EXHIBIT 2.1
CONSULTING AND DISTRIBUTION AGREEMENT
BY AND BETWEEN
AGRI BIO-SCIENCES, INC.
AND
GS FINANCIAL SERVICES, INC.
DATED AS OF
MARCH 12, 1998
Page i
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1 General 1
Agreement 1
Affiliate 1
Agent 1
Commission 1
Distribution Date 1
Distribution Record Date 1
Distribution Shares 2
Documents 2
Exchange Act 2
Effective Date 2
Effective Time 2
NASD 2
Person 2
Prospectus 2
Registration Expenses 2
Registration Statement 2
Restricted Securities 2
Commission 2
Securities 2
Securities Act 2
Shelf Registration 2
Term 2
Transfer Agent 2
Section 1.2 References; Interpretation 2
ARTICLE II
APPOINTMENT AND SERVICES OF CONSULTANT
Section 2.1 Appointment of Consultant 3
Section 2.2 Limitations on Services 4
Section 2.3 Payments to Consultant 4
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1 Representations and Warranties of the Company 5
Section 3.2 Consultant's Representations and Warranties 7
Section 3.3 Covenants of Consultant 7
Section 3.4 Covenants of the Company 8
ARTICLE IV
THE DISTRIBUTION
Section 4.1 Issuance, Sale and Delivery of the Shares 9
Section 4.2 Conditions to the tc Distribution 10
ARTICLE V
REGISTRATION OF AGRI BIO SHARES
Section 5.1 Registration Procedures 13
Section 5.2 Registration Expenses 14
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnification by Company 15
Section 6.2 Indemnification by Consultant 15
Section 6.3 Conduct of Indemnification Proceedings 17
Section 6.4 Contribution 17
ARTICLE VII
DISPUTE RESOLUTION
Section 7.1 Consulting and Distribution Agreement Disputes 18
Section 7.2 Arbitration in Accordance with American Arbitration Association
Rules 18
Section 7.3 Final and Binding Awards 18
Section 7.4 Costs of Arbitration 18
Section 7.5 Settlement by Mutual Agreement 18
SECTION VIII
MISCELLANEOUS
Section 8.1 No Inconsistent Agreements 18
Section 8.2 Survival of Obligations 18
Section 8.3 Severability 19
Section 8.4 Entire Agreement, Amendment 19
Section 8.5 Notices 19
Section 8.6 Assignability 19
Section 8.7 Governing Law 19
Section 8.8 Waiver and Further Agreement 20
Section 8.9 Headings of No Effect 20
Exhibit 2.1 - Page
CONSULTING AND DISTRIBUTION AGREEMENT
AGREEMENT, dated as of March 12, 1998 between Agri Bio-Sciences, Inc., a
Delaware corporation (the "Company"), and GS Financial Services, Inc., a
Delaware corporation (the "Consultant").
W I T N E S S E T H:
-------------------
WHEREAS, the Company has agreed to engage the Consultant to provide the
company with strategic advice related to the company's overall business
strategy, including sources of financing and access to the public capital
markets;
WHEREAS, the Company has agreed to compensate the Consultant for its
services by issuing common stock of the Company to consultant;
WHEREAS, Consultant has agreed to provide such services upon the terms
and for the consideration described herein;
WHEREAS, Consultant has agreed to distribute the Company's Common Stock
to the Consultant's shareholder's; and
WHEREAS, the company and the Consultant now desire to memorialize their
respective agreements in a formal written agreement.
NOW THEREFORE in consideration of the mutual promises and benefits to be
derived from this Agreement, the Company and the Consultant hereby agree as
follows:
ARTICLE I ARTICLE I
DEFINITIONS DEFINITIONS
SECTION 1.1 GENERAL. Section 1.1 General As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
Agreement: AgreementThis Consulting and Distribution Agreement as
amended or supplemented from time to time.
Affiliate: AffiliateAffiliate of any Person shall mean any Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such person. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agent: AgentAny Person authorized to act and who acts on behalf of any
other Person with respect to the transactions contemplated by the Documents.
Commission: CommissionThe Securities and Exchange Commission.
Distribution Date: Distribution Date The date selected by the Company to issue
the Distribution Shares, which shall occur not later than the first business day
after the Effective Date, as the date on which the Distribution shall be
effected.
Distribution Record Date: Distribution Record Date shall mean such date as
may hereafter be determined by GS Financial's Board of Directors as the record
date for determining the stockholders of GS Financial entitled to receive the
Distribution Shares.
Distribution Shares: Distribution SharesCommon voting shares of the
Company, par value $.001, issued to Consultant pursuant to the provisions of
Section 2.3(a).
Documents: DocumentsThis Agreement, the Registration Statement, together
with any exhibits, schedules or other attachments thereto.
Exchange Act: Exchange ActThe Securities Exchange Act of 1934, as
amended from time to time.
Effective Date: Effective DateThe date on which the distribution of the
Distribution Shares contemplated by this Agreement is authorized to commence
pursuant to the Securities Act.
Effective Time: Effective TimeThe time on the Effective Date when the
distribution of the Distribution Shares contemplated by this Agreement is
authorized to commence pursuant to the Securities Act.
NASD: NASDThe National Association of Securities Dealers, Inc.
Person: Personshall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an association, a company, an unincorporated
organization, a government or any department, political subdivision or agency
thereof.
Prospectus: ProspectusThe prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the distribution of any portion of the Distribution Shares
covered by such Registration Statement and by all other amendments and
supplements to the Prospectus, including post-effective amendments and all
documents incorporated by reference in such prospectus. If the prospectus filed
pursuant to Rule 424(b) or Rule 424(c) of the Securities Act shall differ from
the Prospectus, the term "Prospectus" shall also include the prospectus filed
pursuant to such Rule.
Registration Expenses: Registration ExpensesSee Section 5.2 hereof.
Registration Statement: Registration StatementAny registration statement of
the Company which covers any of the Distribution Shares pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all documents incorporated by reference in such Registration
Statement.
Restricted Securities: Restricted SecuritiesThe Distribution Shares upon
original issuance thereof, as provided in Section 2.3 hereof.
Rules and Regulations: CommissionThe rules and regulations of the
Commission.
Securities: SecuritiesThe Company's common stock, $.001 par value, to be
issued by the Company.
Securities Act: Securities ActThe Securities Act of 1933, as amended
from time to time.
Shelf Registration: Shelf RegistrationSee Section 3(a) hereof.
Term: TermThe duration of this Agreement specified in Section 2.1.
Transfer Agent: Transfer Agentshall mean Continental Stock Transfer and
Trust Company, and its successors and assigns.
SECTION 1.2 REFERENCES; INTERPRETATION. Section 1.2 References; Interpretation
References to a "Schedule" or an "Exhibit" are, unless otherwise specified, to
one of the Schedules or Exhibits attached to this Consulting and Distribution
Agreement, and references to a "Section" are, unless otherwise specified, to one
of the Sections of this Consulting and Distribution Agreement.
ARTICLE II ARTICLE II
APPOINTMENT AND SERVICES OF CONSULTANTAPPOINTMENT AND SERVICES OF CONSULTANT
SECTION 2.1 APPOINTMENT OF CONSULTANT. Section 2.1 Appointment of
Consultant Effective upon the date of this Agreement the Company retains
Consultant to render management and financial consulting services, as described
below, to the Company for a period terminating on December 31, 1998 (the
"Term").
(a) During the Term Consultant shall render to the company management
consulting advice in the areas of strategic planning, business strategy, merger
and acquisition planning, administration and such other related management
services as shall reasonably be requested by the Board of Directors of the
company in connection with the operation of the business of the Company.
Notwithstanding the foregoing, Consultant shall not be required to devote a
specified amount of time to the performance of services hereunder.
