<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended January 31, 1996
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Commission File number 1-9579
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Ecogen Inc.
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(Exact name of registrant as specified in its charter)
Delaware 22-2487948
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2005 Cabot Boulevard West, Langhorne, Pennsylvania 19047
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (2l5) 757-l590
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Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section l3 or l5 (d) of the Securities Exchange Act of
l934 during the preceding l2 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes X No .
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Class Outstanding at March 1, 1996
----- ----------------------------
Common Stock, $.01 par value 7,043,307
<PAGE> 2
ECOGEN INC.
INDEX
Page
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements:
Unaudited Consolidated Condensed Balance Sheets as of
January 31, l996 and October 3l, l995. . . . . . . . . . 1
Unaudited Consolidated Condensed Statements of Operations
for the three months ended January 31, l996 and l995 . . 2
Unaudited Consolidated Condensed Statement of Stockholders'
Equity for the three months ended January 31, l996 . . . 3
Unaudited Consolidated Condensed Statements of Cash Flows
for the three months ended January 31, l996 and l995 . . 4
Notes to Unaudited Condensed Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2 - Management's Discussion and Analysis of Results
of Operations and Financial Condition . . . . . . 11
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . 14
Item 6(a) - Exhibits . . . . . . . . . . . . . . . . . . 14
Item 6(b) - Reports on Form 8-K . . . . . . . . . . . . . 15
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
ECOGEN INC. AND
SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Assets JANUARY 31, OCTOBER 31,
1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents.............................................................. $17,889,242 $1,775,213
Inventory.............................................................................. 6,999,454 6,345,452
Contract and trade receivables......................................................... 603,427 733,146
Prepaid expenses and other current assets.............................................. 303,599 145,770
- --------------------------------------------------------------------------------------------------------------------------------
Total current assets 25,795,722 8,999,581
Plant and equipment, net 3,208,012 2,768,318
Intangible and other assets, net 397,947 603,600
- --------------------------------------------------------------------------------------------------------------------------------
$29,401,681 $12,371,499
================================================================================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses.................................................. $3,065,370 $4,077,095
Deferred contract revenue.............................................................. 3,014,400 43,550
- --------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 6,079,770 4,120,645
- --------------------------------------------------------------------------------------------------------------------------------
Long-term debt............................................................................ 995,280 619,978
Other long-term obligations............................................................... 2,247,368 2,123,489
Stockholders' equity:
Preferred stock, par value $.01 per share; authorized 7,500,000 shares
Series B convertible preferred stock - 350,000 shares authorized;
17,501 and 35,000 shares issued and outstanding in 1996 and 1995,
respectively (liquidation value $20 per share).................................. 175 350
Series C convertible preferred stock - 122,000 shares authorized;
110,000 and none shares issued and outstanding in 1996 and 1995,
respectively (liquidation value $25 per share).................................. 1,100 -
Common stock, par value $.01 per share; authorized 42,000,000 shares;
issued 7,043,307 shares in 1996 and 5,978,542 shares in 1995..................... 70,433 59,785
Additional paid-in capital............................................................. 117,652,198 105,343,444
Accumulated deficit.................................................................... (96,488,761) (98,878,279)
Foreign currency translation adjustment................................................ 132,898 270,867
Treasury stock, at cost (36,156 shares in 1996 and 1995)............................... (1,288,780) (1,288,780)
- --------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 20,079,263 5,507,387
- --------------------------------------------------------------------------------------------------------------------------------
29,401,681 12,371,499
================================================================================================================================
</TABLE>
See Accompanying Notes To Unaudited Consolidated Condensed Financial Statements.
1
<PAGE> 4
ECOGEN INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED
JANUARY 31,
1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues:
Product sales, net............................................. $707,033 $1,853,410
Research contract revenue...................................... 73,867 1,618,120
License fees and other income.................................. 4,813,049 -
Interest ...................................................... 31,887 99,229
- ----------------------------------------------------------------------------------------------------------
Total revenues 5,625,836 3,570,759
- ----------------------------------------------------------------------------------------------------------
Costs and expenses:
Cost of product sold........................................... 456,759 1,206,870
Research and development:
Funded by third parties...................................... 73,867 813,362
Self funded.................................................. 947,558 1,473,731
Selling, general and administrative............................ 1,705,159 2,326,757
Special charges................................................ - 9,147,249
- ----------------------------------------------------------------------------------------------------------
Total costs and expenses 3,183,343 14,967,969
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Net income (loss) $2,442,493 ($11,397,210)
==========================================================================================================
Net income (loss) per common share $0.39 ($2.45)
==========================================================================================================
Weighted average number of
common shares outstanding 6,052,000 4,653,000
==========================================================================================================
</TABLE>
See Accompanying Notes To Unaudited Consolidated Condensed Financial Statements.
2
<PAGE> 5
ECOGEN INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
Three months ended January 31, 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
CONVERTIBLE ADDITIONAL
PREFERRED COMMON PAID-IN
STOCK STOCK CAPITAL
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance November 1, 1995 $350 $59,785 $105,343,444
Issuance of 122,000 shares of Series C convertible
preferred stock in connection with a private placement, net ......... 1,220 - 2,792,723
Issuance of 943,397 shares of common stock, net............................ - 9,434 9,507,842
Conversion of 17,499 shares on Series B convertible
preferred stock to 67,794 shares of common stock...................... (175) 678 (503)
Conversion of 12,000 shares on Series C convertible
preferred stock to 51,874 shares of common stock...................... (120) 519 (399)
Dividends on preferred stock............................................... - 17 9,091
Foreign currency translation............................................... - - -
Net income................................................................. - - -
- ----------------------------------------------------------------------------------------------------------------------
Balance January 31, 1996 $1,275 $70,433 $117,652,198
======================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Treasury
Foreign Stock
Accumulated Currency at
Deficit Translation Cost Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance November 1, 1995 ($98,878,279) $270,867 ($1,288,780) $5,507,387
Issuance of 122,000 shares of Series C convertible
preferred stock in connection with a private placement, net ......... - - - 2,793,943
Issuance of 943,397 shares of common stock, net............................ - - - 9,517,276
Conversion of 17,499 shares on Series B convertible
preferred stock to 67,794 shares of common stock...................... - - - -
Conversion of 12,000 shares on Series C convertible
preferred stock to 51,874 shares of common stock...................... - - - -
Dividends on preferred stock............................................... (52,975) - - (43,867)
Foreign currency translation............................................... - (137,969) - (137,969)
Net income................................................................. 2,442,493 - - 2,442,493
- ------------------------------------------------------------------------------------------------------------------------------------
Balance January 31, 1996 ($96,488,761) $132,898 ($1,288,780) $20,079,263
====================================================================================================================================
</TABLE>
See Accompanying Notes To Unaudited Consolidated Condensed Financial Statements.
3
<PAGE> 6
ECOGEN INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Three months ended
January 31,
- --------------------------------------------------------------------------------------------------------------------------------
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)............................................................ $2,442,493 ($11,397,210)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization expense.................................. 108,479 157,312
Unrealized foreign currency transaction gain........................... (14,875) (34,606)
Non cash portion of special charges.................................... - 8,878,806
Loss on sale of plant and equipment.................................... - 125,431
Changes in assets and liabilities, net...................................... 1,466,678 (4,273,534)
- --------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 4,002,775 (6,543,801)
- --------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from maturities
of temporary investments.................................................. - 734,285
Proceeds from plant and equipment............................................ - 42,292
Purchase of plant and equipment.............................................. (74,155) (24,021)
- --------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities (74,155) 752,556
- --------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Cash received from ETech investors........................................... - 3,555,736
Net proceeds from issuance of Series C preferred stock....................... 2,793,943 -
Net proceeds from issuance of common stock................................... 9,517,276 42,729
- --------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 12,311,219 3,598,465
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Effect of foreign exchange rate changes on cash................................. (125,810) (91,455)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents............................ 16,114,029 (2,284,235)
Cash and cash equivalents, beginning of period.................................. 1,775,213 8,094,075
- --------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $17,889,242 $5,809,840
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
4
<PAGE> 7
ECOGEN INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Three months ended
January 31,
- --------------------------------------------------------------------------------------------------------------------------------
1996 1995
<S> <C> <C>
Changes in assets and liabilities, net
Increase in prepaid expenses and
other current assets..................................................... ($157,829) ($65,837)
Increase in inventory....................................................... (654,002) (647,937)
(Increase) decrease in receivables.......................................... 127,885 (903,630)
(Increase) decrease in other assets......................................... 205,653 (230,427)
Decrease in accounts payable
and accrued expenses..................................................... (1,053,758) (897,284)
Increase in other long-term liabilities..................................... 27,879 16,667
Increase (decrease) in deferred contract revenue............................ 2,970,850 (1,545,086)
- --------------------------------------------------------------------------------------------------------------------------------
Changes in assets and liabilities, net $1,466,678 ($4,273,534)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Noncash investing and financing activities:
In the first quarter of 1996 debt totalling approximately $201,000 was
incurred by the Company for the acquisition of production equipment.
In the first quarter of 1996 the Company issued 1,700 shares of common stock
as a dividend on the Company's preferred stock.
See Accompanying Notes To Unaudited Consolidated Condensed Financial Statements.
5
<PAGE> 8
ECOGEN INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JANUARY 31, 1996 AND 1995
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
ORGANIZATION AND BASIS OF PRESENTATION:
The consolidated condensed financial statements include the accounts of
Ecogen Inc. ("Ecogen" or the "Company") and its wholly-owned and
majority-owned subsidiaries. All intercompany accounts and
transactions have been eliminated in consolidation.
The accompanying consolidated condensed financial statements include all
adjustments (consisting of normal recurring accruals) which are, in the
opinion of management, necessary for a fair presentation of the
consolidated results of operations and financial position for the interim
periods presented. The consolidated condensed financial statements have
been prepared in accordance with the requirements for Form l0-Q and,
therefore, do not include all disclosures of financial information
required by generally accepted accounting principles. These consolidated
condensed financial statements should be read in conjunction with the
Company's October 3l, l995 consolidated financial statements and notes
thereto.
The results of operations for the interim period ended January 31, l996
are not necessarily indicative of the operating results for the full
year.
OPERATIONS:
The Company is a biotechnology company specializing in the development
and marketing of environmentally compatible products for the control of
pests in agricultural and related markets. The Company has not yet
achieved profitable operations and there is no assurance that profitable
operations, if achieved could be sustained on a continuing basis.
Further, the Company's future operations are dependent on the success of
the Company's commercialization efforts and market acceptance of the
Company's products.
(Continued)
6
<PAGE> 9
ECOGEN INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS, CONTINUED
NET INCOME (LOSS) PER COMMON SHARE:
Net income (loss) per common share adjusted for preferred stock dividendS
of $52,975 in the quarter ended January 31, 1996, is computed using the
weighted average number of shares outstanding during the period. Common
Stock equivalents are not included in the computation of weighted average
shares outstanding using modified treasury stock method since the effect
would be anti-dilutive for both primary and fully diluted earnings per
share.
(2) INVENTORY
At January 31, l996, inventory consists of raw materials of $1,800,155,
work-in-progress of $2,698,365 and finished products of $2,500,934.
(3) MONSANTO TRANSACTION
In January 1996, the Company entered into an agreement with Monsanto
Company (Monsanto) for an equity investment, purchase of technology and
joint research and development arrangement relating to the Company's
proprietary Bacillus thuringiensis (Bt) technology for in-plant
applications (collectively, the "Monsanto Transaction"). The transaction
includes (i) the acquisition by Monsanto of certain rights in the
Company's Bt technology for an aggregate purchase price of $5.0 million
in cash which was recorded as license and other income in the first
quarter of 1996; (ii) the sale by the Company to Monsanto of 943,397
shares of Common Stock at $10.60 per share for an aggregate purchase
price of $10.0 million in cash during the first quarter; and (iii) a
four-year research and development collaboration arrangement with
Monsanto for the further development of the Company's Bt gene library for
a minimum of $10.0 million, of which $3.0 million was received in the
first quarter of 1996 and was recorded as deferred contract revenue.
Such contract revenue will be recorded as earned under the terms of the
agreement.
(Continued)
7
<PAGE> 10
ECOGEN INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS,
(CONTINUED)
(3) MONSANTO TRANSACTION, CONTINUED
As part of the agreement, Monsanto has agreed to maintain its ownership
position during the term of the research and development agreement and
Monsanto is prohibited, during the first three years following the closing,
from acquiring more than 25% of the Company's voting stock without the
Company's consent, except in certain circumstances primarily related to a
change of control of the Company. Monsanto was granted certain demand and
piggyback registration rights with respect to its shares. In addition,
Monsanto has a right of first refusal to purchase securities of the Company
so as to maintain its ownership percentage in the Company except in certain
circumstances defined in the applicable agreement.
(4) LONG-TERM DEBT
The Company has obtained a $2.0 million line of credit to be used for the
leasing of production equipment. To date, the Company has borrowed
approximately $845,000 under the line of credit. The Company is required to
pay interest only until all of the equipment is delivered at which time the
notes are converted to a capital lease obligation. The Company expects the
lease to be in place in the second quarter of 1996. The lease facility
requires a 15% security deposit which has been made.
(5) STOCKHOLDERS' EQUITY
In November 1995, the Company raised $2.8 million net of expenses, from
institutional investors from the private placement of 122,000 shares of 8%
Series C Convertible Preferred Stock (the "Series C Preferred Stock").
Dividends are payable annually or at the time of redemption or conversion in
cash, shares of the Company's common stock or shares of Series C Preferred
Stock at the discretion of the Company. The Series C Preferred holders have
certain limited voting rights. At the election of the holders, pursuant to
a predetermined schedule, the Series C Preferred Stock may be converted to
shares of the Company's common stock, subject to adjustments for stock
splits and other adjustments, at predetermined discounts from the average
market price per share on the date of conversion. At any time after June 1,
1997, the Company may elect to convert the shares to common stock. At any
time after June 1, 1997, the Company may
(Continued)
8
<PAGE> 11
ECOGEN INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS,
CONTINUED
(5) STOCKHOLDERS' EQUITY, CONTINUED
redeem the Series C Preferred Stock at a predetermined premium to the
original issuance price. In the event of liquidation the holders of the
Series C Preferred Stock have the right to $25.00 per share plus all accrued
and unpaid dividends.
In January 1996 the shareholders approved an amendment to the Company's
Restated Certificate of Incorporation (the "Amendment") which effected a
one-for-five reverse stock split (the "Reverse Split") of the Company's
outstanding shares of common stock. All references to numbers of shares,
weighted average shares and loss per share amounts except shares
authorized, have been retroactively restated to give effect to the stock
split.
During the first quarter of 1996 the Company issued 119,668 shares of its
common stock in exchange for 17,499 and 12,000 shares of the Company's
Series B and Series C Convertible Preferred Stock respectively. Also 1,700
shares of the Company's common stock were issued in payment of cumulative
dividends at the time of conversion.
(6) SPECIAL CHARGES
During 1995, the Company acquired approximately 70% of the outstanding stock
of Ecogen Technology I Incorporated ("ETech") pursuant to which the Company
issued 822,240 shares of its common stock having a market value of
approximately $11.3 million. The acquisition of approximately 70% of ETech
was accounted for under the purchase method of accounting and in fiscal 1995
the Company recorded approximately $8.8 million in the first quarter of 1995
as a special charge to operations for the value of in-process research and
development acquired from ETech. Market feasibility and acceptance has not
yet been established with respect to the ETech research programs and there
is no assurance that the Company will be successful in its commercialization
efforts.
(Continued)
9
<PAGE> 12
ECOGEN INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS,
CONTINUED
(6) SPECIAL CHARGES, CONTINUED
As a result of the acquisition, effective January 1995, ETech's consolidated
financial statements are consolidated with those of the Company resulting in
the Company recording 100% of the research and development expenses of ETech
programs and reflecting any payments from ETech investors, subsequent to the
Exchange Offer, as a long-term obligation.
The special charges recorded in the first quarter of 1995 also included
approximately $.3 million relating to the shutdown of Ecogen Australia
representing principally severance costs paid during the quarter, loss on
disposal of equipment and facilities costs after shutdown of operations
through February.
10
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
THREE MONTHS ENDED JANUARY 31, 1996 AND 1995
OVERVIEW
In the first quarter of 1996, total revenues increased 58% to $5.6 million from
$3.6 million in the same three month period of 1995. For the first time, the
Company recorded a profitable quarter. For the three months ended January 31,
1996, the Company reported net income of $2.4 million compared to a net loss of
($11.4) million in 1995. The 1995 first quarter included special charges of
$9.1 million relating to purchased technology from ETech and the shutdown of
Ecogen Australia. The net loss per common share improved to net income of $.39
per share in 1996 from a net loss of ($2.45) per share. The favorable results
in the first quarter of 1996 were due principally to income associated with the
Monsanto Transaction and a 41% reduction in operating expenses.
REVENUES
Total revenues increased 58% in the three months ended January 31, 1996 to $5.6
million from $3.6 million the same three months ended January 31, 1995. Net
product sales decreased $1.1 million (62%) in the current quarter as a result
of a trend in the industry away from early order programs to selling product
closer to the growing season. The 1995 comparable quarter sales were
principally early order programs for Condor(R) bioinsecticide in the cotton
market. Contract revenue decreased $1.5 million in the current quarter, due
primarily to the divestiture of Ecogen Europe. License fees and other income
increased $4.8 million as a result of the acquisition by Monsanto of certain
rights to the Company's Bt technology.
COSTS AND EXPENSES
Cost of products sold decreased 62% due to the decrease in product sales.
Gross margins remained consistent at 35% in 1996 and 1995. Research and
development costs decreased $1.3 million or 57% and selling, general and
administration expenses decreased .6 million or 27% as a result of the
restructuring decisions made by the Company in 1995.
Net loss for the first quarter of 1995 was ($11.4 million) compared to net
income of $2.4 million in the same period in 1996. The first quarter of 1995
included special charges of $9.1 million principally related to purchased
technology acquired from ETech. The net loss exclusive of special charges was
($2.3) million or ($.48) per share in 1995 compared to net income of $2.4
million or $.39 per share in 1996.
11
<PAGE> 14
SEASONALITY OF BUSINESS
The bulk of the Company's current products are presently marketed for
agricultural applications in the northern hemisphere, where the growing season
generally runs from spring until fall. Commercial introduction of the
Company's new products is contingent on, among other factors, completion of
field testing and receipt of required regulatory approvals. Unusual weather
conditions during field tests or failure to receive regulatory approvals prior
to the growing season may require additional field tests in subsequent growing
seasons, with resulting delays in product development and commercialization.
In addition, because of the seasonal nature of its business, the Company's
product revenues are likely to be concentrated in the fiscal quarters prior to
and during a particular growing season which may result in substantial
variations in quarter-to-quarter financial results. Product sales from
year-to-year are also affected by unusual weather conditions, such as droughts
or floods, and the level of insect pressure in grower areas.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its working capital needs primarily through private
and public offerings of equity securities, research contracts, license fees and
product sales.
In January 1996, the Company completed the Monsanto Transaction which resulted
in an immediate cash infusion to the Company of $18.0 million including $10
million from the sale of 943,397 shares of the Company's common stock at $10.60
per share. Further, the Company sold 122,000 shares of Series C preferred
stock at $25 per share in a private placement to institutional investors for
aggregate net proceeds of $2.8 million. In connection with the private
placement, the Company issued warrants to purchase 77,877 shares of the
Company's common stock at $7.30 per share exercisable for five years.
To date, the Company has not generated positive cash flow from operations. The
Company believes that its existing working capital should be sufficient to meet
its capital and liquidity requirements for the immediate future. However, the
Company's working capital and working capital requirements are affected by
numerous factors and there is no assurance that such factors will not have a
negative impact on the Company's liquidity. Principal among these are the
success of its product commercialization and marketing efforts and the efforts
of its strategic partners in commercializing and selling products based on the
Company's technology, the technological advantages and pricing of the Company's
products, economic and environmental considerations which impact agricultural
crop production and the agricultural pest control market, and access to capital
markets that can provide the Company with the resources necessary to fund its
strategic priorities.
12
<PAGE> 15
At January 31, 1996, the Company had cash and liquid investments of $17.9
million, a net increase of $16.1 million from October 31, 1995. The increase
was due to cash received from the Monsanto Transaction and the preferred stock
offering offset by cash expenditures during the current period for operations
including cash expended for inventory production and a reduction in accounts
payable.
The Company has commitments for capital expenditures totaling approximately
$2.1 million for production equipment. The Company obtained a $2.0 million
line of credit to be used for the leasing of production equipment. To date,
approximately $.8 million has been borrowed under the line of credit.
ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY
The increase of $654,000 in inventory during the first quarter of 1995 resulted
from production runs for anticipated sales during the agricultural growing
season in North America. The decrease of $1.0 million in accounts payable and
accrued expenses is due to timing of payments to vendors. The increase in
deferred contract revenue of $3.0 million is due to advance payments received
from Monsanto for research to be done on certain Bt technology.
13
<PAGE> 16
PART II - OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security-Holders
At a Special Meeting of Stockholders held on January 29, 1996 the
stockholders of the Company voted upon a proposal to approve an amendment to
the Company's Restated Certificate of Incorporation to effect a reverse
split of the Company's outstanding shares of common stock on the basis of
one new share of common stock for each five outstanding shares.
Votes in favor: 25,950,389
Votes against: 1,167,447
Abstensions: 151,965
Broker non-votes: N/A
Item 6(a) Exhibits
Exhibit No. Description
- ----------- -----------
3.1 Restated Certificate of Incorporation of Ecogen
Inc.
10.121 Research and Development Agreement between the
Company and Monsanto Company dated as of
January 24, 1996*
10.122 Investment Agreement between the Company and
Monsanto Company dated as of January 24, 1996
10.123 Technology Assignment Agreement between the
Company, Ecogen-Bio Inc. and Monsanto Company dated
as of January 24, 1996
10.124 Form of Severance Compensation Agreement between
the Company and its Executive Officers
27 Financial Data Schedule
- -------------
* Confidential treatment requested for certain portion of this agreement.
14
<PAGE> 17
Item 6(b): Reports on Form 8-K
A Current Report on Form 8-K was filed on November 10, 1995 with respect to
Acquisition or Disposition of Assets and including the following financial
statements:
Unaudited Pro Forma Balance Sheet at July 31, 1995
Unaudited Pro Forma Statement of Operations for the nine-month period ended
July 31, 1995
Unaudited Pro Forma Statement of Operations for the ten-month period ended
October 31, 1994
Notes to Unaudited Pro Forma Financial Information
A Current Report on Form 8-K was filed on November 23, 1995 with respect to
Other Events.
15
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ECOGEN INC.
Date: March 15, l996 By: /s/ James P. Reilly, Jr.
-----------------------------------
(James P. Reilly, Jr., Chairman
and Chief Executive Officer)
By: /s/ Mary E. Paetzold
-----------------------------------
(Mary E. Paetzold, Vice President
and Chief Financial Officer)
16
<PAGE> 19
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ------------------------------------------- ----
3.1 Restated Certificate of Incorporation of
Ecogen Inc.
10.121 Research and Development Agreement
between the Company and Monsanto Company
dated as of January 24, 1996*
10.122 Investment Agreement between the Company
and Monsanto Company dated as of January
24, 1996
10.123 Technology Assignment Agreement between the
Company, Ecogen-Bio Inc. and Monsanto Company
dated as of January 24, 1996
10.124 Form of Severance Compensation Agreement
between the Company and its Executive
Officers
27 Financial Data Schedule
* Confidential treatment requested as to certain portion of this agreement.
17
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
ECOGEN INC.
It is hereby certified that:
1. The present name of the corporation (hereinafter called the
"Corporation") is Ecogen Inc., which is the name under which the Corporation
was originally incorporated; and the date of filing the original Certificate of
Incorporation of the Corporation with the Secretary of State of the State of
Delaware was November 17, 1983.
2. The provisions of the Restated Certificate of Incorporation, as
amended, of the Corporation are hereby further restated and integrated into the
single instrument which is hereinafter set forth, and which is entitled
Restated Certificate of Incorporation of Ecogen Inc., without any further
amendment and without any discrepancy between the provisions of the Restated
Certificate of Incorporation as heretofore amended and supplemented and the
provisions of the said single instrument hereinafter set forth.
3. The Board of Directors of the Corporation has duly adopted this
Restated Certificate of Incorporation in accordance with the provisions of
Section 245 of the General Corporation Law of the State of Delaware in the form
set forth as follows:
Restated Certificate of Incorporation
of
Ecogen Inc.
FIRST: The name of the Corporation is Ecogen Inc. (hereinafter called the
"Corporation").
SECOND: The registered office of the Corporation is located at 1209 Orange
Street, in the City of Wilmington, in the County of New Castle, in the State of
Delaware. The name of its registered agent at that address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be
<PAGE> 2
organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is forty-nine million five
hundred thousand (49,500,000) shares, of which forty-two million (42,000,000)
shall be shares of Common Stock, the par value of which is one cent ($.01) per
share, amounting in the aggregate to Four Hundred Twenty Thousand Dollars
($420,000) and seven million five hundred thousand (7,500,000) shall be shares
of Preferred Stock, the par value of which is one cent ($.01) per share,
amounting in the aggregate to Seventy Five Thousand Dollars ($75,000).
A. Common Stock, $.01 par value
1. Dividends. The holders of shares of Common Stock shall be
entitled to receive such dividends as the Board of Directors of the Corporation
may from time to time declare thereon out of funds available therefor.
2. Voting. The holders of shares of Common Stock shall be entitled
to one vote for each share of Common Stock held on all matters on which holders
of Common Stock shall be entitled to vote.
B. Preferred Stock, $.01 par value
The Board of Directors of the Corporation is authorized to cause the
Preferred Stock to be issued in one or more series, with such voting powers,
full or limited, or no voting powers, and with 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 providing for the issuance of such
stock adopted by the Board of Directors of the Corporation. The Board of
Directors of the Corporation is expressly authorized to adopt such resolution
or resolutions and to cause the Corporation to issue such stock in exchange for
such consideration as it may deem to be advisable.
1. Series B Convertible Preferred Stock. Pursuant to this Article
FOURTH, the Board of Directors of the Corporation has authorized the issuance
of, and has fixed the designation and preferences and relative, participating,
optional and other special rights, and qualifications, limitations and
restrictions of a series of Preferred Stock consisting of 350,000 shares to be
designated Series B Convertible Preferred Stock (the "Series B
2
<PAGE> 3
Preferred Stock"). Each share of Series B Preferred Stock shall rank equally
in all respects and shall be subject to the provisions set forth on Exhibit A
hereto, such Exhibit being made part of this Restated Certificate of
Incorporation.
2. Series C Convertible Preferred Stock. Pursuant to this Article
FOURTH, the Board of Directors of the Corporation has authorized the issuance
of, and has fixed the designation and preferences and relative, participating,
optional and other special rights, and qualifications, limitations and
restrictions of a series of Preferred Stock consisting of 160,000 shares to be
designated Series C Convertible Preferred Stock (the "Series C Preferred
Stock"). Each share of Series C Preferred Stock shall rank equally in all
respects and shall be subject to the provisions set forth on Exhibit B hereto,
such Exhibit being made part of this Restated Certificate of Incorporation.
C. Residual Rights
All rights accruing by law to the outstanding shares of the Corporation not
expressly provided for to the contrary herein shall be vested in the
outstanding shares of Common Stock and Preferred Stock pari passu.
FIFTH: The election of directors need not be by written ballot unless
the by-laws so provide.
SIXTH: The Board of Directors of the Corporation is authorized and
empowered from time to time in its discretion to make, alter, amend or repeal
by-laws of the Corporation, except as such power may be restricted or limited
by the General Corporation Law of the State of Delaware.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution of or any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of Title 8
of the Delaware Code, order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in
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<PAGE> 4
value of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of this Corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this Corporation as a
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or
class of creditors, and/or on all the stockholders or class of stockholders of
this Corporation, as the case may be, and also on this Corporation.
EIGHTH: No director of this Corporation shall be personally liable to this
Corporation or its stockholders for monetary damages for breach of fiduciary
duty by such director as a director; provided, however, that this Article
EIGHTH shall not eliminate or limit the liability of a director to the extent
provided by applicable law (i) for any breach of the director's duty of loyalty
to this Corporation or its stockholders; (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(iii) under Section 174 of the General Corporation Law of the State of
Delaware; or (iv) for any transaction from which the director derived an
improper personal benefit. If the General Corporation Law of the State of
Delaware is amended, after approval by the stockholders of this Corporation of
this Article EIGHTH, to further eliminate or limit the personal liability of
directors, then the liability of a director of this Corporation shall be
eliminated or limited to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as so amended.
NINTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation in
the manner now or hereafter prescribed by law, and all rights and powers
conferred herein on stockholders, directors and officers are subject to this
reserved power.
Signed and attested to on March 14, 1996
/s/ James P. Reilly, Jr.
---------------------------
Name: James P. Reilly, Jr.
