1
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
EXHIBIT 99.5
PURCHASE AGREEMENT
This Purchase Agreement ("Agreement") is dated and effective as of
November 13, 1996, and is entered into by and among (i) American Ecology
Corporation, a Delaware corporation (the "Company"), (ii) Edward F. Heil
("Heil"), and (iii) Rotchford Barker ("Barker") (the individuals identified in
clauses (ii) through (iii) being herein referred to collectively as
"Purchasers" and severally as "Purchaser").
In consideration of the agreements and undertakings of the parties
hereinafter set forth, and for other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows.
1. Purchase and Sale of Securities. Subject to the terms and
conditions set forth in this Agreement the Company will issue and sell to each
Purchaser on the date hereof and each Purchaser will purchase from the Company
on the date hereof the number of shares of Series E Preferred Stock (as
hereinafter defined) specified on Schedule 1 and (b) the number of Warrants (as
hereinafter defined) specified on Schedule 1 of the Company (collectively the
Series E Preferred Stock, the Warrants and any common stock issued in respect
of the foregoing are sometimes referred to as the "Securities"). The aggregate
purchase price of each (i) one share of Series E Preferred Stock and (ii) ten
Warrants shall be $10.00, which shall be paid to the Company in cash. The
obligations of the respective Purchasers to purchase shares of Series E
Preferred Stock and Warrants pursuant to this Agreement are several, and not
joint. The purchase and sale of the shares of Series E Preferred Stock and
Warrants shall occur at the offices of Jenner & Block, Chicago, Illinois not
later than the close of business on the date hereof, or at such other time and
place as may be agreed to by all of the parties to this Agreement. As used in
this Purchase Agreement, the term "Series E Preferred Stock" means a series of
preferred stock of the Company established by the Certificate of Designation,
Preferences and Rights of Series E Redeemable Convertible Preferred Stock of
American Ecology Corporation (the "Certificate of Designation") attached hereto
as Exhibit A. As used in this Agreement, the term "Warrant" means a warrant to
purchase common stock of the Company in the form attached hereto as Exhibit B.
2. Representations of the Company. The Company represents and
warrants to each Purchaser as follows:
2.1 The Company has all requisite corporate power and
authority to enter into this Agreement and to perform all the obligations
required to be performed by the Company under this Agreement.
1
2
2.2 This Agreement has been duly executed and delivered
by the Company, and, upon execution and delivery by the Purchasers, this
Agreement will be the valid and legally binding obligation of the Company,
enforceable as to the Company in accordance with its terms except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors' rights
and equitable remedies.
2.3 All shares of Series E Preferred Stock being issued
shall be, all Warrants being issued shall be, and all shares of common Stock
issuable pursuant to such Warrants ("Underlying Common Shares") shall be upon
issuance of such Underlying Common Shares, duly authorized, validly issued,
fully paid and nonassessable and issued without violation of and not subject to
any preemptive right; and a number of shares of authorized and unissued Common
Stock of the Company equal to the number of such Underlying Common Shares shall
have been reserved for issuance on or before July 1, 1997.
3. Representations of Purchasers. Each Purchaser, severally and
not jointly, represents and warrants to the Company as to himself as follows:
3.1. Such Purchaser has all requisite authority to enter
into this Agreement and to perform all the obligations required to be performed
by such Purchaser under this Agreement. This Agreement has been duly executed
and delivered by such Purchaser, and, upon execution and delivery by the
Company and the other Purchasers, this Agreement will be the valid and legally
binding obligation of such Purchaser, enforceable as to such Purchaser in
accordance with its terms except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and equitable
remedies.
3.2. Neither the Company nor any person acting or
purporting to act on behalf of the Company has offered or sold any of the
Securities to such Purchaser by means of any form of general solicitation or
general advertising. Such Purchaser is acquiring the Securities to be
purchased by such Purchaser under this Agreement solely for his own beneficial
account, for investment purposes, and not with any view to, or for resale in
connection with, any distribution of any such Securities. Such Purchaser
understands that the Securities have not been registered under the Securities
Act of 1933, as amended (the "Act"), or any state securities laws, by reason of
specific exemptions under the provisions thereof which depend in part upon the
investment intent of such Purchaser and upon the accuracy of the other
representations made by such Purchaser in this Agreement. Such Purchaser
understands that the Company is relying upon the representations and agreements
contained in this Agreement for the purpose of determining that the
transactions contemplated by this Agreement meet the requirements
2
3
for such exemptions. Such Purchaser is a director of the Company and an
"accredited investor" as defined in Regulation D pursuant to the Act.
