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2.1
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Purpose. The
funds advanced under the Note will be used by the PESI, as
follows:
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(a)
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first,
to fund the payment of the unpaid principal balance and interest thereon
owing by East Tennessee Materials & Energy Corporation, a subsidiary
of PESI (“M&EC”), to
Performance Development Corporation (“PDC”), under that certain the
Promissory Note, dated June 25, 2001, as amended by the First Amendment to
Promissory Note, dated December 29, 2008, for monies advanced to M&EC
by PDC and certain services performed by PDC on behalf of M&EC prior
to PESI’s acquisition of M&EC in June 2007;
and
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(b)
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second,
after payment of the amount due under 2.1(a) above, the balance, if any,
in connection with working capital purposes in the ordinary course of
PESI’ business.
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2.2
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Prepayment. PESI
may prepay the Note at any time, without premium or
penalty. Prepayments will not reduce the amount of the regular
annual payment of principal due under the
Note.
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5.1
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Authority. This
Agreement, the Note, and issuance of the Shares, the Warrants, and the
Warrant Shares shall have been duly reviewed and approved by the Audit
Committee of the Board of Directors and authorized by the entire Board of
Directors of PESI;
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5.2
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Stock Quotation or
Listing. There will be no action or proceeding pending
or threatened against PESI by the Nasdaq to prohibit or terminate the
quotation of PESI common stock, or the trading thereof on The Nasdaq
Capital Market;
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5.3
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PNC
Approval. PESI’s lender, PNC Bank, n.a., shall have
provided the necessary written approvals to allow the Loan on terms
satisfactory to PESI.
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6.1
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Reporting
Company. PESI is subject to the reporting requirements
of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). Since January 1, 2009, PESI has
filed with the SEC all reports required to be filed under the Exchange Act
and PESI is and, as of the time Closing Date will be, current in its
reporting obligations under the Exchange
Act.
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6.2
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Material
Changes. To PESI’s knowledge, no material event has
occurred or exists with respect to PESI that is required to be disclosed
under the securities laws and that has not been disclosed by PESI under
applicable securities laws or which has not been publicly announced as of
the date hereof or disclosed to the Lenders and which has or would have a
Material Adverse Effect (as defined in paragraph 11.4) on PESI and its subsidiaries, taken as a
whole.
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6.3
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Power and
Authority. PESI has the necessary corporate authority
and right to enter into and carry out the provisions of this Agreement and
other documents contemplated herein and to consummate the transactions
contemplated hereby.
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6.4
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Litigation. There
is no action, suit, proceeding or investigation pending, threatened
against on PESI, which, if adversely determined, would have a Material
Adverse Effect on PESI and its subsidiaries, taken as a
whole.
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6.5
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No
Default. The making and performance by PESI of this
Agreement or the documents to be executed in connection herewith will not
violate any provision or constitute a default under any indenture,
agreement or instrument to which PESI is bound or affected, the effect of
which would result in a Material Adverse Effect on PESI and its
subsidiaries, taken as a whole, except as disclosed in PESI’s SEC Filings
or disclosed in Schedule 6.5
hereof.
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6.6
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Enforceability. Each
of the this Agreement, the Note, and the Warrants constitute the valid and
legally binding obligations of PESI enforceable against PESI in accordance
with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditor’s rights generally and by general principals of
equity.
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7.1
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Investment
Intent. Each Lender is acquiring the Shares and Warrants
for his own account as principal, not as a nominee or agent, for
investment purposes only, and not with a view to, or for, resale,
distribution or fractionalization thereof in whole or in part and no other
person has a direct or indirect beneficial interest in such Shares and
Warrants. The Lenders do not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any
of the Shares and Warrants for which the Lenders is
subscribing;
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7.2
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Authority. Each
Lender has full power and authority to enter into this Agreement, and this
Agreement constitutes a valid and legally binding obligation of the
Lenders;
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7.3
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SEC
Filings. PESI has previously furnished each of the
Lenders copies of the following documents which have been filed by PESI
with the SEC pursuant to Sections 13(a), 14(a), (b) or (c) or 15(d) of the
Exchange Act (such documents are hereinafter collectively called the “SEC
Filings”):
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(a)
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Annual
Report on Form 10-K for the year ended December 31, 2008 (the “Form
10-K”), which report includes, among other things, consolidated Balance
Sheets as at December 31, 2008 and December 31, 2007, and Consolidated
Statements of Operations, Consolidated Statements of Shareholders’ Equity
and Consolidated Statements of Changes in Financial Position of PESI for
the three year periods ended December 31, 2008, December 31, 2007 and
December 31, 2006, examined and reported on by BDO Seidman, LLP,
independent certified public accountants;
and
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(b)
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Current
Reports on Form 8-K filed with the Securities and Exchange Commission on
March 2, 2009, March 11, 2009, March 30, 2009, and April 8,
2009.