Title: Chairman and CEO
Attest:
/s/ Richard A. Deak
- --------------------------------
Name: Richard A. Deak
Title: Vice President, General
Counsel and Secretary
4
<PAGE> 5
EXHIBIT A
ECOGEN INC.
Certificate of Designations, Rights
and Preferences of Series B
Convertible Preferred Stock of ECOGEN INC.
Ecogen Inc., a Delaware corporation (hereinafter called the
"Company"), pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, does hereby make this Certificate of
Designations, Rights and Preferences and does hereby state and certify that
pursuant to the authority expressly vested in the Board of Directors of the
Company by the Amended and Restated Certificate of Incorporation, the Board of
Directors duly adopted the following resolutions, which resolutions remain in
full force and effect as of the date hereof:
RESOLVED, that, pursuant to Article Fourth of the Amended and Restated
Certificate of Incorporation (which authorized 7,500,000 shares of Preferred
Stock, $.01 par value, of which no shares of preferred stock are currently
issued and outstanding), the Board of Directors hereby authorizes the issuance
of, and fixes the designation and preferences and relative, participating,
optional and other special rights, and qualifications, limitations and
restrictions, of a series of Preferred Stock consisting of 350,000 shares to be
designated Series B Convertible Preferred Stock (the "Series B Preferred
Stock").
RESOLVED, that each share of Series B Preferred Stock shall rank
equally in all respects and shall be subject to the following provisions:
1. Definitions. For purposes hereof the following definitions shall
apply:
"Board" shall mean the Board of Directors of the Company.
"Commitment Date" shall mean the date immediately prior to the date of
original issuance of the Series B Preferred Stock.
"Common Stock" shall mean the Common Stock, par value $.01, of the
Company.
"Company" shall mean this corporation.
"Company Conversion Date" shall have the meaning set forth in
Paragraph 7(c).
<PAGE> 6
"Company Conversion Date Market Price" shall mean an amount that is
equal to 75% of the average Market Price for Shares of Common Stock on each of
the five trading days immediately preceding the Company Conversion Date.
"Designated Price" shall mean $20.00 plus all accrued and unpaid
dividends, subject to adjustment from time to time as set forth in Section 9
hereof.
"Holder Conversion Date" shall have the meaning set forth in Paragraph
6(c).
"Holder Conversion Date Market Price" shall mean an amount that is
equal to 80% of the average Market Price for Shares of Common Stock on each of
the five trading days immediately preceding the Holder Conversion Date.
"Junior Stock" shall mean the Common Stock and all other shares of
the Company's capital stock, whether presently outstanding or hereafter issued,
other than the Series B Preferred Stock; provided, however, the Company may
from time to time, without the consent of the holders of the outstanding shares
of Series B Preferred Stock, issue additional series of its presently
authorized and unissued Preferred Stock which rank pari passu in any or all
respects with the Series B. Preferred Stock.
"Market Price for Shares of Common Stock" shall mean the price of one
share of Common Stock determined as follows:
(i) So long as the Common Stock is traded on the NASDAQ Stock
Market, the last reported bid price at the close of business on the date of
valuation;
(ii) If the Common Stock is no longer traded on the NASDAQ
Stock Market but is traded on a national securities exchange, the last sale
price on such exchange at the close of business on the date of valuation; and
(iii) If neither clause (i) or (ii) above applies, the market
value as determine by the Board in good faith taking into consideration, among
other factors, the earnings history, book value and prospects for the Company,
and the prices at which shares of Common Stock recently have been traded. Such
determination shall be conclusive and binding on all persons.
"Original Issuance Market Price" shall mean an amount equal to the
Market Price for Shares of Common Stock on the Commitment Date.
2
<PAGE> 7
"Redemption Date" shall have the meaning set forth in Paragraph 8(c).
"Redemption Date Market Price" shall mean an amount that is equal to
the Market Price for Shares of Common Stock on the trading day immediately
preceding the Redemption Date.
"Series B Preferred Stock" shall mean the Series B Convertible
Preferred Stock of the Company, par value $.01 per share.
2. Dividends. The holders of the then outstanding Series B Preferred
Stock shall be entitled to receive, when and as declared by the Board, and out
of any funds legally available therefore, cumulative dividends at the annual
rate of $1.60 per share. Dividends shall be payable, at the sole discretion of
the Company, in either cash or shares of Common Stock or combination of cash
and shares of Common Stock (i) annually on October 31 of each year or (ii) at
the time of the Conversion or Redemption (as provided herein) of the shares of
the Series B Preferred Stock upon which the dividend is to be paid. If the
Company makes any dividend payment in Common Stock, each share of Common Stock
shall be valued for this purpose at the Market Price for Shares of Common Stock
on the date such dividend is declared or, if the Common Stock is not issued
within ten days after the date of declaration, on the last trading date
preceding the date such Common Stock is issued. Dividends on the Series B
Preferred Stock shall accumulate and accrue from the date of its original issue
and shall accrue from day to day thereafter, whether or not earned or declared.
Unless full dividends on the Series B Preferred Stock for all past dividend
periods and the then current dividend period shall have been paid or declared
and a sum sufficient for the payment thereof set apart, no dividend whatsoever
(other than a dividend payable solely in Common Stock) shall be paid or
declared, and no distribution shall be made, on any Junior Stock. The Series B
Preferred Stock shall have no right to participate in dividends paid on Junior
Stock.
3. Liquidation Rights of Series B Preferred Stock.
(a) Preference. In the event of any liquidation, dissolution
or winding up of the Company, whether voluntary or involuntary, or a sale or
other disposition of all or substantially all of the assets of the Company
which shall be deemed to be a liquidation, dissolution or winding up of the
Company, the holders of the Series B Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the Company available for distribution
to its shareholders, whether such assets are capital, surplus, or earnings,
before any payment or declaration and setting apart for payment of any amount
shall be made in respect of
3
<PAGE> 8
the Junior Stock, an amount equal to the Designated Price, and no more. If
upon any liquidation, dissolution, or winding up of the Company, whether
voluntary or involuntary, the assets to be distributed to the holders of the
Series B Preferred Stock shall be insufficient to permit the payment to such
shareholders of the full preferential amounts aforesaid, then all of the assets
of the Company to be distributed shall be distributed ratably to the holders of
the Series B Preferred Stock on the basis of the number of shares of Series B
Preferred Stock held. The Company shall promptly mail written notice of such
liquidation, dissolution or winding up, but in any event such notice shall not
be less than five days prior to the payment date stated therein, to each record
holder of the Series B Preferred Stock.
(b) Remaining Assets. After the payment or distribution to
the holders of the Series B Preferred Stock of the full preferential amounts
aforesaid, the holders of the Junior Stock then outstanding shall be entitled
to receive all remaining assets of the Company to be distributed.
4. Merger, Consolidation. If at any time there occurs any
consolidation or merger of the Company with or into any other corporation or
other entity or person (whether or not the Company is the surviving
corporation), or any other corporate reorganization or transaction or series of
related transactions in which in excess of 50% of the Company's voting power is
transferred, the holders of the Series B Preferred Stock then outstanding shall
participate in any such transaction as a class with common stockholders on the
same basis as if the Preferred Stock had been converted at the Company's
election one day prior to the close of such transaction.
5. Voting Rights.
(a) Series B Preferred Stock. Each holder of shares of
Series B Preferred Stock shall be entitled to one vote for each share thereof
held and shall be entitled to vote on all matters presented to the Company's
stockholders for a vote.
(b) Common Stock. Each holder of shares of Common Stock
shall be entitled to one vote for each share thereof held. Except as otherwise
expressly provided herein or as required by law, the holders of Series B
Preferred Stock and the holders of Common Stock shall vote together and not as
separate classes.
4
<PAGE> 9
6. Conversion at the Option of the Holder. The holders of Series B
Preferred Stock shall have the following conversion rights.
(a) Holder's Right to Convert. Each share of Series B
Preferred Stock shall be convertible, at the option of the holder thereof, into
fully paid and nonassable shares of Common Stock, subject to the following
limitations: (i) A holder who was issued shares of Series B Preferred Stock
directly from the Company may convert (x) up to one third of such shares
between 45-89 days from the date of original issuance of the Series B Preferred
Stock (the "Closing Date"), (y) up to an aggregate of two thirds of such shares
between 90 and 134 days from the Closing Date and (z) all of such shares 135
days from the Closing Date and thereafter; and (ii) A holder who obtained
shares other than from an issuance directly by the Company may convert such
shares in whole or in part based on the restrictions that attached to such
shares at the time of purchase based on subprovisions (x), (y) and (z) above.
(b) Conversion Price for Holder Converted Shares. The Series
B Preferred Stock that is converted into shares of Common Stock at the option
of the holder shall be convertible into the number of shares of Common Stock
which results from dividing the Designated Price in effect at the time of
conversion by the lesser of (i) the Original Issuance Market Price, and (ii)
the Holder Conversion Date Market Price.
(c) Mechanics of Conversion. Each holder of Series B
Preferred Stock who desires to convert the same into shares of Common Stock
shall surrender the certificate or certificates therefor, duly endorsed, at the
principal corporate office of the Company, and shall give written notice to the
Company at such office that such holder elects to convert the same and shall
state therein the number of shares of Series B Preferred Stock being converted.
Thereupon the Company (to the extent the Company has authorized and unissued
shares of Common Stock that have not been otherwise reserved) shall promptly
issue and deliver to such holder a certificate or certificates for the number
of shares of Common Stock to which such holder is entitled. Such conversion
shall be deemed to have been made immediately prior to the close of business on
the date of such surrender of the certificate representing the shares of Series
B Preferred Stock to be converted (the "Holder Conversion Date").
7. Conversion at the Option of the Company. The Company shall have
the following conversion rights.
(a) Company's Right to Convert. Any and all of the shares of
Series B Preferred Stock shall be convertible,
5
<PAGE> 10
at the option of the Company, into fully paid and nonassesable shares of Common
Stock at any time after September 8, 1996.
(b) Conversion Price for Company Converted Shares. The
Series B Preferred Stock that is converted into shares of Common Stock at the
option of the Company shall be convertible into the number of shares of Common
Stock which results from dividing the Designated Price in effect at the time of
conversion by the lesser of (i) the Original Issuance Market Price, and (ii)
the Company Conversion Date Market Price.
(c) Mechanics of Company Conversion. In the event the
Company determines to convert some or all of the Series B Preferred Stock, the
Company shall send by certified mail notice of such determination to the record
holders of all of the Shares to be converted. The notice shall provide that
the conversion shall occur on a date (the "Company Conversion Date") that is at
least 45 days after the date such notice was sent by certified mail to the
applicable record holders. The holders of the Shares being converted may, at
the holder's option, convert their Shares in accordance with Section 6 hereof
at any time prior to the Company Conversion Date. On the Company Conversion
Date the subject shares of Series B Preferred Stock shall be converted
automatically into shares of Common Stock without any further action by the
holders of such shares and whether or not the certificates representing such
shares are surrendered to the Company; provided, however, that the Company
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such conversion unless the certificates evidencing such
shares of Series B Preferred Stock are either delivered to the Company, or the
holder notifies the Company that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to the Company to indemnify
the Company from any loss incurred by it in connection with such certificates.
Upon the occurrence of such conversion by the Company of the Series B Preferred
Stock, the holders of Series B Preferred Stock shall surrender the certificates
representing such shares at the principal office of the Company. Thereupon,
there shall be issued and delivered to such holder promptly at such office and
in its name and shown on such surrendered certificate or certificates, a
certificate or certificates for the number of shares of Common Stock into which
the shares of Series B Preferred Stock surrendered were convertible on the
Company Conversion Date.
8. Redemption. The Company shall have the following redemption
rights.
6
<PAGE> 11
(a) Company's Right to Redeem. Any and all of the shares of
Series B Preferred Stock shall be redeemable at the option of the Company at
any time after September 15, 1997, for cash consideration to be paid by the
Company to the holder of the redeemed shares of Series B Preferred Stock.
(b) Redemption Price. The redemption price per share of
Series B Preferred Stock shall be calculated by multiplying the Designated
Price by the greater of (i) 120%, and (ii) a fraction the numerator of which
shall be the Redemption Date Market Price and the denominator of which shall be
an amount equal to the lesser of (x) the Original Issuance Market Price for
such shares and (y) the Holder Conversion Date Market Price that would have
been in effect had the applicable holder chosen to convert on the Redemption
Date.
(c) Mechanics of Redemption. In the event the Company
determines to redeem some or all of the Series B Preferred Stock, the Company
shall send by certified mail notice of such determination to the record holders
of all of the shares to be redeemed. The notice shall provide that the
redemption shall occur on a date (the "Redemption Date") that is at least 45
days after the date such notice was sent by certified mail to the applicable
record holders. The holders of the shares being redeemed may convert their
shares in accordance with Section 6 hereof at any time prior to the Redemption
Date. On the Redemption Date the subject shares of Series B Preferred Stock
shall be redeemed automatically without any further action by the holders of
such shares and whether or not the certificates representing such shares are
surrendered to the Company; provided, however, that the Company shall not be
obligated to issue the cash consideration due to the holder upon redemption
unless the certificates evidencing such shares of Series B Preferred Stock are
either delivered to the Company or the holder notifies the Company that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection with such certificate. Upon the occurrence of such redemption
by the Company of the Series B Preferred Stock, the holders of such Series B
Preferred Stock shall surrender the certificates representing such shares at
the principal office of the Company. Thereupon, there shall be promptly issued
and delivered to such holder a check payable to the name as shown on such
surrendered certificate in the amount of the redemption price as calculated as
set forth in Paragraph 8(b).
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<PAGE> 12
9. Adjustments; Reorganizations.
(a) Adjustment for Stock Splits and Combinations. If the
Company at any time or from time to time after the Commitment Date effects a
subdivision of the outstanding Common Stock, the Designated Price and the
Original Issuance Market Price in effect immediately before such subdivision
shall be proportionately decreased, and conversely, if the Company at any time
or from time to time, after the Commitment Date combines the outstanding shares
of Common Stock into a smaller number of shares, the Designated Price and the
Original Issuance Market Price in effect immediately before the combination
shall be proportionately increased. Any adjustment under this Paragraph 9(a)
shall become effective at the close of business on the date the subdivision or
combination becomes effective.
(b) Adjustment for Certain Dividends and Distributions. If
the Company at any time or from time to time after the Commitment Date makes,
or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional
shares of Common Stock, then and in each such event the Designated Price then
in effect shall be decreased as of the time of such issuance or, in the event
such record date is fixed, as of the close of business on such record date, by
multiplying the Designated Price then in effect by a fraction (1) the numerator
of which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance of the close of business on such
record date, and (2) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date is fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed
therefor, the Designated Price shall be recomputed accordingly as of the close
of business on such record date and thereafter the Designated Price shall be
adjusted pursuant to this Paragraph 9(b) as of the time of actual payment of
such dividends or distributions.
(c) Adjustment for Other Dividends and Distributions. In the
event the Company at any time or from time to time after the Commitment Date
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Company other than shares of Common Stock, then and in each such event
provision shall be made so that the holders of Series B Preferred Stock shall
receive upon conversion thereof, in addition to the number of shares of Common
Stock receivable thereupon, the amount
8
<PAGE> 13
of securities of he Company which they would have received had their Series B
Preferred Stock been converted into Common Stock on the date of such event and
had they thereafter, during the period from the date of such event to and
including the conversion date, retained such securities receivable by them as
aforesaid during such period, subject to all other adjustments called for
during such period under this Section 9 with respect to the rights of the
holders of the Series B Preferred Stock.
(d) Adjustment for Reclassification, Exchange and
Substitution. In the event that at any time or from time to time after the
Commitment Date, the Common Stock issuable upon the conversion of the Series B
Preferred Stock is changed into the same or a different number of shares of any
class or classes of stock, whether by recapitalization, reclassification or
otherwise (other than a subdivision or combination of shares or stock dividend
or reorganization provided for elsewhere in this Section 9, or a merger, or
consolidation, provided for in Section 4), then and in any event each holder of
Series B Preferred Stock shall have the right thereafter to convert such Stock
into the kind and amount of stock and other securities and property receivable
upon such recapitalization, reclassification or other change, by holders of the
maximum number of shares of Common Stock in which such shares of Series B
Preferred Stock could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further adjustment
as provided herein.
(e) Reorganizations. If at any time or from time to time
after the Commitment Date there is a capital reorganization of the Common Stock
(other than a recapitalization, subdivision, combination, reclassification or
exchange of shares provided for elsewhere in this Section 9) then, as a part of
such reorganization, provision shall be made so that the holders of the Series
B Preferred Stock shall thereafter be entitled to receive upon conversion of
the Series B Preferred Stock the number of shares of stock or other securities
or property to which a holder of the maximum number of shares of Common Stock
deliverable upon conversion would have been entitled on such capital
reorganization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 9 with respect to the rights of
the holders of the Series B Preferred Stock after the reorganization to the end
that the provisions of this Section 9 (including adjustment of the Designated
Price then in effect and the number of shares purchasable upon conversion of
the Series B Preferred Stock) shall be applicable after that event and be as
nearly equivalent as may be practicable.
10. Fractional Shares. No fractional shares of Common Stock or scrip
representing fractional shares of Common
9
<PAGE> 14
Stock shall be issuable hereunder. The number of shares of Common Stock that
are issuable hereunder shall be rounded up to the nearest whole share.
11. Reservation of Stock Issuable Upon Conversion. The Company shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series B Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of the
outstanding shares of the Series B Preferred Stock that then may be converted
by a holder into shares of Common Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the Series B Preferred
Stock, the Company will take such corporate action as may, in the opinion of
its counsel, be reasonably necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be reasonably
sufficient for such purpose.
12. No Reissuance of Series B Preferred Stock. No share or shares of
Series B Preferred Stock acquired by the Company by reason of redemption,
purchase, conversion or otherwise shall be reissued as Series B Preferred
Stock, and all such shares shall be retired and shall return to the status of
authorized, unissued and undesignated shares of Preferred Stock.
13. Amendment and Waiver of Series B Preferred Stock. No amendment
to or waiver of the terms relating to the Series B Preferred Stock may be
affected unless the Company has obtained the favorable vote or the prior
written consent of the holders of 66-2/3% of the Series B Preferred Stock then
outstanding.
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<PAGE> 15
IN WITNESS WHEREOF, Ecogen Inc. has caused this Certificate of
Designation, Rights and Preferences to be signed by John E. Davies, as
Chairman of the Board and attested by Richard A. Deak, as Secretary, this 21st
day of September, 1995.
ECOGEN INC.
By: /s/ John E. Davies
---------------------------
Name: John E. Davies
Title: Chairman of the
Board
ATTEST:
/s/ Richard A. Deak
- ----------------------------
Name: Richard A. Deak
Title: Secretary
11
<PAGE> 16
EXHIBIT B
ECOGEN INC.
Certificate of Designations, Rights
and Preferences of Series C
Convertible Preferred Stock of ECOGEN INC.
Ecogen Inc., a Delaware corporation (hereinafter called the
"Company"), pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, does hereby make this Certificate of
Designations, Rights and Preferences and does hereby state and certify that
pursuant to the authority expressly vested in the Board of Directors of the
Company by the Amended and Restated Certificate of Incorporation, the Board of
Directors duly adopted the following resolutions, which resolutions remain in
full force and effect as of the date hereof:
RESOLVED, that, pursuant to Article Fourth of the Amended and
Restated Certificate of Incorporation (which authorized 7,500,000 shares of
Preferred Stock, $.01 par value, of which 29,167 shares of Series B Convertible
Preferred Stock are currently issued and outstanding), the Board of Directors
hereby authorizes the issuance of, and fixes the designation and preferences
and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions, of a series of Preferred Stock
consisting of 160,000 shares to be designated Series C Convertible Preferred
Stock (the "Series C Preferred Stock").
RESOLVED, that each share of Series C Preferred Stock shall
rank equally in all respects and shall be subject to the following provisions:
1. Definitions. For purposes hereof the following
definitions shall apply:
"Board" shall mean the Board of Directors of the Company.
"Closing Date" shall mean the date of original issuance of the
Series C Preferred Stock.
"Common Stock" shall mean the Common Stock, par value $.01, of
the Company.
"Company" shall mean this corporation.
"Company Conversion Date" shall have the meaning set forth in
Paragraph 7(c).
"Company Conversion Date Market Price" shall mean an amount
that is equal to 75% of the average of the Market Price
<PAGE> 17
for Shares of Common Stock on each of the five trading days immediately
preceding the Company Conversion Date.
"Conversion Date Market Price" shall mean an amount that is
equal to 80% of the average of the Market Price for Shares of Common Stock on
each of the five trading days immediately preceding the Holder Conversion Date,
subject to adjustment from time to time as set forth in Section 9 hereof.
"Conversion Default" shall have the meaning set forth in
Paragraph 11(b).
"Conversion Notice" shall have the meaning set forth in
Paragraph 6(c).
"Conversion Rate" shall have the meaning set forth in
Paragraph 6(b).
"Designated Price" shall mean $25.00 plus all accrued and
unpaid dividends.
"Holder Conversion Date" shall have the meaning set forth in
Paragraph 6(c).
"Junior Stock" shall mean the Common Stock and all other
shares of the Company's capital stock, whether presently outstanding or
hereafter issued, other than the Series C Preferred Stock; provided, however,
the Company may from time to time, without the consent of the holders of the
outstanding shares of Series C Preferred Stock, issue additional series of its
presently authorized and unissued Preferred Stock which rank pari passu to or
do not have preference over the Series C Preferred Stock in dividends,
distribution upon liquidation or other respects.
"Market Price for Shares of Common Stock" shall mean the price
of one share of Common Stock determined as follows:
(i) If the Common Stock is listed on NASDAQ, the
last reported bid price on the date of valuation;
(ii) If the Common Stock is listed on a national
securities exchange, the last bid price on such exchange on the date of
valuation;
(iii) If neither (i) nor (ii) apply but the Common
Stock is quoted in the over-the-counter market on the pink sheets or bulletin
board, the mean between the last reported "bid" and "asked" prices thereof on
the date of valuation; and
(iv) If neither clause (i), (ii) or (iii) above
applies, the market value as determined by a nationally recognized investment
banking firm or other nationally
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<PAGE> 18
recognized financial advisor retained by the Company for such purpose, taking
into consideration, among other factors, the earnings history, book value and
prospects for the Company, and the prices at which shares of Common Stock
recently have been traded. Such determination shall be conclusive and binding
on all persons.
"Original Issuance Market Price" shall mean an amount equal to
the Market Price for Shares of Common Stock on the Closing Date.
"Post-Conversion Default" shall have the meaning set forth in
Paragraph 11(b).
"Redemption Date" shall have the meaning set forth in
Paragraph 8(c).
"Redemption Date Market Price" shall mean an amount that is
equal to the Market Price for Shares of Common Stock on the trading day
immediately preceding the Redemption Date.
"Series C Preferred Stock" shall mean the Series C Convertible
Preferred Stock of the Company, par value $.01 per share.
2. Dividends. Subject to Paragraph 11(b) hereof, the holders
of the then outstanding Series C Preferred Stock shall be entitled to receive
cumulative dividends at the annual rate of 8% (or $2.00) per share, payable in
shares of Common Stock at the time of Conversion (as provided in Paragraph 6
and 7 hereof) or in cash at the time of Redemption (as provided in Paragraph 8
hereof) of the shares of the Series C Preferred Stock upon which the dividend
is to be paid. Dividends on the Series C Preferred Stock shall accumulate and
accrue from the date of its original issue and shall accrue from day to day
thereafter, whether or not earned or declared. The Series C Preferred Stock
shall have no right to participate in dividends paid on Junior Stock.
3. Liquidation Rights of Series C Preferred Stock.
(a) Preference. In the event of any liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary, or
a sale or other disposition of all or substantially all of the assets of the
Company which shall be deemed to be a liquidation, dissolution or winding up of
the Company, the holders of the Series C Preferred Stock then outstanding shall
be entitled to be paid out of the assets of the Company available for
distribution to its stockholders, whether such assets are capital, surplus, or
earnings, before any payment or declaration and setting apart for payment of
any amount shall be made in respect of any Junior Stock, an amount equal to the
Designated Price, and no more. If upon any actual or deemed
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<PAGE> 19
liquidation, dissolution, or winding up of the Company, whether voluntary or
involuntary, the assets to be distributed to the holders of the Series C
Preferred Stock shall be insufficient to permit the payment to such
stockholders of the full preferential amounts aforesaid, then all of the assets
of the Company to be distributed shall be distributed ratably to the holders of
the Series C Preferred Stock and to any holders of any series of Preferred
Stock that ranks pari passu with the Series C Preferred Stock, on the basis of
the number of shares of Preferred Stock held. The Company shall promptly mail
written notice of such liquidation, dissolution or winding up (with a copy sent
by facsimile), but in any event such notice shall not be given less than five
days prior to the payment date stated therein to each record holder of the
Series C Preferred Stock.
(b) Remaining Assets. After the payment or
distribution to the holders of the Series C Preferred Stock of the full
preferential amounts aforesaid, the holders of the Junior Stock then
outstanding shall be entitled to receive all remaining assets of the Company to
be distributed.
4. Merger, Consolidation. If at any time there occurs any
consolidation or merger of the Company with or into any other corporation or
other entity or person (whether or not the Company is the surviving
corporation), or any other corporate reorganization or transaction or series of
related transactions in which in excess of 50% of the Company's voting power is
transferred, the holders of the Series C Preferred Stock then outstanding shall
participate in any such transaction as a class with common stockholders on the
same basis as if the Preferred Stock had been converted at the Company's
election one day prior to the close of such transaction.
5. Voting Rights. The holders of the Series C Preferred
Stock will not have any voting rights except as set forth below or as otherwise
from time to time required by law.
The affirmative approval (by vote or written consent as
permitted by applicable law) of the holders of at least 66 2/3% of the
outstanding shares of the Series C Preferred Stock, voting separately as a
class, will be required for (i) any amendment, alteration or repeal of the
Company's Amended and Restated Certificate of Incorporation (including any
Certificate of Designations, Rights and Preferences) if the amendment,
alteration or repeal adversely affects the powers, preferences or rights of the
Series C Preferred Stock (including, without limitation, by creating any class
or series of equity securities having a preference over the Series C Preferred
Stock with respect to dividends, distribution upon liquidation or in any other
respect), or (ii) any amendment to or waiver of the terms of the Series C
Preferred Stock.
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<PAGE> 20
To the extent that under Delaware law the vote of the holders
of the Series C Preferred Stock, voting separately as a class, is required to
authorize a given action of the Company, the affirmative approval (by vote or
written consent as permitted by applicable law) of the holders of a majority of
the outstanding shares of the Series C Preferred Stock shall constitute the
approval of such action by the class. To the extent that under Delaware law
the holders of the Series C Preferred Stock are entitled to vote on a matter
with holders of the Common Stock, voting together as one class, each share of
Series C Preferred Stock shall be entitled to one vote for each share thereof
held. Holders of the Series C Preferred Stock shall be entitled to notice of
all shareholder meetings or written consents with respect to which they would
be entitled to vote, which notice will be provided pursuant to the Company's
by-laws and applicable statutes.
6. Conversion at the Option of the Holder. The holders of
Series C Preferred Stock shall have the following conversion rights.
(a) Holder's Right to Convert. Each share of Series
C Preferred Stock shall be convertible, at the option of the holder thereof,
into fully paid and nonassessable shares of Common Stock, subject to the
following limitations: (i) A holder who was issued shares of Series C
Preferred Stock directly from the Company may convert (x) up to one third of
such shares at any time on or after the 45th day after the Closing Date, (y) up
to an additional one third of such shares at any time on or after the 76th day
following the Closing Date, and (z) all of such shares at any time on or after
the 106th day following the Closing Date; and (ii) Any transfer of shares of
Series C Preferred Stock by the person to whom such shares were originally
issued within 105 days of the Closing Date shall be registered by the Company
on its books and records only upon designation by the transferor of the dates
of convertibility of the shares being transferred in accordance with the
foregoing limitations and any transferee and subsequent transferee of such
shares shall be bound by such conversion restrictions.
(b) Conversion Price for Holder Converted Shares.
Each share of Series C Preferred Stock that is converted into shares of Common
Stock at the option of the holder shall be convertible into the number of
shares of Common Stock which results from application of the following formula:
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<PAGE> 21
[ (.08) (N/365) (25)] + 25
the lesser of (i) the Original
Issuance Market Price and
(ii) the Conversion Date Market Price
N = the number of days between the Closing Date and the
Holder Conversion Date
The number of shares of Common Stock into which each share of
Series C Preferred Stock may be converted pursuant to either this paragraph or
Paragraph 7 hereof is hereafter referred to as the "Conversion Rate" for such
series.
