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EXHIBIT 99.1
Execution Copy
MERGER AGREEMENT AND PLAN OF MERGER
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THIS MERGER AGREEMENT AND PLAN OF MERGER (the "MERGER AGREEMENT") is
made this 1st day of October, 1999, by and among GLOBAL ENERGY INVESTORS, INC.,
a Delaware corporation and successor-in-interest to Global Energy Investors,
LLC, a Delaware limited liability company (collectively, "GEI"), XXXXXX X.
XxXXXXXXX, an individual resident of Washington, D.C. ("XX. XXXXXXXXX"), XXXXXX
X. XXXXXXX, an individual resident of LaJolla, California ("XX. XXXXXXX"),
XXXXXX X. XXXXX, an individual resident of Washington, D.C. ("XX. XXXXX"), J.
XXXXXXXX XXXXXX, III, an individual resident of Washington, D.C. ("XX. XXXXXX"),
XXXXXXX X. XXXXX, an individual resident of New York City, New York ("XX.
XXXXX"), THE XXXXXXXX GROUP, LLC, a New Jersey limited liability company which
maintains its place of business in Arlington, Virginia ( "THE XXXXXXXX GROUP"),
XXXXX X. X'XXXXX, an individual resident of Washington, D.C. ("XX. X'XXXXX"),
HILLS ENTERPRISES, LTD., a Delaware corporation ("HILLS ENTERPRISES") (Xx.
XxXxxxxxx, Xx. Xxxxxxx, Xx. Xxxxx, Xx. Xxxxxx, Xx. Xxxxx, The Xxxxxxxx Group,
Xx. X'Xxxxx, Hills Enterprises, and, when they exercise their GEI Warrants prior
to the Closing, Xx. Xxxxxx and Xx. Xxxxx, are sometimes collectively referred to
herein as "STOCKHOLDERS" and individually as "STOCKHOLDER" and Xx. Xxxxxx, Xx.
Xxxxx, and The Xxxxxxxx Group are sometimes collectively referred to herein as
"GEI WARRANT HOLDERS "), COMMODORE GLOBAL ENERGY, INC., a Delaware corporation
("MERGER SUB"), and COMMODORE APPLIED TECHNOLOGIES, INC., a Delaware corporation
("CXI").
BACKGROUND OF MERGER AGREEMENT
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A. GEI and Merger Sub propose to merge pursuant to this Merger
Agreement, which provides for the statutory merger of GEI with and into Merger
Sub, with Merger Sub as the surviving corporation pursuant to the applicable
laws of the State of Delaware.
B. Merger Sub is a wholly-owned, direct subsidiary of CXI.
C. This Merger Agreement sets forth the representations and warranties
made by GEI, the Stockholders, CXI and Merger Sub in connection with the Merger,
sets forth certain covenants and agreements of the parties, provides conditions
to the obligations of the parties and sets forth other provisions relating to
the Merger.
D. The parties are also parties to that certain Limited Liability
Company Investment and Membership Purchase Agreement dated April 21, 1999 (the
"PRIOR AGREEMENT") which has terminated and is null and void and of no further
force or effect.
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PROVISIONS OF MERGER AGREEMENT
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In consideration of the foregoing, the mutual promises herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION
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Section 1.1. The following terms have the meanings set forth in this
Section 1.1 or elsewhere in the provisions of this Merger Agreement as indicated
below:
"1933 ACT" means the Securities Act of 1933, as amended.
"APPRECIATION PERIOD" is used as defined in Section 2.13(b).
"ASSETS" when used with reference to any Person means such Person's
properties and assets, whether real, personal or mixed, tangible or intangible,
wherever located.
"CAPITAL STOCK" when used with reference to any Person means any equity
interest in or security of such Person.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, 42 U.S.C. Section 9601, et seq., or the
regulations promulgated thereunder.
"CERTIFICATE OF MERGER" is used as defined in Section 2.2 hereof.
"CLOSING" is used as defined in Section 2.8 hereof.
"CLOSING DATE" is used as defined in Section 2.8.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONVERTED SHARES" is used as defined in Section 2.9(b).
"CXI" is used as defined in the preamble to this Merger Agreement.
"CXI COMMON STOCK" means the common stock of CXI, $.001 par value per
share.
"CXI FINANCIAL STATEMENTS" is used as defined in Section 4.4.
"DEBT" is used as defined in Section 7.2.3.
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"DGCL" is used as defined in Section 2.1.
"DISSENTING SHARES" is used as defined in Section 2.11.
"EFFECTIVE TIME" is used as defined in Section 2.2.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" means The Bank of New York.
"ESCROW AGREEMENT" means the Escrow Agreement in the form attached
hereto as Exhibit A.
"ESCROW PARTICIPANT" is used as defined in Section 2.13(a).
"ESCROWED SHARES" is used as defined in Section 2.13(a).
"FASB" is used as defined in Section 1.2(i) hereof.
"FINANCING" means financing arranged by CXI through the issuance of
additional securities of CXI and/or any newly created subsidiaries having terms
and conditions reasonably acceptable to CXI and GEI in a single transaction or a
series of substantially simultaneous transactions, the net proceeds of which (i)
are at least Five Million Dollars ($5,000,000) and (ii) shall have been
specifically identified by CXI in advance of its receipt thereof as to be
applied in satisfaction of the condition set forth in Section 5.1.
"GAAP" is used as defined in Section 1.2(i).
"GEI" is used as defined in the preamble to this Merger Agreement.
"GEI COMMON STOCK" means the common stock of GEI, $.01 par value per
share.
"GEI FINANCIAL STATEMENTS" is used as defined in Section 3.4.
"HAZARDOUS SUBSTANCES" means and includes the following: (A) any
"Hazardous Substance," "Pollutant" or "Contaminant" as defined in CERCLA; (B)
any hazardous waste as that term is defined in applicable state or local law;
(C) any substance containing petroleum, as that term is defined in Section
9001(8) of RCRA; or (D) any other substance for which any governmental entity
with jurisdiction over the Leasehold Premises or the Owned Properties requires
special handling in its generation, handling, use, collection, storage,
treatment or disposal.
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"IMMIGRATION ACT" means the Immigration Reform and Control Act of 1986,
as amended.
"INVENTORY" when used with reference to any Person means such Person's
inventory of items of a quality and quantity usable and rentable or, as the case
may be, salable or returnable in the ordinary course of such Person's business.
"IRS" means the Internal Revenue Service.
"LAST BALANCE SHEET" when used with reference to any Person means the
unaudited consolidated balance sheet of such Person as of June 30, 1999.
"LEASEHOLD PREMISES" when used with reference to any Person means any
leasehold interest in any real property owned by such Person and identified on
an appropriate Schedule hereto.
"LEASES" when used with reference to any Person means the lease
agreements with respect to such Person's Leasehold Premises.
"LIENS" means all claims, liens, mortgages, pledges, security
interests, assessments, restrictions, encumbrances or charges of any kind.
"MATERIAL ADVERSE EFFECT", when used in this Merger Agreement with
reference to any Person and to a standard, means that the fact, event or
occurrence being measured in reference to such standard, would have a material
adverse effect on the business, properties, financial condition or results of
operations of such Person.
"MERGER" is used as defined in Section 2.1.
"MERGER AGREEMENT" is used as defined in the preamble to this Merger
Agreement and Plan of Merger, as the same may be from time to time amended or
modified.
"OFFICER'S CERTIFICATE" is used as defined in Section 2.13(c).
"OWNED PROPERTIES" when used with reference to any Person means any
real property or any interest therein owned by such Person and identified on an
appropriate Schedule hereto.
"PAYABLES" means, with respect to any Person, all payables of such
Person and its Subsidiaries, regardless of where set forth on the pertinent
balance sheet, arising from the operation in the ordinary course of such
Person's business.
"PERMITS" when used with reference to any Person means any licenses and
governmental or official approvals, permits or authorizations required for the
conduct of such Person's business in the ordinary course.
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"PERMITTED ENCUMBRANCES" when used with reference to any Person means,
collectively, (i) liens for taxes, and assessments and other governmental
charges in the nature of taxes, not yet due and payable; (ii) liens in respect
of taxes, assessments and other governmental charges being contested in good
faith as disclosed on the appropriate Schedules hereto; (iii) mechanics',
carriers', workmen's, repairmen's and other like liens arising or incurred in
the ordinary course of conduct of such Person's business as to which either (A)
any related liability or obligation is reflected in such Person's Last Balance
Sheet or is otherwise disclosed on any of the Schedules, or (B) the failure to
disclose the related liability or obligation is not otherwise a breach of any
representation or warranty in this Merger Agreement made by such Person; (iv)
inchoate statutory liens that apply generally in favor of commercial landlords;
(v) liens arising from actions or inaction of the landlords of the pertinent
Leasehold Premises; (vi) Liens set forth on Schedule 3.7.2 or 4.7.2, as the case
may be; and (vii) such imperfections of title, easements, covenants,
rights-of-way, restrictions and encumbrances and zoning, building and other
similar restrictions, if any, as do not interfere with the present use of such
properties by such Person or otherwise impair business operations of such
Person, as used or conducted on the date hereof.
"PERMITTED TRANSFERS" is used as defined in Section 7.5.
"PERSON" means any individual, corporation, partnership, limited
liability company, trust, unincorporated association, joint venture,
organization, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
"PLAN" when used with reference to any Person means an "employee
benefit plan", as defined in section 3(3) of ERISA, or any other retirement,
profit-sharing, deferred compensation, bonus, stock option, stock purchase or
similar plan, program or arrangement of such Person.
"PRIOR AGREEMENT" is used as defined in paragraph D of the Background
of Agreement of this Merger Agreement.
"PROHIBITED TRANSACTION" means any transaction described in section 406
of ERISA that is not exempt by reason of section 408 of ERISA or the
transitional rules set forth in section 414(c) of ERISA, and any transaction
described in section 4975(c) of the Code that is not exempt by reason of section
4975(c)(2) or section 4975(d) of the Code or the transactional rules of section
2003(c) of ERISA.
"RCRA" means the Resource Conservation and Recovery Act, as amended,
and the regulations promulgated thereunder.
"RECEIVABLES" means, with respect to any Person, all receivables of
such Person and its Subsidiaries, regardless of where set forth on the pertinent
balance sheet, including all trade account receivables arising from sales or
rental of inventory in the ordinary course of business, notes receivable, co-op
receivables and insurance proceeds receivable.
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"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
in the form attached hereto as Exhibit B.
"RELEASE" has the meaning given it in CERCLA.
"SEC DOCUMENTS" is used as defined in Section 3.28 hereof.
"STOCKHOLDER" and "STOCKHOLDERS" are used as defined in the preamble to
this Merger Agreement.
"SOFTWARE" when used with reference to any Person means all computer
programs and software necessary for the current operations of such Person's
business.
"SUBSIDIARY" means any corporation, partnership, joint venture,
association or other entity, wherever and however organized, in which the
relevant Person owns directly or indirectly or has the right to acquire any
capital stock, equity or beneficial interest, is a partner of, or otherwise
controls management of, by having the right or ability to designate a majority
of the directors or members of the governing body thereof, whether by agreement
or otherwise.
"SURVIVING CORPORATION" is used as defined in Section 2.1 hereof.
"TERMINATION DATE" is used as defined in Section 7.4 hereof.
"TRIGGERING EVENT" is used as defined in Section 2.13(b).
"UNDERGROUND STORAGE TANK" has the meaning given it in RCRA.
Section 1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Merger Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law, statute, code or regulation includes any
amendment or modification to such law, statute, code or regulation.
(d) A reference to any Person includes such Person's permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by GAAP.
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(f) The words "include", "includes" and "including" are not limiting.
(g) Reference to a particular "Section" refers to that section of this
Merger Agreement unless otherwise indicated.
(h) The words "herein," "hereof," "hereunder" and words of like import
shall refer to this Merger Agreement as a whole and not to any particular
section or subdivision of this Merger Agreement.
(i) The term "GAAP" (i) when used herein, whether directly or
indirectly through reference to a capitalized term used herein, means (A)
principles that are consistent with the principles promulgated or adopted by the
Financial Accounting Standards Board ("FASB") and its predecessors, in effect
for the last day of any period for which financial statements for any Person
have been prepared, and (B) to the extent consistent with such principles, the
accounting practice of such Person reflected in its financial statements, and
(ii) when used in general, other than as provided above, means principles that
are (A) consistent with the principles promulgated or adopted by the FASB and
its predecessors, as in effect from time to time and (B) consistently applied
with past financial statements of the Person adopting the same principles.
Section 1.3. Incorporation of Background of Agreement. The Background
of Agreement of this Merger Agreement is incorporated herein by reference
thereto.
ARTICLE II
THE MERGER; CLOSING; MERGER CONSIDERATION
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Section 2.1. Merger. On the terms and subject to the conditions
contained in this Merger Agreement, on the Closing Date and at the Effective
Time, GEI shall be merged with and into Merger Sub (the "MERGER") and the
separate corporate existence of GEI shall thereupon cease. Merger Sub shall be
the surviving entity in the Merger and shall continue to be governed by the
Delaware General Corporation Law (the "DGCL"). The separate corporate existence
of Merger Sub with all its rights, privileges, powers and franchises shall
continue unaffected by the Merger. The Merger shall have the effects specified
in the DGCL. From and after the Effective Time, Merger Sub is sometimes referred
to herein as the "SURVIVING CORPORATION."
Section 2.2. Certificate of Merger. On the Closing Date, the parties
hereto shall cause a Certificate of Merger (the "CERTIFICATE OF MERGER") meeting
the requirements of Section 264(c) of the DGCL to be properly executed and filed
in accordance with the DGCL. The Merger shall be effective at the time and on
the date of the filing of the Certificate of Merger in accordance with the DGCL
(the "EFFECTIVE TIME").
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Section 2.3. Certificate of Incorporation. The Certificate of
Incorporation of Merger Sub in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation.
Section 2.4. Bylaws. The Bylaws of Merger Sub in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation.
Section 2.5. Officers. The officers of Merger Sub immediately prior to
the Effective Time (which shall include Messrs. XxXxxxxxx and Xxxxxxx) shall be
the officers of the Surviving Corporation and will hold office until their
successors are duly elected or appointed and qualify in the manner provided in
the Certificate of Incorporation or Bylaws of the Surviving Corporation or as
otherwise provided by law, or until their earlier death, resignation or removal.
Section 2.6. Directors. The directors of Merger Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation and
will serve until their successors are duly elected or appointed and qualify in
the manner provided in the Certificate of Incorporation or bylaws of the
Surviving Corporation or as otherwise provided by law, or until their earlier
death, resignation or removal.
Section 2.7. Registration; Resale Restrictions.
(a) As soon as practicable following receipt by CXI of its audited
financial statements for the fiscal year in which the Closing occurs, CXI shall
register on a short form registration statement under applicable securities laws
not less than Twelve and one-half Million (12,500,000) shares of CXI Common
Stock in accordance with the terms of the Registration Rights Agreement.
(b) Each of the Stockholders agrees that it will restrict its sale of
shares of CXI Common Stock acquired by it pursuant to the Merger as follows:
during the first three (3) years following the Effective Time, each Stockholder
will sell no more than ten percent (10%) of such shares during the first six
month period following the Effective Time and each six month period thereafter.
Following the expiration of such three year period, there shall be no further
restrictions on resale of such shares imposed by this Section 2.7(b). The right
to sell 10% of such shares during each six month period shall be non-cumulative.
Section 2.8. Time and Place of the Closing. Subject to and after the
fulfillment or waiver of the conditions set forth in Articles V and VI, the
closing of the Merger (the "CLOSING") shall take place at the offices of CXI,
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m.,
Eastern Time, on October 31, 1999 or such other date upon which the parties may
agree (the "CLOSING DATE"). Cognizant of (i) CXI's status as a public company
with its Common Stock registered for trading on the American Stock Exchange,
(ii) the need for the stockholders of CXI to approve the Merger in accordance
with applicable rules of the American Stock Exchange, (iii) the time necessary
for CXI (a) to provide notice to its stockholders of a meeting at which the
Merger will be considered and (b) to prepare a proxy statement for and solicit
proxies in
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connection with such meeting of stockholders, it is the parties' present
intention that if, on or before the Closing Date, all conditions to Closing
shall have been fulfilled or waived except for the approval of CXI's
stockholders of the Merger, the parties will proceed to place all closing
documents into escrow to be released upon the conclusion of such meeting of
stockholders, either to effectuate the Merger, in the event of approval by CXI's
stockholders or to terminate this Merger Agreement without further liability
thereafter to any party hereto as a consequence hereof, except as provided in
Section 10.1.1, in the event that the Stockholders fail to approve the Merger.
Section 2.9. Conversion of Shares. The manner of converting the shares
of Capital Stock of Merger Sub and the shares of the Capital Stock of GEI upon
the Merger shall, by virtue of the Merger and without any action on the part of
the holders thereof, be as follows:
(a) The shares of Capital Stock of Merger Sub that are outstanding
immediately prior to the Effective Time shall be converted into a like number
and type of shares of Capital Stock of the Surviving Corporation.
(b) All shares of GEI Common Stock outstanding immediately prior to the
Effective Time exclusive of Dissenting Shares as defined and provided in Section
2.11 (the "CONVERTED SHARES"), shall be converted into the right to receive, in
the aggregate and subject to Sections 2.13 and adjustment for any shares of GEI
Common Stock issued after execution and delivery of this Merger Agreement as
permitted by the provisions hereof, (i) 9,000,000 shares of CXI Common Stock and
(ii) if the Triggering Event occurs, an additional 3,500,000 shares of CXI
Common Stock. Accordingly, assuming that no additional shares of GEI Common
Stock were to be issued prior to the Effective Time and that no Dissenting
Shares exist and when the GEI Warrant Holders exercise their GEI Warrants which
are shown on Schedule 3.3 hereof, the Stockholders agree that the Stockholders
would own the number of shares of CXI Common Stock set forth opposite their
respective names on Schedule 2.9 hereto.
(c) All of the Converted Shares, by virtue of the Merger and without
any action on the part of the holders thereof, shall no longer be outstanding
and shall be cancelled and retired and shall cease to exist, and the holders
thereof shall thereafter cease to have any rights with respect to the Converted
Shares except to receive the CXI Common Stock into which the Converted Shares
have been converted pursuant to the Merger as provided in paragraphs (a), (b)
and (c) above. From and after the Effective Time, until surrendered to the
Surviving Corporation, each certificate theretofore representing Converted
Shares shall be deemed for all corporate purposes, except as set forth in the
next sentence, to evidence the number of shares of CXI Common Stock into which
such Converted Shares shall have been converted. Unless and until any such
certificates shall be so surrendered, the holder of such certificate shall not
have any right to receive any dividends paid or other distributions made to
holders of record of CXI Common Stock after the Effective Time. Upon surrender
of a certificate representing Converted Shares, the holder of record thereof
shall receive, together with certificates representing the shares of CXI Common
Stock to which such holder shall be entitled, all dividends and other
distributions which shall have been paid
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or made to holders of record of CXI Common Stock after the Effective Time with
respect to such shares of CXI Common Stock, without interest thereon. The shares
of CXI Common Stock into which all Converted Shares (including those placed in
escrow in accordance with Section 2.13 hereof) shall have no rights other than
those provided under the DGCL or CXI's certificate of incorporation or bylaws.
(d) Each share of GEI Common Stock, if any, held in the treasury of GEI
on the Closing Date shall be cancelled and retired and shall cease to exist, and
no consideration shall be paid with respect thereto.
Section 2.10. Fractional Shares. No fractional shares and no script
certificates therefor shall be issued to represent any fractional interests in
CXI Common Stock. Instead, the number of shares of CXI Common Stock to be issued
upon conversion shall be rounded down to the nearest whole number and no cash
shall be paid for the fractional interest.
Section 2.11. Dissenting Shares. No certificate representing shares of
CXI Common Stock will be issued to any GEI stockholder who as of the Closing has
exercised appraisal rights as to any GEI Common Stock held by such stockholder
("DISSENTING SHARES") as provided in Section 262 of the DGCL.
Section 2.12. Accounting Treatment.
(a) The parties hereto acknowledge that the transactions contemplated
herein shall be treated as a business combination under the purchase method of
accounting.
(b) The parties hereto intend that, except as otherwise provided
herein, Merger Sub and CXI shall, if the Merger becomes effective, assume as of
the date hereof the benefits and risks of ownership of the GEI Common Stock.
