<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
DNAP HOLDING CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
DNAP HOLDING CORPORATION
6701 San Pablo Avenue
Oakland, California 94608
________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 1997
To the Stockholders of
DNAP HOLDING CORPORATION:
You are cordially invited to attend the annual meeting of the stockholders
of DNAP Holding Corporation, a Delaware corporation (the "Company"), to be held
at 9:00 a.m., local time, on Thursday, May 22, 1997, at the Holiday Inn, 1800
Powell Street, Emeryville, California 94608 (the "Annual Meeting") for the
following purposes:
1. To elect the Board of Directors for the ensuing year; and
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record at the close of business on March 31, 1997 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
A record of the Company's activities during 1996 and financial statements
for the fiscal year ended December 31, 1996 are contained in the accompanying
1996 Annual Report. The Annual Report does not form any part of the material for
solicitation of proxies.
All stockholders are cordially invited to attend the meeting. STOCKHOLDERS
ARE URGED, WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING, TO COMPLETE, DATE AND
SIGN THE ACCOMPANYING PROXY AND TO RETURN IT PROMPTLY IN THE POSTAGE-PAID RETURN
ENVELOPE PROVIDED. If a stockholder who has returned a proxy attends the meeting
in person, such stockholder may revoke the proxy and vote in person on all
matters submitted at the meeting.
By Order of the Board of Directors
/s/ JOE A. RUDBERG
----------------------------------
Joe A. Rudberg
SECRETARY
April 25, 1997
<PAGE>
DNAP HOLDING CORPORATION
6701 San Pablo Avenue
Oakland, California 94608
________________________
PROXY STATEMENT
For Annual Meeting of Stockholders
To Be Held on May 22, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors of DNAP Holding Corporation,
a Delaware corporation (the "Company"), for use at the annual meeting of
stockholders of the Company to be held on May 22, 1997, and at any adjournment
thereof.
Shares represented by a validly executed proxy will be voted at the meeting
in accordance with the directions given. If no direction is indicated, the
shares will be voted for the election of the nominees for director named under
the caption "Nominees for Director" in this Proxy Statement. Any stockholder of
the Company returning a proxy has the right to revoke the proxy at any time
before it is voted by communicating such revocation in writing to Carlos
Herrera, Chief Executive Officer, DNAP Holding Corporation, 6701 San Pablo
Avenue, Oakland, California 94608, or by executing and delivering a proxy
bearing a later date. No revocation by written notice or by delivery of another
proxy shall be effective until such notice of revocation or other proxy, as the
case may be, has been received by the Company at or prior to the meeting.
The approximate date on which this proxy statement and the accompanying
proxy were first sent to stockholders of the Company is April 25, 1997.
VOTING SECURITIES
Only holders of record of common stock of the Company, par value $.01 per
share (the "Common Stock"), at the close of business on March 31, 1997, the
record date for the meeting, are entitled to notice of and to vote at the
meeting. On the record date for the meeting, there were issued and outstanding
18,370,640 shares of Common Stock. A majority of the shares of Common Stock
entitled to vote, present in person or represented by proxy, is necessary to
constitute a quorum. Each share of Common Stock is entitled to one vote.
REQUIRED AFFIRMATIVE VOTE AND VOTING PROCEDURES
With respect to the election of directors, votes may be cast in favor of or
withheld from each nominee. The nominees who receive a plurality of the votes
cast by stockholders present or represented by proxy at the annual meeting and
entitled to vote on the election of directors will be elected as directors of
the Company. Consequently, any abstentions, broker non-votes or other limited
proxies will have no effect on the election of directors, provided a quorum is
present at the meeting.
The Company will appoint one inspector of election to act at the meeting
and to make a written report thereof. The inspector will ascertain the number
of shares outstanding and the voting power of each, determine the shares
represented at the meeting and the validity of proxies and ballots, count all
votes and ballots, and perform certain other duties as required by law.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth as of March 31, 1997 information with
respect to the only person who was known to the Company to be the beneficial
owner of more than five percent of the outstanding shares of Common Stock.
NAME AND ADDRESS NUMBER OF SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
- ------------------- ------------------ --------
Bionova International, Inc. (1) 12,859,448 70%
6701 San Pablo Avenue
Oakland, California 94608
- -------------------
(1) Bionova International, Inc. is a wholly-owned subsidiary of Bionova, S.A.
de C.V., a corporation organized under the laws of the United Mexican States
("Bionova Mexico"). Bionova Mexico is a wholly-owned subsidiary of Empresas La
Moderna, S.A. de C.V., a corporation organized under the laws of the United
Mexican States ("ELM").
