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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 13, 1996
AgriBioTech, Inc.
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(Exact name of registrant as specified in its charter)
Nevada 0-19352 85-0325742
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
2700 Sunset Road, Suite C-25, Las Vegas, Nevada 89120
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(Address of Principal Executive Offices) (Zip Code)
(702) 798-1969
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Registrant's telephone number, including area code
Exhibit Index is located on Page 5
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Item 5. Other Events.
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On September 13, 1996, AgriBioTech, Inc. (the "Company") completed the
initial portion of a private offering (the "Offering") of Series C Convertible
Preferred Stock (the "Preferred Stock"), with an aggregate purchase price of up
to $10,000,000. As of September 27, 1996, the Company had received
subscriptions for $10,000,000, of which it had received gross proceeds of
$9,513,100. The Offering will terminate on September 30, 1996, and no further
Preferred Stock will be issued in the Offering after that date. Each share of
Preferred Stock has a principal amount of $1,000 with a liquidation preference
of $1,000 plus an 8% per annum premium. The Preferred Stock is convertible into
a number of shares of common stock of the Company ("Common Stock") derived by
dividing the principal amount, plus an 8% per annum premium by a conversion
price (the "Conversion Price") equal to the lesser of (x) 80% of the average
closing bid price of the Company's Common Stock for the five trading days
immediately preceding the date set forth in the conversion notice, and (y) an
amount which is (i) $3.00 per share for 34% of the shares of Preferred Stock;
(ii) $3.50 per share for an additional 33% of the shares of Preferred Stock; and
(iii) $4.00 per share for the remaining 33% of the shares of Preferred Stock. In
no event shall any holder be entitled to convert such number of shares of
Preferred Stock as would make such person a holder of 5% or more of the
Company's outstanding Common Stock.
A holder of Preferred Stock is entitled to convert up to (x) 34% of his
shares beginning upon the effective date of a registration statement to be filed
by the Company covering the Common Stock underlying the Preferred Stock, (y) an
additional 33% of his shares (on a cumulative basis) beginning December 2, 1996,
and (z) all of his shares beginning February 1, 1997 and until September 30,
1998 when any remaining outstanding shares of Preferred Stock will be
automatically converted. Notwithstanding the foregoing, the Company shall have a
two day right to redeem any of the Preferred Stock noticed for conversion, at a
price per share of Common Stock equal to the average closing bid price for the
five trading days immediately preceding the date of the conversion notice if, at
the date of conversion, any Preferred Stock is converted at a price less than or
equal to 80% of the average closing bid price of the Common Stock for the five
trading days immediately preceding the closing dates. Upon conversion the holder
is also entitled to a premium equal to 8% of the original purchase price per
annum (payable in Common Stock). The Company shall also have the right, in its
sole discretion, at any time after February 15, 1997 upon 30 days' written
notice, to redeem all outstanding Preferred Stock, for a price equal to the then
closing bid price. The holders of Preferred Stock have no voting rights, except
as provided by Nevada law.
The Conversion Price is subject to adjustment in the event of a stock
dividend, stock split or share combination, or a merger, consolidation,
recapitalization or similar events affecting the Common Stock, so that the
holders of Preferred Stock shall be entitled to receive, after such event, such
securities as they would have received if the Preferred Stock had been converted
immediately prior to such event.
The Offering is being made in compliance with Regulation D promulgated
under the Securities Act of 1933, as amended, to accredited investors only.
After conversion of their Preferred Stock, holders may not sell the underlying
Common Stock unless it is registered or an exemption is then available. The
Company agreed to use its best efforts to file a registration statement covering
such Common Stock by October 1, 1996 and in no event later than October 15,
1996, at which time certain penalties commence.
In connection with the Offering, the Company paid the placement agent a 10%
selling commission, plus a 3% non-accountable expense allowance. The Company
intends to use the net proceeds of the Offering to complete a pending
acquisition, another acquisition and/or to satisfy a condition necessary to
increase the amount of the Company's bank line of credit.
2
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Item 7. Financial Statements and Exhibits.
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(c) Exhibits.
3.1. Certificate of Designation and Preferences of Series C
Convertible Preferred Stock.
10.1. Form of Subscription Agreement.
3
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AGRIBIOTECH, INC.
Date: September 30, 1996 By: /s/ Johnny R. Thomas
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Johnny R. Thomas
President
4
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EXHIBIT INDEX
Exhibit No. Description
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3.1 Certificate of Designation and Preferences of Series C
Convertible Preferred Stock.
10.1. Form of Subscription Agreement.
5
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EXHIBIT 3.1
CERTIFICATE OF DESIGNATION, NUMBER, POWERS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL, AND OTHER SPECIAL RIGHTS AND THE QUALIFICATIONS,
LIMITATIONS, RESTRICTIONS, AND OTHER DISTINGUISHING CHARACTERISTICS OF SERIES
C CONVERTIBLE PREFERRED STOCK OF AGRIBIOTECH, INC.
It is here certified that:
1. The name of the Company (hereinafter called the "Company") is AgriBioTech,
Inc., a Nevada company whose address is Quail Park West, 2700 Sunset Rd., Suite
C-25, Las Vegas, Nevada 89120.
2. The articles of incorporation of the Company authorizes the issuance of ten
million (10,000,000) shares of Preferred Stock of a par value of $.001 per share
and expressly vests in the Board of Directors of the Company the authority
provided therein to issue any or all of said shares in one or more series and by
resolution or resolutions to establish the designation, number, full or limited
voting powers, or the denial of voting powers, preferences and relative,
participation, optional, and other special rights and the qualifications,
limitations, restrictions, and other distinguishing characteristics of each
series to be issued.
3. The Board of Directors of the Company, pursuant to the authority expressly
vested in it as aforesaid, has adopted the following resolutions creating a
Series A issue of Convertible Preferred Stock:
RESOLVED, that ten thousand (10,000) of the ten million (10,000,000)
authorized shares of Convertible Preferred Stock of the Company shall be
designated Series A Convertible Preferred Stock, $.001 par value per share, and
shall possess the rights and privileges as set forth in its Certificate of
Designation filed with the Secretary of State on March 28, 1996.
4. The Board of Directors of the Company, pursuant to the authority expressly
vested in it as aforesaid, has adopted the following resolutions creating a
Series B issue of Convertible Preferred Stock:
RESOLVED, that ten thousand (10,000) of the ten million (10,000,000)
authorized shares of Convertible Preferred Stock of the Company shall be
designated Series B Convertible Preferred Stock, $.001 par value per share, and
shall possess the rights and privileges as set forth in its Certificate of
Designation filed with the Secretary of State on April 4, 1996.
3. The Board of Directors of the Company, pursuant to the authority expressly
vested in it as aforesaid, has adopted the following resolutions creating a
Series C issue of Convertible Preferred Stock:
RESOLVED, that fifteen thousand (15,000) of the ten million (10,000,000)
authorized shares of Convertible Preferred Stock of the Company shall be
designated Series C Convertible Preferred Stock, $.001 par value per share, and
shall possess the rights and privileges set forth below:
SECTION 1. DESIGNATION AND AMOUNT.
The shares of such series shall be designated as "Series C Convertible Preferred
Stock" (the "Series C Convertible Preferred Stock") and the number of shares
constituting the Series C Convertible Preferred Stock shall be fifteen thousand
(15,000). Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, that no decrease shall reduce the number of
shares of Series C Convertible Preferred Stock to a number less than the number
of shares then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the Company convertible into Series C
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Convertible Preferred Stock.
SECTION 2. RANK.
The Series C Convertible Preferred Stock shall rank: (i) prior to all of the
Company's Common Stock, par value $.001 per share ("Common Stock"), (ii) prior
to any class or series of capital stock of the Company hereafter created
specifically ranking by its terms junior to any Series C Convertible Preferred
Stock of whatever subdivision (collectively, with the Common Stock, "Junior
Securities"), (iii) on parity with Series B Convertible Preferred and with any
class or series of capital stock of the Company hereafter created specifically
ranking by its terms on parity with the Series C Convertible Preferred Stock
("Parity Securities"); and (iv) junior to any Class or Series of capital stock
of the Company hereafter created specifically ranking by its terms senior to the
Series C Convertible Preferred Stock ("Senior Securities"), in each case as to
distributions of assets upon liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary (all such distributions being referred
to collectively as "Distributions").