(b) Consultant shall act generally as the Company's shareholders and
financial public relations advisor, essentially acting (i) as advisor to the
Company with respect to market makers, broker-dealers, and shareholders; as well
as (ii) at the request of the Company act as liaison between the Company and
such persons and or organizations or firms; and (iii) as advisor to the Company
with respect to communications and information, which may include, but not
necessarily be limited to the writing of a corporate profile and review of any
research reports.
(c) Consultant shall assist in establishing and advising the Company with
respect to interviews of the Company officers by the financial media, interviews
of the Company officers by analysts, broker-dealers and other members of the
financial community.
(d) Consultant shall seek to make the Company, its management, its
products, and its financial performance and prospects, known to financial media,
financial publications, broker-dealers, institutional investors, market makers,
analysts, investment advisors and other members of the financial community and
the public generally.
(e) Consultant will develop and implement a marketing program which
includes, but is not necessarily limited to, the following: (i) review and
analysis of all aspects of the Company's strategic goals and recommend
feasibility and achievability of expressed goals, (ii) provide access to firms
and brokers interested in participating in the Company's growth strategy and
conduct the necessary due diligence and obtain the required approvals necessary
for those firms to participate. Consultant will interview and make
recommendations on any firms or brokers referred by the Company with regard to
their participation, (iii) Consultant shall be available to respond to calls
from brokers inquiring about the Company.
(f) Consultant, in providing the foregoing services, shall be responsible
for all costs for providing the services, including but not limited to,
out-of-pocket expenses for postage, local and overnight delivery services,
telephone and other communication charges, when originated from Consultant's
offices.
(g) Consultant's compensation under this Consulting Agreement shall be
deemed to include the above unless expressly provided herein.
(h) Consultant shall not be required to be based in any particular place to
perform its duties hereunder.
(i) Consultant has the right to place advertisements in financial and other
newspapers and journals at its own expense describing its services to the
Company. Such expense shall not be reimbursable.
(j) Consultant shall use its reasonable best efforts to introduce the
Company to one or more members of the NASD who will secure the necessary
regulatory approvals and agree to make a market in the Distribution Shares
commencing on the Distribution Date. Consultant will undertake to secure the
agreement by such market makers a sufficient time in advance of the Effective
Date to allow the Company to include an appropriate statement to such effect in
the Prospectus.
(k) Subject to the other provisions of this Agreement, Consultant will
distribute not less than 80% of the Distribution Shares to the shareholders of
Consultant.
SECTION 2.2 LIMITATIONS ON SERVICES Section 2.2 Limitations on Services
Consultant understands that it is necessary to comply with certain
responsibilities and obligations imposed by the Securities Act, the Exchange Act
other federal and state securities laws, rules and regulations of national and
regional stock exchanges, including the New York Stock Exchange, the NASD,
internal compliance departments of broker-dealers and others. In order to assure
compliance with all such rules, regulations and requirements, Consultant agrees
to the following:
(a) Consultant shall not release any financial or other information or data
about the Company without the consent and approval of the Company.
(b) Consultant shall not conduct any meetings with financial analysts
without informing the Company, in advance, of any proposed meeting and the
agenda or format of such meeting. The Company may elect to have a representative
of the Company attend such meeting.
(c) Consultant shall not release any information or data about the Company
to any selected person(s), entity, or group if Consultant is aware that such
information or data has not been generally released or promulgated and the
Company requests that said information or data is not to be so released or
promulgated.
(d) After filing of a Registration Statement by the Company, Consultant
shall not engage in any public relations efforts without approval of the Company
or its counsel.
SECTION 2.3 PAYMENTS TO CONSULTANT. Section 2.3 Payments to Consultant
The Company shall pay to Consultant the following:
(a) The Distribution Shares shall be that number of shares which,
immediately after issuance, equals five percent (5%) of the total number of
outstanding common voting shares, par value $.001, of the Company.
(b) Consultant has such knowledge and experience in financial and business
matters that Consultant is capable of evaluating the merits and risks of an
investment in the Company. Consultant is familiar with the nature and extent of
the risks inherent in investments in unregistered securities and in the business
in which the Company engages and has determined that an investment in the
Company is consistent with its investment objectives and income prospects.
Consultant represents and warrants that it is an "accredited investor" as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
Consultant is acquiring the Distribution Shares solely for its own account for
investment purposes only and not with a view toward resale or distribution of
such shares, either in whole or in part except pursuant to an effective
Registration Statement.
(c) Consultant understands that (i) the Distribution Shares issued to
Consultant have not been registered under the Securities Act, or any applicable
state securities laws and therefore, are Restricted Securities as defined in
Rule 144 of the Securities Act; (ii) Consultant cannot distribute to its
shareholders, sell or otherwise transfer such shares unless they are registered
under the Securities Act and any applicable state securities laws or unless
exemptions from such registration requirements are available, (iii) until such
shares are registered under the Securities Act, a legend will be placed on any
certificate or certificates evidencing the Distribution Shares, stating that
such securities have not been registered under the Securities Act and setting
forth or referring to the restrictions on transferability and sales of such
securities and (iv) the Company will place stop transfer instructions against
such securities and the certificates for such securities to restrict the
transfer thereof. Consultant agrees not to resell the Shares without compliance
with the Securities Act and any applicable state securities laws.
(d) Consultant understands and agrees that (i) Consultant will not be
treated as an employee of the Company for federal tax purposes; (ii) Company
will not withhold on behalf of Consultant pursuant to this Agreement any sums
for income tax, unemployment insurance, social security, or any other
withholding pursuant to any law or requirement of any governmental body relating
to Consultant; (iii) all of such payments, withholdings, and benefits, if any,
are the sole responsibility of Consultant; and (iv) Consultant will indemnify
and hold Company harmless from any and all loss or liability arising with
respect to such payments, withholdings, and benefits, if any. In the event the
Internal Revenue Service or any other governmental agency should question or
challenge the independent contractor status of Consultant, the parties agree
that Consultant and Company shall have the right to participate in any
discussion or negotiation occurring with such agency or agencies, irrespective
of who initiates the discussion or negotiations.
SECTION 2.4 BACKGROUND OF CONSULTANT. Section 2.4 Background of Consultant
Consultant hereby represents to the Company and the Company acknowledges receipt
of notice that:
On April 20, 1990, the NASD censured Graystone Xxxx, Incorporated and its
President, Xxxxxx X. Xxxxxxx. The Association fined Graystone Xxxx, Incorporated
and Xxxxxx X. Xxxxxxx $1,325,000 jointly and severely, and expelled Graystone
Xxxx, Incorporated from membership in the Association and barred Xxxxxx X.
Xxxxxxx from association with a member of the Association.
Additionally, the Commission brought an action against Graystone Xxxx,
Incorporated and Xxxxxx X. Xxxxxxx, its President, and on April 21, 1993, a
judgment was entered against the Company and Xxxxxx X. Xxxxxxx in the amount of
$60,565,581.00 plus interest beginning January 1, 1989. The action was appealed
and on June 1, 1994, the judgment was reversed. Graystone Xxxx, Incorporated was
not represented by counsel in the new review ordered and the judgment still
stands against it. Xxxxxx X. Xxxxxxx, acting as his own counsel, presented to
the court additional information for review. Upon review by the Court, on July
10, 1995, the judgment and pre-judgment interest was waived as to Xxxxxx X.
Xxxxxxx. As a result of the above actions, the subsidiary Graystone Xxxx,
Incorporated was forced to close and cease operations.
