EXCHANGE AGREEMENT
among
PERMA-FIX ENVIRONMENTAL SERVICES, INC.,
LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
and
XXXXXX X. XXXX
Liviakis Financial Communications, Inc., a California
corporation ("Liviakis"), Xxxxxx X. Xxxx, an executive officer of
Liviakis ("Prag"), and Perma-Fix Environmental Services, Inc., a
Delaware corporation (the "Company"), previously entered into a
Consulting Agreement (the "Consulting Agreement"), effective as of
June 30, 1998, pursuant to which Liviakis and Prag received
warrants to purchase 2,500,000 shares of the Company's Common
Stock, par value $.001 per share ("Common Stock"), for $1.875 per
share ("Warrants") of which 1,875,000 were issued to Liviakis and
625,000 were issued to Prag in the name of Xxxxxx X. Xxxx. The
Warrants have a term of 4 years.
The Consulting Agreement has been terminated and Liviakis and
Prag (collectively, the "Subscribers") and the Company have agreed
to enter into this Agreement as of the 14th day of March, 1999,
pursuant to which the Warrants will be tendered and delivered to
the Company in exchange for 200,000 shares of Common Stock to be
issued by the Company as described herein.
1. Exchange of Securities.
1.1 Issuance of Common Stock. In full and complete
termination of the Warrants and the Subscribers' rights,
and the interest in and to the Warrants, and in full and
complete release of any and all obligations of the
Company under the Warrants, at the Closing the
Subscribers shall deliver the Warrants to the Company in
exchange for 200,000 shares of Common Stock, pursuant to
such terms, conditions and provisions as set forth in
this Agreement.
1.1.1 Delivery. The Company shall as soon as
practicable upon execution of this Agreement,
deliver or cause to be delivered, (a) to
Liviakis, a certificate or certificates
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representing the 150,000 shares of Common
Stock issued in the name of Liviakis; and (b)
to Prag, a certificate or certificates
representing the 50,000 shares of Common Stock
issued in the name of Prag. The Subscribers
agree that they shall upon delivery of the
200,000 shares of Common Stock, immediately
deliver to the Company the Warrants marked
"Canceled" and duly assigned to the Company.
1.1.2 Cancellation of Warrants. Upon execution of
this Agreement the Warrants shall be
immediately terminated and rendered null and
void in all respects regardless of the
completion of the delivery of the Warrants to
the Company as described in this Section 1.
1.1.3 Restrictive Legends. Subscribers agree that
all certificates representing the Common Stock
delivered hereunder ("Shares") shall bear the
restrictive legend substantially in the form
set forth in Section 3.7 below which shall
include, but not be limited to, a legend to
the effect that (a)the Shares represented by
such certificate have not been registered
under the Securities Act of 1933, as amended
("Securities Act"), and (b) unless there is an
effective registration statement relating to
the Shares, the Shares may not be offered,
sold, transferred, mortgaged, pledged or
hypothecated without an exemption from
registration and an opinion of counsel to the
Company with respect thereto, or an opinion
from counsel for the Subscribers, which
opinion is satisfactory to the Company, to the
effect that registration under the Securities
Act is not required in connection with such
sale or transfer and the reasons therefor.
The legend on all such certificates shall make
reference to the registration rights set forth
in Section 4 hereof.
1.2 Discharge. As of the execution of this Agreement, the
Warrants shall be fully terminated in all respects.
From and after the execution of this Agreement and
delivery of the 200,000 shares of Common Stock to
Liviakis and Prag as described in Section 1.1.1, (i) the
Subscribers release, acquit and forever discharge the
Company, and all of its respective subsidiaries, affil-
iates, agents, employees, officers, and directors, as
well as their respective heirs, successors, legal and
personal representatives, and assigns of any and all of
them, from and against any and all claims, liabilities,
losses, damages, cause or causes of action of any kind or
character whatsoever, whether liquidated, unliquidated or
disputed, asserted or assertable, known or unknown, in
contract or in tort, at law or in equity, which the
Subscribers might now or hereafter have arising out of or
in connection with or relating to the Warrants and/or the
Consulting Agreement and (ii) the Company releases,
acquits and forever discharges Prag and Liviakis, and all
of Liviakis' subsidiaries, affiliates, agents,
employees, officers, and directors, as well as the
Subscribers' respective heirs, successors, legal and
personal representatives, and assigns of any and all of
them, from and against any and all claims, liabilities,
losses, damages, cause or causes of action of any kind or
character whatsoever, whether liquidated, unliquidated or
disputed, asserted or assertable, known or unknown, in
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contract or in tort, at law or in equity, which the
Company might now or hereafter have arising out of or in
connection with or relating to the Warrants and/or the
Consulting Agreement.
