THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT (i) UNDER COVER OF A REGISTRATION STATEMENT
UNDER SUCH ACT WHICH IS EFFECTIVE AND CURRENT WITH RESPECT TO THIS
WARRANT OR SUCH SHARES OF COMMON STOCK, AS THE CASE MAY BE, OR (ii)
PURSUANT TO THE WRITTEN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
PERMA-FIX ENVIRONMENTAL SERVICES, INC. TO THE EFFECT THAT
REGISTRATION UNDER SUCH ACT IS NOT REQUIRED WITH RESPECT TO SUCH
SALE OR TRANSFER.
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
XXXX, XXXX & CO., INC.
AND
LARKSPUR CAPITAL CORPORATION
WARRANT AGREEMENT
Dated as of January 25, 2000
WARRANT AGREEMENT, dated as of January 25, 2000 by and among
PERMA-FIX ENVIRONMENTAL SERVICES, INC., a Delaware corporation (the
"Company"), XXXX XXXX & CO, INC., and LARKSPUR CAPITAL CORPORATION
(hereinafter referred to individually called a "Holder" or "Agent"
and collectively, the "Holders" or the "Agents").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Agents, or
subject to the terms hereof, those permitted designees, warrants
("Warrants") to purchase up to an aggregate 150,000 shares of
common stock of the Company, par value $.001 per share ("Common
Stock");
WHEREAS, the Agents have agreed pursuant to an agreement (the
"Agreement") dated as of the date hereof by and among the Agents
and the Company to provide certain services to the Company;
WHEREAS, the Company proposes to issue to the Agents (and/or
designees) the Warrants as a partial retainer for the Agents'
services;
WHEREAS, the Agents are "accredited investors," as such term
is defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended (the "Act");
WHEREAS, if either of the Agents designates any other party as
a designee for the purpose of receiving any portion of the
Warrants pursuant to the terms hereof, then, prior to receiving any
of the Warrants as designee of the Agents, such designee must
execute and deliver to the Company a written certification
("Certification"), the form and content of which must be
satisfactory to the Company, in which such designee represents to
the Company that such designee is an "accredited investor" under
Rule 501 of Regulation D promulgated under the Act and how such
designee is an accredited investor, and that such designee is
acquiring such designated Warrants for the designees' own account,
for investment purposes only and not with a view toward
distribution or resale and agrees to be subject to and bound by all
of the other conditions and provisions of this Agreement
(including, but not limited to, the representations, warranties and
covenants contained in Sections 3 and 7 hereof) and shall execute
and deliver to the Company an agreement in form and substance
substantially the same as this Agreement except for the name and
number of Warrants to be issued to the designee;
WHEREAS, the Common Stock is listed for trading on the Boston
Stock Exchange and the National Association of Securities Dealers
Automated Quotation SmallCap market ("NASDAQ"), and the Company is
subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
and has been subject to such filing requirements for the past
ninety (90) days; and
WHEREAS, in reliance upon the representations made by the
Agents in this Agreement, the transactions contemplated by this
Agreement are such that the offer and purchase of securities
hereunder will be exempt from registration under applicable federal
securities laws because this is a private placement and intended to
be a nonpublic offering pursuant to Sections 4(2) and/or 3(b) of
the Securities Act and/or Regulation D promulgated under the Act.
NOW, THEREFORE, in consideration of the premises, the payment
by the Agents to the Company of an aggregate of twelve dollars and
fifty cents ($12.50), the agreements herein set forth and other
good and valuable consideration, hereby acknowledged, the parties
hereto agree as follows:
1. Grant. The Agents are hereby granted Warrants providing
the right to purchase in equal amounts, at any time and from the
date hereof until 5:30 p.m., New York time, on January 25, 2005, up
to an aggregate of 150,000 shares of Common Stock (the "Warrant
Shares") at an initial exercise price (subject to adjustment as
provided in Section 11 hereof) of $1.44 per share of Common Stock
subject to the terms and conditions of this Agreement. Except as
set forth herein, the Warrant Shares issuable upon exercise of the
Warrants are in all respects identical to the shares of Common
Stock that have been issued to the public. Anything to the
contrary notwithstanding, the Company shall have the right to
cancel 50% of the Warrants issued and then outstanding, on a pro
rata basis among the registered holders of the Warrants thereof, in
2
the event that no Transaction (as defined in the Agreement dated
January 25, 2000 between Xxxx, Xxxx & Co., Larkspur Capital
Corporation and Perma-Fix Environmental Services, Inc. and its
related subsidiaries) shall have occurred within one year from the
date hereof. In the event any registered holder of the Warrants
holds an odd number of Warrants at the time of cancellation of 50%
of the Warrants issued and then outstanding by the Company, the
number of Warrants held by such registered holder of the Warrants
which are canceled shall be rounded up to the next highest whole
number.
2. Warrant Certificates. The warrant certificates (the
"Warrant Certificates") delivered and to be delivered pursuant to
this Agreement shall be in the form set forth in Exhibit A,
attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Representations, Warranties and Covenants of Holder.
