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INVESTMENT AGREEMENT
BY
AND BETWEEN
MONSANTO COMPANY
AND
ECOGEN INC.
DATED AS OF JANUARY 24, 1996
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TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . 2
Agreement . . . . . . . . . . . . . . . . . . . . . . . . 2
Annual Proxy Statement. . . . . . . . . . . . . . . . . . 2
Assignment Agreement. . . . . . . . . . . . . . . . . . . 2
Audited Financial Statements. . . . . . . . . . . . . . . 2
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . 2
Balance Sheet Date. . . . . . . . . . . . . . . . . . . . 3
Bt Technology . . . . . . . . . . . . . . . . . . . . . . 3
Business Day. . . . . . . . . . . . . . . . . . . . . . . 3
Closing . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commission. . . . . . . . . . . . . . . . . . . . . . . . 3
Common Stock. . . . . . . . . . . . . . . . . . . . . . . 3
Control Securities. . . . . . . . . . . . . . . . . . . . 3
Ecogen. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Ecogen Securities . . . . . . . . . . . . . . . . . . . . 3
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . 3
Financial Statements. . . . . . . . . . . . . . . . . . . 3
hereto. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Holder. . . . . . . . . . . . . . . . . . . . . . . . . . 4
HSR . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indebtedness. . . . . . . . . . . . . . . . . . . . . . . 4
Indemnified Party . . . . . . . . . . . . . . . . . . . . 4
Indemnifying Party. . . . . . . . . . . . . . . . . . . . 4
knowledge . . . . . . . . . . . . . . . . . . . . . . . . 4
Monsanto. . . . . . . . . . . . . . . . . . . . . . . . . 4
Other Selling Stockholders. . . . . . . . . . . . . . . . 5
Person. . . . . . . . . . . . . . . . . . . . . . . . . . 5
Preliminary Prospectus. . . . . . . . . . . . . . . . . . 5
Pre-Offering Percentage . . . . . . . . . . . . . . . . . 5
Price Per Share . . . . . . . . . . . . . . . . . . . . . 5
Prospectus. . . . . . . . . . . . . . . . . . . . . . . . 5
Proxy Statements. . . . . . . . . . . . . . . . . . . . . 5
Purchase Price. . . . . . . . . . . . . . . . . . . . . . 5
Purchased Shares. . . . . . . . . . . . . . . . . . . . . 6
Register. . . . . . . . . . . . . . . . . . . . . . . . . 6
Registration Statement. . . . . . . . . . . . . . . . . . 6
Registrable Securities. . . . . . . . . . . . . . . . . . 6
Registration Expenses . . . . . . . . . . . . . . . . . . 6
Requesting Holder . . . . . . . . . . . . . . . . . . . . 6
Research and Development Agreement. . . . . . . . . . . . 7
Restricted Payments . . . . . . . . . . . . . . . . . . . 7
Restricted Securities . . . . . . . . . . . . . . . . . . 7
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SEC Documents . . . . . . . . . . . . . . . . . . . . . . 7
Securities Act. . . . . . . . . . . . . . . . . . . . . . 7
Selling Expenses. . . . . . . . . . . . . . . . . . . . . 7
Special Proxy Statement . . . . . . . . . . . . . . . . . 7
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . 7
13D Group . . . . . . . . . . . . . . . . . . . . . . . . 8
Unaudited Balance Sheet . . . . . . . . . . . . . . . . . 8
Unaudited Financial Statements. . . . . . . . . . . . . . 8
ARTICLE II. PURCHASE AND SALE OF COMMON STOCK
2.1 Common Stock . . . . . . . . . . . . . . . . . . . . 8
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . 8
2.3 Stock Certificate. . . . . . . . . . . . . . . . . . 9
2.4 Closing. . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III. REPRESENTATIONS AND WARRANTIES
3.1 Organization, Subsidiaries . . . . . . . . . . . . . 10
3.2 Authorization and Binding Effect . . . . . . . . . . 11
3.3 Consolidated Financial Statements: Other
Information. . . . . . . . . . . . . . . . . . . . . 12
3.4 Litigation . . . . . . . . . . . . . . . . . . . . . 13
3.5 Material Contracts . . . . . . . . . . . . . . . . . 14
3.6 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 14
3.7 Capitalization . . . . . . . . . . . . . . . . . . . 15
3.8 Compliance With Instruments, Laws; Governmental
Authorizations . . . . . . . . . . . . . . . . . . . 16
3.9 Patents and Technology Rights. . . . . . . . . . . . 17
3.10 Certain Transactions . . . . . . . . . . . . . . . . 17
3.11 Absence of Changes . . . . . . . . . . . . . . . . . 18
3.12 Restrictions on Personnel. . . . . . . . . . . . . . 19
3.13 Certain Payments . . . . . . . . . . . . . . . . . . 19
3.14 Disclosure . . . . . . . . . . . . . . . . . . . . . 20
3.15 Brokers. . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV. CONDITIONS PRECEDENT TO PURCHASE AND SALE OF
COMMON STOCK
(a) Opinion of Counsel . . . . . . . . . . . . . . . . . 20
(b) Representations and Warranties True and Correct. . . 21
(c) Closing Certificates . . . . . . . . . . . . . . . . 21
(d) Proceedings Satisfactory to Monsanto . . . . . . . . 21
(e) Approvals. . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V. RIGHT OF FIRST REFUSAL AND LIMITATIONS ON
OWNERSHIP
5.1 Right of First Refusal . . . . . . . . . . . . . . . 24
5.2 Private Offering . . . . . . . . . . . . . . . . . . 24
5.3 Public Offering. . . . . . . . . . . . . . . . . . . 25
5.4 Limitations. . . . . . . . . . . . . . . . . . . . . 26
5.5 Limitations on Monsanto's Ownership. . . . . . . . . 26
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ARTICLE VI. LIMITATION ON TRANSFER
6.1 Limitation on Transfer . . . . . . . . . . . . . . . 28
ARTICLE VII. REGISTRATION RIGHTS
7.1 Requested Registration . . . . . . . . . . . . . . . 28
7.2 Ecogen Registration. . . . . . . . . . . . . . . . . 32
7.3 Expenses of Registration . . . . . . . . . . . . . . 34
7.4 Registration Procedures. . . . . . . . . . . . . . . 34
7.5 Indemnification. . . . . . . . . . . . . . . . . . . 36
7.6 Information by Holder. . . . . . . . . . . . . . . . 38
7.7 Rule 144 Reporting . . . . . . . . . . . . . . . . . 39
7.8 Transfer of Registration Rights. . . . . . . . . . . 39
7.9 Limitations on Subsequent Registration Rights. . . . 40
7.10 "Market Stand-off" Agreement . . . . . . . . . . . . 40
7.11 Termination of Registration Rights . . . . . . . . . 40
ARTICLE VIII. REPRESENTATIONS OF MONSANTO
8.1 Investment Purpose . . . . . . . . . . . . . . . . . 41
8.2 Accredited Investor. . . . . . . . . . . . . . . . . 41
8.3 Access to Information. . . . . . . . . . . . . . . . 41
8.4 Due Diligence. . . . . . . . . . . . . . . . . . . . 41
8.5 Restricted Securities. . . . . . . . . . . . . . . . 41
8.6 Exemption Reliance . . . . . . . . . . . . . . . . . 42
8.7 Authorization and Binding Effect . . . . . . . . . . 42
8.8 Brokers. . . . . . . . . . . . . . . . . . . . . . . 42
8.9 Stock Legend . . . . . . . . . . . . . . . . . . . . 42
ARTICLE IX. MISCELLANEOUS
9.1 Survival of Representations and Warranties . . . . . 43
9.2 Assignment . . . . . . . . . . . . . . . . . . . . . 43
9.3 Notice . . . . . . . . . . . . . . . . . . . . . . . 43
9.4 Governing Law. . . . . . . . . . . . . . . . . . . . 44
9.5 Validity of Agreement. . . . . . . . . . . . . . . . 45
9.6 Waiver . . . . . . . . . . . . . . . . . . . . . . . 45
9.7 Entire Agreement . . . . . . . . . . . . . . . . . . 45
9.8 Headings and References; Incorporation of
Schedules. . . . . . . . . . . . . . . . . . . . . . 45
9.9 Counterparts . . . . . . . . . . . . . . . . . . . . 46
9.10 No Presumption Against Drafter, Qualifications on
Schedules. . . . . . . . . . . . . . . . . . . . . . 46
Schedule and Exhibits
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Schedule 3.1 Subsidiaries
Schedule 3.4 Litigation
Schedule 3.7 Outstanding Options, Warrants or other Rights
Schedule 3.9 Patents, Trademarks and Technology Rights
Schedule 3.11 Absence of Changes
Exhibit 3.3(d) Unaudited Balance Sheet
Exhibit 4.1(a) Form of Opinion of Ecogen's Counsel
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INVESTMENT AGREEMENT
This Investment Agreement is made as of the 24th day of
January, 1996 by and between MONSANTO COMPANY, a Delaware
corporation with its general offices at 000 Xxxxx Xxxxxxxxx
Xxxx., Xx. Xxxxx, Xxxxxxxx 00000 ("Monsanto"), and ECOGEN INC., a
Delaware corporation with its general offices at 0000 Xxxxx
Xxxxxxxxx Xxxx, Xxxxxxxxx XX 00000 ("Ecogen").
RECITALS
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1. Ecogen is engaged, among other things, in activities to
develop and commercialize certain valuable Bacillus thuringiensis
("Bt") technology and owns or controls certain patents and patent
applications related thereto.
2. Pursuant to a Technology Assignment Agreement dated as
of the date hereof among Monsanto, Ecogen, and Ecogen-Bio Inc., a
Delaware corporation ("Ecogen-Bio"), (the "Assignment
Agreement"), Monsanto will purchase from Ecogen and Ecogen-Bio
certain technology and other rights relating to the Bt technology
of Ecogen and Ecogen-Bio including, without limitation, (a)
certain of Ecogen's Bt strain library, (b) certain of Ecogen's
crystal protein gene library, (c) certain of Ecogen's
intellectual property rights regarding protein engineering of Bt
crystal proteins, including, without limitation, certain patents
and patent applications, (d) certain of Ecogen's intellectual
property rights associated with the Bt strains and genes being
sold to Monsanto, including, without limitation, certain patents
and patent applications, and (e) research records relating to the
foregoing as set forth in the Assignment Agreement.
3. Pursuant to a Research and Development Agreement dated
as of the date hereof between Monsanto and Ecogen (the "Research
and Development Agreement"), Ecogen will perform research and
development on the Bt Technology.
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4. Monsanto desires to invest in Ecogen to provide capital
to fund (a) research and development on the Bt Technology and (b)
other general corporate purposes.
NOW THEREFORE, in consideration of the promises and mutual
covenants contained herein, the parties agree as follows:
ARTICLE I.
