INVESTMENT AGREEMENT
dated as of August 6, 1997
between
E.I. DU PONT DE NEMOURS AND COMPANY
and
PIONEER HI-BRED INTERNATIONAL, INC.
TABLE OF CONTENTS
SECTION 1 DEFINITIONS..............................................1
Section 1.1. Definitions..........................................1
Section 1.2. General Interpretive Principles.....................16
SECTION 2 ISSUANCE AND SALE OF SHARES.............................16
Section 2.1. Issuance and Sale of Shares.........................16
Section 2.2. Closing.............................................17
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........17
Section 3.1. Corporate Organization and Qualification............17
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Section 3.2. Authorization of Agreements.........................18
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Section 3.3. Consents; No Conflicts..............................19
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Section 3.4. Capitalization......................................20
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Section 3.5. Company Reports; Financial Statements...............21
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Section 3.6. Absence of Certain Changes..........................22
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Section 3.7. Litigation..........................................22
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Section 3.8. Compliance with Laws; Regulatory Approvals..........22
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Section 3.9. Exemption from Registration.........................22
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SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR..........22
Section 4.1. Organization........................................23
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Section 4.2. Authorization of Agreements.........................23
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Section 4.3. Consents; No Conflicts..............................23
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Section 4.4. Investor Reports; Financial Statements..............24
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Section 4.5. Absence of Certain Changes..........................25
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Section 4.6. Purchase for Purpose of Investment..................25
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SECTION 5 GOVERNANCE..............................................25
Section 5.1. Directors Designated by the Shareholder.............25
Section 5.2. Resignation of Investor Nominees....................29
Section 5.3. Committees..........................................29
SECTION 6 ADDITIONAL AGREEMENTS...................................30
Section 6.1. Standstill Agreement................................30
Section 6.2. Voting..............................................33
Section 6.3. Dispositions........................................35
Section 6.4. Company's Right to Purchase Voting Securities.......39
Section 6.5. Company's Right to Purchase Voting Securities in
Case of Unsolicited Offer...........................43
Section 6.6. Required Dispositions...............................47
Section 6.7. Top-Up Rights; Permitted Reacquisitions;
Exchange of Share Certificates......................48
Section 6.8. Spin-off Distributions..............................50
Section 6.9. Competing Investments...............................51
Section 6.10. Rights of the Company upon a Trigger Event.........54
SECTION 7 PRE-CLOSING COVENANTS...................................55
Section 7.1. Taking of Necessary Action..........................55
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Section 7.2. Notifications.......................................55
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Section 7.3. No-Shop.............................................56
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Section 7.4. Share Listing.......................................56
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Section 7.5. Registration Rights Agreement.......................56
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Section 7.6. Pre-Closing Information.............................56
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SECTION 8 ADDITIONAL COVENANTS....................................56
Section 8.1. Certain Information.................................56
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Section 8.2. Right to Participate in Sale of the Company.........57
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Section 8.3. Use of Proceeds.....................................61
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Section 8.4. Rights Agreement....................................62
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Section 8.5. Publicity...........................................63
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Section 8.6. Legend..............................................63
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Section 8.7. No Restrictions.....................................64
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Section 8.8. Amendment to Articles of Incorporation..............64
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Section 8.9. HSR Act Filings.....................................66
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SECTION 9 CONDITIONS..............................................66
Section 9.1. Conditions of Investor's Obligation.................66
Section 9.2. Conditions of the Company's Obligation..............67
SECTION 10 TERMINATION............................................68
Section 10.1. Termination........................................68
Section 10.2. Effect of Termination..............................69
SECTION 11 MISCELLANEOUS..........................................69
Section 11.1. Fees and Expenses..................................69
Section 11.2. Survival...........................................69
Section 11.3. Notices............................................70
Section 11.4. Entire Agreement; Amendment........................71
Section 11.5. Counterparts.......................................71
Section 11.6. Governing Law; Submission to Jurisdiction..........71
Section 11.7. Successors and Assigns.............................71
Section 11.8. Assignment.........................................71
Section 11.9. Remedies; Waiver...................................72
Section 11.10. Specific Performance..............................72
Section 11.11. Severability......................................72
EXHIBIT A Form of Registration Rights Agreement
EXHIBIT B Form of Rights Agreement Amendment
EXHIBIT C Form of Certificate of Designation
EXHIBIT D Initial Investor Nominee Notice
INVESTMENT AGREEMENT
INVESTMENT AGREEMENT, dated as of August 6, 1997 (the
"Agreement"), by and between E.I. du Pont de Nemours and Company, a
Delaware corporation (the "Investor"), and Pioneer Hi-Bred
International, Inc., an Iowa corporation (the "Company").
W I T N E S S E T H:
WHEREAS, contemporaneously herewith, the parties are
entering into a Joint Venture Agreement and a Research Alliance
Agreement (each as defined herein);
WHEREAS, the Company and the Investor have each determined
to enter into this Agreement pursuant to which the Investor has agreed
to purchase from the Company, and the Company has agreed to issue and
sell to the Investor, in each case subject to the conditions herein,
the Shares at the Closing (each as defined herein);
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements contained
herein, the parties hereto hereby agree as follows:
SECTION 1
DEFINITIONS
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Section 1.1. Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below:
"Acceptance Notice" has the meaning set forth in Section
6.4(a) hereof.
"Affiliate" of a Person has the meaning set forth in Rule
12b-2 under the Exchange Act.
"Agreement" has the meaning set forth in the preamble
hereto.
"Amended Rights Agreement" means the Rights Agreement, as
amended by the Rights Agreement Amendment and as further amended from
time to time in accordance with the terms of this Agreement.
"Articles of Incorporation" means the Third Restated
and Amended Articles of Incorporation of the Company, as amended from
time to time.
"Associate" of a Person has the meaning set forth in Rule
12b-2 under the Exchange Act.
"Beneficially Own" with respect to any securities means
having "beneficial ownership" of such securities (as determined
pursuant to Rule 13d-3 under the Exchange Act, as in effect on the
date hereof, without limitation by the 60-day provision in paragraph
(d)(1)(i) thereof). The terms "Beneficial Ownership" and "Beneficial
Owner" have correlative meanings.
"Board" or "Board of Directors" means the Board of Directors
of the Company.
"Business Day" means any day, other than a Saturday, Sunday
or a day on which banking institutions in the State of Iowa or the
State of Delaware are authorized or obligated by law or executive
order to close.
"Bylaws" means the Restated and Amended Bylaws of the
Company as amended from time to time.
"Change in Control" means the occurrence of any of the
following events:
(a) the direct or indirect purchase or acquisition by
any Person or 13D Group (other than an Excluded Person) of Beneficial
Ownership of Voting Securities or Common Securities of the Company if,
after giving effect to such acquisition, such Person or 13D Group
would Beneficially Own Voting Securities or Common Securities
representing an Equity Percentage of 30% or more on a fully diluted
basis; or
(b) the consummation by the Company or any of its
Subsidiaries of a merger, consolidation or other business combination
(including a sale of all or substantially all of the assets of the
Company (other than to wholly-owned Subsidiaries of the Company)) that
requires the approval of the Company's shareholders, whether for such
transaction or the issuance of securities in such transaction, if
immediately after giving effect to such transaction, the Persons who
Beneficially Owned Voting Securities or Common Securities immediately
prior to such transaction Beneficially Own in the aggregate Voting
Securities or Common Securities (or voting securities or common
securities in the case of a surviving entity other than the Company)
representing a Voting Ownership Percentage or a Total Ownership
Percentage (or voting power or common equity ownership of common
securities in the case of a surviving entity other than the Company)
on a fully diluted basis of less than 50% immediately after giving
effect to such transaction; or
(c) the consummation by the Company of a plan of
complete liquidation or
dissolution of the Company.
"Change in Control Transaction" means a transaction which,
if consummated, would result in a Change in Control.
"Closing" means the closing of the sale and purchase of
the Shares pursuant to Section 2.1 hereof.
"Closing Date" has the meaning set forth in Section 2.2
hereof.
"Commission" means the Securities and Exchange Commission.
"Common Securities" means the Common Stock, the Series A
Convertible Preferred Stock and any other securities of the Company
(excluding non-voting securities (other than capital stock) issued to
directors, officers or employees of the Company as compensation) to
the extent to which such securities by the terms thereof (i) are not
effectively limited in amount as to dividends or amounts payable upon
liquidation of the Company or (ii) are otherwise a substantial
equivalent of Common Stock as to dividends or upon liquidation of the
Company or upon consummation of a merger or other extraordinary
transaction in which the outstanding shares of Common Stock
participate.
"Common Stock" means the Common Stock, par value $1.00 per
share, of the Company.
"Company" has the meaning set forth in the preamble hereto.
"Company Buy Back Period" means the period beginning on the
Closing Date and ending twelve months thereafter.
"Company Repurchase" has the meaning set forth in Section
6.6(a).
"Competing Investment" means the acquisition by a Competitor
(other than in connection with a Change in Control Transaction) of
Beneficial Ownership of (i) Common Securities (A) directly from the
Company or any Subsidiary of the Company, (B) pursuant to an agreement
with the Company or any of its Subsidiaries (a "Competitor Agreement")
providing either for the issuance or transfer by the Company or any of
its Subsidiaries of such Common Securities or providing for the waiver
or inapplicability of the Amended Rights Agreement (or a Substantially
Similar Plan) with respect to the ownership of such Common Securities,
or (C) where, in connection with such acquisition, the Company waives
or renders the Amended Rights Agreement (or a Substantially Similar
Plan) inapplicable thereto, in each case, if, after giving effect to
such acquisition, the Competitor would, in the case of clauses (A),
(B) and (C) above, to the knowledge of the Company, after reasonable
inquiry, Beneficially Own Common Securities either (x) in excess of
the Trigger Amount (as defined in the Amended Rights Agreement, as
then in effect, as such term (or comparable term) may be amended from
time to time by the Company in its sole discretion) or (y)
representing an Equity Percentage of 15% or more or with a number of
Votes of 15% or more of the Total Voting Power, (ii) Common Securities
representing an Equity Percentage of 15% or more (whether acquired
from the Company or otherwise) (provided that this clause (ii) will
apply only if the Company shall amend, waive or modify the Amended
Rights Agreement as in effect on the date of this Agreement (or a
Substantially Similar Plan) so as to increase the percentage "15%"
referred to in clause (i) of the definition of Trigger Amount in the
Amended Rights Agreement or increase the percentage "10%" or the
fraction "one-fourth (1/4)" referred to in clause (ii) of the
definition thereof or otherwise render the Amended Rights Agreement
inapplicable (including by taking action to cause a Section 11(a)(ii)
Event or Section 13 Event (each as defined in the Amended Rights
Agreement as in effect on the date hereof), not to occur that, absent
such action, would otherwise have occurred, or to redeem the Preferred
Stock Purchase Rights) to an acquisition referred to in this clause
(ii) (whether or not done in connection therewith or in anticipation
thereof) or so as to provide that the acquisition of any additional
shares of Common Stock under the circumstances contemplated by clause
(2) of the proviso to paragraph (a)(ii) of the definition of Acquiring
Person contained in the Amended Rights Agreement (or similar provision
of any Substantially Similar Plan) will not have the effect specified
in said clause (2) (other than any such amendment, waiver,
modification or redemption legally required to be made by the Board as
a result of a shareholder-sponsored resolution or a final and
non-appealable court order, in each case, that is opposed by the
Board; provided, that for purposes of this clause (ii) references to
the "Amended Rights Agreement" shall also refer to a Substantially
Similar Plan in which the term "Trigger Amount" or comparable term
thereto, and the consequences resulting from its occurrence, are
substantially identical to those set forth in the Amended Rights
Agreement on the date of this Agreement including containing the same
percentages and fraction as those set forth above), or (iii) (a)
Common Securities representing an Equity Percentage of 10% or more,
and (b) the right (whether such right is contingent, conditional or
otherwise) to designate or nominate one or more Directors (or if the
Board within five years after the date of the acquisition of shares
specified in clause (a), nominates or appoints any designee of such
Competitor or its Affiliates to the Board). An acquisition of
Beneficial Ownership of Common Securities in excess of a percentage of
Votes shall be deemed to have occurred when, as a result of such
Common Securities becoming entitled to additional Votes by reason of
the passage of time, such securities represent or have a number of
Votes which represent more than the specified percentage and, in the
case of clause (iii)(a) above, an acquisition of Beneficial Ownership
of Common Securities in excess of an Equity Percentage shall be deemed
to have occurred when, as a result of repurchases by the Company of
Common Securities, such securities represent more than the specified
percentage (provided that such 10% level in clause (iii)(a) above
shall not be deemed exceeded by reason of the repurchase of Common
Securities by the Company unless (i) an Equity Percentage of 10.5% or
more is achieved and (ii) the Competitor fails to reduce its
Beneficial Ownership of Common Securities to an Equity Percentage
below 10% within one year after equaling or exceeding the 10.5%
level). Notwithstanding the foregoing, (A) no transaction with a
Person who is not, at the time such transaction is consummated or
entered into, then designated as a Competitor shall be deemed a
Competing Investment as a result of the subsequent designation of such
Person by the Investor as a Competitor, but (B) by way of
illustration, the acquisition of Common Securities from the Company by
a Person (I) after which such acquisition such Person Beneficially
Owned Common Securities in an amount satisfying the 15% requirement of
clause (i) above, and (II) before which acquisition such Person had
been designated a Competitor but whose Beneficial Ownership did not
satisfy such 15% requirement, shall be deemed to be a Competing
Investment.
"Competitor" means any Person that is one of eight
participants in the agricultural chemicals or biotechnology market as
designated to the Company by the Investor as a Competitor (which term
shall include any Controlled Affiliate of each such Competitor and any
13D Group with respect to securities of the Company of which such
Person is a member). The Investor shall provide to the Company prior
to the date of this Agreement, and within 10 Business Days prior to
each anniversary of the Closing Date, a written list of such
Competitors (which Investor may change from year to year as of each
anniversary of the Closing Date) which Competitors shall conform to
the provisions of the definition of Competitor contained herein. The
Competitors so designated shall constitute the Competitors hereunder
for the initial period commencing on the Closing date hereof and
ending one year following the Closing Date and the successive one year
period following each applicable anniversary of the Closing Date and
if no such notice is provided for any year, the Competitors specified
in the notice for the most recent year that such notice was given
shall continue to be deemed the Competitors.
"Competitor Agreement " shall have the meaning set
forth in the definitions of the term "Competing Investment".
"Confidentiality Agreement" has the meaning set forth in
Section 8.1(a) hereof.
"control" with respect to any Person means the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Controlled Affiliate" shall mean, with respect to any
Person, any Affiliate of such Person that is controlled by or that
controls or is under common control with such Person such that, in any
such case, the controlling party has the legal or contractual power
(including, without limitation, through negative control or through
the controlling parties designees or representatives on the board of
directors or other governing body of the parties controlled by the
controlling or under the articles of incorporation or other
constituent documents of such controlled parties or as a result of
voting rights of any securities or other instruments issued by such
controlled parties) to direct or to manage the direction of the
business and policies of such Affiliate.
"Derivative Securities" means any subscriptions, options,
conversion rights, warrants, phantom stock rights or other agreements,
securities or commitments of any kind obligating the Company or any of
its Subsidiaries to issue, grant, deliver or sell, or cause to be
issued, granted, delivered or sold (i) any Common Securities or Voting
Securities of the Company, (ii) any securities convertible into or
exchangeable for any Common Securities or Voting Securities of the
Company, or (iii) any obligations measured by the price or value of
any shares of capital stock of the Company.
"Dilutive Issuance" has the meaning set forth in Section
6.7(e) hereof.
"Director" shall mean a director of the Company.
"Disposition" has the meaning set forth in Section 6.3(a)
hereof.
"Equity Percentage" means, with respect to any Common
Securities calculated at any particular point in time, the ratio,
expressed as a percentage of (a) the total number of shares of Common
Stock included in, or issuable upon conversion of (whether or not then
convertible), or otherwise constituting the economic equivalent of,
such Common Securities over (b) the total number of shares of Common
Stock then outstanding and the number of shares of Common Stock
issuable upon conversion of (whether or not then convertible), or
otherwise constituting the economic equivalent of, all outstanding
Common Securities.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Excluded Person" shall mean (i) any member of the Investor
Group, (ii) any Grandfathered Person, (iii) any wholly owned
Subsidiary of the Company, or (iv) any underwriter temporarily holding
Common Securities in connection with a public offering of such
securities.
"First Offer Price" has the meaning set forth in Section
6.4(a) hereof.
"Fully Independent Director" means a person who qualifies as
an "outside director" of the Company and the Investor within the
meaning of Section 162(m) of the Internal Revenue Code of 1986 as in
effect on the date hereof and who is not (apart from such
directorship) (i) a current or former officer or employee of the
Company or any Affiliate of the Company, (ii) a current or former
director, officer or employee of the Investor or any member of the
Investor Group, (iii) did not in either of the last two completed
calendar years receive, and is not an officer, director, employee,
stockholder holding more than 10% of the voting interest of, partner
or Affiliate of any person ("Entity") that in either of such Entity's
two most recent fiscal years, received, more than 10% of such person's
total revenues from either the Company or the Investor.
"GAAP" means United States generally accepted accounting
principles.
"Governmental Entity" means any government or any agency,
bureau, board, commission, court, department, political subdivision,
tribunal, or other instrumentality of any government (including any
regulatory or administrative agency), whether federal, state or local,
domestic or foreign.
"Grandfathered Person" means any of the Persons specified in
clauses (i) through (vi) of the term "Grandfathered Person" in the
Amended Rights Agreement as in effect on the date of this Agreement
and any 13D Group referred to in clause (B) below; provided, however,
that a Grandfathered Person shall cease to be a Grandfathered Person
if any of the following occur at any time: (A) such Grandfathered
Person, individually or together with one or more other Grandfathered
Persons, acting together or as part of a 13D Group, Beneficially Owns
Common Securities representing an Equity Percentage of 40% or more on
a fully diluted basis, or (B) such Grandfathered Person, individually
or together with one or more Grandfathered Persons, are acting as part
of a 13D Group which includes Persons who are not Grandfathered
Persons and who individually or in the aggregate Beneficially Own,
directly or indirectly, in excess of 1% of the then outstanding Common
Securities provided that the reference to "1%" referred to in this
clause (B) shall be increased to up to 5% so long as the Beneficial
Ownership of the entire 13D Group referred to in this clause (B) does
not have an Equity Percentage greater than 35%.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the regulations promulgated thereunder.
"Independent Director" means a person who is not (apart from
such directorship) (i) a current or former officer or employee of the
Company or any Affiliate of the Company or (ii) a current or former
director, officer or employee of the Investor or any member of the
Investor Group or Other Investor Affiliate.
"Initial Investor Nominee Notice" has the meaning set forth
in Section 5.1(a) hereof.
"Initial Top-Up Period" has the meaning set forth in Section
6.7(b)(i) hereof.
"Investor" has the meaning set forth in the preamble hereto.
"Investor Group" shall mean (a) the Investor, (b) any
Subsidiary of the Investor, (c) any Affiliate of the Investor
controlled by the Investor such that the Investor has the legal or
contractual power (including, without limitation, through negative
control or through the Investor's designees or representatives on the
board of directors or other governing body of such Affiliate or under
the articles of incorporation or other constituent documents of such
Affiliate or as a result of the voting rights of any securities or
other instruments issued by such Affiliate) to cause such Affiliate to
comply with the terms of this Agreement applicable to the Investor,
and (d) any Person with whom the Investor or any Person included in
the foregoing clauses (b) or (c) is part of a 13D Group.
"Investor Nominee Notice" has the meaning set forth in
Section 5.1(a) hereof.
"Investor Nominee" has the meaning set forth in Section
5.1(a) hereof.
"Investor SEC Reports" has the meaning set forth in Section
4.4 hereof.
"Joint Venture Agreement" shall mean (i) the Formation
Agreement, dated as of August 6, 1997, between the Company and the
Investor (the "Formation Agreement") and (ii) the LLC Agreement
referred to therein.
"Junior Preferred Stock" has the meaning set forth in
Section 3.4(a) hereof.
"Law" means any law, treaty, statute, ordinance, code, rule
or regulation of a Governmental Entity.
"Lien" means any security interest, claim, voting agreement,
restriction, option, mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever and any contingent or other agreement to provide any of the
foregoing.
"Loss" has the meaning set forth in Section 6.6(b) hereof.
"Market Price," shall mean on any trading day, with respect
to shares of Common Stock or any other security which is listed on a
national securities exchange, the last sale price regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices regular way, in either case on the NYSE, or, if
the Common Stock or other security is not listed or admitted to
trading on such exchange, on the principal national securities
exchange on which the Common Stock or other security is listed or
admitted to trading, or, if the Common Stock or other security is not
listed or admitted to trading on any national securities exchange but
is designated as national market system security by the NASD, the last
sale price, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, in either case as report
on the NASD Automated Quotation/National Market System, or if the
Common Stock or other security is not so designated as a national
market systems security, the average of the highest reported bid and
lowest reported asked prices as furnished by the NASD or similar
organization if the NASD is no longer reporting such information.
"Material Adverse Effect" means any material adverse effect
on the financial condition, business or operations of the Company and
its Subsidiaries taken as a whole.
"Maximum Offer Price" has the meaning set forth in Section
8.3(a) hereof.
"NASD" has the meaning set forth in Section 6.4(b) hereof.
"NYSE" means the New York Stock Exchange.
"Offer" has the meaning set forth in Section 8.3(a).
"Offer Purchase Price" has the meaning set forth in Section
8.3(a).
"Options" has the meaning set forth in Section 3.3(b)
hereof.
"Order" means any judgment, decree, order, writ, award,
ruling, stipulation, injunction or determination of an arbitrator or
court or other Governmental Entity.
"Other Investor Affiliate" has the meaning set forth in
Section 6.1(A) hereof.
"Ownership Cap" means a Total Ownership Percentage of 20%,
subject to reduction as provided in Section 6.7(b).
"Per Share Price Range" has the meaning set forth in Section
8.3(a).
"Permitted Underwriter" has the meaning set forth in Section
6.3(b)(I) hereof.
"Person" means any individual, corporation, company,
association, partnership, joint venture, limited liability company,
trust or unincorporated organization, group (within the meaning of
Rule 13d-5 under the Exchange Act) or a government or any agency or
political subdivision thereof.
"Pioneer Competitor" means any Person that is one of eight
participants in the seed market within the Field of Interest (as
defined in the Research Alliance Agreement) as designated to the
Investor by the Company as a Pioneer Competitor (which term shall
exclude the Investor and its Subsidiaries but shall include any
Controlled Affiliate of each such Pioneer Competitor, and the persons
specified in writing by the Company to the Investor on the date of
this Agreement, and any 13D Group with respect to voting securities of
the Spin-Off Entity of which such Person is a member). The Company
shall provide to the Investor prior to the date of this Agreement, and
within 10 Business Days prior to each anniversary of the Closing Date,
a written list of such Pioneer Competitors (which the Company may
change from year to year as of each anniversary of the Closing Date)
which Pioneer Competitors shall conform to the provisions of the
definition of Pioneer Competitor contained herein. The Pioneer
Competitors so designated shall constitute the Pioneer Competitors
hereunder for the initial period commencing with the date hereof and
ending one year following the Closing Date and the successive one year
periods following each applicable anniversary of the Closing Date and
if no such notice is provided for any year, the Competitors specified
in the notice for the most recent year that such notice was given
shall continue to be deemed the Pioneer Competitors.
"Post Termination Standstill Period" has the meaning set
forth in Section 6.1(A) hereof.
"Preferred Stock Purchase Rights" means rights to purchase
the Junior Preferred Stock pursuant to the Amended Rights Agreement,
as amended from time to time.
"Process" has the meaning set forth in Section 8.2 hereof.
"Proposal" means any inquiry, indication of interest,
proposal or offer made to the Company or publicly disclosed by any
Person relating to any Change in Control Transaction or Competing
Investment.
"Purchase Price" has the meaning set forth in Section 2.1
hereof.
"Purchaser Standstill Agreement" has the meaning set forth
in Section 6.3(B)(II) hereof.
"Purchasing Person" has the meaning set forth in Section
6.3(b) hereof.
"Reclassification Amendment" shall have the meaning set
forth on Section 8.8.
"Registration Rights Agreement" means the agreement to be
entered into on the Closing Date between the Company and the Investor
in the form set forth in Exhibit A hereto.
"Regulatory Approvals" means any and all certificates,
permits, licenses, franchises, concessions, grants, consents,
approvals, orders, registrations, authorizations, waivers, variances
or clearance from a Governmental Entity.
"Release Event" has the meaning set forth in Section 6.9
hereof.
"Representatives" means, with respect to any Person, any of
such Person's officers, directors, partners, employees, agents,
attorneys, accountants, consultants or financial or other advisors or
other Person associated with or acting on behalf of such Person.
"Required Disposition" has the meaning set forth in Section
6.6(a) hereof.
"Required Disposition Amount" has the meaning set forth in
Section 6.6(a) hereof.
"Requisite Number" has the meaning set forth in Section
8.3(a).
"Research Alliance Agreement" shall mean the Research
Alliance Agreement, dated as of August 6, 1997, between the Company
and the Investor.
"Rights Agreement" means the Amended and Restated Rights
Agreement, dated as of December 13, 1996, by and between the Company
and The First National Bank of Boston, as Rights Agent.
"Rights Agreement Amendment" means the amendment to the
Rights Agreement executed by the Company and the Rights Agent
concurrently herewith in the form set forth in Exhibit B hereto.
"Sale of Ag Products" means (x) a sale or other transfer to
one or more Persons other than a Subsidiary of the Investor of all or
substantially all of the assets or business of the Agricultural
Products business of the Investor or (y) a transfer (whether by sale,
merger or other transaction) of any of the common equity of any Person
through which any such assets are held (such entity or any transferee
pursuant to clause (x) hereof a "Spin-Off Entity") if, after giving
effect to such transfer, such Person is not a Subsidiary of the
Investor, provided that a transfer referred to in this clause (y)
effected by means of a dividend, distribution, bona fide public
offering or otherwise, and a sale or transfer referred to in clause
(x), in either case, shall not be a "Sale of Ag Products" if and for
so long as all of the following conditions are and continue to be
satisfied: (i) the Spin-Off Entity agrees to be and is bound by the
provisions of Section 6.1(A) of the Agreement (to the same extent as
if the Spin-Off Entity were a Subsidiary of the Investor), (ii) the
Spin-Off Entity shall agree to be and is bound by the Research
Alliance Agreement to the same extent as the Investor (it being
understood that in no event shall the Investor be released from any of
its obligations under this Agreement or the Research Alliance
Agreement as a result of the Spin-Off Entity's agreement to the
matters referred to in clauses (i) and (ii) above except that, in the
case of the Research Alliance Agreement, if substantially all of the
research capabilities of the Investor in agricultural products is
transferred to the Spin-Off Entity, then the Investor will continue
pursuant to the Research Alliance Agreement to provide the Company
with, but only with, genomic and biotechnology support sufficient so
that the research available to the Company from the Spin-Off Entity
under the Research Alliance Agreement, when taken together with such
support from the Investor, is substantially the same in scope and
capability as the research available from the Investor prior to the
transfer of such assets to the Spin-Off Entity), (iii) if at any time,
any Person or 13D Group owns 15% or more of any class of voting
securities of the Spin-Off Entity, the Investor and its wholly owned
Subsidiaries must have an interest in the Voting Securities of the
Spin-Off Entity greater than or equal to any other Person or 13D Group
(however, such interest must be greater than that of any Person or 13D
Group which is a Pioneer Competitor), (iv) no Pioneer Competitor may
own voting or common securities of the Spin-Off Entity (A)
representing more than 15% of the common securities or voting power of
the Spin-Off Entity, which securities have been acquired directly from
the Investor or the Spin-Off Entity or a Subsidiary of either, (B)
representing 10% or more of the common securities of the Spin-Off
Entity if the Pioneer Competitor has the right (whether such right is
contingent, conditional or otherwise) to designate or nominate one or
more directors of the Spin-Off Entity (or if the board of directors of
the Spin-Off Entity within five years after the date of acquisition of
shares referred to in this clause (B) nominates any designee of such
Pioneer Competitor or any Affiliate of such Pioneer Competitor to the
board of the Spin-Off Entity), provided that such 10% level in this
clause (B) shall not be deemed exceeded by reason of the repurchase of
common securities by the Spin-Off Entity unless (i) an ownership of
10.5% or more of the common securities is achieved and (ii) the
Pioneer Competitor fails to reduce its Beneficial Ownership of common
securities to an ownership level below 10% within one year after
equaling or exceeding the 10.5% level or (C) representing in excess of
the level of ownership that would cause a triggering event to occur
under any rights plan or "poison pill" adopted by the Spin-Off Entity
and then in effect, and (v) so long as the Investor owns less than 30%
of the common equity of the Spin-Off Entity, the Company has the right
to nominate one representative of the Company to the board of the
Spin-Off Entity analogous to the rights of the Investor under Sections
5.1(b) and (c) and the first sentence of clause (d) thereof (provided
that such representative must be one of the four most senior
executives of the Company, and provided that, if any such
representative of the Company on the board of the Spin-Off Entity is
unable to attend any meeting of such board, the Company shall have the
right to designate an alternate designee of the Company, who is also
one of the four most senior executives of the Company, to attend such
meeting of the board of the Spin-off Entity as an observer) and the
Investor shall use commercially reasonable efforts (including by
voting its voting securities in favor of such nominee) to cause such
nominee to be elected to the board of the Spin-Off Entity (it being
understood that a Sale of Ag Products will be deemed to occur at any
time any of the foregoing conditions cease to be satisfied; provided,
however, that in the case of a failure of either clauses (iii) or (iv)
above, the conditions as to ownership of common securities or voting
securities by a Pioneer Competitor must have ceased to have been
satisfied with respect to any Person or 13D Group only after the
designation (to the extent in effect at such time) by the Company of
such Person or 13D Group as a Pioneer Competitor).
"Section 6.4 Closing" has the meaning set forth in Section
6.4(a) hereof.
"Section 6.4 Price" has the meaning set forth in Section
6.4(b) hereof.
"Section 6.4 Securities" has the meaning set forth in
Section 6.4(a) hereof.
"Section 6.5 Acceptance Notice" has the meaning set forth in
Section 6.5(a) hereof.
"Section 6.5 Closing" has the meaning set forth in Section
6.5(a) hereof.
"Section 6.5 Price" has the meaning set forth in Section
6.5(b) hereof.
"Section 6.5 Securities" has the meaning set forth in
Section 6.5(a) hereof.
"SEC Reports" has the meaning set forth in Section 3.5(a)
hereof.
"Securities Act" means the Securities Act of 1933, as
amended, and the regulations promulgated thereunder.
"Sell Down Period" has the meaning set forth in Section
6.6(a) hereof.
"Series A Convertible Preferred Stock" has the meaning set
forth in Section 2.1 hereof.
"Shares" has the meaning set forth in Section 2.1 hereof.
"Spin-Off Agreement" has the meaning set forth in Section
6.8 hereof.
"Spin-Off Company" means the corporation or other entity the
capital stock or other equity interests of which are distributed in a
Spin-off Distribution.
"Spin-Off Distribution" means any distribution by the
Company to all holders of Common Securities of capital stock of or
other equity interests in any corporation or entity other than the
Company.
"Spin-Off Entity" has the meaning set forth in the
definition of the term "Sale of Ag Products".
"Standstill Period" means the period commencing on the date
hereof and ending on the termination of this Agreement pursuant to
Section 10.1; subject to extension upon the occurrence of a Trigger
Event or a Release Event as provided in Section 10.2(iv).
"Subsidiary" means, as to any Person, any other Person more
than fifty percent (50%) of the shares of the voting stock or other
voting interests of which are owned or controlled, or the ability to
select or elect more than fifty percent (50%) of the directors or
similar managers is held, directly or indirectly, by such first Person
or one or more of its Subsidiaries or by such first Person and one or
more of its Subsidiaries. A Subsidiary that is directly or indirectly
wholly-owned by another Person except for directors' qualifying shares
shall be deemed wholly-owned for purposes of this Agreement.
"Substantially Similar Plan" has the meaning set forth in
Section 8.4 hereof.