Each of the Holders of Warrants and/or Warrant Shares hereby
represents, warrants and covenants to the Company as follows:
3.1 Investment Intent. The Holders represent and
warrant that the Warrants are being, and any
underlying Warrant Shares will be, purchased or
acquired solely for the Holders' own account, for
investment purposes only and not with a view toward
the distribution or resale to others. The Holders
acknowledge and understand that neither the
Warrants nor Warrant Shares have been registered
under the Act by reason of a claimed exemption
under the provisions of the Act which depends, in
large part, upon the Holders' representations as to
investment intention, investor status, and related
and other matters set forth herein. The Holders
understand that, in the view of the Securities and
Exchange Commission (the "Commission"), among other
things, a purchase with an intent to distribute or
resell would represent a purchase and acquisition
with an intent inconsistent with its representation
to the Company, and the Commission might regard
such a transfer as a deferred sale for which the
registration exemption is not available.
3.2 Certain Risk. The Holders recognize that the
purchase of the Warrants or Warrant Shares involves
a high degree of risk in that (a) although the
Company has had an unaudited net income for the
nine month period ended September 30, 1999, the
Company did sustain losses through December 31,
1998, from its operations, and may require
substantial funds for its operations; (b) that the
Company has a substantial accumulated deficit; (c)
an investment in the Company is highly speculative
and only investors who can afford the loss of their
entire investment should consider investing in the
Company and the Warrants or Warrant Shares; (d) an
investor may not be able to liquidate his
investment; (e) transferability of the Warrants or
Warrant Shares is extremely limited; (f) in the
event of a disposition an investor could sustain
the loss of his entire investment; (g) the Warrants
3
represent non-voting equity securities, and the
right to exercise such Warrants and purchase shares
of voting equity securities in a corporate entity
that has an accumulated deficit; (h) no return on
investment, whether through distributions,
appreciation, transferability or otherwise, and no
performance by, through or of the Company, has been
promised, assured, represented or warranted by the
Company, or by any director, officer, employee,
agent or representative thereof; and, (i) while the
Common Stock is presently quoted and traded on the
Boston Stock Exchange and the NASDAQ and while the
Holders are a beneficiary of certain registration
rights provided herein, the Warrants subscribed for
and that are purchased under this Agreement and the
Warrant Shares (a) are not registered under
applicable federal or state securities laws, and
thus may not be sold, conveyed, assigned or
transferred unless registered under such laws or
unless an exemption from registration is available
under such laws, as more fully described herein,
and (b) the Warrants subscribed for and that are to
be purchased under this Agreement are not quoted,
traded or listed for trading or quotation on the
NASDAQ, or any other organized market or quotation
system, and there is therefore no present public or
other market for the Warrants, nor can there be any
assurance that the Common Stock will continue to be
quoted, traded or listed for trading or quotation
on the Boston Stock Exchange or the NASDAQ or on
any other organized market or quotation system.
3.3 Prior Investment Experience. The Holders
acknowledge that they have prior investment
experience, including investment in non-listed and
non-registered securities, or they have employed
the services of an investment advisor, attorney or
accountant to read all of the documents furnished
or made available by the Company to them and to
evaluate the merits and risks of such an investment
on their behalf, and that they recognize the highly
speculative nature of this investment.
3.4 No Review by the Commission. The Holders hereby
acknowledge that this offering of the Warrants has
not been reviewed by the Commission because this
private placement is intended to be a nonpublic
offering pursuant to Sections 4(2) and/or 3(b) of
the Act and/or Regulation D promulgated under the
Act.
3.5 Not Registered. The Holders understand that the
Warrants and the Warrant Shares have not been
registered under the Act by reason of a claimed
exemption under the provisions of the Act which
depends, in part, upon the Holders' investment
intention. In this connection, the Holders
understand that it is the position of the
Commission that the statutory basis for such
exemption would not be present if their
representations merely meant that their intention
was to hold such securities for a short period,
4
such as the capital gains period of tax statutes,
for a deferred sale, for a market rise (assuming
that a market develops), or for any other fixed
period.
3.6 No Public Market. The Holders understand that
there is no public market for the Warrants. The
Holders understand that although there is presently
a public market for the Common Stock, including the
Warrant Shares, Rule 144 (the "Rule") promulgated
under the Act requires, among other conditions, a
one-year holding period following full payment of
the consideration therefor prior to the resale (in
limited amounts) of securities acquired in a
nonpublic offering without having to satisfy the
registration requirements under the Act. The
Holders understand that the Company makes no
representation or warranty regarding its
fulfillment in the future of any reporting
requirements under the Exchange Act, or its
dissemination to the public of any current
financial or other information concerning the
Company, as is required by the Rule as one of the
conditions of its availability. The Holders
understand and hereby acknowledge that the Company
is under no obligation to register the Warrants or
the Warrant Shares under the Act, except as set
forth in Section 10 hereof.
3.7 Sophisticated Investor. The Holders (a) have
adequate means of providing for the Holders'
current financial needs and possible contingencies
and have no need for liquidity of the Holders'
investment in the Warrants; (b) are able to bear
the economic risks inherent in an investment in the
Warrants and understand that an important
consideration bearing on their ability to bear the
economic risk of the purchase of Warrants is
whether the Holders can afford a complete loss of
the Holders' investment in the Warrants and the
Holders represent and warrant that the Holders can
afford such a complete loss; and (c) have such
knowledge and experience in business, financial,
investment and banking matters (including, but not
limited to, investments in restricted, non-listed
and non-registered securities) that the Holders are
capable of evaluating the merits, risks and
advisability of an investment in the Warrants.
