EXHIBIT 10.49
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("Agreement") dated as of the day of
September, 1996, by and among ECOSCIENCE CORPORATION, a Delaware corporation
(the "Company"), TAGLICH BROTHERS, X'XXXXXX, XXXXXX & COMPANY, INCORPORATED
("Placement Agent"), either on its own behalf or on behalf of other investors,
and the persons and entities listed on EXHIBIT A to this Agreement (Placement
Agent and the persons and entities listed on EXHIBIT A annexed hereto being
referred to individually as an "Investor" and collectively as the "Investors").
W I T N E S S E T H :
WHEREAS, in reliance upon the representations, warranties, terms and
conditions hereinafter set forth, the Investors desire to purchase from the
Company, and the Company desires to sell to the Investors, one million forty
thousand (1,040,000) shares of the Company's common stock, $0.01 par value (each
a "Share" and collectively, the "Shares") subject to the terms hereof; and
WHEREAS, the Shares are being issued pursuant to the Company's Confidential
Private Placement Memorandum and Exhibits thereto dated September 25,1996
(collectively, the "Memorandum"); and
WHEREAS, the Shares are being issued pursuant to an exemption from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act").
NOW, THEREFORE, in consideration of the premises and the respective
promises hereinafter set forth, the Company and the Investors hereby agree as
follows:
1. SALE AND PURCHASE OF SHARES.
(a) Subject to the terms and conditions of this Agreement, the
Company shall sell to the Investors one million forty thousand (1,040,000)
Shares, and each Investor shall purchase from the Company the number of Shares
as is set forth after the Investor's name on EXHIBIT A annexed hereto for a
consideration of One Dollar and 25/100 ($1.25) per Share provided that no
Shares will be sold unless all Shares are subscribed and paid for by September
25,1996.
(b) The sale and purchase described in Paragraph 1(a) of this
Agreement shall take place at a closing (the "Closing") at the offices of
XXXXXXX & XXXXXXX P.C., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000-0000 or such other place as shall be acceptable to the Company and
Placement Agent on September 25, 1996.
2. PAYMENT. At Closing, the Company shall deliver to Placement Agent, on
behalf of the Investors, the original executed and sealed certificates for the
Shares being purchased by the Investors pursuant to Paragraph 1 of this
Agreement, against its receipt of payment therefor by certified or bank check
drawn on a bank located in the United States or by wire transfer in federal
funds in the amount of the aggregate purchase price for such Shares as provided
in Paragraph 1 of this Agreement, less the amount of fees payable to Placement
Agent pursuant to Paragraph 10(a) of this Agreement. All certificates for
Shares being purchased by the Investors shall be issued in the respective names
of the Investors in accordance with instructions provided by Placement Agent.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to and covenants and agrees with each Investor as of the
date hereof and as of the date of the Closing, as follows:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and is qualified and in
good standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted by the Company or the property owned or leased by the
Company requires such qualification. Except as set forth in the Memorandum, the
Company has no subsidiaries and does not own any equity interest and has not
made any loans or advances to or guarantees of indebtedness to any person,
corporation, partnership or other entity.
(b) The authorized capital of the Company consists of twenty-five
million (25,000,000) shares of common stock, $0.01 par value (the "Common
Stock") of which, as of the date of this Agreement, 9,342,177 shares of Common
Stock are issued and outstanding and 1,294,976 Shares of Common Stock are
reserved for issuance. Except as set forth in the Memorandum, the Company is
not a party to any agreement to issue, nor has it issued, any warrants, options
or rights or debentures, notes or other evidence of indebtedness or other
securities, instruments or agreements upon the exercise or conversion of which
or pursuant to the terms of which additional shares of capital stock of the
Company may become issuable. No holder of any of the Company's securities has
preemptive rights or contractual rights of first refusal.
(c) The Company has the full right, power and authority to execute,
deliver and perform under this Agreement, the Shares
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and the Placement Agent Warrants (as defined below). This Agreement has been
duly executed by the Company and, at Closing, the Shares and the Placement Agent
Warrants being issued will have been duly executed by the Company, and this
Agreement, the Shares, the Placement Agent Warrants and the transactions
contemplated by this Agreement, the Shares and the Placement Agent Warrants have
been duly authorized by all necessary corporate action and each constitute, the
legal, valid and binding obligations of the Company, enforceable in accordance
with their respective terms.
(d) All of the issued and outstanding shares of Common Stock of the
Company have been duly and validly authorized and issued and are fully paid and
nonassessable, with no personal liability attaching to the holders thereof, and
such shares of Common Stock have not been issued in violation of the preemptive
rights or rights of first refusal of any holder of securities of the Company.
All of the issued and outstanding shares of Common Stock have been issued
pursuant to either a registration statement under the 1933 Act or an exemption
from the registration requirements of the 1933 Act and were issued in accordance
with all applicable Federal and state securities laws.
(e) The Company has delivered to each Investor a copy of the
following financial statements of the Company (hereinafter collectively, the
"Financial Statements"): (1) (i) its balance sheet as at June 30, 1995 and 1994,
and (ii) the statements of income, shareholders' equity (deficiency) and cash
flows for the fiscal years ended June 30, 1995 and 1994, and the related notes
thereto, which have been audited by Xxxxxx Xxxxxxxx LLP, independent certified
public accountants, and (2) the unaudited balance sheet at March 31, 1996 and
unaudited statements of operations and cash flows for the nine (9) month period
ended March 31, 1996, and the notes related thereto. The Financial Statements,
which are included in the Company's Form 10-K Annual Report for the year ended
June 30, 1995 and the Company's Form 10-Q Quarterly Report for the quarter ended
March 31, 1996, were prepared in accordance with generally accepted accounting
principles consistently applied and present and reflect fairly the financial
position of the Company at the respective balance sheet dates and the results of
its operations, changes in shareholders' equity and cash flows for the periods
then ended.
