JOINT VENTURE AND OPTION AGREEMENT
between
AIR & WATER TECHNOLOGIES CORPORATION
and
CHEMFIX TECHNOLOGIES, INC.
September 1, 1989
TABLE OF CONTENTS
Page
SECTION 1: CERTAIN DEFINITIONS......................................... 1
SECTION 2: FORMATION OF THE JOINT VENTURE.............................. 7
A. Formation................................................ 7
B. Name and Filings......................................... 7
C. Place of Business........................................ 7
D. Purpose.................................................. 7
E. Other Purposes........................................... 7
F. Uniform Partnership Act.................................. 7
G. Equal Interests.......................................... 8
H. Joint Venture Property................................... 8
I. Contributions............................................ 8
J. Fiscal Year.............................................. 8
K. Transfer of Joint Venture Interests...................... 8
L. Relationship of the Parties.............................. 8
SECTION 3: MANAGEMENT OF THE JOINT VENTURE............................. 9
A. Steering Committee....................................... 9
B. Steering Committee Role.................................. 9
C. Steering Committee Meetings.............................. 9
D. Votes of the Steering Committee.......................... 10
E. Operating Group.......................................... 10
F. Delegation............................................... 10
G. Party Contributions...................................... 10
H. Third Party Costs........................................ 11
SECTION 4: NON-COMPETITION............................................. 11
A. AWT Non-Competition...................................... 11
B. AWT Exceptions........................................... 11
C. CTI Non-Competition...................................... 12
D. CTI Exceptions........................................... 12
E. Existing Municipalities.................................. 13
F. Clarifications........................................... 13
G. Solicitation of Employees................................ 13
H. Injunctive Relief........................................ 13
SECTION 5: NOTICE AND PURSUIT OF CERTAIN BUSINESS
OPPORTUNITIES.......................................... 14
A. Notice................................................... 14
B. Non-Municipal Sludge Projects............................ 14
C. AWT Engineering Project Municipalities................... 14
D. Evaluation of Project.................................... 15
E. Vote on Projects......................................... 15
F. Vote to Proceed: Allocations............................ 15
G. Expanded Non-Compete..................................... 16
H. Vote Not to Proceed...................................... 16
I. Deemed Vote Not to Proceed............................... 17
J. CTI License.............................................. 17
SECTION 6: FORMATION OF AND RELATIONSHIP WITH
SUBSIDIARIES................................................ 17
A. Determination Regarding Subsidiaries..................... 17
B. Formation of Subsidiaries................................ 18
C. Project Implementation Services.......................... 18
D. CTI License Agreement.................................... 19
E. AWT License Agreements................................... 19
F. Confidentiality Agreement................................ 20
G. Reagent Supply........................................... 20
H. Additional Services...................................... 20
I. Liabilities to Third Parties............................. 21
SECTION 7: AGRICULTURAL MATERIAL....................................... 21
A. NEC Option............................................... 21
B. Special Services......................................... 22
C. Right to Assign.......................................... 22
D. Indemnification.......................................... 22
E. Certain Transfers........................................ 22
SECTION 8: NEW TECHNOLOGY.............................................. 22
A. Joint Venture New Intellectual Property.................. 22
B. Development of Joint Venture New Intellectual
Property................................................. 23
C. Party New Intellectual Property.......................... 23
D. Certain Actions.......................................... 23
SECTION 9: PERMITTING.................................................. 24
SECTION 10: FINANCIAL ARRANGEMENTS..................................... 24
A. Bonding Arrangements..................................... 24
B. Other Financial Arrangements............................. 25
C. Party Financing Arrangements............................. 25
SECTION 11: REPRESENTATIONS AND WARRANTIES............................. 26
A. CTI Representations and Warranties....................... 26
B. AWT Representations and Warranties....................... 28
SECTION 12: CONFIDENTIAL AND PROPRIETARY INFORMATION................... 29
A. Provision of Confidential Information.................... 29
B. Inclusions............................................... 29
C. Exceptions............................................... 30
D. Need to Know............................................. 31
E. Permitted Purposes....................................... 31
F. Return of Confidential Information....................... 31
G. Survival of Obligations.................................. 31
H. Injunctive Relief........................................ 31
SECTION 13: STOCK OPTIONS.............................................. 32
A. Cash Option.............................................. 32
B. Vesting Options.......................................... 32
C. Earn in Options.......................................... 33
D. Performance Criteria for Earn In Options................. 34
E. Restrictions............................................. 34
F. Injunctive Relief........................................ 35
G. Survival of Obligations.................................. 36
SECTION 14: JOINT VENTURE BOOKS OF ACCOUNT, AUDITS
AND ACCOUNTING........................................ 36
A. Responsibility for Records............................... 36
B. Audits................................................... 36
C. Right of Inspection...................................... 36
D. Presentation of Records.................................. 36
SECTION 15: COMPLIANCE WITH LAW........................................ 37
SECTION 16: TERM OF AGREEMENT AND TERMINATION.......................... 37
A. Term..................................................... 37
B. Termination.............................................. 37
C. Effect of Termination.................................... 38
D. Bankruptcy............................................... 39
SECTION 17: DISPUTES................................................... 40
A. Resolution of Disputes................................... 40
B. Notice of Meeting........................................ 40
C. Act Governs.............................................. 40
D. Notice of Dispute........................................ 41
E. Selection of Umpire...................................... 41
F. Proceeding............................................... 42
G. Fees..................................................... 42
H. Provisional Relief....................................... 42
I. Timing of Decision....................................... 42
J. Act Governs Proceedings.................................. 42
K. Counsels................................................. 42
L. Extensions............................................... 43
SECTION 18: INDEMNITY.................................................. 43
SECTION 19: ASSIGNMENT................................................. 43
A. Permitted Assignees...................................... 43
B. Effect of Assignment..................................... 44
SECTION 20: MISCELLANEOUS.............................................. 44
A. Force Majeure............................................ 44
B. Maintenance and Access to Records........................ 44
C. Obligations.............................................. 44
D. Publicity................................................ 46
E. Further Assurances....................................... 46
F. Full Agreement of the Parties............................ 46
G. Notices.................................................. 47
H. Agency Limitation........................................ 47
I. Schedules and Appendices................................. 47
J. Applicable Law........................................... 48
K. Successors and Assigns................................... 48
L. Counterparts............................................. 48
TABLE OF SCHEDULES
SCHEDULE 1 CHEMFIX INTELLECTUAL PROPERTY
CHEMFIX TECHNOLOGIES, INC. UNITED STATES
TRADEMARKS AND SERVICE MARKS
SCHEDULE 4D CTI EXISTING MUNICIPALITIES
SCHEDULE 4F AWT ALTERNATE TECHNOLOGY
ENGINEERING PROJECT MUNICIPALITIES
SCHEDULE 11A(7) PATENTS, LICENSES AND AGREEMENTS
APPENDICES
APPENDIX A OPTION AGREEMENT
This JOINT VENTURE AND OPTION AGREEMENT (the "Agreement")
entered into as of the 1st day of September, 1989, by and between Air & Water
Technologies Corporation ("AWT"), a Delaware corporation, having its principal
place of business at Route 22 West & Station Road, Branchburg, New Jersey
08853 with a post office address of P.O. Box 1500, Somerville, New Jersey
08876; and Chemfix Technologies, Inc. ("CTI"), a Delaware corporation, having
its principal place of business at 2424 Edenborn Avenue, Metairie, Louisiana
70001.
W I T N E S S E T H:
WHEREAS AWT and the other AWT Companies are engaged in the
business of the treatment of sewage, the production of sewage sludge and the
design and construction of sludge management systems; have established
operating relationships with sewage sludge and septage producers throughout
the United States and Puerto Rico; and have developed a financing capability
for such projects; and
WHEREAS, CTI and the other CTI Companies are in the business of
the design, installation and operation of the Chemfix Process and have
produced a soil-like product determined to be suitable for re-use as bulk fill
and/or landfill cover material by several state regulatory agencies; and
WHEREAS, CTI currently holds several patents issued by the U.S.
Patent and Trademark Office relating to processes and equipment used to treat
and convert sludge into a recyclable, soil-like product; and
WHEREAS, the Parties desire to establish a national, joint
venture relationship for the purpose of selecting specific projects for
participation by the Parties resulting in the re-use and recycling of
municipal sewage sludge and septage as bulk fill and/or landfill cover
material using CTI's proprietary solidification/chemical fixation technology;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the Parties mutually agree as follows:
SECTION 1: CERTAIN DEFINITIONS
As used herein, the following terms shall have the following
meanings:
Acceptance Tests - shall have the meaning set forth in Section
6C.
Act - shall have the meaning set forth in Section 17C.
Additional Earn in Options - shall have the meaning set forth
in Section 13C.
Agreement - shall mean this Joint Venture and Option Agreement,
as the same may be amended by mutual agreement of AWT and CTI from time to
time.
Aggregate Earn in Options - shall have the meaning set forth in
Section 13C.
Aggregate Net Profits - shall mean the Net Profits of the Joint
Venture and all Subsidiaries aggregated.
Alternate Technology - shall mean any and all methods of
treating Municipal Sludge using technologies other than Chemical Fixation
Technology, including, but not limited to aerobic digestion, air drying,
anaerobic digestion, composting, heat drying, heat treatment, beta ray
irradiation, gamma ray irradiation, pasteurization, incineration, land
application and all forms of wet air oxidation.
Analytical Services Agreement - shall have the meaning set
forth in Section 13D.
Assignee - shall mean any party to whom AWT assigns any Options
granted by CTI to AWT pursuant to this Agreement and any assignee or remote
assignee of such party.
AWT - shall mean Air & Water Technologies Corporation and its
successors and assigns.
AWT Companies - shall mean AWT and its direct and indirect
wholly-owned or majority-owned subsidiaries, whether now existing or
hereinafter formed.
AWT Chemical Fixation Engineering Project Municipalities -
shall have the meaning set forth in Subsection 4B of this Agreement.
AWT Chemical Fixation Engineering Project Municipalities List -
shall have the meaning set forth in Subsection 4B of this Agreement.
AWT Engineering Project Municipalities List - shall have the
meaning set forth in Subsection 5C of this Agreement.
Cash Option - shall mean the option CTI grants to AWT pursuant
to Subsection 13A of this Agreement.
Cash Option Price - shall mean the price of the Cash Option as
set forth in Subsection 13A.
Chemfix Intellectual Property - shall mean all right, title and
interest of the CTI Companies in and to all U.S. patents, U.S. patent
applications, trademarks, service marks, trade names, copyrights, inventions,
improvements, processes, trade secrets and know-how of the CTI Companies, U.S.
or foreign, used in the Chemfix Process as of the date of this Agreement as it
relates to the treatment of Municipal Sludge.
Chemfix Patents and Trademarks - shall mean all patents and
trademarks of CTI relating to the Chemfix Process set forth in Schedule 1
hereto.
Chemfix Process - shall mean the Chemical Fixation Technologies
practiced by the CTI Companies from time to time utilizing, among other
things, Chemfix Intellectual Property.
Chemical Fixation Technology - shall mean any and all methods
and technologies for the treatment of Municipal Sludge using solidification or
chemical fixation, including, without being limited to, the Chemfix Process,
lime stabilization and lime conditioning, but not including the treatment of
Municipal Sludge using Alternate Technology.
Confidentiality Agreement - shall have the meaning set forth in
Section 6F.
Confidential Information - shall have the meaning set forth in
Section 12.
Cost - shall mean the direct cost of the services or material
which either of the Parties supplies to the Joint Venture or any Subsidiary,
including, without being limited to, salaries, benefits and out-of-pocket
expenses, but not including any profit margin or overhead for such Party.
CTI - shall mean Chemfix Technologies, Inc. and its successors
and assigns.
CTI Companies - shall mean CTI and its direct or indirect
wholly-owned or majority-owned subsidiaries, whether now existing or
hereinafter formed, including but not limited to: BTC Environmental Inc.,
Chemfix International, Inc., Chemfix Environmental Services, Inc., Chemfix of
Massachusetts, Inc., Environmental Industrial Research Associates, Inc., Houma
Fluid Services, Inc and VenVirotek.
CTI Existing Municipalities - shall have the meaning set forth
in Subsection 4D of this Agreement.
Dispute Notice - shall have the meaning set forth in Section
16B3(b).
Earn in Options - shall mean the stock options which CTI grants
to AWT pursuant to Subsection 13C of this Agreement.
Earn in Maximum - shall have the meaning set forth in Section
13C.
Extension Term - shall mean each and every additional one-year
renewal term of this Agreement, the first of which may begin at the end of the
Initial Term.
Initial Term - shall mean the initial term of this Agreement,
which shall be for a period of five (5) years from the date first set forth
above.
Joint Venture - shall mean the unincorporated joint venture
formed by AWT and CTI pursuant to this Agreement to be known as "Renewable
Earth Products, a Joint Venture".
Joint Venture New Intellectual Property - shall have the
meaning set forth in Section 8A.
License Agreement - shall have the meaning set forth in Section
6D.
Municipality - shall mean any governmental body or entity,
including, but not limited to cities, towns, counties or states, and any
agency or authority thereof, including regional agencies.
Municipal Sludge Project - shall mean any project in the United
States and/or Puerto Rico related to (i) the treatment of municipal sludge
utilizing Chemical Fixation Technology (including, without being limited to,
the Chemfix Process) which produces a product which is suitable for use as
bulkfill, strip mine reclamation, land reclamation material, erosion control
material, agricultural material, landfill cover material and/or landfill,
and/or (ii) the provision of services ancillary to the projects referred to
in clause (i), which services may include, but are not necessarily limited to,
dewatering, designing, engineering, construction management, facility
operation and maintenance, equipment procurement, transportation, disposal and
marketing of end product services. Notwithstanding the foregoing, the term
"Municipal Sludge Project" shall not include any project related to the
treatment of Municipal Sludge utilizing lime stabilization and/or lime
conditioning to the extent that the product which is produced is used for
agricultural material or disposed of as a waste in landfill. (By way of
clarification, nothing contained in clause (i) of the definition of Municipal
Sludge Project shall be deemed to include projects involving the treatment of
Municipal Sludge using Alternate Technology, and nothing contained in clause
(ii) of the definition of Municipal Sludge Project shall be deemed to include
any service performed by any of the AWT Companies or any of the CTI Companies
where such services are not in connection with the treatment of Municipal
Sludge utilizing Chemical Fixation Technology.)
Municipal Sludge - shall mean sewage sludge and septage
produced at privately-owned or publicly-owned Municipal, county, state or
regional wastewater and/or sewage facilities, and/or produced by individual
residences or business that do not have public sewer service. For the
purposes of resolving any questions regarding the interpretation of the
preceding sentence, the term Municipal Sludge shall have the same meaning as
such term has in various federal and state statutes and regulations applicable
to the regulation of sewage sludge and septage.)
Net Profits - shall mean, with respect to the Joint Venture or
any Subsidiary for any given fiscal year, pre-tax profits (or losses)
calculated in accordance with generally accepted accounting principles applied
on a consistent basis.
Neutral Accountants - shall have the meaning set forth in
Section 16B3(b).
Operating Group - shall have the meaning set forth in
Subsection 3E.
Option Agreement - shall mean the form of Option Agreement
appended to this Agreement as Appendix A.
Options - shall mean the stock options granted concurrently
herewith and to be granted by CTI to AWT pursuant to Section 13 hereof.
Party - shall mean AWT acting on behalf of itself and the other
AWT Companies or CTI acting on behalf of itself and the other CTI Companies,
as the context may require.
Party New Intellectual Property - shall have the meaning set
forth in Section 8C.
Project Implementation Services - shall have the meaning set
forth in Section 6C.
Project Notice - shall have the meaning set forth in Section 5.
Request to Vote - shall have the meaning set forth in
Subsection 5E of this Agreement.
Representatives - shall have the meaning set forth in Section
12D.
Steering Committee - shall mean the management organ of the
Joint Venture formed pursuant to Section 2 hereof.
Subsidiary - shall mean any corporation, partnership or other
business entity formed at the direction of the Steering Committee of the Joint
Venture and owned by the Joint Venture or jointly by any of the AWT Companies,
on the one hand, and any of the CTI Companies, on the other hand.
Vesting Options - shall mean the stock options which CTI grants
to AWT pursuant to Subsection 13B of this Agreement.
Vesting Option Price - shall mean the exercise price of the
Vesting Options as set forth in Subsection 13B of this Agreement.
Voting Shares - shall mean all issued and outstanding common
shares of CTI plus all issued and outstanding "common stock equivalents" of
CTI as the term "common stock equivalents" is used in generally accepted
accounting principles.
SECTION 2: FORMATION OF THE JOINT VENTURE
A. Formation. AWT acting on behalf of itself and the other
AWT Companies and CTI acting on behalf of itself and the other CTI Companies
hereby associate themselves to form an unincorporated joint venture (the
"Joint Venture") pursuant to the laws of the State of New Jersey for the
limited purposes and upon the terms, provisions and conditions set forth in
this Agreement.
B. Name and Filings. The name of the Joint Venture shall be
"Renewable Earth Products, a Joint Venture". The Steering Committee of the
Joint Venture shall cause to be executed and filed of record all assumed or
fictitious name certificates and other certificates required by law in
connection with the formation and operation of the Joint Venture.
C. Place of Business. The principal place of business of
the Joint Venture shall be located in Branchburg, New Jersey or such other
place or places as the Steering Committee of the Joint Venture shall determine
from time to time.
D. Purpose. The purpose of the Joint Venture shall be to
evaluate Municipal Sludge Projects and to pursue and implement such selected
Municipal Sludge Projects as the Steering Committee of the Joint Venture shall
determine from time to time.
