<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
OCTOBER 6, 1998
DNAP HOLDING CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 0-12177 75-2632242
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
6701 San Pablo Avenue, Oakland, California 94608
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(510) 547-2395
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Item 5. OTHER EVENTS
On July 16, 1998, Bionova International, Inc. ("Bionova International)
submitted a capitalization proposal to DNAP Holding Corporation ("DHC"). The
Board of Directors of DHC appointed a special committee to review and evaluate
the proposal and to negotiate the final terms of the transaction with Bionova
International. As a result of these negotiations, the special committee and
Bionova International agreed to the terms of a capitalization transaction that
was approved by DHC's Board of Directors on October 1, 1998 and evidenced by a
Stock Purchase Agreement dated October 1, 1998 (the "Stock Purchase Agreement").
Pursuant to the Stock Purchase Agreement, on October 6, 1998, Bionova
International invested $30,000,000 in DHC to purchase 5,217,391 shares of DHC's
common stock, $.01 par value per share ("DHC Common Stock"), at a price of $5.75
per share. As a result of this transaction, the total number of shares of DHC
Common Stock outstanding increased to 23,588,031 and the total number of shares
of DHC Common Stock owned by Bionova International increased to 18,076,839, or
76.6% of the total outstanding. As previously agreed with Bionova
International, DHC used a portion of the proceeds of the stock purchase to repay
$13,000,000 of its outstanding debt to Bionova International and its affiliates.
Section 6.1 of the Stock Purchase Agreement provides that at DHC's 1999
Annual Meeting of Stockholders, the Stockholders will be asked to approve a
proposal to amend DHC's Certificate of Incorporation to increase the number of
authorized shares of common stock to at least 40 million and that Bionova
International will vote its shares in favor of this proposal.
Section 6.2 of the Stock Purchase Agreement provides that following the
annual meeting and subject to the approval of the proposal to amend the
Certificate of Incorporation, DHC will distribute to each record holder of DHC
Common Stock, as of a record date to be set by DHC, three rights (the
"Rights") for every four shares of DHC Common Stock held by such record
holder. Each Right will entitle the holder to purchase one share of DHC
Common Stock at an exercise price of $5.75 per share. Rights to purchase
fractional shares will not be issued; the number of Rights issued to each
stockholder will be rounded up to the next whole number. The Rights will
expire on May 31, 2000. Upon issuance of the Rights, Bionova International
will surrender to DHC (at no cost to DHC), a number of Rights that would
entitle Bionova International to purchase 9,130,435 shares of DHC Common
Stock.
Section 6.3 of the Stock Purchase Agreement provides that if Bionova
International or any of its affiliates loans money to DHC after the date of the
agreement and prior to the issuance of the Rights, then upon issuance of the
Rights Bionova International will immediately exercise a number of Rights (after
the surrender of Rights pursuant to Section 6.2) and thereby make a capital
contribution to DHC sufficient to allow DHC to repay such loan (and any accrued
interest and related withholding taxes) out of the proceeds of such exercise.
DHC shall then use the proceeds to make such repayment. During the period in
which the Rights are exercisable, Bionova International and its affiliates
will not make any loan or capital contribution to DHC (other than by
exercising its Rights) until all Rights held by Bionova International and its
affiliates have been exercised in full.
The foregoing description of the Stock Purchase Agreement is qualified in
its entirety by reference to the Stock Purchase Agreement, which is attached
hereto as Exhibit 99.1. The unaudited pro forma condensed balance sheet of DHC
presenting the pro forma effect of the capitalization transaction assuming that
it occurred as of August 31, 1998, is attached hereto as Exhibit 99.2.
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION
Not applicable.
(c) EXHIBITS.
99.1 Stock Purchase Agreement dated as of October 1, 1998,
between DHC and Bionova International.
99.2 Unaudited pro forma condensed balance sheet of DHC
presenting the pro forma effect of the capitalization
transaction assuming that it occurred as of August 31, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 12, 1998 DNAP HOLDING CORPORATION
By: /s/ ARTHUR H. FINNEL
------------------------------------
Arthur H. Finnel,
Executive Vice President
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INDEX TO EXHIBITS
99.1 Stock Purchase Agreement dated as of October 1, 1998, between DHC and
Bionova International.