ELECTION OF DIRECTORS
Nine directors, constituting the entire Board of Directors, are to be
elected at the meeting to serve until the next annual meeting of stockholders
and until their successors have been elected and qualified. The composition of
the Board of Directors is governed in part by the terms of a Governance
Agreement dated September 26, 1996 between ELM and the Company (the "Governance
Agreement"), which was entered into in connection with the merger on that date
of DNA Plant Technology Corporation ("DNAP") with a wholly-owned subsidiary of
the Company (the "Merger"). Pursuant to the terms of the Governance Agreement,
the Board of Directors consists of eleven members, including one independent
director designated by ELM and three independent directors who were designated
by DNAP prior to the Merger (the "DNAP Independent Directors"). At such time as
one of the DNAP Independent Directors ceases to be a director, the Governance
Agreement calls for the total number of directors to be reduced to nine and the
number of DNAP Independent Directors to be reduced to two. Douglas Luke, who is
one of the DNAP Independent Directors, has indicated that he does not wish to
stand for reelection to the Board. Accordingly, the number of directors is being
reduced to nine. Among the nominees for director listed below, the DNAP
Independent Directors are Evelyn Berezin and Dr. Gerald Laubach. The independent
director designated by ELM is Dr. Nam-Hai Chua. The provisions of the Governance
Agreement relating to independent directors remain in effect until the day prior
to the 1999 annual meeting of stockholders of the Company. Additionally, the
Governance Agreement requires that for as long as Robert Serenbetz remains an
employee of the Company or any of its affiliates, ELM shall cause for him to
continue to be elected as a director of the Company.
Certain background information regarding the nine nominees to the Board of
Directors of the Company is set forth below. Each of the nominees has consented
to serve as a director if elected. If any nominee should become unavailable for
election for any reason, the persons designated as proxies will have full
discretion to cast votes for another person designated by the Board. All of the
nominees have served as directors of the Company since 1996.
NOMINEES FOR DIRECTOR
EVELYN BEREZIN - Ms. Berezin has been a venture capital consultant since 1987
and was President of Greenhouse Management Corporation, the general partner
of a venture capital firm, from 1981 until 1987. Ms. Berezin is a director of
Standard Microsystems Corporation.
DR. NAM-HAI CHUA - Dr. Chua has served since 1988 as the Andrew W. Mellon
Professor and Head of the Laboratory of Plant Molecular Biology at the
Rockefeller University in New York City. He serves on numerous
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<PAGE>
advisory and editorial boards in the United States and other countries relating
to plant biotechnology. He is a director of Delta and Pine Land Company.
DR. PETER DAVIS - Dr. Davis is a member of the Executive Committee of Pulsar
Internacional, S.A. de C.V., an affiliate of ELM. Dr. Davis was previously a
professor at the Wharton School, where he also served as Director of the Wharton
Applied Research Center and Director of Executive Education.
CARLOS HERRERA - Mr. Herrera has served as the Chief Executive Officer of the
Company since 1996. Mr. Herrera has served as the Managing Director (Chief
Executive Officer) of Bionova Mexico since 1993. Prior to that time, he
served as the Director of Operations of Cigarrera La Moderna, S.A. de C.V.,
the leading cigarette company in Mexico and a wholly-owned subsidiary of ELM.
Mr. Herrera is an alternate director of ELM.
FRANCISCO GONZALEZ - Mr. Gonzalez is the Chief Executive Officer of Seminis,
Inc., a majority-owned subsidiary of ELM. From 1995 to 1996, he served as the
Chief Executive Officer of ELM's agrobiotechnology division, and prior to that
time served as the Chief Executive Officer of ELM's cigarette division. Mr.
Gonzalez is a director of ELM.
BERNARDO JIMENEZ - Mr. Jimenez is the Chief Operating Officer of the
agrobiotechnology division of ELM. From 1993 to 1996, he served as the head
of the Industrial Banking Division at the Vector Group, a financial services
company in Mexico which is affiliated with ELM ("Vector Group"), the Vice
President of New Business Development for Pulsar Internacional, S.A. de C.V.,
and the Chief Financial Officer of ELM. From 1975 to 1993, he held various
positions in finance and management at Grupo Industrial Alfa, S.A. de C.V.
ERIK C. JURGENSEN - Mr. Jurgensen has been the Director of Planning and
Corporate Development at Pulsar Internacional, S.A. de C.V. since 1994. From
1992 to 1994, Mr. Jurgensen was the Chief Executive Officer of Vector Group.