DEFINITIONS
-----------
As used in this Agreement, the following terms shall have
the meanings specified below:
"Affiliate" with respect to a specified Person is
---------
another Person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, the specified Person. For purposes of this
definition, the term "control" (including the terms "controlled
by" and "under common control with") means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.
"Agreement" shall mean this Investment Agreement, as
---------
amended from time to time.
"Annual Proxy Statement" has the meaning set forth in
----------------------
Section 3.3(c) hereof.
"Assignment Agreement" has the meaning set forth in the
--------------------
Recitals hereto.
"Audited Financial Statements" has the meaning set
----------------------------
forth in Section 3.3(a) hereof.
"Balance Sheet" shall mean the October 31, 1994 balance
-------------
sheet of Ecogen.
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"Balance Sheet Date" shall mean October 31, 1994.
------------------
"Bt Technology" shall have the meaning set forth in the
-------------
Assignment Agreement.
"Business Day" shall mean any day of the week except
------------
Saturday, Sunday and any legal holiday observed by a national
banking association or one of the parties.
"Closing" shall mean the closing of the transactions
-------
contemplated by this Agreement.
"Commission" shall mean the Securities and Exchange
----------
Commission, or any other federal agency at the time administering
the Securities Act.
"Common Stock" shall mean the shares of common stock,
------------
par value $.01 of Ecogen.
"Control Securities" means securities of Ecogen, other
------------------
than Restricted Securities, owned by a Holder at the time such
Holder would be deemed to be an Affiliate of Ecogen.
"Corporate Approval" shall have the meaning set forth
------------------
in Section 3.2.
"Ecogen" shall mean Ecogen Inc., a Delaware
------
corporation.
"Ecogen Securities" has the meaning set forth in
-----------------
Section 5.1 hereof.
"Exchange Act" shall mean the Securities Exchange Act
------------
of 1934, as amended, or any similar Federal statute, and the
rules and regulations of the Commission issued under such Act, as
they each may, from time to time, be in effect.
"Financial Statements" has the meaning set forth in
--------------------
Section 3.3(b) hereof.
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"hereto", "hereunder", "herein", "hereof" and the like
------ --------- ------ ------
mean and refer to this Agreement as a whole and not merely to the
specific article, section, paragraph or clause in which the
respective word appears.
"Holder" means Monsanto and, subject to Section 7.8
------
hereof, any subsequent holder of outstanding shares of the Common
Stock purchased under the terms of this Agreement.
"HSR" has the meaning set forth in Section 4.1(e)
---
hereof.
"Indebtedness" of any Person shall mean all obligations
------------
of such Person which in accordance with generally accepted
accounting principles are normally classified upon a balance
sheet of such Person as liabilities of such Person, and in any
event shall include all (a) obligations of such Person for
borrowed money or which have been incurred in connection with the
acquisition of property, assets or services, (b) obligations
secured by any lien or other charge upon property or assets owned
by such Person, even though such Person has not assumed or become
liable for the payment of such obligations, (c) obligations
created or arising under any conditional sale, or other title
retention agreement with respect to property where remedies of
the seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of property and (d)
capitalized rentals.
"Indemnified Party" has the meaning set forth in
-----------------
Section 7.5(c) hereof.
"Indemnifying Party" has the meaning set forth in
------------------
Section 7.5(c) hereof.
"Knowledge" with respect to Ecogen means the actual
---------
knowledge of an officer of Ecogen.
"Monsanto" shall mean Monsanto Company, a Delaware
--------
corporation.
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"Other Selling Stockholders" has the meaning set forth
--------------------------
in Section 7.1(c) hereof.
"Person" shall mean a corporation, association,
------
partnership, limited liability company, individual, trust,
unincorporated organization, a government agency or political
subdivision thereof, or any other entity.
"Preliminary Prospectus" means a preliminary prospectus
----------------------
as contemplated by Rule 430 or 430A under the Securities Act
included at any time in a Registration Statement.
"Pre-Offering Percentage" has the meaning set forth in
-----------------------
Section 5.1 hereof.
"Price Per Share" has the meaning set forth in Section
---------------
2.2.
"Prospectus" means (i) a prospectus as first filed with
----------
the Commission pursuant to Rule 424(b) under the Securities Act
or, (ii) if no such filing is required, the form of final
prospectus included in a Registration Statement at the effective
date thereof or (iii) if a Term Sheet or Abbreviated Term Sheet
(as such terms are defined in Rule 434(b) and 434(c),
respectively, under the Securities Act) is filed with the
Commission pursuant to Rule 424(b)(7) under the Securities Act,
the Term Sheet or Abbreviated Term Sheet and the last Preliminary
Prospectus filed with the Commission prior to the time the
Registration Statement became effective, taken together
(including, in each case, the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities
Act), together with any supplement to any of the foregoing.
"Proxy Statements" has the meaning set forth in
----------------
Section 3.3(e) hereof.
"Purchase Price" has the meaning set forth in
--------------
Section 2.2 hereof.
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"Purchased Shares" shall mean the shares of Common
----------------
Stock of Ecogen issued to Monsanto pursuant to this Agreement in
an amount equal to the nearest whole number derived by dividing
(a) the Purchase Price by (b) the Price Per Share.
"Register", "Registered" and "Registration", whether or
-------- ---------- ------------
not capitalized, mean and refer to a registration effected by
preparing and filing a Registration Statement in compliance with
the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness
of such Registration Statement.
"Registration Statement" means any registration
----------------------
statement of Ecogen filed under the Securities Act which covers
any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus relating thereto and all
amendments and supplements to such registration statement,
including post-effective amendments, all exhibits and all
material incorporated or deemed to be incorporated by reference
in such registration statement.
"Registrable Securities" means shares of Common Stock
----------------------
and all such other securities of Ecogen acquired by Monsanto and
any subsequent Holder.
"Registration Expenses" means all expenses incurred by
---------------------
Ecogen in compliance with Article VII, including, without
limitation, all registration fees, qualification fees, filing
fees, advertising and road show expenses (excluding advertising
and road show expenses incurred by a Holder), printing expenses,
escrow fees, fees and disbursements of counsel for Ecogen, blue
sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding
the compensation of regular employees of Ecogen, which shall be
paid in any event by Ecogen).
"Requesting Holder" means a Holder requesting any
-----------------
registration pursuant to Section 7.1 hereof.
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"Research and Development Agreement" shall have the
----------------------------------
meaning set forth in the Recitals hereto.
"Restricted Payments" shall mean dividends or other
-------------------
distributions in respect of the stock of Ecogen or any Subsidiary
(except intercorporate dividends and dividends payable solely in
stock of Ecogen) and purchases, redemptions and other
acquisitions, direct or indirect, of stock of Ecogen or any
Subsidiary.
"Restricted Securities" means the securities of Ecogen
---------------------
acquired by a Holder from Ecogen or an Affiliate of Ecogen
otherwise than pursuant to a public offering.
"Reverse Stock Split" shall mean a one-for-five reverse
-------------------
stock split of the outstanding shares of Common Stock of Ecogen
which stock split is the subject of a special proxy statement
prepared in connection with a stockholders' meeting called on
January 29, 1996.
"SEC Documents" has the meaning set forth in
-------------
Section 3.3 hereof.
"Securities Act" shall mean the Securities Act of 1933,
--------------
as amended, or any similar Federal statute, and the rules and
regulations of the Commission issued under such Act, as they each
may, from time to time, be in effect.
"Selling Expenses" means all underwriting discounts and
----------------
selling commissions applicable to the sale of Registrable
Securities.
"Special Proxy Statement" has the meaning set forth in
-----------------------
Section 3.3(e) hereof.
"Subsidiary" shall mean a subsidiary more than 50
----------
percent of whose outstanding securities representing the right,
other than as affected by events of default, to vote for the
election of directors, is owned by the applicable party and/or
one or more of
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such party's other majority-owned Subsidiaries. Subsidiaries of
Ecogen shall also include the entities set forth in Schedule 3.1
hereto.
"13D Group" has the meaning set forth in Section 5.5
---------
hereof.
"Unaudited Balance Sheet" has the meaning set forth in
-----------------------
Section 3.3(d) hereof.
"Unaudited Financial Statements" has the meaning set
------------------------------
forth in Section 3.3(b) hereof.
ARTICLE II.
PURCHASE AND SALE OF COMMON STOCK
---------------------------------
2.1 Common Stock. Subject to the terms and conditions
------------
set forth in this Agreement Ecogen will issue and sell, and
Monsanto will purchase the Purchased Shares. On the Closing
Date, Ecogen will issue and sell, and Monsanto will purchase
3,450,000 of the Purchased Shares at the Price Per Share. From
time to time after the Closing and subject to the provisions of
Section 2.4(b), Ecogen will issue and sell, and Monsanto will
purchase, the remainder of the Purchased Shares; provided that
after July 31, 1996, Monsanto shall have no further obligation to
purchase any of the Purchased Shares then unpurchased.
2.2 Purchase Price. The aggregate purchase price of
--------------
the Purchased Shares shall be $10,000,000 United States dollars
(the "Purchase Price") payable in increments with respect to the
shares being purchased by Monsanto at the Closing or on any
subsequent date pursuant to Section 2.4(b) thereafter. The
Purchase Price shall be paid in immediately available funds by
bank wire transfer to the account designated by Ecogen. The
price per share shall be the greater of (a) $2.12 or (b) 85% of
the average of the last reported sales price of Ecogen's common
stock on the NASDAQ National Market on each of the last sixty
(60) trading days immediately preceding January 24, 1996 (the
"Price Per Share"), provided, however, in the event that the
Closing shall occur after the effective date of the Reverse Stock
Split, the Price Per Share shall be adjusted to reflect the
Reverse Stock Split. For
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purposes of this Section 2.2, a "trading day" shall mean a day
that the NASDAQ National Market is open for trading. The
aggregate number of Purchased Shares shall be the number, rounded
to the nearest whole number, determined by dividing the Purchase
Price by the Price Per Share.
2.3 Stock Certificate. At the Closing, and upon each
-----------------
subsequent purchase thereafter, and upon payment of the Purchase
Price with respect to Purchased Shares then purchased, Ecogen
shall deliver to Monsanto a stock certificate or certificates in
the name of Monsanto representing the number of shares of Common
Stock then purchased by Monsanto.
2.4 Closing.
-------
(a) The Closing of this Agreement (the "Closing")
shall take place on January 24, 1996 at 10:00 a.m. EST provided
all of the conditions to Closing stated in Article IV of this
Agreement have been satisfied or waived on or before such date;
provided further, however, that Monsanto and Ecogen each
acknowledge that the Closing will occur prior to the effective
date of the Reverse Stock Split and that Ecogen will not have
sufficient authorized and unreserved shares of Common Stock to
issue all of the Purchased Shares. Accordingly, at the Closing
Ecogen will issue and sell, and Monsanto will purchase, 3,450,000
of the Purchased Shares. In the event that all of the conditions
to Closing stated in Article IV of this Agreement shall not have
been satisfied or waived on or before January 24, 1996, such
Closing shall take place as soon as practicable (but not later
than the third Business Day) after the satisfaction or waiver of
such conditions and in no event later than July 31, 1996.
