<PAGE> 1
As filed with the Securities and Exchange Commission on November 17, 1998
Registration No. 333-58535
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 4 TO FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ECOGEN INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
22-2487948
(I.R.S. Employer Identification Number)
2005 Cabot Boulevard West, Langhorne, Pennsylvania 19047, (215) 757-1590
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
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Mary E. Paetzold Copies to:
Vice President and Chief Financial Officer Elizabeth A. Brower, Esq.
Ecogen Inc. Paul, Hastings, Janofsky & Walker LLP
2005 Cabot Boulevard West 1055 Washington Boulevard
Langhorne, Pennsylvania 19047 Stamford, Connecticut 06901
(215) 757-1590 (203) 961-7400
</TABLE>
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
from time to time, as determined by market conditions,
after Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
CALCULATION OF REGISTRATION FEE
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=================================================================================================================================
Title of Securities Amount to be Proposed Maximum Aggregate Proposed Maximum Aggregate Amount of Registration
to be Registered Registered Price Per Share(1) Offering Price(1) Fee
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 2,500,000(2) $1.25 $3,125,000 $922.00(3)
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee. Such estimate has been calculated in accordance with Rule
457(g) under the Securities Act of 1933, as amended (the "Securities Act") and
is based upon the average of the high and low prices per share of the
Registrant's Common Stock as reported by the National Association of Securities
Dealers Automated Quotation National Market System on November 9, 1998.
(2) Pursuant to Rule 416 under the Securities Act, there are also being
registered such indeterminate number of additional shares of Common Stock as may
be issuable to prevent dilution resulting from stock splits and certain stock
dividends.
(3) A registration fee of $1,239.00 was previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE> 3
SUBJECT TO COMPLETION, DATED NOVEMBER 17, 1998
PROSPECTUS
ECOGEN INC.
2,500,000 SHARES OF COMMON STOCK
This Prospectus relates to the offering of up to an aggregate of
2,500,000 shares (the "Shares") of Common Stock, $.01 par value ("Common
Stock"), of Ecogen Inc., a Delaware corporation ("Ecogen" or the "Company"),
which may be offered from time to time by the persons (the "Selling
Stockholders") named in this Prospectus under the caption "Selling
Stockholders."
On June 5, 1998, the Company sold 20,000 shares of its Series 1998-A
Convertible Preferred Stock, $.01 par value (the "Series A Stock") and a warrant
(the "Warrant") to purchase 160,000 shares of Common Stock to one of the Selling
Stockholders (the "Preferred Holder") in a private transaction. Pursuant to the
terms of the Certificate of Designations, Preferences and Rights of the Series
1998-A Convertible Preferred Stock (the "Series A Certificate") regarding
payment of dividends, the Company may, from time to time, issue additional
shares of Series A Stock (the "Dividend Shares") to the Preferred Holder in
payment of dividends on the Series A Stock. The Series A Stock is convertible,
at the option of the holder thereof, at a rate equal to the lesser of (a) 100%
of the average of the two lowest closing bid prices of the Common Stock during
the ten consecutive trading days prior to the applicable conversion date and (b)
$3.39375. As partial consideration for services rendered in connection with the
placement of the shares of Series A Stock to the Preferred Holder, the Company
also issued 24,000 shares of Common Stock to the other Selling Stockholder (the
"Common Holder").
The Shares being offered hereby by the Selling Stockholders may be
acquired from time to time, upon conversion of the Series A Stock or exercise of
the Warrant. The Shares include (a) the 160,000 shares of Common Stock issuable
upon exercise of the Warrant, (b) the 24,000 shares of Common Stock issued to
the Common Holder, and (c) 2,316,000 shares of Common Stock which may be
issuable upon conversion of the Series A Stock (including the Dividend Shares).
The Warrant has a five year term and an initial exercise price of $3.525 per
share. The actual number of shares of Common Stock issued or issuable upon
conversion of the Series A Stock or exercise of the Warrant is subject to
adjustment depending on factors which cannot be predicted by the Company at this
time, including among others, (a) the future market prices of the Common Stock,
and (b) the payment of dividends on the Series A Stock in additional shares of
Series A Stock.
The Shares may, without limitation, be offered for sale from time to
time by the Selling Stockholders in brokerage transactions at prevailing market
prices, in transactions at negotiated prices or otherwise. No representation is
made that any Shares will or will not be offered for sale. The Company will not
receive any proceeds from the sale of the Shares. All costs, expenses and fees
incurred in connection with the registration of the Shares, estimated to be
approximately $20,000, are being borne by the Company, but all selling and other
expenses incurred by the Selling Stockholders will be borne by such Selling
Stockholders. See "Plan of Distribution."
