EXCHANGE AND PURCHASE AGREEMENT
Among
MYCOGEN CORPORATION, a California corporation,
AGRIGENETICS, INC., a Delaware corporation,
DOWELANCO, an Indiana general partnership, and
UNITED AGRISEEDS, INC., a Delaware corporation
Dated as of
January 15, 1996
|| TABLE OF CONTENTS
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Page
ARTICLE 1
DEFINITIONS............................... 2
Section 1.1 Definitions.................................................. 2
ARTICLE 2
THE TRANSACTION............................. 7
Section 2.1 Sale and Purchase of Purchase Shares and
Promissory Note.............................................. 7
Section 2.2 Closing Balance Sheet Adjustment............................. 8
ARTICLE 3
THE CLOSING............................... 9
Section 3.1 Closing...................................................... 9
Section 3.2 Deliveries by Parent......................................... 10
Section 3.3 Deliveries by the Company and Agrigenetics................... 10
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............. 11
Section 4.1 Organization and Qualification; Subsidiaries................. 11
Section 4.2 Capitalization of the Company................................ 12
Section 4.3 Capitalization of Agrigenetics............................... 13
Section 4.4 Authority Relative to This Agreement......................... 13
Section 4.5 Waiver of Rights Agreement................................... 13
Section 4.6 Non-Contravention; Required Filings and Consents............. 14
Section 4.7 SEC Reports.................................................. 15
Section 4.8 Absence of Certain Changes................................... 16
Section 4.9 Finder's Fee................................................. 16
Section 4.10 Absence of Claims and Litigation............................. 16
Section 4.11 Taxes........................................................ 17
Section 4.12 Employee Benefits and Labor Matters.......................... 18
Section 4.13 Compliance................................................... 20
Section 4.14 Environmental Matters........................................ 20
Section 4.15 Intellectual Property........................................ 21
Section 4.16 Significant Agreements....................................... 21
Section 4.17 Product Registrations........................................ 22
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT................. 22
Section 5.1 Organization................................................. 22
Section 5.2 Authority Relative to this Agreement......................... 23
Section 5.3 Non-Contravention; Required Filings and Consents............. 23
Section 5.4 Capitalization of Subsidiary................................. 24
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Section 5.5 Financial Statements......................................... 24
Section 5.6 Absence of Certain Changes................................... 25
Section 5.7 Finder's Fee................................................. 25
Section 5.8 Absence of Claims and Litigation............................. 25
Section 5.9 Taxes........................................................ 26
Section 5.10 Employee Benefits............................................ 27
Section 5.11 Compliance................................................... 29
Section 5.12 Environmental Matters........................................ 29
Section 5.13 Intellectual Property........................................ 30
Section 5.14 Significant Agreements....................................... 30
Section 5.15 Charter Documents and Corporate Records...................... 30
Section 5.16 Assets....................................................... 31
Section 5.17 Licenses, Permits, Authorizations, Etc....................... 32
Section 5.18 Employee Relations........................................... 32
Section 5.19 Investment Intent............................................ 33
ARTICLE 6
COVENANTS................................ 33
Section 6.1 Conduct of Business of the Company, Agrigenetics
and Subsidiary............................................... 33
Section 6.2 Qualified Stock Purchase..................................... 36
Section 6.3 Access to Information and Facilities......................... 36
Section 6.4 Reasonable Best Efforts...................................... 37
Section 6.5 Public Announcements......................................... 37
Section 6.6 Indemnification of Subsidiary, Directors,
Officers, Employees and Agents............................... 37
Section 6.7 Notification of Certain Matters.............................. 38
Section 6.8 No Solicitation.............................................. 38
Section 6.9 Pre-Closing Restrictions on Stock Acquisitions............... 39
Section 6.10 Rights Agreement............................................. 40
Section 6.11 Post-Closing Covenants of the Company........................ 40
Section 6.12 Post-Closing Restrictions on Stock Acquisitions.............. 42
Section 6.13 Buyout Transaction........................................... 43
Section 6.14 Election of Directors........................................ 44
Section 6.15 Audited Financial Statements................................. 45
Section 6.16 Benefit Plans................................................ 46
Section 6.17 Post-Closing Human Resources Matters......................... 46
Section 6.18 Strategic Review Committee................................... 46
Section 6.19 Technology Agreement......................................... 47
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ARTICLE 7
CONDITIONS................................ 47
Section 7.1 Conditions to Each Party's Obligations....................... 47
Section 7.2 Conditions to the Obligation of Parent and
Subsidiary................................................... 47
Section 7.3 Conditions to the Obligations of the Company and
Agrigenetics................................................. 48
ARTICLE 8
TERMINATION; AMENDMENT; WAIVER...................... 49
Section 8.1 Termination.................................................. 49
Section 8.2 Effect of Termination........................................ 51
Section 8.3 Fees and Expenses............................................ 51
Section 8.4 Amendment.................................................... 51
Section 8.5 Extension; Waiver............................................ 51
ARTICLE 9
MISCELLANEOUS.............................. 52
Section 9.1 Survival of Representations and Warranties................... 52
Section 9.2 Indemnification.............................................. 52
Section 9.3 Entire Agreement; Assignment................................. 54
Section 9.4 Notices...................................................... 54
Section 9.5 Governing Law................................................ 55
Section 9.6 Parties in Interest.......................................... 55
Section 9.7 Specific Performance......................................... 55
Section 9.8 Severability................................................. 56
Section 9.9 Descriptive Headings......................................... 56
Section 9.10 Counterparts................................................. 56
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EXHIBITS AND SCHEDULES
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EXHIBITS
--------
EXHIBIT A
EXHIBIT B
SCHEDULES
---------
SCHEDULE 4.2
SCHEDULE 4.3
SCHEDULE 4.7.2
SCHEDULE 4.10
SCHEDULE 4.11
SCHEDULE 4.12.1
SCHEDULE 4.12.5
SCHEDULE 4.16
SCHEDULE 4.17
SCHEDULE 5.5.1
SCHEDULE 5.5.2
SCHEDULE 5.8
SCHEDULE 5.9
SCHEDULE 5.10.1
SCHEDULE 5.10.5
SCHEDULE 5.14
SCHEDULE 5.16.1
SCHEDULE 5.16.3
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EXCHANGE AND PURCHASE AGREEMENT
THIS EXCHANGE AND PURCHASE AGREEMENT, dated as of January 15, 1996, is
among MYCOGEN CORPORATION, a California corporation (the "Company"),
AGRIGENETICS, INC., a Delaware corporation ("Agrigenetics"), DOWELANCO, an
Indiana general partnership ("Parent"), and UNITED AGRISEEDS, INC., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Subsidiary").
WHEREAS, it is proposed that (i) Parent will sell to Agrigenetics all of
the outstanding shares of common stock, $1.00 par value per share, of Subsidiary
(the "Subsidiary Shares") in exchange for the sale by Agrigenetics to Parent of
2,707,884 shares (the "Seed Purchase Shares") of common stock, $.001 par value
per share, of the Company ("Common Stock") and the delivery to Parent of a
promissory note of Agrigenetics payable to Parent in the amount of $100,000
substantially in the form attached hereto as Exhibit A (the "Promissory Note")
and (ii) the Company will sell to Parent 1,745,450 shares of Common Stock (the
"Cash Purchase Shares") for $26,400,000 (the "Cash Payment") (such transactions
are collectively referred to herein as the "Transaction" and the Seed Purchase
Shares and Cash Purchase Shares (which together consist of 4,453,334 shares of
Common Stock) are collectively referred to herein as the "Purchase Shares");
WHEREAS, simultaneously with the execution and delivery hereof, Parent, The
Lubrizol Corporation, an Ohio corporation ("Lubrizol") and AGC Holdings, Inc., a
Delaware corporation, and an indirect wholly-owned subsidiary of Lubrizol
("Investor"), are entering into a stock purchase agreement (the "Stock Purchase
Agreement") pursuant to which Investor has agreed, among other things, to sell,
transfer and assign to Parent all of the shares of Common Stock and other direct
or indirect ownership interests in the Company held by Investor (the "Investor
Interests"); and
WHEREAS, the Board of Directors of the Company (the "Board") and Parent, in
accordance with its Amended and Restated Partnership Agreement, have approved
this Agreement and the transactions contemplated hereby and Parent, in
accordance with its Amended and Restated Partnership Agreement, has approved the
transactions contemplated by the Stock Purchase Agreement; and
WHEREAS, the Board of Directors of Agrigenetics and Parent, as the sole
shareholder of Subsidiary, have approved this Agreement and the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company, Agrigenetics, Parent and Subsidiary hereby agree as follows.
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. The following terms will have the meanings set
forth below unless otherwise defined herein.
"affiliate" of a person means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person.
"beneficial owner" has the meaning set forth in Rule 13d-3 under the
Exchange Act.
"Blue Sky Laws" means laws and regulations of any state or territory of the
United States relating to the regulation of the offer and sale of securities.
"Board" means the board of directors of the Company.
"Buyout Transaction" means a tender offer, merger or similar transaction
involving Parent or one of its affiliates and the Company that offers each
holder of Common Stock other than Parent or its affiliates the opportunity to
dispose of some or all Common Stock owned by such stockholder for consideration
reflecting such stockholder's proportionate share of the Third Party Sale Value
Consideration, but will expressly exclude any sale of the Company's assets.
"Cleanup" means all actions required to: (1) cleanup, remove, treat or
remediate Hazardous Materials in the indoor or outdoor environment; (2) prevent
the Release of Hazardous Materials so that they do not migrate, endanger or
threaten to endanger public health or welfare of the indoor or outdoor
environment; (3) perform pre-remedial studies and investigations and post-
remedial monitoring and care; or (4) respond to any government requests for
information or documents in any way relating to cleanup, removal, treatment or
remediation or potential cleanup, removal, treatment or remediation of Hazardous
Materials in the indoor or outdoor environment.
"Closing" means the closing of the Transaction.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Common Stock Equivalent" means any Company Security (or fraction of a
Company Security) exchangeable for one share of Common Stock and/or having
voting power in an election of directors equal to that of one share of Common
Stock.
"Company Securities" means shares of capital stock or other voting
securities of the Company, securities of the Company or of any subsidiary of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company, options, subscriptions, warrants, convertible
securities, calls or other rights to acquire from the Company, and obligations
of the Company to issue, deliver or sell any capital stock, voting securities or
securities convertible into or exchangeable for shares of capital stock or
voting securities of the Company and equity equivalents, interests in the
ownership or earnings of the Company or other similar rights.
"Confidentiality Agreement" means the Confidentiality Agreement entered
into on October 6, 1995 between Parent and the Company.
"control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the management policies of a
person, whether through the ownership of stock, as trustee or executor, by
contract or credit arrangement or otherwise.
"Data" means the technical and other data and studies which are necessary
to obtain and maintain Product Registrations.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or, if known to an authorized officer, oral) by
any person or entity alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from (a)
the presence, or Release into the indoor or outdoor environment, of any
Hazardous Materials at any location, whether or not owned or operated by the
Company or any of its subsidiaries or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all federal, state, local and foreign laws and
regulations relating to pollution or protection of human health and safety or
the environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conservation and Recovery
Act, the Clean Air Act, the Clean Water Act, the Occupational Safety and Health
Act of 1970, as amended, and
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similar state laws and other laws relating to Releases or threatened Releases of
Hazardous Materials or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, disposal, transport or handling
of Hazardous Materials and all laws and regulations with regard to
recordkeeping, notification, disclosure and reporting requirements respecting
Hazardous Materials, provided, however, that the term Environmental Laws will
not include any Product Registrations.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"generally accepted accounting principles" will mean the generally accepted
accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession in the United
States, in each case applied on a consistent basis.
"Hazardous Materials" means all substances defined as Hazardous Substances,
Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. (S) 300.5, or defined as such by, or
regulated as such under, any Environmental Law, or which otherwise may be the
basis for any federal, state, local or foreign government requiring Cleanup.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"Independent Directors" means a director of the Company (i) who is not and
has never been an officer or employee of the Company or any affiliate of the
Company, (ii) who is not and has never been an officer, employee or director of
Parent or any affiliate of Parent and (iii) who has no affiliation,
compensation, consulting or contracting arrangement with the Company, Parent or
any of their respective affiliates other than solely arising out of such
director's position as a member of the Board.
"Intellectual Property" means trademarks, service marks, brand names,
certification marks, trade dress, assumed names, trade names and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions,
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discoveries and ideas, whether patentable or not in any jurisdiction; patents,
applications for patents (including, without limitation, divisions,
continuations, continuations in part and renewal applications), and any
renewals, extensions or reissues thereof, in any jurisdiction; plant variety
protection certificates, nonpublic information, trade secrets, confidential
information and proprietary materials and rights in any jurisdiction to limit
the use or disclosure thereof by any person; writings and other works, whether
copyrightable or not in any jurisdiction; registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; any similar intellectual property or proprietary rights; and any claims
or causes of action arising out of or related to any infringement or
misappropriation of any of the foregoing.
"Investment Agreement" means Amended and Restated Equity Investment
Agreement dated December 31, 1993 between the Company, Agrigenetics, Investor
and MPS.
"Investor's Conversion Right" means the Investor's rights under the
Investment Agreement to convert its equity interest in Agrigenetics into shares
of Common Stock.
"Market Value" with respect to any security means the average of the daily
closing price for the trading days within the 90 calendar days preceding the
date of the proposed sale and purchase of such security on any national
securities exchange or inter-dealer quotation system on which the security is
then traded, or, if the security is not then traded on any national securities
exchange or inter-dealer quotation system, the fair market value of such
security.
"Material Adverse Effect" with respect to any person means a material
adverse effect, or the occurrence or existence of facts or circumstances
reasonably expected to result in a material adverse effect, on the business,
assets, results of operations, properties, or financial or operating condition
of such person and its subsidiaries taken as a whole or the ability of such
person (and to the extent applicable, its subsidiaries) to perform its (or
their) obligations under this Agreement or consummate the transactions
contemplated hereby.
"Measurement Date" means the earlier to occur of the Closing Date or, if
applicable, the date of termination of this Agreement pursuant to Section 8.1.
"MPS" means Mycogen Plant Science, Inc.
"NASD Rules" means the rules and policies promulgated by the National
Association of Securities Dealers applicable to issuers of securities designated
for inclusion in the Nasdaq National
5
Market, including, without limitation, the By-Laws of the National Association
of Securities Dealers and the Schedules thereto.
"New Security" means any Company Securities issued by the Company after the
Closing other than (i) any securities issuable upon conversion of any
convertible Company Security outstanding as of the date of this Agreement, (ii)
any securities issuable upon exercise of any option, warrant or other similar
Company Security authorized as of the date of this Agreement and (iii) any
securities issuable in connection with any stock split, stock dividend or
recapitalization of the Company where such securities are issued to all
stockholders of the Company on a proportionate basis.
"person" means an individual, corporation, partnership, limited liability
company, association, trust, unincorporated organization, other entity or group
(as defined in Section 13(d)(3) of the Exchange Act).
"Product Registrations" means any approval of a governmental or other
regulatory body which is necessary to market, distribute or sell seeds,
pesticides or genetically modified products in any jurisdiction, including,
without limitation, registrations with the U.S. Environmental Protection Agency
pursuant to the Federal Insecticide, Rodenticide and Fungicide Act and the
regulations promulgated thereunder.
"Release" means any release, spill, emission, discharge, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment (including, without limitation, ambient air,
surface water, groundwater and surface or subsurface strata) or into or out of
any property, including the movement of Hazardous Materials through or in the
air, soil, surface water, groundwater or property.
"Rights" means the preferred share purchase rights under the Rights
Agreement.
"Rights Agreement" means the Company's Amended and Restated Rights
Agreement dated as of October 19, 1995, between the Company and The First
National Bank of Boston.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"subsidiary" or "subsidiaries" of any person means any corporation,
partnership, joint venture or other legal entity of
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which such person (either alone or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of the stock or other
equity interests the holder of which is generally entitled to vote for the
election of the board of directors or other governing body of such corporation,
partnership, joint venture or other legal entity.
"Subsidiary Securities" means shares of capital stock or other voting
securities of Subsidiary, securities of Subsidiary convertible into or
exchangeable for shares of capital stock or voting securities of Subsidiary,
options, subscriptions, warrants, convertible securities, calls or other rights
to acquire from Subsidiary, and obligations of Subsidiary to issue, deliver or
sell any capital stock, voting securities or securities convertible into or
exchangeable for shares of capital stock or voting securities of Subsidiary and
equity equivalents, interests in the ownership or earnings of Subsidiary or
other similar rights.
"Technology Agreement" means the Technology Agreement that will be executed
between the Company, Agrigenetics and Parent at the Closing substantially in the
form attached hereto as Exhibit B.
"Third Party Sale Value" means the value that an unaffiliated third party
would be expected (based on financial analyses generally employed by investment
bankers in the preparation of a fairness opinion for an acquisition transaction)
to pay in an arms'-length transaction negotiated by a willing seller and a
willing buyer for all of the Company's then outstanding shares of Common Stock
and Common Stock Equivalents and not taking into account the potentially
controlling position of Parent, including its rights under Sections 6.11, 6.12
and 6.14.
"Third Party Sale Value Consideration" means consideration at least equal
as of the relevant date to Third Party Sale Value.
ARTICLE 2
THE TRANSACTION
Section 2.1 Sale and Purchase of Purchase Shares and Promissory Note.
Upon the terms and subject to satisfaction or, if appropriate, waiver of all of
the conditions set forth in Article 7, at the Closing: (a) the Company will
issue the Seed Purchase Shares to Agrigenetics, (b) Parent will sell the
Subsidiary Shares to Agrigenetics in exchange for the Seed Purchase Shares and
the Promissory Note, (c) Agrigenetics will sell the Seed Purchase Shares and
deliver the Promissory Note to Parent in exchange for the Subsidiary Shares, and
(d) the Company
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will issue and sell to Parent, and Parent will purchase from the Company, the
Cash Purchase Shares in exchange for the Cash Payment. Parent will pay the Cash
Payment to the Company at the Closing by bank wire transfer of immediately
available funds to an account designated in writing by the Company, or by such
other means as is acceptable to the Company and Parent.
