1
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 8, 1998
AMONG
MONSANTO COMPANY,
CORN ACQUISITION CORPORATION
AND
DEKALB GENETICS CORPORATION
2
TABLE OF CONTENTS
Article I - The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Company Actions . . . . . . . . . . . . . . . . . . . . 3
Section 1.3 Investment Agreement . . . . . . . . . . . . . . . . . 5
Section 1.4 Adjustment to Offer Price. . . . . . . . . . . . . . . 5
Article II - The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Effective Time . . . . . . . . . . . . . . . . . . . . 5
Section 2.4 Effects of the Merger . . . . . . . . . . . . . . . . . 5
Section 2.5 Restated Certificate of Incorporation and By-laws;
Officers and Directors. . . . . . . . . . . . . . . . . 5
Article III - Effect of the Merger on the Stock of the Constituent
Corporations; Surrender of Certificates. . . . . . . . . . . . . . . 6
Section 3.1 Effect on Stock . . . . . . . . . . . . . . . . . . . . 6
Section 3.2 Surrender of Certificates . . . . . . . . . . . . . . . 7
Article IV - Representations and Warranties of the Company . . . . . . . . . 8
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . . 8
Section 4.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . 9
Section 4.3 Capital Structure . . . . . . . . . . . . . . . . . . . 9
Section 4.4 Authority . . . . . . . . . . . . . . . . . . . . . . .10
Section 4.5 Consents and Approvals; No Violations . . . . . . . . .10
Section 4.6 SEC Documents and Other Reports . . . . . . . . . . . .11
Section 4.7 Absence of Material Adverse Change . . . . . . . . . .11
Section 4.8 Information Supplied . . . . . . . . . . . . . . . . .12
Section 4.9 Compliance with Laws. . . . . . . . . . . . . . . . . .12
Section 4.10 Tax Matters. . . . . . . . . . . . . . . . . . . . . .13
Section 4.11 Liabilities. . . . . . . . . . . . . . . . . . . . . .13
Section 4.12 Benefit Plans; Employees and Employment Practices . .13
Section 4.13 Litigation . . . . . . . . . . . . . . . . . . . . . .16
Section 4.14 Environmental Matters . . . . . . . . . . . . . . . .16
Section 4.15 Charter Provisions. . . . . . . . . . . . . . . . . .17
Section 4.16 Intellectual Property . . . . . . . . . . . . . . . .17
Section 4.17 Brokers . . . . . . . . . . . . . . . . . . . . . . .18
Section 4.18 Contracts; Indebtedness . . . . . . . . . . . . . . .18
Article V - Representations and Warranties of Parent and Sub . . . . . . . .19
Section 5.1 Organization . . . . . . . . . . . . . . . . . . . . .19
Section 5.2 Authority . . . . . . . . . . . . . . . . . . . . . . .19
Section 5.3 Consents and Approvals; No Violations . . . . . . . . .19
Section 5.4 Information Supplied . . . . . . . . . . . . . . . . .20
i
3
Section 5.5 Interim Operations of Sub . . . . . . . . . . . . . . . 20
Section 5.6 Brokers . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.7 Financing . . . . . . . . . . . . . . . . . . . . . . . 20
Article VI - Covenants Relating to Conduct of Business . . . . . . . . . . . 20
Section 6.1 Conduct of Business by the Company Pending the Merger . 20
Section 6.2 No Solicitation . . . . . . . . . . . . . . . . . . . . 24
Section 6.3 Third Party Standstill Agreements . . . . . . . . . . . 25
Section 6.4 Disclosure to Parent; Delivery of Certain Filings . . . 25
Article VII - Additional Agreements . . . . . . . . . . . . . . . . . . . . . 25
Section 7.1 Employee Benefits. . . . . . . . . . . . . . . . . . . 25
Section 7.2 Severance Policy and Other Agreements. . . . . . . . . 27
Section 7.3 Bonus Programs . . . . . . . . . . . . . . . . . . . . 27
Section 7.4 Welfare Plans . . . . . . . . . . . . . . . . . . . . . 28
Section 7.5 Retirement Plan . . . . . . . . . . . . . . . . . . . . 29
Section 7.6 Options; Restricted Stock Awards . . . . . . . . . . . 29
Section 7.7 Stockholder Approval; Preparation of Proxy Statement . 29
Section 7.8 Access to Information . . . . . . . . . . . . . . . . . 30
Section 7.9 Fees and Expenses . . . . . . . . . . . . . . . . . . . 31
Section 7.10 Public Announcements . . . . . . . . . . . . . . . . . 31
Section 7.11 Real Estate Transfer Tax. . . . . . . . . . . . . . . . 31
Section 7.12 State Takeover Laws . . . . . . . . . . . . . . . . . . 32
Section 7.13 Indemnification; Directors and Officers Insurance . . . 32
Section 7.14 Notification of Certain Matters . . . . . . . . . . . . 33
Section 7.15 Board of Directors. . . . . . . . . . . . . . . . . . . 34
Section 7.16 Best Efforts. . . . . . . . . . . . . . . . . . . . . . 35
Section 7.17 Certain Litigation. . . . . . . . . . . . . . . . . . . 35
Section 7.18 Return of Confidential Information. . . . . . . . . . . 36
Article VIII - Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 36
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . 36
Article IX - Termination and Amendment . . . . . . . . . . . . . . . . . . . 36
Section 9.1 Termination . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.2 Effect of Termination . . . . . . . . . . . . . . . . . 37
Section 9.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . 38
Article X - General Provisions . . . . . . . . . . . . . . . . . . . . . . . 38
Section 10.1 Non-Survival of Representations and Warranties and
Agreements. . . . . . . . . . . . . . . . . . . . . . . 38
Section 10.2 Notices.. . . . . . . . . . . . . . . . . . . . . . . . 38
Section 10.3 Interpretation; Definitions . . . . . . . . . . . . . . 40
Section 10.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . 45
Section 10.5 Entire Agreement; No Third-Party Beneficiaries. . . . . 45
ii
4
Section 10.6 Governing Law . . . . . . . . . . . . . . . . . . . . 46
Section 10.7 Assignment . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.8 Severability . . . . . . . . . . . . . . . . . . . . . 46
Section 10.9 Enforcement of this Agreement . . . . . . . . . . . . 46
Section 10.10 Obligations of Subsidiaries. . . . . . . . . . . . . . 47
Section 10.11 Merger of the Company into Sub . . . . . . . . . . . . 47
Exhibit A - Conditions of the Offer
Exhibit B - Amended and Restated Certificate of Incorporation of the Company
iii
5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 8, 1998 (this
"Agreement") among Monsanto Company, Delaware corporation ("Parent"), Corn
Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary
of Parent ("Sub"), and DEKALB Genetics Corporation, a Delaware corporation (the
"Company") (Sub and the Company being hereinafter collectively referred to as
the "Constituent Corporations"). Except as otherwise set forth herein,
capitalized (and certain other) terms used herein shall have the meanings set
forth in Section 10.3.
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all of the shares of Class A
Common Stock, without par value, of the Company (the "Company Class A Common
Stock") and all of the shares of Class B Common Stock, without par value, of
the Company (the "Company Class B Common Stock" and together with the Company
Class A Common Stock, the "Shares") at a purchase price of $100 per Share (such
purchase price, as it may be increased pursuant to Section 1.4, being referred
to as the "Offer Price"), net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in this Agreement; and
the Board of Directors of the Company has adopted resolutions approving the
Offer, this Agreement and the Merger and recommending that the Company's
stockholders accept the Offer and that the holders of the Company Class A
Common Stock adopt this Agreement;
WHEREAS, the respective Boards of Directors of Sub and the Company
have each approved the merger of Sub with and into the Company (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement,
whereby each of the Shares, other than Shares owned directly or indirectly by
Parent or the Company and Dissenting Shares, will be converted into the right
to receive the price per Share paid in the Offer;
WHEREAS, the Board of Directors of the Company or the Long-Term
Incentive Plan Administrative Committee of the Board of Directors of the
Company has approved the cancellation of Company Stock Options in
consideration for the cash payments to be made pursuant to this Agreement;
WHEREAS, the Board of Directors of the Company has approved the terms
of the Stockholders Agreement (the "Stockholders Agreement") to be entered into
by Parent, Sub and certain holders of Company Class A Common Stock, pursuant to
which such holders of Company Class A Common Stock have, among other things,
agreed to vote such shares of Company Class A Common Stock in favor of the
Merger and tender such shares of Company Class A Common Stock pursuant to the
Offer; and
6
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Sub and the Company hereby agree as follows:
ARTICLE I - THE OFFER
Section 1.1 The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 9.1 and subject to the
provisions of this Agreement, as promptly as practicable but in no event later
than five business days after the date of the public announcement by Parent and
the Company of this Agreement, Sub shall, and Parent shall cause Sub to,
commence the Offer. The obligation of Sub to, and of Parent to cause Sub to,
commence the Offer and accept for payment, and pay for, any Shares tendered
pursuant to the Offer shall be subject only to the conditions set forth in
Exhibit A (the "Offer Conditions") (any of which may be waived in whole or in
part by Sub in its sole discretion, provided that, without the prior written
consent of the Company, Sub shall not waive the Minimum Condition (as defined
in Exhibit A)). Sub expressly reserves the right to modify the terms of the
Offer, except that, without the prior written consent of the Company, Sub shall
not (i) reduce the number of Shares to be purchased in the Offer, (ii) reduce
the Offer Price, (iii) impose any conditions to the Offer in addition to the
Offer Conditions or modify the Offer Conditions (other than to waive any Offer
Conditions to the extent not prohibited by this Agreement), (iv) except as
provided in the next sentence, extend the Offer, (v) change the form of
consideration payable in the Offer or (vi) make any other change or
modification in any of the terms of the Offer in any manner that is adverse to
the holders of Shares. Notwithstanding the foregoing, Sub may, without the
consent of the Company, (i) extend the Offer, if at the scheduled or extended
expiration date of the Offer any of the Offer Conditions shall not be satisfied
or waived, until such time as such conditions are satisfied or waived, (ii)
extend the Offer for any period required by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable to the
Offer and (iii) on one or more occasions, extend the Offer for a period of up
to an aggregate of 15 business days if, on a scheduled expiration date on which
the Offer Conditions shall have been satisfied or waived, the number of shares
of Company Class A Common Stock (together with any shares of Company Class A
Common Stock held by Parent or any of its Subsidiaries) that have been validly
tendered and not withdrawn represent more than 70% of the then issued and
outstanding shares of Company Class A Common Stock, but less than 90% of the
then issued and outstanding shares of Company Class A Common Stock, and the
number of shares of Company Class B Common Stock (together with any shares of
Company Class B Common Stock held by Parent or any of its Subsidiaries) that
have been validly tendered and not withdrawn represent more than 70% of the
then issued and outstanding shares of Company Class B Common Stock, but less
than 90% of the then issued and outstanding shares of Company Class B Common
Stock. Parent and Sub agree that Sub will not terminate the Offer between
scheduled expiration dates (except in the event that this Agreement is
terminated pursuant to Section 9.1) and that, in the event that Sub would
otherwise be entitled to terminate the Offer at any scheduled expiration date
thereof due to the failure of one or more of the Offer Conditions, unless this
Agreement shall have been terminated pursuant to Section 9.1, Sub shall, and
2
7
Parent shall cause Sub to, extend the Offer until such date as the Offer
Conditions have been satisfied or such later date as required by applicable
law; provided, however, that nothing herein shall require Sub to extend the
Offer beyond the Outside Date. Subject to the terms and conditions of the
Offer and this Agreement, Sub shall, and Parent shall cause Sub to, accept for
payment and pay for, all Shares validly tendered and not withdrawn pursuant to
the Offer that Sub is permitted to accept for payment and pay for under
applicable law, as soon as practicable (and, in any event, within three
business days after the later of the expiration of the Offer and the receipt by
the depository for the Offer of the certificates representing such tendered
shares). If this Agreement is terminated by either Parent or Sub or by the
Company, other than pursuant to Section 9.1(d), Sub shall, and Parent shall
cause Sub to, terminate promptly the Offer. If this Agreement is terminated
pursuant to Section 9.1(d), Parent or Sub may terminate the Offer. Sub may, at
any time, transfer or assign to one or more corporations directly or indirectly
wholly-owned by Parent the right to purchase all or any portion of the Shares
tendered pursuant to the Offer, but any such transfer or assignment shall not
relieve Sub of its obligations under the Offer or prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule
14D-1") with respect to the Offer, which shall contain an offer to purchase and
a related letter of transmittal and summary advertisement (such Schedule 14D-1
and the documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "Offer Documents"),
and Parent and Sub shall cause the Offer Documents to be disseminated to
holders of Shares as and to the extent required by applicable federal
securities laws. Parent, Sub and the Company each agrees promptly to correct
any information provided by it for use in the Offer Documents if and to the
extent that such information shall have become false or misleading in any
material respect, and Parent and Sub further agree to take all steps necessary
to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. The Company and its counsel shall be given reasonable opportunity to
review and comment upon the Offer Documents prior to their filing with the SEC
or dissemination to the Company's stockholders. Parent and Sub agree to
provide the Company and its counsel any comments Parent, Sub or their counsel
may receive from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments and to cooperate with the Company
and its counsel in responding to such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely
basis all funds necessary to accept for payment, and pay for, any Shares that
are validly tendered and not withdrawn pursuant to the Offer and that Sub is
permitted to accept for payment under applicable law and pay for, pursuant to
the Offer.
Section 1.2 Company Actions. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that the Board of Directors
of the Company, at a meeting duly called and held, duly adopted (by unanimous
vote, with the Investor Nominees (as defined in the Investment Agreement) not
participating) resolutions approving the Offer, this Agreement, the Merger and
the Stockholders Agreement, determining that the Offer and the Merger are fair
to, and in the best interests of, the Company's stockholders and recommending
that the Company's
3
8
stockholders accept the Offer and approve and adopt this Agreement and the
Merger (it being understood that, notwithstanding anything in this Agreement to
the contrary, if the Company's Board of Directors modifies or withdraws its
recommendation in accordance with the terms of Section 6.2(b), such
modification or withdrawal shall not constitute a breach of this Agreement).
The Company represents and warrants that its Board of Directors has received
the written opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") that, as of the date hereof, the proposed consideration to be
received by the Company's stockholders pursuant to the Offer and the Merger is
fair to the Company's stockholders from a financial point of view. The Company
hereby consents to the inclusion in the Offer Documents of the recommendations
of the Company's Board of Directors described in this Section 1.2.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendation described in
Section 1.2(a) (subject to the right of the Board of Directors of the Company
to modify or withdraw such recommendation in accordance with Section 6.2(b))
and shall cause the Schedule 14D-9 to be disseminated to the Company's
stockholders as and to the extent required by applicable federal securities
laws. Each of the Company, Parent and Sub agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that such information shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or
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. Parent and its counsel shall be given reasonable opportunity
to review and comment upon the Schedule 14D-9 prior to its filing with the SEC
or dissemination to the Company's stockholders. The Company agrees to provide
Parent and its counsel any comments the Company or its counsel may receive from
the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments and to cooperate with Parent, Sub and their counsel in
responding to such comments.
