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EXHIBIT 1
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SUBSCRIPTION AGREEMENT
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This Subscription Agreement (the "Subscription Agreement") is made
and entered into as of the 9th day of September, 1997 (the "Subscription Date"),
by and between N-Viro International Corporation, a Delaware corporation (the
"Company"), and Xxxxxxx Xxxxx, an individual residing at 00 Xxxxx Xxxxxx,
Xxxxxxxx Xxxxx, Xxx Xxxxxx 00000 ("Purchaser").
W I T N E S S E T H:
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WHEREAS, Purchaser desires to purchase from the Company,
and the Company desires to sell and issue to Purchaser, forty-two thousand
shares of common stock, $.01 par value per share, of the Company ("Purchased
Shares"), upon the terms and subject to the conditions set forth in this
Subscription Agreement.
NOW, THEREFORE, in consideration of the premises, the
mutual promises, covenants and conditions herein contained and for other good
and valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound hereby agree as
follows:
1. SALE OF PURCHASED SHARES TO PURCHASER. On the
Subscription Date, the Company shall sell and issue to Purchaser, and Purchaser
shall purchase from the Company, the Purchased Shares, upon the terms and
subject to the conditions set forth in this Subscription Agreement.
2. PURCHASE PRICE FOR PURCHASED SHARES. In consideration
for the sale and issuance of the Purchased Shares pursuant to Section 1 of this
Subscription Agreement, Purchaser shall pay to the Company the sum of $1.75 per
share or the total sum of $73,500 (the "Purchase Price") for all of the
Purchased Shares.
3. PAYMENT OF PURCHASE PRICE. Payment and delivery by
Purchaser of the Purchase Price to be received by the Company, as determined in
accordance with Section 2 of this Subscription Agreement, shall be paid to the
Company by cashier's check at the offices of the Company on the Subscription
Date.
4. DELIVERY OF THE PURCHASED SHARES. A certificate
evidencing the Purchased Shares registered in the name of Purchaser shall be
executed, issued and mailed to Purchaser by the Company within fifteen (15)
business days of the receipt by the Company from the Purchaser of this
Subscription Agreement as executed by the Purchaser and the Purchase Price.
5. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGEMENTS OF
PURCHASER. Purchaser hereby represents, warrants and acknowledges to the
Company, and the Company may rely on the same in completing the sale of the
Purchased Shares and the other transactions herein contemplated, as of the
Subscription Date, as follows:
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5.01 VALIDITY. This Subscription Agreement constitutes
the legally valid and binding obligation of Purchaser enforceable
against Purchaser in accordance with its terms.
5.02 STATE OF RESIDENCE. The state of residence of
Purchaser is, and shall be at the time of delivery and acceptance of
the Purchased Shares, the State of New Jersey.
5.03 ACCESS. Purchaser has had access to all documents,
records and books pertaining to the Company at the office of the
Company upon reasonable notice to the Company and has had the
opportunity to ask questions of and receive answers from the
officers of the Company concerning the operations of the Company and
the purchase of the Purchased Shares. Prior to the date hereof,
Purchaser has received copies of (i) the Company's Form 10-K for the
year ended December 31, 1996; (ii) the Company's Forms 10-Q for the
quarters ended March 31, 1997 and June 30, 1997, respectively; (iii)
the Company's Notice of Annual Meeting of Stockholders and Proxy
Statement with respect to the annual meeting held on May 9, 1997;
and (iv) the Company's Annual Report for the year ended December 31,
1997 (collectively, the "Disclosed Documents").
5.04 NO REVIEW. Purchaser is aware that no federal or
state agency has made any finding or determination as to the
fairness for public or private investment, nor any recommendation or
endorsement, of the Purchased Shares as an investment.
5.05 SPECULATIVE NATURE. Purchaser recognizes the
speculative nature of an investment in the Purchased Shares.
5.06 HOLDING OF PURCHASED SHARES. As a purchaser of the
Purchased Shares, Purchaser must bear the economic risk of his
investment in the Purchased Shares for an indefinite period of time
because the Purchased Shares have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"), in reliance
upon an exemption from such registration requirements set forth in
Rule 506 of Regulation D promulgated under the 1933 Act ("Regulation
D") and, therefore, cannot be sold unless they are subsequently
registered under the 1933 Act or an exemption from such registration
is available; the Company shall make a notation in its transfer
records regarding said restrictions on transfer of the Purchased
Shares; and the Purchased Shares shall not be sold without
registration under the 1933 Act or exemption therefrom.