3.8 Tax Consequences. The Holders acknowledge that the
Company has made no representation regarding the
potential or actual tax consequences for the
Holders which will result from entering into the
Agreement. The Holders acknowledge that they bear
complete responsibility for obtaining adequate tax
advice regarding the Agreement.
3.9 Commission Filing. The Holders acknowledge that
they have been previously furnished with true and
complete copies of the following documents which
have been filed with the Commission pursuant to
Sections 13(a), 14(a), 14(c) or 15(d) of the
Exchange Act, and that such have been furnished to
the Holders a reasonable time prior to the date
5
hereof: (i) Annual Report on Form 10-K for the
year ended December 31, 1998 (the "Form 10-K"), as
may be amended; (ii) the Company's Proxy Statement
delivered to shareholders on or about November 10,
1999; and (iii) the information contained in any
reports or documents required to be filed by the
Company under Sections 13(a), 14(a), 14(c) or 15(d)
of the Exchange Act since the distribution of the
Form 10-K.
3.10 Documents, Information and Access. The Holders'
decisions to purchase the Warrants are not based on
any promotional, marketing or sales materials, and
the Holders and their representatives have been
afforded, prior to purchase thereof, the
opportunity to ask questions of, and to receive
answers from, the Company and its management, and
has had access to all documents and information
which Holders deem material to an investment
decision with respect to the purchase of Warrants
hereunder.
3.11 No Commission. The Holders agree and acknowledge
that no commission or other remuneration is being
paid or given directly or indirectly for soliciting
the subscription described hereunder.
3.12 Reliance. The Holders understand and acknowledge
that the Company is relying upon all of the
representations, warranties, covenants,
understandings, acknowledgments and agreements
contained in this Agreement in determining whether
to accept this subscription and to sell and issue
the Warrants to the Holders.
3.13 Accuracy or Representations and Warranties. All of
the representations, warranties, understandings and
acknowledgments that Holders have made herein are
true and correct in all material respects as of the
date of execution hereof. The Holders will perform
and comply fully in all material respects with all
covenants and agreements set forth herein, and the
Holder covenants and agrees that until the
acceptance of this Agreement by the Company, the
Holders shall inform the Company immediately in
writing of any changes in any of the
representations or warranties provided or contained
herein.
4. Representations, Warranties and Covenants of the Company.
In order to induce Holder to enter into this Agreement, the Company
hereby represents, warrants and covenants to Holder as follows:
4.1 Organization, Authority, Qualification. The
Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the
State of Delaware. The Company has full corporate
power and authority to own and operate its
properties and assets and to conduct and carry on
its business as it is now being conducted and
operated.
6
4.2 Authorization. The Company has full power and
authority to execute and deliver this Agreement and
to perform its obligations under and consummate the
transactions contemplated by this Agreement. Upon
the execution of this Agreement by the Company and
delivery of the Warrants, this Agreement shall have
been duly and validly executed and delivered by the
Company and shall constitute the legal, valid and
binding obligation of the Company, enforceable
against the Company in accordance with its terms.
4.3 No Commission. The Company agrees and acknowledges
that no commission or other remuneration is being
paid or given directly or indirectly for soliciting
the issuance of the Warrants.
4.4 Ownership of, and Title to, Securities. The
Warrant Shares, if issued, will be, duly
authorized, validly issued, fully paid and
nonassessable shares of the capital stock of the
Company, free of personal liability. Upon
consummation of the issuance of the Warrants (and
upon the exercise of the Warrants, in whole or in
part) pursuant to this Agreement, the Holder will
own and acquire title to the Warrants (and the
Warrant Shares, as the case may be) free and clear
of any and all proxies, voting trusts, pledges,
options, restrictions, or other legal or equitable
encumbrance of any nature whatsoever (other than
the restrictions on transfer due to federal and
state securities laws or as otherwise provided for
in this Agreement or in the Warrants).
5. Exercise of Warrant.
5.1 Method of Exercise. Subject to the terms hereof,
the Warrants initially are exercisable at an aggregate initial
exercise price per share of Common Stock set forth in Section 9
hereof payable by certified or cashier's check in New York Clearing
House funds, subject to adjustment as provided in Section 11
hereof. Upon surrender of a Warrant Certificate with the annexed
Form of Election to Purchase duly executed, together with payment
of the Exercise Price (as hereinafter defined) for the shares of
Common Stock purchased pursuant to the terms hereof, at the
Company's principal offices (presently located at 0000 XX 00xx
Xxxxx, Xxxxxxxxxxx, XX 00000) the Holders shall be entitled to
receive a certificate or certificates for the shares of Common
Stock so purchased. The purchase rights represented by each
Warrant Certificate are exercisable at the option of the Holders
thereof, in whole or in part (but not as to fractional shares of
the Common Stock underlying the Warrants). Warrants may be
exercised to purchase all or part of the shares of Common Stock
represented thereby. In the case of the purchase of less than all
the shares of Common Stock purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon
the surrender thereof and shall execute and deliver a new Warrant
Certificate of like tenor for the balance of the shares of Common
Stock purchasable thereunder.