ARTICLE III ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS REPRESENTATIONS, WARRANTIES AND
COVENANTS
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Section 3.1
Representations and Warranties of the Company The Company hereby represents and
warrants to and covenants and agrees with the Consultant as follows:
(a) The execution and delivery performance of this Agreement by the Company has
been duly and validly authorized and constitutes valid and binding obligations
of the Company, legally enforceable in accordance with their terms. (b) The
execution and delivery of this Agreement, the consummation of the transactions
herein contemplated, and Compliance with the terms of this Agreements will not
conflict with, or constitute a default under any material indenture, mortgage,
deed of trust, or other agreement or instrument to which the Company is now a
party or the Certificate of Incorporation and any amendments thereto, or by-laws
of the Company, or any law, order, rule or regulation, writ, injunction or
decree of any government, governmental instrumentality, or court, domestic or
foreign, having jurisdiction over the Company or its business or properties. (c)
On the Effective Date, the Registration Statement and the Prospectus, and on the
Distribution Date the Prospectus (as amended or as supplemented if the Company
shall have filed with the Commission an amendment thereof or supplement
thereto), will comply with the provisions of the Securities Act, and the Rules
and Regulations, and will contain all statements which are required to be stated
therein in accordance with the Securities Act and the Rules and Regulations and
will not contain an untrue statement of a material fact and will not omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, provided, however, that none of the representations
and warranties contained in this subsection (b) shall extend to the Consultant
in respect of any statements in or omissions from the Registration Statement
and/or the Prospectus, based upon information furnished in writing to the
Company by or on behalf of by Consultant specifically for use in connection with
the preparation thereof. (d) The Company has been duly incorporated and is now
and at each Distribution Date will be validly existing as a corporation in good
standing under the laws of the State of its incorporation and location, having
power and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus. The Company is now and at each
Distribution Date will be duly qualified to do business as a foreign corporation
in good standing in all of the jurisdictions in which it owns or leases property
or in which the conduct of its business requires such qualification. The Company
has no subsidiaries, except as are set forth in the Prospectus. (e) The
financial statements of the Company included in the Registration Statement and
Prospectus fairly present the financial position, results of operations and
other information purported to be shown therein, of the Company at the
respective dates and for the respective periods to which they apply; and such
financial statements have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods involved, and
are in accordance with the books and records of the Company. (f) The accountants
who have certified the financial statements which were included as a part of the
Registration Statement and the Prospectus, and who, as experts, have certified
or reviewed other information of a financial or accounting nature which are
contained in the Registration Statement and the Prospectus, are independent
public accountants as required under the Securities Act and the Rules and
Regulations. (g) Subsequent to the respective dates as of which information is
given in the Prospectus and prior to each Distribution Date, and except as
contemplated in the Prospectus (i) the Company has not incurred, nor will it
incur, any material liabilities or obligations, direct or contingent, nor has
it, nor will it have entered into any material transactions not in the ordinary
course of business and (ii) there has not been, and will not have been, any
material adverse change in the condition (financial or otherwise) of the Company
whether or not arising from transactions in the ordinary course of business. (h)
The real and personal properties of the Company as shown in the Prospectus, are
owned by the Company by good marketable title in fee simple, free and clear of
all liens, encumbrances an equities of record, or otherwise, except those
specifically referred to in the Prospectus, and except those which do not
materially adversely affect the use or value of such assets and except the lien
of current taxes not now due, or are held by the Company by valid leases, none
of which is in default. The Company in all material respects has full right to
maintain and operate its business and properties as the same are now operated or
proposed to be operated and is complying with all laws, ordinances and
regulations applicable thereto. (i) The Company has no material contingent
obligations, nor are its properties or business subject to any material risks,
which may be reasonably anticipated, which are not disclosed in the Prospectus.
(j) There are no actions, suits or proceedings at law or in equity pending or to
the Company's knowledge threatened against the Company and there are no
proceedings pending, or to the knowledge of the Company threatened, against the
Company before or by any Federal or State Commission, regulatory body, or
administrative agency or other governmental body, wherein an unfavorable ruling,
decision or finding would materially adversely affect the business, franchise,
licenses, permits, operations or financial condition or income of the Company,
which are not disclosed in the Prospectus. (k) The outstanding Common Stock of
the Company has been duly and validly issued and is fully-paid and
non-assessable; the outstanding Common Stock of the Company and the Distribution
Shares will conform to all statements with regard thereto contained in the
Prospectus. The Distribution Shares have been duly and validly authorized by
proper corporate authority; are duly and validly issued, fully-paid and
non-assessable, and are not subject to any pre-emptive right of any stockholder
of the Company. (l) The certificate or certificates required to be furnished to
the Consultant pursuant to the provisions of Section 4.2 (h) hereof will be true
and correct. (m) No officer or director of the Company has taken, and each
officer and director has agreed that he will not take, directly or indirectly,
any action designed to stabilize or manipulate the price of the Distribution
Shares, in the open market following the Distribution Date or any other type of
action designed to, or that may reasonably be expected to cause or result in
such stabilization or manipulation, or that may reasonably be expected to
facilitate the initial distribution, or resale, of the Distribution Shares.
(n) The Company, its officers, directors and shareholders understand that
Consultant has not and does not represent that any part of the Distribution
Shares will (i) be authorized for quotation on the NASD Automated Quotation
System (NASDAQ) or the Electronic Bulletin Board or, (ii) any NASD member firm
will agree to make a market in the Distribution Shares. (o) All of the aforesaid
representations, agreements, and warranties shall survive delivery of all or any
part of the Distribution Shares.
SECTION 3.2 CONSULTANT'S REPRESENTATIONS AND WARRANTIES. Section 3.2
Consultant's Representations and Warranties The Consultant represents and
warrants to and agrees with the Company that:
(a) The execution and delivery performance of this Agreement by the Consultant
has been duly and validly authorized and constitutes valid and binding
obligations of the Consultant, legally enforceable in accordance with their
terms. (b) The execution and delivery of this Agreement, the consummation of the
transactions herein contemplated, and Compliance with the terms of this
Agreements will not conflict with, or constitute a default under any material
indenture, mortgage, deed of trust, or other agreement or instrument to which
the Consultant is now a party or the Certificate of Incorporation and any
amendments thereto, or by-laws of the Consultant, or any law, order, rule or
regulation, writ, injunction or decree of any government, governmental
instrumentality, or court, domestic or foreign, having jurisdiction over the
Consultant or its business or properties. (c) Consultant represents and warrants
that all payments and other valuable considerations paid or to be paid under
this agreement constitute compensation for services rendered; that this
agreement and all payments and other valuable considerations and the use of
those payments and valuable considerations are non-political in nature; and that
said payments and valuable considerations shall not be used to influence, sway
or bribe any government or municipal party, either domestic or foreign, in any
way. (d) During the term of this agreement, Consultant shall not engage in any
activities that directly conflict with the interest of the Company. The Company
hereby acknowledges notification by Consultant and understands that Consultant
does, and shall, represent and service other and multiple clients in the same
manner as it does the Company, and that the Company is not an exclusive client
of Consultant. (e) During the Term the Consultant shall not anywhere in the
United States engage in business in competition with the Company (unless the
Board of Directors of the company shall have authorized such activity), either
for its own account, as an investor (except for investments of less than five
percent of the securities of a corporation subject to the reporting requirements
of Section 13 Section 15(d) of the Securities Exchange Act of 1934, as amended),
or as a partner or joint venturer, or as a partner or joint venturer, or as a
consultant, employee, agent or salesman for any other person, or as an officer
or director of a corporation or otherwise.
SECTION 3.3 COVENANTS OF CONSULTANT. Section 3.3 Covenants of Consultant
The parties hereto recognize that a major need of the Company is to preserve its
specialized knowledge, trade secrets, and confidential information. The strength
and good will of the Company is derived from the specialized knowledge, trade
secrets, and confidential information generated from experience with the
activities undertaken by the Company and its subsidiaries. The disclosure of
this information and knowledge to competitors would be beneficial to them and
detrimental to the Company, as would the disclosure of information about the
marketing practices, pricing practices, costs, profit margins, design
specifications, analytical techniques, and similar items of the Company and its
subsidiaries. By reason of his being a Consultant to the Company, Consultant has
or will have access to, and will obtain, specialized knowledge, trade secrets
and confidential information about the Company's operations and the operations
of its subsidiaries, which operations extend through the United States.
