As filed with the Securities and Exchange Commission on January 21, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
Form SB-2
Registration Statement Under The Securities Act of 1933
RIPE TOUCH GREENHOUSES, INC.
----------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 0100 84-1342754
-------- ---- ----------
(State or Jurisdiction (Primary Standard Industrial (IRS Employer
of Incorporation or Classification Code Number) Identification Number)
Organization)
Stanley Abrams
President
Ripe Touch Greenhouses, Inc.
4871 N. Mesa Drive 4871 N. Mesa Drive
Castle Rock, Colorado 80104 Castle Rock, Colorado 80104
(303) 688-9805 (303) 688-9805
- -------------------------------------- ------------------------------------
(Address and telephone number of (Name, address and telephone number of
principal executive offices and agent for service)
principal place of business)
Copies to:
David H. Lieberman, Esq. Michael Beckman, Esq.
Blau, Kramer, Wactlar & Lieberman, P.C. Beckman, Millman and Sanders, P.C.
100 Jericho Quadrangle, Suite 225 116 John Street
Jericho, New York 11753 New York, New York 10038
(516) 822-4820 (212) 227-6777
(516) 822-4824 Fax (212) 227-1486 Fax
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement for the same offering.
[ ]_______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
[ ]_______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box [X].
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================
Proposed Proposed Maximum
Title of Each Class of Amount to be Maximum Offering Aggregate Offering Amount of
Securities to be Registered Registered(1) Price Per Security Price (1) Registration Fee
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value(2) 825,500 $6.00 $4,953,000 $1,461
- -------------------------------------------------------------------------------------------------------------
Class A Warrants(3) 825,500 $.20 $165,100 $49
- -------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value,
underlying Class A Warrants(4)(9) 825,500 $6.00 $4,953,000 $1,461
- -------------------------------------------------------------------------------------------------------------
Representative's Securities 125,000 $.001 $125 --
- -------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value
contained in Representative's
Securities (6)(9) 125,000 $7.20 $900,000 $266
- -------------------------------------------------------------------------------------------------------------
Class A Warrants contained in
Representative's Securities(6)(9) 125,000 $.26 $32,500 $10
- -------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value
underlying Class A Warrants
contained in Representative's
Securities (7)(9) 125,000 $7.20 $900,000 $266
- -------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value,
owned by Selling
Securityholders (8)(9) 316,500 $6.00 $1,899,000 $560
- -------------------------------------------------------------------------------------------------------------
Total $13,802,725 $4,073
- =========== ======
=============================================================================================================
<FN>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 under the Securities Act of 1933, as amended.
(2) Includes up to 123,750 shares of Common Stock which may be purchased by the
Representative to cover over-allotments, if any.
(3) Includes up to 123,750 redeemable Common Stock Class A Purchase Warrants
which may be purchased by the Representative to cover over-allotments, if
any.
(4) Reserved for issuance upon exercise of the Common Stock Purchase Warrants.
(5) Issued to the Representative entitling the Representative to purchase one
share of Common Stock ("Representative's Stock Warrants") and one Common
Stock Class A Purchase Warrant ("Representative's Warrants") for each ten
of such securities sold in the offering.
(6) Reserved for issuance upon exercise of Representative's Securities.
(7) Reserved for issuance upon exercise of the Warrants underlying the
Representative's Warrants.
(8) Represents shares of Common Stock offered by Selling Securityholders.
(9) Pursuant to Rule 416, there is also being registered such additional
securities as may become issuable pursuant to the anti-dilution provisions
of the Warrants.
</FN>
</TABLE>
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Registration Statement
Item Number and Heading Location in Prospectus
----------------------- ----------------------
<S> <C> <C>
1. Front of Registration Statement and
Outside Front Cover Page of Prospectus. . . . . Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus . . . . . . . . . . . . . . . . . Inside Front and Outside Cover Pages
3. Summary Information and Risk Factors. . . . . . Prospectus Summary; The Company;
Risk Factors
4. Use of Proceeds . . . . . . . . . . . . . . . . Use of Proceeds
5. Determination of Offering Price . . . . . . . . Cover Page; Risk Factors; Underwriting
6. Dilution. . . . . . . . . . . . . . . . . . . . Dilution
7. Selling Security Holders. . . . . . . . . . . . Selling Securityholders
8. Plan of Distribution. . . . . . . . . . . . . . Underwriting; Risk Factors;
Selling Securityholders
9. Legal Proceedings . . . . . . . . . . . . . . . Business - Legal Matters
10. Directors, Executive Officers, Promoters
and Control Persons. . . . . . . . . . . . . Management
11. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . Principal Stockholders
12. Description of Securities . . . . . . . . . . . Description of Securities
13. Interests of Named Experts and Counsel. . . . . Legal Matters; Experts
14. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities. . . . . . . . . . . . . . . . . Management
15. Organization within Last Five Years . . . . . . Business; Certain Transactions
16. Description of Business . . . . . . . . . . . . The Company; Business
17. Management's Discussion and Analysis
or Plan of Operation . . . . . . . . . . . . Management's Discussion and Analysis of
Financial Condition and Results of Operations
18. Description of Property . . . . . . . . . . . . Business - Property
19. Certain Relationships and Related Transactions. Certain Transactions
20. Market for Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . Cover Page; Principal Stockholders;
Description of Securities; Risk Factors
21. Executive Compensation. . . . . . . . . . . . . Management
22. Financial Statements. . . . . . . . . . . . . . Financial Statements
23. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . Not applicable
</TABLE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 21, 1998
PRELIMINARY PROSPECTUS
RIPE TOUCH GREENHOUSES, INC.
825,000 Units
Ripe Touch Greenhouses, Inc. (the "Company"), a Delaware corporation is
offering 825,000 units (the "Units"). Each Unit consists of one share of common
stock (the "Common Stock"), $.001 par value, and one Redeemable Common Stock
Class A Purchase Warrant (the " Warrants" or "Class A Warrants"). The Common
Stock and the Class A Warrants comprising each Unit will not trade separately
from the Unit until the earlier of ninety (90) days from the date of this
Prospectus or the determination by Millennium Securities Corp. ("Millennium"),
in its sole discretion, to permit such separate trading. At the time such
separate trading is permitted, the Units may be delisted from separate trading
on the Nasdaq Small Cap Stock Market. See "Description of Securities."
The Class A Warrants shall be exercisable commencing on the date of this
Prospectus. Each Class A Warrant entitles the holder to purchase one share of
Common Stock, at $10.00 per share, during the three year period commencing on
the date of this Prospectus. See "Description of Securities." The Warrants are
redeemable by the Company, for $.01 per Warrant, on not less than thirty (30)
nor more than sixty (60) days' written notice if the average closing bid price
per share of Common Stock is at least $12.00 per share during a period of twenty
(20) consecutive trading days ending not earlier than three (3) days on the date
the Warrants are called for redemption. Any redemption of the Warrants during
the one year period commencing on the date of this Prospectus shall require the
consent of Millennium. See "Description of Securities."
Prior to this offering, there has been no public market for the Units,
Common Stock or Warrants. The price of the Units, Common Stock and exercise
price of the Warrants have been determined by negotiations between the Company
and Millennium Securities Corp. For additional information regarding the factors
considered in determining the initial public offering prices, see
"Underwriting".
The Company has applied for quotation of the Units, Common Stock and the
Warrants on the Nasdaq SmallCap Stock Market. There can be no assurance that
these securities will be approved for listing or, if approved, that an active
trading market will develop. See "Risk Factors".
The registration statement of which this Prospectus forms a part also covers
the offering of an aggregate of 316,500 shares of Common Stock (the "Private
Placement Shares") owned by certain private placement investors (collectively
referred to as the "Private Placement Lenders" or the "Selling
Securityholders"). See "Selling Securityholders". The shares of Common Stock
owned by certain of the Selling Security Holders and registered hereunder may
not be sold or transferred for twenty-four (24) months from the date of this
Prospectus, subject to earlier release at the sole discretion of the
Representative. See "Selling Securityholders" and "Description of Securities."
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK AND IMMEDIATE SUBSTANTIAL DILUTION IN THE SECURITIES OFFERED HEREBY. SEE
"RISK FACTORS" ON PAGE 7 AND "DILUTION" PAGE 13.
-------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
==================================================================================================
Price to Public Underwriting Discounts and Commissions(1) Proceeds to Company (2)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Unit $6.20 $.62 $5.58
- --------------------------------------------------------------------------------------------------
Total $5,115,000 $511,500 $4,603,500
==================================================================================================
<PAGE>
<FN>
(1) Does not include additional compensation to be received by the
Representative in the form of (i) a non-accountable expense allowance of
three percent of the gross proceeds of this Offering ($153,450) and (b) a
Security, purchasable at a nominal price, giving it the right to acquire
125,000 Units at an initial exercise price of $8.06 per Unit (the
"Representative's Purchase Option"). In addition, the Company has agreed to
indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Act") See
"Underwriting."
(2) Before deducting other offering expenses payable by the Company estimated
at $500,000, including the Representative's non-accountable expense
allowance in the amount of $153,450. See "Use of Proceeds" and
"Underwriting".
(3) For the purpose of covering over-allotments, if any, the Company has
granted to the Representative an option, exercisable within forty-five days
of the date hereof, to purchase an additional 123,750 Units, upon the same
terms and conditions as the Units offered hereby. If such over-allotment
option is exercised in full, the Total Price to Public will be $5,882,250,
the Total Underwriting Discount will be $588,225 and the Total Proceeds to
the Company will be $5,294,025. See "Underwriting."
</FN>
</TABLE>
The securities are offered, subject to prior sale, when, as and if accepted
by the Representative named herein and subject to approval of certain legal
matters by counsel for the Representative. It is expected that the delivery of
the certificates representing Common Stock and Class A Warrants will be made on
or about ______, 1998 at the offices of Millennium Securities Corp.
MILLENNIUM SECURITIES CORP.
The date of this Prospectus is , 1998
<PAGE>
[Photographs of the Company's project)
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN , OR OTHERWISE EFFECT THE PRICE OF THE COMMON STOCK AND/OR
THE CLASS A WARRANTS, INCLUDING OVER-ALLOTMENT AND OTHER STABILIZING
TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
The Company intends to furnish its shareholders and holders of Class A
Warrants with annual reports containing audited financial statements, examined
by an independent public accounting firm, and such interim reports as it may
determine to furnish or as may be required by law.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless otherwise indicated, the information in
this Prospectus does not give effect to the exercise of the over-allotment
option described under "Underwriting" or the exercise of any other options,
warrants or other convertible securities. All references herein to the Company
include its predecessor unless the context otherwise requires. Except for
historical information contained in this Prospectus, the matters discussed are
forward looking statements that involve risks and uncertainties. Among the
factors that could cause actual results to differ materially are the following:
the effect of business and economic conditions; the impact of competitive
products and pricing; capacity and supply constraints or difficulties; product
development, commercialization or technological difficulties; and the regulatory
and trade environment.
The Company
Ripe Touch Greenhouses, Inc. (the "Company") has been formed to construct
and operate greenhouses in the United States for the production and sale of
hydroponic, naturally vine ripened tomatoes. The first proposed greenhouse will
be located on 200 acres of land in Colorado. This facility will be powered by
three 1,000HP Thermal Combustors to be purchased from an affiliated party using
alternate fuel sources, such as used tires. The combustors will generate the
heat for the greenhouse as well as the steam necessary to produce five megawatts
of electricity. In addition to revenues from the sale of tomatoes, the Company
anticipates receiving revenue from the sale of electricity generated in excess
of the greenhouse requirements and the sale of recyclables created during the
generation of electricity, including carbon black. The construction of the
Colorado greenhouse and power generation facility is intended to be financed
through a construction loan in the amount of $14,000,000 (the "Construction
Loan") with Heritage Financial Corporation and the sale of approximately
$4,103,500 (net) of common stock and warrants in an initial public offering
under applicable federal and state securities laws.
The Colorado project intends to employ the services of several outside
professional groups. The Company has entered into agreements with Colorado
Greenhouse LLC, which operates several greenhouses in Colorado, to design and
manage the construction of the greenhouse facility as well as manage, grow and
sell the tomatoes. Tri State Power Generation Company has entered into a thirty
(30) year electrical power contract with the Company wherein they will be
purchasing the electricity generated from the Company's power generation
facility. Stone & Webster Engineering Corporation has completed their due
diligence study and will be acting as a consultant to oversee an engineered
procurement contract ("EPC") to guarantee the successful construction and
completion of the greenhouse, both on time and on budget. The Company is
compiling bids from various vendors and anticipates finalizing the EPC by
December 31, 1997. For its initial energy source, the Company has entered into
agreements with (i) El Paso County, Colorado for the supply of approximately
2,000,000 tires per year and (ii) with Dave Mehring, a tire broker, to provide
an additional 2,000,000 used tires annually to fuel the Thermal Combustors.
The Company was incorporated under the laws of the State of Delaware on
October 26, 1995. The Company's executive offices are located at 4871 N. Mesa
Drive, Castle Rock, Colorado 80104 and its telephone number is (303) 688-9805.
See "Risk Factors", "Management" and "Certain Transactions" for a
discussion of certain factors that should be considered in evaluating the
Company and its business.
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered by the Company(1)
Common Stock . . . . . . . . . . . 825,000 shares
Warrants . . . . . . . . . . . . . 825,000 warrants
Price Per Share of Common Stock . . $6.00
Price Per Warrant . . . . . . . . . $0.20
Shares of Common Stock Outstanding
After Offering (2)(3). . . . . . . 4,663,750 Shares
Use of Proceeds . . . . . . . . . . For repayment of notes issued in private
placements, for construction of the greenhouse,
purchase of machinery, and for working capital
and general corporate purposes. See "Use of
Proceeds".
Proposed Nasdaq Small Cap Stock
Market Symbols (4)
Common Stock. . . . . . . . . . . RTGI
Warrants. . . . . . . . . . . . . RTGIW
Risk Factors. . . . . . . . . . . . Purchase of securities being offered hereby
involves a significant degree of risk, including
intense competition, rapid growth, and dependence
on key personnel, among others. See "Risk
Factors".
- -----------------
<FN>
(1) Does not include (a) 316,500 Private Placement Shares offered by
Selling Securityholders, which securities were acquired in connection
with a private placement financing of the Company from September
through December 1996 and in May through October 1997, and (b)
3,489,750 shares of Common Stock owned by the Investors. See "Selling
Securityholders".
(2) Assumes no exercise of: (i) the Representative's over-allotment option
to purchase up to 123,750 shares of Common Stock and 123,750 Class A
Warrants; (ii) the Class A Warrants offered hereby; (iii) the
Representative's Purchase Option to purchase up to 125,000 shares of
Common Stock and 125,000 Class A Warrants; (iv) the Class A Warrants
purchasable by the Representative upon exercise of the
Representative's Purchase Option; and (v) options issuable under the
Company's 1996 Long Term Incentive Plan. See "Description of
Securities and "Underwriting".
(3) See "Dilution".
(4) Although the Company will be applying for initial quotation of the
Common Stock and Class A Warrants on the Nasdaq SmallCap Market, there
can be no assurance that the Company will be approved for listing
these securities or, if approved, that it will be able to continue to
meet the requirements for continued quotation or that a public trading
market will develop or be sustained. See "Risk Factors - Absence of
Public Market; Negotiated Offering Price".
</FN>
</TABLE>
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following summary financial information concerning the Company, other than
the as adjusted balance sheet data, has been derived from the financial
statements included elsewhere in this Prospectus and should be read in
conjunction with such financial statements and the notes thereto. See "Financial
Statements".
Balance Sheet Data:
<TABLE>
<CAPTION>
September 30, December December
1997 31, 1996 31, 1995
------------ ---------- --------
<S> <C> <C> <C>
Total assets $1,550,634 $1,075,145 $98,224
Current liabilities 2,092,160 1,466,248 257,641
Long-term liabilities net of current
portion 223,930 16,646 -
Stockholders' equity (deficit) (765,456) (407,749) (159,417)
Statement of Operations Data:
Nine Months Fiscal Year Nine Months
Ended Ended Ended
September 30, December December
1997 31, 1996 31, 1995
------------- ----------- -----------
Net sales 132,786 - -
Net loss (716,708) (708,434) (162,417)
Loss per Common Share (.18848) (.20235) (.05414)
Common Shares Outstanding 3,802,500 3,501,000 3,000,000
</TABLE>
<PAGE>
RISK FACTORS
The securities offered hereby are speculative and involve a high degree of
risk. Only those persons able to lose their entire investment should purchase
these securities. Prospective investors, prior to making an investment decision,
should carefully read this prospectus and consider, along with other matters
referred to herein, the following risk factors:
Need for Additional Financing; Uncertainty of Initial Public Offering. The
Company anticipates that the proceeds of this offering will enable it to
initiate preliminary activities to prepare for the construction and operation of
greenhouses. However, the Company will require approximately $16,700,000 gross
proceeds to construct and commence operations of its greenhouse and
co-generation facility. In addition to the proceeds of this offering, the
Company has secured an agreement with a lending institution to loan the Company
approximately $15,000,000 the "Construction Loan". The funding of the
Construction Loan would be concurrently with and contingent upon the completion
of this offering, and is dependent, among other things, upon the lending
institution reaching agreement with Stone & Webster Engineering Company or an
alternative suitable party on the construction contract, including the lender's
liquidated damage requirements.
No Operating History; Dependence on Outside Contractors. The Company has no
operating history in the greenhouse or cogeneration industries and will be
dependent on Colorado Greenhouse LLC to operate the greenhouse. Although the
Company has entered into a greenhouse operation and management agreement with
Colorado Greenhouse LLC, whereby Colorado Greenhouse LLC has agreed to operate
and manage the greenhouse for ten years, in the event Colorado Greenhouse LLC
ceases to operate the greenhouse on behalf of the Company, the Company will be
required to hire personnel experienced in the operation, management and
marketing of the greenhouse and there is no assurance that it will be successful
in attracting such personnel. The loss of services of Colorado Greenhouse LLC
could likely have a material adverse effect on the Company.
Development Stage Company. The Company may be deemed a development stage
business. The Company is subject to all the general risks inherent in, and the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with establishing any new business and operations. The
Company is currently operating with inadequate working capital and is dependent
on the proceeds of this offering, the Construction Loan, and the IPO to commence
and maintain operations. There is no assurance that the Company, even with such
funds, will successfully commence operations or maintain operations at a level
sufficient for an investor to obtain a return on the shares of Common Stock or
Class A Warrants.
Price Fluctuations in U.S. Market for Tomatoes. The price of tomatoes
fluctuates from season to season based on supply and demand. The wholesale price
of homegrown tomatoes is substantially higher in the fall and winter months when
there is a shortage of premium tomatoes. There is no assurance that the U.S.
market will provide sufficient revenue and earnings to permit on-going
operations or that the Company will be able to successfully penetrate existing
non-U.S. markets for these products. There is no assurance the Company will ever
generate sufficient revenue to meet on-going cash requirements.
Availability of Raw Materials for Providing Heat and Electricity. The
primary raw materials anticipated by the Company to be used in its thermal
<PAGE>
combustion operations are previously used rubber tires and water. The Company
believes that suitable previously used rubber tires are readily available from a
wide variety of sources, including El Paso County, Colorado, who has agreed to
provide 2,000,000 tires per year and a tire broker who has agreed to provide the
approximately 2,000,000 tires needed each year to operate the Thermal Combustor.
While the Company does not anticipate any difficulties in obtaining sufficient
quantities of used rubber tires to be used in its operations, no assurance can
be given in this regard. In the event that sufficient quantities of rubber tires
are not available, or if the prices thereof become uneconomical and in the
further event that the Company does not find suitable alternative fuel sources,
the Company's business operations and financial condition would be materially
adversely affected. See "Business-Raw Materials".
Default under Existing Note Obligations. The Company's outstanding note
obligations with respect to its initial bridge financing in the sum of
$1,062,500 were due and payable on September 30, 1997. The Company has requested
in writing that the noteholders extend the due date to January 31, 1998. To
date, noteholders owing $675,000 principal amount of the notes have so extended
the due date. In the event the remaining noteholders do not extend the due date
and demand payment, the Company does not have sufficient funds to make such
payment. The failure to make payment, if payment is demanded by noteholders,
could substantially impair the ability of the Company to proceed with a public
offering.
Competition. There are a limited number of hydroponic greenhouse tomatoes
grown in the United States, there are numerous farmers and/or distributors of
tomatoes. The tomato market is quite mature, and is serviced by a large number
of competitors, several of which dominate the marketplace. The Company
anticipates that its primary competition will be from greenhouse growers in
California and Florida where growing conditions are favorable and whose growers
have access to extensive highway systems and inexpensive fuel. Many of these
competitors, which include Campbell's Soup, Archer Daniels Midland and
Weyerhauser have been in existence for many years, have extensive marketing
budgets, established market shares, wide name recognition and existing
franchise, dealer or other distribution networks and have greater financial,
personnel and administrative resources than the Company. The Company also
anticipates competition from premium tomato growers in Holland and Israel which
are imported for domestic use. If the Company is successful, there is no
assurance that other U.S. or foreign tomato growers will not seek to engage in
the growing of hydroponic greenhouse tomatoes. While the Company believes that
the primary area of competition in its industry is quality, and that it competes
favorably in this regard, there is no assurance that the Company will be able to
compete successfully against established producers or any new entrants into its
industry or that consumers will differentiate between the Company's tomatoes and
its competitors tomatoes. See "Business-Competition".
No Assurance of Profitability. The Company is non-operational at the
present time. Although the Company believes that its operations will be
successful, and that the Company will become profitable, no assurance can be
given in this regard.
Environmental and Other Governmental Regulation. As a producer of power,
the Company is subject to federal, state and local rules and regulations. The
Company's commencement of operations will be dependent upon it obtaining all
necessary permits and approvals from federal, state and local governmental
authorities. Although the Company believes it has all requisite permits and does
not anticipate any difficulty or delays in obtaining any future necessary
permits or approvals, no assurance can be given in this regard. If the Company
were to experience significant delays in or denials of any necessary permits or
approvals, the commencement and maintenance of the Company's proposed greenhouse
operations could be delayed or suspended, and its business and results of
operations would be materially adversely affected. While the Company believes
that its combustion operations will comply with all applicable environmental
laws and regulations, no assurance can be given that compliance with
<PAGE>
environmental laws, regulations or other restrictions, including any new laws or
regulations, will not impose additional costs on the Company which could
adversely affect its financial performance and results of operations. See
"Business-Government Regulation".
Discretion In Application of Proceeds. Management of the Company has
certain discretion over the use and expenditure of a significant portion of
proceeds of this offering. The Company intends to use the funds raised in this
offering for the construction of the greenhouse, construction of the
cogenerator, repayment of indebtedness, and for working capital and general
corporate purposes. Although the Company does not contemplate changes in the
allocated use of proceeds, to the extent the Company finds changes are necessary
or appropriate in order to address changed circumstances and/or opportunities,
management may find it necessary to adjust the use of the Company's capital,
including the proceeds of this offering. As a result of the foregoing, the
success of the Company may be substantially dependent upon the discretion and
judgment of the management of the Company with respect to the application and
allocation of the net proceeds hereof. See "Use of Proceeds".
Possible Need for Additional Financing. The Company believes that its
existing capital resources, together with the proceeds of this offering and the
Construction Loan, will enable it to maintain its operations and working capital
requirements for at least the next twelve (12) months, without taking into
account any internally generated funds from operations. However, the Company may
require additional funds thereafter to maintain or expand its operations.
Adequate funds for this purpose on terms favorable to the Company, whether
through equity financing, debt financing, or other sources, may not be available
when needed. The Company's inability to obtain adequate financing could have a
material adverse effect on the Company.
No Credit Facility. The Company has no credit facility or other access to
debt financing, other than the Construction Loan. Accordingly, the Company's
business could be materially adversely affected in the event that it has a need
for funds that it may not be able to obtain through a debt or equity financing.
Product Liability. The Company's business exposes it to potential liability
which is inherent in the marketing and distribution of food products. The
Company maintains $5,000,000 of general and personal injury insurance. If any
product liability claim is made and sustained against the Company and is not
covered by insurance, the Company's business and prospects could be materially
adversely affected. See "Business-Product Liability".
Control by Present Stockholders. As of the date of this Prospectus, the
current officers and directors (the "Management Stockholders") and 5%
stockholders own a majority of the outstanding shares of Common Stock and, after
completion of this offering, will own 60% of the outstanding shares of Common
Stock. Accordingly, although there are no relationships or agreements between
the non-officer 5% stockholders and the Company, these stockholders will be able
to significantly influence the election of the Company's directors, any increase
in the Company's authorized and outstanding capital stock and the other policies
of the Company. See "Principal Stockholders".
Dependence on Key Personnel. The Company's business expansion plans are
dependent in part upon the abilities of Stanley Abrams, its President, and James
Woodley, its Secretary and Treasurer. Although each of Mr. Abrams and Mr.
Woodley have entered into employment agreements with the Company, there can be
no assurance that they will remain in the employ of or continue to provide
services to the Company. The loss of the services of such persons could have an
adverse effect on the Company. The Company maintains a $1,000,000 life insurance
policy with respect to the life of Stanley Abrams, the proceeds of which are
payable to the Company. See "Management - Employment Agreements".
<PAGE>
Absence of Public Market; Negotiated Offering Price. Prior to the offering,
there has been no market for the Common Stock or Class A Warrants. Although the
Company anticipates that upon completion of this offering, the Common Stock and
Class A Warrants will be approved for quotation on the Nasdaq SmallCap Market,
there can be no assurance that these securities will be approved for quotation
or, if approved, that an active market will develop for the Common Stock or the
Class A Warrants or, if developed, that it can be maintained. In addition, the
Common Stock and Class A Warrants will be separately traded immediately. The
initial public offering price of the Common Stock and the exercise price of the
Class A Warrants have been established by negotiations between the Company and
the Representative and will not necessarily bear any relationship to the
Company's book value, assets, past operating results, financial condition, or
other established criteria of value. See "Underwriting".
Dependence of Warrant Holders on Maintenance of Current Registration
Statement; Possible Loss of Value of Warrants. In order for holders of the Class
A Warrants to exercise such warrants there must be a current registration
statement (or an exemption therefrom) in effect with the Securities and Exchange
Commission ("Commission") and with the various state securities authorities in
the States where warrant holders reside. The Company has undertaken to use its
best efforts to keep (and intends to keep) the registration statement effective
with respect to the Class A Warrants for as long as the Class A Warrants remain
exercisable. However, maintenance of an effective registration statement will
subject the Company to substantial continuing expenses for legal and accounting
fees, and there can be no assurance that the Company will be able to maintain a
current registration statement through the period during which the Class A
Warrants remain exercisable. The Class A Warrants may become unexercisable and
deprived of value by the Company's inability to maintain an effective
registration statement (or an exemption therefrom) with respect to the
underlying shares or by the non-qualification of the underlying shares in the
jurisdiction of such holder's residence. See "Description of Securities -- Class
A Warrants".
Potential Adverse Effect of Redemption of Class A Warrants. The Class A
Warrants may be redeemed by the Company at a price of $.01 per warrant, at any
time, on not less than thirty (30) days' nor more than sixty (60) days' prior
written notice provided that the closing bid price of the Common Stock for all
twenty (20) consecutive trading days ending within three (3) days of the notice
of redemption has equaled or exceeded $12.00 and further provided that any
redemption during the one year period commencing on the date of this Prospectus
shall require the consent of the Representative. Redemption of the Class A
Warrants could force the warrant holders to exercise the warrants at a time when
it may be disadvantageous for the holders to do so or to sell the Class A
Warrants at their then current market price when the holders might otherwise
wish to hold the Class A Warrants for possible appreciation. Any holders who do
not exercise warrants prior to their expiration or redemption, as the case may
be, will forfeit the right to purchase the shares of Common Stock underlying the
Class A Warrants. See "Description of Securities -- Class A Warrants".
Substantial and Immediate Dilution. Purchasers of the Common Stock offered
hereby will incur immediate substantial dilution in the net tangible book value
of approximately $5.44 per share. The present shareholders of the Company have
acquired their respective equity interests at a cost substantially below the
offering price. Accordingly, the public investors will bear a disproportionate
risk of loss per share. See "Dilution".
<PAGE>
No Dividends on Common Stock. The Company has never declared or paid any
dividends on its shares of Common Stock. The Company intends to utilize its
earnings, if any, to facilitate the expansion of its business for the
foreseeable future. Accordingly, it has no intention of declaring or paying
dividends on its Common Stock for the foreseeable future. See "Dividend Policy".
Possible Dilutive Effect of the Issuance of Substantial Amounts of
Additional Shares Without Stockholder Approval. After this offering, the Company
will have an aggregate of approximately 3,761,250 shares of Common Stock
authorized but unissued and not reserved for specific purposes including
1,575,000 shares of Common Stock unissued but reserved for issuance pursuant to
(i) exercise of the Class A Warrants, (ii) the Company's Long Term Incentive
Plan, (iii) exercise of the Representative's Purchase Option, and (v) exercise
of the Representative's over-allotment option. All of such shares may be issued
without any action or approval by the Company's shareholders. Any shares issued
would further dilute the percentage ownership of the Company held by the
investors in this offering. The terms on which the Company could obtain
additional capital during the life of these securities may be adversely affected
because of such potential dilution and because the holders thereof might be
expected to convert or exercise them if the market price of the Common Stock
exceeds their conversion or exercise price. See "Description of Securities",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources" and "Underwriting".
Potential Anti-Takeover Effects of Delaware Law and Certificate of
Incorporation; Possible Issuances of Preferred Stock. Certain provisions of
Delaware law and the Company's Certificate of Incorporation and By-laws could
make more difficult a merger, tender offer or proxy contest involving the
Company, even if such events could be beneficial to the interests of the
shareholders. These provisions include Section 203 of the Delaware General
Corporation Law, the classification of the Company's Board of Directors into
three classes and the requirement that 66 2/3% of the stockholders of the
Company entitled to vote thereon approve certain transactions, including mergers
and sales or transfers of all or substantially all the assets of the Company.
Such provisions could limit the price that certain investors might be willing to
pay in the future for shares of the Company's Common Stock or preferred stock.
In addition, the Company's Certificate of Incorporation allows for the issuance
of up to 500,000 shares of preferred stock by the Board of Directors without
shareholder approval on such terms as the Board may determine. The rights of the
holders of Common Stock and preferred stock will be subject to, and may be
adversely affected by, the rights of the holders of additional or other classes
of preferred stock that may be issued in the future. Moreover, although the
ability to issue other classes of preferred stock may provide flexibility in
connection with possible acquisitions and other corporate purposes, such
issuance may make it more difficult for a third party to acquire, or may
discourage a third party from acquiring, a majority of the voting stock of the
Company. The Company has not issued any shares of preferred stock and has no
current plans to issue any shares of any classes of capital stock other than as
described herein. See "Description of Capital Stock".
Limitations on Personal Liability of Directors. The Company's Certificate of
Incorporation and By-laws contain provisions which reduce the potential personal
liability of directors for certain monetary damages and provide for indemnity of
directors and other persons. The Company is unaware of any pending or threatened
litigation against the Company or its directors that would result in any
liability for which such director would seek indemnification or similar
protection. The Company has entered into Indemnification Agreements with certain
of its officers and directors. The Indemnification Agreements provide for
reimbursement for all direct and indirect costs of any type or nature whatsoever
(including attorneys' fees and related disbursements) actually and reasonably
incurred in connection with either the investigation, defense or appeal of a
Proceeding, (as defined) including amounts paid in settlement by or on behalf of
an indemnitee thereunder.
<PAGE>
Penny Stock Regulation. The Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks." Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the NASDAQ system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document prepared by the Securities and Exchange Commission that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with other
information. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from such rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for a stock
that becomes subject to the penny stock rules. If the Company's Common Stock
becomes subject to the penny stock rules, investors in this offering may find it
more difficult to sell their Common Stock in the event it becomes otherwise
freely resalable.
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Common Stock and Class
A Warrants offered hereby (after deducting underwriting discounts and estimated
offering expenses) are estimated to be $4,103,500 ($5,382,250 if the
Representative's over-allotment option is exercised in full). These proceeds,
together with the $15,000,000 net proceeds to be received from Heritage
Financial Corporation, and excluding the exercise price of any Warrants, are
intended to be utilized substantially as follows:
<TABLE>
<CAPTION>
Approximate Approximate
Application of Proceeds Amount Percentage
----------------------- ----------- -----------
<S> <C> <C>
Working capital and general corporate purposes . $3,803,500 20.0%
Greenhouse Construction. . . . . . . . . . . . . $4,800,000 25.1%
Cogenerator Construction . . . . . . . . . . . . $6,800,000 35.6%
Miscellaneous expenses related to Greenhouse
and cogenerator construction. . . . . . . . . $1,900,000 9.9%
Repayment of Indebtedness. . . . . . . . . . . . $1,800,000 9.4%
----------- ------
$19,103,500 100.0%
</TABLE>
Miscellaneous expenses related to greenhouse and cogenerator construction
include professional fees such as engineering, financial and legal costs of
approximately $165,000, construction loan interest of approximately $700,000,
consulting fees of approximately $320,000 and additional working capital of
approximately $715,000.
The amounts set forth above, other than for repayment of Notes and
repayment of indebtedness, are estimates. The actual amount expended to finance
any category of expenses may be increased or decreased by the Company's Board of
Directors, in its discretion, if required by the operating experience of the
Company or if a reapportionment or redirection of funds, including acquisitions
consistent with the business strategy of the Company, is deemed to be in the
best interest of the Company. The Company has no specific plans, arrangements,
understandings or commitments with respect to any such acquisition at the
present time. See "Risk Factors -- Discretion in Application of Proceeds".
If the Representative exercises the over-allotment option in full, the
Company will realize additional net proceeds of approximately $1,278,750, which
will be used for working capital and general corporate purposes.
The net proceeds to the Company from this offering, together with the
proceeds from the Construction Loan, are expected to be adequate to fund the
Company's working capital needs for at least the next twelve (12) months. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources". Pending use of the proceeds from
this offering as set forth above, the Company may invest all or a portion of
such proceeds in short-term, interest-bearing securities, U.S. Government
securities, money market investments and short-term, interest-bearing deposits
in major banks.
<PAGE>
DILUTION
As of September 30, 1997, the net negative tangible book value of the
Company was ($827,927) or ($.22) per share of Common Stock. Net negative
tangible book value per share represents the amount the liabilities exceed the
amount of total tangible assets divided by 3,838,750 , the number of shares of
Common Stock outstanding on September 30, 1997. See "Capitalization". Thus, as
of September 30, 1997, the net negative tangible book value per share of Common
Stock owned by the Company's current stockholders would have increased by
$4,400,050 or $0.98 per share after giving effect to this offering without any
additional investment on their part and the purchasers of the Units offered
hereby would have incurred an immediate dilution of $5.44 per share from the
offering price. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Public Offering price per share of
Common Stock Offered hereby (1) . . . . . . . . . . . . . $6.20
Net tangible book value per share before offering. . . . . . (.22)
Increase per share attributable to new investors. . . . . .98
---
Adjusted net tangible book value per share
after this offering. . . . . . . . . . . . . . . . . . . . $0.76
-----
Dilution per share to new investors. . . . . . $5.44
=====
</TABLE>
The following table summarizes the relative investments of investors
pursuant to this offering and the current shareholders of the Company:
<TABLE>
<CAPTION>
Current Public
Stockholders Investors Total (2)
------------ --------- ---------
<S> <C> <C> <C>
Number of Shares of Common Stock Purchased . . . . . 3,838,750 825,000 4,663,750
Percentage of Outstanding Common Stock After
Offering. . . . . . . . . . . . . . . . . . . . 82% 18% 100%
Gross Consideration Paid . . . . . . . . . . . . . . 863,000 5,115,000 5,978,000
Percentage of Consideration Paid . . . . . . . . . . 14% 86% 100%
Average Consideration Per Share of Common Stock. . . $.22 $6.20 $1.69
</TABLE>
If the over-allotment option is exercised in full, the new Common Stock
investors will have paid $5,882,250 and will hold 948,750 shares of Common
Stock, representing 87% of the total consideration and 20% of the total number
of outstanding shares of Common Stock. See "Description of Securities" and
"Underwriting".
- --------
(1) Assumes no exercise of (i) the Representative's over-allotment option to
purchase up to 123,750 shares of Common Stock; (ii) the Class A Warrants
offered hereby; (iii) the Representative's Purchase Option to purchase up
to 125,000 shares of Common Stock; (iv) the Class A Warrants purchasable by
the Representative upon exercise of the Representative's Purchase Option;
or (v) any options to purchase shares of Common Stock issuable under the
Company's 1996 Incentive Plan. See "Description of Securities",
"Management" and "Underwriting".
<PAGE>
CAPITALIZATION
The following table sets forth the cash and capitalization of the Company
as of September 30, 1997 and the as adjusted capitalization which gives effect
to the consummation of this offering as if it occurred on September 30, 1997.
This table should be read in conjunction with the financial statements and
related notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Before After
Offering Offering (1)
---------- ------------
DEBT:
<S> <C> <C>
Notes payable (including
short-term portion). . . . . . . . . . . . . $1,838,639 $1,838,639
STOCKHOLDERS' EQUITY (DEFICIENCY):
Preferred Stock, $.01 par value; 500,000 . . . - -
shares authorized; none issued and outstanding
and none issued and outstanding as adjusted
Common Stock, $.001 par value; 10,000,000
shares authorized;3,838,750 issued and
outstanding; 4,663,750 shares issued
and outstanding, as adjusted . . . . . . . . 3,839 4,664
Paid-in Capital. . . . . . . . . . . . . . . . 854,514 5,247,314
Retained Earnings (Deficit). . . . . . . . . . (1,617,559) (1,617,559)
Total Stockholders' Equity (Deficit) . . . . . (759,206) 3,634,419
Total Debt and Stockholders' Equity
(Deficiency) . . . . . . . . . . . . . . . . 1,079,433 7,763,808
- -----------
<FN>
(1) Assumes no exercise of: (i) the Representative's over-allotment option
to purchase up to 123,750 shares of Common Stock and 123,750 Class A
Warrants; (ii) the Class A Warrants offered hereby; (iii) the
Representative's Purchase Option to purchase up to 125,000 shares of
Common Stock and 125,000 Class A Warrants; (iv) the Class A Warrants
purchasable by the Representative upon exercise of the Representative's
Purchase Option; and (v) options issuable under the Company's 1996 Long
Term Incentive Plan. See "Description of Securities and "Underwriting".
</FN>
</TABLE>
<PAGE>
DIVIDEND POLICY
Holders of the Company's Common Stock are entitled to dividends when, as and
if declared by the Board of Directors out of funds legally available therefor.
The Company has never declared or paid any cash dividends and currently does not
intend to pay cash dividends in the foreseeable future on the shares of Common
Stock. The Company intends to retain earnings, if any, to finance the
development and expansion of its business. Payment of future dividends on the
Common Stock will be subject to the discretion of the Board of Directors and
will be contingent upon future earnings, if any, the Company's financial
condition, capital requirements, general business conditions and other factors.
Therefore, there can be no assurance that any dividends on the Common Stock will
ever be paid.
<PAGE>
SELECTED FINANCIAL DATA
The following unaudited selected financial information concerning the
Company, other than the as adjusted balance sheet and statement of operations
data, has been derived from the financial statements included elsewhere in this
Prospectus and should be read in conjunction with such financial statements and
the notes thereto. See "Financial Statements".
The selected financial data should be read in conjunction with and is
qualified in its entirety by, the Company's financial statements, related notes
and other financial information included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Balance Sheet Data:
September 30, 1997
------------------
<S> <C>
Total assets $1,550,634
Current liabilities 2,092,160
Long-term liabilities net of current portion 223,930
Stockholders' equity (deficit) (765,456)
Statement of Operations Data:
Inception to
September 30, 1997
------------------
Net sales 132,786
Net loss (1,587,559)
Loss per Common Share (.43)
Common Shares Outstanding 3,802,000
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the historical
financial statements of the Company included elsewhere in this Prospectus.
Business Summary
- ----------------
The Company is a Delaware corporation organized in October 1995. The
Company has been formed to construct and operate greenhouses in the United
States for the production and sale of hydroponic, naturally vine ripened
tomatoes. The first proposed greenhouse will be located on 200 acres of land in
Colorado and will be powered by three 1,000 HP Thermal Combustors using
alternate fuel sources, such as used tires.
The Company has signed a contract with Colorado Greenhouses, LLC (C.G.) a
Colorado company which is currently the single largest hydroponic grower of
tomatoes in the United States with approximately 105 acres under glass producing
the highest quality hydroponic tomatoes. C.G. will, under the contract, grow the
tomatoes, manage the greenhouse and market the tomatoes within their existing
marketing plan.
The Company has also entered into a thirty year contract with Tri-State
Power Generation Company to purchase the electricity generated by the Company's
power generation facility.
For its ongoing source, the Company has entered into agreements with (i) El
Paso County, Colorado for the supply of approximately 2,000,000 tires per year;
and (ii) Dave Mehring, a tire broker, to provide an additional 2,000,000 used
tires annually to fuel the Thermal Combustor.
The Company plans to finance the facility through the proceeds of this
offering and through the sale of approximately $15,000,000 of ten year notes to
a national lending institution. The Company has received an initial commitment
letter subject to certain terms and conditions, including the successful
completion of the public offering of securities contemplated hereby. The Company
has also employed the services of Stone & Webster Engineering Corporation to act
as a consultant in providing an Engineered Procurement contract (EPC) to
guarantee the successful construction and completion of the project, both on
time and on budget.
Liquidity and Capital Resources
- -------------------------------
In the Company's brief history, it has experienced substantial cash flow
difficulties since it has been required to expend monies in preparation of the
construction of the greenhouse and cogenerator facility. To date the Company has
expended $600,893 for such purpose. At December 31, 1995, December 31, 1996 and
September 30, 1997 respectively, the Company's current liabilities of $257,641;
$1,466,248 and $2,092,160, substantially exceeded its current assets of $1,855,
$91,516 and $287,210 and capital deficits of $159,417; $407,749 and $765,456.
Financing activities have generated $1,870,853 from inception through
September 30, 1997 from the issuance of common stock, proceeds from bridge loans
and net loans from stockholders. See "Risk Factors - Default under Existing Note
Obligations."
<PAGE>
The Company believes that the proceeds received from this offering,
together with its $15,000,000 construction loan, will be sufficient to construct
and operate a greenhouse and cogenerator plant until such time as the Company
achieves internally generated funds.
Results of Operations
- ---------------------
Revenue Recognition. Revenues from operations are recognized as billed to
The Tire Broker and El Paso County for tire tipping fees. At this time there are
no revenues from the power purchase agreement with Tri-State Power Generation
Company or from the sale of tomatoes. These revenues will be recognized from
metered billings in the electrical contract and from bills of lading when
tomatoes are shipped from the site.
Nine Months Ended September 30, 1997. Revenues received from tire tipping
fees totaled $132,786 while the cost of shredding these tires totaled $156,238,
leaving a net loss of ($23,452). Selling, General and Administrative costs
consisted of $284,866 and interest cost totaled $408,390, leaving a net loss of
$716,708 for the nine month period.
The Company's activities since its inception in October, 1995 have been
developmental in that it has been necessary to accomplish certain objectives to
prepare the facility for construction. More specifically, it has obtained the
necessary permits required to permit operations and retained Stone and Webster
to determine that the Company had a viable project. The Company purchased the
land upon which the facility is to be constructed and has obtained water well
permits, air permits, certificate of designation, special use permits and
rezoning of the land.
These activities have taken approximately nine months to accomplish and
certain activities would have been farther along except for funding. The
engineering accomplishments are vast, and the EPC contract should be completed
by the end of November, 1997. This EPC contract will delineate the entire
project with a firm price and time line for completion.
The Company had operating expenses for the period of inception through
December 31, 1996 and September 30, 1997 of $714,708 and $441,104 and net
interest expenses of $156,143 and $408,390 with a net loss of $870,851 and
$716,708 for the period.
Seasonality
- -----------
Until the tomato production goes into effect, there will be no effect on
the Company by seasonality or weather conditions. At such time, the Company will
be affected to the extent that its tomatoes will sell for higher prices in the
winter months than in the summer.
Inflation
- ---------
Inflation has not been a material factor in the Company's operations to
date.
<PAGE>
BUSINESS
General
Ripe Touch Greenhouses, Inc. (the "Company") has been formed to construct
and operate greenhouses in the United States for the production and sale of
hydroponic, naturally vine ripened tomatoes. The first proposed greenhouse is to
be located on 200 acres of land in Colorado. This facility will be powered by
three 1,000HP Thermal Combustors to be purchased from an affiliated party using
alternate fuel sources, such as used tires. The combustors will generate the
heat for the greenhouse as well as the steam necessary to produce five megawatts
of electricity. In addition to revenues from the sale of tomatoes, the Company
anticipates receiving revenue from the sale of electricity generated in excess
of the greenhouse requirements and the sale of recyclables created during the
generation of electricity, including carbon black. The construction of the
Colorado greenhouse and power generation facility is intended to be financed
through a construction loan in the amount of $15,000,000 (the "Construction
Loan") with Heritage Financial Corporation and the sale of approximately
$4,103,500 (net) of common stock and warrants in an initial public offering
under applicable federal and state securities laws.
The Colorado project intends to employ the services of several outside
professional groups. The Company has entered into agreements with Colorado
Greenhouse LLC, which operates several greenhouses in Colorado, to design and
manage the construction of the greenhouse facility as well as manage, grow and
sell the tomatoes. Tri State Power Generation Company has entered into a thirty
(30) year electrical power contract with the Company wherein they will be
purchasing the electricity generated from the Company's power generation
facility. Stone & Webster Engineering Corporation has completed their due
diligence study and will be acting as a consultant to oversee an engineered
procurement contract ("EPC") to guarantee the successful construction and
completion of the greenhouse, both on time and on budget. The Company is
compiling bids from various vendors and anticipates finalizing the EPC by
December 31, 1997. For its initial energy source, the Company has entered into
agreements with (i) El Paso County, Colorado for the supply of approximately
2,000,000 tires per year and (ii) Dave Mehring, a tire broker, to provide an
additional 2,000,000 used tires annually to fuel the Thermal Combustors.
The Company was incorporated under the laws of the State of Delaware on
October 26, 1995. The Company's executive offices are located at 4871 N. Mesa
Drive, Castle Rock, Colorado 80104 and its telephone number is (303) 688-9805.
Industry Overview
The United States greenhouse industry is growing rapidly but it is still
relatively small when compared to the greenhouse industry in many parts of
Europe and Asia. This is, in part, due to the growing conditions in California
and Florida which, coupled with an extensive highway system and inexpensive
fuel, have provided fresh crops at reasonable prices in the United States.
Based on industry reports, the entire acreage devoted to greenhouse
vegetable production in the United States is approximately 900 acres. By
comparison, in the Netherlands, over 23,000 total acres are dedicated to
greenhouse production with 13,500 of such acres devoted to vegetable crops.
England and Wales have 2,960 acres dedicated to greenhouse production of
vegetables, and Canada 710 acres. In the United States, dietary trends away from
the consumption of red meat and toward the consumption of fresh vegetables has
caused the consumption of fresh vegetables to rise considerably over the past
ten (10) years with a willingness to pay premium prices for premium products, of
<PAGE>
which in the opinion of the Company vine-ripened tomatoes are a part. Thus, the
premium tomato market, as a specialty niche within the 40 billion dollar
supermarket vegetable business, appears to have significant growth potential.
National Perspective
In the United States, approximately $40 billion of fresh produce is sold
each year at the retail level. This does not include production for the food
service industry or processed foods. Four east coast
metropolitan areas (Baltimore/D.C., Boston/Providence, New York and
Philadelphia) sell approximately $3.72 billion in produce through supermarket
chains, including approximately $170,000,000 in tomatoes.
Most major supermarket chains have sold greenhouse grown tomatoes, lettuce,
cucumbers and herbs continuously during the past ten years. More recently, major
food service companies such as Sysco, P.Y.A., Monarch and Marriott have used
greenhouse-grown vegetables. When McDonald's started their salad program, they
looked at greenhouse production to supplement their West Coast buying.
Based on industry reports, currently there are fewer than 100 acres of
greenhouse tomato production located between the mid-Atlantic states through New
England. The proximity to the populated markets of the northeast corridor makes
the east coast corridor very attractive as a distribution center.
Given location, climactic conditions, population centers and consumer
trends of the major marketing areas, the Company views tomatoes as the most
appropriate crop for large scale greenhouse production in most areas. The
Company believes that an important selling feature with a food chain buyer is
high quality vine ripened tomatoes during the off season. In the northeast area,
local field production would be a competing factor only six to eight weeks
during the late summer months and it is the Company's opinion that once
reliable, year-round production is demonstrated, local produce buyers will
forego the field product to maintain a year-round supply.
Field Competition
In terms of pounds produced, field-grown tomatoes represent over 95% of all
tomatoes consumed in the United States. For most of the year, the field-grown
tomato is the green variety sprayed with gases, shipped from Florida,
California, or Mexico. Gassing the tomatoes causes them to ripen; however, the
Company believes that the flavor of a gassed tomato does not compare favorably
with that of a vine ripened tomato. During all but six to eight weeks of the
year, most regions of the United States do not have vine-ripened tomatoes
available on the shelf unless it is a greenhouse grown product.
In terms of price differential, the greenhouse tomato has historically
called upon the consumer to pay a premium price for its product. During the past
eight to ten years, the price differential between the two tomato varieties has
been narrowed since (a) the U.S. greenhouse grower is consistently becoming a
better producer with better quality and increased yields per square foot through
advanced labor management techniques, and (b) many retailers have shown a
willingness to keep the premium product on the shelf during the winter months
with a reduced markup.
In summary, superior appearance and taste, coupled with a shrinking price
differential between the greenhouse tomato and the gassed-green tomato, make the
field grown produce less of a competitor today than approximately five years
ago.
<PAGE>
Import Competition
Of the four billion pounds of tomatoes consumed in the United States each
year, one billion pounds is imported from Mexico. However, the Mexican tomatoes
are all picked "dead-green" and gas-ripened once they reach their U.S.
destination. Additionally, Mexican tomatoes may have pesticides and chemicals
that are no longer allowed in the U.S.
The most significant import competition comes from Holland (approximately
900,000,000 lbs) with Canada a distant second. There is also a small percentage
of other imports from various offshore points. In some cases the varieties grown
are only for a highly specified and small market niche. The bulk of the Dutch
product is sold in 3.5 and 7 kilogram flats and most of the flats are freighted
as cargo on wide-bodied aircraft. Some importers use ocean freight which takes
approximately twelve (12) days in transit. Depending on the time of the year,
the air freight costs between $.40 and $.60 per pound or up to $9.24 per flat of
tomatoes. Further, there are very few, if any, U.S. retailers who work directly
with the Dutch auction system, which means that there is at least one and often
two middlemen to compensate.
Shelf life is also an issue. A Dutch tomato is transported from the grower
to the central auction warehouse. Those destined for the U.S. market must then
be transported to the air carrier's warehouse, flown to the U.S. port of entry
(usually New York City) and stored at the carrier's warehouse where they undergo
U.S. customs and USDA inspection. From the airport, the tomatoes are shipped to
a U.S. wholesaler and finally on to the local retailers.
A U.S. tomato producer should have at least a $.60 per pound competitive
edge over a Dutch grower. Generally, it is superior growing expertise resulting
in increased yields and a strong brand name recognition that allow the Dutch
growers to compete against domestic tomatoes.
Greenhouse Operations and Management Agreement
The Company has entered into a Greenhouse Operation and Management
Agreement with Colorado Greenhouse LLC ( "Colorado Greenhouse"), an experienced
operator of greenhouses in Colorado. Under this agreement, the Company intends
to construct a Venlo style glass greenhouse of modular type construction similar
to those in Holland, which will include such equipment and materials necessary
to operate the greenhouse. In addition, the Company will own and operate a 5
megawatt power generation facility which will include the scrap rubber tires and
other products for fuel to fire three 1000HP Thermal Combustors to generate
steam to provide the necessary heat and electricity for the greenhouse. Colorado
Greenhouse has agreed to consult in the design and construction of the
greenhouse at a fee of 3% of the subcontract price for such construction. The
Company will be responsible for the purchase of and payment for all materials,
services, labor and equipment needed for construction and start up of the
greenhouse. Further, the Company will pay Colorado Greenhouse a fee (the
"Operator Fee") to operate and manage the greenhouse. The Operator Fee will
equal $20,000 per month escalated 5% per year after the first full year of the
operation of the greenhouse. Colorado Greenhouse also will receive an annual fee
equal to 14% of the Greenhouse annual operating income, defined as sales
revenues less costs of production and the Operator Fee when the annual operating
income exceeds $1.2 million, at which time the operating fee will be reduced by
$7,500 per month. Products will be sold under the name Colorado Greenhouse,
whose name is already recognized as a grower and distributor of hydroponic vine
ripened tomatoes.
<PAGE>
Subject to the Company's direction and control, Colorado Greenhouse will be
responsible for the requisitioning of all materials and supplies necessary for
the Greenhouse operation. Colorado Greenhouse will select the crops to be grown,
the planting and harvesting schedules and the day-to-day husbandry of the crops
at the Greenhouse. Any additional administrative and processing costs incurred
by Colorado Greenhouse for such purposes will be invoiced to and paid promptly
by the Company. An operating budget will be prepared by the parties for the
greenhouse prior to its initial operations.
The Company has agreed to provide, at its own expense, public liability
coverage with a limit of at least $10,000,000, all-risk casualty insurance
covering all of the personal property on or about the greenhouse, workers'
compensation insurance in an amount required by law, and such other insurance as
may be reasonably required pursuant to the terms of any possible credit
agreement with the Company effecting the greenhouse operations ancillary to the
greenhouse. The Agreement with Colorado Greenhouse is for ten (10) years unless
earlier terminated based upon certain defined occurrences.
Power Purchase Agreement
The Company has entered into a thirty year power purchase agreement with
Tri-State Power Generation Company ("Tri-State"). Under this agreement the
Company will install and operate a waste fuel fired generation facility in the
county of El Paso, Colorado. Tri-State, through its own electronic power system,
generates, purchases and transmits power and energy for wholesale to its member
distribution cooperatives. Tri-State has agreed to purchase the entire net
output of capacity and energy from the Company and in return the Company has
agreed to sell and deliver said energy and capacity solely to Tri-State.
Further, Tri-State may terminate the agreement if certain minimum
deliveries are not maintained by the Company. Tri-State will pay the Company a
purchase price based on the number of megawatt hours supplied to Tri-State
multiplied by an energy rate (as defined) which shall be adjusted each year.
The Process
The Company's facility will be differentiated from other cogeneration
projects in the United States involving greenhouses. First, the facility will be
powered by tire derived fuel consisting of shredded rubber tires rather than
natural gas or oil, which will only be used as back-up. Second, the facility
will be owned by the Company not leased by a power company, so that profits, if
any, will remain within the Company. Third, the Company's facility is intended
to have four sources of income: (1) the sale of tomatoes, (2) the sale of
electricity, (3) a tipping fee for receiving the used tires, and (4) the sale of
recyclables such as carbon black.
The facility is intended to create a more profitable operation than a
typical greenhouse because the external charges typical of cogeneration
facilities, i.e., thermal heat and electricity, are being generated directly by
Company owned machinery and equipment. The thermal heat, which an operator such
as Colorado Greenhouse usually records as a line item expense, will be provided
"free" to Colorado Greenhouse by the Company's facility. The electricity, which
is customarily charged to Colorado Greenhouse, will be "offset" against the
electrical income generated by the Company power facility. The Company facility
will make an initial investment of several hundred thousand dollars to drill
three wells at the site so that the usual and customary charge for water will be
absorbed in the electrical offset. All of the water used at the site will be
treated and recycled through a boiler or fed to the tomato plants through the
drip system. All rain and runoff water will be collected in a holding/cooling
pond which will be located on the site, thus insuring that no water will be
wasted.
<PAGE>
The power producing process begins with the arrival of a truck load of used
car and truck tires which are off loaded and sorted by the tire broker. The
Company will receive a tipping fee for each tire delivered to the site. The
scrap tires are then loaded onto a conveyor belt which takes the tires to a
shredder which shreds the tires into approximately one inch square pieces of
rubber. These tire shreds, which are now called tire derived fuel (TDF) are then
moved into storage bins. As the power house facility requires fuel, the shredded
tires are conveyed to the power house where they are gasified to generate a heat
source.
This patented process is owned by Waste Conversion Systems, Inc., the
supplier of three 1000HP Thermal Combustors. These three units each is intended
to generate 33 million BTU's per hour or 33 thousand pounds of steam per hour.
As the TDF is fed to the Thermal Combustors, they turn from a solid into a gas
through a process known as gasification. The solid tires smoke and gasify the
Thermal Combustor's primary chamber and flow into its secondary chamber where
super heated air is introduced, causing the smoke and gases to ignite and form a
horizontal flame. This flame burns into a water tube boiler and turns the water
in the boiler into steam. The steam is then transmitted into steam turbines
which will generate five megawatts of electricity, with the spent steam being
used by the greenhouse facility as needed to heat the greenhouse. Ash produced
in the process is made up of silica and steel, which can then be resold. In
addition, a baghouse, which catches the particles out of the air, will collect
carbon black which can also be sold.
The "Process" is expected to use over three million tires per year to
produce the electricity and steam needed by the greenhouse facility. Tires will
be stock piled to insure that the power house will not run out of tires. It is
anticipated that there will be sufficient TDF stored on site to fuel the
Company's facility for six months. The "Process" will also maintain a large
propane tank as a backup against unscheduled mechanical downtime during the
cooler months.
Properties
The Company's cogeneration greenhouse will be built on a contiguous two
hundred 200 acre site. (the "Project Site") The Project Site is located two
miles west of the town of Calhan, Colorado which is approximately 24 miles east
of Colorado Springs, Colorado on Highway 24. The Project Site will provide
adequate land to build and operate the greenhouse, administrative offices,
packing house, solid fuel handling and water storage facilities. The land has
been rezoned under a land use permit to accommodate the solid fuel storage and
shredding operation of used rubber tires, as they are currently treated as a
waste stream commodity. The purchase price for the land was $340,000.
Legal Matters
The Company is not involved in any material pending legal proceedings.
Employees
The Company employs two people, both of whom are located in the Company's
Castle Rock, Colorado headquarters and serve in administrative capacities. None
of the Company's employees are represented by a labor union. The Company
considers its relationships with its employees to be satisfactory.
<PAGE>
Seasonality
The tomato industry generally experiences its highest volume during the
spring and summer months and the lowest volume in the winter months.
MANAGEMENT
Directors and Executive Officers
The following persons are the current executive officers and directors of
the Company:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Stanley Abrams 57 President and Director
James Woodley 50 Secretary-Treasurer and Director
Arthur Rosenberg 57 Director
</TABLE>
Stanley Abrams has been President and a director of the Company since its
inception. Mr. Abrams has also been Chief Executive Officer, President and a
director of Waste Conversion Systems, Inc. ("WSC"), a publicly traded company
which owns the intellectual property used in the thermal combustors which are
used in the Company's operations, for more than the past five years. Mr. Abrams
is also Chief Executive Officer, President and a director of Nathaniel, Ltd.
("Nathaniel"), the exclusive domestic and international manufacturer and
marketer of the thermal combustors manufactured by WSC.
James Woodley has been Secretary, Treasurer and a director of the Company
since its inception. Mr. Woodley graduated from Pennsylvania State University in
1969 with a degree in Economics and Business Administration. He has been
employed as an accountant with several companies from 1969 to 1977. From 1978 to
1986, he was President of Unique Concepts, a Denver area home builder and
warehouse management company. From December 1986 to January 1989, he was Vice
President of Finance for Essex Management, Inc., Englewood, Colorado; from
January 1989 to July 1980, he was controller for International Training Corp.,
Denver, Colorado. He joined Waste Conversion as Chief Financial Officer in July
1990 and has served on the board since September, 1992. Mr. Woodley is Secretary
Treasurer and a director of Nathaniel Ltd.
Arthur Rosenberg has been a director of the Company since November 1997.
Mr. Rosenberg has been a practicing attorney for more than the past ten years.
Since June 1, 1987, he has been Vice President of Acquisitions of The Associated
Companies, a residential land and commercial developer located in Bethesda,
Maryland. Mr. Rosenberg also is a director of EcoTyre Technologies, Inc., a
publicly-owned manufacturer of remolded tires and Mike's Original, Inc., a
publicly-owned distributor of super-premium ice cream.
<PAGE>
Executive Compensation
The following table sets forth the cash and other compensation paid or
accrued by the Company for the fiscal year ended December 31, 1996 and during
the period from inception through December 31, 1995 to the Company's chief
executive officer.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------------------------------------- ------------
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation(1) Options Compensation
- ------------------ ------- ------- ----- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Stanley Abrams 1996(2) $85,000 - - - -
President (Chief 1995(3) 14,167 - - - -
Executive Officer)
James Woodley 1996(2) 75,000 - - - -
1995(3) 12,500 - - - -
<FN>
(1) The value of all perquisites provided to the Company's officers did not
exceed the lesser of $50,000 or 10% of the officer's salary and bonus.
(2) Represents the fiscal year ended December 31, 1996.
(3) Represents the period from the Company's inception on October 25, 1995
through December 31, 1995.
</FN>
</TABLE>
Employment Agreements
The Company has entered into an employment agreement with Stanley Abrams
pursuant to which Mr. Abrams has agreed to serve as the President of the
Company, at a minimum annual base salary of $95,000. This employment agreement
is for an initial term of three (3) years commencing upon the closing of the
IPO. The agreement also provides that Mr. Abrams will be paid 3% of the
Company's pre-tax earnings (up to a maximum payment of $125,000 with respect to
the Company's fiscal year ending December 31, 1997) during the term thereof upon
the Company achieving certain financial results. The employment agreements
provide that if the employee is terminated after the initial term other than for
"cause" (as defined), or dies or becomes permanently disabled, the Company will
pay to the employee certain severance payments.
The Company has entered into an employment agreement with James Woodley
pursuant to which Mr. Woodley has agreed to serve as the Secretary and Treasurer
of the Company, at a minimum annual base salary of $75,000. This employment
agreement is for an initial term of three (3) years commencing upon the closing
of the IPO. The agreement also provides that Mr. Woodley will be paid 3% of the
Company's pre-tax earnings (up to a maximum payment of $125,000 with respect to
the Company's fiscal year ending December 31, 1997) during the term thereof upon
the Company achieving certain financial results. The employment agreements
provide that if the employee is terminated after the initial term other than for
"cause" (as defined), or dies or becomes permanently disabled, the Company will
pay to the employee certain severance payments.
<PAGE>
Both of the above agreements contain restrictions on the employees engaging
in competition with the Company for the term thereof and for one year thereafter
and provisions protecting the Company's proprietary rights and information. Each
agreement also provides for the payment of three times the employee's previous
year's total compensation, less $1.00, upon the termination of his employment in
the event of a change in control of the Company which adversely affects his
working conditions. For those purposes, a change in control is defined to mean
(a) a person (as such term is defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) other than a current director or
officer of the Company becoming the beneficial owner, directly or indirectly, of
30% of the voting power of the Company's outstanding securities or (b) the
members of the Board of Directors at the beginning of any two-year period
ceasing to constitute at least a majority of the Board of Directors unless the
election of any new director during such period has been approved in advance by
two-thirds of the directors in office at the beginning of such two-year period.
Consulting Agreement
The Company has entered into a consulting agreement as of November 1, 1996
with Srotnac Group, LLC ("Srotnac"). Under this agreement, Srotnac has agreed
to provide business operations and management consulting services to the Company
in exchange for a consulting fee at the annual rate of $125,000 for the first
year of the agreement, $75,000 during the second year of the agreement, $100,000
during the third year of the agreement and $95,000 for each year thereafter. The
consulting agreement with Srotnac expires three years from the effective date of
this offering. Pursuant to the agreement, Srotnac and its principals are
restricted from engaging in competition with the Company for the term thereof
and for one year thereafter, and contains provisions protecting the Company's
trade secrets and proprietary rights and information. The Company may terminate
the services of Srotnac under the consulting agreement upon thirty (30) days'
written notice for a material breach by Srotnac of the non-competition,
confidentiality and proprietary rights clauses.
1996 Long Term Incentive Plan
In May 1996, the Company adopted The Ripe Touch Greenhouses, Inc. 1996 Long
Term Incentive Plan (the "1996 Incentive Plan") in order to motivate qualified
employees of the Company, to assist the Company in attracting employees and to
align the interests of such persons with those of the Company's stockholders.
The 1996 Incentive Plan provides for the grant of "incentive stock options"
within the meaning of the Section 422 of the Internal Revenue Code of 1986, as
amended, "non-qualified stock options," restricted stock, performance grants and
other types of awards to officers, key employees, consultants and independent
contractors of the Company and its affiliates.
The 1996 Incentive Plan, which will be administered by the Board of
Directors or a committee thereof, authorizes the issuance of a maximum of
350,000 shares of Common Stock which may be either newly issued shares, treasury
shares, reacquired shares, shares purchased in the open market or any
combination thereof. If any award under the 1996 Incentive Plan terminates,
expires unexercised, or is canceled, the shares of Common Stock that would
otherwise have been issuable pursuant thereto will be available for issuance
pursuant to the grant of new awards. To date, the Company has granted no options
under this plan.
<PAGE>
Personal Liability and Indemnification of Directors
The Company's Certificate of Incorporation and By-laws contain provisions
which reduce the potential personal liability of directors for certain monetary
damages and provide for indemnity of directors and other persons. The Company is
unaware of any pending or threatened litigation against the Company or its
directors that would result in any liability for which such director would seek
indemnification or similar protection.
Such indemnification provisions are intended to increase the protection
provided directors and, thus, increase the Company's ability to attract and
retain qualified persons to serve as directors. Because directors liability
insurance is only available at considerable cost and with low dollar limits of
coverage and broad policy exclusions, the Company does not currently maintain a
liability insurance policy for the benefit of its directors, although the
Company may attempt to acquire such insurance in the future. The Company
believes that the substantial increase in the number of lawsuits being
threatened or filed against corporations and their directors and the general
unavailability of directors liability insurance to provide protection against
the increased risk of personal liability resulting from such lawsuits have
combined to result in a growing reluctance on the part of capable persons to
serve as members of boards of directors of companies, particularly of companies
which intend to become public companies. The Company also believes that the
increased risk of personal liability without adequate insurance or other
indemnity protection for its directors could result in overcautious and less
effective direction and management of the Company. Although no directors have
resigned or have threatened to resign as a result of the Company's failure to
provide insurance or other indemnity protection from liability, it is uncertain
whether the Company's directors would continue to serve in such capacities if
improved protection from liability were not provided.