Monsanto and Ecogen shall use their best efforts to cause the
satisfaction of such conditions. If such conditions of Closing
have not been satisfied or waived, and if Closing shall not have
occurred, on or before July 31, 1996, then this Agreement shall
be terminated. The Closing shall take place at the offices of
Ecogen or such other place as the parties may agree.
(b) The remaining number of Purchased Shares not
purchased pursuant to Section 2.4(a) (the "Additional Shares")
shall be issued and sold by Ecogen and
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purchased and paid for by Monsanto immediately following the
special stockholders' meeting called on January 29, 1996, provided
that the Reverse Stock Split is approved by the stockholders of
Ecogen at such meeting. The purchase price per share for such
Additional Shares shall be the Per Share Price determined pursuant
to Section 2.2. Monsanto's obligation to purchase the Additional
Shares shall be subject to the prior Closing of the transactions
contemplated under this Agreement pursuant to Section 2.4(a), to
the delivery by Ecogen to Monsanto of a certificate in the name of
Monsanto for such Additional Shares, and to the representations
and warranties contained in Sections 3.1 and 3.2 being true on
such date as if made on such date or to receipt of an opinion of
counsel of Ecogen reasonably acceptable to Monsanto to the effect
that such Additional Shares are duly authorized and validly
issued. If the Reverse Stock Split is not approved by the
stockholders of Ecogen, the Additional Shares shall be issued and
sold by Ecogen and purchased and paid for by Monsanto from time to
time, as shares become available or authorized for issuance and
upon at least five (5) days prior notice, in increments of at
least 50,000 shares, subject to the conditions set forth in the
prior sentence; provided, however, that Monsanto shall have no
obligation to purchase any Additional Shares after July 31, 1996.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce Monsanto to purchase the Purchased Shares
described in Article II, Ecogen represents and warrants to
Monsanto as follows:
3.1 Organization, Subsidiaries. Ecogen is a
--------------------------
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all necessary
corporate power and authority to carry on its business as now
conducted and as proposed to be conducted and to own or lease and
operate its properties. Ecogen's only Subsidiaries are set forth
on Schedule 3.1 hereto. Each Subsidiary is duly organized,
------------
validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all necessary power and
authority to carry on its business as now conducted and as
proposed to be conducted and to own, lease and operate its
properties. Except as set forth in Schedule
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3.1 hereof, Ecogen either directly, or indirectly through the
---
Subsidiaries, owns all of the issued and outstanding stock of each
of its Subsidiaries free and clear of all liens, claims, security
interests or encumbrances. Ecogen and its Subsidiaries are duly
licensed or qualified to do business and are in good standing in
every jurisdiction in which the nature of its business or the
ownership of their properties require such qualification except
where such failure to so qualify would not have a material adverse
effect on the business of Ecogen. Except for cash equivalents and
marketable securities held for investment purposes, Ecogen does
not control, or have any contract or commitment to own or
control, any capital stock, bonds or other securities of, and
does not have a proprietary interest in, any Person other than
the Subsidiaries. Ecogen and each of its Subsidiaries have
delivered to Monsanto complete and correct copies of their
Certificates of Incorporation and By-Laws as amended and in
effect on the date hereof.
3.2 Authorization and Binding Effect. The execution
--------------------------------
and delivery of this Agreement and the performance by Ecogen of
its obligations hereunder are within Ecogen's corporate power,
have been duly authorized by proper corporate action on the part
of Ecogen, are not in violation of, or constitute a default under
any applicable existing law, rule or regulation of any
governmental agency or authority, any order or decision of any
court, the Certificate of Incorporation or By-Laws of Ecogen or
the terms of any agreement, restriction or undertaking to which
Ecogen is a party or by which it is bound, except violations or
defaults which would not, individually or in the aggregate, have
a material adverse effect on Ecogen, and do not require the
approval or consent of the shareholders of Ecogen, any
governmental body, agency or authority or any other person or
entity that has not been obtained; except (i) the filing of any
notice subsequent to Closing which may be required by applicable
state or federal securities laws and (ii) stockholder approval
required for the Reverse Stock Split or other corporate action
necessary to increase the number of shares of Common Stock
available for issuance under the Agreement if the Reverse Stock
Split is not approved ("Corporate Approval").
11
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3.3 Consolidated Financial Statements: Other
----------------------------------------
Information. Ecogen has previously delivered to Monsanto true,
-----------
accurate and complete copies of the following documents, includ-
ing, the exhibits and schedules thereto:
(a) Annual Report on Form 10-K for the transition
period ended October 31, 1994, as filed with the Commission,
which contains the audited consolidated balance sheets of Ecogen
as of December 31, 1993, and October 31, 1994, and audited
consolidated statements of operations, cash flows and
stockholders' equity for the years ended December 31, 1992 and
1993 and the ten (10) months ended October 31, 1994, certified by
KPMG Peat Marwick LLP and heretofore furnished to Monsanto
(together the "Audited Financial Statements");
(b) Quarterly Reports on Form 10-Q for the three
months ended January 31, 1995, April 30, 1995 and July 31, 1995,
as filed with the Commission (the "Unaudited Financial
Statements" and, together with the Audited Financial Statements,
the "Financial Statements");
(c) Proxy statement in definitive form for its
1995 annual meeting of stockholders as filed with the Commission
(the "Annual Proxy Statement");
(d) Unaudited Consolidated Balance Sheet, dated
October 31, 1995 (the "Unaudited Balance Sheet") attached hereto
as Exhibit 3.3(d); and
(e) Proxy Statement in definitive form for a
Special Meeting of Shareholders scheduled for January 29, 1996
(the "Special Proxy Statement" and, together with the Annual
Proxy Statement, the "Proxy Statements").
Except for Current Reports on Form 8-K dated November 7,
1995 and November 24, 1995 and the Special Proxy Statement dated
December 18, 1995, Ecogen has filed no other reports or
registration statements with the Commission since July 31, 1995.
Since January 1, 1994, Ecogen has filed all reports, schedules,
forms, statements and other documents
12
17
required to be filed by it with the Commission pursuant to the
requirements of the Exchange Act and the Securities Act,
including, without limitation, all of the documents listed in
paragraphs (a), (b), (c) and (e) above (all of the foregoing filed
prior to the date hereof being hereinafter referred to as the "SEC
Documents"). Ecogen has delivered to Monsanto true and complete
copies of the SEC Documents. As of their respective dates, the
SEC Documents (as the same may have been amended) complied in all
material respects with the requirements of the Exchange Act and
the Securities Act and the rules and regulations of the Commission
promulgated thereunder applicable to such SEC Documents, and, as
of their respective dates, none of the SEC Documents (when read
together with all exhibits included therein and financial
statement schedules thereto and documents incorporated by
reference) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
Financial Statements were prepared in accordance with generally
accepted accounting principles consistently applied throughout
the periods involved except as may be otherwise indicated in such
financial statements or the notes thereto, and are correct and
complete and fairly present in all material respects the
consolidated financial condition of Ecogen and its Subsidiaries,
as of those dates and the results of their operations for the
periods then ended.
3.4 Litigation. Except as set forth in Ecogen's
----------
October 31, 1994 Annual Report on Form 10-K and in Ecogen's
Quarterly Reports on Form 10-Q provided to Monsanto pursuant to
Section 3.3(b) and except as disclosed on Schedule 3.4 hereto,
------------
there are no judicial or administrative actions, suits,
proceedings or investigations pending or, to the best of Ecogen's
knowledge, threatened against Ecogen or any of its Subsidiaries
or which question the validity of this Agreement or of any action
taken or to be taken pursuant to or in connection with the
provisions of this Agreement, and to the best of Ecogen's
knowledge, no facts exist which would constitute a basis for any
such action, suit, proceeding or investigation, which if
concluded adversely against Ecogen would have a materially
adverse effect on the business or financial condition of Ecogen
and its Subsidiaries taken as a whole.
13
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3.5 Material Contracts. The contracts listed as
------------------
Exhibits 10.1 - 10.119 on the list of exhibits under Part IV,
Item 14(a)(3) of the October 31, 1994 Form 10-K, and filed (or
incorporated by reference) as Exhibits 10.1 - 10.119 to the
October 31, 1994 Form 10-K, were all of the contracts required to
be listed pursuant to the Commission's instructions for the
completion of Form 10-K and filed as exhibits pursuant to Item
601(b)(10) of the Commission's Regulation S-K. Except as
disclosed in Ecogen's January 31, 1995, April 30, 1995 or July
31, 1995 Form 10-Q and in Ecogen's Current Reports on Form 8-K
dated November 7, 1995 and November 24, 1995, neither Ecogen nor
any of its Subsidiaries has entered into any contract since
October 31, 1994 which is required to be filed as an exhibit to a
quarterly report on Form 10-Q or an annual report on Form 10-K.
All of those contracts filed as exhibits to the October 31, 1994
Form 10-K or disclosed in Ecogen's January 31, 1995, April 30,
1995 or July 31, 1995 Form 10-Q or in Ecogen's Current Reports on
Form 8-K dated November 7, 1995 and November 24, 1995 which are
material to the business and operations of Ecogen as presently
conducted are in full force and effect and, to the best of
Ecogen's knowledge, all parties to such contracts have performed
in all material respects all obligations required to be performed
by them to date, are not in default and do not have a right of
rescission. Neither Ecogen nor any of its Subsidiaries has any
outstanding powers of attorney, except routine powers of attorney
relating to representation before governmental agencies or given
in connection with qualification to conduct business in another
jurisdiction. No employees of Ecogen or any of its Subsidiaries
are covered by any collective bargaining agreement.
3.6 Taxes. Ecogen and each of its Subsidiaries has
-----
filed when due all federal, state and local income and other tax
returns, reports and declarations which are required to have been
filed by it and has, to the best of Ecogen's knowledge, paid all
taxes which have become due pursuant thereto and all other taxes,
assessments and other governmental charges imposed by law upon it
or any of its properties, assets, income, receipts, payrolls,
transactions, capital, net worth or franchises other than those
not delinquent except where the failure to file or pay would not
have a material adverse effect on the business of Ecogen. All
such tax returns are complete and correct in all material
respects as filed. To the best of Ecogen's knowledge, there is
no tax lien upon any property or asset
14
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of Ecogen, whether owned or leased, except for liens for taxes not
yet payable and liens which do not have a material adverse effect
on the business of Ecogen. To the extent that tax liabilities
have accrued on or before the Balance Sheet Date but have not
become payable, to the best of Ecogen's knowledge, they have been
adequately reflected as liabilities on the Balance Sheet and
adequate provision for payment thereof has been made. There have
been no examinations by any state or federal taxing authority of
the books and financial statements of Ecogen or any of its
Subsidiaries. The accruals and reserves for federal, state or
local taxes, as shown on the Balance Sheet are adequate in the
opinion of Ecogen. Neither Ecogen nor any of its Subsidiaries has
granted any waiver of any statute of limitation with respect to,
or any extension of a period for the assessment of, any federal,
state or local tax. To the best of Ecogen's knowledge, Ecogen has
withheld and duly paid to the appropriate governmental authority
all taxes required to be withheld by it pursuant to any ordinance,
statute or other law except where the failure to withhold or pay
would not have a material adverse effect on the business of
Ecogen.