Therefore, Consultant hereby agrees as follows, recognizing that the Company is
relying on these agreements in entering into this Agreement:
(a) During and after the Term Consultant will not use, disclose to others,
or publish any inventions or any confidential business information about the
affairs of the Company, including but not limited to confidential information
concerning the Company's products, methods, engineering designs and standards,
analytical techniques, technical information, customer information, employee
information, and other confidential information acquired by him in the course of
his past or future services for the Company. Consultant agrees to hold as the
Company's property all memoranda, books, papers, letters, formulas and other
data, and all copies thereof and therefrom, in any way relating to the Company's
business and affairs, whether made by him or otherwise coming into his
possession, and on termination of his employment, or on demand of the Company,
at any time, to deliver the same to the Company within twenty four hours of such
termination or demand.
(b) During the Term Consultant will not induce any employee of the Company
to leave the Company's employ or hire any such employee (unless the Board of
Directors of the Company shall have authorized such employment and the Company
shall have consented thereto in writing).
SECTION 3.4 COVENANTS OF THE COMPANY. Section 3.4 Covenants of the Company
The Company covenants and agrees with the Consultant that:
(a) After the date hereof, the Company will not at any time, whether before
or after the Effective Date, file any amendment to the Registration Statement or
the Prospectus of which the Consultant shall not previously have been advised
and furnished with a copy, or which the Consultant or the Consultant's counsel,
shall have reasonably objected to in writing on the ground that it is not in
compliance with the Securities Act or the Rules and Regulations.
(b) The Company will use its best efforts to cause the Registration
Statement to become effective as promptly as reasonably practicable and will
advise the Consultant, and will confirm such advice in writing, (i) when the
Registration Statement shall have become effective and when any amendment
thereto shall have become effective, and when any amendment of or supplement to
the Prospectus shall be filed with the Commission, (ii) when the Commission
shall make request or suggestion for any amendment to the Registration Statement
or the Prospectus or for additional information and the nature and substance
thereof, and (iii) of the issuance by the Commission of an order suspending the
effectiveness of the Registration Statement or of the initiation of any
proceedings for that purpose, and will use every reasonable effort to prevent
the issuance of such an order, or if such an order shall be issued, to obtain
the withdrawal thereof at the earliest possible moment.
(c) The Company will prepare and file with the Commission, promptly upon
request of the Consultant, such amendments, or supplements to the Registration
Statement or Prospectus, in form satisfactory to counsel to the Company, as in
the reasonable opinion of counsel to the Consultant may be necessary or
advisable in connection with the offering or distribution of the Distribution
Shares; and will use its best efforts to cause the same to become effective as
promptly as possible.
(d) The Company will, when and as requested by the Consultant, supply all
necessary documents, exhibits and information, and execute all such
applications, instruments and papers as may be required or desirable in the
opinion of the Consultant's counsel to qualify the Distribution Shares or such
part thereof as the Consultant may determine, for distribution under the
so-called Blue Sky Laws of such states as the Consultant shall designate, and to
continue such qualification in effect so long as required for the purposes of
the distribution of the Distribution Shares, provided, however, that the Company
shall not be required to qualify as a foreign corporation or to file a consent
to service of process in any state in any action other than one arising out of
the offering or distribution of the Distribution Shares. The Company shall pay
the filing fees and all other expenses in connection with any such
qualification. Company's counsel shall prepare and file the necessary Blue Sky
filings and the Company shall pay its fees and disbursements relating thereto as
discussed herein.
(e) The Company at its own expense will give and continue to give such
financial statements and other information to and as may be required by the
Commission, or the proper public bodies of the State in which the Distribution
Shares may be qualified.
(f) Neither the Company nor any of its affiliates will take any action
which will impair the effectiveness of the Registration Statement contemplated
by this Agreement.
(g) The Company will pay all fees, taxes and expenses incident to the
performance of its obligations under this Agreement, including expenses and
original issue and transfer taxes incident to the original issue and
distribution of the Distribution Shares, fees and expenses of counsel and
accountants for the Company and expenses incident to the preparation, printing
and filing under the Securities Act of the Registration Statement and Prospectus
(including all exhibits thereto) and all amendment thereto, the cost of printing
the Preliminary Prospectuses and the Prospectus, whether or not the Distribution
and other transactions contemplated in this Agreement are consummated. In
addition, the Company will pay all expenses relative to the qualification of the
Distribution Shares under the Blue Sky Laws of the States designated by
Consultant, together with appropriate state filing fees, including fees of
special counsel, if listing on a national stock exchange is agreed upon by the
Company and the Consultant or a merit review state which may require local
counsel.
(h) The Company will, as promptly as possible after each annual fiscal
period, render and distribute reports to its stockholders, which will include a
statement of its operations during such period and its balance sheets as of the
end of such period.
(i) The Company will make generally available to its security holders, as
soon as practicable, but in no event later than 15 months after the Effective
Date, an earnings statement of the Company (which need not be audited) in
reasonable detail, covering a period of at least twelve months beginning after
the Effective Date, which earnings statement shall satisfy the provisions of
Section 11 (a) of the Securities Act.
(j) Within 10 days following the Distribution Date, the Company will apply
for listing on Xxxxx'x Over-The-Counter Industrial Manual and Standard & Poor's
Corporate Description Manual.
ARTICLE IV ARTICLE IV
THE DISTRIBUTION THE DISTRIBUTION
SECTION 4.1 ISSUANCE, SALE AND DELIVERY OF THE SHARES. Section 4.1
Issuance, Sale and Delivery of the Shares
(a) Consultant shall deliver to the Transfer Agent on or prior to the
Distribution Date the share certificates representing the Distribution Shares
and shall instruct the Transfer Agent to distribute, on or as soon as
practicable following the Distribution Date, such Distribution Shares to holders
of record of shares of Consultant on the Distribution Record Date as further
contemplated by the Prospectus and this Agreement. The Company shall provide all
share certificates that the Transfer Agent shall require in order to effect the
Distribution.
(b) The Parties hereto represent that at the Distribution Date, the
representations and warranties herein contained and the statements contained in
all certificates theretofor or simultaneously delivered by any party to another
pursuant to the Agreement, shall in all respects be true and correct.
(c) The Company will give irrevocable instructions to its Transfer Agent to
deliver to the Consultant (at the company's expense) for a period of three years
from the first Distribution Date of the Distribution Shares, daily advice sheets
showing any transfers of Distribution Shares and from time to time during the
aforesaid period a complete Stockholders' list will be furnished by the Company
when requested by the Consultant.
SECTION 4.2 CONDITIONS TO THE DISTRIBUTION Section 4.2 Conditions to the tc
Distribution The Consultant's obligation to effect the distribution hereunder,
shall be subject to the accuracy as of the date hereof and as of such
Distribution Date, of the representations and warranties on the part of the
Company herein contained, to the performance by the company of all its
agreements herein contained, to the fulfillment of or compliance by the Company
with all covenants and conditions hereof, and to the following additional
conditions:
(a) On or prior to each Distribution Date, no order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission or be pending; any request for additional information on the part of
the Commission (to be included in the Registration Statement or the Prospectus
or otherwise) shall have been complied with to the satisfaction of the
Commission; and neither the Registration Statement nor any amendment thereto
shall have been filed to which counsel to the Consultant shall have reasonably
objected, in writing.
(b) On or prior to the first Distribution Date, the Distribution Shares
shall have (i) been authorized for quotation on the NASD Automated Quotation
System (NASDAQ) or the Electronic Bulletin Board and at least one NASD member
firm has agreed to make a market in the Distribution Shares, or (ii) the
Distribution Shares have been approved for listing on a regional, national or
international exchange.
