FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report: January 26, 1996
DNA PLANT TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-12177 22-2395856
(State or other (Commission File Number) (IRS Employer)
jurisdiction of Identification No.)
incorporation)
6701 San Pablo Avenue, Oakland, CA 94608
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (510) 547-2395
- ----------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
On January 26, 1996, Empresas La Moderna S.A. de C.V. ("ELM") and
certain of its affiliates and DNA Plant Technology Corporation ("DNAP") signed
a definitive merger agreement to combine ELM's fresh produce subsidiary,
Bionova S.A. de C.V. ("Bionova"), with DNAP. Under the terms of the agreement
and plan of merger (the "Merger Agreement"), Bionova will transfer its
controlling interest in its subsidiaries to a new holding company, Bionova
U.S., Inc., a newly formed Delaware corporation to be renamed "DNAP Holding
Corporation" ("Holding"). In the merger (the "Merger"), DNAP will merge with
a merger subsidiary of Holding (with DNAP as the surviving entity). As a
result of the transactions contemplated by the Merger Agreement, ELM or an
affiliate will receive a 70% interest in Holding, and DNAP common and
preferred stockholders, in the aggregate, will receive 30% of the common stock
of Holding (which is expected to trade on the Nasdaq NMS), assuming no
exercise of dissenters' rights.
Under the Merger Agreement, at the effective time of the Merger DNAP's
common stockholders will receive one share of Holding common stock for each
share of DNAP common stock; holders of DNAP $2.25 Convertible Exchangeable
Preferred Stock will receive 6.8375 shares of Holding common stock for each of
their preferred shares; and holders of DNAP Series A Convertible Preferred
Stock will receive 1,000 shares of Holding common stock for each of their
preferred shares. Options and warrants of DNAP will become options and
warrants to acquire Holding common stock on essentially the same terms.
Under the Merger Agreement, ELM has agreed to guarantee certain loans to
Holding with a maximum exposure of $20 million. ELM (directly or through its
related companies, including Asgrow Seed Company, Petoseed and Royal Sluis),
has agreed to enter into a Long-Term Funded Research Agreement with Holding
upon the closing of the Merger, committing ELM or its subsidiaries to fund $30
million in future research and development at Holding over a ten-year period.
The research commitment involves minimum quarterly payments to Holding of
$625,000 and minimum payments of $9 million over each three-year period.
Holding and DNAP have also entered into a three-year Loan Agreement
whereby DNAP will borrow $10 million ($5 million funded upon the execution of
the Merger Agreement and $5 million to be funded on July 1, 1996). As
provided in the Merger Agreement, funding for such loan has been or will be
provided to Holding by ELM or affiliates thereof. The Merger Agreement also
provides that the $10 million in funding provided to Holding by ELM or
affiliates thereof will be deemed a contribution to the capital of Holding as
of the effective time of the Merger. As security for the loan, DNAP has
assigned to Holding, while the loan is outstanding, certain patents and patent
applications, including those relating to DNAP's Transwitch technology, but
will retain certain rights to use the patents. Under a Non-Exclusive Patent
License entered into with Holding, DNAP will receive, in exchange for a non-
exclusive license of the Transwitch patents to Holding, certain license fees
and product royalties.
The closing of the Merger is subject to approval by holders of a
majority of the outstanding common stock of DNAP as well as other conditions.
After the Merger, Robert Serenbetz, the present chief executive officer
of DNAP, and three independent directors from the present DNAP Board will be
included on the Holding Board of Directors, which is also expected to include
initially an additional seven (7) directors (including one independent
director) appointed by ELM. Pursuant to a Governance Agreement, to be entered
into at the effective time of the Merger, approval of a majority of a
committee of independent directors will be required until Holding's 1999
annual stockholder's meeting for certain transactions, including, among other
things, certain material transactions between Holding and ELM or its
affiliates. In addition, the Governance Agreement contains certain
limitations on the ability of ELM and its affiliates to buy or sell shares of
Holding stock for three years after the closing of the Merger.
Under the terms of the Merger Agreement, the DNAP Board and its advisors
are available to receive inquiries from other parties interested in the
possible acquisition of or merger with DNAP and, as appropriate, to provide
information and enter into discussions and negotiations with such parties in
connection with such indicated interest. Under the Merger Agreement, DNAP may
ultimately enter into an agreement with such third party. If the Merger is
not consummated, certain fees and expenses may become payable by Holding to
DNAP or by DNAP to Holding on the terms provided in the Merger Agreement.
The agreements attached as exhibits to this report on Form 8-K are
incorporated by reference into this Item, and each statement made in this Item
is modified by the full text of those agreements.
Item 7. Financial Statements and Exhibits
(c) Exhibits. The following exhibits are attached to this
report:
2.1 Agreement and Plan of Merger among Empresas La
Moderna, S.A. de C.V.; Bionova, S.A. de C.V.;
Bionova, U.S., Inc.; Bionova Acquisition, Inc.;
and DNA Plant Technology Corporation, dated
January 26, 1996.
2.2 Form of Governance Agreement between Empresas La
Moderna S.A. de C.V. and Bionova U.S. Inc.
10.1 Loan Agreement between Bionova U.S. Inc. and DNA
Plant Technology Corporation dated January 26,
1996.
10.2 Promissory Note issued to Bionova U.S. Inc. by
DNA Plant Technology Corporation dated January
26, 1996.
10.3 Assignment of Interest in Patents between DNA
Plant Technology Corporation by Bionova U.S.
Inc. dated January 26, 1996.
10.4 Sole Patent License between Bionova U.S. Inc.
and DNA Plant Technology Corporation dated
January 26, 1996.
10.5 Form of Long-Term Funded Research Agreement
between Empresas La Moderna, S.A. de C.V. and
DNA Plant Technology Corporation.
10.6 Non-Exclusive Patent License between Bionova
U.S. Inc. and DNA Plant Technology Corporation
dated January 26, 1996.
99.1 Press Release dated January 29, 1996.
<PAGE>
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
DNA PLANT TECHNOLOGY CORPORATION
Date: January 31, 1996 By: /s/ Robert Serenbetz
Name: Robert Serenbetz
Title:Chairman and Chief Executive
Officer
<PAGE>
DNA PLANT TECHNOLOGY CORPORATION
Index to Exhibits
Exhibit No.
2.1 Agreement and Plan of Merger among Empresas La Moderna, S.A. de
C.V.; Bionova, S.A. de C.V.; Bionova, U.S., Inc.; Bionova
Acquisition, Inc.; and DNA Plant Technology Corporation, dated
January 26, 1996.
2.2 Form of Governance Agreement between Empresas La Moderna S.A. de
C.V. and Bionova U.S. Inc.
10.1 Loan Agreement between Bionova U.S. Inc. and DNA Plant Technology
Corporation dated January 26, 1996.
10.2 Promissory Note issued to Bionova U.S. Inc. by DNA Plant
Technology Corporation dated January 26, 1996.
10.3 Assignment of Interest in Patents between DNA Plant Technology
Corporation and Bionova U.S. Inc. dated January 26, 1996.
10.4 Sole Patent License between Bionova U.S. Inc. and DNA Plant
Technology Corporation dated January 26, 1996.
10.5 Form of Long-Term Funded Research Agreement between Empresas La
Moderna, S.A. de C.V. and DNA Plant Technology Corporation.
10.6 Non-Exclusive Patent License between Bionova U.S. Inc. and DNA
Plant Technology Corporation dated January 26, 1996.
99.1 Press Release dated January 29, 1996.
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
among
EMPRESAS LA MODERNA, S.A. de C.V.
BIONOVA, S.A. de C.V.
BIONOVA U.S. INC.
BIONOVA ACQUISITION, INC.
and
DNA PLANT TECHNOLOGY CORPORATION
January 26, 1996
<PAGE>
TABLE OF CONTENTS
Page
AGREEMENT AND PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I THE MERGER AND RELATED TRANSACTIONS. . . . . . . . . . . . . . 2
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effective Time of the Merger . . . . . . . . . . . . . . . . . 2
1.3 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effects of the Merger. . . . . . . . . . . . . . . . . . . . . 2
1.5 Certificate of Incorporation . . . . . . . . . . . . . . . . . 2
1.6 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Name Change. . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Directors of the Surviving Corporation . . . . . . . . . . . . 3
1.11 Capitalization of Bionova U.S. and Surviving Corporation . . . 4
ARTICLE II CONVERSION OF SECURITIES; ASSUMPTION OF OPTIONS AND WARRANTS
2.1 Conversion of Securities . . . . . . . . . . . . . . . . . . . 5
2.2 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Exchange of Certificates . . . . . . . . . . . . . . . . . . . 6
2.4 Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 Stock Options. . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6 Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III REPRESENTATIONS AND WARRANTIES REGARDING THE
COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . 10
3.2 Qualification. . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3 Charter and Bylaws . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Capitalization of the Company. . . . . . . . . . . . . . . . . 11
3.5 Authority Relative to This Agreement . . . . . . . . . . . . . 12
3.6 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . 12
3.7 Governmental Approvals . . . . . . . . . . . . . . . . . . . . 12
3.8 Company Subsidiaries . . . . . . . . . . . . . . . . . . . . . 13
3.9 Inapplicability of Section 203 . . . . . . . . . . . . . . . . 14
3.10 SEC Filings. . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.11 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . 14
3.12 Absence of Certain Changes . . . . . . . . . . . . . . . . . . 15
3.13 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.14 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . 15
3.15 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 16
3.16 Title to Properties. . . . . . . . . . . . . . . . . . . . . . 16
3.17 Sufficiency and Condition of Properties. . . . . . . . . . . . 16
3.18 Intellectual Property. . . . . . . . . . . . . . . . . . . . . 17
3.19 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.20 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.21 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.22 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 23
3.23 Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . 25
3.24 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.25 Confidentiality Matters. . . . . . . . . . . . . . . . . . . . 26
3.26 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.27 Insider Interests. . . . . . . . . . . . . . . . . . . . . . . 26
3.28 Offerings of Securities. . . . . . . . . . . . . . . . . . . . 27
3.29 Brokerage Fees . . . . . . . . . . . . . . . . . . . . . . . . 27
3.30 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.31 Disclosure Documents . . . . . . . . . . . . . . . . . . . . . 27
3.32 Representations and Warranties on Closing Date . . . . . . . . 28
3.33 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING PARENT,
BIONOVA MEXICO, BIONOVA U.S. AND SUB . . . . . . . . . . . . . 28
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . 28
4.2 Qualification. . . . . . . . . . . . . . . . . . . . . . . . . 29
4.3 Charter and Bylaws . . . . . . . . . . . . . . . . . . . . . . 29
4.4 Authority Relative to This Agreement . . . . . . . . . . . . . 29
4.5 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . 30
4.6 Governmental Approvals . . . . . . . . . . . . . . . . . . . . 30
4.7 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 31
4.8 Brokerage Fees . . . . . . . . . . . . . . . . . . . . . . . . 31
4.9 Stock Ownership of Bionova Mexico, Bionova U.S. and Sub. . . . 31
4.10 Parent Securities Filings. . . . . . . . . . . . . . . . . . . 32
4.11 Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE V REPRESENTATIONS AND WARRANTIES
REGARDING THE BIONOVA GROUP. . . . . . . . . . . . . . . . . . 33
5.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . 33
5.2 Qualification. . . . . . . . . . . . . . . . . . . . . . . . . 33
5.3 Charter and Bylaws . . . . . . . . . . . . . . . . . . . . . . 33
5.4 Capitalization of the Bionova Group. . . . . . . . . . . . . . 33
5.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . 34
5.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . 34
5.7 Absence of Certain Changes . . . . . . . . . . . . . . . . . . 35
5.8 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.9 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . 36
5.10 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 36
5.11 Title to Properties. . . . . . . . . . . . . . . . . . . . . . 36
5.12 Sufficiency and Condition of Properties. . . . . . . . . . . . 37
5.13 Intellectual Property. . . . . . . . . . . . . . . . . . . . . 37
5.14 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.15 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.16 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.17 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 42
5.18 Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . 43
5.19 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.20 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.21 Insider Interests. . . . . . . . . . . . . . . . . . . . . . . 44
5.22 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.23 Disclosure Documents . . . . . . . . . . . . . . . . . . . . . 45
5.24 Representations and Warranties on Closing Date . . . . . . . . 45
5.25 Confidentiality Matters. . . . . . . . . . . . . . . . . . . . 46
5.26 Offerings of Securities. . . . . . . . . . . . . . . . . . . . 46
5.27 Customers and Suppliers. . . . . . . . . . . . . . . . . . . . 46
5.28 No Prior Activities. . . . . . . . . . . . . . . . . . . . . . 46
5.29 Holding Company. . . . . . . . . . . . . . . . . . . . . . . . 46
5.30 Arm's Length Contracts . . . . . . . . . . . . . . . . . . . . 46
5.31 Real Property. . . . . . . . . . . . . . . . . . . . . . . . . 47
5.32 Leased Property. . . . . . . . . . . . . . . . . . . . . . . . 47
5.33 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.34 Bionova U.S. Common Stock. . . . . . . . . . . . . . . . . . . 48
5.35 Capital Contribution . . . . . . . . . . . . . . . . . . . . . 48
5.36 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VI CONDUCT OF PARTIES PENDING CLOSING . . . . . . . . . . . . . 48
6.1 Conduct and Preservation of Business . . . . . . . . . . . . . 48
6.2 Restrictions on Certain Actions. . . . . . . . . . . . . . . . 48
ARTICLE VII ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . 51
7.1 Access to Information; Confidentiality . . . . . . . . . . . . 51
7.2 Acquisition Proposals. . . . . . . . . . . . . . . . . . . . . 52
7.3 Special Meeting; Proxy Statement . . . . . . . . . . . . . . . 52
7.4 Proxy Statement/Registration Statement . . . . . . . . . . . . 53
7.5 Reasonable Best Efforts. . . . . . . . . . . . . . . . . . . . 54
7.6 HSR Act Notification . . . . . . . . . . . . . . . . . . . . . 54
7.7 Public Announcements . . . . . . . . . . . . . . . . . . . . . 54
7.8 Delivery and Amendment of Schedules. . . . . . . . . . . . . . 55
7.9 Delivery of 1995 Audited Financial Statements. . . . . . . . . 55
7.10 Notice of Litigation . . . . . . . . . . . . . . . . . . . . . 56
7.11 Notification of Certain Matters. . . . . . . . . . . . . . . . 56
7.12 Bionova U.S. Standstill. . . . . . . . . . . . . . . . . . . . 56
7.13 Indemnification and Insurance. . . . . . . . . . . . . . . . . 57
7.14 Limited Guaranty of Parent . . . . . . . . . . . . . . . . . . 57
7.15 Governing Documents. . . . . . . . . . . . . . . . . . . . . . 58
7.16 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . 58
7.17 Bionova U.S. Organizational Documents. . . . . . . . . . . . . 58
7.18 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF THE PARTIES . . . . . . . . . 58
8.1 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.2 Stockholder Approval . . . . . . . . . . . . . . . . . . . . . 58
8.3 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 59
8.4 Registration Statement . . . . . . . . . . . . . . . . . . . . 59
8.5 Bionova U.S. Common Stock. . . . . . . . . . . . . . . . . . . 59
ARTICLE IX CONDITIONS TO OBLIGATIONS OF THE COMPANY . . . . . . . . . . 59
9.1 Representations and Warranties True. . . . . . . . . . . . . . 59
9.2 Covenants and Agreements Performed . . . . . . . . . . . . . . 59
9.3 Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.4 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . 60
9.5 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . 60
9.6 No Material Adverse Change . . . . . . . . . . . . . . . . . . 60
9.7 Phase I Environmental. . . . . . . . . . . . . . . . . . . . . 60
9.8 Governance Agreement . . . . . . . . . . . . . . . . . . . . . 60
9.9 Long-Term Funded Research Agreement. . . . . . . . . . . . . . 60
9.10 Severance Agreements . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE X CONDITIONS TO OBLIGATIONS OF PARENT,
BIONOVA MEXICO, BIONOVA U.S. AND SUB . . . . . . . . . . . . 61
10.1 Representations and Warranties True. . . . . . . . . . . . . . 61
10.2 Covenants and Agreements Performed . . . . . . . . . . . . . . 61
10.3 Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.4 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . 61
10.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . 61
10.6 Preemptive Rights. . . . . . . . . . . . . . . . . . . . . . . 61
10.7 Phase I Environmental. . . . . . . . . . . . . . . . . . . . . 61
10.8 Authorized Shares. . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE XI TERMINATION, AMENDMENT, AND WAIVER . . . . . . . . . . . . . 62
11.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . 63
11.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.4 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 66
12.1 Nonsurvival of Representations, Warranties, and Agreements . . 66
12.2 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . 66
12.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
12.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 69
12.5 Binding Effect; Assignment; No Third Party Benefit . . . . . . 69
12.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 69
12.7 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . 69
12.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 69
12.9 Descriptive Headings . . . . . . . . . . . . . . . . . . . . . 70
12.10 Gender. . . . . . . . . . . . . . . . . . . . . . . . . . 70
12.11 References. . . . . . . . . . . . . . . . . . . . . . . . 70
12.12 Counterparts. . . . . . . . . . . . . . . . . . . . . . . 70
12.13 Assignment. . . . . . . . . . . . . . . . . . . . . . . . 70
12.14 Confidentiality Agreement and Standstill. . . . . . . . . 70
ARTICLE XIII DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 71
13.1 Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . 71
13.2 Certain Additional Defined Terms . . . . . . . . . . . . . . . 74
13.3 Construction . . . . . . . . . . . . . . . . . . . . . . . . . 75
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of January 26,
1996, among Empresas La Moderna, S.A. de C.V., a corporation organized under
the laws of the United Mexican States ("Parent"), Bionova, S.A. de C.V., a
corporation organized under the laws of the United Mexican States and a wholly
owned subsidiary of Parent (except for four shares thereof owned by affiliates
of Parent) ("Bionova Mexico"), Bionova U.S. Inc., a Delaware corporation and
a wholly owned subsidiary of Bionova Mexico ("Bionova U.S."), Bionova
Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of
Bionova U.S. ("Sub"), and DNA Plant Technology Corporation, a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Bionova Mexico, Bionova
U.S., Sub and the Company have determined that the transactions contemplated
hereby are desirable and in the best interests of those entities and their
respective stockholders; and
WHEREAS, the respective Boards of Directors of Bionova U.S., Sub and the
Company, and Bionova U.S., acting as the sole stockholder of Sub, have
approved the Merger of Sub with and into the Company in a transaction in which
the Company will be the surviving entity and will become a wholly-owned
subsidiary of Bionova U.S. and the stockholders of the Company will become
stockholders of Bionova U.S., all upon the terms and subject to the conditions
set forth herein; and
WHEREAS, the Board of Directors of the Company has resolved to recommend
that stockholders of the Company approve this Agreement and the Merger; and
WHEREAS, on the Closing Date, Parent shall cause to be transferred to
Bionova U.S. all of the capital stock then owned by Parent or affiliates
thereof in International Produce Holding Company, a Delaware corporation
("IPHC"), and Agricola Batiz, S.A. de C.V., a corporation organized under the
laws of the United Mexican States ("ABSA"), as provided in Section 1.11(c);
and
WHEREAS, the Non-Exclusive Patent License Agreement and the Loan
Agreement have been executed and delivered as of the date hereof; and
WHEREAS, the parties intend that the Merger qualify for accounting
treatment as a purchase; and
WHEREAS, the parties intend that the Merger shall constitute for United
States federal income tax purposes a tax-free reorganization under the
Internal Revenue Code of 1986, as amended, and that this Agreement, as it
relates to the Merger, shall constitute a "plan of reorganization" within the
meaning thereof; and
WHEREAS, the parties desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
consummation of the Merger; and
WHEREAS, certain terms which are used herein shall have the respective
meanings ascribed to such terms in Article XIII;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Bionova Mexico, Bionova U.S., Sub and the Company hereby agree
as follows:
ARTICLE I
THE MERGER AND RELATED TRANSACTIONS
1.1 The Merger. At the Effective Time, and on the terms and subject
to the conditions set forth in this Agreement, Sub shall be merged with and
into the Company (the "Merger"), the Company shall continue its corporate
existence under the General Corporation Law of the State of Delaware ("State
Law") as the surviving corporation in the Merger (the "Surviving
Corporation"), and the separate corporate existence of Sub shall cease.
1.2 Effective Time of the Merger. At the Closing, the parties hereto
will cause the Merger to be consummated by filing with the Secretary of State
of Delaware a certificate of merger in such form as required by, and executed
in accordance with, the relevant provisions of State Law. The Merger shall
become effective at such time as the certificate of merger is duly filed with
the Secretary of State of Delaware (the "Effective Time").
1.3 Closing. The closing of the Merger (the "Closing") shall take
place (i) at the offices of Thompson & Knight, 1700 Pacific Avenue, Suite
3300, Dallas, Texas 75201, as soon as practicable after the satisfaction or,
if permissible, waiver of the conditions to the obligations of the parties set
forth in Articles VIII, IX and X or (ii) at such other time or place or on
such other date as the parties hereto shall agree, provided that the closing
conditions set forth in Articles VIII, IX and X have been satisfied or waived
at or prior to such other time and date. The date on which the Closing occurs
is herein referred to as the "Closing Date". All Closing transactions shall
be deemed to have occurred simultaneously.
1.4 Effects of the Merger. The Merger shall have the effects set
forth in the applicable provisions of State Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
the properties, rights, privileges, powers, and franchises of the Company and
Sub shall vest in the Surviving Corporation, without any transfer or
assignment having occurred, and all debts, liabilities, and duties of the
Company and Sub shall become the debts, liabilities, and duties of the
Surviving Corporation.
1.5 Certificate of Incorporation. The Certificate of Incorporation of
the Company, as in effect immediately prior to the Effective Time, shall be
the Certificate of Incorporation of the Surviving Corporation, until
thereafter amended in accordance with its terms and as provided by State Law.
1.6 Bylaws. The Bylaws of the Company, as in effect immediately prior
to the Effective Time, shall be the Bylaws of the Surviving Corporation, until
thereafter amended in accordance with its terms and as provided by State Law.
1.7 Directors. The initial directors of Bionova U.S. following the
Effective Time shall be as set forth in Schedule 1.7, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of Bionova U.S.
and until his successor is duly elected and qualified in accordance with State
Law or until his earlier death, resignation, or removal. Not later than the
date on which the Company first transmits its preliminary Proxy Statement to
the Securities and Exchange Commission as provided in Section 7.4, letters
from each of those persons identified in Schedule 1.7 shall have been obtained
pursuant to which they shall consent to their designation as such directors;
provided that if any such person shall not have consented to serve as a
director by that date, then a substitute therefor shall be appointed in a
manner consistent with the applicable terms of the Governance Agreement.
1.8 Officers. The initial officers of Bionova U.S. following the
Effective Time shall be identified by Bionova U.S. not later than the date on
which the Company first transmits its preliminary Proxy Statement to the
Securities and Exchange Commission as provided in Section 7.4. Each such
officer shall hold office in accordance with the Certificate of Incorporation
and Bylaws of Bionova U.S. and until his successor is duly elected and
qualified in accordance with State Law or until his earlier death,
resignation, or removal.
1.9 Name Change. Prior to or on the Closing Date, the Certificate of
Incorporation of Bionova U.S. shall be amended to change the name of Bionova
U.S. to "DNAP Holding Corporation."
1.10 Directors of the Surviving Corporation. Prior to or on the
Closing Date, the then existing directors of the Company and each Company
Subsidiary shall have submitted their resignations from such positions. On
the Closing Date, Bionova U.S., then acting as the sole stockholder of the
Surviving Corporation, and the Surviving Corporation, then acting as the sole
stockholder of each Company Subsidiary, shall cause to be elected as directors
of each of the Surviving Corporation and each Company Subsidiary, as the case
may be, the persons listed on Schedule 1.10. Such persons shall hold office
in accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation and each Company Subsidiary, as the case may be, and
until his successor is duly elected and qualified in accordance with State Law
or until his earlier death, resignation, or removal. Not later than the date
on which the Company first transmits its preliminary Proxy Statement to the
Securities and Exchange Commission as provided in Section 7.4, letters from
each of those persons identified in Schedule 1.10 shall have been obtained
pursuant to which they shall consent to their designation as such directors;
provided that if any such person shall not have consented to serve as a
director by that date, then a substitute therefor shall be appointed by
Parent.
1.11 Capitalization of Bionova U.S. and Surviving Corporation.
(a) Concurrent with the execution and delivery of this
Agreement, Bionova U.S. and the Company have entered into the Loan
Agreement and Bionova U.S. has loaned the sum of $5 million to the
Company as provided in Section 2.01(i) of the Loan Agreement. Subject
to the terms of the Loan Agreement, on the date specified in Section
2.01(ii) of the Loan Agreement, Bionova U.S. shall, and Parent shall
cause Bionova U.S. to, loan the additional sum of $5 million to the
Company as provided therein. In each such case, Parent or affiliates
thereof will have provided such funds to Bionova U.S. and such funds
will have been provided to Bionova U.S. from sources other than the
members of the Bionova Group.
(b) On the Closing Date, Parent shall cause to be transferred to
Bionova U.S. free and clear of all Encumbrances all of the capital stock
then owned by Parent or affiliates thereof in IPHC and ABSA, which
entities shall then own, directly or indirectly, all of the issued and
outstanding capital stock of each other member of the Bionova Group
(except for Bionova Mexico, except to the extent specified in Schedule
5.4 and except for dormant members of the Bionova Group which do not
have material operations or assets). At such time, such transferred
businesses shall represent all of the assets and earning power indicated
in the Bionova Group Financial Statements delivered pursuant to Section
5.5 (except for immaterial variations resulting from the ordinary course
of business).
(c) On the Closing Date, Parent shall cause the $10 million
provided to Bionova U.S. referenced in Section 1.11(a) to be deemed a
contribution to the capital of Bionova U.S. Under such circumstances,
any related accounting entries previously recorded by any of Parent or
its affiliates or by Bionova U.S., as the case may be, shall be
appropriately modified to reflect such capital contribution, and any
conflicting written arrangements shall be deemed cancelled and of no
further force and effect.
(d) In consideration of the transactions specified in Section
1.11(b) and Section 1.11(c), on the Closing Date Bionova U.S. shall
issue to Bionova Mexico such number of shares of Bionova U.S. Common
Stock as shall represent (when added to the 25,000 shares of Bionova
U.S. Common Stock owned by Bionova Mexico as of the date of this
Agreement) 70% (assuming that the holder of any Dissenting Shares does
not exercise its appraisal rights under State Law) of the issued and
outstanding shares thereof as of the Effective Time of the Merger. Such
shares shall be fully paid and nonassessable shares of Bionova U.S.
Common Stock. At the Effective Time, all other issued and outstanding
shares of Bionova U.S. Common Stock shall be represented by the shares
thereof issued pursuant to Sections 2.1(a), (b) and (c).
ARTICLE II
CONVERSION OF SECURITIES; ASSUMPTION OF OPTIONS AND WARRANTS
2.1 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Bionova U.S., Sub, the
Company or any holder of any of the following securities, the following events
will transpire:
(a) Each then outstanding share of Common Stock, par value $0.01
per share, of the Company ("Company Common Stock") (other than the
shares of Company Common Stock referred to in Section 2.1(d)) shall be
converted into the right to receive one fully paid and nonassessable
share of Common Stock, par value $0.01 per share, of Bionova U.S.
("Bionova U.S. Common Stock"), provided, however, that no fractional
shares of Bionova U.S. Common Stock shall be issued, and, in lieu
thereof, a cash payment shall be made in accordance with Section 2.3(d).
All such shares, when so converted, shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist,
and each holder of a certificate representing any such shares shall
cease to have any rights with respect thereto, except the right to
receive shares of Bionova U.S. Common Stock and any cash in lieu of
fractional shares as hereinafter provided.
(b) Each then outstanding share of $2.25 Convertible
Exchangeable Preferred Stock, par value $0.01 per share, of the Company
("Company Convertible Exchangeable Preferred Stock") (other than the
shares of such stock referred to in Section 2.1(d)) shall be converted
into the right to receive 6.8375 fully paid and nonassessable shares of
Bionova U.S. Common Stock, provided, however, that no fractional shares
of Bionova U.S. Common Stock shall be issued, and, in lieu thereof, a
cash payment shall be made in accordance with Section 2.3(d). All such
shares, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and
each holder of a certificate representing any such shares shall cease to
have any rights with respect thereto, except the right to receive shares
of Bionova U.S. Common Stock and any cash in lieu of fractional shares
as hereinafter provided.
(c) Each then outstanding share of Series A Convertible
Preferred Stock, par value $0.01 per share, of the Company ("Company
Series A Preferred Stock") (other than (i) the shares of such stock
referred to in Section 2.1(d) and (ii) Dissenting Shares) shall be
converted into the right to receive 1,000 fully paid and non assessable
shares of Bionova U.S. Common Stock, provided, however, that no
fractional shares of Bionova U.S. Common Stock shall be issued, and, in
lieu thereof, a cash payment shall be made in accordance with Section
2.3(d). All such shares, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the
right to receive shares of Bionova U.S. Common Stock and any cash in
lieu of fractional shares or any amount paid in respect to appraisal
rights, if any, as hereinafter provided.
(d) Each share of Company Common Stock, Company Convertible
Exchangeable Preferred Stock and Company Series A Preferred Stock
(collectively "Company Stock") then held in the treasury of the Company
or by any of the Company Subsidiaries shall be cancelled and
extinguished without any conversion thereof and no payment shall be made
with respect thereto.
(e) Each then outstanding share of Common Stock, par value $.01
per share, of Sub shall be converted into and become one fully paid and
nonassessable share of Company Common Stock.
(f) All then outstanding options and warrants to purchase
Company Common Stock will be assumed by Bionova U.S. in accordance with
Sections 2.5 and 2.6.
The consideration to be paid or delivered to each holder of Company
Stock pursuant to any of Sections 2.1(a), (b) and (c) is herein referred to as
the "Merger Consideration."
2.2 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, if the holder of shares of Company Series A Preferred Stock has
demanded appraisal of such shares in accordance with State Law, and if State
Law provides for appraisal rights for such shares in the Merger ("Dissenting
Shares"), then such holder shall be entitled to appraisal rights for his
Dissenting Shares in accordance with the provisions of State Law; provided
that such holder properly perfects his right to appraisal of his Dissenting
Shares under State Law. The Company shall give Bionova U.S. prompt notice of
any demands received by the Company for appraisal of shares, and Bionova U.S.
shall have the right to participate in all negotiations and proceedings with
respect to such demands. The Company shall not, except with the prior written
consent of Bionova U.S., make or agree to make any payment with respect to, or
settle or offer to settle, any such demands.
2.3 Exchange of Certificates.
(a) Pursuant to an agreement, to be entered into on or before
the Closing Date among Bionova U.S., the Company, and such designee,
Bionova U.S. shall designate a bank or trust company reasonably
acceptable to the Company to act as exchange agent in the Merger (the
"Exchange Agent") for purposes of effecting the exchange for the Merger
Consideration of certificates that, immediately prior to the Effective
Time, represented shares of Company Stock entitled to receive the Merger
Consideration pursuant to Section 2.1 ("Certificates"). Upon the
surrender to the Exchange Agent of each Certificate, together with the
letter of transmittal contemplated by Section 2.3(f) duly completed and
executed, the Exchange Agent shall pay the holder of such Certificate
the applicable Merger Consideration in exchange therefor, and such
Certificate shall forthwith be cancelled. Until so surrendered and
exchanged, each such Certificate shall represent solely the right to
receive the applicable Merger Consideration and any amounts to which the
holder thereof is entitled pursuant to Sections 2.3(c) and (d). No
interest shall be paid or accrue on the Merger Consideration. If the
Merger Consideration (or any portion thereof) is to be delivered to any
person other than the person in whose name the Certificate surrendered
in exchange therefor is registered, it shall be a condition to such
exchange that (i) the Certificate so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and (ii) the person
requesting such exchange shall pay to the Exchange Agent any transfer or
other Taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the
Certificate surrendered or establish to the satisfaction of the Exchange
Agent that such Tax has been paid or is not applicable. Bionova U.S.
may impose such other reasonable conditions upon the exchange of
Certificates as it may deem necessary or desirable and as are consistent
with the provisions of this Agreement. Bionova U.S. Common Stock into
which Company Stock shall be converted pursuant to this Agreement and
the Merger shall be deemed to have been issued at the Effective Time;
provided, however, that, subject to Applicable Law, no holder of an
unsurrendered Certificate shall be entitled, until the surrender of such
Certificate, to vote the shares of Bionova U.S. Common Stock into which
his or her Company Stock shall have been converted.
(b) At or immediately prior to the Effective Time, Bionova U.S.
shall deposit, or cause to be deposited, in trust with the Exchange
Agent stock certificates representing the aggregate stock Merger
Consideration to which holders of shares of Company Stock shall be
entitled at the Effective Time pursuant to Section 2.1 (the "Payment
Fund"). The Exchange Agent shall, pursuant to irrevocable instructions,
make the payments or deliveries referred to in Section 2.3(a) out of the
Payment Fund. The Payment Fund shall not be used for any other purpose
except as expressly provided in this Agreement.
(c) Unless and until a Certificate is surrendered, dividends
payable to the holders of record of Bionova U.S. Common Stock shall not
be paid to the holder of such Certificate in respect of the Bionova U.S.
Common Stock represented thereby, but, subject to applicable abandoned
property, escheat, and similar laws, there shall be paid to the holder
thereof (i) upon surrender of such Certificate, the amount of any
dividends, the record date for the determination of the holders entitled
to which shall be after the Effective Time, which theretofore shall have
become payable with respect to the whole shares of Bionova U.S. Common
Stock represented by such Certificate and issued in exchange upon its
surrender, but without interest on such dividends, and (ii) after
surrender of such Certificate, the amount of any dividends with respect
to such whole shares of Bionova U.S. Common Stock, the record date for
the determination of the holders entitled to which shall be after the
Effective Time but prior to the surrender of such Certificate, and the
payment date of which shall be subsequent to such surrender, such amount
to be paid on such payment date.
(d) No certificates or scrip representing fractional shares of
Bionova U.S. Common Stock shall be issued upon the surrender for
exchange of any Certificate. In lieu of any such fractional share of
Bionova U.S. Common Stock, each holder of a Certificate whose aggregate
number of shares of Company Stock are not convertible into a whole
number of shares of Bionova U.S. Common Stock shall be entitled to
receive from the Exchange Agent, upon surrender of such holder's
Certificates for exchange as provided above, an amount of cash rounded
to the nearest cent (without interest) determined by multiplying such
fractional interest by the mean closing sales price of Bionova U.S.
Common Stock as reported on NASDAQ National Market System ("NASDAQ NMS")
for the ten trading days immediately following the fifth trading day
after the Closing Date. After the Closing Date, Bionova U.S. shall
deposit with the Exchange Agent, as and when required, cash sufficient
for the Exchange Agent to make payment of cash in lieu of fractional
shares in accordance with this Section 2.3(d). Notwithstanding the
foregoing, further rules and regulations concerning the settlement of
fractional shares otherwise issuable, not inconsistent with this
Agreement, may be adopted by Bionova U.S.
(e) Promptly following the date which is one year after the
Effective Time, the Exchange Agent shall deliver to Bionova U.S. all
cash, certificates, and other documents and instruments in its
possession relating to the transactions described in this Agreement, and
the Exchange Agent's duties shall terminate. Thereafter, each holder of
a Certificate may surrender such Certificate to Bionova U.S. and
(subject to applicable abandoned property, escheat, and similar laws)
receive in exchange therefor the applicable Merger Consideration and any
amounts to which such holder is entitled pursuant to Sections 2.3(c) and
(d), but such holder shall have no greater rights against Bionova U.S.
than may be accorded to general creditors of Bionova U.S. under
Applicable Law. Notwithstanding anything in this Agreement to the
contrary, neither the Exchange Agent nor any party hereto shall be
liable to a holder of shares of Company Stock for any cash or other
property delivered to a public official pursuant to applicable abandoned
property, escheat, or similar laws.
(f) Promptly after the Effective Time, the Exchange Agent shall
mail to each record holder of a Certificate a form of letter of
transmittal (which shall specify that delivery of a Certificate shall be
effected, and risk of loss and title to a Certificate shall pass, only
upon proper delivery of the Certificate to the Exchange Agent and shall
be in such form and contain such other provisions, reasonably acceptable
to the Company, as Bionova U.S. shall specify) and instructions for use
in surrendering such Certificate and receiving the applicable Merger
Consideration in exchange therefor.
(g) At the Effective Time, the stock transfer books of the
Company shall be closed and no transfers of Company Stock shall
thereafter be made. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Exchange Agent, they shall
be cancelled and exchanged for the applicable Merger Consideration as
provided in Section 2.1, subject to State Law in the case of Dissenting
Shares.
(h) In the event any Certificate shall have been lost, stolen,
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen, or destroyed, Bionova U.S.
shall issue or cause to be issued in exchange for such lost, stolen, or
destroyed Certificate the Merger Consideration deliverable in respect
thereof as determined in accordance with Section 2.1. When authorizing
such issue of the Merger Consideration in exchange therefor, Bionova
U.S. may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed
Certificate to give Bionova U.S. a bond in such sum as it may direct as
indemnity against any claim that may be made against Bionova U.S. with
respect to the Certificate alleged to have been lost, stolen, or
destroyed.
(i) Bionova U.S. shall be entitled to deduct and withhold from
the Merger Consideration otherwise payable pursuant to this Agreement to
any holder of a Certificate such amounts as Bionova U.S. is required to
deduct and withhold with respect to the making of such payment under the
Code or any provision of state, local, or foreign tax law. To the
extent that amounts are so withheld by Bionova U.S., such withheld
amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Certificate in respect of which such
deduction and withholding was made by Bionova U.S.
2.4 Adjustment. Subject to compliance with Section 6.2, in the event
of any stock split, combination, reclassification, recapitalization, exchange,
or stock dividend or distribution with respect to shares of Company Common
Stock or Bionova U.S. Common Stock (or if a record date with respect to any of
the foregoing should occur) during the period between the date of this
Agreement and the Effective Time, then the conversion rates set forth in
Section 2.1 shall be appropriately adjusted to reflect such stock split,
combination, reclassification, recapitalization, exchange, stock dividend, or
other distribution.