1.3 Exchange. On the basis of the representations,
warranties, covenants and agreements, and subject to the
terms and conditions set forth herein, at the Closing,
the Company agrees to exchange and deliver to the
Subscribers, and the Subscribers agree to accept in such
exchange the delivery from the Company, of the Shares in
exchange for the transfer of the Warrants from the
Subscribers to the Company.
1.4 Reporting Company. The Company is a reporting company
under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and has filed with the United States
Securities and Exchange Commission (the "SEC") all
reports required to be filed by the Company under Section
13 or 15(d) of the Exchange Act. The Subscriber has had
the opportunity to review, and has reviewed, all such
reports and information which the Subscriber deemed
material to an investment decision regarding the
acquisition of the Shares.
2. Closing.
2.1 Closing. The consummation of this Agreement (the
"Closing") will occur on the date that the Warrants are
delivered by the Subscribers to the Company (the "Closing
Date").
3. Representations, Warranties and Covenants of Subscribers. The
Subscribers hereby represent, warrant and covenant to the Company
as follows:
3.1 Liviakis and Prag each acknowledge that the Shares have
not been registered under the Securities Act and accordingly are
"restricted securities" within the meaning of Rule 144 of the
Securities Act. As such, the Shares may not be resold or
transferred unless the Shares have been registered under the
Securities Act or the Company has received an opinion of counsel
reasonably satisfactory to the Company that such resale or transfer
is exempt from the registration requirements of that Securities
Act. Consultant and Prag each further understand that the
exemption from registration afforded by Rule 144 under the
Securities Act depends upon the satisfaction of various conditions
and that, if applicable, Rule 144 affords the basis for sale only
in limited amounts.
3.2 Liviakis and Prag each acknowledge that they have been
afforded the opportunity to ask questions of and receive answers
from duly authorized officers or other representatives of the
Company concerning an investment in the Shares, and regarding any
additional information which Liviakis and Prag have requested.
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3.3 Liviakis and Prag have each had experience in
investments in restricted and publicly traded securities, and
Liviakis and Prag have each had experience in investments in
speculative securities and other investments which involve the risk
of loss of investment. Liviakis and Prag each acknowledge that an
investment in the Shares is speculative and involves the risk of
loss. Both Liviakis and Prag have the requisite knowledge to
assess the relative merits and risks of this investment without the
necessity of relying upon other advisors, and Liviakis and Prag can
afford the risk of loss of their entire investment in the Shares.
Liviakis is an "accredited investor," as that term is defined in
Rule 501 of Regulation D promulgated under the Securities Act, due
to the fact that Liviakis (a) was not created solely to permit the
acquisition of Shares and has total assets in excess of $5,000,000
and/or (b) is wholly owned by persons who qualify as accredited
investors. Prag is an "accredited investor," as that term is
defined in Rule 501 of Regulation D promulgated under the
Securities Act, due to the fact that Prag (a) has an individual net
worth, or joint net worth with his spouse in excess of $1,000,000
and/or (b) had an individual income in excess of $200,000 in each
of the two most recent years or joint income with his spouse in
excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income based in the current year.
Both Liviakis and Prag are purchasers described in Section 25102
(f) (2) of the California Corporate Securities Law of 1968, as
amended.
3.4 Each of Liviakis and Prag is acquiring the Shares for its
or his own account for long-term investment and not with a view
toward resale or distribution thereof except in accordance with
applicable securities laws.
3.5 Each of Liviakis and Prag acknowledges that issuance of
the Shares has not been made in connection with any advertisement.
3.6 Each of Liviakis and Prag acknowledges it or he has
received copies of (i) the Company's Form 10-K for the year ended
December 31, 1997, as amended by the Company's Form 10-K/A filed on
January 14, 1999, (ii) the Company's Form 10-Q for the quarter
ended Xxxxx 00, 0000, (xxx) the Company's Form 10-Q for the quarter
ended June 30, 1998, (iv) the Company's Form 10-Q for the quarter
ended September 30, 1998, as amended by the Company's Form 10-Q/A
filed on January 14, 1999, and proxy soliciting material for the
Company's 1998 annual meeting of shareholders.
