STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of December 7, 1998, is made by and
among COGENTRIX DELAWARE HOLDINGS, INC., a Delaware corporation, having its
principal place of business at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx,
XX 00000 ("Seller"), and ECOSCIENCE CORPORATION, a Delaware corporation, having
its principal place of business at 00 Xxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx
00000 (the "Purchaser").
WHEREAS, Seller owns all of the outstanding shares (the "Shares") of common
stock, of COGENTRIX OF BUFFALO, INC. ("CBI"), COGENTRIX OF FORT XXXXX I, INC.,
("CFDI") COGENTRIX GREENHOUSE INVESTMENTS, INC, ("CGI"), COGENTRIX OF MARFA,
INC., ("CMI") and COGENTRIX OF POCONO, INC., ("CPI"), each Delaware corporations
(each of CBI, CFDI, CGI, CMI and CDI are referred to herein as a "Company" and
collectively as the "Companies"), and Seller wishes to sell to Purchaser, and
Purchaser wishes to purchase from Seller, the Shares upon the terms and subject
to the conditions set forth herein;
NOW, THEREFORE, in consideration of the representations, warranties and
agreements herein contained, the parties agree as follows:
1. Sale of the Shares. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing, Seller will sell, transfer and deliver
to Purchaser, and Purchaser will purchase from Seller, the Shares for the
Purchase Price (as defined in Section 3(a)).
2. Conditions to the Closing. The obligation of Seller to sell the Shares
to Purchaser, and Purchaser's obligation to purchase the Shares, are subject to
the satisfaction at the time of the Closing of the following conditions (any or
all of which may be waived by either party in its sole discretion):
(a) Each of the representations of the other party hereto made in this
Agreement shall be true and correct as of the date of this Agreement and as
of the time of the Closing as though made as of such time and the other
party shall have performed each and every covenant contained in this
Agreement required to be performed by such party by the time of the
Closing.
(b) The parties shall have executed and/or delivered the items
required to be delivered under Section 3 hereof.
(c) The applicable waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act") shall have
expired or been earlier terminated without action by the Justice Department
or the Federal Trade Commission to prevent consummation of the transactions
contemplated by this Agreement.
(d) Purchaser shall have received all the consents listed on Schedule
2(d) (the "Required Consents").
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(e) Cogentrix Energy, Inc. ("Cogentrix") shall have assigned and
contributed to CGI that certain promissory note of APD in the face amount
of $643,197.16, Village Farms of Texas, L.P. shall have cancelled that
certain promissory note (the "CGX Note") of Cogentrix in the face amount of
$1,838,420.47 and CGI shall have issued to Village Farms of Texas L.P. a
promissory note in the amount of $1,838,420.47 (the "CGI Note") dated the
date of, and bearing interest at the same rate as, the CGX Note.
3. Closing.
(a) The closing (the "Closing") of the purchase and sale of the Shares
shall be held on December 31, 1998 at the office of Fennebresque, Clark,
Xxxxxxxx & Hay, 000 Xxxxx Xxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxx Xxxxxxxx
00000, or at such other time and place as Purchaser and Seller may agree.
At the Closing, Purchaser will deliver to Seller an executed promissory
note (the "Note") payable to Seller in the principal amount equal to Twenty
Million, Six Hundred Thousand and No/100 Dollars ($20,600,000),
substantially in the form attached hereto as Exhibit A, and Seller shall
deliver to Purchaser certificates representing the Shares, duly endorsed in
blank or accompanied by stock powers duly executed by Seller in blank, in
proper form for transfer. At the Closing, Purchaser shall deliver to Seller
a certificate, or certificates, representing One Million (1,000,000) shares
(the "Stock Consideration") of common stock, $.01 par value, of Purchaser,
registered in the name of Seller, or to an affiliate of Seller as Seller
may direct. The Note and the Stock Consideration shall constitute the
"Purchase Price".
(b) At the Closing, Seller shall deliver to Purchaser the resignations
by all officers and directors of the Companies and the corporate minute
books, stock records, bylaws and articles or certificates of incorporation
of each of the Companies.
(c) At the Closing, Purchaser and Seller shall deliver to each other
executed counterparts of (i) a Stock Pledge Agreement (the "Stock Pledge"),
substantially in the form attached hereto as Exhibit B, whereby the
Purchaser will pledge the Shares and all of the shares of common stock of
Agro Power Development, Inc. (the "APD Shares") as collateral for the Note,
(ii) the Registration Rights Agreement (the "Rights Agreement") in the Form
of Exhibit C hereto and (iii) a termination agreement in mutually agreeable
form terminating the Agreement Regarding Future Projects, dated as of
February 6, 1996 between Cogentrix Energy, Inc. and Agro Power Development,
Inc.
(d) At the Closing, Purchaser shall also deliver to Seller
certificates representing the Shares and the APD Shares as required by the
Stock Pledge.
4. Representations and Warranties of Seller. Seller hereby represents and
warrants to Purchaser as follows:
(a) Organization and Authority of the Seller. The Seller 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 enter into this Agreement, to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement, the Stock
Pledge and
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the Rights Agreement by the Seller, the performance by the Seller of its
obligations hereunder and thereunder and the consummation by the Seller of
the transactions contemplated hereby and thereby have been duly authorized
by all requisite action on the part of the Seller. This Agreement, the
Stock Pledge and the Rights Agreement have been duly executed and delivered
by the Seller, and (assuming due authorization, execution and delivery by
the Purchaser) each of this Agreement, the Stock Pledge and the Rights
Agreement constitutes a valid and binding obligation of the Seller
enforceable against the Seller in accordance with its terms.
(b) No Conflict. Assuming compliance with the notification
requirements of the HSR Act, except as may result from any facts or
circumstances relating solely to the Purchaser, the execution, delivery and
performance of this Agreement and the Stock Pledge by the Seller do not and
will not (a) violate, conflict with or result in the breach of any
provision of the Certificate of Incorporation or By-laws of the Seller or
any Company, (b) conflict with or violate any law or governmental order
applicable to the Seller or any Company or (c) conflict with, or result in
any breach of, constitute a default (or event which with the giving of
notice or lapse or time, or both, would become a default) under, require
any consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation, or cancellation of, or result in the
creation of any encumbrance on any of the assets or properties of the
Seller or any Company pursuant to, any note, bond, mortgage or indenture,
contract, agreement, lease, sublease, license, permit, franchise or other
instrument or arrangement to which the Seller or any Company is a party or
by which any of such assets or properties are bound or affected which would
have a material adverse effect on the ability of the Seller to consummate
the transactions contemplated by this Agreement or would have a material
adverse affect on the value of the Shares.
(c) Governmental Consents and Approvals. The execution, delivery and
performance of this Agreement, the Stock Pledge and the Rights Agreement by
the Seller do not and will not require any consent, approval, authorization
or other order of, action by, filing with, or notification to, any
governmental authority, except (a) as described in a writing given to the
Purchaser by the Seller on the date of this Agreement and (b) the
notification requirements of the HSR Act.
(d) Title. Seller has legal and beneficial ownership of the Shares,
and good and marketable title to the Shares, free and clear of all liens,
claims, charges and encumbrances.
(e) Economic Risk. Seller acknowledges and understands that the shares
constituting the Stock Consideration to be received by it have not been
registered under the Securities Act of 1933 (the "Securities Act"), or any
state securities or blue sky laws and, therefore, cannot be resold unless
such shares are registered under the Securities Act and under any
applicable state securities or blue sky laws or unless an exemption from
registration thereunder is available. Seller is acquiring the Stock
Consideration for its own account for investment, and not with a view to,
or for resale in connection with, the distribution thereof, and has no
present intention of distributing or reselling any of the Stock
Consideration. In making the foregoing representation, Seller is aware that
it must bear, and it is able to bear, the economic risk of such investment
for an indefinite period of time.
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(f) Capitalization of the Companies. The Shares represent all of the
capital stock of the Companies which are issued and outstanding. All of the
Shares have been duly authorized and are validly issued, fully paid and
non-assessable. There are no outstanding options, warrants, rights, calls,
commitments, conversion rights, plans or other agreements of any character
providing for the purchase or issuance of any capital stock or other
securities of the Companies.
(g) No Other Business or Assets. Except for the ownership of
partnership interests (the "Partnership Interests") in Village Farms of
Buffalo, L.P., Village Farms of Texas, L.P., Village Farms of Marfa, L.P.
and Pocono Village Farms, L.P. (each a "Partnership" and collectively, the
"Partnerships"), none of the Companies has conducted any active business or
held any other assets. Except for the agreements of limited partnership
which govern the Partnerships, none of the Companies is a party to any
agreement. None of the Companies owns an interest in any subsidiaries.
(h) Title to Partnership Interests. The Companies have legal and
beneficial ownership of the Partnership Interests, free and clear of all
liens, claims, charges and encumbrances (collectively, "Liens") other than
Liens related to indebtedness of the Partnerships.
(i) No Litigation; Compliance with Laws. There are no actions,
lawsuits, claims or proceedings pending, or to the knowledge of Seller,
threatened against or affecting the Companies in any court or before any
arbitrator or governmental agency, domestic or foreign. Each of the
Companies has conducted its activities in compliance in all material
respects with all applicable laws and governmental regulations.
(j) Absence of Liabilities. Except for obligations to the Partnerships
and the other partners of the Partnerships that may exist under the
respective agreements of limited partnerships which govern the
Partnerships, none of the Companies has any material debts, liabilities or
obligations of any kind, whether accrued, absolute, contingent or
otherwise, including, without limitation, any liability or obligation on
account of taxes or any governmental charges or penalty, interest or fines.
(k) Tax Matters. Each of the Companies has filed all tax returns that
it was required to file. All such tax returns were correct and complete in
all material respects. All taxes owed by each of the Companies have been
paid and none of the Companies has any additional liability for taxes.
(l) Corporate Records. The copies of the stock records, corporate
minutes, by-laws and articles of incorporation of the Companies which shall
be delivered at the Closing will be true, correct and complete.
(m) Organization of Companies. Each of the Companies is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Each of the Companies is qualified to do business in
each state in which it is required to be so qualified, except where the
failure to be so qualified would have a material adverse effect.
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(n) Knowledge and Experience of Seller. Seller has such knowledge and
experience in financial and business matters that Seller is capable of
evaluating the merits and risks of an acquisition of the Stock
Consideration to be received by Seller. Seller has been given the
opportunity to ask questions of, and receive answers from Purchaser
concerning the terms and conditions of the Stock Consideration to be
acquired by it and other matters pertaining to an investment in the
Purchaser, and has been given the opportunity to obtain such additional
information in order for Seller to evaluate the merits and risks of an
acquisition of the Stock Consideration to be received by Seller to the
extent Purchaser possesses such information or can acquire it without
unreasonable effort or expense. Seller understands and has evaluated the
merits and risks of the acquisition of the Stock Consideration.
(o) Reliance. Seller acknowledges that Purchaser is entering into this
Agreement in reliance upon Seller's representations and warranties in this
Agreement.
5. Representations and Warranties of Purchaser. Purchaser hereby represents
and warrants to Seller as follows:
(a) Organization and Authority of the Purchaser. The Purchaser 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 enter into this Agreement, the Stock Pledge and the Rights
Agreement and to issue the Note, to carry out its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement, the Stock Pledge and
the Rights Agreement and the issuance of the Note by the Purchaser, the
performance by the Purchaser of its obligations hereunder and thereunder
and the consummation by the Purchaser of the transactions contemplated
hereby and thereby have been duly authorized by all requisite action on the
part of the Purchaser. This Agreement, the Stock Pledge, the Rights
Agreement and the Note have been duly executed and delivered by the
Purchaser, and (assuming due authorization, execution and delivery by the
Seller) each of this Agreement, the Stock Pledge, the Rights Agreement and
the Note constitutes a valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms.
