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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): January 31, 1996
DEKALB Genetics Corporation
(Exact name of registrant as specified in its charter)
Delaware 0-17005 36-3586793
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3100 Sycamore Road, DeKalb, Illinois 60115
(Address of principal executive offices) (Zip Code)
815-758-3461
Registrant's telephone number, including area code:
N/A
(Former name or former address, if changed since last report.)
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Item 5. Other Events.
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On February 1, 1996, DEKALB Genetics Corporation, a Delaware
corporation ("DEKALB"), announced that it has entered into a series of
agreements with Monsanto Company, a Delaware corporation ("Monsanto"), including
an agreement (the "Collaboration Agreement") which provides for a long-term
research and development collaboration (the "Collaboration") with Monsanto in
the field of agricultural biotechnology, particularly corn and soybean seed.
DEKALB and Monsanto have also entered into cross-licensing agreements (the
"License Agreements") covering insect-resistant and herbicide-tolerant corn
products targeted to reach the market over the next three years.
DEKALB and Monsanto have also entered into an Investment Agreement
(the "Investment Agreement") pursuant to which Monsanto will purchase from
DEKALB (i) a number of newly issued shares of DEKALB Class A (voting) Common
Stock, without par value ("Class A Stock"), at a price per share of $ 65.00,
equal to ten percent of the shares of Class A Stock outstanding immediately
after the expiration of the Offer (as defined below) and issuance of such newly
issued shares of Class A Stock and (ii) 378,000 newly issued shares of Class B
(non-voting) Common Stock, without par value, of DEKALB ("Class B Stock" and,
together with the Class A Stock, "Common Stock"), at a price per share of
$65.00.
In addition, pursuant to the terms of the Investment Agreement,
Monsanto will make a tender offer (the "Offer") for up to 1,800,000 shares of
Class B Stock at a price per share of $71.00 net to the seller in cash.
The newly issued shares of Class B Stock would constitute
approximately 8% of the total issued and outstanding shares of Class B Stock at
January 16, 1996 (after giving effect to the issuance of such shares of Class B
Stock). In addition, the newly issued shares of Class B Stock, together with
the maximum number of shares of Class B Stock that may be purchased by Monsanto
in the Offer, would constitute approximately 45% of the total issued and
outstanding shares of Class B Stock.
The Investment Agreement, among other things: (i) provides Monsanto
with the right, for one year after the closing under the Investment Agreement
(the `Closing''), to purchase in the market additional Class B Stock so long as
the total Common Stock owned by Monsanto does not exceed 40% of the Common Stock
outstanding at such time, (ii) restricts the ability of Monsanto to transfer
securities of DEKALB; (iii) provides DEKALB under specified circumstances with a
right of first refusal in respect of certain proposed transfers by Monsanto of
securities of DEKALB; (iv) limits for ten years, subject to certain exceptions,
the ability of Monsanto to acquire additional securities of DEKALB; (v) requires
DEKALB to provide notice to Monsanto of certain transactions in order to provide
Monsanto with the opportunity to propose an alternative transaction to DEKALB;
and (vi) prohibits Monsanto from engaging in specified activities.
The Investment Agreement also provides that after the Closing Monsanto
will be entitled to nominate one member to DEKALB's Board of Directors and that
if Monsanto acquires 20% or more of the outstanding Common Stock pursuant to the
Offer and the Investment Agreement, Monsanto may nominate for election in
January, 1997, an additional member to DEKALB's Board. DEKALB is obligated to
support any such nominations made in accordance with the terms of the Investment
Agreement. The Investment Agreement further provides that, during any period in
which Monsanto is entitled to nominate one or more members to DEKALB's Board,
DEKALB will use all reasonable efforts to assure that there be at least three
members of its Board who are independent of DEKALB, Monsanto and certain large
holders of Class A Stock.
4
Monsanto and DEKALB have also entered into a Registration Rights
Agreement (the "Registration Rights Agreement") requiring DEKALB to register
under the Securities Act of 1933, the offer and sale by Monsanto of certain
securities of DEKALB.
Prior to being executed, the Collaboration Agreement, the License
Agreements, the Investment Agreement and the Registration Rights Agreement were
approved by the respective Boards of Directors of DEKALB and Monsanto.
Additional information with respect to those agreements will be included in
DEKALB's Recommendation/Solicitation Statement on Schedule 14D-9 with respect to
the Offer to be mailed to holders of DEKALB's Class B Stock.
Copies of the Investment Agreement and the Press Release issued by
DEKALB on February 1, 1996 are attached hereto as Exhibits 99.1 and 99.2,
respectively, and each is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
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(e) Exhibits:
---------
99.1 Investment Agreement between Monsanto and DEKALB dated as of
January 31, 1996.
99.2 Press release issued by DEKALB on February 1, 1996.
5
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.
DEKALB GENETICS CORPORATION
Date: February 1, 1996 By: Thomas R. Rauman
---------------------
Thomas R. Rauman
Chief Financial Officer
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EXHIBIT INDEX
-------------
The following exhibits are filed herewith:
Exhibit Page
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99.1 Investment Agreement between Monsanto and DEKALB dated as of
January 31, 1996.
99.2 Press release issued by DEKALB on February 1, 1996.
===============================================================================
INVESTMENT AGREEMENT
Between
MONSANTO COMPANY,
a Delaware corporation
and
DEKALB GENETICS CORPORATION,
a Delaware corporation
Dated as of January 31, 1996
2
===============================================================================
EXHIBIT 99.1
INVESTMENT AGREEMENT
dated as of January 31, 1996 (this ``greement''), between MONSANTO
COMPANY, a Delaware corporation (`Investor'') and DEKALB GENETICS
CORPORATION, a Delaware corporation (the ``ompany'').
WHEREAS, the respective managements of Investor and the Company have
negotiated and the Boards of Directors of Investor and the Company have approved
a strategic alliance under which the two companies will enter into various
collaborations, the Company will remain an autonomous and entrepreneurial
business and Investor will make a substantial investment in the Company;
WHEREAS, Investor proposes to make a tender offer (as it may be
amended from time to time as permitted under this Agreement with the Company's
consent if required hereby, the ``ffer'') to purchase any or all up to a
maximum of 1,800,000 shares of Class B Common Stock, without par value, of the
Company (the `Class B Stock''), at a price per share of Class B Stock of $71.00
net to the seller in cash (such price, as may hereafter be increased, the
``ender Offer Price'') (such 1,800,000 shares representing approximately 37% of
the outstanding shares of Class B Stock, after giving effect to the transactions
3
contemplated by this Agreement), upon the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, Investor further proposes to purchase from the Company in
accordance with the terms and conditions hereof newly issued shares of the
Company's Class A Common Stock, without par value (the "Class A Stock") at a
price per share of $65.00 (such shares representing 10% of the outstanding
shares of Class A Stock after expiration of the Offer and after giving effect to
the issuance thereof) (the "Newly Issued Class A Shares") and 378,000 newly
issued shares of Class B Stock at a price per share of $65.00 (the "Newly Issued
Class B Shares") (such Newly Issued Class A Shares and Newly Issued Class B
Shares collectively referred to as the "Newly Issued Shares");
WHEREAS Investor and the Company desire to make certain
representations, warranties, covenants and agreements and also to prescribe
various conditions in connection with the transactions contemplated hereby; and
WHEREAS, contemporaneously herewith, Investor and the Company and
Investor and the Major A Stockholders, as applicable, have entered into the
Ancillary Agreements described herein, which Ancillary Agreements will be
effective upon the consummation of the Closing.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement and in the Ancillary
Agreements, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
4
ARTICLE 1
DEFINITIONS
1.1. Definitions. Capitalized terms used in this Agreement and not
otherwise defined herein shall have the meanings set forth below.
"Acquisition Proposal" shall mean any tender offer or exchange offer
or proposal (including without limitation any proposal or offer to shareholders
of the Company) with respect to a Business Combination or a sale of 10% or more
of the outstanding capital stock of the Company.
"Affiliate" of a party means any person or entity controlling,
controlled by, or under common control with such party. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
person, whether through the ownership of voting securities, by agreement or
otherwise.
"Amended Bylaws" means the Bylaws of the Company, which Bylaws include
the amendments provided in Exhibit B hereto, to be adopted by the Company prior
to the Closing.
5
"Ancillary Agreements" means the Stockholders' Agreement, the
Registration Rights Agreement, the Collaboration Agreement, the Corn Borer-
Protected Corn License Agreement; the Glyphosate-Protected Corn License
Agreement and the CaMV Promoter License Agreement each of which is dated as of
the date hereof and effective upon the consummation of the Closing.
"beneficially owned", "beneficially own" and "beneficial ownership"
shall have the meaning provided in Rule 13d-3 under the Exchange Act, including
subsection (d)(1)(i) thereof, without giving effect to whether or not such
beneficial ownership may be acquired within 60 days as required by such
subsection, provided, however, that "beneficial ownership" shall not be deemed
to include any right of Investor conferred by (i) the Stockholders' Agreement
until such time as Investor shall become legally bound (whether or not subject
to conditions) to purchase any Equity pursuant to such agreement or otherwise or
(ii) Section 10.1 until such time as the Company shall give Investor an Issuance
Notice (unless Investor shall have waived its right thereunder by failure to
provide a Response Notice and as reduced in accordance with Section 10.1.4) or
(iii) Section 10.3 until the Company shall notify Investor that it is entitled
to purchase shares of Common Stock pursuant to such section (unless Investor
shall waive or be deemed to have waived its rights thereunder).
"Board" means the Board of Directors of the Company.
"Business Combination" shall mean a merger or consolidation in which
the Company is a constituent corporation and pursuant to which the Common Stock
is convertible into or exchanged for cash,
6
securities or other property or a sale of all or substantially all of the assets
of the Company and its subsidiaries taken as a whole, or a sale of all or
substantially all the assets of the Company's United States seed corn business;
provided that a transaction in which the beneficial ownership of the capital
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stock of the Company or of the sole surviving corporation to the transaction (or
of the ultimate parent of the Company or of such sole surviving corporation)
immediately after the consummation of such transaction is substantially the same
as the beneficial ownership of the Company's capital stock immediately prior to
the consummation thereof shall not be deemed a Business Combination unless such
transaction shall result in the sale of all or substantially all the assets of
the Company and its subsidiaries taken as a whole or all or substantially all
the assets of the Company's United States seed corn business.
"Business Day" means any day other than a Saturday, a Sunday, or a
bank holiday in the States of Illinois, New York or Missouri.
"CaMV Promoter License Agreement" means the CaMV Promoter License
Agreement dated as of the date hereof between Investor and the Company.
"Class A Stock" means the Class A Common Stock, without par value, of
the Company.
"Class B Percentage Limitation" means the percentage of the Class B
Stock determined by dividing (i) the number of shares of Class B Stock
beneficially owned by Investor after (a) acquisition of the Newly Issued Shares,
(b) acquisition of Class B Stock pursuant to the Offer and (c) acquisition of
any additional Class B Stock actually acquired pursuant to Section 3.6 by (ii)
7
the total number of outstanding shares of Class B Stock outstanding on the first
anniversary of the Closing Date.
"Class B Stock" means the Class B Common Stock, without par value, of
the Company.
"Closing" means the closing of the purchase and sale of the Newly
Issued Shares pursuant to Section 2.1.
"Closing Date" means the date the Closing is consummated.
"Collaboration Agreement" shall mean the Collaboration Agreement and
License between Investor and the Company dated as of the date hereof.
"Common Stock" means the Class A Stock and Class B Stock of the
Company.
"Company" has the meaning set forth at the beginning of this
Agreement.
"Company Indemnified Parties" has the meaning set forth in Section
13.1.
"Company Letter" means the letter, dated as of the date hereof, from
the Company to Investor regarding certain matters related to this Agreement.
8
"Competitor" means a person who either (i) sells seed for growing
corn, sorghum, soybean, sunflower or alfalfa and who is estimated by Doane's
(or, if such information is not provided by Doane's another independent source
generally considered reliable) to have, or who has publicly stated that it does
have, at least 2% of the United States or Argentine market for any such seed
for any of the most recent two years for which such market share is reported or
claimed or (ii) is primarily engaged in the business of selling foundation seed.
"Confidentiality Agreement" means that certain letter agreement
between Investor and the Company, dated May 16, 1995.
"Corn Borer-Protected Corn License Agreement" shall mean the Corn
Borer-Protected Corn License Agreement dated as of the date hereof between
Investor and the Company.
"Current Market Value" shall mean, with respect to any security, the
average of the daily closing prices on the NASDAQ National Market (or such
principal exchange on which such security may be listed) for such security for
the 20 consecutive trading days commencing on the 22nd trading day prior to
the date with respect to which the Current Market Value is being determined.
The closing price for each day shall be the closing price, if reported, or if
the closing price is not reported, the average of the closing bid and asked
prices as reported by NASDAQ or a similar source selected from time to time by
the Company for such purpose.
9
"Director Representation Period" has the meaning set forth in Section
8.5.
"Doane's" shall mean the U.S. Farm Corn Seed Study by Doane Marketing
Research Inc., or if such information is not provided by Doane's, another
independent source generally considered reliable.
"Environmental Laws" has the meaning set forth in Section 4.11.2.
"Equity" shall mean any and all shares of Common Stock of the Company,
securities of the Company convertible into such shares, and options, warrants or
other rights to acquire such shares.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Fair Market Value" shall mean, as to any shares or other property,
the cash price at which a willing seller would sell and a willing buyer would
buy such shares or property in an arms'-length negotiated transaction without
time constraints.
"Final Governmental Order" has the meaning set forth in Section 9.1.1.
"GAAP" means generally accepted accounting principles as in effect in
the United States of America (as such principles may change from time to time).
10
"Glyphosate-Protected Corn License Agreement" shall mean the
Glyphosate-Protected Corn License Agreement dated as of the date hereof between
Investor and the Company.
"Governmental Authority" means any governmental, quasi-governmental,
judicial, self-regulatory or regulatory agency or entity or subdivision thereof
with jurisdiction over the Company or Investor or any of their subsidiaries or
any of the transactions contemplated by this Agreement.
"Hazardous Material" means any substance: (i) the presence of which
requires investigation or remediation under any federal, state or local statute,
regulation, ordinance, order, action policy or common law; (ii) which is defined
and regulated as a "hazardous waste," ``azardous substance," pollutant or
contaminant under any federal, state or local statute, regulation, rule or
ordinance or amendments thereto; (iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous and is regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States, the state in
which such substance is located or any political subdivision thereof; or (iv)
the presence of which poses or threatens to pose a hazard to the health or
safety of persons or the environment on or about the property on which such
substance is located or adjacent properties. Hazardous Material shall include,
without limitation, petroleum, including crude oil and any fraction thereof,
asbestos and polychlorinated biphenyls (PCBs).
"Indemnified Party" has the meaning set forth in Section 13.3.
11
"Indemnifying Party" has the meaning set forth in Section 13.3.
"Independent Director" means an individual who is not (apart from such
directorship) (i) an officer or employee of the Company or any Affiliate of the
Company, (ii) a director, officer or employee of Investor or any Affiliate of
Investor, (iii) a Major A Stockholder, an Affiliate of a Major A Stockholder or
a Permitted Transferee (as defined in the Stockholders' Agreement) of a Major A
Stockholder, (iv) did not in either of the last two completed calendar years
receive, and is not an officer, director, employee, stockholder holding more
than 10% of the voting interest of, partner or Affiliate of any person
(``ntity'') that in either of such Entity's two most recent fiscal years,
received, more than (A) $350,000 in revenues or other compensation or (B) 20%
of such person's total revenues from the Company, the Investor, a Major A
Stockholder or a Permitted Transferee or an Affiliate of any of the foregoing;
provided no person who is serving as a director of the Company as of the date of
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this Agreement shall be excluded pusuant to this clause (iv) unless such person
is also excluded pursuant to clauses (i), (ii), (iii) or (v) of this definition;
or (v) any voting trustee under the Voting Trust Agreement among the Major A
Stockholders and certain voting trustees dated as of January 31, 1996, but shall
not include any Investor Nominee.
"Interest Rate" shall mean the interest rate per annum publicly
announced by Citibank N.A. as its "base rate" as in effect from time to time.
"Issue Price" means $65.00 per share of Class A Stock and $65.00 per
share of Class B Stock.
12
"Investor" has the meaning set forth at the beginning of this
Agreement.
"Investor Indemnified Parties" has the meaning set forth in Section
13.2.
"Investor Nominee" has the meaning set forth in Section 8.5.
"Knowledge", when used in reference to the Company, means the
knowledge of those officers and managerial employees of the Company identified
in the Company Letter and limited as to scope with respect to certain
individuals as specified in the Company Letter.
"Liabilities, Actions and Damages" has the meaning set forth in
Section 13.1.