5.07 FINANCIAL KNOWLEDGE AND EXPERIENCE. Purchaser has
knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risks of an investment in
the Purchased Shares; is not utilizing any other person to be his
"Purchaser Representative" (as defined in Regulation D) in
connection with evaluating such merits and risks; and offers as
evidence of his knowledge and experience in these matters the
representations and information set forth in this Subscription
Agreement.
5.08 ECONOMIC RISK. Purchaser is willing and able to bear
the economic risk of an investment in the Purchased Shares (in
making this representation, consideration has been given to whether
Purchaser can afford to
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hold the Purchased Shares for an indefinite period of time and
whether, at this time, Purchaser can afford a complete loss of his
investment).
5.09 ACCREDITED INVESTOR. Purchaser is an "accredited
investor" as defined in Rule 501 of Regulation D (an "Accredited
Investor"). In addition to certain institutional investors and
fiduciaries, an Accredited Investor in the Company includes any
person or entity that falls within any one of the following
categories:
(a) any natural person whose individual net
worth, or joint net worth with such person's spouse,
exceeds $1,000,000.00;
(b) any natural person who had an individual
income in excess of $200,000.00 in each of the two most
recent tax years or joint income with such person's
spouse in excess of $300,000.00 in each of those years
and who reasonably expects to reach the same income level
in the current year;
(c) any corporation, business trust or
partnership not formed for the specific purpose of
acquiring the Shares, with total assets in excess of
$5,000,000.00;
(d) any entity in which all of the equity
owners are "Accredited Investors";
(e) any trust, with total assets in excess of
$5,000,000.00, not formed for the specific purpose of
acquiring the Shares, whose purchase is directed by a
"Sophisticated Person" (as described in Rule 506 of
Regulation D);
(f) any employee benefit plan within the
meaning of the Employee Retirement Income Security Act of
1974 if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such Act, which
is either a bank, savings and loan association, insurance
company or registered investment adviser, or if the
employee benefit plan has total assets in excess of
$5,000,000.00 or, if a self-directed plan, with
investment decisions made solely by persons who are
Accredited Investors; or
(g) any director or executive officer of the
Company.
5.10 REGISTRATION OF PURCHASED SHARES. Purchaser
understands and acknowledges that no aspect of the transactions
contemplated in this Subscription Agreement has been, prior to the
date of this Subscription Agreement, or will be, prior to the date
of delivery and acceptance of the Purchased Shares, registered with
or reviewed by the Securities and Exchange Commission under the 1933
Act or with or by any state securities law administrator, and no
federal or state securities law administrator has approved any
disclosure or other material concerning the Company or the Purchased
Shares or made any recommendation with respect thereto. Purchaser
also understands and acknowledges that the Company has not granted
Purchaser any rights whatsoever with respect to the
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future registration of any Purchased Shares with any federal or
state securities administrator or authority, including, but not
limited to, any piggyback registration rights whereby the Purchased
Shares would be registered in conjunction with the registration by
the Company of any other of its issued securities.
5.11 COMMITMENTS. Purchaser's overall commitment to
investments which are not readily marketable is not disproportionate
to his net worth.
5.12 LIQUIDITY. Purchaser has adequate means of providing
for his current needs and personal contingencies and has no need for
liquidity in his investment in the Purchased Shares.
5.13 OBJECTIVE. The objectives of the Company are
compatible with Purchaser's investment goals.
5.14 INVESTMENT. Purchaser is purchasing the Purchased
Shares for the Purchaser's own account, as principal, for investment
and not with a view to the resale or distribution of all or any part
of the Purchased Shares.
5.15 ADVISOR. Purchaser has been advised by the Company
that he should consult his own legal counsel, accountant or business
advisor as to the legal, tax and other matters concerning his
purchase of the Purchased Shares and his execution of this
Subscription Agreement.
5.16 NO FINANCIAL PROJECTIONS. The Company has neither
delivered nor disclosed to Purchaser any financial projections
relating to the Company.
5.17 NO OTHER COMPANY MATERIALS. Purchaser acknowledges
that the Company has made no oral or written representations or
warranties to the Purchaser, either directly or indirectly, through
its officers, directors, employees or agents, with respect to the
Company or the Purchased Shares, other than those representations
and warranties included herein. Purchaser further acknowledges that
he has not relied on any disclosures of the Company, its directors,
employees or agents, other than such disclosures as are set forth in
the Disclosed Documents.