E. Other Purposes. The Joint Venture may also explore other
business concepts, including, without being limited to: the development of a
landfill cover and closure business; the securing of state and federal rulings
on the derived product designating it as a "non sludge" product; and, as may
be specifically agreed to by the Parties, the application of other Municipal
Sludge reuse and recycling technologies that provide environmentally sound,
inexpensive means of Municipal Sludge processing and disposal.
Notwithstanding the foregoing, the purpose of the Joint Venture shall not
include and the Joint Venture shall not be authorized to pursue any of the
business concepts except for those set forth in Subsection 2D of this
Agreement unless the Parties shall approve in writing the expansion of the
purpose of the Joint Venture to include such new business concepts.
F. Uniform Partnership Act. Except as expressly stipulated
to the contrary in this Agreement, the rights and obligations of AWT and CTI
between themselves and the administration, termination and liquidation of the
Joint Venture shall be governed by the New Jersey Uniform Partnership Act, as
amended.
G. Equal Interests. AWT and CTI shall each have an equal
interest in the Joint Venture and shall share equally all profits, losses,
liabilities and other economic benefits and burdens of the Joint Venture. The
Joint Venture shall distribute any net profits of the Joint Venture on an
equal basis to AWT and CTI at such times as the Steering Committee shall
determine from time to time.
H. Joint Venture Property. Any property that is acquired by
the Joint Venture shall be beneficially owned jointly by AWT and CTI in equal
proportion, and such ownership shall be subject to all terms and conditions of
this Agreement. Each of AWT and CTI hereby expressly waive the right to
require partition of any assets of the Joint Venture or any part thereof.
I. Contributions. Neither AWT nor CTI shall be required to
make capital contributions to the Joint Venture. However, each Party shall be
required to provide such services and make such other non-cash contributions
to the Joint Venture as set forth in this Agreement. Except to the extent
otherwise agreed in advance of any cash contribution, in the event that either
or both of the Parties voluntarily make cash contributions to the Joint
Venture, the Party making such cash contribution shall have the right upon
thirty (30) days prior notice to demand and receive a return of such cash
contribution.
J. Fiscal Year. The fiscal year of the Joint Venture and
any Subsidiary created by the Joint Venture pursuant to this Agreement shall
end on August 31.
K. Transfer of Joint Venture Interests. Except as set forth
in Section 19 of this Agreement, neither AWT nor CTI may, without the prior
written consent of the other Party, sell, assign, transfer, encumber,
hypothecate, mortgage, pledge or otherwise dispose of any part of its right,
title or interest in the Joint Venture or this Agreement. Any attempted
assignment or transfer by a Party of any interest in the Joint Venture in
violation of this Subsection shall be void and confer no rights upon any third
person.
L. Relationship of the Parties. The relationship of the
Parties shall be a joint venture for the sole purposes of carrying out the
activities provided for in this Agreement. No provision of this Agreement
shall be construed to constitute the Parties as members of any partnership,
association, syndicate or other entity except to the extent expressly provided
for in this Agreement. Nothing contained in this Agreement shall be construed
as constituting any Party as the agent or partners of the other Party or as
conferring on any Party the authority to enter into any contract to make any
legal commitment or other binding obligation on behalf of the Joint Venture
without the prior approval of the Steering Committee or on behalf of the other
Party under any circumstances.
SECTION 3: MANAGEMENT OF THE JOINT VENTURE
A. Steering Committee. The Joint Venture shall be managed
by a Steering Committee which shall consist at all times of four (4) members.
Each of AWT and CTI shall appoint two (2) members of the Steering Committee
and may remove and replace any member so appointed at any time by written
notice to the other Party. The initial members of the Steering Committee
shall be Mark E. Alpert and Paul Alderdice, who are appointed by AWT, and
Daniel N. Silverman III and David L. Donaldson, who are appointed by CTI. The
Steering Committee shall always consist of an equal number of members
appointed by each Party and so that AWT and CTI shall always have equal voting
interests in the Joint Venture.
B. Steering Committee Role. The Steering Committee of the
Joint Venture shall provide overall direction, guidance and decision-making
with respect to all business activities of the Joint Venture. Accordingly,
the activities of the Steering Committee shall include, but are not limited
to: (i) deciding which Municipal Sludge Projects the Joint Venture should
or should not undertake and the particular form of business relationship of
any approved Municipal Sludge Project (e.g. separate corporation); (ii)
establishing budgetary and contract policy for specific Municipal Sludge
Projects of the Joint Venture; (iii) providing general administrative
oversight of project development, marketing, and project implementation
activities; (iv) approving all contracts executed by or on behalf of the
Joint Venture; and (v) approving all borrowing by or on behalf of the Joint
Venture.
C. Steering Committee Meetings. Meetings of the Steering
Committee shall be held at such places and at such times as the Steering
Committee shall determine from time to time. Each member of the Steering
Committee shall be given reasonable notice of any meeting of the Steering
Committee at which a vote is to be taken; provided, however, that no notice is
necessary if all members of the Steering Committee are present or
participating or if either before or after the meeting is held, those absent
or not participating waive notice in writing. Meetings may be conducted by
telephone conference or similar communications equipment by means of which all
persons participating in the meeting can hear each other. It is the intention
of AWT and CTI that the Steering Committee shall meet in person alternately at
CTI's offices in Metairie, Louisiana, or AWT's offices in Branchburg, New
Jersey, at least once every eight (8) weeks.
D. Votes of the Steering Committee. Two members of the
Steering Committee including one representative of each of AWT and CTI
shall constitute a quorum for the transaction of business at a meeting of
the Steering Committee; provided, however, that at each meeting at which a
vote is taken there must be an equal number of representatives of AWT and
CTI present in order for there to be a quorum. The vote of a majority of
the members of the Steering Committee at a meeting at which a quorum is
present shall constitute the act of the Steering Committee. Any action
which may be taken at a meeting of the Steering Committee at which a quorum
is present may also be taken by unanimous written consent of all members of
the Steering Committee.
E. Operating Group. The Steering Committee shall establish
an operating group (the "Operating Group") consisting of at least one
representative functioning in the lead role for each of the Parties, plus an
alternate. The Operating Group shall implement and conduct the daily project
development activities, marketing, business/strategic planning, proposal
development, and day-to-day interface with operating affiliates of the Parties
as directed by the Steering Committee.
F. Delegation. It is the intent of the Parties that the
Steering Committee may subsequently delegate most responsibilities reasonably
necessary for the day-to-day operation of Joint Venture activities to the
Operating Group and/or directly to any staff of the Subsidiaries.
G. Party Contributions. Unless otherwise agreed by the
Steering Committee, the Parties shall contribute at no cost to the Joint
Venture or to the other Party the resources of such Party and the time and
efforts of its employees as determined by the Steering Committee to be
reasonably necessary to initiate and continue the business activities of the
Joint Venture consistent with the intent of this Agreement, including but not
necessarily limited to meeting attendance, proposal development, and data
gathering and background information development. With respect to the costs
associated with pursuit of a given Municipal Sludge Project prior to the
establishment of a Subsidiary with respect to such Municipal Sludge Project,
each respective Party shall contribute the resources of such Party and the
time and effort of its employees and the costs of such contributions shall not
be chargeable to the Joint Venture, the applicable Subsidiary or the other
Party, unless and to the extent otherwise agreed by the Steering Committee.
H. Third Party Costs. It is the intent of AWT and CTI to
limit the expenses owing to third parties incurred by the Joint Venture in
connection with the pursuit of prospective Municipal Sludge Projects prior
to the establishment of a Subsidiary with respect to a given Municipal
Sludge Project. To the extent that any such expenses owing to third
parties are incurred either with respect to pursuit of a given prospective
Municipal Sludge Project (e.g., legal fees, site evaluation and permitting,
detailed engineering, etc.) or with respect to broad marketing activities
applicable to multiple prospective Municipal Sludge Projects (e.g.,
preparation of brochures, trade show fees, etc.), the Party initiating the
incurrence of such expense shall be responsible for the payment of such
expense, unless and to the extent otherwise agreed by the Steering
Committee.
SECTION 4: NON-COMPETITION
A. AWT Non-Competition. Except in accordance with the
procedures set forth in Section 5 of this Agreement and subject only to the
exceptions set forth in Subsection 4B, AWT agrees on behalf of itself and the
other AWT Companies not to knowingly engage or participate in, or attempt to
engage or participate in, either directly or indirectly, Municipal Sludge
Projects during the Initial Term and any Extension Terms of this Agreement and
(i) for one (1) year following the expiration or termination of this Agreement
for any reason, or (ii) if terminated prior to expiration of the Initial Term,
for two (2) years following termination of this Agreement for any reason.
B. AWT Exceptions. The provisions of Subsection 4A shall
not apply to Municipal Sludge Projects: (i) where a Municipality specifies
in a formal procurement document without the influence of any of the AWT
Companies that the Municipal Sludge shall be treated utilizing a patented
chemical fixation process which CTI does not and is legally unable to
practice; (ii) where AWT and/or the other AWT Companies act primarily as,
and only for so long as they act primarily as, consulting engineer or
technical advisor for procurement for a Municipality and the applicable AWT
Company reasonably determines that the submission to or pursuit by the
Joint Venture of such Municipal Sludge Project would, or would reasonably
be perceived to, compromise such AWT Company's independent professional
judgment as a consulting engineer or technical advisor, as the case may be;
(iii) where an AWT Company acts primarily as facilities operator for a
Municipality for a Municipal Sludge Project treatment facility and, except
as provided in clause (ii) above, the technology utilized to treat the
Municipal sludge is not chemical Fixation Technology; and (iv) where the
Steering Committee has unanimously agreed that the provisions of Subsection
4A shall not apply to such Municipal Sludge Project. (The Municipalities
which are covered by clauses (i), (ii) and (iii) of this Subsection 4B from
time to time are hereinafter collectively referred to as the "AWT Chemical
Fixation Engineering Project Municipalities".) AWT agrees to provide CTI
with a list of the AWT Chemical Fixation Engineering Project Municipalities
(the "AWT Chemical Fixation Engineering Project Municipalities List") at
the beginning of every calendar quarter, which list shall identify whether
AWT considers the Municipality to be covered by clause (i), (ii) or (iii)
of this Subsection 4B; and provided, however, that AWT shall not be in
default of the provisions of this sentence in the event that AWT
unintentionally fails to include any Municipality which is covered by
clauses (i), (ii) or (iii) of this Subsection 4B on such AWT Chemical
Fixation Engineering Project Municipalities List.
C. CTI Non-Competition. Except in accordance with the
procedures set forth in Section 5 of this Agreement and subject only to the
exceptions set forth in Subsection 4D, CTI agrees on behalf of itself and the
other CTI Companies not to knowingly engage or participate in, or attempt to
engage or participate in, either directly or indirectly, municipal Sludge
Projects during the Initial term and any Extension Terms of this Agreement.
The foregoing prohibition shall be deemed to include, but not be limited to, a
prohibition against CTI and the other CTI Companies licensing the Chemfix
process for use in Municipal Sludge Projects, directly or indirectly, to any
entity other than the Joint Venture, any Subsidiary, or any AWT Company.
D. CTI Exceptions. The provisions of Subsection 4C shall
not apply to Municipal Sludge Projects: (i) with the Municipalities set forth
on Schedule 4D hereto or contemplated in the agreements set forth in Schedule
4D hereto, (the "CTI Existing Municipalities"); (ii) with the AWT Chemical
Fixation Engineering Project Municipalities; and (iii) where the steering
Committee has unanimously agreed that the provisions of Subsection 4C shall
not apply to such Municipal Sludge Project.
E. Existing Municipalities. Notwithstanding any of the
other provisions of this Agreement, the AWT Companies agree not to participate
in, or attempt to participate in, either directly or indirectly, any projects
involving the treatment, recycling or disposal of Municipal Sludge using
Chemical Fixation Technology or Alternate Technology at the CTI Existing
Municipalities. CTI agrees to use reasonable efforts to enable AWT to
participate in projects at the CTI Existing Municipalities, provided in each
case that such efforts would not, in the sole discretion of CTI, create a
conflict of interest, adversely impact CTI's legal position, or otherwise
adversely affect CTI's relationship with the applicable Municipality.
F. Clarifications. By way of clarification and without
intending to alter the meanings of Subsections A, B, C and D of this Section
4, (i) nothing contained in such Subsections A, B, C and D of this Section 4
is intended to prevent either Party from participating in projects which are
not Municipal Sludge Projects (including, without being limited to, the
projects set forth on Schedule 4F and other project involving the treatment of
Municipal Sludge utilizing Alternate Technology) without the involvement of
the Joint Venture, any Subsidiary or the other Party, except to the extent
otherwise provided in Subsection 4E and 5G of this Agreement; and (ii) nothing
contained in Subsections 4A and 4C of this Agreement is intended to prevent
either Party from participating in Municipal Sludge Projects pursuant to
Subsection 5H of this Agreement without the involvement of the Joint Venture,
any Subsidiary or the other Party.
G. Solicitation of Employees. During the term of this
Agreement and for a period of one (1) year thereafter, each Party agrees not
to, directly or indirectly, solicit for employment or hire the employees of
the other Party (including its affiliates), the Joint Venture or any
Subsidiary without the written permission of the other Party.
H. Injunctive Relief. The Parties agree and acknowledge
that, in the event of a breach or threatened breach of the provisions of this
Section 4 by any of the AWT Companies or any of the CTI Companies, monetary
damages would be an inadequate remedy at law and that both preliminary and
permanent equitable injunctive relief is necessary to protect the rights of
the Parties. In the event of a breach of this Section 4 by either Party, the
running of the non-compete covenants contained in this Section 4 relating to
such Party shall be extended by that period of time during which such Party
was found to be in breach.
SECTION 5: NOTICE AND PURSUIT OF CERTAIN BUSINESS
OPPORTUNITIES
A. Notice. Except to the extent prohibited by law or
contract, each Party agrees to use reasonable efforts to inform the Steering
Committee in writing (the "Project Notice") of any and all projects involving
the treatment, recycling or disposal of Municipal Sludge (including, without
being limited to, the treatment of Municipal Sludge using Chemical Fixation
Technology or Alternate Technology) as soon as reasonably possible after such
Party learns of such project, but in no event later than the date such Party
decides to submit a bid, proposal or formal contract offer with respect to
such project; provided, however, that the AWT Companies shall not be required
to provide the Steering Committee with notice of any projects of which any AWT
Company becomes aware of by virtue of acting in the capacity of or bidding on
a contract to become a (i) consulting engineer to a Municipality, (ii)
technical advisor to a Municipality for procurement for a Municipal Sludge
treatment facility, or (iii) facilities operator for a Municipality for a
Municipal Sludge treatment facility which is not utilizing Chemical Fixation
Technology and where there has been no change in the technology used for
treating the Municipal Sludge from Alternate Technology to Chemical Fixation
Technology at the commencement of or at any time during the period such AWT
Company provides such facilities operation services. The Project Notice shall
contain general information regarding the potential project, including,
without being limited to, the identity of the Municipality, a brief
description of the nature of the potential project and any bid specifications
or proposed contract terms.
B. Non-Municipal Sludge Projects. Notwithstanding the
notice requirements contained in Subsection 5A, either Party may proceed with
the development, bidding, negotiation and consummation of any projects which
are not Municipal Sludge Projects without the participation, permission or
involvement of the other Party or the Joint Venture.
C. AWT Engineering Project Municipalities. AWT agrees to
provide CTI upon request with a list of the Municipalities where any AWT
Company serves, as of the date of such list, as a consulting engineer,
technical advisor for procurement or facilities operator for a Municipality
for a Municipal Sludge treatment facility (the "AWT Engineering Project
Municipality List"); provided, however, that CTI may not make a request for
such list more frequently than once every three months; and provided, further,
that AWT shall not be in default of the provisions of this Subsection 5B in
the event that AWT unintentionally fails to include any Municipality where any
AWT Company serves as consulting engineer, technical advisor for procurement
or facilities operator for a Municipality for a Municipal Sludge treatment
facility on such AWT Engineering Project Municipality List.
D. Evaluation of Project. After the Steering Committee
receives a Project Notice from either Party or otherwise learns of a
prospective Municipal Sludge Project, the Steering Committee shall, within
such time period as shall be reasonable under the circumstances, conduct an
evaluation of the prospective Municipal Sludge Project to determine whether to
bid upon or otherwise pursue such prospective Municipal Sludge Project. In
conducting such evaluation, the Steering Committee shall consider, among other
things, the technical applicability, cost/pricing strategy, regulatory
environment, likely competition, available disposal options and necessary
financing arrangements.
E. Vote on Projects. After completing such evaluation as
may be appropriate under the circumstances, either Party may, by written
notice to the other Party (the "Request to Vote"), request that the Steering
Committee vote as to whether or not to bid upon or otherwise pursue the
prospective Municipal Sludge Project. The Steering Committee shall conduct
such vote within ten (10) days after the receiving Party has received such
Request to Vote, unless otherwise agreed by the Steering Committee. In the
event that the Steering Committee does not conduct such vote within such ten
(10) day period, the Party receiving such Request to Vote shall be deemed to
have voted not to pursue such prospective Municipal Sludge Project for the
purposes of this Section 5.
F. Vote to Proceed: Allocations. In the event that the
Steering Committee votes to pursue a given Municipal Sludge Project, the
Parties shall pursue such Municipal Sludge Project only through the Joint
Venture or a Subsidiary established by the Joint Venture and only in
accordance with the terms and conditions of this Agreement. At such stage in
the process of pursuing the Municipal Sludge Project as the Steering Committee
deems appropriate, the Parties shall establish a separate Subsidiary for the
purposes of further pursuing and conducting the Municipal Sludge Project.
