a Lien on such property, assets or proceeds
         that is senior in priority to or ranks equally with such Lien.

                  (b) The Company will not permit any Subsidiary Guarantor to,
directly or indirectly, create, incur, assume or suffer to exist any Lien
securing Pari Passu Indebtedness or Subordinated Indebtedness of such Subsidiary
Guarantor on or with respect to such Subsidiary Guarantor's properties or
assets, including any shares of stock or Indebtedness of any other Restricted
Subsidiary, whether owned at the date of this Indenture or thereafter acquired,
or any income, profits or proceeds therefrom, or assign or otherwise convey any
right to receive income thereon, unless:

                  (i) in the case of any Lien securing Pari Passu Indebtedness
         of such Subsidiary Guarantor, each Guarantee of such Subsidiary
         Guarantor is secured by a Lien on such property, assets or proceeds
         that is senior in priority to or ranks equally with such Lien; and

                  (ii) in the case of any Lien securing Subordinated
         Indebtedness of such Subsidiary Guarantor, each Guarantee of such
         Subsidiary Guarantor is secured by a Lien on such property, assets or
         proceeds that is senior in priority to such Lien.

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<PAGE>
Section 4.13 Corporate Existence.

                  Subject to Article Five, the Parent and the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect the corporate existence, rights (charter and statutory) and franchises of
the Parent, the Company and each Subsidiary; provided that the Company shall not
be required to preserve any such right or franchise if the Board shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries as a whole and that the loss
thereof is not disadvantageous in any material respect to the Holders.

Section 4.14 Limitation on Layering Debt.

                  Neither the Company nor any Guarantor will incur, create,
issue, assume, guarantee or otherwise become liable for any Indebtedness or
guarantee, as applicable, that is subordinate or junior in right of payment to
any Senior Indebtedness and senior in any respect in right of payment to the
Notes or such Guarantor's Guarantee, respectively.

Section 4.15 Offer to Repurchase upon a Change of Control.

                  (a) Upon the occurrence of a Change of Control, each Holder
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "CHANGE OF CONTROL OFFER") at an offer price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase
(the "CHANGE OF CONTROL PAYMENT"). Within 30 days following any Change of
Control, the Company shall notify the Trustee thereof and mail a notice, by
first-class mail, postage prepaid, to each Holder, describing the transaction or
transactions that constitute the Change of Control and stating (1) that the
Change of Control Offer is being made pursuant to this Section 4.15 and that all
Notes tendered will be accepted for payment; (2) the purchase price and the
purchase date, which shall be no earlier than 30 days and no later than 60 days
from the date such notice is mailed or such later date as is necessary to comply
with the requirements under the Exchange Act (the "CHANGE OF CONTROL PAYMENT
DATE"); (3) that any Note not tendered will continue to accrue interest; (4)
that, unless the Company defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date; (5)
that Holders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a statement that such Holder is
withdrawing its election to have the Notes purchased; and (7) that Holders whose
Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an integral
multiple thereof. The Company shall comply with the requirements of Rule 14e-1
under

                                       59
<PAGE>
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Indenture relating to such Change of Control Offer, the
Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations described in this Indenture
by virtue thereof.

                  (b) By 2:00 p.m. Eastern Time on the Change of Control Payment
Date, the Company shall, to the extent lawful, (1) accept for payment all Notes
or portions thereof properly tendered pursuant to the Change of Control Offer,
(2) deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all Notes or portions thereof so tendered and (3) deliver
or cause to be delivered to the Trustee the Notes so accepted together with an
Officers' Certificate stating the aggregate principal amount of Notes or
portions thereof being purchased by the Company. The Paying Agent shall promptly
mail to each Holder of Notes so tendered the Change of Control Payment for such
Notes, and the Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Note equal in principal amount
to any unpurchased portion of the Notes surrendered, if any; provided that each
such new Note shall be in a principal amount of $1,000 or an integral multiple
thereof.

                  (c) Notwithstanding anything to the contrary in this Section
4.15, the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 4.15 and Section 3.09 hereof and all other provisions of this
Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.

Section 4.16 Limitation on Issuances and Sales of Capital Stock of Restricted
             Subsidiaries.

                  The Company (a) will not permit any Restricted Subsidiary to
issue any Capital Stock unless after giving effect thereto the Company's
percentage interest (direct and indirect) in the Capital Stock of such
Restricted Subsidiary is at least equal to its percentage interest prior
thereto, and (b) will not, and will not permit any Restricted Subsidiary to,
transfer, convey, sell, lease or otherwise dispose of any Capital Stock of any
Restricted Subsidiary to any Person (other than the Company or a Wholly Owned
Restricted Subsidiary); provided that this covenant will not prohibit (i) the
sale or other disposition of all, but not less than all, of the issued and
outstanding Capital Stock of a Restricted Subsidiary owned by the Company and
its Restricted Subsidiaries in compliance with the other provisions of this
Indenture, (ii) the sale or other disposition of a portion of the issued and
outstanding Capital Stock of a Restricted Subsidiary (other than a Subsidiary
Guarantor) whether or not as a result of such sale or disposition such
Restricted Subsidiary continues or ceases to be a Restricted Subsidiary if (A)
at the time of such sale or disposition, the Company could make an Investment in
the remaining Capital Stock held by it or one of its Restricted Subsidiaries in
an amount equal to the amount of its remaining Investment in such Person
pursuant to Section 4.07 hereof and (B) such sale or disposition is permitted
under, and the Company or such Restricted Subsidiary applies the Net Cash
Proceeds of any such sale in accordance with, Section 4.10 hereof, or (iii) the
ownership by directors of director's qualifying shares or the ownership by
foreign nationals of Capital Stock of any Restricted Subsidiary, to the extent
mandated by applicable law. The Company will not permit

                                       60
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any Restricted Subsidiary to issue any Preferred Stock other than to the Company
or any Subsidiary Guarantor.

Section 4.17 Designation of Restricted and Unrestricted Subsidiaries.

                  (a) The Board of the Company may designate any Subsidiary
(including any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary so long as (i) such Subsidiary has no Indebtedness other than
Non-Recourse Indebtedness, (ii) no default with respect to any Indebtedness of
such Subsidiary would permit (upon notice, lapse of time or otherwise) any
holder of any other Indebtedness of the Company or any Restricted Subsidiary to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity, (iii) any Investment in
such Subsidiary made as a result of designating such Subsidiary an Unrestricted
Subsidiary will not violate the provisions of Section 4.07 hereof, (iv) neither
the Company nor any Restricted Subsidiary has a contract, agreement,
arrangement, understanding or obligation of any kind, whether written or oral,
with such Subsidiary other than those that might be obtained at the time from
Persons who are not Affiliates of the Company, (v) neither the Company nor any
Restricted Subsidiary has any obligation to subscribe for additional shares of
Capital Stock or other equity interests in such Subsidiary, or to maintain or
preserve such Subsidiary's financial condition or to cause such Subsidiary to
achieve certain levels of operating results, and (vi) such Unrestricted
Subsidiary has at least one director on its board of directors that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries and has at least one executive officer that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries.
Notwithstanding the foregoing, the Company may not designate any Subsidiary
Guarantor (whether or not existing as of the Closing Date) as an Unrestricted
Subsidiary.

                  (b) The Board of the Company may designate any Unrestricted
Subsidiary as a Restricted Subsidiary; provided that (i) no Default or Event of
Default has occurred and is continuing following such designation and (ii) the
Company could, at the time of making such designation and giving such pro forma
effect as if such designation had been made at the beginning of the applicable
four quarter period, incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) (treating any
Indebtedness of such Unrestricted Subsidiary as the incurrence of Indebtedness
by a Restricted Subsidiary).

Section 4.18 Payments for Consent.

                  Neither the Company nor any of its Restricted Subsidiaries
will, directly or indirectly, pay or cause to be paid any consideration, whether
by way of interest, fee or otherwise, to any Holder for or as an inducement to
any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders that consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such consent, waiver or
agreement.

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Section 4.19  Limitations on Issuances of Guarantees of Indebtedness.

            (a) The Company will not permit any Restricted Subsidiary that is
not a Subsidiary Guarantor, directly or indirectly, to guarantee, assume or in
any other manner become liable for the payment of any Indebtedness of the
Company or any Indebtedness of any other Restricted Subsidiary, unless (i) such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture providing for a guarantee of payment of the Notes by such Restricted
Subsidiary on a senior subordinated basis on the same terms as set forth in this
Indenture and (ii) with respect to any guarantee of Subordinated Indebtedness by
a Restricted Subsidiary, any such guarantee is subordinated to such Restricted
Subsidiary's guarantee with respect to the Notes at least to the same extent as
such Subordinated Indebtedness is subordinated to the Notes, provided that the
foregoing provision will not be applicable to any guarantee by any Restricted
Subsidiary that existed at the time such Person became a Restricted Subsidiary
and was not incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary.

            (b) Any guarantee by a Restricted Subsidiary of the Notes pursuant
to the preceding paragraph may provide by its terms that it will be
automatically and unconditionally released and discharged upon (i) any sale,
exchange or transfer to any Person not an Affiliate of the Company of all of the
Company's and the Restricted Subsidiaries' Capital Stock in, or all or
substantially all the assets of, such Restricted Subsidiary (which sale,
exchange or transfer is not prohibited by this Indenture) or (ii) the release or
discharge of the guarantee that resulted in the creation of such guarantee of
the Notes, except a discharge or release by or as a result of payment under such
guarantee.

Section 4.20  Additional Guarantees.

            The Company shall provide to the Trustee, on the date that any
Person (other than a Foreign Subsidiary) becomes a Wholly Owned Restricted
Subsidiary, a supplemental indenture to this Indenture, executed by such new
Wholly Owned Restricted Subsidiary, providing for a full and unconditional
guarantee on a senior subordinated basis by such new Wholly Owned Restricted
Subsidiary of the Company's obligations under the Notes and this Indenture to
the same extent as that set forth in this Indenture.

                                  ARTICLE FIVE
                                   SUCCESSORS

Section 5.01  Merger, Consolidation or Sale of Assets.

            (a) Neither the Parent nor the Company will, in a single transaction
or series of related transactions, consolidate or merge with or into (whether or
not the Parent or the Company, as the case may be, is the surviving
corporation), or directly and/or indirectly through its Subsidiaries, sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets (determined on a consolidated basis for the Parent
or the Company, as the case may be, and its Subsidiaries taken as a whole) in
one or more related transactions to, another corporation, Person or entity
unless:

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            (i) either (i) the Company or the Parent, as the case may be, is the
      surviving corporation or (ii) the entity or the Person formed by or
      surviving any such consolidation or merger (if other than the Company) or
      to which such sale, assignment, transfer, lease, conveyance or other
      disposition shall have been made (the "SURVIVING ENTITY") is a corporation
      organized or existing under the laws of the United States, any state
      thereof or the District of Columbia and assumes all the obligations of the
      Company or the Parent, as the case may be, under the Notes and this
      Indenture pursuant to a supplemental indenture in a form reasonably
      satisfactory to the Trustee;

            (ii) immediately after giving effect to such transaction and
      treating any obligation of the Company in connection with or as a result
      of such transaction as having been incurred as of the time of such
      transaction, no Default or Event of Default has occurred and is
      continuing;

            (iii) if such transaction involves the Company, the Company (or the
      Surviving Entity if the Company is not the continuing obligor under this
      Indenture) could, at the time of such transaction and after giving pro
      forma effect thereto as if such transaction had occurred at the beginning
      of the applicable four-quarter period, incur at least $1.00 of additional
      Indebtedness (other than Permitted Indebtedness) pursuant Section 4.09(a);

            (iv) each Guarantor, unless it is the other party to the transaction
      described above, has by supplemental indenture confirmed that its
      Guarantee applies to the Surviving Entity's obligations under this
      Indenture and the Notes;

            (v) if any of the property or assets of the Company or any of its
      Restricted Subsidiaries would thereupon become subject to any Lien, the
      provisions of Section 4.12 hereof are complied with; and

            (vi) the Company or the Parent, as the case may be, delivers or
      causes to be delivered, to the Trustee, in form and substance reasonably
      satisfactory to the Trustee, an Officers' Certificate and an Opinion of
      Counsel, each stating that such transaction complies with the requirements
      of this Indenture.

            (b) No Subsidiary Guarantor shall consolidate with or merge with or
into any other Person or convey, sell, assign, transfer, lease or otherwise
dispose of its properties and assets substantially as an entirety to any other
Person (other than the Company or another Subsidiary Guarantor) unless:

            (i) subject to the provisions of the following paragraph, the Person
      formed by or surviving such consolidation or merger (if other than such
      Subsidiary Guarantor) or to which such properties and assets are
      transferred assumes all of the obligations of such Subsidiary Guarantor
      under this Indenture and its Guarantee, pursuant to a supplemental
      indenture in form and substance satisfactory to the Trustee;

            (ii) immediately after giving effect to such transaction, no Default
      or Event of Default has occurred and is continuing; and

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            (iii) the Subsidiary Guarantor delivers, or causes to be delivered,
      to the Trustee, in form and substance reasonably satisfactory to the
      Trustee, an Officers' Certificate and an Opinion of Counsel, each stating
      that such transaction complies with the requirements of this Indenture.

            For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries, the Capital Stock of which constitutes all or substantially all of
the properties and assets of the Company, shall be deemed to be the transfer of
all or substantially all of the properties and assets of the Company.

      (c) In the event of any transaction described in and complying with the
provisions of Section 5.01(a) in which the Company is not the continuing obligor
under this Indenture, the Surviving Entity will succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture, and thereafter the Company will, except in the case of a lease, be
discharged from all of its obligations under this Indenture and the Notes.

                                  ARTICLE SIX
                              DEFAULTS AND REMEDIES

Section 6.01  Events of Default.