The Selling Stockholders, and the brokers through whom sales of the
Shares are made, may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, as
<PAGE> 4
amended (the "Securities Act"). In addition, any profits realized by the Selling
Stockholders or such brokers on the sale of the Shares may be deemed to be
underwriting commissions.
The Common Stock is traded in the NASDAQ National Market System
under the symbol EECN. On November 9, 1998, the last sale price per share of the
Common Stock, as reported on the NASDAQ National Market System, was $1.1875.
THE OFFERING INVOLVES A HIGH DEGREE OF RISK. FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN
THE SHARES, SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is______ __, 1998.
<PAGE> 5
AVAILABLE INFORMATION
Ecogen is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the SEC. Copies
of reports, proxy statements and other information filed by the Company with the
SEC can be inspected and copied at the SEC's public reference facilities at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and, upon request, may be
made available at the SEC's regional offices at 7 World Trade Center, Suite
1300, New York, New York 10048, at 73 Tremont Street, Suite 600, Boston,
Massachusetts 02108-3912, and at The Curtis Center, Suite 1005 E., 601 Walnut
Street, Philadelphia, Pennsylvania 19106-3322. In addition, the SEC maintains a
Web-site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC and the
address of such site is http://www.sec.gov.
The Company's Common Stock is traded on the NASDAQ National Market
System. Copies of reports, proxy statements and other information concerning the
Company can also be inspected at the offices of the National Association of
Securities Dealers, Inc., located at 1735 K Street, N.W., Washington, D.C.
20006.
The Company also has filed with the SEC a Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act) with respect to the Shares offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the offering, reference is made to
such Registration Statement, exhibits and schedules, which may be inspected
without charge at the SEC's office in Washington, D.C., and copies of all or any
part thereof may be obtained from such office after payment of fees prescribed
by the SEC.
TABLE OF CONTENTS
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Page
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<S> <C>
AVAILABLE INFORMATION.................................................. 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................ 4
THE COMPANY............................................................ 5
RISK FACTORS........................................................... 5
FORWARD LOOKING STATEMENTS............................................. 8
SELLING STOCKHOLDERS................................................... 9
PLAN OF DISTRIBUTION................................................... 10
DESCRIPTION OF SECURITIES.............................................. 11
TRANSFER AGENT AND REGISTRAR........................................... 11
EXPERTS................................................................ 11
LEGAL MATTERS.......................................................... 11
</TABLE>
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<PAGE> 6
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the SEC are
incorporated herein by reference:
(a) The Company's Form 10-K Annual Report for the fiscal year ended
October 31, 1997, filed pursuant to Section 13 or 15(d) of the Exchange Act.
(b) The Company's Form 10-Q Quarterly Reports for the fiscal
quarters ended January 31, 1998, April 30, 1998 and July 31, 1998, filed
pursuant to Section 13 or 15(d) of the Exchange Act.
(c) The Company's Form 8-K Current Report dated May 15, 1998, filed
pursuant to Section 13 or 15(d) of the Exchange Act.
(d) The Company's Form 8-K Current Report dated September 2, 1998,
filed pursuant to Section 13 or 15 (d) of the Exchange Act.
(e) The description of the Company's Common Stock contained in the
Company's registration statement on Form 8-A (File No. 1-9579) filed under the
Exchange Act, including any amendments or reports filed for the purpose of
updating such description.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, after the
date of this Prospectus and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of the
filing of such reports and documents. Any statement contained in any document
incorporated by reference shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement.
The Company hereby undertakes to provide without charge to each
person, including any beneficial owner, to whom a prospectus is delivered, upon
the written or oral request of such person a copy of any and all of the
information that has been incorporated by reference in this Prospectus (not
including exhibits to the information that is incorporated by reference unless
such exhibits are specifically incorporated by reference into the information
that this Prospectus incorporates). Such request should be addressed to: Ecogen
Inc., 2005 Cabot Boulevard West, Langhorne, Pennsylvania 19047, Attention: Mary
E. Paetzold, Vice President and Chief Financial Officer.
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<PAGE> 7
THE COMPANY
Ecogen, a Delaware corporation incorporated in 1983, is a
biotechnology company specializing in the development and marketing of
environmentally compatible products for the control of pests in agricultural and
related markets. Ecogen's product revenues are generated by sales of biological
insecticides derived from the bacterial microorganism Bacillus thuringiensis
("Bt") and biological fungicide products for the control of powdery mildew and
post-harvest rot disease. In addition, Ecogen is developing for introduction
into certain niche markets insecticidal nematode (microscopic roundworm)
products for the control of insect pests. Ecogen was the first company to sell
genetically enhanced biological pesticide products which are registered with the
U.S. Environmental Protection Agency (the "EPA") for commercial sale. In
addition, Ecogen is the only Company to have received EPA approvals to sell Bt
insecticides incorporating a recombinant Bt strain.