Section 2.13. Escrow of Shares
(a) Escrow of Shares. Notwithstanding anything to the contrary
contained in this Article II, at the Effective Time, Three Million Five Hundred
Thousand (3,500,000) shares of CXI Common Stock (the "ESCROWED SHARES") issuable
to each Stockholder (each, an "ESCROW PARTICIPANT"), shall not be delivered by
CXI to such Escrow Participant upon surrender of its GEI Common Stock and shall
instead be deposited in escrow with an escrow agent selected by CXI and
reasonably satisfactory to GEI and the Stockholders (the "ESCROW AGENT"). CXI
shall deliver into escrow, on behalf of each Escrow Participant, certificates
representing shares of CXI Common Stock (rounded to the nearest whole share) in
the amounts set forth on Schedule 2.9. Each certificate for Escrowed Shares
shall be registered in the name of the appropriate Escrow Participant. As a
condition to its receipt of merger consideration hereunder, each Escrow
Participant shall execute a stock power in blank with respect to each
certificate for Escrowed Shares and shall deliver such stock power to CXI. CXI
shall deliver to the Escrow Agent one share certificate, together with a signed,
blank stock power, with respect to the CXI Common Stock deposited in escrow on
behalf of each Escrow Participant. The Escrow Agent shall hold such certificates
until it is required to deliver them pursuant to Section 2.13(c).
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(b) Delivery of Shares. In the event (the "TRIGGERING EVENT") that, at
any time during the period commencing on the Closing Date and ending on the
second anniversary of the Closing Date (the "APPRECIATION Period"), CXI Common
Stock shall have traded at or above Three Dollars ($3.00) per share for twenty
consecutive trading days as reported by the American Stock Exchange or any other
exchange on which CXI Common Stock is regularly traded, then, in such event, all
the Escrowed Shares and related stock powers deposited in escrow on behalf of
each Escrow Participant shall be delivered to such Escrow Participant. In the
event that the Triggering Event does not occur during such two year period, upon
the expiration thereof, all of the Escrowed Shares and related stock powers
deposited in escrow hereunder shall be returned to CXI and cancelled.
(c) Procedures. Promptly following (i) the occurrence of the Triggering
Event or (ii) the expiration of the Appreciation Period with the Triggering
Event having failed to occur, CXI shall deliver to the Escrow Agent and the
Stockholders an officer's certificate (each an "OFFICER'S CERTIFICATE")
describing which of the foregoing has occurred and setting forth instructions to
the Escrow Agent in accordance with this Section 2.11. Promptly thereafter, the
Escrow Agent shall deliver the Escrowed Shares and related stock powers in
accordance with the directions set forth in the Officer's Certificate.
(d) Escrow Agent.
(i) The Escrow Agent (A) shall have no duties or responsibilities
except as expressly set forth in this Section 2.01(i), (B) shall not be
responsible in its capacity as Escrow Agent for any recitals, statements,
representations or warranties contained herein, or in any certificate or other
document referred to herein, the validity, effectiveness or enforceability of
this Agreement, or the failure of any party to perform any of its obligations
hereunder, (C) shall not be required to initiate or conduct any litigation or
collection proceedings and (D) shall not be responsibility for any action taken
or omitted to be taken hereunder except for its gross negligence or willful
misconduct. The Escrow Agent may consult with legal counsel and other experts
selected by it in its sole discretion at the expense of CXI, and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel or experts.
(ii) The Escrow Agent shall be entitled to rely upon any
certification, notice or other communication believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper person or
entity and delivered in accordance with this Merger Agreement. The Escrow Agent
shall not be required to take any action which shall expose it to personal
liability or which is contrary to this Merger Agreement or applicable law.
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(iii) The Escrow Agent shall not be deemed to have knowledge or
notice of the occurrence of any event unless it shall have received written
notice thereof in accordance with this Merger Agreement.
(iv) CXI and all Escrow Participants hereby agrees to indemnify the
Escrow Agent for any and all losses, liabilities, damages, deficiencies or
expenses of any kind and nature whatsoever that may be imposed on, incurred by
or asserted against the Escrow Agent in its capacity as such in any way relating
to or arising out of this Merger Agreement or the transactions contemplated
hereby, including the enforcement of any of the terms hereof. Except as
expressly required herein, the Escrow Agent shall in all cases be fully
justified in failing or refusing to act hereunder unless it shall receive
further assurances to its reasonable satisfaction from CXI and all Escrow
Participants of their indemnification obligations hereunder and against any and
all losses, liabilities, damages, deficiencies or expenses that may be incurred
by the Escrow Agent by reason of taking or continuing to take such action in
accordance with the terms hereof.
(v) Any fees or other amounts due to the Escrow Agent in connection
with its obligations hereunder shall be paid by CXI.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GEI
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To induce CXI to enter into this Merger Agreement and to consummate the
Merger, GEI and the Stockholders make the following representations and
warranties, which representations and warranties shall survive the Closing:
Section 3.1. Subsidiaries, Organization, Power and Authority.
Section 3.1.1. Subsidiaries. Set forth on Schedule 3.1.1 are
all Subsidiaries of GEI. GEI owns the percentage of capital stock or equity
interest of each of the Subsidiaries set forth in Schedule 3.1.1 free and clear,
except as set forth on Schedule 3.1.1, of all Liens and, except as set forth on
Schedule 3.1.1, does not own, of record or beneficially, any capital stock or
equity interest or investment in any corporation, partnership, joint venture,
association or other entity.
Section 3.1.2. GEI and Subsidiaries. GEI is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and each of the Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. GEI and each Subsidiary has all requisite power
and authority to own or lease its properties and to carry on its business as it
is now being conducted. GEI and each Subsidiary is duly qualified to transact
business as a foreign corporation or other entity and is in good standing in
each of the jurisdictions set forth on Schedule 3.1.2, which are all of the
jurisdictions in
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which its business or property is such as to require that it be thus qualified,
except for failures to be so qualified which would not, in the aggregate, have a
Material Adverse Effect.
Section 3.1.3. Stockholders. Each of the Stockholders owns the
number of shares of GEI Common Stock set forth on Schedule 3.3, and all such
shares are owned free and clear of all Liens. All persons holding warrants,
conversion rights and options to acquire shares of Capital Stock of GEI, and the
number and type of shares subject to such warrants, conversion rights and
options, are set forth on Schedule 3.3.
Section 3.2. Due Authorization; Binding Obligation; No Conflicts;
Consents. GEI has full power, authority and capacity to enter into this Merger
Agreement and carry out its obligations hereunder. Each Stockholder has full
power, authority and capacity to enter into this Merger Agreement and to carry
out his or its obligations hereunder. The execution, delivery and performance of
this Merger Agreement and all other agreements, instruments and documents
contemplated to be delivered hereby and the consummation of the Merger have been
duly authorized by all necessary corporate action of GEI and by all necessary
action of the Stockholders. This Merger Agreement has been duly executed and
delivered by GEI and the Stockholders and is a legal, valid and binding
obligation of GEI and the Stockholders, enforceable in accordance with its
terms, subject to any applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting generally the enforcement of creditors'
rights and to principles of equity. The execution, delivery and performance of
this Merger Agreement by GEI and the Stockholders do not, and the consummation
of the Merger will not, (i) contravene any provision of the Certificate of
Incorporation or bylaws of GEI, or of the certificate of incorporation or bylaws
of any Subsidiary; (ii) violate or conflict with any federal, state or local
law, statute, ordinance, rule, regulation or any decree, writ, injunction,
judgment or order of any court or administrative or other governmental body or
of any arbitration award that is either applicable to, binding upon or
enforceable against GEI, any Subsidiary, the Stockholders or any of the GEI
Common Stock; (iii) conflict with, result in any breach of, or constitute a
default (or an event which would, with the passage of time or the giving of
notice or both, constitute a default) under, or give rise to a right to
terminate, amend, modify, abandon or accelerate, any mortgage, contract,
agreement, lease, license, indenture, trust or other instrument which is either
binding upon or enforceable against GEI, any Subsidiary, or the Stockholders;
(iv) result in or require the creation or imposition of any Liens upon or with
respect to any GEI Common Stock or property of GEI or any Subsidiary; or (v)
require the consent, approval or authorization of, or the registration,
recording, filing or qualification with, or notice to, or the taking of any
other action in respect of, any governmental authority or any other person or
entity.
Section 3.3. Capital Structure; Ownership. The authorized capital of
GEI consists solely of 1,000 shares of GEI Common Stock, of which 500 are issued
and outstanding. Set forth on Schedule 3.3 is the name of each registered holder
of any shares of GEI Common Stock, the mailing address, taxpayer identification
number and the number of shares and the percentage of the total number of issued
and outstanding shares of GEI Common Stock owned by each such Person. Schedule
3.3 also sets forth the capital
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structure of each Subsidiary and the names and ownership interest of each owner
of the Subsidiaries. Except as otherwise set forth in Schedule 3.3, no options,
warrants, convertible debt or other rights to acquire any equity interest in GEI
or any Subsidiary, whether upon exchange for or conversion of other securities
or otherwise, (i) are outstanding or (ii) will be granted, and no shares of
capital stock of GEI or shares of any Subsidiary will be issued between the date
hereof and the Closing. All outstanding shares of GEI Common Stock, and all of
the outstanding shares of each Subsidiary, are duly authorized, validly issued,
fully paid and non-assessable, and have been offered, issued, sold and delivered
free of pre-emptive rights or rights of first refusal, Liens and in compliance
with applicable federal and state securities laws. No stock appreciation rights,
phantom shares, cash performance units or other similar rights have been issued
by GEI or any of the Subsidiaries.
Section 3.4. Financial Statements of GEI. GEI previously has furnished
to CXI the following financial statements, including the notes pertaining
thereto (the "GEI FINANCIAL STATEMENTS"):
(a) GEI's Last Balance Sheet and its unaudited consolidated balance
sheets as of June 30, 1997 and 1996 and the related consolidated financial
statements (including the related notes or notes payable) for each of the three
years ended December 31, 1998, 1997 and 1996. There will be no adverse material
change to the financial condition of GEI between the time period covered by
GEI's Last Balance Sheet and the execution date hereof. The GEI Financial
Statements present fairly in all material respects the financial position of GEI
at each of the said balance sheet dates and the results of operations for each
of the said periods covered, and they have been prepared in accordance with
generally accepted accounting principles consistently applied. The books and
records of GEI properly and accurately reflect all material transactions,
properties, assets and liabilities of GEI.
Section 3.5. Liabilities. Neither GEI nor any Subsidiary has any
liability or obligation, either accrued, absolute, contingent or otherwise,
except: (i) to the extent reflected in or taken into account in determining net
worth in GEI's Last Balance Sheet and not heretofore paid or discharged; (ii) to
the extent specifically set forth in Schedule 3.5; or (iii) liabilities incurred
since June 30, 1999 and related to the conduct of business activities of GEI and
its Subsidiaries in the ordinary course during the period since that date.
Section 3.6. Tax Matters.
Section 3.6.1. GEI and the Subsidiaries have timely filed all
tax returns and reports required to be filed by them, including all federal,
state, local and foreign tax returns, and have paid in full or made adequate
provision by the establishment of reserves for all taxes and other charges,
including estimated taxes, that have become due. All tax returns and reports
have been prepared in accordance with applicable laws and accurately reflect the
taxable income (or other measure of tax) and tax liability of GEI and its
Subsidiaries for the applicable period. There is no tax deficiency proposed
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or threatened against GEI or any Subsidiary. There are no tax liens upon any
property or assets of GEI or any Subsidiary. GEI and its Subsidiaries have made
all payments of estimated taxes when due in amounts sufficient to avoid the
imposition of any penalty or established adequate reserves on their books in
respect thereof to cover the amount of such estimated taxes, together with
interest and penalties thereon. GEI has delivered to CXI true and complete
copies of all federal and state tax returns filed by GEI and its Subsidiaries in
the past three years.
Section 3.6.2. All taxes and other assessments and levies that
GEI and its Subsidiaries were required by law to withhold or to collect have
been duly withheld and collected and, to the extent due, have been paid over to
the proper governmental entity. All such withholdings and collections and all
other payments due in connection therewith as of the date of GEI's Last Balance
Sheet are duly reflected on such Last Balance Sheet.
Section 3.6.3. The federal income tax returns of GEI and its
Subsidiaries that have been closed by applicable statute or examined by all
applicable taxing authorities are set forth in Schedule 3.6. Except as set forth
on Schedule 3.6, there are no outstanding agreements or waivers extending the
statute of limitations applicable to any federal income tax returns of GEI or
any Subsidiary for any period.
Section 3.6.4. No Reliance. GEI and the Stockholders accept
full responsibility for all tax consequences to GEI and the Stockholders as a
result of the Merger. CXI has not made to GEI or any of the Stockholders, and
none of GEI or any Stockholder has relied upon, any representation, opinion,
advice or recommendation regarding such tax consequences.
Section 3.7. Real Estate.
Section 3.7.1. Neither GEI nor any Subsidiary has any Owned
Properties except as set forth on Schedule 3.7.1.
Section 3.7.2. Neither GEI nor any Subsidiary holds any
Leasehold Premises except as set forth on Schedule 3.7.2. An accurate and
complete copy of the Leases for the properties described on Schedule 3.7.2 has
been delivered to CXI prior to the date hereof. Schedule 3.7.2 also sets forth a
description of the nature and amount of all Liens, other than Permitted
Encumbrances, on GEI's and the Subsidiaries' interests in the Leasehold
Premises. Except as set forth on Schedule 3.7.2, such Leases are in full force
and effect, none of GEI or the Subsidiaries is in default or breach under any
Lease and no event has occurred that, with the passage of time or the giving of
notice or both, would cause a material breach of or default under any Lease. To
the knowledge of GEI, there is no breach or anticipated breach of any Lease by
any other party to such Lease.
Section 3.7.3. GEI and its Subsidiaries own the Owned
Properties and have valid leasehold interests in the Leasehold Premises, free
and clear of any Liens, covenants and easements or title defects of any nature
whatsoever, except for Permitted Encumbrances.
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Section 3.7.4. Except as set forth in Schedule 3.7.4, the
portions of the buildings located on the Leasehold Premises that are used in
GEI's or any Subsidiary's business and the buildings located on the Owned
Properties are each in good repair and condition, normal wear and tear excepted,
and are in the aggregate sufficient to satisfy GEI's and its Subsidiaries'
business activities as conducted thereat.
Section 3.8. Good Title to and Condition of the Assets.
Section 3.8.1. GEI and each Subsidiary has good and marketable
title to all of its Assets free and clear of any Liens other than Permitted
Encumbrances.
Section 3.8.2. The Fixed Assets of GEI and its Subsidiaries
currently in use or necessary for its business are in good operating condition,
normal wear and tear excepted.
Section 3.8.3. The Inventory of GEI and its Subsidiaries has
aggregate values not less than the aggregate values at which such Inventory is
carried on their books.
Section 3.9. Receivables. The Receivables are valid and legally
binding, represent bona fide transactions and arose in the ordinary course of
business of GEI and the Subsidiaries. The Receivables reflected on GEI's Last
Balance Sheet, exclusive of customer accounts, are collectible in the full
amount stated, net of any allowance for doubtful accounts.
Section 3.10. Payables. The Payables are valid and legally binding,
representing bona fide transactions and arose in the ordinary course of business
of GEI and the Subsidiaries.
Section 3.11. Licenses and Permits. GEI and each of its Subsidiaries
possess all Permits material to the business and operation of each of the Owned
Properties and each of the Leasehold Premises. All such Permits are valid and in
full force and effect. GEI and its Subsidiaries are in compliance with their
requirements, and no proceeding is pending or threatened to revoke or amend any
of them. Except as indicated on Schedule 3.11, none of the Permits is or will be
impaired or in any way affected by the execution and delivery of this Merger
Agreement or the consummation of the Merger.
Section 3.12. Investments in Subsidiaries. Except for its interest in a
Brazilian company, X.X. Investors, Limitada, to which GEI has transferred its
interests in the San Xxxxxxxx power development project, GEI does not own or
have any investment in any Subsidiaries.
Section 3.13. Documents of and Information with Respect to GEI.
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Section 3.13.1. Schedule 3.13 is an accurate and complete list
of the following: (i) each loan, credit agreement, guaranty, security agreement
or similar document or instrument to which GEI or any Subsidiary is a party or
by which they are bound; (ii) any memoranda of understanding, letters of intent,
joint ventures, power development agreements, power purchase agreements,
contracts relating to GEI's currently existing power developments in emerging
foreign markets and all other similar material agreements, and (iii) all other
material agreements to which GEI is a party. GEI has previously furnished CXI
with an accurate and complete copy of each such agreement, contract or
commitment listed in Schedule 3.13. There has not been any breach of or default
in any obligation to be performed by GEI or any Subsidiary under any such
instrument or, to the knowledge of GEI, in any obligation to be performed by any
other party to such instrument. All of such instruments to which GEI or any
Subsidiary is a party are valid, binding and enforceable against GEI or the
particular Subsidiaries as the case may be and in full force and effect in
accordance with their respective terms. None of such instruments will expire or
be terminated or be subject to any modification of terms or conditions upon
consummation of the Merger.
Section 3.13.2. GEI and its Subsidiaries carry insurance, which
is substantially comparable in character and amount to that carried by other
companies engaged in similar businesses, with reputable insurers, covering all
of their assets, properties and businesses, and have provided all required
performance or other surety bonds. As of the Closing Date, GEI shall have
furnished CXI with an accurate and complete copy of each policy of insurance in
force with respect to the assets and properties of GEI and its Subsidiaries and
each of the performance or other surety bonds maintained by GEI and its
Subsidiaries in the conduct of their businesses. All premiums and other payments
that have become due under each such policy of insurance have been paid in full,
all of such policies are in full force and effect and neither GEI nor any
Subsidiary has received notice from any insurer, agent or broker of the
cancellation of, or any increase in premium with respect to, any of such
policies or bonds. Except as set forth on Schedule 3.13.2 and except for claims
that would not be material to the business, properties, financial prospects,
financial condition or results of operations of GEI and its Subsidiaries, taken
as a whole, neither GEI nor any Subsidiary has received any notification from
any insurer, agent or broker denying or disputing any claim made by GEI or any
Subsidiary or denying or disputing any coverage for any such claim or the amount
of any claim.
Section 3.14. Litigation. Except as set forth on Schedule 3.14, there
are no actions, suits, claims, governmental investigations or arbitration
proceedings pending or threatened against or affecting GEI or any Subsidiary,
the GEI Common Stock, the Assets or the liabilities of GEI or any Subsidiary or
that question the validity or enforceability of this Merger Agreement or any
action contemplated herein. There are no outstanding orders, decrees or
stipulations issued by any federal, state, local or foreign judicial or
administrative authority in any proceeding to which GEI or any Subsidiary is or
was a party or that affect the GEI Common Stock, the Assets or the liabilities
of GEI or any Subsidiary or the Merger.
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Section 3.15. Records. GEI's and its Subsidiaries' records included as
part of the Assets are accurate and complete in all material respects and there
are no material matters as to which appropriate entries have not been made in
such records. A record of all action taken by the Stockholders, the board of
directors of GEI and the stockholders and boards of directors of the
Subsidiaries and all minutes of their respective meetings are contained in the
minute books of GEI and the Subsidiaries and are accurate and complete. The
record books and equity ledgers of GEI and the Subsidiaries contain an accurate
and complete record of all issuances, transfers and cancellations of shares of
capital stock of GEI and the Subsidiaries.
Section 3.16. No Material Adverse Change. Except for circumstances or
conditions that affect generally and adversely businesses engaged in the
development of power generation projects in foreign emerging markets since the
date of the Last Balance Sheet, other than the Merger, there has not been (i)
any change in the business or properties of GEI or any Subsidiary, or in the
financial condition of GEI or any Subsidiary, other than changes occurring in
the ordinary course of business that have not had a Material Adverse Effect; or
(ii) any threatened or prospective event or condition of any character
whatsoever that could materially adversely affect the GEI Common Stock or have a
Material Adverse Effect.