Notwithstanding any other provisions of this Agreement to the contrary and
unless otherwise agreed in writing by both Parties, each Party shall own an
equal interest in any Subsidiary, shall share any profits and losses of any
Subsidiary on an equal basis, and shall share any other benefits, burdens,
risks and liabilities associated with such Subsidiary on an equal basis.
G. Expanded Non-Compete. In the event that the Steering
Committee votes to pursue a given prospective Municipal Sludge Project,
neither the AWT Companies nor the CTI Companies shall thereafter knowingly
engage or participate in, directly or indirectly, any activity involving the
treatment, recycling or disposal of Municipal Sludge of such Municipality,
including, without being limited to, treatment by Chemical Fixation Technology
or Alternate Technology; provided, however, that either Party may continue any
activities at the applicable site of the applicable Municipality which are not
prohibited by Section 4 of this Agreement and which pre-dated the affirmative
vote of the Steering Committee. Notwithstanding the provisions of the
preceding sentence, AWT or CTI may request the consent of the other Party,
which request shall be responded to promptly and which consent shall not be
unreasonably withheld, to:
(a) submit bids to the applicable Municipality for the
treatment of Municipal Sludge using Alternate Technology if the Municipality
has specified in advance in a formal procurement document that it intends to
award multiple bids to contractors using Chemical Fixation Technology and
Alternate Technology; (e.g., Municipality specifies 50% Chemical Fixation
Technology and 50% composting), or
(b) submit bids to the Municipality for other projects using
Alternate Technology within the Municipality at other separate and
geographically distinct sites for which separate bids have been solicited.
For the purposes of this Subsection 5G, the only reasonable grounds for
withholding a consent requested pursuant to this Subsection shall be where the
requested bid would materially decrease: (i) the chance that a bid of a
Subsidiary would be successful, (ii) the volume of Municipal Sludge which
would be awarded to a Subsidiary pursuant to a successful bid, or (iii) the
chance that the Joint Venture or the applicable Subsidiary would be able to
successfully implement a Municipal Sludge Project.
H. Vote Not to Proceed. In the event that the Steering
Committee votes not to pursue a given prospective Municipal Sludge Project,
(a) the Party which has voted or has been deemed to have voted
not to pursue such Municipal Sludge Project shall not thereafter participate,
directly or indirectly, in such Municipal Sludge Project using Chemical
Fixation Technology alone or in combination with any third party, unless the
other Party consents to such participation in writing; and
(b) the other Party shall be entitled to participate in such
Municipal Sludge Project alone or in combination with any third party using
Chemical Fixation Technology or Alternate Technology without the involvement
of the other Party, the Joint Venture or any Subsidiary.
I. Deemed Vote Not to Proceed. In the event that either
Party is willing to pursue a prospective Municipal Sludge Project, but (i) is
not willing to share the ownership, benefits and burdens of such Municipal
Sludge Project on an equal basis in accordance with the provisions of
Subsection 5F or (ii) is not willing to provide services to the Joint Venture
or any Subsidiary with respect to such prospective Municipal Sludge Project
pursuant to Sections 6 or 9 hereof at Cost or estimated Cost, such Party shall
be deemed to have voted not to pursue such Municipal Sludge Project for the
purposes of this Section 5.
J. CTI License. In the event that CTI is the Party which
has voted or has been deemed to have voted not to pursue a given prospective
Municipal Sludge Project, CTI shall, upon request from AWT, license to an AWT
Company so much of the Chemfix Intellectual Property as shall be necessary or
appropriate for AWT to pursue such Municipal Sludge Project at a commercially
reasonable royalty rate to be mutually agreed upon between the Parties at the
time of the grant of such license.
SECTION 6: FORMATION OF AND RELATIONSHIP WITH SUBSIDIARIES
A. Determination Regarding Subsidiaries. Project-specific,
organizational and contractual arrangements shall be established by the
Steering Committee for each Municipal Sludge Project actively bid or otherwise
pursued during the term of this Agreement. Unless otherwise determined by the
Steering Committee, upon approval by the Steering Committee of a Municipal
Sludge Project to be pursued by the Joint Venture, the Joint Venture shall
direct the formation of a Subsidiary, which shall be the entity through which
the Joint venture pursues that particular Municipal Sludge Project.
B. Formation of Subsidiaries. The Subsidiary shall be
established under the laws of the State of Delaware and shall have as its
principal place of business the same principal place of business as the Joint
Venture, unless the Steering Committee determines that for purposes of bidding
and/or pursuing the target Municipal Sludge Project, other arrangements are
preferable. Each Subsidiary shall have the number of directors on its board
or controlling partners as shall be determined by the Steering Committee,
provided, however, that each Party shall be equally represented on the body
managing the affairs of each Subsidiary. The terms of the certificate of
incorporation, by-laws, partnership agreements and/or management procedures
for each Subsidiary shall be, to the extent applicable and where permitted by
law, substantially similar to those of the Joint Venture.
C. Project Implementation Services. For each Subsidiary
formed by the Joint Venture in connection with a Municipal Sludge Project,
where applicable, the appropriate CTI Company and the appropriate AWT Company
shall each enter into agreements with each Subsidiary pursuant to which such
CTI Company and AWT Company, respectively, shall agree to provide or arrange
for the provision of certain project implementation services (the "Project
Implementation Services") to the Subsidiary, including, without being limited
to, laboratory analysis, engineering analysis, equipment design, equipment
procurement, mobilization, equipment assembly, reagent procurement, acceptance
testing and related services. Such Project Implementation Services shall be
provided by such CTI Company and such AWT Company at the lesser of Cost or
estimated Cost. Unless otherwise provided in the applicable agreements, in
the event that such CTI Company or such AWT Company agrees to provide such
Project Implementation Services to the Subsidiary at estimated Cost and the
actual Cost of providing such Project Implementation Services exceeds the
estimated Cost, such CTI Company or AWT Company, as the case may be, shall be
responsible for the amount by which actual Costs exceed the estimated Costs
and shall not be entitled to reimbursement for such excess Costs from the
Subsidiary, the Joint Venture or the other Party, unless otherwise agreed by
the Steering Committee. Such Project Implementation services and any
dewatering and/or treatment facilities constructed pursuant thereto shall be
accepted by the Subsidiary pursuant to acceptance tests agreed upon among the
applicable Party, the Steering Committee and the Subsidiary (the "Acceptance
Tests"), which Acceptance Tests shall be sufficient for the Subsidiary to
meet any applicable requirements established by the applicable Municipality in
connection with the Municipal Sludge Project and/or any agreed upon regulatory
permit conditions required for the operation of the facility. In the event
that the Acceptance Tests in such agreements are not met, such CTI Company or
such AWT Company, as the case may be, shall, subject to such terms and
conditions as shall be mutually agreed upon among the Parties, the Steering
Committee and the Subsidiary, continue to provide such Project Implementation
Services until the Acceptance Tests are met. In the event that the Acceptance
Tests have been met, such CTI Company or such AWT Company, as the case may be,
shall have no further liability to the Subsidiary, the Joint Venture or the
other Party with respect to the provision of such Project Implementation
Services or the operation of the facilities.
D. CTI License Agreement. For each Subsidiary formed by the
Joint Venture for the purposes of pursuing a Municipal Sludge Project, CTI
shall, where appropriate, enter into a license agreement (the "License
Agreement") with each Subsidiary at no cost to such Subsidiary pursuant to
which CTI, as licensor, shall license to each Subsidiary, as Licensee, so much
of the Chemfix Intellectual Property as shall be necessary or appropriate for
such Subsidiary to conduct its intended business purposes. The License
Agreement shall contain such terms and conditions as CTI and the Steering
Committee shall agree upon from time to time. However, unless not necessary
or appropriate for a given Municipal Sludge Project, the License Agreement
shall (i) grant the Subsidiary rights to use the Chemfix Intellectual Property
for the purposes of the Municipal Sludge Project with the applicable
Municipality, subject, if applicable, to those agreements identified on
Schedule 4D to this Agreement and licenses granted to other Subsidiaries; (ii)
provide that the rights of the Subsidiary to use the Chemfix Intellectual
Property shall be for the term of the agreement between the Subsidiary and the
applicable Municipality and shall survive the termination of the Joint Venture
or the expiration or termination of this Agreement for any reason; and (iii)
include representations by the CTI Companies that they own or have the right
to license the Chemfix Intellectual Property; and (iv) provide that the
Subsidiary shall be indemnified by CTI against the Chemfix Patents and
Trademarks infringing the proprietary rights of others.
E. AWT License Agreements. In the event that any of the AWT
Companies own as of the date of this Agreement any proprietary information or
intellectual property which would be useful to any Subsidiary for the purposes
of conducting its intended business purposes, the AWT Companies shall
contribute and/or license such proprietary information or intellectual
property to such Subsidiary on substantially the same terms and conditions as
the License Agreement; provided, however, that, under appropriate
circumstances, the applicable AWT company may charge the Subsidiary a license
fee which reasonably reflects the fair market value of such proprietary
information or intellectual property or reasonably reflects an allocable
portion of the Cost of the development of such proprietary information or
intellectual property.
F. Confidentiality Agreement. Where appropriate, each
Subsidiary shall enter into a confidentiality, non-disclosure and/or
non-competition agreement (a "Confidentiality Agreement") with any party which
provides services to such Subsidiary (including, without being limited to, any
AWT Company or any CTI Company) on such terms and conditions as the Steering
Committee, the Subsidiary, AWT, CTI and such other party shall mutually agree
upon. It is the intention of the Parties that any such Confidentiality
Agreements shall provide, at a minimum, that such other party shall not use
confidential and proprietary information learned from the Subsidiary, AWT or
CTI, as the case may be, to compete against the Subsidiary, AWT or CTI, as the
case may be.
G. Reagent Supply. CTI shall have the right to identify and
select the suppliers of reagents used by the Joint Venture or any Subsidiary
in the treatment of Municipal Sludge using Chemical Fixation Technology and to
procure or arrange for the procurement of such reagents at competitive prices
from such suppliers on behalf of the Joint Venture or the Subsidiary;
provided, further, that the price to the Joint Venture or the Subsidiary, as
the case may be, of such reagents shall not include, directly or indirectly,
any profit or overhead of CTI.
H. Additional Services. The AWT Companies may provide
additional services to the Joint Venture or any Subsidiary, including, without
being limited to, the following:
1. Technical analyses needed to support specific permit
applications and associated regulatory agency mandated environmental studies;
2. Engineering and design of processing facilities related
to the total project concept proposed to a Municipal Sludge generator;
3. Construction management;
4. Equipment procurement;
5. Studies needed to assess the applicability of the Chemfix
Process or the utilization of the end product;
6. Overall program management; and
7. Facility operation and maintenance.
The CTI Companies may provide additional services to the Joint Venture or any
Subsidiaries, including, without being limited to, the following:
1. Technical review of the Chemfix Process applicability;
2. Laboratory analyses of Municipal Sludge, septage, or
other liquid non-hazardous wastes;
3. Equipment procurement;
4. Facility operation and maintenance;
5. Engineering and design of processing facilities related
to the total project concept proposed to a Municipal Sludge Generator; and
6. Studies needed to assess the applicability of the Chemfix
Process or the utilization of the end product.
Unless otherwise required by the applicable Party at the time
of the agreement to provide such additional services, all additional services
provided by the Parties to the Subsidiaries shall be provided at the lesser of
Cost or estimated Cost.
I. Liabilities to Third Parties. Neither the Joint Venture
nor the Subsidiary shall assume any liability to third parties in connection
with the sale or other disposition of the end product resulting from the
treatment of Municipal Sludge utilizing Chemical Fixation Technology without
the prior approval of the Steering Committee of the Joint Venture.
SECTION 7: AGRICULTURAL MATERIAL
A. NEC Option. National Environmental Controls, Inc.
("NEC") shall have the exclusive right to purchase for agricultural use any or
all of the treated Municipal Sludge produced by the Joint Venture or any
Subsidiary that has not been contractually committed for an end use as
bulkfill, strip mine reclamation, land reclamation, erosion control, or
landfill cover material on terms and conditions not materially different than
the option CTI granted to NEC pursuant to a Naturite Purchase Option Agreement
dated November 30, 1988, a copy of which has been provided to AWT as of the
date of this Agreement. (Pursuant to such agreement, the Joint Venture or the
Subsidiary, as the case may be, will be entitled to the greater of one third
(1/3) of the net profits realized by NEC in connection with the treated
Municipal Sludge purchased by NEC or one dollar ($1.00) per ton.)
B. Special Services. The applicable Subsidiary shall be
obligated to perform such additional treatment procedures and services as
shall be reasonably required by NEC in order to meet the reasonable
agricultural material requirements of NEC, provided that neither the Joint
Venture nor the Subsidiary shall incur any additional costs or obligations
which are not reimbursed or assumed by CTI or NEC.
C. Right to Assign. NEC shall have the right to assign the
rights and options set forth in this Section 7 to a wholly owned subsidiary of
NEC without the prior consent of AWT, the other AWT Companies, the Joint
Venture or any of the Subsidiaries, provided that NEC shall have provided AWT
with prior written notice of such assignment.
D. Indemnification. CTI shall indemnify the AWT Companies,
the Joint Venture or the Subsidiaries, as the case may be, for any losses,
liabilities, claims, damages, including reasonable attorneys' fees and costs,
amounts paid in fines or settlement, suffered, paid or otherwise incurred by
the Joint Venture or Subsidiary, as the case may be, arising out of the option
granted to NEC pursuant to this Section 7, unless such action is based on the
willful misconduct or gross negligence of the Subsidiary or AWT.
E. Certain Transfers. The Joint Venture and/or any of the
Subsidiaries shall not utilize or sell, give or otherwise transfer treated
Municipal Sludge to any third party which intends to utilize treated Municipal
Sludge as agricultural material except as provided herein.
SECTION 8: NEW TECHNOLOGY
A. Joint Venture New Intellectual Property. In the event
that the Joint Venture, any Subsidiary or any employees thereof conceive of
and/or develop any new patents, copyrights, trade secrets, processes,
discoveries, inventions or other forms of proprietary know-how (collectively
"Joint Venture New Intellectual Property"), all ownership rights in such Joint
Venture New Intellectual Property shall belong to the Joint Venture or the
Subsidiary, as the case may be, it being understood and agreed that it is the
intention of the Parties that each Party shall have an equal interest in the
Joint Venture New Intellectual Property through their equal respective
interests in the Joint Venture or the Subsidiary, as the case may be. The
Joint Venture or any Subsidiary, as the case may be, shall, upon request,
grant to the Joint Venture, other Subsidiaries and each Party a non-exclusive,
free, perpetual license to use such Joint Venture New Intellectual Property.
B. Development of Joint Venture New Intellectual Property.
In the event that the Joint Venture, any Subsidiary or any employees thereof
conceive of any Joint Venture New Intellectual Property but the Joint Venture
or Subsidiary, as the case may be, does not choose to invest in the costs of
developing and/or patenting such Joint Venture New Intellectual Property, then
such Joint Venture or Subsidiary shall, upon request, assign their rights in
such Joint Venture New Intellectual Property to either or both of the Parties
at no cost.
C. Party New Intellectual Property. In the event that
either Party conceives of and/or develops patents, copyrights, trade secrets,
processes, discoveries, inventions or other proprietary know-how, singly or
jointly with third parties, whether pursuant to a contract or subcontract with
any Subsidiary or otherwise, (collectively "Party New Intellectual Property"),
such Party New Intellectual Property shall belong to such Party. In the event
that any portion of such Party New Intellectual Property would be useful to
the Joint Venture or any Subsidiary, such Party shall, to the extent and on
such contractual terms as it is legally able, license such Party New
Intellectual Property to the Joint Venture or such Subsidiary on substantially
the same terms and conditions as the License Agreement; provided, however,
that, under appropriate circumstances, the applicable AWT Company or CTI
Company, as the case may be, may charge the Subsidiary a license fee which
reasonably reflects the fair market value of such Party New Intellectual
Property.
D. Certain Actions. Neither Party shall take any action
which would detract from the ability of the Joint Venture, any Subsidiary or
the other Party, as the case may be, to patent any Joint Venture New
Intellectual Property or Party New Intellectual Property.
SECTION 9: PERMITTING
Unless any CTI Company or AWT Company is already a permittee
for a specific Municipal Sludge Project or is in the process of securing
specific permits (in which case such entity will use its best efforts to
transfer the permit to the Subsidiary at no cost), the Subsidiary will obtain
all necessary permits in its own name (which shall become an asset of that
Subsidiary) with the Parties contributing all existing information reasonably
necessary to obtain permits at no cost to that Subsidiary; provided, however,
that AWT or CTI, as the case may be, will be compensated for any unusual costs
agreed upon by the Steering Committee. It is further understood by the
Parties that should additional costs be incurred in conducting legal research
and technical studies and analyses required by state and/or Federal regulatory
agencies, such costs would be reimbursed through Municipal Sludge Project
processing fees.
SECTION 10: FINANCIAL ARRANGEMENTS
A. Bonding Arrangements. The Parties agree that a material
part of this Agreement is the commitment by AWT and the other AWT Companies to
jointly present with CTI specific Municipal Sludge Project opportunities to
AWT's current bonding company, Reliance Insurance Group ("Reliance") or any
successor bonding company. AWT agrees that it and the other AWT Companies
shall use their best efforts to obtain bonding facilities and/or bid and
performance bonds for the Joint Venture and/or any Subsidiary from Reliance
and other bonding companies. In the event Reliance approves a bond for the
Joint Venture or a Subsidiary, AWT and the AWT Companies agree to use so much
of their bonding capacity as is then available under their existing bonding
facilities with Reliance for bonds for the Joint Venture and any Subsidiaries,
which capacity AWT shall determine in its sole discretion. The Parties agree
that the AWT Companies shall be responsible for providing such security,
letters of credit or other credit enhancements as Reliance or any other
bonding company shall require for the issuance of a bond. The AWT Companies
shall contribute the services of their employees in procuring bonding
commitments at no cost to the Joint Venture or the Subsidiaries. However, the
AWT Companies shall charge the Joint Venture or any Subsidiary, as the case
may be, for the direct, non-contingent costs of obtaining such bonds, such as
"points", interest rate charges and the pro rata cost of any letter of credit
usage required to support the bond or the bonding facility.
