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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of September
26, 1997, between Commodore Applied Technologies, Inc., a Delaware corporation,
(the "Corporation"), and an entity advised by Dimensional Fund Advisors Inc.
whose name is set forth at the foot of this Agreement (the "Purchaser").
The Corporation and the Purchaser hereby agree as follows:
SECTION 1
Authorization Purchase and Sale of the Stock
1.1 Authorization of the Stock. The Corporation has authorized issuance
and sale of 300,300 shares of its common stock (the "Stock") to Purchaser as
herein provided.
1.2 Sale and Purchase of the Stock. At the Closing, subject to the terms
and conditions hereof and in reliance upon the representations, warranties and
agreements contained herein, the Purchaser will purchase the Stock from the
Corporation at a purchase price of $3.675 per share, $1,103,602.50 in total.
SECTION 2
Closing, Payment and Delivery
2.1 Closing Date and Place of Closing. The closing shall be held as soon
as practicable, and in no event more than 5 business days after execution of
this Agreement, on such date as the Corporation and the Purchaser may agree to
(the "Closing Date") and shall be held at the offices of Dimensional Fund
Advisors Inc., 0000 Xxxxx Xxxxxx, Xxxxx Xxxxxx, XX 00000.
2.2 Payment and Delivery. At the Closing, the Purchaser will pay or cause
to be paid to the corporation by wire funds transfer the entire purchase price.
The Corporation will deliver in advance of the Closing to an institutional
custodian designated by the Purchaser a certificate or certificates, registered
in such name or names as Purchaser may designate, representing all of the Stock,
with instructions that such certificates are to be held for the account of
Purchaser upon payment of the purchase price.
2.3 Covenant of Best Efforts and Good Faith. The Corporation and the
Purchaser agree to use their respective best
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efforts and to act in good faith to cause to occur all conditions to Closing
which are in their respective control.
SECTION 3
Purchase Price Adjustment
3.1. Subsequent Sale at Lower Price. If during the twelve month period
following the Closing Date (the "Anniversary Period"), the Corporation shall, on
any one or more occasion, sell any shares of its common stock or any security
convertible into or exercisable in respect of common stock, or issue additional
shares of common stock upon conversion during the Anniversary Period of its
currently outstanding Series A Convertible Preferred Stock for a selling price
per share or a conversion price per share which shall be lower than the purchase
price per share of the Stock sold to Purchaser pursuant to Section 1.2 hereof
(such lower price or prices being the "Reset Price"), the purchase price per
share of the Stock sold to the Purchaser hereunder shall be adjusted downward as
at the end of the Anniversary Period so as to equal the Reset Price. The lowest
selling price per share or conversion price per share at which the Corporation
shall issue its common stock during the Anniversary Period shall determine the
applicable Reset Price; provided, that
(a) the lowest sales or conversion prices associated with issuances
by the Corporation of up to 10,000 shares of the Corporation's common
stock, and
(b) issuances of shares of the Corporation's common stock by
Commodore Environmental Services, Inc. ("COES"), the parent of the
Corporation, upon conversion of Series D Convertible Preferred Stock of
COES or upon exercise of certain warrants to purchase shares of the
Corporation's common stock granted by COES, irrespective of the conversion
or exercise price per share,
shall be excluded in determining such Reset Price.
3.2. Adjustment Mechanism. If an adjustment of the purchase price for the
Stock is required pursuant to this Section 3, the Corporation shall, not later
than five business days (subject to the provisions of Subsection 3.6 hereof)
following the expiration of the Anniversary Period, refund to Purchaser in cash
the amount of such downward adjustment which shall be equal to the product of
(a) the total number of shares of common stock originally delivered to Purchaser
hereunder, multiplied by (b) the difference between the purchase price per share
set forth in Section 1.2 and the final Reset Price. If for any reason the
corporation fails to make such cash refund within 10 days after it becomes due
pursuant to this Section 3.2, then the Corporation shall immediately deliver to
Purchaser such number of additional
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shares of coupon stock as will cause (i) the total number of shares of common
stock delivered to Purchaser hereunder, multiplied by (ii) the Reset Price, to
equal the total purchase price set forth in Section 1.2 hereof; provided,
however, that the Corporation shall effect such adjustment in cash, in whole or
in part, to the extent required by the following subsection.
3.3. Limitation on Number of Shares. Purchaser and other entities advised
by Dimensional Fund Advisors Inc. shall not be required to accept, by way of any
such adjustment, a number of shares of the Corporation such that the total
number of such shares held by Purchaser and such other entities, which were held
by them on the date of this Agreement or acquired by them pursuant to this
Agreement or agreements of like tenor with such other entities, would exceed
4.99% of the total outstanding stock of the Corporation. The Corporation shall
effect the adjustment required by this Section by cash refund to the extent
necessary to avoid causing the aforesaid limitation to be exceeded.
3.4 Capital Adjustments. In case of any stock split or reverse stock
split, stock dividend, reclassification of the common stock, recapitalization,
merger or consolidation, or like capital adjustment affecting the common stock
of the Corporation, the provisions of this Section shall be applied as if such
capital adjustment event had occurred immediately prior to the Closing Date and
the original purchase price had been fairly allocated to the stock resulting
from such capital adjustment; and in other respects the provisions of this
Section shall be applied in a fair, equitable and reasonable manner so as to
give effect, as nearly as may be, to the purposes hereof.
3.5. Exclusions. Section 3.1 shall not apply to sales of shares by the
Corporation (i) upon conversion or exercise of any convertible securities,
options or warrants outstanding on the date hereof, except that with respect to
the Corporation's Series A Convertible Preferred Stock, conversions during the
Anniversary Period shall be subject to Section 3.1, (ii) pursuant to the
provisions of any shareholder-approved employee benefit or incentive plan
heretofore or hereafter adopted by the Corporation, or (iii) to an entity which
is a strategic investor in the Corporation or an investor which is in a related
industry, as opposed to a financial investor.
3.6. Definitions. For purposes of Section 3.1 hereof, a sale of shares
shall mean and include the sale or issuance of rights, options, warrants or
convertible securities under which the Corporation is or may become obligated to
issue shares of common stock, and the "selling price" of the common stock
covered thereby shall be the exercise or conversion price thereof plus the
consideration (if any) received by the Corporation upon such sale or issuance.
If the selling price or the exercise or conversion price is not determined until
after the Anniversary Period, an adjustment pursuant to this Section shall be
made promptly
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following such determination, if required. If shares are issued for a
consideration other than cash, the "selling price" shall be the fair value of
the such consideration as determined in good faith by the Board of Directors of
the Corporation. The term "Stock" as used in this Agreement shall include shares
issued pursuant to this Section.
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SECTION 4
Representations and Warranties of the Corporation
The Corporation hereby represents and warrants to the purchaser that:
4.1 Corporate Power, Qualification and Standing. The Corporation and its
subsidiaries are validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and each of them is qualified to
transact business in each jurisdiction in which its ownership of property or
conduct of activities requires such qualification. The Corporation has all
requisite corporate power and authority to enter into this Agreement, to sell
the Stock and to carry out and perform its other obligations under this
Agreement.
4.2 S.E.C. Reports; Financial Statements. The common stock of the
Corporation is registered under Section 12(b) or (g) of the Securities Exchange
Act of 1934 and the Corporation is in full compliance with its reporting and
filing obligations under said Act. The Corporation has delivered to Purchaser
all of its Annual Reports to shareholders and its reports on Form 10K; and all
its quarterly reports to shareholders, quarterly reports on Form 10Q, and each
other report, registration statement, definitive proxy statement or other
document filed with the S.E.C. since the beginning of said three fiscal years
(collectively, the "SEC Reports"). The SEC Reports do not (as of their
respective dates) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The audited and unaudited financial statements of the
Corporation included in the SEC Reports (the "Financial Statements") have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except as stated in such Financial Statements or the notes
thereto) and fairly present the financial position of the Corporation and its
consolidated subsidiaries as of the dates thereof and the results of their
operations and changes in financial position for the periods then ended. Except
as publicly disclosed by the Corporation in the SEC Reports or otherwise, since
the end of the most recent of said fiscal years there has been no material
adverse change in the business, financial condition, or results of operations of
the Corporation and its subsidiaries taken together as a consolidated whole, and
there is no existing condition, event or series of events which can reasonably
be expected to have a material adverse effect on the business, financial
condition or results of operations of the Corporation and its subsidiaries taken
together as a consolidated whole, or its ability to perform its obligations
under this Agreement.
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4.3 Authorization; No Conflict. Execution and delivery of this Agreement
and issuance and sale of the Stock have been duly authorized by all necessary
corporate action of the Corporation, and the Stock when issued will be validly
issued, fully paid and non-assessable. Performance by the Corporation of its
obligations under this Agreement will not conflict with or violate (i) the
charter documents or bylaws of the Corporation, (ii) any indenture, loan
agreement, lease, mortgage or other material agreement binding on the
Corporation, (iii) any order of a court or administrative agency binding on the
Corporation, or (iv) any applicable law or governmental regulation; and such
performance does not and will not require the permission or approval of any
governmental agency, and will not result in the imposition or creation of any
lien or charge against any assets of the Corporation. Except as disclosed in the
Financial Statements or on Exhibit A hereto, (i) the Corporation has no
obligation to redeem or repurchase any of its equity securities, (ii) no
shareholder or other person has pre-emptive or other rights to acquire equity
securities of the Corporation, and (iii) the Corporation has no obligation to
register any of its securities otherwise than pursuant to Section 8 of this
Agreement or as disclosed on Exhibit A hereto.
4.4 Material Agreements; No Defaults. All material indentures, loan
agreements, leases, mortgages and other agreements binding on the Corporation or
its subsidiaries are identified in the list or exhibits contained in the
Corporation's most recent 10K report ("Other Agreements"). No material default
on the part of the Corporation or any or its subsidiaries (including any event
which, with notice or the passage of time, would constitute a default) exists
under any of the Other Agreements.
4.5 Material Liabilities. Except for liabilities disclosed in the
Financial Statements or the SEC Reports, and obligations under the Other
Agreements, the corporation and its subsidiaries have no material liabilities or
obligations, absolute or contingent, other than liabilities arising in the
ordinary course of business subsequent to the date of the most recent of the
Financial Statements.
4.6 Properties. The Corporation and its subsidiaries (i) have good title
to the properties and assets reflected in the Financial Statements as owned by
them, (ii) have valid leasehold interests in the properties leased by them, and
(iii) own or have the right to use under valid license agreements all
trademarks, trade names, copyrights, patents and other intellectual property
rights regularly utilized by them; subject in each case to no material liens,
security interests or adverse claims except as disclosed in the Financial
Statements.
4.7 Litigation. There are no material legal actions, arbitrations, or
administrative proceedings pending against the
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Corporation or its subsidiaries, except for the matters disclosed in the SEC
Reports.
4.8 Tax Matters. The Corporation and its subsidiaries have filed on a
timely basis all tax returns required to be filed by them and have paid their
taxes prior to delinquency, and have made adequate accruals for tax liabilities
on the Financial Statements in accordance with generally accepted accounting
principles.
4.9 ERISA Compliance. Neither the Corporation nor any of its subsidiaries
has incurred any material funding deficiency within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or any material
liability to the Pension Benefit Guarantee Corporation in connection with any
employee benefit plan. The Corporation and its subsidiaries are in compliance in
all material respects with all applicable provisions of ERISA, and have no
obligations with respect to any multi-employer plan. No "reportable event" as
such term is defined in ERISA, which may result in any material liability, has
occurred with respect to any employee benefit or other plan maintained for
employees of the Corporation or any subsidiary.
4.10 Environmental Matters. Except as disclosed in the SEC Reports,
neither the Corporation nor any of its subsidiaries (i) has been notified by any
governmental authority that it is, or may be, a Responsible Party with respect
to cleanup or remediation of any environmental condition or hazardous waste
site, (ii) has violated any law, regulation, order or requirement of
governmental authority with respect to Hazardous Substances, or (iii) has
incurred any material liability for violation or noncompliance with applicable
Environmental Regulations. The term "Environmental Regulations" means any law,
regulation, order or requirement relating to protection of the environment,
including without limitation, the Clean Air Act, the Clean Water Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Hazardous Materials Transportation
Act and the Toxic Substances Control Act. The term "Hazardous Substances" means
any substance defined or listed as such in any Environmental Regulation.
4.11 Other Matters. The corporation is not now and will not be after
giving effect to the receipt of the proceeds from the sale of the Stock an
"Investment Company" within the meaning of the Investment Company Act of 1940,
nor will it be controlled by or acting on behalf of any person which is such an
investment company. The corporation is not selling the Stock "for the purpose of
purchasing or carrying any margin stock" within the meaning of Regulation G of
the Board of Governors of the Federal Reserve System. The Corporation has not
offered the Stock to any person other than the Purchaser.
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SECTION 5
Representations and Warranties of the Purchaser
The purchaser represents and warrants to the Corporation that:
5.1 Corporate Power and Authority. It is validly existing and in good
standing with all requisite power and authority to enter into this Agreement and
carry out its obligations hereunder and has taken all actions necessary to
authorize it to enter into this Agreement and carry out such obligations.
5.2 Investment. It is acquiring the Stock for investment and not with the
view to, or for resale in connection with, any distribution thereof. It is an
"accredited investor" within the meaning of the Securities Act of 1933 and the
rules thereunder. It understands that the Stock has not been registered under
the Securities Act of 1933 nor qualified under any State blue sky law by reason
of specified exemptions therefrom which depend upon, among other things, the
bona fide nature of its investment intent as expressed herein.
5.3 Rule 144. It acknowledges that the Stock must be held indefinitely
unless it is subsequently registered under the Securities Act of 1933 or an
exemption from such registration is available. It has been advised or is aware
of the provisions of Rule 144 promulgated under the Securities Act.
SECTION 6
Conditions to Obligations of the Purchaser
The obligation of the Purchaser to purchase the Stock is subject to the
fulfillment on or prior to the Closing Date of each of the following conditions;
(a) Representations and Warranties. The representations and
warranties of the Corporation shall be true and correct in all material respects
on the Closing Date.
(b) Performance. All covenants, agreements and conditions contained
in this Agreement to be performed or complied with by the Corporation on or
prior to the Closing Date shall have been performed or complied with in all
material respects.