Section 2.2 Closing Balance Sheet Adjustment.
2.2.1 As used in this Section 2.2, the following terms will have the
meanings set forth below:
"Subsidiary Closing Balance Sheet" means the unaudited balance sheet
of Subsidiary prepared in accordance with generally accepted accounting
principles as of the Closing.
"Subsidiary Tangible Net Worth" means the tangible net worth of
Subsidiary as agreed upon between the Company and Parent based on the average
tangible net worth calculated from the balance sheets of Subsidiary for the four
fiscal quarters ending immediately preceding the date of determination of
Subsidiary Tangible Net Worth is made, which balance sheets will be prepared in
accordance with generally accepted accounting principles as mutually agreed.
Parent will provide the Company with its determination of the Subsidiary
Tangible Net Worth within 7 days of the date of this Agreement. In the event
that the Company and Parent are not able to agree on any of the matters in the
immediately preceding sentence within 22 days after the execution of this
Agreement, then such dispute immediately will be submitted for final and binding
determination to a firm of Neutral Auditors (as defined below). The Neutral
Auditors will, within 30 days after the submission of the relevant information
to them, resolve any dispute in the amount of the Subsidiary Tangible Net Worth
and deliver a written report to the Company and Parent. All expenses relating to
the work, if any, to be performed by the Neutral Auditors will be borne one-half
by the Company and one-half by Parent.
2.2.2 Parent will prepare and deliver to the Company the Subsidiary
Closing Balance Sheet on or before the 10th day after the Closing. The
Subsidiary Closing Balance Sheet will be prepared using the same procedures and
in all other respects consistently with the manner of preparing the quarterly
balance sheets of Subsidiary used to determine Subsidiary Tangible Net Worth.
2.2.3 In the event that the tangible net worth of Subsidiary based on the
Subsidiary Closing Balance Sheet is different than the Subsidiary Tangible Net
Worth, then an adjustment (the "Adjustment") will be made to the consideration
for the Transaction as follows:
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(a) If such tangible net worth of Subsidiary is less than the
Subsidiary Tangible Net Worth, Parent will, in accordance with Section 2.2.4,
pay to Company an amount equal to the difference between such tangible net worth
and the Subsidiary Tangible Net Worth.
(b) If such tangible net worth of Subsidiary is greater than the
Subsidiary Tangible Net Worth, the Company or Agrigenetics will, in accordance
with Section 2.2.4, pay to Parent an amount equal to the difference between such
tangible net worth and the Subsidiary Tangible Net Worth.
2.2.4 The Adjustment will be paid in cash within 45 days after the receipt
of the Subsidiary Closing Balance Sheet (the "Adjustment Date"), unless the
Company, in accordance with Section 2.2.5, objects to any matter set forth in
the Subsidiary Closing Balance Sheet. Notwithstanding any objection by the
Company, the undisputed portion of the Adjustment will be paid by the Adjustment
Date, and the disputed portion will be, if applicable, paid within five days
after delivery by the Neutral Auditors (as defined below) of their written
report.
2.2.5 The Company will have 30 days after receipt of the Subsidiary
Closing Balance Sheet to object to any matter set forth therein or any
accounting principle applied in the preparation thereof. Such objection will be
in writing and will set forth in reasonable detail the nature of the objection
and the basis therefor. Failure by the Company to notify Parent in writing of
any objection within such 30-day period will be deemed to be acceptance by the
Company of the Subsidiary Closing Balance Sheet. In the event the Company and
Parent are unable to resolve any objection within 10 days from the date of
receipt of a notice of objection, the matter(s) in dispute will be submitted for
final and binding determination to a "Big Six" accounting firm selected by the
Company (but not any such firm that has previously provided services to the
Company or Parent or any of their respective subsidiaries), which firm will be
reasonably acceptable to Parent (the "Neutral Auditors"). The Neutral Auditors
will, within 30 days of submission of relevant information to them, resolve any
dispute in the amount of the Adjustment and deliver a written report to the
Company and Parent. All expenses relating to the work, if any, to be performed
by the Neutral Auditors will be borne one-half by the Company and one-half by
Parent.
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ARTICLE 3
THE CLOSING
Section 3.1 Closing. The Closing will be held as soon as practicable
after the satisfaction or, if appropriate, waiver of the conditions set forth in
Article 7. At the Closing, the parties hereto will consummate the Transaction.
The Closing will be held at the offices of Xxxxx, Xxxxx & Xxxxx, 000 Xxxxx
XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, 00000, or such other place as the parties may
agree. The date of the Closing is hereafter referred to as the Closing Date.
Section 3.2 Deliveries by Parent. At the Closing, Parent will deliver:
3.2.1 the Subsidiary Shares to Agrigenetics;
3.2.2 the Cash Payment to the Company; and
3.2.3 such other documents and instruments, duly executed to the
extent required, as may be reasonably requested by the Company or Agrigenetics
in order to consummate the Transaction.
Section 3.3 Deliveries by the Company and Agrigenetics. At the Closing, the
Company will deliver, or will cause Agrigenetics to deliver, to Parent the
following:
3.3.1 Agrigenetics will deliver to Parent the Promissory Note;
3.3.2 Agrigenetics will deliver to Parent a certificate, or
certificates in such denominations as may be requested in writing by Parent,
evidencing Parent's ownership of the Seed Purchase Shares and the Company will
deliver to Parent a certificate, or certificates in such denominations as may be
requested in writing by Parent, evidencing Parent's ownership of the Cash
Purchase Shares. The certificates for the Purchase Shares will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS OR PURSUANT TO A WRITTEN
OPINION OF COUNSEL
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FOR THE COMPANY THAT REGISTRATION IS NOT REQUIRED."
; and
3.3.3 such other documents and instruments, duly executed to the
extent required, as may be reasonably requested by Parent in order to consummate
the Transaction.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent as follows:
Section 4.1 Organization and Qualification; Subsidiaries.
4.1.1 Each of the Company, MPS, Agrigenetics and their respective
subsidiaries is a corporation duly incorporated, 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, lease and operate its properties
and to carry on its business as now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power and
authority would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
4.1.2 Each of the Company, MPS, Agrigenetics and their respective
subsidiaries is duly qualified or licensed and in good standing to do business
in each jurisdiction (including any foreign country) in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing would not, individually or in
the aggregate, have a Material Adverse Effect on the Company.
4.1.3 The Company has heretofore furnished to Parent complete and
correct copies of the Company's and Agrigenetics' Articles or Certificate of
Incorporation and By-Laws and, within 15 days of the execution of this
Agreement, will furnish the equivalent organizational documents of each of their
subsidiaries, each as amended through the date hereof. Such Articles of
Incorporation, By-Laws and equivalent organizational documents are in full force
and effect and no other organizational documents are applicable to or binding
upon the Company, Agrigenetics or their subsidiaries. Neither the Company nor
Agrigenetics is in violation of any of the provisions of their respective
Articles or Certificates of Incorporation or By-Laws in any material respect and
no subsidiary of the Company or
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Agrigenetics is in violation of any of the provisions of such subsidiary's
equivalent organizational documents in any material respect.
4.1.4 The Company has heretofore furnished to Parent a complete and
correct list of the subsidiaries of the Company, which list sets forth the
amount of capital stock of or other equity interests in such subsidiaries owned
by the Company, directly or indirectly. No entity in which the Company owns,
directly or indirectly, less than a 50% equity interest is, individually or when
taken together with all other such entities, material to the business of the
Company and its subsidiaries, taken as a whole.
Section 4.2 Capitalization of the Company. The authorized capital stock
of the Company consists of (i) 40,000,000 shares of Common Stock of which, as of
January 12, 1996, 22,610,767 shares of Common Stock were issued and outstanding
(including 186,500 shares of Common Stock subject to restrictions issued
pursuant to employee benefit plans of the Company and its subsidiaries or
otherwise) and (ii) 5,000,000 shares of preferred stock, of which, as of January
14, 1996, 3,940 shares of Senior Redeemable Convertible Preferred Stock, Series
A ("Series A Convertible Preferred Stock") were authorized and 3,158 shares of
Series A Convertible Preferred Stock were issued and outstanding and 200,000
shares of Series B Junior Participating Preferred Stock were reserved for
issuance upon exercise of Rights. All outstanding shares of capital stock of
the Company have been validly issued, and are fully paid, nonassessable and free
of preemptive rights. As of January 12, 1996, (i) employee options to purchase
an aggregate of 4,169,506 shares of Common Stock were authorized, (ii) employee
options to purchase an aggregate of 4,151,248 shares of Common Stock were
outstanding, (iii) 4,169,506 shares of Common Stock were reserved for issuance
pursuant to employee options, and (iv) the weighted average exercise price of
such employee options was $9.76 per share of Common Stock. The Company has
previously provided Parent with a complete list of the dates upon which each
employee option outstanding as of the date of this Agreement becomes exercisable
by the holder thereof. As of January 12, 1996, 1,988,301 shares of Common Stock
were reserved for issuance upon conversion of the Series A Convertible Preferred
Stock and as of January 14, 1996, the outstanding shares of Series A Convertible
Preferred Stock were convertible into 1,815,274 shares of Common Stock and the
Investor's Conversion Right was convertible into 1,538,008 shares of Common
Stock. As of January 12, 1996, 43,500 shares of Common Stock were reserved for
future issuances pursuant to the Restricted Stock Issuance Plan. As of January
12, 1996, 250,000 shares of Common Stock were reserved for future issuances
pursuant to the Employee Stock Purchase Plan. Except as set forth above, and
except as a result of the exercise of employee
12
options outstanding as of January 12, 1996, there are no Company Securities
outstanding. Except as disclosed on Schedule 4.2, there are no outstanding
obligations of the Company or any of its subsidiaries to sell or to repurchase,
redeem or otherwise acquire any Company Securities. Each of the outstanding
shares of capital stock of each of the Company's subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and, except with
respect to Agrigenetics or as otherwise disclosed on Schedule 4.2, is directly
or indirectly owned by the Company, free and clear of all security interests,
liens, claims, pledges, charges, voting agreements or other encumbrances of any
nature whatsoever (collectively, "Liens"). Except as disclosed on Schedule 4.2,
there are no existing options, calls, agreements or commitments of any character
relating to the issued or unissued capital stock or other securities of the
Company or any subsidiary of the Company.
Section 4.3 Capitalization of Agrigenetics. The authorized capital stock
of Agrigenetics consists of (i) 100,000 shares of common stock, $.001 par value
per share ("Agrigenetics Stock"), of which, as of January 12, 1996, 10,000
shares were issued and outstanding. MPS has good and valid title to 8,054
shares of Agrigenetics Stock, free and clear of any Liens. As of the date of
this Agreement, the remaining 1,946 outstanding shares of Agrigenetics Stock are
held by Investor and, assuming these shares of Agrigenetics Stock are exchanged
for Common Stock as contemplated by the Stock Purchase Agreement, MPS will have,
at the Closing, good and valid title to all of the shares of Agrigenetics Stock
issued and outstanding. All outstanding shares of Agrigenetics Stock have been
validly issued, and are fully paid, nonassessable and free of preemptive rights.
Except as set forth above there are outstanding (i) no shares of capital stock
or other voting securities of Agrigenetics, (ii) no securities of Agrigenetics
convertible into or exchangeable for shares of capital stock or voting
securities of Agrigenetics, (iii) no options, subscriptions, warrants,
convertible securities, calls or other rights to acquire from Agrigenetics, and
no obligation of Agrigenetics to issue, deliver or sell any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of Agrigenetics and (iv) no equity equivalents,
interests in the ownership or earnings of Agrigenetics or other similar rights
(collectively, "Agrigenetics Securities"). Except as disclosed on Schedule 4.3,
there are no outstanding obligations of the Company or any of its subsidiaries
to repurchase, redeem or otherwise acquire any Agrigenetics Securities.
Section 4.4 Authority Relative to This Agreement. The Company and
Agrigenetics have all necessary corporate power and authority to execute and
deliver this Agreement, to perform their obligations hereunder and to consummate
the transactions
13
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board and no other corporate proceedings on the part
of the Company or Agrigenetics are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by the Company and constitutes a legal, valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms.
Section 4.5 Waiver of Rights Agreement. The Company and the Board have
taken all necessary action prior to the execution of this Agreement pursuant to
the Rights Agreement so that Parent and its affiliates will not be included in
the definition of "Acquiring Person" (as defined in the Rights Agreement), and
that their acquisition of any shares of Common Stock hereunder, under the Stock
Purchase Agreement, or otherwise after the date hereof will not cause any
adverse consequence to Parent or its affiliates, or the Company, including,
without limitation, the occurrence of a Distribution Date (as defined in the
Rights Agreement) or any adjustment to the Purchase Price (as defined in the
Rights Agreement) as a consequence of the transactions contemplated hereby, by
the Stock Purchase Agreement, or any future acquisitions or proposed
acquisitions of shares of Common Stock by Parent or its affiliates.
Section 4.6 Non-Contravention; Required Filings and Consents.
4.6.1 The execution, delivery and performance by the Company and
Agrigenetics of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene or conflict with the
Articles or Certificate of Incorporation or By-Laws of the Company or
Agrigenetics or the equivalent organizational documents of any of their
respective subsidiaries; (ii) assuming that all consents, authorizations and
approvals contemplated by Section 4.6.2 have been obtained and all filings
described therein have been made, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to the Company, Agrigenetics, any of their
respective subsidiaries or any of their respective properties; (iii) contravene
or conflict with the NASD Rules; (iv) conflict with, or result in the breach or
termination of any provision of or constitute a default (with or without the
giving of notice or the lapse of time or both) under, or give rise to any right
of termination, cancellation, or loss of any benefit to which the Company,
Agrigenetics or any of their respective subsidiaries is entitled under any
provision of any Significant Agreement as defined in Section 4.16 or any
material agreement, contract,
14
license or other instrument binding upon the Company, Agrigenetics, any of their
respective subsidiaries or any of their respective properties, or allow the
acceleration of the performance of, any obligation of the Company, Agrigenetics
or any of their respective subsidiaries under any Significant Agreement or any
material indenture, mortgage, deed of trust, lease, license, contract,
instrument or other agreement to which the Company, Agrigenetics or any of their
respective subsidiaries is a party or by which the Company, Agrigenetics or any
of their subsidiaries or any of their respective assets or properties is subject
or bound, or prevent the Company or any of its subsidiaries from realizing the
benefits otherwise obtainable by the Company or any of its subsidiaries under
any Permits (as defined below) or property interests of Company or any of its
subsidiaries or any contract, agreement, license, arrangement or commitment of
the Company or any of its subsidiaries relating to the business of the Company
with respect to employment arrangements, purchase, sale, lease or license of
assets, guarantees, restriction on conduct of business, leases, licenses,
letters of credit, powers of attorney, joint venture agreements or affiliate
agreements or require the affirmative consent or approval of any third party
under any such material contract, agreement, license, arrangement or commitment;
or (v) result in the creation or imposition of any Lien on any material asset of
the Company, Agrigenetics or any of their respective subsidiaries.
4.6.2 The execution, delivery and performance by the Company and
Agrigenetics of this Agreement and the consummation of the transactions
contemplated hereby by the Company and Agrigenetics require no action by or in
respect of, or filing with, any governmental body, agency, official or authority
(either domestic or foreign) other than (i) compliance with any applicable
requirements of the HSR Act; (ii) compliance with any applicable requirements of
the Exchange Act and state securities, takeover and Blue Sky Laws; and (iii)
such actions or filings which, if not taken or made, would not individually or
in the aggregate have a Material Adverse Effect on the Company or materially
interfere with the consummation of the transactions contemplated by this
Agreement.
Section 4.7 SEC Reports.
4.7.1 The Company has filed or will file when due all required forms,
reports and documents with the SEC since December 31, 1992 (collectively, the
"SEC Reports"), each of which has complied in all material respects with
applicable requirements of the Securities Act and the Exchange Act. As of their
respective dates, none of the SEC Reports, including, without limitation, any
financial statements or schedules included therein, contained any untrue
statement of a material
15
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the SEC Reports fairly present, in conformity with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited interim
financial statements). The Company has heretofore provided complete and correct
copies of each of the SEC Reports to Parent.
4.7.2 Except as reflected or reserved against in the audited
consolidated balance sheet of the Company and its subsidiaries at August 31,
1995 or as set forth on Schedule 4.7.2, to the Company's knowledge, the Company
and its subsidiaries have no liabilities of any nature (whether accrued,
absolute, contingent or otherwise), except for liabilities incurred in the
ordinary course of business since November 30, 1995 which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Section 4.8 Absence of Certain Changes. Since August 31, 1995, there has
not occurred any change or event that has had a Material Adverse Effect on the
Company.
Section 4.9 Finder's Fee. No broker, finder, investment banker or other
intermediary is entitled to any brokerage, finder's or other fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of the Company, other than BioScience
Securities, Inc., the fees and expenses of which will be paid by the Company.
Section 4.10 Absence of Claims and Litigation. Except as specifically
disclosed in Schedule 4.10, as of the date hereof, there is no action, suit,
claim, investigation or proceeding pending against the Company or any of its
subsidiaries or any of their respective properties before any court or
arbitrator or any administrative, regulatory or governmental body, or any agency
or official, nor to the knowledge of the Company, is any action, suit, claim,
investigation or proceeding threatened against or affecting the Company or any
of its subsidiaries or any of their respective properties, other than claims
relating to alleged nonperformance of seeds or biopesticide products or
unsatisfactory services, which, in the aggregate, are adequately reserved
against in the consolidated balance sheet of the Company
16
and its subsidiaries in the ordinary course of business. Neither the Company
nor any of its subsidiaries nor any of their respective properties is subject to
any order, writ, judgment, injunction, decree, determination or award having, or
which would reasonably be expected to have, a Material Adverse Effect on the
Company or which would prevent or delay the consummation of the transactions
contemplated hereby. Except as specifically disclosed on Schedule 4.10, as of
the date hereof, there is no action, suit, claim, investigation or proceeding
pending against, or to the knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries or their respective properties
before any court or arbitrator or any administrative, regulatory or governmental
body, or any agency or official which in any manner challenges or seeks to
prevent, enjoin, alter or delay the Transaction or any of the other transactions
contemplated hereby or by the Stock Purchase Agreement.