B. Other Financial Arrangements. With respect to the
capital and financing requirements of the Joint Venture or any Subsidiary, the
AWT Companies shall use their best efforts to secure third-party financing or
financing commitments for the Joint Venture and/or the Subsidiaries.
Financing requirements and arrangements for each Subsidiary shall be
determined by the Steering Committee. Such financing arrangements shall be
subject to prevailing market conditions at the time of financing. The AWT
Companies shall contribute the services of their employees in procuring
financing at no cost to the Joint Venture or the Subsidiaries, unless the AWT
Companies incur unusual or extraordinary expenses in providing such services.
It is the intention of the Parties that, to the extent possible, the Joint
Venture and any Subsidiaries shall be financed on the basis of their own
creditworthiness and without requiring guarantees or credit enhancements by
either Party. However, it is also the intention of the Parties that, in the
event that financing cannot be obtained on the basis of the creditworthiness
of the Joint Venture or the Subsidiary, as the case may be, and the guarantees
or credit enhancements of the Parties are required, such guarantees and credit
enhancements shall be provided, in the first instance, by the AWT Companies
and that the CTI Companies shall not provide guarantees or credit enhancements
unless the guarantees and credit enhancements of the AWT Companies alone are
determined to be insufficient. Notwithstanding the foregoing, nothing in this
Subsection 10B shall be deemed to constitute a commitment by the AWT Companies
to provide guarantees or credit enhancements to the Joint Venture or any
Subsidiary, and the AWT Companies shall only provide such guarantees or credit
enhancements on a best efforts basis.
C. Party Financing Arrangements. In the event that either
Party agrees to loan funds to any Subsidiary, such Party shall be entitled to
repayment over the term of the applicable Municipal Sludge Project of the
principal amount of such funds plus interest on such funds at the prime rate
of such Party's primary lender plus one percent. The payment of such
principal and interest shall be deemed to be expenses of the Subsidiary for
the purposes of determining whether there are any net profits of the
Subsidiary available to be distributed to the Parties.
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
SECTION 11: REPRESENTATIONS AND WARRANTIES
A. CTI Representations and Warranties. CTI represents and
warrants, on behalf of itself and the other CTI Companies, knowing and
intending that AWT is relying hereon in entering into this Agreement, as
follows:
(1) Due Organization; Good Standing. CTI is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware; is duly qualified and in good standing in all jurisdictions
in which its ownership of property and conduct of its business requires such
qualification; and has full corporate power to carry on its business as now
conducted and to own and operate the properties and assets now owned by it.
(2) Corporate Authorization. The execution of this Agreement
by CTI, and the transfers, conveyances, assignments, deliveries and other
agreements contemplated hereby, have been duly authorized by its Board of
Directors and no further corporate action is necessary on the part of CTI to
make this Agreement valid and binding upon it in accordance with its terms.
(3) No Violations. The execution, delivery and performance by
CTI of this Agreement is not inconsistent with and will not violate its
Certificate of Incorporation, by-laws or other governing documents; does not
contravene any law, governmental rule, regulation or order applicable to the
CTI Companies; does not and will not contravene any provision of, result in
any loss of benefits under, constitute a default under, or with the lapse of
time or action by a third party, constitute a default under, any
indenture,mortgage, lease, contract or other instrument or order, writ,
injunction or decree to which any of the CTI Companies is a party or by which
they or any of their assets are bound; and will not result in the imposition
of a lien upon the assets of any of the CTI Companies pursuant to the terms of
any agreement or instrument to which any of the CTI Companies is a party or by
which they are bound.
(4) Stock Options. The issuance of the Cash Option, Vesting
Options and Earn In Options described in Section 13 hereof does not currently
violate any federal or state law applicable to the issuance of such securities
including, without limitation, the Securities Act of 1933 and the rules and
regulations promulgated thereunder. CTI presently has a sufficient number of
authorized but unissued common shares to be able to fulfill its obligations
under such Cash Option, Vesting Options and Earn In Options. All shares of
CTI common stock issuable upon the exercise of such options shall be duly
authorized.
(5) Litigation. Except as set forth in CTI's most recent Form
10-K for the fiscal year ended August 31, 1988, there is no claim, suit,
action or proceeding pending or, to the knowledge of CTI, overtly threatened
against or affecting the CTI Companies which can reasonably be expected to
affect materially and adversely the business, properties or financial
condition of the CTI Companies taken as a whole. There is no outstanding
order, writ, injunction or decree or, to the knowledge of CTI, any claim or
investigation of any court, governmental agency or arbitration tribunal
materially and adversely affecting or which can reasonably be expected to
materially and adversely affect the CTI Companies, or their respective
properties, assets or business, franchises, licenses or permits under which
they operate.
(6) Governmental Approvals. No governmental consent,
approval, hearing, filing, registration or other action, including the passage
of time, is necessary for the execution and delivery of this Agreement or
consummation of the transactions contemplated hereby except the permits and
authorizations required for particular Municipal Sludge Projects.
(7) Patents, Copyrights, Trademarks, Etc.
(a) Schedule 11A(7) contains a list or description of: (i)
all United States patents, United States patent applications, copyright
registrations, all United States, state and foreign trade names, trademarks
and service marks owned, assigned to or used by the CTI Companies for the
Chemfix Process in treating Municipal Sludge showing in each case the
registration date and number, if any; and (ii) all material licenses,
distributorship agreements, franchise agreements or other agreements
(excluding any financing arrangements) which grant or limit the right to
use any asset, property or right of the character described in the
preceding clause to which any CTI Company is a party.
(b) Except as otherwise provided in the agreements identified
in Schedule 11A(7), the CTI Companies are, singly or collectively, the owners
of all right, title and interest in and to the Chemfix Intellectual Property;
there is no proceeding, pending or overtly threatened, challenging the CTI's
Companies' ownership of any of the Chemfix Intellectual Property; CTI has no
knowledge of infringing use of any of the Chemfix(Trademark) Patents and
Trademarks which would render the Chemfix(Trademark) Patents or Trademarks
unenforceable; CTI has no knowledge or reason to know of any facts which would
invalidate any of the Chemfix(Trademark) Patents or Trademarks; CTI has not
entered into any contract, agreement or arrangement, whether oral or written,
which would compete or be in conflict, in whole or in part, with any of the
warranties and representations in this Subsection or any of the rights claimed
herein. To the best of CTI's knowledge, none of the CTI Companies'
operations, activities, products, equipment, machinery or processes related to
the Chemfix Intellectual Property infringe the patents, trademarks, service
marks, trade names, copyrights or other property rights of others.
B. AWT Representations and Warranties. AWT represents and
warrants, on behalf of itself and the other AWT Companies, knowing and
intending that CTI is relying hereon in entering into this Agreement, that:
(1) Due Organization; Good Standing. AWT is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware; is duly qualified and in good standing in all jurisdictions
in which its ownership of property and conduct of its business requires such
qualification; and has full corporate power to carry on its business as now
conducted and to own and operate the properties and assets now owned by it.
(2) Corporate Authorization. The execution of this Agreement
by AWT, and the transfers, conveyances, assignments, deliveries and other
agreements contemplated hereby, have been duly authorized by its Board of
Directors and no further corporate action is necessary on the part of AWT to
make this Agreement valid and binding upon it in accordance with its terms.
(3) No Violations. The execution, delivery and performance by
AWT of this Agreement is not inconsistent with and will not violate its
Certificate of Incorporation, by-laws or other governing documents; does not
contravene any law, governmental rule, regulation or order applicable to the
AWT Companies; does not and will not contravene any provision of, result in
any loss of benefits under, constitute a default under, or with the lapse of
time or action by a third party, constitute a default under, any indenture,
mortgage, lease, contract or other instrument or order, writ, injunction or
decree to which any of the AWT Companies is a party or by which they or any of
their assets are bound; and will not result in the imposition of a lien upon
the assets of any of the AWT Companies pursuant to the terms of any agreement
or instrument to which any of the AWT Companies is a party or by which they
are bound.
(4) Litigation. There is no claim, suit, action or
proceeding pending or, to the knowledge of AWT, overtly threatened against or
affecting the AWT Companies which can reasonably be expected to affect
materially and adversely the business, properties or financial conditions of
the AWT Companies taken as a whole. There is no outstanding order, writ,
injunction or decree or, to the knowledge of AWT, any claim or investigation
of any court, governmental agency or arbitration tribunal materially and
adversely affecting or which can reasonably be expected to materially and
adversely affect the AWT Companies, or their respective properties, assets or
business taken as a whole, franchises, licenses or permits under which they
operate.
(5) Governmental Approvals. No governmental consent,
approval, hearing, filing, registration or other action, including the passage
of time, is necessary for the execution and delivery of this Agreement or
consummation of the transactions contemplated hereby.
(6) AWT Intellectual Property. To the best of the AWT
Companies' knowledge, the AWT Companies do not have any patents or patent
applications containing claims which embody Chemical Fixation Technology.
SECTION 12: CONFIDENTIAL AND PROPRIETARY INFORMATION
A. Provision of Confidential Information. In furtherance of
this Joint Venture, it is contemplated that the AWT Companies and the CTI
Companies shall disclose to each other, to the Joint Venture and to
Subsidiaries of the Joint Venture certain information which is ordinarily
kept confidential by the respective Parties. As a condition to furnishing
such information, AWT and CTI are each requiring that AWT, the other AWT
Companies, CTI, the other CTI Companies, the Joint Venture, and any
Subsidiaries agree, as set forth herein, to treat confidentially such
information which the AWT Companies and the CTI Companies or any of their
Representatives (as hereinafter defined) furnishes to the Joint Venture,
any Subsidiary and/or the other party ("Confidential Information").
B. Inclusions. The term "Confidential Information" shall
include, without limitation:
(a) Records and data concerning the assets of the respective
Parties, including without limitation, patents, patent
applications, copyrights, trademarks, trade names,
licenses, technology, know how and other proprietary
rights; and
(b) Information concerning the business of the Parties
including but not limited to market studies, contracts,
customer lists and employee compensation; and
(c) Any Chemfix Intellectual Property.
C. Exceptions. For purposes of this Joint Venture, and
notwithstanding the fact that certain information may be considered by the
respective Parties as confidential and subject to the terms hereof, the term
"Confidential Information" does not include information:
(i) Which, on the date of this Agreement, is generally known
to the public; or
(ii) Which is subsequently published by someone having a right
to do so and which publication does not violate or
breach, and the acquisition of such information was not
derived from a violation or breach of, any
confidentiality or proprietary agreement, or
(iii) Which is received from someone, not referred to in this
Agreement, who is not under any obligation to preserve
its secrecy and who is lawfully in possession of such
information from the date of its receipt; or
(iv) The release of which has been authorized in writing by a
Representative of the Party, having power and authority
to authorize the release, from the date of such
authorization; or
(v) Which is or becomes publicly known without the wrongful
act or breach of this Agreement by either Party or their
Representatives.
For purposes of this Agreement, specific information disclosed shall not be
deemed to be in the public domain or in the prior possession of the AWT
Companies or the CTI Companies merely because it is embraced by more general
information in the public domain or by more general information in the prior
possession of the AWT Companies or the CTI Companies.
D. Need to Know. The AWT Companies and the CTI Companies
agree to transmit the Confidential Information only to their directors,
officers, employees, independent contractors, agents, including, without
limitation, legal counsel (collectively "Representatives") and third parties
who have a good faith need to know such information for the purpose of
carrying out the objectives of this Agreement and who shall be advised of and
be bound by this confidentiality provision. Either Party may request that any
Representative of the other Party agree, in which event such other party shall
cause such Representative to agree, in writing, to be bound by the provisions
of this Section.
E. Permitted Purposes. Confidential Information which is
gathered, disclosed, exchanged or otherwise contributed to the Joint
Venture by the AWT Companies or the CTI Companies during the term of this
Agreement shall be kept confidential and shall not be utilized by the Joint
Venture, by any Subsidiary or by the non-contributing Party except for the
purposes of the Joint Venture. The AWT Companies and the CTI Companies
agree that Confidential Information will not be used in any way for the
benefit of any other person, firm, corporation, association, partnership or
entity other than the Joint Venture or the Subsidiaries under any
circumstances; provided, however, that nothing contained herein shall
prohibit or otherwise hinder a contributing Party from using and/or
disclosing and/or licensing Confidential Information it contributes to the
Joint Venture in the contributing Party's business or any other business
opportunity or venture in which it has been, is or may be involved.
F. Return of Confidential Information. All Confidential
Information shall be returned to its owner or destroyed in a manner
satisfactory to the owner at the owner's direction upon the latter of either:
(i) the conclusion of those matters for which the data was exchanged; or (ii)
the termination of the Joint Venture.
G. Survival of Obligations. The obligations assumed under
this Section shall survive the termination of the Joint Venture.
H. Injunctive Relief. It is understood and agreed that the
information contained in the Confidential Information constitutes a valuable
asset of the CTI Companies or the AWT Companies, as the case may be, and the
unauthorized disclosure and/or improper use of Confidential Information would
cause irreparable damage and harm to the Party contributing such
Confidential Information. Each Party agrees to indemnify and hold harmless
the other party for any losses, liabilities, costs and expenses (including
attorneys' fees incurred with regard to any of the foregoing or with regard
to these obligations) it may incur directly or indirectly by breach of this
Section. Accordingly, it is understood and agreed that money damages would
not be sufficient remedy for any breach of this Section by the AWT
Companies, the CTI Companies or their respective Representatives and that a
non-breaching Party shall be entitled to an injunction restraining a
breaching Party or any of its Representatives from such breach. Such
remedy shall not be deemed to be the exclusive remedy for breach of this
Section, but shall be in addition to all other remedies available at law or
equity to the non-breaching Party. If a non-breaching Party fails or
delays exercising any of its rights hereunder, such failure or delay shall
not operate as a waiver of such right, and any single or partial exercise
of such rights shall not preclude a non-breaching Party from any other or
further exercise of such rights or of any other rights hereunder.
SECTION 13: STOCK OPTIONS
A. Cash Option. CTI grants to AWT an option (the "Cash
Option") to purchase up to 100,000 shares of CTI unissued and unregistered
common stock at a price per share of $4.75 pursuant to the terms of the Option
Agreement attached hereto as Appendix A (the "Option Agreement"). The Cash
Option may be exercised in whole or in part in units of not less than 10,000
shares at any time and from time to time until 11:59 p.m. prevailing Eastern
time on the date five (5) years after the date of this Agreement.
B. Vesting Options. CTI grants to AWT an irrevocable option
to purchase 350,000 shares of CTI unissued and unregistered common stock first
exercisable on those dates as indicated in the table set forth below (the
"Vesting Options") for a purchase price of $4.75 per share unless terminated
as provided below.
First Exercise Date Number of Shares
------------------- ----------------
1st anniversary of Agreement Date 50,000
2nd anniversary of Agreement Date 50,000
3rd anniversary of Agreement Date 75,000
4th anniversary of Agreement Date 75,000
5th anniversary of Agreement Date 100,000
The Vesting Options shall be granted pursuant to the terms of the Option
Agreement applicable to the Vesting Options. The Vesting Options may be
exercised in whole or in part in units of not less than 10,000 shares at any
time and from time to time after the applicable anniversary of the date of
this Agreement as set forth above until 11:59 p.m. prevailing Eastern time on
the date five (5) years after the date of this Agreement; provided, however,
that the Vesting Option for 100,000 shares which first becomes exercisable on
the date five (5) years after the date of this Agreement may be exercised
until 11:59 p.m. prevailing Eastern time on the date five (5) years and thirty
(30) days after the date of this Agreement. The exercise price and period for
AWT's or its Assignee's exercise of all Vesting Options shall change upon the
termination of this Agreement as follows:
All Vesting Options not exercisable on the date of termination
shall become exercisable upon termination of this Agreement.
These Vesting Options shall then have an exercise price
equal to 90% of the then existing market price of CTI stock
(herein defined) and have a term of exercise of 25 days from
the time notice is sent by CTI to the holder thereof.
Market price is defined as the average of the closing bid
and asked price of CTI as determined by the NASDAQ on the
date of termination.
C. Earn in Options. In addition to the Cash Option
described in Subsection 13A and the Vesting Option described in Subsection
13B, CTI shall grant AWT additional options (the "Earn In Options") pursuant
to the terms of the Option Agreement to purchase up to that number of shares
which, together with the shares issued or issuable to AWT and its Assignees
pursuant to the Cash Option, the Vesting Options and any Earn In Options
already issued at such time, would enable AWT and its Assignees to hold, after
the issuance of the shares issuable pursuant to such options, up to ten
percent (10%) of the Voting Shares of CTI (the "Earn In Maximum"); provided,
however, that the issuance of such Earn In Options are contingent upon AWT
meeting the performance criteria described in Subsection 13D. Earn In Options
shall be granted within one hundred and twenty (120) days following the end of
each fiscal year of CTI, commencing with the fiscal year ending August 31,
1990 and ending with the fiscal year ending August 31, 1994. No later than
ninety (90) days after the end of each such fiscal year, CTI shall determine
the total number of Earn In Options earned by AWT since the commencement of
the Initial Term (the "Aggregate Earn In Options") and shall grant to AWT that
number of whole Earn In Options, if any, (the "Additional Earn In Options")
that equals the difference between the Aggregate Earn In Options and the
number of Earn In Options previously granted to AWT; provided, however, that
in no event shall the number of CTI common shares issuable or held upon the
exercise of the Additional Earn In Options, together with the number of CTI
common shares issuable upon the exercise of all Earn In Options previously
granted to AWT and its Assignees and the number of CTI common shares issuable
or held by AWT and its Assignees pursuant to the exercise of the Cash Option
and Vesting Options, exceed the Earn In Maximum. Each Earn In Option shall
cover 1,000 CTI common shares and may be exercised at any time during a
five-year period following the date of issuance ending at 11:59 P.M.,
prevailing Eastern time, on the date prior to the fifth anniversary of the
date of issuance. CTI's obligation to grant AWT Earn In Options will
terminate with respect to any Earn In Options not already earned and granted
upon termination of this Agreement.