(c) In connection with the Offer and the Merger, the Company shall
cause its transfer agent to furnish Sub promptly with mailing labels containing
the names and addresses of the record holders of Shares as of a recent date and
of those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings and computer
files and all other information in the Company's possession or control
regarding the beneficial owners of Shares and any securities convertible into
Shares, and shall furnish to Sub such information and assistance (including
updated lists of stockholders, security position listings and computer files)
as Parent or Sub may reasonably request in 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 Merger,
Parent and Sub and their affiliates, associates and agents shall hold in
confidence the information contained in any such labels, listings and files,
will use such information only in connection with the Offer and the Merger and,
if this Agreement shall be terminated, will promptly, upon request, deliver,
and will use reasonable efforts to cause their affiliates, associates and
agents to deliver, to the Company all copies of such information then in their
possession or control.
4
9
Section 1.3 Investment Agreement. Effective upon the acquisition of
Shares pursuant to the Offer, Section 11 (Standstill) of the Investment
Agreement shall be eliminated in its entirety and Sections 9.3 through 9.7 of
the By-laws of the Company shall be eliminated in their entirety. At the
Effective Time of the Merger, the Investment Agreement shall terminate in its
entirety.
Section 1.4 Adjustment to Offer Price. Notwithstanding anything else
to the contrary contained herein, on the tenth day of each calendar month,
commencing with May 10, 1999, the Offer Price as in effect on the ninth day of
such calendar month shall be increased by an amount equal to $.50 per Share.
All references to the Offer Price in this Agreement shall be deemed to be to
the Offer Price as so adjusted.
ARTICLE II - THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the DGCL, Sub shall be merged with and into the
Company at the Effective Time. Following the Effective Time, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Sub and the Company in accordance with
the DGCL.
Section 2.2 Closing. The closing of the Merger will take place at
10:00 a.m. on a date mutually agreed to by Parent and the Company, which shall
be no later than the second business day after satisfaction or waiver of the
conditions set forth in Article VIII (the "Closing Date"), at the offices of
Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, unless
another date, time or place is agreed to in writing by the parties hereto.
Section 2.3 Effective Time. The Merger shall become effective when a
Certificate of Merger or, if applicable, a Certificate of Ownership and Merger
(each, the "Certificate of Merger"), executed in accordance with the relevant
provisions of the DGCL, is duly filed with the Secretary of State of the State
of Delaware, or at such other time as Sub and the Company shall agree should be
specified in the Certificate of Merger. When used in this Agreement, the term
"Effective Time" shall mean the later of the date and time at which the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware or such later time established by the Certificate of Merger. The
filing of the Certificate of Merger shall be made as soon as practicable after
the satisfaction or waiver of the conditions to the Merger set forth herein.
Section 2.4 Effects of the Merger. The Merger shall have the
effects set forth in the DGCL.
Section 2.5 Restated Certificate of Incorporation and By-laws;
Officers and Directors.
(a) If the Merger is effected in accordance with Section 251 of the
DGCL, the Restated Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended and restated in its
entirety as of the Effective Time as set forth in Exhibit B hereto. As so
amended, such Restated Certificate of Incorporation shall be the Restated
Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
5
10
(b) The By-laws of the Company shall be amended as of the Effective
Time to read in their entirety as the By-laws of Sub, as in effect immediately
prior to the Effective Time, until thereafter changed or amended as provided by
the Restated Certificate of Incorporation of the Surviving Corporation or by
applicable law.
(c) The directors of Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, until the next annual
meeting of stockholders (or the earlier of their resignation or removal) and
until their respective successors are duly elected and qualified, as the case
may be.
(d) The officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation until the earlier of
their resignation or removal and until their respective successors are duly
elected and qualified, as the case may be.
ARTICLE III - EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT
CORPORATIONS; SURRENDER OF CERTIFICATES
Section 3.1 Effect on Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of any of Sub, the Company or the
holders of any securities of the Constituent Corporations:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one validly issued,
fully paid and nonassessable share of common stock, $.01 par value, of the
Surviving Corporation.
(b) Treasury Stock and Parent Owned Stock. Each Share that is owned
by the Company or by any Subsidiary of the Company and each Share that is owned
by Parent, Sub or any other Subsidiary of Parent shall automatically be
cancelled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
(c) Conversion of Shares. Subject to Section 3.1(d), each Share
issued and outstanding (other than shares to be cancelled in accordance with
Section 3.1(b)), shall be cancelled and be converted into the right to receive
from the Surviving Corporation in cash, without interest or dividends, the
price per Share paid in the Offer (the "Merger Consideration"). As of the
Effective Time, all such Shares shall be cancelled in accordance with this
paragraph, and when so cancelled, shall no longer be outstanding and shall
automatically be retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration for each
such Share, without interest or dividends.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in
this Agreement to the contrary, any issued and outstanding Shares held by a
person (a "Dissenting Stockholder") who has not voted in favor of or consented
to the Merger and complies with all the provisions of the DGCL concerning the
right of holders of Shares to require appraisal of their Shares ("Dissenting
Shares")
6
11
shall not be converted as described in Section 3.1(c), but shall become the
right to receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to the DGCL. If, after the Effective Time,
such Dissenting Stockholder withdraws his demand for appraisal or fails to
perfect or otherwise loses his right of appraisal, in any case pursuant to the
DGCL, his Shares shall be deemed to be converted as of the Effective Time into
the right to receive the Merger Consideration for each such Share, without
interest or dividends. The Company shall give Parent prompt notice of any
demands for appraisal of Shares received by the Company. The Company shall
not, without the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands.
Section 3.2 Surrender of Certificates. (a) Paying Agent. Prior to
the Effective Time, Parent shall designate a bank or trust company who shall be
reasonably satisfactory to the Company to act as paying agent in the Merger
(the "Paying Agent"), and from time to time, on, prior to or after the
Effective Time, Parent shall make available, or cause the Surviving Corporation
to make available, to the Paying Agent cash in the amounts necessary for the
payment of the Merger Consideration as provided in Section 3.1 upon surrender
of certificates representing Shares as part of the Merger. Funds made
available to the Paying Agent shall be invested by the Paying Agent as directed
by Parent, provided that such investments shall only be in obligations of or
guaranteed by the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard &
Poor's Corporation, respectively, or in certificates of deposit, bank
repurchase agreements or banker's acceptances of commercial banks with capital
exceeding $1 billion (it being understood that any and all interest or income
earned on funds made available to the Paying Agent pursuant to this Agreement
shall be turned over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause the Paying Agent to mail
to each holder of record of a certificate or certificates that immediately
prior to the Effective Time represented Shares (the "Certificates"), (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration as provided in Section 3.1. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor
the amount of cash, without interest or dividends, into which the Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.1, and the Certificate so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of Shares that is not
registered in the transfer records of the Company, payment may be made to a
person other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of such Certificate or establish to the satisfaction
of the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 3.2, each Certificate (other
than Certificates representing Dissenting Shares) shall be deemed at any time
after the Effective Time
7
12
to represent only the right to receive upon such surrender the amount of cash,
without interest, into which the shares of stock theretofore represented by
such Certificate shall have been converted pursuant to Section 3.1. No
interest will be paid or will accrue on the cash payable upon the surrender of
any Certificate. Parent or the Paying Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Shares such amounts as Parent or the Paying Agent is required to
deduct and withhold with respect to the making of such payment under the Code
or under any provision of state, local or foreign tax law. To the extent that
amounts are so withheld by Parent or the Paying Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which such deduction and withholding was
made by the Parent or the Paying Agent.
(c) No Further Ownership Rights in Shares. All cash paid upon the
surrender of Certificates in accordance with the terms of this Article III
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the Shares theretofore represented by such Certificates. At the Effective
Time, the stock transfer books of the Company shall be closed, and there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the Shares that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented
to the Surviving Corporation or the Paying Agent for any reason, they shall be
cancelled and exchanged as provided in this Article III.
(d) Termination of Payment Fund. Any portion of the funds made
available to Paying Agent to pay the Merger Consideration which remains
undistributed to the holders of Shares for twelve months after the Effective
Time shall be delivered to Parent, upon demand, and any holders of Shares who
have not theretofore complied with this Article III and the instructions set
forth in the letter of transmittal mailed to such holders after the Effective
Time shall thereafter look only to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) for payment of the Merger
Consideration to which they are entitled, without interest or dividends.
(e) No Liability. None of Parent, Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 4.1 Organization. The Company and each of its Subsidiaries
is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has requisite corporate
power and authority to carry on its business as now being conducted, except
where the failure to be so organized, existing and in good standing or to have
such power and authority would not reasonably be expected to have a Material
Adverse Effect on the Company. The Company and each of its Subsidiaries is
duly qualified or licensed to do business and 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, except in such
jurisdictions where the failure to be
8
13
so duly qualified or licensed and in good standing would not reasonably be
expected to have a Material Adverse Effect on the Company or prevent or
materially delay the consummation of the Offer and/or the Merger. The Company
has delivered to Parent complete and correct copies of its Restated Certificate
of Incorporation and By-laws and has made available to Parent the Certificate
of Incorporation and By-laws (or similar organizational documents) of each of
its Subsidiaries designated in Item 4.1 of the Company Letter as being a
Significant Subsidiary of the Company (collectively, the "Significant
Subsidiaries").
Section 4.2 Subsidiaries. Item 4.2 of the Company Letter lists each
Subsidiary of the Company. All of the outstanding shares of capital stock of
each Subsidiary that is a corporation have been validly issued and are fully
paid and nonassessable. Except as set forth in Item 4.2 of the Company Letter,
all of the outstanding shares of capital stock of each Subsidiary of the
Company are owned by the Company, by another Subsidiary of the Company or by
the Company and another Subsidiary of the Company, free and clear of all Liens.
Except as set forth in Item 4.2 of the Company Letter and except for the
capital stock of its Subsidiaries, the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any corporation,
partnership, joint venture, limited liability company or other entity which is
material to the business or financial position of the Company and its
Subsidiaries, taken as a whole.
Section 4.3 Capital Structure. The authorized capital stock of the
Company consists of 500,000 shares of Preferred Stock, $1.00 par value (the
"Company Preferred Stock") and 165,000,000 shares of Common Stock, without par
value, divided into two classes, consisting of 35,000,000 shares of Company
Class A Common Stock and 130,000,000 shares of Company Class B Common Stock.
At the close of business on April 30, 1998, (i) no shares of Company Preferred
Stock were outstanding, (ii) 4,646,911 shares of Company Class A Common Stock
and 29,975,568 shares of Company Class B Common Stock were issued and
outstanding, (iii) 287,182 shares of Company Class A Common Stock and no shares
of Company Class B Common Stock were held by the Company in treasury and (iv)
2,339,249 shares of Company Class A Common Stock and no shares of Company Class
B Common Stock were reserved for issuance pursuant to outstanding stock options
(the "Company Stock Options") or other rights to purchase Shares under the
Company's Long Term Incentive Plan, the Company's Savings and Investment Plan
and the Company's Director Stock Option Plan (the "Company Stock Plans") and an
additional 1,692,397 shares of Company Class A Common Stock were reserved for
the grant of additional purchase rights thereunder (including 73,937 shares
reserved for the grant of purchase rights under the Company's Savings and
Investment Plan). Except (i) as set forth above, (ii) as provided in the
Investment Agreement between Parent and the Company dated as of January 31,
1996 (the "Investment Agreement"), (iii) the issuance of Shares pursuant to
options granted under the Company Stock Plans and outstanding on April 30, 1998
and (iv) the issuance of shares of Company Class B Common Stock in exchange for
shares of Company Class A Common Stock in accordance with the Company's
Restated Certificate of Incorporation, as of the date hereof, no Shares 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 with respect to the capital
stock of the Company. Each outstanding Share is, and each Share which may be
issued pursuant to the Company Stock Plans and the other agreements and
instruments listed above will be, when issued,
9
14
duly authorized, validly issued, fully paid and nonassessable and not subject
to preemptive rights. There are no 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 the Company's stockholders may vote. Except as set forth above or in
Item 4.3 of the Company Letter, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any
kind to which the Company or any of its Subsidiaries is a party or by which any
of them is bound obligating the Company or any of its 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 Subsidiaries or obligating the
Company or any of its Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking.
There are no outstanding contractual obligations of the Company or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its Subsidiaries except pursuant to
existing employee arrangements described in Item 4.3 of the Company Letter.
Section 4.4 Authority. The Company has requisite corporate power and
authority to execute and deliver this Agreement and, subject to approval of
this Agreement and the Merger by the holders of a majority of the outstanding
shares of the Company Class A Common Stock (the "Company Stockholder Approval")
(if required), to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, and no other corporate proceedings on the part of
the Company or its Board of Directors are necessary to authorize or approve
this Agreement or to consummate the transactions contemplated hereby, other
than the Company Stockholder Approval (if required). This Agreement has been
duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub)
constitutes the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and
(ii) is subject to general principles of equity.
Section 4.5 Consents and Approvals; No Violations. Except as set
forth in Item 4.5 of the Company Letter, except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the HSR Act, the DGCL, state
takeover laws and foreign and supranational laws relating to antitrust and
anticompetition clearances, neither the execution, delivery or performance of
this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the Restated Certificate of Incorporation or By-laws of the
Company or of the similar organizational documents of any of its Subsidiaries,
(ii) require any filing with, or permit, authorization, consent or approval of,
any Governmental Entity (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would not
reasonably be expected to have a Material Adverse Effect on the Company or
prevent or
10
15
materially delay the consummation of the Offer and/or the Merger), (iii) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets, except in the case of clauses (iii) or
(iv) for matters that would not reasonably be expected to have a Material
Adverse Effect on the Company or prevent or materially delay the consummation
of the Offer and/or the Merger; provided, however, that the contracts,
agreements and other instruments and obligations to which clause (iii) refers
shall for purposes of the second parenthetical phrase of clause (iii) not
include (A) any employee benefit plan, policy, arrangement or understanding
(whether or not in writing) providing benefits to any current or former
employee, officer or director of the Company or any of its Subsidiaries or (B)
any employment, consulting, bonus, non-competition, severance or termination
agreement between the Company or any of its Subsidiaries and any current or
former employee, officer or director of the Company or any of its Subsidiaries.
Section 4.6 SEC Documents and Other Reports. The Company has filed
with the SEC all documents required to be filed by it since August 31, 1995
under the Securities Act or the Exchange Act (the "Company SEC Documents"). As
of their respective filing dates, the Company SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, each as in effect on the date so filed, and at the
time filed with the SEC none of the Company SEC Documents including the
financial statements of the Company and the notes thereto contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company (including the notes thereto) included in the Company
SEC Documents comply as of their respective dates as to form in all material
respects with the then 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
the unaudited statements, as permitted by Form 10-Q under the Exchange Act)
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto) and fairly present the consolidated
financial position of the Company and its consolidated Subsidiaries as at the
dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein none of which were or will be material in amount
or effect).