Section 4.11 Taxes. Except as set forth on Schedule 4.11, (a) the Company
and its subsidiaries have filed, been included in or sent, all material returns,
declarations and reports and information returns and statements required to be
filed or sent by or relating to any of them relating to any Taxes (as defined
below) with respect to any material income, properties or operations of the
Company or any of its subsidiaries (collectively, "Returns"); (b) as of the time
of filing, the Returns correctly reflected in all material respects the facts
regarding the income, business, assets, operations, activities and status of the
Company and its subsidiaries and any other information required to be shown
therein; (c) the Company and its subsidiaries have timely paid or made
appropriate provision for all material Taxes that have been shown as due and
payable on the Returns that have been filed; (d) neither the Company nor any of
its subsidiaries is delinquent in the payment of any material Taxes or has
requested any extension of time within which to file or send any material
Return, which Return has not since been filed or sent or which extension has not
expired; (e) no material deficiency for any Taxes has been proposed, asserted or
assessed in writing against the Company or any of its subsidiaries (or any
member of any affiliated or combined group of which the Company or any of its
subsidiaries is or has been a member for which either the Company or any of its
subsidiaries could be liable) other than those Taxes being contested in good
faith by appropriate proceedings; (f) neither the Company nor any of its
subsidiaries has granted any extension of the limitation period applicable to
any material Tax claims other than those Taxes being contested in good faith by
appropriate proceedings; (g) neither the Company nor any of its subsidiaries is
subject to liability for Taxes of any person (other than the Company or its
subsidiaries), including, without limitation, liability arising from the
application of U.S. Treasury Regulation section 1.1502-6
17
or any analogous provision of state, local or foreign law; (h) neither the
Company nor any of its subsidiaries is or has been a party to any material tax
sharing agreement with any corporation which is not currently a member of the
affiliated group of which the Company is currently a member; and (i) all Taxes
which the Company or any of its subsidiaries is required by law to withhold or
collect, including sales and use Taxes and amounts required to be withheld for
Taxes of employees and other withholding Taxes, have been duly withheld or
collected and, to the extent required, have been paid over to the proper taxing
authorities or are held in separate bank accounts for such purpose.
"Tax" means with respect to any person (i) any net income, gross income,
gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, value-added or windfall profit tax, custom duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest and any penalty, addition to tax or additional amount
imposed by any taxing authority (domestic or foreign) on such person and (ii)
any liability of the Company or any subsidiary for the payment of any amount of
the type described in clause (i) as a result of being a member of an affiliated
or combined group.
Section 4.12 Employee Benefits and Labor Matters.
4.12.1 Within 15 days after the execution of this Agreement, the
Company will provide Parent with Schedule 4.12.1 which will contain a true and
complete list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, restricted stock issuance, severance or
termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement plan,
program, agreement or arrangement, sponsored, maintained or contributed to or
required to be contributed to by the Company, by Agrigenetics, or by any trade
or business, whether or not incorporated (an "ERISA Affiliate"), that together
with the Company or Agrigenetics would be deemed a "single employer" within the
meaning of section 4001 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), for the benefit of any employee or terminated employee of
the Company, Agrigenetics, or any ERISA Affiliate (the "Company Plans").
Schedule 4.12.1 will identify each of the Company Plans that is an "employee
benefit plan," as that term is defined in section 3(3) of ERISA (the "Company
ERISA Plans").
4.12.2 Each of the Company Plans has been operated and administered
in all material respects in accordance with its terms and in compliance with all
statutes, laws, orders, rules,
18
regulations, judgments or decrees applicable to each of the Company Plans
including, but not limited to ERISA and the Code.
4.12.3 With respect to each of the Company Plans, Company and
Agrigenetics have made available to Parent or will make available to Parent
within 15 days of the execution of this Agreement a true and correct copy of (a)
the most recent annual report (Form 5500) filed with the Internal Revenue
Service, (b) such Company Plan, (c) each trust agreement and group annuity
contract, if any, relating to such Company Plan, (d) the most recent actuarial
report or evaluation relating to Company ERISA Plan subject to Title IV of ERISA
and (e) each determination letter, if any, relating to any of the Company Plans
and any related trusts which are intended respectively to qualify under Section
401(a) of the Code and to be exempt from taxation under Section 501(a) of the
Code.
4.12.4 With respect to the Company Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of the Company,
Agrigenetics, or any of their ERISA Affiliates, there exists no condition or set
of circumstances, including, without limitation, pending, threatened or
anticipated claims, actions, suits, proceedings, or investigations in connection
with which the Company, Agrigenetics, or any of their ERISA Affiliates, or any
of the Company Plans, could be subject to any liability that is reasonably
likely to have a Material Adverse Effect upon the Company, Agrigenetics and any
of their ERISA Affiliates or subsidiaries taken as a whole (except liability for
benefits claims and funding obligations payable in the ordinary course) under
ERISA, the Code or any other applicable law. This representation and warranty
as a liability with respect to the Company Plans includes, without limitation:
(i) liability for federal, state, local, or foreign taxes or civil
penalties;
(ii) termination indemnity liability;
(iii) liability for "reportable events" (within the meaning of
Section 4043 of Title IV of ERISA);
(iv) liability for any "accumulated funding deficiency" (as defined
in Section 302 of ERISA and Section 412 of the Code);
(v) liability under Sections 4064, 4069, or 4204 of ERISA; and
(vi) withdrawal liability under Section 4201 of Title IV of ERISA
with respect to any "multiemployer
19
plan" (as defined in sections 3 (37) and 4001 of ERISA).
4.12.5 Except as will be set forth in Schedule 4.12.5, with respect
to the Company Plans, individually and in the aggregate, there are no funded
benefit contribution, or premium obligations for which contributions or payments
have not been made or properly accrued and there are no unfunded benefit,
contribution, or premium obligations which have not been made or accounted for
by reserves, or otherwise properly footnoted in accordance with generally
accepted accounting principles, on the financial statements of the Company,
Agrigenetics, and any of their ERISA Affiliates or subsidiaries, which
obligations are reasonably likely to have a Material Adverse Effect on the
Company, Agrigenetics, and any of their ERISA affiliates or subsidiaries, taken
as a whole.
4.12.6 Neither the Company nor any of its subsidiaries has any labor
contracts, collective bargaining agreements or other employment agreements with
any Company personnel or any representative of Company personnel. Neither the
Company nor any of its subsidiaries has engaged during the three immediately
preceding years in any unfair labor practice with respect to any Company
personnel, nor is there any pending unfair labor practice complaint against it.
Except for routine grievance procedures, there is no labor strike, dispute,
slowdown, or stoppage pending or threatened against or affecting the Company or
any of its subsidiaries or their businesses. Neither the Company nor any of its
subsidiaries has experienced any primary or secondary work stoppage or other
labor difficulty involving its employees during the last five (5) years.
Section 4.13 Compliance. Neither the Company nor any of its subsidiaries
is in violation of, or has violated, any applicable provisions of (i) any laws,
rules, statutes, orders, ordinances or regulations, (ii) the NASD Rules, or
(iii) any material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise, or other instrument or obligations to which the
Company or its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties are bound or affected,
which, individually or in the aggregate, would result or reasonably be expected
to result in a Material Adverse Effect on the Company.
Section 4.14 Environmental Matters.
4.14.1 The Company and its subsidiaries are in compliance with all
applicable Environmental Laws (which compliance includes, but is not limited to,
the possession by the Company and its subsidiaries of all permits and other
governmental authorizations required under applicable
20
Environmental Laws for the operation of the business of the Company and its
subsidiaries, and compliance with the terms and conditions thereof), except for
any noncompliance that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Company.
4.14.2 There is no Environmental Claim pending or threatened against
the Company or any of its subsidiaries which individually or in the aggregate
would reasonably be expected to have a Material Adverse Effect on the Company.
4.14.3 Neither the Company nor any of its subsidiaries has, and to
the knowledge of the Company, no other person has, Released, placed, stored,
buried or dumped Hazardous Materials or any other wastes produced by, or
resulting from, any business, commercial or industrial activities, operations or
processes, on, beneath or adjacent to or in any property owned, operated or
leased or formerly owned, operated or leased by the Company or any of its
subsidiaries which, in either case, would require Cleanup pursuant to applicable
Environmental Laws which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company. Neither the Company
nor any of its subsidiaries has received notice that it is a potentially
responsible party for the Cleanup of any property, whether or not owned or
operated by the Company or any of its subsidiaries, which individually or in the
aggregate would reasonably be expected to have a Material Adverse Effect on the
Company.
Section 4.15 Intellectual Property. Except to the extent that the
inaccuracy of any of the following (or the circumstances giving rise to such
inaccuracy) individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on the Company: (1) the Company and each of
its subsidiaries owns, or is licensed to use (in each case, free and clear of
any Liens), all Intellectual Property used in or necessary for the conduct of
its business as currently conducted; (2) to the knowledge of the Company, the
use of any Intellectual Property by the Company and its subsidiaries does not
infringe on or otherwise violate the rights of any person; (3) to the knowledge
of the Company, no product (or component thereof or process) used, sold or
manufactured by and/or for, or supplied to, the Company or any of its
subsidiaries infringes or otherwise violates the Intellectual Property of any
other person; and (4) to the knowledge of the Company, no person is infringing
on or otherwise violating any right of the Company or any of its subsidiaries
with respect to any Intellectual Property owned by and/or licensed to the
Company and its subsidiaries. Schedule 4.10 sets forth a complete list of all
challenges, claims, infringements, interferences and pending or, to the
knowledge of the Company, threatened litigation relating to any Intellectual
21
Property owned, licensed or used by the Company or any of its subsidiaries.
Section 4.16 Significant Agreements. Schedule 4.16 sets forth as of the
date of this Agreement a complete and correct list of all contracts, agreements,
indentures, leases, mortgages, licenses, plans, arrangements, understandings,
commitments (whether written or oral) and instruments (collectively,
"Contracts") that are material to the Company and its subsidiaries, including,
without limitation, the following: (i) all Contracts set forth as exhibits to
the Company's Annual Report on Form 10-K for the fiscal year ended August 31,
1995 and (ii) any Contract between the Company or any of its subsidiaries, on
the one hand, and on the other hand, Pioneer Hi-Bred International or any of its
affiliates (collectively, the "Significant Agreements"). Except as set forth on
Schedule 4.16, since August 31, 1995, there have been no transactions between
the Company or any of its subsidiaries, on the one hand, and the other parties
to the Significant Agreements or any of their respective affiliates, on the
other hand, other than transactions in the ordinary course of business
consistent with past practice pursuant to and in accordance with the terms of
the Significant Agreements. The execution, delivery and performance by the
Company of this Agreement and the consummation of the transactions contemplated
hereby do not and will not conflict with, or result in the breach or termination
of any provision of or constitute a default (with or without the giving of
notice or the lapse of time or both) under, or give rise to any right of
termination, cancellation, or loss of any benefit to which the Company or any of
its subsidiaries is entitled under any provision of any Significant Agreement.
Section 4.17 Product Registrations. Except as disclosed in Schedule 4.17,
(i) the Company has obtained all Product Registrations required for the conduct
of its business or the business of any of its subsidiaries, (ii) the Company is
the sole and exclusive owner of all right, title and interest in such Product
Registrations, free and clear of any claim, security interest, lien, option or
charge of any kind, unless such Product Registrations must be held by companies
domiciled within a specific country, and (iii) the Company has an unrestricted
right to reference all studies and other Data used to obtain or maintain such
Product Registrations. The Company's Product Registrations are in full force
and effect and have not been used or enforced, or failed to be used or enforced,
in a manner that would result in their abandonment, cancellation or
unenforceability. There are no claims of adverse ownership, invalidity or other
opposition to or conflict with any of the Company's Product Registrations. To
the knowledge of the Company, neither the Company, nor any of its subsidiaries,
has violated or infringed or is in violation of or infringement of
22
any Product Registrations held by any other person. To the Company's knowledge,
no infringements or violations of the Company's Product Registrations have
occurred or are continuing. The Company's Product Registrations constitute all
registrations and other governmental approvals to market and sell the pesticide
or genetically modified products currently marketed and sold by the Company.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 5.1 Organization. Parent is a general partnership organized
under the laws of the State of Indiana and Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and Parent and Subsidiary each has all requisite partnership or
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Subsidiary is duly qualified or
licensed and in good standing to do business in each jurisdiction (including any
foreign country) in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not, individually or in the aggregate, have a Material
Adverse Effect on Subsidiary.
Section 5.2 Authority Relative to this Agreement. Each of Parent and
Subsidiary has all necessary partnership or corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by Parent in
accordance with its Amended and Restated Partnership Agreement, and by Parent as
the sole stockholder of Subsidiary, and no other partnership or corporate
proceedings on the part of Parent or Subsidiary are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by each of Parent and Subsidiary
and constitutes a legal, valid and binding agreement of each of Parent and
Subsidiary, enforceable against each of Parent and Subsidiary in accordance with
its terms.
23
Section 5.3 Non-Contravention; Required Filings and Consents.
5.3.1 The execution, delivery and performance by Parent and
Subsidiary of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene or conflict with the
Amended and Restated Partnership Agreement, Certificate of Incorporation, By-
Laws or other organizational documents of Parent, any of its partners or
Subsidiary; (ii) assuming that all consents, authorizations and approvals
contemplated by Section 5.3.2 have been obtained and all filings described
therein have been made, contravene or conflict with or constitute a violation of
any provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to Parent, any of its partners or Subsidiary or any
of their respective properties; (iii) conflict with, or result in the breach or
termination of any provision of or constitute a default (with or without the
giving of notice or the lapse of time or both) under, or give rise to any right
of termination, cancellation, or loss of any benefit to which Parent or
Subsidiary is entitled under any provision of any Subsidiary Agreement (as
defined in Section 5.14 below) or any material agreement, contract, license or
other instrument binding upon Parent, Subsidiary or any of their respective
properties, or allow the acceleration of the performance of, any obligation of
Parent or Subsidiary under any Subsidiary Agreement or any material indenture,
mortgage, deed of trust, lease, license, contract, instrument or other agreement
to which Parent or Subsidiary is a party or by which Parent or Subsidiary or any
of their respective assets or properties is subject or bound, or prevent
Subsidiary from realizing the benefits otherwise obtainable by Subsidiary under
any Permits (as defined in Section 5.17 below) or property interests of Parent
or Subsidiary or any contract, agreement, license, arrangement or commitment of
Parent or Subsidiary relating to the business of Subsidiary with respect to
employment arrangements, purchase, sale, lease or license of assets, guarantees,
restriction on conduct of business, leases, licenses, letters of credit, powers
of attorney, joint venture agreements or affiliate agreements or require the
affirmative consent or approval of any third party under any such material
contract, agreement license, arrangement or commitment; or (iv) result in the
creation or imposition of any Lien on any asset of Parent or Subsidiary.
5.3.2 The execution, delivery and performance by Parent and
Subsidiary of this Agreement and the consummation of the transactions
contemplated hereby require no action by or in respect of, or filing with, any
governmental body, agency, official or authority (either domestic or foreign)
other than (i) compliance with any applicable requirements of the HSR Act; (ii)
compliance with any applicable requirements of the Exchange Act
24
and state securities, takeover and Blue Sky Laws; and (iii) such actions or
filings which, if not taken or made, would not, individually or in the
aggregate, have a Material Adverse Effect on Subsidiary or materially interfere
with the consummation of the transactions contemplated by this Agreement or the
Stock Purchase Agreement.
Section 5.4 Capitalization of Subsidiary. The authorized capital stock of
Subsidiary consists of (i) 1,000 Subsidiary Shares of which, as of January 12,
1996, 1,000 Subsidiary Shares were issued and outstanding. Parent has, and at
the Closing hereunder Parent will have, good and valid title to all of the
outstanding Subsidiary Shares, free and clear of any Liens. All outstanding
Subsidiary Shares have been validly issued, and are fully paid, nonassessable
and free of preemptive rights. Except as set forth above, there are no
Subsidiary Securities outstanding. There are no outstanding obligations of
Subsidiary to sell or to repurchase, redeem or otherwise acquire any Subsidiary
Securities. Subsidiary has no subsidiaries.
Section 5.5 Financial Statements. 5.5.1 Schedule 5.5.1 sets forth
complete and correct copies of the pro forma unaudited financial statements of
Subsidiary for the twelve month periods ended September 30, 1994 and 1995.
Within 15 days after the execution of this Agreement, Parent will provide
Company a complete and correct copy of unaudited financial statements of
Subsidiary for the calendar quarters ended March 31, 1995, June 30, 1995,
September 30, 1995, and December 31, 1995. Within 10 days after the Closing
Parent will provide Company with a complete and correct copy of the Subsidiary
Closing Balance Sheet. All such financial statements collectively will
hereinafter be referred to as the "Subsidiary Financial Statements." The
Subsidiary Financial Statements and the calculations of the Subsidiary Tangible
Net Worth and the average tangible net worth fairly present, in conformity with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto), the financial position of Subsidiary
as of the dates thereof and the consolidated results of operations and cash
flows for the periods then ended.
5.5.2 Except as reflected or reserved against in the audited
consolidated balance sheet of Subsidiary at September 30, 1995 or as set forth
on Schedule 5.5.2, to the knowledge of Parent, Subsidiary has no liabilities of
any nature (whether accrued, absolute, contingent or otherwise), except for
liabilities incurred in the ordinary course of business since September 30, 1995
which would not, individually or in the aggregate, have a Material Adverse
Effect on Subsidiary.
25
Section 5.6 Absence of Certain Changes. Since September 30, 1995, there
has not occurred any change or event that has had a Material Adverse Effect on
Subsidiary.
Section 5.7 Finder's Fee. No broker, finder, investment banker or other
intermediary is entitled to any brokerage, finder's or other fee or commission
in connection with the transactions contemplated by this Agreement or by the
Stock Purchase Agreement based upon arrangements made by and on behalf of
Parent.