(c) Mechanics of Conversion. In order to convert
Series C Preferred Stock into full shares of Common Stock, the holder shall
surrender the certificate or certificates therefor, duly endorsed, by either
overnight courier or 2-day courier, to the principal office of the Company or
of any transfer agent for the Series C Preferred Stock, and shall give written
notice (the "Conversion Notice") to the Company at such office that he elects
to convert the number of shares specified therein (with an advance copy of the
certificate(s) and the notice confirmed by facsimile), which such notice and
election shall be irrevocable by the holder; provided, however, that the
Company shall not be obligated to issue certificates evidencing the shares of
the Common Stock issuable upon such conversion unless either the certificates
evidencing the shares of Series C Preferred Stock are delivered to the Company
or its transfer agent as provided above, or the holder notifies the Company
that such certificates have been lost, stolen or destroyed and promptly
executes an agreement satisfactory to the Company to indemnify the Company from
any loss incurred by it in connection with such certificates.
The Company shall use its best efforts to issue and deliver
within three business days after delivery to the Company of such certificates,
or after receipt of such agreement and indemnification, to such holder of
Series C Preferred Stock at the address of the holder on the stock books of the
Company, a certificate or certificates for the number of shares of Common Stock
to which he shall be entitled as aforesaid, together with a calculation of the
Conversion Rate. The date on which the Conversion Notice is given (the "Holder
Conversion Date") shall be deemed to be the date the Company received by
facsimile the Conversion Notice, provided that the original shares of Series C
Preferred Stock to be converted, or the aforesaid notice of lost, stolen or
destroyed certificates, are received by the Company or any transfer agent for
the Series C Preferred Stock within five business days thereafter, and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date. If the original
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<PAGE> 22
shares of Series C Preferred Stock to be converted, or the aforesaid notice of
lost, stolen or destroyed certificates, are not received by the Company or any
transfer agent for the Series C Preferred Stock Preferred Stock Agent within
five business days after the Holder Conversion Date, the Conversion Notice
shall become null and void.
7. Conversion at the Option of the Company. The Company
shall have the following conversion rights.
(a) Company's Right to Convert. All (but not less
than all) of the shares of Series C Preferred Stock shall be convertible, at
the option of the Company, into fully paid and nonassessable shares of Common
Stock at any time after June 1, 1997.
(b) Conversion Price for Company Converted Shares.
The Series C Preferred Stock that is converted into shares of Common Stock at
the option of the Company shall be convertible into the number of shares of
Common Stock which results from application of the following formula:
[ (.08) (N/365) (25)] + 25
the lesser of (i) the Original
Issuance Market Price and
(ii) the Company Conversion Date Market Price
N = the number of days between the Closing Date
and the Company Conversion Date
(c) Mechanics of Company Conversion. In the event
the Company determines to convert all of the Series C Preferred Stock, the
Company shall send by either overnight courier or 2-day courier (with a copy
sent by facsimile) notice of such determination to the record holders of all of
the Series C Preferred Stock. The notice shall provide that the conversion
shall occur on a date (the "Company Conversion Date") that is at least 60 days
after the date such notice was sent by confirmed facsimile to each record
holder. Such holders of Series C Preferred Stock may, at the holder's option,
convert his shares in accordance with Section 6 hereof at any time prior to the
Company Conversion Date. On the Company Conversion Date the shares of Series C
Preferred Stock shall be converted automatically into shares of Common Stock
without any further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Company, and such
persons shall be treated for all purposes as the record holders of such shares
of Common Stock on such date; provided, however, that the Company shall not be
obligated to issue to a holder of shares of Series C Preferred Stock
certificates evidencing the shares of Common Stock issuable upon conversion
unless the certificates evidencing such shares of
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<PAGE> 23
Series C Preferred Stock are either delivered to the principal office of the
Company or of any transfer agent for the Series C Preferred Stock, or the
holder notifies the Company that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to the Company to indemnify
the Company from any loss incurred by it in connection with such certificates.
The Company shall use its best efforts to issue and deliver within three
business days after the Company Conversion Date and delivery to the Company of
such certificates, or after receipt of such agreement and indemnification, to
such holder of Series C Preferred Stock at the address of the holder on the
stock books of the Company, a certificate or certificate for the number of
shares of Common Stock to which he shall be entitled as aforesaid.
8. Redemption. The Company shall have the following
redemption rights.
(a) Company's Right to Redeem. All (but not less
than all) of the shares of Series C Preferred Stock shall be redeemable at the
option of the Company at any time after June 1, 1997, for cash consideration to
be paid by the Company to the holder of the redeemed shares of Series C
Preferred Stock.
(b) Redemption Price. The redemption price per
share of Series C Preferred Stock shall be the greater of (i) 120% of the
Designated Price (less any accrued and unpaid dividends) and (ii) the product
of the Designated Price and a fraction the numerator of which shall be the
Redemption Date Market Price and the denominator of which shall be an amount
equal to the lesser of (x) the Original Issuance Market Price and (y) the
Company Conversion Date Market Price that would have been in effect had the
Company Conversion Date occurred on the Redemption Date.
(c) Mechanics of Redemption. In the event the
Company determines to redeem all of the Series C Preferred Stock, the Company
shall send by either overnight courier or 2-day courier (with a copy sent by
facsimile) notice of such determination to the record holders of all of the
Series C Preferred Stock. The notice shall provide that the redemption shall
occur on a date (the "Redemption Date") that is at least 60 days after the date
such notice was sent by confirmed facsimile to such record holders. Each
holder may, at the holder's option, convert his shares in accordance with
Section 6 hereof at any time prior to the Redemption Date. On the Redemption
Date the shares of Series C Preferred Stock shall be redeemed automatically
without any further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Company; provided,
however, that the Company shall not be obligated to pay the cash consideration
due to a holder of Series C Preferred Stock upon redemption
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<PAGE> 24
unless the certificates evidencing such shares of Series C Preferred Stock are
either delivered to the principal office of the Company or any transfer agent
for the Series C Preferred Stock or the holder notifies the Company or any
transfer agent for the Series C Preferred Stock that such certificates have
been lost, stolen or destroyed and executes an agreement satisfactory to the
Company to indemnify the Company from any loss incurred by it in connection
with such certificate. Thereupon, there shall be promptly issued and delivered
to such holder, within three business days after the Redemption Date and
delivery to the Company of such certificates, or after receipt of such
agreement and identification, at the address of such holder on the stock books
of the Company, a check payable to the name as shown on such surrendered
certificate in the amount of the redemption price as calculated as set forth in
Paragraph 8(b).
9. Adjustments; Reorganizations.
(a) Adjustment for Stock Splits and Combinations. If
the Company at any time or from time to time after the Closing Date effects a
subdivision of the outstanding Common Stock, the Original Issuance Market Price
in effect immediately before such subdivision shall be proportionately
decreased, and conversely, if the Company at any time or from time to time
after the Closing Date combines the outstanding shares of Common Stock into a
smaller number of shares (i.e., by reverse stock split or otherwise), the
Original Issuance Market Price in effect immediately before the combination
shall be proportionately increased. Any adjustment under this Paragraph 9(a)
shall become effective at the close of business on the date the subdivision or
combination becomes effective.
(b) Adjustment for Certain Dividends and
Distributions. If the Company at any time or from time to time after the
Closing Date makes, or fixes a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Original
Issuance Market Price then in effect shall be decreased as of the time of such
issuance or, in the event such record date is fixed, as of the close of
business on such record date, by multiplying the Original Issuance Market Price
then in effect by a fraction (1) the numerator of which is the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and (2) the
denominator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common Stock issuable
in payment of such dividend or distribution; provided, however, that if such
record date is fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed
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<PAGE> 25
therefor, the Original Issuance Market Price shall be recomputed accordingly as
of the close of business on such record date and thereafter shall be adjusted
pursuant to this Paragraph 9(b) as of the time of actual payment of such
dividends or distributions to reflect the actual number of shares issued in
such dividend or distribution.
(c) Adjustment for Other Dividends and
Distributions. In the event the Company at any time or from time to time after
the Closing Date makes, or fixes a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution payable
in securities of the Company other than shares of Common Stock, then and in
each such event provision shall be made so that the holders of Series C
Preferred Stock shall receive upon conversion thereof pursuant to either
Paragraph 6 or Paragraph 7 hereof, in addition to the number of shares of
Common Stock receivable thereupon, the amount of such other securities of the
Company to which a holder on the relevant record or payment date, as
applicable, of the number of shares of Common Stock so receivable upon
conversion would have been entitled, plus any dividends or other distributions
which would have been received with respect to such securities had such holder
thereafter, during the period from the date of such event to and including the
Holder Conversion Date or Company Conversion Date, as applicable, retained such
securities, subject to all other adjustments called for during such period
under this Section 9 with respect to the rights of the holders of the Series C
Preferred Stock.
(d) Adjustment for Reclassification, Exchange and
Substitution. In the event that at any time or from time to time after the
Closing Date, the Common Stock issuable upon the conversion of the Series C
Preferred Stock is changed into the same or a different number of shares of any
class or classes of stock, whether by recapitalization, reclassification or
otherwise (other than a subdivision or combination of shares or stock dividend
or reorganization provided for elsewhere in this Section 9, or a merger, or
consolidation, provided for in Section 4), then and in each such event each
holder of Series C Preferred Stock shall have the right thereafter to convert
such stock into the kind of stock receivable upon such recapitalization,
reclassification or other change by holders of shares of Common Stock, all
subject to further adjustment as provided herein. In such event, the formulae
set forth herein for conversion and redemption shall be equitably adjusted to
reflect such change in number of shares or, if shares of a new class of stock
are issued, to reflect the market price of the class or classes of stock
(applying the same factors used in determining the Market Price for Shares of
Common Stock) issued in connection with the above described transaction.
(e) Reorganizations. If at any time or from time
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<PAGE> 26
to time after the Closing Date there is a capital reorganization of the Common
Stock (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this Section
9) then, as a part of such reorganization, provision shall be made so that the
holders of the Series C Preferred Stock shall thereafter be entitled to receive
upon conversion of the Series C Preferred Stock the number of shares of stock
or other securities or property to which a holder of the number of shares of
Common Stock deliverable upon conversion would have been entitled on such
capital reorganization. In any such case, appropriate adjustment shall be made
in the application of the provisions of this Section 9 with respect to the
rights of the holders of the Series C Preferred Stock after the reorganization
to the end that the provisions of this Section 9 (including adjustment of the
Original Issuance Market Price then in effect and the number of shares issuable
upon conversion of the Series C Preferred Stock) shall be applicable after that
event and be as nearly equivalent as may be practicable, including, by way of
illustration and not limitation, by equitably adjusting the formulae set forth
herein for conversion and redemption to reflect the market price of the
securities or property (applying the same factors used in determining the
Market Price for Shares of Common Stock) issued in connection with the above
described transaction.
10. Fractional Shares. No fractional shares of Common Stock
or scrip representing fractional shares of Common Stock shall be issuable
hereunder. The number of shares of Common Stock that are issuable upon any
conversion shall be rounded up or down to the nearest whole share.
11. Reservation of Stock Issuable Upon Conversion.
(a) Reservation Requirement. A special meeting
of the Company's stockholders shall be called and held as promptly as practical
after the date of this Certificate to effect a change in the Company's
authorized Common Stock to allow for the reservation of a sufficient number of
shares of Common Stock for the purpose of enabling the Company to satisfy any
obligation to issue shares of its Common Stock upon conversion of the Series C
Preferred Stock pursuant hereto. After the date of such meeting (if the
Company's stockholders approve the aforementioned change), the Company shall
reserve and keep available at all times, free of preemptive rights shares of
Common Stock for the purpose of enabling the Company to satisfy any obligation
to issue shares of its Common Stock upon conversion of the Series C Preferred
Stock pursuant hereto.
(b) Default. If the Company does not have a
sufficient number of shares of Common Stock available to satisfy the Company's
obligations to a holder of Series C Preferred Stock upon receipt of a
Conversion Notice, all dividends (including
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<PAGE> 27
dividends otherwise payable through the issuance of Common Stock upon
conversion of the Series C Preferred Stock and by application of the formulae
set forth in Paragraphs 6 and 7 hereof) with respect to the Class C Preferred
Stock as to which conversion is not perfected by the Company through the
delivery of certificates representing the shares of Common Stock issuable upon
such conversion (a "Conversion Default") shall thereupon begin to accrue in
cash and such incremental cash dividends shall be payable on the ninetieth
(90th) day following the Company's receipt of the applicable Conversion Notice
and each subsequent 90th day thereafter so long as such Class C Preferred Stock
remain outstanding. The rate of dividends on the Class C Preferred Stock shall
be increased by two percent (2%) commencing on the first day of the thirty (30)
day period (or part thereof) following a Conversion Default; an additional two
percent (2%) commencing on the first day of each of the second and third such
thirty (30) day periods (or part thereof); and an additional one percent (1%)
on the first day of each consecutive thirty (30) day period (or part thereof)
thereafter until such securities have been duly converted or redeemed as herein
provided. Any such cash dividends which are not paid when due shall accrue
interest until paid at the rate from time to time applicable to dividends on
the Class C Preferred Stock as to which the Conversion Default has occurred.
Notwithstanding the foregoing, a holder of the Class C Preferred Stock as to
which there has been a Conversion Default may waive any payment of cash
dividends or interest thereon (whether on the date required for periodic
payments thereof or in connection with a redemption), in whole or in part, and
in lieu thereof receive shares of Common Stock (in a number of shares
determined by application of the formulae specified in Paragraph 6(b) hereof
with the amount of the waived dividend or interest payment as the numerator and
the date of delivery of notice of such waiver to the Company as the Holder
Conversion Date). From and after the ninetieth day following a Conversion
Default (which for all purposes shall be deemed to have occurred upon the
Company's receipt of the applicable Conversion Notice), the holder of the Class
C Preferred Stock as to which such Conversion Default has occurred shall have
the right to demand immediate redemption in cash of such Class C Preferred
Stock at a redemption price (A) determined in accordance with Paragraph 8(b)
hereof adjusted to reflect the changes in the dividend rate from time to time
effected pursuant to this Paragraph, (B) reduced by any dividends theretofore
received by such holder in cash, and (C) increased by the amount of any
interest on overdue cash dividends from the date of the Conversion Default
through the date of redemption, which dividends (and any interest with respect
thereto) shall continue to accrue until the redemption price and all accrued
and unpaid dividends and interest have been paid in full to such holder;
provided, however, that no notice of redemption may be delivered by a holder
subsequent to receipt by such holder of notice from the Company (sent by
overnight or 2-day courier with a copy sent by facsimile) of availability of
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<PAGE> 28
sufficient shares of Common Stock to perfect conversion (a "Post-Default
Conversion") of all the Class C Preferred Stock of such holder as to which a
Conversion Default has occurred; provided further that such right shall be
reinstated if the Company shall thereafter fail to perfect such Post-Default
Conversion by delivery of Common Stock certificates in accordance with the
applicable provisions of Paragraph 6(b) hereof and payment of all accrued and
unpaid cash dividends and interest with respect thereto within five business
days of delivery of the notice of Post-Default Conversion. Notwithstanding the
provisions of Paragraph 6(b), upon a Post-Default Conversion, each share of
Series C Preferred Stock that is converted into shares of Common Stock shall be
convertible into the number of shares of Common Stock which results from
dividing the numerator of the formula set forth therein (as adjusted to reflect
the changes in dividend rate applicable from time to time and the exclusion of
any period of time during which dividends have been or will be paid in cash,
all as provided in this Paragraph) in effect at the time of conversion by the
lesser of (i) the Original Issuance Market Price and (ii) the Conversion Date
Market Price on (A) the Holder Conversion Date or (B) the date the Company
issued the notice of Post-Default Conversion. The application of the
provisions of this Paragraph 11(b) shall constitute the sole and exclusive
rights and remedies of holders of Series C Preferred Stock with respect to a
Conversion Default.
12. No Reissuance of Series C Preferred Stock. No share or
shares of Series C Preferred Stock acquired by the Company by reason of
redemption, purchase, conversion or otherwise shall be reissued as Series C
Preferred Stock, and all such shares shall be retired and shall return to the
status of authorized, unissued and undesignated shares of Preferred Stock.
13. No Impairment. The Company shall not intentionally
take any action which would impair the rights and privileges of the shares of
Series C Preferred Stock set forth herein.
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<PAGE> 29
IN WITNESS WHEREOF, Ecogen Inc. has caused this Certificate of
Designations, Rights and Preferences to be signed by James P. Reilly, Jr., as
Chairman of the Board and attested by Richard A. Deak, as Secretary, this 6th
day of December, 1995.
ECOGEN INC.
By: James P. Reilly, Jr. /s/
-----------------------------------
Name: James P. Reilly, Jr.
Title: Chairman of the Board
ATTEST:
Richard A. Deak /s/
- --------------------------------
Name: Richard A. Deak
Title: Secretary
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<PAGE> 1
EXHIBIT 10.121
RESEARCH AND DEVELOPMENT
AGREEMENT
This Research and Development Agreement (the "Agreement") is
made as of January 24, 1996, by and between Monsanto Company, a Delaware
corporation, with its general offices at 800 North Lindbergh Boulevard, St.
Louis, Missouri 63167 ("Monsanto"), and Ecogen Inc., a Delaware corporation
having its principal office at 2005 Cabot Boulevard West, Langhorne, PA 19047
("Ecogen").
W I T N E S S E T H
WHEREAS, Ecogen owns certain existing Bt strain libraries, certain
crystal protein gene libraries, and certain proprietary rights regarding
protein engineering of Bt crystal proteins;
WHEREAS, Monsanto is acquiring certain of such libraries and
proprietary rights in accordance with the Technology Assignment Agreement dated
as of January 24, 1996 ("Assignment Agreement");
WHEREAS, Monsanto has expertise in the field of plant biotechnology and
Ecogen has expertise in finding, screening and commercializing compounds,
including proteins based on the bacterium Bacillus thurigiensis ("Bt");
WHEREAS, both Monsanto and Ecogen have research facilities and are
capable of conducting research and development within the Field of the
Agreement;
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WHEREAS, Monsanto and Ecogen wish to conduct research and development
which may lead to the commercialization of (i) improved bioinsecticides, and
(ii) plants and/or plant seeds into the genomes of which Bt genes have been
included so that such plants or plant seeds will express proteins;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, Monsanto and Ecogen agree as follows:
ARTICLE
1 - DEFINITIONS
Capitalized terms not otherwise defined in this Agreement shall have
the same meaning given such terms in the Assignment Agreement. In addition,
the following terms shall have the meanings set forth below and will include
the plural as well as the singular.
1.1 "Budget Year" shall have the meaning set forth in Section 3.3.
1.2 "Contract Year" shall mean the year beginning on January 24,
1996 and ending on January 23, 1997 and each anniversary thereafter until such
time as the Agreement is no longer in force.
1.3 "Date of this Agreement" shall mean the date first written
above.
1.4 "Ecogen" shall mean Ecogen and its Subsidiaries.
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1.5 "Field of the Agreement" shall mean research and development
in finding, discovering, screening and developing new proteins and genes.
1.6 "Initial Term of the Agreement" shall mean the period
beginning on the Date of this Agreement and ending on the fourth anniversary
thereof.
1.7 "In Planta Application" means (i) use, development, or
commercialization of transgenic plants, seeds, cells or components thereof
(collectively "Plants") or (ii) use, development, or commercialization of
genetic material used so that Plants express a new material or an existing
material at levels different from the levels that such Plants otherwise would.
1.8 "Intellectual Property Rights" means (i) all patent rights and
all right, title and interest in and to all letters patent and applications for
letters patent, and other government issued or granted indicia of invention
ownership including any substitutions, extensions, reissues, divisions,
continuations or continuations-in-part or applications thereof or therefor
throughout the world; (ii) all rights, title and interest in and to all trade
secrets and trade secret rights arising under the common law, state law,
federal law and laws of foreign countries; (iii) all copyright rights, and all
other literary property and author rights whether or not copyrightable; and all
rights, title and interest in and to all copyrights, copyright registrations,
certificates of copyright and copyrighted interests throughout the world; (iv)
all rights, title and interest in and to all know-how whether or not
protectable by patent, copyright or trade secret law; and (v) all goodwill
associated with any of the foregoing; provided, however, that the term
"Intellectual Property Rights" shall not include any trademarks, trade names or
service marks, whether
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registered or arising under the common law, state law, federal law or the laws
of foreign countries or any registrations thereof or interests therein.
1.9 "Microbial Applications" shall mean use, development or
commercialization of insecticidal, bacterial, fungicidal, pesticidal, medical,
veterinary, scientific, nutritional, food additive or preservative, materials,
textiles, and similar products; provided, however, that such products shall not
include any product for an In Planta Application.
1.10 "Naturally Occurring Genes" shall mean genes expressed by Bt
that produce proteins without genetic engineering or protein engineering.
1.11 "R&D Technology" shall mean the Bt strains or genes
discovered or developed pursuant to the Research Program and the Intellectual
Property Rights arising pursuant to the performance of the parties' obligations
under this Agreement.
1.12 "Research Budget" shall mean the forecast of expenses and
expenditures set by Monsanto from time to time for each Budget Year for that
part of the Research Program undertaken by Ecogen, which may be revised based
on the recommendation of the Supervisory Committee; provided, however the
Research Budget shall not include the cost or expenses of filing, prosecution
or maintenance of patent applications or issued patents.
1.13 "Research Plan" shall mean the Research and Development Plan
as may be amended from time to time, a preliminary draft of which is attached
hereto as Exhibit A, and which Plan shall include a specific schedule for work,
resources to be allocated by each party,
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the identification of target pests, personnel requirements, capital needs, and
a schedule for the duplication and transfer to Monsanto of copies of all
strains and genes developed under the Research Program. The selection of
projects within the Research Plan is to be determined by Monsanto, with Ecogen
having the right to object to any project which is inconsistent with the
practices and procedures of Ecogen.
1.14 "Research Program" shall mean all research, experimentation or
development relating to the projects to be conducted or conducted by the
parties hereto under the terms of the Research Plan, including decisions
regarding the filing, prosecution and maintenance of patent applications and
issued patents.
1.15 "Subsidiary" shall mean a subsidiary more than 50 percent of
whose outstanding securities representing the right, other than as affected by
events of default, to vote for the election of directors, is owned by the
applicable party and/or one or more of such party's other majority-owned
Subsidiaries. Subsidiaries of Ecogen shall also include the entities set forth
in Schedule 3.01 to the Investment Agreement signed contemporaneously herewith.
1.16 "Supervisory Committee" shall mean the Committee described in
Article 2 hereof.
1.17 "Third Party" shall mean any entity other than Monsanto,
Ecogen and/or Subsidiaries or Affiliates.
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ARTICLE - RESEARCH COLLABORATION
2.1 Research Plan. During the term of this Agreement and subject
to its terms and conditions, Monsanto and Ecogen shall use all commercially
reasonable efforts to undertake their respective obligations under the Research
Program in accordance with the Research Plan. The Research Plan shall be
updated in writing and revised from time to time upon mutual written agreement
of the parties upon the recommendation of the Supervisory Committee. Ecogen
agrees to diligently pursue each project covered by the Research Program and to
assign the appropriate number of personnel required to carry out the Research
Program, each of whom shall be qualified to perform his/her assigned duties.
The parties acknowledge that Ecogen makes no representation or assurance
whatsoever that the Research Program will be successfully completed or result
in the development of products with any technical or commercial value.
2.2 Research Funding. Monsanto shall be responsible for providing
all funding necessary for both parties to undertake their respective duties and
obligations under the Research Program and all other costs and expenses related
thereto. Transfers of funds to Ecogen under the Research Budget during the
Initial Term of this Agreement shall be in accordance with the terms of Article
3 hereof.
2.3 Supervisory Committee.
(a) Collaboration between the parties shall be determined
by a Supervisory Committee of four (4) people; two (2) people appointed by each
party. The Chairman of the Supervisory Committee shall be appointed by
Monsanto.
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(b) It is the intent of the parties that information
related to the Research Program be shared with one another in an open manner.
For this purpose, the Supervisory Committee shall meet periodically and no less
than once a quarter to review the status of the Research Program at mutually
convenient locations. It is contemplated, however, that the parties may meet
as frequently as weekly at Ecogen's facility to review results of the Research
Program. At such meetings the implementation of the Research Program,
including insectary services, insect targets and sources of insecticidal or
other biocidal proteins, shall be discussed and mutually agreed upon. Each of
the parties hereto shall provide to the Supervisory Committee quarterly written
summaries of data and the status of its work under the Research Program in such
form as such party routinely uses for the summary of similar research work for
its own purposes. Modifications to the Research Program may be made by the
Supervisory Committee as collaboration progresses in accordance with this
Agreement. In the event that the Supervisory Committee cannot reach a decision
regarding the Research Program, the issue shall be referred for resolution to a
senior business executive of each party responsible for the Research Program.
In the event that the parties continue to have a good faith dispute, the issue
will be resolved by the Monsanto business executive.
2.4 Continuity of Supervisory Committee. Each party shall attempt
in good faith to maintain continuity in the identity of its representatives to
the Supervisory Committee.
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ARTICLE 3 - COSTS
3.1 Minimum Payment During Initial Term. Monsanto shall provide a
minimum of $10 Million for the funding of the Research Program during the
Initial Term of the Agreement in accordance with the timing set out in Sections
3.2 and 3.3 herein.
3.2 Initial Payment. Monsanto shall transfer to Ecogen the sum of
$3 Million upon execution of the Assignment Agreement; provided, however, that
Monsanto shall be entitled to receive a credit in the amount of $2 Million
against payment of this $3 Million for the loans made pursuant to the Senior
Promissory Note dated November 2, 1995 from Ecogen to Monsanto. Such Note
shall be cancelled and returned to Ecogen at the Closing of the transactions
contemplated pursuant to the terms of the Assignment Agreement and Ecogen shall
have no further obligations with respect to such Note.
3.3 Research Budget. On or before thirty (30) days after the Date
of this Agreement, Monsanto will develop, with input from the Supervisory
Committee, and present to the Supervisory Committee a Research Budget for the
period beginning on the Date of this Agreement and ending on October 31, 1996.
At least ninety (90) days prior to November 1, 1996, Monsanto will present to
the Supervisory Committee a Research Budget developed by Monsanto for the year
beginning on November 1, 1996 and ending on October 31, 1997 taking into
consideration the recommendations made by the Supervisory Committee. This
period and each yearly period ending on October 31 of the applicable year
thereafter shall be designated as a _Budget Year". The Research Budget shall
include, to the extent practicable, a break-down of the budget by "Budget Year"
quarters. Monsanto will present to the Supervisory Committee
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at least 90 days prior to the beginning of any Budget Year a Research Budget
developed by Monsanto for each of the following Budget Years taking into
consideration the recommendations made by the Supervisory Committee. In any
given Contract Year Monsanto shall spend not less than $1.5 Million under that
part of the Research Program undertaken by Ecogen. In no event shall Monsanto
transfer to Ecogen less than $1.5 Million in any one Contract Year. Monsanto
shall transfer to Ecogen such amounts as are sufficient to ensure that Ecogen
prior to the beginning of each quarter of the Budget Year has funds available
from Monsanto in an amount equal to the expenses set forth in the Research
Budget for the then current Budget Year quarter. Such amount shall be adjusted
for the difference, if any, between (i) actual expenses and expenditures
incurred by Ecogen in prior quarters under the Research Program and (ii) the
cash transfers made by Monsanto to Ecogen with respect to such previous
quarters.
3.4 Allocated Researchers and Equipment Purchases. In
establishing the Research Budget, each researcher employed by Ecogen shall be
included in the Research Budget at an annual rate of $______*, which annual
rate shall include all costs and expenses for personnel, supplies, existing
equipment, and overhead with respect to such researcher and shall include the
cost of any new equipment required to be purchased hereunder the individual
cost of which is less than $50,000. If any piece of equipment purchased
pursuant to the Research Budget costs $50,000 or more, Monsanto shall pay the
entire cost of such piece of equipment. Any such payment for new equipment
will be paid to Ecogen within fifteen (15) days of delivery to Monsanto of an
invoice from the vendor. Any payments for new equipment shall be credited
against Monsanto's obligations under Section 3.1 and 3.3 hereof. Any new
equipment purchased pursuant to the Research Program shall be owned by Ecogen
as long as the cost of such
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* Confidential treatment requested.
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equipment is credited against Monsanto's obligations under Sections 3.1 and 3.3
hereof. Any payments to Third Party consultants shall be approved in advance
by the Supervisory Committee and shall be included in the Research Budget for
which Monsanto shall receive a credit against Monsanto's obligations under
Section 3.1 and 3.3 hereof.
3.5 Payments Upon Termination. Upon termination of this Agreement
for any reason other than the termination of this Agreement by Monsanto
pursuant to an Event of Default by Ecogen occurring under the provisions of
Section 5.3, Monsanto shall promptly pay to Ecogen an amount equal to the
difference between $10 Million and all amounts previously paid to Ecogen
pursuant to Article 3 of this Agreement. In the event that Monsanto has funded
at least $10 Million under this Agreement, upon termination of the Agreement,
any amounts transferred to Ecogen by Monsanto under this Agreement (i) which
have not been spent or (ii) for which expenses have not been incurred by Ecogen
prior to such termination, shall be returned to Monsanto within ninety (90)
days of such termination.