Section 3.17. Absence of Certain Acts or Events. Except as disclosed in
Schedule 3.17, since the date of the Last Balance Sheet, neither GEI nor any
Subsidiary has (i) authorized or issued any shares of capital stock or other
securities; (ii) declared or paid any dividend or made any other distribution of
or with respect to its capital stock or purchased or redeemed any of its capital
stock or other securities; (iii) paid any bonus in excess of $5,000 as to any
one employee or $20,000 as to all employees in the aggregate or increased the
rate of compensation of any of its salaried employees other than in the ordinary
course of business consistent with past practice; (iv) sold or transferred any
of its assets other than in the ordinary course of business; (v) as of the date
of this Merger Agreement, made or obligated itself to make capital expenditures
aggregating more than $10,000 or, in any case, for use other than in its
business as currently conducted; (vi) made any payment in respect of its
liabilities other than scheduled payments of principal and/or interest, as set
forth on Schedule 3.17, or otherwise than in the ordinary course of business;
(vii) incurred any obligations or liabilities (including any indebtedness) or
entered into any transaction, other than this Merger Agreement, except in the
ordinary course of business consistent with past practice; (viii) suffered any
material theft; (ix) suffered any damage, destruction or casualty loss in excess
of $25,000 that was not covered by insurance or in excess of $5,000 whether or
not covered by insurance; (x) waived any right of material value; (xi) incurred
any indebtedness (other than to trade creditors) (xii) made or adopted any
change in its accounting practice or policies; (xiii) made any adjustment to its
books and records other than in respect of the conduct of its business
activities in the ordinary course during the period since January 1, 1995; (xiv)
made any loan or advance other than advances to employees in the ordinary course
of business not exceeding $5,000 as to all employees in the aggregate.
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Section 3.18. Compliance with Laws.
Section 3.18.1. GEI and its Subsidiaries are in compliance with
all laws, regulations and orders applicable to them, the GEI Common Stock or the
Assets (including the Code and ERISA), except with respect to failures to comply
with domestic local laws, ordinances, rules or regulations relating to the
operation of GEI's business, or maintenance of the Leasehold Premises or Owned
Properties and that, if fully enforced, would not have a Material Adverse
Effect. Except as set forth on Schedule 3.18, since its inception, neither GEI
nor any Subsidiary has been cited, fined or otherwise notified of any asserted
past or present failure to comply with any laws, except with respect to failures
to comply that, if repeated, would not have a Material Adverse Effect, and no
proceeding with respect to any such violation is contemplated.
Section 3.18.2. Neither GEI, any Subsidiary nor any employee of
GEI or any Subsidiary has made, directly or indirectly, any payment of funds in
connection with the business of GEI or any Subsidiary prohibited by law,
including, without limitation the Foreign Corrupt Practices Act, and no funds
have been set aside to be used in connection with the business of GEI or any
Subsidiary for any payment prohibited by law.
Section 3.18.3. GEI and each Subsidiary is and at all times has
been in full compliance with the terms and provisions of the Immigration Act.
Section 3.19. Environmental Matters.
Section 3.19.1. Neither GEI nor any Subsidiary has (i)
transported, stored, handled, treated or disposed, or allowed or arranged for
any third parties to transport, store, handle, treat or dispose of, Hazardous
Substances to or at any location other than a site lawfully permitted to receive
such Hazardous Substances for such purposes, nor has any of them performed,
arranged for or allowed by any method or procedure such transportation, storage,
treatment or disposal in contravention of any laws or regulations or (ii)
stored, handled, treated or disposed of, or allowed or arranged for any third
parties to store, handle, treat or dispose of, Hazardous Substances upon
property owned or leased by it, except as permitted by law.
Section 3.19.2. There has not occurred, nor is there presently
occurring, a Release of any Hazardous Substance on, into or beneath the surface
of any parcel of the Owned Properties or Leasehold Premises for which GEI or any
Subsidiary is responsible or potentially responsible.
Section 3.19.3. Neither GEI nor any Subsidiary has shipped,
transported or disposed of, or allowed or arranged, by contract, agreement or
otherwise, for any third parties to ship, transport or dispose of, any Hazardous
Substance to or at a site that, pursuant to CERCLA or any similar state law, (i)
has been placed on the National Priorities List or its state equivalent; or (ii)
the Environmental Protection Agency or the
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relevant state agency has proposed or is proposing to place on the National
Priorities List or its state equivalent. Except as set forth on Schedule 3.19.3,
neither GEI nor any Subsidiary has received notice, nor does any of them have
knowledge of any facts that could give rise to any notice, that GEI or any
Subsidiary is a potentially responsible party for a federal or state
environmental cleanup site or for corrective action under CERCLA or any other
applicable law or regulation. Neither GEI nor any Subsidiary has submitted or
was required to submit any notice pursuant to Section 103(c) of CERCLA with
respect to the properties set forth on Schedules 3.7.1 or 3.7.2. Neither GEI nor
any Subsidiary has received any written or oral request for information in
connection with any federal or state environmental cleanup site. Neither GEI nor
any Subsidiary has been required to or has undertaken any response or remedial
actions or clean-up actions of any kind at the request of any federal, state or
local governmental entity, or at the request of any other person or entity.
Section 3.19.4. GEI and its Subsidiaries do not use, and have
not used, any Underground Storage Tanks. There are not now nor have there ever
been any Underground Storage Tanks on the Owned Properties or the Leasehold
Premises.
Section 3.19.5. There are no laws, regulations, ordinances,
licenses, permits or orders relating to environmental or worker safety matters
requiring any work, repairs, construction or capital expenditures with respect
to the assets or properties of GEI or any Subsidiary. There are no violations of
environmental law committed by GEI or any Subsidiary relating to (i) the Owned
Properties or any property or parcel adjacent thereto, or (ii) GEI's or any
Subsidiary's use of the Owned Properties or Leasehold Premises.
Section 3.19.6. Schedule 3.19.6 identifies (i) all environmental
audits, assessments or occupational health studies undertaken by GEI, its
Subsidiaries or their agents or, to the knowledge of GEI, undertaken by
governmental agencies relating to or affecting GEI, any Subsidiary or any of the
Owned Properties or Leasehold Premises during the 36 months prior to the date
hereof; (ii) the results of any groundwater, soil, air or asbestos monitoring
undertaken by GEI, its Subsidiaries or their agents or, to the knowledge of GEI,
undertaken by governmental agencies relating to or affecting GEI, any Subsidiary
or any of the Owned Properties or Leasehold Premises; (iii) all written
communications between GEI, its Subsidiaries or their respective
representatives, on the one hand, and environmental agencies, on the other hand
relating to matters that, if adversely determined, would have a Material Adverse
Effect; and (iv) all citations issued under the Occupational Safety and Health
Act (29 U.S.C. Sections 651 et seq.) relating to or affecting GEI, any
Subsidiary or any of the Owned Properties or Leasehold Premises.
Section 3.19.7. Schedule 3.7.1 identifies, to the knowledge of
GEI and the Stockholders, all prior uses of the Owned Properties.
Section 3.20. Labor Relations of GEI. Except as set forth on Schedule
3.20, neither GEI nor any Subsidiary is a party to or bound by any collective
bargaining
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agreement or any other agreement with a labor union, and there has been no
effort by any labor union during the last 24 months to organize any employees of
GEI or any Subsidiary into one or more collective bargaining units. There is not
pending or threatened any labor dispute, strike or work stoppage that affects or
that may affect the business of GEI or any Subsidiary or that may interfere with
the continued operation of their businesses. Except as set forth on Schedule
3.20, none of GEI, any Subsidiary, or any agent, representative or employee of
GEI or any Subsidiary has within the last 24 months committed any unfair labor
practice under the National Labor Relations Act, as amended, and there is not
now pending or threatened any charge or complaint against GEI or any Subsidiary
by or with the National Labor Relations Board or any representative thereof.
There has been no strike, walkout or work stoppage involving any of the
employees of GEI or any Subsidiary during the last 24 months. None of GEI or the
Stockholders is aware that any executive or key employee or group of employees
has any plans to terminate his, her or their employment with GEI or any
Subsidiary.
Section 3.21. Employee Benefits.
Section 3.21.1. For each employee of GEI and its Subsidiaries
with an annual salary, as of the date hereof, greater than $50,000, GEI has
previously furnished CXI with an accurate and complete list setting forth (i)
the name of each such employee, (ii) the current annual salary for each such
employee, and (iii) the profit sharing, bonus or any other form of compensation
paid or payable by GEI or its Subsidiaries to or for the benefit of each such
person for the fiscal year ended December 31, 1998, and GEI has previously
furnished CXI with accurate information as to the aggregate compensation paid
(including any compensation paid in the form of profit sharing, bonus or other
forms) to all employees of GEI during the fiscal year ended December 31, 1998.
Except as set forth on Schedule 3.21.1, the employees of GEI and its
Subsidiaries do not participate (and have not participated in the preceding five
calendar years) in any Plan. Each Plan that is intended to be a qualified plan
under section 401(a) of the Code has been determined by the IRS to be qualified
under section 401(a) of the Code, each trust related to any such Plan has been
determined to be exempt from federal income tax under section 501(a) of the Code
and no event has occurred or condition exists that is materially likely to
adversely affect such determinations. With respect to all Plans (whether or not
subject to ERISA and whether or not qualified under section 401(a) of the Code),
all employer contributions (including any contributions to any trust account or
payments due under any life insurance policy) previously declared or otherwise
required by law or contract to have been made have been paid and all employer
contributions (including any contributions to any trust account or payments due
under any life insurance policy) accrued have been paid as required by law or
contract. No Prohibited Transaction that has not been corrected has occurred
with respect to any Plan.
Section 3.21.2. None of GEI, any Subsidiary or any member of
their "controlled group," as defined in section 4001(a)(14) of ERISA, has
incurred any termination or withdrawal liability under Title IV of ERISA.
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Section 3.21.3. Neither GEI nor any Subsidiary has ever
contributed to any "multiemployer plan," as defined in section 414(f) of the
Code or section 3(37) of ERISA. No Plan has incurred any accumulated funding
deficiency, as defined in section 412 of the Code and section 302 of ERISA.
Section 3.21.4. None of GEI, any Subsidiary or any member of
their "controlled group" has (i) failed to make a required installment under
section 302(e) of ERISA or (ii) been required to provide security to any
employee benefit plan or the Pension Benefit Guaranty Corporation under section
306 or 307 of ERISA.
Section 3.21.5. There are no actions, suits or claims pending
(other than routine claims for benefits) or overtly threatened against a Plan or
the assets of any Plan.
Section 3.21.6. No Plan that is an "employee welfare benefit
plan," as defined in section 3(1) of ERISA, provides employer-paid benefits to
retirees or former employees, except for continuation coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
Section 3.21.7. Except as set forth on Schedule 3.21.7, none of
GEI or the Subsidiaries is obligated to pay any severance benefits to any
employee whose employment may be terminated on or after December 31, 1998.
Section 3.22. Computer Programs and Software; Year 2000 Compliance.
Section 3.22.1. GEI and its Subsidiaries own or hold under valid
license agreements all Software. Neither GEI nor any of the Subsidiaries has
licensed anyone to use any of the Software and neither GEI nor any of the
Subsidiaries has knowledge of any infringing use of the Software or claim of
infringing use. The Software is sufficient for the conduct of the business of
GEI and its Subsidiaries as now operated.
Section 3.22.2. GEI and its Subsidiaries have reviewed the
areas within their business and operations, and have developed or are developing
a program to ensure, on a timely basis, that the Software, if containing or
calling on a calendar function including, without limitation, any function
indexed to the CPU clock, and any function providing specific dates or days or
calculating spans of dates or days will, (i) record, store, process, calculate,
present and, where appropriate, insert time and accurate dates and calculations
for calendar dates falling on or after (and, if applicable, spans of time
including) January 1, 2000, (ii) record, store, process, calculate and present
any information and/or data dependent on or relating to such dates in the same
manner, and with the same functionality, data integrity and performance, as the
Software records, stores, processes, calculates and presents calendar dates on
or before December 31, 1999, and in such fashion as to respond to two-digit date
input in a way that eliminates all ambiguities as to the century of concern, and
treats the year 2000 as a leap-year and correctly and accurately regards and
processes data and information with respect thereto, and (iii) lose no
functionality with respect to the
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introduction of records, including but not limiting to back-up and archived
information and/or data, containing dates falling on or after January 1, 2000.
Based upon such review and program, GEI has no reason to believe that the "Year
2000 Problem" will have a Material Adverse Effect.
Section 3.23. Brokers. Except as set forth on Schedule 3.23, none of
the Stockholders, GEI or its Subsidiaries has paid or become obligated to pay
any fee or commission of any broker, finder or intermediary for or on account of
the Merger.
Section 3.24. Intellectual Property. Set forth on Schedule 3.24 is a
list of all trade names, assumed names, service marks and trademarks, logos,
patents, copyrights, rights and applications therefor and other intellectual
property of GEI and its Subsidiaries and all registrations and filings thereof.
Except as disclosed on Schedule 3.24, GEI and its Subsidiaries hold all
intellectual properties they use in their businesses free and clear of all Liens
and require no rights in such properties that they do not have to conduct their
businesses as presently conducted. Except as disclosed on Schedule 3.24, no
proceedings have been instituted or are pending or threatened or, to the
knowledge of GEI and the Stockholders, contemplated that challenge the validity
of the ownership by GEI or any Subsidiary of any such intellectual property
right. Except as disclosed in Schedule 3.24, neither GEI nor any Subsidiary has
licensed anyone to use any such trademark or any technical know how or other
proprietary rights of GEI or any Subsidiary and neither GEI nor the Stockholders
has knowledge of the infringing use of such proprietary rights by any other
Person.
Section 3.25. Business Locations. As of the date hereof, neither GEI
nor any Subsidiary has any office or place of business other than as identified
on Schedules 3.7.1 and 3.7.2. GEI's and each Subsidiary's principal place of
business and their chief executive offices are indicated on Schedule 3.25, and
all locations where GEI's and each Subsidiary's equipment, inventory, chattel
paper and books and records are located as of the date hereof are fully
identified on Schedules 3.7.1 and 3.7.2.
Section 3.26. Names; Prior Acquisitions. All names under which GEI and
its Subsidiaries do business as of the date hereof are identified on Schedule
3.26. Except as set forth on Schedule 3.26, neither GEI nor any Subsidiary has
changed its name or used any assumed or fictitious name, or been the surviving
entity in a merger, acquired any business or changed its principal place of
business or chief executive office within three years.
Section 3.27. Accuracy of Information Furnished by GEI. Neither any
representation or warranty in this Article III contains, nor any certificate to
be delivered pursuant to this Merger Agreement, when taken together with such
representations and warranties, shall contain when delivered, any untrue
statement of a material fact or omits or shall omit any material fact necessary
to make the information contained therein, in light of the circumstances under
which they were made, not misleading.
Section 3.28. Securities Representations. Each of the Stockholders is
an "Accredited Investor" as such term is defined in Regulation D promulgated
under the
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1933 Act. GEI and the Stockholders have received an annual report to
stockholders of CXI for the year ended December 31, 1997; annual reports of CXI
on Form 10-K for the years ended December 31, 1998 and 1997; quarterly reports
of CXI on Form 10-Q for each of the quarters ended March 31, 1999 and June 30,
1999; and reports of CXI on Form 8-K dated January 5, 1999, May 19, 1999 and
August 23, 1999 (as amended by the filing of a Form 8-K/A on September 1, 1999).
Such documents are referred to collectively as the "SEC DOCUMENTS."
Section 3.29. Franchising. Neither GEI nor any of the Subsidiaries is a
franchisor in any franchising relationship or has any franchisees (as such terms
are defined under federal laws, rules or regulations or the laws, rules or
regulations of any state).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CXI AND MERGER SUB
----------------------------------------------------
To induce GEI and the Stockholders to enter into this Merger Agreement
and to consummate the Merger, CXI and Merger Sub make the following
representations and warranties, which representations and warranties shall
survive the Closing:
Section 4.1. Organization, Power and Authority of CXI. CXI is a
corporation, and Merger Sub is a limited liability company, duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite power and authority to enter into this Merger Agreement
and all other agreements, instruments and documents contemplated hereby and
thereby and to perform its obligations hereunder and thereunder.
Section 4.2. Due Authorization; Binding Obligation; No Conflicts.
Subject to approval by the stockholder and directors of Merger Sub and the board
of directors and stockholders of CXI, the execution, delivery and performance of
this Merger Agreement and all other agreements, instruments and documents
contemplated hereby and the consummation of the Merger have been duly authorized
by all necessary action of CXI and Merger Sub. Subject to such approvals, this
Merger Agreement has been duly executed and delivered by CXI and Merger Sub and
is a valid and binding obligation of CXI and Merger Sub, enforceable against
them in accordance with its terms, subject to any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting generally the
enforcement of creditors' rights and to principles of equity. Neither the
execution and delivery of this Merger Agreement nor the consummation of the
Merger will: (i) contravene any provision of the certificate of incorporation or
bylaws of CXI or Merger Sub; (ii) violate or conflict with any federal, state or
local law, statute, ordinance, rule, regulation or any decree, writ, injunction,
judgment or order of any court or administrative or other governmental body or
of any arbitration award which is either applicable to, binding upon or
enforceable against CXI or Merger Sub; or (iii) require the consent, approval or
authorization of, or the registration, recording, filing or qualification with,
or notice to, or the taking of any other action in respect of, any governmental
authority or any other person or entity (other than approval by the stockholder
and directors of Merger Sub and the board of directors and stockholders of CXI
of the Merger).
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Section 4.3. Capital Structure; Ownership. The authorized capital of
CXI, except for those securities contemplated by this Merger Agreement, is
described on Schedule 4.3.
Section 4.4. Financial Statements of CXI. CXI previously has furnished
to GEI (i) the audited balance sheets of CXI at December 31, 1998 and 1997 and
statements of income and cash flows for the periods then ended) and (ii) the
unaudited balance sheets of CXI at March 31, 1999 and June 30, 1999 and
statements of income and cash flows for the periods then ended (collectively,
the "CXI FINANCIAL STATEMENTS"). The CXI Financial Statements present fairly in
all material respects the financial position of CXI at each of the said balance
sheet dates and the results of operations for each of the said periods covered,
and they have been prepared in accordance with generally accepted accounting
principles consistently applied. The books and records of CXI properly and
accurately reflect all material transactions, properties, assets and liabilities
of CXI.
Section 4.5. Liabilities. Neither CXI nor any Subsidiary has any
liability or obligation, either accrued, absolute, contingent or otherwise,
except: (i) to the extent reflected in or taken into account in determining net
worth in the SEC Documents or the Last Balance Sheet and not heretofore paid or
discharged; (ii) to the extent specifically set forth in Schedule 4.5; or (iii)
liabilities incurred since June 30, 1999 and related to the conduct of business
activities of CXI and its Subsidiaries in the ordinary course during the period
since that date.
Section 4.6. Tax Matters.
Section 4.6.1. CXI and the Subsidiaries have timely filed all
tax returns and reports required to be filed by them, including all federal,
state, local and foreign tax returns, and have paid in full or made adequate
provision by the establishment of reserves for all taxes and other charges,
including estimated taxes, that have become due. All tax returns and reports
have been prepared in accordance with applicable laws and accurately reflect the
taxable income (or other measure of tax) and tax liability of CXI and its
Subsidiaries for the applicable period. There is no tax deficiency proposed or
threatened against CXI or any Subsidiary. There are no tax liens upon any
property or assets of CXI or any Subsidiary. CXI and its Subsidiaries have made
all payments of estimated taxes when due in amounts sufficient to avoid the
imposition of any penalty or established adequate reserves on their books in
respect thereof to cover the amount of such estimated taxes, together with
interest and penalties thereon. CXI has delivered to GEI true and complete
copies of all federal and state tax returns filed by CXI and its Subsidiaries in
the past three years.
Section 4.6.2. All taxes and other assessments and levies that
CXI and its Subsidiaries were required by law to withhold or to collect have
been duly withheld and
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collected and, to the extent due, have been paid over to the proper governmental
entity. All such withholdings and collections and all other payments due in
connection therewith as of the date of the CXI Last Balance Sheet are duly
reflected on the CXI Last Balance Sheet.
Section 4.6.3. The federal income tax returns of CXI and its
Subsidiaries that have been closed by applicable statute or examined by all
applicable taxing authorities are set forth in Schedule 4.6. Except as set forth
on Schedule 4.6, there are no outstanding agreements or waivers extending the
statute of limitations applicable to any federal income tax returns of CXI or
any Subsidiary for any period.