99.2 Unaudited pro forma condensed balance sheet of DHC presenting the pro
forma effect of the capitalization transaction assuming that it
occurred as of August 31, 1998.
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<PAGE>
STOCK PURCHASE AGREEMENT
between
DNAP HOLDING CORPORATION
and
BIONOVA INTERNATIONAL, INC.
October 1, 1998
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
1. Purchase and Sale of Stock. . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Agreement to Sell and Purchase Shares. . . . . . . . . . . . . . . . 1
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Representations and Warranties of the Company . . . . . . . . . . . . . . 1
2.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Capitalization of the Company. . . . . . . . . . . . . . . . . . . . 1
2.4 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Valid Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7 SEC Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.8 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . 3
3. Representations and Warranties of the Investor. . . . . . . . . . . . . . 3
3.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 Purchase Entirely for Own Account. . . . . . . . . . . . . . . . . . 4
3.5 Disclosure of Information. . . . . . . . . . . . . . . . . . . . . . 4
3.6 Investment Experience. . . . . . . . . . . . . . . . . . . . . . . . 4
3.7 Restricted Securities. . . . . . . . . . . . . . . . . . . . . . . . 4
4. Conditions of the Investor's Obligations at Closing . . . . . . . . . . . 5
4.1 Reduction of Number of Shares of Common Stock Reserved for
Issuance under the 1998 Long Term Incentive Plan. . . . . . . . . . 5
4.2 Representations and Warranties . . . . . . . . . . . . . . . . . . . 5
4.3 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.4 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . 5
4.5 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.6 Proceedings and Documents. . . . . . . . . . . . . . . . . . . . . . 5
5. Conditions of the Company's Obligations at Closing. . . . . . . . . . . . 5
5.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . 5
5.2 Payment of Purchase Price. . . . . . . . . . . . . . . . . . . . . . 5
5.3 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6. Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.1 Annual Meeting; Proxy Statement. . . . . . . . . . . . . . . . . . . 6
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6.2 Rights Offering; Registration Statement; Surrender of Rights by
the Investor. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.3 Loans to the Company . . . . . . . . . . . . . . . . . . . . . . . . 7
6.4 Nasdaq Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.5 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 8
7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.1 Indemnification by Company . . . . . . . . . . . . . . . . . . . . . 8
7.2 Indemnification by the Investor. . . . . . . . . . . . . . . . . . . 9
7.3 Conduct of Indemnification Proceedings . . . . . . . . . . . . . . . 9
8. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.1 Survival of Warranties . . . . . . . . . . . . . . . . . . . . . . . 10
8.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . 10
8.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.5 Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.8 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . 11
8.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 1st day of October, 1998,
by and among DNAP Holding Corporation, a Delaware corporation (the "Company"),
and Bionova International, Inc., a Delaware corporation (the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
1.1 AGREEMENT TO SELL AND PURCHASE SHARES. Subject to the terms
and conditions of this Agreement, the Investor agrees to purchase at the Closing
(as hereinafter defined), and the Company agrees to sell and issue to the
Investor at the Closing, 5,217,391 (collectively, the "Shares") shares of the
Company's common stock, par value $.01 per share ("Common Stock") for the
purchase price of $5.75 per share and for an aggregate purchase price of
$30,000,000.
1.2 CLOSING. The purchase and sale of the Shares shall take place
at the offices of Thompson & Knight, P.C., 1700 Pacific Avenue, Suite 3300,
Dallas, Texas 75201 at 9:00 A.M. on October 6, 1998, or at such other time and
place as the Company and the Investor mutually agree upon orally or in writing
(which time and place are designated as the "Closing").
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investor that:
2.1 CORPORATE ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to carry on its
business as now conducted. No actions or proceedings to dissolve the Company
are pending or, to the best knowledge of the Company, threatened.
2.2 QUALIFICATION. Each of the Company and the Company's
subsidiaries is duly qualified or licensed to do business as a foreign
corporation and each of the Company and the Company's subsidiaries is in good
standing in each of the jurisdictions in which the failure to so qualify would
have a Material Adverse Effect.
2.3 CAPITALIZATION OF THE COMPANY. The authorized capital of the
Company consists of:
(i) COMMON STOCK. 25,000,000 shares of Common Stock, of
which 18,370,640 shares are issued and outstanding.
