Exhibit 10.83
-------------
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of May 22, 2001 (this
"Agreement"), by and between Commodore Applied Technologies, Inc., a Delaware
corporation, with principal executive offices located at 0000 Xxxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx 00000 (the "Company"), and Xx. Xxxxxx Xxxxx
("Buyer").
WHEREAS, Buyer desires to purchase from the Company, and the Company
desires to issue and sell to Buyer, upon the terms and subject to the conditions
of this Agreement, (i) on million nine hundred and twenty three thousand and
seventy seven (1,923,077) shares of Common Stock (the "Equity") and (ii) Common
Stock Purchase Warrants in the form attached hereto as Exhibit A to purchase
five hundred thousand (500,000) shares of Common Stock (as defined below)
(collectively, the "Warrants"); and
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
I. PURCHASE AND SALE OF EQUITY AND WARRANTS
A. Transaction. Buyer hereby agrees to purchase from the Company, and
the Company has offered and hereby agrees to issue and sell to Buyer in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act of 1933, as amended (the "Securities Act"), the Equity and
the Warrants to purchase two million four hundred twenty three thousand seventy
seven (2,423,077) shares of Common Stock.
B. Purchase Price; Form of Payment. The purchase price for the Equity
and the Warrants to be purchased by Buyer hereunder shall be two hundred fifty
thousand dollars ($250,000) (the "Purchase Price"). Simultaneously with the
execution of this Agreement, Buyer shall pay the Purchase Price by wire transfer
of immediately available funds to the Company. Simultaneously with the execution
of this Agreement, the Company shall deliver one or more duly authorized, issued
and executed certificates (I/N/O Buyer or, if the Company otherwise has been
notified, I/N/O Buyer's nominee) evidencing the Equity and the Warrants, which
Buyer is purchasing, to the Buyer or its designated agent.
C. Method of Payment. Payment of the Purchase Price shall be made by
wire transfer of immediately available funds to the Company:
The Bank of America
000 Xxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
ABA No.: 000000000
For the Account of: Commodore Applied Technologies, Inc.
Account No.: 004271317667
1
II. BUYER'S REPRESENTATIONS, WARRANTIES; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION
Buyer represents and warrants to and covenants and agrees with the
Company as follows:
A. Buyer is purchasing the Equity (the "Equity Shares") and the Common
Stock issuable upon exercise of the Warrants (the "Warrant Shares"),
collectively (the "Securities") for its own account, for investment purposes
only and not with a view towards or in connection with the public sale or
distribution thereof in violation of the Securities Act.
B. Buyer is (i) an "accredited investor" within the meaning of Rule 501
of Regulation D under the Securities Act, (ii) experienced in making investments
of the kind contemplated by this Agreement, (iii) capable, by reason of its
business and financial experience, of evaluating the relative merits and risks
of an investment in the Securities, and (iv) able to afford the loss of its
investment in the Securities.
C. Buyer understands that the Securities are being offered and sold by
the Company in reliance on an exemption from the registration requirements of
the Securities Act and equivalent state securities and "blue sky" laws, and that
the Company is relying upon the accuracy of, and Buyer's compliance with,
Buyer's representations, warranties and covenants set forth in this Agreement to
determine the availability of such exemption and the eligibility of Buyer to
purchase the Securities;
D. Buyer understands that the Securities have not been approved or
disapproved by the Securities and Exchange Commission (the "Commission") or any
state securities commission.
E. This Agreement has been duly and validly authorized, executed and
delivered by Buyer and is a valid and binding agreement of Buyer enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and except as rights to
indemnity and contribution may be limited by federal or state securities laws or
the public policy underlying such laws.
F. Neither Buyer nor its affiliates nor any person acting on its or
their behalf has the intention of entering, or will enter into, prior to the
closing, any put option, short position or other similar instrument or position
with respect to the Common Stock and neither Buyer nor any of its affiliates nor
any person acting on its or their behalf will use at any time shares of Common
Stock acquired pursuant to this Agreement to settle any put option, short
position or other similar instrument or position that may have been entered into
prior to the execution of this Agreement.
G. Buyer has been given the opportunity for a reasonable time prior to
the date hereof to ask questions of, and receive answers from, the Company or
its representatives concerning the Company and the Securities, and has been
given the opportunity for a reasonable time prior to the date hereof to obtain
2
such additional information necessary to verify the accuracy of the information
which was provided to the extent the Company possesses such information or can
acquire it without unreasonable effort or expense.
H. Buyer is not relying on the Company, or its affiliates with respect
to economic considerations involved in an investment in the Securities.