"Surviving Change in Control Transaction" has the meaning
set forth in Section 8.2(b).
"13D Group" shall mean any group of Persons who, with
respect to those acquiring, holding, voting or disposing of Voting
Securities would, assuming ownership of the requisite percentage
thereof, be required under Section 13(d) of the Exchange Act and the
rules and regulations thereunder to file a statement on Schedule 13D
with the SEC as a "person" within the meaning of Section 13(d)(3) of
the Exchange Act, or who would be considered a "person" for purposes
of Section 13(g)(3) of the Exchange Act. "13D Group" when used with
reference to standards or tests that are based on securities other
than Voting Securities shall have the foregoing meaning except that
the words "Voting Securities" in the second line of the definition of
"13D Group", (i) in the case of standards or tests based on
"securities of the Company", shall be replaced with the words
"securities of the Company", and (ii) in the case of standards or
tests based on "voting securities of the Spin-Off Entity", shall be
replaced with the words "voting securities of the Spin-Off Entity."
"Third Party Offer" has meaning set forth in Section 6.4(a)
hereof.
"Total Ownership Percentage" means, with respect to any
Person calculated at a particular point in time, the ratio, expressed
as a percentage, of (a) the total number of shares of Common Stock
Beneficially Owned by such Person and issuable upon conversion of
(whether or not then convertible), or otherwise constituting the
economic equivalent of, all Common Securities Beneficially Owned by
such Person, over (b) the total number of shares of Common Stock then
outstanding and the number of shares of Common Stock issuable upon
conversion (whether or not then convertible) of, or otherwise
constituting the economic equivalent of, all outstanding Common
Securities.
"Total Voting Power" shall mean, calculated at a particular
point in time, the aggregate Votes represented by all then outstanding
Voting Securities then entitled to vote (a) as estimated conclusively
for purposes of the definition of the terms "Change in Control" and
"Competing Investment" at any time in good faith by the Company on the
assumption that all holders of Common Stock who would, upon taking the
necessary documentation steps under the Articles of Incorporation, be
entitled to five votes per share at such time, have effectively taken
such steps, it being understood that it will be necessary for the
Company to make various assumptions in connection therewith (such as
identity of holders and period of ownership of shares of Common Stock)
and (b) for all other purposes of this Agreement, based on the number
of Votes as were actually entitled to vote at the then current or the
most recent meeting of shareholders as determined by the Company which
excludes any estimation of any kind (including, as to who would have
been entitled to 5 votes per share if such shareholder had taken the
requisite steps to obtain such vote) plus, without duplication of any
Votes otherwise taken into account, the number of Votes attributable
to any Voting Securities issued by the Company since the most recent
meeting of shareholders of the Company.
"Transaction Agreements" means this Agreement, the
Registration Rights Agreement and the Rights Agreement Amendment.
"Transfer" has the meaning set forth in Section 6.7(b)(iii).
"Transfer Notice" has the meaning set forth in Section
6.4(a) hereof.
"Trigger Event" has the meaning set forth in Section 6.10
hereof.
"Unsolicited Offer" has the meaning set forth in Section
6.3(e) hereof.
"Votes" shall mean, at any time, with respect to any Voting
Securities, the total number of votes that would be entitled to be
cast by the holders of such Voting Securities generally (by the terms
of such Voting Securities, the Articles of Incorporation or any
certificate of designations for such Voting Securities) in a meeting
for the election of Directors held at such time, including the votes
that would be able to be cast by holders of shares of Series A
Convertible Preferred Stock.
"Voting Amendment" has the meaning set forth in Section
6.2(a) hereof.
"Voting Ownership Percentage" shall mean, calculated at a
particular point in time, the Voting Power represented by the Voting
Securities Beneficially Owned by the Person whose Voting Ownership
Percentage is being determined.
"Voting Power" shall mean, calculated at a particular point
in time, the ratio, expressed as a percentage, of (a) the Votes
represented by the Voting Securities with respect to which the Voting
Power is being determined to (b) Total Voting Power.
"Voting Securities" means the shares of Common Stock, the
Series A Convertible Preferred Stock and any other securities of the
Company entitled to vote generally for the election of directors, and
any securities (other than employee stock options) which are
convertible into, or exercisable or exchangeable for, Voting
Securities.
Section 1.2. General Interpretive Principles. Whenever used
in this Agreement, except as otherwise expressly provided or unless
the context otherwise requires, any noun or pronoun shall be deemed to
include the plural as well as the singular and to cover all genders.
The name assigned this Agreement and the section captions used herein
are for convenience of reference only and shall not be construed to
affect the meaning, construction or effect hereof. Unless otherwise
specified, the terms "hereof," "herein" and similar terms refer to
this Agreement as a whole (including the exhibits, schedules and
disclosure statements hereto), and references herein to Sections refer
to Sections of this Agreement.
SECTION 2
ISSUANCE AND SALE OF SHARES
Section 2.1. Issuance and Sale of Shares. Upon the terms and
subject to the conditions set forth in this Agreement, and in reliance
upon the representations and warranties hereinafter set forth, on the
Closing Date, the Company will issue, sell and deliver to the
Investor, and the Investor will purchase from the Company, 164,445.86
shares of Series A Convertible Preferred Stock of the Company, par
value $.01 per share, having the terms set forth in the Certificate of
Designation attached hereto as Exhibit C (the "Series A Convertible
Preferred Stock"), together with the associated Preferred Stock
Purchase Rights (such shares of Series A Convertible Preferred Stock,
together with such Preferred Stock Purchase Rights, the "Shares"),
free and clear of all Liens (other than Liens pursuant to this
Agreement), for an aggregate purchase price of $1,710,236,944 (the
"Purchase Price").
Section 2.2. Closing. (a) The Closing shall take place at
the offices of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx at 10:00 a.m.,
Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, XX 00000, New York City time, on the
Business Day of the satisfaction or concurrent satisfaction or, if
permissible, waiver of the conditions set forth in Sections 9.1 and
9.2 hereof (the "Closing Date") or at such other time and place as the
parties may agree.
(b) At the Closing (i) the Company will deliver to the
Investor certificates representing the Shares against payment of the
Purchase Price, registered in the name of the Investor, or any
wholly-owned United States Subsidiary of the Investor designated by it
(provided that such Subsidiary agrees in writing to be bound by this
Agreement to the same extent as the Investor and such Subsidiary at
all times remains a wholly-owned United States Subsidiary of the
Investor), together with the other documents and certificates to be
delivered pursuant to Section 9.1 hereof, and (ii) the Investor, in
full payment for the Shares, will deliver to the Company an amount
equal to the Purchase Price in immediately available funds by wire
transfer to the account designated by the Company, at least two
Business Days prior to the Closing Date, or by such other means as may
be agreed by the parties, together with the other documents and
certificates to be delivered pursuant to Section 9.2 hereof.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to, and agrees
with, the Investor as follows:
Section 3.1. Corporate Organization and Qualification. Each
of the Company and its material Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate
power and authority to own or lease its assets and to conduct its
business. Each of the Company and its Subsidiaries is duly licensed or
qualified as a foreign corporation for the transaction of its business
and is in good standing under the laws of each other jurisdiction in
which its ownership, lease or operation of property or conduct of its
business requires such qualification, except where the failure to be
so licensed, authorized and qualified and in good standing would not
reasonably be expected to have a Material Adverse Effect. The Company
has made available to the Investor a complete and correct copy of the
Articles of Incorporation and the Bylaws of the Company, in each case
as amended to date, and each of which as so made available, as the
case may be, is in full force and effect.
Section 3.2. Authorization of Agreements. (a) The Company
has all requisite corporate power and authority to execute, deliver
and perform its obligations under the Transaction Agreements, to issue
and sell the shares of Series A Convertible Preferred Stock to be sold
to the Investor (or its permitted designee) hereunder and the shares
of Common Stock issuable upon the conversion thereof and to otherwise
consummate the transactions contemplated hereby and thereby and such
issuance, sale and delivery of such shares of Series A Convertible
Preferred Stock to the Investor (or its permitted designee) will
convey to the Investor (or its permitted designee) (and any issuance
of Common Stock upon any such conversion will convey to the Person to
whom such Common Stock is issued) good and marketable title to such
shares, free and clear of all Liens, other than Liens arising pursuant
to any Transaction Agreement. The execution, delivery and performance
of the Transaction Agreements, and the consummation by the Company of
the transactions contemplated hereby and thereby, have been approved
by the Board of Directors (by the vote of the directors as advised by
the Company to the Investor in writing prior to the execution of this
Agreement) and have been duly authorized by all other necessary
corporate action on the part of the Company. The Company has taken the
corporate action necessary to approve the transactions contemplated by
this Agreement for purposes of Section 490.1109 of the Business
Corporation Act of the State of Iowa and to provide that the
Transaction Agreements and the transactions contemplated thereby shall
be exempt from the requirements of any "moratorium," "control share,"
"fair price" or other anti-takeover laws or regulations of any state
which, to the knowledge of the Company, is reasonably likely to
otherwise be applicable thereto.
(b) Each of this Agreement and the Rights Agreement
Amendment have been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general principles of equity. The
Registration Rights Agreement, when executed, will have been duly
executed and delivered by the Company and will constitute a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and
to general principles of equity.
(c) The execution, delivery and performance of the
Transaction Agreements and the acquisition of the Shares contemplated
thereby and the issuance of Common Stock to the Investor Group upon
the conversion thereof in accordance with the Certificate of
Designation for the Series A Convertible Preferred Stock will not
cause a Distribution Date or constitute a Triggering Event, a Section
11(a)(ii) Event or a Section 13 Event (in each case, as defined in the
Amended Rights Agreement) under the Amended Rights Agreement.
Section 3.3. Consents; No Conflicts. (a) Except for (i) the
expiration of the waiting period under the HSR Act, (ii) if necessary,
the approval of the NYSE required for listing of the Common Stock into
which the Series A Convertible Preferred Stock is convertible, (iii)
all consents, authorizations, orders and approvals of, and all filings
and registrations, including the effectiveness of a registration
statement and applicable "Blue Sky" clearance and, in each case
required for, or in connection with, the consummation of the
transactions contemplated by the Registration Rights Agreement, and
(iv) the Regulatory Approvals set forth on Schedule 3.3, no Regulatory
Approval from, or registration, declaration, notice or filing with,
any Governmental Entity is required to be made or obtained by the
Company or any of its Subsidiaries in connection with the execution,
delivery and performance of the Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby,
except for such Regulatory Approvals, registrations, declarations,
notices and filings, (A) the failures of which to be made or obtained,
would not in the aggregate reasonably be expected to have a Material
Adverse Effect, or (B) which are applicable by reason of any facts
specifically relating to, or the particular regulatory status of, the
Investor.
(b) The execution and delivery of this Agreement and the
Rights Agreement Amendment does not, and the execution and delivery of
the Registration Rights Agreement will not, and the performance of the
obligations set forth herein and therein and the consummation of the
transactions contemplated hereby and thereby will not, (i) violate any
provision of the Articles of Incorporation or the Bylaws or the other
organizational documents of the Company or the comparable governing
instruments of any of its material Subsidiaries; (ii) conflict with,
contravene or result in a breach or violation of any of the terms or
provisions of, or constitute a default (with or without notice or the
passage of time) under, or result in or give rise to a right of
termination, cancellation, acceleration, amendment or modification of
any right or obligation under, or to a loss of any benefit to which
any of the Company or its Subsidiaries is entitled, or give rise to a
right to put or to compel a tender offer for outstanding securities of
the Company or any of its Subsidiaries under, or require any consent,
waiver, provision of notice or approval under, any note, bond, debt
instrument, indenture, mortgage, deed of trust, lease, loan agreement,
joint venture agreement, Regulatory Approval, contract or any other
agreement, instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any property of the Company or any of its Subsidiaries
is bound; (iii) result in the creation or imposition of any Lien upon
any assets or properties of the Company or any of its Subsidiaries
except pursuant to any Transaction Agreement; or (iv) violate or
conflict with any Law or Order applicable to the Company or any of its
Subsidiaries or any of their respective assets or properties of any
Governmental Entity having jurisdiction over the Company or any of its
Subsidiaries or any of their respective assets or properties, except
in the case of clause (ii), clause (iii) and clause (iv) for such
violations, conflicts, defaults, creation of Liens and other matters
which would not in the aggregate reasonably be expected to have a
Material Adverse Effect.
Section 3.4. Capitalization. (a) The authorized capital
stock of the Company consists of (i) 150,000,000 shares of Common
Stock, of which 82,222,935 shares are issued and outstanding and (ii)
10,000,000 shares of preferred stock, no par value, of which (x)
150,000 shares have been designated Junior Participating Preferred
Stock (the "Junior Preferred Stock"), of which no shares are
outstanding and (y) 200,000 shares have been designated Series A
Convertible Preferred Stock, of which no shares are outstanding. All
of such outstanding shares of Common Stock were duly authorized and
validly issued and are fully paid and non-assessable.
(b) Other than (i) shares of Common Stock reserved for
issuance pursuant to the Company's stock option plan (the "Options"),
(ii) shares of Common Stock reserved for issuance upon conversion of
the Series A Convertible Preferred Stock and (iii) shares of Junior
Preferred Stock reserved for issuance upon exercise of the currently
existing Preferred Stock Purchase Rights, and except as set forth on
Schedule 3.4(b)(1), there are not authorized or outstanding (or any
obligations to authorize or issue) any Derivative Securities or any
contract, agreement or understanding to pay any dividend on or make
any distribution with respect to any capital stock or other securities
of the Company. Schedule 3.4(b)(2) sets forth the terms (including,
without limitation, the exercise price and the expiration date) and
number of each type of Derivative Securities outstanding. The
transactions contemplated hereby will not affect the terms and
provisions of, and will not alter the rights of holders of, any
Derivative Securities, including but not limited to any anti-dilution
adjustments to the number of outstanding Options, the exercise price
thereof or the number of shares of Common Stock to be acquired upon
exercise thereof. Other than pursuant to the Transaction Agreements
and the Rights Agreement, there are no restrictions on the transfer of
shares of capital stock of the Company, and no contract, agreement or
understanding to which the Company is a party exists among holders of
capital stock of the Company with respect to the ownership, holding,
voting or any other rights or obligations with respect to such capital
stock, except as set forth in Schedule 3.4(b)(3).
(c) The shares of Series A Convertible Preferred Stock to be
issued pursuant to this Agreement and the shares of Common Stock
issuable upon conversion of such shares have been duly and validly
authorized and, when such shares are issued as contemplated by this
Agreement, will have been validly issued, fully paid and
non-assessable. There are no, and the issuance and sale of the Series
A Convertible Preferred Stock pursuant to this Agreement and the
issuance of shares of Common Stock upon conversion of the Series A
Convertible Preferred Stock will not give rise to any, preemptive
rights, rights of first refusal or other similar rights on behalf of
any Person under any provision of applicable Law or any provision of
the Articles of Incorporation or Bylaws of the Company or of any
agreement or instrument to which the Company or any of its material
Subsidiaries is a party or by which the Company or any of its material
Subsidiaries is bound in respect of any capital stock or other
securities of the Company or its material Subsidiaries other than
pursuant to the Transaction Agreements. No consent or approval of the
Company's shareholders is required by Law, the Articles of
Incorporation or Bylaws or otherwise for the execution, delivery and
performance by the Company of the Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby.
Section 3.5. Company Reports; Financial Statements. (a) The
Company has delivered to the Investor a true and complete copy of (i)
the Company's Annual Report on Form 10-K for the fiscal years ended
August 31, 1996, 1995 and 1994; (ii) the Company's Quarterly Report on
Form 10-Q for the periods ended November 30, 1996, February 29, 1997
and May 30, 1997; and (iii) each registration statement, report on
Form 8-K and Form 8-A, proxy statement, information statement or other
document, report or statement filed by the Company or any of its
Subsidiaries with the Commission since December 31, 1994, in each case
in the form (including financial statements, schedules, exhibits and
any amendments thereto) filed with the Commission (collectively, the
"SEC Reports"). As of their respective dates, the SEC Reports (i) were
timely filed with the Commission; (ii) complied, in all material
respects, with the applicable requirements of the Exchange Act and the
Securities Act; and (iii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Other
than the SEC Reports, the Company and its Subsidiaries have not filed
or been required to file any other reports or statements with the
Commission since December 31, 1994.
(b) Each of (i) the consolidated balance sheets (including
the related notes and schedules) included in or incorporated by
reference into the SEC Reports fairly presents the consolidated
financial position of the Company and its Subsidiaries as of the date
thereof, subject, in the case of unaudited statements, to normal
year-end adjustments, and (ii) the consolidated statements of income
(or statements of results of operations), shareholders' equity and
cash flows (including the related notes and schedules) included in or
incorporated by reference into the SEC Reports fairly presents the
results of operations, retained earnings and cash flows, as the case
may be, of the Company and its Subsidiaries (on a consolidated basis)
for the periods set forth therein (subject, in the case of unaudited
statements, to normal year-end adjustments and except as permitted by
Form 10-Q of the Commission) in each case in accordance with GAAP
applied on a consistent basis throughout the periods covered (except
as stated therein or in the notes thereto) and in compliance with the
rules and regulations of the Commission.
Section 3.6. Absence of Certain Changes. Except for
transactions contemplated by the Transaction Agreements or as
disclosed in the SEC Reports or as set forth in Schedule 3.6, since
August 31, 1996, there have not been any changes, conditions,
occurrences, circumstances or other events that have had or would
reasonably be expected to have a Material Adverse Effect.
Section 3.7. Litigation. Except as disclosed in SEC Reports
and Schedule 3.7 hereto, there are no claims, suits, actions,
proceedings, arbitrations or investigations pending or, to the
knowledge of the Company, threatened in writing against the Company or
any of its material Subsidiaries that in the aggregate would
reasonably be expected to have a Material Adverse Effect; nor are
there any Orders outstanding against or applicable to the Company or
any of its material Subsidiaries or against or applicable to any of
their respective assets, properties or businesses which would
reasonably be expected to have a Material Adverse Effect.
Section 3.8. Compliance with Laws; Regulatory Approvals.
Except as disclosed in the SEC Reports and except for matters which in
the aggregate would not have a Material Adverse Effect, the Company
and its Subsidiaries are in compliance with all applicable Laws.
Except, for matters which in the aggregate, as would not have a
Material Adverse Effect, (a) all material Regulatory Approvals
required by the Company and its Subsidiaries to conduct their
respective business as now conducted by them have been obtained and
are in full force and effect and (b) the Company and its Subsidiaries
are in compliance in all material respects with the terms and
requirements of such Regulatory Approvals.
Section 3.9. Exemption from Registration. Assuming the
representations and warranties of the Investor set forth in Section 4
hereof are true and correct, the offer and sale of the shares of
Series A Convertible Preferred Stock made pursuant to this Agreement
will be in compliance with the Securities Act and any applicable state
securities laws and will be exempt from the registration requirements
of the Securities Act and such state securities laws.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor hereby represents and warrants to, and agrees
with, the Company as follows:
Section 4.1. Organization. The Investor is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite power and authority to
own or lease its assets and to conduct its business.
Section 4.2. Authorization of Agreements. (a) The Investor
has all requisite power and authority to execute, deliver and perform
its obligations under this Agreement, the Registration Rights
Agreement and each other document, instrument or certificate to be
executed by the Investor in connection with the consummation of the
transactions contemplated by this Agreement. The execution, delivery
and performance of this Agreement and the Registration Rights
Agreement, and the consummation by the Investor of the transactions
contemplated hereby and thereby, have been approved by the board of
directors of the Investor (by the vote of the directors as advised by
the Investor to the Company in writing prior to execution of this
Agreement) and have been duly authorized by all other necessary
corporate action on the part of the Investor.
(b) This Agreement has been duly executed and delivered by
the Investor and constitutes a valid and binding obligation of the
Investor, enforceable against the Investor in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general principles of
equity. The Registration Rights Agreement, when executed, will have
been duly executed and delivered by the Investor and will constitute a
valid and binding obligation of the Investor, enforceable against the
Investor in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally and to general principles of equity.
Section 4.3. Consents; No Conflicts. (a) Except for (i) the
expiration of the waiting period under the HSR Act, (ii) all consents,
authorizations, orders and approvals of, and filing and registrations
including the effectiveness of a registration statement and applicable
"Blue Sky" clearance required for, or in connection with, the
consummation of the transactions contemplated by the Registration
Rights Agreement, and (iii) the Regulatory Approvals set forth on
Schedule 4.3, no Regulatory Approval from, or registration,
declaration, notice or filing with, any Governmental Entity is
required to be made or obtained by the Investor in connection with the
execution, delivery and performance of this Agreement and the
Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby except for such Regulatory Approvals,
registrations, declarations, notices and filings, (A) the failures of
which to make or obtain would not reasonably be expected to have a
material adverse effect on the ability of the Investor to consummate
or to perform its obligations under the Transaction Documents, or (B)
which are applicable by reason of any facts specifically relating to,
or the particular regulatory status of, the Company or its
Subsidiaries.
(b) The execution and delivery of this Agreement does not,
and the execution and delivery of the Registration Rights Agreement
will not, and the performance of the obligations set forth herein and
therein and the consummation of the transactions contemplated hereby
and thereby will not, (i) violate any provision of the certificate of
incorporation, by-laws or the other organizational documents of the
Investor or any of its material Subsidiaries; (ii) give rise to a
right to put or to compel a tender offer for outstanding securities of
the Investor or any of its Subsidiaries under, or require any consent,
waiver, provision of notice or approval under, any note, bond, debt
instrument, indenture, mortgage, deed of trust, lease, loan agreement,
joint venture agreement, Regulatory Approval, contract or any other
agreement, instrument or obligation to which the Investor or any of
its Subsidiaries is a party or by which the Investor or any property
of the Investor or any of its material Subsidiaries is bound; (iii)
result in the creation or imposition of any Lien upon the Series A
Convertible Preferred Stock to be issued to the Investor pursuant to
this Agreement, other than pursuant to a Transaction Agreement or (iv)
violate or conflict with any Law or Order applicable to the Investor
or any of its Subsidiaries or any of their respective assets or
properties of any Governmental Entity having jurisdiction over the
Investor or any of its Subsidiaries or any of their respective assets
or properties, except in the case of clause (ii), clause (iii) and
clause (iv) for such violations, conflicts, defaults, creation of
Liens and other matters which would not reasonably be expected to have
a material adverse effect on the ability of the Investor to consummate
or to perform its obligations under the Transaction Documents.
Section 4.4. Investor Reports; Financial Statements. (a) The
Investor has delivered to the Company a true and complete copy of (i)
the Investor's Annual Report on Form 10-K for the fiscal years ended
December 31, 1996, 1995 and 1994; (ii) the Investor's Quarterly Report
on Form 10-Q for the period ended March 31, 1997; and (iii) each
registration statement, report on Form 8-K and Form 8-A, proxy
statement, information statement or other document, report or
statement filed by the Investor or any of its Subsidiaries with the
Commission since December 31, 1994, in each case in the form
(including financial statements, schedules, exhibits and any
amendments thereto) filed with the Commission (collectively, the
"Investor SEC Reports"). As of their respective dates, the Investor
SEC Reports (i) were timely filed with the Commission; (ii) complied,
in all material respects, with the applicable requirements of the
Exchange Act and the Securities Act; and (iii) did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. Other than the SEC Reports, the Investor
and its Subsidiaries have not filed or been required to file any other
reports or statements with the Commission since December 31, 1994.
(b) Each of (i) the consolidated balance sheets (including
the related notes and schedules) included in or incorporated by
reference into the Investor SEC Reports fairly presents the
consolidated financial position of the Investor and its Subsidiaries
as of the date thereof, subject, in the case of unaudited statements,
to normal year-end adjustments, and (ii) the consolidated statements
of income (or statements of results of operations), shareholders'
equity and cash flows (including the related notes and schedules)
included in or incorporated by reference into the Investor SEC Reports
fairly presents the results of operations, retained earnings and cash
flows, as the case may be, of the Investor and its Subsidiaries (on a
consolidated basis) for the periods set forth therein (subject, in the
case of unaudited statements, to normal year-end adjustments and
except, as permitted by Form 10-Q of the Commission) in each case in
accordance with GAAP applied on a consistent basis throughout the
periods covered (except as stated therein or in the notes thereto) and
in compliance with the rules and regulations of the Commission.
Section 4.5. Absence of Certain Changes. Except for
transactions contemplated by the Transaction Agreements or as
disclosed in the Investor SEC Reports or as set forth in Schedule 4.5,
since December 31, 1996 there have not been any changes, conditions,
occurrences, circumstances or other events that have had or would
reasonably be expected to have a material adverse effect on the
financial condition of the Investor and its Subsidiaries, taken as a
whole.
Section 4.6. Purchase for Purpose of Investment. The
Investor (or its permitted designee) is acquiring the Shares under
this Agreement for its own account solely for the purpose of
investment and not with a view to, or for sale in connection with, any
distribution thereof in violation of the Securities Act. The Investor
acknowledges that the shares of Series A Convertible Preferred Stock
to be acquired by it or any other member of the Investor Group have
not been registered under the Securities Act and may be sold or
disposed of in the absence of such registration only pursuant to any
exemption from such registration and in accordance with the terms of
the Transaction Agreements. Neither the Investor nor any other member
of the Investor Group Beneficially Owns any Voting Securities.
SECTION 5
GOVERNANCE
Section 5.1. Directors Designated by the Shareholder. (a)
Immediately following the Closing, the Board shall appoint as
additional Directors the two (2) Investor Nominees (as defined in
Section 5.1(b) below) who have been designated by the Investor in the
Investor Nominee Notice (as defined in Section 5.1(b) below) attached
as Exhibit D hereto (the "Initial Investor Nominee Notice"). One
Investor Nominee shall be placed in the class of Directors next
standing for election, and the remaining Investor Nominee shall be
placed in the class of Directors next but one standing for election.
In addition, if at any time following the annual meeting of
shareholders to be held in January 1999, the number of members
constituting the entire Board of Directors shall equal or exceed 15,
including the Investor Nominees appointed pursuant to the previous
sentence, the Investor shall be entitled to designate pursuant to an
Investor Nominee Notice, and the Board shall appoint to the Board, an
additional Investor Nominee in accordance with the provisions of this
Section 5, provided that, for purposes of this sentence (but not for
purposes of requiring the resignation of any Investor Nominee pursuant
to Section 5.2(w)), the number of directors constituting the entire
Board of Directors at any time after the annual meeting of
shareholders to be held in January 2000 shall exclude any Director who
has advised (and not withdrawn) the Company of his or her intention,
or would be scheduled pursuant to the policies of the Company, to
retire or resign from the Board within 12 months of the date as of
which the determination pursuant to this sentence is being made;
provided, further, that no such Director shall be excluded for
purposes of determining the number of directors constituting the
entire Board for a period of greater than 12 consecutive months until
he or she no longer serves as a member of the Board. Any such
additional Investor Nominee shall be placed in the class of Directors
which does not include an Investor Nominee. In the event of a vacancy
caused by the disqualification, removal, resignation or other
cessation of service of any Investor Nominee from the Board, the Board
shall elect as a Director (to serve until the Company's immediately
succeeding annual meeting of shareholders) a new Investor Nominee who
has been designated by the Investor in an additional Investor Nominee
Notice that has been provided to the Company at least seven (7) days
prior the date of a regular meeting of the Board. The Investor shall
nominate each Investor Nominee pursuant to an additional Investor
Nominee Notice in advance of each meeting of shareholders at which
such Investor Nominee is to be elected.
(b) The Investor shall provide notice to the Company (the
"Investor Nominee Notice") as required by Section 5.1(a) above for
each Investor Nominee, which notice shall contain the following
information: (i) the name of the person(s) it has designated to become
Director(s) (the "Investor Nominees"), and (ii) all information
required by Regulation 14A and Schedule 14A under the Exchange Act
with respect to each such Investor Nominee. Subject to Section 5.1(c)
below, (x) if there shall be two or fewer Investor Nominees, such
Investor Nominees may be any person designated by the Investor,
including persons who are officers, directors or employees of the
Investor; and (y) if there shall be three Investor Nominees, two of
such Investor Nominees may be persons described in clause (x) above
and one Investor Nominee shall be an Independent Director.
(c) Any proposed Investor Nominee shall be a person
acceptable to the Board in its reasonable discretion prior to the
initial appointment, or election, as the case may be of each Investor
Nominee to the Board; provided, that at any time (i) any of the five
most senior executives of the Investor (as determined by the Investor
in its reasonable discretion) and (ii) the head of the Investor's
Agricultural Products business, so long as (subject to the following
proviso) such business is owned by the Investor or a Subsidiary of the
Investor, each shall be conclusively deemed to be acceptable to the
Board for purposes of this Section 5.1(c); and provided, further, that
once an Investor Nominee is accepted by, or deemed acceptable to, the
Board, such person shall thereafter be conclusively deemed to be
acceptable pursuant to this Agreement (together with such persons
specified in the foregoing clauses (i) and (ii), the "Pre-Approved
Persons"). Any objection by the Company to a proposed Investor Nominee
must be made no later than five Business Days after the Investor
delivers the applicable Investor Nominee Notice for the proposed
Investor Nominee; provided, however, that the Company shall in all
cases notify the Investor of any such objection sufficiently in
advance of the date on which proxy materials are mailed by the Company
in connection with such election of directors to enable the Investor
to propose an alternate Investor Nominee pursuant to and in accordance
with the terms of this Agreement.
(d) The Company agrees, subject to Section 5.1(c) above and
Section 5.2 below, to include such Investor Nominee to be added to or
retained on the Board pursuant to this Agreement in the slate of
nominees recommended by the Board to the Company's shareholders for
election as Directors and shall use its reasonable efforts to cause
the election or reelection of each such Investor Nominee to the Board
at each meeting of shareholders at which such Investor Nominee is up
for election, including soliciting proxies in favor of the election of
such persons, it being understood that efforts consistent with those
used for other members of the slate recommended by the Board shall be
deemed reasonable. In the event that, notwithstanding the provisions
of this Section 5.1(d), any one or more Investor Nominees is not
elected to the Board then, at the written request of the Investor made
within 30 days after the date of the shareholder meeting at which such
Investor Nominee was not elected, either, as directed by the Investor,
(a) the Company shall promptly call a special meeting of the Company's
shareholders proposing the election of such Investor Nominees not
elected to the Board or an alternative Investor Nominee as may be
designated by the Investor in accordance with Section 5.1 and in
connection with such special meeting shall use its reasonable efforts
to cause the election of such Investor Nominees by the shareholders of
the Company, including recommending the election of such Investor
Nominees and soliciting proxies in favor of the election of such
Investor Nominees by the shareholders of the Company; or (b) the
Company shall appoint another individual selected by the Investor, who
shall be a Fully Independent Director and shall otherwise qualify
under Section 5.1(c), as an additional Director of the Company who
shall serve for a term co-extensive with the term such Investor
Nominee would have served if such Investor Nominee had been elected
(provided that the Investor shall cause such additional Director to
resign at such time as an Investor Nominee is elected to the Board
seat that would have been held by the Investor Nominee whose failure
to be elected triggered the Investor's right to designate such
additional Director). In connection with the expiration of the term of
office of any Fully Independent Director appointed in accordance with
the foregoing clause (b), the Investor shall be free to designate an
Investor Nominee in accordance with this Section 5.1 to replace such
Fully Independent Director. In the event the Investor elects to call a
special meeting of stockholders pursuant to clause (a), the Company
shall, until such time as the Investor Nominee being proposed by the
Investor is elected to the Board, invite such Investor Nominee who was
not elected to the Board to attend meetings of the Board as an
observer and the Company shall afford to such Investor Nominee, on as
nearly equivalent basis as is possible (other than the right to vote)
as would have been the case if such Investor Nominee had been elected
to the Board, the opportunity to meaningfully participate in, express
views with respect to and have influence on the deliberations of the
Board, including through receipt, at the same time as the Board
receives the same, of all information and material as is distributed
to the Board. Notwithstanding the foregoing, if at any time as a
result of the failure of all Investor Nominees designated by the
Investor who are not Independent Directors or Fully Independent
Directors to be elected to the Board as provided in this Section 5.1,
the Investor Nominees shall consist entirely of Independent Directors
and Fully Independent Directors, the Investor shall be entitled to
designate one individual who is an officer, employee or director of
the Investor and who qualifies as an Investor Nominee under Section
5.1(c) to serve as an observer at the meetings of the Board in
accordance with the foregoing sentence until such time as an Investor
Nominee designated by the Investor who is not an Independent Director
or a Fully Independent Director shall be elected by the shareholders
of the Company to the Board provided that the foregoing right to
designate an observer shall not apply if the Investor shall have
(without being required by this Agreement to do so) designated for
election to the Board pursuant to Section 5.1(a) only Investor
Nominees who were Independent Directors or a Fully Independent
Director. If the Board of Directors shall cease to be a classified
board, the Investor shall be entitled to present to the Board of
Directors or the Nominating Committee thereof the full number of
Investor Nominees for election to the Board of Directors at each
annual meeting of shareholders of the Company contemplated by
paragraph (a) above (without regard to the provisions regarding
classes of directors contained therein). At the direction of the
Investor, the Company shall use reasonable efforts to cause the
removal from the Board of Directors of any Investor Nominee (other
than an Independent Director or Fully Independent Director).