2.5 Stock Options.
(a) At the Effective Time, each then outstanding option
(including any option comprising a part of a unit) to purchase shares of
Company Common Stock (a "Company Stock Option") shall become an option
applicable to Bionova U.S., which Company Stock Option shall thereafter
constitute an option to acquire on the same terms, conditions and
vesting requirements as were applicable under the Company Stock Option,
the same number of shares of Bionova U.S. Common Stock as the holder of
such Company Stock Option would have been entitled to receive pursuant
to the Merger had such holder exercised such option in full immediately
prior to the Effective Time, at a price per share equal to (y) the
aggregate exercise price for the shares of Company Common Stock
otherwise purchasable pursuant to such Company Stock Option divided by
(z) the number of full shares of Bionova U.S. Common Stock deemed
purchasable pursuant to such option in accordance with the foregoing,
and Bionova U.S. agrees to issue such Bionova U.S. Common Stock upon any
such exercise; provided, however, that in the case of any Company Stock
Option to which Section 422 of the Code applies (incentive stock
options), the option price, the number of shares purchasable pursuant to
such option and the terms and conditions of exercise of such option
shall be determined in order to comply with Section 424(a) of the Code.
As soon as practicable after the Effective Time, Bionova U.S. shall
deliver to the participants in the Company's stock option plans
appropriate notice setting forth such participants' rights pursuant
thereto and the grants pursuant to those plans shall continue in effect
on the same terms and conditions (subject to the adjustments required by
this Section 2.5 after giving effect to the Merger), Bionova U.S. shall
ensure compliance with the terms of the stock option plans and Bionova
U.S. shall ensure, to the extent required by, and subject to the
provisions of, such plans and Applicable Laws, that the stock options
thereunder which qualified as incentive stock options prior to the
Effective Time continue to qualify as incentive stock options after the
Effective Time.
(b) Prior to the Effective Time, Bionova U.S. shall take all
corporate action necessary to reserve for issuance a sufficient number
of shares of Bionova U.S. Common Stock for delivery under the Company
Stock Options becoming options of Bionova U.S. in accordance with this
Section 2.5. If and to the extent required under the Securities Act, as
soon as practicable after the Effective Time, Bionova U.S. shall file a
registration statement on Form S-3 or Form S-8 as the case may be (or
any successor or other appropriate forms), or another appropriate form
with respect to the shares of Bionova U.S. Common Stock subject to such
options and shall use its best efforts to maintain the effectiveness of
such registration statement or registration statements (and maintain the
current status of the prospectus or prospectuses contained therein) for
so long as such options remain outstanding. With respect to those
individuals who subsequent to the Merger will be subject to the
reporting requirements under Section 16(a) of the Exchange Act, where
applicable, Bionova U.S. shall ensure administration of Company Stock
Options assumed pursuant to this Section 2.5 in a manner that complies
with Rule 16b-3 promulgated under the Exchange Act if and to the extent
the Company Option Plan complied with such rule prior to the Merger.
2.6 Warrants. At the Effective Time, each then outstanding warrant
(including any warrant comprising part of a unit) to purchase shares of
Company Common Stock shall become a warrant applicable to Bionova U.S., and
the registered holders thereof, after the Effective Time, will have the right
to acquire and receive in lieu of the shares of Company Common Stock
acquirable upon exercise of such warrants and upon payment of the
consideration required to be paid thereunder in connection with the exercise
thereof, such shares of Bionova U.S. Common Stock as would have been issued
pursuant to the Merger in exchange for the number of shares of Company Common
Stock acquirable if such warrants had been exercised immediately prior to the
Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
The Company represents and warrants to Parent, Bionova Mexico, Bionova
U.S. and Sub that:
3.1 Corporate Organization. The Company 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
corporate authority to own, lease, and operate its properties and to carry on
its business as now being conducted. Other than as contemplated by this
Agreement, no actions or proceedings to dissolve the Company are pending or,
to the best knowledge of the Company, threatened.
3.2 Qualification. Each of the Company and the Company Subsidiaries
is duly qualified or licensed to do business as a foreign corporation and each
of the Company and the Company Subsidiaries is in good standing in each of the
jurisdictions set forth opposite its name on Schedule 3.2, which are all the
jurisdictions in which the property owned, leased, or operated by it or the
conduct of its business requires such qualification or licensing, except
jurisdictions in which the failure to be so qualified or licensed would not,
individually or in the aggregate, have a Company Material Adverse Effect.
3.3 Charter and Bylaws. The Company has delivered to Bionova U.S.
accurate and complete copies of (i) the charter and bylaws of each of the
Company and the Subsidiaries as currently in effect and (ii) the stock records
of each of the Subsidiaries. Such records accurately reflect the stock
ownership of the Subsidiaries. Neither the Company nor any Subsidiary is in
violation of any provision of its charter or bylaws.
3.4 Capitalization of the Company. The authorized capital stock of
the Company consists of 60,000,000 shares of Common Stock, par value $0.01 per
share, of which, as of the date hereof, 42,828,563 shares are outstanding and
held by persons or entities other than a Company Subsidiary, no shares are
outstanding and held by a Company Subsidiary and no shares are held in the
Company's treasury; 5,000,000 shares of Preferred Stock, par value $0.01 per
share, of which, as of the date hereof, 1,380,000 shares designated as $2.25
Convertible Exchangeable Preferred Stock are outstanding and held by persons
or entities other than a Company Subsidiary and no shares designated as such
are held by a Company Subsidiary, 2,750 shares designated as Series A
Convertible Preferred Stock are outstanding and held by persons or entities
other than a Company Subsidiary and no shares designated as such are held by a
Company Subsidiary, and no such shares of either such designation are held in
the Company's treasury. All outstanding shares of capital stock of the
Company have been validly issued and are fully paid and nonassessable, and no
shares of capital stock of the Company are subject to, nor have any been
issued in violation of, preemptive or similar rights. All issuances, sales,
and repurchases by the Company of shares of its capital stock have been
effected in compliance with all Applicable Laws, including without limitation
applicable federal and state securities laws. Schedule 3.4 describes all
outstanding options and warrants to purchase Company Stock, and the aggregate
number of shares of Company Common Stock reserved for issuance and issuable
upon the exercise of outstanding warrants and stock options. Except as set
forth above in this Section and on Schedule 3.4, there are (and as of the
Closing Date there will be) outstanding (i) no shares of capital stock or
other voting securities of the Company, (ii) no securities of the Company
convertible into or exchangeable for shares of capital stock or other voting
securities of the Company, (iii) no options, warrants or other rights
(including preemptive rights) to acquire from the Company, and no obligation
of the Company to issue or sell, any shares of capital stock or other voting
securities of the Company or any securities of the Company convertible into or
exchangeable for such capital stock or voting securities, and (iv) no equity
equivalents, interests in the ownership or earnings, or other similar rights
of or with respect to the Company. There are (and as of the Closing Date
there will be) no outstanding obligations of the Company or any Subsidiary to
repurchase, redeem, or otherwise acquire any of the foregoing shares,
securities, options, warrants, equity equivalents, interests, or rights. The
Company is not a party to, and is not aware of, any voting agreement, voting
trust, or similar agreement or arrangement relating to any class or series of
its capital stock. The classes of Company Stock denominated as Company Common
Stock and Company Convertible Exchangeable Preferred Stock are each listed for
trading and trade on the NASDAQ NMS.
3.5 Authority Relative to This Agreement. The Company has full
corporate power and corporate authority to execute, deliver, and perform this
Agreement and the Ancillary Documents to which it is a party and, subject to
the approval of this Agreement by the holders of Company Common Stock in
accordance with Applicable Law and the Company's Certificate of Incorporation,
to consummate the transactions contemplated hereby and thereby. The
execution, delivery, and performance by the Company of this Agreement and the
Ancillary Documents to which it is a party, and the consummation by it of the
transactions contemplated hereby and thereby, have been duly authorized by the
Board of Directors of the Company, and no other corporate proceedings (other
than the approval of this Agreement by the holders of Company Common Stock in
accordance with Applicable Law and the Company's Certificate of Incorporation)
are required on the part of the Company to authorize the execution, delivery,
and performance by the Company of this Agreement and such Ancillary Documents
and the consummation by it of the transactions contemplated hereby and
thereby. This Agreement has been duly executed and delivered by the Company
and constitutes, and each Ancillary Document executed or to be executed by the
Company has been, or when executed will be, duly executed and delivered by the
Company and constitutes, or when executed and delivered will constitute, a
valid and legally binding obligation of the Company, enforceable against the
Company in accordance with their respective terms, except that such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting creditors' rights
generally, (ii) fiduciary obligations under the laws of the jurisdiction of
its incorporation, (iii) equitable principles which may limit the availability
of certain equitable remedies (such as specific performance) in certain
instances, and (iv) public policy considerations with respect to the
enforceability of rights of indemnification.
3.6 Noncontravention. The execution, delivery, and performance, as
the case may be, by the Company or the Company Subsidiaries of this Agreement
and the Ancillary Documents to which it is a party and the consummation by it
of the transactions contemplated hereby and thereby do not and will not,
subject to any consents, waivers or approvals to be effective at the Closing
Date and as may be listed on Schedule 3.6, (i) conflict with or result in a
violation of any provision of the charter or bylaws of the Company or any
Company Subsidiary, (ii) conflict with or result in a violation of any
provision of, or constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with or without the
giving of notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, or require any consent, approval,
authorization or waiver of, or notice to, any party to, any material bond,
debenture, note, mortgage, indenture, lease, contract, agreement, or other
instrument or obligation to which the Company or any Company Subsidiary is a
party or by which the Company or any Company Subsidiary or any of their
respective properties may be bound or any material Permit held by the Company
or any Company Subsidiary, (iii) result in the creation or imposition of any
Encumbrance upon the properties of the Company or any Company Subsidiary, or
(iv) assuming compliance with the matters referred to in Section 3.7, violate
any Applicable Law binding upon the Company or any Company Subsidiary.
3.7 Governmental Approvals. No consent, approval, order, or
authorization of, or declaration, filing, or registration with, any
Governmental Entity is required to be obtained or made by the Company or any
Subsidiary in connection with the execution, delivery, or performance by the
Company of this Agreement and the Ancillary Documents to which it is a party
or the consummation by it of the transactions contemplated hereby or thereby,
other than (i) compliance with any applicable requirements of the HSR Act;
(ii) compliance with any applicable requirements of the Securities Act; (iii)
compliance with any applicable requirements of the Exchange Act;
(iv) compliance with any applicable state securities laws; (v) filings with
Governmental Entities to occur in the ordinary course following the
consummation of the transactions contemplated hereby, including without
limitation the filing of a Certificate of Merger with the Secretary of State
of Delaware; (vi) any approvals of Governmental Entities; and (vii) such
consents, approvals, orders, or authorizations which, if not obtained, and
such declarations, filings, or registrations which, if not made, would not,
individually or in the aggregate, have a Company Material Adverse Effect.
3.8 Company Subsidiaries.
(a) Except as set forth on Schedule 3.8, the Company does not
own, directly or indirectly, any capital stock or other securities of
any corporation or have any direct or indirect equity or ownership
interest in any other person, other than the Company Subsidiaries,
excluding for this purpose mutual funds. Schedule 3.8 lists each
Company Subsidiary, the jurisdiction of incorporation of each Company
Subsidiary, and the authorized and outstanding capital stock of each
Company Subsidiary. Each Company Subsidiary is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Each Company Subsidiary has all
requisite corporate power and corporate authority to own, lease, and
operate its properties and to carry on its business as now being
conducted. No actions or proceedings to dissolve any Company Subsidiary
are pending.
(b) Except as otherwise indicated on Schedule 3.8, all the
outstanding capital stock of each Company Subsidiary is owned directly
by the Company, free and clear of all Encumbrances. All outstanding
shares of capital stock of each Company Subsidiary have been validly
issued and are fully paid and nonassessable. No shares of capital stock
of any Company Subsidiary are subject to, nor have any been issued in
violation of, preemptive or similar rights.
(c) Except as set forth on Schedule 3.8, there are (and as of
the Closing Date there will be) outstanding (i) no shares of capital
stock or other voting securities of any Company Subsidiary, (ii) no
securities of the Company or any Company Subsidiary convertible into or
exchangeable for shares of capital stock or other voting securities of
any Company Subsidiary, (iii) no options, warrants or other rights
(including preemptive rights) to acquire from the Company or any Company
Subsidiary, and no obligation of the Company or any Company Subsidiary
to issue or sell, any shares of capital stock or other voting securities
of any Company Subsidiary or any securities convertible into or
exchangeable for such capital stock or voting securities, and (iv) no
equity equivalents, interests in the ownership or earnings, or other
similar rights of or with respect to any Company Subsidiary. There are
(and as of the Closing Date there will be) no outstanding obligations of
the Company or any Company Subsidiary to repurchase, redeem, or
otherwise acquire any of the foregoing shares, securities, options,
equity equivalents, interests, or rights.
3.9 Inapplicability of Section 203. The Board of Directors of the
Company has taken all actions so that the restrictions contained in Section
203 of the State Law applicable to a "business combination" (as defined
therein) will not apply to the execution, delivery or performance of this
Agreement or the consummation of the Merger or the other transactions
contemplated by this Agreement.
3.10 SEC Filings. The Company has filed with the Securities and
Exchange Commission all forms, reports, schedules, statements, and other
documents required to be filed by it under the Securities Act, the Exchange
Act, and all other federal securities laws. All such forms, reports,
schedules, statements, and other documents (including all amendments thereto)
filed by the Company with the Securities and Exchange Commission are herein
collectively referred to as the "SEC Filings". The Company has delivered to
or made available for inspection by Bionova U.S. accurate and complete copies
of all the SEC Filings in the form filed by the Company with the Securities
and Exchange Commission since December 31, 1992. The SEC Filings, including,
without limitation, the financial statements, financial statement footnotes
and financial statement schedules included or incorporated by reference
therein, at the time filed, complied in all material respects with all
applicable requirements of federal securities laws. None of the SEC Filings,
including, without limitation, any financial statements or schedules included
therein, at the time filed, contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. All material
contracts of the Company and the Subsidiaries required to be filed in the
Company's filings with the SEC under Item 601 of Regulation S-K promulgated by
the SEC have been included in the SEC Filings. The audited consolidated
financial statements and unaudited consolidated interim financial statements
of the Company included in the SEC Filings present fairly, in conformity with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto), the consolidated financial position
of the Company as of the dates thereof and its consolidated results of
operations and cash flows for the periods then ended (subject to normal
year-end audit adjustments in the case of any unaudited interim financial
statements). The Company shall deliver to Bionova U.S. as soon as they become
available accurate and complete copies of all forms, reports, and other
documents furnished by it to its stockholders generally or filed by it with
the Securities and Exchange Commission subsequent to the date hereof and prior
to the Closing Date.
3.11 Absence of Undisclosed Liabilities. Except as and to the extent
disclosed in the SEC Filings filed prior to the date hereof, as of
September 30, 1995, neither the Company nor any Subsidiary had any liabilities
or obligations (whether accrued, absolute, contingent, unliquidated, or
otherwise, whether or not known to the Company or any Subsidiary, and whether
due or to become due) material to the Company and the Company's Subsidiaries
taken as a whole. Since September 30, 1995, neither the Company nor any
Subsidiary has incurred any such material liabilities or obligations, other
than those incurred in the ordinary course of business consistent with past
practice or pursuant to or as contemplated by this Agreement.
3.12 Absence of Certain Changes. Except as disclosed in the SEC
Filings filed prior to the date hereof or as disclosed on Schedule 3.12, since
September 30, 1995, (i) there has not been any change, development, or effect,
individually or in the aggregate, that has had, or might reasonably be
expected to have, a Company Material Adverse Effect; (ii) the businesses of
each of the Company and each of the Subsidiaries have been conducted only in
the ordinary course consistent with past practice; (iii) neither the Company
nor any Subsidiary has incurred any material liability, engaged in any
material transaction, or entered into any material agreement outside the
ordinary course of business consistent with past practice; (iv) neither the
Company nor any Subsidiary has suffered any material loss, damage,
destruction, or other casualty to any of its assets (whether or not covered by
insurance); and (v) neither the Company nor any Subsidiary has taken any of
the actions set forth in Section 6.2 except as permitted thereunder.
3.13 Tax Matters.
(a) Except as disclosed on Schedule 3.13:
(i) the Company and each Company Subsidiary have (and as
of the Closing Date will have) duly filed all material federal,
state, local, and foreign Tax Returns required to be filed by or
with respect to them with the IRS or other applicable Taxing
authority, and no extensions with respect to such Tax Returns have
(or as of the Closing Date will have) been requested or granted;
(ii) the Company and each Company Subsidiary have (and as
of the Closing Date will have) paid, or adequately reserved
against in its financial statements included as part of its SEC
Filings, all Taxes due, or claimed by any Taxing authority to be
due, from or with respect to them, except Taxes that are being
contested in good faith by appropriate legal proceedings and for
which adequate reserves have been set aside as disclosed on
Schedule 3.13;
(iii) there has been no issue raised or adjustment proposed
(and none is pending) by the IRS or any other Taxing authority in
connection with any of such Tax Returns;
(iv) the Company and each Company Subsidiary have (and as
of the Closing Date will have) made all deposits required with
respect to Taxes;
(v) the federal income Tax Returns of the Company and the
Subsidiaries have not been audited by the IRS; and
(vi) no waiver or extension of any statute of limitations
as to any federal, state, local, or foreign Tax matter has been
given by or requested from the Company or any Company Subsidiary.
3.14 Compliance With Laws. Except as disclosed in the SEC Filings
filed prior to the date hereof, the Company and the Company Subsidiaries have
complied in all material respects with all Applicable Laws (including without
limitation Applicable Laws relating to securities, properties, business
products, manufacturing processes, advertising and sales practices, employment
practices, terms and conditions of employment, wages and hours, safety,
occupational safety, health, environmental protection, product safety, and
civil rights) relating to any material aspect of the Company's or a Company
Subsidiary's business. Neither the Company nor any Company Subsidiary has
received any written notice, which has not been dismissed or otherwise
disposed of, that the Company or any Company Subsidiary has not so complied.
Neither the Company nor any Company Subsidiary is charged or, to the best
knowledge of the Company, threatened with, or, to the best knowledge of the
Company, under investigation with respect to, any violation of any Applicable
Law relating to any aspect of the business of the Company or any Company
Subsidiary.
3.15 Legal Proceedings. Except as disclosed on Schedule 3.15, there
are no Proceedings pending or, to the best knowledge of the Company,
threatened against or involving the Company or any Company Subsidiary (or, to
the Company's knowledge, any of their respective directors or officers in
connection with the business or affairs of the Company or any Company
Subsidiary) or any properties or rights of the Company or any Company
Subsidiary except (i) as disclosed in the SEC Filings filed prior to the date
hereof, (ii) for any Proceedings that pertain to routine claims by persons
other than Governmental Entities that are covered by insurance (subject to
applicable insurance deductibles), and (iii) for Proceedings which,
individually or in the aggregate, if prosecuted to judgment, would not have a
Company Material Adverse Effect. Neither the Company nor any Company
Subsidiary is subject to any judgment, order, writ, injunction, or decree of
any Governmental Entity which has had or is reasonably likely to have a
Company Material Adverse Effect. There are no Proceedings pending or, to the
best knowledge of the Company, threatened seeking to restrain, prohibit, or
obtain damages or other relief in connection with this Agreement or the
transactions contemplated hereby.
3.16 Title to Properties. Each of the Company and the Company
Subsidiaries has good and indefeasible title, and in the case of real property
insurable title, to all material properties (real, personal, and mixed,
tangible and intangible) it owns or purports to own, including without
limitation the properties reflected in its books and records and in the latest
balance sheet of the Company included in the SEC Filings filed prior to the
date hereof, other than those disposed of after the date of such balance sheet
in the ordinary course of business consistent with past practice, free and
clear of all Encumbrances, except (i) as disclosed in the SEC Filings filed
prior to the date hereof, and (ii) liens for Taxes not yet due and payable.
Except as disclosed on Schedule 3.16, no financing statement (or other
instrument sufficient or effective as a financing statement) under the Uniform
Commercial Code with respect to any properties of the Company or any Company
Subsidiary has been filed and is effective in any jurisdiction, and the
Company and the Company Subsidiaries have not signed any such financing
statement (or other instrument) or any mortgage or security agreement
authorizing any secured party thereunder to file any such financing statement
(or other instrument). Neither the whole nor any part of the Company's or any
Company Subsidiary's property is subject to any pending or, to the Company's
knowledge, threatened condemnation or similar proceeding.
3.17 Sufficiency and Condition of Properties. The material properties
owned, leased, or used by the Company and the Company Subsidiaries are (i) in
the case of tangible properties, in good operating condition and repair
(ordinary wear and tear excepted) and have been maintained in accordance with
standard industry practice, (ii) suitable for the purposes used, and (iii)
adequate and sufficient for the normal operation of the Company's and the
Company Subsidiaries' businesses, as presently conducted. The Company and the
Company Subsidiaries own or have a valid leasehold interest in, or otherwise
have a valid right to use, all such properties. The lessee under each such
lease is not in breach of or in default under such lease. Such properties and
their uses conform in all material respects to all Applicable Laws, except for
such minor variations as do not impair or interfere with the use of such
properties for the purposes for which they are employed and the Company and
the Company Subsidiaries have not received any notice to the contrary. All
such tangible properties are in the Company's or a Company Subsidiary's
possession or under their control.
3.18 Intellectual Property.
(a) Set forth on Schedule 3.18 is a list of all Intellectual
Property owned, held, or used by the Company or any Company Subsidiary.
Schedule 3.18 specifies, as applicable: (i) the nature of such
Intellectual Property; (ii) the owner of such Intellectual Property;
(iii) the jurisdictions by or in which such Intellectual Property is
recognized without regard to registration or has been issued or
registered or in which an application for such issuance or registration
has been filed, including the respective registration or application
numbers; and (iv) all licenses, sublicenses, and other agreements to
which the Company or any Company Subsidiary is a party and pursuant to
which the Company, any Company Subsidiary, or any other person is
authorized to use such Intellectual Property, including the identity of
all parties thereto, a description of the nature and subject matter
thereof, the applicable royalty, and the term thereof. Except as noted
in Schedule 3.18, all maintenance fees/annuities have been paid and
renewals thereof have been duly made with respect to such applications,
patents and registrations.
(b) The listed Intellectual Property constitutes all
Intellectual Property necessary for the operation of the Company's
business and that of the Subsidiaries as presently conducted. The
Company or a Company Subsidiary has good and indefeasible title to or is
validly licensed to use all such Intellectual Property. Except as noted
in Schedule 3.18, each item of such Intellectual Property is in full
force and effect, the Company or such Company Subsidiary is in
compliance with all its obligations with respect thereto, and, to the
best knowledge of the Company, no event has occurred which permits, or
upon the giving of notice or the passage of time or otherwise would
permit, revocation or termination of any thereof. During the
prosecution of the U.S. patents listed in Schedule 3.18, the Company
complied with its Rule 56 disclosure obligations. Other than as
identified in Schedule 3.15 hereto, there are no (i) Proceedings
pending, (ii) to the best knowledge of the Company, Proceedings
threatened against the Company or any Company Subsidiary, or (iii) to
the best knowledge of the Company, notices received by the Company or
any Company Subsidiary from another person, asserting that (x) use by
the Company or a Company Subsidiary of any of such Intellectual Property
(y) the making, producing, using or selling of any commercial product of
the Company or any Company Subsidiary, or (z) the making, producing,
using or selling of any experimental product of the Company or any
Company Subsidiary, infringes the rights of any other person. To the
best of the knowledge of the Company, the (x) use by the Company or a
Company Subsidiary of any of such Intellectual Property (y) the making,
producing, using or selling of any commercial product of the Company or
any Company Subsidiary, or (z) the making, producing, using or selling
of any experimental product of the Company or any Company Subsidiary,
does not infringe the rights of any other person. To the best knowledge
of the Company, none of such Intellectual Property is being infringed
upon by any other person. None of such Intellectual Property owned by
the Company or any Company Subsidiary and, to the best of Company's
knowledge, none of such Intellectual Property held or used by the
Company or any Company Subsidiary is subject to any outstanding
judgment, order, writ, injunction, or decree of any Governmental Entity,
or any agreement, arrangement, or understanding, written or oral,
restricting the scope or use thereof. To the best knowledge of the
Company, other than as identified on Schedule 3.15 the conduct of the
Company's and the Subsidiaries' businesses at any time prior to the
Closing Date did not, and the conduct of such businesses on a basis
consistent with past practice as of the Closing Date will not, infringe
upon or otherwise misappropriate any Intellectual Property of any other
person.
(c) The Company has provided Parent with a complete copy of the
option/license agreement (the "Option/License Agreement") between
Advanced Genetic Sciences, Inc. ("AGS") and Garching Instruments
("Garching"), which has not been amended or supplemented except to the
extent indicated in the correspondence identified in Schedule 3.18-1.
Schedule 3.18-1 is a complete list of all correspondence between the
Company and Garching defining royalty rates under the Option/License
Agreement. To the best of the Company's knowledge, the Option/License
Agreement is in full force and effect, and is enforceable by the
Company. To the best of the Company's knowledge and belief, Garching
was duly authorized by the Max-Planck Institute to enter the
Option/License Agreement on Max-Planck's behalf with AGS. The Company
has made all required royalty payments in a timely manner to Garching
pursuant to the Option/License Agreement. The Company exercised its
option under the Option/License Agreement by providing Garching with
written notice of same, and now is licensed under that agreement. The
Company has made available to Parent's counsel copies of all
correspondence between Max-Planck or Garching on the one hand, and the
Company or AGS on the other. To the best of the Company's knowledge and
belief, there exist only five licenses under the Max-Planck technology
that is the subject of the Option/License Agreement. To the best of the
Company's knowledge and belief, the licensees are Hoechst, Bayer, Plant
Genetic Systems, Keygene and the Company. The only sublicensee under
the Company's Option/License Agreement is Hilleshog. To the best of the
Company's knowledge and belief, there are no patents or patent
applications owned by Max-Planck which dominate the patents or patent
applications licensed to AGS in the Option/License Agreement. AGS is a
wholly owned subsidiary of the Company. By change of name AGS is now
known as DNA Plant Technologies, Inc., which name has been changed to
DNAP Technologies, Inc. To the best of the Company's knowledge and
belief, none of the motions filed by the parties to the interference
proceedings involving the Max-Planck transformation technology has yet
been decided by the United States Patent and Trademark Office. To the
best of the Company's knowledge and belief, Max-Planck has a priority
position in connection with Max-Planck's transformation technology
patent filings (corresponding to the filings that are the subject of the
interference proceedings referenced in the preceding sentence) in
Europe, Australia, Israel and Japan. To the best of the Company's
knowledge and belief, the contract between Gent University and Monsanto
provided to Bionova U.S. or its counsel by the Company, which contract
was filed in the above-referenced interference proceedings, does not in
any way reduce the rights of the Company pursuant to the Option/License
Agreement.
(d) Schedule 3.18-2 is a complete list of all of the Company's
research or license agreements in which the Company is the licensee. To
the best of the Company's knowledge, each of the agreements listed in
Schedule 3.18-2 is valid and subsisting and is enforceable by the
Company (except as the enforceability thereof may be limited by
bankruptcy, insolvency, bank moratorium or similar laws affecting
creditors' rights generally and laws restricting the availability of
equitable remedies and may be subject to general principles of equity
whether or not such enforceability is considered in a proceeding at law
or equity), and none of these agreements has been amended or
supplemented to include terms or conditions not disclosed to Bionova
U.S. To the best of the Company's knowledge, the Company is not in
material breach of the agreements identified in Schedule 3.18-2 except
as noted in Schedule 3.15.
(e) Schedule 3.18-3 is a complete list of all license agreements
of the Company's Transwitch Technology. The Company's Transwitch
patents were developed without the use of any government grant, and the
Company has no obligation to assign or license the Transwitch technology
to any governmental entity. To the best of the Company's knowledge and
belief, Townsend & Townsend has no documents relating to the Transwitch
patents and pending patent applications other than documents that are
part of the U.S. Patent and Trademark Office file histories, or
correspondence with the Company. To the best of the Company's knowledge
and belief, all of the Company's patents are valid, and the Company's
Transwitch patents cover sense suppression technology as claimed in the
patents.
(f) The Confidential Settlement Agreement between the Company
and Monsanto relating to the suit brought by Monsanto against the
Company in the District of Delaware, C.A. No. 95-278 LON, does not
change or alter any of the material terms of the Consent Judgment
entered in that action except as noted in Schedule 3.18-4, which
schedule will be prepared in a manner consistent with the requirements
of such Confidential Settlement Agreement.
3.19 Permits. Except as set forth in Schedule 3.19, (i) the Company
and the Company Subsidiaries hold all the Permits materially necessary or
required for the conduct of the business of the Company and the Company
Subsidiaries as currently conducted; (ii) each of such Permits is in full
force and effect, the Company and the Company Subsidiaries are in compliance
with all their obligations with respect thereto, and, to the best knowledge of
the Company, no event has occurred which permits, or with or without the
giving of notice or the passage of time or both would permit, the revocation
or termination of any thereof; and (iii) no notice has been issued by any
Governmental Entity and no Proceeding is pending or, to the best knowledge of
the Company, threatened with respect to any alleged failure by the Company and
the Company Subsidiaries to have any Permit the absence of which would have a
Company Material Adverse Effect.
3.20 Agreements.
(a) All agreements, arrangements, and understandings of any
nature (written or oral, formal or informal) (collectively, for purposes
of this Section, "agreements") to which the Company or any Company
Subsidiary is a party or by which the Company or any Company Subsidiary
or any of their respective properties is otherwise bound, that are
material to the business, assets, results of operations, condition
(financial or otherwise), or prospects of the Company and the Company
Subsidiaries considered as a whole, and that provide for annual payments
or receipts in excess of $100,000, are listed either in Part IV of the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1994 included in the SEC Filings or on Schedule 3.20.
(b) The Company has made available to Bionova U.S. accurate and
complete copies of the agreements listed in Part IV of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1994
and on Schedule 3.20. Each of such agreements is a valid and binding
agreement of the Company and the Company Subsidiaries (to the extent
each is a party thereto) and (to the best knowledge of the Company) the
other party or parties thereto, enforceable against the Company and the
Company Subsidiaries (to the extent each is a party thereto) and (to the
best knowledge of the Company) such other party or parties in accordance
with its terms, except that such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, and
similar laws affecting creditors' rights generally, (ii) fiduciary
obligations under the laws of the jurisdiction of its incorporation,
(iii) equitable principles which may limit the availability of certain
equitable remedies (such as specific performance) in certain instances,
and (iv) public policy considerations with respect to the enforceability
of rights of indemnification. Neither the Company nor any Company
Subsidiary is in breach of or in default under, nor has any event
occurred which (with or without the giving of notice or the passage of
time or both) would constitute a default by the Company or any Company
Subsidiary under, any material provision of any of such agreements, and
neither the Company nor any Company Subsidiary has received any notice
from, or given any notice to, any other party indicating that the
Company or any Company Subsidiary is in breach of or in default under
any of such agreements. To the best knowledge of the Company, no other
party to any of such agreements is in material breach of or in material
default under such agreements, nor has any assertion been made by the
Company or any Company Subsidiary of any such breach or default.
(c) Neither the Company nor any Company Subsidiary has received
notice of any plan or intention of any other party to any agreement to
exercise any right of offset with respect to, or any right to cancel or
terminate, any agreement, and neither the Company nor any Company
Subsidiary knows of any fact or circumstance that would justify the
exercise by any such other party of such a right other than the
automatic termination of such agreement in accordance with its terms.
Neither the Company nor any Company Subsidiary currently contemplates,
or has reason to believe any other person currently contemplates, any
amendment or change to any agreement, which amendment or change could
have a Company Material Adverse Effect.
3.21 ERISA.
(a) Set forth on Schedule 3.21 is a list identifying each
"employee benefit plan", as defined in Section 3(3) of ERISA, (i) which
is subject to any provision of ERISA, (ii) which is maintained,
administered, or contributed to by the Company or any affiliate of the
Company, and (iii) which covers any employee or former employee of the
Company or any affiliate of the Company or under which the Company or
any affiliate of the Company has any liability. The Company has
delivered to Bionova U.S. accurate and complete copies of such plans
(and, if applicable, the related trust agreements) and all amendments
thereto and written interpretations thereof, together with (i) the three
most recent annual reports (Form 5500 including, if applicable,
Schedule B thereto) prepared in connection with any such plan and
(ii) the most recent actuarial valuation report prepared in connection
with any such plan. Such plans are referred to in this Section as the
"Employee Plans". For purposes of this Section only, an "affiliate" of
any person means any other person which, together with such person,
would be treated as a single employer under Section 414 of the Code.
The only Employee Plans which individually or collectively would
constitute an "employee pension benefit plan" as defined in Section 3(2)
of ERISA are identified as such on Schedule 3.21.
(b) Except as otherwise identified on Schedule 3.21, (i) no
Employee Plan constitutes a "multiemployer plan", as defined in
Section 3(37) of ERISA (for purposes of this Section, a "Multiemployer
Plan"), (ii) no Employee Plan is maintained in connection with any trust
described in Section 501(c)(9) of the Code, (iii) no Employee Plan is
subject to Title IV of ERISA or to the minimum funding standards of
ERISA and the Code, and (iv) during the past five years, neither the
Company nor any of its affiliates have made or been required to make
contributions to any Multiemployer Plan. There are no accumulated
funding deficiencies as defined in Section 412 of the Code (whether or
not waived) with respect to any Employee Plan. The fair market value of
the assets held with respect to each Employee Plan that is a defined
benefit plan and employee pension benefit plan, as defined in
Section 3(2) of ERISA, exceeds the actuarially determined present value
of all benefit liabilities accrued under such Employee Plan (whether or
not vested) determined using reasonable actuarial assumptions. Neither
the Company nor any affiliate of the Company has incurred any material
liability under Title IV of ERISA arising in connection with the
termination of, or complete or partial withdrawal from, any plan covered
or previously covered by Title IV of ERISA. The Company and all of the
affiliates of the Company have paid and discharged promptly when due all
liabilities and obligations arising under ERISA or the Code of a
character which if unpaid or unperformed might result in the imposition
of a lien against any of the assets of the Company or any Subsidiary.
To the knowledge of the Company, nothing done or omitted to be done and
no transaction or holding of any asset under or in connection with any
Employee Plan has or will make the Company or any Subsidiary or any
director or officer of the Company or any Subsidiary subject to any
liability under Title I of ERISA or liable for any Tax pursuant to
Section 4975 of the Code that could have a Company Material Adverse
Effect. To the knowledge of the Company, there are no threatened or
pending claims by or on behalf of the Employee Plans, or by any
participant therein, alleging a breach or breaches of fiduciary duties
or violations of Applicable Laws which could result in liability on the
part of the Company, its officers or directors, or such Employee Plans,
under ERISA or any other Applicable Law and there is no basis for any
such claim.
(c) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified
since the date of its adoption, and each trust forming a part thereof is
exempt from Tax pursuant to Section 501(a) of the Code. Set forth on
Schedule 3.21 is a list of the most recent IRS determination letters
with respect to any such Plans, accurate and complete copies of which
letters have been delivered to Bionova U.S. To the best of the
Company's knowledge, each Employee Plan has been maintained in
compliance with its terms and with the requirements prescribed by all
Applicable Laws, including but not limited to ERISA and the Code, which
are applicable to such Plans.
(d) There is set forth on Schedule 3.21 a list of each
employment, severance, or other similar contract, arrangement, or policy
and each plan or arrangement (written or oral) providing for insurance
coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, retirement benefits, deferred compensation, profit-
sharing, bonuses, stock options, stock appreciation rights, or other
forms of incentive compensation or post-retirement insurance,
compensation, or benefits which (i) is not an Employee Plan, (ii) is
entered into, maintained, or contributed to, as the case may be, by the
Company or any affiliate of the Company, and (iii) covers any employee
or former employee of the Company or any affiliate of the Company or
under which the Company or any affiliate of the Company has any
liability. Such contracts, plans, and arrangements as are described in
the preceding sentence are referred to for purposes of this Section as
the "Benefit Arrangements". Each Benefit Arrangement has been
maintained in substantial compliance with its terms and with the
requirements prescribed by Applicable Laws.
(e) To the best of the Company's knowledge, neither the Company
nor any affiliate of the Company has performed any act or failed to
perform any act, and there is no contract, agreement, plan, or
arrangement covering any employee or former employee of the Company or
any affiliate of the Company, that, individually or collectively, could
give rise to the payment of any amount that would not be deductible
pursuant to the terms of Section 162(a)(1) or 280G of the Code, or could
give rise to any penalty or excise Tax pursuant to Section 4980B or 4999
of the Code.
(f) Except as disclosed on Schedule 3.21, there has been no
amendment, written interpretation, or announcement (whether or not
written) by the Company or any affiliate of the Company of or relating
to, or change in employee participation or coverage under, any Employee
Plan or Benefit Arrangement which would increase materially the expense
of maintaining such Employee Plan or Benefit Arrangement above the level
of the expense incurred in respect thereof for the fiscal year ended
December 31, 1994.