I. Buyer represents, warrants and agrees that it will not sell or
otherwise transfer the Securities without registration under the Securities Act
or an exemption therefrom and fully understands and agrees that it must bear the
economic risk of an investment in the Securities because, among other reasons,
the Securities have not been registered under the Securities Act or under the
securities laws of any state and, therefore, cannot be resold, pledged, assigned
or otherwise disposed of unless they are registered under the Securities Act and
under the applicable securities laws of such states prior to such resale,
pledge, assignment or other disposition, or an exemption from such registration
is available. In particular, Buyer is aware that the Securities, when issued,
will be "restricted securities," as such term is defined in Rule 144 promulgated
under the Securities Act ("Rule 144"), and they may not be sold pursuant to Rule
144 unless all of the conditions of Rule 144 are met. Buyer also understands
that, except as otherwise provided herein, the Company is under no obligation to
register the Securities on its behalf or to assist it in complying with any
exemption from registration under the Securities Act or applicable state
securities laws. Buyer further understands that sales or transfers of the
Securities are further restricted by applicable state securities laws and the
provisions of this Agreement.
J. No representations or warranties have been made to Buyer by the
Company, or any officer, employee, agent, affiliate or subsidiary of the
Company, other than the representations of the Company contained herein, and in
subscribing for the Securities Buyer is not relying upon any representations
other than those contained herein.
K. Any information which Buyer has heretofore furnished to the Company
with respect to its financial position and business experience is correct and
complete as of the date of this Agreement and if there should be any material
change in such information it will immediately furnish such revised or corrected
information to the Company.
L. Buyer is not purchasing the Securities as a result of or subsequent
to any advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio, any
seminar or meeting, or any solicitation of a subscription by a person or entity
not previously known to Buyer in connection with investments in securities
generally.
M. Buyer has not engaged any broker or other person or entity that is
entitled to a commission, fee or other remuneration as a result of the
execution, delivery or performance of this Agreement or any other required
documents.
N. Neither the execution, delivery nor performance of this Agreement or
any other required documents by Buyer violates or conflicts with or creates
3
(with or without the giving of notice or the lapse of time, or both) a default
under, or a lien or encumbrance upon, any of Buyer's assets or properties
pursuant to or requires the consent, approval, or order of any government or
governmental agency or other person or entity under (x) any Equity, indenture,
lease, license or other material agreement to which Buyer is a party or by which
it or any of its assets or properties is bound, (y) any statute, law, rule,
regulation or court decree binding upon or applicable to Buyer or its assets or
properties, or (z) the charter or by-laws or other equivalent governing
documents of Buyer.
III. THE COMPANY'S REPRESENTATIONS
The Company represents and warrants to Buyer that:
A. Capitalization.
1. The authorized capital stock of the Company consists of: (i)
125,000,000 shares of Common Stock, of which 52,060,445 shares are
issued and outstanding on the date hereof; and (ii) 10,000,000 shares
of "blank check" preferred stock, of which (a) 80,000 shares have been
designated as Series A Preferred Stock, of which 18,000 were issued and
have been retired, (b) 25,000 shares have been designated as Series B
6% Convertible Preferred Stock, of which 20.909 have been issued and
have been retired, (c) 15,000 shares have been designated as Series C
6% Convertible Preferred Stock, of which 10,189 have been issued and
have been retired, (d) 25,000 shares have been designated as Series D
6% Convertible Preferred Stock, of which 20,391 have been issued and
have been retired, (e) 335,000 shares have been designated as Series E
Convertible Preferred Stock, of which 335,000 have been issued and
110,000 have been retired, and (f) 266,700 shares have been designated
as Series F Convertible Preferred Stock, of which 266,700 have been
issued and 31,500 have been retired, in each case on the date hereof.
All of the issued and outstanding shares of Common Stock and preferred
stock, if any, have been duly authorized and validly issued and are
fully paid and non-assessable. As of the date hereof, the Company has
outstanding stock options and warrants to purchase 41,684,116 shares of
Common Stock.
2. The shares of Common Stock have been duly and validly
authorized and reserved for issuance by the Company, and, when issued
by the Company upon exercise of the Warrant, will be duly and validly
issued, fully paid and non-assessable and will not subject the holder
thereof to personal liability solely by reason of being such holder.
The Equity Shares and Warrant Shares have been duly and validly
authorized and reserved for issuance by the Company, and, when issued
by the Company on exercise of the Warrants will be duly and validly
issued, fully paid and non-assessable and will not subject the holder
thereof to personal liability solely by reason of being such holder.
3. Schedule III.A.4. hereto lists all the subsidiaries of the
Company (the "Subsidiaries"). Except as disclosed on Schedule III.A.4.
hereto, the Company does not own or control, directly or indirectly,
4
any interest in any other corporation, partnership, limited liability
company, unincorporated business organization, association, trust or
other business entity.
B. Organization; Reporting Company Status.
1. Each of the Company and each of the Subsidiaries is a
corporation duly organized, validly existing and in good standing under
the laws of the state of jurisdiction in which it is incorporated and
is duly qualified as a foreign corporation in all jurisdictions in
which the failure to so qualify would reasonably be expected to have a
material adverse effect on the business, properties, prospects,
condition (financial or otherwise) or results of operations of the
Company and the Subsidiaries taken as a consolidated whole or on the
consummation of any of the transactions contemplated by this Agreement
(a "Material Adverse Effect").