Ecogen's principal executive offices are located at 2005 Cabot
Boulevard West, Langhorne, Pennsylvania 19047. Its telephone number is (215)
757-1590.
RISK FACTORS
AN INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK AND SHOULD NOT BE MADE BY PERSONS WHO CANNOT AFFORD THE LOSS OF THEIR
ENTIRE INVESTMENT. IN CONNECTION WITH THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, THE COMPANY IS HEREBY
IDENTIFYING IMPORTANT FACTORS THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE PROJECTED IN FORWARD-LOOKING STATEMENTS OF THE
COMPANY. THE COMPANY ADVISES PROSPECTIVE INVESTORS NOT TO PLACE UNDUE RELIANCE
ON ANY SUCH FORWARD-LOOKING STATEMENTS IN LIGHT OF THE RISKS AND UNCERTAINTIES
TO WHICH THEY ARE SUBJECT. IN EVALUATING THE COMPANY AND ITS BUSINESS,
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN
ADDITION TO THE OTHER INFORMATION INCLUDED HEREIN.
LIQUIDITY AND LONG-TERM CAPITAL NEEDS. To date, the Company has not
generated positive cash flow from operations. Since the Company's inception in
1983, the Company has financed its working capital needs primarily through
equity securities, revenues from research and development agreements and product
sales. 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
factors 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 sector generally,
competitive conditions in agricultural pest control market, and access to
capital markets that can provide the Company with the resources necessary to
fund its strategic priorities. The Company may need additional financing to
support current levels of product development and commercialization. There is no
assurance that such financing will be available on terms acceptable to the
Company or at all. Over the long-term, the Company's liquidity is dependent on
market acceptance of its products and technology.
EARLY STAGE OF PRODUCT SALES. Ecogen is in its early years of
significant commercial sales of a line of biorational products for the control
of pests in agricultural and related markets. Currently, Ecogen's
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<PAGE> 8
primary products include a line of biological insect control products and
biofungicide products. There can be no assurance that Ecogen's existing or
future products will be commercially accepted.
LACK OF OPERATING PROFITS. Ecogen has incurred net losses since its
inception. Historically, Ecogen's working capital has been maintained primarily
through sales of capital stock and not through operations. To date, Ecogen has
not generated profits or positive cash flow from operations. There can be no
assurance that Ecogen will achieve operating profits or will generate a positive
cash flow. No assurance exists that the Company will be able to market its
products at prices and in quantities that will enable the Company to achieve
profitability.
DIVIDENDS. The Company has never paid a dividend on its Common Stock
and does not anticipate paying dividends on the Common Stock in the foreseeable
future. The Company currently intends to retain earnings, if any, for use in its
business. There can be no assurance that the Company will ever pay dividends on
its Common Stock.
MANUFACTURING RISKS. A key to Ecogen's achieving its product sales
objectives is Ecogen's ability to mass produce its biorational products in a
timely and cost-effective manner. In order for Ecogen's product sales to be
profitable, Ecogen must be able to scale-up its production to meet anticipated
needs and no assurance exists that Ecogen will be able to scale-up its
production on commercially reasonable terms or at all. Ecogen's production plans
call for reliance upon third parties for most of its product manufacturing,
formulation and packaging requirements. Although Ecogen believes that such third
parties have sufficient operating capacity to satisfy Ecogen's product
manufacturing needs, the failure of any such party to provide products to Ecogen
under its product manufacturing arrangement could have a material and adverse
effect on Ecogen's ability to meet the demand for its product.
DEPENDENCE ON KEY PERSONNEL. Ecogen's future success is dependent
upon the efforts and abilities of its employees. Ecogen has assembled a highly
qualified technical staff, many of whom have considerable prior experience with
bioinsecticides. The loss of certain key employees could materially and
adversely affect Ecogen's business. Ecogen's success will depend on its ability
to retain key employees and, if any depart, to replace them with personnel of
comparable scientific and management capability.