3.22 Environmental Matters.
(a) Except as disclosed in the SEC Filings filed prior to the
date hereof or as previously disclosed on Schedule 3.22 and except for
matters that in the aggregate would not have a Company Material Adverse
Effect:
(i) the properties, operations, and activities of the
Company and the Company Subsidiaries comply with all Applicable
Environmental Laws (as defined below);
(ii) the Company and the Company Subsidiaries and the
properties, operations, and activities of the Company and the
Company Subsidiaries are not subject to any existing, pending, or,
to the best knowledge of the Company, threatened Proceeding under,
or to any remedial obligations under, any Applicable Environmental
Laws;
(iii) all Permits, if any, required to be obtained by the
Company or any Company Subsidiary under any Applicable
Environmental Laws in connection with any aspect of the business
of the Company or the Company Subsidiaries, including without
limitation those relating to the treatment, storage, disposal, or
release of a hazardous material (as defined below), have been duly
obtained and are in full force and effect, and the Company and the
Company Subsidiaries are in compliance with the terms and
conditions of all such Permits;
(iv) the Company and the Company Subsidiaries have
satisfied and are currently in compliance with all financial
responsibility requirements applicable to their respective
operations and imposed by any Governmental Entity under any
Applicable Environmental Laws, and the Company and the Company
Subsidiaries have not received any notice of noncompliance with
any such financial responsibility requirements;
(v) to the best knowledge of the Company, there are no
physical or environmental conditions existing on any property
owned or leased by the Company or any Company Subsidiary or
resulting from the Company's or any Company Subsidiary's
operations or activities, past or present, at any location, that
would give rise to any on-site or off-site remedial obligations
under any Applicable Environmental Laws;
(vi) to the best knowledge of the Company, since the
effective date of the relative requirements of Applicable
Environmental Laws, all hazardous materials generated by the
Company or any Company Subsidiary or used in connection with their
respective properties, operations, or activities have been
transported only by carriers authorized under Applicable
Environmental Laws to transport such materials, and have been
disposed of only at treatment, storage, and disposal facilities
authorized under Applicable Environmental Laws to treat, store, or
dispose of such materials, and, to the best knowledge of the
Company, such carriers and facilities have been and are operating
in compliance with such authorizations and are not the subject of
any existing, pending, or threatened Proceeding in connection with
any Applicable Environmental Laws;
(vii) there has been no exposure of any person or property
to hazardous materials, nor has there been any release of
hazardous materials into the environment, by the Company or any
Company Subsidiary or in connection with their respective
properties, operations, or activities that could reasonably be
expected to give rise to any claim for damages or compensation;
and
(viii) the Company and the Company Subsidiaries shall
make available to Bionova U.S. all internal and external
environmental audits and studies and all correspondence on
substantial environmental matters in the possession of the Company
and the Company Subsidiaries relating to any of the current or
former properties, operations, or activities of the Company and
the Company Subsidiaries, provided that the Company and the
Company Subsidiaries shall not be required to make available any
such audits, studies, or correspondence that may be subject to the
attorney-client privilege or similar privilege.
(b) For purposes of this Agreement, "Applicable Environmental
Laws" means any and all Applicable Laws pertaining to health, safety, or
the environment in effect in any and all jurisdictions in which the
Company or any Company Subsidiary has conducted operations or activities
or owned or leased property, including, without limitation, the Clear
Air Act, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Rivers and
Harbors Act of 1899, as amended, the Federal Water Pollution Control
Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, the Resource Conservation and Recovery Act of 1976, as amended,
the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, the Hazardous Materials Transportation Act, as
amended, and other environmental conservation or protection laws. For
purposes of this Agreement, the term "hazardous material" means (i) any
substance that now or in the future is defined as a hazardous or toxic
material, waste or substance or solid waste or is regulated, governed
by, or the Handling (defined below) of which requires investigation,
removal, remediation or cleanup by any Governmental Entity or under any
Applicable Environmental Laws, or any amendment thereto, (ii) any
substance which is listed or defined as a hazardous substance, hazardous
constituent, or solid waste pursuant to any Applicable Environmental
Laws, (iii) petroleum (including crude oil and any fraction thereof),
natural gas, and natural gas liquids, and (iv) any substance that is
otherwise toxic, explosive, ignitable, corrosive, reactive, flammable,
infectious, mutagenic, radioactive, carcinogenic, a pollutant or
contaminant, dangerous or otherwise hazardous, including polychlorinated
biphenyls (PCBs), asbestos, radon or urea formaldehyde. For purposes of
this Agreement, the term "Handle," "Handled," or "Handling" shall mean
any installation, handling, generation, storing, treatment, use,
disposal, discharge, release, manufacture, refinement, processing,
production, presence, migration, emission, abatement, removal,
remediation, transportation, or any other activity of any type in
connection with or involving Hazardous Materials. For purposes of this
Agreement, the term "Remedial Obligations" shall mean any and all
remedial obligations, whether on-site or off-site, incurred in
connection with the Handling of Hazardous Materials, including without
limitation, the obligations to monitor, investigate, remediate, remove,
abate and cleanup.
(c) The representations and warranties contained in this Section
would continue to be true and correct following disclosure to the
applicable Governmental Entities of all relevant facts, conditions, and
circumstances, if any, pertaining to the properties, operations, and
activities of the Company and the Company Subsidiaries.
3.23 Labor Relations.
(a) Except as disclosed on Schedule 3.23, (i) there are no
collective bargaining agreements or other labor union contracts
applicable to any employees to or by which the Company or any Company
Subsidiary is a party or is bound, no such agreement or contract has
been requested by any employee or group of employees of the Company or
any Company Subsidiary, and no discussions have occurred with respect
thereto by management of the Company or any Company Subsidiary with any
such employees; (ii) no employees of the Company or any Company
Subsidiary are represented by any labor organization, collective
bargaining representative, or group of employees; (iii) no labor
organization, collective bargaining representative, or group of
employees claims to represent a majority of the employees of the Company
or any Company Subsidiary in an appropriate unit of the Company or any
Company Subsidiary; (iv) neither the Company nor any Company Subsidiary
is aware of or involved with any representational campaign or other
organizing activities by any union or other organization or group
seeking to become the collective bargaining representative of any of its
employees; (v) neither the Company nor any Company Subsidiary is
obligated to bargain collectively with respect to wages, hours, and
other terms and conditions of employment with any recognized or
certified labor organization, collective bargaining representative, or
group of employees; and (vi) neither the Company nor any Company
Subsidiary is aware of any strikes, work stoppages, work slowdowns, or
lockouts or any threats thereof by or with respect to any of its
employees, and since December 31, 1990, there have been no labor
disputes, strikes, work stoppages, work slowdowns, lockouts, or similar
matters involving any such employees.
(b) The Company and the Company Subsidiaries are in compliance
with all Applicable Laws pertaining to employment and employment
practices and wages, hours, and other terms and conditions of employment
in respect of their respective employees, except for noncompliance with
such Applicable Laws which does not and will not have a Company Material
Adverse Effect, and have no accrued liability for any arrears of wages
or any Taxes or penalties for failure to comply with any thereof. The
Company and the Company Subsidiaries are not engaged in any unfair labor
practices or unlawful employment practices. There is no pending or, to
the best knowledge of the Company, threatened Proceeding against or
involving the Company or any Company Subsidiary by or before, and
neither the Company nor any Company Subsidiary is subject to any
judgment, order, writ, injunction, or decree of or inquiry from, the
National Labor Relations Board, the Equal Employment Opportunity
Commission, the Department of Labor, or any other Governmental Entity in
connection with any current, former, or prospective employee of the
Company or any Company Subsidiary.
3.24 Employees. Set forth on Schedule 3.24 is a list of:
(a) all directors and officers of the Company and the Company
Subsidiaries, and
(b) the name, social security number, and dates of employment by
the Company and the Company Subsidiaries of each employee, and
consultant of the Company and the Company Subsidiaries, whose annual
rate of cash compensation in the 1995 fiscal year will equal or exceed
$50,000, together with the total amounts of salary, bonuses, and other
cash compensation paid or payable by the Company and the Company
Subsidiaries to each such person for such fiscal year. Except as set
forth on Schedule 3.24, the Company has not materially altered any such
compensation arrangements since the end of the 1995 fiscal year, and the
Company does not have any material non-cash compensation arrangements in
favor of its employees.
Except as disclosed on Schedule 3.24, no severance payment, stay-on or
incentive payment, or similar obligation will be owed by the Company and the
Company Subsidiaries to any of their respective directors, officers, or
employees upon consummation of, or as a result of, the transactions
contemplated by this Agreement, nor will any such director, officer, or
employee be entitled to an increase in severance payments or other benefits as
a result of the transactions contemplated by this Agreement in the event of
the subsequent termination of his or her employment.
3.25 Confidentiality Matters. Each of the Company and the Company
Subsidiaries has taken reasonable measures to maintain the confidentiality of
any secret, confidential, or proprietary information relating to the Company
or any Company Subsidiary or its business including written confidentiality
agreements with their respective employees.
3.26 Insurance. Listed on Schedule 3.26 are the policies of insurance
maintained by the Company and the Company Subsidiaries with respect to their
respective assets and operations. All premiums due and payable with respect
to such policies have been timely paid. No notice of cancellation of, or
indication of an intention not to renew, any such policy has been received by
the Company or its Subsidiaries. During the past three years, no application
by the Company and its Subsidiaries for insurance with respect to their assets
or operations has been denied for any reason.
3.27 Insider Interests. Except as disclosed in the SEC Filings, no
event has occurred that would be required to be reported by the Company as a
Certain Relationship or Related Transaction pursuant to Item 404 of Regulation
S-K promulgated by the Securities and Exchange Commission.
3.28 Offerings of Securities. All securities which have been offered
or sold by the Company or any Subsidiary have been registered pursuant to the
Securities Act and applicable state securities laws or were offered and sold
pursuant to valid exemptions therefrom. No registration statement,
prospectus, private offering memorandum, or other information furnished
(whether in writing or orally) to any offeree or purchaser of such securities,
at the time such registration statement became effective (in the case of a
registered offering) or at the time of delivery of such registration
statement, prospectus, private offering memorandum, or other information,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. To the extent that any such securities were
registered under the Securities Act, the applicable registration statements
and prospectuses filed with the Securities and Exchange Commission pursuant to
the Securities Act, at the time each such registration statement became
effective, and at all times when delivery of a prospectus was required
pursuant to the Securities Act, complied in all material respects with the
requirements of the Securities Act and the rules and regulations thereunder.
3.29 Brokerage Fees. Neither the Company nor any of its affiliates has
retained any financial advisor, broker, agent, or finder or paid or agreed to
pay any financial advisor, broker, agent, or finder on account of this
Agreement or any transaction contemplated hereby except that Piper Jaffray,
Inc. and BioScience Securities have been retained as the Company's financial
advisors in connection with the transactions contemplated hereby. The Company
shall indemnify and hold harmless Bionova U.S. from and against any and all
losses, claims, damages, and liabilities (including legal and other expenses
reasonably incurred in connection with investigating or defending any claims
or actions) with respect to any finder's fee, brokerage commission, or similar
payment in connection with any transaction contemplated hereby asserted by any
person on the basis of any act or statement made or alleged to have been made
by the Company or any of its affiliates.
3.30 Disclosure. No representation or warranty made by the Company in
this Agreement, and no statement of the Company contained in any document,
certificate, or other writing furnished or to be furnished by the Company
pursuant hereto or in connection herewith, contains or will contain, at the
time of delivery, any untrue statement of a material fact or omits or will
omit, at the time of delivery, to state any material fact necessary in order
to make the statements contained therein, in light of the circumstances under
which they are made, not misleading.
3.31 Disclosure Documents. None of the information relating to the
Company or its subsidiaries, this Agreement, or the transactions contemplated
by this Agreement which has been or is to be supplied by the Company for
inclusion in, or which has been or is to be incorporated by reference from SEC
Filings of the Company in, (a) the Registration Statement, (b) the Proxy
Statement, and (c) any other documents to be filed with any regulatory
authority by the Company, Parent or their respective subsidiaries in
connection with the transactions contemplated by this Agreement, at the
respective time such document is filed, becomes effective, or is first mailed
to stockholders, or at the Effective Time, as the case may be, will be false
or misleading with respect to any material fact, or will omit to state any
material fact necessary in order to make the statements therein not
misleading, or, in the case of the Proxy Statement, at the time of the Special
Meeting, will be false or misleading with respect to any material fact, or
will omit to state any material fact necessary in order to make the statements
therein not misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the Special
Meeting. All documents required to be filed by the Company and its
subsidiaries in connection with the Merger will comply as to form in all
material respects with the applicable requirements of the statutes, rules, and
regulations pursuant to which they are filed. No representations are made in
this Section with respect to any information included or incorporated by
reference in the Registration Statement, the Proxy Statement, or any other
document referred to in clause (c) of the first sentence of this Section which
relates to Parent or its subsidiaries.
3.32 Representations and Warranties on Closing Date. The
representations and warranties made in this Article III will be true and
correct on and as of the Closing Date with the same force and effect as if
such representations and warranties had been made on and as of the Closing
Date, except that any such representations and warranties which expressly
relate only to an earlier date shall be true and correct on the Closing Date
as of such earlier date.
3.33 Receivables. All receivables (including accounts and notes
receivable, employee advances, and accrued receivables) of the Company as
reflected in the Company's most recent consolidated financial statements
presented in the SEC Filings or arising since the date thereof are, to the
best of the Company's knowledge, valid obligations of the respective makers
thereof, have arisen in the ordinary course of business for goods and services
delivered or rendered, are not subject to any valid defenses, counterclaims,
or set offs, and have been collected or are, to the best of the Company's
knowledge, collectible in full at their recorded amounts in the ordinary
course of business, net of doubtful accounts reserved for in such financial
statements.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
REGARDING PARENT, BIONOVA MEXICO, BIONOVA U.S. AND SUB
Each of Parent, Bionova Mexico, Bionova U.S., and Sub represent and
warrant to the Company that:
4.1 Corporate Organization.
(a) Parent is a corporation duly organized and validly existing
under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and corporate authority to own, lease, and
operate its properties and to carry on its business as now being
conducted. No actions or proceedings to dissolve Parent are pending or,
to the best knowledge of Parent, threatened.
(b) Bionova Mexico is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and corporate authority to own, lease, and
operate its properties and to carry on its business as now being
conducted. No actions or proceedings to dissolve Bionova Mexico are
pending or, to the best knowledge of Bionova Mexico, threatened.
(c) Bionova U.S. 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 corporate
authority to own, lease, and operate its properties and to carry on its
business as now being conducted. No actions or proceedings to dissolve
Bionova U.S. are pending or, to the best knowledge of Bionova U.S.,
threatened.
(d) Sub 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 corporate authority to own,
lease, and operate its properties and to carry on its business as now
being conducted. Other than as contemplated by this Agreement and the
Ancillary Documents, no actions or proceedings to dissolve Sub are
pending or, to the best knowledge of Sub, threatened.
4.2 Qualification. Each of Parent, Bionova Mexico, Bionova U.S. and
Sub is duly qualified or licensed to do business as a foreign corporation and
each of Parent, Bionova U.S. and Sub is in good standing in each of the
jurisdictions set forth opposite its name on Schedule 4.2, which are all the
jurisdictions in which the property owned, leased, or operated by it or the
conduct of its business requires such qualification or licensing, except
jurisdictions in which the failure to be so qualified or licensed would not,
individually or in the aggregate, have a Bionova Group Material Adverse
Effect.
4.3 Charter and Bylaws. Bionova U.S. has delivered to the Company
accurate and complete copies of (i) the estatutos sociales of each of Parent
and Bionova Mexico as currently in effect and (ii) the charter and bylaws of
each of Bionova U.S. and Sub as currently in effect, which charter and bylaws
are attached hereto as Schedule 4.3. Neither Parent, Bionova Mexico, Bionova
U.S. nor Sub is in violation of any provisions of its organizational
documents.
4.4 Authority Relative to This Agreement. Each of Parent, Bionova
Mexico, Bionova U.S., and Sub has full corporate power and corporate authority
to execute, deliver, and perform this Agreement and the Ancillary Documents to
which it is a party and to consummate the transactions contemplated hereby and
thereby. The execution, delivery, and performance by each of them of this
Agreement and the Ancillary Documents to which it is a party, and the
consummation by it of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary corporate action of Parent, Bionova
Mexico, Bionova U.S., and Sub, as the case may be. This Agreement has been
duly executed and delivered by each of Parent, Bionova Mexico, Bionova U.S.,
and Sub and constitutes, and each Ancillary Document executed or to be
executed by each of them has been, or when executed will be, duly executed and
delivered by each of them and constitutes, or when executed and delivered will
constitute, a valid and legally binding obligation of each of them,
enforceable against each of them in accordance with their respective terms,
except that such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting creditors'
rights generally, (ii) fiduciary obligations under the laws of its
jurisdiction of incorporation, (iii) equitable principles which may limit the
availability of certain equitable remedies (such as specific performance) in
certain instances, (iv) public policy considerations with respect to the
enforceability of rights of indemnification, and (v) priority claims under
Mexican law with respect to labor claims, taxes, social security payments,
retirement funds, housing funds and similar items.
4.5 Noncontravention. The execution, delivery, and performance, as
the case may be, by each of Parent, Bionova Mexico, Bionova U.S., and Sub of
this Agreement and the Ancillary Documents to which it is a party and the
consummation by it of the transactions contemplated hereby and thereby do not
and will not, subject to any consents, waivers or approvals to be effective at
the Closing Date and as may be listed on Schedule 4.5, (i) conflict with or
result in a violation of any provision of the organizational documents of such
company or any member of the Bionova Group, (ii) conflict with or result in a
violation of any provision of, or constitute (with or without the giving of
notice or the passage of time or both) a default under, or give rise (with or
without the giving of notice or the passage of time or both) to any right of
termination, cancellation, or acceleration under, or require any consent,
approval, authorization, or waiver of any party to, any material bond,
debenture, note, mortgage, indenture, lease, contract, agreement, or other
instrument or obligation to which such company or any member of the Bionova
Group is a party or by which such companies or any of their respective
properties may be bound, (iii) result in the creation or imposition of any
Encumbrance upon the properties of Parent, Bionova Mexico, Bionova U.S., Sub
or any member of the Bionova Group, or (iv) assuming compliance with the
matters referred to in Section 4.6, violate any Applicable Law binding upon
Parent, Bionova Mexico, Bionova U.S., Sub or any member of the Bionova Group.
4.6 Governmental Approvals. No consent, approval, order, or
authorization of, or declaration, filing, or registration with, any
Governmental Entity is required to be obtained or made by Parent, Bionova
Mexico, Bionova U.S., or Sub in connection with the execution, delivery, or
performance by Parent, Bionova Mexico, Bionova U.S. or Sub of this Agreement
and the Ancillary Documents to which it is a party or the consummation by it
of the transactions contemplated hereby or thereby, other than (i) compliance
with any applicable requirements of the HSR Act and necessary filings with the
Mexican Competition Commission; (ii) compliance with any applicable
requirements of the Securities Act; (iii) compliance with any applicable
requirements of the Exchange Act; (iv) compliance with any applicable state
securities laws; (v) filings with Governmental Entities to occur in the
ordinary course following the consummation of the transactions contemplated
hereby, including without limitation the filing of a Certificate of Merger
with the Secretary of State of Delaware, the filing of a notice with the
Mexican Foreign Investment Registry, the filing of a notice with the Mexican
Agrarian Registry, and the filing of a notice with the Mexican Tax
authorities; and (vi) such consents, approvals, orders, or authorizations
which, if not obtained, and such declarations, filings, or registrations
which, if not made, would not, individually or in the aggregate, have a
Bionova Group Material Adverse Effect.
4.7 Legal Proceedings. There are no Proceedings pending or, to the
best knowledge of Parent, Bionova Mexico, Bionova U.S. or Sub, threatened
seeking to restrain, prohibit, or obtain damages or other relief in connection
with this Agreement or the transactions contemplated hereby.
4.8 Brokerage Fees. Neither Parent, Bionova Mexico, Bionova U.S. nor
Sub nor any of their affiliates has retained any financial advisor, broker,
agent, or finder or paid or agreed to pay any financial advisor, broker,
agent, or finder on account of this Agreement or any transaction contemplated
hereby except that J.P. Morgan Securities, Inc. has been retained as Parent's
financial advisor in connection with the transactions contemplated hereby.
Parent shall indemnify and hold harmless the Company from and against any and
all losses, claims, damages, and liabilities (including legal and other
expenses reasonably incurred in connection with investigating or defending any
claims or actions) with respect to any finder's fee, brokerage commission, or
similar payment in connection with any transaction contemplated hereby
asserted by any person on the basis of any act or statement made or alleged to
have been made by Bionova U.S. or any of its affiliates.
4.9 Stock Ownership of Bionova Mexico, Bionova U.S. and Sub.
(a) All the outstanding capital stock of Bionova Mexico (except
for four shares owned by affiliates of Parent) is owned directly by
Parent.
(b) The authorized capital stock of Bionova U.S. is reflected in
the charter thereof attached as part of Schedule 4.3. As of the date
hereof, 25,000 shares of Common Stock, $.01 par value, of Bionova U.S.
are issued and outstanding. All of such shares are owned directly by
Bionova Mexico, free and clear of all Encumbrances. All of such shares
have been validly issued and are fully paid and nonassessable. No
shares of capital stock of Bionova U.S. are subject to, nor have any
been issued in violation of, preemptive or similar rights. Except (w)
for the 25,000 shares outstanding as of the date hereof as set forth in
this Section 4.9(b), (x) such shares as shall be issued to Bionova
Mexico on the Closing Date as contemplated by Section 1.11(d), (y) such
shares as shall be issued as a result of the Merger as contemplated by
Section 2.1, and (z) such shares as may be issued in connection with the
exercise of those options and warrants to be assumed by Bionova U.S. as
contemplated by Section 2.5 and Section 2.6, there are (and as of the
Closing Date there will be) outstanding (i) no shares of capital stock
or other voting securities of Bionova U.S., (ii) no securities of
Bionova U.S. convertible into or exchangeable for shares of capital
stock or other voting securities of Bionova U.S., (iii) no options,
warrants or other rights (including preemptive rights) to acquire from
Bionova U.S., and no obligation of Bionova U.S. to issue or sell, any
shares of capital stock or other voting securities of Bionova U.S. or
any securities of Bionova U.S. convertible into or exchangeable for such
capital stock or voting securities, and (iv) no equity equivalents,
interests in the ownership or earnings, or other similar rights of or
with respect to Bionova U.S.
(c) The authorized capital stock of Sub is reflected in the
charter thereof attached as part of Schedule 4.3. As of the date
hereof, 1,000 shares of Common Stock, $.01 par value, of Sub are issued
and outstanding. All of such shares are owned directly by Bionova U.S.,
free and clear of all Encumbrances. All of such shares have been
validly issued and are fully paid and nonassessable. No shares of
capital stock of Sub are subject to, nor have any been issued in
violation of, preemptive or similar rights. Except (x) for the 1,000
shares outstanding as of the date hereof as set forth in this Section
4.9(c), and (y) as provided in Section 2.1(e), there are (and as of the
Closing Date there will be) outstanding (i) no shares of capital stock
or other voting securities of Sub, (ii) no securities of Sub convertible
into or exchangeable for shares of capital stock or other voting
securities of Sub, (iii) no options, warrants or other rights (including
preemptive rights) to acquire from Sub, and no obligation of Sub to
issue or sell, any shares of capital stock or other voting securities of
Sub or any securities of Sub convertible into or exchangeable for such
capital stock or voting securities, and (iv) no equity equivalents,
interests in the ownership or earnings, or other similar rights of or
with respect to Sub.
4.10 Parent Securities Filings.
(a) Parent has filed with the Securities and Exchange Commission
and the Comision Nacional Bancaria y de Valores, as the case may be, all
forms, reports, schedules, statements, and other documents required to
be filed by it under the Securities Act, the Exchange Act, and all other
U.S. federal and Mexican securities laws. All such forms, reports,
schedules, statements, and other documents (including all amendments
thereto) filed by Parent with the Securities and Exchange Commission or
the Comision Nacional Bancaria y de Valores are herein collectively
referred to as the "Filings." Parent has delivered to or made available
for inspection by the Company accurate and complete copies of all the
Filings in the form filed by Parent with the Securities and Exchange
Commission or the Comision Nacional Bancaria y de Valores since December
31, 1992. The Filings, at the time filed, complied in all material
respects with all applicable requirements of United States or Mexican
securities laws, as the case may be. None of the Filings, including,
without limitation, any financial statements or schedules included
therein, at the time filed, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein
or necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, not misleading. All
material contracts of Parent have been included in the Filings, except
for those contracts not required to be filed pursuant to the rules and
regulations of the Securities and Exchange Commission or the Comision
Nacional Bancaria y de Valores.
(b) The audited consolidated financial statements and unaudited
consolidated interim financial statements of Parent included in the
Filings present fairly, in conformity with generally accepted accounting
principles in effect in Mexico or the United States (as specified
therein) applied on a consistent basis (except as may be indicated in
the notes thereto), the consolidated financial position of Parent as of
the dates thereof and its consolidated results of operations and cash
flows for the periods then ended (subject to normal year-end audit
adjustments in the case of any unaudited interim financial statements).
Parent shall deliver to the Company as soon as they become available
accurate and complete copies of all forms, reports, and other documents
furnished by it to its stockholders generally or filed by it with the
Securities and Exchange Commission or the Comision Nacional Bancaria y
de Valores subsequent to the date hereof and prior to the Closing Date.
4.11 Control. Except as set forth on Schedule 4.11, Bionova Mexico
controls each other member of the Bionova Group as of the date of this
Agreement (which includes the power on its own, without the joinder of any
other person, to direct all material decisions) and, assuming the
effectiveness of this Agreement and the transactions contemplated by it,
Bionova U.S. will so control such Bionova Group members after the Effective
Time.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
REGARDING THE BIONOVA GROUP
Parent, Bionova Mexico, Bionova U.S. and Sub represent and warrant to
the Company that:
5.1 Corporate Organization. Each member of the Bionova Group 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 corporate authority to own, lease, and operate its properties and to
carry on its business as now being conducted. No actions or proceedings to
dissolve any member of the Bionova Group are pending or, to the best knowledge
of Bionova U.S., threatened except as set forth on Schedule 5.1.
5.2 Qualification. Each member of the Bionova Group is duly qualified
or licensed to do business as a foreign corporation, and is in good standing,
in each of the jurisdictions set forth opposite its name on Schedule 5.2,
which are all the jurisdictions in which the property owned, leased, or
operated by it or the conduct of its business requires such qualification or
licensing, except jurisdictions in which the failure to be so qualified or
licensed would not, individually or in the aggregate, have a Bionova Group
Material Adverse Effect.
5.3 Charter and Bylaws. Bionova U.S. has delivered to the Company
accurate and complete copies of (i) the charter and bylaws (or other
organizational documents) of each member of the Bionova Group as currently in
effect, (ii) the stock records of each member of the Bionova Group, and (iii)
the minutes of all meetings of the respective Boards of Directors of each
member of the Bionova Group, any committees of such Boards, and the
stockholders of such companies (and all consents in lieu of such meetings).
Such records, minutes, and consents accurately reflect the stock ownership of
the Bionova Group and all actions taken by such Boards of Directors,
committees, and stockholders. As of the Closing Date, no member of the
Bionova Group will be in violation of any provision of its organizational
documents.
5.4 Capitalization of the Bionova Group. Except as set forth on
Schedule 5.4, no member of the Bionova Group owns, directly or indirectly, any
capital stock or other securities of any corporation or has any direct or
indirect equity or ownership interest in any other person, other than another
member of the Bionova Group. The jurisdiction of incorporation and authorized
and outstanding capital stock of each member of the Bionova Group is set forth
on Schedule 5.4. The ownership of the outstanding capital stock of each
member of the Bionova Group is also set forth on Schedule 5.4. All
outstanding shares of capital stock of the Bionova Group have been validly
issued and are fully paid and nonassessable, and no shares of capital stock of
the Bionova Group are subject to, nor have any been issued in violation of,
preemptive or similar rights. All issuances, sales, and repurchases by the
Bionova Group of shares of its capital stock have been effected in compliance
with all Applicable Laws, including without limitation applicable securities
laws. Except as set forth above in this Section and set forth on Schedule
5.4, there are (and as of the Closing Date there will be) outstanding (i) no
shares of capital stock or other voting securities of the Bionova Group, (ii)
no securities of the Bionova Group convertible into or exchangeable for shares
of capital stock or other voting securities of the Bionova Group, (iii) no
options, warrants or other rights (including preemptive rights, except to the
extent such preemptive rights exist under Applicable Law) to acquire from the
Bionova Group, and no obligation of the Bionova Group to issue or sell, any
shares of capital stock or other voting securities of the Bionova Group or any
securities of the Bionova Group convertible into or exchangeable for such
capital stock or voting securities, and (iv) no equity equivalents, interests
in the ownership or earnings, or other similar rights of or with respect to
the Bionova Group. Except as set forth on Schedule 5.4, there are (and as of
the Closing Date there will be) no outstanding obligations of the Bionova
Group to repurchase, redeem, or otherwise acquire any of the foregoing shares,
securities, options, equity equivalents, interests, or rights. Except as set
forth on Schedule 5.4, no member of the Bionova Group is a party to, or is
aware of, any voting agreement, voting trust, or similar agreement or
arrangement relating to any class or series of its capital stock.
5.5 Financial Statements. Bionova Mexico has delivered to the Company
accurate and complete copies of the Bionova Group's consolidated balance sheet
as of September 30, 1995, and the related consolidated statement of income for
the nine-month period then ended, as well as, for each material member of the
Bionova Group, such entity's consolidating balance sheet as of September 30,
1995, and the related consolidating statements of income and cash flow for the
nine-month period then ended (the "Bionova Group Financial Statements"). The
Bionova Group Financial Statements (i) represent actual bona fide
transactions, (ii) have been prepared from the books and records of the
Bionova Group in conformity with generally accepted accounting principles in
effect in Mexico or the United States, as the case may be, applied on a basis
consistent with preceding years throughout the periods involved, and (iii)
accurately, completely, and fairly present in all material respects the
Bionova Group's consolidated or consolidating financial position, as the case
may be, as of the date thereof and its consolidated or consolidating results
of operations and cash flows for the period then ended, as the case may be.
5.6 Absence of Undisclosed Liabilities. No member of the Bionova
Group has any material liability or obligation (whether accrued, absolute,
contingent, unliquidated, or otherwise, whether or not known to it, and
whether due or to become due), except (i) liabilities reflected on the Bionova
Group Financial Statements, (ii) liabilities which have arisen since the date
of the Bionova Group Financial Statements in the ordinary course of business
(none of which is a material liability for breach of contract, breach of
warranty, tort, or infringement), (iii) liabilities arising under executory
contracts entered into in the ordinary course of business (none of which is a
material liability for breach of contract), (iv) liabilities specifically set
forth on Schedule 5.6, and (v) other liabilities which, in the aggregate, are
not material to the Bionova Group considered as a whole.
5.7 Absence of Certain Changes. Except as disclosed on Schedule 5.7,
since September 30, 1995, (i) there has not been any change, development, or
effect, individually or in the aggregate, that has had, or might reasonably be
expected to have, a Bionova Group Material Adverse Effect; (ii) the business
of the Bionova Group has been conducted only in the ordinary course consistent
with past practice; (iii) no member of the Bionova Group has incurred any
material liability, engaged in any material transaction, or entered into any
material agreement outside the ordinary course of business consistent with
past practice; (iv) no member of the Bionova Group has suffered any material
loss, damage, destruction, or other casualty to any of its assets (whether or
not covered by insurance); and (v) no member of the Bionova Group has taken
any of the actions set forth in Section 6.2 except as permitted thereunder.
5.8 Tax Matters.
(a) Except as disclosed on Schedule 5.8:
(i) the Bionova Group has (and as of the Closing Date will
have) duly filed all material federal, state, local, and foreign
Tax Returns required to be filed by or with respect to it with the
IRS or other applicable Taxing authority, and no extensions with
respect to such Tax Returns have (or as of the Closing Date will
have) been requested or granted;
(ii) the Bionova Group has (and as of the Closing Date will
have) paid, or adequately reserved against in the Bionova Group
Financial Statements, all Taxes due, or claimed by any Taxing
authority to be due, from or with respect to it, except Taxes that
are being contested in good faith by appropriate legal proceedings
and for which adequate reserves have been set aside as disclosed
on Schedule 5.8;
(iii) there has been no issue raised or adjustment proposed
(and none is pending) by the IRS or any other Taxing authority in
connection with any of such Tax Returns;
(iv) the Bionova Group has (and as of the Closing Date will
have) made all deposits required with respect to Taxes;
(v) the federal income Tax Returns of the Bionova Group
have not been audited by the IRS; and
(vi) no waiver or extension of any statute of limitations
as to any federal, state, local, or foreign Tax matter has been
given by or requested from the Bionova Group.
5.9 Compliance With Laws. Except as disclosed on Schedule 5.9,
Bionova Mexico and the Bionova Group has complied in all material respects
with all Applicable Laws (including without limitation Applicable Laws
relating to securities, properties, business products, manufacturing
processes, advertising and sales practices, employment practices, terms and
conditions of employment, wages and hours, safety, occupational safety,
health, environmental protection, product safety, and civil rights) relating
to any material aspect of the Bionova Group's business. Neither Bionova
Mexico nor any member of the Bionova Group has received any written notice,
which has not been dismissed or otherwise disposed of, that it has not so
complied. Neither Bionova Mexico nor any member of the Bionova Group is
charged or, to the best knowledge of Bionova U.S., threatened with, or, to the
best knowledge of Bionova U.S., under investigation with respect to, any
violation of any Applicable Law relating to any aspect of the business of
Bionova Mexico or the Bionova Group.
5.10 Legal Proceedings. There are no Proceedings pending or, to the
best knowledge of Bionova Mexico and Bionova U.S., threatened against or
involving Bionova Mexico or the Bionova Group (or any of their respective
directors or officers in connection with the business or affairs of Bionova
Mexico or the Bionova Group) or any properties or rights of Bionova Mexico or
the Bionova Group except (i) as disclosed on Schedule 5.10, (ii) for any
Proceedings that pertain to routine claims by persons other than Governmental
Entities that are covered by insurance (subject to applicable insurance
deductibles), and (iii) for Proceedings which, individually or in the
aggregate, if prosecuted to judgment, would not have a Bionova Group Material
Adverse Effect. Neither Bionova Mexico nor any member of the Bionova Group is
subject to any judgment, order, writ, injunction, or decree of any
Governmental Entity which has had or is reasonably likely to have a Bionova
Group Material Adverse Effect. There are no Proceedings pending or, to the
best knowledge of Bionova Mexico or Bionova U.S., threatened seeking to
restrain, prohibit, or obtain damages or other relief in connection with this
Agreement or the transactions contemplated hereby.
5.11 Title to Properties. Each member of the Bionova Group has good
and indefeasible title, and in the case of real property located in the United
States of America insurable title, to all material properties (real, personal,
and mixed, tangible and intangible) it owns or purports to own, including
without limitation the properties reflected in its books and records and in
the Bionova U.S. Financial Statements, other than those disposed of after the
date of such balance sheet in the ordinary course of business consistent with
past practice, free and clear of all Encumbrances, except (i) as disclosed on
Schedule 5.11, and (ii) liens for Taxes not yet due and payable and (iii) such
imperfections or irregularities of title, if any, as (A) are not substantial
in character, amount, or extent and do not materially detract from the value
of the property subject thereto, (B) do not materially interfere with either
the present or intended use of such property, and (C) do not, individually or
in the aggregate, materially interfere with the conduct of the Bionova Group's
normal operations. Except as disclosed on Schedule 5.11, no financing
statement (or other instrument sufficient or effective as a financing
statement) under the Uniform Commercial Code or other comparable statute with
respect to any properties of the Bionova Group has been filed and is effective
in any jurisdiction, and no member of the Bionova Group has signed any such
financing statement (or other instrument) or any mortgage or security
agreement authorizing any secured party thereunder to file any such financing
statement (or other instrument).
5.12 Sufficiency and Condition of Properties. The material properties
owned, leased, or used by the Bionova Group's business are (i) in the case of
tangible properties, in good operating condition and repair (ordinary wear and
tear excepted) and have been maintained in accordance with standard industry
practice, (ii) suitable for the purposes used, and (iii) adequate and
sufficient for the normal operation of the Bionova Group's business, as
presently conducted. The members of the Bionova Group own or have a valid
leasehold interest in, or otherwise have a valid right to use, all such
properties. Such properties and their uses conform in all material respects
to all Applicable Laws, except for such minor variations as do not impair or
interfere with the use of such properties for the purposes for which they are
employed and Bionova U.S. has not, nor has any member of the Bionova Group,
received any notice to the contrary. All such tangible properties are in the
Bionova Group's possession or under their control.
5.13 Intellectual Property.
(a) Set forth on Schedule 5.13 is a list of all Intellectual
Property owned, held, or used by the Bionova Group. Schedule 5.13
specifies, as applicable: (i) the nature of such Intellectual Property;
(ii) the owner of such Intellectual Property; (iii) the jurisdictions by
or in which such Intellectual Property is recognized without regard to
registration or has been issued or registered or in which an application
for such issuance or registration has been filed, including the
respective registration or application numbers; and (iv) all licenses,
sublicenses, and other agreements to which any member of the Bionova
Group is a party and pursuant to which any member of the Bionova Group,
or any other person is authorized to use such Intellectual Property,
including the identity of all parties thereto, a description of the
nature and subject matter thereof, the applicable royalty, and the term
thereof.
(b) The listed Intellectual Property constitutes all
Intellectual Property necessary for the operation of the Bionova Group's
business as presently conducted. The Bionova Group has good and
indefeasible title to or is validly licensed to use all such
Intellectual Property, free from burdensome restrictions. Except as
noted in Schedule 5.13, each item of such Intellectual Property is in
full force and effect, the Bionova Group is in compliance with all its
obligations with respect thereto, and, to the best knowledge of Bionova
U.S., no event has occurred which permits, or upon the giving of notice
or the passage of time or otherwise would permit, revocation or
termination of any thereof. During the prosecution of the U.S. patents
listed on Schedule 5.13, the Bionova Group complied with its Rule 56
disclosure obligations. Other than as identified on Schedule 5.10,
there are no Proceedings pending or, to the best knowledge of Bionova
U.S., threatened against the Bionova Group asserting that the use by the
Bionova Group of any of such Intellectual Property infringes the rights
of any other person or seeking revocation, termination, or concurrent
use of any of such Intellectual Property, and there is, to the best
knowledge of the Bionova U.S., no basis for any such Proceeding. To the
best knowledge of the Bionova U.S., none of such Intellectual Property
is being infringed upon by any other person. None of such Intellectual
Property is subject to any outstanding judgment, order, writ,
injunction, or decree of any Governmental Entity, or any agreement,
arrangement, or understanding, written or oral, restricting the scope or
use thereof. Except as set forth on Schedule 5.13, to the best
knowledge of Bionova U.S., the conduct of the Bionova Group's business
at any time prior to the Closing Date did not, and the conduct of such
business on a basis consistent with past practice as of the Closing Date
will not, infringe upon or otherwise misappropriate any Intellectual
Property of any other person.