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(ii) PREFERRED STOCK. 5,000 shares of Preferred Stock, par
value $.01 per share (the "Preferred Stock"), no shares of which are issued and
outstanding.
2.4 AUTHORIZATION. The Company has full corporate power and
corporate authority to execute, deliver, and perform this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance by the Company of this Agreement, and the consummation by it of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action of the Company (other than those transactions contemplated in
this Agreement which must be approved by the stockholders of the Company in
accordance with Applicable Law and the Company's Certificate of Incorporation).
This Agreement has been duly executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms, except that such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting creditors' rights
generally, (ii) fiduciary obligations under the laws of the jurisdiction of the
Company's incorporation, (iii) equitable principles which may limit the
availability of certain equitable remedies (such as specific performance) in
certain instances, and (iv) public policy considerations with respect to the
enforceability of rights of indemnification.
2.5 NONCONTRAVENTION. The execution, delivery, and performance,
as the case may be, by the Company of this Agreement and the consummation by it
of the transactions contemplated hereby do not and will not (i) conflict with or
result in a violation of any provision of the Certificate of Incorporation or
Bylaws of the Company or (ii) conflict with or result in a violation of any
provision of, or constitute (with or without the giving of notice or the passage
of time or both) a default under, or give rise (with or without the giving of
notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, or require any consent, approval,
authorization, or waiver of, or notice to, any party to, any material bond,
debenture, note, mortgage, indenture, lease, contract, agreement, or other
instrument or obligation to which the Company is a party or by which the Company
or any of its properties may be bound.
2.6 VALID ISSUANCE. The Shares, when issued, sold, and delivered
in accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and nonassessable.
2.7 SEC FILINGS. The Company has filed with the Securities and
Exchange Commission (the "SEC"), and has made available to the Investor a
complete and correct copy of, all forms, reports, schedules, statements, and
other documents required to be filed by it under the Securities Act, the
Exchange Act, and all other federal securities laws since September 26, 1996
(the "SEC Filings"). The SEC Filings, at the time filed, complied as to form in
all material respects with all applicable requirements of federal securities
laws. None of the SEC Filings, including without limitation, any financial
statements or schedules included therein, at the time filed, contained any
untrue statement of a material fact or omitted to state any material fact
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required to be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading except as the same was corrected or superseded in a subsequent
document duly filed with the SEC. The audited consolidated financial statements
and unaudited consolidated interim financial statements of the Company included
in the SEC Filings present fairly in all material respects, in conformity with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto and, in the case of the unaudited
consolidated interim financial statements, except to the extent that preparation
of such financial statements in accordance with generally accepted accounting
principles is not required by applicable rules of the SEC), the consolidated
financial position of the Company as of the dates thereof and its consolidated
results of operations and cash flows for the periods then ended (subject to
normal year-end audit adjustments in the case of any unaudited interim financial
statements).
2.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent
disclosed in the SEC Filings filed prior to the date hereof, (a) as of June 30,
1998, the Company had no material liabilities or obligations (whether accrued,
absolute, contingent, unliquidated, or otherwise) and (b) since June 30, 1998,
the Company has not incurred any such material liabilities or obligations, other
than those incurred in the ordinary course of business consistent with past
practice or pursuant to or as contemplated by this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor hereby
represents and warrants that:
3.1 CORPORATE ORGANIZATION. The Investor is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to carry on its
business as now conducted. No actions or proceedings to dissolve the Investor
are pending or, to the best knowledge of the Investor, threatened.
3.2 AUTHORIZATION. The Investor has full corporate power and
corporate authority to execute, deliver, and perform this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance by the Investor of this Agreement, and the consummation by it of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action of the Investor. This Agreement has been duly executed and
delivered by the Investor and constitutes a valid and legally binding obligation
of the Investor, enforceable against the Investor in accordance with its terms,
except that such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting creditors'
rights generally, (ii) fiduciary obligations under the laws of the jurisdiction
of its incorporation, (iii) equitable principles which may limit the
availability of certain equitable remedies (such as specific performance) in
certain instances, and (iv) public policy considerations with respect to the
enforceability of rights of indemnification.