DR. GERALD D. LAUBACH - Dr. Laubach was the President of Pfizer, Inc., a
pharmaceutical company, from 1972 to 1991. He served as a director of Cigna
Corp. and Millipore Corp. until 1996.
ROBERT SERENBETZ - Mr. Serenbetz has been the Chief Operating Officer of the
Company since 1996 and the President of DNAP since 1991. Mr. Serenbetz was
Chairman of DNAP from 1994 to 1996. From 1989 to 1991, he was Group President
of the American Chicle Division of Warner Lambert Company, a manufacturer of
pharmaceutical and consumer products.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors held three meetings in 1996. Each director attended
every meeting of the Board except that Messrs. Laubach and Rodriguez were absent
from the September 26th Board meeting, Messrs. Jimenez, Gonzalez and Luke were
absent from the November 21st Board meeting, and Messrs. Gonzalez, Luke and
Rodriguez were absent from the December 20th Board meeting.
COMMITTEES OF THE BOARD
The Board has an Audit Committee and a Compensation Committee. The Board
does not have a Nominating Committee. The current members and the primary
functions of the Audit and Compensation Committees are as follows:
AUDIT COMMITTEE - Dr. Gerald D. Laubach (Chairman), Erik Jurgensen and
Dr. Nam Hai-Chua. The primary responsibilities of the Audit Committee are
(i) to recommend the particular persons or firms to be employed by the
Company as its independent auditors, (ii) to review with the Company's
independent auditors the scope of the audit procedures to be applied in
conducting the annual audit, the results of the annual audit and the
accompanying management letter, if any, (iii) to consult with the Company's
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independent auditors (periodically, as appropriate, and out
of the presence of management) with regards to the adequacy
of internal controls and accounting practices and, if need
be, to consult also with the Company's internal auditors
and (iv) to carry out any other duties delegated to the
Audit Committee by the Board from time to time. The Audit
Committee did not meet during 1996.
COMPENSATION COMMITTEE - Erik Jurgensen (Chairman), Evelyn
Berezin, Dr. Nam-Hai Chua and Douglas S. Luke. The primary
responsibilities of the Compensation Committee are (i) to
administer the Company's stock option and stock incentive
plans, (ii) to recommend to the Board matters pertaining to
employment agreements, salaries and bonuses for the
Company's executive officers and contributions to any of the
Company's or its subsidiaries' 401(k) Investment Plans and
(iii) to carry out any other duties delegated to the
Compensation Committee by the Board from time to time. The
Compensation Committee did not meet during 1996.
COMPENSATION OF DIRECTORS
Directors who are not officers of the Company or any of its
affiliates receive an annual retainer of $6,000, a fee of $1,000
for each Board meeting attended and a fee of $500 for each
committee or telephone meeting in which the director
participates. The Company also reimburses directors for travel,
lodging and related expenses they incur in attending Board and
committee meetings.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The table below sets forth as of December 31, 1996, the
shares of Common Stock beneficially owned by each director, each
named executive officer listed in the Summary Compensation Table
included elsewhere in this Proxy Statement and by all directors
and executive officers as a group.
<TABLE>
AMOUNT AND NATURE OF
COMPANY OR BENEFICIAL OWNERSHIP OF
OTHER OFFICES COMMON STOCK AS OF PERCENT
NAME AGE HELD DECEMBER 31, 1996 OF CLASS
---- --- ------------- ------------------ --------
<S> <C> <C> <C> <C>
Bernardo Jimenez 43 Chairman of the Board 0 (3)
and Director
Carlos Herrera 56 Chief Executive Officer 0 (3)
and Director
Robert Serenbetz 52 Chief Operating Officer 2,347 (3)
and Director
Arthur H. Finnel 46 Treasurer and Chief 0 (3)
Financial Officer
Evelyn Berezin 71 Director 10,526 (1)(2) (3)
Dr. Nam-Hai Chua 52 Director 0 (3)
Dr. Peter Davis 52 Director 0 (3)
Francisco Gonzalez 65 Director 0 (3)
Erik C. Jurgensen 54 Director 0 (3)
Dr. Gerald D. Laubach 70 Director 4,700 (1) (3)
Douglas S. Luke 55 Director 4,900 (1) (3)
4
<PAGE>
AMOUNT AND NATURE OF
COMPANY OR BENEFICIAL OWNERSHIP OF
OTHER OFFICES COMMON STOCK AS OF PERCENT
NAME AGE HELD DECEMBER 31, 1996 OF CLASS
---- --- ------------- ------------------ --------
Alejandro Rodriguez 45 Director 0 (3)
Raul Batiz E. 72 President of International 0 (3)
Produce Holding Company
Dr. John R. Bedbrook 47 Executive Vice President 4,798 (4) (3)
and Director of Science
of DNAP
All directors and
executive officers of
the Company as a group
(consisting of 17 persons) 47,866 (5) (3)
</TABLE>
_____________
(1) Includes currently exercisable options to purchase shares of
Common Stock as follows: Ms. Berezin-4,900 shares; Dr.