(c) To the best knowledge of Bionova Mexico and Bionova U.S.,
none of the Bionova Group's commercial products now in the marketplace
infringes any third-party utility patent, plant patent or plant
protection certificate. Schedule 5.13 sets forth a complete list of all
of the Bionova Group's research or license agreements in which a member
of the Bionova Group is a licensee. To the best knowledge of Bionova
Mexico and Bionova U.S., each of the agreements listed on Schedule 5.13
is valid and subsisting and is enforceable by the Bionova Group (except
as the enforceability thereof may be limited by bankruptcy, insolvency,
bank moratorium or similar laws affecting creditors' rights generally
and laws restricting the availability of equitable remedies and may be
subject to general principles of equity whether or not such
enforceability is considered in a proceeding at law or equity), and none
of these agreements has been amended or supplemented to include terms or
conditions not disclosed to the Company.
(d) As of the date of this Agreement, those members of the
Bionova Group using Parent's "Premier Selecion" and "Market Delight"
trademarks or tradenames have a royalty free arrangement from Parent
pursuant to which such members are permitted to utilize such trademarks
or tradenames. Such arrangement will not be cancelled or reconstituted
as a royalty bearing arrangement as a result of the consummation of the
Merger. Not later than the Effective Time of the Merger, such
arrangement will be memorialized in a written instrument granting to
such members of the Bionova Group the right to use all such trademarks
or tradenames for a perpetual period of time and on a royalty free
basis.
5.14 Permits. Except as set forth on Schedule 5.14, (i) the Bionova
Group holds all the Permits materially necessary or required for the conduct
of the business of the Bionova Group as currently conducted; (ii) each of such
Permits is in full force and effect, the Bionova Group is in compliance with
all its obligations with respect thereto, and, to the best knowledge of
Bionova U.S., no event has occurred which permits, or with or without the
giving of notice or the passage of time or both would permit, the revocation
or termination of any thereof; and (iii) no notice has been issued by any
Governmental Entity and no Proceeding is pending or, to the best knowledge of
Bionova U.S., threatened with respect to any alleged failure by the Bionova
Group to have any Permit the absence of which would have a Bionova Group
Material Adverse Effect.
5.15 Agreements.
(a) All agreements, arrangements, and understandings of any
nature (written or oral, formal or informal) (collectively, for purposes
of this Section, "agreements") to which the Bionova Group is a party or
by which the Bionova Group or any of their respective properties is
otherwise bound, that are material to the business, assets, results of
operations, condition (financial or otherwise), or prospects of the
Bionova Group considered as a whole, and that provide for annual
payments or receipts in excess of $100,000, are listed on Schedule
5.15.
(b) Bionova U.S. has delivered to the Company accurate and
complete copies of the agreements listed on Schedule 5.15. Each of such
agreements is a valid and binding agreement of the Bionova Group (to the
extent each is a party thereto) and (to the best knowledge of Bionova
U.S.) the other party or parties thereto, enforceable against the
Bionova Group (to the extent each is a party thereto) and (to the best
knowledge of Bionova U.S.) such other party or parties in accordance
with its terms, except that such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, and
similar laws affecting creditors' rights generally, (ii) fiduciary
obligations under the laws of its jurisdiction of incorporation,
(iii) equitable principles which may limit the availability of certain
equitable remedies (such as specific performance) in certain instances,
(iv) public policy considerations with respect to the enforceability of
rights of indemnification, and (v) priority claims under Mexican law
with respect to labor claims, taxes, social security payments,
retirement funds, housing funds and similar items. No member of the
Bionova Group is in breach of or in default under, nor has any event
occurred which (with or without the giving of notice or the passage of
time or both) would constitute a default by the Bionova Group under, any
material provision of any of such agreements, and no member of the
Bionova Group has received any notice from, or given any notice to, any
other party indicating that the Bionova Group is in breach of or in
default under any of such agreements. To the best knowledge of Bionova
U.S., no other party to any of such agreements is in material breach of
or in material default under such agreements, nor has any assertion been
made by the Bionova Group of any such breach or default.
(c) No member of the Bionova Group has received notice of any
plan or intention of any other party to any agreement to exercise any
right of offset with respect to, or any right to cancel or terminate,
any agreement, and no member of the Bionova Group knows of any fact or
circumstance that would justify the exercise by any such other party of
such a right other than the automatic termination of such agreement in
accordance with its terms. No member of the Bionova Group currently
contemplates, or has reason to believe any other person currently
contemplates, any amendment or change to any agreement, which amendment
or change could have a Bionova Group Material Adverse Effect.
5.16 ERISA.
(a) Set forth on Schedule 5.16 is a list identifying each
"employee benefit plan", as defined in Section 3(3) of ERISA, (i) which
is subject to any provision of ERISA, (ii) which is maintained,
administered, or contributed to by Bionova U.S. or any affiliate of
Bionova U.S., and (iii) which covers any employee or former employee of
Bionova U.S. or any affiliate of Bionova U.S. or under which Bionova
U.S. or any affiliate of Bionova U.S. has any liability. Bionova U.S.
has delivered to the Company accurate and complete copies of such plans
(and, if applicable, the related trust agreements) and all amendments
thereto and written interpretations thereof, together with (i) the three
most recent annual reports (Form 5500 including, if applicable,
Schedule B thereto) prepared in connection with any such plan and
(ii) the most recent actuarial valuation report prepared in connection
with any such plan. Such plans are referred to in this Section as the
"Employee Plans". For purposes of this Section only, an "affiliate" of
any person means any other person which, together with such person,
would be treated as a single employer under Section 414 of the Code.
The only Employee Plans which individually or collectively would
constitute an "employee pension benefit plan" as defined in Section 3(2)
of ERISA are identified as such on Schedule 5.16.
(b) Except as otherwise identified on Schedule 5.16, (i) no
Employee Plan constitutes a "multiemployer plan", as defined in
Section 3(37) of ERISA (for purposes of this Section, a "Multiemployer
Plan"), (ii) no Employee Plan is maintained in connection with any trust
described in Section 501(c)(9) of the Code, (iii) no Employee Plan is
subject to Title IV of ERISA or to the minimum funding standards of
ERISA and the Code, and (iv) during the past five years, neither Bionova
U.S. nor any of its affiliates have made or been required to make
contributions to any Multiemployer Plan. There are no accumulated
funding deficiencies as defined in Section 412 of the Code (whether or
not waived) with respect to any Employee Plan. The fair market value of
the assets held with respect to each Employee Plan that is a defined
benefit plan and an employee pension benefit plan, as defined in
Section 3(2) of ERISA, exceeds the actuarially determined present value
of all benefit liabilities accrued under such Employee Plan (whether or
not vested) determined using reasonable actuarial assumptions. Neither
Bionova U.S. nor any affiliate of Bionova U.S. has incurred any material
liability under Title IV of ERISA arising in connection with the
termination of, or complete or partial withdrawal from, any plan covered
or previously covered by Title IV of ERISA. Bionova U.S. and all of the
affiliates of Bionova U.S. have paid and discharged promptly when due
all liabilities and obligations arising under ERISA or the Code of a
character which if unpaid or unperformed might result in the imposition
of a lien against any of the assets of the Bionova Group. To the
knowledge of Bionova Mexico or Bionova U.S., nothing done or omitted to
be done and no transaction or holding of any asset under or in
connection with any Employee Plan has or will make the Bionova Group or
any director or officer of the Bionova Group subject to any liability
under Title I of ERISA or liable for any Tax pursuant to Section 4975 of
the Code that could have a Bionova Group Material Adverse Effect. To
the knowledge of Bionova Mexico or Bionova U.S., there are no threatened
or pending claims by or on behalf of the Employee Plans, or by any
participant therein, alleging a breach or breaches of fiduciary duties
or violations of Applicable Laws which could result in liability on the
part of Bionova U.S., its officers or directors, or such Employee Plans,
under ERISA or any other Applicable Law and there is no basis for any
such claim.
(c) To the knowledge of Bionova Mexico or Bionova U.S., each
Employee Plan which is intended to be qualified under Section 401(a) of
the Code is so qualified and has been so qualified since the date of its
adoption, and each trust forming a part thereof is exempt from Tax
pursuant to Section 501(a) of the Code. Set forth on Schedule 5.16 is a
list of the most recent IRS determination letters with respect to any
such Plans, accurate and complete copies of which letters have been
delivered to Bionova U.S. To the best of the knowledge of Parent,
Bionova Mexico, Bionova U.S. and Sub, each Employee Plan has been
maintained in compliance with its terms and with the requirements
prescribed by all Applicable Laws, including but not limited to ERISA
and the Code, which are applicable to such Plans.
(d) There is set forth on Schedule 5.16 a list of each
employment, severance, or other similar contract (including any non-
competition agreement), arrangement, or policy and each plan or
arrangement (written or oral) providing for insurance coverage
(including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, deferred compensation, profit-sharing,
bonuses, stock options, stock appreciation rights, or other forms of
incentive compensation or post-retirement insurance, compensation, or
benefits which (i) is not an Employee Plan, (ii) is entered into,
maintained, or contributed to, as the case may be, by the Bionova Group,
and (iii) covers any employee or former employee of the Bionova Group.
Such contracts, plans, and arrangements as are described in the
preceding sentence are referred to for purposes of this Section as the
"Benefit Arrangements". Each Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements
prescribed by Applicable Laws.
(e) To the knowledge of Bionova Mexico or Bionova U.S., neither
Bionova U.S. nor any affiliate of Bionova U.S. has performed any act or
failed to perform any act, and there is no contract, agreement, plan, or
arrangement covering any employee or former employee of Bionova U.S. or
any affiliate of Bionova U.S., that, individually or collectively, could
give rise to the payment of any amount that would not be deductible
pursuant to the terms of Section 162(a)(1) or 280G of the Code, or could
give rise to any penalty or excise Tax pursuant to Section 4980B or 4999
of the Code.
(f) Except as disclosed on Schedule 5.16, there has been no
amendment, written interpretation, or announcement (whether or not
written) by Bionova U.S. or any affiliate of Bionova U.S. of or relating
to, or change in employee participation or coverage under, any Employee
Plan or Benefit Arrangement which would increase materially the expense
of maintaining such Employee Plan or Benefit Arrangement above the level
of the expense incurred in respect thereof for the fiscal year ended
December 31, 1994.
5.17 Environmental Matters.
(a) Except as disclosed on Schedule 5.17 and except for matters
that in the aggregate would not have a Bionova Group Material Adverse
Effect:
(i) the properties, operations, and activities of the
Bionova Group comply with all Applicable Environmental Laws;
(ii) the Bionova Group and the properties, operations, and
activities of the Bionova Group are not subject to any existing,
pending, or, to the best knowledge of Bionova U.S., threatened
Proceeding under, or to any remedial obligations under, any
Applicable Environmental Laws;
(iii) all Permits, if any, required to be obtained by the
Bionova Group under any Applicable Environmental Laws in
connection with any aspect of the business of the Bionova Group,
including without limitation those relating to the treatment,
storage, disposal, or release of a hazardous material, have been
duly obtained and are in full force and effect, and the Bionova
Group is in compliance with the terms and conditions of all such
Permits;
(iv) the Bionova Group has satisfied and is currently in
compliance with all financial responsibility requirements
applicable to their respective operations and imposed by any
Governmental Entity under any Applicable Environmental Laws, and
the Bionova Group has not received any notice of noncompliance
with any such financial responsibility requirements;
(v) to the best knowledge of Bionova U.S., there are no
physical or environmental conditions existing on any property
owned or leased by the Bionova Group or resulting from the Bionova
Group's operations or activities, past or present, at any
location, that would give rise to any on-site or off-site remedial
obligations under any Applicable Environmental Laws;
(vi) to the best knowledge of Bionova U.S., since the
effective date of the relative requirements of Applicable
Environmental Laws, all hazardous materials generated by the
Bionova Group or used in connection with their respective
properties, operations, or activities have been transported only
by carriers authorized under Applicable Environmental Laws to
transport such materials, and have been disposed of only at
treatment, storage, and disposal facilities authorized under
Applicable Environmental Laws to treat, store, or dispose of such
materials, and, to the best knowledge of Bionova U.S., such
carriers and facilities have been and are operating in compliance
with such authorizations and are not the subject of any existing,
pending, or threatened Proceeding in connection with any
Applicable Environmental Laws;
(vii) there has been no exposure of any person or property
to hazardous materials, nor has there been any release of
hazardous materials into the environment, by the Bionova Group or
in connection with their respective properties, operations, or
activities that could reasonably be expected to give rise to any
claim for damages or compensation; and
(viii) the Bionova Group shall make available to the
Company all internal and external environmental audits and studies
and all correspondence on substantial environmental matters in the
possession of the Bionova Group relating to any of the current or
former properties, operations, or activities of the Bionova Group,
provided that the Bionova Group shall not be required to make
available any such audits, studies, or correspondence that may be
subject to the attorney-client privilege or similar privilege.
(b) The representations and warranties contained in this Section
would continue to be true and correct following disclosure to the
applicable Governmental Entities of all relevant facts, conditions, and
circumstances, if any, pertaining to the properties, operations, and
activities of the Bionova Group.
5.18 Labor Relations.
(a) Except as disclosed on Schedule 5.18, (i) there are no
collective bargaining agreements or other labor union contracts
applicable to any employees to or by which the Bionova Group is a party
or is bound, no such agreement or contract has been requested by any
employee or group of employees of the Bionova Group, and no discussions
have occurred with respect thereto by management of the Bionova Group
with any such employees; (ii) no employee of the Bionova Group is
represented by any labor organization, collective bargaining
representative, or group of employees; (iii) no labor organization,
collective bargaining representative, or group of employees claims to
represent a majority of the employees of the Bionova Group in an
appropriate unit of the Bionova Group; (iv) no member of the Bionova
Group is aware of or involved with any representational campaign or
other organizing activities by any union or other organization or group
seeking to become the collective bargaining representative of any of its
employees; (v) no member of the Bionova Group is obligated to bargain
collectively with respect to wages, hours, and other terms and
conditions of employment with any recognized or certified labor
organization, collective bargaining representative, or group of
employees; and (vi) no member of the Bionova Group is aware of any
strikes, work stoppages, work slowdowns, or lockouts or any threats
thereof by or with respect to any of its employees, and since December
31, 1993, there have been no labor disputes, strikes, work stoppages,
work slowdowns, lockouts, or similar matters involving any such
employees.
(b) The Bionova Group is in compliance with all Applicable Laws
pertaining to employment and employment practices and wages, hours, and
other terms and conditions of employment in respect of their respective
employees, except for noncompliance with such Applicable Laws which does
not and will not have a Bionova Group Material Adverse Effect, and has
no accrued liability for any arrears of wages or any Taxes or penalties
for failure to comply with any thereof. The Bionova Group is not
engaged in any unfair labor practices or unlawful employment practices.
There is no pending or, to the best knowledge of Bionova U.S.,
threatened Proceeding against or involving the Bionova Group by or
before, and no member of the Bionova Group is subject to any judgment,
order, writ, injunction, or decree of or inquiry from, the National
Labor Relations Board, the Equal Employment Opportunity Commission, the
Department of Labor, the Immigration and Naturalization Service or any
other Governmental Entity in connection with any current, former, or
prospective employee of the Bionova Group.
(c) No service agreement entered into by any of the companies
collectively identified as the Bionova Group with any third party
service company will cause the Bionova Group member receiving such
services to be deemed the employer of such service company's employees.
5.19 Employees. Set forth on Schedule 5.19 is a list of:
(a) all directors and officers of the Bionova Group, and
(b) the name, social security number, and dates of employment by
the Bionova Group of each employee, and consultant of the Bionova Group,
whose annual rate of cash compensation in the 1995 fiscal year will
equal or exceed $50,000, together with the total amounts of salary,
bonuses, and other cash compensation paid or payable by the Bionova
Group to each such person for such fiscal year. Except as set forth in
Schedule 5.19, the Bionova Group has not materially altered any such
compensation arrangement since the end of the 1995 fiscal year, and the
Bionova Group does not have any material non-cash compensation
arrangements in favor of its employees.
Except as disclosed on Schedule 5.19, no severance payment, stay-on or
incentive payment, or similar obligation will be owed by the Bionova Group to
any of their respective directors, officers, or employees upon consummation
of, or as a result of, the transactions contemplated by this Agreement, nor
will any such director, officer, or employee be entitled to an increase in
severance payments or other benefits as a result of the transactions
contemplated by this Agreement in the event of the subsequent termination of
his or her employment.
5.20 Insurance. Listed on Schedule 5.20 are the policies of insurance
maintained by the Bionova Group with respect to their respective assets and
operations. All premiums due and payable with respect to such policies have
been timely paid. No notice of cancellation of, or indication of an intention
not to renew, any such policy has been received by the Bionova Group. During
the past three years, no application by the Bionova Group for insurance with
respect to its assets or operations has been denied for any reason.
5.21 Insider Interests. Except as disclosed on Schedule 5.21, no
shareholder, director, officer, or employee of the Bionova Group or any
associate of any such shareholder, director, officer, or employee is
presently, directly or indirectly, a party to any material transaction
pertaining to Bionova U.S. or the Bionova Group, including, without
limitation, any agreement, arrangement, or understanding, written or oral,
providing for the employment of, furnishing of services by, rental of real or
personal property from, or otherwise requiring payments to any such
shareholder, director, officer, employee, or associate. To the best knowledge
of Bionova U.S., no shareholder, director, officer, or employee of the Bionova
Group or any associate of any such shareholder, director, officer, or employee
owns, directly or indirectly, any material interest in, or serves as a
director, officer, or employee of, any customer, supplier, or competitor of
Bionova U.S. or the Bionova Group. For purposes of this Section only, an
"associate" of any shareholder, director, officer, or employee means (i) a
spouse, parent, sibling, child, mother- or father-in-law, son- or daughter-in-
law, or brother- or sister-in-law of such shareholder, director, officer, or
employee or (ii) any corporation, partnership, trust, or other entity in which
such shareholder, director, officer, or employee or associate thereof has a
substantial ownership or beneficial interest (other than an interest in a
public corporation which does not exceed three percent of its outstanding
securities) or is a director, officer, partner, or trustee or person holding a
similar position.
5.22 Disclosure. No representation or warranty made by Parent, Bionova
Mexico, Bionova U.S., or Sub in this Agreement, and no statement of Parent,
Bionova Mexico, Bionova U.S., or Sub contained in any document, certificate,
or other writing furnished or to be furnished by Parent, Bionova Mexico,
Bionova U.S., or Sub pursuant hereto or in connection herewith, contains or
will contain, at the time of delivery, any untrue statement of a material fact
or omits, or will omit, at the time of delivery, to state any material fact
necessary in order to make the statements contained therein, in the light of
the circumstances under which they are made, not misleading.
5.23 Disclosure Documents. None of the information relating to Parent,
Bionova Mexico, Bionova U.S., Sub, the Bionova Group, this Agreement, or the
transactions contemplated by this Agreement which has been or is to be
supplied by Parent, Bionova Mexico, Bionova U.S. or the Bionova Group for
inclusion in (a) the Registration Statement, (b) the Proxy Statement, and (c)
any other documents to be filed with any regulatory authority by the Company,
Parent or their respective subsidiaries in connection with the transactions
contemplated by this Agreement, at the respective time such document is filed,
becomes effective, or is first mailed to stockholders, or at the Effective
Time, as the case may be, will be false or misleading with respect to any
material fact, or will omit to state any material fact necessary in order to
make the statements therein not misleading, or, in the case of the Proxy
Statement, at the time of the Special Meeting, will be false or misleading
with respect to any material fact, or will omit to state any material fact
necessary in order to make the statements therein not misleading or necessary
to correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Special Meeting. All documents required to
be filed by Parent, Bionova Mexico, Bionova U.S., or the Bionova Group in
connection with the Merger will comply as to form in all material respects
with the applicable requirements of the statutes, rules, and regulations
pursuant to which they are filed. No representations are made in this Section
with respect to any information included or incorporated by reference in the
Registration Statement, the Proxy Statement, or any other document referred to
in clause (c) of the first sentence of this Section which relates to the
Company or its subsidiaries.
5.24 Representations and Warranties on Closing Date. The
representations and warranties made in Article IV and this Article V will be
true and correct on and as of the Closing Date with the same force and effect
as if such representations and warranties had been made on and as of the
Closing Date, except that any such representations and warranties which
expressly relate only to an earlier date shall be true and correct on the
Closing Date as of such earlier date.
5.25 Confidentiality Matters. Each member of the Bionova Group have
taken reasonable measures to maintain the confidentiality of any secret,
confidential or proprietary information relating to the Bionova Group or its
business.
5.26 Offerings of Securities. All securities which have been offered
or sold by any member of the Bionova Group have been registered pursuant to
Applicable Laws or were offered and sold pursuant to valid exemptions
therefrom. No registration statement, prospectus, private offering
memorandum, or other information furnished (whether in writing or orally) to
any offeree or purchaser of such securities, at the time such registration
statement became effective (in the case of a registered offering) or at the
time of delivery of such registration statement, prospectus, private offering
memorandum, or other information, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. To the extent that
any such securities were registered under the Securities Act or Mexican
securities law, the applicable registration statements and prospectuses filed
with the Securities and Exchange Commission pursuant to the Securities Act or
Mexican securities law, at the time each such registration statement became
effective, and at all times when delivery of a prospectus was required
pursuant to the Securities Act or Mexican securities law, complied in all
material respects with the requirements of the Securities Act and the rules
and regulations thereunder or Mexican securities law, as the case may be.
5.27 Customers and Suppliers. To Bionova Mexico's and Bionova U.S.'s
knowledge, none of the ten largest customers and none of the ten largest
suppliers of the Bionova Group taken as a whole for the most recent fiscal
year has materially reduced or terminated, or intends to materially reduce or
terminate its business with the Bionova Group.
5.28 No Prior Activities. Neither Bionova U.S. nor Sub has
(i) incurred, nor will it incur prior to and including the Closing Date,
directly or indirectly, any liabilities or obligations, (ii) engaged in any
business activity or transaction, or (iii) entered into any agreement or
arrangement with any person or entity, except in connection with its
organization, negotiation, execution and performance of this Agreement and the
Ancillary Documents and the consummation of the transactions contemplated
hereby and thereby.
5.29 Holding Company. Except as set forth in Schedule 5.29, Bionova
Mexico has no material assets other than its direct ownership of shares of
stock of IPHC and ABSA and its indirect ownership of shares of each other
member of the Bionova Group. Except as set forth on Schedule 5.29, IPHC has
no material assets other than its direct and indirect ownership interests in
its subsidiaries.
5.30 Arm's Length Contracts. Except as disclosed on Schedule 5.30,
each contract or other agreement material to the business or the financial
condition of the Bionova Group is a commercially reasonable, arm's length
contract. Except as disclosed on Schedule 5.30, no stockholder, director or
officer of any member of the Bionova Group possesses, directly or indirectly,
any financial interest in, or is a director, officer or employee of, any
corporation, firm, association or business organization which is a client,
supplier, customer, lessor, lessee, or competitor or potential competitor of
any member of the Bionova Group. Except as referenced on Schedule 5.30, none
of the items disclosed thereon is reasonably anticipated to have a Bionova
Group Material Adverse Effect.
5.31 Real Property.
(a) Set forth on Schedule 5.31 is a list, by street address, of all
material real property owned or leased by the Bionova Group (for purposes of
this Section, the "Real Property"), a list of all material Encumbrances to
which the Real Property is subject, and a summary description of the principal
facilities and structures (if any) located thereon. There are no persons
(other than the Bionova Group) in possession of any material portion of the
Real Property. There exists no Proceeding or court order, or building code
provision, deed restriction, or restrictive covenant (recorded or otherwise),
or other private or public limitation, which might in any way materially
impede or materially adversely affect the continued use of the Real Property
by the Bionova Group in the manner it is currently used.
(b) All material buildings, improvements, and fixtures situated on the
Real Property conform in all material respects to all Applicable Laws. All
the Real Property is zoned for the various purposes for which such Real
Property is being materially used, and there exists no pending or, to the best
knowledge of Bionova U.S., threatened Proceeding which might materially
adversely affect the validity of such zoning.
(c) Neither the whole nor any material part of the Real Property is
subject to any pending Proceeding for condemnation or other taking by any
Governmental Entity, and, to the best knowledge of Bionova U.S., no such
condemnation or other taking is contemplated or threatened.
5.32 Leased Property. Set forth on Schedule 5.32 is a list and summary
description of the material terms of all leases under which the Bionova Group
is the lessee of material real or personal property. The Bionova Group has
good and valid leasehold interests in all material properties held by it under
lease. The lessee under each such lease is not in breach of or in default
under such lease.
5.33 Receivables. All receivables (including accounts and notes
receivable, employee advances, and accrued interest receivables) of the
Bionova Group as reflected in the Bionova Group Financial Statements or
arising since the date thereof are, to the best of the knowledge of Parent,
Bionova Mexico, Bionova U.S. or Sub, valid obligations of the respective
makers thereof, have arisen in the ordinary course of business for goods or
services delivered or rendered, are not subject to any valid defenses,
counterclaims, or set offs, and have been collected or are, to the best of the
knowledge of Parent, Bionova Mexico, Bionova U.S. or Sub, collectible in full
at their recorded amounts in the ordinary course of business, net of doubtful
accounts reserved for in such financial statements.
5.34 Bionova U.S. Common Stock. The shares of Bionova U.S. Common
Stock to be issued pursuant to the Merger shall be duly authorized and, when
issued in accordance with the terms of this Agreement, shall be validly
issued, fully paid, nonassessable, free from preemptive rights, registered
under United States federal securities laws, qualified (or exempt from
qualification) under applicable state securities laws, and listed for trading
on the NASDAQ NMS.
5.35 Capital Contribution. None of the transactions contemplated by
Section 1.11 will, upon consummation thereof, result in a Bionova Group
Material Adverse Effect.
5.36 Inventory. To the best of the knowledge of Parent, Bionova
Mexico, Bionova U.S. and Sub, all inventory reflected in the Bionova Group
Financial Statements was, as of September 30, 1995, in good condition and was
merchantable for sale in the Bionova Group's ordinary course of business.
ARTICLE VI
CONDUCT OF PARTIES PENDING CLOSING
6.1 Conduct and Preservation of Business. Except as expressly
provided in this Agreement, during the period from the date hereof to the
Closing, the Company and the Company Subsidiaries, on the one hand, and
Bionova U.S., Sub and the Bionova Group, on the other hand, (i) shall each
conduct its operations according to its ordinary course of business consistent
with past practice and in compliance in all material respects with all
Applicable Laws; (ii) shall each use its reasonable best efforts to preserve,
maintain, and protect its properties; and (iii) shall each use its reasonable
best efforts to preserve intact its business organization, to keep available
the services of its officers and employees, and to maintain existing
relationships with licensors, licensees, suppliers, contractors, distributors,
customers, and others having business relationships with it, provided,
however, that no person shall be required to make any payments or enter into
or amend any contractual agreements, arrangements, or understandings to
satisfy the foregoing obligation unless such payment or other action is
required or consistent with past practice.
6.2 Restrictions on Certain Actions. Without limiting the generality
of the foregoing, and except as otherwise expressly provided in this
Agreement, prior to the Closing, neither the Company nor the Company
Subsidiaries, on the one hand, nor Bionova Mexico, Bionova U.S., Sub or the
Bionova Group, on the other hand, shall, without the prior written consent of
Bionova U.S. in the case of the Company and the Company Subsidiaries, and the
Company in the case of Bionova Mexico, Bionova U.S., Sub and the Bionova
Group, take any of the following actions, except the actions set forth on
Schedule 6.2A (in the case of the Company and the Company Subsidiaries) and
Schedule 6.2B (in the case of Bionova Mexico, Bionova U.S., Sub or the Bionova
Group), which are actions for which each party hereto hereby gives its
consent:
(a) amend its charter or bylaws or other governing instruments
in effect on the date of this Agreement;
(b) (i) issue, sell, or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase, or otherwise) any shares of its capital stock of any class or
any other securities or equity equivalents; or (ii) amend in any respect
any of the terms of any such securities outstanding as of the date
hereof;
(c) (i) split, combine, or reclassify any shares of its capital
stock; (ii) declare, set aside, or pay any dividend or other
distribution (whether in cash, stock, or property or any combination
thereof) in respect of its capital stock; (iii) repurchase, redeem, or
otherwise acquire any of its securities or any securities of any
Subsidiary except pursuant to contractual arrangements in effect on the
date hereof which have been disclosed to Bionova U.S.; or (iv) adopt a
plan of complete or partial liquidation or resolutions providing for or
authorizing a liquidation, dissolution, merger, consolidation,
restructuring, recapitalization, or other reorganization;
(d) (i) create, incur, guarantee, or assume any indebtedness for
borrowed money or otherwise become liable or responsible for the
obligations of any other person except for obligations of majority owned
subsidiaries; (ii) make any loans, advances, or capital contributions
to, or investments in, any other person (other than to majority owned
subsidiaries and customary loans or advances to employees in amounts not
material to the maker of such loan or advance); (iii) pledge or
otherwise encumber shares of capital stock; or (iv) mortgage or pledge
any of its material assets, tangible or intangible, or create or suffer
to exist any material lien thereupon;
(e) (i) enter into, adopt, or (except as may be required by law)
amend or terminate any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase, pension, retirement,
deferred compensation, employment, severance, or other employee benefit
agreement, trust, plan, fund, or other arrangement for the benefit or
welfare of any director, officer, or employee; (ii) increase in any
manner the compensation or fringe benefits of any director, officer, or
employee; or (iii) pay to any director, officer, or employee any benefit
not required by any employee benefit agreement, trust, plan, fund, or
other arrangement as in effect on the date hereof;
(f) acquire, sell, lease, transfer, or otherwise dispose of,
directly or indirectly, any assets outside the ordinary course of
business consistent with past practice or any amount of assets that in
the aggregate is material to its business;
(g) acquire (by merger, consolidation, or acquisition of stock
or assets or otherwise) any corporation, partnership, or other business
organization or division thereof;
(h) make any capital expenditure or expenditures which in the
aggregate are in excess of $1,000,000;
(i) amend any Tax Return or make any Tax election or settle or
compromise any material federal, state, local, or foreign Tax
controversy;
(j) pay, discharge, or satisfy any claims, liabilities, or
obligations (whether accrued, absolute, contingent, unliquidated, or
otherwise, and whether asserted or unasserted), other than the payment,
discharge, or satisfaction in the ordinary course of business consistent
with past practice, or in accordance with their terms, of liabilities
reflected or reserved against in its financial statements or incurred
since September 30, 1995 in the ordinary course of business consistent
with past practice;
(k) enter into any lease, contract, agreement, commitment,
arrangement, or transaction outside the ordinary course of business
consistent with past practice;
(l) amend, modify, or change in any material respect any
existing lease, contract, or agreement, other than in the ordinary
course of business consistent with past practice;
(m) waive, release, grant, or transfer any rights of value,
other than in the ordinary course of business consistent with past
practice;
(n) change any of its banking or safe deposit arrangements;
(o) change any of the accounting principles or practices used by
it;
(p) take any action which would or likely might make any of its
representations or warranties contained in this Agreement untrue or
inaccurate as of any time from the date of this Agreement to the Closing
or would or might likely result in any of the conditions set forth in
this Agreement not being satisfied;
(q) except as specifically permitted under the Sole Patent
License, separately license, sell or otherwise dispose of any patents,
technology, intellectual property or similar items to any third parties;
or
(r) authorize or propose, or agree in writing or otherwise to
take, any of the actions described in this Section.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Access to Information; Confidentiality.
(a) Between the date hereof and the Closing, the Company (i)
shall give each of Parent, Bionova Mexico, Bionova U.S. and Sub and
their authorized representatives reasonable access to all employees, all
plants, offices, warehouses, and other facilities, and all books and
records, including work papers and other materials prepared by the
Company's independent public accountants, of the Company and the Company
Subsidiaries, (ii) shall permit each of Parent, Bionova Mexico, Bionova
U.S. and Sub and their authorized representatives to make such
inspections as they may reasonably require, and (iii) shall cause the
Company's officers and those of the Company Subsidiaries to furnish each
of Parent, Bionova Mexico, Bionova U.S. and Sub and their authorized
representatives with such financial and operating data and other
information with respect to the Company and the Company Subsidiaries as
they may from time to time reasonably request; provided, however, that
no investigation pursuant to this Section shall affect any
representation or warranty of the Company contained in this Agreement or
in any agreement, instrument, or document delivered pursuant hereto or
in connection herewith; and provided further that the Company shall have
the right to have a representative present at all times of any such
inspections, interviews, and examinations conducted at or on the offices
or other facilities or properties of the Company or its affiliates or
representatives. Each of Parent, Bionova Mexico, Bionova U.S. and Sub
and their authorized representatives shall hold in confidence all such
information on the terms and subject to the conditions contained in the
Confidentiality Agreement dated July 12, 1995, between the Company and
Bionova U.S., as amended and supplemented (the "Confidentiality
Agreement").
(b) Between the date hereof and the Closing, Parent, Bionova
Mexico, Bionova U.S., Sub and the Bionova Group (i) shall give the
Company and its authorized representatives reasonable access to all
employees, all plants, offices, warehouses, and other facilities, and
all books and records, including work papers and other materials
prepared by Bionova Mexico, Bionova U.S., Sub and the Bionova Group's
independent public accountants, (ii) shall permit the Company and its
authorized representatives to make such inspections as they may
reasonably require, and (iii) shall cause Bionova Mexico, Bionova U.S.,
Sub and the Bionova Group's officers to furnish the Company and its
authorized representatives with such financial and operating data and
other information with respect to Bionova Mexico, Bionova U.S., Sub and
the Bionova Group as the Company may from time to time reasonably
request; provided, however, that no investigation pursuant to this
Section shall affect any representation or warranty of Parent, Bionova
Mexico, Bionova U.S. or Sub contained in this Agreement or in any
agreement, instrument, or document delivered pursuant hereto or in
connection herewith; and provided further that Parent, Bionova Mexico,
Bionova U.S. or Sub shall have the right to have a representative
present at all times of any such inspections, interviews, and
examinations conducted at or on the offices or other facilities or
properties of Bionova Mexico, Bionova U.S., Sub or the Bionova Group or
its affiliates or representatives. The Company and its authorized
representatives shall hold in confidence all such information on the
terms and subject to the conditions contained in the Confidentiality
Agreement.
7.2 Acquisition Proposals.
(a) Except as provided in Section 7.2(b), none of the Company or
any affiliate, director, officer, employee, or representative of the
Company shall (i) directly or indirectly, solicit or initiate
discussions or negotiations with any person (other than Parent)
concerning any merger, consolidation, sale of assets, tender offer, sale
of shares of capital stock, or similar transaction involving the Company
or any Subsidiary, the securities of the Company, or any significant
assets of the Company or any Subsidiary (each an "Acquisition
Proposal"), or (ii) disclose directly or indirectly to any person
preparing to make an Acquisition Proposal any confidential information
regarding the Company or any Subsidiary, or (iii) enter into any
agreement, arrangement, understanding, or commitment regarding any
Acquisition Proposal. Notwithstanding the immediately preceding
sentence, the Board of Directors, officers, employees and
representatives of the Company may (a) take the actions described in
clauses (ii) and (iii) of the immediately preceding sentence in response
to solicitations and transactions which may, in the reasonable judgement
of the Board of Directors of the Company, ultimately result, directly or
indirectly, in ultimate consideration or value more favorable to the
stockholders of the Company than the consideration payable under (or
value represented by) this Agreement, and (b) under the circumstances
described in clause (a) above, provide confidential information to a
potential purchaser upon the prior written request of such purchaser who
the Board of Directors of the Company reasonably believes is qualified
and is credit worthy. Any disclosure made under this Section 7.2 shall
be made subject to an appropriate confidentiality agreement, and shall
be made only if the request for such disclosure did not arise as a
result of any solicitation for expression of interest made in violation
of this Section by the Company or its affiliates, directors, officers,
employees, or representatives. The Company shall notify Bionova U.S.
promptly if it discloses any confidential information to a potential
purchaser as provided in this Section. The Company shall also notify
Bionova U.S. promptly of the receipt of any Acquisition Proposal after
the date of this Agreement. The Company shall also notify Bionova U.S.
promptly of its determination to accept any Acquisition Proposal.
(b) Notwithstanding the provisions of Section 7.2(a), the
Company shall be permitted, subject to the provisions of Section 7.7,
within ten days of the date of this Agreement to issue a press release
announcing the Merger and its material terms and stating that the
Company's management and financial advisors would be available to
receive inquiries from any other parties interested in the possible
acquisition of the Company and, as appropriate, to provide information
and enter into discussions and negotiations with such parties in
connection with such indicated interest.
7.3 Special Meeting; Proxy Statement. The Company shall take all
action necessary in accordance with State Law and the Company's Certificate of
Incorporation and Bylaws to duly call, give notice of, convene, and hold a
special meeting of its stockholders (the "Special Meeting") as promptly as
practicable after the date hereof to consider and vote upon the adoption and
approval of this Agreement and the Merger. The Board of Directors of the
Company shall, subject to its fiduciary obligations to the Company's
stockholders under Applicable Law as advised by counsel, (i) recommend to the
stockholders of the Company that they vote in favor of the adoption and
approval of this Agreement and the Merger, (ii) use its reasonable best
efforts to solicit from the stockholders of the Company proxies in favor of
such adoption and approval, and (iii) take all other action reasonably
necessary to secure a vote of the stockholders of the Company in favor of such
adoption and approval.
7.4 Proxy Statement/Registration Statement. As promptly as
practicable after the date hereof, the Company shall prepare and file, or
cause to be prepared and filed, with the assistance and consent of Bionova
U.S., a proxy statement with the SEC under the Exchange Act. The term "Proxy
Statement," as used herein means such proxy statement and all amendments and
supplements thereto, if any. The Company shall use all reasonable best
efforts to have the proxy statement cleared with the SEC as promptly as
practicable after the filing thereof. As promptly as practicable after the
date hereof, Bionova U.S., with the assistance and consent of the Company,
shall prepare and file with the Securities and Exchange Commission a
registration statement on an appropriate form (which will contain a prospectus
to be used by the Company as the Proxy Statement) for the purpose of
registering under the Securities Act the offering, sale, and delivery of the
Bionova U.S. Common Stock to be issued to the stockholders of the Company
pursuant to the Merger. The term "Registration Statement", as used herein,
means such registration statement and all amendments and supplements thereto,
if any. Bionova U.S. shall use all reasonable best efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after the filing thereof. Bionova U.S. or the Company, as the
case may be, shall notify the other promptly of the receipt of any comments
on, or any requests for amendments or supplements to, the Proxy Statement or
the Registration Statement by the Securities and Exchange Commission, and each
shall supply the other with copies of all correspondence between it and its
representatives, on the one hand, and the Securities and Exchange Commission
or members of its staff, on the other, with respect to the Proxy Statement or
the Registration Statement. Bionova U.S. or the Company, as the case may be,
after consultation with and the consent of the other, shall use its reasonable
best efforts to respond promptly to any comments made by the Securities and
Exchange Commission with respect to the Proxy Statement or the Registration
Statement. The Company shall obtain the approval of Bionova U.S. and Bionova
U.S. shall obtain the approval of the Company, before making any filings with
the Securities and Exchange Commission pertaining to the Proxy Statement or
the Registration Statement or any matter pertaining to this Agreement.
