AGREEMENT
THIS AGREEMENT is dated as of December 6, 1999, by and among MENLO
ACQUISITION CORPORATION, a Delaware corporation, having an address for the
purposes hereof at 000 Xxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 ("Menlo");
IN-SITU OXIDATIVE TECHNOLOGIES, INC., a Delaware corporation, having an address
for the purposes hereof at 00X Xxxxxxx Xxxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
("ISOTEC"); XXXXXXX XXXXXXXXXX, an individual, having an address for the
purposes hereof at 00 Xxxx Xxxxxx, Xxxx Xxxxxx, Xxx Xxxxxx 00000 ("Xxxxxxx");
XXXXXXX XXXXXXXXX, an individual, having an address for the purposes hereof at
000 Xxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 ("Xxxxxxx"); and ROSEBUD HOLDING,
L.L.C., a New Jersey limited liability company, having an address for the
purposes hereof at 000 Xxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 ("Rosebud").
W I T N E S S E T H:
Recitals:
A. ISOTEC is in the business of remediating contaminated properties using a
proprietary in-situ treatment program. ISOTEC has a negative net worth in excess
of $1 million, has experienced operating losses. Exclusive of previous loans
from Xxxxxxx, ISOTEC has generated significant negative cash flows. ISOTEC
requires additional working capital.
B. Xxxxxxx and Xxxxxxx each own fifty (50%) percent of the issued and
outstanding shares of capital of ISOTEC.
C. Michaeland Rosebud are willing to provide loans to ISOTEC on the terms
and conditions set forth herein.
D. As an inducement to Menlo to make loans to ISOTEC hereunder, Xxxxxxx has
agreed to give Menlo an option to purchase all or a portion of his shares of
ISOTEC, on the terms and conditions set forth herein.
E. In consideration of the option for ISOTEC shares being granted to it by
Xxxxxxx, Menlo is willing to provide loans to ISOTEC on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed as follows:
1. Concurrent Actions: Concurrently herewith, the following actions are
being taken:
1.1 Xxxxxxx is loaning ISOTEC Two Hundred Three Thousand ($203,000)
Dollars.
1.2 ISOTEC is executing and delivering to Xxxxxxx a demand promissory
note in the form of Exhibit A annexed hereto in the principal amount of
Five Hundred Thirteen Thousand ($513,000) Dollars, to evidence such loan
and certain other loans to ISOTEC previously made by Xxxxxxx.
1.3 Rosebud is loaning ISOTEC Three Hundred Thousand ($300,000)
Dollars. This loan is being effected by Rosebud's transferring three
hundred thousand (300,000) shares of capital of Menlo (the "Rosebud
Shares") to ISOTEC. The parties agree that the Rosebud Shares have a fair
market value of $1.00 per share.
1.4 ISOTEC is executing and delivering to Xxxxxxx a demand promissory
note in the form of Exhibit A annexed hereto in the principal amount of
Forty-eight Thousand ($48,000)Dollars, to evidence certain other loans to
ISOTEC previously made by Xxxxxxx.
1.5 ISOTEC is repaying a loan in the amount of One Hundred Ninety-five
Thousand ($195,000) Dollars to Environmental Waste Management Associates,
L.L.C., a wholly-owned subsidiary of Menlo.
2. Loans to ISOTEC.
2.1 If ISOTEC desires to borrow funds from Menlo and Xxxxxxx, it shall
give each of them a written irrevocable notice (a "Loan Notice") signed by
its president, setting forth the amount it reasonably requires for working
capital and it wishes to borrow.
2.2 Within ten (10) business days after the giving of the Loan Notice,
Menlo and Xxxxxxx shall each provide ISOTEC with one-half (1/2) the loan
amount requested in the Loan Notice.
a. Such moneys shall be provided by wired funds or good check.
b. With each Loan Notice, ISOTEC shall execute and deliver to each of
Menlo and Xxxxxxx a demand promissory note in the form of Exhibit A annexed
hereto for one-half (1/2) the loan amount requested in the Loan Notice.
