Exhibit 10.16
AMENDMENT TO SECURITIES SUBSCRIPTION AGREEMENT
GRANT OF OPTION TO PURCHASE SHARES
This Agreement, entered this 15th day of November, 1999 by and between
EARTH SCIENCES, INC., a Colorado corporation with principal executive offices
located at 000 00xx Xxxxxx, Xxxxxx, Xxxxxxxx 00000 (the "Company"), and
________________(the "Buyer"), is an amendment of the Securities Subscription
Agreement dated February 19, 1999 by and between the same parties (the
"Subscription Agreement") pursuant to which Buyer purchased __________ of the
Company's $.01 par value common stock (the "Shares"). Terms not otherwise
defined herein have the meanings set forth in the Subscription Agreement.
WHEREAS, the Subscription Agreement and its Amendment of the same date
(the "1st Amendment") contemplated the issuance by the Company of additional
shares of its $.01 par value common stock to the Buyer under certain
circumstances (the"Additional Shares");
WHEREAS, the Company and the Buyer intended that the Additional Shares be
included in the registration statement on Form S-3 filed by the Company with
regard to the Shares, but such intention has been frustrated;
WHEREAS, the Company and the Buyer desire to transform the rights to
Additional Shares the Buyer held in the 1st Amendment into options to purchase
shares of the Company's $.01 par value common stock exercisable essentially
under the same terms and conditions as the rights for Additional Shares; and
WHEREAS, the Company's Board of Directors has specifically authorized the
granting of the stock option hereinafter described.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the Company and Buyer hereby amend the Subscription Agreement
as follow:
1. Voiding of 1st Amendment. The Company and the Buyer agree that the
1st Amendment is void and of no further force or effect.
2. Grant of Stock Option. The Company hereby grants to Buyer effective this
date the Option to Purchase (hereinafter the "Option") no more than the
aggregate of _________ shares of the Company's $.01 par value common stock, on
the terms and conditions hereinafter set forth at a purchase price of $.01 per
share. To the extent not exercised or exercisable, pursuant to paragraph 3
below, the Option to purchase any remaining shares shall expire as of November
15, 2001.
3. Mechanics of and Limitation on Exercise of Option. If the Buyer delivers to
the transfer agent or the Company certificates representing any of the Shares,
together with a check for the estimated exercise price and a notice to the
Company to exercise a portion or all of the Option (the "Notice") and the
average per share closing bid price for the Common Stock for the five trading
days immediately preceding the receipt of the Notice is less than 125% of the
closing per share bid price the trading day immediately preceding the date of
the Closing (as defined in the Subscription Agreement), then with respect to the
number of Shares specified in such Notice and represented by certificates
actually sent to the transfer agent or the Company, the Company shall cause to
be issued shares under the Option in the name of the Buyer in accordance with
the following formula:
OpSh = Sh x [(1+ Dr) x Pp -Fdb]/Fdb, where
OpSh = the option shares to be issued;
Sh = the number of shares referred to in the Notice;
Pp = the per share purchase price of the Shares of $0.906;
Dr = 25% (or .25); and
Fdb = the 5 trading day average per share closing bid price
preceding the date of receipt of the Notice;
Any shares issued pursuant to this Amendment shall be deemed Shares pursuant to
the Subscription Agreement and shall be subject to all the terms and conditions
of the Subscription Agreement. For purposes of this Amendment, the closing per
share bid price of the Company's $.01 par value common stock shall be as
reported by OTCBB. Notwithstanding anything in this Amendment to the contrary,
the Company shall not be required to issue additional shares in excess of its
legally authorized capital, or issue additional shares greater in number than
the shares granted under the Option, or suffer any penalty forfer to the
Company.