Parent, Bionova U.S., Sub, and the Company each agrees promptly to
correct any information provided by it for use in the Proxy Statement or the
Registration Statement if and to the extent that such information shall have
become false or misleading in any material respect, and Bionova U.S. further
agrees to take all steps necessary to cause the Proxy Statement or the
Registration Statement (or the prospectus contained therein) as so corrected
to be filed with the Securities and Exchange Commission and to be disseminated
promptly to holders of shares of Company Stock, in each case as and to the
extent required by Applicable Law. Bionova U.S. shall also take any action
reasonably required to be taken under any applicable state securities laws in
connection with the issuance of Bionova U.S. Common Stock pursuant to the
Merger, and the Company shall furnish all information concerning the Company
and its stockholders as may be reasonably requested in connection with any
such action.
Bionova U.S. shall prepare and file with the SEC a registration
statement on Form 8-A registering the Bionova U.S. Common Stock as a class of
"equity securities" under the Exchange Act prior to effectiveness of the
Registration Statement.
7.5 Reasonable Best Efforts. Each party hereto agrees that it will
not voluntarily undertake any course of action inconsistent with the
provisions or intent of this Agreement and will use its reasonable best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things reasonably necessary, proper, or advisable under Applicable
Laws to consummate the transactions contemplated by this Agreement, including,
without limitation, (i) cooperation in the preparation and filing of the
Registration Statement; (ii) reasonable best efforts to have the Registration
Statement cleared and declared effective by the Securities and Exchange
Commission as promptly as practicable after filing; (iii) cooperation in
determining whether any consents, approvals, orders, authorizations, waivers,
declarations, filings, or registrations of or with any Governmental Entity or
third party are required in connection with the consummation of the
transactions contemplated hereby; (iv) reasonable best efforts to obtain any
such consents, approvals, orders, authorizations, and waivers and to effect
any such declarations, filings, and registrations; (v) reasonable best efforts
to cause to be lifted or rescinded any injunction or restraining order or
other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby; (vi) reasonable best efforts to defend, and
cooperation in defending, all lawsuits or other legal proceedings challenging
this Agreement or the consummation of the transactions contemplated hereby;
and (vii) the execution of any additional instruments necessary to consummate
the transactions contemplated hereby.
7.6 HSR Act Notification. To the extent required by the HSR Act, each
of the parties hereto shall (i) file or cause to be filed, as promptly as
practicable after the execution and delivery of this Agreement, with the
Federal Trade Commission and the United States Department of Justice, all
reports and other documents required to be filed by such party under the HSR
Act concerning the transactions contemplated hereby and (ii) promptly comply
with or cause to be complied with any requests by the Federal Trade Commission
or the United States Department of Justice for additional information
concerning such transactions, in each case so that the waiting period
applicable to this Agreement and the transactions contemplated hereby under
the HSR Act shall expire as soon as practicable after the execution and
delivery of this Agreement. Prior to making any filing under the HSR Act,
each party will obtain the consent of the other party to the content of such
filing, which consent shall not be unreasonably withheld. Each party hereto
agrees to request, and to cooperate with the other party or parties in
requesting, early termination of any applicable waiting period under the HSR
Act. The filing fees and other costs of compliance with the HSR Act (other
than each party's attorneys' and accountant's fees and other third party
expenses) shall be borne equally by Bionova U.S. and the Company.
7.7 Public Announcements. Except as may be required by Applicable Law
or the National Association of Securities Dealers, Inc., neither Parent,
Bionova U.S. or any member of the Bionova Group, on the one hand, nor the
Company or the Company Subsidiaries, on the other, shall issue any press
release or otherwise make any public statement with respect to this Agreement
or the transactions contemplated hereby without the prior written consent of
the other party (which consent shall not be unreasonably withheld or delayed).
Any such press release or public statement required by Applicable Law or by
the National Association of Securities Dealers, Inc. shall only be made after
reasonable notice to the other party.
7.8 Delivery and Amendment of Schedules. Each of Bionova U.S. and the
Company shall deliver all Schedules relating to the representations and
warranties of such party contained in this Agreement to the other party
simultaneously with the execution of this Agreement, except that (i) the
following schedules may be delivered up to thirty days after the date this
Agreement is signed: Schedules 7.8A, 7.8B, 7.8C, 9.5 and 10.4; and
(ii) Schedules 7.9A and 7.9B may be delivered on February 28, 1996. Any date
on which a party delivers any such Schedule is referred to as a "Schedule
Delivery Date" for such party. Each party hereto agrees that, with respect to
the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation until the Closing to
supplement or amend promptly the Schedules hereto with respect to any matter
hereafter arising or discovered which, if existing or known on a Schedule
Delivery Date, would have been required to be set forth or described in the
Schedules, including, without limitation, any material development with
respect to any pending on threatened litigation or governmental proceeding
previously disclosed in the Schedules. For all purposes of this Agreement,
including without limitation for purposes of determining whether the
conditions set forth in Sections 9.1 and 10.1 have been fulfilled, the
Schedules hereto shall be deemed to include only that information contained
therein on a Schedule Delivery Date and shall be deemed to exclude all
information contained in any supplement or amendment thereto; provided,
however, that if the Closing shall occur, then all matters disclosed pursuant
to any such supplement or amendment at or prior to the Closing shall be waived
and no party shall be entitled to make a claim thereon pursuant to the terms
of this Agreement. In addition to those schedules specifically referenced in
any other section of this Agreement, each of the parties hereto shall be
entitled to deliver to the other as provided in clause (i) above an omnibus
disclosure schedule through which they shall be entitled to supplement any of
the representations and warranties set forth in Articles III, IV and V hereof.
Any such omnibus disclosure schedule shall be delivered as Schedule 7.8A in
the case of the Company and Schedule 7.8B in the case of Parent, Bionova
Mexico, Bionova U.S. or Sub. Any documents referred to in either such
Schedule shall be delivered to the other party by the disclosing party
simultaneously with the delivery of Schedule 7.8A or 7.8B, as the case may be.
Schedule 7.8C referred to above shall consist of documents referenced in the
Schedules to the representations set forth in Articles IV and V together with
certain other documents requested by the Company in a written document request
to Bionova U.S. from the Company (or its counsel) dated January 25, 1996. The
failure to timely deliver any schedule required to be delivered after the date
hereof shall be deemed a material breach for all purposes hereof.
7.9 Delivery of 1995 Audited Financial Statements.
(a) On or before February 28, 1996, Bionova U.S. shall deliver
to the Company copies of the Bionova Group's audited consolidated
balance sheet as of December 31, 1995, and the related consolidated
statements of income, stockholders' equity, and cash flows for the year
then ended, and the notes and schedules thereto, prepared in accordance
with United States generally accepted accounting principles, which
financial statements shall be delivered as Schedule 7.9A hereto. Such
financial statements shall be accompanied by the audit report of a
nationally recognized "Big Six" accounting firm.
(b) On or before February 28, 1996, the Company shall deliver to
Bionova U.S. copies of the Company's audited consolidated balance sheet
as of December 31, 1995, and the related consolidated statements of
income, stockholders' equity, and cash flows for the year then ended,
and the notes and schedules thereto, prepared in accordance with United
States generally accepted accounting principles, which financial
statements shall be delivered as Schedule 7.9B hereto. Such financial
statements shall be accompanied by the audit report of a nationally
recognized "Big Six" accounting firm.
7.10 Notice of Litigation. Until the Closing, (i) Parent, Bionova
Mexico, Bionova U.S., and Sub upon learning of the same, shall promptly notify
the Company of any Proceeding which is commenced or threatened against Parent
(pertaining solely to the transactions contemplated by this Agreement),
Bionova Mexico, Bionova U.S., or the Bionova Group and (ii) the Company, upon
learning of the same, shall promptly notify Bionova U.S. of any Proceeding
which is commenced or threatened against the Company or a Company Subsidiary.
7.11 Notification of Certain Matters. The Company shall give prompt
notice to Bionova U.S. of the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in Article III to be untrue or inaccurate
in any material respect at or prior to the Closing. Parent, Bionova Mexico,
Bionova U.S. and Sub shall give prompt notice to the Company of the occurrence
or nonoccurrence of any event the occurrence or nonoccurrence of which would
be likely to cause any representation or warranty contained in Article IV or
Article V to be untrue or inaccurate in any material respect at or prior to
the Closing. The delivery of any notice pursuant to this Section shall not be
deemed to (i) modify the representations or warranties hereunder of the party
delivering such notice, (ii) modify the conditions set forth in Articles IX
and X, or (iii) limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
7.12 Bionova U.S. Standstill. Prior to the earlier of the Closing or
the termination of this Agreement, none of Parent, Bionova Mexico, the Bionova
Group, or any affiliate, director, officer, employee, or representative of
Parent, Bionova Mexico or the Bionova Group shall (i) directly or indirectly,
solicit, initiate, or conduct discussions or negotiations with any person
(other than the Company) concerning any merger, consolidation, sale of assets,
tender offer, sale of shares of capital stock, or similar transaction
involving Bionova Mexico or the Bionova Group, the securities of the Bionova
Group, or any significant assets of Bionova Mexico or the Bionova Group which
would result in a change in control of Bionova Mexico or the Bionova Group
other than as contemplated by this Agreement (each a "Bionova Acquisition
Proposal"), or (ii) disclose directly or indirectly to any person preparing to
make a Bionova Acquisition Proposal any confidential information regarding the
Bionova Group, or (iii) enter into any agreement, arrangement, understanding,
or commitment regarding any Bionova Acquisition Proposal. Notwithstanding the
immediately preceding sentence, the Boards of Directors of Parent, Bionova
Mexico, Bionova U.S., Sub and the Bionova Group may take any of the actions
described in the preceding sentence where they have been advised by legal
counsel that taking such actions is advisable in order to fulfill their
fiduciary duties. Bionova U.S. shall notify the Company promptly of any
Bionova Acquisition Proposal that is received after the date of this Agreement
and which a related party desires to accept and shall inform the Company if
the Board of Directors of any such party has been advised by counsel to
consider such Bionova Acquisition Proposal in order to fulfill the directors'
fiduciary duties and shall provide to the Company such information regarding
the Bionova Acquisition Proposal as the Company may reasonably request.
7.13 Indemnification and Insurance. To the full extent permitted by
Applicable Law, and subject to the limitations contained in Applicable Law,
all rights to indemnification now existing in favor of the directors of the
Company as provided in its Certificate of Incorporation or Bylaws in effect on
the date of this Agreement shall survive the Merger and shall continue in full
force and effect for such period as shall be permitted by Applicable Law and
shall be deemed to cover and constitute indemnification obligations of the
Surviving Corporation with respect to acts or omissions by such directors
through and including the Effective Time of the Merger (but not thereafter).
The Surviving Corporation shall cause to be maintained for a period of three
years from the Effective Time of the Merger for the benefit of such directors,
policies of directors' and officers' liability insurance providing coverage no
less favorable than the policies currently maintained by the Company with
respect to matters occurring through and including the Effective Time of the
Merger (but not thereafter) and with aggregate limits equal to not less than
three times the aggregate limits of such currently maintained policies.
During such three year period, Bionova U.S. will fund any "deductible" amount
specified in any such policies in the event that a claim is asserted which
implicates such policies and then only to the extent that the Surviving
Corporation is permitted to do so under such policies and Applicable Law but
is unable to do so because of its financial condition. In the event that
Bionova U.S. or the Surviving Corporation or any of its successors and assigns
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or transfers and conveys all or substantially all of its property and assets
to any person, then, and in each case, proper provisions shall be made so that
the successor and assigns of Bionova U.S. or the Surviving Corporation, as the
case may be, assume the obligations set forth in this Section 7.13.
The provisions of this Section 7.13 are intended to be for the benefit
of, and shall be enforceable by, each aforementioned indemnified party, his
heirs and representatives, and may not be amended, altered or repealed without
the written consent of any such indemnified party.
7.14 Limited Guaranty of Parent. For a period of three years from the
Effective Time of the Merger, Parent covenants to provide when requested by
Bionova U.S. a guarantee in a form reasonably acceptable to the applicable
financial institution of Bionova U.S.'s obligations to such financial
institution pursuant to a loan or line of credit (a "Loan") if and only if
(i) Parent's maximum exposure under the guaranty is limited to $20 million,
and (ii) the documents evidencing the Loan provide that the amounts loaned to
Bionova U.S. from time to time will not exceed the sum of 80% of its and its
consolidated subsidiaries' accounts receivable from time to time plus 50% of
its and its consolidated subsidiaries' inventory from time to time and will be
secured by both such accounts and inventory.
7.15 Governing Documents. Prior to the Closing, Parent shall (i) cause
the governing documents of each of ABSA, Interfruver S.A. de C.V., Asesoria y
Servicios del Noreste, S.A. de C.V., Excelencia en Frutas y Verduras, S.A. de
C.V., Premier del Pacifico, S.A. de C.V. and Comercializadora Premier S.A. de
C.V. to be amended to permit the foreign ownership of such entities capital
stock to the maximum extent permitted by Mexican law, and (ii) cause the
governing documents of ABSA to be amended to reduce the quorum required to
conduct ordinary meetings of the equity owners to a simple majority of the
outstanding capital stock of ABSA and to provide that a concurring vote of a
simple majority of the present and voted capital stock of ABSA is sufficient
to validly pass resolutions at such meetings on such matters that do not
require a higher vote under Applicable Law or other governing documents. Such
amendments shall be in the form set forth in Schedule 7.15.
7.16 Fairness Opinion. The Company shall use its best efforts to
obtain the fairness opinion referenced in Section 9.4 not later than the date
set forth therein.
7.17 Bionova U.S. Organizational Documents. Not later than the Closing
Date, Parent shall cause the certificate of incorporation and bylaws of
Bionova U.S., copies of which are included in Schedule 4.3, to be amended if
necessary under State Law, in the reasonable judgment of the parties hereto,
to accomplish the purpose, and to carry out the intent, of the Governance
Agreement.
7.18 Notices. To the extent that the Company and the Company
Subsidiaries, on the one hand, and Parent, Bionova Mexico, Bionova U.S., Sub
or any member of the Bionova Group, on the other hand, are required under the
terms of any agreement or arrangement, whether written or oral, to notify any
third party or to take any other action as a result of the transactions
contemplated hereby or the Ancillary Documents, they will effect any such
notice or action not later than the date specified in any such agreement or
arrangement.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
The obligations of Parent, Bionova Mexico, Bionova U.S., Sub, and the
Company to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment on or prior to the Closing Date of each of the
following conditions:
8.1 HSR Act. All waiting periods (and any extensions thereof)
applicable to this Agreement and the transactions contemplated hereby under
the HSR Act shall have expired or been terminated.
8.2 Stockholder Approval. This Agreement and the Merger shall have
been duly and validly adopted and approved by the requisite vote of the
holders of Company Common Stock in accordance with the Certificate of
Incorporation and Bylaws of the Company, the rules of the NASDAQ NMS, and
Applicable Law.
8.3 Legal Proceedings. No Proceeding shall, on the Closing Date, be
pending seeking to restrain, prohibit, or obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated hereby.
8.4 Registration Statement. The Registration Statement shall have
been declared effective, and no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for such purpose
shall be pending before or threatened by the Securities and Exchange
Commission.
8.5 Bionova U.S. Common Stock. The Bionova U.S. Common Stock to be
issued in connection with the Merger shall have been authorized for quotation
on the NASDAQ NMS.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
9.1 Representations and Warranties True. All the representations and
warranties of Parent, Bionova Mexico, Bionova U.S. and Sub contained in this
Agreement, and in any agreement, instrument, or document delivered pursuant
hereto or in connection herewith on or prior to the Closing Date, shall be
true and correct in all material respects as of the date made and (having been
deemed to have been made again on and as of the Closing Date in the same
language) shall be true and correct in all material respects on and as of the
Closing Date, except as affected by transactions permitted by this Agreement
and except to the extent that any such representation or warranty is made as
of a specified date, in which case such representation or warranty shall have
been true and correct in all material respects as of such specified date.
9.2 Covenants and Agreements Performed. Parent, Bionova Mexico,
Bionova U.S. and Sub shall have performed and complied with in all material
respects all covenants and agreements required by this Agreement and the
Auxiliary Agreements to be performed or complied with by it on or prior to the
Closing Date.
9.3 Certificate. The Company shall have received a certificate
executed on behalf of Parent, Bionova Mexico, Bionova U.S. and Sub by the duly
authorized chief executive officer or chief financial officer and the
secretary of Parent, Bionova Mexico, Bionova U.S. and Sub, dated the Closing
Date, representing and certifying, in such detail as the Company may
reasonably request, that the conditions set forth in this Article IX have been
fulfilled and that Parent, Bionova Mexico, Bionova U.S. and Sub are not in
breach of any provision of this Agreement.
9.4 Fairness Opinion. The Board of Directors of the Company shall
have received a written opinion, in form and substance reasonably satisfactory
to the Board, of a nationally recognized investment banking firm, dated the
date of this Agreement, to the effect that the consideration to be received by
the stockholders of the Company pursuant to the Merger is fair, from a
financial point of view, to the stockholders of the Company, and such opinion
shall not have been amended in a manner adverse to the Company or its
stockholders or withdrawn.
9.5 Legal Opinion. The Company shall have been provided with a legal
opinion of Thompson & Knight, P.C., in form and substance reasonably
satisfactory to the Company, as to the matters specified in Schedule 9.5. In
rendering such legal opinion, such counsel may rely on the opinions of other
acceptable legal counsel as to matters not covered by U.S. or Texas laws or as
otherwise agreed to by the Company.
9.6 No Material Adverse Change. Since December 31, 1995, there shall
not have occurred any Bionova Group Material Adverse Effect.
9.7 Phase I Environmental. The Company shall have been provided not
later than the date on which the Company's preliminary Proxy Statement is
first transmitted to the Securities and Exchange Commission with a Phase I
environmental review (or its equivalent according to the applicable standards
in the country where the property is located), in form and content reasonably
satisfactory to the Company, with respect to all material real estate owned,
leased or operated by the Bionova Group (other than leased real estate used
exclusively for executive office purposes); provided that to the extent that
the Bionova Group has obtained a Phase I environmental review (or its
equivalent) on any such material property in the 18-month period prior to the
date of this Agreement, it shall not be required to obtain an updated version
thereof, subject to the reasonable acceptability of the form and content
thereof to the Company.
9.8 Governance Agreement. The Governance Agreement in the form
attached hereto as Schedule 9.8 shall have been executed and delivered by
Parent and Bionova U.S.
9.9 Long-Term Funded Research Agreement. The Long-Term Funded
Research Agreement in the form attached hereto as Schedule 9.9 shall have been
executed and delivered by the Company and Parent.
9.10 Severance Agreements. Severance agreements containing the
provision set forth in Schedule 9.10, together with such other terms and
conditions as shall be mutually satisfactory to the parties hereto, shall have
been executed by the Company and delivered to each of the Company's officers
and senior management specified in Schedule 9.10.
ARTICLE X
CONDITIONS TO OBLIGATIONS OF PARENT,
BIONOVA MEXICO, BIONOVA U.S. AND SUB
The obligations of Parent, Bionova Mexico, Bionova U.S., and Sub to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment on or prior to the Closing Date of each of the following
conditions:
10.1 Representations and Warranties True. All the representations and
warranties of the Company contained in this Agreement, and in any agreement,
instrument, or document delivered pursuant hereto or in connection herewith on
or prior to the Closing Date, shall be true and correct in all material
respects as of the date made and (having been deemed to have been made again
on and as of the Closing Date in the same language) shall be true and correct
in all material respects on and as of the Closing Date, except as affected by
transactions permitted by this Agreement and except to the extent that any
such representation or warranty is made as of a specified date, in which case
such representation or warranty shall have been true and correct in all
material respects as of such specified date.
10.2 Covenants and Agreements Performed. The Company shall have
performed and complied with in all material respects all covenants and
agreements required by this Agreement to be performed or complied with by it
on or prior to the Closing Date.
10.3 Certificate. Bionova U.S. shall have received a certificate
executed on behalf of the Company by the president and the vice president-
finance of the Company, dated the Closing Date, representing and certifying,
in such detail as Bionova U.S. may reasonably request, that the conditions set
forth in this Article X have been fulfilled and that the Company is not in
breach of any provision of this Agreement.
10.4 Legal Opinion. Bionova U.S. shall have been provided with a legal
opinion of Farella, Braun & Martel and/or Proskauer, Rose, Goetz & Mendelsohn,
LLP, in form and substance reasonably satisfactory to Bionova U.S., as to the
matters specified in Schedule 10.5. In rendering such legal opinion, such
counsel may rely on the opinions of other acceptable legal counsel as to
matters not covered by U.S., California or New York laws, as the case may be,
or as otherwise agreed to by Bionova U.S.
10.5 No Material Adverse Change. Since December 31, 1995, there shall
not have occurred any Company Material Adverse Effect.
10.6 Preemptive Rights. No party, if any, holding preemptive rights to
acquire capital stock or any other security of the Company or a Company
Subsidiary shall have notified the Company or the Company Subsidiary, as the
case may be, of the exercise of any such rights.
10.7 Phase I Environmental. Bionova U.S. shall have been provided not
later than the date on which the Company's preliminary Proxy Statement is
first transmitted to the Securities and Exchange Commission with a Phase I
environmental review (or its equivalent according to the applicable standards
in the country where the property is located), in form and content reasonably
satisfactory to Bionova U.S., with respect to all material real estate owned,
leased or operated by the Company or any Company Subsidiary (other than leased
real estate used exclusively for executive office purposes); provided that to
the extent that the Company or any Company Subsidiary has obtained a Phase I
environmental review (or its equivalent) on any such material property in the
18-month period prior to the date of this Agreement, it shall not be required
to obtain an updated version thereof, subject to the reasonable acceptability
of the form and content thereof to Bionova U.S.
10.8 Authorized Shares. Prior to June 30, 1996, the Company shall have
reserved sufficient authorized shares of Company Common Stock to meet its
contractual obligations to the holders of the options and/or warrants listed
on Schedule 10.8. Bionova U.S. acknowledges that in order to accomplish this,
the Company may be required to take action for which Bionova U.S.'s consent is
required pursuant to Section 6.2. If such consent is required, Bionova U.S.
agrees it shall not be unreasonably withheld or delayed.
ARTICLE XI
TERMINATION, AMENDMENT, AND WAIVER
11.1 Termination. With Bionova U.S. acting for such purpose on behalf
of itself and on behalf of Parent, Bionova Mexico and Sub, this Agreement may
be terminated and the transactions contemplated hereby abandoned at any time
prior to the Closing (notwithstanding any approval of this Agreement by the
stockholders of the Company) in the following manner:
(a) by mutual written consent of the Company and Bionova U.S.;
or
(b) by either the Company or Bionova U.S., if the Closing shall
not have occurred on or before July 31, 1996, unless such failure to
close shall be due to a breach of this Agreement by the party seeking to
terminate this Agreement pursuant to this clause (b); or
(c) by either the Company or Bionova U.S., if there shall be any
statute, rule, or regulation that makes consummation of the transactions
contemplated hereby illegal or otherwise prohibited or a Governmental
Entity shall have issued an order, decree, or ruling or taken any other
action permanently restraining, enjoining, or otherwise prohibiting the
consummation of the transactions contemplated hereby, and such order,
decree, ruling, or other action shall have become final and
nonappealable; or
(d) by either the Company or Bionova U.S., if the stockholders
of the Company shall have failed to approve this Agreement and the
Merger at a special meeting called for such purpose; or
(e) by the Company no later than fifteen days after a Schedule
Delivery Date for Bionova U.S. if, as a result of the delivery of any
such schedule on such date, the Company shall have become aware of
material facts relating to the business, assets, results of operations,
condition (financial or otherwise), or prospects of the Bionova Group
which, in the good faith judgment of the Company, make it inadvisable
for the Company to proceed with the consummation of the transactions
contemplated hereby; or
(f) by Bionova U.S. no later than fifteen days after a Schedule
Delivery Date for the Company if, as a result of the delivery of any
such schedule on such date, Bionova U.S. shall have become aware of
material facts relating to the business, assets, results of operations,
condition (financial or otherwise), or prospects of the Company or any
Company Subsidiary which, in the good faith judgment of Bionova U.S.,
make it inadvisable for Bionova U.S. to proceed with the consummation of
the transactions contemplated hereby; or
(g) by the Company, in the event of a material breach by Parent,
Bionova U.S., or Sub of any representation, warranty, covenant or
agreement contained herein which is not curable or has not been cured,
in the case of a representation or warranty, prior to the Closing or, in
the case of a covenant or agreement, within thirty days following
receipt by Bionova U.S. of written notice of such breach from the
Company; or
(h) by Bionova U.S., in the event of a material breach by the
Company of any representation, warranty, covenant or agreement contained
herein which is not curable or has not been cured, in the case of a
representation or warranty, prior to the Closing or, in the case of a
covenant or agreement, within thirty days following receipt by the
Company of written notice of such breach from Bionova U.S.; or
(i) by the Company, if, for the twelve month period ended
December 31, 1995, the Earnings Before Interest and Tax (net of minority
interests) of the entities that will constitute the Bionova Group as of
the Closing as set forth in the financial statements of the Bionova
Group delivered pursuant to Section 7.9(a) (Delivery of 1995 Audited
Financial Statements) are less than $6 million; or
(j) by either the Company or Bionova U.S., if the Board of
Directors of the Company shall have approved and/or recommended to the
stockholders of the Company an Alternative Transaction (as defined in
Section 11.3(e)).
11.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 11.1 by the Company, on the one hand, or Bionova
U.S., on the other, written notice thereof shall forthwith be given to the
other party specifying the provision hereof pursuant to which such termination
is made, and this Agreement shall become void and have no effect, except that
the agreements contained in this Section, in Sections 7.7 and 11.3, in Article
XII, and in applicable provisions of Article XIII shall survive the
termination hereof. Nothing contained in this Section shall relieve any party
from liability for damages actually incurred as a result of any breach of this
Agreement. No termination of this Agreement shall affect the obligations of
the parties pursuant to the Confidentiality Agreement referred to in
Section 7.1, except to the extent specified in such agreement.
11.3 Expenses.
(a) Except as otherwise expressly provided in this Agreement,
all fees and expenses, including fees and expenses of counsel, financial
advisors, and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party
incurring such fee or expense, whether or not the transactions
contemplated hereby are consummated; provided, that all such fees and
expenses incurred by any of Bionova Mexico, Bionova U.S. or Sub shall be
paid by Parent (other than the expenses pertaining to compliance with
the HSR Act and the expenses associated with the printing and filing of
the Registration Statement, all of which shall be funded by Bionova
U.S.); and provided further, that Bionova U.S. and the Company shall
share equally all fees and expenses, other than attorney's fees,
incurred in relation to the printing and filing of the Registration
Statement (including any related preliminary materials) and any
amendments or supplements.
(b) The Company shall pay Bionova U.S. up to $1,500,000 as
reimbursement for expenses of Parent, Bionova Mexico, Bionova U.S., Sub
and the Bionova Group actually incurred relating to the transactions
contemplated by this Agreement prior to termination (including without
limitation fees and expenses of Bionova U.S.'s counsel, accountants and
financial advisers) upon the earliest to occur of the following:
(i) the termination of this Agreement by Bionova U.S.
pursuant to Section 11.1(f); or
(ii) the termination of this Agreement by Bionova U.S.
pursuant to Section 11.1(h) after a breach by the Company of this
Agreement; or
(iii) the termination of this Agreement pursuant to Section
11.1(j); or
(iv) the termination of the Agreement by the Company
pursuant to Section 11.1(b) at a time when Bionova U.S. could have
terminated the Agreement pursuant to Section 11.1(h).
(c) Parent or Bionova U.S. shall pay the Company up to
$1,500,000 as reimbursement for expenses of the Company actually
incurred relating to the transactions contemplated by this Agreement
prior to termination (including without limitation fees and expenses of
the Company's counsel, accountants and financial advisers) upon the
earliest to occur of the following:
(i) the termination of this Agreement by the Company
pursuant to Section 11.1(e); or
(ii) the termination of this Agreement by the Company
pursuant to Section 11.1(g) after a breach by Parent, Bionova
Mexico, Bionova U.S., or Sub of this Agreement; or
(iii) the termination of the Agreement by Bionova U.S.
pursuant to Section 11.1(b) at a time when the Company could have
terminated the Agreement pursuant to Section 11.1(g).
(d) In addition to any amounts required to be paid by the
Company pursuant to Section 11.3(b), the Company shall pay Bionova U.S.
(or any person designated by Bionova U.S. for such purpose) a fee equal
to the excess of $2,000,000 over the amount paid by the Company pursuant
to Section 11.3(b) if, within one year from the date of termination of
this Agreement for any of the reasons set forth in Section 11.3(b), an
Alternative Transaction occurs, the Company announces publicly its
intention to enter into an Alternative Transaction, or the Company
enters into an agreement contemplating an Alternative Transaction. Such
payment shall be made upon the earlier to occur of the events described
in the preceding sentence.
(e) As used in this Agreement, "Alternative Transaction" means
(i) a transaction pursuant to which any person (or group of persons)
other than Bionova U.S. or its affiliates (a "Third Party") acquires
capital stock (or other securities which are convertible, exchangeable
or exercisable into voting capital stock) of the Company representing
more than 15% (for purposes of Section 11.1(j)) or 35% (for purposes of
Section 11.3(d)) of the outstanding voting power of the Company, whether
from the Company, pursuant to a tender offer or exchange offer, or
otherwise; (ii) a merger or other business combination involving the
Company pursuant to which any Third Party acquires capital stock (or
other securities which are convertible, exchangeable or exercisable into
voting capital stock) of the Company representing more than 15% (for
purposes of Section 11.1(j)) or 35% (for purposes of Section 11.3(d)) of
the outstanding voting power of the Company or the entity surviving such
merger or business combination; or (iii) any other transaction pursuant
to which any Third Party acquires control of assets (including for this
purpose the outstanding equity securities of Subsidiaries of the
Company, and the entity surviving any merger or business combination
including any of them) of the Company having a fair market value equal
to more than 15% (for purposes of Section 11.1(j)) or 35% (for purposes
of Section 11.3(d)) of the fair market value of all the assets of the
Company immediately prior to such transaction.
11.4 Amendment. This Agreement may not be amended except by an
instrument in writing signed by or on behalf of all the parties hereto.
11.5 Waiver. Each of the Company and Bionova U.S. may (i) waive any
inaccuracies in the representations and warranties of the other contained
herein or in any document, certificate, or writing delivered pursuant hereto
or (ii) waive compliance by the other with any of the other's agreements or
fulfillment of any conditions to its own obligations contained herein. Any
agreement on the part of a party hereto to any such waiver shall be valid only
if set forth in an instrument in writing signed by or on behalf of such party.
No failure or delay by a party hereto in exercising any right, power, or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege.
ARTICLE XII
MISCELLANEOUS
12.1 Nonsurvival of Representations, Warranties, and Agreements. None
of the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Closing and
the Effective Time, except for the agreements contained in Article I, Article
II, Article XII, and Sections 7.1, 7.5, 7.13, 7.14, 11.3, 12.2, 12.3, 12.5,
12.6 and 12.14.
12.2 Indemnification.
(a) Subject to the terms and conditions of this Section 12.2,
Parent shall indemnify and hold harmless Bionova U.S. from and against
any and all losses, damages, liabilities, judgments, settlements,
penalties, costs, and expenses (including reasonable attorneys' fees and
expenses), of any nature whatsoever (collectively, "Losses"), incurred
by Bionova U.S. or any member of the Bionova Group, directly or
indirectly, by reason of, relating to, or resulting from any of the
events ("Triggering Events") described on Schedule 12.2-1 (collectively,
"Company Claims").
(b) Parent shall not have any indemnification obligation
pursuant to this Section 12.2 or otherwise in respect of this Agreement
unless before the Claim Limitation Date it shall have received from
Bionova U.S. written notice that a Triggering Event has occurred (a
"Claim Notice"). The Claim Notice shall set forth with reasonable
specificity (i) the factual basis for asserting that a Triggering Event
has occurred and (ii) an estimate of the amount of Losses to be incurred
as a direct or indirect result of such Triggering Event (which estimate
shall not be conclusive of the final amount of indemnification) and an
explanation of the calculation of such estimate, including a statement
of any significant assumptions employed therein. The decision to
deliver a Claim Notice shall be in the sole discretion of the DNAP
Independent Directors as such term is defined in the Governance
Agreement. The "Claim Limitation Date" shall be the first anniversary
of the Closing Date (except for matters identified in items 1 and 4 of
Schedule 12.2-1, in which case the Claim Limitation Date shall be the
Final Claim Date, as defined below).
(c) The indemnification obligations of Parent pursuant to this
Section 12.2 shall be subject to the following limitations and other
provisions:
1. No indemnification shall be required to be made by
Parent with respect to any Company Claims unless the aggregate
amount of Losses incurred by Bionova U.S. and the Bionova Group
with respect to all Company Claims, less all reductions and other
adjustments provided for in this Section 12.2(c), exceeds
$300,000, in which event indemnification will relate back to the
first dollar of Loss.
2. Parent's indemnification obligation hereunder shall in
no event exceed $1,500,000.
3. Any indemnity payments owed by Parent to Bionova U.S.
pursuant to this Section 12.2 shall be reduced by the amount of
the Indemnity Offset, if any, provided that Parent has delivered
an Offset Notice to Bionova U.S. before the first anniversary of
the Closing Date. The "Indemnity Offset" shall be the aggregate
Losses incurred by Bionova U.S. and the Surviving Corporation by
reason of, relating to, or resulting from any of the events
described on Schedule 12.2-2 ("Offset Events"). "Offset Notice"
means a written notice setting forth with reasonable specificity
(i) the factual basis for asserting that an Offset Event has
occurred and (ii) an estimate of the amount of Losses to be
incurred as a direct or indirect result of such Offset Event
(which estimate shall not be conclusive of the final amount of
offset) and an explanation of the calculation of such estimate,
including a statement of any significant assumptions employed
therein.
4. Any indemnity payments owed by Parent to Bionova U.S.
pursuant to this Section 12.2 arising from Losses incurred by a
company of the Bionova Group shall be reduced to the product of
(x) the amount of such Losses multiplied by (y) the percentage of
the equity of such company owned directly or indirectly by Bionova
U.S.
5. Any indemnity payments owed by Parent to Bionova U.S.
pursuant to this Section 12.2 as a result of any Company Claim
shall be reduced to the extent of any amounts actually received by
Bionova U.S. or any other member of the Bionova Group pursuant to
the terms of any insurance policies or contractual indemnities
covering such claim. The amount of the Indemnity Offset shall
likewise be reduced to the extent of any amounts actually received
by Bionova U.S. or the Surviving Corporation pursuant to the terms
of any insurance policies or contractual indemnities covering such
matters.
6. Notwithstanding any other provision of this Section
12.2, Parent will have no obligation to make any payment to
Bionova U.S. relating to a matter described on Schedule 12.2-1
unless, prior to the date of the 1999 annual meeting of
shareholders of Bionova U.S. (the "Final Claim Date"), (i) a
Governmental Entity has issued an order or assessment against a
member of the Bionova Group with respect to that matter,
(ii) Bionova U.S. or a member of the Bionova Group has agreed to
make a payment in settlement of that matter, or (iii) Parent has
become obligated to make such payment pursuant to Section 12.2(d).
(d) With respect to any Company Claim for which a Claim Notice
was delivered to Parent prior to the applicable Claim Limitation Date,
Parent will pay Bionova U.S. the amount required to be paid by it
hereunder no later than ten days after receiving from Bionova U.S.
evidence of the actual payment by Bionova U.S. or a member of the
Bionova Group of the relevant Losses. If (i) an Offset Notice was
delivered to Bionova U.S. before the first anniversary of the Closing
Date, and (ii) Parent has made an indemnity payment to Bionova U.S.
under this Section 12.2, and (iii) thereafter, Bionova U.S. or the
Surviving Corporation incurs Losses constituting an Indemnity Offset,
then Bionova U.S. will pay Parent the amount of the Indemnity Offset no
later than ten days after receiving from Parent evidence of the actual
payment by Bionova U.S. or the Surviving Corporation of the Losses
constituting the Indemnity Offset; provided that in no event shall
Bionova U.S. be required to pay to Parent more than it has received from
Parent pursuant to this Section 12.2.
12.3 Notices. All notices, requests, demands, and other communications
required or permitted to be given or made hereunder by any party hereto shall
be in writing and shall be deemed to have been duly given or made if (i)
delivered personally, (ii) sent by prepaid overnight courier service, or (iii)
sent by telecopy or facsimile transmission, answer back requested, to the
parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice):
If to Parent, Bionova Mexico, Bionova U.S., or Sub:
c/o Pulsar Internacional, S.A. de C.V.
Edificio Torrealta
Av. Roble 300 Mezzanine
66265 Garza Garcia, N.L.
Mexico
Attention: Lic. Alejandro Sanchez
Telefax: 011-528-335-6993
with a copy to:
Joe A. Rudberg
Thompson & Knight, P.C.
1700 Pacific Avenue, Suite 3300
Dallas, Texas 75201
Telefax: (214) 969-1751
If to the Company:
DNA Plant Technology Corporation
6701 San Pablo Avenue
Oakland, California 94608
Attention: Robert Serenbetz, Chief Executive Officer and
Legal Department
Telefax: (510) 450-9395
with a copy to:
Farella, Braun & Martel
235 Montgomery Street
San Francisco, California 94104
Attention: M. Greg Allio
Telefax: (415) 954-4480
Such notices, requests, demands, and other communications shall be effective
upon actual receipt by the intended recipient.