Laubach-4,700 shares; Mr. Luke-4,900 shares.
(2) Includes 5,626 shares of Common Stock owned jointly by Ms.
Berezin and her husband.
(3) Represents less than 1% of Common Stock outstanding on
December 31, 1996.
(4) Includes currently exercisable options to purchase 2,220
shares of Common Stock held by Dr. Bedbrook's wife, who is
an employee of DNAP, as to which shares Dr. Bedbrook
disclaims beneficial ownership. Does not include options to
purchase 600 shares of Common Stock held by Dr. Bedbrook's
wife which are not exercisable within 60 days of December
31, 1996.
(5) Gives effect to the above footnotes.
Except as noted in the footnotes above (i) none of such
shares is known by the Company to be shares with respect to which
such person has the right to acquire beneficial ownership and
(ii) the Company believes the beneficial holders listed above
have sole voting and investment power regarding the shares shown
as being beneficially owned by them.
EXECUTIVE COMPENSATION
The following table sets forth certain information with
respect to annual and long-term compensation paid or awarded to
the Company's chief executive officer and each of the other four
most highly-paid executive officers (together, the "Named
Executive Officers") for or with respect to the fiscal year ended
December 31, 1996, the Company's first year of operations. In
addition, information is provided with respect to the
compensation paid by DNAP to Mr. Serenbetz and Dr. Bedbrook for
or with respect to the fiscal years ended December 31, 1995 and
December 31, 1994.
5
<PAGE>
<TABLE>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS OTHER
------------------------------------------ --------------------------- ------------
RESTRICTED SECURITIES
NAME AND BASE OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) AWARDS ($) OPTIONS (#) COMPENSATION
- ------------------ ---- ---------- --------- ---------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Carlos Herrera, Chief 1996 169,932 (1) 54,122 27,357 (2) 0 0 0
Executive Officer of
the Company
Arthur H. Finnel, 1996 270,000 (3) 0 0 0 0 0
Treasurer and Chief
Financial Officer of
the Company
Robert Serenbetz, 1996 261,289 48,143 477 0 0 4,273 (4)
Chief Operating 1995 225,000 0 23,076 (5) 25,000 (6) 18,000 (7) 4,623 (4)
Officer of the 1994 225,000 0 242,071 (5) 0 25,000 (7) 500 (4)
Company and
President of DNAP
Raul Batiz E., 1996 408,468 0 0 0 0 327
President of
International
Produce Holding
Company
Dr. John R. Bedbrook, 1996 188,711 20,837 0 0 0 4,270 (4)
Executive Vice 1995 174,000 0 10,931 0 0 1,705 (4)
President and 1994 174,000 0 0 0 9,000 (7) 717 (4)
Director of Science
of DNAP
============================================================================================================================
(1) Mr. Herrera served as the Chief Executive Officer of the Company on a full-time basis from July 1, 1996. From January 12
through June 30, 1996, he performed services on behalf of the Company as well as certain other entities. Only the
portion of his compensation during that period related to services on behalf of the Company and its subsidiaries have
been included here.
(2) This amount includes travel-related expenses which are in lieu of cash and are part of the compensation package of the
Chief Executive Officer.
(3) This amount includes compensation paid to Mr. Finnel in the form of fees for consulting services. Mr. Finnel became a
full-time employee of the Company as of January 1, 1997.
(4) Represents contributions made by DNAP to its 401(k) Retirement and Savings Plan.
(5) DNAP paid certain expenses, including tax equalization on nondeductible reimbursements, for the relocation of
Mr. Serenbetz from New Jersey to California.
(6) Represents the value at date of grant of restricted stock awarded in lieu of cash for the 1995 base salary increase.
(7) After adjustment to reflect the conversion in connection with the Merger of every ten shares of common stock of DNAP
into one share of Common Stock of the Company.
</TABLE>
No stock options or stock appreciation rights were granted to or
exercised by any of the Named Executive Officers in 1996. At December 31,
1996, none of the Named Executive Officers held any stock options or stock
appreciation rights, except that the Company has agreed to grant stock
options to certain executive officers, as described below under the caption
"Agreements with Certain Executive Officers."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Erik C. Jurgensen, Evelyn
Berezin, Dr. Nam-Hai Chua and Douglas S. Luke. As mentioned above, Mr.