ARTICLE 4 - INVENTIONS, LICENSES AND PATENTS
4.1 License Grant for Intellectual Property Arising Under
Agreement. Ecogen shall have a worldwide, perpetual, exclusive, fully paid up,
royalty-free, transferable license to the R&D Technology to make, have made,
offer for sale, import, use or sell products solely for Microbial Applications.
The rights granted in this Agreement include the right to grant sublicenses.
In addition, Ecogen shall have a perpetual and permanent right to hold and
possess Bt strains and genes discovered or developed hereunder, solely for
Microbial Applications. Licenses granted pursuant to this Section during the
term of this Agreement shall survive the termination or expiration of this
Agreement for any reason.
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4.2 Rights of Monsanto: Other Than Microbial Applications. The
rights to any (0).0.0.0.1 invention related to the Field of the Agreement,
conceived during the performance under this Agreement, and not related solely
to Microbial Applications 2 applications for a patent for the aforesaid
invention, (0).0.0.1 patent granted on such application, and (0).0.0.1.1 all
other Intellectual Property Rights in the Field of the Agreement arising from
the performance under this Agreement and not related solely to Microbial
Applications shall be owned by Monsanto.
4.3 Rights of Ecogen: Solely Microbial Applications. The rights
to any (0).0.0.1.2 invention related to the Field of the Agreement conceived
during the performance under this Agreement and which is related solely to
Microbial Applications 3 applications for a patent for the aforesaid invention,
(0).0.0.1 patent granted on such application, and (0).0.0.1.1 all other
Intellectual Property Rights in the Field of the Agreement arising from the
performance under this Agreement related solely to Microbial Applications shall
be owned by Ecogen.
4.4 Patent Applications by Monsanto.
(a) From time to time, not less than quarterly, the
Supervisory Committee shall make a determination if any patent applications
should be filed to protect inventions conceived in accordance with this
Agreement and if so the countries in which such patent applications should be
filed. In the event that the Supervisory Committee has decided that one or
more patent applications should be filed regarding an invention that has in
whole or part In Planta Applications, Monsanto shall be responsible for the
filing, prosecution and maintenance of patent applications (and related issued
patents) directed to such rights, including all costs, expenses and taxes
associated therewith. Monsanto shall include in such patent applications such
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claims, including without limitation claims relating solely or in part to
Microbial Applications as Ecogen shall reasonably request. Monsanto shall
remain responsible for the filing, prosecution and maintenance of all claims
(and related patent applications and issued patents) that are submitted in such
patent applications whether or not such claims relate solely to Microbial
Applications and whether or not such claims become the subject of divisional
applications, continuation applications or otherwise related applications
directed solely to Microbial Applications.
(b) Ecogen and Monsanto shall cooperate with one another
as to the preparation and prosecution thereof, including, without limitation,
the claim language. Monsanto shall allow Ecogen, at Ecogen's own expense, to
participate to the extent requested in the preparation and prosecution of such
patent applications including, without limitation, (i) the receipt of copies of
all correspondence to or from the United States Patent and Trademark Office or
foreign patent offices, and (ii) the participation in all communications and/or
meetings with the United States Patent and Trademark Office or foreign patent
offices.
4.5 Abandonment by Monsanto. Monsanto may decide to allow any
patent application or patent directed in whole or in part to In Planta
Applications that was filed pursuant to Section 4.4 hereof to go abandoned
and/or patent to lapse, and, in such event, Monsanto may also allow any patent
application, divisional application, continuation application or patent
directed solely to Microbial Applications related (as described in the fourth
sentence of Section 4.4) to such patent application or patent to go abandoned
or to lapse; provided, however, Monsanto shall have first provided Ecogen with
adequate opportunity to prosecute and/or maintain any patent application,
divisional application, continuation application or patent that Monsanto has
decided
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to go abandoned or to lapse. In the event Ecogen elects to prosecute and/or
maintain any such patent application, divisional application, continuation
application or patent, then Monsanto shall assign all of its rights thereto to
Ecogen and Monsanto shall have no license thereto or to any resulting patents;
provided, however, Ecogen shall not have any rights to In Planta Applications
thereunder nor shall Ecogen have the right to grant rights to In Planta
Applications thereunder to any Third Party.
4.6 Countries Where Patent Applications Are Not Prosecuted. In
the event the Supervisory Committee shall determine not to file a patent
application in any country with respect to an invention conceived in accordance
with this Agreement, Ecogen may decide to file, prosecute and maintain such a
patent application at its own expense and in its own name after notifying
Monsanto of such decision. Upon receipt of notice of such decision Monsanto
shall assign its rights to such invention in such country to Ecogen and
Monsanto shall have no rights with respect to such patent application or
related patent in such country unless Monsanto shall reimburse Ecogen for all
of Ecogen's out-of-pocket costs incurred after such notice including, without
limitation, prosecuting the patent application, maintaining the patent
application and resulting patent or any other administrative or legal
proceeding. Upon receipt of such reimbursement Ecogen shall grant to Monsanto
a royalty-free, worldwide, perpetual exclusive license with the right to
sublicense under such patent solely for In Planta Applications.
4.7 Patent Applications by Ecogen. Ecogen shall be responsible
for the filing and prosecution of patent applications directed solely to its
rights under Section 4.2 hereof including all costs, expenses and taxes
associated therewith. Ecogen may decide to allow any such patent application
or resulting patent to go abandoned and/or to lapse; provided, however, Ecogen
shall
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have first provided Monsanto with adequate opportunity to prosecute and/or
maintain any such patent application or resulting patent. In the event
Monsanto elects to prosecute and/or maintain any such patent application or
resulting patent, Ecogen shall assign all of its rights thereto to Monsanto and
Ecogen shall have the rights set forth in Section 4.1 hereof with respect to
such patent application and resulting patent.
4.8 No Warranty. Neither Monsanto nor Ecogen warrants to the
other that any patent obtained is valid or enforceable.
4.9 Other Ecogen Programs.
(a) Ecogen shall offer (the "Offer") Monsanto the
opportunity to participate in each of Ecogen's own research and development
programs in existence or commenced during the term of the Agreement (the
"Ecogen Programs"), other than Excluded Technology, which are not part of the
Research Program for which in Ecogen's good faith judgment there is a
reasonable expectation that the Ecogen Program will result in technology
applicable to the Field of the Agreement for In Planta Applications. Such
Offer shall be in writing and in reasonable detail and shall be made as soon as
Ecogen has a reasonable expectation that the technology will be applicable to
the Field of the Agreement. Each such Ecogen Program shall be called a
"Designated Program." Such Offer shall be made prior to initiation of the
Designated Program. For Designated Programs already under way as of the Date of
this Agreement, Ecogen shall inform Monsanto of the existence of these
Designated Programs at or before the first meeting of the Supervisory
Committee. Ecogen shall have no duty to present to Monsanto an Offer for
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any Ecogen Programs funded by a Third Party and Monsanto shall have no rights
to such Ecogen Programs.
(b) Should Monsanto desire to have a Designated Program
become subject to this Agreement, it shall notify Ecogen of that decision
within thirty (30) days from Monsanto's receipt of the Offer. The parties
shall negotiate in good faith to modify the Research Program and increase the
Budget, if necessary, to account for the Designated Program.
(c) If Monsanto decides not to have a Designated Program
become subject to this Agreement the results and Intellectual Property arising
from the Designated Program corresponding to the Offer shall be owned solely by
Ecogen and Monsanto shall have no rights thereto.
(d) If Ecogen has not offered an Ecogen Program to
Monsanto and such Ecogen Program results during the term of this Agreement and
within 3 months thereafter in technology applicable to the target pests in the
Research Program, then Monsanto shall have the option to acquire a license, on
the same terms and conditions of the Monsanto License Agreement dated of even
date herewith, for such technology for In Planta Applications by reimbursing
Ecogen for Ecogen's cost in developing such technology based upon the costs and
expenses per year per researcher as if the technology were developed pursuant
to this Agreement and Monsanto had paid the costs of such researcher pursuant
to the terms of Section 3.4.
4.10 Genes Discovered by Ecogen. All genes or strains discovered
by Ecogen in Ecogen's research outside the Research Program shall be owned
solely by Ecogen; provided,
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however, that Ecogen shall license to Monsanto Naturally Occurring Genes
applicable to the target pests of the Research Program that are discovered by
Ecogen to the extent Ecogen then has the right to do so. In that event such a
license shall be deemed to be part of the Research Program.
4.11 Other Research by Monsanto. It is envisioned that in the
course of this Agreement, evaluation of useful Bt Genes by Monsanto will create
research at Monsanto that will have application to Ecogen's performance of its
obligations under this Agreement. Manipulation of Bt Genes in microorganisms
with application to gene discovery expression and protein stability will be
shared with Ecogen for purposes of enhancing gene discovery, expression and
protein stability in connection with Ecogen's performance of its obligations
under this Agreement. Use of such manipulation techniques for the development
of microbial pesticides shall be licensed to Ecogen in paid-up, royalty-free
worldwide license, with the right to sublicense, for use solely in Microbial
Applications.
4.12 During the term of this Agreement, each party shall notify the
other of the existence of an infringement of which such party becomes aware of
an invention or other Intellectual Property Right conceived during or arising
from the performance under this Agreement.
4.13 If the infringement referred to in Section 4.12 relates to an
application solely for Microbial Applications, then Ecogen shall be solely
responsible in its sole discretion for the abatement of the infringement
including settlement and the bringing of a lawsuit and all costs and expenses
of such lawsuit, provided, however, that no settlement shall impose any
affirmative
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obligation or obligation of payment on Monsanto without Monsanto's prior
written consent given in Monsanto's sole discretion. Monsanto shall provide
all reasonable nonmonetary assistance requested by Ecogen and agrees to be
named in the lawsuit if required by law as a necessary or indispensable party.
All recoveries and damages obtained by Ecogen shall be owned solely by Ecogen.
In the event there is a counterclaim regarding the validity or enforceability
of an Intellectual Property Right, Monsanto shall be permitted to join in the
action at its own expense, in which case any recovery obtained or damages
awarded shall be first used to reimburse Ecogen's reasonable attorneys' fees
and other out-of-pocket costs in bringing the lawsuit, then reimbursing
Monsanto's reasonable attorneys' fees and other out-of-pocket costs in joining
the action, and then all remaining recovery and damage award to Ecogen.
4.14 If the infringement referred to in Section 4.12 relates to an
application other than solely for Microbial Applications, then Monsanto shall
be solely responsible in its sole discretion for the abatement of the
infringement including settlement and the bringing of a lawsuit and all costs
and expenses of such lawsuit, provided, however, that no settlement shall
impose any affirmative obligation or obligation of payment on Ecogen without
Ecogen's prior written consent given in Ecogen's sole discretion. Ecogen shall
provide all reasonable nonmonetary assistance requested by Monsanto and agrees
to be named in the lawsuit if required by law as a necessary or indispensable
party. All recoveries and damages obtained by Monsanto shall be owned solely
by Monsanto. In the event there is a counterclaim regarding the validity or
enforceability of an Intellectual Property Right, Ecogen shall be permitted to
join in the action at its own expense, in which case any recovery obtained or
damages awarded shall be first used to reimburse Monsanto's reasonable
attorneys' fees and other out-of-pocket costs in bringing the
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lawsuit, then reimbursing Ecogen's reasonable attorneys' fees and other
out-of-pocket costs in joining the action, and then all remaining recovery and
damage award to Monsanto.
ARTICLE 5 - TERM AND TERMINATION
5.1 Initial Term. The Initial Term of the Agreement shall be four
(4) years from the Date of this Agreement, after which this Agreement shall
automatically be renewed for successive one (1) year terms (each a "Renewal
Term") unless terminated by either party's providing two (2) years notice to
the other party prior to the end of the Initial Term or the then current
Renewal Term; provided, however, a party may terminate the Agreement at the end
of a Renewal Term upon at least one year notice any time on or after the fifth
anniversary of the date of this Agreement.
5.2 Survival of Licenses. Any license which has been granted to
Ecogen pursuant to this Agreement, including one which has been granted under
Section 4.1 hereof, shall survive any termination of this Agreement, including
a termination caused by an Event of Default.
5.3 Events of Default. Each of the following shall be deemed an
"Event of Default":
(a) a petition is filed against either party under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or hereafter in
effect, and the party, as applicable, is not diligently prosecuting a dismissal
of such petition and such petition is not dismissed within 90 days after its
filing;
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(b) either party files a petition in voluntary bankruptcy
or seeking relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law
of any jurisdiction whether now or hereafter in effect, or consents to the
filing of any petition against it under any such law;
(c) a party admits insolvency or bankruptcy or its
inability to pay its debts as they become due or is generally not paying its
debts as such debts become due, or becomes insolvent or bankrupt or makes an
assignment for the benefit of creditors, or a custodian (including without
limitation a receiver, liquidator or trustee) of the party or any of its
property is appointed by court order or takes possession thereof;
(d) other than a failure by Monsanto to transfer funds to
Ecogen under the Research Budget in accordance with the terms of Article 3
hereof, a party shall fail to perform any of its material obligations hereunder
for a period of 90 days after written notice, specifying such failure and
requesting that it be remedied is given to such breaching party by the
nonbreaching party; provided, however, if such default is such that it can be
corrected but cannot be corrected within such 90-day period, it shall not
constitute an Event of Default if corrective action is instituted by the
breaching party within such 90-day period and diligently pursued until the
default is corrected. No such default shall remain uncured 120 days after
written notice.
(e) a failure on Monsanto's part to transfer funds to
Ecogen under the Research Budget in accordance with the terms of Article 3
hereof for a period of 30 days after
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written notice from Ecogen, specifying such failure and requesting that such
funds be transferred;
5.4 Notice of Default. Each party agrees to give the other prompt
written notice if any petition referred to in Section 5.3(a) or 5.3(b) is filed
by or against it or of the occurrence of any other event or condition which
constitutes an Event of Default immediately upon becoming aware of the
existence thereof.
5.5 Termination of Agreement in Event of Default. Subject to the
provisions of Section 3.5, if an Event of Default shall have occurred and shall
be continuing, the nonbreaching party shall have the right to terminate this
Agreement effective upon written notice of such termination from the
nonbreaching party.
5.6 Suspension of Payments During Cure Period. Not withstanding
the period in which Ecogen has to cure a breach of this Agreement and prior to
the time in which such breach would constitute an Event of Default, Monsanto
shall have the right to suspend transfers of funds to Ecogen under the Research
Budget during the applicable cure period and prior to Monsanto's exercise of
its right to terminate this Agreement: (i) if Monsanto has in good faith given
notice to Ecogen of Ecogen's failure to perform any of its material obligations
hereunder pursuant to Section 5.3(d); or (ii) if any petition referred to in
Section 5.3(a) is filed against Ecogen.
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ARTICLE 6 - CONFIDENTIALITY
6.1 Confidentiality. Confidential Information shall be treated by
the parties in accordance with the Confidentiality Agreement executed
simultaneously herewith.
ARTICLE 7 - LIABILITY; INDEMNITY;
PATENT INFRINGEMENT; SEVERABILITY
7.1 Limitation of Liability. It is understood and agreed that the
furnishing of any chemicals, samples or any information (including Confidential
Information) by either party pursuant to this Agreement is not to be construed
as a recommendation by that party to use the same. FURTHERMORE, WITH RESPECT
TO SUCH INFORMATION, MATERIALS, PRODUCTS, PROCESS INFORMATION, PROCESSES,
ADVICE, CONSULTATIONS, ASSISTANCE, SERVICES, LICENSES AND RIGHTS PROVIDED
HEREUNDER, AND ANY MATERIALS OR PRODUCTS MADE USING SUCH, NEITHER PARTY MAKES
ANY REPRESENTATION, WARRANTY OR GUARANTEE OF ANY KIND, EXPRESSED OR IMPLIED, AS
TO MERCHANTABILITY, FITNESS FOR PARTICULAR A PURPOSE, SATISFACTORY RESULTS
BASED UPON USE THEREOF OR RELIANCE THEREON, OR OTHERWISE, AND NEITHER PARTY
SHALL BE LIABLE TO THE OTHER FOR ANY LOSS OR DAMAGE RESULTING FROM THE RELIANCE
AND/OR USE THEREOF.
7.2 Indemnification. Notwithstanding the foregoing Section, each
of the parties agrees to hold the other party harmless from and against any and
all demands, claims, penalties, liabilities, causes of action, suits, damages,
judgments, losses, costs and expenses (including cost
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of defense, settlement and reasonable attorneys' fees and expenses) arising out
of injury to any employee of such party resulting from or in any way connected
with the performance of this Agreement, unless arising from the other party's
negligence or willful misconduct.
7.3 Limitation on Infringement. Neither of the parties to this
Agreement shall be liable to the other party in any way for Third Party patent
infringement by said other party arising out of the use of any information
furnished to such other party pursuant to this Agreement.
ARTICLE 8 - MISCELLANEOUS
8.1 Severability. If any provision of this Agreement is found to
be unenforceable under any law applicable thereto, then that provision shall be
deemed to have been severed from the Agreement in that jurisdiction, but all
other provisions of the Agreement shall remain in full force and effect.
8.2 No Partnership Created. The parties acknowledge that this
Agreement does not constitute nor does it create any partnership or joint
venture between Monsanto and Ecogen.
8.3 Governing Law. This Agreement shall be governed by and shall
be construed to take effect according to the laws of the State of Missouri,
United States of America.
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<PAGE> 23
8.4 Notices. All notices or other communications which any party
to this Agreement may desire or be required to give hereunder shall be in
writing and, except for notices of meetings of the Supervisory Committee which
shall be given as reasonably agreed among the members of such Committee, shall
be given by personal delivery, by mailing the same by registered or certified
mail, postage prepaid, return receipt requested, or by telefax followed up by a
nationally recognized overnight carrier, addressed:
(a) If to Monsanto:
Monsanto Company
Ceregen Group
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Attn: President
Telefax Number: 314-694-7771
with a copy to:
Monsanto Company
Ceregen Group
700 Chesterfield Parkway North
St. Louis, Missouri 63198
Attn: Intellectual Property Counsel
Telefax Number: 314-537-6047
and (b) if to Ecogen:
Ecogen Inc.
2005 Cabot Boulevard West
Langhorne, Pennsylvania 19047
Attention: President
Telecopy Number: 215-757-4156
with a copy to:
Dechert, Price & Rhoads
Princeton Park Corporate Center
997 Lenox Drive
Lawrenceville, New Jersey 08648
Attention: James J. Marino, Esq.
Telecopy Number: 609-520-3259
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<PAGE> 24
Notices given by personal delivery shall be deemed given when delivered,
otherwise notices shall be deemed given when sent.
8.5 Survival. The provisions of Articles 4 and 6 shall survive
any termination of this Agreement.
8.6 Counterparts. This Agreement may be signed in counterparts,
both of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
8.7 Entire Agreement. This Agreement represents the entire
understanding of the parties hereto with respect to research and development in
the Field of the Agreement and supersedes all other and prior memoranda and
agreements between the parties hereto, other than documents executed or
delivered at the Closing of this Agreement or the Assignment Agreement.
8.8 Amendment. No amendment, modification or waiver of any term
or condition of this Agreement shall be valid or of any force or effect unless
made by written instrument signed by the parties hereto, specifying the exact
nature of such amendment, modification or waiver. Any waiver by any party of
any provision of this Agreement shall not imply a subsequent waiver of that or
any other provision.
8.9 Assignment. Neither party shall assign its rights or delegate
its performance under this Agreement without the prior written consent of the
other, other than the licenses granted hereunder, which shall be transferable
without the prior written consent of the other party.
8.10 Section Headings. The section captions and headings in this
Agreement are for convenience and reference purposes only and should not affect
in any way the meaning or interpretation of this Agreement.
8.11 No Presumption Against Drafter, Qualifications on Schedules.
The parties to this Agreement have jointly participated in the negotiation and
drafting of this Agreement. In the
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event an ambiguity or question of intent or interpretation arises, this
Agreement, shall be construed as if drafted jointly by the parties and no
presumptions or burdens of proof shall arise favoring any party by virtue of
the authorship of any of the provisions of this Agreement.
ARTICLE 9 - AFFIRMATIVE COVENANTS
9.1 So long as the Research and Development Agreement is in
effect, Ecogen covenants that it will:
(a) Furnish to Monsanto (i) such financial statements,
financial information and audit reports as are provided to the Board of
Directors of Ecogen, (ii) Quarterly Reports on Form 10-Q and Annual Reports on
Form 10-K as filed with the Securities and Exchange Commission and (iii) all
other information furnished to Ecogen's Board of Directors relating to the
financial condition of Ecogen or Ecogen's Bt technology, other than information
relating to (A) potential acquisitions, mergers, joint ventures or other
strategic alliances, (B) its relationship with Monsanto, and (C) personnel
performance and compensation. The information described in clauses (i) and
(iii) above shall be furnished to Monsanto promptly after the Ecogen Board of
Director's meeting for which such information is provided to Ecogen's Board of
Directors and the information described in clause (ii) above shall be furnished
to Monsanto at the time such reports are filed with the Securities and Exchange
Commission.
(b) Furnish to Monsanto promptly upon preparation a copy
of the minutes of each directors' meeting and each stockholders' meeting
pertaining to financial condition and Bt Technology other than information
relating to (i) potential acquisitions, mergers, joint ventures or other
strategic alliances, (ii) its relationship with Monsanto and (iii) personnel
performance and compensation.
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IN WITNESS WHEREOF, each party has caused this Agreement to be executed
by its duly authorized representative effective on the date set forth first
above.
MONSANTO COMPANY ECOGEN INC.
By: /s/ Derek K. Rapp By: /s/ James P. Reilly, Jr.
----------------- ------------------------
Name: Derek K. Rapp James P. Reilly, Jr.
Title: Director, Commercial Chairman and Chief Executive Officer
Partnerships & Alliances
26
<PAGE> 1
EXHIBIT 10.122
INVESTMENT AGREEMENT
BY
AND BETWEEN
MONSANTO COMPANY
AND
ECOGEN INC.
DATED AS OF JANUARY 24, 1996
<PAGE> 2
INVESTMENT AGREEMENT
This Investment Agreement is made as of the 24th day of January, 1996
by and between MONSANTO COMPANY, a Delaware corporation with its general
offices at 800 North Lindbergh Blvd., St. Louis, Missouri 63167 ("Monsanto"),
and ECOGEN INC., a Delaware corporation with its general offices at 2005 Cabot
Boulevard West, Langhorne PA 19047 ("Ecogen").
RECITALS
Ecogen is engaged, among other things, in activities to
develop and commercialize certain valuable Bacillus thuringiensis ("Bt")
technology and owns or controls certain patents and patent applications related
thereto.
1. Pursuant to a Technology Assignment Agreement dated as of the
date hereof among Monsanto, Ecogen, and Ecogen-Bio Inc., a Delaware corporation
("Ecogen-Bio"), (the "Assignment Agreement"), Monsanto will purchase from
Ecogen and Ecogen-Bio certain technology and other rights relating to the Bt
technology of Ecogen and Ecogen-Bio including, without limitation, (a) certain
of Ecogen's Bt strain library, (b) certain of Ecogen's crystal protein gene
library, (c) certain of Ecogen's intellectual property rights regarding protein
engineering of Bt crystal proteins, including, without limitation, certain
patents and patent applications, (d) certain of Ecogen's intellectual property
rights associated with the Bt strains and genes being sold to Monsanto,
including, without limitation, certain patents and patent applications, and (e)
research records relating to the foregoing as set forth in the Assignment
Agreement.
2. Pursuant to a Research and Development Agreement dated as of
the date hereof between Monsanto and Ecogen (the "Research and Development
Agreement"), Ecogen will perform research and development on the Bt Technology.
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<PAGE> 3
3. Monsanto desires to invest in Ecogen to provide capital to
fund (a) research and development on the Bt Technology and (b) other general
corporate purposes.
NOW THEREFORE, in consideration of the promises and mutual covenants
contained herein, the parties agree as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
specified below:
"Affiliate" with respect to a specified Person is another
Person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the specified
Person. For purposes of this definition, the term "control" (including the
terms "controlled by" and "under common control with") means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall mean this Investment Agreement, as amended
from time to time.
"Annual Proxy Statement" has the meaning set forth in Section
3.3(c) hereof.
"Assignment Agreement" has the meaning set forth in the
Recitals hereto.
"Audited Financial Statements" has the meaning set forth in
Section 3.3(a) hereof.
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<PAGE> 4
"Balance Sheet" shall mean the October 31, 1994 balance sheet
of Ecogen.
"Balance Sheet Date" shall mean October 31, 1994.
"Bt Technology" shall have the meaning set forth in the
Assignment Agreement.
"Business Day" shall mean any day of the week except Saturday,
Sunday and any legal holiday observed by a national banking association or one
of the parties.
"Closing" shall mean the closing of the transactions
contemplated by this Agreement.
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the
Securities Act.
"Common Stock" shall mean the shares of common stock, par
value $.01 of Ecogen.
"Control Securities" means securities of Ecogen, other than
Restricted Securities, owned by a Holder at the time such Holder would be
deemed to be an Affiliate of Ecogen.
"Corporate Approval" shall have the meaning set forth in
Section 3.2.
"Ecogen" shall mean Ecogen Inc., a Delaware corporation.
"Ecogen Securities" has the meaning set forth in Section 5.1
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar Federal statute, and the rules and regulations of
the Commission issued under such Act, as they each may, from time to time, be
in effect.
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<PAGE> 5
"Financial Statements" has the meaning set forth in Section
3.3(b) hereof.
"hereto", "hereunder", "herein", "hereof" and the like mean
and refer to this Agreement as a whole and not merely to the specific article,
section, paragraph or clause in which the respective word appears.
"Holder" means Monsanto and, subject to Section 7.8 hereof,
any subsequent holder of outstanding shares of the Common Stock purchased under
the terms of this Agreement.
"HSR" has the meaning set forth in Section 4.1(e) hereof.
"Indebtedness" of any Person shall mean all obligations of
such Person which in accordance with generally accepted accounting principles
are normally classified upon a balance sheet of such Person as liabilities of
such Person, and in any event shall include all (a) obligations of such Person
for borrowed money or which have been incurred in connection with the
acquisition of property, assets or services, (b) obligations secured by any
lien or other charge upon property or assets owned by such Person, even though
such Person has not assumed or become liable for the payment of such
obligations, (c) obligations created or arising under any conditional sale, or
other title retention agreement with respect to property where remedies of the
seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of property and (d) capitalized rentals.
"Indemnified Party" has the meaning set forth in Section
7.5(c) hereof.
"Indemnifying Party" has the meaning set forth in Section
7.5(c) hereof.
"Knowledge" with respect to Ecogen means the actual knowledge
of an officer of Ecogen.
"Monsanto" shall mean Monsanto Company, a Delaware
corporation.
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<PAGE> 6
"Other Selling Stockholders" has the meaning set forth in
Section 7.1(c) hereof.
"Person" shall mean a corporation, association, partnership,
limited liability company, individual, trust, unincorporated organization, a
government agency or political subdivision thereof, or any other entity.
"Preliminary Prospectus" means a preliminary prospectus as
contemplated by Rule 430 or 430A under the Securities Act included at any time
in a Registration Statement.
"Pre-Offering Percentage" has the meaning set forth in Section
5.1 hereof.
"Price Per Share" has the meaning set forth in Section 2.2.
"Prospectus" means (i) a prospectus as first filed with the
Commission pursuant to Rule 424(b) under the Securities Act or, (ii) if no such
filing is required, the form of final prospectus included in a Registration
Statement at the effective date thereof or (iii) if a Term Sheet or Abbreviated
Term Sheet (as such terms are defined in Rule 434(b) and 434(c), respectively,
under the Securities Act) is filed with the Commission pursuant to Rule
424(b)(7) under the Securities Act, the Term Sheet or Abbreviated Term Sheet
and the last Preliminary Prospectus filed with the Commission prior to the time
the Registration Statement became effective, taken together (including, in each
case, the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the Securities Act), together with any supplement to any of the
foregoing.
"Proxy Statements" has the meaning set forth in Section 3.3(e)
hereof.
"Purchase Price" has the meaning set forth in Section 2.2
hereof.
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<PAGE> 7
"Purchased Shares" shall mean the shares of Common Stock of
Ecogen issued to Monsanto pursuant to this Agreement in an amount equal to the
nearest whole number derived by dividing (a) the Purchase Price by (b) the
Price Per Share.
"Register", "Registered" and "Registration", whether or not
capitalized, mean and refer to a registration effected by preparing and filing
a Registration Statement in compliance with the Securities Act and applicable
rules and regulations thereunder, and the declaration or ordering of the
effectiveness of such Registration Statement.
"Registration Statement" means any registration statement of
Ecogen filed under the Securities Act which covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including the
Prospectus relating thereto and all amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated or deemed to be incorporated by reference in such
registration statement.
"Registrable Securities" means shares of Common Stock and all
such other securities of Ecogen acquired by Monsanto and any subsequent Holder.