(f) The Shares of Common Stock issuable upon the exercise of the
Placement Agent Warrants have been validly authorized for issuance and, when
issued against payment of the exercise price pursuant to this Agreement and the
terms of the Placement Agent Warrants, as the case may be, will be duly and
validly authorized and issued, fully paid and nonassessable and
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free from preemptive rights or rights of first refusal held by any person.
(g) The Company has good and marketable title to all of its property
and assets and, except as set forth in the Memorandum, none of the property or
assets of the Company is subject to any lien, mortgage, pledge, encumbrance or
other security interest.
(h) Since March 31, 1995, except as set forth in the Memorandum,
there has not been any material adverse change in the financial condition or in
the operations, business or prospects of the Company from that shown in the
Financial Statements or any damage or destruction, whether covered by insurance
or not, which affects the business, property or assets of the Company.
(i) The Company has delivered to each Investor (i) a copy of the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995,
(ii) a copy of the Company's Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 1996, December 31, 1995 and September 30, 1995 (iii) a
copy of the Company's annual report and proxy statement relating to the
Company's 1996 annual meeting of stockholders, (iv) any Current Reports on Form
8-K or other reports filed with the Securities and Exchange Commission (the
"SEC") subsequent to April 30, 1996, (v) a copy of each Schedule 13D or 13G
which has been filed with the Company within the past year; provided, that no
representation is made by the Company with respect to the contents of any
Schedule 13D or 13G; and (vi) any additional documents referred to in EXHIBIT B
annexed hereto.
(j) Neither the execution or delivery of this Agreement or the Shares
or the Placement Agent Warrants by the Company nor the performance by the
Company of the transactions contemplated by this Agreement, the Shares or the
Placement Agent Warrants: (i) requires the consent, waiver, approval, license or
authorization of or filing with or notice to any person, entity or public
authority (except any filings required by Federal or state securities laws,
which filings have been or will be made on a timely basis); (ii) violates or
constitutes a default under or breach of any law, rule or regulation applicable
to the Company; (iii) conflicts with or results in a breach or termination of
any provision of, or constitutes a default under, or will result in the creation
of any lien, charge or encumbrance upon any of the property or assets of the
Company with or without the giving of notice, the passage of time or both,
pursuant to (A) the Company's certificate of incorporation or by-laws, (B) any
mortgage, deed of trust, indenture, note, loan agreement, security agreement,
contract, lease, license, alliance agreement, joint venture agreement, or
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other agreement or instrument, or (C) any order, judgment, decree, statute,
regulation or any other restriction of any kind or character to which the
Company is a party or by which any of the assets of the Company may be bound.
(k) The Company has no material indebtedness to any officer,
director, 5% stockholder or other Affiliate (as defined in the Rules and
Regulations of the SEC under the 0000 Xxx) of the Company.
(l) The Company is in compliance in all material respect with all
laws, rules and regulations of all Federal, state and local government agencies
having jurisdiction over it or affecting its business, assets or properties, and
the Corporation possesses all licenses, permits, consents, approvals and
agreements which are required to be issued by any and all applicable Federal,
state or local authorities necessary for the operation of its business and/or in
connection with its assets or properties.
(m) The Company is not in default in any material respects under any
note, loan agreement, security agreement, mortgage, contract, lease, alliance
agreement, joint venture agreement, agreement, license, permit, consent,
approval or instrument to which it is a party, and no event has occurred which,
with or without the lapse of time or giving of notice, or both, would constitute
such default thereof by the Company or would cause acceleration of any
obligation of the Company or would adversely affect the business, operations,
financial condition or prospects of the Company.
(n) Except as set forth in the Memorandum, to the best of the
Company's knowledge, no officer, director or 5% stockholder of the Company and
no Affiliate of any such person either (i) holds any interest in any
corporation, partnership, business, trust, sole proprietorship or any other
entity which is engaged in a business similar to that conducted by the Company
(other than a five (5%) percent or less interest in a public company engaged in
any such business) or (ii) engages in any material related-party transaction
with the Company .
(o) There are no material (i.e., involving an asserted liability in
excess of ten thousand dollars ($10,000)) claims, actions, suits, proceedings or
labor disputes, inquiries or investigations (whether or not purportedly on
behalf of the Company), pending or, to the best of the Company's knowledge,
threatened, against the Company, at law or in equity or by or before any
Federal, state, county, municipal or other governmental department, SEC, NASDAQ,
board, bureau, agency or instrumentality,
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domestic or foreign, whether legal or administrative or in arbitration or
mediation, nor, to the Company's knowledge, is there any basis for any such
action or proceeding. Neither the Company nor any of its assets are subject to,
nor is the Company in default with respect to, any order, writ, injunction,
judgment or decree that could materially adversely affect the financial
condition, business, assets or prospects of the Company.
(p) The accounts receivable of the Company represent receivables
generated from the sale of goods and services in the ordinary course of
business. The Company knows of no material disputes concerning accounts
receivable not disclosed in the Memorandum, and the accounts receivable are
collectible in the ordinary course of business, subject to reserves reflected on
the Financial Statements.