The provisions affecting personal liability do not abrogate a director's
fiduciary duty to the Company and its stockholders, but eliminate personal
liability for monetary damages for breach of that duty. The provisions do not,
however, eliminate or limit the liability of a director for failing to act in
good faith, for engaging in intentional misconduct or knowingly violating a law,
for authorizing the illegal payment of a dividend or repurchase of stock, for
obtaining an improper personal benefit, for breaching a director's duty of
loyalty (which is generally described as the duty not to engage in any
transaction which involves a conflict between the interests of the Company and
those of the director) or for violations of the federal securities laws. The
provisions also limit or indemnify against liability resulting from grossly
negligent decisions including grossly negligent business decisions relating to
attempts to change control of the Company.
The provisions regarding indemnification provide, in essence, that the
Company will indemnify its directors against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any action, suit or proceeding arising out of the
director's status as a director of the Company, including actions brought by or
on behalf of the Company (shareholder derivative actions). The provisions do not
require a showing of good faith. Moreover, they do not provide indemnification
for liability arising out of willful misconduct, fraud, or dishonesty, for
"short-swing" profits violations under the federal securities laws, or for the
receipt of illegal remuneration. The provisions also do not provide
indemnification for any liability to the extent such liability is covered by
insurance. One purpose of the provisions is to supplement the coverage provided
by such insurance. However, as mentioned above, the Company does not currently
provide such insurance to its directors, and there is no guarantee that the
Company will provide such insurance to its directors in the near future,
although the Company may attempt to obtain such insurance.
<PAGE>
These provisions diminish the potential rights of action which might
otherwise be available to shareholders by limiting the liability of officers and
directors to the maximum extent allowable under Delaware law and by affording
indemnification against most damages and settlement amounts paid by a director
of the Company in connection with any shareholders derivative action. However,
the provisions do not have the effect of limiting the right of a shareholder to
enjoin a director from taking actions in breach of his fiduciary duty, or to
cause the Company to rescind actions already taken, although as a practical
matter courts may be unwilling to grant such equitable remedies in circumstances
in which such actions have already been taken. Also, because the Company does
not presently have directors liability insurance and because there is no
assurance that the Company will procure such insurance or that if such insurance
is procured it will provide coverage to the extent directors would be
indemnified under the provisions, the Company may be forced to bear a portion or
all of the cost of the director's claims for indemnification under such
provisions. If the Company is forced to bear the costs for indemnification, the
value of the Company's stock may be adversely affected.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that such indemnification, in the opinion of the Commission, is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of the Company's
Common Stock as of October 31, 1997 of (i) each person known by the Company to
beneficially own 5% or more of the Company's outstanding Common Stock, (ii) each
of the Company's executive officers, directors and director nominees, and (iii)
all of the Company's executive officers and directors as a group. Except as
otherwise indicated, all shares of Common Stock are beneficially owned, and
investment and voting power is held, by the persons named as owners.
<TABLE>
<CAPTION>
Amount and Nature Percentage Ownership (5)
Name and Address of of Shares Before After
Beneficial Owner Beneficially Owned* Offering Offering
- -------------------- ------------------ --------- -----------
<S> <C> <C> <C>
Stanley Abrams (1) 600,000 15.0% 13.0%
James Woodley (1) 375,000 9.9% 8.0%
Arthur Rosenberg - - -
Srotnac Group, LLC (2) 462,000 12.4% 9.9%
Double G Foods, Inc. (3) 375,000 9.9% 8.0%
W & L Acquisition Corp. (4) 375,000 9.9% 8.0$
All officers and directors
as a group (3 persons) 975,000 25.0% 21.0%
* less than one percent (1%) unless otherwise indicated.
<FN>
(1) The address for each of these persons is 4871 N. Mesa Drive, Castle Rock,
Colorado 80104.
(2) The address for Srotnac Group, LLC is P.O. Box 473, Babylon Village, New
York 11702. Steven A. Cantor is the managing member and principal
stockholder of Srotnac Group, LLC.
(3) The address for Double G Foods, Inc. is 193 Elm Place, Mineola, New York
11501.
(4) The address for W & L Acquisition Corp. is 248 E. 31st Street, New York,
New York 10016.
(5) Assumes no exercise of: (i) the Representative's over-allotment option to
purchase up to 123,750 shares of Common Stock and 123,750 Class A Warrants;
(ii) the Class A Warrants offered hereby; (iii) the Representative's
Purchase Option to purchase up to 125,000 shares of Common Stock and
125,000 Class A Warrants; (iv) the Class A Warrants purchasable by the
Representative upon exercise of the Representative's Purchase Option; and
(v) options issuable upon the Company's 1996 Long Term Incentive Plan. See
"Description of Securities" and "Underwriting."
</FN>
</TABLE>
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is a party to a purchase order for the purchase of three
thermal combustors (the "Purchase Order") from Nathaniel, Ltd., a Colorado
corporation ("Nathaniel"). Stanley Abrams and James Woodley are the officers and
directors of Nathaniel. Messrs. Abrams and Woodley collectively own all of the
outstanding stock of Nathaniel. The Purchase Order is for three Thermal
Combustors for an aggregate purchase price of $1,275,000. Approximately $20,000
from the proceeds of this offering will be paid to Nathaniel for preliminary
engineering fees. The remaining $1,255,000 will be paid from the proceeds of the
Construction Loan and the IPO. Nathaniel, pursuant to a distributor agreement,
is the exclusive manufacturer and marketer of the thermal combustors for Waste
Conversion Systems, Inc. ("WCS"). WCS owns the United States patents and
marketing rights for the Thermal Combustors to be utilized in the Company's
business. Stanley Abrams and James Woodley are officers and directors of WCS.
Pursuant to their distributor agreement, WCS will receive royalty payments in
connection with the sale of the thermal combustors by Nathaniel to the Company
pursuant to the Purchase Order. Nathaniel also holds a $50,000 principal amount
demand promissory note payable by the Company at an annual interest rate of 8%.
Pursuant to the consulting agreement between the Company and SAC Consulting
Group, Ltd., SAC Consulting Group, Ltd. is owed $125,000, none of which has been
paid.
In September 1996, the Company loaned Steven A. Cantor $125,000. The loan
is repayable on or before September 27, 1999, at the option of Mr. Cantor, and
bears interest at a rate of 8% per year.
SELLING SECURITYHOLDERS
This Prospectus may also be used for the possible offering of additional
shares of Common Stock owned by the Selling Securityholders. Certain other
Selling Securityholders have agreed that the shares of Common Stock owned by
such persons registered for resale hereunder under may not be sold for
twenty-four (24) months from the date of this Prospectus without the prior
written consent of the Representative. The Company will not receive any proceeds
from such sales. The Representative may release such restriction at any time
after completion of this offering. although there are no understandings or
arrangements in this regard. The resale of the securities by the Selling
Securityholders is subject to Prospectus delivery and other requirements of the
Securities Act.
The Shares are being offered by the following persons in the amounts set
forth below:
<TABLE>
<CAPTION>
Beneficial Number Beneficial
Ownership of Shares Ownership
Stockholder Prior to Offering Offered After Offering
----------- ----------------- --------- --------------
<S> <C> <C> <C>
Jones Enterprises 42,500 37,500 0.835%
Louis Solferino 42,500 37,500 0.835%
Brett Abrams 32,500 32,500 0.639%
<PAGE>
Vosavu Pty., Ltd. 32,500 32,500 0.639%
RLP Holdings Inc. 20,000 20,000 0.393%
Robert LaRusso 20,000 20,000 0.393%
Barbara Rubenfeld 20,000 20,000 0.393%
Barry & Deena Silberman 5,000 5,000 0.098%
Jamie Silberman 5,000 5,000 0.098%
Eric Shenker 5,000 5,000 0.098%
Paul Greenstein 20,000 20,000 0.393%
Michael Ring 10,000 10,000 0.197%
Gary L. Spieler & Yaffa Spieler 10,000 5,000 0.197%
Yaffa Spieler 10,000 5,000 0.197%
Scott M. Sosnik 10,000 5,000 0.197%
Sosnik & Co. 10,000 5,000 0.197%
Glen E. and Karen S. Erfman 5,000 5,000 0.098%
Ralph Ridge 2,500 2,500 0.049%
Ralph H. Grills, Jr. FLP 7,500 7,500 0.147%
John E. Lecomte 10,000 10,000 0.197%
Sally Miglio 5,000 5,000 0.098%
Sol Adler 5,000 5,000 0.098%
Onyx Packaging 42,500 5,000 0.835%
Midon Restaurant 42,500 5,000 0.835%
Moshe Isaac Foundation 20,000 20,000 0.393%
Richard Banach Profit Sharing 10,000 2,500 0.197%
Barry Weintraub 5,000 5,000 0.098%
Barbara Banach 10,000 7,500 0.197%
Dale Lucore 4,000 4,000 0.079%
------- ------- ------
464,000 349,000 9.118%
- -------
<FN>
*less than 1% unless otherwise indicated
</FN>
</TABLE>
The securities offered hereby may be sold from time to time directly by
the Selling Securityholders. Alternatively, the Selling Securityholders may from
time to time offer such securities through underwriters, dealers or agents. The
distribution of securities by the Selling Securityholders may be effected in one
or more transactions that may take place on the over-the-counter market,
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more broker-dealers for resale of such shares as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Securityholders in connection with such sales of securities. The Selling
Securityholders and intermediaries through whom such securities are sold may be
deemed "underwriters" within the meaning of the Securities Act with respect to
the securities offered, and any profits realized or commissions received may be
deemed underwriting compensation. The Company is not aware of any present
intentions of any Selling Stockholders to engage in any transactions with either
of the Representatives of this offering.
<PAGE>
At the time a particular offer of securities is made by or on behalf of a
Selling Securityholder, to the extent required, a prospectus will be distributed
which will set forth the number of shares being offered and the terms of the
offering, including the name or names of any underwriters, dealers or agents, if
any, the purchase price paid by any underwriter for shares purchased from the
Selling Securityholder and any discounts, commissions or concessions allowed or
reallowed or paid to dealers, and the proposed selling price to the public.
Under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the regulations thereunder, any person participating in a
distribution of the securities of the Company offered by this Prospectus may not
simultaneously engage in market-making activities with respect to such
securities of the Company during the applicable restricted period (one or five
business days) before the day of pricing of this offering, and until the
distribution is over. In addition, and without limiting the foregoing, the
Selling Securityholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including without limitation,
Regulation M, and Rules 100 through 105 thereunder, in connection with
transactions in such securities, which provisions may limit the time of
purchases and sales of such securities by the Selling Securityholders.
Sales of securities by the Selling Securityholders or even the potential
of such sales would likely have an adverse effect on the market prices of the
securities offered hereby. As of the date of this Prospectus, the freely
tradeable securities of the Company (the "public float") will be (i) 825,000
shares of Common Stock, and (ii) 825,000 Class A Warrants.
DESCRIPTION OF SECURITIES
Capital Stock
The Company's authorized capital stock consists of 10,000,000 shares of
Common Stock, $.001 par value per share and 500,000 shares of Preferred Stock,
$.01 par value per share.
Common Stock
General. The Company has 10,000,000 authorized shares of Common Stock,
3,838,750 of which were issued and outstanding prior to the offering. All shares
of Common Stock currently outstanding are validly issued, fully paid and
non-assessable, and all shares which are the subject of this Prospectus, when
issued and paid for pursuant to this offering, will be validly issued, fully
paid and non-assessable.
Voting Rights. Each share of Common Stock entitles the holder thereof to
one vote, either in person or by proxy, at meetings of shareholders. The
Company's Board consists of three classes each of which serves for a term of
three years. At each annual meeting of the stockholders the directors in only
one class will be elected. The holders are not permitted to vote their shares
cumulatively. Accordingly, the holders of more than fifty percent (50%) of the
issued and outstanding shares of Common Stock can elect all of the Directors of
the Company. See "Principal Stockholders".
Dividend Policy. All shares of Common Stock are entitled to participate
ratably in dividends when and as declared by the Company's Board of Directors
out of the funds legally available therefor. Any such dividends may be paid in
cash, property or additional shares of Common Stock. The Company has not paid
any dividends since its inception and presently anticipates that all earnings,
<PAGE>
if any, will be retained for development of the Company's business and that no
dividends on the shares of Common Stock will be declared in the foreseeable
future. Payment of future dividends will be subject to the discretion of the
Company's Board of Directors and will depend upon, among other things, future
earnings, the operating and financial condition of the Company, its capital
requirements, general business conditions and other pertinent facts. Therefore
there can be no assurance that any dividends on the Common Stock will be paid in
the future. See "Dividend Policy".
Miscellaneous Rights and Provisions. Holders of Common Stock have no
preemptive or other subscription rights, conversion rights, redemption or
sinking fund provisions. In the event of the liquidation or dissolution, whether
voluntary or involuntary, of the Company, each share of Common Stock is entitled
to share ratably in any assets available for distribution to holders of the
equity of the Company after satisfaction of all liabilities, subject to the
rights of holders of Preferred Stock.
Shares Eligible for Future Sale. Upon completion of this offering, the
Company will have 4,663,750 shares of Common Stock outstanding (4,787,500 shares
if the Representative's over-allotment option is exercised in full). Of these
shares, the 825,000 shares sold in this offering (948,750 shares if the
Representative's over-allotment option is exercised in full) will be freely
tradeable without restriction or further registration under the Securities Act,
except for any shares purchased by an "affiliate" of the Company (in general, a
person who has a control relationship with the Company) which will be subject to
the limitations of Rule 144 adopted under the Securities Act. Another 349,000
shares are registered under the registration statement of which this Prospectus
forms a part and are freely saleable under the Securities Act, but may not be
transferred for twenty-four (24) months from the date of this prospectus or at
such earlier date as may be permitted by the Representative. All of the
remaining shares are deemed to be "restricted securities," as that term is
defined under Rule 144 promulgated under the Securities Act.
In general, under Rule 144 as effective on April 29, 1997, subject to the
satisfaction of certain other conditions, commencing ninety (90) days after the
effective date of the registration statement of which this prospectus is a part,
a person, including an affiliate of the Company (or persons whose shares are
aggregated), who has owned restricted shares of Common Stock beneficially for at
least one year is entitled to sell, within any three-month period, a number of
shares that does not exceed the greater of 1% of the total number of outstanding
shares of the same class or the average weekly trading volume of the Company's
Common Stock on all exchanges and/or reported through the automated quotation
system of a registered securities association during the four calendar weeks
preceding the date on which notice of the sale is filed with the Commission.
Sales under Rule 144 are also subject to certain manner of sale provisions,
notice requirements and the availability of current public information about the
Company. A person who has not been an affiliate of the Company for at least the
three months immediately preceding the sale and who has beneficially owned
shares of Common Stock for at least two years is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above.
3,501,000 of the shares of restricted stock presently outstanding have
been held at least one year. Accordingly, commencing following the completion of
the offering all 3,501,000 shares would be eligible for resale pursuant to Rule
144. However, pursuant to the terms of the Underwriting Agreement, certain
Selling Securityholders owning an aggregate of 212,500 shares of Common Stock
have agreed not to sell any of their shares for a period of twenty-four (24)
months following the date of this prospectus without the prior written consent
of the Representative. The sale of any substantial number of these shares in the
public market could adversely affect prevailing market prices following the
offering.
<PAGE>
No predictions can be made as to the effect, if any, that sales of shares
under Rule 144 or otherwise or the availability of shares for sale will have on
the market, if any, prevailing from time to time. Sales of substantial amounts
of the Common Stock pursuant to Rule 144 or otherwise may adversely affect the
market price of the Common Stock or the Warrants offered hereby.
Class A Warrants
The Class A Warrants offered hereby will be issued in registered form
under a warrant agreement (the "Warrant Agreement") between the Company and
American Stock Transfer & Trust Company, as Warrant Agent (the "Warrant Agent").
The following summary of the provisions of the Warrants is qualified in its
entirety by reference to the Warrant Agreement, a copy of which is filed as an
exhibit to the registration statement of which this Prospectus is a part.
Rights to Purchase Common Stock. Each Class A Warrant will be separately
tradeable and will entitle the registered holder thereof to purchase one share
of Common Stock (subject to adjustment as described below) for a period of three
years commencing on the effective date of this Prospectus at a price of $10.00
per share of Common Stock. A holder of Class A Warrants may exercise such
warrants by surrendering the certificate evidencing such warrants to the Warrant
Agent, together with the form of election to purchase on the reverse side of
such certificate properly completed and executed and the payment of the exercise
price and any transfer tax. If less than all of the warrants evidenced by a
warrant certificate are exercised, a new certificate will be issued for the
remaining number of warrants. Holders of the Class A Warrants may sell the Class
A Warrants if a market exists rather than exercise them. However, there can be
no assurance that a market will develop or continue as to such Class A Warrants.
For a holder of a warrant to exercise the Class A Warrants, there must be
a current registration statement on file with the Commission and various state
securities commissions. The Company will be required to file post-effective
amendments to the registration statement when events require such amendments.
While it is the Company's intention to file post-effective amendments when
necessary, there is no assurance that the registration statement will be kept
effective. If the registration statement is not kept current for any reason, the
Class A Warrants will not be exercisable, and holders thereof may be deprived of
value. Moreover, if the shares of Common Stock underlying the Class A Warrants
are not registered or qualified for sale in the state in which a Class A Warrant
holder resides, such holder might not be permitted to exercise the Class A
Warrants. If the Company is unable to qualify the Common Stock underlying such
Class A Warrants for sale in certain states, holders of the Company's Class A
Warrants in those states will have no choice but to either sell such Class A
Warrants or allow them to expire.
The Company has authorized and reserved for issuance a number of
underlying shares of Common Stock sufficient to provide for the exercise of the
Class A Warrants. When issued, each share of Common Stock will be fully paid and
nonassessable.
Class A Warrant holders will not have any voting or other rights as
shareholders of the Company unless and until Class A Warrants are exercised and
shares issued pursuant thereto.
Redemption Rights. Any or all of the Class A Warrants may be redeemed by
the Company at a price of $.01 per warrant, upon the giving of not less than 30
days' nor more than 60 days' written notice at any time after the date of this
Prospectus, provided that the closing bid price of the Common Stock for all
twenty (20) consecutive trading days ending three (3) days of the notice of
redemption has equaled or exceeded $12.00 per share. The right to purchase the
Common Stock represented by the Class A Warrants so called for redemption will
be forfeited unless the Class A Warrants are exercised prior to the date
<PAGE>
specified in the foregoing notice of redemption. Any redemption of the Class A
Warrants during the one year period commencing on the date of this Prospectus
shall require the consent of the Representative.
Adjustments. The exercise price and the number of shares of Common Stock
issuable upon the exercise of each Class A Warrant are subject to adjustment in
the event of a stock dividend, recapitalization, merger, consolidation or
certain other events.
For the life of the Class A Warrants, the holders thereof are given the
opportunity, at nominal cost, to profit from a rise in the market price of the
Common Stock of the Company. The exercise of the Class A Warrants will result in
the dilution of the then book value of the Common Stock of the Company held by
the public investors and would result in a dilution of their percentage
ownership of the Company. The terms upon which the Company may obtain additional
capital may be adversely affected through the period that the Class A Warrants
remain exercisable. The holders of these Class A Warrants may be expected to
exercise them at a time when the Company would, in all likelihood, be able to
obtain equity capital on terms more favorable than those provided for by the
Class A Warrants.
First Private Placement
From September through October 1996, the Company issued an aggregate of
42.5 Private Placement Units, each Private Placement Unit consisting of a
$25,000 principal amount of Private Placement Notes and 5,000 Private Placement
Shares for aggregate gross proceeds of $1,062,500. The proceeds from the sale of
the Private Placement Units were used to pay pre-engineering expense and to fund
working capital. The Company also has registered under the registration
statement of which this prospectus forms a part, 126,500 of the Private
Placement Shares included in the Private Placement Units. The Private Placement
Shares are not transferable until the earlier of twenty-four (24) months
following the date of this prospectus or at such earlier date as may be
permitted by the Representative. See "Underwriting".
Second Private Placement
During May 1997, the Company issued an aggregate of 20 Second Private
Placement Units, each Second Private Placement Unit consisting of a $25,000
principal amount of Second Private Placement Notes and 5,000 Second Private
Placement Shares for aggregate gross proceeds of $500,000. The proceeds from the
sale of the Second Private Placement Units were used to pay promotional expenses
incurred in connection with entering new markets and maintaining existing
markets and to fund working capital. The Second Private Placement Shares are not
transferable until the earlier of twenty-four (24) months following the date of
this prospectus or at such earlier date as may be permitted by the
Representative. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Underwriting".
The Second Private Placement Notes bear interest at a rate equal to 12%
per annum, payable one year after the issuance of the Second Private Placement
Notes and monthly in arrears thereafter. The Second Private Placement Notes
mature on the earlier of (i) June 30, 1998, or (ii) the closing date of this
offering; provided, that the maturity of the Second Private Placement Notes will
be further accelerated upon an Event of Default (as defined therein).
<PAGE>
Additional Private Issuances
From July through October 1997, the Company received $608,750 in
connection with the private placement of its securities in consideration for the
issuance of 191,500 shares of Common Stock and notes aggregating $481,250 (the
"Notes"). The proceeds from these sales were used to fund working capital
requirements.
The Notes bear interest at a rate equal to 12% per annum, payable on the
earlier of (i) June 30, 1998, or (ii) the closing date of this offering;
provided, that the maturity of the Notes will be accelerated upon an Event of
Default (as defined therein).
Preferred Stock
The Company's Certificate of Incorporation, as amended, authorizes the
issuance of up to 500,000 shares of preferred stock, par value $.01 per share.
Currently there are no shares of preferred stock issued or outstanding.
The issuance of Preferred Stock by the Board of Directors could adversely
affect the rights of holders of shares of Common Stock by, among other things,
establishing preferential dividends, liquidation rights or voting power. The
issuance of Preferred Stock could be used to discourage or prevent efforts to
acquire control of the Company through the acquisition of shares of Common
Stock.
Certain Provisions of the Certificate of Incorporation
The Company's Certificate of Incorporation contains certain provisions
which may be deemed to be "anti-takeover" in nature in that such provisions may
deter, discourage or make more difficult the assumption of control of the
Company by another entity or person. In addition to the ability to issue
Preferred Stock, these provisions are as follows:
A vote of 66-2/3% of the stockholders is required by the Certificate of
Incorporation in order to approve certain transactions including mergers and
sales or transfers of all or substantially all of the assets of the Company.
The Company's By-laws provide that the members of the Board of Directors
of the Company be classified into three classes: Class I (which consists of
Stanley Abrams) will serve until the Company's 1997 Annual Meeting of
Stockholders. Class II (which consists of James Woodley) will serve until the
Company's 1998 Annual Meeting of Stockholders. Class III (which consists of
Arthur Rosenberg) will serve until the Company's 1999 Annual Meeting of
Stockholders. After their initial staggered terms, the term of each class will
run for three years and expire at successive annual meetings of stockholders.
Accordingly, it is expected that it would take a minimum of two annual meetings
of stockholders to change a majority of the Board of Directors. Further,
directors may only be removed for cause prior to the expiration of their term of
office.
The Delaware General Corporation Law further contains certain
anti-takeover provisions. Section 203 of the Delaware General Corporation Law
provides, with certain exceptions, that a Delaware corporation may not engage in
any of a broad range of business combinations with a person who owns 15% or more
of the corporation's outstanding voting stock (an "interested stockholder") for
<PAGE>
a period of three years from the date that such person became an interested
stockholder unless: (i) the transaction resulting in a person's becoming an
interested stockholder, or the business combination is approved by the board of
directors of the corporation before the person becomes an interested
stockholder; (ii) the interested stockholder acquires 85% or more of the
outstanding voting stock of the corporation (excluding shares owned by persons
who are both officers and directors of the corporation, and shares held by
certain employee stock ownership plans); or (iii) the business combination is
approved by the corporation's board of directors and by the holders of at least
66 2/3% of the corporation's outstanding voting stock at an annual or special
meeting, excluding shares owned by the interested stockholder.
Transfer Agent
The transfer agent and registrar for the Company's Common Stock is
American Stock Transfer and Trust Company, 6201 15th Avenue, Brooklyn, New York
11219.
UNDERWRITING
Subject to the terms and conditions contained in the underwriting
agreement between the Company and the Underwriters named below, for which
Millennium Securities Corp. is acting as Representative (a copy of which
agreement is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part), the Company has agreed to sell to each of the
Underwriters named below, and each of such Underwriters has severally agreed to
purchase the number of shares of Common Stock and Warrants set forth opposite
its name. All 825,000 shares of Common Stock and 825,000 Warrants offered must
be purchased by the Underwriters if any are purchased. The shares of Common
Stock and Warrants are being offered by the Underwriters subject to prior sale,
when, as and if delivered to and accepted by the Underwriters and subject to
approval of certain legal matters by counsel and to certain other conditions.
<TABLE>
<CAPTION>
Number Number
Underwriter of Shares of Warrants
----------- --------- -----------
<S> <C> <C>
------- -------
Total 825,000 825,000
======= =======
</TABLE>
The Representative has advised the Company that the Underwriters propose
to offer the shares of Common Stock and the Warrants to the public at the
offering prices set forth on the cover page of this prospectus. The
Representative has further advised the Company that the Underwriters propose to
offer the Securities through members of the National Association of Securities
Dealers, Inc. ("NASD"), and may allow a concession, in their discretion to
certain dealers who are members of the NASD and who agree to sell the Securities
in conformity with the NASD Conduct Rules. Such concessions shall not exceed the
amount of the underwriting discount that the Underwriters are to receive.
The Company has granted the Underwriters an option, exercisable for
forty-five (45) days from the date of this Prospectus, to purchase up to 123,750
shares of Common Stock and 123,750 Warrants, at the public offering prices less
the underwriting discounts set forth on the cover page of this Prospectus. The
Underwriters may exercise this option solely to cover over-allotments in the
sale of the shares of Common Stock and Warrants offered hereby.
<PAGE>
The Company has agreed to indemnify the Representative against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments it may be required to make in respect thereof. It is the position of
the Commission that indemnification for liabilities under the Securities Act is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
The Company has agreed to pay the Representative a non-accountable expense
allowance of 3% of the aggregate offering price (of which $50,000 has already
been received) with respect to the Common Stock and Class A Warrants offered
hereby (and any securities purchased pursuant to the Representative's
over-allotment option). Under certain circumstances, the expenses previously
paid by the Company are nonrefundable if the offering is terminated or otherwise
does not proceed.
The Company has also agreed to pay the Representative a consulting fee of
$50,000 for financial consulting services to be performed over a period of two
(2) years.
Upon the exercise after one year following the date of this offering of
any Warrant included in the Units, the Company has agreed to pay the
Representative a fee of 3% of the aggregate exercise price of such warrant if
(i) the market price of the Company's Common Stock is greater than the exercise
price of such Warrant on the date of exercise; (ii) the exercise of such Warrant
was solicited by the Representative and the holder of such Warrant so states in
writing and designates in writing that the Representative is entitled to receive
such compensation, (iii) such Warrant is not held in a discretionary account;
and (iv) the solicitation of such Warrant was not in violation of Regulation M,
and Rules 100 through 105 thereunder promulgated under the Exchange Act.
The Company has agreed to sell to the Representative or its designees, at
a price of $250, warrants (the "Representative's Warrants") to purchase 125,000
shares of Common Stock of the Company at an exercise price of $7.80 per share
and 125,000 Warrants at an exercise price of $.26 per warrant. Other than a
higher exercise price and the redemption feature, the Warrants underlying the
Representative's Warrants are identical in all respects to the Warrants offered
to the public hereby, as to which they will be treated pari passu with the
public Warrants. The Warrants issuable upon exercise of the Representative's
Warrants will entitle the holder to purchase shares of Common Stock at a price
of $7.80 per share or 120% of the then exercise price of the Warrants offered to
the pubic hereby, for a period of three years commencing on the date hereof. The
Representative's Warrants will not be transferable for one year from the date
hereof except to officers and partners of the Underwriters or members of the
selling group and are exercisable during the four year period commencing one
year from the date of this Prospectus. Any profit realized upon any resale of
the Representative's Warrants or upon the sale of the underlying securities
thereof may be deemed to be an additional underwriter's compensation. The
Company has agreed to register (or file a post-effective registration amendment
with respect to any registration statement registering) the Representative's
Warrant and the underlying securities under the Securities Act at its expense on
one occasion during the five years following the date of this Prospectus and at
the expense of the holders thereof. The Company has also agreed to "piggy-back"
registration rights for the holders of the Representative's Stock Warrants and
the Representative's Warrants and the underlying securities at the Company's
expense during the six (6) years following the date of this Prospectus.
<PAGE>
The Company has also agreed, for a period of not less than two years
commencing on the date of this offering, at the request of the Representative,
to nominate and use its best efforts to elect a designee of the Representative
to the Board of Directors of the Company or to appoint a designee of the
Representative as a non-voting observer of the Board of Directors. The
Representative has not yet exercised its right to designate such person.
The foregoing does not purport to be a complete statement of the terms and
conditions of the Underwriting Agreement and related documents, copies of which
are on file at the offices of the Representative, the Company and the
Commission, and forms of which have been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
The Representative has informed the Company that the Representative does
not intend to confirm sales to any accounts over which it exercises
discretionary authority.
The Company, and its officers and directors, have agreed not to offer,
pledge, sell, contract to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any securities of the Company for a period
of twenty-four (24) months after the date of this Prospectus, without the prior
written consent of the Representative, except pursuant to the exercise of the
Representative's over-allotment option, or the exercise of the Warrants or
currently outstanding stock options.
Prior to this offering, there has been no market for the Common Stock or
the Warrants. Although the Company will apply to list the Common Stock and the
Warrants on the Nasdaq SmallCap Stock Market, there can be no assurance that an
active trading market will develop for the Common Stock or the Warrants, or, if
developed, that it will be maintained. In addition, the Common Stock and the
Warrants will be separately transferable immediately.
The initial public offering price has been arbitrarily determined by
negotiations between the Company and the Representative. Among the factors
contained in determining the initial public offering price, in addition to
prevailing market conditions, were the Company's capital structure, estimates of
its business potential and earnings prospects, an assessment of its management,
and the consideration of the above factors in relation to market valuation of
companies in related businesses.
In connection with the Second Private Placement, the Company paid
Millennium Securities Corp., one of the underwriters, as Placement Agent, 3% of
the gross proceeds of the entire offering as a non-accountable expense allowance
and a 10% commission on the sales of the Second Private Placement Units.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby will be
passed upon for the Company by the law firm of Blau, Kramer, Wactlar &
Lieberman, P.C., Jericho, New York. The law firm of Beckman & Millman, P.C., New
York, New York will pass on certain aspects of this offering on behalf of the
Representative. Employees of Blau, Kramer, Wactlar & Lieberman, P. C. own an
aggregate of 225,000 shares of Common Stock.
<PAGE>
EXPERTS
The audited financial statements of the Company for the fiscal year ended
December 31, 1996 and the fiscal period ended December 31, 1995, are included
herein and in the registration statement in reliance upon the report, which
report includes an emphasis paragraph regarding the ability of the Company to
continue as a going concern, of Bailey, Saetveit & Co., P.C., independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a registration statement on Form
SB-2, pursuant to the Securities Act, with respect to the securities offered by
this Prospectus. This Prospectus does not contain all of the information set
forth in said registration statement, and the exhibits thereto. For further
information with respect to the Company and the securities offered hereby,
reference is made to said registration statement and exhibits which may be
inspected without charge at the Commission's principal office at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
As of the date of this Prospectus, the Company will be subject to the
informational requirements of the Securities Exchange Act of 1934, as amended,
and, in accordance therewith, shall file reports and other information with the
Commission. Such reports and other information can be inspected and copied at
the public reference facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at its following regional
offices: Suite 788, 1375 Peachtree St. N.E., Atlanta, Georgia 30367,
Northwestern Atrium Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois
60621-2511 and 7 World Trade Center, 13th Floor, New York, New York 10048. Also,
copies of such material can be obtained at prescribed rates from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, or at the Commission's Web site located at
http:\\www.sec.gov.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(A Development Stage Company)
Financial Statements
and
Independent Auditors' Report
December 31, 1996 and 1995
and
September 30, 1997 and 1996
Unaudited Stub Periods
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(A Development Stage Company)
Index to Financial Statements
Independent Auditors' Report 1
Balance Sheets 2
Statements of Loss 3
Statements of Stockholders' Deficit 4-5
Statements of Cash Flows 6
Notes to Financial Statements 7-14
<PAGE>
Independent Auditors' Report
To the Board of Directors and
Stockholders of Ripe Touch Greenhouses, Inc.
Castle Rock, Colorado
We have audited the accompanying balance sheets of Ripe Touch Greenhouses, Inc.
(a development stage company) as of December 31, 1996 and December 31 1995, and
the related statements of loss, stockholders' deficit, and cash flows for the
year ended December 31, 1996 and for the period from October 26, 1995
(inception) to December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ripe Touch Greenhouses, Inc. as
of December 31, 1996 and December 31, 1995, and the results of its operations
and its cash flows for the year ended December 31, 1996 and for the period from
October 26, 1995 (inception) to December 31, 1995 in conformity with generally
accepted accounting principles.
As discussed in note 15 to the financial statements, the Company has been in the
development stage since its inception, October 26, 1995. Realization of its
assets is dependent upon the Company's ability to successfully complete both its
initial public offering and closing of long-term financing, and the success of
future operations. The unpredictability of these future events raise substantial
doubt about the Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
April 26, 1997
Bailey Saetveit & Co., P.C.
Englewood, Colorado
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(A Development Stage Company)
Balance Sheets
<TABLE>
<CAPTION>
September December December
30, 1997 31, 1996 31, 1995
(Unaudited) (Audited) (Audited)
----------- --------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 214,992 $ 72,012 $ 985
Accounts receivable - related party (net of allowance
for doubtful accounts of $0 in 1997, 1996 and 1995) 47,218 19,504
Deferred offering costs 25,000 -- 870
----------- ----------- -----------
Total current assets 287,210 91,516 1,855
----------- ----------- -----------
Property and equipment - net 608,449 492,366 15,000
----------- ----------- -----------
Other assets:
Construction in progress 492,504 338,039 71,516
Prepaid offering costs 34,375 74,375 --
Deposits 100,000 50,000 --
Up-front long-term debt financing fees 25,000 25,000 5,000
Organization costs (net of amortization of $1,924, $1,171
and $166 in 1997, 1996 and 1995, respectively) 3,096 3,849 4,853
----------- ----------- -----------
654,975 491,263 81,369
----------- ----------- -----------
$ 1,550,634 $ 1,075,145 $ 98,224
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 20,959 $ 225,574 $ --
Bridge loans payable (net of discount of $133,463 in 1997,
$279,745 in 1996, and $0 in 1995) 1,429,037 782,755 --
Note payable - related party -- 50,000 117,000
Accounts payable 316,138 274,873 110,509
Accrued expenses 326,026 133,046 30,132
----------- ----------- -----------
Total current liabilities 2,092,160 1,466,248 257,641
----------- ----------- -----------
Long-term debt 223,930 16,646 --
----------- ----------- -----------
Commitments and contingencies -- -- --
Stockholders' deficiency
Preferred stock, 500,000 shares of $.01 par value
authorized, no shares issued or outstanding -- -- --
Common stock, 10,000,000 shares of $.001 par value
authorized, 3,802,500, 3,501,000, and 3,000,000
shares issued and outstanding as of June 30,
1997, December 31, 1996, and 1995, respectively 3,803 3,501 3,000
Additional paid-in capital 818,300 459,601 --
Deficit accumulated during the development stage (1,587,559) (870,851) (162,417)
----------- ----------- -----------
Total stockholders' deficit (765,456) (407,749) (159,417)
----------- ----------- -----------
$ 1,550,634 $ 1,075,145 $ 98,224
=========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(A Development Stage Company)
Statements of Loss
<TABLE>
<CAPTION>
For the For the
period from period from
inception For the nine month period ended inception
(October 26, September 30, For the year (October 26,
1995) to Sep- ------------------------------- ended De- 1995) to De-
tember 30, 1997 1997 1996 cember 31, 1996 cember 31, 1995
(Unaudited) (Unaudited) (Unaudited) (Audited) (Audited)
--------------- ----------- ----------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Sales $ 132,786 $ 132,786 $ -- $ -- $ --
Cost of sales 185,592 156,238 2,500 29,354 --
----------- ----------- ----------- ----------- -----------
Gross profit (52,806) (23,452) (2,500) (29,354) --
----------- ----------- ----------- ----------- -----------
General and administrative expenses:
Officers wages and benefits 333,667 131,915 129,180 173,045 28,707
Consulting fees 483,065 89,567 120,400 272,227 121,271
Rent expense 41,400 16,200 16,200 21,600 3,600
Travel and entertainment 29,402 15,197 5,783 14,205 --
Legal and accounting 21,870 11,050 -- 10,820 --
Automobile expense 25,298 10,790 3,631 14,254 254
Telephone 14,043 6,831 3,859 7,004 208
Miscellaneous 10,760 2,274 3,172 8,414 72
Postage & Delivery 6,767 289 -- 6,478 --
Office supplies and equipment 2,025 -- -- 2,025 --
Amortization 1,923 753 -- 1,004 166
----------- ----------- ----------- ----------- -----------
Total general and admin-
istrative expense 970,220 284,866 282,225 531,076 154,278
----------- ----------- ----------- ----------- -----------
Loss from operations (1,023,026) (308,318) (284,725) (560,430) (154,278)
----------- ----------- ----------- ----------- -----------
Other income (expenses)
Interest income 1,175 -- 541 1,175 --
Interest expense (565,708) (408,390) (36,133) (149,179) (8,139)
----------- ----------- ----------- ----------- -----------
(564,533) (408,390) (35,592) (148,004) (8,139)
----------- ----------- ----------- ----------- -----------
Loss before income taxes (1,587,559) (716,708) (320,317) (708,434) (162,417)
Income tax expense -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net loss $(1,587,559) $ (716,708) $ (320,317) $ (708,434) $ (162,417)
=========== =========== =========== =========== ===========
Shares outstanding 3,802,500 3,802,500 3,409,500 3,501,000 3,000,000
----------- ----------- ----------- ----------- -----------
Loss per share $ (0.41750) $ (0.18848) $ (0.09395) $ (0.20235) $ (0.05414)
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(A Development Stage Company)
Statement of Stockholders' Deficit
For the period from inception (October 26, 1995) to December 31, 1995, year
ended December 31, 1996, and
the "unaudited" nine month period ended September 30, 1997
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------------- --------------------- Additional
Date of Number $.01 Number $.001 Paid-in Accumulated
Transaction of Shares Par Value of Shares Par Value Capital Deficit
----------- --------- --------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, October 25, 1995 (inception) -- $ -- -- $ -- $ -- $ --
Stock issued for services in connection 10/26/95 -- -- 2,775,000 2,775 -- --
with formation of the Company
($0.001 per share)
Stock issued for legal services 10/26/95 -- -- 225,000 225 -- --
($0.001 per share)
Net loss for the period ended
December 31, 1995 12/31/95 -- -- -- -- -- (162,417)
----- --------- --------- --------- ---------- -----------
Balances, December 31, 1995 (audited) -- -- 3,000,000 3,000 -- (162,417)
----- --------- --------- --------- ---------- -----------
Stock issued for cash 8/2/96 -- -- 132,500 133 132,368 --
($1.00 per share)
Stock issued for consulting services 9/27/96 -- -- 152,000 152 151,848 --
($1.00 per share)
Stock issued in connection with 9/27/96 -- -- 125,000 125 124,875 --
issuance of bridge loans
($1.00 per share)
Legal costs of private placement 9/30/96 -- -- -- -- (40,898) --
Stock issued in connection with 11/1/96 -- -- 80,000 80 79,920 --
issuance of bridge loans
($1.00 per share)
Stock issued in connection with 12/16/96 -- -- 7,500 7 7,492 --
issuance of bridge loans
($1.00 per share)
Stock issued in connection with 12/18/96 -- -- 4,000 4 3,996 --
land purchase ($1.00 per share)
Net loss for the year ended
December 31, 1996 12/31/96 -- -- -- -- -- (708,434)
----- --------- --------- --------- ---------- -----------
Balances, December 31, 1996 (audited) -- -- 3,501,000 3,501 459,601 (870,851)
----- --------- --------- --------- ---------- -----------
</TABLE>
See notes to financial statements.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(A Development Stage Company)
Statement of Stockholders' Deficit
For the period from inception (October 26, 1995) to December 31, 1995, year
ended December 31, 1996, and
the "unaudited" nine month period ended September 30, 1997
"Continued"
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------------- --------------------- Additional
Date of Number $.01 Number $.001 Paid-in Accumulated
Transaction of Shares Par Value of Shares Par Value Capital Deficit
----------- --------- --------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Stock issued in connection with 6/18-9/30/97 -- -- 100,000 100 99,900 --
issuance of bridge loans
($1.00 per share)
Stock issued for consulting services 7/1/97 -- -- 27,500 28 27,472 --
($1.00 per share)
Stock issued for consulting services 8/15/97 -- -- 100,000 100 99,900 --
($1.00 per share)
Stock issued in connection with 8/20/97 -- -- 4,000 4 3,996 --
land purchase ($1.00 per share)
Stock issued for cash 8/22-9/9/97 -- -- 57,500 58 114,943 --
($2.00 per share)
Stock issued for cash 9/15/97 -- -- 12,500 12 12,488 --
($1.00 per share)
Net loss for the nine month period
ended September 30, 1997 9/30/97 -- -- -- -- -- (716,708)
----- --------- --------- --------- ---------- -----------
Balances, September 30, 1997 (unaudited) -- $ -- 3,802,500 $ 3,803 $ 818,300 $(1,587,559)
----- --------- --------- --------- ---------- -----------
</TABLE>
See notes to financial statements.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(A Development Stage Company)
Statements of Cash Flows
<TABLE>
<CAPTION>
For the For the
period from period from
inception For the nine month period ended inception
(October 26, September 30, For the year (October 26,
1995) to Sep- ------------------------------- ended De- 1995) to De-
tember 30, 1997 1997 1996 cember 31, 1996 cember 31, 1995
(Unaudited) (Unaudited) (Unaudited) (Audited) (Audited)
--------------- ------------------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(1,587,559) $(716,708) $(320,317) $ (708,434) $(162,417)
Adjustments to reconcile net loss to
net cash used by operating activities:
Stock issued for services 282,500 127,500 152,000 152,000 3,000
Depreciation and amortization 72,214 58,615 754 13,433 166
Amortization of discount 380,287 299,407 -- 80,880
Net change in assets and liabilities:
Accounts receivable - related party (47,218) (27,714) (5,935) (18,634) (870)
Prepaid/deferred offering costs (59,375) 15,000 -- (74,375) --
Deposits (100,000) (50,000) -- (50,000) --
Accounts payable 316,138 41,265 140,622 164,364 110,509
Accrued expenses 326,026 192,980 62,575 102,914 30,132
----------- --------- --------- ----------- ---------
Net cash used by operating activities (416,987) (59,655) 29,699 (337,852) (19,480)
----------- --------- --------- ----------- ---------
Cash flows from investing activities:
Capitalized organizational costs (5,019) -- -- -- (5,019)
Purchase of property and equipment (310,740) (169,945) -- (125,795) (15,000)
Construction in progress (492,504) (154,465) (228,534) (266,523) (71,516)
----------- --------- --------- ----------- ---------
Net cash used by investing activities (808,263) (324,410) (228,534) (392,318) (91,535)
----------- --------- --------- ----------- ---------
Cash flows from financing activities:
Up-front long-term debt financing fees (25,000) -- (20,000) (20,000) (5,000)
Net loans from related parties -- (50,000) (117,000) (67,000) 117,000
Proceeds from bridge loans 1,562,500 500,000 625,000 1,062,500 --
Discount on bridge loans in connection
with issuance of stock (513,750) (153,125) (125,000) (360,625) --
Proceeds from long-term debt 250,000 250,000 -- -- --
Payments on long-term debt (365,110) (247,330) -- (117,780) --
Legal fees charged to proceeds from
private placement (40,898) -- (40,898) (40,898) --
Issuance of common stock 572,500 227,500 257,500 345,000 --
----------- --------- --------- ----------- ---------
Net cash provided by financing
activities 1,440,242 527,045 579,602 801,197 112,000
----------- --------- --------- ----------- ---------
Net increase in cash and cash equivalents 214,992 142,980 380,767 71,027 985
----------- --------- --------- ----------- ---------
Cash and cash equivalents, beginning of period -- 72,012 985 985 --
----------- --------- --------- ----------- ---------
Cash and cash equivalents, end of period $ 214,992 $ 214,992 $ 381,752 $ 72,012 $ 985
=========== ========= ========= =========== =========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 8,575 $ 6,354 $ -- $ 2,221 $ --
=========== ========= ========= =========== =========
Income taxes $ -- $ -- $ -- $ -- $ --
=========== ========= ========= =========== =========
</TABLE>
See notes to financial statements.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Development Stage Activities
Ripe Touch Greenhouses, Inc. (the "Company"), is a Delaware corporation
and has been in the development stage since its formation on October
26, 1995. The Company plans to construct and operate a greenhouse
outside of Colorado Springs, Colorado for production and sale of
hydroponic, naturally vine ripened tomatoes. The facilities will be
powered by three 1,000 BHP thermal combustors using used tires as a
fuel source. The combustors will generate the heat for the greenhouse
as well as the steam necessary to produce five megawatts of
electricity. In addition to revenues from the sale of tomatoes, the
Company anticipates receiving revenue from the sale of electricity
generated in excess of the greenhouse requirements.
The construction of the greenhouse and purchase of the thermal
combustors is intended to be financed through the sale of approximately
$15 million of ten year notes to a lending institution and the sale of
approximately $5 million of common stock in the Company's initial
public offering.
Accounting Method
The Company records income and expenses on the accrual method. As of
September 30, 1997 the Company had earned $132,786 in revenues
associated with the tire tipping fees.
Fiscal Year
The Company has selected December 31 as its fiscal year end.
Property and Equipment and Related Depreciation
Property and equipment are recorded at cost. Depreciation is provided
using the straight-line method. The Company uses an estimated useful
life of 5 years to depreciate machinery and equipment.
Deferred Offering Costs
Costs associated with the Company's private placement have been charged
to additional paid-in capital. The Company had prepaid certain costs
associated with its proposed public offering which are included in
other assets. It is the Company's policy to classify costs associated
with the proposed offering to deferred offering costs and charge
against the proceeds upon completion of the offering.
Loss Per Share
Loss per share was computed assuming all shares outstanding at the end
of the period were outstanding during the entire period.
Organization Costs
Costs incurred in organizing the Company have been capitalized and are
being amortized over a sixty-month period.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements, Continued
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Income Taxes
Deferred income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the
future based on enacted tax laws and rates applicable to the periods in
which the differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets
to the amount expected to be realized. Income tax expense is the tax
payable or refundable for the period plus or minus the change during
the period in deferred tax assets and liabilities.
Cash Equivalents
The Company considers all highly liquid debt instruments purchased with
an original maturity of three months or less to be cash equivalents.
Advertising Costs
The Company expenses non-direct advertising costs as incurred. The
Company has not incurred any direct response advertising costs since
its inception that should be capitalized and deferred to future
periods. Total advertising costs for the period ended September 30,
1997 and the years ended December 31, 1996 and 1995 were $0, $128 and
$0, respectively.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
2. STOCKHOLDERS' EQUITY
As of September 30, 1997, 3,802,500 shares of the Company's $.001 par
value common stock were issued and outstanding. The outstanding shares
include 312,500 shares which were issued in connection with the
Company's private placement memorandums where $1,562,500 was raised in
return for stock and $1,048,750 in bridge notes (note 8) payable (net
of $513,750 discount).
On July 25, 1996, the Company restated its certificate of
incorporation. The restated certificate changes the number of shares
the Company is authorized to issue from 5,000 shares of $.01 par value
common stock to 10,500,000 shares, consisting of 10,000,000 shares of
common stock with a par value of $.001 and 500,000 shares of preferred
stock with a par value of $.01. Accordingly, the Company has restated
the number of shares outstanding as of inception from 5,000 common
shares to 3,000,000.
3. PROPOSED PUBLIC OFFERING
The Company has entered into a firm underwriting agreement with
Millennium Securities, Corp. ("Underwriter"). Pursuant to the terms of
the firm underwriting agreement, the Underwriter has agreed to purchase
between 825,000 and 948,750 units. A unit consists of one share of
common stock and one warrant to purchase common stock at $10.00 per
share for three years, unless earlier redeemed.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements, Continued
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
3. PROPOSED PUBLIC OFFERING, CONTINUED
The Underwriter is to receive an expense allowance of 3% of the gross
proceeds, an underwriting discount of 10%, plus $50,000. In addition,
the Underwriter will receive for the purchase price of $100 the option
to purchase 125,000 units consisting of 125,000 shares and 125,000
Class A warrants of the Company at $8.06 per unit exercisable for a
period of four years from the date of the underwriting.
Each share of the 825,000 shares of common stock being offered by the
Company in its initial public offering comes with one detachable, non
voting Class A warrant. Each Class A warrant entitles the registered
holder to purchase one share of common stock for a period of three
years commencing on the effective date of the offering at a price of
$10.00 per share. Class A warrants are subject to redemption by the
Company at a price of $.01 per warrant after given written notice at
any time after the date of the prospectus, provided that the closing
bid price of the common stock for a period of 20 consecutive trading
days ending within three days of the notice of redemption has equaled
or exceeded $12.00 per share.
4. PROPERTY AND EQUIPMENT
Following is a summary of property and equipment at September 30, 1997,
December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- -------
<S> <C> <C> <C>
Land $ 188,045 $ 119,045 $15,000
Building 104,946 -- --
Machinery and equipment 385,750 385,750 --
--------- --------- -------
678,741 504,795 15,000
Less accumulated depreciation (70,292) (12,429) --
--------- --------- -------
$ 608,449 $ 492,366 $15,000
========= ========= =======
</TABLE>
Depreciation expense for the periods ended September 30, 1997 and 1996
and the years ended December 31, 1996 and 1995 was $57,862, $0, $12,429
and $0, respectively.
5. CONSTRUCTION IN PROGRESS
The Company anticipates total construction costs of its facilities will
be approximately $16.6 million. As of September 30, 1997, December 31,
1996 and 1995, the Company had incurred preliminary engineering and
construction management costs of $492,504, $338,039 and $71,516,
respectively.
The Company was issued a special use permit by the state of Colorado on
June 21, 1996 and obtained approval of its designated land use from El
Paso County, Colorado in October 1996.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements, Continued
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
6. LONG-TERM DEBT
Long-term debt at September 30, 1997 and December 31, 1996 consists of
the following:
<TABLE>
<CAPTION>
September 30, December
1997 31, 1996
--------- ---------
<S> <C> <C>
Doich International
Payable in monthly principal and interest installments of
$20,000 at prime plus 2% through January 1998. The note
is collateralized by the Company's tire shredder -- $ 242,220
Colorado Housing and Finance Authority ("CHAFA")
In May 1997 the Company refinanced its note with Doich
International with CHAFA. The note is payable in monthly
principal and interest installments of $2,531 at 4% through
May 2007. The note is collateralized by the Company's tire
shredder 244,889 --
Less current maturities (20,959) (225,574)
--------- ---------
Long-term debt $ 223,930 $ 16,646
========= =========
</TABLE>
Interest expense related to long-term debt for the periods ended
September 30, 1997 and 1996, and year ended December 31, 1996 was
$6,181, $0 and $2,221, respectively.
Current maturities of long-term debt as of December 31, 1996 and
September 30, 1997 are as follows:
<TABLE>
<CAPTION>
Year ending Year ending
December 31, September 30,
------------ -------------
<S> <C> <C>
1997 $ 225,574
1998 16,646 $ 20,959
1999 -- 21,813
2000 -- 22,702
2001 -- 23,627
2002 -- 24,590
thereafter -- 131,198
------------ ------------
$ 242,220 $ 244,889
============ ============
</TABLE>
7. LONG-TERM INCENTIVE PLAN
The Company has a long-term incentive plan. Under the plan, the Company
may issue stock options, stock appreciation rights, restricted stock,
performance grants, and any other type of award deemed to be consistent
with the purpose of the plan to key employees and other key persons
performing services for the Company. The Company may issue an aggregate
of not more than 350,000 common shares, subject to modification in the
event of a change in the Company's capitalization. As of September 30,
1997, the Company had not issued any common shares in connection with
its long-term incentive plan.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements, Continued
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
8. BRIDGE NOTES PAYABLE
Bridge notes payable at September 30, 1997 and December 31, 1996
consist of the following:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
12% unsecured bridge notes, principal and interest due at
maturity which is the earlier of September 30, 1997 or the
effective date of the Company's initial public offering. The
notes were issued in connection with the Company's first
private placement memorandum. On October 24, 1997 the
Company extended the maturity date of the notes to
January 31, 1998. $ 1,062,500 $ 1,062,500
12% unsecured bridge notes, principal and interest due at
maturity which is the earlier of June 30, 1998 or the
effective date of the Company's initial public offering. The
notes were issued in connection with the Company's second
private placement memorandum. 500,000 --
Less: discount on notes as of September 30, 1997 and
December 31, 1996 (net of amortization of $299,407 and
$80,880, respectively) (133,463) (279,745)
----------- -----------
Bridge notes payable $ 1,429,037 $ 782,755
=========== ===========
</TABLE>
Interest expense related to bridge notes payable for the periods ended
September 30, 1997 and 1996, and year ended December 31, 1996 was
$106,628, $617 and $28,030, respectively.
9. NOTES PAYABLE - RELATED PARTIES
Notes payable - related parties consist of the following at September
30, 1997, December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ------- --------
<S> <C> <C> <C>
Nathaniel, Ltd.
The Company has an unsecured promissory note
payable on demand with interest at 8%. $ -- $50,000 --
Shareholder
The Company has an unsecured promissory note
payable on demand with interest at 8%. -- -- 117,000
---------- ------- --------
Notes payable - related parties $ -- $50,000 $117,000
========== ======= ========
</TABLE>
Interest expense relating to notes payable - related parties for the
periods ended September 30, 1997 and 1996, and years ended December 31,
1996 and 1995 was $0, $7,947, $7,947 and $189, respectively.
10. INCOME TAXES
The Company's income tax expense for the periods ended September 30,
1997 and 1996, and years ended December 31, 1996 and 1995 are as
follows:
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements, Continued
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
10. INCOME TAXES, CONTINUED
<TABLE>
<CAPTION>
September 30, September 30, December 31, December 31,
1997 1996 1996 1995
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Current income tax expense
Federal $ -- $ -- $ -- $ --
State -- -- -- --
--------- --------- --------- --------
Current provision for income tax expense (benefits) -- -- -- --
--------- --------- --------- --------
Deferred income tax expense (benefits)
Federal (241,200) (103,400) (228,800) (43,400)
State (37,300) (16,000) (35,400) (8,100)
Less valuation allowance 278,500 119,400 264,200 51,500
--------- --------- --------- --------
Deferred provision for income taxes (benefits) -- -- -- --
--------- --------- --------- --------
Total provision for income taxes (benefits) $ -- $ -- $ -- $ --
========= ========= ========= ========
</TABLE>
As of September 30, 1997 and 1996, December 31, 1996 and 1995, the
Company's deferred tax assets were offset entirely by its valuation
allowances.
11. RELATED PARTY TRANSACTIONS
Rent
The Company rents office space from both its president and
secretary/treasurer at a cost of $800 and $1,000 per month on a
month-to-month basis, respectively. Rent expense was $16,200, $16,200,
$21,600 and $3,600 for the periods ended September 30, 1997 and 1996,
and years ended December 31, 1996 and 1995, respectively. At September
30, 1997, December 31, 1996 and 1995 accrued liabilities included
unpaid rents of $41,400, $25,200 and $3,600, respectively.
Accounts Receivable
The Company had accounts receivable from a company under common
control.
Notes Payable
The Company had notes payable to a shareholder and a Company under
common control (note 9).
Purchase of Thermal Combustors
The Company is affiliated with Waste Conversion Systems, Inc. through
common ownership. The Company plans to purchase its thermal combustors
from a distributor of Waste Conversion Systems, Inc. at a cost of
approximately $1,275,000.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements, Continued
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
12. COMMITMENTS AND CONTINGENCIES
Power Purchase Agreement
The Company has a power purchase agreement with Tri-State Generation
and Transmission Association, Inc. ("Tri-State"). The agreement will
allow the Company to sell its entire output of capacity and energy
(projected to be 5,000 kw) to Mountain View Electric Association, Inc.
("Mountain View"), a cooperative of Tri-State. The agreement calls for
a capacity rate of $10.07 per kw for a 30 year term, to be extended at
the option of the parties for two successive terms of 15 consecutive
years. The agreement is cancelable at Tri-State's option if certain
minimum deliveries are not maintained by the Company. Under the terms
of the agreement the contract is terminated unless power is delivered
by April 30, 1998.
During 1995 the Company incurred $100,438 in consulting fees with
Citizens Lehman Power ("Citizens"). The fees were related to the
formation of the above power purchase agreement with Tri-State
Generation and Transmission Association, Inc. Balances of $118,490,
$118,490 and $108,389, including interest charges were due as of
September 30, 1997, December 31, 1996 and 1995, respectively, and
accordingly, have been included in accounts payable.
In addition to the full satisfaction of the above liability, management
intends to issue 20,000 shares of the Company's common stock to
Citizens in recognition of their cooperation in sustaining from
collection proceedings, accordingly, a $20,000 liability has been
recorded in accounts payable.
Greenhouse Operation and Management Agreement
On October 10, 1995, the Company entered into an agreement with
Colorado Greenhouses LLC ("CG"), which is the operator of comparable
greenhouses in Ft. Lupton, Brush, and Rifle, Colorado. CG will be
responsible for providing consulting services during the design and
construction of the greenhouses for which it will receive 3% of such
subcontract prices.
In addition, CG will operate and manage the greenhouses for a fee of
$20,000 per month, (to be reduced to $7,500 per month when annual
operating income exceeds $1.2 million) subject to a 5% escalation
charge per year, plus an annual gross margin bonus of 14% of the
greenhouses operating income. CG will also receive $.05 for each pound
of produce sold. The term of the agreement is for ten years, and is
renewable at the option of the parties on a year-to-year basis.
Tire Shredding Agreement
On April 15, 1997, the Company entered into two agreements with an
individual and his controlled corporation. Under the terms of the
agreement the individual is to receive 100,000 shares of common stock
for past services which the Company has valued at $100,000. In
addition, the agreement requires the Company issue stock options to the
individual for 100,000 shares exercisable for two years at the initial
public offering price. In addition, the Company has agreed to reimburse
the individual's controlled corporation up to $10,000 per month for
salaries and other expenses to operate and maintain a tire shredding
operation at the Company's facilities. The Company has also agreed to
pay fees to this individual and his company for consulting and other
services of $3,000 per month when power generation begins. The tire
shredding agreement has an initial period of 5 years with a required
renewal subject to binding arbitration. The consulting agreement has an
initial period of 10 years. Under the terms of the consulting agreement
the individual will make a good faith effort to supply used tires to
the Company.
Consulting Agreement
The Company has a three year consulting agreement with a shareholder.
The agreement requires an annual compensation of $125,000 for the first
year, $75,000 for the second year, and $100,000 for the third year to
be paid to the shareholder.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements, Concluded
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
12. COMMITMENTS AND CONTINGENCIES, CONTINUED
Officer Employment Contracts
The Company has contracts with its president and secretary/treasurer
for services through November 1998. The contracts require $95,000 to be
paid to the president and $75,000 to be paid to the secretary/treasurer
annually during the contract period. In addition, the officers may
receive 3% of the Company's pre-tax income, not to exceed certain
limits.
Land Clean-up Fund
As a condition of El Paso County, Colorado's acceptance of the
Company's designated land use (note 5), the Company is to establish a
$100,000 clean-up fund. As of September 30, 1997 this fund was fully
funded.
Going Concern
The Company has been in the development stage since its inception,
October 26, 1995. As shown in the accompanying financial statements,
the Company incurred a net loss of $1,587,559 for the period from
inception (October 26, 1995) to September 30, 1997. As of September 30,
1997, current liabilities exceeded current assets by $1,804,950. Those
factors, as well as the uncertainties regarding the ability of the
Company to obtain long-term financing, and the successful completion of
its initial public offering create an uncertainty about the Company's
ability to continue as a going concern. The financial statements do not
include any adjustments that might be necessary if the Company is
unable to continue as a going concern.
In view of these matters, realization of the assets in the accompanying
balance sheet is dependent upon success of its future operations and
obtaining long-term financing for its greenhouse project, which in turn
is dependent upon the successful completion of the Company's initial
public offering. Management believes that actions presently being taken
to satisfy the Company's financial requirements provide the opportunity
for the Company to continue as a going concern.
13. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Non-cash investing and financing activities for the nine months ended
September 30, 1997 and 1996, year ended December 31, 1996, and period
ended December 31, 1995 are as follows:
<TABLE>
<CAPTION>
September 30, September 30, December 31, December 31,
1997 1996 1996 1995
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Equipment acquired by long-term debt $ -- $ -- $360,000 $ --
Land acquired by common stock issuance 4,000 -- 4,000 --
-------- -------- -------- ------
Total non-cash investing activities $ 4,000 $ -- $364,000 $ --
======== ======== ======== ======
Stock issued for consulting services $127,500 $152,000 $152,000 $3,000
======== ======== ======== ======
</TABLE>
<PAGE>
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained in this Prospectus. Any information or presentations
not herein contained, if given or made, must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any security other than the securities
offered by this Prospectus, nor does it constitute an offer to sell or a
solicitation of an offer to buy the securities by any person in any jurisdiction
where such offer or solicitation is not authorized, or in which the person
making such offer is not qualified to do so, or to any person to whom it is
unlawful to make such offer or solicitation. The delivery of this Prospectus
shall not, under any circumstances create any implication that there has been no
change in the affairs of the Company since the date hereof.
- ---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary . . . . . . . . 4
Risk Factors . . . . . . . . . . . 7
Use of Proceeds. . . . . . . . . . 13
Dilution . . . . . . . . . . . . . 14
Capitalization . . . . . . . . . . 15
Dividend Policy. . . . . . . . . . 16
Selected Financial Data. . . . . . 17
Management's Discussion and Analysis and
of Financial Condition and Results of
Operations . . . . . . . . . . . 18
Business . . . . . . . . . . . . . 20
Management . . . . . . . . . . . . 25
Principal Stockholders . . . . . . 29
Certain Relationships and
Related Transactions. . . . 30
Selling Securityholders. . . . . . 30
Description of Securities. . . . . 32
Underwriting . . . . . . . . . . . 37
Legal Matters. . . . . . . . . . . 39
Experts. . . . . . . . . . . . . . 40
Available Information. . . . . . . 40
Index to Financial Statements
Independent Auditor's Report
</TABLE>
Until , 1998 (90 days after the commencement of the offering), all dealers
effecting transactions in the Units, whether or not participating in this
distribution, may be required to deliver a Prospectus. This delivery requirement
is in addition to the obligation of dealers to deliver a Prospectus when acting
as Representatives and with respect to their unsold allotments or subscriptions.
<PAGE>
825,000 Units
\
RIPE TOUCH GREENHOUSES, INC.
---------------
PROSPECTUS
---------------
MILLENNIUM SECURITIES CORP.
, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Offices
See "Management -- Personal Liability and Indemnification of Directors".
Item 25. Other Expenses of Issuance and Distribution
The estimated expenses of the distribution, all of which are to be borne by
the Company, are as follows:
<TABLE>
<S> <C>
SEC Registration Fee. . . . . . . . . . . . . . . . . $4,073
NASD Filing Fee . . . . . . . . . . . . . . . . . . . *
Blue Sky Fees and Expenses. . . . . . . . . . . . . . 35,000
Transfer Agent Fees . . . . . . . . . . . . . . . . . 5,000
Accounting Fees and Expenses. . . . . . . . . . . . . *
Legal Fees and Expenses . . . . . . . . . . . . . . . *
Printing and Engraving. . . . . . . . . . . . . . . . 60,000
Representative's Non-Accountable
Expense Allowance. . . . . . . . . . . . . . . . . *
Miscellaneous . . . . . . . . . . . . . . . . . . . . *
------------
Total. . . . . . . . . . . . . . . . . . . . . . . $ 450,000
============
- ---------
<FN>
* To be filed by amendment
</FN>
</TABLE>
Item 26. Recent Sales of Unregistered Securities
1. In October 1995, the Company issued an aggregate of 2,775,000 shares of
Common Stock to founding stockholders. This was a transaction by the issuer not
involving any public offering which was exempt from the registration
requirements under the Securities Act pursuant to Section 4(2) thereof.
2. In August 1996, the Company issued 225,000 shares of its Common Stock in
consideration of for services rendered. This transaction by the Company did not
involve any public offering and was exempt from the registration requirements
under the Securities Act pursuant to Section 4(2) thereof.
3. In August 1996, the Company issued 152,000 shares of its Common Stock to
a consultant at a price of $1 per share. This transaction by the Company did not
involve any public offering and was exempt from the registration requirements
under the Securities Act pursuant to Section 4(2) thereof.
4. In August 1996, the Company issued 132,500 shares of its common stock to
four individuals. These transactions by the Company did not involve any public
offering and was exempt from the registration requirements under the Securities
Act pursuant to Section 4(2) thereof.
<PAGE>
5. In August through September 1996, the Company sold $1,062,500 principal
amount of First Private Placement Units, each Second Private Placement Unit
consisted of one $25,000 principal amount of 12% promissory notes and 5,000
shares of Common Stock, to 25 persons, all of whom are deemed accredited
pursuant to Rule 501 of Regulation D, in private transactions by the issuer not
involving any public offering which were exempt from registration requirements
under the Securities Act pursuant to Section 4(2) thereof and Rule 506 of
Regulation D promulgated pursuant thereto.