(c) Opinion of Corporation's Counsel. The Purchaser shall have
received from counsel to the Corporation an opinion confirming the
representations set forth in the first sentence of Section 4.3 hereof, and on
the basis of such counsel's review of the Other Agreements and certificates of
officers of the
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Corporation as to factual matters, confirming the representations set forth in
the second and third sentences of Section 4.3 hereof.
(d) Legal Issuance. At the time of the Closing, the issuance and
purchase of the Stock shall be legally permitted by all laws and regulations to
which the Purchaser and the Corporation are subject.
(e) proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be satisfactory in form and
substance to the purchaser and its counsel.
(f) Satisfaction of Obligations to Broker. The Corporation shall
have furnished the Purchaser with assurances satisfactory to the purchaser that
the Corporation has satisfied its obligations to any broker entitled to
compensation in connection with the sale of the Stock.
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SECTION 7
Conditions to Obligations of the Corporation
The Corporation's obligation to sell the Stock is subject to the
fulfillment on or prior to the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties made by the purchaser shall be true and correct in all material
respects on the Closing Date.
(b) Legal Issuance. At the time of the Closing, the issuance and
purchase of the Stock shall be legally permitted by all laws and regulations to
which the purchaser and the Corporation are subject.
(c) Payment. The Corporation shall concurrently receive payment for
the stock as provided in Section 2.
SECTION 8
Covenant to Register
(a) For purposes of this Section 8, the following definitions shall
apply:
(i) The terms "register", "registered", and "registration"
refer to a registration under the Securities Act of 1933, as amended (the
"Act") effected by preparing and filing a registration statement or
similar document in compliance with the Act or an amendment thereto, and
the declaration or ordering of effectiveness of such registration
statement, document or amendment thereto.
(ii) The term "Registrable Securities" means the Stock and any
securities of the Corporation or securities of any successor corporation
issued as, or issuable upon the conversion or exercise of any warrant,
right or other security that is issued as, a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
Stock.
(b) (i) At any time after one hundred and twenty (120) days after
the date of this Purchase Agreement and from time to time thereafter,
Purchaser shall have the right to require by notice in writing that the
Corporation register all or any part of the Registrable Securities held by
purchaser (a "Demand Registration") and the Corporation shall thereupon
effect such registration in accordance herewith. The Corporation agrees to
file a registration statement (Form S-
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3) in order to register the Common Stock and to cause such registration
statement to be declared effective within ninety (90) days of Closing. A
3% cash penalty will accrue for every thirty (30) days after such date
that the securities remain unregistered. The penalty shall be pro-rated
for periods of less than thirty (30) days.
(ii) The Corporation shall not be obligated to effect Demand
Registration (i) if all of the Registrable Securities held by Purchaser
which are intended to be covered by the Demand Registration are, at the
time of the request of a Demand Registration, included in an effective
registration statement and the Corporation is in compliance with its
obligations under Subsection (d)(ii) through (v) hereof with respect to
such registration statement, or (ii) within 120 days after the effective
date of any other registration as to which Purchaser was given piggy-back
rights pursuant to subsection (c) hereof and in which purchaser was able
to register and sell at least eighty percent (80%) of the Registrable
Securities requested by Purchaser to be included in such registration.
(c) If the Corporation proposes to register (including for this
purpose a registration effected by the Corporation for shareholders other than
the Purchaser) any of its stock or other securities under the Act in connection
with a public offering of such securities (other than a registration on Form S-
4, Form S-8 or other limited purpose form) and the Registrable Securities have
not heretofore been included in a registration statement under Subsection (b),
which remains effective, the Corporation shall, at such time, promptly give the
Purchaser written notice of such registration. Upon the written request of the
Purchaser given within twenty (20) days after receipt of such notice by the
Purchaser, the Corporation shall cause to be registered under the Act all of the
Registrable Securities that the Purchaser has requested to be registered.
However, the Corporation shall have no obligation under this Subsection (c) to
the extent that, with respect to a public offering registration, any underwriter
of such public offering reasonably requests that the Registrable Securities or a
portion thereof be excluded therefrom.
(d) Whenever required under this Section 8 to effect the
registration of any Registrable Securities, the Corporation shall, as
expeditiously as reasonably possible:
(i) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to
cause such registration to become effective and, upon the request of the
Purchaser, keep such registration statement effective for so long as
Purchaser desires to dispose of the securities covered by such
registration statement (but not after Purchaser in the reasonable opinion
of its counsel is free to sell such
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securities under the provisions of Rule 144(k) under the Act).
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statements and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.
(iii) Furnish to the Purchaser such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as the Purchaser
may reasonably request in order to facilitate the disposition of
Registrable Securities owned by Purchaser.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by Purchaser, provided that the Corporation shall not be
required in connection therewith or as a condition thereto to qualify to
do business or to file a general consent to service and process in any
such states or jurisdictions.
(v) Notify Purchaser of the happening of any event as a result
of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing.
(vi) Furnish, at the request of Purchaser, an opinion of
counsel of the Corporation, dated the effective date of the registration
statement, as to the due authorization and issuance of the securities
being registered and compliance with securities laws by the Corporation in
connection with the authorization and issuance thereof.
(e) The purchaser will furnish to the Corporation in connection with
any registration under this Section 8 such information regarding itself, the
Registrable Securities and other securities of the Corporation held by it, and
the intended method of disposition of such securities as shall be required to
effect the registration of the Registrable Securities held by Purchaser.
(f) (i) The Corporation shall indemnify, defend and hold harmless
each holder of Registrable Securities which are included in a registration
statement pursuant to the provisions of Subsections (b) or (c), any
underwriter (as defined in the Act) for such holder, and the directors,
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officers and controlling persons of such holder or underwriter from and
against, and shall reimburse all of them with respect to, any and all
claims, suits, demands, causes of action, losses, damages, liabilities,
costs or expenses ("Liabilities") to which any of them may become subject
under the Act or otherwise, arising from or relating to (A) any untrue
statement or alleged untrue statement of any material fact contained in
such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or (B) 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
Corporation shall not be liable in any such case to the extent that any
such Liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by such person in writing
specifically for use in the preparation thereof.
(ii) Each holder or Registrable Securities included in a
registration pursuant to the provisions of Subsection (b) or (c) shall
indemnify, defend, and hold harmless the Corporation, its directors and
officers, and shall reimburse the corporation, its directors and officers
with respect to, any and all Liabilities to which any of them may become
subject under the Act or otherwise, arising from or relating to (A) any
untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein
or any amendment or supplement thereto, or (B) 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 such
holder specifically for use in the preparation thereof.
(iii) Promptly after receipt by an indemnified party pursuant
to the provisions of Subsection (f)(i) or (f)(ii) of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party shall, if a claim thereof is
to be made against the indemnifying party pursuant to the provisions of
Subsection (f)(i) or (f)(ii), promptly notify the indemnifying party of
the commencement thereof; provided, however, that the failure to so notify
the indemnifying party shall not relieve it from its indemnification
obligations hereunder except to the extent that the indemnifying party is
materially prejudiced by such failure. If such action is
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brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party shall have the
right to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses different from or in
addition to those available to the indemnifying party, or if there is
conflict of interest which would prevent counsel for the indemnifying
party from also representing the indemnified party, the indemnified party
shall have the right to select separate counsel to participate in the
defense of such action on behalf of such indemnified party. After notice
from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable
to such indemnified party pursuant to Subsection (f)(i) or (f)(ii) for any
expense of counsel subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless (A) the indemnified party shall have employed
counsel in accordance with the provisions of the preceding sentence, or
(B) the indemnifying party shall not have employed counsel satisfactory to
the indemnified party to represent the indemnified party within a
reasonable time after the notice of the commencement of the action. An
indemnifying party shall not be responsible for amounts paid in settlement
without its consent, provided that its consent may not be unreasonably
withheld.
(g) (i) With respect to the inclusion of Registrable Securities in a
registration statement pursuant to subsections (b) or (c), all fees, costs
and expenses of and incidental to such registration, inclusion and public
offering shall be borne by the Corporation; provided, however, that any
securityholders participating in such registration shall bear their pro
rata share of the underwriting discounts and commissions, if any.
(ii) The fees, costs and expenses of registration to be borne
by the Corporation as provided in this Subsection (g) shall include,
without limitation, all registration, filing and NASD fees, printing
expenses, fees and disbursements of counsel and accountants for the
Corporation, and all legal fees and disbursements and other expenses of
complying with state securities or Blue Sky laws of any jurisdiction or
jurisdictions in which securities to be offered are to be registered and
qualified. Fees and disbursements of counsel and accountants for the
selling securityholders shall, however, be borne by the respective selling
securityholder.
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(h) The rights to cause the Corporation to register all or any
portion of Registrable Securities pursuant to this Section 8 may be assigned by
Purchaser to a transferee or assignee of 20% or more of the Stock. Within a
reasonable time after such transfer the Purchaser shall notify the Corporation
of the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned. Such assignment
shall be effective only if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted
under the Act. Any transferee asserting registration rights hereunder shall be
bound by the provisions of this Section 8.
(i) From and after the date of this Agreement, the Corporation shall
not agree to allow the holders of any securities of the Corporation to include
any of their securities in any registration statement filed by the Corporation
pursuant to Subsection (b) unless the inclusion of such securities will not
reduce the amount of the Registrable Securities included therein.
SECTION 9
Affirmative Covenants of the Corporation
The Corporation hereby covenants that, during such time as the Purchaser
(or one of its affiliates) owns any Stock, or for four years, whichever period
is shorter:
9.1 Reports and Financial Statements.
(a) The Corporation will cause its common stock to continue to be
registered under Sections 12(b) or 12(g) of the Securities Exchange Act of 1934,
will comply in all respects with its reporting and filing obligations under said
Act, and will not take any action or file any document (whether or not permitted
by said Act or the rules thereunder) to terminate or suspend such registration
or to terminate or suspend its reporting and filing obligations under said Act.
The Corporation will take all action necessary to continue the listing or
trading of its common stock on any national securities exchange or the Automated
Quotation System of the National Association of Securities Dealers on which such
common stock is listed or traded, and will comply in all respects with its
reporting, filing and other obligations under the bylaws or rules of said
exchange or Association.
(b) The Corporation will furnish to the Purchaser, concurrently with
the distribution or filing thereof, each annual and quarterly report to its
shareholders, its reports on Form 10K and 10Q, and each other report,
registration statement, definitive proxy statement or other document filed with
the S.E.C., and each press release or other public announcement issued by the
Corporation.
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9.2 Maintenance of Office. The Corporation will maintain an office or
agency in the United States at such address as may be designated in writing from
time to time to the registered holders of the Stock, where notices,
presentations and demands to or upon the Corporation in respect of the Stock may
be given or made. Unless or until another office or agency is designated by the
Corporation, such office shall be at the address set forth adjacent to the name
of the Corporation at the foot of this Agreement.
9.3 Maintenance and Compliance. The Corporation will (i) maintain its
corporate existence, rights, powers and privileges in good standing, (ii) comply
in all material respects with all laws and governmental regulations and
restrictions applicable to its business or properties, (iii) keep records and
books of account and maintain a system of internal accounting controls in
accordance with generally accepted accounting principles and in compliance with
Section 13(b)(2) of the Securities Exchange Act of 1934, and (iv) retain
independent public accountants of recognized national standing as auditors of
the Corporation's annual financial statements.
9.4 Assignment of Rights. The rights of the Purchaser hereunder may be
assigned by the Purchaser in connection with the transfer or assignment to a
single transferee of not less than 20% of the Stock originally purchased by the
Purchaser hereunder, and such rights may be further reassigned by such
transferee to another such single transferee. Any transferee asserting rights
under this Agreement shall be bound by its provisions.
9.5 Effect of Covenants. The covenants in Sections 9.1 and 9.3 shall not
be deemed to prohibit a merger, sale of all assets or other corporate
reorganization if (i) the entity surviving or succeeding to the Corporation is
bound by this Agreement with respect to its securities issued in exchange for or
replacement of the Stock, or (ii) the consideration received in exchange for or
replacement of the Stock is cash.
SECTION 10
Legend on Stock
Each certificate representing the Stock shall be stamped or otherwise
imprinted with a legend substantially in the following form (in addition to any
legend required under any applicable state securities laws):
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
Upon request of a holder of Stock the Corporation shall remove the
foregoing legend or issue to such holder a new certificate therefor free of any
such legend, if the Corporation shall have received either an opinion of counsel
or a "no-action" letter of the S.E.C., in either case reasonably satisfactory in
substance to the Corporation and its counsel, to the effect that such legend is
no longer required.
SECTION 11
Miscellaneous
11.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California. Any action or proceeding
relating to this Agreement may be brought in the courts of California sitting in
Los Angeles County, or in the United States courts located in Los Angeles
County, California, and each of the parties irrevocably consents to the
jurisdiction of such courts in any such action or proceeding.
11.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of and be binding upon
the successors and assigns of the parties.
11.3 Entire Agreement; Amendment. This Agreement (including any Exhibits
hereto) and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated except by a written instrument signed
by the Corporation and the Purchaser.
11.4 Notices, etc. All notices and other communications required or
permitted hereunder shall be mailed by first-class mail, postage prepaid, or
delivered either by hand or by messenger, addressed (a) if to the Purchaser, as
indicated below the Purchaser's signature, or at such other address as the
Purchaser shall have furnished to the Corporation in writing, or (b) if to any
other holder of any Stock, at the address of such holder as shown on the records
of the Corporation, or (c) if to the Corporation, at its address set forth below
or at such other
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address as the Corporation shall have furnished to the Purchaser and each such
other holder in writing. All such notices or communications shall be deemed
given when actually delivered by hand, messenger, facsimile or mailgram or, if
mailed, three days after deposit in the U.S. mail.
11.5 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement (including any holder of
Stock), upon any breach or default of another party under this Agreement, shall
impair any such right, power or remedy of such party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. All remedies, either under this
Agreement or by law or otherwise afforded to any party, shall be cumulative and
not alternative.
11.6 Severability. In case any provision of the Agreement 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.
11.7 Titles and Subtitles. The titles of the Sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
11.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the day and year first
written above.
Commodore Applied Technologies, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx
Senior Vice President and Chief
Administrative and Financial Officer
Address: 000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
[Signatures continued on following page]
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DFA Group Trust - Small Company Subtrust
By: /s/
------------------------------------
Address: c/o Dimensional Fund Advisors
0000 Xxxxx Xxxxxx, 00xx xxxxx
Xxxxx Xxxxxx, XX 00000
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of September
26, 1997, between Commodore Applied Technologies, Inc., a Delaware corporation,
(the "Corporation"), and an entity advised by Dimensional Fund Advisors Inc.
whose name is set forth at the foot of this Agreement (the "Purchaser").