            "EVENT OF DEFAULT", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):

            (i) default for 30 days in the payment when due of interest on, or
      Liquidated Damages with respect to, the Notes (whether or not prohibited
      by Article Ten of this Indenture);

            (ii) default in payment when due of the principal of (or premium, if
      any, on) the Notes (whether or not prohibited by Article Ten of this
      Indenture);

            (iii) failure by the Parent or the Company, as applicable, or any of
      their Restricted Subsidiaries to comply with the provisions of Sections
      4.07, 4.09, 4.10, 4.15 and 5.01;

            (iv) default in the performance, or breach, of any covenant or
      agreement of the Company or any Guarantor contained in this Indenture or
      in any Guarantee (other than a default in the performance, or breach, of a
      covenant or agreement that is specifically dealt with elsewhere herein),
      and continuance of such default or breach for a period of 60 days after
      written notice has been given to the Company by the Trustee or to the
      Company and the Trustee by the Holders of at least 25% in aggregate
      principal amount of the Notes then outstanding;

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            (v) (x) an event of default has occurred under any mortgage, bond,
      indenture, loan agreement or other document evidencing an issue of
      Indebtedness of the Company, the Parent or any Restricted Subsidiary,
      which issue individually or in the aggregate has an aggregate outstanding
      principal amount of not less than $10 million, and such default has
      resulted in such Indebtedness becoming, whether by declaration or
      otherwise, due and payable prior to the date on which it would otherwise
      become due and payable or (y) a default (a "PAYMENT DEFAULT") in any
      payment when due at final maturity of any such Indebtedness;

            (vi) failure by the Company, the Parent or any of its Restricted
      Subsidiaries to pay one or more final judgments the uninsured portion of
      which exceeds in the aggregate $10 million, which judgment or judgments
      are not paid, discharged or stayed for a period of 60 days;

            (vii) any Guarantee ceases to be in full force and effect or is
      declared null and void or any such Guarantor denies that it has any
      further liability under any Guarantee, or gives notice to such effect
      (other than by reason of the termination of this Indenture or the release
      of any such Guarantee in accordance with this Indenture);

            (viii) the entry of a decree or order by a court having jurisdiction
      in the premises adjudging the Company, the Parent or any Significant
      Subsidiary a bankrupt or insolvent, or approving as properly filed a
      petition seeking reorganization, arrangement, adjustments or composition
      of or in respect of the Company, the Parent or any Significant Subsidiary
      under any Bankruptcy Law, or appointing a receiver, liquidator, assignee,
      trustee, sequestrator (or other similar official) of the Company, the
      Parent or any Significant Subsidiary or of any substantial part of its
      property, or ordering the winding up or liquidation of its affairs, and
      the continuance of any such decree or order unstayed and in effect for a
      period of 90 consecutive days; or

            (ix) the institution by the Company, the Parent or any Significant
      Subsidiary of proceedings to be adjudicated a bankrupt or insolvent, or
      the consent by it to the institution of bankruptcy or insolvency
      proceedings against it, or the filing by it of a petition or answer or
      consent seeking reorganization or relief under any Bankruptcy Law, or the
      consent by it to the filing of any such petition or to the appointment of
      a receiver, liquidator, assignee, trustee, sequestrator (or other similar
      official) of the Company, the Parent or any Significant Subsidiary or of
      any substantial part of its property, or the making by it of an assignment
      for the benefit of creditors, or the admission by it in writing of its
      inability to pay its debts generally as they become due.

Section 6.02  Acceleration.

            (a) If an Event of Default (other than as specified in Section
6.01(viii) or (ix) hereof) occurs and is continuing, the Trustee or the Holders
of not less than 25% in aggregate principal amount of then outstanding Notes
may, and the Trustee at the request of such Holders will, declare the principal
of, and accrued interest on, all of the outstanding Notes immediately due and
payable and, upon any such declaration, such principal and such interest will
become

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due and payable immediately. The Trustee shall promptly notify the Company of
any such acceleration of the Notes pursuant to this Section 6.02(a).

            If an Event of Default specified in Section 6.01(viii) or (ix)
hereof occurs and is continuing, then the principal of and accrued interest on
all of the outstanding Notes will ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.

            (b) At any time after a declaration of acceleration under this
Indenture, but before a judgment or decree for payment of the money due has been
obtained by the Trustee, the holders of a majority in aggregate principal amount
of the outstanding Notes, by written notice to the Company and the Trustee, may
rescind such declaration and its consequences if: (i) the Company has paid or
deposited with the Trustee a sum sufficient to pay (A) all overdue interest on,
and Liquidate Damages with respect to, all Notes, (B) all unpaid principal of
(and premium, if any, on) any outstanding Notes that has become due otherwise
than by such declaration of acceleration and interest thereon at the rate borne
by the Notes, (C) to the extent that payment of such interest is lawful,
interest upon overdue interest and overdue principal at the rate borne by the
Notes and (D) all sums paid or advanced by the Trustee under this Indenture and
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and (ii) all Events of Default, other than the
non-payment of amounts of principal of (or premium, if any, on), interest on or
Liquidated Damages with respect to, the Notes that have become due solely by
such declaration of acceleration, have been cured or waived. No such rescission
will affect any subsequent default or impair any right consequent thereon.

            (c) Notwithstanding the preceding paragraph, in the event of a
declaration of acceleration in respect of the Notes because an Event of Default
specified in Section 6.01(v) shall have occurred and be continuing and provided
no judgment or decree for payment of the money due has been obtained by the
Trustee, such declaration of acceleration shall be automatically annulled if the
Indebtedness that is the subject of such Event of Default has been discharged or
the holders thereof have rescinded their declaration of acceleration in respect
of such Indebtedness, and written notice of such discharge or rescission, as the
case may be, shall have been given to the Trustee by the Company and
countersigned by the holders of such Indebtedness or a trustee, fiduciary or
agent for such holders, within 30 days after such declaration of acceleration in
respect of the Notes, and no other Event of Default has occurred during such
30-day period which has not been cured or waived during such period.

Section 6.03  Other Remedies.

            (a) If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, interest, and Liquidated Damages, if any, with respect to, the Notes or to
enforce the performance of any provision of the Notes or this Indenture.

            (b) The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any right
or remedy accruing upon and during the continuance of an Event of Default shall
not impair the right or remedy or constitute a waiver of

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or acquiescence in the Event of Default. All remedies are cumulative to the
extent permitted by law.

Section 6.04  Waiver of Past Defaults.

            Holders of a majority in principal amount of the then outstanding
Notes by notice to the Trustee, may on behalf of the Holders of all of the
Notes, waive an existing Default or Event of Default and its consequences
hereunder, except a continuing Default or Event of Default in the payment of
interest or Liquidated Damages, if any, on, or the principal of, the Notes
(including in connection with an offer to purchase) (provided, however, that the
Holders of a majority in principal amount of the then outstanding Notes may
rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration). The Company shall deliver to the
Trustee an Officers' Certificate stating that the requisite percentage of
Holders have consented to such waiver and attaching copies of such consents. In
case of any such waiver, the Company, the Trustee and the Holders shall be
restored to their former positions and rights hereunder and under the Notes,
respectively. This Section 6.04 shall be in lieu of Section 316(a)(1)(B) of the
TIA and such Section 316(a)(1)(B) of the TIA is hereby expressly excluded from
this Indenture and the Notes, as permitted by the TIA. Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.

Section 6.05  Control by Majority.

            Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest or Liquidated
Damages, if any) if it determines that withholding notice is in their interest.

Section 6.06  Limitation on Suits.

            (a) A Holder may pursue a remedy with respect to this Indenture, or
the Notes or the Guarantees only if:

            (i) the Holder gives to the Trustee written notice of a continuing
      Event of Default;

            (ii) the Holders of at least 25% in principal amount of the then
      outstanding Notes make a written request to the Trustee to pursue the
      remedy;

            (iii) such Holder of a Note or Holders of Notes offer and, if
      requested, provide to the Trustee security and indemnity satisfactory to
      the Trustee against any loss, liability or expense that might be incurred
      by it in connection with the request or direction;

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            (iv) the Trustee does not comply with the request within 60 days
      after receipt of the request and the offer and, if requested, the
      provision of indemnity; and

            (v) during such 60-day period the Holders of a majority in principal
      amount of the then outstanding Notes do not give the Trustee a direction
      inconsistent with the request.

            (b) A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.

Section 6.07  Rights of Holders of Notes to Receive Payment.

            Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium, if any, interest
on, and Liquidated Damages, if any, with respect to, the Note, on or after the
respective due dates expressed in the Note (including in connection with an
offer to purchase), or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.

Section 6.08  Collection Suit by Trustee.

            If an Event of Default specified in Section 6.01(i) or (ii) occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium, if any, interest, and Liquidated Damages, if any,
remaining unpaid on the Notes and interest on overdue principal and premium, if
any, and, to the extent lawful, interest and Liquidated Damages, if any, and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

Section 6.09  Trustee May File Proofs of Claim.

            The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
or any Guarantor (or any other obligor upon the Notes), its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other securities or property payable or deliverable on any such
claims and any custodian in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof. To the extent that
the payment of any such compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other

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properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.

Section 6.10  Priorities.

            (a) If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:

            First:  to the Trustee, its agents and attorneys for amounts due
      under Section 7.07 hereof, including payment of all compensation,
      expense and liabilities incurred, and all advances made, by the Trustee
      and the costs and expenses of collection;

            Second: to Holders of Notes for amounts due and unpaid on the Notes
      for principal, premium, if any, interest and Liquidated Damages, if any,
      ratably, without preference or priority of any kind, according to the
      amounts due and payable on the Notes for principal, premium, if any,
      interest, and Liquidated Damages, if any, respectively; and

            Third:  to the Company or to such party as a court of competent
      jurisdiction shall direct.

            (b) The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.

Section 6.11  Undertaking for Costs.

            In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than ten
percent in principal amount of the then outstanding Notes.

                                  ARTICLE SEVEN
                                     TRUSTEE

Section 7.01  Duties of Trustee.

            (a) If an Event of Default has occurred and is continuing, and is
actually known to the Trustee, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and skill
in its exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.

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            (b) Except during the continuance of an Event of Default:

            (i) the duties of the Trustee shall be determined solely by the
      express provisions of this Indenture and the Trustee need perform only
      those duties that are specifically set forth in this Indenture and no
      others, and no implied covenants or obligations shall be read into this
      Indenture against the Trustee; and

            (ii) in the absence of bad faith on its part, the Trustee may
      conclusively rely, as to the truth of the statements and the correctness
      of the opinions expressed therein, upon certificates or opinions furnished
      to the Trustee and conforming to the requirements of this Indenture.
      However, the Trustee shall examine the certificates and opinions to
      determine whether or not they conform on their face to the requirements of
      this Indenture.

            (c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

            (i) this paragraph does not limit the effect of paragraph (b) of
      this Section;

            (ii) the Trustee shall not be liable for any error of judgment made
      in good faith by a Responsible Officer, unless it is proved that the
      Trustee was negligent in ascertaining the pertinent facts; and

            (iii) the Trustee shall not be liable with respect to any action it
      takes or omits to take in good faith in accordance with a direction
      received by it pursuant to Section 6.05 hereof.

            (d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b) and (c) of this Section 7.01.

            (e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of the rights or powers vested in it by this
Indenture at the request or direction of any of the Holders unless such Holders
shall have offered to the Trustee security or indemnity reasonably satisfactory
to it against the costs, expenses and liabilities that might be incurred by it
in compliance with such request or direction.

            (f) Money held in trust by the Trustee need not be segregated from
other funds and need not be held in an interest-bearing account, in each case
except to the extent required by law or by any other provision of this
Indenture.

Section 7.02  Certain Rights of Trustee.

            (a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.

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            (b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.

            (c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.

            (d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.

            (e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.

            (f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
security or indemnity reasonably satisfactory to it against the costs, expenses
and liabilities that might be incurred by it in compliance with such request or
direction.

            (g) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of such event is sent to the Trustee
in accordance with Section 13.02 hereof, and such notice references the Notes.

Section 7.03  Individual Rights of Trustee.

            The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may become a creditor of, or otherwise deal with,
the Company or any of its Affiliates with the same rights it would have if it
were not Trustee. However, in the event that the Trustee acquires any
conflicting interest as described in the Trust Indenture Act, it must eliminate
such conflict within 90 days, apply to the SEC for permission to continue as
trustee or resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 7.10 and 7.11 hereof.

Section 7.04  Trustee's Disclaimer.

            The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture, it shall not be accountable
for the Company's use of the proceeds from the Notes or any money paid to the
Company or upon the Company's direction under any provision of this Indenture,
it shall not be responsible for the use or application of any money received by
any Paying Agent other than the Trustee, and it shall not be responsible for any
statement or recital herein or any statement in the Notes or any other document
in connection with the sale of the Notes or pursuant to this Indenture other
than its certificate of authentication.

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Section 7.05  Notice of Defaults.

            If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of
the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium and
Liquidated Damages, if any, or interest on any Note, the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of the Holders
of the Notes.

Section 7.06  Reports by Trustee to Holders of the Notes.

            (a) Within 60 days after each May 15 beginning with the May 15
following the date hereof, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event describeD
in TIA Section 313(a) has occurred within the twelve months preceding the
reportiNG date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports
as reqUIred by TIA Section 313(c).

            (b) A copy of each report at the time of its mailing to the Holders
of Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange or any delisting thereof.

Section 7.07  Compensation and Indemnity.

            (a) The Company shall pay to the Trustee (in its capacity as
Trustee, and, to the extent it has been appointed as such, as Paying Agent and
Registrar) from time to time reasonable compensation for its acceptance of this
Indenture and services hereunder in accordance with a written schedule provided
by the Trustee to the Company. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee promptly upon request for all reasonable and customary
disbursements, advances and reasonable out-of-pocket expenses incurred or made
by it in addition to the compensation for its services. Such expenses shall
include the reasonable and customary compensation, disbursements and expenses of
the Trustee's agents and counsel.