6. In May 1997, the Company sold $50,000 principal amount of Second Private
Placement Units, each Second Private Placement Unit consisted of one $25,000
principal amount of 12% promissory notes and 5,000 shares of Common Stock, to 1
persons, (all of whom are deemed accredited pursuant to Rule 501 of Regulation
D, in private transactions by the issuer not involving any public offering which
were exempt from registration requirements under the Securities Act pursuant to
Section 4(2) thereof and Rule 506 of Regulation D promulgated pursuant thereto.
7. From July through October 1997 the Company sold an aggregate of 191,500
shares of Common Stock for an aggregate consideration of $608,750 to 33 persons,
all of whom are deemed accredited pursuant to Rule 501 of Regulation D, in
private transactions by the issuer not involving any public offering which were
exempt from registration requirements under the Securities Act pursuant to
Section 4(2) thereof and Rule 506 of Regulation D promulgated pursuant thereto.
Item 27. Exhibits.
1.1 Form of Underwriting Agreement.
1.2 Form of Agreement Among Underwriters.
1.3 Form of Selling Agreement.
3.1 Certificate of Incorporation of the Registrant.
3.2 By-laws of the Registrant.
4.1 Specimen Common Stock Certificate.*
4.2 Form of Warrant Agreement (including Warrant Certificate).*
4.3 Form of Representative's Purchase Option.*
5.1 Form of Opinion and Consent of Blau, Kramer, Wactlar & Lieberman, P.C.
regarding the legality of the securities being registered.*
10.1 1996 Long Term Incentive Plan.
10.2 Employment Agreement dated November 1, 1997 between the Registrant and
Stanley Abrams.*
10.3 Employment Agreement dated November 1, 1997 between the Registrant and
James Woodley.*
10.4 Consulting Agreement dated as of November 1, 1996 between the Registrant
and Srotnac Group, LLC.
10.5 Operations and Maintenance Agreement dated April 1, 1997 between the
Registrant and David Mehring.
10.6 Greenhouse Operation and Management Agreement dated October 10, 1995
between Registrant and Colorado Greenhouse CCC.
10.7 Agreement dated November 25, 1996 between Registrant and El Paso County.
10.8 Agreement dated March 22, 1995 between Registrant and Tri State Power
Generation and Transmission Association, Inc.
10.9 Equipment Purchase Agreement dated December 14, 1995 between Registrant and
Nathaniel Ltd.
10.10 Form of First Private Placement Note.
10.11 Form of First Private Placement Unit Subscription Agreement .
10.12 Form of Second Private Placement Note.
10.13 Form of Second Private Placement Unit Subscription Agreement .
<PAGE>
10.14 Form of Additional Private Placement Subscription Agreement.
10.15 Form of Additional Private Placement Note.
23.1 Consent of Blau, Kramer, Wactlar & Lieberman, P.C. (included in
Exhibit 5.1).
23.2 Consent of Bailey, Saetveit & Co., P.C.
25.1 Powers of Attorney.
- -------
* To be filed by Amendment
Item 28. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the small business
issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement; and
(iii)Include any additional or changed material information on the plan of
distribution.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the small business issuer under Rule 424(b)(1), or
(4) or 497(h) under the Securities Act as part of this registration
statement as of the time the Commission declared it effective.
(5) Provide to the underwriter at the closing specified in the underwriting
agreement certificates in such denominations and registered in such names
as required by the underwriter to permit prompt delivery to each
purchaser.
<PAGE>
Certain Selling Securityholders have agreed not to sell or transfer the
shares of Common Stock owned by them and registered hereunder for twenty-four
(24) months from the date of this Prospectus. The Representative and the
Underwriters have indicated that in the event they enter into transactions with
any of the Selling Securityholders, or waive the lock-ups applicable to such
Selling Securityholders securities under the following circumstances, disclosure
will be provided in the following manners: (i) if such transactions involve from
five (5) percent up to ten (10) percent of the registered Selling
Securityholders' securities, to file "Sticker" supplements pursuant to Rule
242(c) of the Securities Act and (ii) if such transactions involve over ten (10)
percent of the registered Selling Securityholders securities, to file a
post-effective amendment to the registration statement of which this Prospectus
forms a part.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in Castle Rock,
Colorado on the 19th day of January, 1998.
Ripe Touch Greenhouses, Inc.
By: /s/ Stanley Abrams
----------------------------
Stanley Abrams, President
(Chief Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes an appoints Stanley Abrams, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
indicated on January 19th, 1998.
Signatures Title
---------- -----
/s/ Stanley Abrams
- ----------------------------- President (Chief Executive
Stanley Abrams Officer), and Director
/s/ James Woodley
- ----------------------------- Secretary, Treasurer and Director
James Woodley
/s/ Arthur Rosenberg
- ----------------------------- Director
Arthur Rosenberg
Exhibit 1.1
825,000 Units
Each Unit Consisting of
One (1) Share of Common Stock and
One (1) Class A Common Stock Purchase Warrant
RIPE TOUCH GREENHOUSES, INC.
UNDERWRITING AGREEMENT
New York, New York
January ___, 1998
Millennium Securities
150 East 58th - 38th Floor
New York, New York 10155
Attn: Mr. Richard Sitomer
President
Ladies and Gentlemen:
Ripe Touch Greenhouses, Inc., a Delaware corporation (the "Company"),
confirms its agreement with Millennium Securities Corp. ("Millennium") and each
of the underwriters named in Schedule A hereto (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 14), for whom Millennium is acting as
representative (in such capacity, Millennium shall hereinafter be referred to as
"you" or the "Representative"), with respect to the sale by the Company and the
purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of units (the "Units"), each Unit consisting of one (1) share
(the "Shares") of the Company's common stock, $0.001 par value per share (the
"Common Stock"), and one (1) Redeemable Common Stock Class A Purchase Warrant
(the "Warrants") set forth in said Schedule A. The 825,000 Units, consisting of
a total of 825,000 Shares together with the 825,000 Warrants and 825,000 Shares
of Common Stock underlying the Warrants (the "Warrant Shares") are hereinafter
collectively referred to as the "Firm Securities". The Common Stock and Warrant
comprising each Unit will not trade separately from the Unit until the earlier
<PAGE>
of 90 days from the date of the Prospectus or the determination by Millennium
Securities Corp. ("Millennium"), in its sole discretion, to permit such separate
trading. Each Warrant is exercisable commencing the date of this Agreement until
three years after the date of this Agreement, unless previously redeemed by the
Company, at an initial exercise price of $______ for one share of Common Stock.
For a period of three (3) years from the date of this Agreement, the Warrants
may be redeemed by the Company, upon ten (10) business days' prior written
notice to Millennium, if the Company shall have given not less than thirty (30)
days' and not more than sixty (60) days' prior written notice to the holders
thereof at a redemption price of $0.01 per Warrant at any time, provided, the
average reported closing bid quotation of the Common Stock equals or exceeds
$12.00 per share (subject to adjustment as provided in the Warrant Agreement
dated________________ 1998 between the Company and
_______________________________________) for a period of twenty (20) consecutive
trading days ending on the third trading day prior to the date of the notice of
redemption. Any redemption prior to one year from the effective date shall
require the consent of Millennium. (The Firm Securities are sometimes
collectively referred to herein as the "Securities"). The Company also proposes
to issue and to sell to you for the sum of $250.00 an Option (the "RPO") for the
purchase of up to an additional 125,000 Shares and 125,000 Warrants. The Shares,
Warrants and Warrant Shares issuable upon exercise of the RPO are hereinafter
referred to as the "Representative's Securities." Neither the Representative's
Securities nor any of the securities underlying the Representative's Securities
shall be redeemable by the Company but the Representative's Securities and the
securities underlying the Representative's Securities shall otherwise be
identical to the Firm Securities. The RPO will be exercisable between the first
and fifth anniversary dates of the Effective Date as below defined (the "RPO
Exercise Term"). You agree that during the one year period from the Effective
Date, Millennium will not transfer the Representative's Securities except to
Millennium's officers or partners or to any underwriters or selected dealers or
their officers or partners. The RPO shall be exercisable at a price per Share
equal to 120% of the public offering price of the Units and for the Warrants, at
a price per Warrant equal to 120% of the public offering price of the Shares and
shall be exercisable at any time and from time to time, in whole or in part,
during the RPO Exercise Term. The RPO contains the terms and conditions
substantially as set forth in Exhibit 4.3 to the Registration Statement. The
shares of the Common Stock issuable upon exercise of the Warrants (including the
Warrants issuable upon exercise of the RPO) are hereinafter referred to as the
"Warrant Shares." The Firm Securities, the Shares, the Warrants, the
Representative's Securities and the Warrant Shares are more fully described in
the Registration Statement and the Prospectus referred to below.
1. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, each of the Underwriters as of the date hereof,
and the Closing Date as follows:
(a) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission"), a registration statement, and an amendment or
amendments thereto, on Form SB-2, including any related preliminary prospectus
(the "Preliminary Prospectus"), for the registration of the Firm Securities,
Representative Securities as well as the Shares more fully described in the
Prospectus under the heading "Selling Security holders", under the Securities
Act of 1933, as amended (the "Act"), which registration statement and amendment
or amendments have been prepared by the Company in conformity with the
requirements of the Act, and the Rules and Regulations, as defined below. The
<PAGE>
Company will promptly file a further amendment to the registration statement in
the form heretofore delivered to the Underwriters but will not file any other
amendment thereto to which the Underwriters shall have objected in writing after
having been furnished with a copy thereof. Except as the context may otherwise
require, the registration statement, as amended, on file with the Commission at
the time the registration statement becomes effective (including the prospectus,
financial statements, schedules, exhibits and all other documents filed as a
part thereof or incorporated therein (including, but not limited to those
documents or information incorporated by reference therein) and all information
deemed to be a part thereof as of such time pursuant to paragraph (b) of Rule
430(A) of the Regulations) and as further amended by any post effective
amendment declared effective prior to the Closing Date, is hereinafter called
the "Registration Statement", and the form of prospectus in the form first filed
with the Commission pursuant to Rule 424(b) of the Regulations, is hereinafter
called the "Prospectus." For purposes hereof, "Rules and Regulations" shall mean
the rules and regulations adopted by the Commission under either the Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as applicable.
The Preliminary Prospectus, Registration Statement and Prospectus are sometimes
referred to herein as the "Offering Documents".
(b) Neither the Commission nor any state regulatory authority has issued
any order preventing or suspending the use of any Preliminary Prospectus, the
Registration Statement or the Prospectus or any part of any thereof and no
proceedings for a stop order suspending the effectiveness of the Registration
Statement or any of the Company's securities have been instituted or are pending
or threatened. Each of the Preliminary Prospectus, the Registration Statement
and the Prospectus at the time of filing thereof conformed with the requirements
of the Act and the Rules and Regulations, and none of the Preliminary
Prospectus, the Registration Statement or the Prospectus at the time of filing
thereof contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(c) When the Registration Statement becomes effective and at all times
subsequent thereto until the Closing Date and any Additional Closing Date (as
defined in Section 5 hereof) and during such longer period as the Prospectus may
be required to be delivered in connection with sales by the Underwriters or a
dealer, the Registration Statement and the Prospectus contained, and as amended
by any amendment or supplement thereto, will contain, all statements which are
required to be stated therein in accordance with the Act and the Rules and
Regulations, and will conform to the requirements of the Act and the Rules and
Regulations; neither the Registration Statement nor the Prospectus, as amended
or supplemented by any amendment or supplement thereto, nor any such amendment
or supplement thereto, will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(d) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the state of its incorporation.
The Company does not own an interest in any firm, association, corporation,
partnership, trust, joint venture or other business entity. The Company is duly
qualified and licensed for the transaction of business and in good standing as a
<PAGE>
foreign corporation in each jurisdiction in which its ownership or leasing of
any properties or the conduct of its business ("Business") requires such
qualification or licensing, except for jurisdictions where the failure to be so
registered or qualified would not have a material adverse effect on the
Company's Business, assets, prospects, earnings, properties, condition
(financial or otherwise) or results of operation of the Company (herein referred
to as a "Material Adverse Effect"). The Company has all requisite power and
authority (corporate and other), and has obtained any and all necessary and
material authorizations, approvals, orders, licenses, certificates, franchises
and permits of and from all government or regulatory officials and bodies
(including, without limitation, those having jurisdiction over building,
factory, environmental or similar matters) to own or lease its properties and
conduct its Business (collectively, the "Approvals"); the Company is and has
been doing business in, and on each Closing Date will be in, compliance with all
such Approvals, and all Federal, state, local and foreign laws, rules and
regulations; and the Company has not received any notice of proceedings relating
to the revocation or modification of any such Approval, which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, which
would have a Material Adverse Effect.
(e) The Company has a fully authorized, issued and outstanding
capitalization as set forth in the Prospectus under "Capitalization" and
"Description of Securities" and will have the capitalization set forth therein
on the Closing Date after giving effect to the Closing, and the Company is not a
party to or bound by any instrument, agreement or other arrangement providing
for the issuance of any capital stock, rights, warrants, options or other
securities, except for this Agreement and as described in the Prospectus. The
offers and sales of all securities of the Company outstanding on the date hereof
and/or immediately prior to the Closing Date were at all relevant times either
registered under the Securities Act and the applicable state securities or Blue
Sky laws, or exempt from such registration. No holder of any of the Company's
securities has any rights, "demand," "piggyback" or otherwise, to have such
securities registered (including without limitation on the Registration
Statement) or to demand the filing of a registration statement except as
specifically described in the Prospectus. No holder of any outstanding
securities of the Company has any rights of rescission with respect to the
offering and sale of such securities. The Firm Securities and the
Representative's Securities (collectively, hereinafter sometimes referred to as
the "Securities") and all other securities issued or issuable by the Company
conform or, when issued and paid for, will conform, in all respects to all
statements with respect thereto contained in the Offering Documents. All issued
and outstanding securities of the Company have been duly authorized and validly
issued and are fully paid and non-assessable, and the holders thereof are not
subject to personal liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of any holders of
any security of the Company or similar contractual rights granted by the
Company. The Securities are not and will not be subject to any preemptive or
other similar rights of any stockholder, have been duly authorized and, when
issued, paid for and delivered in accordance with the terms hereof, will be
validly issued, fully paid and non-assessable; the holders thereof will not be
subject to any personal liability solely by reason of being such holders; all
corporate action required to be taken for the authorization, issuance and sale
of the Securities has been duly and validly taken, and the certificates
representing the Securities will be in due and proper form. Upon the issuance
and delivery pursuant to the terms hereof of the Securities to be sold by the
Company hereunder, the Underwriters or the Representative, as the case may be,
will acquire good and marketable title to such securities free and clear of any
<PAGE>
lien, charge, claim, encumbrance, pledge, security interest, defect or other
restriction or right of equity of any kind whatsoever.
(f) The financial statements of the Company are true and complete and
fairly present the financial position 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
and the Rules and Regulations, consistently applied throughout the periods
involved and are in accordance with the books and records of the Company. No
other financial statements are required by Form SB-2 or otherwise to be included
in the Registration Statement or the Prospectus. The outstanding debt, the
property, both tangible and intangible, and the business of the Company conform
in all respects to the descriptions thereof contained in the Registration
Statement and the Prospectus. Financial information set forth in the Prospectus
under the headings "Selected Financial Data," "Capitalization," and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," fairly present, on the basis stated in the Prospectus, the
information set forth therein and have been derived from or compiled on a basis
consistent with that of the audited financial statements included in the
Prospectus. Except as otherwise stated in the Offering Documents, since December
31, 1996, (I) the Company has not incurred any liabilities or obligations,
direct or contingent, not in the ordinary course of business, or entered into
any transaction not in the ordinary course of business, which is material to the
business of the Company, and there has not been any change in the capital stock
of, or any incurrence of long-term debt by, the Company, or any issuance of
options, warrants or other rights to purchase the capital stock of the Company,
or any security or other instrument which by its terms is convertible into,
exercisable for or exchangeable for capital stock of the Company and (ii) there
has not occurred any Material Adverse Effect or any development involving a
prospective Material Adverse Effect. The Company has not become a party to, and
neither the business nor the property of the Company has become the subject of,
any litigation which, if adversely determined, would have a Material Adverse
Effect whether or not in the ordinary course of business.
(g) The Company has filed all federal tax returns and all state and
municipal and local tax returns (whether relating to income, sales, franchise,
real or personal property or other types of taxes) required to be filed under
the laws of the United States and applicable states, and has paid in full all
taxes which have become due pursuant to such returns or claimed to be due by any
taxing authority or otherwise due and owing; provided, however, that the Company
has not paid any tax, assessment, charge, levy or license fee that it contests
in good faith and by proper proceedings, which it has disclosed in writing to
the Representative and for which adequate reserves for the accrual of same are
maintained if required by generally accepted accounting principles. Each of the
tax returns heretofore filed by the Company correctly and accurately reflects
the amounts of its tax liability thereunder. The Company has withheld, collected
and paid all other levies, assessments, license fees and taxes (including,
without limitation, employment withholding taxes, FICA/social security and
similar employee taxes) to the extent required and, with respect to payments, to
the extent that the same have become due and payable.
(h) No transfer tax, stamp duty or other similar tax is payable by or on
<PAGE>
behalf of the Underwriters in connection with (I) the issuance by the Company of
the Securities; (ii) the purchase by the Underwriters of the Securities from the
Company and the purchase by the Representative of the Representative's
Securities from the Company; (iii) the consummation by the Company of any of its
obligations under this Agreement, or (iv) resales of the Securities in
connection with the distribution contemplated hereby.
(i) The Company has, and at the Closing will have, good and marketable
title to, or valid and enforceable leasehold estates in, all items of real
property owned or leased by it, and good and marketable title to, or valid and
enforceable leases with respect to, all items of personal property (tangible and
intangible), free and clear of all liens, encumbrances, claims, security
interests, defects of title, and restrictions of any nature whatsoever, other
than those referred to in the Offering Documents and liens for taxes not yet due
and payable. The Company has adequately insured its tangible and/or real
properties, other than its intellectual properties, against loss or damage by
fire or other casualty (other than earthquake and flood) and maintains such
insurance in adequate amounts (such adequacy being measured by such types and
levels of insurance as are carried by companies conducting comparable volumes of
business of the nature carried on and proposed to be carried on by the Company),
on terms generally offered by reputable insurance carriers in New York State.
The Company (I) has not failed to give notice or present any insurance claims
with respect to any matter, including but not limited to the Company's business
and property under any such insurance policy in a due and timely manner; (ii)
does not have any disputes or claims against any underwriter of such insurance
policies or has not failed to pay any premiums due and payable thereunder, or
(iii) has not failed to comply with all conditions contained in such insurance
policies. To the best of the Company's knowledge, there are no facts or
circumstances under any such insurance policy which would relieve any insurer of
its obligation to satisfy in full any valid claim of the Company.
(j) There is no action, suit, proceeding, injury, arbitration,
investigation, litigation or governmental proceeding (including, without
limitation, those having jurisdiction over environmental or similar matters),
domestic or foreign, pending or, to the best knowledge of the Company,
threatened against, or involving the properties or business of, the Company in
or before any court, agency, tribunal, arbitrator, governmental authority or
other person with jurisdiction over the Company and/or its properties
(including, without limitation, those having jurisdiction over environmental or
similar matters) which (I) questions the validity of the capital stock of the
Company, this Agreement, the RPO, or the Warrant Agreement (as defined herein)
or of any action taken or to be taken by the Company pursuant to or in
connection with this Agreement or the Warrant Agreement, or (ii) is required
under the Act or the Rules and Regulations to be disclosed in the Registration
Statement and/or the Prospectus which is not so disclosed (and such proceedings
as are summarized in the Registration Statement and/or the Prospectus are
accurately summarized in all material respects).
(k) The Company is not in violation of its Certificate of Incorporation or
By-Laws. The Company has full legal right, power and authority to issue, deliver
and sell the Securities, to execute and deliver this Agreement, the Warrant
<PAGE>
Agreement, and the RPO and to consummate the transactions provided for in each
such agreement; and this Agreement, the Warrant Agreement, and the RPO have each
been duly and properly authorized, executed and delivered by the Company. Each
of this Agreement, the Warrant Agreement, and the RPO constitutes a legal, valid
and binding agreement of the Company enforceable against the Company in
accordance with its respective terms, and none of the Company's issue and sale
of the RPO, the Securities or the execution, delivery or performance of this
Agreement, the Warrant Agreement or the RPO, the consummation of the
transactions contemplated herein and therein or the conduct of its current or
proposed business as described in the Offering Documents and any amendments or
supplements thereto, conflicts with or with the lapse of time will conflict
with, or results or with the lapse of time will result in, any breach or
violation of any of the terms or provisions of, or constitutes a default under,
or result in the creation or imposition of any lien, charge, claim, encumbrance,
pledge, security interest defect or other restriction or right of equity of any
kind whatsoever upon , any property or assets (tangible or intangible) of the
Company pursuant to or under the terms of, (I) the certificate of incorporation
or By-Laws of the Company; (ii) any license, contract, indenture, mortgage, deed
of trust, voting trust agreement, stockholders agreement, note, loan or credit
agreement or any other agreement or instrument to which the Company is a party
or by which it is or may be bound or to which its properties or assets (tangible
or intangible) is or may be subject, or any indebtedness; (iii) any statute,
judgment, decree, order, rule or regulation applicable to the Company of any
arbitrator, court, regulatory body or administrative agency or other
governmental agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or foreign, having
jurisdiction over the Company or any of its activities or properties; or (iv)
any permit, certification, registration, approval, consent, license or franchise
necessary for the Company to own or lease and operate any of its properties and
to conduct its business or the ability of the Company to make use thereof.
(l) No consent, approval, authorization or order of, and no filing with,
any court, regulatory body, government agency or other body, domestic or
foreign, is required for the issuance of the Securities or the RPO as described
in the Prospectus and the Registration Statement, the performance of this
Agreement, the Warrant Agreement or the RPO and the transactions contemplated
hereby and thereby, including without limitation, any waiver of any preemptive,
first refusal or other rights that any entity or person may have for the issue
and/or sale of any of the Securities, except such as (I) have been made or
obtained prior to the date hereof or (ii) may be obtained under the Act or may
be required under state securities or Blue Sky laws in connection with the
Underwriters' purchase and distribution of the Securities or the clearance of
such purchase, distribution and sale by the National Association of Securities
Dealers, Inc. (the "NASD").
(m) All executed agreements, contracts or other documents or copies of
executed agreements, contracts or other documents filed as exhibits to the
Registration Statement to which the Company is a party or by which it may be
bound or to which its assets, properties or business may be subject have been
duly and validly authorized, executed and delivered by the Company and
constitute the legal, valid and binding agreements of the Company enforceable
<PAGE>
against the Company in accordance with their respective terms. There are no
contracts or other documents which are required by the Act to be described in
the Registration Statement or filed as exhibits to the Registration Statement
which are not described or filed as required, and the exhibits which have been
filed are complete and correct copies of the documents of which they purport to
be copies. The descriptions in the Registration Statement of such agreements,
contracts and other documents are accurate and fairly present the information
required to be disclosed in conformity with the Act and the Rules and
Regulations. The contracts so described are in full force and effect and the
Company is not in breach of any such agreement.
(n) Subsequent to the respective dates as of which information is set forth
in the Registration Statement and the Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not (I) issued any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money; (ii) entered into any transaction other than in the ordinary
course of business, or (iii) declared or paid any dividend or made any other
distribution in respect of its capital stock of any class, and there has not
been any change in the capital stock or any change in the debt (long or short
term) or liabilities or material change in or affecting the general affairs,
management, financial operations, stockholders' equity or results of the
operations of the Company.
(o) No default by the Company (or to the Company's knowledge by any other
party) exists in the due performance of any term, covenant or condition of any
license, contract, indenture, mortgage, installment sale agreement, license,
permit, franchise, lease, deed of trust, voting trust agreement, stockholders
agreement, note, loan or credit agreement, purchase agreement, or any other
agreement or instrument evidencing an obligation for borrowed money, or any
other agreement or instrument to which the Company is a party or by which the
Company may be bound or to which the property or assets (tangible or intangible)
of the Company is subject or affected.
(p) The Company is in compliance with all Federal, state, local, and
foreign laws and regulations respecting employment and employment practices,
terms and conditions of employment and wages and hours. To the best of the
Company's knowledge, there are no pending investigations involving the Company
by the United States Department of Labor or any other governmental agency
responsible for the enforcement of such Federal, state, local, or foreign laws
and regulations. There is no unfair labor practice charge or complaint against
the Company pending before the National Labor Regulations Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or, to the best of the
Company's knowledge, threatened against or involving the Company, or any
predecessor entity, and none has ever occurred. No representation question
exists respecting the employees of the Company, and no collective bargaining
agreement or modification thereof is currently being negotiated by the Company.
No grievance or arbitration proceeding is pending under any expired or existing
collective bargaining agreements of the Company. No labor dispute with the
employees of the Company exists or, to the best of the Company's knowledge, is
imminent.
(q) The Company does not maintain, sponsor or contribute to any program or
arrangement that is an "employee pension benefit plan," an "employee welfare
benefit plan," or a "multiemployer plan" as such terms are defined in sections
32(2) and 3(1) and 3(37), respectively, of the Employee Retirement Income
<PAGE>
Security Act of 1974, as amended ("ERISA") ("ERISA" Plans") The Company does not
maintain or contribute, now or at any time previously, to a defined benefit
plan, as defined in Section 3(35) of ERISA. The Company has never completely or
partially withdrawn from a "multiemployer plan."
(r) None of the Company, any of its employees, directors, shareholders, or
affiliates (within the meaning of the Rules and Regulations) of any of the
foregoing has taken or will take, directly or indirectly, any action designed to
or which has constituted or which might be expected to cause or result in, under
the Exchange Act, stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities or otherwise.
(s) The Company owns or possesses the requisite licenses and/or enforceable
rights to use, free and clear of all liens, charges, claims, encumbrances,
pledges, security interests, defects or other restrictions of any kind
whatsoever, all trademarks, trademark applications, service marks, service
names, trade names, patents and patent applications, copyrights and other rights
(collectively, "Intangibles") described as owned or used by it in the Offering
Documents and/or which are necessary for the conduct of its current business and
the business it proposes to conduct as described in the Offering Documents.
There is no proceeding or action by any person pertaining to, or proceeding or
claim pending or, to the best knowledge of the Company, threatened, and the
Company has not received any claim alleging, infringement directly or indirectly
attributable to the Company's use of its Intangibles with the rights of any
third party or any notice of conflict with the asserted rights of others which
challenges the exclusive right of the Company with respect to, any Intangibles
used in the conduct of the Company's present or proposed business. The Company's
current products, services and processes do not and to the best knowledge of the
Company its proposed products, services and processes do not, infringe on any
Intangibles of any third party. The Company has direct ownership and title, free
and clear of any liens, security interests, encumbrances or claims of others, to
all intellectual property (including all United States patents and United States
and foreign patent applications) and other proprietary rights, confidential
information and know-how. Except as set forth in the Offering Documents, the
Company is not obligated or under any liability whatsoever to make any payments
by way of royalties, fees or otherwise to any owner or licensee of, or other
claimant to, any patent, trademark, service mark, trade name, copyright,
know-how, technology or other intangible asset, with respect to the use thereof
or in connection with the conduct of the Company's business as now (or currently
proposed to be) conducted or otherwise. No unresolved claims or notices have
been asserted or given during the past three years by any person challenging the
use by the Company of any Intangible or challenging or questioning the validity,
enforceability or effectiveness of or the title to any Intangible or agreement
relating thereto nor to the Company's knowledge is there any action, suit,
investigation or proceeding by or before any court or other governmental entity
reasonably likely to have a Material Adverse Effect on the validity or
enforceability of, or the title or right of the Company to use, any Intangible.
(t) Bailey, Saetveit & Co., P.C., whose report is filed with the Commission
as a part of the Registration Statement, are independent certified public
accountants as required by the Act and the Rules and Regulations.
<PAGE>
(u) The Company is not obligated to pay a finder's or broker's fee to
anyone in connection with the introduction of the Company to the Representative
or the consummation of the offering contemplated hereunder, other than payments
to the Representative. The Company has not paid or issued any monies, securities
or other compensation to any member of the National Association of Securities
Dealers, Inc. ("NASD"), or to any affiliate of such a member during the previous
twelve (12) months, except payments made to Millennium Securities Corp. in
connection with the __________ Private Placement Financing.
(v) The Securities have been approved for quotation on the OTC Bulletin
Board.
(w) Neither the Company nor any of its officers, employees, agents or any
other person acting on behalf of the Company, has, directly or indirectly, given
or agreed to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, or official employee of
any governmental agency (domestic or foreign) or instrumentality of any
government (domestic or foreign) or any political party or candidate for office
(domestic or foreign) or other person who was, is, or may be in a position to
help or hinder the current or proposed business of the Company (or assist the
Company in connection with any actual or proposed transaction) which (a) might
subject the Company, or any other such person to any damage or penalty in any
civil, criminal or governmental litigation or proceeding (domestic or foreign);
(b) if not given in the past, might have had a Material Adverse Effect, or (c)
if not continued in the future, might cause a Material Adverse Effect. The
Company's internal accounting controls are sufficient to cause the Company to
comply with the Foreign Corrupt Practices Act of 1977, as amended.
(x) Except as disclosed in the Prospectus, no officer, director or
shareholder of the Company, or any "affiliate" or "associate" (as these terms
are defined in Rule 405 promulgated under the Rules and Regulations) of any of
the foregoing persons or entities has or has had, either directly or indirectly,
(I) an interest in any person or entity which (A) currently furnishes or sells
services or products which are furnished or sold or are proposed to be furnished
or sold by the Company, or (B) purchases from or sells or furnishes to the
Company any goods or services, or (ii) a beneficial interest in any contract or
agreement to which the Company is a party or by which it may be bound or
affected, which in any such case is required to be so disclosed. Except as set
forth in the offering documents, there are no existing agreements, arrangements,
understandings or transactions, or proposed agreements, arrangements,
understandings or transactions, between or among the Company on the one hand,
and any officer, director or shareholder owning in excess of 5% of the Common
Stock of the Company, or any affiliate or associate of any of the foregoing
persons or entities, on the other hand.
(y) The minute books of the Company contain a complete summary of all
meetings and actions of the directors and shareholders of the Company, since the
time of its incorporation, and reflect all transactions referred to in such
minutes accurately in all respects.
(z) No holders of any securities of the Company or of any options, warrants
<PAGE>
or other convertible or exchangeable securities of the Company has any
anti-dilution rights with respect to any securities of the Company except as
described in the Prospectus.
(aa) The Company has entered into an agreement substantially in the form
filed as Exhibit 4.2 to the Registration Statement (the "Warrant Agreement")
with American Stock Transfer & Trust Company in form and substance satisfactory
to the Representative, with respect to the Warrants. The Warrant Agreement has
been duly and validly authorized by the Company and, assuming due execution by
the parties thereto other than the Company, constitutes a valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (ii) as enforceability of any indemnification provision may be
limited under the Federal and state securities laws, and (iii) that the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(bb) The Company (i) has not filed a registration statement which is the
subject of any pending proceeding or examination under Section 8 of the
Securities Act, or is the subject of any refusal order or stop order thereunder;
(ii) is not subject to any pending proceeding under Rule 261 of the Securities
Act or any similar rule adopted under Section 3(b) of the Securities Act, or to
an order entered thereunder; (iii) has not been convicted of any felony or
misdemeanor in connection with the purchase or sale of any security or involving
the making of any false filing with the Commission; (iv) is not subject to any
order, judgment, or decree of any court of competent jurisdiction temporarily,
preliminarily or permanently restraining or enjoining, the Company from engaging
in or continuing any conduct or practice in connection with the purchase or sale
of any security or involving the making of any false filing with the Commission;
or (v) is not subject to a United States Postal Service false representation
order entered under Section 3005 of Title 39, United States Code; or a temporary
restraining order or preliminary injunction entered under Section 3007 of Title
39, United States Code, with respect to conduct alleged to have violated Section
3005 of Title 39, United States Code. None of the Company's directors, officers,
or beneficial owners of five percent (5%) or more of any class of its equity
securities (i) has been convicted of any felony or misdemeanor in connection
with the purchase or sale of any security involving the making of a false filing
with the Commission, or arising out of the conduct of the business of an
underwriter, broker, dealer, municipal securities dealer, or investment advisor;
(ii) is subject to any order, judgment, or decree of any court of competent
jurisdiction temporarily, preliminarily or permanently enjoining or restraining,
such person from engaging in or continuing any conduct or practice in connection
with the purchase or sale of any security, or involving the making of a false
filing with the Commission, or arising out of the conduct of the business of an
underwriter, broker, dealer, municipal securities dealer, or investment adviser;
(iii) is subject to an order of the Commission entered pursuant to section
15(b), 15B(a) or 15B(c) of the Securities Exchange Act of 1934 (the "1934 Act"),
or is subject to an order of the Commission entered pursuant to Section 203(e)
or (f) of the Investment Advisers Act of 1940; (iv) is suspended or expelled
from membership in, or suspended or barred from association with a member of, an
exchange registered as a national securities exchange pursuant to Section 6 of
the 1934 Act, an association registered as a national securities association
under Section 15A of the 1934 Act, or a Canadian securities exchange or
association for any act or omission to act constituting conduct inconsistent
<PAGE>
with just and equitable principles of trade; or (v) is subject to a United
States Postal Service false representation order entered under Section 3005 of
Title 39, United States Code; or is subject to a restraining order or
preliminary injunction entered under Section 3007 of Title 39, United States
Code, with respect to conduct alleged to have violated Section 3005 of Title 39,
United States Code.
(cc) The Company is not, and the Closing will not be, in violation of any
law, rule, regulation, judgment or decree of any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or any of its
properties or Business other than any violation which individually or in the
aggregate would not have a Material Adverse Effect.
(dd) None of the Company's obligations to any third party are secured by
any of the Company's outstanding securities.
(ee) Any certificate signed by any officer of the Company, and delivered to
the Underwriters or the Underwriters's Counsel (as defined herein) shall be
deemed a representation and warranty by the Company to the Underwriters as to
the matters covered thereby.
2. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, and each Underwriter,
severally and not jointly agrees to purchase from the Company, at a price of
$5.58 per Unit, that number of Firm Securities set forth in Schedule A opposite
the name of such Underwriter, subject to such adjustment as the Representative
in its discretion shall make to eliminate any sales or purchases of fractional
shares, plus any additional numbers of Firm Securities which such Underwriter
may become obligated to purchase pursuant to the provisions of Section 14
hereof. The initial public offering price per Unit shall be $6.20, comprising of
one Share and one Warrant.
(b) Payment of the purchase price and delivery of certificates for the Firm
Securities shall be made at the offices Beckman, Millman & Sanders, LLP, 116
John Street, New York, New York 10038, or at such other place as shall be agreed
upon by the Representative and the Company. Such delivery and payment shall be
made at 10:00 a.m. (New York City time) on the third business day following the
date on which the Registration Statement has been declared effective (the
"Effective Date") or at such earlier time and date or other time and date as
shall be agreed upon by the Representative and the Company not later than third
business days after such third business day (such time and date of payment and
delivery being herein called the "Closing Date"). Delivery of the certificates
for the Firm Securities shall be made to you, for the respective accounts of the
Underwriters, against payment by you, for the respective accounts of the
Underwriters, of the purchase price for the Firm Securities by certified or
official bank checks payable in same day funds or by wire transfer of
immediately available funds, to the order of the Company. Certificates for the
Firm Securities shall be in definitive, fully registered form, shall bear no
restrictive legends (except with respect to Blue Sky resale restrictions) and
<PAGE>
shall be in such denominations and registered in such names as the Underwriters
may request in writing at least two business days prior to the Closing Date. The
certificates for the Firm Securities shall be made available to the
Representative at such office or such other place as the Representative may
designate for inspection, checking and packaging no later than 9:30 a.m. on the
last business day prior to the Closing Date.
(c) The Additional Securities shall be purchased by the Underwriter from
the Company as provided herein. This option may be exercised only to cover
over-allotments in the sale of Shares and Warrants by the Underwriter. This
option may be exercised by you on the basis of the representations, warranties,
covenants, and agreements herein contained, but subject to the terms and
conditions herein set forth, at any time and from time to time on or before the
forty-fifth day following the date that the Registration Statement is declared
effective by the Commission, by written notice by you to the Company. Such
notice shall set forth the aggregate number of Additional Securities as to which
the option is being exercised, the name or names in which the certificates for
the Shares and Warrants (the "Additional Securities") underlying such Additional
Securities are to be registered, the authorized denominations in which such
Additional Securities are to be issued, and the time and date, as determined by
the Underwriter, when such Additional Securities are to be delivered (each such
time and date are herein called an "Additional Closing Date") (references herein
to the Closing Date shall mean the Closing Date referred to in section 5(a)
hereof and/or any Additional Closing Date, if any, as the context requires,
unless otherwise specifically provided herein); provided, however, that no
Additional Closing Date shall be earlier than the Closing Date nor earlier than
the second business day after the date on which the notice of the exercise of
the option shall have been given nor later than the eighth business day after
the date on which such notice shall have been given.
(d) Payment of the purchase price of $5.58 per Unit and delivery of
certificates for the Additional Securities shall be made at the offices Beckman,
Millman & Sanders, LLP, 116 John Street, New York, New York 10038, or at such
other place as shall be agreed upon by the Representative and the Company.
Delivery of the certificates for the Additional Securities shall be made to you,
for the respective accounts of the Underwriters, against payment by you, for the
respective accounts of the Underwriters, of the purchase price for the
Additional Securities by certified or official bank checks payable in same day
funds or by wire transfer of immediately available funds, to the order of the
Company. Certificates for the Additional Securities shall be in definitive,
fully registered form, shall bear no restrictive legends (except with respect to
Blue Sky resale restrictions) and shall be in such denominations and registered
in such names as the Underwriters may request in writing at least two business
days prior to the Closing Date. The certificates for the Additional Securities
shall be made available to the Representative at such office or such other place
as the Representative may designate for inspection, checking and packaging no
later than 9:30 a.m. on the last business day prior to the Additional Closing
Date.
You have advised the Company that each Underwriter has authorized you to
accept delivery of its Securities, to make payment and to deliver a receipt
<PAGE>
therefor. You, individually and not as the Representative of the Underwriters,
may (but shall not be obligated to) make payment for any Securities to be
purchased by any Underwriter whose funds shall not have been received by you by
the Closing Date for the account of such Underwriter, but any such payment shall
not relieve such Underwriter from any of its obligations under this Agreement.
3. Public Offering of the Securities. Immediately upon effectiveness of the
Registration Statement, the Underwriters shall make a public offering of the
Securities (other than to residents of or in any jurisdiction in which
qualification of the Securities is required and has not become effective) at the
price and upon the other terms set forth in the Prospectus. The Representative
may from time to time increase or decrease the public offering price after
distribution of the Securities has been completed to such extent as the
Representative, in its sole discretion deems advisable. The Underwriters may
enter into one of more agreements as the Underwriters, in each of their sole
discretion, deem advisable with one or more broker-dealers who shall act as
dealers in connection with such public offering.
4. Covenants of the Company. The Company covenants and agrees with each of
the Underwriters as follows:
(a) The Company shall use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
practicable and will not at any time, whether before or after the Effective
Date, file any amendment to the Registration Statement or supplement to the
Prospectus or file any document under the Act or Exchange Act before termination
of the offering of the Securities by the Underwriters of which the
Representative shall not previously have been advised and furnished with a copy,
to which the Representative shall have reasonably objected or which is not in
compliance with the Act, the Exchange Act or the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof, the
Company will advise the Representative and confirm the notice in writing (I)
when the Registration Statement as amended, becomes effective or, if the
provisions of Rule 430A promulgated under the Act will be relied upon, when the
Prospectus has been filed in accordance with said rule 430A and when any post
effective amendment to the Registration Statement becomes effective; (ii) of the
issuance by the Commission of any stop order or of the initiation, or the
threatening, of any proceeding, suspending the effectiveness of the Registration
Statement or any order preventing or suspending the use of the Preliminary
Prospectus or the Prospectus, or any amendment or supplement thereto, or the
institution of proceedings for that purpose; (iii) of the issuance by the
Commission or by any state securities commission of any proceedings for the
suspension of the qualification of any of the Securities for offering or sale in
any jurisdiction or the initiation, or the threatening, of any proceeding for
that purpose; (iv) of the receipt of any comments from the Commission, and (v)
of any request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to the Prospectus or for additional information.
If the Commission or any state securities commission or authority shall enter a
stop order or suspend such qualification at any time, the Company will make
every effort to obtain promptly the lifting of such order.
<PAGE>
(c) The Company shall file the Prospectus (in form and substance reasonably
satisfactory to the Representative) or transmit the Prospectus by a means
reasonably calculated to result in filing with the Commission pursuant to Rule
424(b) not later than the Commission's close of business on the earlier of (I)
the second business day following the execution and delivery of this Agreement,
and (ii) the third business day after the Effective Date.
(d) The Company will give the Representative notice of its intention to
file or prepare any amendment to the Registration Statement (including any
revised prospectus which the Company proposes for use by the Underwriters in
connection with the offering of the Securities which differs from the
corresponding Prospectus on file at the Commission at the time the Registration
Statement becomes effective, whether or not such revised prospectus is required
to be filed pursuant to Rule 424(b) of the Rules and Regulations), and will
furnish the Representative with copies of any such amendment or supplement
within a reasonable amount of time prior to such proposed filing or use, as the
case may be, and will not file any such amendment to which the Representative
shall reasonably object.
(e) The Company shall use its best efforts, in cooperation with the
Representative, at or prior to the time the Registration Statement becomes
effective, to qualify the Securities for offering and sale under the securities
laws of such jurisdiction as the Representative may designate to permit the
continuance of sales and dealings therein for as long as may be necessary to
complete the distribution, and shall make such applications, file such documents
and furnish such information as may be required for such purpose. In each
jurisdiction where such qualification shall be effected, the Company will,
unless the Representative agrees that such action is not at the time necessary
or advisable, use best efforts to file and make such statements or reports at
such times as are or may reasonably be required by the laws of such jurisdiction
to continue such qualification.
(f) During the time when a prospectus is required to be delivered under the
Act, the Company shall use best efforts to comply with all requirements imposed
upon it by the Act and the Exchange Act, as now and hereafter amended, and by
the Rules and Regulations, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Securities in accordance
with the provisions hereof and the Prospectus, or any amendments or supplements
thereto. If at any time when a prospectus relating to the Securities or the
Representative's Securities is required to be delivered under the Act, any event
shall have occurred as a result of which, in the judgment of the Company, or in
the opinion of counsel to the Underwriters, the Prospectus, as then amended or
supplemented, included an 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, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will notify the Representative promptly and
prepare and file with the Commission an appropriate amendment or supplement (in
form and substance satisfactory to the Underwriters) to correct such statement
or omission or to effect such compliance, and the Company will furnish to the
Underwriters copies of such amendment or supplement as soon as available and in
such quantities as the Underwriters may request.
<PAGE>
(g) As soon as practicable, but in any event not later than 45 days after
the end of the 12-month period beginning on the day after the end of the fiscal
quarter of the Company during which the Effective Date occurs (90 days in the
event that the end of such fiscal quarter is the end of the Company's fiscal
year), the Company shall make generally available to its security holders, in
the manner specified in Rule 158(b) of the Rules and Regulations, and to the
Representative, an earnings statement which will be in the detail required by,
and will otherwise comply with, the provisions of Section 11(a) of the Act and
Rule 158(a) of the Rules and Regulations, which statement need not be audited
unless required by the Act, covering a period of at least 12 consecutive months
after the Effective Date.
(h) During the period of three years after the date hereof, the Company
will furnish to its shareholders, as soon as practicable, annual reports
(including financial statements audited by independent public accountants) and
unaudited quarterly reports of earnings, and will deliver to the Representative:
(i) concurrently with furnishing such quarterly reports to its
shareholders, statements of income of the Company for each quarter in the
form furnished to the Company's shareholders and certified by the Company's
principal financial or accounting officer;
(ii) concurrently with furnishing such annual reports to its shareholders,
a balance sheet of the Company as at the end of the preceding fiscal year,
together with statements of operations, shareholders' equity, and cash
flows of the Company for such fiscal year, accompanied by a copy of the
certification thereof by the Company's independent certified public
accountants;
(iii) as soon as they are available, copies of all reports (financial or
other) mailed to shareholders;
(iv) as soon as practicable after the filing thereof, copies of all reports
and financial statements furnished to or filed with the Commission, the
NASD or any securities exchange, and
(v) every press release and every material news item or article of interest
to the financial community in respect of the Company or its affairs which
was released or prepared by or on behalf of the Company.
(i) The Company will maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar (which may be the same
entity as the transfer agent) for its Common Stock and Warrants.
(j) The Company will furnish to the Representative or on the
Representative's order, without charge, at such place as the Representative may
designate, copies of each Preliminary Prospectus, and all amendments and
<PAGE>
supplements thereto, including any Prospectus, the Registration Statement and
any pre-effective or post-effective amendments thereto (two of which copies will
be signed and will include all financial statements and exhibits), the
Prospectus and all amendments and supplements thereto, including any prospectus
prepared after the Effective Date, in each case as soon as available and in such
quantities as the Representative may request.
(k) On or before the Effective Date, the Company shall provide the
Representative with true copies of duly executed, legally binding and
enforceable agreements pursuant to which for a period of 24 months from the
effective date of the Registration Statement (or for such longer period not to
exceed 36 months as may be required under applicable state blue sky laws) each
of the Selling Security holders agrees that it or he or she will not directly or
indirectly, issue, offer to sell, grant an option for the sale of, assign,
transfer, pledge, hypothecate or otherwise encumber or dispose of any shares of
Common Stock or securities convertible into, exercisable or exchangeable for or
evidencing any right to purchase or subscribe for any shares of Common Stock
which are registered in the Registration Statement (either pursuant to Rule 144
of the Rules and Regulations or otherwise) or dispose of any beneficial interest
therein without the prior written consent of the Representative (collectively,
the "Lock-up Agreements"). On or before the Closing Date, the Company shall
deliver instructions to the transfer agent authorizing it to place appropriate
legends on the certificates representing the securities subject to the Lock-up
Agreements and to place appropriate stop transfer orders on the Company's
ledgers.
(l) None of the Company, any of its officers, directors, shareholders or
affiliates (within the meaning of the Rules and Regulations) will take, directly
or indirectly, any action designed to, or which might in the future reasonably
be expected to cause or result in, stabilization or manipulation of the price of
any securities of the Company.
(m) The Company shall timely file all such reports, forms or other
documents as may be required (including, but not limited to a Form SR as may be
required pursuant to Rule 463 under the Act) from time to time, under the Act,
the Exchange Act, and the Rules and Regulations, and all such reports, forms and
documents filed will comply as to form and substance with the applicable
requirements under the Act, the Exchange Act, and the Rules and Regulations.
(n) The Company shall furnish to the Representative as early as practicable
prior to each of the date hereof, and the Closing Date but not later than two
business days prior thereto, a copy of the latest available unaudited interim
financial statements of the Company (which in no event shall be as of a date
more than 30 days prior to the effective date of the Registration Statement)
which have been read by the Company's independent public accountants, as stated
in their letters to be furnished pursuant to Section 9(g) hereof.
(o) The Company shall cause the Securities to be quoted on OTC Bulletin
Board for a period of five years from the date hereof shall use its best efforts
to maintain such quotation of the Securities.
(p) For a period of three years from the Closing Date, at the
Representative's request, the Company shall furnish to the Representative at the
<PAGE>
Company's sole expense, daily consolidated transfer sheets relating to the
Common Stock and Warrants.
(q) Until the completion of the distribution of the Securities but in no
event more than 25 days after the Effective Date, the Company shall not without
prior written consent of the Representative, issue, directly or indirectly any
press release or other communication or hold any press conference with respect
to the Company or its activities or the offering contemplated hereby.
(r) Until the earlier to occur of (I) the seventh anniversary of the date
hereof, and (ii) the sale to the public of the Representative's Securities, the
Company will not take any action or actions which may prevent or disqualify the
Company's use of Form S-1 (or other appropriate form) for the registration under
the Act of the Representative's Securities.
(s) For a period of not less than two years from the Closing Date, the
Company will recommend and use its best efforts to elect the Representative's
designee (the "Designee") at the Representative's option, either as a member of
or a non-voting observer to the Company's Board of Directors; such Designee, if
elected or appointed, shall attend meetings of the Board and receive no more or
less compensation than is paid to other directors of the Company and shall be
entitled to receive reimbursement for all reasonable expenses incurred in
attending such meetings, including, but not limited to, food, lodging and
transportation. To the extent permitted by law, the Company will agree to
indemnify the Representative and the Designee for the actions of such Designee
as a director of the Company. The Company shall include each of the
Representative and the Designee as an insured under the insured policy referred
to in Section 7 of this agreement. If the Representative does not exercise its
option to designate a member of or an advisor to the Company's Board of
Directors, the Representative shall nevertheless have the right to send a
representative (who need not be the same individual from meeting to meeting,
although the Representative shall endeavor to send the same representative to
each meeting to observe such meeting of the Board of Directors. The Company
agrees to give the Representative notice of each such meeting not later than it
gives such notice and provides such items to the other directors.
(t) The Company agrees that any and all future transactions between the
Company and its officers, directors, principal shareholders and the affiliates
of the foregoing persons will be on terms no less favorable to the Company than
could reasonably be obtained in arm's length transactions with independent third
parties, and that any such transactions also be approved by a majority of the
Company's outside independent directors disinterested in the transaction, if
any.
(u) Until the offering contemplated hereby has been completed or
terminated, if there shall occur any event relating to or affecting, among other
things, the Company or any affiliate thereof, or the operations of the Company
as described in the Offering Documents, as a result of which it is necessary, in
the opinion of counsel for the Representative or counsel for the Company, to
amend or supplement the Offering Documents in order that the Offering Documents
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, the Company shall
immediately prepare and furnish to the Representative a reasonable number of
<PAGE>
copies of an appropriate amendment of or supplement to the Offering Documents,
in form and substance satisfactory to counsel for the Representative.
(v) The Company shall apply the net proceeds from the sale of the
Securities in the manner, and subject to the conditions, substantially as set
forth under "Use of Proceeds" in the Prospectus.
(w) The Company shall be responsible for, and shall pay, all expenses
directly and necessarily incurred in connection with this Offering, including,
but not limited to, the costs of preparing, printing, mailing and filing, where
necessary, the Offering Documents and all amendments and supplements thereto;
the Company's legal and accounting fees, transfer agent fees and the blue sky
fees, filing fees and disbursements of the Representative's counsel in
connection with blue sky matters, as well as the fees and expenses of the
Representative as set forth in Section 5(b) hereof.
(x) Except as disclosed in the Offering Documents the Company has not prior
to the date hereof issued and irrespective of such disclosure will not hereafter
issue, any of the Company's Common Stock, or Preferred Stock(as defined in the
Offering Documents) or securities exercisable or convertible into any of such
securities or enter into any agreement therefor in satisfaction of any
obligation or indebtedness of the Company arising out of any agreement to which
the Company is a party or by which the Company is bound now or for a period of
one year after the Effective Date.
(y) Until one (1) year from the date hereof, the maximum number of shares
of capital stock of the Company issuable under its 1996 Long Term Incentive Plan
shall not exceed 350,000 without the prior written consent of the
Representative.
(z) Except as contemplated hereby during the period commencing on the date
hereof and ending on the Closing Date, the Company shall not, without prior
notice to and consent of the Representative, (a) issue any securities or incur
any liability or obligation except the purchase of inventory, equipment and
machinery for the Company's manufacturing operations as described in the
Offering Documents, (b) enter into any transaction not in the ordinary course of
business, or (c) declare or pay any dividend on its capital stock.
(aa) The Company shall for a period of no less than five years from the
date hereof cause and/or take all action necessary to maintain no less than two
(2) outside directors on the Company's Board of Directors.
(bb) For a period of three (3) years from the date hereof, the Company
shall register with and remain covered by the Corporation Records Service
published by Standard and Poor's Corporation.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on the first Closing Date all expenses
and fees (other than fees of Underwriters' counsel, except as provided in
subclause (iv) of this section 5(a)) incident to the performance of the
<PAGE>
obligations of the Company under this Agreement and the Warrant Agreement,
including, without limitation, (i) the fees and expenses of accountants and
counsel for the Company; (ii) all costs and expenses incurred in connection with
the preparation, duplication, printing (including mailing and handling charges),
filing, delivery and mailing (including the payment of postage with respect
thereto) of the Registration Statement and the Prospectus and any amendments and
supplements thereto and the duplication, mailing (including the payment of
postage with respect thereto) and delivery of this Agreement, the Agreement
Among Underwriters, the Selected Dealer Agreement, the Powers of Attorney, and
related documents, including the cost of all copies thereof and of the
Preliminary Prospectus and of the Prospectus and any amendments thereof or
supplements thereto supplied to the Underwriters and such dealers as the
Underwriters may request; (iii) the printing, engraving, issuance and delivery
of the Securities; (iv) the qualification of the Securities under state
securities or "Blue Sky" laws, including the costs of printing and mailing the
"Preliminary Blue Sky Memorandum," the "Supplemental Blue Sky Memorandum" if
any, and disbursements and fees of counsel to the Underwriters in connection
therewith (such fees and disbursements to be so reimbursed not to exceed $35,000
in the aggregate; (v) the fees and disbursements of Underwriter's counsel in
connection with the qualification with the NASD of the terms of the transaction
relating to underwriting compensation; (vi) advertising costs and expenses,
including but not limited to costs and expenses in connection with the "road
show," information meetings and presentations, and "tombstone" advertisement
expenses; (vii) fees and expenses of the transfer agent and registrar, and
(viii) the fees payable to the Commission, the NASD and OTC Bulletin Board
including the fees and expenses incurred in connection with the listing of the
Securities on the OTC Bulletin Board.
(b) The Company further agrees that, in addition to the expenses payable
pursuant to subsection (a) of this Section 5, it will pay to the Representative
on the Closing Date by certified or bank cashier's check or, at the election of
the Representative, by deduction from the proceeds of the offering contemplated
herein a non-accountable expense allowance equal to three percent (3%) of the
gross proceeds received by the Company from the sale of the Securities, it being
acknowledged that $50,000 of said amount has already been delivered to the
Representative.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of each Closing Date, as if they had been made on and as of each Closing
Date, the accuracy on and as of each Closing Date of the statements of officers
of the Company made pursuant to the provisions hereof, and the performance by
the Company on and as of each Closing Date of its covenants and obligations
hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not later than 5:00
p.m. New York time, on the date subsequent to the date of this Agreement or such
later date and time as shall be consented to in writing by the Representative,
and, at the Closing Date no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or contemplated by the
<PAGE>
Commission and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of the
Representative. If the Company has elected to rely upon Rule 430A of the Rules
and Regulations, the price of the Shares and Warrants and any price-related
information previously omitted from the effective Registration Statement
pursuant to such Rule 430A shall have been transmitted to the Commission for
filing pursuant to Rule 424(b) of the Rules and Regulations within the
prescribed time period, and prior to the Closing Date the Company shall have
provided evidence satisfactory to the Representative of such timely filing, or a
post-effective amendment providing such information shall have been promptly
filed and declared effective in accordance with the requirements of Rule 430A of
the Rules and Regulations.
(b) The Registration Statement, or any amendment thereto, shall not contain
an untrue statement of a material fact or omit to state a material fact which is
required to be stated therein or is necessary to make the statements therein not
misleading, or the Prospectus, or any supplement thereof, shall not contain an
untrue statement of a material fact, or omit to state a material fact which is
required to be stated therein or is necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(c) At each of the Effective Date and each Closing Date, the Underwriters
shall have received the opinion of Blau, Kramer, Wactlar & Lieberman, P.C. (the
"Firm") counsel to the Company, dated the Effective Date and each Closing Date,
respectively, addressed to the Underwriters and in form and substance
satisfactory to Millennium, to the effect that:
(i) the Company (A) has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation; (B) is duly qualified and licensed for the transaction of
business and in good standing as a foreign corporation in every
jurisdiction in which its ownership, leasing, licensing or use of property
and assets or the conduct of its Business makes such qualification
necessary except where the failure to be so qualified does not now have and
will not in the future have a Material Adverse Effect; and (C) has all
requisite corporate power and authority, has obtained any and all material
authorizations, approvals, orders, licenses, certificates, franchises and
permits of and from all governmental or regulatory officials and bodies, to
own or lease its properties and conduct its Business. The disclosures in
the Registration Statement concerning the effects of Federal, state and
local laws, rules and regulations on the Company's business as currently
conducted and as contemplated are accurate in all respects and do not omit
to state a fact necessary to make the statements contained therein not
misleading in light of the circumstances in which they were made;
(ii) the Firm has not been engaged to perform legal services in connection
with any transaction whereby the Company would acquire an interest in any
corporation, partnership, joint venture, trust or other business entity;
(iii) the Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus (and any amendment or
supplement thereto) under the heading "Capitalization" and except as set
<PAGE>
forth in the Prospectus, the Company is not a party to or bound by any
instrument, agreement or other arrangement providing for it to issue any
capital stock, rights, warrants, options or other securities. The
Securities and all other securities issued or issuable by the Company have
been duly authorized; all outstanding shares of Common Stock have been
fully paid for and are non-assessable, and the Securities when issued, paid
for and delivered in accordance with the terms hereof and of the Warrant
Agreement, will be validly issued fully paid and non-assessable. The
Securities conform to the description thereof in the Prospectus. All
corporate action required to be taken for the authorization, issue and sale
of the Securities has been duly and validly taken. The Representative's
Securities constitute valid and binding obligations of the Company to issue
and sell, upon exercise thereof and payment therefor, the number and type
of securities of the Company called for thereby. Upon the issuance and
delivery pursuant to this Agreement, the Warrant Agreement and the RPO of
the Securities and Representative's Securities, as applicable, the
Underwriters will acquire title to the Firm Securities, and the
Representative will acquire title to the Representative's Securities, free
and clear of any pledge, lien, charge, claim, encumbrance, pledge, security
interest, or other restriction or equity of any kind whatsoever. No
transfer tax is payable by or on behalf of the Underwriters in connection
with (A) the issuance by the Company of the Securities; (B) the purchase by
the Underwriters and the Representative of the Firm Securities and the
Representative's Securities, respectively, from the Company;(C)the
consummation by the Company of any of its obligations under this Agreement,
the Warrant Agreement or the RPO or (D) resales of the Firm Securities in
connection with the distribution contemplated hereby;
(iv) the Registration Statement has become effective under the Act, and, if
applicable, filing of all pricing information has been timely made in the
appropriate form under Rule 430A, and to counsel's knowledge no stop order
suspending the effectiveness of the Registration Statement or preventing
the use of the preliminary prospectus or any part of any thereof has been
issued and no proceeding for that purpose has been instituted or is
pending, or is threatened or contemplated under the Act;
(v) counsel does not know of any agreements, contracts or other documents
required by the Act to be described in the Registration Statement and the
Prospectus or to be filed as exhibits to the Registration Statement (or
required to be filed under the Exchange Act if upon such filing they would
be incorporated, in whole or in part, by reference therein) which are not
so described or filed; the descriptions in the Registration Statement and
the Prospectus and any supplement or amendment thereto of contracts and
other documents to which the Company is a party or by which it is bound,
incorporated by reference into the Prospectus and any supplement or
amendment thereto, are accurate and fairly present in all material respects
the information required to be presented therein; to counsel's knowledge
there is no action, arbitration, suit, proceeding, inquiry, investigation,
litigation, governmental, legal or other proceeding (including, without
limitation those having jurisdiction over environmental or similar
matters), domestic or foreign, pending or threatened against the Company,
or involving the properties or business of the Company which is required to
be disclosed in the Registration Statement which is not so disclosed. No
<PAGE>
Federal, state or local statute or regulation required to be described in
the Prospectus is not described as required;
(vi) the Company has full corporate power and authority to enter into each
of this Agreement, the RPO and the Warrant Agreement and to consummate the
transactions contemplated therein; and each of this Agreement, the RPO and
the Warrant Agreement has been duly authorized, executed and delivered by
or on behalf of the Company. Each of this Agreement, the RPO and the
Warrant Agreement, assuming due authorization, execution and delivery by
each other party thereto, constitutes a legal, valid and binding agreement
of the Company enforceable against the Company in accordance with its
respective terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
of general application relating to or affecting enforcement of creditors'
rights generally and the application of general equitable principles in any
action, legal or equitable, and except as to those provisions relating to
indemnity or contribution as to which no opinion is expressed). None of the
Company's execution, delivery or performance of this Agreement, the Warrant
Agreement, the RPO, or the conduct of its Business will result in any
breach or violation of any of the terms or provisions of, or conflicts or
will conflict with or constitutes or will constitute a default under, or
result in the creation or imposition of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or
equity of any kind whatsoever upon, any property or assets (tangible or
intangible) of the Company pursuant to the terms of (A) the articles of
incorporation or by-laws of the Company; (B) any material license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
shareholders agreement, note, loan or credit agreement or any other
agreement or instrument to which the Company is a party or by which it is
or may be bound or to which any of its properties or assets (tangible or
intangible) is or may be subject; (C) any Federal, state or local statute,
judgment, decree, order, rule or regulation applicable to the Company of
any arbitrator, court, regulatory body or administrative agency or other
governmental agency or body, domestic or foreign, having jurisdiction over
the Company or any of its properties, or (D) have any Material Adverse
Effect on any permit, certification, registration, approval, consent,
license or franchise necessary for the Company to own or lease and operate
any of its properties and to conduct its Business or the ability of the
Company to make use thereof;
(vii)the Firm has not been engaged to provide legal services with respect
to, nor does the Firm have any knowledge of, any breach of or a default
under, any term or provision of any license, contract, indenture, mortgage,
installment sale agreement, deed of trust, lease, voting trust agreement,
shareholders' agreement, note, loan or credit agreement or any other
agreement or instrument evidencing any obligation for borrowed money, or
any other agreement or instrument to which the Company is a party or by
which the Company may be bound or to which the property or assets (tangible
or intangible) of the Company is subject or affected. The Company is not in
violation of any term or provision of its certificate of incorporation or
by-laws or, to counsel's knowledge in violation of any franchise, license,
<PAGE>
permit, judgment, decree, order, statute, rule or regulation;
(viii) the statements in the Prospectus under the headings "THE COMPANY",
"BUSINESS", "MANAGEMENT," "PRINCIPAL STOCKHOLDERS, "SELLING SECURITY
HOLDERS", "CERTAIN TRANSACTIONS", "DESCRIPTION OF SECURITIES", and "SHARES
ELIGIBLE FOR FUTURE SALE" have been reviewed by such counsel, and insofar
as they refer to statements of law, descriptions of statutes, licenses,
rules or regulations or legal conclusions, except for any of the foregoing
opined upon to the underwriters by counsel to the Company other than Blau,
Kramer, Wactlar & Lieberman, P.C.; are correct in all material respects;
(ix) the Firm Securities have been accepted for quotation on the OTC
Bulletin Board;
(x) to counsel's knowledge, there are no claims, payments, issuances,
arrangements or understandings for services in the nature of a finder's or
origination fee with respect to the sale of the Securities hereunder or
financial consulting arrangement or any other arrangements, agreements,
understandings, payments or issuances that may affect the Underwriters'
compensation, as determined by the NASD;
(xi) to counsel's knowledge, the Company is not party to any ERISA plans or
defined benefit plan, as defined in Section 3(35) of ERISA; and
(xii)The Securities, when issued in accordance with the terms of this
Agreement, will be duly and validly issued. The stock certificates and
warrants comprising the Securities are in due and proper legal form. To the
knowledge of such counsel and except as disclosed in the Prospectus, no
holder of any of the Company's securities has any rights, "demand,"
"piggyback" or otherwise, to have such securities registered or to demand
the filing of a registration statement. Except as set forth in the
Prospectus, there are no preemptive or other rights to subscribe for or
purchase, or any restriction upon the voting or transfer of, any shares of
Common Stock, under the Certificate of Incorporation or By-Laws of the
Company or under the General Corporation Law of the State of Delaware, or,
to the knowledge of such counsel, under any agreement or other outstanding
instrument to which the Company is a party or by which it is bound.
(xiii) To such counsel's knowledge, no approval or consent of any court,
board or governmental agency, instrumentality or authority of the United
States or of any state having jurisdiction or authority over the Company or
of any other third party, not duly obtained (other than any approval or
consent required under any state securities or Blue Sky laws) is required
for the valid authorization, issuance, sale and delivery of the Securities
and the consummation of the transactions contemplated by this Agreement,
the Warrant Agreement, the RPO or the Offering Documents.
<PAGE>
(xiv)To such counsel's knowledge, there are no claims, actions, suits,
hearings, investigations, inquiries or proceedings of any kind or nature,
before or by any court, governmental authority, tribunal or instrumentality
pending or threatened against the Company or involving the properties of
the Company which could materially and adversely affect the Business of the
Company, or which would reasonably be expected to materially adversely
affect the transactions or other acts contemplated by this Agreement, the
Warrant Agreement, the RPO or the validity or enforceability of such
agreements.
(xv) To such counsel's knowledge, there are no material licenses, permits,
certificates, registrations, approvals or consents of any governmental
agency, commission, board, instrumentality or department that are required
to be obtained by the Company in order to conduct its current or presently
proposed business as described in the Offering Documents which have not
been so obtained and the failure to so obtain which would have a Material
Adverse Effect.
(xvi)To such counsel's knowledge and except as disclosed in the Prospectus,
the issuance of the Securities will not give any holder of any of the
Company's outstanding securities or rights to purchase shares of the
Company's Common Stock, the right to purchase any additional shares of
Common Stock and/or the right to purchase shares at a reduced price.
The opinion shall also state that the Registration Statement, the
Prospectus and each amendment thereto or supplement thereof (except for the
financial statements and schedules and other financial information included
therein, as to which such counsel will express no opinion) comply as to form in
all material respects with the applicable requirements of the Act and the Rules
and Regulations.