COMPETITION AND TECHNOLOGY. The markets in which Ecogen operates are
highly competitive. Competition is based principally on price and efficacy, but
safety and ease of application are also factors. Competitors of Ecogen include
manufacturers and marketers of synthetic chemical pesticides and biopesticides
including large chemical companies, such as Abbott Laboratories, Novartis and
Dow AgroSciences, as well as specialized biotechnology firms. Many of these
companies have considerably greater financial and marketing resources than
Ecogen. Competitors with respect to research and development activities also
include universities and public and private research organizations. In addition,
Ecogen's bioinsecticide products compete with certain transgenic seed and plant
products that have insecticidal capabilities. No assurance exists that the
competitive pressure will not result in a reduction in prices of the Company's
products which could adversely affect the Company's profitability. The
agricultural pesticide industry is undergoing, and is expected to continue to
undergo, rapid and significant technological change. Ecogen expects competition
to intensify as technical advances in the field are made and become more widely
known. There can be no assurance that developments by others will not render
Ecogen's products or technology obsolete or noncompetitive.
SEASONALITY. The bulk of the Company's products are 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. Field testing, regulatory approval
and commercial introduction of
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<PAGE> 9
Ecogen's products not yet registered with the EPA must occur at certain times
before or during the growing season. Unusual weather conditions during field
tests or the failure to receive regulatory approval prior to the growing season
may require additional field tests to be conducted in subsequent growing
seasons, with resulting delays in new product development and commercialization.
In addition, because of the seasonal nature of its business, Ecogen's product
revenues are likely to be concentrated in the fiscal quarters prior to and
during a particular growing season and 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 infestation in grower areas.
GOVERNMENTAL REGULATION. Pesticides are subject to rigorous testing
and approval processes by the EPA and similar regulatory authorities in certain
states and in other countries. The process of obtaining these approvals can be
time-consuming and costly. There can be no assurance that such approvals will be
granted on a timely basis, if at all. Delays in obtaining necessary product
registrations could have a significant impact upon Ecogen's revenues and
competitive position in the way of delayed product sales and lost market
opportunities. Additionally, while the EPA has in place a registration procedure
for biopesticides that is less burdensome in comparison to the registration
procedures for synthetic chemical pesticides, there can be no assurance that
additional requirements will not be added by the EPA which could make the
procedure more time-consuming and costly or that a particular product developed
in the future will qualify for registration as a biopesticide. There is no
assurance that any registrations that have been granted will not be revoked or
that, if the Company applies for any additional registrations or approvals, they
will be issued.
PROPRIETARY TECHNOLOGY AND TRADE SECRETS. Although Ecogen has issued
and pending patents with respect to certain of its technologies, there can be no
assurance that any additional patents will be issued or that any issued patents
will provide adequate protection for Ecogen's products or processes. Although
Ecogen pursues a policy of seeking patent protection, both in the United States
and abroad, for its novel micro-organisms and related biopesticide compositions
of matter and processes, the issuance of a patent is not conclusive as to its
validity or enforceability, nor does it provide the patent holder with freedom
to operate without infringing the patent rights of others. A patent could be
challenged by litigation and, if the outcome of such litigation were adverse to
the patent holder, competitors could be free to use the subject matter covered
by the patent, or the patent holder could be required to license the technology
to others.
Because of the uncertainty concerning patent protection, Ecogen also
relies upon unpatented proprietary technology and trade secrets. All Ecogen
employees and consultants sign confidentiality agreements under which they agree
not to use or disclose Ecogen's confidential information as long as that
information remains proprietary or, in some cases, for fixed time periods. There
can be no assurance that others have not developed or will not independently
develop such proprietary technology or substantially equivalent information and
techniques or that secrecy will not be breached. Ecogen's ability to compete
will depend, in part, on maintaining the proprietary nature of its technology.
Ecogen is aware that substantial research efforts in biotechnology
are taking place at universities, government laboratories and public
corporations around the world and that numerous patent applications have been
filed, and that patents have been issued, relating to fundamental technologies
and to specific biological pesticide products and processes. The costs
associated with the enforcement of Ecogen's patents and with obtaining licenses,
if required, under patents held by third parties can be significant and thus
could materially and adversely affect Ecogen's business. There can be no
assurance that Ecogen could obtain licenses with respect to such patents on
favorable terms, if at all.
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<PAGE> 10
PRODUCT LIABILITY. Product liability claims may be asserted with
respect to the Company's technology or products. Although Ecogen currently has
product liability insurance, there can be no assurance that Ecogen has obtained
sufficient insurance coverage, or that Ecogen will have sufficient resources, to
satisfy any product liability claims. A successful product liability claim in
excess of the Company's insurance coverage could have a material adverse effect
on the Company.