7
5.2 Exercise by Surrender of Warrants. In addition to
the method of payment set forth in Section 5.1 and in lieu of any
cash payment required thereunder, subject to the terms hereof, each
Holder of the Warrants shall have the right at any time and from
time to time to exercise the Warrants held by such Holder in full
or in part by surrendering a Warrant Certificate in the manner
specified in Section 5.1 in exchange for the number of Warrant
Shares equal to the product of (x) the number of Warrant Shares as
to which the Warrants are being exercised multiplied by (y) a
fraction, the numerator of which is the Market Price (as defined in
Section 5.3 below) of the Warrant Shares less the Exercise Price
and the denominator of which is such Market Price. Solely for the
purposes of this paragraph, Market Price shall be calculated as the
average of the Market Prices for each of the five trading days
preceding the Notice Date.
5.3 Definition of Market Price. As used herein, the
phrase "Market Price" at any date shall be deemed to be the average
closing bid quotation of the Company's Common Stock (i) as reported
on the NASDAQ for the last five (5) trading days, or (ii) if the
Common Stock is not traded on NASDAQ, the average closing price as
listed on a national securities exchange for the last five (5)
trading days, or (iii) if no longer traded on NASDAQ or listed on
a national securities exchange, as determined in good faith by
resolution of the Board of Directors of the Company, based on the
best information available to it.
6. Issuance of Certificates. Upon the exercise of the
Warrants or any portion thereof, the issuance of certificates for
the Warrant Shares underlying such Warrants so exercised, shall be
made forthwith (and in any event within five (5) business days
thereafter) without charge to the Holder exercising such Warrants,
including, without limitation, any tax which may be payable in
respect of the issuance thereof, and such certificates shall be
issued in the name of the Holder thereof.
The Warrants and the certificates representing the Warrant
Shares shall be executed on behalf of the Company by the manual or
facsimile signature of the then Chairman or Vice Chairman of the
Board of Directors or President or Vice President of the Company.
7. Restriction on Transfer of Warrants or Warrant Shares.
The Holder of a Warrant Certificate, by its acceptance thereof,
covenants and agrees that the Warrants are being acquired as an
investment and not with a view to the distribution thereof. The
Holder of a Warrant Certificate, by its acceptance thereof, agrees
that (i) no public distribution of Warrants or Warrant Shares will
be made in violation of the provisions of the Act and the Rules and
Regulations promulgated thereunder and (ii) during such period as
delivery of a prospectus with respect to Warrants or Warrant Shares
may be required by the Act, no public distribution of Warrants or
Warrant Shares will be made in a manner or on terms different from
those set forth in, or without delivery of, a prospectus then
meeting the requirements of Section 10 of the Act and in compliance
with all applicable state securities laws. The Holder of each
Warrant Certificate and each transferee thereof further agrees that
if any distribution of any of the Warrants or Warrant Shares is
proposed to be made by them otherwise than by delivery of a
prospectus meeting the requirements of Section 10 of the Act, such
action shall be taken only after receipt by the Company of an
opinion of its counsel, or an opinion of counsel reasonably
8
satisfactory to the Company, to the effect that the proposed
distribution will not be in violation of the Act or of applicable
state law. Furthermore, it shall be a condition to the transfer of
the Warrants that any transferee thereof deliver to the Company his
or its written agreement to accept and be bound by all of the terms
and conditions contained in this Agreement. Any Warrant Shares
issued upon exercise of the Warrants shall bear a legend to the
following effect:
The securities represented by this
certificate have not been registered
under the Securities Act of 1933, as
amended (the "Act"), or qualified under
applicable state securities laws, and are
restricted securities within the meaning
of the Act. Such securities may not be
sold or transferred, except pursuant to a
registration statement under such Act and
qualification under applicable state
securities laws which are effective and
current with respect to such securities
or pursuant to an opinion of counsel
reasonably satisfactory to the issuer of
such securities that registration and
qualification are not required under
applicable federal or state securities
laws or an exemption is available
therefrom.
These securities are also subject to the
registration rights set forth in that
certain Warrant Agreement by and among
Perma-Fix Environmental Services, Inc.,
(the "Company") Xxxx, Xxxx & Co., Inc.,
and Larkspur Capital Corporation, dated
as of January 25, 2000, a copy of which
is on file at the Company's Principal
Executive Office.
8. Warrant Holder Not Shareholder. A Warrant Certificate
shall not be deemed to confer upon the Holder any right to vote the
Warrant Shares or to consent to or receive notice as a shareholder
of the Company as such, because of the Warrant Certificate, in
respect of any matters whatsoever, or any other rights or
liabilities as a shareholder.
9. Exercise Price.
9.1 Initial and Adjusted Exercise Price. Except as
otherwise provided in Section 11 hereof, the initial exercise price
of each Warrant shall be $1.44 per share of Common Stock. The
adjusted exercise price shall be the price which shall result from
time to time from any and all adjustments of the initial exercise
price in accordance with the provisions of Section 11 hereof.
9.2 Exercise Price. The term "Exercise Price" herein
shall mean the initial exercise price or the adjusted exercise
price, depending upon the context.