6. Liquidated Damages. The Company acknowledges that time is of the essence
with respect to the Company's compliance with its obligations to issue shares
pursuant to a Notice under Paragraph 3 above. Accordingly, the Company hereby
warrants and represents that in the event it becomes obligated to issue shares
under the Option to the Buyer, it the Transfer Agent such shares and an
applicable Notice pursuant to Paragraph 3 hereof) at a price per share equal to
125% of the per share closing bid price of the Common Stock the day immediately
preceding the date of the Closing (the "Call") and cancel any remaining shares
under the Option. The Buyer shall have the right to decline to sell shares
pursuant to the Call, provided however, that such refusal shall automatically
extinguish the Buyer's right to any remaining shares under the Option as
provided in Paragraph 2 of this Amendment with respect to the number of shares
called. The Company may assign its purchase rights under this Paragraph 4 with
consent of the Buyer.
5. Mechanics for Exercise of the Call. To exercise the Call, the Company
shall deliver written notice to the Buyer along with its commitment to pay the
appropriate price to the Buyer within ten (10) business days of the date of
delivery of such notice of the Call. The Buyer shall have five (5) business
days from delivery of the notice of the Call to decline to sell the shares
pursuant to the Call by a written notice of such declination to the Company
within such 5 business day period. In the event the Company does not receive
timely delivery of such notice to decline the Call, the Company shall be
authorized to treat the Call as accepted and, after payment to the Buyer of the
appropriate price, shall be authorized to take those actions it deems necessary
to terminate the Buyers Option and rights in the Shares. After receipt of the
payment pursuant to the Call, the Buyer shall deliver any and all certificates
evidencing the Shares to the Company properly endorsed for transfer
6. Liquidated Damages. The Company acknowledges that time is of the essence
with respect to the Company's compliance with its obligations to issue shares
pursuant to a Notice under Paragraph 3 above. Accordingly, the Company hereby
warrants and represents that in the event it becomes obligated to issue shares
under the Option to the Buyer, it shall (i) instruct its transfer agent with
respect to such issuance; (ii) cause its counsel to issue any necessary
opinion letters; and (iii) take any and all other action necessary to cause its
Transfer Agent to issue any required shares and deliver the same in accordance
with purchaser's instructions within ten (10) business days after the Transfer
Agent has received the certificates for the Shares and the Company has received
the Notice. In the event the Company breaches this warranty, for any reason,
other than an act of God as described below, then the Company shall immediately
pay the Buyer liquidated damages in the amount of 1% of the pro rata Purchase
Price, allocable to the shares for which such additional shares are to be
issued, per day (the "Cash Damages") until the Company shall have complied with
its obligations under Paragraph 1. In the event the Company is in breach of
this warranty for more than ten (10) business days, the Company shall issue to
the Buyer, as additional liquidated damages, additional shares per day of the
Company's Common Stock equal to 1% of the number of the shares originally
purchased pursuant to the Subscription Agreement. The Company's payment of such
liquidated damages shall not, however, alter in any way the Company's
obligations under Paragraph 3. Further, until the Company cures the breach of
Warranty by delivering the shares and paying the liquidated damages, the Company
shall not issue or contract to issue to any other party any of its equity
securities or debt securities convertible into equity securities of the Company.
For purposes of this agreement, an act of God shall excuse a breach of
warranty in the event that weather conditions, acts of war or terrorism, or some
other catastrophic event not generally encountered in business or reasonably
within the contemplation of the parties at the time of execution of this
agreement renders the Company's performance impossible. Such breach of warranty
shall be excused only for so long as the act of God in fact renders performance
impossible.
7. Filing of Registration Statement. The Company agrees to use its best efforts
to file a registration statement on Form S-3 to include the shares covered by
the Option as soon as practicable.
8. Limitation on Weekly Sale of Shares. Except in the event of unusual market
activity, the Buyer hereby agrees to limit the weekly sale of Shares (including
the shares received from any exercise of the Option) to the greater of : a)
______ shares per week, or b) ____ % of the previous week's volume of the
Company's shares sold as reported by the OTCBB.
No other amendments of the Subscription Agreement are intended.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the date first above written.
EARTH SCIENCES, INC.
By: _________________________
Name: Xxxx X. XxXxxxxxx
Title: President
BUYER
By: __________________________