Section 4.7. Real Estate.
Section 4.7.1. Except as set forth on Schedule 4.7.1, neither
CXI nor any Subsidiary has any Owned Properties.
Section 4.7.2. CXI and its Subsidiaries own the Owned
Properties and have valid leasehold interests in the premises for which they are
Lessees, free and clear of any Liens, covenants and easements or title defects
of any nature whatsoever, except for Permitted Encumbrances.
Section 4.7.3. Except as set forth in Schedule 4.7.3, the
portions of the buildings located on the Leasehold Premises that are used in
CXI's or any Subsidiary's business and the buildings located on the Owned
Properties are each in good repair and condition, normal wear and tear excepted,
and are in the aggregate sufficient to satisfy CXI's and its Subsidiaries'
business activities as conducted thereat.
Section 4.8. Good Title to and Condition of the Assets.
Section 4.8.1. CXI and each Subsidiary has good and marketable
title to all of its Assets, free and clear of any Liens other than Permitted
Encumbrances.
Section 4.8.2. The Fixed Assets of CXI and its Subsidiaries
currently in use or necessary for its business are in good operating condition,
normal wear and tear excepted.
Section 4.8.3. The Inventory of CXI and its Subsidiaries have
aggregate values not less than the aggregate values at which such items are
carried on their books.
Section 4.9. Receivables. The Receivables are valid and legally
binding, represent bona fide transactions and arose in the ordinary course of
business of CXI and the Subsidiaries. The Receivables reflected on the SEC
Documents, and the Last Balance Sheet exclusive of customer accounts, are
collectible in the full amount stated, net of any allowance for doubtful
accounts.
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Section 4.10. Payables. The Payables are valid and legally binding,
representing bona fide transactions and arose in the ordinary course of business
of CXI and the Subsidiaries.
Section 4.11. Licenses and Permits. CXI and each of its Subsidiaries
possess all Permits material to the business and operation of each of the Owned
Properties and each of the Leasehold Premises. All such Permits are valid and in
full force and effect. CXI and its Subsidiaries are in compliance with their
requirements, and no proceeding is pending or threatened to revoke or amend any
of them. Except as indicated on Schedule 4.10, none of the Permits is or will be
impaired or in any way affected by the execution and delivery of this Merger
Agreement or the consummation of the Merger.
Section 4.12. [Omitted Intentionally].
Section 4.13. [Omitted Intentionally].
Section 4.13.1. The material agreements to which CXI and its
subsidiaries are a party are contained in the SEC Documents or in other filings
made with the SEC. CXI has previously furnished GEI with an accurate and
complete copy of each such agreement, contract or commitment. There has not been
any breach of or default in any obligation to be performed by CXI or any
Subsidiary under any such instrument or, to the knowledge of CXI, in any
obligation to be performed by any other party to such instrument. All of such
instruments to which CXI or any Subsidiary is a party are valid, binding and
enforceable against CXI or the particular Subsidiaries as the case may be and in
full force and effect in accordance with their respective terms. None of such
instruments will expire or be terminated or be subject to any modification of
terms or conditions upon consummation of the Merger.
Section 4.13.2. CXI and its Subsidiaries carry insurance, which is
substantially comparable in character and amount to that carried by other
companies engaged in similar businesses, with reputable insurers, covering all
of their assets, properties and businesses, and have provided all required
performance or other surety bonds. As of the Closing Date, CXI shall have
furnished GEI with an accurate and complete copy of each policy of insurance in
force with respect to the assets and properties of CXI and its Subsidiaries and
each of the performance or other surety bonds maintained by CXI and its
Subsidiaries in the conduct of their businesses. All premiums and other payments
which have become due under each such policy of insurance have been paid in
full, all of such policies are in full force and effect and neither CXI nor any
Subsidiary has received notice from any insurer, agent or broker of the
cancellation of, or any increase in premium with respect to, any of such
policies or bonds. Except as set forth on Schedule 4.13 and except for claims
which would not, in the aggregate for CXI and its consolidated subsidiaries, be
material to the business, properties, financial prospects, financial condition
or results of operations of CXI and such subsidiaries, neither CXI nor any
Subsidiary has received any notification from any insurer, agent or broker
denying or disputing any claim made by CXI or any Subsidiary or denying or
disputing any coverage for any such claim or the amount of any claim.
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Section 4.14. Litigation. Except as set forth on Schedule 4.14, there
are no actions, suits, claims, governmental investigations or arbitration
proceedings pending or threatened against or affecting CXI or any Subsidiary,
the Assets or the liabilities of CXI or any Subsidiary or that question the
validity or enforceability of this Merger Agreement or any action contemplated
herein. There are no outstanding orders, decrees or stipulations issued by any
federal, state, local or foreign judicial or administrative authority in any
proceeding to which CXI or any Subsidiary is or was a party or that affect the
Assets or the liabilities of CXI or any Subsidiary or the Merger.
Section 4.15. Records. CXI's and its Subsidiaries' records included as
part of the Assets are accurate and complete in all material respects and there
are no material matters as to which appropriate entries have not been made in
such records. A record of all action taken by the stockholders and Board of
Directors of CXI and the stockholders and boards of directors of the
Subsidiaries and all minutes of their respective meetings are contained in the
minute books of CXI and the Subsidiaries and are accurate and complete. The
record books and equity ledgers of CXI and the Subsidiaries contain an accurate
and complete record of all issuances, transfers and cancellations of shares of
capital stock of CXI and of the Subsidiaries.
Section 4.16. No Material Adverse Change. Except for circumstances or
conditions that affect generally and adversely businesses engaged in the type
engaged in by CXI and its Subsidiaries, since the date of the CXI Last Balance
Sheet, other than the Merger, there has not been (a) any change in the business
or properties of CXI or any Subsidiary, or in the financial condition of CXI or
any Subsidiary, other than changes occurring in the ordinary course of business
that have not had a Material Adverse Effect; or (b) any threatened or
prospective event or condition of any character whatsoever that could materially
adversely affect or have a Material Adverse Effect on CXI or its Subsidiaries,
taken as a whole.
Section 4.17. Absence of Certain Acts or Events. Except as disclosed in
Schedule 4.17, since the date of its Last Balance Sheet, neither CXI nor any
Subsidiary has (i) authorized or issued any CXI Common Stock or other
securities; (ii) declared or paid any dividend or made any other distribution of
or with respect to its Common Stock or purchased or redeemed any of its Common
Stock or other securities; (iii) paid any bonus in excess of $5,000 as to any
one employee or $20,000 as to all employees in the aggregate or increased the
rate of compensation of any of its salaried employees other than in the ordinary
course of business consistent with past practice; (iv) sold or transferred any
of its assets other than in the ordinary course of business; (v) as of the date
of this Merger Agreement, made or obligated itself to make capital expenditures
aggregating more than $10,000 or, in any case, for use other than in its
business as currently conducted; (vi) made any payment in respect of its
liabilities other than scheduled payments of principal and/or interest, as set
forth on Schedule 4.17, or otherwise than in the ordinary course of business;
(vii) incurred any obligations or liabilities (including any indebtedness) or
entered into any transaction, other than this Merger Agreement, except in the
ordinary course of business consistent with past
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practice; (viii) suffered any material theft; (ix) suffered any damage,
destruction or casualty loss in excess of $25,000 that was not covered by
insurance or in excess of $5,000 whether or not covered by insurance; (x) waived
any right of material value; (xi) incurred any indebtedness (other than to trade
creditors) (xii) made or adopted any change in its accounting practice or
policies; (xiii) made any adjustment to its books and records other than in
respect of the conduct of its business activities in the ordinary course during
the period since January 1, 1995; or (xiv) made any loan or advance other than
advances to employees in the ordinary course of business not exceeding $5,000 as
to all employees in the aggregate.
Section 4.18. Compliance with Laws.
Section 4.18.1. CXI and its Subsidiaries are in compliance with all
laws, regulations and orders applicable to them, or the Assets (including the
Code and ERISA), except with respect to failures to comply with domestic local
laws, ordinances, rules or regulations relating to the operation of CXI's
business, or maintenance of the Leasehold Premises or Owned Properties and that,
if fully enforced, would not have a Material Adverse Effect. Except as set forth
on Schedule 4.18, since its inception, neither CXI nor any Subsidiary has been
cited, fined or otherwise notified of any asserted past or present failure to
comply with any laws, except with respect to failures to comply that, if
repeated, would not have a Material Adverse Effect, and no proceeding with
respect to any such violation is contemplated.
Section 4.18.2. Neither CXI, any Subsidiary nor any employee of CXI or
any Subsidiary has made, directly or indirectly, any payment of funds in
connection with the business of CXI or any Subsidiary prohibited by law,
including, without limitation the Foreign Corrupt Practices Act, and no funds
have been set aside to be used in connection with the business of CXI or any
Subsidiary for any payment prohibited by law.
Section 4.18.3. CXI and each Subsidiary is and at all times has been in
full compliance with the terms and provisions of the Immigration Act.
Section 4.19. Environmental Matters.
Section 4.19.1. Except as permitted by law, neither CXI nor any
Subsidiary has (i) transported, stored, handled, treated or disposed, or allowed
or arranged for any third parties to transport, store, handle, treat or dispose
of, Hazardous Substances to or at any location other than a site lawfully
permitted to receive such Hazardous Substances for such purposes, nor has any of
them performed, arranged for or allowed by any method or procedure such
transportation, storage, treatment or disposal in contravention of any laws or
regulations or (ii) stored, handled, treated or disposed of, or allowed or
arranged for any third parties to store, handle, treat or dispose of, Hazardous
Substances upon property owned or leased by it.
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Section 4.19.2. There has not occurred, nor is there presently
occurring, a Release of any Hazardous Substance on, into or beneath the surface
of any parcel of the Owned Properties or Leasehold Premises for which CXI or any
Subsidiary is responsible or potentially responsible.
Section 4.19.3. Except for activities in the ordinary course of the
conduct of their businesses, neither CXI nor any Subsidiary has shipped,
transported or disposed of, or allowed or arranged, by contract, agreement or
otherwise, for any third parties to ship, transport or dispose of, any Hazardous
Substance to or at a site that, pursuant to CERCLA or any similar state law, (i)
has been placed on the National Priorities List or its state equivalent; or (ii)
the Environmental Protection Agency or the relevant state agency has proposed or
is proposing to place on the National Priorities List or its state equivalent.
Except as set forth on Schedule 4.19.3, neither CXI nor any Subsidiary has
received notice, nor does any of them have knowledge of any facts that could
give rise to any notice, that CXI or any Subsidiary is a potentially responsible
party for a federal or state environmental cleanup site or for corrective action
under CERCLA or any other applicable law or regulation. Neither CXI nor any
Subsidiary has submitted or was required to submit any notice pursuant to
Section 103(c) of CERCLA with respect to the properties set forth on Schedules
4.7.1 or 4.7.2. Neither CXI nor any Subsidiary has received any written or oral
request for information in connection with any federal or state environmental
cleanup site. Neither CXI nor any Subsidiary has been required to or has
undertaken any response or remedial actions or clean-up actions of any kind at
the request of any federal, state or local governmental entity, or at the
request of any other person or entity.
Section 4.19.4. CXI and its Subsidiaries do not use, and have not used,
any Underground Storage Tanks. There are not now nor have there ever been any
Underground Storage Tanks on the Owned Properties or the Leasehold Premises.
Section 4.19.5. There are no laws, regulations, ordinances, licenses,
permits or orders relating to environmental or worker safety matters requiring
any work, repairs, construction or capital expenditures with respect to the
assets or properties of CXI or any Subsidiary other than any of the foregoing
required or incurred by the conduct of CXI's or any Subsidiary's business in the
ordinary course. There are no violations of environmental law committed by CXI
or any Subsidiary relating to (i) the Owned Properties or any property or parcel
adjacent thereto, or (ii) CXI's or any Subsidiary's use of the Owned Properties
or Leasehold Premises.
Section 4.19.6. Schedule 4.19.6 identifies (i) all environmental
audits, assessments or occupational health studies undertaken by CXI, its
Subsidiaries or their agents or, to the knowledge of CXI, undertaken by
governmental agencies relating to or affecting CXI, any Subsidiary or any of the
Owned Properties or Leasehold Premises during the 36 months prior to the date
hereof; (ii) the results of any groundwater, soil, air or asbestos monitoring
undertaken by CXI, its Subsidiaries or their agents or, to the knowledge of CXI,
undertaken by governmental agencies relating to or affecting CXI, any Subsidiary
or any of the Owned Properties or Leasehold Premises; (iii) all written
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communications between CXI, its Subsidiaries or their respective
representatives, on the one hand, and environmental agencies, on the other hand
relating to matters that, if adversely determined, would have a Material Adverse
Effect; and (iv) all citations issued under the Occupational Safety and Health
Act (29 U.S.C. Sections 651 et seq.) relating to or affecting CXI, any
Subsidiary or any of the Owned Properties or Leasehold Premises.
Section 4.19.7. Schedule 4.7.1 identifies, to the knowledge of CXI and
the Stockholders, all prior uses of the Owned Properties.
Section 4.20. Labor Relations of CXI. Except as set forth on Schedule
4.20 neither CXI nor any Subsidiary is a party to or bound by any collective
bargaining agreement or any other agreement with a labor union, and there has
been no effort by any labor union during the last 24 months to organize any
employees of CXI or any Subsidiary into one or more collective bargaining units.
There is not pending or threatened any labor dispute, strike or work stoppage
that affects or that may affect the business of CXI or any Subsidiary or that
may interfere with the continued operation of their businesses. Except as set
forth on Schedule 4.20, none of CXI, any Subsidiary, or any agent,
representative or employee of CXI or any Subsidiary has within the last 24
months committed any unfair labor practice under the National Labor Relations
Act, as amended, and there is not now pending or threatened any charge or
complaint against CXI or any Subsidiary by or with the National Labor Relations
Board or any representative thereof. There has been no strike, walkout or work
stoppage involving any of the employees of CXI or any Subsidiary during the last
24 months. None of CXI or the Stockholders is aware that any executive or key
employee or group of employees has any plans to terminate his, her or their
employment with CXI or any Subsidiary.
Section 4.21. Employee Benefits.
Section 4.21.1. For each employee of CXI and its Subsidiaries with an
annual salary, as of the date hereof, greater than $50,000, CXI has previously
furnished GEI with an accurate and complete list setting forth (i) the name of
each such employee, (ii) the current annual salary for each such employee, and
(iii) the profit sharing, bonus or any other form of compensation paid or
payable by CXI or its Subsidiaries to or for the benefit of each such person for
the fiscal year ended December 31, 1998, and CXI has previously furnished GEI
with accurate information as to the aggregate compensation paid (including any
compensation paid in the form of profit sharing, bonus or other forms) to all
employees of CXI during the fiscal year ended December 31, 1998. Except as set
forth on Schedule 4.21.1, the employees of CXI and its Subsidiaries do not
participate (and have not participated in the preceding five calendar years) in
any Plan. Each Plan that is intended to be a qualified plan under section 401(a)
of the Code has been determined by the IRS to be qualified under section 401(a)
of the Code, each trust related to any such Plan has been determined to be
exempt from federal income tax under section 501(a) of the Code and no event has
occurred or condition exists that is materially likely to adversely affect such
determinations. With respect to all Plans (whether or not subject to ERISA and
whether or not qualified under section 401(a) of
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the Code), all employer contributions (including any contributions to any trust
account or payments due under any life insurance policy) previously declared or
otherwise required by law or contract to have been made have been paid and all
employer contributions (including any contributions to any trust account or
payments due under any life insurance policy) accrued have been paid as required
by law or contract. No Prohibited Transaction that has not been corrected has
occurred with respect to any Plan.
Section 4.21.2. None of CXI, any Subsidiary or any member of their
"controlled group," as defined in section 4001(a)(14) of ERISA, has incurred any
termination or withdrawal liability under Title IV of ERISA.
Section 4.21.3. Neither CXI nor any Subsidiary has ever contributed to
any "multiemployer plan," as defined in section 414(f) of the Code or section
3(37) of ERISA. No Plan has incurred any accumulated funding deficiency, as
defined in section 412 of the Code and section 302 of ERISA.
Section 4.21.4. None of CXI, any Subsidiary or any member of their
"controlled group" has (i) failed to make a required installment under section
302(e) of ERISA or (ii) been required to provide security to any employee
benefit plan or the Pension Benefit Guaranty Corporation under section 306 or
307 of ERISA.
Section 4.21.5. There are no actions, suits or claims pending (other
than routine claims for benefits) or overtly threatened against a Plan or the
assets of any Plan.
Section 4.21.6. No Plan that is an "employee welfare benefit plan," as
defined in section 3(1) of ERISA, provides employer-paid benefits to retirees or
former employees, except for continuation coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended.
Section 4.21.7. Except as set forth on Schedule 4.21.7, none of CXI or
the Subsidiaries is obligated to pay any severance benefits to any employee
whose employment may be terminated on or after December 31, 1998.
Section 4.22. Computer Programs and Software; Year 2000 Compliance.
Section 4.22.1. CXI and its Subsidiaries own or hold under valid
license agreements all Software. Neither CXI nor any of the Subsidiaries has
licensed anyone to use any of the Software and neither CXI nor any of the
Subsidiaries has knowledge of any infringing use of the Software or claim of
infringing use. The Software is sufficient for the conduct of the business of
CXI and its Subsidiaries as now operated.
Section 4.22.2. CXI and its Subsidiaries have reviewed the areas
within their business and operations, and have developed or are developing a
program to ensure, on a timely basis, that the Software, if containing or
calling on a calendar function including, without limitation, any function
indexed to the CPU clock, and any function providing specific dates or days or
calculating spans of dates or days will, (i) record,
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store, process, calculate, present and, where appropriate, insert time and
accurate dates and calculations for calendar dates falling on or after (and, if
applicable, spans of time including) January 1, 2000, (ii) record, store,
process, calculate and present any information and/or data dependent on or
relating to such dates in the same manner, and with the same functionality, data
integrity and performance, as the Software records, stores, processes,
calculates and presents calendar dates on or before December 31, 1999, and in
such fashion as to respond to two-digit date input in a way that eliminates all
ambiguities as to the century of concern, and treats the year 2000 as a
leap-year and correctly and accurately regards and processes data and
information with respect thereto, and (iii) lose no functionality with respect
to the introduction of records, including but not limiting to back-up and
archived information and/or data, containing dates falling on or after January
1, 2000. Based upon such review and program, CXI has no reason to believe that
the "Year 2000 Problem" will have a Material Adverse Effect.
Section 4.23. Brokers. Except as set forth on Schedule 4.23, none of
the Stockholders, CXI or its Subsidiaries has paid or become obligated to pay
any fee or commission of any broker, finder or intermediary for or on account of
the Merger.
Section 4.24. [Omitted Intentionally].
Section 4.25. Business Locations. As of the date hereof, neither CXI
nor any Subsidiary has any office or place of business other than as identified
on Schedules 3.7.1 and 3.7.2. CXI's and each Subsidiary's principal place of
business and their chief executive offices are indicated on Schedule 4.25, and
all locations where CXI's and each Subsidiary's equipment, inventory, chattel
paper and books and records are located as of the date hereof are fully
identified on Schedules 4.7.1 and 4.7.2.
Section 4.26. Names; Prior Acquisitions. All names under which CXI and
its Subsidiaries do business as of the date hereof are identified on Schedule
4.26. Except as set forth on Schedule 4.26, neither CXI nor any Subsidiary has
changed its name or used any assumed or fictitious name, or been the surviving
entity in a merger, acquired any business or changed its principal place of
business or chief executive office within three years.
Section 4.27. Accuracy of Information Furnished by CXI. Neither any
representation or warranty in this Article IV contains, nor any certificate to
be delivered pursuant to this Merger Agreement, when taken together with such
representations and warranties, shall contain when delivered, any untrue
statement of a material fact or omits or shall omit any material fact necessary
to make the information contained therein, in light of the circumstances under
which they were made, not misleading.
Section 4.28. Franchising. Neither CXI nor any of the Subsidiaries is a
franchisor in any franchising relationship or has any franchisees (as such terms
are defined under federal laws, rules or regulations or the laws, rules or
regulations of any state). If and to the extent any activities of CXI or any
Subsidiary may have constituted the offering of a franchise, CXI and the
Subsidiaries have fully complied with all applicable laws, rules and regulations
with respect thereto, including any registration requirements of any state or
other jurisdiction.
