Exhibit A
TERMINATION OPTION AGREEMENT
This TERMINATION OPTION AGREEMENT (this "Agreement"), is made
and entered into as of May 8, 1998, by and among Monsanto Company, a Delaware
corporation (the "Grantee"), and Delta and Pine Land Company, a Delaware
corporation (the "Grantor").
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Grantor and the Grantee are entering into an Agreement and Plan
of Merger, dated as of the date hereof (the "Merger Agreement"); and
WHEREAS, as a condition to the Grantee's willingness to enter
into the Merger Agreement, the Grantee has requested that the Grantor agree, and
in order to induce the Grantee to enter into the Merger Agreement, the Grantor
has agreed, to grant to the Grantee an option with respect to certain shares of
the Grantor's common stock, $0.10 par value per share (the "Grantor Common
Stock"), on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements set forth herein and in the Merger Agreement and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Grant of Option. The Grantor hereby grants to the Grantee an
irrevocable option (the "Stock Option") to purchase up to 7,614,659 shares of
Grantor Common Stock, or such other number of shares of the Grantor Common Stock
as equals 19.9% of the issued and outstanding shares of the Grantor Common Stock
at the time of exercise of the Stock Option, in the manner set forth below, at a
price of $46.25 per share (the "Exercise Price"), payable in cash in accordance
with Section 4 hereof. Capitalized terms used and not otherwise defined herein
shall have the meanings set forth in the Merger Agreement.
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2. Exercise of Option. The Stock Option may be exercised by the
Grantee, in whole or in part, at any time or from time to time after (a) any
corporation, partnership, person, other entity or group (as defined in Section
13(d)(3) of the Exchange Act) other than Grantor or any of its subsidiaries or
affiliates or any entities included in the "Institutional Investor Group" set
forth in the Company Disclosure Letter (each a "Third Party") shall have become
the beneficial owner of more than 15% of the outstanding Grantor Common Stock
(either on a primary or a fully diluted basis); (b) any Third Party shall
commence a tender offer for at least 15% of the outstanding Grantor Common Stock
(either on a primary or a fully diluted basis); or (c) Grantor enters into, or
announces that it has agreed to enter into, an agreement in respect of an
Acquisition Transaction. The Stock Option shall be exercisable until the
earliest to occur of (i) the closing of any Acquisition Transaction with a Third
Party; (ii) any Third Party acquiring beneficial ownership of more than 50% of
the outstanding Grantor Common Stock; (iii) ninety (90) days after the
occurrence of any event set forth in the foregoing clauses (a), (b) and (c); or
(iv) ninety (90) days after the date of termination of the Merger Agreement. In
the event the Grantee wishes to exercise the Stock Option, the Grantee shall
deliver to the Grantor a written notice (an "Exercise Notice") specifying the
total number of shares of the Grantor Common Stock it wishes to purchase. Each
closing of a purchase of shares of Grantor Common Stock (a "Closing") shall
occur at a place, on a date and at a time designated by the Grantee in any
Exercise Notice delivered at least two (2) business days prior to the date of
such Closing.
3. Conditions to Closing. The obligation of the Grantor to issue shares
of the Grantor Common Stock to the Grantee hereunder is subject to the
conditions (which, other than the conditions described in clauses (a) and (b)
below, may be waived by the Grantor in its sole discretion) that (a) all waiting
periods, if any, under the HSR Act applicable to the issuance of shares of the
Grantor Common Stock hereunder shall have expired or have been terminated, and
all consents, approvals, order or authorization of, or registration,
declarations or filings with, any federal administrative agency or commission or
other federal governmental authority or instrumentality, if any, required in
connection with the issuance of shares of the Grantor Common Stock hereunder
shall have been obtained or made, as the case may be; (b) no preliminary or
permanent injunction or other order by any court of competent jurisdiction
prohibiting or otherwise restraining such issuance shall be in effect; and (c)
such shares shall have been approved for listing on the NYSE, subject to
official notice of issuance.