2. The Company has registered its common stock pursuant to Section
12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Common Stock is listed and traded on the American Stock
Exchange (the "Amex") and the Company has not received any notice
regarding, and to its knowledge there is no threat of, the termination
or discontinuance of the eligibility of the Common Stock for such
listing.
C. Authorization. The Company (i) has duly and validly authorized and
reserved for issuance one million six hundred forty on thousand six hundred and
sixty seven (1,641,667) shares of Common Stock, sufficient in number for the
Equity purchase and the exercise of the Warrants, and (ii) at all times from and
after the date hereof shall have a sufficient number of shares of Common Stock
duly and validly authorized and reserved for the exercise of the Warrants. The
Company understands and acknowledges the potentially dilutive effect to the
Common Stock of the issuance of the Equity Shares and the Warrant Shares upon
the exercise of the Warrants, respectively. The Company further acknowledges
that its obligation to issue Warrant Shares upon exercise of the Warrants in
accordance with this Agreement, the Warrants are absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company and notwithstanding the
commencement of any case under 11 U.S.C. ss. 101 et seq. (the "Bankruptcy
Code"). In the event the Company is a debtor under the Bankruptcy Code, the
Company hereby waives to the fullest extent permitted any rights to relief it
may have under 11 U.S.C. ss. 362 in respect of the conversion of the Preferred
Shares and the exercise of the Warrants. The Company agrees, without cost or
expense to Buyer, to take or consent to any and all action necessary to
effectuate relief under 11 U.S.C. ss. 362.
D. Authority; Validity and Enforceability. The Company has the
requisite corporate power and authority to file and perform its obligations
under the Stock Purchase Agreement and to enter into the Documents (as
hereinafter defined), and to perform all of its obligations hereunder and
thereunder (including the issuance, sale and delivery to Buyer of the
Securities). The execution, delivery and performance by the Company of the
Documents, and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance of the Equity,
5
the Warrants and the issuance and reservation for issuance of the Warrant
Shares), have been duly authorized by all necessary corporate action on the part
of the Company. The Company has duly and validly executed each of the Documents.
Each Document constitutes a valid and binding obligation of the Company
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and except as
rights to indemnity and contribution may be limited by federal or state
securities laws or the public policy underlying such laws. The Securities have
been duly and validly authorized for issuance by the Company and, when executed
and delivered by the Company, will be valid and binding obligations of the
Company enforceable against it in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally.
For purposes of this Agreement, the term "Documents" means (i) this Agreement;
(ii) the Equity, (iii) the Registration Rights Agreement of even date herewith
between the Company and Buyer, a copy of which is annexed hereto as Exhibit B
(the "Registration Rights Agreement"); and (iv) the Warrants.
E. Validity of Issuance of the Securities. The Equity and the Warrants
as of the Closing Date and the Warrant Shares upon their issuance, respectively,
are or will be validly issued and outstanding, fully paid and non-assessable,
and not subject to any preemptive rights, rights of first refusal, tag-along
rights, drag-along rights or other similar rights.
F. Non-contravention. The execution and delivery by the Company of the
Documents, the issuance of the Securities, and the consummation by the Company
of the other transactions contemplated hereby and thereby, including, without
limitation, do not, and compliance with the provisions of this Agreement and
other Documents will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of a material benefit under, or result in the creation of any Lien (as
defined below) upon any of the properties or assets of the Company or any of its
Subsidiaries under, or result in the termination of, or require that any consent
be obtained or any notice be given with respect to, (i) the Certificate of
Incorporation or By-Laws of the Company or the comparable charter or
organizational documents of any of its Subsidiaries, (ii) any loan or credit
agreement, Equity, bond, mortgage, indenture, lease, contract or other
agreement, instrument or permit applicable to the Company or any of its
Subsidiaries or their respective properties or assets, or (iii) any Law (as
defined below) applicable to the Company or any of its Subsidiaries or their
respective properties or assets.
G. Approvals. No authorization, approval or consent of any court or
public or governmental authority is required to be obtained by the Company for
the issuance and sale of the Equity or the Warrants (and Warrant Shares) to
Buyer as contemplated by this Agreement, except such authorizations, approvals
and consents that have been obtained by the Company prior to the date hereof.
H. Commission Filings. The Company has filed with the Commission all
reports, proxy statements, forms and other documents required to be filed with
the Commission under the Securities Act and the Exchange Act (the "Commission
Filings"). As of their respective dates, (i) the Commission Filings complied in
6
all material respects with the requirements of the Securities Act, or the
Exchange Act, as the case may be, and the rules and regulations of the
Commission promulgated thereunder applicable to such Commission Filings, and
(ii) none of the Commission Filings contained at the time of their filing any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the Commission Filings, as of
the dates of such documents, were true and complete in all material respects and
complied with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto, have been prepared in
accordance with generally accepted accounting principles in the United States
("GAAP") (except in the case of the unaudited statements, as permitted by Form
10-Q under the Exchange Act) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly presented
the consolidated financial position of the Company and its Subsidiaries as of
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments that in the aggregate are not material and
to any other adjustment described therein).