(b) No Conflict. Assuming compliance with the notification
requirements of the HSR Act, except as may result from any facts or
circumstances relating solely to the Seller, the execution, delivery and
performance of this Agreement, the Stock Pledge and the Rights Agreement
and the issuance of the Note by the Purchaser do not and will not except
for the Required Consents (a) violate, conflict with or result in the
breach of any provision of the Certificate of Incorporation or By-laws of
the Purchaser, (b) conflict with or violate any law or governmental order
applicable to the Purchaser or (c) conflict with, or result in any breach
of, constitute a default (or event which with the giving of notice or lapse
or time, or both, would become a default) under, require any consent under,
or give to others any rights of termination, amendment, acceleration,
suspension, revocation, or cancellation of, or result in the creation of
any encumbrance on any of the assets or properties of the Purchaser
pursuant to, any note, bond, mortgage or indenture, contract, agreement,
lease, sublease, license, permit, franchise or other instrument or
arrangement to which the Purchaser is a party or by which any of such
assets or properties are bound or affected which would have a
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material adverse effect on the ability of the Purchaser to consummate the
transactions contemplated by this Agreement.
(c) Governmental Consents and Approvals. The execution, delivery and
performance of this Agreement, the Stock Pledge and the Rights Agreement
and the issuance of the Note by the Purchaser do not and will not require
any consent, approval, authorization or other order of, action by, filing
with, or notification to, any governmental authority, except (a) as
described in a writing given to the Seller by the Purchaser on the date of
this Agreement and (b) the notification requirements of the HSR Act.
(d) Knowledge and Experience of Purchaser. Purchaser has such
knowledge and experience in financial and business matters that Purchaser
is capable of evaluating the merits and risks of a purchase of the Shares
to be purchased by Purchaser. Purchaser has been given the opportunity to
ask questions of, and receive answers from, Seller and the Companies
concerning the terms and conditions of the Shares to be purchased by it and
other matters pertaining to an investment in the Companies, and has been
given the opportunity to obtain such additional information in order for
Purchaser to evaluate the merits and risks of a purchase of the Shares to
be purchased by Purchaser to the extent Seller and the Companies possess
such information or can acquire it without unreasonable effort or expense.
Purchaser understands and has evaluated the merits and risks of the
purchase of the Shares.
(e) Economic Risk. Purchaser acknowledges and understands that the
Shares to be purchased by it have not been registered under the Securities
Act, or any state securities or blue sky laws and, therefore, cannot be
resold unless such Shares are registered under the Securities Act and under
any applicable state securities or blue sky laws or unless an exemption
from registration thereunder is available. Purchaser is acquiring the
Shares to be purchased by it for its own account for investment, and not
with a view to, or for resale in connection with, the distribution thereof,
and has no present intention of distributing or reselling any of the
Shares. In making the foregoing representation, Purchaser is aware that it
must bear, and it is able to bear, the economic risk of such investment for
an indefinite period of time.
(f) Public Documents. The Purchaser has heretofore delivered to the
Seller, true, complete and accurate copies of the Purchaser's Annual Report
on Form 10-K for the year ended June 30, 1998 (the "Form 10-K"), a
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998,
Current Reports on Form 8-K filed since July 1, 1998, the Purchaser's proxy
statement relating to its special meeting in lieu of the 1997 annual
meeting of its shareholders and all other reports or documents required to
be filed by the Purchaser pursuant to Section 13(a) or 15(d) of the
Exchange Act since the filing of the most recent quarterly report on Form
10-Q (collectively, including all the financial statements contained
therein, the "Disclosure Documents"). The Disclosure Documents have been
prepared, filed and comply in all material respects in accordance with the
rules and regulations promulgated by the Securities and Exchange Commission
(the "Commission") and as of the date of this Agreement, no additional
filing or amendment to any previous filing is required under such rules and
regulations. The Form 10-K fairly summarizes the assets, properties,
business, operations and management of the Purchaser and its
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Subsidiaries as of the date thereof. The Disclosure Documents, as of the
case may be, did not contain any misstatements of a material fact or omit
to state a material fact necessary to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading.
(g) Financial Statements. The audited consolidated financial
statements (including the notes thereto) of the Purchaser and its
Subsidiaries set forth in the Form 10-K fairly present the consolidated
financial position of the Purchaser and its Subsidiaries as of the
respective dates thereof and the results of operations and cash flow for
the respective periods covered thereby in accordance with GAAP (except as
specifically noted therein). The unaudited consolidated financial
statements included in each Form 10-Q, fairly present in all material
respects (subject to normal year-end audit adjustments) the consolidated
financial position of the Purchaser and its Subsidiaries for the respective
periods covered thereby in accordance with GAAP applied on a consistent
basis (other than the footnote disclosure included therewith). Since
September 30, 1998, there have been no changes in the Purchaser's method of
accounting for tax purposes or any other purposes. The financial statements
of the Purchaser as of September 30, 1998, included in the Disclosure
Documents disclose all liabilities of the Purchaser required to be
disclosed therein and contained adequate reserves for taxes and all other
material accrued liabilities as on the date thereof.
(h) Reliance. Purchaser acknowledges that Seller is entering into this
Agreement in reliance upon Purchaser's representations and warranties in
this Agreement.
6. No Brokers. Seller and Purchaser each represent to the other that no
agent, broker or other firm or person is or will be entitled to any broker's or
finder's fees or any other commission or similar fee in connection with the
purchase and sale of the Shares contemplated by this Agreement and respectively
agree to indemnify and hold the other harmless from and against any and all
claims, liabilities or obligations with respect to any such fees, commissions or
expenses asserted by any person on the basis of any act or statement alleged to
have occurred or been made by such party.
7. Survival of Representations and Covenants. All representations and
warranties made by the parties to this Agreement shall survive the Closing for a
period of one year after the Closing hereunder.
8. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by either party without the prior
written consent of the other party. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective heirs, personal representatives, successors and
permitted assigns. Any purported assignment in violation of the foregoing shall
be void.
9. General Provisions.
(a) Specific Performance. The parties hereto acknowledge that damages
would be an inadequate remedy for any breach of the provisions of this
Agreement and agree that the obligations of the parties hereunder shall be
specifically enforceable.
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(b) Expenses. Neither Seller nor Purchaser shall be responsible for
the expenses incurred by the other in connection with this Agreement and
the transactions contemplated hereby.
(c) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(d) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, sent by
overnight courier or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) if to Purchaser, to:
EcoScience Corporation
00 Xxxxx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxxx, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Post Office Box 190
Middletown, New Jersey 07748
(ii) if to Seller, to:
Cogentrix Delaware Holdings, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
with a copy to:
Xxxxxx X. Xxxxxx
Xxxxxxxxxxxx, Xxxxx, Xxxxxxxx & Hay
Suite 2900
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
(e) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
it being understood that all parties need not sign the same counterpart.
(f) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein and therein)
(i) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral,
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between Seller and Purchaser with respect to the subject matter hereof and
(ii) is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of North Carolina.
10. Mandatory Prepayments. If an Event of Default under the Stock Pledge
occurs, the principal and all accrued and unpaid interest on the Note shall
without further act become immediately due and payable in full.
The following shall constitute "Prepayment Events"; (i) Purchaser or any of
its subsidiaries shall incur any indebtedness for borrowed money, (other than
under their respective working capital facilities (a "Debt Event") (ii)
Purchaser or any of its Subsidiaries shall issue any capital stock for cash (a
"Stock Event"), or (iii) Purchaser or any of its Subsidiaries, shall sell any
asset, other than in the ordinary course of business (an "Asset Sale"). Net
Proceeds shall mean (i) in the case of a Debt Event, all cash loan proceeds,
less reasonable transactions expenses, (ii) in the case of a Stock Event, all
cash proceeds, less reasonable transaction expenses and (iii) in the case of an
Asset Sale, all net cash proceeds, after payment of reasonable transactions
expenses and indebtedness required to be repaid by any lien attached to the
related asset, and, only in the case of a sale of the Pocono facility, the
payment of indebtedness to Agro Power Development, Inc. related to the Pocono
facility.
On the day that a Prepayment Event occurs, Purchaser shall pay over to
Seller as a prepayment on the Note, the lesser of the Net Proceeds related to
such Prepayment Event and the principal and interest the outstanding on the
Note. Amounts received by Seller shall be applied first against accrued interest
and the balance against the remaining principal outstanding. If any such payment
shall be sufficient to pay the Note in full, Seller shall on receipt of such
payment, xxxx the Note as cancelled and return the same to Purchaser. If such
payment is not sufficient to pay the Note in full, Seller shall, on receipt of a
new Note, in the form of Exhibit A in a principal amount equal to the
outstanding principal after such payment, surrender to Purchaser the Note then
held by Seller.
11. Restrictions on Sale of Stock Consideration. Seller agrees that until
September 30, 1999 it will not sell or otherwise transfer any shares of the
Stock Consideration without the written consent of Purchaser; provided that no
consent of Purchaser shall be required for Seller to sell (i) up to 250,000
shares of the Stock Consideration after April 1, 1999, (ii) up to 500,000 shares
of the Stock Consideration (including shares sold after April 1, 1999 and prior
to June 30, 1999) after June 30, 1999 or (iii) any number of shares so long as
the Note shall not have been paid in full when due and remains unpaid. Seller
agrees that it will give Purchaser at least seven days prior written notice (a
"Sale Notice") of Seller's intention to sell 100,000 or more shares of the Stock
Consideration in any one transaction. Seller agrees that on receipt of a Sale
Notice, it will not, nor will it permit any of the officers or directors of
Seller or any subsidiary of Seller to execute, or place for execution, any sales
of Common Stock of Seller, until the earlier of (a) the sale of the shares of
Stock Consideration by the Seller shall have been consummated and (b) expiration
of the thirty (30) day period following the receipt of the Sale Notice.
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12. Restrictive Legend. Each certificate representing the shares comprising
the Stock Consideration (the "EcoScience Shares") or any other securities issued
in respect of the EcoScience Shares upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted or unless the securities evidenced by such certificate shall
have been registered under the Securities Act) be stamped or otherwise imprinted
with a legend in substantially the following form (in addition to any legend
required under applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES LAW OR AN OPINION OF COUNSEL FOR OR SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. IN ADDITION, THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFER CONTAINED IN A
STOCK PURCHASE AGREEMENT DATED DECEMBER 4, 1998, A COPY OF WHICH IS ON
FILE AT THE COMPANY'S OFFICES.
At any time after the EcoScience Shares shall have been registered under the
Securities Act or shall be tradable without restriction under this Agreement or
any Rule or Regulation promulgated under the Securities Act, Seller shall, at
Purchaser's request, exchange the certificates held by Purchaser for
certificates that do not contain the foregoing legend.
13. "Market Stand-Off" Agreement. On and after December 1, 1999, if
requested by the Purchaser and an underwriter of common stock (or other
securities) of the Purchaser, Seller shall not sell or otherwise transfer or
dispose of any common stock of the Purchaser held by Purchaser during the ten
(10) day period prior to and the ninety (90) day period following the
anticipated effective date (as notified to Seller in writing by Purchaser) of a
registration statement of the Purchaser filed under the Securities Act, provided
that:
(a) such agreement only applies to such registration statements of the
Purchaser, including securities to be sold on its behalf to the public in a
firm commitment underwritten offering, and Seller owns 5% or more of the
outstanding Common Stock of the Purchaser; and
(b) all other shareholders holding at least 5% of the Common Stock of
Seller and officers and directors of Purchaser enter into similar
agreements.