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ARTICLE V
CONDITIONS TO CLOSINGS
----------------------
In addition to any conditions set forth in Section 2.8 hereof, the
obligation of CXI to proceed to consummate the Merger shall be subject to the
fulfillment at or prior to the Closing Date, of each of the following
conditions:
Section 5.1. Financing. CXI shall have obtained the proceeds of the
Financing.
Section 5.2. Accuracy of Representations and Warranties and Compliance
with Obligations. The representations and warranties of GEI and the Stockholders
contained in this Merger Agreement shall have been true and correct at and as of
the date hereof, and they shall be true and correct at and as of the Closing
Date, with the same force and effect as though made at and as of that time. GEI
and the Stockholders shall have performed and complied in all material respects,
and as to the covenants set forth in Section 7.2 in all respects, with all of
their respective obligations required by this Merger Agreement to be performed
or complied with at or prior to the Closing Date. GEI shall have delivered to
CXI a certificate, dated the Closing Date and signed by its President,
certifying that such representations and warranties were true and correct at and
as of the date hereof, and are true and correct at and as of the Closing Date,
with the same force and effect as though made at and as of that time, and that
all such obligations have been thus performed and complied with.
Section 5.3. No Material Adverse Changes or Destruction of Property.
Between the date hereof and the Closing Date (i) there shall have been no
material adverse change in the condition, financial or otherwise, of GEI and the
Subsidiaries, (ii) there shall have been no adverse federal, state or local
legislative or regulatory change affecting in any material respect the services,
products or business of GEI and the Subsidiaries, and (iii) none of the
properties and assets of GEI or the Subsidiaries shall have been damaged by
fire, flood, casualty, act of God or the public enemy or other cause, regardless
of insurance coverage for such damage, that may have a Material Adverse Effect;
and there shall have been delivered to CXI a certificate to that effect, dated
the Closing Date and signed on behalf of GEI by its President.
Section 5.4. No Adverse Litigation. No action, suit, investigation or
proceeding shall have been instituted by or before any court or other
governmental body that shall seek to restrain, prohibit, invalidate or collect
damages arising out of the Merger or any other transaction contemplated hereby,
or that might affect the right of GEI and the Subsidiaries to own the Assets,
and that, in the reasonable judgment of CXI, makes it inadvisable to proceed
with the Merger.
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Section 5.5. Consent of Board of Directors. The board of directors of
CXI shall have approved the Merger.
Section 5.6. Corporate Action. GEI and the Stockholders shall have
taken all corporate action necessary to effect the Merger, and GEI shall have
furnished CXI with certified copies of resolutions duly adopted by GEI's
stockholders and directors, in form and substance satisfactory to counsel for
CXI, in connection with the foregoing.
Section 5.7. Corporate Certificates. GEI and the Stockholders shall
have delivered to CXI (a) true, correct and complete copies of the certificate
of incorporation and bylaws of GEI and the correlative documents of each
Subsidiary, as in effect immediately prior to the Closing and (b) a certificate
of good standing of GEI and each Subsidiary issued by the appropriate officer of
each state in which GEI and such Subsidiaries are formed and each state in which
GEI and such Subsidiaries are qualified to do business, in each case dated as of
a reasonably recent date.
Section 5.8. Contract and Lease Consents. GEI or its Subsidiaries, as
the case may be, shall have received consents to the Merger and waivers of
rights to terminate or modify any material rights or obligations of GEI or its
Subsidiaries, as the case may be, from any person from whom such consent or
waiver is required under any material instrument or agreement, or who, as a
result of the Merger, would have such rights to terminate or modify such
instruments or agreements, either by the terms of any contract or agreement, or
as a matter of law.
Section 5.9 Securities Laws. CXI shall have received all necessary
consents and approvals from the American Stock Exchange, permits and otherwise
complied with any state Blue Sky, securities, tender offer or take-over laws
applicable to the issuance of shares of Common Stock in connection with the
Merger. CXI agrees to use its best efforts promptly to accomplish the foregoing.
Section 5.10. Opinion of Counsel. GEI and the Stockholders shall have
delivered to CXI and Merger Sub an opinion, dated the Closing Date and in form
reasonably acceptable to CXI, from Hills & Xxxxx, outside counsel for GEI and
the Stockholders (or such other counsel reasonably acceptable to CXI), as to the
matters that have been agreed with counsel for CXI as of the date hereof.
Section 5.11. Escrow Agreement. Escrow Agent shall have executed and
delivered the Escrow Agreement.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF GEI AND THE STOCKHOLDERS
-----------------------------------------------------
The obligations of GEI and the Stockholders to consummate the Merger
shall be subject to the fulfillment at or prior to the Closing Date of the
following conditions:
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Section 6.1. Accuracy of Representations and Warranties and Compliance
with Obligations. The representations and warranties of CXI and Merger Sub
contained in this Merger Agreement shall have been true and correct at and as of
the date hereof, and they shall be true and correct at and as of the Closing
Date with the same force and effect as though made at and as of that time. CXI
and Merger Sub shall have performed and complied in all material respects with
all of their obligations required by this Merger Agreement to be performed or
complied with at or prior to the Closing Date. Each of CXI and Merger Sub shall
have delivered to GEI a certificate, dated as of the Closing Date and signed by
one of its senior officers, certifying that such representations and warranties
were true and correct at and as of the date hereof, and are true and correct at
and as of the Closing Date with the same force and effect as though made at and
as of that time, and that all such obligations have been thus performed and
complied with.
Section 6.2. Corporate Action. CXI and Merger Sub shall have taken all
action necessary to effect the Merger and CXI shall have furnished GEI with
certified copies of resolutions duly adopted by CXI's and Merger Sub's
stockholders and directors, in form and substance satisfactory to counsel for
GEI, in connection with the foregoing.
Section 6.3. Corporate Certificates. CXI and Merger Sub shall have
delivered to GEI (a) true, correct and complete copies of the certificate of
incorporation and bylaws of CXI and Merger Sub as in effect immediately prior to
the Closing and (b) a certificate of good standing of CXI and Merger Sub issued
by the Department of State of the State of Delaware, in each case dated as of a
reasonably recent date.
Section 6.4. Opinion of Counsel. CXI and Merger Sub shall have
delivered to the Stockholders an opinion, dated the Closing Date and in form
reasonably acceptable to the Stockholders, from Sable, Pusateri, Xxxxx, Xxxxxx &
Xxxxx, LLC, and/or Xxxxxxxxx Traurig, counsel for CXI and Merger Sub, as to the
matters that have been agreed with counsel for GEI and the Stockholders as of
the date hereof.
Section 6.5. No Material Adverse Changes or Destruction of Property.
Between the date hereof and the Closing Date and except for the fact that CXI's
auditors qualified CXI's financial statement for the period ending December 31,
1998, with a "going concern" limitation, (i) there shall have been no material
adverse change in the condition, financial or otherwise, of CXI and the
Subsidiaries, (ii) there shall have been no adverse federal, state or local
legislative or regulatory change affecting in any material respect the services,
products or business of CXI and the Subsidiaries, and (iii) none of the
properties and assets of CXI or the Subsidiaries shall have been damaged by
fire, flood, casualty, act of God or the public enemy or other cause, regardless
of insurance coverage for such damage, that may have a Material Adverse Effect;
and there shall have been delivered to GEI a certificate to that effect, dated
the Closing Date and signed on behalf of CXI by its President.
Section 6.6. Registration Rights Agreement. CXI shall have executed and
delivered the Registration Rights Agreement.
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ARTICLE VII
PRE-CLOSING COVENANTS
---------------------
Section 7.1. Best Efforts--GEI and Stockholders. GEI and the
Stockholders will use their best efforts to cause to be satisfied as soon as
practicable and prior to the Closing Date all of the conditions set forth in
Article VI (including assisting CXI to obtain the Financing) to the obligation
of CXI and Merger Sub to proceed with the Merger.
Section 7.1.1. Without in any way intending to limit the generality of
Section 7.1 above, Xx. XxXxxxxxx and Xx. Xxxxxxx will use their individual best
efforts and will expend a reasonable amount of their personal time to assist CXI
in obtaining the Financing.
Section 7.2. Conduct of Business pending the Closing. From and after
the execution and delivery of this Merger Agreement and until the Closing Date,
except as otherwise provided by the prior written consent of CXI:
Section 7.2.1. GEI and the Stockholders will cause GEI and its
Subsidiaries to conduct its and their respective businesses and operations in
the ordinary course of business consistent with past practices and GEI will use
its best efforts to and will cause the Subsidiaries to use their best efforts to
(i) preserve its and their respective business organizations intact; (ii) keep
available to GEI and the Subsidiaries the services of their officers, agents and
distributors and, consistent with past practice, their employees; (iii) pursue
all power generation and development projects exclusively through GEI; and (iv)
preserve its and their relationships with landlords and, in a manner consistent
with past practices, with customers, suppliers, lenders and others having
dealings with them.
Section 7.2.2. GEI will and will cause its Subsidiaries to
maintain all of its and their respective properties in good repair, order and
condition, reasonable wear and use and damage by unavoidable casualty excepted,
and will, and will cause such Subsidiaries to maintain insurance of such types
and in such amounts upon all of their respective properties and with respect to
the conduct of their businesses as are in effect on the date of this Merger
Agreement.
Section 7.2.3. GEI will not (i) authorize or issue any Capital
Stock or grant any option, warrant, or other right to acquire same; (ii) declare
or pay any dividend or make any distribution on or with respect to its Capital
Stock or purchase or redeem any of its Capital Stock; (iii) pay any bonus that
exceeds $10,000 as to any one employee or $20,000 as to all employees in the
aggregate or increase the rate of compensation of any of its employees other
than in the ordinary course of business consistent with past practice or enter
into any employment agreement or amend any existing employment agreement; (iv)
sell or transfer any of its assets other than in the ordinary course of
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business or grant any liens thereon; (v) make or obligate itself to make capital
expenditures aggregating more than $5,000 in any period of 30 days or, in any
case, for use other than in its business as currently conducted; (vi) make any
payment in respect of its liabilities other than scheduled payments of principal
and/or interest, as set forth on Schedule 3.5, or otherwise than in the ordinary
course of business and as authorized by this Merger Agreement; (vii) incur any
obligations or liabilities or enter into any transaction other than in the
ordinary course of business consistent with past practice; (viii) amend its
certificate of incorporation or bylaws; (ix) waive any right of value; (x) enter
into any material amendment to any Lease or enter into any new lease of real
property; (xi) incur any indebtedness (other than to trade creditors); (xii)
permit the aggregate senior and subordinated debt (including current portions)
of GEI and its Subsidiaries as of the Closing Date (the "DEBT") to exceed the
aggregate amount of the Notes Payable reflected on the Schedule of accounts
payable referred to in Section 3.5 hereof; (xiii) make or adopt any change in
its accounting practice or policies; (xiv) make any adjustment to its books and
records other than in respect of the conduct of its business activities in the
ordinary course during the period from the date hereof; or (xv) make any loan or
advance other than advances to employees in the ordinary course of business that
exceeds $1,000 in the aggregate as to all employees.
Section 7.3. Access to Properties and Records. From and after the
execution and delivery of this Merger Agreement, GEI will afford and will cause
the Subsidiaries to afford to representatives of CXI access, during normal
business hours and upon reasonable notice, to their respective premises
sufficient to enable CXI to inspect the Assets or the operation of their
businesses, and GEI will furnish to such representatives during such period all
such information relating to the foregoing investigation as CXI may reasonably
request; provided, however, that any furnishing of such information to CXI and
any investigation by CXI, whether prior to or subsequent to the date hereof,
shall not affect the right of CXI to rely on the representations and warranties
made by GEI and the Stockholders in this Merger Agreement.
Section 7.4. No Other Discussions. From the date hereof until October
31, 1999 (the "TERMINATION DATE"), GEI, the Stockholders and their respective
affiliates, employees, agents or representatives, either alone or together,
except as hereinafter provided, (i) will not initiate or encourage the
initiation by others of discussions or negotiations with third parties or
respond to (other than to decline interest in) solicitations by third parties
relating to any merger, sale or other disposition of any substantial part of the
Capital Stock or Assets of GEI, (ii) will immediately notify CXI if any third
party attempts to initiate any such solicitation, discussion or negotiation with
any of their affiliates, employees, agents or representatives, and (iii) will
not enter into any agreement with respect thereto with any third party. Xxxxxxxx
Proceeds realized from the sell down of any of GEI's existing power development
projects in emerging foreign markets may not be used for distributions to any
Stockholder except (i) in the ordinary course of business and (ii) in accordance
with Section 7.2.3 (vi).
Section 7.5. Retention of Capital Stock. Except for (i) transfer to the
immediate family member of a Stockholder or (ii) transfer to an intervivos trust
for the benefit of an
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immediate family member of a Stockholder, as authorized by GEI's Stockholders'
Agreement, (the "PERMITTED TRANSFERS"), the Stockholders will not, prior to the
Closing Date, sell, assign, transfer, pledge, encumber, suffer any Lien with
respect thereto or otherwise dispose of any of GEI's Capital Stock (or any
interest therein) nor grant any options or similar rights with respect to any of
such Capital Stock. Provided, however, that, prior to the Closing, the
transferees of any Permitted Transfer shall be prohibited from making any
further transfer of the subject Capital Stock, except upon approval of the
directors of the Surviving Corporation.
Section 7.6. Best Efforts--CXI. CXI will use its best efforts to cause
to be satisfied as soon as practicable and prior to the Closing Date all of the
conditions set forth in Article VI (including obtaining the Financing) to the
obligation of GEI and the Stockholders to proceed with the Merger. All
out-of-pocket expenses incurred by the Stockholders in connection with obtaining
the Financing will be paid for and promptly reimbursed by CXI.
Section 7.7. Approval of CXI Board of Directors. CXI promptly will
submit this Merger Agreement and the Merger to its Board of Directors in
accordance with applicable provisions of the DGCL. In the event that CXI's Board
of Directors fails to approve this Merger Agreement and the Merger within a
reasonable period of time, not to exceed thirty (30) days, following the
execution and delivery of this Merger Agreement, then at the option of CXI or
GEI, this Merger Agreement shall terminate whereupon no party hereto shall have
any liability to any other party hereto. In the event that CXI's Board of
Directors approves this Merger Agreement, CXI will promptly begin to prepare and
will pursue diligently to completion a proxy statement for a meeting of its
stockholders to be held as soon as is reasonably practicable following such
approval for purposes of obtaining the approval of such stockholders of the
Merger. At the meeting of CXI's stockholders CXI's Board of Directors shall
recommend approval of the Merger Agreement and the Merger to the stockholders.
Section 7.8. Additional Information. At any time prior to the Closing,
CXI will provide GEI and the Stockholders the opportunity to ask questions of,
and receive answers from CXI, and its officers concerning CXI and to make
available to GEI and the Stockholders at its corporate headquarters during
regular business hours such information reasonably requested by GEI or the
Stockholders which concerns CXI.
Section 7. 9. GEI Audits. At CXI's cost and expense, GEI has prepared
audited financial statements for GEI's two most recent fiscal years.
Section 7.10. Approval of GEI Stockholders. GEI will promptly submit
this Merger Agreement and the Merger to the Stockholders and its directors in
accordance with applicable provisions of the DGCL. In the event GEI's
Stockholder or directors fail to approve this Merger Agreement and the Merger
within a reasonable period of time, not to exceed thirty (30) days following the
execution and delivery of this Merger Agreement, then at the option of CXI or
GEI, this Merger Agreement will terminate whereupon no party hereto shall have
any liability to any other party.
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Section 7.11. Termination. If, between the execution date of this
Merger Agreement and October 31, 1999, in CXI's sole discretion, it becomes
apparent that, despite CXI's best efforts, the Financing becomes impossible or
impracticable, CXI may terminate this Merger Agreement.
Section 7.12. Conversion of GEI Warrants and Options. On or before the
Closing Date, the GEI Warrant Holders shall exercise their warrants or their
options, all of which are shown on Schedule 3.3 hereof. In the case of The
Xxxxxxxx Group it shall pay for its GEI shares or in the case of Messrs. Xxxxx
and Xxxxxx, they shall convert their debt into shares of common stock of GEI,
whereupon such common stock will be converted into its allocable share of CXI
Common Stock in accordance with Section 2.9 hereof.
ARTICLE VIII
POST-CLOSING COVENANTS
----------------------
Section 8.1. Execution of Further Documents. From and after the
Closing, upon the reasonable request of CXI, GEI and the Stockholders shall
execute, acknowledge and deliver all such further acts, deeds, bills of sale,
assignments, transfers, conveyances, powers of attorney and assurances as may be
requested to convey and transfer to and vest in CXI and protect its right, title
and interest in all of the GEI Capital Stock and its Assets, and as may be
required or otherwise appropriate to carry out the Merger.
Section 8.2. Management of CXI, GEI and Affiliated Entities. Following
the Closing, CXI will (i) adopt a resolution to expand the number of directors
on its Board of Directors to nine (9) in total and Xx. XxXxxxxxx and Xx. Xxxxxxx
will be elected to CXI's Board of Directors, (ii) form a nominating committee to
make recommendations for the united companies' boards of directors, (iii) elect
Xx. XxXxxxxxx as Chairman of the Board and Chief Executive Officer of CXI, and
(iv) elect Xx. Xxxxxxx as Vice-Chairman of CXI and President of the Surviving
Corporation.
Section 8.3. GEI Business Plan. Following the Closing, GEI will limit
its business to development of power generation projects in emerging foreign
markets. GEI's business plans relating to, inter alia, (i) the acquisition
and/or management of domestic nuclear power plants, (ii) the purchase of fuel
stock for conversion to commercial sale and use; (iii) funding for gas-turbine
high temperature gas-cooled reactor and (iv) the business expressed by the
hypothetical company "NUGENCO", shall be pursued and commercialized through
CXI's anticipated subsidiary, Commodore Global Energy, LLC. or another CXI
subsidiary. GEI will take all steps reasonably necessary to transfer any rights
that it has to pursue and commercialize the aforementioned businesses to CXI or
its subsidiaries.
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ARTICLE IX
INDEMNIFICATION
---------------
Section 9.1. Agreement by the Stockholders to Indemnify. The
Stockholders, in proportion to their ownership of GEI severally shall, subject
to the terms and conditions of this Article IX, indemnify and hold CXI harmless
in respect of the aggregate of all Indemnifiable Damages CXI.
Section 9.1.1. Definition of "Indemnifiable Damages." "INDEMNIFIABLE
DAMAGES" when used with reference to CXI means, without duplication, the
aggregate of all expenses, losses, costs, deficiencies, liabilities and damages
(including reasonable related counsel and paralegal fees and expenses) incurred
or suffered by GEI or CXI net of any economic benefit to the extent (i)
resulting from any breach of a representation or warranty (whether or not so
captioned) of the Stockholders in or pursuant to Article III or elsewhere
herein; (ii) resulting from any breach of the covenants or agreements (whether
or not so captioned) of GEI or the Stockholders in this Merger Agreement; or
(iii) resulting from any inaccuracy in any certificate delivered pursuant to
Section 5.2.
Section 9.1.2. Without limiting the generality of the foregoing, with
respect to the measurement of Indemnifiable Damages, CXI shall have the right to
be put in the same after-tax financial position as they would have been in had
each of the representations and warranties of GEI and the Stockholders been true
and complete and had each of the covenants of GEI and the Stockholders been
performed in full.
Section 9.1.3. Each of the representations and warranties made by GEI
or the Stockholders in this Merger Agreement or pursuant hereto shall survive
for a period of 24 months after the Closing Date, notwithstanding any
investigation at any time made by or on behalf of CXI, and upon the expiration
of such 24 month period such representations and warranties shall expire except
as follows: (i) the representations and warranties of GEI and the Stockholders
contained in Sections 3.6 and 3.21 shall expire at the time the period of
limitations (including any extensions thereof pursuant to the delivery of
waivers of the applicable period of limitations) expires for the assessment by
the taxing authority of additional taxes with respect to which the
representations and warranties relate; (ii) the representations and warranties
of GEI and the Stockholders contained in Sections 3.18, 3.19 and 3.28 shall
expire at the time the latest period of limitations expires for the enforcement
by an applicable governmental authority of any remedy with respect to which the
particular representation or warranty relates; and (iii) the representations and
warranties of GEI and the Stockholders contained in Sections 3.1, 3.2, 3.3 and
3.8.1 shall not expire, but shall continue indefinitely. No claim for the
recovery of Indemnifiable Damages may be asserted by the Surviving Corporation
or CXI against the Stockholders or their successors in interest after such
representations and warranties shall thus expire; provided, however, that claims
for Indemnifiable Damages first asserted in writing within the applicable period
shall not thereafter be barred.