The Corporation and the Purchaser hereby agree as follows:
SECTION 1
Authorization, Purchase and Sale of the Stock
1.1 Authorization of the Stock. The Corporation has authorized issuance
and sale of 157,700 shares of its common stock (the "Stock") to Purchaser as
herein provided.
1.2 Sale and Purchase of the Stock. At the Closing, subject to the terms
and conditions hereof and in reliance upon the representations, warranties and
agreements contained herein, the Purchaser will purchase the Stock from the
Corporation at a purchase price of $3.675 per share, $579,547.50 in total.
SECTION 2
Closing, Payment and Delivery
2.1 Closing Date and Place of Closing. The closing shall be held as soon
as practicable, and in no event more than 5 business days after execution of
this Agreement, on such date as the Corporation and the Purchaser may agree to
(the "Closing Date") and shall be held at the offices of Dimensional Fund
Advisors Inc., 0000 Xxxxx Xxxxxx, Xxxxx Xxxxxx, XX 00000.
2.2 Payment and Delivery. At the Closing, the Purchaser will pay or cause
to be paid to the corporation by wire funds transfer the entire purchase price.
The Corporation will deliver in advance of the Closing to an institutional
custodian designated by the Purchaser a certificate or certificates, registered
in such name or names as Purchaser may designate, representing all of the Stock,
with instructions that such certificates are to be held for the account of
Purchaser upon payment of the purchase price.
2.3 Covenant of Best Efforts and Good Faith. The Corporation and the
Purchaser agree to use their respective best
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efforts and to act in good faith to cause to occur all conditions to Closing
which are in their respective control.
SECTION 3
Purchase Price Adjustment
3.1. Subsequent Sale at Lower Price. If during the twelve month period
following the Closing Date (the "Anniversary Period"), the Corporation shall, on
any one or more occasion, sell any shares of its common stock or any security
convertible into or exercisable in respect of common stock, or issue additional
shares of common stock upon conversion during the Anniversary Period of its
currently outstanding Series A Convertible Preferred Stock for a selling price
per share or a conversion price per share which shall be lower than the purchase
price per share of the Stock sold to Purchaser pursuant to Section 1.2 hereof
(such lower price or prices being the "Reset Price"), the purchase price per
share of the Stock sold to the Purchaser hereunder shall be adjusted downward as
at the end of the Anniversary Period so as to equal the Reset Price. The lowest
selling price per share or conversion price per share at which the Corporation
shall issue its common stock during the Anniversary Period shall determine the
applicable Reset Price; provided, that
(a) the lowest sales or conversion prices associated with issuances
by the Corporation of up to 10,000 shares of the Corporation's common
stock, and
(b) issuances of shares of the Corporation's common stock by
Commodore Environmental Services, Inc. ("COES"), the parent of the
Corporation, upon conversion of Series D Convertible Preferred Stock of
COES or upon exercise of certain warrants to purchase shares of the
Corporation's common stock granted by COES, irrespective of the conversion
or exercise price per share,
shall be excluded in determining such Reset Price.
3.2. Adjustment Mechanism. If an adjustment of the purchase price for the
Stock is required pursuant to this Section 3, the Corporation shall, not later
than five business days (subject to the provisions of Subsection 3.6 hereof)
following the expiration of the Anniversary Period, refund to Purchaser in cash
the amount of such downward adjustment which shall be equal to the product of
(a) the total number of shares of common stock originally delivered to Purchaser
hereunder, multiplied by (b) the difference between the purchase price per share
set forth in Section 1.2 and the final Reset Price. If for any reason the
corporation fails to make such cash refund within 10 days after it becomes due
pursuant to this Section 3.2, then the Corporation shall immediately deliver to
Purchaser such number of additional
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shares of common stock as will cause (i) the total number of shares of common
stock delivered to Purchaser hereunder, multiplied by (ii) the Reset Price, to
equal the total purchase price set forth in Section 1.2 hereof; provided,
however, that the Corporation shall effect such adjustment in cash, in whole or
in part, to the extent required by the following subsection.
3.3. Limitation on Number of Shares. Purchaser and other entities advised
by Dimensional Fund Advisors Inc. shall not be required to accept, by way of any
such adjustment, a number of shares of the Corporation such that the total
number of such shares held by Purchaser and such other entities, which were held
by them on the date of this Agreement or acquired by them pursuant to this
Agreement or agreements of like tenor with such other entities, would exceed
4.99% of the total outstanding stock of the Corporation. The Corporation shall
effect the adjustment required by this Section by cash refund to the extent
necessary to avoid causing the aforesaid limitation to be exceeded.
3.4 Capital Adjustments. In case of any stock split or reverse stock
split, stock dividend, reclassification of the common stock, recapitalization,
merger or consolidation, or like capital adjustment affecting the common stock
of the Corporation, the provisions of this Section shall be applied as if such
capital adjustment event had occurred immediately prior to the Closing Date and
the original purchase price had been fairly allocated to the stock resulting
from such capital adjustment; and in other respects the provisions of this
Section shall be applied in a fair, equitable and reasonable manner so as to
give effect, as nearly as may be, to the purposes hereof.
3.5. Exclusions. Section 3.1 shall not apply to sales of shares by the
Corporation (i) upon conversion or exercise of any convertible securities,
options or warrants outstanding on the date hereof, except that with respect to
the Corporation's Series A Convertible Preferred Stock, conversions during the
Anniversary Period shall be subject to Section 3.1, (ii) pursuant to the
provisions of any shareholder-approved employee benefit or incentive plan
heretofore or hereafter adopted by the Corporation, or (iii) to an entity which
is a strategic investor in the Corporation or an investor which is in a related
industry, as opposed to a financial investor.
3.6. Definitions. For purposes of Section 3.1 hereof, a sale of shares
shall mean and include the sale or issuance of rights, options, warrants or
convertible securities under which the Corporation is or may become obligated to
issue shares of common stock, and the "selling price" of the common stock
covered thereby shall be the exercise or conversion price thereof plus the
consideration (if any) received by the Corporation upon such sale or issuance.
If the selling price or the exercise or conversion price is not determined until
after the Anniversary Period, an adjustment pursuant to this Section shall be
made promptly
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following such determination, if required. If shares are issued for a
consideration other than cash, the "selling price" shall be the fair value of
the such consideration as determined in good faith by the Board of Directors of
the Corporation. The term "Stock" as used in this Agreement shall include shares
issued pursuant to this Section.
3A
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SECTION 4
Representations and Warranties of the Corporation
The Corporation hereby represents and warrants to the Purchaser that:
4.1 Corporate Power, Qualification and Standing. The Corporation and its
subsidiaries are validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and each of them is qualified to
transact business in each jurisdiction in which its ownership of property or
conduct of activities requires such qualification. The Corporation has all
requisite corporate power and authority to enter into this Agreement, to sell
the Stock and to carry out and perform its other obligations under this
Agreement
4.2 S.E.C. Reports; Financial Statements. The common stock of the
Corporation is registered under Section 12(b) or (g) of the Securities Exchange
Act of 1934 and the Corporation is in full compliance with its reporting and
filing obligations under said Act. The Corporation has delivered to Purchaser
all of its Annual Reports to shareholders and its reports on Form 10K; and all
its quarterly reports to shareholders, quarterly reports on Form 10Q, and each
other report, registration statement, definitive proxy statement or other
document filed with the S.E.C. since the beginning of said three fiscal years
(collectively, the "SEC Reports"). The SEC Reports do not (as of their
respective dates) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The audited and unaudited financial statements of the
Corporation included in the SEC Reports (the "Financial Statements") have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except as stated in such Financial Statements or the notes
thereto) and fairly present the financial position of the Corporation and its
consolidated subsidiaries as of the dates thereof and the results of their
operations and changes in financial position for the periods then ended. Except
as publicly disclosed by the Corporation in the SEC Reports or otherwise, since
the end of the most recent of said fiscal years there has been no material
adverse change in the business, financial condition, or results of operations of
the Corporation and its subsidiaries taken together as a consolidated whole, and
there is no existing condition, event or series of events which can reasonably
be expected to have a material adverse effect on the business, financial
condition or results of operations of the Corporation and its subsidiaries taken
together as a consolidated whole, or its ability to perform its obligations
under this Agreement.
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4.3 Authorization; No Conflict. Execution and delivery of this Agreement
and issuance and sale of the Stock have been duly authorized by all necessary
corporate action of the Corporation, and the Stock when issued will be validly
issued, fully paid and non-assessable. Performance by the Corporation of its
obligations under this Agreement will not conflict with or violate (i) the
charter documents or bylaws of the Corporation, (ii) any indenture, loan
agreement, lease, mortgage or other material agreement binding on the
Corporation, (iii) any order of a court or administrative agency binding on the
Corporation, or (iv) any applicable law or governmental regulation; and such
performance does not and will not require the permission or approval of any
governmental agency, and will not result in the imposition or creation of any
lien or charge against any assets of the Corporation. Except as disclosed in the
Financial Statements or on Exhibit A hereto, (i) the Corporation has no
obligation to redeem or repurchase any of its equity securities, (ii) no
shareholder or other person has pre-emptive or other rights to acquire equity
securities of the Corporation, and (iii) the Corporation has no obligation to
register any of its securities otherwise than pursuant to Section 8 of this
Agreement or as disclosed on Exhibit A hereto.
4.4 Material Agreements; No Defaults. All material indentures, loan
agreements, leases, mortgages and other agreements binding on the Corporation or
its subsidiaries are identified in the list or exhibits contained in the
Corporation's most recent 10K report ("Other Agreements"). No material default
on the part of the Corporation or any or its subsidiaries (including any event
which, with notice or the passage of time, would constitute a default) exists
under any of the Other Agreements.
4.5 Material Liabilities. Except for liabilities disclosed in the
Financial Statements or the SEC Reports, and obligations under the Other
Agreements, the Corporation and its subsidiaries have no material liabilities or
obligations, absolute or contingent, other than liabilities arising in the
ordinary course of business subsequent to the date of the most recent of the
Financial Statements.
4.6 Properties. The Corporation and its subsidiaries (i) have good title
to the properties and assets reflected in the Financial Statements as owned by
them, (ii) have valid leasehold interests in the properties leased by them, and
(iii) own or have the right to use under valid license agreements all
trademarks, trade, names, copyrights, patents and other intellectual property
rights regularly utilized by them; subject in each case to no material liens,
security interests or adverse claims except as disclosed in the Financial
Statements.
4.7 Litigation. There are no material legal actions, arbitrations, or
administrative proceedings pending against the
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Corporation or its subsidiaries, except for the matters disclosed in the SEC
Reports.
4.8 Tax Matters. The Corporation and its subsidiaries have filed on a
timely basis all tax returns required to be filed by them and have paid their
taxes prior to delinquency, and have made adequate accruals for tax liabilities
on the Financial Statements in accordance with generally accepted accounting
principles.
4.9 ERISA Compliance. Neither the Corporation nor any of its subsidiaries
has incurred any material funding deficiency within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or any material
liability to the Pension Benefit Guarantee Corporation in connection with any
employee benefit plan. The Corporation and its subsidiaries are in compliance in
all material respects with all applicable provisions of ERISA, and have no
obligations with respect to any multi-employer plan. No "reportable event" as
such term is defined in ERISA, which may result in any material liability, has
occurred with respect to any employee benefit or other plan maintained for
employees of the Corporation or any subsidiary.
4.10 Environmental Matters. Except as disclosed in the SEC Reports,
neither the Corporation nor any of its subsidiaries (i) has been notified by any
governmental authority that it is, or may be, a Responsible Party with respect
to cleanup or remediation of any environmental condition or hazardous waste
site, (ii) has violated any law, regulation, order or requirement of
governmental authority with respect to Hazardous Substances, or (iii) has
incurred any material liability for violation or noncompliance with applicable
Environmental Regulations. The term "Environmental Regulations" means any law,
regulation, order or requirement relating to protection of the environment,
including without limitation, the Clean Air Act, the Clean Water Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Hazardous Materials Transportation
Act and the Toxic Substances Control Act. The term "Hazardous Substances" means
any substance defined or listed as such in any Environmental Regulation.
4.11 Other Matters. The Corporation is not now and will not be after
giving effect to the receipt of the proceeds from the sale of the Stock an
"Investment Company" within the meaning of the Investment Company Act of 1940,
nor will it be controlled by or acting on behalf of any person which is such an
investment company. The Corporation is not selling the Stock "for the purpose of
purchasing or carrying any margin stock" within the meaning of Regulation G of
the Board of Governors of the Federal Reserve System. The Corporation has not
offered the Stock to any person other than the Purchaser.
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SECTION 5
Representations and Warranties of the Purchaser
The Purchaser represents and warrants to the Corporation that:
5.1 Corporate Power and Authority. It is validly existing and in good
standing with all requisite power and authority to enter into this Agreement and
carry out its obligations hereunder and has taken all actions necessary to
authorize it to enter into this Agreement and carry out such obligations.
5.2 Investment. It is acquiring the Stock for investment and not with the
view to, or for resale in connection with, any distribution thereof. It is an
"accredited investor" within the meaning of the Securities Act of 1933 and the
rules thereunder. It understands that the Stock has not been registered under
the Securities Act of 1933 nor qualified under any State blue sky law by reason
of specified exemptions therefrom which depend upon, among other things, the
bona fide nature of its investment intent as expressed herein.
5.3 Rule 144. It acknowledges that the Stock must be held indefinitely
unless it is subsequently registered under the Securities Act of 1933 or an
exemption from such registration is available. It has been advised or is aware
of the provisions of Rule 144 promulgated under the Securities Act.
SECTION 6
Conditions to Obligations of the Purchaser
The obligation of the Purchaser to purchase the Stock is subject to the
fulfillment on or prior to the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Corporation shall be true and correct in all material respects
on the Closing Date.
(b) Performance. All covenants, agreements and conditions contained
in this Agreement to be performed or complied with by the Corporation on or
prior to the Closing Date shall have been performed or complied with in all
material respects.
(c) Opinion of Corporation's Counsel. The Purchaser shall have
received from counsel to the Corporation an opinion confirming the
representations set forth in the first sentence of Section 4.3 hereof, and on
the basis of such counsel's review of the Other Agreements and certificates of
officers of the
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Corporation as to factual matters, confirming the representations set forth in
the second and third sentences of Section 4.3 hereof.