2.3 The loans to be made to ISOTEC by Menlo and Xxxxxxx under this
Section 2 (the "WC Loans") shall be subject to the following restrictions:
a. No Loan Notice shall be effective unless it is given prior to
December 31, 2000.
b. The aggregate WC Loans made by Menlo and Xxxxxxx under this Section
2 shall not exceed the principal sum of Five Hundred Thousand ($500,000)
Dollars (i.e., $250,000 loaned by each of Menlo and Xxxxxxx). Any moneys
that are repaid to Menlo or Xxxxxxx shall not be available for reborrowing.
c. It is the intention of the parties hereto that the WC Loans to
ISOTEC by Menlo and Xxxxxxx shall at all times be equal in amount. Towards
that end, neither Menlo nor Xxxxxxx shall demand or accept repayment of any
WC Loan unless and until the other of them is repaid an equal amount on
account of its or his WC Loans.
3. Grant of Options.
3.1 As an inducement for Menlo to make the WC Loans, Xxxxxxx hereby
agrees that for each Fifty Thousand ($50,000) Dollars or part thereof of WC
Loans that Menlo makes to ISOTEC, Xxxxxxx shall grant Menlo an option to
buy twenty (20%) percent of his interest in ISOTEC, equaling ten (10%)
percent of the issued and outstanding shares of capital of ISOTEC.
a. By way of example, if Menlo makes WC Loans in the aggregate amount
of Five Thousand ($5,000) Dollars, Xxxxxxx shall xxxxx Menlo an option to
buy twenty (20%) percent of his interest in ISOTECH.
b. By way of a further example, if Menlo makes WC Loans to ISOTEC in
the aggregate amount of One Hundred Thousand ($100,000) Dollars, Xxxxxxx
shall grant Menlo an option or options to buy forty (40%) percent of his
interest in ISOTEC.
3.2 The exercise price for each twenty (20%) percent of Richard's
interest in ISOTEC shall be One Thousand ($1,000) Dollars.
3.3 The options granted pursuant to this Section 3 shall be in the
form of Exhibit B annexed hereto, and shall be delivered by Xxxxxxx to
Menlo concurrently with the making of the WC Loan giving rise thereto.
3.4 Concurrently herewith, Xxxxxxx is delivering to Xxxxxx, Xxxxxx,
Brody & Xxxxxxxxx, L.L.C. (the "Escrowee") certificates evidencing the
shares of capital of ISOTEC he owns, accompanied by stock assignments
endorsed in blank, to be held in escrow under the terms of this Agreement.
3.5 Exercise of Options. Each option granted pursuant to this Section
3 may be exercised by Menlo by notice in writing to the Escrowee and
Xxxxxxx given on or before June 30, 2001, and by deposit with the Escrowee
of the exercise price of such option. Within ten (10) business days after
the exercise of an option, the Escrowee shall cause ISOTEC to transfer the
shares of capital subject to the option to be transferred to Menlo, and
shall deliver to Xxxxxxx the option price deposited by Menlo in payment
therefor.
3.6 Dividends; Voting. Xxxxxxx shall be entitled to all cash dividends
declared upon the shares held by the Escrowee between the date hereof and
the dates an option is exercised. All stock dividends on the option shares
declared between the date hereof and the date an option is exercised shall
attach to the respective stock and shall be considered part thereof.
Xxxxxxx shall retain the right to vote all of the option shares.
3.7 Escrowee.
a. The Escrowee shall not be under any duty to deal with the property
held by it hereunder with any greater degree of care than it uses when
dealing with its own similar property.
b. The Escrowee may act in reliance upon any instrument or signature
believed by it to be genuine, and may assume that any person purporting to
give any notice or receipt of advice or to make any statement in connection
with the provisions hereof has been duly authorized to do so.
c. The Escrowee may act relative hereto in reliance upon advice of
counsel in reference to any matter connected herewith, and shall not be
liable for any mistake of fact or error of judgment, or for any acts or
omissions of any kind, unless caused by its willful misconduct.
d. In the event that the Escrowee shall be uncertain as to its duties
or rights hereunder or shall receive one or more instructions, claims or
demands from any of the parties hereto or from third persons with respect
to the property held hereunder which, in its opinion, are in conflict with
any other instructions it has received or any provision of this Agreement,
it may refrain from taking any action other than to use reasonable care to
keep safely said property until it shall be directed otherwise in writing
by the other parties hereto and such third persons, if any, or by a final
order or judgment of a court of competent jurisdiction; or, alternatively,
the Escrowee may resign and deliver the property to any party reasonably
deemed appropriate by the Escrowee, upon which all obligations of the
Escrowee hereunder shall cease and terminate.
e. The Escrowee may at any time resign hereunder by giving at least
ten (10) days' prior written notice thereof to the other parties hereto.