"Licenses" shall mean the European Corn Borer-Protected License
Agreement, the Glyphosate-Protected Corn License Agreement and the CaMV Promoter
License Agreement.
"Lien" means any mortgage, lien, security interest, pledge, lease or
other charge or encumbrance of any kind, including, without limitation, the lien
or retained security title of a purchase money creditor or conditional vendor,
and any easement, right of way or other encumbrance on title to real property,
and any agreement to give any of the foregoing.
"Major A Stockholder" shall have the meaning set forth in the
Stockholders' Agreement.
13
"Material Adverse Effect" means a material adverse effect, or the
occurrence or existence of facts or circumstances reasonably expected to result
in a material adverse effect, on the business, assets, results of operations,
properties, financial or operating condition of the Company and its subsidiaries
taken as a whole (without including economic or other matters affecting business
or the seed industry generally) or the ability of the Company (and, to the
extent applicable, its subsidiaries) to perform its (or their) obligations under
this Agreement or consummate the transactions contemplated hereby or by the
Ancillary Agreements.
"Merrill Lynch" has the meaning set forth in Section 3.5.1
"Newly Issued Shares" has the meaning set forth in the third Whereas
clause.
"Newly Issued Class A Shares" has the meaning set forth in the third
Whereas clause.
"Newly Issued Class B Shares" has the meaning set forth in the third
Whereas clause.
"Offer" has the meaning set forth in the second Whereas clause.
"Offer Conditions" has the meaning set forth in Section 3.1.
"Offer Documents" has the meaning set forth in Section 3.4.
14
"Offer Notice" shall have the meaning specified in Section 9.3.1.
"Offer Price" has the meaning set forth in Section 9.3.2.
"Offer Shares" means those shares of Class B Stock, if any, purchased
by Investor pursuant to the Offer.
"Outstanding Interest" shall mean the respective aggregate percentages of
the outstanding shares of Class A Stock or Class B Stock beneficially owned
(without regard to any rights Investor may have to acquire shares pursuant to
Section 10.3) from time to time by Investor and its United States subsidiaries,
including (for purposes of determining the outstanding shares of Class A Stock
and Class B Stock) as Class A Stock any Equity convertible into or entitling the
holder to acquire Class A Stock and as Class B Stock any Equity convertible into
or entitling the holder to acquire Class B Stock (except by virtue of converting
Class A Stock into Class B Stock), but excluding in each case stock options or
other rights to acquire Class A Stock or Class B Stock granted under Stock Plans
or under any stock option plan or any stock-based incentive compensation plan
adopted in the future and Investor's rights described in Section 10.3 with
respect thereto.
"Percentage Limitation" shall have the meaning specified in Section
11.1.
"Permitted Acquisition Proposal" shall have the meaning specified in
Section 11.1.
15
"Permitted Offering" shall have the meaning specified in Section 9.1.2
(ii).
"person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
"Primary Business" means the research-based production, marketing,
licensing and sale of agronomic seed, including both technology related thereto
and products derived therefrom.
"Reasonable Solicitation Efforts" shall have the meaning set forth in
Section 8.5(i).
"Registration Rights Agreement" shall have the meaning specified in
Section 9.5.
"Schedule 14D-1" has the meaning set forth in Section 3.4.
"Schedule 14D-9" has the meaning set forth in Section 3.5.2.
"SEC" means the Securities and Exchange Commission.
"SEC Reports" has the meaning set forth in Section 4.5.
"Securities Act" means the Securities Act of 1933, as amended and the
rules and regulations promulgated thereunder.
16
"Shares" means issued and outstanding shares of Common Stock.
"Significant Subsidiary" means any subsidiary of the Company or
Investor, as the case may be, that constitutes a significant subsidiary within
the meaning of Rule 1-02 of Regulation S-X of the SEC.
"Small Offering" shall have the meaning specified in Section 10.2.2.
"Stockholders' Agreement" shall mean the Stockholders' Agreement dated
as of the date hereof by and among Investor and the Major A Stockholders.
"Stock Plans" shall have the meaning specified in Section 4.3.
"subsidiary" of any person means another person whose voting
securities, other voting ownership or voting partnership interests are owned
directly or indirectly by such first person in an amount sufficient to elect at
least a majority of the board of directors or other governing body of such other
person (or, if there are no such voting interests, more than 50% of the equity
interests of such other person).
"taxes" has the meaning set forth in Section 4.8.
"Tender Offer Price" has the meaning specified in the second Whereas
clause.
17
"third party" means any person (including a "person" as defined in
Section 13(d)(3) of the Exchange Act) or entity other than, or group not
including, Investor or any Affiliate of Investor or the Company.
"Total Voting Power" means, at any date, the total number of votes
that may be cast in the election of directors of the Company at any meeting of
stockholders of the Company held on such date, assuming all shares of Voting
Stock were present and voted at such meeting, other than votes that may be cast
only by one class or series of stock (other than Class A Stock) or upon the
happening of a contingency.
"Transfer" shall have the meaning set forth in Section 9.1.1.
"United States subsidiary" means a direct or indirect subsidiary of
Investor which is a corporation organized and existing under the laws of the
United States and with its principal place of business in the United States.
"Voting Stock" means Class A Stock and all other securities of the
Company, if any, entitled to vote generally in the election of directors.
18
ARTICLE 2
SALE AND PURCHASE OF THE NEWLY ISSUED SHARES
2.1. Sale and Purchase of the Newly Issued Shares. Upon the terms
and subject to the satisfaction or waiver of all of the conditions set forth in
Article 7, the Company shall issue and sell to Investor, and Investor shall
purchase from the Company, in exchange for the Issue Prices thereof, the Newly
Issued Shares at the Closing. Investor shall pay the Issue Prices with respect
to the Newly Issued Shares to the Company at the Closing by bank wire transfer
of immediately available funds to an account designated by the Company, or by
such other means as is acceptable to the Company and Investor.
2.2. Closing and Deliveries. Subject to the satisfaction or waiver
of all of the conditions set forth in Article 7, the Closing shall take place as
promptly as practicable after the expiration of the Offer, or on such later date
and time as may be mutually agreed by the parties within five Business Days
after the last to occur of satisfaction or waiver of the respective conditions
set forth in Article 7. Such Closing shall occur at the offices of Sidley &
Austin, One First National Plaza, Chicago, Illinois 60603, or at such other
place and time as Investor and the Company agree in writing.
2.2.1. Deliveries by Investor. At the Closing, Investor shall
deliver to the Company the following:
(i) the Issue Price for each of the Newly Issued Shares; and
19
(ii) such other documents and instruments, duly executed to the
extent required, as may be reasonably requested by the Company in order to
consummate the transactions contemplated hereby.
2.2.2. Deliveries by the Company. At the Closing, the Company shall
deliver to Investor the following:
(i) stock certificates in such denominations as may be
reasonably requested by Investor evidencing the Newly Issued Shares; and
(ii) such other documents and instruments, duly executed to the
extent required, as may reasonably requested by Investor in order to consummate
the transactions contemplated hereby.
ARTICLE 3
THE OFFER
3.1. Commencement of the Offer. As promptly as practicable, but no
later than the fifth Business Day following the public announcement of this
Agreement, Purchaser shall commence the Offer within the meaning of Rule 14d-2
under the Exchange Act. The obligations of Investor to accept for payment, and
pay for, any Offer Shares tendered pursuant to the Offer shall be subject to
(the following being referred to as the "Offer Conditions") the satisfaction or
waiver of the conditions set forth in Exhibit A attached hereto.
20
3.2. Changes to the Offer. Investor may increase the Tender Offer
Price and may make any other changes in the terms and conditions of the Offer,
provided that, unless previously approved by the Company in writing, Investor
may not (i) decrease the Tender Offer Price, (ii) change the form of
consideration payable in the Offer, (iii) increase or decrease the maximum
number of Shares sought pursuant to the Offer, (iv) add to or modify the Offer
Conditions (v) amend the Offer in a manner which would require the extension of
the originally scheduled expiration date to a date later than 50 business days
from the date of the commencement of the Offer, as required by any rule,
regulation, interpretation or position of the SEC or the staff or (vi) otherwise
amend the Offer in any manner adverse to the
interests of the Company or its stockholders. Subject to the terms and
conditions thereof, the Offer shall expire at midnight, New York City time, on
the date that is not more than 30 business days from the date the Offer is first
published or sent to holders of Class B Stock. Investor shall be required to
extend the Offer for at least ten business days from the originally scheduled
expiration date and shall be entitled to extend the Offer for up to 20 business
days from such original expiration date (A) if at the scheduled expiration date
of the Offer any of the Offer Conditions shall not have been satisfied or
waived, until such time as such Offer Conditions are satisfied or waived and (B)
for any period required by any rule, regulation, interpretation or position of
the SEC or the staff thereof applicable to the Offer, provided, however, that
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Investor shall terminate the Offer if this Agreement is terminated.
3.3. Purchase. Provided that this Agreement shall not have been
terminated in accordance with Article 12 and provided that all Offer Conditions
shall have been satisfied or waived by Investor in accordance with this Article
3, Investor shall accept for payment and purchase, in accordance with the terms
21
of the Offer, shares of Class B Stock validly tendered and not withdrawn
pursuant to the Offer (up to the amount sought pursuant to the Offer). The
Offer Conditions are for the sole benefit of Investor and may be asserted by
Investor regardless of the circumstances giving rise to any such condition or
may be waived by Investor, in whole or in part at any time and from time to
time, in Investor's sole discretion. The failure by Investor at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right,
the waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances
and each such right shall be deemed an ongoing right which may be asserted at
any time and from time to time. Any determination (which shall be made in good
faith) by Investor with respect to any of the foregoing conditions (including
without limitation the satisfaction of such conditions) shall be final and
binding on the parties. The Offer Price (to the extent, if any, adjusted
pursuant to the Offer) shall be paid net to the seller in cash, less any
required withholding of taxes, upon the terms and subject to the conditions of
the Offer as soon as practicable after expiration of the Offer. It is the
intention of Investor and the Company that the purchase by Investor of the Offer
Shares shall not be a condition to the purchase by Investor of the Newly Issued
Shares.
3.4. Schedule 14D-1 and Other Offer Documents. On the date the Offer
is commenced, Investor shall file with the SEC a Tender Offer Statement on
Schedule 14D-1 (together with all amendments and supplements thereto, the
"Schedule 14D-1") with respect to the Offer. The Schedule 14D-1 shall contain
as an exhibit or incorporate by reference the Offer to Purchase (or portions
22
thereof) and form of the related letter of transmittal and summary advertisement
to be used in connection with the Offer (the Schedule 14D-1 and such other
documents, together with any supplements thereto or amendments thereof, being
referred to herein collectively as the "Offer Documents"). The Company shall
provide to Investor in writing all information regarding the Company necessary
for the preparation of the Offer Documents, which information shall be accurate
and shall not contain any material misstatement of fact or omit to state any
material fact necessary to make the statements included in such information, in
light of the circumstances under which they are made, not misleading. The
Company and its counsel shall be given a reasonable opportunity to review and
comment on the Offer Documents prior to the filing thereof with the SEC and the
distribution thereof to the Company's stockholders. Investor shall provide to
the Company and its counsel any comments that Investor receives (directly or
through its counsel) from the SEC or its staff with respect to the Offer
Documents promptly after receipt of such comments. The Offer Documents shall
comply in all material respects with the provisions of applicable federal
securities laws and shall not, on the date the Offer Documents are filed with
the SEC and on the date first published, sent or given to the Company's
stockholders, as the case may be, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by Investor with respect to information supplied by the Company in writing
specifically for inclusion in the Offer Documents. If any event relating to the
Company or any of its Affiliates, officers or directors shall be discovered by
the Company which causes the information previously supplied by the Company to
Investor for use in the Offer Documents to contain any untrue statements of a
23
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, the Company
shall promptly inform Investor. Investor and the Company shall each promptly
correct any information provided by it for use in the Offer Documents if and to
the extent that it shall have become false or misleading in any material
respect, and Investor shall promptly amend and supplement the Offer Documents if
and to the extent that they shall have become false or misleading in any
material respect and shall promptly cause the Offer Documents as so amended and
supplemented to be filed with the SEC and to be disseminated to the Company's
stockholders, in each case as and to the extent required by applicable federal
securities laws.
3.5. Actions by the Company.
3.5.1. Approval and Recommendation of Offer. On January 31, 1996,
the Company's Board of Directors, at a meeting duly called, unanimously adopted
resolutions by which the Board (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer, are fair to and in the
best interest of the Company and the Company's stockholders, (ii) approved this
Agreement and the transactions contemplated hereby, including the Offer, and
(iii) resolved to recommend that the stockholders of the Company accept the
Offer and tender their Shares thereunder to Investor. In connection with such
approval by the Board, Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") delivered to the Board its written opinion dated the date of
such meeting to the effect that, as of the date of such opinion, the proposed
consideration to be received by the Company and the holders of Class B Common
Stock is fair to the Company and such holders from a financial point of view.
The Company is
24
authorized by Merrill Lynch to permit the inclusion of such fairness opinion in
the Offer Documents and the Schedule 14D-9 referred to below. The Company
hereby consents to the inclusion in the Offer Documents of the recommendations
of the Board described in this Section 3.5.1.
3.5.2. Schedule 14D-9. As promptly as practicable, but no later than
the tenth Business Day following the commencement of the Offer, the Company
shall file with the SEC a solicitation/recommendation statement on Schedule 14D-
9 pertaining to the Offer (together with any amendments or supplements thereto,
the "Schedule 14D-9") containing the Board's recommendation described in Section
3.5.1. The Company shall promptly mail the Schedule 14D-9 to the Company's
stockholders. Investor and its counsel shall be given a reasonable opportunity
to review and comment on the Schedule 14D-9 prior to the filing thereof with the
SEC and its dissemination to the Company's stockholders. The Company shall
provide to Investor and its counsel any comments that the Company receives
(directly or through its counsel) from the SEC or its staff with respect to the
Schedule 14D-9 promptly after receipt of such comments. The Schedule 14D-9 shall
comply in all material respects with the provisions of applicable federal
securities laws and shall not, on the date filed with the SEC and on the date
first published, sent or given to the Company's stockholders, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representations are made by the Company with respect to information supplied by
Investor in writing specifically for inclusion in the Schedule 14D-9. If any
event relating to Investor or any of its Affiliates, officers or directors shall
be discovered by Investor which causes the information previously supplied by
Investor to the Company for use in the Schedule 14D-9 to contain any untrue
25
statements of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, Investor shall promptly inform the Company. Investor and the
Company shall each promptly correct any information provided by it for use in
the Schedule 14D-9 if and to the extent that it
shall have become false or misleading in any material respect, and the Company
shall promptly amend and supplement the Schedule 14D-9 if and to the extent that
it shall have become false or misleading in any material respect and shall
promptly cause the Schedule 14D-9 as so amended and supplemented to be filed
with the SEC and disseminated to the Company's stockholders in each case as and
to the extent required by applicable federal securities laws.
3.5.3. Stockholder Information. In connection with the Offer the
Company shall promptly furnish Investor with mailing labels, security position
listings and any available listing or computer files containing the names and
addresses of the record holders of the Shares as of a recent date and shall
furnish Investor with such additional information and assistance (including,
without limitation, updated lists of stockholders, mailing labels and list of
securities positions) as Investor or its agents may reasonably request for the
purpose of communicating the Offer to the record and beneficial holders of
Shares. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the transactions contemplated by this
Agreement, Investor shall and shall cause its Affiliates, associates, agents and
advisors to, hold the information contained in any such labels, listings and
files confidential and use such information only in connection with the Offer,
and, if this Agreement shall be terminated, shall deliver to the Company all
26
copies of such information and any extracts or summaries thereof then in their
possession or control.
3.6. Acquisition of Additional Class B Shares. If Investor shall
beneficially own less than 40% of the outstanding Common Stock on the first day
after completion of the Offer and the Closing, then Investor shall have the
right, at any time during the period ending on the first anniversary of the
Closing Date to acquire in the market at prices prevailing from time to time up
to an additional number of shares of Class B Stock such that after completion of
all such purchases, the total Common Stock beneficially owned by Investor and
its Affiliates does not exceed 40% of the Common Stock outstanding at such time.
The Investor may from time to time request that the Company provide information
as to the number of shares of Common Stock of each class outstanding as of the
most recent conveniently available date, provided, the
Investor shall be entitled to rely on the number of outstanding shares of Common
Stock, Class A Stock and Class B Stock as most recently reported by a filing of
the Company pursuant to the Exchange Act unless the Company shall advise the
Investor in writing of more recent information.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Investor as follows:
4.1. Organization, Standing and Corporate Power. Each of the Company
and its Significant Subsidiaries is a corporation duly organized, validly
27
existing and in good standing under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and authority to carry on its
business as now being conducted. The Company and each of its Significant
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) could not reasonably be expected
to have a Material Adverse Effect on the Company.