(c) The Consultant shall not have disclosed in writing to the Company that
the Registration Statement or Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of counsel to the
Consultant, is material, or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein, or is necessary to
make the statements therein not misleading.
(d) Between the date hereof and each Distribution Date, the Company shall
not have sustained any loss on account of fire, explosion, flood, accident,
calamity or other cause, of such character as materially adversely affects its
business or property, whether or not such loss is covered by insurance.
(e) Between the date hereof and each Distribution Date there shall be no
material litigation instituted or to the knowledge of the Company threatened
against the Company and there shall be no proceeding instituted or to the
knowledge of the Company threatened against the Company before or by any federal
or state commission, regulatory body or administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling, decision
or finding would materially adversely affect the business, franchises, licenses,
permits, operations or financial condition or income of the Company.
(f) Except as contemplated herein or as set forth in the Registration
Statement and Prospectus, during the period subsequent to the Effective Date and
prior to each Distribution Date, (i) the Company (A) shall have conducted its
business in the usual and ordinary manner as the same was being conducted on the
date of the filing of the initial Registration Statement and (B) except in the
ordinary course of its business, the Company shall not have incurred any
liabilities or obligations (direct or contingent), or disposed of any of its
assets, or entered into any material transaction or suffered or experienced any
substantially adverse change in its condition, financial or otherwise. On each
Distribution Date, the capital stock and surplus accounts of the Company shall
be substantially as great as at its last financial report without considering
the proceeds from the distribution of the Distribution Shares.
(g) The authorization of the Distribution Shares, the Registration
Statement, the Prospectus and all corporate proceedings and other legal matters
incident thereto and to this Agreement, shall be reasonably satisfactory in all
material respects to counsel to the Consultant.
(h) The Company shall have furnished to the Consultant the opinion, dated
the first Distribution Date, addressed to the Consultant, or its counsel that:
(i) The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of its incorporation
with full corporate power and authority to own and operate its properties and to
carry on its business as set forth in the Registration Statement and Prospectus,
and has an authorized and outstanding capitalization as set forth in the
Registration Statement and Prospectus, and the Company is duly licensed or
qualified as a foreign corporation in all jurisdictions in which by reason of
maintaining an office in such jurisdiction or by owning or leasing real property
in such jurisdiction it is required to be so licensed or qualified, except where
the failure to do so would not have a material adverse effect on the business,
properties or operations of the Company.
(ii) The Distribution Shares, and the outstanding Common Stock of the
Company, conform to the statements concerning them in the Registration Statement
and Prospectus; the outstanding Common Stock of the Company has been duly and
validly issued and is fully-paid and non-assessable and does not have any
pre-emptive rights applicable thereto; the Distribution Shares have been duly
and validly authorized are duly and validly issued, fully-paid and
non-assessable and have no pre-emptive right applicable thereto.
(iii) No consents, approvals, authorizations or orders of agencies,
officers or other regulatory authorities are necessary for the valid
distribution of the Distribution Shares hereunder, except such as may be
required under the Securities Act or state securities or Blue Sky Laws.
(iv) The Registration Statement has become effective under the Securities
Act and, to the best of the knowledge of such counsel, no order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or contemplated under the
Securities Act, and the Registration Statement and Prospectus, and each
amendment thereof and supplement thereto, comply as to form in all material
respects with the requirements of the Securities Act and the Rules and
Regulations (except that no opinion need be expressed as to financial statements
and financial data contained in the Registration Statement or Prospectus), and
nothing has come to the attention of such counsel which would lead such counsel
to believe that either the Registration Statement or the Prospectus or any such
amendment or supplement contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and such counsel is familiar with
all contracts referred to in the Registration Statement or in the Prospectus and
such contracts are sufficiently summarized or disclosed therein, or filed as
exhibits thereto, as required, and such counsel does not know of any other
contracts required to be summarized or disclosed or filed, and such counsel does
not know of any legal or governmental proceedings pending or threatened to which
the Company is a party, or in which property of the Company is the subject, of a
character required to be disclosed in the Registration Statement or the
Prospectus which are not disclosed and properly described therein.
(v) Based upon the Company's representations, the Company (a) owns the real
and personal properties shown in the Prospectus as being owned by it by good and
marketable title, free and clear of all liens, encumbrances and equities of
record, except for those expressly referred to in the Prospectus, and except for
those which do not in the reasonable opinion of such counsel materially affect
the use or value of such assets, and except for the lien of current taxes not
due, or (b) holds by valid lease, its properties as shown in the Prospectus, and
to the best of our knowledge is not in violation of any applicable laws,
ordinances and regulations applicable thereto.
(vi) The Agreement has been duly authorized and executed by the Company and
is a valid and binding agreement of the Company, except no opinion need be given
regarding contribution and indemnification under Article VI and enforceability
under laws affecting creditors' rights.
(vii) To the best of the knowledge of such counsel, the warranties and
representations referred to in sub-paragraphs (d), (j) and (k) of Section 3.1
hereof are true and correct.
Such opinion shall also cover such other matters incident to the
transactions contemplated by this Agreement as the Consultant shall reasonably
request.
At any Distribution Date, subsequent to the first Distribution Date, the
Company shall have furnished to the Consultant the opinion of such counsel,
dated such Distribution Date confirming in all respects, as of such Distribution
Date, the opinion given by such counsel on the first Distribution Date pursuant
to this Section 4.2 (h).
(i) The Company shall have furnished to the Consultant a certificate of the
President and the Treasurer of the Company, dated as of the first Distribution
Date, to the effect that:
(i) The representations and warranties of the Company in this Agreement are
true and correct at and as of such Distribution Date, and the Company has
complied with all the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to the first Distribution Date;
(ii) The Registration Statement has become effective and no order
suspending the effectiveness of the Registration Statement has been issued, and,
to the best of the knowledge of the respective signers, no proceeding for that
purpose has been initiated or is threatened by the Commission:
(iii) The respective signers have each carefully examined the Registration
Statement and the Prospectus and any amendments and supplements thereto, and to
the best of their knowledge the Registration Statement and the Prospectus and
any amendments and supplements thereto and all statements contained therein are
true and correct, and neither the Registration Statement nor the Prospectus nor
any amendment or supplement thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and, since the Effective
Date, there has occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been so set forth.
(iv) Except as set forth in the Registration Statement and Prospectus since
the respective dates as of which or periods for which information is given in
the Registration Statement and Prospectus and prior to the date of such
certificate (A) there has not been any substantially adverse change, financial
or otherwise, in the affairs or condition of the Company and (B) the Company has
not incurred any material liabilities, direct or contingent, or entered into any
material transactions, otherwise than in the ordinary course of business.
At any Distribution Date, subsequent to the first Distribution Date, you
shall be furnished a letter from the President and Treasurer of the Company,
confirming in all respects, as of such Distribution Date, the opinion given by
such President and Treasurer on the first Distribution Date pursuant to this
Section 4.2(i).
(j) The Company shall have furnished to the Consultant at the Distribution
Date, such other certificates, additional to those specifically mentioned
herein, as the Consultant may have reasonably requested as to the accuracy and
completeness of any statement in the Registration Statement or the Prospectus,
or in any amendment or supplement thereto; of the representations and warranties
of the Company herein; as to the performance by the Company of its obligations
hereunder, or as to the fulfillment of the conditions concurrent and precedent
to its obligations hereunder, which are required to be performed or fulfilled on
or prior to the Distribution Date.
All the opinions, letters, certificates and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance satisfactory to counsel
to the Consultant, whose approval shall not be unreasonably withheld. The
Consultant reserves the right to waive any of the conditions herein set forth.