Such counsel's opinion shall also include a statement to the effect that it has
participated in conferences with officers and other representatives of the
Company representatives of the independent public accountants of the Company and
representatives of the Representative at which the contents of the Registration
Statement and the Prospectus were discussed and, although such counsel is not
passing upon and does not assume responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or the
Prospectus, on the basis of the foregoing (relying as to materiality to a large
extent upon the opinions of officers and other representatives of the Company),
nothing has come to such counsel's attention that causes it to believe that the
Registration Statement at the time the Registration Statement became effective
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus at the date of the Prospectus and as
supplemented or amended at all times up to and including the date of such
opinion, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein, in light of circumstances under
which they were made, not misleading (it being understood that such counsel
expresses no opinion or belief with respect to the financial statements and
schedules, statistical information or other financial information included in
the Registration Statement or Prospectus, or as to information set forth in the
Registration Statement under the captions "Risk Factors -- Government
<PAGE>
Regulation", "Business -- Intellectual Properties Patent, Patents Pending and
Products", "Business -- Government Regulation" and "Business -- Legal
Proceedings").
(d) On or prior to each Closing Date, the Representative shall receive from
the President and Chief Financial Officer of the Company a certificate dated the
date of each Closing Date stating that:
(i) the representations and warranties of the Company in this Agreement are
true and correct in all material respects, on and as of each Closing Date,
and the Company has complied with all agreements and covenants and
satisfied all conditions contained in this Agreement on its part to be
performed or satisfied at or prior to each Closing Date;
(ii)no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued, and no proceedings for that
purpose have been instituted or are pending or, to the best of each of such
person's knowledge, after due inquiry, are contemplated or threatened under
the Act;
(iii) the Registration Statement and Prospectus contain all statements and
information required to be included therein, and neither of the
Registration Statement or the Prospectus includes any untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make statements therein not misleading and neither
the Preliminary Prospectus or any 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, in light
of the circumstances under which they were made, not misleading, and
(iv)subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, (A) the Company has not
incurred up to and including each Closing Date, other than in the ordinary
course of its business, any material liabilities or obligations, direct or
contingent; (B) the Company has not paid or declared any dividends or other
distributions on its capital stock;(C)the Company has not entered into any
transactions not in the ordinary course of business; (D) there has not been
any change in the capital stock or long-term debt or any increase in the
short-term borrowings of the Company; (E) the Company has not sustained any
loss or damage to its property or assets, whether or not insured; (F) there
is no litigation which is pending or threatened (or circumstances giving
rise to same) against the Company or any affiliated party or any of the
foregoing which is required to be set forth in an amended or supplemental
Prospectus which has not been set forth, and (G) there has occurred no
event required to be set forth in an amended or supplemental Prospectus
which has not been set forth.
(References to the Registration Statement and the Prospectus in this subsection
are to such documents as amended and supplemented at the date of such
certificate.)
<PAGE>
(e) By the Effective Date, the Underwriters will have received clearance
from the NASD as to the amount of compensation allowable or payable to the
Underwriters.
(f) At the date this Agreement is executed, the Underwriters shall have
received a letter, dated such date, addressed to the Underwriters in form and
substance satisfactory in all respects (including the non-material nature of the
changes or decreases, if any, referred to in clause (iii) below) to the
Underwriters and Underwriters' counsel, from Bailey, Saetveit & Co., P.C.
(i) confirming that they are independent certified public accountants with
respect to the Company within the meaning of the Act and the applicable
Rules and Regulations;
(ii) stating that it is their opinion that the financial statements and
supporting schedules and footnotes thereto of the Company included in the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and Regulations
thereunder and that the Representatives may rely upon the opinion of
Bailey, Saetveit & Co., P.C. with respect to the financial statements and
supporting schedules included in the Registration Statement;
(iii) stating that, on the basis of a limited review which included a
reading of the latest available unaudited interim financial statements of
the Company (with an indication of the date of the latest available
unaudited interim financial statements), a reading of the latest available
minutes of meetings of the shareholders and board of directors and the
various committees of the board of directors of the Company, consultations
with officers and other employees of the Company responsible for financial
and accounting matters and other specified procedures and inquiries,
nothing has come to their attention which would lead them to believe that
(A) the unaudited financial statements and supporting schedules of the
Company included in the Registration Statement, if any, do not comply as to
form in all material respects with the applicable accounting requirements
of the Act and the Rules and Regulations or are not fairly presented in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements of
the Company included in the Registration Statement, or (B) at a specified
date not more than five days prior to the Effective Date, there has been
any change in the capital stock or long-term debt of the Company, or any
decrease in the shareholders' equity or net current assets or net assets of
the Company as compared with amounts shown in the June 30, 1996 balance
sheet included in the Registration Statement, other than as set forth in or
contemplated by the Registration Statement, or, if there was any change or
decrease, setting forth the amount of such change or decrease;
(iv)setting forth, at a date not later than five days prior to the date of
the Registration Statement, the amount of liabilities of the Company
(including a breakdown of commercial paper and notes payable);
(v) stating that they have compared specific dollar amounts, numbers of
<PAGE>
shares, percentages of revenues and earnings, statements and other
financial information pertaining to the Company set forth in the Prospectus
in each case to the extent that such amounts, numbers, percentages,
statements and information may be derived from the general accounting
records, including work sheets, of the Company and excluding any questions
requiring an interpretation by legal counsel, with the results obtained
from the application of specified readings, inquiries and other appropriate
procedures (which procedures do not constitute an examination in accordance
with generally accepted auditing standards) set forth in the letter and
found them to be in agreement, and
(vi)statements as to such other matters incident to the transaction
contemplated hereby as the Representative may request.
(g) On each Closing Date, there shall have been duly tendered to the
Representative for the several Underwriters' accounts, the certificates in the
names and denominations requested by the Representative for the Securities.
(h) No order suspending the sale of the Securities in any jurisdiction
designated by the Representative pursuant to subsection (e) of Section 4 hereof
shall have been issued on the Closing Date and no proceedings for that purpose
shall have been instituted or shall be contemplated.
(i) On or before each Closing Date and upon exercise of the RPO and payment
of the exercise price therefor, if applicable, the Company shall have executed
and delivered to the Representative, the Representative's Securities in the such
denominations and to such designees as shall have been provided to the Company.
(j) On or before Closing Date, the Securities shall have been duly approved
for quotation on the OTC Bulletin Board.
(k) On or before Closing Date, there shall have been delivered to the
Representative all of the Lock-up Agreements, in form and substance satisfactory
to Underwriters' counsel.
(l) On or before Closing Date, the Company shall have executed the RPO and
the Warrant Agreement, substantially in the forms thereof filed as exhibits to
the Registration Statement.
(m) On or before the Effective Date the Company shall deliver to the
Representative satisfactory results of UCC, lien and title searches effected in
all appropriate jurisdictions, showing that the Company's assets, including all
of its intellectual properties, except as set forth in the offering documents,
are unencumbered, and satisfactory evidence, including trademark and copyright
searches, of its unencumbered title to its owned intellectual properties.
If any condition to the Underwriters' obligations hereunder to be fulfilled
prior to or at the Closing Date is not so fulfilled, the Representative may
terminate this Agreement on notice to the Company or, if the Representative so
elects, it may waive any such conditions which have not been fulfilled or extend
<PAGE>
the time for their fulfillment, and proceed with the transactions contemplated
by this Agreement.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each of the
Underwriters (for purposes of this Section 7 "Underwriters" shall include the
officers, directors, partners, employees, agents and counsel of the
Underwriters), including specifically each person who may be substituted for an
Underwriter (a "controlling person") within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, from and against any and all losses,
claims, damages, expenses or liabilities, joint or several (and actions in
respect thereof), whatsoever (including but not limited to any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever), as such are
incurred, to which the Underwriters or such controlling person may become
subject under the Act, the Exchange Act or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out of based upon any
untrue statement or alleged untrue statement of a material fact contained (I) in
any Preliminary Prospectus, the Registration Statement or the Prospectus (as
from time to time amended and supplemented); (ii) in any post-effective
amendment or amendments or any new registration statement and prospectus in
which is included securities of the Company issued or issuable upon exercise of
the Securities, or (iii) in any application or other document or written
communication (in this Section 7 collectively called "application") executed by
the Company or based upon written information furnished by the Company in any
jurisdiction in order to qualify the Securities under the securities laws
thereof or filed with the Commission, any state securities commission or agency,
OTC Bulletin Board or any other securities exchange; or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading (in the case of the Prospectus, in
light of the circumstances under which they were made) unless such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company expressly for use in any Preliminary Prospectus, the
Registration Statement or Prospectus, or any amendment thereof or supplement
thereto, or in any application, as the case may be.
The indemnity agreement above referred to shall be in addition to any
liability which the Company may have at common law or otherwise.
(b) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its officers and directors who
has signed the Registration Statement, and each other person, if any, who
controls the Company, within the meaning of the Act, to the same extent as the
foregoing indemnity from the Company to the Underwriters but only with respect
to statements or omissions, if any, made in any Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment thereof or supplement
thereto or in any application made in reliance upon, and in strict conformity
<PAGE>
with, written information furnished to the Company by such Underwriter expressly
for use in such Preliminary Prospectus, the Registration Statement or Prospectus
or any amendment thereof or supplement thereto or any such application. The
Company acknowledges that the statements with respect to the public offering of
the securities set forth under the heading "Underwriting," the risk factor
entitled "Experience of the Underwriter" and the stabilization legend in the
Prospectus have been furnished by the Underwriters expressly for use therein and
constitute the only information furnished in writing by or on behalf of the
Underwriters for inclusion in the Prospectus.
(c) Promptly after receipt of an indemnified party under this Section 7 of
notice of the commencement of any action, suit or proceeding, such indemnified
party shall, if a claim in respect thereof is to be made against one or more
indemnifying parties under this Section 7, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party, and it
notifies an indemnifying party or parties of the commencement thereof, the
indemnifying party or parties will be entitled to participate therein, and to
the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such case
but the fees and expenses of such counsel shall be at the expense of the
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying parties in connection with
the defense of such action at the expense of the indemnifying party; (ii) the
indemnifying parties shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses of one additional counsel shall be borne by the
indemnifying parties. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
Anything is this Section 7 to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent, provided, such consent was not unreasonably
withheld.
(d) In order to provide for just and equitable contribution in any case in
which (i) an indemnified party makes claim for indemnification pursuant to this
Section 7, but it is judicially determined (by 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
<PAGE>
enforced in such case notwithstanding the fact that the express provisions of
this Section 7 provide for indemnification in such case, or (ii) contribution
under the Act may be required on the part of any indemnified party, then each
indemnifying party shall contribute to the amount paid as a result of such
losses, claims, damages, expenses or liabilities (or actions in respect thereof)
(A) in such proportion as is appropriate to reflect the relative benefits
received by each of the contributing parties, on the one hand, and the party to
be indemnified on the other hand from the offering of the Securities, or (B) if
the allocation provided by clause (A) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (I) above but also the relative fault of each of the
contributing parties, on the one hand, and the party to be indemnified on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. In any case where the Company is a contributing party
and the Underwriters are the indemnified party, the relative benefits received
by the Company on the one hand, and the Underwriters on the other, shall be
deemed to be in the same proportions as the total net proceeds from the offering
of the Securities (before deducting expenses) bear to the total underwriting
discounts received by the Underwriters hereunder, in each case as set forth in
the table on the Cover Page of the Prospectus. Relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission of alleged omission to state
a material fact relates to information supplied by the Company, or by the
Underwriters, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, expense or liabilities (or actions in respect thereof) referred
to above in this subdivision (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claims. Notwithstanding the
provisions of this subdivision (d) the Underwriters shall not be required to
contribute any amount in excess of the underwriting discount applicable to the
Securities purchased by the Underwriters hereunder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 12(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person, if
any, who controls the Company within the meaning of the Act, each officer of the
Company who has signed the Registration Statement, and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to this subparagraph (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect to which a claim for contribution may
be made against another party or parties under this subparagraph (d), notify
such party or parties from whom contribution may be sought, but the omission so
to notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they have hereunder or
otherwise than under this subparagraph (d), or to the extent that such party or
parties were not adversely affected by such omission. The contribution agreement
set forth above shall be in addition to any liabilities which any indemnifying
party may have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All representations,
warranties, covenants and agreements contained in this Agreement or contained in
certificates of officers of the Company submitted pursuant hereto, shall be
<PAGE>
deemed to be representations warranties and agreements of the Company at the
Closing Date and such representations, warranties and agreements of the Company
including without limitation the respective indemnity agreements contained in
Sections 4 and 7 hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter, the
Company, any controlling person of either the Underwriter or the Company and
shall survive the execution and/or termination of this Agreement or the issuance
and delivery of the Securities to the Underwriters and the Representative, as
the case may be.
9. Effective Date. This Agreement shall become effective at 9:00 a.m., New
York City time, on the next full business day following the date hereof, or at
such earlier time after the Registration Statement becomes effective as the
Representative, in its discretion, shall release the Securities for the sale to
the public, provided, the provisions of Sections 7, 8 and 10 of this Agreement
shall at all times be effective. For purposes of this Section 9, the Securities
to be purchased hereunder shall be deemed to have been so released upon the
earlier of dispatch by the Representative of telegrams to securities dealers
releasing such shares for offering or the release by the Representative for
publication of the first newspaper advertisement which is subsequently published
relating to the Securities.
10. Termination.
(a) The Representative shall have the right to terminate this Agreement by
giving written notice to the Company at any time prior to the Closing Date if
(i) market conditions are unsuitable for the offering contemplated hereby at the
price per Share and Warrant set forth in Section 5(a) hereof and the Company and
the Representative cannot agree on another price or structure; or (ii) the
Company shall have failed, refused, or been unable to perform any of its
obligations hereunder, or breached any of its representations or warranties
hereunder or there shall be a failure of a closing condition to the
Representative's obligations hereunder; (iii) information comes to the
Representative's attention subsequent to the date hereof relating to the
Company, its financial operations and status, its management, its prospects or
its position in the industry which would preclude a successful offering on the
terms set forth herein; (iv) a material adverse change has occurred in the
financial condition, business or prospects of the Company; (v) the Company has
failed to comply with all applicable statutes, laws, rules and regulations; (vi)
the Company cannot expeditiously proceed with the offering contemplated hereby;
(vii) an action, suit or proceeding at law or in equity is commenced or brought
against the Company by any Federal, state or other commission, board or agency,
where any unfavorable decision would materially adversely affect the business
property, financial condition, prospects or income of the Company; (viii) any
domestic or international event or act or occurrence shall have disrupted the
financial markets; (ix) minimum or maximum prices shall have been established by
the New York Stock Exchange, by the American Stock Exchange or in the
over-the-counter market by the NASD (but not in the discretion of any
Underwriter), or trading in securities generally shall have been suspended or
materially limited by either stock exchange or in the over-the-counter market by
the NASD; (x) the United States shall have become involved in a war or major
hostilities, or if there shall have been an escalation in an existing war or
major hostilities in which the United States is a participant, or a national
emergency shall have been declared in the United States; (xi) a general banking
<PAGE>
moratorium shall have been declared by New York or Federal authorities, or (xii)
there shall have been a material adverse change in the general market, political
or economic conditions in the United States, such that in any such case, in the
Representative's judgment it would make it inadvisable to proceed with the
offering, sale and/or delivery of the Securities.
(b) If the Representative exercises its rights to terminate this Agreement
and not proceed with the Offering as a result of the circumstances enumerated in
subclauses (ii) through (xi) of the previous sentence, the Company shall
reimburse the Representative in full for its accountable out-of-pocket expenses
(including the Representative's counsel fees and disbursements), minus any
amounts previously paid pursuant to Section 5 hereof. If the Representative
exercises its rights to terminate this Agreement as a result of the
circumstances enumerated in subclause (i) of such sentence, the Company shall
reimburse the Representative in full for its accountable out-of-pocket expenses
(including the Representative's counsel fees and disbursements) up to a maximum
of $_________ minus the amount previously paid pursuant to Section 5 hereof.
(c) In the event the Representative elects not to proceed with the offering
contemplated hereby as a result of any condition enumerated in Section 10(a)
above, then the Company agrees that it will not negotiate with or engage any
investment banking firm or underwriter other than the Representative with
respect to any private or public financing for the Company during the 12-month
period commencing on the date of such termination.
11. Substitution of the Underwriters. If one or more of the Underwriters
shall fail (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of ____________________ hereof) to purchase
the Securities which it or they are obligated to purchase on such date under
this Agreement (the "Defaulted Securities"), the Representative shall have the
right, within 24 hours thereafter, to make arrangement for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth and if any such underwriter is willing to so
purchase the Defaulted Securities, then notwithstanding Section 11(ii) below,
the Representative shall be obligated to effect such arrangement; if, however,
the Representative shall not have completed such arrangement within such 24-hour
period, then:
(i) if the number of Defaulted Securities does not exceed 10% of the total
number of Firm Securities to be purchased on such date, the non-defaulting
Underwriters shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear
to the underwriting obligations of all non-defaulting Underwriters, or
(ii)if the number of Defaulted Securities exceeds 10% of the total number
of Firm Securities, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriters.
<PAGE>
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of any default by such Underwriter under
this Agreement.
In the event of any such default which does not result in a termination of
this Agreement, the Representative shall have the right to postpone the Closing
Date for a period of not exceeding ten days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements.
12. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to have
been duly given three days following the day when mailed by prepaid first class
mail, or upon the day of personal delivery. Notices to the Underwriters shall be
directed to the Representative, Millennium Securities Corp., 150 E. 58th Street
- - 38th Floor, New York, New York 10155, Att: Richard Sitomer, President, with a
copy to Beckman, Millman & Sanders, LLP, 116 John Street, New York, NY 10038,
Att: Michael Beckman, Esq. Notices to the Company shall be directed to the
Company at 4871 N. Mesa Drive, Castle Rock, CO 80104, with a copy to Blau,
Kramer, Wactlar & Lieberman, P.C., 100 Jericho Quadrangle, Jericho, NY 11753,
Att: David H. Lieberman, Esq.
13. Parties. This Agreement shall inure solely to the benefit of and shall
be binding upon, the Underwriters, the Company and the controlling persons,
directors and officers and their respective successors, legal representatives
and assigns, and no person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of by virtue of this
Agreement or any provisions herein contained. No purchaser of Securities from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
14. Construction. This Agreement shall be governed by and construed and
enforced in accordance with the law of the State of New York without giving
effect to the choice of law or conflict of laws principles.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
16. Entire Agreement; Amendments. This Agreement and the Warrant Agreement
constitute the entire agreement between the parties hereto, and supersede all
prior written or oral agreement, understandings and negotiations, with respect
to the subject matter hereof, except as herein expressly provided. This
Agreement may not be amended except in writing, signed by the Representative and
the Company.
17. Law. This Agreement shall be deemed to have been made and delivered in
New York City and shall be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws of the State
of New York. The Company and you (i) agree that any legal suit, action or
<PAGE>
proceeding arising out or relating to this letter shall be instituted
exclusively in New York State Supreme Court, County of New York or in the United
States District Court for the Southern District of New York, and the United
States District Court for the Southern District of New York; (ii) waive any
objection to the venue of any such suit, action or proceeding, and (iii)
irrevocably consent to the jurisdiction of the New York State Supreme Court,
County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding. The Company and you
further agree to accept and acknowledge service of any and all process which may
be served in any such suit, action or proceeding in the New York State Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York and agree that service of process upon it mailed
by certified mail to its address shall be deemed in every respect effective
service of process upon it in any such suit, action or proceeding.
18. No Assignment. Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the prior written consent of
the other party, and any attempted assignment without such consent shall be void
and of no effect.
19. Schedules. Any disclosure made on any schedule hereto shall be deemed
as also having been made on any other schedule hereto as to which such
disclosure is also responsive.
If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
RIPE TOUCH GREENHOUSES, INC.
By:______________________________
Stanley Abrams
President
Confirmed and accepted as of
the date first above written
Millennium Securities Corp.
For itself and as Representative
of the other Underwriters named
in Schedule A hereto.
By: _______________________________
Richard Sitomer
President
<PAGE>
SCHEDULE A
Underwriter Number of Units to be Purchased
----------- -------------------------------
Millennium Securities Corp.
----------
TOTAL 825,000
Exhibit 1.2
RIPE TOUCH GREENHOUSES, INC.
825,000 Units Each Consisting of One Share of Common Stock and
One Class A Redeemable Common Stock Purchase Warrant
January ___, 1998
AGREEMENT AMONG UNDERWRITERS
Millennium Securities Corp.
150 E. 58th Street - 38th Floor
New York, New York 10155
Gentlemen:
We wish to confirm as follows the agreement among you, the undersigned, and
the other Underwriters named in Schedule A to the Underwriting Agreement (as
defined hereinafter), as it is to be executed (all such parties being herein
called the "Underwriters"), with respect to the purchase by the Underwriters
severally from Ripe Touch Greenhouses, Inc., a Delaware corporation (the
"Company"), of 825,000 units (the "Units"), each consisting of one share of (the
"Shares") of Common Stock, par value $.001 per share, of the Company (the
"Common Stock"), and one Redeemable Common Stock Class A Purchase Warrant,
which, upon exercise, entitles the owner thereof to purchase one share of Common
Stock (the "Warrant"), and the proposed sale of the Units as hereinafter set
forth. The obligations of the Underwriters to purchase the Shares pursuant to
the Underwriting Agreement are herein called "Underwriting Obligations".
I. Authority and Compensation of Representative. We hereby authorize you,
as our Representative and on our behalf, (a) to enter into an agreement with the
Company substantially in the form attached hereto as Exhibit A (the
"Underwriting Agreement), but with such changes therein, including changes in
those who are to be Underwriters and in the respective numbers Shares and/or
Warrants to be purchased by them, as in your judgment are not materially adverse
to the Underwriters; provided, however, that the number of Shares and/or
Warrants to be purchased by us as set forth in or determined pursuant to the
Underwriting Agreement will not be increased, except as provided herein and in
the Underwriting Agreement, without our consent, (b) to exercise all the
authority and discretion vested in the Underwriters and in you by the provisions
of the Underwriting Agreement, and (c) to take all such action and execute all
such documents and instruments as you in your discretion may deem necessary or
advisable in order to carry out the provisions of the Underwriting Agreement and
<PAGE>
this Agreement and the sale and distribution of the Shares and/or Warrants;
provided, however, that the time within which the Registration Statement (as
defined in the Underwriting Agreement) is required to become effective pursuant
to the Underwriting Agreement will not be extended by more than 24 hours without
the approval of a majority in interest of the Underwriters (including you).
As your share of the compensation for your services hereunder, we will pay
you, and we authorize you to charge to our account on the Closing Date and the
Additional Closing Dates referred to in the Underwriting Agreement, a sum equal
to not more than 25% of the underwriting discount per Share or Warrant for each
Share or Warrant which we are then obligated to purchase from the Company
pursuant to the Underwriting Agreement.
We hereby authorize you to furnish such information and to make such
representations to the Securities and Exchange Commission (the "Commission") on
behalf of the undersigned as you in your discretion may deem necessary or
advisable.
II. Public Offering. A public offering of the Shares and Warrants is to be
made, as herein provided, as soon, on or after the effective date of the
Registration Statement, as you deem it advisable so to do. The Shares and
Warrants are to be initially offered to the public at the public offering price
set forth on, or determined pursuant to the disclosure on, the cover page of the
Prospectus (as defined in the Underwriting Agreement). You will advise us by
telegraph or telephone when the Shares and Warrants are released for offering.
We authorize you, as Representative of the Underwriters, after the initial
public offering, from time to time to increase or decrease the public offering
price, in your sole discretion, by reason of changes in general market
conditions or otherwise. The public offering price of the Shares and Warrants at
the time in effect is herein called the "Offering Price".
III. Offering to Dealers and Group Sales. We authorize you to reserve for
offering and sale, and on our behalf to sell, to institutions or other retail
purchasers (such sales being herein called "Group Sales") and to dealers
selected by you (such dealers, among whom any of the Underwriters may be
included, being herein called "Dealers") all or any part of our Shares and/or
Warrants as you may determine. Such sales of Shares and/or Warrants, if any,
shall be made (a) in the case of Group Sales, at the Offering Price, and (b) in
the case of sales to Dealers, at the Offering Price or at the Offering Price
less such concession or concessions as you may from time to time determine.
The aggregate of any Group Sales made for our account shall be as nearly as
practicable in proportion to our underwriting obligations (unless you agree to a
smaller proportion for the account of any Underwriter at the request of such
Underwriter), but it shall not be necessary for each such sale to be made in
such proportion. Any sales to Dealers made for our account shall be as nearly as
practicable in the ratio that the Shares and/or Warrants reserved for our
account for offering to Dealers bears to the aggregate of all Shares and/or
Warrants of all Underwriters so reserved.
You agree to notify us promptly on the date of the public offering as to
<PAGE>
the number of Shares and/or Warrants, if any, which we may retain for direct
sale. Prior to the termination of this Agreement, you may reserve for offering
and sale as hereinbefore provided any Shares and/or Warrants remaining unsold
theretofore retained by us and we may, with your consent, retain any Shares
and/or Warrants remaining unsold theretofore reserved by you.
We authorize you to determine the form and manner of any communications or
agreements with Dealers, which may be in the form of the Selling Agreement, or
otherwise, as you may determine. If there shall be any such agreements with
Dealers, you are authorized to act as manager thereunder and we agree, in such
event, to be governed by the terms and conditions of such agreements. You may
arrange for any Underwriter, including yourself, to become one of such Dealers.
Each Underwriter agrees that it will not offer any of the Shares and/or Warrants
for sale at a price below the Offering Price or allow any concession therefrom
except as herein otherwise provided.
It is understood that any Dealer to which an offer may be made as
hereinbefore provided shall be actually engaged in the investment banking or
securities business, shall execute the written agreement prescribed by Section
24(c) of Article III of the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. (the "NASD"), and shall either be a member in good
standing of the NASD or be a foreign dealer or institution not eligible for
membership in the NASD which agrees to make no offers or sales of the Shares
and/or Warrants in the United States, its territories, or its possessions or to
persons who are citizens thereof or residents therein, and, in making sales, to
comply with the NASD's interpretation with respect to Free-Riding and
Withholding and Sections 8, 24, and 36 of the Article III of the NASD's Rules of
Fair Practice as if it were an NASD member and Section 25 of such Article III as
it applies to a non-member broker or dealer in a foreign country. The
Underwriters may allow, and the Dealers, if any may reallow, such concession or
concessions as you may from time to time determine on sales of Shares and/or
Warrants, to any eligible broker or dealer, all subject to the Rules of Fair
Practice of the NASD.
You, as Representative, and any of the Underwriters with your prior
consent, may make purchases or sales of Shares and/or Warrants (c) from or to
any of the other Underwriters, at the Offering Price less all or any part of the
underwriting discount as set forth on, or determined pursuant to the disclosure
on, the cover page of the Prospectus and (d) from or to any of the dealers, at
the Offering Price or at the Offering Price less all or any part of the
concession to Dealers.
We authorize you to determine the form and manner of any public
advertisement of the Shares and/or Warrants.
Nothing contained in this Agreement shall be deemed to restrict our right,
subject to the provisions of this Section 3, to offer our Shares and/or Warrants
prior to the effective date of the Registration Statement, provided that any
such offer shall be made in compliance with any applicable requirements of the
Securities Act of 1933, as amended (the "Act"), and the Securities Exchange act
of 1934, as amended (the "Exchange Act"), and the rules and regulation of the
Commission thereunder and of any applicable state or foreign laws.
<PAGE>
IV. Repurchases in the Open Market. Any Shares and/or Warrants sold by us
(otherwise than through you) which, prior to the termination of this Agreement
or such earlier date as you may determine, shall be contracted for or purchased
in the open market by you on behalf of any Underwriter or Underwriters, shall be
repurchased by us on demand at a price equal to the cost of such purchase
(including commissions and taxes paid in connection with such purchase) plus
commissions and taxes on redelivery. Any Shares and/or Warrants delivered on
such repurchase need not be the identical Shares and/or Warrants originally sold
by us. In lieu of delivery of such Shares and/or Warrants to us, you may (a)
sell such Shares and/or Warrants in any manner for our account and charge us
with the amount of any loss or expense, or credit us with the amount of any
profit less any expense, resulting from such sale or, at your option, (b) charge
our account with an amount not in excess of the concession to Dealers on such
Shares and/or Warrants, plus commissions and taxes paid in connection with such
purchase.
V. Delivery and Payment. We agree to deliver to you at or before 8:30 A.M.,
New York City Time, on the Closing Date and any Additional Closing Date referred
to in the Underwriting Agreement, at the office of Millennium Securities Corp.,
150 E. 58th Street - 38th Floor, New York, New York 10155, a certified or
official bank check in New York Clearing House funds payable to your order for
an amount equal to the initial public offering price, less the selling
concession, of either (a) the Shares and Warrants which we are then obligated to
purchase pursuant to the Underwriting Agreement or (b) such of our Shares or
Warrants which have not been sold or reserved for sale in Group Sales or to
Dealers, as you direct. The proceeds of such check shall be credited to our
account and applied by you, in the manner provided in the Underwriting
Agreement, to the payment of the purchase price of the Shares and/or Warrants,
against delivery of certificates for such Shares or Warrants to you for our
account. You are authorized to accept such delivery and to give receipts
therefor. If we fail (whether or not such failure shall constitute a default
hereunder) to deliver to you, or you fail to receive, our check for the Shares
and/or Warrants which we have agreed to purchase, at the time and in the manner
provided in this Section 5, you, individually and not as representative of the
Underwriters, are authorized (but shall not be obligated) to make payment for
such Shares and/or Warrants for our account, but any such payment shall not
relieve us of any of our obligations under the Underwriting Agreement or under
this Agreement, and we agree to repay on demand the amount so advanced for our
account (plus interest at then current rates).
Notwithstanding the other provisions of this Section 5, if transactions in
the Shares and/or Warrants can be settled through the facilities of The
Depository Trust Company, payment for and delivery of our Shares and/or Warrants
will be made through the facilities of The Depository Trust Company if we are a
member, unless we have otherwise notified you prior to a date to be specified by
you, or, if we are not a member, settlement may be made through a correspondent
which is a member pursuant to instructions we may send to you prior to such
specified date.
We also agree on demand to take up and pay for or to deliver to you funds
sufficient to pay for at cost any securities purchased by you for our account
pursuant to the provisions of Section 9 hereof, and to deliver to you on demand
any securities sold or over-allotted by you for our account pursuant to any
provision of this Agreement. We also authorize you to deliver our Shares and/or
<PAGE>
Warrants and any other securities purchased by you for our account pursuant to
the provisions of Section 9 hereof, against sales made by you for our account
pursuant to any provision of this Agreement.
Upon receipt by you of payment for the Shares and/or Warrants sold by or
though you for our account, you will (c) with respect to such Shares and/or
Warrants paid for by us, remit to us promptly an amount equal to the purchase
price paid by us for such Shares and/or Warrants and credit or debit our account
on your books with the difference between the selling price and the purchase
price of such Shares and/or Warrants as set forth in or determined pursuant to
Section 5 of the Underwriting Agreement and (d) with respect to such Shares
and/or Warrants not paid for by us, credit or debit our account on your books
with the difference between the selling price and the purchase price of such
Shares and/or Warrants as set forth in or determined pursuant to Section 5 of
the Underwriting Agreement. You agree to cause to be delivered to us, as soon as
practicable after the Closing Date or any Additional Closing Date, as the case
may be, referred to in the Underwriting Agreement, such part of our Shares
and/or Warrants as shall not have been sold or reserved for sale by you for our
account.
In case any Shares and/or Warrants reserved for sale in Group Sales or to
Dealers shall not be purchased and paid for in due course as contemplated
hereby, we agree (e) to accept delivery when tendered by you of any Shares
and/or Warrants so reserved for our account and not so purchased and paid for
and (f) in case we shall have received payment from you in respect of any such
Shares and/or Warrants, to reimburse you on demand for the full amount which you
shall have paid us in respect of such Shares and/or Warrants.
VI. Authority to Borrow. We authorize you (to the extent permitted by law)
to advance your funds for our account (charging then current interest rates) and
to arrange loans and to purchase funds for our account for the purpose of
carrying out this Agreement and in connection therewith to execute and deliver
any notes or other instruments and to hold or pledge as security therefor all or
any part of the Shares and/or Warrants purchased by us pursuant to the
Underwriting Agreement or any other securities purchased by you for our account
pursuant to the provisions of Section 9 hereof as you shall determine in your
discretion. Any lending bank is hereby authorized to accept your instructions as
Representative in all matters relating to such loans and purchase of funds. We
will repay on demand any such advances, loans, or purchases, including interest
thereon at then current rates.
VII. Allocation of Expense and Liability. We authorize you to charge our
account with and we agree to pay (a) all transfer taxes on sales made by you for
our account, except as herein otherwise provided, and (b) our proportionate
share (based on our underwriting obligations) of all expenses incurred by you in
connection with the purchase, carrying, and distribution, or proposed purchase
and distribution, of the Shares and/or Warrants and all other expenses arising
under the terms of the Underwriting Agreement or this Agreement. Your
determination of all such expenses and your allocation thereof shall be final
and conclusive. Funds for our account at any time in your hands as our
Representative may be held in your general funds without accountability for
interest. As soon as practicable after the termination of this Agreement, the
net credit or debit balance in our account, after proper charge and credit for
<PAGE>
all interim payments and receipts, shall be paid to or paid by us; provided,
however, that you in your discretion may establish such reserves as you deem
advisable to cover possible additional expenses chargeable to the Underwriters.
VIII. Liability for Future Claims. Neither any statement by you, as
Representative of the Underwriters, of any credit or debit balance in our
account nor any reservation from distribution to cover possible additional
expenses relating to the Shares and/or Warrants shall constitute any
representation by you as to the existence or non-existence of possible
unforeseen expenses or liabilities of or charges against the Underwriters.
Notwithstanding the distribution of any net credit balance to us or the
termination of this Agreement or both, we shall be and remain liable for, and
will pay on demand, (a) our proportionate share (based on our underwriting
obligations) of all expenses and liabilities which may be incurred by or for the
accounts of the Underwriters or any of them, including any liability which may
be incurred by or for the accounts of the Underwriters or any of them based on
the claim that the Underwriters constitute an association, unincorporated
business, partnership, or separate entity, and (b) any transfer taxes paid after
such settlement on account of any sale or transfer for our account.
IX. Stabilization. We authorize you, until the termination of this
Agreement, (a) to make purchases and sales of Shares and/or Warrants or of any
other securities of the Company, in the open market or otherwise, for long or
short account, and on such terms and at such prices as you in your discretion
may deem desirable, (b) in arranging for sales of Shares and/or Warrants to
Dealers, to over-allot, and (c) either before or after the termination of this
Agreement, to cover any short position incurred pursuant to this Section 9;
subject, however, to the applicable rules and regulations of the Commission
under the Exchange Act. All such purchases, sales, and over-allotments shall be
made for the accounts of the several Underwriters as nearly as practicable in
proportion to their respective underwriting obligations.
If you engage in any stabilizing transactions as Representative of the
Underwriters, you shall notify us of that fact. If we effect any transaction
which may be deemed to be a stabilizing purchase, we will notify you in writing
within three business days following such purchase of the information required
by Rule 17a-2(d) under the Exchange Act.
We agree to advise you, from time to time upon request until the settlement
of accounts hereunder, of the number of Shares and/or Warrants at the time
retained by us unsold, and we will upon request sell to you for the accounts of
one or more of the several Underwriters such number of our unsold Shares and/or
Warrants as you may designate, at the Offering Price less such amount, not in
excess of the concession to Dealers, as you may determine.
X. Open Market Transactions. We agree that except with your consent and
except as herein provided we will not, prior to the termination of this
agreement or until you notify us that we are released from this restriction, bid
for, purchase, or sell, directly or indirectly, for our own account, in the open
market or otherwise, or attempt to induce others to bid for, purchase, or sell,
<PAGE>
either before or after the sale of the Shares and/or Warrants and either for
long or short account, any securities of the Company or any right to purchase
any such security, and, prior to the completion (as defined in Rule 10b-6 under
the Exchange Act) of our participation in the distribution, we will otherwise
comply with Rule 10b-6. We represent that we have complied with Rule 10b-6 in
connection with the offering. Nothing in this Section 10 shall prohibit us from
acting as broker or agent in the execution of unsolicited orders of customers
for the purchase or sale of any securities of the Company.
XI. "Blue Sky." Prior to the initial offering by the Underwriters, you will
inform us as to the advice you have received from counsel concerning the
jurisdictions under the respective "blue sky" or securities laws of which it is
believed that the Shares and/or Warrants have been qualified or registered or
are exempt for offer and sale, but you have not assumed and will no assume any
responsibility or obligation as to the accuracy of such information or as to the
right of any Underwriter or Dealer to offer or sell the Shares and/or Warrants
in any jurisdiction. You agree, however, to cause to be filed a Further State
Notice with respect to the Shares and/or Warrants if, in the opinion of counsel
for the Underwriters, such filing is required by Article 23-A of the General
Business Law of the State of New York.
We authorize you, if you deem it inadvisable in arranging sales of Shares
and/or Warrants for our account hereunder to sell any of our Shares and/or
Warrants to any particular Dealer or other buyer because of the "blue sky" or
securities laws of any jurisdiction, to sell our Shares and/or Warrants to one
or more other Underwriters at the Offering Price less, in the case of a sale for
resale to a Dealer, such amount, not in excess of the concession to Dealers, as
you may determine. The transfer tax on any such sales among Underwriters shall
be treated as an expense and charged to the respective accounts of the
Underwriters in proportion to their respective underwriting obligations.
XII. Default by Underwriters. Default by one or more Underwriters in
respect of their obligations under the Underwriting Agreement shall not release
us from any of our obligations or in any way affect the liability of any
defaulting Underwriter to the other Underwriters for damages resulting from such
default.
In the event of default by one or more Underwriters in respect of their
obligations under this Agreement to take up and pay for any securities purchased
by you for their respective accounts pursuant to Section 9 hereof, or to deliver
any such securities sold or over-allotted by you for their respective accounts
pursuant to any provision of this Agreement, or to bear their respective shares
of expenses or liabilities pursuant to any provision of this Agreement, and to
the extent that arrangements shall not have been made by you or the Company for
other persons to assume the obligations of such defaulting Underwriter or
Underwriters, each non-defaulting Underwriter shall assume its proportionate
share (without regard to the obligation of such defaulting Underwriter or
Underwriters) of the aforesaid obligations of each such defaulting Underwriter
without relieving any such Underwriter of its liability therefor.
XIII. Termination of Agreement. Unless earlier terminated by you, the
provisions of Sections 2, 3, 4, 6, 9 and 10 hereof shall, except as otherwise
provided therein, terminate at the close of business on the forty-fifth day
<PAGE>
after the public offering price of the Stock is determined, but may be extended
by you for an additional period or periods not exceeding forty five days in the
aggregate. You may, however, terminate this Agreement or any provisions hereof
at any time by written or telegraphic notice to us.
XIV. General Position of the Representative. In taking action under this
Agreement, you shall act only as agent of the Underwriters, except as otherwise
specifically provided herein where you may act individually. Your authority as
Representative of the Underwriters shall include the taking of such actions as
you may deem advisable in respect of all matters pertaining to any and all
offers and sales of the Shares and/or Warrants, including the right to make any
modifications which you consider necessary or desirable in the arrangements with
Dealers or others. You shall be under no liability for or in respect of the
value of the Shares and/or Warrants or the validity or the form thereof, any
preliminary prospectus, the Registration Statement, the Prospectus, the
Underwriting Agreement, or other instruments executed by the Company, or others;
or for or in respect of the delivery of the Shares and/or Warrants; or for the
performance by the Company, or others of any agreement on its or their part; nor
shall you as such Representative or otherwise be liable to the Underwriters
under any of the provisions hereof or for any matters connected herewith, except
for want of good faith; and no obligation not expressly assumed by you as such
Representative herein shall be implied from this Agreement. In representing the
Underwriters hereunder, you shall act as the Representative of each of them
respectively. Nothing herein contained shall constitute the Underwriters
partners with you or with each other, or render any Underwriter liable for the
commitments of any other Underwriter, except as otherwise provided in Section 12
hereof. The commitments and liabilities of each of the Underwriters are several
in accordance with their respective underwriting obligations and are not joint.
If for federal income tax purposes the Underwriters should be deemed to
constitute a partnership, then each Underwriter elects to be excluded from the
application of Subchapter K, Chapter 1, Subtitle A of the Internal Revenue Code
of 1986, as amended, and agrees not to take any position inconsistent with such
election. You, as Representative of the Underwriters, are authorized, in your
discretion, to execute and file on behalf of the Underwriters such evidence of
such election as may be required by the Internal Revenue Service.
XV. Acknowledgment of Registration Statement. We hereby confirm that we
have received and examined the Registration Statement (including all amendments
thereto but excluding exhibits) and the related prospectus in respect of the
Stock as heretofore filed with the Commission, that we are familiar with any
amendment to the Registration Statement which may have been filed and the final
form of amendment and prospectus proposed to be filed, that we are willing to
accept the responsibilities of an Underwriter thereunder, and that we are
willing to proceed as therein contemplated. We further confirm that the
statements made under the heading " Underwriting" in such proposed final form of
prospectus, insofar as they relate to us, do not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. We understand that
the aforementioned documents are subject to further change and that we will be
supplied with copies of any amendment or supplement to the Registration
Statement or the Prospectus promptly, if and when received by you, but the
making of such changes, amendments, or supplements shall not release us or
<PAGE>
affect our obligations hereunder or under the Underwriting Agreement.
XVI. Indemnity and Contribution. A. We agree to indemnify and hold harmless
each other Underwriter (including you), its officers, directors, partners,
employees, agents, and counsel and each person, if any, who controls any such
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, to the extent and upon the terms which we agree to indemnify and
hold harmless the Company as set forth in the Underwriting Agreement.
B. Each Underwriter (including you) will pay, upon your request, as
contribution, its proportionate share, based upon its underwriting obligation,
of any losses, liabilities, claims, or damages, joint or several, paid or
incurred by any Underwriter (including you) to any person other than an
Underwriter, arising out of, based upon, or in connection with any untrue
statement or alleged untrue statement of any material fact contained in any
preliminary prospectus, the Registration Statement, the Prospectus (as from time
to time amended or supplemented), any amendment or supplement thereto, any other
selling or advertising material approved by you for use by the Underwriters in
connection with the sale of the Shares and/or Warrants, or in any application or
other document or communication executed by or on behalf of the Company or based
upon written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Shares and/or Warrants under the "blue sky"
or securities laws thereof or filed with the Commission or any securities
exchange, 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; and will pay such proportionate share, based upon its underwriting
obligation, of all attorney's fees and any and all expenses whatsoever
reasonably incurred by you or with your consent in investigating, preparing, or
defending against any such loss, liability, claim, or damage, or any action in
respect thereof and any amounts paid in settlement of any claim or litigation.
In determining the amount of our obligation under this Section 16(b),
appropriate adjustment will be made by you to reflect any amounts received by
any Underwriter in respect of such untrue statement, alleged untrue statement,
omission, or alleged omission from the Company pursuant to the Underwriting
Agreement or otherwise. There shall be credited against any amount paid or
payable by us pursuant to this Section 16(b) any loss, liability, claim, damage,
or expense which is reasonably incurred by us as a result of any such claim
asserted against us (other than fees and disbursements of our separate counsel
if such counsel is not approved by you as provided in the next sentence), and if
such loss, liability, claim, damage, or expense is incurred by us subsequent to
any payment by us pursuant to this Section 16(b), appropriate provision shall be
made to effect such credit by refund or otherwise. If any such claim is asserted
or any action is commenced in respect thereto, you may take such action in
connection therewith as you deem necessary or desirable, including retaining
counsel for the Underwriters, and in your discretion separate counsel for any
particular Underwriter or group or Underwriters, and the fees and disbursements
of any counsel so retained by you shall be included in the amounts payable
pursuant to this Section 16(b).
C. Our indemnity and contribution agreements contained in this Section 16
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of such other Underwriter or its officers,
<PAGE>
directors, partners, employees, agents, counsel, or controlling persons (if any)
and shall survive the delivery of the Shares and/or Warrants to the several
Underwriters and the termination of this Agreement and the similar agreements
entered into with the other Underwriters. In determining amounts payable
pursuant to Section 16(b) hereof, any loss, liability, claim, damage, or expense
incurred by any person who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act or by any officer,
director, partner, employee, agent, or counsel of any Underwriter which has been
incurred by reason of such control or other relationship shall be deemed to have
been incurred by such Underwriter. Any Underwriter shall have the right to
employ its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Underwriter. No Underwriter may settle any such claim or
action, except you may so settle on advice of counsel retained by you and with
approval of a majority in interest of the Underwriters (including you). Whenever
you receive notice of the assertion of any claim or the commencement of any
action to which the provisions of Section 16(b) hereof would be applicable, you
will give prompt notice thereof to each Underwriter. If any Underwriter or
Underwriters default in its or their obligation to make payments under Section
16(b) hereof, each non-defaulting Underwriter shall be obligated to pay its
proportionate share of all defaulted payments, based upon such Underwriter's
underwriting commitment as related to the underwriting commitments of all
non-defaulting Underwriters. Nothing herein shall relieve a defaulting
Underwriter of liability for its default.
XVII. Capital Requirements. We confirm that we may, in accordance with and
pursuant to Rule 15c3-1 promulgated by the Commission under the Exchange Act and
any applicable rules relating to capital requirements of any securities exchange
to which we are subject, agree to purchase the numbers of Shares and/or Warrants
we may be obligated to purchase under any provision of the Underwriting
Agreement or this Agreement.
XVIII. Undertaking to Mail Prospectuses. As contemplated by Rule 15c2-8
under the Exchange Act, you agree to mail a copy of the Prospectus to any person
making a written request therefor during the period referred to in Rule 15c2-8,
such mailing to be made to the address given in the request. We confirm that we
have delivered all preliminary prospectuses and revised preliminary
prospectuses, if any, required to be delivered under the provisions of Rule
15c2-8 and agree to deliver all final prospectuses and amendments or supplements
thereto required to be delivered under Rule 15c2-8. You have heretofore
delivered to us such preliminary prospectuses as have been requested by us,
receipt of which is hereby acknowledged, and will deliver such copies of the
Prospectus will be requested by us.
XIX. Miscellaneous. Any notice hereunder from you to us or from us to you
shall be deemed to have been duly given if sent by registered mail, telegram, or
teletype, to us at our address as set forth in our Underwriters' Questionnaire
previously delivered to you, or to you at IAR Securities Corp., 150 E. 58th
Street - 38th Floor, New York, New York 10155 Attention: Richard Sitomer,
President.
We understand that you are a member in good standing of the NASD. We
represent that we are actually engaged in the investment banking or securities
<PAGE>
business and that we are a member in good standing of the NASD which agrees to
comply with all applicable rules of the NASD, including, without limitation, the
NASD's interpretation with respect to Free-Riding and Withholding and Section 24
of Article III of the NASD's Rules of Fair Practice, or, if we are not such a
member, we are a foreign dealer or institution not eligible for membership in
the NASD (a) which agrees to make no offers or sales within the United States,
its territories, or its possessions (except that we may participate in Group
Sales under Section 3 hereof) or to persons who are citizens thereof or
residents therein, and, in making sales, to comply with the NASD's
interpretation with respect to Free-Riding and Withholding and Sections 8, 24,
and 36 of Article III of the NASD's Rules of Fair Practice as if we were an NASD
member and Section 25 of such Article III as it applies to a non-member broker
or dealer in a foreign country and (b) which in connection with sales and offers
of Shares and/or Warrants made by us outside the United States, (i) will either
furnish to each person to whom any such offer or sale is made a copy of the then
current preliminary prospectus or the Prospectus (as then amended or
supplemented if the Company shall have furnished amendments or supplements
thereto), as the case may be, or inform such person that such preliminary
prospectus or the Prospectus will be made available upon request and (ii) will
furnish to each person to whom any such offer or sale is made such prospectus,
advertisement, or other offering document containing information relating to the
Shares and/or Warrants, Common Stock, Warrants, or the Company as may be
required under the law of the jurisdiction in which such offer or sale is made.
Any prospectus, advertisement, or other offering document furnished by us to any
person in accordance with clause (b)(ii) of the preceding sentence and any such
additional offering material as we may furnish to any person (c) shall comply in
all respects with the laws of the jurisdiction in which it is so furnished, (d)
shall be prepared and so furnished at our sole risk and expense, and (e) shall
not contain information relating to the Common Stock, Warrants, or the Company
which is inconsistent in any respect with the information contained in the then
current preliminary prospectus or in the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), as the case may be.
This Agreement may be signed by the Underwriters in various counterparts
which together shall constitute one and the same agreement among all the
Underwriters and shall become effective at such time as all the Underwriters
shall have signed such counterparts and you shall have confirmed all such
counterparts.
This Agreement shall be construed in accordance with the laws of the State
of New York, without giving effect to conflict of laws. Time is of the essence
in this Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK]
<PAGE>
Please confirm that the foregoing correctly sets forth the understanding between
us by signing and returning to us a counterpart hereof.
Very truly yours,
---------------------------------
As Attorney-in-Fact for each of the
Underwriters named in Schedule A to the
Underwriting Agreement
Confirmed as of the date first above written.
New York, New York
MILLENNIUM SECURITIES CORP.
By: __________________________________
Name:
Title:
Exhibit 1.3
RIPE TOUCH GREENHOUSES, INC.
825,000 Units, Each Consisting of One (1) Share of Common Stock and
One (1) Class A Redeemable Common Stock Purchase Warrant
SELLING AGREEMENT
January ___, 1998
Dear Sirs:
The undersigned, Millennium Securities Corp., as representative of the
underwriters (the "Representative"), has agreed, subject to the terms and
conditions of the Underwriting Agreement dated January ___, 1998 (the
"Underwriting Agreement"), to purchase from Ripe Touch Greenhouses, Inc., a
Delaware corporation (the "Company"), an aggregate of 825,000 units (the
"Units") consisting of a total of 825,000 shares of Common Stock, par value
$.001 per share, of the Company (the "Common Stock") and 825,000 Class A
Redeemable Common Stock Purchase Warrants (the "Warrants") to purchase one share
of Common Stock, at the purchase price set forth on the cover of the Prospectus
(as hereinafter defined). The 825,000 Shares of Common Stock and 825,000
Warrants are hereinafter referred to as the "Firm Securities." The Firm
Securities, Common Stock and Warrants are more particularly described in the
enclosed prospectus (the "Prospectus"), additional copies of which will be
supplied in reasonable quantities upon request.
We are offering a part of the Securities for sale to selected dealers (the
"Selected Dealers"), among which we are pleased to include you, at the public
offering price or at such price less a concession in the amount set forth in the
Prospectus under "Underwriting", as provided herein. This offering is made
subject to delivery of the Securities and its acceptance by us, to the approval
of all legal matters by counsel, and to the terms and conditions herein set
forth and may be made on the basis of the reservation of Securities or an
allotment against subscription.
We have advised you by telegram or telex of the method and terms of the
offering. Acceptances should be sent to Millennium Securities Corp., 150 E. 58th
Street - 38th Floor, New York, New York 10155, Attn: Richard Sitomer, President.
We reserve the right to reject any acceptance in whole or in part.
The Securities purchased by you hereunder are to be offered by you to the
public at the public offering price, except as herein otherwise provided.
We, as Representative, may buy Securities from, or sell Securities to, any
Selected Dealer, and any Selected Dealer may buy Securities from, or sell
Securities to, any other Selected Dealer at the public offering price or at such
price less all or any part of the concession in the amount set forth in the
Prospectus under "Underwriting", as provided herein. We, as Representative,
after the initial public offering may change the public offering price, the
<PAGE>
concession, and the reallowance set forth in the Prospectus under
"Underwriting".
Securities purchased by you hereunder shall be paid for in full at the
public offering price or such price less the applicable concession, as we shall
advise, on such date as we shall determine, on one day's notice to you, by
certified or official bank check payable in New York Clearing House funds to the
order of Millennium Securities Corp., 150 E. 58th Street - 38th Floor, New York,
New York 10155 against delivery of the Securities. If you are called upon to pay
the public offering price for the Securities purchased by you, the applicable
concession will be paid to you, less any amounts charged to your account as
provided herein, after termination of this Agreement as it applies to the
offering of the Securities. Notwithstanding the preceding two sentences, payment
for and delivery of Securities purchased by you hereunder will be made at our
option either by physical delivery of certificates representing the shares so
purchased or through the facilities of The Depository Trust Company if you are a
member or, if you are not a member, settlement may be made through a
correspondent which is a member pursuant to instructions you may send to us
prior to such specified date.
We have been advised by the Company that a registration statement for the
Securities, filed under the Securities Act of 1933, as amended (the "Securities
Act"), has become effective. You agree (which agreement shall also be for the
benefit of the Company) that in selling Securities purchased pursuant hereto you
will comply with the applicable requirements of the Securities Act and of the
Securities Exchange Act of 1934, as amended, (the "Exchange Act"). No person is
authorized by the Company or the Representative to give any information or to
make any representations not contained in the Prospectus, in connection with the
sale of Securities. You are not authorized to act as agent for the Company or
the Representative in offering Securities to the public or otherwise. Nothing
contained herein shall constitute the Selected Dealers partners with the
Representative or with one another.
Upon your application to us, we will inform you as to the advice we have
received from counsel concerning the jurisdictions under the respective "blue
sky" or securities laws of which it is believed that the Securities have been
qualified or registered or is exempt for offer and sale, but we have not assumed
and will not assume any responsibility or obligation as to the accuracy of such
information or as to the right of any Selected Dealers to offer or sell
Securities in any jurisdiction.
As Representative, we shall have full authority to take such action as we
may deem advisable in respect of all matters pertaining to the offering or
arising thereunder. We, acting as the Representative shall not be under any
obligation to you except for obligations expressly assumed by us in this
Agreement.
We are authorized to purchase and sell the Securities and shares of Common
Stock or Warrants for long or short account and we are also authorized to
stabilize or maintain the market prices of the Common Stock and the Warrants.
You agree, from time to time until the termination of this Agreement, to
report to us the number of Securities purchased by you pursuant to the
provisions hereof which then remain unsold and, on our request, you will resell
<PAGE>
to us any such Securities remaining unsold at the purchase price thereof if, in
our opinion, such Securities are needed to make delivery against sales made to
others.
If prior to the termination of this Agreement as it applies to the offering
of the Securities (or prior to such earlier date as we have determined) we
purchase or contract to purchase in the open market or otherwise any Securities
or shares of Common Stock or Warrants underlying the Securities which were
purchased by you from us or from any other underwriter or dealer for reoffering
(including any Securities or shares of Common Stock or Warrants which may have
been issued on transfer or in exchange for such Securities or shares of Common
Stock or Warrants), and which Securities or shares of Common Stock or Warrants
were therefore not effectively placed for investment by you, you authorize us
either to charge your account with an amount equal to the concession from the
public offering price for which you purchased such Securities, which shall be
credited against the cost of such Securities, or to require you to repurchase
such Securities at a price equal to the total cost of such purchase, including
any commissions and transfer taxes on redelivery.
You agree that except with our consent and except as otherwise provided
herein, you will not, prior to termination of this Agreement or until we notify
you that you are released from this restriction, bid for, purchase, or sell,
directly or indirectly, any Securities or any shares of Common Stock or Warrants
(or, if requested by us by telex or otherwise, any other securities of the
Company) for your account or for the accounts of customers except as broker or
agent in the execution of unsolicited brokerage orders therefor.
As contemplated by Rule 15c2-8 under the Exchange Act, we agree to mail a
copy of the Prospectus to any person making a written request therefor during
the period referred to in Rule 15c2-8, such mailing to be made to the address
given in the request. You confirm that you have delivered all preliminary
prospectuses and revised preliminary prospectuses, if any, required to be
delivered under the provisions of Rule 15c2-8 and agree to deliver all final
prospectuses and amendments or supplements thereto required to be delivered
under Rule 15c2-8. We have heretofore delivered to you such preliminary
prospectuses as have been requested by you, receipt of which is hereby
acknowledged, and will deliver such copies of the Prospectus as will be
requested by you.
Selected Dealers will be governed by the conditions herein set forth until
this Agreement is terminated. This Agreement will terminate at the close of
business on the 45th full day after the date hereof, but may be extended by us
for an additional period or periods not exceeding 45 full days in the aggregate.
Whether or not extended, we may, however, terminate this agreement or any
provision hereof at any time. Notwithstanding the termination of this Agreement,
you shall be and shall remain liable for, and will pay on demand, your
proportionate amount of any loss, liability, claim, or damage or related expense
which may be asserted against you alone, or against you together with other
dealers purchasing Securities upon the terms hereof, or against us, based upon
the claim that the Selected Dealers, or any of them, constitute an association,
unincorporated business, partnership, or separate entity.
All communications from you shall be address to Millennium Securities
Corp., 150 E. 58th Street - 38th Floor, New York, New York 10155, Attn: Richard
Sitomer, President. Any notice from us to you shall be deemed to have been fully
authorized by us and to have been duly given if mailed, telegraphed, or telexed
<PAGE>
to you at the address to which this letter is mailed. This Agreement shall be
construed in accordance with the laws of the State of New York, without giving
effect to conflict of laws. Time is of the essence in this Agreement.
If you agree to purchase Securities in accordance with the terms hereof,
kindly confirm such agreement by completing and signing the form provided for
that purpose on the enclosed duplicate hereof and returning it to us promptly.
Very truly yours,
MILLENNIUM SECURITIES CORP.
By: __________________________
Richard Sitomer
President
<PAGE>
Millennium Securities Corp.
150 E. 58th Street- 38th Floor
New York, New York 10155
Dear Sirs:
We hereby confirm our agreement to purchase units (the "Units"), each
consisting of one share of Common Stock, par value $.001 per share, of Ripe
Touch Greenhouses, Inc. (the "Company") (the "Common Stock") and one warrant
(the "Warrants") to purchase one share of Common Stock, allotted to us subject
to the terms and conditions of the foregoing Selling Agreement and your telegram
or telex to us referred to therein. We hereby acknowledge receipt of the
definitive Prospectus relating to the Common Stock and Warrants, and we confirm
that in purchasing Common Stock and Warrants we have relied upon no statements
whatsoever, written or oral, other than the statements in the Prospectus. We
represent that we are actually engaged in the investment banking or securities
business and that we are a member in good standing of the NASD which agrees to
comply with all applicable rules of the NASD or, if we are not such a member, we
are a foreign dealer or institution not eligible for membership in the NASD (a)
which agrees to make no offers or sales within the United States, its
territories, or its possessions or to persons who are citizens thereof or
residents therein, and, in making sales, to comply with the NASD's
interpretation with respect to free-Riding and Withholding and Rules 2730, 2740
and 2750 of the NASD Conduct Rules as if we were an NASD member and Rule 2420 as
it applies to a nonmember broker or dealer in a foreign country and (b) which in
connection with offers and sales of Common Stock and Warrants made by us outside
the United States (i) will either furnish to each person to whom any such offer
or sale is made a copy of the then current preliminary prospectus or the
Prospectus (as then amended or supplemented if the Company shall have furnished
amendments or supplements thereto), as the case may be, or inform such person
that such preliminary prospectus or the Prospectus will be available upon
request and (ii) will furnish to each person to whom any such offer or sale is
made such prospectus, advertisement, or other offering document containing
information relating to the Common Stock, the Warrants or the Company as may be
required under the law of the jurisdiction in which such offer or sale is made.
Any prospectus, advertisement, or other offering document furnished by us to any
person in accordance with clause (b)(ii) of the preceding sentence and any such
additional offering material as we may furnish to any person (c) shall comply in
all respects with the laws of the jurisdiction in which it is so furnished, (d)
shall be prepared and so furnished at our sole risk and expense, and (e) shall
not contain information relating to the Common Stock, the Warrants or the
Company which is inconsistent in any respect with the information contained in
the then current preliminary prospectus or in the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), as the case may be. It is understood that no action has been taken to
permit a public offering in any jurisdiction other than the United States where
action would be required for such purpose.
<PAGE>
If for federal income tax purposes the Selected Dealers, among themselves
or with the Representative, should be deemed to constitute a partnership, then
we elect to be excluded from the application of Subchapter K, Chapter 1,
Subtitle A of the Internal Revenue Code of 1986, as amended, and we agree not to
take any position inconsistent with such election. We authorize you, in your
discretion, to execute and file on our behalf such evidence of such election as
may be required by the Internal Revenue Service.
- --------------------- -------------------------------
(Amount of Units) (Name of Selected Dealer)
-------------------------------
(Authorized Signature)
Dated: January ____, 1998
Exhibit 3.1
RESTATED CERTIFICATE OF
INCORPORATION OF
RIPE TOUCH GREENHOUSES, INC.
* * * * * *
Under Sections 242 and 245 of the
General Corporation Law of the State of Delaware
* * * * * *
RIPE TOUCH GREENHOUSES, INC., a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
1. The name of the Corporation is RIPE TOUCH GREENHOUSES, INC. The date of
filing of its original Certificate of Incorporation with the Secretary of State
was October 26, 1995.
2. This Restated Certificate of Incorporation restates and integrates and
further amends the Certificate of Incorporation of this Corporation by amending
previous Article FOURTH to increase the number of shares which the corporation
shall have authority to issue from 5,000 shares of Common Stock of the par value
of $.01 per share to 10,500,000 shares consisting of 10,000,000 shares of Common
Stock of the par value of $.001 per share and 500,000 shares of Preferred Stock
of the par value of $.01 per share. To effect the foregoing, the presently
authorized and issued 5,000 shares of Common Stock, $.01 par value, are hereby
changed into 3,000,000 shares of Common Stock with a par value of $.001 each in
the ratio of 600 shares with a par value of $.001 per share for each share with
a par value of $.01. The Certificate of Incorporation is further amended by
adding Articles ELEVENTH to (a) provide for the removal of directors for cause
and only by the stockholders, and (b) provide for classification of the Board of
Directors; TWELFTH to provide for location of meetings of stockholders;
THIRTEENTH to provide the rights to amend, alter, change or repeal provisions in
<PAGE>
the Certificate of Incorporation; FOURTEENTH to deny the rights of stockholders
to consent in writing in lieu of a meeting; FIFTEENTH to provide for the calling
of special meetings of stockholders; SIXTEENTH to provide for the vote required
for certain mergers or consolidations; and SEVENTEENTH to provide the vote
required for amendments, alterations or repeal of certain provisions in the
Certificate of Incorporation.
3. The amendments and the restatement of the Certificate of Incorporation
set forth herein were duly adopted by vote of the stockholders in accordance
with Sections 242 and 245 of the General Corporation Law of the State of
Delaware.
4. The Certificate of Incorporation of the Corporation is hereby restated
to set forth its entire terms as follows:
FIRST: The name of the Corporation is:
RIPE TOUCH GREENHOUSES, INC.
SECOND: The location of the registered office of the Corporation in the
State of Delaware is at Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle. The name of the registered agent of the
Corporation in the State of Delaware at such address upon whom process against
the Corporation may be served is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a Corporation may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
corporation shall have authority to issue is 10,500,000 shares. Of these (i)
10,000,000 shares shall be shares of Common Stock of the par value of $.001 per
share; and (ii) 500,000 shares shall be shares of Preferred Stock of the par
value of $.01 per share.
Subject to the rights of any holders of Preferred Stock, the Common Stock
shall be entitled to dividends out of funds legally available therefor, when, as
and if declared and paid to the holders of Common Stock, and upon liquidation,
-2-
<PAGE>
dissolution or winding up of the Corporation, to share ratably in the assets of
the Corporation available for distribution to the holders of Common Stock.
Except as otherwise provided herein or by law, the holders of the Common Stock
shall have full voting rights and powers, and each share of Common Stock shall
be entitled to one vote.
The Preferred Stock may be issued from time to time in classes or series
and shall have such voting powers, full or limited, or no voting powers, and
such designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, as
shall be stated and expressed in the resolution or resolutions of the Board of
Directors providing for the issuance of such stock.
FIFTH: The name and mailing address of the incorporator is as follows:
Melinda O'Donnell Blau, Kramer, Wactlar
& Lieberman, P.C.
100 Jericho Quadrangle
Suite 225
Jericho, New York 11753
SIXTH: The Board of Directors of the Corporation shall expressly have the
power and authorization to make, alter and repeal the By-Laws of the
Corporation, subject to the reserved power of the stockholders to make, alter
and repeal any By-Laws adopted by the Board of Directors. Unless and except to
the extent required by the By-Laws of the Corporation, elections of directors
need not be by written ballot.
SEVENTH: Each person who at any time is or shall have been a director or
officer of the Corporation and is threatened to be or is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is, or
he or his testator or intestate was, a director, officer, employee or agent of
the Corporation, or served at the request of the Corporation as a director,
officer, employee, trustee or agent of another corporation, partnership, joint,
venture, trust or other enterprise, shall be indemnified against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with any such threatened,
pending or completed action, suit or proceeding to the full extent authorized
under Section 145 of the General Corporation Law of the State of Delaware. The
foregoing right of indemnification shall in no way be exclusive of any other
rights of indemnification to which such director, officer, employee or agent may
be entitled under any By-Law, agreement, vote of stockholders or disinterested
directors, or otherwise.
EIGHTH: Any and all right, title, interest and claim in or to any
dividends declared by the Corporation, whether in cash, stock, or otherwise,
which are unclaimed by the stockholder entitled thereto for a period of six (6)
years after the close of business on the payment date shall be and be deemed to
-3-
<PAGE>
be extinguished and abandoned; such unclaimed dividends in the possession of the
Corporation, its transfer agents, or other agents or depositaries, shall at such
time become the absolute property of the Corporation, free and clear of any and
all claims for any person whatsoever.
NINTH: Any and all directors of the Corporation shall not be liable to the
Corporation or any stockholder thereof for monetary damages for breach of
fiduciary duty as director except as otherwise required by law. No amendment to
or repeal of this Article NINTH shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any act or omission of such director occurring prior to such
amendment or repeal.
TENTH: From time to time any of the provisions of this Certificate of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the Corporation by the
Certificate of Incorporation are granted subject to the provisions of this
Article TENTH.