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7.4
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Investment
Representations. Each of the Lenders acknowledges
and agrees that the Shares and Warrants acquired under this
Agreement and the Warrant Shares issuable under the Warrants are not
being registered under any state securities laws on the ground that the
issuance thereof is exempt from registration, and are not being registered
under the Act on the ground that the issuance thereof is exempt from
registration under Rule 506 of Regulation D and/or 4(2) of the Act and
that reliance by PESI on such exemptions is predicated in part
on each Lenders’ representations and warranties set forth
in this Agreement. In furtherance thereof, the Lenders represent and
warrant to and agrees with PESI and its affiliates as
follows:
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(a)
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The
Lenders realize that the basis for the exemption may not be present if,
notwithstanding such representations, the Lenders have in mind merely
acquiring the Shares, Warrants or Warrant Shares for a fixed or
determinable period in the future, or for a market rise, or for sale if
the market does not rise. The Lenders do not have any such
intention;
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(b)
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The
Lenders have the financial ability to bear the economic risk of his
investment, has adequate means for providing for current needs and
personal contingencies and has no need for liquidity with respect to an
investment in PESI;
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(c)
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The
Lenders have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of the
prospective investment in the Shares, Warrants and the Warrant Shares;
and
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(d)
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Each
Lender is an accredited investor as defined in Rule 501 of the Act, for
the following reasons, which are not intended to be exclusive Both Lampson
and Rettig have net worths in excess of $1,000,000 and a net incomes in
excess of $200,000 in each of the most recent years and has reasonable
expectation of reaching the same income level in the current
year.
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7.5
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Due
Diligence. The
Lenders:
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(a)
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have
been furnished for a reasonable period of time prior to the date hereof
with the SEC Filings and any documents which may have been made available
upon request (collectively with this Agreement, the “Investment
Materials”) and the Lenders have carefully read and evaluated the
Investment Materials and understand the risks involved in an investment in
the Shares and Warrants, including the risks set forth under the section
titled “Risk Factors” in the Form 10-K and the considerations set forth in
the Investment Materials, and have relied solely (except as indicated in
subsections (b) and (c) below) on the information contained in the
Investment Materials (including all exhibits
thereto);
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(b)
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have
been provided an opportunity, for a reasonable period of time prior to the
date hereof, to obtain additional information concerning the acquisition
of the Shares and Warrants, PESI and all other information to the extent
PESI possesses such information or can acquire it without unreasonable
effort or expense;
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(c)
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have
been given the opportunity, for a reasonable period of time prior to the
date hereof, to ask questions of and receive answers from, PESI or its
representatives concerning the terms and conditions of the acquisition of
the Shares and Warrants and other matters pertaining to an investment
therein, and have been given the opportunity for a reasonable period of
time prior to the date hereof to obtain such additional information
necessary to verify the accuracy of the information contained in the
Investment Materials or that which was otherwise provided in order to
evaluate the merits and risks of a purchase of the Shares and
Warrants;
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(d)
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have
not been furnished with any oral representation or oral information in
connection with the acquisition of the Shares and Warrants which is not
contained in the Investment Materials;
and
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(e)
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have
determined that the Shares and Warrants are a suitable investment for the
Lenders and that at this time the Lenders could bear a complete loss of
such investment.