Jurgensen is the Director of Planning and Corporate Development at Pulsar
Internacional, S.A. de C.V., which is an affiliate of ELM, the indirect owner
of 70% of the issued and outstanding shares of Common Stock of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In accordance with the rules of the Securities and Exchange Commission
(the "Commission"), the following report of the Compensation Committee of the
Board of Directors and the information herein under "Performance
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Graph" shall not be deemed to be "soliciting material" or to be "filed" with
the Commission, and such information shall not be deemed to be incorporated
by reference into any statements or reports filed by the Company with the
Commission that do not specifically incorporate such information by
reference, notwithstanding the incorporation by reference of this Proxy
Statement into any such statements or reports.
The Compensation Committee of the Board of Directors of the Company is
responsible for reviewing and approving policies, practices and procedures
relating to executive compensation and the establishment of employee benefit
plans. As the Company was first formed in January, 1996, and several of the
executive officers entered the Company on September 26, 1996 upon completion
of the Merger, the pay policies and practices in 1996 were a result of the
policies and practices of the subsidiaries of the Company prior to these
subsidiaries becoming a part of the Company. Furthermore, the compensation of
the Chief Executive Officer and the Chief Financial Officer are a carry over
from positions and relationships they had with Bionova Mexico and Asesorias
Administrativas Moderna, S.A. de C.V., both of which are subsidiaries of ELM,
prior to assuming their current positions in the Company. The Chief Executive
Officer's bonus was determined based on a comparison of his performance
against Company and individual objectives in accordance with the pay policies
of Bionova Mexico. Over the next several years the Company expects to bring
all of these officers under a common set of pay policies, including the Chief
Executive Officer and Chief Financial Officer. Management of the Company is
currently developing these pay policies which will then be submitted to the
Compensation Committee of the Board of Directors for approval.
BY THE MEMBERS OF THE COMPENSATION COMMITTEE:
Erik C. Jurgensen (Chairman), Dr. Nam-Hai Chua, Evelyn Berezin and
Douglas S. Luke
PERFORMANCE GRAPH
The following graph reflects the total return, which assumes
reinvestment of dividends, of a $100 investment in the Company, the Standard
& Poor's 500 Stock Index, and a competitor group index on September 27, 1996,
the date on which the Company's Common Stock first traded on the Nasdaq
National Market.
[GRAPH]
- --------------------------------------------------------------------------------
09/27/96 10/31/96 11/29/96 12/31/96
- --------------------------------------------------------------------------------
DNAP Holding Corporation 100.00 76.79 78.57 50.00
Peer Group(1) 100.00 100.21 103.37 98.51
S&P 500 Index 100.00 102.76 110.53 108.34
- --------------------------------------------------------------------------------
- -------------------------
(1) The Peer Group is made up of the following securities: Calgene, Inc.,
Chiquita Brands International, Inc., Cyanotech Corporation, Dole Food
Company, Inc., Mycogen Corporation and Northland Cranberries. Total return
calculations were weighted according to each company's market
capitalization.
7
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
THE MERGER AGREEMENT AND RELATED AGREEMENTS
The Company acquired DNAP on September 26, 1996, pursuant to that
certain Agreement and Plan of Merger dated January 26, 1996, as amended (the
"Merger Agreement"), among ELM, Bionova Mexico, the Company, Bionova
Acquisition, Inc. and DNAP. From the date of the Merger, Bionova
International, Inc. has been the owner of 70% of the issued and outstanding
shares of the Company's Common Stock. As described above under the caption
"Security Ownership of Beneficial Owners," Bionova International, Inc. is a
wholly-owned subsidiary of Bionova Mexico, which is a wholly-owned subsidiary
of ELM.
Under the terms of the Merger Agreement, during the three-year period
immediately following the Merger, ELM agreed to provide when requested by the
Company a guarantee of the Company's indebtedness to a financial institution
under a loan or line of credit, provided that (i) ELM's maximum exposure
under such guarantee is limited to $20 million and (ii) the documents
evidencing such loan or line of credit provide that the aggregate amount
loaned to the Company thereunder will not exceed at any time the sum of (x)
80% of the accounts receivable of the Company and its consolidated
subsidiaries and (y) 50% of the inventories of the Company and its
consolidated subsidiaries and such loan is secured by such accounts
receivable and inventories. At December 31, 1996, ELM guaranteed
approximately $26.4 million of the Company's bank debt.