(e) The Investor agrees, to the extent required by Iowa law,
to cause the Investor Nominees to comply with the standards for
recusal from Board meetings applicable to all members of the Board.
Except for any Investor Nominee who is an Independent Director or a
Fully Independent Director, the Investor acknowledges that the
Investor Nominees to the Board will not be entitled to receive any
compensation as directors.
Section 5.2. Resignation of Investor Nominees. Unless
otherwise agreed by the Company, (w) at any time that there are three
Investor Nominees serving on the Board, the Investor shall cause one
of the Investor Nominees then serving on the Board to offer his or her
resignation from the Board immediately upon the number of directors
constituting the entire Board constituting 15 or fewer, (x) the
Investor shall cause all of the Investor Nominees then serving on the
Board to offer their resignations from the Board immediately upon
either (i) at any time after the Initial Top-Up Period the Investor
Group's Total Ownership Percentage falls below 10% for twelve
consecutive months (subject to extension by the number of days equal
to the period of time purchases by the Investor Group would be
prohibited by Section 6.7(b)(iv) or Section 6.7(d)) or (ii) the
Ownership Cap is at any time less than 10%; (y) the Investor shall
cause Investor Nominees then serving on the Board to offer his or her
resignations from the Board immediately upon the Ownership Cap at any
time being less than 18%, so that the total number of Investor
Nominees does not exceed 2 at any time thereafter; and (z) the
Investor shall cause all of the Investor Nominees then serving on the
Board to offer their resignations from the Board immediately upon the
occurrence of a Trigger Event or a Release Event; provided, however,
that in the event that the Investor Group's Total Ownership Percentage
is less than the 10% amount referred to in clause (x)(i) of this
Section 5.2 and would not be so but for the issuance of capital stock
by the Company during, or within one month prior to, the twelve month
period referred to in clause (x)(i) of this Section 5.2, such twelve
month period shall be extended by an additional six months to eighteen
consecutive months. To effectuate the resignations provided for in
this Section 5.2, the Investor shall cause each Investor Nominee to
provide the Investor with a letter of resignation upon such Investor
Nominee's election to the Board which may be used by the Investor at
any time.
Section 5.3. Committees. The Board will not establish an
executive committee authorized to exercise the power of the Board
generally unless the Investor is granted representation on such
committee proportional to its representation on the Board, nor will
the Board establish or employ committees (unless the Investor is
granted proportional representation thereon) as a means designed to
circumvent or having the effect of circumventing the rights of the
Investor under this Agreement to representation on the Board.
SECTION 6
ADDITIONAL AGREEMENTS
Section 6.1. Standstill Agreement.
(A) During the Standstill Period, and, if this Agreement is
terminated prior to Closing pursuant to Section 10.1(a), for the one
year period after the end of the Standstill Period (such one year
period, the "Post Termination Standstill Period"), unless the Company
shall have materially breached its obligation to nominate Investor
Nominees or to appoint any Fully Independent Director pursuant to
Section 5 (provided that, with respect to any such material breach
that does not concern a Pre-Approved Person, a court of competent
jurisdiction shall have determined pursuant to a final non-appealable
order that the Company has so materially breached its obligations),
the Investor shall not, shall cause each other member of the Investor
Group not to, and shall use reasonable commercial efforts to cause
other Affiliates and Associates of the Investor not members of the
Investor Group ("Other Investor Affiliates") not to, directly or
indirectly, alone or in concert with others:
(a) acquire, offer or propose to acquire or agree to
acquire, whether by purchase, tender or exchange offer, through the
acquisition of control of another person, by joining a partnership,
limited partnership, syndicate or other 13D Group or otherwise,
Beneficial Ownership of any Voting Securities, Derivative Securities
or any other securities of the Company or any rights to acquire
(whether currently, upon lapse of time, following the satisfaction of
any conditions, upon the occurrence of any event or any combination of
the foregoing) any Voting Securities, other than (i) the purchase of
Shares or other Voting Securities expressly permitted by this
Agreement, (ii) the acquisition of Voting Securities as a result of
any stock split, stock dividends or other distributions,
recapitalizations or offerings made available by the Company to
holders of Voting Securities generally or (iii) in a transaction in
which the Investor or a Subsidiary of the Investor acquires a
previously unaffiliated business entity that, to the knowledge of the
Investor after reasonable inquiry, owns shares of Common Stock that
represents less than 4% of the Company's outstanding Common Stock and
less than 10% of the unaffiliated entity's assets; provided, that all
such Voting Securities shall be subject to the terms of this
Agreement; provided, further, however, that in the event of a
transaction as contemplated by clause (iii) hereof, the Investor will
transfer, or cause such Subsidiary to transfer, in a manner consistent
with Section 6.3, such shares of Common Stock previously owned by the
unaffiliated entity within twelve months following the consummation of
such transaction and all such shares of Common Stock, pending their
transfer, shall be voted by the Investor or such Subsidiary in
accordance with the requirements of clauses (w) through (z) of Section
6.2 and on any other matter in the same proportion as the votes cast
by or on behalf of all holders of the Company's Voting Securities
other than the Investor Group and Other Investor Affiliates;
(b) propose or seek to effect any merger, business
combination, restructuring, recapitalization or similar transaction
involving the Company or any of its Subsidiaries or the sale or other
disposition outside the ordinary course of business of any material
portion of the assets of the Company or any of its Subsidiaries except
pursuant to Section 8.2 hereof;
(c) deposit any Voting Securities in a voting trust or
subject any Voting Securities to any arrangement or agreement with
respect to the voting of such Voting Securities except pursuant to
Section 8.8 hereof;
(d) seek election to, seek to place a representative on, or
seek the removal of any member of, the Board, except pursuant to
Section 5 hereof;
(e) engage in any "solicitation" (within the meaning of rule
14a-1 under the Exchange Act) of proxies or consents (whether or not
relating to the election or removal of directors) with respect to the
Company, or become a "participant" in any "election contest" (within
the meaning of Rule 14a-11 under the Exchange Act) or, unless the
execution by the Investor, member of the Investor Group or Other
Investor Affiliate is first approved by the Board, execute any written
consent in lieu of a meeting of the holders of any class of Voting
Securities that is solicited by or on behalf of any shareholder of the
Company;
(f) call or seek to have called any meeting of the
shareholders of the Company (except for the exercise by the Investor
of its rights pursuant to Section 5.1(d));
(g) initiate, propose or otherwise solicit shareholders for
the approval of any shareholder proposal (as described in Rule 14a-8
under the Exchange Act or otherwise) with respect to the Company;
(h) form, join or in any way participate in or assist in the
formation of a 13D Group with respect to any Voting Securities, other
than any such "group" consisting exclusively of the Investor and other
wholly-owned United States Subsidiaries of the Investor who have
acquired Voting Securities in accordance with Section 2.2(b) or
Section 6.3(a);
(i) otherwise act, alone or in concert with others, to seek
control or influence the management, the Board or the policies of the
Company in a manner designed or having the deliberate effect of
circumventing the restrictions otherwise imposed under this Section
6.1(A);
(j) disclose or publicly announce any intention, plan or
arrangement inconsistent with the foregoing;
(k) advise, assist or encourage or finance any other persons
in connection with any of the foregoing types of activities; or
(l) request the Company (or its directors, officers,
employees or agents) to amend or waive any provision of this
Agreement;
provided that nothing in this Section 6.1(A) shall limit any rights of
the members of the Investor Group under the Joint Venture Agreement or
the Research Alliance Agreement, or (I) prohibit any individual who is
serving as a Director of the Company, solely in his or her capacity as
such Director and provided no public disclosure thereof by the Company
would be required, from (x) taking any action or making any statement
at any meeting of the Board of Directors or of any committee thereof,
(y) making any statement to any Representative of the Company, or (z)
making any statement or disclosure required under federal securities
laws or other applicable Law, (II) restrict any private communications
not requiring public disclosure between the Investor and any Investor
Nominee, (III) restrict any disclosure or statements required to be
made by any member of the Investor Group under applicable Law to the
extent any such requirement does not arise from actions by the
Investor Group inconsistent with this Agreement, or (IV) limit the
rights of the Investor Group pursuant to Section 6.2, Section 6.9 or
Section 8.2.
(B) Notwithstanding the foregoing, if this Agreement is
terminated prior to Closing pursuant to Section 10.1(a), the
provisions of paragraph (A) of this Section 6.1 (other than the
provisions of clauses (a) (except as to proposals to the Company as to
the matters in clause (b)) and (h) thereof and the provisions of (i),
(j), (k) and (l) thereof to the extent such provisions relate to the
acquisition of Voting Securities or other securities of the Company)
shall cease to apply during the Post-Termination Standstill Period if
(i) the Company enters into an agreement contemplating a Change in
Control Transaction or a Competing Investment or the Company makes any
filing with respect to, or seeks expiration of the waiting period
under, the HSR Act with respect to a Change in Control Transaction or
Competing Investment; (ii) the Board of Directors publicly announces
its intention to solicit or publicly solicits any Proposal or publicly
approves, accepts, authorizes or recommends to shareholders of the
Company their approval of or the conveyance of shares pursuant to a
Change in Control Transaction or Competing Investment; (iii) during or
prior to the pendency of a bona fide tender or exchange offer made by
any Person or 13D Group (other than a member of the Investor Group),
the Board of Directors determines or resolves to, or announces its
intention to, or is ordered or directed by any Governmental Entity to,
redeem, amend or modify (to render inapplicable (including by taking
action to cause a Section 11(a)(ii) Event or Section 13 Event (each as
defined in the Amended Rights Agreement as in effect on the date
hereof), not to occur that, absent such action, would otherwise have
occurred, or to redeem the Preferred Stock Purchase Rights) thereto or
otherwise exempt therefrom) the Preferred Stock Purchase Rights or the
Amended Rights Agreement (or a Substantially Similar Agreement) or;
(iv) any Person other than the Investor or an Excluded Person acquires
or agrees to acquire 20% or more of the then outstanding Voting
Securities or Common Securities.
Section 6.2. Voting. (a) At all times during the Standstill
Period, the Investor shall, shall cause each other member of the
Investor Group to, and shall use its commercially reasonable efforts
to cause each Other Investor Affiliate to, vote all Voting Securities
which they Beneficially Own, at any shareholder meeting or in
connection with any action by written consent at or in which such
Voting Securities are entitled to vote, (w) in favor of the slate of
nominees (including any Investor Nominee to be included in such slate
in accordance with Section 5) proposed by the Board; provided, that
any Investor Nominee nominated by the Investor for inclusion in such
slate pursuant to Section 5.1 is so included, (x) in favor of any
amendment to the Company's Articles of Incorporation proposed by the
Board to change the voting rights of the Common Stock to one vote per
share of Common Stock (a "Voting Amendment"), (y) in favor of the
Reclassification Amendment at each meeting of the Company's
shareholders at which the Reclassification Amendment is submitted for
approval of the Company's shareholders, and (z) on any matter relating
to the adoption of any stock option, stock purchase or other benefit
or compensation plan for employees, executives or directors of the
Company, and on any non-Company sponsored shareholder proposal which
is opposed by the Company, in accordance with the direction of the
Board as to how such Voting Securities shall be voted, except that
during any period or at any time when there shall be in full force and
effect a valid order or judgment of a court of competent jurisdiction
or a ruling, pronouncement or requirement of the NYSE to the effect
that the foregoing provisions of this Section 6.2 are invalid, void,
unenforceable or not in accordance with NYSE policy, then the Investor
will, if so requested by the Board, vote or cause (or, in the case of
the Other Investor Affiliates, use its commercially reasonable efforts
to cause) to be voted all of the Voting Securities beneficially owned
by it, the Investor Group and the Other Investor in the same
proportion as the votes cast by or on behalf of the other holders of
the Company's Voting Securities other than the Investor Group and
Other Investor Affiliates, but only with respect to the foregoing
matters. On all other matters the Investor, the members of the
Investor Group and the Other Investor Affiliates shall be entitled to
vote the Voting Securities held by them in their discretion; provided,
that at any meeting at which a quorum would not be present but for the
inclusion of the Voting Securities Beneficially Owned by the Investor
Group, the Investor shall cause such Voting Securities to be voted
with respect to each of the matters presented to shareholders at such
meeting and such vote shall be in accordance with the foregoing
provisions of this Section 6.2(a). At all times during the Standstill
Period, the Investor shall be, shall cause each other member of the
Investor Group to be, and shall use its commercially reasonable
efforts to cause each Other Investor Affiliate to be, as the
Beneficial Owners of Voting Securities, present, in person or by
proxy, at all meetings of shareholders of the Company, so that all
Voting Securities which Investors or any other member of the Investor
Group or any Other Investor Affiliate Beneficially Owns may be counted
for the purpose of determining the presence of a quorum at all
meetings of shareholders of the Company.
(b) If the holders of the outstanding shares of Common Stock
are entitled to vote as a separate class or voting group under the
Articles of Incorporation or the corporation laws of the Company's
jurisdiction of incorporation on any matter on which a shareholder
vote is otherwise required, then the Company hereby covenants and
agrees that if the Investor advises the Company in writing prior to
the meeting held (or the record date for action taken by written
consent in lieu of a meeting) to approve such matter that the Investor
opposes such matter so to be voted upon by such class or voting group,
then it shall be a condition to the effectiveness of the matter to be
voted on that the matter be approved by an aggregate number of Votes
that would have been sufficient to approve such matter under the
Articles of Incorporation and the corporation laws of the Company's
jurisdiction of incorporation if all the Votes that could have been
voted by the Investor Group had such class or voting group included
the Voting Power represented by the Series A Convertible Preferred
Stock held by the Investor Group been included in such class or voting
group and cast against the approval of such matter.
(c) To the full extent permitted by Iowa law, the Investor
hereby waives, shall cause each member of the Investor Group to waive,
and shall use its commercially reasonable efforts to cause each Other
Investor Affiliate to waive, any rights that the Investor, any member
of the Investor Group or any Other Investor Affiliate, as the case may
be, may have or hereafter acquire under Division XIII of the Iowa
Business Corporation Act with respect to any disposition of Voting
Securities pursuant to this Agreement.
(d) At any time after the conversion of the Series A
Convertible Preferred Stock into Common Stock pursuant to Section
6(a)(ii) of the Certificate of Designation for the Series A
Convertible Preferred Stock, the Investor will cause all Votes
attributable to any shares of Common Stock thereafter owned by the
Investor Group and acquired prior to the termination of this Agreement
to be voted (a) with respect to a number of Votes representing no more
than voting power equal to the Investor Group's Total Ownership
Percentage at such time, during the Standstill Period, in accordance
with the provisions of Section 6.2(a) and after the Standstill Period,
in the sole discretion of the Investor, and (b) with respect to all
other Votes, on any matter pro rata in accordance with the Votes voted
on such matter by all holders of Voting Securities other than the
Investor Group and Other Investor Affiliates.
(e) Notwithstanding the foregoing provisions of this Section
6.2, at any time following the occurrence of a Trigger Event or a
Release Event, the Investor shall, shall cause each other member of
the Investor Group to, and shall use its commercially reasonable
efforts to cause each Other Investor Affiliate to vote all Voting
Securities which they Beneficially Own, (i) in favor of the slate of
nominees proposed by the Board (except that during any period or at
any time when there shall be in full force and effect a valid order or
judgment of a court of competent jurisdiction or a ruling,
pronouncement or requirement of the NYSE to the effect that the
foregoing provisions of this Section 6.2(e) are invalid, void,
unenforceable or not in accordance with NYSE policy, in which case,
the Investor will, if so requested by the Board, vote or cause to be
voted all of its Voting Securities Beneficially Owned by it and the
other members of the Investor Group, and use commercially reasonable
efforts to cause all Voting Securities Beneficially Owned by Other
Investor Affiliates to be voted, for the election of directors in the
same proportion as the votes cast by or on behalf of the other holders
of the Company's Voting Securities other than the Investor Group and
Other Investor Affiliates) and (ii) on all other matters at any
shareholder meeting or in connection with any action by written
consent, in the same proportion as the votes cast by or on behalf of
all holders of the Company's Voting Securities other than the Investor
Group and Other Investor Affiliates.
Section 6.3. Dispositions. During the Standstill Period and
thereafter in perpetuity in the case of clauses (f) and (g) hereof to
the extent specified therein, the Investor shall not, shall cause each
other member of the Investor Group not to, and shall use its
commercially reasonable efforts to cause each Other Investor Affiliate
not to, directly or indirectly (including, without limitation, through
the disposition or transfer of any equity interest in another Person),
sell, assign, transfer, pledge, hypothecate, grant any option with
respect to or otherwise dispose of any interest in (or enter into an
agreement or understanding with respect to the foregoing) any Voting
Securities (a "Disposition"), except as set forth below in this
Section 6.3.
(a) Dispositions may be made to wholly-owned United States
Subsidiaries of the Investor; provided, that such Subsidiaries agree
in writing to be bound by this Agreement to the same extent as the
Investor and such Subsidiaries at all times remain wholly-owned United
States Subsidiaries of the Investor.
(b) Dispositions of Voting Securities may be made to Persons
other than members of the Investor Group and Other Investor Affiliate
pursuant to (i) a bona fide public offering effected in accordance
with the Registration Rights Agreement, (ii) in bona fide open market
"brokers' transactions" as permitted by the provisions of Rule 144 as
currently promulgated under the Securities Act (other than pursuant to
the provisions of clause (k) thereof) and subject to the requirement
that the amount of Voting Securities sold may not exceed the lesser of
the amounts specified under clauses (i) and (ii) of paragraph (e)(1)
of Rule 144 as currently in effect, (iii) in privately-negotiated
transactions to (A) any Person specified in Rule 13d-1(b)(1)(ii)
promulgated under the Exchange Act who would be eligible based on such
person's status and passive intent with respect to the ownership,
holding and voting of such Voting Securities to report such person's
ownership of such Voting Securities (assuming such person owned a
sufficient number of such Voting Securities to require such filing) on
Schedule 13G or (B) any other Person, and (iv) pursuant to a pro rata
dividend to the stockholders of the Investor, provided, however, that:
(I) Dispositions shall not be made pursuant to clauses (i),
(ii), (iii)(A) or (iv) of this Section 6.3(b) if, (A) in the case of
Dispositions pursuant to clauses (i), (ii) and (iii)(A) of this
Section 6.3(b), any Person (other than any underwriter who is in the
business of underwriting securities and who, in the ordinary course of
its business as an underwriter, acquired Common Securities in
connection with a public offering with the bona fide intention of
reselling all of the Common Securities so acquired pursuant to such
public offering (a "Permitted Underwriter")) to whom the Disposition
in question is made would, to the actual knowledge of the Investor
(without any duty of inquiry) in the case of Dispositions pursuant to
clause (ii) of Section 6.3(b), and to the knowledge of the Investor,
after reasonable inquiry, in all other cases after giving effect to
such Disposition, together with such Person's Affiliates and
Associates and the members of any 13D Group existing with respect to
Voting Securities of which such Person is a part (any such Person and
its Affiliates, Associates and 13D Group members being collectively
referred to herein as a "Purchasing Person"), Beneficially Own Voting
Securities representing more than 3% (or 5% in the case of clause
(iii)(A)), as the case may be (or, in any such case, 1% if any Person
included in a Purchasing Person is a Pioneer Competitor) of the Total
Voting Power or Total Ownership Percentage then outstanding, (B) in
the case of Dispositions pursuant to clauses (ii) and (iii)(A) of this
Section 6.3(b), the Investor Group shall have complied with the
provisions of Section 6.4 and the Company shall have had the right to
purchase pursuant to Section 6.4 the Voting Securities subject to such
Disposition; or (C) in the case of a Disposition pursuant to clause
(iv) of this Section 6.3(b), any shareholder receives in such dividend
more than 2% of the Total Voting Power or Total Ownership Percentage,
unless such shareholder shall have executed and delivered a Purchaser
Standstill Agreement (as defined below) pursuant to which such
shareholder agrees to be bound by Section 6 of this Agreement (other
than Section 6.6(b), Section 6.7 and Section 6.9 hereof) to the same
extent as the Investor as if references to the Investor in such
Section were to such shareholder with an Ownership Cap equal to its
then current ownership provided that for purposes of Section 6.6(a)
only the Ownership Cap of such shareholder shall be 5%; provided,
however, that in no event shall any disposition be made pursuant to
such clause (iv) if any shareholder would be entitled to receive in
connection therewith 7.5% (or 2% if such shareholder is a Pioneer
Competitor) or more of the Total Voting Power or Total Ownership
Percentage;
(II) Dispositions shall not be made pursuant to clauses
(iii)(B) of this Section 6.3(b) if the Purchasing Person would, to the
knowledge of the Investor, after reasonable inquiry, after giving
effect to the Disposition, Beneficially Own Voting Securities
representing more than 5% (or 1% if any Person included in the
Purchasing Person is a Pioneer Competitor) of the Total Voting Power
or Total Ownership Percentage then outstanding, provided that if any
such Purchasing Person would, to the knowledge of the Investor, after
reasonable inquiry, after giving effect to such Disposition,
Beneficially Own Voting Securities representing more than 3% of the
Total Voting Power or Total Ownership Percentage then outstanding, (x)
the Investor Group shall, in the case of Dispositions pursuant to
clause (iii)(B) of this Section 6.3(b), have complied with the
provisions of Section 6.4 and the Company shall have had the right to
purchase pursuant to Section 6.4 the Voting Securities subject to the
Disposition, and (y) the Purchasing Person shall have executed and
delivered to the Company a written agreement (which agreement shall be
addressed to the Company and reasonably satisfactory in form and
substance to the Company) (a "Purchaser Standstill Agreement") of each
such Purchasing Person to be bound by Section 6 of this Agreement
(other than Section 6.6(b), Section 6.7 and Section 6.9 hereof) to the
same extent as the Investor as if references to the Investor in such
Section were to such Purchasing Person with an Ownership Cap equal to
its then current ownership provided that for purposes of Section
6.6(a) only the Ownership Cap of such Purchasing Person shall be 5%;
and
(III) No Disposition pursuant to this Section 6.3(b) (other
than pursuant to Section 6.3(b)(iv)) shall be effected prior to the
third anniversary of the Closing Date, unless the Investor Group is
required to make a Disposition pursuant to the last proviso to Section
6.1(A)(a)(iii) or Section 6.6 hereof, nor shall any Disposition be
made (other than pursuant to Section 6.3(b)(i)) if such Disposition
would constitute a distribution in violation of Regulation M under the
Securities Act by reason of any repurchase program of the Company then
announced.
(c) Dispositions may be made to the Company in accordance
with Sections 6.4 through 6.6 hereof.
(d) Dispositions may be made pursuant to a tender offer or
exchange offer (or, during the pendency thereof pursuant to Section
6.3(b)(iii)(A) or in open market transactions permitted under Section
6.3(b)(ii) and, in each case, subject to the restrictions of clause
(I)(A) thereof but not subject to clause (I)(B) thereof) or any other
transaction (x) which is recommended to shareholders of the Company by
the Board of Directors (or, in the case of a tender or exchange offer,
which is not within 10 Business Days of the commencement thereof
opposed by the Board of Directors or, in the case of an Unsolicited
Offer which is opposed, in the event such opposition is thereafter
withdrawn by the vote of the Board of Directors) or (y) in the case of
a merger or other business combination transaction, which has been
approved by the shareholders of the Company (including approval
without a meeting pursuant to the short-form merger provisions of the
Iowa Business Corporation Act) in a manner so as to be legally binding
on all shareholders of the Company and so as to require the
disposition by such shareholders of their shares pursuant to such
merger or other business combination transaction (without regard to
this Agreement); and
(e) Dispositions may be made pursuant to a tender offer or
exchange offer which is not recommended by a majority of the entire
Board (an "Unsolicited Offer"); provided that such Unsolicited Offer
is for at least a majority of the Common Stock outstanding on a fully
diluted basis; and provided further, (i) if the Amended Rights
Agreement (or a Substantially Similar Plan) was in effect prior to the
commencement of such Unsolicited Offer, the Company has redeemed the
Rights (as defined in the Amended Rights Agreement) or otherwise
amended or modified the Amended Rights Agreement (or a Substantially
Similar Plan) to be inapplicable (including by taking action to cause
a Section 11(a)(ii) Event or Section 13 Event (each as defined in the
Amended Rights Agreement as in effect on the date hereof), not to
occur that, absent such action, would otherwise have occurred, or to
redeem the Preferred Stock Purchase Rights) to such Unsolicited Offer
or otherwise taken any Board action pursuant to the Amended Rights
Agreement (or a Substantially Similar Plan) in order to permit the
Unsolicited Offer to be consummated without causing a Triggering Event
(as defined in the Amended Rights Agreement) to occur and (ii) in any
event, the Investor and each member of the Investor Group shall have
complied with the provisions of Section 6.5 and the Company shall have
had the right pursuant to Section 6.5 to purchase the Voting
Securities subject to such Disposition.
(f) At any time subsequent to the Standstill Period, the
Investor shall not, shall cause each other member of the Investor
Group not to, and shall use its commercially reasonable efforts to
cause each Other Investor Affiliate not to, directly or indirectly,
effect any Disposition of Voting Securities if, to the knowledge of
the Investor, such member of the Investor Group or such Other Investor
Affiliate, after reasonable inquiry, the Purchasing Person (other than
a Permitted Underwriter and broker-dealers acting in connection with a
block trade in which no Person or 13D Group acquires Voting Securities
representing an Equity Percentage of more than 5%) would, after giving
effect to such Disposition, Beneficially Own Voting Securities
representing more than 5% of the Total Voting Power or Total Ownership
Percentage then outstanding; provided, however, that the foregoing
restrictions shall not be applicable to any Disposition in connection
with a tender or exchange offer or a merger, business combination or
other extraordinary transaction.
(g) Notwithstanding the foregoing, at any time subsequent to
(i) the consummation of a Surviving Change in Control Transaction (as
defined in Section 8.2(b)), (ii) a Release Event, or (iii) a Trigger
Event, the provisions of Sections 6.3(a) through (c) and Section
6.3(f) shall not apply and in lieu thereof, the Investor shall not,
and shall cause each other member of the Investor Group not to, and
shall use commercially reasonable efforts to cause each Other Investor
Affiliate not to, directly or indirectly effect any Disposition of
Voting Securities (a) representing an Equity Percentage of more than
3% to any one Person or 13D Group (other than a Permitted Underwriter
and broker-dealers acting in connection with a block trade in which no
Person or 13D Group acquires Voting Securities representing an Equity
Percentage of more than 3%) or (b) to any Person or 13D Group who has
filed a Schedule 13D with the Commission with respect to any Voting
Securities issued by the Company; provided, however, that the
foregoing restrictions shall not be applicable to any Disposition of
Voting Securities in compliance with Section 6.3(d) or (e) and Section
6.5.
(h) If the Investor intends to effect a Disposition in
accordance with this Section 6.3, it shall give the Company as much
prior notice of such intention as is reasonably practicable.
Section 6.4. Company's Right to Purchase Voting Securities.
Prior to any Disposition of Voting Securities pursuant to clauses (ii)
and (iii) of Section 6.3(b), the Company shall have the right, to the
extent provided in Section 6.3(b), exercisable in accordance with this
Section 6.4, to purchase all, but not less than all, of the Voting
Securities intended to be subject to such Disposition by the Investor
or any other member of the Investor Group.
(a) To the extent required by Section 6.3(b), if any member
of the Investor Group wishes to effect any Disposition of Voting
Securities pursuant to clauses (ii) and (iii) of Section 6.3(b), the
Investor shall give notice (a "Transfer Notice") to the Company of
such intended Disposition, specifying the Voting Securities to be
subject to Disposition and the intended method of Disposition. The
Transfer Notice shall specify, in the case of Dispositions pursuant to
clauses (ii) or (iii)(A) of Section 6.3(b), the cash price (the "First
Offer Price") at or above which the Investor intends to effect such
Dispositions and, in the case of Dispositions pursuant to clause
(iii)(B) of Section 6.3(b), the terms of a bona fide third party offer
(a "Third Party Offer") to purchase such Voting Securities theretofore
received by the Investor and then remaining open (including the
identity of the offeror and the price offered). If the Company wishes
to purchase the Voting Securities specified in the Transfer Notice,
then within fifteen Business Days (or, in the case of any Required
Disposition being made as a result of a Company request pursuant to
Section 6.6, five Business Days) following receipt of the Transfer
Notice, the Company shall deliver a written notice (an "Acceptance
Notice") to the Investor indicating that the Company wishes to
purchase such Voting Securities (such Voting Securities, the "Section
6.4 Securities"), a date for the closing of such purchase, which shall
not be more than 45 days after delivery of such Acceptance Notice
(subject to extension as provided in Section 6.4(f) hereof), and a
place for the closing of such purchase (a "Section 6.4 Closing"). Upon
delivery of an Acceptance Notice, a binding agreement shall be deemed
to exist providing for the purchase by the Company of the Section 6.4
Securities to which such Acceptance Notice relates, upon the terms and
subject to the conditions set forth in this Section 6.4 and the
Company shall use its reasonable best efforts to secure all approvals
required in connection therewith; provided, that (i) the Company may
rescind its Acceptance Notice (in which event it will have no
obligation to purchase such Section 6.4 Securities) at any time within
two Business Days following any determination of (x) the value of any
untraded securities pursuant Section 6.4(b)(ii) hereof or (y) fair
market value pursuant to Section 6.4(b)(ii) hereof; and (ii) the
Investor may rescind its Transfer Notice (in which event it will have
no obligation to sell such Section 6.4 Securities) at any time within
two Business Days following any determination of (a) the value of any
untraded securities pursuant to Section 6.4(b)(ii) hereof or (y) fair
market value pursuant to Section 6.4(b)(ii) hereof.
(b) The purchase price for any Section 6.4 Securities (the
"Section 6.4 Price") shall be determined as set forth below.
(i) With respect to any Section 6.4 Securities for which a
Third Party Offer consisting of other than solely cash and/or
readily marketable securities is disclosed in the applicable
Transfer Notice, the Section 6.4 Price per share or other unit of
such Section 6.4 Securities (which shall refer, in the case of
shares of Series A Convertible Preferred Stock that are Section
6.4 Securities, to the applicable number of shares of Common
Stock issuable upon conversion of such Series A Convertible
Preferred Stock), shall equal the average Market Price per share
or per unit of the Section 6.4 Securities during the 30
consecutive trading days immediately preceding the Company's
receipt of the Transfer Notice.