6. INDEMNIFICATION. Purchaser acknowledges his
understanding of the meaning and legal consequences of all the representations,
warranties and agreements contained in this Subscription Agreement and
Purchaser hereby agrees to indemnify and hold harmless the Company, its agents
and affiliates, successors and assigns from and against any and all loss,
damage, or liability arising out of, connected with or any way related to a
breach of any representation or warranty of Purchaser contained in this
Subscription Agreement.
7. REPRESENTATIONS, WARRANTIES, ACKNOWLEDGEMENTS AND
COVENANTS OF THE COMPANY. The Company hereby represents, warrants, acknowledges
and covenants to Purchaser, and Purchaser may rely on the same in consummating
transactions herein contemplated, as of the Subscription Date, as follows:
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7.01 DUE INCORPORATION. The Company is a corporation duly
organized and validly existing under the Delaware General
Corporation Law (the "DGCL").
7.02 VALIDITY. Subject to the approval of the Board of
Directors (the "Board") of the Company, this Subscription Agreement
constitutes the legally valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. The
company covenants to seek Board approval of this Subscription
Agreement within ten (10) days of the date of receipt by the Company
from the Purchaser of this Subscription Agreement executed by the
Purchaser and the Purchase Price (the "Payment Date"). In the event
that the Board does not approve this Subscription Agreement within
ten (10) business days of the Payment Date, then the Company shall
return the entire Purchase Price to the Purchaser as soon as
practicable after the expiration of such ten (10) business day
period.
7.03 RECEIPT. Upon receipt by the Company of the Purchase
Price from Purchaser and the delivery of the certificate(s) for
the Purchased Shares to Purchaser, the Purchased Shares will be
validly issued, fully paid and nonassessable.
8. FURTHER ACTION. The parties hereto hereby agree that
they will, at any time and from time to time, after the date hereof, upon
request of any other party hereto, do, execute, acknowledge and deliver or
cause to be done, executed, acknowledged and delivered, all such further acts,
assignments, transfers, agreements, assurances and powers of attorney as may be
reasonably required to carry out the transactions herein contemplated.
9. WAIVER OF BREACH. The waiver of any party hereto of a
breach of any provision of this Subscription Agreement shall not operate or be
construed as a waiver of any subsequent breach by any party hereto.
10. BINDING EFFECT. This Subscription Agreement shall be
binding upon and shall inure to the benefit of the parties hereto, their
respective heirs, personal representatives, successors and permitted assigns.
11. AMENDMENTS. No amendments or variations of the terms
and conditions of this Subscription Agreement shall be valid unless the same is
in writing and signed by the parties hereto.
12. HEADINGS. The paragraph headings contained herein are
for convenience only and shall not, in any way, affect the interpretation or
enforceability of any provision of this Subscription Agreement.
13. GOVERNING LAW. This Subscription Agreement shall be
construed and enforced pursuant to the laws of the State of Delaware.
14. ENTIRE AGREEMENT. This instrument contains the entire
agreement between the parties hereto with respect to the transactions
contemplated in this Subscription Agreement.
15. SEVERABILITY. The validity or unenforceability of any
provision of this Subscription Agreement shall not affect the enforceability or
validity of any other provision of this
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Subscription Agreement and such provisions shall remain valid and binding on the
parties to this Subscription Agreement.
16. GENDER. Unless the context otherwise requires a
different meaning, words of a masculine gender shall be deemed and construed to
include correlative words of the feminine and neuter genders, words importing
the singular number shall include the plural number, and vice versa, and the
terms "hereof", "hereby", "hereto", "hereunder", "herein" and similar terms
mean this Subscription Agreement.
17. ASSIGNMENT. None of the parties hereto may assign,
transfer or otherwise dispose of any of their rights or obligations under this
Subscription Agreement.
18. REMEDIES. The rights and obligations under this
Subscription Agreement are several, with each party being completely free to
enforce any or all rights or obligations under this Subscription Agreement
against any other party with or without the concurrence or joinder of any other
party hereto.
19. COUNTERPARTS. This Subscription Agreement may be
executed in one or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute but one document.
IN WITNESS WHEREOF, the undersigned have executed this
Subscription Agreement in three (3) counterparts effective as of the
Subscription Date.
N-VIRO INTERNATIONAL CORPORATION
By /s/ J. Xxxxxxx Xxxxxxxxx
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J. Xxxxxxx Xxxxxxxxx, Chairman, Chief
Executive Officer and President
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx, Purchaser
[Notary Stamp - Xxxxx X. Xxxxxxxxx Notary Public of New Jersey - Comm. exp
10/10/2000]