(q) Except as set forth in the Memorandum, the Company has (i) no
written employment contracts and no oral employment contracts not terminable at
will by the Company, with any officer, director or other employee of the Company
or any five (5%) percent shareholder of the Company, (ii) no consulting
agreement or other compensation agreement with any officer, director or other
employee of the Company or any five (5%) percent shareholder of the Company, and
(iii) no agreement or contract with any party that will result in the payment by
the Company, or the creation of any commitment or obligation (absolute or
contingent), of the Company to pay any severance, termination, "golden
parachute", or similar payment to any present or former personnel of the Company
following termination of employment. To the Company's knowledge, no director,
executive officer or other key employee of the Company has indicated that he or
she intends to resign as director and/or executive officer of the Company or to
terminate his or her employment with the Company.
(r) The accounts payable of the Company represent bona fide payables
to third parties incurred in the ordinary course of business and represent bona
fide debts for services and/or goods provided to the Company.
(s) The Company is not a party to a labor agreement with respect to
its employees with any labor organization, union, group or association and there
are no employee unions (nor any similar labor or employee organizations). In
the last five (5) years, the Company has not experienced any attempt by
organized labor or its representatives to make the Company conform to demands of
organized labor relating to its employees or to enter into a binding agreement
with organization labor that would cover any of the Company's employees. There
is no labor strike or labor stoppage or
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slowdown pending, or, to the knowledge of the Company, threatened against the
Company nor has the Company experienced in the last five (5) years any work
stoppage or other material labor difficulty. The Company is in compliance in
all material respects with all applicable laws, rules and regulations regarding
employment practices, employee documentation, terms or conditions of employment
and wage and hours and the Company is not engaged in any unfair labor practices.
There are no unfair labor practices, charges or complaints against the Company
pending before the National Labor Relations Board or any other governmental
agency.
(t) Except as set forth in the Memorandum, there are no employee
pension, retirement or other benefit plans, maintained, contributed to or
required to be contributed to by the Company covering any employee or former
employee of the Company. The Company has no material liability or obligation of
any kind or nature, whether accrued or contingent, matured or unmatured, known
or unknown, under any provision of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") or any provision of the Internal Revenue Code of
1986, as amended, specifically relating to persons subject to ERISA.
(u) The Company has timely filed with the appropriate taxing
authorities all returns in respect of taxes required to be filed through the
date hereof and has timely paid all taxes it is required to pay or has
established an adequate reserve therefor, except where the Company has timely
filed for extensions. There are no pending or, to the knowledge of the Company,
threatened audits, investigations or claims for or relating to any liability of
the Company in respect of taxes.
(v) The Company has no liabilities of any kind or nature whether
accrued or contingent, matured or unmatured, known or unknown, except (i) as
set forth in the Financial Statements, (ii) as set forth in the Memorandum and
(iii) those liabilities incurred by the Company in the ordinary course of
business since March 31, 1996.
(w) Except as set forth in the Memorandum, no customer of the Company
during fiscal year 1996 accounted for more than five (5%) percent of the
revenues of the Company, except for one customer which accounted for 7% and to
the best of the Company's knowledge, no customer will account for more than five
(5%) percent of the Company's revenues during fiscal year 1997.
(x) There are no finder's fees or brokerage commissions payable with
respect to the transactions contemplated by this Agreement, except as provided
in Paragraph 10 of this Agreement,
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and the Company agrees to indemnify and hold harmless each of the Investors from
and against any and all cost, damage, liability, judgment and expense (including
reasonable fees and expenses of counsel) arising out of or relating to claims
for such fees or commissions (and to pay Placement Agent pursuant to a separate
agreement between the Company and Placement Agent), except to the extent that
any such fees or commissions have been incurred by an Investor as a result of
the actions of that Investor.
(y) The Company is not currently and has not during the past six (6)
months been engaged in negotiations with respect to any merger, consolidation,
acquisition, disposition or other material business transaction.
(z) The Company has the right to conduct its business in the manner
in which its business has been heretofore conducted. The conduct of such
business by the Company does not violate or infringe upon the patent, copyright,
trade secret or other proprietary rights of any third party, and the Company has
received no notice of any claim of any such violation or infringement.
(aa) The Company has delivered to each Investor a copy of the
Memorandum. The information contained in the Financial Statements and the
Memorandum, taken together, describe in all material respects the business and
financial condition of the Company, and such material, taken together, does not
contain any misstatement of a material fact or omit to state a material fact
necessary to make the information not misleading. The Investors shall be
entitled to rely on such material notwithstanding any investigation they or any
of them may have made, provided that the Investor does not have knowledge of a
misrepresentation or omission as a result of such investigation .
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each Investor hereby
represents and warrants to and covenants and agrees with the Company and
Placement Agent, as of the date hereof and as of the Closing Date, as follows:
(a) Investor has the full right, power and authority to enter into
this Agreement and to carry out and consummate the transactions contemplated
herein. The execution, delivery and performance of this Agreement and the
transaction contemplated hereby have been authorized by all necessary action of
the Investor. This Agreement constitutes the legal, valid and binding
obligation of the Investor.
(b) Investor acknowledges that Investor has received and reviewed the
Financial Statements and the Memorandum and has had an
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opportunity to meet with and ask questions of the management of the Company. In
evaluating the suitability of making this investment, the Investor has not
relied upon any representations or warranties made by the Company or its agents
or any of the other Investors except as set forth in this Agreement, and each
Investor acknowledges that no such other representations or warranties have been
made to it, or to its advisors (if applicable), by the Company or its agents or
by any of the other Investors and it has relied only on its review of this
Agreement and its own advisors in deciding to make this investment.
(c) Investor is an Accredited Investor (as defined in Rule 501
promulgated by SEC under the 1933 Act), has the financial ability to bear the
economic risk of the Investor's investment, can afford to sustain a complete
loss of such investment and has adequate means of providing for the Investor's
current needs and personal contingencies, and has no need for liquidity in the
Investor's investment in the Company; and the amount invested in the Company by
the Investor does not constitute a substantial portion of the Investor's net
worth. The Investor has delivered to the Company and Placement Agent a
confidential investor questionnaire, and all of the information set forth in the
confidential investor questionnaire is true and correct in all material
respects.