4.2. Subsidiaries. Schedule 4.2 to the Company Letter lists each
subsidiary of the Company. All the outstanding shares of capital stock of each
Significant Subsidiary that is a corporation have been validly issued and are
fully paid and nonassessable. Except as set forth in Schedule 4.2 to the
Company Letter, the entire equity interest in each subsidiary of the Company is
owned by the Company, by another subsidiary of the Company or by the Company and
another such subsidiary, free and clear of all Liens.
4.3. Capital Structure; New Shares. The authorized capital stock of
the Company consists of 500,000 shares of Preferred Stock, par value $1.00 per
share ("Preferred Stock"), and 20,000,000 shares of Common Stock, without par
value, divided into two classes, consisting of 5,000,000 shares of Class A Stock
and 15,000,000 shares of Class B Stock. At the close of business on January 16,
1996, (i) no shares
of Preferred Stock were outstanding, (ii) 763,799 shares of Class A Stock and
4,431,327 shares of Class B Stock were issued and outstanding, (iv) no shares of
Class A Stock and 73,201 shares of Class B Stock were held by the Company in
28
treasury, and (v) 349,689 shares of Class A Stock were reserved for issuance
pursuant to outstanding stock options or other rights to purchase shares of
Class A Stock under the Company's Long Term Incentive Plan, the Company's
Savings and Investment Plan and the Company's Director Stock Option Plan (the
"Stock Plans") and an additional 417,340 shares of Common Stock were reserved
for the grant of additional purchase rights thereunder. Except as set forth
above or as otherwise expressly provided herein, and except for conversions of
Class A Stock to Class B Stock and the issuance of shares pursuant to options
granted under the Stock Plans, as of the date hereof, no shares of capital stock
or other voting securities of the Company were issued, reserved for issuance or
outstanding and there are not any phantom stock or other contractual rights the
value of which is determined in whole or in part by the value of any capital
stock of the Company ("Stock Equivalents"). There are no outstanding stock
appreciation rights ("SARs") with respect to Common Stock. Upon issuance
pursuant to the terms of this Agreement, the Newly Issued Shares will be duly
authorized and no further approval of the stockholders or the directors of the
Company will be required by the Company for the issuance and sale of the Newly
Issued Shares as contemplated by this Agreement. When issued and sold to
Investor upon payment of the Issue Price, the Newly Issued Shares will be duly
authorized, validly issued, fully paid and non-assessable. Other than this
Agreement, the Newly Issued Shares are not subject to any voting trust agreement
or other contract, agreement, arrangement, commitment or understanding,
including any such agreement, arrangement, commitment or understanding
restricting or otherwise relating to the voting or disposition of the Newly
Issued Shares. All outstanding shares of capital stock of the Company are, and
all shares that may be issued pursuant to the Stock Plans and the other
agreements and instruments listed above will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
29
rights. There are not any outstanding bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matter on which
stockholders of the Company may vote. Except as set forth above and in Schedule
4.3 of
the Company Letter, and as otherwise expressly set forth in this Agreement, as
of the date of this Agreement, there are not any securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which the Company or any of its Significant Subsidiaries is a party or by
which any of them is bound obligating the Company or any of its Significant
Subsidiaries to issue, deliver or sell or create, or cause to be issued,
delivered or sold or created, additional shares of capital stock or other voting
securities or Stock Equivalents of the Company or of any of its Significant
Subsidiaries or obligating the Company or any of its Significant Subsidiaries to
issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. As of the date of
this Agreement, there are not any outstanding contractual obligations of the
Company or any of its Significant Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
Significant Subsidiaries except pursuant to existing employee arrangements.
4.4. Authority; Noncontravention. The Company has requisite
corporate power and authority to enter into this Agreement and the Ancillary
Agreements to which it is a party and to consummate the transactions
contemplated by this Agreement and such Ancillary Agreements. The execution and
delivery by the Company of this Agreement and each Ancillary Agreement to which
it is a party and the consummation by the Company of the transactions
30
contemplated by this Agreement and such Ancillary Agreements have been duly
authorized by all necessary corporate action on the part of the Company. This
Agreement and the Ancillary Agreements to which it is a party have been duly
executed and delivered by the Company and constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms. Except as set forth on Schedule 4.4 to the Company
Letter, the execution and delivery of this Agreement and the Ancillary
Agreements to which it is a party by the Company did not, and the consummation
of the transactions contemplated by this Agreement and such Ancillary Agreements
and compliance with the provisions of this Agreement and such Ancillary
Agreements without obtaining the consent of any third party will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right to termination,
cancellation or acceleration of any obligation or to loss by the Company or any
of its Significant Subsidiaries of a material benefit under, or the creation of
any material additional benefit to any third party under, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its subsidiaries under, (i) the Certificate of Incorporation or Bylaws of the
Company or the comparable charter or organizational documents of any of its
Significant Subsidiaries, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit or license
applicable to the Company or any of its subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its subsidiaries or their respective properties or assets, other than, in the
case of clauses (ii) and (iii), any such conflicts, violations, defaults, rights
31
or Liens that individually or in the aggregate could not reasonably be expected
to (x) have a Material Adverse Effect on the Company, (y) materially impair the
ability of the Company to perform its obligations under this Agreement or any
Ancillary Agreement to which it is a party or (z) prevent the consummation of
any of the transactions contemplated by this Agreement or any of such Ancillary
Agreements. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Authority or any party to a
Material Contract (as defined in Section 4.12 is required by or with respect to
the Company or any of its Significant Subsidiaries or its subsidiaries that are
parties to such a Material Contract in connection with the execution and
delivery of this Agreement and the Ancillary Agreements to which it is a party
or the consummation by the Company of the transactions contemplated by this
Agreement and such Ancillary Agreements, except for (A) any filings required
pursuant to foreign antitrust and competition law statutes and regulations, (B)
the filing with the SEC of (x) a solicitation/recommendation statement on
Schedule 14D-9 and (y) such reports under Sections 12 and 13(a) of the Exchange
Act as may be required in connection with this Agreement, such Ancillary
Agreements and the transactions contemplated by this Agreement and such
Ancillary Agreements, and (C) such other consents, approvals, orders,
authorizations, registrations, declarations and filings as are set forth on
Schedule 4.4 to the Company Letter.
4.5. SEC Reports; Undisclosed Liabilities. The Company has timely
filed all required reports, schedules, forms, statements and other documents
with the SEC since December 31, 1994 (the "SEC Reports"). As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
32
SEC Reports, and none of the SEC Reports contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of the
Company and its subsidiaries as of the dates thereof and their consolidated
statements of operations, stockholders' equity and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments). Except as set forth in the SEC Reports, to the Company's
knowledge neither the Company nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by generally accepted accounting principles to be set forth on a
consolidated balance sheet of the Company and its subsidiaries or in the notes
thereto, other than liabilities and obligations incurred in the ordinary course
of business consistent with prior practice and experience since August 31, 1995
and liabilities which would not, individually or in the aggregate, have a
Material Adverse Effect.
4.6. Absence of Certain Changes or Events. Except as set forth on
Schedule 4.6 to the Company Letter, since August 31, 1995, the Company and each
of its subsidiaries has conducted its business only in the ordinary course, and
there has not been (i) one or more events or occurrences which individually or
33
in the aggregate has had or would reasonably be expected to result in a Material
Adverse
Effect, (ii) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of the
Company's capital stock, except for declaration and payment to holders of record
of Common Stock of normal quarterly dividends consistent with existing practice,
(iii) any split, combination or reclassification of any of its capital stock or
any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of the Company's capital
stock, or (iv) any change in accounting methods, principles or practices by the
Company materially affecting its assets, liabilities or business, except insofar
as may have been required by a change in generally accepted accounting
principles.
4.7. Litigation. Except as set forth on Schedule 4.7 to the Company
Letter, there is no suit, action or proceeding pending or, to the knowledge of
the Company, threatened against the Company or any of its subsidiaries that,
individually or in the aggregate, could reasonably be expected to (i) have a
Material Adverse Effect, (ii) materially impair the ability of the Company to
perform its obligations under this Agreement or any Ancillary Agreement to which
it is a party or (iii) prevent the consummation of any of the transactions
contemplated by this Agreement or any such Ancillary Agreement, nor is there any
judgment, decree, injunction, rule or order of any Governmental Authority or
arbitrator outstanding against the Company or any of its subsidiaries having, or
that could reasonably be expected to have, a Material Adverse Effect.
34
4.8. Taxes. The Company and each of its subsidiaries has timely
filed all tax returns and reports required to be filed by them either on a
separate or combined or consolidated basis except where failure to timely file
could not reasonably be expected to have a Material Adverse Effect. All such
returns are complete and accurate except where the failure to be complete or
accurate could not reasonably be expected to have a Material Adverse Effect.
Each of the Company and its subsidiaries has paid or caused to be paid all taxes
shown as due on such returns and all material taxes for which no return was
filed except where the failure to do so could not reasonably be expected to have
a Material Adverse Effect. No deficiencies for any taxes have been asserted,
proposed or assessed against the Company or any of its
subsidiaries that have not been paid or otherwise settled or are not otherwise
being challenged under appropriate procedures except for deficiencies the
assertion, proposing or assessment of which could not reasonably be expected to
have a Material Adverse Effect, and no requests for waivers of the time to
assess any such taxes are pending. As used in this Agreement, "taxes" shall
include all Federal, state, local and foreign income, property, sales, excise,
employment, withholding and other taxes, tariffs or governmental charges of any
nature whatsoever.
4.9. Voting Requirements. No vote of the holders of any class or
series of the Company's capital stock is necessary to approve this Agreement,
the Ancillary Agreements to which the Company is a party or the transactions
contemplated by this Agreement and such Ancillary Agreements.
4.10. Brokers. No broker, investment banker, financial advisor or
other person, other than Merrill Lynch, the fees and expenses of which will be
35
paid by the Company, is entitled to any broker's, finder's, financial advisor's
or other similar fee in connection with the transactions contemplated by this
Agreement and the Ancillary Agreements based upon arrangements made by or on
behalf of the Company and its subsidiaries.
4.11. Compliance with Laws.
4.11.1. The Company and each of its subsidiaries has in effect all
Federal, state, local and foreign governmental approvals, authorizations,
certificates, filings, franchises, licenses, notices, permits and rights
("Permits") necessary for it to own, lease or operate its properties and assets
and to carry on its business as now conducted, and there has not occurred any
default under any Permit, except for absence of Permits and for defaults under
Permits which absence or defaults, individually or in the aggregate, have not
had and could not reasonably be expected to have a Material Adverse Effect.
Except as disclosed in Section 4.11.1 to the Company Letter, the Company and its
subsidiaries are in compliance with all applicable statues, laws, ordinances,
regulations, rules, judgments, decrees or orders of any Governmental Authority
except where failures to so comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
4.11.2. Except as set forth in Schedule 4.11.2 to the Company Letter,
(i) neither the Company nor any of its subsidiaries has received any written
communication from a Governmental Authority that alleges that the Company or any
subsidiary thereto is not in compliance with any Environmental Law (as defined
below) if such non-compliance could reasonably be expected to have a Material
Adverse Effect and (ii) the Company has no knowledge of any environmental
materials or information, other than as listed in the Schedule 4.11.2 to the
36
Company Letter, including on-site or off-site storage, disposal or releases of
Hazardous Materials, that could reasonably be expected to have a Material
Adverse Effect on the Company. As used in this Agreement, the term
"Environmental Laws" means any applicable treaties, laws, regulations,
enforceable requirements, orders, decrees or judgments issued, promulgated or
entered into by any Governmental Authority, which relate to (A) pollution or
protection of the environment or (B) the generation, storage, use, handling,
disposal or transportation of or exposure to Hazardous Materials, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Section Section9601, et seq. ("CERCLA"), the Resource
-- ----
Conservation and Recovery Act, as amended, 42 U.S.C. Section Section 6901 et
--
seq., the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section
- - ----
Section 1251 et seq., the Clean Air Act of 1970, as amended, 42 U.S.C. Section
-- ----
Section 7401 et seq., the Toxic Substances Control Act of 1976, 15 U.S.C.
-- ----
Section Section 2601 et seq., the Hazardous Materials Transportation Act, 49
-- ----
U.S.C. Section Section 1801 et seq., and any similar or implementing state or
-- ----
local law, and all amendments or regulations promulgated thereunder.
37
4.12. Material Contracts. All contracts, leases and other agreements
to which the Company or any of its subsidiaries is a party that would be
required to be filed as Exhibits to the SEC Documents (the "Material Contracts")
have been filed as Exhibits to the SEC Documents. Except as disclosed in
Schedule 4.12 to the Company Letter, (i) each Material Contract is in full force
and effect except as the same may have expired in accordance with its terms;
(ii) the Company and its subsidiaries have performed all the material
obligations required to be performed thereby under each Material Contract;
(iii) neither the Company nor any of its subsidiaries has received any written
assertion of default under any Material Contract; (iv) neither the Company nor
any of its subsidiaries expects or has received any notice related to any
termination or material change to, or proposal with respect to, any of the
Material Contracts as a result of the transactions contemplated by this
Agreement and the Ancillary Agreements to which it is a party; and (v) the
Company has no knowledge of any material breach or anticipated material breach
by any other party to any Material Contract; in each case except where the
result of a failure of a representation contained in clauses (i), (ii), (iii),
(iv) or (v) above would not reasonably be expected to have a Material Adverse
Effect.
4.13. No Untrue Statement or Omission. Neither this Agreement nor
any Ancillary Agreement to which the Company is a party nor any exhibit or
schedule hereto or thereto, nor any statement, list or certificate delivered to
Investor pursuant to this Agreement or any such Ancillary Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein not misleading.
38
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF INVESTOR
5.1. Organization; Authority; Noncontravention. Investor is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is incorporated. Investor has all requisite
corporate power and authority to enter into this Agreement and the Ancillary
Agreements to which it is a party and to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements. The execution and
delivery by Investor of this Agreement and each Ancillary Agreement to which it
is a party and the consummation by Investor of the transactions contemplated by
this Agreement and the Ancillary Agreements have been duly authorized by all
necessary corporate action on the part of
39
Investor. This Agreement and the Ancillary Agreements to which it is a party
have been duly executed and delivered by Investor, and constitute valid and
binding obligations of Investor, enforceable against Investor in accordance with
their respective terms. The execution and delivery by Investor of this
Agreement and the Ancillary Agreements to which it is a party did not, and the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements and compliance with the provisions of this Agreement and
the Ancillary Agreements to which it is a party without obtaining the consent of
any third party will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss by Investor or any of its Significant Subsidiaries of a material benefit
under, or the creation of any material additional benefit to any third party
under, or result in the creation of any Lien upon any of the properties or
assets of Investor or any of its Significant Subsidiaries under, (i) the
certificate of incorporation or bylaws of Investor, (ii) any loan or credit
agreement, note, bond, mortgage indenture, lease or other agreement, instrument,
permit or license applicable to Investor or its subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Investor, or its
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflict, violations, defaults, rights or Liens that individually or in the
aggregate could not reasonably be expected to impair the ability of Investor to
perform its obligations under this Agreement and the Ancillary Agreements or
prevent the consummation of any of the transactions contemplated by this
Agreement and the Ancillary Agreements. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
40
Authority or any other third party is required by or with respect to Investor in
connection with the execution and delivery of this Agreement and the Ancillary
Agreements to which it is a party or the consummation by Investor of any
transaction contemplated by this Agreement or any Ancillary Agreement, except
for (i) any filings required pursuant to the foreign antitrust and competition
law statutes and regulations, (ii) the filing with the SEC of the Offer
Documents, and such statements and reports under Sections 12, 13 and 16(a) of
the Exchange Act as may be required in connection with this Agreement, the
Ancillary Agreements and the transactions contemplated by this Agreement and the
Ancillary Agreements, and (iii) such other consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
the "takeover" or "blue sky" laws of various states.
5.2. Brokers. No broker, investment banker, financial advisor or
other person, other than Robertson, Stephens & Company LLC, the fees and
expenses of which will be paid by Investor, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement and the Ancillary
Agreements based upon arrangements made by or on behalf of Investor and its
subsidiaries.
5.3. Investment Intent. Investor is purchasing or acquiring the
Newly Issued Shares for its own account for investment and not with a present
view to, or for sale in connection with, any distribution thereof in violation
of the Securities Act. The certificates evidencing the Newly Issued Shares and
any other Shares issued to Investor pursuant to this Agreement shall bear
substantially the following legend until such time as the same is no longer
41
required under the applicable requirements of the Securities Act or applicable
state securities or blue sky laws and under this Agreement and the Ancillary
Agreements:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. THE TRANSFER OF SUCH SHARES IS SUBJECT TO THE
CONDITIONS SPECIFIED IN THE INVESTMENT AGREEMENT DATED AS OF JANUARY
31, 1996, BETWEEN THE COMPANY AND INVESTOR, AND THE COMPANY RESERVES
THE RIGHT TO REFUSE THE TRANSFER OF SUCH SHARES UNTIL SUCH CONDITIONS
HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH
CONDITIONS WILL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON
WRITTEN REQUEST AND WITHOUT CHARGE. THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED EXCEPT IN
ACCORDANCE THEREWITH."