Section 5.8 Absence of Claims and Litigation. Except as specifically
disclosed on Schedule 5.8, as of the date of this Agreement, there is no action,
suit, claim, investigation or proceeding pending against Subsidiary or any of
its respective properties before any court or arbitrator or any administrative,
regulatory or governmental body, or any agency or official, nor to the knowledge
of Parent, is any action, suit, claim, investigation or proceeding threatened
against or affecting Subsidiary or any of its properties, other than the claims
relating to alleged nonperformance of seeds, which, in the aggregate, are
adequately reserved against in Subsidiary's balance sheet in the ordinary course
of business. Neither Subsidiary nor any of its properties is subject to any
order, writ, judgment, injunction, decree, determination or award having, or
which would reasonably be expected to have, a Material Adverse Effect on
Subsidiary or which would prevent or delay the consummation of the transactions
contemplated hereby. Except as specifically disclosed on Schedule 5.8, as of
the date of this Agreement, there is no action, suit, claim, investigation or
proceeding pending against, or to the knowledge of Parent, threatened against or
affecting Parent or any of its partners or properties before any court or
arbitrator or any administrative, regulatory or governmental body, or any agency
or official which in any manner challenges or seeks to prevent, enjoin, alter or
delay the Transaction or any of the other transactions contemplated hereby or by
the Stock Purchase Agreement. Neither Parent nor any of its partners or
properties is subject to any order, writ, judgment, injunction, decree,
determination or award which would reasonably be expected to have a Material
Adverse Effect on Subsidiary or would prevent or delay the consummation of the
transactions contemplated hereby.
Section 5.9 Taxes. Except as set forth on Schedule 5.9, (a) Subsidiary
has filed, been included in or sent, all material returns, declarations and
reports and information returns and statements required to be filed or sent by
or relating to it relating to any Taxes with respect to any material income,
properties or operations of Subsidiary (collectively, "Subsidiary Returns"); (b)
as of the time of filing, the Subsidiary Returns correctly reflected in all
material respects the facts regarding
26
the income, business, assets, operations, activities and status of Subsidiary
and any other information required to be shown therein; (c) Subsidiary has
timely paid or made provision for all material Taxes that have been shown as due
and payable on the Subsidiary Returns that have been filed; (d) Subsidiary has
made or will make provision for all material Taxes payable for any periods that
end before the Closing for which no Subsidiary Returns have yet been filed and
for any periods that begin before the Closing and end after the Closing to the
extent such Taxes are attributable to the portion of any such period ending at
the Closing; (e) the charges, accruals and reserves for taxes reflected on the
books of Subsidiary are adequate to cover the Tax liabilities accruing or
payable by Subsidiary in respect of periods prior to the date hereof; (f)
Subsidiary is not delinquent in the payment of any material Taxes nor has it
requested any extension of time within which to file or send any material
Subsidiary Return, which Subsidiary Return has not since been filed or sent or
which extension has not expired; (g) no material deficiency for any Taxes has
been proposed, asserted or assessed in writing against Subsidiary (or any member
of any affiliated or combined group of which Subsidiary is or has been a member
for which either the Company or any of its subsidiaries could be liable) other
than those Taxes being contested in good faith by appropriate proceedings; (h)
Subsidiary has not granted any extension of the limitation period applicable to
any material Tax claims other than those Taxes being contested in good faith by
appropriate proceedings; (i) Subsidiary is not subject to liability for Taxes of
any other person, including, without limitation, liability arising from the
application of U.S. Treasury Regulation section 1.1502-6 or any analogous
provision of state, local or foreign law; (j) Subsidiary is not nor has it been
a party to any material tax sharing agreement with any corporation which is not
currently a member of the affiliated group of which Subsidiary is currently a
member; and (k) all Taxes which Subsidiary is required by law to withhold or
collect, including sales and use Taxes and amounts required to be withheld for
Taxes of employees and other withholding Taxes, have been duly withheld or
collected and, to the extent required, have been paid over to the proper taxing
authorities or are held in separate bank accounts for such purpose.
Section 5.10 Employee Benefits.
5.10.1 Within 15 days after the execution of this Agreement, Parent
will provide the Company with Schedule 5.10.1 which will contain a true and
complete list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, restricted stock issuance, severance or
termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement plan,
program, agreement or arrangement, sponsored,
27
maintained or contributed to or required to be contributed to by Subsidiary for
the benefit of any employee or terminated employee of Subsidiary (the
"Subsidiary Plans"). Schedule 5.10.1 will identify each of the Subsidiary Plans
that is an "employee benefit plan," as that term is defined in section 3(3) of
ERISA (the "Subsidiary ERISA Plans").
5.10.2 Each of the Subsidiary Plans has been operated and
administered in all material respects in accordance with its terms and in
compliance with all statutes, laws, orders, rules, regulations, judgments or
decrees applicable to each of the Subsidiary Plans including, but not limited to
ERISA and the Code.
5.10.3 With respect to each of the Subsidiary Plans, Parent has made
available to the Company or will make available to Company within 15 days of the
execution of this Agreement a true and correct copy of (a) the most recent
annual report (Form 5500) filed with the Internal Revenue Service, (b) such
Subsidiary Plan, (c) each trust agreement and group annuity contract, if any,
relating to such Subsidiary Plan, (d) the most recent actuarial report or
evaluation relating to Subsidiary ERISA Plan subject to Title IV of ERISA and
(e) each determination letter, if any, relating to any of the Subsidiary Plans
and any related trusts which are intended respectively to qualify under Section
401(a) of the Code and to be exempt from taxation under Section 501(a) of the
Code.
5.10.4 With respect to the Subsidiary Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of Parent there exists no
condition or set of circumstances, including, without limitation, pending,
threatened or anticipated claims, actions, suits, proceedings, or investigations
in connection with which Subsidiary, or any of the Subsidiary Plans, could be
subject to any liability that is reasonably likely to have a Material Adverse
Effect upon Subsidiary (except liability for benefits claims and funding
obligations payable in the ordinary course) under ERISA, the Code or any other
applicable law. This representation and warranty as a liability with respect to
the Company Plans includes, without limitation:
(i) liability for federal, state, local, or foreign taxes or civil
penalties;
(ii) termination indemnity liability;
(iii) liability for "reportable events" (within the meaning of
Section 4043 of Title IV of ERISA);
28
(iv) liability for any "accumulated funding deficiency" (as defined
in Section 302 of ERISA and Section 412 of the Code);
(v) liability under Sections 4064, 4069, or 4204 of ERISA; and
(vi) withdrawal liability under Section 4201 of Title IV of ERISA
with respect to any "multiemployer plan" (as defined in
sections 3 (37) and 4001 of ERISA).
5.10.5 Within 15 days after the date of this Agreement, Parent will
provide the Company with Schedule 5.10.5. Except as will be set forth in
Schedule 5.10.5, with respect to the Subsidiary Plans, individually and in the
aggregate, there are no funded benefit contribution, or premium obligations for
which contributions or payments have not been made or properly accrued and there
are no unfunded benefit, contribution, or premium obligations which have not
been made or accounted for by reserves, or otherwise properly footnoted in
accordance with generally accepted accounting principles, on the financial
statements of Subsidiary, which obligations are reasonably likely to have a
Material Adverse Effect on Subsidiary.
5.10.6 Subsidiary does not have any labor contracts, collective
bargaining agreements or other employment agreements with any company personnel
or any representative of company personnel. Subsidiary has not engaged during
the three immediately preceding years in any unfair labor practice with respect
to any company personnel, nor is there any pending unfair labor practice
complaint against it. Except for routine grievance procedures, there is no
labor strike, dispute, slowdown, or stoppage pending or threatened against or
affecting Subsidiary or its business. Subsidiary has not experienced any
primary or secondary work stoppage or other labor difficulty involving its
employees during the last five (5) years.
5.10.7 None of the Company, Subsidiary, Agrigenetics or any of their
subsidiaries will be liable on or after the Closing in respect of any benefit
plan maintained or contributed to by any affiliate of Subsidiary prior to the
Closing.
Section 5.11 Compliance. Neither Parent nor Subsidiary is in violation
of, or has violated, any applicable provisions of (i) any laws, rules, statutes,
orders, ordinances or regulations or (ii) any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise, or other
instrument or obligations to which Parent or Subsidiary is a party or by which
Subsidiary or their respective properties are bound or affected, which,
individually or in the aggregate, would result
29
or reasonably be expected to result in a Material Adverse Effect on Subsidiary.
Section 5.12 Environmental Matters.
5.12.1 Subsidiary is in compliance with all applicable Environmental
Laws (which compliance includes, but is not limited to, the possession by
Subsidiary of all permits and other governmental authorizations required under
applicable Environmental Laws for the operation of Subsidiary's business, and
compliance with the terms and conditions thereof), except for any noncompliance
that individually or in the aggregate would not reasonably be expected to result
in any loss or liability to Subsidiary in excess of $100,000.
5.12.2 There is no Environmental Claim pending or threatened against
Subsidiary which individually or in the aggregate would reasonably be expected
to result in any loss or liability to Subsidiary in excess of $100,000.
5.12.3 Subsidiary has not, and to the knowledge of Parent, no other
person has Released, placed, stored, buried or dumped Hazardous Materials or any
other wastes produced by, or resulting from, any business, commercial or
industrial activities, operations or processes, on, beneath or adjacent to or in
any property owned, operated or leased or formerly owned, operated or leased by
Subsidiary, which, in either case, would require Cleanup pursuant to applicable
Environmental Laws which, individually or in the aggregate, would reasonably be
expected to result in any loss or liability to Subsidiary in excess of $100,000,
and Subsidiary has not received notice that it is a potentially responsible
party for the Cleanup of any property, whether or not owned or operated by
Subsidiary, which individually or in the aggregate would reasonably be expected
to result in any loss or liability to Subsidiary in excess of $100,000.
Section 5.13 Intellectual Property.
5.13.1 Except to the extent that the inaccuracy of any of the
following (or the circumstances giving rise to such inaccuracy) individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Subsidiary: (1) Subsidiary owns, or is licensed to use (in each case,
free and clear of any Liens), all Intellectual Property used in or necessary for
the conduct of Subsidiary's business as currently conducted; (2) to the
knowledge of Parent, the use of any Intellectual Property by Subsidiary does not
infringe on or otherwise violate the rights of any person; (3) to the knowledge
of Parent, no product (or component thereof or process) used, sold or
manufactured by and/or for, or supplied to, Subsidiary
30
infringes or otherwise violates the Intellectual Property of any other person;
and (4) to the knowledge of Parent, no person is challenging, infringing on or
otherwise violating any right of Subsidiary with respect to any Intellectual
Property owned by and/or licensed to Subsidiary. Schedule 5.8 sets forth a
complete list as of the date of this Agreement of all challenges, claims,
infringements, interferences and pending or, to the knowledge of Parent,
threatened litigation relating to any Intellectual Property owned, licensed or
used by Subsidiary.
Section 5.14 Significant Agreements. Schedule 5.14 sets forth as of the
date of this Agreement a complete and correct list of all contracts that are
material to the business, properties, assets, condition (financial or otherwise)
or results of operations of Subsidiary, except such contracts that were executed
in the ordinary course of business (collectively, the "Subsidiary Agreements").
Except as set forth on Schedule 5.14, since September 30, 1995, there have been
no transactions between Subsidiary, on the one hand, and the other parties to
the Subsidiary Agreements or any of their respective affiliates, on the other
hand, other than transactions in the ordinary course of business consistent with
past practice pursuant to and in accordance with the terms of the Subsidiary
Agreements. Except as specified on Schedule 5.14, all Subsidiary Agreements
required to be listed on Schedule 5.14 are valid and binding, enforceable (in
all material respects) in accordance with their respective terms and in full
force and effect. Neither Subsidiary nor, to the best of Parent's knowledge,
any other party thereto, is in breach of any material provision of or in default
under any material term of any such Subsidiary Agreement, and there exists no
condition or event which after lapse of time or notice (or both) would
constitute any such breach or default or result in any right of termination,
cancellation, acceleration or loss of any benefits thereunder. True and
complete copies of all such Subsidiary Agreements have been or will be delivered
to the Company within 15 days after the execution of this Agreement.
Section 5.15 Charter Documents and Corporate Records. Parent and
Subsidiary have delivered to the Company or will deliver within a reasonable
time after signing true and complete copies of (i) the Certificate of
Incorporation and By-laws, or comparable instruments, of Subsidiary as in effect
on the date hereof, (ii) the stock books of Subsidiary and (iii) the minute
books of Subsidiary. The minute books of Subsidiary contain true and complete
records of all meetings and consents in lieu of meeting of the Board of
Directors (and any committee thereof) of Subsidiary, and its stockholders, for
the periods covered thereby and accurately reflect in all material respects all
transactions referred to in such minutes and consents in lieu of meeting.
31
Section 5.16 Assets.
5.16.1 Subsidiary owns or has the right to use all of the patents,
trademarks, tradenames, copyrights, conventional germplasm, real property and
equipment ("Assets") used predominantly in or necessary for the conduct of
Subsidiary's business as currently conducted; provided, however, that High Oil
Germ Plasm (as defined in Schedule 5.16.1) shall be specifically excluded from
Assets. Schedule 5.16.1 sets forth Parent's High Oil Germ Plasm as of the date
of this Agreement. To the extent any of the Assets were owned by Parent
immediately prior to the execution of this Agreement, they were transferred to
Subsidiary pursuant to the Transfer Agreement executed between Parent and
Subsidiary dated January 12, 1996, as amended.
5.16.2 None of the Assets are subject to Liens, except (i) Liens
incurred or made in the ordinary course of business which are not substantial in
character, amount or extent and do not materially impair the usefulness of such
properties and assets in the conduct of the business of Subsidiary; (ii) Liens
for taxes, assessments or other governmental charges or levies which are either
not yet due or are being contested in good faith and by appropriate proceedings
or can be paid without penalty and which do not materially impair the usefulness
of such Assets in the conduct of the business of Subsidiary; or (iii) as
reflected on the Subsidiary Balance Sheet.
5.16.3 Subsidiary has good and insurable fee title to, or a valid and
subsisting leasehold interest in, the real property and, in the case of such
owned real property, to all the buildings, structures and other improvements
located thereon. Subsidiary does not own or hold, and is not contractually
obligated under or a party to, any option, right of first refusal or other
contractual right to lease, purchase or acquire any real property or interest
therein. Within 15 days after the date of execution of this Agreement, Parent
will deliver to the Company true, correct and complete copies of all leases,
subleases, licenses and other agreements (including all modifications,
amendments and supplements thereto) for the leased real property listed on
Schedule 5.16.3 (collectively, the "Real Property Leases"). Each Real Property
Lease is valid, binding and in full force and effect, all rent and other sums
and charges payable by Parent or Subsidiary as tenant thereunder are current, no
notice of default or termination under any Real Property Lease is outstanding,
no termination event or condition or uncured default on the part of Parent or
Subsidiary or, to Parent's and Subsidiary's knowledge, the landlord, exists
under any Property Lease and, to Parent's or Subsidiary's knowledge no event has
occurred and no condition exists which, with the giving of notice or the lapse
of time or both, would constitute such a default or termination event or
condition. Parent has not received notice
32
of, and Parent has no knowledge of, any pending, threatened or contemplated
condemnation proceeding affecting the real property or any part thereof or of
any sale or other disposition of the real property or any part thereof in lieu
of condemnation. No portion of the real property has suffered any material
damage by fire or other casualty which has not heretofore been completely
repaired and restored to its original condition.
Section 5.17 Licenses, Permits, Authorizations, Etc. Subsidiary has all
required governmental approvals, authorizations, consents, licenses, orders,
registrations and permits of all agencies, whether federal, state, local or
foreign (collectively, "Permits"), the failure to obtain which would be expected
to have a Material Adverse Effect on Subsidiary. Neither Parent nor, to
Parent's knowledge, Subsidiary, has received any notifications of any asserted
failure or is otherwise aware of any failure by it to have obtained any such
Permit or past and unremedied failure to obtain any such Permit. All Permits
are in full force and effect. No material violations have been alleged in
writing by any governmental authority or agency, whether federal, state, local
or foreign, and no proceeding is pending or, to the knowledge of Parent,
threatened, to revoke, suspend, cancel or limit a Permit, which revocation or
similar action would be expected to have a Material Adverse Effect on
Subsidiary. No action by any of the parties hereto is required in order that
all Permits will remain in full force and effect immediately after the Closing.
Section 5.18 Employee Relations. Subsidiary has approximately 160
employees. No union or other collective bargaining unit has been certified or
recognized by Subsidiary as representing any of its employees and, to the
knowledge of Parent, no union organizing efforts have been conducted within the
last five years or are now being conducted. Subsidiary has not at any time
during the last five years had, nor, to the knowledge of Parent, is there now
threatened, a strike, picket, work stoppage, work slowdown or other labor
trouble. Subsidiary has complied in all material respects with all applicable
laws, rules and regulations relating to the employment of labor, including,
without limitation, those relating to wages, hours, employment practices, terms
and conditions of employment, collective bargaining, equal opportunity or
similar laws and the payment and withholding of taxes, and Subsidiary has
withheld all amounts required by law or agreement to be withheld from the wages
or salaries of its employees and is not liable for any arrears of wages or other
taxes or penalties for failure to comply with any of the foregoing. There are
no material claims, suits, actions, proceedings or controversies pending or, to
the knowledge of Parent, threatened between Subsidiary and any of its employees,
and, to the knowledge of Parent, no basis exists for the making of any claim,
suit, action or proceeding against
33
Subsidiary in respect of sexual harassment or discrimination based on sex, age,
race, disability or sexual orientation.
Section 5.19 Investment Intent. Parent is purchasing or acquiring the
Purchase Shares for its own account for investment and not with a present view
to, or for sale in connection with, any distribution thereof in violation of the
Securities Act. Subject to compliance with the HSR Act, the purchase of the
Purchase Shares by Parent hereunder is legally permitted by all laws and
regulations to which Parent is subject.