3.7 Each of Liviakis and Prag acknowledges that the Shares
shall upon issuance thereof have stamped or imprinted thereon or
affixed thereto a legend to the following effect:
THE REGISTERED HOLDER HEREOF HAS ACQUIRED
THE SHARES REPRESENTED BY THIS
CERTIFICATE FOR INVESTMENT AND NOT FOR
RESALE IN CONNECTION WITH A DISTRIBUTION
THEREOF. ACCORDINGLY, SUCH SHARES HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE SOLD,
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TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO A CURRENTLY EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR
OTHERWISE IN A TRANSACTION EXEMPT FROM
THE PROVISIONS OF SECTION5 OF SAID ACT.
3.8 Each of Liviakis and Prag agrees that it or he shall not
sell, transfer, pledge, hypothecate, dispose, sell short or
otherwise take actions to reduce their economic interest in the
Shares, for a two month period from the date of this Agreement. At
the end of such two month period and after each of the next five 30
day periods passing after the end of the two month period, Liviakis
and Prag shall be permitted to sell, transfer, pledge, hypothecate,
dispose or otherwise reduce its or his economic interest in 1/6 of
the total Shares delivered to such party pursuant to this Agreement
in addition to any other Shares which have been previously released
from the lockup arrangement described in this Section 3.8 so that
150 days after the end of such two month period, all Shares shall
be free of restrictions under this Section 3.8.
4. Registration Rights.
4.1 Subject to the terms of this Section 4, the Subscribers
shall have the right to include all of the Shares as part of
Registration No. 333-43149 filed by the Company and to be amended
on or before April 30, 1999, and thereafter prosecuted diligently
to effectiveness. The Subscribers hereby elect to include the
Shares as part of the registration. Notwithstanding the foregoing
provisions, the Company may, prior to effectiveness, withdraw any
registration statement without incurring any liability to the
Subscribers if (i) the Company's Board of Directors determines in
good faith that the withdrawal of such registration statement is in
the best interests of the Company, (ii) the Company shall refile a
registration statement covering the Shares within four (4) months
of the withdrawal, and (iii) the Shares and other shares of Common
Stock of the Company covered by Registration No. 333-43149 shall be
treated in a like manner regarding inclusion in any registration
statement filed by the Company.
4.2 The Company shall use reasonable efforts to keep
effective and current the registration statement filed by the
Company under Section 4.1 hereof, which registration statement has
been declared effective by the Commission, with respect to the
Shares for an aggregate period ending upon the earlier of (i) two
(2) years after the Closing Date or(ii) the disposal or transfer of
all of the Shares by the Subscribers such that there is a change in
beneficial ownership of the Shares.
4.3 Unless terminated sooner, the registration rights set
forth in Section 4.1 above (but not Section 4.2) shall cease upon
the earliest of (a) the effective registration under the Securities
Act of all of the Shares, (b) the disposal or transfer of such
Shares by the Subscribers such that there is a change in beneficial
ownership of the Shares or (c) registration under the Securities
Act is no longer required for the immediate public distribution of
such Shares as a result of the provisions of Rule 144 promulgated
under the Securities Act.
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4.4 Subject to the immediately following sentence, the
Company shall in all events pay and be responsible for all fees,
expenses, costs and disbursements associated with the registering
of the Shares under this Section 4, including filing fees, fees,
costs and disbursements of the Company's counsel, accountants and
other consultants representing the Company therewith.
Notwithstanding anything set forth herein to the contrary,
Subscribers shall be responsible for and shall pay any and all
underwriting discounts and commissions in connection with the sale
of the Shares pursuant to this Section 4 and all fees of its legal
counsel and other advisors retained by the Subscribers in
connection with reviewing any registration statement.
4.5 (i) The Company will indemnify and hold harmless the
Subscribers and their directors and officers and any underwriter
(as defined in the Securities Act) for the Subscribers and each
person, if any, who controls the Subscribers or such underwriter
within the meaning of the Securities Act, from and against, and
will reimburse the Subscribers and each such underwriter and
controlling person with respect to, any and all loss, damage,
liability, cost and expense to which such Subscribers or any such
underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement
or alleged untrue statement of any material fact contained in such
registration statement referred to in Section 4.1 of this
Agreement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of, or are based upon, the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made not
misleading; provided, however, that the Company will not be liable
in any such case to the extent that any such loss, damage,
liability, cost or expense arises out of, or is based upon, any
untrue statement or alleged untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity
with information furnished by the Subscribers, such underwriter or
such controlling person in writing specifically for use in the
preparation thereof.