9
10. Registration Rights.
10.1 Piggyback Registration. Subject to the terms of
this Section 10, if, at any time commencing after the date hereof
and expiring seven (7) years from the effective date, the Company
proposes to register any of its equity securities under the Act
(other than a registration statement (i) on Form S-8 or any
successor form to such form or in connection with any employee or
director welfare, benefit or compensation plan, (ii) on Form S-4 or
any successor form to such form or in connection with an exchange
offer, (iii) in connection with a rights offering exclusively to
existing holders of Common Stock, (iv) in connection with an
offering solely to employees of the Company or its subsidiaries, or
(v) relating to a transaction pursuant to Rule 145 of the Act), it
will give written notice by registered mail, at least thirty (30)
days prior to the filing of each such registration statement, to
each Holder of its intention to do so. If any Holder notifies the
Company within twenty (20) business days after receipt of any such
notice of its desire to include any such securities in such
proposed registration statement, the Company shall afford any such
Holder of the opportunity to have any such Warrant Shares held by
such Holder or Warrant Shares underlying Warrants held by such
Holder, registered under such registration statement (sometimes
referred to herein as the "Piggyback Registration").
Notwithstanding the provisions of this Section 10.1, the
Company shall have the right at any time after it shall have given
written notice pursuant to this Section 10.1 (irrespective of
whether a written request for inclusion of any such securities
shall have been made) to elect not to file any such proposed
registration statement, or to withdraw the same after the filing
but prior to the effective date thereof.
If a Piggyback Registration is an underwritten primary
registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their reasonable
opinion based upon market conditions the number of securities
requested to be included in such registration exceeds the number
that can be sold in such offering or would impair the pricing of
such offering, the Company will include in such registration (i)
first, the securities the Company proposes to sell, (ii) second, up
to the full number of applicable Common Stock requested to be
included in such registration by holders of Common Stock with prior
or superior piggyback registration rights, (iii) third, the number
of applicable Warrant Shares requested to be included in such
registration, pro rata among the Holders on the basis of the number
of shares requested by such holders to be included and which, in
the opinion of the managing underwriter, can be sold without
adversely affecting the price range or probability of success of
such offering, and (iv) fourth, other securities to be included in
such registration.
10.2 Demand Registration.
(a) Subject to the terms of this Section 10, at any time after
the date hereof and expiring five (5) years from the effective date, the
Holders representing a "Majority" (as hereinafter defined) of the Warrant
Shares (assuming the exercise of all the Warrants) shall have the right
(which right is in addition to the registration rights under Section 10.1
hereof), exercisable by written notice to the Company, to have the Company
10
prepare and file with the Securities and Exchange Commission (the
"Commission"), on one occasion only, a registration statement and such
other documents, including a prospectus, as may be necessary in the opinion
of both counsel for the Company and counsel for Xxxx Xxxx & Co., Inc., in
order to comply with the provisions of the Act, so as to permit a public
offering and the sale of their respective Warrant Shares for nine (9)
consecutive months by such Holders and any other Holder notifying the Company
within ten (10) days after receiving notice from the Company of such request.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 10.2 by any Holder to each Holder
within ten (10) days from the date of the receipt of any such registration
request.
(c) Notwithstanding anything to the contrary contained herein,
if the Company is obligated to file a registration statement covering the
Warrant Shares under Section 10.2(a) but shall not have filed a registration
statement for the Warrant Shares within the time period specified in Section
10.3 hereof pursuant to the written notice specified in Section 10.2(a) of a
Majority of the Holders, which time period shall be extended pursuant to
10.2(d) below, the Company shall have the option, but not the obligation,
upon the written notice of election of a Majority of the Holders to
repurchase (i) any and all Warrant Shares at the higher of the Market Price
per share of Common Stock on (y) the date of the notice sent pursuant to
Section 10.2(a) or (z) the expiration of the period specified in Section
10.3(a) and (ii) any and all Warrants at such Market Price less the Exercise
Price of such Warrant. Such repurchase shall be in immediately available
funds and shall close within two (2) days after the later of (i) the
expiration of the period specified in Section 10.3(a) or (ii) the delivery
of the written notice of election specified in this Section 10.2(d). The
Company shall have no obligation to exercise the option that may be granted
pursuant to the terms of this paragraph (c) of Section 10.2 hereof.
(d) Notwithstanding anything to the contrary, the Company may
delay the filing of a Registration Statement under this Section 10.2 and may
withhold efforts to cause such Registration Statement to become effective
if the Company determines in good faith that such registration might
interfere with or affect the negotiation or completion of any material
transaction or other material event that is being contemplated by the Company
(whether or not a final decision has been made to undertake such material
transaction at the time the right to delay is exercised). The Company may
exercise such right to delay the filing or effectiveness of a Registration
Statement two times and may delay the filing or effectiveness of such
registration statement for not more than 90 days beyond the relevant period
set forth in Section 10.3(a). Upon any delay by the Company pursuant to
this Section 10.2(d) which lasts more than 60 days, the Majority of the
Holders may rescind the notice given pursuant to Section 10.2(a), and the
Holders will be deemed not to have exercised the right to effect the filing of
a Registration Statement under Section 10.2(a) as a result of such notice.