As provided in the Merger Agreement, ELM and DNAP entered into that
certain Long Term Funded Research Agreement dated September 26, 1996, which
provides that ELM, directly or through its affiliates, and DNAP will use
their best efforts to agree on research projects to be conducted by DNAP for
ELM or its affiliates which will result in payments to DNAP of $30 million
over a ten-year period, with minimum funding (subject to carryforwards) of $9
million in any three-year period. Unless otherwise agreed by the parties,
payments of at least $625,000 in respect of ELM's obligation to fund research
projects are to be paid to DNAP at the beginning of each calendar quarter
during the term of the Long Term Funded Research Agreement. During the fourth
quarter of 1996, Seminis Vegetable Seeds, Inc., a majority-owned subsidiary
of ELM ("Seminis"), commenced a limited amount of work under this agreement
and paid DNAP $625,000.
Also as provided in the Merger Agreement, ELM and the Company entered
into the Governance Agreement on September 26, 1996. In addition to the
provisions described above under the caption "Election of Directors," the
Governance Agreement provides that ELM (together with its affiliates) may,
subject to applicable law, acquire or dispose of shares of Common Stock so
long as their aggregate beneficial ownership of the Common Stock does not
fall below 51% or exceed 80.1%, subject to certain conditions and exceptions.
OTHER TRANSACTIONS WITH ELM AND ITS AFFILIATES
On July 1, 1996, the Company and Bionova Mexico entered into an
Administrative Services Agreement. This agreement provides that Bionova
Mexico will render certain administrative and clerical services to the
Company and its subsidiaries in return for payment equivalent to the
compensation, benefits and other overhead attributable to the employees of
Bionova Mexico performing these services, all of which will be performed in
Mexico. The initial term of the agreement was extended to December 31, 1996
and will continue thereafter for successive one-year terms unless either the
Company or Bionova Mexico elects to terminate the agreement. In 1996, the
amount billed by Bionova Mexico under this agreement was $616,000.
Prior to the date of the Administrative Services Agreement, Bionova
Mexico rendered certain administrative and clerical services to the Company's
subsidiaries for which certain of the Company's subsidiaries were indebted to
Bionova Mexico in the amount of $1.7 million at December 31, 1996.
The Company contracts for insurance and factoring services with a
company that is an affiliate of ELM. During 1996, the Company incurred
insurance expense of $591,000 to this company. At December 31, 1996, amounts
due under factoring arrangements were $1.2 million, and interest expense
incurred in connection with such factoring arrangements was $123,000 in 1996.
8
<PAGE>
In January 1996, the Company granted to a company affiliated with ELM
the option to obtain a sublicense from the Company to use certain licensed
patents in the field of tobacco products and to make, have made, use and sell
certain licensed products related to the field of tobacco. The option was
terminated on September 30, 1996. The Company has accrued an $80,000 account
receivable in respect of this option.
AGREEMENTS WITH MEMBERS OF THE BATIZ FAMILY
The Company owns 57.7% of International Produce Holding Company, a
Delaware corporation ("IPHC"), and 50.004% of Agricola Batiz, S.A. de C.V., a
corporation organized under the laws of the United Mexican States ("ABSA").
The remaining 42.3% of IPHC is owned by Raul Batiz E. and members of his
family. Raul Batiz E., by virtue of his position as President of IPHC and its
R.B. Packing, Inc. subsidiary is deemed to be an executive officer of the
Company. The remaining 49.996% of ABSA is owned by relatives of Raul Batiz
E., including his sons Raul Batiz G. and Guillermo Batiz G., who by virtue of
their respective positions as Director of Operations and Director of
Administration of ABSA, are also deemed to be executive officers of the
Company. On April 1, 1997, the Company announced that the Board of Directors
of the Company has approved the acquisition of all of the minority interests
in ABSA and IPHC, subject to the availability of financing on satisfactory
terms and certain other conditions. This acquisition would be made under the
terms of an agreement reached by ELM and the Batiz family in March 1997
providing that, subject to certain conditions, ELM or its designee would
purchase all of the minority interests in ABSA and IPHC for a purchase price
of $23.75 million, $11.75 million to be paid in cash at the closing of the
transaction and $12 million to be paid in equal annual installments over the
following three years, with interest on the outstanding amount to be paid
quarterly. The conditions include satisfactory completion of due diligence
and assurances from the Batiz family regarding continuity of operations. Raul
Batiz G. and Guillermo Batiz G. have agreed to remain with ABSA in consulting
roles following the transaction. The Company intends to seek bank debt to
finance this transaction.