"Registration Expenses" means all expenses incurred by Ecogen
in compliance with Article VII, including, without limitation, all registration
fees, qualification fees, filing fees, advertising and road show expenses
(excluding advertising and road show expenses incurred by a Holder), printing
expenses, escrow fees, fees and disbursements of counsel for Ecogen, blue sky
fees and expenses, and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of Ecogen, which shall be paid in any event by Ecogen).
"Requesting Holder" means a Holder requesting any registration
pursuant to Section 7.1 hereof.
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<PAGE> 8
"Research and Development Agreement" shall have the meaning
set forth in the Recitals hereto.
"Restricted Payments" shall mean dividends or other
distributions in respect of the stock of Ecogen or any Subsidiary (except
intercorporate dividends and dividends payable solely in stock of Ecogen) and
purchases, redemptions and other acquisitions, direct or indirect, of stock of
Ecogen or any Subsidiary.
"Restricted Securities" means the securities of Ecogen
acquired by a Holder from Ecogen or an Affiliate of Ecogen otherwise than
pursuant to a public offering.
"Reverse Stock Split" shall mean a one-for-five reverse stock
split of the outstanding shares of Common Stock of Ecogen which stock split is
the subject of a special proxy statement prepared in connection with a
stockholders' meeting called on January 29, 1996.
"SEC Documents" has the meaning set forth in Section 3.3
hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Selling Expenses" means all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities.
"Special Proxy Statement" has the meaning set forth in Section
3.3(e) hereof.
"Subsidiary" shall mean a subsidiary more than 50 percent of
whose outstanding securities representing the right, other than as affected by
events of default, to vote for the election of directors, is owned by the
applicable party and/or one or more of
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<PAGE> 9
such party's other majority-owned Subsidiaries. Subsidiaries of Ecogen shall
also include the entities set forth in Schedule 3.1 hereto.
"13D Group" has the meaning set forth in Section 5.5 hereof.
"Unaudited Balance Sheet" has the meaning set forth in Section
3.3(d) hereof.
"Unaudited Financial Statements" has the meaning set forth in
Section 3.3(b) hereof.
ARTICLE II.
PURCHASE AND SALE OF COMMON STOCK
2.1 Common Stock. Subject to the terms and conditions set forth
in this Agreement Ecogen will issue and sell, and Monsanto will purchase the
Purchased Shares. On the Closing Date, Ecogen will issue and sell, and
Monsanto will purchase 3,450,000 of the Purchased Shares at the Price Per
Share. From time to time after the Closing and subject to the provisions of
Section 2.4(b), Ecogen will issue and sell, and Monsanto will purchase, the
remainder of the Purchased Shares; provided that after July 31, 1996, Monsanto
shall have no further obligation to purchase any of the Purchased Shares then
unpurchased.
2.2 Purchase Price. The aggregate purchase price of the Purchased
Shares shall be $10,000,000 United States dollars (the "Purchase Price")
payable in increments with respect to the shares being purchased by Monsanto at
the Closing or on any subsequent date pursuant to Section 2.4(b) thereafter.
The Purchase Price shall be paid in immediately available funds by bank wire
transfer to the account designated by Ecogen. The price per share shall be the
greater of (a) $2.12 or (b) 85% of the average of the last reported sales price
of Ecogen's common stock on the NASDAQ National Market on each of the last
sixty (60) trading days immediately preceding January 24, 1996 (the "Price Per
Share"), provided, however, in the event that the Closing shall occur after the
effective date of the Reverse Stock Split, the Price Per Share shall be
adjusted to reflect the Reverse Stock Split. For
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<PAGE> 10
purposes of this Section 2.2, a "trading day" shall mean a day that the NASDAQ
National Market is open for trading. The aggregate number of Purchased Shares
shall be the number, rounded to the nearest whole number, determined by
dividing the Purchase Price by the Price Per Share.
2.3 Stock Certificate. At the Closing, and upon each subsequent
purchase thereafter, and upon payment of the Purchase Price with respect to
Purchased Shares then purchased, Ecogen shall deliver to Monsanto a stock
certificate or certificates in the name of Monsanto representing the number of
shares of Common Stock then purchased by Monsanto.
2.4 Closing.
(a) The Closing of this Agreement (the "Closing")
shall take place on January 24, 1996 at 10:00 a.m. EST provided all of the
conditions to Closing stated in Article IV of this Agreement have been
satisfied or waived on or before such date; provided further, however, that
Monsanto and Ecogen each acknowledge that the Closing will occur prior to the
effective date of the Reverse Stock Split and that Ecogen will not have
sufficient authorized and unreserved shares of Common Stock to issue all of the
Purchased Shares. Accordingly, at the Closing Ecogen will issue and sell, and
Monsanto will purchase, 3,450,000 of the Purchased Shares. In the event that
all of the conditions to Closing stated in Article IV of this Agreement shall
not have been satisfied or waived on or before January 24, 1996, such Closing
shall take place as soon as practicable (but not later than the third Business
Day) after the satisfaction or waiver of such conditions and in no event later
than July 31, 1996. Monsanto and Ecogen shall use their best efforts to cause
the satisfaction of such conditions. If such conditions of Closing have not
been satisfied or waived, and if Closing shall not have occurred, on or before
July 31, 1996, then this Agreement shall be terminated. The Closing shall take
place at the offices of Ecogen or such other place as the parties may agree.
(b) The remaining number of Purchased Shares not
purchased pursuant to Section 2.4(a) (the "Additional Shares") shall be issued
and sold by Ecogen and
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<PAGE> 11
purchased and paid for by Monsanto immediately following the special
stockholders' meeting called on January 29, 1996, provided that the Reverse
Stock Split is approved by the stockholders of Ecogen at such meeting. The
purchase price per share for such Additional Shares shall be the Per Share
Price determined pursuant to Section 2.2. Monsanto's obligation to purchase
the Additional Shares shall be subject to the prior Closing of the transactions
contemplated under this Agreement pursuant to Section 2.4(a), to the delivery
by Ecogen to Monsanto of a certificate in the name of Monsanto for such
Additional Shares, and to the representations and warranties contained in
Sections 3.1 and 3.2 being true on such date as if made on such date or to
receipt of an opinion of counsel of Ecogen reasonably acceptable to Monsanto to
the effect that such Additional Shares are duly authorized and validly issued.
If the Reverse Stock Split is not approved by the stockholders of Ecogen, the
Additional Shares shall be issued and sold by Ecogen and purchased and paid for
by Monsanto from time to time, as shares become available or authorized for
issuance and upon at least five (5) days prior notice, in increments of at
least 50,000 shares, subject to the conditions set forth in the prior sentence;
provided, however, that Monsanto shall have no obligation to purchase any
Additional Shares after July 31, 1996.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
In order to induce Monsanto to purchase the Purchased Shares described
in Article II, Ecogen represents and warrants to Monsanto as follows:
3.1 Organization, Subsidiaries. Ecogen is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all necessary corporate power and authority to carry on its
business as now conducted and as proposed to be conducted and to own or lease
and operate its properties. Ecogen's only Subsidiaries are set forth on
Schedule 3.1 hereto. Each Subsidiary is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and
has all necessary power and authority to carry on its business as now conducted
and as proposed to be conducted and to own, lease and operate its properties.
Except as set forth in Schedule
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<PAGE> 12
3.1 hereof, Ecogen either directly, or indirectly through the Subsidiaries,
owns all of the issued and outstanding stock of each of its Subsidiaries free
and clear of all liens, claims, security interests or encumbrances. Ecogen and
its Subsidiaries are duly licensed or qualified to do business and are in good
standing in every jurisdiction in which the nature of its business or the
ownership of their properties require such qualification except where such
failure to so qualify would not have a material adverse effect on the business
of Ecogen. Except for cash equivalents and marketable securities held for
investment purposes, Ecogen does not control, or have any contract or
commitment to own or control, any capital stock, bonds or other securities of,
and does not have a proprietary interest in, any Person other than the
Subsidiaries. Ecogen and each of its Subsidiaries have delivered to Monsanto
complete and correct copies of their Certificates of Incorporation and By-Laws
as amended and in effect on the date hereof.
3.2 Authorization and Binding Effect. The execution and delivery
of this Agreement and the performance by Ecogen of its obligations hereunder
are within Ecogen's corporate power, have been duly authorized by proper
corporate action on the part of Ecogen, are not in violation of, or constitute
a default under any applicable existing law, rule or regulation of any
governmental agency or authority, any order or decision of any court, the
Certificate of Incorporation or By-Laws of Ecogen or the terms of any
agreement, restriction or undertaking to which Ecogen is a party or by which it
is bound, except violations or defaults which would not, individually or in the
aggregate, have a material adverse effect on Ecogen, and do not require the
approval or consent of the shareholders of Ecogen, any governmental body,
agency or authority or any other person or entity that has not been obtained;
except (i) the filing of any notice subsequent to Closing which may be required
by applicable state or federal securities laws and (ii) stockholder approval
required for the Reverse Stock Split or other corporate action necessary to
increase the number of shares of Common Stock available for issuance under the
Agreement if the Reverse Stock Split is not approved ("Corporate Approval").
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3.3 Consolidated Financial Statements: Other Information. Ecogen
has previously delivered to Monsanto true, accurate and complete copies of the
following documents, including, the exhibits and schedules thereto:
(a) Annual Report on Form 10-K for the transition
period ended October 31, 1994, as filed with the Commission, which contains the
audited consolidated balance sheets of Ecogen as of December 31, 1993, and
October 31, 1994, and audited consolidated statements of operations, cash flows
and stockholders' equity for the years ended December 31, 1992 and 1993 and the
ten (10) months ended October 31, 1994, certified by KPMG Peat Marwick LLP and
heretofore furnished to Monsanto (together the "Audited Financial Statements");
(b) Quarterly Reports on Form 10-Q for the three
months ended January 31, 1995, April 30, 1995 and July 31, 1995, as filed with
the Commission (the "Unaudited Financial Statements" and, together with the
Audited Financial Statements, the "Financial Statements");
(c) Proxy statement in definitive form for its
1995 annual meeting of stockholders as filed with the Commission (the "Annual
Proxy Statement");
(d) Unaudited Consolidated Balance Sheet, dated
October 31, 1995 (the "Unaudited Balance Sheet") attached hereto as Exhibit
3.3(d); and
(e) Proxy Statement in definitive form for a
Special Meeting of Shareholders scheduled for January 29, 1996 (the "Special
Proxy Statement" and, together with the Annual Proxy Statement, the "Proxy
Statements").
Except for Current Reports on Form 8-K dated November 7, 1995 and
November 24, 1995 and the Special Proxy Statement dated December 18, 1995,
Ecogen has filed no other reports or registration statements with the
Commission since July 31, 1995. Since January 1, 1994, Ecogen has filed all
reports, schedules, forms, statements and other documents
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<PAGE> 14
required to be filed by it with the Commission pursuant to the requirements of
the Exchange Act and the Securities Act, including, without limitation, all of
the documents listed in paragraphs (a), (b), (c) and (e) above (all of the
foregoing filed prior to the date hereof being hereinafter referred to as the
"SEC Documents"). Ecogen has delivered to Monsanto true and complete copies of
the SEC Documents. As of their respective dates, the SEC Documents (as the
same may have been amended) complied in all material respects with the
requirements of the Exchange Act and the Securities Act and the rules and
regulations of the Commission promulgated thereunder applicable to such SEC
Documents, and, as of their respective dates, none of the SEC Documents (when
read together with all exhibits included therein and financial statement
schedules thereto and documents incorporated by reference) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The Financial
Statements were prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved except as may
be otherwise indicated in such financial statements or the notes thereto, and
are correct and complete and fairly present in all material respects the
consolidated financial condition of Ecogen and its Subsidiaries, as of those
dates and the results of their operations for the periods then ended.
3.4 Litigation. Except as set forth in Ecogen's October 31,
1994 Annual Report on Form 10-K and in Ecogen's Quarterly Reports on Form 10-Q
provided to Monsanto pursuant to Section 3.3(b) and except as disclosed on
Schedule 3.4 hereto, there are no judicial or administrative actions, suits,
proceedings or investigations pending or, to the best of Ecogen's knowledge,
threatened against Ecogen or any of its Subsidiaries or which question the
validity of this Agreement or of any action taken or to be taken pursuant to or
in connection with the provisions of this Agreement, and to the best of
Ecogen's knowledge, no facts exist which would constitute a basis for any such
action, suit, proceeding or investigation, which if concluded adversely against
Ecogen would have a materially adverse effect on the business or financial
condition of Ecogen and its Subsidiaries taken as a whole.
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3.5 Material Contracts. The contracts listed as Exhibits
10.1 - 10.119 on the list of exhibits under Part IV, Item 14(a)(3) of the
October 31, 1994 Form 10-K, and filed (or incorporated by reference) as
Exhibits 10.1 - 10.119 to the October 31, 1994 Form 10-K, were all of the
contracts required to be listed pursuant to the Commission's instructions for
the completion of Form 10-K and filed as exhibits pursuant to Item 601(b)(10)
of the Commission's Regulation S-K. Except as disclosed in Ecogen's January
31, 1995, April 30, 1995 or July 31, 1995 Form 10-Q and in Ecogen's Current
Reports on Form 8-K dated November 7, 1995 and November 24, 1995, neither
Ecogen nor any of its Subsidiaries has entered into any contract since October
31, 1994 which is required to be filed as an exhibit to a quarterly report on
Form 10-Q or an annual report on Form 10-K. All of those contracts filed as
exhibits to the October 31, 1994 Form 10-K or disclosed in Ecogen's January 31,
1995, April 30, 1995 or July 31, 1995 Form 10-Q or in Ecogen's Current Reports
on Form 8-K dated November 7, 1995 and November 24, 1995 which are material to
the business and operations of Ecogen as presently conducted are in full force
and effect and, to the best of Ecogen's knowledge, all parties to such
contracts have performed in all material respects all obligations required to
be performed by them to date, are not in default and do not have a right of
rescission. Neither Ecogen nor any of its Subsidiaries has any outstanding
powers of attorney, except routine powers of attorney relating to
representation before governmental agencies or given in connection with
qualification to conduct business in another jurisdiction. No employees of
Ecogen or any of its Subsidiaries are covered by any collective bargaining
agreement.
3.6 Taxes. Ecogen and each of its Subsidiaries has filed when due
all federal, state and local income and other tax returns, reports and
declarations which are required to have been filed by it and has, to the best
of Ecogen's knowledge, paid all taxes which have become due pursuant thereto
and all other taxes, assessments and other governmental charges imposed by law
upon it or any of its properties, assets, income, receipts, payrolls,
transactions, capital, net worth or franchises other than those not delinquent
except where the failure to file or pay would not have a material adverse
effect on the business of Ecogen. All such tax returns are complete and
correct in all material respects as filed. To the best of Ecogen's knowledge,
there is no tax lien upon any property or asset
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of Ecogen, whether owned or leased, except for liens for taxes not yet payable
and liens which do not have a material adverse effect on the business of
Ecogen. To the extent that tax liabilities have accrued on or before the
Balance Sheet Date but have not become payable, to the best of Ecogen's
knowledge, they have been adequately reflected as liabilities on the Balance
Sheet and adequate provision for payment thereof has been made. There have
been no examinations by any state or federal taxing authority of the books and
financial statements of Ecogen or any of its Subsidiaries. The accruals and
reserves for federal, state or local taxes, as shown on the Balance Sheet are
adequate in the opinion of Ecogen. Neither Ecogen nor any of its Subsidiaries
has granted any waiver of any statute of limitation with respect to, or any
extension of a period for the assessment of, any federal, state or local tax.
To the best of Ecogen's knowledge, Ecogen has withheld and duly paid to the
appropriate governmental authority all taxes required to be withheld by it
pursuant to any ordinance, statute or other law except where the failure to
withhold or pay would not have a material adverse effect on the business of
Ecogen.
3.7 Capitalization. Prior to the Reverse Stock Split, the
authorized capital stock of Ecogen consists of (i) 42,000,000 shares of common
stock, par value $.01 per share, of which 29,996,287 shares were issued and
outstanding at December 8, 1995, and no additional shares have subsequently
been issued except upon exercise of options, warrants or convertible securities
outstanding as of December 8, 1995; and (ii) 7,500,000 shares of preferred
stock, par value $.01 per share, issuable in series, of which 350,000 shares
have been designated Series B convertible preferred stock and 23,334 shares of
which are issued and outstanding at December 8, 1995, and of which 160,000
shares have been designated Series C Convertible Preferred Stock, and 122,000
shares of which are issued and outstanding as of December 8, 1995. After the
consummation of the reverse stock split described in the Special Proxy
Statement, the authorized capital stock of Ecogen will consist of (i)
42,000,000 shares of common stock, par value $.01 per share of which
approximately 5,990,000 shall be issued and outstanding; and (ii) 7,500,000
shares of preferred stock, par value $.01 per share with no change in the
designated preferred or the issued and outstanding shares of preferred stock.
The issued and outstanding shares of Ecogen have been duly and validly issued
and are fully paid and nonassessable, and the Purchased Shares, when issued,
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<PAGE> 17
will be duly and validly issued and fully paid and nonassessable. Except for
180,778 shares of common stock, Ecogen holds no shares of its common stock or
preferred stock in its treasury. Except as disclosed in Schedule 3.7, there
are no outstanding options, warrants or other rights in existence, other than
under this Agreement and under the Warrant Agreement dated as of November 2,
1995 between Monsanto and Ecogen, to acquire from Ecogen any of its shares of
capital stock. Since the Balance Sheet Date there have been no dividends,
Restricted Payments or other distributions declared or paid in respect of the
shares of capital stock of Ecogen.
3.8 Compliance With Instruments, Laws; Governmental
Authorizations. Neither Ecogen nor any of its Subsidiaries is (i) in violation
of any term or provision of its Certificate of Incorporation or By-Laws or, to
the best of Ecogen's knowledge, any governmental license or permit; (ii) in
violation or default under any material contract, agreement or other
instrument; or (iii) in violation of any statute, law, ordinance, rule,
regulation, judgment, order, decree, permit, concession, grant, franchise,
license or other governmental authorization or approval which is material to
its business or operations. All material permits, concessions, grants,
franchises, licenses and other governmental authorizations and approvals
necessary for the conduct of the business of Ecogen and its Subsidiaries have
been duly obtained and are in full force and effect, and there are no
proceedings pending or, to the best of Ecogen's knowledge, threatened which may
result in the revocation, cancellation or suspension, or any adverse
modification, of any permit, concession, grant, franchise, license or other
governmental authorization which would have a material adverse effect on the
business or financial condition of Ecogen and its Subsidiaries taken on a
whole. There have been no citations, fines or penalties heretofore assessed
against Ecogen or any of its Subsidiaries and, to the best of Ecogen's
knowledge, Ecogen and each of its Subsidiaries have complied with in all
material respects any and all federal, state or local laws, including but not
limited to laws relating to air or water pollution, solid waste disposal or
other environmental protection matters, or relating to occupation, health or
safety, and no such citations, fines or penalties have been assessed or, to the
best of Ecogen's knowledge, have been threatened since the Balance Sheet Date
or are now being threatened. There exists no default nor has any act or
omission occurred which, with the
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giving of notice or the passage of time, would constitute a default under the
provisions of any instrument evidencing Indebtedness or liability or any
agreement relating thereto or any other agreement or instrument to which Ecogen
is a party, and which would have a material adverse effect on the business or
financial condition of Ecogen.
3.9 Patents and Technology Rights.
(a) Except as set forth in Schedule 3.9 hereof and except
with respect to bioinsecticide product supply, manufacturing, distributor and
marketing agreements to which Ecogen is a party, to the best of Ecogen's
Knowledge, Ecogen and its Subsidiaries and their successors and assigns have a
right (1) to practice all processes and process steps as now practiced or
planned to be practiced by Ecogen and its Subsidiaries, and (2) to make, use
and sell throughout the world, products now made, used or sold or planned to be
made, used or sold by Ecogen and its Subsidiaries without substantial risk of
infringement of any right, interest, or patent of any third party.
(b) Ecogen and each of its Subsidiaries owns and
possesses, or is licensed or is otherwise entitled to use, all patents,
trademarks, copyrights and such pending applications therefor and trade
secrets, technologies, know-how, processes and other proprietary rights
necessary for conducting its business operations; provided, however, that
certain intellectual property rights will be sold by Ecogen to Monsanto
pursuant to the Assignment Agreement.
(c) Except as set forth in Schedule 3.9 hereof, to the
best of Ecogen's Knowledge, there exists no contest, litigation, infringement,
fraud, misappropriation, or misuse by Ecogen, pending or threatened in respect
of, any patent or application therefor, or any license or agreement of a third
party which is necessary for the conduct of Ecogen's business or the business
of any of its Subsidiaries.
3.10 Certain Transactions. No Affiliate of Ecogen that is not a
Subsidiary of Ecogen owns or controls, directly or indirectly, in whole or in
part, any property, asset or
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right, tangible or intangible (including but not limited to, any patent,
trademark, service mark, trade name, brand name, copyright, or pending
application for any patent, trademark, service mark, or copyright, invention,
process, know-how, formula, design or trade secret), which Ecogen or any of its
Subsidiaries is presently operating or using or the use of which is necessary
for its business.
3.11 Absence of Changes. Since the Balance Sheet Date, except as
disclosed on Ecogen's January 31, 1995, April 30, 1995 and July 31, 1995 Form
10-Qs, the Unaudited Balance Sheet, the Current Report on Form 8-K dated
November 7, 1995, the Current Report on Form 8-K dated November 29, 1995, or as
specified in Schedule 3.11 hereto, Ecogen and its Subsidiaries have not:
(a) undergone any changes in its condition, properties,
assets, liabilities, business or operations which are in the aggregate
materially adverse except for net losses of $20,834,022 for the nine months
ended July 31, 1995 and a continuation of operating losses and a liquidity
position similar to that reported in the July 31, 1995 Form 10-Q;
(b) declared, set aside, made or paid any Restricted
Payment;
(c) incurred any Indebtedness or issued or sold any debt
securities except for Indebtedness incurred in connection with the purchase or
lease of property in the ordinary course of business which in the aggregate is
not materially adverse to Ecogen and Indebtedness to Monsanto;
(d) mortgaged, pledged, licensed, sublicensed or
subjected to any lien, lease, security interest or other charge or encumbrance
any of its properties or assets, tangible or intangible which in the aggregate
materially adversely affect the financial condition, property, assets,
business, or operations of Ecogen and its Subsidiaries taken as a whole, other
than liens and security interests in favor of Monsanto;
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(e) acquired or disposed of any assets or properties
(except for common stock of Ecogen) in any transaction with any officer or
director or with any shareholder owning more than 5% of the outstanding common
stock except for transactions that have a value of less than $60,000;
(f) forgiven or cancelled any debts or claims, or waived
any rights having a value of more than $60,000 except in the ordinary course of
business which in the aggregate is not materially adverse to Ecogen;
(g) suffered any damage, destruction or loss (whether or
not covered by insurance) which in the aggregate materially adversely affects
the financial condition, properties, assets, business or operations of Ecogen
and its Subsidiaries; or
(h) incurred other than in the ordinary course of
business any liability or obligation (whether absolute, accrued, contingent or
otherwise), exceeding $1,000,000 other than liabilities and obligations to
Monsanto.
3.12 Restrictions on Personnel. To the best of Ecogen's
Knowledge, no officer or employee of Ecogen or any of its Subsidiaries has
entered into any agreement which is now in effect with any Person other than
Ecogen or its Subsidiaries (a) requiring such officer or employee to assign any
interest in any invention or trade secrets developed while employed by Ecogen
or any of its Subsidiaries or (b) containing any prohibition or restriction of
competition or solicitation of customers which if enforced against such officer
or employee would have a material adverse effect on the business or financial
condition of Ecogen or any of its Subsidiaries.
3.13 Certain Payments. Neither the Internal Revenue Service, the
Commission nor any other federal, state, local or foreign government agency or
entity has initiated or, to the best of Ecogen's knowledge, threatened any
investigation of any payments made by Ecogen and alleged to have been of the
type covered by Section 162(c) of the Internal Revenue Code.
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3.14 Disclosure. Neither this Agreement nor any exhibit or
schedule hereto, nor any statement, list or certificate delivered to Monsanto
pursuant to this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein and therein in the context in which they were made not
misleading.
3.15 Brokers. This Agreement was not induced or incurred through
any person, firm or corporation acting as a broker or finder, other than Len
Bogner, for whose fees Ecogen shall be responsible. Ecogen agrees to hold
Monsanto harmless from any loss, damage, cost or expense resulting from any
claim by any person, firm or corporation based upon any such person, firm or
corporation having acted as a broker or finder for Ecogen or any other Person
in connection with the transactions contemplated by this Agreement, the
Assignment Agreement and/or the Research and Development Agreement.
ARTICLE IV.
CONDITIONS PRECEDENT TO PURCHASE AND SALE OF COMMON STOCK
4.1 Conditions to Monsanto Obligations. The obligation of
Monsanto to purchase the Purchased Shares described in Article II is subject to
the satisfaction of the following conditions each of which may be waived in
writing by an authorized representative of Monsanto:
(a) Opinion of Counsel. Monsanto shall have received an
opinion addressed to Monsanto and dated as of the Closing, of Dechert, Price &
Rhoads, counsel for Ecogen, satisfactory in substance and form to Monsanto and
its counsel and substantially in the form attached hereto as Exhibit 4.1(a). In
rendering such opinion, counsel may rely to the extent deemed appropriate on
the certificates of officers or employees of Ecogen and of public officials as
to matters of fact and authenticity of documents and on opinions of counsel in
other states as to questions under the laws of such states.
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(b) Representations and Warranties True and Correct. The
representations and warranties in Article III hereof shall be true and correct
on the date of Closing. Monsanto shall have received from the President of
Ecogen an officer's certificate to the foregoing effect dated as of the
Closing.
(c) Closing Certificates. Monsanto shall have received
copies, certified by the Secretary or Assistant Secretary of Ecogen to be true
and correct and in full force and effect, of (i) the Certificate of
Incorporation and By-Laws of Ecogen; (ii) resolutions of the Board of Directors
of Ecogen authorizing the issuance of the Purchased Shares, the execution and
delivery of this Agreement and any other documents to be executed by or on
behalf of Ecogen pursuant to this Agreement; and (iii) a statement containing
the names and titles of the officer or officers of Ecogen authorized to sign
this Agreement and other documents required by this Agreement, together with
true signatures of such officers.
(d) Proceedings Satisfactory to Monsanto. All
proceedings taken in connection with the transaction contemplated by this
Agreement and all instruments, authorizations and other documents applicable
thereto shall be reasonably satisfactory in form and content to Monsanto and
Monsanto shall have received copies of all such documents reasonably required
by it.
(e) Approvals. The pre-transaction filing and waiting
period requirements applicable to the transactions contemplated by this
Agreement, the Assignment Agreement and the Research and Development Agreement
under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended
("HSR"), shall have expired or shall have been terminated, and any necessary
foreign approvals shall have been obtained, and there shall not be pending or
threatened any governmental litigation or proceeding which restrains, prohibits
or prevents or in the reasonable opinion of counsel presents a significant risk
of restraining, prohibiting or preventing, or changing the terms of, or
obtaining material damages in connection with, the transactions contemplated by
this Agreement, the Assignment Agreement or the Research and Development
Agreement.
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(f) Research and Development Agreement. Ecogen shall
have executed and delivered the Research and Development Agreement.
(g) Assignment Agreement. The transactions contemplated
under the Assignment Agreement shall have been closed simultaneously with the
Closing hereunder.
4.2 Conditions to Ecogen's Obligation. The obligation of Ecogen
to sell the Purchased Shares described in Article II is subject to the
satisfaction of the following conditions each of which may be waived in writing
by an authorized representative of Ecogen.
(a) At Closing, Monsanto shall have delivered the
Purchase Price with respect to those Shares purchased at Closing.
(b) Closing Certificate. Ecogen shall have received a
Certificate, dated as of the Closing Date and executed by an officer of
Monsanto to the effect that the representations and warranties of Monsanto
contained in this Agreement are true and correct in all respects on and as of
the Closing as though made on and as of such date.
(c) Representations, Warranties and Covenants.
(i) All representations and warranties of
Monsanto made in this Agreement, or in any Exhibit or certificate
delivered pursuant hereto shall be true and complete in all material
respects on and as of the Closing Date with the same force and effect
as if made on and as of that date.
(ii) All terms, covenants, and conditions to be
complied with and performed by Monsanto on or prior to the Closing
Date shall have been complied with or performed in all material
respects.
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(d) Adverse Proceedings. No suit, action or governmental
proceeding shall have been instituted or threatened against and no order,
decree, or judgment of any court, agency, or other governmental authority shall
have been rendered against Monsanto which it is reasonably believed would
render it unlawful, as of the Closing Date, to effect the transactions
contemplated by this Agreement in accordance with its terms.