5.4. Acquisition for Investment and Rule 144. Investor understands
that the Newly Issued Shares will not be registered under the Securities Act by
reason of a specific exemption from the registration provision of the Securities
Act which depends upon, among other things, the bona fide nature of Investor's
investment intent as expressed herein. Investor acknowledges that the Newly
Issued Shares must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
Investor has been advised or is aware of the provisions of Rule 144 promulgated
under the Securities Act which permits limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions. Investor
42
is aware that the certificates representing the Newly Issued Shares will bear
such legends relating to restrictions on resale under the Securities Act as
provided in Section 5.3 and the Company under certain conditions may issue stop
transfer instructions to its stock transfer agent with respect to the Newly
Issued Shares.
5.5. Legal Investment. The purchase of the Newly Issued Shares by
Investor hereunder is legally permitted by all laws and regulations to which
Investor is subject and all consents, approvals, authorizations of or
designations, declarations or filings in connection with the valid execution and
delivery of this Agreement by Investor and the purchase of the Newly Issued
Shares by Investor have been obtained, or will be obtained prior to the Closing
Date.
5.6. Purchase Entirely for Own Account. The Newly Issued Shares will
be acquired for investment for Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and Investor has no present intention of selling, granting any participation in,
or otherwise distributing the same. Investor does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Newly Issued Shares.
5.7. Current Ownership. Except for it rights to acquire Newly Issued
Shares pursuant to this Agreement, neither Investor nor any of its Affiliates
beneficially owns any shares of Class A Stock or Class B Stock; provided, with
respect to any Affiliate of Investor which is not incorporated or otherwise
organized in the United States, Investor shall be entitled to correct this
43
representation by advising the Company in writing at any time within 90 days of
the date of this Agreement of the beneficial ownership of any shares of Class A
or Class B Stock by any such Affiliate, including the amount thereof, nature of
ownership, identity of the beneficial owner, and nature of its relationship with
Investor, in such detail as the Company shall reasonably request. Investor
shall cause any Affiliate which is not a United States subsidiary of Investor to
divest such beneficial ownership within 30 days after Investor becomes aware of
such ownership, but only in the manner permitted by Section 9.1.2 (without
regard to the time limitations thereof and excluding Transfers permitted
pursuant to 9.1.2(i)) and shall promptly advise the Company upon completion of
any such divestitures.
ARTICLE 6
COVENANTS OF THE COMPANY
6.1. Conduct of Business by the Company Prior to Closing. During the
period from the date of this Agreement until the Closing, the Company shall, and
shall cause its subsidiaries to, carry on their respective businesses in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted. Without limiting the generality of the foregoing, the
Company will not (and as to Section 6.1.3, or Section 6.1.5 as applicable to
Section 6.1.3, neither the Company nor any subsidiary shall) take any of the
following actions:
6.1.1. (i) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other than
44
dividends on its Common Stock to be declared and paid only at the customary
rates and times, or (ii) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock;
6.1.2. issue, deliver, sell, pledge or otherwise encumber any shares
of capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares,
voting securities or convertible securities (other than (i) the issuance of
new options or Common Stock under existing Stock Plans or Common Stock upon
the exercise or conversion of rights outstanding on the date of this
Agreement and in accordance with their present terms, (ii) the purchase of
Common Stock pursuant to such Stock Plans, in accordance with their terms
and (iii) the issuance and sale of the Newly Issued Shares in accordance
with the terms hereof);
6.1.3. acquire, in a single transaction or in a series of related
transactions, any business or assets outside the Primary Business of the
Company that would be equal in amount to more than 25% of the total
consolidated assets of the Company as shown on the Company's consolidated
balance sheet as of the end of the most recent fiscal quarter ending prior
to the time the determination is made whether such acquisition be by merger
or consolidation or the purchase of stock or assets or otherwise;
6.1.4 amend its certificate of incorporation or bylaws except for the
adoption of Amended Bylaws by the Company; or
45
6.1.5 authorize, or commit or agree to take, any of the foregoing
actions.
ARTICLE 7
CONDITIONS TO CLOSING
7.1. Obligations of Investor with respect to the Closing. The
obligation of Investor to consummate the transactions contemplated to occur at
the Closing is subject to the satisfaction (or waiver by Investor) as of the
Closing of the following conditions:
7.1.1. The representations and warranties of the Company set forth in
this Agreement and in the Ancillary Agreements to which it is a party
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, as of the
date hereof and as of the time of the Closing as though made as of such
time, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and
warranties qualified as to materiality shall be true and correct, and those
not so qualified shall be true and correct in all material respects, on and
as of such earlier date) and Investor shall have received a certificate to
such effect dated the Closing Date and executed by a duly authorized
officer of the Company. The Company shall have performed or complied in
all material respects with all obligations and covenants required by this
Agreement and the Ancillary Agreements to which it is a party to be
performed or complied with by the Company by the time of the Closing.
46
7.1.2. There shall not be threatened or pending by any Governmental
Authority any suit, action or proceeding, and there shall not be pending by
any other person any suit, action or proceeding, which has a substantial
likelihood of success, (i) seeking to restrain or prohibit the purchase and
sale of the Newly Issued Shares or the Class B Stock pursuant to the Offer,
(ii) seeking to compel the Company to dispose of or hold separate any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or to compel Investor or its subsidiaries
to dispose of or hold separate any material portion of the business or
assets of Investor
and its subsidiaries, as a result of any of the transactions contemplated
by this Agreement or the Ancillary Agreements or (iii) seeking to prohibit
Investor from effectively exercising any of its material rights under this
Agreement or any Ancillary Agreement.
7.1.3. No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or other
order enacted, entered, promulgated, enforced or issued by any Governmental
Authority or other legal restraint or prohibition preventing the
consummation of any of the transactions contemplated hereby or by the
Ancillary Agreements or having any of the other consequences described in
Section 7.1.2 shall be in effect.
7.1.4. The Amended Bylaws shall have been duly authorized, approved
and effected.
47
7.1.5. The Company shall have furnished to Investor an opinion of
John H. Witmer, Jr., Senior Vice President and General Counsel of the
Company, in the form attached hereto as Exhibit C.
7.1.6. During the period from the date of this Agreement until the
Closing Date, neither the Company nor any subsidiary shall have sold or
otherwise disposed of (or authorized, committed or agreed to sell or
otherwise dispose of), in a single transaction or in a series of
transactions, excluding sales of inventory or other assets in the normal
course of business, any business or assets relating to the Primary Business
of the Company that constitute more than five percent of the total
consolidated assets of the Company as shown on the Company's consolidated
balance sheet as of the end of the most recent fiscal quarter ending prior
to the time the determination is made, whether such sale or disposition be
by merger or consolidation or the sale of stock or assets or otherwise.
7.2. Obligations of the Company with respect to the Closing. The
obligation of the Company to consummate the transactions contemplated to occur
at the Closing is subject to the satisfaction (or waiver by the Company) as of
the Closing of the following conditions:
7.2.1. The representations and warranties of Investor set forth in
this Agreement and in the Ancillary Agreements qualified as to materiality
shall be true and correct, and those not so qualified shall be true and
correct in all material respects, as of the date hereof and as of the time
of the Closing as though made as of such time, except to the extent such
representations and warranties expressly relate to an earlier date (in
which case such representations and warranties qualified as to materiality
48
shall be true and correct, and those not so qualified shall be true and
correct in all material respects, on and as of such earlier date) and the
Company shall have received a certificate to such effect dated the Closing
Date and executed by a duly authorized officer of Investor. Investor shall
have performed or complied in all material respects with all obligations
and covenants required by this Agreement and the Ancillary Agreements to be
performed or complied with by Investor by the time of the Closing.
7.2.2. There shall not be threatened or pending by any Governmental
Authority any suit, action or proceeding and there shall not be pending by
any other person any suit, action or proceeding, which has a substantial
likelihood of success, (i) seeking to restrain or prohibit the purchase and
sale of the Newly Issued Shares or the Class B Stock pursuant to the Offer,
(ii) seeking to compel the Company to dispose of or hold separate any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or to compel Investor or its subsidiaries
to dispose of or hold separate any material portion of the business or
assets of Investor and its subsidiaries, as a result of any of the
transactions contemplated by this Agreement or the Ancillary Agreements or
(iii) seeking to prohibit the Company from effectively exercising any of
its material rights under this Agreement or any Ancillary Agreement.
7.2.3. No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent inunction or other
order enacted, entered, promulgated, enforced or issued by any Governmental
Authority or other legal restraint or prohibition preventing the
consummation of any of the transactions contemplated hereby or by the
49
Ancillary Agreements or having any of the other consequences described in
Section 7.2.2 shall be in effect.
7.2.4. The Offer shall have expired and Investor shall have purchased
or accepted for payment and purchase any Class B Stock which it will
acquire pursuant to the Offer.
7.2.5. Investor shall have furnished to the Company an opinion of
Frank E. Vigus, Assistant General Counsel of Investor, in the form attached
hereto as Exhibit D.
50
ARTICLE 8
CERTAIN ADDITIONAL AGREEMENTS
8.1. Confidentiality. Except as required by law, each of the Company
and Investor shall hold, and shall cause its respective officers, employees,
accountants, counsel, financial advisors and other representatives and
affiliates to hold, in confidence any nonpublic information obtained from the
other pursuant to the Confidentiality Agreement or from time to time hereafter
as may be disclosed to the Company, the Investor or any Investor Nominee until
such time as such information becomes publicly available (otherwise than through
the wrongful act of any such person) and shall use all reasonable efforts to
cause such persons not to disclose such information to others without the prior
written consent of the Company or Investor, as the case may be. In the event of
the termination of this Agreement for any reason, the Company and Investor shall
promptly return or destroy all documents containing nonpublic information so
obtained from the other party or any of its subsidiaries and any copies made of
such documents.
51
8.2. Reasonable Efforts; Notification.
8.2.1. Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties shall use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement and the Ancillary
Agreements to which they are parties, including (i) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Authorities and the making of all necessary registrations and
filings (including filings with Governmental Authorities, if any) and the taking
of all reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Authority, (ii)
the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or any of such Ancillary
Agreements or the consummation of the transactions contemplated by this
Agreement or such Ancillary Agreements; including seeking to have any stay or
temporary restraining order entered by any court or other Governmental
Authorities vacated or reversed, and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement and such Ancillary
Agreements.
8.2.2. The Company shall give prompt notice to Investor, and Investor
shall give prompt notice to the Company, of (i) any representation or warranty
52
made by it contained in this Agreement or any Ancillary Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue and
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement or any Ancillary
Agreement; provided, however, that no such notification shall affect the
-------- -------
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement or the
Ancillary Agreements.
8.3. Fees and Expenses. All fees and expenses incurred in connection
with the Offer, this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such fees or expenses, whether or not the Offer or
the sale of the Newly Issued Shares on the terms contemplated hereby is
consummated.
8.4. Public Announcements. Investor and the Company shall consult
with each other before issuing, and provide each other the opportunity to review
and comment upon, any press release or other public statements with respect to
the transactions contemplated by this Agreement and the Ancillary Agreements and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law, court process
or by obligations pursuant to any listing agreement with any national securities
exchange.
8.5. Election of Directors.
53
(i) No later than 20 Business Days after the Closing Date,
subject to occurrence of the Closing, the Board of Directors of the Company
shall be increased in number so that Investor may nominate one director whose
term shall expire at the Company's 1999 annual meeting of stockholders. In
addition, subject to the occurrence of the Closing, if Investor shall have
acquired beneficial ownership of at least 20% of the outstanding Common Stock in
accordance with the terms hereof (including, without limitation, pursuant to
Section 3.6), Investor may nominate an additional director who shall be placed
on the ballot for election at the Company's annual meeting of stockholders to be
held in January, 1997 and whose term shall expire at the Company's 2000 annual
meeting (each such director and any other persons nominated from time to time by
Investor pursuant to this Section 8.5 being referred to herein as an "Investor
Nominee"). Any Investor Nominee may be an employee, officer or director of
Investor or any of its subsidiaries and each Investor Nominee shall be
reasonably satisfactory to the Company. The Company shall use all reasonable
efforts at all times thereafter during which (x) Investor shall retain
beneficial
ownership of at least 7.5% of the Class A Stock and that number of shares of
Common Stock (the "75% Limitation") as is equal to at least 75% of the highest
percentage of the outstanding Common Stock as is beneficially owned by Investor
after completion of the Offer, the Closing and the acquisition of any additional
shares of Class B Stock acquired by Investor pursuant to Section 3.6, and (y)
the Collaboration Agreement shall remain in full force and effect (except if
terminated by reason of material breach of its terms by the Company), to cause
the Investor Nominees to be elected to the Board of Directors (such efforts
shall include the same efforts to solicit from the stockholders of the Company
eligible to vote for the election of Directors proxies in favor of Investor
54
Nominees as the Company devotes to election of the other management-recommended
nominees (such efforts being hereafter described as "Reasonable Solicitation
Efforts"); provided, if Investor shall retain beneficial ownership of less than
--------
7.5% of the Class A Stock and the 75% Limitation but at least 5% of the
outstanding Class A Stock and that number of shares of Common Stock as is equal
to at least 50% of the highest percentage of the outstanding Common Stock as is
beneficially owned by Investor after completion of the Offer, the Closing and
the acquisition of any additional shares of Class B Stock acquired by Investor
pursuant to Section 3.6, and the Collaboration Agreement shall remain in full
force and effect as aforesaid, the Investor Nominees shall be limited to one
director. The period in which Investor is entitled to one or more Investor
Nominees is referred to as the "Director Representation Period". If, at any
time, the conditions entitling the Investor to elect one or two Investor
Nominees, as the case may be, shall not be met, Investor shall at the request of
the Company use all reasonable efforts to cause such Investor Nominee(s) who
shall then be serving as a director to resign and shall thereafter have no
further rights under this Section 8.5 with respect to election of one or two
Investor Nominees, as the case may be. During any Director Representation
Period in which two Investor Nominees shall serve as directors, one such Nominee
shall be a member of the Executive Committee and the other shall be a member of
the Audit Committee; provided, if only one such Nominee shall serve as a
director, such Nominee shall serve as a member of the Executive Committee.
Investor Nominees will not be paid director fees or meeting fees but will be
reimbursed for reasonable expenses of attending meetings.
(ii) During the Director Representation Period, Investor shall
have the right to designate any replacement for an Investor Nominee upon the
death, resignation, retirement, disqualification or removal from office for
55
cause of such Investor Nominee, such replacement to be reasonably satisfactory
to the Company. The Company shall use all reasonable efforts, including
Reasonable Solicitation Efforts to cause each person so designated by Investor
pursuant to this paragraph (ii) to be promptly appointed or elected to the
Board. During any period in which Investor is entitled to designate an Investor
Nominee to the Board but no Investor Nominee is then serving on the Board (if
Investor shall have designated such a person within a reasonable period of
time), the Board shall not amend Sections 9.3, 9.4, 9.5, 9.6 or 9.7 of the
Bylaws without Investor's consent.
8.6. Nonrecognition of Certain Transfers. The Company shall promptly
notify Investor in writing of all requests for transfers and conversions of
shares of Common Stock held subject to the Stockholders' Agreement to anyone who
has received such shares in a transfer or conversion made other than in
accordance with the terms of the Stockholders' Agreement of which the Company
has knowledge. The Company shall not recognize any transfer or conversion, or
issue any certificate representing such shares in writing for at least 15 days
after giving Investor such notice, unless prior or during such 15 days, it shall
have received notice from Investor that it has no objection to such transfer.
In addition, the Company agrees that it shall not in any manner, whether
directly or indirectly, redeem any such shares from a Major A Stockholder if
within 15 days after having been given notice of a proposed redemption, the
Investor shall object in writing that such stockholder has not complied with the
provisions of the Stockholders' Agreement, stating the reasons therefor, until
the Investor shall have withdrawn such objection in writing or as otherwise
ordered by a court having competent jurisdiction.
56
8.7. Independent Directors. The Company shall use all reasonable
efforts including Reasonable Solicitation Efforts to assure that at all times
during the Director Representation Period there will be at least three
Independent Directors on the Board.