(e) Notwithstanding anything herein to the contrary, the
obligations of the Company and rights of the Holders under Sections 10.1, 10.2
and 10.3 shall expire and terminate at such time as Xxxx, Xxxx & Co., or its
successors, shall have received from counsel to the Company an unqualified
11
written opinion of such counsel that the Holders have the right, pursuant
to the provision of Rule 144 under the Act, to sell within any three month
period from the date of the opinion all Warrant Shares then held and
purchasable
upon exercise of the Warrants by such Holders.
10.3 Covenants of the Company With Respect to Registration. In
connection with any registration under Section 10.1 or 10.2 hereof, the
Company
covenants and agrees as follows:
(a) The Company shall use its reasonable efforts to file a
registration statement within fifty (50) days of receipt of any demand
therefor, shall use its reasonable efforts to have any registration statements
declared effective at the earliest possible time, and shall furnish each
Holder desiring to sell Warrant Shares under such registration statement such
number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs (excluding
fees and expenses of Holder(s)' counsel and any underwriting or
selling commissions which shall be paid by the Holders),
fees and expenses in connection with all registration statements
filed pursuant to Section 10.1 and 10.2(a) hereof including,
without limitation, the Company's legal and accounting fees,
printing expenses, blue sky fees and expenses.
(c) The Company will take all necessary action
which may be required in qualifying or registering the Warrant
Securities included in a registration statement for offering and
sale under the securities or blue sky laws of such states as
reasonably are requested by the Holder(s), provided that the
Company shall not be obligated to execute or file any general
consent to service of process or to qualify as a foreign
corporation to do business under the laws of any such
jurisdiction.
(d) Nothing contained in this Agreement shall be
construed as requiring the Holders to exercise their Warrants
prior to the initial filing of any registration statement or the
effectiveness thereof.
(e) The Company shall deliver promptly to each
Holder participating in the offering requesting the
correspondence and memoranda described below copies of all
correspondence between the Commission and the Company, its
counsel or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to the registration
statement.
(f) Notwithstanding anything herein to the
contrary, the obligations of the Company and rights of the
Holders under Sections 10.1, 10,.2 and 10.3 shall expire and
terminate at such time as Xxxx, Xxxx & Co., Inc. or its
successors, shall have received from counsel to the Company an
unqualified written opinion of such counsel that the Holders have
the right, pursuant to the provisions of Rule 144 under the Act,
to sell within any three month period from the date of the
opinion all Warrant Shares then held and purchasable upon
exercise of the Warrants by such Holders.
12
10.4 Indemnification.
(a) Subject to the terms of this Section 10, the
Company will indemnify and hold harmless each Holder, its
directors and officers, and each person, if any, who controls the
Holder within the meaning of Section 15 of the Act or Section
20(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against, and will reimburse the Holder
and each such controlling person with respect to, any and all
loss, damage, liability, cost and expense to which such holder or
controlling person may become subject under the Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses
are caused by any untrue statement or alleged untrue statement of
any material fact contained in a Registration Statement filed
with the Commission pursuant to Section 10, any prospectus
contained therein or any amendment or supplement thereto, or
arise out of, or are based upon, the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which they were made not misleading; provided,
however, that the Company will not be liable in any such case to
the extent that any such loss, damage, liability, cost or expense
arises out of, or is based upon, an untrue statement or alleged
untrue statement or omission or alleged omission so made in
conformity with information furnished by a Holder or such
controlling person in writing specifically for use in the
preparation thereof.
(b) Subject to the terms of this Section 10, each
Holder will severally, and not jointly, indemnify and hold
harmless the Company, its directors and officers, any controlling
person and any underwriter from and against, and will reimburse
the Company, its directors and officers, any controlling person
and any underwriter with respect to, any and all loss, damage,
liability, cost or expense to which the Company or any
controlling person and/or any underwriter may become subject
under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement
or alleged untrue statement of any material fact contained in
such Registration Statement filed with the Commission pursuant
to Section 10, any prospectus contained therein or any amendment
or supplement thereto, or arise out of, or are based upon, the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made,
not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was so made in reliance upon, and in
strict conformity with, written information furnished by, or on
behalf of, the Holder specifically for use in the preparation
thereof.
(c) Promptly after receipt by an indemnified
party pursuant to the provisions of Section 10.4(a) or 10.(b) of
notice of the commencement of any action involving the subject
matter of the foregoing indemnity provisions, such indemnified
party will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of Section 10.4(a)
or 10.4(b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the
indemnifying party will not relieve the indemnifying party from
any liability which it may have to any indemnified party
otherwise than hereunder. In case such action is brought against
any indemnified party and the indemnified party notifies the
indemnifying party of the commencement thereof, the indemnifying
13
party shall have the right to participate in, and, to the extent
that it may wish, assume the defense thereof; or, if there is a
conflict of interest which would prevent counsel for the
indemnifying party from also representing the indemnified party,
(or, in the event that the indemnified party and the indemnifying
party are both named as parties in the action and it is
reasonably determined, in good faith, by counsel for the
indemnified party and counsel for the indemnifying party that
there is such a conflict) the indemnified parties have the right
to select only one (1) separate counsel to participate in the
defense of such action on behalf of all such indemnified parties.