Section 4.7 Absence of Material Adverse Change. Except as disclosed
in Item 4.7 of the Company Letter or in the documents filed by the Company with
the SEC and publicly available prior to the date of this Agreement (the
"Company Filed SEC Documents"), since August 31, 1997 the Company and its
Subsidiaries have conducted their respective businesses in all material
respects only in the ordinary course, and there has not been (i) any Material
Adverse Change with respect to the Company, (ii) any declaration, setting aside
or payment of any dividend or other distribution with respect to its capital
stock (other than regular quarterly cash dividends not in excess of $.035 per
11
16
Share) or any redemption, purchase or other acquisition of any of its capital
stock, (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 its
capital stock, (iv) any change in accounting methods, principles or practices
by the Company materially affecting its assets, liabilities, business or
results of operations, (v) any grant by the Company or its Subsidiaries to any
officer of the Company or its Subsidiaries of any increase in compensation,
except as was required under employment agreements in effect as of August 31,
1997 or as were made in the ordinary course of business consistent with past
practice, (vi) any grant by the Company or its Subsidiaries to any such officer
of any increase in severance or termination pay, except as part of a standard
employment package to any person promoted or hired, or as was required under
employment, severance or termination agreements in effect as of August 31,
1997, (vii) any revaluation by the Company of any of its material assets or
(viii) any other action or omission of the type described in subparagraphs (a),
(c), (f), (g), (h), (k), (l), (m), (n) or (o) of Section 6.1 or, except as
previously disclosed to Parent in writing, subparagraphs (b), (e) or (j) of
Section 6.1. The representations made in clauses (v) and (vi) of this Section
4.7 shall, to the extent made with respect to officers of the Company's foreign
Subsidiaries, be deemed to be made to the knowledge of the executive officers
of the Company.
Section 4.8 Information Supplied. None of the information supplied
or to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
information to be filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the "Information Statement") or
(iv) the proxy statement (together with any amendments or supplements thereto,
the "Proxy Statement") relating to the Stockholders Meeting, will, in the case
of the Offer Documents, the Schedule 14D-9 and the Information Statement, at
the respective times the Offer Documents, the Schedule 14D-9 and the
Information Statement are filed with the SEC or first published, sent or given
to the Company's stockholders, or, in the case of the Proxy Statement, at the
time the Proxy Statement is first mailed to the Company's stockholders or at
the time of the Stockholders Meeting, 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 are made, not misleading or necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the Stockholders Meeting which has become false or misleading. The
Schedule 14D-9, the Information Statement and the Proxy Statement will comply
as to form in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder, except that no representation or
warranty is made by the Company with respect to statements made or incorporated
by reference therein based on information supplied by Parent or Sub
specifically for inclusion or incorporation by reference therein.
Section 4.9 Compliance with Laws. The businesses of the Company and
its Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for possible violations that
would not reasonably be expected to have a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the Offer and/or the
Merger. Except as disclosed in Item 4.9 of the Company Letter, the Company and
its Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses as presently conducted (the "Company
12
17
Permits"), except for failures to hold such permits, licenses, variances,
exemptions, orders and approvals that would not reasonably be expected to have
a Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger. The Company and its Subsidiaries
are in compliance with the terms of the Company Permits, except where the
failure to so comply would not reasonably be expected to have a Material
Adverse Effect on the Company or prevent or materially delay the consummation
of the Offer and/or the Merger. Except as disclosed in Item 4.9 of the Company
Letter, to the knowledge of the Company, except as set forth in the Company
Filed SEC Documents, as of the date of this Agreement, no investigation or
review by any Governmental Entity with respect to the Company or any of its
Subsidiaries is pending or threatened, other than, in each case, those the
outcome of which would not be reasonably expected to have a Material Adverse
Effect on the Company or prevent or materially delay the consummation of the
Offer and/or the Merger. All representations made in this Section 4.9 shall,
to the extent made with respect to any foreign law, ordinance, regulation or
foreign Company Permit, be deemed to be made to the knowledge of the Company.
Section 4.10 Tax Matters. The Company and each of its Subsidiaries
has timely filed (after taking into account any extensions to file) all Tax
Returns required to be filed by them either on a separate or combined or
consolidated basis, except where the failure to timely file would not
reasonably be expected to have a Material Adverse Effect on the Company. All
such Tax Returns are complete and accurate, except where the failure to be
complete or accurate would not reasonably be expected to have a Material
Adverse Effect on the Company. Each of the Company and its Subsidiaries has
paid or caused to be paid all Taxes as shown as due on such Tax Returns and all
material Taxes for which no return was filed, except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect on the
Company. 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 would not reasonably be expected to have a Material Adverse Effect on the
Company, and no requests for waivers of the time to assess any such Taxes are
pending.
Section 4.11 Liabilities. Except as disclosed in Item 4.11 of the
Company Letter or as set forth in the Company Filed SEC Documents, to the
knowledge of the Company, 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 since August 31, 1997 and
liabilities which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
Section 4.12 Benefit Plans; Employees and Employment Practices. (a)
With respect to each material bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical, fringe benefit, employee stock purchase,
stock appreciation, restricted stock or other material employee benefit plan,
policy, arrangement or understanding (whether or not in writing) providing
benefits to any current or former employee, officer or director
13
18
of, and maintained or contributed to as of the date of this Agreement by, the
Company or any of its Subsidiaries, including but not limited to the health
care plan (the "EMWA Plan") operated by the Employees' Mutual Welfare
Association (the "EMWA"), and excluding any Employee Agreements (as defined
below) (collectively, excluding such Employee Agreements, the "Benefit Plans"),
other than any such plan, policy, arrangement or understanding under which most
of the current or former employees, officers or directors of the Company or any
of its Subsidiaries provided benefits thereunder are provided benefits with
respect to employment outside of the United States of America (the Benefit
Plans, excluding those under which most of the current or former employees,
officers or directors of the Company or any of its Subsidiaries provided
benefits thereunder are provided benefits with respect to employment outside of
the United States of America, collectively the "U.S. Benefit Plans"), such U.S.
Benefit Plan has not since August 31, 1997 and prior to the date of this
Agreement been adopted or amended in any material respect by the Company or any
of its Subsidiaries except as disclosed in the Company Filed SEC Documents or
Item 4.12(a) of the Company Letter or as required by law. The Company has with
respect to each material employment, consulting, bonus, non-competition,
severance and termination agreement in effect as of the date of this Agreement
between the Company or any of its Subsidiaries other than any foreign
Subsidiary and any current or former employee, officer or director of the
Company or any of its Subsidiaries other than any foreign Subsidiary
(collectively, the "Employee Agreements") disclosed such agreement in Item
4.12(a) of the Company Letter or in the Company filed SEC Documents or made
available to Parent a copy of such agreement.
(b) Item 4.12(b) of the Company Letter contains a list of all U.S.
Benefit Plans which are "employee pension benefit plans" (as defined in Section
3(2) of ERISA) or "employee welfare benefit plans" (as defined in Section 3(1)
of ERISA) (collectively, the "ERISA Benefit Plans"). With respect to each U.S.
Benefit Plan, except as disclosed in Item 4.12(b) of the Company Letter, the
Company has made available to Parent true, complete and correct copies, where
applicable and to the extent that they exist as of the date of this Agreement,
of (i) the current plan document (including all amendments adopted on or before
the date hereof that are still applicable) (or, in the case of any unwritten
U.S. Benefit Plan, a description thereof), (ii) the most recent annual report
on Form 5500 filed with the Internal Revenue Service, (iii) the most recent
actuarial report, (iv) the most recent summary plan description and (v) the
most recent determination letter issued by the Internal Revenue Service. The
Company has made available to Parent or filed in the Company Filed SEC
Documents a true, complete and correct copy of each Employee Agreement as in
effect as of the date of the Agreement. The Company has made available to
Parent a true, complete and correct copy of the three employment agreements as
in effect as of the date hereof pursuant to which the most senior officer in
each of the Company's three foreign Subsidiaries located in Argentina, Italy
and Canada are employed by such foreign Subsidiaries.
(c) Except as disclosed in Item 4.12(c) of the Company Letter, none
of the Company or any of its Subsidiaries, or any other person or entity that
together with the Company is treated as a single employer under Section 414 of
the Code (an "ERISA Affiliate"), has, with respect to any ERISA Benefit Plan,
or any other plan subject to the minimum funding requirements of Section 302 of
ERISA, incurred or could reasonably be expected to incur (i) any material
liability under Title IV of ERISA or to the Pension Benefit Guaranty
Corporation (other than for contributions and premiums in the ordinary course)
that has not been fully paid as of the date hereof , (ii) any accumulated
funding
14
19
deficiency under Section 302 of ERISA or Section 412 of the Code of a material
amount that has not been fully paid as of the date hereof, or (iii) any
requirement under ERISA or the Code to post security of a material amount under
such plan that is still outstanding as of the date hereof. To the Company's
knowledge, none of the Company, any of its Subsidiaries, any officer of the
Company or any of its Subsidiaries or any of the ERISA Benefit Plans, or any of
the other plans maintained by the Company or any Subsidiary of the Company and
subject to Section 406 of ERISA (an "Other ERISA Benefit Plan"), has on or
before the date of this Agreement engaged in a "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) with respect to
any ERISA Benefit Plan or Other ERISA Benefit Plan that could reasonably be
expected to subject the Company, any of its Subsidiaries or any officer of the
Company or any of its Subsidiaries to any material tax on prohibited
transactions imposed by Section 4975 of the Code or to any material liability
under Section 502(i) or (l) of ERISA. Except as disclosed in Item 4.12(c) of
the Company Letter, none of the Company, its Subsidiaries or ERISA Affiliates
has at any time during the five-year period preceding the date hereof
contributed to any ERISA Benefit Plan that is a "multiemployer plan" (as
defined in Section 3(37) of ERISA) except for any such plan maintained outside
of the United States.
(d) Except as disclosed in Item 4.12(d) of the Company Letter, as of
the date of this Agreement there is no pending dispute, arbitration, claim,
suit or grievance involving a Benefit Plan (other than routine claims for
benefits payable under any such Benefit Plan) that would reasonably be expected
to give rise to a material liability of the Company or any Subsidiary of the
Company. All material contributions already required to be made to any Benefit
Plan have been made. Notwithstanding the foregoing, to the extent the
representations and warranties set forth in this paragraph are provided with
respect to a Benefit Plan that is not a U.S. Benefit Plan, they are provided
only to the knowledge of the Company.
(e) Except as disclosed in Item 4.12(e) of the Company Letter, as of
the date of this Agreement there are no material controversies, strikes, work
stoppages or disputes pending between the Company or any of its Subsidiaries
and any current or former employees, and, to the Company's knowledge, no
material organizational effort by any labor union or other collective
bargaining unit currently is under way with respect to any employee. None of
the Company or any its Subsidiaries other than a foreign Subsidiary, and to the
Company's knowledge no foreign Subsidiary of the Company, is a party to a
collective bargaining agreement.
(f) To the knowledge of the Company, all Benefit Plans that are not
U.S. Benefit Plans and are subject to the laws of any jurisdiction outside of
the United States have been maintained in material compliance with all
applicable requirements and, if they are intended to be funded or book
reserved, are appropriately funded or book reserved.
(g) Except as set forth in the Company Filed SEC Documents, as
expressly contemplated by this Agreement, or with respect to U.S. Benefit Plans
and Employee Agreements copies of which have been made available by the Company
to Parent, neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (either alone or in
conjunction with any other event) result in, cause the accelerated vesting or
payment of, or increase the amount or value of, any payment or benefit to any
employee, officer or director of the Company or any of its Subsidiaries under
any U.S. Benefit Plan or Employment Agreement. No executive
15
20
officer of the Company or of any Subsidiary of the Company that is not a
foreign Subsidiary is aware of any provision in an employment agreement to
which a foreign Subsidiary of the Company is a party, or in a plan maintained
by a foreign Subsidiary of the Company, pursuant to which the execution and
delivery of this Agreement, or the consummation of the transactions
contemplated hereby, will (either alone or in conjunction with any other event)
result in, cause the accelerated vesting or payment of, or increase the amount
or value of, any material payment or benefit to any employee, officer or
director of such foreign Subsidiary except for any such plan or agreement a
copy of which has been made available by the Company to the Parent. The
aggregate amount of the after-tax cost to the Company and its Subsidiaries of
"parachute payments" within the meaning of Section 280G of the Code that could
become payable to individuals who would be subject to the excise tax on "excess
parachute payments" as a result of receiving such parachute payments is not
more than $50,000,000 (assuming that such aggregate amount is calculated based
upon the same assumptions as to "Change-in-Control Date," stock price, discount
rate, individual income tax rate and corporate tax rates as were used to
prepare the Towers Perrin Change-in-Control Analysis revised as of May 8, 1998
that has been delivered to Parent by the Company, to determine the amount shown
under the column heading "Gross-Up/After-Tax Cost to Company" in such
Analysis).
(h) The Internal Revenue Service has issued a favorable determination
letter with respect to each Benefit Plan that is intended to be qualified under
Section 401(a) of the Code (although such letter does not pertain to the Code
as in effect as of the date hereof), and, except as disclosed in Item 4.12(h)
of the Company Letter, to the knowledge of the Company as of the date of this
Agreement, such qualified status is not reasonably likely to be adversely
affected by any circumstances that exist, or events that have occurred, on or
prior to the date of this Agreement.
Section 4.13 Litigation. Except as disclosed in Item 4.13 of the
Company Letter or in the Company Filed SEC Documents, as of the date of this
Agreement, there is no suit, action, proceeding or investigation pending or to
the knowledge of the Company threatened against the Company or any of its
Subsidiaries that would reasonably be expected to have a Material Adverse
Effect on the Company or prevent or materially delay the consummation of the
Offer and/or the Merger. Except as disclosed in Item 4.13 of the Company
Letter or in the Company Filed SEC Documents, neither the Company nor any of
its Subsidiaries is subject to any outstanding judgment, order, writ,
injunction or decree that would reasonably be expected to have a Material
Adverse Effect on the Company or prevent or materially delay the consummation
of the Offer and/or the Merger.
Section 4.14 Environmental Matters. Except as set forth in the
Company Filed SEC Documents or in Item 4.14 of the Company Letter, neither the
Company nor any of its Subsidiaries has (i) any knowledge that the Company or
any of its Subsidiaries (or their predecessors) has stored, released, disposed
or arranged for the disposal of any Hazardous Substances on, under or at any of
the Company's or any of its Subsidiaries' properties or any other properties,
or exposed any employee or other individual to any Hazardous Substance other
than in a manner that would not, in all such cases taken individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on the
Company, (ii) any knowledge of the presence of any Hazardous Substance on,
under or at any of the Company's or any of its Subsidiaries' owned or leased
properties other than that which would not reasonably be expected to result in
a Material Adverse Effect on the Company, (iii) received any written notice or
has knowledge of any facts which could reasonably be expected
16
21
to give rise to such notice (A) of any actual or alleged violation of or
liability (whether accrued, contingent, known or unknown) arising under any
Environmental Law that has not been resolved or settled with the relevant
Governmental Entity or third party, (B) of the threat, institution or pendency
of any suit, action, claim, proceeding or investigation by any Governmental
Entity or any third party in connection with any such violation or liability,
(C) by any Governmental Entity requiring response to or remediation of
Hazardous Substances at or arising from any of the Company's or any of its
Subsidiaries' properties or any other properties, (D) alleging noncompliance by
the Company or any of its Subsidiaries with the terms of any permit, license,
approval or other authorization required under any Environmental Law in any
manner reasonably likely to require material expenditures or to result in
material liability that has not been resolved or settled or in the revocation
or denial of a permit or (E) demanding payment for, response to or remediation
of Hazardous Substances at or arising from any of the Company's or any of its
Subsidiaries' properties or any other properties, (iv) any knowledge of the
storage of PCBs on the Company's or any of its Subsidiaries' owned or leased
properties, (v) any knowledge of the existence of underground storage tanks on
the Company's or any of its Subsidiaries' owned or leased properties located
within the United States or (vi) any knowledge of the existence of
asbestos-containing material in any of the buildings on the Company's or any of
its Subsidiaries' owned or leased properties located within the United States,
except in each case for the notices set forth in Item 4.14 of the Company
Letter and except in each case for notices that would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect on
the Company.