(d) Legal Issuance. At the time of the Closing, the issuance and
purchase of the Stock shall be legally permitted by all laws and regulations to
which the Purchaser and the Corporation are subject.
(e) Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be satisfactory in form and
substance to the purchaser and its counsel.
(f) Satisfaction of Obligations to Broker. The Corporation shall
have furnished the Purchaser with assurances satisfactory to the Purchaser that
the Corporation has satisfied its obligations to any broker entitled to
compensation in connection with the sale of the Stock.
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SECTION 7
Conditions to Obligations of the Corporation
The Corporation's obligation to sell the Stock is subject to the
fulfillment on or prior to the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties made by the purchaser shall be true and correct in all material
respects on the Closing Date.
(b) Legal Issuance. At the time of the Closing, the issuance and
purchase of the Stock shall be legally permitted by all laws and regulations to
which the purchaser and the Corporation are subject.
(c) Payment. The Corporation shall concurrently receive payment for
the Stock as provided in Section 2.
SECTION 8
Covenant to Register
(a) For purposes of this Section 8, the following definitions shall
apply:
(i) The terms "register", "registered", and "registration"
refer to a registration under the Securities Act of 1933, as amended (the
"Act") effected by preparing and filing a registration statement or
similar document in compliance with the Act or an amendment thereto, and
the declaration or ordering of effectiveness of such registration
statement, document or amendment thereto.
(ii) The term "Registrable Securities" means the Stock and any
securities of the Corporation or securities of any successor corporation
issued as, or issuable upon the conversion or exercise of any warrant,
right or other security that is issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
Stock.
(b) (i) At any time after one hundred and twenty (120) days after
the date of this Purchase Agreement and from time to time thereafter,
Purchaser shall have the right to require by notice in writing that the
Corporation register all or any part of the Registrable Securities held by
Purchaser (a "Demand Registration") and the Corporation shall thereupon
effect such registration in accordance herewith. The Corporation agrees to
file a registration statement (Form S-
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3) in order to register the Common Stock and to cause such registration
statement to be declared effective within ninety (90) days of Closing. A
3% cash penalty will accrue for every thirty (30) days after such date
that the securities remain unregistered. The penalty shall be pro-rated
for periods of less than thirty (30) days.
(ii) The Corporation shall not be obligated to effect Demand
Registration (i) if all of the Registrable Securities held by purchaser
which are intended to be covered by the Demand Registration are, at the
time of the request of a Demand Registration, included in an effective
registration statement and the Corporation is in compliance with its
obligations under Subsection (d) (ii) through (v) hereof with respect to
such registration statement, or (ii) within 120 days after the effective
date of any other registration as to which Purchaser was given piggy-back
rights pursuant to subsection (c) hereof and in which Purchaser was able
to register and sell at least eighty percent (80%) of the Registrable
Securities requested by Purchaser to be included in such registration.
(c) If the Corporation proposes to register (including for this
purpose a registration effected by the Corporation for shareholders other than
the Purchaser) any of its stock or other securities under the Act in connection
with a public offering of such securities (other than a registration on Form S-
4, Form S-8 or other limited purpose form) and the Registrable Securities have
not heretofore been included in a registration statement under Subsection (b),
which remains effective, the Corporation shall, at such time, promptly give the
Purchaser written notice of such registration. Upon the written request of the
Purchaser given within twenty (20) days after receipt of such notice by the
Purchaser, the Corporation shall cause to be registered under the Act all of the
Registrable Securities that the Purchaser has requested to be registered.
However, the Corporation shall have no obligation under this Subsection (c) to
the extent that, with respect to a public offering registration, any underwriter
of such public offering reasonably requests that the Registrable Securities or a
portion thereof be excluded therefrom.
(d) Whenever required under this Section 8 to effect the
registration of any Registrable Securities, the Corporation shall, as
expeditiously as reasonably possible:
(i) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to
cause such registration to become effective and, upon the request of the
Purchaser, keep such registration statement effective for so long as
Purchaser desires to dispose of the securities, covered by such
registration statement (but not after Purchaser in the reasonable opinion
of its counsel is free to sell such
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securities under the provisions of Rule 144(k) under the Act).
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statements and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.
(iii) Furnish to the Purchaser such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as the Purchaser
may reasonably request in order to facilitate the disposition of
Registrable Securities owned by Purchaser.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by Purchaser, provided that the Corporation shall not be
required in connection therewith or as a condition thereto to qualify to
do business or to file a general consent to service and process in any
such states or jurisdictions.
(v) Notify Purchaser of the happening of any event as a result
of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing.
(vi) Furnish, at the request of Purchaser, an opinion of
counsel of the Corporation, dated the effective date of the registration
statement, as to the due authorization and issuance of the securities
being registered and compliance with securities laws by the Corporation in
connection with the authorization and issuance thereof.
(e) The Purchaser will furnish to the Corporation in connection with
any registration under this Section 8 such information regarding itself, the
Registrable Securities and other securities of the Corporation held by it, and
the intended method of disposition of such securities as shall be required to
effect the registration of the Registrable Securities held by Purchaser.
(f) (i) The Corporation shall indemnify, defend and hold harmless
each holder of Registrable Securities which are included in a registration
statement pursuant to the provisions of Subsections (b) or (c), any
underwriter (as defined in the Act) for such holder, and the directors,
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officers and controlling persons of such holder or underwriter from and
against, and shall reimburse all of them with respect to, any and all
claims, suits, demands, causes of action, losses, damages, liabilities,
costs or expenses ("Liabilities") to which any of them may become subject
under the Act or otherwise, arising from or relating to (A) any untrue
statement or alleged untrue statement of any material fact contained in
such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or (B) 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
Corporation shall not be liable in any such case to the extent that any
such Liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by such person in writing
specifically for use in the preparation thereof.
(ii) Each holder of Registrable Securities included in a
registration pursuant to the provisions of Subsection (b) or (c) shall
indemnify, defend, and hold harmless the Corporation, its directors and
officers, and shall reimburse the Corporation, its directors and officers
with respect to, any and all Liabilities to which any of them may become
subject under the Act or otherwise, arising from or relating to (A) any
untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein
or any amendment or supplement thereto, or (B) 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 such
holder specifically for use in the preparation thereof.
(iii) Promptly after receipt by an indemnified party pursuant
to the provisions of Subsection (f)(i) or (f)(ii) of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party shall, if a claim thereof is
to be made against the indemnifying party pursuant to the provisions of
Subsection (f)(i) or (f)(ii), promptly notify the indemnifying party of
the commencement thereof; provided, however, that the failure to so notify
the indemnifying party shall not relieve it from its indemnification
obligations hereunder except to the extent that the indemnifying party is
materially prejudiced by such failure. If such action is
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brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party shall have the
right to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses different from or in
addition to those available to the indemnifying party, or if there is
conflict of interest which would prevent counsel for the indemnifying
party from also representing the indemnified party, the indemnified party
shall have the right to select separate counsel to participate in the
defense of such action on behalf of such indemnified party. After notice
from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable
to such indemnified party pursuant to Subsection (f)(i) or (f)(ii) for any
expense of counsel subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless (A) the indemnified party shall have employed
counsel in accordance with the provisions of the preceding sentence, or
(B) the indemnifying party shall not have employed counsel satisfactory to
the indemnified party to represent the indemnified party within a
reasonable time after the notice of the commencement of the action. An
indemnifying party shall not be responsible for amounts paid in settlement
without its consent, provided that its consent may not be unreasonably
withheld.
(g) (i) With respect to the inclusion of Registrable Securities in a
registration statement pursuant to subsections (b) or (c), all fees, costs
and expenses of and incidental to such registration, inclusion and public
offering shall be borne by the Corporation; provided, however, that any
securityholders participating in such registration shall bear their pro
rata share of the underwriting discounts and commissions, if any.
(ii) The fees, costs and expenses of registration to be borne
by the Corporation as provided in this Subsection (g) shall include,
without limitation, all registration, filing and NASD fees, printing
expenses, fees and disbursements of counsel and accountants for the
Corporation, and all legal fees and disbursements and other expenses of
complying with state securities or Blue Sky laws of any jurisdiction or
jurisdictions in which securities to be offered are to be registered and
qualified. Fees and disbursements of counsel and accountants for the
selling securityholders shall, however, be borne by the respective selling
securityholder.
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(h) The rights to cause the Corporation to register all or any
portion of Registrable Securities pursuant to this Section 8 may be assigned by
Purchaser to a transferee or assignee of 20% or more of the Stock. Within a
reasonable time after such transfer the Purchaser shall notify the Corporation
of the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned. Such assignment
shall be effective only if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted
under the Act. Any transferee asserting registration rights hereunder shall be
bound by the provisions of this Section 8.
(i) From and after the date of this Agreement, the Corporation shall
not agree to allow the holders of any securities of the Corporation to include
any of their securities in any registration statement filed by the Corporation
pursuant to Subsection (b) unless the inclusion of such securities will not
reduce the amount of the Registrable Securities included therein.
SECTION 9
Affirmative Covenants of the Corporation
The Corporation hereby covenants that, during such time as the Purchaser
(or one of its affiliates) owns any Stock, or for four years, whichever period
is shorter:
9.1 Reports and Financial Statements.
(a) The Corporation will cause its common stock to continue to be
registered under Sections 12(b) or 12(g) of the Securities Exchange Act of 1934,
will comply in all respects with its reporting and filing obligations under said
Act, and will not take any action or file any document (whether or not permitted
by said Act or the rules thereunder) to terminate or suspend such registration
or to terminate or suspend its reporting and filing obligations under said Act.
The Corporation will take all action necessary to continue the listing or
trading of its common stock on any national securities exchange or the Automated
Quotation System of the National Association of Securities Dealers on which such
common stock is listed or traded, and will comply in all respects with its
reporting, filing and other obligations under the bylaws or rules of said
exchange or Association.
(b) The Corporation will furnish to the Purchaser, concurrently with
the distribution or filing thereof, each annual and quarterly report to its
shareholders, its reports on Form 10K and 10Q, and each other report,
registration statement, definitive proxy statement or other document filed with
the S.E.C., and each press release or other public announcement issued by the
Corporation.
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9.2 Maintenance of Office. The Corporation will maintain an office or
agency in the United States at such address as may be designated in writing from
time to time to the registered holders of the Stock, where notices,
presentations and demands to or upon the Corporation in respect of the Stock may
be given or made. Unless or until another office or agency is designated by the
Corporation, such office shall be at the address set forth adjacent to the name
of the Corporation at the foot of this Agreement.
9.3 Maintenance and Compliance. The Corporation will (i) maintain its
corporate existence, rights, powers and privileges in good standing, (ii) comply
in all material respects with all laws and governmental regulations and
restrictions applicable to its business or properties, (iii) keep records and
books of account and maintain a system of internal accounting controls in
accordance with generally accepted accounting principles and in compliance with
Section 13(b)(2) of the Securities Exchange Act of 1934, and (iv) retain
independent public accountants of recognized national standing as auditors of
the Corporation's annual financial statements.
9.4 Assignment of Rights. The rights of the Purchaser hereunder may be
assigned by the Purchaser in connection with the transfer or assignment to a
single transferee of not less than 20% of the Stock originally purchased by the
Purchaser hereunder, and such rights may be further reassigned by such
transferee to another such single transferee. Any transferee asserting rights
under this Agreement shall be bound by its provisions.
9.5 Effect of Covenants. The covenants in Sections 9.1 and 9.3 shall not
be deemed to prohibit a merger, sale of all assets or other corporate
reorganization if (i) the entity surviving or succeeding to the Corporation is
bound by this Agreement with respect to its securities issued in exchange for or
replacement of the Stock, or (ii) the consideration received in exchange for or
replacement of the Stock is cash.
SECTION 10
Legend on Stock
Each certificate representing the Stock shall be stamped or otherwise
imprinted with a legend substantially in the following form (in addition to any
legend required under any applicable state securities laws):
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
Upon request of a holder of Stock the Corporation shall remove the
foregoing legend or issue to such holder a new certificate therefor free of any
such legend, if the Corporation shall have received either an opinion of counsel
or a "no-action" letter of the S.E.C., in either case reasonably satisfactory in
substance to the Corporation and its counsel, to the effect that such legend is
no longer required.
SECTION 11
Miscellaneous
11.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California. Any action or proceeding
relating to this Agreement may be brought in the courts of California sitting in
Los Angeles County, or in the United States courts located in Los Angeles
County, California, and each of the parties irrevocably consents to the
jurisdiction of such courts in any such action or proceeding.
11.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of and be binding upon
the successors and assigns of the parties.
11.3 Entire Agreement; Amendment. This Agreement (including any Exhibits
hereto) and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated except by a written instrument signed
by the Corporation and the Purchaser.
11.4 Notices, etc. All notices and other communications required or
permitted hereunder shall be mailed by first-class mail, postage prepaid, or
delivered either by hand or by messenger, addressed (a) if to the Purchaser, as
indicated below the Purchaser's signature, or at such other address as the
Purchaser shall have furnished to the Corporation in writing, or (b) if to any
other holder of any Stock, at the address of such holder as shown on the records
of the Corporation, or (c) if to the Corporation, at its address set forth below
or at such other
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address as the Corporation shall have furnished to the Purchaser and each such
other holder in writing. All such notices or communications shall be deemed
given when actually delivered by hand, messenger, facsimile or mailgram or, if
mailed, three days after deposit in the U.S. mail.
11.5 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement (including any holder of
Stock), upon any breach or default of another party under this Agreement, shall
impair any such right, power or remedy of such party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. All remedies, either under this
Agreement or by law or otherwise afforded to any party, shall be cumulative and
not alternative.
11.6 Severability. In case any provision of the Agreement 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.
11.7 Titles and Subtitles. The titles of the Sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
11.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the day and year first
written above.
Commodore Applied Technologies, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx
Senior Vice President and Chief
Administrative and Financial Officer
Address: 000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
[Signatures continued on following page]
00
00
X.X. 0-00 Small Company Portfolio of DFA
Investment Group Inc.
By: /s/
---------------------------------
Address: c/o Dimensional Fund Advisors
0000 Xxxxx Xxxxxx, 00xx xxxxx
Xxxxx Xxxxxx, XX 00000
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of
September 26, 1997, between Commodore Applied Technologies, Inc., a Delaware
corporation, (the "Corporation"), and an entity advised by Dimensional Fund
Advisors Inc. whose name is set forth at the foot of this Agreement (the
"Purchaser").