ELEVENTH: (a) The number of directors of the corporation shall be
determined in the manner prescribed by the by-laws of this corporation. No
director need be a stockholder of the corporation. Any director may be removed
from office with cause at any time by the affirmative vote of stockholders of
record holding a majority of the outstanding shares of stock of the corporation
entitled to vote, given at a meeting of the stockholders called for that
purpose.
(b) The Board of Directors shall be divided into three (3)
classes as nearly equal in number as possible, and no class shall include less
than one (1) director. The terms of the office of the directors initially
classified shall be as follows: that of Class I shall expire at the next annual
meeting of shareholders to be held in 1996, Class II at the second annual
meeting of shareholders to be held in 1997 and Class III at the third succeeding
annual meeting of shareholders to be held in 1998. The foregoing
notwithstanding, each director shall serve until his successor shall have been
duly elected and qualified, unless he shall resign, become disqualified,
disabled or shall otherwise be removed. Whenever a vacancy occurs on the Board
of Directors, a majority of the remaining directors have the power to fill the
vacancy by electing a successor director to fill that portion of the unexpired
term resulting from the vacancy.
(c) At each annual meeting of shareholders after such initial
classification, directors chosen to succeed those whose terms then expire at
such annual meeting shall be elected for a term of office expiring at the third
succeeding annual meeting of shareholders after their election. When the number
of directors is increased by the Board of Directors and any newly created
directorships are filled by the Board of Directors, there shall be no
classification of the additional directors until the next annual meeting of
shareholders. Directors elected, whether by the Board of Directors or by the
shareholders, to fill a vacancy, subject to the foregoing, shall hold office for
a term expiring at the annual meeting at which the term of the Class to which
they shall have been elected expires. Any newly created directorships or any
decrease in directorships shall be so apportioned among the classes as to make
all classes as nearly equal in number as possible.
-4-
<PAGE>
TWELFTH: Meetings of stockholders may be held within or without the State
of Delaware as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the corporation. Election of directors
need not be by written ballot unless the by-laws of the corporation shall so
provide.
THIRTEENTH: Subject to the provisions contained in Article SEVENTEENTH
hereof, the corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
FOURTEENTH: No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the corporation may be taken
without a meeting, and the power of stockholders to consent in writing to the
taking of any action is specifically denied.
FIFTEENTH: Special meetings of stockholders may be called by the Chairman
of the Board, President or Board of Directors or at the written request of
stockholders owning at least sixty-six and two-thirds percent (66-2/3%)of the
entire voting power of the corporation's capital stock.
SIXTEENTH: In the event that it is proposed that the corporation enter
into a merger or consolidation with any other corporation and such other
corporation or its affiliates singly or in the aggregate own or control directly
or indirectly fifteen (15%) percent or more of the outstanding voting power of
the capital stock of this corporation, or that the corporation sell
substantially all of its assets or business to such other corporation, the
affirmative vote of the holders of not less than sixty-six and two-thirds
(66-2/3%) percent of the total voting power of all outstanding shares of capital
stock of this corporation shall be required for the approval of any such
proposal; provided, however, that the foregoing shall not apply to any such
merger, consolidation or sale of assets or business which was approved by
resolutions of the Board of Directors of this corporation prior to the
acquisition of the ownership or control of fifteen (15%) percent of the
outstanding shares of this corporation by such other corporation or its
affiliates, nor shall it apply to any such merger, consolidation or sale of
assets or business between this corporation and another corporation, fifty (50%)
percent or more of the total voting power of which is owned by this corporation.
For the purposes hereof, an "affiliate" is any person (including a corporation,
partnership, trust, estate or individual) who directly or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the person specified; and "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of management and
policies of a person, whether through the ownership of voting securities, by
contract, or otherwise.
SEVENTEENTH: The provisions set forth in Articles ELEVENTH, FOURTEENTH,
FIFTEENTH and SIXTEENTH above may not be altered, amended or repealed in any
respect unless such alteration, amendment or repeal is approved by the
-5-
<PAGE>
affirmative vote of the holders of not less than sixty-six and two-thirds
percent (66-2/3%) of the total voting power of all outstanding shares of capital
stock of the corporation.
IN WITNESS WHEREOF, said RIPE TOUCH GREENHOUSES, INC. has caused this
Certificate to be signed by Stanley Abrams, its President this 25th day of July,
1996.
RIPE TOUCH GREENHOUSES, INC.
By:/s/Stanley Abrams
--------------------------
Stanley Abrams
President
Exhibit 3.2
RIPE TOUCH GREENHOUSES, INC.
BY-LAWS
* * * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be in the city of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held at such place as may be fixed from time to time by the
board of directors either within or without the State of Delaware as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting. Meetings of stockholders for any other purpose may be held at
such time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
<PAGE>
Section 2. Annual meetings of stockholders shall be held on the
second Thursday of September if not a legal holiday, and if a legal holiday,
then on the next secular day following, at 11:00 a.m., or at such other date and
time as shall be designated from time to time by the board of directors and
stated in the notice of meeting, at which they shall elect by a plurality vote
those directors whose terms have expired pursuant to the provisions of the
Certificate of Incorporation, and transact such other business as may properly
be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than fifty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of meeting,
or, if not specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, may be called only at the written request of the Chairman of the
Board, the President, a majority of the Board of Directors or by stockholders
owning at least sixty-six and two-thirds percent (66-2/3%) of the entire voting
-2-
<PAGE>
power of the corporation's capital stock. Such request shall state the purpose
or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose for which the meeting is called, shall be
given not less than ten nor more than fifty days before the date of the meeting
to each stockholder entitled to vote at such meeting.
Section 7. (A) (1) Nominations of persons for election to the board of
directors of the corporation and the proposal of business to be considered by
the stockholders may be made at an annual meeting of stockholders (a) pursuant
to the Corporation's notice of meeting, (b) by or at the direction of the board
of directors or (c) by any stockholder of the corporation who was a stockholder
of record at the time of giving of notice provided for in this By-law, who is
entitled to vote at the meeting and who complies with the notice procedures set
forth in this By-law.
(2) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of paragraph (A) (1) of
this by-law the stockholder must have given timely notice thereof in writing to
the Secretary of the corporation and such other business must otherwise be a
proper matter for stockholder action. To be timely, a stockholder's notice shall
be delivered to the Secretary at the principal executive offices of the
corporation not later than the close of business on the 60th day nor earlier
than the close of business on the 90th day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is more than 30 days before or more than 60 days
after such anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the close of business on the 90th day prior to such
annual meeting and not later than the close of business on the later of the 60th
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day prior to such annual meeting or the 10th day following the day on which
public announcement of the date of such meeting is first made by the
Corporation. In no event shall the public announcement of an adjournment of an
annual meeting commence a new time period for the giving of a stockholder's
notice as described above. Such stockholder's notice shall set forth (a) as to
each person whom the stockholder proposes to nominate for election or reelection
as a director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule
14a-11 thereunder (including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected); (b) as to
any other business that the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is made
(i) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the class and number
of shares of the corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph (A) (2) of
this by-law to the contrary, in the event that the number of directors to be
elected to the board of directors of the corporation is increased and there is
no public announcement by the corporation naming all of the nominees for
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director or specifying the size of the increased board of directors at least 70
days prior to the first anniversary of the preceding year's annual meeting, a
stockholder's notice required by this by-law shall also be considered timely,
but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal executive
offices of the Corporation not later than the close of business on the 10th day
following the day on which such public announcement is first made by the
Corporation.
(B) Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
board of directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the corporation's notice of meeting (a)
by or at the direction of the board of directors or (b) provided that the board
of directors has determined that directors shall be elected at such meeting, by
any stockholder of the corporation who is a stockholder of record at the time of
giving of notice provided for in this by-law, who shall be entitled to vote at
the meeting and who complies with the notice procedures set forth in this
by-law. In the event the corporation calls a special meeting of stockholders for
the purpose of electing one or more directors to the board of directors, any
such stockholder may nominate a person or persons (as the case may be), for
election to such position(s) as specified in the corporation's notice of
meeting, if the stockholder's notice required by paragraph (A) (2) of this
by-law shall be delivered to the Secretary at the principal executive offices of
the corporation not earlier than the close of business on the 90th day prior to
such special meeting and not later than the close of business on the later of
the 60th day prior to such special meeting or the 10th day following the day on
which public announcement is first made of the date of the special meeting and
of the nominees proposed by the board of directors to be elected at such
meeting. In no event shall the public announcement of an adjournment of a
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special meeting commence a new time period for the giving of a stockholder's
notice as described above.
(C) (1) Only such persons who are nominated in accordance with the
procedures set forth in this by-law shall be eligible to serve as directors and
only such business shall be conducted at a meeting of stockholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this by-law. Except as otherwise provided by law, the certificate of
incorporation or these by-laws, the Chairman of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made or proposed, as the case may be, in
accordance with the procedures set forth in this by-law and, if any proposed
nomination or business is not in compliance with this by-law, to declare that
such defective proposal or nomination shall be disregarded.
(2) For purposes of this by-law, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this by-law, a stockholder
shall also comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the matters set forth in this
by-law. Nothing in this by-law shall be deemed to affect any rights (i) of
stockholders to request inclusion of proposals in the corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders
of any series of Preferred Stock to elect directors under specified
circumstances.
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Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting, at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation or certificates of designations, and preferences, each stockholder
shall at every meeting of the stockholders be entitled to one vote in person or
by proxy for each share of the capital stock having voting power held by such
stockholder, but no proxy shall be voted on after three years from its date,
unless the proxy provides for a longer period.
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ARTICLE III
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DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be not less than three nor more than nine. No director need be a
stockholder of the corporation. Any director may be removed from office at any
time by the affirmative vote of stockholders of record holding a majority of the
outstanding shares of stock of the corporation entitled to vote, given at a
meeting of the stockholders called for that purpose.
Section 2. The board of directors shall be divided into three classes
as nearly equal in number as possible, and no class shall include less than two
directors. The terms of office of the directors initially classified shall be as
follows: that of Class I shall expire at the next annual meeting of stockholders
in 1996, Class II at the second succeeding annual meeting of stockholders in
1997 and Class III at the third succeeding annual meeting of stockholders in
1998. The foregoing notwithstanding, each director shall serve until his
successor shall have been duly elected and qualified, unless he shall resign,
become disqualified, disabled or shall otherwise be removed. Whenever a vacancy
occurs on the board of directors, a majority of the remaining directors have the
power to fill the vacancy by electing a successor director to fill that portion
of the unexpired term resulting from the vacancy.
Section 3. The business of the corporation shall be managed by its
board of directors, which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by these by-laws
directed or required to be exercised or done by the stockholders.
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Section 4. The board of directors shall choose a chairman of the board of
directors who shall preside at all meetings of stockholders and directors.
Section 5. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board may be called by the president or
chairman of the board on three days' prior notice to each director, either
personally or by mail or by telegram; special meetings shall be called by the
president or secretary in like manner and on like notice on the written request
of two directors.
Section 8. At all meetings of the board one-half of the board of directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors, the
directors present thereat may adjourn the meeting form time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.
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COMMITTEES OF DIRECTORS
Section 10. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member of any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders of sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders of a dissolution, or amending the
by-laws of the corporation; and, unless the resolution or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors.
Section 11. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors.
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COMPENSATION OF DIRECTORS
Section 12. Unless otherwise restricted by the certificate of
incorporation, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV
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NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telephone.
Section 2. Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these by-laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
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ARTICLE V
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OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a chairman of the board of directors, a president, one or
more vice-presidents, a secretary and a treasurer. The board of directors may
also choose additional vice-presidents, and one or more assistant secretaries
and assistant treasurers. Any number of offices may be held by the same person,
unless the certificate of incorporation or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a chairman of the board of directors, a
president, one or more vice-presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation shall
be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
CHAIRMAN OF THE BOARD
Section 6. The chairman of the board of directors shall be the chief
executive officer of the corporation. He shall preside at all meetings of
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stockholders and directors. Except where by law the signature of the president
is required, the chairman of the board of directors shall possess the same power
as the president to sign all certificates, contracts, and other instruments of
the corporation which may be authorized by the board of directors. During the
absence or disability of the president, he shall exercise all powers and
discharge all duties of the president.
THE PRESIDENT
Section 7. The president shall be the chief operating officer of the
corporation. In the absence of the chairman of the board of directors, the
president shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
The president shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. In the absence of the chairman of the board of directors or the
president or in the event of his inability or refusal to act, the vice president
(or in the event there be more than one vice president, the vice presidents in
the order designated, or in the absence of any designation, first any vice
presidents in the order of their election and then the remaining vice presidents
in the order of their election) shall perform the duties of the chairman of the
board of directors or the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the chairman
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of the board of directors or the president. The vice presidents shall perform
such other duties and shall have other powers as the board of directors may from
time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all proceedings of the
meetings of the corporation and of the board of directors in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the board of directors, and shall perform
such other duties as may be prescribed by the board of directors, the chairman
of the board of directors or the president, under whose supervision he shall be.
He shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries, in the order determined by the board of directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
TREASURER AND ASSISTANT TREASURER
Section 11. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
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disbursements in books belonging to the corporation and shall deposit all monies
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the chairman of the board of directors and
the president and board of directors, at its regular meetings, or when the board
of directors so requires, an account of all his transactions as treasurer and of
the financial condition of the corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 14. The assistant treasurer, of if there shall be more than one,
the assistant treasurers in the order determined by the board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the treasurer and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
INDEMNIFICATION PROVISION
Section 15. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened pending or
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completed action, suit or proceeding by reason of the fact that he is or was a
director, officer, employee or an agent of the corporation or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against all expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
the defense or settlement of such action, suit or proceeding, to the fullest
extent and in the manner set forth in and permitted by the General Corporation
Law of the State of Delaware, as from time to time in effect, and any other
applicable law, as from time to time in effect. Such right of indemnification
shall not be deemed exclusive of any other rights to which such director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of each such person.
The foregoing provisions of this Article shall be deemed to be a contract
between the corporation and each director, officer, employee or agent who serves
in such capacity at any time while this Article, and the relevant provisions of
the General Corporation Law of the State of Delaware and other applicable law,
if any, are in effect, and any repeal or modification thereof shall not affect
any rights or obligations then existing with respect to any state of facts then
or theretofore existing or any action, suit or proceeding theretofore existing
existing or any action, suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts.
ARTICLE VI
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CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by the
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chairman of the board of directors, the president or a vice president and the
treasurer or an assistant treasurer, or the secretary or an assistant secretary
of the corporation, certifying the number of shares owned by him in the
corporation.
Certificates may be issued for partly paid shares and in such case upon the
face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitation or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock; provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Section 2. Where a certificate is countersigned (1) by a transfer agent
other than the corporation or its employee, or (2) by a registrar other than the
corporation or its employee, any other signature on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate
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is issued, it may be issued by the corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance hereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall required
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
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FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting. REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
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ARTICLE VII
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GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining property of the corporation, or for such other purpose
as the directors shall think conducive to the interest of the corporation, and
the directors may modify or abolish any such reserve in the manner in which it
was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting, and
at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
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FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words, "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
------------
AMENDMENTS
Section 1. These by-laws may be altered, amended, repealed or new by-laws
may be adopted by the stockholders or by the board of directors, when such power
is conferred upon the board of directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors if notice of
such alteration, amendment, repeal or adoption of new by-laws be contained in
the notice of such special meeting.
Exhibit 10.1
RIPE TOUCH GREENHOUSES, INC.
1996 Long-Term Incentive Plan
1. PURPOSE.
-------
The purpose of the 1996 Long-Term Incentive Plan (the "Plan") is to
advance the interests of Ripe Touch Greenhouses, Inc. a Delaware corporation
(the "Company"), and its shareholders by providing incentives to certain key
employees of the Company and its affiliates and to certain other key individuals
who perform services for these entities, including those who contribute
significantly to the strategic and long-term performance objectives and growth
of the Company and its affiliates.
2. ADMINISTRATION.
--------------
(a) The Plan shall be determined solely by the Long-Term Incentive Plan
Administrative Committee (the "Committee") of the Board of Directors (the
"Board") of the Company, as such Committee is from time to time constituted, or
any successor committee the Board may designate to administer the Plan; provided
that if at any time Rule 16b-3 or any successor rule ("Rule 16b-3") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), so permits
without adversely affecting the ability of the Plan to comply with the
conditions for exemption from Section 16 of the Exchange Act (or any successor
provision) provided by Rule 16b-3, the Committee may delegate the administration
of the Plan in whole or in part, on such terms and conditions, and to such
person or persons as it may determine in its discretion, as it relates to
persons not subject to Section 16 of the Exchange Act (or any successor
provision). The membership of the Committee or such successor committee shall be
constituted so as to comply at all times with the applicable requirements of
Rule 16b-3. No member of the Committee shall be eligible or have been eligible
within one year prior to his appointment to receive awards under the Plan
("Awards") or to receive awards under any other plan, program or arrangement of
the Company or any of its affiliates if such eligibility would cause such member
to cease to be a "Non-employee director" under Rule 16b-3; provided that if at
any time Rule 16b-3 so permits without adversely affecting the ability of the
Plan to comply with the conditions for exemption from Section 16 of the Exchange
Act (or any successor provision) provided by Rule 16b-3, one or more members of
the Committee may cease to be "Non-employee directors."
(b) The Committee has all the powers vested in it by the terms of the
Plan set forth herein, such powers to include exclusive authority (except as may
be delegated as permitted herein) to select the key employees and other key
individuals to be granted Awards under the Plan, to determine the type, size and
terms of the Award to be made to each individual selected, to modify the terms
<PAGE>
of any Award that has been granted, to determine the time when awards will be
granted, to establish performance objectives, to make any adjustments necessary
or desirable as a result of the granting of Awards to eligible individuals
located outside the United States and to prescribe the form of the instruments
embodying Awards made under the Plan. The Committee is authorized to interpret
the Plan and the Awards granted under the Plan, to establish, amend and rescind
any rules and regulations relating to the Plan, and to make any other
determination, which it deems necessary or desirable for the administration of
the Plan. The Committee (or its delegate as permitted herein) may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any Award in the manner and to the extent the Committee deems necessary or
desirable to carry it into effect. any decision of the Committee (or its
delegate as permitted herein) in the interpretation and administration of the
Plan, as described herein, shall lie within its sole and absolute discretion and
shall be final, conclusive and binding on all parties concerned. The Committee
may act only by a majority of its members in office, except that the members
thereof may authorize any one or more of their members or any officer of the
Company to execute and deliver documents or to take any other ministerial action
on behalf of the Committee with respect to Awards made or to be made to Plan
participants. No member of the Committee and no officer of the Company shall be
liable for anything done or omitted to be done by him, by any other member of
the Committee or by any officer of the Company in connection with the
performance of duties under the Plan, except for his own willful misconduct or
as expressly provided by statute. Determinations to be made by the Committee
under the Plan may be made by its delegates.
3. PARTICIPATION.
-------------
(a) Affiliates. If an Affiliate (as hereinafter defined) of the
Company wishes to participate in the Plan and its participation shall have been
approved by the Board upon the recommendation of the Committee, the board of
directors or other governing body of the Affiliate shall adopt a resolution in
form and substance satisfactory to the Committee authorizing participation by
the Affiliate in the Plan with respect to its key employees or other key
individuals performing services for it. As used herein, the term "Affiliate"
means any entity in which the Company has a substantial direct or indirect
equity interest or which has a substantial direct or indirect equity interest in
the Company, as determined by the Committee in its discretion.
An Affiliate participating in the Plan may cease to be a
participating company at any time by action of the Board or by action of the
board of directors or other governing body of such Affiliate, which latter
action shall be effective not earlier than the date of delivery to the Secretary
of the Company of a certified copy of a resolution of the Affiliate's board of
directors or other governing body taking such action. If the participation in
the Plan of an Affiliate shall terminate, such termination shall not relieve it
of any obligations theretofore incurred by it, except as may be approved by the
Committee in its discretion.
(b) Participants. Consistent with the purposes of the Plan, the
Committee shall have exclusive power (except as may be delegated as permitted
herein) to select the key employees and other key persons performing services
for the Company, including consultants or independent contractors and others who
<PAGE>
perform services for the Company and its Affiliates who may participate in the
Plan and be granted Awards under the Plan. Eligible persons may be selected
individually or by groups or categories, as determined by the Committee in its
discretion. For the purposes of this Plan, "person" shall include individuals,
corporations, partnerships, trusts, limited liability companies, limited
liability partnerships or other business entities. In no event may a corporation
be eligible to receive an Award of incentive stock options under the Plan.
4. AWARDS UNDER THE PLAN.
---------------------
(a) Types of Awards. Awards under the Plan may include, but need
not be limited to, one or more of the following types, either alone or in any
combination thereof: (i) "Stock Options," (ii) "Stock Appreciation Rights,"
(iii) "Restricted Stock," (iv) "Performance Grants" and (v) any other type of
Award deemed by the Committee in its discretion to be consistent with the
purposes of the Plan (including but not limited to, Awards of or options or
similar rights granted with respect to unbundled stock units or components
thereof, and Awards to be made to participants who are foreign nationals or are
employed or performing services outside the United States). Stock Options, which
include "Non-Qualified Stock Options" and "Incentive Stock Options" or
combinations thereof, are rights to purchase common shares of the Company and
stock of any other class into which such shares may thereafter be changed (the
"Common Shares"). Non-Qualified Stock Options and Incentive Stock Options are
subject to the terms, conditions and restrictions specified in Paragraph 5.
Stock Appreciation Rights are rights to receive (without payment to the Company)
cash, Common Shares, other Company securities (which may include, but need not
be limited to, unbundled stock units or components thereof, debentures,
preferred stock, warrants, securities convertible into Common Shares or other
property, and other types of securities including, but not limited to, those of
the Company or an Affiliate, or any combination thereof ("Other Company
Securities") or property, or other forms of payment, or any combination thereof,
as determined by the Committee, based on the increase in the value of the number
of Common Shares specified in the Stock Appreciation Right. Stock Appreciation
Rights are subject to the terms, conditions and restrictions specified in
Paragraph 6. Shares of Restricted Stock are Common Shares which are issued
subject to certain restrictions pursuant to Paragraph 7. Performance Grants are
contingent awards subject to the terms, conditions and restrictions described in
Paragraph 8, pursuant to which the participant may become entitled to receive
cash, Common Shares, Other Company Securities or property, or other forms of
payment, or any combination thereof, as determined by the Committee.
(b) Maximum Number of Shares that May Be Issued. There may be
issued under the Plan (as Restricted Stock, in payment of Performance Grants,
pursuant to the exercise of Stock Options or Stock Appreciation Rights, or in
payment of or pursuant to the exercise of such other Awards as the Committee, in
its discretion, may determine) an aggregate of not more than 350,000 Common
Shares, subject to adjustment as provided in Paragraph 15. Common Shares issued
pursuant to the Plan may be either authorized but unissued shares, treasury
shares, reacquired shares, or any combination thereof. If any Common Shares
issued as Restricted Stock or otherwise subject to repurchase or forfeiture
rights are reacquired by the Company pursuant to such rights, or if any Award is
<PAGE>
cancelled, terminates or expires unexercised, any Common Shares that would
otherwise have been issuable pursuant thereto will be available for issuance
under new Awards.
(C) Rights with Respect to Common Shares and Other Securities.
(i) Unless otherwise determined by the Committee in its
discretion, a participant to whom an Award of Restricted Stock has been
made (and any person succeeding to such a participant's rights pursuant
to the Plan) shall have, after issuance of a certificate or copy thereof
for the number of Common Shares awarded and prior to the expiration of
the Restricted Period or the earlier repurchase of such Common Shares as
herein provided, ownership of such Common Shares, including the right to
vote the same and to receive dividends or other distributions made or
paid with respect to such Common Shares (provided that such Common
Shares, and any new, additional or different shares, or Other Company
Securities or property, or other forms of consideration which the
participant may be entitled to receive with respect to such Common
Shares as a result of a stock split, stock dividend or any other change
in the corporate or capital structure of the Company, shall be subject
to the restrictions hereinafter described as determined by the Committee
in its discretion), subject, however, to the options, restrictions and
limitations imposed thereon pursuant to the Plan. Notwithstanding the
foregoing, unless otherwise determined by the Committee in its
discretion, a participant with whom an Award agreement is made to issue
Common Shares in the future shall have no rights as a shareholder with
respect to Common Shares related to such agreement until issuance of a
certificate to him.
(ii) Unless otherwise determined by the Committee in its
discretion, a participant to whom a grant of Stock Options, Stock
Appreciation Rights, Performance Grants or any other Award is made (and
any person succeeding to such a participant's rights pursuant to the
Plan) shall have no rights as a stockholder with respect to any Common
Shares or as a holder with respect to other securities, if any, issuable
pursuant to any such Award until the date of the issuance of a stock
certificate to him for such Common Shares or other instrument of
ownership, if any. Except as provided in Paragraph 15, no adjustment
shall be made for dividends, distributions or other rights (whether
ordinary or extraordinary, and whether in cash, securities, other
property or other forms of consideration, or any combination thereof)
for which the record date is prior to the date such stock certificate or
other instrument of ownership, if any, is issued.
5. STOCK OPTIONS.
-------------
The Committee may grant Stock Options either alone, or in
conjunction with Stock Appreciation Rights, Performance Grants or other Awards,
either at the time of grant or by amendment thereafter, provided that an
<PAGE>
Incentive Stock Option may be granted only to an eligible employee of the
Company or its parent or subsidiary corporation. Each Stock Option (referred to
herein as an "Option") granted under the Plan shall be evidenced by an
instrument in such form as the Committee shall prescribe from time to time in
accordance with the Plan and shall comply with the following terms and
conditions, and with such other terms and conditions, including, but not limited
to, restrictions upon the Option or the Common Shares issuable upon exercise
thereof, as the Committee, in its discretion, shall establish:
(a) The option price may be less than, equal to, or greater than,
the fair market value of the Common Shares subject to such Option at the time
the Option is granted, as determined by the Committee, but in no event will such
option price be less than 85% of the fair market value of the underlying Common
Shares at the time the Option is granted; provided, however, that in the case of
an Incentive Stock Option granted to such an employee, the option price shall
not be less than the fair market value of the Common Shares subject to such
Option at the time the Option is granted, or if granted to such an employee who
owns stock representing more than ten percent of the voting power of all classes
of stock of the Company or of its parent or subsidiary (a "Ten Percent
Employee"), such option price shall be not less than 110% of such fair market
value at the time the Option is granted; provided, further that in no event will
such option price be less than the par value of such Common Shares.
(b) The Committee shall determine the number of Common Shares to be
subject to each option. The number of Common Shares subject to an outstanding
Option may be reduced on a share-for-share or other appropriate basis, as
determined by the Committee, to the extent that Common Shares under such Option
are used to calculate the cash, Common Shares, Other Company Securities or
property, or other forms of payment, or any combination thereof, received
pursuant to exercise of a Stock Appreciation Right attached to such Option, or
to the extent that any other Award granted in conjunction with such Option is
paid.
(c) The Option may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, except by will or the laws of descent and
distribution, and shall be exercisable during the grantee's lifetime only by
him. Unless the Committee determines otherwise, the Option shall not be
exercisable for at least six months after the date of grant, unless the grantee
ceases employment or performance of services before the expiration of such
six-month period by reason of his disability as defined in Paragraph 12 or his
death.
(d) The Option shall not be exercisable:
(i) in the case of any Incentive Stock Option granted to a Ten
Percent Employee, after the expiration of five years from the date it is
granted, and, in the case of any other Option, after the expiration of
ten years from the date it is granted. Any Option may be exercised
during such period only at such time or times and in such installments
as the Committee may establish;
<PAGE>
(ii) unless payment in full is made for the shares being
acquired thereunder at the time of exercise, such payment shall be made
in such form (including, but not limited to, cash, Common Shares, or the
surrender of another outstanding Award under the Plan, or any
combination thereof) as the Committee may determine in its discretion;
and
(iii) unless the person exercising the Option has been, at all
times during the period beginning with the date of the grant of the
Option and ending on the date of such exercise, employed by or otherwise
performing services for the Company or an Affiliate, or a corporation,
or a parent or subsidiary of a corporation, substituting or assuming the
Option in a transaction to which Section 424(a) of the Internal Revenue
Code of 1986, as amended, or any successor statutory provisions thereto
(the "Code"), is applicable, except that:
(A) in the case of any Non-Qualified Stock Option, if such
person shall cease to be employed by or otherwise performing
services for the Company or an Affiliate solely by reason of a
period of related Employment as defined in Paragraph 14, he may,
during such period of Related Employment, exercise the
Non-Qualified Stock Option as if he continued such employment or
performance of service; or
(B) if such person shall cease such employment or
performance of services by reason of his disability as defined in
Paragraph 12 or early, normal or deferred retirement under an
approved retirement program of the Company or an Affiliate (or
such other plan or arrangement as may be approved by the
Committee, in its discretion, for this purpose) while holding an
option which has not expired and has not been fully exercised,
such person, at any time within three months (or such other
period determined by the Committee) after the date he ceased such
employment or performance of services (but in no event after the
Option has expired), may exercise the Option with respect to any
shares as to which he could have exercised the Option on the date
he ceased such employment or performance of services, or with
respect to such greater number of shares as determined by the
Committee; or
(C) if such person shall cease such employment or
performance of services for reasons other than Related
Employment, disability, early, normal or deferred retirement or
death (as provided elsewhere) while holding an Option which has
not expired and has not been fully exercised, such person may
exercise the Option at any time within three months (or such
other period determined by the Committee) after the date he
ceased such employment or performance of services (but in no
event after the Option has expired), but only to the extent such
Option is exercisable on the date of such termination, or with
respect to such greater number of shares as determined by the
Committee; or
<PAGE>
(D) if any person to whom an Option has been granted shall
die holding an Option which has not expired and has not been
fully exercised, his executors, administrators, heirs or
distributees, as the case may be, may, at any time within one
year (or such other period determined by the Committee) after the
date of death (but in no event after the Option has expired),
exercise the Option with respect to any shares as to which the
decedent could have exercised the Option at the time of his
death, or with respect to such greater number of shares as
determined by the Committee.
(E) In the case of an Incentive Stock Option, the amount of
aggregate fair market value of Common Shares (determined at the
time of grant of the Option pursuant to subparagraph 5(a) of the
Plan) with respect to which incentive stock options are
exercisable for the first time by an employee during any calendar
year (under all such plans of his employer corporation any
calendar year (under all such plans of his employer corporation
and its parent and its parent and subsidiary corporations) shall
not exceed $100,000.
(F) It is the intent of the Company that Non-Qualified Stock
Options granted under the Plan not be classified as Incentive
Stock Options, that the Incentive Stock Options granted under the
Plan be consistent with and contain or be deemed to contain all
provisions required under Section 422(b) and other appropriate
provisions of the Code and any implementing regulations (and any
successor provisions thereof), and that any ambiguities in
construction shall be interpreted in order to effectuate such
intent. The Agreements providing Non-Qualified Stock Options
shall provide that such Options are not "incentive stock options"
for the purposes of Section 422(b) of the Code.
6. STOCK APPRECIATION RIGHTS.
-------------------------
The Committee may grant Stock Appreciation Rights either alone, or in
conjunction with Stock Options, Performance Grants or other Awards, either at
the time of grant or by amendment thereafter. Each Award of Stock Appreciation
Rights granted under the Plan shall be evidenced by an instrument in such form
as the Committee shall prescribe from time to time in accordance with the Plan
and shall comply with the following terms and conditions, and with such other
terms and conditions, including, but not limited to, restrictions upon the Award
of Stock Appreciation Rights or the Common Shares issuable upon exercise
thereof, as the Committee in its discretion shall establish:
(a) The Committee shall determine the number of Common Shares to be subject
to each Award of Stock Appreciation Rights. The number of Common Shares subject
to an outstanding Award of Stock Appreciation Rights may be reduced on a
share-for-share or other appropriate basis, as determined by the Committee, to
the extent that Common Shares under such Award of Stock Appreciation Rights are
used to calculate the cash, Common Shares, Other Company Securities or property,
or other forms of payment, or any combination thereof, received pursuant to
<PAGE>
exercise of an Option attached to such Award of Stock Appreciation Rights, or to
the extent that any other Award granted in conjunction with such Award of Stock
Appreciation Rights is paid.
(b) The Award of Stock Appreciation Rights may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, except by will or
the laws of the descent and distribution, and shall be exercisable during the
grantee's lifetime only by him. Unless the Committee determines otherwise, the
Award of Stock Appreciation Rights shall not be exercisable for at least six
months after the date of grant, unless the grantee ceases employment or
performance of services before the expiration of such six-month period by reason
of his disability as defined in Paragraph 12 or his death.
(c) The Award of Stock Appreciation Rights shall not be exercisable:
(i) in the case of any Award of Stock Appreciation Rights that are attached
to an Incentive Stock Option granted to a Ten Percent Employee, after the
expiration of five years from the date it is granted, and, in the case of any
other award of Stock Appreciation Rights, after the expiration of ten years from
the date it is granted. Any Award of Stock Appreciation Rights may be exercised
during such period only at such time or times and in such installments as the
Committee may establish;
(ii) unless the Option or other Award to which the Award of Stock
Appreciation Rights is attached is at the time exercisable; and
(iii) unless the person exercising the Award of Stock Appreciation Rights
has been, at all times during the period beginning with the date of the grant
thereof and ending on the date of such exercise, employed by or otherwise
performing services for the Company or an Affiliate, except that
(A) in the case of any Award of Stock Appreciation Rights
(other than those attached to an Incentive Stock Option), if such
person shall cease to be employed by or otherwise performing
services for the Company or an Affiliate solely by reason of a
period of Related Employment as defined in Paragraph 14, he may,
during such period of Related Employment, exercise the Award of
Stock Appreciation Rights as if he continued such employment or
performance of services; or
(B) if such person shall cease such employment or
performance of services by reason of his disability as defined in
Paragraph 12 or early, normal or deferred retirement under an
approved retirement program of the Company or an Affiliate (or such
other plan or arrangement as may be approved by the Committee, in
its discretion, for this purpose) while holding an Award of Stock
<PAGE>
Appreciation Rights which has not expired and has not been fully
exercised, such person may, at any time within three years (or such
other period determined by the Committee) after the date he ceased
such employment or performance of services (but in no event after
the Award of Stock Appreciation Rights has expired), exercise the
Award of Stock Appreciation Rights with respect to any shares as to
which he could have exercised the Award of Stock Appreciation
Rights on the date he ceased such employment or performance of
services, or with respect to such greater number of shares as
determined by the Committee; or
(C) if such person shall cease such employment or
performance of services for reasons other than Related Employment,
disability, early, normal or deferred retirement or death (as
provided elsewhere) while holding an Award of Stock Appreciation
Rights which has not expired and has not been fully exercised, such
person may exercise the Award of Stock Appreciation Rights at any
time during the period, if any, which the Committee approves (but
in no event after the Award of Stock Appreciation Rights expires)
following the date he ceased such employment or performance of
services with respect to any shares as to which he could have
exercised the Award of Stock Appreciation Rights on the date he
ceased such employment or performance of services or as otherwise
permitted in the Committee's discretion; or
(D) if any person to whom an Award of Stock Appreciation
Rights has been granted shall die holding an Award of Stock
Appreciation Rights which has not expired and has not been fully
exercised, his executors, administrators, heirs or distributees, as
the case may be, may, at any time within one year (or such other
period determined by the Committee) after the date of death (but in
no event after the Award of Stock Appreciation Rights has expired),
exercise the Award of Stock Appreciation Rights with respect to any
shares as to which the decedent could have exercised the Award of
Stock Appreciation Rights at the time of his death, or with respect
to such greater number of shares as determined by the Committee.
(d) An Award of Stock Appreciation Rights shall entitle the holder (or
any person entitled to act under the provisions of subparagraph 6(c)(iii)(D)
hereof) to exercise such Award or to surrender unexercised the option (or other
Award) to which the Stock Appreciation Rights is attached (or any portion of
such Option or other Award) to the Company and to receive from the Company in
exchange therefor, without payment to the Company, that number of Common Shares
having an aggregate value equal to the excess of the fair market value of one
share, at the time of such exercise, over the exercise price (or Option Price,
as the case may be) per share, times the number of shares subject to the Award
or the Option (or other Award), or portion thereof, which is so exercised or
surrendered, as the case may be. The Committee shall be entitled in its
discretion to elect to settle the obligation arising out of the exercise of a
Stock Appreciation Right by the payment of cash or Other Company Securities or
property, or other forms of payment, or any combination thereof, as determined
by the Committee, equal to the aggregate value of the Common Shares it would
otherwise be obligated to deliver. Any such election by the Committee shall be
made as soon as practicable after the receipt by the Committee of written notice
<PAGE>
of the exercise of the Stock Appreciation Right. The value of a Common Share,
Other Company Securities or property, or other forms of payment determined by
the Committee for this purpose shall be the fair market value thereof on the
last business day next preceding the date of the election to exercise the Stock
Appreciation Right, unless the Committee, in its discretion, determines
otherwise.
(e) A Stock Appreciation Right may provide that it shall be deemed to
have been exercised at the close of business on the business day preceding the
expiration date of the Stock Appreciation Right or of the related Option (or
other Award), or such other date as specified by the Committee, if at such time
such Stock Appreciation Right has a positive value. Such deemed exercise shall
be settled or paid in the same manner as a regular exercise thereof as provided
in subparagraph 6(d) hereof.
(f) No fractional shares may be delivered under this Paragraph 6, but in
lieu thereof a cash or other adjustment shall be made as determined by the
Committee in its discretion.
7. RESTRICTED STOCK.
----------------
Each Award of Restricted Stock under the Plan shall be evidenced by an
instrument in such form as the Committee shall prescribe from time to time in
accordance with the Plan and shall comply with the following terms and
conditions, and with such other terms and conditions as the Committee, in its
discretion, shall establish:
(a) The Committee shall determine the number of Common Shares to be
issued to a participant pursuant to the Award, and the extent, if any, to which
they shall be issued in exchange for cash, other consideration, or both.
(b) Common Shares issued to a participant in accordance with the
Award may not be sold, assigned, transferred, pledged, hypothecated or otherwise
disposed of, except by will or the laws of descent and distribution, or as
otherwise determined by the Committee, for such period as the Committee shall
determine, from the date on which the Award is granted (the "Restricted
Period"). The Company will have the option, at the Committee's discretion, to
repurchase the shares subject to the Award at such price as the Committee shall
have fixed or to provide for forfeiture to the Company of the shares subject to
the Award, which option or forfeiture may be exercisable (i) if the
participant's continuous employment or performance of services for the Company
and its Affiliates shall terminate for any reason, except solely by reason of a
period of Related Employment as defined in Paragraph 14, or except as otherwise
provided in subparagraph 7(c), prior to the expiration of the Restricted Period,
(ii) if, on or prior to the expiration of the Restricted Period or the earlier
<PAGE>
lapse of such forfeiture option, the participant has not paid to the Company an
amount equal to any federal, state, local or foreign income or other taxes which
the Company determines is required to be withheld in respect of such shares, or
(iii) under such other circumstances as determined by the Committee in its
discretion. Such repurchase option or forfeiture shall be exercisable on such
terms, in such manner and during such period as shall be determined by the
Committee when the Award is made or as amended thereafter, except as otherwise
determined in the Committee's discretion. Each certificate for Common Shares
issued pursuant to a Restricted Stock Award shall bear an appropriate legend
referring to the foregoing repurchase option or forfeiture and other
restrictions and to the fact that the shares are partly paid, shall be deposited
by the award holder with the Company, together with a stock power endorsed in
blank, or shall be evidenced in such other manner permitted by applicable law as
determined by the Committee in its discretion. Any attempt to dispose of any
such Common Shares in contravention of the foregoing repurchase and forfeiture
options and other restrictions shall be null and void and without effect. If
Common Shares issued pursuant to a Restricted Stock Award shall be repurchased
or forfeited pursuant to the repurchase option described above, the participant,
or in the event of his death, his personal representative, shall forthwith
deliver to the Secretary of the Company the certificates for the Common Shares
awarded to the participant, accompanied by such instrument of transfer, if any,
as may reasonably be required by the Secretary of the Company.
(c) If a participant who has been in continuous employment or
performance of services for the Company or an Affiliate since the date on which
a Restricted Stock Award was granted to him shall, while in such employment or
performance of services, die, or terminate such employment or performance of
services by reason of disability as defined in Paragraph 12 or by reason of
early normal or deferred retirement under an approved retirement program of the
Company or an Affiliate (or such other plan or arrangement as may be approved by
the Committee in its discretion, for this purpose) and any of such events shall
occur after the date on which the Award was granted to him and prior to the end
of the Restricted Period of such Award, the Committee may determine to cancel
the repurchase option or forfeiture (and any and all other restrictions) on any
or all of the Common Shares subject to such Award; and the repurchase option or
forfeiture shall become exercisable at such time as to the remaining shares, if
any.
8. PERFORMANCE GRANTS.
------------------
The Award of a Performance Grant ("Performance Grant") to a
participant will entitle him to receive a specified amount determined by the
Committee (the "Actual Value"), if the terms and conditions specified herein and
in the Award are satisfied. Each Award of a Performance Grant shall be subject
to the following terms and conditions, and to such other terms and conditions,
including but not limited to, restrictions upon any cash, Common Shares, Other
Company Securities or property, or other forms of payment, or any combination
thereof, issued in respect of the Performance Grant, as the Committee, in its
discretion, shall establish, and shall be embodied in an instrument in such form
and substance as is determined by the Committee.
(a) The Committee shall determine the value or range of values of a
Performance Grant to be awarded to each participant selected for an award and
whether or not such a Performance Grant is granted in conjunction with an Award
<PAGE>
of Options, Stock Appreciation Rights, Restricted Stock or other Award, or any
combination thereof, under the Plan (which may include, but need not be limited
to, deferred Awards) concurrently or subsequently granted to the participant
(the "Associated Award"). As determined by the Committee, the maximum value of
each Performance Grant (the "Maximum Value") shall be: (i) an amount fixed by
the Committee at the time the award is made or amended thereafter, (ii) an
amount which varies from time to time based in whole or in part on the then
current value of a Common Share, Other Company Securities or property, or other
securities or property, or any combination thereof, or (iii) an amount that is
determinable from criteria specified by the Committee. Performance Grants may be
issued in different classes or series having different names, terms and
conditions. In the case of a Performance Grant awarded in conjunction with an
Associated Award, the Performance Grant may be reduced on an appropriate basis
to the extent that the Associated Award has been exercised, paid to or otherwise
received by the participant, as determined by the Committee.
(b) The award period ("Award Period") in respect of any Performance
Grant shall be a period determined by the Committee. At the time each Award is
made, the Committee shall establish performance objectives to be attained within
the Award Period as the means of determining the Actual Value of such a
Performance Grant. The performance objectives shall be based on such measure or
measures of performance, which may include, but need not be limited to, the
performance of the participant, the Company, one or more of its subsidiaries or
one or more of their divisions or units, or any combination of the foregoing, as
the Committee shall determine, and may be applied on an absolute basis or be
relative to industry or other indices, or any combination thereof. The Actual
Value of a Performance Grant shall be equal to its Maximum Value only if the
performance objectives are attained in full, but the Committee shall specify the
manner in which the Actual Value of Performance Grants shall be determined if
the performance objectives are met in part. Such performance measures, the
Actual Value or the Maximum Value, or any combination thereof, may be adjusted
in any manner by the Committee in its discretion at any time and from time to
time during or as soon as practicable after the Award Period, if it determines
that such performance measures, the Actual Value or the Maximum Value, or any
combination thereof, are not appropriate under the circumstances.
(c) The rights of a participant in Performance Grants awarded to
him shall be provisional and may be cancelled or paid in whole or in part, all
as determined by the Committee, if the participant's continuous employment or
performance of services for the Company and its Affiliates shall terminate for
any reason prior to the end of the Award Period, except solely by reason of a
period of Related Employment as defined in Paragraph 14.
(d) The Committee shall determine whether the conditions of
subparagraph 8(b) or 8(c) hereof have been met and, if so, shall ascertain the
Actual Value of the Performance Grants. If the Performance Grants have no Actual
Value, the Award and such Performance Grants shall be deemed to have been
cancelled and the Associated Award, if any, may be cancelled or permitted to
continue in effect in accordance with its terms. If the Performance Grants have
any Actual Value and:
<PAGE>
(i) were not awarded in conjunction with an Associated Award, the
Committee shall cause an amount equal to the actual Value of the Performance
Grants earned by the participant to be paid to him or his beneficiary as
provided below; or
(ii) were awarded in conjunction with an Associated Award, the Committee
shall determine, in accordance with criteria specified by the Committee (A) to
cancel the Performance Grants, in which event no amount in respect thereof shall
be paid to the participant or his beneficiary, and the Associated Award may be
permitted to continue in effect in accordance with its terms, (B) to pay the
Actual Value of the Performance Grants to the participant or his beneficiary as
provided below, in which event the Associated Award may be cancelled or (C) to
pay to the participant or his beneficiary as provided below, the Actual Value of
only a portion of the Performance Grants, in which a complimentary portion of
the Associated Award may be permitted to continue in effect in accordance with
its terms or be cancelled, as determined by the Committee.
Such determination by the Committee shall be made as promptly as
practicable following the end of the Award Period or upon the earlier
termination of employment or performance of services, or at such other time or
times as the Committee shall determine, and shall be made pursuant to criteria
specified by the Committee.
Payment of any amount in respect of the Performance Grants which the
Committee determines to pay as provided above shall be made by the Company as
promptly as practicable after the end of the Award Period or at such other time
or times as the Committee shall determine, and may be made in cash, Common
Shares, Other Company Securities or property, or other forms of payment, or any
combination thereof or in such other manner, as determined by the Committee in
its discretion. Notwithstanding anything in this Paragraph 8 to the contrary,
the Committee may, in its discretion, determine and pay out the Actual Value of
the Performance Grants at any time during the Award Period.
9. DEFERRAL OF COMPENSATION.
------------------------
The Committee shall determine whether or not an Award shall be
made in conjunction with deferral of the participant's salary, bonus or other
compensation, or any combination thereof, and whether or not such deferred
amounts may be
(i) forfeited to the Company or to other participants, or any
combination thereof, under certain circumstances (which may include, but
need not be limited to, certain types of termination of employment or
performance of services for the Company and its Affiliates),
(ii) subject to increase or decrease in value based upon the
attainment of or failure to attain, respectively, certain performance
measures and/or
<PAGE>
(iii) credited with income equivalents (which may include, but need
not be limited to, interest, dividends or other rates of return) until
the date or dates of payment of the Award, if any.
10. DEFERRED PAYMENT OF AWARDS.
--------------------------
The Committee may specify that the payment of all or any portion
of cash, Common Shares, Other Company Securities or property, or any other form
of payment, or any combination thereof, under an Award shall be deferred until a
later date. Deferrals shall be for such periods or until the occurrence of such
events, and upon such terms, as the Committee shall determine in its discretion.
Deferred payments of Awards may be made by undertaking to make payment in the
future based upon the performance of certain investment equivalents (which may
include, but need not be limited to, government securities, Common Shares, other
securities, property or consideration, or any combination thereof), together
with such additional amounts of income equivalents (which may be compounded and
may include, but need not be limited to, interest, dividends or other rates of
return, or any combination thereof) as may accrue thereon until the date or
dates of payment, such investment equivalents and such additional amounts of
income equivalents to be determined by the Committee in its discretion.
11. AMENDMENT OR SUBSTITUTION OF AWARDS UNDER THE PLAN.
--------------------------------------------------
The terms of any outstanding Award under the Plan may be amended
from time to time by the Committee in its discretion in any manner that it deems
appropriate (including, but not limited to, acceleration of the date of exercise
of any Award and/or payments thereunder, or reduction of the Option Price of an
Option or exercise price of an Award of Stock Appreciation Rights); provided,
that no such amendment shall adversely affect in a material manner any right of
a participant under the Award without his written consent, unless the Committee
determines in its discretion that there have occurred or are about to occur
significant changes in the participant's position, duties or responsibilities,
or significant changes in economic, legislative, regulatory, tax, accounting or
cost/benefit conditions which are determined by the Committee in its discretion
to have or to be expected to have a substantial effect on the performance of the
Company, or any subsidiary, affiliate, division or department thereof, on the
Plan or an any Award under the Plan. The Committee may, in its discretion,
permit holders of Awards to surrender outstanding Awards as a condition
precedent to the grant of new Awards under the Plan.
12. DISABILITY.
----------
For the purposes of this Plan, a participant shall be deemed to
have terminated his employment or performance of services for the Company and
its Affiliates by reason of disability if the Committee shall determine that the
<PAGE>
physical or mental condition of the participant by reason of which such
employment or performance of services terminated was such at that time as would
entitle him to payment of monthly disability benefits under any disability plan
of the Company or an Affiliate in which he is a participant. If the participant
is not eligible for benefits under any disability plan of the Company or an
Affiliate, he shall be deemed to have terminated such employment or performance
of services by reason of disability if the Committee shall determine that he is
permanently and totally disabled within the meaning of Section 22(e)(3) of the
Code.
13. TERMINATION OF A PARTICIPANT.
----------------------------
For all purposes under the Plan, the Committee shall determine
whether a participant has terminated employment by or the performance of
services for the Company or an Affiliate, provided that transfers between the
Company and an Affiliate or between Affiliates, and approved leaves of absence
shall not be deemed such a termination.
14. RELATED EMPLOYMENT.
------------------
For the purposes of this Plan, Related Employment shall mean the
employment or performance of services by an individual for an employer that is
neither the Company nor an Affiliate, provided that (i) such employment or
performance of services is undertaken by the individual at the request of the
Company or an Affiliate, (ii) immediately prior to undertaking such employment
or performance of services, the individual was employed by or performing
services for the Company or an Affiliate or was engaged in Related Employment as
herein defined, and (iii) such employment or performance of services is in the
best interests of the Company and is recognized by the Committee, in its
discretion, as Related Employment for purposes of this Paragraph 14. The death
or disability of an individual during a period of Related Employment as herein
defined shall be treated, for purposes of this Plan, as if the death or onset of
disability had occurred while the individual was employed by or performing
services for the Company or an Affiliate.
15. DILUTION AND OTHER ADJUSTMENTS.
------------------------------
In the event of any change in the outstanding Common Shares of the
Company by reason of any stock split, stock dividend, split-up, split-off,
spin-off, recapitalization, merger, consolidation, rights offering, share
offering, reorganization, combination or exchange of shares, a sale by the
Company of all or part of its assets, any distribution to shareholders other
than a normal cash dividend, or other extraordinary or unusual event, if the
Committee shall determine, in its discretion, that such change equitably
requires an adjustment in the terms of any Award or the number of Common Shares
available for Awards, such adjustment may be made by the Committee and shall be
final, conclusive and binding for all purposes of the Plan.
<PAGE>
16. DESIGNATION OF BENEFICIARY BY PARTICIPANT.
-----------------------------------------
A participant may name a beneficiary to receive any payment to
which he may be entitled in respect of any Award under the Plan in the event of
his death, on a written form to be provided by and filed with the Committee, and
in a manner determined by the Committee in its discretion. The Committee
reserves the right to review and approve beneficiary designations. A participant
may change his beneficiary from time to time in the same manner, unless such
participant has made an irrevocable designation. Any designation of beneficiary
under the Plan (to the extent it is valid and enforceable under applicable law)
shall be controlling over any other disposition, testamentary or otherwise, as
determined by the Committee in its discretion. If no designated beneficiary
survives the participant and is living on the date on which any amount becomes
payable to such participant's beneficiary, such payment will be made to the
legal representatives of the participant's estate, and the term "beneficiary" as
used in the Plan shall be deemed to include such person or persons. If there is
any question as to the legal right of any beneficiary to receive a distribution
under the Plan, the Committee in its discretion may determine that the amount in
question be paid to the legal representatives of the estate of the participant,
in which event the Company, the Board and the Committee and the members thereof
will have no further liability to anyone with respect to such amount.
17. CHANGE IN CONTROL.
-----------------
(a) Upon any Change in Control:
(i) each Stock Option and Stock Appreciation Right that is
outstanding on the date of such Change in Control shall be exercisable
in full immediately;
(ii) all restrictions with respect to Restricted Stock shall
lapse immediately, and the Company's right to repurchase or forfeit any
Restricted Stock outstanding on the date of such Change in Control shall
thereupon terminate and the certificates representing such Restricted
Stock and the related stock powers shall be promptly delivered to the
participants entitled thereto; and
(iii) All Award Periods for the purposes of determining the
amounts of Awards of Performance Grants shall end as of the end of the
calendar quarter immediately preceding the date of such Change in
Control, and the amount of the Award payable shall be the portion of the
maximum possible Award allocable to the portion of the Award Period that
had elapsed and the results achieved during such portion of the Award
Period.
(b) For this purpose, a Change in Control shall be deemed to
occur when and only when any of the following events first occurs:
<PAGE>
(i) any person who is not currently such becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's
then outstanding voting securities; or
(ii) three or more directors, whose election or nomination
for election is not approved by a majority of the Incumbent Board (as
hereinafter defined), are elected within any single 24-month period to
serve on the Board of Directors; or
(iii) members of the Incumbent Board cease to constitute a
majority of the Board of Directors without the approval of the remaining
members of the Incumbent Board; or
(iv) any merger (other than a merger where the Company is the
survivor and there is no accompanying Change in Control under
subparagraphs (i), (ii) or (iii) of this paragraph (b)), consolidation,
liquidation or dissolution of the Company, or the sale of all or
substantially all of the assets of the Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur pursuant to subparagraph (i) of this paragraph (b) solely because 25%
or more of the combined voting power of the Company's outstanding securities is
acquired by one or more employee benefit plans maintained by the Company or by
any other employer, the majority interest in which is held, directly or
indirectly, by the Company. For purposes of this Section 17, the terms "person"
and "beneficial owner" shall have the meaning set forth in Sections 3(a) and
13(d) of the Exchange Act, and in the regulations promulgated thereunder, as in
effect on June 1, 1996; and the term "Incumbent Board" shall mean (A) the
members of the Board of Directors of the Company on June 1, 1996, to the extent
that they continue to serve as members of the Board of Directors, and (B) any
individual who becomes a member of the Board of Directors after June 1, 1996, if
his election or nomination for election as a director was approved by a vote of
at least three-quarters of the then Incumbent Board.
18. MISCELLANEOUS PROVISIONS.
------------------------
(a) No employee or other person shall have any claim or right to be
granted an Award under the Plan. Determinations made by the Committee under the
Plan need not be uniform and may be made selectively among eligible individuals
under the Plan, whether or not such eligible individuals are similarly situated.
Neither the Plan nor any action taken hereunder shall be construed as giving any
employee or other person any right to continue to be employed by or perform
services for the Company or any Affiliate, and the right to terminate the
employment of or performance of services by any participant at any time and for
any reason is specifically reserved.
(b) No participant or other person shall have any right with
respect to the Plan, the Common Shares reserved for issuance under the Plan or
in any Award, contingent or otherwise, until written evidence of the Award shall
<PAGE>
have been delivered to the recipient and all the terms, conditions and
provisions of the Plan and the Award applicable to such recipient (and each
person claiming under or through him) have been met.
(c) Except as may be approved by the Committee where such approval
shall not adversely affect compliance of the Plan with Rule 16b-3 under the
Exchange Act, a participant's rights and interest under the Plan may not be
assigned or transferred, hypothecated or encumbered in whole or in part either
directly or by operation of law or otherwise (except in the event of a
participant's death) including, but not by way of limitation, execution, levy,
garnishment, attachment, pledge, bankruptcy or in any other manner; provided,
however, that any Option or similar right (including, but not limited to, a
Stock Appreciation Right) offered pursuant to the Plan shall not be transferable
other than by will or the laws of descent and distribution and shall be
exercisable during the participant's lifetime only by him.
(d) No Common Shares, Other Company Securities or property, other
securities or property, or other forms of payment shall be issued hereunder with
respect to any Award unless counsel for the Company shall be satisfied that such
issuance will be in compliance with applicable federal, state, local and foreign
legal, securities exchange and other applicable requirements.
(e) It is the intent of the Company that the Plan comply in all
respects with Rule 16b-3 under the Exchange Act, that any ambiguities or
inconsistencies in construction of the Plan be interpreted to give effect to
such intention and that if any provision of the Plan is found not to be in
compliance with Rule 16b-3, such provision shall be deemed null and void to the
extent required to permit the Plan to comply with Rule 16b-3.
(f) The Company and its Affiliates shall have the right to deduct
from any payment made under the Plan, any federal, state, local or foreign
income or other taxes required by law to be withheld with respect to such
payment. It shall be a condition to the obligation of the Company to issue
Common Shares, Other Company Securities or property, other securities or
property, or other forms of payment, or any combination thereof, upon exercise,
settlement or payment of any Award under the Plan, that the participant (or any
beneficiary or person entitled to act) pay to the Company, upon its demand, such
amount as may be requested by the Company for the purpose of satisfying any
liability to withhold federal, state, local or foreign income or other taxes. If
the amount requested is not paid, the Company may refuse to issue Common Shares,
Other Company Securities or property, other securities or property, or other
forms of payment, or any combination thereof. Notwithstanding anything in the
Plan to the contrary, the Committee may, in its discretion, permit an eligible
participant (or any beneficiary or person entitled to act) to elect to pay a
portion or all of the amount requested by the Company for such taxes with
respect to such Award, at such time and in such manner as the Committee shall
deem to be appropriate including, but not limited to, by authorizing the Company
to withhold, or agreeing to surrender to the Company on or about the date such
tax liability is determinable, Common Shares, Other Company Securities or
property, other securities or property, or other forms of payment, or any
combination thereof, owned by such person or a portion of such forms of payment
that would otherwise be distributed, or have been distributed, as the case may
<PAGE>
be, pursuant to such Award to such person, having a fair market value equal to
the amount of such taxes.
(g) The expenses of the Plan shall be borne by the Company.
However, if an Award is made to an individual employed by or performing services
for an Affiliate:
(i) if such Award results in payment of cash to the
participant, such Affiliate shall pay to the Company an amount equal to
such cash payment unless the Committee shall otherwise determine in its
discretion;
(ii) if the Award results in the issuance by the Company to
the participant of Common Shares, Other Company Securities or property,
other securities or property, or other forms of payment, or any
combination thereof, such Affiliate shall, unless the Committee shall
otherwise determine in its discretion, pay to the Company an amount
equal to the fair market value thereof, as determined by the Committee,
on the date such Common Shares, other Company Securities or property,
other securities or property, or other forms of payment, or any
combination thereof, are issued (or in the case of the issuance of
Restricted Stock or of Common Shares, Other Company Securities or
property, or other securities or property, or other forms of payment
subject to transfer and forfeiture conditions, equal to the fair market
value thereof on the date on which they are no longer subject to
applicable restrictions), minus the amount, if any, received by the
Company in respect of the purchase of such Common Shares, Other Company
Securities or property, other securities or property or other forms of
payment, or any combination thereof, all as the Committee shall
determine in its discretion; and
(iii) the foregoing obligations of any such Affiliate entity
shall survive and remain in effect and binding on such entity even if
its status as an Affiliate of the Company should subsequently cease,
except as otherwise agreed by the Company and the entity.
(h) The Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Award under the Plan, and rights to the
payment of Awards shall be no greater than the rights of the Company's general
creditors.
(i) By accepting any Award or other benefit under the Plan, each
participant and each person claiming under or through him shall be conclusively
deemed to have indicated his acceptance and ratification of, and consent to, any
action taken by the Company, the Board or the Committee or its delegates.
(j) Fair market value in relation to Common Shares, Other Company
Securities or property, other securities or property or other forms of payment
of Awards under the Plan or any combination thereof, as of any specific time
<PAGE>
shall mean such value as determined by the Committee in accordance with
applicable law.
(k) The masculine pronoun includes the feminine and the singular
includes the plural wherever appropriate.
(l) The appropriate officers of the Company shall cause to be filed
any reports, returns or other information regarding Awards hereunder or any
Common Shares issued pursuant hereto as may be required by Section 13 or 15(d)
of the Exchange Act (or any successor provision) or any other applicable
statute, rule or regulation.
(m) The validity, construction, interpretation, administration and
effect of the Plan, and of its rules and regulations, and rights relating to the
Plan and to Awards granted under the Plan, shall be governed by the substantive
laws, but not the choice of law rules, of the State of Delaware.
19. PLAN AMENDMENT OR SUSPENSION.
----------------------------
The Plan may be amended or suspended in whole or in part at any
time and from time to time by the Board, but no amendment shall be effective
unless and until the same is approved by shareholders of the Company where the
failure to obtain such approval would adversely affect the compliance of the
Plan with Rule 16b-3 under the Exchange Act and with other applicable law. No
amendment of the Plan shall adversely affect in a material manner any right of
any participant with respect to any Award theretofore granted without such
participant's written consent, except as permitted under Paragraph 11.
20. PLAN TERMINATION.
----------------
This Plan shall terminate upon the earlier of the following dates
or events to occur:
(a) upon the adoption of a resolution of the Board terminating the Plan; or
(b) ten years from the date the Plan is initially approved and adopted by
the shareholders of the Company in accordance with Paragraph 21 hereof;
provided, however, that the Board may, prior to the expiration of such ten-year
period, extend the term of the Plan for an additional period of up to five years
for the grant of Awards other than Incentive Stock Options. No termination of
the Plan shall materially alter or impair any of the rights or obligations of
any person, without his consent, under any Award theretofore granted under the
Plan except that subsequent to termination of the Plan, the Committee may make
amendments permitted under Paragraph 11.
Exhibit 10.4
CONSULTING AGREEMENT
--------------------
Consulting Agreement made as of this 1st day of November, 1996 by and
between Ripe Touch Greenhouses, Inc., a Delaware corporation (hereinafter the
"Company") and Srotnac Group, LLC (hereinafter called the "Consultant").
W I T N E S S E T H:
Whereas, the Company desires to enter into an Consulting Agreement with
Consultant; and
Whereas, Consultant desires to act as a consultant to the Company on the
terms and conditions set forth herein.
Now, therefore, in consideration of the premises and of the mutual
covenants and conditions herein contained, the parties hereto agree as follows:
1. Prior Agreements Superseded. The Agreement supersedes any employment or
consulting agreements, oral or written, entered into between the Consultant and
the Company or any of its subsidiaries, prior to the date of this Agreement.
2. Term. The Company hereby retains Consultant to perform certain
consulting services to the Company as shall be determined by Consultant for a
term commencing on the date hereof and terminating three years from the
effective date of a registration statement for gross proceeds to the Company of
at least $2,000,000. In no event, however, shall this agreement extend beyond
October 31, 2001. Consultant hereby accepts such retention.
3. Remuneration. The Company shall pay to Consultant an annual salary at
the rate of $125,000 for the first year, $75,000 for the second year; $100,000
for the third year of this Agreement, and $95,000 for each year thereafter,
payable in weekly installments, or in such other manner as shall be agreed to in
writing by the Company and Consultant.
4. Accrual of Salary until Initial Public Offering. Notwithstanding the
terms contained herein, the parties agree that without the Company's consent, no
monies shall be payable to Consultant, except for reimbursement of expenses as
provided in Paragraph 5 hereof, until such time as the Company shall consummate
<PAGE>
a private or public offering of its securities for not less than $2,000,000 in
gross proceeds. In such event, all accrued amounts under this Agreement not
previously paid shall immediately become due and payable.
5. Consultant Benefits; Expenses. The Company shall reimburse Consultant
for all proper expenses incurred by him, including disbursements made in the
performance of his duties to the Company; provided, however, that no expenses
and/or disbursements shall be incurred by Consultant without the prior approval
of the Chief Executive Officer or the Board of Directors of the Company.
6. Non-Competition. Consultant agrees that during the term of this
Agreement and provided he is receiving payment hereunder, he will not directly
or indirectly enter into or remain in the employ of any person, firm or
corporation, or engage in or have a financial interest in any business which is
then directly or indirectly competitive to the business of the Company or is
then manufacturing any article or product or performing any service which is the
same as, or similar to, any articles or products manufactured, or service
performed by the Company. In the event of a breach of this covenant not to
compete, the parties acknowledge that the Company may be irreparably damaged and
may not have an adequate remedy at law. The Company may therefore obtain
injunctive relief, without the necessity of posting a bond, for any breach or
threatened breach of this covenant. The parties hereto further acknowledge that
this covenant not to compete is intended to conform with the laws of the State
of New York. Any court of competent jurisdiction is hereby authorized to expend
or contract the restrictions of this covenant not to compete in order to conform
with the laws of New York so that it shall bind the parties hereto.
Consultant further agrees that he will not use the name "Ripe Touch
Greenhouses" or any variation thereof, or otherwise allow any person to use such
name or permit any member of his family to use such name, or authorize the use
of such name as or in the name of any corporation, partnership, firm or venture
which manufactures any article, product, special process or performs any service
which is the same as, or similar or in competition with any article, product,
special process or service manufactured or performed by the Company, or as in
the name of any such article or product.
However, nothing contained in this paragraph shall be construed as
preventing Consultant from investing his assets in such form or manner as will
not require him to become an officer, director or employee of, or render any
services (including consulting services) to, any competitor of the Company.
<PAGE>
7. Termination. Consultant's agreement hereunder may be terminated by the
Company on thirty days prior written notice for a material breach of the terms
of paragraph 6 of this Agreement.
8 Consolidation or Merger. In the event of any consolidation or merger of
the Company into or with any other corporation during the term of this
Agreement, or the sale of all or substantially all of the assets of the Company
to another corporation during the term of this Agreement, such successor
corporation shall assume this Agreement and become obligated to perform all of
the terms and provisions hereof applicable to the Company, and Consultant's
obligations hereunder shall continue in favor of such successor corporation.
9. Notices. Notice is to be given hereunder to the parties by telegram or
by certified or registered mail, addressed to the respective parties at the
addresses hereinbelow set forth or to such addresses as may be hereinafter
furnished, in writing:
To: Mr. Steven A. Cantor
173 Burlington Avenue
Deer Park, New York 11729
To: Ripe Touch Greenhouses, Inc.