After notice from the indemnifying parties to such indemnified
party of the indemnifying parties' election so to assume the
defense thereof, the indemnifying parties will not be liable to
such indemnified parties pursuant to the provisions of said
Section 10.4(a) or 10.4(b) for any legal or other expense
subsequently incurred by such indemnified parties in connection
with the defense thereof, other than reasonable costs of
investigation, unless (a) the indemnified parties shall have
employed counsel in accordance with the provisions of the
preceding sentence; (b) the indemnifying parties shall not have
employed counsel satisfactory to the indemnified parties to
represent the indemnified parties within a reasonable time after
the notice of the commencement of the action or (c) the
indemnifying party has authorized the employment of counsel for
the indemnified party at the expense of the indemnifying parties.
10.5 Majority. For purposes of this Agreement, the term
"Majority" in reference to the Holders, shall mean in excess of
fifty percent (50%) of the then outstanding Warrants or Warrant
Shares that (y) are not held by the Company, an affiliate,
officer, creditor, employee or agent thereof or any of their
respective affiliates, members of their family, persons acting as
nominees or in conjunction therewith and (z) have not been resold
to the public pursuant to a registration statement filed with the
Commission under the Act.
11. Adjustments to Exercise Price and Number of Securities.
11.1 Subdivision and Combination. In case the Company
shall at any time subdivide or combine the outstanding shares of
Common Stock, the Exercise Price shall forthwith be
proportionately decreased in the case of subdivision or increased
in the case of combination.
11.2 Stock Dividends and Distributions. If the Company
at any time, or from time to time, while the Warrants are
outstanding shall declare or pay, without consideration, any
dividend on the Common Stock payable in Common Stock, then the
Exercise Price shall be proportionately decreased.
11.3 Adjustment in Number of Securities. Upon each
adjustment of the Exercise Price pursuant to the provisions of
this Section 11, the number of Warrant Shares issuable upon the
exercise at the adjusted exercise price of each Warrant shall be
adjusted to the nearest full amount by multiplying a number equal
to the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares issuable upon exercise
of the Warrants immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price.
14
11.4 Definition of Common Stock. For the purpose of
this Agreement, the term "Common Stock" shall mean (i) the Common
Stock or (ii) the class of stock designated as Common Stock in
the Articles of Incorporation of the Company as may be amended as
of the date hereof, or (ii) any other class of stock resulting
from successive changes or reclassifications of such Common
Stock consisting solely of changes in par value, or from par
value to no par value, or from no par value to par value.
11.5 Merger or Consolidation. In case of any
consolidation of the Company with, or merger of the Company with,
or merger of the Company into, another corporation (other than a
consolidation or merger in which the Company is the surviving
entity), the corporation formed by such consolidation or merger
shall execute and deliver to each Holder a supplemental warrant
agreement providing that the holder of each Warrant then
outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise
of such Warrant, the kind and amount of shares of stock and other
securities and property receivable upon such consolidation or
merger, by a holder of the number of shares of Common Stock of
the Company for which such warrant might have been exercised
immediately prior to such consolidation, merger, sale or
transfer. Such supplemental warrant agreement shall provide for
adjustments which shall be identical to the adjustments provided
in Section 11. The above provision of this subsection shall
similarly apply to successive consolidations or mergers.
11.6 No Adjustment of Exercise Price in Certain Cases.
No adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants or
the shares of Common Stock issuable upon the exercise of the
Warrants;
(b) If the amount of said adjustment shall be
less than two cents (2 cents) per Warrant Share, provided, however,
that in such case any adjustment that would otherwise be
required then to be made shall be carried forward and shall be
made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried
forward, shall amount to at least two cents (2 cents) per Warrant
Share.
12. Exchange and Replacement of Warrant Certificates. Each
Warrant Certificate is exchangeable without expense, upon the
surrender thereof by the registered Holder at the principal
executive office of the Company, for a new Warrant Certificate of
like tenor and date representing in the aggregate the right to
purchase the same number of Warrant Shares in such denominations
as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation
of any Warrant Certificate, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to
it, and reimbursement to the Company of all reasonable expense
incidental thereto, and upon surrender and cancellation of the
15
Warrants, if mutilated, the Company will make and deliver a new
Warrant Certificate of like tenor, in lieu thereof.
13. Elimination of Fractional Interests. The Company shall
not be required to issue certificates representing fractions of
shares of Common Stock upon the exercise of the Warrants,
nor shall it be required to issue scrip or pay cash in lieu of
fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction
up to the nearest whole number of shares of Common Stock or other
securities, properties or rights.
14. Reservation and Listing of Securities. The Company
shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of
issuance upon the exercise of the Warrants, such number of shares
of Common Stock or other securities, properties or rights as
shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of the Warrants and
payment of the Exercise Price therefor, all shares of Common
Stock and other securities issuable upon such exercise shall be
duly and validly issued, fully paid, non-assessable and not
subject to the preemptive rights of any stockholder. As long as
the Warrants shall be outstanding, the Company shall use its
reasonable efforts to cause all shares of Common Stock issuable
upon the exercise of the Warrants to be listed (subject to
official notice of issuance) on all securities exchanges on which
the Common Stock issued to the public in connection herewith may
then be listed and/or quoted.