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Section 9.1.4. Notwithstanding the foregoing, CXI shall not be entitled
to recover Indemnifiable Damages arising out of breaches of representations or
warranties, other than Indemnifiable Damages resulting from a breach of the
representations and warranties in Sections 3.1, 3.2, and 3.3 ("DEDUCTIBLE EXEMPT
DAMAGES"), unless the aggregate of Indemnifiable Damages other than Deductible
Exempt Damages ("DEDUCTIBLE SUBJECT DAMAGES") exceeds $25,000 but GEI and CXI
shall be entitled to recover all Deductible Subject Damages if and at such time
as the aggregate Deductible Subject Damages exceed $25,000. The rights of GEI
and CXI to recover Deductible Exempt Damages shall not be affected by the
preceding sentence.
Section 9.1.5. The Stockholders shall have the responsibility for, and
the right to control at the Stockholders' expense, the audit (and disposition
thereof ) of any tax return relating to periods ended on or prior to the Closing
Date and to participate in and approve the disposition of the audit of any tax
return relating to the periods ended after the Closing Date if such audit or
disposition thereof could give rise to a claim for indemnification hereunder.
CXI shall have the right, directly or through its designated representatives, to
review in advance and comment upon all submissions made in the course of audits
or appeals thereof to any taxing authority relating to periods ending on or
prior to the Closing Date and to approve the disposition of any audit adjustment
with respect to such periods if such disposition will result in an increase in
the federal tax liability of CXI, GEI or any Subsidiary for any period beginning
after the Closing Date.
Section 9.2. Agreement by CXI to Indemnify. CXI shall indemnify and hold
harmless the Stockholders in respect of all Losses of the Stockholders. For this
purpose, "LOSSES OF THE STOCKHOLDERS" means, without duplication, the aggregate
of all expenses, losses, costs, deficiencies, liabilities and damages (including
reasonable related counsel and paralegal fees and expenses) incurred or suffered
by the Stockholders, (i) resulting from any breach of a representation or
warranty (whether or not so captioned) of CXI contained in Article IV or
elsewhere herein; (ii) resulting from any default in the performance of any of
the covenants or agreements (whether or not so captioned) of CXI in this Merger
Agreement; or (iii) resulting from any inaccuracy in any certificate delivered
pursuant to Section 6.1.
Section 9.2.1. Definition of "Indemnifiable Damages." "INDEMNIFIABLE
DAMAGES" when used with reference to the Stockholders means, without
duplication, the aggregate of all expenses, losses, costs, deficiencies,
liabilities and damages (including reasonable related counsel and paralegal fees
and expenses) incurred or suffered by Stockholders net of any economic benefit
to the extent (i) resulting from any breach of a representation or warranty
(whether or not so captioned) of CXI or Merger Sub in or pursuant to Article IV
or elsewhere herein; (ii) resulting from any breach of the covenants or
agreements (whether or not so captioned) of CXI or Merger Sub in this Merger
Agreement; or (iii) resulting from any inaccuracy in any certificate delivered
pursuant to Section 6.1.
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Section 9.2.2. Without limiting the generality of the foregoing, with
respect to the measurement of Indemnifiable Damages, Stockholders shall have the
right to be put in the same after-tax financial position as they would have been
in had each of the representations and warranties of CXI been true and complete
and had each of the covenants of CXI been performed in full.
Section 9.2.3. Each of the representations and warranties made by CXI
in this Merger Agreement or pursuant hereto shall survive for a period of
24months after the Closing Date, notwithstanding any investigation at any time
made by or on behalf of Stockholders, and upon the expiration of such 24 month
period such representations and warranties shall expire except as follows: (i)
the representations and warranties of CXI contained in Sections 4.6 and 4.21
shall expire at the time the period of limitations (including any extensions
thereof pursuant to the delivery of waivers of the applicable period of
limitations) expires for the assessment by the taxing authority of additional
taxes with respect to which the representations and warranties relate; (ii) the
representations and warranties of CXI contained in Sections 4.18, 4.19 and 4.28
shall expire at the time the latest period of limitations expires for the
enforcement by an applicable governmental authority of any remedy with respect
to which the particular representation or warranty relates; and (iii) the
representations and warranties of CXI contained in Sections 4.1, 4.2, 4.3 and
3.8.1 shall not expire, but shall continue indefinitely. No claim for the
recovery of Indemnifiable Damages may be asserted by Stockholders against CXI,
the Surviving Corporation or their successors in interest after such
representations and warranties shall thus expire; provided, however, that claims
for Indemnifiable Damages first asserted in writing within the applicable period
shall not thereafter be barred.
ARTICLE X
TERMINATION
-----------
Section 10.1. Termination.
Section 10.1.1. Anything to the contrary herein
notwithstanding, this Merger Agreement may be terminated and the Merger may be
abandoned:
(a) by the mutual written consent of GEI, the Stockholders,
CXI and Merger Sub at any time prior to the Closing Date;
(b) by CXI or GEI at any time prior to the Closing Date if
there shall be a pending or threatened action or proceeding by or before any
court or other governmental body which shall seek to restrain, prohibit or
invalidate the Merger or any other transaction contemplated hereby, or which
might affect the right of GEI to conduct its business following the Closing, or
if the Merger will violate any rule of the American Stock Exchange, and which,
in the reasonable judgment of CXI or GEI, makes it inadvisable to proceed with
the Merger;
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(c) by CXI in the event of the material breach by GEI or the
Stockholders of any provision of this Merger Agreement, or by GEI in the event
of the material breach by CXI of any provision of this Merger Agreement, which
breach in either case is not remedied by the breaching party within 30 days
after receipt of notice thereof from the terminating party; or
(d) by CXI if its stockholders fail to approve the Merger; or
(e) by CXI if the SEC or American Stock Exchange communicates
to CXI that completion of the Merger would violate one or more federal
securities laws or statutes or one or more rules and/or regulations promulgated
by the SEC or the American Stock Exchange.
If this Merger Agreement is terminated pursuant to
clause (a) or (b) of this Section 10.1.1, no party shall have any liability for
any costs, expenses, loss of anticipated profit or any further obligation for
breach of warranty or otherwise to any other party to this Merger Agreement. Any
termination of this Merger Agreement pursuant to clause (c) of this paragraph
10.1.1 shall be without prejudice to any other rights or remedies of the
respective parties. If this Merger Agreement is terminated pursuant to clause
(d) of this Section 10.1.1, CXI shall promptly pay to GEI the sum of Fifty
Thousand Dollars ($50,000) and shall grant to GEI warrants ("BREAK-UP WARRANTS")
to acquire up to Five Hundred Thousand (500,000) shares of CXI Common Stock at
an exercise price equal to One Hundred Ten Percent (110%) of the closing price
for CXI Common Stock on the date of the stockholder vote to approve the Merger.
The Break-up Warrants shall expire on the second anniversary of their issuance.
The Break-up Warrants or a corresponding registration rights agreement shall (i)
provide that as soon as practicable following receipt by CXI of its audited
financial statements for the fiscal year in which the Merger Agreement is
terminated pursuant to clause (d) of this Section 10.1.1, CXI shall register on
a short form registration statement under the Securities Act of 1933, as
amended, Five Hundred Thousand (500,000) shares of CXI Common Stock issuable to
GEI pursuant to the Break-up Warrants and (ii) shall contain such other terms
and conditions as are customary included in warrants and corresponding
registration rights agreements of this type.
Section 10.1.2. The risk of any loss to GEI's Assets and all
liability with respect to injury and damage occurring in connection therewith
shall be the sole responsibility of GEI and the Stockholders until the
completion of the Closing. If any material part of such Assets shall be damaged
by fire or other casualty prior to the completion of the Closing hereunder, GEI
and the Stockholders shall so notify CXI and CXI shall have the right and
option:
(a) to terminate this Merger Agreement, without liability to
any party thereto; or
(b) to proceed with the Closing hereunder, in which event such
casualty shall not constitute a breach by GEI or the Stockholders of any
representation, warranty
44
45
or covenant in this Merger Agreement, and CXI and GEI shall be entitled to
receive and retain the insurance proceeds arising from such casualty.
Section 10.1.3. This Merger Agreement may be terminated by CXI
or by GEI and the Stockholders upon written notice to all other parties hereto,
without liability for any costs, expenses, loss of anticipated profit or any
further obligation for breach of warranty or otherwise to any party to this
Merger Agreement, if the Closing does not occur as a result of the inability of
CXI to obtain the Financing.
ARTICLE XI
MISCELLANY
----------
Section 11.1. Amendment and Modification. The parties hereto may amend,
modify and supplement this Merger Agreement in such manner as may be agreed upon
by them in writing.
Section 11.2. Investment Representations. Each party hereto expressly
represents and warrants to all other parties hereto that (a) before executing
this Merger Agreement, said party has fully informed itself or himself of the
terms, contents, conditions and effects of this Merger Agreement; (b) said party
has relied solely and completely upon its or his own judgment in executing this
Merger Agreement; (c) said party has had the opportunity to seek and has
obtained the advice of counsel before executing this Merger Agreement; (d) said
party has acted voluntarily and of its or his own free will in executing this
Merger Agreement; (e) said party is not acting under duress, whether economic or
physical, in executing this Merger Agreement; and (f) this Merger Agreement is
the result of arm's-length negotiations conducted by and among the parties and
their counsel.
Section 11.3. Binding Effect. This Merger Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
Section 11.4. Entire Agreement. This Merger Agreement, including the
exhibits and schedules, contains the entire agreement of the parties hereto with
respect to the Merger, and supersedes all prior understandings and agreements
(oral or written), including without limitation the Prior Agreement, of the
parties with respect to the subject matter hereof. The parties expressly
represent and warrant that in entering into this Merger Agreement they are not
relying on any prior representations made by any other party concerning the
terms, conditions or effects of this Merger Agreement which terms, conditions or
effects are not expressly set forth herein. Any reference herein to this Merger
Agreement shall be deemed to include the schedules and exhibits.
Section 11.5. Interpretation. When a reference is made in this Merger
Agreement to an article, section, paragraph, clause, schedule or exhibit, such
reference shall be to an article, section, paragraph, clause, schedule or
exhibit of this Merger Agreement unless otherwise indicated. The headings
contained herein and on the
45
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schedules are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Merger Agreement or the schedules or exhibits.
References to pronouns shall be deemed to include the masculine, feminine and
neuter versions thereof. Time shall be of the essence in this Merger Agreement.
Section 11.6. Execution in Counterparts. This Merger Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
Section 11.7. Notices. Any notice, consent, approval, request,
acknowledgment, other communications or information to be given or made
hereunder to any of the parties by any other party shall be in writing and
delivered personally or sent by express delivery service or certified mail,
postage prepaid, as follows:
If to GEI or the Stockholders, addressed to:
Global Energy Investors, Inc.
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. XxXxxxxxx and Xxxxxx Xxxxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
with a copy to:
Xxxxxx X. Xxxxx
0000 00xx Xxxxxx XX, Xxxxx 000
Xxxxxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
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If to CXI, addressed to:
Commodore Applied Technologies, Inc.
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. XxXxxxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
with a copy to:
Xxxxx X. Xxxxx
Sable, Pusateri, Xxxxx, Xxxxxx & Xxxxx, LLC
Xxxxxxx Xxxxx, Xxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
Any party may change the address to which notices hereunder are to be sent to it
by giving written notice of such change of address in the manner herein provided
for giving notice. Any notice delivered personally shall be deemed to have been
given on the date it is so delivered, and any notice delivered by express
delivery service or certified mail shall be deemed to have been given on the
date it is received.
Section 11.8. Governing Law. This Merger Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed therein.
Section 11.9. Confidentiality; Publicity. Without the prior written
consent of CXI, which consent will not be unreasonably withheld, GEI and the
Stockholders will not, prior to the Closing Date, disclose the existence of or
any term or condition of this Merger Agreement to any person or entity, except
that such disclosure may be made to any lender to or other person in a business
relationship with GEI to whom such disclosure is necessary in order to satisfy
any of the conditions to the consummation of the Merger that are set forth in
this Merger Agreement. No press release or other public announcement related to
this Merger Agreement or the Merger will be issued by GEI or any of its
affiliates without the prior approval of CXI. No press release or other public
announcement related to this Merger Agreement or the Merger will be issued by
CXI without the prior approval of GEI and the Stockholders, except that CXI may
make such public disclosure which it believes in good faith to be required by
law or by the terms of any listing Merger Agreement with a securities exchange
(in which case CXI will consult with GEI and the Stockholders prior to making
such disclosure).
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Section 11.10. Severability. If any term or other provision of this
Merger Agreement is invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this Merger
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the Merger is not affected in any manner adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Merger Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the Merger and related transactions are fulfilled to the greatest
extent possible.
Section 11.11. Assignment. Neither this Merger Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior consent of the other parties.
Section 11.12. No Third-Party Beneficiaries. This Merger Agreement
shall inure to the benefit of, be binding upon and be enforceable by and
against, the parties hereto and their respective successors, heirs, personal
representatives and permitted assigns, and nothing herein expressed or implied
shall be construed to give any other person any legal or equitable rights
hereunder.
[SIGNATURE LINES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the undersigned have caused this Merger Agreement
to be duly executed as of the day and year first above written.
COMMODORE APPLIED TECHNOLOGIES, INC.
BY: /s/ XXXX X. XXXXXXXXX
--------------------------------
OFFICER
COMMODORE GLOBAL ENERGY, INC.
BY: /s/ XXXX X. XXXXXXXXX
--------------------------------
OFFICER
GLOBAL ENERGY INVESTORS, INC.
BY: /s/ XXXXXX X. XXXXXXXXX
------------------------------
XXXXXX X. XXXXXXXXX, PRESIDENT
/s/ XXXXXX X. XXXXXXXXX
-----------------------------
XXXXXX X. XXXXXXXXX,
INDIVIDUALLY
/s/ XXXXXX X. XXXXXXX
-----------------------------
XXXXXX X. XXXXXXX,
INDIVIDUALLY
/s/ XXXXXX X. XXXXX
------------------------------
XXXXXX X. XXXXX,
INDIVIDUALLY
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/s/ XXXXX X. X'XXXXX
---------------------------
XXXXX X. X'XXXXX,
INDIVIDUALLY
THE XXXXXXXX GROUP, LLC
BY: /s/ XXXXXXX XXXXXX
---------------------------
HILLS ENTERPRISES, LTD.
BY: /s/ XXXXXX X. XXXXX
---------------------------
/s/ J. XXXXXXXX XXXXXX, III
---------------------------
J. XXXXXXXX XXXXXX, III
/s/ XXXXXXX X. XXXXX
---------------------------
XXXXXXX X. XXXXX
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Exhibit Designation
------- -----------
Escrow Agreement A
Registration Rights Agreement B
Schedule Designation
-------- -----------
Merger Consideration 2.9
GEI Schedules
-------------
GEI Subsidiaries 3.1.1
Foreign Qualifications 3.1.2
Capital Structure and Ownership of Stock (GEI) 3.3
Notes Payable and Liabilities 3.5
Tax Returns (GEI and Subs) 3.6
Owned Properties 3.7.1
Leasehold Premises 3.7.2
Exceptions to Good Repair 3.7.4
Permits 3.11
Material Contracts 3.13.1
Insurance 3.13.2
Litigation 3.14
Proscribed Activities 3.17
Compliance with Laws 3.18
Environmental Notices 3.19.3
Environmental Audits 3.19.6
Collective Bargaining Agreements 3.20
Employee Benefit Plans 3.21.1
Severance Obligations 3.21.7
Brokers 3.23
Intellectual Property 3.24
51
00
Xxxxxxxxx Xxxxx of Business 3.25
Trade Names 3.26
CXI Schedules
-------------
Capital Structure and Ownership of Stock 4.3
Liabilities 4.5
Tax Returns 4.6
Owned Properties 4.7.1
Exceptions to Good Repair 4.7.3
Licenses and Permits 4.11
Insurance 4.13.2
Litigation 4.14
Proscribed Activities 4.17
Compliance with Laws 4.18
Environmental Notices 4.19.3
Environmental Audits 4.19.6
Collective Bargaining Agreements 4.20
Employee Benefit Plans 4.21.1
Severance Obligations 4.21.7
Brokers 4.23
Principal Place of Business 4.25
Trade Names 4.26
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SCHEDULE 2.9. MERGER CONSIDERATION
----------------------------------
INITIAL MERGER ESCROW MERGER
GEI STOCKHOLDER CONSIDERATION CONSIDERATION TOTAL
--------------- ------------- ------------- -----
Xx. XxXxxxxxx 3,472,178 1,350,292 4,822,470
Xx. Xxxxxxx 2,840,873 1,104,784 3,945,657
The Xxxxxxxx Group 1,261,869 490,727 1,752,595
Xx. Xxxxx 696,901 271,017 967,918
Xx. X'Xxxxx 243,977 94,880 338,857
Hills Enterprises 124,200 48,300 172,500
Xx. Xxxxxx 180,001 70,000 250,001
Xx. Xxxxx 180,001 70,000 250,001
TOTAL 9,000,000 CXI Shares 3,500,000 CXI Shares 12,500,000 CXI Shares
SCHEDULE 3.1.1
--------------
GEI SUBSIDIARIES
----------------
SJ Investors Participacoes LTDA. 60% ownership
SCHEDULE 3.1.2
FOREIGN QUALIFICATIONS
GEI is qualified to transact business in:
(i) Delaware
(ii) District of Columbia
SJ Investors is qualified to transact business in Brazil.
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SCHEDULE 3.3
GEI CAPITAL STRUCTURE AND OWNERSHIP OF STOCK
OUTSTANDING SHARES PERCENTAGE
------------------ ----------
Xxxxxx X. XxXxxxxxx 1100 41.93
Xxxxxx X. Xxxxxxx 900 31.31
The Xxxxxxxx Group 285.716 10.89
Xxxxxx X. Xxxxx 220.781 8.42
Xxxxx X. X'Xxxxx 77.293 2.95
Hills Enterprises 39.347 1.5
Total 2623.137 100%
WARRANTS
In consideration of payment by Xxxxxxx Xxxxx of $5,000 on October 22, 1998 GEI
grants to the holder the right, exercisable up to 3 years, 2001, to purchase up
to that number of shares of the Company's common stock as equals 2% of the total
number of such shares outstanding immediately after exercise of the right. The
exercise price shall be at the rate of $47,500 per 1% of such shares.
In consideration of payment by Xxx Xxxxxxxx Xxxxxx, III of $5,000 on October 22,
1998 GEI grants to the holder the right, exercisable up to 3 years, 2001, to
purchase up to that number of common stock of the Company's shares as equals 2%
of the total number of such shares outstanding immediately after exercise of the
right. The exercise price shall be at the rate of $47,500 per 1% of such shares.
OPTIONS
The Xxxxxxxx Group
The Xxxxxxxx Group has the option, exercisable by written notice and payment of
$50,000 for each one percent of GEI's common stock purchased by December 31,
1999, to purchase common stock of the Company representing four percent of the
company's Common Stock.
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I.
SCHEDULE 3.5
NOTES PAYABLE AND LIABILITIES
GEI NOTE PAYABLES
-----------------------------------------------------------------------------
ORIGINAL DATE INTEREST
NOTE HOLDER PRINCIPAL INCURRED ACCRUED (12%)
----------- --------- -------- -------------
Xxxxxx, X. Xxxxxxxx $ 95,000.00 10/30/98 $10,450.00
Xxxxx, Xxxxxxx $ 95,000.00 10/30/98 $10,450.00
XxXxxxxxx, Xxxxxx $ 45,000.00 12/22/98 $ 4,230.00
Xxxxxxx, Xxxxxx $ 35,000.00 12/22/98 $ 3,290.00
Xxxxxxx, Xxxxxx $ 5,000.00 03/16/99 $ 330.00
Xxxxxxx, Xxxxxx $ 15,000.00 02/25/99 $ 1,085.00
Xxxxxxx, Xxxxxx $ 20,000.00 12/30/98 $ 1,800.00
Xxxxxxx, Xxxxxx $ 10,000.00 01/20/99 $ 843.33
=========== ==========
$320,000.00 $32,478.33
=========== ==========
(i) Xxxxxx Xxxxxx In consideration for services $10,000
rendered at successful financial
close of Sao Xxxxxxxx.