4. Closing. At any Closing, (a) the Grantor will deliver to the Grantee
a single certificate in definitive form representing the number of shares of the
Grantor Common Stock designated by the Grantee in its Exercise Notice, such
certificate to be registered in the name of the Grantee, or a nominee of the
Grantee designated by the Grantee in the Exercise Notice, and to bear the legend
set forth in Section 9 hereof, and (b) the Grantee will deliver to the Grantor
the aggregate Exercise Price for the shares of the Grantor Common Stock so
designated and being purchased at such Closing by wire transfer of immediately
available funds.
5. Representations, Warranties and Covenants of the Grantor. The
Grantor represents and warrants to the Grantee that (a) the Grantor is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder, (b) the execution and
delivery of this Agreement by the Grantor and the consummation by the Grantor of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Grantor and no other corporate proceedings
on the part of the Grantor are necessary to authorize this Agreement or any of
the transactions contemplated hereby, (c) this Agreement has been duly executed
and delivered by the Grantor and constitutes a valid and binding obligation of
the Grantor, and, assuming this Agreement constitutes a valid and binding
obligation of the Grantee, is enforceable against the Grantor in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles, (d) the Grantor
has taken all necessary corporate action to authorize and reserve for issuance
and to permit it to issue, upon exercise of the Stock Option, and at all times
from the date hereof through the expiration of the Stock Option will have so
reserved, 7,614,659 unissued shares of Grantor Common Stock, all of which, upon
their issuance and delivery in accordance with the terms of this Agreement, will
be validly issued, fully paid and nonassessable, (e) upon delivery of such
shares of the Grantor Common Stock to the Grantee upon exercise of the Stock
Option, the Grantee will acquire valid title to all of such shares, free and
clear of any and all Liens of any nature whatsoever, (f) the execution and
delivery of this Agreement by the Grantor does not, and the performance of this
Agreement by the Grantor will not, (1) violate the certificate of incorporation
or bylaws of the Grantor, (2) conflict with or violate any statute, rule,
regulation, order, judgment or decree applicable to the Grantor or by which it
or any of its assets or properties is bound or affected, or (3) result in any
breach or violation of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give rise to any rights
or termination, amendment, acceleration or cancellation of, or result in the
creation of any Lien on any of the property or assets of the Grantor pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license, or
other instrument or obligation to which the Grantor or any of its Subsidiaries
is a party or by which the Grantor or any of its assets or properties is bound
or affected (except, in the case of clauses (2) and (3) above, for violations,
breaches or defaults which would not, individually or in the aggregate, have a
Material Adverse Effect on the Grantor and except with respect to any item
listed in the Company Disclosure Letter), and (g) the execution and delivery of
this Agreement by the Grantor does not, and the performance of this Agreement by
the Grantor will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority
except for pre-merger notification requirements of the HSR Act and except with
respect to any item listed in the Company Disclosure Letter. The Grantee agrees
that it shall not knowingly (after due inquiry) sell to any person (including
any Group) and its affiliates (other than the Grantor or any person approved by
the Grantor) in any private placement Restricted Shares (as defined in Section 7
below) representing more than 2% of the outstanding shares of common stock of
the Grantor on a fully diluted basis.