(e) HSR Act Approval. The applicable HSR Waiting Period
shall have expired or shall have been terminated and any necessary foreign
approvals shall have been obtained and there shall not be pending or threatened
any governmental litigation proceeding which restrains, prohibits, or prevents
or in the reasonable opinion of counsel presents a significant risk of
restraining, prohibiting or preventing, or changing the terms of, or obtaining
material damages in connection with the transactions contemplated by this
Agreement, the Assignment Agreement or the Research and Development Agreement.
(f) Research and Development Agreement. Monsanto shall
have executed and delivered the Research and Development Agreement.
(g) Assignment Agreement. The transactions contemplated
under the Assignment Agreement shall have been closed simultaneously with the
Closing hereunder.
(h) Senior Promissory Note. Monsanto shall have
delivered to Ecogen, marked paid, the original of the Senior Promissory Note
dated November 2, 1995 in the face amount of $2,000,000 and payable to
Monsanto.
(i) Security Agreement. Monsanto shall have executed and
delivered such documents required to terminate the security interest granted
pursuant to the Security Agreement dated as of November 2, 1995 by and between
Monsanto and Ecogen.
(j) Warrant Agreement. Monsanto shall have delivered to
Ecogen, marked cancelled, the original of the Warrant to Purchase Two Million
Shares of Common
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Stock dated November 2, 1995 granted pursuant to the Warrant Agreement by and
between Monsanto and Ecogen dated November 2, 1995.
ARTICLE V.
RIGHT OF FIRST REFUSAL AND LIMITATIONS ON OWNERSHIP
5.1 Right of First Refusal. If during the term of the Research
and Development Agreement and for 2 years following its termination Ecogen
agrees to sell shares of its common stock or other voting securities ("Ecogen
Securities") in a private or public offering other than (i) Ecogen Securities
issued to Ecogen employees or directors pursuant to Ecogen's stock option
plans, or to members of Ecogen's Scientific Advisory Board, or issued in
connection with any stock options, warrants or other rights in existence as of
the Closing Date, (ii) upon the conversion or exchange of convertible or
exchangeable securities outstanding as of the date of this Agreement, (iii) an
equity investment in Ecogen by the other party to, or partner in, any license
agreement, research and development agreement, distribution agreement,
joint-venture or other similar corporate alliance, provided that such equity
investment is made as a condition to Ecogen's good faith agreement to enter
into such license agreement, research and development agreement, distribution
agreement, joint-venture or other similar corporate alliance, (iv) in
connection with a merger or acquisition, or (v) to any underwriter, placement
agent or financial advisor in connection with any financing or other
transaction by Ecogen, and provided Monsanto still owns all of the Purchased
Shares at the time of such private or public offering, Monsanto shall have the
right, but not the obligation, to acquire upon the same terms and conditions
applicable to such private or public offering all or any portion of such Ecogen
Securities sufficient for Monsanto to maintain after the offering the same
percentage of ownership of issued and outstanding Ecogen Securities that
Monsanto possessed immediately prior to the offering (the "Pre-Offering
Percentage").
5.2 Private Offering. With respect to a private offering, Ecogen
shall no later than five (5) Business Days after the execution of any agreement
entered into in connection with such private offering notify Monsanto in
writing of the proposed offering (a
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"Notice") which Notice shall include the description of the securities proposed
to be issued by Ecogen and specify the number, price and payment and other
terms, together with any letter of intent and the final contract, if available.
Monsanto shall have twenty (20) Business Days from the date of receipt of
Ecogen's notice in which to advise Ecogen whether Monsanto elects to exercise
its rights under Section 5.1. If Monsanto does not respond, or if Monsanto
indicates that it will not exercise its rights, Monsanto shall be considered
irrevocably to have waived its rights under Section 5.1 with respect to the
private offering. If Monsanto timely advises Ecogen that Monsanto will
exercise its rights under Section 5.1, Monsanto shall have the right to acquire
all or any portion of the necessary amount of the Ecogen Securities to maintain
Monsanto's Pre-Offering Percentage at the price and upon the terms (other than
any registration rights which are on terms different than those granted
hereunder) specified in the Notice. Closing shall be in accordance with the
terms of the private offering agreement, provided, however, that if such
agreement provides for the payment of consideration other than cash, Monsanto
shall have the right to purchase its Pre-Offering Percentage of shares for the
cash equivalent amount of such other consideration. Monsanto shall make such
investment representations to Ecogen and shall provide Ecogen with such other
documentation at closing as is reasonably required by Ecogen to comply with
applicable securities laws. The cash equivalent amount referred to above shall
be determined by an independent third party reasonably agreed to by Monsanto
and Ecogen (the costs and expenses of which shall be paid by Ecogen).
5.3 Public Offering. With respect to a public offering, Ecogen
shall notify Monsanto no later than five (5) Business Days after Ecogen has
entered into a letter of intent with its underwriters, and shall provide
Monsanto with a copy of any letter of intent with its underwriters. Monsanto
shall have twenty (20) Business Days from the date of receipt of Ecogen's
notice in which to advise Ecogen whether Monsanto elects to exercise its rights
under Section 5.1. If Monsanto does not respond or if Monsanto indicates that
it will not exercise its rights, Monsanto shall be considered irrevocably to
have waived its rights under Section 5.1 with respect to the public offering.
If Monsanto timely advises Ecogen that Monsanto desires to retain its rights
under Section 5.1, then when Ecogen files a registration statement containing a
preliminary prospectus with the Commission, Ecogen shall provide
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Monsanto with copies of the preliminary prospectus and all subsequent
amendments. Monsanto shall have twenty (20) Business Days from its receipt of
the preliminary prospectus in which to exercise its rights under Section 5.1 by
making an offer to acquire all or any portion of the necessary amount of Ecogen
Securities to maintain Monsanto's Pre-Offering Percentage based on the price
and the other terms contained in the final prospectus, except that the price to
be paid by Monsanto shall be net of any underwriting discount and selling
commissions. No such offer to buy shall be accepted prior to the time that the
registration statement becomes effective. The registration statement shall
indicate that Monsanto has anti-dilution rights to purchase Ecogen Securities
on the terms offered to the public.
5.4 Limitations. Notwithstanding the preceding provisions of this
Article V, Ecogen shall not be required to issue any fractional shares as a
result of Monsanto's exercise of its rights under Section 5.1. Ecogen shall not
be required to transfer any Ecogen Securities to Monsanto under this Article V,
if to do so would result in the violation of any applicable law, rule or
regulation.
5.5 Limitations on Monsanto's Ownership. Except for purchases of
Ecogen Securities made in accordance with this Article V, prior to the third
anniversary of the Closing, neither Monsanto nor any of its Affiliates shall
directly or indirectly acquire any Ecogen Securities (except by way of stock
dividends, stock splits, or similar events affecting holders of Ecogen
Securities generally) if the effect of the acquisition would be to increase the
aggregate voting power in the election of directors of all Ecogen Securities
owned by Monsanto and its Affiliates to more than twenty-five percent (25%) of
the total combined voting power of all Ecogen Securities then outstanding;
provided, however, that nothing contained in this Agreement shall be deemed to
prohibit Monsanto and its Affiliates from acquiring Ecogen Securities (through
open market purchases or otherwise) so long as the effect of such acquisitions
does not increase the aggregate voting power in the election of directors of
all Ecogen Securities owned by Monsanto and its Affiliates to more than
twenty-five percent (25%) of the total combined voting power of all Ecogen
Securities then outstanding. Notwithstanding the foregoing limitation:
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(a) Monsanto or any of its Affiliates may acquire an
unlimited percentage of Ecogen Securities prior to the third anniversary of the
Closing if any of the following events occur:
(i) A tender or exchange offer is made by any
Person or 13D Group (other than an Affiliate of or Person acting in
concert with Monsanto) to acquire Ecogen Securities and/or other
securities of Ecogen that, if added to the Ecogen Securities and other
securities of Ecogen already owned by that Person or 13D Group, would
represent more than thirty percent (30%) of the total combined voting
power or profit and loss participation of all Ecogen Securities and
other securities of Ecogen issued and outstanding;
(ii) There is public disclosure that Ecogen
Securities and/or other securities of Ecogen representing more
than thirty percent (30%) of the total combined voting power
or profit and loss participation of all Ecogen Securities and
other securities of Ecogen issued and outstanding have been
acquired or are proposed to be acquired by any Person or 13D
Group (other than an Affiliate of or Person acting in concert
with Monsanto);
(iii) Any Person or 13D Group (other than an
Affiliate of or Person acting in concert with Monsanto) shall
beneficially own Ecogen Securities representing more than thirty
percent (30%) of the total combined voting power of all issued and
outstanding Ecogen Securities;
(iv) At any election or series of elections,
persons not proposed for nomination or nominated by the management of
Ecogen are elected as directors of Ecogen, and together constitute
fifty percent (50%) or more of Ecogen's Board of Directors; or
(v) Any Person or 13D Group (other than an
Affiliate of or Person acting in concert with Monsanto) solicits or
receives valid proxies for the
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election of Ecogen's Board of Directors representing an aggregate of
thirty percent (30%) or more of the total combined voting power of all
Ecogen Securities issued and outstanding.
(b) Neither Monsanto nor any of its Affiliates shall be
required to dispose of any shares of Ecogen Securities if their aggregate
percentage ownership is increased as a result of Ecogen's recapitalization or
any other action taken by Ecogen.
As used herein, "13D Group" means any group of persons formed for the purpose
of acquiring, holding, voting or disposing of securities that would be required
under Section 13(d) of the Exchange Act and the related rules and regulations
(as now in effect, and based on present legal interpretations) to file a
statement on Schedule 13D or 13G with the Commission as a "person" within the
meaning of Section 13(d)(3) of the Exchange Act if the group beneficially owned
Ecogen Securities representing more than five percent (5%) of the total
combined voting power of all Ecogen Securities then issued and outstanding.
ARTICLE VI.
LIMITATION ON TRANSFER
6.1 Limitation on Transfer. During the term of the Research and
Development Agreement, Monsanto shall not directly or indirectly offer for
sale, or transfer any Common Stock acquired by Monsanto pursuant to this
Agreement. Notwithstanding the foregoing, the limitations on transfers set
forth in this Section 6.1 shall terminate upon the occurrence of an event set
forth in Section 5.5(a).
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ARTICLE VII.
REGISTRATION RIGHTS
7.1 Requested Registration.
(a) Request for Registration. Subject to Section 6.1,
Holders of Registrable Securities shall have the right to request (with such
requests in writing and stating the number of shares of Registrable Securities
to be disposed of and the intended method of disposition of shares by such
Holders) up to two (2) registrations on Form S-3 at Ecogen's expense and an
unlimited number of additional registrations on Form S-3 at the selling
Holder's expense, provided that a request for registration includes at least
fifty percent (50%) of the aggregate Registrable Securities held on such date
and (ii) the requests for additional registrations are made by Holders of at
least twenty percent (20%) of the Registrable Securities, and (iii) such
Registerable Securities have an aggregate offering price of at least $1,000,000
or represent all of the Registerable Securities of the Holders held on such
date, subject only to the following:
(i) Ecogen shall not be required to effect a
registration pursuant to this Section 7.1 prior to the second
anniversary of the Closing unless Monsanto otherwise has a right
hereunder to sell Registrable Securities before such date.
(ii) Ecogen shall not be required to effect a
registration pursuant to this Section 7.1 within one hundred eighty
(180) days after the effective date of the last such registration
pursuant to this Section 7.1.
(iii) Ecogen shall not be required to effect a
registration in any particular jurisdiction in which Ecogen would be
required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless
Ecogen is already subject to service in such jurisdiction and except
as may be required by the Securities Act or applicable rules or
regulations thereunder.
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(iv) Ecogen shall not be required to effect a
registration for a period of not more than ninety (90) days
immediately following the delivery of a certificate signed by the
President of Ecogen to the Requesting Holders stating that, in the
good-faith judgment of the Board of Directors of Ecogen, it would be
seriously detrimental to Ecogen and its shareholders for a
Registration Statement to be filed on or before the date filing would
otherwise be required hereunder; provided, however, that Ecogen may
not utilize this right more than once in any twelve (12) month period
and Ecogen may not exercise this right based on the fact that Ecogen
has recently registered any of its securities for the account of
another security holder or holders exercising their respective demand
registration rights.
If Ecogen cannot qualify for registration on Form S-3, then Ecogen
shall effect any registration required or requested by the Holder on
Form S-1, or such other appropriate form, in which event this Section
7.1 shall apply in all respects as if the words "Form S-3" were
replaced by the words "Form S-1" or the appropriate designation for
such other form.
(b) Notice of Inclusion. Ecogen shall give written
notice to all Holders of Registrable Securities of the receipt of a request for
registration pursuant to this Section 7.1 and shall provide a reasonable
opportunity for other Holders to participate in the registration; provided,
however, that, if the registration is for an underwritten offering, then the
terms of Section 7.1(c) hereof shall apply to all participants in such
offering. Subject to the foregoing, Ecogen shall use its best efforts to
effect promptly the registration of all shares of Registrable Securities on
Form S-3 to the extent requested by the Holder or Holders thereof for purposes
of disposition.
(c) Underwriting. If the Requesting Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, then they shall so advise Ecogen as a part of their request made
pursuant to this Section 7.1 and Ecogen shall include such information in the
written notice referred to in Section 7.1(b) hereof. The right of any Holder
to registration pursuant to this Section 7.1 shall be conditioned upon such
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Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent requested and to the
extent provided herein.
Ecogen shall (together with all Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters of recognized national standing, selected for such
underwriting by a majority in interest of the Requesting Holders and reasonably
acceptable to Ecogen. Notwithstanding any other provision of this Section 7.1,
if the representative advises the Requesting Holders in writing that marketing
factors require a limitation on the number of shares to be underwritten, then
the Requesting Holders shall so advise all Holders, and the number of shares of
Registrable Securities that may be included in the registration and
underwriting shall be allocated first among all Holders thereof in proportion,
as nearly as practicable, to the respective amounts of Registrable Securities
held by such Holders at the time of filing the Registration Statement. No
Registrable Securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration.
If any Holder of Registrable Securities disapproves of the
terms of the underwriting, then such person may elect to withdraw therefrom by
written notice to Ecogen, the underwriter and the Requesting Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration; provided, however, that, if, by the withdrawal of
such Registrable Securities, a greater number of Registrable Securities held by
other Holders may be included in such registration (up to the maximum of any
limitation imposed by the underwriters), then Ecogen shall offer to all Holders
who have included Registrable Securities in the registration the right to
include additional Registrable Securities in the same proportion used to
determine the underwriter limitation in this Section 7.1(c).
If the underwriter has not limited the number of Registrable
Securities to be underwritten, then Ecogen and its executive officers, and such
other Persons as are determined by the Board of Directors, their successors,
and their assigns ("Other Selling
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Stockholders"), may include securities for their own account in such
registration if the underwriter so agrees and if the number of Registrable
Securities held by the Holders that would otherwise have been included in such
registration and underwriting will not thereby be limited for any reason,
including but not limited to the price for which the Registrable Securities
will be sold. To the extent that the underwriter wishes to limit the number of
shares to be included in the registration on behalf of Ecogen and the Other
Selling Stockholders, the shares of common stock to be registered held by the
Other Selling Stockholders shall be excluded from such offering prior to
excluding any shares held by Ecogen and those held by Ecogen shall be excluded
prior to excluding any Registrable Securities held by the Holders.
7.2 Ecogen Registration.
(a) Notice and Inclusion. Subject to Section 6.1, if, at
any time after the Closing until the tenth anniversary of the Closing, Ecogen
shall determine to register any of its securities for its own account, other
than a registration relating solely to employee benefit plans, or a
registration relating solely to a Commission Rule 145 transaction, Ecogen
shall:
(i) promptly give to each Holder written notice
thereof (which shall include a list of the jurisdictions in which
Ecogen intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws); and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all Registrable Securities specified
in a written request or requests, within twenty (20) days after
receipt of the written notice from Ecogen, by any Holder or Holders.
(b) Underwriting. If the registration of which Ecogen
gives notice is for a registered public offering by Ecogen of its securities
through an underwriting, then
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Ecogen shall so advise the Holders as a part of the written notice given
pursuant to Section 7.2(a)(i) hereof. In such event, the right of any Holder
to registration pursuant to this Section 7.2 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting
shall (together with Ecogen, and all the Other Selling Stockholders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for underwriting by Ecogen. Notwithstanding any other provision of
this Section 7.2, if the underwriter determines that marketing factors require
a limitation on the number of shares to be underwritten, then the underwriter
may exclude from such registration and underwriting some or all of the
Registrable Securities held by the Holders or the stock held by Other Selling
Stockholders in accordance with this Section 7.2(b). Ecogen shall so advise
all Holders and all Other Selling Stockholders distributing their securities
through such underwriting, and (i) as to the first registration in which
Holders are entitled to participate pursuant to this Section 7.2, the number of
Registrable Securities and other securities that may be included in the
registration and underwriting shall be allocated among all Holders thereof on
the basis that shares held by all the Other Selling Stockholders who are not
Holders shall first be excluded to the extent required and, if further
exclusion is necessary, shares held by the selling Holders shall then be
excluded; provided, however, that, as among the respective Other Selling
Stockholders as a group on the one hand and the Holders as a group on the other
hand suffering such exclusion, the exclusion shall be in proportion, as nearly
as practicable, to the amount of securities entitled to inclusion in such
registration held by each of the Other Selling Stockholders as a group and each
of the Holders at the time of filing the Registration Statement; and (ii) as to
all subsequent registrations, the number of shares of Registrable Securities
and other securities that may be included in the registration and underwriting
shall be allocated among all Other Selling Stockholders and the Holders in
proportion, as nearly as practicable, to the respective amounts of securities
entitled to inclusion in such registration held by all such Other Selling
Stockholders and Holders at the time of filing the Registration Statement. For
purposes of the apportionment provisions in clause (i) above, for any selling
Holder that is a partnership or corporation, the partners, retired partners,
and shareholders of
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such Holder, the estate and family members of such partners and retired
partners, and any trusts for the benefit of any of the foregoing persons shall
be deemed to be a single "selling Holder," and any pro rata reduction with
respect to such selling Holder shall be based upon the aggregate number of
shares carrying registration rights owned by all entities and individuals
included in such "selling Holder," as defined in this sentence. If any Other
Selling Stockholder or Holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to Ecogen
and the underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
7.3 Expenses of Registration. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
this Article VII shall be borne by Ecogen; provided, however, that the
Registration Expenses for the third and all subsequent registrations under
Section 7.1(a) hereof requested by the Holders shall be borne by the requesting
Holders pro rata on the basis of the number of their shares so registered. All
Selling Expenses relating to the securities registered by Holders and, if
applicable, Other Selling Stockholders, and fees and disbursements of counsel,
shall be borne by the Holders or the Other Selling Stockholders, as the case
may be, of such securities pro rata on the basis of the number of their shares
so registered.
7.4 Registration Procedures.
(a) Ecogen shall use its best efforts to register or
qualify the Registrable Securities covered by a Registration Statement under
such other securities or blue sky laws of such United States jurisdictions as
Holder shall reasonably request and do any and all acts and things which may be
necessary or desirable to enable Holder to consummate the public sale or other
disposition in such jurisdictions; provided, however, that Ecogen shall not be
required in connection therewith or as a condition thereto to qualify to do
business or file a general consent to service of process in any such
jurisdictions.
(b) Ecogen represents and warrants that, on the date of
its effectiveness, the Registration Statement will comply in all material
respects with the
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applicable requirements of the Securities Act and the rules thereunder,
including without limitation Rule 415; on the date of its effectiveness, the
Registration Statement will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements made therein not misleading; provided, however,
that no representation is made by Ecogen with respect to information relative
to any Holder; and the Prospectus will not include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that no representation is made by Ecogen
with respect to information relative to any Holder.
(c) If, at any time or times while the Registration
Statement is effective, Ecogen notifies Holder that a development has occurred
or is pending which, based upon consultation with Ecogen's legal counsel,
Ecogen reasonably believes may cause the then current Prospectus not to be in
compliance with applicable securities laws, then Holder shall refrain from
delivering the Prospectus and from making any offers or sales of Registrable
Securities requiring the delivery of the Prospectus until such time as Ecogen
either notifies Holder that the Prospectus complies with such laws or delivers
an amended Prospectus in replacement of the deficient Prospectus. Ecogen shall
use its reasonable best efforts to minimize the time during which Holder must
so refrain, and no more than one (1) such period of refrain shall be imposed
during any period of one hundred eighty (180) days.
(d) At least two (2) Business Days prior to the
initial filing of the Registration Statement or Prospectus and no fewer than
two (2) Business Days prior to the filing of any amendment or supplement
thereto (including any document that would be incorporated or deemed to be
incorporated therein by reference), Ecogen shall furnish each selling Holder,
its legal counsel and the managing underwriter, if any, copies of all such
documents proposed to be filed, which documents (other than those incorporated
or deemed to be incorporated by reference) shall be subject to review of such
Holder, its legal counsel and such underwriters, if any, and Ecogen shall cause
its officers and directors and the independent certified public accountants to
Ecogen to respond to such inquiries as shall be necessary, in the opinion of
respective counsel to Ecogen and any such underwriters, to
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conduct a reasonable investigation within the meaning of the Securities Act.
Ecogen shall not file any such Registration Statement or Prospectus or any
amendments or supplements thereto to which a selling Holder, its legal counsel,
or the managing underwriters, if any, shall reasonably object on a timely basis
(i.e., within two (2) Business Days of receipt thereof).
(e) Ecogen shall promptly notify each selling Holder when
the Registration Statement is declared effective; notify Holder of any
stop-order or similar proceeding by the Commission or any state securities
authority; and furnish such number of Prospectuses, Prospectus supplements and
other documents incident thereto as Holder from time to time may reasonably
request.
(f) In the event of any breach by Ecogen of the
provisions of Section 7.1, 7.2, 7.3 or 7.4, the parties agree that each Holder
will suffer irreparable harm. Accordingly, the parties agree that the
provisions of Sections 7.1, 7.2, 7.3 and 7.4 are specifically enforceable by
each Holder and that each Holder shall be entitled to temporary and permanent
injunctive relief against Ecogen and the other rights and remedies to which
each Holder may be entitled to at law, in equity or under this Agreement for
any such breach.
7.5 Indemnification.
(a) Indemnification by Ecogen. Ecogen shall indemnify
each Holder with respect to which registration, qualification or
compliance has been effected pursuant to this Article VII, each of its
officers, directors, employees, agents and partners, each Person
controlling such Holder within the meaning of Section 15 of the
Securities Act, each underwriter, if any, and each Person who controls
any underwriter within the meaning of Section 15 of the Securities
Act, against all expenses, claims, losses, damages and liabilities (or
actions in respect thereof), including any of the foregoing incurred
in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue
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statement) of a material fact contained in any such Registration
Statement, Prospectus, offering circular or other document or any
amendment or supplement thereto or incident to any such registration,
qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
any violation by Ecogen of the Securities Act or any rule or
regulation thereunder applicable to Ecogen and relating to action or
inaction required of Ecogen in connection with any such registration,
qualification or compliance. Ecogen shall reimburse each such Holder,
each of its officers, directors, employees, agents and partners, and
each Person controlling such Holder, each such underwriter and each
Person who controls any such underwriter for any legal and any other
expenses reasonably incurred in connection with investigating,
preparing or defending any such expense, claim, loss, damage,
liability or action; provided, however, that Ecogen shall not be
liable in any such case to the extent that any such claim, loss,
damage, liability, action or expense arises out of or is based on any
untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information
furnished to Ecogen by an instrument duly executed by such Holder or
underwriter and stated to be specifically for use therein.
(b) Indemnification by the Holders. To the extent set
forth in the second sentence of this Section 7.5(b), each Holder shall, if
Registrable Securities or other securities held by such Holder are included in
the securities as to which such registration, qualification or compliance is
being effected, indemnify Ecogen, each of its directors, officers, employees
and agents, each underwriter, if any, of Registrable Securities covered by such
a Registration Statement, each Person who controls Ecogen or such underwriter
within the meaning of Section 15 of the Securities Act, each other such Holder,
each of such other Holder's officers, directors, employees, agents and
partners, and each Person controlling such Holder within the meaning of Section
15 of the Securities Act against all expenses, claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact made
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by the Holder and contained in any such Registration Statement, Prospectus,
offering circular or other document, or any amendment or supplement thereto or
incident to any such registration, qualification or compliance or based on any
omission (or alleged omission) to state therein a material fact required to be
made by the Holder and stated therein or necessary to make the statements
therein not misleading or any violation by Ecogen of any rule or regulation
promulgated under the Securities Act applicable to Ecogen in connection with
such registration, qualification or compliance as a result of any statement (or
based on any omission to state or alleged omission) required to be made by such
Holder. Each such Holder shall reimburse Ecogen, such other Holders,
directors, officers, employees, agents, partners, Persons, underwriters and
control Persons for any legal or any other expenses reasonably incurred in
connection with investigating, preparing or defending any such expense, claim,
loss, damage, liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission
(or alleged omission) is made in such Registration Statement, Prospectus,
offering circular or other document or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished by the
Holder to Ecogen by an instrument duly executed by such Holder and stated to be
specifically for use therein; provided, however, that the obligations of such
Holders hereunder shall be limited to an amount equal to the proceeds to each
such Holder of Registrable Securities sold as contemplated herein inconnection
with the particular registration, qualification or compliance involved.
(c) Notice. Each party entitled to indemnification under
this Section 7.5 (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom; provided, however, that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or any litigation resulting therefrom, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld), and that the
Indemnified Party may participate in such defense at its own expense; and
provided further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve
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the Indemnifying Party of its obligations under this Section 7.5 unless such
failure is materially detrimental to the Indemnifying Party. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.
7.6 Information by Holder. Each Holder or Holders of Registrable
Securities in any registration shall furnish to Ecogen such information
regarding such Holder or Holders and the distribution proposed by such Holder
or Holders as Ecogen may reasonably request in writing but only to the extent
as shall be required in connection with any registration, qualification or
compliance referred to in this Article VII.
7.7 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may permit
the sale of the Restricted Securities or Control Securities to the public
without registration, Ecogen agrees to:
(a) Use its best efforts to make and keep public
information available as those terms are understood and defined in Rule 144
under the Securities Act;
(b) Use its best efforts to file with the Commission in a
timely manner all reports and other documents required of Ecogen under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements);
(c) For so long as a Holder owns any Restricted
Securities or Control Securities, furnish to the Holder forthwith upon request
(i) a written statement by Ecogen as to its compliance with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act, (ii) a
copy of the most recent annual or quarterly report of Ecogen, and (iii) such
other reports and documents so filed as such Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing a Holder
to sell any such securities without registration; and
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(d) When any Holder qualifies under Rule 144 for the
unrestricted right of sale under Rule 144, Ecogen shall, upon written request
of such Holder (such request to include sufficient detail as to establish how
the Holder so qualifies under Rule 144) and an opinion of counsel satisfactory
to Ecogen, promptly remove any restrictive legend that may have been placed on
any Restricted or Control Securities and issue Ecogen Securities free of such
restrictive or other legends.
7.8 Transfer of Registration Rights. Monsanto may transfer the
rights to cause Ecogen to register the Registrable Securities under Sections
7.1 and 7.2 hereof to an aggregate of no more than five Holders and each such
Holder may transfer or assign such rights to a transferee or assignee in
connection with the transfer or assignment of not less than all of the shares
of the Registrable Securities held by such Holder; provided, however, that
Ecogen shall be entitled to notice of any such transfer of registration rights
within thirty (30) days of the date such transfer is effected.
7.9 Limitations on Subsequent Registration Rights. No owner or
prospective owner of Ecogen Securities or other securities of Ecogen shall have
any registration rights that are inconsistent with the provisions of this
Agreement. Ecogen shall not, without the prior written consent of the Holders
(which consent shall not be unreasonably withheld) of not less than sixty-six
and two-thirds percent (66-2/3%) of the Registrable Securities then held by
Holders, enter into any agreement with any owner or prospective owner of any
Ecogen Securities or other securities of Ecogen that would allow such owner or
prospective owner to include such securities in any registration filed under
this Article VII if such inclusion would adversely affect the rights of any
Holder.
7.10 "Market Stand-off" Agreement. Each Holder hereby agrees that,
to the extent requested by Ecogen and an underwriter of a sale of Ecogen
Securities or other securities of Ecogen for the account of Ecogen and not for
the account of a security holder or holders exercising their respective demand
registration rights, it shall not sell or otherwise transfer or dispose of
(other than to transferees who agree to be similarly bound) any Registrable
Securities during the ninety (90) day period following the effective date of a
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registration statement of Ecogen filed under the Securities Act; provided,
however, that all officers and directors of Ecogen, all Other Selling
Stockholders and all other Persons with registration rights (whether or not
pursuant to this Agreement) shall enter into similar agreements. To enforce
the foregoing covenant, Ecogen may impose stop-transfer instructions with
respect to the Registrable Securities of each Holder (and the shares or
securities of every other Person subject to the foregoing restriction) until
the end of such ninety (90) day period.