(d) Investor is acquiring the Shares being purchased for investment
and not with a view to the sale or distribution thereof, for such Investor's own
account and without any present intention of selling and not on behalf of
others and the Investor has not granted any other person any right or option or
any participation or beneficial interest in any of the Shares, except that
Placement Agent may acquire Shares (but Placement Agent has no obligation to
acquire Shares) and thereafter transfer such Shares to persons who qualify as
Investors pursuant to this Agreement and execute this Agreement as an Investor,
provided that Placement Agent shall have delivered the Shares being transferred
to the Company or its transfer agent prior to the effective date of the
registration statement to be filed by the Company pursuant to Paragraph 7(a) of
this Agreement. Investor acknowledges that the Common Stock comprising the
Shares constitute restricted securities within the meaning of Rule 144 of the
SEC under the 1933 Act, and that such securities may not be sold except pursuant
to an effective registration statement under the 1933 Act or in a transaction
exempt from registration under the 1933 Act, and the Investor acknowledges that
the Investor understands the meaning and effect of such restriction. The
Investor will only transfer Shares or shares issued upon exercise of the
Placement Agent Warrant in accordance with the provisions of applicable federal
and state
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securities laws. The Investor has sufficient knowledge and experience in
financial and business matters so that the Investor is capable of evaluating the
risks and merits of the purchase of the Shares. The Investor is aware that no
Federal or state regulatory agency or authority has passed upon the sale of the
Shares or the terms of the sale or the accuracy or adequacy of any material
being provided to the Investor and that the price of the Shares was negotiated
between the Company and Placement Agent and does not necessarily bear any
relationship to the underlying assets or value of the Company. INVESTOR
UNDERSTANDS THAT AN INVESTMENT IN THE SHARES BEING PURCHASED INVOLVES A HIGH
DEGREE OF RISK.
(e) INVESTOR UNDERSTANDS THAT, IN CONNECTION WITH INVESTOR'S
EVALUATION OF THE COMPANY, INVESTOR HAS BEEN OR MAY HAVE BEEN PROVIDED WITH
ACCESS TO CERTAIN INFORMATION CONCERNING THE COMPANY WHICH HAS NOT BEEN PUBLICLY
DISCLOSED. INVESTOR FURTHER UNDERSTANDS THAT ANY TRADING BY THE INVESTOR IN
SECURITIES OF THE COMPANY USING NON-PUBLIC INFORMATION COULD CONSTITUTE A
VIOLATION OF FEDERAL AND STATE SECURITIES LAWS AND OTHER LAWS AND MAY SUBJECT
THE INVESTOR TO CRIMINAL AND/OR CIVIL PENALTIES AND/OR LIABILITY. In view of
the foregoing, Investor agrees not to (i) purchase or sell, including a short
sale, any of the Company's securities or rights to purchase or sell such
securities as long as the Investor is in possession of material non-public
information or (ii) disclose any non-public information to any other person.
(f) There are no finder's fees or brokerage commissions payable with
respect to the purchase by the Investor of the Shares, except as provided in
Paragraph 10 of this Agreement.
(g) For purposes hereof, Placement Agent is only included in the term
"Investor" in its capacity as acquiror of the Placement Agent Warrant.
5. USE OF PROCEEDS. The net proceeds from the sale of the Shares will be
used by the Company to prepay at a discount certain indebtedness of the Company,
for expenses related to the transactions contemplated hereby and other general
corporate purposes, as disclosed in the Memorandum.
6. UNREGISTERED SECURITIES. The Shares have not been registered under
the 1933 Act, in reliance upon the applicability of Section 3(b), 4(2), 4(6)
and/or Regulation D of the 1933 Act to the transactions contemplated hereby.
The Investor acknowledges that the Company is relying in part on such Investor's
representations in Paragraph 4 of this Agreement and in the confidential
investor questionnaire to establish such exemption. In furtherance of such
reliance, the certificates representing the
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Shares will bear an investment legend prominently stamped or printed thereon,
substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") OR UNDER ANY STATE SECURITIES LAW AND MAY NOT
BE SOLD, TRANSFERRED, OR ASSIGNED EXCEPT: (i) PURSUANT TO AN
EFFECTIVE REGISTRATION THEREOF UNDER THE ACT OR (ii) IF IN THE OPINION
OF COUNSEL FOR THE REGISTERED OWNER HEREOF, WHICH OPINION IS
REASONABLY SATISFACTORY TO THE COMPANY, THE PROPOSED SALE, TRANSFER OR
ASSIGNMENT MAY BE EFFECTED WITHOUT SUCH REGISTRATION AND WILL NOT BE
IN VIOLATION OF APPLICABLE STATE SECURITIES LAWS.