15. Notices to Warrant Holders. Nothing contained in this
Agreement shall be construed as conferring upon the Holders the
right to vote or to consent or to receive notice as a stockholder
in respect of any meetings of stockholders for the election of
directors or any other matter, or as having any rights whatsoever
as a stockholder of the Company. If, however, at any time prior
to the expiration of the Warrants and their exercise, any of the
following events shall occur:
(a) the Company shall take a record of the holders of
its shares of Common Stock for the purpose of entitling them to
receive a dividend or distribution payable otherwise than in
cash, or a cash dividend or distribution payable otherwise than
out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the
books of the Company;
or
(b) the Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the
Company or securities convertible into or exchangeable for shares
of capital stock of the Company, or any option, right or warrant
to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger)
or a sale of all or substantially all of its property, assets and
business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give
written notice of such event at least fifteen (15) days prior to
the date fixed as a record date or the date of closing the
16
transfer books for the determination of the stockholders entitled
to such dividend, distribution, convertible or exchangeable
securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the
transfer books, as the case may be. Failure to give such notice
or any defect therein shall not affect the validity of any action
taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any
proposed dissolution, liquidation, winding up or sale.
16. Notices.
All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been
duly made and sent when delivered, or mailed by registered or
certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in
Section 5 hereof or to such other address as the Company may
designate by notice to the Holder; or
(c) If to Xxxx, Xxxx & Co., Inc., to Xxxx, Xxxx & Co.,
Inc. 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention Xxxxx X.
Rock; or
(d) If to Larkspur Capital Corporation, to Larkspur
Capital Corporation, 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000,
Attention: Xxxxxx X. Xxxxxxx.
17. Supplements and Amendments. The Company and Xxxx, Xxxx
& Co. may from time to time supplement or amend this Agreement
without the approval of any Holder in order to cure any
ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions
herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and Xxxx, Xxxx &
Co. may deem necessary or desirable and which the Company and
Xxxx, Xxxx & Co. xxxx shall not adversely affect the interests of
the Holders.
18. Successors. All the covenants and provisions of this
Agreement shall be binding upon and inure to the benefit of the
Company, each Holder and their respective successors and assigns
hereunder.
19. Termination. This Agreement shall terminate at the
close of business on January 25, 2005.
20. Governing Law; Submission to Jurisdiction. This
Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of
17
Delaware and for all purposes shall be construed in accordance
with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
The Company, the Agents and each Holder hereby agrees that
any action, proceeding or claim against it arising out of, or
relating in any way to, this Agreement shall be brought and
enforced in the federal courts located in Wilmington, Delaware,
and irrevocably submits to such jurisdiction, which jurisdiction
shall be exclusive. The Company, the Agents and each Holder
hereby irrevocably waives any objection to such exclusive
jurisdiction or inconvenient forum. Any such process or summons
to be served upon any of the Company, the Agents and the
Holder(s) (at the option of the party bringing such action,
proceeding or claim) may be served by transmitting a copy
thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set
forth in Section 16 hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon the party so
served in any action, proceeding or claim. The Company, the
Agents and the Holder(s) agree that the prevailing party(ies) in
any such action or proceeding shall be entitled to recover from
the other party(ies) all of its/their reasonable legal costs
and expenses relating to such action or proceeding and/or
incurred in connection with the preparation therefor.
21. Entire Agreement; Modification. This Agreement
contains the entire understanding between the parties hereto with
respect to the subject matter hereof and may not be modified or
amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
22. Severability. If any provision of this Agreement shall
be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision of this
Agreement.
23. Captions. The caption headings of the Sections of this
Agreement are for convenience of reference only and are not
intended, nor should they be construed as, a part of this
Agreement and shall be given no substantive effect.
24. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other
than the Company and the Agents and any other Holder any legal
or equitable right, remedy or claim under this Agreement; and
this Agreement shall be for the sole benefit of the Company and
the Agents and any other registered Holder.
25. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and such counterparts
shall together constitute but one and the same instrument.
26. Assignment. This Agreement may not be assigned without
prior written consent of all parties hereto. The Warrants
granted hereunder may be assigned in part, or in whole if prior
to any such assignment the assignee executes and delivers to the
Company a Certification, the form and content of which must be
18
satisfactory to the Company, in which such assignee represents to
the Company that such assignee is an "accredited investor" under
Rule 501 of Regulation D promulgated under the Act and how such
assignee is an accredited investor, and that such assignee is
acquiring such designated Warrants for the assignees' own
account, for investment purposes only and not with a view toward
distribution or resale and agrees to be subject to and bound by
all of the other conditions and provisions of this Agreement
(including, but not limited to, the representations, warranties
and covenants contained in Sections 3 and 7 hereof) and such
assignee shall execute and deliver to the Company an agreement in
form and substance substantially the same as this Agreement
except for the name and number of Warrants to be issued to the
assignee.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above
written.
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
By:
_______________________________________
Xx. Xxxxx X. Xxxxxxxxxx
Chief Executive Officer
XXXX, XXXX & CO., INC.
By:
______________________________________
Name:
Title:
LARKSPUR CAPITAL CORPORATION
By:
______________________________________
Name:
Title:
19