4871 N. Mesa Drive
Castle Rock, Colorado 80104
Attn: Mr. Stanley Abrams
10. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Company. Unless clearly
inapplicable, reference herein to the Company shall be deemed to include such
other successor. In addition, this Agreement shall be binding upon and inure to
the benefit of the Consultant and his heirs, executors, legal representatives
and assigns, provided, however, that the obligations of Consultant hereunder may
not be delegated without the prior written approval of the Board of Directors of
the Company.
11. Amendments. This Agreement may not be altered, modified, amended or
terminated except by a written instrument signed by each of the parties hereto.
12. Governing Law. This Agreement is entered into and shall be construed in
accordance with the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
RIPE TOUCH GREENHOUSES, INC.
By: /s/ Stanley Abrams
-----------------------------------------
/s/ Steven A. Cantor
-----------------------------------------
Steven A. Cantor
Exhibit 10.5
OPERATIONS AND MAINTENANCE AGREEMENT
BETWEEN DAVID MEHRING d/b/a FAIRPLAY SHREDDING, LLC,
INDEPENDENT CONTRACTOR
AND RIPE TOUCH GREENHOUSES, INC., OWNER
1. THIS AGREEMENT outlines the relationship, duties, and responsibilities
between: David Mehring d/b/a/ Fairplay Shredding, LLC, located in El Paso
County, Colorado, referred to herein as "Fairplay;" and Ripe Touch Greenhouses,
Inc., a Delaware corporation, with their place of business located at Castle
Rock, Colorado, referred to herein as "Ripe Touch."
2. RIPE TOUCH ENGAGES FAIRPLAY to operate and maintain a tire shredding
operation at a location in El Paso County, Colorado where Ripe Touch will
maintain a business enterprise. Ripe Touch will specifically locate the site on
their business property for the tire shredding operation. The tire shreddings
will be used as an energy source for Ripe Touch's business enterprise.
3. FAIRPLAY SHALL BE RESPONSIBLE for the following on-site activities and
related duties:
a. Day to day on-site operation of tire shredding process to insure
adequate supply of shredded tires necessary to meet energy demands of Ripe Touch
enterprise on site;
b. Employ sufficient employees at a reasonable rate and competitive salary
or wage to operate tire shredding machine and related tire feeding operation;
parties estimate at this date the number of employees needed is seven; final
determination of number of employees, consistent with reasonable and safe
operation of this process and consistent with applicable safety and labor
practices, shall be made at the discretion of Fairplay; however, Ripe Touch
shall have the right to approve or disapprove such salaries or wages for the
employees, with such approval not to be unreasonably withheld, considering
competitive salaries and wages in the local economy.
c. Perform routine and periodic preventative maintenance on tire shredding
machinery;
<PAGE>
d. Fairplay shall provide appropriate training and supervision of employees
for the safe conduct of tire shredding operations, operation of tire shredding
machinery, and periodic and preventative maintenance on tire shredding
machinery;
e. Fairplay shall timely inform Ripe Touch of shredding machine breakage
and the need for repair parts and outside labor for machine repair, in order to
minimize down time of this operation;
f. Fairplay shall have available for inspection, if requested by Ripe
Touch, current documentation to verify costs for outside labor or parts
necessary to maintain and operate tire shredding equipment and machinery;
g. Fairplay shall be responsible for payment of all state, local, federal,
and unemployment taxes for employees as well as any other required workman
compensation or other required insurance premiums, subject to reimbursement by
Ripe Touch; Fairplay shall have available for inspection, if requested by Ripe
Touch, timely updated books or documentation showing monthly amounts of wages
and above noted taxes;
h. Fairplay shall be expected to conduct tire shredding operations not more
than six days per week and not more than twelve (12) hours per day, or as
necessary to keep a minimum of 24 hours supply of tire shreddings for use by
Ripe Touch or an adequate supply of shredding for normal and routine operations
for the season, unless the operation of the tire shredding process is
interrupted by acts of God, strikes, operation of law, war time limitations, or
any other event beyond the control of Fairplay.
4. RIPE TOUCH SHALL BE RESPONSIBLE for the following activities:
a. Provide, by either purchase or rent or other methods of their choice, a
tire shredding machine assembled on-site and ready for operation on a day to be
determined by the parties as the start work date;
b. Timely inform Fairplay of time and date of shredder's delivery and
assembly on-site, so that Fairplay and its employees may observe or participate
as necessary preparatory to their learning to operate and maintain the machine;
c. Compensate Fairplay as follows: Effective 25 November, Ripe Touch shall
compensate Fairplay in the amount of Three Thousand dollars ($3,000.00) per
month until such time as power generation begins, and subsequent months
thereafter Ripe Touch shall compensate Fairplay in the amount of Fifty Thousand
dollars ($50,000.00) per year for a period of five years at the rate of Four
Thousand One Hundred Sixty-six dollars and 67/100 ($4,166.67) per month payable
one month in advance, commencing on the lst of the month. These amounts may be
prorated if the start work date for this agreement begins on a day other than
the first day of given month. Ninety days prior to the end of five years (sixty
months) of operation, parties agree to begin negotiations for renewal of this
<PAGE>
agreement as to terms concerning compensation and current market and
inflationary changes; and for volume increase, if applicable, of the tire
shredding operation. In the event the parties hereto can not reach an agreement
as to the renewal of this agreement then the parties agree to submit their
dispute to binding arbitration. Such arbitration shall be before three
arbitrators, with each party hereto to select one arbitrator, and those two
arbitrators will then select the third arbitrator, subject to approval of the
parties. In the event that the third arbitrator can not be mutually agreed upon
within 14 days, then Ted Burnhardt shall be the third arbitrator. In the event
Ted Burnhardt is unavailable for any reason, then the third arbitrator shall be
selected by the Chief Judge for the El Paso County District Court.
d. Compensate Fairplay Ten Thousand dollars and 00/100 ($10,000.00) on the
first of each month for Fairplay's costs, to include wages, Fairplay's
contributions to employee taxes and benefits, taxes, insurance, licenses and
fees, and all other costs required of an employer on behalf of its employees
that are specifically employed for shredding operations at the Ripe Touch
enterprise in El Paso County, Colorado, as well as costs associated with running
the plant. This amount incurred by Fairplay shall be submitted monthly on the
first of each month by Fairplay to Ripe Touch. If the amount of costs incurred
by Fairplay in any given month shall be less than Ten Thousand dollars and
00/100 ($10,000.00), then Ripe Touch shall be entitled to a set-off of that
amount against the Ten Thousand dollars and 00/100 ($10,000.00) payable to
Fairplay the following month.
e. Such Ten Thousand dollars and 00/100 ($10,000.00) paid monthly to
Fairplay by Ripe Touch shall reimburse Fairplay for any invoices submitted for
any parts or supplies Fairplay purchased to maintain or repair tire shredding
machinery. Said invoices should be delivered to Ripe Touch no less than five
days prior to the first of each month. Any amounts expended or incurred by
Fairplay in excess of Ten Thousand dollars and 00/100 ($10,000.00) in any given
month shall be paid by Ripe Touch to Fairplay by the fifth of the month,
following receipt by Ripe Touch of such invoice or bill.
f. Ripe Touch shall forthwith pay any invoice directly to Fairplay or the
supplier for any part, supply, or other cost which exceeds Two Thousand dollars
($2,000.00).
g. Ripe Touch has the authority to approve or disapprove of any and all
costs incurred by Fairplay under this Agreement; however, such approval shall
not be unreasonably withheld, particularly if it affects the ability of Mehring
or Fairplay to perform under this Agreement.
<PAGE>
h. TIRE DISPOSAL PRICING: Mehring, to fulfill the supply of tires
requirement of this agreement, will need to supply Ripe Touch with approximately
2 million tires per year. To reach that supply goal, Ripe Touch will have to
charge a competitive price to induce suppliers of used/discarded tires to
dispose of tires with Ripe Touch or Mehring. To this end, Ripe Touch agrees to
charge a competitive disposal fee per tire which will not only maximize profits,
but will induce suppliers of used/discarded tires to bring such tires to
Mehring, one of his businesses, or Ripe Touch for disposal. Any disputes
regarding the price charged by Ripe Touch for tire disposal will be settled
utilizing the binding arbitration procedure contained herein.
5. ACCESS TO AND USE OF REAL PROPERTY owned and used by Ripe Touch for this
enterprise shall be granted to David Mehring d/b/a Tire Broker or Fairplay for
the duration of this agreement; David Mehring d/b/a Tire Broker or Fairplay
shall be granted additional use, rent free, of not more than two acres of land
adjacent to the on-site tire shredding operation owned by Ripe Touch for David
Mehring d/b/a/ Tire Broker or Fairplay's exclusive use for tire sorting,
processing, and storage as Fairplay so chooses.
6. START WORK DATE is the date this agreement becomes effective and is a
date to be determined by the parties; this date should include sufficient time
for Fairplay to familiarize and train employees for tire shredding operations
and machinery, prior to Ripe Touch demands for tire shreddings needed as an
energy supply.
7. DURATION of this agreement is for the lifetime of Ripe Touch's El Paso
County, Colorado enterprise/venture so long as it involves the use of tires.
8. NON-COMPETITION AND AGREEMENT NOT TO CIRCUMVENT: The parties hereto
further agree not to compete in a substantially similar operation or endeavor
involving tire shredding for fuel source along the Colorado front range for a
period of twenty (20) years.
The parties further agree not to take any action, including investment, which
will circumvent this agreement or the Equity Agreement.
9. THIS AGREEMENT IS FURTHER INTEGRATED with and contingent upon the
execution of separate "Equity Agreement" between Fairplay (or David Mehring) and
Ripe Touch contained in a separate document.
10. NOTICES between the parties shall be in writing and sent by certified
mail with return receipt to the following addresses:
a. Ripe Touch: P.O. Box 69, Castle Rock, CO 80104
b. Tire Broker: 1065 Pleasant View Lane, Colorado
Springs, CO 80921
<PAGE>
11. ENFORCEMENT OF AGREEMENT: In the event either party must take steps to
enforce this agreement, the prevailing party shall be entitled to reimbursement
of accrued and actual attorney fees and costs including, but not limited to,
expert witness fees and other litigation costs.
12. INDEMNIFICATION: Ripe Touch agrees to indemnify and hold harmless
Fairplay and/or David Mehring, for any and all attorney fees, costs, fines,
assessments, penalties, or other charges which he may incur or be subject to in
the good faith running of this tire shredding operation, or thereafter.
Additionally, Fairplay agrees to indemnify and hold harmless Ripe Touch for
any and all attorney fees, costs, fines, penalties or other charges that Ripe
Touch may incur as a result of the negligence or intentional torts of Fairplay
or its agents. Such indemnification by Fairplay shall not extend to any EPA or
environmental clean-up actions resulting from the operation of this plant by
Ripe Touch.
13. ACTS OF GOVERNMENT: Ripe Touch agrees to indemnify and hold harmless
David Mehring and/or Fairplay for any local, county, state or federal
governmental action, lawsuit, assessment, fine or penalty relative to the good
faith operation of this tire shredding business.
14. SEVERABILITY: In the event any part or parts of this agreement,
including the "Equity Agreement," are found by a Court or Administrative Law
Judge to be unenforceable, void as against public policy, or unconscionable,
then the offending portions shall be void, with the remainder of such agreement
to remain in full force and effect.
15. CONTROLLING LAW: The laws of the State of Colorado shall govern the
interpretation and enforcement of this agreement, including the "Equity
Agreement." Any and all litigation or arbitration relative to the enforcement or
interpretation of this agreement shall be in the El Paso County Courts, unless
the parties specifically agree otherwise in writing.
/s/ 4/15/97
- -------------------------------------------
For Ripe Touch Greenhouses, Inc/ Date
/s/ 4/15/97
- --------------------------------------------
For Fairplay Shredding, LLC/ Date
Exhibit 10.6
GREENHOUSE OPERATION AND
MANAGEMENT AGREEMENT
THIS GREENHOUSE OPERATION AND MANAGEMENT AGREEMENT("Agreement") is being
entered into on this 20th day of November, 1995, between COLORADO GREENHOUSE
LLC, a Colorado limited liability company ("Operator") and RIPE TOUCH
GREENHOUSES, INC., a Delaware corporation ("Owner").
RECITALS
WHEREAS, the parties wish to provide for the terms under which Owner will
construct and operate a 10-acre greenhouse near Colorado Springs, Colorado (the
"Project Site") with the understanding that it will be a 10-acre Venlo style
glass greenhouse designed to be expanded to 20-acres in the future including the
equipment and materials necessary to operate the greenhouse (the "Greenhouse");
and
WHEREAS, the Owner intends to own and operate on the Project Site a project
that includes the Greenhouse and a 5 MW electric generating plant using scrap
rubber tires and other products for fuel to fire two 1000 h.p. Thermal
Combustors to generate steam to provide the necessary heat for the Greenhouse
(together the "Project"); and
WHEREAS, Operator is the operator of 53 acres of comparable greenhouses in
Ft. Lupton and Brush, Colorado, has extensive experience in operating
greenhouses at locations similar to the Project Site and is interested in
assisting Owner to construct and operate the Greenhouse; and
WHEREAS, based on Operator's expertise, Owner will be engaging Operator to
assist in constructing and operating the Greenhouse on the terms and conditions
set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
AGREEMENT
Article 1. Engagement of Colorado Greenhouse.
- --------------------------------------------
Owner engages Operator, and Operator accepts the engagement, to assist
in constructing and operating the Greenhouse in accordance with the terms and
conditions of this Agreement.
<PAGE>
Article 2. Greenhouse Construction.
- ----------------------------------
2.1 Both parties agree upon the mutual goal of constructing a first quality
greenhouse on the Project Site. Subject to Owner's direction and control, and
based on Operator's prior expertise, Operator will provide consulting for the
supervision of such construction, equipping and commencement of Greenhouse
operations.
2.2 Operator agrees to provide consulting to help design and construct the
Greenhouse during the period of its construction on the Project Site, at a fee
to be included in the subcontracts for such construction. This fee will be 3% of
such subcontract prices ("Consulting Fee") and will be paid by Owner to Operator
on a monthly basis if it is not otherwise included in the subcontracts for such
construction.
2.3 Commencement of such service will begin after Owner's written confirmation
that it has obtained funding for construction of the Greenhouse and payment to
Operator of a $25,000 mobilization fee to be applied toward the 3% Consulting
Fee. Such construction is expected to continue for a period not expected to
exceed six (6) months and no other fees are to be earned or received by Operator
prior to construction commencement.
2.4 Operator will provide written detailed design and specifications necessary
for constructing and equipping the Greenhouse. The parties will together
promptly prepare material and equipment specifications and detailed construction
costs for the Greenhouse including all necessary components. Such specifications
and costs will be utilized in a Greenhouse Construction Budget to be prepared by
the parties.
2.5 Engineering supervision for the Greenhouse will be provided by Owner or an
engineering group retained by it for this purpose, with Operator to provide
consulting services.
2.6 Purchasing of and payment for all materials, services and equipment needed
for construction and start up of the Greenhouse will be the responsibility of
Owner after recommendations for such purchases are made to it by Operator.
Operator shall have no responsibility for such payments and shall be held
harmless therefrom by Owner.
2.7 Direct and indirect labor for the Greenhouse construction will be contracted
out by Owner to a subcontractor or subcontractors agreeing to meet Operator's
specifications, selected for such purpose, with Operator assisting in such
selection and contract negotiations.
2.8 Owner will be responsible for providing insurance, administration and all
start up costs necessary for Greenhouse construction and start up. Owner will
also be responsible for the costs of all processing, handling, operation
equipment and planting needs.
2.9 Subject to Owner's direction and control, Operator will provide supervision
and review concerning the quality and quantity of work performed in relation to
the budget, schedule and specifications for the Greenhouse construction.
<PAGE>
Article 3. Greenhouse Operation and Management.
- ----------------------------------------------
3.1 Operator will operate and manage the Greenhouse for a fee ("Operator Fee")
to be paid monthly by Owner and to continue during the remaining Term of this
Agreement as defined below, subject to the provisions of Article 3.2 below. The
Operator Fee shall be $20,000 per month escalated 5% per year after the first
full year of Greenhouse operation. The Operator Fee shall be paid on or before
the 10th day of the next succeeding month. Any amount which is not paid within
fifteen (15) days after the same is due shall bear interest at a default rate
equal to 12% per year from the first day due until paid.
3.2 In consideration for Operator's commitment hereunder to assist with the
construction, operation and management of the Greenhouse, Operator will receive
a bonus based on the gross margin of sales of the Greenhouse ("Gross Margin
Bonus"). The Gross Margin Bonus will be paid annually to Operator at the rate of
12-1/2% of the Greenhouse annual operating income ("AOI") defined as its sales
revenues less costs of production and the Operator Fee. When the AOI is above
$1.2 million (after the second 10 acres is added), the Gross Margin Bonus will
be paid at the rate of 10-1/2% of AOI.
3.3 Subject to Owner's direction and control, Operator will be responsible for
the requisitioning of all materials and supplies necessary for the Greenhouse
operation. Operator will select the crops to be grown, the planting and
harvesting schedules and the day-to-day husbandry of the crops at the
Greenhouse. Materials, supplies, payroll, taxes, insurance, utilities and other
operating costs will be paid for by Owner, and Owner shall hold Operator
harmless therefrom. Any additional administrative and processing costs incurred
by Operator for such purposes will be invoiced to and paid promptly by Owner. An
Operating Budget will be prepared by the parties for the Greenhouse prior to its
initial operations. Before each succeeding year during the term of this
Agreement as defined in Article 4 below, the parties will work together to
prepare an Operating Budget for that year.
Article 4. Term and Termination.
- -------------------------------
4.1 This Agreement shall continue for a term of ten (10) years ("Term") unless
sooner terminated as hereinafter provided. Each party shall have the option to
renew the Term of this Agreement thereafter on a year to year basis subject to
termination thereafter by either party on 90 days prior written notice.
4.2 If any of the following events occur with one of the parties hereto, the
other party shall have the right upon written notice to the other party hereto,
to terminate this Agreement.
(a) If a party hereto defaults or fails in the performance of any
material responsibility or obligation under this Agreement and such default or
failure is not cured by it within thirty (30) days after receipt of a notice
specifying the default or failure.
<PAGE>
(b) If a party hereto is adjudicated a bankrupt or insolvent and such
adjudication is not vacated within sixty (60) days.
(c) If there is a filing of a voluntary or involuntary bankruptcy or
insolvency petition of a party hereto or its reorganization, or the making by a
party hereto of an assignment for the benefit of its creditors, whether pursuant
to the Federal Bankruptcy Act or any similar federal or state proceedings,
unless such petition is withdrawn or dismissed within ninety (90) days after the
date of filing.
(d) If there is appointment of a receiver or trustee for the business
or property of a party hereto, or the making by a party hereto of an assignment
for the benefit of its creditors, unless such action shall be vacated within
sixty (60) days of its entry.
(e) If there is the making by a party hereto of an assignment for the
benefit of its creditors.
Article 5. Marketing.
- --------------------
5.1 It is the intention of the parties that produce from the Greenhouse will be
marketed through Operator as a part of its overall production under the name
"Colorado Greenhouse" in a similar manner and basis to produce marketed from its
current greenhouse operations in Brush and Ft. Lupton. Decisions related to such
marketing and sales will be made by Operator in its reasonable discretion
seeking the best market for the produce. Operator covenants and represents that
all produce from the Greenhouse and from the various greenhouses of Operator
will be handled and sold on similar terms and conditions.
5.2 All products from the Greenhouse will be marketed through Operator and
Operator will receive a marketing fee of 5> per pound of produce sold
("Marketing Fee"). This will be included as a line item in the costs of
operation to cover Operator's sales and marketing expenses for produce from the
Greenhouse and shall be deducted by Operator from monthly sales allocations to
the Greenhouse.
5.3 Annual marketing plans will be prepared by Operator and reviewed with Owner.
They will include provisions for Operator having (1) sales personnel; (2)
marketing personnel; (3) advertising; (4) promotions and (5) attendance at trade
shows to the extent applicable at the Operator's expense. If Operator considers
having such marketing of produce from its other greenhouses to be handled by a
third party to enhance the profitability of such marketing effort, the marketing
of produce from the Greenhouse can also be transferred by Operator to such third
party so long as Owner's consent is first obtained.
<PAGE>
Article 6. Warranties; Remedies.
- -------------------------------
6.1 The parties will have the mutual goal of constructing a first quality
greenhouse to operate on a profitable basis. Such operations will be conducted
in a prudent and efficient manner, in accordance with all safety, fire
protection and other requirements of applicable insurance policies and
applicable laws.
6.2 In no event shall Operator, Owner or any of their respective affiliates,
members, managers, employees or agents, be liable for any consequential,
incidental or special damages or any other liabilities not expressly set forth
herein, regardless of whether based on contract, warranty, indemnity, tort,
strict liability or otherwise.
6.3 Nothing contained in this Article 6, or in any other provision of this
Agreement, shall be deemed to waive, limit or impair in any way any claims that
Owner may have against subcontractors, manufacturers of equipment or third party
suppliers to the Greenhouse.
6.4 All claims or disputes arising out of or relating to this Agreement or the
interpretation or breach hereof, shall be decided by arbitration in accordance
with the Arbitration Rules of the American Arbitration Association then in
effect, unless the parties mutually agree otherwise. Such arbitration shall be
held in Denver, Colorado before a panel of three arbitrators, one chosen by each
party and the third chosen by the first two arbitrators. Notice of the demand
for arbitration shall be filed in writing with the other party to this Agreement
and with the American Arbitration Association. The demand for arbitration shall
be made within a reasonable time after the claim, dispute or other matter in
question has arisen. The award rendered by the arbitrators shall be final and
judgment may be entered in accordance with applicable law in any court having
jurisdiction thereof. Attorneys' fees and expenses may be payable to the
prevailing party in such arbitration in the discretion of the arbitrators.
Article 7. Other Provisions.
- ---------------------------
7.1 The Operator will have a first right of refusal exercisable within 60 days
after written notice to work together as Owner develops other projects that
include greenhouses in locations in the United States. Similarly, Owner will
have the first right of refusal exercisable within 60 days after written notice
to work together if Operator develops other greenhouses that are heated by an
alternate fuel combustor that is similar in technology to the Waste Conversion
Thermal Combustor being used to heat the Greenhouse.
7.2 Titles and headings of this Agreement are for convenience only and shall not
in any way limit or affect the interpretation of this Agreement.
7.3 Except as provided in Article 13 hereof this Agreement shall not be
assignable by either party hereto without the prior written consent of the other
party. Notwithstanding the forgoing either party will have the right to assign
<PAGE>
this Agreement without consent to a corporation that is an affiliate of such
party (except that with respect to the Operator, the assignee must have the same
expertise as Operator has in greenhouse operations and marketing).
7.4 Owner will permit Operator, its agents, employees and contractors to enter
all parts of the Greenhouse during the Term hereof to enable Operator to carry
out the provisions of this Agreement.
7.5 Neither party hereto shall be deemed to be in breach or in violation of this
Agreement if such party is prevented from performing any of its obligations
hereunder by reason of events beyond its control that in fact prevent or delay
performance hereunder ("Uncontrollable Forces"). To the extent that performance
of any obligation is so prevented, such performance shall be suspended during
the continuance of the Uncontrollable Forces and during the period following
their cessation that is required to repair or rebuild the Greenhouse to the
extent necessary to place the Greenhouse back into commercial operation. All
fees otherwise due and owing Operator during the suspended period shall cease
during such period to the extent that Operator's work hereunder ceases during
the suspended period.
7.6 The waiver of any breach of a term or condition hereof shall not be deemed a
waiver of any other or subsequent breach. No failure by either party to exercise
or delay in exercising any right hereunder shall operate as a waiver thereof.
The rights and remedies provided herein are cumulative and not exclusive of any
rights or remedies at law.
7.7 If any term or provision of this Agreement shall to any extent be invalid or
unenforceable, this shall not affect or render invalid or unenforceable any
other provision of this Agreement.
7.8 No modification or amendment of this Agreement shall be valid unless in
writing and executed by both parties hereto.
Article 8. Insurance.
- --------------------
8.1 At all times during the Term hereof, Owner will carry and maintain at its
expense the following insurance covering the Greenhouse and the Project:
(a) public liability coverage with a limit of at least $10,000,000 under
this Agreement; and
(b) all-risk casualty insurance covering all of the personal property on or
about the Project Site including all improvements installed on or about the
Greenhouse; and
(c) workers compensation insurance for Owner's employees in form and amounts
required by law; and
<PAGE>
(d) such other insurance as may reasonably be required pursuant to the terms
of any applicable credit agreement with Owner affecting the Greenhouse or
operations at the Project Site.
8.2 To the extent applicable, Operator shall be named as an additional insured
under Owner's coverage.
8.3 Operator agrees to carry and maintain insurance covering its own operations
including public liability coverage with a limit of at least $2,000,000 and
all-risk casualty coverage. Policies evidencing such insurance shall name Owner
as an additional insured to the extent applicable.
8.4 Owner shall require all of its Subcontractors engaged in work at the
Greenhouse to maintain insurance coverage of the types that Owner is required to
maintain in accordance with Article 8.1 above.
Article 9. Repairs and Alterations.
- ----------------------------------
9.1 Owner will see that the Greenhouse facility remains in good repair and
condition, and ordinary and customary repairs and replacements for the
Greenhouse shall be promptly undertaken and completed at Owner's expense.
Article 10. Greenhouse Account, Books and Records.
- --------------------------------------------------
10.1 With initiation of construction of the Greenhouse, Owner shall maintain an
account for the Greenhouse construction and operation (the "Account"). Such
Account will be used by Owner to pay for such Greenhouse expenses. Owner agrees
to pay all expenses for construction and operation of the Greenhouse including
the working capital necessary for such purpose. On the twenty-fifth (25th) day
of each month, Operator will to submit to Owner all bills and a list of all
expenses for which it seeks payment hereunder (or reimbursement, if such
expenses were previously approved in writing by Owner) with the understanding
that efforts will be made to pay all such bills and expenses by the tenth (10th)
day of the month following. All Greenhouse receipts and income will be deposited
in the Account, which will be administered by Owner for the benefit of the
Greenhouse.
10.2 The books and records of Owner and Operator related directly or indirectly
to the construction and operation of the Greenhouse will be maintained in
accordance with generally accepted accounting principles, and be available for
inspection and review by each of the parties at all reasonable times. Owner
shall also have access to Operator's books and records for its other greenhouse
operations, to verify that produce from the Greenhouse is being marketed on
similar terms and conditions as is produce from the other greenhouse operations.
<PAGE>
Article 11. Independent Contractor.
- ----------------------------------
11.1 Operator and its representatives and employees are independent contractors.
Operator will provide an Operations Manager and possibly other employees for the
Greenhouse from among Operator's employees, for functions as set forth in the
Operating Budget in lieu of Owner's employees, and Operator will invoice Owner
monthly for any such persons' earnings, taxes, insurance and other related
expenses, which Owner will pay to Operator within fifteen (15) days of such
invoice.
Article 12. Permits.
- --------------------
12.1 All applicable permits needed for the construction and operation of the
Greenhouse shall be obtained and maintained by Owner on behalf of Operator.
Operator shall cooperate with Owner in the securing of such applicable permits.
Article 13. Consolidation or Merger.
- ------------------------------------
13.1 In the event of any consolidation or merger of Owner or Operator into or
with any other corporation during the term of this Agreement, or the sale of all
or substantially all of the assets of Owner or Operator to another corporation
during the term of this Agreement, such successor corporation shall assume this
Agreement and become obligated to perform all of the terms and provisions hereof
applicable to such party, and the parties' obligations hereunder shall continue
in favor of such successor corporation.
Article 14. Applicable Laws.
- ---------------------------
14.1 This Agreement shall be governed by and constructed under the laws of the
State of Colorado. The parties hereby consent to the jurisdiction of the courts
of the State of Colorado for the purpose of enforcing the arbitration provisions
of Article 6.4 above.
14.2 Owner shall, with Operator's help, operate and maintain the Greenhouse in
conformance with all applicable laws and applicable permits.
Article 15. Indemnification.
- ----------------------------
15.1 Owner shall indemnify and hold harmless Operator and its affiliates,
managers, members, employees and agents, from any loss, liability or damage
incurred or suffered by any such person by reason of Owner's failure to perform
its obligations hereunder or its negligence or willful misconduct, including,
without limitation, any judgment, award or settlement, other costs and expenses,
and reasonable attorneys' fees incurred in connection with the defense of any
actual or threatened claim or action based on any such act or omission, unless
such loss, liability or damage results from such indemnified person's fraud,
negligence or willful misconduct. Any such indemnification shall be paid only
from the assets of Owner and neither Operator nor any third party shall have
recourse against the personal assets of any employee, directors, stockholder or
officer of Owner or their respective affiliates for such indemnification.
<PAGE>
15.2 Operator shall indemnify and hold harmless Owner and its affiliates,
managers, members, employees and agents, from any loss, liability or damage
incurred or suffered by any such person by reason of Operator's failure to
perform its obligations hereunder or its negligence or willful misconduct,
including, without limitation, any judgment, award or settlement, other costs
and expenses, and reasonable attorneys' fees incurred in connection with the
defense of any actual or threatened claim or action based on any such act or
omission or based on any third party claim related to use of the name "Colorado
Greenhouse", unless such loss, liability or damage results from such indemnified
person's fraud, negligence or willful misconduct. Any such indemnification shall
be paid only from the assets of Operator and neither Owner nor any third party
shall have recourse against the personal assets of any employee, directors,
stockholder or officer of Operator or their respective affiliates for such
indemnification.
15.3 Any indemnification required herein to be made by Operator or Owner shall
be made promptly following the determination of the loss, liability or damage
incurred.
Article 16. Notices.
- --------------------
16.1 Notices and other communications with respect to this Agreement shall be in
writing and shall be delivered by hand or overnight courier service, mailed or
sent by telecopy. Unless other addresses or telecopy numbers are specified in
writing pursuant to this Article 15 to each party, such notices or other
communications shall be sent to the following addresses or telecopy numbers as
the case may be:
Owner: Operator:
Ripe Touch Greenhouses, Inc. Colorado Greenhouse, LLC
P.O. Box 69 P.O. Box 309
Castle Rock, Colorado 80104 Ft. Lupton, Colorado 80621
Attention: Stan Abrams Attention: Matthew Cook
Telephone: (303) 660-5582 Telephone: (303) 857-4050
FAX: (303) 688-9805 FAX: (303) 857-4049
Copy to:
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle, Suite 225
Jericho, New York 11753
Attention: David Lieberman, Esq.
Telephone: (516) 822-4820
FAX: (516) 822-4824
<PAGE>
Article 17. Entire Agreement.
- -----------------------------
This Agreement sets forth the entire agreement between the parties with
respect to the subject matter hereof and it supersedes and replaces all prior
written agreements, negotiations and oral understandings with respect thereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date and year first above written.
COLORADO GREENHOUSE LLC, RIPE TOUCH GREENHOUSES, INC.
a Colorado Limited Liability Company a Delaware corporation
By:/s/_________________ By: /s/___________________
Title:__________________ Title: ___________________
Exhibit 10.7
EL PASO COUNTY
GENERAL SERVICES CONTRACT
CONTRACT NUMBER: 124-96
------
SUBJECT MATTER: RECYCLING FOR TIRE DISPOSAL
COUNTY DEPARTMENT: SOLID WASTE MANAGEMENT
CONTRACTOR: RIPE TOUCH GREENHOUSES, INC.
P.O. BOX 69
CASTLE ROCK, NY 80104
(303) 660-5582
EFFECTIVE DATE: NOVEMBER 25, 1996
EXPIRATION DATE: DECEMBER 31, 1997
THIS AGREEMENT, entered into on the date set forth below, is made by and
between the BOARD OF COUNTY COMMISSIONERS OF EL PASO COUNTY, COLORADO ("COUNTY")
and RIPE TOUCH GREENHOUSES, INC.
("CONTRACTOR").
WHEREAS, the COUNTY desires to purchase and receive from CONTRACTOR the
services described in Appendices A, B, C, D & E; and
WHEREAS, CONTRACTOR is an individual or entity qualified and
able to Provide the type of services required by the COUNTY; and
WHEREAS, the parties to this Agreement desire to reduce to written terms
the manner and conditions under which these services will be provided and
compensated.
NOW, THEREFORE, in consideration of the above, and in accordance with the
mutual terms, conditions, requirements and obligations set forth in this
Agreement, the COUNTY and CONTRACTOR agree as follows:
SECTION 1. SERVICES
- -------------------
The COUNTY agrees to retain CONTRACTOR to perform the services
described in Appendices A, B, C, D. & E. CONTRACTOR agrees to provide those
services in accordance with the provisions of this Agreement.
<PAGE>
CONTRACT NO.: 124-96
------
GENERAL SERVICES CONTRACT
RECYCLING FOR TIRE DISPOSAL
PAGE TWO
SECTION 2. CONTRACTOR'S RESPONSIBILITIES
- ----------------------------------------
2.1 The scope of services to be performed by CONTRACTOR is set forth in
Appendices A, B, C, D. & E attached to this Agreement and incorporated by
reference.
a. The minimum number of tires accepted per day shall be 6,000.
b. CONTRACTOR shall coordinate with the vendors providing labor and
hauling to provide timely notification if CONTRACTOR is unable to
accept tires. Such timely notification is required to re-route tires
to the other approved tire recycling/dumping locations.
2.2 All issues or questions of CONTRACTOR about this Agreement arising
during the term of this Agreement shall be addressed to the designated County
Representative identified in Section 3 below.
2.3 CONTRACTOR shall attend meetings and submit reports, plans, drawings
and specifications as required in Appendices A, B, C, D. & E and shall be
reasonably available to the County Representative to respond to any issues that
may arise during the term of this Agreement.
2.4 All employees, agents, representatives and sub-contractors of
CONTRACTOR who will have significant responsibility for performance under this
Agreement shall be identified to and be subject to approval by the County
Representative prior to the commencement of any work by these individuals.
2.5 All governmental permits or licenses specified in Appendices A, B, C, D
& E to be acquired by CONTRACTOR shall be obtained by CONTRACTOR in a prompt and
legally sufficient manner and at CONTRACTOR's own expense. Upon demand by the
COUNTY, CONTRACTOR shall provide the COUNTY with evidence of the permits or
licenses.
2.6 All services to be performed under this Agreement by CONTRACTOR shall
be performed in accordance with generally recognized professional practices and
standards of CONTRACTOR's profession and to the reasonable satisfaction of the
COUNTY.
<PAGE>
CONTRACT NO.: 124-96
------
GENERAL SERVICES CONTRACT
RECYCLING FOR TIRE DISPOSAL
PAGE THREE
SECTION 3. COUNTY'S RESPONSIBILITIES
- ------------------------------------
3.1 The COUNTY agrees to compensate CONTRACTOR as set forth in Section 5
below for services rendered in accordance with this Agreement.
3.2 The County Representative is JOHN FISHER, MANAGER, SOLID WASTE
DEPARTMENT, (719) 520-8450. The County Representative shall have authority to
transmit instructions, receive information and documents and resolve any issues
arising out of the performance of this Agreement. The County Representative
shall provide CONTRACTOR with the identity of an alternate contact person in the
event the County Representative is unavailable to respond to CONTRACTOR's
inquiries.
SECTION 4. TIME OF PERFORMANCE AND DELAY
- ----------------------------------------
CONTRACTOR's time of performance shall commence as of the effective
date of this Agreement unless otherwise terminated in accordance with Section 13
below.
SECTION 5. COMPENSATION
- -----------------------
5.1 The COUNTY agrees to pay CONTRACTOR for the complete and satisfactory
performance of services under this Agreement in the following manner:
The Solid Waste Management department will be responsible for
monitoring the billing and paying invoices for the services performed
under this contract. The Solid Waste Management Department will be
billed according to the Price List as submitted by the CONTRACTOR for
tipping rates.
The amount and terms of compensation referenced above shall not be
modified except in accordance with Section 19 below.
5.2 CONTRACTOR shall provide to the COUNTY written evidence of services
actually performed, on a weekly basis detailing the number of tons of tires
received daily. Other direct expenses incurred by CONTRACTOR shall be itemized
upon request.
<PAGE>
CONTRACT NO.: 124-96
------
GENERAL SERVICES CONTRACT
RECYCLING FOR TIRE DISPOSAL
PAGE FOUR
SECTION 5. COMPENSATION (continued)
- -----------------------
5.3 If the County Representative determines that CONTRACTOR is not making
sufficient progress or is performing unsatisfactory work under this Agreement,
the County Representative may protest CONTRACTOR's written invoice or statement
by providing written notice to CONTRACTOR within ten (10) days following receipt
of the invoice or statement. The written notice shall identify the nature of the
problem and request an appropriate remedial action by CONTRACTOR. CONTRACTOR
shall either correct the problem and advise the County Representative of the
correction, or shall provide a detailed written response to the notice within
ten (10) days following receipt of the COUNTY's notice.
If resolution of the problem cannot be achieved, the dispute will be
resolved in accordance with Section 12 below. During the term of any dispute
resolution, payment of CONTRACTOR's invoice or statement may be withheld by the
COUNTY.
5.4 Unless otherwise agreed upon in writing by the COUNTY, CONTRACTOR shall
be solely responsible for compensation of third parties, including
subcontractors, consultants and suppliers, which are retained at the request of
CONTRACTOR to perform this Agreement. Such third parties shall not be considered
third-party beneficiaries to this Agreement.
5.5 No payment made under this Agreement shall be conclusive evidence of
the performance of this Agreement, either in whole or in part, and no payment,
including final payment, shall be construed to be a consent on the part of the
COUNTY to accept unsatisfactory or deficient work.
SECTION 6. FUNDING AVAILABILITY
- -------------------------------
6.1 This agreement is subject to appropriation of funds by the Board of
County Commissioners of El Paso County, Colorado. This agreement shall not
become effective until at such time that said funds are appropriated.
<PAGE>
CONTRACT NO.: 124-96
------
GENERAL SERVICES CONTRACT
RECYCLING FOR TIRE DISPOSAL
PAGE FIVE
SECTION 6. FUNDING AVAILABILITY (continued)
- --------------------------------
6.2 Financial obligations of the COUNTY payable after the current fiscal
year are contingent on appropriation or budgeting of funds for those
obligations. Should the performance of this Agreement continue past the current
fiscal year, the COUNTY shall notify CONTRACTOR in writing that sufficient funds
are available for continuance of CONTRACTOR's performance under this Agreement
into the new fiscal year. Unless CONTRACTOR is notified in writing of
availability of funds prior to the end of the current fiscal year, CONTRACTOR
shall not commence any work in the new fiscal year for which a new appropriation
is required to make payment.
SECTION 7. INDEPENDENT CONTRACTOR
- ---------------------------------
It is agreed and understood by CONTRACTOR that nothing in this Agreement
shall make any action undertaken by CONTRACTOR an official action of the COUNTY,
and that CONTRACTOR is an independent contractor, providing services on a
contractual basis.
SECTION 8. INSURANCE
- --------------------
8.1 During the entire term of this Agreement, CONTRACTOR shall maintain, at
its own expense, insurance in the following minimum amounts and classification:
<TABLE>
<CAPTION>
LIMITS OF LIABILITY
-------------------
<S> <C>
Workmen's Compensation/
Employer's Liability As required By statute
Comprehensive General
Liability (including
blanket contractual
liability insurance):
Bodily injury $150,000 each person
$600,000 each occurrence
Property damage $600,000
<PAGE>
CONTRACT NO.: 124-96
------
GENERAL SERVICES CONTRACT
RECYCLING FOR TIRE DISPOSAL
PAGE SIX
SECTION 8. INSURANCE (continued)
- --------------------
Comprehensive Automobile
Liability
Bodily injury $150,000 each person
$600,000 each occurrence
Property damage $600,000
Professional Liability Commensurate with risks of
(if applicable) services provided under this
Agreement
</TABLE>
8.2 CONTRACTOR shall furnish certificates of such insurance to the County
Purchasing/Contracts Manager ("MANAGER") prior to the performance of this
Agreement. The COUNTY shall be named as an additional insured on all policies of
liability insurance.
SECTION 9. INDEMNIFICATION
- --------------------------
CONTRACTOR shall indemnify, hold harmless and defend the COUNTY, its
officers and employees from any and all losses, injuries, damages, liability,
claims, penalties, fines, legal actions (including costs and expenses incidental
thereto) which may be asserted or brought against the COUNTY by any individual
or entity and which may arise out of or occur during the performance of this
Agreement by CONTRACTOR.
SECTION 10. AUDIT AND INSPECTION
- ---------------------------------
10.1 CONTRACTOR shall at all times during the term of this Agreement
maintain such books and records as shall sufficiently and properly reflect all
direct costs of any nature in the performance of this Agreement, and shall
utilize such bookkeeping procedures and practices as will reflect these costs.
Books and records shall be subject, at any reasonable time, to inspection, audit
or copying by Federal, State or County personnel, or such independent auditors
or accountants as are designated by the COUNTY.
<PAGE>
CONTRACT NO.: 124-96
------
GENERAL SERVICES CONTRACT
RECYCLING FOR TIRE DISPOSAL
PAGE SEVEN
SECTION 10. AUDIT AND INSPECTION (continued)
10.2 CONTRACTOR shall permit the County Representative or other authorized
Federal, State or County personnel, at any reasonable time, to inspect,
transcribe or copy any and all data, notes, records, documents and files of the
work CONTRACTOR is performing in relation to this Agreement.
10.3 CONTRACTOR shall retain for at least for (4) years after the closeout
of this contract all records required for the contract including documentation
and records of all expenditures incurred under this contract. Retention for
longer than the four years may be deemed necessary to resolve any matter which
may be pending from the State of Colorado's grant closeout. This retention is
for the purpose of review and audit by the State or their authorized
representative, or by the COUNTY or their authorized representative.
SECTION 11. OWNERSHIP
- ----------------------
11.1 All data, plans, resorts, notes and documents provided to or prepared
by CONTRACTOR in performance of this Agreement shall become the property of the
COUNTY upon payment of services rendered by CONTRACTOR, and shall be delivered
to the County Representative.
11.2 Except as provided in Section 10 above, all such documents shall
remain confidential and shall not be made available by CONTRACTOR to any
individual or entity without the consent of the County Representative.
SECTION 12. DISPUTES
- ---------------------
12.1. Any dispute concerning the performance of this Agreement which is not
resolved by mutual agreement of the parties shall be resolved by an independent
committee under the direction of the MANAGER. The disputing party must provide
written notice to the MANAGER within fifteen (15) working days from the date the
dispute was known or should have been known. The written notice must provide the
following information: 1) contract number; 2) cause of the dispute; 3) contract
language in dispute, if any; 4) amount of dollars in controversy, if any.
<PAGE>
CONTRACT NO.: 124-96
------
GENERAL SERVICES CONTRACT
RECYCLING FOR TIRE DISPOSAL
PAGE EIGHT
SECTION 12. DISPUTES (continued)
- ---------------------
Within five (5) working days following receipt of the written notice, a
meeting with the County Representative, CONTRACTOR and the independent committee
will be scheduled. In the event additional meetings are required, a maximum of
three (3) meetings will be held over the course of a ten (10) day period. In the
event the dispute cannot be resolved after the third meeting, a final statement
will be issued by the independent committee and delivered to the parties within
ten (10) days of the final meeting.
12.2 CONTRACTOR shall not cease performance of this Agreement during the
term of the dispute resolution process unless the parties mutually agree in
writing that performance may be suspended.
SECTION 13. SUSPENSION AND TERMINATION
- --------------------------------------
13.1 Without terminating this Agreement, the COUNTY may suspend
CONTRACTOR's services following written notice to CONTRACTOR. Within five (5)
days following receipt of such notice, CONTRACTOR shall have completed all
reasonable measures to cease its services in an orderly manner. CONTRACTOR shall
be paid for all reasonable costs incurred and unpaid for services rendered
through the date services were suspended, but in no case no later than five (5)
days after CONTRACTOR's receipt of notice of suspension. If resumption of
CONTRACTOR's services requires any waiver or change in this Agreement, the
parties must mutually agree to such waiver or change in writing and the writing
must be attached as an addendum to this Agreement.
13.2 The COUNTY shall have the right to terminate this Agreement, in whole
or in part, at any time during the course of performance by providing written
notice to CONTRACTOR. Within ten (10) days following receipt of such notice,
CONTRACTOR shall have completed all reasonable measures to cease its services in
an orderly manner. If new contractor is retained to complete the services,
CONTRACTOR will cooperate fully with the COUNTY in preparing the new contractor
to take over completion of the services. CONTRACTOR will be paid for all
reasonable costs incurred and unpaid for services rendered through the date
CONTRACTOR was notified of the termination of this Agreement, but in no case
will CONTRACTOR be paid for services rendered later than ten (10) days after
receipt of notice of termination.
<PAGE>
CONTRACT NO.: 124-96
GENERAL SERVICES CONTRACT
RECYCLING FOR TIRE DISPOSAL
PAGE NINE
SECTION 14. COMPLIANCE WITH LAWS
- ---------------------------------
At all times during the performance of this Agreement, CONTRACTOR shall
strictly observe and conform to all applicable federal, state and local laws,
rules, regulations and orders that have been or may hereafter be established.
SECTION 15. NON-DISCRIMINATION
- -------------------------------
CONTRACTOR shall not hire, discharge, transfer, promote or demote, or in
any manner discriminate against any person otherwise qualified and capable
because of race, color, sex, marital status, age, religion, disability or
national origin. CONTRACTOR agrees to comply with all applicable Federal and
State statutes and regulations concerning non-discrimination.
SECTION 16. APPLICABLE LAW
- ---------------------------
The laws, rules and regulations of the State of Colorado and El Paso
County shall be applicable in the enforcement, interpretation and execution of
this Agreement.
SECTION 17. RIGHTS OF THIRD PARTIES
- ------------------------------------
This Agreement does not and shall not be deemed to confer on any third
party the right to the performance or proceeds under this Agreement, to claim
any damages or to bring any legal action or other proceeding against the COUNTY
or CONTRACTOR for any breach or other failure to perform this Agreement.
SECTION 18. ASSIGNMENT/SUBCONTRACTS
- ------------------------------------
CONTRACTOR shall not assign its interest in this Agreement or subcontract
any of the work to be performed under this Agreement without the written consent
of the COUNTY.
SECTION 19. CHANGES OR MODIFICATIONS
- ------------------------------------
19.1 No modification, amendment, novation, change or other alteration of
this Agreement shall be valid unless mutually agreed by the parties in writing
and executed as an addendum to this Agreement.
<PAGE>
CONTRACT NO.: 124-96
------
GENERAL SERVICES CONTRACT
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PAGE TEN
SECTION 19. CHANGES OR MODIFICATIONS (continued)
- ------------------------------------
19.2 No change order resulting in an increase to the contract price set
forth in Section 5 above shall be executed or effective unless the increase is
approved by the appropriate County official(s) and the additional funds have
been appropriated or otherwise made available. CONTRACTOR shall prepare a cost
calculation for the additional costs and submit it to the County Representative
prior to approval of any change order. The County Representative then will
arrange for a change order, confirming with CONTRACTOR that funds have been
appropriated or made available to cover the additional costs.
SECTION 20. SEVERABILITY
- -------------------------
If any section, subsection, clause or phrase of this Contract is, for any
reason, held to be invalid, such holding shall not affect the validity of the
remaining portions of this Contract.
SECTION 21. ENTIRE AGREEMENT
- -----------------------------
This Agreement, including attached Appendices, constitutes the entire
understanding of the parties. At the time of execution of this Agreement, there
are no other terms, conditions, requirements or obligations affecting this
Agreement which are not specifically set forth herein.
SECTION 22. APPENDICES
- -----------------------
The following appendices are attached to and made a part of this Agreement:
APPENDIX A: IFB NO.: 124-96(AND CLARIFICATION)
------
APPENDIX B: COMPANY'S RESPONSE
APPENDIX C: INSURANCE CERTIFICATE(S)
APPENDIX D: STATE OF COLORADO WASTE TIRE DISPOSAL GRANT
AWARD CONTRACT DATED 9/26/96
APPENDIX E: CONDITIONS 9.a., b., and c., Page 4 OF RIPE
TOUCH GREENHOUSES, INC. CERTIFICATE OF
DESIGNATION APPROVAL DATED 10/4/96
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
________day of NOVEMBER, 1996.
BOARD OF COUNTY COMMISSIONERS RIPE TOUCH GREENHOUSES,INC.
EL PASO COUNTY, COLORADO STAN ABRAMS
PRESIDENT
BY:_______________________ BY: /s/___________________
CHAIRPERSON AUTHORIZED REPRESENTATIVE
ATTEST: SOLID WASTE MANAGEMENT
__________________________ BY: /s/___________________
DEPUTY COUNTY CLERK JOHN FISHER
MANAGER
APPROVED AS TO FORM: PURCHASING DEPARTMENT
BY:/s/_____________________ BY: /s/_____________________
ASSISTANT COUNTY ATTORNEY PURCHASING/CONTRACTS MANAGER
<PAGE>
AMENDMENT #1 TO
GENERAL SERVICE CONTRACT
NO.: 124-96
------
RECYCLING FOR TIRE DISPOSAL
FOR SOLID WASTE MANAGEMENT
THIS AMENDMENT TO THE CONTRACT, entered into this 16th day of DECEMBER
1996, and effective immediately by and between the BOARD OF COUNTY COMMISSIONERS
OF EL PASO COUNTY, COLORADO ("COUNTY"), and RIPE TOUCH GREENHOUSES, INC.
("CONTRACTOR"), WITNESSETH THAT:
WHEREAS, the COUNTY has entered into the original Agreement
with the CONTRACTOR on the 25th day of NOVEMBER, 1996; and
WHEREAS, the CONTRACTOR agrees to do, perform, and carry out in a good and
professional manner the services as outlined in the original Agreement;
NOW, THEREFORE, the parties hereto mutually agree as follows:
1. Under Section 5. Compensation of the General Services Contract, the
second paragraph of section 5.1 should be changed as follows:
"The Solid Waste Management Department will be billed monthly, according to
the Price List as submitted by the CONTRACTOR for tipping rates"
2. Under Section 22. Appendices of the General Services
Contract, in clarification of Appendix E, 9. a., this requirement
will be implemented as follows:
a. Ripe Touch Greenhouses, Inc. shall provide cash, bond
or other financial mechanism in the amount of $50,000.00.
b. Ripe Touch Greenhouses, Inc. shall provide an amount of
$10,000 per month, or 25% of payment for services for each
invoice, until the cleanup fund reaches the required total
of $100,000.
<PAGE>
CONTRACT NO: 124-96
------
AMENDMENT #1
RECYCLING FOR TIRE DISPOSAL
PAGE 2
2.(continued)...
c. Ripe Touch Greenhouses, Inc. can substitute full funding ($100,
000) of the cleanup fund at any time, in lieu of paragraph 2 above.
3. All other terms and conditions of the original Agreement remain the
same.
IN WITNESS WHEREOF, the COUNTY and the CONTRACTOR have executed this
AMENDMENT TO THE AGREEMENT as of the date first written above.
BOARD OF COUNTY COMMISSIONERS RIPE TOUCH GREENHOUSES, INC.
EL PASO COUNTY, COLORADO STAN ABRAMS,
PRESIDENT
BY : /s/______________________ BY:/s/_____________________
CHAIRPERSON AUTHORIZED REPRESENTATIVE
ATTEST: SOLID WASTE MANAGEMENT
BY:/s/________________________ BY:/s/______________________
DEPUTY COUNTY CLERK JOHN FISHER, MANAGER
APPROVED AS TO FORM:
BY: /s/_______________________ BY: /s/______________________
ASSISTANT COUNTY ATTORNEY PURCHASING/CONTRACTS MANAGER
Exhibit 10.8
POWER PURCHASE AGREEMENT
BETWEEN
TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, INC.
AND
RIPE TOUCH GREENHOUSE, LLC.
THIS AGREEMENT, made and entered into this 15th day of March, 1995, by and
between TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, INC., a cooperative
corporation duly organized and existing under and by virtue of the laws of the
State of Colorado, hereinafter called "Tri-State", its successors and assigns,
and Ripe Touch Greenhouse, LLC., a limited liability company duly organized,
created, and existing under and by virtue of the laws of the State of Colorado,
hereinafter called "Producer", its successors and assigns. Tri-State and
Producer are hereinafter known collectively as the Parties and individually as
the Party.
This Agreement is made pursuant to the Tri-State Interconnection Standards
For Qualifying Facilities (hereinafter referred to as "Interconnection
Standards") dated September, 1992, attached hereto as Exhibit "A" and by this
reference incorporated herein.
RECITALS
WHEREAS, Tri-State owns and operates an electric power system within the
States of Colorado, Nebraska and Wyoming, and is engaged in generating,
purchasing, and transmitting power and energy for sale at wholesale to its
member distribution cooperatives, including Mountain View Electric Association,
Inc., (hereinafter called "Mountain View") on an "all requirements" basis; and
WHEREAS, Mountain View is engaged in transmitting and distributing power
and energy to, among others, consumers in El Paso County in the State of
Colorado; and
WHEREAS, the Producer intends to install and operate a waste fuel fired
generation facility (hereinafter referred to as "Project") in northwest El Paso
County, two miles west of the town of Calhan; and
<PAGE>
WHEREAS, the Producer has requested electrical interconnection with
Mountain View directly and with Tri-State indirectly, to facilitate delivery and
sale of approximately 5,000 kilowatts of power and associated energy from the
Project to Tri-State.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
conditions set forth herein, the Parties agree as follows:
ARTICLE 1 - DEFINITIONS
-----------------------
For purposes of this Agreement, all terms with initial capital letters
textually defined and used herein, and not otherwise defined, shall have the
definitions ascribed to them by the text. The following terms shall have the
following meanings:
A. "Authorization for Interconnection" means the Agreement between Tri-State,
Mountain View, and Producer that details certain conditions that must be met in
order for Producer to continue interconnected operation beyond the initial
testing period of the Project.
B. "Billing Period" means the period of time between the consecutive monthly
cutoff meter reading dates used to determine billing quantities. The Billing
Period will normally coincide with a calendar month.
C. "Billing Year" means January 1 through December 31, or such other dates which
coincide with Tri-State's Billing Year for its Class A members.
D. "Capacity Rate" means the amount expressed in dollars per kilowatt per month
that Tri-State will pay Producer for metered capacity per Article 5.
E. "Commercial Date" means the first day of which capacity and energy deliveries
to Tri-State begin, subsequent to the initial testing period as described in
Article 8.
F. "Effective Date" is the date stated on page one (1) of this Agreement.
G. "Energy Rate" means the amount expressed in dollars per megawatthour that
Tri-State will pay Producer for metered energy per Article 5.
<PAGE>
H. "Interconnection Facilities" means all of the electrical connection
facilities which must be installed or modified for the purpose of
interconnecting and delivering power from the Project to the Tri-State system,
including, but not limited to, all metering equipment, transmission and
distribution lines and equipment, communications and telemetering equipment,
protective devices and safety equipment.
I. "Member System Peak" means the half-hour interval during which Tri-State's
Class A Membership was billed for demand during a Billing Period.
J. "Operating Representative(s)" means a person designated by each Party to act
on its behalf as set forth in Article 23.
K. "Point(s) of Delivery" means the point(s) of interconnection between the
Project and Tri-State's electrical system.
L. "Rated Output" means the design capability of the Project which is projected
to be 5,000 kW.
M. "REA [RUS] Form 12d" means that certain document prescribed by the Rural
Utilities service entitled, "Operating Report-Steam Plant" REA [RUS] Form 12d,
REV. 12/93, which Tri-State submits to the Rural Utilities Service, or in lieu
thereof such other records of Tri-State providing essentially the same
information in essentially the same reporting format as said REA [RUS] Form 12d.
N. "Rolling Three-Year Average Monthly Load Factor", means Tri-State's
system-wide three-year weighted average monthly load factor as calculated per
Exhibit B. Tri-State's monthly load factor to be used in this calculation is
calculated by taking the total Class A member energy sales for the month in kWh
divided by the product of the total Class A member capacity sales for the month
in kW, and the number of hours in the month.
0. "Test Period" means the period of time between the Effective Date and the
Commercial Date when Project testing is performed per Article S.
P. "Twelve Month Weighted Average Monthly Load Factor" means Producer's twelve
month weighted average monthly load factor of capacity and energy deliveries to
<PAGE>
Tri-State as calculated per Exhibit B attached here-to and by this reference
incorporated herein. Producer's monthly load factor to be used in this
calculation is calculated by taking the total metered energy delivered by
Producer to Tri-State for the month in kWh divided by the product of the total
metered capacity produced by the Project at the time of the Member System Peak
in kW, and the number of hours in the month. If this calculation yields a
monthly load factor in excess of 100%, the load factor shall be deemed to be
100% for that particular month.
ARTICLE 2 - AGREEMENT FOR SALE
------------------------------
Tri-State agrees to purchase the entire net output of capacity and energy
from the Project (delivered to the Point(s) of Delivery), and Producer agrees to
sell and deliver said capacity and energy solely to Tri-State for the term of
this Agreement. Producer agrees the production and delivery of capacity and
energy will be pursuant to the restrictions contained in Exhibit "A" and that
any variance from such restrictions shall enable Tri-State to terminate its
obligations under this Agreement, without notice, without penalty or cost, upon
Tri-State's sole discretion, by notice of termination delivered in writing to
Producer.
Notwithstanding the provisions of Article 19, there may be times when these
purchases may have to be curtailed to ensure safe and reliable service to
electric customers of Tri-State, Mountain view, or other interconnected power
suppliers. These curtailments would be performed only under adverse electrical
conditions including, but not limited to, power system interruptions, overload
of facilities, loss of system generation, or other adverse conditions. Tri-State
shall have the sole responsibility to determine the capability of the Tri-State
and Mountain View electrical systems to accept capacity and energy purchases
from the Project. In the event purchases are curtailed, Tri-state shall make
reasonable efforts to minimize the duration of the curtailment. It is further
understood and agreed that Tri-State shall not be liable for loss of revenue or
other costs to the Producer as a result of such curtailment(s).
<PAGE>
ARTICLE 3 - TERM AND TERMINATION
--------------------------------
This Agreement shall have an initial term of thirty (30) years beginning
with the Effective Date. The Agreement shall thereafter be deemed to be extended
by the Parties hereto for up to two (2) successive terms of fifteen (15)
consecutive years in the absence of any Party giving written notice to the other
Party of its election not to so extend, said notice to be given at least 30 days
prior to the expiration of the initial or any additional term.
Tri-State may also terminate this Agreement if certain minimum load factor
deliveries are not maintained by Producer, as outlined in Article 5. In
addition, if the Commercial Date does not occur prior to February 28, 1997, the
terms of this Agreement become null and void.
ARTICLE - 4 DETERMINATION OF CAPACITY AND ENERGY
------------------------------------------------
DELIVERED BY PRODUCER TO TRI-STATE
----------------------------------
Tri-State shall make monthly payments for capacity and energy based on
actual metered quantities per Article 5. The monthly payments shall consist of a
Capacity Rate applied to the metered capacity delivered by the Project at the
time of the Member System Peak during the Billing Period, and a Energy Rate
applied to the total metered energy delivered by the Project during the Billing
Period.
If the Project is off-line, or not producing power for any reason during
the time of the Member System Peak, the metered capacity for the Billing Period
will be determined by taking an average of the daily metered peak capacity
produced for all days during the Billing Period in which the Project is on-line
for the entire twenty-four hours of each day during the Billing Period.
In the event of partial-month service, the capacity component of the rate
shall be prorated on the basis of the number of whole (24 hour) days served.
<PAGE>
ARTICLE 5 - PURCHASE PRICE FOR CAPACITY AND ENERGY
--------------------------------------------------
Energy Rate - Energy purchased for a Billing Year of this Agreement
shall be priced at the average operation cost as shown on line 12 of the REA
[RUS) Form 12d for Tri-State's Craig Station Unit No. 3 for the preceding twelve
month period ended October 31. Any lease expense contained in line 10 of said
form shall be removed prior to calculating the Energy Rate. The energy billing
charge for any period shall be the product the number of megawatthours metered
and received by Tri-State in the period times the Energy Rate. An example of the
calculation of the Energy Rate is contained in Exhibit B attached hereto.
Tri-State will provide an initial Energy Rate calculation to Producer no later
than the Commercial Date of this Agreement. This initial Energy Rate will be in
effect for the first Billing Year of the Agreement, or portion thereof, if less
than a full year. Subsequent Energy Rate calculations will be provided by letter
prior to the start of each succeeding Billing Year. If subsequent Energy Rate
calculations for any Billing Year result in an Energy Rate less than the initial
Energy Rate, the initial Energy Rate will be assessed for such Billing Year(s).
Capacity Rate - The Capacity Rate during the entire term of this Agreement
shall be $10.07 per kW per Billing Period.
If total capacity and energy deliveries from Producer to Tri-State for any
Billing Period yield a Twelve Month Weighted Average Monthly Load Factor for the
most recent twelve month period, ended with the current Billing Period, of less
than the Rolling Three Year Average Monthly Load Factor for the most recent
thirty-six month period, ended with the current Billing Period, a billing
adjustment will be performed to prorate the total capacity revenue paid to
Producer for the Billing Period. A proration factor will be determined by
multiplying the total capacity revenue paid by Tri-State by a fraction, the
numerator of which is the actual Twelve Month Weighted Average Monthly Load
Factor and the denominator of which is the Rolling Three Year Average Monthly
Load Factor. Tri-State will receive from Producer a discount for said Billing
Period based on the difference between the total capacity revenue calculations
per this Article 5 and the proration factor so determined. An example of the
calculation of the Twelve Month Weighted Average Monthly Load Factor and the
Rolling Three Year Average Monthly Load Factor is contained in Exhibit B.
<PAGE>
The purpose of 'the preceding billing adjustment is to reduce the capacity
revenue received by Producer in the event deliveries to Tri-State do not meet
the Rolling Three Year Average Monthly Load Factor. Monthly deliveries to
Tri-State resulting in a Twelve Month Weighted Average Monthly Load Factor
exceeding the Rolling Three Year Average Monthly Load Factor will not result in
calculations to increase the capacity revenue received by Producer.
If the Twelve Month Weighted Average Monthly Load Factor drops below fifty
(50) percent for three consecutive months, Tri-State may terminate this
Agreement upon 30 days writ-ten notice to Producer, unless Producer can
demonstrate to Tri-State's sole satisfaction that it is exercising its best
efforts to correct the problem with all dispatch.
ARTICLE 6 - METERING
--------------------
Tri-State shall provide, own, and maintain, all at Producer's sole
expense, all necessary meters, dedicated potential and current transformers, and
associated equipment to be utilized for the measurement of capacity and energy
for determining Tri-State's payments to Producer pursuant to this Agreement.
Producer shall provide, at no expense to Tri-State, a suitable location for all
meters and associated equipment, and a dedicated telephone circuit for
telemetering purposes. Producer, under the term and conditions set forth herein,
hereby grants to Tri-State, its agents, employees, and subcontractors, a license
to enter the premises to operate, maintain, or replace the equipment installed
hereunder. All reasonable costs associated with any remote recorder readings,
translations, billing costs, and any applicable administrative and general
expenses including labor and travel, shall be borne solely by Producer.
Tri-State's meters shall be sealed by Tri-State and the seals shall be
broken only when the meters are to be inspected, tested or adjusted by Tri-State
or its agent. Producer shall be given reasonable notice of testing and have the
right to have its representative present on such occasions.
<PAGE>
Tri-State's meters installed pursuant to this Agreement shall be tested by
Tri-State, at Producer's sole expense, at least once each year and at any
reasonable time upon request by either Party, at the requesting Party's sole
expense. metering equipment found to be inaccurate shall be repaired, adjusted,
or replaced by Tri-State, at Producer's sole expense, such that the metering
accuracy of said equipment shall be within two percent (2%). If metering
inaccuracy exceeds two percent (2%), the correct amount of capacity and energy
output during such Billing Period shall be measured by check meters installed by
Tri-State. If Tri-State's check meters have not been installed, or if such check
meters have failed to fully register during such Billing Period, the amount of
metered capacity and energy shall be determined based on a mutually agreed upon
estimate between the authorized Operating Representatives of the Parties. Any
correction in the billing resulting from such a correction in meter records
shall be made in the next monthly bill rendered, and such correction, when made,
shall constitute full resolution of any claim between the Parties hereto arising
out of such inaccuracy of metering equipment.
ARTICLE 7 - FIRST RIGHT OF REFUSAL
----------------------------------
In the event Producer proposes to sell the Project or its associated rights
to any third party, Tri-State shall have the first right of refusal to purchase
the Project for a purchase price equal to any bona fide offer offered and
conditionally accepted by Producer (such condition being only the Tri-State
first right of refusal). The provisions of this Article shall not apply to
transactions associated with the financing or refinancing of the Project.
<PAGE>
ARTICLE 8 - TEST ENERGY
-----------------------
Prior to the Commercial Date of operation of the Project, the Parties
anticipate a period of testing during which a limited amount of test energy will
be produced. Tri-State agrees to purchase all metered test energy from Producer,
subject to the following terms and conditions:
1. Metering will be installed by Tri-State, at the Project's expense, before any
interconnected operation for testing is permitted.
2. Producer will obtain liability insurance which conforms to the
Interconnection Standards prior to any testing. Approval of liability insurance
by Tri-State and Mountain View, in Tri-State's and Mountain View's sole opinion,
is required prior to any interconnection for testing.
3. The Project will be required to receive authorization from the Tri-State
dispatchers in Westminster, Colorado, at least thirty (30) minutes before
commencing each testing period. Unauthorized testing will not be permitted.
4. The Project will have personnel on-site during each testing period who can be
contacted immediately by Mountain View or Tri-State. Prior to testing, the
Project will provide telephone numbers or radio frequencies through which they
can be contacted.
5. The Project will immediately disconnect upon request from Mountain View or
Tri-State.
6. Tri-State will pay $5.00/MWh ($0.005/kWh) for the metered energy during
authorized testing periods. There will be no associated capacity rate assessed
or paid for test energy.
7. Upon satisfactory completion of the test period, as solely determined by
Tri-State, the Authorization for Interconnection will be executed before the
Project may be placed into commercial operation.