ARTICLE V ARTICLE V
REGISTRATION OF AGRI BIO SHARES REGISTRATION OF AGRI BIO SHARES
SECTION 5.1 REGISTRATION PROCEDURES. Section 5.1 Registration Procedures In
connection with the Company's registration obligations pursuant to Section 3.1
hereof, the company will use its best efforts to effect such registrations to
permit the distribution of the Distribution Shares in accordance with the
intended method or methods of distribution thereof, and pursuant thereto the
Company will as expeditiously as possible:
(a) Prepare and file with the Commission, as soon as practicable, a
Registration Statement or Registration Statements relating to the applicable
registration on any appropriate form under the Securities Act, which form shall
be available for the distribution of the Distribution Shares in accordance with
the intended method or methods of distribution thereof and shall include all
financial statements required by the Commission to be filed therewith, and use
its best efforts to cause such Registration Statement to become effective;
provided, however, that before filing a Registration Statement or Prospectus or
any amendments or supplements thereto, including documents incorporated by
reference after the initial filing of the Registration Statement, the Company
will furnish to the Consultant copies of all such documents proposed to be
filed, and the Company will not file any registration Statement or amendment
thereto or any Prospectus or any supplement thereto (including such documents
incorporated by reference) to which the Consultant shall reasonably object;
(b) Prepare and file with the Commission such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep the
Registration Statement effective for the applicable period, or such shorter
period which will terminate when all Distribution Shares covered by such
Registration Statement have been distributed; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed with the Commission pursuant to Rule 424 under the Securities Act;
(c) Notify the Consultant promptly, and (if requested by Consultant)
confirm such advice in writing, (i) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective, (ii) of any request by the Commission for amendments or supplements
to the Registration Statement or the Prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness to the Registration Statement for the initiation of any
proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Distribution Shares for distribution in any jurisdiction or the initiation or
threatening of any proceeding for such purpose and (v) of the happening of any
event which makes any statement made in the Registration Statement, the
Prospectus or any document incorporated therein by reference untrue or which
requires the making of any changes in the Registration Statement, the Prospectus
or any document incorporated therein by reference in order to make the
statements therein not misleading;
(d) Make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(e) If requested by the Consultant, promptly incorporate in a Prospectus
supplement or post-effective amendment such information as the Consultant
requests to be included therein relating to the distribution of the Distribution
Shares and make all required filings of such Prospectus supplement or
post-effective amendment;
(f) Furnish to Consultant, without charge, at least one copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(g) Deliver to Consultant without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons may reasonably request; the Company consents to the use of the
Prospectus or any amendment or supplement thereto by Consultant in connection
with the distribution of the Distribution Shares covered by the Prospectus or
any amendment or supplement thereto;
(h) Prior to any public offering of Distribution Shares, register or
qualify or cooperate with the Consultant and its counsel in connection with the
registration or qualification of such Distribution Shares covered by the
Registration Statement; provided, however, that the Company will not be required
to qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process in any such jurisdiction where it is not then so subject;
(i) Cooperate with the Consultant to facilitate the timely preparation and
delivery of certificates representing Distribution Shares to be distributed,
which certificates shall not bear any restrictive legends; and enable such
Distribution Shares to be in such denominations and registered in such names as
the managing Consultant or Consultants may request at least two business days
prior to any distribution of Distribution Shares to the shareholders of
Consultant;
(j) Use its best efforts to cause the Distribution Shares covered by the
applicable Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
Consultant to consummate the distribution of such Distribution Shares;
(k) Upon the occurrence of any event contemplated by subparagraph (c)(v)
above, prepare a supplement or post-effective amendment to the 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 Distribution Shares, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading;
(l) Use its best efforts to cause all Distribution Shares covered by the
Registration Statement to be listed on each securities exchange on which similar
securities issued by the Company are then listed if requested by the Consultant
or, if not listed, to become listed or qualified for quotation on the NASDAQ
Stock Market or the Electronic Bulletin Board;
(m) Provide a CUSIP number for all Distribution Shares, not later than the
effective date of the applicable Registration Statement;
(n) Make generally available to its security holders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act, no later than
45 days after the end of any 12-month period (or 90 days, if such period is a
fiscal year) commencing at the end of any fiscal quarter in which Distribution
Shares.
The Company may require Consultant to furnish to the Company such
information regarding the distribution of the Distribution Shares as the Company
may from time to time reasonably request in writing.
Consultant agrees by acquisition of the Distribution Shares that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 5.1(c)(iii) or 5.1(k) hereof, such holder will forthwith
discontinue disposition of Distribution Shares until such holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
5.1(c)(iii) or 5.1(k) hereof, or until it is advised in writing (the "Advice")
by the Company that the use of the Prospectus may be resumed, and has received
copies of any additional or supplemental filings which are incorporated by
reference in the Prospectus, and if so directed by the Company, Consultant will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in possession or control of Consultant at the time of
receipt of such notice.
SECTION 5.2 REGISTRATION EXPENSES. Section 5.2 Registration Expenses All
expenses incident to the Company's performance of or compliance with this
Agreement, including without limitation all registration and filing fees, fees
with respect to filings required to be made with the NASD fees and expenses of
compliance with state securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky registrations of
qualifications of the Distribution Shares and determination of their eligibility
for investment under the laws of such jurisdictions as the Consultant may
reasonably designate), printing expenses, messenger, telephone and delivery
expenses, and fees and disbursements of counsel for the Company and of all
independent certified public accountants of the company securities acts
liability insurance if the Company so desires and fees and expenses of other
Persons retained by the Company (all such expenses being herein called
"Registration Expenses") will be borne by the Company, regardless of whether the
Registration Statement becomes effective, except as otherwise required by
applicable laws. The Company will, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting expenses incurred in connection with
the listing of the securities to be registered on any securities exchange or
qualified for quotation by the NASDAQ Stock Market on the Electronic Bulletin
Board and the fees and expenses of any Person, including special experts,
retained by the Company.
ARTICLE VI ARTICLE VI
INDEMNIFICATION INDEMNIFICATION
SECTION 6.1 INDEMNIFICATION BY COMPANY. Section 6.1 Indemnification by
Company The Company agrees to indemnify and hold harmless the Consultant and
each person who controls the Consultant within the meaning of Section 15 of the
Securities Act against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Securities
Act or any other statute or at common law and to reimburse persons indemnified
as above for any legal or other expense (including the cost of any investigation
and preparation) incurred by them in connection with any litigation whether or
not resulting in any liability, but only insofar as such losses, claims,
liabilities and litigation arise out of or are based upon any untrue statement
in the Registration Statement or an amendment or supplement thereto or alleged
untrue statement of a material fact required to be stated in the Registration
Statement or necessary to make the statement therein not misleading, all as of
the date when the Registration Statement or such amendment, as the case may be,
becomes effective, or any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus or any supplement thereto, or any
omission or alleged omission to state therein a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they are made, not misleading; provided, However, that the indemnity agreement
contained in this Section 6.1 shall not apply to amounts paid in settlement of
any such litigation if such settlement is effected without the consent of the
Company, nor shall it apply to the Consultant or any person controlling the
Consultant in respect of any such losses, claims, damages, liabilities or
actions arising out of, or based upon, any such untrue statement or alleged
untrue statement, or any such omission or alleged omission, if such statement or
omission was made in reliance upon information or furnished in writing to the
Company by or on behalf of such Consultant specifically for use in connection
with the preparation of the Registration Statement or the Prospectus or any such
amendment thereof or supplement thereto.