(ii) With respect to any Section 6.4 Securities for which a
First Offer Price or a Third Party Offer is disclosed in the
applicable Transfer Notice which provides for consideration
consisting solely of cash and/or readily marketable securities,
the Section 6.4 Price per share or other unit of such Section 6.4
Securities shall equal the per share or per unit price specified
in such First Offer Price or Third Party Offer; provided,
however, that, except for Acceptance Notices delivered in respect
of a Required Disposition, in the event the Market Price per
share or per unit on the last Business Day prior to the date the
Acceptance Notice is delivered is more than 10% greater than the
per share or per unit price specified by such First Offer Price
or Third Party Offer, than the price per share or per unit shall
equal the Market Price per share or per unit on the last Business
Day prior to the date the Acceptance Notice is delivered. The
value of any readily marketable securities identified in such
Third Party Offer shall equal the average Market Price per share
or per unit of such securities during the 30 consecutive trading
days immediately preceding the Company's receipt of the Transfer
Notice. In the case of any securities not theretofore traded,
such securities must be issued or proposed to be issued by an
entity which has been subject to the reporting requirements of
the Exchange Act for at least one year, and the value of such
securities shall be determined by two nationally recognized
investment banking firms, one firm to be selected by each of the
Investor and the Company, or in the event such firms are unable
to agree, by a third nationally recognized investment banking
firm selected by such firms. The Investor and the Company shall
use their reasonable best efforts to cause any such determination
of value to be made within five Business Days following the
Company's receipt of the applicable Transfer Notice. In
connection with any determination of fair market value pursuant
to this Section 6.4(b)(ii), each party will bear the fees and
expenses of the investment banking firm selected by it and the
parties will bear equally the fees and expenses of any third
investment banking firm.
(c) At any Section 6.4 Closing, the Company shall pay to the
Investor (or its designees) the aggregate Section 6.4 Price for the
Section 6.4 Securities by wire transfer of immediately available
funds, and the Investor shall deliver or cause to be delivered to the
Company such Section 6.4 Securities, with documentation satisfactory
to the Company evidencing the transfer of such Section 6.4 Securities,
in form acceptable for transfer on the Company's books.
(d) If the Company does not exercise its right to purchase
Voting Securities specified in a Transfer Notice, or if the Company
exercises its right to rescind as described in the proviso to the last
sentence of Section 6.4(a) hereof, or if any agreement deemed to exist
with respect to Voting Securities upon delivery of an Acceptance
Notice is terminated pursuant to Section 6.4(f), then the party giving
such Transfer Notice shall be free to effect the Disposition of such
Voting Securities, subject to any other requirements applicable to
such Disposition pursuant to Section 6.3; provided, that any such
Disposition is completed within 60 days following the expiration of
the period in which the Company had the right to elect to purchase
such Voting Securities or such rescission or termination, as the case
may be (which 60 day period may be extended day by day by the Investor
if as of such 60th day or any day thereafter on which such period is
extended (x) all waiting periods, if any, applicable to such
Disposition under the HSR Act, shall not have expired or been
terminated or (y) any statute, rule, regulation, executive order,
decree, ruling, injunction or other order shall have been enacted,
entered, promulgated or enforced by any court or governmental
authority of competent jurisdiction which prohibits such Disposition
or makes such Disposition illegal, provided that no such extension
shall be for more than 60 days in the aggregate); provided, further,
that such Disposition is effected in accordance with the intended
method of Disposition described in the applicable Transfer Notice;
provided, further, that with respect to any such Disposition of Voting
Securities for which a First Offer Price or a Third Party Offer is
disclosed in the applicable Transfer Notice, the Disposition of such
Voting Securities is at the price specified therein or at any price in
excess thereof (or, in the case of Dispositions pursuant to Section
6.3(b)(ii) or in the case of Dispositions pursuant to Section
6.3(b)(iii)(A) which are being made as a result of the Company's
request for a Required Disposition pursuant to Section 6.6 (a), where,
in each case, the applicable First Offer Price per share of Common
Stock does not exceed the average Market Price for the Common Stock
for the three trading days immediately preceding the receipt by the
Company of the related Transfer Notice, the Disposition is completed
at prices in excess of 95% of the applicable First Offer Price) and,
in the case of a Third Party Offer, to the transferee specified in the
Transfer Notice. In the case of any Disposition pursuant to clause
(iii) of Section 6.3(b), the price per share of Common Stock at which
such Disposition is deemed to be effected shall (i) not have deducted
therefrom any ordinary brokerage or placement fees, and (ii) be
increased by the amount of any discount in purchase price granted to
any broker-dealer in connection with such Disposition in lieu of any
such ordinary brokerage or placement fees. If any such Disposition is
not completed within the 60-day period specified in the first proviso
of the preceding sentence, any Voting Securities specified in the
applicable Transfer Notice and not disposed of in such Disposition
shall again be subject to the restrictions on transfer set forth in
Section 6.3, including the Company's purchase rights under this
Section 6.4, to the extent provided in Section 6.3.
(e) Without limiting Section 6.3(b), if any Disposition is
made to any Purchasing Person who is required to have entered into a
Purchaser Standstill Agreement, then such person shall be deemed to
have consented to be bound by Section 6 of this Agreement (other than
Section 6.6(b), Section 6.7 and Section 6.9 hereof) to the same extent
as the Investor and to the extent of such Purchasing Person's
ownership interest as if references to the Investor in such Section
were to such Purchasing Person provided that for purposes of Section
6.6(a) only, the Ownership Cap of the Purchasing Person shall be 5%.
(f) The obligations of the parties to effect any Section 6.4
Closing shall be subject to the satisfaction of the following
conditions: (i) all waiting periods, if any, applicable to the
transactions occurring at such Section 6.4 Closing under the HSR Act,
shall have expired or been terminated and (ii) no statute, rule,
regulation, executive order, decree, ruling, injunction or other order
shall have been enacted, entered, promulgated or enforced by any court
or governmental authority of competent jurisdiction which prohibits
such transactions or makes such transactions illegal. If, as of any
date on which a Section 6.4 Closing is scheduled to occur, the
foregoing conditions relating thereto have not been satisfied, then
such Section 6.4 Closing shall occur as promptly as practicable
following such satisfaction, and the parties shall use their
reasonable best efforts to cause the satisfaction of such conditions;
provided that if the foregoing conditions relating to any Section 6.4
Closing are not satisfied within 120 days in the case of clause (i),
and 180 days in the case of clause (ii), following delivery of the
applicable Acceptance Notice (or in the case of an order or injunction
arising out of any proceeding initiated by the Investor or any member
of the Investor Group, such later date on which such order or
injunction becomes final and nonappealable), then the Investor or the
Company may terminate the agreement deemed to exist upon delivery of
the applicable Acceptance Notice; provided that no such termination
shall excuse any party for a breach of its obligations thereunder.
Section 6.5. Company's Right to Purchase Voting Securities
in Case of Unsolicited Offer. Prior to any Disposition of Voting
Securities pursuant to Section 6.3(e), the Company (and/or its
designees) shall have the right, exercisable in accordance with this
Section 6.5, to purchase all of the Voting Securities permitted to be
subject to such Disposition by the Investor Group.
(a) If any member of the Investor Group wishes to effect any
Disposition of Voting Securities pursuant to Section 6.3(e), the
Investor shall give notice (a "Section 6.5 Transfer Notice") to the
Company of such intended Disposition at least 9 Business Days prior to
the latest date, as provided below, on which the Company (and/or its
designees) is entitled to exercise its right to purchase the Voting
Securities specified in such Section 6.5 Transfer Notice, unless a
shorter period after commencement of the Unsolicited Offer or a change
in the price term thereof is provided for acceptance or qualification
for proration, in which case the Section 6.5 Transfer Notice shall be
given promptly after commencement of the Unsolicited Offer or such
change; provided that the Investor may rescind such Section 6.5
Transfer Notice at any time prior to delivery of a Section 6.5
Acceptance Notice (as defined below). The Section 6.5 Transfer Notice
shall specify the Voting Securities to be tendered. If the Company
(and/or its designees) wishes to purchase the Voting Securities
specified in the Transfer Notice, then not later than 24 hours prior
to the latest time by which such securities must be tendered in order
to be accepted in the Unsolicited Offer, the Company shall deliver a
written notice (a "Section 6.5 Acceptance Notice") to the Investor
specifying that the Company (and/or its designees) wishes to purchase
such Voting Securities (such Voting Securities, the "Section 6.5
Securities"), a date for the closing of such purchase, which shall not
be more than 45 days after delivery of such Section 6.5 Acceptance
Notice (subject to extension as provided in Section 6.5(e) hereof),
and a place for the closing of such purchase (a "Section 6.5
Closing"). Upon delivery of a Section 6.5 Acceptance Notice, a binding
agreement shall be deemed to exist providing for the purchase by the
Company (and/or its designees) of the Section 6.5 Securities to which
such Section 6.5 Acceptance Notice relates, upon the terms and subject
to the conditions set forth in this Section 6.5 and the Company shall
use its reasonable best efforts to secure all approvals required in
connection therewith; provided, that if the Unsolicited Offer is for
less than all of the outstanding shares of Common Stock, the Section
6.5 Securities to be purchased by the Company as a result of the
Section 6.5 Acceptance Notice shall equal (i) if the Section 6.5
Closing occurs after the date of consummation of the applicable
Unsolicited Offer, the Voting Securities specified in the Section 6.5
Transfer Notice that would have been purchased (taking into account
prorationing) if all of such Voting Securities so specified had been
tendered into such Unsolicited Offer and (ii) otherwise, the Voting
Securities specified in the Section 6.5 Transfer Notice that would
have been so purchased (taking into account prorationing) if the party
giving the Section 6.5 Transfer Notice had tendered such Voting
Securities into the Unsolicited Offer, and all other shareholders of
the Company had tendered all their Voting Securities into the
Unsolicited Offer; and, provided, further, that if following delivery
of a Section 6.5 Acceptance Notice, the price per share of Common
Stock in the Unsolicited Offer is increased, the Company may, not
later than 24 hours prior to the latest time by which Common Stock
must be tendered in order to be accepted in the Unsolicited Offer,
rescind its Section 6.5 Acceptance Notice (in which event it will have
no obligation to purchase such Section 6.5 Securities and such Section
6.5 Securities may be sold into the Unsolicited Offer).
Notwithstanding anything to the contrary contained in this Section
6.5, for so long as the agreement deemed to exist upon delivery of a
Section 6.5 Acceptance Notice remains in effect, the Investor shall
not and shall cause the Investor Group not to, tender any Voting
Securities pursuant to the Unsolicited Offer.
(b) The purchase price for any Section 6.5 Securities (the
"Section 6.5 Price"), assuming simultaneous conversion of any Series A
Convertible Preferred Stock, shall be the per share price of Common
Stock paid in the Unsolicited Offer. The value of any securities
offered in the Unsolicited Offer shall equal the average Market Price
per share or per unit of such securities during the 30 consecutive
trading days immediately preceding the Company's receipt of the
Section 6.5 Transfer Notice. In the case of any securities not
theretofore traded, the value of such securities shall be determined
by two nationally recognized investment banking firms, one firm to be
selected by each of the Investor and the Company, or in the event such
firms are unable to agree, by a third nationally recognized investment
banking firm selected by such firms. The Investor and the Company
shall use their reasonable best efforts to cause any such
determination of value to be made within five business days following
the Company receipt of a Section 6.5 Transfer Notice. In connection
with any determination of value pursuant to this Section 6.5(b), each
party will bear the fees and expenses of the investment banking firm
selected by it and the parties will bear equally the fees and expenses
of any third investment banking firm.
(c) At any Section 6.5 Closing, the Company (and/or its
designees) shall pay to the Investor (or its designees) the aggregate
Section 6.5 Price for the Section 6.5 Securities by wire transfer of
immediately available funds, and the Investor shall deliver or cause
to be delivered to the Company (and/or its designees) such Section 6.5
Securities, with documentation satisfactory to the Company evidencing
the transfer of such Section 6.5 Securities, in form acceptable for
transfer on the Company's books. In the event a Section 6.5 Closing
occurs after the 30th day following delivery of the applicable Section
6.5 Acceptance Notice, then, in addition to the aggregate Section 6.5
Price, the Company (and/or its designees) shall pay to the Investor
(or its designees) interest on the aggregate Section 6.5 Price for the
period from and after such 30th day to and including the date of such
Section 6.5 Closing. Such interest shall accrue at the Federal Funds
Rate as in effect from time to time, plus 1/4 of 1%. Such interest
shall not be compounded and shall be calculated on the basis of a
360-day year and the actual number of days elapsed.
(d) If the Company (and/or its designee) does not, to the
extent specified in Section 6.5(a), exercise its right to purchase the
securities specified in a Section 6.5 Transfer Notice, then the party
giving such Section 6.5 Transfer Notice shall be free to effect the
Disposition pursuant to the Unsolicited Offer of such Voting
Securities, but only such Voting Securities, so specified in such
Section 6.5 Transfer Notice (without being subject to the restrictions
contained in Section 6.3(e) hereof relating to the Company's purchase
rights under this Section 6.5) and the Company shall take such steps
as are necessary to effectuate the conversion into Common Stock of any
Series A Convertible Preferred Stock to be tendered by the party
giving the Section 6.5 Transfer Notice prior to the acceptance of such
shares for payment pursuant to the Unsolicited Offer so that such
party shall have a reasonable opportunity to timely tender such shares
in accordance with such Unsolicited Offer (including tenders of such
shares by the Company on behalf of such party); provided that the
Company and the Investor shall request that such shares be returned to
the Company for exchange in accordance with Section 6.7(c) if such
shares are not accepted for purchase pursuant to the Unsolicited Offer
and that, in the event of the return of such shares to the Investor,
the Investor shall promptly return such shares to the Company for
exchange in accordance with Section 6.7(c); provided, further, that
the Company shall take such steps to ensure that any shares not
tendered shall be duly issued and outstanding; provided, further, that
(i) such Disposition is effected at a price equal to or in excess of
the price offered in the Unsolicited Offer at the time that the
Company's right to purchase such securities expires, taking into
account any extension of the time by which the Company must exercise
such right including by reason of clause (iii) below, (ii) except as
provided in Section 6.5(e) below, the foregoing shall not apply with
respect to any shares as to which the Company shall have delivered a
Section 6.5 Acceptance Notice in the event that the agreement deemed
to exist with respect to such securities upon delivery of the
applicable Section 6.5 Acceptance Notice is terminated pursuant to
Section 6.5(e) hereof, and (iii) in the event that the price per share
of Common Stock in the Unsolicited Offer is decreased at any time
during such offer, any member of the Investor Group who wishes to
effect a Disposition of Voting Securities pursuant to Section 6.3(e)
shall give a Section 6.5 Transfer Notice to the Company of such
intended Disposition (irrespective of whether a Section 6.5 Transfer
Notice was previously delivered with respect thereto) at least 48
hours prior to the latest time by which such securities must be
tendered in order to be accepted in the Unsolicited Offer, and,
notwithstanding any other provision of this Section 6.5, the Company
shall have 24 hours following delivery of such Section 6.5 Transfer
Notice to deliver a Section 6.5 Acceptance Notice. If any such
Disposition is not, subject to Section 6.3(e) hereof, completed prior
to the later of (i) 60 days following the expiration of the Company's
right to purchase the securities specified in a Section 6.5 Transfer
Notice, and (ii) 30 days following the redemption, amendment or
modification of the Preferred Stock Purchase Rights or the Amended
Rights Agreement (or a Substantially Similar Plan), any Voting
Securities specified in such Section 6.5 Transfer Notice and not
disposed of in such Disposition shall again be subject to the
Company's purchase rights under this Section 6.5, to the extent
provided in Section 6.3(e) hereof.
(e) The obligations of the parties to effect any Section 6.5
Closing shall be subject to the satisfaction of the following
conditions: (i) all waiting periods, if any, applicable to the
transactions occurring at such Section 6.5 Closing under the HSR Act,
shall have expired or been terminated and (ii) no statute, rule,
regulation, executive order, decree, ruling, injunction or other order
shall have been enacted, entered, promulgated or enforced by any court
or governmental authority of competent jurisdiction which prohibits
such transactions or makes such transactions illegal. The obligation
of the Company (and/or its designees) to effect any Section 6.5
Closing shall be further subject to the condition that shares of
Common Stock validly tendered in accordance with the terms of the
Unsolicited Offer subject to prorationing in accordance therewith
shall have been paid for or shall simultaneously with such Section 6.5
Closing be paid for pursuant to the Unsolicited Offer. If, as of any
date on which a Section 6.5 Closing is scheduled to occur, the
foregoing conditions relating thereto have not been satisfied, then
such Section 6.5 Closing shall occur as promptly as practicable
following such satisfaction, and, with respect to the conditions set
forth in the first sentence of this Section 6.5(e), the parties shall
use their reasonable best efforts to cause the satisfaction of such
conditions. If (x) the conditions relating to any Section 6.5 Closing
are not satisfied within 120 days in the case of clause (i), and 180
days in the case of clause (ii), following delivery of the applicable
Section 6.5 Acceptance Notice (or in the case of an order or
injunction arising out of any proceeding initiated by the Investor or
any member of the Investor Group, such later date on which such order
or injunction becomes final and nonappealable), or (y) the Unsolicited
Offer is terminated without the condition set forth in the second
sentence of this Section 6.5 (e) being satisfied, then the Investor or
the Company in the case of the preceding clause (x), or the Company in
the case of the preceding clause (y), may, prior to the acceptance for
payment of shares pursuant to the Unsolicited Offer, terminate the
agreement deemed to exist upon delivery of the applicable Section 6.5
Acceptance Notice by delivering written notice to the other; provided
that no such termination shall excuse a party for a breach of its
obligations thereunder and, in the case of a termination by the
Company pursuant to clause (x), the party having given the applicable
Section 6.5 Transfer Notice shall be free to sell the Section 6.5
Securities into the Unsolicited Offer.
Section 6.6. Required Dispositions. (a) If, at any time
during the Standstill Period, the Total Ownership Percentage of the
Investor Group shall exceed the Ownership Cap plus 1%, whether as a
result of any repurchase of Common Stock by the Company pursuant to a
tender offer, open market purchases or otherwise (a "Company
Repurchase") or for any other reason, then, if and to the extent
requested by the Company by written notice to the Investor which may
be made at any time, the Investor shall, within twelve months after
such request (the "Sell Down Period"), dispose of, or cause the other
members of the Investor Group to dispose of (a "Required
Disposition"), such number of Common Securities owned by the Investor
Group as shall be necessary to reduce the Total Ownership Percentage
of the Investor Group to no more than the then applicable Ownership
Cap immediately prior to such Company Repurchase or other event giving
rise to such Required Disposition (the "Required Disposition Amount"),
as applicable; provided that any such Required Disposition shall be
subject to the provisions of Section 6.3 and provided, further, that
the Investor agrees that such Common Securities in excess of the
Ownership Cap shall be voted by the Investor Group at any meeting of
shareholders (or action by written consent in lieu of any such
meeting) pro rata in accordance with the vote of all shares held by
Persons other than the members of the Investor Group and Other
Investor Affiliates. Notwithstanding the foregoing, if any Required
Disposition during the applicable Sell Down Period (A) would result in
liability to the Investor or other members of the Investor Group under
Section 16(b) of the Exchange Act or any similar successor statute, or
(B) would be prohibited as a result of the restrictions set forth in
Section 9 of the Registration Rights Agreement on transfer of Common
Securities, then such Sell Down Period (x) shall, in the case of
clause (A) above, begin on the first date on which such Required
Disposition may be effected without liability under Section 16(b) of
the Exchange Act and (y) with respect to clause (B) above, be extended
by the number of days that the Investor Group is restricted from
selling Common Securities under the Registration Rights Agreement.
(b) The Company agrees to indemnify the Investor Group
against any Loss (as defined below) incurred by the Investor Group as
a result of any Required Disposition; provided, that (i) such Required
Disposition is effected on an arm's-length basis to a Person that is
not affiliated with any member of the Investor Group or Other Investor
Affiliate either in a bona fide open market "brokers' transaction" or
in a privately negotiated transaction, (ii) the purchase price in
connection with such Required Disposition is paid in cash and (iii)
the Required Disposition is made during the Sell Down Period following
the receipt by the Investor of the notice from the Company specified
in the first sentence of Section 6.6(a). For purposes of this Section
6.6, Voting Securities disposed of in a Required Disposition shall be
deemed to have been disposed of in the order in which such Voting
Securities were purchased. "Loss" means the amount, if any, by which
(A) the weighted average purchase price of the Voting Securities
disposed of by the Investor Group in a Required Disposition during a
Sell Down Period calculated on a per share of Common Stock basis
(based on the number of shares of Common Stock such Voting Securities
are convertible into at such time, if applicable) (which shall not
include (x) sales pursuant to the last proviso of Section 6.1(A)(a) or
(y) sales of Voting Securities in excess of the Required Disposition
Amount) (excluding any out-of-pocket expenses incurred in connection
with such purchase) exceeds (B)(1) the higher of (x) the Market Price
of the Common Stock for the trading day immediately preceding the
closing of such Required Disposition and (y) the price received by the
Investor Group pursuant to such Required Disposition (net in each case
of ordinary brokerage or placement commissions incurred by the
Investor to effect such Required Disposition) multiplied by (2) the
number of Voting Securities sold in connection with such Required
Disposition (excluding any Voting Securities in excess of the Required
Disposition Amount). In no event will Losses be deemed to include any
taxes payable in connection with such Required Disposition. Such
indemnification payment, if any, shall be made, without interest,
within five business days after the sale occurs.
Section 6.7. Top-Up Rights; Permitted Reacquisitions;
Exchange of Share Certificates.
(a) After the end of the Company Buy Back Period the
Investor at its option may, at any time, purchase Voting Securities in
open market purchases or privately negotiated transactions provided
that, after giving effect to such purchase, the Investor Group's Total
Ownership Percentage does not exceed the Ownership Cap then applicable
to the Investor Group; provided that a block purchase of Voting
Securities in accordance with the foregoing effected as a single
transaction which results in the Investor Group's Total Ownership
Percentage exceeding the Ownership Cap then applicable to the Investor
Group shall not be deemed to violate this Section 6.7(a), Section 6.1
or any other provision hereof solely as a result of the acquisition of
such excess securities so long as the aggregate Voting Securities so
held by the Investor Group at any time in excess of the Ownership Cap
represent an Equity Percentage of less than .04% and have an aggregate
Market Price at the time of purchase of less than $2,000,000; provided
that the Investor will transfer, or cause to be transferred, such
excess Voting Securities to an unaffiliated entity within twelve
months of the acquisition thereof by the Investor Group and all such
excess Voting Securities, pending their transfer, shall be voted by
the Investor Group in accordance with the requirements of clause (w)
through (z) of Section 6.2 and on any other matter in the same
proportion as the votes cast by or on behalf of all holders of the
Company's Voting Securities other than the Investor Group and Other
Investor Affiliates.
(b) The Ownership Cap shall initially be 20%, subject to
reduction as follows:
(i) If, on the last day of the twelve-month period
commencing on the day immediately succeeding the last day of
the Company Buy Back Period (or in the event that the
Company shall issue during such twelve-month period Common
Securities having an aggregate Equity Percentage after such
issuance of 3% or more, the twenty-four-month period
commencing on the day immediately succeeding the last day of
the Company Buy Back Period (the "Initial Top-Up Period"))
the Investor Group's Total Ownership Percentage is less than
20%, the Ownership Cap shall be reduced to the amount of
such Total Ownership Percentage.
(ii) At any time after the expiration of the Initial
Top-Up Period, the Ownership Cap shall be reduced by the
amount by which, during each successive twelve-month period
following any Dilutive Issuance, the Common Stock purchased
by the Investor represents an Equity Percentage of less than
3% (disregarding in computing such Equity Percentage any
subsequent Dilutive Issuance); notwithstanding the
foregoing, the Ownership Cap shall not be reduced at any
time the Total Ownership Percentage is equal to the
Ownership Cap.
(iii) The Ownership Cap shall be reduced by the Equity
Percentage represented by all Transfers (as hereinafter
defined) by the Investor Group of Common Securities to
Persons other than members of the Investor Group other than
(a) inadvertent dispositions or (b) dispositions in excess
of the Required Disposition Amount in connection with block
trades executed to facilitate a Required Disposition,
provided that the aggregate amount excluded under (a) and
(b) above does not exceed .5% of the Equity Percentage and
is actually purchased by the Investor or a wholly-owned
United States Subsidiary of the Investor within twelve
months of the date of the disposition referred to in (a) or
(b) above, as the case may be. For purposes of this Section
6.7(b)(iii), the term "Transfer" with respect to Voting
Securities shall include any sale, exchange, offer to sell
or exchange, contract to sell or exchange, option or warrant
to purchase or exchange, any dividend of, or any swap or
other agreement or transaction that transfers, directly or
indirectly, the economic consequence of ownership of Voting
Securities and such Transfer shall be deemed to occur on the
date upon which the all conditions to the consummation of
such Transfer are subject to the discretion of the
transferee.
(iv) Any period of twelve or twenty-four months under
this Section 6.7 shall be extended by the number of days
that the Investor Group cannot purchase Common Stock without
liability under Section 16(b) of the Exchange Act due to a
Required Disposition.
(c) The Investor shall present for exchange, and the Company
shall exchange at no cost to the Investor, any Common Securities
acquired by the Investor Group, whether purchased pursuant to this
Section 6.7 or received by way of dividend or otherwise (other than
shares of Common Stock acquired pursuant to Section 6.1(A)(a)(iii))
for shares of Series A Convertible Preferred Stock (at a ratio of one
share of Series A Convertible Preferred Stock in exchange for each 100
shares of Common Stock (as appropriately adjusted to reflect any stock
split, stock dividend, reverse stock split, reclassification or any
other transaction with a comparable effect)).
(d) No purchase pursuant to this Section 6.7 may be made by
the Investor Group during any period during which the Company notifies
the Investor that this Company is effecting a "distribution" as
defined in Regulation M under the Securities Act; provided, that any
period of twelve months or twenty-four months under this Section 6.7
shall be extended by the number of days that the Investor Group is so
prohibited from purchasing shares of Common Securities as a result of
this Section 6.7(d).
(e) A "Dilutive Issuance" shall mean any issuance of Common
Securities by the Company after the Closing Date; provided, that no
Dilutive Issuance shall be deemed to have occurred unless such
issuance, together with all other issuances since the Closing Date or
the most recent Dilutive Issuance to occur (other than those which
have been theretofore taken into account for purposes of this Section
6.7(e)), shall represent an Equity Percentage of 1% or more; provided,
however, that any adjustments which by reason of this Section 6.7(e)
are not required to be made shall be carried forward and taken into
account in, and as of the date of, any subsequent adjustment. All
calculations shall be made to the nearest one thousandth of a percent.
Section 6.8. Spin-off Distributions. In the event that the
Company makes any Spin-off Distribution, then effective as of the date
of such Spin-off Distribution, without any action on the part of the
Company, the Spin-off Company or the Investor, there shall be deemed
to exist, in addition to this Agreement, between the Investor and the
Spin-off Company a binding agreement (the "Spin-off Agreement")
containing provisions substantially identical to Section 6 hereof,
including the definitions of any capitalized terms used in such
Sections but defined in other Sections of this Agreement; provided
that, for purposes of the Spin-off Agreement (i) references to the
Company shall mean the Spin-off Company; (ii) references to Voting
Securities shall mean the Voting Securities of the Spin-off Company,
(iii) references to "the date hereof" and "the date of this Agreement"
shall mean the date of the Spin-off Distribution; and (iv) the
Spin-off Agreement shall terminate on the date this Agreement would
have terminated or does terminate pursuant to Section 10. Prior to any
Spin-off Distribution, the Investor shall, and the Company shall cause
the Spin-off Company to, enter into an agreement memorializing the
Spin-off Agreement.
Section 6.9. Competing Investments. From and after the date
hereof, and following the Closing for so long as the Ownership Cap is
18% or more and no Trigger Event or Release Event shall have occurred,
the Company shall not consummate or agree pursuant to a binding
agreement to consummate a Competing Investment at any time prior to
the fourth anniversary of the date of this Agreement. So long as the
Ownership Cap is 18% or more and no Trigger Event or Release Event
shall have occurred, the Company shall not consummate or agree
pursuant to a binding agreement to consummate a Competing Investment
at any time after the fourth anniversary of the date of this
Agreement, unless (a) the Company shall have provided the Investor
prior written notice of such proposed Competing Investment at least 30
days prior to the earlier of the consummation of or the entering into
a binding agreement providing for such Competing Investment specifying
the principal terms thereof (including the form and amount of such
Competing Investment and the identity of the Competitor proposing to
make such Competing Investment) (such notice, the "Competing
Investment Notice") and (b) the Competitor shall have agreed in the
Competitor Agreement or otherwise that (x) neither it nor any of its
Affiliates or Associates (including any of its designees on the Board)
will have access to any DuPont Proprietary Information or Joint
Intellectual Property (as such terms are defined in the Research
Alliance Agreement) except pursuant to a sublicense from the Company
with respect to Pioneer Products (as defined in the Research Alliance
Agreement) that is permitted pursuant to the Research Alliance
Agreement, (y) upon any breach of the agreement referred to in clause
(x) above, and so long as the Investor shall have the right to
designate any Investor Nominees for election or appointment to the
Board pursuant to Section 5 (and without limiting any other remedies
the Investor may otherwise have), the Competitor will cause all
designees of the Competitor on the Board to immediately resign and the
Competitor will not have any rights to nominate any other persons to
the Board, and (z) the provisions of the agreement referred to in this
clause (b) shall be for the express benefit of the Investor and the
Investor shall be a third party beneficiary thereof. The Investor
shall have the right, which may be exercised by written notice to the
Company delivered during the period commencing on the date of delivery
of the Competing Investment Notice to the Investor and ending on the
date which is the later of (i) the 30th day thereafter, (ii) the
execution by the Company of a binding agreement providing for the
Competing Investment (or, if no such agreement is executed, the
consummation of such Competing Investment) and (iii) the second
Business Day after the Company notifies the Investor in writing it
will execute an agreement effectuating (or consummate, as the case may
be) the transactions contemplated in the preceding clause (ii),
provided that such notification shall not be deemed given unless such
agreement is in fact executed (or transaction consummated, as the case
may be) within such two Business Day period, notwithstanding the
provisions of Section 6.1(A), to discuss the merits of the Competing
Investment with the Company and the Board or to make alternative
public or private proposals with respect thereto. The Investor shall
also have the right, exercisable by delivering a notice (the
"Competitor Release Notice") to the Company within the time period
specified below, of its election to immediately terminate the
Formation Agreement (the election of the Investor to so terminate the
Formation Agreement, a "Release Event"), which termination shall be
carried out, (i) if the Competing Investment resulting in such Release
Event occurs or is consummated, or if the agreement providing therefor
is executed by the parties thereto, prior to the seventh anniversary
of the date of this Agreement, in accordance with the provisions of
Section 9.2(d)(X) of the Formation Agreement as if an Involuntary
Default described therein had occurred (and as if the Investor was the
non-defaulting "Party" for purposes of Section 9.2(d)(X) of the
Formation Agreement) upon consummation of the Competing Investment,
and (ii) in all other cases, in accordance with the provisions Section
9.2(d)(Y) of the Formation Agreement as if an Involuntary Default
described therein had occurred (and as if the Investor was the
non-defaulting "Party" for purposes of Section 9.2(d)(Y) of the
Formation Agreement). A Release Event shall be irrevocable and binding
upon the Investor and the Company, except that (A) the Investor may,
in the case of a termination carried out in accordance with clause (i)
of the preceding sentence, rescind such Release Event (in which event
all rights and obligations of the parties shall be as if no Release
Event shall have ever occurred) for a period of five Business Days
after the determination of Fair Market Value (as defined in, and
calculated pursuant to, the Formation Agreement) by delivering a
written notice of such rescission to the Company within such period,
and (B) the Investor may rescind such Release Event (in which event
all rights and obligations of the parties shall be as if no Release
Event shall have ever occurred) for a period of five Business Days
following the entry of a final and non-appealable Order as
contemplated by the following sentence and (C) the Release Event shall
automatically be rescinded (in which event all rights and obligations
of the parties shall be as if no Release Event shall have occurred) if
the Competing Investment which triggered such Release Event was not
consummated, as advised in writing by the Company to the Investor. The
closing of the transfer of the Investor's or the Company's Venture
Interest, as applicable (as defined in the Formation Agreement)
following a Release Event shall be as soon as practicable following
the expiration or termination of all waiting periods, if any, under
the HSR Act and in any event no later than the later to occur of (I)
15 days after the delivery of the Competitor Release Notice and (II) 5
business days after the expiration or termination of all waiting
periods, if any, under the HSR Act, subject to no Order having been
entered, promulgated or enforced by a court or governmental authority
of competent jurisdiction which prohibits such transaction (and the
Investor and the Company shall use commercially reasonable efforts to
have any such Order lifted or terminated in order to allow
consummation of such transaction unless and until such time as such
Order becomes final and non-appealable). The Competitor Release
Notice, in order to result in the rights described above, must be
delivered by the Investor to the Company within twenty Business Days
after the earlier of (i) the public announcement by the Company of the
consummation of the Competing Investment, and (ii) the Company
notifying the Investor in writing that the Competing Investment has
been consummated (and the Company agrees to promptly so notify the
Investor); provided, however, that the Investor may deliver a
Competitor Release Notice at any time after it becomes aware of the
consummation of a Competing Investment until twenty Business Days
after either of the events described in clauses (i) or (ii) above
shall have occurred. Notwithstanding anything to the contrary in this
Agreement, following consummation of the Competing Investment, the
Investor, with the consent of the Company, may engage in discussions
with the Company as to matters relating to the Joint Venture Agreement
(including the entity established pursuant to the Formation Agreement)
and the Research Alliance Agreement, including the terms of a purchase
or sale of any interest therein. Notwithstanding anything herein to
the contrary, solely for purposes of Section 5.2(z), 6.2(e) and clause
(iii) and the reference to Sections 8.1(b) and (c) contained in the
second to last sentence of Section 6.9, the Release Event will not be
deemed to have occurred (and the rights and obligations of the parties
referenced therein will not come into effect) until the earlier of (I)
the time, following a Release Event, of the consummation of the
transfer of the Company's or the Investor's Venture Interest, as
applicable (each as defined in the Formation Agreement) in connection
with such Release Event and (II) six months following such Release
Event. Upon the occurrence of a Release Event, (i) the Standstill
Period shall be extended, in respect of the sections indicated, and to
the extent provided, in Section 10.2(iv), (ii) the Company shall file
and use commercially reasonable efforts to obtain and maintain the
effectiveness of a shelf registration statement on the terms set forth
in the Registration Rights Agreement, (iii) the Investor shall
immediately cause all of the Investor Nominees then serving on the
Board to offer their resignations from the Board, and the Company's
obligations to designate Investor Nominees to the Board pursuant to
Section 5 shall terminate, (iv) the parties' obligations and rights
pursuant to Section 6.7(a), Section 8.1(b) and (c), Section 8.2,
Section 8.3 and Section 8.8 shall terminate, (v) the provisions of
Section 6.3(g) shall thereafter apply and (vi) the provisions of
Section 6.1(A), Section 6.2(e), Section 6.6, Section 6.7(b) through
(e) and Section 6.8 shall remain in full force and effect in
perpetuity. The rights of the Investor to terminate the Formation
Agreement pursuant to Section 6.9 and Section 8.2(c) hereof shall
automatically be transferred and assigned at the election of the
Investor, upon notice to and acknowledgment by the Company of such
notice, but without any consent required on the part of the Company,
to any Spin-Off Entity (which term, for purposes of this sentence,
shall include any Person who would otherwise be deemed a Spin-Off
Entity but for such Person's status as a Subsidiary of the Investor)
which is a Subsidiary of the Investor or satisfies each of the
conditions set forth in clauses (i) through (v) of the definition of
the term "Sale of Ag Products."