SECTION 3. DIVIDENDS.
The Series C Convertible Preferred Stock will bear no dividends, and the holders
of Series C Convertible Preferred Stock ("Holders") shall not be entitled to
receive dividends on the Series C Convertible Preferred Stock.
SECTION 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidations, dissolution or winding up of the Company,
either voluntary or involuntary, the Holders of shares of Series C Convertible
Preferred Stock shall be entitled to receive, immediately after any
distributions to Senior Securities required by the Company's Certificate of
Incorporation or any certificate of designation of preferences (specifically
ranking by its terms senior to Series C Convertible Preferred Stock), and prior
and in preference to any distribution to Junior Securities but in parity with
any distribution of Parity Securities, an amount per share equal to the sum of
(i) $1,000 for each outstanding share of Series C Convertible Preferred Stock
(the "Original Series C Issue Price") and (ii) an amount equal to 8% of the
Original Series C Issue Price per annum for the period that has passed since the
date of issuance of any Series C Convertible Preferred Stock (such amount being
referred to herein as the "Premium"). If upon the occurrence of such event, the
assets and funds thus distributed among the Holders of Series C Convertible
Preferred Stock and Parity Securities shall be insufficient to permit the
payment to such Holders of the full preferential amounts due to the Holders of
the Series C Convertible Preferred Stock and the Parity securities,
respectively, then the entire assets and funds of the Company legally available
for distribution shall be distributed among the Holders of the Series C
Convertible Preferred Stock and the Parity Securities, pro rata, based on the
respective liquidation amounts to which each such series of stock is entitled by
the Company's Certificate of Incorporation and any certificate of designation of
preferences.
(b) Upon the completion of the distribution required by subsection 4(a), if
assets remain in this Company, they shall be distributed to holders of Parity
Securities (unless holders of Parity Securities have received distributions
pursuant to subsection (a) above) and Junior Securities in accordance with the
Company's Certificate of Incorporation including any duly adopted certificate(s)
of designation of preferences.
(c) A consolidation or merger of the Company with or into any other corporation
or corporations, or a sale, conveyance or disposition of all or substantially
all of the assets of the Company or the effectuation by the Company of a
transaction or series of related transactions in which more than 50% of the
voting power of the Company is disposed of, shall not be deemed to be a
liquidation, dissolution or winding up within the meaning of this Section 4, but
shall instead by treated pursuant to Section 8 hereof.
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SECTION 5. CONVERSION. THE RECORD HOLDERS OF THE SERIES C CONVERTIBLE
PREFERRED STOCK SHALL HAVE CONVERSION RIGHTS AS FOLLOWS (THE "CONVERSION
RIGHTS"):
(a) HOLDER'S RIGHT TO CONVERT.
(i) The record Holder of this Series C Convertible Preferred Stock shall be
entitled (at the times and in the amounts set forth below), and, subject to the
Company's right of redemption set forth in Section 7, at the office of the
Company or any transfer agent for the Series C Convertible Preferred Stock, to
convert portions of the Series C Convertible Preferred Stock held by such Holder
(but only in multiples of $10,000) into that number of restricted, fully-paid
and non-assessable shares of the $.001 par value common stock of the Company
(the "Common Stock") at the Conversion Rate as set forth below. The number of
shares of Common Stock into which this Series C Convertible Preferred Stock may
be converted is hereinafter referred to as the "Conversion Number" for such
Series C Convertible Preferred Stock. The record Holder of this Series C
Convertible Preferred Stock shall be entitled to convert up to 34 percent of the
initial number of shares of Series C Convertible Preferred Stock held by such
Holder on the effective date of the registration statement to be filed by the
Company by October 1, 1996 ("First Conversion Period"), an additional 33 percent
(on a cumulative basis) of the initial number of shares of Series C Convertible
Preferred Stock held by such Holder beginning December 2, 1996 ("Second
Conversion Period"), and an additional 33 percent (on a cumulative basis) of the
initial number of the shares of Series C Convertible Preferred Stock held by
such Holder beginning February 1, 1996 ("Third Conversion Date). The following
formula sets forth the number of shares (Conversion Number) issued upon
conversion of one (1) share of Series C Convertible Preferred Stock:
Conversion Number = (.08) (N/365) (1,000) + 1,000
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Conversion Rate
where,
The Premium (as defined in Section 4(a) is multiplied by a fraction consisting
of N, (as defined), divided by 365 days per annum. N= the number of days
between (i) the closing date (the "Closing Date"), in connection with the
consummation of the purchase of this Series C Convertible Preferred Stock for
which the Company receives funds representing full payment for the shares of
Series C Convertible Preferred Stock for which conversion is being elected, and
(ii) the applicable date of conversion for the shares of Series C Convertible
Preferred Stock for which conversion is being elected, and
Conversion Price = 80% of the average Closing Bid Price, as that term is defined
below, of the Company's Common Stock for the five (5) trading days immediately
preceding the Date of Conversion, as defined below. For purposes hereof, the
term "Closing Bid Price" shall mean the closing bid price of the Company's
Common Stock as reported by NASDAQ (or, if not reported by NASDAQ as reported by
such other exchange or market where traded) or, if actual sales price
information is not available on any such day, the Closing Bid Price on the last
reported day, prior to such day, for each of the five trading days immediately
preceding the date of conversion.
Not withstanding the above-formula, the Conversion Rate (the "Convertible Rate")
for the First Conversion Period shares of the Series C Convertible Preferred
Stock, shall equal the lower of (x) $3.00 per share of (y) the Conversion Price,
whichever results in the greater number of shares of Common Stock being issued.
The Conversion Rate for the Second Conversion Period shares of the Series C
Convertible Stock shall equal the lower of (x) the sum of $3.50 per share or (y)
the Conversion Price. The Conversion Rate for the Third Conversion Period
shares shall equal the lower of (x) the sum of $4.00 per share or (y) the
Conversion Price. For the purpose of this paragraph, each Holder shall convert
all First Conversion Period shares first, then convert Second Conversion Period
shares, and lastly, convert Third Conversion Period shares.
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Notwithstanding the provisions of Section 7 hereof, in any event, if, at the
date of conversion, any or all of the Series C Convertible Preferred Stock is
converted at a Conversion Price less than or equal to 80% of the average Closing
Bid Price for the five (5) trading days immediately preceding the Closing Date,
the holders of Series C Convertible Preferred Stock shall be obligated to
provide the Company a two (2) day right of first refusal to purchase any of the
shares of Common Stock issued upon conversion of the Series C Convertible
Preferred Stock at a price equal to the Closing Bid Price plus the Premium as
described in Section 4(a) above.
(ii) MECHANICS OF CONVERSION. In order to convert Series C Convertible
Preferred Stock into full shares of Common Stock, the Holder shall (i) transmit
facsimile copy of the fully executed notice of conversion in the form attached
hereto ("Notice of Conversion") to the Company at such office that he elects to
convert the same (Facsimile number 702-798-8808), which notice shall specify the
number of shares of Series C Convertible Preferred Stock to be converted and
shall contain a calculation of the Conversion Rate (together with a copy of the
first page of each certificate to be converted) to the Company or its designated
transfer agent prior to midnight, New York City time (the "Conversion Notice
Deadline) on the date of conversion specified on the Notice of Conversion and
(ii) surrender the original certificate or certificates therefor, duly endorsed,
and deliver the original Notice of Conversion by either overnight courier or 2-
day courier, to the office of the Company or of any transfer agent for the
Series C Convertible Preferred Stock; provided, however, that the Company shall
not be obligated to issue certificates evidencing the shares of Common Stock
issuable upon such conversion unless either the certificates evidencing such
Series C Convertible Preferred Stock are delivered to the Company or its
transfer agent as provided above, or the Holder notifies the Company or its
transfer agent that such certificates have been lost, stolen, or destroyed.
Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of the certificate or certificates ("Stock Certificates")
representing shares of Series C Convertible Preferred Stock, and (in the case of
loss, theft or destruction) of indemnity or security reasonably satisfactory to
the Company, and upon surrender and cancellation of the Stock Certificate(s), if
mutilated, the Company shall execute and deliver new Stock Certificate(s) of
like tenor and date. No fractional shares of Common Stock shall be issued upon
conversion of this Series C Convertible Preferred Stock. In lieu of any
fractional share to which the Holder would otherwise be entitled, the Company
shall round up to the nearest whole share. In the case of a dispute as to the
calculation of the Conversion Rate, the Company's calculation shall be deemed
conclusive absent manifest error.