The Purchaser may impose stop-transfer instructions with respect to the
shares (or securities) subject to the foregoing restrictions during said one
hundred (100) day period.
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IN WITNESS WHEREOF, Seller and Purchaser have each caused this Agreement to
be duly executed as of the date first written above.
PURCHASER:
ECOSCIENCE CORPORATION
By:
-------------------------------------------------
Name:
Title:
SELLER:
COGENTRIX DELAWARE HOLDINGS, INC.
By:
-------------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President - Finance and Treasurer
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APPENDICES
Schedules
Schedule 2(d) - Required Consents
Exhibits
Exhibit A - Form of Promissory Note
Exhibit B - Form of Stock Pledge Agreement
Exhibit C - Form of Registration Rights Agreement
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EXHIBIT A
TO
STOCK PURCHASE AGREEMENT
PROMISSORY NOTE
$20,600,000.00 December ___, 1998
FOR VALUE RECEIVED, the undersigned, ECOSCIENCE CORPORATION, a Delaware
corporation, having its principal place of business at 00 Xxxxx Xxxxx, Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000 (collectively, the "Maker"), hereby promises to pay
to the order of COGENTRIX DELAWARE HOLDINGS, INC., a Delaware corporation,
having its principal place of business at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxxx, XX 00000 (together with his successors and assigns, the "Holder),
the principal sum of TWENTY MILLION, SIX HUNDRED THOUSAND AND NO/100 DOLLARS
($20,600,000.00), together with interest at eleven and a quarter percent
(11.25%) per annum, in one installment payable on the 15th day of March, 1999.
If (i) there should be a default in the payment of interest or principal
due hereunder or (ii) the Maker or any other person liable hereon should make an
assignment for the benefit of creditors or (iii) attachment or garnishment
proceedings are commenced against the Maker or any other person liable hereon,
or (iv) a receiver, trustee or liquidator is appointed over or execution levied
upon any property of the Maker or (v) proceedings are instituted by or against
the Maker or any other person liable hereon under any bankruptcy, insolvency,
reorganization or other law relating to the relief of debtors, including without
limitation the United States Bankruptcy Code, as amended, or (vii) the Maker
makes any misrepresentation or breaches any warranties made to the Holder in
connection with any loans extended by the Holder to the Maker, then, and in each
such event, the Holder may, at its option, without notice or demand, declare the
remaining unpaid principal balance of this Promissory Note and all accrued
interest thereon immediately due and payable in full.
Any amount hereunder which is not paid when due, whether at stated
maturity, by acceleration or otherwise, shall bear interest from the date when
due until paid at the lesser of (a) the foregoing rate per annum plus four
percentage points or (b) the maximum rate permitted by law, said interest to be
compounded annually and computed on the basis of a 360-day year consisting of
twelve 30 day months.
All payments made hereunder shall be made in lawful currency of the United
States of American to Wilmington Trust Company, Wilmington, Delaware, ABA
Routing Number 000-000-000, Account of Cogentrix Delaware Holdings, Inc.,
Account Number 32561-4, Attn: Xxxxxxxxxxx Xxxxxxx, or at such other place as the
Holder may designate in writing. All payments made hereunder, whether a
scheduled payment, prepayment, or payments as a result of acceleration, shall be
allocated first to accrued but unpaid interest, and then to payments of
principal remaining outstanding hereunder.
- 16 -
Maker agrees to pay all reasonable costs of collection, including
attorneys' fees paid or incurred by the Holder in enforcing this Promissory Note
on default or the rights and remedies herein provided.
This Promissory Note is made pursuant to the provisions of the Stock
Purchase Agreement (the "Purchase Agreement") dated as of December 7, 1998,
between the Maker and the Holder. This Promissory Note is secured by a Stock
Pledge Agreement dated as of December ___, 1998, between the Maker and the
Holder. This Promissory Note is subject to mandatory prepayment, in whole or in
part, as provided in the Purchase Agreement. The Maker may prepay this
Promissory Note in whole or in part without premium or penalty.
The Maker, for itself and for any guarantors, sureties, endorsers and/or
any other person or persons now or hereafter liable hereon, if any, hereby
waives demand of payment, presentment for payment, protest, notice of nonpayment
or dishonor and any and all other notices and demands whatsoever, and any and
all delays or lack of diligence in the collection hereof, and expressly consents
and agrees to any and all extensions or postponements of the time of payment
hereof from time to time at or after maturity and any other indulgence and
waives all notice thereof.
This Promissory Note shall be governed by and construed and enforced in
accordance with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the undersigned has duly caused this Promissory Note to
be executed and delivered as of the date first written above.
ECOSCIENCE CORPORATION
By:
--------------------------------------
Name:
Title:
- 17 -
EXHIBIT B
TO
STOCK PURCHASE
AGREEMENT
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Agreement"), entered into as of December
____, 1998, is made by ECOSCIENCE CORPORATION, a Delaware corporation, having
its principal place of business at 00 Xxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx
00000 (the "Pledgor"), to COGENTRIX DELAWARE HOLDINGS, INC., a Delaware
corporation, having its principal place of business at 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxxx, XX 00000 ("Pledgee").
- 18 -
WHEREAS, Pledgor and Pledgee have entered into a Stock Purchase Agreement
(the "Stock Purchase Agreement") dated as of December 7, 1998 pursuant to which
(i) Pledgor has executed a promissory note in favor of Pledgee (the "Note"),
which Note is dated of even date herewith and under the terms of which Pledgor
has agreed to pay to Pledgee the principal sum of TWENTY MILLION, SIX HUNDRED
THOUSAND AND NO/00 Dollars ($20,600,000.00), together with interest on such
principal sum at eleven and one-quarter percent (11.25%) per annum as set forth
therein, on March 15, 1999 and (ii) Pledgee has sold to Pledgor all of the
outstanding shares of common stock (the "Shares") of COGENTRIX OF BUFFALO, INC.
("CBI"), COGENTRIX OF FORT XXXXX I, INC., ("CFDI") COGENTRIX GREENHOUSE
INVESTMENTS, INC., ("CGI"), COGENTRIX OF MARFA, INC., ("CMA") AND COGENTRIX OF
POCONO INC. ("CPI"), each a Delaware corporation (each of CBI, CFDI, CGI, CMI
and CDI are referred to herein as a "Company" and collectively as the
"Companies"). In connection with the Stock Purchase Agreement, Pledgor and
Pledgee have entered into a Registration Rights Agreement (the "Rights
Agreement") of even date herewith. The Stock Purchase Agreement, the Rights
Agreement and the Note are referred to herein collectively as the "Documents".
WHEREAS, Pledgor is the legal and beneficial owner of all of the shares of
common stock, par value _________ per share (the "APD Shares", and together with
the Shares, the "Pledged Shares"), of AGRO POWER DEVELOPMENT, INC. ("APD").
Pledgor has agreed to pledge the Pledged Shares (and during the term of this
Agreement agrees to pledge all Additional Shares (as defined in Section 4.2
hereof)) to the Pledgee to secure the performance by Pledgor of any and all
obligations arising as a result of a default by the Pledgor under any Document.
NOW, THEREFORE, in consideration of the benefits accruing to Pledgor under
the Documents, and in order to induce Pledgee to enter into the Documents,
Pledgor hereby agrees as follows:
1. Security for Obligations. This Agreement is for the benefit of Pledgee
to secure (i) the performance of the obligations of Pledgor under the Documents,
and (ii) all costs and expenses that may be incurred by Pledgee in connection
with the exercise or enforcement of its rights and remedies hereunder (including
reasonable attorneys' fees actually incurred) (all such obligations collectively
being the "Secured Obligations").
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2. Pledge of Shares; etc.
2.1 Pledge. For the purposes set forth in Section 1, Pledgor hereby pledges
the Pledged Shares to Pledgee, together with (i) the certificates representing
such Pledged Shares delivered herewith accompanied by undated stock powers duly
executed in favor of Pledgee by Pledgor, (ii) subject to the rights of Pledgor
set forth in Section 4, all dividends (whether in cash, stock, warrants,
options, or other securities), cash, instruments or other property from time to
time received, receivable or otherwise distributed in respect of, or in exchange
for, any or all of the Pledged Shares pledged by Pledgor hereunder, and (iii)
all cash and non-cash proceeds of the foregoing, and hereby assigns, transfers,
hypothecates and sets over to Pledgee all of Pledgor's right, title and interest
in and to and grants to a Pledgee security interest in the Pledged Shares (and
in and to the certificates or instruments evidencing the items described in
clauses (i), (ii) and (iii) above) to be held by Pledgee, upon the terms and
conditions set forth in this Agreement. Pledgor agrees to deliver to Pledgee all
certificates and instruments evidencing the items described in clauses (ii) and
(iii) above promptly upon Pledgor's receipt thereof.
2.2 Delivery of Pledged Shares. All certificates or instruments
representing or evidencing the Pledged Shares shall be delivered to and held by
or on behalf of the Pledgee, pursuant hereto and shall be in suitable form for
transfer by delivery, duly endorsed and shall be accompanied by duly executed
instruments of transfer or assignments in blank, with signatures appropriately
guaranteed, and accompanied in each case by any required transfer tax stamps,
all in form and substance satisfactory to the Pledgee.
2.3 Definition of Collateral. The Pledged Shares and all items described in
clauses (ii) and (iii) of Section 2.1, including, without limitation, Additional
Shares (as defined in Section 4.2 hereof) are hereinafter called the
"Collateral".
3. Security Interests Absolute. All rights of the Pledgee hereunder, and
all obligations of the Pledgor hereunder, shall be absolute and unconditional
and, without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or release
in respect of any Secured Obligation or any other document securing any
Secured Obligation, by operation of law or otherwise;
(b) any modification or amendment or supplement to the Documents, or
any other document evidencing or securing any Secured Obligation;
(c) any release, non-perfection or invalidity of any other direct or
indirect security for any Secured Obligation;
(d) any change in the existence, structure or ownership of the Pledgor
or any insolvency, bankruptcy, reorganization or other similar proceeding
affecting the
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Pledgor or its assets or any resulting disallowance, release or discharge
of all or any portion of the Secured Obligations;
(e) the existence of any claim, set-off or other right which the
Pledgor may have at any time against the Pledgee or any other corporation
or person, whether in connection herewith or any unrelated transactions;
provided that nothing herein shall prevent the assertion of any such claim
by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability for any reason of any Secured
Obligation relating to or against the Pledgor or any provision of
applicable law or regulation purporting to prohibit the payment by the
Pledgor of the Secured Obligations;
(g) any failure by the Pledgee (i) to file or enforce a claim against
the Pledgor or its estate (in a bankruptcy or other proceeding), (ii) to
give notice of the existence, creation or incurrence by the Pledgor of any
new or additional indebtedness or obligation under or with respect to the
Secured Obligations, (iii) to commence any action against the Pledgor, (iv)
to disclose to the Pledgor any facts which the Pledgee may now or hereafter
know with regard to the Pledgor or (v) to proceed with due diligence in the
collection, protection or realization upon any collateral securing the
Secured Obligations; or
(h) any other act or omission to act or delay of any kind by the
Pledgor, the Pledgee or any other person or any other circumstance
whatsoever which might, but for the provisions of this clause, constitute a
legal or equitable discharge of the Pledgor's obligations hereunder.
4. Right to Receive Distributions on Pledged Collateral; Voting. (a) So
long as no Event of Default shall have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Shares or any part
thereof for any purpose permitted by the terms of this Agreement.