Upon the effective date of such resignation, all property then held by the
Escrowee hereunder shall be delivered to a joint designee of Xxxxxxx and
Menlo. Upon making such delivery, all obligations of the Escrowee hereunder
shall cease and terminate. If no such person shall have been designated by
the date validly set hereunder for the Escrowee's resignation, all
obligations of the Escrowee hereunder shall, nevertheless, cease and
terminate. Its sole responsibility thereafter shall be to keep safely all
property then held by it and to deliver the same to a person designated by
both other parties hereto or in accordance with the directions of a final
order or judgment of a court of competent jurisdiction.
f. Notwithstanding any other provisions herein, no notice, demand,
request or other communication to the Escrowee in connection herewith shall
be binding on the Escrowee unless it is in writing, refers specifically to
this Agreement, is addressed to the Escrowee at 000 Xxxxxxxxxx Xxxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000, Attention: Xxx X Xxxxxx, Esq. or such other
address as the Escrowee may, at any time or from time to time, designate,
and is actually received by the Escrowee at that address.
g. The Escrowee is acting as a stakeholder at the request of the other
parties hereto, and may continue to act as counsel to Menlo notwithstanding
any dispute among the parties hereto.
h. This Agreement sets forth exclusively the duties of the Escrowee
with respect to any and all matters pertinent hereto. Except as otherwise
expressly provided herein, the Escrowee shall not refer to, and shall not
be bound by, the provisions of any other agreement.
3.8 Representation of Xxxxxxx. Xxxxxxx hereby warrants and represents
to Menlo, knowing and intending that it is relying hereon, that:
a. He is the sole owner, and has the lawful right to sell and transfer
the 1,000 shares of ISOTEC common stock, and that these shares of capital
are now, and shall be at all times during the option period, free of all
encumbrances.
b. He shall forthwith on notification and at his own expense,
discharge and satisfy all encumbrances against the option stock arising
during the option period, and shall pay to the Escrowee the cost of any and
all transfer or other taxes which may be required by law at the time an
option is exercised.
c. If Menlo exercises an option, it shall receive good and marketable
title to the option stock, free of all encumbrances and rights of others.
4. Matters Regarding Rosebud Shares.
4.1 Rosebud hereby warrants and represents to ISOTEC, knowing and
intending that it is relying hereon, that:
a. Rosebud was the sole owner, and had the lawful right to transfer
the Rosebud Shares to ISOTEC. The transfer of the Rosebud Shares to ISOTEC
was duly authorized by all requisite action, and did not contravene the
organizational documents of Rosebud.
b. ISOTEC received good and marketable title to the Rosebud Shares,
free of all encumbrances and rights of others.
4.2 ISOTEC hereby warrants and represents to Rosebud, knowing and
intending that it is relying hereon, that:
a. ISOTEC has relied solely upon independent investigations made by
ISOTEC or representatives of ISOTEC regarding the value of the Rosebud
Shares, and has not relied on any oral or written representations which
have been made to ISOTEC or its representatives.
b. The Rosebud Shares are and will be characterized as "restricted
securities" under the Securities Act of 1933, as amended (the "Act"),
because they were acquired from Menlo in a transaction not involving a
public offering. Under the Act, the Rosebud Shares may be sold without
registration only in limited circumstances. ISOTEC understands that sales
of the Rosebud Shares may be subject to federal and/or state restrictions.
c. The certificate issued to ISOTEC representing the Rosebud Shares
shall, until such time as the same is no longer required by the Act and the
rules and regulations thereunder, contain a legend substantially in the
form set forth below:
THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATES. THESE SECURITIES
ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY
NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. THE HOLDER OF
THE SECURITIES REPRESENTED HEREBY
SHOULD BE AWARE THAT IT MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS
OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF
COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT
AND APPLICABLE STATE SECURITIES
LAWS.
5. Notice.
All notices, requests, demands and other communications made in
accordance with this Agreement shall be in writing and shall be sent by
certified mail, return receipt requested, to the addresses set forth herein
or to such other addresses it may be specified by like notice. All notices
given pursuant to this Section 5 shall be deemed given when mailed.