Section 4.15 Charter Provisions. The action of the Board of
Directors of the Company in approving the Offer (including the purchase of
Shares pursuant to the Offer), the Merger, this Agreement, the Stockholders
Agreement and the transactions contemplated by this Agreement and the
Stockholders Agreement, is sufficient to render (i) Section 203 of the DGCL,
(ii) Article EIGHTH of the Company's Restated Certificate of Incorporation and
(iii) Article 11 of the Investment Agreement irrevocably inapplicable to the
Offer, the Merger, this Agreement and the Stockholders Agreement, the
transactions contemplated by this Agreement and/or the Stockholders Agreement
and any other transaction (except a transaction in which Parent acquires
beneficial ownership of Shares other than pursuant to the Merger) between
Parent and any of its affiliates on the one hand, and the Company and any of
its affiliates, on the other hand, consummated after the date that Sub acquires
Shares pursuant to the Offer that could be defined as a "Business Combination"
under Section 203 of the DGCL or Article EIGHTH of the Company's Restated
Certificate of Incorporation. The Board of Directors has, in conjunction with
the matters contemplated by this Agreement, considered all of the factors
required by Article TENTH of the Company's Restated Certificate of
Incorporation.
Section 4.16 Intellectual Property. (a) Except as set forth in the
Company Filed SEC Documents or in Item 4.16 of the Company Letter, the Company
and its Subsidiaries own, or are validly licensed or otherwise have the right
to use or practice, all Intellectual Property Rights that are material to the
conduct of the business of the Company and its Subsidiaries taken as a whole,
free and clear of all Liens (except with respect to recombinant DNA technology,
for failures to own or possess the rights to freely use or practice such
technology that would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, properties, assets,
financial condition, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole).
17
22
Except as set forth in the Company Filed SEC Documents or in Item 4.16 of the
Company Letter, no claims are pending or to the knowledge of the Company
threatened that the Company or any of its Subsidiaries is infringing or
otherwise adversely affecting the rights of any person with regard to any
Intellectual Property Right so as to materially adversely affect the Company's
ability to use or practice any of its material Intellectual Property Rights.
To the knowledge of the Company, except as set forth in the Company Filed SEC
Documents or in Item 4.16 of the Company Letter, no person is infringing the
rights of the Company or any of its Subsidiaries with respect to any material
Intellectual Property Right.
(b) Except as set forth in Item 4.16 of the Company Letter, (i) the
Company owns and possesses all right, title and interest in and to, or
possesses the valid right to use, all germplasm and all recombinant DNA
technology used in the conduct of the Company's business (except with respect
to recombinant DNA technology, for failures to own or possess the rights to
freely use or practice such technology that would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, properties, assets, financial condition, results of operations or
prospects of the Company and its Subsidiaries, taken as a whole); and (ii) the
Company has not received any notice of, and the Company has no knowledge of any
potential claim of any, infringement of any patent, certificate of plant
variety protection or other intellectual property right or misappropriation
from any third party with respect to any such technology or right.
(c) Notwithstanding the foregoing, the representations and warranties
contained in this Section 4.16 shall not be untrue or incorrect as a result of,
or otherwise be affected by, the issuance to any Person of any patent after the
date of this Agreement.
Section 4.17 Brokers. No broker, investment banker, financial
advisor or other person, other than Merrill Lynch, the fees and expenses of
which will be paid by the Company (and are reflected in an agreement between
Merrill Lynch and the Company, a complete copy of which has been furnished to
Parent), 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 based upon arrangements made by or on behalf of the Company.
Section 4.18 Contracts; Indebtedness. Except as disclosed in the
Company Filed SEC Documents or as listed under Item 4.18 or other Items of the
Company Letter, there are no contracts or agreements that are material to the
business, properties, assets, financial condition or results of operations of
the Company and its Subsidiaries taken as a whole; provided, however, that such
contracts and agreements shall not include (i) any employee benefit plan,
policy, arrangement or understanding (whether oral or written) providing
benefits to any current or former employee, officer or director of the Company
or any of its Subsidiaries or (ii) any employment, consulting, bonus,
non-competition, severance or termination agreement between the Company or any
of its Subsidiaries and any current or former employee, officer or director of
the Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice would cause
such a violation of or default under) any loan or credit agreement, note, bond,
mortgage, indenture, lease, permit, concession, franchise, license or any other
contract, agreement, arrangement or understanding, to which it is a party or by
which it or any of its properties or assets is bound, except
18
23
for violations or defaults that could not reasonably be expected to result in a
Material Adverse Effect on the Company.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 5.1 Organization. Each of Parent and Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has requisite corporate power and
authority to carry on its business as now being conducted.
Section 5.2 Authority. Parent and Sub have the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Parent and Sub, and the consummation by Parent and Sub of the
Merger and of the other transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Sub, and
no other corporate proceedings on the part of Parent or Sub or their respective
Boards of Directors are necessary to authorize or approve this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Parent and Sub and (assuming the valid authorization,
execution and delivery of this Agreement by the Company) constitutes the valid
and binding obligation of each of Parent and Sub enforceable against each of
them in accordance with its terms, except that such enforceability (i) may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
or relating to the enforcement of creditors' rights generally and (ii) is
subject to general principles of equity.
Section 5.3 Consents and Approvals; No Violations. Except as set
forth in Item 5.3 of the Parent Letter, except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the HSR Act, the DGCL, state
takeover laws and foreign and supranational laws relating to antitrust and
anticompetition clearances, neither the execution, delivery or performance of
this Agreement by Parent and Sub nor the consummation by Parent and Sub of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the respective certificate of incorporation or By-laws of
Parent and Sub, (ii) require any filing with, or permit, authorization, consent
or approval of, any Governmental Entity (except where the failure to obtain
such permits, authorizations, consents or approvals or to make such filings
would not reasonably be expected to have a Material Adverse Effect on Parent or
prevent or materially delay the consummation of the Offer and/or the Merger),
(iii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
lease, contract, agreement or other instrument or obligation to which Parent or
any of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent, any of its
Subsidiaries or any of their properties or assets, except in the case of
clauses (iii) or (iv) for violations,
19
24
breaches or defaults that would not reasonably be expected to have a Material
Adverse Effect on Parent or prevent or materially delay the consummation of the
Offer and/or the Merger.
Section 5.4 Information Supplied. None of the information supplied
or to be supplied by Parent or Sub specifically for inclusion or incorporation
by reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in the case of the
Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or, in the case of the Proxy Statement, at the time the
Proxy Statement is first mailed to the Company's stockholders or at the time of
the Stockholders Meeting, 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 are made, not misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Stockholders Meeting which has become false or misleading, except that no
representation or warranty is made by Parent or Sub in connection with any of
the foregoing with respect to statements made or incorporated by reference
therein based on information supplied by the Company or any of its
representatives specifically for inclusion or incorporation by reference
therein. The Offer Documents will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by Parent or Sub
in connection with any of the foregoing with respect to statements made or
incorporated by reference therein based on information supplied by the Company
or any of its representatives specifically for inclusion or incorporation by
reference therein.
Section 5.5 Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
Section 5.6 Brokers. No broker, investment banker, financial advisor
or other person, other than BancAmerica Robertson Stephens and Goldman, Sachs &
Co., the fees and expenses of which will be paid by Parent, 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 based upon
arrangements made by or on behalf of Parent or Sub.
Section 5.7 Financing. Parent has or will have, and shall provide
Sub with, the funds necessary to consummate the Offer and the Merger and the
transactions contemplated hereby in accordance with the terms hereof.
ARTICLE VI - COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1 Conduct of Business by the Company Pending the Merger.
During the period from the date of this Agreement until the earlier of the
Effective Time or such time as Parent's designees shall constitute a majority
of the Board of Directors of the Company, the Company shall, and shall cause
each of its Subsidiaries to, in all material respects, except as contemplated
by this
20
25
Agreement, carry on its business in the ordinary course as currently conducted
and, to the extent consistent therewith, with no less diligence and effort than
would be applied in the absence of this Agreement, seek to preserve intact
their current business organizations, keep available the services of their
current officers and employees and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that
goodwill and ongoing businesses shall be unimpaired at the Effective Time.
Without limiting the generality of the foregoing, and except as otherwise
contemplated by this Agreement (including, without limitation, as permitted or
required by Section 7.16), during such period, the Company shall not, and shall
not permit any of its Subsidiaries to, without the prior written consent of
Parent (which consent shall not be unreasonably withheld or delayed):
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock or otherwise make any
payment to stockholders in their capacity as such, other than dividends on
Shares to be declared and paid only at the customary times at a quarterly rate
not in excess of $0.035 per Share, except for dividends by a wholly-owned
domestic Subsidiary of the Company to its parent, (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 or (iii) redeem, purchase or otherwise acquire any of its
securities;
(b) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for,
or any rights, warrants, options or any other agreements of any character to
acquire, any such shares, voting securities or convertible or exchangeable
securities or rights, or securities or rights evidencing the right to
subscribe, other than (i) the issuance, in the ordinary course, to new
employees or promoted employees, of options to purchase not more than an
aggregate of 40,000 Shares (as described in Item 6.1 of the Company Letter) or
the issuance of Shares pursuant to options outstanding under existing Company
Stock Plans, (ii) the issuance of shares of Company Class B Common Stock in
exchange for shares of Company Class A Common Stock in accordance with the
Company's Restated Certificate of Incorporation, (iii) the issuance of Shares
upon exercise of rights outstanding on the date of this Agreement (including,
without limitation, under the Investment Agreement) and (iv) the issuance of
Shares pursuant to the Company's Savings and Investment Plan, in accordance
with its terms;
(c) amend its Restated Certificate of Incorporation or By-laws or
other similar organizational documents;
(d) acquire, or agree to acquire, in a single transaction or in a
series of related transactions, any business or assets (other than materials
and supplies purchased in the ordinary course, consistent with past practice),
other than transactions which involve assets having a purchase price not in
excess of $5,000,000 individually;
(e) make or agree to make any new capital expenditure in excess of
$1,000,000 other than expenditures contemplated by the Company's capital budget
for fiscal 1998 or fiscal 1999 as previously provided to Parent in writing;
21
26
(f) sell, lease, encumber or otherwise dispose of, or agree to sell,
lease, encumber or otherwise dispose of, any of its assets, other than (i)
sales of inventory in the ordinary course of business and (ii) transactions
which involve assets having a current value not in excess of $5,000,000
individually or $20,000,000 in the aggregate; provided that notwithstanding
this Section 6.1(f), neither the Company nor any of its Subsidiaries shall
sell, lease, encumber or otherwise dispose of, or agree to sell, lease,
encumber or otherwise dispose of, any germplasm, recombinant DNA technology or
Intellectual Property Rights, except with respect to Intellectual Property
Rights as specifically permitted by Section 6.1(j);
(g) except as disclosed in Item 4.12(a) of the Company Letter, (i)
increase the salary or wages payable or to become payable to its directors,
officers or employees, except for increases required under employment
agreements existing on the date hereof, and except for increases for officers
and employees in the ordinary course of business, consistent with past
practice; (ii) pay or agree to pay any pension, retirement allowance or
employee benefit not required or contemplated by any existing benefit,
severance, pension or employment plans, agreements or arrangements; or (iii)
enter into any employment or severance agreement with, or establish, adopt,
enter into or amend any bonus, profit sharing, thrift, stock option, restricted
stock, pension, retirement, deferred compensation, employment, termination or
severance plan, agreement, policy or arrangement for the benefit of, any
director, officer or employee, except, in each case, as may be expressly
required by the terms of any such plan, agreement, policy or arrangement or to
comply with applicable law;
(h) except as is required as a result of a change in law or in
generally accepted accounting principles, make any material change in its
method of accounting;
(i) enter into, modify in any material respect, amend in any material
respect or terminate any material contract or agreement (including without
limitation any contract or agreement which (i) cannot by its terms be
terminated without liability or continuing obligation by the Company on less
than one year's notice or (ii) may require a cash expenditure by the Company in
excess of $5,000,000 in any fiscal year) to which the Company or any of its
Subsidiaries is a party, or waive, release or assign any material rights or
claims, in each case, in any manner adverse to the Company or any of its
Subsidiaries and, in each case, except for (A) customary operational contracts
not involving payments in excess of $5,000,000 individually over the term of
such contract, (B) hedging and similar futures contracts with a term not in
excess of one year or which can, by their terms, be terminated without
liability or continuing obligation by the Company on not more than one year's
notice and (C) seed production contracts, in each of cases (A), (B) and (C)
above entered into in the ordinary course of business consistent with past
practice;
(j) (i) acquire a license or right to use from a third party for
consideration (including without limitation cash, human or other resources or
other assets or commitments, including out-licenses) in excess of $1,000,000
per year or $10,000,000 over the course of the agreement governing such license
or right, or which by its terms cannot be terminated without liability or
continued obligation by the Company on less than six months' notice or (ii)
grant any license or sublicense other than (v) licenses to contract growers in
the ordinary course of business consistent with past practice, (w) licenses
granted under and in accordance with the Corn Borer-Protected License
22
27
Agreement dated as of January 31, 1996 between Parent and the Company, the
Glyphosate-Protected Corn License Agreement dated as of January 31, 1996
between Parent and the Company or the CaMV Promoter License Agreement dated as
of January 31, 1996 between Parent and the Company, in each case, in the
ordinary course of business consistent with past practice (and provided that
this Section 6.1 shall not prohibit the granting by the Company in accordance
with such licenses of sublicenses to the entities described with respect to
this Section 6.1(j) in Item 6.1 of the Company letter), (x) licenses of swine
in the ordinary course of business consistent with past practice, (y) licenses
included in "material transfer agreements" entered into solely for the purposes
of research in the ordinary course of business consistent with past practice,
and (z) licenses required to be granted pursuant to the terms of agreements to
which the Company or any of its Subsidiaries is a party (as such terms are in
effect on the date hereof);
(k) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its Subsidiaries not constituting an inactive
Subsidiary (other than the Merger);
(l) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money or guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any wholly-owned
subsidiary of the Company;
(m) settle or agree to dismiss any litigation with respect to
Intellectual Property Rights or material litigation with respect to other
matters;
(n) pay, discharge, settle or satisfy any other claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of claims, liabilities or obligations (in each case not
related to pending or threatened litigation) reflected or disclosed in the most
recent consolidated financial statements (or the notes thereto) of the Company
included in the Company Filed SEC Documents or incurred since the date of such
financial statements in the ordinary course of business consistent with past
practice;
(o) enter into any contract, license, agreement or arrangement of any
kind without including confidentiality agreements consistent with past
practice; or
(p) authorize, recommend, propose or announce an intention to do any
of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Notwithstanding anything else in this Agreement to the contrary, the Company
and its Subsidiaries may, during the period from the date of this Agreement
until the earlier of the Effective Time or such time as Parent's designees
shall constitute a majority of the Board of Directors of the Company, (i) sell
all or a portion of the Company's business solely relating to the research and
development of swine breeding stock and the marketing of such hybrid breeding
swine and related management services to hog producers in domestic or
international markets, so long as Parent is reasonably satisfied with the terms
and conditions of such sale, and (ii) take any action set forth in Item 6.1 of
the Company Letter.