The Corporation and the Purchaser hereby agree as follows:
SECTION 1
Authorization, Purchase and Sale of the Stock
1.1 Authorization of the Stock. The Corporation has authorized
issuance and sale of 125,400 shares of its common stock (the "Stock") to
Purchaser as herein provided.
1.2 Sale and Purchase of the Stock. At the Closing, subject to the
terms and conditions hereof and in reliance upon the representations, warranties
and agreements contained herein, the Purchaser will purchase the Stock from the
Corporation at a purchase price of $3.675 per share, $460,845.00 in total.
SECTION 2
Closing, Payment and Delivery
2.1 Closing Date and Place of Closing. The closing shall be held as
soon as practicable, and in no event more than 5 business days after execution
of this Agreement, on such date as the Corporation and the Purchaser may agree
to (the "Closing Date") and shall be held at the offices of Dimensional Fund
Advisors Inc., 0000 Xxxxx Xxxxxx, Xxxxx Xxxxxx, XX 00000.
2.2 Payment and Delivery. At the Closing, the Purchaser will pay or
cause to be paid to the Corporation by wire funds transfer the entire purchase
price. The Corporation will deliver in advance of the Closing to an
institutional custodian designated by the Purchaser a certificate or
certificates, registered in such name or names as Purchaser may designate,
representing all of the Stock, with instructions that such certificates are to
be held for the account of Purchaser upon payment of the purchase price.
2.3 Covenant of Best Efforts and Good Faith. The Corporation and the
Purchaser agree to use their respective best
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efforts and to act in good faith to cause to occur all conditions to Closing
which are in their respective control.
SECTION 3
Purchase Price Adjustment
3.1. Subsequent Sale at Lower Price. If during the twelve month
period following the Closing Date (the "Anniversary Period"), the Corporation
shall, on any one or more occasion, sell any shares of its common stock or any
security convertible into or exercisable in respect of common stock, or issue
additional shares of common stock upon conversion during the Anniversary Period
of its currently outstanding Series A Convertible Preferred Stock for a selling
price per share or a conversion price per share which shall be lower than the
purchase price per share of the Stock sold to Purchaser pursuant to Section 1.2
hereof (such lower price or prices being the "Reset Price"), the purchase price
per share of the Stock sold to the Purchaser hereunder shall be adjusted
downward as at the end of the Anniversary Period so as to equal the Reset Price.
The lowest selling price per share or conversion price per share at which the
Corporation shall issue its common stock during the Anniversary Period shall
determine the applicable Reset Price; provided, that
(a) the lowest sales or conversion prices associated with
issuances by the Corporation of up to 10,000 shares of the Corporation's
common stock, and
(b) issuances of shares of the Corporation's common stock by
Commodore Environmental Services, Inc. ("COES"), the parent of the
Corporation, upon conversion of Series D Convertible Preferred Stock of
COES or upon exercise of certain warrants to purchase shares of the
Corporation's common stock granted by COES, irrespective of the conversion
or exercise price per share,
shall be excluded in determining such Reset Price.
3.2. Adjustment Mechanism. If an adjustment of the purchase price
for the Stock is required pursuant to this Section 3, the Corporation shall, not
later than five business days (subject to the provisions of Subsection 3.6
hereof) following the expiration of the Anniversary Period, refund to Purchaser
in cash the amount of such downward adjustment which shall be equal to the
product of (a) the total number of shares of common stock originally delivered
to Purchaser hereunder, multiplied by (b) the difference between the purchase
price per share set forth in Section 1.2 and the final Reset Price. If for any
reason the Corporation fails to make such cash refund within 10 days after it
becomes due pursuant to this Section 3.2, then the Corporation shall immediately
deliver to Purchaser such number of additional
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shares of common stock as will cause (i) the total number of shares of common
stock delivered to Purchaser hereunder, multiplied by (ii) the Reset Price, to
equal the total purchase price set forth in Section 1.2 hereof; provided,
however, that the Corporation shall effect such adjustment in cash, in whole or
in part, to the extent required by the following subsection.
3.3. Limitation on Number of Shares. Purchaser and other entities
advised by Dimensional Fund Advisors Inc. shall not be required to accept, by
way of any such adjustment, a number of shares of the Corporation such that the
total number of such shares held by Purchaser and such other entities, which
were held by them on the date of this Agreement or acquired by them pursuant to
this Agreement or agreements of like tenor with such other entities, would
exceed 4.99% of the total outstanding stock of the Corporation. The Corporation
shall effect the adjustment required by this Section by cash refund to the
extent necessary to avoid causing the aforesaid limitation to be exceeded.
3.4 Capital Adjustments. In case of any stock split or reverse stock
split, stock dividend, reclassification of the common stock, recapitalization,
merger or consolidation, or like capital adjustment affecting the common stock
of the Corporation, the provisions of this Section shall be applied as if such
capital adjustment event had occurred immediately prior to the Closing Date and
the original purchase price had been fairly allocated to the stock resulting
from such capital adjustment; and in other respects the provisions of this
Section shall be applied in a fair, equitable and reasonable manner so as to
give effect, as nearly as may be, to the purposes hereof.
3.5. Exclusions. Section 3.1 shall not apply to sales of shares by
the Corporation (i) upon conversion or exercise of any convertible securities,
options or warrants outstanding on the date hereof, except that with respect to
the Corporation's Series A Convertible Preferred Stock, conversions during the
Anniversary Period shall be subject to Section 3.1, (ii) pursuant to the
provisions of any shareholder-approved employee benefit or incentive plan
heretofore or hereafter adopted by the Corporation, or (iii) to an entity which
is a strategic investor in the Corporation or an investor which is in a related
industry, as opposed to a financial investor.
3.6. Definitions. For purposes of Section 3.1 hereof, a sale of
shares shall mean and include the sale or issuance of rights, options, warrants
or convertible securities under which the Corporation is or may become obligated
to issue shares of common stock, and the "selling price" of the common stock
covered thereby shall be the exercise or conversion price thereof plus the
consideration (if any) received by the Corporation upon such sale or issuance.
If the selling price or the exercise or conversion price is not determined until
after the Anniversary Period, an adjustment pursuant to this Section shall be
made promptly
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following such determination, if required. If shares are issued for a
consideration other than cash, the "selling price" shall be the fair value of
the such consideration as determined in good faith by the Board of Directors of
the Corporation. The term "Stock" as used in this Agreement shall include shares
issued pursuant to this Section.
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SECTION 4
Representations and Warranties of the Corporation
The Corporation hereby represents and warrants to the Purchaser
that:
4.1 Corporate Power, Qualification and Standing. The Corporation and
its subsidiaries are validly existing and in good standing under the laws of
their respective jurisdictions of incorporation and each of them is qualified to
transact business in each jurisdiction in which its ownership of property or
conduct of activities requires such qualification. The Corporation has all
requisite corporate power and authority to enter into this Agreement, to sell
the Stock and to carry out and perform its other obligations under this
Agreement.
4.2 S.E.C. Reports; Financial Statements. The common stock of the
Corporation is registered under Section 12(b) or (g) of the Securities Exchange
Act of 1934 and the Corporation is in full compliance with its reporting and
filing obligations under said Act. The Corporation has delivered to Purchaser
all of its Annual Reports to shareholders and its reports on Form 10K, and all
its quarterly reports to shareholders, quarterly reports on Form 10Q, and each
other report, registration statement, definitive proxy statement or other
document filed with the S.E.C. since the beginning of said three fiscal years
(collectively, the "SEC Reports"). The SEC Reports do not (as of their
respective dates) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The audited and unaudited financial statements of the
Corporation included in the SEC Reports (the "Financial Statements") have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except as stated in such Financial Statements or the notes
thereto) and fairly present the financial position of the Corporation and its
consolidated subsidiaries as of the dates thereof and the results of their
operations and changes in financial position for the periods then ended. Except
as publicly disclosed by the Corporation in the SEC Reports or otherwise, since
the end of the most recent of said fiscal years there has been no material
adverse change in the business, financial condition, or results of operations of
the Corporation and its subsidiaries taken together as a consolidated whole, and
there is no existing condition, event or series of events which can reasonably
be expected to have a material adverse effect on the business, financial
condition or results of operations of the Corporation and its subsidiaries taken
together as a consolidated whole, or its ability to perform its obligations
under this Agreement.
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4.3 Authorization; No Conflict. Execution and delivery of this
Agreement and issuance and sale of the Stock have been duly authorized by all
necessary corporate action of the Corporation, and the Stock when issued will be
validly issued, fully paid and non-assessable. Performance by the Corporation
of its obligations under this Agreement will not conflict with or violate (i)
the charter documents or bylaws of the Corporation, (ii) any indenture, loan
agreement, lease, mortgage or other material agreement binding on the
Corporation, (iii) any order of a court or administrative agency binding on the
Corporation, or (iv) any applicable law or governmental regulation; and such
performance does not and will not require the permission or approval of any
governmental agency, and will not result in the imposition or creation of any
lien or charge against any assets of the Corporation. Except as disclosed in the
Financial Statements or on Exhibit A hereto, (i) the Corporation has no
obligation to redeem or repurchase any of its equity securities, (ii) no
shareholder or other person has pre-emptive or other rights to acquire equity
securities of the Corporation, and (iii) the Corporation has no obligation to
register any of its securities otherwise than pursuant to Section 8 of this
Agreement or as disclosed on Exhibit A hereto.
4.4 Material Agreements; No Defaults. All material indentures, loan
agreements, leases, mortgages and other agreements binding on the Corporation or
its subsidiaries are identified in the list of exhibits contained in the
Corporation's most recent 10K report ("Other Agreements"). No material default
on the part of the Corporation or any of its subsidiaries (including any event
which, with notice or the passage of time, would constitute a default) exists
under any of the Other Agreements.
4.5 Material Liabilities. Except for liabilities disclosed in the
Financial Statements or the SEC Reports, and obligations under the Other
Agreements, the Corporation and its subsidiaries have no material liabilities
or obligations, absolute or contingent, other than liabilities arising in the
ordinary course of business subsequent to the date of the most recent of the
Financial Statements.
4.6 Properties. The Corporation and its subsidiaries (i) have good
title to the properties and assets reflected in the Financial Statements as
owned by them, (ii) have valid leasehold interests in the properties leased by
them, and (iii) own or have the right to use under valid license agreements all
trademarks, trade names, copyrights, patents and other intellectual property
rights regularly utilized by them; subject in each case to no material liens,
security interests or adverse claims except as disclosed in the Financial
statements.
4.7 Litigation. There are no material legal actions, arbitrations,
or administrative proceedings pending against the
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Corporation or its subsidiaries, except for the matters disclosed in the SEC
Reports.
4.8 Tax Matters. The Corporation and its subsidiaries have filed on
a timely basis all tax returns required to be filed by them and have paid their
taxes prior to delinquency, and have made adequate accruals for tax liabilities
on the Financial Statements in accordance with generally accepted accounting
principles.
4.9 ERISA Compliance. Neither the Corporation nor any of its
subsidiaries has incurred any material funding deficiency within the meaning of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or any
material liability to the Pension Benefit Guarantee Corporation in connection
with any employee benefit plan. The Corporation and its subsidiaries are in
compliance in all material respects with all applicable provisions of ERISA, and
have no obligations with respect to any multi-employer plan. No "reportable
event" as such term is defined in ERISA, which may result in any material
liability, has occurred with respect to any employee benefit or other plan
maintained for employees of the Corporation or any subsidiary.
4.10 Environmental Matters. Except as disclosed in the SEC Reports,
neither the Corporation nor any of its subsidiaries (i) has been notified by any
governmental authority that it is, or may be, a Responsible Party with respect
to cleanup or remediation of any environmental condition or hazardous waste
site, (ii) has violated any law, regulation, order or requirement of
governmental authority with respect to Hazardous Substances, or (iii) has
incurred any material liability for violation or noncompliance with applicable
Environmental Regulations. The term "Environmental Regulations" means any law,
regulation, order or requirement relating to protection of the environment,
including without limitation, the Clean Air Act, the Clean Water Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Hazardous Materials Transportation
Act and the Toxic Substances Control Act. The term "Hazardous Substance" means
any substance defined or listed as such in any Environmental Regulation.
4.11 Other Matters. The Corporation is not now and will not be after
giving effect to the receipt of the proceeds from the sale of the Stock an
"Investment Company" within the meaning of the Investment Company Act of 1940,
nor will it be controlled by or acting on behalf of any person which is such an
investment company. The Corporation is not selling the Stock "for the purpose of
purchasing or carrying any margin stock" within the meaning of Regulation G of
the Board of Governors of the Federal Reserve System. The Corporation has not
offered the Stock to any person other than the Purchaser.
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SECTION 5
Representations and Warranties of the Purchaser
The Purchaser represents and warrants to the Corporation that:
5.1 Corporate Power and Authority. It is validly existing and in
good standing with all requisite power and authority to enter into this
Agreement and carry out its obligations hereunder and has taken all actions
necessary to authorize it to enter into this Agreement and carry out such
obligations.
5.2 Investment. It is acquiring the Stock for investment and not
with the view to, or for resale in connection with, any distribution thereof. It
is an "accredited investor" within the meaning of the Securities Act of 1933 and
the rules thereunder. It understands that the Stock has not been registered
under the Securities Act of 1933 nor qualified under any State blue sky law by
reason of specified exemptions therefrom which depend upon, among other things,
the bona fide nature of its investment intent as expressed herein.
5.3 Rule 144. It acknowledges that the Stock must be held
indefinitely unless it is subsequently registered under the Securities Act of
1933 or an exemption from such registration is available. It has been advised or
is aware of the provisions of Rule 144 promulgated under the Securities Act.
SECTION 6
Conditions to Obligations of the Purchaser
The obligation of the Purchaser to purchase the stock is subject to
the fulfillment on or prior to the Closing Date of each of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Corporation shall be true and correct in, all material
respects on the Closing Date.
(b) Performance. All covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the Corporation
on or prior to the Closing Date shall have been performed or complied with in
all material respects.
(c) Opinion of Corporation's Counsel. The Purchaser shall have
received from counsel to the Corporation an opinion confirming the
representations set forth in the first sentence of Section 4.3 hereof, and on
the basis of such counsel's review of the Other Agreements and certificates of
officers of the
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Corporation as to factual matters, confirming the representations set forth in
the second and third sentences of Section 4.3 hereof.