ARTICLE 9
RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS
9.1. Restrictions on Transfer.
9.1.1. Investor covenants and agrees with the Company that, prior to
the earliest of (a) the third anniversary of the Closing Date, (b) the
termination or expiration of the Collaboration Agreement (except if the same is
terminated by reason of material breach of its terms by Investor), (c) the
issuance by any Governmental Authority having competent jurisdiction of a final,
non-appealable order requiring Investor to divest its Equity, ("Final
Governmental Order") or (d) the agreement of the Company to enter into a
Business Combination with a person other than Investor or any Affiliate of
Investor, neither Investor nor any of its United States subsidiaries will,
directly or indirectly, offer, sell, transfer, assign, pledge, hypothecate or
otherwise dispose of the beneficial ownership of (any such act, a "Transfer")
any Equity except for
(i) a Transfer by Investor to a United States subsidiary of Investor,
provided that prior to such Transfer each such transferee consents in
--------
writing with the Company to be bound by the restrictions set forth in this
Section 9.1 and assumes all other rights and obligations of Investor under
57
this Agreement and the Registration Rights Agreement, provided further that
-------- -------
Investor (A) shall remain liable for the performance by any such subsidiary
of its obligations under this Agreement, (B) shall act as agent for any and
all such subsidiaries in connection with the receipt or giving of any and
all notices under this Agreement and (C) shall not cause or permit any such
subsidiary to be other than United States subsidiary of Investor,
(ii) a Transfer to the Company or to a subsidiary of the Company
pursuant to a self-tender offer or otherwise,
(iii) a Transfer pursuant to a merger or consolidation that is
recommended by the Board of Directors of the Company in which the Company
is a constituent corporation,
(iv) a Transfer pursuant to a bona fide third party tender offer or
exchange offer, which was not induced directly or indirectly by Investor or
any of its Affiliates, that is recommended by the Board of Directors of the
Company or pursuant to which Major A Stockholders tender or exchange shares
equal to a majority of the Total Voting Power of the Company and do not
withdraw the same on or before the Business Day immediately prior to the
expiration date of such offer, subject to the Company's right of first
refusal set forth in Section 9.3, or
(v) a Transfer of Class B Stock tendered on the expiration date of a
bona fide third party tender offer or exchange offer, which was not induced
directly or indirectly by Investor or any of its Affiliates, of a number of
shares of Class B Stock equal to the aggregate number of shares of Common
Stock tendered by all Major A Stockholders and not withdrawn by such Major
58
A Stockholders prior to the close of business on the Business Day
immediately prior to such expiration date; provided Investor shall have
received (and shall be entitled to rely for such purposes on) written
notice from the third party making such tender or exchange offer certifying
that such Major A Stockholders shall have tendered and not withdrawn such
shares as of the close of business on the Business Day prior to such
expiration date, subject to the Company's right of first refusal set forth
in Section 9.3.
The certificate or certificates representing any such Equity transferred as
provided above shall bear the legend or legends described in Section 9.2 to the
extent required by such Section 9.2.
9.1.2. After the earliest to occur of the events described in clauses
(a) through (d) of Section 9.1.1, neither Investor nor any of its United States
subsidiaries will, directly or indirectly, Transfer any Equity except for,
(i) a Transfer permitted pursuant to Section 9.1.1, or
(ii) a Transfer by Investor or any of its United States subsidiaries
of Class B Stock for cash (A) in private sales to financial or
institutional buyers who shall not be or purchase on behalf of any
Competitor of the Company, (B) in bona fide open market "brokers'
transactions" as permitted by the provisions of Rule 144 under the
Securities Act or (C) in a bona fide public offering pursuant to the
Registration Rights Agreement (such a public offering being hereafter
referred to as a "Permitted Offering"), provided that in the case of a
--------
Transfer described in (A) or (C) the Company has waived its right of first
59
refusal set forth in Section 9.3, and provided further that Investor or
-------- -------
such subsidiaries, as the case may be, will take all reasonable steps to
assure that, in connection with any such open market transactions or
Permitted Offering, Transfers shall not be made to any Person or "group"
(as defined in Section 13(d) of the Exchange Act) that would, following
such Transfer, beneficially own more than 5% of the outstanding Voting
Stock or more than 5% of the outstanding Class B Stock or in the case of a
private sale described in (A) more than 7.5% of the outstanding Voting
Stock or more than 7.5% of the outstanding Class B Stock; and provided
--------
further, in the case of a Permitted Offering which is not made pursuant to
-------
a firm underwriting commitment, such Transfers are completed within 60 days
from the date such shares are first made available for public sale.
The certificate or certificates representing any such Equity transferred as
provided above (other than pursuant to clause (ii) in the preceding sentence)
shall bear the legend or legends described in Section 9.2 to the extent required
by such Section 9.2.
9.1.3. No Transfer of any Equity in violation of this Section 9 shall
be made or recorded on the books of the Company and any such Transfer shall be
void and of no effect.
9.1.4. Subject to the provisions of the Registration Rights Agreement
and except as otherwise provided in Sections 9.1.5, 9.1.6 or 9.1.7, the expenses
incurred by the transferor and/or transferee in connection with any Transfer
permitted under this Section 9.1 shall be borne by the purchaser and/or seller
party to such sale.
60
9.1.5. In the event that prior to the tenth anniversary of the
Closing Date, Investor shall dispose of beneficial ownership of any Equity
pursuant to the terms of Section 9.1.2 as a result of a Final Governmental Order
which arises out of or results from the acquisition or attempted acquisition by
Investor (by merger, consolidation, purchase of stock or assets, contract or
otherwise) of assets or businesses not owned by Investor or its Affiliates on
the date hereof other than the transaction contemplated by this Agreement (the
"Acquisition"), then the terms of the Collaboration Agreement and the Licenses
shall be amended as provided in Subsection 9.05(d) of the Collaboration
Agreement and Subsections 4.08(a) of the CaMV Promoter License Agreement,
4.09(a) of the Corn Borer-Protected Corn License Agreement and 4.12(a) of the
Glyphosate-Protected Corn License Agreement. In addition, (i) Investor shall be
required to reimburse the Company for all reasonable costs and expenses incurred
by the Company in connection with any registrations effected by the Company to
permit such disposition of Equity whether or not required to be borne by the
Company in accordance with the Registration Rights Agreement and (ii) Investor
shall only be entitled to dispose of that amount of Equity required to be
disposed of pursuant to the Final Governmental Order.
9.1.6. In the event Investor shall dispose of beneficial ownership
of any Equity after the third anniversary of the Closing Date and prior to the
tenth anniversary of the Closing Date other than in (i) Transfers permitted
pursuant to Section 9.1.1, (ii) dispositions required after the issuance of a
Final Government Order (such dispositions being covered by Sections 9.1.5 and
9.1.7, whichever is applicable), (iii) dispositions following the termination or
expiration of the Collaboration Agreement (except if the same is terminated by
61
reason of a material breach of its terms by Investor), (iv) dispositions for
Cause (as hereafter defined), or (v) dispositions following the agreement of the
Company to enter into a Business Combination with a person other than Investor
or any Affiliate of Investor, then the terms of the Collaboration Agreement and
the Licenses shall be amended as provided in Subsection 9.05(d) of the
Collaboration Agreement and Subsections 4.08(a) of the CaMV Promoter License
Agreement, 4.09(a) of the Corn Borer-Protected Corn License Agreement and
4.12(a) of the Glyphosate-Protected Corn License Agreement. In addition,
Investor shall be required to reimburse the Company for all reasonable costs and
expenses incurred by the Company in connection with any registrations effected
by the Company to permit such disposition of Equity whether or not required to
be borne by the Company in accordance with the Registration Rights Agreement.
For purposes of this Section 9.1.6, "Cause" shall mean (a) a decrease in the
Company's share of the United States seed corn market as reported by Doane's to
less than seven per cent as determined by annual gross units sold or licensed in
any two consecutive fiscal years or (b) the incurrence by the Company of net
operating losses in any two consecutive fiscal years.
9.1.7. In the event that prior to the tenth anniversary of the
Closing Date, the Investor shall dispose of beneficial ownership of any Equity
pursuant to the terms of Section 9.1.2 as a result of a Final Governmental Order
which arises out of or results from the acquisition or attempted acquisition by
the Company (by merger, consolidation, purchase of stock or assets, contract or
otherwise) of assets or business not owned by the Company or its Affiliates on
the date hereof other than as contemplated by this Agreement, then the terms of
the Collaboration Agreement and the Licenses shall be amended as provided in
Subsection 9.05(e) of the Collaboration Agreement and Subsections 4.08(b) of the
62
CaMV Promoter License Agreement, 4.09(b) of the Corn Borer-Protected Corn
License Agreement and 4.12(b) of the Glyphosate-Protected Corn License
Agreement. In addition, the Company shall be required to reimburse Investor for
all reasonable costs and expenses, excluding underwriting discounts and
commissions, incurred by Investor in connection with any registrations effected
by the Company on behalf of Investor to permit such disposition of Equity
whether or not required to be borne by Investor in accordance with the
Registration Rights Agreement.
9.2. Legends.
9.2.1. Upon original issuance thereof and until such time as the same
is no longer required hereunder or under the applicable requirements of the
Securities Act or applicable state securities or blue sky laws, any certificate
issued representing any of the Newly Issued Shares and any Common Stock issued
pursuant to Section 10 (including, without limitation, all certificates issued
upon transfer or in exchange thereof or in substitution therefor) shall bear the
legend set forth in Section 5.3. If at any time the legend set forth in Section
5.3 is not required, and until such time as the same is no longer required
pursuant to the provisions of Section 9.3, any certificate issued representing
Shares described in the preceding sentence and any of the Class B Stock acquired
pursuant to the Offer (including without limitation all certificates issued upon
transfer or in exchange thereof or in substitution therefor) shall bear the
following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED
PURSUANT TO THE PROVISIONS OF ARTICLE 9 OF A CERTAIN INVESTMENT
AGREEMENT DATED AS OF JANUARY 31, 1996 BETWEEN INVESTOR AND THE
63
COMPANY, COPIES OF WHICH INVESTMENT AGREEMENT ARE ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY. A COPY OF ARTICLE 9 WILL BE
FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND
WITHOUT CHARGE"
A similar legend shall be placed upon any certificates described in the first
sentence of this Section 9.2.1 in the event such shares are no longer subject to
the applicable requirements of the Securities Act or applicable state securities
or blue sky laws, but continue to be beneficially owned by Investor or its
United States subsidiaries.
9.2.2. The Company may make a notation on its records or give
instructions to any transfer agents or registrars for the Class A Stock or the
Class B Stock in order to implement the restrictions on transfer set forth in
this Section 9.2.
9.2.3. Investor shall submit any and all certificates representing
Equity beneficially owned by Investor or any of its United States subsidiaries
to the Company so that the legend or legends required by this Section 9.2 may be
placed thereon. All Equity beneficially owned by Investor or any of such
subsidiaries that is neither Class A Stock or Class B Stock shall be treated in
the same manner as Common Stock for purposes of this Section 9.2.
9.2.4. In connection with any Transfer of Equity, the transferor
shall provide the Company with such customary certificates, opinions and other
documents as the Company may reasonably request to assure that such Transfer
complies fully with applicable securities and other laws.
64
9.2.5. The Company shall not incur any liability for any delay in
recognizing any Transfer of Equity if the Company in good faith reasonably
believes that such Transfer may have been or would be in violation in any
material respect of the provisions of the Securities Act, applicable state
securities or blue sky laws, or this Agreement.
9.2.6. After such time as any of the legends described by this
Section 9.2 are no longer required on any certificate or certificates
representing the Common Stock, upon the request of Investor the Company will
cause such certificate or certificates to be exchanged for a certificate or
certificates that do not bear such legend.
9.3. Right of First Refusal.
9.3.1. Until the tenth anniversary of the Closing, prior to any
Transfer described in clause (ii) (A) or (C) of Section 9.1.2 or any Transfer
described in clauses (iv) or (v) of Section 9.1.1 pursuant to a tender or
exchange offer not recommended by the Board, Investor shall deliver a written
notice (the "Offer Notice") to the Company, which Offer Notice shall specify (i)
the number and amount and description of Equity to be sold or otherwise
transferred, including the method of proposed distribution, (ii) the Offer Price
65
(as defined in Section 9.3.2), (iii) in the case of a privately negotiated
transaction described in clause (ii) (A) of Section 9.1.2, any other proposed
terms of the Transfer including the identity of the proposed transferees and a
description of the nature of their respective businesses and (iv) in the case of
a tender or exchange offer (A) shall be conditional upon tender by one or more
Major A Stockholders of the requisite number of shares of Common Stock described
in clause (iv) or (v) of Section 9.1.1 (without subsequent withdrawal of any
such shares on or before the close of business on the Business Day immediately
prior to the expiration date) and (B) in the case of such clause (v) shall
relate only to the Class B Stock permitted to be tendered thereunder. The Offer
Notice shall constitute an irrevocable offer to the Company or its designee, for
the period of time described below, to purchase such securities upon the same
terms specified in the Offer Notice, subject to Section 9.3.6.
9.3.2. For purposes of this Section 9.3, "Offer Price" shall be
defined to mean on a per share or other amount of Equity basis (i) in the case
of a Permitted Offering, the market value per share or other amount of Equity
determined as provided below (the ``arket Value'' ) as of the date that the
Investor publicly announces its intention to dispose of such equity (a "Public
Notice"), less the cost and expenses, including underwriting commissions,
reasonably expected to be incurred by Investor and any of its United States
subsidiaries in connection with such Permitted Offering on a per share or other
amount of Equity basis (ii) in the case of a privately negotiated transaction
the proposed sales price per share or other amount of Equity and (iii) in the
case of a third party tender offer or exchange offer, the tender offer or
exchange offer price per share. For purposes of determination of the Offer
Price in the case of a Permitted Offering, (A) the Market Value shall mean with
respect to any security, the average of the daily closing prices on the NASDAQ
National Market (or such principal exchange on which such security may be
66
listed) for such security for the 40 consecutive trading days commencing on the
20th consecutive trading day prior to the date of the Public Notice, and (B) in
the event Investor shall intend to sell in the Permitted Offering (by conversion
to Class B Stock) any Class A Stock, such Class A Stock shall be valued as if
it had been converted into Class B Stock as of the beginning of the 20th
consecutive trading day prior to the date of the Public Notice. The closing
price for each day shall be the closing price, if reported, or if the closing
price is not reported, the average of the closing bid and asked prices, as
reported by NASDAQ or a similar source selected from time to time by the Company
for such purpose. (If Investor does not exercise its right of first refusal as
provided herein, transfers of such Equity shall be made only in compliance with
Article 9.)
9.3.3. The Company may elect to purchase all or in the case of a
Permitted Offering, any portion of the securities at the Offer Price and upon
the terms and conditions specified in the Offer Notice, provided that, if in the
--------
case of a Permitted Offering the Company elects to purchase less than all of the
offered securities in connection with a Permitted Offering, the number of shares
or other amount of such offered securities that the Company has elected to
purchase shall be subject to a reduction (determined by the managing underwriter
after consultation with a financial advisor selected by Investor) to the extent
the managing underwriter (after consultation with Investor's financial advisor)
determines that the full number of shares or other amount of such offered
securities that the Company has elected to purchase would so reduce the number
of shares or other amount of Equity to be sold pursuant to the Permitted
Offering as to have a material adverse effect on such offering as contemplated
by Investor (including the price at which Investor proposes to sell such
67
securities), provided further that if the managing underwriter determines that
-------- -------
the number of shares or other amount of such offered securities that the Company
has elected to purchase hereunder should be reduced in accordance with the
criteria set forth in the preceding proviso in this sentence, then the Company
shall be given the opportunity to make a further election either (i) to purchase
the number of shares or other amount of such offered securities as so reduced
(or, at the Company's sole option, a lesser number of shares or other amount of
such offered securities), (ii) to purchase all of such offered securities or
(iii) to withdraw its earlier election and to be released from any obligation to
purchase any of such offered securities, provided that such election shall be
--------
made within five Business Days of notice to the Company of the managing
underwriter's determination.
9.3.4. If the Company elects to purchase the offered securities, it
shall give notice to Investor within 90 days of its receipt of the Offer Notice
(or in the case of a third party tender offer or exchange offer, not later than
the close of business on the second Business Day prior to the expiration date of
such offer, provided that the Offer Notice shall have been provided at least ten
--------
Business Days prior to the initial expiration date of such offer and provided
--------
further that such purchase shall be rescinded and be of no
- - -------
effect if shares are not actually taken up pursuant to the tender offer or to
the extent Investor is not entitled to tender or exchange shares pursuant to
clauses (iv) or (v) of Section 9.1.1) of its election, which shall constitute a
binding obligation, subject to standard terms and conditions for a stock
purchase contract between an issuer and a significant stockholder, to purchase
68
the offered securities, which notice shall include the date set for the closing
of such purchase, which date shall be no later than 30 days (or in the case of a
third party tender or exchange offer 90 days) following the delivery of such
election notice. Notwithstanding the foregoing, such time periods shall not be
deemed to commence with respect to, and the Company shall not be obligated to
respond to, any purported notice that does not comply in all material respects
with the requirements of this Section 9.3, which purported notice shall not be
deemed to be an Offer Notice for purposes of this Agreement and shall be null
and void under this Agreement, provided that if such purported notice is
--------
actually received by the Company and the Company does not within five Business
Days of such receipt notify Investor that such purported notice does not comply
in all material respects with such requirements, such purported notice shall be
deemed not to be defective in any material respect with regard to such
requirements.