ARTICLE 6
COVENANTS
Section 6.1 Conduct of Business of the Company, Agrigenetics and
Subsidiary. Except as otherwise expressly provided in this Agreement, during
the period from the date hereof to the Closing, the Company, Agrigenetics and
their respective subsidiaries and Subsidiary will each conduct its operations
according to its ordinary course of business consistent with past practice, and
the Company, Agrigenetics and their respective subsidiaries and Subsidiary will
each use its best efforts to preserve intact its business organization, to keep
available the services of its officers and employees and to maintain existing
relationships with licensors, licensees, suppliers, contractors, distributors,
customers and others having business relationships with it. Without limiting
the generality of the foregoing, and except as otherwise expressly provided in
this Agreement, prior to the Closing, neither the Company and Agrigenetics on
the one hand, nor Subsidiary on the other hand, will, except, with the prior
written consent of the other:
6.1.1 amend or propose to amend its certificate or articles of
incorporation or by-laws or equivalent organizational documents;
6.1.2 authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities or equity equivalents (including, without
limitation, stock appreciation rights), except, in the case of the Company,
pursuant to any Company Plan as in effect as of the date hereof or upon any
conversion of Series A Convertible Preferred Stock or upon exercise of the
Investor's Conversion Right, or amend any of the terms of any such securities or
agreements outstanding as of the date hereof;
34
6.1.3 split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock, or property or any combination thereof) in respect of its capital stock
(other than dividends or distributions by a directly or indirectly wholly owned
subsidiary of the Company), or redeem, repurchase or otherwise acquire any of
its securities or any securities of its subsidiaries;
6.1.4 (i) incur any indebtedness for borrowed money or issue any debt
securities or, except in the ordinary course of business consistent with past
practice, assume, guarantee or endorse the obligations of any other person; (ii)
except as the Company has previously informed Parent in writing, make any loans,
advances or capital contributions to, or investments in, any other person (other
than, in the case of the Company, to subsidiaries of the Company); (iii) pledge
or otherwise encumber shares of its capital stock or of its subsidiaries; or
(iv) except in the ordinary course of business consistent with past practice,
mortgage or pledge any of its assets, tangible or intangible, or create or
suffer to exist any Lien thereupon;
6.1.5 enter into, adopt or (except as may be required by law) amend
or terminate any bonus, profit sharing, compensation, severance, termination,
stock appreciation right, restricted stock, performance unit, stock equivalent,
stock purchase agreement, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreement, trust, plan, fund or
other arrangement for the benefit or welfare of any director, officer or
employee, increase in any manner the compensation or benefits of any director,
officer or employee or pay any benefit not required by any plan or arrangement
as in effect as of the date hereof (including, without limitation, the granting
of stock options, restricted stock, stock appreciation rights or performance
units); provided, however, the Company may adopt, amend or enter into (i)
employee stock option plans or agreements up to the limit described in Section
6.16.2 or (ii) in the case of employees who are not officers or directors,
provision for normal compensation increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense;
6.1.6 acquire, sell, lease or dispose of any assets outside the
ordinary course of business or any assets which in the aggregate are material to
the Company and Agrigenetics on the one hand or Subsidiary on the other hand, or
enter into any contract, agreement, commitment or transaction outside the
ordinary course of business consistent with past practice;
35
6.1.7 change any of the accounting principles or practices
used by it;
6.1.8 (i) acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof; (ii) authorize any new capital expenditure or expenditures
which, individually, is in excess of $500,000 or, in the aggregate, are in
excess of $2,000,000 (in the case of the Company, other than capital
expenditures heretofore approved by the management of the Company in the
aggregate amount of $5,400,000 and additional capital expenditures that may be
approved by management of the Company to upgrade the production facilities which
shall not exceed $3,700,000; (iii) settle any litigation involving payments in
excess of $50,000 individually or $200,000 in the aggregate; or (iv) enter into
or amend any contract, agreement, commitment or arrangement with respect to any
of the foregoing;
6.1.9 make any tax election or settle or compromise any tax
liability;
6.1.10 pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in its financial statements
(or the notes thereto) or incurred in the ordinary course of business consistent
with past practice;
6.1.11 in the case of the Company or its subsidiaries, terminate,
modify, amend or waive compliance with any provision of, any of the Significant
Agreements, or fail to take any action necessary to preserve the benefits of any
Significant Agreement to the Company or any of its subsidiaries, and in the case
of Subsidiary, terminate, modify, amend or waive compliance with any provision
of, any of the Subsidiary Agreements (except as described in Schedule 5.14), or
fail to take any action necessary to preserve the benefits to Subsidiary of any
Subsidiary Agreements; or
6.1.12 except, in the case of the Company or its subsidiaries, as may
arise out of the discussions currently in progress that have been previously
disclosed to Parent in writing, enter into any licensing agreements, technical
collaborations with third parties or any other similar transactions outside of
the ordinary course of business;
6.1.13 take, or agree in writing or otherwise to take, any of the
actions described above in this Section 6.1 or any action which would make any
of the representations or warranties
36
of the Company or of Parent contained in this Agreement untrue or incorrect or
would result in any of the conditions hereunder not being satisfied.
Section 6.2 Qualified Stock Purchase. The parties agree that the sale of
the Subsidiary Shares in exchange for the Seed Purchase Shares and the
Promissory Note is intended to constitute a "qualified stock purchase" within
the meaning of Section 338 (d)(3) of the Code and the parties will not take any
positions inconsistent with that intention in any Return or Subsidiary Return.
Section 6.3 Access to Information and Facilities.
6.3.1 Subject to applicable law, for a period of 90 days from the
date hereof, upon reasonable notice, the Company will give each of Parent and
its counsel, financial advisors, auditors, consultants and other authorized
representatives reasonable access to all senior management, outside accountants
and other experts and to all properties and books and records of the Company and
its subsidiaries, and the Company will permit each of Parent and its counsel,
financial advisors, auditors, consultants and other authorized representatives
to make such inspections of the foregoing properties, books and records as
Parent may reasonably require and will cause the Company's officers and those of
its subsidiaries to furnish Parent or its authorized representatives with such
financial and operating data and other information with respect to the business
and properties of the Company and any of its subsidiaries as Parent may
reasonably request. Any such access will be provided, and all such inspections
will be conducted, at reasonable times and in such a manner so as not to
interfere unreasonably with the operation of the business of the Company or its
subsidiaries. No investigation pursuant to this Section 6.3.1 will affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereunder. Information supplied and access granted
under this Section 6.3.1 will be subject to the Confidentiality Agreement.
6.3.2 Subject to applicable law, between the date hereof and the
Closing, upon reasonable notice, Subsidiary will give each of the Company and
its counsel, financial advisors, auditors, consultants and other authorized
representatives reasonable access to all senior management, outside accountants
and other experts and to all properties and books and records of Subsidiary, and
Subsidiary will permit each of the Company and its counsel, financial advisors,
auditors, consultants and other authorized representatives to make such
inspections of the foregoing properties, books and records as the Company may
reasonably require and will cause Subsidiary's officers and those of its
subsidiaries to furnish the Company or its authorized
37
representatives with such financial and operating data and other information
with respect to the business and properties of Subsidiary as the Company may
reasonably request. Any such access will be provided, and all such inspections
will be conducted, at reasonable times and in such a manner so as not to
interfere unreasonably with the operation of the business of Subsidiary. No
investigation pursuant to this Section 6.3.2 will affect any representations or
warranties of the parties herein or the conditions to the obligations of the
parties hereunder. Information supplied and access granted under this Section
6.3.2 will be subject to the Confidentiality Agreement.
Section 6.4 Reasonable Best Efforts. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, Parent,
Subsidiary, the Company and Agrigenetics will cooperate with one another (i) in
the preparation and filing of any required filings under the HSR Act; (ii) in
determining whether action by or in respect of, or filing with, any governmental
body, agency, official or authority (either domestic or foreign) is required,
proper or advisable or any actions, consents, waivers or approvals are required
to be obtained from parties to any contracts, in connection with the
transactions contemplated by this Agreement and taking into account the
transactions contemplated by the Stock Purchase Agreement; and (iii) in seeking
to obtain on a timely basis any such actions, consents and waivers and to make
any such filings. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party hereto will take all such necessary action.
Section 6.5 Public Announcements. Parent and Subsidiary, one the one
hand, and the Company and Agrigenetics, on the other hand, will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
the Stock Purchase Agreement, and will not issue any such press release or make
any such public statement prior to such consultation, except as may be required
by applicable law or by applicable rules of any securities exchange or inter-
dealer quotation system.
Section 6.6 Indemnification of Subsidiary, Directors, Officers, Employees
and Agents. The Company and Agrigenetics agree that all rights to
indemnification existing in favor of the present or former directors, officers,
employees and agents of Subsidiary as provided in Subsidiary's Certificate of
38
Incorporation or By-Laws as in effect as of the date hereof with respect to
matters occurring prior to the Closing will survive the Closing and will
continue in full force and effect for a period of not less than five years.
Section 6.7 Notification of Certain Matters. The Company and Agrigenetics
will give prompt notice to Parent and Subsidiary, and Parent and Subsidiary will
give prompt notice to the Company and Agrigenetics, of (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which would
be likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate and (ii) any failure of the Company, Agrigenetics,
Parent or Subsidiary, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, that the delivery of any notice pursuant to this Section
6.7 will not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
Section 6.8 No Solicitation.
6.8.1 The Company will immediately cease any existing discussions or
negotiations with any third parties conducted prior to the date hereof with
respect to any Acquisition Proposal (as defined below). The Company will not,
directly or indirectly, through any officer, director, employee, representative
or agent or any of its subsidiaries, (i) solicit, initiate, or encourage any
inquiries or proposals that constitute, or could reasonably be expected to lead
to, a proposal or offer for a merger, consolidation, business combination, sale
of substantial assets, sale of shares of capital stock (including, without
limitation, by way of a tender offer) or similar transactions involving the
acquisition, in any manner, directly or indirectly, of a material equity
interest in or a material amount of voting securities or assets of the Company,
Agrigenetics or any of their respective subsidiaries, other than the
transactions contemplated by this Agreement (any of the foregoing inquiries or
proposals being referred to in this Agreement as an "Acquisition Proposal"),
(ii) engage in negotiations or discussions concerning, or provide any non-public
information to any person or entity relating to, any Acquisition Proposal, or
(iii) agree to, approve or recommend any Acquisition Proposal; provided, that
nothing contained in this Section 6.8 will prevent the Company from (A)
furnishing information to, or entering into discussions or negotiations with,
any person in connection with an unsolicited bona fide written Acquisition
Proposal by such person or recommending an Acquisition Proposal to the
stockholders of the Company or entering into an agreement with respect to an
Acquisition Proposal or terminating this Agreement, if and only to the extent
that the Board determines in good faith after consultation with outside legal
counsel that
39
such action is necessary for the Board to comply with its fiduciary duties to
stockholders under applicable law and prior to furnishing such information to,
or entering into discussions or negotiations with, such person, the Board
receives from such person an executed confidentiality agreement in form
customary for transactions of such nature, and the Company may do the foregoing
without any liability for breach of this Agreement; and (B) complying with Rules
14D-9 and 14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal.
6.8.2 The Company will notify Parent immediately (and no later than
24 hours) after receipt by the Company of any Acquisition Proposal or any
request for non-public information in connection with an Acquisition Proposal or
for access to the properties, books or records of the Company, Agrigenetics or
any of their respective subsidiaries by any person or entity that informs the
Company that it is considering making, or has made, an Acquisition Proposal.
Such notice will be made orally and in writing and will indicate in reasonable
detail the identity of the offeror and the terms and conditions of such
proposal, inquiry or contract.
Section 6.9 Pre-Closing Restrictions on Stock Acquisitions. From the date
of this Agreement until the Closing, neither Parent nor any of its affiliates
will, directly or indirectly, acquire or propose to acquire any shares of Common
Stock other than pursuant to this Agreement or the Stock Purchase Agreement or
any amendments hereto or thereto, unless, on or after the date of this
Agreement, (a) any person or group of persons other than (1) any person
specified in Rule 13d-1(b)(1)(i) and (ii) under the Exchange Act or (2) any
person who does not own 10% or more of the outstanding shares of Common Stock as
of the date of this Agreement, acquires beneficial ownership of shares of Common
Stock representing 10% or more of the then total outstanding shares of Common
Stock, (b) any beneficial owner, other than any person specified in Rule 13d-
1(b)(1)(i) and (ii) under the Exchange Act, of the Company who beneficially
owned 10% or more of the outstanding shares of Common Stock as of the date of
this Agreement acquires beneficial ownership of additional shares of Common
Stock representing 2% or more of the outstanding shares of Common Stock, (c) any
person or group of persons other than Parent or any of its affiliates commences
or makes a public announcement of an intention to commence a tender offer to
acquire 10% or more of the then total outstanding shares of Common Stock, (d)
any person or group of persons other than Parent or any of its affiliates makes
an Acquisition Proposal relating to shares of Common Stock representing 40% or
more of the then outstanding shares of Common Stock, which Acquisition Proposal
is not conditioned on obtaining financing or financing commitments, or (e) the
Company enters into an agreement with any
40
person pursuant to the proviso in Section 6.8.1 or this Agreement has been
terminated.
Section 6.10 Rights Agreement. Unless this Agreement and the Stock
Purchase Agreement have both been terminated according to their terms without
Parent or an affiliate, successor or assign of Parent having purchased any
shares of Common Stock under either this Agreement or the Stock Purchase
Agreement (collectively, "Double Termination"), the Company, from and after the
date of this Agreement (i) will take all necessary steps to ensure that the
Rights Agreement and the rights thereunder will not prevent Parent or an
affiliate of Parent from acquiring or proposing to acquire some or all of the
outstanding shares of Common Stock and (ii) will not amend, interpret or enforce
the Rights Agreement or adopt any new shareholder rights agreement or other
similar agreement, plan or measure, if such amendment, interpretation,
enforcement or adoption would have an adverse effect on Parent or on the ability
of Parent or an affiliate to acquire or propose to acquire some or all of the
outstanding shares of Common Stock. If a Double Termination occurs the action
described in Section 4.5 may be revoked.
Section 6.11 Post-Closing Covenants of the Company.
6.11.1 Subject to Section 6.12, so long as Parent has the right to
nominate at least two members to the Board, the Company will not, without the
prior written approval of Parent, issue any shares of Common Stock or Common
Stock Equivalents except: (i) shares of Common Stock authorized and reserved as
of the date hereof for issuance pursuant to any Company Plan, (ii) not more than
an aggregate of 2,000,000 new Common Stock Equivalents issued to directors,
officers or employees pursuant to any employee benefit plans approved by the
Company during the 3 year period after the Measurement Date and (iii) not more
than an aggregate of 2,000,000 shares of Common Stock in exchange for the assets
or securities of one or more other persons. In the event that the Company at
any time after the date of this Agreement declares or pays a dividend on any
Company Security payable in shares of Common Stock, subdivides or splits the
outstanding Common Stock, combines or consolidates the outstanding Common Stock
into a smaller number of shares, effects a reverse split of the outstanding
shares, or issues any shares of Common Stock in an exchange, reclassification,
consolidation or merger, the 2,000,000 share limitations in (ii) and (iii) above
will be proportionately adjusted accordingly. Whenever the Company proposes to
issue any shares of Common Stock pursuant to this Section 6.11.1, the Company
will offer Parent the right, exercisable within 60 days of such offer, to
purchase at Market Value such number of additional shares of Common Stock from
the Company as will prevent the Total Percentage Interest of Parent from being
reduced as a result of the proposed issuance of Common
41
Stock. For purposes of this Section 6.11, "Total Percentage Interest of Parent"
means the percentage of shares of Common Stock beneficially owned by Parent and
its affiliates, determined on the basis of the total number of shares of Common
Stock actually outstanding.
6.11.2 Subject to Section 6.12, but notwithstanding the limitations
in Section 6.11.1, following the second anniversary of the Measurement Date, the
Company may issue New Securities for cash provided that the Company will have
first afforded Parent a right of first refusal to purchase all of the New
Securities proposed to be issued for cash in accordance with this Section 6.11.2
(other than any New Securities issued to (i) officers, directors or employees or
the Company and any of its subsidiaries pursuant to any Company Plan or newly
created employee benefit plan, and (ii) Parent or any of its affiliates). If
the Company proposes to issue any New Securities for cash at any time following
the second anniversary of the Measurement Date, the Company will deliver to
Parent a written notice stating the number and kind of New Securities proposed
to be issued, the identities of the persons to whom the New Securities are
proposed to be issued, the proposed cash issue price of the New Securities and
the other terms and conditions upon which the New Securities are proposed to be
issued (a "Right of First Refusal Notice"). For a period of 20 business days
following the date of Parent's receipt of a Right of First Refusal Notice,
Parent will have the right to purchase the New Securities described in the Right
of First Refusal Notice in whole or in part at a cash price equal to the Market
Value (the "Right of First Refusal") by so notifying the Company in writing. If
Parent has not notified the Company in writing of its intention to exercise such
Right of First Refusal by the close of business on the 20th business day
following Parent's receipt of the Right of First Refusal Notice, the Company may
issue such New Securities for cash in the manner stated in the Right of First
Refusal Notice, or, if Parent has notified the Company in writing of its
intention to exercise such Right of First Refusal only in part, the Company may
thereafter issue for cash the portion of the New Securities not being purchased
by Parent or its affiliates in the manner stated in the Right of First Refusal
Notice. If, subsequent to the date of any Right of First Refusal Notice, the
Company proposes to issue the New Securities described in the Right of First
Refusal Notice at a different price or on terms and conditions otherwise
materially different from those described in the Right of First Refusal Notice,
the Company will deliver to Parent a new Right of First Refusal Notice
describing such terms and conditions and repeat the foregoing procedures. The
Company and Parent understand and acknowledge that the foregoing Right of First
Refusal is not intended to enforce a common law preemptive right and is entered
into as a matter of contract at arms'-length. If the Right of First Refusal is
deemed to be invalid or unenforceable, in whole
42
or in part, by the final judgment of a court of competent jurisdiction, the
Company will, for a period of 30 days following the date of such final judgment,
offer Parent the right to purchase at Market Value such number of additional
shares of Common Stock from the Company as will prevent the Total Percentage
Interest of Parent represented by the Common Stock then beneficially owned by
Parent from being reduced as a result of the proposed issuance of New
Securities.