D. Performance Criteria for Earn In Options. The price per
share for the shares issuable upon the exercise of each Earn In Option for any
fiscal year shall be equal to the average closing market price of CTI common
stock for each day of the last calendar month of CTI's fiscal year and each
day of the first calendar month of CTI's new fiscal year. AWT shall be
granted on a prorated basis an option to purchase 1,000 shares of CTI Common
Stock for each $22,500 of (a) that portion of the aggregate Net Profits, if
any, of the Joint Venture and all Subsidiaries allocable to CTI determined at
the end of each fiscal year, to the extent that such Net Profits have been
recognized by CTI, plus (b) a percentage of the revenues, if any, which any
CTI Companies earn during the applicable fiscal year pursuant to any agreement
by such CTI Company to provide analytical, sampling or testing services
directly to any AWT Companies during the Initial Term or any Extension Term of
this Agreement (an "Analytical Services Agreement"), which percentage shall be
agreed upon by CTI and AWT prior to the commencement of such Analytical
Services Agreement and shall be an estimate of the Net Profits which the CTI
Company is expected to earn under such Analytical Services Agreement, plus (c)
the Net Profits of any CTI Companies earned during the applicable fiscal year
pursuant to any agreements by any CTI Companies to provide services directly
to any AWT Companies, including, without being limited to, remediation
services or hazardous waste treatment services. If either Party shall
request, the Net profits of the Joint Venture and/or any Subsidiary shall be
audited and certified to by a certified public accounting firm selected by the
Steering Committee.
E. Restrictions. Notwithstanding anything in this Agreement
to the contrary, at no time from the date of this Agreement until the
latter of (a) the expiration or termination of this Agreement or (b) the
exercise or issuance of all Options issued pursuant to this Agreement: (i)
shall AWT or any of the AWT Companies alone or in combination own, acquire
or control by any means, including without being limited to open market
purchases, legally or equitably, directly or indirectly, such aggregate
number of CTI common shares as equals more than fifteen percent (15%) of
the issued and outstanding common shares of CTI, excluding from the
calculation of such fifteen percent (15%) any shares of the common stock of
CTI issued pursuant to the exercise of the Cash Option, the Vesting Options
or any of the Earn In Options; (ii) shall AWT, any of the AWT Companies or
any Assignees alone or in combination own, acquire or control by any means,
including without being limited to open market purchases, legally or
equitably, directly or indirectly, such aggregate number of CTI common
shares as equal more than twenty-five percent (25%) of the issued and
outstanding common shares of CTI; (iii) shall AWT or any of the AWT
Companies alone or in combination own, acquire or control by any means,
including without being limited to open market purchases, legally or
equitably, directly or indirectly, more than five percent (5%) of the
shares of capital stock, options, warrants or convertible securities of
National Environmental Controls, Inc.; and (iv) shall AWT or any of the
other AWT Companies or any Assignee alone or in combination participate,
directly or indirectly, in any acquisition, take-over or other effort to
secure control of the Board of Directors of CTI or any of the CTI Companies
by any means whatsoever without the prior written consent of CTI; provided,
however, that AWT, the other AWT Companies or any Assignee may not tender
shares of CTI stock in a tender offer without offering a right of first
refusal to CTI as set forth in the Option Agreement.
For the purposes of this Subsection, financial institutions
which own shares of common stock of AWT shall not be deemed to be the legal or
beneficial owners of shares of common stock of CTI by virtue of their
ownership of such shares of common stock of AWT; provided, however, that any
such financial institutions shall be deemed to be the legal and beneficial
owners of any Cash Options, Vesting Options or Earn In Options or Option
Shares assigned to such financial institutions by AWT or any Assignee, any
shares of common stock issued pursuant to such Options or any shares of common
stock issued pursuant to such Options sold or otherwise transferred to such
financial institutions by AWT or any Assignee.
F. Injunctive Relief. AWT and the AWT Companies acknowledge
and agree that, in the event of a breach or a threatened breach of the
provisions of Subsection 13E by AWT, the other AWT Companies or any Assignee,
monetary damages would be an inadequate remedy at law and that both
preliminary and permanent equitable injunctive relief is necessary to protect
the rights of CTI. CTI will have no obligation to issue or register transfers
of Options or stock made in contravention of Subsection 13E.
G. Survival of Obligations. The provisions of Subsection
13E shall survive the expiration or termination of this Agreement until all
Options have been exercised or expired.
SECTION 14: JOINT VENTURE BOOKS OF ACCOUNT, AUDITS
AND ACCOUNTING
A. Responsibility for Records. The Steering Committee shall
have the primary responsibility for maintaining the official business records
and books of account of the Joint Venture, including the management,
collection and disbursement of funds, the maintenance of bank accounts in the
name of the Joint Venture, and the preparation and filing of any tax and other
business returns and statements. All such records and books shall be subject
to inspection by either Party during regular business hours.
B. Audits. Appropriate audits shall be made by independent
certified public accountants engaged by the Steering Committee at the
termination of this Agreement, or at such other times as the Steering
Committee may direct.
C. Right of Inspection. Each party and its representatives
shall have the right at reasonable times and intervals to have access to, and
to inspect and copy, any of the books of account or other records maintained
by the other Party which relate to services or materials which such Party has
contributed or is contributing to the Joint Venture or any Subsidiary,
including, without being limited to, any books or records which would be
useful in verifying whether services or materials which were to be contributed
at Cost or estimated Cost have in fact been contributed at Cost or estimated
Cost.
D. Presentation of Records. Records of the Joint Venture
which are required to be kept subsequent to termination of this Agreement
shall be kept at such place or places as shall be determined by the Steering
Committee.
SECTION 15: COMPLIANCE WITH LAW
Each Party represents and warrants to the other that any contract
made by the Joint Venture or a Subsidiary with a Municipality or other third
party shall be obtained without violation of any law.
SECTION 16: TERM OF AGREEMENT AND TERMINATION
A. Term. This Agreement shall continue in full force and
effect to the end of the Initial Term and automatically thereafter for each
Extension Term unless earlier terminated by either Party in accordance with
Subsection B of this Section.
B. Termination. This Agreement may be terminated by either
Party or CTI alone in the case of Subsection B3 below upon thirty (30) days
notice to the other Party solely for the reasons set forth below:
1. By mutual written agreement of the Parties.
2. By the non-breaching Party, upon breach of any material
term, covenant or condition of this Agreement, in the event the breaching
Party has been given written notice of the alleged breach by the non-breaching
Party and such breach has not been cured thirty (30) days after receipt of
such notice.
3. (a) By CTI only, upon the failure of the CTI Companies
to realize pre-tax Aggregate Net Profits from the Joint Venture and the
Subsidiaries as of the end of each fiscal year of the Joint Venture and the
Subsidiaries at least equal to those amounts set forth below:
DOLLAR
FISCAL YEAR ENDING AMOUNT
------------------ ------
1990 $ -0-
1991 2,500,000
1992 5,000,000
1993 7,500,000
1994 11,000,00
(b) Not later than ninety (90) days following the end of the
Joint Venture's fiscal year, CTI shall notify AWT in writing as to the pre-tax
Aggregate Net Profits for such fiscal year. AWT shall have ten (10) business
days following its receipt of such notice to notify CTI in writing that it
disputes such calculation (the "Dispute Notice"). If the Parties cannot
resolve their differences with respect to such calculation within thirty (30)
days following the receipt of the Dispute Notice, then the Parties shall
engage any accounting firm mutually agreeable to the Parties which is not then
engaged by either the CTI Companies or the AWT Companies (the "Neutral
Accountants") to resolve the dispute. The Parties shall direct the Neutral
Accountants to promptly render a decision as to the proper pre-tax Aggregate
Net Profits figure for the fiscal year in dispute, which decision shall be
binding upon the Parties. The Neutral Accountants shall be given reasonable
access to all of the books and records of the Joint Venture, the Subsidiaries
and CTI as deemed necessary by the Neutral Accountants in preparing their
decision. Unless otherwise agreed, the expenses of the Neutral Accountants
shall be borne by the Parties on an equal basis.
C. Effect of Termination. Upon termination of this
Agreement:
1. No further business of the Joint Venture will be
transacted other than winding up the Joint Venture's affairs, including, but
not limited to, the fulfillment of any existing contracts of the Joint
Venture, collection of any outstanding accounts and payment of any outstanding
liabilities.
2. Each Subsidiary shall continue in existence with all
appropriate powers and authority as may be necessary to complete the purpose
for which it was organized. Any and all agreements, including but not limited
to licenses, between CTI and the Subsidiary and/or between AWT and the
Subsidiary shall similarly continue in full force and effect notwithstanding
any termination of this Agreement or the Joint Venture.
3. If the Joint Venture owns the stock of or any other
interest in any Subsidiary, the Joint Venture shall transfer the stock of such
Subsidiary in such a manner as to provide each Party with equal value of the
stock of or other interest in such Subsidiaries, unless the Steering Committee
votes otherwise.
4. Any business entities other than the Subsidiaries formed
by the Joint Venture shall remain in the ownership of the Parties as set forth
in the Certificate of Incorporation, Partnership Agreement or other applicable
documents relating to the formation of that entity.
5. Any and all Municipal Sludge Projects which the Steering
Committee has voted to pursue prior to termination shall be pursued to
completion pursuant to the terms of this Agreement, including the formation of
an appropriate Subsidiary and licensing thereof.
6. Any assets remaining in the Joint Venture shall be
distributed to each Party on an equal basis or retained in joint ownership as
agreed between the Parties, unless otherwise mutually agreed upon by the
Parties.
D. Bankruptcy. The interests and obligations of a Bankrupt
party are of a personal and non-delegable nature and shall not be sold,
assigned or otherwise transferred by the Bankrupt Party as debtor in
possession and/or by any trustee appointed in any bankruptcy proceeding.
Notwithstanding this provision, however, in the event a court of competent
jurisdiction should hold that the Bankrupt Party as debtor in possession or a
trustee appointed in any bankruptcy proceeding may assume and assign the
Bankrupt Party's interest in the Joint Venture pursuant to a bona fide offer
of a third party in accordance with the provisions of the Bankruptcy Code,
then:
1. The Non-Bankrupt Party shall have a right of first
refusal to purchase and/or succeed to and/or assume as assignee all of the
right, title and interest of the Bankrupt Party in and to the Joint Venture
upon the same terms and conditions and for the same consideration, if any, as
the bona fide offer made by such third party. The Non-Bankrupt Party shall
exercise its right of first refusal, if at all, within ten (10) days of
receipt of written notice from the debtor in possession and/or trustee of any
such bona fide offer. Said notice shall set forth with particularity the
terms and conditions of such bona fide offer as well as a description of the
third party.
2. If the Non-Bankrupt Party does not exercise its right of
first refusal to purchase and/or succeed to and/or assume the rights of the
Bankrupt Party as set forth above, the Bankrupt Party as debtor in possession
or any trustee appointed in the bankruptcy proceeding may assume and assign
all of the right, title and interest of the Bankrupt Party in the Joint
Venture to a bona fide third party with the prior written consent of the
Non-Bankrupt Party. The Non-Bankrupt Party shall consent to the assumption
and assignment of the Bankrupt Party's interest to said third party provided
that the third party provides "adequate assurance" to the Non-Bankrupt Party
of such assignee's future performance under the Joint Venture, including,
without limitation, "adequate assurances" as that term is referred to in any
applicable provision of the Bankruptcy Code. This "adequate assurance" to be
provided to the Non-Bankrupt Party to assure the assignee's future performance
under the Joint Venture shall include, without limitation:
(a) a written demonstration that the assignee meets all
reasonable financial and technical criteria of the Non-Bankrupt Party as did
the Bankrupt Party and its business at the time of the execution of this Joint
Venture, including without limitation, the production of the most recently
audited financial statement of the assignee prepared by a certified public
accountant; and
(b) assurances in form acceptable to the Non-Bankrupt Party
as to all matters identified in any applicable provision of the Bankruptcy
Code.
SECTION 17: DISPUTES
A. Resolution of Disputes. In order to resolve disputes
between the Parties effectively, efficiently, and at the least cost and
inconvenience, the parties agree to resolve all disputes relating to or
arising out of this Agreement or its subject matter as set forth in this
Section.
B. Notice of Meeting. Notice of a demand for a meeting of
the Parties to discuss and settle a dispute(s) ("Notice of Meeting") may be
given by either Party. Such notice shall be in writing. The Notice of
Meeting shall set a date at least five (5) business days but no more than ten
(10) business days from the date of the Notice of Meeting on which the Parties
shall meet during normal business hours at the Joint Venture's offices in
Branchburg, New Jersey. If within five (5) days after the date of the meeting
the Parties have not resolved their dispute(s), then the Parties shall proceed
pursuant to Subsection C. Notwithstanding anything in this Section to the
contrary, in the event a Party suffers irreparable harm or injury, such party
shall have the ability to seek provisional remedies in any state or federal
court in New Jersey, including but not limited to injunctive relief and other
equitable remedies.
C. Act Governs. Any dispute not resolved pursuant to
Subsection B shall be resolved by means of alternative dispute resolution, as
provided in the New Jersey Alternative Procedure for Dispute Resolution Act,
N.J.S.A. 2A:23A-1 et seq. (the "Act"). The Parties expressly waive the right
to resolve all claims, disputes and issues arising out of or relating to this
Agreement by means of traditional litigation, including the right to appeal,
except as provided in the Act or in Subsection B.
D. Notice of Dispute. Notice of demand for resolution of a
dispute under the Act (a "Notice of Dispute") shall be given by either Party.
Such notice shall be in writing.
E. Selection of Umpire.
(a) Within fifteen (15) days after a Notice of Dispute is
given, each party shall select four (4) prospective umpires from among the
persons listed in paragraphs (i) through (iv) below. In addition to meeting
the requirements of paragraphs (i), (ii), (iii) or (iv) below, each
prospective umpire must also satisfy the requirements described in Subsection
E below. Prospective umpires are:
(i) any retired judge of the United States District Court for
the District of New Jersey;
(ii) any retired judge of the New Jersey Superior or Supreme
Court;
(iii) any attorney licensed to practice in the State of New
Jersey who has actually practiced law for more than fifteen (15)
years and has specialized in environmental litigation or contracts
dealing primarily with environmental issues; and
(iv) other persons with such qualifications upon which the
Parties agree.
(b) Within fifteen (15) days after each Party has selected
its prospective umpires, the Parties shall agree to one (1) umpire from among
the eight (8) prospective umpires to hear the dispute.
(c) In addition to the requirements described in Subsection E
above, each prospective umpire selected must:
(i) be free of any potential for bias or conflict of interest
with respect to either of the Parties, directly or indirectly, or by
virtue of any direct or indirect financial interest, family
relationship or close friendship; and
(ii) be in a position to immediately hear the dispute and
render resolution within the time specified in Subsection I below.
(d) If an umpire is not selected within the period of time
specified in Subsection E(a) or E(b) above, an umpire shall be selected within
fifteen (15) days by the Chief Judge of the United States District Court for
the District of New Jersey or, if the Chief Judge is unable or unwilling to
act, by the President of the New Jersey State Bar Association. Such
selection shall be in accordance with the requirements of Subsection E(a)
and E(c) above.
F. Proceeding. The proceeding for the alternative
resolution of a dispute (the "ADR Proceeding") shall be held at a location
within the State of New Jersey selected by the Umpire. The ADR Proceeding
shall commence no later than forty (40) days after the Notice of Dispute is
given.
G. Fees. All fees and expenses associated with the ADR
Proceeding shall be divided equally between the Parties; provided, however,
that each Party shall be responsible for its own attorneys' fees and
disbursements. The fees payable to the umpire shall be the usual hourly rate
of such umpire for consulting or dispute resolution services.
H. Provisional Relief. Where appropriate under applicable
New Jersey substantive and procedural law, the umpire shall have full and
complete authority to award provisional relief, whether on an ex parte
basis or otherwise, upon the commencement of an ADR Proceeding, in
accordance with the provisions of the Act.
I. Timing of Decision. The umpire shall render a decision
within a reasonable time, but in no event later than sixty (60) days after the
final oral testimony is taken or the final briefs are filed. Notwithstanding
the foregoing, any decision must be rendered within six (6) months from the
date of the Notice of Dispute.
J. Act Governs Proceedings. Except as otherwise provided in
this Agreement, the Act shall govern the procedures and methods for any ADR
Proceeding.
K. Counsels. In order to facilitate the expeditious
resolution of disputes, the Parties agree that no Party shall object to the
other Party being represented by counsel of its choice, whether or not such
counsel is admitted to practice law in New Jersey.
L. Extensions. If the Parties mutually agree in writing to
extend any deadline set forth in this Section, all other deadlines shall be
extended correspondingly.