12.4 Entire Agreement. This Agreement, together with the Schedules,
Ancillary Documents, Agreements, and other writings referred to herein or
delivered pursuant hereto, constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and thereof.
12.5 Binding Effect; Assignment; No Third Party Benefit. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Except as otherwise
expressly provided in this Agreement, neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties. Except
as provided in Section 12.1, nothing in this Agreement, express or implied, is
intended to or shall confer upon any person other than the parties hereto, and
their respective successors and permitted assigns, any rights, benefits, or
remedies of any nature whatsoever under or by reason of this Agreement.
12.6 Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in
all other respects this Agreement shall remain in full force and effect;
provided, however, that if any such provision may be made enforceable by
limitation thereof, then such provision shall be deemed to be so limited and
shall be enforceable to the maximum extent permitted by Applicable Law.
12.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
12.8 Further Assurances. From time to time following the Closing, at
the request of any party hereto and without further consideration, the other
party or parties hereto shall execute and deliver to such requesting party
such instruments and documents and take such other action (but without
incurring any financial obligation) as such requesting party may reasonably
request in order to consummate more fully and effectively the transactions
contemplated hereby.
12.9 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only, do not constitute a part of this
Agreement, and shall not affect in any manner the meaning or interpretation of
this Agreement.
12.10 Gender. Pronouns in masculine, feminine, and neuter genders shall
be construed to include any other gender, and words in the singular form
shall be construed to include the plural and vice versa, unless the context
otherwise requires.
12.11 References. All references in this Agreement to Articles,
Sections, and other subdivisions refer to the Articles, Sections, and other
subdivisions of this Agreement unless expressly provided otherwise. The words
"this Agreement", "herein", "hereof", "hereby", "hereunder", and words of
similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. Whenever the words "include",
"includes", and "including" are used in this Agreement, such words shall be
deemed to be followed by the words "without limitation". Unless the context
otherwise requires, each reference herein to a Schedule refers to the item
identified separately in writing by the parties hereto as the described
Schedule to this Agreement. All Schedules are hereby incorporated in and made
a part of this Agreement as if set forth in full herein.
12.12 Counterparts. This Agreement may be executed by the parties
hereto in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same agreement. Each
counterpart may consist of a number of copies hereof each signed by less than
all, but together signed by all, the parties hereto.
12.13 Assignment. Notwithstanding anything to the contrary set forth
herein and provided that Seminis, Inc. executes and delivers a written
instrument assuming all of Parent's obligations hereunder under such
circumstances, not later than the date on which the Proxy Statement is first
transmitted in preliminary form to the Securities and Exchange Commission,
Bionova Mexico shall be entitled to transfer its ownership interest in Bionova
U.S. to Seminis, Inc., a majority owned subsidiary of Parent, so that Bionova
U.S. then becomes a direct wholly-owned subsidiary of Seminis, Inc. Parent
shall notify the Company in writing of any such transfer and shall provide a
counterpart original of such instrument of assumption to the Company, which
instrument shall be in a form reasonably acceptable to the Company. After any
such transfer and upon the Effective Time of the Merger, Parent shall be
released from any further obligations hereunder (except for its obligations
under Sections 7.14, 11.3 and 12.2 and under the Governance Agreement and the
Long-Term Funded Research Agreement) and any representation and warranty or
other reference herein as to the ownership of the capital stock of Bionova
U.S. shall be deemed to have been amended to reflect such new ownership. Any
such transfer shall not affect the obligations of Bionova Mexico, Bionova U.S.
or Sub hereunder.
12.14 Confidentiality Agreement and Standstill. The Confidentiality
Agreement, including the standstill provisions included therein, shall survive
the execution and delivery of this Agreement and shall automatically
terminate, expire and be of no further force and effect upon the first to
occur of (i) the Effective Time of the Merger or (ii) the expiration date, if
any, set forth therein.
ARTICLE XIII
DEFINITIONS
13.1 Certain Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it below:
"affiliate" has the meaning specified in Rule 12b-2 promulgated
under the Exchange Act (except as otherwise provided in Section 3.21 and
Section 5.16).
"Ancillary Documents" means each agreement, instrument, and
document (other than this Agreement) executed or to be executed by the
Company, Parent, Bionova Mexico, Sub or Bionova U.S. in connection with
the execution of this Agreement or the transactions contemplated hereby.
"Applicable Law" means any statute, law, rule, or regulation or
any judgment, order, writ, injunction, or decree of any Governmental
Entity to which a specified person or property is subject.
"Bionova Group" means Bionova, S.A. de C.V., a corporation
organized under the laws of the United Mexican States, International
Produce Holding Company, a Delaware corporation; R.B. Packing, Inc., an
Arizona corporation; Batiz and Sons, Inc., an Arizona corporation; R.B.
Packing of California, Inc., a California corporation; Tanimura
Distributing Inc., a California corporation; Premier Fruits and
Vegetables BBL Ltd., a Quebec corporation; Agricola Batiz, S.A. de C.V.,
a corporation organized under the laws of the United Mexican States;
Comercializadora Premier, S.A. de C.V. a corporation organized under the
laws of the United Mexican States; Interfruver, S.A. de C.V. a
corporation organized under the laws of the United Mexican States;
Premier del Pacifico, S.A. de C.V., a corporation organized under the
laws of the United Mexican States; Excelencia en Frutas y Verduras, S.A.
de C.V., a corporation organized under the laws of the United Mexican
States; Asesoria y Servicios del Noreste, S.A. de C.V., a corporation
organized under the laws of the United Mexican States; and R.B. Packing
of Texas, Inc., a Texas corporation.
"Bionova Group Material Adverse Effect" means a material adverse
effect on the business, assets, results of operations, condition
(financial or otherwise), or prospects of Bionova Mexico, Bionova U.S.,
Sub, and the Bionova Group considered as a whole or on the ability of
Parent, Bionova Mexico, Bionova U.S., or Sub to perform on a timely
basis any material obligation of Bionova Mexico, Bionova U.S., Parent or
Sub under this Agreement or any agreement, instrument, or document
entered into or delivered in connection herewith.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Material Adverse Effect" means a material adverse effect
on the business, assets, results of operations, condition (financial or
otherwise), or prospects of the Company and the Company Subsidiaries
considered as a whole or on the ability of the Company to perform on a
timely basis any material obligation of the Company under this Agreement
or any agreement, instrument, or document entered into or delivered in
connection herewith.
"Encumbrances" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions (whether on
voting, sale, transfer, disposition, or otherwise), easements, and other
encumbrances of every type and description, whether imposed by law,
agreement, understanding, or otherwise.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any federal, state, municipal, or
other governmental body, agency, authority, department, commission,
board, bureau, or instrumentality (domestic or foreign).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"independent director" means a person serving as a director of a
company other than an officer or employee of such company or its
subsidiaries or any other individual having a relationship which, in the
opinion of the board of directors of such company, would interfere with
the exercise by that person of independent judgment in carrying out the
responsibilities of a director.
"Intellectual Property" means patents, plant variety protection
certificate rights, breeders' rights, trademarks, service marks, trade
names, service names, brand names, copyrights, trade secrets, know-how,
technology, inventions, computer software (including documentation and
object and source codes), and similar rights, and all registrations,
applications, licenses, and rights with respect to any of the foregoing.
"IRS" means the Internal Revenue Service.
"Loan Agreement" means that certain Loan Agreement of even date
herewith between Bionova U.S. and the Company as well as the "Loan
Documents" referred to in Section 1.21 of such Loan Agreement.
"Non-Exclusive Patent License Agreement" means that certain Non-
Exclusive Patent License Agreement of even date herewith between the
Company and Bionova U.S.
"Permits" means licenses, permits, franchises, consents,
approvals, variances, exemptions, and other authorizations of or from
Governmental Entities.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise,
unincorporated organization, or Governmental Entity.
"Proceedings" means all proceedings, actions, claims, suits,
investigations, and inquiries by or before any arbitrator or
Governmental Entity.
"reasonable best efforts" means a party's reasonable best efforts
in accordance with reasonable commercial practice and without the
incurrence of unreasonable expense.
"Securities Act" means the Securities Act of 1933, as amended.
"Sole Patent License" means that certain Sole Patent License
executed by Bionova U.S. and the Company as of the date of this
Agreement as required under the Loan Agreement.
"Subsidiary" means any corporation more than 50% of whose
outstanding voting securities, or any general partnership, joint
venture, or similar entity more than 50% of whose total equity
interests, is owned, directly or indirectly, by the relevant entity, or
any limited partnership of which the relevant entity or any Subsidiary
is a general partner. Subsidiaries of the Company are sometimes
referred to herein as "Company Subsidiaries."
"Tax" or "Taxes" means any income taxes or similar assessments or
any sales, excise, occupation, use, ad valorem, property, production,
severance, transportation, employment, payroll, franchise, or other tax
imposed by any United States federal, state, or local (or any foreign or
provincial) taxing authority, including any interest, penalties, or
additions attributable thereto.
"Tax Return" means any return or report, including any related or
supporting information, with respect to Taxes.
"to the best knowledge of the Company" (or similar references to
the Company's knowledge) means the knowledge of any of the Company's
officers, as such knowledge has been obtained in the normal conduct of
the business of the Company or in connection with the preparation of the
Schedules to this Agreement and the furnishing of information to Bionova
U.S. as contemplated by this Agreement, after having made a reasonable
investigation of the accuracy of the representations and warranties made
by the Company in this Agreement or in any document, certificate, or
other writing furnished by the Company to Bionova U.S. pursuant hereto
or in connection herewith.
"to the best knowledge of Bionova U.S." (or similar references to
Bionova U.S.'s knowledge) means the knowledge of any of Parent's,
Bionova Mexico, Bionova U.S.'s or Sub's officers, as such knowledge has
been obtained in the normal conduct of the business of the Bionova Group
or in connection with the preparation of the Schedules to this Agreement
and the furnishing of information to the Company as contemplated by this
Agreement, after having made a reasonable investigation of the accuracy
of the representations and warranties made by Parent, Bionova Mexico,
Bionova U.S. and Sub in this Agreement or in any document, certificate,
or other writing furnished by Parent, Bionova Mexico, Bionova U.S. and
Sub to the Company pursuant hereto or in connection herewith.
13.2 Certain Additional Defined Terms. In addition to such terms as
are defined in the opening paragraph of and the recitals to this Agreement and
in Section 13.1, the following terms are used in this Agreement as defined in
the Sections set forth opposite such terms:
Defined Term Section Reference
Acquisition Proposal 7.2
agreements 3.24; 5.19
AGS 3.22
Alternative Transaction 11.3
Applicable Environmental Laws 3.26
associate 5.25
Benefit Arrangements 3.25; 5.20
Bionova Group Financial Statements 5.5
Bionova U.S. Acquisition Proposal 7.12
Bionova U.S. Common Stock 2.1
Certificate 2.3
Claim Limitation Date 12.2
Claim Notice 12.2
Closing 1.3
Closing Date 1.3
Company Claims 12.2
Company Common Stock 2.1
Company Convertible Exchangeable Preferred Stock 2.1
Company Series A Preferred Stock 2.1
Company Stock 2.1
Company Stock Option 2.5
Confidential Information 7.1
Confidentiality Agreement 7.1
Dissenting Shares 2.2
Effective Time 1.2
Employee Plans 3.25; 5.16
Exchange Agent 2.3
Final Claim Date 12.2
Garching 3.22
hazardous material 3.26
Indemnity Offset 12.2
Losses 12.2
Merger 1.1
Merger Consideration 2.1
Multiemployer Plan 3.25; 5.20
NASDAQ NMS 2.3
Offset Events 12.2
Offset Notice 12.2
Option/License Agreement 3.22
Parent Directors 7.16
Payment Fund 2.3
Proxy Statement 7.3
Real Property 3.18; 5.13
Registration Statement 7.4
Schedule Delivery Date 7.8
SEC Filings 3.10
Special Meeting 7.3
State Law 1.1
Surviving Corporation 1.1
Third Party 11.3
Triggering Event 12.2
13.3 Construction. Unless herein otherwise provided, or unless the
context shall otherwise require, words importing the singular number shall
include the plural number, and vice versa; the terms "herein", "hereof",
"hereby", and "hereunder", or other similar terms, refer to this Agreement as
a whole and not only to the particular Article, Section, or other subdivision
in which any such terms may be employed; and references to Articles, Sections,
and other subdivisions refer to the Articles, Sections, and other subdivisions
of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be executed by their duly authorized representatives, all as
of the day and year first above written.
EMPRESAS LA MODERNA, DNA PLANT TECHNOLOGY
S.A. de C.V.
CORPORATION
By: /s/ Carlos Herrera By: /s/ Robert Serenbetz
Name: Carlos Herrera Name: Robert Serenbetz
Title: Director Title: Chief Executive Officer
By: /s/ Erik Jurgensen
Name: Erik Jurgensen
Title: Attorney-in-Fact
BIONOVA, S.A. de C.V.
By: /s/ Carlos Herrera
Name: Carlos Herrera
Title: Director General
By: /s/ Erik Jurgensen
Name: Erik Jurgensen
Title: Attorney-in-Fact
BIONOVA U.S. INC.
By: /s/ Carlos Herrera
Name: Carlos Herrera
Title: Chairman of the Board and Chief Executive Officer
BIONOVA ACQUISITION, INC.
By: /s/ Carlos Herrera
Name: Carlos Herrera
Title: Chairman of the Board and Chief Executive Officer
Exhibit 2.2
GOVERNANCE AGREEMENT
THIS GOVERNANCE AGREEMENT, dated as of _______________, 1996 (the
"Agreement"), is entered into by and among Empresas La Moderna, S.A. de C.V.,
a corporation organized under the laws of the United Mexican States ("ELM"),
and DNAP Holding Corporation (formerly known as Bionova U.S. Inc.), a Delaware
corporation (the "Company").
Background
WHEREAS, the Company, a subsidiary of the Company (the "Subsidiary"),
ELM, Bionova, S.A. de C.V. and DNA Plant Technology Corporation ("DNAP") have
entered into an Agreement and Plan of Merger, dated as of January 26, 1996
(the "Merger Agreement"), pursuant to which (i) the Subsidiary is being merged
with and into DNAP on the date of this Agreement (the "Merger"), and (ii) the
issued and outstanding shares of capital stock of DNAP (except for shares held
by DNAP in its treasury, which shares shall be cancelled, and shares as to
which appraisal rights have been perfected) are being converted in the Merger
into shares of common stock, $.01 par value, of the Company (the "Common
Stock") at various rates provided in the Merger Agreement;
WHEREAS, the parties to this Agreement recognize the need to protect the
public shareholders (because of their status as minority shareholders) of the
Company subsequent to the Merger and intend that such shareholders as a group
be deemed third-party beneficiaries of this Agreement whose rights will be
protected by certain independent directors of the Company;
WHEREAS, the parties to this Agreement desire to establish certain terms
and conditions concerning the corporate governance of the Company including
the composition of the board of the Company (the "Board"); and
WHEREAS, the parties to this Agreement also desire to establish certain
terms and conditions concerning the acquisition and disposition of securities
of the Company by ELM and its affiliates;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and agreements contained herein, the parties hereto agree as follows:
ARTICLE I - BOARD OF DIRECTORS
1.01 Independent Directors. From and after the effective time of the
Merger ("Effective Time") and until this Agreement is terminated in accordance
with its terms, the number of directors comprising the Board shall be not less
than eleven. Of those eleven directors, four directors shall (subject to the
adjustment pursuant to Section 1.02 hereof) be independent directors, each of
whom shall be deemed independent (each of these four directors being an
"Independent Director") if: (i) other than acting as a director of DNAP at
any time or of the Company or a subsidiary of the Company after the date of
this Agreement, such director is not an employee or an Affiliate (as defined
below) of the Company, ELM or any Affiliate of ELM, and (ii) such director is
an "independent director" for purposes of Part III Section 6(c) of Schedule D
to the By-Laws of the National Association of Securities Dealers, Inc.
"Affiliate" means, with respect to any person, any other person controlling,
controlled by or under direct or indirect common control with such person.
For the purposes of this definition, "control," when used with respect to any
specified person, shall mean the power to direct the management and policies
of such person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise. Three of the initial Independent
Directors shall be current DNAP Independent Directors (the "DNAP Independent
Directors") designated by the DNAP board of directors prior to the Merger and
one shall be designated by ELM (the "ELM Independent Director"), with the
consent of DNAP, which consent shall not be unreasonably withheld or delayed,
prior to the Merger. Notwithstanding the foregoing and any other provision of
this Agreement, upon the occurrence of the first DNAP Independent Director to
resign or die after the date of this Agreement, the number of Company
directors shall be reduced to not less than nine. Of those nine directors,
three directors (subject to adjustment pursuant to Section 1.02 hereof) shall
be Independent Directors. Under such circumstances, two of such Independent
Directors shall be DNAP Independent Directors and one such Independent
Director shall be an ELM Independent Director. The reduction from eleven to
nine directors as hereinabove provided shall not have the effect of shortening
the term of any director in office at the time of such reduction, but such
reduction will be effected in connection with the next succeeding annual
meeting of Company stockholders.
1.02 ELM Directors. The other seven (six in the event of a reduction
of the type contemplated in Section 1.01) directors shall be designated by ELM
and may be Affiliates or employees of either the Company or ELM, but shall not
be considered "Independent Directors" for purposes of this Agreement. If the
Common Stock beneficially owned, directly or indirectly, by ELM and its
Affiliates is 80% or more, ELM may designate nine (seven in the event of a
reduction of the type contemplated in Section 1.01) directors, and the number
of DNAP Independent Directors shall be reduced to two. All such adjustments
are intended to be made at the next annual meeting of the Company after a
change in stock ownership.
1.03 Initial Nomination. In accordance with this Agreement, ELM and
DNAP shall designate the eleven director nominees prior to the mailing of the
Proxy Statement (as defined in the Merger Agreement), to serve from the
Effective Time until the next annual meeting of stockholders of the Company.
1.04 Continued Independent Director Representation. Each year the
proxy statement for the Company s annual meeting as approved by the Board
(each an "Annual Proxy Statement") shall include as nominees for election to
the Board the Independent Directors who then currently sit on the Board. If
any of the DNAP Independent Directors resigns from, or otherwise leaves, the
Board, the remaining Independent Directors shall by majority vote select a
replacement Independent Director for the departing DNAP Independent Director,
subject to the consent of ELM which shall not be unreasonably withheld or
delayed, and upon the receipt of such consent such individual shall
immediately assume the remaining term of the departing Independent Director.
If the ELM Independent Director resigns, or otherwise leaves, the Board, ELM
shall select a replacement Independent Director for the departing ELM
Independent Director, subject to the consent of a majority of the DNAP
Independent Directors which consent shall not be unreasonably withheld or
delayed, and upon the receipt of such consent such individual shall
immediately assume the remaining term of the departing ELM Independent
Director. To the extent permitted by the certificate of incorporation and the
bylaws of the Company, the Board shall elect each person so designated or
nominated, and shall include such individual in the next Annual Proxy
Statement as a nominee for election to the Board. Notwithstanding the
foregoing, the Company shall not be required in the Annual Proxy Statement for
the Company's 1999 annual meeting of stockholders to include as nominees for
election as directors at such meeting any DNAP Independent Directors then in
office, which annual meeting shall be held no earlier than May 1, 1999.
1.05 ELM Vote. Whenever an election of the directors of the Company is
held, ELM shall vote, or cause to be voted, all shares of the Common Stock
that it directly or indirectly beneficially owns for the incumbent DNAP
Independent Directors (and any replacement Independent Director(s) nominated
by the Independent Directors). In addition, ELM shall not vote its shares in
a manner that contravenes the terms and intentions of this Agreement.
1.06 Removal of Independent Directors. A DNAP Independent Director may
be removed from office only with the unanimous vote of the other DNAP
Independent Directors. An ELM Independent Director may be removed from office
only with the consent of ELM.
1.07 Non-Independent Directors. Other than Robert Serenbetz whom ELM
shall cause to continue as a director so long as he remains an employee of the
Company or any of its Affiliates, ELM (subject to the requirements of
Section 1.01 and subject to the adjustment in Section 1.02 (ELM Directors))
and any nominating or proxy committee of the Company shall have the right to
designate or nominate any replacement director who is not a DNAP Independent
Director at the termination of such director s term or upon death,
resignation, retirement, disqualification, removal from office or other cause.
To the extent permitted by the certificate of incorporation or bylaws of the
Company, the Board shall elect each person so designated or nominated.
1.08 Committees. Each committee which may be established by the Board
(other than a committee of Independent Directors constituted for the purposes
of making any determination under the terms of this Agreement or otherwise)
shall at all times include at least one DNAP Independent Director (in each
case designated by a majority of the Independent Directors), and no action by
any such committee shall be valid unless taken at a meeting for which adequate
notice has been duly given to or waived by the members of such committee. Any
committee member unable to participate in person at any meeting shall be given
the opportunity to participate by telephone. Any DNAP Independent Director
designated by the Independent Directors to serve on any committee may
designate as his or her alternate another DNAP Independent Director.
1.09 Independent Director Approval Required for Certain Actions. In
addition to such other approvals as may be required under applicable law, the
approval of a majority of the Independent Directors then in office shall be
required to approve any of the following:
(a) the sale, lease, license, transfer or other disposal of, including
any pledge or other grant of a security interest in all or a substantial
portion of the business or assets of the Company or any merger or
consolidation of any kind involving the Company in one or in a series of
transactions. (For purposes of this clause, a "substantial portion of the
business or assets of the Company" shall mean either substantially all of the
assets that constitute the assets of DNAP as of the date of this Agreement or
a portion of the business or assets of the Company accounting for 51% of the
consolidated total assets, contribution to net income or revenues of the
Company and its subsidiaries taken as a whole, and shall include any
intellectual property that is material to the business of the Company and its
subsidiaries taken as a whole, and "material intellectual property" shall mean
any intellectual property that is required in any process resulting in or
independently results in 51% of the revenues of the Company and its
subsidiaries taken as a whole);
(b) any material transaction or activities (including, without
limitation, any repurchase, redemption or issuance of any capital stock or
equity including any Equity Securities of the Company) by the Company or one
of its subsidiaries with or for the benefit of ELM or an ELM Affiliate (other
than any benefit that derives as a result of its or its Affiliate's ownership
interest in the Company) other than as expressly permitted by the Ancillary
Documents (as defined in the Merger Agreement), except that any amendment to
the Ancillary Documents or any waiver by the Company of any covenant or other
provision under them or the Merger Agreement requires approval under this
Section 1.09. For purposes of this Section 1.09(b) "material" transactions
and activities shall not include the following so long as the terms thereof
are commercially reasonable and entered on terms that are no less favorable
than could be obtained in a similar transaction with an independent third
party: (i) a transaction or activity, or series of related transactions or
activities not involving the repurchase, redemption or issuance of any capital
stock or equity including any Equity Security, not reasonably anticipated to
result in annual expenditures or annual revenue in excess of $1,000,000 in any
of the first five years after such transaction occurs or activity begins; (ii)
any renewal on substantially the same terms of an existing agreement other
than an Ancillary Agreement or (iii) an inter-company transfer involving the
purchase or sale of goods or services available in the ordinary course from
third party providers on substantially the same terms. "Equity Security"
shall mean any (x) voting stock of the Company (other than shares of voting
stock not having the right to vote generally in any election of directors of
the Company), (y) securities of the Company convertible into or exchangeable
for such stock, and (z) options, rights and warrants issued by the Company to
acquire such stock;
(c) the repurchase or redemption of any Equity Securities or other
capital stock of the Company, other than redemptions required by the terms
thereof and purchases made at fair market value in connection with any
deferred compensation plan maintained by the Company;
(d) the creation of any committee of the Board with power to approve
any matter that is the subject of this Agreement;
(e) a tender offer, directly or indirectly, by ELM for Equity
Securities of the Company, as provided in Section 2.01 (Purchase Limitation);
(f) the amendment or the waiver by the Company of a provision of this
Agreement, as provided in Section 6.02 to this Agreement (Amendments; No
Waivers);
(g) any amendment to the certificate of incorporation or bylaws of the
Company which would have a direct adverse effect on the rights or protections
provided to those holders of Common Stock other than ELM and its Affiliates
under this Agreement; or
(h) any attempt to effect or any action that reasonably could be
anticipated to result in the delisting or deregistering of the Company's
Common Stock from the NASDAQ National Market System or from any other national
securities exchange on which such Common Stock may then be listed.
1.10 Indemnification and Insurance for Independent Directors.
(a) After the Effective Time, ELM shall cause the Company, to the full
extent permitted, but subject to the limitations of, applicable law, to
indemnify, defend and hold harmless each person who is at any time after the
date of this agreement an Independent Director (for the purposes of this
section, the "Indemnified Parties") against all losses, claims, damages,
costs, expenses, liabilities or judgments or amounts that are paid in
settlement with the approval of the Company (which approval shall not be
unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole
or in part out of the fact that such person is or was after the Effective Time
an Independent Director ("Indemnified Liabilities") including, without
limitation, all losses, claims, damages, costs, expenses, liabilities or
judgments based in whole or in part on, or arising in whole or in part out of,
or pertaining to this Agreement or any transaction contemplated hereby. The
Company will pay expenses in advance of the final disposition of any such
action or proceeding to each Indemnified Party to the full extent permitted by
law upon receipt of any undertaking contemplated by Section 145(e) of the
Delaware General Corporation Law ("DGCL"). Without limiting the foregoing, in
the event of any such claim, action, suit, proceeding or investigation is
brought against any Indemnified Party, (i) the Indemnified Parties may retain
counsel satisfactory to them and the Company, (ii) the Company shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received, and (iii) the Company will use
all reasonable efforts to assist in the defense of any such matter, provided
that the Company shall not be liable for any settlement or any claim effected
without such party s written consent, which consent, however, shall not be
unreasonably withheld. Any Indemnified Party wishing to claim indemnification
under this Section 1.10, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Company (but the
failure so to notify the Company shall not relieve it from any liability which
it may have under this Section 1.10 except to the extent such failure
prejudices such party), and shall deliver to the Company the undertaking
contemplated by Section 145(e) of the DGCL. The Indemnified Parties as a
group shall retain only one law firm to represent them with respect to each
such matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two
or more Indemnified Parties.
(b) For a period of five years after the Effective Time, the Company
shall use its best efforts to contract and maintain in effect directors and
officers liability insurance covering equally all directors, including the
Independent Directors, on terms and in an amount not less than that provided
to the directors of DNAP prior to the Effective Time (which policy may take
the form of a policy covering the directors of ELM and majority owned
subsidiaries thereof).
(c) In the event that any of the Company or any of its successors and
assigns consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or transfers and conveys all or substantially all of its property and assets
to any person, then, and in each case, proper provisions shall be made so that
the successor and assigns of such Indemnifying Parties assume the obligations
set forth in this Section 1.10.
(d) The provisions of this Section 1.10 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or he
heirs and representatives, and may not be amended, altered or repealed without
the written consent of any affected Indemnified Party.
(e) Other than to cause the Company to carry out the terms of this
Section 1.10, ELM shall have no liability or obligation under this
Section 1.10, including, without limitation, any obligation to advance funds
to the Company for the purpose of enabling the Company to pay or satisfy any
obligations arising under this Section 1.10.
ARTICLE II - FURTHER ACQUISITIONS OF COMPANY SECURITIES BY ELM
2.01 Purchase Limitation. Prior to the third anniversary of the date
of this Agreement, ELM and its Affiliates shall not, directly or indirectly,
purchase or otherwise acquire, or propose or offer to purchase or acquire, any
Equity Security of the Company, whether by tender offer, market purchase,
privately negotiated purchase, merger or otherwise. In addition, except as
specifically provided in this Agreement, ELM and its Affiliates shall not
solicit any proxies or form a "group" with any third party as such term is
defined in Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act").
2.02 "Top Up" Rights. Notwithstanding the restrictions in Section 2.01
(Purchase Limitation), when any holder as of the Effective Time (not
affiliated with ELM) of warrants or options to purchase capital stock of DNAP
which have been assumed by the Company pursuant to Sections 2.5 and 2.6 of the
Merger Agreement exercises such warrants or options and is issued shares of
the Common Stock, ELM may make purchases in the open market or in privately
negotiated transactions of such number of shares ("Top-Up Right") required to
maintain its Voting Interest at the level held immediately prior to the
exercise of the warrants or options referred to in this sentence. ELM's
"Voting Interest" means the percentage of votes for election of directors of
the Company generally controlled directly or indirectly by ELM.
2.03 Subscription Right. Notwithstanding the restrictions in
Section 2.01 (Purchase Limitation), upon any issuance (except upon the
exercise of warrants or options creating a Top-Up Right) by the Company
(except to a person who is an Affiliate of ELM), by direct sale or as a result
of a merger or otherwise, ELM has a right to purchase directly from the
Company such amount of shares required to maintain its Voting Interest at the
level held immediately before the issuance referred to in this sentence.
2.04 Subscription Procedure. Any offer of securities required to be
made to ELM pursuant to Section 2.03 (Subscription Right) shall be made by
notice in writing at least thirty (30) days prior to the date on which the
Company intends to issue and sell such securities (the "Subscription Notice").
Such Subscription Notice shall set forth (i) the approximate number and type
of securities proposed to be issued and sold to persons other than ELM and ELM
Affiliates and the material terms of such securities, (ii) the proposed price
or range of prices at which such securities are proposed to be sold and the
terms of payment, (iii) the number of securities offered to ELM in compliance
with the provisions of Section 2.03, and (iv) the proposed date of issuance
and sale of such securities. Not later than ten (10) days after receipt of
such notice, ELM shall notify the Company in writing whether it elects to
purchase all or any portion of the securities offered to ELM pursuant to such
Subscription Notice. If ELM elects to purchase any such securities, it shall
be obligated to do so, and the securities that it shall have so elected to
purchase shall be issued and sold to ELM by the Company at the same time and
on the same terms and conditions as the securities that are issued and sold to
third parties. If, for any reason, the sale of securities to the third
parties is not consummated, ELM s election with regard solely to the issuance
referenced in the Subscription Notice shall lapse.
2.05 Termination of Top-Up and Subscription Rights. Both the Top-Up
Right pursuant to Section 2.02 ("Top-Up" Rights) and the Subscription Right
pursuant to Section 2.03 (Subscription Right) shall terminate upon the sale or
any other transfer of shares of Common Stock such that ELM in combination with
its Affiliates no longer beneficially owns more than 50% of the Common Stock
on a fully diluted basis.
2.06 Tender Offer Exception. Notwithstanding the restrictions in
Section 2.01 (Purchase Limitation), ELM or an ELM Affiliate may make a tender
offer for 100% of the outstanding Common Stock; provided, however, that the
majority of Independent Directors then in office make a determination that the
tender offer is fair to the holders of the Company's Common Stock other than
ELM and its Affiliates from a financial point of view.
2.07 Acquisitions of 80.1%. Notwithstanding the restrictions in
Section 2.01 (Purchase Limitation), ELM or an ELM Affiliate can acquire
additional shares of the outstanding Common Stock so long as their aggregate
beneficial ownership of Common Stock shall not exceed 80.1%.
ARTICLE III - RESTRICTIONS ON TRANSFER OF COMMON STOCK
3.01 Restrictions on Transfer of Common Stock. Until the third
anniversary of the date of this Agreement, ELM agrees that it will not sell or
otherwise transfer (for the purposes of this section, "transfer" is intended
in the broadest sense and specifically includes, without limitation, a pledge
of such shares (other than a pledge of shares to secure ordinary course
loan(s) from unaffiliated commercial lender(s) or other unaffiliated financing
source(s)) and any assignment by operation of law, but shall not include a
change-in-control of ELM) any shares of Common Stock except (i) a transfer to
any entity that is directly or indirectly 51% or more owned and controlled by
ELM, provided that such entity agrees in writing to assume all of ELM s
obligations under this Agreement and performs such obligations, (ii) if it
shall have become illegal for ELM to own its shares of Common Stock directly
or indirectly or exercise fully its rights of ownership with respect to its
shares of Common Stock, ELM may sell such shares as applicable law requires,
(iii) pursuant to an unsolicited tender offer by a non-Affiliate of ELM, (iv)
any sale or other transfer of Common Stock by ELM or an Affiliate of ELM which
results in ELM together with its Affiliates beneficially owning less than 51%
of the outstanding Common Stock (on a fully diluted basis) and all holders of
Common Stock (other than ELM and its Affiliates) are given the opportunity to
sell all of their Common Stock in the transaction on substantially the same
terms per share as ELM (provided, that such holders have the opportunity to
receive all of their consideration in cash), and (v) any sale so long as,
after giving effect to such sale, ELM and its Affiliates shall beneficially
own 51% or more of the outstanding Common Stock on a fully diluted basis.
ARTICLE IV - REGISTRATION RIGHTS
4.01 Registration. (a) The Company agrees that, at any time after the
third anniversary of the date of this Agreement (or such earlier date as it
shall have become illegal for ELM to own Common Stock directly or indirectly
or to exercise fully all rights of ownership with respect to its shares) and
until the tenth anniversary of the date of this Agreement, upon the request of
ELM, the Company will file a registration statement (a "Registration
Statement") under the 1933 Act as to the number of shares specified in such
request (the "Registered Shares"); provided that, subject to Section 4.04 of
this Agreement (Additional Conditions), the Company shall not be required to
file more than two Registration Statements that become effective and remain
effective for the period referred to in Section 4.01(b).
(b) The Company agrees to use its best efforts (i) to have any
registration of the Registered Shares declared effective as promptly as
practicable after the filing thereof, and (ii) to keep such registration
statement effective for a period (up to three months) sufficient to complete
the distribution of the Registered Shares. The Company further agrees to
supplement or make amendments to the Registration Statement, if required (w)
to respond to the comments of the Securities and Exchange Commission, (x)
by the registration form utilized by the Company for such registration or by
the instructions applicable to such registration form, (y) by the 1933 Act or
the rules and regulations thereunder, or (z) by ELM (or any underwriter for
ELM) with respect to information concerning ELM or such underwriter or the
plan of distribution to be utilized with respect to the Registered Shares.
The Company agrees to furnish to ELM copies of any such supplement or
amendment prior to its being used or filed with the Securities and Exchange
Commission (the "SEC").
4.02 Registration Procedures. Subject to the provisions of
Section 4.01 of this Agreement (Registration) in connection with the
registration of shares hereunder, the Company will as expeditiously as
possible:
(a) furnish to ELM, prior to filing of a Registration Statement,
copies of such Registration Statement as is proposed to be filed, and
thereafter such number of copies of such Registration Statement, each
amendment and supplement thereto (in each case including all exhibits
thereto), the prospectus included in such Registration Statement (including
each preliminary thereto), the prospectus included in such Registration
Statement (including each preliminary prospectus) and such other documents in
such quantities as ELM may reasonably request from time to time in order to
facilitate the disposition of the Registered Shares:
(b) use all reasonable efforts to register or qualify the Registered
Shares under such other securities or Blue Sky laws of such jurisdiction as
ELM reasonably requests and of any and all other acts and things as may be
reasonably necessary or advisable to enable ELM to consummate the disposition
in such jurisdictions of the Shares owned by ELM; provided that the Company
will not be required to qualify but for this subsection (b), (ii) subject
itself to taxation in any such jurisdiction, or (iii) consent to general
service of process in any such jurisdiction;
(c) use all reasonable efforts to cause the Registered Shares to be
registered with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the Company to
enable ELM to consummate the disposition of such Shares;
(d) notify ELM, at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act, of the happening of any event as
a result of which the prospectus included in such Registration Statement or
amendment contains an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Company will prepare a supplement
or amendment to such prospectus so that, as thereafter delivered to the
purchasers of the Registered Shares, such prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading;
(e) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the Registered
Shares;
(f) make available for inspection by ELM, any underwriter participating
in any disposition pursuant to such registration, and any attorney, accountant
or other agent retained by any ELM or any such underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the officers, directors and employees of the Company
to supply all information reasonably requested by any such Inspector in
connection with such registration; provided that (i) records and information
obtained hereunder shall be used by such persons only to exercise their due
diligence responsibility, and (ii) records or information which the Company
determines, in good faith, to be confidential shall not be disclosed by the
Inspectors unless (x) the disclosure of such Records or information is
necessary to avoid or correct a misstatement or omission in the Registration
Statement, or (y) the release of such Records or information is ordered
pursuant to a subpoena or other order from a court or governmental authority
of competent jurisdiction. ELM shall use reasonable efforts, prior to any
such disclosure, to inform the Company that such disclosure is necessary to
avoid or correct a misstatement or omission in the Registration Statement.
ELM further agrees that it will, upon learning that disclosure of such Records
or information is sought in a court of governmental authority, give notice to
the Company and allow the Company, at the expense of the Company, to undertake
appropriate action to prevent disclosure of the Records or information deemed
confidential;
(g) use all reasonable efforts to obtain a comfort letter from the
independent public accountants for the Company in customary form and covering
such matters of the type customarily covered by comfort letters as ELM
reasonably requests;
(h) otherwise use all reasonable efforts to comply with all applicable
rules and regulations of the SEC, and make generally available to its security
holders, as soon as reasonably practicable, an earnings statement covering a
period of twelve months, beginning within three months after the effective
date of the registration, which earnings statement shall satisfy the
provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder; and
(i) use all reasonable efforts to cause all Registered Shares to be
listed on each securities exchange on which similar securities issued by the
Company are listed.
4.03 Conditions to Offerings. The obligations of the Company to take
the actions contemplated by Section 4.01 (Registration) with respect to an
offering of Shares shall be subject to the following conditions:
(i) The Registered Shares shall constitute at least 10% of the
outstanding Common Stock. If Registered Shares are to be distributed in an
underwritten firm commitment offering, ELM shall have the right to select the
investment banker or bankers and lead manager or managers to administer the
offering and its or their counsel; provided that such lead manager or managers
and such counsel must be reasonably satisfactory to the Company.
(ii) There shall not have been an offering registered pursuant to
Section 4.01 (Registration) within the immediately preceding twelve months and
if such earlier offering was completed or is continuing.