3.7 Capitalization. Prior to the Reverse Stock Split,
--------------
the authorized capital stock of Ecogen consists of (i) 42,000,000
shares of common stock, par value $.01 per share, of which
29,996,287 shares were issued and outstanding at December 8,
1995, and no additional shares have subsequently been issued
except upon exercise of options, warrants or convertible
securities outstanding as of December 8, 1995; and (ii) 7,500,000
shares of preferred stock, par value $.01 per share, issuable in
series, of which 350,000 shares have been designated Series B
convertible preferred stock and 23,334 shares of which are issued
and outstanding at December 8, 1995, and of which 160,000 shares
have been designated Series C Convertible Preferred Stock, and
122,000 shares of which are issued and outstanding as of
December 8, 1995. After the consummation of the reverse stock
split described in the Special Proxy Statement, the authorized
capital stock of Ecogen will consist of (i) 42,000,000 shares of
common stock, par value $.01 per share of which approximately
5,990,000 shall be issued and outstanding; and (ii) 7,500,000
shares of preferred stock, par value $.01 per share with no
change in the designated preferred or the issued and outstanding
shares of preferred stock. The issued and outstanding shares of
Ecogen have been duly and validly issued and are fully paid and
nonassessable, and the Purchased Shares, when issued,
15
20
will be duly and validly issued and fully paid and nonassessable.
Except for 180,778 shares of common stock, Ecogen holds no shares
of its common stock or preferred stock in its treasury. Except as
disclosed in Schedule 3.7, there are no outstanding options,
------------
warrants or other rights in existence, other than under this
Agreement and under the Warrant Agreement dated as of November 2,
1995 between Monsanto and Ecogen, to acquire from Ecogen any of
its shares of capital stock. Since the Balance Sheet Date there
have been no dividends, Restricted Payments or other
distributions declared or paid in respect of the shares of
capital stock of Ecogen.
3.8 Compliance With Instruments, Laws; Governmental
-----------------------------------------------
Authorizations. Neither Ecogen nor any of its Subsidiaries is
--------------
(i) in violation of any term or provision of its Certificate of
Incorporation or By-Laws or, to the best of Ecogen's knowledge,
any governmental license or permit; (ii) in violation or default
under any material contract, agreement or other instrument; or
(iii) in violation of any statute, law, ordinance, rule,
regulation, judgment, order, decree, permit, concession, grant,
franchise, license or other governmental authorization or
approval which is material to its business or operations. All
material permits, concessions, grants, franchises, licenses and
other governmental authorizations and approvals necessary for the
conduct of the business of Ecogen and its Subsidiaries have been
duly obtained and are in full force and effect, and there are no
proceedings pending or, to the best of Ecogen's knowledge,
threatened which may result in the revocation, cancellation or
suspension, or any adverse modification, of any permit,
concession, grant, franchise, license or other governmental
authorization which would have a material adverse effect on the
business or financial condition of Ecogen and its Subsidiaries
taken on a whole. There have been no citations, fines or
penalties heretofore assessed against Ecogen or any of its
Subsidiaries and, to the best of Ecogen's knowledge, Ecogen and
each of its Subsidiaries have complied with in all material
respects any and all federal, state or local laws, including but
not limited to laws relating to air or water pollution, solid
waste disposal or other environmental protection matters, or
relating to occupation, health or safety, and no such citations,
fines or penalties have been assessed or, to the best of Ecogen's
knowledge, have been threatened since the Balance Sheet Date or
are now being threatened. There exists no default nor has any
act or omission occurred which, with the
16
21
giving of notice or the passage of time, would constitute a
default under the provisions of any instrument evidencing
Indebtedness or liability or any agreement relating thereto or any
other agreement or instrument to which Ecogen is a party, and
which would have a material adverse effect on the business or
financial condition of Ecogen.
3.9 Patents and Technology Rights.
-----------------------------
(a) Except as set forth in Schedule 3.9 hereof
and except with respect to bioinsecticide product supply,
manufacturing, distributor and marketing agreements to which
Ecogen is a party, to the best of Ecogen's Knowledge, Ecogen and
its Subsidiaries and their successors and assigns have a right
(1) to practice all processes and process steps as now practiced
or planned to be practiced by Ecogen and its Subsidiaries, and
(2) to make, use and sell throughout the world, products now
made, used or sold or planned to be made, used or sold by Ecogen
and its Subsidiaries without substantial risk of infringement of
any right, interest, or patent of any third party.
(b) Ecogen and each of its Subsidiaries owns and
possesses, or is licensed or is otherwise entitled to use, all
patents, trademarks, copyrights and such pending applications
therefor and trade secrets, technologies, know-how, processes and
other proprietary rights necessary for conducting its business
operations; provided, however, that certain intellectual property
rights will be sold by Ecogen to Monsanto pursuant to the
Assignment Agreement.
(c) Except as set forth in Schedule 3.9 hereof,
to the best of Ecogen's Knowledge, there exists no contest,
litigation, infringement, fraud, misappropriation, or misuse by
Ecogen, pending or threatened in respect of, any patent or
application therefor, or any license or agreement of a third
party which is necessary for the conduct of Ecogen's business or
the business of any of its Subsidiaries.
3.10 Certain Transactions. No Affiliate of Ecogen that
--------------------
is not a Subsidiary of Ecogen owns or controls, directly or
indirectly, in whole or in part, any property, asset or
17
22
right, tangible or intangible (including but not limited to, any
patent, trademark, service xxxx, trade name, brand name,
copyright, or pending application for any patent, trademark,
service xxxx, or copyright, invention, process, know-how, formula,
design or trade secret), which Ecogen or any of its Subsidiaries
is presently operating or using or the use of which is necessary
for its business.
3.11 Absence of Changes. Since the Balance Sheet
------------------
Date, except as disclosed on Ecogen's January 31, 1995, April 30,
1995 and July 31, 1995 Form 10-Qs, the Unaudited Balance Sheet,
the Current Report on Form 8-K dated November 7, 1995, the
Current Report on Form 8-K dated November 29, 1995, or as
specified in Schedule 3.11 hereto, Ecogen and its Subsidiaries
-------------
have not:
(a) undergone any changes in its condition,
properties, assets, liabilities, business or operations which are
in the aggregate materially adverse except for net losses of
$20,834,022 for the nine months ended July 31, 1995 and a
continuation of operating losses and a liquidity position similar
to that reported in the July 31, 1995 Form 10-Q;
(b) declared, set aside, made or paid any
Restricted Payment;
(c) incurred any Indebtedness or issued or sold
any debt securities except for Indebtedness incurred in
connection with the purchase or lease of property in the ordinary
course of business which in the aggregate is not materially
adverse to Ecogen and Indebtedness to Monsanto;
(d) mortgaged, pledged, licensed, sublicensed or
subjected to any lien, lease, security interest or other charge
or encumbrance any of its properties or assets, tangible or
intangible which in the aggregate materially adversely affect the
financial condition, property, assets, business, or operations of
Ecogen and its Subsidiaries taken as a whole, other than liens
and security interests in favor of Monsanto;
18
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(e) acquired or disposed of any assets or
properties (except for common stock of Ecogen) in any transaction
with any officer or director or with any shareholder owning more
than 5% of the outstanding common stock except for transactions
that have a value of less than $60,000;
(f) forgiven or cancelled any debts or claims, or
waived any rights having a value of more than $60,000 except in
the ordinary course of business which in the aggregate is not
materially adverse to Ecogen;
(g) suffered any damage, destruction or loss
(whether or not covered by insurance) which in the aggregate
materially adversely affects the financial condition, properties,
assets, business or operations of Ecogen and its Subsidiaries; or
(h) incurred other than in the ordinary course of
business any liability or obligation (whether absolute, accrued,
contingent or otherwise), exceeding $1,000,000 other than
liabilities and obligations to Monsanto.
3.12 Restrictions on Personnel. To the best of
-------------------------
Ecogen's Knowledge, no officer or employee of Ecogen or any of
its Subsidiaries has entered into any agreement which is now in
effect with any Person other than Ecogen or its Subsidiaries (a)
requiring such officer or employee to assign any interest in any
invention or trade secrets developed while employed by Ecogen or
any of its Subsidiaries or (b) containing any prohibition or
restriction of competition or solicitation of customers which if
enforced against such officer or employee would have a material
adverse effect on the business or financial condition of Ecogen
or any of its Subsidiaries.
3.13 Certain Payments. Neither the Internal Revenue
----------------
Service, the Commission nor any other federal, state, local or
foreign government agency or entity has initiated or, to the best
of Ecogen's knowledge, threatened any investigation of any
payments made by Ecogen and alleged to have been of the type
covered by Section 162(c) of the Internal Revenue Code.
19
24
3.14 Disclosure. Neither this Agreement nor any
----------
exhibit or schedule hereto, nor any statement, list or
certificate delivered to Monsanto pursuant to this Agreement
contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained herein and therein in the context in which they were
made not misleading.
3.15 Brokers. This Agreement was not induced or
-------
incurred through any person, firm or corporation acting as a
broker or finder, other than Xxx Xxxxxx, for whose fees Ecogen
shall be responsible. Ecogen agrees to hold Monsanto harmless
from any loss, damage, cost or expense resulting from any claim
by any person, firm or corporation based upon any such person,
firm or corporation having acted as a broker or finder for Ecogen
or any other Person in connection with the transactions
contemplated by this Agreement, the Assignment Agreement and/or
the Research and Development Agreement.
ARTICLE IV.
CONDITIONS PRECEDENT TO PURCHASE AND SALE OF COMMON STOCK
---------------------------------------------------------
4.1 Conditions to Monsanto Obligations. The
----------------------------------
obligation of Monsanto to purchase the Purchased Shares described
in Article II is subject to the satisfaction of the following
conditions each of which may be waived in writing by an
authorized representative of Monsanto:
(a) Opinion of Counsel. Monsanto shall have
------------------
received an opinion addressed to Monsanto and dated as of the
Closing, of Dechert, Price & Xxxxxx, counsel for Ecogen,
satisfactory in substance and form to Monsanto and its counsel
and substantially in the form attached hereto as Exhibit 4.1(a).
--------------
In rendering such opinion, counsel may rely to the extent deemed
appropriate on the certificates of officers or employees of
Ecogen and of public officials as to matters of fact and authen-
ticity of documents and on opinions of counsel in other states as
to questions under the laws of such states.
20
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(b) Representations and Warranties True and
---------------------------------------
Correct. The representations and warranties in Article III hereof
-------
shall be true and correct on the date of Closing. Monsanto shall
have received from the President of Ecogen an officer's
certificate to the foregoing effect dated as of the Closing.