SECTION 18: INDEMNITY
CTI and AWT shall each be responsible for and shall indemnify
and hold harmless the Joint Venture, any Subsidiary and the other Party
from and against such indemnitor Party's own grossly negligent or willfully
wrongful acts or omissions and for such indemnitor Party's acts and
omissions which are in breach of such indemnitor Party's representations,
warranties and/or obligations hereunder ("Obligations"). Neither Party
shall be liable to the Joint Venture or to the other Party for any loss or
damage arising out of any activities, not in breach of such Party's
Obligations unless caused by such Party's gross negligence or willful
misconduct. Except to the extent that a Party incurs loss or damage caused
by its gross negligence or willful misconduct, or for its acts and
omissions which are beyond the scope of its authority hereunder or which
are in breach of its Obligations, the Joint Venture shall, out of Joint
Venture assets (but not the assets of either Party), indemnify and hold the
Parties harmless from and against any personal loss or damage incurred by
them arising from any act performed by them for and on behalf of the Joint
Venture or arising out of any business of the Joint Venture. The
agreements of indemnity set forth in this Section shall survive the
dissolution of the Joint Venture and the complete winding up of its
business and affairs. Any provision herein to the contrary
notwithstanding, no indemnified Party shall be entitled to indemnification
for lost or prospective profits, good will or other special, incidental or
consequential damages, but shall be entitled to reasonable attorneys' fees
in enforcing this indemnity.
SECTION 19: ASSIGNMENT
A. Permitted Assignees. Either AWT or CTI may, without the
consent of the other and without limitation to its obligations hereunder,
assign all of its rights, title and interest in and to this Agreement and its
obligations hereunder except as otherwise expressly provided herein, to a
wholly-owned subsidiary of AWT or CTI, as the case may be. Any such
subsidiary shall perform all of the terms, covenants and conditions to be
performed by AWT or CTI, as the case may be pursuant to this Agreement.
B. Effect of Assignment. Upon an assignment to a
wholly-owned subsidiary pursuant to this Section, for all purposes of this
Agreement, such assignee shall be entitled to all rights and benefits inuring
to AWT or CTI, as the case may be, hereunder; however, AWT or CTI, as the case
may be, shall not be released or discharged from any of its obligations
hereunder, including, but not limited to, its obligations under any
transactions accompanying or related to this Agreement.
SECTION 20: MISCELLANEOUS
A. Force Majeure. Any delays in or failure by either Party
in its performance hereunder shall be excused if and to the extent caused by
occurrences beyond the Party's reasonable control including, but not limited
to, acts, omissions, decrees or restraints of federal, state or local
governments, acts of God, strikes or other labor disturbances, war, vandalism,
inability to obtain necessary equipment, facilities or supplies at reasonable
cost and shortages or absence of energy or utility requirements. The Party
claiming to be affected by any such event shall give prompt notice to the
other Party, specifying the full particulars thereof.
B. Maintenance and Access to Records. Both Parties shall
maintain financial records in a manner consistent with past practices and/or
generally accepted accounting practices and shall permit for the sole purpose
of determining such Party's compliance with their respective obligations under
this Agreement any authorized representative designated by the other Party to
visit and inspect any of the records of such Party (including, without
limitation, books of account, records, correspondence and other papers and to
make copies thereof and extracts therefrom), on reasonable notice and at
reasonable times, and to discuss the affairs, finances and accounts of such
Party with such Party's officers and independent certified public accountants
or other parties preparing financial statements for or on behalf of such
Party. All such financial records will be maintained by each Party for a
period of at least three (3) years from the time they came into existence.
C. Obligations. CTI and AWT agree and acknowledge that it
is their intention that obligations which CTI or AWT have assumed pursuant to
the terms of this Agreement will actually be performed in whole or in part by
CTI Companies or AWT Companies other than CTI or AWT, as the case may be, and
that the CTI Companies and AWT Companies will comply with the provisions of
this Agreement and not act in a manner inconsistent with the transactions
contemplated by this Agreement. CTI and AWT further acknowledge that neither
Party would have entered into this Agreement without the understanding set
forth in the preceding sentence.
Therefore, as CTI enters into this Agreement on behalf of
itself and the other CTI Companies, CTI agrees and acknowledges that it is
agreeing to exercise all means available to CTI (including, without being
limited to, its direct or indirect voting control over the stock of the other
CTI Companies so long as it owns such stock) to cause such other CTI Companies
to perform, where necessary or appropriate, the duties and obligations assumed
by CTI under this Agreement, to comply with the terms of this Agreement and to
not act in any manner which is inconsistent with the transactions contemplated
by this Agreement. Similarly, as AWT enters into this Agreement on behalf of
itself and the other AWT Companies, AWT agrees and acknowledges that it is
agreeing to exercise all means available to AWT (including, without being
limited to, its direct or indirect voting control over the stock of the other
AWT Companies so long as its owns such stock) to cause such other AWT
Companies to perform, where necessary or appropriate, the duties and
obligations assumed by AWT under this Agreement, to comply with the terms of
this Agreement and to not act in any manner which is inconsistent with the
transactions contemplated by this Agreement.
Any failure by CTI or AWT to cause the other CTI Companies or
the other AWT Companies, as the case may be, to and any failure by such other
CIT Companies or other AWT Companies to perform obligations under this
Agreement, comply with the terms of this Agreement or not act in a manner
inconsistent with the transactions contemplated by this Agreement (including,
without being limited to, any failure by any CTI Company or AWT Company to
comply with the non-compete provisions of Section 4 of this Agreement or the
confidentiality provisions of Section 12 of this Agreement) would constitute a
material breach of this Agreement by CTI or AWT, as the case may be, and would
entitle the non-breaching Party to terminate this Agreement and recover
monetary damages. In the event of a breach of this Agreement, AWT or CTI, as
the case may be, hereby agrees to assume responsibility for and pay on demand
all damages, whether direct or consequential, suffered by the other Party by
reason of the breach, and neither AWT nor CTI shall be required to make any
prior demand for payment directly on any AWT Company or CTI Company which may
have caused such breach. Further, CTI and AWT acknowledge that monetary
damages would be an inadequate remedy at law and that specific performance
and/or both preliminary and permanent injunctive relief is necessary to
protect the rights of the Parties.
Nothing contained in this Agreement shall be deemed to (a)
obligate CTI or AWT to cause any other CTI Company or AWT Company,
respectively, to be bound to or to comply with the terms of this Agreement
following a transfer of the controlling interest in such CTI Company or AWT
Company by CTI or AWT, respectively, to a third party, or (b) bind any CTI
Company other than CTI or AWT Company other than AWT to the terms of this
Agreement following a transfer of the interest in such CTI Company or AWT
Company by CTI or AWT, respectively, to a third party. Notwithstanding the
foregoing, AWT is not entering into this Agreement as the agent of Metcalf &
Eddy Companies, Inc. ("MECI") or any of MECI's subsidiaries.
D. Publicity. Unless otherwise required by law, neither
Party shall release any written publicity or other formal public statements
concerning this Agreement, the Joint Venture formed hereunder, and a specific
contract or Municipal Sludge Project, without obtaining the prior consent of
the other Party, which consent shall not be unreasonably withheld.
E. Further Assurances. AWT and CTI hereby covenant to
execute and deliver any instruments, documents or agreements, and to take all
other actions and do all things reasonable, necessary and desirable to fully
and promptly effectuate the general intentions and purposes of the Parties as
set forth in this Agreement.
F. Full Agreement of the Parties. (1) This Agreement
constitutes the entire understanding and agreement between AWT and CTI with
respect to the subject matter hereof and supersedes all prior or
contemporaneous representations, understandings or agreements of any kind,
whether verbal or written.
(2) This Agreement shall not be modified except by a written
amendment duly executed by authorized representatives of both Parties.
(3) Failure of a Party to insist upon strict and punctual
performance of any terms or conditions of this Agreement shall not be
construed to constitute a waiver of, or estoppel against, asserting the right
to require such performance.
(4) If any term or provision hereof is or becomes invalid or
unenforceable, both Parties shall, in good faith, negotiate a replacement term
or provision which is valid and enforceable and which comes as close as
possible to expressing the intention of the invalid or unenforceable term or
provision. Declaration of a term or provision as invalid or unenforceable
shall not, however, affect any other term or provision of this Agreement. The
Agreement shall continue to bind and be effective between the Parties to the
maximum extent possible.
(5) The captions in this Agreement are for the convenience of
the Parties in identification of the several provisions and shall not
constitute a part of this Agreement nor be considered interpretive hereof.
G. Notices. All notices under this Agreement shall be in
writing and delivered as appropriate to an officer of a Party, deposited in
the United States mails, certified, post prepaid or by telecopy or overnight
courier, addressed as follows:
If to AWT: E. Chris Beck
President
Air & Water Technologies Corporation
Route 22 West & Station Road
Somerville, New Jersey 08856
Copy to: General Counsel
If to CTI: Mr. Daniel N. Silverman, III
President
Chemfix Technologies, Inc.
2424 Edenborn Avenue, Suite 620
Metairie, Louisiana 70001
Copy to: General Counsel
or to such other person or address as the Party to receive the communication
shall designate in writing.
H. Agency Limitation. No person shall be authorized to
legally bind the Joint Venture by entering into any contractual or other
business relationship purporting to bind the Joint Venture in any way absent
the prior written approval of the Steering Committee.
I. Schedules and Appendices. All Schedules and Appendices
attached hereto are incorporated herein by reference. All references in this
Agreement shall be deemed to include this Agreement and all such Schedules and
Appendices.
J. Applicable Law. This Agreement shall be construed and
interpreted in accordance with, and all questions under or pertaining to it
shall be governed by, the law of the State of New Jersey; with respect to any
dispute arising out of or pursuant to the terms of this Agreement, both
parties irrevocably consent and submit to the jurisdiction of the federal
courts situated in New Jersey.
K. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Parties and their respective successors and
assigns.
L. Counterparts. This Agreement may be executed in one or
more counterparts each of which shall be deemed to be an original.
IN WITNESS WHEREOF, CTI and AWT have caused this Agreement to
be signed by their duly authorized officers, to be effective as of the date
first above written.
ATTEST AIR & WATER TECHNOLOGIES CORPORATION
By:/s/ E. Chris Beck
---------------------------------
E. Chris Beck
President
CHEMFIX TECHNOLOGIES, INC.
By:/s/ Daniel N. Silverman, III
---------------------------------
Daniel N. Silverman, III
President
SCHEDULE 1
CHEMFIX INTELLECTUAL PROPERTY
Patents
U.S. Patent No. 3,837,872 "Method of Making Wastes Non-Polluting
and Disposable" September 24, 1974
U.S. Patent No. 3,841,102 "Method of Improving the Quality of
Leachate from Sanitary Landfills" dated
October 15, 1974
U.S. Patent No. 4,012,320 "Method of Improving the Quality of
Contaminated Waste Water" dated March
15, 1977
U.S. Patent No. 4,471,916 "Apparatus for Treating Liquid and
Semi-Solid Organic Waste Materials"
dated September 18, 1984
U.S. Patent No. 4,474,479 "Apparatus for Treating Liquid and
Semi-Solid Organic Waste Materials"
dated October 2, 1984
U.S. Patent No. 4,509,696 "Method for Treating Liquid and
Semi-Solid Organic Waste Materials"
dated April 9, 1985
U.S. Patent No. 3,893,656 "Mobile Unit for Treating Liquid Waste"
dated July 8, 1975
U.S. Patent No. 4,793,927 "Method of Treating Sewage" dated
December 27, 1988
U.S. Patent No. 4,793,208 "Method of Binding Metals in Alkaline
Matrix" dated August 1, 1989
Trademarks
(attached)
CHEMFIX TECHNOLOGIES, INC.
UNITED STATES
TRADEMARKS AND SERVICE MARKS
REGISTRATION TERM OF
MARK NUMBER ISSUED REGISTRATION
- --------------------------------------------------------------------------
Chemfix 1,043,119 7/6/76 20 years
* Chemfix Round Logo 939,081 7/25/72 20 years
(Service Mark)
* Chemfix Block Logo 955,966 3/20/73 20 years
(Service Mark)
Chemset 59,950 3/11/87 10 years
(Trademark)
"C" Logo 1,497,115 7/19/88 20 years
(Service Mark)
"From Hazardous to 1,497,116 7/19/88 20 years
Harmless ... it takes
just the right
chemistry"
(Service Mark)
"In Partnership with 1,338,413 5/28/85 20 years
the Environment"
(Service Mark)
Naturfil 1,447,016 7/14/87 20 years
(Trademark)
Naturite 1,278,481 5/22/84 20 years
(Trademark)
"The Solid Solution" 1,420,481 12/9/86 20 years
(Service Mark)
Chemfix & Design 1,511,267 11/1/88 20 years
(Service Mark)
* Service marks not in use at this time
SCHEDULE 4D
CTI EXISTING MUNICIPALITIES
Agreements
A. CTI/National Environmental Controls, Inc., Naturite Purchase Option
Agreement
B. CTI/AgOrganic Joint Venture in Naturite, Inc.
CTI Existing Municipalities
C. South Essex Sewerage District, Salem, Massachusetts
D. Greater Lawrence Sanitary District, North Andover, Massachusetts
E. Springfield, Massachusetts
F. Los Angeles, California
G. Orange County Sanitation District, California
H. Cities of Ventura and Oxnard, California
I. Sunnyvale, California
J. Gloucester, Massachusetts
K. Delaware County Regional Water Quality Control Authority,
Pennsylvania
L. City of San Diego/San Diego North County Treatment District,
California
M. Camden County Utility Authority, New Jersey
N. Gloucester County Utilities Authority, New Jersey
SCHEDULE 4F
AWT ALTERNATE TECHNOLOGY ENGINEERING PROJECT MUNICIPALITIES
A. Baltimore Composting Facility, Baltimore, Maryland
B. Leroy, New York
C. Ellington, Connecticut
D. Los Angeles County, Composting Facility
SCHEDULE 11 A (7)
PATENTS, LICENSES AND AGREEMENTS
(i) 1. All items on Schedule 1
(ii) 1. License Agreement between Chemfix, Inc. and
Browning-Ferris Industries, Inc. dated October 1, 1974.
2. License and Assignment Agreement dated January 27, 1976
between Chemfix, Inc. and The Carborundum Company.
3. License Agreement between the Carborundum Company and
Delaware Custom Material, Inc. dated March 1, 1976 - non-exclusive license for
the nuclear industry only.
4. The Agreement between CTI and AgOrganics, Inc. dated
September 20, 1988.
5. The Patent License Agreement between CTI and Tulane
Medical Center of Tulane University dated March 3, 1988, and Patent License
Agreement between CTI and Tulane Medical Center of Tulane University dated
January 6, 1987.
6. Licensing Agreement between Chemfix Technologies, Inc.
and Chemfix of Massachusetts, Inc., a wholly-owned subsidiary of CTI.
7. Licensing Agreement dated March 27, 1985 between CTI and
VenVirotek, a wholly-owned subsidiary of CTI.
8. Agreement between National Environmental Controls, Inc.
and Envirotech Corporation dated August 7, 1977 for the Treatment of Waste and
Sludge in the Field of Fixed Treatment Units at a customer's site. This
license was subsequently re-purchased.
[APPENDIX A]
[FORM OF STOCK OPTION]
[All bracketed language is for inclusion in Vesting Options only]
No. of Shares
________________
THIS OPTION AND THE SHARES UNDERLYING THE SAME ARE NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933
AND ARE SUBJECT TO THE PROVISIONS OF
SECTION 5 OF THIS OPTION
OPTION
to Purchase Common Stock
of
CHEMFIX TECHNOLOGIES, INC.
(A Delaware Corporation)
Expiring on _______________ [unless earlier terminated
pursuant to Section 12 hereof]
THIS CERTIFIES THAT, for value received, Air & Water
Technologies Corporation, a corporation organized and existing under the laws
of Delaware ("AWT"), or its permitted and registered Assignee as provided in
Section 5 hereof, is entitled to purchase from Chemfix Technologies, Inc., a
corporation organized and existing under the laws of the State of Delaware
("CTI"), at any time [from _________] until the expiration of this Option on
_________________ [, unless earlier terminated pursuant to Section 12 hereof,]
_______( ) shares of the $0.01 par value Common Stock of CTI at a Purchase
Price (as hereinafter defined) of $__________ per share [or the Adjusted
Market Price if earlier terminated pursuant to Section 12 hereof] in lawful
money of the United States of America. The number of shares of Common Stock
purchasable hereunder, and the Purchase Price therefor, are subject to
adjustment as hereinafter set forth in Section 7.
SECTION 1. Definitions. For all purposes of this Option, the
following terms shall have the meanings indicated:
["Adjusted Market Price" shall mean ninety percent (90%) of the
average of the closing bid and asked price as determined by the NASDAQ on the
Early Termination Date.]
"Assignee" shall mean the permitted assignee of AWT as provided
in Section 5 hereof.
"AWT Companies" shall mean AWT and its wholly-owned
subsidiaries, whether now existing or hereinafter formed, and Metcalf and Eddy
Companies, Inc. and its wholly-owned subsidiaries, whether now existing or
hereinafter formed.
"Commission" shall mean the Securities and Exchange Commission,
or any other Federal Agency then administering the securities laws of the
United States.
"Common Stock" shall mean and include CTI's authorized $0.01
par value Common Stock and shall also include any capital stock of any class
of CTI hereafter authorized which shall not be limited to a fixed sum or
percentage of par value in respect of the rights of the holders thereof to
participate in dividends and in the distribution of assets upon the voluntary
or involuntary liquidation, dissolution or winding up of CTI, and shall
include any Common Stock of any class or classes resulting from any
reclassification or reclassifications thereof.
"Exchange Act" shall mean the Securities and Exchange Act of
1934, or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Initial Purchase Price" shall mean the initial purchase price
of _______________ ($__________) per share of Common Stock as set forth in
Section 2 hereof.