(iii) ELM shall conform to all applicable requirements of the 1933 Act
and the 1934 Act with respect to the offering and sale of securities and
advise each underwriter, broker or dealer through which any of the Registered
Shares are offered that the Registered Shares are part of a distribution that
is subject to the prospectus delivery requirements of the 1933 Act.
The Company may require ELM to furnish to the Company such information
regarding ELM or the distribution of the Registered Shares as the Company may
from time to time reasonably request in writing, in each case only as required
by the 1933 Act or the rules and regulations thereunder or under state
securities or Blue Sky laws.
ELM agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4.02(d) hereof, such
holder will forthwith discontinue disposition of Registered Shares pursuant to
the registration covering such Shares until ELM's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4.02(d) hereof.
4.04 Additional Conditions. The Company's obligations pursuant to
Section 4.01 (Registration) shall be suspended if (i) the fulfillment of such
obligations would require the Company to make a disclosure that would, in the
reasonable good faith judgment of the Board, be detrimental to the Company
because it is premature, (ii) the Company has filed a registration statement
with respect to securities to be distributed in an underwritten public
offering and it is advised by its lead or managing underwriter that an
offering by ELM of the Registered Shares would materially adversely affect the
distribution of such equity securities, or (iii) the fulfillment of such
obligations would require the Company to prepare audited financial statements
not required to be prepared for the Company to comply with its obligations
under the 1934 Act as of any date not coincident with the last day of any
fiscal year of the Company. Such obligations shall be reinstated (x) in the
case of clause (i) above, upon the making of such disclosure by the Company
(or, if earlier, when such disclosure would either no longer be necessary for
the fulfillment of such obligations or no longer be detrimental, (y) in the
case of clause (ii) above, upon the conclusion of any period during which the
Company would not, pursuant to the terms of its underwriting arrangements, be
permitted to sell the Registered Securities for its own account, and (z) in
the case of clause (iii) above, as soon as it would no longer be necessary to
prepare such financial statements to comply with the 1933 Act. The period
during which ELM is required to sell its shares pursuant to Section 4.05
(Registration Expenses) shall be tolled for the duration of any suspension
pursuant to this paragraph.
4.05 Registration Expenses. All expenses incident to the performance
of or compliance with this Article IV by the Company, including, without
limitation, all fees and expenses of compliance with securities or Blue Sky
laws (including reasonable fees and disbursements of counsel in connection
with Blue Sky qualifications of the Registered Shares), rating agency fees,
printing expenses, messenger and delivery expenses, internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the fees and expenses
incurred in connection with the listing of the securities to be registered on
each securities exchange on which similar securities issued by the Company are
then listed, fees and disbursements of counsel for the Company and its
independent certified public accounts (including the expenses of any comfort
letters required by or incident to such performance), securities acts
liability insurance (if the Company elects to obtain such insurance), the
reasonable fees and expenses of any special experts retained by the Company in
connection with such registration and the fees and expenses of other persons
retained by the Company (all such expenses being herein called "Registration
Expenses"), will be borne by the Company. The Company will not have any
responsibility for any registration or filing fees payable under any federal
or state securities or Blue Sky laws or for any of the expenses of the holders
of Registrable Securities incurred in connection with any registration
hereunder including, without limitation, underwriting fees, discounts and
commissions and transfer taxes, if any, attributable to the sale of
Registrable Securities, counsel fees of such holders and travel costs.
4.06 Indemnification Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify,
to the fullest extent permitted by law, ELM, its directors and officers and
each person who controls ELM (within the meaning of either the 1933 Act or the
1934 Act) against any and all losses, claims, damages, liabilities and
expenses (including attorneys' fees) caused by any untrue or alleged untrue
statement of material fact contained in any Registration Statement, prospectus
or preliminary prospectus (each as amended and or supplemented, if the Company
shall have furnished any amendments or supplements thereto), or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances, under which they were made) not
misleading, provided that the Company shall not be required to indemnify ELM
or its officers, directors or controlling persons for any losses, claims,
damages, liabilities or expenses resulting from any such untrue statement or
omission if such untrue statement or omission is made in reliance on and
conformity with any information with respect to such ELM or such other parties
furnished to the Company by ELM or such other parties expressly for use
therein. In connection with an underwritten offering, the Company will
indemnify each underwriter thereof, the officers and directors of such
underwriter, and each person who controls such underwriter (within the meaning
of either the 1933 Act or 1934 Act) to the same extent as provided above with
respect to the indemnification of ELM.
(b) Indemnification by ELM. In connection with any registration in
which ELM is participating, ELM will furnish to the Company in writing such
information and affidavits with respect to ELM as the Company reasonably
requests for use in connection with any such registration, prospectus, or
preliminary prospectus and agrees to indemnify the Company, its directors, its
officers who sign the Registration Statement and each person, if any, who
controls the Company (within the meaning of either the 1933 Act or the 1934
Act) to the same extent as the foregoing indemnity from the Company to such
holder, but only with respect to information relating to such holder furnished
to the Company in writing by ELM expressly for use in the Registration
Statement, the prospectus, any amendment or supplement thereto, or any
preliminary prospectus.
(c) Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to Section 4.07(a)
or Section 4.07(b), such person (hereinafter called the indemnified party) in
writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel, or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and the indemnified party shall
have been advised by counsel that representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all such indemnified parties, and
that all such fees and expenses shall be reimbursed as they are incurred. In
the case of any such separate firm for the indemnified parties, such firm
shall be designated in writing by the indemnified parties. The indemnifying
party shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to indemnify
the indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as
contemplated by the third sentence of this Section 4.07(c), the indemnifying
party agrees that it shall be liable for any settlement of any proceeding
affected without its written consent if (i) such settlement is entered into
more than 30 days after receipt by such indemnifying party of the aforesaid
request, and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request or reasonably objected in
writing, on the basis of the standards set forth herein, to the propriety of
such reimbursement prior to the date of such settlement. No indemnifying
party shall, without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened proceeding in respect of
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
(d) Contribution. If the indemnification provided for in this
Section 4.07 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 4.07, then 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
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has
been made 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 action. 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 4.07(c), any legal or other fees or
expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 4.07(d) 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 the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 4.07, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section Section 4.06(a) and (b) without regard to the relative
fault of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 4.06(d).
4.07 Rule 144. The Company covenants that it will file the reports
required to be filed by it under the 1933 Act and the 1934 Act and the rules
and regulations adopted by the SEC thereunder, and it will take such further
action as ELM may reasonably request, all to the extent required from time to
time to enable ELM to sell Shares without registration under the 1933 Act
within the limitation of the exemptions provided by (i) Rule 144 under the
1933 Act, as such Rule may be amended from time to time, or (ii) any similar
rule or regulation hereafter adopted by the SEC. Upon the request of ELM, the
Company will deliver to ELM a written statement as to whether it has complied
with such requirements.
4.08 No Inconsistent Agreements. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with
the rights granted to ELM in this Agreement.
4.09 Determination by Independent Directors. Any determination
required to be made by the Company under this Article IV shall be made by a
majority of the Independent Directors then in office.
ARTICLE V - REPRESENTATIONS AND WARRANTIES
5.01 Representations of the Company. (a) The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby are within the Company's
corporate powers and have been duly authorized by all necessary corporate
action. This Agreement constitutes a valid and binding agreement of the
Company.
(b) The execution, delivery and performance by the Company of this
Agreement require no action by or in respect of, or filing with, any
governmental body, agency, official or authority, other than (i) compliance
with any applicable requirements of the 1934 Act; (ii) compliance with any
applicable requirements of the 1933 Act; and (iii) compliance with any
applicable foreign or state securities or Blue Sky laws.
(c) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby do not and will not (i) contravene or conflict with the certificate of
incorporation or bylaws of the Company, and (ii) assuming compliance with the
matters referred to in Section 4.01(b), contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the company.
5.02 Representations of ELM. (a) The execution, delivery and
performance by ELM of this Agreement and the consummation by ELM of the
transactions contemplated hereby are within ELM's corporate powers and have
been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding agreement of ELM.
(b) The execution, delivery and performance by ELM of this Agreement
require no action by or in respect of, or filing with, any governmental body,
agency, official or authority, other than (i) compliance with any applicable
requirements of the 1934 Act; (ii) compliance with any applicable requirements
of the 1933 Act; and (iii) compliance with any applicable foreign or state
securities or Blue Sky laws.
(c) The execution, delivery and performance by ELM of this Agreement
and the consummation by ELM of the transactions contemplated hereby do not and
will not (i) contravene or conflict with the certificate of incorporation or
bylaws of ELM, and (ii) assuming compliance with the matters referred to in
Section 4.01(b), contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to ELM.
<PAGE>
ARTICLE VI - MISCELLANEOUS
6.01 Notices. All notices, requests, demands, and other communications
required or permitted to be given or made hereunder by any party hereto shall
be in writing and shall be deemed to have been duly given or made if (i)
delivered personally, (ii) sent by prepaid overnight courier service, or (iii)
sent by telecopy or facsimile transmission, answer back requested, to the
parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice:
if to ELM:
c/o Pulsar Internacional, S.A. de C.V.
Edificio Torrealta
Av. Roble 300 Mezzanine
66265 Garza Garcia, N.L.
Mexico
Attention: Lic. Alejandro Sanchez
Telefax: 011-528-335-6993
if to the Company:
DNAP Holding Corporation
6701 San Pablo Avenue
Oakland, California 94608
Attention: Carlos Herrera, Chairman and Chief Executive
Officer
Telefax: _______________________
in each case, with a copy to each Independent Director at their
address as reflected in the Company's records.
Such notices, requests, demands, and other communications shall be effective
upon actual receipt by the intended recipient.
6.02 Amendments; No Waivers. (a) Any provision of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by ELM and Company, or in the case of
a waiver, by the party against whom the waiver is to be effective; provided
that no such amendment or waiver shall be effective without the approval of a
majority of the Independent Directors.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
6.03 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other party hereto except that, ELM may assign its
rights to any transferee of its shares permitted under clauses (i) and (iii)
of Section 3.01 (Restrictions on Transfer of Common Stock).
6.04 Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of Delaware.
6.05 Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have
received counterparts hereof signed by the other party hereto.
6.06 Specific Performance. The Company acknowledges and agrees that
ELM's and the Company's respective remedies at law for a breach or threatened
breach of any of the provisions of this Agreement would be inadequate and, in
recognition of that fact, agrees that, in the event of a breach or threatened
breach by the Company or ELM of the provisions of this Agreement, in addition
to any remedies at law, ELM and the Company, respectively, without posting any
bond shall be entitled to obtain equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.
6.07 Termination. Except for the provisions of Article V, the
provisions of Section 1.07 pertaining to Robert Serenbetz and the provisions
of Section 1.10, which provisions shall survive for the periods set forth
therein, this Agreement shall terminate upon the first to occur of (i) ELM and
its Affiliates becoming the beneficial owner of 100% of the voting stock of
the Company, and (ii) the day immediately preceding the 1999 annual meeting of
Company stockholders, which annual meeting shall be held no earlier than
May 1, 1999.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
EMPRESAS LA MODERNA, S.A. DE C.V.
By:
Name:
Title:
DNAP HOLDING CORPORATION
By:
Name: Carlos Herrera
Title: Chairman and Chief Executive
Officer
Exhibit 10.1
LOAN AGREEMENT
BETWEEN
BIONOVA U.S. INC., A DELAWARE CORPORATION,
AND
DNA PLANT TECHNOLOGY CORPORATION, A DELAWARE CORPORATION
January 26, 1996
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT dated January 26, 1996, is made by and between
BIONOVA U.S. INC., a Delaware corporation ("Lender"), whose address for
notices hereunder is 1700 Pacific, Suite 3300, Dallas, Texas 75201 (Attention:
Joe A. Rudberg), and DNA PLANT TECHNOLOGY CORPORATION, a Delaware corporation
("Borrower"), whose address is 6701 San Pablo Avenue, Oakland, California
94608-1239 in respect of a loan by Lender to Borrower in the principal sum of
up to Ten Million Dollars ($10,000,000.00).
ARTICLE I
Definitions
For purposes of this Loan Agreement, the following terms shall have the
respective meanings assigned to them.
1.01 Advance. The term "Advance" shall mean a disbursement by Lender
of any of the proceeds of the Loan.
1.02 Affiliates. The term "affiliates" shall mean as to any person or
entity, each other person or entity that directly or indirectly (through one
or more intermediaries or otherwise) controls, is controlled by, or is under
common control with, such person or entity. A person or entity shall be
deemed to be "controlled by" any other person or entity if such other person
or entity possesses, directly or indirectly, power to direct or cause the
direction of the management and policies of such person or entity whether by
contract or otherwise.
1.03 Assignment of Patents. The term "Assignment of Patents" shall
mean the Assignment of Patents in the form attached hereto as Schedule 1,
which assignment has been executed and delivered by Borrower to Lender as of
the date hereof in order to assign to Lender Borrower's interest in the
Patents.
1.04 Borrower. The term "Borrower" shall mean the party named as such
in the first paragraph of this Loan Agreement.
1.05 Closing. The term "Closing" shall mean the initial funding by
Lender of an Advance to Borrower in the principal amount of $5,000,000.00,
which funding has occurred on the date first set forth above.
1.06 Collateral. The term "Collateral" shall mean Lender's interest in
Borrower's interest in the Patents and any other property in which Borrower
grants to Lender a valid Lien.
1.07 Collateral Value. The term "Collateral Value" shall mean, as of
any date, the value of the Collateral established by a Qualified Professional.
1.08 Collateral Value Deficiency. The term "Collateral Value
Deficiency" shall mean, as of any date, the amount, as determined by Lender in
its sole discretion, by which the sum of (i) the outstanding Loan Indebtedness
and (ii) $3,000,000.00 exceeds the Collateral Value.
1.09 Collateral Value Deficiency Notification Date. The term
"Collateral Value Deficiency Notification Date" shall mean the date on which
any notice of a Collateral Value Deficiency is received by Borrower.
1.10 Code. The term "Code" shall mean the Uniform Commercial Code in
effect from time to time in the State of Delaware.
1.11 Debtor Relief Laws. The term "Debtor Relief Laws" shall mean any
applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, insolvency, reorganization, or similar laws affecting the
rights or remedies of creditors generally, as in effect from time to time.
1.12 Event of Default. The term "Event of Default" shall mean:
(a) A failure by Borrower to make any payment of principal or
interest on the Note when due, which such failure remains unremedied by
Borrower for five business days after receipt of notice from Lender of
such failure;
(b) A failure by Borrower to comply with any of the other terms
or conditions specified herein or in any other Loan Document and such
failure remains unremedied for sixty days following receipt by Borrower
of notice from Lender of such failure;
(c) The appointment of a receiver, trustee, conservator, or
liquidator of Borrower, or for substantially all of the property of
Borrower, and such appointment remains undischarged for a period of
thirty days;
(d) A filing by Borrower of a voluntary petition in bankruptcy,
seeking reorganization or rearrangement or taking advantage of any
Debtor Relief Laws, or an answer by Borrower admitting the material
allegations of a petition filed against Borrower, as the case may be, in
any bankruptcy, reorganization, insolvency, conservatorship, or similar
proceeding;
(e) The making by Borrower of a general assignment for the
benefit of creditors;
(f) The entry of an order, judgment or decree by any court of
competent jurisdiction adjudicating Borrower as bankrupt or insolvent,
or approving a petition seeking reorganization of Borrower or an
arrangement of its debts, or appointing a receiver, trustee,
conservator, or liquidator of Borrower, or for substantially all of the
property of Borrower, and such order, judgment or decree remains
undischarged or unstayed for a period of thirty days;
(g) The occurrence of any event or condition which results in a
default in the payment of any indebtedness or performance of any
obligation of Borrower to Lender under the Loan Documents;
(h) The liquidation, termination, or dissolution of Borrower;
(i) The occurrence of any event under any other material credit,
loan or similar agreement of Borrower or any subsidiary thereof which
results in the acceleration of the entire amount of the indebtedness or
other amounts owed thereunder; or
(j) The failure of Borrower to cure a Collateral Value Deficiency
in accordance with this Loan Agreement.
1.13 Financial Statements. The term "Financial Statements" shall mean
such balance sheets, profit and loss statements, reconciliations of capital
and surplus, changes in financial condition, schedules of sources and
applications of funds and other financial information of Borrower and its
subsidiaries, as shall be required by Lender from time to time, which
statements, if required by Lender, shall be certified by an independent
certified public accountant.
1.14 Financing Statements. The term "Financing Statements" shall mean
with respect to the Loan any financing statement filed under the Code or any
similar law and any notices of recordation of assignment of patent or similar
filings in any jurisdiction for the perfection of a security interest or lien
in any property.
1.15 Governmental Authority. The term "Governmental Authority" shall
mean the United States, the State, the County, the City, or any other
political subdivision in which property of Borrower is located, and any other
political subdivision, agency, or instrumentality exercising jurisdiction over
Borrower or property of Borrower.
1.16 Governmental Requirements. The term "Governmental Requirements"
shall mean all laws, statutes, ordinances, rules, and regulations of any
Governmental Authority applicable to Borrower.
1.17 Indebtedness. The term "Indebtedness" shall mean all
indebtedness, obligations and liabilities of Borrower or its subsidiaries,
including without limitation:
(i) all "liabilities" which would be reflected on a balance sheet
of Borrower or its subsidiaries prepared in accordance with generally
accepted accounting principles;
(ii) all obligations of Borrower or its subsidiaries in respect of
any guaranty; and
(iii) all obligations, indebtedness and liabilities secured by a
Lien on any property or assets of Borrower or its subsidiaries.
1.18 Lender. The term "Lender" shall mean the party named as such in
the first paragraph of this Loan Agreement.
1.19 Liens. The term "Liens" shall mean any lien, mortgage, security
interest, tax lien, pledge, encumbrance, conditional sale or title retention
arrangement, or any other interest in property designed to secure the
repayment of Indebtedness, whether arising by agreement or under any statute
or law, or otherwise.
1.20 Loan. The term "Loan" shall mean the loan by Lender to Borrower
of the principal sum of up to Ten Million Dollars ($10,000,000.00), or such
other amount as shall be advanced by Lender to Borrower from time to time
pursuant to this Loan Agreement.
1.21 Loan Documents. The term "Loan Documents" shall include this Loan
Agreement, the Note, the Assignment of Patents, the Financing Statements, and
such other security or similar agreements or instruments evidencing or
securing the Loan as shall, from time to time, be executed and delivered by
Borrower to Lender pursuant to this Loan Agreement.
1.22 Loan Indebtedness. The term "Loan Indebtedness" shall mean all
amounts due and owing under the Note, this Loan Agreement and the other Loan
Documents, including, without limitation, all principal, interest, costs, and
attorneys fees.
1.23 Merger Agreement. The term "Merger Agreement" shall mean that
certain Merger Agreement of even date herewith among Empresas La Moderna, S.A.
de C.V., Bionova, S.A. de C.V., Lender, Bionova Acquisition, Inc. and
Borrower, as such agreement may be amended from time to time.
1.24 Note. The term "Note" shall mean the promissory note in the form
attached hereto as Schedule 2 issued by Borrower to Lender as of the date
hereof in the amount of and evidencing the Loan and shall include any
promissory note given in renewal or extension thereof or in substitution
thereof, in whole or in part.
1.25 Patents. The term "Patents" shall mean Borrower's interest,
either existing or hereafter acquired, in the patents and applications
therefor identified on Schedule 4 attached hereto.
1.26 Permitted Liens. The term "Permitted Liens" shall mean (i) Liens
granted to Lender to secure the repayment of the Note, (ii) Liens described on
Schedule 7 attached hereto, (iii) pledges or deposits made to secure payment
of worker's compensation insurance, unemployment insurance, pensions or social
security programs, (iv) Liens imposed by mandatory provisions of law such as
for materialmen's, mechanics, warehousemen's and other like Liens arising in
the ordinary course of business, securing Indebtedness the payment of which is
not yet due, and (v) Liens for taxes, assessments and governmental charges or
levies imposed upon Borrower or upon Borrower's income or profits or property,
if the same are not yet due and payable or if the same are being contested in
good faith and as to which adequate cash reserves have been provided.
1.27 Qualified Professional. The term "Qualified Professional" shall
have the meaning ascribed to such term in Section 5.03.
1.28 Sole Patent License. The term "Sole Patent License" shall mean
the Sole Patent License in the form attached hereto as Schedule 3, which
license has been executed and delivered by Lender to Borrower as of the date
hereof in order to provide Borrower with a license in the Patents as provided
therein.
ARTICLE II
Agreements of Lender
2.01 Commitment of Lender. Subject to the conditions hereof and the
terms of the Note, and provided that an Event of Default has not occurred,
Lender will make Advances to Borrower (i) of $5,000,000.00 on the date of
Closing, and (ii) unless the "Closing Date" (as such term is defined in the
Merger Agreement) has occurred, of $5,000,000.00 on July 1, 1996.
2.02 Principal and Interest Payments. The Loan Indebtedness shall be
payable by Borrower to Lender as provided in the Note. Interest on the Loan
Indebtedness, at the rate specified in the Note, shall be computed and payable
as provided in the Note.
2.03 Conditions to Funding. As conditions precedent to the Advance
specified in Section 2.01(ii), no Event of Default (and no event which, if
left unchanged, would become an Event of Default through the mere passage of
time) shall exist hereunder.
2.04 Conditions Precedent for the Benefit of Lender. All conditions
precedent to the obligation of Lender to fund are imposed hereby solely for
the benefit of Lender, and no other party may require satisfaction of any such
condition precedent or be entitled to assume that Lender will refuse to fund
in the absence of strict compliance with such conditions precedent. All
requirements of this Loan Agreement may be waived by Lender, in whole or in
part, at any time.
2.05 Prepayment of Loan Indebtedness. The Borrower may prepay the Loan
Indebtedness in whole or in part at any time without bonus or penalty.
ARTICLE III
Agreements Regarding Patents
3.01 Assignment of Patents. On the date of Closing, Borrower shall
execute and deliver to Lender the Assignment of Patents which assignment shall
be expressly subject to the rights of existing licensees as listed on Schedule
5 attached hereto. Borrower shall have the right to offset any losses
(including reasonable attorneys' fees) arising from any claim by any such
licensees that the Assignment of Patents violates the terms of any of such
existing licenses. Notwithstanding anything herein to the contrary, the
occurrence of any such claim or loss shall not be deemed a breach of any of
Borrower's representations, warranties or covenants hereunder or give rise to
Borrower's indemnification obligations under Section 5.17. Upon repayment in
full of the Loan Indebtedness, Lender shall execute and deliver to Borrower an
assignment in substantially the same form as Schedule 1, assigning Lender's
interest in the Patents back to Borrower, along with such other documentation
as may be reasonably required by Borrower to evidence the termination of
Lender's interest in the Patents.
3.02 Sole Patent License. On the date of Closing, Lender shall execute
and deliver to Borrower the Sole Patent License, which license shall continue
for the term specified therein.
ARTICLE IV
Representations and Warranties of Borrower
Borrower hereby represents and warrants (except as may be otherwise
disclosed by Borrower to Lender in Schedule 8 attached hereto) as of the date
of Closing as follows:
4.01 The Financial Statements. The Financial Statements are true,
correct, and complete as of the dates specified therein and fully and
accurately present the financial condition of Borrower and its subsidiaries as
of the dates specified. No material adverse change has occurred in the
financial condition of Borrower since the dates of the Financial Statements.
4.02 Suits, Actions, Etc. There are no material actions, suits, or
proceedings pending or, to the best knowledge of Borrower, threatened in any
court or before or by any Governmental Authority against or affecting Borrower
or its subsidiaries or involving the validity or enforceability of any of the
Patents, at law or in equity. The consummation of the transactions
contemplated hereby, and the performance of any of the terms and conditions
hereof and of the other Loan Documents, will not result in a breach of, or
constitute a default in, any mortgage, deed of trust, lease, promissory note,
loan agreement, credit agreement, partnership agreement, or other agreement to
which Borrower or any of its affiliates or subsidiaries is a party or by which
Borrower or any of its affiliates or subsidiaries may be bound or affected.
4.03 Valid and Binding Obligation. Each of the Loan Documents when
duly executed and delivered will be, legal, valid and binding obligations of
Borrower, enforceable in accordance with their terms except as such
enforcement may be limited by (i) Debtor Relief Laws, (ii) fiduciary
obligations under the laws of its jurisdiction of incorporation,
(iii) equitable principles which may limit the availability of certain
equitable remedies (such as specific performance) in certain instances and
(iv) public policy considerations with respect to the enforceability of rights
of indemnification.
4.04 Title to the Patents. Immediately prior to Closing, Borrower
holds full and complete legal and equitable title to the Patents free and
clear of all liens, encumbrances or adverse claims, subject only to the
licenses identified on Schedule 5 attached hereto.
4.05 Existing Patent Licenses. At the date of Closing, Schedule 5
attached hereto contains a complete list of all existing license agreements
with respect to the Patents to which Borrower is a party.
4.06 Authorization. Borrower has duly taken all corporate action
necessary to authorize the execution and delivery by it of the Loan Documents
to which it is a party and to authorize the consummation of the transactions
contemplated thereby and the performance of its obligations thereunder.
Borrower is duly authorized to borrow funds hereunder.
4.07 No Conflicts or Consents. The execution and delivery by Borrower
of the Loan Documents to which it is a party, the performance of its
obligations under such Loan Documents, and the consummation of the
transactions contemplated by the various Loan Documents, do not and will not
(i) conflict with any material provision of (1) any applicable domestic or
foreign law, statute, rule or regulation, (2) the articles or certificate of
incorporation, bylaws, charter, or partnership agreement or certificate of
Borrower or any of its affiliates or subsidiaries, or (3) any agreement,
judgment, license, order or permit applicable to or binding upon Borrower or
any of its affiliates and subsidiaries, (ii) result in the acceleration of any
debt owed by Borrower or any of its affiliates or subsidiaries, or (iii)
result in or require the creation of any material lien upon any assets or
properties of Borrower or any of its affiliates or subsidiaries, except as
expressly contemplated in the Loan Documents. Except as expressly
contemplated in the Loan Documents no consent, approval, authorization or
order of, and no notice to or filing with, any court or governmental authority
or third party is required in connection with the execution, delivery or
performance by Borrower or any of its affiliates and subsidiaries of any Loan
Document or to consummate any transactions contemplated by the Loan Documents.
4.08 Solvency. At the time of Closing, Borrower is not insolvent and
will not be rendered insolvent after giving effect to the consummation of the
transactions contemplated by the Loan Documents. For purposes of this Section
4.08, "insolvent" means that (i) Borrower is unable to pay its debts and
liabilities as they become due and payable or (ii) Borrower's liabilities
exceed its assets.
ARTICLE V
Covenants and Agreements of Borrower
To conform with the terms and conditions under which Lender is willing
to have credit outstanding to Borrower, and to induce Lender to enter into
this Agreement and make the Loan, Borrower warrants, covenants and agrees as
follows until all of the Loan Indebtedness has been paid in full:
5.01 Use of Proceeds. Borrower shall use the proceeds of this Loan
Agreement solely for purposes of paying operating costs of the businesses of
Borrower and other general corporate purposes (including payment of costs
incurred in relation to the Merger Agreement and the Ancillary Documents (as
defined therein)), but not for any purposes prohibited by this Article V. In
no event shall the proceeds of any Advance be used directly or indirectly for
personal, family, or household purposes.
5.02 Costs and Expenses. All reasonable costs and expenses associated
with collection under this Loan Agreement, including, without limitation, (a)
all fees for filing or recording any documents related to consummation of the
transactions contemplated by this Loan Agreement, (b) all reasonable fees and
expenses of counsel to Lender related to collection under this Loan Agreement,
and (c) all other reasonable costs and expenses payable to third parties
incurred by Lender in connection with the collection under this Loan
Agreement, including in connection with the defense of the Loan Documents or
the defense of Lender's exercise of its rights thereunder shall be added to
and included as Loan Indebtedness payable by Borrower to Lender in accordance
with this Loan Agreement.
5.03 Collateral Value Deficiencies. If at any time not earlier than
365 days after July 1, 1996 and not later than 180 days prior to the scheduled
termination date of this Loan Agreement, Lender has received an opinion from
any of the qualified professionals listed in Schedule 6 to this Loan Agreement
or such other professional as may be mutually agreed from time to time by the
parties (a "Qualified Professional") that a Collateral Value Deficiency
exists, Lender may notify Borrower of such Collateral Value Deficiency in
writing, which shall include the amount of such Collateral Value Deficiency;
provided, that no Collateral Value Deficiency Notice shall be delivered
earlier than 180 days following a prior Collateral Value Deficiency Notice
Date. Within 30 days from and after the Collateral Value Deficiency
Notification Date, Borrower shall, at its election, take one of the following
actions:
(i) demonstrate to Lender's satisfaction that no such Collateral
Value Deficiency exists; provided that the delivery to Lender of a written
opinion from a Qualified Professional that no Collateral Value Deficiency
exists shall be deemed to have satisfied Lender. Such opinion of value may
assume that additional security is made available to Lender as provided in
Section 5.03(ii) below provided that such security is so provided to Lender;
(ii) execute and deliver to Lender additional security which may
include, without limitation, letters of credit, guaranties and supplemental or
additional documents, in each case in form and substance reasonably
satisfactory to Lender and its counsel, securing repayment of the Loan
Indebtedness, covering property owned by Borrower not currently covered by any
Loan Document and which property is of a type and nature, and having a value
(determined by Lender and its advisors using customary standards for lending)
satisfactory to Lender; provided, however, that Borrower shall not be required
to provide an item of additional collateral if the provision of such would
cause Borrower, in the reasonable opinion of Borrower's counsel, to materially
breach any agreement between Borrower and an unrelated third party; or
(iii) make a payment to Lender with respect to the Loan
Indebtedness in an amount sufficient to eliminate such Collateral Value
Deficiency.
Borrower's obligations to cure a Collateral Value Deficiency shall be
limited to those assets (other than cash and marketable securities) available
to Borrower; provided, however, if a Collateral Value Deficiency Notice has
been sent and the Collateral Value is determined to be less than the Loan
Indebtedness, then cash and marketable securities shall be considered
available assets to the extent they exceed the amount of $4,400,000.
5.04 Additional Documents. Borrower shall execute and deliver to
Lender, from time to time as requested by Lender, such other documents as
shall reasonably be necessary to provide the rights and remedies to Lender
granted or provided for by the Loan Documents.
5.05 Inspection of Books and Records. Borrower shall permit Lender or
its representatives, including independent accountants and agents, at all
reasonable times to examine and copy the books and records of Borrower
pertaining to the Loan.
5.06 Defense of Actions. Borrower shall retain all rights to commence,
appear in, or defend or make decisions concerning any action or proceeding or
prosecution (including any proceeding in the United States Patent and
Trademark Office) purporting to affect, the Patents or the respective rights
and obligations of Lender and Borrower with respect thereto pursuant to any
Loan Document; provided, however, if Lender requests that Borrower take any
action regarding the matters set forth in this Section 5.06 and Borrower
refuses or fails to take such action on a timely basis, then, prior to the
repayment of the Loan Indebtedness, Lender may (but shall not be obligated to)
commence, appear in, or defend any action or proceeding (including any
proceeding in the United States Patent and Trademark Office) purporting to
affect the Patents or the respective rights and obligations of Lender and
Borrower with respect thereto pursuant to any Loan Document. In the event
Borrower refuses or fails to take action on a timely basis reasonably
requested by Lender, then Lender shall, at its sole option, control any such
action or proceeding and Borrower agrees to appear as a party therein if
requested by Lender, and to cooperate with Lender in the conduct of such
action or proceeding whether or not it is a party. Lender may (but shall not
be obligated to) pay all necessary expenses, including reasonable attorneys'
fees and expenses incurred in connection with such proceedings or actions,
which shall be added to and included as Loan Indebtedness payable by Borrower
to Lender in accordance with this Loan Agreement. Any recovery obtained by
either party in enforcing the Patents will be applied first to the expenses
incurred in obtaining such recovery and then to the Loan Indebtedness.
5.07 Prohibition on Assignment. Borrower shall not assign or encumber
any interest of Borrower under this Loan Agreement without the prior written
consent of Lender.
5.08 Financial Statements. Within three business days of their filing
with the Securities and Exchange Commission (the "SEC"), Borrower shall
furnish Lender copies of its annual report on Form 10-K, quarterly reports on
form 10-Q as well as such other reports and filings filed from time to time
with the SEC. Borrower shall provide to Lender any additional documents
relating to, or supporting, such filings or that otherwise relate to
Borrower's ability to repay the Loan Indebtedness that are reasonably
requested by Lender within thirty days of such request.
5.09 Notification of Adverse Changes. Borrower shall promptly notify
Lender of the occurrence of any event or condition which, if not remedied,
would result in a material, adverse change to the financial condition of
Borrower and its subsidiaries taken as a whole or would materially and
adversely affect the value of the Patents or any portion thereof.
5.10 Limitation on Dividends and Redemptions. Without the prior
written consent of Lender, Borrower will not declare or pay any dividends on,
or make any other distribution in respect of, any class of its capital stock
or its other equity interests (whether such stock or interests are now or
hereafter issued, outstanding or created) while any part of the Loan
Indebtedness is unpaid. Without the written consent of Lender, Borrower will
not directly or indirectly make any capital contribution to or purchase,
redeem, acquire or retire any shares of its capital stock or its other equity
interests (whether such stock or interests are now or hereafter issued,
outstanding or created), or cause or permit any reduction or retirement of
such capital stock or such other equity interests.
5.11 Limitation on Sales of Property. Without the written consent of
Lender, except as otherwise specifically permitted under the Sole Patent
License, Borrower and its subsidiaries will not, prior to July 1, 1996, sell,
transfer, lease, exchange, license, alienate or dispose of any of its material
assets or properties or any material interest therein except to the extent not
otherwise forbidden under the Sole Patent License:
a. equipment which is worthless or obsolete or which is
replaced by equipment of equal suitability and value;
b. inventory which is sold in the ordinary course of
business on ordinary trade terms; and
c. sales or other dispositions not otherwise permitted
hereunder, not to exceed $25,000 in any single
transaction and $100,000 in the aggregate in any Fiscal
Year.
5.12 Limitation on Investments and New Businesses. Without the prior
written consent of Lender, Borrower and its subsidiaries will not, prior to
July 1, 1996, make any material expenditure or commitment or incur any
material obligation or enter into or engage in any material transaction except
in the ordinary course of business.
5.13 Limitation on Capital Expenditures. Without the written prior
consent of Lender, prior to July 1, 1996, Borrower and its subsidiaries will
not make any capital expenditures in an amount exceeding $250,000.00 for any
single expenditure or $1,000,000.00 on an annual aggregate basis.
5.14 Limitation on Credit Extensions. Borrower and its subsidiaries
will not extend credit, make advances or make loans to any person, including
any stockholder, employee, officer or director of Borrower, other than normal
extensions of credit to customers buying goods and services in the ordinary
course of business, working capital advances to its subsidiaries and advances
to employees for travel, relocation and other expense advances in the ordinary
course of business.
5.15 Limitation on Other Borrowings. Without the prior written consent
of Lender, Borrower and its subsidiaries shall not incur, create, contract,
waive, assume, have outstanding, guarantee or otherwise be or become, directly
or indirectly liable in respect of any Indebtedness, except (i) Indebtedness
arising out of this Loan Agreement, (ii) Indebtedness secured by Permitted
Liens, (iii) current liabilities for taxes and assessments incurred in the
ordinary course of business, (iv) Indebtedness in respect of current accounts
payable or accrued (other than for borrowed funds or purchase money
obligations) and incurred in the ordinary course of business, (v) Indebtedness
of Borrower as reflected in the financial statements of Borrower provided to
Lender at the date of Closing, (vi) Indebtedness secured by inventory and/or
receivables for working capital lines, and (vii) Indebtedness incurred to
acquire property, plant or equipment and secured by the acquired asset, and
(viii) up to $2,500,000.00 of other Indebtedness (e.g., letters of credit)
incurred by Borrower in the ordinary course of business; provided, however,
Borrower shall not, without the consent of Lender, be permitted to incur
Indebtedness under provisions (vi) or (viii) of this Section 5.15 if Borrower
has received a Notice of Collateral Value Deficiency and such Collateral Value
Deficiency continues to exist; and provided further, however, that the renewal
of existing Indebtedness in the amount then outstanding shall not constitute
the incurrence of additional Indebtedness under this provision.
5.16 Transactions with Affiliates. Neither Borrower nor any of its
subsidiaries will engage in any transaction with or pay any management or
other fees or compensation to any of its affiliates except transactions in the
ordinary course of business and transactions among Borrower and its
subsidiaries expressly permitted hereunder.
5.17 Indemnity. Borrower agrees to indemnify Lender, upon demand, from
and against any and all liabilities, obligations, claims, losses, damages,
penalties, fines, actions, judgments, suits, settlements, costs, expenses or
disbursements (including reasonable fees of attorneys, accountants, experts
and advisors) of any kind or nature whatsoever (in this section collectively
called "liabilities and costs") which to any extent (in whole or in part) may
be imposed on, incurred by, or asserted against Lender growing out of,
resulting from or in any way associated with any of the Collateral, the Loan
Documents, or the transactions and events (including the enforcement or
defense thereof) at any time associated therewith or contemplated therein
(including any violation or noncompliance with any environmental or other
applicable laws by Borrower or any liabilities or duties of Borrower or Lender
with respect to hazardous materials found in or release into the environment).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY LENDER, provided only that Lender
shall be not entitled under this section to receive indemnification for that
portion, if any, of any liabilities and costs which is proximately caused by
its own individual gross negligence or willful misconduct, as determined by a
final judgment. If any person (including Borrower or any of its affiliates)
ever alleges such gross negligence or willful misconduct by Lender, the
indemnification provided for in this section shall nonetheless by paid upon
demand, subject to later adjustment or reimbursement, until such time as a
court of competent jurisdiction enters a final judgment as to the extent and
effect of the alleged gross negligence or willful misconduct. As used in this
section, the term "Lender" shall refer not only to the person designated as
such in the first paragraph of this Loan Agreement, but also to each director,
officer, agent, attorney, employee, representative, and affiliate of such
Person. The term "Environmental Laws" shall mean any and all federal, state,
local and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses,
agreements or other governmental restrictions relating to the environment or
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or
wastes into the environment including ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
5.18 Permitted Activities. Notwithstanding anything to the contrary
set forth in this Article V, in the event that Borrower is permitted under
Section 6.2 of the Merger Agreement to take or fail to take any action, it
shall also be permitted to take or fail to take such action hereunder.