I. Absence of Litigation. Except as set forth on Schedule III.K, there
are (i) no suits, actions or proceedings pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries, (ii) no
complaints, lawsuits, charges or other proceedings pending or, to the knowledge
of the Company, threatened in any forum by or on behalf of any present or former
employee of the Company or any of its Subsidiaries, any applicant for employment
or classes of the foregoing alleging breach of any express or implied contract
of employment, any applicable law governing employment or the termination
thereof or other discriminatory, wrongful or tortuous conduct in connection with
the employment relationship, or (iii) no judgments, decrees, injunctions or
orders of any governmental entity or arbitrator outstanding against the Company
or any Subsidiary.
J. Absence of Events of Default. Except as set forth in Schedule III.L,
no "Event of Default" (as defined in any agreement or instrument to which the
Company is a party) and no event which, with notice, lapse of time or both,
would constitute an Event of Default (as so defined), has occurred and is
continuing.
K. Financial Statements; No Undisclosed Liabilities. The Company has
delivered to Buyer true and complete copies of the (i) audited balance sheet of
the Company and the Subsidiaries as at December 31, 2000 and 1999, respectively,
and the related audited statements of income, changes in stockholders' equity
and cash flows for the three fiscal years ended December 31, 2000, including the
related notes and schedules thereto and (ii) unaudited balance sheets of the
Company and the Subsidiaries and the statements of income, changes in
stockholders' equity and cash flows for each fiscal quarter since December 31,
1998, including the related notes and schedules, all certified by the chief
financial officer of the Company (collectively, the "Financial Statements"), and
all management letters, if any, from the Company's independent auditors relating
to the dates and periods covered by the Financial Statements. Each of the
Financial Statements is complete and correct in all material respects, has been
7
prepared in accordance with GAAP (subject, in the case of the interim Financial
Statements, to normal year end adjustments and the absence of footnotes), and
fairly presents the financial position, results of operations and cash flows of
the Company as at the dates and for the periods indicated. For purposes hereof,
the audited balance sheet of the Company as at December 31, 2000 is hereinafter
referred to as the "Balance Sheet" and December 31, 2000 is hereinafter referred
to as the "Balance Sheet Date". Except as set forth on Schedule III.M. hereto,
the Company has no indebtedness, obligations or liabilities of any kind (whether
accrued, absolute, contingent or otherwise, and whether due or to become due),
which was not fully reflected in, reserved against or otherwise described in the
Balance Sheet or the notes thereto or was not incurred in the ordinary course of
business consistent with the Company's past practices since the Balance Sheet
Date.
L. Related Party Transactions. Except as set forth in the Commission
Filings or on Schedule III.O. hereto, neither the Company nor any of its
officers, directors or "Affiliates" (as such term is defined in Rule 12b-2 under
the Exchange Act) nor any family member of any officer, director or Affiliate of
the Company has borrowed any moneys from or has outstanding any indebtedness or
other similar obligations to the Company or any of the Subsidiaries. Except as
set forth in the Commission Filings or on Schedule III.O. hereto, neither the
Company nor any of its officers, directors or Affiliates nor any family member
of any officer, director or Affiliate of the Company (i) owns any direct or
indirect interest constituting more than a 1% equity (or similar profit
participation) interest in, or controls or is a director, officer, partner,
member or employee of, or consultant to or lender to or borrower from, or has
the right to participate in the profits of, any person or entity which is (x) a
competitor, supplier, customer, landlord, tenant, creditor or debtor of the
Company or any Subsidiary, (y) engaged in a business related to the business of
the Company or any Subsidiary, or (z) a participant in any transaction to which
the Company or any Subsidiary is a party or (ii) is a party to any contract,
agreement, commitment or other arrangement with the Company or any Subsidiary.
M. Securities Law Matters. Assuming the accuracy of the representations
and warranties of Buyer set forth in Section II hereof, the offer and sale by
the Company of the Securities is exempt from (i) the registration and prospectus
delivery requirements of the Securities Act and the rules and regulations of the
Commission thereunder and (ii) the registration and/or qualification provisions
of all applicable state securities and "blue sky" laws. Other than pursuant to
an effective registration statement under the Securities Act, the Company has
not issued, offered or sold the Preferred Shares or any shares of Common Stock
(including for this purpose any securities of the same or a similar class as the
Preferred Shares or Common Stock, or any securities convertible into or
exchangeable or exercisable for the Preferred Shares or Common Stock or any such
other securities) within the one-year next preceding the date hereof, except as
disclosed in the Commission Filings or on Schedule III.Q. hereto or otherwise
previously disclosed in writing to Buyer, and the Company shall not directly or
indirectly take, and shall not permit any of its directors, officers or
Affiliates directly or indirectly to take, any action (including, without
limitation, any offering or sale to any person or entity of the shares of Common
Stock), so as to make unavailable the exemption from Securities Act registration
being relied upon by the Company for the offer and sale to Buyer of the Equity
Shares and the Warrants (and the Warrant Shares) as contemplated by this
Agreement. No form of general solicitation or advertising has been used or
authorized by the Company or any of its officers, directors or Affiliates in
8
connection with the offer or sale of the Equity and the Warrants (and Warrant
Shares) as contemplated by this Agreement or any other agreement to which the
Company is a party.