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7.6
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No
Reliance. The Lenders are not relying on PESI, or its
affiliates with respect to economic considerations involved in an
investment in the Shares and Warrants. The Lenders have relied
on the advice of, or has consulted with only their lawyers, accountants,
and advisors in connection with the transactions contemplated by this
Agreement. Each Lender is capable of evaluating the merits and
risks of an investment in the Shares and Warrants on the terms and
conditions set forth in this
Agreement.
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7.7
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Restrictions on
Transfer. The Lenders represent, warrant and agree that
he will not sell or otherwise transfer the Shares and Warrants without
registration under the Act or an exemption therefrom and fully understands
and agrees to bear the economic risk of any purchase because, among other
reasons, the Shares and the Warrant Shares have not been registered under
the Act or under the securities laws of any state and, therefore, cannot
be resold, pledged, assigned or otherwise disposed of unless, inter alia, they are
subsequently registered under the Act and under the applicable securities
laws of such states or an exemption from such registration is available.
In particular, the Lenders are aware that the Shares and Warrants are
“restricted securities,” as such term is defined in Rule 144 promulgated
under the Act (“Rule 144”), and they may not be sold pursuant to Rule 144
unless all of the conditions of Rule 144 are met. The Lenders
also understand that PESI is under no obligation to register the Shares,
the Warrants, or the Warrant Shares on the Lenders’ behalf or to assist
the Lenders in complying with any exemption from registration under the
Act or applicable state securities laws. The Lenders further
understands that U. S. securities laws, applicable state securities laws,
and the provisions of this Agreement further restrict sales or transfers
of the Shares, Warrants and Warrant
Shares.
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7.8
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Representations. No
representations or warranties have been made to the Lenders by PESI, or
any officer, employee, agent, affiliate or subsidiary of PESI, other than
the representations of PESI contained herein and in connection with this
Agreement the Lenders have not relied upon any representations other than
those expressly contained herein.
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7.9
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Financial
Information. Any information which the Lenders have
heretofore furnished to PESI with respect to his financial position and
business experience is correct and complete as of the date of this
Agreement and if there should be any material change in such information
the Lenders shall immediately furnish such revised or corrected
information to PESI.
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7.10
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Restrictive
Legends. The Lenders understand and agree that the
certificates for the Shares and Warrants will bear, substantially, the
following legend until (a) such securities will have been registered under
the Act and effectively been disposed of in accordance with an effective
registration statement; or (b) in the opinion of counsel for PESI such
securities may be sold without registration under the Act, as well as any
applicable “Blue Sky” or state securities
laws:
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7.11
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Speculative
Investment. The Lenders understand that an investment in
the Shares and Warrants is a speculative investment that involves a high
degree of risk and the potential loss of the entire
investment.
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7.12
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Overall
Commitments. Each Lender’s overall commitment to
investments that are not readily marketable is not disproportionate to the
Lender’s net worth, and an investment in the Shares and Warrants will not
cause such overall commitment to become
excessive.
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7.13
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Survival. The
representations, warranties and agreements of the Lenders set forth in
this Agreement will survive the
Closing.
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11.1
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KeyBank. The
Lenders intend to borrow from KeyBank National Association
(“KeyBank”) up to $3,000,000 (the “KeyBank Loan”) to fund the Loan to
PESI in accordance with paragraph 1 of this Agreement. PESI
agrees to pay, on behalf of the Lenders, all reasonable and customary
closing costs and bank fees assessed against the Lenders by KeyBank in
connection with the KeyBank Loan. All other legal, accounting,
and miscellaneous fees and expenses incurred in connection with the
negotiation and preparation of this Agreement and the transactions
contemplated by this Agreement will be paid by the party incurring such
expenses. At the written direction of the Lenders, payments
under the Note will be paid to Lenders’ account at
KeyBank.
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11.2
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Amendment and
Waiver. This agreement may not be amended or modified in
any way, except by an instrument in writing executed by all of the parties
hereto; provided, however, the Lenders may, in writing: (a) extend the
time for performance of any of the obligations of PESI; (b) waive any
default by PESI; and (c) waive the satisfaction of any condition that is
precedent to the performance of the Lenders’ obligations under this
Agreement.