The Company shall use all reasonable efforts to issue and deliver within three
(3) business days after delivery to the Company of such certificates, or after
such agreement and indemnification, to such Holder of Series C Convertible
Preferred Stock at the address of the Holder on the books of the Company, a
certificate or certificates for the number of shares of Common Stock to which
the Holder shall be entitled as aforesaid. The date on which conversion occurs
(the "Date of Conversion") shall be deemed to be the date set forth in such
Notice of Conversion, provided (i) that the advance copy of the Notice of
Conversion is faxed to the Company before midnight, New York City time, on the
Date of Conversion, and (ii) that the original Stock Certificates representing
the shares of Series C Convertible Preferred Stock to be converted are received
by the transfer agent or the Company within five business days thereafter. 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 Stock
Certificates representing the Series C Convertible Preferred Stock to be
converted are not received by the transfer agent or the Company within five
business days after the Date of Conversion or if the facsimile of the Notice of
Conversion is nor received by the Company or its designated transfer agent prior
to the Conversion Notice Deadline, the Notice of Conversion, at the Company's
option, may be declared null and void.
Following conversion of shares of Series C Convertible Preferred Stock, such
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shares of Series C Convertible Preferred Stock will no longer be outstanding.
(b) RESERVATION OF STOCK ISSUANCE 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 Series C
Convertible Preferred Stock, such number of shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all then outstanding
Series C Convertible Preferred 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 Series C Convertible Preferred
Stock, the Company will take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
(c) ADJUSTMENT TO CONVERSION RATE.
(i) If, prior to the conversion of all Series C Convertible Preferred Stock,
there shall be any merger, consolidation, exchange of shares, recapitalization,
reorganization, or other similar event, as a result of which shares of Common
Stock of the Company shall be changed into the same or a different number of
shares of the same or another class or classes of stock or securities of the
Company or another entity, then the Holders of Series C Convertible Preferred
Stock shall thereafter have the right to purchase and receive upon conversion of
Series C Convertible Preferred Stock, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such shares of stock and/or
securities as may be issued or payable with respect to or in exchange for the
number of shares of Common Stock held by such Holders had such merger,
consolidation, exchange of shares, recapitalization or reorganization not taken
place, and in any such case appropriate provisions shall be made with respect to
the rights and interests of the Holders of the Series C Convertible Preferred
Stock to the end that the provisions hereof (including without limitation,
provisions for adjustment of the number of shares issuable upon conversion of
the Series C Convertible Preferred Stock) shall thereafter be applicable, as
nearly as may be practicable in relation to any shares of stock or securities
thereafter deliverable upon the exercise hereof. The Company shall not effect
any transaction described in this subsection 5(c) unless the resulting successor
or acquiring entity (if not the Company) assumes by written instrument the
obligation to deliver to the Holders of the Series C Convertible Preferred Stock
such shares of stock and/or securities as, in accordance with the foregoing
provisions, the Holders of the Series C Convertible Preferred Stock may be
entitled to purchase.
(ii) If, any adjustment under this subjection 5(c) would create a fractional
share of Common Stock or a right to acquire a fractional share of Common Stock,
such fractional share shall be disregarded and the number of shares of Common
Stock issuable upon conversion shall be the next higher number of shares.
Notwithstanding the provisions hereof, in no event shall the holder be entitled
to convert any Series C Convertible Preferred Stock in excess of that number of
shares upon conversion of which the sum of (1) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Series C Convertible Preferred Stock) and (2) the
number of shares of Common Stock issuable upon the conversion of the shares of
Convertible Preferred Stock with respect to which the determination of this
proviso is being made, would result in beneficial ownership by the Holder and
its affiliates of more than 4.9% of the outstanding shares of Common Stock. For
purposes of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13 D-G thereunder, except as
otherwise provided in clause (1) of such proviso.
(d) AUTOMATIC CONVERSION.
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The Series C Convertible Preferred Stock shall be automatically converted by the
Company into Common Stock on September 30, 1998, if it has not previously been
converted. The conversion shall be determined in accordance with the provisions
of Section 5.
SECTION 6. ADVANCE NOTICE OF REDEMPTION
(a) SUBSCRIBER'S RIGHTS TO ELECT TO RECEIVE NOTICE OF CASH REDEMPTION BY
COMPANY. A holder of Series C Convertible Preferred Stock ("Holder") shall have
the right to require the Company to provide advance notice stating whether
Company will elect to redeem such Holder's shares in cash, pursuant to Company's
redemption rights discussed in Section 7.
(b) MECHANICS OF SUBSCRIBER'S ELECTION NOTICE. A Holder shall send notice to
Company by facsimile ("Election Notice") stating Holder's intention to require
Company to disclose that if Holder were to exercise his, her or its right of
conversion (pursuant to section 5) whether Company would elect to redeem
Subscriber's convertible Security for cash in lieu of issuing Common Stock.
Company is required to disclose to Subscriber what action Company would take
over the subsequent five day period, including the date Company receives such
Election Notice.
(c) COMPANY'S RESPONSE. Company must respond within one business day of
receipt of Holder's Election Notice (1) via facsimile and (2) via overnight
courier. If Company does not respond to Holder within one business day via
facsimile and overnight courier, Company shall be required to issue to Holder
Common Stock upon Subscriber's conversions within seven (7) days after the
Election Notice was sent by Subscriber.
SECTION 7. CASH REDEMPTION BY COMPANY.
(a) Right To Redeem. The Company shall have the right, in its sole discretion,
upon receipt of a notice of conversion, to redeem in whole or in part, any
shares of Series C Convertible Preferred Stock submitted for conversion in
accordance with the provisions of the last paragraph of Section 5(a)(i) above.
If the Company elects to redeem some, but not all, of the Series C Convertible
Preferred Stock submitted for conversion, the Company shall redeem from among
the shares submitted by the various shareholders for conversion on the
applicable date, a pro-rata amount from each shareholder so submitting shares
for conversion.
(b) Mechanics of Redemption. The Company shall effect each such redemption by
giving notice of its election to redeem, by facsimile within 2 business days
following receipt of a Notice of Conversion with a copy by 2-day courier, to the
Holder of shares of Series C Convertible Preferred Stock submitted for
conversion at the address and facsimile number of such holder appearing in the
Company's register for the Series C Convertible Preferred Stock. Such
redemption notice shall indicate whether the Company will redeem all or part of
the shares of Series C Convertible Preferred Stock submitted for conversion and
the applicable redemption price. The Company shall not be entitled to send any
notice of redemption and begin the redemption procedure unless it has the full
amount of the redemption price, in cash or liquid assets, available in a demand
or other immediately available account in a bank or similar financial
institution on the date the redemption notice is sent to shareholders.
(c) Mandatory Redemption. The Company, at its option, shall have the right to
redeem all outstanding Series C Convertible Preferred Stock for a price equal to
the Closing Bid Price anytime after February 15, 1997. The Company must provide
the investor with 30 days' written notice of its intent to exercise its right
for a mandatory redemption.
The mandatory redemption price shall be paid to the Holder of shares of Series C
Convertible Preferred Stock redeemed within 10 business days after the
redemption date specified in the notice of such redemption to such holder,
provided, however, that the Company shall not be obligated to deliver any
portion
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of such redemption price unless either the certificates evidencing the shares of
Series C Convertible Preferred Stock redeemed are delivered to the Company or
its transfer agent as provided in Section 6, or the holder notifies the Company
or its transfer agent 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.
SECTION 8. CORPORATE CHANGE.
The Closing Bid Price used to determine the Convertible Price shall be
appropriately adjusted to reflect, as deemed equitable and appropriate by the
Company, any stock dividend, stock split or share combination of the Common
Stock. In the event of a merger, reorganization, recapitalization or similar
event of or with respect to the Company (a "Corporate Change") (other than a
Corporate Change in which all or substantially all of the consideration received
by the holders of the Company's equity securities upon such Corporate Change
consists of cash or assets other than securities issued by the acquiring entity
or any affiliate thereof), this Series C Convertible Preferred Stock shall be
assumed by the acquiring entity and thereafter this Series C Convertible
Preferred Stock shall be convertible into such class and type of securities as
the Holder would have received had the Holder converted this Series C
Convertible Preferred Stock immediately prior to such Corporate Change.