N. No Misrepresentation. No representation or warranty of the Company
contained in this Agreement, any schedule, annex or exhibit hereto contains any
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein, not
misleading.
IV. CERTAIN COVENANTS AND ACKNOWLEDGMENTS
A. Restrictive Legend. Buyer acknowledges and agrees that, upon
issuance pursuant to this Agreement, the Securities (including any Warrant
Shares) shall have endorsed thereon a legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the Preferred
Shares, the Warrant Shares and the Conversion Shares until such legend has been
removed):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE, AND ARE BEING OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR SUCH OTHER LAWS."
B. Filings. The Company shall make all necessary Commission Filings and
"blue sky" filings required to be made by the Company in connection with the
sale of the Securities to Buyer as required by all applicable Laws, and shall
provide a copy thereof to Buyer promptly after such filing.
C. Reporting Status. So long as Buyer beneficially owns any of the
Securities, the Company shall timely file all reports required to be filed by it
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
D. Use of Proceeds. The Company may use the net proceeds from the sale
of the Securities, for general corporate and working capital purposes. As used
herein, "net proceeds" shall mean two hundred and fifty thousand dollars
($250,000).
E. Listing. The Company shall use its best efforts to maintain its
listing of the Common Stock on the Amex. If the Common Stock is delisted from
the Amex, the Company will use its best efforts to list the Common Stock on the
9
most liquid national securities exchange or quotation system that the Common
Stock is qualified to be listed on.
F. Reserved Warrant Shares. The Company at all times from and after the
date hereof shall have such number of shares of Common Stock duly and validly
authorized and reserved for issuance as shall be sufficient for the Equity
Shares and the exercise in full of the Warrants.
G. Information. Each of the parties hereto acknowledges and agrees that
Buyer shall not be provided with, nor be given access to, any material
non-public information relating to the Company and the Subsidiaries.
V. TRANSFER AGENT INSTRUCTIONS
A. The Company undertakes and agrees that no instruction other than the
instructions referred to in this Section V and customary stop transfer
instructions prior to the registration and sale of the Common Stock pursuant to
an effective Securities Act registration statement will be given to its transfer
agent for the Common Stock and the Warrants Shares otherwise shall be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement, the Registration Rights Agreement and applicable
law. Nothing contained in this Section V.A. shall affect in any way Buyer's
obligations and agreement to comply with all applicable securities laws upon
resale of such Common Stock. If, at any time, Buyer provides the Company with an
opinion of counsel reasonably satisfactory to the Company and its counsel that
registration of the resale by Buyer of such Common Stock is not required under
the Securities Act and that the removal of restrictive legends is permitted
under applicable law, the Company shall permit the transfer of such Common Stock
and, promptly instruct the Company's transfer agent to issue one or more
certificates for Common Stock without any restrictive legends endorsed thereon.
B. Buyer shall have the right to purchase shares of Common Stock
pursuant to exercise of the Warrants in accordance with its applicable terms of
the Warrants. The last date that the Company may deliver shares of Common Stock
issuable upon any exercise of Warrants is referred to herein as the "Warrant
Delivery Date."
VI. DELIVERY INSTRUCTIONS
The Company shall deliver the Equity Shares to the Buyer at the
Closing.
VII. CLOSING DATE
The date and time (the "Closing Date") of the issuance and sale of the
Equity and the Warrants (the "Closing") shall be the date hereof or such other
as shall be mutually agreed upon in writing.
10
VIII. CONDITIONS TO THE COMPANY'S OBLIGATIONS
Buyer understands that the Company's obligation to sell the Securities
on the Closing Date to Buyer pursuant to this Agreement is conditioned upon:
A. Delivery by Buyer to the Company of the Purchase Price;
B. The accuracy on the Closing Date of the representations and
warranties of Buyer contained in this Agreement as if made on the Closing Date
(except for representations and warranties which, by their express terms, speak
as of and relate to a specified date, in which case such accuracy shall be
measured as of such specified date) and the performance by Buyer in all material
respects on or before the Closing Date of all covenants and agreements of Buyer
required to be performed by it pursuant to this Agreement on or before the
Closing Date; and
C. There shall not be in effect any Law or order, ruling, judgment or
writ of any court or public or governmental authority restraining, enjoining or
otherwise prohibiting any of the transactions contemplated by this Agreement.