The Consultant agrees within twenty days after the receipt by it of written
notice of the commencement of any action against it or against any person
controlling it as aforesaid, in respect of which indemnity may be sought from
the Company on account of the indemnity agreement contained in this Section 6.1,
to notify the Company in writing of the commencement thereof. The omission of
the Consultant so to notify the Company of any such action shall relieve the
Company from any liability which it may have to the Consultant or any person
controlling it as aforesaid on account of the indemnity agreement contained in
this Section 6.1, but shall not relieve the Company from any other liability
which it may have to the Consultant or such controlling person. In case any such
action shall be brought against the Consultant or any such controlling person
and the Consultant shall notify the Company of the commencement thereof, the
Company shall be entitled to participate in (and, to the extent that it shall
wish, to direct) the defense thereof at its own expense but such defense shall
be conducted by counsel of recognized standing and satisfactory to the
Consultant or such controlling person or persons, defendant or defendants in the
litigation. The Company agrees to notify the Consultant promptly of the
commencement of any litigation or proceeding against it or such controlling
person, or which it may be advised, in connection with the issue and
distribution of any of its securities and to furnish to the Consultant, at its
request, copies of all pleadings therein and permit the Consultant to be an
observer therein and appraise the Consultant of all developments therein, all at
the Company's expense.
SECTION 6.2 INDEMNIFICATION BY CONSULTANT. Section 6.2 Indemnification by
Consultant The Consultant agrees, in the same manner and to the same extent as
set forth in Section 6.1 above, to indemnify and hold harmless the Company, the
directors of the Company, each officer who signs the Registration Statement, and
each person, if any, who controls the company within the meaning of Section 15
of the Securities Act, with respect to any statement in or omission from the
Registration Statement or any amendment thereto, or the Prospectus (as amended
or as supplemented, if amended or supplemented as aforesaid), if such statement
or omission was made in reliance upon information or furnished in writing to the
Company by the Consultant, or on its behalf, specifically for use in connection
with the preparation of the Registration Statement or the Prospectus or any such
amendment thereof or supplement thereto. The Consultant shall not be liable for
amounts paid in settlement of any such litigation if such settlement was
effected without its consent. In case of commencement of any action, in respect
of which indemnity may be sought from the Consultant on account of the indemnity
agreement contained in this Section 6.2, each person agreed to be indemnified by
the Consultant shall have the same obligation to notify the Consultant as the
Consultant has toward the Company in Section 6.1 above, subject to the same loss
of indemnity in the event such notice is not given, and the Consultant shall
have the same right to participate in (and, to the extent that it shall wish, to
direct) the defense of such action at its own expense, but such defense shall be
conducted by counsel of recognized standing and satisfactory to the Company. The
Consultant agrees to notify the Company promptly of the commencement of any
litigation or proceeding against it or against any such controlling person, of
which it may be advised, in connection with the issue and distribution of any of
the securities of the Company, and to furnish to the Company at its request
copies of all pleadings therein and permit the Company to be an observer therein
and apprise it of all developments therein, all at the Consultant's expense.
The respective indemnity agreements between the Consultant and the Company
contained in Sections 6.1 and 6.2 above, and the representations and warranties
of the Company set forth in Section 3.1 hereof or elsewhere in this Agreement,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Consultant or is or on behalf of any
controlling person of the Consultant or the Company or any such officer or
director or any controlling person of the Company, and shall survive the
delivery of the Stock, and any successor of the Company, and the Consultant, or
of any controlling person of the Company or the Consultant, as the case may be,
shall be entitled to the benefit of the respective indemnity agreements.
In order to provide for just and equitable contribution under the
Securities Act in any case in which (i) any person entitled to indemnification
under this Article VI makes claim for indemnification pursuant hereto but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Article VI provides for indemnification in
such case, or (ii) contribution under the Securities Act may be required on the
part of any such person in circumstances for which indemnification is provided
under this Article VI, then, and in each such case, the Company and the
Consultant shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after any contribution from others) in
such proportion so that the Consultant is responsible for the proportion that
the number of Distribution Shares covered by the Prospectus bears to the total
number of outstanding shares of Common Stock of the Company and the Company is
responsible for the remaining portion; provided, that, in any such case, no
person guilty of a fraudulent misrepresentation (within the meaning of Section
11 (f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
Within twenty days after receipt by any party to this Agreement (or its
representative) of notice of the commencement of any action, suit or proceeding,
such party will, if a claim for contribution in respect thereof is to be made
against another party (the "contributing party"), notify the contributing party,
in writing, of the commencement thereof, but the omission so to notify the
contributing party will not relieve it from any liability which it may have to
any other party other than for contribution hereunder. In case any such action,
suit or proceeding is brought against any party, and such party so notifies a
contributing party or his or its representative of the commencement thereof
within the aforesaid twenty days, the contributions party will be entitled to
participate therein with the notifying party and any other contributing party
similarly notified. Any such contributing party shall not be liable to any party
seeking contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution without the written
consent of such contributing party. The contribution provisions contained in
this Article VI are in addition to any other rights or remedies which either
party hereto may have with respect to the other or hereunder.
The Company agrees to indemnify and hold harmless, to the full extent
permitted by law, Consultant, its officers, directors and employees and each
Person who controls Consultant (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary prospectus or 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, except insofar as
the same are caused by or contained in any information furnished in writing to
the Company by, or on behalf of, Consultant expressly for use therein; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any such Registration Statement, Prospectus or
preliminary prospectus if (i) Consultant failed to deliver a copy of the
Prospectus to the person asserting such loss, claim, damage, liability or
expense after the Company had furnished Consultant with the number of copies of
the same requested by Consultant and (ii) the Prospectus corrected such untrue
statement or omission; provided, further however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission in the Prospectus, if
such untrue statement or alleged untrue statement, omission or alleged omission
is corrected in an amendment or supplement to the Prospectus and the Consultant
thereafter fails to deliver such Prospectus as so amended or supplemented prior
to or concurrently with the distribution of the Distribution Shares to the
person asserting such loss, claim, damage, liability or expense after the
Company had furnished Consultant with the number of copies of the same requested
by Consultant.
SECTION 6.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Section 6.3 Conduct of
Indemnification Proceedings Any Person entitled to indemnification hereunder
will (i) give prompt notice to the indemnifying party of any claim with respect
to which it seeks indemnification and (ii) permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, however, that any Person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
separate counsel shall be at the expense of such Person unless (a) the
indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such Person or (c) in the reasonable
judgment of any such Person, based upon advice of its counsel, a conflict of
interest may exist between such Person and the indemnifying party with respect
to such claims or such Person may have one or more legal defenses available to
it which are different from or additional to those available to the indemnifying
party (in either of which cases, if the person notifies the indemnifying party
in writing that such Person elects to employ separate counsel at the expense of
the indemnifying party, the indemnifying party shall not have the right to
assume the defense of such claim on behalf of such Person). If such defense is
not assumed by the indemnifying party, the indemnifying party will not be
subject to any liability for any settlement made without its consent (but such
consent shall not be unreasonably withheld). No indemnified party will be
required to consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation. An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the fees
and expenses of such additional counsel or counsels; provided, however, that the
indemnifying party shall only be obligated to pay the fees and expenses of up to
two additional counsels.
SECTION 6.4 CONTRIBUTION. Section 6.4 Contribution If for any reason the
indemnification provided for in the preceding Sections 6.1, 6.2 and 6.3 is
unavailable to any indemnified party or is insufficient to hold it harmless as
contemplated by the preceding Sections 6.1, 6.2 and 6.3, then the indemnifying
party shall contribute to the amount paid or payable by the indemnified party as
a result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations; provided, however, that Consultant shall be required
to contribute an amount greater than the dollar amount of the proceeds received
by Consultant from any sale of Distribution Shares. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
ARTICLE VII ARTICLE VII
DISPUTE RESOLUTION DISPUTE RESOLUTION
SECTION 7.1 CONSULTING AND DISTRIBUTION AGREEMENT DISPUTES. Section 7.1
Consulting and Distribution Agreement Disputes In the event of a controversy,
dispute or claim arising out of, in connection with, or in relation to the
interpretation, performance, nonperformance, validity or breach of this
Agreement or otherwise arising out of, or in any way related to this Agreement,
including, without limitation, any claim based on contract, tort, statute or
constitution (singly, an "Agreement Dispute" and collectively, "Agreement
Disputes"), the party asserting the Agreement Dispute shall give written notice
to the other party of the existence and nature of such Agreement Dispute.