SECTION 9. VOTING RIGHTS.
Except as otherwise provided by the Nevada Revised Statutes Law, the holders of
the Series C Convertible Preferred Stock shall have no voting power whatsoever,
and no holder of Series C Convertible Preferred Stock shall vote or otherwise
participate in any proceeding in which actions shall be taken by the Company or
the shareholders thereof or be entitled to notification as to any meeting of the
Board of Directors or the shareholders.
To the extent that under Nevada Law the vote of holders of the Series C
Convertible Preferred Stock, voting separately as a class, is required to
authorize a given action of the company, the affirmative vote or consent of the
holders of at least a majority of the outstanding shares of the Series C
Convertible Preferred Stock shall constitute the approval of such action by the
class. To the extent that under Nevada Law the holders of the Series C
Convertible Preferred Stock are entitled to vote on a matter with holders of
Common Stock, voting together as one class, each share of Series C Convertible
Preferred Stock shall be entitled to a number of votes equal to the number of
shares of Common Stock into which it is then convertible using the record date
for the taking of such vote of stockholders as the date as of which the
Conversion Rate is calculated. Holders of the Series C Convertible 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
would be provided pursuant to the Company's by-laws and applicable statutes.
SECTION 10. PROTECTION PROVISIONS.
So long as shares of Series C Convertible Preferred Stock are outstanding, the
Company shall not without first obtaining the approval (by vote or written
consent, as provided by law) of the holders of at least a majority of the then
outstanding shares of Series C Convertible Preferred Stock:
(a) alter or change the rights, preferences or privileges of the shares of
Series C Convertible Preferred Stock or any Senior Securities so as to affect
adversely the Series C Convertible Preferred Stock; or
(b) create any new class or series of stock having a preference over the Series
C Convertible Preferred Stock with respect to Distributions (as defined in
Section 2 above); or
(c) do any act or thing not authorized or contemplated by this Designation
which
<PAGE>
would result in taxation of the holders of shares of the Series C Convertible
Preferred Stock under Section 305 of the Internal Revenue Code of 1986, as
amended (or any comparable provision of the Internal Revenue Code as hereafter
from time to time amended).
SECTION 11. STATUS OF REDEEMED OR CONVERTED STOCK.
In the event any shares of Series C Convertible Preferred Stock shall be
redeemed or converted pursuant to Section 5 or Section 6 hereof, the shares so
redeemed or converted shall be canceled, shall return to the status of
authorized, but unissued Convertible Preferred Stock of no designated series,
and shall not be issuable by the Company as Series C Convertible Preferred
Stock.
SECTION 12. PREFERENCE RIGHTS.
Nothing contained herein shall be construed to prevent the Board of Directors of
the Company from issuing one or more series of Convertible Preferred Stock with
dividend and/or liquidation preferences equal to the dividend and liquidation
preferences of the Series C Convertible Preferred Stock.
FURTHER RESOLVED, that the statements contained in the foregoing resolutions
creating and designating the said Series C Convertible Preferred Stock and
fixing the number, powers, preferences and relative, optional, participating,
and other special rights and the qualifications, limitations, restrictions, and
other distinguishing characteristics thereof shall, upon the effect date of said
series, be deemed to be included in and be a part of the certificate of
incorporation of the Company pursuant to the provisions of Chapter 78 of the
Nevada Revised Statutes.
Signed On September 10, 1996
/s/ Johnny R. Thomas President
- -------------------------------
Attest: /s/ John C. Francis Secretary
-------------------------
NOTICE OF CONVERSION
(To be executed by the Registered Holder
in order to Convert the Series C Convertible Preferred Stock)
The undersigned hereby irrevocably elects to convert _____ shares of Series C
Convertible Preferred Stock, represented by stock certificate No(s). ____ (the
"Convertible Preferred Stock Certificates") into shares of common stock ("Common
Stock") of AgriBioTech, (the "Company") according to the conditions of the
Certificate of Designation of Series C Convertible Preferred Stock, as of the
date written below. If shares are to be issues in the name of a person other
than undersigned, the undersigned will pay all transfer taxes payable with
respect thereof and is delivering herewith such certificates. No fee will be
charged to the Holder for any conversion, except for transfer taxes, it any.
The undersigned represents and warrants that all offers and sales by the
undersigned of the shares of Common Stock issuable to the undersigned upon
conversion of the Series C Convertible Preferred Stock shall be made pursuant to
registration of the Common Stock under the Act or pursuant to an exemption from
registration under the Act.
<PAGE>
Conversion Calculations:
Date of Conversion
Applicable Conversion Price
Signature
Name
Address
No shares of Common Stock shall be issued until the original Convertible
Preferred Stock Certificate(s) to be converted and the Notice of Conversion are
received by the Company's Attorney or transfer Agent. The original Stock
Certificates representing the Series C Convertible Preferred Stock to be
converted and the Notice of Conversion must be received by the Company's
Attorney or Transfer Agent by the fifth business day following the Date of
Conversion, or the Notice of Conversion, at the Company's option, may be
declared null and void.
<PAGE>
EXHIBIT 10.1
SUBSCRIPTION AND PURCHASE AGREEMENT
FOR
UP TO 10,000 SHARES OF SERIES C CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.001 PER SHARE
OF AGRIBIOTECH, INC.
(A NEVADA CORPORATION)
SUBSCRIPTION AND PURCHASE AGREEMENT (THE "AGREEMENT) dated as of the ____ day
of September, 1996, by and between AgriBioTech, Inc., a Nevada corporation,
having offices at Quail Park West, 2700 Sunset Rd., Suite C25, Las Vegas, Nevada
89120 (the "Company"), and those subscribers who execute this Agreement on or
before September 13, 1996 (the "Primary Subscribers") and any additional
subscribers who execute this Agreement after September 13, 1996, but by
September 30, 1996 (the "Over-Allotment Primary Subscribers") (collectively
"Subscribers").
WITNESSETH:
WHEREAS, Primary Subscribers and the Company have arranged for this
Subscription and Purchase Agreement (the "Agreement") executed on this date for
7,500 shares of a convertible preferred stock, par value $.001 per share for the
Primary Subscribers , to be designated by the Company's Board of Directors as
"Series C Convertible Preferred Stock" (hereinafter referred to as the "Series C
Preferred Stock") with the Company having granted the Over-Allotment Subscribers
an over-allotment option until September 30, 1996, to purchase an additional
2,500 shares of Series C Preferred Stock (the 7,500 shares shall hereafter be
referred to as the Initial Shares and the 2,500 additional shares of Series C
Preferred Stock as the Over-Allotment Shares), to provide for the subscription
and, if such subscription as set forth in this Agreement is accepted by the
Company, the purchase by the Subscribers, on the terms and subject to the
conditions set forth in this Agreement, of that number of shares of Series C
Preferred Stock set forth on the signature page hereof.
WHEREAS, the Company's Common Stock is listed for trading on the Nasdaq Small
Cap Market, and the Company is subject to the reporting requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and has been subject to such filing requirements for the past ninety (90)
days; and
WHEREAS, the Subscribers are "accredited investors" as such term is defined in
Rule 501 of Regulation D promulgated under the Securities Act of 1933, as
amended (the "Act"); and
WHEREAS, the Securities to be sold in accordance with this Agreement shall not
be registered securities under federal or state securities laws or quoted or
listed for trading on any securities exchange (although they will be listed on
the Nasdaq Small Cap market), organized market or quotation system at the time
of acquisition hereunder; and
WHEREAS, in order to induce the Subscribers to enter into this Agreement and
to subscribe for and purchase the Securities on the terms and subject to the
conditions hereof, the Company is granting certain registration rights hereunder
with respect to the Common stock issuable upon the conversion of the Series C
Preferred Stock; and
WHEREAS, in reliance upon certain representations made by the Subscribers
herein, the transactions contemplated by this Agreement are such that the offer
and sale of Securities by the Company hereunder will be exempt from registration
under applicable federal and state securities laws pursuant to exemptions made
available under such laws.