7. REGISTRATION RIGHTS AND "PIGGY-BACK" REGISTRATION RIGHTS.
(a) As soon as possible after the closing hereunder, the Company
shall at its sole cost and expense file a registration statement on the
appropriate form with the SEC covering all of the Shares and all of the shares
of Common Stock issuable upon the exercise of the Placement Agent Warrants
(collectively, the "Registrable Securities"), time being of the essence. The
Company will use its best efforts to have such registration statement declared
effective as soon as possible thereafter, and shall keep such registration
statement current and effective for at least three (3) years from the effective
date thereof or until such earlier date as all of the Registrable Securities
registered pursuant to such registration statement shall have been sold or
otherwise transferred. Notwithstanding anything to the contrary contained
herein, if such registration statement shall not be declared effective within
nine (9) months after the Closing hereunder, then (i) the Company shall issue to
each Investor, additional Shares of Common Stock equal to the lesser of (x) the
product of (1) four (4%) percent of the number of Shares then owned by the
Investor (and transferences authorized under applicable securities laws) and
purchased hereunder, and (2) the number of months, or any part thereof, beyond
said nine (9) month period until the initial registration statement described
herein covering the Registrable Securities is declared effective or (y) thirty-
five (35%) percent of the number of Shares being purchased by each Investor
hereunder and (ii) the number of shares issuable under Placement Agent Warrants
will be increased by the lesser of (1) four (4%) percent multiplied by the
number of months, or any part thereof, beyond said nine (9) month period until
the initial registration statement described herein covering the Registrable
Securities is declared effective or (2) thirty-five (35%) percent
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of the number of shares issuable under the Placement Agent Warrants issued to
Placement Agent at Closing.
(b) In the event the Company effects any registration under the 1933
Act of any Registrable Securities pursuant to Paragraphs 7(a) above or 7(g)
below, the Company shall indemnify and hold harmless, to the extent permitted by
law, any registered holder whose Registrable Securities are included in such
registration statement (each, a "Seller"), any underwriter, any officer,
director, employee or agent of any Seller or underwriter, and each other person,
if any, who controls any Seller or underwriter within the meaning of Section 15
of the 1933 Act, against any losses, claims, damages or liabilities, judgment,
fines, penalties, costs and expenses, joint or several, or actions in respect
thereof (collectively, the "Claims"), to which each such indemnified party
becomes subject, under the 1933 Act or otherwise, insofar as such Claims arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement or prospectus or any
amendment or supplement thereto or any document filed under a state securities
or blue sky law (collectively, the "Registration Documents") or insofar as such
Claims arise out of or are based upon the omission or alleged omission to state
in any Registration Document a material fact required to be stated therein or
necessary to make the statements made therein not misleading, and will reimburse
any such indemnified party for any legal or other expenses reasonably incurred
by such indemnified party in investigating or defending any such Claim; provided
that the Company shall not be liable in any such case to the extent such Claim
is based upon an untrue statement or alleged untrue statement of a material fact
or omission or alleged omission of a material fact made in any Registration
Document in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any indemnified party specifically for use in
the preparation of such Registration Document.
(c) In connection with any registration statement in which any Seller
is participating, each Seller, severally and not jointly, shall indemnify, and
hold harmless, to the extent permitted by law, the Company, each of its
directors, each of its officers who have signed the registration statement, each
other person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act, each other Seller and each underwriter, any officer, director,
employee or agent of any such other Seller or underwriter and each other person,
if any, who controls such other Seller or underwriter within the meaning of
Section 15 of the 1933 Act against any Claims to which each such indemnified
party may become subject under the 1933 Act or otherwise, insofar as such
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Claims (or actions in respect thereof) are based upon any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Document, or insofar as any Claims are based upon the omission or alleged
omission to state in any Registration Document a material fact required to be
stated therein or necessary to make the statements made therein not misleading,
and will reimburse any such indemnified party for any legal or other expenses
reasonably incurred by such indemnified party in investigating or defending any
such claim; provided, however, that such indemnification or reimbursement shall
be payable only if, and to the extent that, any such Claim arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Registration Document in reliance upon and in
conformity with written information furnished to the Company by the Seller
specifically for use in the preparation thereof.
(d) Any person entitled to indemnification under Paragraphs 7(b) or
7(c) above shall notify promptly the indemnifying party in writing of the
commencement of any Claim if a claim for indemnification in respect thereof is
to be made against an indemnifying party under this Paragraph 7(d), but the
omission of such notice shall not relieve the indemnifying party from any
liability which it may have to any indemnified party otherwise than under
Paragraph 7(b) or 7(c) above, except to the extent that such failure shall
materially adversely affect any indemnifying party or its rights hereunder. In
case any action is brought against the indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it chooses, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified party;
and, after notice from the indemnifying party to the indemnified party that it
so chooses, the indemnifying party shall not be liable for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that (i) if the indemnifying party fails to take reasonable steps necessary to
defend diligently the Claim within twenty (20) days after receiving notice from
the indemnified party that the indemnified party believes it has failed to do
so; (ii) if the indemnified party who is a defendant in any action or proceeding
which is also brought against the indemnifying party reasonably shall have
concluded that there are legal defenses available to the indemnified party which
are not available to the indemnifying party; or (iii) if representation of both
parties by the same counsel is otherwise inappropriate under applicable
standards of professional conduct, the indemnified party shall have the right to
assume or continue its own defense as set forth above (but with no more than one
firm of counsel for all indemnified
-13-
parties in each jurisdiction, except to the extent any indemnified party or
parties reasonably shall have concluded that there are legal defenses available
to such party or parties which are not available to the other indemnified
parties or to the extent representation of all indemnified parties by the same
counsel is otherwise inappropriate under applicable standards of professional
conduct) and the indemnifying party shall be liable for any reasonable expenses
therefor; provided, that no indemnifying party shall be subject to any liability
for any settlement of a Claim made without its consent (which may not be
unreasonably withheld, delayed or conditioned). If the indemnifying party
assumes the defense of any Claim hereunder, such indemnifying party shall not
enter into any settlement without the consent of the indemnified party if such
settlement attributes liability to the indemnified party (which consent may not
be unreasonably withheld, delayed or conditioned).