ABSA has entered into a contractual arrangement with Copropriedad
Agricola Batiz Hermanos, a Mexican entity that is controlled by members of
the Batiz family but is not a subsidiary of the Company ("CABH"), pursuant to
which CABH provides labor and administrative services to ABSA and ABSA pays a
fee to CABH based on CABH's costs incurred in connection with providing such
services. Both Raul Batiz E. and Guillermo Batiz G. own in excess of 10% of
CABH. In 1996, ABSA paid a total of approximately $13.2 million to CABH under
this arrangement.
Beginning in August 1996, a credit facility was established between a
separate company owned by members of the Batiz family and ABSA to enable ABSA
to fund a large grower advance and some property, plant and equipment
investments. Loans made under this credit facility were in the form of demand
loans bearing interest at 15.3% per annum. As of December 31, 1996, the
outstanding balance under this credit facility was approximately $1.5
million. Interest paid during 1996 under this credit facility was $89,319.
Raul Batiz E. provides a personal guarantee with respect to $6.2 million
in bank debt of certain of the Company's subsidiaries.
Raul Batiz G. and Guillermo Batiz G. each received $106,684 in total
compensation from ABSA in 1996. Both Raul Batiz G. and Guillermo Batiz G. are
sons of Raul Batiz E.
Pedro Batiz G. is the Vice President of Marketing of R.B. Packing, Inc.
In 1996, his total compensation was approximately $303,000. He is the son of
Raul Batiz E.
Rodolfo Batiz G. is a Senior Salesman at R.B. Packing, Inc. In 1996, his
total compensation was approximately $89,054. He is the son of Raul Batiz E.
AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS
To assist DNAP to satisfy certain contractual obligations, on June 21,
1996, Mr. Serenbetz, Dr. Bedbrook and Dr. David A. Evans, Executive Vice
President - Business Development of DNAP, surrendered certain options to
purchase shares of common stock of DNAP previously granted to them. The
Company has agreed to grant to each of such persons options to purchase
shares of Common Stock of the Company which would be for the same number
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of shares (adjusted in accordance with the exchange ratio applicable to the
Merger) and exercisable on the same terms as the surrendered options.
Accordingly, each of such persons is entitled to receive the following
options: Mr. Serenbetz - 94,500 options at exercise prices ranging from
$24.69 to $56.25 and expiration dates ranging from November 2001 to March
2005; Dr. Bedbrook - 38,500 options at exercise prices ranging from $24.69 to
$81.25 and expiration dates ranging from November 1998 to March 2005; and Dr.
Evans - 38,500 options at exercise prices ranging from $24.69 to $81.25 and
expiration dates ranging from November 1997 to March 2005.
DNAP has entered into severance agreements with Mr. Serenbetz and Dr.
Bedbrook, which provide, subject to certain conditions, that such person will
be paid a severance payment equal to one year's total compensation (measured
as base salary at the time of the agreement plus the average incentive
compensation paid to such person during the three-year period from 1993 to
1995) in the event that prior to September 1, 1997, (i) such person's
employment is involuntarily terminated without cause or (ii) such person
voluntarily terminates his employment with DNAP for good reason (meaning a
reduction in such person's base compensation or duties). The amount of the
severance payment for Mr. Serenbetz would be $310,534 and for Dr. Bedbrook
would be $210,704
DNAP has entered into a severance agreement with Dr. Evans, which
provides, subject to certain conditions, that Dr. Evans will be paid a
severance payment equal to one year's total compensation (measured as base
salary at the time of the agreement plus the average incentive compensation
paid to such person during the three-year period from 1993 to 1995) in the
event that prior to September 1, 1997, his employment is involuntarily
terminated without cause. The amount of this severance payment would be
$207,737. The agreement further provides that Dr. Evans will not terminate
his employment with DNAP prior to September 1, 1997, and that if he notifies
DNAP by August 20, 1997 of his intention to terminate on September 1, 1997,
he will be entitled to a severance payment equal to 285 days total
compensation (measured as base salary at the time of the agreement plus the
average incentive compensation paid to Dr. Evans during the three-year period
from 1993 to 1995).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires directors
and officers of the Company, and persons who beneficially own more than 10
percent of the Common Stock, to file with the SEC initial reports of
ownership and reports of changes in ownership of the Common Stock. Directors,
officers and more than 10 percent stockholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms
they file. To the Company's knowledge, based solely on a review of the copies
of such reports furnished to the Company and written representations that no
other reports were required, during the year ended December 31, 1996, and
except that the initial statements of beneficial ownership of securities on
Form 3 of Ms. Berezin, Dr. Chua, Dr. Laubach and Mr. Serenbetz were
inadvertently filed late, all Section 16(a) filing requirements applicable to
its directors, officers and more than 10 percent beneficial owners were
complied with.