(c) Closing Certificates. Monsanto shall have
--------------------
received copies, certified by the Secretary or Assistant
Secretary of Ecogen to be true and correct and in full force and
effect, of (i) the Certificate of Incorporation and By-Laws of
Ecogen; (ii) resolutions of the Board of Directors of Ecogen
authorizing the issuance of the Purchased Shares, the execution
and delivery of this Agreement and any other documents to be
executed by or on behalf of Ecogen pursuant to this Agreement;
and (iii) a statement containing the names and titles of the
officer or officers of Ecogen authorized to sign this Agreement
and other documents required by this Agreement, together with
true signatures of such officers.
(d) Proceedings Satisfactory to Monsanto. All
------------------------------------
proceedings taken in connection with the transaction contemplated
by this Agreement and all instruments, authorizations and other
documents applicable thereto shall be reasonably satisfactory in
form and content to Monsanto and Monsanto shall have received
copies of all such documents reasonably required by it.
(e) Approvals. The pre-transaction filing and
---------
waiting period requirements applicable to the transactions
contemplated by this Agreement, the Assignment Agreement and the
Research and Development Agreement under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvement Act of 1976, as amended ("HSR"), shall have
expired or shall have been terminated, and any necessary foreign
approvals shall have been obtained, and there shall not be
pending or threatened any governmental litigation or proceeding
which restrains, prohibits or prevents or in the reasonable
opinion of counsel presents a significant risk of restraining,
prohibiting or preventing, or changing the terms of, or obtaining
material damages in connection with, the transactions
contemplated by this Agreement, the Assignment Agreement or the
Research and Development Agreement.
21
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(f) Research and Development Agreement. Ecogen
----------------------------------
shall have executed and delivered the Research and Development
Agreement.
(g) Assignment Agreement. The transactions
--------------------
contemplated under the Assignment Agreement shall have been
closed simultaneously with the Closing hereunder.
4.2 Conditions to Ecogen's Obligation. The obligation
---------------------------------
of Ecogen to sell the Purchased Shares described in Article II is
subject to the satisfaction of the following conditions each of
which may be waived in writing by an authorized representative of
Ecogen.
(a) At Closing, Monsanto shall have delivered the
Purchase Price with respect to those Shares purchased at Closing.
(b) Closing Certificate. Ecogen shall have
-------------------
received a Certificate, dated as of the Closing Date and executed
by an officer of Monsanto to the effect that the representations
and warranties of Monsanto contained in this Agreement are true
and correct in all respects on and as of the Closing as though
made on and as of such date.
(c) Representations, Warranties and Covenants.
-----------------------------------------
(i) All representations and warranties of
Monsanto made in this Agreement, or in any Exhibit or
certificate delivered pursuant hereto shall be true and
complete in all material respects on and as of the Closing
Date with the same force and effect as if made on and as of
that date.
(ii) All terms, covenants, and conditions to
be complied with and performed by Monsanto on or prior to
the Closing Date shall have been complied with or performed
in all material respects.
22
27
(d) Adverse Proceedings. No suit, action or
-------------------
governmental proceeding shall have been instituted or threatened
against and no order, decree, or judgment of any court, agency,
or other governmental authority shall have been rendered against
Monsanto which it is reasonably believed would render it
unlawful, as of the Closing Date, to effect the transactions
contemplated by this Agreement in accordance with its terms.
(e) HSR Act Approval. The applicable HSR Waiting
----------------
Period shall have expired or shall have been terminated and any
necessary foreign approvals shall have been obtained and there
shall not be pending or threatened any governmental litigation
proceeding which restrains, prohibits, or prevents or in the
reasonable opinion of counsel presents a significant risk of
restraining, prohibiting or preventing, or changing the terms of,
or obtaining material damages in connection with the transactions
contemplated by this Agreement, the Assignment Agreement or the
Research and Development Agreement.
(f) Research and Development Agreement. Monsanto
----------------------------------
shall have executed and delivered the Research and Development
Agreement.
(g) Assignment Agreement. The transactions
--------------------
contemplated under the Assignment Agreement shall have been
closed simultaneously with the Closing hereunder.
(h) Senior Promissory Note. Monsanto shall have
----------------------
delivered to Ecogen, marked paid, the original of the Senior
Promissory Note dated November 2, 1995 in the face amount of
$2,000,000 and payable to Monsanto.
(i) Security Agreement. Monsanto shall have
------------------
executed and delivered such documents required to terminate the
security interest granted pursuant to the Security Agreement
dated as of November 2, 1995 by and between Monsanto and Ecogen.
(j) Warrant Agreement. Monsanto shall have
-----------------
delivered to Ecogen, marked cancelled, the original of the
Warrant to Purchase Two Million Shares of Common
23
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Stock dated November 2, 1995 granted pursuant to the Warrant
Agreement by and between Monsanto and Ecogen dated November 2,
1995.
ARTICLE V.
RIGHT OF FIRST REFUSAL AND LIMITATIONS ON OWNERSHIP
---------------------------------------------------
5.1 Right of First Refusal. If during the term of the
----------------------
Research and Development Agreement and for 2 years following its
termination Ecogen agrees to sell shares of its common stock or
other voting securities ("Ecogen Securities") in a private or
public offering other than (i) Ecogen Securities issued to Ecogen
employees or directors pursuant to Ecogen's stock option plans,
or to members of Ecogen's Scientific Advisory Board, or issued in
connection with any stock options, warrants or other rights in
existence as of the Closing Date, (ii) upon the conversion or
exchange of convertible or exchangeable securities outstanding as
of the date of this Agreement, (iii) an equity investment in
Ecogen by the other party to, or partner in, any license
agreement, research and development agreement, distribution
agreement, joint-venture or other similar corporate alliance,
provided that such equity investment is made as a condition to
Ecogen's good faith agreement to enter into such license
agreement, research and development agreement, distribution
agreement, joint-venture or other similar corporate alliance,
(iv) in connection with a merger or acquisition, or (v) to any
underwriter, placement agent or financial advisor in connection
with any financing or other transaction by Ecogen, and provided
Monsanto still owns all of the Purchased Shares at the time of
such private or public offering, Monsanto shall have the right,
but not the obligation, to acquire upon the same terms and
conditions applicable to such private or public offering all or
any portion of such Ecogen Securities sufficient for Monsanto to
maintain after the offering the same percentage of ownership of
issued and outstanding Ecogen Securities that Monsanto possessed
immediately prior to the offering (the "Pre-Offering
Percentage").
5.2 Private Offering. With respect to a private
----------------
offering, Ecogen shall no later than five (5) Business Days after
the execution of any agreement entered into in connection with
such private offering notify Monsanto in writing of the proposed
offering (a
24
29
"Notice") which Notice shall include the description of the
securities proposed to be issued by Ecogen and specify the
number, price and payment and other terms, together with any
letter of intent and the final contract, if available. Monsanto
shall have twenty (20) Business Days from the date of receipt of
Ecogen's notice in which to advise Ecogen whether Monsanto elects
to exercise its rights under Section . If Monsanto does not
respond, or if Monsanto indicates that it will not exercise its
rights, Monsanto shall be considered irrevocably to have waived
its rights under Section 5.1 with respect to the private
offering. If Monsanto timely advises Ecogen that Monsanto will
exercise its rights under Section 5.1, Monsanto shall have the
right to acquire all or any portion of the necessary amount of
the Ecogen Securities to maintain Monsanto's Pre-Offering
Percentage at the price and upon the terms (other than any
registration rights which are on terms different than those
granted hereunder) specified in the Notice. Closing shall be in
accordance with the terms of the private offering agreement,
provided, however, that if such agreement provides for the
payment of consideration other than cash, Monsanto shall have the
right to purchase its Pre-Offering Percentage of shares for the
cash equivalent amount of such other consideration. Monsanto
shall make such investment representations to Ecogen and shall
provide Ecogen with such other documentation at closing as is
reasonably required by Ecogen to comply with applicable
securities laws. The cash equivalent amount referred to above
shall be determined by an independent third party reasonably
agreed to by Monsanto and Ecogen (the costs and expenses of which
shall be paid by Ecogen).
5.3 Public Offering. With respect to a public
---------------
offering, Ecogen shall notify Monsanto no later than five (5)
Business Days after Ecogen has entered into a letter of intent
with its underwriters, and shall provide Monsanto with a copy of
any letter of intent with its underwriters. Monsanto shall have
twenty (20) Business Days from the date of receipt of Ecogen's
notice in which to advise Ecogen whether Monsanto elects to
exercise its rights under Section 51. If Monsanto does not
respond or if Monsanto indicates that it will not exercise its
rights, Monsanto shall be considered irrevocably to have waived
its rights under Section 5.1 with respect to the public offering.
If Monsanto timely advises Ecogen that Monsanto desires to retain
its rights under Section 5.1, then when Ecogen files a
registration statement containing a preliminary prospectus with
the Commission, Ecogen shall provide
25
30
Monsanto with copies of the preliminary prospectus and all
subsequent amendments. Monsanto shall have twenty (20) Business
Days from its receipt of the preliminary prospectus in which to
exercise its rights under Section 5.1 by making an offer to
acquire all or any portion of the necessary amount of Ecogen
Securities to maintain Monsanto's Pre-Offering Percentage based on
the price and the other terms contained in the final prospectus,
except that the price to be paid by Monsanto shall be net of any
underwriting discount and selling commissions. No such offer to
buy shall be accepted prior to the time that the registration
statement becomes effective. The registration statement shall
indicate that Monsanto has anti-dilution rights to purchase Ecogen
Securities on the terms offered to the public.
5.4 Limitations. Notwithstanding the preceding
-----------
provisions of this Article V, Ecogen shall not be required to
issue any fractional shares as a result of Monsanto's exercise of
its rights under Section 5.1. Ecogen shall not be required to
transfer any Ecogen Securities to Monsanto under this Article V,
if to do so would result in the violation of any applicable law,
rule or regulation.