STOCK PRICE VOLATILITY. The market prices for shares of common stock
and other securities of biotechnology companies (including Ecogen) historically
have been extremely volatile. Factors such as announcements of technical
innovations and new commercial products by Ecogen's current or potential
competitors, adverse results in Ecogen's field tests or product sales, adverse
litigation, adverse legislation, patent or proprietary rights developments or
market conditions in general may have a significant impact on the market prices
of the Shares offered hereby. In addition, the future sale of a substantial
number of shares of Common Stock by existing stockholders or by Ecogen may have
an adverse impact on the market price of the Shares offered hereby. There can be
no assurance that the trading price of the Company's Common Stock will remain at
or near its current level.
DILUTION. Ecogen has granted options to purchase Common Stock under
employee benefit plans and agreements with management and directors of Ecogen.
Warrants, options, convertible securities (including, without limitation, the
Series A Stock ) and other rights to purchase Common Stock are also outstanding
under financing arrangements and other transactions. Ecogen regularly examines
opportunities to expand its technology base and product line through means such
as licenses, joint ventures and acquisition of assets or ongoing businesses
(including the acquisition of outstanding minority interests in its Ecogen
Technology I Incorporated subsidiary) and may issue securities in connection
with such transactions. Ecogen may issue additional stock, warrants and/or
options or other convertible securities in order to raise funds or for other
purposes in the future and may also issue additional securities in connection
with its employee benefit plans. During the terms of any such options, warrants
and other convertible securities, the holders thereof have an opportunity to
profit from a future rise, if any, in the market price of the Common Stock. The
exercise of any such outstanding options, warrants or other convertible
securities or the issuance of any such additional warrants, options or other
equity or derivative securities of the Company may adversely affect the market
value of the Shares offered hereby or adversely affect the terms on which Ecogen
may obtain additional equity financing.
FORWARD LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this
Prospectus, including without limitation statements containing the words
"believes," "anticipates," "intends," "expects," and words of similar import,
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company, or industry
results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, those set forth in this Prospectus, including
under the caption "Risk Factors." Given these uncertainties, prospective
investors are cautioned not to place undue reliance on such forward-looking
statements. The Company disclaims any obligation to update any such statements
or to publicly announce any updates or revisions to any of the forward-looking
statements contained herein to reflect any change in the Company's expectation
with regard thereto or any change in events, conditions, circumstances or
assumptions underlying such statements.
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<PAGE> 11
SELLING STOCKHOLDERS
The following table sets forth as of November 2, 1998, and upon
completion of the offering described in this Prospectus, information with regard
to the beneficial ownership of the Company's Common Stock by the Selling
Stockholders. Such Selling Stockholders may not have a present intention of
selling the Shares and may offer less than the amount of Shares indicated.
Shares Beneficially Owned
<TABLE>
<CAPTION>
Shares Beneficially Shares Shares Beneficially
Owned Before to Owned After Offering (1)
Name and Address Offering be Offered Number Percentage
<S> <C> <C> <C> <C>
KA Investments LDC (2) 2,003,325(3) 2,476,000(3) 0 __
c/o Deephaven Capital Management
1712 Hopkins Crossroads
Minnetonka, MN 55305
Jesup & Lamont Securities Corp. (4) 24,000 24,000 0 __
650 Fifth Avenue, Third Floor
New York, NY 10019
</TABLE>
(1) Assumes resale of all shares of Common Stock offered hereby.
(2) KA Investments LDC is managed by Deephaven Capital Management LLC, 1712
Hopkins Crossroads, Minnetonka, MN 55305, a privately held investment management
firm. Irvin R. Kessler is managing director of Deephaven and is responsible for
this type of investment.
(3) Includes shares of Common Stock issuable upon conversion of the Series A
Stock and the payment of dividends thereon at an assumed conversion price of
$1.1250 per share and shares of Common Stock issuable upon exercise of the
Warrant (the "Initial Stock"). Because the number of shares of Common Stock
issuable upon conversion of the Series A Stock and as payment of dividends
thereon is dependent in part upon the market price of the Common Stock prior to
a conversion, the actual number of shares of Common Stock that will be issued in
respect of such conversions or dividend payments and, consequently, offered for
sale under this Registration Statement, cannot be determined at this time. In
order to provide for a cushion for such fluctuations, the number of shares of
Common Stock registered hereunder in excess of the Initial Stock shall be
available for issuance upon conversion of the Series A Stock and payment of
dividends thereon and exercise of the Warrant.
(4) Jesup & Lamont Securities Corp. is owned 100% by Jesup & Lamont Group
Holdings, 650 Fifth Avenue, Third Floor, New York, NY 10019, which is owned 80%
by Mr. Howard F. Curd, c/o Jesup & Lamont Group Holdings, 650 Fifth Avenue,
Third Floor, New York, NY 10019.