INDEPENDENT ACCOUNTANTS
The appointment of the accounting firm selected to audit the Company's
financial statements is subject to ratification by the Board of Directors and
will not be submitted to stockholders for ratification or approval. It is the
present intention of the Company's management to recommend to the Board of
Directors the re-appointment of Price Waterhouse LLP, which has audited the
financial statements of the Company and certain of its subsidiaries since
1996, to audit the financial statements of the Company for 1997.
Representatives of Price Waterhouse LLP are expected to be present at the
meeting to respond to appropriate questions from stockholders and will be
given the opportunity to make a statement at the meeting should they desire
to do so.
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STOCKHOLDER PROPOSALS AND OTHER MATTERS
Stockholder proposals intended to be included in the Company's proxy
statement relating to the 1998 annual meeting of stockholders must be
received by the Company's Secretary, Joe A. Rudberg, 1700 Pacific Avenue,
Suite 3300, Dallas, Texas 75201, no later than November 30, 1997.
The cost of solicitation of proxies will be borne by the Company.
Solicitation may be made by mail, personal interview or telephone by officers
and regular employees of the Company, who will receive no additional
compensation therefor.
The Board of Directors does not intend to present any other matter at
the meeting and knows of no other matters that will be presented. However, if
any other matter comes before the meeting, the persons named in the enclosed
proxy intend to vote thereon in accordance with their best judgment.
Oakland, California BY ORDER OF THE BOARD OF DIRECTORS
April 25, 1997
/s/ JOE A. RUDBERG
----------------------------------
Joe A. Rudberg
SECRETARY
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DNAP HOLDING CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) of DNAP HOLDING CORPORATION hereby
appoints BERNARDO JIMENEZ, CARLOS HERRERA and ARTHUR H. FINNEL and each of them,
with full power of substitution, as proxies, and authorizes them to represent
and to vote, as designated below, all the common stock, par value $.01 per
share, of DNAP HOLDING CORPORATION that the undersigned is entitled to vote at
the Annual Meeting of Stockholders of DNAP HOLDING CORPORATION to be held on May
22, 1997 at 9:00 a.m., local time, at the Holiday Inn, 1800 Powell Street,
Emeryville, California 94608, and at any adjournment or postponement thereof.
THE SHARES REPRESENTED BY THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE
VOTED IN THE MANNER SPECIFIED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S) WITH
RESPECT TO ANY MATTER TO BE VOTED UPON. IF NO SPECIFICATION IS MADE, THE
PROXIES WILL VOTE THESE SHARES FOR THE ELECTION OF THE NOMINEES NAMED BELOW.
THE PROXIES WILL VOTE IN THEIR SOLE DISCRETION UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
DNAP HOLDING CORPORATION
P.O. BOX 11385
NEW YORK, N.Y. 10203-0385
ELECTION OF THE DIRECTORS FOR THE TERMS OF OFFICE EXPIRING AT THE 1998 ANNUAL
MEETING OF STOCKHOLDERS
[ ] FOR all nominees listed below
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
[ ] *EXCEPTIONS
Nominees: Evelyn Berezin, Dr. Nam-Hai Chua, Dr. Peter Davis, Francisco
Gonzalez, Carlos Herrera, Bernardo Jimenez, Erik C.
Jurgensen, Dr. Gerald D. Laubach, Robert Serenbetz
(Instructions: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions
-------------------
NOTE: IF YOU DESIRE TO WITHHOLD AUTHORITY FOR ONE OR MORE BUT NOT ALL OF THE
ABOVE-NAMED NOMINEES, INDICATE YOUR DESIRE TO WITHHOLD AUTHORITY FOR SUCH
NOMINEES(S) BY DRAWING A LINE THROUGH OR OTHERWISE STRIKING OUT THE NAME(S) OF
SUCH NOMINEE(S).
[ ] Change of Address and or Comments Mark Here
Note: Please sign exactly as shown at left. If stock is jointly
held, each owner should sign. Executors, administrators,
trustees, guardians, attorneys and corporate officers should
indicate their fiduciary capacity or full title when signing.
Dated: , 1997
--------------------------------
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(Signature)
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(Signature, if held jointly)
Votes MUST be indicated [X] in Black or Blue Ink.
PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY CARD
PROMPTLY IN THE ENCLOSED ENVELOPE.