9.3.5. The Company may assign its rights to purchase under this
Section 9.3 to any person. If the Company does not respond to the Offer Notice
within the required response time period or elects not to purchase the offered
securities, Investor or its United States subsidiary, as the case may be, shall
be free to complete the proposed Transfer in accordance with the terms of this
Article 9 (including to the same proposed transferees in the case of a privately
negotiated transaction, unless in the case of a previously undesignated
transferee which is a financial not a strategic buyer Investor shall certify to
the Company that after reasonable investigation Investor does not believe that
any transferee identified for the first time may be considered to be a
Competitor or to have purchased on behalf of a Competitor), on terms no less
favorable to Investor or such subsidiary, as the case may be, than those set
69
forth in the Offer Notice, provided that (i) such Transfer is closed within 120
--------
days of the latest of (x) the expiration of the foregoing required response time
period, or (y) in the case of a Permitted Offering within 90 days of the
declaration by the SEC of the effectiveness of a registration statement filed
with the SEC pursuant to the Registration
Rights Agreement and (ii) the price at which the securities are transferred must
be equal to or higher than the Offer Price (except in the case of a Permitted
Offering, in which case the price may be equal to, higher than or less than the
Offer Price), provided, however, that such periods within which such Transfer
-------- -------
must be closed shall be extended to the extent necessary to obtain required
governmental approvals and Investor shall use all reasonable efforts to obtain
such approvals, provided further that the terms and conditions of the Transfer
-------- -------
other than the financial terms thereof may be varied in non-material respects
from those set forth in the Offer Notice if Investor gives notice to the Company
of the nature of such variations at least five Business Days prior to the
consummation of the Transfer, provided that compliance with such five Business
--------
Day period shall not operate to terminate any of the Company's rights under this
Section 9.3.
9.3.6. In the case of a Permitted Offering, Investor shall provide
the Company with a good faith estimate of the costs and expenses, including
underwriting commissions, reasonably expected to be incurred by Investor and any
of its United States subsidiaries in connection with such Permitted Offering.
70
9.4. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. The provisions of this Section 9 shall apply, to the
full extent set forth herein with respect to the Equity of the Company, to any
and all Equity or other securities of the Company or any successor or assign of
the Company (whether by merger, consolidation, sale of assets or otherwise) that
may be issued in respect of, in exchange for, or in substitution of such Equity,
including, without limitation, in connection with any stock dividends, splits,
reverse splits, combinations, reclassifications, recapitalizations, mergers,
consolidations and the like occurring after the date hereof.
9.5. Registration Rights. The Company and Investor have entered into
an agreement (the "Registration Rights Agreement") providing for registration
rights with respect to shares of Class B Stock issued or acquired hereunder or
issuable upon the conversion of any shares of Class A Stock issued or acquired
hereunder to the extent provided under such agreement. The registration rights
provided to Investor under the Registration Rights Agreement shall not be
transferrable to any Person other than a transferee to which Investor has
transferred Equity pursuant to clause (i) of the first sentence of Section
9.1.1.
71
ARTICLE 10
EQUITY PURCHASE RIGHTS
10.1. Equity Purchase Rights.
72
10.1.1. From the Closing Date and for so long as Investor shall
beneficially own either 5% of the Class A Stock or 20% of the Class B Stock, if
the Company proposes to issue for cash (excluding (i) grants of any options or
any other rights to acquire Common Stock pursuant to Stock Plans or as otherwise
described in Section 10.3 and issuance of Common Stock pursuant to any such
options or other rights (as to which Investor will have the benefit of Section
10.3), (ii) issuance of shares of Common Stock upon the exercise of any options
exercisable for Common Stock that are outstanding as of the Closing Date, (iii)
issuance of shares of Common Stock upon the conversion or exercise of any
options, warrants, rights or other securities convertible into or exercisable
for Common Stock the issuance of which was subject to the provisions of this
Section 10.1, (iv) issuance of shares of Common Stock in a Small Offering and
(v) the reissuance of Common Stock purchased by the Company subsequent to the
Closing Date) any Equity ("Additional Equity") it shall give Investor at least
ten days prior written notice (the "Issuance Notice") of such intention,
describing the type of Equity, the estimated price and the other terms upon
which the Company proposes to issue the Additional Equity and the estimated date
of such issuance. If the Company intends to issue Additional Equity in a public
offering, then the Issuance Notice may state both the minimum and maximum amount
of Additional Equity that the Company intends to issue ("Issuance Range")
together with both the minimum and maximum prices ("Price Range") that
correspond with the Issuance Range. It is agreed that Investor shall have no
more than 20 days from the date the Issuance Notice is received to agree to
purchase all or any portion of its Pro Rata Share (as defined below) of the
Additional
73
Equity by giving written notice to the Company of its desire to purchase the
Additional Equity (the "Response Notice"), subject to obtaining regulatory
approval for such purchase and completion of the issuance of the Additional
Equity as contemplated in the applicable Issuance Notice, and stating therein
the amount of Additional Equity to be purchased. Investor shall use all
reasonable efforts to obtain such regulatory approval. Such Response Notice
shall constitute the irrevocable agreement of Investor to purchase the amount of
Additional Equity indicated in the Response Notice at the price and upon the
terms stated in the Issuance Notice. Any purchase by Investor of Additional
Equity shall be consummated on or prior to the date on which all other
Additional Equity described in the applicable Issuance Notice is issued, except
that such purchase may be up to 90 days later than such date if Investor cannot
consummate such purchase due solely to the failure of Investor to obtain
regulatory approval.
"Pro Rata Share" means the amount of Additional Equity necessary to
permit Investor to maintain Investor's Outstanding Interest immediately prior to
issuance of Additional Equity (without regard to any rights Investor may have to
acquire shares pursuant to the application of Section 10.1 for which Pro Rata
Share is then being determined or Section 10.3) for the price and upon the other
terms and conditions upon which the Company actually effects such issuance;
provided, however, that in the case of a public offering of Additional Equity,
- - --------
then the price to be paid by Investor shall be net of underwriting discounts or
commissions.
10.1.2. (i) If the Equity issued or proposed to be issued in respect
of which Investor is entitled to a purchase right under Section 10.1 consists of
shares of Class A Stock, Investor's right to acquire Equity under Section 10.1
74
shall be the right to acquire the number of shares of Class A Stock determined
in all other respects in accordance with the provisions of Section 10.1.1
(except to the extent subject to clause (iii) of this sentence), (ii) if the
Equity issued or proposed to be issued in respect of which Investor is entitled
to a purchase right under this Section 10.1 consists of shares of Class B Stock,
Investor's right to acquire Equity under Section 10.1.1 shall be the right to
acquire the number of shares of Class B Stock determined in all other respects
in accordance with the provisions of this Section 10.1 (except to the extent
subject to clause (iii) of this sentence), and (iii) if the Equity issued or
proposed to be issued in respect of which Investor is entitled to a purchase
right under this Section 10.1 consists of securities of the Company convertible
into shares of Common Stock or options, warrants or other rights to acquire
shares of Common Stock (collectively, "Option Securities"), Investor's right to
acquire Equity under Section 10.1 shall be the right to acquire Equity
convertible into shares of the class of Common Stock or options, warrants or
other rights to acquire shares of the class of Common Stock, in each case upon
the same terms as the Option Securities; provided, Investor's rights with
--------
respect to Option Securities giving the holder the right to acquire Common Stock
shall be determined pursuant to Section 10.1.1 according to the then Outstanding
Interest of Investor and its United States subsidiaries in Class A Stock or
Class B Stock, as the case may be, without regard to any outstanding Equity
convertible into or entitling the holder to acquire such Common Stock.
10.1.3. If there have been issuances of the Company's Equity in
respect of which Investor has a purchase right under this Section 10.1 in Small
Offerings as to which Investor's rights to acquire Equity hereunder have not yet
become exercisable (the "Small Offering Shares"), then, as of and in connection
75
with the immediately following issuance of Equity of the same class that is
subject to the purchase rights of this Section 10.1, Investor shall also have a
right to acquire (on the same terms and conditions applicable herein to such
issuance, including, without limitation, price) additional shares or other
amounts of a class of Equity equal to the number of shares or other amounts
Investor would have been entitled to acquire at the time or times of issuance of
the Small Offering Shares but for the inapplicability of its purchase rights to
such issuances.
10.1.4. To the extent that, after Investor's election to acquire
Equity pursuant to its purchase right under Section 10.1.1, the number of shares
or other amount of Equity to be issued to Persons other than Investor and any of
its United States subsidiaries that gave rise to Investor's purchase right under
this Section 10 shall be reduced (whether at the discretion of the Company or
otherwise), then the number of shares or other amount of Equity that Investor
has the right to acquire under Section 10.1.1 shall be reduced pro rata and
Investor's election shall be deemed to have been its irrevocable commitment to
purchase such reduced number of shares or other amount of such Equity.
76
10.2. Limitations.
10.2.1. Notwithstanding anything to the contrary contained in this
Section 10, Investor shall not be entitled to purchase any securities pursuant
to Section 10.1 or, in the case of clause (iii), to convert any Equity
convertible into, or exercise any rights to acquire, any Class A Stock, (i)
unless and until the Company actually issues the securities that gave rise to
Investor's purchase right under Section 10.1 (and the Company may in its sole
discretion elect at any time to abandon any such issuance) or (ii) in connection
with any pro rata stock split, stock dividend or other combination or
reclassification of any capital stock of the Company or (iii) in the case of
Class A Stock, to the extent that the percentage of Class A Stock then permitted
to be held by Investor pursuant to Section 11.1 exceeds 10% in which event
Investor shall only have the right to acquire sufficient shares of Class A Stock
to maintain the percentage of Class A Stock beneficially owned by Investor at
10% or in case a higher percentage of Class A Stock shall then be permitted to
be beneficially owned pursuant to Section 11.1(i), such higher percentage .
10.2.2. Notwithstanding anything to the contrary contained in this
Section 10, Investor shall not be entitled to purchase any securities pursuant
to Section 10.1 in connection with the issuance of a number of shares or other
amounts of Equity representing less than 1% of the total number of shares of the
relevant class of Common Stock of the Company outstanding as of the date of such
issuance (a "Small Offering"), except as otherwise provided in Section 10.1.3,
unless the Company elects to otherwise provide Investor with Equity purchase
rights in connection therewith on the terms and conditions set forth in Section
10.1.1.
77
10.3. Stock Options. From the Closing Date and for so long as
Investor shall beneficially own either 5% of the Class A Stock or 20% of the
Class B Stock, with respect to the issuance of shares of
Class A Stock or Class B Stock pursuant to the exercise of stock options or
other rights to acquire Class A Stock or Class B Stock granted under the Stock
Plans, or under any other stock option plan or any stock-based incentive
compensation plan that the Company may adopt in the future, Investor shall have
the right, in respect of each fiscal year of the Company beginning with its
fiscal year ending August 31, 1996, to purchase from the Company all or any
portion of the number of shares of Class A Stock or Class B Stock which it would
be necessary for Investor to purchase in order to maintain the same percentage
of ownership of issued and outstanding shares of Class A Stock and Class B Stock
that Investor owned as of the last day of that fiscal year without regard to
shares of Class A Stock and Class B Stock issued pursuant to the exercise of
stock options during that fiscal year (or in the case of the Company's fiscal
year ending August 31, 1996, after the Closing Date); provided, that no share
issued pursuant to exercise of such options shall be considered Class A Stock if
prior to the time the Company is required to give the notice described in the
following sentence with regard to such fiscal year, such share has been
converted to Class B Stock (in which event such share shall be considered Class
B Stock). The Company shall notify Investor no later than 20 Business Days
after the end of each fiscal year of the Company of the shares of the Class A
Stock or Class B Stock which Investor is entitled to purchase under this Section
10.3 in respect of that fiscal year. Investor shall have 20 Business Days from
the date of receipt of the Company's notice in which to advise the Company
whether or to what extent Investor elects to exercise its rights under this
78
Section 10.3. If Investor does not respond, or if Investor indicates in writing
that it will not exercise its rights, then Investor shall be considered
irrevocably to have waived its rights under this Section 10.3 with respect to
the fiscal year in question. If Investor timely advises the Company that
Investor will exercise its rights, then Investor shall have the right to acquire
all or any portion of the number of shares of Class A Stock or Class B Stock
which it is entitled to purchase at a price per share equal to the Current
Market Value on the date Investor advises the Company that it will exercise its
rights under this Section 10.3. For purposes of determination of the Current
Market Value, any Class A Stock shall be deemed to have been converted into
Class B Stock as of the beginning of the 22nd trading day prior to the date with
respect to which the determination of Current Market Value is to be made. At
the closing of such purchase, the Company and Investor shall provide customary
and appropriate representations to one another regarding the purchase and sale
of the Common Stock being purchased by Investor and shall also provide any
additional documentation reasonably requested by the other party.
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ARTICLE 11
STANDSTILL
11.1. Restriction on Acquisition by Investor of Company Securities.
Investor covenants and agrees with the Company that prior to the tenth
anniversary of the Closing Date (I) none of Investor's Affiliates except for
United States subsidiaries of Investor shall beneficially own (subject to
Section 5.7) any Equity of the Company, (II) neither Investor nor its Affiliates
shall acquire directly or indirectly any beneficial ownership of any Equity of
the Company except as permitted by Articles 2, 3 or 10 of this Agreement and
(III) neither Investor nor any of its Affiliates will acquire directly or
indirectly beneficial ownership of any additional Equity of the Company such
that the Equity beneficially owned by Investor and its Affiliates would
represent in the aggregate more than any of the foregoing (x) 10% of the Total
Voting Power of the Company, or (y) the Class B Percentage Limitation, or (z)
40% of the outstanding Common Stock (each such percentage described herein as a
"Percentage Limitation'' unless (i) Investor shall receive from a Major A
Stockholder an offer to purchase shares of Class A Stock beneficially owned by
such Major A Stockholder pursuant to any rights granted by such Major A
Stockholder to Investor in the Stockholders' Agreement, in which event Investor
shall be entitled to acquire beneficial ownership from such Major A Stockholder
of such additional shares of Class A Stock, and (ii) no later than 60 days after
acquisition of beneficial ownership of a majority of the Total Voting Power of
the Company in accordance with the terms hereof, Investor shall be required to
make a Permitted Acquisition Proposal. A "Permitted Acquisition Proposal" shall
be an Acquisition Proposal (including any proposed tender offer) which:
80
(A) is made to the Board and, unless and until approved in accordance with
clause (B), not made directly to stockholders;
(B) is subject to the approval of a majority of the Independent Directors
prior to execution of any definitive agreement in connection with a transaction
involving the Company or the making of any tender or other offer to purchase
Common Stock from any stockholders who are not Major A Stockholders; and
(C) would result, if successful, in the acquisition by Investor of
beneficial ownership of not less than 100% of the outstanding capital stock of
the Company at a price per share not less than the highest price at which
Investor has acquired (or proposes to acquire in connection with the
transaction) beneficial ownership of any Common Stock from a Major A Stockholder
within the preceding two years and for cash and/or the same form of
consideration if other than cash as paid or offered to be paid the Major A
Stockholders.
11.1.1. If Investor shall have acquired a majority of the Total
Voting Power of the Company, but Investor has not acquired 100% of the
outstanding capital stock of the Company, Investor shall:
(i) use all reasonable efforts to assure that at all times thereafter
there will be three Independent Directors on the Board of the Company until
such time as Investor has acquired 100% of the outstanding capital stock of
the Company, and
81
(ii) not acquire additional capital stock of the Company (other than
from a Major A Stockholder) or implement any Acquisition Proposal with
regard to the Company or enter into any commercial transaction with the
Company (not previously in existence) involving a value to the Company as
approved in good faith by a majority of the Independent Directors of less
than $1,000,000 unless such offer, Acquisition Proposal or commercial
transaction is approved by a majority of the Independent Directors of the
Company.
11.1.2. Neither Investor nor any of its Affiliates shall be deemed in
violation of the foregoing limitations in Section 11.1 if their beneficial
ownership of Equity exceeds such limitation solely as a result of (i) an
acquisition of Common Stock by the Company that, by reducing the number of
securities outstanding, increases the proportionate amount of Common Stock
beneficially owned by Investor and its Affiliates in the aggregate to more than
the respective Percentage Limitations of Total Voting Power, Class B Percentage
Limitation or Common Stock or (ii) the exercise by third parties of the right to
convert Class A Stock into Class B Stock, provided that in each case such
--------
limitation shall be deemed crossed if Investor or any of its Affiliates
thereafter becomes the beneficial owner of any additional Equity unless (i)
Investor shall be permitted to acquire such Common Stock pursuant to Subsection
11.1(i) or (ii), or (ii) upon the consummation of the acquisition of such
additional Equity Investor and its Affiliates do not beneficially own in the
aggregate more than the applicable respective Percentage Limitations of Total
Voting Power, Class B Percentage Limitation or Common Stock outstanding.