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<PAGE> 12
PLAN OF DISTRIBUTION
The Selling Stockholders or their pledgees, donees, transferees or
other successors-in-interest, may, from time to time, sell all or a portion of
the Shares on the NASDAQ National Market System, in privately negotiated
transactions or otherwise, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such market prices or at
negotiated prices. The Shares may sold by the Selling Stockholders by one or
more of the following methods, without limitation: (a) block trades in which the
broker or dealer so engaged will attempt to sell the Shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction, (b) purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this Prospectus, (c) an exchange
distribution in accordance with the rules of the applicable exchange, (d)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers, (e) privately negotiated transactions, (f) short sales and (g) a
combination of any such methods of sale.
From time to time the Selling Stockholders may engage in short
sales, short sales against the box, puts and calls and other transactions in
securities of the Company or derivatives thereof, and may sell and deliver the
Shares in connection therewith or in settlement of securities loans. If the
Selling Stockholders engage in such transactions, the applicable conversion
price may be affected. From time to time the Selling Stockholders may pledge
their Shares pursuant to the margin provisions of its customer agreements with
its brokers. Upon a default by the Selling Stockholders, the broker may offer
and sell the pledged Shares from time to time.
In effecting sales, brokers and dealers engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate in such
sales. Brokers or dealers may receive commissions or discounts from the Selling
Stockholders (or, if any such broker-dealer acts as agent for the purchaser of
such shares, from such purchaser) in amounts to be negotiated which are not
expected to exceed those customary in the types of transactions involved.
Broker-dealers may agree with the Selling Stockholders to sell a specified
number of such Shares at a stipulated price per share, and, to the extent such
broker-dealer is unable to do so acting as agent for a Selling Stockholder, to
purchase as principal any unsold Shares at the price required to fulfill the
broker-dealer commitment to the Selling Stockholders. Broker-dealers who acquire
shares as principal may thereafter resell such Shares from time to time in
transactions (which may involve block transactions and sales to and through
other broker-dealers, including transactions of the nature described above) in
the over-the-counter market or otherwise at prices and on terms then prevailing
at the time of sale, at prices then related to the then-current market price or
in negotiated transactions and, in connection with such resales, may pay to or
receive from the purchasers of such Shares commissions as described above. The
Selling Stockholders may also sell the Shares in accordance with Rule 144 under
the Securities Act, rather than pursuant to this Prospectus.
The Selling Stockholders and any broker-dealers or agents that
participate with the Selling Stockholders in sales of the Shares may be deemed
to be "underwriters" within the meaning of the Securities Act in connection with
such sales. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the Shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
The Company is required to pay all fees and expenses incident to the
registration of the Shares, including fees and disbursements of counsel to the
Selling Stockholders (not to exceed an aggregate of $5,000). The Company has
agreed to indemnify the Selling Stockholders against certain losses, claims,
damages and liabilities, including liabilities under the Securities Act.
-10-
<PAGE> 13
DESCRIPTION OF SECURITIES
The following description does not purport to be complete and is
subject in all respects to the applicable provisions of the Company's Restated
Certificate of Incorporation, as amended, and By-Laws.
The authorized capital stock of the Company consists of 42,000,000
shares of Common Stock, par value $0.01, and 7,500,000 shares of Preferred
Stock, par value $0.01, the terms of which will be determined by the Company's
Board of Directors as and when such shares are issued. Of the 7,500,000 shares
of Preferred Stock, 35,000 have been designated Series 1998-A Convertible
Preferred Stock and 50,000 have been designated Series 1998-C Convertible
Preferred Stock. At November 2, 1998, 8,185,500 shares of Common Stock, 19,500
shares of Series 1998-A Convertible Preferred Stock and 32,354 shares of Series
1998-C Convertible Preferred Stock were outstanding.
Common Stock
The holders of shares of Common Stock are entitled to one vote for
each share of Common Stock held on all matters on which holders of Common Stock
are entitled to vote. Holders of Common Stock are entitled to receive dividends
when and as declared by the Board of Directors out of funds legally available
therefor and are entitled to receive on a pro rata basis all assets of the
Company legally available for distribution to the stockholders in the event of
the liquidation, dissolution or winding up of the Company. Holders of Common
Stock have no preemptive, subscription, redemption or conversion rights, and no
right to vote cumulatively for the election of directors.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is
American Stock Transfer & Trust Company, 40 Wall Street, New York, NY 10005.