6. Resolution of Disputes.
6.1 Any controversy arising hereunder shall be settled by arbitration.
Such arbitration shall be governed by the Federal Arbitration Act, 9 USC
ss.1-15. A single arbitrator determined pursuant to 9 USC ss.5 shall be
empowered to determine each and every issue relating to such controversy or
claim including whether the controversy, claim or issue is subject to
arbitration.
6.2 The arbitration shall take place in Morristown, New Jersey and
shall be governed by the "Rules For Non-Administered Arbitration of
Business Disputes" promulgated by the Center for Public Resources, Inc.
(N.Y.), when not inconsistent with this Agreement.
6.3 Each party shall be entitled to discovery which must be completed
within forty-five (45) days of the date the arbitrator is appointed (unless
extended by the arbitrator for good cause). Discovery shall be limited to
the inspection and copying of documents within fifteen (15) days after a
written request therefor and oral depositions at which reasonable document
production may be requested.
6.4 The arbitrator shall make all decisions concerning issues
submitted in accordance with applicable principles of substantive law. The
arbitrator shall file a written determination making the award and stating
findings of fact and conclusions of law as to all relevant issues submitted
to arbitration. If the arbitrator fails to make his decision in accordance
with substantive law, or to properly apply the facts to the law, the
arbitrator's award will be deemed to have been procured by "undue means"
pursuant to 9 USC ss.10, sub-clause (a) and beyond the arbitrator's power
in violation of 9 USC ss.10, sub-clause (d). Any party may apply to a court
of competent jurisdiction to have the arbitrator's decision confirmed,
reviewed, modified, affirmed or remanded to the arbitrator with directions.
6.5 All fees and expenses of the arbitration, including the fees of
the arbitrator and costs of the hearing (including court reporter, hearing
room rental, etc.) shall be paid by the non-prevailing party. Should no
party be designated by the arbitrator as the "prevailing party" then each
of the parties shall pay one-half (1/2) of such fees and expenses. In
addition, the arbitrator shall order the non-prevailing party to pay
one-half (1/2) of the legal fees and disbursements of the prevailing party.
Should no party be designated as the "prevailing party," then each party
shall pay its own legal fees and disbursements.
7. Miscellaneous.
7.1 Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.
7.2 Entire Agreement. This Agreement, together with the Exhibits
hereto, constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
7.3 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which
shall together constitute one and the same instrument.
7.4 Governing Law. This Agreement shall be governed in all respects,
including as to validity, interpretation and effect, by the laws of the
State of New Jersey.
7.5 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors
and permitted assigns.
7.6 Assignment. This Agreement shall not be assignable by any party
hereto without the prior written consent of the other parties hereto.
7.7 No Third Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto
and their respective heirs, successors and permitted assigns.
7.8 Amendment; Waivers. No amendment, modification or discharge of
this Agreement, and no waiver hereunder, shall be valid or binding unless
set forth in writing and duly executed by the party against whom
enforcement of the amendment, modification, discharge or waiver is sought.
Neither the waiver by any of the parties hereto of a breach of or a default
under any of the provisions of this Agreement, nor the failure by any of
the parties, on one or more occasions, to enforce any of the provisions of
this Agreement or to exercise any right or privilege hereunder, shall be
construed as a waiver of any other breach or default of a similar nature,
or as a waiver of any of such provisions, rights or privileges hereunder.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
MENLO ACQUISITION CORPORATION
By:/s/Xxxxx Xxxxxxxxxx
______________________________
Name: Xxxxx Xxxxxxxxxx
Title: CFO
IN-SITU OXIDATIVE TECHOLOGIES, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
_______________________________
Name:Xxxxxxx Xxxxxxxxx
Title:
/s/ Xxxxxxx Xxxxxxxxxx
________________________________
Xxxxxxx Xxxxxxxxxx, Individually
/s/ Xxxxxxx Xxxxxxxxx
_______________________________
Xxxxxxx Xxxxxxxxx, Individually
ROSEBUD HOLDING, L.L.C.