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11.3
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Non-Waiver; Cumulative
Remedies. No failure on the part of the Lenders to
exercise and no delay in exercising any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Lenders of
any right hereunder preclude any other or further right of exercise
thereof. The remedies herein provided are cumulative and not
alternative.
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11.4
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Material Adverse
Effect. The term “Material
Adverse Effect” when used in connection with an entity means any change,
event, violation, inaccuracy, circumstance or effect, individually or when
aggregated with other changes, events, violations, inaccuracies,
circumstances or effects, that is materially adverse to the business,
assets (including intangible assets), revenues, financial condition or
results of operations of such entity, it being understood that none of the
following alone or in combination shall be deemed, in and of itself, to
constitute a Material Adverse Effect: (a) changes attributable
to the public announcement or pendency of the transactions contemplated
hereby, (b) changes in general national or regional economic conditions,
or (c) any SEC rulemaking.
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11.5
|
Governing
Law. This Agreement shall be governed by and construed
in accordance with the law of the State of Washington regardless of the
law that might otherwise govern under applicable principals of conflicts
of law thereof.
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11.6
|
Descriptive
Headings. The descriptive headings of the paragraphs of
this Agreement are for convenience only and shall not be used in the
construction of the terms hereof.
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11.7
|
Integrated
Agreement. This Agreement, the Note and the Warrants
executed pursuant hereto or in connection herewith constitute the entire
agreement between the parties hereto, and there are no agreements,
understandings, warranties or representations between the parties other
than those set forth in such
documents.
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11.8
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Binding Effect.
This Agreement shall be binding on and inure to the benefit of the parties
hereto and their respective successors, personal representatives, legal
representatives and assigns.
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11.9
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Third Party
Beneficiary. Nothing in this Agreement, express or
implied, is intended to confer on any person, other than the parties
hereto and their respective successors and assigns, any rights or remedies
under or by reason of this
Agreement.
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11.10
|
Maximum Legal Rate of
Interest. Notwithstanding any other provisions of this
Agreement or the Note to the contrary, the total interest charges incurred
by PESI pursuant to the Note shall not exceed the maximum legal rate of
interest under Washington law. If the holder of the Note shall
ever be entitled to receive, collect or apply, as interest on the Loan,
any amount in excess of the maximum legal rate of interest permitted to be
charged by applicable law, and, in the event any holder of the Note ever
receives, collects or applies, as interest, any such excess, such amount
which would be excessive interest shall be applied to the reduction of the
unpaid principal balance of the applicable Note, and if the principal
balance is paid in full, any remaining excess shall be forthwith paid to
PESI. In determining whether or not the interest paid or
payable under any specific contingency exceeds the highest lawful rate,
PESI and the Lenders shall, to the maximum extent permitted, under
applicable law: (a) characterize any non-principal payment as an expense,
fee or premium rather than as interest; (b) exclude voluntary prepayments
and the effects thereof; (c) “spread” the total amount of interest on the
Note throughout the entire term of the Note so that the interest rate is
uniform throughout the entire term of the
Note.
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11.11
|
No Responsibility of
Lenders. Notwithstanding
any term or provision of this Agreement or the Note, the Lenders shall not
have any rights as to management, conduct or operation of the business and
affairs of PESI or any of their
subsidiaries.
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11.12
|
Counterparts;
Facsimile Signatures. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the
same agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other party,
it being understood that all parties need not sign the same
counterpart. Delivery by facsimile to counsel for the other
party of a counterpart executed by a party shall be deemed to meet the
requirements of the previous
sentence.
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11.13
|
Assignment. No
party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other
parties. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
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11.14
|
Attorneys’
Fees. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party shall be entitled to recover
reasonable attorneys’ fees.
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|
PERMA-FIX
ENVIRONMENTAL SERVICES,
INC.,
a Delaware corporation
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By:
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/s/Louis Centofanti
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(“PESI”)
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/s/ William N. Lampson
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WILLIAM
N. LAMPSON, an individual
|
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(“Lampson”)
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/s/Diehl Rettig
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DIEHL
RETTIG, an individual
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(“Rettig”)
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(Lampson
and Rettig are collectively,
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the
“Lenders”)
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