6.11.3 So long as Parent has the right to nominate at least two
members to the Board, the Company will not, without the prior written approval
of Parent, merge, consolidate, exchange, sell, lease, transfer or otherwise
dispose of (i) the Company's plant science business (the "Seed Business") or
(ii) the Company's crop protection business (the "Crop Business").
6.11.4 So long as Parent has the right to nominate at least two
members to the Board, the Company will not, without the prior written approval
of Parent, purchase, invest, lease or otherwise acquire securities or assets
which are not related to and for use in the Seed Business or the Crop Business.
6.11.5 After the Closing, the Company and Agrigenetics will use their
reasonable best efforts to cause Subsidiary to perform and comply with all of
its material contractual obligations existing as of the Closing, including such
obligations assigned by Parent to Subsidiary, where the failure of Subsidiary to
so perform and comply would result in actual damages or losses to Parent.
6.11.6 After the Closing, upon Parent's request, the Company will
establish a voluntary process by which Parent will be permitted to purchase
shares of Common Stock from participating employees of the Company upon the
exercise of employee stock options by such participating employees; provided,
however, that Parent shall have no obligation to purchase any such shares of
Common Stock.
Section 6.12 Post-Closing Restrictions on Stock Acquisitions.
6.12.1 (a) For a period of 2 years from the Measurement Date, neither
Parent nor any of its affiliates will acquire or propose to acquire shares of
Common Stock from third parties which, when aggregated with all shares of Common
Stock beneficially owned by Parent and its affiliates other than any shares of
Common Stock which were acquired by Parent or any of its affiliates after the
Measurement Date directly from the Company or any of its subsidiaries or
employees, would constitute in excess of 60% of the then total outstanding
shares of Common Stock and (b) from the second anniversary of the Measurement
Date
43
through the third anniversary of the Measurement Date, neither Parent nor any of
its affiliates will acquire or propose to acquire shares of Common Stock from
third parties which, when aggregated with all shares of Common Stock owned by
Parent and its affiliates other than any shares of Common Stock which were
acquired by Parent or any of its affiliates after the Measurement Date directly
from the Company or any of its subsidiaries or employees, would constitute in
excess of 65% of the then total outstanding shares of Common Stock; provided,
however, that the foregoing restrictions will not apply if a person or group
other than Parent or its affiliates has made an Acquisition Proposal in which it
proposes to acquire 25% or more of the Company's then outstanding shares of
Common Stock or Common Stock Equivalents.
6.12.2 Except as provided in Section 6.13, at any time after the
Measurement Date, neither Parent nor any of its affiliates may acquire or
propose to acquire shares of Common Stock from persons, including the Company,
which, when aggregated with all shares of Common Stock then beneficially owned
by Parent and its affiliates, would constitute more than 79.9% of the then total
outstanding shares of Common Stock (taking into account in the calculation of
total outstanding shares of Common Stock any shares of Common Stock that the
Company issued or proposes to issue to Parent or any of its affiliates after the
Measurement Date).
Section 6.13 Buyout Transaction. Following the third anniversary of the
Measurement Date, Parent may increase its beneficial ownership of Common Stock
above 79.9% of the total outstanding shares of Common Stock only pursuant to a
Buyout Transaction complying with the following procedures:
6.13.1 If Parent is able to obtain the approval of a majority of the
Company's Independent Directors for a proposed Buyout Transaction after they
have received an opinion, satisfactory to them, from an internationally
recognized investment bank selected by the Independent Directors on the
aggregate Third Party Sale Value with respect to such Buyout Transaction, Parent
may proceed with such Buyout Transaction (in which event nothing in this
Agreement will prevent or impede such Buyout Transaction from proceeding or
being consummated and the Company will take all action reasonably necessary to
allow such transaction to proceed in accordance with the provisions hereof).
6.13.2 If pursuant to Section 6.13.1 Parent is not able to obtain the
approval of a majority of the Independent Directors for a proposed Buyout
Transaction within 60 days after such Buyout Transaction is first proposed to
the directors of the Company, Parent may either (a) withdraw such proposal or
(b) request arbitration of the amount of the Third Party Sale Value. Parent and
the Company will appoint an independent appraiser
44
(which will be an internationally recognized investment bank) mutually
satisfactory to them that will determine the aggregate Third Party Sale Value
with respect to the proposed Buyout Transaction. If Parent and the Company are
unable to agree on a mutually acceptable appraiser within such 15-day period,
the Third Party Sale Value will be determined by an independent appraiser (which
will be an internationally recognized investment bank) chosen by two other
independent appraisers (which will be internationally recognized investment
banks), one of whom will be appointed by Parent and the other of whom will be
appointed by the Company or, if such two appraisers are unable to agree on a
third appraiser within seven days after the appointment of the second of them,
by the American Arbitration Association (or its successor); provided, however,
that if Parent or the Company will not have appointed its appraiser within 30
days after a request by Parent for determination of the amount of the Third
Party Sale Value, such determination will be made solely by the appraiser
selected by the other party. Parent and the Company may each submit to the
appraiser their respective positions on the Third Party Sale Value and may also
submit written and oral presentations to support their respective positions.
The appraiser will determine the aggregate amount of the Third Party Sale Value.
The appraiser will be directed to make its determination within 30 calendar days
of appointment and such determination, when made, will be final and binding with
respect to the proposed Buyout Transaction.
6.13.3 Within 10 business days after the appropriate Third Party Sale
Value is determined pursuant to the procedures set forth above, Parent will
elect: (a) to proceed with a Buyout Transaction offering the Third Party Sale
Value Consideration payable in cash and/or marketable securities (in which event
nothing in this Agreement will prevent or impede such Buyout Transaction from
proceeding or being consummated and the Company will take all action reasonably
necessary to allow such transaction to proceed in accordance with the provisions
hereof, including obtaining the vote of the directors on the Board in favor of
such Buyout Transaction so as to obtain the requisite Board approval therefor);
or (b) to withdraw its proposal for a Buyout Transaction (in which event Parent
may not again propose a Buyout Transaction for a period of one year after such
withdrawal, unless it is invited to do so by the Company's Independent
Directors).
6.13.4 The fees and expenses of the appraiser will be divided equally
between Parent and the Company.
Section 6.14 Election of Directors.
45
6.14.1 For a period of three years from and after the Measurement
Date, Parent and the Company will use their reasonable best efforts to cause the
following to occur: (i) at any time that Parent and its affiliates are the
beneficial owners of less than 20% of the then outstanding Common Stock, Parent
will have the right to designate for nomination one director to the Board; (ii)
at any time that Parent and its affiliates are the beneficial owners of less
than 30% but in any event not less than 20% of the then outstanding Common
Stock, Parent will have the right to designate for nomination two directors to
the Board; (iii) at any time that Parent and its affiliates are the beneficial
owners of less than 50% but in any event not less than 30% of the then
outstanding Common Stock, the Company will cause the Board to consist of seven
directors with three of such directors to be designees of Parent, or, if the
Board will for any reason consist of a number of directors other than seven,
with such number of directors equal to the nearest whole number less than one-
half times the total number of directors to be designees of Parent; and (iv) at
any time that Parent and its affiliates are the beneficial owners of more than
50% of the then outstanding Common Stock, the Company will cause the Board to
consist of nine directors with five of such directors to be designees of Parent,
or, if the Board will for any reason consist of a number of directors other than
nine, with such number of directors equal to the nearest whole number greater
than one-half times the total number of directors to be designees of Parent.
The parties will use their best efforts to obtain the resignations of all
existing directors currently serving at the designation of Investor prior to the
closing of the transactions contemplated by the Stock Purchase Agreement and to
provide for the appointment of Parent's designees, in order to effectuate the
immediately preceding sentence.
6.14.2 Parent's initial nominee to fill a particular seat on the
Board shall be entitled to any benefits or compensation then generally paid or
made available to new members of the Board. Any person subsequently nominated
by Parent to fill that particular seat on the Board after it has become vacant
for any reason (a "Replacement Director") shall not be entitled to any benefits
or compensation then generally paid or made available to new members of the
Board; provided, however, that such Replacement Director shall be entitled to
any benefits or compensation then generally paid or made available to incumbent
directors upon their reelection to the Board upon such Replacement Director's
reelection to the Board for terms following his or her initial term.
Section 6.15 Audited Financial Statements. Within 50 days after the
Closing, Parent will provide to the Company, a complete and correct copy of
audited financial statements of Subsidiary
46
for the twelve-month periods ended September 30, 1994 and September 30, 1995.
Section 6.16 Benefit Plans.
6.16.1 Parent will assume or retain all liability for the payment of
any and all benefits accrued as of the Closing Date under any Subsidiary Plan
that is an unfunded deferred compensation plan, program, agreement or
arrangement or any "excess benefit plan" (as such term is defined in section
3(36) of ERISA).
6.16.2 Parent hereby agrees that, for a period of 3 years from the
Closing, it will vote the shares of Common Stock beneficially owned by it and
its affiliates and to cause its nominees on the Board to vote in favor of an
increase in the number of stock options and restricted stock awards issuable
under the Company Plans by up to a combined total of 2,000,000 new shares of
Common Stock (including any increase authorized by Section 6.1.5) for future
issuances under such Company Plans or newly created employee benefit plans,
subject to adjustment to reflect any stock split, recapitalization, stock
dividend or other similar event.
Section 6.17 Post-Closing Human Resources Matters.
6.17.1 Parent and Company will form a transition steering committee
(the "Steering Committee") that will have responsibility for overseeing the
integration of Subsidiary and its employees with the Company and its
subsidiaries and employees. The Steering Committee will consist of 4 members, 2
of whom will be appointed by the Company and 2 of whom will be appointed by
Parent. Any Steering Committee action will require the unanimous consent of all
of the members. The Steering Committee will be effective immediately after the
Closing and may be discontinued at any time upon the mutual agreement of the
Company and Parent, but in no event will it exist beyond 12 months after the
Closing.
6.17.2 The Company and its subsidiaries will not implement any job
elimination programs that may impact current Subsidiary employees who have
satisfactory job performance without the approval of the Steering Committee for
as long as such committee is in existence. Any separations involving Subsidiary
personnel will be based on severance compensation policies approved by the
Steering Committee, with the Subsidiary personnel receiving credit for their
years of service with Subsidiary. For as long as the Steering Committee is in
existence, the committee will review modifications to the compensation and
benefits policies and programs offered to Subsidiary personnel.
47
Section 6.18 Strategic Review Committee. Parent and the Company will form
a Strategic Review Team to meet quarterly and on an "as-needed" basis to develop
and review (i) the strategic direction of the Company and its Subsidiaries and
their projects, and (ii) the tactics employed to pursue such strategic
objectives. The Strategic Review Team may from time-to-time designate subteams
or specific personnel to review technical, intellectual property, and financial
issues that impact or support the strategic direction of the Company and its
Subsidiaries and their projects.
Section 6.19 Technology Agreement. The Company, Agrigenetics and Parent
will execute and deliver the Technology Agreement at the Closing.
ARTICLE 7
CONDITIONS
Section 7.1 Conditions to Each Party's Obligations. The respective
obligations of each party hereto to effect the Transaction is subject to the
satisfaction or, if appropriate, waiver at or prior to the Closing of the
following conditions:
7.1.1 There will not be in effect any order, decree or ruling or
other action restraining, enjoining or otherwise prohibiting the Transaction, or
the purchase of the Investor Interests by Parent, which order, decree, ruling or
action will have been issued or taken by any court of competent jurisdiction or
other governmental body located or having jurisdiction within the United States
or any country or economic region in which the Company or any of its
subsidiaries or Parent or any of its affiliates, directly or indirectly, has
material assets or operations.
7.1.2 Any waiting period under the HSR Act applicable to the
transactions contemplated by this Agreement or the Stock Purchase Agreement will
have terminated or expired and there will have been no material modification to
the terms of the transactions contemplated by this Agreement or the Stock
Purchase Agreement.
Section 7.2 Conditions to the Obligation of Parent and Subsidiary. The
obligations of Parent and Subsidiary to effect the Transaction is subject to the
satisfaction or, if appropriate, waiver at or prior to the Closing of the
following further conditions:
48
7.2.1 Provision will have been made to the reasonable satisfaction of
Parent that the Board will have the composition described in Section 6.14
immediately following the Closing.
7.2.2 The Stock Purchase Agreement will not have been terminated.
7.2.3 The Company and Agrigenetics will have performed in all
material respects their respective covenants, agreements and obligations under
this Agreement to the date of the Closing.
7.2.4 Except as otherwise contemplated by this Agreement, the
representations and warranties of the Company contained in this Agreement which
are qualified as to materiality will be true and correct and which are not so
qualified will be true and correct in all material respects, in each case, as of
the date when made and at and as of the Closing as though newly made at and as
of that time, except that representations and warranties made as of a particular
date need only be so true and correct as of such date.
7.2.5 The Company will have delivered to Parent a certificate dated
as of the Closing and signed by the President and Chief Financial Officer of the
Company certifying as to (i) the accuracy, as of the date when made and at and
as of the Closing as though newly made at and as of that time, of the
representations and warranties of the Company contained in this Agreement which
are qualified as to materiality (except that representations and warranties made
as of a particular date need only be so accurate as of such date), (ii) the
accuracy, as of the date when made and at and as of the Closing as though newly
made at and as of that time, in all material respects of the representations and
warranties of the Company contained in this Agreement which are not so qualified
(except that representations and warranties made as of a particular date need
only be so accurate as of such date), and (iii) the performance in all material
respects of the obligations required by the Company and Agrigenetics to be
performed under this Agreement as of the Closing.
7.2.6 The Company and Agrigenetics will have delivered, or will be
delivering concurrently with the Closing, the Purchase Shares, the Promissory
Note and the documents and instruments required to be delivered by the Company
and Agrigenetics pursuant to Section 3.3.
Section 7.3 Conditions to the Obligations of the Company and Agrigenetics.
The obligations of the Company and Agrigenetics to effect the Transaction is
subject to the satisfaction or, if appropriate, waiver at or prior to the
Closing of the following further conditions:
49
7.3.1 Parent and Subsidiary will have performed in all material
respects their respective covenants, agreements and obligations under this
Agreement to the date of the Closing.
7.3.2 Except as otherwise contemplated by this Agreement, the
representations and warranties of Parent contained in this Agreement which are
qualified as to materiality will be true and correct and which are not so
qualified will be true and correct in all material respects, in each case, as of
the date when made and at and as of the Closing as though newly made at and as
of that time, except that representations and warranties made as of a particular
date need only be so true and correct as of such date.
7.3.3 Parent will have delivered to the Company a certificate dated
as of the Closing and signed by the Chief Financial Officer and General Counsel
of Parent certifying as to (i) the accuracy, as of the date when made and at and
as of the Closing as though newly made at and as of that time, of the
representations and warranties of Parent contained in this Agreement which are
qualified as to materiality (except that representations and warranties made as
of a particular date need only be so accurate as of such date), (ii) the
accuracy, as of the date when made and at and as of the Closing as though newly
made at and as of that time, in all material respects of the representations and
warranties of Parent contained in this Agreement which are not so qualified
(except that representations and warranties made as of a particular date need
only be so accurate as of such date), and (iii) the performance in all material
respects of the obligations required by Parent and Subsidiary to be performed
under this Agreement as of the Closing.
7.3.4 Parent will have delivered, or will be delivering concurrently
with the Closing, the Subsidiary Shares, the Cash Payment and the documents and
instruments required to be delivered by Parent pursuant to Section 3.2.
ARTICLE 8
TERMINATION; AMENDMENT; WAIVER
Section 8.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
8.1.1 By mutual written consent of the Company, Agrigenetics, Parent
and Subsidiary.
8.1.2 By Parent or the Company if the Closing has not occurred prior
to April 30, 1996 unless such failure is solely a
50
result of the failure to satisfy the condition set forth in Section 7.1.2 on or
prior to April 30, 1996, in which event, by Parent or the Company if the Closing
has not occurred prior to July 31, 1996.
8.1.3 By Parent or the Company if any court of competent jurisdiction
or other governmental body located or having jurisdiction within the United
States or any country or economic region in which the Company or any of its
subsidiaries or Parent or any of the affiliates, directly or indirectly, has
material assets or operations, will have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
Transaction and such order, decree, ruling or other action will have become
final and nonappealable.
8.1.4 By Parent if any court of competent jurisdiction or other
governmental body located or having jurisdiction within the United States or any
country or economic region in which the Company or any of its subsidiaries,
Parent or any of the affiliates or Investor or any of its affiliates, directly
or indirectly, has material assets or operations, will have issued an order,
decree or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the sale and purchase of the Investor Interests and such order,
decree, ruling or other action will have become final and nonappealable.
8.1.5 By Parent if (i) there will have been a material breach of any
representation or warranty of the Company contained herein or of Investor
contained in the Stock Purchase Agreement, or (ii) there will have been a
material breach of any covenant, agreement or obligation of the Company or
Agrigenetics contained herein or of Investor contained in the Stock Purchase
Agreement, in either the case of (i) or (ii) which will not have been cured
prior to 10 business days following notice of such breach.
8.1.6 By the Company if (i) there will have been a material breach of
any representation or warranty of Parent contained herein, (ii) there will have
been a material breach of any covenant, agreement or obligation of Parent, in
either the case of (i) or (ii) which will not have been cured prior to 10
business days following notice of such breach.
8.1.7 By Parent if the Stock Purchase Agreement will have terminated
without the consummation of the transactions contemplated thereby.
8.1.8 By Parent if the Board will have withdrawn or modified in a
manner adverse to Parent the Board's approval of this Agreement, the Transaction
or the approval of the transactions contemplated by the Stock Purchase Agreement
for the purpose of rendering the Rights Agreement inapplicable to the
51
transactions contemplated by the Stock Purchase Agreement, or the Company will
have indicated to Parent that the Company does not intend to consummate the
transactions contemplated by this Agreement or will have entered into an
agreement with respect to an Acquisition Proposal, or the Board will have
resolved to do any of the foregoing.