Section 6.10. Rights of the Company upon a Trigger Event.
In the event that:
(A) the Research Alliance Agreement or the Formation
Agreement shall be terminated (notwithstanding the survival
of certain obligations of the parties for the periods
following such termination as provided in Section 9.4 of the
Formation Agreement) other than (i) a termination of the
Research Alliance Agreement or the Formation Agreement as a
result of a willful and substantial breach by the Company of
any material term of the Formation Agreement or the Research
Alliance Agreement, (ii) a termination of the Research
Alliance Agreement at or after the sixteenth anniversary of
the date of such agreement, and (iii) a termination of the
Formation Agreement or the Research Alliance Agreement in
connection with the acquisition by one party of the Venture
Interest of the other pursuant to a Change in Control
Release Event or a Release Event and where the consequences
set forth in Section 8.2(b) or in the second to last
sentence of Section 6.9, as and to the extent applicable,
shall apply; or
(B) there shall have occurred a Sale of Ag Products;
(any of such events, a "Trigger Event"), then, effective immediately
upon the occurrence of such Trigger Event (i) the Standstill Period
shall be extended, in respect of the sections indicated, and to the
extent provided, in Section 10.2(iv), (ii) the Company shall file and
use its commercially reasonable efforts to obtain and maintain the
effectiveness of a shelf registration statement on the terms set forth
in the Registration Rights Agreement, (iii) the Investor shall
immediately cause all Investor Nominees then serving on the Board to
offer their resignations from the Board, and the Company's obligations
to designate Investor Nominee to the Board pursuant to Section 5 shall
terminate, (iv) the parties' obligations and rights pursuant to the
provisions of Section 6.6(b) (but only with respect to Section 6.6(b)
in the case of a Trigger Event pursuant to clause (B) above or in the
case of a Trigger Event pursuant to clause (A) above occurring as a
result of a willful and substantial breach by the Investor of any
material term of the Joint Venture Agreement or the Research Alliance
Agreement), Section 6.7(a), Section 6.9, clauses (b) and (c) of
Section 8.1, Section 8.2, Section 8.3, and Section 8.8 shall
terminate, (v) the provisions of Section 6.3(g) shall thereafter
apply, and (vi) Section 6.1(A), Section 6.2(e), Section 6.6(a),
Section 6.6(b) (but only with respect to Section 6.6(b) in the case of
a Trigger Event pursuant to clause (A) above other than a Trigger
Event occurring as a result of a willful and substantial breach by the
Investor of any material term of the Joint Venture Agreement or the
Research Alliance Agreement), Section 6.7(b)-(e) and Section 6.8 shall
remain in full force and effect in perpetuity. The Investor agrees
that it will not permit a transaction constituting a Sale of Ag
Products (including, without limitation, a transaction that would
otherwise be excluded from the definition of a Sale of Ag Products by
reason of the satisfaction of the conditions set forth in clauses (i)
through (v) of the proviso thereof) to be consummated or a binding
agreement with respect thereto to be entered into prior to the first
anniversary of the Closing Date.
SECTION 7
PRE-CLOSING COVENANTS
Section 7.1. Taking of Necessary Action. Each of the parties
hereto agrees to use its reasonable best efforts promptly to take or
cause to be taken all action and promptly to do or cause to be done
all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Closing of the
transactions contemplated by this Agreement. Without limiting the
foregoing, the Investor and the Company (a) will use their reasonable
best efforts to make all filings, including filings under the HSR Act,
and obtain all other Regulatory Approvals necessary or, in the opinion
of the Investor or the Company, advisable in order to permit the
consummation of the transactions contemplated hereby and (b) will not
take actions (including by making other acquisitions of or investments
in any other Person) that could reasonably be expected to have the
effect of delaying or hindering the Closing of the transactions
contemplated hereby. Each party shall execute and deliver both before
and after the Closing such further certificates, agreements and other
documents and take such other actions as the other party may
reasonably request to consummate or implement the transactions
contemplated hereby or to evidence such events or matters.
Section 7.2. Notifications. (a) At all times prior to the
Closing Date, the Investor shall promptly notify the Company and the
Company shall promptly notify the Investor in writing of any fact,
change, condition, circumstance or occurrence or nonoccurrence of any
event which will or is reasonably likely to (i) constitute a breach of
any representation or warranty of such party contained in the
Transaction Agreements; or (ii) result in the failure to satisfy the
conditions to be complied with or satisfied by it hereunder; provided,
that the delivery of any notice pursuant to this Section 7.2 shall not
limit or otherwise affect the remedies available hereunder to any
party receiving such notice.
(b) To the extent that the Investor or the Company is
required to make any filings with the Commission in connection with
the transactions contemplated by this Agreement, such party shall give
the other party a reasonable opportunity to review and comment on such
filings prior to the filing thereof with the Commission.
Section 7.3. No-Shop. From the date hereof until the Closing
or the earlier termination of this Agreement, except with respect to
an unsolicited Proposal to the extent required by the fiduciary
obligations of the Board of Directors of the Company, as determined in
good faith by the Board of Directors based on the advice of outside
counsel, the Company shall not and shall not permit or authorize any
of its Subsidiaries, Affiliates or Representatives to, directly or
indirectly, (i) solicit or initiate, or encourage the submission of,
any Proposal with respect to the Company, or (ii) participate in any
discussions or negotiations regarding, or furnish to any Person any
information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Proposal, other than the
transaction contemplated hereby with the Investor.
Section 7.4. Share Listing. As soon as practicable but in
any event prior to the date that the Closing would otherwise have
occurred, the Company shall take reasonable action as is required to
cause the shares of Common Stock into which the shares of Series A
Convertible Preferred Stock are convertible to be listed for trading
on the NYSE.
Section 7.5. Registration Rights Agreement. At the Closing,
the Company and the Investor shall enter into the Registration Rights
Agreement.
Section 7.6. Pre-Closing Information. The Company shall (and
shall cause each of its Subsidiaries to), from and after the date
hereof and until the Closing and subject to Section 8.1(a), afford to
the Investor and its Representatives reasonable access, upon
reasonable notice and in such manner as will not unreasonably
interfere with the conduct of the Company's business, to material
financial information regarding the Company. The Company will
reasonably promptly inform the Investor of the principal terms of any
Proposal with respect to which the Company has entered into
substantive discussions or negotiations.
SECTION 8
ADDITIONAL COVENANTS
Section 8.1. Certain Information. (a) Subject to applicable
law and the provisions of this Agreement, all information provided to
the Investor or the Company hereunder shall be provided in confidence
in accordance with the provisions of the Confidentiality Agreement
(the "Confidentiality Agreement"), dated March 13, 1997, between the
Company and the Investor.
(b) At such time as the Investor shall notify the Company
that it shall account for its investment in the Company pursuant to
the full equity method (including earnings and investments), the
Company will, at Investor's sole cost and expense, cooperate to the
extent necessary to furnish to the Investor all information that is
required by GAAP to enable the Investor to account for its investment
in such manner and the Company hereby consents to the Investor doing
so. To the extent reasonably requested by the Investor, the Company
will and will cause its Representatives to, at the Investor's sole
cost and expense, provide information regarding the Company and its
Subsidiaries, and otherwise cooperate with, the Investor so as to
enable the Investor to prepare financial statements in accordance with
GAAP and to comply with its disclosure requirements under securities
laws and regulations.
(c) From time to time upon reasonable advance request by the
Company, the Investor will notify the Company of the amount of each
class of Voting Securities then Beneficially Owned by the Investor
Group. From time to time upon reasonable advance request by the
Investor, the Company will provide the Investor with information known
to the Company with respect to the number of votes entitled to be
voted by shareholders of the Company at the time of such request;
provided, however, that the Company shall not be obligated pursuant to
this Section 8.1(c) to make any general solicitation of shareholders
of the Company in connection therewith.
Section 8.2. Right to Participate in Sale of the Company.
(a) Prior to the Closing and thereafter, so long as the Ownership Cap
is 18% or more, (I) the Company shall not enter into, and the Board
shall not publicly recommend to shareholders or approve, a definitive
agreement providing for a Change in Control Transaction and (II) the
Board shall not redeem the Preferred Stock Purchase Rights or
otherwise amend or modify the Amended Rights Agreement (or a
Substantially Similar Plan) to be inapplicable (including by taking
action to cause a Section 11(a)(ii) Event or Section 13 Event (each as
defined in the Amended Rights Agreement as in effect on the date
hereof), not to occur that, absent such action, would otherwise have
occurred, or to redeem the Preferred Stock Purchase Rights) to a
proposed Change in Control Transaction for which no definitive
agreement is entered into as a means, in any such case, intended to
permit a proposed Change in Control Transaction to be consummated
without causing a Triggering Event (as defined in the Amended Rights
Agreement) to occur or otherwise exempt such transaction therefrom,
unless prior thereto (i) the Investor shall have been given at least
30 days prior notice of the proposed Change in Control Transaction and
of the material terms thereof and a full and fair opportunity, as
conclusively determined by the Board in good faith and in the exercise
of its fiduciary duties, after consultation with outside counsel, to
participate in the Company's bidding process (the "Process")
undertaken by the Company (if any) in advance of such Change in
Control Transaction on terms, and to have any proposal submitted by
the Investor pursuant to clause (ii) below evaluated on a basis, no
less favorable to the Investor than those afforded to other interested
parties, (ii) the Investor shall have been permitted notwithstanding
the restrictions contained in Section 6.1, to submit a proposal for an
alternative transaction during the Interim Period (as defined below)
or in connection with such Process, subject in any event to the
Board's right to accept or reject any such proposal as may be made and
(iii) the Interim Period shall have terminated. "Interim Period" shall
mean the period commencing on the date of the delivery to the Investor
by the Company of written notice (such notice, the "Change in Control
Transaction Notice") of its considering to take any action specified
in clause (I) or clause (II) of the preceding sentence and ending on
the date which is the later of (i) the 30th day thereafter, and (ii)
the public announcement by the Company of the taking of any action
specified in clause (I) or clause (II) of the preceding sentence. In
connection with the foregoing, the Investor agrees that if the Company
establishes procedures uniformly applicable to all interested parties
for the evaluation of proposals for a Change in Control Transaction
and if the Investor wishes to participate in the sale process, then,
the Investor will, subject to the Investor not violating applicable
law (other than violations based on claims or allegations of breach of
the Company's fiduciary duty), comply with such procedures as long as
such procedures (i) are applied uniformly to all interested parties
(and the Company agrees that it shall give the Investor at least one
Business Day's prior written notice if any such procedures are not to
be uniformly applied to all such interested parties), (ii) except as
conclusively determined by the Board in good faith and in the exercise
of its fiduciary duties, after consultation with outside counsel, do
not have a materially greater impact when applied to the Investor than
when applied to other participants, and (iii) except as provided in
Section 8.2(c) below and the Formation Agreement, shall not establish
procedures relating to the Joint Venture Agreement, or the entity
established thereby, or the Research Alliance Agreement, or the rights
and obligations of the Investor relating thereto. If the Company
rejects any offer made by the Investor pursuant to the Process, the
Company will advise the Investor in writing of the reasons for such
rejection.
(b) Following the consummation of a Change in Control
Transaction, unless either (x) any Person or 13D Group shall
Beneficially Own Common Securities representing an Equity Percentage
of more than 50% of the Company or of the common securities of the
company or other entity surviving such Change in Control Transaction
or (y) the Investor Group shall Beneficially Own Voting Securities
representing less than 5% of the Total Voting Power of the Company or
the voting power of the company or other entity surviving such Change
in Control Transaction (a Change in Control Transaction where neither
clause (x) nor (y) is satisfied, a "Surviving Change in Control
Transaction"), then (unless, in the case of clause (i) below, the
Company or other entity surviving such Change in Control Transaction
shall otherwise determine as to all of such provisions) (i) the
provisions of Section 6.1(A), Section 6.6, Section 6.7 (other than
clause (c) thereof to the extent that the Common Stock of the Company
or the voting securities of the company or other entity surviving such
Change in Control Transaction (1) is not entitled to more than one
vote per share or (2) is entitled to more than one vote per share, but
all shares of such class are so entitled), Section 6.8, Section 6.10,
Sections 8.1(b) and (c) and Sections 8.2(a) and (b), shall continue in
full force and effect through the balance of the Standstill Period
(except that the Ownership Cap shall be appropriately adjusted to
equal the ownership that the Investor Group would have owned after the
Surviving Change in Control Transaction if the Investor Group had
owned Common Securities equal to the Ownership Cap immediately prior
to the Surviving Change in Control Transaction), (ii) the provisions
of Section 5 and Section 6.2 shall terminate and (iii) the provisions
of Section 6.3(g) shall thereafter apply provided, however,
notwithstanding anything to the contrary contained in this Agreement
(other than the following sentence), that at and following such time
as (a) any Person or 13D Group shall Beneficially Own Common
Securities representing an Equity Percentage of more than 50% of the
Company or the company or other entity surviving such Change in
Control Transaction or (b) the Investor Group shall Beneficially Own
Voting Securities representing less than 5% of the Total Voting Power
of the Company or of the voting power of the company or other entity
surviving such Change in Control Transaction, then, in either case,
none of the provisions or obligations set forth in this Agreement
shall be applicable to the members of the Investor Group or to any
Other Investor Affiliate. Following a Surviving Change in Control
Transaction, the Company (or the surviving company or entity) shall
file and use its commercially reasonable efforts to obtain and
maintain the effectiveness of a shelf registration statement on the
terms set forth in the Registration Rights Agreement. Notwithstanding
anything to the contrary contained in the Agreement, following any
Change in Control Transaction, the provisions of Section 8.2(c) shall
apply to such Change in Control Transaction and, unless the Company or
other entity surviving such Change in Control Transaction shall
otherwise determine by written notice to the Investor at least 10 days
prior to the date by which the Investor must exercise its rights to
declare a Change in Control Release Event to occur as a result of such
Change in Control Transaction, the provisions of Section 8.2(c) and
Section 6.9 shall apply to any Change in Control Transaction or
Competing Investment, as the case may be, arising thereafter with
respect to the Company or other entity surviving such Change in
Control Transaction.
(c) Without limiting the rights of the Investor set forth in
Section 8.2(a) hereof, the Investor shall have the right, exercisable
by delivering a notice (the "Change in Control Release Notice") to the
Company within the time period specified below, of its election to
immediately terminate the Formation Agreement (the election of the
Investor to so terminate the Formation Agreement, a "Change in Control
Release Event"), which termination shall be carried out, (i) if the
Change in Control Transaction resulting in such Change in Control
Release Event occurs or is consummated, or if the Company enters into,
or the Board publicly recommends to shareholders or approves, a
binding agreement providing for a Change in Control Transaction prior
to the sixth anniversary of the date of this Agreement (or, in the
case of a Change of Control Transaction involving a Person who is not
a Competitor, the fifth anniversary of the date of this Agreement), in
accordance with the provisions of Section 9.2(d)(X) of the Formation
Agreement as if an Involuntary Default described therein had occurred
(and as if the Investor was the non-defaulting "Party" for purposes of
Section 9.2(d)(X) of the Formation Agreement) upon consummation of the
Change in Control Transaction, and (ii) in all other cases, in
accordance with the provisions of Section 9.2(d)(Y) of the Formation
Agreement as if an Involuntary Default described therein had occurred
(and as if the Investor was the non-defaulting "Party" for purposes of
Section 9.2(d)(Y) of the Formation Agreement). A Change in Control
Release Event shall be irrevocable and binding upon the Investor and
the Company, except that (A) the Investor may, in the case of a
termination carried out in accordance with clause (i) of the preceding
sentence, rescind such Change in Control Release Event (in which event
all rights and obligations of the parties shall be as if no Change in
Control Release Event shall have ever occurred) for a period of five
Business Days after the determination of Fair Market Value (as defined
in, and calculated pursuant to, the Formation Agreement) by delivering
a written notice of such rescission to the Company within such period,
and (B) the Investor may rescind such Change in Control Release Event
(in which event all rights and obligations of the parties shall be as
if no Change in Control Release Event shall have ever occurred) for a
period of five Business Days following the entry of a final and
non-appealable Order as contemplated by the following sentence, and
(C) the Change in Control Release Event shall be automatically
rescinded (in which event all rights and obligations of the parties
shall be as if no Change in Control Release Event shall have occurred)
if the Change in Control Transaction which triggered such Change in
Control Release Event was not consummated, as advised in writing by
the Company to the Investor. The closing of the transfer of the
Investor's or the Company's Venture Interest, as applicable (as
defined in the Formation Agreement) following a Change in Control
Release Event shall be as soon as practicable following the expiration
or termination of all waiting periods, if any, under the HSR Act and
in any event no later than the later to occur of (I) 15 days after
delivery of the Change in Control Release Notice and (II) 5 business
days after the expiration or termination of all waiting periods, if
any, under the HSR Act, subject to no Order having been entered,
promulgated or enforce by a court or governmental authority of
competent jurisdiction which prohibits such transaction (and the
Investor and the Company shall use their commercially reasonable
efforts to have any such Order lifted or terminated in order to allow
consummation of such transaction unless and until such time as such
Order becomes final and non-appealable). The Change in Control Release
Notice, in order to result in the rights described above, must be
delivered by the Investor to the Company within twenty Business Days
after the earlier of (i) the public announcement by the Company of the
consummation of the Change in Control Transaction, and (ii) the
Company notifying the Investor in writing that the Change in Control
Transaction has been consummated (and the Company agrees to promptly
so notify the Investor); provided, however, that the Investor may
deliver a Change in Control Release Notice at any time after it
becomes aware of the consummation of a Change in Control Transaction
until twenty Business Days after either of the events described in
clauses (i) or (ii) above shall have occurred. Notwithstanding
anything to the contrary in this Agreement, following consummation of
Change in Control Transaction, the Investor may engage in discussions
with the Company (and/or the Person consummating such Change in
Control Transaction) as to matters relating to the Joint Venture
Agreement (including the entity established pursuant to the Formation
Agreement) and the Research Alliance Agreement, including the terms of
a purchase or sale of any interest therein..
Section 8.3. Use of Proceeds. (a) Subject to the provisions
of this Agreement, as promptly as practicable, but in no event later
than five business days after the Closing, the Company shall commence
a self-tender offer (the "Offer") to purchase 16,444,586 shares of
Common Stock (the "Requisite Number") at a price per share not in
excess of $104 per share (the "Maximum Offer Price"), nor less than a
per share price to be determined in the sole discretion of the Company
after consultation with the Investor (the price range from such
maximum to minimum price, the "Per Share Price Range") net to the
seller in cash. Pursuant to the Offer, the Company will determine the
single per share price, within the Per Share Price Range, net to the
seller in cash (the "Offer Purchase Price") that it will pay for
shares properly tendered pursuant to the Offer, taking into account
the number of shares so tendered and the prices specified by the
tendering stockholders. The Company will select the lowest Offer
Purchase Price that will allow it to buy the Requisite Number of
shares of Common Stock (or such lesser number of shares as are
properly tendered and not withdrawn at prices within the Per Share
Price Range). All shares of Common Stock properly tendered at prices
at or below the Offer Purchase Price and not withdrawn will be
purchased at the Offer Purchase Price, subject to the terms and
conditions of the Offer. All shares of Common Stock acquired in the
Offer will be acquired at the Offer Purchase Price. Subject to the
terms and conditions thereof, the Offer shall expire at midnight New
York City time on the date that is 20 business days from the date the
Offer is first published or sent to holders of Common Stock; provided,
however, that the Company may (A) extend the Offer, if at the
scheduled expiration date of the Offer any of the conditions to the
Company's obligation to accept for payment, and pay for, shares of
Common Stock shall not have been satisfied or waived, until such time
as such conditions are satisfied or waived, (B) extend the Offer for
any period required by any rule, regulation, interpretation or
position of the Commission or the staff thereof applicable to the
Offer and (C) extend the Offer for any reason on one or more occasions
for an aggregate period of not more than 5 business days beyond the
latest expiration date that would otherwise be permitted under clause
(A) or (B) of this sentence. No member of the Investor Group shall,
and the Investor shall use commercially reasonable efforts to cause
all Other Investor Affiliates not to, tender any shares of Common
Stock owned by them into the Offer.
(b) If the Company, pursuant to the Offer, shall have
purchased fewer than the Requisite Number of shares of Common Stock,
the Company shall use commercially reasonable efforts during the
remainder of the Company Buy Back Period to repurchase shares of
Common Stock from the shareholders of the Company other than the
Investor, any member of the Investor Group or any Other Investor
Affiliates in open market purchases or pursuant to additional
self-tender offers by the Company to the extent necessary so that the
Total Ownership Percentage of the Investor Group shall be equal to
Ownership Cap; provided, however, that in no event shall (i) unless
the provisions of clause (c) of this Section 8.3 are applicable, the
Company be required to pay greater than $104 per share of Common Stock
in any such repurchase, (ii) the aggregate amount paid by the Company
(deducting therefrom all amounts paid by the Investor to the Company
pursuant to paragraph (c) below) for shares of Common Stock pursuant
to the Offer and pursuant to additional repurchases under this Section
8.3(b) exceed the total Purchase Price, and (iii) the number of shares
of Common Stock acquired by the Company pursuant to the Offer and this
Section 8.3(b) exceed the Requisite Number.
(c) Following completion of the Offer, the Investor shall
have the right to designate in writing from time to time a maximum
price or prices at which the Company shall seek to purchase shares of
Common Stock that is in excess of $104 per share provided that at the
end of the Company Buy-Back Period, the Investor shall pay in cash in
immediately available funds to the Company an amount equal to the
excess, if any, of (x) the weighted average cost to the Company for
the purchase of all shares of Price Protected Common Stock (as defined
below) purchased by the Company during the Company Buy-Back Period
over (y) the Purchase Price, together with interest thereon at the
Company's borrowing rate under its bank lines of credit, for each day
the Company has incurred all or any portion of such excess. "Price
Protected Common Stock" shall mean all shares of Common Stock
purchased by the Company pursuant to the Offer and the first shares of
Common Stock purchased by the Company after the consummation of the
Offer at or below the maximum price or prices specified by the
Investor pursuant to this paragraph (c) which, taken together with the
number of shares of Common Stock purchased pursuant to the Offer, are
equal to the Requisite Number.
(d) References herein to Requisite Number and price per
share of Common Stock shall be appropriately adjusted in the event of
any stock split, stock combination or similar adjustment in the number
of shares of Common Stock outstanding.
Section 8.4. Rights Agreement. From and after the date
hereof the Company shall not amend, modify, waive, terminate or
invalidate any provision of the Amended Rights Agreement or any
similar shareholder rights plan or similar device (a "Substantially
Similar Plan"), in a manner which would cause the Investor Group to
become an "acquiring person" under the Amended Rights Agreement or any
Substantially Similar Plan upon the exercise of any rights granted to
the Investor hereunder.
Section 8.5. Publicity. Except as required by Law or by
obligations pursuant to any listing agreement with any relevant
securities exchange, neither the Company or any of its Affiliates nor
the Investor or any of its Affiliates shall, without the prior written
consent of the other, which consent shall not be unreasonably withheld
or delayed, make any public announcement or issue any press release
with respect to the transactions contemplated by this Agreement. Prior
to making any public disclosure required by applicable Law or pursuant
to any listing agreement with any relevant national exchange, the
disclosing party shall consult with the other party, to the extent
feasible, as to the content of such public announcement or press
release. Notwithstanding the foregoing, the Investor and the Company
may, in meetings with securities and other financial analysts and
press interviews, disclose information (other than non-public
information) concerning the transactions contemplated hereby and the
Investor's investment in the Company and in a manner not inconsistent
with prior joint public announcements regarding the transactions and
in a manner consistent with the other terms of this Agreement.
Section 8.6. Legend. The Investor agrees to the placement on
certificates representing shares of Series A Convertible Preferred
Stock purchased by the Investor pursuant hereto, of a legend
substantially as set forth below (except that the first sentence of
such legend shall not be placed on any shares of Common Stock issuable
upon conversion of Series A Convertible Preferred Stock that have been
registered under the Securities Act or if, in the opinion of counsel,
such sentence is not required under the Securities Act), unless the
Company determines otherwise, in accordance with the opinion of
counsel:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
NON-U.S. JURISDICTION AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
ANY APPLICABLE SECURITIES LAWS OF SUCH OTHER JURISDICTIONS. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS (INCLUDING PROVISIONS THAT RESTRICT THE TRANSFER OF SUCH
SECURITIES) OF AN INVESTMENT AGREEMENT DATED AS OF AUGUST 6, 1997
BETWEEN THE E.I. DU PONT DE NEMOURS AND COMPANY AND PIONEER HI-BRED
INTERNATIONAL, INC. (THE "COMPANY"), COPIES OF WHICH ARE ON FILE AT
THE OFFICES OF THE SECRETARY OF THE COMPANY."
Section 8.7. No Restrictions. For so long as the Total
Ownership Percentage of the Investor Group shall equal 10% or more, in
the aggregate, the Company will not take or recommend to its
shareholders any amendment to the Company's Articles of Incorporation
or Bylaws which would impose limitations on the legal rights of the
Investor Group as Company shareholders (other than those imposed
pursuant to this Agreement) based upon the size of security holding
permitted under this Agreement, the business in which a security
holder is engaged or other considerations applicable to the Investor
Group and not to security holders generally.
Section 8.8. Amendment to Articles of Incorporation. So long
as the Ownership Cap is 18% or more, the Company will propose, and the
Board shall recommend for adoption by the shareholders of the Company,
no later than the first annual meeting of shareholders following the
end of the Company Buy Back Period (or such earlier time as the Total
Ownership Percentage of the Investor Group shall equal the Ownership
Cap), and no less frequently than each annual meeting thereafter until
the Reclassification Amendment (as hereinafter defined) is adopted, an
amendment (the "Reclassification Amendment") to the Articles of
Incorporation of the Company providing for, and only for, (a) the
authorization of a new class of common stock (in addition to the
Common Stock) to be designated as the Class B Common Stock and
consisting of the same number of authorized shares as the number of
authorized shares of Series A Convertible Preferred Stock and which
Class B Common Stock shall, as to each share, have the identical
rights, powers and preferences (including as to dividends, voting
rights, liquidation preference, restriction on transfer, adjustment
and conversion) as pertains to each share of Series A Convertible
Preferred Stock and (b) upon the adoption and effectiveness of the
Reclassification Amendment, the automatic reclassification of each
outstanding share of Series A Convertible Preferred Stock into one
validly issued and fully paid share of Class B Common Stock
(whereupon, all references to the Series A Convertible Preferred Stock
in this Agreement shall thereafter mean and refer to the corresponding
number of shares of Class B Common Stock). In connection with each
meeting of the Company's shareholders at which the Reclassification
Amendment is submitted for approval of the Company's shareholders, the
Company shall use its commercially reasonable efforts to cause the
adoption of the Reclassification Amendment by the shareholders of the
Company, including soliciting proxies in favor of the adoption of the
Reclassification Amendment by the shareholders of the Company. If,
after the date of the fifth annual meeting of the Company's
shareholders following the end of the Company Buy-Back Period, (x) the
Reclassification Amendment shall not have been approved by the
shareholders of the Company, and (y) the Investor shall have been
advised in writing by its regular independent public accounting firm
that unless the shares of Series A Convertible Preferred Stock owned
by the Investor Group are converted into Common Stock in accordance
with this Section 8.8, such firm cannot deliver its opinion that the
Investor is entitled to account for its investment in the Company on
the full equity accounting method (including earnings and investments)
(other than, in any such case referred to in this clause (y), as a
result of the failure of the Investor to fully exercise its rights
under this Agreement, including its rights to acquire Voting
Securities hereunder (but assuming for purposes hereof that the
Investor owned Voting Securities equal to the then applicable
Ownership Cap) or to designate Investor Nominees for election or
appointment to the Board or to have such Board members participate as
Board members in the management of the business and affairs of the
Company), then, at the written request of the Investor, both parties
will use commercially reasonable efforts to seek approval of the
Commission or its staff that would permit the Investor to account (or,
if such accounting has theretofore been allowed, to permit the
Investor to continue to account) for its investment in the Company on
the full equity accounting method (including earnings and investments)
without the conversion of the Series A Convertible Preferred Stock
owned by the Investor into Common Stock on the terms set forth below.