<PAGE>
NOW, THEREFORE, for and in consideration of the premises, and the mutual
representations, warranties, covenants and agreements set forth herein, and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto agree as follows:
1. SUBSCRIPTION FOR PURCHASE OF SECURITIES
a. SALE AND PURCHASE. (i) On the basis of the representations, warranties,
covenants and agreements, and subject to the terms and conditions set forth
herein, upon the Closing hereof (as that term is defined in Section 2(a) below)
the Company agrees to sell, transfer, convey and deliver to the Primary
Subscribers, and the Primary Subscribers agree to purchase, acquire and accept
delivery from the Company the Initial Shares for an aggregate purchase price of
United States ("U.S.") $7,500,000 (the "Purchase Price"); (ii) On the basis of
the representations, warranties, covenants and agreements being true as of the
additional closing date of no later than September 30, 1996, for the Over-
Allotment Shares, the Company has the option to sell transfer, convey and
deliver to the Over-Allotment Subscribers and the Over-Allotment Subscribers
agree to purchase, acquire and accept delivery from the Company the Over-
Allotment Shares for an aggregate purchase price of U.S. $2,500,000 (the "Over-
Allotment Price").
b. REPORTING COMPANY. Although the Securities, the shares of Common
Stock issuable upon conversion of the Series C Preferred Stock (the "Conversion
Shares") shall not be registered upon the Closing under federal or state
securities laws or any rules or regulations promulgated thereunder, the Company
is a public reporting company and has filed or obtained an extension to file
all reports required to be filed by Section 13 or 15(d) of the Exchange Act,
since the Company was required to file such reports. Subscribers has had the
opportunity to review, and has reviewed, all such reports and information which
such Subscribers deemed material to an investment decision regarding the
purchase of the Securities hereunder.
c. TERMS OF THE SERIES C PREFERRED STOCK. The Series C Preferred Stock
shall contain and be subject to the terms, conditions, preferences and
restrictions set forth in the Certificate of Designations attached hereto as
Exhibit "A".
2. PAYMENT OF PURCHASE PRICE: DELIVERY OF SECURITIES.
a. INITIAL SHARE CLOSING. The Initial Closing of the purchase of the
Initial Shares contemplated by this Agreement shall occur on or about September
13, 1996, at the offices of the Company's attorneys Snow Becker Krauss P.C., 605
Third Avenue, New York, NY 10158 (the "Escrow Agent") or at such other mutually
convenient time or at such other mutually convenient place as agreed upon by the
parties. The Escrow Agent shall be authorized to pay 10% of the gross proceeds
payable in cash plus 3% non-accountable expenses as directed in written
instructions from J. W. Charles Securities Inc.
b. PURCHASE PRICE AND PAYMENT. At the Initial Closing, Primary
Subscribers shall deliver to the Company, in cash, by wire transfer, the
Purchase Price in U.S. dollars and upon receipt by the Company of the Purchase
Price, the Company shall cause to be delivered:
i) to the Primary Subscribers, written evidence from the Secretary of
State for the State of Nevada that the Certificate of Designations has
been filed in the Office of the Secretary of State for the State of
Nevada on or before the date of Closing and;
ii) to the Primary Subscribers, a certificate or certificates representing
the shares of Series C Preferred Stock purchased by the Primary
Subscribers hereunder, in such denominations as Primary Subscribers
shall request, all of which certificates
<PAGE>
shall total the Initial Shares.
c. OVER-ALLOTMENT CLOSING. At the Over-Allotment Closing, Subscribers
shall deliver to the Company, in cash, by wire transfer, the Purchase Price in
U.S. dollars and upon receipt by the Company of the Purchase Price and
acceptance of the subscription by the Company, the Company shall cause to be
delivered:
i) to the Over-Allotment Subscribers, an officers' certificate attesting
to the truth and accuracy of all representations, warranties and
obligations hereunder and that there have been no material adverse
changes in the Company's condition (financial or otherwise ) since the
Initial Closing, and
ii) certificate(s) representing the Over-Allotment Shares in such
denominations as Over-Allotment Subscribers shall request.
d. RESTRICTIVE LEGENDS. Subject to the provisions of Section 5 below,
all certificates representing the Series C Preferred Stock shall bear the
restrictive legend substantially in the form set forth in Section 6 below which
shall include, but not be limited to, a legend to the effect that the securities
represented by such certificate have not been registered under the Securities
Act of 1933, as amended (the "Act"), and unless there is an effective
registration statement relating thereto, such securities may not be offered,
sold, transferred, mortgaged, pledged or hypothecated without an exemption from
registration and an opinion of counsel to the Company with respect thereto. The
legend on all such certificates shall also make reference to the registration
rights set forth in Section 5 hereof.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SUBSCRIBERS. In connection
with this Agreement, the Subscribers individually hereby represent, warrant and
covenant to the Company as follows:
a. INVESTMENT INTENT. The Subscribers represent and warrant that the
Series C Preferred Stock being purchased (and any underlying Conversion Shares)
are being purchased or acquired solely for the Subscribers's own account, for
investment purposes only and not with a view toward the distribution or resale
to others. Subscribers acknowledge, understand, and appreciate that the Series
C Preferred Stock have not been registered under the Act by reason of a claimed
exemption under the provision of such Act which depends, in large part, upon
Subscribers's representations as to investment intention, investor status and
related and other matters set forth herein. In this connection, the Subscribers
understand that it is the position of the SEC that the statutory basis for such
exemption would not be present if his representation merely meant that their
present intention was to hold such securities for a short period, such as the
capital gains period of tax statutes, for a deferred sale, for a market rise,
assuming that a market develops, or for any other fixed period. Subscribers
understand that, in the view of the United State Securities and Exchange
Commission ( the "SEC"), among other things, a purchase now with an intent to
distribute or resell would represent a purchase and acquisition with an intent
inconsistent with its representation to the Company, and the SEC might regard
such a transfer as a deferred sale for which the registration exemption is not
available. Subscribers agree and consent to the placement of a legend on the
certificate(s) representing the Series C Preferred Stock purchased and acquired
hereunder, stating that such Series C Preferred Stock has not been registered
under the Act or applicable state securities laws and cannot be sold by them
without registration or an exemption from registration.
b. CERTAIN RISK. The Subscribers recognize that the purchase of the
Securities involves a high degree of risk in that (i) the Company has sustained
losses through June 30, 1996, from its operations, and may require substantial
funds in addition to the proceeds of this private placement; (ii) an investment
in the Company is highly speculative and only investors who can
<PAGE>
afford the loss of their entire investment should consider investing in the
Company and the Series C Preferred Stock; (iii) an investor may not be able to
liquidate his investment; (iv) transferability of the Series C Preferred Stock
is extremely limited; (v) in the event of disposition, an investor could sustain
the loss of his entire investment; (vi) the Series C Preferred Stock represent
non-voting equity securities, and the right to convert into and purchase shares
of voting equity securities in a corporate entity: (vii) no return on
investment, whether through distributions, appreciation, transferability or
otherwise, and no performance by, through or of the Company, has been promised,
assured, represented or warranted by the Company, or by any director, officer,
employee, agent or representative thereof; and (viii) while the Common Stock is
presently quoted and traded on the Nasdaq Small Cap Market and while the
Subscribers are beneficiaries of certain registration rights provided herein,
the Securities subscribed for and that may be purchased under this Agreement and
the Conversion Shares issuable upon conversion of the Series C Preferred Stock,
(x) are not registered under applicable federal or state securities laws, and
thus may not be sold, conveyed, assigned or transferred unless registered under
such laws or unless an exemption from registration is available under such laws,
as more fully described below, and (y) are not quoted, traded or listed for
trading or quotation on the Nasdaq Small Cap Market, or any other organized
market or quotation system, and there is therefore no present public or other
market for such Securities or the Conversion Shares, nor can there be any
assurance that the Common Stock will continue to be quoted, traded or listed for
trading or quotation on the Nasdaq Small Cap Market or on any other organized
market or quotation system.
c. PRIOR INVESTMENT EXPERIENCE. The Subscribers acknowledge that they
have prior investment experience, including investment in non-listed and non-
registered securities, or have employed the services of an investment advisor,
attorney or accountant to read all of the documents furnished or made available
by the Company to them and to evaluate the merits and risks of such an
investment on their behalf, and that they recognize the highly speculative
nature of this investment.
d. NO REVIEW BY THE SEC. The Subscribers hereby acknowledge that this
offering of the Securities has not been reviewed by the SEC because this private
placement is intended to be a nonpublic offering pursuant to Sections 4(2) or
3(b) of the Act and/or Regulation D promulgated under the Act.
e. NO PUBLIC MARKET. The Subscribers understand that there is no public
market for the Series C Preferred Stock. The Subscribers understand that
although there is presently a public market for the Common Stock, including the
Common Stock issuable upon conversion of the Series C Preferred Stock, Rule 144
(the "Rule") promulgated under the Act requires, among other conditions, a two-
year holding period following full payment of the consideration therefore prior
to the resale (in limited amounts) of securities acquired in a nonpublic
offering without having to satisfy the registration requirements under the Act.