23
28
Section 6.2 No Solicitation. (a) The Company shall, and shall cause
its executive officers, directors, authorized representatives and authorized
agents to, immediately cease any discussions or negotiations with any parties
that may be ongoing with respect to any Takeover Proposal. The Company shall
not, nor shall it permit any of its Subsidiaries to, nor shall it permit any of
its executive officers, directors, authorized representatives or authorized
agents to, directly or indirectly, (i) solicit, initiate or knowingly encourage
(including by way of furnishing non-public information) any inquiries or the
making of any proposal which constitutes, or may reasonably be expected to lead
to, any Takeover Proposal or (ii) participate in any discussions or
negotiations regarding any Takeover Proposal. For purposes of this Agreement,
"Takeover Proposal" means (x) any inquiry, proposal or offer from any person
relating to any direct or indirect acquisition or purchase of any of the assets
of the Company or its Subsidiaries (other than the purchase of inventory or
other assets in the ordinary course of business) or any of the Shares then
outstanding, any tender offer or exchange offer for any of the Shares then
outstanding, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries, other than the transactions contemplated by
this Agreement or (y) any other transaction the consummation of which could
reasonably be expected to impede, interfere with, prevent or materially delay
the Offer and/or the Merger or which would reasonably be expected to dilute
materially the benefits to Parent of the transactions contemplated by this
Agreement and the Stockholders Agreement. Notwithstanding the foregoing,
proposals solely relating to the sale of all or a portion of the Company's
business relating solely to the research and development of swine breeding
stock and the marketing of such hybrid breeding swine and related management
services to hog producers in domestic or international markets shall not be
considered Takeover Proposals, so long as the terms and conditions of any such
proposal described in this sentence do not have any of the effects described in
clause (y) of the preceding sentence.
(b) Except as otherwise provided in this Section 6.2, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or such
committee of the Offer, the Merger or this Agreement (or any transaction
contemplated thereby); provided that, the Board of Directors may, (A) in
response to any Takeover Proposal, suspend such recommendation for a period of
up to 24 hours pending its analysis of such Takeover Proposal or (B) at any
time prior to the consummation of the Offer, modify or withdraw such
recommendation, but only if the Board of Directors of the Company determines in
good faith, based on a written opinion of Morris, Nichols, Arsht & Tunnell,
which written opinion shall specifically take into account the Stockholders
Agreement and all the terms thereof, including the obligations and agreements
therein of the Voting Trustees and Registered Holders with respect to tendering
Shares and voting for the Merger and against any Takeover Proposal other than
the Merger (a "Written Opinion"), that it would be a breach of its fiduciary
duties not to so modify or withdraw such recommendation; provided further that,
unless this Agreement shall have been terminated, any such suspension,
modification or withdrawal shall not prevent Parent and Sub, in its or their
discretion, from consummating the Offer and in any event shall be subject to
Section 6.2(e) of this Agreement, (ii) approve or recommend, or propose
publicly to approve or recommend, any Takeover Proposal or (iii) cause the
Company to enter into any letter of intent, agreement in principle,
24
29
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Takeover Proposal.
(c) In addition to the obligations of the Company contained in
paragraphs (a) and (b) of this Section 6.2, the Company shall immediately
advise Parent orally and in writing of any request for information or of any
Takeover Proposal, the material terms and conditions of such request or
Takeover Proposal and the identity of the person making such request or
Takeover Proposal.
(d) Subject to Section 6.2(e), nothing contained in this Section 6.2
shall prohibit the Company from taking and disclosing to its stockholders a
position contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange
Act or from making any disclosure to the Company's stockholders if, in the good
faith judgment of the Board of Directors of the Company, based on a Written
Opinion, such disclosure is required under applicable law.
(e) Nothing in this Section 6.2 (including any modified or withdrawn
recommendation contemplated by paragraphs (b) or (c) of Section 6.2) shall be
deemed to prevent or impede Parent and Sub, in its or their discretion, from
consummating the Offer, or to limit or affect any of the actions taken by the
Company and described in Section 4.15 of this Agreement. In addition, if Sub
purchases Shares pursuant to the Offer, the Company and its Board of Directors
shall take all actions legally permitted to permit the Merger to occur.
Section 6.3 Third Party Standstill Agreements. During the period
from the date of this Agreement through the Effective Time, the Company shall
enforce and shall not terminate, amend, modify or waive any standstill or other
provision of, any confidentiality, nonsolicitation or standstill agreement to
which the Company or any of its Subsidiaries is a party (other than any
involving Parent), including, without limitation, any such agreement entered
into with any party in connection with the process conducted by the Company to
solicit acquisition proposals for the Company.
Section 6.4 Disclosure to Parent; Delivery of Certain Filings. The
Company shall promptly advise Parent orally and in writing if there occurs, to
the knowledge of the Company, any change or event which results in the
executive officers of the Company having a good faith belief that such change
or event has resulted in or is reasonably likely to result in a Material
Adverse Effect on the Company or that such change or event could materially
delay the consummation of the Offer and/or the Merger. The Company shall
provide to Parent, and Parent shall provide to the Company, copies of all
filings made by the Company or Parent, as the case may be, with any
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
ARTICLE VII - ADDITIONAL AGREEMENTS
Section 7.1 Employee Benefits. (a) Parent shall take all necessary
action so that each person who is an employee of the Company or any of its
Subsidiaries upon the consummation of the Offer (including each such person who
is on vacation, temporary layoff, approved leave of absence, sick leave or
short-term disability) shall be permitted to remain an employee of the Company
or the Surviving Corporation or a Subsidiary of the Company or of the Surviving
Corporation, as the case
25
30
may be, immediately following such time with wages or salary, as applicable, no
less favorable than as in effect immediately preceding such time. Parent shall
take all necessary action so that each person receiving, or but for any waiting
period would be receiving, long-term disability benefits under a plan of the
Company or any of its Subsidiaries upon the consummation of the Offer shall
retain after such time the right to continue or begin receiving such long-term
disability benefits, so long as they remain disabled. Until the first
anniversary of the consummation of the Offer, Parent shall take all necessary
action so that the Company, the Surviving Corporation and their Subsidiaries
maintain for each employee of the Company and its Subsidiaries who is employed
by the Company or the Surviving Corporation or a Subsidiary of the Company or
the Surviving Corporation upon the consummation of the Offer (collectively, the
"Retained Employees") wages and other compensation levels, and benefits
(including without limitation benefits thereunder for the spouses, dependents
and other beneficiaries of Retained Employees, if applicable) of the types
provided under the Benefit Plans, and under all other employee benefit plans,
policies, arrangements and understandings that would be Benefit Plans but for
their not being material (the "Other Benefit Plans"), as in effect as of the
consummation of the Offer which are not and have eligibility requirements that
are not less favorable than those wages and other compensation levels, and
benefits provided under the Benefit Plans and the Other Benefit Plans, as in
effect as of the consummation of the Offer. Parent shall take all necessary
action so that each Retained Employee shall after the consummation of the Offer
continue to be credited with the unused vacation and sick leave credited to
such employee through the consummation of the Offer under the applicable
vacation and sick leave policies of the Company and its Subsidiaries, and
Parent shall permit or cause the Company, the Surviving Corporation and their
Subsidiaries to permit such employees to use such vacation and sick leave.
Parent shall take all necessary action so that, for all purposes under each
benefit plan maintained or otherwise provided by the Company, the Surviving
Corporation or any of their Subsidiaries in which employees or former employees
of the Company and its Subsidiaries or the spouses, dependents or other
beneficiaries of such persons become eligible to participate after the
consummation of the Offer, each such person shall be credited with all years of
service to the extent such service would be taken into account under the
Benefit Plan or Other Benefit Plan providing benefits of a similar type in
effect at the consummation of the Offer.
(b) Parent shall take all necessary action so that neither it, the
Company, the Surviving Corporation, nor any of their Subsidiaries will during
the one-year period commencing with the consummation of the Offer (i) terminate
the employment of any Retained Employee other than for Cause or (ii) relocate
the site of any such person's employment or reassign any such person to a
different location without such person's consent. Following such one-year
period, employment of any of the Retained Employees will be "at will" and may
be terminated at any time for any reason (subject to any legally binding
agreement other than this Agreement, and subject to any applicable laws or
collective bargaining agreement). Except as otherwise specifically provided in
Sections 7.1 through 7.6, nothing in this Agreement shall be interpreted as
limiting the power of the Surviving Corporation, Parent, or any of their
respective Subsidiaries to amend or terminate any particular Benefit Plan or
any other particular employee benefit plan, program, agreement or policy or as
requiring the Surviving Corporation to offer to continue (other than as
required by its terms) any written employment contract, provided, however, that
no such termination or amendment may impair the rights of any person with
respect to benefits or any other payments already accrued as of the time of
such termination or amendment without the consent of such person. As used in
this Section 7.1(b),
26
31
"Cause" shall mean the willful failure to substantially perform the duties
reasonably assigned by Parent or its Subsidiaries (including the Surviving
Corporation), as the case may be (other than a failure resulting from
disability), any act of dishonesty, the commission of a felony, or a
significant violation of any statutory or common law duty of loyalty to Parent
and its Subsidiaries (including the Surviving Corporation).
Section 7.2 Severance Policy and Other Agreements. (a) For a period
of not less than twelve months from the consummation of the Offer, Parent shall
maintain, and shall cause to be maintained by the Company, the Surviving
Corporation and their Subsidiaries, for the benefit of the Retained Employees
the Company's Severance Pay Plan as in effect as of the date hereof.
(b) Parent shall honor or cause to be honored by the Company, the
Surviving Corporation and their Subsidiaries all Employment Agreements, copies
of which have been made available by the Company to Parent, with the persons
who are directors, officers and employees of the Company and its Subsidiaries
(it being understood that nothing herein shall be deemed to mean that the
Company, the Surviving Corporation and their Subsidiaries shall not be required
to honor their obligations under any legally binding employment, bonus,
severance, consulting, termination or non-competition agreement to which they
are a party). Parent acknowledges and agrees that anything in this Agreement
to the contrary notwithstanding, in the event it shall be determined that any
payment or distribution by, or any other amount resulting from compensation,
benefits or any other remuneration provided by, Parent, the Company, the
Surviving Corporation or any of their Subsidiaries to or for the benefit of any
person employed by the Company or any of its Subsidiaries at any time before
the consummation of the Offer (a "Payment") is or will be subject to the excise
tax imposed by Section 4999 of the Code as a result of the consummation of the
Offer or the Merger, or any interest or penalties or expenses (including any
attorney fees or other professional expenses incurred in challenging the
application of any such tax) are incurred by such person with respect to such
excise tax (such excise tax, together with any such interest and penalties and
expenses, are hereinafter collectively referred to as the "Excise Tax"), then
such person shall be entitled to receive from Parent, the Company or the
Surviving Corporation, and Parent shall cause the Company or the Surviving
Corporation to make, an additional payment pursuant to the terms of the DEKALB
Genetics Corporation Policy and Procedure Regarding Reimbursement of Employees
for Parachute Payment Taxes and Expenses (the "Policy and Procedure"). Parent
shall maintain, and shall cause to be maintained by the Company, the Surviving
Corporation and their Subsidiaries such Policy and Procedure to the extent
required pursuant to the terms thereof.
Section 7.3 Bonus Programs. Without limitation of Parent's or the
Company's obligations under any existing Employment Agreement, Parent shall
maintain, or shall cause the Company and the Surviving Corporation to maintain,
the Company's bonus programs set forth in the documents made available by the
Company to Parent through the end of the twelve-month period beginning on the
most recent September 1 preceding the consummation of the Offer, with bonuses
to be paid to each Retained Employee participating thereunder in accordance
with the performance goals previously established for such period (the
"Existing Goals"), if (i) the achievement of the Existing Goals can still
reasonably be measured despite the consummation of the transactions
contemplated hereby, and (ii) such achievement has not become unreasonably more
difficult or easier than it would have been absent such consummation. If
either of clause (i) or clause (ii) of the preceding sentence
27
32
is not satisfied with respect to the Existing Goals applicable to a particular
Retained Employee, then the Existing Goals shall be reasonably adjusted, if
possible, so that both such clauses are satisfied as to the adjusted Existing
Goals, and if no such adjustment is possible, such Retained Employee's bonus
shall be paid at his or her target bonus level (subject to all terms and
conditions of such bonus except for the Existing Goals that cannot be so
adjusted).
Section 7.4 Welfare Plans. Parent shall, or shall cause the Company
and the Surviving Corporation to, take all necessary action so that there shall
be (i) waived all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the Retained Employees and former employees of the Company and
its Subsidiaries and the spouses, dependents and other beneficiaries of such
persons under any welfare or fringe benefit plan that any such persons may be
eligible to participate in after the consummation of the Offer, other than
limitations or waiting periods that are in effect with respect to such persons
and that have not been satisfied as of the consummation of the Offer under the
corresponding welfare or fringe benefit plan maintained for such persons
immediately prior to the consummation of the Offer and are not satisfied
thereafter and (ii) provided each such person credit for any co-payments and
deductibles paid by such person for the applicable plan year prior to the
consummation of the Offer in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans that such person is eligible
to participate in after the consummation of the Offer. Parent shall, or shall
cause the Company and the Surviving Corporation to, provide or continue to
provide (and never terminate), pursuant to the DEKALB Genetics Corporation
Retiree Health Care Plan as in effect on the date hereof, retiree medical and
other retiree health benefits to persons who are immediately prior to the
consummation of the Offer eligible for such benefits under the EMWA Plan as in
effect immediately prior to the consummation of the Offer, or who would
immediately prior to the consummation of the Offer be eligible therefor but for
the fact that they, or the person with respect to whom they are a dependent,
had not yet terminated employment with the Company and its Subsidiaries, or who
will or would within twelve months after the consummation of the Offer be so
eligible therefor (such eligibility to be determined based on the terms of the
EMWA Plan as in effect immediately prior to the date of this Agreement).
Parent shall, or shall cause the Company and the Surviving Corporation to,
provide or continue to provide (and never terminate), pursuant to the DEKALB
Genetics Corporation Retiree Health Care Plan as in effect on the date hereof,
medical and other health benefits to persons who incur or are dependents of
persons who incur an illness or other disability or leave of absence, or are
dependents of persons who die, prior to the consummation of the Offer and who
are at such time, or would be after such time, according to the terms of the
EMWA Plan as in effect immediately prior to such time, eligible for benefits
under such plan due to such illness or other disability or leave of absence or
death. Parent shall take all necessary action so that no amount held at any
particular time by the trustee pursuant to the terms of EMWA Trust Agreement
entered into between First National Bank in DeKalb and the Company (the "EMWA
Trust") shall be used for the benefit of any persons other than the group of
employees and former employees (and their spouses, dependents and
beneficiaries) who contributed, or with respect to whom the Company, the
Surviving Corporation and their Subsidiaries contributed, such amounts. In
particular, if after the consummation of the Offer any action is taken to
change the group of employees and former employees covered by the EMWA Plan,
the assets of the EMWA Trust at such time shall only be used for the benefit of
the group of employees and former employees (and their
28
33
spouses, dependents and beneficiaries) covered by the EMWA Plan prior the
effective time of such action.