7.11 Termination of Registration Rights. The registration rights
granted pursuant to Section 7.1 shall terminate as to each Holder on the third
anniversary of the termination or expiration of the term of the Research and
Development Agreement.
ARTICLE VIII.
REPRESENTATIONS OF MONSANTO
To induce Ecogen to sell the Purchased Shares described in Article II,
Monsanto represents and warrants to Ecogen as follows:
8.1 Investment Purpose. Monsanto is acquiring the Purchased
Shares issued pursuant to this Agreement for purposes of investment and for its
own account and not with a view to the sale or other distribution thereof as
such terms are defined in the Securities Act, as amended, and the regulations
of the Commission promulgated thereunder.
8.2 Accredited Investor. Monsanto is an "accredited investor" as
defined in Rule 501(a) promulgated under the Securities Act.
8.3 Access to Information. Monsanto has been given access to all
information requested by it regarding Ecogen, including information requested
regarding the current financial condition of Ecogen and the risks associated
therewith.
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8.4 Due Diligence. Monsanto has made its own due diligence
investigation of Ecogen and Ecogen's business, and its own analysis of the
merits and risks of the investment made pursuant to this Agreement, and is not
relying on anyone else's analysis or investigation or Ecogen, its business or
the merits and risks of the purchase of the Purchased Shares other than
professionals employed specifically by Monsanto to assist Monsanto.
8.5 Restricted Securities. Monsanto understands that the sale of
the Purchased Shares hereunder has not been registered under the Securities Act
and that the Purchased Shares cannot be resold or transferred by Monsanto
unless it is subsequently registered under the Securities Act or unless an
exemption from such registration is available. In this connection, Monsanto
represents that it is familiar with Rule 144 under the Securities Act as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act.
8.6 Exemption Reliance. Monsanto has been advised that the
Purchased Shares are not being registered under the Securities Act or under
state securities laws, but are being offered and sold pursuant to exemptions
from such laws, and that Ecogen's reliance upon such exemptions is predicated
in part on Monsanto's representations contained herein.
8.7 Authorization and Binding Effect. The execution and delivery
of this Agreement and the performance by Monsanto of its obligations hereunder
are within Monsanto's corporate power, have been duly authorized by proper
corporate action on the part of Monsanto, are not in violation of, or default
under any existing law, rule or regulation of any governmental agency or
authority, any order or decision of any court, the Certificate of Incorporation
or By-Laws of Monsanto or the terms of any agreement, restriction or
undertaking to which Monsanto is a party or by which it is bound, and except
for the notification required by the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the approval of Ecogen's shareholders of the
proposed reverse stock split as described in the Special Proxy Statement, do
not require the approval or consent of the shareholders of Monsanto, any
governmental body, agency or authority or any other person or entity.
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8.8 Brokers. This Agreement was not induced or procured through
any person, firm or corporation acting as a broker or finder for Monsanto.
Monsanto agrees to hold Ecogen harmless from any loss, damage, cost or expense
resulting from any claim by any person, firm or corporation based upon any such
person, firm or corporation having acted as a broker or finder for Monsanto or
any other Person in connection with the transactions contemplated by this
Agreement, the Assignment Agreement and/or the Research and Development
Agreement.
8.9 Stock Legend. Subject to Section 7.7(d) hereof, certificates
representing the Purchased Shares shall bear the following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under any
state securities law and may not be sold or offered for sale in the
absence of an effective registration statement under such act and
applicable state securities laws or an opinion of counsel satisfactory
to the Company that such registration is not required. The securities
represented by this certificate are further subject to certain resale
restrictions and entitled to the benefits set forth in an Investment
Agreement dated as of January 24, 1996 between Ecogen, Inc., a
Delaware corporation, and Monsanto Company, a Delaware corporation
(the "Agreement"). A copy of the Agreement and all amendments
thereto is on file in the office of the Secretary of the Company."
ARTICLE IX.
MISCELLANEOUS
9.1 Survival of Representations and Warranties. Ecogen's
representations and warranties contained in Article III hereof and Monsanto's
representations and warranties set forth in Article VIII hereof shall survive
the Closing for a period of two (2) years. Notwithstanding the foregoing, the
representations and warranties set forth in Sections 3.2, 3.3, 3.7 hereof, to
the extent applicable to the shares of Common Stock to be issued to Monsanto
hereunder, shall survive the Closing indefinitely.
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9.2 Assignment. Except as set forth in Section 7.8, this
Agreement shall not be assigned by either party without the written consent of
the other party. Notwithstanding the foregoing, either party may assign this
Agreement, without such consent, to the purchaser of all its assets, or of all
the assets of its business to which this Agreement or the Research and
Development Agreement relates, and Monsanto, in addition to its rights under
Section 7.8, may assign this Agreement or its rights hereunder to any
Affiliate.
9.3 Notice. All notices, communications and demands required or
permitted to be given or made hereunder or pursuant hereto shall be in writing
and shall be effective when delivered in person or transmitted by telegram or
telecopier (confirmed by mail), addressed as follows:
If to Monsanto:
Monsanto Company
800 North Lindbergh Blvd.
St. Louis, Missouri 63167
Attention: President, Ceregen
Telecopier Number: 314-694-7771
with a copy to
Monsanto Company
800 North Lindbergh Blvd.
St. Louis, Missouri 63167
Attention: General Counsel
Telecopy Number: 314-694-2594
If to any other Holder, at such address and telecopy number as such
Holder shall have furnished Ecogen in writing.
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If to Ecogen:
Ecogen Inc.
2005 Cabot Boulevard West
Langhorne, Pennsylvania 19047
Attention: President
Telecopy Number: 215-757-4156
with a copy to:
Dechert, Price & Rhoads
Princeton Park Corporate Center
997 Lenox Drive
Lawrenceville, New Jersey 08648
Attention: James J. Marino, Esq.
Telecopy Number: 609-520-3259
Either party may change the address designated by notice given by such
party. The parties agree to acknowledge in writing the receipt of any such
notice delivered in person.
9.4 Governing Law. This Agreement is deemed to have been entered
into in the State of Missouri, and its interpretation, construction, and the
remedies for its enforcement or breach are to be applied pursuant to and in
accordance with the laws of the State of Missouri (without regarding to the
conflict of laws principles thereof).
9.5 Validity of Agreement. If any provision of this Agreement is,
becomes, or is deemed invalid or unenforceable in any jurisdiction, such
provision shall be deemed amended to conform to applicable law so as to be
valid, legal and enforceable in such jurisdiction so deeming. The validity,
legality and enforceability of such provision shall not in any way be affected
or impaired thereby in any other jurisdiction. If such provision cannot be so
amended without materially altering the intention of the parties, it shall be
stricken in the jurisdiction so deeming, and the remainder of this Agreement
shall remain in full force and effect.
9.6 Waiver. No waiver of any right under this Agreement shall be
deemed effective unless contained in a writing signed by the party charged with
such waiver, and no
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waiver of any right arising from any breach or failure to perform shall be
deemed to be a waiver of any future such right or of any other right arising
under this Agreement.
9.7 Entire Agreement. This Agreement sets forth and constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof, and supersedes any and all prior agreements, understandings,
promises and representations made by either party to the other concerning the
subject matter hereof and the terms applicable hereto.
9.8 Headings and References; Incorporation of Schedules. The
headings contained in this Agreement are inserted for convenience of reference
only and shall not be a part, control or affect the meaning hereof. All
references herein to Articles and Sections are to the Articles and Sections of
this Agreement. All references herein to Schedules are to the Schedules
hereto, each of which shall be incorporated into and deemed a part of this
Agreement.
9.9 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but which together shall
constitute one and the same instrument.
9.10 No Presumption Against Drafter, Qualifications on Schedules.
The parties to this Agreement have jointly participated in the negotiation and
drafting of this Agreement, except for the Schedules. In the event an
ambiguity or question of intent or interpretation arises, this Agreement,
except for the Schedules, shall be construed as if drafted jointly by the
parties and no presumptions or burdens of proof shall arise favoring any party
by virtue of the authorship of any of the provisions of this Agreement. The
Schedules have been prepared by Ecogen and are solely the responsibility of
Ecogen even if Monsanto provided drafts of or information appearing on such
Schedules. Any Schedule which is qualified by "knowledge", "materiality", or
words of similar import which apply to any representation or warranty which is
not similarly qualified shall be interpreted as if no qualification were stated
on the Schedule.
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IN WITNESS WHEREOF, the parties hereunto have executed this Agreement
as to be effective as of the date first written above.
MONSANTO COMPANY ECOGEN INC.
By: Derek K. Rapp /s/ By: James P. Reilly, Jr. /s/
------------------ ------------------------
Name: Derek K. Rapp James P. Reilly, Jr.
Title: Director, Commercial Chairman and Chief Executive Officer
Partnerships & Alliances
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<PAGE> 1
EXHIBIT 10.123
TECHNOLOGY ASSIGNMENT AGREEMENT
AMONG
MONSANTO COMPANY,
ECOGEN INC.
AND
ECOGEN-BIO INC.
<PAGE> 2
TECHNOLOGY ASSIGNMENT AGREEMENT
This Technology Assignment Agreement (the "Agreement") is made
as of January 24, 1996, by and among Monsanto Company, a Delaware corporation,
with its general offices at 800 North Lindbergh Boulevard, St. Louis, Missouri
63167 ("Monsanto") and Ecogen Inc., a Delaware corporation having its principal
office at 2005 Cabot Boulevard West, Langhorne, PA 19047, and Ecogen-Bio,
Inc., a Delaware corporation (Ecogen Inc. and Ecogen-Bio, Inc are together
referred to herein, unless the context requires otherwise, as "Ecogen").
W I T N E S S E T H
WHEREAS, Ecogen owns a library of certain Bt strains, owns a
library of certain crystal protein genes, and has certain proprietary rights
regarding protein engineering of Bt crystal proteins;
WHEREAS, Monsanto desires to acquire certain of such libraries
and proprietary rights.
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, Monsanto and Ecogen agree as follows:
ARTICLE I: DEFINITIONS
For purposes of this Agreement, the following terms shall have
the meanings hereinafter indicated and will include the plural as well as the
singular:
1.1 "Affiliate" with respect to a specified person is
another person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the specified
person. For purposes of this definition, the term "control" (including the
terms "controlled by" and "under common control with") means the
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<PAGE> 3
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
1.2 "Bt" means the bacterium Bacillus thuringiensis.
1.3 "Bt Gene" means a Bt gene that encodes an insecticidal
protein and has been derived by Monsanto from the Ecogen Bt Technology, the
Licensed Technology, or technology resulting from or developed pursuant to the
Research and Development Agreement.
1.4 "Closing" means the closing of the transactions
contemplated under this Agreement.
1.5 "Closing Date" has the meaning stated in Section 4.1.
1.6 "Commercialization" means the point (a) when an Ecogen
Product has received all applicable U.S. Federal regulatory approvals or (b)
Monsanto has offered an Ecogen Product for sale to the public or to one or more
unrelated third parties generally, either for direct purchase or by a
sublicensing or other arrangement.
1.7 "Ecogen" as used in this Agreement shall include Ecogen
Inc. and its Subsidiaries including, without limitation, Ecogen-Bio Inc.
1.8 "Ecogen Bt Technology" means:
(a) Ecogen's existing Bt strain library, excluding
only those Bt strains identified on Attachment A and their
related Intellectual Property Rights, provided, however, that
Ecogen Bt Technology shall include all genes and proteins
included in the Bt strains identified on Attachment A and their
related Intellectual Property Rights;
<PAGE> 4
(b) Ecogen's existing crystal protein gene library,
including the genes identified on Attachment B but subject to
the Existing License Agreements;
(c) Ecogen's Intellectual Property Rights regarding
protein engineering of Bt crystal proteins, including, without
limitation, the patents and patent applications identified on
Attachment C;
(d) Ecogen's Intellectual Property Rights associated
with the Bt strains and genes being sold to Monsanto,
including, without limitation, the patents and patent
applications identified on Attachment D; and
(e) all research records related to the foregoing,
including, but not limited to, laboratory notebooks, test data,
diagrams, and methods of analyses, whether contained in
documentary form or electronic or magnetic medium;
provided, however, the term "Ecogen Bt Technology" shall not include the
Excluded Technology.
1.9 "Ecogen License Agreement" has the meaning stated in
Section 2.4.
1.10 "Ecogen Product" means a product which incorporates or
consists of a Bt Gene. The term "Ecogen Product" shall not include any gene or
genes sourced from or resulting from property or Intellectual Property Rights
purchased, acquired, or licensed by Monsanto from parties other than Ecogen,
provided that Ecogen has not then done any work or provided information with
respect to such gene under the Research and Development Agreement.
1.11 "Excluded Technology" means:
(a) those Bt strains identified on Attachment A and
the related Intellectual Property Rights; provided, however,
that "Excluded Technology" shall not include genes and proteins
included in the Bt strains identified on Attachment A;
(b) Intellectual Property Rights whose application is
solely for the use of Bt as a bioinsecticide;
(c) Intellectual Property Rights relating to
fermentation and formulation technology;
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<PAGE> 5
(d) Intellectual Property Rights relating to
insectary technology;
(e) Intellectual Property Rights relating to the
movement of Bt genes from Bt and back into Bt without foreign
DNA;
(f) the Bt strains listed on Attachment E acquired
from the National Regional Research Laboratory and not owned by
Ecogen; and
(g) the Bt strains listed on Attachment F acquired
from the Institut Pasteur and not owned by Ecogen.
1.12 "Existing License Agreements" means the agreements
identified on Schedule 1.12.
1.13 "Gene Success Fee" has the meaning given such term in
Section 3.2(a).
1.14 "Gene Value" means that percentage of the value of any
Ecogen Product, measured with respect to actual or anticipated sales prices or
license fees of such Ecogen Product, attributable to a trait or traits of a Bt
Gene.
1.15 "In Planta Application" means (i) use, development, or
commercialization of transgenic plants, seeds, cells or components thereof
(collectively "Plants") or (ii) use, development, or commercialization of
genetic material used so that Plants express a new material or an existing
material at levels different from the levels that such Plants otherwise would.
1.16 "Intellectual Property Rights" means (i) all patent
rights and all right, title and interest in and to all letters patent and
applications for letters patent, and other government issued or granted indicia
of invention ownership including any substitutions, extensions, reissues,
divisions, continuations or continuations-in-part or applications thereof or
therefor throughout the world; (ii) all rights, title and interest in and to
all trade secrets and trade secret rights arising under the common law, state
law, federal law and laws of foreign countries; (iii) all copyright rights, and
all other literary property and author rights whether or not copyrightable; and
all rights, title and interest in and to all copyrights, copyright
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<PAGE> 6
registrations, certificates of copyright and copyrighted interests throughout
the world; (iv) all rights, title and interest in and to all know-how whether
or not protectable by patent, copyright or trade secret law; and (v) all
goodwill associated with any of the foregoing; provided, however, that the term
"Intellectual Property Rights" shall not include any trademarks, trade names or
service marks, whether registered or arising under the common law, state law,
federal law or the laws of foreign countries or any registrations thereof or
interests therein.
1.17 "Knowledge" with respect to Ecogen means the actual
knowledge of an executive officer of Ecogen or an officer or employee of
Ecogen, or a subsidiary, with primary oversight responsibility for Bt
technology.
1.18 "Licensed Technology" means those Bt strains identified
on Attachment A and the related Intellectual Property Rights. The Licensed
Technology will be licensed at Closing to Monsanto pursuant to the Monsanto
License Agreement.
1.19 "Microbial Application" means (i) use, development, or
commercialization of insecticidal, bacterial, fungicidal, pesticidal, medical,
veterinary, scientific, nutritional, food additive or preservative, materials,
textiles and similar products; provided, however, that such products shall not
include any product for an In Planta Application.
1.20 "Monsanto License Agreement" has the meaning stated in
Section 2.2.
1.21 "Net Sales" means the gross revenue of Monsanto, its
affiliates or its or their assignees from the sale or license of Ecogen
Products to distributors or other unrelated third parties during the applicable
period: less,
(a) trade and quantity discounts or rebates and cash
discounts; and
(b) credits or allowances given or made for rejection
or return of previously sold Ecogen Product.
Net Sales shall not include any (a) transportation or transportation insurance
charges; (b) packing charges attributed to the Ecogen Product and separately
stated on the invoice; or (c)
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<PAGE> 7
any applicable sales tax, use tax and other similar governmental charges levied
directly on the sale, transportation or delivery of the Ecogen Product.
1.22 "Patents" means the patents and patent applications,
whether U.S. or foreign, included in the Ecogen Bt Technology, including,
without limitation, the patents identified on Attachment C and Attachment D.
1.23 "Research and Development Agreement" means the Research
and Development Agreement between Monsanto and Ecogen dated of even date
herewith.
ARTICLE II: ASSIGNMENT OF BT TECHNOLOGY
2.1 Sale and Assignment. On the Closing Date and subject to
the terms and conditions of this Agreement and the representations and
warranties of the parties each to the other as hereinafter set forth, Monsanto
agrees to purchase, accept and assume from Ecogen and Ecogen agrees to sell,
assign, and deliver to Monsanto free and clear of all debts, liens, security
interests, mortgages, trusts, claims or other liabilities (other than those
identified on Schedule 2.1(a)), all of its worldwide right, title and interest
(subject to the rights granted back to Ecogen pursuant to Section 2.4) in and
to the Ecogen Bt Technology. Except as set forth on Schedule 2.1(b), at
Closing, Ecogen shall deliver to Monsanto physical possession of (i) a working
copy of each Bt strain and each crystal protein gene included in the Ecogen Bt
Technology or the Licensed Technology and (ii) a computer database, a
microfiche library and other documentation which contain in the aggregate the
Ecogen Bt Technology described in Section 1.8(e) hereof. The microfiche
library and other documentation referred to in the preceding sentence
containing proprietary information with respect to technology of Ecogen, other
than the Ecogen Bt Technology or the Licensed Technology, shall be delivered by
Ecogen to a third party reasonably acceptable to both Ecogen and Monsanto which
party shall hold the microfiche library and other documentation in escrow for
the benefit of Monsanto. Monsanto shall have the right to access, review, and
retrieve copies of the microfiche library and other documentation upon at least
ten (10) days prior written notice to
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<PAGE> 8
Ecogen, which notice shall specify the information that Monsanto desires to
copy or retrieve. Monsanto shall pay any costs of such escrow arrangement.
2.2 License of Certain Technology to Monsanto. At the
Closing, Ecogen shall grant to Monsanto a license to use the Licensed
Technology in In Planta Applications pursuant to a License Agreement in the
form of Exhibit 2.2 (the "Monsanto License Agreement").
2.3 Assignment of Patents. On the Closing Date and subject
to the terms and conditions of this Agreement and the representations and
warranties of the parties each to the other as hereinafter set forth, Monsanto
agrees to purchase, accept and assume from Ecogen and Ecogen agrees to sell,
assign, and deliver to Monsanto all Patents and all Patents shall be deemed
assigned to Monsanto. At Closing, documents in the form of Exhibit 2.3 shall
be delivered to Monsanto for the recordation of U.S. Patents in the U.S.
Patents and Trademark Office to evidence such assignment, the expenses for
which will be assumed by Monsanto.
2.4 License of Certain Technology to Ecogen. At the
Closing, Monsanto shall grant to Ecogen a license to the Ecogen Bt Technology
for Microbial Applications, pursuant to a license agreement in the form of
Exhibit 2.4 (the "Ecogen License Agreement").
2.5 Covenant Not to Sue. Except for its rights under the
Ecogen License Agreement, Ecogen agrees that it shall not assert any of its
United States or foreign Patents against Monsanto or its Affiliates or its or
their In Planta Application customers or licensees for the manufacture, use,
and/or sale of products using or produced using the Ecogen Bt Technology or
Licensed Technology for In Planta Applications.
7
<PAGE> 9
2.6 Excluded Liabilities. No liability or obligation of
Ecogen is to be assumed by Monsanto hereunder except as specifically provided
herein.
2.7 Ancillary Agreement. Ecogen and Monsanto shall execute
and deliver at Closing an agreement in the form set forth as Exhibit 2.7 with
respect to certain obligations of the parties after Closing.
2.8 Termination of Existing License Agreement. As of the
Closing the License Agreements dated October 10, 1991 and May 15, 1987 by and
between the parties hereto shall be deemed terminated and the parties shall
have no further obligations thereunder.
ARTICLE III: PURCHASE PRICE
3.1 Payment at Closing. As consideration for the assignment
of the Ecogen Bt Technology and the grant of the license pursuant to the
Monsanto Licensee Agreement, Monsanto agrees to pay in cash at Closing the sum
of five million dollars (the "Closing Payment") by electronic funds transfer of
immediately available funds to an account to be designated by Ecogen prior to
Closing.
3.2 Commercialization Payments. In addition to the Closing
Payment and as additional consideration for the sale and assignment of the
Ecogen Bt Technology and the license of the Licensed Technology pursuant to the
Monsanto License Agreement, Monsanto shall pay Ecogen a Gene Success Fee and a
Commercialization Success Fee in accordance with the following for the
commercialization success of the Ecogen Bt Technology, the Licensed Technology,
and the technology developed, or to which Monsanto is granted rights, under the
Research and Development Agreement. Ecogen's sole and exclusive remedy against
Monsanto for nonpayment of the Gene Success Fee or the Commercialization
Success Fee shall be an action for payment of such fees. Ecogen shall have no
claim, lien, right, title or interest in the Ecogen Bt Technology because of or
arising out of Monsanto's obligation to pay the Gene Success Fee or the
Commercialization Success Fee.
8
<PAGE> 10
(a) Gene Success Fee. Commencing at such time as
Monsanto has (i) successfully inserted at least five (5) different Bt Genes
into the seeds of one or more species of plants, and (ii) either (a) completed
the Commercialization of an Ecogen Product, or (b) submitted at least three (3)
Bt Genes to the applicable U.S. Federal regulatory agency for approval, for
each different Bt Gene, in excess of the five (5) Bt Genes referred to above,
which is successfully inserted into the seed of one or more plant species (a
"Gene Event") by Monsanto, Monsanto shall pay Ecogen an annual fee (the "Gene
Success Fee") of One Hundred Thousand Dollars ($100,000) per Bt Gene, but in no
event more than One Million Dollars ($1,000,000) per calendar year. The Gene
Success Fee shall be payable on the next June 1 or December 1, as the case may
be, following such Gene Event and on each June 1 or December 1 thereafter;
provided, however, that Monsanto's obligation to pay the Gene Success Fee with
respect to any specific Bt Gene shall terminate on the earlier to occur of (i)
written notice by Monsanto of the termination of its efforts to further develop
the particular Bt Gene which is the subject of a Gene Success Fee, or (ii)
Commercialization of an Ecogen Product which contains such Bt Gene.
(b) Commercialization Success Fee.
(i) In addition to other amounts due
hereunder, Monsanto shall pay Ecogen an amount (the "Commercialization Success
Fee") with respect to the amount of Net Sales attributable to Gene Value
determined according to the formulae and guidelines set forth on Exhibit
3.2(a). The Gene Value shall be determined by mutual agreement of Monsanto and
Ecogen in accordance with Exhibit 3.2(a) hereof for each Bt Gene and with
respect to each Ecogen Product. Monsanto and Ecogen acknowledge that the Gene
Value may be different for each Ecogen Product and that the Gene Value may
fluctuate annually depending upon various factors, including, but not limited
to, market conditions at the applicable time, the amount of time the Ecogen
Product has been on the market, and whether other genes, whether Bt Genes or
otherwise, have been inserted by Monsanto into the Ecogen Product.
(ii) Determination of the Amount of the
Commercialization Success Fee. To enable Ecogen to prepare its determination
of the Gene Value and to assist it in connection with its internal forecasts of
revenues, Monsanto shall provide Ecogen with
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<PAGE> 11
written notice of its intent to commence marketing an Ecogen Product (a "Notice
to Sell") as soon as reasonably practicable prior to the anticipated date of
the Commercialization of such Ecogen Product. Monsanto shall also provide
Ecogen with information that Monsanto believes would be helpful for
determination of the Gene Value of the Ecogen Product and to enable Ecogen to
prepare for its own internal use a three-year forecast of Net Sales for such
Ecogen Product. Monsanto shall have no responsibility for the accuracy of
Ecogen's three-year forecasts. Ecogen agrees to hold all such information in
confidence, not to disclose it to any third party, and not to use the
information for any purpose other than in connection with its internally
prepared forecasts and in the determination of the Gene Value. Unless
otherwise agreed, the parties shall engage an independent third party
reasonably acceptable to both parties, the costs and expenses of which shall be
borne equally by both parties, to assist the parties to negotiate in good faith
and in accordance with the guidelines listed on Exhibit 3.2(a) attached hereto
the initial Gene Value for the Ecogen Product into which the Bt Gene has been
inserted. If either party believes that any Gene Value should be changed for
the current year or the following year, that party may, prior to July 15 of any
year, give a notice (a "Notice of Change") stating information relevant to the
party's desired change to a particular Gene Value; provided, however, that
neither party shall give any Notice of Change with respect to a particular
Ecogen Product more often than once in any calendar year. Unless otherwise
agreed, the parties shall engage an independent third party reasonably
acceptable to both parties, the costs and expenses of which shall be borne
equally by both parties, to assist the parties to negotiate in good faith and
in accordance with the guidelines listed on Exhibit 3.2(a) any such change or
amendment. In the event that the parties fail to agree on the Gene Value
within thirty (30) days of the Notice to Sell or a Notice of Change, then such
determination shall be made by such independent third party who shall be
instructed to make such determination within forty-five (45) days. In the
event that a party disputes any determination by such third party, or if the
parties are unable to agree on the independent third party, the determination
of the Gene Value shall be submitted to arbitration in accordance with Exhibit
3.2(b) attached hereto. Unless otherwise agreed, any change in a Gene Value
pursuant to a Notice of Change shall be effective the first day of the selling
season in the year for which the Notice of Change is given and, if applicable,
Commercialization Success Fees paid or accrued with respect to the current year
shall be
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<PAGE> 12
adjusted to reflect the change to Gene Value. Any amounts due, either from
Monsanto or Ecogen because of such change shall be paid within thirty (30) days
of the determination of the changed Gene Value. The selling season shall be
deemed to begin on November 1 of each year. Each party shall be entitled to
submit to the arbitrator a proposed Gene Value, however the arbitrator shall
not be required to select either of the Gene Values submitted for
consideration. This procedure shall be implemented for each Ecogen Product to
be marketed and sold by Monsanto or on its behalf by third parties; provided,
however, that if Ecogen shall refuse to take any action whatsoever in the
determination of a Gene Value whether by reason of refusal or failure to act,
rejection, or repudiation or termination of this Agreement or otherwise
(provided, further that if in any instance Ecogen and Monsanto are not able to
reach agreement on a Gene Value, such failure to reach agreement shall not be
deemed a refusal for purposes of this sentence), the Gene Value shall be
determined by the last independent third party.
(iii) Payment of the Commercialization
Success Fee. Monsanto's obligation to pay the Commercialization Success Fee
shall commence, with respect to a particular Ecogen Product, on the date of
Commercialization and terminate on the later of (i) ten (10) years from the
date of the Commercialization, or (ii) the expiration of the last to expire
patent covering the Ecogen Bt Technology acquired hereunder or developed under
the Research and Development Agreement and used in the particular Ecogen
Product for which the Commercialization Success Fee is due. The
Commercialization Success Fee shall be due, with respect to sales of Ecogen
Product in each calendar quarter, on or before the fifteenth (15th) day of the
second month after the end of each such quarter. All amounts shall be paid by
electronic funds transfer in immediately available funds to a bank account
designated in writing by Ecogen. Monsanto shall be entitled to a credit
against all Commercialization Success Fees due with respect to a calendar year
for all Gene Success Fees made or accrued during such year. The
Commercialization Success Fee due pursuant to Section 3.2(b) shall not apply to
the sale or license by Monsanto of all or substantially all of the Ecogen Bt
Technology; provided, however, the provisions of this Section 3.2 shall apply
to any such recipient or licensee of all or substantially all of the Ecogen Bt
Technology and Monsanto and such recipient or licensee shall be obligated to
pay to Ecogen all amounts due to Ecogen
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under this Section 3.2 with respect to activities by such recipient or licensee
following such sale or license as if such activities were performed by
Monsanto. The provisions of this Section 3.2 shall apply to any such recipient
or licensee to the same extent and in the same way that such provisions applied
to Monsanto. Monsanto shall give Ecogen prior notice of the sale or license of
all or substantially all of the Ecogen Bt Technology.
(c) Quarterly Reports. On or before the 15th day of
the second month following the end of each calendar quarter, Monsanto shall
provide Ecogen with a written statement with respect to such period, (i)
specifying the Net Sales of Ecogen Product during the period and the amount of
Commercialization Success Fee due, if any, and (ii) the occurrence of any Gene
Event and any Gene Success Fee due, if any, during such quarter. Monsanto shall
give Ecogen prompt written notice of the Commercialization of each Ecogen
Product.