(ii) The Pledgor shall be entitled to receive and retain any and all
dividends, interest and principal paid in cash on the Pledged Shares to the
extent and only to the extent that such cash dividends, interest and
principal are permitted by, and otherwise paid in accordance with,
applicable laws. Other than pursuant to the first sentence of this
paragraph (a)(ii), all principal, all noncash dividends, interest and
principal, and all dividends, interest and principal paid or payable in
cash or otherwise in connection with a partial or total liquidation or
dissolution, return of capital, capital surplus or paid-in surplus, and all
other distributions made on or in respect of Pledged Shares, whether paid
or payable in cash or otherwise, whether resulting from a subdivision,
combination or reclassification or received in exchange for Pledged Shares
or any part thereof, or in redemption thereof, or as a result of any
- 21 -
merger, consolidation, acquisition or other exchange of assets or
otherwise, shall be and become part of the Collateral, and, if received by
the Pledgor, shall not be commingled by the Pledgor with any of his other
funds or property but shall be held separate and apart therefrom, shall be
held in trust for the benefit of the Pledgee and shall be forthwith
delivered to the Pledgee in the form in which received (with any necessary
endorsement).
(iii) The Pledgee shall execute and deliver (or cause to be executed
and delivered) to the Pledgor all such proxies, powers of attorney,
consents, ratifications and waivers and other instruments as the Pledgor
may reasonably request for the purpose of enabling the Pledgor to exercise
the voting and other rights which it is entitled to exercise pursuant to
paragraph (i) above and to receive the dividends or interest payments which
it is authorized to receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of Default:
(i) All rights of the Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain
pursuant to Section 4(a)(ii) shall cease, and all such rights shall
thereupon become vested in the Pledgee which shall thereupon have the sole
right to receive and hold as Collateral such dividends and interest
payments.
(ii) All dividends and interest payments which are received by the
Pledgor contrary to the provisions of paragraph (i) of this Section 4(b)
shall be received in trust for the benefit of the Pledgee, shall be
segregated from other funds of the Pledgor and shall be forthwith paid over
to the Pledgee as Collateral in the same form as so received (with any
necessary endorsement).
After all Events of Default have been cured or waived, the Pledgee shall repay
to the Pledgor an amount equal to the excess, if any, of (A) the aggregate
amount of any dividends and interest payments actually collected by the Pledgee
under clauses (i) and (ii) of this Section 4(b) over (B) the aggregate amount of
such dividends and interest payments applied by the Pledgee pursuant to Section
8.
(c) Upon the occurrence and during the continuance of an Event of Default,
all rights of the Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to Section 4(a)(i)
shall cease, and all such rights shall thereupon become vested in the Pledgee,
which shall thereupon have the sole right to exercise such voting and other
consensual rights. After all Events of Default have been cured or waived, the
Pledgor will have the right to exercise the voting and consensual rights and
powers to which it would otherwise be entitled pursuant to the terms of
paragraph 4(a)(i).
- 22 -
4.2 Additional Shares. In the event that any Company or APD shall issue to
Pledgor, any additional common stock, preferred stock, warrants, options to
purchase unissued stock or other securities (collectively referred to as
"Additional Shares") during the term of this Agreement, Pledgor shall pledge or
cause to be pledged to Pledgee all such Additional Shares during the term of
this Agreement.
5. Events of Default.
5.1 Definition of Events of Default. Any of the following specified events
shall constitute an event of default (each an "Event of Default") under this
Agreement with respect to Pledgor:
(a) the failure of Pledgor to pay when due any amount under the Note;
(b) any representation, warranty or statement made or deemed to be
made by Pledgor under or in connection with this Agreement, the Stock
Purchase Agreement or the Rights Agreement shall have been false or
misleading in any material respect when made or deemed to have been made
and on the date on which such misrepresentation or breach is discovered or
determined; provided, that, no such misrepresentation or breach shall
constitute an Event of Default hereunder if such misrepresentation or
breach is cured within thirty (30) days after the earlier of (i) its
discovery or determination by Pledgor and (ii) notice to Pledgor by Pledgee
and the costs of effecting such cure are not material;
(c) Pledgor shall breach or fail to observe or perform any covenant or
agreement set forth in the Documents;
(d) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (A)
relief in respect of the Pledgor, or of a substantial part of his property
or assets, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (B) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Pledgor, or for a substantial part of his property or assets, or (C) the
winding-up or liquidation of the Pledgor; and such proceeding or petition
shall continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered; or
(e) the Pledgor shall (A) voluntarily commence any proceeding or file
any petition seeking relief under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other Federal, state or
foreign bankruptcy, insolvency, receivership or similar law, (B) consent to
the
- 23 -
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in paragraph (i) above,
(C) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for such party or
for a substantial part of its property or assets, (D) file an answer
admitting the material allegations of a petition filed against it in any
such proceeding, (E) make a general assignment for the benefit of
creditors, (F) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (G) take any action for
the purpose of effecting any of the foregoing.
5.2 Notice and Opportunity to Cure. Except with respect to a failure to
observe or perform any covenant or agreement set forth in Sections 4, 5.1(a), 12
or 15 hereof with respect to which no notice shall be required, Pledgee shall
give Pledgor written notice that an Event of Default has occurred or is
occurring hereunder, and Pledgor shall have ten (10) days (or such longer period
as may otherwise be expressly provided herein) from the receipt of such notice
to cure or cause to be cured the Event of Default. If the Event of Default is
not cured with such period, then Pledgee shall be entitled to exercise the
remedies set forth in Section 5.3 below. Any failure of Pledgee to give notice
to Pledgor upon the occurrence or continuation of an Event of Default shall in
no way be deemed to limit or abridge the rights of Pledgee under this Agreement
or the Documents, including the right of Pledgee to exercise the remedies set
forth in Section 5.3 upon the giving of any notice or opportunity to cure that
is required hereunder.
5.3 Remedies. If an Event of Default shall have occurred and be continuing,
Pledgee shall be entitled to exercise all of the rights, powers and remedies
(whether vested in it by this Agreement or by law and including, without
limitation, all rights and remedies of a secured party of a debtor in default
under the Uniform Commercial Code (the "Code") in effect in the State of North
Carolina at that time) for the protection and enforcement of its rights in
respect of the Collateral relating to the Pledged Shares of Pledgor with respect
to whom an Event of Default has occurred. In addition to, and not in limitation
of the foregoing, Pledgee shall be entitled to exercise the following rights:
(a) to receive all amounts in respect of such Collateral otherwise
payable under Section 4 to Pledgor and to enforce the payment rights
appurtenant to the Pledged Shares and to exercise all of the rights,
powers, and remedies of Pledgor thereunder;
(b) to transfer all or any part of such Collateral into Pledgee's name
or the name of its nominee or nominees;
(c) to vote all or any part of such Collateral (whether or not
transferred into the name of Pledgee) and give all consents, waivers and
ratifications in respect of such Collateral and otherwise act with respect
thereto as though it were the outright owner thereof;
- 24 -
(d) at any time or from time-to-time to sell, assign and deliver, or
grant options to purchase, all or any part of such Collateral, or any
interest therein, at any public or private sale at any exchange, broker's
board or elsewhere, without demand of performance, advertisement or notice
of intention to sell or of the time or place of sale or adjournment thereof
or to redeem or otherwise (all of which are hereby expressly and
irrevocably waived by Pledgor), for cash, on credit or for other property,
for immediate or future delivery without any assumption of credit risk, and
for such price or prices and on such terms as Pledgee in its sole
discretion may determine. Pledgor agrees that to the extent that notice of
sale shall be required by any applicable law, ten (10) days' notice to a
Pledgor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification.
Pledgee shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. Pledgee may adjourn any public or private
sale from time-to-time by announcement at the time and place fixed
therefor, and any such sale may, without further notice, be made at the
time and place to which it was so adjourned. Pledgor hereby waives and
releases to the fullest extent permitted by law any right or equity of
redemption with respect to the Collateral, whether before or after sale
hereunder. At any such sale, unless prohibited by applicable law, Pledgee
may bid for and purchase all or any part of the Collateral so sold free
from any such right or equity of redemption. Pledgee shall not be liable
for failure to collect or realize upon any or all of the Collateral or for
any delay in so doing, nor shall it be under any obligation to take any
action whatsoever with regard thereto;
(e) to settle, adjust, compromise and arrange all accounts,
controversies, questions, claims and demands whatsoever in relation to all
or any part of such Collateral;
(f) to execute all contracts, agreements, documents and instruments to
bring, defend and abandon all such actions, suits and proceedings and to
take all other actions in relation to all or any part of such Collateral as
Pledgee in its sole discretion may determine;
(g) to appoint agents for any of the purposes mentioned in the
foregoing provisions of this Section 5.3 and to dismiss the same, all as
Pledgee in its sole discretion may determine; and
(h) generally, to take all such other action as Pledgee may determine
as incidental or conducive to any of the matters or powers mentioned in the
foregoing provisions of this Section 5.3 and which Pledgee may or can do
lawfully and to use the name of Pledgor for the purposes aforesaid and in
any proceedings arising therefrom.
- 25 -
5.4. Additional Rights of the Pledgee. Upon the occurrence and during the
continuance of an Event of Default:
(a) The Pledgee shall have the right and power to institute and maintain
such suits and proceedings as it may deem appropriate to protect and enforce the
rights vested in it by this Agreement and may proceed by suit or suits at law or
in equity to enforce such rights and to foreclose upon and sell the Collateral
or any part thereof pursuant to the judgment or decree of a court of competent
jurisdiction.
(b) The Pledgee shall, to the extent permitted by law and without regard to
the solvency or insolvency at the time of any person then liable for the payment
of any of the Secured Obligations or the then value of the Collateral, and
without requiring any bond from any party to such proceedings, be entitled to
the appointment of a special receiver or receivers (who may be the Pledgee) for
the Collateral or any part thereof and for the rents, issues, tolls, profits,
royalties, revenues and other income therefrom, which receiver shall have such
powers as the court making such appointment shall confer, and to the entry of an
order directing that the rents, issues, tolls, profits, royalties, revenues and
other income of the property constituting the whole or any part of the
Collateral be segregated, sequestered and impounded for the benefit of the
Pledgee, and the Pledgor irrevocably consents to the appointment of such
receiver or receivers and to the entry of such order.
5.5. Securities Act, etc. In view of the position of the Pledgor in
relation to the Pledged Shares, or because of other present or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such Act and any such similar statute as from time to time in
effect being herein called the "Federal Securities Laws"), with respect to any
disposition of the Pledged Shares permitted hereunder. The Pledgor understands
that compliance with the Federal Securities Laws might very strictly limit the
course of conduct of the Pledgee if the Pledgee were to attempt to dispose of
all or any part of the Pledged Shares, and might also limit the extent to which
or the manner in which any subsequent transferee of any such Pledged Shares
could dispose of the same. Similarly, there may be other legal restrictions or
limitations affecting the Pledgee in any attempt to dispose of all or part of
the Pledged Shares under applicable Blue Sky or other state securities laws or
similar laws analogous in purpose or effect.