(e) If for any reason the indemnity provided in Paragraphs 7(b) or
7(c) above is unavailable, or is insufficient to hold harmless, an indemnified
party, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of any Claim in such proportion as
is appropriate to reflect the relative benefits received by the indemnifying
party on the one hand and the indemnified party on the other from the
transactions contemplated by this Agreement. If, however, the allocation
provided in the immediately preceding sentence is not permitted by applicable
law, or if the indemnified party failed to give the notice required by Paragraph
7(d) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid
or payable in respect of any Claim shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such Claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
-14-
(f) The provisions of Paragraphs 7(b) through 7(e) of this Agreement
shall be in addition to any other rights to indemnification or contribution
which any indemnified party may have pursuant to law or contract and shall
remain operative and in full force and effect regardless of any investigation
made or omitted by or on behalf of any indemnified party and shall survive the
transfer of the Registrable Securities by any such party.
(g) Investor shall have certain "piggy-back" registration rights with
respect to the Registrable Securities as hereinafter provided:
A. If at any time after the Closing, the Company shall file
with the SEC a registration statement under the 1933 Act registering any shares
of Common Stock owned by any person or entity, the Company shall give written
notice to Investor thereof prior to such filing.
B. Within twenty (20) days after such notice from the Company,
Investor shall give written notice to the Company whether or not the Investor
desires to have all of the Investor's Registrable Securities included in the
registration statement. If Investor fails to give such notice within such
period, Investor shall not have the right to have Investor's Registrable
Securities registered pursuant to such registration statement. If Investor
gives such notice, then the Company shall use its best efforts to include the
Registrable Securities in the registration statement, at the Company's sole cost
and expense, subject to the remaining terms of this Paragraph 7(g).
C. If the registration statement relates to an underwritten
offering, and the underwriter shall determine in writing that the total number
of shares of Common Stock to be included in the offering, including the
Registrable Securities, shall exceed the amount which the underwriter deems to
be appropriate for the offering, the number of shares of the Registrable
Securities shall be reduced in the same proportion as the remainder of the
shares in the offering and each Investor's Registrable Securities included in
such registration statement will be reduced proportionately. For this purpose,
if other securities in the registration statement are derivative securities,
their underlying shares shall be included in the computation.
D. Investor shall have two (2) opportunities to have the
Registrable Securities registered under this Paragraph 7(g).
-00-
X. Xxxxxxxx shall furnish in writing to the Company such
information as the Company shall reasonably require in connection with a
registration statement.
F. In connection with any offering involving an underwriting of
Common Stock to be issued by the Company, the Company shall not be required to
include a Selling Shareholder's Registrable Shares in such underwriting unless
such Selling Shareholder accepts the terms of the underwriting as agreed upon by
the Company and the underwriters selected by the Company.
(h) If and whenever the Company is required by the provisions of this
Paragraph 7 to use its best efforts to register any Registrable Securities under
the 1933 Act, the Company shall, as expeditiously as possible under the
circumstances:
A. Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective as soon as possible and remain
effective.
B. Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement current and to
comply with the provisions of the 1933 Act, and any regulations promulgated
thereunder, with respect to the sale or disposition of all Registrable
Securities covered by the registration statement required to effect the
distribution of the securities, but in no event shall the Company be required to
do so for a period of more than three (3) years following the effective date of
the registration statement.
C. Furnish to the Sellers participating in the offering, copies
(in reasonable quantities) of summary, preliminary, final, amended or
supplemented prospectuses, in conformity with the requirements of the 1933 Act
and any regulations promulgated thereunder, and other documents as reasonably
may be required in order to facilitate the disposition of the securities, but
only while the Company is required under the provisions hereof to keep the
registration statement current.
D. Use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions of the United States as the Sellers
participating in the offering shall reasonably request, and do any and all other
acts and things which may be reasonably necessary to enable each participating
Seller to
-16-
consummate the disposition of the Registrable Securities in such jurisdictions.
E. Notify each Seller selling Registrable Securities, at any
time when a prospectus relating to any such Registrable Securities covered by
such registration statement is required to be delivered under the 1933 Act, of
the Company's becoming aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing, and promptly prepare and furnish to each such Seller selling
Registrable Securities a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to the purchasers of
such Registrable Securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing.
F. As soon as practicable after the effective date of the
registration statement, and in any event within eighteen (18) months thereafter,
make generally available to Sellers participating in the offering an earnings
statement (which need not be audited) covering a period of at least twelve (12)
consecutive months beginning after the effective date of the registration
statement which earnings statement shall satisfy the provisions of Section 11(a)
of the 1933 Act, including, at the Company's option, Rule 158 thereunder. To
the extent that the Company files such information with the SEC in satisfaction
of the foregoing, the Company need not deliver the above referenced earnings
statement to Seller.
G. Upon request, deliver promptly to counsel of each Seller
participating in the offering copies of all correspondence between the SEC and
the Company, its counsel or auditors and all memoranda relating to discussions
with the SEC or its staff with respect to the registration statement and permit
each such Seller to do such investigation at such Seller's sole cost and
expense, upon reasonable advance notice, with respect to information contained
in or omitted from the registration statement as it deems reasonably necessary.
Each Seller agrees that it will use its best efforts not to interfere
unreasonably with the Company's business when conducting any such investigation.
H. Provide a transfer agent and registrar located in the United
States for all such Registrable Securities covered by
-17-
such registration statement not later than the effective date of such
registration statement.
I. List the Registrable Securities covered by such registration
statement on such exchanges and/or on the NASDAQ as the Common Stock is then
currently listed upon.