(d) Records and Audit Rights. Monsanto shall keep
complete and accurate records pertaining to the occurrence of a Gene Event and
the sale of Ecogen Product appropriate to determine all Gene Success Fees and
Commercialization Success Fees due hereunder. At the request of Ecogen, an
independent accountant selected by Ecogen and acceptable to Monsanto shall have
access limited to once per calendar year at Monsanto's principal place of
business during ordinary business hours to such records maintained by Monsanto
as may be necessary to determine the amount of any Gene Success Fee or
Commercialization Success Fee due with respect the preceding year. If deemed
necessary or desirable in the sole opinion of the independent accountant, the
independent accountant shall at Ecogen's expense be permitted to consult with
and obtain the assistance of consultants selected by the independent accountant
and acceptable to Monsanto. Such acceptance shall not be unreasonably
withheld. Neither the auditor nor the selected consultants shall disclose to
Ecogen or any third parties or use any information relating to the business of
Monsanto other than information relating solely to the accuracy of the reports
and payments due under this Agreement. All fees for such audit shall be borne
by Ecogen unless the audit shows an under-reporting of payments due in excess
of 5%, in which case the cost of such audit shall be borne by Monsanto,
provided that such underpayment is due to Monsanto's under reporting of Net
Sales.
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3.3 Payment Allocation. Monsanto shall have sole discretion
to allocate the Closing Payment among the various rights assigned and licensed
hereunder.
ARTICLE IV: CLOSING
4.1 Closing. The Closing of this Agreement shall take place
on January 24, 1996 at 10:00 a.m. EST provided all of the conditions to Closing
stated in Article X and Article XI of the Agreement shall have be satisfied or
waived on or before such date. In the event that all of the conditions to
Closing stated in Article X and Article XI of this Agreement shall not have
been satisfied or waived on or before such date, the Closing shall take place
as soon as practicable (but not later than the third Business Day) after the
satisfaction or waiver of such conditions and in no event later than July 31,
1996. Monsanto and Ecogen shall use their efforts to cause the satisfaction of
such conditions. If such conditions of Closing have not been satisfied or
waived and if Closing shall not have occurred on or before July 31, 1996, then
this Agreement shall be terminated, in which case this Agreement shall be
deemed terminated and neither party shall have any obligation to the other
hereunder, other than Ecogen's obligation to pay one-half of the HSR filing fee
pursuant to Section 9.1. The Closing shall take place at the offices of Ecogen
or such other place as the parties may agree.
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF ECOGEN
Ecogen represents and warrants to Monsanto as of the date of
this Agreement and as of the Closing Data that:
5.1 Organization and Standing; Corporate Power. Ecogen is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Ecogen has all requisite legal and corporate
power and authority to own the Ecogen Bt Technology, to execute and deliver
this Agreement, and to perform its obligations under the terms of this
Agreement. Ecogen has furnished Monsanto with true, correct and complete
copies of Ecogen's Certificate of Incorporation and By-Laws, each as amended
and currently in effect.
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5.2 Authorization, Validity of this Agreement. All
corporate action on the part of Ecogen, its officers, directors and
stockholders necessary for Ecogen's authorization, execution and delivery of
and performance of its obligations under this Agreement has been taken. This
Agreement, and at Closing the Monsanto License Agreement will, constitute valid
and legally binding obligations of Ecogen enforceable against Ecogen in
accordance with their respective terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of
equity governing specific performance, injunctive relief or other equitable
remedies.
5.3 Title to the Ecogen Bt Technology and Licensed
Technology.
(a) Except as set forth on Schedule 5.3, Ecogen has
good title to the Ecogen Bt Technology and the Licensed Technology free of all
liens, claims or encumbrances, other than the security interest granted to
Monsanto pursuant to the Security Agreement dated November 2, 1995 by and
between Ecogen and Monsanto. Notwithstanding Schedule 5.3, Ecogen represents
and warrants that the license to Bio Integrated Technology S.r.l. is a license
of rights only to certain Bt strains for use in Europe, Africa and certain
"Middle Eastern" countries, and not the genes or proteins included therein for
any purpose.
(b) Except as set forth on Schedule 5.3, the Patents
are subsisting and have not been adjudged invalid or unenforceable, in whole or
in part, and there is no litigation or proceeding pending concerning the
validity or enforceability of the Patents. To Ecogen's Knowledge, each of the
issued Patents is valid and enforceable. To Ecogen's Knowledge, there has been
no infringement by others of the issued Patents or patent rights in the Ecogen
Bt Technology or Licensed Technology.
(c) Except as set forth on Schedule 5.3, no claim has
been made that the use of any of the Patents, the Ecogen Bt Technology or the
Licensed Technology does or may violate the rights of any third person, and to
Ecogen's Knowledge there is no infringement by Ecogen of the patent rights, or
other Intellectual Property Rights, of others in connection with the Ecogen Bt
Technology or Licensed Technology.
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(d) Except as set forth on Schedule 5.3, Ecogen is
the sole and exclusive owner of the entire and unencumbered right, title and
interest in and to each of the Patents, free and clear of any liens, charges,
encumbrances and adverse claims, including without limitation pledges,
assignments, licenses, shop rights and covenants by Ecogen not to sue third
persons, except only for the rights created by the Security Agreement dated
November 2, 1995 by and between Ecogen and Monsanto and except for the Existing
License Agreements. Except for the Existing License Agreements, Ecogen has not
granted any license or rights to any other entity or person with respect to the
Ecogen Bt Technology or the Licensed Technology, which license or rights are
still in effect.
5.4 Compliance with Other Instruments. The execution,
delivery, and performance of this Agreement or the Monsanto License Agreement
does not and will not materially conflict with, or result in a material breach
or violation of the terms, conditions or provisions of, or constitute a
material default under, or result in the creation or imposition of any material
lien pursuant to the terms of, the Certificate of Incorporation or By-Laws of
Ecogen or any applicable statute, law, rule or regulation or any applicable
state or federal order, judgment or decree or any indenture, mortgage, lease or
other agreement or instrument to which Ecogen, or any of its properties, is
subject and which Ecogen is required to file as an exhibit to its Form 10-K
which conflict, breach or violation would have a material adverse effect on
Ecogen.
5.5 Litigation and Patent Claims. Except as set forth in
Schedule 5.5 hereof there are no legal actions pending or, to Ecogen's
Knowledge, threatened, which question the validity of this Agreement or any
action taken or to be taken in connection therewith or otherwise could impair
the ability of Ecogen to perform its obligations under this Agreement or the
Monsanto License Agreement. Except as set forth in Schedule 5.5 there are no
pending or, to the Knowledge of Ecogen, threatened claims against Ecogen or its
Affiliates for patent infringement with respect to any Ecogen Bt Technology
hereby assigned and transferred or licensed to Monsanto.
15
<PAGE> 17
5.6 Governmental Consent. Except as contemplated in Section
9.1 and except for the filings with the United States Patent and Trademark
Office, no consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of Ecogen is required in
connection with the valid execution and performance by Ecogen of this Agreement
or the Monsanto License Agreement or the consummation of the transactions
contemplated by this Agreement or the Monsanto License Agreement.
ARTICLE VI: REPRESENTATIONS AND WARRANTIES OF MONSANTO
Monsanto represents and warrants to Ecogen as of the date of
this Agreement and as of the Closing Data that:
6.1 Organization and Standing; Corporate Power. Monsanto is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Monsanto has all requisite legal and corporate
power and authority to execute and deliver this Agreement, and to perform its
obligations under the terms of this Agreement.
6.2 Authorization, Validity of this Agreement. All
corporate action on the part of Monsanto, its officers, directors, and
stockholders necessary for Monsanto's execution and delivery of and performance
of its obligations under this Agreement has been taken. This Agreement, and at
Closing the Ecogen License Agreement will, constitute valid and legally binding
obligations of Monsanto enforceable against Monsanto in accordance with their
respective terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of equity governing
specific performance, injunctive relief or other equitable remedies.
ARTICLE VII: COVENANTS OF ECOGEN
Between the date hereof and the Closing Date, except as
contemplated by this Agreement or with the prior written consent of Monsanto,
Ecogen shall conduct the business and operations of Ecogen in accordance with
the following:
16
<PAGE> 18
7.1 Affirmative Covenants. Ecogen shall:
(a) From the date of this Agreement until the first
to occur of (i) the termination of this Agreement or (ii) the Closing Date,
promptly inform Monsanto of any matter which may materially adversely affect
the Ecogen Bt Technology or Licensed Technology, and, if any representation or
warranty of Ecogen set forth herein was untrue in any respect when made or
would be untrue on or as of the Closing Date, promptly so notify Monsanto.
(b) Give to Monsanto and its respective counsel,
accountants, engineers and other authorized representatives, reasonable access
during normal business hours to the Ecogen Bt Technology and the Licensed
Technology necessary to complete inspections or audits and furnish or cause to
be furnished to Monsanto and its authorized representatives all information
relating to the Ecogen Bt Technology and the Licensed Technology as they may
reasonably request; provided, however, that no investigation or examination by
Monsanto in connection with the foregoing shall in any way diminish or obviate
any representation or warranty of Ecogen made in this Agreement and in the
Schedules hereto or in connection herewith;
(c) Notify Monsanto of any litigation or
administrative proceeding pending or threatened against it or the Ecogen Bt
Technology or Licensed Technology which challenges the transactions
contemplated hereby; and
7.2 Negative Covenants. Ecogen shall not:
(a) Create, assume or permit to exist any mortgage,
pledge, lien or other charge or encumbrance, license or rights affecting the
Ecogen Bt Technology or the Licensed Technology, other than those in favor of
Monsanto;
(b) Sell, assign, lease or otherwise transfer or
dispose of any of the Ecogen Bt Technology and the Licensed Technology without
the prior written consent of Monsanto; or
(c) Waive any right relating to the Ecogen Bt
Technology and the Licensed Technology.
17
<PAGE> 19
ARTICLE VIII: COVENANTS OF MONSANTO
8.1 Representations and Warranties. From the date of this
Agreement until the first to occur of: (i) the termination of this Agreement
or (ii) the Closing Date, Monsanto shall promptly inform Ecogen if any
representation or warranty of Monsanto set forth herein was untrue in any
respect when made or would be untrue on or as of the Closing Date.
ARTICLE IX: JOINT COVENANTS
Ecogen and Monsanto shall act in accordance with the following:
9.1 Hart-Scott-Rodino Filing; Other Regulatory Approvals. On
December 15, 1995, Monsanto and Ecogen filed with the Federal Trade Commission
and the Antitrust Division of the Department of Justice the notification and
other information required to be filed under the premerger notification rules
promulgated by the Federal Trade Commission pursuant to Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). On or
before Closing, or if Closing does not occur on or before January 29, 1996,
Ecogen shall reimburse Monsanto for one-half of the filing fees paid by
Monsanto in connection with such filing. Monsanto shall be entitled to a credit
against the Closing Payment for such amount.
9.2 Other Governmental Consents. Promptly following the
execution of this Agreement, on or before Closing the parties will file with
the appropriate governmental authorities any other requests for approval or
waiver that are required in connection with the transactions contemplated
hereby, and shall jointly diligently and expeditiously prosecute, and shall
cooperate fully with each other in the prosecution, and shall cooperate fully
with each other in the prosecution of, such requests for approval or waiver in
all proceedings necessary to secure such permits, approvals or waivers.
18
<PAGE> 20
9.3 Further Assurances. Ecogen and Monsanto shall cooperate
and take such actions, and execute such other documents, at Closing or
subsequently, as may be reasonably requested by the other in order to carry out
the provisions and purposes of this Agreement.
ARTICLE X: CONDITIONS PRECEDENT TO MONSANTO'S OBLIGATIONS
The obligations of Monsanto to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, prior to or at
Closing, of each of the following conditions, any of which Monsanto may waive
in writing:
10.1 Instruments of Conveyance and Transfer. Ecogen shall
have delivered to Monsanto:
(a) instruments of assignment duly executed by Ecogen
for the assignment and conveyance of all right, title and interest in and to
Ecogen Bt Technology in form and substance reasonably satisfactory to Monsanto;
(b) instruments of assignment duly executed by Ecogen
for the assignment of the Patents and patent applications included in the
Ecogen Bt Technology in the form set forth as Exhibit 2.3;
(c) such other instruments required and reasonably
requested by Monsanto to effect the sale, assignment, and delivery of the
Ecogen Bt Technology to Monsanto.
10.2 Physical Possession of Bt Libraries. Ecogen shall have
delivered to Monsanto physical possession of a set of each Bt strain and each
crystal protein gene included in the Ecogen Bt Technology or the Licensed
Technology and a computer database, a microfiche library and other
documentation which contain in the aggregate the Ecogen Bt Technology described
in Section 1.8(e) hereof.
10.3 Monsanto License Agreement. Ecogen shall have executed
and delivered the Monsanto License Agreement.
19
<PAGE> 21
10.4 Ecogen License Agreement. Ecogen shall have executed
and delivered the Ecogen License Agreement.
10.5 Closing Certificate. Monsanto shall have received a
Certificate, dated as of the Closing Date and executed by an officer of Ecogen
to the effect that the representations and warranties of Ecogen contained in
this Agreement are true and correct in all respects on and as of the Closing as
though made on and as of such date.
10.6 Representations, Warranties and Covenants.
(a) All representations and warranties of Ecogen made
in this Agreement, or in any Exhibit or certificate delivered pursuant hereto
shall be true and correct in all material respects on and as of the Closing
Date with the same force and effect as if made on and as of that date, except
for changes contemplated by this Agreement.
(b) All of the terms, covenants and conditions to be
complied with and performed by Ecogen on or prior to the Closing Date shall
have been complied with or performed in all material respects.
10.7 Adverse Proceedings. No suit, action or governmental
proceeding shall have been instituted or threatened against, and no order,
decree, or judgment of any court, agency, or other governmental authority shall
have been rendered against, Ecogen which Monsanto reasonably believes would
render this Agreement unlawful, as of the Closing Date, or adversely effect the
transactions contemplated by this Agreement in accordance with its terms.
10.8 HSR Act Approval. The applicable HSR Waiting Period
shall have expired or shall have been terminated and there shall not be in
effect any governmental order or legal proceeding pending or threatened to
prohibit the transactions contemplated by this Agreement.
20
<PAGE> 22
10.9 Ancillary Agreement. Ecogen shall have executed and
delivered an agreement in the form set forth as Exhibit 2.7 with respect to
certain obligations of the parties after Closing.
10.10 Research and Development Agreement. Ecogen shall have
executed and delivered the Research and Development Agreement.
10.11 Investment Agreement. The transactions contemplated
under the Investment Agreement by and between Ecogen Inc. and Monsanto dated of
even date herewith shall have been closed simultaneously with the Closing
hereunder.
ARTICLE XI: CONDITIONS PRECEDENT TO ECOGEN'S OBLIGATIONS
The obligations of Ecogen to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, prior to or at
Closing, of each of the following conditions, any of which Ecogen may waive in
writing:
11.1 Payment of Purchase Price. At Closing, Monsanto shall
have delivered the Closing Payment.
11.2 Ecogen License Agreement. Monsanto shall have executed
and delivered the Ecogen License Agreement.
11.3 Monsanto License Agreement. Monsanto shall have
executed and delivered the Monsanto License Agreement.
11.4 Closing Certificate. Ecogen shall have received a
Certificate, dated as of the Closing Date and executed by an officer of
Monsanto, to the effect that the representations and warranties of Monsanto
contained in this Agreement are true and correct in all respects on and as of
the Closing as though made on and as of such date.
21
<PAGE> 23
11.5 Representations, Warranties and Covenants.
(a) All representations and warranties of Monsanto
made in this Agreement, or in any Exhibit or certificate delivered pursuant
hereto shall be true and complete in all material respects on and as of the
Closing Date with the same force and effect as if made on and as of that date.
(b) All terms, covenants, and conditions to be
complied with and performed by Monsanto on or prior to the Closing Date shall
have been complied with or performed in all material respects.
11.6 Adverse Proceedings. No suit, action or governmental
proceedings shall have been instituted or threatened against and no order,
decree, or judgment of any court, agency, or other governmental authority shall
have been rendered against, Monsanto which it is reasonably believed would
render it unlawful, as of the Closing Date, or adversely effect the
transactions contemplated by this Agreement in accordance with its terms.
11.7 HSR Act Approval. The applicable HSR Waiting Period
shall have expired or shall have been terminated and there shall not be in
effect any governmental order or legal proceeding pending or threatened to
prohibit the transactions contemplated by this Agreement.
11.8 Ancillary Agreement. Monsanto shall have executed and
delivered an agreement in the form set forth as Exhibit 2.7 with respect to
certain obligations of the parties after Closing.
11.9 Research and Development Agreement. Monsanto shall have
executed and delivered the Research and Development Agreement.
11.10 Investment Agreement. The transactions contemplated
under the Investment Agreement by and between Ecogen Inc. and Monsanto dated of
even date herewith shall have been closed simultaneously with the Closing
hereunder.
22
<PAGE> 24
ARTICLE XII: MISCELLANEOUS
12.1 Survival of Representations, Warranties and Covenants.
The representations, warranties, covenants, indemnities and agreements of
Ecogen and Monsanto contained in this Agreement shall survive the Closing for a
period of two (2) years. Notwithstanding the foregoing, the representations and
warranties set forth in Section 5.3 hereof shall survive the Closing
indefinitely and the covenants contained in Sections 2.5 and 3.2 shall survive
according to the terms of such Section.
12.2 Attorney's Fees and Costs. Should either party default
in the performance of any of the terms or conditions of this Agreement, which
default results in the filing of a lawsuit, the prevailing party in such
lawsuit shall be entitled to reasonable attorneys' fees and costs as shall be
determined by the court.
12.3 Successors and Assigns. This Agreement shall be binding
upon, and inure to the benefit of, the respective permitted successors and
assigns of the parties.
12.4 Construction. This Agreement shall be construed and
enforced in accordance with the laws of the State of Missouri. If any provision
of this Agreement is held to be invalid or unenforceable, all other provisions
shall nevertheless continue in full force and effect.
12.5 Notices. All notices or other communications which any
party to this Agreement may desire or be required to give hereunder shall be in
writing and shall be given by personal delivery, by mailing the same by
registered or certified mail, postage prepaid, return receipt requested, or by
telefax followed up by a nationally recognized overnight carrier, addressed:
23
<PAGE> 25
(1) If to Monsanto:
Monsanto Company
Ceregen Group
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Attn: President
Telefax Number: 314-694-7771
with a copy to:
Monsanto Company
Ceregen Group
700 Chesterfield Parkway North
St. Louis, Missouri 63198
Attn: Intellectual Property Counsel
Telefax Number: 314-537-6047
and (2) If to Ecogen:
Ecogen Inc.
2005 Cabot Boulevard West
Langhorne, Pennsylvania 19047
Attention: President
Telecopy Number: 215-757-4156
with a copy to:
Dechert, Price & Rhoads
Princeton Park Corporate Center
997 Lenox Drive
Lawrenceville, New Jersey 08648
Attention: James J. Marino, Esq.
Telecopy Number: 609-520-3259
Notices given by personal delivery shall be deemed given when delivered,
otherwise notices shall be deemed given when sent.
12.6 Multiple Counterparts. This Agreement may be signed in
counterparts, both of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
24
<PAGE> 26
12.7 Entire Agreement. This Agreement represents the entire
understanding of the parties hereto with respect to the transfer and assignment
of the Ecogen Bt Technology and supersedes all other and prior memoranda and
agreements between the parties hereto, other than documents executed or
delivered at Closing.
12.8 Amendments. No amendment, modification or waiver of any
term or condition of this Agreement shall be valid or of any force or effect
unless made by written instrument signed by the parties hereto, specifying the
exact nature of such amendment, modification or waiver. Any waiver by any
party of any provision of this Agreement shall not imply a subsequent waiver of
that or any other provision.
12.9 Captions. The section captions and headings in this
Agreement are for convenience and reference purposes only and should not affect
in any way the meaning or interpretation of this Agreement.
12.10 Exhibits. The Schedules, Exhibits and Attachments
attached hereto are hereby incorporated by reference into and made a part of
this Agreement.
12.11 No Presumption Against Drafter, Qualifications on
Schedules. The parties to this Agreement have jointly participated in the
negotiation and drafting of this Agreement, except for the Schedules. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement, except for the Schedules, shall be construed as if drafted jointly
by the parties and no presumptions or burdens of proof shall arise favoring any
party by virtue of the authorship of any of the provisions of this Agreement.
The Schedules have been prepared by Ecogen and are solely the responsibility of
Ecogen even if Monsanto provided drafts of or information appearing on such
Schedules. Any Schedule which is qualified by "knowledge", "materiality", or
words of similar import which apply to any representation or warranty which is
not similarly qualified shall be interpreted as if no qualification were stated
on the Schedule.
25
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the date and year first above written.
MONSANTO COMPANY ECOGEN INC.
By: Derek K. Rapp /s/ By: James P. Reilly, Jr. /s/
----------------- ------------------------
Derek K. Rapp James P. Reilly, Jr.
Title: Director, Commercial Chairman and Chief Executive Officer
Partnerships & Alliances
ECOGEN-BIO INC.
By: James P. Reilly, Jr. /s/
------------------------
James P. Reilly, Jr.
Title: President and Chief Executive Officer
26
<PAGE> 1
EXHIBIT 10.124
FORM OF
SEVERANCE COMPENSATION AGREEMENT
SEVERANCE COMPENSATION AGREEMENT (the "Agreement"), dated
_____________, 199_, between ECOGEN INC., a Delaware corporation (the
"Company"), and ________________________ (the "Executive").
The Company's Board of Directors has determined that it is
important to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Executive, to their assigned
duties. Therefore, the Company is providing the Executive the benefits set
forth in this Agreement in the event the Executive's employment with the
Company is terminated in certain circumstances.
1. Termination. (a) If the Executive's employment
with the Company is terminated by the Company or by the Executive at any time,
the Company shall pay the Executive the compensation set forth in Section 2,
unless such termination is a result of (i) the Executive's death, (ii) the
Executive's Disability (as defined below), (iii) the Executive's Retirement (as
defined below), (iv) Cause (as defined below) or (v) the Executive's
termination of the Executive's employment other than for Good Reason (as
defined below) within six months of the event constituting Good Reason.
(b) "Disability" means the Executive's incapacity due to
physical or mental illness, as evidenced by the Executive being absent from the
Executive's duties with the Company for a period of six months within any
12-month period and, within 30 days after written notice of termination is
thereafter given by the Company, not returning immediately to the performance
of the Executive's duties. For the purposes of this Agreement, the Executive's
"absence" shall include the inability of the Executive to perform the
Executive's duties substantially on a full-time basis.
(c) "Retirement" means termination by the Company or the
Executive of the Executive's employment on account of the Executive's having
reached age 65 or such other age as shall have been fixed in any retirement
arrangement
<PAGE> 2
established with the Executive's consent with respect to the Executive.
(d) "Cause" means (i) the Executive's material fraud,
misappropriation or embezzlement in connection with the Company or (ii)
repeated and intemperate use of alcohol or illegal drugs which interferes with
the Executive's performance of Executive's duties, each as determined by and
set forth in a resolution duly adopted by the affirmative vote of the members
of the Company's Board of Directors, at a meeting of the Board called and held
for the purpose of making a determination of Cause and after reasonable notice
to the Executive and an opportunity for the Executive and the Executive's
counsel to be heard before the Board, finding that in the good faith opinion of
the Board the Executive was guilty of the conduct set forth above and
specifying the particulars thereof in detail.
(e) "Good Reason" means (without the Executive's prior
express written consent):
(i) any material reduction in the Executive's position,
duties, responsibilities or status with the Company or any removal
of the Executive from, or any failure to reelect the Executive to,
any position consistent with the Executive's duties,
responsibilities and status except in connection with the
termination of the Executive's employment (x) for Disability,
Retirement or Cause, (y) as a result of the Executive's death or
(z) by the Executive other than for Good Reason; or
(ii) a reduction by the Company in the Executive's
salary; or
(iii) any failure by the Company to permit the Executive
to participate in any benefit plan or arrangement which is
generally available to employees of the Company (hereinafter,
"Benefit Plans"); or
(iv) any change in any incentive, bonus or compensation
plan or other arrangement which is likely to materially reduce, in
the aggregate, the total compensation payable to the Executive; or
2
<PAGE> 3
(v) a relocation of the Company's principal executive
offices to a location which is greater than twenty-five miles from
the Company's current place of business or the Company's
relocation of the Executive to a place other than the Company's
principal executive offices; or
(vi) any material breach by the Company of this
Agreement or violation of law in respect of the executive's
employment; or
(vii) any failure by the Company to obtain the assumption
of this Agreement by any successor or assign of the Company; or
(viii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 1(f).
(f) Any termination by the Company pursuant to Section 1(b),
1(c) or, 1(d) shall be communicated by a Notice of Termination. A "Notice of
Termination" means a written notice indicating the specific provisions in this
Agreement relied upon and, in reasonable detail, the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(g) "Date of Termination" means (i) if this Agreement is
terminated by the Company for Disability, 30 days after Notice of Termination
is given to the Executive, provided that the Executive shall not have returned
to the performance of the Executive's duties on a full-time basis during such
30-day period, (ii) if the Executive's employment is terminated by the Company
for any other reason, the date on which a Notice of Termination is given or
(iii) if the Executive gives notice of such termination, immediately upon the
giving of such notice.
2. Compensation. If the requirements of Section 1 are
fulfilled, the Company shall continue to pay to the Executive, as severance
pay, the Executive's base salary for a period of 18 months following the
Termination Date and shall, for such period, continue to (a) cover the
Executive and the Executive's family on all life insurance, health insurance,
hospitalization, dental, drug prescription, disability and accidental death and
3
<PAGE> 4
dismemberment plans and policies of the Company that the Executive and the
Executive's family are participating in at the time of termination on the same
basis of participation as applied prior to termination, to the extent such
plans and policies permit non-employees to participate therein and subject to
any other terms and conditions of such plans and policies and (b) provide the
Executive with other standard benefits available at the time to the Company's
executive officers, such as automobile privileges; provided, however, if any of
the plans described in clause (a) above do not permit the participation therein
of persons who are not employees of the Company, the Company shall endeavor, in
lieu thereof, to replace such benefit for the Executive with a substantially
equivalent benefit to the extent such benefit may be obtained on commercially
reasonable terms.
3. Mitigation; Other Contractual Rights. (a) The Executive
shall not be required to mitigate damages or the amount of any payment provided
for under this Agreement by seeking other employment or otherwise, nor shall
the amount of any payment provided for under this Agreement be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the Date of Termination or otherwise.
(b) This Agreement, and any payment provided for hereunder,
shall not reduce any amounts otherwise payable, or in any way diminish the
Executive's existing rights or rights that would accrue solely as a result of
the passage of time, under any Benefit Plan, Incentive Plan or Securities Plan,
employment agreement or other contract, plan or arrangement.
4. Successors. (a) The Company shall require any successor
or assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Executive,
expressly, absolutely and unconditionally to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place.
Any failure of the Company to obtain such agreement prior to the effectiveness
of any such succession or assignment shall be a material breach of this
Agreement and shall entitle the Executive to terminate the Executive's
employment for Good Reason. "Company" means, as used throughout this
Agreement, the Company as hereinbefore
4
<PAGE> 5
defined and any successor or assign to its business and/or assets as aforesaid
that executes and delivers the agreement provided for in this Section or that
otherwise becomes bound by this Agreement by operation of law.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts are still payable to the Executive
hereunder, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's devisee, legatee
or other designee, or, if there be no such designee, to the Executive's estate.
5. Term. This Agreement shall terminate, except to the
extent that any obligation of the Company hereunder remains unpaid, upon the
termination of the Executive's employment with the Company on account of death,
Disability, Retirement or Cause or by the Executive other than for Good Reason.
6. Notice. Notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when delivered by hand or mailed by United States registered mail, return
receipt requested, postage prepaid, as follows:
If to the Company:
Ecogen Inc.
2005 Cabot Boulevard West
Langhorne, Pennsylvania 19047
Attention:
-----------------------
Chief Executive Officer
If to the Executive:
----------------------
----------------------
----------------------
or such other address as either party may have furnished to the other in
writing in accordance herewith, except that
5
<PAGE> 6
notices of change of address shall be effective only upon receipt.
7. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
8. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
9. Legal Fees and Expenses. The Company shall pay all legal
fees and expenses that the Executive may incur as a result of the Company's
contesting the validity, enforceability or the Executive's interpretation of,
or determinations under, this Agreement.
10. General. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party that are not set forth
expressly in this Agreement. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
11. Integration. This Agreement shall replace the provisions
of any severance provisions of any employment agreement or change of control
severance agreement, in each case which pre-dates this agreement, providing for
severance compensation and other benefits following termination following, or
resulting from, a change of control of the Company, and the parties hereto
agree that all such provisions are hereby terminated and discharged.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
ECOGEN INC.
By
-----------------------------
Name:
Title:
-------------------------------
Name:
Title:
7
<PAGE> 8
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