(ii) Songbin System International Contingent liabilities in accordance
with Consultant Agreement dated
March 18, 1998.
(iii) Loans and other agreements referred to on Schedule 3.13.1.
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(iv) Contingent Professional Fees due to Xxxxxx X. Xxxxx, Esquire and/or Hills
and Xxxxx in an amount not to exceed approximately $137,000.
Contingency Payments to Xxx Xxxxx Contingency Payments to Xxx Xxxxx
XXX XXXXX ACCOUNTS PAYABLE HILLS AND XXXXX ACCOUNTS PAYABLE
Date Legal Fees Date Legal Fees
Dec-97 $ 15,600.00 Mar-99 $12,862.50
Jan-98 $ 12,862.50 Apr-99 $12,412.50
Feb-98 $ 12,075.00 Jun-99 $16,987.50
Mar-98 $ 1,650.00 Jun-99 $ 8,887.50
Apr-98 $ 12,225.00 Jun-99 $11,662.50
===========
TOTAL $ 54,412.50 Aug-99 $ 9,637.50
===========
Aug-99 $ 1,387.50
Sep-99 $ 9,112.50
--------------------------------- ==========
MAXIMUM LIABILITY $137,362.50 TOTAL $82,950.00
==========
MINIMUM LIABILITY $ 0
---------------------------------
SCHEDULE 3.6
TAX RETURNS
No GEI tax returns have been closed by applicable statute. There are no open,
outstanding agreements or waivers with IRS or any state or local governments
with respect to any GEI tax return.
SCHEDULE 3.7.1
OWNED PROPERTIES
None.
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SCHEDULE 3.7.2
LEASEHOLD PREMISES
Office Lease dated February 19, 1996 for:
0000 X Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, XX 00000
SCHEDULE 3.7.4
EXCEPTIONS
None.
SCHEDULE 3.11
PERMITS
None.
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SCHEDULE 3.13.1
MATERIAL CONTRACTS
(LOANS, LEASES, EMPLOYMENT CONTRACTS, SUBSIDIARY DIRECTORS,
BANKS AND POWERS OF ATTORNEY)
i See attached letters from Conoco Global Power dated 10/97 and 2/98.
ii None.
iii None.
iv None.
v SJ Investors Participacoes LTDA.
vi Xxxxx National Bank of Washington, DC
000 00xx Xxxxxx, XX
Xxxxxxxxxx, XX 00000-0000
Checking account: 00-000-000
Money market account: 00-000-000
Authorized Signatures: Xxxxxx X. XxXxxxxxx, Xxxxxx X. Xxxxxxx and
Xxxxx X. Xxxxx
vii Powers of Attorney to Xx. Xxxxx Xxxxxxx- See Schedule 3.13.1
viii None
ix MOUs - See Schedule 3.13.1
SCHEDULE 3.13.1
CONTRACTUAL COMMITMENTS
Xxxxx National Bank of Washington, DC
000 00xx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
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MOUS AND XXXX
January 7, 1999 letter agreement between GEI and Xxxxxx X. Xxxxx
March 18, 1998 Consultant Agreement between GEI and
Songbin Systems International - See Schedule 3.5
January 15, 1997 Equity Joint Venture Agreement by and among GEI and Shanxi
Provincial Planning Committee, PRC, et al.
March 30 and 31, 1998 Joint Planning Memorandum by and between Shanxi Electric
Power Company and GEI, et al.
Memorandum of Agreement re Meetings of September 25 and 26, 1997 between Shanxi
Electric Power Company and GEI, et al.
Memorandum of Agreement of August 24 and 25, 1998 by and among leaders of Shanxi
Province and GEI, et al.
Memorandum of Agreement of November 13 and 14, 1997 by and among the Chinese
Project Team for the preparation phase of Zhangze-3-2-X 300 MW Power Project and
GEI, et al.
January 8, 1998 Engagement Letter with Xxxxxx Xxxx.
June 2, 1998 Proposal and Agreement between GEI and Deutsche Xxxxxx
Xxxxxxxx
October 26-30, 1998 Memorandum of Understanding by and between Shanxi Provincial
Electric Power Company and GEI
January, 1999 Memorandum of Understanding between Shanxi Provincial Electric
Power Company and GEI.
January, 1997 Memorandum of Understanding by and between Accord-Gentiga and GEI.
January 9, 1997 Letter Agreement by and among GEI, Xxxxxx Xxxxxx, Esquire
and Xxxx Xxxxxxxx
October 30, 1996 Memorandum of Understanding between Tri-Star Energy Company and
GEI.
March 20, 1996 Memorandum of Understanding by and between GEI and
Partner Business Development
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April 3, 1997 Memorandum of Understanding by and among Conpaniha Paranaense
De Energia and GEI, et al. - Copel
July 1, 1998 Professional Services Agreement between Conpaniha Paranaense
De Energia and GEI, et al. - Copel
Power of Attorney - Xxxxx Xxxxxxx (Cannot locate)
Tozzini Agreement (Cannot locate)
November 21, 1994 Articles of Incorporate for Asian Energy and Power Corporation
of the Philippines.
April 16, 1999 Memorandum of Understanding between Alarko-Altek and GEI.
May 3, 1999 Letter Agreement between GEI and Xxxxxx Xxxxxx, Esquire
SCHEDULE 3.14
LITIGATION
None.
SCHEDULE 3.17
PROSCRIBED ACTIVITIES
None.
SCHEDULE 3.19.3
ENVIRONMENTAL NOTICES
None.
SCHEDULE 3.19.6
ENVIRONMENTAL AUDITS
None.
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SCHEDULE 3.20
COLLECTIVE BARGAINING AGREEMENTS
None.
SCHEDULE 3.21
EMPLOYEE BENEFIT PLANS
Health Care Plan Blue Cross Blue Shield Capital Care, full coverage
including medical, drug, dental and vision.
SCHEDULE 3.21.7
SEVERANCE OBLIGATIONS
None.
SCHEDULE 3.23
BROKERS AND COMMISSIONS
II. Xxxxxx X. Xxxxxx, Esquire $10,000
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SCHEDULE 3.24
INTELLECTUAL PROPERTY
GEI logo
SCHEDULE 3.25
BUSINESS LOCATIONS
0000 X Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, XX 00000
SCHEDULE 3.26
TRADE NAMES
None.
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SCHEDULE 4.3
CXI CAPITAL STRUCTURE
----------------------------------------------------- -------------------------------- ---------------- -----------------
NUMBER OF EXERCISE EXPIRATION
OWNER COMMON SHARES PRICE DATE
----------------------------------------------------- -------------------------------- ---------------- -----------------
-----------------------------------------------------
COMMON STOCK
-----------------------------------------------------
Commodore Environmental Services, Inc. 9,599,098
Various 5,750,000
Various 900,000
Dimensional Fund Advisors/Capello 700,000
EDJ Limited 42,393
Xxxxxx Partners, L.P. 296,752
Okemo Partners Limited 444,202
AIG 1,429,891
Xxxxxx 899,790
ELARA 906,182
COES private placement of CAT stock 1,381,692
Various - Preferred A conversions 753,200
Dimensional Fund Advisors/Capello-Reprice 599,063
--------------------------------
TOTAL OUTSTANDING COMMON STOCK 23,702,263
================================
-----------------------------------------------------
COMMON STOCK WARRANTS (NEW SHARES)
-----------------------------------------------------
Various 5,750,000 8.40 06/28/2001
Commodore Environmental Services, Inc. 7,500,000 10.00 12/01/2003
National Securities Corp Representatives 500,000 7.20 08/01/2001
National Securities Corp Representatives 500,000 13.86 08/01/2001
Pacific Continental Securities Corp. 19,407 5.80 08/31/2002
Xxxxxxxx Capital Corp. 60,000 3.68 09/30/2002
Commodore Environmental Services, Inc. 1,000,000 5.03 08/31/2002
Vista Quest 60,000 5.00 11/01/2000
Vista Quest 40,000 1.81 02/28/2004
Commodore Environmental Services, Inc. 514,000 4.50 03/31/2003
Commodore Environmental Services, Inc. 1,500,000 1.50 02/09/2004
================================
TOTAL NEW SHARES COMMON STOCK FROM WARRANTS 17,443,407
================================
-----------------------------------------------------
CONVERTIBLE PREFERRED STOCK (NEW SHARES OF CAT)
-----------------------------------------------------
Commodore Environmental Services, Inc. 2,987,000
Commodore Environmental Services, Inc. 1,358,533
Commodore Environmental Services, Inc. 2,913,000
================================
TOTAL NEW SHARES COMMON STOCK FROM PREFERRED 7,258,533
================================
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SCHEDULE 4.7.3
EXCEPTIONS TO GOOD REPAIR
None.
SCHEDULE 4.11
LICENSES AND PERMITS
None.
SCHEDULE 4.13.2
INSURANCE
CXI maintains directors and officers liability insurance with a coverage amount
of $10 million. Neither CXI nor any Subsidiary has received any notification
from any insurer, agent or broker denying or disputing any claim or denying or
disputing any coverage.
SCHEDULE 4.14
LITIGATION
None.
SCHEDULE 4.17
PROSCRIBED ACTIVITIES
None.
SCHEDULE 4.18
COMPLIANCE WITH LAWS
None.
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SCHEDULE 4.19.3
ENVIRONMENTAL NOTICES
None.
SCHEDULE 4.19.6
ENVIRONMENTAL AUDITS
I. Audit of Marengo, Ohio facilities proposal dated August 25, 1995.
SCHEDULE 4.20
COLLECTIVE BARGAINING AGREEMENTS
None.
SCHEDULE 4.21.1
CXI EMPLOYEE BENEFIT PLANS
o COMPREHENSIVE MEDICAL AND DENTAL PLAN, with 2 option choices, includes
prescription drug card. The plan is administered by Great-West Life
Assurance Company
o VISION CARE COVERAGE, includes annual exam, allowance for frames and
lenses, or contact lenses.
o LIFE INSURANCE, coverage is 1 x annual salary as gift insurance.
Employees have the option of purchasing additional life at group price
subject to limitations. This plan is primarily through UNUM Life, however
$10,000 of the company provided coverage is through Great-West Life.
o SHORT AND LONG-TERM DISABILITY INSURANCE (SALARY PROTECTION), This is a
company provided coverage, which pays 70% of salary, if an employee is
disabled through illness or accident. The plan has a 5-day waiting period
unless there is immediate hospitalization. Coverage converts to Long-Term
Disability after 90 days. UNUM Life provides the plan
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o 401(K) PLAN, The Company provides this plan through PaineWebber Trust
offering a variety of investment options for employees' pre-tax
contributions. All full-time regular employees are eligible after 90 days
of employment. The company has the option to make a voluntary employer
contribution each year based upon operational results and profitability.
o An employee handbook is available upon request, which describes other
benefits such as paid time off, holidays, education assistance and
professional membership plans.
SCHEDULE 4.21.7
SEVERANCE OBLIGATIONS
CXI has a severance obligation to Xxxx X. Xxxxxxxxx, which is
continually self-reducing as time progresses and moves toward the December 31,
1999. The severance obligation to Xx. Xxxxxxxxx is fully set out in the minutes
of the CXI Board of Directors dated December 15, 1998.
SCHEDULE 4.23
BROKERS
None.
SCHEDULE 4.25
PRINCIPAL PLACE OF BUSINESS
CXI maintains its corporate offices at 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000.
CXI's operations are headquartered at 0000 Xxxxxx Xxxxxxxxx, X.X., Xxxxxxxxxxx,
Xxx Xxxxxx 00000.
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SCHEDULE 4.6
CXI CLOSED TAX RETURNS
No CXI tax returns have been closed by applicable statute. There are no open,
outstanding agreements or waivers with the IRS or any state or local governments
with respect to any CXI tax return.
SCHEDULE 4.7.1
CXI OWNED AND LEASED REAL ESTATE
Leasehold Premises
------------------
1. Commodore Applied Technologies, Inc., 000 Xxxx 00xx Xxxxxx, Xxxxx 0000,
Xxx Xxxx, Xxx Xxxx 00000.
2. Commodore Applied Technologies, Inc., 0000 Xxxxxxxx Xxxx 000, Xxxxxxx, XX
00000.
3. Commodore Advanced Sciences, Inc., 0000 Xxxxxx Xxxxxxxxx, X.X., Xxxxxxxxxxx,
XX 00000.
4. Commodore Applied Technologies, Inc., 0000 X. Xxx Xxxxxxx Xxxxxxx Xxxx,
Xxxxx 000, Xxxxxxx, XX 00000.
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SCHEDULE 4.21.1
CXI EMPLOYEE BENEFIT PLANS
o COMPREHENSIVE MEDICAL AND DENTAL PLAN, with 2 option choices, includes
prescription drug card. The plan is administered by Great-West Life
Assurance Company
o VISION CARE COVERAGE, includes annual exam, allowance for frames and
lenses, or contact lenses.
o LIFE INSURANCE, coverage is 1 x annual salary as gift insurance.
Employees have the option of purchasing additional life at group price
subject to limitations. This plan is primarily through UNUM Life, however
$10,000 of the company provided coverage is through Great-West Life.
o SHORT AND LONG-TERM DISABILITY INSURANCE (SALARY PROTECTION), This is a
company provided coverage, which pays 70% of salary, if an employee is
disabled through illness or accident. The plan has a 5-day waiting period
unless there is immediate hospitalization. Coverage converts to Long-Term
Disability after 90 days. UNUM Life provides the plan
o 401(K) PLAN, The Company provides this plan through PaineWebber Trust
offering a variety of investment options for employees' pre-tax
contributions. All full-time regular employees are eligible after 90 days
of employment. The company has the option to make a voluntary employer
contribution each year based upon operational results and profitability.
o An employee handbook is available upon request, which describes other
benefits such as paid time off, holidays, education assistance and
professional membership plans.
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SCHEDULE 4.26
NAMES OF CXI AND ITS SUBSIDIARIES
---------------------------------------------------------------------------------------------------------------
STATE OR
NAME OF DIRECT OR JURISDICTION OF PERCENTAGE OF
INDIRECT SUBSIDIARY INCORPORATION OWNED
---------------------------------------------------------------------------------------------------------------
Commodore Solution Technologies, Inc. Delaware 100%
Commodore CFC Technologies, Inc. Delaware 100%
CFC Technologies, Inc. Ohio 100%
Commodore Advanced
Sciences, Inc.* New Mexico 100%
A.S. Environmental, Inc.* Delaware 100%
Commodore Remediation
Technologies, Inc.* Delaware 100%
Commodore Government
Environmental Technologies, Inc.* Delaware 100%
Commodore Technologies, Inc.*
Sandpiper Properties, Inc.* Ohio 100%
Environmental Alternatives, Inc.*
Advanced Sciences Integrated
Mexico, S.A. de C.V.* Mexico 100%
Advanced Sciences Integradas S.A.*
CORT Technologies, Inc.* Delaware 100%
Commodore Refrigerant
Technologies, Inc. Delaware 100%
Teledyne-Commodore LLC
---------------------------------------------------------------------------------------------------------------
*Wholly owned subsidiary of Commodore Solution Technologies, Inc.
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EXHIBIT A
CUSTODY AGREEMENT
Custody Agreement dated as of by and among Commodore Applied
Technologies, Inc, a Delaware corporation ("CXI"), XXXXXX X. XxXXXXXXX, an
individual resident of Washington, D.C. ("XX. XXXXXXXXX"), XXXXXX X. XXXXXXX, an
individual resident of LaJolla, California ("XX. Xxxxxxx"), XXXXXX X. XXXXX, an
individual resident of Washington, D.C. ("XX. XXXXX"), J. XXXXXXXX XXXXXX, III,
an individual resident of Washington, D.C. ("XX. XXXXXX"), XXXXXXX X. XXXXX, an
individual resident of New York City, New York ("XX. XXXXX"), THE XXXXXXXX
GROUP, LLC, a New Jersey limited liability company which maintains its place of
business in Arlington, Virginia ("THE XXXXXXXX GROUP"), XXXXX X. X'XXXXX, an
individual resident of Washington, D.C. ("XX. X'XXXXX"), HILLS ENTERPRISES,
LTD., a Delaware corporation ("HILLS ENTERPRISES") (Xx. XxXxxxxxx, Xx. Xxxxxxx,
Xx. Xxxxx, Xx. Xxxxxx, Xx. Xxxxx, The Xxxxxxxx Group, Xx. X'Xxxxx and Hills
Enterprises are sometimes collectively referred to herein as "DEPOSITORS" and
individually as "DEPOSITOR") and The Chase Manhattan Bank, a New York State
chartered bank, (hereinafter called the "CUSTODIAN").
WITNESSETH
WHEREAS, pursuant to Agreement and Plan of Merger (the "MERGER
AGREEMENT") dated September ___, 1999 by and among CXI, Global Energy Investors,
Inc., a Delaware corporation and successor-in-interest to Global Energy
Investors, LLC, a Delaware limited liability company (collectively, "GEI"),
Commodore Global Energy, Inc., a Delaware corporation and wholly owned
subsidiary of CXI, and the Depositors, there is required to be deposited in
custody certain securities to be held by the Custodian subject to the terms and
conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
The CXI and Depositors hereby appoint and designate the Custodian as
custodian for the purposes set forth herein, and the Custodian does hereby
accept such appointment under the terms and conditions set forth herein.
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1. ESTABLISHMENT OF CUSTODY FUND
Simultaneous with the execution of this agreement, CXI is depositing
with the Custodian 3,500,000 shares (the "ESCROWED SHARES") of common stock
of CXI. Set forth on Schedule "II" attached hereto and incorporated herein
by reference is information pertaining to the Escrowed Shares and
identifying the certificate numbers, the number of shares represented by
such certificates and the names of the Depositors in whose name such
certificates are registered. The Custodian shall hold, subject to the terms
and conditions hereof, such cash, securities and such investments and
reinvestments as may be permitted pursuant to Section 2 hereof (which,
together with the income from such investments, are hereinafter referred to
as the "Custody Fund").
2. INVESTMENT OF CUSTODY FUND
During the term of this Custody Agreement, the Custody Fund shall be
held in escrow by the Custodian pending written instructions in accordance
with paragraph 3 hereto. Escrow Agent shall have no obligation to pay
interest on or to invest or reinvest any Escrow Property deposited or
received hereunder.
3. DISPOSITION AND TERMINATION
The Custodian shall deliver the Custody Fund or any part thereof upon,
and pursuant to receipt of any of the following:
(i) A certificate signed by CXI stating that (A) the Depositors
are entitled to receive the Escrowed Shares as a result of
the occurrence of the Triggering Event (as such term is
defined in the Merger Agreement) and (B) CXI has provided
notice of such occurrence by registered or certified mail,
return receipt requested, to the Depositors; or
(ii) A certificate signed by CXI stating that (A) CXI is entitled
to receive the Escrowed Shares as a result of the failure to
occur of the Triggering Event (as such term is defined in
the Merger Agreement) and (B) CXI has provided notice of
such failure by registered or certified mail, return receipt
requested (or marked "refused" (or similarly marked) by the
U.S. Post Office), to the Depositors; provided that Escrow
Agent shall not deliver any Escrowed Shares to CXI pursuant
to this clause (i) (X) until 30 days following the date on
which the last of CXI's notices is received by the
Depositors (or marked "refused" (or similarly marked) by the
U.S. Post
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Office) and (Y) if Escrow Agent and CXI receive a
certificate from the Depositors during such 30 day period
stating that CXI is not entitled to receive the Escrowed
Shares and setting forth the basis for such statement; or
(iii) A certificate signed jointly by CXI and the Depositors
directing the release and disbursement of Escrowed Shares
from the Escrow by delivery to each of the Depositors the
certificate for such of the Escrowed Shares as are
registered in the name of each such Stockholder as set forth
on Schedule A hereto.
Upon delivery by the Custodian, this Custody Agreement shall terminate,
subject to the provisions of Paragraph 9 hereunder, which paragraph shall
survive such termination.