The Subscribers understand that the Company makes no representation or warranty
regarding its fulfillment in the future of any reporting requirements under the
Exchange Act, or its dissemination to the public of any current financial or
other information concerning the Company, as is required by the Rule as one of
the conditions of its availability. The Subscribers understand and hereby
acknowledge that the Company is under no obligation to register the Securities
or the Conversion Shares under the Act, with the exception that the Company is
obligated to provide those registration rights set forth in Section 5 hereof.
The Subscribers consent that the Company may, if it desires, permit the transfer
of the Series C Preferred Stock or Common Stock issuable upon exercise thereof
out of their name only when their request for transfer is accompanied by an
opinion of counsel reasonably satisfactory to the Company that neither the sale
nor the proposed transfer results in a violation of the Act or any applicable
state "Blue Sky" laws (collectively, "Securities Laws"). The Subscribers agree
to hold the Company and its directors, officers and controlling persons and
their
<PAGE>
respective heirs, representatives, successors and assigns harmless and to
indemnify them against all liabilities, costs and expenses incurred by them as a
result of any misrepresentation made by the Subscribers contained herein or any
sale or distribution by the Subscribers in violation of any Securities Laws.
f. SOPHISTICATED INVESTORS. That (i) the Subscribers have adequate means
of providing for the Subscribers' current financial needs and possible
contingencies and have no need for liquidity of the Subscribers' investment in
the Securities; (ii) the Subscribers are able to bear the economic risks
inherent in an investment in the Securities and that an important consideration
bearing on their ability to bear the economic risk of the purchase of Series C
Preferred Stock is whether the Subscribers can afford a complete loss of the
Subscribers' investment in the Series C Preferred Stock and the Subscribers s
represent and warrant that the Subscribers can afford such a complete loss; and
(iii) the Subscribers have such knowledge and experience in business, financial,
investment and banking matters (including, but not limited to, investments in
restricted, non-listed and non-registered securities) that the Subscribers are
capable of evaluating the merits, risks and advisability of an investment in the
Series C Preferred Stock.
g. SEC FILING. The Subscribers acknowledge that they have been previously
furnished with true and complete copies of the following documents which have
been filed with the SEC pursuant to Sections 13(a), 14(a), 14(c) or 15(d) of the
Exchange Act since June 30, 1995, and that such have been furnished to the
Subscribers a reasonable time prior to the date hereof:
i. the Company's Form 10-KSB for the year ended June 30, 1995;
ii. the Company's Form 10-QSB for the quarters ended September 30,
1995; December 31, 1995; and March 31, 1996,
iii. the Company's Forms 8-K, dated:
April 19, 1995
May 23, 1995
May 26, 1995
June 22, 1995
June 23, 1995
December 14, 1995
December 22, 1995
February 1, 1996
April 12, 1996
iv. the Company's Proxy Statement, dated January 8, 1996.
h. DOCUMENTS, INFORMATION AND ACCESS. That (i) Subscribers' decision to
purchase the Securities is not based on any promotional, marketing or sales
materials, and (ii) Subscribers and their representatives have been afforded,
prior to purchase thereof, the opportunity to ask questions of, and to receive
answers from, the Company and its management, and have had access to all
documents and information which Subscribers deem material to an investment
decision with respect to the purchase of Series C Preferred Stock hereunder.
i. NO REGISTRATION, REVIEW OR APPROVAL. The Subscribers acknowledge and
understand that the limited private offering and sale of Series C Preferred
Stock pursuant to this Agreement has not been reviewed or approved by the SEC or
by any state securities commission, authority or agency, and is not registered
under the Act or under the securities or "blue sky" laws, rules or regulations
of any state. The Subscribers acknowledge, understand and agree that the Series
C Preferred Stock is being offered and sold hereunder pursuant to (i) a private
placement exemption to the registration provisions of the Act pursuant to
Section 3(b) or Section 4(2) of such Act and Regulation
<PAGE>
D promulgated under such Act, and (ii) a similar exemption to the registration
provisions of applicable state securities laws.
j. TRANSFER RESTRICTIONS. That Subscribers will not transfer any Series
C Preferred Stock purchased under this Agreement unless such Series C Preferred
Stock is registered under the Act and under any applicable state securities or
"blue sky" laws (collectively, the "Securities Laws"), or unless an exemption is
available under such Securities Laws, and the Company may, if it chooses, where
an exemption from registration is claimed by such Subscribers, condition any
transfer of Series C Preferred Stock out of such Subscribers' name on an opinion
of the Company's counsel, to the effect that the proposed transfer is being
effected in accordance with, and does not violate, an applicable exemption from
registration under the Securities Laws.
k. NO SHORT SALE. Subscribers expressly agree that until such time that
they have sold all of the Series C Preferred Stock and/or all of the Conversion
Shares that they shall not, directly or indirectly, through an affiliate (as
that term is defined under Rule 405 promulgated under the Act) or by, with or
through an unrelated third party or entity, whether or not pursuant to a written
or oral understanding, agreement, arrangement, scheme, or artifice of nature
whatsoever, engage in the short selling of the Company's Common Stock or any
other equity securities of the Company, whether now existing or hereafter
issued, or engage in any other activity of any nature whatsoever that has the
same effect as a short sale, or is a de facto or de jure short sale, of the
Company's Common Stock or any other equity security of the Company, whether now
existing or hereafter issued, including, but not limited to, the sale of any
rights pursuant to any understanding, agreement, arrangement, scheme or artifice
of any nature whatsoever, whether oral or in writing, relative to the Company's
Common Stock or any other equity securities of the Company whether now existing
or hereafter created.
l. RELIANCE. Subscribers understand and acknowledge that the Company is
relying upon all of the representations, warranties, covenants, understandings,
acknowledgments and agreements contained in this Agreement in determining
whether to accept this subscription, sell and issue the Series C Preferred Stock
to the Subscribers.
m. ACCURACY OF REPRESENTATIONS AND WARRANTIES. That all of the
representations, warranties, understandings and acknowledgments that Subscribers
have made herein are true and correct in all material respects as of the date of
execution hereof, and that Subscribers will perform and comply fully in all
material respects with all covenants and agreements set forth herein, and
Subscribers covenant and agree that until the acceptance of this Agreement by
the Company, Subscribers shall inform the Company immediately in writing of any
changes in any of the representations or warranties provided or contained
herein.
n. INDEMNITY. Subscribers hereby agree to indemnify and hold harmless
the Company, and the Company's successors and assigns, from, against and in all
respects of any demands, claims, actions or causes of action, assessments,
liabilities, losses, costs, damages, penalties, charges, fines or expenses
(including, without limitation, interest, penalties, and attorney and
accountants' fees, disbursements and expenses), arising out of or relating to
any breach by Subscribers of any representations, warranty, covenant or
agreement made by Subscribers in this Agreement. Such right to indemnification
shall be in addition to any and all other rights of the Company under this
Agreement or otherwise, at law or in equity.
o. SURVIVAL. Subscribers expressly acknowledge and agree that all of
their representations, warranties, agreements and covenants set forth in this
Agreement shall be of the essence hereof and shall survive the execution,
delivery and closing of this Agreement, the sale and purchase of the Series C
Preferred Stock, the conversion of the Series C Preferred Stock, and the sale of
the Conversion Shares.