4. Restrictive Legends.
4.1. Each certificate or other document representing any
of the Securities issued pursuant to this Agreement shall be stamped or
otherwise imprinted with a restrictive legend in the form set forth on the form
of the Warrant attached hereto as an exhibit (or, in the case of shares of
Series E Preferred Stock or shares of common stock issuable upon conversion
thereof or exercise of the Warrants, an equivalent legend appropriately
modified to refer to such Securities). In the event of any transfer or
reissuance of any such Security, the certificates or other instruments
representing such Securities shall continue to bear such legends.
4.2. The Company hereby agrees that it will promptly
deliver or cause to be delivered a new certificate or certificates or
instrument or instruments for any Securities, which certificate or certificates
or instrument or instruments will not bear the legends referred to above, upon
determination by the Company that such Securities have been held beneficially
by the holder for at least three years and that such holder is not and has not
been within the preceding three months an affiliate of the Company. All
determinations pursuant to the preceding sentence shall be made in accordance
with Rule 144(k) under the Act or any applicable successor rule. In the event
that a period shorter than specified above is permitted by reason of the
amendment or replacement of such Rule 144(k), then the Company shall impose no
greater restriction than the restriction imposed as the result of such
amendment or replacement.
5. Conditions to the Obligations of the Purchasers. The
obligations of each Purchaser to purchase the Securities to be purchased by
such Purchaser under this Agreement are subject to the satisfaction or waiver
by such Purchaser of the following conditions:
5.1. The Company shall, against receipt of payment
therefore as provided herein, deliver to the Purchaser the certificates or
other instruments evidencing such Securities in the form contemplated by this
Agreement; and
5.2. The representations of the Company set forth in
Section 2 of the Agreement shall be true and correct in all material respects
at the time of such purchase and sale of such Securities.
6. Conditions to the Obligations of the Company. The obligations
of the Company to issue and sell the Securities to be issued and sold by the
Company under this Agreement are subject to the satisfaction or waiver by the
Company of the following conditions:
3
4
6.1. Each Purchaser shall have delivered payment as
provided herein against delivery to such Purchaser of the certificates or other
instruments evidencing such Securities in the form contemplated by this
Agreement; and
6.2. The representations of each Purchaser set forth in
Section 3 of this Agreement shall be true and correct in all material respects
at the time of such purchase and sale of such Securities; and
6.3. The Company shall have received such consents,
waivers and agreements from its secured bank lender as shall be required, in
the judgment of the Company, to permit the issuance and sale of such Securities
with the result that, upon consummation of such issuance and sale, the Company
shall not be in default (or shall be subject to a forbearance agreement
reasonably satisfactory to the Company with respect to any such default) under
the provisions of any agreement or instrument governing or evidencing any
obligations of the Company to its secured bank lender.
7. Registration Rights.
7.1. As used in this Section 7:
(a) The terms "register," "registered" and
"registration" refer to a registration effective by preparing and filing a
registration statement in compliance with the Act, and the declaration or
ordering of the effectiveness of such registration statement.
(b) The term "Registrable Securities" means: (i)
any common stock of the Company ("Common Stock") issued, or issuable, upon the
conversion of any Series E Preferred Stock regardless of whether such
conversion has taken place at any time; (ii) any Common Stock issued, or
issuable upon the conversion or exercise of any Warrant, regardless of whether
such exercise has taken place at any time, or any warrant, right or other
security which is issued as a dividend or other distribution with respect to,
or in exchange for or in replacement of, any Series E Preferred Stock or any
Warrant; and (iii) any Common Stock issued as a dividend on any Series E
Preferred Stock; excluding in all cases, however, any Registrable Securities
sold by a person in a transaction in which his rights under this Section 7 are
not assigned.
(c) The term "Holder" means any holder of
Registrable Securities who acquired such Registrable Securities in a
transaction or series of transactions not involving any public offering or any
sale pursuant to Rule 144 under the Act.