Thereafter, the general counsels (or other designated representatives) of the
respective parties shall negotiate in good faith for a period no less than 60
days after the date of the notice in an attempt to settle such Agreement
Dispute. If after such 60 calendar day period such representatives are unable to
settle such Agreement Dispute, any party hereto may commence arbitration by
giving written notice to all other party that such Agreement Dispute has been
referred to the American Arbitration Association for arbitration in accordance
with the provisions of this Article.
SECTION 7.2 ARBITRATION IN ACCORDANCE WITH AMERICAN ARBITRATION ASSOCIATION
RULES. Section 7.2 Arbitration in Accordance with American Arbitration
Association Rules All Agreement Disputes shall be settled by arbitration in
Houston, Texas, before a single arbitrator in accordance with the rules of the
American Arbitration Association (the "Rules"). The arbitrator shall be selected
by the mutual agreement of all parties, but if they do not so agree within
twenty (20) days after the date of the notice of arbitration referred to above,
the selection shall be made pursuant to the Rules from the panels of arbitrators
maintained by the American Arbitration Association. The arbitrator shall be an
individual with substantial professional experience with regard to resolving or
settling sophisticated commercial disputes.
SECTION 7.3 FINAL AND BINDING AWARDS.Section 7.3 Final and Binding Awards
Any award rendered by the arbitrator shall be conclusive and binding upon the
parties hereto; provided, however, that any such award shall be accompanied by a
written opinion of the arbitrator giving the reasons for the award. This
provision for arbitration shall be specifically enforceable by the parties and
the decision of the arbitrator in accordance therewith shall be final and
binding, and there shall be no right of appeal therefrom. The parties agree to
comply with any award made in any such arbitration proceedings that has become
final in accordance with the Rules, and agree to the entry of a judgment in any
jurisdiction upon any award rendered in such proceedings becoming final under
the Rules.
SECTION 7.4 COSTS OF ARBITRATION. Section 7.4 Costs of Arbitration In the
award the arbitrator shall allocate, in his or her discretion, among the parties
to the arbitration all costs of the arbitration, including, without limitation,
the fees and expenses of the arbitrator and reasonable attorneys' fees, costs
and expert witness expenses of the parties. Absent such an allocation by the
arbitrator, each party shall pay its own expenses of arbitration, and the
expenses of the arbitrator shall be equally shared.
SECTION 7.5 SETTLEMENT BY MUTUAL AGREEMENT. Section 7.5 Settlement by
Mutual Agreement Nothing contained in this Article shall prevent the parties
from settling any Agreement Dispute by mutual agreement at any time.
SECTION VIII SECTION VIII
MISCELLANEOUS MISCELLANEOUS
SECTION 8.1 NO INCONSISTENT AGREEMENTS. Section 8.1 No Inconsistent
Agreements The Company will not on or after the date of this Agreement enter
into any agreement with respect to its securities which is inconsistent with
this Agreement or otherwise conflicts with the provisions hereof. In the event
the Company has previously entered into any agreement with respect to its
securities granting any registration rights to any Person, the rights granted to
the Consultant hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any such agreements.
SECTION 8.2 SURVIVAL OF OBLIGATIONS. Section 8.2 Survival of Obligations
The obligations of the parties under Sections 6 and 7 of this Agreement shall
survive the termination for any reason of this Agreement (whether such
termination is by the Company, by the Consultant, upon the expiration of this
Agreement or otherwise).
SECTION 8.3 SEVERABILITY. Section 8.3 Severability In case any one or more
of the provisions or part of the provision contained in this Agreement shall for
any reason be held to be invalid, illegal or unenforceable in any respect in any
jurisdiction, such invalidity, illegality or unenforceability shall be deemed
not to affect any other jurisdiction or any other provision or part of a
provision of this Agreement, but this Agreement shall be reformed and construed
in such jurisdiction as if such provision or part of a provision held to be
invalid or illegal or unenforceable had never been contained herein and such
provision or part reformed so that it would be valid, legal and enforceable in
such jurisdiction to the maximum extent possible. In furtherance and not in
limitation of the foregoing, the Company and Consultant each intend that the
covenants contained in Sections 4 and 5 shall be deemed to be a series of
separate covenants, one for each county of the State of Texas and one for each
and every other state, territory or jurisdiction of the United States and any
foreign country set forth therein. If, in any judicial proceeding, a court shall
refuse to enforce any of such separate covenants, then such enforceable
covenants shall be deemed eliminated from the provisions hereof for the purpose
of such proceedings to the extent necessary to permit the remaining separate
covenants to be enforced in such proceedings. If, in any judicial proceeding, a
court shall refuse to enforce any one or more of such separate covenants because
the total time thereof is deemed to be excessive or unreasonable, then it is the
intent of the parties hereto that such covenants, which would otherwise be
unenforceable due to such excessive or unreasonable period of time, be enforced
for such lesser period of time as shall be deemed reasonable and not excessive
by such court.
SECTION 8.4 ENTIRE AGREEMENT, AMENDMENT. Section 8.4 Entire Agreement,
Amendment This Agreement contains the entire agreement between the Company and
the Consultant with respect to the subject matter thereof. Consultant
acknowledges that it neither holds any right, warrant or option to acquire
securities of the company, nor has the right to any such rights, warrants or
options, except pursuant to the is Agreement. This Agreement may not be amended,
waived, changed, modified or discharged except by an instrument in writing
executed by or on behalf of the party against whom any amendment, waiver,
change, modification or discharge is sought.
SECTION 8.5 NOTICES. Section 8.5 Notices All notices and other communications
provided for or permitted hereunder shall be made in writing and shall be deemed
to have duly given if delivered by hand-delivery, registered first-class mail,
postage prepaid, telex, telecopier, or air courier guaranteeing overnight
delivery as follows:
To the Company: To the Consultant
Agri Bio-Sciences, Inc. GS Financial Services, Inc.
0000 Xxxxxxxxxxx Xxxxx 00 Xxxx Xxxxxx, Xxxxxxxxx 3
Spring, Texas 77379 Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, President Attn: Xxxxxx X. Xxxxxxx, President
with an additional copy by like means to:
Sonfield & Sonfield
000 Xxxxx Xxxx Xxx Xxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Xx., Esq.
and/or to such other persons and addresses as any party shall have
specified in writing to the other.
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 acknowledged, if telecopied; and on the
next business day if timely delivered to an air courier guaranteeing overnight
delivery.
SECTION 8.6 AsSIGNABILITY. Section 8.6 Assignability This Agreement shall
be assignable by either party on the express consent of the other and shall be
binding upon, and shall inure to the benefit of, the successors and assigns of
the parties.
SECTION 8.7 GOVERNING LAW. Section 8.7 Governing Law This Agreement shall
be governed by and construed under the laws of the State of Delaware.
SECTION 8.8 WAIVER AND FURTHER AGREEMENT. Section 8.8 Waiver and Further
Agreement Any waiver of any breach of any terms or conditions of this Agreement
shall not operate as a waiver of any other breach of such terms or conditions or
any other term or condition, nor shall any failure to enforce any provision
hereof operate as a waiver of such provision or of any other provision hereof.
Each of the parties hereto agrees to execute all such further instruments and
documents and to take all such further action as the other party may reasonably
require in order to effectuate the terms and purposes of this Agreement.
SECTION 8.9 HEADING OF NO EFFECT. Section 8.9 Headings of No Effect The
paragraph headings contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
AGRI BIO-SCIENCES, INC.
By: /s/Xxxxxx X. Xxxxxxxx
-----------------------
Xxxxxx X. Xxxxxxxx, President
GS FINANCIAL SERVICES, INC.
By: /s/Xxxxxx X. Xxxxxxx
----------------------
Xxxxxx X. Xxxxxxx, President