(ii) The Subscribers will jointly and severally indemnify and
hold harmless the Company, its directors and officers, any
controlling person and any underwriter from and against, and will
reimburse the Company, its directors and officers, any controlling
person and any underwriter with respect to, any and all loss,
damage, liability, cost or expenses to which the Company or any
controlling person and/or any underwriter may become subject under
the Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement,
or alleged untrue statement, of any material fact contained in such
registration statement referred to in Section 4.1 of this
Agreement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of, or are based upon, the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission
or alleged omission was so made in reliance upon, and in strict
conformity with, written information furnished by, or on behalf of,
the Subscribers specifically for use in the preparation thereof.
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5. Legal Representation. Liviakis and Prag each
represents that it or he has consulted with independent legal
counsel and/or tax, financial and business advisors, to the extent
deemed necessary.
6. Attorney's Fee. If any legal action or any
arbitration or other proceeding is brought for the enforcement or
interpretation of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with or related
to this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs in
connection with that action or proceeding, in addition to any other
relief to which it or they may be entitled.
7. Waiver. The waiver by any party of a breach of any
provision of this Agreement by another party shall not operate or
be construed as a waiver of any subsequent breach by such other
party.
8. Notices. All notices, requests, and other
communications hereunder shall be deemed to be duly given if sent
by U.S. mail, postage prepaid, addressed to the other parties at
the address as set forth herein below:
To the Company: Perma Fix Environmental
Services, Inc.
Xx. Xxxxx X. Xxxxxxxxxx, CEO
Perma-Fix Environmental
Services, Inc.
0000 Xxxxxxxxx 00xx Xxxxx
Xxxxxxxxxxx, Xxxxxxx 00000-0000
with copies
simultaneously
by like means to: Xxxxxx & Xxxxxxx
One Leadership Square, Suite 1700
000 Xxxxx Xxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esquire
To Liviakis: Liviakis Financial
Communications, Inc.
Xxxx X. Xxxxxxxx, President
2420 "K" Street, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
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To Prag: Xxxxxx X. Xxxx
0000 Xx Xxxxx Xxxx
Xxx Xxx, Xxxxxxxxxx 00000
with copies
simultaneously
by like means to: Xxxxx Xxxxxx Xxxxx & Xxxx
1900 Avenue of the Stars
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx, Esquire
It is understood that any party may change the address to
which notices for it shall be addressed by providing notice of such
change to the other parties in the manner set forth in this
paragraph.
9. Choice of Law, Jurisdiction and Venue. This Agreement
shall be governed by, construed and enforced in accordance with the
laws of the State of Delaware.
10. Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the alleged breach thereof, shall be
settled by binding arbitration in Chicago, Illinois in accordance
with the applicable rules of the American Arbitration Association,
and judgment on the award rendered by the arbitrator(s) shall be
binding on the parties and may be entered in any court having
jurisdiction thereof.
11. Complete Agreement. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof.
This Agreement and its terms may not be changed orally but only by
an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or
discharge is sought. This Agreement supercedes in all respects
that certain Letter Agreement, dated March 8, 1999, between the
Company and Liviakis ("Letter Agreement") and renders such Letter
Agreement null and void in all respects and without any effect
whatsoever.
12. Counterparts. This Agreement may be executed in any
number of counterparts which, taken together, shall constitute one
and the same instrument.
The next page is the signature page.
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AGREED TO:
"Company"
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
_____________________________________
Xx. Xxxxx X. Xxxxxxxxxx,
President and Chief Executive Officer
"Liviakis"
LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
By: /s/ Xxxx X. Xxxxxxxx
_____________________________________
Xxxx X. Xxxxxxxx, President
By: /s/ Xxxxxx X. Xxxx
_____________________________________
Xxxxxx X. Xxxx, Xx. Vice-President
"Prag"
/s/ Xxxxxx X. Xxxx
________________________________________
Xxxxxx X. Xxxx, individually
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