6. Representations and Warranties of the Grantee. The Grantee
represents and warrants to the Grantor that (a) the Grantee is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder, (b) the execution and
delivery of this Agreement by the Grantee and the consummation by the Grantee of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Grantee and no other corporate proceedings
on the part of the Grantee are necessary to authorize this Agreement or any of
the transactions contemplated hereby, (c) this Agreement has been duly executed
and delivered by the Grantee and constitutes a valid and binding obligation to
the Grantee in accordance with its terms subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles, (d) the execution and delivery of this Agreement by the Grantee does
not, and the performance of this Agreement by the Grantee will not (1) violate
the certificate of incorporation or bylaws of the Grantee, (2) conflict with or
violate any statute, rule, regulation, order, judgment or decree applicable to
the Grantee or by which it or any of its properties or assets is bound or
affected or (3) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give rise to any rights of termination, amendment, acceleration or cancellation
of, or result in the creation of a Lien on any of the property or assets of the
Grantee pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, or other instrument or obligation to which the Grantee is a
party or by which the Grantee or any of its properties or assets is bound or
affected (except, in the case of clauses (2) and (3) above, for violations,
breaches, or defaults which would not, individually or in the aggregate, have a
material adverse effect on the Grantee), (e) the execution and delivery of this
Agreement by the Grantee does not, and the performance of this Agreement by the
Grantee will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, except
for pre-merger notification requirements of the HSR Act and (f) any shares of
the Grantor Common Stock acquired upon exercise of the Stock Option will be, and
the Stock Option is being, acquired by the Grantee for its own account and not
with a view to the public distribution or resale thereof in any manner which
would be in violation of applicable United States securities laws.
7. Registration Rights. In the event that the Grantee shall desire to
sell any of the shares of the Grantor Common Stock purchased pursuant to the
Stock Option within two (2) years after such purchase, and such sale requires in
the opinion of counsel to the Grantor, which opinion shall be reasonably
satisfactory to the Grantee and its counsel, registration of such shares under
the Securities Act of 1933, the Grantee may, by written notice (the
"Registration Notice") to the Grantor (the "Registrant"), request the Registrant
to register under the Securities Act all or any part of the shares purchased
pursuant to the Stock Option ("Restricted Shares") beneficially owned by the
Grantee (the "Registrable Securities") pursuant to a bona fide firm commitment
underwritten public offering in which the Grantee and the underwriters shall
effect as wide a distribution of such Registrable Securities as is reasonably
practicable and shall use their best efforts to prevent any person (including
any Group) and its affiliates from purchasing through such offering Restricted
Shares representing more than 2% of the outstanding shares of common stock of
the Registrant on a fully diluted basis (a "Permitted Offering"). The
Registration Notice shall include a certificate executed by the Grantee and its
proposed managing underwriter, which underwriter shall be an investment banking
firm of nationally recognized standing reasonably acceptable to the Grantor (the
"Manager"), stating that (a) it has a good faith intention to commence promptly
a Permitted Offering and (b) the Manager in good faith believes that, based on
the then prevailing market conditions, it will be able to sell the Registrable
Securities at a per share price to be specified in such Registration Notice (the
"Fair Market Value"). The Registrant (and/or any person designated by the
Registrant) shall thereupon have the option, exercisable by written notice
delivered to the Grantee within ten (10) business days after the receipt of the
Registration Notice, irrevocably to agree to purchase all or any part of the
Registrable Securities for cash at a price (the "Option Price") equal to the
product of (a) the number of Registrable Securities and (b) the Fair Market
Value of such Registrable Securities. Any such purchase of Registrable
Securities by the Registrant hereunder shall take place at a closing to be held
at the principal executive offices of the Registrant or its counsel at any
reasonable date and time designated by the Registrant and its designee in such
notice within twenty (20) business days after delivery of such notice. Any
payment for the shares to be purchased shall be made by delivery at the time of
such closing of the Option Price in immediately available funds. If the
Registrant does not elect to exercise its option pursuant to this Section 7 with
respect to all Registrable Securities designated in the Registration Notice, it
shall use its best efforts to effect, as promptly as practicable, the
registration under the Securities Act of the unpurchased Registrable Securities;
provided, however, that (a) the Grantee shall not be entitled to more than an
aggregate of two effective registration statements hereunder and (b) the
Registrant will not be required to file any such registration statement during