(d) Legal Issuance. At the time of the Closing, the issuance
and purchase of the Stock shall be legally permitted by all laws and regulations
to which the Purchaser and the Corporation are subject.
(e) Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated hereby and all
documents and instruments incident to such transactions shall be satisfactory in
form and substance to the Purchaser and its counsel.
(f) Satisfaction of Obligations to Broker. The Corporation
shall have furnished the Purchaser with assurances satisfactory to the Purchaser
that the Corporation has satisfied its obligations to any broker entitled to
compensation in connection with the sale of the Stock.
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SECTION 7
Conditions to Obligations of the Corporation
The Corporation's obligation to sell the Stock is subject to the
fulfillment on or prior to the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties made by the Purchaser shall be true and correct in all material
respects on the Closing Date.
(b) Legal Issuance. At the time of the Closing, the issuance
and purchase of the Stock shall be legally permitted by all laws and regulations
to which the Purchaser and the Corporation are subject.
(c) Payment. The Corporation shall concurrently receive
payment for the Stock as provided in Section 2.
SECTION 8
Covenant to Register
(a) For purposes of this Section 8, the following definitions shall
apply:
(i) The terms "register", "registered", and "registration"
refer to a registration under the Securities Act of 1933, as amended (the
"Act" effected by preparing and filing a registration statement or similar
document in compliance with the Act or an amendment thereto, and the
declaration or ordering of effectiveness of such registration statement,
document or amendment thereto.
(ii) The term "Registrable Securities" means the Stock and
any securities of the Corporation or securities of any successor
corporation issued as, or issuable upon the conversion or exercise of any
warrant, right or other security that is issued as, a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
Stock.
(b) (i) At any time after one hundred and twenty (120) days after
the date of this Purchase Agreement and from time to time thereafter,
Purchaser shall have the right to require by notice in writing that the
Corporation register all or any part of the Registrable Securities held by
Purchaser (a "Demand Registration") and the Corporation shall thereupon
effect such registration in accordance herewith. The Corporation agrees to
file a registration statement (Form S-
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3) in order to register the Common Stock and to cause such registration
statement to be declared effective within ninety (90), days of Closing. A
3% cash penalty will accrue for every thirty (30) days after such date
that the securities remain unregistered. The penalty shall be pro-rated
for periods of less than thirty (30) days.
(ii) The Corporation shall not be obligated to effect Demand
Registration (i) if all of the Registrable Securities held by Purchaser
which are intended to be covered by the Demand Registration are, at the
time of the request of a Demand Registration, included in an effective
registration statement and the Corporation is in compliance with its
obligations under Subsection (d) (ii) through (v) hereof with respect to
such registration statement, or (ii) within 120 days after the effective
date of any other registration as to which Purchaser was given piggy-back
rights pursuant to subsection (c) hereof and in which Purchaser was able
to register and sell at least eighty percent (80%) of the Registrable
Securities requested by Purchaser to be included in such registration.
(c} If the Corporation proposes to register (including for this
purpose a registration effected by the Corporation for shareholders other than
the Purchaser) any of its stock or other securities under the Act in connection
with a public offering of such securities (other than a registration on Form
X-0, Xxxx X-0 or other limited purpose form) and the Registrable Securities have
not heretofore been included in a registration statement under Subsection (b),
which remains effective, the Corporation shall, at such time, promptly give the
Purchaser written notice of such registration. Upon the written request of the
Purchaser given within twenty (20) days after receipt of such notice by the
Purchaser, the Corporation shall cause to be registered under the Act all of the
Registrable Securities that the Purchaser has requested to be registered.
However, the Corporation shall have no obligation under this Subsection (c) to
the extent that, with respect to a public offering registration, any underwriter
of such public offering reasonably requests that the Registrable Securities or a
portion thereof be excluded therefrom.
(d) Whenever required under this Section 8 to effect the
registration of any Registrable Securities, the Corporation shall, as
expeditiously as reasonably possible:
(i) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to
cause such registration to become effective and, upon the request of the
Purchaser, keep such registration statement effective for so long as
Purchaser desires to dispose of the securities covered by such
registration statement (but not after Purchaser in the reasonable opinion
of its counsel is free to sell such
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securities under the provisions of Rule 144(k) under the Act).
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statements and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.
(iii) Furnish to the Purchaser such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as the Purchaser
may reasonably request in order to facilitate the disposition of
Registrable Securities owned by Purchaser.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other
securities or Blue Sky Laws of such jurisdictions as shall be reasonably
requested by Purchaser, provided that the Corporation shall not be
required in connection therewith or as a condition thereto to qualify to
do business or to file a general consent to service and process in any
such states or jurisdictions.
(v) Notify Purchaser of the happening of any event as a result
of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing.
(vi) Furnish, at the request of Purchaser, an opinion of
counsel of the Corporation, dated the effective date of the registration
statement, as to the due authorization and issuance of the securities
being registered and compliance with securities laws by the Corporation in
connection with the authorization and issuance thereof.
(e) The Purchaser will furnish to the Corporation in connection
with any registration under this Section 8 such information regarding itself,
the Registrable Securities and other securities of the Corporation held by it,
and the intended method of disposition of such securities as shall be required
to effect the registration of the Registrable Securities held by Purchaser.
(f) (i) The Corporation shall indemnify, defend and hold harmless
each holder of Registrable Securities which are included in a registration
statement pursuant to the provisions of Subsections (b) or (c), any
underwriter (as defined in the Act) for such holder, and the directors,
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officers and controlling persons of such holder or underwriter from and
against, and shall reimburse all of them with respect to, any and all
claims, suits, demands, causes of action, losses, damages, liabilities,
costs or expenses ("Liabilities") to which any of them may become subject
under the Act or otherwise, arising from or relating to (A) any untrue
statement or alleged untrue statement of any material fact contained in
such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or (B) 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
Corporation shall not be liable in any such case to the extent that any
such Liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by such person in writing
specifically for use in the preparation thereof.
(ii) Each holder of Registrable Securities included in a
registration pursuant to the provisions of Subsection (b) or (c) shall
indemnify, defend, and hold harmless the Corporation, its directors and
officers, and shall reimburse the Corporation, its directors and officers
with respect to, any and all Liabilities to which any of them may become
subject under the Act or otherwise, arising from or relating to (A) any
untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein
or any amendment or supplement thereto, or (B) 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 such
holder specifically for use in the preparation thereof.
(iii) Promptly after receipt by an indemnified party pursuant
to the provisions of Subsection (f)(i) or (f)(ii) of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party shall, if a claim thereof is
to be made against the indemnifying party pursuant to the provisions of
Subsection (f)(i) or (f)(ii), promptly notify the indemnifying party of
the commencement thereof; provided, however, that the failure to so notify
the indemnifying party shall not relieve it from its indemnification
obligations hereunder except to the extent that the indemnifying party is
materially prejudiced by such failure. If such action is
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brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party shall have the
right to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses different from or in
addition to those available to the indemnifying party, or if there is
conflict of interest which would prevent counsel for the indemnifying
party from also representing the indemnified party, the indemnified party
shall have the right to select separate counsel to participate in the
defense of such action on behalf of such indemnified party. After notice
from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable
to such indemnified party pursuant to Subsection (f)(i) or (f)(ii) for any
expense of counsel subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless (A) the indemnified party shall have employed
counsel in accordance with the provisions of the preceding sentence, or
(B) the indemnifying party shall not have employed counsel satisfactory to
the indemnified party to represent the indemnified party within a
reasonable time after the notice of the commencement of the action. An
indemnifying party shall not be responsible for amounts paid in settlement
without its consent, provided that its consent may not be unreasonably
withheld.
(g) (i) With respect to the inclusion of Registrable Securities in a
registration statement pursuant to subsections (b) or (c), all fees, costs
and expenses of and incidental to such registration, inclusion and public
offering shall be borne by the Corporation; provided, however, that any
securityholders participating in such registration shall bear their pro
rata share of the underwriting discounts and commissions, if any.
(ii) The fees, costs and expenses of registration to be borne
by the Corporation as provided in this Subsection (g) shall include,
without limitation, all registration, filing and NASD fees, printing
expenses, fees and disbursements of counsel and accountants for the
Corporation, and all legal fees and disbursements and other expenses of
complying with state securities or Blue Sky laws of any jurisdiction or
jurisdictions in which securities to be offered are to be registered and
qualified. Fees and disbursements of counsel and accountants for the
selling securityholders shall, however, be borne by the respective selling
securityholder.
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(h) The rights to cause the Corporation to register all or any
portion of Registrable Securities pursuant to this Section 8 may be assigned by
Purchaser to a transferee or assignee of 20% or more of the Stock. Within a
reasonable time after such transfer the Purchaser shall notify the Corporation
of the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned. Such assignment
shall be effective only if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted under
the Act. Any transferee asserting registration rights hereunder shall be bound
by the provisions of this Section 8.
(i) From and after the date of this Agreement, the Corporation shall
not agree to allow the holders of any securities of the Corporation to include
any of their securities in any registration statement filed by the Corporation
pursuant to Subsection (b) unless the inclusion of such securities will not
reduce the amount of the Registrable Securities included therein.
SECTION 9
Affirmative Covenants of the Corporation
The Corporation hereby covenants that, during such time as the
Purchaser (or one of its affiliates) owns any Stock, or for four years,
whichever period is shorter:
9.1 Reports and Financial Statements.
(a) The Corporation will cause its common stock to continue to
be registered under Sections 12(b) or 12(g) of the Securities Exchange Act of
1934, will comply in all respects with its reporting and filing obligations
under said Act, and will not take any action or file any document (whether or
not permitted by said Act or the rules thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing obligations
under said Act. The Corporation will take all action necessary to continue the
listing or trading of its common stock on any national securities exchange or
the Automated Quotation System of the National Association of Securities Dealers
on which such common stock is listed or traded, and will comply in all respects
with its reporting, filing and other obligations under the bylaws or rules of
said exchange or Association.
(b) The Corporation will furnish to the Purchaser,
concurrently with the distribution or filing thereof, each annual and quarterly
report to its shareholders, its reports on Form 10K and 10Q, and each other
report, registration statement, definitive proxy statement or other document
filed with the S.E.C., and each press release or other public announcement
issued by the Corporation.
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9.2 Maintenance of Office. The Corporation will maintain an office
or agency in the United States at such address as may be designated in writing
from time to time to the registered holders of the Stock, where notices,
presentations and demands to or upon the Corporation in respect of the Stock may
be given or made. Unless or until another office or agency is designated by the
Corporation, such office shall be at the address set forth adjacent to the name
of the Corporation at the foot of this Agreement.
9.3 Maintenance and Compliance. The Corporation will (i) maintain
its corporate existence, rights, powers and privileges in good standing, (ii)
comply in all material respects with all laws and governmental regulations and
restrictions applicable to its business or properties, (iii) keep records and
books of account and maintain a system of internal accounting controls in
accordance with generally accepted accounting principles and in compliance with
section 13(b)(2) of the Securities Exchange Act of 1934, and (iv) retain
independent public accountants of recognized national standing as auditors of
the Corporation's annual financial statements.
9.4 Assignment of Rights. The rights of the Purchaser hereunder may
be assigned by the Purchaser in connection with the transfer or assignment to a
single transferee of not less than 20% of the Stock originally purchased by the
Purchaser hereunder, and such rights may be further reassigned by such
transferee to another such single transferee. Any transferee asserting rights
under this Agreement shall be bound by its provisions.
9.5 Effect of Covenants. The covenants in Sections 9.1 and 9.3 shall
not be deemed to prohibit a merger, sale of all assets or other corporate
reorganization if (i) the entity surviving or succeeding to the Corporation is
bound by this Agreement with respect to its securities issued in exchange for or
replacement of the Stock, or (ii) the consideration received in exchange for or
replacement of the Stock is cash.
SECTION 10
Legend on Stock
Each certificate representing the Stock shall be stamped or
otherwise imprinted with a legend substantially in the following form (in
addition to any legend required under any applicable state securities laws):
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
Upon request of a holder of Stock the Corporation shall remove the
foregoing legend or issue to such holder a new certificate therefor free of any
such legend, if the Corporation shall have received either an opinion of
counsel or a "no-action" letter of the S.E.C., in either case reasonably
satisfactory in substance to the Corporation and its counsel, to the effect that
such legend is no longer required.
SECTION 11
Miscellaneous
11.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California. Any action or
proceeding relating to this Agreement may be brought in the courts of California
sitting in Los Angeles County, or in the United States courts located in Los
Angeles County, California, and each of the parties irrevocably consents to the
jurisdiction of such courts in any such action or proceeding.
11.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of and be binding upon
the successors and assigns of the parties.
11.3 Entire Agreement; Amendment. This Agreement (including any
Exhibits hereto) and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and thereof. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated except by a written instrument
signed by the Corporation and the Purchaser.
11.4 Notices. etc. All notices and other communications required or
permitted hereunder shall be mailed by first-class mail, postage prepaid, or
delivered either by hand or by messenger, addressed (a) if to the Purchaser, as
indicated below the Purchaser's signature, or at such other address as the
Purchaser shall have furnished to the Corporation in writing, or (b) if to any
other holder of any Stock, at the address of such holder as shown on the records
of the Corporation, or (c) if to the Corporation, at its address set forth below
or at such other
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address as the Corporation shall have furnished to the Purchaser and each such
other holder in writing. All such notices or communications shall be deemed
given when actually delivered by hand, messenger, facsimile or mailgram or, if
mailed, three days after deposit in the U.S. mail.
11.5 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party to this Agreement (including any
holder of Stock), upon any breach or default of another party under this
Agreement, shall impair any such right, power or remedy of such party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. All remedies, either
under this Agreement or by law or otherwise afforded to any party, shall be
cumulative and not alternative.
11.6 Severability. In case any provision of the Agreement 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.
11.7 Titles and Subtitles. The titles of the Sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
11.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first written above.
Commodore Applied Technologies, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxx
Senior Vice President and Chief
Administrative and Financial Officer
Address: 000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
[Signatures continued on following page]
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DFA Group Trust - 6-10 Subtrust
By: /s/
----------------------------------------
Address: c/o Dimensional Fund Advisors
0000 Xxxxx Xxxxxx, 00xx xxxxx
Xxxxx Xxxxxx, XX 00000
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of
September 26, 1997, between Commodore Applied Technologies, Inc., a Delaware
corporation, (the "Corporation"), and an entity advised by Dimensional Fund
Advisors Inc. whose name is set forth at the foot of this Agreement (the
"Purchaser").