Accordingly, the Pledgor expressly agrees that the Pledgee is authorized,
in connection with any sale of the Pledged Shares, if it deems it advisable so
to do, (i) to restrict the prospective bidders on or purchasers of any of the
Pledged Shares to a limited number of sophisticated investors who will represent
and agree that they are purchasing for their own account for investment and not
with a view to the distribution or sale of any of such Pledged Shares, (ii) to
cause to be placed on certificates for any or all of the Pledged Shares or on
any other securities pledged hereunder a legend to the effect that such security
has not been registered under the Federal Securities Laws and may not be
disposed of in violation of the provision of the Federal Securities Laws and
(iii) to impose such other limitations or conditions in connection with any such
sale as the Pledgee deems necessary or advisable in order to comply with the
Federal Securities Laws or any other law. The Pledgor covenants and agrees that
it will execute and deliver such documents and take such
- 26 -
other action as the Pledgee deems necessary or advisable in order to comply with
the Federal Securities Laws or any other law in connection with any private sale
of the Pledged Shares. The Pledgor acknowledges and agrees that such limitations
may result in prices and other terms less favorable to the seller than if such
limitations were not imposed, and, notwithstanding such limitations, agrees that
any such sale shall be deemed to have been made in a commercially reasonable
manner, it being the agreement of the Pledgor and the Pledgee that the
provisions of this Section 5.5 will apply notwithstanding the existence of a
public or private market upon which the quotations or sales prices may exceed
substantially the price at which the Pledgee sells the Pledged Shares. The
Pledgee shall be under no obligation to delay a sale of any Pledged Shares for a
period of time necessary to permit the issuer of any securities contained
therein to register such securities under the Federal Securities Laws, or under
applicable state securities laws, even if the issuer would agree to do so.
5.6. Remedies Not Exclusive. (a) No remedy conferred upon or reserved to
the Pledgee in this Agreement is intended to be exclusive of any other remedy or
remedies, but every such remedy shall be cumulative and shall be in addition to
every other remedy conferred herein or now or hereafter existing at law, in
equity or by statute.
(b) If the Pledgee shall have proceeded to enforce any right, remedy or
power under this Agreement and the proceeding for the enforcement thereof shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Pledgee, the Pledgor and the Pledgee shall, subject to any
determination in such proceeding, severally and respectively be restored to
their former positions and rights under this Agreement, and thereafter all
rights, remedies and powers of the Pledgee shall continue as though no such
proceedings had been taken.
(c) All rights of action under this Agreement may be enforced by the
Pledgee without the possession of any instrument evidencing any Secured
Obligation or the production thereof at any trial or other proceeding relative
thereto, and any suit or proceeding instituted by the Pledgee shall be brought
in its name and any judgment shall be held as part of the Collateral.
5.7 Transfer in lieu of Foreclosure. Pledgee agrees that in lieu of any
other remedy available to Pledgor hereunder or at law or equity, so long as an
Event of Default has occurred and is continuing, Pledgor may in its sole
discretion elect to transfer the Shares to its own name, or the name of its
nominee, cancel the Note, release Pledgor from the remaining Secured Obligations
and release the remaining Collateral from the lien of this Agreement. Upon such
transfer and releases, legal and beneficial ownership in the Shares shall
automatically vest in Pledgee, free and clear of any claim, including any right
or equity of redemption of Pledgor. Pledgor agrees that the exercise of Pledgee
of its rights under this Section 5.7 is strictly in the nature of a remedy, and
shall in no way constitute a recession of the Stock Purchase Agreement. Pledgor
agrees that Pledgee shall have the absolute right to retain the Stock
Consideration, (as defined in the Stock Purchase Agreement), as consideration of
the releases granted by Pledgee under this Section 5.7 and as liquidated
damages, and not as a penalty, for Pledgor's breach.
- 27 -
6. Waiver and Estoppel. (a) The Pledgor, to the extent it may lawfully do
so, agrees that it will not at any time in any manner whatsoever claim or take
the benefit or advantage of any appraisement, valuation, stay, extension,
moratorium, turnover or redemption law, or any law now or hereafter in force
permitting it to direct the order in which the Collateral shall be sold which
may delay, prevent or otherwise affect the performance or enforcement of this
Agreement and the Pledgor hereby waives the benefits or advantage of all such
laws, and covenants that it will not hinder, delay or impede the execution of
any power granted to the Pledgee in this Agreement but will permit the execution
of every such power as though no such law were in force; provided that nothing
contained in this Section 6 shall be construed as a waiver of any rights of the
Pledgor under any applicable Federal bankruptcy law.
(b) The Pledgor, to the extent it may lawfully do so, on behalf of itself
and all who may claim through or under it, including any and all subsequent
creditors, vendees, assignees and lienors, waives and releases all rights to
demand or to have any marshalling of the Collateral upon any sale, whether made
under any power of sale granted herein or pursuant to judicial proceedings or
upon any foreclosure or any enforcement of this Agreement and consents and
agrees that all of the Collateral may at any such sale be offered and sold as an
entirety.
(c) The Pledgor, to the extent it may lawfully do so, waives presentment,
demand, protest and any notice of any kind (except notices explicitly required
under any document) in connection with this Agreement and any action taken by
the Pledgee with respect to the Collateral.
7. Power of Attorney. The Pledgor hereby irrevocably constitutes and
appoints the Pledgee, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Pledgor and in the name of the Pledgor or in its own name, from
time to time in the Pledgee's discretion for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement and, without limiting the generality
of the foregoing, hereby gives the Pledgee the power and right, on behalf of the
Pledgor, without notice to or assent by the Pledgor to do the following:
(a) upon the occurrence and during the continuance of any Event of
Default, to pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against the Collateral; and
(b) upon the occurrence and during the continuance of any Event of
Default and otherwise to the extent provided in this Agreement, (i) to
direct any party liable for any payment under any of the Collateral to make
payment of any and all moneys due and to come due thereunder directly to
the Pledgee or as the Pledgee shall direct; (ii) to receive payment of and
receipt for any and all moneys, claims and other amounts due and to become
due at any time in respect of or arising out of any
- 28 -
Collateral; (iii) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to enforce any other right in
respect of any Collateral; (iv) to defend any suit, action or proceeding
brought against the Pledgor with respect to any Collateral; (v) to settle,
compromise and adjust any suit, action or proceeding described above and,
in connection therewith, to give such discharges or releases as the Pledgee
may deem appropriate; and (vi) generally to sell, transfer, pledge, make
any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Pledgee were the absolute owner
thereof for all purposes, and to do, at the option of the Pledgee and the
Pledgor's expense, at any time, or from time to time, all acts and things
which the Pledgee deems necessary to protect, preserve or realize upon the
Collateral and the Pledgee's security interest therein, in order to effect
the intent of this Agreement, all as fully and effectively as the Pledgor
might do.
The Pledgor hereby ratifies all that such attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable, provided, however, that this power of
attorney shall terminate immediately upon the satisfaction of the Secured
Obligations.
Except as provided by law or the Code or its equivalent, nothing herein
contained shall be construed as requiring or obligating the Pledgee to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment
received by the Pledgee, or to present or file any claim or notice, or to take
any action with respect to the Collateral or any part thereof or the moneys due
or to become due in respect thereof or any property covered thereby, and the
Pledgee shall not be liable hereunder for any action taken by the Pledgee or
omitted to be taken with respect to the Collateral or any part thereof (other
than any action or inaction that a court of competent jurisdiction shall have
determined by final and nonappealable judgment to constitute gross negligence or
willful misconduct). The provisions of this Section 7 shall in no event relieve
the Pledgor of any of his obligations hereunder with respect to the Collateral
or any part thereof or impose any obligation on the Pledgee to proceed in any
particular manner with respect to the Collateral or any part thereof, or in any
way limit the exercise by the Pledgee of any other or further right which it may
have on the date of this Agreement or hereafter, whether hereunder or by law or
otherwise.
8. Application of Proceeds. All moneys collected by Pledgee upon any sale,
collection or other disposition of the Collateral, together with all other
moneys received by Pledgee hereunder, shall be applied as follows:
First, to the payment of the reasonable costs and expenses of such
sale, collection or other realization, including, without limitation,
reasonable attorneys' fees and all other reasonable expenses, liabilities
and advances actually made or incurred by Pledgee in connection therewith;
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Second, to the payment in full of all obligations owing to Pledgee
under the Secured Obligations; and
Third, to the Pledgor, or its successors or assigns, or to whomsoever
may be lawfully entitled to receive the same, or as a court of competent
jurisdiction may direct, any surplus then remaining from such proceeds.
(b) The Pledgee shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement.
9. Purchasers of Collateral. Upon any sale of any of the Collateral
hereunder (whether by virtue of the power of sale herein granted, pursuant to
judicial process or otherwise), the receipt by Pledgee or the officer making the
sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold, and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to Pledgee or
such officer or be answerable in any way for the misapplication or
nonapplication thereof.
10. Further Assurances. Pledgor agrees that it will do such acts and things
and promptly execute and deliver to Pledgee such additional conveyances,
assignments, agreements and instruments as Pledgee may reasonably require or
deem advisable to carry into effect the purposes of this Agreement or to further
assure and confirm unto Pledgee its rights, powers and remedies hereunder.
11. Representations and Warranties. Pledgor hereby represents and warrants
that: (i) the Pledged Shares are subject to no liens or other encumbrances,
except liens and security interests created by this Agreement or expressly
permitted by this Agreement or the Documents; (ii) it has legal capacity, power
and right to pledge all of the Pledged Shares pledged by it pursuant to this
Agreement; (iii) except as contemplated by the Stock Purchase Agreement no
consent of any other party (including, without limitation, any creditor of
Pledgor), and no order, consent, license, permit, approval, validation or
authorization of, exemption by, notice to or registration, recording, filing or
declaration with, any governmental or public body or authority, is required to
be obtained by Pledgor in connection with the execution, delivery or performance
of this Agreement or consummation of the transactions contemplated hereby,
including, without limitation, the exercise by Pledgee of the voting or other
rights provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement (except as may be required in connection
with the disposition of the Pledged Shares by laws affecting the offering and
sale of securities generally); (iv) the pledge and delivery of the Pledged
Shares pursuant to this Agreement creates a valid and perfected first priority
security interest in the Pledged Shares, and the proceeds thereof, which
security interest is not subject to any prior lien permitted by Pledgor or any
agreement purporting to grant to any third party a lien on the property or
assets of Pledgor which would include the Pledged Shares; and (v) Pledgor is the
sole beneficial owner of the Pledged Shares. All Pledged Shares have been duly
authorized and validly issued and are fully paid and nonassessable. None of the
Pledged Shares is subject to options to purchase or similar rights of any
person. The Pledgor is not and will not
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become a party to or otherwise bound by any agreement, other than this
Agreement, which restricts in any manner the rights of any present or future
holder of any of the Pledged Shares with respect thereto.
12. Covenants of Pledgor. Pledgor covenants and agrees that it will not,
with respect to any Collateral, without the prior written consent of Pledgee,
enter into any shareholder agreements, voting agreements, voting trusts, trust
deeds, irrevocable proxies or any other similar agreements or instruments.
13. Payment of Taxes, etc. The Pledgor will pay all taxes, assessments and
other governmental charges or levies imposed upon the Collateral or in respect
of any of its income or profits therefrom when the same become due and payable,
but in any event before any penalty or interest accrues thereon, and all claims
(including claims for labor, services, materials and supplies) for sums which
have become due and payable and which by law have or might become a Lien upon
any of his properties or assets, and promptly reimburse the Pledgee for any such
taxes, assessments, charges or claims paid by them; provided that no such tax,
assessment, charge or claim need be paid or reimbursed if being contested in
good faith by appropriate proceedings promptly initiated and diligently
conducted and if such reserves or other appropriate provision, if any, as shall
be required by generally accepted accounting principles ("GAAP") shall have been
made therefor and be adequate in the good faith judgment of the Pledgor.
14. Limitation on Liens on Collateral. The Pledgor will not create, permit
or suffer to exist, but will defend the Collateral and the Pledgor's rights with
respect thereto against and take such other action as is necessary to remove,
any security interest, encumbrance, claim or other Lien in respect of the
Collateral.
15. Limitations on Dispositions of Collateral. The Pledgor will not,
directly or indirectly, sell, transfer, lease or otherwise dispose of any of the
Collateral (or any interest therein), or attempt, offer or contract to do so.