ARTICLE 9 - OPERATIONS AND MAINTENANCE
--------------------------------------
Producer shall maintain an operating log at the Project with records of:
1. Real power generation;
<PAGE>
2. Changes in operating status;
3. Outages;
4. Operations of protective devices;
5. Any unusual conditions found during inspections; and
6. Routine maintenance.
Such information shall be made available to Tri-State upon request and
copies of said operating log and records shall be provided, if requested, within
thirty (30) days of Tri-State's request. Producer shall coordinate all scheduled
out-ages and major overhauls with Tri-State.
ARTICLE 10 - INTERCONNECTIONS FACILITIES
----------------------------------------
The Producer shall design, construct, own, operate., and maintain, at its
own expense, all equipment on the Project side of the Point of Delivery, except
for equipment set forth in Article 6.
Producer is required to meet the interconnection requirements of Mountain
View as well as those of Tri-State, as set forth in Tri-State's Interconnection
Standards (Exhibit "A") . The Interconnection Standards set forth the details of
Tri-State's requirements concerning protective equipment, inspection and
maintenance, insurance, metering, liability, and the procedure to be followed
during application for interconnection.
Any costs incurred by Tri-State in connection with an interconnection
request pursuant to this Agreement shall be the sole responsibility of Producer,
including, but not limited to, contracting, engineering, and testing activities
(inclusive of all payroll burdens and overheads), and any required construction
or modification of distribution or transmission system facilities or of any
metering or telecommunication facilities.
<PAGE>
ARTICLE 11 - CONDITIONS PRECEDENT TO COMMERCIAL DATE
----------------------------------------------------
Sales of power and energy, except as defined in Article 8, shall not
commence until:
1. The Project is tested per Article 8, and such test is accepted in
writing by Tri-State and Mountain View.
2. The Producer's liability insurance per Article 14 is in force and
such insurance has been approved in writing by Tri-State and Mountain
View.
3. Tri-State, Mountain View, and Producer have signed an
"Authorization for Interconnection" Agreement which is satisfactory to
Tri-State and Mountain View
4. Producer has provided an electrical power system single line
drawing of the Project to Tri-State and Mountain View.
ARTICLE 12 - BILLING AND PAYMENT
--------------------------------
Tri-State shall mail to Producer not later than twenty-five (25) days after
the end of each monthly billing period, a statement showing metered capacity and
energy, a computation of 'the payment due Producer, and a check for that amount.
Payments are deemed paid on the date they are postmarked. Absent proof of
postmark, payments shall be deemed paid as of the date of the check. Payments
postmarked subsequent to the 25th day of the month shall be subject to a
prorated annual interest charge at the Norwest Bank, or its successors, prime
rate plus two percent applied to late payments on a daily basis, on a 365 day
year. Contested billings shall bear a similar amount of interest due to the
prevailing Party upon payment or refund of the contested amount. In the event
the due date of an invoice falls on a weekend or Tri-State holiday, the due date
shall be the next business day.
ARTICLE 13 - LIABILITY
----------------------
Each Party shall save, defend, and hold harmless the other Party, its
officers, employees, and agents from any and all claims for injury to person or
<PAGE>
persons or damage to property occurring on its respective side of the Point of
Delivery; provided, however, that nothing herein contained shall be construed as
relieving or releasing either Party from liability far injury or damage,
wherever occurring, resulting from its own negligence or the negligence of any
of its officers, servants, employees, or agents; and in the event of concurrent
negligence by the Parties, there shall be contribution; and provided further,
that each of the Parties hereto shall be solely responsible far injury or
damage, wherever occurring, due solely to any defect in equipment installed,
furnished, or maintained by such Party. Each Party is solely responsible for the
risk of loss, or damage to, its equipment, unless the loss or damage results
from the negligence or fault of the other Party.
ARTICLE 14 - INSURANCE
----------------------
Prior to any testing of the Project, Producer shall obtain liability
insurance as outlined in Tri-State's Interconnection Standards, and present to
Tri-State a current and valid certificate of insurance. Such certificate of
insurance shall state that Tri-State shall receive notice of lapse, cancellation
and renewal from the insurance carrier. Producer shall give Tri-State thirty
(30) days notice of cancellation or material change in the policy. Producer
shall maintain such liability insurance for the term of this Agreement. If for
any reason such liability insurance is cancelled or not renewed, Tri-State shall
disconnect or cause to disconnect Producer's Project from the Mountain View
electrical system and shall discontinue purchases of metered capacity and energy
output until such time as Producer obtains liability insurance pursuant to the
Interconnection Standards and presents the certificate of insurance to Tri-State
and Mountain View.
ARTICLE 15 - TITLE
------------------
Delivery of energy and capacity shall be deemed completed at the Point of
Delivery, and title to energy and capacity shall pass to Tri-State upon
delivery.
<PAGE>
ARTICLE 16 - WAIVER
-------------------
Any waiver at any time by either Party of its rights with respect to this
Agreement, or with respect to any other matter arising in connection with this
Agreement, shall be deemed a waiver of that specific instance only and shall not
be deemed a waiver with respect to any other matter arising thereafter in
connection with this Agreement.
ARTICLE 17 - CHOICE OF LAW
--------------------------
This Agreement shall be construed and interpreted in accordance with the
laws of the State of Colorado. Jurisdiction and venue shall be in the Adams
County, Colorado, District Court.
ARTICLE 18 - REACTIVE POWER
---------------------------
Each Party shall provide the reactive power requirements for its own system
unless otherwise mutually agreed upon from time to time by the Operating
Representatives of the Parties.
ARTICLE 19 - UNCONTROLLABLE FORCES
----------------------------------
No Party hereto shall be considered to be in default in respect to any
obligation hereunder if performance of such obligation is prevented by
uncontrollable forces. The term uncontrollable forces is deemed for the purpose
of this Agreement to mean any cause beyond the control of the Party affected,
including, but not limited to, flood, earthquake, storm, drought, lightning,
fire epidemic, war, riot, civil disturbance, labor disturbance, sabotage, and
restraint by a court order, regulatory agency, or public authority, which by
exercise of due diligence and foresight such Party could not reasonably have
been expected to avoid. Any Party rendered unable to fulfill any obligation by
reason of uncontrollable forces shall exercise due diligence to remove such
inability with all reasonable dispatch. Nothing contained herein shall be
construed to obligate a Party to forestall or settle a strike against its will.
<PAGE>
ARTICLE 20 - EXHIBITS MADE PART OF THIS AGREEMENT
-------------------------------------------------
Inasmuch as Exhibits A and B attached hereto and made a part hereof, set
forth conditions which may change during the term of this Agreement, the
conditions set forth in the Exhibits shall be as from time to time formulated by
the Parties by mutual revision of said Exhibits. The initial Exhibits A and B,
attached hereto, shall be in force and effect in accordance with its provisions
until superseded by subsequent Exhibit(s). Other exhibits may be added to this
Agreement by mutual agreement of 'the Parties.
ARTICLE 21 - SUCCESSORS AND ASSIGNS
-----------------------------------
A. Permitted Assignments - This Agreement shall be binding upon and inure
to the benefit of the permitted successors and assigns of the Parties hereto.
Producer, without the approval of Tri-State, may assign, transfer, mortgage or
pledge this Agreement to create a security interest for the benefit of the
United States of America, acting through the Administrator of the Rural
Utilities Service (the Administrator). Thereafter, the Administrator, without
the approval of Tri-State, may (1) cause this Agreement to be sold, assigned,
transferred, or otherwise disposed of to a third party pursuant to the terms
governing such security interest, or (2) if the Administrator first acquires
this Agreement pursuant to 7 U.S.C., Section 907, sell, assign, transfer, or
otherwise dispose of this Agreement to a third party; provided, however, that in
either case (a) Producer is in default of its obligations to the Administrator
that are secured by such security interest and the Administrator has given
Tri-State notice of such default,; and (b) the Administrator has given Tri-State
thirty days' prior notice of its intention to sell, assign, transfer or
otherwise dispose of this Agreement indicating the identity of the intended
third party assignee or purchaser. No permitted, sale, assignment, transfer, or
other disposition shall release or discharge Producer from its obligations under
this Agreement.
B. Assignments to Affiliates - Each Party shall have the right to assign
all or part of its rights and interests herein, without prior consent of the
<PAGE>
other Party, to (i) any entity acquiring all ox- substantially all of the assets
of such Party; (ii) any entity merged or consolidated with such Party; or (iii)
any entity which is wholly owned by such Party.
C. Other Assignment - Except as provided in paragraph A, and B., above,
neither Party shall assign its interest in the Agreement in whole or in part
without the prior written consent of the other Party. Such consent shall not be
unreasonably withheld.
ARTICLE 22 - APPROVALS
----------------------
This Agreement is subject to the regulatory powers of any state or federal
agency having jurisdiction, and subject to approval of the Rural Utilities
Service. Each Party hereto shall use it best efforts and shall cooperate with
the other to obtain from all such state and federal authorities as may have
jurisdiction, all authorizations, approvals, and orders to the extent required
by law in order to enable them to validly enter into this Agreement and to
perform all their obligations hereunder.
ARTICLE 23 - OPERATING REPRESENTATIVES
--------------------------------------
The Parties hereby establish Operating Representatives to secure effective
coordination and to deal on a prompt and orderly basis with the various
operating and technical problems which arise in conjunction with the delivery of
power, reciprocal services, and coordination. Each Party, by written notice to
the other Party, shall designate an Operating Representative who is authorized
to act on its behalf.
The establishment of any procedure or practice or any other action or
determination by the operating Representative shall be effective when signed by
the Operating Representative of each of the Parties. The Operating
Representatives of the Parties shall have no authority to modify any provision
of this Agreement, except as provided hereunder.
The Operating Representatives agree to work together to develop procedures
for operations, metering, etc., not less -than six (6) months prior to the
commercial Date of this Agreement.
<PAGE>
ARTICLE 24 - SEVERABILITY
-------------------------
In the event that any of the terms, covenants or conditions of this
Agreement, its Exhibits, or the application of any such term, covenant, or
condition shall be held invalid by any court or administrative body having
jurisdiction, it is the intention of the Parties that in lieu of each such
- -term, covenant or condition that is invalid, there be added as part of this
Agreement, a term, covenant, or condition as similar in terms as possible to
such invalid term, covenant or condition. The Agreement shall not be effected
thereby and shall remain in full force and effect.
ARTICLE 25 - INTEGRATION
------------------------
The terms and provisions contained in this Agreement between Tri-State
and Producer constitute the entire agreement between Tri-State and Producer, and
supersede all previous communications and representations, either oral or
written, between Tri-State and Producer with respect to the subject matter of
this Agreement.
ARTICLE 26 - NOTICES
--------------------
All notices under this Agreement shall be deemed sufficient if deposited in
the U. S. Mail, first-class postage prepaid thereon, addressed as follows:
To Tri-State Generation and Transmission Association, Inc.
General Manager
12076 Grant Street Post Office Box 33695
Denver, Colorado 80233
To Ripe Touch Greenhouse, LLC.
14590 East Fremont Avenue
Englewood, Colorado 80112
The designation of the person to be notified or -the address of said person
may be changed at any time by similar notice.
<PAGE>
ARTICLE 27 - AUDIT
------------------
The Parties shall maintain accurate records and books of account in
accordance with generally accepted accounting principles and consistent with
this Agreement. Said books and records shall present fairly all costs and
expenses utilized, either directly or indirectly, in computing any charges or
payments to the other Party under 'this Agreement.
Upon thirty (30) days' written notice, each Party shall afford the other
Party or its independent auditors reasonable access to the relevant records and
books of account for a period of twenty four (24) months during the term of this
Agreement, and fox, a period of twenty-four months thereafter. The Parties shall
make every reasonable effort to obtain information from major subcontractors and
suppliers requested in connection with such access to the records and books of
account, at the requesting Party's expense.
ARTICLE 28 - ARBITRATION
------------------------
If a dispute between the Parties should arise under this Agreement, either
Party may call for submission of the dispute to arbitration, which call shall be
binding upon the other Party. The arbitration shall be governed by the rules and
practice of the American Arbitration Association (or the rules and practice of a
similar organization if the American Arbitration Association should not then
exist). If such rules and practices conflict with the then existing provisions
of Colorado law applicable to arbitration proceedings, such law shall govern.
ARTICLE 29 - AMENDMENT
----------------------
This Agreement may be amended, changed, modified or altered, provided that
such amendment, change, modification or alteration shall be in writing and
signed by both Parties hereto.
<PAGE>
ARTICLE 30 - ATTEST
-------------------
IN WITNESS WHEREOF, The Parties hereto have caused this Agreement to be
executed in their respective names as of the date and year first above written.
TRI-STATE GENERATION AND RIPE TOUCH GREENHOUSE,
TRANSMISSION ASSOCIATION, INC LLC.
By /s/______________________________ By /s/__________________________
Frank R. Knutson, General Manager Stan Abrams, Manager
Attest: /s/___________________________ Attest: /s/_________________________
<PAGE>
EXHIBIT B
---------
PURCHASE PRICE FOR ENERGY
(Article 5)
This Exhibit B, made this 15th day of March, 1995, to be effective under and as
a part of the Power Purchase Agreement between Tri-State Generation and
Transmission, Association, Inc., and Ripe Touch Greenhouse, LLC.,
dated_______________ _____,shall become effective on the Effective Date of said
Agreement and shall remain in effect until superseded by another Exhibit B. This
Exhibit B or any superseding Exhibit- B shall terminate upon the termination of
said Agreement.
ENERGY RATE - Information necessary to complete the calculation of the Billing
Year Energy Rate illustrated below shall be taken from Tri-State's REA [RUS]
Form 12d entitled, "Operating Report - Steam Plant" for Craig Station Unit No.
3.
ENERGY RATE FOR 1995 BILLING YEAR
(Example)
<TABLE>
<CAPTION>
October 1994 October 1994
12 Months 12 Months
YEAR-TO-DATE YEAR-TO-DATE
OPERATION EXPENSE NET GENERATION
(Sec. E, Col. G, (Sec. B, Col. C,
Line 12) Line 8)
<S> <C> <C>
Craig Station (Unit 3) *$43,502,495 2,897,505 MWh
*Total Operation Expense $79,565,667
Minus lease expense $36,063,172 (line 10)
-----------
= $43,502,495
Energy Rate - 1995 = ($43,502,495 o2,897,505 MWh) = $15.01/mwh
</TABLE>
<PAGE>
CALCULATION OF TWELVE MONTH WEIGHTED AVERAGE MONTHLY LOAD FACTOR AND
- --------------------------------------------------------------------
ROLLING THREE YEAR AVERAGE MONTHLY LOAD FACTOR
- ----------------------------------------------
Weighted Average = LF (1) x KW (1) + LF (2) x KW (2) +... + LF (n) x KW (n)
--------------------------------------------------------
KW (1) + KW (2) + ... KW (n)
Where: LF (m) is the load factor for the month m
KW (m) is the Tri-State Class A member peak kW demand for month m
n = 36 months for Tri-State, or number of whole months elapsed since
April 15, 1992, is less than thirty-six.
n = 12 months for Producer, or number of months elapsed since the
Commercial Date, if less than twelve.
IN WITNESS WHEREOF, The Parties hereto have caused this Exhibit B to be
executed in their respective names as of the date and year first above written.
TRI-STATE GENERATION AND RIPE TOUCH GREENHOUSE, LLC.
TRANSMISSION ASSOCIATION, INC.
By /s/_________________________________ By /s/_______________________
Frank R. Knutson, General Manager Stan Abrams, Manager
Attest: /s/_____________________________ Attest: /s/___________________
<PAGE>
Power Marketing Agreement
April 20,1994 Revision 1
Page 6 of 6 September 8. 1995
APPENDIX A
The additional monthly compensation referred to in Section 4(a)(ii) of the
Agreement shall be calculated as according to the following formula:
R = (E - 14.6727) x $833.33
where:
R = Additional monthly compensation ($ / month) E = Energy rate from
power sales contract ($ / MWh)
The energy rate (E) shall be updated annually on January 1st to reflect annual
rate adjustments in the power sales contract. In any event the additional
monthly compensation (R) shall not be less than zero.
Example
Where:
E = 15.01 ($ / MWh)
Then:
R = (15.01 - 14.6727) x $833.33 ($ / month)
= $281 per month
APPROVED:
- --------
ClTIZENS LEHMAN POWER L.P. RIPE TOUCH GREENHOUSE, LLC KENNETH M. MCBRYDE
By:/s/___________________ By: /s/___________________ By: /s/_________________
Date: 9/13/95 Date: 9/8/95 Date: 9/8/85
------------------- --------------------- -------------------
<PAGE>
AMENDMENT NO. 1
TO THE
POWER PURCHASE AGREEMENT
------------------------
BETWEEN
TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, INC.
AND
RIPE TOUCH GREENHOUSE, LLC
I PREAMBLE. This Contract Amendment is made this 28th day of February
1997, between TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION INC.,
hereinafter called Tri-State-, and RIPE TOUCH GREENHOUSE, INC.,
formerly known as Ripe Touch Greenhouse, LLC., hereinafter called Ripe
Touch, as part of the Power Purchase Agreement, dated March 15, 1995,
(Original Contract) pursuant to the same authorities as the Original
Contract, and subject to all of the provisions of the Original Contract
except as herein amended.
2. EXPLANATORY RECITALS:
--------------------
2.1 Ripe Touch has begun the processes necessary to install and operate a
waste fuel fired generation facility, hereinafter referred to as the
Project, in northwest El Paso County, two miles west of Calhan,
Colorado.
2.2 The Original Contract provides, among other things, for electrical
interconnection by Ripe Touch with Tri-State's Member, Mountain View
Electric Association, Inc., directly and with Tri-State indirectly to
facilitate delivery and sale of approximately 5,000 kilowatts of power
and associated energy from the Project to Tri-State-
2.3 The terms of the Original Contract stipulate that the Original
Contract shall become null and void in the event the Commercial Date
has not occurred by February 28, 1997.
2.4 Ripe Touch has requested extension of such termination date until
April 30, 1998, has demonstrated to Tri-State that significant
progress has been made toward construction of the Project, and has
provided to Tri-State a deposit in the amount of $25,000 which shall
be refundable only in the event the Commercial Date occurs prior to
the requested extension date.
2.5 Ripe Touch Greenhouse, LLC, a party to the Original Contract, along
with Tri-State, is now known as Ripe Touch Greenhouses, Inc.,
2.6 The parties desire to change the terms of the Original Contract to
change the date of termination and to change the name by which Ripe
Touch is known under the Original Contract.
3. AGREEMENT: The parties hereto agree to the terms and conditions set
forth herein.
<PAGE>
4. TERM OF CONTRACT AMENDMENT: This Contract Amendment shall become
effective on the date first above written, subject, however, to
written approval by the Rural Electrification Administration and any
regulatory agency having jurisdiction, and shall remain in effect
concurrently with the Original Contract and shall terminate
concurrently therewith.
5. REVISION OF ARTICLE 3. "TERM AND TERMINATION": The second paragraph of
Article 3, "Term and Termination", of the Original Contract is hereby
deleted in its entirety and the following substituted therefor:
"Tri-State may also terminate this Agreement if certain minimum
load factor deliveries are not maintained by Producer, as
outlined in Article 5. In addition, if the Commercial Date does
not occur prior to May 1, 1998, the terms of this Agreement
become null and void."
6. REVISION OF VARIOUS CONTRACT ARTICLES: All references in the Original
Contract to "RIPE TOUCH GREENHOUSE, LLC." shall be understood to refer
to "RIPE TOUCH GREENHOUSES, INC."
7. ORIGINAL CONTRACT TO REMAIN IN FULL FORCE AND EFFECT: Except as
expressly modified by this Contract Amendment, the Original Contract
shall remain in full force and effect, and this Contract Amendment
shall be subject to all the provisions, except as herein modified, of
the Original Contract.
IN WITNESS WHEREOF, the Parties have caused this Contract Amendment to be
executed the date first written above.
RIPE TOUCH GREENHOUSES INC
- --------------------------
By: /s/_________________________ Witness: /s/_____________________
Stan Abrams, President
TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION INC,
By: /s/________________________________ Witness: /s/_____________________
Frank R. Knutson, General Manager
Exhibit 10.9
EQUIPMENT PURCHASE AGREEMENT
THIS AGREEMENT, entered into this 14th day of December, 1995, by and
between NATHANIEL, LTD, a Colorado Corporation, with its principle place of
business located at 4871 N. Mesa Drive, Castle Rock, CO 80104 (SELLER), and Ripe
Touch Greenhouses, Inc., a Delaware Corporation, whose principal address is P.O.
Box 69, Castle Rock, Colorado 80104 (BUYER).
WITNESSETH
WHEREAS, Buyer desires to purchase form Seller and Seller desires to sell
to Buyer certain system equipment, plus installation, permitting, and technical
support;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. SYSTEM EQUIPMENT DESCRIPTION: Seller agrees to sell and Buyer agrees to
Buy the system equipment and electrical instrumentation described on Exhibit A,
attached hereto.
2. PURCHASE PRICE: Subject to the terms of paragraph three (3) below, the
total purchase price to be paid by Buyer to Seller for the system equipment and
electrical instrumentation described herein shall be $1,585,000.00 F.O.B.
Lakewood Colorado.
3. PAYMENT: Buyer shall pay to Seller the purchase price as follows:
40% of the purchase price ($634,000.00) to be paid upon signing of this
agreement. 50% of the purchase price ($792,500.00) will be paid upon shipment of
product from manufactor. Balance of 10% of the price ($158,500.00) will be paid
upon following installation and testing of the system equipment, and upon
receipt of the necessary Emission Permit or Letter of Compliance as described
within section 11 of this agreement.
4. TITLE - RISK OF LOSS AND INSURANCE: Buyer will provide the Seller a
certificate of insurance. Title to and risk of loss for all equipment to be
supplied hereunder by Seller shall pass to Buyer upon arrival of same at the
Power Paper, Inc. Site: provided however, that Buyer shall grant to Seller a
present and continuing security interest in the equipment supplied hereunder
until Seller has been paid in full pursuant to the terms hereof. Buyer shall
<PAGE>
promptly execute and deliver such documentation as may be required by Seller, in
proper form, to perfect Seller's security interest under the Uniform Commercial
Code or any other relevant statute, law, or regulation. Buyer will not cause or
permit any other security interest, lien, encumbrance or claim to attach to the
system which shall have priority over or be ahead of Seller's security interest,
as described herein, and Buyer authorizes Seller to make any public filings
necessary to perfect or maintain its security interest under the Uniform
Commercial Code, or any other relevant statue, law, or regulation.
Until Seller has received full payment of the purchase price, Seller shall
have all rights and remedies of a Seller and secured party as established or
permitted upon agreement by the Uniform Commercial Code, in addition to all
other rights as established herein, which rights and remedies, to the extent
permitted by law, shall be cumulative.
From the time of receipt of the equipment to be supplied hereunder by
Seller until payment in full has been received for same by Seller, Buyer will
maintain insurance coverage on the equipment supplied hereunder by Seller in an
amount sufficient to pay any outstanding sums due or that will become due from
Buyer to Seller for said equipment. Seller will be listed as a named insured on
all such insurance coverage.. If so requested by Seller, Buyer will cause
certificates of insurance to be supplied to Buyer to verify the insurance
coverage described herein is in place. Such insurance will not be materially
reduced or canceled without the prior written consent of Buyer.
5. INSTALLATION: As per Exhibit B. Buyer shall provide the building needed
to house the system equipment, complete with the electrical wiring necessary for
installation of the system equipment.
6. TRAINING AND OPERATIONAL INSTRUCTION: Seller shall provide Buyer with
all the instructional documentation supplied by the manufacturer of the system
equipment described in Exhibit A. In addition, Seller will train a reasonable
number of Buyer's personnel in the operation and maintenance of the system
equipment described in Exhibit A.
7. WARRANTY: All manufacturers warranties supplied to Seller by the
manufacturers of the equipment described in Exhibit A will be passed through to
Buyer. Each item of equipment to be supplied will strictly conform to the
individual specifications set forth on Exhibit A, attached hereto. The equipment
will be free from defects in design, material, and workmanship, both latent or
patent, and will be fit for the use reasonably intended.
8. REPRESENTATIONS, WARRANTIES AND LIABILITIES: Seller warrants that
the equipment listed on Exhibit A will meet or exceed the performance criteria
listed for same on Exhibit A, and meet or exceed the requirements of the Air
<PAGE>
Quality Permit to be obtained by Seller for Buyer for the completed system, so
long as:
a. The equipment has not been damaged or in any way altered by Buyer;
b. The equipment has been operated and maintained in accordance with
manufacturer's instructions;
c. The fuel supply to the Thermal Combustor conforms to the requirements
set forth in Exhibit B, attached hereto; and,
d. Seller approves, in writing, the contents of any Air Quality Permit
Application(s) for the system, prior to the Seller's filing of the application
with appropriate governmental air quality agencies, whether they be Federal,
State, or local.
Seller shall be responsible for, indemnify and hold harmless Buyer, its
employees, agents, guests, invitees, and tenants from any and all claims,
damages, fees, expenses, and costs for personal injury and property damage
caused by or resulting from Seller's performance hereunder, or from the actions
or conduct of Seller, its employees, agents and representatives provided
however, that Seller shall not be liable for special or consequential damages.
Buyer shall be responsible for, indemnify and hold harmless Seller, its
employees, agents, guests, invitees, and tenants for any and all claims,
damages, fees, expenses, and costs for personal injury and property damage
caused by or resulting from Buyer's performance hereunder, or from the actions
or conduct of Buyer, its employees, agents and representatives; provided
however, that Buyer shall not be liable for special or consequential damages.
Each party represents and warrants to the other that:
a. It has or will have the requisite power, authority, licenses and
permits to execute and perform under this Agreement;
b. The execution and performance of this Agreement have been duly
authorized by, and are in accordance with the legal purposes of, each
party,
c. The execution and performance of this Agreement will not result in
any breach or violation of, or constitute a default under an agreement,
instrument, or document to which either party may be a party;
<PAGE>
d. Neither party has received any notice, nor to the best of its
knowledge is there pending or threatened any notice, that the terms of the
Agreement would violate any applicable laws, ordinances, regulations, rules
or decrees which would materially adversely affect its ability to perform
under this Agreement;
e. It has provided to the other party all records requested pertaining
to this Agreement, and all information contained therein is, to the best
knowledge of the party supplying such records, true and accurate in all
material respect;
f. All approvals required hereunder by either party will not be
unreasonably withheld and will be supplied with adequate timeliness so as
not to delay, hinder or obstruct the performance of the other party.
9. ALTERATIONS TO THERMAL COMBUSTOR: Notwithstanding the requirement of
numbered paragraph eight (8), above, at such time as the system in on line and
in operation, should Buyer alter or modify the Thermal Combustor in a way that,
in the opinion of Seller, improves the Thermal Combustors performance,
reliability, or suitability, Seller and/or Seller's Thermal Combustor
manufacturer or supplier, their agents, heirs, or assigns, shall have the right
to incorporate such alteration or modification into other Thermal Combustors it
sells without any requirement to pay to Buyer, their agents, heirs, or assigns,
any royalty or other use fee.
10. CONFIDENTIAL INFORMATION: Any information, drawings, manuals, or other
documents delivered or supplied by either party hereto to the other and marked
"Confidential," shall be received and treated by the receiving party in secrecy
and confidence and shall not be used by said receiving party for any purpose,
except in furtherance of the terms of this Agreement; provided however, that
such confidential information may be disseminated within the receiving party's
own organization only to the extent reasonably required to fulfill the terms of
this Agreement.
11. CONDITIONS PRECEDENT: Seller's obligations to supply the equipment
described on Exhibit A and Buyer's obligations to purchase same are conditional
on the following:
a. An Air Quality Permit, which shall have been applied for by the
Buyer by the date of execution of this agreement, and which shall be issued
and approved by any and all agencies, the approval of which is required
prior to continuous operation of the system and closing of this agreement.
The time for issuance of the Air Quality Permit may be extended by mutual
agreement of the parties;
<PAGE>
12. PATENT INDEMNITY: Seller shall defend, indemnify and hold Buyer
harmless against all claims, actions, costs and liability resulting from actual
or alleged patent infringement, domestic or foreign, in the use and/or sale of
the equipment listed on Exhibit A, provided that Buyer gives Seller a notice of
claim or action against Buyer within ten (10) days of the date of receipt
thereof by Buyer, and Buyer permits Seller to control the defense thereof.
Seller may, at its expense and at its option, with the approval of Buyer,
either (i) procure for Buyer and its customers the right to continue to use the
equipment that is the subject of claim or action or (ii) modify the equipment so
that it becomes noninfringing, so long as the performance is not altered or
reduced thereby or the warranties affected in any manner; or (iii) accept return
of the equipment subject to the claim or action and refund the pro-rata share of
the purchase price or replace the equipment with a unit of equal or greater
quality.
This numbered paragraph twelve (12) shall constitute the sole remedy of
Buyer for patent infringement and shall constitute the sole liability of Seller
for patent infringement.
13. FORCE MAJEURE: Force Majeure shall mean any cause or causes which
wholly or partly prevent or delay the performance of obligations arising under
this Agreement and shall include, without limitation by enumeration, an act of
God, explosion, accident, fire, epidemic, landslide, lightning, earthquake,
storms, flood or similar cataclysmic occurrence; an act of the public enemy,
war, blockade, insurrection, riot, civil disturbance, sabotage, strikes,
lockouts, or other labor difficulties; unavailability of labor, fuel, power or
raw materials, plant breakdowns or equipment failure due to cause(s) beyond the
reasonable control of the affected party; inability to obtain supplies;
restrictions or restraints imposed by law or by rule, regulation or order of
governmental authorities, whether Federal, State or local; action or failure to
act of governmental authorities; interruption or other loss of utilities due to
causes beyond the reasonable control of the affected Party; and any other cause
beyond the reasonable control of the Party relying on such cause to excuse its
performance hereunder.
In the event that the parties are unable in good faith to agree that a
Force Majeure event has occurred, the parties shall submit the dispute for
arbitration pursuant to numbered Paragraph 14, below, provided that the burden
of proof as to whether an event of Force Majeure has occurred shall be upon the
party claiming an event of Force Majeure.
If either party is rendered wholly or partially unable to perform its
<PAGE>
obligations under this Agreement because of a Force Majeure event, that party
shall be excused from whatever performance is affected by the Force Majeure
event to the extent so affected, provided that:
a. The non-performing party, within a reasonable period after the
occurrence of the inability to perform due to a Force Majeure event, (i)
provides written notice to the other party of the particulars of the
occurrence, including an estimation of the event's expected duration and
probable impact on the performance of its obligation hereunder, and (ii)
continues to furnish timely, regular reports with respect thereto during
the period of Force Majeure;
b. The non-performing party shall exercise all reasonable efforts to
continue to perform its obligations hereunder and remedy its inability to
so perform;
c. The non-performing party shall provide the other party with prompt
notification of the cessation of the event of Force Majeure, giving rise to
the excusal from performance and,
d. No obligation of either party that arose prior to the occurrence of
the event of Force Majeure shall be excused as a result of such occurrence.
Nothing in this Paragraph 13 shall require the settlement of any strike,
walkout, lockout or other labor dispute on terms which, in the sole judgement of
the party involved in the dispute, are contrary to that party's interest. It is
understood and agreed that the settlement of strikes, walkouts, lockouts or
other labor disputes shall be entirely within the discretion of the party having
the difficulty.
14. ARBITRATION: If the parties are unable to resolve a dispute hereunder,
either party may serve upon the other a demand that the matter be arbitrated, in
which case the dispute shall be resolved by arbitration conducted by three
arbitrators in accordance with the commercial arbitration rules of the American
Arbitration Association. The decision of the arbitrators on any issue shall be
final.
15. CHANGES: Buyer, without invalidating this Agreement, may order changes
in the type or quantity of equipment to be supplied by Seller hereunder, within
the general scope of the Agreement; provided that any such change shall entitle
Seller to an equitable adjustment in purchase price and/or the time allowed
Seller for performance. No such change in the scope of supply shall be performed
by Seller until so ordered, in writing, by Buyer.
16. STATE LAW: It is the intention of the parties that this Agreement and
its performance hereunder shall be governed by and construed in accordance with
the laws of the State of Colorado and that, in any action, special proceeding or
<PAGE>
other proceeding that may be brought, arising out of, in connection with, or by
reason of this Agreement, the laws of the State of Colorado shall be applicable
and shall be given to the exclusion of any other forum, without regard to the
jurisdiction in which any action or special proceeding may instituted. Legal
actions regarding this Agreement may be brought only in the State of Colorado.
17. NO WAIVER: No provision of this Agreement may be waived except by
agreement in writing, signed by the waiving party. A waiver of any term or
provision of this Agreement shall not be construed as a waiver of any other term
or provision.
18. BINDING EFFECT: This Agreement shall be binding upon the parties, their
heirs, legal representatives, successors and assigns.
19. CONSTRUCTION: The singular shall include the plural, the plural shall
include the singular and the masculine and neuter shall include the feminine,
wherever the context so requires.
20. SEVERABILITY: If any provision of this Agreement is declared by any
court of competent jurisdiction to be invalid for any reason, such invalidity
shall not affect the remaining provisions. Such remaining provisions shall be
fully severable and this Agreement shall be construed and enforced as if such
invalid provisions never had been inserted in this Agreement.
21. AMENDMENT: This Agreement may be amended, altered or revoked at any
time, in whole or in part, by filing with this Agreement a written instrument
setting forth such changes, signed by Buyer and Seller.
22. NOTICES: All notices required to be given by this Agreement shall be in
writing by either personal delivery to the party requiring notice, with a
written receipt, or by mailing such notice to the last known address of the
party requiring notice by certified mail, return receipt requested. The
effective date of such notice shall be the date of receipt of such notice. The
current addresses of the parties are as follows:
SELLER: Nathaniel, Ltd.
4871 N. Mesa Dr.
Castle Rock, CO 80104
Att: Stan Abrams, President
BUYER: Ripe Touch Greenhouse, Inc.
P.O. Box 69
Castle Rock, Co 80104
Att: James Woodley, Secretary
<PAGE>
23. ASSIGNMENT: Neither party to this Agreement shall assign its rights and
obligations under this Agreement. except by merger or operation of law, without
prior written consent of the other party, which consent shall not be
unreasonably withheld.
24. TIME OF ESSENCE: It is understood by and between the parties hereto
that time is of the essence of this Agreement.
25. WHOLE AGREEMENT: This agreement is intended to represent the entire
agreement between the parties hereto. Any oral agreements or representations
entered into or made prior to the execution of this Agreement are considered
merged hereunto and made a part hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
Nathaniel, Ltd. (SELLER) RipeTouch Greenhouse,Inc. (BUYER)
By: /s/_________________ By: /s/______________________
Stan Abrams, James Woodley
President Secretary
By: ___________________
By: ___________________
<PAGE>
EXHIBIT A
Equipment to Be Supplied by:
Nathaniel, Ltd.
Ripe Touch Greenhouses, Inc.
Calahan, Co
3 - 1,000 HP Thermal Combustor Model 1,000 HP, BTU 35,000,000 per hour, Steam
34,500 lbs. per hour;
3 - Computerized Controller Systems,
3 - Secondary Ash Auger with Drive and 1 HP Motor, Length 10' overall,
diameter 9" and with water proof shaft seal;
INSTALLATION BY OTHERS
Building
Utilities
Walking Floor Storage
Feed system from walking floor to WCS surge bin.
Exhibit 10.10
RIPE TOUCH GREENHOUSES, INC.
Promissory Note
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR UNDER ANY
STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED UNTIL
(i) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE
SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES LAW OR (ii) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE COMPANY OR OTHER COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH NOTE MAY BE
PLEDGED, SOLD, ASSIGNED OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
$_____________
______________, 1996
Note No. 96-________
FOR VALUE RECEIVED, Ripe Touch Greenhouses, Inc., a Delaware corporation (the
"Company"), with its principal office at P.O. Box 69, Castle Rock, Colorado
80104 promises to pay to __________________ residing at
__________________________________________ (the "Holder"),the principal amount
of _______________________________ Dollars ($_______________), in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public or private debts, together with interest
on the unpaid balance of said principal amount from time to time outstanding at
the rate of twelve (12%) percent per annum from the date hereof until the
Maturity Date (as defined below). Payment of principal shall be made on the
earlier of (i) September 30, 1997, or (ii) such date as shall be determined
pursuant to the provisions of Sections 4.1, 4.2 or 4.3 of this Note (the earlier
of such dates set forth in or referred to in clauses (i) and (ii) of this
sentence is herein referred to as the "Maturity Date"). Payment of interest
accrued on the unpaid principal balance hereof shall be made on the Maturity
Date and thereafter shall be payable monthly, if applicable. Payments of
principal and interest are to be made at the address of the Holder designated
above or at such other place as the Holder shall have notified the Company in
writing at least five days before such payment is due.
This Note is issued pursuant to a Subscription Agreement between the Company
and the Holder and is entitled to all the benefits, and is subject to all the
limitations, set forth therein, provided, that reference herein to the
Subscription Agreement shall in no way impair the absolute and unconditional
obligation of the Company to pay both principal and interest hereon as provided
herein. The Company covenants that the proceeds of this Note will be used only
for the purposes described in the Subscription Agreement and/or in the Agency
Agreement (as defined below).
<PAGE>
1. Events of Default.
-----------------
(a) Upon the occurrence of any of the following events (each an "Event of
Default", and collectively the "Events of Default"):
(i) the Company shall fail to make a payment of the principal or
of interest on this Note within five (5) days after such payment
is due;
(ii) (1) the Company shall commence any proceeding or other
action relating to it in bankruptcy or seek reorganization,
arrangement, readjustment of its debts, receivership,
dissolution, liquidation, winding-up, composition or any other
relief under any bankruptcy law, or under any other insolvency,
reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or any other similar act or
law, of any jurisdiction, domestic or foreign, now or hereafter
existing; or (2) the Company shall admit the material allegations
of any petition or pleading in connection with any such
proceeding; or (3) the Company applies for, or consents or
acquiesces to, the appointment of a receiver, conservator,
trustee or similar officer for it or for all or a substantial
part of its property; or (4) the Company makes a general
assignment for the benefit of creditors;
(iii) (1) the commencement of any proceedings or the taking of
any other action against the Company in bankruptcy or seeking
reorganization, arrangement, readjustment of its debts,
liquidation, dissolution, arrangement, composition, readjustment
of debt or any other relief under any bankruptcy law or any other
similar act or law of any jurisdiction, domestic or foreign, now
or hereafter existing and the continuance of any of such events
for forty-five (45) days undismissed, unbonded or undischarged;
or (2) the appointment of a receiver, conservator, trustee or
similar officer for the Company or for all or substantially all
of its property and the continuance of any of such events for
forty-five (45) days undismissed, unbonded or undischarged; or
(3) the issuance of a warrant of attachment, execution or similar
process against substantially all of the property of the Company
and the continuance of such event for forty-five (45) days
undismissed, unbonded and undischarged;
(iv) the Company shall fail to perform any obligation of the
Company contained in the Subscription Agreement relating to the
offering of the Notes (as defined below) and such failure is not
remedied within twenty (20) days after the occurrence thereof,
which failure shall have the effect more fully set forth in
Section 3.3 hereof, to the extent applicable, or there shall have
occurred any breach of a representation or warranty of the
Company set forth in the Subscription Agreement which breach
shall have the effect more fully set forth in Section 3.3 hereof;
<PAGE>
(v) the Company shall fail to comply with any of its obligations
under this Note (including without limitation those incorporated
by reference herein);
(vi) the Company shall (a)(i) fail to pay any indebtedness for
borrowed money owing by it to the Holder of any promissory note
issued by the Company as part of the private placement of the
Company's securities (comprised of units of notes and shares of
Common Stock) contemplated by the Private Placement Memorandum
dated August 15, 1996 when due, whether such indebtedness shall
become due by scheduled maturity, required prepayment,
acceleration or otherwise, (ii) fail to pay any other
indebtedness in excess of $100,000 existing at the date hereof or
created at any time prior to the Maturity Date, when due, whether
such indebtedness shall become due by scheduled maturity,
required prepayment, acceleration or otherwise, or (iii) any
"event of default" (as defined in any such promissory note or
other instrument of indebtedness) has occurred; or
(vii) a final judgment or judgments for the payment of money in
excess of $100,000 in the aggregate shall be rendered by one or
more courts, administrative or arbitral tribunals or other bodies
having jurisdiction against the Company and the same shall not be
discharged (or provision shall not be made for such discharge),
or a stay of execution thereof shall not be procured, within 60
days from the date of entry thereof and the Company shall not,
within such 60-day period, or such longer period during which
execution of the same shall have been stayed, appeal therefrom
and cause the execution thereof to be stayed during such appeal;
then, in any such event, the entire unpaid principal amount of this Note
outstanding together with accrued interest thereon shall forthwith become
immediately due and payable without presentment, demand, protest, or other
notice of any kind, all of which are expressly waived. The Events of Default
listed herein are solely for the purpose of protecting the interests of the
Holder of this Note. If the Note is not paid in full upon acceleration, as
required above, interest shall accrue on the outstanding principal of and
interest on this Note from the date of the Event of Default up to and including
the date of payment at a rate equal to the lesser of 18% per annum or the
maximum interest rate permitted by applicable law, and shall be payable monthly.
(b) Non-Waiver and Other Remedies. No course of dealing or delay on
the part of the Holder in exercising any right hereunder shall operate as a
waiver or otherwise prejudice the right of the Holder. No remedy conferred
hereby shall be exclusive of any other remedy referred to herein or now or
hereafter available at law, in equity, by statute or otherwise.
2. Principal Obligation: Covenants. No provision of this Note shall alter
or impair the obligation of the Company, which is absolute and unconditional, to
<PAGE>
pay the principal of and interest on this Note at the place, at the respective
times, at the rates, and in the currency herein prescribed.
2.1 Affirmative Covenants. In addition to any other agreements, covenants
and obligations of the Company set forth in the Agency Agreement, all of which
are incorporated by reference herein, the Company hereby covenants and agrees
that, while this Note is outstanding, it shall:
(a) Pay and discharge all taxes, assessments and governmental charges or
levies imposed upon it or upon its income and profits, or upon any properties
belonging to it before the same shall be in default; provided, however, that the
Company shall not be required to pay any such tax, assessment, charge or levy
which is being contested in good faith by proper proceedings and adequate
reserves for the accrual of same are maintained if required by generally
accepted accounting principals; and
(b) Do all things necessary to preserve its corporate existence.
2.2 Negative Covenants. In addition to any other prohibitions and/or
restrictions on the Company's business and operations set forth in the Agency
Agreement, all of which are incorporated by reference herein, the Company hereby
covenants and agrees that while this Note is outstanding it will not directly or
indirectly:
(a) guaranty or otherwise in any way become or be responsible for
indebtedness for borrowed money or obligations of any of its officers, directors
or principal stockholders or any of their affiliates, contingently or otherwise,
except presently outstanding indebtedness.
(b) sell, transfer or dispose of, any of its assets other than in the
ordinary course of its business and for fair value;
(c) fail to comply with any statute, law, ordinance, order, judgment,
decree, injunction, rule, regulation, permit, license, authorization or
requirement ("Requirement(s)") of any governmental body, department, commission,
board, company or association insuring the Company or its property, court,
authority, official, or officer, which are or may be applicable to the Company
or its properties and of which the Company has knowledge; except wherein the
failure to comply would not have a material adverse effect on the Company or its
property; provided that nothing contained herein shall prevent the Company from
contesting the validity or the application of any Requirement.
3. Prepayment.
----------
3.1 Public Offering. This Note shall be paid in full, without premium, in
the event, and on the date (the "Effective Date"), that the Company successfully
consummates an initial public offering of securities of the Company including,
but not limited to, the initial public offering contemplated by the Letter of
Intent dated February 2, 1996 betwen the Company and Millenium Securities, Corp.
<PAGE>
3.2 Change of Control.
-----------------
(a) Upon the occurrence of any of the following events (herein called
a "Change of Control"):
(i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially
all of the assets of the Company and its Subsidiaries to any person or
related group of persons for purposes of Section 13(d) of the Exchange Act
(a "Group"), together with any affiliates thereof (whether or not otherwise
in compliance with the provisions of this Note);
(ii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company (whether or not
otherwise in compliance with the provisions of this Note); or
(iii) the acquisition in one or more transactions of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) by (y)
any person or entity or (z) any Group, in either case, of any Capital Stock
of the Company such that, as a result of such acquisition, such person,
entity or Group beneficially owns (within the meaning of Rule 13d-3 under
the Exchange Act), directly or indirectly, at least 50% of the Company's
then outstanding voting capital stock entitled to vote on a regular basis
for a majority of the Board of Directors;
each Holder shall have the right, at such Holder's option, to require the
Company to immediately repurchase such Holder's Notes at a purchase price in
cash equal to the principal amount thereof, plus accrued and unpaid interest, if
any, to the date of purchase, in accordance with the terms contemplated in
paragraph (b) below.
(b) Within 10 Business Days following any Change of Control, the Company
shall mail a notice (a "Change of Control Offer") to each Holder, stating:
(i) that a Change of Control has occurred and that such Holder has the
right, at such Holder's option, to require the Company to repurchase such
Holder's Notes at the applicable purchase price in cash as determined
above;
(ii) the circumstances and relevant facts regarding such Change
of Control (including, but not limited to, information with respect to pro
forma historical income, cash flow and capitalization after giving effect
to such Change of Control and whether the transaction giving rise to such
Change of Control was approved by a majority of the Board of Directors);
(iii) the purchase date (which shall be no earlier than 10 days
nor later than 20 days from the date such notice is mailed); and
<PAGE>
(iv) the instructions determined by the Company, consistent with this
Section 3.2, that a Holder must follow in order to have Notes repurchased.
3.3 Voluntary Prepayment. This Note may be called and prepaid by the
Company at any time in whole or in part from time to time at par, without
premium or penalty. Interest shall accrue to and including the date on which
prepayment is made.
4. Required Consent. The Company may not modify any of the terms of this
Note without the prior written consent of the Holder.
5. Lost Documents. Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Note or any Note
exchanged for it, and (in the case of loss, theft or destruction) of indemnity
satisfactory to it, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such Note,
if mutilated, the Company will make and deliver in lieu of such Note a new Note
of like tenor and unpaid principal amount and dated as of the original date of
the Note.
6. Miscellaneous.
(a) Benefit. This Note shall be binding upon and inure to the benefit
of the parties hereto and their legal representatives, successors and assigns
(but with respect to an assignee, only an assignee to whom this Note has been
assigned in accordance with the provisions of Section 7(f) hereof).
(b) Notices and Addresses. All notices, offers, acceptance and any
other acts under this Note (except payment) shall be in writing, and shall be
sufficiently given if delivered to the addressee in person, by Federal Express
or similar receipted delivery, by facsimile delivery or, if mailed, postage
prepaid, by certified mail, return receipt requested, as follows:
Holder: To his address on page 1 of this Note
The Company: Ripe Touch Greenhouses, Inc.
Post Office Box 69
Castle Rock, Colorado 80104
Attention: Mr. Stanley Abrams
Fax: (303) 688-9806
In either case
with a copies to: Millenium Securities, Corp.
110 East 59th Streeet
New York, New York 10004
Attention: Mr. Richard A. Sitomer
Fax: (212) 909-0528
and
<PAGE>
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle, Suite 225
Jericho, New York 11753
Attention: David H. Lieberman, Esq.
Fax: (516) 822-4824
and
Beckman & Millman, P.C.
116 John Street
New York, New York 10004
Attention: Michael Beckman, Esq.
Fax: (212) 227-1486
or to such other address as any of them, by notice to the others may designate
from time to time. The transmission confirmation-receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person,
by Federal Express or similar receipted delivery, by facsimile or by mailing.
(c) Governing Law. This Note and any dispute, disagreement, or issue of
construction or interpretation arising hereunder whether relating to its
execution, its validity, the obligations provided therein or performance shall
be governed and interpreted according to the laws of the State of New York,
without regard to its conflicts of law principles.
(d) Section Headings. Section headings herein have been inserted for
reference only and shall not be deemed to limit or otherwise affect, in any
matter, or be deemed to interpret in whole or in part any of the terms or
provisions of this Note.
(e) Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements contained herein shall survive the
delivery of this Note.
(f) Restriction on Transfer. This Note has not been registered under the
Securities Act of 1933, as amended (the "Act"), nor under any state securities
law and may not be pledged, sold, assigned or transferred until (i) a
registration statement with respect thereto is effective under the Act and any
applicable state securities law or (ii) the Company receives an opinion of
counsel to the Company or other counsel to the Holder of such Note which other
counsel is reasonably satisfactory to the Company that such Note may be pledged,
sold, assigned or transferred without an effective registration statement under
the Act or applicable state securities laws.
(g) Payment of Costs of Collection. The Company agrees to pay all costs of
collection, when incurred, including, without limitation, reasonable attorneys'
fees and court costs.
<PAGE>
IN WITNESS WHEREOF, this Note has been executed and delivered on the date
specified above by the duly authorized representative of the Company.
RIPE TOUCH GREENHOUSES, INC.
By:__________________________________
Stanley Abrams, President
Exhibit 10.11
SUBSCRIPTION AGREEMENT
----------------------
Subscription Agreement, dated as of _________, 1996, between Ripe Touch
Greenhouses, Inc., a Delaware corporation (the "Company") and
________________________________ (the "Purchaser").
WHEREAS, the Purchaser desires to subscribe for, and the Company desires to
issue to the Purchaser, Bridge Units (the "Units") consisting of $25,000
principal amount of promissory notes (the "Notes"), substantially in the form
attached hereto as Exhibit A, and 5,000 of shares of common stock, par value
$.001 per share (the "Common Stock") of the Company (the "Shares"), all upon the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
premises, covenants, representations and warranties herein contained, it is
hereby agreed as follows:
1. Subscription Price; Issuance.
----------------------------
In reliance on the representations and warranties contained herein and
subject to the terms and conditions hereof, the Purchaser hereby subscribes for
___ Units and concurrently with delivery hereof has paid to the Company an
amount equal to $25,000 per Unit or $__________ in the aggregate, in immediately
available funds upon the execution and delivery of this Agreement, and the
Company will issue upon the closing as contemplated by the Memorandum (as
hereinafter defined) to the Purchaser a Note in the principal amount of $25,000
with respect to each such Unit and 5,000 Shares with respect to each such Unit.
2. Representations and Warranties of the Company.
---------------------------------------------
The Company represents and warrants to the Purchaser as follows:
2.1. Corporate Status.
----------------
The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with full corporate
power and authority to carry on its business as now conducted.
2.2. Authority of Agreement.
----------------------
The Company has the power and authority to execute and deliver
this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company and this Agreement
constitutes the valid and legally binding obligation of the Company enforceable
<PAGE>
against the Company in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally now or hereafter in effect and
subject to the application of equitable principles and the availability of
equitable remedies. The Company has reserved from its authorized but unissued
shares of Common Stock such number of shares as shall be deliverable to the
Purchaser upon the Closing of the units subscribed for hereby.
2.3. No Conflicts.
------------
The execution, delivery and performance of this Agreement and
the other instruments and agreements to be executed, delivered and performed by
the Company pursuant hereto and the consummation of the transactions
contemplated hereby and thereby by the Company do not and will not with or
without the giving of notice or the passage of time or both, violate or conflict
with or result in a breach or termination of any provision of, or constitute a
default under, the Certificate of Incorporation or the By-Laws of the Company or
any order, judgment, decree, statute, regulation, contract, agreement or any
other restriction of any kind or description to which the Company or its assets
may be bound or subject.
2.4 Fully Paid and Non-Assessable
-----------------------------
Upon issuance of the Shares and payment therefor pursuant to the
terms hereof, each share of Common Stock shall be validly issued, fully paid and
non-assessable.
3. Representations and Warranties of the Purchaser.
-----------------------------------------------
The Purchaser represents and warrants to the Company as follows:
3.1. Status.
------
If the Purchaser is a corporation or other entity, the Purchaser
is a corporation or other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization with full power
and authority to execute, deliver and perform its obligations under this
Agreement. If the Purchaser is an individual, the Purchaser has legal capacity
to execute, deliver and perform his or her obligations under this Agreement.
3.2 Authority for Agreements.
------------------------
The Purchaser has the power and authority to execute and deliver
this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance by the Purchaser of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary action on the part of the Purchaser and this Agreement constitutes the
valid and legally binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors' rights generally now or hereafter in effect and subject to the
application of equitable principles and the availability of equitable remedies.
<PAGE>
3.3. No Conflicts.
------------
The execution, delivery and performance of this Agreement and the
other instruments and agreements to be executed, delivered and performed by the
Purchaser pursuant hereto and the consummation of the transactions contemplated
hereby and thereby by the Purchaser do not and will not with or without the
giving of notice or the passage of time or both, violate or conflict with or
result in a breach or termination of any provision of, or constitute a default
under, the Certificate of Incorporation or the By-Laws of the Purchaser (if the
Purchaser is a corporation), any other organizational instrument (if the
Purchaser is a legal entity other than a corporation) or any order, judgment,
decree, statute, regulation, contract, agreement or any other restriction of any
kind or description to which the Purchaser is a party or by which the Purchaser
may be bound.
3.4. Investor Representations and Acknowledgements.
---------------------------------------------
(a) The Purchaser is acquiring the Units for the Purchaser's own
account for investment only and not as nominee or agent and not with a view to,
or for sale in connection with, a distribution of the Units or its components
and with no present intention of selling, transferring, granting a participation
in or otherwise distributing, the Units or such components, all within the
meaning of the Securities Act of 1933, as amended, and the rules and regulations
thereunder (the "Securities Act") and any applicable state, securities or
blue-sky laws.
(b) The Purchaser is not a party or subject to or bound by any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or pledge the Units or any part thereof to any person, and has no
present intention to enter into such a contract, undertaking, agreement or
arrangement.
(c) The Purchaser acknowledges to the Company that:
(i) The Company has advised the Purchaser that the Units and
their components have not been registered under the Securities Act or under
the laws of any state on the basis that the issuance thereof contemplated
by this Agreement is exempt from such registration;
(ii) The Company's reliance on the availability of such exemption
is, in part, based upon the accuracy and truthfulness of the Purchaser's
representations contained herein;
(iii) The Units and their components cannot be resold without
registration or an exemption under the Securities Act and such state
securities laws, and that certificates representing the Common Stock will
bear a restrictive legend to such effect;
(iv) The Purchaser has evaluated the merits and risks of
purchasing the Units, and has such knowledge and experience in financial
and business matters that the Purchaser is capable of evaluating the merits
and risks of such purchase, is aware of and has considered the financial
risks and financial hazards of purchasing the Units, and is able to bear
the economic risk of purchasing the Units, including the possibility of a
complete loss with respect thereto;
<PAGE>
(v) The Purchaser has had access to such information regarding the
business and finances of the Company, including without limitation, the
Company's audited and unaudited financial statements included in the
disclosure documents delivered by the Company to the Purchaser, and has
been provided the opportunity to discuss with the Company's management the
business, affairs and financial condition of the Company and such other
matters with respect to the Company as would concern a reasonable person
considering the transactions contemplated by this Agreement and/or
concerned with the operation of the Company;
(vi) The Purchaser hereby covenants and agrees that Purchaser shall
not directly or indirectly, offer, offer to sell, contract to sell, pledge,
hypothecate, grant any option to purchase or otherwise dispose or transfer
(or announce any offer, offer of sale, sale, contract of sale, grant of any
option to purchase or other disposition or transfer), or agree to do any of
the foregoing, with respect to the Units and/or Shares, without the prior
written consent of Millenium Securities, Corp., for a period of up to
twelve (12) months after an initial public offering of Common Stock of the
Company, even if such Units or Shares are registered in such initial public
offering. The certificates representing the Units, Notes and the Shares
will bear a restrictive legend to such effect;
(vii) All the information which is set forth with respect to the
Purchaser in the Qualified Purchaser Questionnaire executed by the
Purchaser, all of which are incorporated herein by this reference, and all
of the Purchaser's representations and warranties set forth herein are
correct and complete as of the date of this Agreement, shall be true and
correct as of the closing of the transaction contemplated by this
Agreement, shall survive such closing and if there should be any material
change in such information prior to the sale to the Purchaser of the Units
the Purchaser will immediately furnish such revised or corrected
information to the Company; and
(viii) Additional Representations and Warranties of Accredited
Investors. The Purchaser, by initialing the applicable paragraph below (a)
through (g) hereby represents and warrants that the Purchaser is an
"Accredited Investor", because the Purchaser comes within one or more of
the enumerated categories. The Purchaser has reviewed the Investor
Suitability Standards attached as Annex A hereto and confirms it is an
"Accredited Investor" as indicated below. Place your initials in the space
provided in the beginning of each applicable paragraph, thereby
representing and warranting as to the applicability to the Purchaser of the
initialed paragraph or paragraphs:
[ ] (a) any individual Purchaser whose net worth, or joint net worth
with that person's spouse at the time of his purchase, exceeds $1,000,000
(including any individual participant of a Keogh Plan, IRA or IRA Rollover
Purchaser);
[ ] (b) any individual Purchaser who had an income in excess of
$200,000 in each of the two most recent years or joint income with that
person's spouse in excess of $300,000 in each of those years and who
reasonably expects an income in excess of the same income level in the
current year (including any individual participant of a Keogh Plan, IRA or
IRA Rollover Purchaser);
<PAGE>
[ ] (c) any corporation or partnership not formed for the specific
purpose of making an investment in the Common Stock, with total assets in
excess of $5,000,000;
[ ] (d) any trust, which is not formed for the specific purpose of
investing in the Common Stock, with total assets in excess of $5,000,000,
whose purchase is directed by a sophisticated person, as such term is
defined in Rule 506(b) of Regulation D under the Securities Act;
[ ] (e) any ERISA Plan if the investment decision is made by a plan
fiduciary, as defined in section 3(21) of ERISA, which is either a bank,
insurance company, or registered investment adviser, or the Plan has total
assets in excess of $5,000,000;
[ ] (f) any entity in which all of the equity owners are Accredited
Investors under paragraphs (a), (b) or (c) above or any other entity
meeting required "Accredited Investor" standards under Rule 501 of
Regulation D under the Securities Act and applicable State securities law
criteria;
[ ] (g) other (please explain)
4. Registration Rights.
-------------------
4.1 IPO Registration. In connection with the purchase of the
Units and as an inducement to the Purchaser with respect thereto, the Company
hereby covenants and agrees that it shall cause all Shares purchased by the
Purchaser pursuant hereto to be registered under the registration statement
relating to the Company's initial public offering, as contemplated by the Letter
of Intent dated February 2, 1996 between the Company and Millenium Securities,
Corp. In addition, the Company does hereby grant certain other registration
rights, which rights are set forth in more detail in Section 4.2 hereof and
Section 5.
4.2 Piggyback Registration Rights. The Company further covenants
and agrees that if, at any time following the date hereof, the Company proposes
to file a registration statement with respect to the public offering of any
class of security (other than in connection with a merger or acquisition on Form
S-4 or successor form or in connection with an employee benefit plan on Form S-8
or successor form) under the Securities Act in a primary registration on behalf
of the Company and/or in a secondary registration on behalf of holders of such
securities (other than the Shares) and the registration form to be used may be
used for registration of the Shares, the Company will give prompt written notice
(which shall be at least thirty (30) days prior to the proposed date of such
filing) to the holders of the Shares (the "Holders") at the addresses appearing
on the records of the Company of its intention to file a registration statement
and will offer to include in such registration to the maximum extent possible,
subject to paragraph (a) and (b) below of this Section 4.2, such number of
Shares with respect to which the Company has received written requests for
inclusion therein within ten (10) days after the giving of the Company's
aforementioned notice. The registration requested pursuant to this Section 4.2
is referred to herein as a "Piggyback Registration." The Company shall continue
to provide these Piggyback Registration rights and shall continue to give notice
of any such registrations to the Holders until such time as all of the Shares
shall have been registered under the Act.
<PAGE>
(a) Priority on Primary Registrations. If the Piggyback Registration
applies to an underwritten primary registration on behalf of the Company and the
underwriter(s) of the offering being registered by the Company shall determine
in good faith and advise the Company in writing that, in its/their opinion, the
number of Shares requested to be included in such registration exceeds the
number than can be registered on such registration statement without materially
adversely affecting the distribution of such securities by the Company, the
Company will include in such registration (i) first, the securities that the
Company proposes to sell, (ii) second, the securities purchased by the Purchaser
pursuant to this Subscription Agreement and all other purchasers in the same
offering (iii) third, the securities issued to Millenium Securities, Corp. in
connection with that certain Unit Purchase Option more fully described in that
certain Letter of Intent dated February 2, 1996 between the Company and
Millenium Securities, Corp. and (iv) fourth, any other securities requested to
be included in such registration, apportioned pro rata among the holders of such
securities.
(b) Priority on Secondary Registrations. If the Piggyback Registration
applies only to an underwritten secondary registration on behalf of holders of
securities of the Company, and the underwriter(s) for such offering being
registered by the Company advise(s) the Company in writing that, in its/their
opinion, the number of Shares requested to be included in such registration
exceeds the number which can be registered on such registration statement
without materially adversely affecting the distribution of such securities, the
Company will include in such registration (i) first, the securities requested to
be included therein by the initial holders requesting such registration, (ii)
second, the securities purchased by the Purchaser pursuant to this Subscription
Agreement and all other purchasers in the same offering, and (iii) third, any
other securities requested to be included in such registration, apportioned pro
rata among the holders of such securities.
(c) Notwithstanding the foregoing, if any such underwriter shall determine
in good faith and advise the Company in writing that any distribution of the
Shares requested to be included in the registration concurrently with the
securities being registered by the Company would materially adversely affect the
distribution of such securities by the Company, then the Holders of such Shares
shall delay their offering and sale for such period ending on the earliest of
(1) 120 days following the effective date of the Company's registration
statement, (2) the day upon which the underwriting syndicate, if any, for such
offering shall have been disbanded or, (3) such date as the Company, the
managing underwriter of such offering and the Holders shall otherwise agree. In
the event of such delay, the Company shall file such supplements, post-effective
amendments and take any such other steps as may be necessary to permit such
Holders to make his proposed offering and sale for a period of 120 days
immediately following the end of such period or delay. If the Purchaser
disapproves of the terms of any such underwriting, the Purchaser may elect to
withdraw therefrom by written notice to the Company.
5. Company's Obligations for Registrations.
---------------------------------------
5.1 Costs and Expenses. The Company shall pay all costs
(excluding expenses of counsel to the Holders and underwriting, dealers or
selling commissions, which shall be borne by the Holders), fees and expenses in
connection with any registration statement filed pursuant to Section 4 hereof
including, without limitation, the Company's legal and accounting fees, printing
expenses, blue sky fees and expenses. If the Company shall fail to comply with
the provisions of Section 4 hereof, the Company shall, in addition to any other
equitable or other non-monetary relief available to the Holders, be liable for
any or all incidental, special and consequential damages due to loss of profit
sustained by the Holders as a result of such failure.
<PAGE>
5.2 Blue Sky Laws. The Company will take all necessary action
which may be required in qualifying or registering the Shares included in a
registration statement for offer and sale under the securities or blue sky laws
of such states as reasonably are requested by the Holder(s); provided, that the
Company shall not be obligated to execute or file any general consent to service
of process or to qualify as a foreign corporation to do business under the laws
of any such jurisdiction; provided, further, that the Company shall not be
obligated to qualify or register the Shares in any state where the Company's
shares are not already qualified or registered for offer and sale as of the
effective date of the Company's initial public offering contemplated by that
certain Letter of Intent dated February 2, 1996 between the Company and
Millenium Securities, Corp.
5.3 Indemnification of Holders. The Company shall indemnify the
Holder(s) of the Shares to be sold pursuant to any registration statement and
each person, if any, who controls such Holders within the meaning of Section 15
of the Securities Act or Section 20(a) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), against all loss, claim, damage, expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which any of them may
become subject under the Securities Act, the Exchange Act or otherwise, arising
from such registration statement; provided, however, that the Company shall not
be required to indemnify the Holders for any loss, claim, damage, expense or
liability arising from any misstatement or omission of a material fact which is
based on information furnished in writing by or on behalf of such Holders, or
their successors or assigns, for inclusion in the registration statement. In
addition, the Company shall not be obligated to indemnify the Holders for any
loss, claims, damage, expense or liability arising from any misstatement or
omission of a material fact where the Company shall have timely delivered to the
Holders amendments or supplements of a registration statement or prospectus
which correct such misstatement or omission of a material fact and the Holders
fail to utilize such amendment or supplement in the offer and sale of the
Shares.
5.4 Indemnification of the Company. The Holders(s) of the Shares
to be sold pursuant to a registration statement, and their successors and
assigns, shall severally, and not jointly, indemnify the Company, its officers
and directors and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which they may become subject under the Securities Act,
the Exchange Act or otherwise, arising from information furnished in writing by
or on behalf of such Holders, or their successors or assigns, for inclusion in
such registration statement.
5.5 Deliveries. The Company shall furnish to each Holder
participating in the offering and to each underwriter thereof, if any, a signed
counterpart, addressed to such Holder or underwriter, of a "cold comfort" letter
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
<PAGE>
statements included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the prospectus
included therein) and, with respect to events subsequent to the date of such
financial statements, as are customarily covered in accountants' letters
delivered to underwriters in underwritten public offerings of securities. In
addition, in the event that the subject registration is underwritten, the
Company shall furnish to each Holder participating in such offering and to each
such underwriter thereof, an opinion of counsel to the Company, dated as of the
closing date of the public offering covered by such registration statement,
covering substantially the same matters with respect to such registration
statement (and the Prospectus included therein) as are customarily covered in
opinions of issuer's counsel delivered to underwriters in underwritten public
offerings of securities.
5.6 Financial Statements. The Company as soon as practicable, but
in any event not later than 45 days after the end of the 12-month period
beginning on the day after the end of the fiscal quarter of the Company during
which the effective date of the registration statement occurs (90 days in the
event that the end of such fiscal quarter is the end of the Company's fiscal
year), shall make generally available to its securities holders, in the manner
specified in Rule 158(b) under the Securities Act, and to the underwriter, an
earnings statement which will be in the detail required by, and will otherwise
comply with, the provisions of section 11(a) of the Securities Act and Rule
158(a), which statement need not be audited unless required by the Securities
Act, covering a period of at least 12 consecutive months after the effective
date of the registration statement.