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3.3 NONCONTRAVENTION. The execution, delivery, and performance,
as the case may be, by the Investor of this Agreement and the consummation by it
of the transactions contemplated hereby do not and will not (i) conflict with or
result in a violation of any provision of the Certificate of Incorporation or
Bylaws of the Investor or (ii) conflict with or result in a violation of any
provision of, or constitute (with or without the giving of notice or the passage
of time or both) a default under, or give rise (with or without the giving of
notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, or require any consent, approval,
authorization or waiver of, or notice to, any party to, any material bond,
debenture, note, mortgage, indenture, lease, contract, agreement, or other
instrument or obligation to which the Investor is a party or by which the
Investor or any of its properties may be bound or any material Permit held by
the Investor.
3.4 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with the Investor in reliance upon the Investor's representation to the Company,
which by the Investor's execution of this Agreement the Investor hereby
confirms, that the Shares will be acquired for investment for the Investor's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same.
By executing this Agreement, the Investor further represents that the Investor
does not have any contract, undertaking, agreement, or arrangement with any
person to sell, transfer or grant participations to the person or to any third
person, with respect to any of the Shares.
3.5 DISCLOSURE OF INFORMATION. The Investor believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Shares. The Investor further represents that it has had
an opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the offering of the Shares and the business,
properties, prospects, and financial condition of the Company. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 2 of this Agreement or the right of the Investor to rely
thereon.
3.6 INVESTMENT EXPERIENCE. The Investor acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Shares. The
Investor also represents it has not been organized for the purpose of acquiring
the Shares.
3.7 RESTRICTED SECURITIES. The Investor understands that the
Shares it is purchasing are characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from the Company in
a transaction not involving a public offering and that under such laws and
applicable regulations such securities may not be resold without registration
under the Act, except in certain limited circumstances.
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4. CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT CLOSING. The obligations
of the Investor under Section 1.1 of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions:
4.1 REDUCTION OF NUMBER OF SHARES OF COMMON STOCK RESERVED FOR
ISSUANCE UNDER THE 1998 LONG TERM INCENTIVE PLAN. The Board of Directors of the
Company shall have duly and validly approved a reduction of the number of shares
of Common Stock reserved for issuance under the Company's Long Term Incentive
Plan from 2,000,000 to 500,000.
4.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
date of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing.
4.3 PERFORMANCE. The Company shall have performed and complied
with all agreements, obligations, and conditions contained in this Agreement
that are required to be performed or complied with by it on or before the
Closing.
4.4 COMPLIANCE CERTIFICATE. The President of the Company shall
deliver to the Investor at the Closing a certificate stating that the conditions
specified in Sections 4.2 and 4.3 have been fulfilled.
4.5 QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Shares pursuant to this Agreement shall be duly obtained and effective as of
the Closing.
4.6 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to the Investor's counsel, and it shall have received all such
counterpart original and certified or other copies of such documents as it may
reasonably request.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
of the Company to the Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by the
Investor:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investor contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing.
5.2 PAYMENT OF PURCHASE PRICE. The Investor shall have delivered
to the Company the full purchase price specified in Section 1.1.
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5.3 QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
6. ADDITIONAL AGREEMENTS.
6.1 ANNUAL MEETING; PROXY STATEMENT.
(a) At the 1999 Annual Meeting of Stockholders of the
Company (the "1999 Annual Meeting"), the stockholders will be asked to approve a
proposal to amend the Company's Certificate of Incorporation to increase the
number of shares of Common Stock authorized thereunder from 25,000,000 to at
least 40,000,000 (the "Charter Amendment"). The Company shall propose to its
Board of Directors that they recommend to the stockholders of the Company that
they vote in favor of the adoption and approval of the Charter Amendment. The
Company will use its reasonable best efforts to solicit from the stockholders of
the Company proxies in favor of such adoption and approval and take all other
action reasonably necessary to secure a vote of the stockholders of the Company
in favor of such adoption and approval. In the event that the stockholders of
the Company approve the Charter Amendment, the Company shall take all actions
necessary to implement the Charter Amendment prior to the commencement of the
Rights Offering (as hereinafter defined).
(b) The Investor shall vote (including the taking of any
action by written consent, as necessary or appropriate) all shares of Common
Stock (including the Shares) which it is entitled to vote (or control the voting
of, directly or indirectly) at the 1999 Annual Meeting in favor of the Charter
Amendment.