5.5 Limitations on Monsanto's Ownership. Except for
-----------------------------------
purchases of Ecogen Securities made in accordance with this
Article V, prior to the third anniversary of the Closing, neither
Monsanto nor any of its Affiliates shall directly or indirectly
acquire any Ecogen Securities (except by way of stock dividends,
stock splits, or similar events affecting holders of Ecogen
Securities generally) if the effect of the acquisition would be
to increase the aggregate voting power in the election of
directors of all Ecogen Securities owned by Monsanto and its
Affiliates to more than twenty-five percent (25%) of the total
combined voting power of all Ecogen Securities then outstanding;
provided, however, that nothing contained in this Agreement shall
be deemed to prohibit Monsanto and its Affiliates from acquiring
Ecogen Securities (through open market purchases or otherwise) so
long as the effect of such acquisitions does not increase the
aggregate voting power in the election of directors of all Ecogen
Securities owned by Monsanto and its Affiliates to more than
twenty-five percent (25%) of the total combined voting power of
all Ecogen Securities then outstanding. Notwithstanding the
foregoing limitation:
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(a) Monsanto or any of its Affiliates may acquire
an unlimited percentage of Ecogen Securities prior to the third
anniversary of the Closing if any of the following events occur:
(i) A tender or exchange offer is made by
any Person or 13D Group (other than an Affiliate of or
Person acting in concert with Monsanto) to acquire Ecogen
Securities and/or other securities of Ecogen that, if added
to the Ecogen Securities and other securities of Ecogen
already owned by that Person or 13D Group, would represent
more than thirty percent (30%) of the total combined voting
power or profit and loss participation of all Ecogen
Securities and other securities of Ecogen issued and
outstanding;
(ii) There is public disclosure that Ecogen
Securities and/or other securities of Ecogen representing
more than thirty percent (30%) of the total combined voting
power or profit and loss participation of all Ecogen
Securities and other securities of Ecogen issued and
outstanding have been acquired or are proposed to be
acquired by any Person or 13D Group (other than an Affiliate
of or Person acting in concert with Monsanto);
(iii) Any Person or 13D Group (other than
an Affiliate of or Person acting in concert with Monsanto)
shall beneficially own Ecogen Securities representing more
than thirty percent (30%) of the total combined voting power
of all issued and outstanding Ecogen Securities;
(iv) At any election or series of elections,
persons not proposed for nomination or nominated by the
management of Ecogen are elected as directors of Ecogen, and
together constitute fifty percent (50%) or more of Ecogen's
Board of Directors; or
(v) Any Person or 13D Group (other than an
Affiliate of or Person acting in concert with Monsanto)
solicits or receives valid proxies for the
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election of Ecogen's Board of Directors representing an
aggregate of thirty percent (30%) or more of the total
combined voting power of all Ecogen Securities issued and
outstanding.
(b) Neither Monsanto nor any of its Affiliates
shall be required to dispose of any shares of Ecogen Securities
if their aggregate percentage ownership is increased as a result
of Ecogen's recapitalization or any other action taken by Ecogen.
As used herein, "13D Group" means any group of persons formed for
the purpose of acquiring, holding, voting or disposing of
securities that would be required under Section 13(d) of the
Exchange Act and the related rules and regulations (as now in
effect, and based on present legal interpretations) to file a
statement on Schedule 13D or 13G with the Commission as a
"person" within the meaning of Section 13(d)(3) of the Exchange
Act if the group beneficially owned Ecogen Securities
representing more than five percent (5%) of the total combined
voting power of all Ecogen Securities then issued and
outstanding.
ARTICLE VI.
LIMITATION ON TRANSFER
----------------------
6.1 Limitation on Transfer. During the term of the
----------------------
Research and Development Agreement, Monsanto shall not directly
or indirectly offer for sale, or transfer any Common Stock
acquired by Monsanto pursuant to this Agreement. Notwithstanding
the foregoing, the limitations on transfers set forth in this
Section 6.1 shall terminate upon the occurrence of an event set
forth in Section 5.5(a).
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ARTICLE VII.
REGISTRATION RIGHTS
-------------------
7.1 Requested Registration.
----------------------
(a) Request for Registration. Subject to Section
------------------------
6.1, Holders of Registrable Securities shall have the right to
request (with such requests in writing and stating the number of
shares of Registrable Securities to be disposed of and the
intended method of disposition of shares by such Holders) up to
two (2) registrations on Form S-3 at Ecogen's expense and an
unlimited number of additional registrations on Form S-3 at the
selling Holder's expense, provided that a request for
registration includes at least fifty percent (50%) of the
aggregate Registrable Securities held on such date and (ii) the
requests for additional registrations are made by Holders of at
least twenty percent (20%) of the Registrable Securities, and
(iii) such Registerable Securities have an aggregate offering
price of at least $1,000,000 or represent all of the Registerable
Securities of the Holders held on such date, subject only to the
following:
(i) Ecogen shall not be required to effect a
registration pursuant to this Section 7.1 prior to the
second anniversary of the Closing unless Monsanto otherwise
has a right hereunder to sell Registrable Securities before
such date.
(ii) Ecogen shall not be required to effect a
registration pursuant to this Section 7.1 within one hundred
eighty (180) days after the effective date of the last such
registration pursuant to this Section 7.1.
(iii) Ecogen shall not be required to
effect a registration in any particular jurisdiction in
which Ecogen would be required to execute a general consent
to service of process in effecting such registration,
qualification or compliance, unless Ecogen is already
subject to service in such jurisdiction and except as may be
required by the Securities Act or applicable rules or
regulations thereunder.
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(iv) Ecogen shall not be required to effect a
registration for a period of not more than ninety (90) days
immediately following the delivery of a certificate signed
by the President of Ecogen to the Requesting Holders stating
that, in the good-faith judgment of the Board of Directors
of Ecogen, it would be seriously detrimental to Ecogen and
its shareholders for a Registration Statement to be filed on
or before the date filing would otherwise be required
hereunder; provided, however, that Ecogen may not utilize
this right more than once in any twelve (12) month period
and Ecogen may not exercise this right based on the fact
that Ecogen has recently registered any of its securities
for the account of another security holder or holders
exercising their respective demand registration rights.
If Ecogen cannot qualify for registration on Form S-3, then
Ecogen shall effect any registration required or requested
by the Holder on Form S-1, or such other appropriate form,
in which event this Section 7.1 shall apply in all respects
as if the words "Form S-3" were replaced by the words "Form
S-1" or the appropriate designation for such other form.
(b) Notice of Inclusion. Ecogen shall give
-------------------
written notice to all Holders of Registrable Securities of the
receipt of a request for registration pursuant to this Section
7.1 and shall provide a reasonable opportunity for other Holders
to participate in the registration; provided, however, that, if
the registration is for an underwritten offering, then the terms
of Section 7.1(c) hereof shall apply to all participants in such
offering. Subject to the foregoing, Ecogen shall use its best
efforts to effect promptly the registration of all shares of
Registrable Securities on Form S-3 to the extent requested by the
Holder or Holders thereof for purposes of disposition.
(c) Underwriting. If the Requesting Holders
------------
intend to distribute the Registrable Securities covered by their
request by means of an underwriting, then they shall so advise
Ecogen as a part of their request made pursuant to this Section
7.1 and Ecogen shall include such information in the written
notice referred to in Section 7.1(b) hereof. The right of any
Holder to registration pursuant to this Section 7.1 shall be
conditioned upon such
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Holder's participation in such underwriting and the inclusion of
such Holder's Registrable Securities in the underwriting to the
extent requested and to the extent provided herein.
Ecogen shall (together with all Holders proposing
to distribute their securities through such underwriting) enter
into an underwriting agreement in customary form with the
representative of the underwriter or underwriters of recognized
national standing, selected for such underwriting by a majority
in interest of the Requesting Holders and reasonably acceptable
to Ecogen. Notwithstanding any other provision of this Section
7.1, if the representative advises the Requesting Holders in
writing that marketing factors require a limitation on the number
of shares to be underwritten, then the Requesting Holders shall
so advise all Holders, and the number of shares of Registrable
Securities that may be included in the registration and
underwriting shall be allocated first among all Holders thereof
in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders at the
time of filing the Registration Statement. No Registrable
Securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such
registration.
If any Holder of Registrable Securities
disapproves of the terms of the underwriting, then such person
may elect to withdraw therefrom by written notice to Ecogen, the
underwriter and the Requesting Holders. The Registrable
Securities and/or other securities so withdrawn shall also be
withdrawn from registration; provided, however, that, if, by the
withdrawal of such Registrable Securities, a greater number of
Registrable Securities held by other Holders may be included in
such registration (up to the maximum of any limitation imposed by
the underwriters), then Ecogen shall offer to all Holders who
have included Registrable Securities in the registration the
right to include additional Registrable Securities in the same
proportion used to determine the underwriter limitation in this
Section 7.1(c).
If the underwriter has not limited the number of
Registrable Securities to be underwritten, then Ecogen and its
executive officers, and such other Persons as are determined by
the Board of Directors, their successors, and their assigns
("Other Selling
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Stockholders"), may include securities for their own account in
such registration if the underwriter so agrees and if the number
of Registrable Securities held by the Holders that would otherwise
have been included in such registration and underwriting will not
thereby be limited for any reason, including but not limited to
the price for which the Registrable Securities will be sold. To
the extent that the underwriter wishes to limit the number of
shares to be included in the registration on behalf of Ecogen and
the Other Selling Stockholders, the shares of common stock to be
registered held by the Other Selling Stockholders shall be
excluded from such offering prior to excluding any shares held by
Ecogen and those held by Ecogen shall be excluded prior to
excluding any Registrable Securities held by the Holders.
7.2 Ecogen Registration.
-------------------
(a) Notice and Inclusion. Subject to Section
--------------------
6.1, if, at any time after the Closing until the tenth
anniversary of the Closing, Ecogen shall determine to register
any of its securities for its own account, other than a
registration relating solely to employee benefit plans, or a
registration relating solely to a Commission Rule 145
transaction, Ecogen shall:
(i) promptly give to each Holder written
notice thereof (which shall include a list of the
jurisdictions in which Ecogen intends to attempt to qualify
such securities under the applicable blue sky or other state
securities laws); and
(ii) include in such registration (and any
related qualification under blue sky laws or other compli-
ance), and in any underwriting involved therein, all
Registrable Securities specified in a written request or
requests, within twenty (20) days after receipt of the
written notice from Ecogen, by any Holder or Holders.
(b) Underwriting. If the registration of which
------------
Ecogen gives notice is for a registered public offering by Ecogen
of its securities through an underwriting, then
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Ecogen shall so advise the Holders as a part of the written notice
given pursuant to Section 7.2(a)(i) hereof. In such event, the
right of any Holder to registration pursuant to this Section 7.2
shall 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 their securities through such
underwriting shall (together with Ecogen, and all the Other
Selling Stockholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for
underwriting by Ecogen. Notwithstanding any other provision of
this Section 7.2, if the underwriter determines that marketing
factors require a limitation on the number of shares to be
underwritten, then the underwriter may exclude from such
registration and underwriting some or all of the Registrable
Securities held by the Holders or the stock held by Other Selling
Stockholders in accordance with this Section 7.2(b). Ecogen
shall so advise all Holders and all Other Selling Stockholders
distributing their securities through such underwriting, and (i)
as to the first registration in which Holders are entitled to
participate pursuant to this Section 7.2, the number of
Registrable Securities and other securities that may be included
in the registration and underwriting shall be allocated among all
Holders thereof on the basis that shares held by all the Other
Selling Stockholders who are not Holders shall first be excluded
to the extent required and, if further exclusion is necessary,
shares held by the selling Holders shall then be excluded;
provided, however, that, as among the respective Other Selling
Stockholders as a group on the one hand and the Holders as a
group on the other hand suffering such exclusion, the exclusion
shall be in proportion, as nearly as practicable, to the amount
of securities entitled to inclusion in such registration held by
each of the Other Selling Stockholders as a group and each of the
Holders at the time of filing the Registration Statement; and
(ii) as to all subsequent registrations, the number of shares of
Registrable Securities and other securities that may be included
in the registration and underwriting shall be allocated among all
Other Selling Stockholders and the Holders in proportion, as
nearly as practicable, to the respective amounts of securities
entitled to inclusion in such registration held by all such Other
Selling Stockholders and Holders at the time of filing the
Registration Statement. For purposes of the apportionment
provisions in clause (i) above, for any selling Holder that is a
partnership or corporation, the partners, retired partners, and
shareholders of
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such Holder, the estate and family members of such partners and
retired partners, and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single "selling Holder,"
and any pro rata reduction with respect to such selling Holder
shall be based upon the aggregate number of shares carrying
registration rights owned by all entities and individuals included
in such "selling Holder," as defined in this sentence. If any
Other Selling Stockholder or Holder disapproves of the terms of
any such underwriting, he may elect to withdraw therefrom by
written notice to Ecogen and the underwriter. Any securities
excluded or withdrawn from such underwriting shall be withdrawn
from such registration.