J. Pay all Registration Expenses incurred in connection with a
registration of Registrable Securities, whether or not such registration
statement shall become effective; provided that each Seller shall pay all
underwriting discounts, commissions and transfer taxes, if any, relating to the
sale or disposition of such Seller's Registrable Securities pursuant to a
registration statement. As used herein, "Registration Expenses" means any and
all reasonable and customary expenses incident to performance of or compliance
with the registration rights set forth herein, including, without limitation,
(i) all SEC and stock exchange or National Association of Securities Dealers,
Inc. registration and filing fees, (ii) all fees and expenses of complying with
state securities or blue sky laws (including reasonable fees and disbursements
of counsel for the underwriters in connection with blue sky qualifications of
the Registrable Securities but no other expenses of the underwriters or their
counsel), (iii) all printing, messenger and delivery expenses, and (iv) the
reasonable fees and disbursements of counsel for the Company and the Company's
independent public accountants.
(i) The Company acknowledges that there is no adequate remedy at law
for failure by it to comply with the provisions of this Paragraph 7 and that
such failure would not be adequately compensable in damages, and therefore
agrees that its agreements contained in this Paragraph 7 may be specifically
enforced. In the event that the Company shall fail to file such registration
statement when required pursuant to Paragraph 7(a) above or to keep any
registration statement effective as provided in this Paragraph or otherwise
fails to comply with its obligations and agreements in this Paragraph 7, then,
in addition to any other rights or remedies Investors may have at law or in
equity, including without limitation, the right of rescission, the Company shall
indemnify and hold harmless the Investors from and against any and all manner or
loss which they may incur as a result of such failure. In addition, the Company
shall also reimburse the Investors for any and all reasonable legal fees and
expenses incurred by them in enforcing their rights pursuant to this Paragraph
7, regardless of whether any litigation was commenced; provided, however, that
the Company shall not be liable for the fees and expenses of more than one law
firm, which firm shall be designated by Placement Agent.
-18-
(j) The word Investor as used in this Paragraph 7 includes all
transferees of Registrable Securities authorized under applicable securities
laws.
8. CONDITIONS. The obligations of the Investors to purchase the Shares
are subject to the satisfaction or fulfillment, as of the date of Closing, of
each of the following conditions:
(a) The Company shall have delivered to Placement Agent, on behalf of
the Investors, (i) a currently-dated long-form good standing certificate or
telegram from the Secretary of State of Delaware and each other jurisdiction in
which the Company is incorporated or qualified to do business as a foreign
corporation; (ii) the certificate of incorporation of the Company, as currently
in effect, certified by the Secretary of State of the State of Delaware (iii)
by-laws of the Company certified by the secretary of the Company; and (iv)
certified resolutions of the Company's Board of Directors approving this
Agreement, the issuance of the Shares and Placement Agent Warrants, the
registration of the Common Stock and the other transactions contemplated by this
Agreement.
(b) There shall have occurred no material adverse event affecting the
Company its business, assets, prospects or the Company's securities since the
date of this Agreement.
(c) No litigation or administrative proceeding shall have been
threatened or commenced against the Company which (i) seeks to enjoin or
otherwise prohibit or restrict the consummation of the transactions contemplated
by this Agreement or (ii) if adversely determined, would have an adverse effect
upon the Company's business, assets or prospects or the Company's securities.
(d) The Company shall have delivered to Placement Agent, on behalf of
the Investors, a certificate of its principal executive and financial officers
as to the matters set forth in Paragraphs 8(a), (b) and (c) of this Agreement
and to the further effect that (i) the Company is not in default, in any
respect, under any note, loan agreement, security agreement, mortgage, deed of
trust, indenture, contract, alliance agreement, lease, license, joint venture
agreement, agreement or other instrument to which it is a party, except as
disclosed in the Financial Statements or the Memorandum; (ii) the Company's
representations and warranties contained in this Agreement are true and correct
in all respects on such date with the same force and effect as if made on such
date; (iii) there has been no amendment or changes to the Company's certificate
of incorporation or by-laws or authorizing resolutions from those delivered
pursuant to Paragraph 8(a) of this Agreement;
-19-
and (iv) no event has occurred which, with or without the lapse of time or
giving of notice, or both, would constitute a material breach or default thereof
by the Company or would cause acceleration of any obligation of the Company, or
could materially adversely affect the business, operations, financial condition
or prospects of the Company.
(e) Placement Agent, on behalf of the Investors, shall have received
the opinion of Warner & Xxxxxxxxx LLP, counsel for the Company, dated as of the
closing date in form and substance satisfactory to counsel to Placement Agent.
(f) The Company shall have prepared and filed or delivered to counsel
for filing with the SEC and any states in which such filing is required, a Form
D relating to the sale of the Shares and such other documents and certificates
as are required.
(g) In addition to the right of Placement Agent to terminate this
Agreement and not consummate the transaction contemplated by this Agreement as a
result of the failure of the Company to comply with any of its obligations set
forth in this Agreement, this Agreement may be terminated by Placement Agent by
written notice to the Company at any time prior to the Closing if, in Placement
Agent' sole judgment, (i) the Company shall have sustained a loss that is
material to the Company, whether or not insured, by reason of fire, earthquake,
flood, accident or other calamity, or from any labor dispute or court or
government action, order or decree; (ii) trading in securities on any exchange
or system shall have been suspended or limited either generally or specifically
with respect to the Company's Common Stock; (iii) material governmental
restrictions have been imposed on trading in securities generally or
specifically with respect to the Company's Common Stock (not in force and effect
on the date of this Agreement); (iv) a banking moratorium shall have been
declared by Federal or New York State authorities; (v) an outbreak of major
international hostilities or other national or international calamity shall have
occurred; (vi) the Congress of the United States or any state legislative body
shall have passed or taken any action or measure, or such bodies or any
governmental body or any authoritative accounting institute, or board, or any
governmental executive shall have adopted any orders, rules or regulations,
which Placement Agent believes is likely to have an adverse effect on the
business, financial condition or financial statements of the Company or the
market for the Shares; (vii) the Common Stock shall have been delisted from
NASDAQ or the Company shall have received notice from NASDAQ advising the
Company of its intention to have the Common Stock delisted from NASDAQ, whether
conditional or otherwise, or the Company shall fail to meet the requirements for
-20-
continued listing on NASDAQ; unless in any such case, receipt of the aggregate
purchase price for Shares under this Agreement and other Agreements closing
contemporaneously herewith satisfies the condition to continuing the Company's
listing therewith, (viii) there shall have been, in Placement Agent's judgment,
a material decline in the Dow Xxxxx Industrial Index or the market price of the
Common Stock at any time subsequent to the date of this Agreement.