4. The Custodian undertakes to perform only such duties as are expressly set
forth herein.
5. The Custodian may rely and shall be protected in acting or refraining from
acting upon any written notice, instruction or request furnished to it
hereunder and believed by it to be genuine and to have been signed or
presented by the proper party or parties. The Custodian shall be under no
duty to inquire into or investigate the validity, accuracy or content of
any such document. The Custodian shall have no duty to solicit any payments
which may be due it hereunder.
6. The Custodian shall not be liable for any action taken or omitted by it in
good faith unless a court of competent jurisdiction determines that the
Custodian's willful misconduct was the primary cause of any loss to CXI
and/or the Depositors. In the administration of the Custody Fund hereunder,
the Custodian may execute any of its powers and perform its duties
hereunder directly or through agents or attorneys and may, consult with
counsel, accountants and other skilled persons to be selected and retained
by it. The Custodian shall not be liable for anything done, suffered or
omitted in good faith by it in accordance with the advice or opinion of any
such counsel, accountants or other skilled persons.
7. The Custodian may resign and be discharged from its duties or obligations
hereunder by giving notice in writing of such resignation specifying a date
when such resignation shall take effect. The Custodian shall have the right
to withhold an amount equal to the amount due and owing to the Custodian,
plus any costs and expenses the Custodian shall reasonably believe may be
incurred by the Custodian in connection with the termination of the Custody
Agreement.
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8. CXI hereby agrees to (i) pay the Custodian upon execution of this agreement
reasonable compensation for the services to be rendered hereunder, as
described in Schedule I attached hereto, and (ii) pay or reimburse the
Custodian upon request for all expenses, disbursement and advances,
including reasonable attorney's fees, incurred or made by it in connection
with the preparation, execution, performance, delivery modification and
termination of this agreement. The parties hereby grant the Custodian a
lien, right of set-off and security interest to the amount for the payment
of any claim for compensation, expenses and amounts due hereunder.
9. Each of CXI and the Depositers severally, but not jointly and severally,
shall indemnify, defend and save harmless the Custodian from all loss,
liability or expense (including the fees and expenses of in house or
outside counsel) caused by the individual indemnitor arising out of or in
connection with (i) its execution and performance of this Agreement, except
to the extent that such loss, liability or expense is due to the gross
negligence or willful misconduct of the Custodian, or (ii) its following
any instructions or other directions from CXI or the Depositors, except to
the extent that its following any such instruction or direction is
expressly forbidden by the terms hereof. Anything in this agreement to the
contrary notwithstanding, in no event shall the Custodian be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Custodian has been
advised of the likelihood of such loss or damage and regardless of the form
of action. The parties hereto acknowledge that the foregoing indemnities
shall survive the resignation or removal of the Custodian or the
termination of this agreement.
10. The Depositors, shall provide the Custodian with their social security
number or Tax Identification Number (TIN) as assigned by the Internal
Revenue Service. All interest or other income earned under this Custody
Agreement shall be allocated and paid as provided herein and reported by
the recipient to the Internal Revenue Service as having been so allocated
and paid.
11. The duties and responsibilities of the Custodian hereunder shall be
determined solely by the express provisions of this Custody Agreement and
no other or further duties or responsibilities shall be implied. The
Custodian shall not have any liability under, nor duty to inquire into the
terms and provisions of any agreement or instructions, other than outlined
in this agreement.
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12. All notices and communications hereunder shall be in writing and shall be
deemed to be duly given if sent by registered mail, return receipt
requested, as follows:
The Chase Manhattan Bank
Capital Markets Fiduciary Services
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Escrow Administration, 10th Floor
If to the Depositors, addressed as follows:
Global Energy Investors, Inc.
0000 X Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. XxXxxxxxx and Xxxxxx Xxxxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
with a copy to:
Xxxxxx X. Xxxxx
0000 00xx Xxxxxx XX, Xxxxx 000
Xxxxxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
If to CXI, addressed as follows:
Commodore Applied Technologies, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. XxXxxxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
with a copy to:
Xxxxx X. Xxxxx
Sable Xxxxxxxx Xxxxx Xxxxxx & Xxxxx, LLC
Xxxxxxx Xxxxx, Xxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
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or at such other address as any of the above may have furnished to the
other parties in writing by registered mail, return receipt requested and
any such notice or communication given in the manner specified in this
Paragraph 12 shall be deemed to have been given as of the date so mailed
except with respect to the Custodian as to which date shall be deemed to
have been given on the date received by the Custodian. In the event that
the Custodian, in its sole discretion, shall determine that an emergency
exists, the Custodian may use such other means of communications as the
Custodian deems advisable.
13(a)In the event funds transfer instructions are given (other than in writing
at the time of execution of the agreement), whether in writing, by
telecopier or otherwise, the Custodian is authorized to seek confirmation
of such instructions by telephone call-back to the person or persons
designated on Schedule 2 hereto, and the Custodian may rely upon the
confirmations of anyone purporting to be the person or persons so
designated. The persons and telephone numbers for call-backs may be changed
only in a writing actually received and acknowledged by the Custodian. The
parties to this agreement acknowledge that such security procedure is
commercially reasonable.
(b) It is understood that the Custodian and the beneficiary's bank in any funds
transfer may rely solely upon any account numbers or similar identifying
number provided by either of the other parties hereto to identify (i) the
beneficiary, (ii) the beneficiary's bank, or (iii) an intermediary bank.
The Custodian may apply any of the funds for any payment order it executes
using any such identifying number, even where its use may result in a
person other than the beneficiary being paid, or the transfer of funds to a
bank other than the beneficiary's bank, or an intermediary bank designated.
14. The provisions of this Custody Agreement may be waived, altered, amended or
supplemented, in whole or in part, only by a writing signed by all of the
parties hereto.
15. Neither this Custody Agreement nor any right or interest hereunder may be
assigned in whole or in part by any party without the prior consent of the
other parties.
16. This Custody Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument. All signatures of the parties to
this Agreement may be transmitted by facsimile, and such facsimile will,
for all purposes, be deemed to be the original signature of such party
whose signature it reproduces and will be binding upon such party.
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17. The Custodian shall not incur any liability for following the instructions
herein contained or expressly provided for, or written instructions given
by the parties hereto.
18. In the event that the Custodian shall be uncertain as to its duties or
rights hereunder or shall receive instructions, claims or demands from any
party hereto which, in its opinion, conflict with any of the provisions of
this agreement, it shall be entitled to refrain from taking any action and
its sole obligation shall be to keep safely all property held until it
shall be directed otherwise in writing by all of the other parties hereto
or by a final order or judgment of a court of competent jurisdiction.
19. Any corporation into which the Custodian in its individual capacity may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which
the Custodian in its individual capacity shall be a party, or any
corporation to which substantially all the corporate trust business of the
Custodian in its individual capacity may be transferred, shall be the
Custodian under this Custody Agreement without further act.
20. This agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to its principles of conflicts
of laws and any action brought hereunder shall be brought in the courts of
the State of New York, located in the County of New York. Each party hereto
irrevocably waives any objection on the grounds of venue, forum
non-conveniens or any similar grounds and irrevocably consents to service
of process by mail or in any other manner permitted by applicable law and
consents to the jurisdiction of said courts.
21. Force Majeure. In the event that any party to this Agreement is unable to
perform its obligations under the terms of this Agreement because of acts
of God, strikes, equipment or transmission failure or damage reasonably
beyond its control, or other cause reasonably beyond its control, such
party shall not be liable for damages to the other parties for any
unforeseeable damages resulting from such failure to perform or otherwise
from such causes. Performance under this Agreement shall resume when the
affected party is able to perform substantially that party's duties.
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IN WITNESS WHEREOF, the parties hereto have executed this Custody
Agreement on the date and year first above written.
THE CHASE MANHATTAN BANK
By:
--------------------------------
COMMODORE APPLIED TECHNOLOGIES, INC.
By:
---------------------------
Officer
---------------------------
XXXXXX X. XXXXXXXXX,
individually
---------------------------
XXXXXX X. XXXXXXX,
individually
---------------------------
XXXXXX X. XXXXX,
individually
---------------------------
XXXXX X. X'XXXXX,
individually
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THE XXXXXXXX GROUP, LLC
By:
---------------------------
HILLS ENTERPRISES, LTD.
By:
---------------------------
-------------------------------
J. XXXXXXXX XXXXXX, III
-------------------------------
XXXXXXX X. XXXXX
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SCHEDULE I
----------
15 basis points of the value of the collateral, valued on the date it is
deposited into custody, per annum or any part thereof without proration for
partial years, subject to a minimum of $7,500 per annum or any part thereof
without proration for partial years, (includes investment in a Chase Manhattan
Bank Money Market Account, Chase Manhattan Bank Deposit Account or The Chase
Manhattan Bank Mutual Fund known as the Vista Fund).
$75 per investment (excludes Money Market, Deposit Account or Vista Fund
investments).
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SCHEDULE II. ESCROWED SHARES
----------------------------
(1) Certificate number(s) ____________ in the name of Xxxxxx X. XxXxxxxxx
representing 1,350,292 shares of CXI Common Stock.
(2) Certificate number(s) ____________ in the name of Xxxxxx X. Xxxxxxx
representing 1,104,784 shares of CXI Common Stock.
(3) Certificate number(s) ____________ in the name of Xxxxxx X. Xxxxx
representing 271,017 shares of CXI Common Stock.
(4) Certificate number(s) ____________ in the name of Xxxxx X. X'Xxxxx
representing 94,880 shares of CXI Common Stock.
(5) Certificate numbers(s) ____________ in the name of The Xxxxxxxx Group, LLC
representing 490,727 shares of CXI Common Stock.
(6) Certificate number(s) _____________ in the name of Hills Enterprises, Ltd.
representing 48,300 shares of CXI Common Stock.
(7) Certificate number(s) _____________ in the name of J. Xxxxxxxx Xxxxxx, III
representing 70,000 shares of CXI Common Stock.
(8) Certificate number(s) _____________ in the name of Xxxxxxx X. Xxxxx
representing 70,000 shares of CXI Common Stock.
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SCHEDULE 2
----------
TELEPHONE NUMBER(S) FOR CALL-BACKS AND
PERSON(S) DESIGNATED TO CONFIRM SHARE TRANSFER INSTRUCTIONS
------------------------------- ---------------------
FOR DEPOSITORS:
---------------
Xxxxxx X. XxXxxxxxx, Global Energy Investors, Inc.
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Telephone No. 202/000-0000
Facsimile No. 202/457-0602
FOR COMMODORE APPLIED TECHNOLOGIES, INC.:
-----------------------------------------
Xxxxx X. XxXxxxxxx, Treasurer
Commodore Applied Technologies, Inc.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Telephone No. 212/000-0000
Facsimile No. 212/753-0731
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EXHIBIT B
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
DATED: SEPTEMBER ____, 1999
With reference to that certain Agreement and Plan of Merger of even
date herewith (the "MERGER AGREEMENT") by and among GLOBAL ENERGY INVESTORS,
INC., a Delaware corporation and successor-in-interest to Global Energy
Investors, LLC, a Delaware limited liability company (collectively, "GEI"),
XXXXXX X. XxXXXXXXX, an individual resident of Washington, D.C. ("XX.
XXXXXXXXX"), XXXXXX X. XXXXXXX, an individual resident of LaJolla, California
("XX. XXXXXXX"), XXXXXX X. XXXXX, an individual resident of Washington, D.C.
("XX. XXXXX"), J. XXXXXXXX XXXXXX, III, an individual resident of Washington,
D.C. ("XX. XXXXXX"), XXXXXXX X. XXXXX, an individual resident of New York City,
New York ("XX. XXXXX"), THE XXXXXXXX GROUP, LLC, a New Jersey limited liability
company which maintains its place of business in Arlington, Virginia ( "THE
XXXXXXXX GROUP"), XXXXX X. X'XXXXX, an individual resident of Washington, D.C.
("XX. X'XXXXX"), HILLS ENTERPRISES, LTD., a Delaware corporation ("HILLS
ENTERPRISES") (Xx. XxXxxxxxx, Xx. Xxxxxxx, Xx. Xxxxx, Xx. Xxxxxx, Xx. Xxxxx,
The Xxxxxxxx Group, Xx. X'Xxxxx, Hills Enterprises, Xx. Xxxxxx and Xx. Xxxxx are
sometimes collectively referred to herein as "STOCKHOLDERS" and individually as
"STOCKHOLDER"), COMMODORE GLOBAL ENERGY, INC., a Delaware corporation ("MERGER
SUB") and COMMODORE APPLIED TECHNOLOGIES, INC., a Delaware corporation ("CXI"),
whereby GEI, the Stockholders, Commodore and Merger Sub have agreed that GEI
will be merged with and into Merger Sub in exchange for shares of the Common
Stock of CXI to be issued to the Stockholders, and in order to induce the
Stockholders to enter into the Agreement and Plan of Merger, and for other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. As soon as practicable following receipt by CXI of its audited
financial statements for the fiscal year in which the Merger (as such term and
all other defined terms used but not defined herein is defined in the Merger
Agreement) occurs, CXI shall register on a short form registration statement
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), not less
than Twelve Million Five Hundred Thousand (12,500,000) shares of CXI Common
Stock issuable to the Stockholders pursuant to the Merger Agreement upon the
Effective Time of the Merger. Such shares are referred to hereinafter as the
"REGISTRABLE SECURITIES."
2. Until a Registration Statement has become effective under the
Securities Act with respect to any Registrable Securities, each certificate
representing such Registrable Securities, and all certificates and instruments
issued in transfer thereof, shall be endorsed with the following restrictive
legend:
84
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO
THE DISTRIBUTION THEREOF, AND NEITHER SUCH SHARES NOR ANY INTEREST
THEREIN MAY BE SOLD, TRANSFERRED, ASSIGNED OR PLEDGED, EXCEPT IF
REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE BLUE SKY OR
SECURITIES LAWS OR EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION
REQUIREMENTS ARE AVAILABLE."
At such time as any Registrable Securities cease to be Registrable Securities
pursuant to Section 1, CXI shall, upon the request of any Stockholder with
respect to such securities, issue to such Stockholder a replacement certificate
without such legend in exchange for any certificate bearing such legend.
3. If any of a Stockholder's Registrable Securities are registered
hereunder, CXI shall furnish to such Stockholder, at CXI's expense, such number
of copies of the Registration Statement and each amendment and supplement
thereto, preliminary prospectus, final prospectus and such other documents as
such Stockholder may reasonably request in order to facilitate the public
offering of the Registrable Securities.
4. If any of a Stockholder's Registrable Securities are registered
hereunder, CXI shall promptly, at CXI's expense, use its reasonable efforts to
register or qualify the Registrable Securities covered by the Registration
Statement under such state securities or blue sky laws of such jurisdictions as
the Stockholders participating in such registration may reasonably request,
except that CXI shall not for any purpose be required to execute a general
consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction where it is not so qualified.
5. If any of a Stockholder's Registrable Securities are registered
hereunder, CXI shall notify such Stockholder, promptly after it shall receive
notice thereof, of the date and time when the Registration Statement and each
post-effective amendment thereto has become effective or a supplement to any
prospectus forming a part of the Registration Statement has been filed.
6. If any of a Stockholder's Registrable Securities are registered
hereunder, CXI shall advise such Stockholder, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order by the
Securities Exchange Commission (the "COMMISSION") suspending the effectiveness
of the Registration Statement or the initiation or threatening of any proceeding
for such purpose and promptly use its best efforts to prevent the issuance of
any stop order or to obtain its withdrawal if such stop order should be issued.
7. If any of a Stockholder's Registrable Securities are registered
hereunder, (a) CXI agrees to bear all Commission registration and filing fees,
printing
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and mailing expenses, NASD filing fees and expenses incurred by any person or
entity in connection therewith, fees, disbursements of counsel and accountants
for CXI and any underwriters, brokers and dealers and all expenses and fees
incident to an application for listing the shares of CXI Common Stock on the
American Stock Exchange, and (b) the Stockholders agree to bear, pro rata (or as
they may otherwise agree), all fees and disbursements of counsel for the
Stockholders and any discounts, commissions and fees of any underwriters,
brokers and dealers with respect to the Registrable Securities sold in
connection with such registration.
8. (a) CXI hereby agrees to indemnify and hold harmless each
Stockholder from and against, and agrees to reimburse such Stockholder with
respect to, any and all claims, actions (actual or threatened), demands, losses,
damages, liabilities, costs and expenses to which such Stockholder may become
subject under the Securities Act or otherwise, insofar as such claims, actions,
demands, losses, damages, liabilities, costs or expenses are caused by any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any prospectus contained therein, or any amendment
or supplement thereto, or are caused by the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that CXI shall not be
liable in any such case to the extent that any such claim, action, demand, loss,
damage, liability, cost or expense is caused by an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished in writing by such Stockholder for use in the preparation
thereof.
(b) Each Stockholder hereby agrees to indemnify and hold
harmless CXI, its officers, directors, legal counsel and accountants and each
person or entity who controls CXI within the meaning of the Securities Act, from
and against, and agrees to reimburse CXI, its officers, directors, legal
counsel, accountants and controlling persons or entities with respect to any and
all claims, actions, demands, losses, damages, liabilities, costs or expenses to
which CXI, its officers, directors, legal counsel, accountants or such
controlling persons or entities may become subject under the Securities Act or
otherwise, insofar as such claims, actions, demands, losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged untrue
statement of any material fact contained in the Registration Statement, any
prospectus contained therein or any amendment or supplement thereto, or are
caused by the omission or the alleged omission to state therein a material
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 conformity with information furnished in writing by such Stockholder for
use in the preparation thereof.
(c) If any claim shall be asserted against any person or
entity (an "INDEMNIFIED PERSON") for which such person or entity intends to seek
indemnification pursuant to Section 8(a) or (b) from the other party hereto (the
"INDEMNIFYING PERSON"), as the case may be, such Indemnified Person shall give
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prompt written notice to the Indemnifying Person of the nature of such claim,
but the failure to give such notice shall not relieve the Indemnifying Person of
its obligations under this Section 8 unless it has been prejudiced substantially
thereby. The Indemnifying Person shall have the right to conduct, at its
expense, through counsel of its own choosing, which counsel is approved by the
Indemnified Person (which approval may not be unreasonably withheld), the
defense of any such claim, and may compromise or settle such claims with the
prior consent of the Indemnified Person (which consent shall not be unreasonably
withheld); provided, that (i) if the Indemnifying Person does not elect to
conduct the defense of any such claim, the Indemnified Person may undertake to
conduct the defense of such claim and the Indemnifying Person shall be
responsible for the fees and disbursements of the Indemnified Person's legal
counsel in connection with such defense and (ii) if the person or entity that is
not conducting the defense desires to join in such defense, it may elect to do
so at its own cost by retaining legal counsel acceptable to the person or entity
conducting the defense (which acceptance shall not be unreasonably withheld).
9. The rights and privileges of this Registration Rights Agreement may
inure to the benefit of other stockholders of the Company in addition to the
Stockholders who have executed this Registration Rights Agreement; provided,
that CXI's obligations to any one or more such Stockholders shall be subject to
their execution of an addendum or joinder agreement substantially similar in
form and content to this Agreement.
10. THIS AGREEMENT SHALL BE CONSTRUED (BOTH AS TO VALIDITY AND
PERFORMANCE) AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WHOLLY
WITHIN SUCH JURISDICTION.
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IN WITNESS WHEREOF, this Agreement has been duly executed by or on
behalf of each party hereto on the date set forth above.
COMMODORE APPLIED TECHNOLOGIES, INC.
By:
------------------------------------------
Officer
COMMODORE GLOBAL ENERGY, INC.
By:
------------------------------------------
GLOBAL ENERGY INVESTORS, INC.
By:
-------------------------------------
Xxxxxx X. XxXxxxxxx, President
-------------------------------------
Xxxxxx X. XxXxxxxxx,
Individually
-------------------------------------
Xxxxxx X. Xxxxxxx,
Individually
-------------------------------------
Xxxxxx X. Xxxxx,
Individually
----------------------------
Xxxxx X. X'Xxxxx,
Individually
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88
THE XXXXXXXX GROUP, LLC
By:
-------------------------------------
HILLS ENTERPRISES, LTD.
By:
-------------------------------------
-------------------------------------
J. Xxxxxxxx Xxxxxx, III
-------------------------------------
Xxxxxxx X. Xxxxx
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