The Corporation and the Purchaser hereby agree as follows:
SECTION 1
Authorization, Purchase and Sale of the Stock
1.1 Authorization of the Stock. The Corporation has authorized
issuance and sale of 16,600 shares of its common stock (the "Stock") to
purchaser as herein provided.
1.2 Sale and Purchase of the Stock. At the Closing, subject to the
terms and conditions hereof and in reliance upon the representations, warranties
and agreements contained herein, the Purchaser will purchase the Stock from the
Corporation at a purchase price of $3.675 per share, $61,005.00 in total.
SECTION 2
Closing, Payment and Delivery
2.1 Closing Date and Place of Closing. The closing shall be held as
soon as practicable, and in no event more than 5 business days after execution
of this Agreement, on such date as the Corporation and the Purchaser may agree
to (the "Closing Date") and shall be held at the offices of Dimensional Fund
Advisors Inc., 0000 Xxxxx Xxxxxx, Xxxxx Xxxxxx, XX 00000.
2.2 Payment and Delivery. At the Closing, the Purchaser will pay or
cause to be paid to the Corporation by wire funds transfer the entire purchase
price. The Corporation will deliver in advance of the Closing to an
institutional custodian designated by the Purchaser a certificate or
certificates, registered in such name or names as Purchaser may designate,
representing all of the stock, with instructions that such certificates are to
be held for the account of Purchaser upon payment of the purchase price.
2.3 Covenant of Best efforts and Good Faith. The Corporation and the
Purchaser agree to use their respective best
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efforts and to act in good faith to cause to occur all conditions to Closing
which are in their respective control.
SECTION 3
Purchase Price Adjustment
3.1. Subsequent Sale at Lower Price. If during the twelve month
period following the Closing Date (the "Anniversary Period"), the Corporation
shall, on any one or more occasion, sell any shares of its common stock or any
security convertible into or exercisable in respect of common stock, or issue
additional shares of common stock upon conversion during the Anniversary Period
of its currently outstanding Series A Convertible Preferred Stock for a selling
price per share or a conversion price per share which shall be lower than the
purchase price per share of the Stock sold to Purchaser pursuant to Section 1.2
hereof (such lower price or prices being the "Reset Price"), the purchase price
per share of the Stock sold to the Purchaser hereunder shall be adjusted
downward as at the end of the Anniversary Period so as to equal the Reset Price.
The lowest selling price per share or conversion price per share at which the
Corporation shall issue its common stock during the Anniversary Period shall
determine the applicable Reset Price; provided, that
(a) the lowest sales or conversion prices associated with
issuances by the Corporation of up to 10,000 shares of the Corporation's
common stock, and
(b) issuances of shares of the Corporation's common stock by
Commodore Environmental Services, Inc. ("COES"), the parent of the
Corporation, upon conversion of Series D Convertible Preferred Stock of
COES or upon exercise of certain warrants to purchase shares of the
Corporation's common stock granted by COES, irrespective of the conversion
or exercise price per share,
shall be excluded in determining such Reset Price.
3.2. Adjustment Mechanism. If an adjustment of the purchase price
for the Stock is required pursuant to this Section 3, the Corporation shall, not
later than five business days (subject to the provisions of Subsection 3.6
hereof) following the expiration of the Anniversary Period, refund to Purchaser
in cash the amount of such downward adjustment which shall be equal to the
product of (a) the total number of shares of common stock originally delivered
to Purchaser hereunder, multiplied by (b) the difference between the purchase
price per share set forth in Section 1.2 and the final Reset Price. If for any
reason the Corporation fails to make such cash refund within 10 days after it
becomes due pursuant to this Section 3.2, then the Corporation shall immediately
deliver to Purchaser such number of additional
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shares of common stock as will cause (i) the total number of shares of common
stock delivered to Purchaser hereunder, multiplied by (ii) the Reset Price, to
equal the total purchase price set forth in Section 1.2 hereof; provided,
however, that the Corporation shall effect such adjustment in cash, in whole or
in part, to the extent required by the following subsection.
3.3. Limitation on Number of Shares. Purchaser and other entities
advised by Dimensional Fund Advisors Inc. shall not be required to accept, by
way of any such adjustment, a number of shares of the Corporation such that the
total number of such shares held by Purchaser and such other entities, which
were held by them on the date of this Agreement or acquired by them pursuant to
this Agreement or agreements of like tenor with such other entities, would
exceed 4.99% of the total outstanding stock of the Corporation. The Corporation
shall effect the adjustment required by this Section by cash refund to the
extent necessary to avoid causing the aforesaid limitation to be exceeded.
3.4 Capital Adjustments. In case of any stock split or reverse stock
split, stock dividend, reclassification of the common stock, recapitalization,
merger or consolidation, or like capital adjustment affecting the common stock
of the Corporation, the provisions of this Section shall be applied as if such
capital adjustment event had occurred immediately prior to the Closing Date and
the original purchase price had been fairly allocated to the stock resulting
from such capital adjustment; and in other respects the provisions of this
Section shall be applied in a fair, equitable and reasonable manner so as to
give effect, as nearly as may be, to the purposes hereof.
3.5. Exclusions. Section 3.1 shall not apply to sales of shares by
the Corporation (i) upon conversion or exercise of any convertible securities,
options or warrants outstanding on the date hereof, except that with respect to
the Corporation's Series A Convertible Preferred Stock, conversions during the
Anniversary Period shall be subject to Section 3.1, (ii) pursuant to the
provisions of any shareholder-approved employee benefit or incentive plan
heretofore or hereafter adopted by the Corporation, or (iii) to an entity which
is a strategic investor in the Corporation or an investor which is in a related
industry, as opposed to a financial investor.
3.6. Definitions. For purposes of Section 3.1 hereof, a sale of
shares shall mean and include the sale or issuance of rights, options, warrants
or convertible securities under which the Corporation is or may become obligated
to issue shares of common stock, and the "selling price" of the common stock
covered thereby shall be the exercise or conversion price thereof plus the
consideration (if any) received by the Corporation upon such sale or issuance.
If the selling price or the exercise or conversion price is not determined until
after the Anniversary Period, an adjustment pursuant to this Section shall be
made promptly
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following such determination, if required. If shares are issued for a
consideration other than cash, the "selling price" shall be the fair value of
the such consideration as determined in good faith by the Board of Directors of
the Corporation. The term "Stock" as used in this Agreement shall include shares
issued pursuant to this Section.
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SECTION 4
Representations and Warranties of the Corporation
The Corporation hereby represents and warrants to the purchaser
that:
4.1 Corporate Power, Qualification and Standing. The Corporation and
its subsidiaries are validly existing and in good standing under the laws of
their respective jurisdictions of incorporation and each of them is qualified to
transact business in each jurisdiction in which its ownership of property or
conduct of activities requires such qualification. The Corporation has all
requisite corporate power and authority to enter into this Agreement, to sell
the stock and to carry out and perform its other obligations under this
Agreement.
4.2 S.E.C. Reports; Financial Statements. The common stock of the
Corporation is registered under Section 12(b) or (g) of the Securities Exchange
Act of 1934 and the Corporation is in full compliance with its reporting and
filing obligations under said Act. The Corporation has delivered to Purchaser
all of its Annual Reports to shareholders and its reports on Form 10K, and all
its quarterly reports to shareholders, quarterly reports on Form l0Q, and each
other report, registration statement, definitive proxy statement or other
document filed with the S.E.C. since the beginning of said three fiscal years
(collectively, the "SEC Reports"). The SEC Reports do not (as of their
respective dates) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The audited and unaudited financial statements of the
Corporation included in the SEC Reports (the "Financial Statements") have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except as stated in such Financial Statements or the notes
thereto) and fairly present the financial position of the Corporation and its
consolidated subsidiaries as of the dates thereof and the results of their
operations and changes in financial position for the periods then ended. Except
as publicly disclosed by the Corporation in the SEC Reports or otherwise, since
the end of the most recent of said fiscal years there has been no material
adverse change in the business, financial condition, or results of operations of
the Corporation and its subsidiaries taken together as a consolidated whole, and
there is no existing condition, event or series of events which can reasonably
be expected to have a material adverse effect on the business, financial
condition or results of operations of the Corporation and its subsidiaries taken
together as a consolidated whole, or its ability to perform its obligations
under this Agreement.
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4.3 Authorization; No Conflict. Execution and delivery of this
Agreement and issuance and sale of the Stock have been duly authorized by all
necessary corporate action of the Corporation, and the Stock when issued will be
validly issued, fully paid and non-assessable. Performance by the Corporation of
its obligations under this Agreement will not conflict with or violate (i) the
charter documents or bylaws of the Corporation, (ii) any indenture, loan
agreement, lease, mortgage or other material agreement binding on the
Corporation, (iii) any order of a court or administrative agency binding on the
Corporation, or (iv) any applicable law or governmental regulation; and such
performance does not and will not require the permission or approval of any
governmental agency, and will not result in the imposition or creation of any
lien or charge against any assets of the Corporation. Except as disclosed in the
Financial Statements or on Exhibit A hereto, (i) the Corporation has no
obligation to redeem or repurchase any of its equity securities, (ii) no
shareholder or other person has pre-emptive or other rights to acquire equity
securities of the Corporation, and (iii) the corporation has no obligation to
register any of its securities otherwise than pursuant to Section 8 of this
Agreement or as disclosed on Exhibit A hereto.
4.4 Material Agreements; No Defaults. All material indentures, loan
agreements, leases, mortgages and other agreements binding on the Corporation or
its subsidiaries are identified in the list of exhibits contained in the
Corporation's most recent 10K report ("Other Agreements"). No material default
on the part of the Corporation or any of its subsidiaries (including any event
which, with notice or the passage of time, would constitute a default) exists
under any of the Other Agreements.
4.5 Material Liabilities. Except for liabilities disclosed in the
Financial Statements or the SEC Reports, and obligations under the Other
Agreements, the Corporation and its subsidiaries have no material liabilities or
obligations, absolute or contingent, other than liabilities arising in the
ordinary course of business subsequent to the date of the most recent of the
Financial Statements.
4.6 Properties. The Corporation and its subsidiaries (i) have good
title to the properties and assets reflected in the Financial Statements as
owned by them, (ii) have valid leasehold interests in the properties leased by
them, and (iii) own or have the right to use under valid license agreements all
trademarks, trade names, copyrights, patents and other intellectual property
rights regularly utilized by them; subject in each case to no material liens,
security interests or adverse claims except as disclosed in the Financial
Statements.
4.7 Litigation. There are no material legal actions, arbitrations,
or administrative proceedings pending against the
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Corporation or its subsidiaries, except for the matters disclosed in the SEC
Reports.
4.8 Tax Matters. The Corporation and its subsidiaries have filed on
a timely basis all tax returns required to be filed by them and have paid their
taxes prior to delinquency, and have made adequate accruals for tax liabilities
on the Financial Statements in accordance with generally accepted accounting
principles.
4.9 ERISA Compliance. Neither the Corporation nor any of its
subsidiaries has incurred any material funding deficiency within the meaning of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or any
material liability to the Pension Benefit Guarantee Corporation in connection
with any employee benefit plan. The Corporation and its subsidiaries are in
compliance in all material respects with all applicable provisions of ERISA, and
have no obligations with respect to any multi-employer plan. No "reportable
event" as such term is defined in ERISA, which may result in any material
liability, has occurred with respect to any employee benefit or other plan
maintained for employees of the Corporation or any subsidiary.
4.10 Environmental Matters. Except as disclosed in the SEC Reports,
neither the Corporation nor any of its subsidiaries (i) has been notified by any
governmental authority that it is, or may be, a Responsible Party with respect
to cleanup or remediation of any environmental condition or hazardous waste
site, (ii) has violated any law, regulation, order or requirement of
governmental authority with respect to Hazardous Substances, or (iii) has
incurred any material liability for violation or noncompliance with applicable
Environmental Regulations. The term "Environmental Regulations" means any law,
regulation, order or requirement relating to protection of the environment,
including without limitation, the Clean Air Act, the Clean Water Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Hazardous Materials Transportation
Act and the Toxic Substances Control Act. The term "Hazardous Substance" means
any substance defined or listed as such in any Environmental Regulation.
4.11 Other Matters. The Corporation is not now and will not be after
giving effect to the receipt of the proceeds from the sale of the Stock an
"Investment Company" within the meaning or the Investment Company Act of 1940,
nor will it be controlled by or acting on behalf of any person which is such an
investment company. The Corporation is not selling the Stock "for the purpose of
purchasing or carrying any margin stock" within the meaning of Regulation G of
the Board of Governors of the Federal Reserve System. The Corporation has not
offered the Stock to any person other than the Purchaser.
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SECTION 5
Representations and Warranties of the Purchaser
The Purchaser represents and warrants to the Corporation that:
5.1 Corporate Power and Authority. It is validly existing and in
good standing with all requisite power and authority to enter into this
Agreement and carry out its obligations hereunder and has taken all actions
necessary to authorize it to enter into this Agreement and carry out such
obligations.
5.2 Investment. It is acquiring the Stock for investment and not
with the view to, or for resale in connection with, any distribution thereof. It
is an "accredited investor" within the meaning of the Securities Act of 1933 and
the rules thereunder. It understands that the Stock has not been registered
under the Securities Act of 1933 nor qualified under any State blue sky law by
reason of specified exemptions therefrom which depend upon, among other things,
the bona fide nature of its investment intent as expressed herein.
5.3 Rule 144. It acknowledges that the Stock must be held
indefinitely unless it is subsequently registered under the Securities Act of
1933 or an exemption from such registration is available. It has been advised or
is aware of the provisions of Rule 144 promulgated under the Securities Act.
SECTION 6
Conditions to Obligations of the Purchaser
The obligation of the Purchaser to purchase the Stock is subject to
the fulfillment on or prior to the Closing Date of each of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Corporation shall be true and correct in all material respects
on the Closing Date.
(b) Performance. All covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the Corporation
on or prior to the Closing Date shall have been performed or complied with in
all material respects.
(c) Opinion of Corporation's Counsel. The Purchaser shall have
received from counsel to the Corporation an opinion confirming the
representations set forth in the first sentence of Section 4.3 hereof, and on
the basis of such counsel's review of the Other Agreements and certificates of
officers of the
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Corporation as to factual matters, confirming the representations set forth in
the second and third sentences of Section 4.3 thereof.