11.1.3. (i) In the event the Company receives an Acquisition Proposal
(including an indication of interest in making such a proposal) from a third
82
party which has not been solicited by the Board and which, if consummated, would
result in a Business Combination (an "Unsolicited Proposal"), the Company shall
promptly notify Investor in writing (the "Company Notice") of the material terms
of such Unsolicited Proposal, including without limitation any specified
consideration.
(ii) In the event (A) the Board determines to enter into negotiations
with regard to an Unsolicited Proposal and the Investor shall not have advised
the Company subsequent to the receipt of the Company Notice that it is not
interested in submitting an Investor Proposal (as hereinafter defined), or (B)
in the absence of receipt of an Unsolicited Proposal, the Company invites any
third party to make an Acquisition Proposal which if consummated would lead to a
Business Combination (the "Company Proposal"), then the Company shall also
promptly invite the Investor to submit a proposal (an "Investor Proposal") for a
Business Combination which would result in the acquisition of an equal or
greater amount of assets or shares of Common Stock than the Unsolicited Offer or
the Company Proposal (which may include all or substantially all the assets or
all of the Common Stock of the Company). Thereafter, if Investor shall have
submitted an Investor Proposal, the Company shall conduct the solicitation and
negotiation process as an open process available to all bidders, including
provision to the Investor and other
interested parties of further information with regard to the terms of any offers
received and the opportunity to submit further offers in accordance with
procedures approved by a committee of directors consisting of an equal number of
(A) non-employee or officer Major A Stockholder directors (if such directors
agree to serve on such committee) including the Chairman of the Board and (B)
Independent Directors; provided however, that the Board shall not be required to
conduct such process in a manner which, after advice of special independent
83
outside counsel and its financial advisors, the Board determines is inconsistent
with its fiduciary duties. If Investor shall not have submitted an Investor
Proposal or shall withdraw any such proposal and advise the Company that it is
not interested in submitting a further proposal, the Company shall conduct the
negotiation and sale process in such manner as the Board determines.
(iii) Solely for purposes of this Section 11.1.3, a Business
Combination shall include a transaction with respect to which the Company
receives or solicits from a third party or enters into negotiations with respect
to, a proposal (the ``imited Proposal'') which (A) contemplates the
acquisition of a portion of the Company's international seed business or the
Company's North American seed business that would be equal to or greater in
amount than 25% of the average revenues derived from such international or North
American seed business, respectively, in the Company's most recently completed
two fiscal years, and (B) would not otherwise be described by Section 11.1.3 (i)
or (ii), provided, that Investor shall not in such case be entitled to make a
--------
proposal which would involve the acquisition of a greater amount of assets or
ownership interest than the Limited Proposal.
11.2. Other Restrictions. Prior to the earliest of (a) the tenth
anniversary of the Closing Date or (b) such date as Investor and its
subsidiaries acquire a majority of the Total Voting Power, in accordance with
the terms of this Agreement, neither Investor nor any of its Affiliates shall
(i) seek to have the Company waive, amend or modify any of the restrictions
contained in this Article 11, the Certificate of Incorporation or the bylaws
(other than the amendment described on Exhibit B hereto) of the Company, (ii)
make any Acquisition Proposal or proposal with respect to a Business
Combination, (iii) take any initiatives involving the Company that would
84
otherwise require the Company to make a public announcement, or make any public
comment or proposal with respect to any
Acquisition Proposal, (iv) become a member of a ``roup" within the meaning of
Section 13(d) of the Exchange Act (other than a group composed solely of
Investor and any of its wholly owned direct or indirect subsidiaries), (v)
solicit, or encourage any other person to solicit, ``roxies'' or become a
`participant'' or otherwise engage in an ``solicitation'' (as such terms are
defined or used in Regulation 14A under the Exchange Act) in opposition to a
recommendation of a majority of the directors of the Company with respect to any
matter; seek to advise or influence any person (within the meaning of Section
13(d)(3) of the Exchange Act) with respect to the voting of any securities of
the Company; or execute any written consent in lieu of a meeting of holders of
securities of the Company or any class thereof, (vi) initiate, propose or
otherwise solicit stockholders for the approval of one or more stockholder
proposals with respect to the Company, as described in Rule 14a-8 under the
Exchange Act, (vii) deposit any of the Equity into a voting trust, or subject
any of the Equity to any agreement or arrangement other than the Stockholders'
Agreement with respect to the voting of the Shares or any agreement having
similar effect to any of the foregoing in this Section 11.2; or (viii) enter
into any discussions, negotiations, arrangements or understandings with any
third party with respect to any of the foregoing ("Contacts") or otherwise seek
to control or influence the Company other than Contacts with one or more Major A
Stockholder(s) if such Major A Stockholder(s) shall have given Investor a
Transfer Notice pursuant to Section 3.2(b) of the Stockholders' Agreement or has
otherwise actively initiated such Contact, provided, however, that (A) Investor
--------
85
shall be permitted to make any proposal which Investor is permitted to make
pursuant to Sections 11.1 or 11.1.3, as the case may be, (B) if Investor shall
in good faith determine to accept any offer from a Major A Stockholder to
purchase shares of Class A Stock beneficially owned by such Major A Stockholder
or to make a counter proposal to such Major A Stockholder as permitted by and in
accordance with the terms of the Stockholders' Agreement, as a result of which
Investor would acquire beneficial ownership of a majority of the Total Voting
Power of the Company, Investor shall be entitled to make any Permitted
Acquisition Proposal to the Board which it is permitted or required to make
pursuant to Section 11.1, and (C) actions taken by any representative of
Investor on the Board, acting solely in his or her capacity as such a director,
shall not violate this Section 11.2.
ARTICLE 12
TERMINATION
12.1. Termination. Prior to the Closing Date, this Agreement and the
transactions contemplated hereby may be terminated at any time:
12.1.1. Mutual Consent. By mutual consent of the Company and
Investor;
12.1.2. Expiration Date. By the Company or Investor by written
notice to the other party at any time after June 30, 1996 if any condition is
not waived or satisfied within such period; provided, however, that if any
-------- -------
condition shall not have been waived or satisfied within such period due to the
86
willful act or omission of one of the parties, that party may not terminate this
Agreement;
12.1.3. Permanent Injunction. By the Company or Investor if
consummation of the issuance and sale by the Company of the Newly Issued Shares
contemplated by this Agreement shall violate any final non-appealable order,
decree or judgment of any court or governmental body having competent
jurisdiction; or
12.1.4. Failure to Honor Agreements. By the Company or Investor if
the other party shall have failed to perform or comply in any material respect
with any agreement or covenant contained herein that is required to be performed
or complied with by it on or before the Closing Date after having been provided
by the other party written notice of, and a reasonable opportunity to cure, such
failure.
12.2. Termination After Closing Date. This Agreement, with the
exception of Article 11, shall terminate at any time after the Closing Date in
the event that the Investor and its Affiliates beneficially own less than (a)
five percent of the Total Voting Power of the Company and (b) less than ten
percent of the outstanding Common Stock of the Company. The Investor shall
promptly notify the Company in writing at any time that it believes it no longer
owns such amounts.
12.3. Effect of Termination. If this Agreement is terminated
pursuant to this Section 12, this Agreement shall forthwith become wholly void
and of no further force and effect, except as provided in Section 12.2, and all
further obligations of the Company and Investor or their respective officers or
87
directors with respect to any obligation under this Agreement shall terminate
without further liability except, (i) for the obligations of the Company and
Investor under Sections 8.1 and 8.3 and (ii) that to the extent that such
termination results from the material breach by a party of any representations,
warranties, or covenants herein contained such termination shall not constitute
a waiver or bar by any party of any rights or remedies at law or in equity it
may have by reason of a breach of this Agreement by the other party.
ARTICLE 13
INDEMNIFICATION
13.1. Investor's Indemnification Agreement. Subject to Sections
13.3 and 14.1, Investor shall indemnify and hold the Company and its directors,
officers, employees and agents (collectively, the "Company Indemnified Parties")
harmless from and against any and all claims, liabilities, fines, penalties,
demands, causes of action, suits, judgments, losses, injuries, damages
(including costs of defense, settlement and reasonable attorneys' fees) (all of
the foregoing hereinafter collectively called "Liabilities, Actions and
Damages") suffered or incurred by said Company Indemnified Parties with respect
to (i) any inaccuracy of representations and warranties made herein including
without limitation pursuant to Article 5 by Investor, and (ii) breaches of
covenants made herein by Investor, which breaches, if curable, are not cured
within 60 days after written notice thereof from the Company.
13.2. Company's Indemnification Agreement. Subject to Sections 13.3
and 14.1, the Company shall indemnify and hold Investor and its directors,
88
officers, employees and agents (collectively, the "Investor Indemnified
Parties") harmless from and against any and all Liabilities, Actions and Damages
suffered or incurred by said Investor Indemnified Parties with respect to (i)
any inaccuracy of representations and warranties made herein, including but not
limited to, pursuant to Article 4 hereof by the Company, or (ii) breaches of
covenants made herein by the Company, which breaches, if curable, are not cured
within 60 days after written notice thereof from Investor.
13.3. Procedure. In the event that, from and after the Closing Date,
a third party asserts any claim against any Company Indemnified Party or any
Investor Indemnified Party with respect to any matter to which the foregoing
indemnities apply, the party against whom the claim is asserted (the
"Indemnified Party") shall give prompt written notice to the indemnifying party
(the "Indemnifying Party"), and the Indemnifying Party shall have the right, at
its election, to take over the defense or settlement of such claim at its own
expense by giving prompt written notice to the Indemnified Party; provided,
however, that, if the Indemnifying Party does not give such notice and does not
proceed diligently to defend the claim within 30 days after receipt of such
notice of the claim, the Indemnifying Party shall be bound by any defense or
settlement that the Indemnified Party may make as to such claim and shall
reimburse the Indemnified Party for any and all losses and expenses resulting
therefrom. The Indemnified Party and the Indemnifying Party shall cooperate in
defending any such third party's claim, and the Indemnifying Party, to the
extent the Indemnifying Party elects to defend such claim, shall have reasonable
access to records, information and personnel in the possession or control of any
other party hereto which are applicable to the subject matter of any claim or
which are otherwise pertinent to the defense of such claim and the Indemnified
Party shall otherwise cooperate with the Indemnifying Party in all respects in
89
connection therewith. The Indemnifying Party shall reimburse the Indemnified
Party for all of the Indemnified Party's reasonable out-of-pocket costs incurred
in connection with the activities set forth in the immediately preceding
sentence and in enforcing this indemnification. Each party hereto shall have an
obligation to retain all relevant records until the period ending on December 31
of the seventh full calendar year
following the Closing Date unless such records relate to actions, claims or
proceedings known to such party to be pending at the time such records are
scheduled not to be retained or unless such records are required to be
maintained for longer periods of time under applicable laws, rules or
regulations or unless such records relate to taxes, in which case each party
hereto shall have an obligation to retain such records for the term of the
applicable statute of limitations, as the same may be extended or tolled. Not-
withstanding the foregoing, the Indemnifying Party shall not settle or
compromise any such claim without the prior written consent of the Indemnified
Party, (such consent not to be unreasonably withheld) unless, after consultation
between such parties, the terms of such settlement or compromise release such
Indemnified Party from any and all liability with respect to such claim and do
not in any manner adversely affect the future operations or activities of such
Indemnified Party.
90
ARTICLE 14
GENERAL PROVISIONS
14.1. Survival of Representations and Warranties. The
representations and warranties in this Agreement and in the instruments
delivered pursuant to this Agreement (without regard to the Ancillary
Agreements) shall survive the Closing for a period of 24 months.
Notwithstanding the foregoing, (i) the representations and warranties set forth
in Sections 4.3 and 4.4, to the extent applicable to the issuance of the Newly
Issued Shares to Investor at Closing, shall survive the Closing indefinitely and
(ii) the representations and warranties set forth in Section 4.8 shall survive
until the expiration of the applicable statute of limitations (as such statute
of limitations may be extended). This Section 14.1 shall not limit any covenant
or agreement of the parties which by its terms contemplates performance after
the Closing.
14.2. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
transmission or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 14.2):
91
If to Investor, to:
Monsanto Company
800 N. Lindbergh Boulevard
St. Louis, Missouri 63167
Attention: Chief Financial Officer
Fax: 314-694-3001
with a copy to:
General Counsel and Secretary
Fax: 314-694-3001
If to Company, to:
DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, IL 60115
Attention: Senior Vice President and General Counsel
Fax: 815-758-6953
with a copy to:
92
James G. Archer
c/o Sidley & Austin
875 Third Avenue
New York, NY 10022
Fax: 212-906-2021
14.3. Interpretation. References in this Agreement to any gender
include all genders and references to the singular include the plural and vice
versa. When a reference is made in this Agreement to a Section, Exhibit or
Schedule, such reference shall be to a Section of, or an Exhibit or Schedule to,
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". The words "hereof,"
"hereby" and "herein" and words of similar meaning where used in this Agreement
or any exhibit or schedule refer to such agreement, exhibit or schedule in its
entirety and not to any particular article, section or paragraph unless
otherwise specifically indicated.
14.4. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
14.5. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Ancillary Agreements and the Confidentiality Agreement between
Investor and the Company (i) constitute the entire agreement, and supersede all
93
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement and such Ancillary
Agreements and (ii) are not intended to confer upon any person other than the
parties and their permitted successors and assigns any rights or remedies.
14.6. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
14.7. Corporate Powers. Nothing herein shall be construed to relieve
the directors and officers of the Company or its subsidiaries from the
performance of their respective fiduciary duties or limit the exercise of their
powers in performance of their duties hereunder and the obligations of the
Company herein shall be subject to such fiduciary duties.
14.8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned or transferred,
in whole or in part, by any of the parties without the prior written consent of
the other party, except that Investor may, without the prior written consent of
the Company, assign all or any of its rights, interests, and obligations under
this Agreement (other than under Articles 8, 9 and 11) to a wholly owned, direct
or indirect, United States subsidiary of Investor, provided that Investor (i)
--------
shall remain liable for the performance by any such subsidiary of its
obligations under this Agreement, (ii) shall act as agent for any and all such
subsidiaries in connection with the receipt and giving of notices under this
Agreement and (iii) shall not cause or permit any such subsidiary to be other
than a wholly owned direct or indirect subsidiary of Investor, and Investor may
94
assign its rights under the Registration Rights Agreement to the extent provided
therein. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and permitted assigns. Any attempted assignment in
violation of this Section 14.8 shall be void.
14.9. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or any of the
Ancillary Agreements between Investor and the Company were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and such Ancillary Agreements
and to enforce specifically the terms and provisions of this Agreement and such
Ancillary agreements in any Federal or state court located in the State of
Delaware, this being in addition to any other remedy to which they are entitled
at law or in equity. In addition, each of the parties hereto (i) consents to
submit itself to the personal jurisdiction of any Federal or state court located
in the State of Delaware in the event any dispute arises out of this Agreement,
any of such Ancillary Agreements, or any of the transactions contemplated by
this Agreement or any of such Ancillary Agreements, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (iii) agrees that it will not bring any action
relating to this Agreement, any of such Ancillary Agreements or any of the
transactions contemplated by this Agreement or any of such Ancillary Agreements
in any court other than a Federal or state court sitting in the State of
Delaware. All rights and remedies existing hereunder are cumulative to and not
exclusive of any rights or remedies otherwise available.
95
14.10. Amendment and Waiver. No amendment to this Agreement or
waiver of any provision hereof shall be effective unless such amendment or
waiver is in writing and signed by each party to this Agreement. Any failure of
a party to comply with any obligation, covenant, agreement or condition
contained in this Agreement may be waived by the parties entitled to the
benefits thereof only by a written instrument duly executed and delivered by the
parties granting such waiver. Any waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure of compliance.
14.11. Accounting Information. As soon as reasonably practicable but
in any event within 25 days after the end of each calendar month after the
Closing Date, the Company shall provide Investor with such accounting and
financial information as is reasonably requested by Investor in order for
Investor to implement equity accounting for its investment in the Company.