If the Commission or its staff shall not have approved such accounting
within six months after the Investor's written request referred to
above, the Investor shall have the option (the "Optional Conversion
Right"), which shall be exercisable by the Investor by delivering
written notice to the Company within 30 days after the end of such six
month period, to convert all of the Series A Convertible Preferred
Stock owned by the Investor Group into Common Stock as set forth in
Section 6(a)(iii) of the Certificate of Designation for the Series A
Convertible Preferred Stock. All Common Stock issued to the Investor
Group upon exercise of the Optional Conversion Right, together with
all other shares of Common Stock thereafter acquired by the Investor
pursuant to the Agreement, shall immediately upon each acquisition
thereof, be deposited by the Investor Group into a permanent voting
trust in accordance with applicable Law (the "Voting Trust") pursuant
to a perpetual voting trust agreement in a form reasonably
satisfactory to the Company, and, with respect to matters contained
therein which are not specifically contemplated hereby, in a form
reasonably satisfactory to the Investor, and with an independent trust
company, commercial bank or other financial institution reasonably
satisfactory to the Company and the Investor designated as voting
trustee (the "Voting Trustee"). Pursuant to such Voting Trust, the
aggregate number of Votes as the Investor Group would from time to
time have been able to vote if the Investor had not exercised the
Optional Conversion Right and continued to own the Series A
Convertible Preferred Stock will be voted by the Voting Trustee at the
direction of the Investor consistent with how such Votes could have
been voted under this Agreement if the Optional Conversion Right had
not been exercised, and the balance of the Votes attributable to all
shares of Common Stock deposited in the Voting Trust shall be voted by
the Voting Trustee pro rata in accordance with the votes of all
shareholders of the Company other than the members of the Investor
Group and the Other Investor Affiliates. The Voting Trust shall
provide for the release and delivery to the Investor of shares of
Common Stock, free of the restrictions of the Voting Trust, and the
termination of the provisions thereof with respect to shares of Common
Stock, upon transfer of such shares by the Investor to unaffiliated
parties in accordance with the provisions of this Agreement. The
parties hereto hereby agree to enter into arrangements to permit the
timely tender into a tender or exchange offer of Common Stock subject
to the Voting Trust in a manner similar to that applied to the Series
A Convertible Preferred Stock. There shall not be any obligation to
deliver any shares of Common Stock to the Voting Trust, and the Voting
Trust shall immediately terminate if it has already been established,
at such time as all outstanding shares of Common Stock (or such
securities as the Common Stock has been converted into) has the same
votes per share if any, as all other such shares or other securities,
without any "time phased" voting.
Section 8.9. HSR Act Filings. Notwithstanding anything to
the contrary contained in this Agreement, the Investor Group shall be
entitled to make any HSR Act filing in connection with the Investor
Group's intention to acquire or its acquisition of Common Securities
pursuant to Section 6.1(A)(a)(iii) or Section 6.7 of this Agreement.
The Company shall use its reasonable best efforts to make all HSR
filings required to be made by it and to cause any waiting period
under HSR Act related to the Investor's and its filings to expire as
soon as practicable.
SECTION 9
CONDITIONS
Section 9.1. Conditions of Investor's Obligation. The
obligation of the Investor to purchase and pay for the Shares at the
Closing is subject to satisfaction or waiver of each of the following
conditions precedent:
(a) Representations and Warranties; Covenants. The
representations and warranties of the Company contained in this
Agreement shall be true and correct in all respects on and as of the
date of this Agreement. The Company shall have in all material
respects performed all obligations and complied with all agreements,
undertakings, covenants and conditions required hereunder to be
performed by it at or prior to the Closing.
(b) Compliance with Laws; No Adverse Action or Decision. No
Governmental Entity of competent jurisdiction shall have issued any
Order restraining, enjoining or otherwise prohibiting the consummation
of the transactions contemplated by the Transaction Agreements. No
action, suit or other proceeding by any Governmental Entity shall have
been instituted that seeks to restrain, enjoin, prohibit or otherwise
make illegal the performance of any of the Transaction Agreements or
the consummation of the transactions contemplated hereby or thereby.
(c) Consents. All Regulatory Approvals from any Governmental
Entity and all consents, waivers or approvals from any other Person
required for or in connection with the execution and delivery of the
Transaction Agreements and the consummation at the Closing by the
parties hereto and thereto of the transactions contemplated hereby and
thereby shall have been obtained or made on terms reasonably
satisfactory to the Investor, except for the failures to obtain such
Regulatory Approvals, consents, waivers and approvals which would not
reasonably be expected to have a Material Adverse Effect, and the
waiting period specified under the HSR Act shall have expired or been
terminated.
(d) Transaction Agreements. The Investor shall have received
counterpart originals or certified or other copies of the Transaction
Agreements.
(e) Registration Rights Agreements. The Investor shall have
received a fully executed counterpart of the Registration Rights
Agreement and the Registration Rights Agreement shall be in full force
and effect.
(f) Consummation of Certain Transactions. The closing under
the Joint Venture Agreement, and all transactions to be consummated in
connection therewith, shall have occurred.
Section 9.2. Conditions of the Company's Obligation. The
obligation of the Company to issue and sell the Shares at the Closing
is subject to satisfaction or waiver of each of the following
conditions precedent:
(a) Representations and Warranties; Covenants. The
representations and warranties of the Investor contained in this
Agreement shall be true and correct on and as of the date of this
Agreement. The Investor shall have in all material respects performed
all obligations and complied with all agreements, undertakings,
covenants and conditions required hereunder to be performed by it at
or prior to the Closing.
(b) Compliance with Laws; No Adverse Action or Decision. No
Governmental Entity of competent jurisdiction shall have issued any
Order restraining, enjoining or otherwise prohibiting the consummation
of the transactions contemplated by the Transaction Agreements. No
action, suit or other proceeding by any Governmental Entity shall have
been instituted that seeks to restrain, enjoin, prohibit or otherwise
make illegal the performance of any of the Transaction Agreements or
the consummation of the transactions contemplated hereby or thereby.
(c) Consents. All Regulatory Approvals from any Governmental
Entity and all consents, waivers or approvals required for or in
connection with the execution and delivery of the Transaction
Agreements and the consummation at Closing by the parties hereto and
thereto on terms reasonably satisfactory to the Company, of the
transactions contemplated hereby and thereby shall have been obtained
or made, except for the failures to obtain such Regulatory Approvals,
consents, waivers and approvals which would not reasonably be expected
to have a material adverse effect on the ability of the Investor to
consummate the transactions contemplated by the Transaction
Agreements, and the waiting period specified under the HSR Act shall
have expired or been terminated.
(d) Transaction Agreements. The Company shall have received
all counterpart originals or certified or other copies of the
Transaction Agreements.
(e) Consummation of Certain Transactions. The closing under
the Joint Venture Agreement, and all transactions to be consummated in
connection therewith, shall have occurred.
SECTION 10
TERMINATION
Section 10.1. Termination. (a) Subject to Section 10.2
hereof, this Agreement may be terminated by notice in writing at any
time prior to the Closing by either the Investor or the Company if:
(i) the Closing shall not have occurred on or before
August 6, 1998; or
(ii) the Company and the Investor so mutually agree in
writing.
(b) Subject to Section 10.2 hereof, and without limiting any
liability of the Company or the Investor for any breach of its
obligations hereunder, this Agreement may be terminated by notice in
writing at any time prior to the Closing (x) by the Investor if a
Change in Control Transaction or a Competing Investment shall have
been consummated or if the Company has entered into a binding
agreement or a letter of intent with respect thereto or (y) by the
Company if a Change in Control Transaction shall have been consummated
or if the Company shall have entered into a binding agreement with
respect thereto.
(c) Subject to Section 10.2 hereof, if the Closing shall
occur, this Agreement may be terminated by one year's prior notice in
writing by either the Investor or the Company which notice may be
delivered at any time after the 15th anniversary of the date of this
Agreement.
Section 10.2. Effect of Termination. If this Agreement is
terminated in accordance with Section 10.1 hereof, this Agreement
shall become null and void and of no further force and effect except
that (i) the terms and provisions of this Section 10.2, Section 8.1(a)
and Section 11.1 (and, in the event this Agreement was terminated in
accordance with Section 10.1(c), then Section 6.2(d) and Section
6.3(f)) shall remain in full force and effect, (ii) so long as any
member of the Investor Group shall own any Series A Convertible
Preferred Stock, the provisions of Section 6.2(b) shall remain in
force and effect, (iii) any termination of this Agreement shall not
relieve any party hereto from any liability for any breach of its
obligations hereunder, regardless of whether such party terminated
this Agreement pursuant to Section 10.1(a)(i); and (iv) subject to the
proviso to the first sentence in Section 8.2(b) hereof, in the event
that a Trigger Event or a Release Event shall have occurred, prior to
such termination, the provisions of Section 6.1(A), Section 6.2(e),
Section 6.3(g), Section 6.6 (to the extent with respect to a Trigger
Event, as provided in Section 6.10), Section 6.7(b) through (e) and
Section 6.8 shall remain in full force and effect.
SECTION 11
MISCELLANEOUS
Section 11.1. Fees and Expenses. Each party shall bear its
own expenses, including the fees and expenses of any Representatives
engaged by it, incurred in connection with the Transaction Agreements
and the transactions contemplated hereby and thereby.
Section 11.2. Survival. The representations, warranties,
covenants and agreements contained in or made pursuant to this
Agreement shall expire as of the consummation of the transactions to
be completed at the Closing, except (i) for the representations and
warranties contained in Sections 3.1, 3.2, 3.4(c), 4.1 and 4.2 which
shall survive without limitation, and (ii) the covenants and
agreements contained in or made pursuant to this Agreement which by
their terms are to survive after the Closing, which shall survive for
the period specified therein, provided, that if a claim or notice is
given with respect to any representation, warranty, covenant or
agreement prior to any such expiration date, the claim with respect to
such representation, warranty, covenant or agreement shall continue
indefinitely until such claim is finally resolved.
Section 11.3. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly
given, if delivered personally, by telecopier or sent by first class
mail, postage prepaid, as follows:
(a) If to the Company, to:
Pioneer Hi-Bred International, Inc,
000 Xxxxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attention: General Counsel
Telephone: 000-000-0000
Telecopier: 000-000-0000
With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 212-859-4000
(b) If to the Investor, to:
E.I. du Pont de Nemours and Company
Agricultural Products
Xxxxxx Xxxx Xxxxx #00
X.X. Xxx 00000
Xxxxxxxxxx, XX 19880-0038
Attention: Xxxxxxx X. Xxxx,
Vice President and General Manager
Telephone: 000-000-0000
Telecopier: 000-000-0000
With a copy to:
Skadden, Arps, Slate, Xxxxxxx
& Xxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
(c) If to any other holder of capital stock of the Company,
addressed to such holder at the address of such holder in the record
books of the Company; or to such other address or addresses as shall
be designated in writing. All notices shall be effective when
received.
Section 11.4. Entire Agreement; Amendment. This Agreement
and the documents described herein or attached or delivered pursuant
hereto (including, without limitation, the Registration Rights
Agreement and the Rights Agreement Amendment) and the Confidentiality
Agreement set forth the entire agreement between the parties hereto
with respect to the matters provided herein and therein. Any provision
of this Agreement may be amended or modified in whole or in part at
any time by an agreement in writing among the parties hereto executed
in the same manner as this Agreement. No failure on the part of any
party to exercise, and no delay in exercising, any right shall operate
as waiver thereof, nor shall any single or partial exercise by either
party of any right preclude any other or future exercise thereof or
the exercise of any other right.
Section 11.5. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed to
constitute an original, but all of which together shall constitute one
and the same document.
Section 11.6. Governing Law; Submission to Jurisdiction.
This Agreement shall be governed by, and interpreted, in accordance
with, the laws of the State of Iowa applicable to contracts made and
to be performed in that state. The parties hereto irrevocably (a)
submit to the exclusive personal jurisdiction of any state or federal
court in the State of Illinois in any suit, action or other legal
proceeding relating to this Agreement; (b) agree that all claims in
respect of any such suit, action or other legal proceeding may be
heard and determined in, and enforced in and by, any such court; and
(c) waive any objection that they may now or hereafter have to venue
in any such court or that such court is an inconvenient forum.
Section 11.7. Successors and Assigns. Except as otherwise
expressly provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon, the Company's successors and assigns.
Section 11.8. Assignment. Except as otherwise expressly
provided in the last sentence of Section 6.9 hereof, neither this
Agreement nor any rights or obligations hereunder shall be assignable.
Section 11.9. Remedies; Waiver. To the extent permitted by
Law, all rights and remedies existing under this Agreement and any
related agreements or documents are cumulative to, and are exclusive
of, any rights or remedies otherwise available under applicable Law.
No failure on the part of any party to exercise, or delay in
exercising, any right hereunder shall be deemed a waiver thereof, nor
shall any single or partial exercise preclude any further or other
exercise of such or any other right.
Section 11.10. Specific Performance. Each party hereto
acknowledges that, in view of the uniqueness of the transactions
contemplated by this Agreement, the other party would not have an
adequate remedy at law for money damages in the event that this
Agreement has not been performed in accordance with its terms. Each
party therefore agrees that the other party shall be entitled to
specific enforcement of the terms hereof in addition to any other
remedy to which it may be entitled, at law or in equity.
Section 11.11. Severability. If any provision of this
Agreement is determined to be invalid, illegal, or unenforceable, the
remaining provisions of this Agreement shall remain in full force and
effect provided that the economic and legal substance of the
transactions contemplated is not affected in any manner materially
adverse to any party. In the event of any such determination, the
parties agree to negotiate in good faith to modify this Agreement to
fulfill as closely as possible the original intent and purpose hereof.
To the extent permitted by law, the parties hereby to the same extent
waive any provision of law that renders any provision hereof
prohibited or unenforceable in any respect.
IN WITNESS WHEREOF, this Agreement has been executed on
behalf of the parties hereto by their respective duly authorized
officers, all as of the date first above written.
PIONEER HI-BRED INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
E.I. DU PONT DE NEMOURS AND COMPANY
By: /s/ Xxxxxxx X. Xxxx
----------------------------------------
Name:
Title:
EXHIBIT A
Form of Registration Rights Agreement
EXHIBIT B
Form of Rights Agreement Amendment
EXHIBIT C
Form of Certificate of Designation
EXHIBIT D
Initial Investor Nominee Notice
EXHIBIT A
Form of Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated
as of ____________, 1997 between Pioneer Hi-Bred International,
Inc., an Iowa corporation (the "Company"), and E.I. du Pont de
Nemours and Company, a Delaware corporation (the "Holder").
RECITALS
WHEREAS, the Holder has purchased from the Company
pursuant to an Investment Agreement, dated as of _____________
___, 1997 (the "Investment Agreement"), between the Company and
the Holder, shares of the Company's Series A Convertible
Preferred Stock, par value $.01 per share (the "Series A
Convertible Preferred Stock");
WHEREAS, the parties hereto desire to set forth the
Holder's rights and the Company's obligations with respect to the
registration of the Registrable Securities pursuant to the
Securities Act; and
WHEREAS, the execution and delivery of this Agreement
by the parties hereto is a condition to the obligations of each
of the Company and the Holder under the Investment Agreement;
NOW, THEREFORE, in consideration of the covenants and
agreements of the Holder and the Company contained herein and in
the Investment Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions and Usage.
---------------------
As used in this Agreement:
1.1. Definitions.
-----------
"Board" shall mean the Board of Directors of the
Company.
"Class B Common Stock" shall mean the Class B Common
Stock of the Company, if and when authorized and issued to the
Holder.
"Closing" shall mean the closing for the purchase of
the Series A Convertible Preferred Stock pursuant to the
Investment Agreement.
"Closing Date" shall mean the date of the Closing.
"Commission" shall mean the Securities and Exchange
Commission.
"Common Stock" shall mean the Common Stock, par value
$1.00 per share, of the Company.
"Continuously Effective," with respect to a specified
registration statement, shall mean that such registration
statement shall not cease to be effective and available for
transfers of Registrable Securities thereunder for longer than
either (i) any ten (10) consecutive business days, or (ii) an
aggregate of fifteen (15) business days during the period
specified in the relevant provision of this Agreement.
"Demand Registration" shall have the meaning set forth
in Section 2.1(i).
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Investment Agreement" shall have the meaning set forth
in the first Recital to this Agreement.
"Investor Group" shall have the meaning specified in
the Investment Agreement.
"Permitted Holder Group Transferee" shall mean any
wholly owned (other than directors' qualifying shares) United
States subsidiary of the Holder which, at the time of
determination, owns shares of Series A Convertible Preferred
Stock or Class B Common Stock acquired from the Holder during the
term of the Investment Agreement and in accordance with terms
thereof.
"Person" shall mean any individual, corporation,
partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity.
"Piggyback Registration" shall have the meaning set
forth in Section 3.
"Register," "registered," and "registration" shall
refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the
Securities Act, and the declaration or ordering by the Commission
of effectiveness of such registration statement or document.
"Registrable Securities" shall mean the Common Stock
issuable upon conversion of the Series A Convertible Preferred
Stock or Class B Common Stock (which conversion shall be deemed
to occur upon the sale of such shares of Series A Convertible
Preferred Stock or Class B Common Stock to the underwriter or
underwriters in connection with any Registration hereunder) which
Series A Convertible Preferred Stock or Class B Common Stock the
Holder, or any Permitted Holder Group Transferee acquires in
accordance with the Investment Agreement and which is owned by
the Holder or such Permitted Holder Group Transferee on the date
of determination; provided, however, that Registrable Securities
shall not include any security of the Company acquired by the
Holder or any member of the Investor Group other than in
accordance with or in violation of the terms of the Investment
Agreement. In the event that the Common Stock is converted into
any other security pursuant to any merger, consolidation,
recapitalization, liquidation or other similar transaction, and
if any securities are distributed in respect of any Registrable
Securities, then all of such securities shall be considered
Registrable Securities for purposes of this Agreement.
"Registration Expenses" shall have the meaning set
forth in Section 7.1.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Shelf Registration" means a Registration Statement
effected pursuant to Section 4.
"Shelf Registration Event" means the receipt by the
Company from the Investor at any time following the occurrence of
a Surviving Change in Control Transaction, a Release Event or a
Trigger Event (each, as defined in the Investment Agreement) of a
written request to file a shelf registration statement in
accordance with Section 4 provided that in no event may the
Investor give such notice at any time that the Total Ownership
Percentage (or percentage ownership of the common equity of any
other company or entity surviving a Surviving Change in Control
Transaction) of the Investor Group is 10% or more. In the event
of a Surviving Change in Control Transaction, or in the event the
Company or other company or entity that survives a Surviving
Change in Control Transaction determines that the provisions of
Section 8.2(b)(i) of the Investment Agreement will not apply to
the Company or such surviving company or entity, references
herein to the Company shall apply to the Company or other entity
surviving such Change in Control Transaction (the "Standstill
Successor") but in the event of any other Change in Control
Transaction, the provisions of Section 4 herein shall terminate.
"Shelf Registration Statement" means a Registration
Statement of the Company filed with the Commission or Form S-3
(or any successor form) for an offering to be made on a
continuous basis pursuant to Rule 415 under the Securities Act
(or any similar rule that may be adopted by the Commission)
covering some or all of the Registrable Securities, as
applicable.
"Transfer" shall mean and include the act of selling,
giving, transferring, creating a trust (voting or otherwise),
assigning or otherwise disposing of (other than pledging,
hypothecating or otherwise transferring as security) (and
correlative words shall have correlative meanings); provided,
however, that any transfer or other disposition upon foreclosure
or other exercise of remedies of a secured creditor after an
event of default under or with respect to a pledge, hypothecation
or other transfer as security shall constitute a "Transfer."
"Underwriters' Representative" shall mean the managing
underwriter, or, in the case of a co-managed underwriting, the
managing underwriter designated as the Underwriters'
Representative by the co-managers.
"Violation" shall have the meaning set forth in Section
8.1.
1.2. Usage.
-----
(i) References to a Person are also references
to its successors in interest (by means of merger, consolidation
or sale of all or substantially all the assets of such Person or
otherwise, as the case may be) and permitted assigns.
(ii) References to a document are to it as
amended, waived and otherwise modified from time to time and
references to a statute or other governmental rule are to it as
amended and otherwise modified from time to time (and references
to any provision thereof shall include references to any
successor provision).
(iii) References to Sections, unless the context
otherwise requires.
(iv) The definitions set forth herein are
equally applicable both to the singular and plural forms and the
feminine, masculine and neuter forms of the terms defined.
(v) The term "including" and correlative terms
shall be deemed to be followed by "without limitation" whether
or not followed by such words or words of like import.
(vi) The term "hereof" and similar terms refer
to this Agreement as a whole.
(vii) The "date of" any notice or request given
pursuant to this Agreement shall be determined in accordance
with Section 12.2.
Section 2. Demand Registration.
-------------------
2.1. (i) At any time after the third anniversary of
the Closing Date, and subject to compliance by the Holder with
the provisions of Section 6 of the Investment Agreement, if the
Holder shall make a written request to the Company, the Company
shall cause to be filed with the Commission a registration
statement, including all exhibits required by the Commission to
be filed therewith (a "Demand Registration Statement") meeting
the requirements of the Securities Act for an underwritten public
offering of Registrable Securities (a "Demand Registration"), and
the Holder shall be entitled to have included therein all or such
number of Registrable Securities as the Holder shall request in
writing; provided, however, that no request may be made pursuant
to this Section 2.1 if within twelve (12) months prior to the
date of such request a Demand Registration Statement pursuant to
this Section 2.1 shall have been declared effective by the
Commission. Any request made pursuant to this Section 2.1 shall
be addressed to the attention of the Secretary of the Company,
and shall specify the number of Registrable Securities to be
registered (which shall be not less than 1,500,000 shares,
provided, however that the Holder may request registration of any
amount of Registrable Securities where the Holder requests
registration (i) of all of its remaining Registrable Securities,
or (ii) pursuant to its last Demand Registration right), the
intended method of distribution thereof and that the request is
for a Demand Registration pursuant to this Section 2.1(i).
(ii) The Company shall be entitled to postpone
for up to 180 days, but in no event more than 180 days during
any 24 month period and no sooner than 180 days after the end of
any prior postponement under this Section 2.1(ii) or any
holdback period described in the first sentence of Section 9.1
the filing of any Demand Registration Statement otherwise
required to be prepared and filed pursuant to this Section 2.1
(or delay seeking effectiveness of a Demand Registration
Statement which has been filed), if the Board determines, in its
reasonable good faith judgment, that such Demand Registration
would materially interfere with, or require premature disclosure
of, any material financing, acquisition, reorganization or other
material transaction involving the Company or any of its
subsidiaries and the Company promptly gives the Holder notice of
such determination.
2.2. Following receipt of a request for a Demand
Registration, the Company shall:
(i) File the Demand Registration Statement with
the Commission as promptly as reasonably practicable, and,
subject to Section 2.1(ii), shall use the Company's commercially
reasonable efforts to have the Demand Registration Statement
declared effective under the Securities Act as soon as
reasonably practicable, in each instance giving due regard to
the need to prepare current financial statements, conduct due
diligence and complete other actions that are reasonably
necessary to effect a registered public offering.
(ii) Use the Company's commercially reasonable
efforts to keep the relevant registration statement Continuously
Effective, if a Demand Registration Statement, for up to 60 days
or until such earlier date as of which all the Registrable
Securities under the Demand Registration Statement shall have
been disposed of in the manner described in the Registration
Statement, or such longer period (but in no event longer than
120 days) as in the judgment of counsel for the underwriters a
prospectus is required by law to be delivered in connection with
sales of Registrable Securities by an underwriter or dealer in
accordance with plan of distribution included in such Demand
Registration Statement. Notwithstanding the foregoing, if for
any reason the effectiveness of a Demand Registration Statement
pursuant to this Section 2 is delayed or suspended or filing of
the Demand Registration Statement or seeking effectiveness
thereof is postponed as permitted by Section 2.1(ii), the
commencement of the foregoing period shall be extended by the
aggregate number of days of such suspension or postponement.
2.3. The Company shall be obligated to effect not more
than six Demand Registrations, subject to the provisions of
Section 4.1. For purposes of the preceding sentence, a Demand
Registration shall not be deemed to have been effected (i) unless
a Demand Registration Statement with respect thereto has become
effective, (ii) if after such Demand Registration Statement has
become effective, such Demand Registration Statement or the
related offer, sale or distribution of Registrable Securities
thereunder is interfered with by any stop order, injunction or
other order or requirement of the Commission or other
governmental agency or court for any reason not attributable to
the Holder and such interference is not thereafter eliminated, or
(iii) if the conditions to closing specified in the underwriting
agreement entered into in connection with such registration are
not satisfied or waived, other than by reason of a failure on the
part of the Holder. If the Company shall have complied with its
obligations under this Agreement, a right to demand a
registration pursuant to this Section 2 shall be deemed to have
been satisfied upon the earlier of (x) the date as of which all
of the Registrable Securities included therein shall have been
distributed pursuant to the Registration Statement, and (y) the
date as of which such Demand Registration shall have been
Continuously Effective for a 60-day period or other period
specified in 2.2(ii) following the effectiveness of such Demand
Registration Statement, provided no stop order or similar order,
or proceedings for such an order, is thereafter entered or
initiated.
2.4. A registration pursuant to this Section 2 shall
be on such appropriate registration form of the Commission as
shall (i) be selected by the Company and be reasonably acceptable
to the Holder, and (ii) permit the distribution of the
Registrable Securities in accordance with the intended method or
methods of distribution specified in the request pursuant to
Section 2.1(i).
2.5. The Holder shall have the right to select the
underwriter or underwriters and manager or managers to administer
such offering; provided, however, that each Person so selected
shall be acceptable to the Company in its reasonable judgment.
2.6. The Company may not include in a Demand
Registration pursuant to Section 2.1 shares of Common Stock for
the account of the Company or any subsidiary of the Company, but
may include shares of Common Stock for the account of any other
person or entity who holds shares of Common Stock; provided,
however, that if the Underwriters' Representative of any offering
described in this Section 2.6 shall have informed the Company in
writing that in its opinion the total number of shares of Common
Stock that the Holder, and any other persons or entities desiring
to participate in such registration intend to include in such
offering is such as to materially and adversely affect the
success or pricing of such offering, then the Company shall
include in such Demand Registration all Registrable Securities
requested to be included in such registration by the Holder
together with up to such additional number of shares of Common
Stock that any other persons or entities entitled to participate
in such registration desire to include in such registration and
that the Underwriters' Representative has informed the Company
may be included in such registration without adversely affecting
the success of pricing of such offering; provided that the number
of shares of Common Stock to be offered for the account of all
such other persons and entities participating in such
registration shall be reduced or limited pro rata in proportion
to the respective number of shares of Common Stock requested to
be registered by such persons and entities to the extent
necessary to reduce the respective total number of shares of
Common Stock requested to be included in such offering to the
number of shares of Common Stock recommended by such
Underwriters' Representative.
Section 3. Piggyback Registration.
----------------------
3.1. If at any time after the third anniversary of the
Closing Date, the Company proposes to register (including for
this purpose a registration effected by the Company for the
account of the Company or shareholders of the Company other than
the Holder) shares of Common Stock or securities convertible or
exercisable into shares of Common Stock under the Securities Act
in connection with the public offering solely for cash on Form X-
0, X-0 or S-3 (or any replacement or successor forms) as soon as
practicable (but in not event less than ten (10) business days
prior to the date of filing any related Registration Statement),
the Company shall promptly give the Holder written notice of such
registration (a "Piggyback Registration"). Upon the written
request of the Holder given within 10 days following the date of
such notice, the Company shall use commercially reasonable
efforts to cause to be included in such registration statement (a
"Piggyback Registration Statement," the Shelf Registration
Statement, the Demand Registration Statement and Piggyback
Registration Statement are hereinafter called collectively,
"Registration Statements" and, individually, a "Registration
Statement"), and use its commercially reasonable efforts to cause
to be registered under the Securities Act all the Registrable
Securities that the Holder shall have requested to be registered.
The Company shall have the absolute right to withdraw or cease to
prepare or file any Piggyback Registration Statement for any
offering referred to in this Section 3 without any obligation or
liability to the Holder; provided, that the Company shall
promptly notify the Holder in writing of any such action.
3.2. If the Piggyback Registration Statement relates
to an underwritten offering of Common Stock or securities
convertible or exercisable into shares of Common Stock and if the
Underwriters' Representative of such underwritten offering shall
inform the Company that in its opinion the inclusion in such
underwritten distribution of all or a specified number of such
Registrable Securities or of any other shares of Common Stock
requested to be included would materially and adversely effect
the success or pricing of such offering or of such distribution
by the underwriters, then the Company may, upon written notice to
the Holder, exclude from such underwritten offering (i) in the
event the Piggyback Registration Statement relates to an offering
for the account of the Company, shares of Common Stock requested
to be included by any persons or entities other than the Company,
pro rata in proportion to the respective number of shares of
Common Stock requested to be included by such persons and
entities, to the extent necessary to reduce the respective total
number of shares of Common Stock requested to be included in such
offering to the number of shares of Common Stock recommended by
such Underwriters' Representative and (ii) in the event the
Piggyback Registration Statement relates to an offering for the
account of any person or entity other than the Company,
(A) first, shares of Common Stock requested to be registered for
the account of any persons or entities other than the person or
entity making the initial request for such registration (the
"Requesting Party"), pro rata in proportion to the respective
number of shares of Common Stock requested to be registered by
such other persons and entities to the extent necessary to reduce
the respective total number of shares of Common Stock requested
to be included in such offering to the number of shares of Common
Stock recommended by such Underwriters' Representative,
(B) second, to the extent reduction as a result of clause (A) is
insufficient, shares of Common Stock requested to be registered
for the account of the Company, and (C) third, to the extent
reduction as a result of clauses (A) and (B) is insufficient,
shares of Common Stock requested to be registered for the account
of the Requesting Party.
The Company may decline to file a Piggyback
Registration Statement referred to in this Section 3.2 after
giving notice to the Holder, or withdraw such a Piggyback
Registration Statement after filing, or otherwise abandon any
such proposed underwritten offering; provided that the Company
shall promptly notify the Holder in writing of any such action.
3.3. The Holder may not participate in any
underwritten offering under Section 2.1 or Section 3.1 hereof
unless it completes and executes all customary questionnaires,
powers of attorney, custody agreements, underwriting agreements,
and other customary documents required under the customary terms
of such underwriting arrangements. In connection with any
underwritten offering under Section 2.1, 3.1 or 4.1, each of the
Holder and the Company shall be a party to the underwriting
agreement with the underwriters and may be required to make
certain customary representations and warranties (in the case of
the Holder only as to the Registrable Securities being sold by
the Holder and any Permitted Group Transferee in such
underwritten offering and the plan of distribution thereof) and
provide certain customary indemnifications for the benefit of the
underwriters.
3.4. The Holder shall be entitled to have its
Registrable Securities included in an unlimited number of
Piggyback Registrations pursuant to this Section 3.
Section 4. Shelf Registration.
------------------
4.1. Upon the occurrence of a Shelf Registration
Event, the Company shall file with the Commission as promptly as
practicable, but in no event later than 20 business days after
the Shelf Registration Event, a Shelf Registration Statement
relating to the offer and sale of the Registrable Securities by
the Holder and the Permitted Holder Group Transferees from time
to time in accordance with the methods of distribution elected by
the Holder and set forth in such Shelf Registration Statement
and, thereafter, shall use its commercially reasonable efforts to
cause such Shelf Registration Statement to be declared effective
under the Securities Act as promptly as practicable. If, on the
occurrence of a Shelf Registration Event, the Company does not
qualify to file a Shelf Registration Statement, then the Holder
shall be entitled to one additional Demand Registration pursuant
to Section 3, but at any time thereafter that the Company does so
qualify, it shall, as promptly as practicable, file a Shelf
Registration Statement.
4.2. The Company shall use its commercially reasonable
efforts to keep the Shelf Registration Statement continuously
effective in order to permit the prospectus forming part thereof
to be usable by the Holder and the Permitted Holder Group
Transferees for a period ending on the date twenty-four months
(the "Shelf Maintenance Period") after the occurrence of the
Shelf Registration Event (such date to be extended by the
aggregate number of days any Shelf Registration Statement shall
be subject to a Shelf Suspension) or such shorter period as shall
terminate when all the Registrable Securities covered by the
Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement (but in no event prior to the applicable
period referred to in Section 4(3) of the Act and Rule 174
thereunder) (such period being the "Shelf Period").