EXPERTS
The consolidated financial statements and schedules of Ecogen Inc.
and its subsidiaries as of October 31, 1996 and October 31, 1997, and for each
of the years in the three-year period ended October 31, 1997 have been
incorporated by reference herein in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, which has been
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
LEGAL MATTERS
Certain legal matters relating to the Common Stock, including the
validity thereof, will be passed upon for the Company by Paul, Hastings,
Janofsky & Walker LLP, Stamford, Connecticut, counsel for the Company. Esteban
A. Ferrer, a member of Paul, Hastings, Janofsky & Walker LLP, is a director of
the Company.
-11-
<PAGE> 14
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses payable by the
Company in connection with the sale of the Shares being registered. All of the
amounts shown are estimates except the registration fee.
<TABLE>
<S> <C>
Registration fee ......................................... $ 922
Legal fees and expenses .................................. 16,000
Accounting fees and expenses ............................. 2,000
Miscellaneous ............................................ 1,078
TOTAL .................... $20,000
=======
</TABLE>
Item 15. Indemnification of Directors and Officers
Article VIII of the Bylaws of the Company, as amended, provides
generally for indemnification of officers, directors, agents and employees of
the Company to the extent authorized by the General Corporation Law of the State
of Delaware. Pursuant to Section 145 of the Delaware General Corporation Law, a
corporation generally has the power to indemnify its present and former
directors, officers, employees and agents against expenses incurred by them in
connection with any suit to which they are, or are threatened to be made, a
party by reason of their serving in such positions so long as they acted in good
faith and in a manner they reasonably believed to be in, or not opposed to, the
best interests of a corporation, and with respect to any criminal action, they
had no reasonable cause to believe their conduct was unlawful. With respect to
suits by or in the right of a corporation, however, indemnification is not
available if such person is adjudged to be liable for negligence or misconduct
in the performance of his duty to the corporation unless the court determines
that indemnification is appropriate. In addition, a corporation has the power to
purchase and maintain insurance for such persons. The statute also expressly
provides that the power to indemnify authorized thereby is not exclusive of any
rights granted under any bylaw, Agreement, vote of stockholders or disinterested
directors, or otherwise.
As permitted by Section 102 of the Delaware General Corporation Law,
the Company's stockholders have approved and incorporated provisions into the
Company's Restated Certificate of Incorporation eliminating a director's
personal liability for monetary damages to the Company and its stockholders
arising from a breach of a director's fiduciary duty, except for liability under
Section 174 of the Delaware General Corporation Law or liability for any breach
of the director's duty of loyalty to the Company or its stockholders, for acts
or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law or for any transaction in which the director derived an
improper personal benefit.
The Company has entered into indemnification agreements with
directors and officers. These agreements provide substantially broader indemnity
rights than those provided under the Delaware General Corporation Law and the
Company's Bylaws. The indemnification agreements are not intended to deny or
otherwise limit third party or derivative suits against the Company or its
directors or officers, but to the extent a director or office were entitled to
II-1
<PAGE> 15
indemnity or contribution under the indemnification Agreement, the financial
burden of a third party suit would be borne by the Company, and the Company
would not benefit from derivative recoveries against the director or officer.
Such recoveries would accrue to the benefit of the Company but would be offset
by the Company's obligations to the director or officer under the
indemnification Agreement.
The above discussion of the Company's Bylaws, Restated Certificate
of Incorporation and indemnification agreements and of Section 145 of the
Delaware General Corporation Law is not intended to be exhaustive and is
qualified in its entirety by such Bylaws, Restated Certificate of Incorporation,
indemnification agreements and statute.
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
* 3.1 Restated Certificate of Incorporation of Ecogen Inc. (Form 10-Q for fiscal quarter
ended January 31, 1996).
* 3.2 By-laws of Ecogen Inc., as amended (Form S-1 Registration Statement, File No.
33-14119).
* 3.3 Certificate of Designations, Preferences and Rights of Series 1998-A Convertible
Preferred Stock. (Form 10-Q for fiscal quarter ended April 30, 1998).
* 3.4 Certificate of Designations, Preferences and Rights of Series 1998-C Convertible
Preferred Stock. (Form 8-K, dated September 2, 1998).
5 Opinion of counsel as to legality of securities being registered.
** 10.140 Amended and Restated Convertible Preferred Stock Purchase Agreement between
Ecogen Inc. and KA Investments LDC dated as of June 5, 1998.
** 10.141 Warrant Agreement between Ecogen Inc. and KA Investments LDC dated June
5, 1998.