14.12. Severability. In the event any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
IN WITNESS WHEREOF, Investor and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
MONSANTO COMPANY
96
By
Name: Robert T. Fraley
Title: President, Ceregen
DEKALB GENETICS CORPORATION
By
Name: Bruce P. Bickner
Title: Chairman and CEO
97
EXHIBIT A
Conditions of the Offer
-----------------------
Notwithstanding any other term of the Offer or this Agreement,
Investor shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Investor's obligation to pay for or return tendered
shares of Class B Stock after the termination or withdrawal of the Offer), to
pay for any shares of Class B Stock tendered pursuant to the Offer and may
terminate or amend the Offer, with the consent of the Company or if, at any time
on or after the date of this Agreement and before the acceptance of such shares
for payment or the payment therefor, any of the following conditions exists:
(a) there shall be threatened or pending by any Governmental
Authority any suit, action or proceeding, or there shall be pending by any
other person any suit, action or proceeding, which has a substantial
likelihood of success, (i) challenging the acquisition by Investor of any
shares of Common Stock, seeking to restrain or prohibit the making or
consummation of the Offer or the share issuances as contemplated by the
Agreement or the performance of any of the other transactions contemplated
by the Agreement or the Ancillary Agreements, or seeking to obtain from the
Company or Investor any damages that are material in relation to the
Company and its subsidiaries taken as a whole, (ii) seeking to prohibit or
limit the ownership or operation by the Company, Investor or any of their
respective subsidiaries of the business or assets of the Company and its
subsidiaries, taken as a whole, or Investor and its subsidiaries, taken as
a whole, or to compel the Company to dispose of or hold separate any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole or Investor and its subsidiaries, taken as a
whole, as a result of the Offer or any of the other transactions
contemplated by this Agreement or the Ancillary Agreements, (iii) seeking
to impose limitations on the ability of Investor to acquire or hold, or
exercise full rights of ownership of, any shares of Common Stock to be
accepted for
payment pursuant to the Offer or any Newly Issued Shares including, without
limitation, the right to vote such Newly Issued Shares on all matters
properly presented to the stockholders of the Company, (iv) seeking to
prohibit Investor or any of its subsidiaries from exercising any of their
respective material rights under this Agreement or any Ancillary Agreement;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or applicable to the
Offer or the share issuances, or any other action shall be taken by any
Governmental Authority or court, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses
(i) through (iv) of paragraph (a) above;
(c) there shall have occurred any event which constitutes a Material
Adverse Effect;
(d) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not be
true and correct and any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in each
2
case as of the date of the Agreement and as of the Expiration Date as
though made on and as of the Expiration Date (or any other date as of which
such representations and warranties expressly speak);
(e) the Company shall have failed to furnish to Investor an opinion
of John H. Witmer, Jr., Senior Vice President and General Counsel of the
Company, in the form attached hereto as Exhibit C, dated as of the Closing
Date if it occurs on or before the Expiration Date, or if the Closing Date
shall not have occurred, speaking in future tense as relates to issuance of
the Newly Issued Shares;
(f) during the period from the date of this Agreement until the
Expiration Date, neither the Company nor any subsidiary shall have sold or
otherwise disposed of (or authorized, committed or agreed to sell or
otherwise dispose of), in a single transaction or in a series of
transactions,
excluding sales of inventory or other assets in the normal course of
business, any business or assets relating to the Primary Business of the
Company that constitute more than five percent of the total consolidated
assets of the Company as shown on the Company's consolidated balance sheet
as of the end of the most recent fiscal quarter ending prior to the time
the determination is made, whether such sale or disposition be by merger or
consolidation or the sale of stock or assets or otherwise;
(g) there shall have occurred (i) any general suspension or trading
in, or limitation on prices for, securities (excluding any coordinated
trading halt triggered solely as a result of a specified decrease in a
3
market index), (ii) any extraordinary change in the financial markets in
the United States, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iv) any
limitation (whether or not mandatory) by any Governmental Authority on, or
other event that materially affects, the extension of credit by banks or
other lending institutions, (v) a commencement of a war directly involving
the armed forces of the United States, or (vi) in case of any of the
foregoing existing on the date of this Agreement, material acceleration or
worsening thereof;
(h) the Board of Directors of the Company shall have failed to give,
withdrawn or modified in a manner adverse to Investor its approval or
recommendation of the Offer or the other transactions contemplated by this
Agreement or the Ancillary Agreements;
(i) the Amended Bylaws shall not be authorized, approved and
effected; or
(j) the Agreement shall have terminated in accordance with its terms;
which, in the reasonable good faith judgment of Investor, and regardless of the
circumstances giving rise to any such condition (other than any action or
inaction by Investor or any of its subsidiaries which constitutes a breach of
the Agreement), makes it inadvisable to proceed with such acceptance for payment
or payment.
The foregoing conditions are for the sole benefit of Investor and may
be asserted by Investor regardless of the circumstances giving rise to any such
condition or may be waived by Investor in whole or in part at any time and from
4
time to time in its sole discretion. The failure by Investor or any other
subsidiary of Investor at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right, the waiver of any such right with
respect to particular facts and circumstances shall not be deemed a waiver with
respect to any other facts and circumstances and each such right shall be deemed
an ongoing right that may be asserted at any time and from time to time. Any
determination (which shall be made in good faith by the Investor) with respect
to the foregoing conditions shall be final and binding on the parties.
5
EXHIBIT B
AMENDED BYLAWS OF THE COMPANY TO CONTAIN THE FOLLOWING BY-LAW PROVISIONS:
- Section 9.3 Primary Business. The Primary Business of the Corporation
----------------
shall be the research-based production, marketing, licensing and sale of
agronomic seed, including both technology related thereto and products
derived therefrom.
- Section 9.4 Use of Voting Securities.
------------------------
i) The use of the Corporation's Voting Securities to facilitate
strategic collaborations is in the Corporation's interest, but as
to any one strategic collaboration, the maximum amount of Voting
Securities to be issued to any Person or Group shall not exceed
10 percent of Voting Securities of the Corporation outstanding at
the time of issuance.
(ii) As used in this Section 9.4, the following terms shall have
the meanings set forth: "Voting Securities" means any shares of
capital stock or other securities of the Corporation entitled to
vote generally in the election of directors, (including the right
to elect one or more directors as a class unless such right is
only exercisable during the continuance of a defined event.)
"Person" means any individual, limited partnership, general
partnership, trust, corporation or other firm or entity.
"Group" shall have the meaning ascribed in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended, or any successor
provision thereto.
- Section 9.5 Acquisitions. The Corporation shall not acquire, in a
------------
single transaction or in series of related transactions, any business or
assets outside of the Primary Business of the Corporation that would be
equal to or greater in amount than twenty-five percent (25%) of the total
consolidated assets of the Corporation as shown on the Corporation's
consolidated balance sheet as of the end of the most recent fiscal quarter
ending prior to the time the determination is made whether such acquisition
be by merger or consolidation or the purchase of stock or assets or
otherwise;
- Section 9.6 "Permitted Transactions". No transaction which would result
----------------------
in the change of the Primary Business of the Corporation as set forth in
Section 9.3, no issuance of Voting Securities to facilitate a strategic
collaboration in contravention of Section 9.4 and no acquisition of any
business or assets outside the Primary Business of the Corporation in
contravention of Section 9.5 shall be approved by the Board of Directors if
the resolution regarding such transaction receives the negative vote of at
least three directors after the 1997 annual meeting of stockholders and at
least two directors prior to the 1997 annual meeting of stockholders.
- Section 9.7 Certain Amendments. The Corporation shall not amend Sections
------------------
9.3, 9.4, 9.5, 9.6 or 9.7 hereof if the resolution regarding such amendment
7
receives the negative vote of at least one director, or two directors after
the 1997 annual meeting of stockholders.
EXHIBIT C
Opinion of John H. Witmer
Subject to appropriate qualifications, limitations, conditions and
assumptions, which are reasonably acceptable to Investor:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has corporate power
and authority to own the properties it purports to own and conduct its business
as described in the SEC Reports (as defined in the Investment Agreement) and has
corporate power and authority to execute, deliver and perform its obligations
under the Investment Agreement and the Ancillary Agreements to which it is a
party (collectively, the ``ransaction Documents'').
2. The Transaction Documents have been duly authorized, executed and
delivered by the Company and (assuming the due authorization, execution and
delivery thereof by the Investor) constitute the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with
their respective terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
similar laws of general applicability relating to or affecting the enforcement
of creditors' rights and by the effect of general principles of equity
8
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
3. Neither the execution and delivery by the Company of the Transaction
Documents or the consummation of the transactions contemplated thereby, nor
compliance by the Company with the terms and conditions thereof, does or will
result in any breach of or constitute a default under the Restated Certificate
of Incorporation of the Company, or the By-laws of the Company, or, to my
knowledge, any agreement, instrument or judgment which is applicable to the
Company or any of its subsidiaries or any court injunction or decree or any
valid and enforceable order of a governmental entity having jurisdiction over
the Company or any of its subsidiaries.
4. To my knowledge, after due inquiry, there are no actions, suits or
proceedings or claims pending against the Company seeking to restrain or
prohibit (or questioning the validity or legality of) the consummation of the
transactions contemplated by the Transaction Documents.
5. The authorized, issued and outstanding shares of capital stock of the
Company are as set forth in Section 4.3 of the Investment Agreement; all of the
issued and outstanding shares of Common Stock (as defined in the Investment
Agreement) have been duly authorized and validly issued, are fully paid and non-
assessable; and the Newly Issued Shares (as defined in the Investment Agreement)
to be issued in connection with the Investment Agreement, when certificates
therefor have been duly executed, countersigned and registered and delivered
against payment of the agreed consideration therefor in accordance with the
terms of the Investment Agreement, will constitute shares of Common Stock which
have been duly authorized and validly issued, are fully paid and non-assessable
9
and have not been issued in violation of the preemptive rights of any
stockholder of the Company.
10
EXHIBIT D
Opinion of Frank E. Vigus
Subject to appropriate qualifications, limitations, conditions and
assumptions, which are reasonably acceptable to the Company:
1. Investor is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has corporate power and
authority to execute, deliver and perform its obligations under the Investment
Agreement and the Ancillary Agreements (collectively, the `Transaction
Documents').
2. The Transaction Documents have been duly authorized, executed and
delivered by Investor and (assuming the due authorization, execution and
delivery thereof by the other parties thereto) constitute the legal, valid and
binding obligation of Investor enforceable against Investor in accordance with
their respective terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
similar laws of general applicability relating to or affecting the enforcement
of creditors' rights and by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
3. Neither the execution and delivery by Investor of the Transaction
Documents or the consummation of the transactions contemplated thereby, nor
compliance by Investor with the terms and conditions thereof, does or will
result in any breach of or constitute a default under the Certificate of
Incorporation, as amended, of Investor, or the By-Laws of Investor, or, to my
knowledge, any agreement, instrument or judgment which is applicable to Investor
or any of its subsidiaries or any court injunction or decree or any valid and
enforceable order of a governmental entity having jurisdiction over Investor or
its subsidiaries.
4. To my knowledge, after due inquiry, there are no actions, suits or
proceedings or claims pending against Investor or any subsidiary seeking to
restrain or prohibit (or questioning the validity or legality of) the
consummation of the transactions contemplated by the Transaction Documents.
EXHIBIT 99.2
NEWS RELEASE
------------
Thomas R. Rauman
Chief Financial Officer
(815) 758-9223
FOR IMMEDIATE RELEASE
THURSDAY, FEBRUARY 1, 1996
DEKALB GENETICS AND MONSANTO ANNOUNCE RESEARCH COLLABORATION;
-------------------------------------------------------------
MONSANTO TO MAKE EQUITY INVESTMENT IN DEKALB
--------------------------------------------
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DEKALB, Illinois, February 1, 1996 -- DEKALB Genetics Corporation and Monsanto
Company today announced a definitive agreement for a long-term research and
development collaboration in the field of agricultural biotechnology,
particularly corn and soybean seed. Both companies also announced nonexclusive
cross-licensing agreements covering herbicide-tolerant and insect-protected corn
products targeted to reach the market during the next three years. In addition,
Monsanto will acquire 10 percent of DEKALB Genetics Class A (voting) common
stock and up to 45 percent of Class B (non-voting) common stock.
``he research collaboration combines the strengths of both companies'
agricultural biotechnology programs,''said Bruce P. Bickner, DEKALB's chairman
and chief executive officer. `By coordinating certain of our respective
research activities, we will be able to bring more value-added products to
market within a shorter time span.''
``his is a strategic relationship to make Monsanto's crop technology
available to growers in the seeds they prefer to plant,''said Robert B.
Shapiro, chairman and chief executive officer of Monsanto. ``his collaboration
greatly strengthens Monsanto's position in the important seed corn business.
The quality of our technology is important, but so is the quality of the seeds
that contain the improved performance traits. DEKALB is one of the industry's
leaders in both biotechnology and conventional breeding.''
As part of their 10-year research collaboration, Monsanto will pay DEKALB
$19.5 million, and the two companies will share licensing revenues for products
that are developed as a result of the collaboration. The primary crops involved
are corn and soybeans, but the collaboration also covers other crops, including
sorghum, wheat, oilseeds, and produce.
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DEKALB will receive worldwide licenses for certain Monsanto technology,
including technology for YieldGard insect protected corn, and ROUNDUP READY
corn, tolerant of ROUNDUP herbicide, and for corn tolerant of glufosinate
herbicide. Monsanto will receive worldwide licenses to use DEKALB's technology
for YieldGard and ROUNDUP READY corn and the ability to further license the
technology. YieldGard corn is protected against certain insect pests with
traits derived from a naturally occurring microorganism, Bacillus thuringiensis
or ``t.''
DEKALB and Monsanto will share royalties on future licenses. The worldwide
licenses created by the agreement are nonexclusive. Both companies remain free
to license technologies to others. Neither the collaboration nor the cross-
licensing agreements transfer to Monsanto any rights to DEKALB's proprietary
inbred, hybrid or varietal seed lines.
3100 SYCAMORE ROAD, DEKALB IL 60115-9600
815-758-3461 FAX: 815-758-3711
As part of the agreement, Monsanto will invest approximately $30 million to
acquire 10 percent of the Class A voting stock of DEKALB and approximately 8
percent of the company's Class B non-voting stock. As a result of the
additional stock issuance, the total number of DEKALB Genetics Corporation's
outstanding shares would rise from about 5.2 million to over 5.6 million. `The
sale of equity provides us with funds to support our growing seed business,''
said Bickner.
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Monsanto will also make a cash tender offer for up to 1.8 million shares of
the publicly traded Class B non-voting stock at a price of $71 per share.
DEKALB's board of directors has unanimously endorsed Monsanto's tender offer and
recommends it to shareholders who desire to sell all or a portion of their
shares at a premium over the current market price.
Details of the tender offer will be communicated promptly to DEKALB
shareholders. The transaction is expected to be completed during March.
Monsanto will add one representative to the DEKALB board of directors in 1996
and, assuming a successful tender offer, another representative in 1997.
A 10-year standstill agreement between the companies limits Monsanto
ownership of DEKALB to 10 percent of the company's voting stock and 40 percent
of DEKALB's total outstanding common stock. In a related agreement, the Roberts
family members, owners of more than 50 percent of DEKALB's voting stock, have
agreed with Monsanto that if family members decide to sell their stock at any
time during the next eleven years, Monsanto will be given the first opportunity
to purchase such stock.
``learly, Monsanto will hold a significant minority share, but there is no
change in control at DEKALB. The Roberts family continues to own a majority of
the company's voting stock,''Bickner said. ``More important to DEKALB
shareholders, however, is that this agreement strategically positions DEKALB's
research capabilities for the start of the 21st Century and creates an important
source of licensing revenue. It also provides added assurance to our customers
and dealers that DEKALB will continue to offer the most advanced genetic seed
products to the marketplace.
`Monsanto is making a sound investment in an industry leader. We will
gain access to DEKALB's biotechnology portfolio, outstanding breeding
capabilities, and to the expertise of a leading seed corn company,''Shapiro
said.
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`This new relationship recognizes the importance of linking biotechnology
capabilities closely with breeding and seed production in order to bring new
hybrids with improved production traits quickly into a very competitive
marketplace. We intend to offer growers the best traits, in the best seeds,
through leading seed companies like DEKALB,''Shapiro said.
Monsanto is a science and technology company based in St. Louis, Missouri.
It is a global leader in agricultural biotechnology and in the development of
improved food and fiber crops. Monsanto stock is traded on the New York Stock
Exchange under the symbol MTC.
Based in DeKalb, Illinois, DEKALB Genetics Corporation is engaged in the
research, production and marketing of agricultural seed and swine breeding
stock. DEKALB Genetics Corporation Class B Common Stock is traded on the NASDAQ
National Market System under the symbol SEEDB.
###
NOTE TO EDITORS: Roundup, Roundup Ready, and YieldGard are among the trademarks
owned or licensed by Monsanto Company and its subsidiaries.
For Further Information Contact:
Loren Wassell
Monsanto Company
314-694-7002
3100 SYCAMORE ROAD, DEKALB IL 60115-9600
815-758-3461 FAX: 815-758-3711
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