<PAGE>
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. In order to
induce Subscribers to enter into this Agreement and to purchase the Series C
Preferred Stock, the Company hereby represents, warrants and covenants to the
Subscribers as follows:
a. ORGANIZATION, AUTHORITY, QUALIFICATION. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Nevada. The Company has full corporate power and authority to own and
operate its properties and assets and to conduct and carry on its business as it
is now being conducted and operated.
b. AUTHORIZATION. The Company has full power and authority to execute
and deliver this Agreement and to perform its obligations under and consummate
the transactions contemplated by this Agreement. Upon the execution of this
Agreement by the Company and delivery of the Series C Preferred Stock, this
Agreement shall have been duly and validly executed and delivered by the Company
and shall constitute the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
c. OWNERSHIP OF, AND TITLE TO, SERIES C PREFERRED STOCK: EXEMPTION FROM
REGISTRATION.
i. The Series C Preferred Stock to be purchased by the Subscribers are, and
Conversion Shares, when issued, will be, duly authorized, validly issued, fully
paid and nonassessable shares of the capital stock of the Company, free of
personal liability. Upon consummation of the purchase of Series C Preferred
Stock (and upon the conversion of the Series C Preferred Stock, in whole or in
part) pursuant to this Agreement, the Subscribers will own and acquire title to
the Series C Preferred Stock (and the Conversion Shares) free and clear of any
and all proxies, voting trusts, pledges, options, restrictions, or other legal
or equitable encumbrance of any nature whatsoever (other than the restrictions
on transfer due to securities laws or as otherwise provided for in this
Agreement or the Certificate of Designations).
ii. The Company represents and warrants that the offer and sale of Series C
Preferred Stock to the Subscribers in accordance with the terms and provisions
of this Agreement is being effected in accordance with the Act pursuant to (i) a
private placement exemption to the registration provisions of the Act pursuant
to Section 3(b) or 4(2) of such Act and Regulation D promulgated under such Act.
d. USE OF PROCEEDS FROM THIS OFFERING. The net proceeds from the sale of
the initial shares of the Series C Preferred Stock are estimated to be
approximately $6,500,000 after payment of placement fees to brokers of $975,000
and legal and accounting fees and miscellaneous expenses of approximately
$25,000, but prior to any fees and expenses relating to the registration of the
Conversion Shares pursuant to the terms of Section 5 hereof. The Company
intends to utilize substantially all of such net proceeds to complete a pending
acquisition and/or another acquisition and/or as a condition to increase the
Company's bank line of credit.
5. REGISTRATION RIGHTS. In order to induce the Subscribers to enter into
this Agreement and purchase the Series C Preferred Stock, the Company hereby
convenants and agrees to grant to the Subscribers the rights set forth in this
Section 5 with respect to the registration of the Conversion Shares.
a. REGISTRATION OF CONVERSION SHARES. Subject to the terms of Section 5
hereof, the Company agrees that by October 1, 1996, it shall prepare and file
with the SEC, a registration statement and such other documents, including a
prospectus, as may be necessary in the opinion of counsel for the Company in
order to comply with the provisions of the Act, so as to permit a public
offering of the shares of Common Stock issuable upon conversion of the Series C
Preferred Stock, plus shares of Common Stock, if any, issuable as
<PAGE>
payment of dividends on the Series C Preferred Stock pursuant to the terms of
the Series C Preferred Stock. The Company shall use its reasonable efforts to
cause such registration statement to become effective at the earliest possible
date after filing. In connection with the offering of such Common Stock
registered pursuant to this Section 5, the Company shall take such actions as
shall be reasonably necessary to qualify the Common Stock covered by such
registration statement under such "blue sky" or other state securities laws for
offer and sale as shall be reasonably necessary to permit the public offering
and sale of shares of Common Stock covered by such registration statement;
provided, however, that the Company shall not be required (i) to qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph, (ii) to subject itself to
taxation in any such jurisdiction, or (iii) to consent to general service of
process in any such jurisdiction. It is expressly agreed that in no event are
any registration rights being granted to the Series C Preferred Stock itself,
but only with respect to the underlying Conversion Shares issuable upon exercise
of the Series C Preferred Stock.
b. CURRENT REGISTRATION STATEMENT. Once effective, the Company shall
use its reasonable efforts to cause any registration statement filed hereunder
to remain current and effective for a period of one (1 year) or until the shares
of Common Stock covered by such registration statement are sold by the
Subscribers, whichever is less. The Subscribers shall promptly provide all such
information and materials and take all such actions as may be required in order
to permit the Company to comply with all applicable requirements of the SEC and
to obtain any desired acceleration of the effective date of such registration
statement.
c. PENALTY. The Company expressly agrees that in the event that it does
not file with the SEC the registration statement relative to the Conversion
Shares referred to in Section 5(a) above by October 15, 1996, each day
thereafter until the Company files such registration statement with the SEC, the
Company agrees to pay to the Subscribers a pro-rata penalty of $1,000, payable
in cash or Common Stock of the Company at the Company's election. If the
Company elects to pay such penalty in Common Stock of the Company, the number of
shares of Common Stock to be issued per day to the Subscribers shall be
determined by dividing the $1,000 by the closing bid price of the Company's
Common stock as reported on the Nasdaq Small Cap market for such day, or the
closing sale price for such day if the Company's Common Stock is listed on a
different national securities exchange. The penalty shall be waived if the
Subscribers and/or their counsel delay or cause the delay of the filing past
October 15, 1996.
d. OTHER PROVISIONS. In connection with the offering of any Conversion
Shares registered pursuant to this Section 5, the Company shall furnish to the
Subscribers such number of copies of any final prospectus as it may reasonably
request in order to effect the offering and sale of the Conversion Shares to be
offered and sold. In connection with any offering of Conversion Shares
registered pursuant to this Section 5, the Company shall (x) furnish to the
underwriters (if any), at the Company's expense, unlegended certificates
representing ownership of the Conversion Shares being sold in such denominations
as requested and (y) instruct any transfer agent and registrar of the Conversion
Shares to release immediately any stop transfer order, and to remove any
restrictive legend, with respect to Conversion Shares included in any
registration becoming effective pursuant to this Agreement.
e. COSTS. Subject to the immediately following sentence, the Company
shall in all events pay and be responsible for all fees, expenses, costs and
disbursements associated with the registration statement relating to the
Conversion Shares under this Section 5, including filing fees, fees, costs and
disbursements of any counsel, accountants and other consultants representing the
Company in Connection therewith. Notwithstanding anything set forth herein to
the contrary, Subscribers shall be responsible for any and all underwriting
discounts and commissions in connection with the sale of the
<PAGE>
Conversion Shares pursuant hereto and all fees of its legal counsel and other
advisors retained in connection with reviewing any registration statement.
f. SUCCESSORS. The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business, properties, stock or assets of the Company,
to expressly 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 had taken place.
g. INDEMNIFICATION.
i) The Company will indemnify and hold harmless the Subscribers, their
directors and officers, and any underwriter (as defined in the Act) for
the Subscribers and each person, if any, who controls the Subscribers or
such underwriter within the meaning of the Act, from and against, and
will reimburse the Subscribers and each such underwriter and controlling
person with respect to any and all loss, damage, liability, cost and
expense to which such holder or any such underwriter or controlling
person may become subject under the Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in
such registration statement, any final Prospectus contained therein or
any amendment or supplement thereto, or arise out of, or are based upon,
the omission alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made not misleading;
provided, however, that the Company will not be liable in any such case
to the extent that any such loss, damage, liability, cost or expense
arises out of, or is based upon, an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with
information furnished by the Subscribers, such underwriter or such
controlling person in writing specifically for use in the preparation
thereof.
ii) The Subscribers will indemnify and hold harmless the Company, its
directors and officers, any controlling person and any underwriter from
and against, and will reimburse the Company, its directors and officers,
any controlling person and any underwriter with respect to, any and all
loss, damage, liability, cost or expense to which the Company or any
controlling person and/or any underwriter may become subject under the
Act or otherwise, insofar as such losses, damages, liabilities, costs or
expenses are caused by any untrue statement or alleged untrue statement
of any material fact contained in such registration statement, any
prospectus contained therein or any amendment or supplement thereto, or
arise out of, or are based upon, the omission or alleged omission to
state therein a material fact required to be stated therein or necessary
to make therein, in light of the circumstances in which there were made,
not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was so made in reliance upon, and in strict conformity with,
written information furnished by, or on behalf of, the Subscribers
specifically for use in the preparation thereof.
iii) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (i) and (ii) of this Section 5(h) of notice of
the commencement of any action involving the subject matter of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is
to be made against the indemnifying party pursuant to the provisions of
said paragraph (i) or (ii), promptly notify the indemnifying party of the
commencement thereof; but the omission to
<PAGE>
so notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than hereunder. In
case such action is brought against any indemnified party and it notifies
the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and , to the extent that it
may wish, assume the defense thereof; or, if there is a conflict of
interest which would prevent counsel for the indemnified parties have the
right to select only one (1) separate counsel to participate in the
defense of such action on behalf of all such indemnified parties. After
notice from the indemnifying parties to such indemnified party of the
indemnifying parties' election so to assume the defense thereof, the
indemnifying parties will not be liable to such indemnified parties
pursuant to the provisions of said paragraph (i) or (ii) for any legal or
other expense subsequently incurred by such indemnified parties in
connection with the defense thereof, other than reasonable costs of
investigation, unless (i) the indemnified parties shall have employed
counsel in accordance with the provisions of the preceding sentence; (ii)
the indemnifying parties shall not have employed counsel satisfactory to
the indemnified parties to represent the indemnified parities with a
reasonable time after the notice of the commencement of the action or
(iii) the indemnifying party has authorized the employment of counsel for
the indemnified party at the expense of the indemnifying parties.