7.3 Expenses of Registration. All Registration
------------------------
Expenses incurred in connection with any registration,
qualification or compliance pursuant to this Article VII shall be
borne by Ecogen; provided, however, that the Registration
Expenses for the third and all subsequent registrations under
Section 7.1(a) hereof requested by the Holders shall be borne by
the requesting Holders pro rata on the basis of the number of
their shares so registered. All Selling Expenses relating to the
securities registered by Holders and, if applicable, Other
Selling Stockholders, and fees and disbursements of counsel,
shall be borne by the Holders or the Other Selling Stockholders,
as the case may be, of such securities pro rata on the basis of
the number of their shares so registered.
7.4 Registration Procedures.
-----------------------
(a) Ecogen shall use its best efforts to register
or qualify the Registrable Securities covered by a Registration
Statement under such other securities or blue sky laws of such
United States jurisdictions as Holder shall reasonably request
and do any and all acts and things which may be necessary or
desirable to enable Holder to consummate the public sale or other
disposition in such jurisdictions; provided, however, that Ecogen
shall not be required in connection therewith or as a condition
thereto to qualify to do business or file a general consent to
service of process in any such jurisdictions.
(b) Ecogen represents and warrants that, on the
date of its effectiveness, the Registration Statement will comply
in all material respects with the
34
39
applicable requirements of the Securities Act and the rules
thereunder, including without limitation Rule 415; on the date of
its effectiveness, the Registration Statement will not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements made therein not misleading; provided, however,
that no representation is made by Ecogen with respect to
information relative to any Holder; and the Prospectus will not
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading; provided, however, that no representation is made by
Ecogen with respect to information relative to any Holder.
(c) If, at any time or times while the
Registration Statement is effective, Ecogen notifies Holder that
a development has occurred or is pending which, based upon
consultation with Ecogen's legal counsel, Ecogen reasonably
believes may cause the then current Prospectus not to be in
compliance with applicable securities laws, then Holder shall
refrain from delivering the Prospectus and from making any offers
or sales of Registrable Securities requiring the delivery of the
Prospectus until such time as Ecogen either notifies Holder that
the Prospectus complies with such laws or delivers an amended
Prospectus in replacement of the deficient Prospectus. Ecogen
shall use its reasonable best efforts to minimize the time during
which Holder must so refrain, and no more than one (1) such
period of refrain shall be imposed during any period of one
hundred eighty (180) days.
(d) At least two (2) Business Days prior to the
initial filing of the Registration Statement or Prospectus and no
fewer than two (2) Business Days prior to the filing of any
amendment or supplement thereto (including any document that
would be incorporated or deemed to be incorporated therein by
reference), Ecogen shall furnish each selling Holder, its legal
counsel and the managing underwriter, if any, copies of all such
documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) shall be
subject to review of such Holder, its legal counsel and such
underwriters, if any, and Ecogen shall cause its officers and
directors and the independent certified public accountants to
Ecogen to respond to such inquiries as shall be necessary, in the
opinion of respective counsel to Ecogen and any such
underwriters, to
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conduct a reasonable investigation within the meaning of the
Securities Act. Ecogen shall not file any such Registration
Statement or Prospectus or any amendments or supplements thereto
to which a selling Holder, its legal counsel, or the managing
underwriters, if any, shall reasonably object on a timely basis
(i.e., within two (2) Business Days of receipt thereof).
----
(e) Ecogen shall promptly notify each selling
Holder when the Registration Statement is declared effective;
notify Holder of any stop-order or similar proceeding by the
Commission or any state securities authority; and furnish such
number of Prospectuses, Prospectus supplements and other
documents incident thereto as Holder from time to time may
reasonably request.
(f) In the event of any breach by Ecogen of the
provisions of Section 7.1, 7.2, 7.3 or 7.4, the parties agree
that each Holder will suffer irreparable harm. Accordingly, the
parties agree that the provisions of Sections 7.1, 7.2, 7.3 and
7.4 are specifically enforceable by each Holder and that each
Holder shall be entitled to temporary and permanent injunctive
relief against Ecogen and the other rights and remedies to which
each Holder may be entitled to at law, in equity or under this
Agreement for any such breach.
7.5 Indemnification.
---------------
(a) Indemnification by Ecogen. Ecogen shall
-------------------------
indemnify each Holder with respect to which registration,
qualification or compliance has been effected pursuant to
this Article VII, each of its officers, directors,
employees, agents and partners, each Person controlling such
Holder within the meaning of Section 15 of the Securities
Act, each underwriter, if any, and each Person who controls
any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses,
damages and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue
36
41
statement) of a material fact contained in any such
Registration Statement, Prospectus, offering circular or
other document or any amendment or supplement thereto or
incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
or any violation by Ecogen of the Securities Act or any rule
or regulation thereunder applicable to Ecogen and relating to
action or inaction required of Ecogen in connection with any
such registration, qualification or compliance. Ecogen shall
reimburse each such Holder, each of its officers, directors,
employees, agents and partners, and each Person controlling
such Holder, each such underwriter and each Person who
controls any such underwriter for any legal and any other
expenses reasonably incurred in connection with
investigating, preparing or defending any such expense,
claim, loss, damage, liability or action; provided, however,
that Ecogen shall not be liable in any such case to the
extent that any such claim, loss, damage, liability, action
or expense arises out of or is based on any untrue statement
or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information
furnished to Ecogen by an instrument duly executed by such
Holder or underwriter and stated to be specifically for use
therein.
(b) Indemnification by the Holders. To the
------------------------------
extent set forth in the second sentence of this Section 7.5(b),
each Holder shall, if Registrable Securities or other securities
held by such Holder are included in the securities as to which
such registration, qualification or compliance is being effected,
indemnify Ecogen, each of its directors, officers, employees and
agents, each underwriter, if any, of Registrable Securities
covered by such a Registration Statement, each Person who
controls Ecogen or such underwriter within the meaning of Section
15 of the Securities Act, each other such Holder, each of such
other Holder's officers, directors, employees, agents and
partners, and each Person controlling such Holder within the
meaning of Section 15 of the Securities Act against all expenses,
claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement
of any litigation, commenced or threatened, arising out of or
based on any untrue statement (or alleged untrue statement) of a
material fact made
37
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by the Holder and contained in any such Registration Statement,
Prospectus, offering circular or other document, or any amendment
or supplement thereto or incident to any such registration,
qualification or compliance or based on any omission (or alleged
omission) to state therein a material fact required to be made by
the Holder and stated therein or necessary to make the statements
therein not misleading or any violation by Ecogen of any rule or
regulation promulgated under the Securities Act applicable to
Ecogen in connection with such registration, qualification or
compliance as a result of any statement (or based on any omission
to state or alleged omission) required to be made by such Holder.
Each such Holder shall reimburse Ecogen, such other Holders,
directors, officers, employees, agents, partners, Persons,
underwriters and control Persons for any legal or any other
expenses reasonably incurred in connection with investigating,
preparing or defending any such expense, claim, loss, damage,
liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such Registration
Statement, Prospectus, offering circular or other document or any
amendment or supplement thereto in reliance upon and in conformity
with written information furnished by the Holder to Ecogen by an
instrument duly executed by such Holder and stated to be
specifically for use therein; provided, however, that the
obligations of such Holders hereunder shall be limited to an
amount equal to the proceeds to each such Holder of Registrable
Securities sold as contemplated herein in connection with the
particular registration, qualification or compliance involved.
(c) Notice. Each party entitled to
------
indemnification under this Section 7.5 (the "Indemnified Party")
shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought and shall permit the Indemnifying Party
to assume the defense of any such claim or any litigation
resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim
or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not unreasonably be
withheld), and that the Indemnified Party may participate in such
defense at its own expense; and provided further that the failure
of any Indemnified Party to give notice as provided herein shall
not relieve
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the Indemnifying Party of its obligations under this Section 7.5
unless such failure is materially detrimental to the Indemnifying
Party. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to
such claim or litigation.
7.6 Information by Holder. Each Holder or Holders of
---------------------
Registrable Securities in any registration shall furnish to
Ecogen such information regarding such Holder or Holders and the
distribution proposed by such Holder or Holders as Ecogen may
reasonably request in writing but only to the extent as shall be
required in connection with any registration, qualification or
compliance referred to in this Article VII.
7.7 Rule 144 Reporting. With a view to making
------------------
available the benefits of certain rules and regulations of the
Commission which may permit the sale of the Restricted Securities
or Control Securities to the public without registration, Ecogen
agrees to:
(a) Use its best efforts to make and keep public
information available as those terms are understood and defined
in Rule 144 under the Securities Act;
(b) Use its best efforts to file with the
Commission in a timely manner all reports and other documents
required of Ecogen under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting
requirements);
(c) For so long as a Holder owns any Restricted
Securities or Control Securities, furnish to the Holder forthwith
upon request (i) a written statement by Ecogen as to its
compliance with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of Ecogen, and (iii) such other
reports and documents so filed as such Holder may reasonably
request in availing itself of any rule or regulation of the
Commission allowing a Holder to sell any such securities without
registration; and
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(d) When any Holder qualifies under Rule 144 for
the unrestricted right of sale under Rule 144, Ecogen shall, upon
written request of such Holder (such request to include
sufficient detail as to establish how the Holder so qualifies
under Rule 144) and an opinion of counsel satisfactory to Ecogen,
promptly remove any restrictive legend that may have been placed
on any Restricted or Control Securities and issue Ecogen
Securities free of such restrictive or other legends.
7.8 Transfer of Registration Rights. Monsanto may
-------------------------------
transfer the rights to cause Ecogen to register the Registrable
Securities under Sections 7.1 and 7.2 hereof to an aggregate of
no more than five Holders and each such Holder may transfer or
assign such rights to a transferee or assignee in connection with
the transfer or assignment of not less than all of the shares of
the Registrable Securities held by such Holder; provided,
however, that Ecogen shall be entitled to notice of any such
transfer of registration rights within thirty (30) days of the
date such transfer is effected.