(c) The Company shall prepare, shall file with the SEC
under the Exchange Act, and shall use its reasonable best efforts to have
cleared by the SEC, and promptly thereafter shall mail to its stockholders, a
proxy statement with respect to the 1999 Annual Meeting. The term "Proxy
Statement," as used herein, means such proxy statement and all related proxy
materials and all amendments and supplements thereto, if any. Except to the
extent otherwise determined in good faith by the Board of Directors of the
Company in the exercise of its fiduciary duties, taking into account the advice
of counsel, the Proxy Statement shall contain the recommendation of the Board
that the stockholders of the Company vote in favor of the adoption and approval
of all matters necessary to effectuate the Charter Amendment. The Company and
the Investor shall cooperate with each other in preparing the Proxy Statement,
and each of the Company and the Investor shall use its reasonable best efforts
to obtain and furnish the information required to be included in the Proxy
Statement. Each of the Company and the Investor each agrees promptly to correct
any information provided by it for use in the Proxy Statement if and to the
extent that such information shall have become false or misleading in any
material respect, and the Company further agrees to take all steps necessary to
cause the Proxy
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Statement as so corrected to be filed with the SEC and to be disseminated
promptly to holders of shares of the Common Stock, in each case as and to the
extent required by Applicable Law.
6.2 RIGHTS OFFERING; REGISTRATION STATEMENT; SURRENDER OF RIGHTS
BY THE INVESTOR.
(a) Following the 1999 Annual Meeting and subject to the
approval by the stockholders of the Company of the Charter Amendment and the
effectiveness of the registration statement filed with the SEC in accordance
with Section 6.2(b) the Company will distribute to each record holder of
Common Stock, as of a record date to be set by the Company, three rights (the
"Rights") for every four shares of Common Stock held by such record holder.
Each Right will entitle the holder to purchase one share of Common Stock at
an exercise price of $5.75 per share. Rights to purchase fractional shares
will not be issued; the number of Rights issued to each stockholder will be
rounded up to the next whole number. The Rights will expire on May 31, 2000.
As used herein, the term "Rights Offering" means the transactions described
in this Section 6.2(a).
(b) The Company shall prepare and file a registration
statement on the appropriate form for the purpose of registering under the
Securities Act the offering, sale and delivery of the securities issuable in the
Rights Offering. The term "Registration Statement," as used herein, means such
registration statement and all amendments and supplements thereto, if any. The
Company shall use its reasonable best efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after the
1999 Annual Meeting. The Company, after consultation with the Investor, shall
use its reasonable best efforts to respond promptly to any comments made by the
SEC with respect to the Registration Statement. If and to the extent that the
information contained in the Registration Statement shall have become false or
misleading in any material respect, and the Company further agrees to take all
steps necessary to cause the Registration Statement (or the prospectus contained
therein) as so corrected to be filed with the SEC and to be disseminated to the
extent required by Applicable Law. The Company shall also take any action
(other than qualifying to do business in any jurisdiction in which it is not now
so qualified) reasonably required to be taken under any applicable state
securities laws in connection with the issuance of securities pursuant to the
Registration Statement.
(c) Upon issuance of the Rights, the Investor agrees to
immediately surrender to the Company at no cost to the Company, a number of
Rights that would entitle the Investor to purchase 9,130,435 shares of Common
Stock.
6.3 LOANS TO THE COMPANY. If the Investor or any of its
affiliates loans money to the Company after the date hereof and prior to the
issuance of the Rights, then upon issuance of the Rights the Investor will
immediately exercise a number of Rights (after the surrender of Rights pursuant
to Section 6.2(c)) sufficient to allow the Company to repay such loan (and any
accrued interest and related withholding taxes) out of the proceeds of such
exercise, and the Company shall use the proceeds to make such repayment.
Neither the Investor nor any of its
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<PAGE>
affiliates shall make a capital contribution to the Company after the date
hereof and prior to the issuance of the Rights except in accordance with the
Governance Agreement dated September 26, 1996 between the Company and
Empresas La Moderna, S.A. de C.V. During the period in which the Rights are
exercisable, the Investor and its affiliates will not make any loan or
capital contribution to the Company until all Rights held by the Investor and
its affiliates have been exercised in full.