The inclusion of proceeds of the Collateral under the security interest granted
hereby shall not be deemed a consent by the Pledgee to any sale or disposition
of any Collateral.
16. Notices. The Pledgor will advise the Pledgee promptly and in reasonable
detail, (a) of any security interest, encumbrance or claim made or other Lien
asserted against any of the Collateral, (b) of any material change in the
composition of the Collateral and (c) of the occurrence of any other event which
would have a material effect on the aggregate value of the Collateral or on the
security interests granted to the Pledgee in this Agreement.
17. Change of Law. The Pledgor shall promptly notify the Pledgee in writing
of any change in law known to it which (i) adversely affects or will adversely
affect the validity, perfection or priority of the security interests granted
hereby, (ii) requires or will require a change in the procedures to be followed
in order to maintain and protect such validity, perfection and priority or (iii)
could result in the Pledgee not having a perfected security interest in any of
the Collateral.
- 31 -
18. Notices, etc. All notices and other communications hereunder shall be
given in accordance with Section 9(d) of the Stock Purchase Agreement.
19. Partial Release of Collateral; Termination. Upon payment in full of the
Note, and so long as the registration statement referred to in Section 2(a) of
the Rights Agreement shall have been filed by Pledgor and Pledgor is diligently
pursuing the effectiveness of such registration statement, Pledgee shall, at
Pledgor's written request, release the APD Shares from the lien of this
Agreement and return the certificates representing the APD Shares to Pledgor, at
Pledgor's expense. Upon the full satisfaction of the Secured Obligations this
Agreement shall terminate, and Pledgee will execute and deliver to Pledgor a
proper instrument or instruments acknowledging the satisfaction and termination
of Pledgor's obligation and will duly assign, transfer and deliver to Pledgor
(without recourse and without representation or warranty) such of the
Collateral, including the Pledged Shares, as may be in the possession or under
the control or direction of Pledgee and which has not theretofore been sold or
otherwise applied pursuant to this Agreement, together with any moneys with
respect thereto held by or under the control or direction of Pledgee at that
time pursuant to this Agreement.
20. Survival of Agreement. All covenants, agreements, representations and
warranties made by the Pledgor herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement shall be considered to have been relied upon by the Pledgee regardless
of any investigation made by the Pledgee, and shall continue in full force and
effect until the Secured Obligations have been indefeasibly paid in full.
21. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Agreement shall be
effective with respect to the Pledgor when a counterpart hereof which bears the
signature of the Pledgor shall have been delivered to the Pledgee.
22. Amendments, Etc. No amendment, modification or waiver of any provision
of this Agreement and no consent to any departure by the Pledgor therefrom shall
in any event be effective unless the same shall be in a writing, executed and
delivered by Pledgor and Pledgee, and then such amendment, modification, waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
23. Assignments. This Agreement and the terms, covenants and conditions
hereof shall be binding upon the Pledgor and its successors and shall inure to
the benefit of the Pledgee and its successors and assigns. The Pledgor shall not
be permitted to assign, transfer or delegate any of its rights or obligations
under this Agreement (and any such purported assignment, transfer or delegation
without such consent shall be void).
24. Savings Clause. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect with respect to the Pledgor, no party hereto shall be required to
comply with such provision with respect
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to the Pledgor for so long as such provision is held to be invalid, illegal or
unenforceable, and the validity, legality and enforceability of the remaining
provisions contained herein, and of such invalid, illegal or unenforceable
provision with respect to any other party, shall not in any way be affected or
impaired. The parties shall endeavor in good-faith negotiations to replace any
invalid, illegal or unenforceable provisions with valid provisions, the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
25. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NORTH CAROLINA.
26. Entire Agreement. This Agreement and the Documents constitute the
entire contract between the parties relative to the subject matter hereof. Any
previous agreement among the parties with respect to the subject matter hereof
is superseded by this Agreement and the Documents. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party other than the
parties hereto, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
27. No Waiver. No failure on the part of the Pledgee to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by such person preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.
28. Submission to Jurisdiction. (a) The Pledgor hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any North Carolina State court or Federal court of the United
States of America sitting in Charlotte, North Carolina, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Documents, or for recognition or enforcement of any
judgment, and hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
North Carolina State or, to the extent permitted by law, in such Federal court.
Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Pledgee may otherwise have to bring
any action or proceeding relating to this Agreement or the other Documents
against the Pledgor or his properties in the courts of any jurisdiction.
(b) The Pledgor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Documents in any North
Carolina State court or Federal court of the United States of America sitting in
Charlotte, North Carolina. Each of the parties hereto hereby irrevocably waives,
to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
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(c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 18. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
33. NO ORAL AGREEMENTS. THIS AGREEMENT AND THE INSTRUMENTS AND DOCUMENTS
EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
- 34 -
IN WITNESS WHEREOF, Pledgor and Pledgee have executed, or caused to be
executed by their duly authorized officers, this Agreement as an instrument
under seal as of the date first above written.
PLEDGEE:
COGENTRIX DELAWARE HOLDINGS, INC.
By:
------------------------------
Name:
Title:
PLEDGOR:
ECOSCIENCE CORPORATION
By:
------------------------------
Name:
Title:
- 35 -
EXHIBIT C
TO
STOCK PURCHASE AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of December ___, 1998 by and among ECOSCIENCE CORPORATION, a Delaware
corporation (the "Company"), and COGENTRIX DELAWARE HOLDINGS, INC. ("CDH").
This Agreement is made pursuant to the Stock Purchase Agreement dated as of
December 7, 1998 (the "Stock Purchase Agreement"), by and between the Company
and CDH.
Pursuant to the Stock Purchase Agreement, CDH will receive shares (the
"Shares") of common stock, $.01 par value (the "Common Stock"), of the Company
on December 31, 1998 (the "Delivery Date").
In order to induce CDH to enter into the Stock Purchase Agreement, the
Company has agreed to provide to CDH and their direct and indirect transferees
the registration rights with respect to the Registrable Shares (as defined
below) set forth in this Agreement. The execution of this Agreement is a
condition to the closing under the Stock Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms shall
have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time to
time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended from
time to time.
"CDH" shall have the meaning set forth in the preamble.
"Common Stock" shall have the meaning set forth in the preamble.
"Company" shall have the meaning set forth in the preamble and shall also
include the Company's successors.
- 36 -
"Delivery Date" shall have the meaning set forth in the preamble.
"Holder" shall mean a holder of Registrable Shares.
"Interested Persons" shall mean the Holders of Registrable Shares included
within the coverage of the Shelf Registration.
"Majority Holders" shall mean the Holders of a majority of the outstanding
Registrable Shares.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Shares covered by a Shelf Registration Statement, and by all other
amendments and supplements to such prospectus, and in each case including all
material incorporated by reference therein.
"Registrable Shares" shall mean (i) the Shares and (ii) any Common Stock
issued or issuable with respect to the capital stock referred to in clause (i)
above by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization; provided, however, that the Shares shall cease to be Registrable
Shares (i) when a Shelf Registration Statement with respect to such Shares shall
have been declared effective under the 1933 Act and such Shares shall have been
disposed of pursuant to such Shelf Registration Statement, (ii) when such Shares
have been sold to the public pursuant to Rule 144(k) (or any similar provision
then in force, but not Rule 144A) under the 1933 Act or (iii) when such Shares
shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC (as defined below), stock exchange, automated
quotation system or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all fees and expenses incurred in connection
with compliance with state securities or blue sky laws (including reasonable
fees and disbursements of counsel for any Underwriters (as defined below) in
connection with blue sky qualification of any of the Registrable Shares), (iii)
all expenses of any Persons retained by the Company in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, any amendments or supplements thereto, any
underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement, (iv) the fees
and disbursements of counsel for the Company and (v) the fees and disbursements
of the independent public accountants of the Company and any Person, including
special experts, retained by the Company (including the expenses of any special
audits or "cold comfort" letters required by or incident to such performance and
compliance)
- 37 -
but excluding fees and expenses of counsel to the Underwriters (other than fees
and expenses set forth in clause (ii) above) or the Holders and underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Shares by a Holder.
"Registration Statement" shall mean any registration statement of the
Company that covers any of the Shares pursuant to the provisions of this
Agreement and all amendments and supplements to any such Registration Statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant to Section
2(a) hereof on any applicable registration form.
"Shelf Registration Statement" shall mean a "shelf" registration statement
of the Company pursuant to the provisions of Section 2(a) of this Agreement
which covers all of the Registrable Shares on an appropriate form under Rule 415
under the 1933 Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Stock Purchase Agreement" shall have the meaning set forth in the
preamble.
"Transfer Agent" shall mean [ ] or any successor
transfer agent appointed by the Company.
"Underwriters" shall have the meaning set forth in Section 3 hereof.
"Underwritten Registration" or "Underwritten Offering" shall mean a
registered offering in which Registrable Shares are sold to an Underwriter for
reoffering to the public.
2. Registration Under the 1933 Act.
(a) As promptly as reasonably possible, the Company shall prepare and file
with the SEC the Shelf Registration Statement relating to all of the Registrable
Shares. The Company shall use its commercially reasonable efforts to (i) cause
such Shelf Registration Statement to be declared effective by the SEC at the
earliest practicable time, but in no event later than March 16, 1999 and (ii)
keep such Shelf Registration Statement effective until the earlier of (A) the
sale by the Holders of all the Registrable Shares relating to such Shelf
Registration Statement, (B) the date upon which the Registrable Shares may be
sold without registration under Rule 144(k) promulgated under the 1933 Act
("Rule 144(k)) or (C) three years after the date the Shelf Registration
Statement is declared effective; provided, however, that no Holders shall be
entitled to have Registrable Shares held by such Holder
- 38 -
covered by such Shelf Registration Statement unless the Holder agrees to be
bound by all of the provisions of this Agreement applicable to such Holder; and
provided, further, that, if for any reason the effectiveness of the Shelf
Registration Statement is suspended, the period set forth in clause (B) above
shall be extended by the aggregate number of days of each suspension period.
The Company further agrees to supplement or amend the Shelf Registration
Statement as required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement
or by the 1933 Act or by any other rules and regulations thereunder for shelf
registration or if reasonably requested by a Holder with respect to information
relating to such Holder, the Company agrees to furnish the Holder of the
Registrable Shares copies of any such supplement or amendment prior to its being
used and/or filed with the SEC, and to use its commercially reasonable efforts
to cause any such amendment to become effective and such Shelf Registration
Statement to become usable as soon as practicable thereafter. The Company agrees
to furnish to the Holders of Registrable Shares copies of any such supplement or
amendment promptly after its being used or filed with the SEC.
(b) The Company shall pay all Registration Expenses in connection with the
registration pursuant to Section 2(a) or (e), whether or not it becomes
effective. Each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Shares pursuant to the Shelf Registration Statement.
(c) A Shelf Registration Statement pursuant to Section 2(a) hereof will not
be deemed to have become effective unless it has been declared effective by the
SEC; provided, however, that if, after it has been declared effective, the
offering of Registrable Shares pursuant to a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
will be deemed not to have been effective during the period of such interference
until the offering of Registrable Shares pursuant to such Registration Statement
may legally resume. If the Shelf Registration Statement is not declared
effective by the SEC on or prior to March 16, 1999, each Holder shall have the
right thereafter to sell to the Company upon demand and the Company shall buy
from such Holder on or prior to the third business day following the date of
such demand, as many Registrable Shares as such Holder shall elect (but, if the
Note shall have been paid in full when due, in no event more than the number of
shares that may be sold without the consent of the Company under Section 11 of
the Stock Purchase Agreement) from time to time, until the Shelf Registration
Statement shall have been declared effective at a purchase price equal to the
greater of $4.00 and the closing price for the Common Stock on the National
Association of Securities Dealers Automated Quotations System on the day prior
to such sale.