"Joint Venture and Option Agreement" shall mean the Joint
Venture Agreement between CTI and AWT dated September 1, 1989.
"Option" shall mean this Option.
"Option Shares" shall mean __________ shares of Common Stock,
as adjusted from time to time pursuant to the terms hereof, purchased or
purchasable by the registered holder of this Option upon the exercise thereof
pursuant to Section 3.
"Purchase Price" shall mean the Initial Purchase price or such
Initial Purchase price as adjusted from time to time pursuant to the
provisions hereof [or the Adjusted Market Price if terminated pursuant to
Section 12 hereof].
"Securities Act" shall mean the Securities Act of 1933, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Transfer" as used in Section 5 shall include any disposition
of any Option or Option Shares, or of any interest in either thereof which
would constitute a sale thereof within the meaning of the Securities Act.
All capitalized terms used herein and not defined herein shall
have the meanings assigned to such terms in the Joint Venture and Option
Agreement.
SECTION 2. Determination of Purchase Price. [Unless
terminated pursuant to Section 12 hereof,] the Initial Purchase Price at which
a holder may exercise this Option shall be a price equal to
dollars ($ ) per share of Common Stock and shall be subject to
adjustment from time to time pursuant to the provisions hereof.
SECTION 3.
A. Exercise of Option. [This Option may not be exercised
prior to except pursuant to Section 12.] In order to exercise this
Option in whole or in part, the registered holder hereof shall complete the
Subscription Form attached hereto, and deliver to CTI this Option and cash or
a certified check in an amount equal to the then aggregate Purchase Price of
the shares of Common Stock being purchased at CTI's principal office at 2424
Edenborn Avenue, Metairie, Louisiana (or at such office or agency of CTI as
CTI may designate by notice in writing to the holder of this Option). Upon
receipt thereof, CTI shall, as promptly as practicable, and in any event
within twenty (20) business days thereafter, execute or cause to be executed
and deliver to such holder a certificate or certificates representing the
aggregate number of shares of Common Stock specified in said Subscription
Form. Each stock certificate so delivered shall be in the denomination of
1,000 shares or such other denomination as may reasonably be requested by the
registered holder thereof and shall be registered in the name of such holder
or such other name as shall be designated by any such holder. If this Option
shall have been exercised only in part, CTI shall, at the time of delivery of
said stock certificate or certificates, deliver to such holder a new Option
evidencing the rights of such holder to purchase the remaining shares of
Common Stock covered by this Option. CTI shall pay all expenses, taxes and
other charges payable in connection with the preparation, execution and
delivery of stock certificates pursuant to this Section, except that, in case
such stock certificates shall be registered in a name or names other than the
name of the registered holder of this Option, funds sufficient to pay all
stock transfer taxes which shall be payable upon the execution and delivery of
such stock certificate or certificates shall be paid by the registered holder
hereof to CTI at the time of delivery of this Option to CTI as mentioned
above.
B. Acknowledgement of Continuing Obligation. CTI, at the
time of the exercise of this Option, in whole or in part, upon request of the
holder hereof, shall acknowledge in writing its continuing obligation to such
holder in respect of any rights (including, without limitation, any right to
registration of the shares of Common Stock issued upon such exercise) to which
such holder shall continue to be entitled after such exercise in accordance
with this Option; provided, however, that the failure of such holder to make
any such request shall not affect the continuing obligation of CTI to such
holder in respect of such rights.
C. Character of Option Shares. All shares of Common Stock
issuable upon the exercise of this Option shall be duly authorized, validly
issued, fully paid and non-assessable; and, without limiting the generality of
the foregoing, CTI covenants and agrees that it will from time to time take
all such action as may be requisite to assure that the par value, if any, per
share of Common Stock is at all times equal to or less than the then effective
Purchase Price.
SECTION 4.
A. Ownership of this Option. CTI may deem and treat the
person in whose name this Option is registered as the holder and owner hereof
(notwithstanding any negotiations of ownership or writing hereon made by
anyone other than CTI) for all purposes and shall not be affected by any
notice to the contrary, until presentation of this Option for registration of
transfer as provided in this Section 4.
B. Exchange, Transfer and Replacement. This Option is
exchangeable upon the surrender hereof by the registered holder to CTI at its
office or the agency described in Section 3, for new Options of like tenor and
date representing in the aggregate the right to purchase the number of shares
purchasable hereunder, each of such new Options to represent the right to
purchase such number of shares as shall be designated by said registered
holder at the time of such surrender. Subject to the conditions and
restrictions contained in Section 5 hereof, this Option and all rights
hereunder are transferable in whole or in part upon the books of CTI by the
registered holder hereof in person or by such holder's duly authorized
attorney, and a new Option shall be made and delivered by CTI, of the same
tenor and date as this Option but registered in the name of the transferee,
upon surrender of this Option duly endorsed, at said office or agency of CTI.
Upon receipt by CTI of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Option, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to it, and
upon surrender and cancellation of this Option, if mutilated, CTI will make
and deliver a new Option of like tenor, in lieu of this Option. This Option
shall be promptly canceled by CTI upon the surrender hereof in connection with
any exchange, transfer or replacement. CTI shall pay all expenses, taxes,
(other than stock transfer taxes) and other charges payable in connection with
the preparation, execution and delivery of Options pursuant to this Section 4.
SECTION 5. Transfer of Options or Option Shares.
A. Restrictions on Exercise and Transfer. Notwithstanding
any provisions contained in this Option to the contrary, this Option shall not
be exercisable or transferable and the related Option Shares shall not be
transferable except upon the conditions specified in this Section 5, which
conditions are intended, among other things, to ensure compliance with the
provisions of the Securities Act in respect of the exercise or transfer of
this Option or transfer of such Option Shares. The holder of this Option
agrees that such holder will not, prior to delivery to CTI of (a) an opinion
of the holder of this Option's counsel satisfactory to CTI, pursuant to clause
(1) of subsection B of this Section 5, or until registration of such Option
Shares under the Securities Act has become effective, and (b) the delivery of
the certificate provided for in clause (2) of subsection C of this Section 5,
(i) transfer this Option or (ii) transfer such Option Shares.
B. Notice of Intention to Exercise; Opinion of Counsel. The
holder of this Option agrees that prior to any transfer of this Option or any
transfer of the related Option Shares, such holder will give written notice to
CTI of its intention to effect such transfer, together with a copy of the
opinion of the holder of this Option's counsel specified in subsection A of
this Section 5 as to the necessity or non-necessity for registration under the
Securities Act in connection with such transfer. The following provisions
shall then apply:
(1) If, in the opinion of such counsel, the proposed transfer
of this Option and/or the proposed transfer of such Option Shares may be
effected without registration under the Securities Act of this Option and/or
such Option Shares, the holder of this Option shall be entitled to transfer
this Option and/or transfer such Option Shares in accordance with the intended
method of disposition specified in the notice delivered by such holder to CTI.
(2) If, in the opinion of such counsel, the proposed transfer
of this Option and/or the proposed transfer of such Option Shares may not be
effected without registration under the Securities Act of this Option and/or
such Option Shares, this Option or Option Shares shall not be transferred
until such registration is effective or until such time as in the opinion of
such counsel such proposed transfer may be effected without registration under
the Securities Act.
C. Other Restrictions. (1) Notwithstanding anything in
this Option to the contrary, at no time from the date of this Option until the
latter of (a) the expiration or termination of the Joint Venture and Option
Agreement or (b) the issuance of all Option Shares issuable pursuant to this
Option, shall CTI be obligated to register the transfer of this Option or
issue any Option Shares to AWT or its Assignees if, as a result of such
transfer or issuance, (i) AWT or any of the AWT Companies alone or in
combination would own, acquire or control by any means, including without
being limited to open market purchases, legally or equitably, directly or
indirectly, such aggregate number of Common Stock shares as equals more than
fifteen percent (15%) of the Common Stock, excluding from the calculation of
such fifteen percent (15%) any shares of the Common Stock issued to AWT or any
of the AWT Companies pursuant to the exercise of this Option or any other
option for shares of Common Stock or (ii) AWT, any of the AWT Companies or any
Assignees alone or in combination with one another would own, acquire or
control by any means, including without being limited to open market
purchases, legally or equitably, directly or indirectly, such aggregate number
of shares of Common Stock as equals more than twenty-five percent (25%) of the
Common Stock.
(2) As a condition precedent to the transfer of this Option,
the transferor shall be required to deliver to CTI a certificate executed by
both the transferor and transferee stating that all conditions and
restrictions in Section 5.C.(1) hereof have been met at the time of the
proposed transfer.
(3) For the purposes of this Section, financial institutions
which own shares of common stock of AWT shall not be deemed to be the legal or
beneficial owners of shares of Common Stock by virtue of their ownership of
such shares of common stock of AWT; provided, however, that any such financial
institutions shall be deemed to be the legal and beneficial owners of any Cash
Options, Vesting Options or Earn in Options or Option Shares assigned to such
financial institutions by AWT or any Assignee, any shares of Common Stock
issued pursuant to such Options or any shares of Common Stock issued pursuant
to such Options sold or otherwise transferred to such financial institutions
by AWT or any Assignee.
SECTION 6. Registration Rights.
A. (1) At any time after August 31, 1991, AWT (but not its
Assignees) may request CTI to file a registration statement under the
Securities Act covering all or any portion of the Common Stock issued pursuant
to any Option issued to AWT or its Assignees. Promptly following receipt of
such a request, CTI shall use its best efforts to effect the registration
under the Securities Act of all Common Stock specified in the request in
accordance with the manner of disposition specified therein and to cause the
registration statement covering such Common Stock to remain effective until
all Common Stock included in the registration statement is sold or until three
months after the registration statement is declared effective, whichever comes
first.
(2) Notwithstanding the foregoing, (i) CTI shall not be
obligated to effect a registration pursuant to this Section during the period
starting with the date 60 days before CTI's estimated date of filing of, and
ending on a date three months following the effective date of, any
registration statement pertaining to an underwritten public offering of
securities for the account of CTI, if CTI is actively employing in good faith
all reasonable efforts to cause such registration statement to become
effective and CTI's estimate of the date of filing such registration statement
is made in good faith; (ii) if CTI furnishes to AWT a certificate signed by
the President of CTI stating that in the good faith judgment of the Board of
Directors of CTI it would be seriously detrimental to CTI or its shareholders
for a registration statement to be filed in the near future, then CTI's
obligation pursuant to this Section to use its best efforts to effect the
registration of any shares shall be deferred for a reasonable period not to
exceed one hundred and eighty (180) days; and (iii) CTI shall not be obligated
to effect more than one registration at the request of AWT irrespective of the
number of separate Options or shares which may be issued to AWT or its
Assignees.
(3) If the method of disposition specified in AWT's request
is an underwritten public offering, CTI may designate the managing underwriter
for such offering, subject to the approval of AWT, which approval shall not be
withheld unreasonably.
(4) CTI shall be entitled to include in any registration
statement filed pursuant to AWT's right of registration under this Section,
for sale in accordance with the method of disposition specified by AWT, (i)
shares of Common Stock to be sold by CTI for its own account except as and to
the extent that, in the opinion of the managing underwriter (if such method of
disposition shall be an underwritten public offering), such inclusion would
adversely affect the marketing of the shares to be sold, and (ii) shares of
Common Stock to be sold by any other shareholder of CTI who, before the date
of this Option, acquired rights to have such shares included in such
registration statement, but CTI shall not be entitled to include such shares
in excess of the largest number of shares derived by multiplying (x) the
number of shares of Common Stock then held by the other shareholder by (y) for
each selling shareholder, a fraction, the numerator of which is the number of
shares of Common Stock included in the registration statement for such
shareholder and the denominator of which is the number of all shares of Common
Stock held by such shareholder.
(5) It shall be a condition precedent to the obligations of
CTI to take any action pursuant to this Section to effect the registration of
any shares under the Securities Act that AWT shall furnish to CTI such
information regarding AWT and the Common Stock held by AWT and the intended
method of disposition of the shares to be sold as CTI shall reasonably request
and as shall be required in connection with the action to be taken by CTI.
(6) Except as otherwise specifically provided herein, all
expenses incurred in connection with a demand registration shall be borne by
AWT and CTI in proportion to the number of shares registered by AWT or by or
on behalf of CTI.
B. (1) If CTI at any time proposes to register any of its
Common Stock under the Securities Act on a form which will allow for
registration of the stock of AWT and/or its Assignees, CTI will at each such
time give written notice to AWT and/or its Assignees of its intention so to
do. Upon the written request of AWT and/or its Assignees given within 30 days
after receipt of any such notice, CTI will use its best efforts to cause the
Option Shares which CTI has been requested to register by AWT or its Assignees
to be registered under the Securities Act, all to the extent requisite to
permit the sale or other disposition by AWT or its Assignee of the Common
Stock so registered.
(2) This subsection 6.B. shall not be applicable to any
registration statement or prospectus filed by CTI to register any shares
previously issued or to be issued to any employee or Director or prior
employee or Director of CTI or any of the other CTI Companies in connection
with such person's employment or previous employment by CTI or the other CTI
Companies, and AWT and its Assignees shall not be entitled to any "piggyback"
registration in regard to any such registration statement.
(3) In connection with any offering involving an underwriting
of securities being issued by CTI, CTI shall not be required under this
subsection 3 to include any of AWT's or its Assignees' shares in such
underwriting unless they accept the terms of the underwriting as agreed upon
between CTI and the underwriters selected by it. If the total amount of
securities requested by AWT and/or its Assignees to be included in such
offering exceeds the amount of securities that the underwriters reasonably
believe compatible with the success of the offering, then CTI shall be
required to include in the offering only that aggregate number of securities
requested by AWT and/or its Assignees which the underwriters believe will not
jeopardize the success of the offering, selected in the following order from
those securities requested to be included in the offering: (i) first, the
shares which are requested to be included by holders of options, warrants or
agreements regarding registration rights issued prior to the date of this
Option, which options, warrants or agreements contain a provision that
obligates CTI to give shares issued or to be issued to such holders pursuant
to such options, warrants or agreements priority in any such offering; and
(ii) second, pro rata among the holders (including AWT and its Assignees) of
any other securities requested to be included in the offering according to the
total amount of securities entitled to be included therein owned by each such
holder or in such other proportions as shall mutually be agreed by any of such
holders.
(4) Except as otherwise specifically provided for herein, all
expenses incurred in connection with a "piggy-back" registration shall be
borne by CTI.
C. If and whenever CTI is obligated by the provisions of this
Section to effect the registration of the shares under the Securities Act, as
expeditiously as possible CTI will, or will use its best efforts to, as the
case may be:
(1) prepare and file with the Commission a registration
statement with respect to the shares issuable thereunder and cause such
registration statement to become and remain effective for a period not to
exceed ninety (90) days;
(2) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all shares that are covered by such registration
statement whenever AWT and/or any Assignee shall desire to dispose of the
same;
(3) furnish to AWT and any Assignee for whom such shares are
registered or are to be registered, such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as AWT and any Assignee may
reasonably request in order to facilitate the disposition of such options
and/or shares;
(4) register or qualify the shares covered by such
registration statement under such securities or blue sky laws of such
reasonable number of jurisdictions as AWT and/or any Assignees to whom such
options and/or shares issuable thereunder are registered shall reasonably
request, and do any and all other acts and things which may be reasonably
necessary or advisable to enable AWT and/or any Assignee to consummate the
disposition in such jurisdictions of such options and/or shares; provided,
however, that CTI shall not be obligated, by reason thereof, to qualify as a
foreign corporation or file any general consent to service of process under
the laws of any such jurisdiction or subject itself to taxation as doing
business in such jurisdiction;
(5) furnish to AWT and/or any Assignees to whom such shares
issuable thereunder are registered or are to be registered at the time of the
disposition of such shares by AWT and/or any Assignees an opinion of counsel
for CTI acceptable to AWT and/or any Assignees to the effect that a
registration statement covering such shares has been filed with the Commission
under the Securities Act and has been made effective by order of the
Commission, that a prospectus complying as to form with the requirements of
the Securities Act is available for delivery, that no stop order has been
issued by the Commission suspending the effectiveness of such registration
statement and that, to the best of such counsel's knowledge, no proceedings
for the issuance of such a stop order are threatened or contemplated, and that
the shares have been registered or qualified under the securities or blue sky
laws of each state in which CTI shall be required pursuant to clause (d) above
to register or qualify such shares.
(6) Except as otherwise provided in this Section 6 with
respect to demand registration, the costs and expenses of all registrations
under the Securities Act, and of all other actions which CTI is required to
take or effect, shall be paid by CTI (including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for CTI), except that, if AWT or its Assignees request the
registration statement to be kept effective more than 90 days, all such
expenses in connection with any amendment or supplement to the registration
statement or the prospectus used in connection therewith required to be filed
to keep such registration statement effective for more than ninety (90) days
after the date on which such registration statement becomes effective under
the Securities Act because AWT or its Assignees have not effected the
disposition of the shares covered by such registration statement shall be
borne by AWT and such Assignees in such proportions as they may agree;
(7) Notices and requests delivered by AWT or its Assignee to
CTI pursuant to this subsection B shall contain (a) such information regarding
the Options and/or the Option Shares and the intended method of disposition
thereof as reasonably shall be required in connection with the action to be
taken and (b) AWT's or the Assignee's, as the case may be, agreement to the
terms of the underwriting agreement, if any.