IX. CONDITIONS TO BUYER'S OBLIGATIONS
The Company understands that Buyer's obligation to purchase the
Securities on the Closing Date pursuant to this Agreement is conditioned upon:
A. Delivery by the Company to the Buyer or his designated agent of one
or more certificates (I/N/O Buyer or I/N/O Buyer's nominee) evidencing the
Securities to be purchased by Buyer pursuant to this Agreement;
B. The accuracy on the Closing Date of the representations and
warranties of the Company contained in this Agreement as if made on the Closing
Date (except for representations and warranties which, by their express terms,
speak as of and relate to a specified date, in which case such accuracy shall be
measured as of such specified date) and the performance by the Company in all
material respects on or before the Closing Date of all covenants and agreements
of the Company required to be performed by it pursuant to this Agreement on or
before the Closing Date, all of which shall be confirmed to Buyer by the chief
executive officer of the Company by delivery of the certificate to that effect;
C. There not having occurred any event or development, and there being
in existence no condition, having or which reasonably and foreseeable could have
a Material Adverse Effect;
D. Delivery by the Company of irrevocable instructions to the Company's
transfer agent to reserve 1,041,667 shares of Common Stock for issuance of the
Equity Shares and the Warrant Shares; and
E. The Company shall have obtained all consents, approvals or waivers
from governmental authorities and third persons necessary for the execution,
11
delivery and performance of the Documents and the transactions contemplated
thereby, all without material cost to the Company.
X. SURVIVAL; INDEMNIFICATION
A. The representations, warranties and covenants made by each of the
Company and Buyer in this Agreement, the annexes, schedules and exhibits hereto
and in each instrument, agreement and certificate entered into and delivered by
them pursuant to this Agreement, shall survive the Closing and the consummation
of the transactions contemplated hereby. In the event of a breach or violation
of any of such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach or violation available to it under the provisions
of this Agreement or otherwise, whether at law or in equity, irrespective of any
investigation made by or on behalf of such party on or prior to the Closing
Date.
B. The Company hereby agrees to indemnify and hold harmless Buyer, its
Affiliates and their respective officers, directors, partners and members
(collectively, the "Buyer Indemnitees"), from and against any and all losses,
claims, damages, judgments, penalties, liabilities and deficiencies
(collectively, "Losses"), and agrees to reimburse Buyer Indemnitees for all out
of-pocket expenses (including the reasonable fees and expenses of legal
counsel), in each case promptly as incurred by Buyer Indemnitees and to the
extent arising out of or in connection with:
1. any breach of any of the Company's representations or
warranties contained in this Agreement or the other Documents, or the
annexes, schedules or exhibits hereto or thereto; and
2. the purchase of the Equity and the Warrants, the conversion of
the Equity, the exercise of the Warrants, the consummation of the
transactions contemplated by this Agreement and the other Documents,
the use of any of the proceeds of the Purchase Price by the Company,
the purchase or ownership of any or all of the Securities, the
performance by the parties hereto of their respective obligations
hereunder and under the Documents or any claim, litigation,
investigation, proceedings or governmental action relating to any of
the foregoing, whether or not Buyer is a party thereto.
C. Buyer hereby agrees to indemnify and hold harmless the Company, its
Affiliates and their respective officers, directors, partners and members
(collectively, the "Company Indemnitees"), from and against any and all Losses,
and agrees to reimburse the Company Indemnitees for all out-of-pocket expenses
(including the reasonable fees and expenses of legal counsel), in each case
promptly as incurred by the Company Indemnitees and to the extent arising out of
or in connection with:
1. any misrepresentation, omission of fact, or breach of any of
Buyer's representations or warranties contained in this Agreement or
the other Documents, or the annexes, schedules or exhibits hereto or
12
thereto or any instrument, agreement or certificate entered into or
delivered by Buyer pursuant to this Agreement or the other Documents;
and
2. any failure by Buyer to perform in any material respect any of
its covenants, agreements, undertakings or obligations set forth in
this Agreement or the other Documents or any instrument, certificate or
agreement entered into or delivered by Buyer pursuant to this Agreement
or the other Documents.
D. Promptly after receipt by either party hereto seeking
indemnification pursuant to this Section XI (an "Indemnified Party") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to this
Section XI is being sought (the "Indemnifying Party") of the commencement
thereof; but the omission to so notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified Party except
to the extent that the Indemnifying Party is materially prejudiced and forfeits
substantive rights and defenses by reason of such failure. In connection with
any Claim as to which both the Indemnifying Party and the Indemnified Party are
parties, the Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by the Indemnifying
Party, the Indemnified Party shall have the right to employ separate legal
counsel and to participate in the defense of such Claim, and the Indemnifying
Party shall bear the reasonable fees, out-of-pocket costs and expenses of such
separate legal counsel to the Indemnified Party if (and only if): (x) the
Indemnifying Party shall have agreed to pay such fees, out-of-pocket costs and
expenses, (y) the Indemnified Party and the Indemnifying Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying Party,
or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
clauses (x), (y) or (z) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except as provided
above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of
legal counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.