4.3. The Company shall be entitled to postpone the
filing of any Shelf Registration Statement otherwise required to
be prepared and filed pursuant to this Section 4 (or delay
seeking, or maintaining continued, effectiveness of a Shelf
Registration Statement that has been filed) if the Board
determines in its reasonable good faith judgment, that such Shelf
Registration would materially interfere with, or require
premature disclosure of, any material financing, acquisition,
reorganization or other material transaction involving the
Company or any of its subsidiaries and the Company gives the
Holder notice of such determination (a "Shelf Suspension");
provided, however, that the Company shall not have postponed
pursuant to this Section 4.3, the commencement of the filing of,
delay the seeking the effectiveness of, or suspend the use of any
Shelf Registration Statement otherwise required to be prepared
and filed pursuant to this Section 4, (i) more than 180 days
during the Shelf Maintenance Period, (ii) for a period exceeding
180 days on any one occasion during or (iii) sooner than 90 days
after the end of any prior Shelf Suspension and provided,
further, that the Shelf Maintenance Period shall be extended by
the aggregate number of days of each Shelf Suspension. In the
case of a Shelf Suspension, the notice required above shall
request the Holder to suspend any sale or purchase, or offer to
sell or purchase the Registrable Securities, and to suspend any
sale or purchase, or offer to sell or purchase the Registrable
Securities, and to suspend use of the prospectus related to the
Shelf Registration in connection with any such sale or purchase
or offer to sell or purchase. The Company shall immediately
notify the Holder upon the termination of any Shelf Suspension,
shall amend or supplement the related prospectus, if necessary,
so it does not contain any untrue statement or omission therein
and shall furnish to the holders such numbers of copies of the
prospectus as so amended or supplemental as the Holder may
reasonably request. The Holder will advise the Company by at
least 5 business days' prior written notice if the Holder intends
to make any sale under the Shelf Registration Statement that
would constitute a "distribution" for purposes of Regulation M
under the Securities Act.
4.4. The Holder shall have the right to effect an
underwritten offering covering not fewer than 1,500,000 shares
pursuant to a Shelf Registration (in which case each such
underwritten offering shall constitute a Demand Registration for
purposes of Section 2.3) and to select the underwriter or
underwriters and manager or managers to administer any offering
pursuant to a Shelf Registration; provided, however, that each
Person so selected shall be acceptable to the Company in its
reasonable judgment.
Section 5. Registration Procedures.
-----------------------
Whenever required under Section 2, Section 3 or Section
4 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as practicable:
5.1. Prepare and file with the Commission a
Registration Statement, including all exhibits required by the
Commission to be filed therewith, with respect to such
Registrable Securities and, subject to Section 2.1 and Section
4.3, use the Company's commercially reasonable efforts to cause
such Registration Statement to become effective; provided,
however, that before filing a Registration Statement or
prospectus or any amendments or supplements thereto, including
documents incorporated by reference after the initial filing of
the Registration Statement and prior to effectiveness thereof,
the Company shall furnish to counsel for the Holder and
underwriters, copies of all such documents in the form
substantially as proposed to be filed with the Commission at a
reasonable time prior to filing for review and comment by such
counsel.
5.2. Prepare and file with the Commission such
amendments and supplements to such Registration Statement and the
prospectus used in connection with such Registration Statement as
may be necessary to comply with the provisions of the Securities
Act and rules thereunder with respect to the distribution of all
securities covered by such Registration Statement and as may be
reasonably requested by the Holder or necessary to keep such
Registration Statement effective pursuant to Section 2.2(i) and
4.2. If the registration is for an underwritten offering, the
Company shall amend the Registration Statement or supplement the
prospectus whenever required by the terms of the underwriting
agreement. Pending such amendment or supplement the Holder and
all other members of the Investor Group, upon written notice by
the Company, shall cease making offers or Transfers of
Registrable Securities pursuant to the prior prospectus. In the
event that any Registrable Securities included in a Registration
Statement subject to, or required by, this Agreement remain
unsold at the end of the period during which the Company is
obligated to use its commercially reasonable efforts to maintain
the effectiveness of such Registration Statement, the Company may
file a post-effective amendment to the Registration Statement for
the purpose of removing such Securities from registered status.
5.3. Notify the Holder and the Underwriters'
Representative and (if requested) confirm such advise in writing,
as soon as practicable after notice thereof is received by the
Company (i) when the Registration Statement or any amendment
thereto has been filed or becomes effective, the prospectus or
any amendment or supplement to the prospectus included therein
has been filed, and, to furnish the Holder and the underwriters
with copies thereof, (ii) of any request by the Commission for
amendments or supplements to the Registration Statement or the
prospectus included therein or for additional information, (iii)
if at any time the representations and warranties of the Company
contemplated by Section 3.3 cease to be true and correct, and
(iv) of the receipt by the Company of any notification with
respect to the suspension or qualification of the Registrable
Securities for offering or sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
5.4. Promptly notify the Holder and the Underwriters'
Representative, if any, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act when
the Company becomes aware of the happening of any event as a
result of which the prospectus included in any Registration
Statement (as then in effect) contains any untrue statement of a
material fact or omits to state a material fact necessary to make
the statements therein (in the case of the prospectus and any
preliminary prospectus, in light of the circumstances under which
they were made) when such prospectus was delivered not misleading
or, if for any other reason it shall be necessary during such
time period to amend or supplement the prospectus in order to
comply with the Securities Act and, in either case as promptly as
practicable thereafter, prepare and file with the Commission, and
furnish without charge to the Holder and the Underwriters'
Representative, if any, a supplement or amendment to such
prospectus which will correct such statement or omission or
effect such compliance.
5.5. If requested by the Underwriters' Representative
or the Holder, promptly incorporate in a prospectus supplement or
post-effective amendment such information as the Underwriters'
Representative and the Holder agree should be included therein
relating to the plan of distribution with respect to such
Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities
being sold to such underwriters, the purchase price being paid
therefor by such underwriters and with respect to any other terms
of the underwritten (or best efforts underwritten) offering of
Registrable Securities to be sold in such offering; and make all
required filings of such prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment.
5.6. Cooperate with the Holder and the Underwriters'
Representatives to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold
and not bearing any restrictive legends; and enable such
Registrable Securities to be in such denomination and registered
in such names as the Underwriters' Representative may request at
least two business days prior to the sale of Registrable
Securities to the underwriters.
5.7. Cooperate with the Holders in connection with any
filings required to be made with the National Association of
Securities Dealers, Inc. (the "NASD"), and otherwise use its best
efforts to comply with the rules, by-laws and regulations of the
NASD as they apply to the registration.
5.8. Furnish to the Holder such numbers of copies of
the Registration Statement, any pre-effective or post-effective
amendment thereto, the prospectus, including each preliminary
prospectus and any amendments or supplements thereto, in each
case in conformity with the requirements of the Securities Act
and the rules thereunder, and such other related documents as the
Holder may reasonably request in order to facilitate the
distribution of Registrable Securities owned by the Holder.
5.9. Use the Company's commercially reasonable efforts
(i) to register and qualify the securities covered by such
Registration Statement under such other securities or blue sky
laws of such states or jurisdictions as shall be reasonably
requested by the Underwriters' Representative, and (ii) to obtain
the withdrawal of any order suspending the effectiveness of a
Registration Statement, or the lifting of any suspension of the
qualification (or exemption from qualification) of the offer and
transfer of any of the Registrable Securities in any
jurisdiction, at the earliest possible moment; provided, however,
that the Company shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or
jurisdictions.
5.10. In the event of any underwritten offering, enter
into and perform the Company's obligations under an underwriting
agreement (including indemnification and contribution obligations
of underwriters or agents in the form set forth in Section 8), in
usual and customary form, with the managing underwriter or
underwriters of or agents for such offering. The Company shall
also cooperate with the Holder, and the Underwriters'
Representative for such offering in the marketing, and customary
selling efforts relating to the Registrable Securities, including
participating in customary "road show" presentations as may be
reasonably requested by the Underwriters' Representative.
5.11. Promptly notify the Holder of any stop order
issued or threatened to be issued by the Commission in connection
therewith and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.
5.12. Make available for inspection by the Holder, any
underwriter participating in such offering and the
representatives of the Holder and such underwriter all financial
and other information as shall be reasonably requested by them,
and provide the Holder, any underwriter participating in such
offering and the representatives of the Holder and such
underwriter the reasonable opportunity to discuss the business
affairs of the Company with its principal executives and
independent public accountants who have certified the audited
financial statements included in such registration statement, in
each case all as necessary to enable them to exercise their due
diligence responsibilities under the Securities Act; provided,
however, that information that the Company determines, in its
reasonable and good faith judgment, to be confidential and which
the Company advises such Person in writing, is confidential shall
not be disclosed unless such Person signs a confidentiality
agreement reasonably satisfactory to the Company and the Holder
of Registrable Securities agrees to be responsible for such
Person's breach of confidentiality on terms reasonably
satisfactory to the Company.
5.13. Use the Company's commercially reasonable
efforts to obtain a so-called "comfort letter" from its
independent public accountants, and legal opinions of counsel to
the Company addressed to the Holder, in customary form and
covering such matters of the type customarily covered by such
letters, and in a form that shall be reasonably satisfactory to
the Holder. The Company shall furnish to the Holder a signed
counterpart of any such comfort letter or legal opinion.
Delivery of any such opinion or comfort letter shall be subject
to the recipient furnishing such written representations or
acknowledgments as are customarily provided by selling
shareholders who receive such comfort letters or opinions.
5.14. Provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by
such Registration Statement from and after a date not later than
the effective date of such Registration Statement.
5.15. Use commercially reasonable efforts to cause the
Registrable Securities covered by such Registration Statement to
continue to be listed on all exchanges where the Company's Common
Stock is listed and to be Registered with or approved by such
other United States or state governmental agencies or authorities
as may be necessary by virtue of the business and operations of
the Company to enable the Holder to consummate the distribution
of the Registrable Securities which are included in such
registration.
5.16. Take such other actions as are reasonably
required in order to expedite or facilitate the registration of
Registrable Securities included in such registration.
Section 6. Holder's Obligations.
--------------------
6.1 It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this
Agreement with respect to the Registrable Securities which are
included in such registration that the Holder shall furnish to
the Company such information regarding the Holder and any
participating Permitted Holder Group Transferee, the number of
the Registrable Securities owned by it and any participating
Permitted Holder Group Transferee, and the intended method of
distribution of such Registrable Securities as shall be required
to effect the registration of such Registrable Securities, and to
cooperate with the Company in preparing such registration.
6.2 The Holder agrees, and each Permitted Holder Group
Transferee shall be deemed by acceptance of Registrable
Securities to have agreed, that, upon receipt of any notice of
the Company pursuant to clauses (ii) through (iv) of Section 5.3
and Section 5.4 hereof, the Holder and each Permitted Holder
Group Transferee will discontinue disposition of such Registrable
Securities covered by such Registration Statement until such
Holder's or Permitted Holder Group Transferee's receipt of copies
of the supplemental or amended prospectus contemplated by Section
5.4 hereof, or until advised in writing (the "Advice") by the
Company that the use of the applicable prospectus may be resumed.
If the Company shall give any notice under clauses (ii) through
(iv) of Section 5.3 or Section 5.4 hereof during the period that
the Company is required to maintain an effective Registration
Statement (the "Effectiveness Period"), such Effectiveness Period
shall be extended by the number of days during such period from
and including the date of the giving of such notice to and
including the date when each seller of Registrable Securities
covered by such Registration Statement shall have received (x)
the copies of the supplemental or amended prospectus contemplated
by Section 5.4 (if an amended or supplemental prospectus is
required) or (y) the Advice (if no amended or supplemental
prospectus is required).
Section 7. Expenses of Registration. Expenses in
connection with registrations pursuant to this Agreement shall be
allocated and paid as follows:
7.1. With respect to the first two Demand
Registrations effected pursuant to Section 2 hereof, the Company
shall bear and pay, and with respect to each additional Demand
Registration, the Holder shall bear and pay, all expenses
incurred in connection with any registration, filing, or
qualification of Registrable Securities with respect to such
Demand Registration, including all registration, filing and
National Association of Securities Dealers, Inc. fees, all fees
and expenses of complying with securities or blue sky laws, all
word processing, duplicating and printing expenses, messenger and
delivery expenses, and the reasonable fees and disbursements of
counsel for the Company, and of the Company's independent public
accountants, including the expenses of "cold comfort" letters
required by or incident to such performance and compliance (the
"Registration Expenses"), but in no event shall the Company bear
underwriting discounts and commissions relating to Registrable
Securities or fees and expenses of Holder's counsel (which shall
be paid by the Holder) and provided that the Company shall not be
required to pay for any expenses of any registration begun
pursuant to Section 2 if the registration is subsequently
withdrawn at the request of the Holder (in which case the Holder
shall bear such expense), other than by reason of failure of the
Company to comply with Section 5.12 or if the proviso of such
section becomes applicable unless the Holder agrees that such
withdrawn registration shall constitute one of the Demand
Registrations under Section 2 hereof.
7.2. The Company shall bear and pay all Registration
Expenses incurred in connection with any Shelf Registrations
pursuant to Section 4 and any Piggyback Registrations pursuant to
Section 3 for the Holder, but excluding, incremental registration
and qualification fees and expenses (including underwriting
discounts and commissions relating to Registrable Securities) and
any incremental costs and disbursements (including fees and
expenses of the Holder's counsel) that result from the inclusion
of the Registrable Securities in any Piggyback Registrations
(each of which shall be paid by the Holder).
Section 8. Indemnification; Contribution. If any
Registrable Securities are included in a Registration Statement
under this Agreement:
8.1. To the extent permitted by applicable law, the
Company shall indemnify and hold harmless the Holder and each
Permitted Holder Group Transferee, each Person, if any, who
controls such Holder or Permitted Holder Group Transferee within
the meaning of the Securities Act, and each officer, director,
partner, and employee of the Holder and each Permitted Holder
Group Transferee, and any such controlling Person, against any
and all losses, claims, damages, liabilities and expenses (joint
or several), including reasonable attorneys' fees and
disbursements and expenses of investigation, incurred by such
party pursuant to any actual or threatened action, suit,
proceeding or investigation, or to which any of the foregoing
Persons may become subject under the Securities Act, the Exchange
Act or other federal or state laws, insofar as such losses,
claims, damages, liabilities and expenses arise out of or are
based upon any of the following statements, omissions or
violations (collectively a "Violation"):
(i) Any untrue statement or alleged untrue
statement of a material fact contained in such registration
statement, including any preliminary prospectus or final
prospectus contained therein, or any amendments or supplements
thereto;
(ii) The omission or alleged omission to state
therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading; or
(iii) Any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any applicable
state securities law or any rule or regulation promulgated under
the Securities Act, the Exchange Act or any applicable state
securities law;
provided, however, that the indemnification required by this
Section 8.1 shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or expense if such settlement
is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage,
liability or expense to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in
conformity with written information furnished to the Company by
the indemnified party expressly for use in connection with such
registration; provided, further, that the indemnity agreement
contained in this Section 8 shall not apply to any underwriter to
the extent that any such loss is based on or arises out of an
untrue statement or alleged untrue statement of a material fact,
or an omission or alleged omission to state a material fact,
contained in or omitted from any preliminary prospectus if the
final prospectus shall correct such untrue statement or alleged
untrue statement, or such omission or alleged omission, and a
copy of the final prospectus has not been sent or given to such
person at or prior to the confirmation of sale to such person if
such underwriter was under an obligation to deliver such final
prospectus and failed to do so. The Company shall also indemnify
underwriters participating in the distribution, their officers,
directors, agents and employees and each person who controls such
persons (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) to the same extent as provided
above with respect to the indemnification of the Holder provided,
however, that no such underwriter shall be entitled to
indemnification under this Agreement if such person shall have
entered into a separate underwriting or indemnification agreement
with the Company.
8.2. To the extent permitted by applicable law, the
Holder shall indemnify and hold harmless the Company, each of its
directors, each of its officers who shall have signed the
registration statement, each Person, if any, who controls the
Company within the meaning of the Securities Act, and each
officer, director, partner, and employee of the Company and such
controlling Person, against any and all losses, claims, damages,
liabilities and expenses (joint and several), including
reasonable attorneys' fees and disbursements and expenses of
investigation, incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation, or to which
any of the foregoing may otherwise become subject under the
Securities Act, the Exchange Act or other federal or state laws,
insofar as such losses, claims, damages, liabilities and expenses
arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with information furnished in
writing by the Holder specifically for use in connection with
such registration; provided, further, however, that the
indemnification required by this Section 8.2 shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability or expense if settlement is effected without the
consent of the Holder, which consent shall not be unreasonably
withheld; provided, further, however, in no event shall the
liability of the Holder be greater in amount than the dollar
amount of the net proceeds by the Holder upon sale of Registrable
Securities giving rise to such indemnification obligation.
8.3. Promptly after receipt by an indemnified party
under this Section 8 of notice of the commencement of any action,
suit, proceeding, investigation or threat thereof made in writing
for which such indemnified party may make a claim under this
Section 8, such indemnified party shall deliver to the
indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate
in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the
parties; subject to the rights of an indemnified party to retain
its own counsel as hereinafter provided. The failure to deliver
written notice to the indemnifying party within a reasonable time
following the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party
under this Section 8 but shall not relieve the indemnifying party
of any liability that it may have to any indemnified party
otherwise than pursuant to this Section 8. Any fees and expenses
incurred by the indemnified party (including any fees and
expenses incurred in connection with investigating or preparing
to defend such action or proceeding) owed by the indemnifying
party hereunder shall be paid to the indemnified party, as
incurred, within thirty (30) days of written notice thereof to
the indemnifying party (subject to refund if it is ultimately
determined that an indemnified party is not entitled to
indemnification hereunder). Any such indemnified party shall
have the right to employ separate counsel in any such action,
claim or proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be the expenses
of such indemnified party unless (i) the indemnifying party has
agreed to pay such fees and expenses or (ii) the indemnifying
party shall have failed to promptly assume the defense of such
action, claim or proceeding or (iii) the named parties to any
such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying
party, and such indemnified party shall have been advised by
counsel that there may be one or more legal defenses available to
it which are different from or in addition to those available to
the indemnifying party and that the assertion of such defenses
would create a conflict of interest such that counsel employed by
the indemnifying party could not faithfully represent the
indemnified party (in which case, if such indemnified party
notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party,
the indemnifying party shall not have the right to assume the
defense of such action, claim or proceeding on behalf of such
indemnified party, it being understood, however, that the
indemnifying party shall not, in connection with any one such
action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified
parties, unless in the reasonable judgment of such indemnified
party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to
such action, claim or proceeding, in which event the indemnifying
party shall be obligated to pay the fees and expenses of such
additional counsel or counsels).
8.4. If the indemnification required by this Section 8
from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to in this Section 8:
(i) The indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of
such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified parties in connection with the
actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to,
among other things, whether any Violation has been committed by,
or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
Violation. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set
forth in Section 8.1 and Section 8.2, any legal or other fees or
expenses reasonably incurred by such party in connection with any
investigation or proceeding; provided, however, that in no event
shall the Holder be required to contribute an amount greater than
the dollar amount of the net proceeds received by the Holder with
respect to the sale of any securities.
(ii) The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Section
8.4 were determined by pro rata allocation or by any other method
of allocation which does not take into account the equitable
considerations referred to in Section 8.4(i). No Person guilty
of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent
misrepresentation.
8.5. If indemnification is available under this
Section 8 the indemnifying parties shall indemnify each
indemnified party to the full extent provided in this Section 8
without regard to the relative fault of such indemnifying party
or indemnified party or any other equitable consideration
referred to in Section 8.4.
8.6. The obligations of the Company, the Holder and
any Permitted Holder Group Transferee under this Section 8 shall
survive the completion of any offering of Registrable Securities
pursuant to a Registration Statement under this Agreement, and
otherwise.
Section 9. Holdback.
--------
9.1 If so requested by the Underwriters'
Representative in connection with an offering of any securities
covered by a registration statement filed by the Company, whether
or not securities of the Holder or any Permitted Holder Group
Transferee are included therein, the Holder shall agree not to
effect or permit any Permitted Holder Group Transferee to effect
any sale or distribution of shares of Common Stock including a
sale pursuant to Rule 144 under the Securities Act (except as
part of such underwritten registration) during the 7-day period
prior to, and during the 90-day period beginning on, the date
such registration statement is declared effective under the
Securities Act by the Commission, provided that the Holder is
timely notified of such effective date in writing by the Company
or such Underwriters' Representative. In order to enforce the
foregoing covenant, the Company shall be entitled to impose stop-
transfer instructions with respect to the Registrable Securities
of the Holder until the end of such period. The restrictions in
this Section 9 are in addition to and not in limitation of the
restrictions on transfer applicable to the Investor Group under
the Investment Agreement. The Holder shall not be subject to the
restrictions set forth in this Section 9.1 for longer than 90
days during any 12 month period.
9.2. If so requested by the Underwriters'
Representative in connection with an offering of any Registrable
Securities, the Company shall agree not to effect any sale or
distribution of shares of Common Stock during the 7-day period
prior to, and during the 90-day period beginning on, the date
such Registration Statement is declared effective under the
Securities Act by the Commission (or, in the case of an
underwriting under the Shelf Registration, the date of the
closing under the underwriting agreement). The Company agrees to
use its commercially reasonable efforts to obtain from each
holder of restricted securities of the Company the same as or
similar to those being registered by the Company on behalf of the
Holder, or any restricted securities convertible into or
exchangeable or exercisable for any of its securities, an
agreement not to effect any sale or distribution of such
securities (other than securities purchased in a public offering)
during any period referred to in this paragraph, except as part
of any such Registration Statement if permitted. Without
limiting the foregoing, if the Company grants any Person (other
than a holder of Registrable Securities) any rights to demand or
participate in a Registration, the Company agrees that the
agreement with respect thereto shall include such Person's
agreement as contemplated by the previous sentence.
Section 10. Amendment, Modification and Waivers;
Further Assurances.
------------------------------------
(i) This Agreement may be amended with the
consent of the Company and the Company may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained the
written consent of the Holder to such amendment, action or
omission to act.
(ii) No waiver of any terms or conditions of this
Agreement shall operate as a waiver of any other breach of such
terms and conditions or any other term or condition, nor shall
any failure to enforce any provision hereof operate as a waiver
of such provision or of any other provision hereof. No written
waiver hereunder, unless it by its own terms explicitly provides
to the contrary, shall be construed to effect a continuing waiver
of the provisions being waived and no such waiver in any instance
shall constitute a waiver in any other instance or for any other
purpose or impair the right of the party against whom such waiver
is claimed in all other instances or for all other purposes to
require full compliance with such provision.
(iii) Each of the parties hereto shall exercise
all such further instruments and documents and take all such
further action as any other party hereto may reasonably require
in order to effectuate the terms and purposes of this Agreement.
The Company shall cause the Standstill Successor to be bound by
the terms of this Agreement.
Section 11. Assignment; Benefit. This Agreement and
all of its provisions hereof shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, however, that neither
this Agreement nor any of the rights, interests or obligations
hereunder may be assigned or delegated by the Holder to any
Person except a wholly owned direct or indirect subsidiary of the
Holder to whom the Holder shall have transferred all of the
Registrable Securities then owned by the Holder as permitted by,
and subject to the terms of, the Investment Agreement.
Section 12. Miscellaneous.
-------------
12.1 Governing Law; Submission to Jurisdiction. This
Agreement shall be governed by, and interpreted in accordance
with, the laws of the State of Iowa applicable to contracts made
and to be performed in that state. The parties hereto
irrevocably (a) submit to the exclusive personal jurisdiction of
any state or federal court in the State of Illinois in any suit,
action or other legal proceeding relating to this Agreement;
(b) agree that all claims in respect of any such suit, action or
other legal proceeding may be heard and determined in, and
enforced in and by, any such court; and (c) waive any objection
that they may now or hereafter have to venue in any such court or
that such court is an inconvenient forum.
12.2 Notices. All notices and requests given pursuant
to this Agreement shall be in writing and shall be made by hand-
delivery, first-class mail (registered or certified, return
receipt requested), confirmed facsimile or overnight air courier
guaranteeing next business day delivery to the relevant address
specified below:
(a) If to the Company, to:
Pioneer Hi-Bred International, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attention: General Counsel
Telephone: 000-000-0000
Telecopier: 000-000-0000
With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 212-859-4000
(b) If to the Investor, to:
E.I. du Pont de Nemours and Company
Agricultural Products
Xxxxxx Xxxx Xxxxx #00
X.X. Xxx 00000
Xxxxxxxxxx, XX 19880-0038
Attention: Xxxxxxx X. Xxxx,
Vice President and
General Manager
Telephone: 000-000-0000
Telecopier: 000-000-0000
With a copy to:
Skadden, Arps, Slate, Xxxxxxx
& Xxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
Except as otherwise provided in this Agreement, the date of each
such notice and request shall be deemed to be, and the date on
which each such notice and request shall be deemed given shall
be: at the time delivered, if personally delivered or mailed;
when receipt is acknowledged, if sent by facsimile; and the next
business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next business day delivery.
12.3. Entire Agreement; Integration. This Agreement
supersedes all prior agreements between or among any of the
parties hereto with respect to the subject matter contained
herein and therein, and such agreements embody the entire
understanding among the parties relating to such subject matter.
12.4. Injunctive Relief. Each of the parties hereto
acknowledges that in the event of a breach by any of them of any
material provision of this Agreement, the aggrieved party may be
without an adequate remedy at law. Each of the parties therefore
agrees that in the event of such a breach hereof the aggrieved
party may elect to institute and prosecute proceedings in any
court of competent jurisdiction to enforce specific performance
or to enjoin the continuing breach hereof. By seeking or
obtaining any such relief, the aggrieved party shall not be
precluded from seeking or obtaining any other relief to which it
may be entitled.
12.5. Section Headings. Section headings are for
convenience of reference only and shall not affect the meaning of
any provision of this Agreement.
12.6. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original,
and all of which shall together constitute one and the same
instrument. All signatures need not be on the same counterpart.
12.7. Severability. If any provision of this
Agreement shall be invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity and enforceability
of the remaining provisions of this Agreement, unless the result
thereof would be unreasonable, in which case the parties hereto
shall negotiate in good faith as to appropriate amendments
hereto.
12.8. Filing. A copy of this Agreement and of all
amendments thereto shall be filed at the principal executive
office of the Company with the corporate records of the Company.
12.9. Termination. This Agreement may be terminated
at any time by a written instrument signed by the parties hereto.
Unless sooner terminated in accordance with the preceding
sentences, this Agreement (other than Section 8 hereof) shall
terminate in its entirety on such date as the Total Ownership
Percentage (as defined in the Investment Agreement) of the Holder
shall be less than 2%, provided that any shares of Common Stock
previously subject to this Agreement shall not be Registrable
Securities following the sale of any such shares in an offering
registered pursuant to this Agreement.
12.10. Attorneys' Fees. In any action or proceeding
brought to enforce any provision of this Agreement, or where any
provision hereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees
(including any fees incurred in any appeal) in addition to its
costs and expenses and any other available remedy.
12.11. No Third Party Beneficiaries. Nothing herein
expressed or implied is intended to confer upon any person, other
than the parties hereto or their respective permitted assigns,
successors, heirs and legal representatives, any rights,
remedies, obligations or liabilities under or by reason of this
Agreement; provided, however, that any Permitted Holder Group
Transferee shall be entitled to any rights, remedies, obligations
or liabilities conferred under or by reason of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly
executed by the parties hereto as of the date first written
above.
E.I. DU PONT DE NEMOURS AND COMPANY
By: -----------------------------
Name:
Title:
PIONEER HI-BRED INTERNATIONAL, INC.
By: -----------------------------
Name:
Title:
EXHIBIT B
Form of Rights Agreement Amendment
AMENDMENT NO. 1, dated as of _________ __, 1997, to
AMENDED AND RESTATED RIGHTS AGREEMENT, dated as of December 13,
1996 (the "Amended and Restated Rights Agreement"), between
Pioneer Hi-Bred International, Inc., an Iowa corporation (the
"Company"), and Bank Boston N.A. (formally known as The First
National Bank of Boston), a national banking association ("Rights
Agent").
On April 6, 1989, the Board of Directors of the Company
(the "Board") authorized and declared a dividend of one common
share purchase right (a "Right") for each share of Common Stock,
par value $1.00 per share, of the Company ("Common Stock")
outstanding at the Close of Business (as defined in the Amended
and Restated Rights Agreement) on April 6, 1989 (the "Record
Date"), each Right representing the right to purchase one
(subject to adjustment as provided in the Amended and Restated
Rights Agreement) share of Common Stock, upon the terms and
subject to the conditions set forth in the Amended and Restated
Rights Agreement, and has further authorized the issuance of one
Right with respect to each share of Common Stock that shall
become outstanding between the Record Date and the Distribution
Date (as defined in the Amended and Restated Rights Agreement);
provided, however, that Rights may be issued with respect to
shares of Common Stock that shall become outstanding after the
Distribution Date and prior to the earlier of the Redemption Date
and the Final Expiration Date in accordance with the provisions
of Section 23 of the Amended and Restated Rights Agreement.
On December 13, 1994, the Board amended and modified,
and on December 13, 1996, the Board amended and restated, the
terms of the Rights Agreement, dated as of April 6, 1989, between
the Company and the Rights Agent, to, among other things, modify
the Rights so that each Right represents the right to purchase
one one-thousandth of a Preferred Share (as defined in the
Amended and Restated Rights Agreement). On _________ __, 1997,
the Board authorized the execution and delivery of this Amendment
No. 1, which amends such Amended and Restated Rights Agreement.
Accordingly, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
SECTION 1. AMENDMENTS. (a) The definition of
"Acquiring Person" contained in subsection 1(a) of the Amended
and Restated Rights Agreement is hereby amended in its entirety
to read as follows:
"(a) "Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of the Trigger Amount or
more of the then outstanding Common Shares or was such a
Beneficial Owner at any time after the date hereof, whether or
not such person continues to be the Beneficial Owner of the
Trigger Amount or more of the then outstanding Common Shares.
Notwithstanding the foregoing, (i) the term "Acquiring Person"
shall not include (A) the Company, (B) any Subsidiary of the
Company, (C) any employee benefit plan of the Company or of any
Subsidiary of the Company, (D) any Person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such plan acting in such capacity, (E) any
Grandfathered Person or (F) the Investor or any Permitted
Investor Transferee, but only to the extent of Common Shares held
or acquired by the Investor and any Permitted Investor Transferee
during the term of the Investment Agreement in accordance with
the terms of the Investment Agreement and, following the
termination of the Investment Agreement, only to the extent of
Common Shares Beneficially Owned by the Investor and any
Permitted Investor Transferee on the date of the termination (the
"Termination Date") of the Investment Agreement, it being
understood that (I) if, after the Termination Date, the Investor
or any Permitted Investor Transferee acquires Beneficial
Ownership of any Common Shares not owned by such person on the
Termination Date, the Investor or such Permitted Investor
Transferee will be deemed an Acquiring Person if, after giving
effect to such acquisition, such person would be an Acquiring
Person but for the provisions of this clause (F) and (II) if any
Permitted Investor Transferee ceases to be a wholly-owned (other
than directors' qualifying shares) United States Subsidiary of
the Investor, such Permitted Investor Transferee will be deemed
an Acquiring Person if such person would be an Acquiring Person
at such time but for the provisions of this clause (F); and
(ii) no Person shall become an "Acquiring Person" (x) as a result
of the acquisition of Common Shares by the Company which, by
reducing the number of Common Shares outstanding, increases the
proportional number of shares beneficially owned by such Person
together with all Affiliates and Associates of such Person,
provided, that if (1) a Person would become an Acquiring Person
(but for the operation of this clause (x)) as a result of the
acquisition of Common Shares by the Company, and (2) after such
share acquisition by the Company, such Person, or an Affiliate or
Associate of such Person, becomes the Beneficial Owner of any
additional Common Shares, then such Person shall be deemed an
Acquiring Person, or (y) if (1) within five Business Days after
such Person would otherwise have become or, if such Person did so
inadvertently, after such Person discovers that such Person would
otherwise have become, an Acquiring Person (but for the operation
of this clause (y)), such Person notifies the Board that such
Person did so inadvertently, and (2) within two Business Days
after such notification (or such greater period of time as may be
determined by action of the Board, but in no event greater than
five Business Days), such Person divests itself of a sufficient
number of Common Shares so that such Person is the Beneficial
Owner of such number of Common Shares that such Person no longer
would be an Acquiring Person."