9. COVENANTS OF THE COMPANY. The Company agrees at all times as long as
the securities comprising the Placement Agent Warrants may be exercised, to keep
reserved from the authorized and unissued Common Stock, such number of shares of
Common Stock as may be, from time to time, issuable upon the exercise of the
Placement Agent Warrants.
10. FEES.
(a) Upon the receipt by the Company of the payments from the
Investors provided for in Paragraph l of this Agreement, the Company shall pay
to Placement Agent a fee equal to Twenty-Five Thousand ($25,000) Dollars plus
seven (7.0%) percent of the gross proceeds paid to the Company for all Shares
sold pursuant to this Agreement, a portion of which may be paid by Placement
Agent to other registered broker-dealers. Such amount may be deducted by
Placement Agent from the payment being made to the Company pursuant to Paragraph
2 of this Agreement. In addition, the Company shall issue to the Placement
Agent at the Closing, five (5) year warrants ("Placement Agent Warrants") to
purchase 156,000 shares of Common Stock at an exercise price of Two Dollars
($2.00) per share. The Company shall reimburse Placement Agent for up to
Fifteen Thousand Dollars ($15,000) of expenses, including legal fees of counsel
to Placement Agent .
.
(b) The Company shall pay any fees required in connection with the
qualification of the sale of the Shares under the state securities or blue sky
laws of any state which Placement Agent reasonably deems necessary.
11. NOTICES. All notices provided for in this Agreement shall be in
writing signed by the party giving such notice, and delivered personally or sent
by overnight courier or messenger against receipt thereof or sent by registered
or certified mail (air mail if overseas), return receipt requested, or by
facsimile transmission, if confirmed by mail as provided in this Paragraph 11.
Notices shall be deemed to have been received on the date of personal delivery
or facsimile or, if sent by certified or registered mail, return receipt
requested, shall be deemed to be
-21-
delivered on the third business day after the date of mailing. Notices shall be
sent to the following addresses:
TO THE COMPANY:
ECOSCIENCE CORPORATION
00 Xxxxx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
TELECOPIER: (000) 000-0000
Attention: Xxxxxxx XxXxxxxx
President and Chief Executive Officer
WITH A COPY TO:
WARNER & XXXXXXXXX LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
TELECOPIER: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
TO THE INVESTORS:
at the addresses set forth in Exhibit A to this Agreement
WITH COPIES TO:
TAGLICH BROTHERS, X'XXXXXX, XXXXXX
& COMPANY, INCORPORATED
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
TELECOPIER: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxxx, President
and
XXXXXXX & XXXXXXX P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
TELECOPIER: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
or to such other address as any party shall designate in the manner provided in
this Paragraph 11.
-22-
12. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement between the
parties relating to the subject matter hereof, superceding any and all prior or
contemporaneous oral and prior written agreements and understandings. This
Agreement may not be modified or amended nor may any right be waived except by a
writing which expressly refers to this Agreement, states that it is a
modification, amendment or waiver and is signed by all parties with respect to a
modification or amendment or the party granting the waiver with respect to a
waiver. No course of conduct or dealing and no trade custom or usage shall
modify any provisions of this Agreement.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed entirely within such State. Each party hereby consents to the
exclusive jurisdiction of the Federal and state courts situated in New York
County, New York in connection with any action arising out of or based upon this
Agreement and the transactions contemplated by this Agreement.
(c) This Agreement shall be binding upon and inure to the benefit of
the parties hereto, and their respective personal representatives, successors
and permitted assigns.
(d) In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
(e) Each party shall, without payment of any additional consideration
by any other party, at any time on or after the date of any Closing take such
further action and execute such other and further documents and instruments as
the other party may request in order to provide the other party with the
benefits of this Agreement.
(f) The captions and headings contained herein are solely for
convenience and reference and do not constitute a part of this Agreement.
(g) All references to any gender shall be deemed to include the
masculine, feminine or neuter gender, the singular shall include the plural and
the plural shall include the singular.
-23-
(h) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same document.
-24-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first aforesaid.
ECOSCIENCE CORPORATION TAGLICH BROTHERS, X'XXXXXX,
XXXXXX & COMPANY,
INCORPORATED
By:
-----------------------------------------
By:
---------------------------
Xxxxxxx XxXxxxxx, President and Xxxxxxx X.Xxxxxxx,President
Chief Executive Officer
TO BE COMPLETED BY INVESTOR
----------------------------------------
Print Name
Signature for Individual Investor Signature of Investor
Other than Individual
------------------------------ By:
Signature ------------------------------------
Name:
Title:
----------------------------------------
Address
----------------------------------------
City State Zip Code
----------------------------------------
Number of Shares
----------------------------------------
Social Security or Employer Identification
Number
-25-