(d) Legal Issuance. At the time of the Closing, the issuance
and purchase of the Stock shall be legally permitted by all laws and regulations
to which the Purchaser and the Corporation are subject.
(e) Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated hereby and all
documents and instruments incident to such transactions shall be satisfactory in
form and substance to the Purchaser and its counsel.
(f) Satisfaction of Obligations to Broker. The corporation
shall have furnished the Purchaser with assurances satisfactory to the Purchaser
that the Corporation has satisfied its obligations to any broker entitled to
compensation in connection with the sale of the Stock.
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SECTION 7
Conditions to Obligations of the Corporation
The Corporation's obligation to sell the Stock is subject to the
fulfillment on or prior to the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties made by the Purchaser shall be true and correct in all material
respects on the Closing Date.
(b) Legal Issuance. At the time of the Closing, the issuance
and purchase of the Stock. shall be legally permitted by all laws and
regulations to which the Purchaser and the Corporation are subject.
(c) Payment. The Corporation shall concurrently receive
payment for the Stock as provided in Section 2.
SECTION 8
Covenant to Register
(a) For purposes of this Section 8, the following definitions shall
apply:
(i) The terms "register", "registered", and "registration"
refer to a registration under the Securities Act of 1933, as amended (the
"Act") effected by preparing and filing a registration statement or
similar document in compliance with the Act or an amendment thereto, and
the declaration or ordering of effectiveness of such registration
statement, document or amendment thereto.
(ii) The term "Registrable Securities" means the Stock and any
securities of the Corporation or securities of any successor corporation
issued as, or issuable upon the conversion or exercise of any warrant,
right or other security that is issued as, a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
Stock.
(b) (i) At any time after one hundred and twenty (120) days
after the date of this Purchase Agreement and from time to time
thereafter, Purchaser shall have the right to require by notice in writing
that the Corporation register all or any part of the Registrable
Securities held by Purchaser (a "Demand Registration") and the Corporation
shall thereupon effect such registration in accordance herewith. The
corporation agrees to file a registration statement (Form S-
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3) in order to register the Common Stock and to cause such registration
statement to be declared effective within ninety (90) days of Closing. A
3% cash penalty will accrue for every thirty (30) days after such date
that the securities remain unregistered. The penalty shall be pro-rated
for periods of less than thirty (30) days.
(ii) The Corporation shall not be obligated to effect Demand
Registration (i) if all of the Registrable Securities held by Purchaser
which are intended to be covered by the Demand Registration are, at the
time of the request of a Demand Registration, included in an effective
registration statement and the Corporation is in compliance with its
obligations under Subsection (d) (ii) through (v) hereof with respect to
such registration statement, or (ii) within 120 days after the effective
date of any other registration as to which Purchaser was given piggy-back
rights pursuant to subsection (c) hereof and in which Purchaser was able
to register and sell at least eighty percent (80%) of the Registrable
Securities requested by Purchaser to be included in such registration.
(c) If the Corporation proposes to register (including for this
purpose a registration effected by the Corporation for shareholders other than
the Purchaser) any of its stock or other securities under the Act in connection
with a public offering of such securities (other than a registration on Form
X-0, Xxxx X-0 or other limited purpose form) and the Registrable Securities have
not heretofore been included in a registration statement under Subsection (b),
which remains effective, the Corporation shall, at such time, promptly give the
Purchaser written notice of such registration. Upon the written request of the
Purchaser given within twenty (20) days after receipt of such notice by the
Purchaser, the Corporation shall cause to be registered under the Act all of
the Registrable Securities that the Purchaser has requested to be registered.
However, the Corporation shall have no obligation under this Subsection (c) to
the extent that, with respect to a public offering registration, any underwriter
of such public offering reasonably requests that the Registrable Securities or a
portion thereof be excluded therefrom.
(d) Whenever required under this Section 8 to effect the
registration of any Registrable Securities, the Corporation shall, as
expeditiously as reasonably possible:
(i) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to
cause such registration to become effective and, upon the request of the
Purchaser, keep such registration statement effective for so long as
Purchaser desires to dispose of the securities covered by such
registration statement (but not after Purchaser in the reasonable
opinion of its counsel is free to sell such
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securities under the provisions of Rule 144(k) under the Act).
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statements and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.
(iii) Furnish to the Purchaser such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as the Purchaser
may reasonably request in order to facilitate the disposition of
Registrable Securities owned by Purchaser.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by Purchaser, provided that the Corporation shall not be
required in connection therewith or as a condition thereto to qualify to
do business or to file a general consent to service and process in any
such states or jurisdictions.
(v) Notify Purchaser of the "happening" of any event as a
result of which the prospectus included in such registration statement,
as then in effect, includes an untrue statement of material fact or omits
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances
then existing.
(vi) Furnish, at the request of Purchaser, an opinion of
counsel of the Corporation, dated the effective date of the registration
statement, as to the due authorization and issuance of the securities
being registered and compliance with securities laws by the Corporation in
connection with the authorization and issuance thereof.
(e) The Purchaser will furnish to the Corporation in connection
with any registration under this Section 8 such information regarding itself,
the Registrable Securities and other securities of the Corporation held by it,
and the intended method of disposition of such securities as shall be required
to effect the registration of the Registrable Securities held by Purchaser.
(f) (i) The Corporation shall indemnify, defend and hold harmless
each holder of Registrable Securities which are included in a registration
statement pursuant to the provisions of Subsections (b) or (c), any
underwriter (as defined in the Act) for such holder, and the directors,
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officers and controlling persons of such holder or underwriter from and
against, and shall reimburse all of them with respect to, any and all
claims, suits, demands, causes of action, losses, damages, liabilities,
costs or expenses ("Liabilities") to which any of them may become subject
under the Act or otherwise, arising from or relating to (A) any untrue
statement or alleged untrue statement of any material fact contained in
such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or (B) 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
Corporation shall not be liable in any such case to the extent that any
such Liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by such person in writing
specifically for use in the preparation thereof.
(ii) Each holder of Registrable Securities included in a
registration pursuant to the provisions of Subsection (b) or (c) shall
indemnify, defend, and hold harmless the Corporation, its directors and
officers, and shall reimburse the Corporation, its directors and officers
with respect to, any and all Liabilities to which any of them may become
subject under the Act or otherwise, arising from or relating to (A) any
untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein
or any amendment or supplement thereto, or (B) 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 such
holder specifically for use in the preparation thereof.
(iii) Promptly after receipt by an indemnified party pursuant
to the provisions of Subsection (f)(i) or (f)(ii) of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party shall, if a claim thereof is
to be made against the indemnifying party pursuant to the provisions of
subsection (f)(i) or (f)(ii), promptly notify the indemnifying party of
the commencement thereof; provided, however, that the failure to so notify
the indemnifying party shall not relieve it from its indemnification
obligations hereunder except to the extent that the indemnifying party is
materially prejudiced by such failure. If such action is
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brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party shall have the
right to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses different from or
in addition to those available to the indemnifying party, or if there is
conflict of interest which would prevent counsel for the indemnifying
party from also representing the indemnified party, the indemnified party
shall have the right to select separate counsel to participate in the
defense of such action on behalf of such indemnified party. After notice
from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable
to such indemnified party pursuant to subsection (f)(i) or (f)(ii) for
any expense of counsel subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation, unless (A) the indemnified party shall have employed
counsel in accordance with the provisions of the preceding sentence, or
(B) the indemnifying party shall not have employed counsel satisfactory to
the indemnified party to represent the indemnified party within a
reasonable time after the notice of the commencement of the action. An
indemnifying party shall not be responsible for amounts paid in settlement
without its consent, provided that its consent may not be unreasonably
withheld.
(g) (i) With respect to the inclusion of Registrable Securities in a
registration statement pursuant to subsections (b) or (c), all fees, costs
and expenses of and incidental to such registration, inclusion and public
offering shall be borne by the Corporation; provided, however, that any
securityholders participating in such registration shall bear their pro
rata share of the underwriting discounts and commissions, if any.
(ii) The fees, costs and expenses of registration to be borne
by the Corporation as provided in this Subsection (g) shall include,
without limitation, all registration, filing and NASD fees, printing
expenses, fees and disbursements of counsel and accountants for the
Corporation, and all legal fees and disbursements and other expenses of
complying with state securities or Blue Sky laws of any jurisdiction or
jurisdictions in which securities to be offered are to be registered and
qualified. Fees and disbursements of counsel and accountants for the
selling securityholders shall, however, be borne by the respective
selling securityholder.
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(h) The rights to cause the Corporation to register all or any
portion of Registrable Securities pursuant to this Section 8 may be
assigned by Purchaser to a transferee or assignee of 20% or more of the
Stock. Within a reasonable time after such transfer the Purchaser shall
notify the Corporation of the name and address of such transferee of
assignee and the securities with respect to which such registration rights
are being assigned. Such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Act. Any transferee
asserting registration rights hereunder shall be bound by the provisions
of this Section 8.
(i) From and after the date of this Agreement, the
Corporation shall not agree to allow the holders of any securities of the
Corporation to include any of their securities in any registration
statement filed by the Corporation pursuant to Subsection (b) unless
the inclusion of such securities will not reduce the amount of the
Registrable Securities included therein.
SECTION 9
Affirmative Covenants of the Corporation
The Corporation hereby covenants that, during such time as
the Purchaser (or one of its affiliates) owns any Stock, or for four
years, whichever period is shorter:
9.1 Reports and Financial Statements.
(a) The Corporation will cause its common stock to continue
to be registered under Sections 12(b) or 12(g) of the Securities Exchange Act of
1934, will comply in all respects with its reporting and filing obligations
under said Act, and will not take any action or file arty document (whether or
not permitted by said Act or the rules thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing obligations
under said Act. The Corporation will take all action necessary to continue the
listing or trading of its common stock on any national securities exchange or
the Automated Quotation System of the National Association of Securities Dealers
on which such common stock is listed or traded, and will comply in all respects
with its reporting, filing and other obligations under the bylaws or rules of
said exchange or Association.
(b) The Corporation will furnish to the Purchaser,
concurrently with the distribution or filing thereof, each annual and quarterly
report to its shareholders, its reports on Form 10K and 10Q, and each other
report, registration statement, definitive proxy statement or other document
filed with the S.E.C., and each press release or other public announcement
issued by the Corporation.
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9.2 Maintenance of Office. The Corporation will maintain an office
or agency in the United States at such address as may be designated in writing
from time to time to the registered holders of the Stock, where notices,
presentations and demands to or upon the Corporation in respect of the Stock may
be given or made. Unless or until another office or agency is designated by the
Corporation, such office shall be at the address set forth adjacent to the name
of the Corporation at the foot of this Agreement.
9.3 Maintenance and Compliance. The Corporation will (i) maintain
its corporate existence, rights, powers and privileges in good standing, (ii)
comply in all material respects with all laws and governmental regulations and
restrictions applicable to its business or properties, (iii) keep records and
books of account and maintain a system of internal accounting controls in
accordance with generally accepted accounting principles and in compliance with
Section 13(b)(2) of the Securities Exchange Act of 1934, and (iv) retain
independent public accountants of recognized national standing as auditors of
the Corporation's annual financial statements.
9.4 Assignment of Rights. The rights of the Purchaser hereunder may
be assigned by the Purchaser in connection with the transfer or assignment to a
single transferee of not less than 20% of the Stock originally purchased by the
Purchaser hereunder, and such rights may be further reassigned by such
transferee to another such single transferee. Any transferee asserting rights
under this Agreement shall be bound by its provisions.
9.5 Effect of Covenants. The covenants in Sections 9.1 and 9.3 shall
not be deemed to prohibit a merger, sale of all assets or other corporate
reorganization if (i) the entity surviving or succeeding to the Corporation is
bound by this Agreement with respect to its securities issued in exchange for or
replacement of the Stock, or (ii) the consideration received in exchange for or
replacement of the Stock is cash.
SECTION 10
Legend on Stock
Each certificate representing the Stock shall be stamped or
otherwise imprinted with a legend substantially in the following form (in
addition to any legend required under any applicable state securities laws):
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
Upon request of a holder of Stock the Corporation shall remove the
foregoing legend or issue to such holder a new certificate therefor free of
any such legend, if the Corporation shall have received either an opinion of
counsel or a "no-action" letter of the S.E.C., in either case reasonably
satisfactory in substance to the Corporation and its counsel, to the effect that
such legend is no longer required.
SECTION 11
Miscellaneous
11.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California. Any action or
proceeding relating to this Agreement may be brought in the courts of California
sitting in Los Angeles County, or in the United States courts located in Los
Angeles County, California, and each of the parties irrevocably consents to the
jurisdiction of such courts in any such action or proceeding.
11.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of and be binding upon
the successors and assigns of the parties.
11.3 Entire Agreement; Amendment. This Agreement (including any
Exhibits hereto) and the Other documents delivered pursuant hereto constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and thereof. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated except by a written instrument
signed by the Corporation and the Purchaser.
11.4 Notices, etc. All notices and other communications required or
permitted hereunder shall be mailed by first-class mail, postage prepaid, or
delivered either by hand or by messenger, addressed (a) if to the Purchaser, as
indicated below the Purchaser's signature, or at such other address as the
Purchaser shall have furnished to the Corporation in writing, or (b) if to any
other holder of any Stock, at the address or such holder as shown on the records
of the Corporation, or (c) if to the Corporation, at its address set forth below
or at such other
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address as the Corporation shall have furnished to the Purchaser and each such
other holder in writing. All such notices or communications shall be deemed
given when actually delivered by hand, messenger, facsimile or mailgram or, if
mailed, three days after deposit in the U.S. mail.
11.5 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party to this Agreement (including any
holder of Stock), upon any breach or default of another party under this
Agreement, shall impair any such right, power or remedy of such party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore, or thereafter occurring. All remedies, either
under this Agreement or by law or otherwise afforded to any party, shall be
cumulative and not alternative.
11.6 Severability. In case any provision of the Agreement 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.
11.7 Titles and Subtitles. The titles of the Sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
11.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first written above.
Commodore Applied Technologies, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxx
Senior Vice President and Chief
Administrative and Financial Officer
Address: 000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
[Signatures continued on following page]
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U.S 6-10 Small Company Series of the
DFA Investment Trust Company
By: /s/
----------------------------------
Address: c/o Dimensional Fund Advisors
0000 Xxxxx Xxxxxx 00xx xxxxx
Xxxxx Xxxxxx, XX 00000
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