7.2. The Company hereby agrees that:
4
5
(a) If at any time or from time to time, the
Company determines to register any of its securities, either for its own
account or the account of a security holder or holders, (other than a
registration solely to implement an employee benefit plan or a registration on
Form S-4 or a Rights Offering as such term is defined in the Certificate of
Designation), the Company will:
(i) promptly give to each Holder written
notice thereof (which will include a list of the jurisdictions in which the
Company intends to attempt to qualify such securities under the applicable blue
sky law or other state securities laws); and
(ii) include in such registration (and
any related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in any
written request or requests by any Holder received by the Company within twenty
days after such written notice is given and make its best efforts to qualify
all the Registrable Securities specified in such request under the blue sky or
other securities laws of any jurisdiction which said Holders may reasonably
request.
(b) If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company will so advise the Holders as a part of the written notice given
pursuant to Section 7.2(a)(i) above. In such event, the right of any Holder to
registration pursuant to this Section 7.2 will be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute Registrable Securities through such
underwriting (together with the Company and the other shareholders distributing
their securities through such underwriting) will enter into an underwriting
agreement in customary form, satisfactory to the Company, with the underwriter
or underwriters selected for such underwriting by the Company. Notwithstanding
any other provision of this Section 7.2, if the managing underwriter determines
in good faith that marketing factors require a limitation of the number of
shares to be underwritten for the accounts of Holders of Registrable Securities
and other securities of the Company entitled to registration pursuant to
agreements with the Company, the managing underwriter may limit the number of
Registrable Securities and other securities of the Company entitled to
registration pursuant to agreements with the Company to be included in the
registration. The Company will so advise all Holders of Registrable Securities
and all shareholders owning securities of the Company entitled to registration
pursuant to agreements with the Company and participating in such registration,
and the number of shares of Registrable Securities and such other securities
that may be included in the registration and underwriting will be allocated
among all Holders and other shareholders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities and such other
securities entitled to such registration held by such Holders and other
shareholders at the
5
6
time of filing the registration statement. No Registrable Securities excluded
from the underwriting by reason of the underwriter's marketing limitation will
be included in such registration. If any Holder disapproves of the terms of
the underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter. The Registrable Securities so withdrawn
will also be withdrawn from registration; provided, however, that, if by the
withdrawal of such Registrable Securities or any other securities entitled to
registration pursuant to agreements with the Company a greater number of
Registrable Securities held by Holders may be included in such registration (up
to the maximum of any limitation imposed by the managing underwriter) then the
Company will offer to all Holders and other shareholders who have included
Registrable Securities and such other securities in the registration the right
to include additional Registrable Securities or other securities in portion to
the amounts of their Registrable Securities and such other securities so
included.
(c) The Company shall cooperate and communicate
with all Holders wishing to participate in any registration pursuant to this
Section 7.2 so as to permit them a reasonable and effective opportunity to
participate, including providing prompt notice of any stop orders and copies of
all registration statements and prospectuses filed with the Securities and
Exchange Commission, including any amendments, and any such other materials and
information that is provided to other participating securities holders. The
Company will bear all expenses of any registration, including filing fees, blue
sky fees and expenses, accounting and legal fees and expenses, printing and
mailing costs and other similar expenses, but will not bear any expenses
(including fees of legal counsel) incurred by participating Holders and will
not bear any underwriting discount or concession or similar sale costs with
respect to Registrable Securities offered and sold by or for participating
Holders. The Company and the participating Holders will agree to indemnify
each other or to contribute to one another on reasonable and customary terms.
8. Selection of Shares to be Redeemed or Converted. If less than
all the Series E Preferred Stock is required to be redeemed or converted
pursuant to Subsections 5(a) or 6(a) of the Certificate of Designation, the
shares to be redeemed or converted shall be determined by written agreement of
the Purchasers or, if the Purchasers fail to tender a written agreement to the
Company prior to the time for redemption or conversion, the shares to be
redeemed or converted shall be determined as follows:
8.1. The first 100,000 shares of Series E Preferred Stock
redeemed pursuant to Subsection 5(a) of the Certificate of Designation shall be
redeemed from those shares purchased by Barker and any remaining shares
redeemed shall be redeemed ratably from the balance of the Series E Preferred
Stock purchased by each Purchaser after deducting therefrom any Series E
Preferred Stock tendered by the Purchaser to pay for Common Stock purchased in
a Rights Offering pursuant to Subsection 5(b) of the Certificate of
Designation.