Section 7.5 Retirement Plan. For a period of not less than twelve
months from the consummation of the Offer, Parent shall (i) maintain, or cause
to be maintained, for the benefit of the Retained Employees the Company's
Savings and Investment Plan (the "Retirement Plan") as in effect prior to the
consummation of the Offer and (ii) contribute, or cause to be contributed, to
the Retirement Plan, on behalf of each Retained Employee who is or becomes a
participant therein, matching contributions in amounts determined in accordance
with the terms of the Retirement Plan as in effect as of the date hereof, such
contributions to be made on at least a bi-weekly basis, and a "Compensation
Based Contribution" as defined therein equal to 2% of compensation as described
in the Retirement Plan.
Section 7.6 Options; Restricted Stock Awards. (a) Prior to the
execution of this Agreement, the Board of Directors of the Company or the
Long-Term Incentive Plan Administrative Committee of the Board of Directors of
the Company has adopted such resolutions or has taken such other actions as are
required (i) to provide that each Company Stock Option heretofore granted under
any Company Stock Plan (other than the Company's Director Stock Option Plan)
outstanding immediately prior to the consummation of the Offer, whether or not
then exercisable, shall become fully exercisable immediately prior to the
consummation of the Offer, (ii) to provide that all restrictions applicable to
any restricted stock award heretofore granted under any Company Stock Plan
outstanding immediately prior to the Offer shall lapse immediately prior to the
consummation of the Offer, (iii) to provide that upon the consummation of the
Offer each Company Stock Option then outstanding shall be cancelled in
consideration for the cash payment described in Section 7.6(b) and (iv) with
respect to Company Stock Options held by persons subject to the reporting
requirements of Section 16 of the Exchange Act, to specifically approve the
transactions contemplated by this Section 7.6. The Company shall use
reasonable efforts to obtain any necessary consents of the holders of such
Company Stock Options to effect this Section 7.6.
(b) The Company shall use reasonable efforts to ensure that, upon the
consummation of the Offer each Company Stock Option then outstanding shall be
cancelled by the Company in consideration for which the holder thereof shall
thereupon be entitled to receive promptly (but in no event later than five
days) after the consummation of the Offer, a cash payment in respect of such
cancellation from the Company in an amount (if any) equal to (i) the product of
(x) the number of shares of Company Common Stock subject or related to such
Company Stock Option and (y) the excess, if any, of the Offer Price over the
exercise or purchase price per share of Company Common Stock subject or related
to such Option, minus (ii) all applicable federal, state and local taxes
required to be withheld by the Company. The Company shall use reasonable
efforts to ensure that, after giving effect to the foregoing, no Company Stock
Option shall be exercisable for Company Common Stock following the consummation
of the Offer.
Section 7.7 Stockholder Approval; Preparation of Proxy Statement.
(a) If the Company Stockholder Approval is required by law, the Company shall,
at Parent's request, as soon as practicable following the expiration of the
Offer in accordance with the terms of Section 1.1 of this Agreement, so long as
permitted by law, duly call, give notice of, convene and hold a meeting of its
29
34
stockholders (the "Stockholders Meeting") for the purpose of obtaining the
Company Stockholder Approval. The Company shall, through its Board of
Directors (but subject to the right of the Company's Board of Directors to
withdraw or modify its approval or recommendation of the Offer, the Merger and
this Agreement as set forth in Section 6.2(b)), recommend to its stockholders
that the Company Stockholder Approval be given. Notwithstanding the foregoing,
if Sub or any other Subsidiary of Parent shall acquire 90% or more of the
outstanding shares of Company Class A Common Stock and 90% or more of the
outstanding shares of Company Class B Common Stock, the parties shall, at the
request of Parent, take all necessary and appropriate action to cause the
Merger to become effective as soon as reasonably practicable after the
expiration of the Offer without a Stockholders Meeting in accordance with
Section 253 of the DGCL.
(b) If the Company Stockholder Approval is required by law, the
Company shall, at Parent's request, as soon as practicable following the
expiration of the Offer in accordance with the terms of Section 1.1, and to the
extent permitted by law, prepare and file a preliminary Proxy Statement with
the SEC and shall use all reasonable efforts to respond to any comments of the
SEC or its staff, and, to the extent permitted by law, to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly as practicable
after responding to all such comments to the satisfaction of the staff. The
Company shall notify Parent promptly of the receipt of any comments from the
SEC or its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and will
supply Parent with copies of all correspondence between the Company or any of
its representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Proxy Statement or the Merger. If at any time prior
to the Stockholders Meeting there shall occur any event that should be set
forth in an amendment or supplement to the Proxy Statement, the Company shall
promptly prepare and mail to its stockholders such an amendment or supplement.
Parent shall cooperate with the Company in the preparation of the Proxy
Statement or any amendment or supplement thereto. Parent and its counsel shall
be given a reasonable opportunity to review and comment upon the Proxy
Statement and any such correspondence prior to its filing with the SEC or
dissemination to the Company's stockholders, and the Company shall not so file
or disseminate any Proxy Statement, or any amendment or supplement thereto, to
which Parent reasonably objects.
(c) Parent agrees to cause all Shares purchased pursuant to the Offer
and all other Shares of the Company entitled to vote on the Merger owned by
Parent or any Subsidiary of Parent to be voted in favor of the Merger.
Section 7.8 Access to Information. Upon reasonable notice and
subject to restrictions contained in confidentiality agreements to which the
Company is subject and subject to the terms of the Confidentiality Agreement,
dated March 12, 1998, between the Company and Parent, as the same may be
amended, supplemented or modified (the "Confidentiality Agreement"), the
Company shall, and shall cause each of its Subsidiaries to, afford to Parent
and to the officers, employees, accountants, counsel and other representatives
of Parent all reasonable access, during normal business hours during the period
prior to the Effective Time, to all their respective personnel, properties,
books, contracts, commitments and records and, during such period, the Company
shall and shall cause each of its Subsidiaries to furnish promptly to Parent
(a) a copy of each report, schedule, registration statement and other document
filed or received by it during such period pursuant to the
30
35
requirements of the Federal or state securities laws or the Federal tax laws
and (b) all other information concerning its business, properties and personnel
as Parent may reasonably request, provided, that until the earlier of the
Effective Time or such time as Parent's designees shall constitute a majority
of the Board of Directors of the Company, none of the foregoing persons shall
have access to the respective properties, books, contracts, commitments and
records of the Company or its Subsidiaries with respect to (i) pricing or
pricing strategy or (ii) Intellectual Property Rights, except that the
independent person who reviewed the Company's patent applications on behalf of
Parent during the due diligence process conducted in connection with the
negotiation of this Agreement shall be permitted to review the Company's
Intellectual Property Rights other than access to germplasm pedigree and basic
research, and in any event, subject to confidentiality and disclosure
limitations comparable to those previously applicable to such independent
person's review of patent applications, and any representative of Parent shall
be entitled to review material relating to the Company's Intellectual Property
Rights that is otherwise publicly available. Notwithstanding anything to the
contrary in this Agreement or any other agreement to which the Company and
Parent are a party, the Confidentiality Agreement shall terminate and be of no
further force and effect from and after the date upon which the Offer is
consummated.
Section 7.9 Fees and Expenses. (a) All fees and expenses incurred
in connection with the Offer, the Merger, 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 Merger is consummated.
(b) The Company may pay the fees and expenses of Merrill Lynch
described in Section 4.17 on or prior to the Effective Time.
Section 7.10 Public Announcements. Parent and the Company will
consult with each other before issuing any press release or otherwise making
any public statements with respect to the transactions contemplated by this
Agreement 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, fiduciary duties or by obligations pursuant to any listing agreement with
any national securities exchange.
Section 7.11 Real Estate Transfer Tax. Parent and the Company agree
that either the Surviving Corporation or Parent (without any liability to any
of the Company's stockholders) will pay any state or local tax which is
attributable to the transfer of the beneficial ownership of the Company's or
its Subsidiaries' real property, if any (collectively, the "Transfer Taxes"),
and any penalties or interest with respect to the Transfer Taxes, payable in
connection with the consummation of the Offer and the Merger. The Company
agrees to cooperate with Parent in the filing of any returns with respect to
the Transfer Taxes, including supplying in a timely manner a complete list of
all real property interests held by the Company and its Subsidiaries and any
information with respect to such property that is reasonably necessary to
complete such returns. The portion of the consideration allocable to the real
property of the Company and its Subsidiaries shall be determined by Parent in
its reasonable discretion. To the extent permitted by law, the Company's
stockholders shall be deemed to have agreed to be bound by the allocation
established pursuant to this Section 7.11 in the preparation of any return with
respect to the Transfer Taxes.
31
36
Section 7.12 State Takeover Laws. If any "fair price" or "control
share acquisition" statute or other similar statute or regulation shall become
applicable to the transactions contemplated hereby, Parent and the Company and
their respective Boards of Directors shall use all reasonable efforts to grant
such approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to minimize the effects of any such
statute or regulation on the transactions contemplated hereby.
Section 7.13 Indemnification; Directors and Officers Insurance. (a)
All rights to indemnification or exculpation, existing in favor of a director,
officer, employee or agent (an "Indemnified Person") of the Company or any of
its Subsidiaries (including, without limitation, rights relating to advancement
of expenses and indemnification rights to which such persons are entitled
because they are serving as a director, officer, agent or employee of another
entity at the request of the Company or any of its Subsidiaries), as provided
in the Restated Certificate of Incorporation of the Company, the By-laws of the
Company or any indemnification agreement, in each case, as in effect on the
date of this Agreement, and relating to actions or events through the Effective
Time, shall survive the Merger and shall continue in full force and effect,
without any amendment thereto; provided, however, that the Surviving
Corporation shall not be required to indemnify any Indemnified Person in
connection with any proceeding (or portion thereof) to the extent involving any
claim initiated by such Indemnified Person unless the initiation of such
proceeding (or portion thereof) was authorized by the Board of Directors of the
Company or unless such proceeding is brought by an Indemnified Person to
enforce rights under this Section 7.13; provided further that any determination
required to be made with respect to whether an Indemnified Person's conduct
complies with the standards set forth under the DGCL, the Restated Certificate
of Incorporation of the Company, the By-laws of the Company or any such
agreement, as the case may be, shall be made by independent legal counsel
selected by such Indemnified Person and reasonably acceptable to Parent; and
provided further that nothing in this Section 7.13 shall impair any rights of
any Indemnified Person. Without limiting the generality of the preceding
sentence, in the event that any Indemnified Person becomes involved in any
actual or threatened action, suit, claim, proceeding or investigation after the
Effective Time, Parent shall, or shall cause the Surviving Corporation to,
promptly advance to such Indemnified Person his or her legal and other expenses
(including the cost of any investigation and preparation incurred in connection
therewith), subject to the providing by such Indemnified Person of an
undertaking to reimburse all amounts so advanced in the event of a
non-appealable determination of a court of competent jurisdiction that such
Indemnified Person is not entitled thereto.
(b) In the event that, from and after the Effective Time, a third
person asserts any claim against any Indemnified Person with respect to any
matter to which the foregoing indemnities apply, the Indemnified Person shall
give prompt written notice to the Surviving Corporation, and the Surviving
Corporation 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 Person; provided, however, that, (i) if the Surviving
Corporation does not give such notice and does not proceed diligently to defend
the claim within thirty (30) days (or such shorter period as is necessary to
permit the Indemnified Person to respond) after receipt of such notice of the
claim, then the Indemnified Person may employ separate counsel to represent it
and defend it against such claim and (ii) if the Surviving Corporation elects
to defend the claim then the Surviving Corporation shall employ counsel
32
37
reasonably satisfactory to the Indemnified Person and the Indemnified Person
shall be entitled to participate in (but not control) the defense of such claim
and to employ separate counsel at its own expense to assist in the handling of
such claim. The Indemnified Person and the Surviving Corporation shall
cooperate in defending any such third person's claim. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Indemnified Person may
settle or compromise any such claim without the prior written consent of the
other, which consent shall not be unreasonably withheld, unless, after
consultation between such parties, the terms of such settlement or compromise
release such Indemnified Person 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 Person.
(c) Prior to the Effective Time, the Company shall have the right to
obtain and pay for in full a "tail" coverage directors' and officers' liability
insurance policy ("D&O Insurance") covering a period of not less than six years
after the Effective Time and providing coverage in amounts and on terms
consistent with the Company's existing D&O Insurance. In the event the Company
is unable to obtain such insurance, Parent shall cause the Surviving
Corporation to maintain the Company's D&O Insurance for a period of not less
than six years after the Effective Time; provided, that the Surviving
Corporation may substitute therefor policies of substantially similar coverage
and amounts containing terms no less advantageous to such former directors or
officers; provided further that if the existing D&O Insurance expires or is
cancelled during such period, Parent or the Surviving Corporation shall use its
best efforts to obtain substantially similar D&O Insurance; and provided
further that the Company shall not, without Parent's consent (but after
consultation with Parent), expend an amount in excess of 350% of the last
annual premium paid prior to the date hereof to procure the above described
"tail" coverage and neither Parent nor the Surviving Corporation shall be
required to expend, in order to maintain or procure an annual D&O Insurance
policy, in lieu of a tail policy, an amount in excess of 250% of the last
annual premium paid prior to the date hereof, but in such case shall purchase
as much coverage as possible for such amount.
Section 7.14 Notification of Certain Matters. Parent shall give
prompt notice to the Company, and the Company shall give prompt notice to
Parent, of: (i) the occurrence, or non-occurrence, in each case, to the
knowledge of the Company or Parent, as the case may be, of any event the
occurrence, or non-occurrence, of which results in the executive officers of
the Company or Parent, as the case may be, having a good faith belief that such
change or event would be reasonably likely to cause (x) any representation or
warranty of such entity contained in this Agreement that is not qualified as to
materiality to be untrue or inaccurate in any material respect, (y) any
representation or warranty of such entity contained in this Agreement that is
qualified as to materiality to be untrue or inaccurate in any respect, or (z)
any covenant, condition or agreement of such entity contained in this Agreement
not to be complied with or satisfied in all material respects; and (ii) the
executive officers of the Company or Parent, as the case may be, believing in
good faith that the Company or Parent, as the case may be, has, to the
knowledge of the Company or Parent, as the case may be, failed to comply with
in all material respects or satisfy in all material respects any covenant,
condition or agreement of such entity to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 7.14 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice. Each of the Company, Parent and
Sub shall give prompt notice to the other parties hereof of any notice or other
33
38
communication from any third party alleging that the consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement.