7.9 Limitations on Subsequent Registration Rights. No
---------------------------------------------
owner or prospective owner of Ecogen Securities or other
securities of Ecogen shall have any registration rights that are
inconsistent with the provisions of this Agreement. Ecogen shall
not, without the prior written consent of the Holders (which
consent shall not be unreasonably withheld) of not less than
sixty-six and two-thirds percent (66-2/3%) of the Registrable
Securities then held by Holders, enter into any agreement with
any owner or prospective owner of any Ecogen Securities or other
securities of Ecogen that would allow such owner or prospective
owner to include such securities in any registration filed under
this Article VII if such inclusion would adversely affect the
rights of any Holder.
7.10 "Market Stand-off" Agreement. Each Holder hereby
----------------------------
agrees that, to the extent requested by Ecogen and an underwriter
of a sale of Ecogen Securities or other securities of Ecogen for
the account of Ecogen and not for the account of a security
holder or holders exercising their respective demand registration
rights, it shall not sell or otherwise transfer or dispose of
(other than to transferees who agree to be similarly bound) any
Registrable Securities during the ninety (90) day period
following the effective date of a
40
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registration statement of Ecogen filed under the Securities Act;
provided, however, that all officers and directors of Ecogen, all
Other Selling Stockholders and all other Persons with registration
rights (whether or not pursuant to this Agreement) shall enter
into similar agreements. To enforce the foregoing covenant,
Ecogen may impose stop-transfer instructions with respect to the
Registrable Securities of each Holder (and the shares or
securities of every other Person subject to the foregoing
restriction) until the end of such ninety (90) day period.
7.11 Termination of Registration Rights. The
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registration rights granted pursuant to Section 7.1 shall
terminate as to each Holder on the third anniversary of the
termination or expiration of the term of the Research and
Development Agreement.
ARTICLE VIII.
REPRESENTATIONS OF MONSANTO
---------------------------
To induce Ecogen to sell the Purchased Shares described in
Article II, Monsanto represents and warrants to Ecogen as
follows:
8.1 Investment Purpose. Monsanto is acquiring the
------------------
Purchased Shares issued pursuant to this Agreement for purposes
of investment and for its own account and not with a view to the
sale or other distribution thereof as such terms are defined in
the Securities Act, as amended, and the regulations of the
Commission promulgated thereunder.
8.2 Accredited Investor. Monsanto is an "accredited
-------------------
investor" as defined in Rule 501(a) promulgated under the
Securities Act.
8.3 Access to Information. Monsanto has been given
---------------------
access to all information requested by it regarding Ecogen,
including information requested regarding the current financial
condition of Ecogen and the risks associated therewith.
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8.4 Due Diligence. Monsanto has made its own due
-------------
diligence investigation of Ecogen and Ecogen's business, and its
own analysis of the merits and risks of the investment made
pursuant to this Agreement, and is not relying on anyone else's
analysis or investigation or Ecogen, its business or the merits
and risks of the purchase of the Purchased Shares other than
professionals employed specifically by Monsanto to assist
Monsanto.
8.5 Restricted Securities. Monsanto understands that
---------------------
the sale of the Purchased Shares hereunder has not been
registered under the Securities Act and that the Purchased Shares
cannot be resold or transferred by Monsanto unless it is
subsequently registered under the Securities Act or unless an
exemption from such registration is available. In this
connection, Monsanto represents that it is familiar with Rule 144
under the Securities Act as presently in effect, and understands
the resale limitations imposed thereby and by the Securities Act.
8.6 Exemption Reliance. Monsanto has been advised
------------------
that the Purchased Shares are not being registered under the
Securities Act or under state securities laws, but are being
offered and sold pursuant to exemptions from such laws, and that
Ecogen's reliance upon such exemptions is predicated in part on
Monsanto's representations contained herein.
8.7 Authorization and Binding Effect. The execution
--------------------------------
and delivery of this Agreement and the performance by Monsanto of
its obligations hereunder are within Monsanto's corporate power,
have been duly authorized by proper corporate action on the part
of Monsanto, are not in violation of, or default under any
existing law, rule or regulation of any governmental agency or
authority, any order or decision of any court, the Certificate of
Incorporation or By-Laws of Monsanto or the terms of any
agreement, restriction or undertaking to which Monsanto is a
party or by which it is bound, and except for the notification
required by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the approval of Ecogen's shareholders of
the proposed reverse stock split as described in the Special
Proxy Statement, do not require the approval or consent of the
shareholders of Monsanto, any governmental body, agency or
authority or any other person or entity.
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8.8 Brokers. This Agreement was not induced or
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procured through any person, firm or corporation acting as a
broker or finder for Monsanto. Monsanto agrees to hold Ecogen
harmless from any loss, damage, cost or expense resulting from
any claim by any person, firm or corporation based upon any such
person, firm or corporation having acted as a broker or finder
for Monsanto or any other Person in connection with the
transactions contemplated by this Agreement, the Assignment
Agreement and/or the Research and Development Agreement.
8.9 Stock Legend. Subject to Section 7.7(d) hereof,
------------
certificates representing the Purchased Shares shall bear the
following legend:
"The securities represented by this certificate have not
been registered under the Securities Act of 1933, as
amended, or under any state securities law and may not be
sold or offered for sale in the absence of an effective
registration statement under such act and applicable state
securities laws or an opinion of counsel satisfactory to the
Company that such registration is not required. The
securities represented by this certificate are further
subject to certain resale restrictions and entitled to the
benefits set forth in an Investment Agreement dated as of
January 24, 1996 between Ecogen, Inc., a Delaware
corporation, and Monsanto Company, a Delaware corporation
(the "Agreement"). A copy of the Agreement and all
amendments thereto is on file in the office of the Secretary
of the Company."
ARTICLE IX.
MISCELLANEOUS
-------------
9.1 Survival of Representations and Warranties.
------------------------------------------
Ecogen's representations and warranties contained in Article III
hereof and Monsanto's representations and warranties set forth in
Article VIII hereof shall survive the Closing for a period of two
(2) years. Notwithstanding the foregoing, the representations
and warranties set forth in Sections 3.2, 3.3, 3.7 hereof, to the
extent applicable to the shares of Common Stock to be issued to
Monsanto hereunder, shall survive the Closing indefinitely.
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9.2 Assignment. Except as set forth in Section 7.8,
----------
this Agreement shall not be assigned by either party without the
written consent of the other party. Notwithstanding the
foregoing, either party may assign this Agreement, without such
consent, to the purchaser of all its assets, or of all the assets
of its business to which this Agreement or the Research and
Development Agreement relates, and Monsanto, in addition to its
rights under Section 7.8, may assign this Agreement or its rights
hereunder to any Affiliate.
9.3 Notice. All notices, communications and demands
------
required or permitted to be given or made hereunder or pursuant
hereto shall be in writing and shall be effective when delivered
in person or transmitted by telegram or telecopier (confirmed by
mail), addressed as follows:
If to Monsanto:
Monsanto Company
000 Xxxxx Xxxxxxxxx Xxxx.
Xx. Xxxxx, Xxxxxxxx 00000
Attention: President, Ceregen
Telecopier Number: 000-000-0000
with a copy to
Monsanto Company
000 Xxxxx Xxxxxxxxx Xxxx.
Xx. Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telecopy Number: 000-000-0000
If to any other Holder, at such address and telecopy number
as such Holder shall have furnished Ecogen in writing.
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If to Ecogen:
Ecogen Inc.
0000 Xxxxx Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: President
Telecopy Number: 000-000-0000
with a copy to:
Dechert, Price & Xxxxxx
Princeton Park Corporate Center
000 Xxxxx Xxxxx
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy Number: 000-000-0000
Either party may change the address designated by notice
given by such party. The parties agree to acknowledge in writing
the receipt of any such notice delivered in person.
9.4 Governing Law. This Agreement is deemed to have
-------------
been entered into in the State of Missouri, and its
interpretation, construction, and the remedies for its
enforcement or breach are to be applied pursuant to and in
accordance with the laws of the State of Missouri (without
regarding to the conflict of laws principles thereof).
9.5 Validity of Agreement. If any provision of this
---------------------
Agreement is, becomes, or is deemed invalid or unenforceable in
any jurisdiction, such provision shall be deemed amended to
conform to applicable law so as to be valid, legal and
enforceable in such jurisdiction so deeming. The validity,
legality and enforceability of such provision shall not in any
way be affected or impaired thereby in any other jurisdiction.
If such provision cannot be so amended without materially
altering the intention of the parties, it shall be stricken in
the jurisdiction so deeming, and the remainder of this Agreement
shall remain in full force and effect.
9.6 Waiver. No waiver of any right under this
------
Agreement shall be deemed effective unless contained in a writing
signed by the party charged with such waiver, and no
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waiver of any right arising from any breach or failure to perform
shall be deemed to be a waiver of any future such right or of any
other right arising under this Agreement.
9.7 Entire Agreement. This Agreement sets forth and
----------------
constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof, and supersedes any and all
prior agreements, understandings, promises and representations
made by either party to the other concerning the subject matter
hereof and the terms applicable hereto.
9.8 Headings and References; Incorporation of
-----------------------------------------
Schedules. The headings contained in this Agreement are inserted
---------
for convenience of reference only and shall not be a part,
control or affect the meaning hereof. All references herein to
Articles and Sections are to the Articles and Sections of this
Agreement. All references herein to Schedules are to the
Schedules hereto, each of which shall be incorporated into and
deemed a part of this Agreement.
9.9 Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed to be an original,
but which together shall constitute one and the same instrument.
9.10 No Presumption Against Drafter, Qualifications on
-------------------------------------------------
Schedules. The parties to this Agreement have jointly
---------
participated in the negotiation and drafting of this Agreement,
except for the Schedules. In the event an ambiguity or question
of intent or interpretation arises, this Agreement, except for
the Schedules, shall be construed as if drafted jointly by the
parties and no presumptions or burdens of proof shall arise
favoring any party by virtue of the authorship of any of the
provisions of this Agreement. The Schedules have been prepared
by Ecogen and are solely the responsibility of Ecogen even if
Monsanto provided drafts of or information appearing on such
Schedules. Any Schedule which is qualified by "knowledge",
"materiality", or words of similar import which apply to any
representation or warranty which is not similarly qualified shall
be interpreted as if no qualification were stated on the
Schedule.
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IN WITNESS WHEREOF, the parties hereunto have executed this
Agreement as to be effective as of the date first written above.
MONSANTO COMPANY ECOGEN INC.
By: ----------------------------- By: ----------------------------------
Name: Xxxxx X. Xxxx Xxxxx X. Xxxxxx, Xx.
Title: Director, Commercial Chairman and Chief Executive Officer
Partnerships & Alliances
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