8.1.9 By the Company if and only to the extent that the Board has
determined in good faith after consultation with outside legal counsel that such
action is necessary for the Board to comply with its fiduciary duties to
stockholders under applicable law.
Section 8.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.1, the respective obligations of the
parties under this Agreement will terminate, except that, (i) if the Stock
Purchase Agreement has not been terminated according to its terms, the
provisions of Section 6.10, Section 6.11, Section 6.12 and Section 6.13 will
survive the termination of this Agreement, (ii) if Parent has purchased the
Investor Interests pursuant to the Stock Purchase Agreement, Section 6.14 will
survive the termination of this Agreement, (iii) this Section 8.2 will survive
the termination of this Agreement, and (iv) Section 8.3 will survive the
termination of this Agreement. Nothing contained in this Section 8.2 will
relieve any party from liability for any breach of this Agreement.
Section 8.3 Fees and Expenses. Each party will bear its own expenses and
costs in connection with this Agreement and the transactions contemplated
hereby.
Section 8.4 Amendment. This Agreement may not be amended except by an
instrument in writing signed by Parent and the Company. After the Closing, any
amendment to this Agreement must be approved by a majority of the Company's
Independent Directors in addition to a majority of the whole Board.
Section 8.5 Extension; Waiver. The Company and Agrigenetics, on the one
hand, and Parent and Subsidiary, on the other hand, may (i) extend the time for
the performance of any of the obligations or other acts of the other party, (ii)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document, certificate or writing delivered pursuant
hereto, or (iii) waive compliance by the other party with any of the agreements
or conditions contained herein. Any agreement on the part of any party hereto
to any such extension or waiver will be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder will not constitute a waiver of such rights.
52
ARTICLE 9
MISCELLANEOUS
Section 9.1 Survival of Representations and Warranties. Each of the
representations and warranties made herein will survive for a period of 24
months from the date of the Closing, provided, that the representations and
warranties contained in Section 4.11 and Section 5.9 shall survive the Closing
and continue until the termination of any applicable statute of limitation. The
covenants and agreements herein will survive indefinitely.
Section 9.2 Indemnification.
9.2.1 The Company will indemnify and hold Parent and its affiliates
and any of their respective directors, officers, partners and affiliates of
partners, employees and agents (each, a "Parent Indemnified Party") harmless
from and against any and all losses, damages, claims, liabilities or obligations
(including interest, penalties, amounts paid in settlement and reasonable fees
and disbursements of attorneys) (collectively, the "Losses") (which, for the
purposes of this Section 9.2, will also include the reasonable fees and
disbursements of attorneys incurred by a Parent Indemnified Party in bringing a
claim under this Agreement, prosecuting its rights of indemnity in respect of
such claim and collecting any amounts awarded upon such claim) suffered,
sustained or incurred or required to be paid by any such Parent Indemnified
Party due to, based upon, arising out of or otherwise with respect to (i) any
breach of any representation, warranty, covenant, agreement or obligation of the
Company or Agrigenetics contained in this Agreement, (ii) any brokerage fees,
commissions or finders' fees payable on the basis of any action taken by the
Company or any of its affiliates and (iii) any Taxes or any liability with
respect to Taxes attributable to any merger of Subsidiary, any transfer of
assets of Subsidiary or any election with respect to Subsidiary pursuant to
Section 338(g) of the Code to the extent any of the foregoing occur after the
completion of the Transaction.
9.2.2 Parent will indemnify and hold the Company and its affiliates
and any of their respective directors, officers, employees and agents (each, a
"Company Indemnified Party") harmless from and against any and all Losses,
(which, for the purposes of this Section 9.2, will also include the reasonable
fees and disbursements of attorneys incurred by a Company Indemnified Party in
bringing a claim under this Agreement, prosecuting its rights of indemnity in
respect of such claim and collecting any amounts awarded upon such claim)
suffered, sustained or incurred or required to be paid by any such Company
53
Indemnified Party due to, based upon, arising out of or otherwise with respect
to (i) any breach of any representation, warranty, covenant, agreement or
obligation of Parent or Subsidiary contained in this Agreement and (ii) any
brokerage fees, commissions or finders' fees payable on the basis of any action
taken by Parent or any of its affiliates.
9.2.3 If either a Parent Indemnified Party, on the one hand, or a
Company Indemnified Party, on the other hand, as the case may be (the
"Indemnitee"), receives written notice of any third party claim or potential
claim or the commencement of any action or proceeding which could give rise to
an obligation on the part of the Company, on the one hand, or Parent, on the
other hand, as the case may be, to provide indemnification (the "Indemnifying
Party") pursuant to Section 9.2.1 or 9.2.2, the Indemnitee will promptly give
the Indemnifying Party notice thereof (the "Indemnification Notice"); provided,
that the failure to give the Indemnification Notice promptly will not impair the
Indemnitee's right to indemnification in respect of such claim, action or
proceeding unless, and only to the extent that, the lack of prompt notice
adversely affects the ability of the Indemnifying Party to defend against or
diminish the Losses arising out of such claim, action or proceeding. Delivery
of the Indemnification Notice will be a condition precedent to any liability of
the Indemnifying Party under the provisions for indemnification contained in
this Agreement. The Indemnification Notice will contain factual information (to
the extent known to the Indemnitee) describing the asserted claim in reasonable
detail and will include copies of any notice or other document received from any
third party in respect of any such asserted claim. The Indemnifying Party will
have the right to assume the defense of a third party claim or suit described in
this Section 9.2.3 at its own cost and expense and with counsel of its own
choosing; provided, however, that, the Indemnitee is kept fully informed of all
developments and is furnished copies of all papers; the Indemnitee is given the
opportunity, at its option, to participate at its own cost and expense and with
counsel of its own choosing (which will be reasonably satisfactory to the
Indemnifying Party) in the defense of such claim or suit; and the Indemnifying
party diligently prosecutes the defense of such claim or suit. In the event
that all of the conditions of the foregoing provision are not satisfied, the
Indemnitee will have the right, without impairing any of its rights to
indemnification as provided herein, to assume and control the defense of such
claim or suit and to settle such claim or suit. No settlement of any such third
party claim or suit will be made by the Indemnifying Party without the prior
written consent of the Indemnitee (which will not be unreasonably withheld). No
settlement of any such third party claim or suit will be made by the Indemnitee
if the Indemnifying Party will have assumed the defense thereof and will be in
compliance with its obligations
54
with respect thereto as set forth above in this Section 9.2.3. If the
Indemnifying Party chooses to defend any claim, the Indemnitee will make
available to the Indemnifying Party any books, records or other documents within
its control that are necessary or appropriate for such defense. Notwithstanding
the foregoing, the Indemnitee will have the right to employ separate counsel at
the Indemnifying Party's expense and to control its own defense of such asserted
liability if in the reasonable opinion of counsel to such Indemnitee (i) there
are or may be legal defenses available to such Indemnitee or to other
Indemnitees that are different from or additional to those available to the
Indemnifying Party, or (ii) a conflict or potential conflict exists between the
Indemnifying Party and such Indemnitee that would make such separate
representation advisable.
9.2.4 The indemnification contained in Section 9.2 shall not apply to
the extent that a loss has been reimbursed pursuant to the Adjustment.
Section 9.3 Entire Agreement; Assignment. This Agreement, the
Confidentiality Agreement and the Technology Agreement (i) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersede all other prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof and (ii) will not be
assigned by operation of law or otherwise; provided that Parent may assign its
rights and obligations in whole or in part (other than the rights of Parent to
nominate directors to the Board pursuant to Section 6.14) to any affiliate of
Parent, but no such assignment will relieve Parent of its obligations hereunder
if such assignee does not perform such obligations. This Agreement shall inure
to the benefit of and be binding upon Parent's successors and permitted assigns.
Section 9.4 Notices. All notices, requests, claims, demands and other
communications hereunder will be in writing and will be given (and will be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
or by registered or certified mail (postage prepaid, return receipt requested),
to the other party as follows:
if to the Company or Agrigenetics:
Mycogen Corporation
0000 Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: President and Chief Operating Officer
55
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax: 000-000-0000
Attention: Xxxxxx X. Xxxxxx
if to Parent or Subsidiary, to:
DowElanco
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Fax: 000-000-0000
Attention: Xxxxx X. Xxxxx
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
Section 9.5 Governing Law. This Agreement will be governed by and
construed in accordance with the law of the State of Delaware, without regard to
the principles of conflicts of law thereof, except for the General Corporation
Law of the State of California, as applicable to the Company, and the laws
applicable with respect to fiduciary duties of the Board, which will be governed
by and construed in accordance with the law of the State of California, without
regard to the principles of conflicts of law thereof.
Section 9.6 Parties in Interest. This Agreement will be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns, and nothing in this Agreement, express or implied, is
intended to or will confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 9.7 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties will be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
56
Section 9.8 Severability. The provisions of this Agreement will be deemed
severable and the invalidity or unenforceability of any provision will not
affect the validity and enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision will be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid and unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons, entities or circumstances will not be affected by
such invalidity or unenforceability, nor will such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
Section 9.9 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 9.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed to be an original, but all of which
will constitute one and the same agreement.
57
[INTENTIONALLY LEFT BLANK]
58
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its representatives thereunto duly authorized, all as
of the day and year first above written.
MYCOGEN CORPORATION
By: /s/ Xxxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Executive Vice President Finance
and Legal
AGRIGENETICS, INC.
By: /s/ Xxxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President, Assistant
Secretary and Treasurer
DOWELANCO
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer
UNITED AGRISEEDS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
59
EXHIBIT A
PROMISSORY NOTE
$100,000 Dated ____________, 1996
Chicago, Illinois
FOR VALUE RECEIVED, the undersigned, Agrigenetics, Inc., a Delaware
corporation ("Agrigenetics"), hereby promises to pay to the order of DowElanco
("Parent"), an Indiana general partnership, by bank wire transfer of immediately
available funds to an account designated in writing by Parent, or at such other
place as the holder hereof may from time to time designate in writing the
principal sum of ONE HUNDRED THOUSAND DOLLARS ($100,000), due and payable in
full on December 31, 1998.
The undersigned further promises to pay interest on the principal
amount from the date hereof until maturity (whether by acceleration or
otherwise), at the rate per annum equal to [THE APPLICABLE FEDERAL RATE].
Interest shall be payable hereon in arrears on the last business day of each
March, June, September and December commencing with March 29, 1996 and with the
final payment of interest due and payable on December 31, 1998.
Interest shall be charged on the unpaid principal balance of this Note
on a daily basis for the actual number of days elapsed, computed on the basis of
a 360-day year.
This Note has been made and delivered at Chicago, Illinois. This Note
is made under and governed by the internal laws of the State of Illinois,
without regard to principles of conflicts of law.
This Note shall be binding upon Agrigenetics and its respective
successors and assigns; provided, however, that Agrigenetics may not assign its
rights hereunder or in connection herewith; and this Note shall inure to the
benefit of Parent, or the holder hereof, and its successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Note as of the date and year first above written, at Chicago, Illinois pursuant
to proper authority duly granted.
AGRIGENETICS, INC.
By: _______________________________
Name: _____________________________
v
Title: ____________________________
vi
EXHIBIT B
TECHNOLOGY AGREEMENT
This Technology Agreement, effective as of ________________, is among Mycogen
Corporation ("Mycogen"), a California corporation, Agrigenetics, Inc., a
Delaware corporation doing business as Mycogen Seeds ("MS"), and DowElanco, an
Indiana general partnership ("DowElanco").
Whereas, Mycogen, the parent company of MS, has acquired or developed technology
through Mycogen or Mycogen Affiliates to assorted biological tools which provide
the means by which particular genetic modifications may be made to plants;
Whereas, Mycogen and/or Mycogen Affiliates will continue to develop and acquire
tools which are useful in modifying plants such that the plants have desirable
commercial characteristics;
Whereas, DowElanco has been the parent of United AgriSeeds, Inc. ("UAS"), a
Delaware corporation involved in the seed business;
Whereas, as part of a series of transactions involving Mycogen and DowElanco,
UAS is being acquired by a Mycogen Affiliate and certain germplasm of UAS will
become available to Mycogen or a Mycogen Affiliate;
Whereas, apart from UAS, DowElanco has had, and is expected to continue to have,
a research program directed to the identification and development of genes and
tools which may have value when used to modify plants in a manner to enhance or
impart pesticidal properties to the plants;
Whereas, Mycogen desires to have access to new genes which DowElanco decides to
license and to new tools which are developed or acquired during the five year
period following the closing of the transactions between DowElanco and Mycogen;
Whereas, DowElanco desires to have access to the tools which Mycogen and Mycogen
Affiliates currently have and to new tools which are developed or acquired
during the five year period following the aforementioned closing which are
useful in modifying plants such that the plants have certain desirable
commercial characteristics, as well as to new genes which Mycogen decides to
license;
Now therefore, in consideration of the above, Mycogen, MS and DowElanco
(collectively referred to herein as the "Parties") agree as follows:
vii
Article 1 - Definitions
-----------------------
The following terms when the initial letter of each word is capitalized as set
forth in this Article 1, will have the following meanings whenever used in this
Agreement:
1.01 "Agricultural Input" means the introduction of genes to plants to impart
Pesticidal Properties such that the plant, when grown from seed, exhibits
favorable Pesticidal Properties beyond those that were exhibited prior to
the introduction of the genes.
1.02 "Agricultural Output" means the introduction of genes to plants and/or
the genetic manipulation of plants using tools to impart desirable
commercial characteristics, that otherwise would not have been there, to
the plant and/or to any part thereof, such that the plant, or plant part,
when grown and/or harvested has such desirable commercial characteristics
without further processing, or desirable products can be obtained from
the plant or plant part by processing, purification or otherwise,
including any products which are made by modifying any material obtained
from such plant or plant part; provided that, in any event, Agricultural
Output does not include commercial characteristics which are new
Pesticidal Properties imparted by the introduction of one or more genes.
1.03 "Closing" means the definition of Closing as set forth in the Exchange
and Purchase Agreement dated January 15, 1996 to which Mycogen and
DowElanco are parties.
1.04 "Confidential Information" means all proprietary information (including,
without limitation, information related to technical, business and
intellectual property matters), know-how, data, trade secrets, biological
materials and other tangible materials or samples owned or held by a
Party to this Agreement which is maintained as confidential.
1.05 "Development Period" means the period commencing on the date of Closing
and ending five (5) years thereafter.
1.06 "DowElanco Affiliate" means any entity other than DowElanco which
directly or indirectly, through one or more intermediaries, is (a) owned
or controlled by DowElanco or DowElanco B.V., or (b) owns or controls
DowElanco or DowElanco B.V., or (c) is under common ownership or control
with DowElanco or DowElanco B.V., where ownership or control is direct or
indirect ownership of at least fifty percent (50%) of the voting shares
entitled to vote for the directors of the entity in question, or having
management control of the entity in question.
1.07 "DowElanco Companies" means DowElanco and DowElanco Affiliates
collectively.
viii
1.08 "DowElanco Tools" means all plasmids, constructions, markers, enhancers,
introns, promoters, genetic sequences to assist in transcription,
translation or transformation, and similar tools, excluding genes and
germplasm, useful to Mycogen in practicing the license granted to Mycogen
under this Agreement; provided that, in any event, DowElanco Tools do not
include any tools (a) which are developed or acquired outside of the
Development Period, or (b) which cannot be provided to Mycogen because of
obligations to another party.
1.09 "Effective Date" means the date entered on the first line of this
Agreement.
1.10 "Identity Preserved Oil" means oil produced from plant crops that are
grown from genetically transformed planting seeds, when said seeds are
planted, and when the resulting plants are grown and processed, the oil
produced consistently has one or more characteristics different from or
greater in degree than the characteristics of other similar oils produced
from other oil seeds without such specific genetic transformation, where
"genetically transformed" means using tools to modify the genetic
character of the plant.
1.11 "Mycogen Affiliate" means any entity which directly or indirectly,
through one or more intermediaries, is owned or controlled by Mycogen,
where ownership or control is direct or indirect ownership of at least
fifty percent (50%) of the voting shares entitled to vote for the
directors of the entity in question, or having management control of the
entity in question; this definition includes MS.
1.12 "Mycogen Companies" means Mycogen and Mycogen Affiliates collectively.
1.13 "Mycogen Tools" means all plasmids, constructions, markers, enhancers,
introns, promoters, genetic sequences to assist in transcription,
translation or transformation, and similar tools, excluding genes and
germplasm, useful to DowElanco Companies in practicing the license
granted to DowElanco Companies under this Agreement; provided that, in
any event, Mycogen Tools do not include any tools (a) which are developed
or acquired after the Development Period, or (b) which cannot be provided
to DowElanco Companies because of obligations to another party.
1.14 "Party" means a party to this Agreement.
1.15 "Pesticidal Properties" means that a plant or plant part, when grown from
seed or vegetatively propagated, exhibits resistance to insects,
nematodes, disease or herbicides.
1.16 "Third Party" means any entity which is not a Party, a Mycogen Affiliate
or a DowElanco Affiliate.
ix
Article 2 - Grant of Rights to Mycogen
--------------------------------------
2.01 DowElanco hereby grants to Mycogen, an irrevocable, non-exclusive, non-
sublicensable (except to Mycogen Affiliates without the right to
sublicense further), non-transferable, royalty-free, world-wide license
to DowElanco Tools that DowElanco Companies (except for The Dow Chemical
Company), during the Development Period, discover or acquire (where
transferable) for Mycogen Companies to develop and commercialize
Agricultural Inputs that are delivered via the plant.