** 10.142 Amended and Restated Registration Rights Agreement between Ecogen Inc. and
KA Investments LDC dated as of June 5, 1998.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of counsel. (The Consent of counsel is included in Exhibit 5).
</TABLE>
* These items are hereby incorporated by reference from the exhibits of the
filing or report indicated and are made a part of this Registration
Statement.
** Previously filed as an exhibit to this Registration Statement.
II-2
<PAGE> 16
<TABLE>
<S> <C>
24 Power of Attorney executed by certain officers of the Company and individual
members of the Board of Directors authorizing certain officers of the Company
to file amendments to the Company's Registration Statement on Form S-3.
</TABLE>
Item 17. Undertakings.
(A) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement; provided,
however, that paragraphs A(1)(i) and (ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13(a)
or Section 15(d) of the Exchange Act that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(B) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(C) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and
II-3
<PAGE> 17
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Langhorne,
Commonwealth of Pennsylvania, on November 17, 1998.
ECOGEN INC.
By: /s/ James P. Reilly, Jr.
---------------------------------------------
Name: James P. Reilly, Jr.
Title: Chairman and Chief Executive Officer
II-5
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated as of the 17th day of November, 1998.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C> <C>
/s/ James P. Reilly, Jr. Chairman of the Board, President and November 17, 1998
- ------------------------------ Chief Executive Officer (Principal
(James P. Reilly, Jr.) Executive Officer)
* Vice President and Chief Financial November 17, 1998
- ------------------------------ Officer (Principal Financial and
(Mary E. Paetzold) Accounting Officer)
* Director November 17, 1998
- ------------------------------
(Esteban A. Ferrer)
* Director November 17, 1998
- ------------------------------
(Philippe D. Katz)
* Director November 17, 1998
- ------------------------------
(Lowell N. Lewis)
* Director November 17, 1998
- ------------------------------
(John R. Sutley)
* /s/ James P. Reilly, Jr.
- ------------------------------
James P. Reilly, Jr., as
attorney-in-fact
</TABLE>
II-6
<PAGE> 20
ECOGEN INC.
INDEX TO EXHIBITS FILED WITH
FORM S-3 REGISTRATION STATEMENT
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
5 Opinion of counsel as to legality of Securities being registered.
* 10.140 Amended and Restated Convertible Preferred Stock Purchase Agreement between Ecogen Inc. and KA
Investments LDC dated as of June 5, 1998.
* 10.141 Warrant Agreement between Ecogen Inc. and KA Investments LDC dated June 5, 1998.
* 10.142 Amended and Restated Registration Rights Agreement between Ecogen Inc. and KA Investments LDC dated
as of June 5, 1998.
23.1 Consent of KPMG Peat Marwick LLP.
</TABLE>
* Previously filed as an exhibit to this Registration Statement.
<PAGE> 1
EXHIBIT 5
Opinion of Counsel as to Legality of Securities Being Registered
<PAGE> 2
November 12, 1998
Ecogen Inc.
2005 Cabot Boulevard West
Langhorne, Pennsylvania 19047
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have acted as special counsel to Ecogen Inc. (the "Company") in
connection with the preparation and filing with the Securities and Exchange
Commission (the "Commission") of a Registration Statement on Form S-3 (the
"Registration Statement"), pursuant to which the Company is registering for sale
2,500,000 shares (the "Shares") of Common Stock of the Company, which may be
offered from time to time by the persons named in the Prospectus which is part
of the Registration Statement as the Selling Stockholders. You have requested
that we furnish our opinion as to the matters set forth below.
In this connection, we have examined the Registration Statement as
filed with the Commission on the date hereof, the Restated Certificate of
Incorporation, the Certificate of Designations, Preferences and Rights of the
Series 1998-A Convertible Preferred Stock and By-laws of the Company, each as in
effect as of the date hereof, records of corporate proceedings of the Company,
and such other documents as we have deemed relevant as a basis for this opinion,
in each case as made available to us by the Company. We have assumed the
conformity with original documents of all copies of documents examined by us.
Based on the foregoing, and in reliance thereon, we are of the
opinion that the Shares have been duly authorized and are legally and validly
issued, fully paid and nonassessable.
We hereby consent to the reference to this Firm under the caption
"Legal Matters" in the Prospectus and to the filing of this opinion as an
exhibit to the Registration Statement.
Very truly yours,
/s/ Paul, Hastings, Janofsky & Walker LLP
<PAGE> 1
EXHIBIT 23.1
Consent of KPMG Peat Marwick LLP
<PAGE> 2
Board of Directors
Ecogen Inc.
We consent to the use of our report incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Short Hills, New Jersey
November 11, 1998