6
7
8.2. Any Series E Preferred Stock converted pursuant to
Subsection 6(a) of the Certification of Designation shall come ratably from the
Series E Preferred Stock purchased by each Purchaser after deducting therefrom
any Series E Preferred Stock tendered by the Purchaser to pay for Common Stock
purchased in a Rights Offering pursuant to Subsection 5(b) of the Certificate
of Designation.
8.3. Should either or both Purchasers transfer all or any
part of their Series E Preferred Stock, the shares transferred shall be treated
for purposes of the computations in this Section 8 as still owned by the
transferring Purchaser and a pro rata portion of any shares required to be
redeemed or converted from the shares originally purchased by the Purchaser
shall be converted or redeemed from those transferred. The Purchasers shall
notify each transferee of the restrictions in this Agreement and shall require
that each transferee notify any transferee from it of such restrictions.
9. Miscellaneous.
9.1. Remedies Not Exclusive. No remedy conferred by any
of the specific provisions of this Agreement is intended to be exclusive of any
other remedy, and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise. The election of any one or more
remedies by any party hereto shall not constitute a waiver of the right to
pursue other available remedies.
9.2. Parties Bound. Except to the extent otherwise
expressly provided herein, this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, representatives,
administrators, guardians, successors and assigns; and no other person shall
have any right, benefit or obligation hereunder.
9.3. Notices. All notices, reports records or other
communications that are required or permitted to be given to the parties under
this Agreement shall be sufficient in all respects if given in writing and
delivered in person, by telecopy, by overnight courier or by registered or
certified mail, postage prepaid, return receipt requested, to the receiving
party at the following address:
If to a Purchaser, to him at the most recent address furnished by him to the
Company;
If to the Company, to the Company's main office;
or to such other address as such party may have given to the other parties by
notice pursuant to this Section 9.3. Notice shall be deemed given on the date
of delivery, in the case of personal delivery or telecopy, or on the delivery
or refusal date, as specified on the return receipt, in the case of overnight
courier or registered or certified mail.
7
8
9.4. Choice of Law. This Agreement shall be construed,
interpreted, and the rights of the parties determined in accordance with, the
laws of the State of Delaware, without giving effect to any conflicts of laws
principles.
9.5. Entire Agreement; Amendments and Waivers; Assignment.
This Agreement, together with all exhibits and schedules hereto, constitutes
the entire agreement between the parties pertaining to the subject matter
hereof and supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. Except
as set forth herein, there are no warranties, representations or other
agreements between the parties in connection with the subject matter hereof.
No supplement, modification or waiver of this Agreement shall be binding unless
it shall be specifically designated to be a supplement, modification or wavier
of this Agreement and shall be executed in writing by each party to be bound
thereby. No wavier of any of the provisions of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided. In
the event of any permitted transfer of any Securities, any rights of the holder
thereof pursuant to Section 7 shall be transferred automatically. Except as
set forth in the preceding sentence and except as provided in Section 8 hereof,
this Agreement may not be assigned by operation of law or otherwise.
9.6. Further Assurances. From time to time hereafter and
without further consideration, each of the parties hereto shall execute and
deliver such additional or further instruments of conveyance, assignment and
transfer and take such actions as any of the other parties hereto may
reasonably request in order to more effectively consummate the transactions
contemplated by this Agreement or as shall be reasonably necessary or
appropriate in connection with the carrying out of the parties' respective
obligations hereunder or the purposes of this Agreement.
9.7. Multiple Counterparts. This Agreement may be
executed in or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
9.8. Headings. The headings of the several Sections
herein are inserted for convenience of reference only and are not intended to
be a part of or to affect the meaning or interpretation of this Agreement.
8
9
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of November 13, 1996.
AMERICAN ECOLOGY CORPORATION
By: /s/ Jack L. Lemley
-----------------------------------
Jack K. Lemley
Chairman & CEO
/s/ Edward F. Heil
---------------------------------------
Edward F. Heil
/s/ Rotchford Barker
---------------------------------------
Rotchford Barker
9
10
SCHEDULE 1
Aggregate Purchase
Price of Series D
Number of Shares Preferred Stock
of Series D Number of Shares and Warrants
Purchaser Preferred Stock Warrants to be Purchased
- --------- --------------- -------- ---------------
Rotchford Barker 200,000 2,000,000 $2,000,000
Edward F. Heil 100,000 1,000,000 $1,000,000
10