(d) Without limiting the remedies available to the Interested Persons, the
Company acknowledges that any failure by the Company to comply with its
obligations under Section 2(a) hereof may result in material irreparable injury
to the Interested Persons for which there
- 39 -
is no adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of any such failure, the
Interested Persons may obtain such relief as may be required to specifically
enforce the Company's obligations under Section 2(a).
(e) Piggyback Registrations
(i) Right to Piggyback. If at any time upon the earlier to occur of: (i)
after 60 days subsequent to the termination of the effectiveness of the Shelf
Registration Statement effected pursuant to Section 2 prior to the expiration of
the periods set forth in Section 2(a)(ii), or (ii) if the Shelf Registration
Statement has not been declared effective on or before March 16, 1999, and the
Company proposes to file a registration statement under the 1933 Act (except on
Form X-0, Xxxx X-0 or any successor forms thereto), whether or not for its own
account (other than a registration effected pursuant to Section 2.a hereof),
then the Company shall give written notice of such proposed filing to Holders at
least thirty days before the anticipated effective date (the "Piggyback
Notice"). The Piggyback Notice shall offer such holders the opportunity to
register such amount of Registerable Shares as each such holder may request (a
"Piggyback Registration"). Any such request shall be made by the Holder no later
than 10 days after receipt of the Piggyback Notice. Subject to Section 2(e)(ii)
hereof, the Company shall include in each such Piggyback Registration all
Registrable Shares requested to be included in the registration for such
offering. The holders of Registrable Shares shall be permitted to withdraw all
or part of the Registrable Shares from a Piggyback Registration at any time
prior to the effective date of such Piggyback Registration.
(ii) Priority on Piggyback Registrations. Subject to any rights that have
been granted to security holders of the Company prior to the date hereof (the
"Prior Rights"). The Company shall cause the managing underwriters of a proposed
underwritten offering to permit holders of Registrable Shares requested to be
included in the registration for such offering to include all such Registrable
Shares on the same terms and conditions as any similar securities, if any, of
the Company or any selling security holder included. Notwithstanding the
foregoing, if the managing underwriters of such underwritten offering determines
in good faith that the total number of securities that such Holders, the
Company, and any other person having rights to participate in such registration,
propose to include in such offering is such as to materially and adversely
affect the success of such offering, then, subject to the Prior Rights, (x) if
such Piggyback Registration is a primary registration on behalf of the Company,
the securities to be offered (i) for the account of all such other persons shall
be reduced or limited pro rata in proportion to the respective dollar amounts of
securities owned to the extent necessary to reduce the total number of
securities to be included in such offering to the amount recommended by such
managing underwriters, and (y) if such Piggyback Registration is an underwritten
secondary registration on behalf of the holders of securities of the Company,
the Company shall include in such registration: (A) first, up to the full number
of securities of such persons exercising "demand" registration rights that in
the opinion of such underwriter can be sold (allocated among such holders as
they may so determine), and (B) second, the number of securities included in
such registration pursuant to this Section 2.2 in excess of the securities such
persons exercising
- 40 -
"demand" registration rights proposed to sell that, in the opinion of such
managing underwriter, can be sold (allocated pro rata on the basis of the
aggregate dollar amount of securities requested to be included therein). The
rights granted under this Section 2(e) may only be exercised by a Holder in a
non-underwritten offering, if Rule 144(k) (or any successor rule) is not then
available for the sale of the Holder's Registrable Shares.
3. Registration Procedures
In connection with the obligations of the Company with respect to the Shelf
Registration Statement pursuant to Section 2(a) hereof, the Company shall as
soon as reasonably possible:
(a) prepare and file with the SEC a Shelf Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by the
Company and (y) shall be available for the sale of the Registrable Shares by the
selling Holders thereof, and which Shelf Registration Statement shall comply as
to form in all material respects with the requirements of the applicable form
and include all financial statements by the SEC to be filed therewith, and the
Company shall use commercially reasonable efforts to cause such Shelf
Registration Statement to become effective and remain effective in accordance
with Section 2 hereof, and upon the occurrence of any event that would cause any
such Shelf Registration Statement or the Prospectus contained therein (A) to
contain a material misstatement or omission or (B) not to be effective and
usable during the period required by this Agreement, the Company shall file
promptly an appropriate amendment to such Shelf Registration Statement, in the
case of clause (A), correcting any such misstatement or omission, and, in the
case of either clause (A) or (B), use its best efforts to cause such amendment
to be declared effective and such Shelf Registration Statement and the related
Prospectus to become usable for their intended purpose(s) as soon as practicable
thereafter;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Shelf Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period and cause each
Prospectus to be supplemented by any required prospectus supplement and, as so
supplemented, to be filed pursuant to Rule 424 under the 1933 Act and to keep
each Prospectus current during the period described under Section 4(3) and Rule
174 under the 1933 Act that is applicable to transactions by brokers or dealers
with respect to the Registrable Shares;
(c) furnish to the Interested Persons, and to each Underwriter of an
Underwritten Offering of Registrable Shares, if any, without charge, as many
copies, which copies may be photocopies, of each Prospectus, including each
preliminary Prospectus, and any amendment or supplement thereto and such other
documents as such Interested Persons or Underwriter may reasonably request, in
order to facilitate the public sale or other disposition of the Registrable
Shares; and the Company consents to the use of such Prospectus and any amendment
or supplement thereto in accordance with applicable law by each of the
Interested Persons and any such Underwriters in connection with the offering and
sale of the Registrable Shares covered by and in the manner described in such
Prospectus or any amendment or supplement thereto in accordance with applicable
law;
- 41 -
(d) use its commercially reasonable efforts to register or qualify, by the
time the Shelf Registration Statement is declared effective by the SEC, the
Registrable Shares under all applicable state securities or "blue sky" laws of
such jurisdictions in which any Holder of Registrable Shares covered by the
Shelf Registration Statement reasonably requests, to cooperate with such Holder
in connection with any filings required to be made with the National Association
of Securities Dealers, Inc. and do any and all other acts and things which may
be reasonably necessary or advisable to enable such Holder to consummate the
disposition in each such jurisdiction of such Registrable Shares owned by such
Holder; provided, however, that the Company shall not be required to (i) qualify
as a foreign corporation or as a dealer in securities in any jurisdiction where
it would not otherwise be required to qualify but for this Section 3(d), (ii)
file any general consent to service of process or (iii) subject itself to
taxation in any such jurisdiction if it is not otherwise so subject;
(e) notify the Interested Persons promptly and, if requested by any of the
Interested Persons, confirm such advice in writing (i) when a Shelf Registration
Statement has become effective and when any post-effective amendment thereto has
been filed and becomes effective, (ii) of any request by the SEC or any state
securities authority for amendments and supplements to the Shelf Registration
Statement and Prospectus or for additional information after the Shelf
Registration Statement his become effective, (iii) of the issuance by the SEC or
any state securities authority of any stop order suspending the effectiveness of
the Shelf Registration Statement or the initiation of any proceedings for that
purpose, (iv) if, between the effective date of the Shelf Registration Statement
and the closing of any sale of Registrable Shares covered thereby, the
representations and warranties of the Company contained in any underwriting
agreement, securities sales agreement or other similar agreement, if any,
relating to the offering cease to be true and correct in all material or if the
Company receives any notification with respect to the suspension of the
qualification of the Registrable Shares for sale in any jurisdiction or the
initiation of any proceeding for such purpose, (v) of the happening of any event
or existence of any fact during the period the Shelf Registration Statement is
effective which any statement made in such Shelf Registration Statement or the
related Prospectus untrue in any material respect or which requires the making
of any changes in such Shelf Registration Statement or Prospectus in order to
make the statements therein not misleading and (vi) of any determination by the
Company that a post-effective amendment to the Shelf Registration Statement
would be appropriate;
(f) make every commercially reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the Shelf Registration Statement at
the earliest possible moment and provide immediate notice to the Interested
Persons of the withdrawal of any such order;
(g) furnish to the Interested Persons, without charge, at least one
conformed copy of the Shelf Registration Statement and any post-effective
amendment thereto (without documents incorporated therein by reference or
exhibits thereto, unless requested);
- 42 -
(h) cooperate with the Interested Persons to facilitate the timely
preparation and delivery of certificates representing Registrable Shares to be
sold and not bearing any restrictive legends and enable such Registrable Shares
to be in such denominations (consistent with the provisions of the Certificate
of Incorporation) and registered in such names as the Holders may reasonably
request at least two business days prior to the closing of any sale of
Registrable Shares;
(i) upon the occurrence of any event contemplated by Section 3(e)(v)
hereof, use its commercially reasonable efforts to prepare a supplement or
post-effective amendment to the Shelf Registration Statement or the related
Prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of the
Registrable Shares, such Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company agrees to notify the Interested Persons to use of the
Prospectus as promptly as practicable after the occurrence of such an event, and
the Holders hereby agree to suspend use of the Prospectus until the Company has
amended or supplemented Prospectus to correct such misstatement or omission;
(j) within a reasonable time prior to the filing of the Shelf Registration
Statement, any Prospectus, any amendment to the Shelf Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into the Shelf Registration Statement (except the
Company's filing under the 0000 Xxx) or a Prospectus after initial filing of the
Shelf Registration Statement, provide copies of such document to the Persons and
make such representatives of the Company as shall be reasonably requested by the
Interested Persons available for discussion of such document;
(k) make available for inspection by one representative of the Interested
Persons, any Underwriter participating in any disposition pursuant to such Shelf
Registration Statement, and accountants designated by the Interested Persons, at
reasonable times and in reasonable manner, all financial and records, pertinent
documents and properties of the Company (collectively, "Records"), as shall be
reasonably necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the Company
to supply all information reasonably requested by any such representative,
Underwriter, attorney or accountant in connection with a Shelf Registration
Statement. Records which the Company determines, in good faith, to be
confidential and any Records which it notifies any representative of the Holders
or any Underwriter as confidential shall not be disclosed by such persons,
unless (f) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such Shelf Registration Statement, (ii) the release
of such Records is ordered pursuant to a subpoena from a court of competent
jurisdiction or (iii) the information in such Records has generally been made
available to the public. Each Holder will be required to agree that information
obtained by it as a result of such inspections shall be deemed confidential and
shall not be used by it as the basis for any market transactions in the
securities of the Company unless and until such information is made generally
available to the public. Each Holder will be required to further agree that it
will, upon learning that disclosure of such Records is sought in a court of
competent
- 43 -
jurisdiction, give notice to the Company and allow the Company to undertake
appropriate action to prevent disclosure of the confidential at its expense;
(l) use its commercially reasonably efforts to cause all Registrable Shares
to be listed or quoted, as applicable on any securities exchange or any
automated quotation system on which similar securities issued by the Company are
then listed or quoted to the extent such Registrable Shares satisfy applicable
listing or quotation requirements;
(m) if reasonably requested by any Holder of Registrable Shares covered by
a Registration Statement, (i) promptly incorporate in a Prospectus Supplement or
post-effective amendment such information with respect to such Holder as such
Holder reasonably requests to be included and (ii) make all required filings of
such Prospectus supplement or such post-effective amendment as soon as the
Company has received notification of the matters to be incorporated in such
filing; provided, however, that if such Holder requests that the Company make
such amendment or supplement because such Holder provided misleading or false
information to the Company, such Holder shall bear all the costs and expenses
related to such amendment or supplement; and
(n) in connection with an Underwritten Offering pursuant to a Shelf
Registration Statement, take all actions as are reasonably requested by the
managing Underwriter in order to facilitate the disposition of the Registrable
Shares, and in such connection, (i) make such representations and warranties to
the Holders and any Underwriters of such Registrable Shares with respect to the
business of the Company and its subsidiaries, the Registration Statement,
Prospectus and documents incorporated by reference or deemed incorporated by
reference, if any, in each case, in form, substance and scope as are customarily
made by issuers to Underwriters in underwritten offerings and confirm the same
if and when requested, (ii) obtain opinions of counsel to the Company (which
counsel and opinions, in form, scope and substance, shall be reasonably
satisfactory to the Holders and such Underwriters and its counsel) addressed to
each Holder and Underwriter of Registrable Shares, covering the matters
customarily covered in opinions requested in underwritten offerings, (iii)
obtain "cold comfort" letters from the independent certified public accountants
of the Company (and, if applicable, any other certified public accountant of any
business acquired by the Company for which financial statements and financial
data are or are required to be included in the Registration Statement) addressed
to each Holder and Underwriter of Registrable Shares, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings, and (iv) deliver
such documents and certificates as may be reasonably requested by the Holders of
a majority in principal amount of the Registrable Shares being sold or the
Underwriters, and which are customarily delivered in underwritten offerings, to
evidence the continued validity of the representations and warranties of the
Company made pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in an underwriting agreement.