            (b) The Company shall indemnify the Trustee against any and all
losses, liabilities or reasonable out-of-pocket expenses incurred by it arising
out of or in connection with the acceptance or administration of its duties
under this Indenture, including the costs and expenses of enforcing this
Indenture against the Company (including this Section 7.07) and defending itself
against any claim (whether asserted by either of the Company or any Holder or
any other person) or liability in connection with the exercise or performance of
any of its powers or duties hereunder, except to the extent any such loss,
liability or expense may be attributable to its negligence or bad faith. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee may have separate counsel
and the Company shall pay the reasonable and customary fees and expenses of such
counsel. The Company need not

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pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.

            (c) The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.

            (d) To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.

            (e) When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(viii) or (ix) hereof occurs, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of administration
under any Bankruptcy Law.

Section 7.08  Replacement of Trustee.

            (a) A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.

            (b) The Trustee may resign in writing at any time and be discharged
from the trust hereby created by so notifying the Company. The Holders of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:

            (i) the Trustee fails to comply with Section 7.10 hereof;

            (ii) the Trustee is adjudged a bankrupt or an insolvent or an order
      for relief is entered with respect to the Trustee under any Bankruptcy
      Law;

            (iii) a custodian or public officer takes charge of the Trustee or
      its property; or

            (iv) the Trustee becomes incapable of acting.

            (c) If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.

            (d) If a successor Trustee does not take office within 30 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company,
or the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition at the expense of the Company any court of
competent jurisdiction for the appointment of a successor Trustee.

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            (e) If the Trustee, after written request by any Holder who has been
a Holder for at least six months, fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.

            (f) A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.

Section 7.09  Successor Trustee by Merger, Etc.

            If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another Person, the
successor Person without any further act shall be the successor Trustee.

Section 7.10  Eligibility; Disqualification.

            There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has (or its corporate parent shall have) a
combined capital and surplus of at least $100.0 million as set forth in its most
recent published annual report of condition.

            This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).

Section 7.11  Preferential Collection of Claims Against Company.

            The Trustee is subject to TIA Section 311(a), excluding any creditOR
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
The Trustee hereby waives any right to set-off any claim that it may have
against the Company in any capacity (other than as Trustee and Paying Agent)
against any of the assets of the Company held by the Trustee; provided, however,
that if the Trustee is or becomes a lender of any other Indebtedness permitted
hereunder to be pari passu with the Notes, then such waiver shall not apply to
the extent of such Indebtedness.

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                                 ARTICLE EIGHT
                       DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01  Option to Effect Legal Defeasance or Covenant Defeasance.

            The Company may, at the option of the Board evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.

Section 8.02  Legal Defeasance and Discharge.

            Upon the Company's exercise under Section 8.02 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes and all
obligations of the Guarantors shall be deemed to have been discharged with
respect to their obligations under the Subsidiary Guarantees on the date the
conditions set forth below are satisfied (hereinafter, "LEGAL DEFEASANCE"). For
this purpose, Legal Defeasance means that the Company and the Guarantors shall
be deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes and Subsidiary Guarantees, respectively, which shall
thereafter be deemed to be "outstanding" only for the purposes of Section 8.05
hereof and the other Sections of this Indenture referred to in (a) and (b)
below, and to have satisfied all its other obligations under such Notes and this
Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.04 hereof, and as more fully
set forth in such Section, payments in respect of the principal of, premium, if
any, interest and Liquidated Damages, if any, on such Notes when such payments
are due, (b) the Company's obligations with respect to such Notes under Article
Two and Section 4.02 hereof, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations in connection
therewith and (d) this Article 8. Subject to compliance with this Article 8, the
Company may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.

Section 8.03  Covenant Defeasance.

            Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.19, 4.20 and 5.01 hereof with
respect to the outstanding Notes on and after the date the conditions set forth
in Section 8.04 are satisfied (hereinafter, "COVENANT DEFEASANCE"), and the
Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply

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with and shall have no liability in respect of any term, condition or limitation
set forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03, subject to the satisfaction of the conditions set forth in Section
8.04 hereof, Sections 6.01(iii) through (vii) shall not constitute Events of
Default.

Section 8.04  Conditions to Legal or Covenant Defeasance.

            (a) The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes:

            (i) the Company must irrevocably deposit or cause to be deposited
      with the Trustee, as trust funds in trust, specifically pledged as
      security for, and dedicated solely to, the benefit of the Holders, money
      in an amount, or U.S. Government Obligations that through the scheduled
      payment of principal and interest thereon will provide money in an amount,
      or a combination thereof, sufficient, in the opinion of a nationally
      recognized firm of independent public accountants, to pay and discharge
      the principal of (and premium, if any, on) and interest and Liquidated
      Damages, if any, on the outstanding Notes at maturity (or upon redemption,
      if applicable) of such principal or installment of interest or Liquidated
      Damages;

            (ii) no Default or Event of Default has occurred and is continuing
      on the date of such deposit or, insofar as an event of bankruptcy under
      Section 6.01(viii) is concerned, at any time during the period ending on
      the 91st day after the date of such deposit;

            (iii) such Legal Defeasance or Covenant Defeasance may not result in
      a breach or violation of, or constitute a default under, this Indenture,
      the Credit Agreement or any material agreement or instrument to which the
      Company or any Guarantor is a party or by which it is bound;

            (iv) in the case of Legal Defeasance, the Company must deliver to
      the Trustee an Opinion of Counsel stating that the Company has received
      from, or there has been published by, the Internal Revenue Service a
      ruling, or, since the Closing Date, there has been a change in applicable
      federal income tax law, to the effect, and based thereon such opinion must
      confirm, that the Holders of the outstanding Notes will not recognize
      income, gain or loss for federal income tax purposes as a result of such
      Legal Defeasance and will be subject to federal income tax on the same
      amounts, in the same manner and at the same times as would have been the
      case if such Legal Defeasance had not occurred;

            (v) in the case of Covenant Defeasance, the Company must have
      delivered to the Trustee an Opinion of Counsel to the effect that the
      Holders of the outstanding Notes will not recognize income, gain or loss
      for federal income tax purposes as a result of such

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      Covenant Defeasance and will be subject to federal income tax on the same
      amounts, in the same manner and at the same times as would have been the
      case if such Covenant Defeasance had not occurred; and

            (vi) the Company must have delivered to the Trustee an Officers'
      Certificate and an Opinion of Counsel, each stating that all conditions
      precedent provided for relating to either the Legal Defeasance or the
      Covenant Defeasance, as the case may be, have been complied with.

Section 8.05  Deposited Money and U.S. Government Obligations to Be Held
              in Trust; Other Miscellaneous Provisions.

            (a) Subject to Section 8.06 hereof, all money and non-callable U.S.
Government Obligations (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "TRUSTEE") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium and
Liquidated Damages, if any, and interest, but such money need not be segregated
from other funds except to the extent required by law.

            (b) The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the cash or non-callable U.S.
Government Obligations deposited pursuant to Section 8.04 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the
outstanding Notes.

            (c) Anything in this Article Eight to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or non-callable U.S. Government Obligations
held by it as provided in Section 8.04 hereof which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.

Section 8.06  Repayment to the Company.

            Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published

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once, in the New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining shall be
repaid to the Company.

Section 8.07  Reinstatement.

            If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable U.S. Government Obligations in accordance with Section
8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee
or Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company
makes any payment of principal of, premium, if any, or interest on any Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money held by the Trustee or Paying Agent.

                                  ARTICLE NINE
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01  Without Consent of Holders of Notes.

            (a) Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors, and the Trustee may amend or supplement this Indenture or the Notes
without the consent of any Holder of a Note:

            (i) to evidence the succession of another Person to the Company and
      the assumption by any such successor of the covenants of the Company in
      this Indenture and in the Notes; or

            (ii) to add to the covenants of the Company for the benefit of the
      Holders, or to surrender any right or power herein conferred upon the
      Company; or

            (iii) to add additional Events of Defaults; or

            (iv) to provide for uncertificated Notes in addition to or in place
      of certificated Notes; or

            (v) to evidence and provide for the acceptance of appointment under
      this Indenture by a successor Trustee; or

            (vi) to secure the Notes; or

            (vii) to cure any ambiguity, to correct or supplement any provision
      in this Indenture that may be defective or inconsistent with any other
      provision in this Indenture,

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      or to make any other provisions with respect to matters or questions
      arising under this Indenture, provided that such actions pursuant to this
      clause do not adversely affect the interests of the Holders in any
      material respect; or

            (viii) to comply with any requirements of the SEC in order to effect
      and maintain the qualification of this Indenture under the Trust Indenture
      Act; or

            (ix) to provide for the issuance of Additional Notes in accordance
      with the limitations set forth in the Indenture as of its date; or

            (x) to allow any Guarantor to execute a supplemental Indenture and a
      Guarantee with respect to the Notes; or (xi) to provide for the issuance
      of the Exchange Notes pursuant to the terms of this Indenture.

            Notwithstanding the foregoing, neither the Company nor the Trustee
may amend any provisions of the Indenture or the Notes concerning (i) the
subordination of the Notes and the Guarantees or (ii) legal defeasance or
covenant defeasance without, in either case, the prior written consent of the
Agent Bank, acting on behalf of the Banks under the Credit Agreement.

            (b) Upon the request of the Company accompanied by a resolution of
its Board authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.

Section 9.02  With Consent of Holders of Notes.

            (a) Except as provided below in this Section 9.02, the Company the
Guarantors and the Trustee may amend or supplement this Indenture or the Notes
with the consent of the Holders of at least a majority in principal amount of
the Notes (including Additional Notes, if any) then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes), and, subject to Sections 6.04 and
6.07 hereof, any existing Default or Event of Default or compliance with any
provision of this Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes
(including Additional Notes, if any) (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Notes).

            (b) The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Persons entitled to consent to any
indenture supplemental hereto. If a record date is fixed, the Holders on such
record date, or its duly designated proxies, and only such Persons, shall be
entitled to consent to such supplemental indenture, whether or not such Holders
remain Holders after such record date; provided that unless such consent shall
have

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become effective by virtue of the requisite percentage having been obtained
prior to the date which is 90 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
cancelled and of no further effect.

            (c) Upon the request of the Company accompanied by a resolution of
its Board authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence reasonably
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid,
and upon receipt by the Trustee of the documents described in Section 7.02
hereof, the Trustee shall join with the Company in the execution of such amended
or supplemental Indenture unless such amended or supplemental Indenture directly
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.

            (d) It shall not be necessary for the consent of the Holders of
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.

            (e) After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the then outstanding
Notes (including Additional Notes, if any) may waive compliance in a particular
instance by the Company with any provision of this Indenture, or the Notes.
However, without the consent of each Holder affected, an amendment or waiver
under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):

            (i) change the Stated Maturity of the principal of, or any
      installment of interest on, any Note, or reduce the principal amount
      thereof or the rate of interest or Liquidated Damages, if any, thereon or
      any premium payable upon the redemption thereof, or change the coin or
      currency in which any Note or any premium or the interest or any
      Liquidated Damages thereon are payable, or impair the right to institute
      suit for the enforcement of any such payment after the Stated Maturity
      thereof (or, in the case of redemption, on or after the redemption date);

            (ii) amend, change or modify the obligation of the Company to make
      and consummate an Excess Proceeds Offer with respect to any Asset Sale in
      accordance with the covenant described under Section 4.10 or the
      obligation of the Company to make and consummate a Change of Control Offer
      in the event of a Change of Control in accordance with Section 4.15,
      including, in each case, amending, changing or modifying any definition
      relating thereto;

            (iii) reduce the percentage in principal amount of outstanding
      Notes, the consent of whose Holders is required for any waiver of
      compliance with certain

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      provisions of, or certain defaults and their consequences provided for
      under, this Indenture;

            (iv) waive a Default or Event of Default in the payment of principal
      of, or premium, if any, or interest or Liquidated Damages, if any, on the
      Notes or reduce the percentage or aggregate principal amount of
      outstanding Notes the consent of whose Holders is necessary for waiver of
      compliance with certain provisions of this Indenture or for waiver of
      certain Defaults or Events of Default;

            (v) modify the ranking or priority of the Notes or the Guarantee of
      any Guarantor;

            (vi) release any Guarantor from any of its obligations under its
      Guarantee or this Indenture other than in accordance with the terms of
      this Indenture; or

            (vii) make any change in the preceding amendment and waiver
      provisions.

Section 9.03  Compliance with Trust Indenture Act.

            Every amendment or supplement to this Indenture or the Notes shall
be set forth in a amended or supplemental Indenture that complies with the TIA
as then in effect.

Section 9.04  Revocation and Effect of Consents.

            Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.

Section 9.05  Notation on or Exchange of Notes.

            (a) The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall, upon receipt
of an Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.

            (b) Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.

Section 9.06  Trustee to Sign Amendments, Etc.

            The Trustee shall sign any amended or supplemental indenture or Note
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment

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or supplemental Indenture or Note until its Board approves it. In executing any
amended or supplemental indenture or Note, the Trustee shall be entitled to
receive and (subject to Section 7.01 hereof) shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel stating that the
execution of such amended or supplemental indenture is authorized or permitted
by this Indenture.

                                  ARTICLE TEN
                                  SUBORDINATION

Section 10.01  Agreement to Subordinate.

            The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Notes is subordinated in right of payment, to
the extent and in the manner provided in this Article Ten, to the prior payment
in full of all Senior Indebtedness (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of the holders of Senior Indebtedness.

Section 10.02  Liquidation; Dissolution; Bankruptcy.