Section 7.15 Board of Directors. Promptly after such time as Sub
purchases Shares pursuant to the Offer (but subject to the satisfaction of the
Minimum Condition), Sub shall be entitled, to the fullest extent permitted by
law, to designate at its option up to that number of directors, rounded to the
next highest whole number, of the Company's Board of Directors, subject to
compliance with Section 14(f) of the Exchange Act, as will make the percentage
of the Company's directors designated by Sub pursuant to this sentence equal to
the aggregate voting power of the shares of Company Class A Common Stock held
by Parent or any of its Subsidiaries; provided, however, that in the event that
Sub's designees are elected to the Board of Directors of the Company, until the
Effective Time, such Board of Directors shall have (i) at least three directors
who are directors on the date of this Agreement or are designated by a majority
of the directors of the Company who were directors on the date hereof, in each
case excluding the Investor Nominees (as defined in the Investment Agreement)
(the "Independent Directors") and (ii) the number of Investor Nominees required
by the Investment Agreement which shall be in addition to the number of
directors designated by Sub pursuant to this Section 7.15; and provided,
further that, in such event, if the number of Independent Directors shall be
reduced below three for any reason whatsoever, the remaining Independent
Directors shall, to the fullest extent permitted by law, designate a person to
fill such vacancy who shall be deemed to be an Independent Director for
purposes of this Agreement or, if no Independent Directors then remain, the
other directors shall designate three persons to fill such vacancies who shall
not be officers or affiliates of the Company or any of its Subsidiaries, or
officers or affiliates of Parent, of any of its Subsidiaries or of any other
entity in which Parent owns, directly or indirectly, any material amount of
capital stock or other significant ownership interest, and such persons shall
be deemed to be Independent Directors for purposes of this Agreement.
Following the election or appointment of Sub's designees pursuant to
this Section 7.15 and prior to the Effective Time, any termination or amendment
of this Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or other acts of Sub or waiver or
assertion of any of the Company's rights hereunder, and any other consent or
action by the Board of Directors of the Company with respect to this Agreement
(other than recommending or reconfirming the recommendation that the holders of
the Company Class A Common Stock approve and adopt this Agreement and the
Merger, and making determinations in connection therewith, which
recommendations and determinations may be made by a majority of the Board of
Directors as constituted at any time after such election or appointment of
Sub's designees pursuant to this Section) will require the concurrence of a
majority of the Independent Directors and, to the extent permitted by law, no
other action by the Company, including any action by any other director of the
Company, shall be required to approve such actions. To the fullest extent
permitted by applicable law, the Company shall take all actions requested by
Parent which are reasonably necessary to effect the election of any such
designee, including mailing to its stockholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing
with the mailing of the Schedule 14D-9 (provided that Sub shall have provided
to the Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). Parent and Sub will be
solely responsible for any information with respect to either of them and their
34
39
nominees, officers, directors and affiliates required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. In connection with the
foregoing, the Company will promptly, at the option of Parent, to the fullest
extent permitted by law, either increase the size of the Company's Board of
Directors and/or obtain the resignation of such number of its current directors
as is necessary to enable Sub's designees to be elected or appointed to the
Company's Board of Directors as provided above.
Section 7.16 Best Efforts. Subject to fiduciary responsibilities,
each of the Company, Parent and Sub agrees to use best efforts to cause the
purchase of Shares pursuant to the Offer prior to the Outside Date, and
consummation of the Merger to occur as soon as practicable after such purchase
of Shares. Without limiting the foregoing, (a) each of the Company, Parent and
Sub agrees to use best efforts to take, or cause to be taken, all actions
necessary to comply promptly with all legal requirements that may be imposed on
itself with respect to the Offer and the Merger (which actions shall include
making all filings and furnishing all information required under the HSR Act
and in connection with approvals of or filings with any other Governmental
Entity) and shall promptly cooperate with and furnish information (including
all correspondence with any Governmental Entity) to each other in connection
with any such requirements imposed upon any of them or any of their
Subsidiaries in connection with the Offer and the Merger (b) each of the
Company, Parent and Sub shall, and shall cause its Subsidiaries to, use best
efforts to obtain prior to the Outside Date (and shall cooperate with each
other in obtaining) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity or other public or private third party
required to be obtained or made by Parent, Sub, the Company or any of their
Subsidiaries in connection with the Offer and the Merger or the taking of any
action contemplated thereby or by this Agreement and (c) if necessary to cause
the purchase of Shares pursuant to the Offer prior to the Outside Date, Parent
shall, and shall cause its Subsidiaries to, divest or hold separate or
otherwise take or commit to take any action that limits its freedom of action
with respect to, or its ability to retain, any of the businesses, product lines
or assets of Parent, the Company or any of their respective Subsidiaries. At
the request of Parent, the Company shall agree to divest, hold separate or
otherwise take or commit to take any action that limits its freedom of action
with respect to, or its ability to retain, any of the businesses, product lines
or assets of the Company or any of its Subsidiaries, provided that any such
action may be conditioned upon the purchase of Shares pursuant to the Offer.
Notwithstanding anything to the contrary contained in this Agreement, in
connection with any filing or submission required or action to be taken by
Parent, the Company or any of its respective Subsidiaries to consummate the
Offer, the Merger or the other transactions contemplated in this Agreement, the
Company shall not, without Parent's prior written consent, commit to any
divestiture of assets or businesses of the Company and its Subsidiaries.
Section 7.17 Certain Litigation. The Company agrees that it shall
not settle any litigation commenced after the date hereof against the Company
or any of its directors by any stockholder of the Company relating to the
Offer, the Merger, this Agreement or the Stockholders Agreement without the
prior written consent of Parent. In addition, the Company shall not
voluntarily cooperate with any third party that may hereafter seek to restrain
or prohibit or otherwise oppose the Offer or the Merger and shall cooperate
with Parent and Sub to resist any such effort to restrain or prohibit or
otherwise oppose the Offer or the Merger.
35
40
Section 7.18 Return of Confidential Information. No later than five
(5) business days following the date hereof, the Company shall take all
reasonable actions necessary to cause all third parties who have received any
confidential information in connection with any discussions of potential
acquisition or business combination proposals relating to the Company during
the previous twelve months, to return such confidential information to the
Company or to destroy all copies and records of such confidential information.
ARTICLE VIII - CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Company Stockholder Approval. If required by applicable law, the
Company Stockholder Approval shall have been obtained; provided, however, that
Parent and Sub shall vote all of their shares of capital stock of the Company
entitled to vote thereon in favor of the Merger.
(b) No Injunction or Restraint. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other Governmental Entity preventing the consummation of the Merger shall be in
effect; provided, however, that each of the parties shall have used their best
efforts to prevent the entry of any such temporary restraining order,
injunction or other order, including, without limitation, taking such action as
is required to comply with Section 7.16, and to appeal promptly any injunction
or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for
payment and paid for Shares pursuant to the Offer.
(d) HSR Act. Any waiting period (and any extension thereof) under
the HSR Act applicable to the Merger shall have expired or been terminated.
ARTICLE IX - TERMINATION AND AMENDMENT
Section 9.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Company
Stockholder Approval (if required by applicable law):
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions set forth in Exhibit A, (other than the Minimum Condition)
the Offer shall have terminated or expired in accordance
36
41
with its terms without Sub having accepted for payment any Shares
pursuant to the Offer or (y) Sub shall have, consistent with its
obligations hereunder, failed to pay for the Shares prior to November
9, 1999 (the "Outside Date"); provided, however, that the right to
terminate this Agreement pursuant to this Section 9.1(b)(i) shall not
be available to any party whose failure to perform any of its
obligations under this Agreement results in the failure of any such
Offer Condition or if the failure of such condition results from facts
or circumstances that constitute a breach of any representation or
warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree or ruling or other action shall
have become final and nonappealable; provided, however, that the right
to terminate this Agreement pursuant to this Section 9.1(b)(ii) shall
not be available to any party who has not used its best efforts to
cause such order to be lifted or otherwise taken such action as is
required to comply with its obligation under Section 7.16;
(c) by Parent or Sub prior to the election of Sub's designees to the
Board of Directors of the Company in the event of a breach by the Company of
any representation, warranty, covenant or other agreement contained in this
Agreement which (i) would give rise to the failure of a condition set forth in
paragraph (d) or (e) of Exhibit A and (ii) cannot be or has not been cured
within 30 days after the giving of written notice to the Company;
(d) by Parent or Sub if either Parent or Sub is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph (c)
of Exhibit A; provided that the temporary suspension of the recommendation of
the Company's Board of Directors referred to herein in accordance with Section
6.2(b) shall not give rise to a right of termination pursuant to this Section
9.1(d);
(e) by the Company, if Sub or Parent shall have breached in any
material respect any of their respective representations, warranties, covenants
or other agreements contained in this Agreement, which breach or failure to
perform cannot be or has not been cured within 30 days after the giving of
written notice to Parent or Sub, as applicable; or
(f) by the Company, if the Offer has not been timely commenced in
accordance with Section 1.1.
Section 9.2 Effect of Termination. In the event of a termination of
this Agreement by either the Company or Parent as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
officers or directors, except with respect to Section 4.17, Section 5.6,
Section 7.9, this Section 9.2 Article X, the penultimate sentence of Section
1.1(a) and the last sentence of Section 1.2(c); provided, however, that (a)
nothing herein shall relieve any party for liability for any breach hereof and
(b) the periods of limitation with respect to Proprietary Information provided
in the second paragraph of the Confidentiality Agreement shall not expire.
37
42
Section 9.3 Amendment. Subject to Section 7.15, this Agreement may
be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors at any time before or after obtaining the
Company Stockholder Approval (if required by law), but if the Company
Stockholder Approval shall have been obtained, thereafter no amendment shall be
made which by law requires further approval by the Company's stockholders
without obtaining such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 9.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (i) subject to the
provisions of Section 7.15, extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) subject to the
provisions of Section 7.15, waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or
(iii) subject to the provisions of Section 7.15, waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE X - GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations and Warranties and
Agreements. None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 10.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time of
the Merger.
Section 10.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by overnight courier (providing proof
of delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
38
43
(a) if to Parent or Sub, to:
Monsanto Company
700 Chesterfield Parkway North
BB3N
St. Louis, Missouri 63198
Attn: Robert T. Fraley, Ph. D.
Telecopy: 314 737-7037
with copies to:
Monsanto Company
800 N. Lindbergh Blvd.
E2ND
St. Louis, Missouri 63167
Attn: Barbara Blackford, Esq.
Telecopy: 314 694-2594
and:
Wachtell Lipton Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn: Richard D. Katcher, Esq.
David M. Silk, Esq.
Telecopy: 212 403-2000
(b) if to the Company, to:
DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attn: Richard O. Ryan, President and Chief Operating
Officer
Telecopy: 815 758-3711
with copies to:
DEKALB Genetics Corporation
3100 Sycamore Road
DeKalb, Illinois 60115
Attn: John H. Witmer, Jr., Esq. Senior Vice
President and General Counsel
Telecopy: 815 895-4862
39
44
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attn: Thomas A. Cole, Esq.
Telecopy: 312 853-7036
and:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attn: James G. Archer, Esq.
Telecopy: 212 906-2021
Section 10.3 Interpretation; Definitions. When a reference is made
in this Agreement to an Article or a Section, such reference shall be to an
Article or a Section of 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." As used in this Agreement, the phrase "made available" shall mean
that the information referred to has been made available if requested by the
party to whom such information is to be made available.
As used in this Agreement, the following terms have the meanings
specified or referred to in this Section 10.3 and shall be equally applicable
to both the singular and plural forms. Any agreement referred to below shall
mean such agreement as amended, supplemented or modified from time to time to
the extent permitted by the applicable provisions thereof and by this
Agreement.
"ACQUISITION AGREEMENT" shall have the meaning set forth in Section
6.2(b).
"AGREEMENT" means this Agreement and Plan of Merger, dated as of May
8, 1998 among Parent, Sub and the Company.
"BENEFIT PLANS" shall have the meaning set forth in Section 4.12(a).
"CAUSE" shall have the meaning set forth in Section 7.1(b).
"CERTIFICATE OF MERGER" shall have the meaning set forth in Section
2.3.
"CLOSING DATE" shall have the meaning set forth in Section 2.2.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"COMPANY CLASS A COMMON STOCK" shall have the meaning set forth in the
second Whereas provision of this Agreement.
40
45
"COMPANY CLASS B COMMON STOCK" shall have the meaning set forth in the
second Whereas provision of this Agreement.
"COMPANY FILED SEC DOCUMENTS" shall have the meaning set forth in
Section 4.7.
"COMPANY LETTER" means the letter from the Company to Parent dated the
date hereof, which letter relates to this Agreement and is designated therein
as the Company Letter.
"COMPANY PREFERRED STOCK" shall have the meaning set forth in Section
4.3.
"COMPANY SEC DOCUMENTS" shall have the meaning set forth in Section
4.6.
"COMPANY STOCKHOLDER APPROVAL" shall have the meaning set forth in
Section 4.4.
"COMPANY STOCK OPTIONS" shall have the meaning set forth in Section
4.3.
"COMPANY STOCK PLANS" shall have the meaning set forth in Section 4.3.
"CONFIDENTIALITY AGREEMENT" shall have the meaning set forth in
Section 7.8.
"CONSTITUENT CORPORATIONS" shall have the meaning set forth in the
introductory paragraph of this Agreement.
"CONSUMMATION OF THE OFFER" means the purchase of Shares pursuant to
the Offer.
"D&O INSURANCE" shall have the meaning set forth in Section 7.13(b).
"DGCL" means the General Corporation Law of the State of Delaware.
"DISSENTING SHARES" shall have the meaning set forth in Section
3.1(d).
"DISSENTING STOCKHOLDER" shall have the meaning set forth in Section
3.1(d).
"EFFECTIVE TIME" shall have the meaning set forth in Section 2.3.
"EMWA" shall have the meaning set forth in Section 4.12.
"EMWA PLAN" shall have the meaning set forth in Section 4.12.
"EMWA TRUST" shall have the meaning set forth in Section 7.4.
"ENVIRONMENTAL LAWS" means any applicable statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity relating
to any matter of pollution, protection of the environment or environmental
regulation or control or regarding Hazardous Substances.
41
46
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" shall have the meaning set forth in Section 4.12(c).
"ERISA BENEFIT PLANS" shall have the meaning set forth in Section
4.12(b).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"EXCISE TAX" shall have the meaning set forth in Section 7.2(b).
"EXISTING GOALS" shall have the meaning set forth in Section 7.4.
"EXPENSES" means documented and reasonable out-of-pocket fees and
expenses incurred or paid by or on behalf of Parent in connection with the
Offer, the Merger or the consummation of any of the transactions contemplated
by this Agreement, including all fees and expenses of law firms, commercial
banks, investment banking firms, accountants, experts and consultants to
Parent.
"GOVERNMENTAL ENTITY" means any Federal, state, local or foreign
government or any court, tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, domestic, foreign or
supranational.
"HAZARDOUS SUBSTANCE" means any material defined as toxic or
hazardous, including any petroleum and petroleum products, under any applicable
Environmental Law.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"INDEMNIFIED PERSON" shall have the meaning set forth in Section
7.13(a).
"INDEPENDENT DIRECTORS" shall have the meaning set forth in Section
7.15.
"INFORMATION STATEMENT" shall have the meaning set forth in Section
4.8.
"INTELLECTUAL PROPERTY RIGHTS" means any right to use, all patents,
patent rights, certificates of plant variety protection, trademarks, trade
names, service marks, copyrights, know how and other proprietary intellectual
property rights and computer programs held by the Company or any of its
Subsidiaries.
"INVESTMENT AGREEMENT" shall have the meaning set forth in Section
4.3.