6.4 NASDAQ LISTING. The Company shall use its reasonable best
efforts to cause the shares of Common Stock issuable upon exercise of the Rights
to be approved for listing on the Nasdaq National Market (or such other stock
exchange on which the Common Stock is then listed), subject to official notice
of issuance prior to the consummation of the Rights Offering.
6.5 FEES AND EXPENSES. The Company shall be responsible for the
payment of all expenses incurred by the Company in connection with the purchase
of the Shares and the Rights Offering, including, without limitation, all fees
and expenses incurred in connection with the Registration Statement and the
Proxy Statement and the fees and expenses of the Company's legal counsel and all
other parties engaged by the Company to assist in these transactions.
7. INDEMNIFICATION.
7.1 INDEMNIFICATION BY COMPANY. The Company shall indemnify,
defend, and hold harmless the Investor and its Affiliates and each other person
who controls the Investor and its Affiliates within the meaning of Section 15 of
the Securities Act (collectively, the "Indemnified Parties") against all losses,
claims, damages, liabilities and expenses (including, without limitation,
reasonable fees of counsel and any amounts paid in settlement effected with the
Company's consent), to which any such Indemnified Party may become subject under
the Securities Act, the Exchange Act, at common law, or otherwise, insofar as
such losses, claims, damages, liabilities, or expenses (or action or
proceedings, whether commenced or threatened, in respect thereof) result from
(1) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Proxy Statement or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (2) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus, together with the documents
incorporated by reference therein (as amended or supplemented if the Company
shall have filed with the SEC any amendment thereof or supplement thereto), or
the omission or alleged omission to state therein 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, or (3) any
violation by the Company of any federal, state or common law rule or regulation
applicable to the Company and relating to action or inaction by the Company in
connection with the Registration Statement, the Proxy Statement or the Rights
Offering; and in each such case, the Company shall reimburse each Indemnified
Party for any reasonable legal or other expenses incurred by any of them in
connection with investigating or defending any such
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<PAGE>
loss, claim, damage, liability, expense, action or proceeding; provided,
however, that the Company shall not be liable to any Indemnified Party in any
such case to the extent, but only to the extent, that any such loss, claim,
damage, liability or expense (or action or proceeding, whether commenced or
threatened, in respect thereof) arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement or in any preliminary, final or summary
prospectus, or the Proxy Statement in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any
Indemnified Party for use in the preparation thereof. Such indemnity and
reimbursement of expenses and other obligations shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Indemnified Parties and shall survive the transfer of such securities by the
Indemnified Parties.
7.2 INDEMNIFICATION BY THE INVESTOR. The Investor shall indemnify
and hold harmless, to the fullest extent permitted by law, the Company, its
directors, officers, employees and agents, and each other person who controls
the Company (within the meaning of Section 15 of the Securities Act)
(collectively, "Company Indemnified Parties") against all losses, claims,
damages, liabilities and expenses (including, without limitation, reasonable
fees of counsel and any amounts paid in settlement effected with the Investor's
consent) to which any Company Indemnified Party may become subject under the
Securities Act, the Exchange Act, at common law, or otherwise, insofar as such
losses, claims, damages, liabilities, or expenses (or actions or proceedings,
whether commenced or threatened, in respect thereof) are caused by (1) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Proxy Statement or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (2) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus, together with the documents
incorporated by reference therein (as amended or supplemented if the Company
shall have filed with the Commission any amendment thereof or supplement
thereto), or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading to the extent in the cases described in clauses (1) and (2), that
such untrue statement or omission was furnished in writing by such holder for
use in the preparation thereof, and (3) any violation by such holder of any
federal, state or common law rule or regulation applicable to such holder and
relating to action of or inaction by such holder in connection with the
Registration Statement, the Proxy Statement or the Rights Offering. Such
indemnity obligation shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company Indemnified Parties and shall
survive the transfer of such securities by such holder.
7.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after
receipt by an indemnified party under Section 7.1 or 7.2 of written notice of
the commencement of any action, suit, proceeding, investigation or threat
thereof made in writing with respect to which a claim for indemnification may be
made pursuant to this Section 7, such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the
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<PAGE>
indemnifying party of the threat or commencement thereof; provided, however,
that the failure to so notify the indemnifying party shall not relieve it
from any liability which it may have to any indemnified party except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. If any such claim or action referred to under Section 7.1 or
7.2 is brought against any indemnified party and it then notifies the
indemnifying party of the threat or commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other indemnifying party similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense of any such claim
or action, the indemnifying party shall not be liable to such indemnified
party under this Section 7 for any legal expenses of counsel or any other
expenses subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation unless the
indemnifying party has failed to assume the defense of such claim or action
or to employ counsel reasonably satisfactory to such indemnified party.
Under no circumstances will the indemnifying party be obligated to pay the
fees and expenses of more than one law firm for all indemnified parties. The
indemnifying party shall not be required to indemnify the indemnified party
with respect to any amounts paid in settlement of any action, proceeding, or
investigation entered into without the written consent of the indemnifying
party. No indemnifying party shall consent to the entry of any judgment or
enter into any settlement without the consent of the indemnified party unless
(1) such judgment or settlement does not impose any obligation or liability
upon the indemnified party other than the execution, delivery or approval
thereof, and (2) such judgment or settlement includes as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified
party of a full release and discharge from all liability in respect of such
claim for all persons that may be entitled to or obligated to provide
indemnification under this Section 7.
8. MISCELLANEOUS.
8.1 SURVIVAL OF WARRANTIES. The warranties, representations, and
covenants of the Company and the Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing, for a period of two years following the Closing, and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Investor or the Company.
8.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
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<PAGE>
8.3 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Delaware without regard to the
principles of conflicts of laws thereof.
8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.5 SECTION HEADINGS. The section headings used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
8.6 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given (i) one business day after it has been sent by overnight
courier to the party to be notified, (ii) one business day after it has been
sent by facsimile to the party to be notified, provided receipt of such
facsimile has been confirmed by the recipient in writing, or (iii) three days
after it has been mailed to the party to be notified or upon deposit with the
United States Post Office, by registered or certified mail, postage prepaid; in
each case addressed or sent to the party to be notified at the address and/or
facsimile number indicated for such party on the signature page hereof, or at
such other address or facsimile number as such party may designate by 10 days'
advance written notice to the other parties.
8.7 EXPENSES. Irrespective of whether the Closing is effected,
each party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery, and performance of this Agreement. If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
8.8 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Company and the Investor.
8.9 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under Applicable Law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
8.10 ENTIRE AGREEMENT. This Agreement and the documents referred
to herein constitute the entire agreement between the parties hereto and no
party hereto shall be liable or bound to the other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein.
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<PAGE>
9. CERTAIN DEFINED TERMS. As used in this Agreement, each of the
following terms has the meaning given it in this Article:
"Affiliate" has the meaning specified in Rule 12b-2 promulgated under
the Exchange Act.
"Applicable Law" means any statute, law, rule, or regulation or any
judgment, order, writ, injunction, or decree of any Governmental Entity to which
a specified person or property is subject.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Governmental Entity" means any court or tribunal in any jurisdiction
(domestic or foreign) or any public, governmental, or regulatory body, agency,
department, commission, board, bureau, or other authority or instrumentality
(domestic or foreign).
"Material Adverse Effect" means any change, development, or effect
(individually or in the aggregate) which is, or is reasonably likely to be,
materially adverse (i) to the business, assets, results of operations, condition
(financial or otherwise), or prospects of the Company and its subsidiaries
considered as a whole, other than as a result of changes affecting companies
involved in the same business as the Company or affecting the economy in
general, or (ii) to the ability of the Company to perform on a timely basis any
material obligation of the Company under this Agreement.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise, unincorporated
organization, or Governmental Entity.
"reasonable best efforts" means a party's best efforts in accordance
with reasonable commercial practice and without the incurrence of unreasonable
expense.
"Securities Act" means the Securities Act of 1933, as amended.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
DNAP HOLDING CORPORATION
By: /s/ ARTHUR H. FINNEL
------------------------------------
Name: Arthur H. Finnel
Title: Executive Vice President
Address: 6701 San Pablo Avenue
Oakland, California 94608
Attn: Chief Executive Officer
Fax: (510) 450-9395
Phone: (510) 547-2395
BIONOVA INTERNATIONAL, INC.
By: /s/ BERNARDO JIMENEZ
------------------------------------
Name: Bernardo Jimenez
Title: President
Address: 6701 San Pablo Avenue
Oakland, California 94608
Attn: President
Fax: (510) 450-9395
Phone: (510) 547-2395
[SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT]
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<PAGE>
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
Set forth below is an unaudited pro forma condensed balance sheet of DNAP
Holding Corporation presenting the pro forma effect of the capitalization
transaction completed by Bionova International, Inc. on October 6, 1998 assuming
that such transaction occurred as of August 31, 1998. The pro forma condensed
balance sheet is based on historical financial statements of DNAP Holding
Corporation, giving effect to the capitalization transaction and the assumptions
and adjustments as discussed in the accompanying notes to the pro forma
condensed balance sheet. The unaudited condensed pro forma balance sheet should
be read in conjunction with the company's historical financial statements and
notes thereto. The pro forma condensed balance sheet is not necessarily
indicative of the future financial position of the company.
<PAGE>
DNAP HOLDING CORPORATION
CONDENSED BALANCE SHEET
THOUSANDS OF U.S. DOLLARS
<TABLE>
<CAPTION>
August 31, Pro Pro
1998 Forma Forma
(unaudited) Adjustments Results
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................ $ 5,332 $ 16,250 (1) $ 21,582
Accounts receivable .............................. 16,975 16,975
Advances to growers .............................. 13,459 13,459
Inventories ...................................... 10,087 10,087
Other current assets ............................. 254 254
----------- ----------- -----------
Total current assets ........................ 46,107 16,250 62,357
----------- ----------- -----------
Property, plant and equipment, net ............... 33,246 33,246
Patents and trademarks, net ...................... 12,436 12,436
Goodwill, net .................................... 30,108 30,108
Deferred income taxes ............................ 3,279 3,279
Other assets ..................................... 719 719
----------- ----------- -----------
Total assets ................................ $ 125,895 $ 16,250 $ 142,145
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank loans ............................ $ 37,954 $ 37,954
Current portion of long-term debt ................ 2,381 2,381
Accounts payable and accrued expenses ............ 14,184 14,184
Accounts due to related parties .................. 44,799 $ (13,000)(2) 31,799
Deferred income taxes ............................ 4,738 4,738
----------- ----------- -----------
Total current liabilities ................... 104,056 (13,000) 91,056
Long-term debt ................................... 5,617 5,617
----------- ----------- -----------
Total liabilities ........................... 109,673 96,673
----------- ----------- -----------
Minority interest ................................ 0 0
----------- ----------- -----------
Stockholders' equity:
Preferred stock, $.01 par value, 5,000 shares
Authorized, no shares issued and outstanding ... -- --
Common stock, $.01 par value, 25,000,000
shares authorized, 23,588,031 shares issued
and outstanding ................................ 184 52 (3) 236
Additional paid-in capital ....................... 78,720 29,198 (3) 107,918
Accumulated deficit .............................. (62,478) (62,478)
Cumulative other comprehensive income ............ (204) (204)
----------- ----------- -----------
Total stockholders' equity ....................... 16,222 29,250 45,472
----------- ----------- -----------
Total liabilities and stockholders' equity ....... $ 125,895 $ 16,250 $ 142,145
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
DNAP HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED BALANCE SHEET
NOTE 1
Adjustment to record the receipt of $16,250,000, which represents the net of the
$30,000,000 of cash contributed by Bionova International, Inc. less the
repayment of debt to related parties of $13,000,000 and $ 750,000 of transaction
expenses.
NOTE 2
Adjustment to record the repayment and cancellation of debt to DNAP Holding
Corporation's indirect parent company, Empresas La Moderna, S.A. de C.V. in the
amount of $13,000,000.
NOTE 3
Adjustment to record the Bionova International, Inc. capitalization of DNAP
Holding Corporation.
Consideration received by Bionova International, Inc. in return for its
$30,000,000 cash investment was the issuance of 5,217,391 shares of DNAP Holding
Corporation common stock, $.01 par value.
Expenses related to the transaction, estimated at $750,000, were recorded
against the proceeds.
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