E. In the event one party hereunder should have a claim for
indemnification that does not involve a claim or demand being asserted by a
third party, the Indemnified Party promptly shall deliver notice of such claim
to the Indemnifying Party. If the Indemnified Party disputes the claim, such
13
dispute shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association. Judgment upon any
award rendered by any arbitrators may be entered in any court having competent
jurisdiction thereof.
XI. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York, without regard to the conflicts of law
principles of such state.
XII. SUBMISSION TO JURISDICTION
Each of the parties hereto consents to the exclusive jurisdiction of
the federal courts whose districts encompass any part of the City of New York or
the state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement and the other
Documents. Each party hereto hereby irrevocably and unconditionally waives, to
the fullest extent it may effectively do so, any defense of an inconvenient
forum or improper venue to the maintenance of such action or proceeding in any
such court and any right of jurisdiction on account of its place of residence or
domicile. Each party hereto irrevocably and unconditionally consents to the
service of any and all process in any such action or proceeding in such courts
by the mailing of copies of such process by certified or registered airmail at
its address specified in Section IXX. Each party hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
XIII. WAIVER OF JURY TRIAL
TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ITS RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OTHER DOCUMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT AND OTHER DOCUMENTS. EACH PARTY HERETO (i)
CERTIFIES THAT NEITHER OF THEIR RESPECTIVE REPRESENTATIVES, AGENTS OR ATTORNEYS
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT
IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.
XIV. COUNTERPARTS; EXECUTION
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all the counterparts shall
together constitute one and the same instrument. A facsimile transmission of
14
this signed Agreement shall be legal and binding on all parties hereto.
XV. HEADINGS
The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
XVI. SEVERABILITY
In the event any one or more of the provisions contained in this
Agreement or in the other Documents should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
XVII. ENTIRE AGREEMENT; REMEDIES, AMENDMENTS AND WAIVERS
This Agreement and the Documents constitute the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by all parties. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
XVIII. NOTICES
Except as may be otherwise provided herein, any notice or other
communication or delivery required or permitted hereunder shall be in writing
and shall be delivered personally or sent by certified mail, postage prepaid, or
by a nationally recognized overnight courier service, and shall be deemed given
when so delivered personally or by overnight courier service, or, if mailed,
three (3) days after the date of deposit in the United States mails, as follows:
A. if to the Company, to:
Commodore Applied Technologies, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
(000) 000-0000
(000) 000-0000 (Fax)
15
B. if to Buyer, to:
Xx. Xxxxxx Xxxxx
0000 Xxx Xxxxxx
Xxxx 00X
Xxxxxxx, XX 00000
(000)-000-0000
(000)-000-0000 (Fax)
The Company or Buyer may change the foregoing address by notice given
pursuant to this Section XVIII.
XVIIII. CONFIDENTIALITY
Each of the Company and Buyer agrees to keep confidential and not to
disclose to or use for the benefit of any third party the terms of this
Agreement or any other information which at any time is communicated by the
other party as being confidential without the prior written approval of the
other party; provided, however, that this provision shall not apply to
information which, at the time of disclosure, is already part of the public
domain (except by breach of this Agreement) and information which is required to
be disclosed by law (including, without limitation, pursuant to Item 601(b)(10)
of Regulation S-K under the Securities Act and the Exchange Act).
XX. ASSIGNMENT
This Agreement shall not be assignable by either of the parties hereto
prior to the Closing without the prior written consent of the other party, and
any attempted assignment contrary to the provisions hereby shall be null and
void; provided, however, that Buyer may assign its rights and obligations
hereunder, in whole or in part, to any affiliate of Buyer.
16
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the date first above written.
COMMODORE APPLIED TECHNOLOGIES, INC.
By:---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman and CEO
By: ________________________________
Name: Xx. Xxxxxx Xxxxx
Title: Investor
17
EXHIBIT A
WARRANT
18
EXHIBIT B
Registration Rights Agreement
19
SCHEDULE III.A.4.
Subsidiaries
State or
Name of Subsidiary Jurisdiction of Incorporation Percentage Owned
Commodore Solution
Technologies, Inc. Delaware 100%
Commodore CFC
Technologies, Inc. Delaware 100%
CFC Technologies, Inc. Ohio 100%
Commodore Advanced
Sciences, Inc.* New Mexico 100%
A.S. Environmental, Inc.* Delaware 100%
Commodore Remediation
Technologies, Inc.* Delaware 100%
Commodore Government
Environmental
Technologies, Inc.* Delaware 100%
Commodore Technologies, Inc.* Ohio 100%
Sandpiper Properties, Inc.* Ohio 100%
Environmental Alternatives, Inc.* New Mexico 100%
Advanced Sciences Integrated
Mexico, S.A. de C.V.* Mexico 100%
Advanced Sciences Integradas S.A.* Argentina 100%
CORT Technologies, Inc.* Delaware 100%
Commodore Refrigerant
Technologies, Inc. Delaware 100%
Commodore Nuclear, Inc. Delaware 100%
Dispute Resolution Management, Inc. Utah 81%
* Wholly owned subsidiary of Commodore Solution Technologies, Inc.