any period of time (not to exceed 90 days after such request in the case of
clause (ii) below or 120 days in the case of clauses (i) and (iii) below) when
(i) the Registrant is in possession of material non-public information which it
reasonably believes would be detrimental to be disclosed at such time and, in
the judgment of the Board of Directors of the Registrant, such information would
have to be disclosed if a registration statement were filed at that time; (ii)
the Registrant is required under the Securities Act to include audited financial
statements for any period in such registration statement and such financial
statements are not yet available for inclusion in such registration statement;
or (iii) the Registrant determines, in its reasonable judgment, that such
registration would interfere with any financing, acquisition or other material
transaction involving the Registrant or any of its affiliates. If consummation
of the sale of any Registrable Securities pursuant to a registration hereunder
does not occur within 120 days after the filing with the SEC of the initial
registration statement with respect thereto, the provisions of this Section 7
shall again be applicable to any proposed registration; provided, however, that
the Grantee shall not be entitled to request more than two registrations
pursuant to this Section 7 to be qualified for sale under the securities or
blue-sky laws of such jurisdictions as the Grantee may reasonably request and
shall continue such registration or qualification in effect in such
jurisdiction; provided, further, that the Registrant shall not be required to
qualify to do business in, or consent to general service of process in, any
jurisdiction by reason of this provision. The registration rights set forth in
this Section 7 are subject to the condition that the Grantee shall provide the
Registrant with such information with respect to the Grantee's Registrable
Securities, the plans for the distribution thereof, and such other information
with respect to the Grantee as, in the reasonable judgment of counsel for the
Registrant, is necessary to enable the Registrant to include in such
registration statement all material facts required to be disclosed with respect
to a registration thereunder. A registration effected under this Section 7 shall
be effected at the Registrant's expense, except for underwriting discounts and
commissions and the fees and the expenses of counsel to the Grantee, and the
Registrant shall provide to the underwriters such documentation (including
certificates, opinions of counsel and "comfort" letters from auditors) as are
customary in connection with underwritten public offerings as such underwriters
may reasonably require. In connection with any such registration, the parties
agree (a) to indemnify each other and the underwriters in the customary manner
and (b) to enter into an underwriting agreement in form and substance customary
to transactions of this type with the Manager and the other underwriters
participating in such offering.
8. Adjustment upon Changes in Capitalization. In the event of any
change in the Grantor Common Stock by reason of stock dividends, stock splits,
mergers (other than the Merger), recapitalizations, combinations, exchange of
shares or the like, the type and number of shares or securities subject to the
Stock Option, and the Exercise Price per share, shall be adjusted appropriately.
9. Restrictive Legends. Each certificate representing shares of the
Grantor Common Stock issued to the Grantee hereunder shall initially be endorsed
with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR
SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION
AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE. SUCH SECURITIES ARE
ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
TERMINATION OPTION AGREEMENT, DATED MAY 8, 1998, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER HEREOF.
10. Binding Effect; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors,
and permitted assigns. Except as expressly provided in this Agreement, neither
this Agreement nor the rights or the obligations of either party hereto are
assignable, except by operation of law, or with the written consent of the other
party. Nothing contained in this Agreement, express or implied, is intended to
confer upon any person other than the parties hereto and their respective
permitted assigns any rights or remedies of any nature whatsoever by reason of
this Agreement. Any Restricted Shares sold by a party in compliance with the
provisions of Section 7 hereof shall, upon consummation of such sale, be free of
the restrictions imposed with respect to such shares by this Agreement, in no
event will any transferee of any Restricted Shares be entitled to the rights of
the Grantee hereunder. Certificates representing shares sold in a registered
public offering pursuant to Section 7 hereof shall not be required to bear the
legend set forth in Section 9 hereof.
11. Incorporation by Reference. The provisions of Sections 7.01, 10.01,
10.04, 10.06, 10.07, 10.08 and 10.09 of the Merger Agreement are incorporated
herein by reference, to be read as though the references therein to the Merger
Agreement were references to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
MONSANTO COMPANY
By: _/s/ Susan D. Berland____________
Name: _____Susan D. Berland____________
Title: _Authorized Representative
DELTA AND PINE LAND COMPANY
By: _/s/ Roger D. Malkin_____________
Name: _____Roger D. Malkin_____________
Title: _____Chairman____________________