The Company may require each Holder of Registrable Shares to furnish to the
Company such information regarding the Holder and the proposed distribution by
such Holder of such Registrable Shares as the Company may from time to time
reasonably
- 44 -
request in writing. The Company may exclude from a Registration Statement the
Registrable Shares of any Holder who fails to furnish such information in
writing to the Company within 20 business days (or such longer period if the
Company agrees in writing) after the Company mails such request. Each Holder of
Registrable Shares included within the coverage of any Registered Statement
agrees to furnish promptly to the Company all information required by applicable
law to be disclosed by such Holder in order to make the information previously
to the Company not misleading.
Each Holder agrees that, upon receipt of any notice from the Company (a
"Suspension Notice") of the happening of any event of the kind described in
Section 3(e) (iii), (iv), (v) or (vi) hereof, such Holder will forthwith
discontinue disposition of Registrable Shares pursuant to the Shelf Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(i) hereof, and, if so directed by
the Company, such Holder will deliver to the Company (at its expense) all copies
in it possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such registrable Shares current at the
time of receipt of the Suspension Notice or until such Holder is advised in
writing (the "Advice") by the Company that the use of the applicable prospectus
may be resumed, and has received copies of any amendments or supplements
thereto. If the Company shall give a Suspension Notice to the disposition of
Registrable Shares pursuant to the Shelf Registration Statement, the Company
shall extend the period during which the Shelf Registration Statement shall be
maintained effective pursuant to this Agreement by the number of days during the
period from and including the date of the giving of the Suspension Notice to and
including the date when the Holders shall have received copies of the
supplemented or amended Prospectus necessary to resume such dispositions or the
Advice.
The Holders of Registrable Shares covered by a Shelf Registration Statement
who desire to do so may sell such Registrable Shares in an Underwritten
Offering. In any such Underwritten Offering, the investment banker or investment
bankers and manager or managers (the "Underwriters") that will administer the
offering will be selected by the Majority Holders of the Registrable Shares
included in such offering and shall be reasonably acceptable to the Company.
No Holder may participate in an Underwritten Offering hereunder unless such
Holder (a) agrees to sell such Holder's Registrable Shares on the basis provided
in any underwriting arrangements approved by the persons or entities entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
4. Indemnification and Contribution.
(a) In connection with a Shelf Registration Statement, the Company agrees
to indemnify and hold harmless (i) each Holder of Registrable Shares included in
such Shelf Registration Statement, (ii) each Person, if any, who controls any
such Holder within the meaning of either Section 15 of the 1933 Act or Section
20 of the 1934 Act, or is under
- 45 -
common control with, or is controlled by any such Holder and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or any controlling person (any person referred to in clauses (i),
(ii) or (iii), an "Indemnified Party"), from and against, to the fullest extent
lawful, all losses, claims, damages, judgments, actions, expenses and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by any Indemnified Party in connection with defending or
investigating any such action or claim), to which any Indemnified Party may
subject, under the 1933 Act or otherwise, insofar as any such loss, claim,
damage, judgments, actions, expenses or liability is directly or indirectly
caused by, related to, based upon, arising out of in connection with (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Shelf Registration Statement (or any amendment thereto) pursuant to which
Registrable Shares were registered under the 1933 Act, including all documents
incorporated therein by reference, (ii) 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 caused by any untrue statement or
alleged untrue statement of a material fact contained in any Prospectus (as
amended or supplemented if the Company shall have any amendments or supplements
thereto), or (iii) any omission or alleged omission to state therein a material
fact necessary to make the statements therein in light of the circumstances
under which they were made not misleading, except insofar as such losses,
claims, damages, judgments, actions, expenses or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or alleged
omission based upon and in conformity with information relating to an Interested
Persons furnished to the Company in writing by the Interested Persons, expressly
for use therein. This indemnity agreement will be in addition to any liability
that the Company may otherwise have. In connection with any Underwritten
Offering permitted by Section 3 of this Agreement, the Company will also
indemnify the Underwriters, if any, selling brokers, dealers and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls such Persons (within the
meaning of the 1933 Act and the 0000 Xxx) to the same extent as provided above
with respect to the indemnification of the Indemnified Party, if requested in
connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify and hold
harmless the Company, the Interested Persons, each Person, if any, who controls
the Company or any such Interested Person within the meaning of either Section
15 of the 1933 Act or Section 20 of the 1934 Act, or is under common control
with, or is controlled by the Company or any such Interested Person and each of
their directors, officers and employees to the same extent as the foregoing
indemnity from the Company to the Interested Persons, but only with reference to
information relating to such Holder furnished to the Company in writing by such
Holder expressly for use in the Shelf Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto). In no event
shall the liability of any selling Holder hereunder be greater in amount than
the dollar amount of the proceeds received by such Holder upon the sale of the
Registrable Shares giving rise to such indemnification obligation.
(c) In case any action or proceeding (including any governmental
investigation or proceeding) shall be brought, asserted or instituted involving
any Person in respect of
- 46 -
which indemnity may be sought pursuant to either paragraph (a) or paragraph (b)
above, such the Indemnified Party shall promptly notify the Person against whom
such indemnity may be sought (the "indemnifying party") in writing; provided
however, that the failure to notify the indemnifying party shall not relieve it
of any liability which it may have under this Section 5 except to the extent
that the indemnifying party did not otherwise learn of such action and it has
been prejudiced by such failure. The indemnifying party, upon request of the
Indemnified Party, shall retain counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party and any others the
indemnifying party may reasonably designate in such proceeding and shall pay the
reasonable fees and disbursements of such counsel related to such proceeding. If
any such claim or action shall be brought against an Indemnified Party, and it
shall have notified the indemnifying party, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similar notified indemnified party, to assume the defense of thereof
with counsel reasonably satisfactory to be the Indemnified Party. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the indemnifying party has failed to assume
the defense on behalf of Indemnified Party, (ii) the indemnifying party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or
(iii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the Indemnified Party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate counsel (in addition to any local counsel) designated in
writing by a majority of the Holders of Registrable Shares seeking
indemnification, if more than one Holder is an Indemnified Party, as the case
may be, and that all such reasonable fees and expenses shall be reimbursed as
they are incurred. The indemnifying party shall not be liable for any settlement
of any proceeding effected without its written consent but, if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the Indemnified Party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened proceeding in respect of which such
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such proceeding. Notwithstanding the foregoing
sentence, if at any time an Indemnified Party shall have requested an
indemnifying party to reimburse the Indemnified Party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
Indemnified Party may settle any proceeding without the written consent of the
indemnifying party, if the indemnifying party has not agreed to indemnify the
Indemnified Party pursuant to this paragraph within 60 days of such request for
indemnification from the Indemnified Party.
(d) If the indemnification provided for in paragraph (a) or paragraph (b)
of this Section 4 is unavailable to an Indemnified Party or insufficient in
respect of any losses, claims, damages, expenses or liabilities, then each
applicable indemnifying party under such
- 47 -
paragraph, in lieu of indemnifying such Indemnified Party thereunder, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, expenses or liabilities in such proportion as
is appropriate to reflect the relative fault of the indemnifying party or
parties on the one hand of the Indemnified Party or parties on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. The relative fault of the Company and the Holders
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or by
the Holders and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Holders'
obligations to contribute pursuant to this Section 5(d) are several in
proportion to the number of Registrable Shares of such Holder that were
registered pursuant to a Registration Statement.
(e) Company and each Holder agree that it would not be just or equitable if
contribution pursuant to this Section 4 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in paragraph (d) above. The amount paid or payable by
an Indemnified Party as a result of the losses, claims, damages and liabilities
referred to in paragraph (d) above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 4, no Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which Registrable Shares were sold by such Holder exceeds the
amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 4 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any Indemnified Party at law or
in equity. The Holder's obligations to contribute pursuant to this Section 5(e)
are several in proportion to the respective amount of Registrable Shares
registered by each of the Holders and not jointly.
(f) Survival. The indemnity and contribution provisions contained in this
Section 4 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of the Interested Persons or any person controlling the Interested Persons, or
by or on behalf of the Company, its officers or directors or any Person
controlling the Company, and (iii) any sale of Registrable Shares pursuant to
the Shelf Registration Statement.
(a) No Inconsistent Agreements. The Company has not entered into, and on or
after the date of this Agreement will not enter into, any agreement which is
inconsistent with the rights granted to the Holders of Registrable Shares in
this Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in
- 48 -
any way conflict with and are not inconsistent with the rights granted to the
holders of the Company's other issued and outstanding securities under any such
agreements.
(b) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, a
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of Holders of at least a
majority of the outstanding Registrable Shares affected by such amendment,
modification, supplement, waiver or consent; provided however, that no
amendment, modification, supplement, waiver or consents to any departure from
the provisions of Section 4 hereof shall be effective as against any Holder of
Registrable Shares unless consented to in writing by such Holder.
(c) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if
to a Holder, at the most current address given by such Holder to the Company by
means of a notice given in accordance with the provisions of this Section 5(c),
which address initially is as set forth on Schedule A, (ii) if to the Company,
initially at 00 Xxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000, Attention:
Xxxxxxx X. XxXxxxxx, President, with a copy to Xxxxxxxx, Xxxxxxxx & Ciesla,
D.C., 000 Xxxx Xxxx Xxxx, X.X. Xxx 000, Xxxxxxxxxx Xxx Xxxxxx 00000, Attention:
Xxxxxx X. Xxxxxxxx, and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 5(c).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Shares in
violation of the terms of the Stock Purchase Agreement. If any transferee of any
Holder shall acquire Registrable Shares, in any manner, whether by operation of
law or otherwise, such Registrable Shares shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Shares such
person shall be conclusively deemed to have to be bound by and to perform all of
the terms and provisions of this Agreement and such person shall be entitled to
receive benefits hereof.
(e) Counterparts. This Agreement may be executed manually or by telecopier
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
- 49 -
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NORTH CAROLINA, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(i) Entire Agreement. This Agreement (together with the Stock Purchase
Agreement) is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. Them are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein (or therein) with respect to the
registration rights granted by the Company with respect to the Registrable
Shares. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
- 50 -
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ECOSCIENCE CORPORATION
By:
--------------------------------------
Name:
Title:
COGENTRIX DELAWARE
HOLDINGS, INC.
By:
--------------------------------------
Name:
Title:
- 51 -