20
SCHEDULE III.K.
LEGAL PROCEEDINGS
Indemnification Matters
The Company, along with several other entities, in a prior year
guaranteed a performance bond of Separation relating to the Port of Baltimore
contract. The Company was notified on June 28, 2000 that the performance bond is
being called. It is not known, at this time, the amount, if any, the Company's
share will be.
As of April 30, 2001, no litigation has been filed against the Company,
Separation, or any of the Company's subsidiaries with respect to this
indemnification issue. The Company is currently investigating all of the
relevant facts and circumstances in connection with the Surety's potential claim
or cause of action. In the event that the Company is obligated to indemnify the
Surety, the Company estimates that its liability will not exceed approximately
$390,000.
Incidental Matters
------------------
As of April 30, 2001, the Company and its subsidiaries are involved in
ordinary, routine litigation incidental to the conduct of their business.
Management believes that none of this litigation, individually or in the
aggregate, is material to the Company's financial condition or results of
operations.
A-1
SCHEDULE III.L.
EVENTS OF DEFAULT
$500,000 Bridge Loan and Extension
On November 13, 2000, we issued and sold to certain investors (the
"Investors") 12% Senior Secured Promissory Notes (the "Bridge Loan Notes") in
the aggregate principal amount of $500,000. In connection with the Notes,
Commodore Environmental Services, Inc. issued and sold to the Investors
1,000,000 shares of our common stock owned by Commodore Environmental Services,
Inc, at a purchase price of $.01 per share. We shall pay each Investor the
outstanding principal amount, together with all accrued and unpaid interest on
the earliest to occur (the "Maturity Date") of (i) the prepayment of the Notes
out of one hundred percent (100%) of the first proceeds received by us as a cash
distribution (whether in the form of an intercompany dividend, bonus, loan or
otherwise) from DRM, or (ii) the consummation of a contemplated $2,000,000 debt
financing with BHC Funding, Inc. or (iii) on February 12, 2001. The Notes may be
prepaid at any time, on five-(5) business days prior notice, without penalty. We
did not pay the Notes as of the February 12, 2001 Maturity Date.
On April 16, 2001, the Investors executed a Memorandum of Understanding
to extend the payment date of the $500,000 of Bridge Loan Notes. Three of the
holders of the Bridge Loan Notes have granted payment extensions until June 30
and July 31, 2001, while the fourth holder of the Bridge Loan Notes has extended
only until May 1, 2001. If the fourth holder of the Bridge Loan Notes declares a
default on May 1, 2001, the other three holders of the Bridge Loan Notes also
are permitted to declare a default. As of May 21, 2001 the Company has not been
notified of the holder's intent to declare a default on the Xxxxx Group Note. In
connection with the Bridge Loan Extension, the Company issued to the Investors
500,000 warrants for 500,000 shares of the Company's common stock at an exercise
price of $0.22 per share.
A-2
SCHEDULE III.W.
Intellectual ProperTy
The Company currently has thirty-five (35) issued, U.S. and foreign
patents. Additionally, the Company has sixty-eight (68) patent applications
currently on file and pending in the U.S. and in foreign countries. The average
life expectancy for the currently issued patents is 14.25 years. As patents
issue, the U.S. Patent and Trademark Office assigns the Company a twenty (20)
year patent-life for each patent issued.
The Company believes that its patent portfolio provides the Company the
necessary "proprietary turf" in which it can market, distribute, and license the
full range of the SET technology and all of its derivatives. Additionally, the
Company's strength of its patent portfolio may operate as an effective "barrier
to entry" in several of the markets in which the Company is presently conducting
business.
To protect its trade secrets and the un-patented proprietary
information in its development activities, the Company requires its employees,
consultants and contractors to enter into agreements providing for the
confidentiality and the Company's ownership of such trade secrets and other
un-patented proprietary information originated by such persons while in the
employ of the Company. The Company also requires potential collaborative
partners to enter into confidentiality and non-disclosure agreements.
There can be no assurance that any patents that may hereafter be
obtained, or any of the company's confidentiality and non-disclosure agreements,
will provide meaningful protection of the company's confidential or proprietary
information in the case of unauthorized use or disclosure. In addition, there
can be no assurance that the company will not incur significant costs and
expenses, including the costs of any future litigation, to defend its rights in
respect of any such intellectual property.
A-3