5.7 Copies. The Company shall furnish to each Holder of Shares
such number of copies of the registration statement, each amendment thereto, the
prospectus included in such registration (including each preliminary prospectus)
and such other documents as such Holder any reasonably request in order to
facilitate the disposition of the Shares owned by such Holder.
5.8 Underwritten Piggyback Offering. Subject to the Company's
other contractual obligations, the Company shall enter into an underwriting
agreement with the managing underwriters reasonably selected for such
underwriting by Holders holding a majority of the Shares requested to be
included in such underwriting and upon consent of the Company, which consent
shall not be unreasonably withheld. Such agreement shall be satisfactory in form
and substance to the Company, each Holder and such managing underwriters, and
shall contain such representations, warranties and covenants by the Company and
such other terms as are customarily contained in agreements of that type used by
the managing underwriter. The Company shall deliver promptly to each managing
underwriter, if any, of an offering to which Piggyback Registration applies,
copies of all correspondence between the Securities and Exchange Commission (the
"Commission") and the Company, its counsel or auditors and all memoranda
relating to discussions with the Commission or its staff with respect to the
registration statement and permit each underwriter to do such investigation,
upon reasonable advance notice, with respect to information contained in or
omitted from the registration statement as it deems reasonably necessary to
comply with applicable securities laws or rules of the National Association of
Securities Dealers, Inc. ("NASD"). Such investigation shall include access to
books, records and properties and opportunities to discuss the business of the
Company with its officers and independent auditors, all to such reasonable
extent and at such reasonable times and as often as any such Underwriter shall
reasonably request. The Holders shall be parties to any underwriting agreement
relating to an underwritten sale of their Shares and may, at their option,
require that any or all the representations, warranties and covenants of the
Company to or for the benefit of such underwriters shall also be made to and for
the benefit of such Holders. Such Holders shall be required to make such
representations or warranties as to such Holders to or agreements with the
Company or the underwriters as are customary under the circumstances.
<PAGE>
6. Further Assurances.
------------------
At any time and from time to time after the date hereof, each
party shall, without further consideration, execute and deliver to the other
such other instruments or documents and shall take such other actions as the
other may reasonably request to carry out the transactions contemplated by this
Agreement.
7. Miscellaneous.
-------------
Any party may waive compliance by the other with any of the provisions of
this Agreement. No waiver of any provision shall be construed as a waiver of any
other provision. Any waiver must be in writing. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. This Agreement may not be modified
or amended except in writing signed by both parties hereto. This Agreement may
be executed in several counterparts, each of which shall be deemed an original,
and all of which shall constitute one and the same instrument. This Agreement
shall be governed in all respects, including validity, interpretation and
effect, by the laws of the State of Delaware, applicable to contracts made and
to be performed in Delaware. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the successors and assigns of the parties
hereto. This Agreement shall not be assignable by either party without the prior
written consent of the other, such consent not to be unreasonably withheld. The
rights and obligations contained in this Agreement are solely for the benefit of
the parties hereto and are not intended to benefit or be enforceable by any
other party, under the third party beneficiary doctrine or otherwise.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
<PAGE>
EXECUTION PAGE FOR SUBSCRIPTION BY INDIVIDUALS
(not applicable to subscriptions by entities, Individual
Retirement Accounts, Keogh Plans or ERISA Plans)
TOTAL SUBSCRIPTION AMOUNT $_______________________.
[ ]INDIVIDUAL OWNER [ ]CUSTODIAN UNDER
(One signature required below) Uniform Gifts to Minors Act
[ ]JOINT TENANTS WITH RIGHT ______________________________________
OF SURVIVORSHIP (Insert applicable state)
(All tenants must sign below) (Custodian must sign below)
[ ]TENANTS IN COMMON [ ]COMMUNITY PROPERTY
(All tenants must sign below) (Both spouses in community property
states must sign below)
Print information as it is to
appear on the Company records.
_______________________________ ______________________________________
(Name of Subscriber) (Social Security or Taxpayer ID No.)
_______________________________
_______________________________ ______________________________________
(Home Address) (Home Telephone)
_______________________________
_______________________________ ____________________________________
(Business Address) (Business Telephone)
_______________________________ ____________________________________
(Name of Co-Subscriber) (Social Security or Taxpayer ID No.)
_______________________________
_______________________________ ____________________________________
(Home Address) (Home Telephone)
_______________________________ ____________________________________
______________________________ ____________________________________
(Business Address) (Business Telephone)
SIGNATURE(S)
-----------
Dated:______________, 1996.
(1)By:_______________________________ (2)By:___________________________________
Signature of Authorized Signatory Signature of Authorized Co-Signatory
___________________________________ _____________________________________
Print Name of Signatory and Title, Print Name of Co-Signatory and Title,
if applicable if applicable
ACCEPTED AND AGREED:
RIPE TOUCH GREENHOUSES, INC.
By:___________________________ Dated:___________________, 1996.
Name:
Title:
<PAGE>
(ACKNOWLEDGEMENT FOR INDIVIDUALS)
STATE OF :
: s:
COUNTY OF :
On this _____________ day of ___________, 1996, before me, a notary public in
and for the state and county aforesaid, personally appeared
___________________________, known to me to be the person(s) whose name(s) is
(are) subscribed to the foregoing Subscription Agreement and acknowledged that
he, she or they executed the same.
__________________________________
Notary Public
<PAGE>
EXECUTION PAGE FOR SUBSCRIPTION BY ENTITIES
TOTAL SUBSCRIPTION AMOUNT $___________________________.
[ ]EMPLOYMENT BENEFIT PLAN OR TRUST (including pension plan, profit sharing
plan, other defined contribution plan and SEP)
[ ]IRA, IRA ROLLOVER OR KEOGH PLAN
[ ]TRUST (other than employee benefit trust)
[ ]CORPORATION (Please include certified corporate resolution authorizing
signature)
[ ]PARTNERSHIP
[ ]OTHER____________________________________
Print information as it is to appear on the Company records.
________________________________ ____________________________________________
(Name of Subscriber) (Taxpayer ID Number)
________________________________ ____________________________________________
(Plan number, if applicable)
________________________________ ____________________________________________
(Address) (Telephone Number)
________________________________________________________________________________
Name and Taxpayer ID number of sponsor, if applicable
The undersigned trustee, partner, corporate officer or fiduciary certifies
that he or she has full power and authority from all beneficiaries, partners or
shareholders of the entity named above to execute this Subscription Agreement on
behalf of the entity and to make the representations, warranties and agreements
made herein on their behalf and that investment in the Units has been
affirmatively authorized by the governing board or body of such entity and is
not prohibited by law or the governing documents of the entity.
SIGNATURE(S)
-----------
Dated:__________________, 1996.
By:_______________________________ By:__________________________________________
Signature of Authorized Signatory Signature of Required Authorized Co-Signatory
__________________________________ _____________________________________________
Print Name of Signatory Print Name of Required Co-Signatory
__________________________________ _____________________________________________
Print Name of Signatory Print Title of Required Co-Signatory
ACCEPTED AND AGREED:
RIPE TOUCH GREENHOUSES, INC.
By:_______________________________ Dated:___________________________, 1996
Name:
Title:
<PAGE>
(ACKNOWLEDGEMENT FOR ENTITIES)
STATE OF :
: ss:
COUNTY OF :
On this ___________ day of _______, 1996, before me personally came
_____________________ known to me, who, being by me duly sworn, did depose and
say that he or she is the __________ of ___________________________________, the
entity described in and which executed the foregoing Subscription Agreement;
that is was so affirmatively authorized by the governing board or body of such
entity; and that he or she signed his or her name thereto by like order.
______________________________
Notary Public
<PAGE>
Annex A
-------
INVESTOR SUITABILITY STANDARDS
A purchase of the Units involves a high degree of risk and is suitable only
for persons of substantial financial means who have no need for liquidity in
their investments. The offer, offer for sale, and sale of the securities are
intended to be exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act"), pursuant to Regulation D promulgated
thereunder ("Regulation D"), and are intended to be exempt from the requirements
of applicable state securities laws.
The Common Stock is being offered and sold only to up to thirty-five (35)
"non-accredited investors" and to "accredited investors," as those terms are
defined in Regulation D.
Regulation D defines an "accredited investor" as follows:
(1) Any bank as defined in section 3(a)(2) of the Securities Act, or any
savings and loan association or other institution as defined in section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity; any broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934; any insurance company as defined in section
2(13) of the Securities Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
section 2(a)(48) of that act; any Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d) of the Small
Business Investment act of 1958; any plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; 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
or 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 or, if a self-directed plan, with investment decisions made solely
by persons that are accredited investors;
(2) Any private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership, not
formed for the specific purpose or acquiring the securities offered, with total
assets in excess of $5,000,000;
(4) Any director, executive officer, or general partner of the issuer of
the securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer;
(5) Any natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his or her purchase exceeds $1,000,000;
<PAGE>
(6) Any natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;
(7) Any trust with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is directed
by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D;
and
(8) Any entity in which all of the equity owners are accredited investors.
Exhibit 10.12
RIPE TOUCH GREENHOUSES, INC.
Promissory Note
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR UNDER ANY
STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED UNTIL
(i) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE
SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES LAW OR (ii) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE COMPANY OR OTHER COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH NOTE MAY BE
PLEDGED, SOLD, ASSIGNED OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
$_____________
_________, 1997
Note No. 97A-___
FOR VALUE RECEIVED, Ripe Touch Greenhouses, Inc., a Delaware corporation (the
"Company"), with its principal office at P.O. Box 69, Castle Rock, Colorado
80104 promises to pay to ______________________ residing at
___________________________________________ 11518 (the "Holder"),the principal
amount of ______________________________________ ($_____), in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public or private debts, together with interest
on the unpaid balance of said principal amount from time to time outstanding at
the rate of twelve (12%) percent per annum from the date hereof until the
Maturity Date (as defined below). Payment of principal shall be made on the
earlier of (i) June 30, 1998, or (ii) such date as shall be determined pursuant
to the provisions of Sections 3.1, 3.2 or 3.3 of this Note (the earlier of such
dates set forth in or referred to in clauses (i) and (ii) of this sentence is
herein referred to as the "Maturity Date"). Payment of interest accrued on the
unpaid principal balance hereof shall be made on the Maturity Date and
thereafter shall be payable monthly, if applicable. Payments of principal and
interest are to be made at the address of the Holder designated above or at such
other place as the Holder shall have notified the Company in writing at least
five days before such payment is due.
This Note is issued pursuant to a Subscription Agreement between the
Company and the Holder and is entitled to all the benefits, and is subject to
all the limitations, set forth therein, provided, that reference herein to the
Subscription Agreement shall in no way impair the absolute and unconditional
obligation of the Company to pay both principal and interest hereon as provided
<PAGE>
herein. The Company covenants that the proceeds of this Note will be used
only for the purposes described in the Subscription Agreement and/or in the
Agency Agreement (as defined below).
1. Events of Default.
(a) Upon the occurrence of any of the following events (each an "Event
of Default", and collectively the "Events of Default"):
(i) the Company shall fail to make a payment of the principal
or of interest on this Note within five (5) days after such
payment is due;
(ii) (1) the Company shall commence any proceeding or other
action relating to it in bankruptcy or seek reorganization,
arrangement, readjustment of its debts, receivership,
dissolution, liquidation, winding-up, composition or any
other relief under any bankruptcy law, or under any other
insolvency, reorganization, liquidation, dissolution,
arrangement, composition, readjustment of debt or any other
similar act or law, of any jurisdiction, domestic or foreign,
now or hereafter existing; or (2) the Company shall admit the
material allegations of any petition or pleading in
connection with any such proceeding; or (3) the Company
applies for, or consents or acquiesces to, the appointment of
a receiver, conservator, trustee or similar officer for it or
for all or a substantial part of its property; or (4) the
Company makes a general assignment for the benefit of
creditors;
(iii) (1) the commencement of any proceedings or the taking
of any other action against the Company in bankruptcy or
seeking reorganization, arrangement, readjustment of its
debts, liquidation, dissolution, arrangement, composition,
readjustment of debt or any other relief under any bankruptcy
law or any other similar act or law of any jurisdiction,
domestic or foreign, now or hereafter existing and the
continuance of any of such events for forty-five (45) days
undismissed, unbonded or undischarged; or (2) the appointment
of a receiver, conservator, trustee or similar officer for
the Company or for all or substantially all of its property
and the continuance of any of such events for forty-five (45)
days undismissed, unbonded or undischarged; or (3) the
issuance of a warrant of attachment, execution or similar
process against substantially all of the property of the
Company and the continuance of such event for forty-five (45)
days undismissed, unbonded and undischarged;
<PAGE>
(iv) the Company shall fail to perform any obligation of the
Company contained in the Subscription Agreement relating to
the offering of the Notes (as defined below) and such failure
is not remedied within twenty (20) days after the occurrence
thereof, which failure shall have the effect more fully set
forth in Section 3.3 hereof, to the extent applicable, or
there shall have occurred any breach of a representation or
warranty of the Company set forth in the Subscription
Agreement which breach shall have the effect more fully set
forth in Section 3.3 hereof;
(v) the Company shall fail to comply with any of its
obligations under this Note (including without limitation
those incorporated by reference herein); or
(vi) a final judgment or judgments for the payment of money
in excess of $100,000 in the aggregate shall be rendered by
one or more courts, administrative or arbitral tribunals or
other bodies having jurisdiction against the Company and the
same shall not be discharged (or provision shall not be made
for such discharge), or a stay of execution thereof shall not
be procured, within 60 days from the date of entry thereof
and the Company shall not, within such 60-day period, or such
longer period during which execution of the same shall have
been stayed, appeal therefrom and cause the execution thereof
to be stayed during such appeal;
then, in any such event, the entire unpaid principal amount of this Note
outstanding together with accrued interest thereon shall forthwith become
immediately due and payable without presentment, demand, protest, or other
notice of any kind, all of which are expressly waived. The Events of Default
listed herein are solely for the purpose of protecting the interests of the
Holder of this Note. If the Note is not paid in full upon acceleration, as
required above, interest shall accrue on the outstanding principal of and
interest on this Note from the date of the Event of Default up to and including
the date of payment at a rate equal to the lesser of 18% per annum or the
maximum interest rate permitted by applicable law, and shall be payable monthly.
(b) Non-Waiver and Other Remedies. No course of dealing or delay
on the part of the Holder in exercising any right hereunder shall operate as a
waiver or otherwise prejudice the right of the Holder. No remedy conferred
hereby shall be exclusive of any other remedy referred to herein or now or
hereafter available at law, in equity, by statute or otherwise.
2. Principal Obligation: Covenants. No provision of this Note shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of and interest on this Note at the place,
at the respective times, at the rates, and in the currency herein prescribed.
<PAGE>
2.1 Affirmative Covenants. In addition to any other agreements,
covenants and obligations of the Company set forth in the Agency Agreement, all
of which are incorporated by reference herein, the Company hereby covenants and
agrees that, while this Note is outstanding, it shall:
(a) Pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income and profits, or upon any
properties belonging to it before the same shall be in default; provided,
however, that the Company shall not be required to pay any such tax, assessment,
charge or levy which is being contested in good faith by proper proceedings and
adequate reserves for the accrual of same are maintained if required by
generally accepted accounting principals; and
(b) Do all things necessary to preserve its corporate existence.
2.2 Negative Covenants. In addition to any other prohibitions and/or
restrictions on the Company's business and operations set forth in the Agency
Agreement, all of which are incorporated by reference herein, the Company hereby
covenants and agrees that while this Note is outstanding it will not directly or
indirectly:
(a) guaranty or otherwise in any way become or be responsible for
indebtedness for borrowed money or obligations of any of its officers, directors
or principal stockholders or any of their affiliates, contingently or otherwise,
except presently outstanding indebtedness.
(b) sell, transfer or dispose of, any of its assets other than in
the ordinary course of its business and for fair value;
(c) fail to comply with any statute, law, ordinance, order,
judgment, decree, injunction, rule, regulation, permit, license, authorization
or requirement ("Requirement(s)") of any governmental body, department,
commission, board, company or association insuring the Company or its property,
court, authority, official, or officer, which are or may be applicable to the
Company or its properties and of which the Company has knowledge; except wherein
the failure to comply would not have a material adverse effect on the Company or
its property; provided that nothing contained herein shall prevent the Company
from contesting the validity or the application of any Requirement.
3. Prepayment.
3.1 Public Offering. This Note shall be paid in full, without premium,
in the event, and on the date (the "Effective Date"), that the Company
successfully consummates an initial public offering of securities of the Company
including, but not limited to, the initial public offering contemplated by the
Letter of Intent dated February 2, 1996 between the Company and Millennium
Securities, Corp.
<PAGE>
3.2 Change of Control.
(a) Upon the occurrence of any of the following events (herein
called a "Change of Control"):
(i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company and its Subsidiaries to
any person or related group of persons for purposes of Section 13(d) of
the Exchange Act (a "Group"), together with any affiliates thereof
(whether or not otherwise in compliance with the provisions of this
Note);
(ii) the shareholders of the Company shall approve any plan
or proposal for the liquidation or dissolution of the Company (whether
or not otherwise in compliance with the provisions of this Note); or
(iii) the acquisition in one or more transactions of
beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) by (y) any person or entity or (z) any Group, in either
case, of any Capital Stock of the Company such that, as a result of
such acquisition, such person, entity or Group beneficially owns
(within the meaning of Rule 13d-3 under the Exchange Act), directly or
indirectly, at least 50% of the Company's then outstanding voting
capital stock entitled to vote on a regular basis for a majority of the
Board of Directors;
each Holder shall have the right, at such Holder's option, to require the
Company to immediately repurchase such Holder's Notes at a purchase price in
cash equal to the principal amount thereof, plus accrued and unpaid interest, if
any, to the date of purchase, in accordance with the terms contemplated in
paragraph (b) below.
(b) Within 10 Business Days following any Change of Control, the
Company shall mail a notice (a "Change of Control Offer") to each Holder,
stating:
(i) that a Change of Control has occurred and that such
Holder has the right, at such Holder's option, to require
the Company to repurchase such Holder's Notes at the applicable
purchase price in cash as determined above;
(ii) the circumstances and relevant facts regarding such
Change of Control (including, but not limited to, information with
respect to pro forma historical income, cash flow and capitalization
after giving effect to such Change of Control and whether the
transaction giving rise to such Change of Control was approved by a
majority of the Board of Directors);
<PAGE>
(iii) the purchase date (which shall be no earlier than 10
days nor later than 20 days from the date such notice is mailed); and
(iv) the instructions determined by the Company, consistent
with this Section 3.2, that a Holder must follow in order to have Notes
repurchased.
3.3 Voluntary Prepayment. This Note may be called and prepaid by the
Company at any time in whole or in part from time to time at par, without
premium or penalty. Interest shall accrue to and including the date on which
prepayment is made.
4. Required Consent. The Company may not modify any of the terms of
this Note without the prior written consent of the Holder.
5. Lost Documents. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Note or any Note
exchanged for it, and (in the case of loss, theft or destruction) of indemnity
satisfactory to it, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such Note,
if mutilated, the Company will make and deliver in lieu of such Note a new Note
of like tenor and unpaid principal amount and dated as of the original date of
the Note.
6. Miscellaneous.
(a) Benefit. This Note shall be binding upon and inure to the
benefit of the parties hereto and their legal representatives, successors and
assigns (but with respect to an assignee, only an assignee to whom this Note has
been assigned in accordance with the provisions of Section 7(f) hereof).
(b) Notices and Addresses. All notices, offers, acceptance and any
other acts under this Note (except payment) shall be in writing, and shall be
sufficiently given if delivered to the addressee in person, by Federal Express
or similar receipted delivery, by facsimile delivery or, if mailed, postage
prepaid, by certified mail, return receipt requested, as follows:
Holder: To his address on page 1 of this Note
The Company: Ripe Touch Greenhouses, Inc.
4871 N. Mesa Drive
Castle Rock, Colorado 80104
Attention: Mr. Stanley Abrams
Fax: (303) 688-9806
and
<PAGE>
With a copy to: Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle, Suite 225
Jericho, New York 11753
Attention: David H. Lieberman, Esq.
Fax: (516) 822-4824
or to such other address as any of them, by notice to the others may designate
from time to time. The transmission confirmation-receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person,
by Federal Express or similar receipted delivery, by facsimile or by mailing.
(c) Governing Law. This Note and any dispute, disagreement, or
issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided therein or performance
shall be governed and interpreted according to the laws of the State of New
York, without regard to its conflicts of law principles.
(d) Section Headings. Section headings herein have been inserted
for reference only and shall not be deemed to limit or otherwise affect, in any
matter, or be deemed to interpret in whole or in part any of the terms or
provisions of this Note.
(e) Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements contained herein shall survive the
delivery of this Note.
(f) Restriction on Transfer. This Note has not been registered
under the Securities Act of 1933, as amended (the "Act"), nor under any state
securities law and may not be pledged, sold, assigned or transferred until (i) a
registration statement with respect thereto is effective under the Act and any
applicable state securities law or (ii) the Company receives an opinion of
counsel to the Company or other counsel to the Holder of such Note which other
counsel is reasonably satisfactory to the Company that such Note may be pledged,
sold, assigned or transferred without an effective registration statement under
the Act or applicable state securities laws.
(g) Payment of Costs of Collection. The Company agrees to pay all
costs of collection, when incurred, including, without limitation, reasonable
attorneys' fees and court costs.
<PAGE>
IN WITNESS WHEREOF, this Note has been executed and delivered on the date
specified above by the duly authorized representative of the Company.
RIPE TOUCH GREENHOUSES, INC.
By:__________________________________
Stanley Abrams, President
Exhibit 10.13
SUBSCRIPTION AGREEMENT
Subscription Agreement, dated as of _________, 1997, between Ripe Touch
Greenhouses, Inc., a Delaware corporation (the "Company") and
________________________________ (the "Purchaser").
WHEREAS, the Purchaser desires to subscribe for, and the Company desires to
issue to the Purchaser, Second Private Placement Units (the "Units") consisting
of $25,000 principal amount of promissory notes (the "Notes"), substantially in
the form attached hereto as Exhibit A, and 5,000 of shares of common stock, par
value $.001 per share (the "Common Stock") of the Company (the "Shares"), all
upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
premises, covenants, representations and warranties herein contained, it is
hereby agreed as follows:
1. Subscription Price; Issuance.
----------------------------
In reliance on the representations and warranties contained herein and
subject to the terms and conditions hereof, the Purchaser hereby subscribes for
___ Units and concurrently with delivery hereof has paid to the Company an
amount equal to $25,000 per Unit or $__________ in the aggregate, in immediately
available funds upon the execution and delivery of this Agreement, and the
Company will issue upon the closing as contemplated by the Memorandum (as
hereinafter defined) to the Purchaser a Note in the principal amount of $25,000
with respect to each such Unit and 5,000 Shares with respect to each such Unit.
2. Representations and Warranties of the Company.
---------------------------------------------
The Company represents and warrants to the Purchaser as follows:
2.1. Corporate Status.
----------------
The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with full corporate
power and authority to carry on its business as now conducted.
2.2. Authority of Agreement.
----------------------
The Company has the power and authority to execute and deliver
this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company and this Agreement
<PAGE>
constitutes the valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally now or hereafter in effect and
subject to the application of equitable principles and the availability of
equitable remedies. The Company has reserved from its authorized but unissued
shares of Common Stock such number of shares as shall be deliverable to the
Purchaser upon the Closing of the units subscribed for hereby.
2.3. No Conflicts.
------------
The execution, delivery and performance of this Agreement and
the other instruments and agreements to be executed, delivered and performed by
the Company pursuant hereto and the consummation of the transactions
contemplated hereby and thereby by the Company do not and will not with or
without the giving of notice or the passage of time or both, violate or conflict
with or result in a breach or termination of any provision of, or constitute a
default under, the Certificate of Incorporation or the By-Laws of the Company or
any order, judgment, decree, statute, regulation, contract, agreement or any
other restriction of any kind or description to which the Company or its assets
may be bound or subject.
2.4 Fully Paid and Non-Assessable
-----------------------------
Upon issuance of the Shares and payment therefor pursuant to the
terms hereof, each share of Common Stock shall be validly issued, fully paid and
non-assessable.
3. Representations and Warranties of the Purchaser.
-----------------------------------------------
The Purchaser represents and warrants to the Company as follows:
3.1. Status.
------
If the Purchaser is a corporation or other entity, the Purchaser
is a corporation or other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization with full power
and authority to execute, deliver and perform its obligations under this
Agreement. If the Purchaser is an individual, the Purchaser has legal capacity
to execute, deliver and perform his or her obligations under this Agreement.
3.2 Authority for Agreements.
------------------------
The Purchaser has the power and authority to execute and deliver
this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance by the Purchaser of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary action on the part of the Purchaser and this Agreement constitutes the
valid and legally binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors' rights generally now or hereafter in effect and subject to the
application of equitable principles and the availability of equitable remedies.
<PAGE>
3.3. No Conflicts.
------------
The execution, delivery and performance of this Agreement and the
other instruments and agreements to be executed, delivered and performed by the
Purchaser pursuant hereto and the consummation of the transactions contemplated
hereby and thereby by the Purchaser do not and will not with or without the
giving of notice or the passage of time or both, violate or conflict with or
result in a breach or termination of any provision of, or constitute a default
under, the Certificate of Incorporation or the By-Laws of the Purchaser (if the
Purchaser is a corporation), any other organizational instrument (if the
Purchaser is a legal entity other than a corporation) or any order, judgment,
decree, statute, regulation, contract, agreement or any other restriction of any
kind or description to which the Purchaser is a party or by which the Purchaser
may be bound.
3.4. Investor Representations and Acknowledgments.
--------------------------------------------
(a) The Purchaser is acquiring the Units for the Purchaser's own
account for investment only and not as nominee or agent and not with a view to,
or for sale in connection with, a distribution of the Units or its components
and with no present intention of selling, transferring, granting a participation
in or otherwise distributing, the Units or such components, all within the
meaning of the Securities Act of 1933, as amended, and the rules and regulations
thereunder (the "Securities Act") and any applicable state, securities or
blue-sky laws.
(b) The Purchaser is not a party or subject to or bound by any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or pledge the Units or any part thereof to any person, and has no
present intention to enter into such a contract, undertaking, agreement or
arrangement.
(c) The Purchaser acknowledges to the Company that:
(i) The Company has advised the Purchaser that the Units and
their components have not been registered under the Securities Act or under
the laws of any state on the basis that the issuance thereof contemplated
by this Agreement is exempt from such registration;
(ii) The Company's reliance on the availability of such exemption
is, in part, based upon the accuracy and truthfulness of the Purchaser's
representations contained herein;
(iii) The Units and their components cannot be resold without
registration or an exemption under the Securities Act and such state
securities laws, and that certificates representing the Common Stock will
bear a restrictive legend to such effect;
<PAGE>
(iv) The Purchaser has evaluated the merits and risks of
purchasing the Units, and has such knowledge and experience in financial
and business matters that the Purchaser is capable of evaluating the merits
and risks of such purchase, is aware of and has considered the financial
risks and financial hazards of purchasing the Units, and is able to bear
the economic risk of purchasing the Units, including the possibility of a
complete loss with respect thereto;
(v) The Purchaser has had access to such information regarding the
business and finances of the Company, including without limitation, the
Company's audited and unaudited financial statements included in the
disclosure documents delivered by the Company to the Purchaser, and has
been provided the opportunity to discuss with the Company's management the
business, affairs and financial condition of the Company and such other
matters with respect to the Company as would concern a reasonable person
considering the transactions contemplated by this Agreement and/or
concerned with the operation of the Company;
(vi) The Purchaser hereby covenants and agrees that Purchaser shall
not directly or indirectly, offer, offer to sell, contract to sell, pledge,
hypothecate, grant any option to purchase or otherwise dispose or transfer
(or announce any offer, offer of sale, sale, contract of sale, grant of any
option to purchase or other disposition or transfer), or agree to do any of
the foregoing, with respect to the Units and/or Shares, without the prior
written consent of Millennium Securities, Corp., for a period of up to
twenty-four (24) months after an initial public offering of Common Stock of
the Company, even if such Units or Shares are registered in such initial
public offering. The certificates representing the Units, Notes and the
Shares will bear a restrictive legend to such effect;
(vii) All the information which is set forth with respect to the
Purchaser in the Qualified Purchaser Questionnaire executed by the
Purchaser, all of which are incorporated herein by this reference, and all
of the Purchaser's representations and warranties set forth herein are
correct and complete as of the date of this Agreement, shall be true and
correct as of the closing of the transaction contemplated by this
Agreement, shall survive such closing and if there should be any material
change in such information prior to the sale to the Purchaser of the Units
the Purchaser will immediately furnish such revised or corrected
information to the Company; and
(viii) Additional Representations and Warranties of Accredited
Investors. The Purchaser, by initialing the applicable paragraph below (a)
through (g) hereby represents and warrants that the Purchaser is an
"Accredited Investor", because the Purchaser comes within one or more of
the enumerated categories. The Purchaser has reviewed the Investor
Suitability Standards attached as Annex A hereto and confirms it is an
"Accredited Investor" as indicated below. Place your initials in the space
provided in the beginning of each applicable paragraph, thereby
representing and warranting as to the applicability to the Purchaser of the
initialed paragraph or paragraphs:
<PAGE>
[ ] (a) any individual Purchaser whose net worth, or joint net worth with
that person's spouse at the time of his purchase, exceeds $1,000,000 (including
any individual participant of a Keogh Plan, IRA or IRA Rollover Purchaser);
[ ] (b) any individual Purchaser who had an income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and who reasonably expects an income
in excess of the same income level in the current year (including any individual
participant of a Keogh Plan, IRA or IRA Rollover Purchaser);
[ ] (c) any corporation or partnership not formed for the specific purpose
of making an investment in the Common Stock, with total assets in excess of
$5,000,000;
[ ] (d) any trust, which is not formed for the specific purpose of
investing in the Common Stock, with total assets in excess of $5,000,000, whose
purchase is directed by a sophisticated person, as such term is defined in Rule
506(b) of Regulation D under the Securities Act;
[ ] (e) any ERISA Plan if the investment decision is made by a plan
fiduciary, as defined in section 3(21) of ERISA, which is either a bank,
insurance company, or registered investment adviser, or the Plan has total
assets in excess of $5,000,000;
[ ] (f) any entity in which all of the equity owners are Accredited
Investors under paragraphs (a), (b) or (c) above or any other entity meeting
required "Accredited Investor" standards under Rule 501 of Regulation D under
the Securities Act and applicable State securities law criteria;
[ ] (g) other (please explain)
4. Further Assurances.
------------------
At any time and from time to time after the date hereof, each
party shall, without further consideration, execute and deliver to the other
such other instruments or documents and shall take such other actions as the
other may reasonably request to carry out the transactions contemplated by this
Agreement.
<PAGE>
5. Miscellaneous.
-------------
Any party may waive compliance by the other with any of the provisions of
this Agreement. No waiver of any provision shall be construed as a waiver of any
other provision. Any waiver must be in writing. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. This Agreement may not be modified
or amended except in writing signed by both parties hereto. This Agreement may
be executed in several counterparts, each of which shall be deemed an original,
and all of which shall constitute one and the same instrument. This Agreement
shall be governed in all respects, including validity, interpretation and
effect, by the laws of the State of Delaware, applicable to contracts made and
to be performed in Delaware. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the successors and assigns of the parties
hereto. This Agreement shall not be assignable by either party without the prior
written consent of the other, such consent not to be unreasonably withheld. The
rights and obligations contained in this Agreement are solely for the benefit of
the parties hereto and are not intended to benefit or be enforceable by any
other party, under the third party beneficiary doctrine or otherwise.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
<PAGE>
EXECUTION PAGE FOR SUBSCRIPTION BY INDIVIDUALS
(not applicable to subscriptions by entities, Individual
Retirement Accounts, Keogh Plans or ERISA Plans)
TOTAL SUBSCRIPTION AMOUNT $_______________________________.
[ ] INDIVIDUAL OWNER [ [ CUSTODIAN UNDER
(One signature required below) Uniform Gifts to Minors Act
[ ] JOINT TENANTS WITH RIGHT _________________________________
OF SURVIVORSHIP (Insert applicable state)
(All tenants must sign below) (Custodian must sign below)
[ ] TENANTS IN COMMON [ ] COMMUNITY PROPERTY
(All tenants must sign below) (Both spouses in community property
states must sign below)
Print information as it is to
appear on the Company records.
________________________________ __________________________________
(Name of Subscriber) (Social Security or Taxpayer ID No.)
________________________________
________________________________ __________________________________
(Home Address) (Home Telephone)
________________________________
________________________________ __________________________________(Business
Address) (Business Telephone)
________________________________ __________________________________
(Name of Co-Subscriber) (Social Security or Taxpayer ID No.)
________________________________
________________________________ __________________________________
(Home Address) (Home Telephone)
________________________________
________________________________ __________________________________
(Business Address) (Business Telephone)
SIGNATURE(S)
-----------
Dated:______________, 1997.
(1)By:_________________________________ (2)By:__________________________________
Signature of Authorized Signatory Signature of Authorized Co-Signatory
_________________________________ _____________________________________
Print Name of Signatory and Title, Print Name of Co-Signatory and Title,
if applicable if applicable
ACCEPTED AND AGREED:
RIPE TOUCH GREENHOUSES, INC.
By:_________________________________ Dated:________________________, 1997.
Name:
Title:
<PAGE>
(ACKNOWLEDGMENT FOR INDIVIDUALS)
STATE OF :
: s:
COUNTY OF :
On this _____________ day of ___________, 1997, before me, a notary public in
and for the state and county aforesaid, personally appeared
___________________________, known to me to be the person(s) whose name(s) is
(are) subscribed to the foregoing Subscription Agreement and acknowledged that
he, she or they executed the same.
_______________________________
Notary Public
<PAGE>
EXECUTION PAGE FOR SUBSCRIPTION BY ENTITIES
TOTAL SUBSCRIPTION AMOUNT $__________________________.
[ ] EMPLOYMENT BENEFIT PLAN OR TRUST (including pension plan, profit
sharing plan, other defined contribution plan and SEP)
[ ] IRA, IRA ROLLOVER OR KEOGH PLAN
[ ] TRUST (other than employee benefit trust)
[ ] CORPORATION (Please include certified corporate resolution authorizing
signature)
[ ] PARTNERSHIP
[ ] OTHER ______________________________________________________________
Print information as it is to appear on the Company records.
________________________________ __________________________________________
(Name of Subscriber) (Taxpayer ID Number)
________________________________ (Plan number, if applicable)
________________________________ __________________________________________
(Address) (Telephone Number)
_____________________________________________________________________________
Name and Taxpayer ID number of sponsor, if applicable
The undersigned trustee, partner, corporate officer or fiduciary certifies
that he or she has full power and authority from all beneficiaries, partners or
shareholders of the entity named above to execute this Subscription Agreement on
behalf of the entity and to make the representations, warranties and agreements
made herein on their behalf and that investment in the Units has been
affirmatively authorized by the governing board or body of such entity and is
not prohibited by law or the governing documents of the entity.
SIGNATURE(S)
-----------
Dated: __________________________, 1997.
By:_____________________________ By:________________________________________
Signature of Authorized Signatory Signature of Required Authorized Co-Signatory
________________________________ ________________________________________
Print Name of Signatory Print Name of Required Co-Signatory
________________________________ ________________________________________
Print Name of Signatory Print Title of Required Co-Signatory
ACCEPTED AND AGREED:
RIPE TOUCH GREENHOUSES, INC.
By:____________________________ Dated:___________________________, 1997
Name:
Title:
<PAGE>
(ACKNOWLEDGMENT FOR ENTITIES)
STATE OF :
: ss:
COUNTY OF :
On this ___________ day of _______, 1997, before me personally came
_____________________ known to me, who, being by me duly sworn, did depose and
say that he or she is the __________ of ___________________________________, the
entity described in and which executed the foregoing Subscription Agreement;
that is was so affirmatively authorized by the governing board or body of such
entity; and that he or she signed his or her name thereto by like order.
____________________________
Notary Public
<PAGE>
Annex A
-------
INVESTOR SUITABILITY STANDARDS
A purchase of the Units involves a high degree of risk and is suitable only
for persons of substantial financial means who have no need for liquidity in
their investments. The offer, offer for sale, and sale of the securities are
intended to be exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act"), pursuant to Regulation D promulgated
thereunder ("Regulation D"), and are intended to be exempt from the requirements
of applicable state securities laws.
The Common Stock is being offered and sold only to "accredited investors," as
that term is defined in Regulation D.
Regulation D defines an "accredited investor" as follows:
(1) Any bank as defined in section 3(a)(2) of the Securities Act, or any
savings and loan association or other institution as defined in section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity; any broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934; any insurance company as defined in section
2(13) of the Securities Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
section 2(a)(48) of that act; any Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d) of the Small
Business Investment act of 1958; any plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; 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
or 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 or, if a self-directed plan, with investment decisions made solely
by persons that are accredited investors;
(2) Any private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership, not
formed for the specific purpose or acquiring the securities offered, with total
assets in excess of $5,000,000;
(4) Any director, executive officer, or general partner of the issuer of
the securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer;
(5) Any natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his or her purchase exceeds $1,000,000;
<PAGE>
(6) Any natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;
(7) Any trust with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is directed
by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D;
and
(8) Any entity in which all of the equity owners are accredited investors.
Exhibit 10.14
SUBSCRIPTION AGREEMENT
Subscription Agreement, dated as of _________, 1997, between Ripe Touch
Greenhouses, Inc., a Delaware corporation (the "Company") and
________________________________ (the "Purchaser").
WHEREAS, the Purchaser desires to subscribe for, and the Company desires to
issue to the Purchaser, Private Placement Units (the "Units") consisting of
$______ principal amount of promissory notes (the "Notes"), substantially in the
form attached hereto as Exhibit A, and ______ of shares of common stock, par
value $.001 per share (the "Common Stock") of the Company (the "Shares"), all
upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
premises, covenants, representations and warranties herein contained, it is
hereby agreed as follows:
1. Subscription Price; Issuance.
----------------------------
In reliance on the representations and warranties contained herein and
subject to the terms and conditions hereof, the Purchaser hereby subscribes for
___ Units and concurrently with delivery hereof has paid to the Company an
amount equal to $______ per Unit or $__________ in the aggregate, in immediately
available funds upon the execution and delivery of this Agreement, and the
Company will issue upon the closing as contemplated by the Memorandum (as
hereinafter defined) to the Purchaser a Note in the principal amount of $______
with respect to each such Unit and ______ Shares with respect to each such Unit.
2. Representations and Warranties of the Company.
---------------------------------------------
The Company represents and warrants to the Purchaser as follows:
2.1. Corporate Status.
----------------
The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with full corporate
power and authority to carry on its business as now conducted.
2.2. Authority of Agreement.
----------------------
The Company has the power and authority to execute and deliver
this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company and this Agreement
constitutes the valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally now or hereafter in effect and
subject to the application of equitable principles and the availability of
<PAGE>
equitable remedies. The Company has reserved from its authorized but unissued
shares of Common Stock such number of shares as shall be deliverable to the
Purchaser upon the Closing of the units subscribed for hereby.
2.3. No Conflicts.
------------
The execution, delivery and performance of this Agreement and
the other instruments and agreements to be executed, delivered and performed by
the Company pursuant hereto and the consummation of the transactions
contemplated hereby and thereby by the Company do not and will not with or
without the giving of notice or the passage of time or both, violate or conflict
with or result in a breach or termination of any provision of, or constitute a
default under, the Certificate of Incorporation or the By-Laws of the Company or
any order, judgment, decree, statute, regulation, contract, agreement or any
other restriction of any kind or description to which the Company or its assets
may be bound or subject.
2.4 Fully Paid and Non-Assessable
-----------------------------
Upon issuance of the Shares and payment therefor pursuant to the
terms hereof, each share of Common Stock shall be validly issued, fully paid and
non-assessable.
3. Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to the Company as follows:
3.1. Status.
------
If the Purchaser is a corporation or other entity, the Purchaser
is a corporation or other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization with full power
and authority to execute, deliver and perform its obligations under this
Agreement. If the Purchaser is an individual, the Purchaser has legal capacity
to execute, deliver and perform his or her obligations under this Agreement.
3.2 Authority for Agreements.
------------------------
The Purchaser has the power and authority to execute and deliver
this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance by the Purchaser of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary action on the part of the Purchaser and this Agreement constitutes the
valid and legally binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors' rights generally now or hereafter in effect and subject to the
application of equitable principles and the availability of equitable remedies.
<PAGE>
3.3. No Conflicts.
------------
The execution, delivery and performance of this Agreement and the
other instruments and agreements to be executed, delivered and performed by the
Purchaser pursuant hereto and the consummation of the transactions contemplated
hereby and thereby by the Purchaser do not and will not with or without the
giving of notice or the passage of time or both, violate or conflict with or
result in a breach or termination of any provision of, or constitute a default
under, the Certificate of Incorporation or the By-Laws of the Purchaser (if the
Purchaser is a corporation), any other organizational instrument (if the
Purchaser is a legal entity other than a corporation) or any order, judgment,
decree, statute, regulation, contract, agreement or any other restriction of any
kind or description to which the Purchaser is a party or by which the Purchaser
may be bound.
3.4. Investor Representations and Acknowledgments.
--------------------------------------------
(a) The Purchaser is acquiring the Units for the Purchaser's own
account for investment only and not as nominee or agent and not with a view to,
or for sale in connection with, a distribution of the Units or its components
and with no present intention of selling, transferring, granting a participation
in or otherwise distributing, the Units or such components, all within the
meaning of the Securities Act of 1933, as amended, and the rules and regulations
thereunder (the "Securities Act") and any applicable state, securities or
blue-sky laws.
(b) The Purchaser is not a party or subject to or bound by any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or pledge the Units or any part thereof to any person, and has no
present intention to enter into such a contract, undertaking, agreement or
arrangement.
(c) The Purchaser acknowledges to the Company that:
(i) The Company has advised the Purchaser that the Units and their
components have not been registered under the Securities Act or under the
laws of any state on the basis that the issuance thereof contemplated by
this Agreement is exempt from such registration;
(ii) The Company's reliance on the availability of such exemption
is, in part, based upon the accuracy and truthfulness of the Purchaser's
representations contained herein;
(iii) The Units and their components cannot be resold without
registration or an exemption under the Securities Act and such state
securities laws, and that certificates representing the Common Stock will
bear a restrictive legend to such effect;
(iv) The Purchaser has evaluated the merits and risks of
purchasing the Units, and has such knowledge and experience in financial
and business matters that the Purchaser is capable of evaluating the merits
and risks of such purchase, is aware of and has considered the financial
risks and financial hazards of purchasing the Units, and is able to bear
the economic risk of purchasing the Units, including the possibility of a
complete loss with respect thereto;
<PAGE>
(v) The Purchaser has had access to such information regarding the
business and finances of the Company, including without limitation, the
Company's audited and unaudited financial statements included in the
disclosure documents delivered by the Company to the Purchaser, and has
been provided the opportunity to discuss with the Company's management the
business, affairs and financial condition of the Company and such other
matters with respect to the Company as would concern a reasonable person
considering the transactions contemplated by this Agreement and/or
concerned with the operation of the Company;
(vi) The Purchaser hereby covenants and agrees that Purchaser shall not
directly or indirectly, offer, offer to sell, contract to sell, pledge,
hypothecate, grant any option to purchase or otherwise dispose or transfer
(or announce any offer, offer of sale, sale, contract of sale, grant of any
option to purchase or other disposition or transfer), or agree to do any of
the foregoing, with respect to the Units and/or Shares, without the prior
written consent of Millennium Securities, Corp., for a period of up to
eighteen (18) months after an initial public offering of Common Stock of
the Company, even if such Units or Shares are registered in such initial
public offering. The certificates representing the Units, Notes and the
Shares will bear a restrictive legend to such effect;
(vii) All the information which is set forth with respect to the
Purchaser in the Qualified Purchaser Questionnaire executed by the
Purchaser, all of which are incorporated herein by this reference, and all
of the Purchaser's representations and warranties set forth herein are
correct and complete as of the date of this Agreement, shall be true and
correct as of the closing of the transaction contemplated by this
Agreement, shall survive such closing and if there should be any material
change in such information prior to the sale to the Purchaser of the Units
the Purchaser will immediately furnish such revised or corrected
information to the Company; and
(viii) Additional Representations and Warranties of Accredited
Investors. The Purchaser, by initialing the applicable paragraph below (a)
through (g) hereby represents and warrants that the Purchaser is an
"Accredited Investor", because the Purchaser comes within one or more of
the enumerated categories. The Purchaser has reviewed the Investor
Suitability Standards attached as Annex A hereto and confirms it is an
"Accredited Investor" as indicated below. Place your initials in the space
provided in the beginning of each applicable paragraph, thereby
representing and warranting as to the applicability to the Purchaser of the
initialed paragraph or paragraphs:
[ ] (a) any individual Purchaser whose net worth, or joint net worth with
that person's spouse at the time of his purchase, exceeds $1,000,000 (including
any individual participant of a Keogh Plan, IRA or IRA Rollover Purchaser);
[ ] (b) any individual Purchaser who had an income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and who reasonably expects an income
in excess of the same income level in the current year (including any individual
participant of a Keogh Plan, IRA or IRA Rollover Purchaser);
[ ] (c) any corporation or partnership not formed for the specific purpose
of making an investment in the Common Stock, with total assets in excess of
$5,000,000;
<PAGE>
[ ] (d) any trust, which is not formed for the specific purpose of
investing in the Common Stock, with total assets in excess of $5,000,000, whose
purchase is directed by a sophisticated person, as such term is defined in Rule
506(b) of Regulation D under the Securities Act;
[ ] (e) any ERISA Plan if the investment decision is made by a plan
fiduciary, as defined in section 3(21) of ERISA, which is either a bank,
insurance company, or registered investment adviser, or the Plan has total
assets in excess of $5,000,000;
[ ] (f) any entity in which all of the equity owners are Accredited
Investors under paragraphs (a), (b) or (c) above or any other entity meeting
required "Accredited Investor" standards under Rule 501 of Regulation D under
the Securities Act and applicable State securities law criteria;
[ ] (g) other (please explain)
4. Further Assurances.
------------------
At any time and from time to time after the date hereof, each
party shall, without further consideration, execute and deliver to the other
such other instruments or documents and shall take such other actions as the
other may reasonably request to carry out the transactions contemplated by this
Agreement.
5. Miscellaneous.
-------------
Any party may waive compliance by the other with any of the provisions of
this Agreement. No waiver of any provision shall be construed as a waiver of any
other provision. Any waiver must be in writing. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. This Agreement may not be modified
or amended except in writing signed by both parties hereto. This Agreement may
be executed in several counterparts, each of which shall be deemed an original,
and all of which shall constitute one and the same instrument. This Agreement
shall be governed in all respects, including validity, interpretation and
effect, by the laws of the State of Delaware, applicable to contracts made and
to be performed in Delaware. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the successors and assigns of the parties
hereto. This Agreement shall not be assignable by either party without the prior
written consent of the other, such consent not to be unreasonably withheld. The
rights and obligations contained in this Agreement are solely for the benefit of
the parties hereto and are not intended to benefit or be enforceable by any
other party, under the third party beneficiary doctrine or otherwise.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
<PAGE>
EXECUTION PAGE FOR SUBSCRIPTION BY INDIVIDUALS
(not applicable to subscriptions by entities, Individual
Retirement Accounts, Keogh Plans or ERISA Plans)
TOTAL SUBSCRIPTION AMOUNT $______________________________.
[ ]INDIVIDUAL OWNER [ ]CUSTODIAN UNDER
(One signature required below) Uniform Gifts to Minors Act
[ ]JOINT TENANTS WITH RIGHT ____________________________________
OF SURVIVORSHIP (Insert applicable state)
(All tenants must sign below) (Custodian must sign below)
[ ]TENANTS IN COMMON [ ]COMMUNITY PROPERTY
(All tenants must sign below) (Both spouses in community property
states must sign below)
Print information as it is to
appear on the Company records.
_________________________________ _____________________________________
(Name of Subscriber) (Social Security or Taxpayer ID No.)
_________________________________
_________________________________ _____________________________________
(Home Address) (Home Telephone)
_________________________________
_________________________________ ___________________________________
(Business Address) (Business Telephone)
_________________________________ _____________________________________
(Name of Co-Subscriber) (Social Security or Taxpayer ID No.)
_________________________________
_________________________________ _____________________________________
(Home Address) (Home Telephone)
_________________________________
_________________________________ _____________________________________
(Business Address) (Business Telephone)
SIGNATURE(S)
-----------
Dated:______________, 1997.
(1)By:___________________________________ (2) By:_____________________________
Signature of Authorized Signatory Signature of Authorized Co-Signatory
___________________________________ _____________________________________
Print Name of Signatory and Title, Print Name of Co-Signatory and Title,
if applicable if applicable
ACCEPTED AND AGREED:
RIPE TOUCH GREENHOUSES, INC.
By:__________________________________ Dated:________________, 1997.
Name:
Title:
<PAGE>
(ACKNOWLEDGMENT FOR INDIVIDUALS)
STATE OF :
: s:
COUNTY OF :
On this _____________ day of ___________, 1997, before me, a notary public in
and for the state and county aforesaid, personally appeared
___________________________, known to me to be the person(s) whose name(s) is
(are) subscribed to the foregoing Subscription Agreement and acknowledged that
he, she or they executed the same.
______________________
Notary Public
<PAGE>
EXECUTION PAGE FOR SUBSCRIPTION BY ENTITIES
TOTAL SUBSCRIPTION AMOUNT $______________________.
[ ] EMPLOYMENT BENEFIT PLAN OR TRUST (including pension plan, profit
sharing plan, other defined contribution plan and SEP)
[ ] IRA, IRA ROLLOVER OR KEOGH PLAN
[ ] TRUST (other than employee benefit trust)
[ ] CORPORATION (Please include certified corporate resolution authorizing
signature)
[ ] PARTNERSHIP
[ ] OTHER _____________________________________________________
Print information as it is to appear on the Company records.
_________________________________ ________________________________________
(Name of Subscriber) (Taxpayer ID Number)
_________________________________ ________________________________________
(Plan number, if applicable)
_________________________________ ________________________________________
(Address)(Telephone Number)
____________________________________________________________________________
Name and Taxpayer ID number of sponsor, if applicable
The undersigned trustee, partner, corporate officer or fiduciary certifies
that he or she has full power and authority from all beneficiaries, partners or
shareholders of the entity named above to execute this Subscription Agreement on
behalf of the entity and to make the representations, warranties and agreements
made herein on their behalf and that investment in the Units has been
affirmatively authorized by the governing board or body of such entity and is
not prohibited by law or the governing documents of the entity.
SIGNATURE(S)
-----------
Dated:___________________, 1997.
By:______________________________ By:__________________________________________
Signature of Authorized Signatory Signature of Required Authorized Co-Signatory
_________________________________ __________________________________________
Print Name of Signatory Print Name of Required Co-Signatory
_________________________________ __________________________________________
Print Name of Signatory Print Title of Required Co-Signatory
ACCEPTED AND AGREED:
RIPE TOUCH GREENHOUSES, INC.
By:______________________________ Dated:___________________________, 1997
Name:
Title:
<PAGE>
(ACKNOWLEDGMENT FOR ENTITIES)
STATE OF :
: ss:
COUNTY OF :
On this ___________ day of _______, 1997, before me personally came
_____________________ known to me, who, being by me duly sworn, did depose and
say that he or she is the __________ of ___________________________________, the
entity described in and which executed the foregoing Subscription Agreement;
that is was so affirmatively authorized by the governing board or body of such
entity; and that he or she signed his or her name thereto by like order.
______________________
Notary Public
<PAGE>
Annex A
-------
INVESTOR SUITABILITY STANDARDS
A purchase of the Units involves a high degree of risk and is suitable only
for persons of substantial financial means who have no need for liquidity in
their investments. The offer, offer for sale, and sale of the securities are
intended to be exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act"), pursuant to Regulation D promulgated
thereunder ("Regulation D"), and are intended to be exempt from the requirements
of applicable state securities laws.
The Common Stock is being offered and sold only to "accredited investors," as
that term is defined in Regulation D.
Regulation D defines an "accredited investor" as follows:
(1) Any bank as defined in section 3(a)(2) of the Securities Act, or any
savings and loan association or other institution as defined in section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity; any broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934; any insurance company as defined in section
2(13) of the Securities Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
section 2(a)(48) of that act; any Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d) of the Small
Business Investment act of 1958; any plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; 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
or 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 or, if a self-directed plan, with investment decisions made solely
by persons that are accredited investors;
(2) Any private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership, not
formed for the specific purpose or acquiring the securities offered, with total
assets in excess of $5,000,000;
(4) Any director, executive officer, or general partner of the issuer of
the securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer;
(5) Any natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his or her purchase exceeds $1,000,000;
<PAGE>
(6) Any natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;
(7) Any trust with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is directed
by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D;
and
(8) Any entity in which all of the equity owners are accredited investors.
Exhibit 10.15
RIPE TOUCH GREENHOUSES, INC.
Promissory Note
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR UNDER ANY
STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED UNTIL
(i) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE
SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES LAW OR (ii) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE COMPANY OR OTHER COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH NOTE MAY BE
PLEDGED, SOLD, ASSIGNED OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
$-------------------
______________, 1997
Note No. 97-________
FOR VALUE RECEIVED, Ripe Touch Greenhouses, Inc., a Delaware corporation (the
"Company"), with its principal office at P.O. Box 69, Castle Rock, Colorado
80104 promises to pay to __________________ residing at
__________________________________________ (the "Holder"),the principal amount
of _______________________________ Dollars ($_______________), in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public or private debts, together with interest
on the unpaid balance of said principal amount from time to time outstanding at
the rate of twelve (12%) percent per annum from the date hereof until the
Maturity Date (as defined below). Payment of principal shall be made on the
earlier of (i) June 30, 1998, or (ii) such date as shall be determined pursuant
to the provisions of Sections 3.1, 3.2 or 3.3 of this Note (the earlier of such
dates set forth in or referred to in clauses (i) and (ii) of this sentence is
herein referred to as the "Maturity Date"). Payment of interest accrued on the
unpaid principal balance hereof shall be made on the Maturity Date and
thereafter shall be payable monthly, if applicable. Payments of principal and
interest are to be made at the address of the Holder designated above or at such
other place as the Holder shall have notified the Company in writing at least
five days before such payment is due.
This Note is issued pursuant to a Subscription Agreement between the Company
and the Holder and is entitled to all the benefits, and is subject to all the
limitations, set forth therein, provided, that reference herein to the
Subscription Agreement shall in no way impair the absolute and unconditional
obligation of the Company to pay both principal and interest hereon as provided
herein. The Company covenants that the proceeds of this Note will be used only
for the purposes described in the Subscription Agreement and/or in the Agency
<PAGE>
Agreement (as defined below).
1. Events of Default.
-----------------
(a) Upon the occurrence of any of the following events (each an "Event of
Default", and collectively the "Events of Default"):
(i) the Company shall fail to make a payment of the principal or
of interest on this Note within five (5) days after such payment
is due;
(ii) (1) the Company shall commence any proceeding or other
action relating to it in bankruptcy or seek reorganization,
arrangement, readjustment of its debts, receivership,
dissolution, liquidation, winding-up, composition or any other
relief under any bankruptcy law, or under any other insolvency,
reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or any other similar act or
law, of any jurisdiction, domestic or foreign, now or hereafter
existing; or (2) the Company shall admit the material allegations
of any petition or pleading in connection with any such
proceeding; or (3) the Company applies for, or consents or
acquiesces to, the appointment of a receiver, conservator,
trustee or similar officer for it or for all or a substantial
part of its property; or (4) the Company makes a general
assignment for the benefit of creditors;
(iii) (1) the commencement of any proceedings or the taking of
any other action against the Company in bankruptcy or seeking
reorganization, arrangement, readjustment of its debts,
liquidation, dissolution, arrangement, composition, readjustment
of debt or any other relief under any bankruptcy law or any other
similar act or law of any jurisdiction, domestic or foreign, now
or hereafter existing and the continuance of any of such events
for forty-five (45) days undismissed, unbonded or undischarged;
or (2) the appointment of a receiver, conservator, trustee or
similar officer for the Company or for all or substantially all
of its property and the continuance of any of such events for
forty-five (45) days undismissed, unbonded or undischarged; or
(3) the issuance of a warrant of attachment, execution or similar
process against substantially all of the property of the Company
and the continuance of such event for forty-five (45) days
undismissed, unbonded and undischarged;
(iv) the Company shall fail to perform any obligation of the
Company contained in the Subscription Agreement relating to the
offering of the Notes (as defined below) and such failure is not
remedied within twenty (20) days after the occurrence thereof,
which failure shall have the effect more fully set forth in
Section 3.3 hereof, to the extent applicable, or there shall have
occurred any breach of a representation or warranty of the
Company set forth in the Subscription Agreement which breach
shall have the effect more fully set forth in Section 3.3 hereof;
<PAGE>
(v) the Company shall fail to comply with any of its obligations
under this Note (including without limitation those incorporated
by reference herein); or
(vi) a final judgment or judgments for the payment of money in
excess of $100,000 in the aggregate shall be rendered by one or
more courts, administrative or arbitral tribunals or other bodies
having jurisdiction against the Company and the same shall not be
discharged (or provision shall not be made for such discharge),
or a stay of execution thereof shall not be procured, within 60
days from the date of entry thereof and the Company shall not,
within such 60-day period, or such longer period during which
execution of the same shall have been stayed, appeal therefrom
and cause the execution thereof to be stayed during such appeal;
then, in any such event, the entire unpaid principal amount of this Note
outstanding together with accrued interest thereon shall forthwith become
immediately due and payable without presentment, demand, protest, or other
notice of any kind, all of which are expressly waived. The Events of Default
listed herein are solely for the purpose of protecting the interests of the
Holder of this Note. If the Note is not paid in full upon acceleration, as
required above, interest shall accrue on the outstanding principal of and
interest on this Note from the date of the Event of Default up to and including
the date of payment at a rate equal to the lesser of 18% per annum or the
maximum interest rate permitted by applicable law, and shall be payable monthly.
(b) Non-Waiver and Other Remedies. No course of dealing or delay on
the part of the Holder in exercising any right hereunder shall operate as a
waiver or otherwise prejudice the right of the Holder. No remedy conferred
hereby shall be exclusive of any other remedy referred to herein or now or
hereafter available at law, in equity, by statute or otherwise.
2. Principal Obligation: Covenants. No provision of this Note shall alter
or impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of and interest on this Note at the place, at the respective
times, at the rates, and in the currency herein prescribed.
2.1 Affirmative Covenants. In addition to any other agreements, covenants
and obligations of the Company set forth in the Agency Agreement, all of which
are incorporated by reference herein, the Company hereby covenants and agrees
that, while this Note is outstanding, it shall:
(a) Pay and discharge all taxes, assessments and governmental charges or
levies imposed upon it or upon its income and profits, or upon any properties
belonging to it before the same shall be in default; provided, however, that the
Company shall not be required to pay any such tax, assessment, charge or levy
which is being contested in good faith by proper proceedings and adequate
reserves for the accrual of same are maintained if required by generally
accepted accounting principals; and
<PAGE>
(b) Do all things necessary to preserve its corporate existence.
2.2 Negative Covenants. In addition to any other prohibitions and/or
restrictions on the Company's business and operations set forth in the Agency
Agreement, all of which are incorporated by reference herein, the Company hereby
covenants and agrees that while this Note is outstanding it will not directly or
indirectly:
(a) guaranty or otherwise in any way become or be responsible for
indebtedness for borrowed money or obligations of any of its officers, directors
or principal stockholders or any of their affiliates, contingently or otherwise,
except presently outstanding indebtedness.
(b) sell, transfer or dispose of, any of its assets other than in the
ordinary course of its business and for fair value;
(c) fail to comply with any statute, law, ordinance, order, judgment,
decree, injunction, rule, regulation, permit, license, authorization or
requirement ("Requirement(s)") of any governmental body, department, commission,
board, company or association insuring the Company or its property, court,
authority, official, or officer, which are or may be applicable to the Company
or its properties and of which the Company has knowledge; except wherein the
failure to comply would not have a material adverse effect on the Company or its
property; provided that nothing contained herein shall prevent the Company from
contesting the validity or the application of any Requirement.
3. Prepayment.
----------
3.1 Public Offering. This Note shall be paid in full, without premium, in
the event, and on the date (the "Effective Date"), that the Company successfully
consummates an initial public offering of securities of the Company including,
but not limited to, the initial public offering contemplated by the Letter of
Intent dated February 2, 1996 between the Company and Millennium Securities,
Corp.
<PAGE>
3.2 Change of Control.
-----------------
(a) Upon the occurrence of any of the following events (herein called
a "Change of Control"):
(i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially
all of the assets of the Company and its Subsidiaries to any person or
related group of persons for purposes of Section 13(d) of the Exchange Act
(a "Group"), together with any affiliates thereof (whether or not otherwise
in compliance with the provisions of this Note);
(ii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company (whether or not
otherwise in compliance with the provisions of this Note); or
(iii) the acquisition in one or more transactions of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) by (y)
any person or entity or (z) any Group, in either case, of any Capital Stock
of the Company such that, as a result of such acquisition, such person,
entity or Group beneficially owns (within the meaning of Rule 13d-3 under
the Exchange Act), directly or indirectly, at least 50% of the Company's
then outstanding voting capital stock entitled to vote on a regular basis
for a majority of the Board of Directors;
each Holder shall have the right, at such Holder's option, to require the
Company to immediately repurchase such Holder's Notes at a purchase price in
cash equal to the principal amount thereof, plus accrued and unpaid interest, if
any, to the date of purchase, in accordance with the terms contemplated in
paragraph (b) below.
(b) Within 10 Business Days following any Change of Control, the Company
shall mail a notice (a "Change of Control Offer") to each Holder, stating: (i)
that a Change of Control has occurred and that such Holder has the right, at
such Holder's option, to require the Company to repurchase such Holder's Notes
at the applicable purchase price in cash as determined above;
(ii) the circumstances and relevant facts regarding such Change of Control
(including, but not limited to, information with respect to pro forma historical
income, cash flow and capitalization after giving effect to such Change of
Control and whether the transaction giving rise to such Change of Control was
approved by a majority of the Board of Directors);
(iii) the purchase date (which shall be no earlier than 10 days nor later
than 20 days from the date such notice is mailed); and
<PAGE>
(iv) the instructions determined by the Company, consistent with this
Section 3.2, that a Holder must follow in order to have Notes repurchased.
3.3 Voluntary Prepayment. This Note may be called and prepaid by the
Company at any time in whole or in part from time to time at par, without
premium or penalty. Interest shall accrue to and including the date on which
prepayment is made.
4. Required Consent. The Company may not modify any of the terms of this
Note without the prior written consent of the Holder.
5. Lost Documents. Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Note or any Note
exchanged for it, and (in the case of loss, theft or destruction) of indemnity
satisfactory to it, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such Note,
if mutilated, the Company will make and deliver in lieu of such Note a new Note
of like tenor and unpaid principal amount and dated as of the original date of
the Note.
6. Miscellaneous.
-------------
(a) Benefit. This Note shall be binding upon and inure to the benefit
of the parties hereto and their legal representatives, successors and assigns
(but with respect to an assignee, only an assignee to whom this Note has been
assigned in accordance with the provisions of Section 7(f) hereof).
(b) Notices and Addresses. All notices, offers, acceptance and any
other acts under this Note (except payment) shall be in writing, and shall be
sufficiently given if delivered to the addressee in person, by Federal Express
or similar receipted delivery, by facsimile delivery or, if mailed, postage
prepaid, by certified mail, return receipt requested, as follows:
Holder: To his address on page 1 of this Note
The Company: Ripe Touch Greenhouses, Inc.
4871 N. Mesa Drive
Castle Rock, Colorado 80104
Attention: Mr. Stanley Abrams
Fax: (303) 688-9806
and
With a copy to: Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle, Suite 225
Jericho, New York 11753
Attention: David H. Lieberman, Esq.
Fax: (516) 822-4824
<PAGE>
or to such other address as any of them, by notice to the others may designate
from time to time. The transmission confirmation-receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person,
by Federal Express or similar receipted delivery, by facsimile or by mailing.
(c) Governing Law. This Note and any dispute, disagreement, or issue of
construction or interpretation arising hereunder whether relating to its
execution, its validity, the obligations provided therein or performance shall
be governed and interpreted according to the laws of the State of New York,
without regard to its conflicts of law principles.
(d) Section Headings. Section headings herein have been inserted for
reference only and shall not be deemed to limit or otherwise affect, in any
matter, or be deemed to interpret in whole or in part any of the terms or
provisions of this Note.
(e) Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements contained herein shall survive the
delivery of this Note.
(f) Restriction on Transfer. This Note has not been registered under the
Securities Act of 1933, as amended (the "Act"), nor under any state securities
law and may not be pledged, sold, assigned or transferred until (i) a
registration statement with respect thereto is effective under the Act and any
applicable state securities law or (ii) the Company receives an opinion of
counsel to the Company or other counsel to the Holder of such Note which other
counsel is reasonably satisfactory to the Company that such Note may be pledged,
sold, assigned or transferred without an effective registration statement under
the Act or applicable state securities laws.
(g) Payment of Costs of Collection. The Company agrees to pay all costs of
collection, when incurred, including, without limitation, reasonable attorneys'
fees and court costs.
<PAGE>
IN WITNESS WHEREOF, this Note has been executed and delivered on the date
specified above by the duly authorized representative of the Company.
RIPE TOUCH GREENHOUSES, INC.
By:__________________________________
Stanley Abrams, President
Exhibit 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated April 26, 1997, which includes an explanatory
paragraph discussing the factors described in Note 15 to the financial
statements about the Company's ability to continue as a going concern,
accompanying the financial statements of Ripe Touch Greenouses, Inc. contained
in the Registration Statement on Form SB-2 and Prospectus. We consent to the use
of the aforementioned report in the Registration Statement and Prospectus, and
to the use of our name as it appears under the caption "Experts."
/s/ Bailey Saetveit & Co., P.C.
Englewood, Colorado
January 20, 1998