6. SECURITIES LEGENDS AND NOTICES. Subscribers represent and warrant that
they have read, considered and understood that the following legends,
substantially in the form and substance set forth below, shall be placed on all
of the certificates representing the Preferred Stock.
NEITHER THIS PREFERRED STOCK NOR ANY SHARES OF COMMON STOCK ISSUABLE
UPON THE CONVERSION OF THIS PREFERRED STOCK HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFIED
UNDER APPLICABLE STATE SECURITIES LAWS. THIS PREFERRED STOCK AND THE
COMMON STOCK ISSUABLE UPON CONVERSION OF THIS PREFERRED STOCK MAY NOT BE
OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT
WITH RESPECT THERETO UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE
STATE SECURITIES LAW OR WITHOUT THE PRIOR WRITTEN CONSENT OF AGRIBIOTECH,
INC.'S COUNSEL THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED
UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN EXEMPTION
THEREFROM.
NOTWITHSTANDING THE FOREGOING, THE SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION ARE ALSO SUBJECT TO THE REGISTRATION RIGHTS SET FORTH IN
THAT CERTAIN SUBSCRIPTION AND PURCHASE AGREEMENT BY AND BETWEEN THE HOLDER
HEREOF AND THE COMPANY, A COPY OF WHICH IS ON FILE AT THE COMPANY'S
PRINCIPAL EXECUTIVE OFFICE.
7. MISCELLANEOUS.
a. AMENDMENT; WAIVER. This Agreement shall not be changed, modified or
amended in any respect except by the mutual written agreement of the parties
hereto. Any provision of this Agreement may be waived in writing by the party
which is entitled to the benefits thereof. No waiver of any provision of this
Agreement shall be deemed to, or shall constitute a waiver of, any other
provision hereof or thereof (whether or not similar), nor shall any such waiver
constitute a continuing waiver.
b. BINDING EFFECT; ASSIGNMENT. This Agreement and any rights or
obligations hereunder or thereunder, are not assignable by the Subscribers.
c. GOVERNING LAW; LITIGATION COSTS. This Agreement and its validity,
construction and performance shall be governed in all respects by
<PAGE>
the internal laws of the State of Nevada without giving effect to such State's
conflicts of laws provisions. Each of the Company and the Subscribers expressly
and irrevocably consent to the jurisdiction and venue of the federal courts
located in Las Vegas, Nevada. Each of the parties agrees that in the event
either party brings an action to enforce any of the provisions of this Agreement
or to recovery for an alleged breach of any of the provisions of this Agreement,
each party shall be responsible for its own legal costs and disbursements during
the pendency of any such action; provided however, that after any such action
has been reduced to a final, unappealable judgment, the prevailing party shall
be entitled to recover from the other party all reasonable, documented
attorneys' fees and disbursements and court costs from the other party.
d. SEVERABILITY. Any term or provision of this Agreement which is
prohibited or unenforeceable in any jurisdiction shall, as to such jurisdiction
only, be ineffective only to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof or thereof affecting the
validity or enforeceability of such provision in any other jurisdiction.
e. HEADINGS. The captions, headings and titles preceding the text of
each or any Section, subsection or paragraph hereof are for convenience of
reference only and shall not affect the construction, meaning or interpretation
of this Agreement or any term or provision thereof.
f. COUNTERPARTS. This Agreement may be executed in one or more original
or facsimile counterparts, each of which shall be deemed an original and all of
which shall be considered one and the same agreement, binding on all of the
parties hereto, notwithstanding that all parties are not signatories to the same
counterpart. Upon delivery of an executed counterpart by the undersigned
Subscribers to the Company, which in turn is executed and delivered by the
Company, this Agreement shall be binding as one original agreement between
Subscribers and the Company.
g. TRANSFER TAXES. Each party hereto shall pay all such sales,
transfer, use, gross receipts, registration and similar taxes arising out of, or
in connection with, the transactions contemplated by this Agreement
(collectively, the "Transfer Taxes") as are payable by such party under
applicable law, and the Company shall pay the cost of any documentary stock
transfer stamps, if any, to be affixed to the certificates representing Shares
to be sold.
h. ENTIRE AGREEMENT. This Agreement, along with the Certificate of
Designations, merges and supersedes any and all prior agreements,
understandings, discussions, assurances, promises, representations or warranties
among the parties with respect to the subject matter hereof, and contains the
entire agreement among the parties with respect to the subject matter set forth
herein and therein.
I. NO BROKERS. Except with respect to J.W. Charles Securities Inc.,
each of the parties hereto represent and warrants to the other that there are no
broker's, finder's or any other similar fees and commissions due or payable with
respect to the sale of the Securities by the Company to the Subscribers and each
of the parties hereby agrees to indemnify and hold harmless the other with
respect to such representation and warranty and any breach thereof. The Company
expressly acknowledges and agrees that it shall be solely responsible for all
fees and commissions payable to J.W. Charles Securities, Inc. in connection with
the sale of the Securities by the Company to the Subscribers pursuant to this
Agreement.
j. AUTHORITY; ENFORCEABILITY. The Subscribers are duly authorized to
enter into this Agreement and to perform all of their obligations hereunder.
Upon the execution and delivery of this Agreement by the Subscribers, this
Agreement shall be enforceable against the Subscribers in
<PAGE>
accordance with its terms.
k. NOTICES. Except as otherwise specified herein to the contrary, all
notices, requests, demands and other communications required or desired to be
given hereunder shall only be effective if given in writing, by hand or by fax,
by certified or registered mail, return receipt requested, postage prepaid, or
by U.S. Express Mail service, or by private overnight mail service (e.g.,
Federal Express). Any such notice shall be deemed to have been given (i) on the
business day actually received if given by hand or by fax, (ii) on the business
day immediately subsequent to mailing, if sent by U.S. Express Mail service or
private overnight mail service, or (iii) five (5) business days following the
mailing thereof, if mailed by certified or registered mail, postage prepaid,
return receipt requested, and all such notices shall be sent to the following
addresses (or to such other address or addresses as a party may have advised the
other in the manner provided in this Sections 9(k).
If to the Company: Johnny R. Thomas, President
AgriBioTech, Inc.
2700 Sunset Road, Suite C-25
Las Vegas, NV 89120
Fax No.: (702)798-8808
with copies simultaneously Elliot H. Lutzker, Esquire
by like means to: Snow Becker Krauss P.C.
605 Third Avenue
New York, NY 10158
Fax No.: (212) 949-7052
If to the Subscribers: Names and address set forth on the
attached hereto
l. NO THIRD PARTY BENEFICIARIES. This Agreement and the rights,
benefits, privileges, interests, duties and obligations contained or referred to
herein shall be solely for the benefit of the parties hereto and no third party
shall have any rights or benefits hereunder as a third party beneficiary or
otherwise hereunder.
m. PUBLIC ANNOUNCEMENT. Neither Subscribers nor any officer, director,
stockholder, employee, affiliate or affiliated person or entity of Subscribers,
shall make or issue any press releases or otherwise make any public statements
or make any disclosures to any third person or entity with respect to the
transactions contemplated herein and will not make or issue any press releases
or otherwise make any public statements of any nature whatsoever with respect to
the Company without the express prior approval of the Company.
IN WITNESS WHEREOF, the Company and the undersigned Primary Subscribers
have each duly executed this Agreement as of this ___ day of September, 1996.
AGRIBIOTECH, INC.
By________________________
Johnny R. Thomas, Ph.D.,
Chief Executive Officer
PRIMARY SUBSCRIBERS:
_________ shares of __________________________
Series C Preferred Stock (Print name)
$________ amount of
Stock Subscription