"INVESTOR NOMINEES" shall have the meaning set forth in the Investment
Agreement.
42
47
"KNOWLEDGE" shall mean, with respect to the Company, the actual
knowledge of its executive officers and the actual knowledge of the senior
officer of each of its foreign Subsidiaries and, with respect to Parent, the
actual knowledge of its executive officers of Parent.
"LIENS" means any pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means, when
used in connection with the Company or Parent, as the case may be, any change
or effect (or any development that, insofar as can reasonably be foreseen, is
likely to result in any change or effect) or fact or condition (or any
development that, insofar as can reasonably be foreseen, is likely to result in
any fact or condition) that is materially adverse to the business, properties,
assets, financial condition or results of operations of the Company and its
Subsidiaries taken as a whole, or Parent and its Subsidiaries taken as a whole,
as the case may be, provided, however, that (i) any adverse change, effect or
development that is primarily caused by conditions affecting the United States
economy generally or the economy of any nation or region in which the Company
or Parent, as the case may be, or its Subsidiaries conducts business that is
material to the business of the Company or Parent, as the case may be, and its
Subsidiaries, taken as a whole, shall not be taken into account in determining
whether there has been (or whether there could reasonably be foreseen) a
"Material Adverse Change" or "Material Adverse Effect" with respect to the
Company or Parent, as the case may be, (ii) any adverse change, effect or
development that is primarily caused by conditions generally affecting the
industries in which the Company or Parent, as the case may be, conducts its
business shall not be taken into account in determining whether there has been
(or whether there could reasonably be foreseen) a "Material Adverse Change" or
"Material Adverse Effect" with respect to the Company or Parent, as the case
may be, and (iii) any adverse change, effect or development that is primarily
caused by the announcement or pendency of this Agreement, the Offer, the Merger
or the transactions contemplated hereby shall not be taken into account in
determining whether there has been (or whether there could reasonably be
foreseen) a "Material Adverse Change" or "Material Adverse Effect" with respect
to the Company or Parent, as the case may be.
"MERGER" shall have the meaning set forth in the third Whereas
provision of this Agreement.
"MERGER CONSIDERATION" shall have the meaning set forth in Section
3.1(c).
"MERRILL LYNCH" shall have the meaning set forth in Section 1.2(a).
"MINIMUM CONDITION" shall have the meaning set forth in Exhibit A of
this Agreement.
"OFFER" shall have the meaning set forth in the second Whereas
provision of this Agreement.
"OFFER CONDITIONS" shall have the meaning set forth in Section 1.1(a).
"OFFER DOCUMENTS" shall have the meaning set forth in Section 1.1(b).
43
48
"OFFER PRICE" shall have the meaning set forth in the second Whereas
provision of this Agreement.
"OTHER BENEFIT PLANS" shall have the meaning set forth in Section
7.1(a).
"OUTSIDE DATE" shall have the meaning set forth in Section 9.1(b).
"PARENT" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"PARENT LETTER" means the letter from Parent to the Company dated the
date hereof, which letter relates to this Agreement and is designated therein
as the Parent Letter.
"PAYING AGENT" shall have the meaning set forth in Section 3.2(a).
"PAYMENT" shall have the meaning set forth in Section 7.2(b).
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
"POLICY AND PROCEDURE" shall have the meaning set forth in Section
7.2.
"PROXY STATEMENT" shall have the meaning set forth in Section 4.8.
"REGISTERED HOLDER" shall have the meaning set forth in the
Stockholders Agreement.
"RETAINED EMPLOYEES" shall have the meaning set forth in Section
7.1(a).
"RETIREMENT PLAN" shall have the meaning set forth in Section 7.5.
"SCHEDULE 14D-1" shall have the meaning set forth in Section 1.1(b).
"SCHEDULE 14D-9" shall have the meaning set forth in Section 1.2(b).
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"SHARES" shall have the meaning set forth in the second Whereas
provision of this Agreement.
"SIGNIFICANT SUBSIDIARY" shall have the meaning set forth in Section
4.1.
"STOCK EQUIVALENTS" shall have the meaning set forth in Section 4.3.
44
49
"STOCKHOLDERS AGREEMENT" shall have the meaning set forth in the fifth
Whereas provision of this Agreement.
"STOCKHOLDERS MEETING" shall have the meaning set forth in Section
7.7(a).
"SUB" shall have the meaning set forth in the introductory paragraph
of this Agreement.
"SUBSIDIARY" or "SUBSIDIARY" of any person means another person, an
amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly
by such first person.
"SURVIVING CORPORATION" shall have the meaning set forth in Section
2.1.
"TAKEOVER PROPOSAL" shall have the meaning set forth in Section
6.2(a).
"TAX" and "TAXES" means any federal, state, local or foreign net
income, gross income, gross receipts, windfall profit, severance, property,
production, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any Governmental Entity.
"TAX RETURN" means any return, report or similar statement required to
be filed with respect to any tax including, without limitation, any information
return, claim for refund, amended return or declaration of estimated tax.
"TRANSFER TAXES" shall have the meaning set forth in Section 7.11.
"U.S. BENEFIT PLANS" shall have the meaning set forth in Section
4.12(a).
"VOTING TRUST AGREEMENT" shall have the meaning set forth in the
Stockholders Agreement.
"VOTING TRUSTEE" shall have the meaning set forth in the Stockholders
Agreement.
Section 10.4 Counterparts. This Agreement may be executed in
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, it being understood that all
parties need not sign the same counterpart.
Section 10.5 Entire Agreement; No Third-Party Beneficiaries. Except
for the Confidentiality Agreement and the Investment Agreement (including the
confidentiality agreement dated May 16, 1995 referenced therein) this Agreement
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. To the extent there is any inconsistency between the
terms of this Agreement and the Confidentiality Agreement and/or the Investment
Agreement, the provisions of this Agreement shall
45
50
govern. This Agreement, except for the provisions of Section 7.13 and the
second and third sentences of Section 7.2(b), is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.
Section 10.6 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. 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 or any of the transactions contemplated by this Agreement, (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 or any of the transactions
contemplated by this Agreement in any court other than a Federal or state court
sitting in the State of Delaware.
Section 10.7 Assignment. Except as otherwise provided in Section
1.1(a) neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties except that Parent shall be able without
the consent of the Company to assign all of its and Sub's rights and
obligations under this Agreement to another Person that is capable of acquiring
a majority of the Class A Common Stock by the Outside Date, subject in any case
to Parent's guarantee of the performance by such other Person of all of
Parent's and Sub's obligations hereunder, including without limitation the
obligation to pay the Offer Price and the Merger Consideration, and the Company
shall take all action necessary to permit such assignee to consummate the
Merger after the purchase of Shares. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
Section 10.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
may be consummated as originally contemplated to the fullest extent possible.
Section 10.9 Enforcement of this Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement 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 to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, such remedy being in addition
to any other remedy to which any party is entitled at law or in equity.
46
51
Section 10.10 Obligations of Subsidiaries. Whenever this Agreement
requires any Subsidiary of Parent (including Sub) or of the Company to take any
action, such requirement shall be deemed to include an undertaking on the part
of Parent or the Company, as the case may be, to cause such Subsidiary to take
such action.
Section 10.11. Merger of the Company into Sub. If at any time prior
to the Closing Date Parent notifies the Company that it desires for the Company
to be merged with and into Sub (in lieu of Sub merging with and into the
Company), the Company, Parent and Sub will promptly negotiate in good faith an
amendment to and restatement of this Agreement which provides for such changes
to this Agreement as are necessary or appropriate to effectuate such merger
(and upon finalization thereof, the parties will promptly enter into such
amendment and restatement).
IN WITNESS WHEREOF, Parent, Sub 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
By: /s/ Derek Rapp
-------------------------------------
Derek Rapp
Director, Mergers & Acquisitions
CORN ACQUISITION CORPORATION
By: /s/ Barbara Blackford
-------------------------------------
Barbara Blackford
President
DEKALB GENETICS CORPORATION
By: /s/ Bruce P. Bickner
-------------------------------------
Bruce P. Bickner
Chairman and Chief Executive Officer
47
52
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer, but subject, in all
cases, to Parent's and Sub's obligations set forth under the Merger Agreement,
including, without limitation, under Section 1.1 and Section 7.16, Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered
pursuant to the Offer unless (i) there shall have been validly tendered and not
withdrawn prior to the expiration of the Offer such number of shares of Company
Class A Common Stock (together with the shares of Company Class A Common Stock
then held by Parent or any of its Subsidiaries) that would constitute a
majority of the outstanding shares of Company Class A Common Stock (assuming
the exercise of all options to purchase, and the conversion or exchange of all
securities convertible or exchangeable into, shares of Company Class A Common
Stock) outstanding at the expiration date of the Offer (the "Minimum
Condition") and (ii) any waiting period under the HSR Act applicable to the
purchase of Shares pursuant to the Offer shall have expired or been terminated
prior to the expiration of the Offer. Furthermore, notwithstanding any other
term of the Offer, but subject, in all cases, to Parent's and Sub's obligations
set forth in the Merger Agreement under Section 1.1, Sub shall not be required
to accept for payment or, subject as aforesaid, to pay for any Shares not
theretofore accepted for payment or paid for, and may terminate the Offer at
any time 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 (other than as a result of any action or inaction
of Parent or any of its Subsidiaries that constitutes a breach of this
Agreement):
(a) there shall be threatened or pending by any Governmental
Entity any suit, action or proceeding (i) challenging the acquisition
by Parent or Sub of any Shares under the Offer, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by this
Agreement or the Stockholders Agreement or seeking to obtain from the
Company, Parent or Sub any damages that are material in relation to
the Company and its subsidiaries taken as a whole, (ii) seeking to
prohibit or materially limit the ownership or operation by the
Company, Parent or any of their respective Subsidiaries of a material
portion of the business or assets of the Company and its Subsidiaries,
taken as a whole, or Parent and its Subsidiaries, taken as a whole, or
to compel the Company or Parent 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 Parent 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 Stockholders Agreement, (iii)
seeking to impose material limitations on the ability of Parent or Sub
to acquire or hold, or exercise full rights of ownership of, any
Shares to be accepted for payment pursuant to the Offer including,
without limitation, the right to vote such Shares on all matters
properly presented to the stockholders of the Company, (iv) seeking to
prohibit
A-1
53
Parent or any of its Subsidiaries from effectively controlling in any
material respect any material portion of the business or operations of
the Company or its Subsidiaries or (v) which otherwise is reasonably
likely to have a material adverse effect on the business, properties,
assets, financial condition or results of operations of the Company
and its Subsidiaries taken as a whole; provided that the right of Sub
to not accept for payment or pay for, any Shares not theretofore
accepted for payment or paid for, or to terminate the Offer, pursuant
to this subparagraph (a) shall not be available if Parent or Sub has
not taken such action as is required to comply with Section 7.16;
(b) there shall be enacted, entered, enforced, promulgated or
deemed applicable to the Offer or the Merger by any Governmental
Entity any statute, rule, regulation, judgment, order or injunction,
other than the application to the Offer or the Merger of applicable
waiting periods under the HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (v) of paragraph (a) above; provided that the
right of Sub to not accept for payment or pay for, any Shares not
theretofore accepted for payment or paid for, or to terminate the
Offer pursuant to this subparagraph (b) shall not be available to
Parent or Sub if Parent or Sub has not taken such action as is
required to comply with Section 7.16;
(c) (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse
to Parent or Sub its approval or recommendation of the Offer, the
Merger or this Agreement or (ii) the Board of Directors of the Company
or any committee thereof shall have resolved to take any of the
foregoing actions;
(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 in any respect or any such representations and
warranties that are not so qualified shall not be true and correct in
any material respect, in each case, at the date of this Agreement and
as if such representations and warranties were made as of such time of
determination (except that (i) representations and warranties that
speak as of a specified date shall only be true and correct to such
extent as of such date and (ii) no representation or warranty of the
Company shall be deemed to be untrue in any respect as a result of any
event or circumstance that occurred after (and did not occur on or
before) the first anniversary of the date hereof);
(e) the Company shall have and be continuing to have failed
to perform in any material respect any material obligation or to
comply in any material respect with any material agreement or covenant
of the Company to be performed or complied with by it under this
Agreement; or
A-2
54
(f) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on a national
securities exchange in the United States (excluding any coordinated
trading halt triggered solely as a result of a specified decrease in a
market index), (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iii)
any limitation (whether or not mandatory) by any Governmental Entity
on, or other event that materially adversely affects, the extension of
credit by banks or other lending institutions, (iv) a commencement of
a war or armed hostilities or other national or international calamity
directly or indirectly involving the United States which in any case
is reasonably expected to have a material adverse effect on the
Company or to materially adversely affect Parent's or Sub's ability to
complete the Offer and/or the Merger or materially delay the
consummation of the Offer and/or the Merger; or
(g) this Agreement shall have been terminated in accordance
with its terms.
The foregoing conditions are for the sole benefit of Parent and Sub
and may, subject to the terms of this Agreement, be waived by Parent and Sub in
whole or in part at any time and from time to time in their sole discretion.
The failure by Parent or Sub 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. Terms used but not defined herein shall have the meanings assigned to
such terms in the Agreement to which this Exhibit A is a part.
A-3
55
EXHIBIT B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
DEKALB GENETICS CORPORATION
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is: DEKALB Genetics Corporation
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 2,000 shares
of capital stock, of which 1,000 shares shall be shares of Common Stock, $0.01
par value ("Common Stock"), and 1,000
B-1
56
shares shall be shares of Preferred stock, $0.01 par value ("Preferred Stock").
Section 2. Shares of Preferred Stock may be issued from time to time
in one or more series. The Board (as defined below) is hereby authorized to
fix the voting rights, if any, designations, powers, preferences and the
relative, participation, optional or other rights, if any, and the
qualifications, limitations or restrictions thereof, of any unissued series of
Preferred Stock; and to fix the number of shares constituting such series, and
to increase or decrease the number of shares of any such series (but not below
the number of shares thereof then outstanding).
Section 3. Except as otherwise provided by law or by the resolution
or resolutions adopted by the Board designating the rights, powers and
preferences of any series of Preferred Stock, the Common Stock shall have the
exclusive right to vote for the election of directors and for all other
purposes. Each share of Common Stock shall have one vote, and the Common Stock
shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal, the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter
or repeal any
B-2
57
By-Laws made by the Board.
ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director
of the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under the General Corporation Law of the State of Delaware as the
same exists or may hereafter be amended.
Any appeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative
B-3
58
or investigative (hereinafter a "proceeding"), by reason of the fact that he or
she, or a person of whom he or she is the legal representative, is or was a
director or officer of the Corporation or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the General Corporation Law
of the State of Delaware, as the same exists or may hereafter be amended (but,
in the case of any such amendment, to the fullest extent permitted by law, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, amounts paid or to be paid in settlement,
and excise taxes or penalties arising under the Employee Retirement Income
Security Act of 1974) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
that, except as provided in paragraph (b) hereof, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in this Section shall be a contract right and shall include the right
to be paid by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that, if the
General Corporation Law of the State of Delaware requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a
B-4
59
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise. The Corporation may, by action of the Board, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a)
of this Section is not paid in full by the Corporation within thirty days after
a written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the General Corporation Law of the
State of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an
actual determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant
B-5
60
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, By-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
B-6