(b) The definition of "Common Shares" contained in
subsection 1(g) of the Amended and Restated Rights Agreement is
hereby amended in its entirety to read as follows:
"(g) "Common Shares" when used with reference to the
Company shall mean the shares of Common Stock, par value of One
Dollar ($1.00) per share, of the Company or, in the event of a
subdivision, combination or consolidation with respect to such
shares of Common Stock, the shares of Common Stock resulting from
such subdivision, combination or consolidation; provided that, so
long as any Series A Convertible Preferred Stock remains
outstanding, (i) the number of Common Shares outstanding at any
time shall include all shares of Common Stock, par value $1.00
per share, of the Company issuable upon conversion of such
outstanding Series A Convertible Preferred Stock, whether or not
then convertible, and (ii) for purposes of Sections 3(a), (b)
(except for the first three sentences) and (c), Section 12,
Section 13, Section 15, Sections 16(a) and (c), Section 18,
Section 21, Section 22, Section 23 (except for the provisions of
(a)(i)), Section 26, Section 27 and Section 30 hereof, "Common
Shares" shall be deemed to mean both the shares of Common Stock,
par value $1.00 per share, then outstanding and shares of Series
A Convertible Preferred Stock, used in the conjunctive or the
alternative, as the context may require. "Common Shares" when
used with reference to any Person other than the Company shall
mean the capital stock (or equity interest) with the greatest
combined economic and voting power of such other Person or, if
such other Person is a Subsidiary of another Person, the Person
or Persons which ultimately control such first-mentioned Person."
(c) The definition of "Disinterested Directors" contained
in subsection 1(h) of the Amended and Restated Rights Agreement
is hereby deleted in its entirety.
(d) The definition of "Permitted Offer" contained in
subsection 1(k) of the Amended and Restated Rights Agreement is
hereby deleted in its entirety.
(e) The definition of "Trigger Amount" contained in
subsection 1(r) of the Amended and Restated Rights Agreement is
hereby amended in its entirety to read as follows:
"(r) "Trigger Amount" shall mean the lesser of:
(i) 15% or more of the Common Shares
then outstanding; or
(ii)10% or more of the Common Shares
then outstanding, but only when and if
such Common Shares represent one-fourth
(1/4) or more of the combined voting
power of the shares of Common Stock, par
value $1.00 per share, of the Company,
and the shares of Series A Convertible
Preferred Stock then outstanding. As to
any Beneficial Owner (and its Affiliates
and Associates) with respect to which
the Trigger Amount is being determined,
the voting power will be determined by
the Company in the ordinary course of
corporate governance relating to the
determination of voting power with
respect to actions submitted to a vote
of stockholders assuming such holder has
taken the necessary documentation steps
to have effectuated the right to have
five votes per Common Share with no
other estimation or assumption as to
holdings."
(f) Section 1 of the Amended and Restated Rights Agreement
shall be amended to add the following subsections (t) through
(x):
"(t) "Investment Agreement" means the Investment
Agreement, dated as of _____ __, 1997, between the Company and
the Investor.
(u) "Investor" shall have the meaning set forth in
the Investment Agreement.
(v) "Permitted Investor Transferee" shall mean any
wholly owned (other than directors' qualifying shares) United
States Subsidiary of the Investor which, at the time of
determination continues to be a wholly-owned (other than
directors' qualifying shares) United States Subsidiary of the
Investor and, owns shares of Series A Convertible Preferred Stock
acquired from the Holder or from the Company during the term of
the Investment Agreement and in accordance with the terms
thereof.
(w) "Series A Convertible Preferred Stock" means the
Series A Convertible Preferred Stock of the Company, par value
$.01 per share and, following any reclassification of the
Series A Convertible Preferred Stock into Class B Common Stock in
accordance with Section 8.8 of the Investment Agreement, the
Class B Common Stock (as defined in the Investment Agreement).
(x) "13D Group" shall mean any group of Persons who,
with respect to those acquiring, holding, voting or disposing of
Voting Securities would be required under Section 13(d) of the
Exchange Act and the rules and regulations thereunder to file a
statement on Schedule 13D with the Securities and Exchange
Commission as a "person" within the meaning of Section 13(d)(3)
of the Exchange Act, or who would be considered a "person" for
purposes of Section 13(g)(3) of the Exchange Act."
(g) Section 13(d) of the Amended and Restated Rights
Agreement is hereby deleted in its entirety.
(h) The penultimate sentence of Section 3(a) of the
Amended and Restated Rights Agreement is hereby amended in its
entirety to read as follows: "As soon as practicable after the
Distribution Date, the Company will prepare and execute, the
Rights Agent will countersign and send, or cause to be sent, by
first-class, insured, postage prepaid mail, to each record holder
of Common Shares and Series A Convertible Preferred Stock as of
the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right
Certificate, substantially in the form of Exhibit B hereto (a
"Right Certificate"), evidencing, in the case of holders of
Common Shares, one Right for each Common Share so held, and, in
the case of holders of Series A Convertible Preferred Stock, one
Right for each share of Common Stock, par value $1.00 per share,
into which such Series A Convertible Preferred Stock is
convertible (whether or not then convertible)."
(i) The third sentence of Section 7(b) of the Amended
and Restated Rights Agreement is hereby amended in its entirety
to read as follows: "Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the date
hereof and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common Shares payable in
Common Shares or (ii) effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) into a
greater or lesser number of Common Shares, then in any such case,
each Common Share outstanding following such subdivision,
combination or consolidation shall continue to have one Right
(or, in the case of Series A Convertible Preferred Stock, one
Right for each share of Common Stock, par value $1.00 per share,
into which such Series A Convertible Preferred Stock is
convertible (whether or not then convertible) following such
subdivision, combination or consolidation) (subject to adjustment
as provided here) associated therewith and the Purchase Price
following any such event shall be proportionately adjusted to
equal the result obtained by multiplying the Purchase Price
immediately prior to such event by a fraction the numerator of
which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the
denominator of which shall be the total number of Common Shares
outstanding immediately following the occurrence of such event."
SECTION 2. EFFECT OF AMENDMENT. Except as modified by
this Amendment No. 1, the Amended and Restated Rights Agreement
shall remain in full force and effect.
SECTION 3. SEVERABILITY. If any term, provision,
covenant or restriction of this Amendment No. 1 is held by a
court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or
invalidated.
SECTION 4. GOVERNING LAW. This Amendment No. 1 shall
be deemed to be a contract made under the laws of the State of
Iowa and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State.
SECTION 5. COUNTERPARTS. This Amendment No. 1 may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the date
and year first above written.
PIONEER HI-BRED INTERNATIONAL, INC.
By:
Name: Xxxxxxx X. Xxxxxxx
Title: President and CEO
By:
Name: Xxxxx Xxxxxxxx
Title: Vice President and Chief
Financial Officer
BANK BOSTON N.A.
the Rights Agent
By:
Name: Xxxxxxx Xxxxxxxx
Title: Administrative Manager
EXHIBIT C
Form of Certificate of Designation
CERTIFICATE OF THE DESIGNATIONS, POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
PIONEER HI-BRED INTERNATIONAL, INC.
Pioneer Hi-Bred International, Inc., an Iowa corporation
(the "Corporation"), does hereby certify that the Board of
Directors of the Corporation duly adopted the following
resolution, at a meeting duly convened and held on August 5,
1997, in respect of a series of Preferred Stock of the
Corporation, pursuant to authority conferred upon the Board by
Article IV of the Articles of Incorporation of the Corporation
and in accordance with Section ____ of the Business Corporation
Act of the State of Iowa:
BE IT RESOLVED, that the issuance of a series of Preferred
Stock of the Corporation is hereby authorized, and the
designation, amount, powers, preferences and relative,
participating, optional and other special rights and
qualifications, limitations and restrictions thereof, of the
shares of such series of Preferred Stock of the Corporation, are
hereby fixed as follows:
1. DESIGNATION; CLASS AND AMOUNT; CERTAIN DEFINITIONS.
The series of Preferred Stock, the issuance of which is hereby
authorized, shall comprise 200,000 shares the distinctive serial
designation of which shall be "Preferred Stock, Series A", which
is sometimes herein referred to as "Series A Convertible
Preferred Stock". Each share of Series A Convertible Preferred
Stock shall be identical in all respects with all other shares of
Series A Convertible Preferred Stock. The number of shares of
Series A Convertible Preferred Stock which are purchased or
otherwise acquired by the Corporation or converted into Common
Stock shall be canceled and shall revert to authorized but
unissued shares of Series A Convertible Preferred Stock
undesignated as to series. The Corporation shall not issue, sell
or otherwise transfer shares of Series A Convertible Preferred
Stock to any Person other than the members of the Investor Group.
Certain capitalized terms used herein have the meanings specified
therefor in Section 10 below.
2. DIVIDENDS. (a) Except as set forth in the Investment
Agreement, each Holder of shares of Series A Convertible
Preferred Stock shall participate with the holders of Common
Stock in all Dividends, when, as and if declared by the Board and
paid or distributed by the Corporation on or in respect of the
Common Stock on a share for share basis and in like tenor and
forms as the Dividend paid on the Common Stock as if all shares
of Series A Convertible Preferred Stock were converted into the
number of shares of Common Stock (whether or not the Series A
Convertible Preferred Stock is then so convertible) calculated in
accordance with Section 6 below, immediately prior to the record
date for such Dividend. Except as set forth above, holders of
shares of Series A Convertible Preferred Stock shall not be
entitled to receive any dividends. Except to the extent payable
in respect of dividends paid on the Common Stock, no interest, or
sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on shares of Series A
Convertible Preferred Stock.
(b) Dividends on the Series A Convertible Preferred Stock
in respect of each Dividend shall be payable, when and if
declared by the Board of Directors, concurrently with each date
of payment (each such date, a "Dividend Payment Date") by the
Corporation of Dividends on the Common Stock. Dividends payable
in cash shall be paid by wire transfer in immediately available
funds to the accounts designated by the respective Holders in
written notices given to the Corporation at least two Business
Days prior to the payment date or by such other means as may be
agreed to by the Corporation and the respective Holders.
(c) The Corporation will cause written notice of each
Dividend on the Series A Convertible Preferred Stock to be given
to each Holder within five Business Days after it is determined
by the Board of Directors.
3. VOTING RIGHTS. (a) Except as otherwise provided herein
or as required by law, the Holders of Series A Convertible
Preferred Stock shall not be entitled to any Vote.
(b) At any meeting called for the purpose of voting on (or
acting by written consent with respect to) any matter to be voted
upon by the holders of Common Stock of the Corporation, the
holders of shares of Series A Convertible Preferred Stock and the
holders of shares of Common Stock shall vote together as one
class on all matters so submitted to a vote of stockholders of
the Corporation. At any such meeting or in connection with any
such action by written consent, each share of Series A
Convertible Preferred Stock shall carry, as of the record date
applicable to such vote, a number of votes equal to the Per Share
Vote Amount as calculated by the Corporation for such meeting.
(c) In accordance with Section 6.2(b) of the Investment
Agreement, the Corporation will cause written notice of any vote
as to which holders of Common Stock are entitled to vote as a
separate class or voting group under the Articles of
Incorporation or Iowa Law (a "Class Vote"), to be given to each
Holder at least 15 Business Days prior to such Class Vote.
4. LIQUIDATION PREFERENCE. In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, the Holders of shares of Series A
Convertible Preferred Stock then outstanding shall be entitled,
for each share of Series A Convertible Preferred Stock, to be
paid out of the assets of the Corporation available for
distribution to its stockholders the amount of cash or other
property that would be payable on the number of shares of Common
Stock then issuable upon conversion of such share of Series A
Convertible Preferred Stock (whether or not then convertible)
(such amount payable being adjusted appropriately to reflect any
stock split, stock dividend, reverse stock split, or any
transaction with comparable effect upon the Common Stock) (the
"Liquidation Preference"). This entitlement of the Holders of
shares of Series A Convertible Preferred Stock, to the extent
equal to $.01 for each share of Series A Convertible Preferred
Stock, shall be satisfied before any similar payment shall be
made or any assets distributed to the holders of the Common Stock
or any other security junior in rank to the Series A Convertible
Preferred Stock as to distribution of assets upon such
dissolution, liquidation or winding up and otherwise shall be
satisfied on a pari passu basis with the holders of the Common
Stock. If the assets of the Corporation are not sufficient to
pay in full the liquidation payments payable to all of the
Holders of the outstanding shares of Series A Convertible
Preferred Stock, then the Holders of all such shares shall share
ratably in such distribution of assets in accordance with the
liquidation preference to which they are entitled. For the
purposes of this section, neither the voluntary sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property
or assets of the Corporation nor the consolidation or merger of
the Corporation with one or more other corporations shall be
deemed to be a liquidation, dissolution or winding up, voluntary
or involuntary, unless such voluntary sale, conveyance, exchange
or transfer shall be in connection with a dissolution or winding
up of the business of the Corporation.
5. RESTRICTIONS ON TRANSFER. The shares of Series A
Convertible Preferred Stock are subject to the provisions of the
Investment Agreement (including the provisions thereof
restricting transfer of such stock).
6. CONVERSION. (a)(i) Concurrently with the transfer of
Beneficial Ownership of any share of Series A Convertible
Preferred Stock to any Person other than the Investor or another
member of the Investor Group or Other Investor Affiliate, such
share of Series A Convertible Preferred Stock shall convert into
[100] < FN > Number of shares of Common Stock each share is
convertible into is subject to adjustment prior to Closing in the
event of a stock split, stock combination or similar adjustment
in the number of shares of Common Stock outstanding./< FN > fully-
paid and non-assessable shares of Common Stock (as adjusted
pursuant to Section 6(c)), in accordance with the procedures
provided in clause (b) of this Section 6.
(ii) At any time (x) at the direction of the
Corporation, but only if the Corporation intends to recommend
approval of a Voting Amendment (as defined in the Investment
Agreement), and (y) at the direction of the Investor, following
the approval and effectiveness of a Voting Amendment, shares of
Series A Convertible Preferred Stock shall be mandatorily
convertible into fully-paid and non-assessable shares of Common
Stock, with each share of Series A Convertible Preferred Stock
being converted into [100] < FN> Number of shares of Common Stock
each share is convertible into is subject to adjustment prior to
Closing in the event of a stock split, stock combination or
similar adjustment in the number of shares of Common Stock
outstanding./< FN > shares of Common Stock (as adjusted pursuant to
Section 6(c)).
(iii) The Investor shall have the right, in
accordance with Section 8.8 of the Investment Agreement, at any
time that the Investor may exercise the Optional Conversion Right
(as defined in the Investment Agreement) in accordance with the
Investment Agreement, to cause all shares of Series A Convertible
Preferred Stock to be converted into fully-paid and non-
assessable shares of Common Stock, with each share of Series A
Convertible Preferred Stock being converted into [100] < FN > Number
of shares of Common Stock each share is convertible into is
subject to adjustment prior to Closing in the event of a stock
split, stock combination or similar adjustment in the number of
shares of Common Stock outstanding./< FN > shares of Common Stock
(as adjusted pursuant to Section 6(c)).
(iv) At any time that all outstanding shares of Common
Stock (or whatever security received upon conversion or exchange
thereof) have the same vote per share, if any, without any time
phase voting, all shares of Series A Convertible Preferred Stock
shall be convertible into fully-paid and non-assessable shares of
Common Stock, with each such share of Series A Convertible
Preferred Stock being converted into [100] < FN > Number of shares
of Common Stock each share is convertible into is subject to
adjustment prior to Closing in the event of a stock split, stock
combination or similar adjustment in the number of shares of
Common Stock outstanding./ < FN > shares of Common Stock (as
adjusted pursuant to Section 6(c)).
(v) Except as set forth in this Section 6(a), the
shares of Series A Convertible Preferred Stock are not
convertible at the option of the Holder thereof.
(b) (i) Any Holder of shares of Series A Convertible
Preferred Stock required (or in the case of clauses (iii) or (iv)
above requesting) to convert any or all such shares into Common
Stock shall surrender the certificate(s) evidencing such shares
of Series A Convertible Preferred Stock of the Holder at the
office of the transfer agent appointed for the purpose of such
conversion by the Corporation. Such surrendered certificate(s),
if the Corporation shall so require, shall be duly endorsed to
the Corporation or in blank, or accompanied by proper instruments
of transfer to the Corporation or in blank.
(ii) The Corporation shall, within one Business Day
after such surrender of certificates evidencing shares of Series
A Convertible Preferred Stock accompanied by written notice and
in compliance with any other conditions contained herein, issue
and deliver, or cause to be issued and delivered, to the
Person(s) for whose account such certificate(s) evidencing shares
of Series A Convertible Preferred Stock were so surrendered, or
to the nominee(s) of such Person(s), certificates representing
the number of full shares of Common Stock to which such Person
shall be entitled pursuant to the then-applicable conversion
rate. Such conversion shall be deemed to have been made on the
date of such surrender of the certificate(s) evidencing shares of
Series A Convertible Preferred Stock to be converted (the
"Surrender Date") and the Person(s) entitled to receive the
Common Stock deliverable upon conversion of such Series A
Convertible Preferred Stock shall be treated for all purposes as
the record holder(s) of such Common Stock on such date and
thereafter. Conversion of Series A Convertible Preferred Stock
may otherwise be achieved in accordance with such procedures as
the Corporation and a majority of the Holders may agree.
(iii) In the event that fewer than all shares of
Series A Convertible Preferred Stock represented by a surrendered
certificate are to be converted hereunder, a new certificate
shall be issued at the Corporation's expense representing the
shares of Series A Convertible Preferred Stock not so converted.
(iv) In connection with the conversion of any shares of
Series A Convertible Preferred Stock, no fractions of shares of
Common Stock shall be issued, but in lieu thereof the Corporation
shall pay a cash adjustment in respect of such fractional
interest in an amount equal to such fractional interest
multiplied by the Market Price (as defined in the Investment
Agreement) per share of Common Stock on the day on which such
shares of Series A Convertible Preferred Stock are deemed to have
been converted.
(c) The conversion rate shall be adjusted from time to
time as follows:
(i) In case the Corporation shall, at any time or from
time to time while any of the shares of Series A Convertible
Preferred Stock are outstanding, (A) subdivide or reclassify its
outstanding shares of Common Stock into a larger number of
shares, or (B) combine or reclassify its outstanding shares of
Common Stock into a smaller number of shares, the conversion rate
in effect immediately prior to such action shall be adjusted so
that the Holder of any shares of Series A Convertible Preferred
Stock thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock which such Holder
would have owned or have been entitled to receive immediately
following such action had such shares of Series A Convertible
Preferred Stock been converted immediately prior thereto. An
adjustment made pursuant to this Section 6(c)(i) shall become
effective immediately after the close of business on the
effective date of a subdivision, reclassification or combination.
If, as a result of an adjustment made pursuant to this Section
6(c)(i), the Holder of any shares of Series A Convertible
Preferred Stock thereafter surrendered for conversion shall
become entitled to receive shares of two or more classes of
capital stock of the Corporation, the Board of Directors shall
make an appropriate allocation of the adjusted conversion rate
between or among shares of such classes of capital stock in
accordance with the entitlements of the Common Stock underlying
the Series A Convertible Preferred Stock in connection with such
adjustment.
(ii) Whenever an adjustment in the conversion rate is
required, the Corporation shall forthwith place on file with its
Transfer Agent a statement signed by its Chief Executive Officer,
Chief Financial Officer or a Vice President and by its Secretary,
Assistant Secretary, Treasurer or Assistant Treasurer, stating
the adjusted conversion rate determined as provided herein. Such
statements shall set forth in reasonable detail such facts as
shall be necessary to show the reason and the manner of computing
such adjustment.
(d) (i) The Corporation shall at all times reserve and
keep available, free from preemptive rights, out of its
authorized and unissued stock, such number of shares of its
Common Stock as shall from time to time be sufficient to effect
the conversion of all shares of Series A Convertible Preferred
Stock from time to time outstanding, solely for the purpose of
effecting such conversion. The Corporation shall, from time to
time, in accordance with the laws of the State of Iowa, increase
the authorized number of shares of Common Stock if at any time
the number of shares of authorized and unissued Common Stock
shall not be sufficient to permit the conversion of all the then
outstanding shares of Series A Convertible Preferred Stock.
(ii) The Corporation will pay any and all stamp and
transfer taxes that may be payable in respect of the issuance or
delivery of shares of Common Stock upon conversion of shares of
Series A Convertible Preferred Stock pursuant hereto. The
Corporation shall not, however, be required to pay any tax which
may be payable in respect of any transfer involved in the
issuance and delivery of shares of Common Stock in a name other
than that in which the shares of Series A Convertible Preferred
Stock so converted were registered and no such issuance or
delivery shall be made unless and until the person requesting
such issuance has paid to the Corporation the amount of any such
tax or has established to the satisfaction of the Corporation
that such tax has been paid.
(e) In case of (i) any reclassification or change of
outstanding shares of Common Stock (other than a change in par
value or from par value to no par value or from no par value to
par value, or as a result of a subdivision or combination) or
(ii) any consolidation or merger of the Corporation with one or
more other corporations (other than a consolidation or merger in
which the Corporation is the continuing corporation and which
does not result in any reclassification or change of outstanding
shares of Common Stock issuable upon conversion of Series A
Convertible Preferred Stock) or (iii) any sale or conveyance to
another corporation or other entity of all or substantially all
of the property of the Corporation, then the Corporation, or such
successor corporation or other entity, as the case may be, shall
make appropriate provision so that the holder of each share of
Series A Convertible Preferred Stock then outstanding shall have
the right to convert such share into the kind and amount of
shares of stock or other securities and property receivable upon
such consolidation, merger, sale, reclassification, change or
conveyance by a holder of the number of shares of Common Stock
into which such shares of Series A Convertible Preferred Stock
might have been converted immediately prior to such
consolidation, merger, sale, reclassification, change or
conveyance, subject to adjustment which shall be as nearly
equivalent as may be practicable to the adjustments provided for
in Section 6(c). If the holders of Common Stock are entitled to
elect the consideration payable pursuant any consolidation,
merger, sale, conveyance or other transaction or event set forth
above, the Holders also shall be entitled to elect between such
forms of consideration. The provisions of this paragraph shall
apply similarly to successive consolidations, mergers, sales,
conveyances or other transactions or events.
(f) Whenever the number of shares of Common Stock into
which each share of Series A Convertible Preferred Stock is
convertible is adjusted as provided in this Section 6, the
Corporation shall promptly mail to the Holders a notice in
accordance with Section 8 below stating that the number of shares
of Common Stock into which the shares of Series A Convertible
Preferred Stock are convertible has been adjusted and setting
forth the new number of shares of Common Stock (or describing the
new stock, securities, cash or other property) into which each
share of Series A Convertible Preferred Stock is convertible, as
a result of such adjustment, a brief statement of the facts
requiring such adjustment and the computation thereof, and when
such adjustment became effective.
7. LIMITED PRIORITY. The Series A Convertible Preferred
Stock shall, to the extent of the Liquidation Preference set
forth in Section 4, be senior in rank as to distribution of
assets upon any liquidation, dissolution or winding up of the
affairs of the Corporation, to the Common Stock, or any class of
equity securities of the Corporation which by its terms are
junior to the Series A Convertible Preferred Stock, unless the
Holders of 66 2/3 percent of the outstanding shares of the Series
A Convertible Preferred Stock shall otherwise consent.
8. NOTICES. The Corporation shall provide notice to each
Holder of any action taken or proposed to be taken or any
determination made by the Corporation and/or the Holder under the
terms of this Certificate of Designations. Notice of any such
action or determination by the Corporation and/or the Holder and
all other notices and other communications provided for in this
Certificate of Designations shall be delivered by facsimile and
by reputable overnight courier,
(a) If to the Company, to:
Pioneer Hi-Bred International, Inc,
000 Xxxxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attention: General Counsel
Telephone: 000-000-0000
Telecopier: 000-000-0000
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn.: Xxxxxxx Xxxxxxx
or such other address as the Corporation shall have
furnished to the Holders in writing,
(b) if to a Holder, to the address and facsimile number of
such Holder listed on the Stock Books of the Corporation.
9. DEFINITIONS. Certain capitalized terms are used herein
as defined below:
"AFFILIATE" of a Person has the meaning set forth in Rule
12b-2 under the Exchange Act.
"ARTICLES OF INCORPORATION" means the Third Restated and
Amended Articles of Incorporation of the Corporation, as amended
from time to time.
"BENEFICIALLY OWNED" with respect to any securities means
having "beneficial ownership" of such securities (as determined
pursuant to Rule 13d-3 under the Exchange Act, as in effect on
the date hereof, without limitation by the 60-day provision in
paragraph (d)(1)(i) thereof). The terms "Beneficial Ownership"
and "Beneficial Owner" have correlative meanings.
"BOARD" means the Board of Directors of the Corporation.
"BUSINESS DAY" means any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of Iowa are
authorized or obligated by law or executive order to close.
"CERTIFICATE OF DESIGNATIONS" means this Certificate of
Designations, Powers, Preferences and Relative, Participating,
Optional or other Rights, and the Qualifications, Limitations or
Restrictions Thereof, creating the Series A Convertible Preferred
Stock.
"COMMON STOCK" means the Common Stock, par value $1.00 per
share, of the Corporation.
"COMMON VOTING POWER" means, in respect of any record date
for any meeting of stockholders (or action by written consent in
lieu of a meeting) the aggregate Votes represented by all then
outstanding Voting Securities other than the Series A Convertible
Preferred Stock as determined by the Board in accordance with the
procedures set forth in the Articles of Incorporation based on
the actual Votes entitled to be voted at such meeting (excluding
any estimation of any kind, including as to who would have been
entitled to 5 Votes per share if such shareholders had taken the
requisite steps to obtain such Vote).
"DIVIDEND" means any dividend or distribution on or in
respect of the Common Stock of the Corporation, whether in cash,
additional shares of Common Stock or other property.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"HOLDER" means a holder of record of a share or shares of
Series A Convertible Preferred Stock.
"INVESTMENT AGREEMENT" means the Agreement, dated as of
August 6, 1997, between the Investor and the Corporation, as
amended and/or restated from time to time.
"INVESTOR" means E.I. du Pont de Nemours and Company.
"INVESTOR GROUP" shall have the meaning set forth in the
Investment Agreement.
"INVESTOR GROUP TOTAL OWNERSHIP PERCENTAGE" means, with
respect to the Investor Group calculated at a particular point in
time, the ratio, expressed as a percentage, of (a) the total
number of shares of Common Stock Beneficially Owned by the
Investor Group and issuable upon conversion of (whether or not
then convertible), or otherwise constituting the economic
equivalent of, all Common Securities (as defined in the
Investment Agreement) Beneficially Owned by the Investor Group,
over (b) the total number of shares of Common Stock then
outstanding and the number of shares of Common Stock issuable
upon conversion (whether or not then convertible) of, or
otherwise constituting the economic equivalent of, all
outstanding Common Securities; PROVIDED that in no event shall
the Investor Group Total Ownership Percentage of all Holders of
Series A Convertible Preferred Stock be greater than 20%.
"IOWA LAW" shall mean the Business Corporation Act of the
State of Iowa.
"LIQUIDATION PREFERENCE" has the meaning specified in
Section 4 above.
"OTHER INVESTOR AFFILIATE" shall have the meaning set forth
in the Investment Agreement.
"PER SHARE VOTE AMOUNT" means in respect of any record date
for any meeting of stockholders (or action by written consent in
lieu of a meeting) that number of Votes per share of Series A
Convertible Preferred Stock equal to (x) the Total Preferred Vote
Amount as of such record date amount divided by (y) the number of
shares of Series A Convertible Preferred Stock outstanding as of
such record date.
"PERSON" means any individual, corporation, company,
association, partnership, joint venture, limited liability
company, trust or unincorporated organization, group (within the
meaning of Rule 13d-5 under the Exchange Act) or a government or
any agency or political subdivision thereof.
"SERIES A CONVERTIBLE PREFERRED STOCK" has the meaning
specified in Section 1 above.
"STOCK BOOKS" means the stock transfer books of the
Corporation relating to its Common Stock and Preferred Stock.
"SUBSIDIARY" means, as to any Person, any other Person more
than fifty percent (50%) of the shares of the voting stock or
other voting interests of which are owned or controlled, or the
ability to select or elect more than fifty percent (50%) of the
directors or similar managers is held, directly or indirectly, by
such first Person or one or more of its Subsidiaries or by such
first Person and one or more of its Subsidiaries. A Subsidiary
that is directly or indirectly wholly-owned by another Person
except for directors' qualifying shares shall be deemed wholly-
owned for purposes of this Agreement.
"SURRENDER DATE" has the meaning specified in Section 6
above.
"13D GROUP" shall mean any group of Persons who, with
respect to those acquiring, holding, voting or disposing of
Voting Securities would, assuming ownership of the requisite
percentage thereof, be required under Section 13(d) of the
Exchange Act and the rules and regulations thereunder to file a
statement on Schedule 13D with the Securities and Exchange
Commission as a "person" within the meaning of Section 13(d)(3)
of the Exchange Act, or who would be considered a "person" for
purposes of Section 13(g)(3) of the Exchange Act.
"TOTAL PREFERRED VOTE AMOUNT" means, in respect of the
record date for any meeting (or action by written consent in lieu
of a meeting) of shareholders of the Corporation to vote on any
matter, an aggregate number of Votes equal to (a) the Common
Voting Power as of such record date multiplied by (b) a fraction,
the numerator of which is the Investor Group Total Ownership
Percentage (expressed as a fraction carried to two decimal
places) as of such record date and the denominator of which is
1.00 minus the Investor Group Total Ownership Percentage
(expressed as a fraction carried to two decimal places) as of
such record date; provided that in no event shall the Total
Preferred Vote Amount be greater than 20% of Total Voting Power.
"TOTAL VOTING POWER" means in respect of any record date for
any meeting of stockholders (or action by written consent in lieu
of a meeting) the aggregate Votes represented by all then
outstanding Voting Securities as determined by the Board in
accordance with the procedures set forth in the Articles of
Incorporation based on the actual Votes entitled to be voted at
such meeting (excluding any estimation of any kind, including as
to who would have been entitled to 5 Votes per share if such
shareholders had taken the requisite steps to obtain such Vote).
"VOTES" shall mean, at any time, with respect to any Voting
Securities, the total number of votes that would be entitled to
be cast by the holders of such Voting Securities generally (by
the terms of such Voting Securities, the Articles of
Incorporation or any certificate of designations for such Voting
Securities) in a meeting for the election of directors held at
such time, including the votes that would be able to be cast by
holders of shares of Series A Convertible Preferred Stock in
accordance with the procedures set forth in the Articles of
Incorporation based on the actual number of Votes entitled to be
voted at such meeting (excluding any estimation of any kind,
including as to who would have been entitled to 5 Votes per share
if such shareholders had taken the requisite steps to obtain such
Vote).
"VOTING SECURITIES" means the shares of Common Stock, the
Series A Convertible Preferred Stock and any other securities of
the Corporation entitled to vote generally for the election of
directors, and any securities (other than employee stock options)
which are convertible into, or exercisable or exchangeable for,
Voting Securities.
IN WITNESS WHEREOF, Pioneer Hi-Bred International, Inc., has
caused this Certificate to be made under the seal of the
Corporation and signed and attested by the undersigned officers
of the Corporation this ____ day of ___________, 1997.
PIONEER HI-BRED INTERNATIONAL, INC.
By
Name:
Title:
(Corporate Seal)
Attest:
By
Name:
Title:
EXHIBIT D
INITIAL INVESTOR NOMINEE
NOTICE PURSUANT TO SECTION 5.1(B)
0.Xxxx of Investor Xxxxxxx X. (Xxxx) Xxxxxxxx,
Nominee Jr.
14A Information:
Age 49 (DOB 3/9/48)
Current Since 1995, Executive Vice
Position President, DuPont,
Chairman, DuPont Asia
Pacific and member of the
Office of the Chief
Executive. DuPont is a
global chemical, energy and
life sciences company.
Previous Senior Vice President,
Positions: DuPont (1992) President,
(Past 5 + DuPont Asia Pacific (1990)
years)
Other Analog Devices, Inc.
Directorships: DuPont Photmasks, Inc.
E.I. du Pont de Nemours and
Company
0.Xxxx of Investor Xxxxxxx X. (Xxxx) Xxxx
Nominee
14A Information:
Age: 54 (DOB 9/11/42)
Current Since 1990, Vice President,
Position General Manager, DuPont
Agricultural Products.
Dupont is a global chemical
energy and life sciences
company.
Previous General Manager,
Positions: Agricultural
(Past 5+ years) Products (1985)
Other None
Directorships:
