SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
Pioneer Hi-Bred International, Inc.
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(Name of Issuer)
Common Stock,
par value $1.00 per share
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(Title of Class and Securities)
723686101
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(CUSIP Number of Class of Securities)
Mary E. Bowler, Esq.
Senior Counsel E.I. du Pont de Nemours and Company
1007 Market Street
Wilmington, Delaware 19898
(302) 774-5303
-------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
Copy to:
Lou R. Kling, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
September 18, 1997
------------------------------------------------------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Statement
because of Rule 13d-1(b)(3) or (4), check the following: ( )
Check the following box if a fee is being paid with this
Statement: ( )
SCHEDULE 13D
CUSIP No. 723686101
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(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
E.I. DU PONT DE NEMOURS AND COMPANY
51-0014090
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS
WC, OO
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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(7) SOLE VOTING POWER
None
NUMBER OF SHARES ___________________________________
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH 164,445.86 shares of Series A Convertible
REPORTNING Preferred Stock (convertible upon transfer
PERSON WITH and under certain other circumstances into
16,444,586 shares of Common Stock)
___________________________________
(9) SOLE DISPOSITIVE POWER
None
___________________________________
(10) SHARED DISPOSITIVE POWER
164,445.86 shares of Series A
Convertible Preferred Stock
(convertible upon transfer and under
certain other circumstances into
16,444,586 shares of Common Stock)
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
164,445.86 shares of Series A Convertible Preferred Stock
(convertible upon transfer and under certain other
circumstances into 16,444,586 shares of Common Stock)
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
100% of the Series A Convertible Preferred Stock
(convertible upon transfer and under certain other
circumstances into approximately 16.7% of the Common Stock
outstanding as of the date hereof)
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(14) TYPE OF REPORTING PERSON
CO
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SCHEDULE 13D
CUSIP No. 723686101
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(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
DU PONT CHEMICAL AND ENERGY OPERATIONS, INC.
51-0313062
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
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(3) SEC USE ONLY
-----------------------------------------------------------------
(4) SOURCE OF FUNDS
WC
-----------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
-----------------------------------------------------------------
(7) SOLE VOTING POWER
None
NUMBER OF SHARES ___________________________________
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH 164,445.86 shares of Series A Convertible
REPORTING Preferred Stock, par value $.01 per shares
PERSON WITH (convertible upon transfer and under
certain other circumstances into
16,444,586 shares of Common Stock, par
value $1.00 per share)
___________________________________
(9) SOLE DISPOSITIVE POWER
None
___________________________________
(10) SHARED DISPOSITIVE POWER
164,445.86 shares of Series A
Convertible Preferred Stock
(convertible upon transfer and under
certain other circumstances into
16,444,586 shares of Common Stock)
-----------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
164,445.86 shares of Series A Convertible Preferred Stock
(convertible upon transfer and under certain other
circumstances into 16,444,586 shares of Common Stock)
-----------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
-----------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
100% of the Series A Convertible Preferred Stock
(convertible upon transfer and under certain other
circumstances into approximately 16.7% of the Common Stock
outstanding as of the date hereof)
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(14) TYPE OF REPORTING PERSON
CO
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This Amendment No. 1 to the Schedule 13D (the "Amended
Schedule 13D"), filed pursuant to Rule 13d-1 of the Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
by E.I. du Pont de Nemours and Company, a Delaware corporation ("DuPont")
and Du Pont Chemical and Energy Operations, Inc. ("DCEO"), amends and
restates the Schedule 13D filed by DuPont on August 18, 1997 (the
"Original Schedule 13D") relating to the acquisition of the Series A
Convertible Preferred Stock, par value $.01 per share (the "Preferred
Stock"), of Pioneer Hi-Bred International, Inc., an Iowa corporation
("Pioneer"), which is convertible into shares of Common Stock, par value
$1.00, of Pioneer (the "Common Stock"):
ITEM 1 Security and Issuer
This Amended Schedule 13D relates to the Common Stock of
Pioneer. The principal executive offices of Pioneer are located at 700
Capital Square, 400 Locust, Des Moines, Iowa 50309.
ITEM 2 Identity and Background
This Amended Schedule 13D is filed by DuPont and DCEO, which
are both Delaware corporations. The principal executive offices of DuPont
are located at 1007 Market Street, Wilmington, Delaware 19898. The
principal executive offices of DCEO are located at Suite 8045, 1007 Market
Street, Wilmington, Delaware 19898. DuPont is a global chemical, energy
and life sciences company whose businesses manufacture and sell a wide
range of products in many different markets including energy,
transportation, textile, construction, automotive, agriculture, printing,
health care, packaging and electronic markets. DCEO, a holding company, is
a wholly-owned subsidiary of DuPont whose businesses include the making,
maintenance and mangement of intangible investments and the collection and
distribution of the income from such investments or from tangible
property.
Set forth below are the name, address and present principal
occupation or employment with DuPont and DCEO (except as otherwise
indicated) of each director and executive officer of DuPont and DCEO .
With the exception of Percy N. Barnevik, who is a Swedish citizen, Goro
Watanabe, who is a Japanese citizen, and Robert Gachot, who is a French
citizen, each person listed below is a citizen of the United States of
America.
DuPont
Name and Address Position
Percy N. Barnevik Chairman - ABB Asea Brown Boveri Ltd.;
ABB Asea Brown Boveri Ltd. Director
PO Box 8131
CH-8050
Zurich, Switzerland
Andrew F. Brimmer President and Director - Brimmer &
Brimmer & Company, Inc. Company, Inc.; Director
4400 MacArthur Blvd., NW
Suite 302
Washington, DC 20007
Louisa C. Duemling Director
c/o John Thayer
1100 DuPont Building
1007 Market Street
Wilmington, DE 19898
Archie W. Dunham Executive Vice President; Director
Conoco Inc.
PE-3034
600 North Dairy Ashford
Houston, TX 77079
Edward B. du Pont Director
100 West 10th Street
Suite 1109
Wilmington, DE 19801
Charles M. Harper Director
Suite 1500
One Central Park Plaza
Omaha, NE 68102
Charles O. Holliday, Jr. Executive Vice President; Director
DuPont Asia Pacific
9000 DuPont Building
1007 Market Street
Wilmington, DE 19898
Lois D. Juliber Executive Vice President and Chief of
Colgate-Palmolive Operations, Developed Markets,
300 Park Avenue Colgate-Palmolive Company; Director
New York, NY 10022
John A. Krol President and Chief Executive Officer;
Administration Director
9000 DuPont Building
1007 Market Street
Wilmington, DE 19898
William K. Reilly Chief Executive Officer - Aqua
1250 24th Street N.W. International Partners; Director
Sixth Floor
Washington, D.C. 20037
H. Rodney Sharp, III Director
PO Box 3779
Greenville, DE 19807
Charles M. Vest President - Massachusetts Institute of
111 Memorial Drive Technology; Director
Cambridge, MA 02142
Goro Watanabe Executive Vice President and Representative
2-1 Ohtemachi 1-chome Director - Mitsui & Co., Ltd.;
Chiyoda-Ky, Tokyo 100 Japan Director
Edgar S. Woolard, Jr. Chairman of the Board of Directors
Administration
9000 DuPont Building
1007 Market Street
Wilmington, DE 19898
Jerald A. Blumberg Executive Vice President
Administration
9000 DuPont Building
1007 Market Street
Wilmington, DE 19898
Gary W. Edwards Senior Vice President
Conoco Inc.
PE-3052
600 No. Dairy Ashford
Houston, TX 77079
Kurt M. Landgraf Executive Vice President
DuPont Finance
D-8000
1007 Market Street
Wilmington, DE 19898
Robert E. McKee, III Senior Vice President
Conoco Inc.
PE-3070
600 N. Dairy Ashford
Houston, TX 77079
Joseph A. Miller Senior Vice President
DuPont Research and Development
E-328/411
Rt. 141 and Henry Clay
Wilmington, DE 19880
Stacey J. Mobley Senior Vice President
DuPont External Affairs
N-9510
1007 Market Street
Wilmington, DE 19898
Howard J. Rudge Senior Vice President and General Counsel
DuPont Legal
D-7038
1007 Market Street
Wilmington, DE 19898
DCEO
Name and Address Position
Charles L. Downing Vice President and Treasurer; Director
Du Pont Chemical and
Energy Operations, Inc.
1007 Market Street
Wilmington, DE 19898
Robert Gachot Vice President and Assistant Treasurer;
Du Pont Chemical and Director
Energy Operations, Inc.
1007 Market Street
Wilmington, DE 19898
John C. Sargent President; Director
Du Pont Chemical and
Energy Operations, Inc.
1007 Market Street
Wilmington, DE 19898
Calissa W. Brown Assistant Secretary
Du Pont Chemical and
Energy Operations, Inc.
1007 Market Street
Wilmington, DE 19898
Ann L. Douglas Assistant Treasurer
Du Pont Chemical and
Energy Operations, Inc.
1007 Market Street
Wilmington, DE 19898
Michael Koziski Assistant Treasurer
Du Pont Chemical and
Energy Operations, Inc.
1007 Market Street
Wilmington, DE 19898
Loriann Lea Secretary
Du Pont Chemical and
Energy Operations, Inc.
1007 Market Street
Wilmington, DE 19898
During the last five years, neither DuPont nor DCEO, nor, to
the best knowledge of DuPont and DCEO, any director or executive officer
of DuPont or DCEO has been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding has been or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
ITEM 3 Source and Amount of Funds or Other Consideration
The funds used by DCEO to consummate the purchase of the
Preferred Stock as described in Item 6 came from DuPont's repayment to
DCEO of previously issued loans and notes. The funds used by DuPont to
make such repayment to DCEO came from cash on hand and the sale of
commercial paper. The aggregate purchase price paid by DuPont and DCEO for
the Preferred Stock at the Closing (as defined below) was $1,710,236,944.
ITEM 4 Purpose of Transaction
As described in Item 6 below, pursuant to an Investment
Agreement, dated as of August 6, 1997 (the "Investment Agreement"),
between DuPont and Pioneer, and the Letter Agreement (as defined below),
at the closing of the transactions contemplated by the Investment
Agreement on September 18, 1997 (the "Closing"), DCEO purchased 164,445.86
shares of Preferred Stock from Pioneer. As described in Item 6 below, the
Investment Agreement generally precludes DuPont or any entity controlled
by it (the "DuPont Group") from acquiring any Pioneer voting securities
during the term of the Investment Agreement, except for certain rights
that allow DuPont to obtain and maintain a specified equity ownership
interest (as discussed in Item 6 below). The Investment Agreement also
provides for certain sell down requirements such that the DuPont Group's
equity ownership level does not exceed a specified level (as discussed in
Item 6 below). The purpose of DuPont's and DCEO's investment in Pioneer is
to complement the related transactions contemplated by a Research Alliance
Agreement and the Joint Venture Formation Agreements (each as defined
below) by providing DuPont with equity participation in Pioneer's equity
interest in the commercial joint venture established thereby.
In accordance with the terms of the Investment Agreement, at
and as of the Closing and subject to the terms and conditions of the
Investment Agreement, DuPont will be entitled to designate two nominees to
Pioneer's Board of Directors; such number of nominees may be increased to
three nominees in the event of an increase in the size of Pioneer's Board
of Directors and may be reduced to none based on the DuPont Group's equity
ownership level in Pioneer.
In connection with the transactions contemplated by the
Investment Agreement, DuPont and Pioneer entered into Joint Venture
Formation Agreements and a Research Alliance Agreement contemplating
certain transactions more fully described in Item 6 below.
Pursuant to the terms of the Investment Agreement, Pioneer has
agreed to use the proceeds from the sale of Preferred Stock to DCEO to
repurchase shares of its Common Stock by commencing shortly after the
Closing a dutch auction tender offer (and, thereafter, if necessary,
through open market repurchases) with Pioneer seeking to repurchase
sufficient shares to increase DuPont's equity ownership level up to
approximately 19.99%.
Except as set forth above, DuPont and DCEO have no present
plans or proposals that relate to or would result in any of the actions
described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
ITEM 5 Interest in Securities of the Issuer
(a) and (b) As of the date hereof, DuPont, through its
wholly-owned subsidiary DCEO, beneficially owns an aggregate of 164,445.86
shares of Preferred Stock (convertible upon transfer and under certain
other circumstances into 16,444,586 shares of Common Stock). Such shares
represent 100% of the shares of Preferred Stock anticipated to be
outstanding at the Closing (convertible upon transfer and under certain
other circumstances into approximately 16.67% of the shares of Common
Stock outstanding at the Closing (based on the number of shares of Common
Stock stated to be outstanding as of Pioneer's Quarterly Report on Form
10-Q for the quarterly period ended May 30, 1997 and assuming that the
Preferred Stock to be acquired by DCEO was converted in full)). DuPont and
DCEO share the power to vote and to dispose of the shares of Preferred
Stock (and to vote and dispose of the shares of Common Stock such
Preferred Stock is convertible into) subject to the terms and conditions
of the Investment Agreement.
Except as set forth in this Item 5, to the best knowledge of
DuPont and DCEO, no director or executive officer of DuPont or DCEO
beneficially owns any shares of Preferred Stock or Common Stock.
(c) Other than the transactions contemplated by the Investment
Agreement described herein, neither DuPont nor DCEO, nor, to the best
knowledge of DuPont and DCEO, any director or executive officer of DuPont
or DCEO, has effected any transactions in Preferred Stock or Common Stock
during the past 60 days.
(d) No person, other than DuPont and DCEO, has the right to
receive dividends from the Preferred Stock (or the Common Stock such
Preferred Stock is convertible into), and no person other than DuPont and
DCEO has the right to receive the proceeds from the sale of Preferred
Stock (or the Common Stock such Preferred Stock is convertible into).
(e) Not applicable.
ITEM 6 Contracts, Arrangement, Understanding or Relationships With
Respect to Securities of the Issuer
On August 6, 1997, Pioneer and DuPont entered into a Research
Alliance Agreement (the "Research Alliance Agreement") and a Formation
Agreement and a Limited Liability Company Agreement (collectively, the
"Joint Venture Formation Agreements") which, along with the Investment
Agreement, established a broad research alliance and collaboration between
the two companies that includes the formation of a joint venture to
exploit business opportunities in quality grain traits and an equity
investment by DuPont in Pioneer.
Pursuant to the Research Alliance Agreement, Pioneer and
DuPont have agreed to a broad research alliance to collaborate to take
advantage of their respective expertise in technology and know-how
concerning quality grain traits, agronomic traits, industrial use traits,
genomics and enabling technologies for developing seed, grain, grain
products, plant materials and other crop improvement products. Pursuant to
the Joint Venture Formation Agreements, the jointly owned commercial joint
venture (with each party owning 50%) will create, maximize and capture
value for quality traits.
The Investment Agreement provides for the acquisition by
DuPont of a new series of Preferred Stock which represents a common
equivalent economic ownership interest in Pioneer equal to approximately
19.99% of Pioneer's outstanding shares of Common Stock outstanding at the
Closing before giving effect to the transaction, and approximately 16.67%
after giving effect thereto. The Investment Agreement requires the DuPont
Group to sell down certain shares such that its equity ownership level
does not exceed a specified level (generally 20% subject to reduction in
certain instances including following the sale of shares by the DuPont
Group) and allows the DuPont Group to purchase additional shares of Common
Stock in order to maintain its equity ownership level. Pioneer has agreed
to repurchase certain shares of its Common Stock with the proceeds of the
sale of Preferred Stock to DCEO as described in Item 4 above.
As more fully specified in the Investment Agreement, the
DuPont Group has agreed that it will generally not make any proposals
seeking a business combination involving Pioneer, deposit Pioneer voting
securities into a voting trust (except as provided in the Investment
Agreement) or make any similar arrangements regarding Pioneer voting
securities, engage in a proxy contest or solicitation, call a meeting of
shareholders or seek shareholder approval of any action or participate in
a group with other holders of Pioneer voting securities. The Investment
Agreement contains certain restrictions on the transfer of Preferred Stock
held by the DuPont Group and grants Pioneer a right of first offer or a
right of first refusal with respect to certain such transfers. At the
Closing, DuPont and Pioneer entered into a Registration Rights Agreement
granting the DuPont Group certain registration rights with respect to
shares of Common Stock into which the Preferred Stock is convertible.
The Investment Agreement grants DuPont certain rights to
nominate directors to Pioneer's Board of Directors as set forth in Item 4
above. The DuPont Group has agreed to vote its shares of Preferred Stock
for the election of the slate of nominees proposed by Pioneer for election
to its Board of Directors (so long as DuPont's nominees are included in
such slate) and, except for certain matters specified in the Investment
Agreement, DuPont is otherwise free to vote such shares as it elects
provided that, in certain instances, any votes in excess of DuPont's
equity ownership percentage at the time of the vote must be voted by
DuPont pro rate in accordance with the vote of shareholders of Pioneer
other than the DuPont Group.
Upon the occurrence of certain events including the
acquisition by a third party of a specified equity interest in Pioneer,
certain of the restrictions and rights set forth above and in the
Investment Agreement are modified, terminated or become perpetual, and
certain additional rights may come into effect including the termination
of the Joint Venture Formation Agreements (and the purchase or sale of the
commercial joint venture established in accordance therewith) and the
Research Alliance Agreement. The Investment Agreement may be terminated
following one year's prior written notice deliverable be either party
following the 15th anniversary of the date thereof.
Pursuant to the terms of the Preferred Stock, the Preferred
Stock is convertible upon sale to a third party (other than a member of
the DuPont Group) and upon certain other circumstances. In certain
circumstances following the sixth anniversary of the date of the
Investment Agreement, the Preferred Stock may convert at the option of
DuPont into Common Stock, in which case, DuPont has agreed that such
shares of Common Stock will be placed in a voting trust with such shares
to be voted in accordance with the provisions specified above and as set
forth in the Investment Agreement.
At the Closing, DuPont, DCEO and Pioneer entered into a letter
agreement (the "Letter Agreement") whereby DuPont directed Pioneer to
issue the Preferred Stock to DCEO and whereby DCEO agreed to be bound by
the terms of the Investment Agreement to the same extent as DuPont.
The preceding summary of certain provisions of the Investment
Agreement and the related agreements is not intended to be complete and is
qualified in its entirety by reference to the full text of the Investment
Agreement, a copy of which is filed as an Exhibit hereto.
Except as set forth herein, DuPont does not and DCEO does not,
nor to the best knowledge of DuPont and DCEO, does any director or
executive officer of DuPont or DCEO, have any contract, arrangement,
understanding or relationship (legal or otherwise) with any person with
respect to any securities of Pioneer, including, but not limited to,
transfer or voting of any securities of Pioneer, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding of
proxies.
ITEM 7 Material to be Filed as Exhibits
(a) Investment Agreement, dated as of August 6, 1997, between
Pioneer and DuPont.
(b) Letter Agreement, dated as of September 18, 1997, between
Pioneer, DuPont and DCEO.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
DATED: September 29, 1997
E.I. DU PONT DE NEMOURS AND
COMPANY
By: /s/ Kurt M. Landgraf
_____________________________
Kurt M. Landgraf
Executive Vice President -
DuPont Finance and Chief
Financial Officer
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
DATED: September 29, 1997
DUPONT CHEMICAL AND ENERGY
OPERATIONS, INC.
By: /s/ John C. Sargent
_______________________________
John C. Sargent
President
Du Pont Chemical and Energy
Operations, Inc.
EXHIBIT INDEX
(a) Investment Agreement, dated as of August 6, 1997,
between Pioneer and DuPont.
(b) Letter Agreement, dated as of September 18, 1997, between Pioneer,
DuPont and DCEO.
Exhibit (a)
INVESTMENT AGREEMENT
dated as of August 6, 1997
between
E.I. DU PONT DE NEMOURS AND COMPANY
and
PIONEER HI-BRED INTERNATIONAL, INC.
TABLE OF CONTENTS
SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . 7
Section 1.1. Definitions . . . . . . . . . . . 7
Section 1.2. General Interpretive Principles . 21
SECTION 2 ISSUANCE AND SALE OF SHARES . . . . . . . . 21
Section 2.1. Issuance and Sale of Shares . . . 21
Section 2.2. Closing . . . . . . . . . . . . . 22
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE
COMPANY . . . . . . . . . . . . . . . . . . . . 22
Section 3.1. Corporate Organization and
Qualification . . . . . . . . . . . . . . . 22
Section 3.2. Authorization of Agreements . . . 22
Section 3.3. Consents; No Conflicts . . . . . . 23
Section 3.4. Capitalization . . . . . . . . . . 24
Section 3.5. Company Reports; Financial
Statements . . . . . . . . . . . . . . . . 25
Section 3.6. Absence of Certain Changes . . . . 26
Section 3.7. Litigation . . . . . . . . . . . . 26
Section 3.8. Compliance with Laws; Regulatory
Approvals . . . . . . . . . . . . . . . . . 26
Section 3.9. Exemption from Registration . . . 27
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE
INVESTOR . . . . . . . . . . . . . . . . . . . . 27
Section 4.1. Organization . . . . . . . . . . . 27
Section 4.2. Authorization of Agreements . . . 27
Section 4.3. Consents; No Conflicts . . . . . . 27
Section 4.4. Investor Reports; Financial
Statements . . . . . . . . . . . . . . . . 28
Section 4.5. Absence of Certain Changes . . . . 29
Section 4.6. Purchase for Purpose of
Investment . . . . . . . . . . . . . . . . 29
SECTION 5 GOVERNANCE . . . . . . . . . . . . . . . . 30
Section 5.1. Directors Designated by the
Shareholder . . . . . . . . . . . . . . . . 30
Section 5.2. Resignation of Investor Nominees . 33
Section 5.3. Committees . . . . . . . . . . . . 33
SECTION 6 ADDITIONAL AGREEMENTS . . . . . . . . . . . 33
Section 6.1. Standstill Agreement . . . . . . . 33
Section 6.2. Voting . . . . . . . . . . . . . . 36
Section 6.3. Dispositions . . . . . . . . . . . 38
Section 6.4. Company's Right to Purchase Voting
Securities . . . . . . . . . . . . . . . . 42
Section 6.5. Company's Right to Purchase
Voting Securities in Case of Unsolicited
Offer . . . . . . . . . . . . . . . . . . . 46
Section 6.6. Required Dispositions . . . . . . 49
Section 6.7. Top-Up Rights; Permitted
Reacquisitions; Exchange of Share
Certificates . . . . . . . . . . . . . . . 51
Section 6.8. Spin-off Distributions . . . . . . 53
Section 6.9. Competing Investments . . . . . . 53
Section 6.10. Rights of the Company upon a
Trigger Event . . . . . . . . . . . . . . . 56
SECTION 7 PRE-CLOSING COVENANTS . . . . . . . . . . . 57
Section 7.1. Taking of Necessary Action . . . . 57
Section 7.2. Notifications . . . . . . . . . . 57
Section 7.3. No-Shop . . . . . . . . . . . . . 57
Section 7.4. Share Listing . . . . . . . . . . 58
Section 7.5. Registration Rights Agreement . . 58
Section 7.6. Pre-Closing Information . . . . . 58
SECTION 8 ADDITIONAL COVENANTS . . . . . . . . . . . 58
Section 8.1. Certain Information . . . . . . . 58
Section 8.2. Right to Participate in Sale of
the Company . . . . . . . . . . . . . . . . 59
Section 8.3. Use of Proceeds . . . . . . . . . 62
Section 8.4. Rights Agreement . . . . . . . . . 64
Section 8.5. Publicity . . . . . . . . . . . . . 64
Section 8.6. Legend . . . . . . . . . . . . . . 64
Section 8.7. No Restrictions . . . . . . . . . 65
Section 8.8. Amendment to Articles of
Incorporation . . . . . . . . . . . . . . . 65
Section 8.9. HSR Act Filings . . . . . . . . . 67
SECTION 9 CONDITIONS . . . . . . . . . . . . . . . . 67
Section 9.1. Conditions of Investor's
Obligation . . . . . . . . . . . . . . . . 67
Section 9.2. Conditions of the Company's
Obligation . . . . . . . . . . . . . . . . 68
SECTION 10 TERMINATION . . . . . . . . . . . . . 69
Section 10.1. Termination . . . . . . . . . . . 69
Section 10.2. Effect of Termination . . . . . . 69
SECTION 11 MISCELLANEOUS . . . . . . . . . . . . 70
Section 11.1. Fees and Expenses . . . . . . . . 70
Section 11.2. Survival . . . . . . . . . . . . . 70
Section 11.3. Notices . . . . . . . . . . . . . 70
Section 11.4. Entire Agreement; Amendment . . . 71
Section 11.5. Counterparts . . . . . . . . . . . 71
Section 11.6. Governing Law; Submission to
Jurisdiction . . . . . . . . . . . . . . . 71
Section 11.7. Successors and Assigns . . . . . . 72
Section 11.8. Assignment . . . . . . . . . . . . 72
Section 11.9. Remedies; Waiver . . . . . . . . . 72
Section 11.10. Specific Performance . . . . . . 72
Section 11.11. Severability . . . . . . . . . . 72
EXHIBIT A Form of Registration Rights Agreement
EXHIBIT B Form of Rights Agreement Amendment
EXHIBIT C Form of Certificate of Designation
EXHIBIT D Initial Investor Nominee Notice
INVESTMENT AGREEMENT
INVESTMENT AGREEMENT, dated as of August 6,
1997 (the "Agreement"), by and between E.I. du Pont de
Nemours and Company, a Delaware corporation (the
"Investor"), and Pioneer Hi-Bred International, Inc., an
Iowa corporation (the "Company").
W I T N E S S E T H:
WHEREAS, contemporaneously herewith, the
parties are entering into a Joint Venture Agreement and a
Research Alliance Agreement (each as defined herein);
WHEREAS, the Company and the Investor have each
determined to enter into this Agreement pursuant to which
the Investor has agreed to purchase from the Company, and
the Company has agreed to issue and sell to the Investor,
in each case subject to the conditions herein, the Shares
at the Closing (each as defined herein);
NOW, THEREFORE, in consideration of the
premises and the mutual representations, warranties,
covenants and agreements contained herein, the parties
hereto hereby agree as follows:
SECTION 1
DEFINITIONS
Section 1.1. Definitions. As used in this
Agreement, the following terms shall have the meanings
set forth below:
"Acceptance Notice" has the meaning set forth
in Section 6.4(a) hereof.
"Affiliate" of a Person has the meaning set
forth in Rule 12b-2 under the Exchange Act.
"Agreement" has the meaning set forth in the
preamble hereto.
"Amended Rights Agreement" means the Rights
Agreement, as amended by the Rights Agreement Amendment
and as further amended from time to time in accordance
with the terms of this Agreement.
"Articles of Incorporation" means the Third
Restated and Amended Articles of Incorporation of the
Company, as amended from time to time.
"Associate" of a Person has the meaning set
forth in Rule 12b-2 under the Exchange Act.
"Beneficially Own" with respect to any
securities means having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under
the Exchange Act, as in effect on the date hereof,
without limitation by the 60-day provision in paragraph
(d)(1)(i) thereof). The terms "Beneficial Ownership" and
"Beneficial Owner" have correlative meanings.
"Board" or "Board of Directors" means the Board
of Directors of the Company.
"Business Day" means any day, other than a
Saturday, Sunday or a day on which banking institutions
in the State of Iowa or the State of Delaware are
authorized or obligated by law or executive order to
close.
"Bylaws" means the Restated and Amended Bylaws
of the Company as amended from time to time.
"Change in Control" means the occurrence of any
of the following events:
(a) the direct or indirect purchase or
acquisition by any Person or 13D Group (other than an
Excluded Person) of Beneficial Ownership of Voting
Securities or Common Securities of the Company if, after
giving effect to such acquisition, such Person or 13D
Group would Beneficially Own Voting Securities or Common
Securities representing an Equity Percentage of 30% or
more on a fully diluted basis; or
(b) the consummation by the Company or any
of its Subsidiaries of a merger, consolidation or other
business combination (including a sale of all or
substantially all of the assets of the Company (other
than to wholly-owned Subsidiaries of the Company)) that
requires the approval of the Company's shareholders,
whether for such transaction or the issuance of
securities in such transaction, if immediately after
giving effect to such transaction, the Persons who
Beneficially Owned Voting Securities or Common Securities
immediately prior to such transaction Beneficially Own in
the aggregate Voting Securities or Common Securities (or
voting securities or common securities in the case of a
surviving entity other than the Company) representing a
Voting Ownership Percentage or a Total Ownership
Percentage (or voting power or common equity ownership of
common securities in the case of a surviving entity other
than the Company) on a fully diluted basis of less than
50% immediately after giving effect to such transaction;
or
(c) the consummation by the Company of a
plan of complete liquidation or dissolution of the
Company.
"Change in Control Transaction" means a
transaction which, if consummated, would result in a
Change in Control.
"Closing" means the closing of the sale and
purchase of the Shares pursuant to Section 2.1 hereof.
"Closing Date" has the meaning set forth in
Section 2.2 hereof.
"Commission" means the Securities and Exchange
Commission.
"Common Securities" means the Common Stock, the
Series A Convertible Preferred Stock and any other
securities of the Company (excluding non-voting
securities (other than capital stock) issued to
directors, officers or employees of the Company as
compensation) to the extent to which such securities by
the terms thereof (i) are not effectively limited in
amount as to dividends or amounts payable upon
liquidation of the Company or (ii) are otherwise a
substantial equivalent of Common Stock as to dividends or
upon liquidation of the Company or upon consummation of a
merger or other extraordinary transaction in which the
outstanding shares of Common Stock participate.
"Common Stock" means the Common Stock, par
value $1.00 per share, of the Company.
"Company" has the meaning set forth in the
preamble hereto.
"Company Buy Back Period" means the period
beginning on the Closing Date and ending twelve months
thereafter.
"Company Repurchase" has the meaning set forth
in Section 6.6(a).
"Competing Investment" means the acquisition by
a Competitor (other than in connection with a Change in
Control Transaction) of Beneficial Ownership of (i)
Common Securities (A) directly from the Company or any
Subsidiary of the Company, (B) pursuant to an agreement
with the Company or any of its Subsidiaries (a
"Competitor Agreement") providing either for the issuance
or transfer by the Company or any of its Subsidiaries of
such Common Securities or providing for the waiver or
inapplicability of the Amended Rights Agreement (or a
Substantially Similar Plan) with respect to the ownership
of such Common Securities, or (C) where, in connection
with such acquisition, the Company waives or renders the
Amended Rights Agreement (or a Substantially Similar
Plan) inapplicable thereto, in each case, if, after
giving effect to such acquisition, the Competitor would,
in the case of clauses (A), (B) and (C) above, to the
knowledge of the Company, after reasonable inquiry,
Beneficially Own Common Securities either (x) in excess
of the Trigger Amount (as defined in the Amended Rights
Agreement, as then in effect, as such term (or comparable
term) may be amended from time to time by the Company in
its sole discretion) or (y) representing an Equity
Percentage of 15% or more or with a number of Votes of
15% or more of the Total Voting Power, (ii) Common
Securities representing an Equity Percentage of 15% or
more (whether acquired from the Company or otherwise)
(provided that this clause (ii) will apply only if the
Company shall amend, waive or modify the Amended Rights
Agreement as in effect on the date of this Agreement (or
a Substantially Similar Plan) so as to increase the
percentage "15%" referred to in clause (i) of the
definition of Trigger Amount in the Amended Rights
Agreement or increase the percentage "10%" or the
fraction "one-fourth (1/4)" referred to in clause (ii) of
the definition thereof or otherwise render the Amended
Rights Agreement inapplicable (including by taking action
to cause a Section 11(a)(ii) Event or Section 13 Event
(each as defined in the Amended Rights Agreement as in
effect on the date hereof), not to occur that, absent
such action, would otherwise have occurred, or to redeem
the Preferred Stock Purchase Rights) to an acquisition
referred to in this clause (ii) (whether or not done in
connection therewith or in anticipation thereof) or so as
to provide that the acquisition of any additional shares
of Common Stock under the circumstances contemplated by
clause (2) of the proviso to paragraph (a)(ii) of the
definition of Acquiring Person contained in the Amended
Rights Agreement (or similar provision of any
Substantially Similar Plan) will not have the effect
specified in said clause (2) (other than any such
amendment, waiver, modification or redemption legally
required to be made by the Board as a result of a
shareholder-sponsored resolution or a final and
non-appealable court order, in each case, that is opposed
by the Board; provided, that for purposes of this clause
(ii) references to the "Amended Rights Agreement" shall
also refer to a Substantially Similar Plan in which the
term "Trigger Amount" or comparable term thereto, and the
consequences resulting from its occurrence, are
substantially identical to those set forth in the Amended
Rights Agreement on the date of this Agreement including
containing the same percentages and fraction as those set
forth above), or (iii) (a) Common Securities representing
an Equity Percentage of 10% or more, and (b) the right
(whether such right is contingent, conditional or
otherwise) to designate or nominate one or more Directors
(or if the Board within five years after the date of the
acquisition of shares specified in clause (a), nominates
or appoints any designee of such Competitor or its
Affiliates to the Board). An acquisition of Beneficial
Ownership of Common Securities in excess of a percentage
of Votes shall be deemed to have occurred when, as a
result of such Common Securities becoming entitled to
additional Votes by reason of the passage of time, such
securities represent or have a number of Votes which
represent more than the specified percentage and, in the
case of clause (iii)(a) above, an acquisition of
Beneficial Ownership of Common Securities in excess of an
Equity Percentage shall be deemed to have occurred when,
as a result of repurchases by the Company of Common
Securities, such securities represent more than the
specified percentage (provided that such 10% level in
clause (iii)(a) above shall not be deemed exceeded by
reason of the repurchase of Common Securities by the
Company unless (i) an Equity Percentage of 10.5% or more
is achieved and (ii) the Competitor fails to reduce its
Beneficial Ownership of Common Securities to an Equity
Percentage below 10% within one year after equaling or
exceeding the 10.5% level). Notwithstanding the
foregoing, (A) no transaction with a Person who is not,
at the time such transaction is consummated or entered
into, then designated as a Competitor shall be deemed a
Competing Investment as a result of the subsequent
designation of such Person by the Investor as a
Competitor, but (B) by way of illustration, the
acquisition of Common Securities from the Company by a
Person (I) after which such acquisition such Person
Beneficially Owned Common Securities in an amount
satisfying the 15% requirement of clause (i) above, and
(II) before which acquisition such Person had been
designated a Competitor but whose Beneficial Ownership
did not satisfy such 15% requirement, shall be deemed to
be a Competing Investment.
"Competitor" means any Person that is one of
eight participants in the agricultural chemicals or
biotechnology market as designated to the Company by the
Investor as a Competitor (which term shall include any
Controlled Affiliate of each such Competitor and any 13D
Group with respect to securities of the Company of which
such Person is a member). The Investor shall provide to
the Company prior to the date of this Agreement, and
within 10 Business Days prior to each anniversary of the
Closing Date, a written list of such Competitors (which
Investor may change from year to year as of each
anniversary of the Closing Date) which Competitors shall
conform to the provisions of the definition of Competitor
contained herein. The Competitors so designated shall
constitute the Competitors hereunder for the initial
period commencing on the Closing date hereof and ending
one year following the Closing Date and the successive
one year period following each applicable anniversary of
the Closing Date and if no such notice is provided for
any year, the Competitors specified in the notice for the
most recent year that such notice was given shall
continue to be deemed the Competitors.
"Competitor Agreement " shall have the
meaning set forth in the definitions of the term
"Competing Investment".
"Confidentiality Agreement" has the meaning set
forth in Section 8.1(a) hereof.
"control" with respect to any Person means the
possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of
such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Controlled Affiliate" shall mean, with respect
to any Person, any Affiliate of such Person that is
controlled by or that controls or is under common control
with such Person such that, in any such case, the
controlling party has the legal or contractual power
(including, without limitation, through negative control
or through the controlling parties designees or
representatives on the board of directors or other
governing body of the parties controlled by the
controlling or under the articles of incorporation or
other constituent documents of such controlled parties or
as a result of voting rights of any securities or other
instruments issued by such controlled parties) to direct
or to manage the direction of the business and policies
of such Affiliate.
"Derivative Securities" means any
subscriptions, options, conversion rights, warrants,
phantom stock rights or other agreements, securities or
commitments of any kind obligating the Company or any of
its Subsidiaries to issue, grant, deliver or sell, or
cause to be issued, granted, delivered or sold (i) any
Common Securities or Voting Securities of the Company,
(ii) any securities convertible into or exchangeable for
any Common Securities or Voting Securities of the
Company, or (iii) any obligations measured by the price
or value of any shares of capital stock of the Company.
"Dilutive Issuance" has the meaning set forth
in Section 6.7(e) hereof.
"Director" shall mean a director of the
Company.
"Disposition" has the meaning set forth in
Section 6.3(a) hereof.
"Equity Percentage" means, with respect to any
Common Securities calculated at any particular point in
time, the ratio, expressed as a percentage of (a) the
total number of shares of Common Stock included in, or
issuable upon conversion of (whether or not then
convertible), or otherwise constituting the economic
equivalent of, such Common Securities over (b) the total
number of shares of Common Stock then outstanding and the
number of shares of Common Stock issuable upon conversion
of (whether or not then convertible), or otherwise
constituting the economic equivalent of, all outstanding
Common Securities.
"Exchange Act" means the Securities Exchange
Act of 1934, as amended, and the regulations promulgated
thereunder.
"Excluded Person" shall mean (i) any member of
the Investor Group, (ii) any Grandfathered Person, (iii)
any wholly owned Subsidiary of the Company, or (iv) any
underwriter temporarily holding Common Securities in
connection with a public offering of such securities.
"First Offer Price" has the meaning set forth
in Section 6.4(a) hereof.
"Fully Independent Director" means a person who
qualifies as an "outside director" of the Company and the
Investor within the meaning of Section 162(m) of the
Internal Revenue Code of 1986 as in effect on the date
hereof and who is not (apart from such directorship) (i)
a current or former officer or employee of the Company or
any Affiliate of the Company, (ii) a current or former
director, officer or employee of the Investor or any
member of the Investor Group, (iii) did not in either of
the last two completed calendar years receive, and is not
an officer, director, employee, stockholder holding more
than 10% of the voting interest of, partner or Affiliate
of any person ("Entity") that in either of such Entity's
two most recent fiscal years, received, more than 10% of
such person's total revenues from either the Company or
the Investor.
"GAAP" means United States generally accepted
accounting principles.
"Governmental Entity" means any government or
any agency, bureau, board, commission, court, department,
political subdivision, tribunal, or other instrumentality
of any government (including any regulatory or
administrative agency), whether federal, state or local,
domestic or foreign.
"Grandfathered Person" means any of the Persons
specified in clauses (i) through (vi) of the term
"Grandfathered Person" in the Amended Rights Agreement as
in effect on the date of this Agreement and any 13D Group
referred to in clause (B) below; provided, however, that
a Grandfathered Person shall cease to be a Grandfathered
Person if any of the following occur at any time: (A)
such Grandfathered Person, individually or together with
one or more other Grandfathered Persons, acting together
or as part of a 13D Group, Beneficially Owns Common
Securities representing an Equity Percentage of 40% or
more on a fully diluted basis, or (B) such Grandfathered
Person, individually or together with one or more
Grandfathered Persons, are acting as part of a 13D Group
which includes Persons who are not Grandfathered Persons
and who individually or in the aggregate Beneficially
Own, directly or indirectly, in excess of 1% of the then
outstanding Common Securities provided that the reference
to "1%" referred to in this clause (B) shall be increased
to up to 5% so long as the Beneficial Ownership of the
entire 13D Group referred to in this clause (B) does not
have an Equity Percentage greater than 35%.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations
promulgated thereunder.
"Independent Director" means a person who is
not (apart from such directorship) (i) a current or
former officer or employee of the Company or any
Affiliate of the Company or (ii) a current or former
director, officer or employee of the Investor or any
member of the Investor Group or Other Investor Affiliate.
"Initial Investor Nominee Notice" has the
meaning set forth in Section 5.1(a) hereof.
"Initial Top-Up Period" has the meaning set
forth in Section 6.7(b)(i) hereof.
"Investor" has the meaning set forth in the
preamble hereto.
"Investor Group" shall mean (a) the Investor,
(b) any Subsidiary of the Investor, (c) any Affiliate of
the Investor controlled by the Investor such that the
Investor has the legal or contractual power (including,
without limitation, through negative control or through
the Investor's designees or representatives on the board
of directors or other governing body of such Affiliate or
under the articles of incorporation or other constituent
documents of such Affiliate or as a result of the voting
rights of any securities or other instruments issued by
such Affiliate) to cause such Affiliate to comply with
the terms of this Agreement applicable to the Investor,
and (d) any Person with whom the Investor or any Person
included in the foregoing clauses (b) or (c) is part of a
13D Group.
"Investor Nominee Notice" has the meaning set
forth in Section 5.1(a) hereof.
"Investor Nominee" has the meaning set forth in
Section 5.1(a) hereof.
"Investor SEC Reports" has the meaning set
forth in Section 4.4 hereof.
"Joint Venture Agreement" shall mean (i) the
Formation Agreement, dated as of August 6, 1997, between
the Company and the Investor (the "Formation Agreement")
and (ii) the LLC Agreement referred to therein.
"Junior Preferred Stock" has the meaning set
forth in Section 3.4(a) hereof.
"Law" means any law, treaty, statute,
ordinance, code, rule or regulation of a Governmental
Entity.
"Lien" means any security interest, claim,
voting agreement, restriction, option, mortgage, deed of
trust, pledge, hypothecation, assignment, charge or
deposit arrangement, encumbrance, lien (statutory or
other) or preferential arrangement of any kind or nature
whatsoever and any contingent or other agreement to
provide any of the foregoing.
"Loss" has the meaning set forth in Section
6.6(b) hereof.
"Market Price," shall mean on any trading day,
with respect to shares of Common Stock or any other
security which is listed on a national securities
exchange, the last sale price regular way, or, in case no
such sale takes place on such day, the average of the
closing bid and asked prices regular way, in either case
on the NYSE, or, if the Common Stock or other security is
not listed or admitted to trading on such exchange, on
the principal national securities exchange on which the
Common Stock or other security is listed or admitted to
trading, or, if the Common Stock or other security is not
listed or admitted to trading on any national securities
exchange but is designated as national market system
security by the NASD, the last sale price, or, in case no
such sale takes place on such day, the average of the
closing bid and asked prices, in either case as report on
the NASD Automated Quotation/National Market System, or
if the Common Stock or other security is not so
designated as a national market systems security, the
average of the highest reported bid and lowest reported
asked prices as furnished by the NASD or similar
organization if the NASD is no longer reporting such
information.
"Material Adverse Effect" means any material
adverse effect on the financial condition, business or
operations of the Company and its Subsidiaries taken as a
whole.
"Maximum Offer Price" has the meaning set forth
in Section 8.3(a) hereof.
"NASD" has the meaning set forth in Section
6.4(b) hereof.
"NYSE" means the New York Stock Exchange.
"Offer" has the meaning set forth in Section
8.3(a).
"Offer Purchase Price" has the meaning set
forth in Section 8.3(a).
"Options" has the meaning set forth in Section
3.3(b) hereof.
"Order" means any judgment, decree, order,
writ, award, ruling, stipulation, injunction or
determination of an arbitrator or court or other
Governmental Entity.
"Other Investor Affiliate" has the meaning set
forth in Section 6.1(A) hereof.
"Ownership Cap" means a Total Ownership
Percentage of 20%, subject to reduction as provided in
Section 6.7(b).
"Per Share Price Range" has the meaning set
forth in Section 8.3(a).
"Permitted Underwriter" has the meaning set
forth in Section 6.3(b)(I) hereof.
"Person" means any individual, corporation,
company, association, partnership, joint venture, limited
liability company, trust or unincorporated organization,
group (within the meaning of Rule 13d-5 under the
Exchange Act) or a government or any agency or political
subdivision thereof.
"Pioneer Competitor" means any Person that is
one of eight participants in the seed market within the
Field of Interest (as defined in the Research Alliance
Agreement) as designated to the Investor by the Company
as a Pioneer Competitor (which term shall exclude the
Investor and its Subsidiaries but shall include any
Controlled Affiliate of each such Pioneer Competitor, and
the persons specified in writing by the Company to the
Investor on the date of this Agreement, and any 13D Group
with respect to voting securities of the Spin-Off Entity
of which such Person is a member). The Company shall
provide to the Investor prior to the date of this
Agreement, and within 10 Business Days prior to each
anniversary of the Closing Date, a written list of such
Pioneer Competitors (which the Company may change from
year to year as of each anniversary of the Closing Date)
which Pioneer Competitors shall conform to the provisions
of the definition of Pioneer Competitor contained herein.
The Pioneer Competitors so designated shall constitute
the Pioneer Competitors hereunder for the initial period
commencing with the date hereof and ending one year
following the Closing Date and the successive one year
periods following each applicable anniversary of the
Closing Date and if no such notice is provided for any
year, the Competitors specified in the notice for the
most recent year that such notice was given shall
continue to be deemed the Pioneer Competitors.
"Post Termination Standstill Period" has the
meaning set forth in Section 6.1(A) hereof.
"Preferred Stock Purchase Rights" means rights
to purchase the Junior Preferred Stock pursuant to the
Amended Rights Agreement, as amended from time to time.
"Process" has the meaning set forth in Section
8.2 hereof.
"Proposal" means any inquiry, indication of
interest, proposal or offer made to the Company or
publicly disclosed by any Person relating to any Change
in Control Transaction or Competing Investment.
"Purchase Price" has the meaning set forth in
Section 2.1 hereof.
"Purchaser Standstill Agreement" has the
meaning set forth in Section 6.3(B)(II) hereof.
"Purchasing Person" has the meaning set forth
in Section 6.3(b) hereof.
"Reclassification Amendment" shall have the
meaning set forth on Section 8.8.
"Registration Rights Agreement" means the
agreement to be entered into on the Closing Date between
the Company and the Investor in the form set forth in
Exhibit A hereto.
"Regulatory Approvals" means any and all
certificates, permits, licenses, franchises, concessions,
grants, consents, approvals, orders, registrations,
authorizations, waivers, variances or clearance from a
Governmental Entity.
"Release Event" has the meaning set forth in
Section 6.9 hereof.
"Representatives" means, with respect to any
Person, any of such Person's officers, directors,
partners, employees, agents, attorneys, accountants,
consultants or financial or other advisors or other
Person associated with or acting on behalf of such
Person.
"Required Disposition" has the meaning set
forth in Section 6.6(a) hereof.
"Required Disposition Amount" has the meaning
set forth in Section 6.6(a) hereof.
"Requisite Number" has the meaning set forth in
Section 8.3(a).
"Research Alliance Agreement" shall mean the
Research Alliance Agreement, dated as of August 6, 1997,
between the Company and the Investor.
"Rights Agreement" means the Amended and
Restated Rights Agreement, dated as of December 13, 1996,
by and between the Company and The First National Bank of
Boston, as Rights Agent.
"Rights Agreement Amendment" means the
amendment to the Rights Agreement executed by the Company
and the Rights Agent concurrently herewith in the form
set forth in Exhibit B hereto.
"Sale of Ag Products" means (x) a sale or other
transfer to one or more Persons other than a Subsidiary
of the Investor of all or substantially all of the assets
or business of the Agricultural Products business of the
Investor or (y) a transfer (whether by sale, merger or
other transaction) of any of the common equity of any
Person through which any such assets are held (such
entity or any transferee pursuant to clause (x) hereof a
"Spin-Off Entity") if, after giving effect to such
transfer, such Person is not a Subsidiary of the
Investor, provided that a transfer referred to in this
clause (y) effected by means of a dividend, distribution,
bona fide public offering or otherwise, and a sale or
transfer referred to in clause (x), in either case, shall
not be a "Sale of Ag Products" if and for so long as all
of the following conditions are and continue to be
satisfied: (i) the Spin-Off Entity agrees to be and is
bound by the provisions of Section 6.1(A) of the
Agreement (to the same extent as if the Spin-Off Entity
were a Subsidiary of the Investor), (ii) the Spin-Off
Entity shall agree to be and is bound by the Research
Alliance Agreement to the same extent as the Investor (it
being understood that in no event shall the Investor be
released from any of its obligations under this Agreement
or the Research Alliance Agreement as a result of the
Spin-Off Entity's agreement to the matters referred to in
clauses (i) and (ii) above except that, in the case of
the Research Alliance Agreement, if substantially all of
the research capabilities of the Investor in agricultural
products is transferred to the Spin-Off Entity, then the
Investor will continue pursuant to the Research Alliance
Agreement to provide the Company with, but only with,
genomic and biotechnology support sufficient so that the
research available to the Company from the Spin-Off
Entity under the Research Alliance Agreement, when taken
together with such support from the Investor, is
substantially the same in scope and capability as the
research available from the Investor prior to the
transfer of such assets to the Spin-Off Entity), (iii) if
at any time, any Person or 13D Group owns 15% or more of
any class of voting securities of the Spin-Off Entity,
the Investor and its wholly owned Subsidiaries must have
an interest in the Voting Securities of the Spin-Off
Entity greater than or equal to any other Person or 13D
Group (however, such interest must be greater than that
of any Person or 13D Group which is a Pioneer
Competitor), (iv) no Pioneer Competitor may own voting or
common securities of the Spin-Off Entity (A) representing
more than 15% of the common securities or voting power of
the Spin-Off Entity, which securities have been acquired
directly from the Investor or the Spin-Off Entity or a
Subsidiary of either, (B) representing 10% or more of the
common securities of the Spin-Off Entity if the Pioneer
Competitor has the right (whether such right is
contingent, conditional or otherwise) to designate or
nominate one or more directors of the Spin-Off Entity (or
if the board of directors of the Spin-Off Entity within
five years after the date of acquisition of shares
referred to in this clause (B) nominates any designee of
such Pioneer Competitor or any Affiliate of such Pioneer
Competitor to the board of the Spin-Off Entity), provided
that such 10% level in this clause (B) shall not be
deemed exceeded by reason of the repurchase of common
securities by the Spin-Off Entity unless (i) an ownership
of 10.5% or more of the common securities is achieved and
(ii) the Pioneer Competitor fails to reduce its
Beneficial Ownership of common securities to an ownership
level below 10% within one year after equaling or
exceeding the 10.5% level or (C) representing in excess
of the level of ownership that would cause a triggering
event to occur under any rights plan or "poison pill"
adopted by the Spin-Off Entity and then in effect, and
(v) so long as the Investor owns less than 30% of the
common equity of the Spin-Off Entity, the Company has the
right to nominate one representative of the Company to
the board of the Spin-Off Entity analogous to the rights
of the Investor under Sections 5.1(b) and (c) and the
first sentence of clause (d) thereof (provided that such
representative must be one of the four most senior
executives of the Company, and provided that, if any such
representative of the Company on the board of the
Spin-Off Entity is unable to attend any meeting of such
board, the Company shall have the right to designate an
alternate designee of the Company, who is also one of the
four most senior executives of the Company, to attend
such meeting of the board of the Spin-off Entity as an
observer) and the Investor shall use commercially
reasonable efforts (including by voting its voting
securities in favor of such nominee) to cause such
nominee to be elected to the board of the Spin-Off Entity
(it being understood that a Sale of Ag Products will be
deemed to occur at any time any of the foregoing
conditions cease to be satisfied; provided, however, that
in the case of a failure of either clauses (iii) or (iv)
above, the conditions as to ownership of common
securities or voting securities by a Pioneer Competitor
must have ceased to have been satisfied with respect to
any Person or 13D Group only after the designation (to
the extent in effect at such time) by the Company of such
Person or 13D Group as a Pioneer Competitor).
"Section 6.4 Closing" has the meaning set forth
in Section 6.4(a) hereof.
"Section 6.4 Price" has the meaning set forth
in Section 6.4(b) hereof.
"Section 6.4 Securities" has the meaning set
forth in Section 6.4(a) hereof.
"Section 6.5 Acceptance Notice" has the meaning
set forth in Section 6.5(a) hereof.
"Section 6.5 Closing" has the meaning set forth
in Section 6.5(a) hereof.
"Section 6.5 Price" has the meaning set forth
in Section 6.5(b) hereof.
"Section 6.5 Securities" has the meaning set
forth in Section 6.5(a) hereof.
"SEC Reports" has the meaning set forth in
Section 3.5(a) hereof.
"Securities Act" means the Securities Act of
1933, as amended, and the regulations promulgated
thereunder.
"Sell Down Period" has the meaning set forth in
Section 6.6(a) hereof.
"Series A Convertible Preferred Stock" has the
meaning set forth in Section 2.1 hereof.
"Shares" has the meaning set forth in Section
2.1 hereof.
"Spin-Off Agreement" has the meaning set forth
in Section 6.8 hereof.
"Spin-Off Company" means the corporation or
other entity the capital stock or other equity interests
of which are distributed in a Spin-off Distribution.
"Spin-Off Distribution" means any distribution
by the Company to all holders of Common Securities of
capital stock of or other equity interests in any
corporation or entity other than the Company.
"Spin-Off Entity" has the meaning set forth in
the definition of the term "Sale of Ag Products".
"Standstill Period" means the period commencing
on the date hereof and ending on the termination of this
Agreement pursuant to Section 10.1; subject to extension
upon the occurrence of a Trigger Event or a Release Event
as provided in Section 10.2(iv).
"Subsidiary" means, as to any Person, any other
Person more than fifty percent (50%) of the shares of the
voting stock or other voting interests of which are owned
or controlled, or the ability to select or elect more
than fifty percent (50%) of the directors or similar
managers is held, directly or indirectly, by such first
Person or one or more of its Subsidiaries or by such
first Person and one or more of its Subsidiaries. A
Subsidiary that is directly or indirectly wholly-owned by
another Person except for directors' qualifying shares
shall be deemed wholly-owned for purposes of this
Agreement.
"Substantially Similar Plan" has the meaning
set forth in Section 8.4 hereof.
"Surviving Change in Control Transaction" has
the meaning set forth in Section 8.2(b).
"13D Group" shall mean any group of Persons
who, with respect to those acquiring, holding, voting or
disposing of Voting Securities would, assuming ownership
of the requisite percentage thereof, be required under
Section 13(d) of the Exchange Act and the rules and
regulations thereunder to file a statement on Schedule
13D with the SEC as a "person" within the meaning of
Section 13(d)(3) of the Exchange Act, or who would be
considered a "person" for purposes of Section 13(g)(3) of
the Exchange Act. "13D Group" when used with reference to
standards or tests that are based on securities other
than Voting Securities shall have the foregoing meaning
except that the words "Voting Securities" in the second
line of the definition of "13D Group", (i) in the case of
standards or tests based on "securities of the Company",
shall be replaced with the words "securities of the
Company", and (ii) in the case of standards or tests
based on "voting securities of the Spin-Off Entity",
shall be replaced with the words "voting securities of
the Spin-Off Entity."
"Third Party Offer" has meaning set forth in
Section 6.4(a) hereof.
"Total Ownership Percentage" means, with
respect to any Person calculated at a particular point in
time, the ratio, expressed as a percentage, of (a) the
total number of shares of Common Stock Beneficially Owned
by such Person and issuable upon conversion of (whether
or not then convertible), or otherwise constituting the
economic equivalent of, all Common Securities
Beneficially Owned by such Person, over (b) the total
number of shares of Common Stock then outstanding and the
number of shares of Common Stock issuable upon conversion
(whether or not then convertible) of, or otherwise
constituting the economic equivalent of, all outstanding
Common Securities.
"Total Voting Power" shall mean, calculated at
a particular point in time, the aggregate Votes
represented by all then outstanding Voting Securities
then entitled to vote (a) as estimated conclusively for
purposes of the definition of the terms "Change in
Control" and "Competing Investment" at any time in good
faith by the Company on the assumption that all holders
of Common Stock who would, upon taking the necessary
documentation steps under the Articles of Incorporation,
be entitled to five votes per share at such time, have
effectively taken such steps, it being understood that it
will be necessary for the Company to make various
assumptions in connection therewith (such as identity of
holders and period of ownership of shares of Common
Stock) and (b) for all other purposes of this Agreement,
based on the number of Votes as were actually entitled to
vote at the then current or the most recent meeting of
shareholders as determined by the Company which excludes
any estimation of any kind (including, as to who would
have been entitled to 5 votes per share if such
shareholder had taken the requisite steps to obtain such
vote) plus, without duplication of any Votes otherwise
taken into account, the number of Votes attributable to
any Voting Securities issued by the Company since the
most recent meeting of shareholders of the Company.
"Transaction Agreements" means this Agreement,
the Registration Rights Agreement and the Rights
Agreement Amendment.
"Transfer" has the meaning set forth in Section
6.7(b)(iii).
"Transfer Notice" has the meaning set forth in
Section 6.4(a) hereof.
"Trigger Event" has the meaning set forth in
Section 6.10 hereof.
"Unsolicited Offer" has the meaning set forth
in Section 6.3(e) hereof.
"Votes" shall mean, at any time, with respect
to any Voting Securities, the total number of votes that
would be entitled to be cast by the holders of such
Voting Securities generally (by the terms of such Voting
Securities, the Articles of Incorporation or any
certificate of designations for such Voting Securities)
in a meeting for the election of Directors held at such
time, including the votes that would be able to be cast
by holders of shares of Series A Convertible Preferred
Stock.
"Voting Amendment" has the meaning set forth in
Section 6.2(a) hereof.
"Voting Ownership Percentage" shall mean,
calculated at a particular point in time, the Voting
Power represented by the Voting Securities Beneficially
Owned by the Person whose Voting Ownership Percentage is
being determined.
"Voting Power" shall mean, calculated at a
particular point in time, the ratio, expressed as a
percentage, of (a) the Votes represented by the Voting
Securities with respect to which the Voting Power is
being determined to (b) Total Voting Power.
"Voting Securities" means the shares of Common
Stock, the Series A Convertible Preferred Stock and any
other securities of the Company entitled to vote
generally for the election of directors, and any
securities (other than employee stock options) which are
convertible into, or exercisable or exchangeable for,
Voting Securities.
Section 1.2. General Interpretive Principles.
Whenever used in this Agreement, except as otherwise
expressly provided or unless the context otherwise
requires, any noun or pronoun shall be deemed to include
the plural as well as the singular and to cover all
genders. The name assigned this Agreement and the section
captions used herein are for convenience of reference
only and shall not be construed to affect the meaning,
construction or effect hereof. Unless otherwise
specified, the terms "hereof," "herein" and similar terms
refer to this Agreement as a whole (including the
exhibits, schedules and disclosure statements hereto),
and references herein to Sections refer to Sections of
this Agreement.
SECTION 2
ISSUANCE AND SALE OF SHARES
Section 2.1. Issuance and Sale of Shares. Upon
the terms and subject to the conditions set forth in this
Agreement, and in reliance upon the representations and
warranties hereinafter set forth, on the Closing Date,
the Company will issue, sell and deliver to the Investor,
and the Investor will purchase from the Company,
164,445.86 shares of Series A Convertible Preferred Stock
of the Company, par value $.01 per share, having the
terms set forth in the Certificate of Designation
attached hereto as Exhibit C (the "Series A Convertible
Preferred Stock"), together with the associated Preferred
Stock Purchase Rights (such shares of Series A
Convertible Preferred Stock, together with such Preferred
Stock Purchase Rights, the "Shares"), free and clear of
all Liens (other than Liens pursuant to this Agreement),
for an aggregate purchase price of $1,710,236,944 (the
"Purchase Price").
Section 2.2. Closing. (a) The Closing shall
take place at the offices of Fried, Frank, Harris,
Shriver & Jacobson at 10:00 a.m., One New York Plaza, New
York, NY 10004, New York City time, on the Business Day
of the satisfaction or concurrent satisfaction or, if
permissible, waiver of the conditions set forth in
Sections 9.1 and 9.2 hereof (the "Closing Date") or at
such other time and place as the parties may agree.
(b) At the Closing (i) the Company will deliver
to the Investor certificates representing the Shares
against payment of the Purchase Price, registered in the
name of the Investor, or any wholly-owned United States
Subsidiary of the Investor designated by it (provided
that such Subsidiary agrees in writing to be bound by
this Agreement to the same extent as the Investor and
such Subsidiary at all times remains a wholly-owned
United States Subsidiary of the Investor), together with
the other documents and certificates to be delivered
pursuant to Section 9.1 hereof, and (ii) the Investor, in
full payment for the Shares, will deliver to the Company
an amount equal to the Purchase Price in immediately
available funds by wire transfer to the account
designated by the Company, at least two Business Days
prior to the Closing Date, or by such other means as may
be agreed by the parties, together with the other
documents and certificates to be delivered pursuant to
Section 9.2 hereof.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to,
and agrees with, the Investor as follows:
Section 3.1. Corporate Organization and
Qualification. Each of the Company and its material
Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite
corporate power and authority to own or lease its assets
and to conduct its business. Each of the Company and its
Subsidiaries is duly licensed or qualified as a foreign
corporation for the transaction of its business and is in
good standing under the laws of each other jurisdiction
in which its ownership, lease or operation of property or
conduct of its business requires such qualification,
except where the failure to be so licensed, authorized
and qualified and in good standing would not reasonably
be expected to have a Material Adverse Effect. The
Company has made available to the Investor a complete and
correct copy of the Articles of Incorporation and the
Bylaws of the Company, in each case as amended to date,
and each of which as so made available, as the case may
be, is in full force and effect.
Section 3.2. Authorization of Agreements. (a)
The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations
under the Transaction Agreements, to issue and sell the
shares of Series A Convertible Preferred Stock to be sold
to the Investor (or its permitted designee) hereunder and
the shares of Common Stock issuable upon the conversion
thereof and to otherwise consummate the transactions
contemplated hereby and thereby and such issuance, sale
and delivery of such shares of Series A Convertible
Preferred Stock to the Investor (or its permitted
designee) will convey to the Investor (or its permitted
designee) (and any issuance of Common Stock upon any such
conversion will convey to the Person to whom such Common
Stock is issued) good and marketable title to such
shares, free and clear of all Liens, other than Liens
arising pursuant to any Transaction Agreement. The
execution, delivery and performance of the Transaction
Agreements, and the consummation by the Company of the
transactions contemplated hereby and thereby, have been
approved by the Board of Directors (by the vote of the
directors as advised by the Company to the Investor in
writing prior to the execution of this Agreement) and
have been duly authorized by all other necessary
corporate action on the part of the Company. The Company
has taken the corporate action necessary to approve the
transactions contemplated by this Agreement for purposes
of Section 490.1109 of the Business Corporation Act of
the State of Iowa and to provide that the Transaction
Agreements and the transactions contemplated thereby
shall be exempt from the requirements of any
"moratorium," "control share," "fair price" or other
anti-takeover laws or regulations of any state which, to
the knowledge of the Company, is reasonably likely to
otherwise be applicable thereto.
(b) Each of this Agreement and the Rights
Agreement Amendment have been duly executed and delivered
by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the
Company in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general
principles of equity. The Registration Rights Agreement,
when executed, will have been duly executed and delivered
by the Company and will constitute a valid and binding
obligation of the Company, enforceable against the
Company in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general
principles of equity.
(c) The execution, delivery and performance of
the Transaction Agreements and the acquisition of the
Shares contemplated thereby and the issuance of Common
Stock to the Investor Group upon the conversion thereof
in accordance with the Certificate of Designation for the
Series A Convertible Preferred Stock will not cause a
Distribution Date or constitute a Triggering Event, a
Section 11(a)(ii) Event or a Section 13 Event (in each
case, as defined in the Amended Rights Agreement) under
the Amended Rights Agreement.
Section 3.3. Consents; No Conflicts. (a)
Except for (i) the expiration of the waiting period under
the HSR Act, (ii) if necessary, the approval of the NYSE
required for listing of the Common Stock into which the
Series A Convertible Preferred Stock is convertible,
(iii) all consents, authorizations, orders and approvals
of, and all filings and registrations, including the
effectiveness of a registration statement and applicable
"Blue Sky" clearance and, in each case required for, or
in connection with, the consummation of the transactions
contemplated by the Registration Rights Agreement, and
(iv) the Regulatory Approvals set forth on Schedule 3.3,
no Regulatory Approval from, or registration,
declaration, notice or filing with, any Governmental
Entity is required to be made or obtained by the Company
or any of its Subsidiaries in connection with the
execution, delivery and performance of the Transaction
Agreements and the consummation of the transactions
contemplated hereby and thereby, except for such
Regulatory Approvals, registrations, declarations,
notices and filings, (A) the failures of which to be made
or obtained, would not in the aggregate reasonably be
expected to have a Material Adverse Effect, or (B) which
are applicable by reason of any facts specifically
relating to, or the particular regulatory status of, the
Investor.
(b) The execution and delivery of this
Agreement and the Rights Agreement Amendment does not,
and the execution and delivery of the Registration Rights
Agreement will not, and the performance of the
obligations set forth herein and therein and the
consummation of the transactions contemplated hereby and
thereby will not, (i) violate any provision of the
Articles of Incorporation or the Bylaws or the other
organizational documents of the Company or the comparable
governing instruments of any of its material
Subsidiaries; (ii) conflict with, contravene or result in
a breach or violation of any of the terms or provisions
of, or constitute a default (with or without notice or
the passage of time) under, or result in or give rise to
a right of termination, cancellation, acceleration,
amendment or modification of any right or obligation
under, or to a loss of any benefit to which any of the
Company or its Subsidiaries is entitled, or give rise to
a right to put or to compel a tender offer for
outstanding securities of the Company or any of its
Subsidiaries under, or require any consent, waiver,
provision of notice or approval under, any note, bond,
debt instrument, indenture, mortgage, deed of trust,
lease, loan agreement, joint venture agreement,
Regulatory Approval, contract or any other agreement,
instrument or obligation to which the Company or any of
its Subsidiaries is a party or by which the Company or
any of its Subsidiaries or any property of the Company or
any of its Subsidiaries is bound; (iii) result in the
creation or imposition of any Lien upon any assets or
properties of the Company or any of its Subsidiaries
except pursuant to any Transaction Agreement; or (iv)
violate or conflict with any Law or Order applicable to
the Company or any of its Subsidiaries or any of their
respective assets or properties of any Governmental
Entity having jurisdiction over the Company or any of its
Subsidiaries or any of their respective assets or
properties, except in the case of clause (ii), clause
(iii) and clause (iv) for such violations, conflicts,
defaults, creation of Liens and other matters which would
not in the aggregate reasonably be expected to have a
Material Adverse Effect.
Section 3.4. Capitalization. (a) The
authorized capital stock of the Company consists of (i)
150,000,000 shares of Common Stock, of which 82,222,935
shares are issued and outstanding and (ii) 10,000,000
shares of preferred stock, no par value, of which (x)
150,000 shares have been designated Junior Participating
Preferred Stock (the "Junior Preferred Stock"), of which
no shares are outstanding and (y) 200,000 shares have
been designated Series A Convertible Preferred Stock, of
which no shares are outstanding. All of such outstanding
shares of Common Stock were duly authorized and validly
issued and are fully paid and non-assessable.
(b) Other than (i) shares of Common Stock
reserved for issuance pursuant to the Company's stock
option plan (the "Options"), (ii) shares of Common Stock
reserved for issuance upon conversion of the Series A
Convertible Preferred Stock and (iii) shares of Junior
Preferred Stock reserved for issuance upon exercise of
the currently existing Preferred Stock Purchase Rights,
and except as set forth on Schedule 3.4(b)(1), there are
not authorized or outstanding (or any obligations to
authorize or issue) any Derivative Securities or any
contract, agreement or understanding to pay any dividend
on or make any distribution with respect to any capital
stock or other securities of the Company. Schedule
3.4(b)(2) sets forth the terms (including, without
limitation, the exercise price and the expiration date)
and number of each type of Derivative Securities
outstanding. The transactions contemplated hereby will
not affect the terms and provisions of, and will not
alter the rights of holders of, any Derivative
Securities, including but not limited to any
anti-dilution adjustments to the number of outstanding
Options, the exercise price thereof or the number of
shares of Common Stock to be acquired upon exercise
thereof. Other than pursuant to the Transaction
Agreements and the Rights Agreement, there are no
restrictions on the transfer of shares of capital stock
of the Company, and no contract, agreement or
understanding to which the Company is a party exists
among holders of capital stock of the Company with
respect to the ownership, holding, voting or any other
rights or obligations with respect to such capital stock,
except as set forth in Schedule 3.4(b)(3).
(c) The shares of Series A Convertible
Preferred Stock to be issued pursuant to this Agreement
and the shares of Common Stock issuable upon conversion
of such shares have been duly and validly authorized and,
when such shares are issued as contemplated by this
Agreement, will have been validly issued, fully paid and
non-assessable. There are no, and the issuance and sale
of the Series A Convertible Preferred Stock pursuant to
this Agreement and the issuance of shares of Common Stock
upon conversion of the Series A Convertible Preferred
Stock will not give rise to any, preemptive rights,
rights of first refusal or other similar rights on behalf
of any Person under any provision of applicable Law or
any provision of the Articles of Incorporation or Bylaws
of the Company or of any agreement or instrument to which
the Company or any of its material Subsidiaries is a
party or by which the Company or any of its material
Subsidiaries is bound in respect of any capital stock or
other securities of the Company or its material
Subsidiaries other than pursuant to the Transaction
Agreements. No consent or approval of the Company's
shareholders is required by Law, the Articles of
Incorporation or Bylaws or otherwise for the execution,
delivery and performance by the Company of the
Transaction Agreements and the consummation of the
transactions contemplated hereby and thereby.
Section 3.5. Company Reports; Financial
Statements. (a) The Company has delivered to the Investor
a true and complete copy of (i) the Company's Annual
Report on Form 10-K for the fiscal years ended August 31,
1996, 1995 and 1994; (ii) the Company's Quarterly Report
on Form 10-Q for the periods ended November 30, 1996,
February 29, 1997 and May 30, 1997; and (iii) each
registration statement, report on Form 8-K and Form 8-A,
proxy statement, information statement or other document,
report or statement filed by the Company or any of its
Subsidiaries with the Commission since December 31, 1994,
in each case in the form (including financial statements,
schedules, exhibits and any amendments thereto) filed
with the Commission (collectively, the "SEC Reports"). As
of their respective dates, the SEC Reports (i) were
timely filed with the Commission; (ii) complied, in all
material respects, with the applicable requirements of
the Exchange Act and the Securities Act; and (iii) did
not contain any untrue statement of a material fact or
omit to state a material fact required to be stated
therein or necessary in order to make the statements
therein, in light of the circumstances under which they
were made, not misleading. Other than the SEC Reports,
the Company and its Subsidiaries have not filed or been
required to file any other reports or statements with the
Commission since December 31, 1994.
(b) Each of (i) the consolidated balance
sheets (including the related notes and schedules)
included in or incorporated by reference into the SEC
Reports fairly presents the consolidated financial
position of the Company and its Subsidiaries as of the
date thereof, subject, in the case of unaudited
statements, to normal year-end adjustments, and (ii) the
consolidated statements of income (or statements of
results of operations), shareholders' equity and cash
flows (including the related notes and schedules)
included in or incorporated by reference into the SEC
Reports fairly presents the results of operations,
retained earnings and cash flows, as the case may be, of
the Company and its Subsidiaries (on a consolidated
basis) for the periods set forth therein (subject, in the
case of unaudited statements, to normal year-end
adjustments and except as permitted by Form 10-Q of the
Commission) in each case in accordance with GAAP applied
on a consistent basis throughout the periods covered
(except as stated therein or in the notes thereto) and in
compliance with the rules and regulations of the
Commission.
Section 3.6. Absence of Certain Changes.
Except for transactions contemplated by the Transaction
Agreements or as disclosed in the SEC Reports or as set
forth in Schedule 3.6, since August 31, 1996, there have
not been any changes, conditions, occurrences,
circumstances or other events that have had or would
reasonably be expected to have a Material Adverse Effect.
Section 3.7. Litigation. Except as disclosed
in SEC Reports and Schedule 3.7 hereto, there are no
claims, suits, actions, proceedings, arbitrations or
investigations pending or, to the knowledge of the
Company, threatened in writing against the Company or any
of its material Subsidiaries that in the aggregate would
reasonably be expected to have a Material Adverse Effect;
nor are there any Orders outstanding against or
applicable to the Company or any of its material
Subsidiaries or against or applicable to any of their
respective assets, properties or businesses which would
reasonably be expected to have a Material Adverse Effect.
Section 3.8. Compliance with Laws; Regulatory
Approvals. Except as disclosed in the SEC Reports and
except for matters which in the aggregate would not have
a Material Adverse Effect, the Company and its
Subsidiaries are in compliance with all applicable Laws.
Except, for matters which in the aggregate, as would not
have a Material Adverse Effect, (a) all material
Regulatory Approvals required by the Company and its
Subsidiaries to conduct their respective business as now
conducted by them have been obtained and are in full
force and effect and (b) the Company and its Subsidiaries
are in compliance in all material respects with the terms
and requirements of such Regulatory Approvals.
Section 3.9. Exemption from Registration.
Assuming the representations and warranties of the
Investor set forth in Section 4 hereof are true and
correct, the offer and sale of the shares of Series A
Convertible Preferred Stock made pursuant to this
Agreement will be in compliance with the Securities Act
and any applicable state securities laws and will be
exempt from the registration requirements of the
Securities Act and such state securities laws.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor hereby represents and warrants to,
and agrees with, the Company as follows:
Section 4.1. Organization. The Investor is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has
all requisite power and authority to own or lease its
assets and to conduct its business.
Section 4.2. Authorization of Agreements. (a)
The Investor has all requisite power and authority to
execute, deliver and perform its obligations under this
Agreement, the Registration Rights Agreement and each
other document, instrument or certificate to be executed
by the Investor in connection with the consummation of
the transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement and
the Registration Rights Agreement, and the consummation
by the Investor of the transactions contemplated hereby
and thereby, have been approved by the board of directors
of the Investor (by the vote of the directors as advised
by the Investor to the Company in writing prior to
execution of this Agreement) and have been duly
authorized by all other necessary corporate action on the
part of the Investor.
(b) This Agreement has been duly executed and
delivered by the Investor and constitutes a valid and
binding obligation of the Investor, enforceable against
the Investor in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general
principles of equity. The Registration Rights Agreement,
when executed, will have been duly executed and delivered
by the Investor and will constitute a valid and binding
obligation of the Investor, enforceable against the
Investor in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general
principles of equity.
Section 4.3. Consents; No Conflicts. (a)
Except for (i) the expiration of the waiting period under
the HSR Act, (ii) all consents, authorizations, orders
and approvals of, and filing and registrations including
the effectiveness of a registration statement and
applicable "Blue Sky" clearance required for, or in
connection with, the consummation of the transactions
contemplated by the Registration Rights Agreement, and
(iii) the Regulatory Approvals set forth on Schedule 4.3,
no Regulatory Approval from, or registration,
declaration, notice or filing with, any Governmental
Entity is required to be made or obtained by the Investor
in connection with the execution, delivery and
performance of this Agreement and the Registration Rights
Agreement and the consummation of the transactions
contemplated hereby and thereby except for such
Regulatory Approvals, registrations, declarations,
notices and filings, (A) the failures of which to make or
obtain would not reasonably be expected to have a
material adverse effect on the ability of the Investor to
consummate or to perform its obligations under the
Transaction Documents, or (B) which are applicable by
reason of any facts specifically relating to, or the
particular regulatory status of, the Company or its
Subsidiaries.
(b) The execution and delivery of this
Agreement does not, and the execution and delivery of the
Registration Rights Agreement will not, and the
performance of the obligations set forth herein and
therein and the consummation of the transactions
contemplated hereby and thereby will not, (i) violate any
provision of the certificate of incorporation, by-laws or
the other organizational documents of the Investor or any
of its material Subsidiaries; (ii) give rise to a right
to put or to compel a tender offer for outstanding
securities of the Investor or any of its Subsidiaries
under, or require any consent, waiver, provision of
notice or approval under, any note, bond, debt
instrument, indenture, mortgage, deed of trust, lease,
loan agreement, joint venture agreement, Regulatory
Approval, contract or any other agreement, instrument or
obligation to which the Investor or any of its
Subsidiaries is a party or by which the Investor or any
property of the Investor or any of its material
Subsidiaries is bound; (iii) result in the creation or
imposition of any Lien upon the Series A Convertible
Preferred Stock to be issued to the Investor pursuant to
this Agreement, other than pursuant to a Transaction
Agreement or (iv) violate or conflict with any Law or
Order applicable to the Investor or any of its
Subsidiaries or any of their respective assets or
properties of any Governmental Entity having jurisdiction
over the Investor or any of its Subsidiaries or any of
their respective assets or properties, except in the case
of clause (ii), clause (iii) and clause (iv) for such
violations, conflicts, defaults, creation of Liens and
other matters which would not reasonably be expected to
have a material adverse effect on the ability of the
Investor to consummate or to perform its obligations
under the Transaction Documents.
Section 4.4. Investor Reports; Financial
Statements. (a) The Investor has delivered to the Company
a true and complete copy of (i) the Investor's Annual
Report on Form 10-K for the fiscal years ended December
31, 1996, 1995 and 1994; (ii) the Investor's Quarterly
Report on Form 10-Q for the period ended March 31, 1997;
and (iii) each registration statement, report on Form 8-K
and Form 8-A, proxy statement, information statement or
other document, report or statement filed by the Investor
or any of its Subsidiaries with the Commission since
December 31, 1994, in each case in the form (including
financial statements, schedules, exhibits and any
amendments thereto) filed with the Commission
(collectively, the "Investor SEC Reports"). As of their
respective dates, the Investor SEC Reports (i) were
timely filed with the Commission; (ii) complied, in all
material respects, with the applicable requirements of
the Exchange Act and the Securities Act; and (iii) did
not contain any untrue statement of a material fact or
omit to state a material fact required to be stated
therein or necessary in order to make the statements
therein, in light of the circumstances under which they
were made, not misleading. Other than the SEC Reports,
the Investor and its Subsidiaries have not filed or been
required to file any other reports or statements with the
Commission since December 31, 1994.
(b) Each of (i) the consolidated balance
sheets (including the related notes and schedules)
included in or incorporated by reference into the
Investor SEC Reports fairly presents the consolidated
financial position of the Investor and its Subsidiaries
as of the date thereof, subject, in the case of unaudited
statements, to normal year-end adjustments, and (ii) the
consolidated statements of income (or statements of
results of operations), shareholders' equity and cash
flows (including the related notes and schedules)
included in or incorporated by reference into the
Investor SEC Reports fairly presents the results of
operations, retained earnings and cash flows, as the case
may be, of the Investor and its Subsidiaries (on a
consolidated basis) for the periods set forth therein
(subject, in the case of unaudited statements, to normal
year-end adjustments and except, as permitted by Form
10-Q of the Commission) in each case in accordance with
GAAP applied on a consistent basis throughout the periods
covered (except as stated therein or in the notes
thereto) and in compliance with the rules and regulations
of the Commission.
Section 4.5. Absence of Certain Changes.
Except for transactions contemplated by the Transaction
Agreements or as disclosed in the Investor SEC Reports or
as set forth in Schedule 4.5, since December 31, 1996
there have not been any changes, conditions, occurrences,
circumstances or other events that have had or would
reasonably be expected to have a material adverse effect
on the financial condition of the Investor and its
Subsidiaries, taken as a whole.
Section 4.6. Purchase for Purpose of
Investment. The Investor (or its permitted designee) is
acquiring the Shares under this Agreement for its own
account solely for the purpose of investment and not with
a view to, or for sale in connection with, any
distribution thereof in violation of the Securities Act.
The Investor acknowledges that the shares of Series A
Convertible Preferred Stock to be acquired by it or any
other member of the Investor Group have not been
registered under the Securities Act and may be sold or
disposed of in the absence of such registration only
pursuant to any exemption from such registration and in
accordance with the terms of the Transaction Agreements.
Neither the Investor nor any other member of the Investor
Group Beneficially Owns any Voting Securities.
SECTION 5
GOVERNANCE
Section 5.1. Directors Designated by the
Shareholder. (a) Immediately following the Closing, the
Board shall appoint as additional Directors the two (2)
Investor Nominees (as defined in Section 5.1(b) below)
who have been designated by the Investor in the Investor
Nominee Notice (as defined in Section 5.1(b) below)
attached as Exhibit D hereto (the "Initial Investor
Nominee Notice"). One Investor Nominee shall be placed in
the class of Directors next standing for election, and
the remaining Investor Nominee shall be placed in the
class of Directors next but one standing for election. In
addition, if at any time following the annual meeting of
shareholders to be held in January 1999, the number of
members constituting the entire Board of Directors shall
equal or exceed 15, including the Investor Nominees
appointed pursuant to the previous sentence, the Investor
shall be entitled to designate pursuant to an Investor
Nominee Notice, and the Board shall appoint to the Board,
an additional Investor Nominee in accordance with the
provisions of this Section 5, provided that, for purposes
of this sentence (but not for purposes of requiring the
resignation of any Investor Nominee pursuant to Section
5.2(w)), the number of directors constituting the entire
Board of Directors at any time after the annual meeting
of shareholders to be held in January 2000 shall exclude
any Director who has advised (and not withdrawn) the
Company of his or her intention, or would be scheduled
pursuant to the policies of the Company, to retire or
resign from the Board within 12 months of the date as of
which the determination pursuant to this sentence is
being made; provided, further, that no such Director
shall be excluded for purposes of determining the number
of directors constituting the entire Board for a period
of greater than 12 consecutive months until he or she no
longer serves as a member of the Board. Any such
additional Investor Nominee shall be placed in the class
of Directors which does not include an Investor Nominee.
In the event of a vacancy caused by the disqualification,
removal, resignation or other cessation of service of any
Investor Nominee from the Board, the Board shall elect as
a Director (to serve until the Company's immediately
succeeding annual meeting of shareholders) a new Investor
Nominee who has been designated by the Investor in an
additional Investor Nominee Notice that has been provided
to the Company at least seven (7) days prior the date of
a regular meeting of the Board. The Investor shall
nominate each Investor Nominee pursuant to an additional
Investor Nominee Notice in advance of each meeting of
shareholders at which such Investor Nominee is to be
elected.
(b) The Investor shall provide notice to the
Company (the "Investor Nominee Notice") as required by
Section 5.1(a) above for each Investor Nominee, which
notice shall contain the following information: (i) the
name of the person(s) it has designated to become
Director(s) (the "Investor Nominees"), and (ii) all
information required by Regulation 14A and Schedule 14A
under the Exchange Act with respect to each such Investor
Nominee. Subject to Section 5.1(c) below, (x) if there
shall be two or fewer Investor Nominees, such Investor
Nominees may be any person designated by the Investor,
including persons who are officers, directors or
employees of the Investor; and (y) if there shall be
three Investor Nominees, two of such Investor Nominees
may be persons described in clause (x) above and one
Investor Nominee shall be an Independent Director.
(c) Any proposed Investor Nominee shall be a
person acceptable to the Board in its reasonable
discretion prior to the initial appointment, or election,
as the case may be of each Investor Nominee to the Board;
provided, that at any time (i) any of the five most
senior executives of the Investor (as determined by the
Investor in its reasonable discretion) and (ii) the head
of the Investor's Agricultural Products business, so long
as (subject to the following proviso) such business is
owned by the Investor or a Subsidiary of the Investor,
each shall be conclusively deemed to be acceptable to the
Board for purposes of this Section 5.1(c); and provided,
further, that once an Investor Nominee is accepted by, or
deemed acceptable to, the Board, such person shall
thereafter be conclusively deemed to be acceptable
pursuant to this Agreement (together with such persons
specified in the foregoing clauses (i) and (ii), the
"Pre-Approved Persons"). Any objection by the Company to
a proposed Investor Nominee must be made no later than
five Business Days after the Investor delivers the
applicable Investor Nominee Notice for the proposed
Investor Nominee; provided, however, that the Company
shall in all cases notify the Investor of any such
objection sufficiently in advance of the date on which
proxy materials are mailed by the Company in connection
with such election of directors to enable the Investor to
propose an alternate Investor Nominee pursuant to and in
accordance with the terms of this Agreement.
(d) The Company agrees, subject to Section
5.1(c) above and Section 5.2 below, to include such
Investor Nominee to be added to or retained on the Board
pursuant to this Agreement in the slate of nominees
recommended by the Board to the Company's shareholders
for election as Directors and shall use its reasonable
efforts to cause the election or reelection of each such
Investor Nominee to the Board at each meeting of
shareholders at which such Investor Nominee is up for
election, including soliciting proxies in favor of the
election of such persons, it being understood that
efforts consistent with those used for other members of
the slate recommended by the Board shall be deemed
reasonable. In the event that, notwithstanding the
provisions of this Section 5.1(d), any one or more
Investor Nominees is not elected to the Board then, at
the written request of the Investor made within 30 days
after the date of the shareholder meeting at which such
Investor Nominee was not elected, either, as directed by
the Investor, (a) the Company shall promptly call a
special meeting of the Company's shareholders proposing
the election of such Investor Nominees not elected to the
Board or an alternative Investor Nominee as may be
designated by the Investor in accordance with Section 5.1
and in connection with such special meeting shall use its
reasonable efforts to cause the election of such Investor
Nominees by the shareholders of the Company, including
recommending the election of such Investor Nominees and
soliciting proxies in favor of the election of such
Investor Nominees by the shareholders of the Company; or
(b) the Company shall appoint another individual selected
by the Investor, who shall be a Fully Independent
Director and shall otherwise qualify under Section
5.1(c), as an additional Director of the Company who
shall serve for a term co-extensive with the term such
Investor Nominee would have served if such Investor
Nominee had been elected (provided that the Investor
shall cause such additional Director to resign at such
time as an Investor Nominee is elected to the Board seat
that would have been held by the Investor Nominee whose
failure to be elected triggered the Investor's right to
designate such additional Director). In connection with
the expiration of the term of office of any Fully
Independent Director appointed in accordance with the
foregoing clause (b), the Investor shall be free to
designate an Investor Nominee in accordance with this
Section 5.1 to replace such Fully Independent Director.
In the event the Investor elects to call a special
meeting of stockholders pursuant to clause (a), the
Company shall, until such time as the Investor Nominee
being proposed by the Investor is elected to the Board,
invite such Investor Nominee who was not elected to the
Board to attend meetings of the Board as an observer and
the Company shall afford to such Investor Nominee, on as
nearly equivalent basis as is possible (other than the
right to vote) as would have been the case if such
Investor Nominee had been elected to the Board, the
opportunity to meaningfully participate in, express views
with respect to and have influence on the deliberations
of the Board, including through receipt, at the same time
as the Board receives the same, of all information and
material as is distributed to the Board. Notwithstanding
the foregoing, if at any time as a result of the failure
of all Investor Nominees designated by the Investor who
are not Independent Directors or Fully Independent
Directors to be elected to the Board as provided in this
Section 5.1, the Investor Nominees shall consist entirely
of Independent Directors and Fully Independent Directors,
the Investor shall be entitled to designate one
individual who is an officer, employee or director of the
Investor and who qualifies as an Investor Nominee under
Section 5.1(c) to serve as an observer at the meetings of
the Board in accordance with the foregoing sentence until
such time as an Investor Nominee designated by the
Investor who is not an Independent Director or a Fully
Independent Director shall be elected by the shareholders
of the Company to the Board provided that the foregoing
right to designate an observer shall not apply if the
Investor shall have (without being required by this
Agreement to do so) designated for election to the Board
pursuant to Section 5.1(a) only Investor Nominees who
were Independent Directors or a Fully Independent
Director. If the Board of Directors shall cease to be a
classified board, the Investor shall be entitled to
present to the Board of Directors or the Nominating
Committee thereof the full number of Investor Nominees
for election to the Board of Directors at each annual
meeting of shareholders of the Company contemplated by
paragraph (a) above (without regard to the provisions
regarding classes of directors contained therein). At the
direction of the Investor, the Company shall use
reasonable efforts to cause the removal from the Board of
Directors of any Investor Nominee (other than an
Independent Director or Fully Independent Director).
(e) The Investor agrees, to the extent required
by Iowa law, to cause the Investor Nominees to comply
with the standards for recusal from Board meetings
applicable to all members of the Board. Except for any
Investor Nominee who is an Independent Director or a
Fully Independent Director, the Investor acknowledges
that the Investor Nominees to the Board will not be
entitled to receive any compensation as directors.
Section 5.2. Resignation of Investor Nominees.
Unless otherwise agreed by the Company, (w) at any time
that there are three Investor Nominees serving on the
Board, the Investor shall cause one of the Investor
Nominees then serving on the Board to offer his or her
resignation from the Board immediately upon the number of
directors constituting the entire Board constituting 15
or fewer, (x) the Investor shall cause all of the
Investor Nominees then serving on the Board to offer
their resignations from the Board immediately upon either
(i) at any time after the Initial Top-Up Period the
Investor Group's Total Ownership Percentage falls below
10% for twelve consecutive months (subject to extension
by the number of days equal to the period of time
purchases by the Investor Group would be prohibited by
Section 6.7(b)(iv) or Section 6.7(d)) or (ii) the
Ownership Cap is at any time less than 10%; (y) the
Investor shall cause Investor Nominees then serving on
the Board to offer his or her resignations from the Board
immediately upon the Ownership Cap at any time being less
than 18%, so that the total number of Investor Nominees
does not exceed 2 at any time thereafter; and (z) the
Investor shall cause all of the Investor Nominees then
serving on the Board to offer their resignations from the
Board immediately upon the occurrence of a Trigger Event
or a Release Event; provided, however, that in the event
that the Investor Group's Total Ownership Percentage is
less than the 10% amount referred to in clause (x)(i) of
this Section 5.2 and would not be so but for the issuance
of capital stock by the Company during, or within one
month prior to, the twelve month period referred to in
clause (x)(i) of this Section 5.2, such twelve month
period shall be extended by an additional six months to
eighteen consecutive months. To effectuate the
resignations provided for in this Section 5.2, the
Investor shall cause each Investor Nominee to provide the
Investor with a letter of resignation upon such Investor
Nominee's election to the Board which may be used by the
Investor at any time.
Section 5.3. Committees. The Board will not
establish an executive committee authorized to exercise
the power of the Board generally unless the Investor is
granted representation on such committee proportional to
its representation on the Board, nor will the Board
establish or employ committees (unless the Investor is
granted proportional representation thereon) as a means
designed to circumvent or having the effect of
circumventing the rights of the Investor under this
Agreement to representation on the Board.
SECTION 6
ADDITIONAL AGREEMENTS
Section 6.1. Standstill Agreement.
(A) During the Standstill Period, and, if this
Agreement is terminated prior to Closing pursuant to
Section 10.1(a), for the one year period after the end of
the Standstill Period (such one year period, the "Post
Termination Standstill Period"), unless the Company shall
have materially breached its obligation to nominate
Investor Nominees or to appoint any Fully Independent
Director pursuant to Section 5 (provided that, with
respect to any such material breach that does not concern
a Pre-Approved Person, a court of competent jurisdiction
shall have determined pursuant to a final non-appealable
order that the Company has so materially breached its
obligations), the Investor shall not, shall cause each
other member of the Investor Group not to, and shall use
reasonable commercial efforts to cause other Affiliates
and Associates of the Investor not members of the
Investor Group ("Other Investor Affiliates") not to,
directly or indirectly, alone or in concert with others:
(a) acquire, offer or propose to acquire or
agree to acquire, whether by purchase, tender or exchange offer,
through the acquisition of control of another person, by
joining a partnership, limited partnership, syndicate or
other 13D Group or otherwise, Beneficial Ownership of any
Voting Securities, Derivative Securities or any other
securities of the Company or any rights to acquire
(whether currently, upon lapse of time, following the
satisfaction of any conditions, upon the occurrence of
any event or any combination of the foregoing) any Voting
Securities, other than (i) the purchase of Shares or
other Voting Securities expressly permitted by this
Agreement, (ii) the acquisition of Voting Securities as a
result of any stock split, stock dividends or other
distributions, recapitalizations or offerings made
available by the Company to holders of Voting Securities
generally or (iii) in a transaction in which the Investor
or a Subsidiary of the Investor acquires a previously
unaffiliated business entity that, to the knowledge of
the Investor after reasonable inquiry, owns shares of
Common Stock that represents less than 4% of the
Company's outstanding Common Stock and less than 10% of
the unaffiliated entity's assets; provided, that all such
Voting Securities shall be subject to the terms of this
Agreement; provided, further, however, that in the event
of a transaction as contemplated by clause (iii) hereof,
the Investor will transfer, or cause such Subsidiary to
transfer, in a manner consistent with Section 6.3, such
shares of Common Stock previously owned by the
unaffiliated entity within twelve months following the
consummation of such transaction and all such shares of
Common Stock, pending their transfer, shall be voted by
the Investor or such Subsidiary in accordance with the
requirements of clauses (w) through (z) of Section 6.2
and on any other matter in the same proportion as the
votes cast by or on behalf of all holders of the
Company's Voting Securities other than the Investor Group
and Other Investor Affiliates;
(b) propose or seek to effect any merger,
business combination, restructuring, recapitalization or
similar transaction involving the Company or any of its
Subsidiaries or the sale or other disposition outside the
ordinary course of business of any material portion of
the assets of the Company or any of its Subsidiaries
except pursuant to Section 8.2 hereof;
(c) deposit any Voting Securities in a voting
trust or subject any Voting Securities to any arrangement
or agreement with respect to the voting of such Voting
Securities except pursuant to Section 8.8 hereof;
(d) seek election to, seek to place a
representative on, or seek the removal of any member of,
the Board, except pursuant to Section 5 hereof;
(e) engage in any "solicitation" (within the
meaning of rule 14a-1 under the Exchange Act) of proxies
or consents (whether or not relating to the election or
removal of directors) with respect to the Company, or
become a "participant" in any "election contest" (within
the meaning of Rule 14a-11 under the Exchange Act) or,
unless the execution by the Investor, member of the
Investor Group or Other Investor Affiliate is first
approved by the Board, execute any written consent in
lieu of a meeting of the holders of any class of Voting
Securities that is solicited by or on behalf of any
shareholder of the Company;
(f) call or seek to have called any meeting of
the shareholders of the Company (except for the exercise
by the Investor of its rights pursuant to Section
5.1(d));
(g) initiate, propose or otherwise solicit
shareholders for the approval of any shareholder proposal
(as described in Rule 14a-8 under the Exchange Act or
otherwise) with respect to the Company;
(h) form, join or in any way participate in or
assist in the formation of a 13D Group with respect to
any Voting Securities, other than any such "group"
consisting exclusively of the Investor and other
wholly-owned United States Subsidiaries of the Investor
who have acquired Voting Securities in accordance with
Section 2.2(b) or Section 6.3(a);
(i) otherwise act, alone or in concert with
others, to seek control or influence the management, the
Board or the policies of the Company in a manner designed
or having the deliberate effect of circumventing the
restrictions otherwise imposed under this Section 6.1(A);
(j) disclose or publicly announce any
intention, plan or arrangement inconsistent with the
foregoing;
(k) advise, assist or encourage or finance any
other persons in connection with any of the foregoing
types of activities; or
(l) request the Company (or its directors,
officers, employees or agents) to amend or waive any
provision of this Agreement;
provided that nothing in this Section 6.1(A) shall limit
any rights of the members of the Investor Group under the
Joint Venture Agreement or the Research Alliance
Agreement, or (I) prohibit any individual who is serving
as a Director of the Company, solely in his or her
capacity as such Director and provided no public
disclosure thereof by the Company would be required, from
(x) taking any action or making any statement at any
meeting of the Board of Directors or of any committee
thereof, (y) making any statement to any Representative
of the Company, or (z) making any statement or disclosure
required under federal securities laws or other
applicable Law, (II) restrict any private communications
not requiring public disclosure between the Investor and
any Investor Nominee, (III) restrict any disclosure or
statements required to be made by any member of the
Investor Group under applicable Law to the extent any
such requirement does not arise from actions by the
Investor Group inconsistent with this Agreement, or (IV)
limit the rights of the Investor Group pursuant to
Section 6.2, Section 6.9 or Section 8.2.
(B) Notwithstanding the foregoing, if this
Agreement is terminated prior to Closing pursuant to
Section 10.1(a), the provisions of paragraph (A) of this
Section 6.1 (other than the provisions of clauses (a)
(except as to proposals to the Company as to the matters
in clause (b)) and (h) thereof and the provisions of (i),
(j), (k) and (l) thereof to the extent such provisions
relate to the acquisition of Voting Securities or other
securities of the Company) shall cease to apply during
the Post-Termination Standstill Period if (i) the Company
enters into an agreement contemplating a Change in
Control Transaction or a Competing Investment or the
Company makes any filing with respect to, or seeks
expiration of the waiting period under, the HSR Act with
respect to a Change in Control Transaction or Competing
Investment; (ii) the Board of Directors publicly
announces its intention to solicit or publicly solicits
any Proposal or publicly approves, accepts, authorizes or
recommends to shareholders of the Company their approval
of or the conveyance of shares pursuant to a Change in
Control Transaction or Competing Investment; (iii) during
or prior to the pendency of a bona fide tender or
exchange offer made by any Person or 13D Group (other
than a member of the Investor Group), the Board of
Directors determines or resolves to, or announces its
intention to, or is ordered or directed by any
Governmental Entity to, redeem, amend or modify (to
render inapplicable (including by taking action to cause
a Section 11(a)(ii) Event or Section 13 Event (each as
defined in the Amended Rights Agreement as in effect on
the date hereof), not to occur that, absent such action,
would otherwise have occurred, or to redeem the Preferred
Stock Purchase Rights) thereto or otherwise exempt
therefrom) the Preferred Stock Purchase Rights or the
Amended Rights Agreement (or a Substantially Similar
Agreement) or; (iv) any Person other than the Investor or
an Excluded Person acquires or agrees to acquire 20% or
more of the then outstanding Voting Securities or Common
Securities.
Section 6.2. Voting. (a) At all times during
the Standstill Period, the Investor shall, shall cause
each other member of the Investor Group to, and shall use
its commercially reasonable efforts to cause each Other
Investor Affiliate to, vote all Voting Securities which
they Beneficially Own, at any shareholder meeting or in
connection with any action by written consent at or in
which such Voting Securities are entitled to vote, (w) in
favor of the slate of nominees (including any Investor
Nominee to be included in such slate in accordance with
Section 5) proposed by the Board; provided, that any
Investor Nominee nominated by the Investor for inclusion
in such slate pursuant to Section 5.1 is so included, (x)
in favor of any amendment to the Company's Articles of
Incorporation proposed by the Board to change the voting
rights of the Common Stock to one vote per share of
Common Stock (a "Voting Amendment"), (y) in favor of the
Reclassification Amendment at each meeting of the
Company's shareholders at which the Reclassification
Amendment is submitted for approval of the Company's
shareholders, and (z) on any matter relating to the
adoption of any stock option, stock purchase or other
benefit or compensation plan for employees, executives or
directors of the Company, and on any non-Company
sponsored shareholder proposal which is opposed by the
Company, in accordance with the direction of the Board as
to how such Voting Securities shall be voted, except that
during any period or at any time when there shall be in
full force and effect a valid order or judgment of a
court of competent jurisdiction or a ruling,
pronouncement or requirement of the NYSE to the effect
that the foregoing provisions of this Section 6.2 are
invalid, void, unenforceable or not in accordance with
NYSE policy, then the Investor will, if so requested by
the Board, vote or cause (or, in the case of the Other
Investor Affiliates, use its commercially reasonable
efforts to cause) to be voted all of the Voting
Securities beneficially owned by it, the Investor Group
and the Other Investor in the same proportion as the
votes cast by or on behalf of the other holders of the
Company's Voting Securities other than the Investor Group
and Other Investor Affiliates, but only with respect to
the foregoing matters. On all other matters the Investor,
the members of the Investor Group and the Other Investor
Affiliates shall be entitled to vote the Voting
Securities held by them in their discretion; provided,
that at any meeting at which a quorum would not be
present but for the inclusion of the Voting Securities
Beneficially Owned by the Investor Group, the Investor
shall cause such Voting Securities to be voted with
respect to each of the matters presented to shareholders
at such meeting and such vote shall be in accordance with
the foregoing provisions of this Section 6.2(a). At all
times during the Standstill Period, the Investor shall
be, shall cause each other member of the Investor Group
to be, and shall use its commercially reasonable efforts
to cause each Other Investor Affiliate to be, as the
Beneficial Owners of Voting Securities, present, in
person or by proxy, at all meetings of shareholders of
the Company, so that all Voting Securities which
Investors or any other member of the Investor Group or
any Other Investor Affiliate Beneficially Owns may be
counted for the purpose of determining the presence of a
quorum at all meetings of shareholders of the Company.
(b) If the holders of the outstanding shares of
Common Stock are entitled to vote as a separate class or
voting group under the Articles of Incorporation or the
corporation laws of the Company's jurisdiction of
incorporation on any matter on which a shareholder vote
is otherwise required, then the Company hereby covenants
and agrees that if the Investor advises the Company in
writing prior to the meeting held (or the record date for
action taken by written consent in lieu of a meeting) to
approve such matter that the Investor opposes such matter
so to be voted upon by such class or voting group, then
it shall be a condition to the effectiveness of the
matter to be voted on that the matter be approved by an
aggregate number of Votes that would have been sufficient
to approve such matter under the Articles of
Incorporation and the corporation laws of the Company's
jurisdiction of incorporation if all the Votes that could
have been voted by the Investor Group had such class or
voting group included the Voting Power represented by the
Series A Convertible Preferred Stock held by the Investor
Group been included in such class or voting group and
cast against the approval of such matter.
(c) To the full extent permitted by Iowa law,
the Investor hereby waives, shall cause each member of
the Investor Group to waive, and shall use its
commercially reasonable efforts to cause each Other
Investor Affiliate to waive, any rights that the
Investor, any member of the Investor Group or any Other
Investor Affiliate, as the case may be, may have or
hereafter acquire under Division XIII of the Iowa
Business Corporation Act with respect to any disposition
of Voting Securities pursuant to this Agreement.
(d) At any time after the conversion of the
Series A Convertible Preferred Stock into Common Stock
pursuant to Section 6(a)(ii) of the Certificate of
Designation for the Series A Convertible Preferred Stock,
the Investor will cause all Votes attributable to any
shares of Common Stock thereafter owned by the Investor
Group and acquired prior to the termination of this
Agreement to be voted (a) with respect to a number of
Votes representing no more than voting power equal to the
Investor Group's Total Ownership Percentage at such time,
during the Standstill Period, in accordance with the
provisions of Section 6.2(a) and after the Standstill
Period, in the sole discretion of the Investor, and (b)
with respect to all other Votes, on any matter pro rata
in accordance with the Votes voted on such matter by all
holders of Voting Securities other than the Investor
Group and Other Investor Affiliates.
(e) Notwithstanding the foregoing provisions of
this Section 6.2, at any time following the occurrence of
a Trigger Event or a Release Event, the Investor shall,
shall cause each other member of the Investor Group to,
and shall use its commercially reasonable efforts to
cause each Other Investor Affiliate to vote all Voting
Securities which they Beneficially Own, (i) in favor of
the slate of nominees proposed by the Board (except that
during any period or at any time when there shall be in
full force and effect a valid order or judgment of a
court of competent jurisdiction or a ruling,
pronouncement or requirement of the NYSE to the effect
that the foregoing provisions of this Section 6.2(e) are
invalid, void, unenforceable or not in accordance with
NYSE policy, in which case, the Investor will, if so
requested by the Board, vote or cause to be voted all of
its Voting Securities Beneficially Owned by it and the
other members of the Investor Group, and use commercially
reasonable efforts to cause all Voting Securities
Beneficially Owned by Other Investor Affiliates to be
voted, for the election of directors in the same
proportion as the votes cast by or on behalf of the other
holders of the Company's Voting Securities other than the
Investor Group and Other Investor Affiliates) and (ii) on
all other matters at any shareholder meeting or in
connection with any action by written consent, in the
same proportion as the votes cast by or on behalf of all
holders of the Company's Voting Securities other than the
Investor Group and Other Investor Affiliates.
Section 6.3. Dispositions. During the
Standstill Period and thereafter in perpetuity in the
case of clauses (f) and (g) hereof to the extent
specified therein, the Investor shall not, shall cause
each other member of the Investor Group not to, and shall
use its commercially reasonable efforts to cause each
Other Investor Affiliate not to, directly or indirectly
(including, without limitation, through the disposition
or transfer of any equity interest in another Person),
sell, assign, transfer, pledge, hypothecate, grant any
option with respect to or otherwise dispose of any
interest in (or enter into an agreement or understanding
with respect to the foregoing) any Voting Securities (a
"Disposition"), except as set forth below in this Section
6.3.
(a) Dispositions may be made to wholly-owned
United States Subsidiaries of the Investor; provided,
that such Subsidiaries agree in writing to be bound by
this Agreement to the same extent as the Investor and
such Subsidiaries at all times remain wholly-owned United
States Subsidiaries of the Investor.
(b) Dispositions of Voting Securities may be
made to Persons other than members of the Investor Group
and Other Investor Affiliate pursuant to (i) a bona fide
public offering effected in accordance with the
Registration Rights Agreement, (ii) in bona fide open
market "brokers' transactions" as permitted by the
provisions of Rule 144 as currently promulgated under the
Securities Act (other than pursuant to the provisions of
clause (k) thereof) and subject to the requirement that
the amount of Voting Securities sold may not exceed the
lesser of the amounts specified under clauses (i) and
(ii) of paragraph (e)(1) of Rule 144 as currently in
effect, (iii) in privately-negotiated transactions to (A)
any Person specified in Rule 13d-1(b)(1)(ii) promulgated
under the Exchange Act who would be eligible based on
such person's status and passive intent with respect to
the ownership, holding and voting of such Voting
Securities to report such person's ownership of such
Voting Securities (assuming such person owned a
sufficient number of such Voting Securities to require
such filing) on Schedule 13G or (B) any other Person, and
(iv) pursuant to a pro rata dividend to the stockholders
of the Investor, provided, however, that:
(I) Dispositions shall not be made pursuant to
clauses (i), (ii), (iii)(A) or (iv) of this Section
6.3(b) if, (A) in the case of Dispositions pursuant to
clauses (i), (ii) and (iii)(A) of this Section 6.3(b),
any Person (other than any underwriter who is in the
business of underwriting securities and who, in the
ordinary course of its business as an underwriter,
acquired Common Securities in connection with a public
offering with the bona fide intention of reselling all of
the Common Securities so acquired pursuant to such public
offering (a "Permitted Underwriter")) to whom the
Disposition in question is made would, to the actual
knowledge of the Investor (without any duty of inquiry)
in the case of Dispositions pursuant to clause (ii) of
Section 6.3(b), and to the knowledge of the Investor,
after reasonable inquiry, in all other cases after giving
effect to such Disposition, together with such Person's
Affiliates and Associates and the members of any 13D
Group existing with respect to Voting Securities of which
such Person is a part (any such Person and its
Affiliates, Associates and 13D Group members being
collectively referred to herein as a "Purchasing
Person"), Beneficially Own Voting Securities representing
more than 3% (or 5% in the case of clause (iii)(A)), as
the case may be (or, in any such case, 1% if any Person
included in a Purchasing Person is a Pioneer Competitor)
of the Total Voting Power or Total Ownership Percentage
then outstanding, (B) in the case of Dispositions
pursuant to clauses (ii) and (iii)(A) of this Section
6.3(b), the Investor Group shall have complied with the
provisions of Section 6.4 and the Company shall have had
the right to purchase pursuant to Section 6.4 the Voting
Securities subject to such Disposition; or (C) in the
case of a Disposition pursuant to clause (iv) of this
Section 6.3(b), any shareholder receives in such dividend
more than 2% of the Total Voting Power or Total Ownership
Percentage, unless such shareholder shall have executed
and delivered a Purchaser Standstill Agreement (as
defined below) pursuant to which such shareholder agrees
to be bound by Section 6 of this Agreement (other than
Section 6.6(b), Section 6.7 and Section 6.9 hereof) to
the same extent as the Investor as if references to the
Investor in such Section were to such shareholder with an
Ownership Cap equal to its then current ownership
provided that for purposes of Section 6.6(a) only the
Ownership Cap of such shareholder shall be 5%; provided,
however, that in no event shall any disposition be made
pursuant to such clause (iv) if any shareholder would be
entitled to receive in connection therewith 7.5% (or 2%
if such shareholder is a Pioneer Competitor) or more of
the Total Voting Power or Total Ownership Percentage;
(II) Dispositions shall not be made pursuant to
clauses (iii)(B) of this Section 6.3(b) if the Purchasing
Person would, to the knowledge of the Investor, after
reasonable inquiry, after giving effect to the
Disposition, Beneficially Own Voting Securities
representing more than 5% (or 1% if any Person included
in the Purchasing Person is a Pioneer Competitor) of the
Total Voting Power or Total Ownership Percentage then
outstanding, provided that if any such Purchasing Person
would, to the knowledge of the Investor, after reasonable
inquiry, after giving effect to such Disposition,
Beneficially Own Voting Securities representing more than
3% of the Total Voting Power or Total Ownership
Percentage then outstanding, (x) the Investor Group
shall, in the case of Dispositions pursuant to clause
(iii)(B) of this Section 6.3(b), have complied with the
provisions of Section 6.4 and the Company shall have had
the right to purchase pursuant to Section 6.4 the Voting
Securities subject to the Disposition, and (y) the
Purchasing Person shall have executed and delivered to
the Company a written agreement (which agreement shall be
addressed to the Company and reasonably satisfactory in
form and substance to the Company) (a "Purchaser
Standstill Agreement") of each such Purchasing Person to
be bound by Section 6 of this Agreement (other than
Section 6.6(b), Section 6.7 and Section 6.9 hereof) to
the same extent as the Investor as if references to the
Investor in such Section were to such Purchasing Person
with an Ownership Cap equal to its then current ownership
provided that for purposes of Section 6.6(a) only the
Ownership Cap of such Purchasing Person shall be 5%; and
(III) No Disposition pursuant to this Section
6.3(b) (other than pursuant to Section 6.3(b)(iv)) shall
be effected prior to the third anniversary of the Closing
Date, unless the Investor Group is required to make a
Disposition pursuant to the last proviso to Section
6.1(A)(a)(iii) or Section 6.6 hereof, nor shall any
Disposition be made (other than pursuant to Section
6.3(b)(i)) if such Disposition would constitute a
distribution in violation of Regulation M under the
Securities Act by reason of any repurchase program of the
Company then announced.
(c) Dispositions may be made to the Company in
accordance with Sections 6.4 through 6.6 hereof.
(d) Dispositions may be made pursuant to a
tender offer or exchange offer (or, during the pendency
thereof pursuant to Section 6.3(b)(iii)(A) or in open
market transactions permitted under Section 6.3(b)(ii)
and, in each case, subject to the restrictions of clause
(I)(A) thereof but not subject to clause (I)(B) thereof)
or any other transaction (x) which is recommended to
shareholders of the Company by the Board of Directors
(or, in the case of a tender or exchange offer, which is
not within 10 Business Days of the commencement thereof
opposed by the Board of Directors or, in the case of an
Unsolicited Offer which is opposed, in the event such
opposition is thereafter withdrawn by the vote of the
Board of Directors) or (y) in the case of a merger or
other business combination transaction, which has been
approved by the shareholders of the Company (including
approval without a meeting pursuant to the short-form
merger provisions of the Iowa Business Corporation Act)
in a manner so as to be legally binding on all
shareholders of the Company and so as to require the
disposition by such shareholders of their shares pursuant
to such merger or other business combination transaction
(without regard to this Agreement); and
(e) Dispositions may be made pursuant to a
tender offer or exchange offer which is not recommended
by a majority of the entire Board (an "Unsolicited
Offer"); provided that such Unsolicited Offer is for at
least a majority of the Common Stock outstanding on a
fully diluted basis; and provided further, (i) if the
Amended Rights Agreement (or a Substantially Similar
Plan) was in effect prior to the commencement of such
Unsolicited Offer, the Company has redeemed the Rights
(as defined in the Amended Rights Agreement) or otherwise
amended or modified the Amended Rights Agreement (or a
Substantially Similar Plan) to be inapplicable (including
by taking action to cause a Section 11(a)(ii) Event or
Section 13 Event (each as defined in the Amended Rights
Agreement as in effect on the date hereof), not to occur
that, absent such action, would otherwise have occurred,
or to redeem the Preferred Stock Purchase Rights) to such
Unsolicited Offer or otherwise taken any Board action
pursuant to the Amended Rights Agreement (or a
Substantially Similar Plan) in order to permit the
Unsolicited Offer to be consummated without causing a
Triggering Event (as defined in the Amended Rights
Agreement) to occur and (ii) in any event, the Investor
and each member of the Investor Group shall have complied
with the provisions of Section 6.5 and the Company shall
have had the right pursuant to Section 6.5 to purchase
the Voting Securities subject to such Disposition.
(f) At any time subsequent to the Standstill
Period, the Investor shall not, shall cause each other
member of the Investor Group not to, and shall use its
commercially reasonable efforts to cause each Other
Investor Affiliate not to, directly or indirectly, effect
any Disposition of Voting Securities if, to the knowledge
of the Investor, such member of the Investor Group or
such Other Investor Affiliate, after reasonable inquiry,
the Purchasing Person (other than a Permitted Underwriter
and broker-dealers acting in connection with a block
trade in which no Person or 13D Group acquires Voting
Securities representing an Equity Percentage of more than
5%) would, after giving effect to such Disposition,
Beneficially Own Voting Securities representing more than
5% of the Total Voting Power or Total Ownership
Percentage then outstanding; provided, however, that the
foregoing restrictions shall not be applicable to any
Disposition in connection with a tender or exchange offer
or a merger, business combination or other extraordinary
transaction.
(g) Notwithstanding the foregoing, at any time
subsequent to (i) the consummation of a Surviving Change
in Control Transaction (as defined in Section 8.2(b)),
(ii) a Release Event, or (iii) a Trigger Event, the
provisions of Sections 6.3(a) through (c) and Section
6.3(f) shall not apply and in lieu thereof, the Investor
shall not, and shall cause each other member of the
Investor Group not to, and shall use commercially
reasonable efforts to cause each Other Investor Affiliate
not to, directly or indirectly effect any Disposition of
Voting Securities (a) representing an Equity Percentage
of more than 3% to any one Person or 13D Group (other
than a Permitted Underwriter and broker-dealers acting in
connection with a block trade in which no Person or 13D
Group acquires Voting Securities representing an Equity
Percentage of more than 3%) or (b) to any Person or 13D
Group who has filed a Schedule 13D with the Commission
with respect to any Voting Securities issued by the
Company; provided, however, that the foregoing
restrictions shall not be applicable to any Disposition
of Voting Securities in compliance with Section 6.3(d) or
(e) and Section 6.5.
(h) If the Investor intends to effect a
Disposition in accordance with this Section 6.3, it shall
give the Company as much prior notice of such intention
as is reasonably practicable.
Section 6.4. Company's Right to Purchase Voting
Securities. Prior to any Disposition of Voting Securities
pursuant to clauses (ii) and (iii) of Section 6.3(b), the
Company shall have the right, to the extent provided in
Section 6.3(b), exercisable in accordance with this
Section 6.4, to purchase all, but not less than all, of
the Voting Securities intended to be subject to such
Disposition by the Investor or any other member of the
Investor Group.
(a) To the extent required by Section 6.3(b),
if any member of the Investor Group wishes to effect any
Disposition of Voting Securities pursuant to clauses (ii)
and (iii) of Section 6.3(b), the Investor shall give
notice (a "Transfer Notice") to the Company of such
intended Disposition, specifying the Voting Securities to
be subject to Disposition and the intended method of
Disposition. The Transfer Notice shall specify, in the
case of Dispositions pursuant to clauses (ii) or (iii)(A)
of Section 6.3(b), the cash price (the "First Offer
Price") at or above which the Investor intends to effect
such Dispositions and, in the case of Dispositions
pursuant to clause (iii)(B) of Section 6.3(b), the terms
of a bona fide third party offer (a "Third Party Offer")
to purchase such Voting Securities theretofore received
by the Investor and then remaining open (including the
identity of the offeror and the price offered). If the
Company wishes to purchase the Voting Securities
specified in the Transfer Notice, then within fifteen
Business Days (or, in the case of any Required
Disposition being made as a result of a Company request
pursuant to Section 6.6, five Business Days) following
receipt of the Transfer Notice, the Company shall deliver
a written notice (an "Acceptance Notice") to the Investor
indicating that the Company wishes to purchase such
Voting Securities (such Voting Securities, the "Section
6.4 Securities"), a date for the closing of such
purchase, which shall not be more than 45 days after
delivery of such Acceptance Notice (subject to extension
as provided in Section 6.4(f) hereof), and a place for
the closing of such purchase (a "Section 6.4 Closing").
Upon delivery of an Acceptance Notice, a binding
agreement shall be deemed to exist providing for the
purchase by the Company of the Section 6.4 Securities to
which such Acceptance Notice relates, upon the terms and
subject to the conditions set forth in this Section 6.4
and the Company shall use its reasonable best efforts to
secure all approvals required in connection therewith;
provided, that (i) the Company may rescind its Acceptance
Notice (in which event it will have no obligation to
purchase such Section 6.4 Securities) at any time within
two Business Days following any determination of (x) the
value of any untraded securities pursuant Section
6.4(b)(ii) hereof or (y) fair market value pursuant to
Section 6.4(b)(ii) hereof; and (ii) the Investor may
rescind its Transfer Notice (in which event it will have
no obligation to sell such Section 6.4 Securities) at any
time within two Business Days following any determination
of (a) the value of any untraded securities pursuant to
Section 6.4(b)(ii) hereof or (y) fair market value
pursuant to Section 6.4(b)(ii) hereof.
(b) The purchase price for any Section 6.4
Securities (the "Section 6.4 Price") shall be determined
as set forth below.
(i) With respect to any Section 6.4 Securities
for which a Third Party Offer consisting of other
than solely cash and/or readily marketable
securities is disclosed in the applicable Transfer
Notice, the Section 6.4 Price per share or other
unit of such Section 6.4 Securities (which shall
refer, in the case of shares of Series A Convertible
Preferred Stock that are Section 6.4 Securities, to
the applicable number of shares of Common Stock
issuable upon conversion of such Series A
Convertible Preferred Stock), shall equal the
average Market Price per share or per unit of the
Section 6.4 Securities during the 30 consecutive
trading days immediately preceding the Company's
receipt of the Transfer Notice.
(ii) With respect to any Section 6.4
Securities for which a First Offer Price or a Third
Party Offer is disclosed in the applicable Transfer
Notice which provides for consideration consisting
solely of cash and/or readily marketable securities,
the Section 6.4 Price per share or other unit of
such Section 6.4 securities shall equal the per
share or per unit price specified in such First
Offer Price or Third Party Offer; provided, however,
that, except for Acceptance Notices delivered in
respect of a Required Disposition, in the event the
Market Price per share or per unit on the last
Business Day prior to the date the Acceptance Notice
is delivered is more than 10% greater than the per
share or per unit price specified by such First
Offer Price or Third Party Offer, than the price per
share or per unit shall equal the Market Price per
share or per unit on the last Business Day prior to
the date the Acceptance Notice is delivered. The
value of any readily marketable securities
identified in such Third Party Offer shall equal the
average Market Price per share or per unit of such
securities during the 30 consecutive trading days
immediately preceding the Company's receipt of the
Transfer Notice. In the case of any securities not
theretofore traded, such securities must be issued
or proposed to be issued by an entity which has been
subject to the reporting requirements of the
Exchange Act for at least one year, and the value of
such securities shall be determined by two
nationally recognized investment banking firms, one
firm to be selected by each of the Investor and the
Company, or in the event such firms are unable to
agree, by a third nationally recognized investment
banking firm selected by such firms. The Investor
and the Company shall use their reasonable best
efforts to cause any such determination of value to
be made within five Business Days following the
Company's receipt of the applicable Transfer Notice.
In connection with any determination of fair market
value pursuant to this Section 6.4(b)(ii), each
party will bear the fees and expenses of the
investment banking firm selected by it and the
parties will bear equally the fees and expenses of
any third investment banking firm.
(c) At any Section 6.4 Closing, the Company
shall pay to the Investor (or its designees) the
aggregate Section 6.4 Price for the Section 6.4
Securities by wire transfer of immediately available
funds, and the Investor shall deliver or cause to be
delivered to the Company such Section 6.4 Securities,
with documentation satisfactory to the Company evidencing
the transfer of such Section 6.4 Securities, in form
acceptable for transfer on the Company's books.
(d) If the Company does not exercise its right
to purchase Voting Securities specified in a Transfer
Notice, or if the Company exercises its right to rescind
as described in the proviso to the last sentence of
Section 6.4(a) hereof, or if any agreement deemed to
exist with respect to Voting Securities upon delivery of
an Acceptance Notice is terminated pursuant to Section
6.4(f), then the party giving such Transfer Notice shall
be free to effect the Disposition of such Voting
Securities, subject to any other requirements applicable
to such Disposition pursuant to Section 6.3; provided,
that any such Disposition is completed within 60 days
following the expiration of the period in which the
Company had the right to elect to purchase such Voting
Securities or such rescission or termination, as the case
may be (which 60 day period may be extended day by day by
the Investor if as of such 60th day or any day thereafter
on which such period is extended (x) all waiting periods,
if any, applicable to such Disposition under the HSR Act,
shall not have expired or been terminated or (y) any
statute, rule, regulation, executive order, decree,
ruling, injunction or other order shall have been
enacted, entered, promulgated or enforced by any court or
governmental authority of competent jurisdiction which
prohibits such Disposition or makes such Disposition
illegal, provided that no such extension shall be for
more than 60 days in the aggregate); provided, further,
that such Disposition is effected in accordance with the
intended method of Disposition described in the
applicable Transfer Notice; provided, further, that with
respect to any such Disposition of Voting Securities for
which a First Offer Price or a Third Party Offer is
disclosed in the applicable Transfer Notice, the
Disposition of such Voting Securities is at the price
specified therein or at any price in excess thereof (or,
in the case of Dispositions pursuant to Section
6.3(b)(ii) or in the case of Dispositions pursuant to
Section 6.3(b)(iii)(A) which are being made as a result
of the Company's request for a Required Disposition
pursuant to Section 6.6 (a), where, in each case, the
applicable First Offer Price per share of Common Stock
does not exceed the average Market Price for the Common
Stock for the three trading days immediately preceding
the receipt by the Company of the related Transfer
Notice, the Disposition is completed at prices in excess
of 95% of the applicable First Offer Price) and, in the
case of a Third Party Offer, to the transferee specified
in the Transfer Notice. In the case of any Disposition
pursuant to clause (iii) of Section 6.3(b), the price per
share of Common Stock at which such Disposition is deemed
to be effected shall (i) not have deducted therefrom any
ordinary brokerage or placement fees, and (ii) be
increased by the amount of any discount in purchase price
granted to any broker-dealer in connection with such
Disposition in lieu of any such ordinary brokerage or
placement fees. If any such Disposition is not completed
within the 60-day period specified in the first proviso
of the preceding sentence, any Voting Securities
specified in the applicable Transfer Notice and not
disposed of in such Disposition shall again be subject to
the restrictions on transfer set forth in Section 6.3,
including the Company's purchase rights under this
Section 6.4, to the extent provided in Section 6.3.
(e) Without limiting Section 6.3(b), if any
Disposition is made to any Purchasing Person who is
required to have entered into a Purchaser Standstill
Agreement, then such person shall be deemed to have
consented to be bound by Section 6 of this Agreement
(other than Section 6.6(b), Section 6.7 and Section 6.9
hereof) to the same extent as the Investor and to the
extent of such Purchasing Person's ownership interest as
if references to the Investor in such Section were to
such Purchasing Person provided that for purposes of
Section 6.6(a) only, the Ownership Cap of the Purchasing
Person shall be 5%.
(f) The obligations of the parties to effect
any Section 6.4 Closing shall be subject to the
satisfaction of the following conditions: (i) all waiting
periods, if any, applicable to the transactions occurring
at such Section 6.4 Closing under the HSR Act, shall have
expired or been terminated and (ii) no statute, rule,
regulation, executive order, decree, ruling, injunction
or other order shall have been enacted, entered,
promulgated or enforced by any court or governmental
authority of competent jurisdiction which prohibits such
transactions or makes such transactions illegal. If, as
of any date on which a Section 6.4 Closing is scheduled
to occur, the foregoing conditions relating thereto have
not been satisfied, then such Section 6.4 Closing shall
occur as promptly as practicable following such
satisfaction, and the parties shall use their reasonable
best efforts to cause the satisfaction of such
conditions; provided that if the foregoing conditions
relating to any Section 6.4 Closing are not satisfied
within 120 days in the case of clause (i), and 180 days
in the case of clause (ii), following delivery of the
applicable Acceptance Notice (or in the case of an order
or injunction arising out of any proceeding initiated by
the Investor or any member of the Investor Group, such
later date on which such order or injunction becomes
final and nonappealable), then the Investor or the
Company may terminate the agreement deemed to exist upon
delivery of the applicable Acceptance Notice; provided
that no such termination shall excuse any party for a
breach of its obligations thereunder.
Section 6.5. Company's Right to Purchase
Voting Securities in Case of Unsolicited Offer. Prior to
any Disposition of Voting Securities pursuant to Section
6.3(e), the Company (and/or its designees) shall have the
right, exercisable in accordance with this Section 6.5,
to purchase all of the Voting Securities permitted to be
subject to such Disposition by the Investor Group.
(a) If any member of the Investor Group wishes
to effect any Disposition of Voting Securities pursuant
to Section 6.3(e), the Investor shall give notice (a
"Section 6.5 Transfer Notice") to the Company of such
intended Disposition at least 9 Business Days prior to
the latest date, as provided below, on which the Company
(and/or its designees) is entitled to exercise its right
to purchase the Voting Securities specified in such
Section 6.5 Transfer Notice, unless a shorter period
after commencement of the Unsolicited Offer or a change
in the price term thereof is provided for acceptance or
qualification for proration, in which case the Section
6.5 Transfer Notice shall be given promptly after
commencement of the Unsolicited Offer or such change;
provided that the Investor may rescind such Section 6.5
Transfer Notice at any time prior to delivery of a
Section 6.5 Acceptance Notice (as defined below). The
Section 6.5 Transfer Notice shall specify the Voting
Securities to be tendered. If the Company (and/or its
designees) wishes to purchase the Voting Securities
specified in the Transfer Notice, then not later than 24
hours prior to the latest time by which such securities
must be tendered in order to be accepted in the
Unsolicited Offer, the Company shall deliver a written
notice (a "Section 6.5 Acceptance Notice") to the
Investor specifying that the Company (and/or its
designees) wishes to purchase such Voting Securities
(such Voting Securities, the "Section 6.5 Securities"), a
date for the closing of such purchase, which shall not be
more than 45 days after delivery of such Section 6.5
Acceptance Notice (subject to extension as provided in
Section 6.5(e) hereof), and a place for the closing of
such purchase (a "Section 6.5 Closing"). Upon delivery of
a Section 6.5 Acceptance Notice, a binding agreement
shall be deemed to exist providing for the purchase by
the Company (and/or its designees) of the Section 6.5
Securities to which such Section 6.5 Acceptance Notice
relates, upon the terms and subject to the conditions set
forth in this Section 6.5 and the Company shall use its
reasonable best efforts to secure all approvals required
in connection therewith; provided, that if the
Unsolicited Offer is for less than all of the outstanding
shares of Common Stock, the Section 6.5 Securities to be
purchased by the Company as a result of the Section 6.5
Acceptance Notice shall equal (i) if the Section 6.5
Closing occurs after the date of consummation of the
applicable Unsolicited Offer, the Voting Securities
specified in the Section 6.5 Transfer Notice that would
have been purchased (taking into account prorationing) if
all of such Voting Securities so specified had been
tendered into such Unsolicited Offer and (ii) otherwise,
the Voting Securities specified in the Section 6.5
Transfer Notice that would have been so purchased (taking
into account prorationing) if the party giving the
Section 6.5 Transfer Notice had tendered such Voting
Securities into the Unsolicited Offer, and all other
shareholders of the Company had tendered all their Voting
Securities into the Unsolicited Offer; and, provided,
further, that if following delivery of a Section 6.5
Acceptance Notice, the price per share of Common Stock in
the Unsolicited Offer is increased, the Company may, not
later than 24 hours prior to the latest time by which
Common Stock must be tendered in order to be accepted in
the Unsolicited Offer, rescind its Section 6.5 Acceptance
Notice (in which event it will have no obligation to
purchase such Section 6.5 Securities and such Section 6.5
Securities may be sold into the Unsolicited Offer).
Notwithstanding anything to the contrary contained in
this Section 6.5, for so long as the agreement deemed to
exist upon delivery of a Section 6.5 Acceptance Notice
remains in effect, the Investor shall not and shall cause
the Investor Group not to, tender any Voting Securities
pursuant to the Unsolicited Offer.
(b) The purchase price for any Section 6.5
Securities (the "Section 6.5 Price"), assuming
simultaneous conversion of any Series A Convertible
Preferred Stock, shall be the per share price of Common
Stock paid in the Unsolicited Offer. The value of any
securities offered in the Unsolicited Offer shall equal
the average Market Price per share or per unit of such
securities during the 30 consecutive trading days
immediately preceding the Company's receipt of the
Section 6.5 Transfer Notice. In the case of any
securities not theretofore traded, the value of such
securities shall be determined by two nationally
recognized investment banking firms, one firm to be
selected by each of the Investor and the Company, or in
the event such firms are unable to agree, by a third
nationally recognized investment banking firm selected by
such firms. The Investor and the Company shall use their
reasonable best efforts to cause any such determination
of value to be made within five business days following
the Company receipt of a Section 6.5 Transfer Notice. In
connection with any determination of value pursuant to
this Section 6.5(b), each party will bear the fees and
expenses of the investment banking firm selected by it
and the parties will bear equally the fees and expenses
of any third investment banking firm.
(c) At any Section 6.5 Closing, the Company
(and/or its designees) shall pay to the Investor (or its
designees) the aggregate Section 6.5 Price for the
Section 6.5 Securities by wire transfer of immediately
available funds, and the Investor shall deliver or cause
to be delivered to the Company (and/or its designees)
such Section 6.5 Securities, with documentation
satisfactory to the Company evidencing the transfer of
such Section 6.5 Securities, in form acceptable for
transfer on the Company's books. In the event a Section
6.5 Closing occurs after the 30th day following delivery
of the applicable Section 6.5 Acceptance Notice, then, in
addition to the aggregate Section 6.5 Price, the Company
(and/or its designees) shall pay to the Investor (or its
designees) interest on the aggregate Section 6.5 Price
for the period from and after such 30th day to and
including the date of such Section 6.5 Closing. Such
interest shall accrue at the Federal Funds Rate as in
effect from time to time, plus 1/4 of 1%. Such interest
shall not be compounded and shall be calculated on the
basis of a 360-day year and the actual number of days
elapsed.
(d) If the Company (and/or its designee) does
not, to the extent specified in Section 6.5(a), exercise
its right to purchase the securities specified in a
Section 6.5 Transfer Notice, then the party giving such
Section 6.5 Transfer Notice shall be free to effect the
Disposition pursuant to the Unsolicited Offer of such
Voting Securities, but only such Voting Securities, so
specified in such Section 6.5 Transfer Notice (without
being subject to the restrictions contained in Section
6.3(e) hereof relating to the Company's purchase rights
under this Section 6.5) and the Company shall take such
steps as are necessary to effectuate the conversion into
Common Stock of any Series A Convertible Preferred Stock
to be tendered by the party giving the Section 6.5
Transfer Notice prior to the acceptance of such shares
for payment pursuant to the Unsolicited Offer so that
such party shall have a reasonable opportunity to timely
tender such shares in accordance with such Unsolicited
Offer (including tenders of such shares by the Company on
behalf of such party); provided that the Company and the
Investor shall request that such shares be returned to
the Company for exchange in accordance with Section
6.7(c) if such shares are not accepted for purchase
pursuant to the Unsolicited Offer and that, in the event
of the return of such shares to the Investor, the
Investor shall promptly return such shares to the Company
for exchange in accordance with Section 6.7(c); provided,
further, that the Company shall take such steps to ensure
that any shares not tendered shall be duly issued and
outstanding; provided, further, that (i) such Disposition
is effected at a price equal to or in excess of the price
offered in the Unsolicited Offer at the time that the
Company's right to purchase such securities expires,
taking into account any extension of the time by which
the Company must exercise such right including by reason
of clause (iii) below, (ii) except as provided in Section
6.5(e) below, the foregoing shall not apply with respect
to any shares as to which the Company shall have
delivered a Section 6.5 Acceptance Notice in the event
that the agreement deemed to exist with respect to such
securities upon delivery of the applicable Section 6.5
Acceptance Notice is terminated pursuant to Section
6.5(e) hereof, and (iii) in the event that the price per
share of Common Stock in the Unsolicited Offer is
decreased at any time during such offer, any member of
the Investor Group who wishes to effect a Disposition of
Voting Securities pursuant to Section 6.3(e) shall give a
Section 6.5 Transfer Notice to the Company of such
intended Disposition (irrespective of whether a Section
6.5 Transfer Notice was previously delivered with respect
thereto) at least 48 hours prior to the latest time by
which such securities must be tendered in order to be
accepted in the Unsolicited Offer, and, notwithstanding
any other provision of this Section 6.5, the Company
shall have 24 hours following delivery of such Section
6.5 Transfer Notice to deliver a Section 6.5 Acceptance
Notice. If any such Disposition is not, subject to
Section 6.3(e) hereof, completed prior to the later of
(i) 60 days following the expiration of the Company's
right to purchase the securities specified in a Section
6.5 Transfer Notice, and (ii) 30 days following the
redemption, amendment or modification of the Preferred
Stock Purchase Rights or the Amended Rights Agreement (or
a Substantially Similar Plan), any Voting Securities
specified in such Section 6.5 Transfer Notice and not
disposed of in such Disposition shall again be subject to
the Company's purchase rights under this Section 6.5, to
the extent provided in Section 6.3(e) hereof.
(e) The obligations of the parties to effect
any Section 6.5 Closing shall be subject to the
satisfaction of the following conditions: (i) all waiting
periods, if any, applicable to the transactions occurring
at such Section 6.5 Closing under the HSR Act, shall have
expired or been terminated and (ii) no statute, rule,
regulation, executive order, decree, ruling, injunction
or other order shall have been enacted, entered,
promulgated or enforced by any court or governmental
authority of competent jurisdiction which prohibits such
transactions or makes such transactions illegal. The
obligation of the Company (and/or its designees) to
effect any Section 6.5 Closing shall be further subject
to the condition that shares of Common Stock validly
tendered in accordance with the terms of the Unsolicited
Offer subject to prorationing in accordance therewith
shall have been paid for or shall simultaneously with
such Section 6.5 Closing be paid for pursuant to the
Unsolicited Offer. If, as of any date on which a Section
6.5 Closing is scheduled to occur, the foregoing
conditions relating thereto have not been satisfied, then
such Section 6.5 Closing shall occur as promptly as
practicable following such satisfaction, and, with
respect to the conditions set forth in the first sentence
of this Section 6.5(e), the parties shall use their
reasonable best efforts to cause the satisfaction of such
conditions. If (x) the conditions relating to any Section
6.5 Closing are not satisfied within 120 days in the case
of clause (i), and 180 days in the case of clause (ii),
following delivery of the applicable Section 6.5
Acceptance Notice (or in the case of an order or
injunction arising out of any proceeding initiated by the
Investor or any member of the Investor Group, such later
date on which such order or injunction becomes final and
nonappealable), or (y) the Unsolicited Offer is
terminated without the condition set forth in the second
sentence of this Section 6.5 (e) being satisfied, then
the Investor or the Company in the case of the preceding
clause (x), or the Company in the case of the preceding
clause (y), may, prior to the acceptance for payment of
shares pursuant to the Unsolicited Offer, terminate the
agreement deemed to exist upon delivery of the applicable
Section 6.5 Acceptance Notice by delivering written
notice to the other; provided that no such termination
shall excuse a party for a breach of its obligations
thereunder and, in the case of a termination by the
Company pursuant to clause (x), the party having given
the applicable Section 6.5 Transfer Notice shall be free
to sell the Section 6.5 Securities into the Unsolicited
Offer.
Section 6.6. Required Dispositions. (a) If, at
any time during the Standstill Period, the Total
Ownership Percentage of the Investor Group shall exceed
the Ownership Cap plus 1%, whether as a result of any
repurchase of Common Stock by the Company pursuant to a
tender offer, open market purchases or otherwise (a
"Company Repurchase") or for any other reason, then, if
and to the extent requested by the Company by written
notice to the Investor which may be made at any time, the
Investor shall, within twelve months after such request
(the "Sell Down Period"), dispose of, or cause the other
members of the Investor Group to dispose of (a "Required
Disposition"), such number of Common Securities owned by
the Investor Group as shall be necessary to reduce the
Total Ownership Percentage of the Investor Group to no
more than the then applicable Ownership Cap immediately
prior to such Company Repurchase or other event giving
rise to such Required Disposition (the "Required
Disposition Amount"), as applicable; provided that any
such Required Disposition shall be subject to the
provisions of Section 6.3 and provided, further, that the
Investor agrees that such Common Securities in excess of
the Ownership Cap shall be voted by the Investor Group at
any meeting of shareholders (or action by written consent
in lieu of any such meeting) pro rata in accordance with
the vote of all shares held by Persons other than the
members of the Investor Group and Other Investor
Affiliates. Notwithstanding the foregoing, if any
Required Disposition during the applicable Sell Down
Period (A) would result in liability to the Investor or
other members of the Investor Group under Section 16(b)
of the Exchange Act or any similar successor statute, or
(B) would be prohibited as a result of the restrictions
set forth in Section 9 of the Registration Rights
Agreement on transfer of Common Securities, then such
Sell Down Period (x) shall, in the case of clause (A)
above, begin on the first date on which such Required
Disposition may be effected without liability under
Section 16(b) of the Exchange Act and (y) with respect to
clause (B) above, be extended by the number of days that
the Investor Group is restricted from selling Common
Securities under the Registration Rights Agreement.
(b) The Company agrees to indemnify the
Investor Group against any Loss (as defined below)
incurred by the Investor Group as a result of any
Required Disposition; provided, that (i) such Required
Disposition is effected on an arm's-length basis to a
Person that is not affiliated with any member of the
Investor Group or Other Investor Affiliate either in a
bona fide open market "brokers' transaction" or in a
privately negotiated transaction, (ii) the purchase price
in connection with such Required Disposition is paid in
cash and (iii) the Required Disposition is made during
the Sell Down Period following the receipt by the
Investor of the notice from the Company specified in the
first sentence of Section 6.6(a). For purposes of this
Section 6.6, Voting Securities disposed of in a Required
Disposition shall be deemed to have been disposed of in
the order in which such Voting Securities were purchased.
"Loss" means the amount, if any, by which (A) the
weighted average purchase price of the Voting Securities
disposed of by the Investor Group in a Required
Disposition during a Sell Down Period calculated on a per
share of Common Stock basis (based on the number of
shares of Common Stock such Voting Securities are
convertible into at such time, if applicable) (which
shall not include (x) sales pursuant to the last proviso
of Section 6.1(A)(a) or (y) sales of Voting Securities in
excess of the Required Disposition Amount) (excluding any
out-of-pocket expenses incurred in connection with such
purchase) exceeds (B)(1) the higher of (x) the Market
Price of the Common Stock for the trading day immediately
preceding the closing of such Required Disposition and
(y) the price received by the Investor Group pursuant to
such Required Disposition (net in each case of ordinary
brokerage or placement commissions incurred by the
Investor to effect such Required Disposition) multiplied
by (2) the number of Voting Securities sold in connection
with such Required Disposition (excluding any Voting
Securities in excess of the Required Disposition Amount).
In no event will Losses be deemed to include any taxes
payable in connection with such Required Disposition.
Such indemnification payment, if any, shall be made,
without interest, within five business days after the
sale occurs.
Section 6.7. Top-Up Rights; Permitted
Reacquisitions; Exchange of Share Certificates.
(a) After the end of the Company Buy Back
Period the Investor at its option may, at any time,
purchase Voting Securities in open market purchases or
privately negotiated transactions provided that, after
giving effect to such purchase, the Investor Group's
Total Ownership Percentage does not exceed the Ownership
Cap then applicable to the Investor Group; provided that
a block purchase of Voting Securities in accordance with
the foregoing effected as a single transaction which
results in the Investor Group's Total Ownership
Percentage exceeding the Ownership Cap then applicable to
the Investor Group shall not be deemed to violate this
Section 6.7(a), Section 6.1 or any other provision hereof
solely as a result of the acquisition of such excess
securities so long as the aggregate Voting Securities so
held by the Investor Group at any time in excess of the
Ownership Cap represent an Equity Percentage of less than
.04% and have an aggregate Market Price at the time of
purchase of less than $2,000,000; provided that the
Investor will transfer, or cause to be transferred, such
excess Voting Securities to an unaffiliated entity within
twelve months of the acquisition thereof by the Investor
Group and all such excess Voting Securities, pending
their transfer, shall be voted by the Investor Group in
accordance with the requirements of clause (w) through
(z) of Section 6.2 and on any other matter in the same
proportion as the votes cast by or on behalf of all
holders of the Company's Voting Securities other than the
Investor Group and Other Investor Affiliates.
(b) The Ownership Cap shall initially be 20%,
subject to reduction as follows:
(i) If, on the last day of the twelve-month
period commencing on the day immediately succeeding
the last day of the Company Buy Back period (or in
the event that the Company shall issue during such
twelve-month period Common Securities having an
aggregate Equity Percentage after such issuance of
3% or more, the twenty-four-month period commencing
on the day immediately succeeding the last day of
the Company Buy Back Period (the "Initial Top-Up
Period")) the Investor Group's Total Ownership
Percentage is less than 20%, the Ownership Cap shall
be reduced to the amount of such Total Ownership
Percentage.
(ii) At any time after the expiration of the
Initial Top-Up Period, the Ownership Cap shall be
reduced by the amount by which, during each
successive twelve-month period following any
Dilutive Issuance, the Common Stock purchased by the
Investor represents an Equity Percentage of less
than 3% (disregarding in computing such Equity
Percentage any subsequent Dilutive Issuance);
notwithstanding the foregoing, the Ownership Cap
shall not be reduced at any time the Total Ownership
Percentage is equal to the Ownership Cap.
(iii) The Ownership Cap shall be reduced by the
Equity Percentage represented by all Transfers (as
hereinafter defined) by the Investor Group of Common
Securities to Persons other than members of the
Investor Group other than (a) inadvertent
dispositions or (b) dispositions in excess of the
Required Disposition Amount in connection with block
trades executed to facilitate a Required
Disposition, provided that the aggregate amount
excluded under (a) and (b) above does not exceed .5%
of the Equity Percentage and is actually purchased
by the Investor or a wholly-owned United States
Subsidiary of the Investor within twelve months of
the date of the disposition referred to in (a) or
(b) above, as the case may be. For purposes of this
Section 6.7(b)(iii), the term "Transfer" with
respect to Voting Securities shall include any sale,
exchange, offer to sell or exchange, contract to
sell or exchange, option or warrant to purchase or
exchange, any dividend of, or any swap or other
agreement or transaction that transfers, directly or
indirectly, the economic consequence of ownership of
Voting Securities and such Transfer shall be deemed
to occur on the date upon which the all conditions
to the consummation of such Transfer are subject to
the discretion of the transferee.
(iv) Any period of twelve or twenty-four months
under this Section 6.7 shall be extended by the
number of days that the Investor Group cannot
purchase Common Stock without liability under
Section 16(b) of the Exchange Act due to a Required
Disposition.
(c) The Investor shall present for exchange,
and the Company shall exchange at no cost to the
Investor, any Common Securities acquired by the Investor
Group, whether purchased pursuant to this Section 6.7 or
received by way of dividend or otherwise (other than
shares of Common Stock acquired pursuant to Section
6.1(A)(a)(iii)) for shares of Series A Convertible
Preferred Stock (at a ratio of one share of Series A
Convertible Preferred Stock in exchange for each 100
shares of Common Stock (as appropriately adjusted to
reflect any stock split, stock dividend, reverse stock
split, reclassification or any other transaction with a
comparable effect)).
(d) No purchase pursuant to this Section 6.7
may be made by the Investor Group during any period
during which the Company notifies the Investor that this
Company is effecting a "distribution" as defined in
Regulation M under the Securities Act; provided, that any
period of twelve months or twenty-four months under this
Section 6.7 shall be extended by the number of days that
the Investor Group is so prohibited from purchasing
shares of Common Securities as a result of this Section
6.7(d).
(e) A "Dilutive Issuance" shall mean any
issuance of Common Securities by the Company after the
Closing Date; provided, that no Dilutive Issuance shall
be deemed to have occurred unless such issuance, together
with all other issuances since the Closing Date or the
most recent Dilutive Issuance to occur (other than those
which have been theretofore taken into account for
purposes of this Section 6.7(e)), shall represent an
Equity Percentage of 1% or more; provided, however, that
any adjustments which by reason of this Section 6.7(e)
are not required to be made shall be carried forward and
taken into account in, and as of the date of, any
subsequent adjustment. All calculations shall be made to
the nearest one thousandth of a percent.
Section 6.8. Spin-off Distributions. In the
event that the Company makes any Spin-off Distribution,
then effective as of the date of such Spin-off
Distribution, without any action on the part of the
Company, the Spin-off Company or the Investor, there
shall be deemed to exist, in addition to this Agreement,
between the Investor and the Spin-off Company a binding
agreement (the "Spin-off Agreement") containing
provisions substantially identical to Section 6 hereof,
including the definitions of any capitalized terms used
in such Sections but defined in other Sections of this
Agreement; provided that, for purposes of the Spin-off
Agreement (i) references to the Company shall mean the
Spin-off Company; (ii) references to Voting Securities
shall mean the Voting Securities of the Spin-off Company,
(iii) references to "the date hereof" and "the date of
this Agreement" shall mean the date of the Spin-off
Distribution; and (iv) the Spin-off Agreement shall
terminate on the date this Agreement would have
terminated or does terminate pursuant to Section 10.
Prior to any Spin-off Distribution, the Investor shall,
and the Company shall cause the Spin-off Company to,
enter into an agreement memorializing the Spin-off
Agreement.
Section 6.9. Competing Investments. From and
after the date hereof, and following the Closing for so
long as the Ownership Cap is 18% or more and no Trigger
Event or Release Event shall have occurred, the Company
shall not consummate or agree pursuant to a binding
agreement to consummate a Competing Investment at any
time prior to the fourth anniversary of the date of this
Agreement. So long as the Ownership Cap is 18% or more
and no Trigger Event or Release Event shall have
occurred, the Company shall not consummate or agree
pursuant to a binding agreement to consummate a Competing
Investment at any time after the fourth anniversary of
the date of this Agreement, unless (a) the Company shall
have provided the Investor prior written notice of such
proposed Competing Investment at least 30 days prior to
the earlier of the consummation of or the entering into a
binding agreement providing for such Competing Investment
specifying the principal terms thereof (including the
form and amount of such Competing Investment and the
identity of the Competitor proposing to make such
Competing Investment) (such notice, the "Competing
Investment Notice") and (b) the Competitor shall have
agreed in the Competitor Agreement or otherwise that (x)
neither it nor any of its Affiliates or Associates
(including any of its designees on the Board) will have
access to any DuPont Proprietary Information or Joint
Intellectual Property (as such terms are defined in the
Research Alliance Agreement) except pursuant to a
sublicense from the Company with respect to Pioneer
Products (as defined in the Research Alliance Agreement)
that is permitted pursuant to the Research Alliance
Agreement, (y) upon any breach of the agreement referred
to in clause (x) above, and so long as the Investor shall
have the right to designate any Investor Nominees for
election or appointment to the Board pursuant to Section
5 (and without limiting any other remedies the Investor
may otherwise have), the Competitor will cause all
designees of the Competitor on the Board to immediately
resign and the Competitor will not have any rights to
nominate any other persons to the Board, and (z) the
provisions of the agreement referred to in this clause
(b) shall be for the express benefit of the Investor and
the Investor shall be a third party beneficiary thereof.
The Investor shall have the right, which may be exercised
by written notice to the Company delivered during the
period commencing on the date of delivery of the
Competing Investment Notice to the Investor and ending on
the date which is the later of (i) the 30th day
thereafter, (ii) the execution by the Company of a
binding agreement providing for the Competing Investment
(or, if no such agreement is executed, the consummation
of such Competing Investment) and (iii) the second
Business Day after the Company notifies the Investor in
writing it will execute an agreement effectuating (or
consummate, as the case may be) the transactions
contemplated in the preceding clause (ii), provided that
such notification shall not be deemed given unless such
agreement is in fact executed (or transaction
consummated, as the case may be) within such two Business
Day period, notwithstanding the provisions of Section
6.1(A), to discuss the merits of the Competing Investment
with the Company and the Board or to make alternative
public or private proposals with respect thereto. The
Investor shall also have the right, exercisable by
delivering a notice (the "Competitor Release Notice") to
the Company within the time period specified below, of
its election to immediately terminate the Formation
Agreement (the election of the Investor to so terminate
the Formation Agreement, a "Release Event"), which
termination shall be carried out, (i) if the Competing
Investment resulting in such Release Event occurs or is
consummated, or if the agreement providing therefor is
executed by the parties thereto, prior to the seventh
anniversary of the date of this Agreement, in accordance
with the provisions of Section 9.2(d)(X) of the Formation
Agreement as if an Involuntary Default described therein
had occurred (and as if the Investor was the
non-defaulting "Party" for purposes of Section 9.2(d)(X)
of the Formation Agreement) upon consummation of the
Competing Investment, and (ii) in all other cases, in
accordance with the provisions Section 9.2(d)(Y) of the
Formation Agreement as if an Involuntary Default
described therein had occurred (and as if the Investor
was the non-defaulting "Party" for purposes of Section
9.2(d)(Y) of the Formation Agreement). A Release Event
shall be irrevocable and binding upon the Investor and
the Company, except that (A) the Investor may, in the
case of a termination carried out in accordance with
clause (i) of the preceding sentence, rescind such
Release Event (in which event all rights and obligations
of the parties shall be as if no Release Event shall have
ever occurred) for a period of five Business Days after
the determination of Fair Market Value (as defined in,
and calculated pursuant to, the Formation Agreement) by
delivering a written notice of such rescission to the
Company within such period, and (B) the Investor may
rescind such Release Event (in which event all rights and
obligations of the parties shall be as if no Release
Event shall have ever occurred) for a period of five
Business Days following the entry of a final and
non-appealable Order as contemplated by the following
sentence and (C) the Release Event shall automatically be
rescinded (in which event all rights and obligations of
the parties shall be as if no Release Event shall have
occurred) if the Competing Investment which triggered
such Release Event was not consummated, as advised in
writing by the Company to the Investor. The closing of
the transfer of the Investor's or the Company's Venture
Interest, as applicable (as defined in the Formation
Agreement) following a Release Event shall be as soon as
practicable following the expiration or termination of
all waiting periods, if any, under the HSR Act and in any
event no later than the later to occur of (I) 15 days
after the delivery of the Competitor Release Notice and
(II) 5 business days after the expiration or termination
of all waiting periods, if any, under the HSR Act,
subject to no Order having been entered, promulgated or
enforced by a court or governmental authority of
competent jurisdiction which prohibits such transaction
(and the Investor and the Company shall use commercially
reasonable efforts to have any such Order lifted or
terminated in order to allow consummation of such
transaction unless and until such time as such Order
becomes final and non-appealable). The Competitor Release
Notice, in order to result in the rights described above,
must be delivered by the Investor to the Company within
twenty Business Days after the earlier of (i) the public
announcement by the Company of the consummation of the
Competing Investment, and (ii) the Company notifying the
Investor in writing that the Competing Investment has
been consummated (and the Company agrees to promptly so
notify the Investor); provided, however, that the
Investor may deliver a Competitor Release Notice at any
time after it becomes aware of the consummation of a
Competing Investment until twenty Business Days after
either of the events described in clauses (i) or (ii)
above shall have occurred. Notwithstanding anything to
the contrary in this Agreement, following consummation of
the Competing Investment, the Investor, with the consent
of the Company, may engage in discussions with the
Company as to matters relating to the Joint Venture
Agreement (including the entity established pursuant to
the Formation Agreement) and the Research Alliance
Agreement, including the terms of a purchase or sale of
any interest therein. Notwithstanding anything herein to
the contrary, solely for purposes of Section 5.2(z),
6.2(e) and clause (iii) and the reference to Sections
8.1(b) and (c) contained in the second to last sentence
of Section 6.9, the Release Event will not be deemed to
have occurred (and the rights and obligations of the
parties referenced therein will not come into effect)
until the earlier of (I) the time, following a Release
Event, of the consummation of the transfer of the
Company's or the Investor's Venture Interest, as
applicable (each as defined in the Formation Agreement)
in connection with such Release Event and (II) six months
following such Release Event. Upon the occurrence of a
Release Event, (i) the Standstill Period shall be
extended, in respect of the sections indicated, and to
the extent provided, in Section 10.2(iv), (ii) the
Company shall file and use commercially reasonable
efforts to obtain and maintain the effectiveness of a
shelf registration statement on the terms set forth in
the Registration Rights Agreement, (iii) the Investor
shall immediately cause all of the Investor Nominees then
serving on the Board to offer their resignations from the
Board, and the Company's obligations to designate
Investor Nominees to the Board pursuant to Section 5
shall terminate, (iv) the parties' obligations and rights
pursuant to Section 6.7(a), Section 8.1(b) and (c),
Section 8.2, Section 8.3 and Section 8.8 shall terminate,
(v) the provisions of Section 6.3(g) shall thereafter
apply and (vi) the provisions of Section 6.1(A), Section
6.2(e), Section 6.6, Section 6.7(b) through (e) and
Section 6.8 shall remain in full force and effect in
perpetuity. The rights of the Investor to terminate the
Formation Agreement pursuant to Section 6.9 and Section
8.2(c) hereof shall automatically be transferred and
assigned at the election of the Investor, upon notice to
and acknowledgment by the Company of such notice, but
without any consent required on the part of the Company,
to any Spin-Off Entity (which term, for purposes of this
sentence, shall include any Person who would otherwise be
deemed a Spin-Off Entity but for such Person's status as
a Subsidiary of the Investor) which is a Subsidiary of
the Investor or satisfies each of the conditions set
forth in clauses (i) through (v) of the definition of the
term "Sale of Ag Products."
Section 6.10. Rights of the Company upon a
Trigger Event.
In the event that:
(A) the Research Alliance Agreement or the
Formation Agreement shall be terminated (notwithstanding
the survival of certain obligations of the parties for
the periods following such termination as provided in
Section 9.4 of the Formation Agreement) other than (i) a
termination of the Research Alliance Agreement or the
Formation Agreement as a result of a willful and
substantial breach by the Company of any material term of
the Formation Agreement or the Research Alliance
Agreement, (ii) a termination of the Research Alliance
Agreement at or after the sixteenth anniversary of the
date of such agreement, and (iii) a termination of the
Formation Agreement or the Research Alliance Agreement in
connection with the acquisition by one party of the
Venture Interest of the other pursuant to a Change in
Control Release Event or a Release Event and where the
consequences set forth in Section 8.2(b) or in the second
to last sentence of Section 6.9, as and to the extent
applicable, shall apply; or
(B) there shall have occurred a Sale of Ag
Products; (any of such events, a "Trigger Event"), then,
effective immediately upon the occurrence of such Trigger
Event (i) the Standstill Period shall be extended, in
respect of the sections indicated, and to the extent
provided, in Section 10.2(iv), (ii) the Company shall
file and use its commercially reasonable efforts to
obtain and maintain the effectiveness of a shelf
registration statement on the terms set forth in the
Registration Rights Agreement, (iii) the Investor shall
immediately cause all Investor Nominees then serving on
the Board to offer their resignations from the Board, and
the Company's obligations to designate Investor Nominee
to the Board pursuant to Section 5 shall terminate, (iv)
the parties' obligations and rights pursuant to the
provisions of Section 6.6(b) (but only with respect to
Section 6.6(b) in the case of a Trigger Event pursuant to
clause (B) above or in the case of a Trigger Event
pursuant to clause (A) above occurring as a result of a
willful and substantial breach by the Investor of any
material term of the Joint Venture Agreement or the
Research Alliance Agreement), Section 6.7(a), Section
6.9, clauses (b) and (c) of Section 8.1, Section 8.2,
Section 8.3, and Section 8.8 shall terminate, (v) the
provisions of Section 6.3(g) shall thereafter apply, and
(vi) Section 6.1(A), Section 6.2(e), Section 6.6(a),
Section 6.6(b) (but only with respect to Section 6.6(b)
in the case of a Trigger Event pursuant to clause (A)
above other than a Trigger Event occurring as a result of
a willful and substantial breach by the Investor of any
material term of the Joint Venture Agreement or the
Research Alliance Agreement), Section 6.7(b)-(e) and
Section 6.8 shall remain in full force and effect in
perpetuity. The Investor agrees that it will not permit a
transaction constituting a Sale of Ag Products
(including, without limitation, a transaction that would
otherwise be excluded from the definition of a Sale of Ag
Products by reason of the satisfaction of the conditions
set forth in clauses (i) through (v) of the proviso
thereof) to be consummated or a binding agreement with
respect thereto to be entered into prior to the first
anniversary of the Closing Date.
SECTION 7
PRE-CLOSING COVENANTS
Section 7.1. Taking of Necessary Action. Each
of the parties hereto agrees to use its reasonable best
efforts promptly to take or cause to be taken all action
and promptly to do or cause to be done all things
necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Closing
of the transactions contemplated by this Agreement.
Without limiting the foregoing, the Investor and the
Company (a) will use their reasonable best efforts to
make all filings, including filings under the HSR Act,
and obtain all other Regulatory Approvals necessary or,
in the opinion of the Investor or the Company, advisable
in order to permit the consummation of the transactions
contemplated hereby and (b) will not take actions
(including by making other acquisitions of or investments
in any other Person) that could reasonably be expected to
have the effect of delaying or hindering the Closing of
the transactions contemplated hereby. Each party shall
execute and deliver both before and after the Closing
such further certificates, agreements and other documents
and take such other actions as the other party may
reasonably request to consummate or implement the
transactions contemplated hereby or to evidence such
events or matters.
Section 7.2. Notifications. (a) At all times
prior to the Closing Date, the Investor shall promptly
notify the Company and the Company shall promptly notify
the Investor in writing of any fact, change, condition,
circumstance or occurrence or nonoccurrence of any event
which will or is reasonably likely to (i) constitute a
breach of any representation or warranty of such party
contained in the Transaction Agreements; or (ii) result
in the failure to satisfy the conditions to be complied
with or satisfied by it hereunder; provided, that the
delivery of any notice pursuant to this Section 7.2 shall
not limit or otherwise affect the remedies available
hereunder to any party receiving such notice.
(b) To the extent that the Investor or the
Company is required to make any filings with the
Commission in connection with the transactions
contemplated by this Agreement, such party shall give the
other party a reasonable opportunity to review and
comment on such filings prior to the filing thereof with
the Commission.
Section 7.3. No-Shop. From the date hereof
until the Closing or the earlier termination of this
Agreement, except with respect to an unsolicited Proposal
to the extent required by the fiduciary obligations of
the Board of Directors of the Company, as determined in
good faith by the Board of Directors based on the advice
of outside counsel, the Company shall not and shall not
permit or authorize any of its Subsidiaries, Affiliates
or Representatives to, directly or indirectly, (i)
solicit or initiate, or encourage the submission of, any
Proposal with respect to the Company, or (ii) participate
in any discussions or negotiations regarding, or furnish
to any Person any information with respect to, or take
any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may
reasonably be expected to lead to, any Proposal, other
than the transaction contemplated hereby with the
Investor.
Section 7.4. Share Listing. As soon as
practicable but in any event prior to the date that the
Closing would otherwise have occurred, the Company shall
take reasonable action as is required to cause the shares
of Common Stock into which the shares of Series A
Convertible Preferred Stock are convertible to be listed
for trading on the NYSE.
Section 7.5. Registration Rights Agreement. At
the Closing, the Company and the Investor shall enter
into the Registration Rights Agreement.
Section 7.6. Pre-Closing Information. The
Company shall (and shall cause each of its Subsidiaries
to), from and after the date hereof and until the Closing
and subject to Section 8.1(a), afford to the Investor and
its Representatives reasonable access, upon reasonable
notice and in such manner as will not unreasonably
interfere with the conduct of the Company's business, to
material financial information regarding the Company. The
Company will reasonably promptly inform the Investor of
the principal terms of any Proposal with respect to which
the Company has entered into substantive discussions or
negotiations.
SECTION 8
ADDITIONAL COVENANTS
Section 8.1. Certain Information. (a) Subject
to applicable law and the provisions of this Agreement,
all information provided to the Investor or the Company
hereunder shall be provided in confidence in accordance
with the provisions of the Confidentiality Agreement (the
"Confidentiality Agreement"), dated March 13, 1997,
between the Company and the Investor.
(b) At such time as the Investor shall notify
the Company that it shall account for its investment in
the Company pursuant to the full equity method (including
earnings and investments), the Company will, at
Investor's sole cost and expense, cooperate to the extent
necessary to furnish to the Investor all information that
is required by GAAP to enable the Investor to account for
its investment in such manner and the Company hereby
consents to the Investor doing so. To the extent
reasonably requested by the Investor, the Company will
and will cause its Representatives to, at the Investor's
sole cost and expense, provide information regarding the
Company and its Subsidiaries, and otherwise cooperate
with, the Investor so as to enable the Investor to
prepare financial statements in accordance with GAAP and
to comply with its disclosure requirements under
securities laws and regulations.
(c) From time to time upon reasonable advance
request by the Company, the Investor will notify the
Company of the amount of each class of Voting Securities
then Beneficially Owned by the Investor Group. From time
to time upon reasonable advance request by the Investor,
the Company will provide the Investor with information
known to the Company with respect to the number of votes
entitled to be voted by shareholders of the Company at
the time of such request; provided, however, that the
Company shall not be obligated pursuant to this Section
8.1(c) to make any general solicitation of shareholders
of the Company in connection therewith.
Section 8.2. Right to Participate in Sale of
the Company. (a) Prior to the Closing and thereafter, so
long as the Ownership Cap is 18% or more, (I) the Company
shall not enter into, and the Board shall not publicly
recommend to shareholders or approve, a definitive
agreement providing for a Change in Control Transaction
and (II) the Board shall not redeem the Preferred Stock
Purchase Rights or otherwise amend or modify the Amended
Rights Agreement (or a Substantially Similar Plan) to be
inapplicable (including by taking action to cause a
Section 11(a)(ii) Event or Section 13 Event (each as
defined in the Amended Rights Agreement as in effect on
the date hereof), not to occur that, absent such action,
would otherwise have occurred, or to redeem the Preferred
Stock Purchase Rights) to a proposed Change in Control
Transaction for which no definitive agreement is entered
into as a means, in any such case, intended to permit a
proposed Change in Control Transaction to be consummated
without causing a Triggering Event (as defined in the
Amended Rights Agreement) to occur or otherwise exempt
such transaction therefrom, unless prior thereto (i) the
Investor shall have been given at least 30 days prior
notice of the proposed Change in Control Transaction and
of the material terms thereof and a full and fair
opportunity, as conclusively determined by the Board in
good faith and in the exercise of its fiduciary duties,
after consultation with outside counsel, to participate
in the Company's bidding process (the "Process")
undertaken by the Company (if any) in advance of such
Change in Control Transaction on terms, and to have any
proposal submitted by the Investor pursuant to clause
(ii) below evaluated on a basis, no less favorable to the
Investor than those afforded to other interested parties,
(ii) the Investor shall have been permitted
notwithstanding the restrictions contained in Section
6.1, to submit a proposal for an alternative transaction
during the Interim Period (as defined below) or in
connection with such Process, subject in any event to the
Board's right to accept or reject any such proposal as
may be made and (iii) the Interim Period shall have
terminated. "Interim Period" shall mean the period
commencing on the date of the delivery to the Investor by
the Company of written notice (such notice, the "Change
in Control Transaction Notice") of its considering to
take any action specified in clause (I) or clause (II) of
the preceding sentence and ending on the date which is
the later of (i) the 30th day thereafter, and (ii) the
public announcement by the Company of the taking of any
action specified in clause (I) or clause (II) of the
preceding sentence. In connection with the foregoing, the
Investor agrees that if the Company establishes
procedures uniformly applicable to all interested parties
for the evaluation of proposals for a Change in Control
Transaction and if the Investor wishes to participate in
the sale process, then, the Investor will, subject to the
Investor not violating applicable law (other than
violations based on claims or allegations of breach of
the Company's fiduciary duty), comply with such
procedures as long as such procedures (i) are applied
uniformly to all interested parties (and the Company
agrees that it shall give the Investor at least one
Business Day's prior written notice if any such
procedures are not to be uniformly applied to all such
interested parties), (ii) except as conclusively
determined by the Board in good faith and in the exercise
of its fiduciary duties, after consultation with outside
counsel, do not have a materially greater impact when
applied to the Investor than when applied to other
participants, and (iii) except as provided in Section
8.2(c) below and the Formation Agreement, shall not
establish procedures relating to the Joint Venture
Agreement, or the entity established thereby, or the
Research Alliance Agreement, or the rights and
obligations of the Investor relating thereto. If the
Company rejects any offer made by the Investor pursuant
to the Process, the Company will advise the Investor in
writing of the reasons for such rejection.
(b) Following the consummation of a Change in
Control Transaction, unless either (x) any Person or 13D
Group shall Beneficially Own Common Securities
representing an Equity Percentage of more than 50% of the
Company or of the common securities of the company or
other entity surviving such Change in Control Transaction
or (y) the Investor Group shall Beneficially Own Voting
Securities representing less than 5% of the Total Voting
Power of the Company or the voting power of the company
or other entity surviving such Change in Control
Transaction (a Change in Control Transaction where
neither clause (x) nor (y) is satisfied, a "Surviving
Change in Control Transaction"), then (unless, in the
case of clause (i) below, the Company or other entity
surviving such Change in Control Transaction shall
otherwise determine as to all of such provisions) (i) the
provisions of Section 6.1(A), Section 6.6, Section 6.7
(other than clause (c) thereof to the extent that the
Common Stock of the Company or the voting securities of
the company or other entity surviving such Change in
Control Transaction (1) is not entitled to more than one
vote per share or (2) is entitled to more than one vote
per share, but all shares of such class are so entitled),
Section 6.8, Section 6.10, Sections 8.1(b) and (c) and
Sections 8.2(a) and (b), shall continue in full force and
effect through the balance of the Standstill Period
(except that the Ownership Cap shall be appropriately
adjusted to equal the ownership that the Investor Group
would have owned after the Surviving Change in Control
Transaction if the Investor Group had owned Common
Securities equal to the Ownership Cap immediately prior
to the Surviving Change in Control Transaction), (ii) the
provisions of Section 5 and Section 6.2 shall terminate
and (iii) the provisions of Section 6.3(g) shall
thereafter apply provided, however, notwithstanding
anything to the contrary contained in this Agreement
(other than the following sentence), that at and
following such time as (a) any Person or 13D Group shall
Beneficially Own Common Securities representing an Equity
Percentage of more than 50% of the Company or the company
or other entity surviving such Change in Control
Transaction or (b) the Investor Group shall Beneficially
Own Voting Securities representing less than 5% of the
Total Voting Power of the Company or of the voting power
of the company or other entity surviving such Change in
Control Transaction, then, in either case, none of the
provisions or obligations set forth in this Agreement
shall be applicable to the members of the Investor Group
or to any Other Investor Affiliate. Following a Surviving
Change in Control Transaction, the Company (or the
surviving company or entity) shall file and use its
commercially reasonable efforts to obtain and maintain
the effectiveness of a shelf registration statement on
the terms set forth in the Registration Rights Agreement.
Notwithstanding anything to the contrary contained in the
Agreement, following any Change in Control Transaction,
the provisions of Section 8.2(c) shall apply to such
Change in Control Transaction and, unless the Company or
other entity surviving such Change in Control Transaction
shall otherwise determine by written notice to the
Investor at least 10 days prior to the date by which the
Investor must exercise its rights to declare a Change in
Control Release Event to occur as a result of such Change
in Control Transaction, the provisions of Section 8.2(c)
and Section 6.9 shall apply to any Change in Control
Transaction or Competing Investment, as the case may be,
arising thereafter with respect to the Company or other
entity surviving such Change in Control Transaction.
(c) Without limiting the rights of the Investor
set forth in Section 8.2(a) hereof, the Investor shall
have the right, exercisable by delivering a notice (the
"Change in Control Release Notice") to the Company within
the time period specified below, of its election to
immediately terminate the Formation Agreement (the
election of the Investor to so terminate the Formation
Agreement, a "Change in Control Release Event"), which
termination shall be carried out, (i) if the Change in
Control Transaction resulting in such Change in Control
Release Event occurs or is consummated, or if the Company
enters into, or the Board publicly recommends to
shareholders or approves, a binding agreement providing
for a Change in Control Transaction prior to the sixth
anniversary of the date of this Agreement (or, in the
case of a Change of Control Transaction involving a
Person who is not a Competitor, the fifth anniversary of
the date of this Agreement), in accordance with the
provisions of Section 9.2(d)(X) of the Formation
Agreement as if an Involuntary Default described therein
had occurred (and as if the Investor was the
non-defaulting "Party" for purposes of Section 9.2(d)(X)
of the Formation Agreement) upon consummation of the
Change in Control Transaction, and (ii) in all other
cases, in accordance with the provisions of Section
9.2(d)(Y) of the Formation Agreement as if an Involuntary
Default described therein had occurred (and as if the
Investor was the non-defaulting "Party" for purposes of
Section 9.2(d)(Y) of the Formation Agreement). A Change
in Control Release Event shall be irrevocable and binding
upon the Investor and the Company, except that (A) the
Investor may, in the case of a termination carried out in
accordance with clause (i) of the preceding sentence,
rescind such Change in Control Release Event (in which
event all rights and obligations of the parties shall be
as if no Change in Control Release Event shall have ever
occurred) for a period of five Business Days after the
determination of Fair Market Value (as defined in, and
calculated pursuant to, the Formation Agreement) by
delivering a written notice of such rescission to the
Company within such period, and (B) the Investor may
rescind such Change in Control Release Event (in which
event all rights and obligations of the parties shall be
as if no Change in Control Release Event shall have ever
occurred) for a period of five Business Days following
the entry of a final and non-appealable Order as
contemplated by the following sentence, and (C) the
Change in Control Release Event shall be automatically
rescinded (in which event all rights and obligations of
the parties shall be as if no Change in Control Release
Event shall have occurred) if the Change in Control
Transaction which triggered such Change in Control
Release Event was not consummated, as advised in writing
by the Company to the Investor. The closing of the
transfer of the Investor's or the Company's Venture
Interest, as applicable (as defined in the Formation
Agreement) following a Change in Control Release Event
shall be as soon as practicable following the expiration
or termination of all waiting periods, if any, under the
HSR Act and in any event no later than the later to occur
of (I) 15 days after delivery of the Change in Control
Release Notice and (II) 5 business days after the
expiration or termination of all waiting periods, if any,
under the HSR Act, subject to no Order having been
entered, promulgated or enforce by a court or
governmental authority of competent jurisdiction which
prohibits such transaction (and the Investor and the
Company shall use their commercially reasonable efforts
to have any such Order lifted or terminated in order to
allow consummation of such transaction unless and until
such time as such Order becomes final and
non-appealable). The Change in Control Release Notice, in
order to result in the rights described above, must be
delivered by the Investor to the Company within twenty
Business Days after the earlier of (i) the public
announcement by the Company of the consummation of the
Change in Control Transaction, and (ii) the Company
notifying the Investor in writing that the Change in
Control Transaction has been consummated (and the Company
agrees to promptly so notify the Investor); provided,
however, that the Investor may deliver a Change in
Control Release Notice at any time after it becomes aware
of the consummation of a Change in Control Transaction
until twenty Business Days after either of the events
described in clauses (i) or (ii) above shall have
occurred. Notwithstanding anything to the contrary in
this Agreement, following consummation of Change in
Control Transaction, the Investor may engage in
discussions with the Company (and/or the Person
consummating such Change in Control Transaction) as to
matters relating to the Joint Venture Agreement
(including the entity established pursuant to the
Formation Agreement) and the Research Alliance Agreement,
including the terms of a purchase or sale of any interest
therein..
Section 8.3. Use of Proceeds. (a) Subject to
the provisions of this Agreement, as promptly as
practicable, but in no event later than five business
days after the Closing, the Company shall commence a
self-tender offer (the "Offer") to purchase 16,444,586
shares of Common Stock (the "Requisite Number") at a
price per share not in excess of $104 per share (the
"Maximum Offer Price"), nor less than a per share price
to be determined in the sole discretion of the Company
after consultation with the Investor (the price range
from such maximum to minimum price, the "Per Share Price
Range") net to the seller in cash. Pursuant to the Offer,
the Company will determine the single per share price,
within the Per Share Price Range, net to the seller in
cash (the "Offer Purchase Price") that it will pay for
shares properly tendered pursuant to the Offer, taking
into account the number of shares so tendered and the
prices specified by the tendering stockholders. The
Company will select the lowest Offer Purchase Price that
will allow it to buy the Requisite Number of shares of
Common Stock (or such lesser number of shares as are
properly tendered and not withdrawn at prices within the
Per Share Price Range). All shares of Common Stock
properly tendered at prices at or below the Offer
Purchase Price and not withdrawn will be purchased at the
Offer Purchase Price, subject to the terms and conditions
of the Offer. All shares of Common Stock acquired in the
Offer will be acquired at the Offer Purchase Price.
Subject to the terms and conditions thereof, the Offer
shall expire at midnight New York City time on the date
that is 20 business days from the date the Offer is first
published or sent to holders of Common Stock; provided,
however, that the Company may (A) extend the Offer, if at
the scheduled expiration date of the Offer any of the
conditions to the Company's obligation to accept for
payment, and pay for, shares of Common Stock shall not
have been satisfied or waived, until such time as such
conditions are satisfied or waived, (B) extend the Offer
for any period required by any rule, regulation,
interpretation or position of the Commission or the staff
thereof applicable to the Offer and (C) extend the Offer
for any reason on one or more occasions for an aggregate
period of not more than 5 business days beyond the latest
expiration date that would otherwise be permitted under
clause (A) or (B) of this sentence. No member of the
Investor Group shall, and the Investor shall use
commercially reasonable efforts to cause all Other
Investor Affiliates not to, tender any shares of Common
Stock owned by them into the Offer.
(b) If the Company, pursuant to the Offer,
shall have purchased fewer than the Requisite Number of
shares of Common Stock, the Company shall use
commercially reasonable efforts during the remainder of
the Company Buy Back Period to repurchase shares of
Common Stock from the shareholders of the Company other
than the Investor, any member of the Investor Group or
any Other Investor Affiliates in open market purchases or
pursuant to additional self-tender offers by the Company
to the extent necessary so that the Total Ownership
Percentage of the Investor Group shall be equal to
Ownership Cap; provided, however, that in no event shall
(i) unless the provisions of clause (c) of this Section
8.3 are applicable, the Company be required to pay
greater than $104 per share of Common Stock in any such
repurchase, (ii) the aggregate amount paid by the Company
(deducting therefrom all amounts paid by the Investor to
the Company pursuant to paragraph (c) below) for shares
of Common Stock pursuant to the Offer and pursuant to
additional repurchases under this Section 8.3(b) exceed
the total Purchase Price, and (iii) the number of shares
of Common Stock acquired by the Company pursuant to the
Offer and this Section 8.3(b) exceed the Requisite
Number.
(c) Following completion of the Offer, the
Investor shall have the right to designate in writing
from time to time a maximum price or prices at which the
Company shall seek to purchase shares of Common Stock
that is in excess of $104 per share provided that at the
end of the Company Buy-Back Period, the Investor shall
pay in cash in immediately available funds to the Company
an amount equal to the excess, if any, of (x) the
weighted average cost to the Company for the purchase of
all shares of Price Protected Common Stock (as defined
below) purchased by the Company during the Company
Buy-Back Period over (y) the Purchase Price, together
with interest thereon at the Company's borrowing rate
under its bank lines of credit, for each day the Company
has incurred all or any portion of such excess. "Price
Protected Common Stock" shall mean all shares of Common
Stock purchased by the Company pursuant to the Offer and
the first shares of Common Stock purchased by the Company
after the consummation of the Offer at or below the
maximum price or prices specified by the Investor
pursuant to this paragraph (c) which, taken together with
the number of shares of Common Stock purchased pursuant
to the Offer, are equal to the Requisite Number.
(d) References herein to Requisite Number and
price per share of Common Stock shall be appropriately
adjusted in the event of any stock split, stock
combination or similar adjustment in the number of shares
of Common Stock outstanding.
Section 8.4. Rights Agreement. From and after
the date hereof the Company shall not amend, modify,
waive, terminate or invalidate any provision of the
Amended Rights Agreement or any similar shareholder
rights plan or similar device (a "Substantially Similar
Plan"), in a manner which would cause the Investor Group
to become an "acquiring person" under the Amended Rights
Agreement or any Substantially Similar Plan upon the
exercise of any rights granted to the Investor hereunder.
Section 8.5. Publicity. Except as required by
Law or by obligations pursuant to any listing agreement
with any relevant securities exchange, neither the
Company or any of its Affiliates nor the Investor or any
of its Affiliates shall, without the prior written
consent of the other, which consent shall not be
unreasonably withheld or delayed, make any public
announcement or issue any press release with respect to
the transactions contemplated by this Agreement. Prior to
making any public disclosure required by applicable Law
or pursuant to any listing agreement with any relevant
national exchange, the disclosing party shall consult
with the other party, to the extent feasible, as to the
content of such public announcement or press release.
Notwithstanding the foregoing, the Investor and the
Company may, in meetings with securities and other
financial analysts and press interviews, disclose
information (other than non-public information)
concerning the transactions contemplated hereby and the
Investor's investment in the Company and in a manner not
inconsistent with prior joint public announcements
regarding the transactions and in a manner consistent
with the other terms of this Agreement.
Section 8.6. Legend. The Investor agrees to
the placement on certificates representing shares of
Series A Convertible Preferred Stock purchased by the
Investor pursuant hereto, of a legend substantially as
set forth below (except that the first sentence of such
legend shall not be placed on any shares of Common Stock
issuable upon conversion of Series A Convertible
Preferred Stock that have been registered under the
Securities Act or if, in the opinion of counsel, such
sentence is not required under the Securities Act),
unless the Company determines otherwise, in accordance
with the opinion of counsel:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933
(THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR NON-U.S. JURISDICTION AND
MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS
OF SUCH OTHER JURISDICTIONS. THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS
(INCLUDING PROVISIONS THAT RESTRICT THE TRANSFER OF SUCH
SECURITIES) OF AN INVESTMENT AGREEMENT DATED AS OF AUGUST
6, 1997 BETWEEN THE E.I. DU PONT DE NEMOURS AND COMPANY
AND PIONEER HI-BRED INTERNATIONAL, INC. (THE "COMPANY"),
COPIES OF WHICH ARE ON FILE AT THE OFFICES OF THE
SECRETARY OF THE COMPANY."
Section 8.7. No Restrictions. For so long as
the Total Ownership Percentage of the Investor Group
shall equal 10% or more, in the aggregate, the Company
will not take or recommend to its shareholders any
amendment to the Company's Articles of Incorporation or
Bylaws which would impose limitations on the legal rights
of the Investor Group as Company shareholders (other than
those imposed pursuant to this Agreement) based upon the
size of security holding permitted under this Agreement,
the business in which a security holder is engaged or
other considerations applicable to the Investor Group and
not to security holders generally.
Section 8.8. Amendment to Articles of
Incorporation. So long as the Ownership Cap is 18% or
more, the Company will propose, and the Board shall
recommend for adoption by the shareholders of the
Company, no later than the first annual meeting of
shareholders following the end of the Company Buy Back
Period (or such earlier time as the Total Ownership
Percentage of the Investor Group shall equal the
Ownership Cap), and no less frequently than each annual
meeting thereafter until the Reclassification Amendment
(as hereinafter defined) is adopted, an amendment (the
"Reclassification Amendment") to the Articles of
Incorporation of the Company providing for, and only for,
(a) the authorization of a new class of common stock (in
addition to the Common Stock) to be designated as the
Class B Common Stock and consisting of the same number of
authorized shares as the number of authorized shares of
Series A Convertible Preferred Stock and which Class B
Common Stock shall, as to each share, have the identical
rights, powers and preferences (including as to
dividends, voting rights, liquidation preference,
restriction on transfer, adjustment and conversion) as
pertains to each share of Series A Convertible Preferred
Stock and (b) upon the adoption and effectiveness of the
Reclassification Amendment, the automatic
reclassification of each outstanding share of Series A
Convertible Preferred Stock into one validly issued and
fully paid share of Class B Common Stock (whereupon, all
references to the Series A Convertible Preferred Stock in
this Agreement shall thereafter mean and refer to the
corresponding number of shares of Class B Common Stock).
In connection with each meeting of the Company's
shareholders at which the Reclassification Amendment is
submitted for approval of the Company's shareholders, the
Company shall use its commercially reasonable efforts to
cause the adoption of the Reclassification Amendment by
the shareholders of the Company, including soliciting
proxies in favor of the adoption of the Reclassification
Amendment by the shareholders of the Company. If, after
the date of the fifth annual meeting of the Company's
shareholders following the end of the Company Buy-Back
Period, (x) the Reclassification Amendment shall not have
been approved by the shareholders of the Company, and (y)
the Investor shall have been advised in writing by its
regular independent public accounting firm that unless
the shares of Series A Convertible Preferred Stock owned
by the Investor Group are converted into Common Stock in
accordance with this Section 8.8, such firm cannot
deliver its opinion that the Investor is entitled to
account for its investment in the Company on the full
equity accounting method (including earnings and
investments) (other than, in any such case referred to in
this clause (y), as a result of the failure of the
Investor to fully exercise its rights under this
Agreement, including its rights to acquire Voting
Securities hereunder (but assuming for purposes hereof
that the Investor owned Voting Securities equal to the
then applicable Ownership Cap) or to designate Investor
Nominees for election or appointment to the Board or to
have such Board members participate as Board members in
the management of the business and affairs of the
Company), then, at the written request of the Investor,
both parties will use commercially reasonable efforts to
seek approval of the Commission or its staff that would
permit the Investor to account (or, if such accounting
has theretofore been allowed, to permit the Investor to
continue to account) for its investment in the Company on
the full equity accounting method (including earnings and
investments) without the conversion of the Series A
Convertible Preferred Stock owned by the Investor into
Common Stock on the terms set forth below. If the
Commission or its staff shall not have approved such
accounting within six months after the Investor's written
request referred to above, the Investor shall have the
option (the "Optional Conversion Right"), which shall be
exercisable by the Investor by delivering written notice
to the Company within 30 days after the end of such six
month period, to convert all of the Series A Convertible
Preferred Stock owned by the Investor Group into Common
Stock as set forth in Section 6(a)(iii) of the
Certificate of Designation for the Series A Convertible
Preferred Stock. All Common Stock issued to the Investor
Group upon exercise of the Optional Conversion Right,
together with all other shares of Common Stock thereafter
acquired by the Investor pursuant to the Agreement, shall
immediately upon each acquisition thereof, be deposited
by the Investor Group into a permanent voting trust in
accordance with applicable Law (the "Voting Trust")
pursuant to a perpetual voting trust agreement in a form
reasonably satisfactory to the Company, and, with respect
to matters contained therein which are not specifically
contemplated hereby, in a form reasonably satisfactory to
the Investor, and with an independent trust company,
commercial bank or other financial institution reasonably
satisfactory to the Company and the Investor designated
as voting trustee (the "Voting Trustee"). Pursuant to
such Voting Trust, the aggregate number of Votes as the
Investor Group would from time to time have been able to
vote if the Investor had not exercised the Optional
Conversion Right and continued to own the Series A
Convertible Preferred Stock will be voted by the Voting
Trustee at the direction of the Investor consistent with
how such Votes could have been voted under this Agreement
if the Optional Conversion Right had not been exercised,
and the balance of the Votes attributable to all shares
of Common Stock deposited in the Voting Trust shall be
voted by the Voting Trustee pro rata in accordance with
the votes of all shareholders of the Company other than
the members of the Investor Group and the Other Investor
Affiliates. The Voting Trust shall provide for the
release and delivery to the Investor of shares of Common
Stock, free of the restrictions of the Voting Trust, and
the termination of the provisions thereof with respect to
shares of Common Stock, upon transfer of such shares by
the Investor to unaffiliated parties in accordance with
the provisions of this Agreement. The parties hereto
hereby agree to enter into arrangements to permit the
timely tender into a tender or exchange offer of Common
Stock subject to the Voting Trust in a manner similar to
that applied to the Series A Convertible Preferred Stock.
There shall not be any obligation to deliver any shares
of Common Stock to the Voting Trust, and the Voting Trust
shall immediately terminate if it has already been
established, at such time as all outstanding shares of
Common Stock (or such securities as the Common Stock has
been converted into) has the same votes per share if any,
as all other such shares or other securities, without any
"time phased" voting.
Section 8.9. HSR Act Filings. Notwithstanding
anything to the contrary contained in this Agreement, the
Investor Group shall be entitled to make any HSR Act
filing in connection with the Investor Group's intention
to acquire or its acquisition of Common Securities
pursuant to Section 6.1(A)(a)(iii) or Section 6.7 of this
Agreement. The Company shall use its reasonable best
efforts to make all HSR filings required to be made by it
and to cause any waiting period under HSR Act related to
the Investor's and its filings to expire as soon as
practicable.
SECTION 9
CONDITIONS
Section 9.1. Conditions of Investor's
Obligation. The obligation of the Investor to purchase
and pay for the Shares at the Closing is subject to
satisfaction or waiver of each of the following
conditions precedent:
(a) Representations and Warranties; Covenants.
The representations and warranties of the Company
contained in this Agreement shall be true and correct in
all respects on and as of the date of this Agreement. The
Company shall have in all material respects performed all
obligations and complied with all agreements,
undertakings, covenants and conditions required hereunder
to be performed by it at or prior to the Closing.
(b) Compliance with Laws; No Adverse Action or
Decision. No Governmental Entity of competent
jurisdiction shall have issued any Order restraining,
enjoining or otherwise prohibiting the consummation of
the transactions contemplated by the Transaction
Agreements. No action, suit or other proceeding by any
Governmental Entity shall have been instituted that seeks
to restrain, enjoin, prohibit or otherwise make illegal
the performance of any of the Transaction Agreements or
the consummation of the transactions contemplated hereby
or thereby.
(c) Consents. All Regulatory Approvals from any
Governmental Entity and all consents, waivers or
approvals from any other Person required for or in
connection with the execution and delivery of the
Transaction Agreements and the consummation at the
Closing by the parties hereto and thereto of the
transactions contemplated hereby and thereby shall have
been obtained or made on terms reasonably satisfactory to
the Investor, except for the failures to obtain such
Regulatory Approvals, consents, waivers and approvals
which would not reasonably be expected to have a Material
Adverse Effect, and the waiting period specified under
the HSR Act shall have expired or been terminated.
(d) Transaction Agreements. The Investor shall
have received counterpart originals or certified or other
copies of the Transaction Agreements.
(e) Registration Rights Agreements. The
Investor shall have received a fully executed counterpart
of the Registration Rights Agreement and the Registration
Rights Agreement shall be in full force and effect.
(f) Consummation of Certain Transactions. The
closing under the Joint Venture Agreement, and all
transactions to be consummated in connection therewith,
shall have occurred.
Section 9.2. Conditions of the Company's
Obligation. The obligation of the Company to issue and
sell the Shares at the Closing is subject to satisfaction
or waiver of each of the following conditions precedent:
(a) Representations and Warranties; Covenants.
The representations and warranties of the Investor
contained in this Agreement shall be true and correct on
and as of the date of this Agreement. The Investor shall
have in all material respects performed all obligations
and complied with all agreements, undertakings, covenants
and conditions required hereunder to be performed by it
at or prior to the Closing.
(b) Compliance with Laws; No Adverse Action or
Decision. No Governmental Entity of competent
jurisdiction shall have issued any Order restraining,
enjoining or otherwise prohibiting the consummation of
the transactions contemplated by the Transaction
Agreements. No action, suit or other proceeding by any
Governmental Entity shall have been instituted that seeks
to restrain, enjoin, prohibit or otherwise make illegal
the performance of any of the Transaction Agreements or
the consummation of the transactions contemplated hereby
or thereby.
(c) Consents. All Regulatory Approvals from any
Governmental Entity and all consents, waivers or
approvals required for or in connection with the
execution and delivery of the Transaction Agreements and
the consummation at Closing by the parties hereto and
thereto on terms reasonably satisfactory to the Company,
of the transactions contemplated hereby and thereby shall
have been obtained or made, except for the failures to
obtain such Regulatory Approvals, consents, waivers and
approvals which would not reasonably be expected to have
a material adverse effect on the ability of the Investor
to consummate the transactions contemplated by the
Transaction Agreements, and the waiting period specified
under the HSR Act shall have expired or been terminated.
(d) Transaction Agreements. The Company shall
have received all counterpart originals or certified or
other copies of the Transaction Agreements.
(e) Consummation of Certain Transactions. The
closing under the Joint Venture Agreement, and all
transactions to be consummated in connection therewith,
shall have occurred.
SECTION 10
TERMINATION
Section 10.1. Termination. (a) Subject to
Section 10.2 hereof, this Agreement may be terminated by
notice in writing at any time prior to the Closing by
either the Investor or the Company if:
(i) the Closing shall not have occurred on or
before August 6, 1998; or
(ii) the Company and the Investor so mutually
agree in writing.
(b) Subject to Section 10.2 hereof, and
without limiting any liability of the Company or the
Investor for any breach of its obligations hereunder,
this Agreement may be terminated by notice in writing at
any time prior to the Closing (x) by the Investor if a
Change in Control Transaction or a Competing Investment
shall have been consummated or if the Company has entered
into a binding agreement or a letter of intent with
respect thereto or (y) by the Company if a Change in
Control Transaction shall have been consummated or if the
Company shall have entered into a binding agreement with
respect thereto.
(c) Subject to Section 10.2 hereof, if the
Closing shall occur, this Agreement may be terminated by
one year's prior notice in writing by either the Investor
or the Company which notice may be delivered at any time
after the 15th anniversary of the date of this Agreement.
Section 10.2. Effect of Termination. If this
Agreement is terminated in accordance with Section 10.1
hereof, this Agreement shall become null and void and of
no further force and effect except that (i) the terms and
provisions of this Section 10.2, Section 8.1(a) and
Section 11.1 (and, in the event this Agreement was
terminated in accordance with Section 10.1(c), then
Section 6.2(d) and Section 6.3(f)) shall remain in full
force and effect, (ii) so long as any member of the
Investor Group shall own any Series A Convertible
Preferred Stock, the provisions of Section 6.2(b) shall
remain in force and effect, (iii) any termination of this
Agreement shall not relieve any party hereto from any
liability for any breach of its obligations hereunder,
regardless of whether such party terminated this
Agreement pursuant to Section 10.1(a)(i); and (iv)
subject to the proviso to the first sentence in Section
8.2(b) hereof, in the event that a Trigger Event or a
Release Event shall have occurred, prior to such
termination, the provisions of Section 6.1(A), Section
6.2(e), Section 6.3(g), Section 6.6 (to the extent with
respect to a Trigger Event, as provided in Section 6.10),
Section 6.7(b) through (e) and Section 6.8 shall remain
in full force and effect.
SECTION 11
MISCELLANEOUS
Section 11.1. Fees and Expenses. Each party
shall bear its own expenses, including the fees and
expenses of any Representatives engaged by it, incurred
in connection with the Transaction Agreements and the
transactions contemplated hereby and thereby.
Section 11.2. Survival. The representations,
warranties, covenants and agreements contained in or made
pursuant to this Agreement shall expire as of the
consummation of the transactions to be completed at the
Closing, except (i) for the representations and
warranties contained in Sections 3.1, 3.2, 3.4(c), 4.1
and 4.2 which shall survive without limitation, and (ii)
the covenants and agreements contained in or made
pursuant to this Agreement which by their terms are to
survive after the Closing, which shall survive for the
period specified therein, provided, that if a claim or
notice is given with respect to any representation,
warranty, covenant or agreement prior to any such
expiration date, the claim with respect to such
representation, warranty, covenant or agreement shall
continue indefinitely until such claim is finally
resolved.
Section 11.3. Notices. All notices and other
communications hereunder shall be in writing and shall be
deemed to have been duly given, if delivered personally,
by telecopier or sent by first class mail, postage
prepaid, as follows:
(a) If to the Company, to:
Pioneer Hi-Bred International, Inc,
700 Capital Square
Des Moines, Iowa 50309
Attention: General Counsel
Telephone: 515-248-4800
Telecopier: 515-248-4844
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10044
Attention: Stephen Fraidin, Esq.
Telephone: 212-859-8000
Telecopier: 212-859-4000
(b) If to the Investor, to:
E.I. du Pont de Nemours and Company
Agricultural Products
Barley Mill Plaza #38
P.O. Box 80038
Wilmington, DE 19880-0038
Attention: William F. Kirk,
Vice President and General Manager
Telephone: 302-774-1000
Telecopier: 302-992-6184
With a copy to:
Skadden, Arps, Slate, Meagher
& Flom, LLP
919 Third Avenue
New York, New York 10022
Attention: Lou R. Kling, Esq.
Telephone: 212-735-3000
Telecopier: 212-735-2000
(c) If to any other holder of capital stock of
the Company, addressed to such holder at the address of
such holder in the record books of the Company; or to
such other address or addresses as shall be designated in
writing. All notices shall be effective when received.
Section 11.4. Entire Agreement; Amendment.
This Agreement and the documents described herein or
attached or delivered pursuant hereto (including, without
limitation, the Registration Rights Agreement and the
Rights Agreement Amendment) and the Confidentiality
Agreement set forth the entire agreement between the
parties hereto with respect to the matters provided
herein and therein. Any provision of this Agreement may
be amended or modified in whole or in part at any time by
an agreement in writing among the parties hereto executed
in the same manner as this Agreement. No failure on the
part of any party to exercise, and no delay in
exercising, any right shall operate as waiver thereof,
nor shall any single or partial exercise by either party
of any right preclude any other or future exercise
thereof or the exercise of any other right.
Section 11.5. Counterparts. This Agreement may
be executed in two or more counterparts, each of which
shall be deemed to constitute an original, but all of
which together shall constitute one and the same
document.
Section 11.6. Governing Law; Submission to
Jurisdiction. This Agreement shall be governed by, and
interpreted, in accordance with, the laws of the State of
Iowa applicable to contracts made and to be performed in
that state. The parties hereto irrevocably (a) submit to
the exclusive personal jurisdiction of any state or
federal court in the State of Illinois in any suit,
action or other legal proceeding relating to this
Agreement; (b) agree that all claims in respect of any
such suit, action or other legal proceeding may be heard
and determined in, and enforced in and by, any such
court; and (c) waive any objection that they may now or
hereafter have to venue in any such court or that such
court is an inconvenient forum.
Section 11.7. Successors and Assigns. Except as
otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding
upon, the Company's successors and assigns.
Section 11.8. Assignment. Except as otherwise
expressly provided in the last sentence of Section 6.9
hereof, neither this Agreement nor any rights or
obligations hereunder shall be assignable.
Section 11.9. Remedies; Waiver. To the extent
permitted by Law, all rights and remedies existing under
this Agreement and any related agreements or documents
are cumulative to, and are exclusive of, any rights or
remedies otherwise available under applicable Law. No
failure on the part of any party to exercise, or delay in
exercising, any right hereunder shall be deemed a waiver
thereof, nor shall any single or partial exercise
preclude any further or other exercise of such or any
other right.
Section 11.10. Specific Performance. Each party
hereto acknowledges that, in view of the uniqueness of
the transactions contemplated by this Agreement, the
other party would not have an adequate remedy at law for
money damages in the event that this Agreement has not
been performed in accordance with its terms. Each party
therefore agrees that the other party shall be entitled
to specific enforcement of the terms hereof in addition
to any other remedy to which it may be entitled, at law
or in equity.
Section 11.11. Severability. If any provision
of this Agreement is determined to be invalid, illegal,
or unenforceable, the remaining provisions of this
Agreement shall remain in full force and effect provided
that the economic and legal substance of the transactions
contemplated is not affected in any manner materially
adverse to any party. In the event of any such
determination, the parties agree to negotiate in good
faith to modify this Agreement to fulfill as closely as
possible the original intent and purpose hereof. To the
extent permitted by law, the parties hereby to the same
extent waive any provision of law that renders any
provision hereof prohibited or unenforceable in any
respect.
IN WITNESS WHEREOF, this Agreement has been
executed on behalf of the parties hereto by their
respective duly authorized officers, all as of the date
first above written.
PIONEER HI-BRED INTERNATIONAL, INC.
By:______________________________________
Name: Charles S. Johnson
Title: President and Chief Executive
Officer
E.I. DU PONT DE NEMOURS AND COMPANY
By:______________________________________
Name:
Title:
EXHIBIT A
Form of Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this
"Agreement") dated as of ____________, 1997 between
Pioneer Hi-Bred International, Inc., an Iowa corporation
(the "Company"), and E.I. du Pont de Nemours and Company,
a Delaware corporation (the "Holder").
RECITALS
WHEREAS, the Holder has purchased
from the Company pursuant to an Investment Agreement,
dated as of _____________ ___, 1997 (the "Investment
Agreement"), between the Company and the Holder, shares
of the Company's Series A Convertible Preferred Stock,
par value $.01 per share (the "Series A Convertible
Preferred Stock");
WHEREAS, the parties hereto desire to
set forth the Holder's rights and the Company's
obligations with respect to the registration of the
Registrable Securities pursuant to the Securities Act;
and
WHEREAS, the execution and delivery
of this Agreement by the parties hereto is a condition to
the obligations of each of the Company and the Holder
under the Investment Agreement;
NOW, THEREFORE, in consideration of
the covenants and agreements of the Holder and the
Company contained herein and in the Investment Agreement
and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
Section 1. Definitions and Usage.
As used in this Agreement:
1.1. Definitions.
"Board" shall mean the Board of
Directors of the Company.
"Class B Common Stock" shall mean the
Class B Common Stock of the Company, if and when
authorized and issued to the Holder.
"Closing" shall mean the closing for
the purchase of the Series A Convertible Preferred Stock
pursuant to the Investment Agreement.
"Closing Date" shall mean the date of
the Closing.
"Commission" shall mean the
Securities and Exchange Commission.
"Common Stock" shall mean the Common
Stock, par value $1.00 per share, of the Company.
"Continuously Effective," with
respect to a specified registration statement, shall mean
that such registration statement shall not cease to be
effective and available for transfers of Registrable
Securities thereunder for longer than either (i) any ten
(10) consecutive business days, or (ii) an aggregate of
fifteen (15) business days during the period specified in
the relevant provision of this Agreement.
"Demand Registration" shall have the
meaning set forth in Section 2.1(i).
"Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
"Investment Agreement" shall have the
meaning set forth in the first Recital to this Agreement.
"Investor Group" shall have the
meaning specified in the Investment Agreement.
"Permitted Holder Group Transferee"
shall mean any wholly owned (other than directors'
qualifying shares) United States subsidiary of the Holder
which, at the time of determination, owns shares of
Series A Convertible Preferred Stock or Class B Common
Stock acquired from the Holder during the term of the
Investment Agreement and in accordance with terms
thereof.
"Person" shall mean any individual,
corporation, partnership, limited liability company,
joint venture, association, trust, unincorporated
organization or other entity.
"Piggyback Registration" shall have
the meaning set forth in Section 3.
"Register," "registered," and
"registration" shall refer to a registration effected by
preparing and filing a registration statement or similar
document in compliance with the Securities Act, and the
declaration or ordering by the Commission of
effectiveness of such registration statement or document.
"Registrable Securities" shall mean
the Common Stock issuable upon conversion of the Series A
Convertible Preferred Stock or Class B Common Stock
(which conversion shall be deemed to occur upon the sale
of such shares of Series A Convertible Preferred Stock or
Class B Common Stock to the underwriter or underwriters
in connection with any Registration hereunder) which
Series A Convertible Preferred Stock or Class B Common
Stock the Holder, or any Permitted Holder Group
Transferee acquires in accordance with the Investment
Agreement and which is owned by the Holder or such
Permitted Holder Group Transferee on the date of
determination; provided, however, that Registrable
Securities shall not include any security of the Company
acquired by the Holder or any member of the Investor
Group other than in accordance with or in violation of
the terms of the Investment Agreement. In the event that
the Common Stock is converted into any other security
pursuant to any merger, consolidation, recapitalization,
liquidation or other similar transaction, and if any
securities are distributed in respect of any Registrable
Securities, then all of such securities shall be
considered Registrable Securities for purposes of this
Agreement.
"Registration Expenses" shall have
the meaning set forth in Section 7.1.
"Securities Act" shall mean the
Securities Act of 1933, as amended.
"Shelf Registration" means a
Registration Statement effected pursuant to Section 4.
"Shelf Registration Event" means the
receipt by the Company from the Investor at any time
following the occurrence of a Surviving Change in Control
Transaction, a Release Event or a Trigger Event (each, as
defined in the Investment Agreement) of a written request
to file a shelf registration statement in accordance with
Section 4 provided that in no event may the Investor give
such notice at any time that the Total Ownership
Percentage (or percentage ownership of the common equity
of any other company or entity surviving a Surviving
Change in Control Transaction) of the Investor Group is
10% or more. In the event of a Surviving Change in
Control Transaction, or in the event the Company or other
company or entity that survives a Surviving Change in
Control Transaction determines that the provisions of
Section 8.2(b)(i) of the Investment Agreement will not
apply to the Company or such surviving company or entity,
references herein to the Company shall apply to the
Company or other entity surviving such Change in Control
Transaction (the "Standstill Successor") but in the event
of any other Change in Control Transaction, the
provisions of Section 4 herein shall terminate.
"Shelf Registration Statement" means
a Registration Statement of the Company filed with the
Commission or Form S-3 (or any successor form) for an
offering to be made on a continuous basis pursuant to
Rule 415 under the Securities Act (or any similar rule
that may be adopted by the Commission) covering some or
all of the Registrable Securities, as applicable.
"Transfer" shall mean and include the
act of selling, giving, transferring, creating a trust
(voting or otherwise), assigning or otherwise disposing
of (other than pledging, hypothecating or otherwise
transferring as security) (and correlative words shall
have correlative meanings); provided, however, that any
transfer or other disposition upon foreclosure or other
exercise of remedies of a secured creditor after an event
of default under or with respect to a pledge,
hypothecation or other transfer as security shall
constitute a "Transfer."
"Underwriters' Representative" shall
mean the managing underwriter, or, in the case of a
co-managed underwriting, the managing underwriter
designated as the Underwriters' Representative by the
co-managers.
"Violation" shall have the meaning
set forth in Section 8.1.
1.2. Usage.
(i) References to a Person are also
references to its successors in interest (by means of
merger, consolidation or sale of all or substantially all
the assets of such Person or otherwise, as the case may
be) and permitted assigns.
(ii) References to a document are to
it as amended, waived and otherwise modified from time to
time and references to a statute or other governmental
rule are to it as amended and otherwise modified from
time to time (and references to any provision thereof
shall include references to any successor provision).
(iii) References to Sections, unless
the context otherwise requires.
(iv) The definitions set forth
herein are equally applicable both to the singular and
plural forms and the feminine, masculine and neuter forms
of the terms defined.
(v) The term "including" and
correlative terms shall be deemed to be followed by
"without limitation" whether or not followed by such
words or words of like import.
(vi) The term "hereof" and similar
terms refer to this Agreement as a whole.
(vii) The "date of" any notice or
request given pursuant to this Agreement shall be
determined in accordance with Section 12.2.
Section 2. Demand Registration.
2.1. (i) At any time after the third
anniversary of the Closing Date, and subject to
compliance by the Holder with the provisions of Section 6
of the Investment Agreement, if the Holder shall make a
written request to the Company, the Company shall cause
to be filed with the Commission a registration statement,
including all exhibits required by the Commission to be
filed therewith (a "Demand Registration Statement")
meeting the requirements of the Securities Act for an
underwritten public offering of Registrable Securities (a
"Demand Registration"), and the Holder shall be entitled
to have included therein all or such number of
Registrable Securities as the Holder shall request in
writing; provided, however, that no request may be made
pursuant to this Section 2.1 if within twelve (12) months
prior to the date of such request a Demand Registration
Statement pursuant to this Section 2.1 shall have been
declared effective by the Commission. Any request made
pursuant to this Section 2.1 shall be addressed to the
attention of the Secretary of the Company, and shall
specify the number of Registrable Securities to be
registered (which shall be not less than 1,500,000
shares, provided, however that the Holder may request
registration of any amount of Registrable Securities
where the Holder requests registration (i) of all of its
remaining Registrable Securities, or (ii) pursuant to its
last Demand Registration right), the intended method of
distribution thereof and that the request is for a Demand
Registration pursuant to this Section 2.1(i).
(ii) The Company shall be entitled
to postpone for up to 180 days, but in no event more than
180 days during any 24 month period and no sooner than
180 days after the end of any prior postponement under
this Section 2.1(ii) or any holdback period described in
the first sentence of Section 9.1 the filing of any
Demand Registration Statement otherwise required to be
prepared and filed pursuant to this Section 2.1 (or delay
seeking effectiveness of a Demand Registration Statement
which has been filed), if the Board determines, in its
reasonable good faith judgment, that such Demand
Registration would materially interfere with, or require
premature disclosure of, any material financing,
acquisition, reorganization or other material transaction
involving the Company or any of its subsidiaries and the
Company promptly gives the Holder notice of such
determination.
2.2. Following receipt of a request
for a Demand Registration, the Company shall:
(i) File the Demand Registration
Statement with the Commission as promptly as reasonably
practicable, and, subject to Section 2.1(ii), shall use
the Company's commercially reasonable efforts to have the
Demand Registration Statement declared effective under
the Securities Act as soon as reasonably practicable, in
each instance giving due regard to the need to prepare
current financial statements, conduct due diligence and
complete other actions that are reasonably necessary to
effect a registered public offering.
(ii) Use the Company's commercially
reasonable efforts to keep the relevant registration
statement Continuously Effective, if a Demand
Registration Statement, for up to 60 days or until such
earlier date as of which all the Registrable Securities
under the Demand Registration Statement shall have been
disposed of in the manner described in the Registration
Statement, or such longer period (but in no event longer
than 120 days) as in the judgment of counsel for the
underwriters a prospectus is required by law to be
delivered in connection with sales of Registrable
Securities by an underwriter or dealer in accordance with
plan of distribution included in such Demand Registration
Statement. Notwithstanding the foregoing, if for any
reason the effectiveness of a Demand Registration
Statement pursuant to this Section 2 is delayed or
suspended or filing of the Demand Registration Statement
or seeking effectiveness thereof is postponed as
permitted by Section 2.1(ii), the commencement of the
foregoing period shall be extended by the aggregate
number of days of such suspension or postponement.
2.3. The Company shall be obligated
to effect not more than six Demand Registrations, subject
to the provisions of Section 4.1. For purposes of the
preceding sentence, a Demand Registration shall not be
deemed to have been effected (i) unless a Demand
Registration Statement with respect thereto has become
effective, (ii) if after such Demand Registration
Statement has become effective, such Demand Registration
Statement or the related offer, sale or distribution of
Registrable Securities thereunder is interfered with by
any stop order, injunction or other order or requirement
of the Commission or other governmental agency or court
for any reason not attributable to the Holder and such
interference is not thereafter eliminated, or (iii) if
the conditions to closing specified in the underwriting
agreement entered into in connection with such
registration are not satisfied or waived, other than by
reason of a failure on the part of the Holder. If the
Company shall have complied with its obligations under
this Agreement, a right to demand a registration pursuant
to this Section 2 shall be deemed to have been satisfied
upon the earlier of (x) the date as of which all of the
Registrable Securities included therein shall have been
distributed pursuant to the Registration Statement, and
(y) the date as of which such Demand Registration shall
have been Continuously Effective for a 60-day period or
other period specified in 2.2(ii) following the
effectiveness of such Demand Registration Statement,
provided no stop order or similar order, or proceedings
for such an order, is thereafter entered or initiated.
2.4. A registration pursuant to this
Section 2 shall be on such appropriate registration form
of the Commission as shall (i) be selected by the Company
and be reasonably acceptable to the Holder, and (ii)
permit the distribution of the Registrable Securities in
accordance with the intended method or methods of
distribution specified in the request pursuant to Section
2.1(i).
2.5. The Holder shall have the right
to select the underwriter or underwriters and manager or
managers to administer such offering; provided, however,
that each Person so selected shall be acceptable to the
Company in its reasonable judgment.
2.6. The Company may not include in
a Demand Registration pursuant to Section 2.1 shares of
Common Stock for the account of the Company or any
subsidiary of the Company, but may include shares of
Common Stock for the account of any other person or
entity who holds shares of Common Stock; provided,
however, that if the Underwriters' Representative of any
offering described in this Section 2.6 shall have
informed the Company in writing that in its opinion the
total number of shares of Common Stock that the Holder,
and any other persons or entities desiring to participate
in such registration intend to include in such offering
is such as to materially and adversely affect the success
or pricing of such offering, then the Company shall
include in such Demand Registration all Registrable
Securities requested to be included in such registration
by the Holder together with up to such additional number
of shares of Common Stock that any other persons or
entities entitled to participate in such registration
desire to include in such registration and that the
Underwriters' Representative has informed the Company may
be included in such registration without adversely
affecting the success of pricing of such offering;
provided that the number of shares of Common Stock to be
offered for the account of all such other persons and
entities participating in such registration shall be
reduced or limited pro rata in proportion to the
respective number of shares of Common Stock requested to
be registered by such persons and entities to the extent
necessary to reduce the respective total number of shares
of Common Stock requested to be included in such offering
to the number of shares of Common Stock recommended by
such Underwriters' Representative.
Section 3. Piggyback Registration.
3.1. If at any time after the third
anniversary of the Closing Date, the Company proposes to
register (including for this purpose a registration
effected by the Company for the account of the Company or
shareholders of the Company other than the Holder) shares
of Common Stock or securities convertible or exercisable
into shares of Common Stock under the Securities Act in
connection with the public offering solely for cash on
Form S- 1, S-2 or S-3 (or any replacement or successor
forms) as soon as practicable (but in not event less than
ten (10) business days prior to the date of filing any
related Registration Statement), the Company shall
promptly give the Holder written notice of such
registration (a "Piggyback Registration"). Upon the
written request of the Holder given within 10 days
following the date of such notice, the Company shall use
commercially reasonable efforts to cause to be included
in such registration statement (a "Piggyback Registration
Statement," the Shelf Registration Statement, the Demand
Registration Statement and Piggyback Registration
Statement are hereinafter called collectively,
"Registration Statements" and, individually, a
"Registration Statement"), and use its commercially
reasonable efforts to cause to be registered under the
Securities Act all the Registrable Securities that the
Holder shall have requested to be registered. The Company
shall have the absolute right to withdraw or cease to
prepare or file any Piggyback Registration Statement for
any offering referred to in this Section 3 without any
obligation or liability to the Holder; provided, that the
Company shall promptly notify the Holder in writing of
any such action.
3.2. If the Piggyback Registration
Statement relates to an underwritten offering of Common
Stock or securities convertible or exercisable into
shares of Common Stock and if the Underwriters'
Representative of such underwritten offering shall inform
the Company that in its opinion the inclusion in such
underwritten distribution of all or a specified number of
such Registrable Securities or of any other shares of
Common Stock requested to be included would materially
and adversely effect the success or pricing of such
offering or of such distribution by the underwriters,
then the Company may, upon written notice to the Holder,
exclude from such underwritten offering (i) in the event
the Piggyback Registration Statement relates to an
offering for the account of the Company, shares of Common
Stock requested to be included by any persons or entities
other than the Company, pro rata in proportion to the
respective number of shares of Common Stock requested to
be included by such persons and entities, to the extent
necessary to reduce the respective total number of shares
of Common Stock requested to be included in such offering
to the number of shares of Common Stock recommended by
such Underwriters' Representative and (ii) in the event
the Piggyback Registration Statement relates to an
offering for the account of any person or entity other
than the Company, (A) first, shares of Common Stock
requested to be registered for the account of any persons
or entities other than the person or entity making the
initial request for such registration (the "Requesting
Party"), pro rata in proportion to the respective number
of shares of Common Stock requested to be registered by
such other persons and entities to the extent necessary
to reduce the respective total number of shares of Common
Stock requested to be included in such offering to the
number of shares of Common Stock recommended by such
Underwriters' Representative, (B) second, to the extent
reduction as a result of clause (A) is insufficient,
shares of Common Stock requested to be registered for the
account of the Company, and (C) third, to the extent
reduction as a result of clauses (A) and (B) is
insufficient, shares of Common Stock requested to be
registered for the account of the Requesting Party.
The Company may decline to file a
Piggyback Registration Statement referred to in this
Section 3.2 after giving notice to the Holder, or
withdraw such a Piggyback Registration Statement after
filing, or otherwise abandon any such proposed
underwritten offering; provided that the Company shall
promptly notify the Holder in writing of any such action.
3.3. The Holder may not participate
in any underwritten offering under Section 2.1 or Section
3.1 hereof unless it completes and executes all customary
questionnaires, powers of attorney, custody agreements,
underwriting agreements, and other customary documents
required under the customary terms of such underwriting
arrangements. In connection with any underwritten
offering under Section 2.1, 3.1 or 4.1, each of the
Holder and the Company shall be a party to the
underwriting agreement with the underwriters and may be
required to make certain customary representations and
warranties (in the case of the Holder only as to the
Registrable Securities being sold by the Holder and any
Permitted Group Transferee in such underwritten offering
and the plan of distribution thereof) and provide certain
customary indemnifications for the benefit of the
underwriters.
3.4. The Holder shall be entitled to
have its Registrable Securities included in an unlimited
number of Piggyback Registrations pursuant to this
Section 3.
Section 4. Shelf Registration.
4.1. Upon the occurrence of a Shelf
Registration Event, the Company shall file with the
Commission as promptly as practicable, but in no event
later than 20 business days after the Shelf Registration
Event, a Shelf Registration Statement relating to the
offer and sale of the Registrable Securities by the
Holder and the Permitted Holder Group Transferees from
time to time in accordance with the methods of
distribution elected by the Holder and set forth in such
Shelf Registration Statement and, thereafter, shall use
its commercially reasonable efforts to cause such Shelf
Registration Statement to be declared effective under the
Securities Act as promptly as practicable. If, on the
occurrence of a Shelf Registration Event, the Company
does not qualify to file a Shelf Registration Statement,
then the Holder shall be entitled to one additional
Demand Registration pursuant to Section 3, but at any
time thereafter that the Company does so qualify, it
shall, as promptly as practicable, file a Shelf
Registration Statement.
4.2. The Company shall use its
commercially reasonable efforts to keep the Shelf
Registration Statement continuously effective in order to
permit the prospectus forming part thereof to be usable
by the Holder and the Permitted Holder Group Transferees
for a period ending on the date twenty-four months (the
"Shelf Maintenance Period") after the occurrence of the
Shelf Registration Event (such date to be extended by the
aggregate number of days any Shelf Registration Statement
shall be subject to a Shelf Suspension) or such shorter
period as shall terminate when all the Registrable
Securities covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration
Statement (but in no event prior to the applicable period
referred to in Section 4(3) of the Act and Rule 174
thereunder) (such period being the "Shelf Period").
4.3. The Company shall be entitled
to postpone the filing of any Shelf Registration
Statement otherwise required to be prepared and filed
pursuant to this Section 4 (or delay seeking, or
maintaining continued, effectiveness of a Shelf
Registration Statement that has been filed) if the Board
determines in its reasonable good faith judgment, that
such Shelf Registration would materially interfere with,
or require premature disclosure of, any material
financing, acquisition, reorganization or other material
transaction involving the Company or any of its
subsidiaries and the Company gives the Holder notice of
such determination (a "Shelf Suspension"); provided,
however, that the Company shall not have postponed
pursuant to this Section 4.3, the commencement of the
filing of, delay the seeking the effectiveness of, or
suspend the use of any Shelf Registration Statement
otherwise required to be prepared and filed pursuant to
this Section 4, (i) more than 180 days during the Shelf
Maintenance Period, (ii) for a period exceeding 180 days
on any one occasion during or (iii) sooner than 90 days
after the end of any prior Shelf Suspension and provided,
further, that the Shelf Maintenance Period shall be
extended by the aggregate number of days of each Shelf
Suspension. In the case of a Shelf Suspension, the
notice required above shall request the Holder to suspend
any sale or purchase, or offer to sell or purchase the
Registrable Securities, and to suspend any sale or
purchase, or offer to sell or purchase the Registrable
Securities, and to suspend use of the prospectus related
to the Shelf Registration in connection with any such
sale or purchase or offer to sell or purchase. The
Company shall immediately notify the Holder upon the
termination of any Shelf Suspension, shall amend or
supplement the related prospectus, if necessary, so it
does not contain any untrue statement or omission therein
and shall furnish to the holders such numbers of copies
of the prospectus as so amended or supplemental as the
Holder may reasonably request. The Holder will advise
the Company by at least 5 business days' prior written
notice if the Holder intends to make any sale under the
Shelf Registration Statement that would constitute a
"distribution" for purposes of Regulation M under the
Securities Act.
4.4. The Holder shall have the right
to effect an underwritten offering covering not fewer
than 1,500,000 shares pursuant to a Shelf Registration
(in which case each such underwritten offering shall
constitute a Demand Registration for purposes of Section
2.3) and to select the underwriter or underwriters and
manager or managers to administer any offering pursuant
to a Shelf Registration; provided, however, that each
Person so selected shall be acceptable to the Company in
its reasonable judgment.
Section 5. Registration Procedures.
Whenever required under Section 2,
Section 3 or Section 4 to effect the registration of any
Registrable Securities, the Company shall, as
expeditiously as practicable:
5.1. Prepare and file with the
Commission a Registration Statement, including all
exhibits required by the Commission to be filed
therewith, with respect to such Registrable Securities
and, subject to Section 2.1 and Section 4.3, use the
Company's commercially reasonable efforts to cause such
Registration Statement to become effective; provided,
however, that before filing a Registration Statement or
prospectus or any amendments or supplements thereto,
including documents incorporated by reference after the
initial filing of the Registration Statement and prior to
effectiveness thereof, the Company shall furnish to
counsel for the Holder and underwriters, copies of all
such documents in the form substantially as proposed to
be filed with the Commission at a reasonable time prior
to filing for review and comment by such counsel.
5.2. Prepare and file with the
Commission such amendments and supplements to such
Registration Statement and the prospectus used in
connection with such Registration Statement as may be
necessary to comply with the provisions of the Securities
Act and rules thereunder with respect to the distribution
of all securities covered by such Registration Statement
and as may be reasonably requested by the Holder or
necessary to keep such Registration Statement effective
pursuant to Section 2.2(i) and 4.2. If the registration
is for an underwritten offering, the Company shall amend
the Registration Statement or supplement the prospectus
whenever required by the terms of the underwriting
agreement. Pending such amendment or supplement the
Holder and all other members of the Investor Group, upon
written notice by the Company, shall cease making offers
or Transfers of Registrable Securities pursuant to the
prior prospectus. In the event that any Registrable
Securities included in a Registration Statement subject
to, or required by, this Agreement remain unsold at the
end of the period during which the Company is obligated
to use its commercially reasonable efforts to maintain
the effectiveness of such Registration Statement, the
Company may file a post-effective amendment to the
Registration Statement for the purpose of removing such
Securities from registered status.
5.3. Notify the Holder and the
Underwriters' Representative and (if requested) confirm
such advise in writing, as soon as practicable after
notice thereof is received by the Company (i) when the
Registration Statement or any amendment thereto has been
filed or becomes effective, the prospectus or any
amendment or supplement to the prospectus included
therein has been filed, and, to furnish the Holder and
the underwriters with copies thereof, (ii) of any request
by the Commission for amendments or supplements to the
Registration Statement or the prospectus included therein
or for additional information, (iii) if at any time the
representations and warranties of the Company
contemplated by Section 3.3 cease to be true and correct,
and (iv) of the receipt by the Company of any
notification with respect to the suspension or
qualification of the Registrable Securities for offering
or sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
5.4. Promptly notify the Holder and
the Underwriters' Representative, if any, at any time
when a prospectus relating thereto is required to be
delivered under the Securities Act when the Company
becomes aware of the happening of any event as a result
of which the prospectus included in any Registration
Statement (as then in effect) contains any untrue
statement of a material fact or omits to state a material
fact necessary to make the statements therein (in the
case of the prospectus and any preliminary prospectus, in
light of the circumstances under which they were made)
when such prospectus was delivered not misleading or, if
for any other reason it shall be necessary during such
time period to amend or supplement the prospectus in
order to comply with the Securities Act and, in either
case as promptly as practicable thereafter, prepare and
file with the Commission, and furnish without charge to
the Holder and the Underwriters' Representative, if any,
a supplement or amendment to such prospectus which will
correct such statement or omission or effect such
compliance.
5.5. If requested by the
Underwriters' Representative or the Holder, promptly
incorporate in a prospectus supplement or post-effective
amendment such information as the Underwriters'
Representative and the Holder agree should be included
therein relating to the plan of distribution with respect
to such Registrable Securities, including, without
limitation, information with respect to the number of
Registrable Securities being sold to such underwriters,
the purchase price being paid therefor by such
underwriters and with respect to any other terms of the
underwritten (or best efforts underwritten) offering of
Registrable Securities to be sold in such offering; and
make all required filings of such prospectus supplement
or post-effective amendment as soon as notified of the
matters to be incorporated in such prospectus supplement
or post-effective amendment.
5.6. Cooperate with the Holder and
the Underwriters' Representatives to facilitate the
timely preparation and delivery of certificates
representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such
Registrable Securities to be in such denomination and
registered in such names as the Underwriters'
Representative may request at least two business days
prior to the sale of Registrable Securities to the
underwriters.
5.7. Cooperate with the Holders in
connection with any filings required to be made with the
National Association of Securities Dealers, Inc. (the
"NASD"), and otherwise use its best efforts to comply
with the rules, by-laws and regulations of the NASD as
they apply to the registration.
5.8. Furnish to the Holder such
numbers of copies of the Registration Statement, any
pre-effective or post-effective amendment thereto, the
prospectus, including each preliminary prospectus and any
amendments or supplements thereto, in each case in
conformity with the requirements of the Securities Act
and the rules thereunder, and such other related
documents as the Holder may reasonably request in order
to facilitate the distribution of Registrable Securities
owned by the Holder.
5.9. Use the Company's commercially
reasonable efforts (i) to register and qualify the
securities covered by such Registration Statement under
such other securities or blue sky laws of such states or
jurisdictions as shall be reasonably requested by the
Underwriters' Representative, and (ii) to obtain the
withdrawal of any order suspending the effectiveness of a
Registration Statement, or the lifting of any suspension
of the qualification (or exemption from qualification) of
the offer and transfer of any of the Registrable
Securities in any jurisdiction, at the earliest possible
moment; provided, however, that the Company shall not be
required in connection therewith or as a condition
thereto to qualify to do business or to file a general
consent to service of process in any such states or
jurisdictions.
5.10. In the event of any
underwritten offering, enter into and perform the
Company's obligations under an underwriting agreement
(including indemnification and contribution obligations
of underwriters or agents in the form set forth in
Section 8), in usual and customary form, with the
managing underwriter or underwriters of or agents for
such offering. The Company shall also cooperate with the
Holder, and the Underwriters' Representative for such
offering in the marketing, and customary selling efforts
relating to the Registrable Securities, including
participating in customary "road show" presentations as
may be reasonably requested by the Underwriters'
Representative.
5.11. Promptly notify the Holder of
any stop order issued or threatened to be issued by the
Commission in connection therewith and take all
reasonable actions required to prevent the entry of such
stop order or to remove it if entered.
5.12. Make available for inspection
by the Holder, any underwriter participating in such
offering and the representatives of the Holder and such
underwriter all financial and other information as shall
be reasonably requested by them, and provide the Holder,
any underwriter participating in such offering and the
representatives of the Holder and such underwriter the
reasonable opportunity to discuss the business affairs of
the Company with its principal executives and independent
public accountants who have certified the audited
financial statements included in such registration
statement, in each case all as necessary to enable them
to exercise their due diligence responsibilities under
the Securities Act; provided, however, that information
that the Company determines, in its reasonable and good
faith judgment, to be confidential and which the Company
advises such Person in writing, is confidential shall not
be disclosed unless such Person signs a confidentiality
agreement reasonably satisfactory to the Company and the
Holder of Registrable Securities agrees to be responsible
for such Person's breach of confidentiality on terms
reasonably satisfactory to the Company.
5.13. Use the Company's commercially
reasonable efforts to obtain a so-called "comfort letter"
from its independent public accountants, and legal
opinions of counsel to the Company addressed to the
Holder, in customary form and covering such matters of
the type customarily covered by such letters, and in a
form that shall be reasonably satisfactory to the Holder.
The Company shall furnish to the Holder a signed
counterpart of any such comfort letter or legal opinion.
Delivery of any such opinion or comfort letter shall be
subject to the recipient furnishing such written
representations or acknowledgments as are customarily
provided by selling shareholders who receive such comfort
letters or opinions.
5.14. Provide and cause to be
maintained a transfer agent and registrar for all
Registrable Securities covered by such Registration
Statement from and after a date not later than the
effective date of such Registration Statement.
5.15. Use commercially reasonable
efforts to cause the Registrable Securities covered by
such Registration Statement to continue to be listed on
all exchanges where the Company's Common Stock is listed
and to be Registered with or approved by such other
United States or state governmental agencies or
authorities as may be necessary by virtue of the business
and operations of the Company to enable the Holder to
consummate the distribution of the Registrable Securities
which are included in such registration.
5.16. Take such other actions as are
reasonably required in order to expedite or facilitate
the registration of Registrable Securities included in
such registration.
Section 6. Holder's Obligations.
6.1 It shall be a condition
precedent to the obligations of the Company to take any
action pursuant to this Agreement with respect to the
Registrable Securities which are included in such
registration that the Holder shall furnish to the Company
such information regarding the Holder and any
participating Permitted Holder Group Transferee, the
number of the Registrable Securities owned by it and any
participating Permitted Holder Group Transferee, and the
intended method of distribution of such Registrable
Securities as shall be required to effect the
registration of such Registrable Securities, and to
cooperate with the Company in preparing such
registration.
6.2 The Holder agrees, and each
Permitted Holder Group Transferee shall be deemed by
acceptance of Registrable Securities to have agreed,
that, upon receipt of any notice of the Company pursuant
to clauses (ii) through (iv) of Section 5.3 and Section
5.4 hereof, the Holder and each Permitted Holder Group
Transferee will discontinue disposition of such
Registrable Securities covered by such Registration
Statement until such Holder's or Permitted Holder Group
Transferee's receipt of copies of the supplemental or
amended prospectus contemplated by Section 5.4 hereof, or
until advised in writing (the "Advice") by the Company
that the use of the applicable prospectus may be resumed.
If the Company shall give any notice under clauses (ii)
through (iv) of Section 5.3 or Section 5.4 hereof during
the period that the Company is required to maintain an
effective Registration Statement (the "Effectiveness
Period"), such Effectiveness Period shall be extended by
the number of days during such period from and including
the date of the giving of such notice to and including
the date when each seller of Registrable Securities
covered by such Registration Statement shall have
received (x) the copies of the supplemental or amended
prospectus contemplated by Section 5.4 (if an amended or
supplemental prospectus is required) or (y) the Advice
(if no amended or supplemental prospectus is required).
Section 7. Expenses of Registration.
Expenses in connection with registrations pursuant to
this Agreement shall be allocated and paid as follows:
7.1. With respect to the first two
Demand Registrations effected pursuant to Section 2
hereof, the Company shall bear and pay, and with respect
to each additional Demand Registration, the Holder shall
bear and pay, all expenses incurred in connection with
any registration, filing, or qualification of Registrable
Securities with respect to such Demand Registration,
including all registration, filing and National
Association of Securities Dealers, Inc. fees, all fees
and expenses of complying with securities or blue sky
laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, and the
reasonable fees and disbursements of counsel for the
Company, and of the Company's independent public
accountants, including the expenses of "cold comfort"
letters required by or incident to such performance and
compliance (the "Registration Expenses"), but in no event
shall the Company bear underwriting discounts and
commissions relating to Registrable Securities or fees
and expenses of Holder's counsel (which shall be paid by
the Holder) and provided that the Company shall not be
required to pay for any expenses of any registration
begun pursuant to Section 2 if the registration is
subsequently withdrawn at the request of the Holder (in
which case the Holder shall bear such expense), other
than by reason of failure of the Company to comply with
Section 5.12 or if the proviso of such section becomes
applicable unless the Holder agrees that such withdrawn
registration shall constitute one of the Demand
Registrations under Section 2 hereof.
7.2. The Company shall bear and pay
all Registration Expenses incurred in connection with any
Shelf Registrations pursuant to Section 4 and any
Piggyback Registrations pursuant to Section 3 for the
Holder, but excluding, incremental registration and
qualification fees and expenses (including underwriting
discounts and commissions relating to Registrable
Securities) and any incremental costs and disbursements
(including fees and expenses of the Holder's counsel)
that result from the inclusion of the Registrable
Securities in any Piggyback Registrations (each of which
shall be paid by the Holder).
Section 8. Indemnification;
Contribution. If any Registrable Securities are included
in a Registration Statement under this Agreement:
8.1. To the extent permitted by
applicable law, the Company shall indemnify and hold
harmless the Holder and each Permitted Holder Group
Transferee, each Person, if any, who controls such Holder
or Permitted Holder Group Transferee within the meaning
of the Securities Act, and each officer, director,
partner, and employee of the Holder and each Permitted
Holder Group Transferee, and any such controlling Person,
against any and all losses, claims, damages, liabilities
and expenses (joint or several), including reasonable
attorneys' fees and disbursements and expenses of
investigation, incurred by such party pursuant to any
actual or threatened action, suit, proceeding or
investigation, or to which any of the foregoing Persons
may become subject under the Securities Act, the Exchange
Act or other federal or state laws, insofar as such
losses, claims, damages, liabilities and expenses arise
out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"):
(i) Any untrue statement or alleged
untrue statement of a material fact contained in such
registration statement, including any preliminary
prospectus or final prospectus contained therein, or any
amendments or supplements thereto;
(ii) The omission or alleged
omission to state therein a material fact required to be
stated therein, or necessary to make the statements
therein not misleading; or
(iii) Any violation or alleged
violation by the Company of the Securities Act, the
Exchange Act, any applicable state securities law or any
rule or regulation promulgated under the Securities Act,
the Exchange Act or any applicable state securities law;
provided, however, that the indemnification required by
this Section 8.1 shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or
expense if such settlement is effected without the
consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable
in any such case for any such loss, claim, damage,
liability or expense to the extent that it arises out of
or is based upon a Violation which occurs in reliance
upon and in conformity with written information furnished
to the Company by the indemnified party expressly for use
in connection with such registration; provided, further,
that the indemnity agreement contained in this Section 8
shall not apply to any underwriter to the extent that any
such loss is based on or arises out of an untrue
statement or alleged untrue statement of a material fact,
or an omission or alleged omission to state a material
fact, contained in or omitted from any preliminary
prospectus if the final prospectus shall correct such
untrue statement or alleged untrue statement, or such
omission or alleged omission, and a copy of the final
prospectus has not been sent or given to such person at
or prior to the confirmation of sale to such person if
such underwriter was under an obligation to deliver such
final prospectus and failed to do so. The Company shall
also indemnify underwriters participating in the
distribution, their officers, directors, agents and
employees and each person who controls such persons
(within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) to the same extent as
provided above with respect to the indemnification of the
Holder provided, however, that no such underwriter shall
be entitled to indemnification under this Agreement if
such person shall have entered into a separate
underwriting or indemnification agreement with the
Company.
8.2. To the extent permitted by
applicable law, the Holder shall indemnify and hold
harmless the Company, each of its directors, each of its
officers who shall have signed the registration
statement, each Person, if any, who controls the Company
within the meaning of the Securities Act, and each
officer, director, partner, and employee of the Company
and such controlling Person, against any and all losses,
claims, damages, liabilities and expenses (joint and
several), including reasonable attorneys' fees and
disbursements and expenses of investigation, incurred by
such party pursuant to any actual or threatened action,
suit, proceeding or investigation, or to which any of the
foregoing may otherwise become subject under the
Securities Act, the Exchange Act or other federal or
state laws, insofar as such losses, claims, damages,
liabilities and expenses arise out of or are based upon
any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon
and in conformity with information furnished in writing
by the Holder specifically for use in connection with
such registration; provided, further, however, that the
indemnification required by this Section 8.2 shall not
apply to amounts paid in settlement of any such loss,
claim, damage, liability or expense if settlement is
effected without the consent of the Holder, which consent
shall not be unreasonably withheld; provided, further,
however, in no event shall the liability of the Holder be
greater in amount than the dollar amount of the net
proceeds by the Holder upon sale of Registrable
Securities giving rise to such indemnification
obligation.
8.3. Promptly after receipt by an
indemnified party under this Section 8 of notice of the
commencement of any action, suit, proceeding,
investigation or threat thereof made in writing for which
such indemnified party may make a claim under this
Section 8, such indemnified party shall deliver to the
indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof
with counsel mutually satisfactory to the parties;
subject to the rights of an indemnified party to retain
its own counsel as hereinafter provided. The failure to
deliver written notice to the indemnifying party within a
reasonable time following the commencement of any such
action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party
of any liability to the indemnified party under this
Section 8 but shall not relieve the indemnifying party of
any liability that it may have to any indemnified party
otherwise than pursuant to this Section 8. Any fees and
expenses incurred by the indemnified party (including any
fees and expenses incurred in connection with
investigating or preparing to defend such action or
proceeding) owed by the indemnifying party hereunder
shall be paid to the indemnified party, as incurred,
within thirty (30) days of written notice thereof to the
indemnifying party (subject to refund if it is ultimately
determined that an indemnified party is not entitled to
indemnification hereunder). Any such indemnified party
shall have the right to employ separate counsel in any
such action, claim or proceeding and to participate in
the defense thereof, but the fees and expenses of such
counsel shall be the expenses of such indemnified party
unless (i) the indemnifying party has agreed to pay such
fees and expenses or (ii) the indemnifying party shall
have failed to promptly assume the defense of such
action, claim or proceeding or (iii) the named parties to
any such action, claim or proceeding (including any
impleaded parties) include both such indemnified party
and the indemnifying party, and such indemnified party
shall have been advised by counsel that there may be one
or more legal defenses available to it which are
different from or in addition to those available to the
indemnifying party and that the assertion of such
defenses would create a conflict of interest such that
counsel employed by the indemnifying party could not
faithfully represent the indemnified party (in which
case, if such indemnified party notifies the indemnifying
party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the
defense of such action, claim or proceeding on behalf of
such indemnified party, it being understood, however,
that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but
substantially similar or related actions, claims or
proceedings in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for
the reasonable fees and expenses of more than one
separate firm of attorneys (together with appropriate
local counsel) at any time for all such indemnified
parties, unless in the reasonable judgment of such
indemnified party a conflict of interest may exist
between such indemnified party and any other of such
indemnified parties with respect to such action, claim or
proceeding, in which event the indemnifying party shall
be obligated to pay the fees and expenses of such
additional counsel or counsels).
8.4. If the indemnification required
by this Section 8 from the indemnifying party is
unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses
referred to in this Section 8:
(i) The indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute
to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which
resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying
party and indemnified parties shall be determined by
reference to, among other things, whether any Violation
has been committed by, or relates to information supplied
by, such indemnifying party or indemnified parties, and
the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such
Violation. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 8.1 and
Section 8.2, any legal or other fees or expenses
reasonably incurred by such party in connection with any
investigation or proceeding; provided, however, that in
no event shall the Holder be required to contribute an
amount greater than the dollar amount of the net proceeds
received by the Holder with respect to the sale of any
securities.
(ii) The parties hereto agree that
it would not be just and equitable if contribution
pursuant to this Section 8.4 were determined by pro rata
allocation or by any other method of allocation which
does not take into account the equitable considerations
referred to in Section 8.4(i). No Person guilty of
fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such
fraudulent misrepresentation.
8.5. If indemnification is available
under this Section 8 the indemnifying parties shall
indemnify each indemnified party to the full extent
provided in this Section 8 without regard to the relative
fault of such indemnifying party or indemnified party or
any other equitable consideration referred to in Section
8.4.
8.6. The obligations of the Company,
the Holder and any Permitted Holder Group Transferee
under this Section 8 shall survive the completion of any
offering of Registrable Securities pursuant to a
Registration Statement under this Agreement, and
otherwise.
Section 9. Holdback.
9.1 If so requested by the
Underwriters' Representative in connection with an
offering of any securities covered by a registration
statement filed by the Company, whether or not securities
of the Holder or any Permitted Holder Group Transferee
are included therein, the Holder shall agree not to
effect or permit any Permitted Holder Group Transferee to
effect any sale or distribution of shares of Common Stock
including a sale pursuant to Rule 144 under the
Securities Act (except as part of such underwritten
registration) during the 7-day period prior to, and
during the 90-day period beginning on, the date such
registration statement is declared effective under the
Securities Act by the Commission, provided that the
Holder is timely notified of such effective date in
writing by the Company or such Underwriters'
Representative. In order to enforce the foregoing
covenant, the Company shall be entitled to impose stop-
transfer instructions with respect to the Registrable
Securities of the Holder until the end of such period.
The restrictions in this Section 9 are in addition to and
not in limitation of the restrictions on transfer
applicable to the Investor Group under the Investment
Agreement. The Holder shall not be subject to the
restrictions set forth in this Section 9.1 for longer
than 90 days during any 12 month period.
9.2. If so requested by the
Underwriters' Representative in connection with an
offering of any Registrable Securities, the Company shall
agree not to effect any sale or distribution of shares of
Common Stock during the 7-day period prior to, and during
the 90-day period beginning on, the date such
Registration Statement is declared effective under the
Securities Act by the Commission (or, in the case of an
underwriting under the Shelf Registration, the date of
the closing under the underwriting agreement). The
Company agrees to use its commercially reasonable efforts
to obtain from each holder of restricted securities of
the Company the same as or similar to those being
registered by the Company on behalf of the Holder, or any
restricted securities convertible into or exchangeable or
exercisable for any of its securities, an agreement not
to effect any sale or distribution of such securities
(other than securities purchased in a public offering)
during any period referred to in this paragraph, except
as part of any such Registration Statement if permitted.
Without limiting the foregoing, if the Company grants any
Person (other than a holder of Registrable Securities)
any rights to demand or participate in a Registration,
the Company agrees that the agreement with respect
thereto shall include such Person's agreement as
contemplated by the previous sentence.
Section 10. Amendment, Modification
and Waivers; Further Assurances.
(i) This Agreement may be amended
with the consent of the Company and the Company may take
any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the
Company shall have obtained the written consent of the
Holder to such amendment, action or omission to act.
(ii) No waiver of any terms or
conditions of this Agreement shall operate as a waiver of
any other breach of such terms and conditions or any
other term or condition, nor shall any failure to enforce
any provision hereof operate as a waiver of such
provision or of any other provision hereof. No written
waiver hereunder, unless it by its own terms explicitly
provides to the contrary, shall be construed to effect a
continuing waiver of the provisions being waived and no
such waiver in any instance shall constitute a waiver in
any other instance or for any other purpose or impair the
right of the party against whom such waiver is claimed in
all other instances or for all other purposes to require
full compliance with such provision.
(iii) Each of the parties hereto
shall exercise all such further instruments and documents
and take all such further action as any other party
hereto may reasonably require in order to effectuate the
terms and purposes of this Agreement. The Company shall
cause the Standstill Successor to be bound by the terms
of this Agreement.
Section 11. Assignment; Benefit.
This Agreement and all of its provisions hereof shall be
binding upon and shall inure to the benefit of the
parties hereto and their respective successors and
permitted assigns; provided, however, that neither this
Agreement nor any of the rights, interests or obligations
hereunder may be assigned or delegated by the Holder to
any Person except a wholly owned direct or indirect
subsidiary of the Holder to whom the Holder shall have
transferred all of the Registrable Securities then owned
by the Holder as permitted by, and subject to the terms
of, the Investment Agreement.
Section 12. Miscellaneous.
12.1 Governing Law; Submission to
Jurisdiction. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of
Iowa applicable to contracts made and to be performed in
that state. The parties hereto irrevocably (a) submit to
the exclusive personal jurisdiction of any state or
federal court in the State of Illinois in any suit,
action or other legal proceeding relating to this
Agreement; (b) agree that all claims in respect of any
such suit, action or other legal proceeding may be heard
and determined in, and enforced in and by, any such
court; and (c) waive any objection that they may now or
hereafter have to venue in any such court or that such
court is an inconvenient forum.
12.2 Notices. All notices and
requests given pursuant to this Agreement shall be in
writing and shall be made by hand- delivery, first-class
mail (registered or certified, return receipt requested),
confirmed facsimile or overnight air courier guaranteeing
next business day delivery to the relevant address
specified below:
(a) If to the Company, to:
Pioneer Hi-Bred International, Inc.
700 Capital Square
Des Moines, Iowa 50309
Attention: General Counsel
Telephone: 515-248-4800
Telecopier: 515-248-4844
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10044
Attention: Stephen Fraidin, Esq.
Telephone: 212-859-8000
Telecopier: 212-859-4000
(b) If to the Investor, to:
E.I. du Pont de Nemours and Company
Agricultural Products
Barley Mill Plaza #38
P.O. Box 80038
Wilmington, DE 19880-0038
Attention: William F. Kirk,
Vice President and
General Manager
Telephone: 302-774-1000
Telecopier: 302-992-6184
With a copy to:
Skadden, Arps, Slate, Meagher
& Flom, LLP
919 Third Avenue
New York, New York 10022
Attention: Lou R. Kling, Esq.
Telephone: 212-735-3000
Telecopier: 212-735-2000
Except as otherwise provided in this Agreement, the date
of each such notice and request shall be deemed to be,
and the date on which each such notice and request shall
be deemed given shall be: at the time delivered, if
personally delivered or mailed; when receipt is
acknowledged, if sent by facsimile; and the next business
day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next business day
delivery.
12.3. Entire Agreement; Integration.
This Agreement supersedes all prior agreements between or
among any of the parties hereto with respect to the
subject matter contained herein and therein, and such
agreements embody the entire understanding among the
parties relating to such subject matter.
12.4. Injunctive Relief. Each of
the parties hereto acknowledges that in the event of a
breach by any of them of any material provision of this
Agreement, the aggrieved party may be without an adequate
remedy at law. Each of the parties therefore agrees that
in the event of such a breach hereof the aggrieved party
may elect to institute and prosecute proceedings in any
court of competent jurisdiction to enforce specific
performance or to enjoin the continuing breach hereof.
By seeking or obtaining any such relief, the aggrieved
party shall not be precluded from seeking or obtaining
any other relief to which it may be entitled.
12.5. Section Headings. Section
headings are for convenience of reference only and shall
not affect the meaning of any provision of this
Agreement.
12.6. Counterparts. This Agreement
may be executed in any number of counterparts, each of
which shall be an original, and all of which shall
together constitute one and the same instrument. All
signatures need not be on the same counterpart.
12.7. Severability. If any
provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall
not affect the validity and enforceability of the
remaining provisions of this Agreement, unless the result
thereof would be unreasonable, in which case the parties
hereto shall negotiate in good faith as to appropriate
amendments hereto.
12.8. Filing. A copy of this
Agreement and of all amendments thereto shall be filed at
the principal executive office of the Company with the
corporate records of the Company.
12.9. Termination. This Agreement
may be terminated at any time by a written instrument
signed by the parties hereto. Unless sooner terminated in
accordance with the preceding sentences, this Agreement
(other than Section 8 hereof) shall terminate in its
entirety on such date as the Total Ownership Percentage
(as defined in the Investment Agreement) of the Holder
shall be less than 2%, provided that any shares of Common
Stock previously subject to this Agreement shall not be
Registrable Securities following the sale of any such
shares in an offering registered pursuant to this
Agreement.
12.10. Attorneys' Fees. In any
action or proceeding brought to enforce any provision of
this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be
entitled to recover reasonable attorneys' fees (including
any fees incurred in any appeal) in addition to its costs
and expenses and any other available remedy.
12.11. No Third Party Beneficiaries.
Nothing herein expressed or implied is intended to confer
upon any person, other than the parties hereto or their
respective permitted assigns, successors, heirs and legal
representatives, any rights, remedies, obligations or
liabilities under or by reason of this Agreement;
provided, however, that any Permitted Holder Group
Transferee shall be entitled to any rights, remedies,
obligations or liabilities conferred under or by reason
of this Agreement.
IN WITNESS WHEREOF, this Agreement
has been duly executed by the parties hereto as of the
date first written above.
E.I. DU PONT DE NEMOURS AND
COMPANY
By: -----------------------------
Name:
Title:
PIONEER HI-BRED INTERNATIONAL, INC.
By: -----------------------------
Name:
Title:
EXHIBIT B
Form of Rights Agreement Amendment
AMENDMENT NO. 1, dated as of
_________ __, 1997, to AMENDED AND RESTATED RIGHTS
AGREEMENT, dated as of December 13, 1996 (the "Amended
and Restated Rights Agreement"), between Pioneer Hi-Bred
International, Inc., an Iowa corporation (the "Company"),
and Bank Boston N.A. (formally known as The First
National Bank of Boston), a national banking association
("Rights Agent").
On April 6, 1989, the Board of
Directors of the Company (the "Board") authorized and
declared a dividend of one common share purchase right (a
"Right") for each share of Common Stock, par value $1.00
per share, of the Company ("Common Stock") outstanding at
the Close of Business (as defined in the Amended and
Restated Rights Agreement) on April 6, 1989 (the "Record
Date"), each Right representing the right to purchase one
(subject to adjustment as provided in the Amended and
Restated Rights Agreement) share of Common Stock, upon
the terms and subject to the conditions set forth in the
Amended and Restated Rights Agreement, and has further
authorized the issuance of one Right with respect to each
share of Common Stock that shall become outstanding
between the Record Date and the Distribution Date (as
defined in the Amended and Restated Rights Agreement);
provided, however, that Rights may be issued with respect
to shares of Common Stock that shall become outstanding
after the Distribution Date and prior to the earlier of
the Redemption Date and the Final Expiration Date in
accordance with the provisions of Section 23 of the
Amended and Restated Rights Agreement.
On December 13, 1994, the Board
amended and modified, and on December 13, 1996, the Board
amended and restated, the terms of the Rights Agreement,
dated as of April 6, 1989, between the Company and the
Rights Agent, to, among other things, modify the Rights
so that each Right represents the right to purchase one
one-thousandth of a Preferred Share (as defined in the
Amended and Restated Rights Agreement). On _________ __,
1997, the Board authorized the execution and delivery of
this Amendment No. 1, which amends such Amended and
Restated Rights Agreement.
Accordingly, in consideration of the
premises and the mutual agreements herein set forth, the
parties hereby agree as
follows:
SECTION 1. AMENDMENTS. (a) The
definition of "Acquiring Person" contained in subsection
1(a) of the Amended and Restated Rights Agreement is
hereby amended in its entirety to read as follows:
"(a) "Acquiring Person" shall mean
any Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner
of the Trigger Amount or more of the then outstanding
Common Shares or was such a Beneficial Owner at any time
after the date hereof, whether or not such person
continues to be the Beneficial Owner of the Trigger
Amount or more of the then outstanding Common Shares.
Notwithstanding the foregoing, (i) the term "Acquiring
Person" shall not include (A) the Company, (B) any
Subsidiary of the Company, (C) any employee benefit plan
of the Company or of any Subsidiary of the Company, (D)
any Person or entity organized, appointed or established
by the Company for or pursuant to the terms of any such
plan acting in such capacity, (E) any Grandfathered
Person or (F) the Investor or any Permitted Investor
Transferee, but only to the extent of Common Shares held
or acquired by the Investor and any Permitted Investor
Transferee during the term of the Investment Agreement in
accordance with the terms of the Investment Agreement
and, following the termination of the Investment
Agreement, only to the extent of Common Shares
Beneficially Owned by the Investor and any Permitted
Investor Transferee on the date of the termination (the
"Termination Date") of the Investment Agreement, it being
understood that (I) if, after the Termination Date, the
Investor or any Permitted Investor Transferee acquires
Beneficial Ownership of any Common Shares not owned by
such person on the Termination Date, the Investor or such
Permitted Investor Transferee will be deemed an Acquiring
Person if, after giving effect to such acquisition, such
person would be an Acquiring Person but for the
provisions of this clause (F) and (II) if any Permitted
Investor Transferee ceases to be a wholly-owned (other
than directors' qualifying shares) United States
Subsidiary of the Investor, such Permitted Investor
Transferee will be deemed an Acquiring Person if such
person would be an Acquiring Person at such time but for
the provisions of this clause (F); and (ii) no Person
shall become an "Acquiring Person" (x) as a result of the
acquisition of Common Shares by the Company which, by
reducing the number of Common Shares outstanding,
increases the proportional number of shares beneficially
owned by such Person together with all Affiliates and
Associates of such Person, provided, that if (1) a Person
would become an Acquiring Person (but for the operation
of this clause (x)) as a result of the acquisition of
Common Shares by the Company, and (2) after such share
acquisition by the Company, such Person, or an Affiliate
or Associate of such Person, becomes the Beneficial Owner
of any additional Common Shares, then such Person shall
be deemed an Acquiring Person, or (y) if (1) within five
Business Days after such Person would otherwise have
become or, if such Person did so inadvertently, after
such Person discovers that such Person would otherwise
have become, an Acquiring Person (but for the operation
of this clause (y)), such Person notifies the Board that
such Person did so inadvertently, and (2) within two
Business Days after such notification (or such greater
period of time as may be determined by action of the
Board, but in no event greater than five Business Days),
such Person divests itself of a sufficient number of
Common Shares so that such Person is the Beneficial Owner
of such number of Common Shares that such Person no
longer would be an Acquiring Person."
(b) The definition of "Common
Shares" contained in subsection 1(g) of the Amended and
Restated Rights Agreement is hereby amended in its
entirety to read as follows:
"(g) "Common Shares" when used with
reference to the Company shall mean the shares of Common
Stock, par value of One Dollar ($1.00) per share, of the
Company or, in the event of a subdivision, combination or
consolidation with respect to such shares of Common
Stock, the shares of Common Stock resulting from such
subdivision, combination or consolidation; provided that,
so long as any Series A Convertible Preferred Stock
remains outstanding, (i) the number of Common Shares
outstanding at any time shall include all shares of
Common Stock, par value $1.00 per share, of the Company
issuable upon conversion of such outstanding Series A
Convertible Preferred Stock, whether or not then
convertible, and (ii) for purposes of Sections 3(a), (b)
(except for the first three sentences) and (c), Section
12, Section 13, Section 15, Sections 16(a) and (c),
Section 18, Section 21, Section 22, Section 23 (except
for the provisions of (a)(i)), Section 26, Section 27 and
Section 30 hereof, "Common Shares" shall be deemed to
mean both the shares of Common Stock, par value $1.00 per
share, then outstanding and shares of Series A
Convertible Preferred Stock, used in the conjunctive or
the alternative, as the context may require. "Common
Shares" when used with reference to any Person other than
the Company shall mean the capital stock (or equity
interest) with the greatest combined economic and voting
power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person."
(c) The definition of "Disinterested
Directors" contained in subsection 1(h) of the Amended
and Restated Rights Agreement is hereby deleted in its
entirety.
(d) The definition of "Permitted
Offer" contained in subsection 1(k) of the Amended and
Restated Rights Agreement is hereby deleted in its
entirety.
(e) The definition of "Trigger
Amount" contained in subsection 1(r) of the Amended and
Restated Rights Agreement is hereby amended in its
entirety to read as follows:
"(r) "Trigger Amount" shall mean the lesser of:
(i) 15% or more of the Common Shares
then outstanding; or
(ii) 10% or more of the Common Shares
then outstanding, but only when and
if such Common Shares represent
one-fourth (1/4) or more of the
combined voting power of the shares
of Common Stock, par value $1.00 per
share, of the Company, and the shares
of Series A Convertible Preferred
Stock then outstanding. As to any
Beneficial Owner (and its Affiliates
and Associates) with respect to which
the Trigger Amount is being
determined, the voting power will be
determined by the Company in the
ordinary course of corporate
governance relating to the
determination of voting power with
respect to actions submitted to a
vote of stockholders assuming such
holder has taken the necessary
documentation steps to have
effectuated the right to have five
votes per Common Share with no other
estimation or assumption as to
holdings."
(f) Section 1 of the Amended and
Restated Rights Agreement shall be amended to add the
following subsections (t) through (x):
"(t) "Investment Agreement" means the
Investment Agreement, dated as of _____ __, 1997, between
the Company and the Investor.
(u) "Investor" shall have the
meaning set forth in the Investment Agreement.
(v) "Permitted Investor Transferee"
shall mean any wholly owned (other than directors'
qualifying shares) United States Subsidiary of the
Investor which, at the time of determination continues to
be a wholly-owned (other than directors' qualifying
shares) United States Subsidiary of the Investor and,
owns shares of Series A Convertible Preferred Stock
acquired from the Holder or from the Company during the
term of the Investment Agreement and in accordance with
the terms thereof.
(w) "Series A Convertible Preferred
Stock" means the Series A Convertible Preferred Stock of
the Company, par value $.01 per share and, following any
reclassification of the Series A Convertible Preferred
Stock into Class B Common Stock in accordance with
Section 8.8 of the Investment Agreement, the Class B
Common Stock (as defined in the Investment Agreement).
(x) "13D Group" shall mean any group
of Persons who, with respect to those acquiring, holding,
voting or disposing of Voting Securities would be
required under Section 13(d) of the Exchange Act and the
rules and regulations thereunder to file a statement on
Schedule 13D with the Securities and Exchange Commission
as a "person" within the meaning of Section 13(d)(3) of
the Exchange Act, or who would be considered a "person"
for purposes of Section 13(g)(3) of the Exchange Act."
(g) Section 13(d) of the Amended and
Restated Rights Agreement is hereby deleted in its
entirety.
(h) The penultimate sentence of
Section 3(a) of the Amended and Restated Rights Agreement
is hereby amended in its entirety to read as follows:
"As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will
countersign and send, or cause to be sent, by
first-class, insured, postage prepaid mail, to each
record holder of Common Shares and Series A Convertible
Preferred Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on
the records of the Company, a Right Certificate,
substantially in the form of Exhibit B hereto (a "Right
Certificate"), evidencing, in the case of holders of
Common Shares, one Right for each Common Share so held,
and, in the case of holders of Series A Convertible
Preferred Stock, one Right for each share of Common
Stock, par value $1.00 per share, into which such Series
A Convertible Preferred Stock is convertible (whether or
not then convertible)."
(i) The third sentence of Section
7(b) of the Amended and Restated Rights Agreement is
hereby amended in its entirety to read as follows:
"Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the
date hereof and prior to the Distribution Date, the
Company shall (i) declare or pay any dividend on the
Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common
Shares (by reclassification or otherwise than by payment
of dividends in Common Shares) into a greater or lesser
number of Common Shares, then in any such case, each
Common Share outstanding following such subdivision,
combination or consolidation shall continue to have one
Right (or, in the case of Series A Convertible Preferred
Stock, one Right for each share of Common Stock, par
value $1.00 per share, into which such Series A
Convertible Preferred Stock is convertible (whether or
not then convertible) following such subdivision,
combination or consolidation) (subject to adjustment as
provided here) associated therewith and the Purchase
Price following any such event shall be proportionately
adjusted to equal the result obtained by multiplying the
Purchase Price immediately prior to such event by a
fraction the numerator of which shall be the total number
of Common Shares outstanding immediately prior to the
occurrence of the event and the denominator of which
shall be the total number of Common Shares outstanding
immediately following the occurrence of such event."
SECTION 2. EFFECT OF AMENDMENT.
Except as modified by this Amendment No. 1, the Amended
and Restated Rights Agreement shall remain in full force
and effect.
SECTION 3. SEVERABILITY. If any
term, provision, covenant or restriction of this
Amendment No. 1 is held by a court of competent
jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected,
impaired or invalidated.
SECTION 4. GOVERNING LAW. This
Amendment No. 1 shall be deemed to be a contract made
under the laws of the State of Iowa and for all purposes
shall be governed by and construed in accordance with the
laws of such State applicable to contracts made and to be
performed entirely within such State.
SECTION 5. COUNTERPARTS. This
Amendment No. 1 may be executed in any number of
counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed and
attested, all as of the date and year first above
written.
PIONEER HI-BRED INTERNATIONAL, INC.
By: /s/ Charles S. Johnson
-------------------------------
Name: Charles S. Johnson
Title: President and CEO
By: /s/ Jerry Chicoine
-------------------------------
Name: Jerry Chicoine
Title: Vice President and Chief
Financial Officer
BANK BOSTON N.A.
the Rights Agent
By:
Name: Kathryn Anderson
Title: Administrative Manager
EXHIBIT C
Form of Certificate of Designation
CERTIFICATE OF THE DESIGNATIONS, POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
PIONEER HI-BRED INTERNATIONAL, INC.
Pioneer Hi-Bred International, Inc., an Iowa
corporation (the "Corporation"), does hereby certify that
the Board of Directors of the Corporation duly adopted
the following resolution, at a meeting duly convened and
held on August 5, 1997, in respect of a series of
Preferred Stock of the Corporation, pursuant to authority
conferred upon the Board by Article IV of the Articles of
Incorporation of the Corporation and in accordance with
Section ____ of the Business Corporation Act of the State
of Iowa:
BE IT RESOLVED, that the issuance of a series of
Preferred Stock of the Corporation is hereby authorized,
and the designation, amount, powers, preferences and
relative, participating, optional and other special
rights and qualifications, limitations and restrictions
thereof, of the shares of such series of Preferred Stock
of the Corporation, are hereby fixed as follows:
1. DESIGNATION; CLASS AND AMOUNT; CERTAIN
DEFINITIONS. The series of Preferred Stock, the issuance
of which is hereby authorized, shall comprise 200,000
shares the distinctive serial designation of which shall
be "Preferred Stock, Series A", which is sometimes herein
referred to as "Series A Convertible Preferred Stock".
Each share of Series A Convertible Preferred Stock shall
be identical in all respects with all other shares of
Series A Convertible Preferred Stock. The number of
shares of Series A Convertible Preferred Stock which are
purchased or otherwise acquired by the Corporation or
converted into Common Stock shall be canceled and shall
revert to authorized but unissued shares of Series A
Convertible Preferred Stock undesignated as to series.
The Corporation shall not issue, sell or otherwise
transfer shares of Series A Convertible Preferred Stock
to any Person other than the members of the Investor
Group. Certain capitalized terms used herein have the
meanings specified therefor in Section 10 below.
2. DIVIDENDS. (a) Except as set forth in the
Investment Agreement, each Holder of shares of Series A
Convertible Preferred Stock shall participate with the
holders of Common Stock in all Dividends, when, as and if
declared by the Board and paid or distributed by the
Corporation on or in respect of the Common Stock on a
share for share basis and in like tenor and forms as the
Dividend paid on the Common Stock as if all shares of
Series A Convertible Preferred Stock were converted into
the number of shares of Common Stock (whether or not the
Series A Convertible Preferred Stock is then so
convertible) calculated in accordance with Section 6
below, immediately prior to the record date for such
Dividend. Except as set forth above, holders of shares
of Series A Convertible Preferred Stock shall not be
entitled to receive any dividends. Except to the extent
payable in respect of dividends paid on the Common Stock,
no interest, or sum of money in lieu of interest, shall
be payable in respect of any dividend payment or payments
on shares of Series A Convertible Preferred Stock.
(b) Dividends on the Series A Convertible Preferred
Stock in respect of each Dividend shall be payable, when
and if declared by the Board of Directors, concurrently
with each date of payment (each such date, a "Dividend
Payment Date") by the Corporation of Dividends on the
Common Stock. Dividends payable in cash shall be paid by
wire transfer in immediately available funds to the
accounts designated by the respective Holders in written
notices given to the Corporation at least two Business
Days prior to the payment date or by such other means as
may be agreed to by the Corporation and the respective
Holders.
(c) The Corporation will cause written notice of
each Dividend on the Series A Convertible Preferred Stock
to be given to each Holder within five Business Days
after it is determined by the Board of Directors.
3. VOTING RIGHTS. (a) Except as otherwise
provided herein or as required by law, the Holders of
Series A Convertible Preferred Stock shall not be
entitled to any Vote.
(b) At any meeting called for the purpose of voting
on (or acting by written consent with respect to) any
matter to be voted upon by the holders of Common Stock of
the Corporation, the holders of shares of Series A
Convertible Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all
matters so submitted to a vote of stockholders of the
Corporation. At any such meeting or in connection with
any such action by written consent, each share of Series
A Convertible Preferred Stock shall carry, as of the
record date applicable to such vote, a number of votes
equal to the Per Share Vote Amount as calculated by the
Corporation for such meeting.
(c) In accordance with Section 6.2(b) of the
Investment Agreement, the Corporation will cause written
notice of any vote as to which holders of Common Stock
are entitled to vote as a separate class or voting group
under the Articles of Incorporation or Iowa Law (a "Class
Vote"), to be given to each Holder at least 15 Business
Days prior to such Class Vote.
4. LIQUIDATION PREFERENCE. In the event of any
voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, the Holders
of shares of Series A Convertible Preferred Stock then
outstanding shall be entitled, for each share of Series A
Convertible Preferred Stock, to be paid out of the assets
of the Corporation available for distribution to its
stockholders the amount of cash or other property that
would be payable on the number of shares of Common Stock
then issuable upon conversion of such share of Series A
Convertible Preferred Stock (whether or not then
convertible) (such amount payable being adjusted
appropriately to reflect any stock split, stock dividend,
reverse stock split, or any transaction with comparable
effect upon the Common Stock) (the "Liquidation
Preference"). This entitlement of the Holders of shares
of Series A Convertible Preferred Stock, to the extent
equal to $.01 for each share of Series A Convertible
Preferred Stock, shall be satisfied before any similar
payment shall be made or any assets distributed to the
holders of the Common Stock or any other security junior
in rank to the Series A Convertible Preferred Stock as to
distribution of assets upon such dissolution, liquidation
or winding up and otherwise shall be satisfied on a pari
passu basis with the holders of the Common Stock. If the
assets of the Corporation are not sufficient to pay in
full the liquidation payments payable to all of the
Holders of the outstanding shares of Series A Convertible
Preferred Stock, then the Holders of all such shares
shall share ratably in such distribution of assets in
accordance with the liquidation preference to which they
are entitled. For the purposes of this section, neither
the voluntary sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other consideration)
of all or substantially all of the property or assets of
the Corporation nor the consolidation or merger of the
Corporation with one or more other corporations shall be
deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, unless such voluntary sale,
conveyance, exchange or transfer shall be in connection
with a dissolution or winding up of the business of the
Corporation.
5. RESTRICTIONS ON TRANSFER. The shares of Series
A Convertible Preferred Stock are subject to the
provisions of the Investment Agreement (including the
provisions thereof restricting transfer of such stock).
6. CONVERSION. (a)(i) Concurrently with the
transfer of Beneficial Ownership of any share of Series A
Convertible Preferred Stock to any Person other than the
Investor or another member of the Investor Group or Other
Investor Affiliate, such share of Series A Convertible
Preferred Stock shall convert into [100] [FN]Number of
shares of Common Stock each share is convertible into is
subject to adjustment prior to Closing in the event of a
stock split, stock combination or similar adjustment in
the number of shares of Common Stock outstanding./[FN]
fully-paid and non-assessable shares of Common Stock (as
adjusted pursuant to Section 6(c)), in accordance with
the procedures provided in clause (b) of this Section 6.
(ii) At any time (x) at the direction of the
Corporation, but only if the Corporation intends to
recommend approval of a Voting Amendment (as defined in
the Investment Agreement), and (y) at the direction of
the Investor, following the approval and effectiveness of
a Voting Amendment, shares of Series A Convertible
Preferred Stock shall be mandatorily convertible into
fully-paid and non-assessable shares of Common Stock,
with each share of Series A Convertible Preferred Stock
being converted into [100] [FN]Number of shares of Common
Stock each share is convertible into is subject to
adjustment prior to Closing in the event of a stock
split, stock combination or similar adjustment in the
number of shares of Common Stock outstanding./[FN] shares
of Common Stock (as adjusted pursuant to Section 6(c)).
(iii) The Investor shall have the right, in
accordance with Section 8.8 of the Investment Agreement,
at any time that the Investor may exercise the Optional
Conversion Right (as defined in the Investment Agreement)
in accordance with the Investment Agreement, to cause all
shares of Series A Convertible Preferred Stock to be
converted into fully-paid and non- assessable shares of
Common Stock, with each share of Series A Convertible
Preferred Stock being converted into [100] Number of
shares of Common Stock each share is convertible into is
subject to adjustment prior to Closing in the event of a
stock split, stock combination or similar adjustment in
the number of shares of Common Stock outstanding./[FN]
shares of Common Stock (as adjusted pursuant to Section
6(c)).
(iv) At any time that all outstanding shares of
Common Stock (or whatever security received upon
conversion or exchange thereof) have the same vote per
share, if any, without any time phase voting, all shares
of Series A Convertible Preferred Stock shall be
convertible into fully-paid and non-assessable shares of
Common Stock, with each such share of Series A
Convertible Preferred Stock being converted into [100]
[FN]Number of shares of Common Stock each share is
convertible into is subject to adjustment prior to
Closing in the event of a stock split, stock combination
or similar adjustment in the number of shares of Common
Stock outstanding shares of Common Stock (as adjusted
pursuant to Section 6(c)).
(v) Except as set forth in this Section 6(a),
the shares of Series A Convertible Preferred Stock are
not convertible at the option of the Holder thereof.
(b) (i) Any Holder of shares of Series A Convertible
Preferred Stock required (or in the case of clauses (iii)
or (iv) above requesting) to convert any or all such
shares into Common Stock shall surrender the
certificate(s) evidencing such shares of Series A
Convertible Preferred Stock of the Holder at the office
of the transfer agent appointed for the purpose of such
conversion by the Corporation. Such surrendered
certificate(s), if the Corporation shall so require,
shall be duly endorsed to the Corporation or in blank, or
accompanied by proper instruments of transfer to the
Corporation or in blank.
(ii) The Corporation shall, within one Business
Day after such surrender of certificates evidencing
shares of Series A Convertible Preferred Stock
accompanied by written notice and in compliance with any
other conditions contained herein, issue and deliver, or
cause to be issued and delivered, to the Person(s) for
whose account such certificate(s) evidencing shares of
Series A Convertible Preferred Stock were so surrendered,
or to the nominee(s) of such Person(s), certificates
representing the number of full shares of Common Stock to
which such Person shall be entitled pursuant to the
then-applicable conversion rate. Such conversion shall
be deemed to have been made on the date of such surrender
of the certificate(s) evidencing shares of Series A
Convertible Preferred Stock to be converted (the
"Surrender Date") and the Person(s) entitled to receive
the Common Stock deliverable upon conversion of such
Series A Convertible Preferred Stock shall be treated for
all purposes as the record holder(s) of such Common Stock
on such date and thereafter. Conversion of Series A
Convertible Preferred Stock may otherwise be achieved in
accordance with such procedures as the Corporation and a
majority of the Holders may agree.
(iii) In the event that fewer than all
shares of Series A Convertible Preferred Stock
represented by a surrendered certificate are to be
converted hereunder, a new certificate shall be issued at
the Corporation's expense representing the shares of
Series A Convertible Preferred Stock not so converted.
(iv) In connection with the conversion of any
shares of Series A Convertible Preferred Stock, no
fractions of shares of Common Stock shall be issued, but
in lieu thereof the Corporation shall pay a cash
adjustment in respect of such fractional interest in an
amount equal to such fractional interest multiplied by
the Market Price (as defined in the Investment Agreement)
per share of Common Stock on the day on which such shares
of Series A Convertible Preferred Stock are deemed to
have been converted.
(c) The conversion rate shall be adjusted from
time to time as follows:
(i) In case the Corporation shall, at any time
or from time to time while any of the shares of Series A
Convertible Preferred Stock are outstanding, (A)
subdivide or reclassify its outstanding shares of Common
Stock into a larger number of shares, or (B) combine or
reclassify its outstanding shares of Common Stock into a
smaller number of shares, the conversion rate in effect
immediately prior to such action shall be adjusted so
that the Holder of any shares of Series A Convertible
Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number of shares of
Common Stock which such Holder would have owned or have
been entitled to receive immediately following such
action had such shares of Series A Convertible Preferred
Stock been converted immediately prior thereto. An
adjustment made pursuant to this Section 6(c)(i) shall
become effective immediately after the close of business
on the effective date of a subdivision, reclassification
or combination. If, as a result of an adjustment made
pursuant to this Section 6(c)(i), the Holder of any
shares of Series A Convertible Preferred Stock thereafter
surrendered for conversion shall become entitled to
receive shares of two or more classes of capital stock of
the Corporation, the Board of Directors shall make an
appropriate allocation of the adjusted conversion rate
between or among shares of such classes of capital stock
in accordance with the entitlements of the Common Stock
underlying the Series A Convertible Preferred Stock in
connection with such adjustment.
(ii) Whenever an adjustment in the conversion
rate is required, the Corporation shall forthwith place
on file with its Transfer Agent a statement signed by its
Chief Executive Officer, Chief Financial Officer or a
Vice President and by its Secretary, Assistant Secretary,
Treasurer or Assistant Treasurer, stating the adjusted
conversion rate determined as provided herein. Such
statements shall set forth in reasonable detail such
facts as shall be necessary to show the reason and the
manner of computing such adjustment.
(d) (i) The Corporation shall at all times
reserve and keep available, free from preemptive rights,
out of its authorized and unissued stock, such number of
shares of its Common Stock as shall from time to time be
sufficient to effect the conversion of all shares of
Series A Convertible Preferred Stock from time to time
outstanding, solely for the purpose of effecting such
conversion. The Corporation shall, from time to time, in
accordance with the laws of the State of Iowa, increase
the authorized number of shares of Common Stock if at any
time the number of shares of authorized and unissued
Common Stock shall not be sufficient to permit the
conversion of all the then outstanding shares of Series A
Convertible Preferred Stock.
(ii) The Corporation will pay any and all stamp
and transfer taxes that may be payable in respect of the
issuance or delivery of shares of Common Stock upon
conversion of shares of Series A Convertible Preferred
Stock pursuant hereto. The Corporation shall not,
however, be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and
delivery of shares of Common Stock in a name other than
that in which the shares of Series A Convertible
Preferred Stock so converted were registered and no such
issuance or delivery shall be made unless and until the
person requesting such issuance has paid to the
Corporation the amount of any such tax or has established
to the satisfaction of the Corporation that such tax has
been paid.
(e) In case of (i) any reclassification or change
of outstanding shares of Common Stock (other than a
change in par value or from par value to no par value or
from no par value to par value, or as a result of a
subdivision or combination) or (ii) any consolidation or
merger of the Corporation with one or more other
corporations (other than a consolidation or merger in
which the Corporation is the continuing corporation and
which does not result in any reclassification or change
of outstanding shares of Common Stock issuable upon
conversion of Series A Convertible Preferred Stock) or
(iii) any sale or conveyance to another corporation or
other entity of all or substantially all of the property
of the Corporation, then the Corporation, or such
successor corporation or other entity, as the case may
be, shall make appropriate provision so that the holder
of each share of Series A Convertible Preferred Stock
then outstanding shall have the right to convert such
share into the kind and amount of shares of stock or
other securities and property receivable upon such
consolidation, merger, sale, reclassification, change or
conveyance by a holder of the number of shares of Common
Stock into which such shares of Series A Convertible
Preferred Stock might have been converted immediately
prior to such consolidation, merger, sale,
reclassification, change or conveyance, subject to
adjustment which shall be as nearly equivalent as may be
practicable to the adjustments provided for in Section
6(c). If the holders of Common Stock are entitled to
elect the consideration payable pursuant any
consolidation, merger, sale, conveyance or other
transaction or event set forth above, the Holders also
shall be entitled to elect between such forms of
consideration. The provisions of this paragraph shall
apply similarly to successive consolidations, mergers,
sales, conveyances or other transactions or events.
(f) Whenever the number of shares of Common Stock
into which each share of Series A Convertible Preferred
Stock is convertible is adjusted as provided in this
Section 6, the Corporation shall promptly mail to the
Holders a notice in accordance with Section 8 below
stating that the number of shares of Common Stock into
which the shares of Series A Convertible Preferred Stock
are convertible has been adjusted and setting forth the
new number of shares of Common Stock (or describing the
new stock, securities, cash or other property) into which
each share of Series A Convertible Preferred Stock is
convertible, as a result of such adjustment, a brief
statement of the facts requiring such adjustment and the
computation thereof, and when such adjustment became
effective.
7. LIMITED PRIORITY. The Series A Convertible
Preferred Stock shall, to the extent of the Liquidation
Preference set forth in Section 4, be senior in rank as
to distribution of assets upon any liquidation,
dissolution or winding up of the affairs of the
Corporation, to the Common Stock, or any class of equity
securities of the Corporation which by its terms are
junior to the Series A Convertible Preferred Stock,
unless the Holders of 66 2/3 percent of the outstanding
shares of the Series A Convertible Preferred Stock shall
otherwise consent.
8. NOTICES. The Corporation shall provide notice
to each Holder of any action taken or proposed to be
taken or any determination made by the Corporation and/or
the Holder under the terms of this Certificate of
Designations. Notice of any such action or determination
by the Corporation and/or the Holder and all other
notices and other communications provided for in this
Certificate of Designations shall be delivered by
facsimile and by reputable overnight courier,
(a) If to the Company, to:
Pioneer Hi-Bred International, Inc,
700 Capital Square
Des Moines, Iowa 50309
Attention: General Counsel
Telephone: 515-248-4800
Telecopier: 515-248-4844
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Facsimile: (212) 859-4000
Attn.: Stephen Fraidin
or such other address as the Corporation shall have
furnished to the Holders in writing,
(b) if to a Holder, to the address and facsimile
number of such Holder listed on the Stock Books of the
Corporation.
9. DEFINITIONS. Certain capitalized terms are used
herein as defined below:
"AFFILIATE" of a Person has the meaning set forth in
Rule 2b-2 under the Exchange Act.
"ARTICLES OF INCORPORATION" means the Third Restated
and Amended Articles of Incorporation of the Corporation,
as amended from time to time.
"BENEFICIALLY OWNED" with respect to any securities
means having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Exchange
Act, as in effect on the date hereof, without limitation
by the 60-day provision in paragraph (d)(1)(i) thereof).
The terms "Beneficial Ownership" and "Beneficial Owner"
have correlative meanings.
"BOARD" means the Board of Directors of the
Corporation.
"BUSINESS DAY" means any day other than a Saturday,
Sunday, or a day on which banking institutions in the
State of Iowa are authorized or obligated by law or
executive order to close.
"CERTIFICATE OF DESIGNATIONS" means this Certificate
of Designations, Powers, Preferences and Relative,
Participating, Optional or other Rights, and the
Qualifications, Limitations or Restrictions Thereof,
creating the Series A Convertible Preferred Stock.
"COMMON STOCK" means the Common Stock, par value
$1.00 per share, of the Corporation.
"COMMON VOTING POWER" means, in respect of any
record date for any meeting of stockholders (or action by
written consent in lieu of a meeting) the aggregate Votes
represented by all then outstanding Voting Securities
other than the Series A Convertible Preferred Stock as
determined by the Board in accordance with the procedures
set forth in the Articles of Incorporation based on the
actual Votes entitled to be voted at such meeting
(excluding any estimation of any kind, including as to
who would have been entitled to 5 Votes per share if such
shareholders had taken the requisite steps to obtain such
Vote).
"DIVIDEND" means any dividend or distribution on or
in respect of the Common Stock of the Corporation,
whether in cash, additional shares of Common Stock or
other property.
"EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, and the regulations promulgated
thereunder.
"HOLDER" means a holder of record of a share or
shares of Series A Convertible Preferred Stock.
"INVESTMENT AGREEMENT" means the Agreement, dated as
of August 6, 1997, between the Investor and the
Corporation, as amended and/or restated from time to
time.
"INVESTOR" means E.I. du Pont de Nemours and
Company.
"INVESTOR GROUP" shall have the meaning set forth in
the Investment Agreement.
"INVESTOR GROUP TOTAL OWNERSHIP PERCENTAGE" means,
with respect to the Investor Group calculated at a
particular point in time, the ratio, expressed as a
percentage, of (a) the total number of shares of Common
Stock Beneficially Owned by the Investor Group and
issuable upon conversion of (whether or not then
convertible), or otherwise constituting the economic
equivalent of, all Common Securities (as defined in the
Investment Agreement) Beneficially Owned by the Investor
Group, over (b) the total number of shares of Common
Stock then outstanding and the number of shares of Common
Stock issuable upon conversion (whether or not then
convertible) of, or otherwise constituting the economic
equivalent of, all outstanding Common Securities;
PROVIDED that in no event shall the Investor Group Total
Ownership Percentage of all Holders of Series A
Convertible Preferred Stock be greater than 20%.
"IOWA LAW" shall mean the Business Corporation Act
of the State of Iowa.
"LIQUIDATION PREFERENCE" has the meaning specified
in Section 4 above.
"OTHER INVESTOR AFFILIATE" shall have the meaning
set forth in the Investment Agreement.
"PER SHARE VOTE AMOUNT" means in respect of any
record date for any meeting of stockholders (or action by
written consent in lieu of a meeting) that number of
Votes per share of Series A Convertible Preferred Stock
equal to (x) the Total Preferred Vote Amount as of such
record date amount divided by (y) the number of shares of
Series A Convertible Preferred Stock outstanding as of
such record date.
"PERSON" means any individual, corporation, company,
association, partnership, joint venture, limited
liability company, trust or unincorporated organization,
group (within the meaning of Rule 13d-5 under the
Exchange Act) or a government or any agency or political
subdivision thereof.
"SERIES A CONVERTIBLE PREFERRED STOCK" has the
meaning specified in Section 1 above.
"STOCK BOOKS" means the stock transfer books of the
Corporation relating to its Common Stock and Preferred
Stock.
"SUBSIDIARY" means, as to any Person, any other
Person more than fifty percent (50%) of the shares of the
voting stock or other voting interests of which are owned
or controlled, or the ability to select or elect more
than fifty percent (50%) of the directors or similar
managers is held, directly or indirectly, by such first
Person or one or more of its Subsidiaries or by such
first Person and one or more of its Subsidiaries. A
Subsidiary that is directly or indirectly wholly-owned by
another Person except for directors' qualifying shares
shall be deemed wholly- owned for purposes of this
Agreement.
"SURRENDER DATE" has the meaning specified in
Section 6 above.
"13D GROUP" shall mean any group of Persons who,
with respect to those acquiring, holding, voting or
disposing of Voting Securities would, assuming ownership
of the requisite percentage thereof, be required under
Section 13(d) of the Exchange Act and the rules and
regulations thereunder to file a statement on Schedule
13D with the Securities and Exchange Commission as a
"person" within the meaning of Section 13(d)(3) of the
Exchange Act, or who would be considered a "person" for
purposes of Section 13(g)(3) of the Exchange Act.
"TOTAL PREFERRED VOTE AMOUNT" means, in respect of
the record date for any meeting (or action by written
consent in lieu of a meeting) of shareholders of the
Corporation to vote on any matter, an aggregate number of
Votes equal to (a) the Common Voting Power as of such
record date multiplied by (b) a fraction, the numerator
of which is the Investor Group Total Ownership Percentage
(expressed as a fraction carried to two decimal places)
as of such record date and the denominator of which is
1.00 minus the Investor Group Total Ownership Percentage
(expressed as a fraction carried to two decimal places)
as of such record date; provided that in no event shall
the Total Preferred Vote Amount be greater than 20% of
Total Voting Power.
"TOTAL VOTING POWER" means in respect of any record
date for any meeting of stockholders (or action by
written consent in lieu of a meeting) the aggregate Votes
represented by all then outstanding Voting Securities as
determined by the Board in accordance with the procedures
set forth in the Articles of Incorporation based on the
actual Votes entitled to be voted at such meeting
(excluding any estimation of any kind, including as to
who would have been entitled to 5 Votes per share if such
shareholders had taken the requisite steps to obtain such
Vote).
"VOTES" shall mean, at any time, with respect to any
Voting Securities, the total number of votes that would
be entitled to be cast by the holders of such Voting
Securities generally (by the terms of such Voting
Securities, the Articles of Incorporation or any
certificate of designations for such Voting Securities)
in a meeting for the election of directors held at such
time, including the votes that would be able to be cast
by holders of shares of Series A Convertible Preferred
Stock in accordance with the procedures set forth in the
Articles of Incorporation based on the actual number of
Votes entitled to be voted at such meeting (excluding any
estimation of any kind, including as to who would have
been entitled to 5 Votes per share if such shareholders
had taken the requisite steps to obtain such Vote).
"VOTING SECURITIES" means the shares of Common
Stock, the Series A Convertible Preferred Stock and any
other securities of the Corporation entitled to vote
generally for the election of directors, and any
securities (other than employee stock options) which are
convertible into, or exercisable or exchangeable for,
Voting Securities.
IN WITNESS WHEREOF, Pioneer Hi-Bred International,
Inc., has caused this Certificate to be made under the
seal of the Corporation and signed and attested by the
undersigned officers of the Corporation this ____ day of
___________, 1997.
PIONEER HI-BRED INTERNATIONAL, INC.
By
--------------------------------
Name:
Title:
(Corporate Seal)
Attest:
By
---------------------------
Name:
Title:
EXHIBIT D
INITIAL INVESTOR NOMINEE
NOTICE PURSUANT TO SECTION 5.1(B)
1. Name of Investor Charles O. (Chad)
Nominee Holliday, Jr.
14A Information:
Age 49 (DOB 3/9/48)
Current Since 1995, Executive Vice
Position President, DuPont,
Chairman, DuPont Asia
Pacific and member of the
Office of the Chief
Executive. DuPont is a
global chemical, energy
and life sciences
company.
Previous Senior Vice President,
Positions: DuPont (1992) President,
(Past 5 + DuPont Asia Pacific (1990)
years)
Other Analog Devices, Inc.
Director- DuPont Photmasks, Inc.
ships: E.I. du Pont deNemours and
Company
2. Name of Investor William F. (Bill) Kirk
Nominee
14A Information:
Age: 54 (DOB 9/11/42)
Current Since 1990, Vice President,
Position General Manager, DuPont
Agricultural Products.
Dupont is a global chemical
energy and life sciences
company.
Previous General Manager,
Positions: Agricultural
(Past 5+ Products (1985)
years)
Other None
Director-
ships:
E.I. du Pont de Nemours DuPont Chemical and
and Company Operations, Inc.
Agricultural Products 1007 Market Street
Barley Mill Plaza #38 Suite 8045
P.O. Box 80038 Wilmington, DE 19898
Wilmington, DE 19880-0038 Telephone: (302) 773-3407
Telephone: (302) 774-1000 Telecopier: (302) 773-1536
Telecopier: (302) 992-6184
As of September 18, 1997
Pioneer Hi-Bred International, Inc.
700 Capital Square
Des Moines, Iowa 50309
Attention: General Counsel
Gentlemen:
Reference is hereby made to the Investment Agreement
(the "Investment Agreement"), dated as of August 6, 1997,
by and between E.I. du Pont de Nemours and Company (the
"Investor") and Pioneer Hi-Bred International, Inc.
Unless otherwise indicated, capitalized terms used herein
are as defined in the Investment Agreement. Pursuant to
Section 2.2(b) of the Investment Agreement, the Investor
hereby designates DuPont Chemical and Energy Operations,
Inc. ("DCEO"), a corporation organized under the laws of
Delaware and a wholly-owned Subsidiary of the Investor,
to receive the certificates representing the Shares
issuable to the Investor pursuant to the Investment
Agreement. DCEO hereby agrees to be bound by the
Investment Agreement to the same extent as the Investor.
Notwithstanding the foregoing, the Investor hereby agrees
to remain bound by the Investment Agreement to the extent
provided for in the Investment Agreement.
If you are in agreement with the foregoing, kindly
so indicate by signing a counterpart of this letter,
whereafter it will become a binding agreement between us.
Sincerely,
E.I. DU PONT DE NEMOURS AND
COMPANY
By: /s/ William F. Kirk
Name: William F. Kirk
Title: Vice President and General
Manager
DUPONT CHEMICAL AND
OPERATIONS, INC.
By: /s/ Charles L. Downing
Name: Charles L. Downing
Title: Vice President and Treasurer
Agreed and accepted as of
the date first written above:
PIONEER HI-BRED INTERNATIONAL,
INC.
By: /s/ Jerry L. Chicoine
Name: Jerry L. Chicoine
Title: Senior Vice President and
Chief Financial Officer