2.02 (a) Except to the extent restricted under current and future agreements
with Third Parties, DowElanco hereby grants to Mycogen the right to
obtain a non-exclusive, non-sublicensable (except to Mycogen Affiliates
without the right to sublicense further), non-transferable, royalty-
bearing, world-wide license to any genes that DowElanco Companies (except
for The Dow Chemical Company) discover during the Development Period in
research initiatives commencing on or after the date of Closing or
acquire (where transferable) during the Development Period for Mycogen
Companies to develop and commercialize Agricultural Inputs that are
delivered via the plant; provided that, this right will only apply to
those situations in which DowElanco elects to license the gene and
decides to license the gene non-exclusively, and only to the extent that
DowElanco so elects. If DowElanco grants a non-exclusive license to a
Third Party on terms more favorable than Mycogen's terms for licensing
the same gene when all factors are taken into consideration (including
the scope of the license and any reciprocal licensing of other
technologies to DowElanco), Mycogen, at its option, will have the right
to have its license modified so that the terms for Mycogen's license are
the same as the Third Party's terms.
(b) If DowElanco decides to license a gene that DowElanco Companies
(except for The Dow Chemical Company) discover during the Development
Period in research initiatives commencing on or after the date of Closing
or acquire (where transferable) during the Development Period and is
interested in licensing the gene to Mycogen on an exclusive or co-
exclusive basis, for all uses or for any particular field of use,
DowElanco will contact Mycogen and provide the terms and conditions on
which DowElanco is willing to license the gene. If Mycogen is interested
in taking a license, DowElanco and Mycogen will enter into good faith
negotiations to attempt to finalize the exclusive or co-exclusive
license. This provision does not restrict DowElanco, in any way, from
contacting and/or negotiating an exclusive or co-exclusive license with
any Third Party.
2.03 As used in this Article 2, (a) the term "except to Mycogen Affiliates
without the right to sublicense further" means that Mycogen Affiliates
can be sublicensed but
x
that sublicensed Mycogen Affiliates do not have the right to grant
further sublicenses, and (b) the term "where transferable" means those
instances where DowElanco or a DowElanco Affiliate has the right to
license or sublicense others, except with respect to anything obtained
from The Dow Chemical Company.
2.04 If DowElanco Tools are acquired from a Third Party during the Development
Period, DowElanco will use reasonable efforts to ensure that DowElanco
has the right to sublicense such acquired DowElanco Tools to Mycogen.
Article 3 - Grant of Rights to DowElanco
----------------------------------------
3.01 (a) Mycogen and MS hereby grant to DowElanco Companies, an irrevocable,
non-exclusive, sublicensable (to the extent set forth below), non-
transferable, royalty-free, world-wide license to Mycogen Tools that
Mycogen Companies own or possess prior to Closing, or discover or acquire
(where transferable) during the Development Period, for DowElanco
Companies to conduct all activities on DowElanco Companies' projects or
DowElanco sponsored projects which DowElanco believes appropriate to
participate in, or develop or commercialize products in, the field of
Agricultural Outputs and Agricultural Inputs.
(b) The license granted in this section 3.01 is sublicensable by
DowElanco and/or DowElanco Affiliates to the extent necessary for
DowElanco Companies to work with any Third Parties in the field of
Agricultural Outputs, and for Agricultural Inputs to the following
extent. DowElanco shall only have the right to sublicense Third Parties
for Agricultural Input applications when the application involves genes
discovered or acquired by DowElanco Companies. In all cases, DowElanco
will only sublicense the Mycogen Tools under confidentiality and limited
use restrictions prohibiting the Third Party from disclosing the Mycogen
Tools to others, or using the Mycogen Tools other than in connection with
the specific gene discovered or acquired by DowElanco Companies. In any
event, DowElanco will notify Mycogen whenever DowElanco is considering
sublicensing a Third Party for an Agricultural Input application and will
confer with Mycogen prior to pursuing such opportunity.
3.02 (a) Except to the extent restricted under current and future agreements
with Third Parties, Mycogen and MS hereby grant to DowElanco Companies
the right to obtain a non-exclusive, sublicensable (to the extent set
forth below), non-transferable, royalty-bearing, world-wide license to
any genes that Mycogen Companies own or possess prior to Closing, or
discover or acquire (where transferable) during the Development Period,
for DowElanco Companies to participate in, or develop or commercialize
products in, the field of Agricultural Outputs; provided that, this right
will only apply to those situations in which
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Mycogen or MS elects to license the gene and decides to license the gene
non-exclusively, and only to the extent that Mycogen or MS so elects. If
Mycogen or MS grants a non-exclusive license to a Third Party on terms
more favorable than DowElanco's terms for licensing the same gene when
all factors are taken into consideration (including the scope of the
license and any reciprocal licensing of other technologies to Mycogen or
MS), DowElanco, at its option, will have the right to have its license
modified so that the terms for DowElanco's license are the same as the
Third Party's terms. If such licenses are granted to DowElanco, such
licenses will be sublicensable by DowElanco Companies to the extent
necessary for DowElanco Companies to work with any Third Parties in the
field of Agricultural Outputs; provided that, in all cases, DowElanco
will only sublicense the Mycogen genes under confidentiality and limited
use restrictions prohibiting the Third Party from disclosing the Mycogen
genes to others, or using the Mycogen genes other than in connection with
the specific DowElanco sponsored Agricultural Output project with such
Third Party. In any event, DowElanco will notify Mycogen whenever
DowElanco is considering sublicensing a Third Party for an Agricultural
Output application involving a Mycogen gene and will confer with Mycogen
prior to pursuing such opportunity.
(b) If Mycogen or MS decides to license a gene and is interested in
licensing the gene to DowElanco on an exclusive or co-exclusive basis,
for all uses or for any particular field of use, Mycogen or MS will
contact DowElanco and provide the terms and conditions on which Mycogen
or MS is willing to license the gene. If DowElanco is interested in
taking a license, DowElanco and Mycogen (or MS) will enter into good
faith negotiations to attempt to finalize the exclusive or co-exclusive
license. This provision does not restrict Mycogen or MS, in any way,
from contacting and/or negotiating an exclusive or co-exclusive license
with any Third Party.
3.03 As used in this Article 3, the term "where transferable" means those
instances where Mycogen or a Mycogen Affiliate has the right to license
or sublicense others.
3.04 If Mycogen Tools are acquired from a Third Party during the Development
Period, Mycogen and MS will use reasonable efforts to ensure that Mycogen
or a Mycogen Affiliate has the right to sublicense such acquired Mycogen
Tools to DowElanco Companies.
3.05 Mycogen will have a right to produce the seed necessary to deliver the
technology licensed pursuant to sections 3.01 and 3.02 above, so long as
Mycogen is able to meet competitive goals for production quality,
quantity and price. If Mycogen does not produce such seed and Mycogen's
germplasm is used in the seed commercialized, Mycogen will be entitled to
a three percent (3%) royalty on the
xii
net sales of the seeds containing such germplasm to the extent produced
by a Third Party for the intended application. The terms and conditions
under which Mycogen would produce the aforementioned seed will be the
subject of separate agreements between Mycogen (or a Mycogen Affiliate)
and DowElanco.
3.06 For a period of thirty-six (36) months after Closing, neither Mycogen nor
MS will grant to any Third Party any commercial license or other right or
permission to use Mycogen Tools for Agricultural Output applications
involving Identity Preserved Oil opportunities, except for phaseolin,
without DowElanco's prior consent. For the aforementioned thirty-six
(36) month period and thereafter, Mycogen will notify DowElanco of any
Agricultural Output opportunities, including phaseolin, and confer with
DowElanco about such opportunities. If new technologies or tools are
identified which make it reasonable to consider modifying or imposing a
requirement to obtain DowElanco's prior consent, Mycogen and DowElanco
will enter into good faith negotiations regarding such prior consent
requirements. In any event, DowElanco will indicate whether DowElanco
consents to any Agricultural Output opportunities requiring DowElanco's
prior consent within ten (10) working days of DowElanco being contacted
about the opportunity. DowElanco will not unreasonably withhold its
consent for Mycogen or MS to pursue Agricultural Output opportunities
with Third Parties.
3.07 DowElanco will consider contract research opportunities with Mycogen or a
Mycogen Affiliate. Contract research opportunities may include, but are
not limited to, breeding programs in corn, canola, soybeans and rice.
The terms and conditions of such research and development arrangements
will be the subject of separate agreements between Mycogen (or a Mycogen
Affiliate) and DowElanco.
Article 4 - Technical Consultation
----------------------------------
4.01 It is expected that Mycogen Companies may desire or require technical
consultation in order to implement DowElanco Tools, and that DowElanco
Companies may desire or require technical consultation in order to
implement Mycogen Tools. Each Party will provide reasonable assistance
to the other Parties, via telephone or other means of communication, to
address technical questions regarding the implementation of the
respective Tools.
4.02 The Parties will establish a Technology Assessment Committee, to meet
semi-annually, or as otherwise agreed by the Parties, to facilitate
technical interactions.
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Article 5 - Reports
-------------------
5.01 Mycogen, within sixty (60) days after Closing, will provide a written
description of the Mycogen Tools subject to this Agreement at that time.
5.02 DowElanco and Mycogen will provide to each other, in writing, at least
fifteen (15) days prior to the meeting of the Technical Assessment
Committee, a semi-annual highlight report providing an overview of the
Tools developed in the interval since the last report. If Mycogen or
DowElanco identifies an item on the highlight report that appears of
interest to the recipient, the recipient may request additional
information about the item of interest. A more detailed description of
the item of interest will be provided to the requester within thirty (30)
days from the date of the request.
Article 6 - Export of Technology
--------------------------------
6.01 The Parties agree that they will not disclose, export or re-export any
technology, or products made using technology provided herein, in
violation of the United States Department of Commerce Export
Administration Regulations or in violation of any other law or regulation
prohibiting the disclosure, export or re-export of the same.
Article 7 - Intellectual Property
---------------------------------
7.01 Unless otherwise specified in an agreement between DowElanco and Mycogen
(or MS), inventions, discoveries and improvements which are made and
information, data, technology, know-how and other items generated will be
owned by the party or parties making or generating the same.
7.02 No license or right is granted by implication or otherwise with respect
to any patent application, patent or other intellectual property, except
as specifically set forth in this Agreement.
Article 8 - Confidentiality
---------------------------
8.01 The Parties will exchange Confidential Information to the extent that the
disclosing Party, at its sole discretion, determines that it is needed by
the receiving Party. For a period of ten (10) years after its receipt
hereunder, each receiving Party will keep secret and confidential and
will not disclose to any Third Party any Confidential Information
received from another Party hereunder, and will use such
xiv
Confidential Information only for the purposes permitted under this
Agreement; provided, however, that the receiving Party may voluntarily
disclose the portion of the disclosing Party's Confidential Information
relevant in any given situation to any governmental agency concerned with
public health or safety if the agency agrees to treat the disclosed
portion of the Confidential Information as proprietary and confidential
and the Party originally providing the information is informed in advance
of the proposed disclosure. If the receiving Party is compelled by law
to disclose any portion of the disclosing Party's Confidential
Information without a guarantee of confidentiality, the receiving Party
will notify the disclosing Party and consent to the disclosing Party's
intervention to attempt to preserve the confidentiality of the disclosing
Party's Confidential Information. Confidential Information disclosed by,
or received by, an Affiliate of a Party shall be treated as if the
disclosure was made by, or received by, a Party to this Agreement.
8.02 The obligations of confidence, non-disclosure and limited use set forth
in section 8.01 above shall not apply to any Confidential Information
which (a) was in the recipient's possession prior to receipt from another
Party or an Affiliate thereof; or (b) which is, or through no fault of
the recipient or its employees becomes, available to the general public;
or (c) which is received by the recipient, without binder of secrecy
therefor, from a Third Party having a legal right to disclose the same;
or (d) which is released from confidential status in writing by the Party
originally providing it.
8.03 Mycogen and DowElanco will ensure that each of their respective
Affiliates (if they are involved with the activities contemplated
hereunder) comply with the confidentiality obligations of this Agreement,
and that such Affiliates comply with any other obligations applying to
them hereunder.
Article 9 - Force Majeure
-------------------------
9.01 The Parties will not be responsible to the other Parties hereto for any
failure or delay in performing any of their obligations under this
Agreement, or for non-performance hereunder, if such delay or non-
performance is beyond the reasonable control of the Party affected;
provided that, the Party affected has used reasonable efforts to avoid
such occurrence. Any failure or delay in performance will only be
excused for such time that the failure to perform is beyond the
reasonable control of the affected Party.
Article 10 - Notices
--------------------
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10.01 Any notices or other communications required to be given under this
Agreement will be deemed to have been sufficiently given if mailed by
certified or registered mail addressed to the persons and addresses given
below, or to such other address as may be designated by written notice to
the other Parties.
(a) to DowElanco:
DowElanco
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Vice President, Research and Development
(b) to Mycogen:
Mycogen Corporation
0000 Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000-0000
Attention: Chief Technical Officer
(c) to Mycogen Seeds:
Mycogen Seeds
0000 Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: President
Article 11 - Assignment
-----------------------
11.01 This Agreement, and any of the rights or obligations hereof, will not be
assigned to any other party without the prior written consent of the
other Parties, except that a Party may assign its rights and obligations
under this Agreement to any party succeeding to substantially all of the
assets and relevant business interests of the assigning Party; provided
that, the assignee agrees to be bound by the rights and obligations of
the assigning Party.
xvi
Article 12 - Warranties
-----------------------
12.01 EXCEPT AS EXPLICITLY SET FORTH HEREIN, EACH PARTY EXPRESSLY DISCLAIMS ANY
AND ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION,
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF
THE TOOLS LICENSED HEREUNDER OR THE PRODUCTS MADE USING SUCH TOOLS.
12.02 Nothing in this Agreement will be construed as:
(a) a warranty or representation by DowElanco or Mycogen, or their
respective Affiliates, that anything made, used, sold or otherwise
disposed of under the terms of this Agreement is or will be free from
infringement of patents of Third Parties;
(b) a requirement that DowElanco or Mycogen, or their respective
Affiliates, file any patent application, secure any patent, or maintain
any patent in force;
(c) an obligation on DowElanco or Mycogen, or their respective
Affiliates, to bring or prosecute actions or suits against Third
Parties for infringement.
12.03 Each Party warrants that it is entitled to grant the rights granted
herein.
Article 13 - Indemnification
----------------------------
13.01 Except with respect to any claims relating to the infringement of any
intellectual property rights of a Third Party, Mycogen will indemnify and
hold harmless DowElanco, DowElanco Affiliates, and their respective
partners, directors, officers, employees and agents from and against any
and all claims, demands, causes of action or damages (including
reasonable attorney fees) arising from or in connection with Mycogen's
use of DowElanco Tools or the use or sale of any products developed using
DowElanco Tools by or for Mycogen Companies.
13.02 Except with respect to any claims relating to the infringement of any
intellectual property rights of a Third Party, DowElanco will indemnify
and hold harmless Mycogen, Mycogen Affiliates, and their respective
partners, directors, officers, employees and agents from and against any
and all claims, demands, causes of action or damages (including
reasonable attorney fees) arising from or in connection with DowElanco's
use of Mycogen Tools or the use or sale of any products developed using
Mycogen Tools by or for DowElanco Companies.
13.03 A person or entity claiming indemnification under this Article 13 will
give the indemnifying Party prompt notice of any such claim for which
indemnification is requested. The indemnifying Party will have the right,
but not the obligation, to assume the defense of any such claim at any
time. In such event, the indemnified
xvii
person or entity may participate in the action, at its expense, with
counsel of its own choosing reasonably acceptable to the indemnifying
Party. In no event will the indemnifying Party be liable for any
settlement without its express written consent, which consent will not be
unreasonably withheld.
Article 14 - Termination
------------------------
14.01 In the event of any material breach of this Agreement, a non-breaching
Party may, on ninety (90) days' advance written notice to the breaching
Party, terminate this Agreement. However, if such breach is corrected
within the ninety (90) day period, and there are no unreimbursed damages
resulting from the breach, this Agreement will continue in force.
14.02 If a Party (a) becomes insolvent or unable to pay its debts as they
mature, or (b) makes an assignment for the benefit of creditors, or (c)
permits or procures the appointment of a receiver for its assets, or (d)
becomes the subject of any bankruptcy, insolvency or similar proceeding,
then the other Parties may at any time thereafter on written notice
effective forthwith, terminate this Agreement.
14.03 Termination of this Agreement will not affect the Parties' obligations
under Article 8. In the event of a termination of this Agreement because
of a breach, the rights and licenses of the breaching party will
terminate; however, the licenses and rights granted to the nonbreaching
Parties will continue in perpetuity.
Article 15 - Miscellaneous
--------------------------
15.01 This Agreement supersedes all previous oral and written agreements
between the Parties and constitutes the entire understanding between the
Parties with respect to the subject matter of this Agreement. No
amendment, modification, or alteration of any terms or provisions of this
Agreement will be valid unless in writing and signed by the Parties.
15.02 If any one or more of the provisions of this Agreement should for any
reason be held by a Court of competent jurisdiction to be invalid,
illegal or unenforceable, the remainder of this Agreement will
nevertheless remain in full force and effect unless such provision or
provisions go to the essence and substance of this Agreement.
15.03 It is agreed that any failure by a Party, at any time, to enforce or
require the strict keeping and performance by the other Parties of any of
the terms and conditions of this Agreement will not constitute a waiver
of such terms and conditions.
15.04 The headings of Articles used in this Agreement are for reference
purposes only and will not be considered as part of this Agreement for
purposes of interpretation.
xviii
15.05 In case of any dispute arising out of this Agreement, the Courts and Laws
of the domicile of the Party sued will be competent, however, the Parties
agree so far as possible to use every reasonable effort to settle any
dispute or disagreement between them relative to this Agreement by
amicable means, and if necessary, will utilize the assistance of an
independent party acceptable to both sides and will not resort to legal
action unless and until the Parties have in good faith attempted to
settle such dispute or disagreement in the foregoing manner.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed in
triplicate by their duly authorized representatives.
AGREED TO AND ACCEPTED:
Mycogen Corporation Agrigenetics, Inc.
DBA Mycogen Seeds
By __________________________ By __________________________
Name ________________________ Name ________________________
(type or print) (type or print)
Title _______________________ Title _______________________
DowElanco
By __________________________
Name_________________________
(type or print)
Title _______________________
[IN TRIPLICATE]
xix