By:/s/Xxxxxx Xxxxxxxxx
______________________________
Name:Xxxxxx Xxxxxxxxx
Title:
The undersigned hereby agrees to act as Escrow Agent under the
within Agreement, and acknowledge receipt of a certificate(s) evidencing 1,000
shares of Isotec common stock registered in the name of Xxxxxxx Xxxxxxxxx,
together with blank stock powers.
XXXXXX, XXXXXX, XXXXX &
XXXXXXXXX, L.L.C.
By: /s/Xxx X. Xxxxxx
___________________
XXX X XXXXXX,
A Member of the Firm
Exhibit A
Demand
Negotiable Promissory Note
(Unsecured)
DATED: PRINCIPAL AMOUNT:
For value received In-Situ Oxidative Technologies, Inc., a Delaware
corporation with an address for the purpose hereof at 00X Xxxxxxx Xxxxx,
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000 and its successors and assigns ("Maker")
promises to pay to the order ____________________of with an address for the
purpose hereof at _________________ ("Holder") or at such other place that
the Holder may from time to time designate in writing, the principal amount
of ______________________($___________ ) DOLLARS in lawful money of the
United States, ON DEMAND.
Interest shall accumulate on the outstanding principal balance of this
Note at the rate of six (6%) percent per year commencing with the date
hereof. Accumulated interest shall be paid in full monthly beginning on the
first monthly anniversary hereof or, ON DEMAND, at the option of the
Holder.
This Note may be prepaid in whole or in part at anytime. If Maker
fails to make any required payment of principal and/or interest when due
then from and after the due date late payment charges shall accrue on the
balance of principal and interest due on this Note at the rate of 1 1/2%
per every thirty day period, or part thereof, following this default. On
the event that Holder shall place this Note in the hands of an attorney for
collection on default, the Holder also shall be entitled to receive from
the Maker costs of collection and attorney's fees incurred in connection
therewith.
The Maker waives presentment, demand for payment, protest and notice
of dishonor of this Note.
The waiver by Holder of any one or more breaches or default of any
provision of this Note shall not constitute a waiver or estoppel as to any
other or subsequent breach or default.
This Note shall be construed under and governed by the laws of the
State of New Jersey.
IN WITNESS WHEREOF, the Maker has executed and sealed this Note as of
the date first above written.
ATTEST: IN-SITU OXIDATIVE
TECHNOLOGIES, INC
___________________________ By _____________________
, Secretary , President
Exhibit B
Option to Purchase Shares of
In-Situ Oxidative Technologies, Inc.,
a Delaware corporation ("ISOTEC")
DATED: _______________________
This is to certify that for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, XXXXXXX XXXXXXXXX,
an individual having an address at 000 Xxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000
(the "Optionor") hereby grants to MENLO ACQUISITION CORPORATION, a Delaware
corporation having an address for the purposes hereof at 000 Xxxxx Xxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000 (the "Optionee") the right to purchase (______ )
of the issued and outstanding common shares of ISOTEC upon presentation of this
Option and payment of ($ ) dollars at the office of Xxx X Xxxxxx, Esq., Xxxxxx,
Xxxxxx, Brody & Xxxxxxxxx, L.L.C., 000 Xxxxxxxxxx Xxxxxxx, Xxxxxxxxxx, XX 00000.
This Option will be void unless exercised on or before June
30, 2001.
The Optionor agrees that if the Optionee exercises this
Option, it shall receive good and marketable title to the option stock, free and
clear of all encumbrances and rights of others.
This Option has been executed and delivered pursuant to and in
accordance with the terms and conditions of a certain Agreement, dated as of
October 26, 1999, by and among the Optionor, the Optionee, ISOTEC, Xxxxxxx
Xxxxxxxxxx, and Rosebud Holding, L.L.C. (the "Agreement"), and is subject to the
terms and conditions of the Agreement, which are, by this reference,
incorporated herein and made a part hereof. Capitalized terms used in this
Option without definition shall have the respective meanings set forth in the
Agreement.
In the event of any stock dividend, stock split, combination,
recapitalization or other change in the capital structure of the ISOTEC, this
Option and the option exercise price shall be equitably adjusted.
This Option shall be construed under and governed by the laws
of the State of New Jersey.
IN WITNESS WHEREOF, the Optionor has executed and sealed this
Option as of the date first above written.
WITNESS
(L.S.)
______________________ ________________________
XXXXXXX XXXXXXXXX