            The holders of Senior Indebtedness of the Company will be entitled
to receive payment in full of all Obligations due in respect of Senior
Indebtedness of the Company (including interest after the commencement of any
bankruptcy proceeding at the rate specified in the applicable Senior
Indebtedness of the Company) before the Holders will be entitled to receive any
payment with respect to the Notes (except that Holders may receive and retain
securities that are subordinated at least to the same extent as the Notes to
Senior Indebtedness and any securities issued in exchange for Senior
Indebtedness ("PERMITTED JUNIOR SECURITIES") and payments made from the trust
pursuant to Article Eight hereunder), in the event of any distribution to
creditors of the Company: (i) in a liquidation or dissolution of the Company;
(ii) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property; (iii) in an assignment for
the benefit of creditors; or (iv) in any marshaling of the Company's assets and
liabilities.

Section 10.03  Default on Designated Senior Indebtedness.

            (a) The Company may not make any payment in respect of the Notes
(except in Permitted Junior Securities or from the trust pursuant to Article
Eight hereof):

            (i) in the event any default in the payment of principal of,
      interest or premium, if any, on Designated Senior Indebtedness occurs and
      is continuing beyond any applicable period of grace (a "PAYMENT EVENT OF
      DEFAULT"), or

            (ii) any Non-payment Event of Default occurs and is continuing with
      respect to Designated Senior Indebtedness which permits holders of the
      Designated Senior Indebtedness as to which such default relates to
      accelerate its maturity and the Trustee receives a notice of such default
      (a "PAYMENT BLOCKAGE NOTICE") from (A) with respect to the Designated
      Senior Indebtedness arising under the Credit Agreement, the Agent

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      Bank, or (B) with respect to any other Designated Senior Indebtedness, the
      holders or the representative of the holders of any such Designated Senior
      Indebtedness.

            (iii) Payments on the Notes may and shall be resumed (x) in the case
      of a Payment Event of Default, upon the date on which such default is
      cured or waived and (y) in case of a Non-payment Event of Default, the
      earlier of the date on which such Non-payment Event of Default is cured or
      waived or 179 days after the date on which the applicable Payment Blockage
      Notice is received unless the maturity of any Designated Senior
      Indebtedness has been accelerated. No new period of payment blockage may
      be commenced by a Payment Blockage Notice unless and until (i) 360 days
      have elapsed since the first day of the effectiveness of the immediately
      prior Payment Blockage Notice and (ii) all scheduled payments of
      principal, premium, if any, and interest on the Notes that have come due
      have been paid in full in cash. No Non-payment Event of Default that
      existed or was continuing on the date of delivery of any Payment Blockage
      Notice to the Trustee shall be, or be made, the basis for a subsequent
      Payment Blockage Notice, unless such default has been cured or waived for
      a period of not less than 90 days.

Section 10.04  Acceleration of Securities.

            If payment of the Securities is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Indebtedness of the
acceleration.

Section 10.05  When Distribution Must Be Paid Over.

            (a) In the event that the Trustee or any Holder receives any payment
of any Obligations with respect to the Notes (except in Permitted Junior
Securities or from the trust pursuant to Article Eight hereof) at a time when
such payment is prohibited by Article Ten hereof and the Trustee or such Holder,
as applicable, has actual knowledge that such payment is prohibited by Article
Ten hereof, such payment shall be held by the Trustee or such Holder, as
applicable, in trust for the benefit of the holders of Senior Indebtedness of
the Company. Upon proper written request of the holders of Senior Indebtedness
of the Company, the Trustee or such Holder, as the case may be, shall deliver
the amounts in trust to the holders of Senior Indebtedness or their proper
Representative under the indenture or other agreement (if any) pursuant to which
Senior Indebtedness may have been issued, as their respective interests may
appear, for application to the payment of all Obligations with respect to Senior
Indebtedness remaining unpaid to the extent necessary to pay such Obligations in
full in accordance with their terms, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.

            (b) With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to which
any holders of Senior Indebtedness shall

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be entitled by virtue of this Article Ten, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.

Section 10.06  Notice by the Company.

            The Company shall promptly notify the Trustee and the Paying Agent
in writing of any facts known to the Company that would cause a payment of any
Obligations with respect to the Notes to violate this Article Ten, but failure
to give such notice shall not affect the subordination of the Notes to the
Senior Indebtedness as provided in this Article Ten.

Section 10.07  Subrogation.

            After all Senior Indebtedness is paid in full and until the Notes
are paid in full, Holders shall be subrogated (equally and ratably with the
holders of all Indebtedness of the Company which by its express terms is
subordinated to Senior Indebtedness of the Company to the same extent as the
Notes are subordinated and which is entitled to like rights of subrogation) to
the rights of holders of Senior Indebtedness to receive distributions applicable
to Senior Indebtedness to the extent that distributions otherwise payable to the
Holders have been applied to the payment of Senior Indebtedness. A distribution
made under this Article Ten to holders of Senior Indebtedness that otherwise
would have been made to Holders is not, as between the Company and Holders, a
payment by the Company on the Notes.

Section 10.08  Relative Rights.

            (a) This Article Ten defines the relative rights of Holders and
holders of Senior Indebtedness. Nothing in this Indenture shall:

            (i) impair, as between the Company and Holders, the obligation of
      the Company, which is absolute and unconditional, to pay principal of and
      interest on the Notes in accordance with their terms;

            (ii) affect the relative rights of Holders of Notes and creditors of
      the Company other than their rights in relation to holders of Senior
      Indebtedness; or

            (iii) prevent the Trustee or any Holder of Notes from exercising its
      available remedies upon a Default or Event of Default, subject to the
      rights of holders and owners of Senior Indebtedness to receive
      distributions and payments otherwise payable to Holders.

            (b) If the Company fails because of this Article Ten to pay
principal of or interest on a Note on the due date, the failure is still a
Default or Event of Default.

Section 10.09  Subordination May Not Be Impaired by the Company.

            No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this Indenture.

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Section 10.10  Distribution or Notice to Representative.

            (a) Whenever a distribution is to be made or a notice given to
holders of Senior Indebtedness, the distribution may be made and the notice
given to their Representative.

            (b) Upon any payment or distribution of assets of the Company
referred to in this Article Ten, the Trustee and the Holders of Notes shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders of Notes for the purpose of ascertaining the Persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Ten.

Section 10.11  Rights of Trustee and Paying Agent.

            (a) Notwithstanding the provisions of this Article Ten or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article Ten. Only the Company or a
Representative may give the notice. Nothing in this Article Ten shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.

            (b) The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights.

Section 10.12  Authorization to Effect Subordination.

            Each Holder, by the Holder's acceptance thereof, agrees and directs
the Trustee on such Holder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in this Article Ten, and
appoints the Trustee to act as such Holder's attorney-in-fact for any and all
such purposes. If the Trustee does not file a proper proof of claim or proof of
debt in the form required in any proceeding referred to in Section 6.09 hereof
at least 30 days before the expiration of the time to file such claim, the
lenders under the Credit Agreement are hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes.

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                                 ARTICLE ELEVEN
                                   GUARANTEES

Section 11.01  Guarantee.

            (a) Subject to this Article Eleven each of the Guarantors hereby,
jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of this Indenture,
the Notes or the obligations of the Company hereunder or thereunder, that: (i)
the principal of, premium, if any, interest and Liquidated Damages, if any, on
the Notes will be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal of
and interest on the Notes, if any, if lawful (subject in all cases to any
applicable grace period provided herein), and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder will be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and (ii) in case of any extension of time of payment or renewal of any Notes or
any of such other obligations, that same will be promptly paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise. Failing payment when due of
any amount so guaranteed or any performance so guaranteed for whatever reason,
the Guarantors shall be jointly and severally obligated to pay the same
immediately. Each Guarantor agrees that this is a guarantee of payment and not a
guarantee of collection.

            (b) The Guarantors hereby agree that their obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a Guarantor.
Subject to Section 6.06 hereof, each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and covenant
that this Guarantee shall not be discharged except by complete performance of
the obligations contained in the Notes and this Indenture.

            (c) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Guarantors, any amount paid by either to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.

            (d) Each Guarantor agrees that it shall not be entitled to any right
of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Guarantor further agrees that, as between the Guarantors, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Six
hereof for the purposes of this Guarantee, notwithstanding any stay, injunction
or other

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prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article Six hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Guarantee. The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Guarantee.

Section 11.02  Subordination of Guarantee.

            The Obligations of each Guarantor under its Guarantee pursuant to
this Article Eleven shall be junior and subordinated to the prior payment in
full of all Senior Indebtedness of such Guarantor (including Senior Indebtedness
of the Guarantor incurred after the date hereof) on the same basis as the Notes
are junior and subordinated to the prior payment in full all Senior Indebtedness
of the Company, as described in Article Ten hereof. For the purposes of the
foregoing sentence, the Trustee and the Holders shall have the right to receive
and/or retain payments by any of the Guarantors only at such times as they may
receive and/or retain payments in respect of the Notes pursuant to this
Indenture, including Article Ten hereof.

Section 11.03  Limitation on Guarantor Liability.

            Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Guarantee of such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and
the Guarantors hereby irrevocably agree that the obligations of such Guarantor
will, after giving effect to such maximum amount and all other contingent and
fixed liabilities of such Guarantor that are relevant under such laws, and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Article Eleven, result in the
obligations of such Guarantor under its Guarantee not constituting a fraudulent
transfer or conveyance.

Section 11.04  Execution and Delivery of Guarantee.

            (a) To evidence its Guarantee set forth in Section 11.01, each
Guarantor hereby agrees that a notation of such Guarantee substantially in the
form included in Exhibit E shall be endorsed by an Officer of such Guarantor on
each Note authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of such Guarantor by any of its executive officers.

            (b) Each Guarantor hereby agrees that its Guarantee set forth in
Section 11.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Guarantee.

            (c) If an Officer whose signature is on this Indenture or on the
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Guarantee is endorsed, the Guarantee shall be valid
nevertheless.

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            (d) The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of the Guarantors.

            (e) In the event that the Company creates or acquires any new Wholly
Owned Restricted Subsidiaries subsequent to the date of this Indenture, if
required by Section 4.20 hereof, the Company shall cause such Subsidiaries to
execute supplemental indentures to this Indenture and Guarantees in accordance
with Section 4.20 hereof and this Article Eleven, to the extent applicable.

Section 11.05  Releases of Guarantors.

            (a) A Subsidiary Guarantor will be deemed automatically and
unconditionally released and discharged from all of its obligations under its
Guarantee without any further action on the part of the Trustee or any Holder of
the Notes upon a sale or other disposition to a Person not an Affiliate of the
Company of all of the Capital Stock of, or all or substantially all of the
assets of, such Subsidiary Guarantor, by way of merger, consolidation or
otherwise, which transaction is carried out in accordance with Section 4.10
hereof; provided that any such termination shall occur (x) only to the extent
that all obligations of such Subsidiary Guarantor under all of its guarantees
of, and under all of its pledges of assets or other security interests which
secure any Indebtedness of the Company shall also terminate upon such sale,
disposition or release and (y) only if the Trustee is furnished with written
notice of such release together with an Officers' Certificate from such
Subsidiary Guarantor to the effect that all of the conditions to release in this
Section 11.05(a) have been satisfied.

            (b) Any Guarantor not released from its obligations under its
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article Eleven.

                                 ARTICLE TWELVE
                           SATISFACTION AND DISCHARGE

Section 12.01  Satisfaction and Discharge.

            (a) This Indenture shall be discharged and shall cease to be of
      further effect as to all Notes issued thereunder, when:

            (i)   either:

                  (A) all Notes that have been authenticated (except lost,
            stolen or destroyed Notes that have been replaced or paid and Notes
            for whose payment money has theretofore been deposited in trust and
            thereafter repaid to the Company) have been delivered to the Trustee
            for cancellation; or

                  (B) all Notes that have not been delivered to the Trustee for
            cancellation have become due and payable by reason of the making of
            a notice of redemption or otherwise or will become due and payable
            within one year and the

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            Company or any Guarantor has irrevocably deposited or caused to be
            deposited with the Trustee as trust funds in trust solely for the
            benefit of the Holders, cash in U.S. dollars, non-callable U.S.
            Government Obligations, or a combination thereof, in such amounts as
            will be sufficient without consideration of any reinvestment of
            interest, to pay and discharge the entire indebtedness on the Notes
            not delivered to the Trustee for cancellation for principal, premium
            and Liquidated Damages, if any, and accrued interest to the date of
            maturity or redemption;

            (ii) no Default or Event of Default shall have occurred and be
      continuing on the date of such deposit or shall occur as a result of such
      deposit and such deposit will not result in a breach or violation of, or
      constitute a default under, any other instrument to which the Company or
      any Guarantor is a party or by which the Company or any Guarantor is
      bound;

            (iii) the Company or any Guarantor has paid or caused to be paid all
      sums payable by it hereunder; and

            (iv) the Company has delivered irrevocable instructions to the
      Trustee hereunder to apply the deposited money toward the payment of the
      Notes at maturity or the redemption date, as the case may be.

            (b) In addition, the Company must deliver an Officers' Certificate
and an Opinion of Counsel (which opinion may be subject to customary assumptions
and exclusions) to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.

            (c) Notwithstanding the above, the Trustee shall pay to the Company
from time to time upon its request any cash or U.S. Government Obligations held
by it as provided in this section which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification delivered to the Trustee, are in excess of the amount thereof that
would then be required to be deposited to effect a satisfaction and discharge
under this Article Twelve.

Section 12.02  Deposited Money and U.S. Government Obligations to Be Held
               in Trust; Other Miscellaneous Provisions.

            Subject to Section 12.03 hereof, all money and non-callable U.S.
Government Obligations (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
12.02, the "TRUSTEE") pursuant to Section 12.01 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium and
Liquidated Damages, if any, and interest, but such money need not be segregated
from other funds except to the extent required by law.

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Section 12.03  Repayment to the Company.

            Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium and
Liquidated Damages, if any, or interest on any Note and remaining unclaimed for
two years after such principal, and premium, if any, or interest has become due
and payable shall be paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Note shall
thereafter look only to the Company for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be published
once, in the New York Times or The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining shall be
repaid to the Company.

                                ARTICLE THIRTEEN
                                  MISCELLANEOUS

Section 13.01  Trust Indenture Act Controls.

            If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by TIA Section 318(c), tHe
imposed duties shall control.

Section 13.02  Notices.

            (a) Any notice or communication by the Company or any Guarantor, on
the one hand, or the Trustee on the other hand, to the other is duly given if in
writing and delivered in Person or mailed by first class mail (registered or
certified, return receipt requested), facsimile or overnight air courier
guaranteeing next day delivery, to the others' address:

            If to the Company or any Guarantor:

            InSight Health Services Corp.
            4400 MacArthur Blvd.
            Suite 800
            Newport Beach, CA  92660
            Facsimile:  949-476-8006
            Attention:  Chief Financial Officer, with a copy to General
            Counsel

            with copies to:

            J.W. Childs Associates, L.P.
            One Federal Street
            21st Floor
            Boston, MA  02110
            Facsimile:  617-753-1101

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<PAGE>
            Attention: Edward D. Yun

            and to:

            Halifax Capital Partners, L.P.
            1133 Connecticut Avenue N.W.
            Suite 700
            Washington, D.C.  20036
            Facsimile:   202-296-7133
            Attention:   David W. Dupree

            and to:

            Kaye Scholer LLP
            245 Park Avenue
            New York, NY 10022
            Facsimile: 212-836-8689
            Attention:  Stephen C. Koval, Esq.

            If to the Trustee:

            State Street Bank and Trust Company, N.A.
            61 Broadway, 15th Floor
            New York, NY 10006
            Attention: Corporate Trust Department

            (b) The Company, the Guarantors or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices or
communications.

            (c) All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.

            (d) Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.

            (e) If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.

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            (f) If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.

Section 13.03  Communication by Holders of Notes with Other Holders of Notes.

            Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to its rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).

Section 13.04  Certificate and Opinion as to Conditions Precedent.

            (a) Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:

            (i) an Officers' Certificate in form and substance reasonably
      satisfactory to the Trustee (which shall include the statements set forth
      in Section 13.05 hereof) stating that, in the opinion of the signers, all
      conditions precedent and covenants, if any, provided for in this Indenture
      relating to the proposed action have been satisfied; and

            (ii) to the extent required under Section 314 of the Trust Indenture
      Act, an Opinion of Counsel in form and substance reasonably satisfactory
      to the Trustee (which shall include the statements set forth in Section
      13.05 hereof) stating that, in the opinion of such counsel, all such
      conditions precedent and covenants have been satisfied.

Section 13.05  Statements Required in Certificate or Opinion.

            (a) Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA SectIon 314(e) and shall include:

            (i) a statement that the Person making such certificate or opinion
      has read such covenant or condition;

            (ii) a brief statement as to the nature and scope of the examination
      or investigation upon which the statements or opinions contained in such
      certificate or opinion are based;

            (iii) a statement that, in the opinion of such Person, he or she has
      made such examination or investigation as is necessary to enable him to
      express an informed opinion as to whether or not such covenant or
      condition has been satisfied; and

            (iv) a statement as to whether or not, in the opinion of such
      Person, such condition or covenant has been satisfied.

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Section 13.06  Rules by Trustee and Agents.

            The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.

Section 13.07  No Personal Liability of Directors, Officers, Employees and
Stockholders.

            No director, officer, employee, incorporator or shareholder of the
Parent, the Company or any Subsidiary Guarantor, as such, shall have any
liability for any obligations of the Parent, the Company or the Subsidiary
Guarantors under the Notes, this Indenture, the Guarantees or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
The waiver may not be effective to waive liabilities under the federal
securities laws.

Section 13.08  Governing Law.

            THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE, THE NOTES AND THE GUARANTEES WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 13.09  Consent to Jurisdiction.

            Any legal suit, action or proceeding arising out of or based upon
this Indenture or the transactions contemplated hereby ("RELATED PROCEEDINGS")
may be instituted in the federal courts of the United States of America located
in the City of New York or the courts of the State of New York in each case
located in the City of New York (collectively, the "SPECIFIED COURTS"), and each
party irrevocably submits to the exclusive jurisdiction (except for proceedings
instituted in regard to the enforcement of a judgment of any such court (a
"RELATED JUDGMENT"), as to which such jurisdiction is non-exclusive) of such
courts in any such suit, action or proceeding. Service of any process, summons,
notice or document by mail to such party's address set forth above shall be
effective service of process for any suit, action or other proceeding brought in
any such court. The parties irrevocably and unconditionally waive any objection
to the laying of venue of any suit, action or other proceeding in the Specified
Courts and irrevocably and unconditionally waive and agree not to plead or claim
in any such court that a Related Proceeding has been brought in an inconvenient
forum.

Section 13.10  No Adverse Interpretation of Other Agreements.

            This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or any of its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.

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Section 13.11  Successors.

            All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors. All agreements of each Guarantor in this Indenture shall bind
its successors, except as otherwise provided in Section 5.01.

Section 13.12  Severability.

            In case any provision in this Indenture or the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

Section 13.13  Counterpart Originals.

            The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.

Section 13.14  Acts of Holders.

            (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by the
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "ACT" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company if made in the
manner provided in this Section 13.14.

            (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such witness, notary or officer the
execution thereof. Where such execution is by a signer acting in a capacity
other than his individual capacity, such certificate or affidavit shall also
constitute sufficient proof of authority. The fact and date of the execution of
any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.

            (c) Notwithstanding anything to the contrary contained in this
Section 13.14, the principal amount and serial numbers of Notes held by any
Holder, and the date of holding the same, shall be proved by the register of the
Notes maintained by the Registrar as provided in Section 2.04 hereof.

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<PAGE>
            (d) If the Company shall solicit from the Holders of the Notes any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to a resolution of its Board, fix
in advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. Notwithstanding TIA Section
316(c), such record date shall be the record date specified in or pursuant to
such resolution, which shall be a date not earlier than the date 30 days prior
to the first solicitation of Holders generally in connection therewith or the
date of the most recent list of Holders forwarded to the Trustee prior to such
solicitation pursuant to Section 2.06 hereof and not later than the date such
solicitation is completed. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of the then outstanding
Notes have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that
purpose the then outstanding Notes shall be computed as of such record date;
provided that no such authorization, agreement or consent by the Holders on such
record date shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than eleven months after the
record date.

            (e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Note shall bind every future Holder of
the same Note and the Holder of every Note issued upon the registration or
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such Note.

            (f) Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Note may do so itself
with regard to all or any part of the principal amount of such Note or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.

Section 13.15  Benefit of Indenture.

            Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto, any Paying Agent, any
Registrar and its successors hereunder, and the Holders, any benefit or any
legal or equitable right, remedy or claim under this Indenture.

                                       95
<PAGE>
Section 13.16  Table of Contents, Headings, Etc.

            The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.

Section 13.17  Trustee Not Fiduciary for Holders of Senior Indebtedness.

            The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders or the Company
or to any other Person cash, property or securities to which any holders of
Senior Indebtedness shall be entitled by virtue of this Agreement or otherwise.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       96
<PAGE>
                                   SIGNATURES

                                    INSIGHT HEALTH SERVICES CORP.

                                    By: /s/ Mark J. Tricolli
                                       ______________________________
                                        Name: Mark J. Tricolli
                                        Title: Authorized Person

                                    INSIGHT HEALTH SERVICES HOLDINGS CORP.

                                    By: /s/ Mark J. Tricolli
                                       ______________________________
                                        Name: Mark J. Tricolli
                                        Title: Vice President
                                               & Secretary

                                    INSIGHT HEALTH CORP.

                                    By: /s/ Mark J. Tricolli
                                       ______________________________
                                        Name: Mark J. Tricolli
                                        Title: Authorized Person

                                    SIGNAL MEDICAL SERVICES, INC.

                                    By: /s/ Mark J. Tricolli
                                       ______________________________
                                        Name: Mark J. Tricolli
                                        Title: Authorized Person

                                    OPEN MRI, INC.

                                    By: /s/ Mark J. Tricolli
                                       ______________________________
                                        Name: Mark J. Tricolli
                                        Title: Authorized Person

                                    MAXUM HEALTH CORP.

                                    By: /s/ Mark J. Tricolli
                                       ______________________________
                                        Name: Mark J. Tricolli

                                       97
<PAGE>
                                        Title: Authorized Person

                                    RADIOSURGERY CENTERS, INC.

                                    By: /s/ Mark J. Tricolli
                                       ______________________________
                                        Name: Mark J. Tricolli
                                        Title: Authorized Person

                                    MAXUM HEALTH SERVICES CORP.

                                    By: /s/ Mark J. Tricolli
                                       ______________________________
                                        Name: Mark J. Tricolli
                                        Title: Authorized Person

                                    MRI ASSOCIATES, L.P.

                                    By: InSight Health Corp., its General
                                     Partner

                                    By: /s/ Mark J. Tricolli
                                       ______________________________
                                        Name: Mark J. Tricolli
                                        Title: Authorized Person

                                    MAXUM HEALTH SERVICES OF NORTH TEXAS, INC.

                                    By: /s/ Mark J. Tricolli
                                       ______________________________
                                        Name: Mark J. Tricolli
                                        Title: Authorized Person

                                    MAXUM HEALTH SERVICES OF DALLAS, INC.

                                    By: /s/ Mark J. Tricolli
                                       ______________________________
                                        Name: Mark J. Tricolli
                                        Title: Authorized Person

                                    NDDC, INC.

                                    By: /s/ Mark J. Tricolli
                                       ______________________________
                                        Name: Mark J. Tricolli

                                       98
<PAGE>
                                        Title: Authorized Person

                                    DIAGNOSTIC SOLUTIONS CORP.

                                    By: /s/ Mark J. Tricolli
                                       ______________________________
                                        Name: Mark J. Tricolli
                                        Title: Authorized Person

                                    STATE STREET BANK AND TRUST COMPANY,
                                    N.A., as Trustee

                                    By: /s/ Angelita L. Pena
                                       ______________________________
                                        Name: Angelita L. Pena
                                        Title: Assistant Vice President

                                       99
<PAGE>
                                                                      EXHIBIT A1

                                 [Face of Note]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

      THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.12 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

      THIS NOTE AND THE GUARANTEES ENDORSED HEREON HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS. NEITHER THIS NOTE NOR THE GUARANTEES ENDORSED HEREON NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE AND THE
GUARANTEES ENDORSED HEREON BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL CLOSING DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY
OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE AND THE GUARANTEES
ENDORSED HEREON (OR ANY PREDECESSOR OF THIS NOTE AND THE GUARANTEES ENDORSED
HEREON) (THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY, THE
PARENT OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED

                                      A1-1
<PAGE>
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER (I) PURSUANT TO CLAUSE (D) PRIOR TO THE END OF THE 40-DAY
DISTRIBUTION COMPLIANCE PERIOD WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT OR PURSUANT TO CLAUSE (E) PRIOR TO THE RESALE RESTRICTION
TERMINATION DATE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE
FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.

                                      A1-2
<PAGE>
                                                                CUSIP  [       ]

No.                                                                   **$_____**

                          INSIGHT HEALTH SERVICES CORP.

                    9-7/8% Senior Subordinated Notes due 2011

Closing Date:    October 30, 2001

            InSight Health Services Corp., a Delaware corporation (the
"Company", which term includes any successor under this Indenture hereinafter
referred to), for value received, promises to pay to CEDE & CO., or its
registered assigns, the principal sum of [Amount of Note] ($[         ]) on
November 1, 2011.

Interest Payment Dates:  May 1 and November 1, commencing May 1, 2002.

Record Dates:  April 15 and October 15.

            Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

                                      A1-3
<PAGE>
            IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.

                                          INSIGHT HEALTH SERVICES CORP.

                                          By: ____________________________
                                              Name:
                                              Title:

                                          By: ____________________________
                                              Name:
                                              Title:

This is one of the 9-7/8% Senior Subordinated Notes due 2011 described in the
within-mentioned Indenture.

Dated:  October 30, 2001

STATE STREET BANK AND TRUST COMPANY, N.A.,

as Trustee

By: __________________________________
            Authorized Signatory

                                      A1-4
<PAGE>
                             [Reverse Side of Note]

                        INSIGHT HEALTH SERVICES CORP.

                  9-7/8% Senior Subordinated Notes due 2011

            Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.

            1. Interest. The Company promises to pay interest on the principal
amount of this Note at 9-7/8% per annum from the date hereof until maturity and
shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the
Registration Rights Agreement referred to below. The Company shall pay interest
and Liquidated Damages, if any, semi-annually in arrears on May 1 and November 1
of each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Notes shall
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance; provided that if
there is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided further that the first Interest
Payment Date shall be May 1, 2002. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.

            2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered Holders of Notes at the close of business on the 15th day of the
month next preceding the Interest Payment Date, even if such Notes are canceled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.13 of the Indenture with respect to defaulted interest.
The Notes shall be payable as to principal, premium and Liquidated Damages, if
any, and interest at the office or agency of the Company maintained for such
purpose in The City of New York, or, at the option of the Company, payment of
interest and Liquidated Damages, if any, may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided
that payment by wire transfer of immediately available funds shall be required
with respect to principal of and interest, premium and Liquidated Damages, if
any, on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.

            3.    Paying Agent and Registrar.  Initially, State Street Bank
and Trust Company, N.A., the Trustee under the Indenture, shall act as Paying
Agent and Registrar.  The

                                      A1-5
<PAGE>
Company may change any Paying Agent or Registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.

            4. Indenture. The Company issued the Notes under an Indenture dated
as of October 30, 2001 ("Indenture") among the Company, the Parent, the
Subsidiary Guarantors and the Trustee. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended. The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. This Note is an obligation of the Company limited to $225 million
in aggregate principal amount. The Indenture pursuant to which this Note is
issued provides that up to $100 million aggregate principal amount of Additional
Notes may be issued thereunder.

            5. Optional Redemption. (a) Except as set forth in paragraphs 5(b)
below, the Company shall not have the option to redeem the Notes prior to
November 1, 2006. Thereafter, the Company shall have the option to redeem the
Notes, in whole or in part, upon not less than 30 nor more than 60 days' prior
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on November 1 of the years indicated below:

<TABLE>
<CAPTION>
      Year                                               Percentage
      ----                                               ----------
<S>                                                      <C>
      2006............................................    104.938%
      2007............................................    103.292%
      2008............................................    101.646%
      2009 and thereafter.............................    100.000%
</TABLE>

            (b) Notwithstanding the foregoing, at any time prior to November 1,
2004, the Company may redeem up to 35% of the aggregate principal amount of
Notes originally issued under the Indenture at a redemption price of 109.875% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date, with the net cash proceeds of the
initial Public Equity Offerings of the Company or the Parent; provided that (A)
at least 65% of the aggregate principal amount of the Notes originally issued
under the Indenture remains outstanding immediately after the occurrence of such
redemption, excluding Notes held by the Parent, the Company and its
Subsidiaries; and (B) the redemption must occur within 60 days of the date of
the closing of such initial Public Equity Offering.

            6. Mandatory Redemption. Except as set forth in paragraph 7 below,
the Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.

            7. Repurchase at Option of Holder. (a) Upon the occurrence of a
Change of Control, each Holder of Notes will have the right to require the
Company to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages

                                      A1-6
<PAGE>
thereon, if any, to the date of purchase (the "Change of Control Payment").
Within 30 days following any Change of Control, the Company will mail a notice
to each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase Notes on the date specified in such
notice, which date shall be no earlier than 30 days and no later than 60 days
from the date such notice is mailed (the "Change of Control Payment Date"),
pursuant to the procedures required by the Indenture and described in such
notice.

            (b) Within 365 days after the receipt of any Net Cash Proceeds from
an Asset Sale, the Company may, at its option, within 12 months after such Asset
Sale, (i) apply all or a portion of the Net Cash Proceeds to the permanent
reduction of amounts outstanding under the Credit Agreement (and to
correspondingly reduce the commitments, if any, with respect thereto) or to the
permanent repayment of other Senior Indebtedness of the Company or a Restricted
Subsidiary, provided that the repayment of any Indebtedness incurred under the
Credit Agreement in connection with the acquisition of any Facility with the
proceeds of any subsequent Sale and Leaseback Transaction relating to such
Facility shall not be required to result in the permanent reduction of the
amounts outstanding under the Credit Agreement or correspondingly permanently
reduce the commitments thereunder, or (ii) invest (or enter into a legally
binding agreement to invest) all or a portion of such Net Cash Proceeds in
properties and assets to replace the properties and assets that were the subject
of the Asset Sale or in properties and assets that will be used in the
businesses of the Company or its Restricted Subsidiaries, as the case may be,
existing on the Reference Date or in businesses the same, similar or reasonably
related thereto. If any such legally binding agreement to invest such Net Cash
Proceeds is terminated, the Company may, within 90 days of such termination or
within 12 months of such Asset Sale, whichever is later, invest such Net Cash
Proceeds as provided in clause (i) or (ii) (without regard to the parenthetical
contained in such clause (ii)) above. Pending the final application of any such
Net Cash Proceeds, the Company may temporarily reduce revolving credit
borrowings or otherwise invest such Net Cash Proceeds in a manner that is not
prohibited by this Indenture. The amount of such Net Cash Proceeds not so used
as set forth above in this paragraph shall constitute "Excess Proceeds". When
the aggregate amount of Excess Proceeds exceeds $10 million, the Company will,
within 30 days thereafter, make an offer to purchase (an "Excess Proceeds
Offer") from all Holders of Notes on a pro rata basis, in accordance with the
procedures set forth in this Indenture, the maximum principal amount (expressed
as a multiple of $1,000) of Notes that may be purchased with the Excess
Proceeds, at a purchase price in cash equal to 100% of the principal amount
thereof, plus accrued interest and Liquidated Damages, if any, to the date such
offer to purchase is consummated. If the aggregate principal amount of Notes
validly tendered and not withdrawn by holders thereof exceeds the Excess
Proceeds, the Notes to be purchased will be selected on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds will be
reset to zero.

            8. Selection and Notice of Redemption If less than all of the Notes
are to be redeemed or purchased in an offer to purchase at any time, the Trustee
shall select the Notes to be redeemed or purchased among the Holders of the
Notes in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not so
listed, on a pro rata basis, by lot or in accordance with any other method the
Trustee considers fair and appropriate. In the event of partial redemption by
lot, the particular Notes to be redeemed shall be selected, unless otherwise
provided herein, not less than 30 nor more than 60 days prior to the redemption
date by the Trustee from the outstanding Notes not previously

                                      A1-7
<PAGE>
called for redemption. Notices of redemption may not be conditional. If any Note
is to be redeemed in part only, the notice of redemption that relates to that
Note will state the portion of the principal amount thereof to be redeemed. A
new Note in principal amount equal to the unredeemed portion of the original
Note will be issued in the name of the Holder thereof upon cancellation of the
original Note. Notes called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest and Liquidated Damages,
if any, cease to accrue on Notes or portions of them called for redemption.

            9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company is not required to transfer or
exchange any Note selected for redemption. Also, the Company is not required to
transfer or exchange any Note for a period of 15 days before a selection of
Notes to be redeemed.

            10. Persons Deemed Owners. The registered Holder of a Note will be
treated as its owner for all purposes.

            11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes and Additional Notes, if any, voting as a single class (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, the Notes), and any existing default or compliance with
any provision of the Indenture or the Notes may be waived with the consent of
the Holders of a majority in principal of the then outstanding Notes and
Additional Notes, if any, voting as a single class (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, the Notes). Without the consent of any Holder of a Note,
the Indenture or the Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency; to provide for uncertificated Notes in addition to or
in place of certificated Notes; to evidence the succession of another Person to
the Company and the assumption by any such successor of the covenants of the
Company; to add to the covenants of the Company for the benefit of the Holders
or to surrender any right or power herein conferred upon the Company; to add
additional Events of Default; to evidence and provide for the acceptance of
appointment under the Indenture by a successor Trustee; to secure the Notes; to
comply with requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act; to provide for the
issuance of Additional Notes in accordance with the limitations set forth in the
Indenture as of its date; to allow any Guarantor to execute a supplemental
Indenture and a Guarantee with respect to the Notes; or to provide for the
issuance of the Exchange Notes pursuant to the terms of the Indenture.

            12. Defaults and Remedies. In the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Parent, the Company or any Restricted Subsidiary that is a Significant
Subsidiary, all outstanding Notes will become due and payable immediately
without further action or notice. If any other Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding

                                      A1-8
<PAGE>
Notes may declare all the Notes to be due and payable immediately by notice in
writing to the Company specifying the respective Event of Default. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest or Liquidated Damages, if any) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest or Liquidated Damages, if any, on,
or the principal of, the Notes.

            13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

            14. No Recourse Against Others. No director, officer, employee,
incorporator or stockholder of the Parent, the Company or any Subsidiary
Guarantor, as such, shall have any liability for any obligations of the Parent,
the Company or the Subsidiary Guarantors under the Notes, the Indenture, the
Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be effective to
waive liabilities under the federal securities laws.

            15. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.

            16. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the Registration Rights Agreement
dated as of October 30, 2001, between the Company, the Parent, the Guarantors
and the parties named on the signature pages thereof or, in the case of
Additional Notes, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have the rights set forth in one or more registration rights
agreements, if any, between the Company, the Parent, the Guarantors and the
other parties thereto, relating to rights given by the Company and the
Guarantors to the purchasers of Additional Notes (the "Registration Rights
Agreement").

            17. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

            The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:

                                      A1-9
<PAGE>
            InSight Health Services Corp.
            4400 MacArthur Blvd., Suite 800
            Newport Beach, California  92660
            Attention:  General Counsel
            Facsimile:  (949) 476-0137

                                     A1-10
<PAGE>
                                 ASSIGNMENT FORM

            To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to: _________________________________
                                                (Insert assignee's legal name)

_______________________________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. no.)

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________
              (Print or type assignee's name, address and zip code)

and irrevocably appoint________________________________________________________

to transfer this Note on the books of the Company.  The agent may substitute
another to act for him.

Date: _____________

                              Your Signature:___________________________________
                                             (Sign exactly as your name appears
                                              on the face of this Note)

Signature Guarantee*:

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                     A1-11
<PAGE>
                       OPTION OF HOLDER TO ELECT PURCHASE

            If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:

                     [ ] Section 4.10      [ ] Section 4.15

            If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:

                             $ ________________

Date:_____________

                              Your Signature:__________________________________
                                             (Sign exactly as your name appears
                                              on the face of this Note)

                              Tax Identification No.:__________________________

Signature Guarantee*:______

*  Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).

                                     A1-12
<PAGE>
              SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

            The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:

<TABLE>
<CAPTION>
                                                                    Principal Amount at
                     Amount of Decrease in  Amount of Increase in         Maturity             Signature of
                      Principal Amount at    Principal Amount at     of this Global Note    Authorized Officer
                           Maturity                Maturity            Following such          of Trustee or
Date of Exchange      of this Global Note    of this Global Note   Decrease (or Increase)     Note Custodian
----------------      -------------------    -------------------   ----------------------     --------------
<S>                  <C>                    <C>                    <C>                      <C>

</TABLE>

                                     A1-13
<PAGE>
                                                                      EXHIBIT A2

                                 [Face of Note]

Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the Registered owner hereof, Cede & Co., has an interest
herein.

      THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.12 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

      THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.

THIS NOTE AND THE GUARANTEES ENDORSED HEREON HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS NOTE NOR THE GUARANTEES ENDORSED HEREON NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE AND THE GUARANTEES
ENDORSED HEREON BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF
THE ORIGINAL CLOSING DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE

                                      A2-1
<PAGE>
AND THE GUARANTEES ENDORSED HEREON (OR ANY PREDECESSOR OF THIS NOTE AND THE
GUARANTEES ENDORSED HEREON) (THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A)
TO THE COMPANY, THE PARENT OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS
THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER (I) PURSUANT TO CLAUSE (D) PRIOR TO THE END OF THE 40-DAY
DISTRIBUTION COMPLIANCE PERIOD WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT OR PURSUANT TO CLAUSE (E) PRIOR TO THE RESALE RESTRICTION
TERMINATION DATE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE
FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.

                                      A2-2
<PAGE>
                                                                CUSIP  [       ]

No.                                                                   **$_____**

                          INSIGHT HEALTH SERVICES CORP.

                  9-7/8% Senior Subordinated Notes due 2011

Closing Date:    October 30, 2001

            InSight Health Services Corp., a Delaware corporation (the
"Company", which term includes any successor under this Indenture hereinafter
referred to), for value received, promises to pay to CEDE & CO., or its
registered assigns, the principal sum of [Amount of Note] ($[         ]) on
November 1, 2011.

Interest Payment Dates:  May 1 and November 1, commencing May 1, 2002.

Record Dates:  April 15 and October 15.

            Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

                                      A2-3
<PAGE>
            IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.

                                          INSIGHT HEALTH SERVICES CORP.

                                          By: ______________________________
                                              Name:
                                              Title:

                                          By: ______________________________
                                              Name:
                                              Title:

This is one of the 9-7/8% Senior Subordinated Notes due 2011 described in the
within-mentioned Indenture.

Dated:  October 30, 2001

STATE STREET BANK AND TRUST COMPANY, N.A.,

as Trustee

By: __________________________________
            Authorized Signatory

                                      A2-4
<PAGE>
                             [Reverse Side of Note]

                        INSIGHT HEALTH SERVICES CORP.

                  9-7/8% Senior Subordinated Notes due 2011

            Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.

            1. Interest. The Company promises to pay interest on the principal
amount of this Note at 9-7/8% per annum from the date hereof until maturity and
shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the
Registration Rights Agreement referred to below. The Company shall pay interest
and Liquidated Damages, if any, semi-annually in arrears on May 1 and November 1
of each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Notes shall
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance; provided that if
there is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided further that the first Interest
Payment Date shall be May 1, 2002. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.

            2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered Holders of Notes at the close of business on the 15th day of the
month next preceding the Interest Payment Date, even if such Notes are canceled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.13 of the Indenture with respect to defaulted interest.
The Notes shall be payable as to principal, premium and Liquidated Damages, if
any, and interest at the office or agency of the Company maintained for such
purpose in The City of New York, or, at the option of the Company, payment of
interest and Liquidated Damages, if any, may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided
that payment by wire transfer of immediately available funds shall be required
with respect to principal of and interest, premium and Liquidated Damages, if
any, on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.

            3. Paying Agent and Registrar. Initially, State Street Bank and
Trust Company, N.A., the Trustee under the Indenture, shall act as Paying Agent
and Registrar. The

                                      A2-5
<PAGE>
Company may change any Paying Agent or Registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.

            4. Indenture. The Company issued the Notes under an Indenture dated
as of October 30, 2001 ("Indenture") among the Company, the Parent, the
Subsidiary Guarantors and the Trustee. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended. The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. This Note is an obligation of the Company limited to $225 million
in aggregate principal amount. The Indenture pursuant to which this Note is
issued provides that up to $100 million aggregate principal amount of Additional
Notes may be issued thereunder.

            5. Optional Redemption. (a) Except as set forth in paragraphs 5(b)
below, the Company shall not have the option to redeem the Notes prior to
November 1, 2006. Thereafter, the Company shall have the option to redeem the
Notes, in whole or in part, upon not less than 30 nor more than 60 days' prior
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on November 1 of the years indicated below:

<TABLE>
<CAPTION>
      Year                                               Percentage
      ----                                               ----------
<S>                                                      <C>
      2006............................................    104.938%
      2007............................................    103.292%
      2008............................................    101.646%
      2009 and thereafter.............................    100.000%
</TABLE>

            (b) Notwithstanding the foregoing, at any time prior to November 1,
2004, the Company may redeem up to 35% of the aggregate principal amount of
Notes originally issued under the Indenture at a redemption price of 109.875% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date, with the net cash proceeds of the
initial Public Equity Offerings of the Company or the Parent; provided that (A)
at least 65% of the aggregate principal amount of the Notes originally issued
under the Indenture remains outstanding immediately after the occurrence of such
redemption, excluding Notes held by the Parent, the Company and its
Subsidiaries; and (B) the redemption must occur within 60 days of the date of
the closing of such initial Public Equity Offering.

            6. Mandatory Redemption. Except as set forth in paragraph 7 below,
the Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.

            7. Repurchase at Option of Holder. (a) Upon the occurrence of a
Change of Control, each Holder of Notes will have the right to require the
Company to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages

                                      A2-6
<PAGE>
thereon, if any, to the date of purchase (the "Change of Control Payment").
Within 30 days following any Change of Control, the Company will mail a notice
to each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase Notes on the date specified in such
notice, which date shall be no earlier than 30 days and no later than 60 days
from the date such notice is mailed (the "Change of Control Payment Date"),
pursuant to the procedures required by the Indenture and described in such
notice.

            (b) Within 365 days after the receipt of any Net Cash Proceeds from
an Asset Sale, the Company may, at its option, within 12 months after such Asset
Sale, (i) apply all or a portion of the Net Cash Proceeds to the permanent
reduction of amounts outstanding under the Credit Agreement (and to
correspondingly reduce the commitments, if any, with respect thereto) or to the
permanent repayment of other Senior Indebtedness of the Company or a Restricted
Subsidiary, provided that the repayment of any Indebtedness incurred under the
Credit Agreement in connection with the acquisition of any Facility with the
proceeds of any subsequent Sale and Leaseback Transaction relating to such
Facility shall not be required to result in the permanent reduction of the
amounts outstanding under the Credit Agreement or correspondingly permanently
reduce the commitments thereunder, or (ii) invest (or enter into a legally
binding agreement to invest) all or a portion of such Net Cash Proceeds in
properties and assets to replace the properties and assets that were the subject
of the Asset Sale or in properties and assets that will be used in the
businesses of the Company or its Restricted Subsidiaries, as the case may be,
existing on the Reference Date or in businesses the same, similar or reasonably
related thereto. If any such legally binding agreement to invest such Net Cash
Proceeds is terminated, the Company may, within 90 days of such termination or
within 12 months of such Asset Sale, whichever is later, invest such Net Cash
Proceeds as provided in clause (i) or (ii) (without regard to the parenthetical
contained in such clause (ii)) above. Pending the final application of any such
Net Cash Proceeds, the Company may temporarily reduce revolving credit
borrowings or otherwise invest such Net Cash Proceeds in a manner that is not
prohibited by this Indenture. The amount of such Net Cash Proceeds not so used
as set forth above in this paragraph shall constitute "Excess Proceeds". When
the aggregate amount of Excess Proceeds exceeds $10 million, the Company will,
within 30 days thereafter, make an offer to purchase (an "Excess Proceeds
Offer") from all Holders of Notes on a pro rata basis, in accordance with the
procedures set forth in this Indenture, the maximum principal amount (expressed
as a multiple of $1,000) of Notes that may be purchased with the Excess
Proceeds, at a purchase price in cash equal to 100% of the principal amount
thereof, plus accrued interest and Liquidated Damages, if any, to the date such
offer to purchase is consummated. If the aggregate principal amount of Notes
validly tendered and not withdrawn by holders thereof exceeds the Excess
Proceeds, the Notes to be purchased will be selected on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds will be
reset to zero.

            8. Selection and Notice of Redemption If less than all of the Notes
are to be redeemed or purchased in an offer to purchase at any time, the Trustee
shall select the Notes to be redeemed or purchased among the Holders of the
Notes in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not so
listed, on a pro rata basis, by lot or in accordance with any other method the
Trustee considers fair and appropriate. In the event of partial redemption by
lot, the particular Notes to be redeemed shall be selected, unless otherwise
provided herein, not less than 30 nor more than 60 days prior to the redemption
date by the Trustee from the outstanding Notes not previously

                                      A2-7
<PAGE>
called for redemption. Notices of redemption may not be conditional. If any Note
is to be redeemed in part only, the notice of redemption that relates to that
Note will state the portion of the principal amount thereof to be redeemed. A
new Note in principal amount equal to the unredeemed portion of the original
Note will be issued in the name of the Holder thereof upon cancellation of the
original Note. Notes called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest and Liquidated Damages,
if any, cease to accrue on Notes or portions of them called for redemption.

            9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company is not required to transfer or
exchange any Note selected for redemption. Also, the Company is not required to
transfer or exchange any Note for a period of 15 days before a selection of
Notes to be redeemed.

            10. Persons Deemed Owners. The registered Holder of a Note will be
treated as its owner for all purposes.

            11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes and Additional Notes, if any, voting as a single class (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, the Notes), and any existing default or compliance with
any provision of the Indenture or the Notes may be waived with the consent of
the Holders of a majority in principal of the then outstanding Notes and
Additional Notes, if any, voting as a single class (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, the Notes). Without the consent of any Holder of a Note,
the Indenture or the Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency; to provide for uncertificated Notes in addition to or
in place of certificated Notes; to evidence the succession of another Person to
the Company and the assumption by any such successor of the covenants of the
Company; to add to the covenants of the Company for the benefit of the Holders
or to surrender any right or power herein conferred upon the Company; to add
additional Events of Default; to evidence and provide for the acceptance of
appointment under the Indenture by a successor Trustee; to secure the Notes; to
comply with requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act; to provide for the
issuance of Additional Notes in accordance with the limitations set forth in the
Indenture as of its date; to allow any Guarantor to execute a supplemental
Indenture and a Guarantee with respect to the Notes; or to provide for the
issuance of the Exchange Notes pursuant to the terms of the Indenture.

            12. Defaults and Remedies. In the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Parent, the Company or any Restricted Subsidiary that is a Significant
Subsidiary, all outstanding Notes will become due and payable immediately
without further action or notice. If any other Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding

                                      A2-8
<PAGE>
Notes may declare all the Notes to be due and payable immediately by notice in
writing to the Company specifying the respective Event of Default. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest or Liquidated Damages, if any) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest or Liquidated Damages, if any, on,
or the principal of, the Notes.

            13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

            14. No Recourse Against Others. No director, officer, employee,
incorporator or stockholder of the Parent, the Company or any Subsidiary
Guarantor, as such, shall have any liability for any obligations of the Parent,
the Company or the Subsidiary Guarantors under the Notes, the Indenture, the
Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be effective to
waive liabilities under the federal securities laws.

            15. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.

            16. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the Registration Rights Agreement
dated as of October 30, 2001, between the Company, the Parent, the Guarantors
and the parties named on the signature pages thereof or, in the case of
Additional Notes, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have the rights set forth in one or more registration rights
agreements, if any, between the Company, the Parent, the Guarantors and the
other parties thereto, relating to rights given by the Company and the
Guarantors to the purchasers of Additional Notes (the "Registration Rights
Agreement").

            17. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

            The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:

                                      A2-9
<PAGE>
            InSight Health Services Corp.
            4400 MacArthur Blvd., Suite 800
            Newport Beach, California  92660
            Attention:  General Counsel
            Facsimile:  (949) 476-0137

                                     A2-10
<PAGE>
                                 ASSIGNMENT FORM

            To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to: _________________________________
                                                (Insert assignee's legal name)

_______________________________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. no.)

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________
              (Print or type assignee's name, address and zip code)

and irrevocably appoint________________________________________________________

to transfer this Note on the books of the Company.  The agent may substitute
another to act for him.

Date: _____________

                              Your Signature:___________________________________
                                             (Sign exactly as your name appears
                                              on the face of this Note)

Signature Guarantee*:

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                     A2-11
<PAGE>
                       OPTION OF HOLDER TO ELECT PURCHASE

            If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:

                     [ ] Section 4.10      [ ] Section 4.15

            If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:

                             $ ________________

Date:_____________

                              Your Signature:__________________________________
                                             (Sign exactly as your name appears
                                              on the face of this Note)

                              Tax Identification No.:__________________________

Signature Guarantee*:______

*  Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).

                                     A2-12
<PAGE>
         SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE

            The following exchanges of a part of this Regulation S Temporary
Global Note for an interest in another Global Note or of other Restricted Global
Notes for an interest in this Regulation S Temporary Global Note, have been
made:

<TABLE>
<CAPTION>
                                                                    Principal Amount at
                     Amount of Decrease in  Amount of Increase in         Maturity             Signature of
                      Principal Amount at    Principal Amount at     of this Global Note    Authorized Officer
                           Maturity                Maturity            Following such          of Trustee or
Date of Exchange      of this Global Note    of this Global Note   Decrease (or Increase)     Note Custodian
----------------      -------------------    -------------------   ----------------------     --------------
<S>                  <C>                    <C>                    <C>                      <C>

</TABLE>

                                     A2-13
<PAGE>
                                                                       EXHIBIT B

                         FORM OF CERTIFICATE OF TRANSFER

InSight Health Services Corp.
4400 MacArthur Blvd., Suite 800
Newport Beach, California  92660
Attention:  General Counsel
Facsimile:  (949) 476-0137

State Street Bank and Trust Company, N.A.
61 Broadway, 15th Floor
New York, NY 10006
Attention: Corporate Trust Department

            Re:  9-7/8% Senior Subordinated Notes due 2011

            Reference is hereby made to the Indenture, dated as of October
30, 2001 (the "Indenture"), among InSight Health Services Corp., a Delaware
corporation (the "Company"), InSight Health Services Holdings Corp., a
Delaware corporation (the "Parent"), the Subsidiary Guarantors, and State
Street Bank and Trust Company, N.A., as trustee.  Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.

            ___________________ (the "Transferor") owns and proposes to transfer
the Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount at maturity of $___________ in such Note[s] or interests (the
"Transfer"), to ___________________________ (the "Transferee"), as further
specified in Annex A hereto. In connection with the Transfer, the Transferor
hereby certifies that:

                            [CHECK ALL THAT APPLY]

            1. Check if Transferee will take delivery of a beneficial interest
in the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.

                                      B-1
<PAGE>
            2. Check if Transferee will take delivery of a beneficial interest
in the Regulation S Temporary Global Note, the Regulation S Permanent Global
Note or a Definitive Note pursuant to Regulation S. The Transfer is being
effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and, accordingly, the Transferor hereby further certifies that
(i) the Transfer is not being made to a person in the United States and (x) at
the time the buy order was originated, the Transferee was outside the United
States or such Transferor and any Person acting on its behalf reasonably
believed and believes that the Transferee was outside the United States or (y)
the transaction was executed in, on or through the facilities of a designated
offshore securities market and neither such Transferor nor any Person acting on
its behalf knows that the transaction was prearranged with a buyer in the United
States, (ii) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities
Act, (iii) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act and (iv) if the proposed
transfer is being made prior to the expiration of the Restricted Period, the
transfer is not being made to a U.S. Person or for the account or benefit of a
U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed
transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
Transfer enumerated in the Private Placement Legend printed on the Regulation S
Permanent Global Note, the Regulation S Temporary Global Note and/or the
Definitive Note and in the Indenture and the Securities Act.

            3. Check and complete if Transferee will take delivery of a
beneficial interest in the IAI Global Note or a Definitive Note pursuant to any
provision of the Securities Act other than Rule 144A or Regulation S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):

            (a) such Transfer is being effected pursuant to and in accordance
      with Rule 144 under the Securities Act;

                                       or

            (b) such Transfer is being effected to the Company or a subsidiary
      thereof;

                                       or

            (c) such Transfer is being effected pursuant to an effective
      registration statement under the Securities Act and in compliance with the
      prospectus delivery requirements of the Securities Act;

                                       or

            (d) such Transfer is being effected to an Institutional Accredited
      Investor and pursuant to an exemption from the registration requirements
      of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the
      Transferor hereby further certifies that it has not engaged in any general
      solicitation within the meaning of Regulation D under the

                                      B-2
<PAGE>
      Securities Act and the Transfer complies with the transfer restrictions
      applicable to beneficial interests in a Restricted Global Note or
      Restricted Definitive Notes and the requirements of the exemption claimed,
      which certification is supported by (1) a certificate executed by the
      Transferee in the form of Exhibit D to the Indenture and (2) an Opinion of
      Counsel provided by the Transferor or the Transferee (a copy of which the
      Transferor has attached to this certification), to the effect that such
      Transfer is in compliance with the Securities Act. Upon consummation of
      the proposed transfer in accordance with the terms of the Indenture, the
      transferred beneficial interest or Definitive Note will be subject to the
      restrictions on transfer enumerated in the Private Placement Legend
      printed on the IAI Global Note and/or the Definitive Notes and in the
      Indenture and the Securities Act.

            4. Check if Transferee will take delivery of a beneficial interest
in an Unrestricted Global Note or of an Unrestricted Definitive Note.

            (a) Check if Transfer is Pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.

            (b) Check if Transfer is Pursuant to Regulation S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.

            (c) Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.

                                      B-3
<PAGE>
            This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.

                                    ________________________________________
                                            [Insert Name of Transferor]

                                    By:________________________________________
                                       Name:
                                       Title:

Dated:______________

                                      B-4
<PAGE>
                       ANNEX A TO CERTIFICATE OF TRANSFER

1.    The Transferor owns and proposes to transfer the following:

                            [CHECK ONE OF (A) OR (B)]

            (A)   a beneficial interest in the:

                  (i)   144A Global Note (CUSIP __________); or

                  (ii)  Regulation S Global Note (CUSIP __________); or

                  (iii) IAI Global Note (CUSIP __________); or

            (B)   a Restricted Definitive Note.

2.    After the Transfer the Transferee will hold:

                                   [CHECK ONE]

            (A)   a beneficial interest in the:

                  (i)   144A Global Note (CUSIP __________); or

                  (ii)  Regulation S Global Note (CUSIP __________); or

                  (iii) IAI Global Note (CUSIP________); or

                  (iv)  Unrestricted Global Note (CUSIP___________); or

            (B)   a Restricted Definitive Note; or

            (C)   an Unrestricted Definitive Note,

in accordance with the terms of the Indenture.

                                      B-5
<PAGE>
                                                                       EXHIBIT C

                         FORM OF CERTIFICATE OF EXCHANGE

InSight Health Services Corp.
4400 MacArthur Blvd., Suite 800
Newport Beach, California  92660
Attention:  General Counsel
Facsimile:  (949) 476-0137

State Street Bank and Trust Company, N.A.
61 Broadway, 15th Floor
New York, NY 10006
Attention: Corporate Trust Department

            Re:  9-7/8% Senior Subordinated Notes due 2011

            Reference is hereby made to the Indenture, dated as of October
30, 2001 (the "Indenture"), among InSight Health Services Corp., a Delaware
corporation (the "Company"), InSight Health Services Holdings Corp., a
Delaware corporation (the "Parent"), the Subsidiary Guarantors, and State
Street Bank and Trust Company, N.A., as trustee.  Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.

            __________________________ (the "Owner") owns and proposes to
exchange the Note[s] or interest in such Note[s] specified herein, in the
principal amount at maturity of $____________ in such Note[s] or interests (the
"Exchange"). In connection with the Exchange, the Owner hereby certifies that:

            1.    Exchange of Restricted Definitive Notes or Beneficial
Interests in a Restricted Global Note for Unrestricted Definitive Notes or
Beneficial Interests in an Unrestricted Global Note

            (a) Check if Exchange is from beneficial interest in a Restricted
Global Note to beneficial interest in an Unrestricted Global Note. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount at maturity, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.

            (b) Check if Exchange is from beneficial interest in a Restricted
Global Note to Unrestricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby

                                      C-1
<PAGE>
certifies (i) the Definitive Note is being acquired for the Owner's own account
without transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the Definitive
Note is being acquired in compliance with any applicable blue sky securities
laws of any state of the United States.

            (c) Check if Exchange is from Restricted Definitive Note to
beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

            (d) Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

            2. Exchange of Restricted Definitive Notes or Beneficial Interests
in Restricted Global Notes for Restricted Definitive Notes or Beneficial
Interests in Restricted Global Notes

            (a) Check if Exchange is from beneficial interest in a Restricted
Global Note to Restricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount at maturity, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.

            (b) Check if Exchange is from Restricted Definitive Note to
beneficial interest in a Restricted Global Note. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] [ ] 144A Global Note, [ ] Regulation S Global Note, [ ] IAI
Global Note with an equal principal amount at maturity, the Owner hereby
certifies (i) the beneficial interest is being acquired for the Owner's own
account

                                      C-2
<PAGE>
without transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any applicable
blue sky securities laws of any state of the United States. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
beneficial interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.

            This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.

                                    __________________________________________
                                            [Insert Name of Transferor]

                                    By:_______________________________________
                                       Name:
                                       Title:

Dated:____________

                                      C-3
<PAGE>
                                                                       EXHIBIT D

                            FORM OF CERTIFICATE FROM
                   ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

[        ]

            Re:  9-7/8% Senior Subordinated Notes due 2011

            Reference is hereby made to the Indenture, dated as of October
30, 2001 (the "Indenture"), among InSight Health Services Corp., a Delaware
corporation (the "Company") InSight Health Services Holdings Corp., a
Delaware corporation (the "Parent"), the Subsidiary Guarantors, and State
Street Bank and Trust Company, N.A., as trustee.  Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.

            In connection with our proposed purchase of $____________ aggregate
principal amount at maturity of:

            (a)            beneficial interest in a Global Note, or

            (b)            a Definitive Note,

            we confirm that:

            1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").

            2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such transfer is in
compliance with the Securities Act, (D) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
provisions of Rule 144(k) under the Securities Act or (F) pursuant to an
effective registration statement under the Securities Act, and we further agree
to provide to any person purchasing the Definitive Note or beneficial interest
in a Global Note from us in a transaction meeting the requirements of clauses
(A) through (E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.

                                      D-1
<PAGE>
            3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.

            4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.

            5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.

            You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.

                                    ___________________________________________
                                       [Insert Name of Accredited Investor]

                                    By:________________________________________
                                       Name:
                                       Title:

Dated:__________________

                                      D-2
<PAGE>
                                                                       EXHIBIT E

                          FORM OF NOTATION OF GUARANTEE

            For value received, each Guarantor (which term includes any
successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and subject
to the provisions in the Indenture dated as of October 30, 2001 (the
"Indenture") among InSight Health Services Corp. (the "Company"), InSight Health
Services Holdings Corp., the Subsidiary Guarantors (as defined in the
Indenture), and State Street Bank and Trust Company, N.A., as trustee (the
"Trustee"), (a) the due and punctual payment of the principal of, premium, if
any, and interest on the Notes (as defined in the Indenture), whether at
maturity, by acceleration, redemption or otherwise, the due and punctual payment
of interest on overdue principal and premium, and, to the extent permitted by
law, interest, and the due and punctual performance of all other obligations of
the Company to the Holders or the Trustee all in accordance with the terms of
the Indenture and (b) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that the same will be promptly paid
in full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise. The
obligations of the Guarantors to the Holders of Notes and to the Trustee
pursuant to the Guarantee and the Indenture are expressly set forth in Article
Eleven of the Indenture and reference is hereby made to the Indenture for the
precise terms of the Guarantee. Each Holder of a Note, by accepting the same,
(a) agrees to and shall be bound by such provisions, (b) authorizes and directs
the Trustee, on behalf of such Holder, to take such action as may be necessary
or appropriate to effectuate the subordination as provided in the Indenture and
(c) appoints the Trustee attorney-in-fact of such Holder for such purpose;
provided that the Indebtedness evidenced by this Guarantee shall cease to be so
subordinated and subject in right of payment upon any defeasance of this Note in
accordance with the provisions of the Indenture.

                                    [Name of Guarantor]

                                    By: ________________________________
                                        Name:
                                        Title:

                                      E-1
<PAGE>
                                                                       EXHIBIT F

                         FORM OF SUPPLEMENTAL INDENTURE
                    TO BE DELIVERED BY SUBSEQUENT GUARANTORS

            Supplemental Indenture (this "Supplemental Indenture"), dated as of
_____________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of InSight Health Services Corp. (or its permitted successor), a
Delaware corporation (the "Company"), InSight Health Services Holdings Corp.,
the Subsidiary Guarantors (as defined in the Indenture referred to herein) and
State Street Bank and Trust Company, N.A., as trustee under the Indenture
referred to below (the "Trustee").

                               W I T N E S S E T H

            WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of October 30, 2001 providing
for the issuance of an aggregate principal amount of $225 million of 9-7/8%
Senior Subordinated Notes due 2011 (the "Notes");

            WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Guarantee"); and

            WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.

            NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:

            1. Capitalized Terms. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.

            2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees
as follows:

      (a) Along with all other Guarantors, to jointly and severally Guarantee to
each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Notes or the obligations of the Company
hereunder or thereunder, that:

                  (i) the principal of and interest on the Notes will be
promptly paid in full when due, whether at maturity, by acceleration, redemption
or otherwise, and interest on the overdue principal of and interest on the
Notes, if any, if lawful, and all other obligations of the
<PAGE>
Company to the Holders or the Trustee hereunder or thereunder will be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and

                  (ii) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed or any performance so guaranteed
for whatever reason, the Guarantors shall be jointly and severally obligated to
pay the same immediately.

      (b) The obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes or the Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, the recovery of
any judgment against the Company, any action to enforce the same or any other
circumstance that might otherwise constitute a legal or equitable discharge or
defense of a guarantor.

      (c) The following are hereby waived: diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever.

      (d) This Guarantee shall not be discharged except by complete performance
of the obligations contained in the Notes and the Indenture.

      (e) If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors, or any Custodian, Trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.

      (f) The Guaranteeing Subsidiary shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby.

      (g) As between the Guarantors, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six of the Indenture for the
purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article Six of the Indenture, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Guarantee.

      (h) Pursuant to Section 10.02 of the Indenture, after giving effect to any
maximum amount and any other contingent and fixed liabilities that are relevant
under any applicable Bankruptcy or fraudulent conveyance laws, and after giving
effect to any collections from, rights to receive contribution from or payments
made by or on behalf of any other Guarantor in respect of the obligations of
such other Guarantor under Article Ten of the Indenture shall result in the
<PAGE>
obligations of such Guarantor under its Guarantee not constituting a fraudulent
transfer or conveyance.

            3. Subordination. The Obligations of the Guaranteeing Subsidiary
under its Guarantee pursuant to this Supplemental Indenture shall be junior and
subordinated to the Senior Indebtedness of the Guaranteeing Subsidiary on the
same basis as the Notes are junior and subordinated to the Senior Indebtedness
of the Company. For the purposes of the foregoing sentence, the Trustee and the
Holders shall have the right to receive and/or retain payments by the
Guaranteeing Subsidiary only at such time as they may receive and/or retain
payments in respect of the Notes pursuant to the Indenture, including Article
Ten thereof.

            4. Execution and Delivery.  Each Guaranteeing Subsidiary agrees
that the Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Guarantee.

            5. Guaranteeing Subsidiary May Consolidate, Etc., on Certain Terms.

            Except as otherwise provided in Section 11.05 of the Indenture, a
Subsidiary Guarantor may not consolidate with or merge with or into any other
Person or convey, sell, assign, transfer, lease or otherwise dispose of its
properties and assets substantially as an entirety to any other Person (other
than the Company or another Subsidiary Guarantor) unless:

            (i) subject to the provisions of the following paragraph, the Person
      formed by or surviving such consolidation or merger (if other than such
      Subsidiary Guarantor) or to which such properties and assets are
      transferred assumes all of the obligations of such Subsidiary Guarantor
      under this Indenture and its Guarantee, pursuant to a supplemental
      indenture in form and substance satisfactory to the Trustee;

            (ii) immediately after giving effect to such transaction, no Default
      or Event of Default has occurred and is continuing; and

            (iii) the Subsidiary Guarantor delivers, or causes to be delivered,
      to the Trustee, in form and substance reasonably satisfactory to the
      Trustee, an Officers' Certificate and an Opinion of Counsel, each stating
      that such transaction complies with the requirements of this Indenture.

            For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries, the Capital Stock of which constitutes all or substantially all of
the properties and assets of the Company, shall be deemed to be the transfer of
all or substantially all of the properties and assets of the Company.

            In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor Person, by supplemental indenture, executed
and delivered to the Trustee and reasonably satisfactory in form to the Trustee,
of the Guarantee endorsed upon the Notes and the due and punctual performance of
all of the covenants and conditions of the Indenture to be performed by a
Guarantor, such successor Person shall succeed to and be
<PAGE>
substituted for a Guarantor with the same effect as if it had been named herein
as a Guarantor. Such successor Person thereupon may cause to be signed any or
all of the Guarantees to be endorsed upon all of the Notes issuable hereunder
which theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Guarantees so issued shall in all respects have the same legal
rank and benefit under the Indenture as the Guarantees theretofore and
thereafter issued in accordance with the terms of the Indenture as though all of
such Guarantees had been issued at the date of the execution hereof.

            6. Releases.

            (a) A Subsidiary Guarantor will be deemed automatically and
unconditionally released and discharged from all of its obligations under its
Guarantee without any further action on the part of the Trustee or any Holder of
the Notes upon a sale or other disposition to a Person not an Affiliate of the
Company of all of the Capital Stock of, or all or substantially all of the
assets of, such Subsidiary Guarantor, by way of merger, consolidation or
otherwise, which transaction is carried out in accordance with Section 4.10
hereof; provided that any such termination shall occur (x) only to the extent
that all obligations of such Subsidiary Guarantor under all of its guarantees
of, and under all of its pledges of assets or other security interests which
secure any Indebtedness of the Company shall also terminate upon such sale,
disposition or release and (y) only if the Trustee is furnished with written
notice of such release together with an Officers' Certificate from such
Subsidiary Guarantor to the effect that all of the conditions to release in this
Section 6 have been satisfied.

            (b) Any Guarantor not released from its obligations under its
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under the Indenture
as provided in Article Eleven of the Indenture.

            7. No Recourse Against Others. No director, officer, employee,
incorporator or stockholder of the Parent, the Company or any Subsidiary
Guarantor, as such, shall have any liability for any obligations of the Parent,
the Company or the Subsidiary Guarantors under the Notes, this Indenture, the
Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be effective to
waive liabilities under the federal securities laws.

            8. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

            9. Counterparts.  The parties may sign any number of copies of
this Supplemental Indenture.  Each signed copy shall be an original, but all
of them together represent the same agreement.

            10. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
<PAGE>
            11. Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
<PAGE>
            IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.

Dated:  _______________, ____

                                    [Guaranteeing Subsidiary]

                                    By: __________________________
                                        Name:
                                        Title:

                                    INSIGHT HEALTH SERVICES CORP.

                                    By: __________________________
                                        Name:
                                        Title:

                                    INSIGHT HEALTH SERVICES HOLDINGS CORP.

                                    By: ______________________________
                                        Name:
                                        Title:

                                    [Subsidiary Guarantors]

                                    By: ______________________________
                                        Name:
                                        Title:

                                    STATE STREET BANK AND TRUST COMPANY,
                                    N.A.,  AS TRUSTEE

                                    By: ______________________________
                                        Name:
                                        Title:

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