(8) In the event of any registration under the Securities Act
of any Option Shares pursuant to this Section 6, to the extent permitted by
law, CTI hereby agrees to indemnify and hold harmless AWT and any Assignee and
each other person, if any, who controls AWT and/or such Assignee within the
meaning of the Securities Act and each other person (including each
underwriter, and each other person, if any, who controls such underwriter) who
participates in the offering of such Option Shares, against any losses,
claims, damages or liabilities, joint or several (including attorney fees and
expenses, including attorney fees and expenses in connection with the
enforcement of CTI's obligations hereunder), to which AWT and/or such Assignee
or controlling person or participating person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which such Option or Option Shares were registered under the Securities Act,
in any preliminary prospectus or final prospectus contained therein, or in 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 not misleading, and
will reimburse AWT and/or such Assignee and each such controlling person or
participating person in connection with investigating or defending any such
loss, claim, damage, liability or proceeding; provided, however, that CTI will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such registration
statement, such preliminary or final prospectus or such amendment or
supplement in reliance upon and in conformity with written information
furnished to CTI by an instrument duly executed by AWT and/or such Assignee or
such controlling or participating person, as the case may be, specifically for
use in the preparation thereof, and AWT and/or such Assignee similarly agrees
to indemnify and hold CTI and its officers, directors, agents, controlling
persons and employees harmless with respect to any data supplied by AWT, such
Assignee, or its controlling person, as the case may be, which is contained
in the registration statement.
SECTION 7. Anti-Dilution Provisions.
A. The Initial Purchase Price, as well as the number of shares
issuable upon exercise of the Option, shall be subject to adjustment from
time to time as hereinafter provided. Upon each adjustment of the Purchase
Price, AWT and its assignees shall thereafter be entitled to purchase, at
the Purchase Price resulting from such adjustment, the number of shares
(calculated to the nearest whole share) obtained by multiplying the
Purchase Price in effect immediately prior to such adjustment by the number
of shares purchasable pursuant thereto immediately prior to such adjustment
and dividing the product thereof by the Purchase price resulting from such
adjustment.
B. If and whenever after CTI shall issue or sell any shares of
its Common Stock for a consideration per share less than the Purchase Price in
effect immediately prior to such issue or sale (excluding any options or
shares of its Common Stock to be issued or which have been issued to then
former or present employees or directors), then forthwith the Purchase Price
shall be reduced to the price (calculated to the nearest cent) determined as
follows:
by dividing (a) an amount equal to the sum of the number of shares of
Common Stock outstanding immediately prior to such issue or sale
multiplied by the then existing Purchase Price, and the
consideration, if any, received and deemed received by CTI upon such
issue or sale, by (b) the total number of shares of Common Stock
outstanding and deemed outstanding immediately after such issue or
sale.
No adjustment of the Purchase Price, however, shall be made in an amount less
then $0.05 per share, but any such lesser adjustment shall be carried forward
and shall be made at the time and together with the next subsequent adjustment
which together with any adjustment so carried forward shall amount to $0.05
per share or more.
C. For the purposes of this Section 7, the following
provisions (1) through (4), inclusive, shall also be applicable:
(1) In case at any time CTI shall declare a dividend or make
any other distribution on any stock of CTI payable in Common Stock, any Common
Stock issuable in payment of such dividend or distribution shall be deemed to
have been issued or sold without consideration.
(2) In case at any time any shares of Common Stock shall be
issued or sold for cash, the consideration received therefor shall be deemed
to be the amount payable to CTI therefor, without deduction therefrom of any
expenses incurred or any underwriting commissions or concessions or discounts
paid or allowed by CTI in connection therewith. In case any shares of Common
Stock shall be issued or sold for a consideration other than cash, the amount
of the consideration other than cash payable to CTI shall be deemed to be the
fair value of such consideration as reasonably determined by the Board of
Directors of CTI, without deduction therefrom of any expenses incurred or any
underwriting commissions or concessions or discounts paid or allowed by CTI in
connection therewith. In case any shares of Common Stock shall be issued in
connection with any merger of another corporation into CTI, the amount of
consideration therefor shall be deemed to be the fair value as reasonably
determined by the Board of Directors of CTI of such portion of the assets of
such merged corporation as such Board shall determine to be attributable to
such Common Stock, convertible securities, rights or options, as the case may
be.
(3) In case at any time CTI shall take a record of the holders
of its Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock, or (ii) to subscribe
for or purchase Common Stock, then such record date shall be deemed to be the
date of the issue or sale of the shares of Common Stock deemed to be issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(4) The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of
CTI, but any disposition of any such shares other than the same being canceled
or designated as treasury stock shall be considered an issue or sale of Common
Stock.
D. In case at any time or from time to time conditions arise
by reason of action taken by CTI which are not adequately covered by the
provisions of this Section 7, and which might materially and adversely
affect the exercise rights of the holders of the Option, the Board of
Directors of CTI shall appoint a firm of independent certified public
accountants of recognized standing, who may be the firm regularly retained
by CTI, who shall give their opinion upon the adjustment, if any, on a
basis consistent with the standards established in the other provisions of
this Section 7 necessary with respect to the Purchase Price so as to
preserve, without dilution, the exercise rights of the holders of the
Option. Upon receipt of such opinion, the Board of Directors shall
immediately make the adjustments described therein.
E. Effect of Certain Dividends. In case at any time CTI shall
declare a dividend upon its Common Stock (other than a dividend payable in
Common Stock) payable otherwise than out of net earnings after taxes during
the prior fiscal year, the Purchase Price in effect immediately prior to the
declaration of such dividend shall be reduced by an amount equal, in the case
of a dividend in cash, to the amount thereof payable per share of Common Stock
or, in the case of any other dividend, to the fair value thereof per share of
Common stock as determined by the Board of Directors of CTI. Such reductions
shall take effect as of the date on which a record is taken for the purpose of
such dividend, or if a record is not taken, the date as of which the holders
of record of Common Stock of record entitled to such dividend are to be
determined. As used in this subsection E, the term "dividend" shall mean any
distribution to the holders of Common Stock as such.
F. Stock Splits and Reverse Splits. In case at any time CTI
shall subdivide its outstanding shares of Common Stock into a greater number
of shares, the Purchase Price in effect immediately prior to such subdivision
shall be proportionately reduced and the number of shares purchasable pursuant
to such Option immediately prior to such subdivision shall be proportionately
increased, and conversely, in case at any time CTI shall combine its
outstanding shares of Common Stock into a smaller number of shares, the
Purchase Price in effect immediately prior to such combination shall be
proportionately increased and the number of shares issuable upon exercise of
such Option shall be proportionately reduced. Except as provided in this
Section 7F no adjustment in the Purchase Price and no change in the number of
shares purchasable upon exercise of such Option shall be made as a result of
or by reason of any such subdivision or combination.
G. Effect of Reorganization and Asset Sales. If any capital
reorganization or reclassification of the capital stock of CTI, or
consolidation or merger of CTI with another corporation, or the sale of all
or substantially all of its assets to another corporation, shall be
effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for
Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate
provision shall be made whereby AWT and its Assignees shall thereafter have
the right to receive upon the basis and upon the terms and conditions
specified herein and in lieu of the shares of the Common Stock of CTI
immediately theretofore receivable upon the exercise of such Options, such
shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such Common Stock immediately
theretofore so receivable had such reorganization, reclassification,
consolidation, merger or sale not taken place, and in any such case
appropriate provision shall be made with respect to the rights and
interests of AWT and such Assignees to the end that the provisions of this
Option (including, without limitation, provisions for adjustment of the
Purchase Price and of the number of shares issuable upon exercise and for
the registration of the Option Shares) shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of such Options. CTI shall not
effect any such consolidation, merger or sale unless prior to or
simultaneously with the consummation thereof the successor corporation (if
other than CTI) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument
executed and mailed or delivered to AWT and any Assignee, the obligation to
deliver to AWT and any Assignee such shares of stock, securities or assets
as, in accordance with the foregoing provisions, AWT and any Assignee may
be entitled to receive, and containing the express assumption of such
successor corporation of the due and punctual performance and observance of
every provision of this Option to be performed and observed by CTI and of
all liabilities and obligations of CTI under this Option.
H. Accountants' Certificates. In the event that during any
fiscal year of CTI there is a change in the number of shares of Common Stock
issuable upon the exercise of this Option, or any change in the rights of the
holder of this Option by reason of other events herein set forth, then CTI
shall, within ninety (90) days after the end of such fiscal year or, at any
time upon the request of AWT and/or its Assignees in connection with an
exercise or a proposed exercise of such Options, obtain a certificate of the
firm of independent certified public accountants of recognized standing
selected by CTI's Board of Directors (who may be the regular auditors of CTI),
stating the adjusted Purchase Price and the number of Option Shares so
issuable, or specifying the other shares of stock, securities or assets and
the amount thereof receivable as a result of such change in rights, and
setting forth in reasonable detail the method of calculation and facts upon
which such calculation is based. CTI will promptly mail a copy of such
accountants' certificate to AWT and its Assignees. The certificate of such
firm of independent public accountants shall be conclusive evidence of the
correctness of the computation with respect to any such adjustment of the
Purchase Price and any such change in the number of such shares so issuable.
All charges or expenses incurred in connection with a request for an
accountants' certificate by AWT and/or any Assignee shall be borne by AWT
and/or any Assignee, as the case may be.
SECTION 8. Covenants. CTI covenants and agrees that:
A. CTI will reserve and set apart and have at all times, free
from preemptive rights, a number of shares of authorized but unissued Common
Stock deliverable upon the exercise of the Option, and CTI will have at all
times such other rights or privileges which are sufficient to enable it at any
time to fulfill all of its obligations hereunder.
B. CTI will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, issue or sale of securities or otherwise, avoid or take
any action which would have the effect of avoiding the observance or
performance of any of the terms to be observed or performed under this Option
by CTI, but will at all times in good faith assist in carrying out all of the
provisions of this Option and in taking all of such action as may be necessary
or appropriate in order to protect the rights of AWT and its Assignees under
this Option against dilution or other impairment.
C. If any shares of Common Stock required to be reserved for
the purposes of exercise of the Option, require registration with or approval
of any governmental authority under any federal law (other than the Securities
Act) or under any state law before such Option Shares may be issued upon
exercise of such Option, CTI will, at its expense, as expeditiously as
possible, use its best efforts to cause such Option Shares to be duly
registered or approved, as the case may be.
D. If, and so long as, CTI's Common Stock shall be listed on
any securities exchange (as defined in the Exchange Act), it will, at its
expense, obtain and maintain the approval for listing upon official notice of
issuance of all registered shares of Common Stock receivable upon the exercise
of the Option at the time outstanding and maintain the listing of such Option
Shares after their issuance; and CTI will so list on such securities exchange,
will register under the Exchange Act (or any similar statute then in effect)
and will maintain such listing of, any other registered securities that at any
time are issuable upon exercise of such Options, if and at the time that any
securities of the same class shall be listed on such securities exchange by
CTI.
SECTION 9. Notification by CTI. In case at any time:
(1) CTI shall pay any dividend payable in stock upon Common
Stock or make any distribution (other than cash dividends which are not in a
greater amount per share than the most recent cash dividend) to the holders of
the Common Stock;
(2) CTI shall make an offer for subscription pro rata to the
holders of its Common Stock of any additional shares of stock of any class or
other rights;
(3) there shall be any capital reorganization,
reclassification of the capital stock of CTI, consolidation or merger of CTI
with, or sale of all or substantially all of its assets to, another
corporation; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of CTI.
Then, in any one or more of such cases, CTI shall give written
notice to AWT and/or its Assignees of the date on which (x) the books of
CTI shall close, or a record shall be taken for such dividend, distribution
or subscription rights, or (y) such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up shall
take place, as the case may be. Such notice shall also specify the date as
of which the holders of Common Stock of record shall participate in such
dividend, distribution or subscription rights, or shall be entitled to
exchange their Common Stock for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding-up, as the case may be. Such written
notice shall be given not less than 30 and not more than 90 days prior to
the action in question and not less than 30 days and not more than 90 days
prior to the record date or date on which CTI's transfer books are closed
in respect thereto, and such notice may state that the record date is
subject to the effectiveness of a registration statement under the
Securities Act, or to a favorable vote of stockholders, if either is
required.
SECTION 10. Right of First Refusal With Respect to Shares to
be Issued. In the event that AWT or any of its Assignees exercise the Option,
AWT and/or its Assignees, as the case may be, agree thereafter not to sell,
assign, or otherwise transfer the Option Shares in any private transaction
(including tender offers) without first offering to CTI a right of first
refusal to purchase such shares on the same terms. AWT and/or its Assignees
agree to notify CTI as soon as any of them becomes aware of any proposed
private transaction. CTI may exercise its right of first refusal for a period
commencing upon such notification by AWT or its Assignees and ending
twenty-four (24) hours prior to the time that a transfer or tender of Common
Stock by AWT or its Assignees is due (including any extensions which may be
granted). If CTI either declines to exercise its right of first refusal or
does not do so within the applicable time period, AWT or its Assignee, as the
case may be, may transfer such stock on the terms and to the party indicated
in the notice provided to CTI, but not otherwise, without once again extending
to CTI a right of first refusal as provided herein. For purposes of the
foregoing, "private transaction" shall mean any transactions other than
transfers made if the Option Shares are then registered pursuant to the
Securities Act or transfers made pursuant to Rule 144.
SECTION 11. Restrictive Legend. All Option Shares shall bear
a restrictive legend providing that:
"The shares represented by this stock certificate have
not been registered pursuant to the Securities Act of 1933, as
amended (the "Act") and may not be sold or transferred unless
registered pursuant to the Act or subject to an exemption
therefrom. In addition, the shares represented by this
certificate are issued pursuant to and or subject to certain
restrictions on transfer contained in an Option Agreement
between _______ and Chemfix Technologies, Inc., dated _______
and may not be sold or transferred except in accordance with
the terms contained therein.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution under a registration statement of the
securities represented thereby) shall also bear such legend unless, in the
opinion of counsel specified in subsection A of Section 5, the securities
represented thereby need no longer be subject to the restrictions contained in
Section 5. The provisions of said Section 5 shall be binding upon all
subsequent holders of certificates bearing the above legend, and shall also be
applicable to all subsequent holders of certificates bearing the above legend,
and shall also be applicable to all subsequent holders of this Option.
SECTION 12. Termination. [A.] This Option shall terminate as
of the date set forth on the cover page hereof.
[B. Early Termination. If the Joint Venture and Option Agreement is
terminated or expires prior to the exercise of this Option, then CTI will send
notice to the holder of this Option at the address specified pursuant to
Section 14 hereof of such event within five (5) days of such termination or
expiration and shall set forth the Adjusted Market Price in such notice.
Notwithstanding anything to the contrary contained in this Option, upon the
sending of such notice, the holder of this Option will have a period of
twenty-five (25) days to tender this Option to CTI as provided for in Section
3A hereof to purchase the Option Shares at the Adjusted Market Price. This
Option will expire and be of no further force and effect on the twenty-fifth
(25th) day subsequent to the sending of such notice.]
SECTION 13. Successors. This Option shall be binding upon any
corporation succeeding to CTI by merger, consolidation or acquisition of all
or substantially all of CTI's assets.
SECTION 14. Notices. Any notice or other document required or
permitted to be given or delivered to AWT or any Assignee shall be delivered
at, or sent by certified or registered mail, overnight courier or
hand-delivery to AWT or any Assignee at the address shown in CTI's option
ledger upon issuance or transfer or to such other address as shall have been
furnished to CTI in writing by AWT or any Assignee. Any notice or other
document required or permitted to be given or delivered to CTI shall be
delivered at, or sent by certified or registered mail, overnight courier or
hand-delivery to the principal office of CTI at 2424 Edenborn Avenue,
Metairie, Louisiana, Attention: President, or such other address as shall
have been furnished to AWT or any Assignee.
SECTION 15. No Rights as Shareholder; Limitation of Liability.
This Option shall not entitle any holder hereof to any of the rights of a
shareholder of CTI. No provision hereof, in the absence of affirmative action
by the holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the Purchase Price or as a
shareholder of CTI, whether such liability is asserted by CTI or by creditors
of CTI.
SECTION 16. Miscellaneous. The Option shall be governed by,
and construed and enforced in accordance with, the laws of the State of
Delaware. This Option and any provision hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
(or any predecessor in interest thereof) against which enforcement of the same
is sought. The headings in this Option are for the purposes of reference only
and shall not affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, CTI has caused this Option to be signed by
its duly authorized officer under its corporate seal, attested by its duly
authorized officer, and to be dated as of ________________.
CHEMFIX TECHNOLOGIES, INC.
By___________________________
(Corporate Seal)
Attest:
____________________________
Gloria J. Newbern, Secretary
ASSIGNMENT
To Be Executed by the Registered Holder if It Desires
to Transfer the Within Option.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_________________________
(Name)
_________________________
(Address)
_________________________
_________________________
(Social Security or Federal Identification Number)
the Option to purchase _____________ shares of Common Stock covered by the
within Option, as said shares were constituted at the date of said Option, and
does hereby irrevocably constitute and appoint ________________________
______________, Attorney, to make such transfer on the books of Chemfix
Technologies, Inc. maintained for that purpose with full power of
substitution.
Signature_________________________
Dated, ____________, 19__.
In the presence of
______________________________
NOTICE
The signature to the foregoing Assignment must correspond to
the name as written upon the face of the within Option in every particular,
without alteration or enlargement or any change whatsoever.
FULL SUBSCRIPTION FORM
To Be Executed by the Registered Holder if It Desires
to Exercise in Full the Within Option
The undersigned hereby exercises the right to purchase the
_________________ shares of Common Stock covered by the within Option at the
date of this subscription and herewith makes payment of the sum of $_________
representing the Purchase Price of $_________ per share in effect at this
date. Certificates for such shares shall be issued in the name of and
delivered to the undersigned, unless otherwise specified by written
instructions, signed by the undersigned and accompanying this subscription.
Dated, _____________, 19__.
Signature___________________________
Address_____________________________
____________________________________
____________________________________
Social Security or Federal I.D. Number