ARTICLE VI
Rights and Remedies of Lender
6.01 Acceleration. Upon the occurrence of an Event of Default, Lender
may, at its option, declare the entire outstanding amount of the Loan
Indebtedness to be immediately due and payable which such declaration shall
take affect five business days after notice from Lender to Borrower if such
Event of Default has not been fully cured.
6.02 Termination of Borrower's Assignment Rights. Upon acceleration
under Section 6.02, Borrower's rights under Section 3.01 of this Loan
Agreement to require Lender to convey an assignment of Lender's interest in
the Patents back to Borrower shall immediately terminate and Lender shall have
no obligation to convey any interest in the Patents back to Borrower. In the
event of such termination of Borrower's assignment rights, Lender shall be
entitled to (i) dispose of the Patents (subject to such retained rights, if
any, in the Patents that may then be granted to Borrower by Lender under the
Sole Patent License) in a commercially reasonable manner (including, without
limitation, a sale in which Lender shall be entitled to "credit bid" the Loan
Indebtedness and, if it is the highest bidder for the Patents, retain title to
the Patents) and the proceeds therefrom shall be applied to the Loan
Indebtedness, or (ii) if Lender can demonstrate with a written opinion of a
Qualified Professional that (a) the value of the Patents is equal to or less
than the amount of the Loan Indebtedness or (b) the value of the Patents
exceeds the Loan Indebtedness by an amount which Lender agrees to pay to
Borrower, retain the Patents in full and complete satisfaction of the Loan
Indebtedness by giving Borrower thirty days prior written notice of such
election.
6.03 No Waiver or Exhaustion. All of Lender's rights and remedies with
respect to any Loan Document or relating to the Patents shall be cumulative
and may be exercised singularly or concurrently. No waiver by Lender of any
of its rights or remedies hereunder, in the other Loan Documents, or
otherwise, shall be considered a waiver of any other or subsequent right or
remedy of Lender; no delay or omission in the exercise or enforcement by
Lender of any rights or remedies shall ever be construed as a waiver of any
right or remedy of Lender; and, no exercise or enforcement of any such rights
or remedies shall ever be held to exhaust any right or remedy of Lender.
ARTICLE VII
General Terms and Conditions
7.01 Notices. All notices, demands, requests, and other communications
required or permitted hereunder shall be in writing and shall be deemed to
have been given when received by Borrower or Lender, as the case may be, at
the respective addresses set forth on the first page of this Loan Agreement,
or such other address as Borrower or Lender may from time to time designate by
written notice to the other as herein required.
7.02 Modifications. No provision of this Loan Agreement or the other
Loan Documents may be modified, waived, or terminated except by instrument in
writing executed by the party against whom a modification, waiver, or
termination is sought to be enforced.
7.03 Severability. In case any of the provisions of this Loan
Agreement shall for any reason be held to be invalid, illegal, or
unenforceable, such invalidity, illegality, or unenforceability shall not
affect any other provision hereof, and this Loan Agreement shall be construed
as if such invalid, illegal, or unenforceable provision had never been
contained herein.
7.04 Election of Remedies. Lender shall have all of the rights and
remedies granted in the Loan Documents and available at law or in equity, and
these same rights and remedies shall be cumulative and may be pursued
separately, successively, or concurrently against Borrower, or the Patents at
the sole discretion of Lender. The exercise or failure to exercise any of the
same shall not constitute a waiver or release thereof or of any other right or
remedy, and the same shall be nonexclusive.
7.05 Form and Substance. All documents, certificates, and other items
required under this Loan Agreement to be executed and/or delivered to Lender
shall be in form and substance reasonably satisfactory to Lender.
7.06 Controlling Agreement. All agreements between Borrower and
Lender, whether now existing or hereafter arising and whether written or oral,
are hereby limited so that in no event shall the interest paid, or agreed to
be paid, to Lender for the use, forbearance, or detention of the money to be
loaned pursuant to this Loan Agreement, or for the performance or payment of
any covenant or obligation contained herein, exceed the maximum amount
permissible under applicable law. If from any circumstances whatsoever
fulfillment of any provision hereof or of any other document evidencing,
securing, or pertaining to the Loan, at any time performance of such provision
shall be due, shall involve transcending the limit of validity prescribed by
law, then ipso facto, the obligation to be fulfilled shall be reduced to the
limit of such validity; and if from any such circumstances Lender shall ever
receive anything of value deemed interest under applicable law which would
exceed interest at the highest lawful rate, the excessive interest shall be
applied to the reduction of the principal amount owing under the Note and not
to the payment of interest, or if the excessive interest exceeds the unpaid
balance of principal of the Note, such excess shall be refunded to Borrower.
All sums paid or agreed to be paid to Lender for the use, forbearance, or
detention of the indebtedness evidenced hereby shall, to the extent permitted
by applicable law, be amortized, prorated, allocated, and spread throughout
the full term of such indebtedness until payment in full in such manner as is
permitted by law. This paragraph shall control all agreements between
Borrower and Lender.
7.07 No Third Party Beneficiary. This Loan Agreement is for the sole
benefit of Lender and Borrower and is not for the benefit of any third party.
7.08 Number and Gender. Whenever used herein, the singular number
shall include the plural and the singular, and the use of any gender shall be
applicable to all genders.
7.09 Captions. The captions, headings, and arrangements used in this
Loan Agreement are for convenience only and do not in any way affect, limit,
amplify, or modify the terms and provisions hereof.
7.10 Applicable Law. This Loan Agreement and the Loan Documents shall
be governed by and construed in accordance with the laws of the State of New
York and the laws of the United States applicable to Lender and transactions
within such State.
7.11 Entire Agreement. This Loan Agreement, the other Loan Documents
and the Sole Patent License shall constitute the entire agreement and
understanding between the parties and supersede all prior agreements and
understandings with respect to the subject matter of the aforementioned
agreements, whether written or oral.
<PAGE>
EXECUTED AND DELIVERED on the date first recited.
LENDER:
BIONOVA U.S. INC.
By: /s/ Carlos Herrera
Name: Carlos Herrera
Title: Chairman of the Board and
Chief Executive Officer
BORROWER:
DNA PLANT TECHNOLOGY CORPORATION
By: /s/ Robert Serenbetz
Name: Robert Serenbetz
Title: Chief Executive Officer
Exhibit 10.2
PROMISSORY NOTE
$10,000,000.00 Dallas, Texas January 26, 1996
FOR VALUE RECEIVED, the undersigned, DNA PLANT TECHNOLOGY CORPORATION, a
Delaware corporation (herein called the "Borrower"), hereby promises to pay to
the order of BIONOVA U.S. INC., a Delaware corporation (herein called the
"Lender", which term shall also include any subsequent transferee of this Note),
the principal sum of Ten Million and No/100 Dollars U.S. ($10,000,000.00), with
interest on the unpaid balance thereof from the date of advancement thereof
pursuant to the Loan Agreement (as hereinafter defined) until maturity at the
rate or rates hereinafter provided, both principal and interest payable as
hereinafter provided funds in lawful money of the United States of America at
1700 Pacific Avenue, Suite 3300 (attention: JAR), Dallas, Texas 75201, or at
such other place as from time to time may be designated in writing by the holder
of this Note.
Borrower promises to pay interest on the principal amount hereof from time
to time outstanding, from January 29, 1996, at the rate of 10.25% per annum (the
"Loan Rate"), compounded annually. Interest shall accrue but not be payable
until the unpaid principal amount hereof or any portion hereof which is prepaid
is due and payable in full to Lender. Such interest shall be payable in like
coin or currency as the principal amount hereof. Anything to the contrary
notwithstanding, if at any time the Loan Rate exceeds the Maximum Rate (as
hereinafter defined), the Loan Rate shall be limited to the Maximum Rate, but
any subsequent reductions in the Loan Rate shall not reduce the rate of interest
which the unpaid principal balance of this Note bears below the Maximum Rate
until such time as the total amount of interest accrued on this Note equals the
amount of interest that would have accrued under this Note if the Loan Rate had
at all times been in effect. All past due principal and/or interest hereunder
shall bear interest from maturity at the Maximum Rate. All interest
calculations hereunder shall be made on the basis of a 365 day year and the
actual number of days elapsed. Any payment made by Borrower to Lender
hereunder be credited first to accrued and unpaid expenses hereunder or under
the Loan Agreement, next to accrued and unpaid interest hereunder, and last to
unpaid principal hereunder.
Unless sooner demanded by Lender as permitted under the Loan Agreement, the
entire unpaid principal amount hereof, together with interest accrued hereon,
shall, without notice, be due and payable in full to Lender in immediately
available funds on the earlier of (i) January 26, 1999, (ii) if either party has
elected to terminate that certain Merger Agreement of even date herewith among
Lender, Borrower and certain other parties noted therein (as such agreement may
be amended from time to time,the "Merger Agreement") pursuant to Section 11.1(j)
thereof, then on the date on which any form of "Alternative Transaction"(as that
term is defined in the Merger Agreement) is actually consummated by Borrower,and
(iii) if the Merger Agreement terminates for any other reason, then on the date
on which an Alternative Transaction involving more than 35% of the voting power,
directly or indirectly through options, warrants or convertible securities, of
Borrower or any party surviving such Alternative Transaction or more than 35% of
the fair market value of the assets of Borrower) is actually consummated by
Borrower. Upon the occurrence of an "Event of Default" under the Loan
Agreement, Lender may elect to declare and may at any time declare the entire
unpaid principal amount hereof, together with interest accrued hereon, to be
immediately due and payable.
As provided in the Loan Agreement, this Note is secured by an Assignment
of Patents of even date herewith evidencing a transfer of an interest in certain
patent rights by Borrower to Lender as described therein.
This Note may be prepaid in whole or in part at any time without bonus or
penalty, subject to the terms and conditions of the Loan Agreement.
This Note (a) is issued and delivered under that certain Loan Agreement of
even date herewith between Borrower and Lender (herein, as from time to time
supplemented, amended or restated, called the "Loan Agreement"), and is the Note
as defined therein, and (b) is subject to the terms and provisions of the Loan
Agreement, which contains provisions for payments and prepayments hereunder and
acceleration of the maturity hereof upon the happening of certain stated events.
It is the intent of Borrower and Lender in the execution of this Note and
all other instruments now or hereafter executed in connection with this Note to
contract in strict compliance with applicable usury law. In furtherance thereof,
Borrower and Lender stipulate and agree that none of the terms and provisions
contained in this Note, or in any other instrument executed in connection
herewith, shall ever be construed to create a contract to pay for the use,
forbearance or detention of money, interest at a rate in excess of the maximum
interest rate permitted to be charged by applicable law (the "Maximum Rate").
Neither the Borrower nor any guarantors, endorsers or other parties now or
hereafter becoming liable for payment of this Note shall ever be required to pay
interest on this Note at a rate in excess of the Maximum Rate and the provisions
of this paragraph shall control over all other provisions of this Note and any
other instruments now or hereafter executed in connection herewith which may be
in apparent conflict herewith. Lender expressly disavows any intention to charge
or collect excessive unearned interest or finance charges in the event the
maturity of this Note is accelerated. If the maturity of this Note shall be
accelerated for any reason or if the principal of this Note is paid prior to the
end of the term of this Note, and as a result thereof the interest received for
the actual period of existence of the loan evidenced by this Note exceeds the
Maximum Rate, Lender shall refund to Borrower the amount of such excess or shall
credit the amount of such excess against the principal balance of this Note then
outstanding. In the event that Lender shall collect monies which are deemed to
constitute interest which would increase the effective interest rate on this
Note to a rate in excess of the Maximum Rate, all such sums deemed to constitute
interest in excess of the Maximum Rate shall, upon such determination, at the
option of Lender, be either immediately returned to Borrower or credited against
the principal balance of this Note then outstanding, without further penalty to
Lender. By execution of this Note Borrower acknowledges that it believes the
loan evidenced by this Note to be non-usurious and agrees that if, at any time,
Borrower should have reason to believe that such loan is in fact usurious, it
will give Lender notice of such condition and Borrower agrees that Lender shall
have ninety (90) days in which to make appropriate refund or other adjustment in
order to correct such condition if in fact such exists. The term "applicable
law" as used in this Note shall mean the laws of the State of New York or the
laws of the United States, whichever laws allow the greater rate of interest, as
such laws now exist or may be changed or amended or come into effect in the
future.
Should the indebtedness represented by this Note or any part thereof be
collected at law or in equity or through any bankruptcy, receivership, probate
or other court proceedings or if this Note is placed in the hands of attorneys
for collection after default, Borrower and all endorsers, guarantors and
sureties of this Note jointly and severally agree to pay in addition to the
principal and interest due and payable hereon reasonable attorneys' and
collection fees.
Borrower and all endorsers, guarantors and sureties of this Note and all
other persons liable or to become liable on this Note severally waive
presentment for payment, demand, notice of demand and of dishonor and nonpayment
of this Note, notice of intention to accelerate the maturity of this Note,
protest and notice of protest, diligence in collecting, and the bringing of
suit against any other party, and agree to all renewals, extensions,
modifications, partial payments, releases or substitutions of security, in whole
or in part, with or without notice, before or after maturity.
This Note and the rights and duties of the parties hereunder shall be
governed for all purposes by the law of the State of New York and the law of the
United States applicable to transactions within such state.
DNA PLANT TECHNOLOGY CORPORATION
By: /s/ Robert Serenbetz
----------------------------
Robert Serenbetz
Chief Executive Officer
Exhibit 10.3
ASSIGNMENT OF PATENTS
ASSIGNMENT OF PATENTS MADE AS OF THE 26TH DAY OF JANUARY, 1996;
FOR VALUE RECEIVED, DNA Plant Technology Corporation
a Delaware corporation (hereinafter called the "Assignor")
having a place of business at 6701 San Pablo Avenue
Oakland, California 94608
hereby sells, assigns, transfers and conveys unto
Bionova U.S. Inc.
a Delaware corporation (hereinafter called the "Assignee")
having a place of business at c/o Thompson & Knight
(Attn: JAR)
1700 Pacific Ave., Suite 3300
Dallas, Texas 75201
its successors, assigns and legal representatives, Assignor's entire right,
title and interest, for the United States and for all other countries and
regions throughout the world in and to the utility patents and applications
therefor, identified in Schedule A attached hereto and hereby made a part
hereof (collectively the "Patents"), owned by Assignor, subject to certain
rights retained by Assignor as defined in that certain Loan Agreement between
Assignor and Assignee of even date herewith; and including certain inventions
described and or claimed in those Patents; and in and to said applications,
divisions, continuations, continuations-in-part and all Letters Patent of the
United States which may be granted thereon; and all reissues, reexaminations,
renewals and extensions thereof; and all applications for Letters Patent or
other grants of protection of proprietary rights including, but not limited
to, patents, inventor's certificates, utility models, utility certificates,
patents of importation, registrations of patent and industrial design
registrations which may be filed, and which may be granted, upon said
inventions in any counties or regions of the world; and all reissues
reexaminations, renewals and extensions thereof.
AND Assignor hereby authorizes and requests the Commissioner of Patents
and Trademarks of the United States, and the Secretary of the Department of
Agriculture of the United States, or comparable authority in each country or
region to issue all Letters Patent or other grants of protection upon said
inventions to the Assignee or to such nominees as it may designate.
AND Assignor authorizes and empowers said Assignee or its nominees to
invoke and claim for any application for such Letters Patent or other form of
protection for said inventions filed by it or them, the benefit of the right
of priority of Industrial Property, as amended, or by any convention which may
henceforth be substituted for it, and to invoke and claim such right of
priority without further written or oral authorization from Assignor.
AND Assignor hereby agrees and acknowledges that a copy of this
assignment shall be deemed a full legal and formal equivalent of any
assignment, consent to file or like document which may be required in any
country or region for any purpose and more particularly in proof of the right
of said Assignee or its nominees to claim the aforesaid benefit of the right
of its priority provided by the International Convention for the Protection of
Industrial Property, as amended, or by any convention which may henceforth be
substituted for it.
DNA PLANT TECHNOLOGY CORPORATION
By: /s/ Robert Serenbetz
Robert Serenbetz
Chief Executive Officer
STATE OF TEXAS
ss.:
COUNTY OF DALLAS
On this 26th day of January, 1996, before me personally appeared Robert
Serenbetz to me known and known to me to be the Chief Executive Officer of DNA
Plant Technology Corporation and who executed the foregoing instrument, and
who thereupon acknowledged to me that he was authorized by DNA Plant
Technology Corporation to execute the same on its behalf for the purposes
therein set forth.
(Seal) /s/ Kitty Kane
Notary Public
(Notary Stamp)
The foregoing assignment is hereby accepted by and on behalf of Bionova
U.S. Inc.
BIONOVA U.S. INC.
By: /s/ Carlos Herrera
Carlos Herrera
Chairman of the Board and
Chief Executive Officer
STATE OF TEXAS
ss.:
COUNTY OF DALLAS
On this 26th day of January, 1996, before me personally appeared Carlos
Herrera to me known and known to me to be the Chairman of the Board and Chief
Executive Officer of Bionova U.S. Inc. and who executed the foregoing
instrument, and who thereupon acknowledged to me that he was authorized by
Bionova U.S. Inc. to execute the same on its behalf for the purposes therein
set forth.
(Seal) /s/ Kitty Kane
Notary Public
(Notary Stamp)
<PAGE>
SCHEDULE A
LIST OF PATENTS AND APPLICATIONS THEREFOR
I. Issued U.S. Patents
1. U.S. Patent No. 5,034,323 "Genetic Engineering of Novel Plant
Phenotypes"
2. U.S. Patent No. 5,231,020 "Genetic Engineering of Novel Plant
Phenotypes"
3. U.S. Patent No. 5,283,184 "Genetic Engineering of Novel Plant
Phenotypes"
II. Pending U.S. Patent Applications
1. U.S. Serial No. 027,133 "Genetic Engineering of Novel Plant
Phenotypes"
2. U.S. Serial No. 557,373 "Genetic Engineering of Novel Plant
Phenotypes"
III. Foreign Filings
PCT Serial No. 90/01690 WO 90/12084
European Granted Patent No. 465,572 (issuing from Serial No. 90905970.1)
European Patent Application Serial No. 94203025.5
Japan Patent Application Serial No. 2-505875
Australia Patent No. 640,644 (issuing from Serial No. 54123/90)
Exhibit 10.4
SOLE PATENT LICENSE AGREEMENT
THIS AGREEMENT is made and entered into this 26th day of January, 1996,
by and between BIONOVA U.S. INC., a Delaware corporation (hereinafter BIONOVA)
and DNA PLANT TECHNOLOGY, a Delaware corporation (hereinafter DNAP).
WITNESSETH
WHEREAS, BIONOVA, pursuant to the Loan Agreement dated as of even date
herewith ("Loan Agreement"), as the Lender, has agreed, subject to certain
conditions, to lend to DNAP, as the Borrower, $10,000,000 on a term loan
basis;
WHEREAS, BIONOVA is willing to make the term loan under the Loan
Agreement only upon the condition, inter alia, that DNAP shall have executed
and delivered to BIONOVA an Assignment dated as of even date herewith of
patents and patent applications listed on the attached Schedule I;
WHEREAS, immediately prior to the execution of such Assignment, DNAP and
BIONOVA executed a Non-Exclusive Patent License Agreement (the "NON-EXCLUSIVE
LICENSE"), which the parties hereto acknowledge continues through and beyond
the term of this Agreement, unless such Non-Exclusive Patent License Agreement
is earlier terminated pursuant to its terms.
WHEREAS, BIONOVA, pursuant to the Loan Agreement and the Assignment, is
the owner of the right, title and interest in and to the patents and patent
applications listed on the attached Schedule I;
WHEREAS, DNAP desires to obtain a sole license under the patents and
patent applications listed on the attached Schedule I;
WHEREAS, BIONOVA is willing to grant such sole license to DNAP, for the
time and subject to the terms and conditions hereinafter set forth.
NOW THEREFORE, for and in consideration of the mutual promises contained
herein, and for other good and valuable consideration, the parties hereto
agree as follows:
1. Definitions. In this Agreement, the following terms shall have
the following meanings:
a. LICENSED PATENTS shall mean the patents and patent
applications listed on the attached Schedule I, patents to
be issued pursuant thereto, and all divisions,
continuations, reissues, reexamination certificates,
substitutes, and extensions thereof.
b. LICENSED PRODUCTS shall mean any product or process covered
by one or more claims of the Licensed Patents.
c. COMMERCIALIZATION COLLABORATORS shall mean only those
entities who, from the Closing Date until the time of a
termination under this License Agreement, are in the chain
of commercialization of the products made, used or sold by
DNAP or by Affiliates of the DNAP.
d. RESEARCH SPONSORS shall mean those entities (other than
entities listed on Schedule II with respect only to the
Existing Licenses and extensions thereof) who, from the date
hereof until the time of termination of this License
Agreement shall fund research activities of DNAP or
Affiliates of DNAP under agreements requiring funding to
DNAP of at least $350,000 over a period not to exceed three
years.
e. EXISTING LICENSES shall mean those license agreements with
respect to the LICENSED PATENTS that are set forth in
Schedule II hereto.
f. AFFILIATES means persons or entities controlling, controlled
by or under common control with the party, as well as any
majority owned entities of the party and of its other
affiliates. "Control" of an entity means either the power,
directly or indirectly, to direct or cause the direction of
the management and policies of the entity, whether by
contract or otherwise, or the right to receive at least 50%
of the profits from such entity.
2. License Grant to DNAP.
a. Upon execution of this Agreement and until termination of
DNAP's rights to compel a reconveyance of the LICENSED PATENTS pursuant to
Section 6.03 of the Loan Agreement, only for the Term indicated in Section
5(a) hereof, and subject to the NON-EXCLUSIVE LICENSE, BIONOVA hereby grants
to DNAP and its Affiliates a fully paid up royalty free sole license under the
LICENSED PATENTS to (i) use the LICENSED PATENTS, (ii) together with its
COMMERCIALIZATION COLLABORATORS, to make, have made, use and sell throughout
the world all LICENSED PRODUCTS, and (iii) to meet its obligations under the
Existing Licenses.
b. Upon termination of DNAP's rights to compel a reconveyance
of the LICENSED PATENTS pursuant to Section 6.03 of the Loan Agreement, and
for the Term indicated in Section 5(b) hereof and subject to the NON-EXCLUSIVE
LICENSE, BIONOVA hereby grants to DNAP and its Affiliates a fully paid up,
royalty free, non-exclusive license under the LICENSED PATENTS to (i) use the
LICENSED PATENTS, (ii) together with its COMMERCIALIZATION COLLABORATORS, to
make, have made, use and sell throughout the world all LICENSED PRODUCTS, and
(iii) to meet its obligations under the Existing Licenses.
3. DNAP's Right to Sublicense. Except as specifically set forth
herein, during the term of this Agreement, DNAP shall not have a right to
sublicense the LICENSED PATENTS under this Agreement. BIONOVA shall be deemed
to have consented to the EXISTING LICENSES and the NON-EXCLUSIVE LICENSE (and
to DNAP's continuing ability to receive all royalties and license fees
thereunder). DNAP shall have the right to sublicense the LICENSED PATENTS to
RESEARCH SPONSORS at a commercially reasonable royalty rate acceptable to DNAP
whereby 50% of such royalties received by DNAP shall be paid, only if and to
the extent that there is any outstanding "Loan Indebtedness," as that term is
defined in the Loan Agreement, to BIONOVA within thirty (30) days of receipt
by DNAP and applied to such "Loan Indebtedness," and provided that the scope
of any such sublicense shall be (i) a non-exclusive license, and (ii) strictly
limited to the development and commercialization of the products and processes
resulting from the funded research program (collectively, the "Permitted
Sublicenses"). Allocations of royalty value in agreements with RESEARCH
SPONSORS between the LICENSED PATENTS and other intellectual property or
research services to be provided by DNAP shall be commercially reasonable.
Without the written consent of BIONOVA, DNAP shall not be entitled to
materially amend or modify any such PERMITTED SUBLICENSE if such amendment or
modification would cause the sublicense to no longer meet the criteria for a
Permitted Sublicense. Without the written consent of BIONOVA, DNAP shall not
be entitled to materially amend or modify any of the EXISTING LICENSES, if
such amendment or modification would have a materially adverse affect on the
value of the LICENSED PATENTS. Subject to BIONOVA executing a Confidentiality
Agreement, DNAP agrees to send BIONOVA a complete and executed copy of each
PERMITTED SUBLICENSE or any modification of such PERMITTED SUBLICENSE or any
of the EXISTING LICENSES modified hereunder within 10 days of the final
execution or modification.
4. Limitation of Rights of BIONOVA. While the sole license is in
effect, and other than pursuant to the NON-EXCLUSIVE LICENSE, BIONOVA shall
have no rights, without the prior written consent of DNAP (i) to grant any
licenses of the LICENSED PATENTS; or (ii) to make any use on its own behalf of
the LICENSED PATENTS including without limitation the right to make, have
made, use and sell throughout the world all LICENSED PRODUCTS.
5. Term.
a. The term of the sole license granted to DNAP in section 2(a)
shall be the earlier of three years from the date of execution hereof or until
termination of DNAP's right to compel a reconveyance of the LICENSED PATENTS
pursuant to Section 6.03 of the Loan Agreement.
b. The term of the non-exclusive license granted to DNAP in
section 2(b) shall be until expiration of the last to expire of the LICENSED
PATENTS.
6. Enforcement of LICENSED PATENTS. As long as its sole license
remains in effect pursuant to Section 2(a) and subsequent to that time for the
sole purpose of meeting its obligations under the EXISTING LICENSES and the
PERMITTED SUBLICENSES, DNAP shall retain all rights to commence, appear in, or
defend or make decisions concerning any action or proceeding (including any
proceeding or prosecution in the United States Patent and Trademark Office)
including the right to compel the joinder of BIONOVA as a party, purporting to
affect, the LICENSED PATENTS. If BIONOVA requests that DNAP take any action
regarding the matters set forth in this Section 6 and DNAP refuses or fails to
take such action on a timely basis, then, while the sole license remains in
effect, BIONOVA may (but shall not be obligated to) commence, appear in, or
defend any action or proceeding (including any proceeding in the United States
Patent and Trademark Office) purporting to affect the LICENSED PATENTS or the
respective rights and obligations of BIONOVA and DNAP with respect thereto.
In the event DNAP refuses or fails to take action on a timely basis reasonably
requested by BIONOVA, then BIONOVA shall, at its sole option and expense,
control any such action or proceeding and DNAP agrees to appear as a party
therein if requested by BIONOVA, and to cooperate with BIONOVA in the conduct
of such action or proceeding whether or not it is a party. BIONOVA may (but
shall not be obligated to) pay all necessary expenses, including reasonable
attorneys' fees and expenses incurred in connection with such proceedings or
actions, which DNAP agrees to repay to BIONOVA on the terms set forth in the
Loan Agreement.
7. Notices. All notices, demands, requests, and other communications
required or permitted hereunder shall be in writing and shall be deemed to
have been given when received by BIONOVA or DNAP, as the case may be, at the
respective addresses set forth below or as BIONOVA or DNAP may from time to
time designate by written notice to the other.
BIONOVA U.S. INC.
c/o Thompson & Knight (attn: JAR)
1700 Pacific, Ste. 3300
Dallas, Texas 75201
With a copy to:
Lic. Alejandro Sanchez-Mujica
Edificio Torrealta
Av. Roble 300 Mezzzanine
66265 Garza Garcia, N.L.
Mexico
DNA PLANT TECHNOLOGY CORPORATION
6701 San Pablo Avenue
Oakland, CA 94608-1239
Attn.: Vice President, Business Development
(with copy to DNAP Legal Department, at the same address);
8. Modifications. No provision of this LICENSE AGREEMENT may be
modified, waiver, or terminated except by instrument in writing executed by
the party against whom a modification, waiver, or termination is sought to be
enforced.
9. Severability. In case any of the provisions of this LICENSE
AGREEMENT shall for any reason be held to be invalid, illegal or
unenforceable, such invalidity, illegality, or unenforceability shall not
affect any other provision hereof, and this LICENSE AGREEMENT shall be
construed as if such invalid, illegal, or unenforceable provision had never
been contained herein.
10. Election of Remedies. Each party shall have all of the rights and
remedies granted herein and available at law or in equity, and these same
rights and remedies shall be cumulative and may be pursued separately,
successively, or concurrently against the other party, or the LICENSED PATENTS
at the sole discretion of the pursuing party. The exercise or failure to
exercise any of the same shall not constitute a waiver or release thereof or
of any other right or remedy, and the same shall be non-exclusive.
11. Form and Substance. All documents, certificates, and other items
required under this LICENSE AGREEMENT to be executed and/or delivered to a
party shall be in form and substance satisfactory to the receiving party.
12. No Third Party Beneficiary. This LICENSE AGREEMENT is for the
sole benefit of BIONOVA and DNAP and is not for the benefit of any third
party.
13. Number and Gender. Whenever used herein, the singular number
shall include the plural and the singular, and the use of any gender shall be
applicable to all genders.
14. Captions. The captions, headings, and arrangements used in this
LICENSE AGREEMENT are for convenience only and do not in any way affect,
limit, amplify, or modify the terms and provisions hereof.
15. Applicable Law. This LICENSE AGREEMENT shall be governed by and
construed in accordance with the laws of the State of California and the laws
of the United States of America.
16. Assignability. Neither this LICENSE AGREEMENT nor any interest
herein may be assigned, in whole or in part, by a party without the prior
written consent of the other party. A party may assign this LICENSE AGREEMENT
to a successor of all or substantially all of its business without the prior
written consent of the other party; provided, however, that no such assignment
shall be valid unless the assignee assumes all of the duties and obligations
of the assigning party and provided further that the assigning party shall
remain liable and responsible to the other party for the performance and
observance of all such duties and obligations.
17. General Assurances. The parties hereto agree to execute,
acknowledge and deliver all such further instruments, and to do all such other
acts, as may be necessary or appropriate in order to carry out the intent and
purposes of this LICENSE AGREEMENT.
18. Negation Of Agency And Similar Relationships. Nothing contained
herein shall be deemed to create any agency, joint venture or partnership
relationship between the parties hereto.
19. Confidentiality.
a. Duties: DNAP and its PERMITTED SUBLICENSEES shall keep
confidential and not disclose to any third person or entity any information
regarding the Licensed Patents or the Licensed Products, except as provided in
subparagraph (b) below. Notwithstanding the foregoing, DNAP and its PERMITTED
SUBLICENSEES shall be free to use such information for purposes of exercising
its rights under this Agreement.
b. Exceptions: The duties of confidentiality, access
restrictions and non-use provided by subparagraph (a) above shall not apply to
information received by DNAP from BIONOVA if the information:
(1) is public information at the time of disclosure by
BIONOVA to DNAP;
(2) subsequently becomes public information other than by
act or omission of DNAP;
(3) is already in the lawful possession of DNAP, as can
reasonably be demonstrated by documentary evidence from DNAP, at the time of
first disclosure by BIONOVA to DNAP; or
(4) is independently developed by employees of DNAP who
did not have access to the information.
20. Termination. This Agreement will terminate upon the date of the
last to expire of the LICENSED PATENTS. In the event of a material breach of
this Agreement by either party and the failure to cure such breach within 30
days of the receipt of written notice from the other party, this Agreement
shall terminate. In the event of such termination, the non-breaching party
retains all other rights and remedies available to it under law, including the
right to collect payments owed by not made.
21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which will
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered on the date first above written.
BIONOVA U.S. INC.
By: /s/ Carlos Herrera
Name: Carlos Herrera
Title: Chairman of the Board and Chief
Executive Officer
DNA PLANT TECHNOLOGY CORPORATION
By: /s/ Robert Serenbetz
Name: Robert Serenbetz
Title: Chief Executive Officer
Exhibit 10.5
LONG TERM FUNDED RESEARCH AGREEMENT
This LONG TERM FUNDED RESEARCH AGREEMENT ("Agreement") is effective as
of the ___ day of ______, 1996, and is by and between DNA PLANT TECHNOLOGY
CORPORATION ("DNAP"), a corporation duly organized and existing under the laws
of the State of Delaware, and EMPRESAS LA MODERNA, S.A. de C.V., a
corporation organized under the laws of the United Mexican States, directly or
through its subsidiaries and/or its affiliates (collectively, "ELM").
W I T N E S S E T H:
WHEREAS, DNAP has expertise, personnel, facilities, equipment,
technology and intellectual property useful in the development of improved
plants using biotechnological techniques; and
WHEREAS, ELM is, among other things, a leading developer and marketer of
improved varieties of fruits, vegetables and agronomic crops; and
WHEREAS, the parties desire to enter a long term relationship whereby
the parties will consult with each other regarding utilization of
biotechnology in the seed industry and ELM will fund research and development
projects to be conducted by DNAP;
NOW, THEREFORE, the parties hereto agree as follows:
Article I. Definitions
For the purposes of this Agreement, the following terms shall have
the following meanings:
1.1 "DNAP" means DNA Plant Technology Corporation, a Delaware
corporation, and its Affiliates.
1.2 "ELM", means EMPRESAS LA MODERNA, S.A. de C.V., a
corporation organized under the laws of the United Mexican States, and its
subsidiaries and/or its Affiliates including Agroindustrias Moderna, S.A. de
C.V., a corporation organized under the laws of the United Mexican States,
Bionova, S.A. de C.V., Seminis, Inc., an Illinois corporation and its
Affiliates, which as of the date of this Agreement include PetoSeed Company,
Inc., Asgrow Seed Company, and Royal Sluis.
1.3 "Affiliates" means, with respect to a particular party,
persons or entities controlling, controlled by or under common control with
the party, as well as any majority owned entities of the party and of its
other affiliates. "Control" of an entity means either the power, directly or
indirectly, to direct or cause the direction of the management and policies of
the entity, whether by contract or otherwise, or the right to receive at least
50% of the profits from such entity.
1.4 "Research Program" means the research and development
program described in Article II to this Agreement, and includes Projects.
1.5 "Project" means a particular research or development project
to be carried out by DNAP for ELM as approved and accepted by the parties
pursuant to paragraph 2.2.
1.6 "Developed Intellectual Property" or "Developed IP" means
inventions, discoveries, know-how, trade secrets, confidential information,
biomaterials, patents, plant variety protection act rights, breeders' rights,
or other intellectual or industrial property on a worldwide basis arising out
of or developed in the course of the Research Program or any Project.
1.7 "DNAP Intellectual Property" or "DNAP IP" shall mean the
intellectual property (including know how, trade secrets, confidential
information, biomaterials, patents, plant variety protection rights, breeders'
rights, and rights under licenses) owned in whole or in part, controlled or
licensable by DNAP from time to time. A listing of DNAP's patent portfolio of
issued patents, which is part of DNAP IP, as of the date of this Agreement is
set forth in Appendix A.
1.8 "ELM Intellectual Property" or "ELM IP" means the
intellectual property (including know how, trade secrets, confidential
information, biomaterials, patents, plant variety protection rights, breeders'
rights, and rights under licenses) owned in whole or in part, controlled or
licensable by ELM from time to time.
1.9 "Product" means any product or process which incorporates
DNAP IP.
Article II. Research Program
2.1 The Research Program
On the terms and conditions set forth in this Agreement,
DNAP shall conduct research and development on approved Projects for ELM and
shall consult with ELM regarding the application of biotechnology to products
manufactured and distributed by ELM from time to time, including, without
limitation, products of the agricultural seed industry. The Research Program
shall have a ten-year (10) term, commencing with the date of this Agreement.
2.2 Research Projects
a. Projects. During the term of the Agreement, the
parties will discuss potential Projects. Either party may propose such
Projects. ELM will decide which particular Projects to undertake. The
parties shall use their best efforts to agree on reasonable terms for all
Projects proposed, and DNAP shall not unreasonably refuse to agree to the
terms of any project proposed by ELM, including any confidentiality
restrictions regarding the subject matter and scope of a Project.
b. Project Plan. Each such agreed Project shall have a
Project Plan, which shall include at least: (i) the goals of the Project, (ii)
research plan, including benchmarks to be used in judging the Project's
progress and timelines therefor, (iii) a budget and payment schedule, (iv) a
listing prepared by DNAP of the DNAP IP to be used in the Project, (v) a
listing prepared by ELM if the ELM IP is to be used in the Project, and (vi) a
definition of the "Field" for such project. For purposes of this Agreement,
"Field" means the intended market for commercialization of the Developed IP at
the time a Project is initiated but in no event shall the Field include a
market (which may be defined broadly to include, for example, all vegetables
or narrowly, to refer, for example, to a specific vegetable, depending on the
circumstances) that the entity proposing the Project does not actively
participate in or intend to participate in at the time the Project is
initiated.
c. Project Termination. ELM may terminate any Project at
any time for any reason, upon payment of Project costs to date of termination
and reimbursement to DNAP of actual loss on account of commitments made (but
no consequential damages).
2.3 Reports
DNAP shall provide ELM with written reports on the progress
of each Project, on a quarterly basis or more often if requested by ELM.
2.4 Oversight
ELM shall have the right to oversee each Project, including
reasonable access to the DNAP employees and facilities being utilized in the
Project.
2.5 License to Existing IP
a. License. ELM shall have a worldwide royalty bearing
non-exclusive license under this Agreement with respect to DNAP IP solely to
the extent necessary or reasonably appropriate for ELM to commercialize the
Developed IP, including the right to make, have made, use and sell any Product
or technology resulting from a Project.
b. Royalty.
(i) ELM shall pay a royalty to DNAP for the use of
DNAP IP which royalty shall be at standard industry rates, with the specific
amount to be negotiated as Projects are identified; provided that the royalty
rate shall be equitably adjusted to the extent that the Non-Exclusive Patent
License between DNAP and Bionova U.S. Inc. remains in full force and effect.
(ii) With each royalty payment, ELM will provide to
DNAP a written royalty statement verified by the President or Chief Financial
Officer of ELM, setting forth the total sales identified by Product
designation or other basis upon which royalties are calculated during the
period covered by the statement. DNAP shall have the right once per year to
designate an independent certified public accountant to inspect ELM's books
and records relating to the basis upon which royalties are calculated.
c. Exclusivity. DNAP agrees that it will not undertake
to perform substantially the same research and development program as any
Project without the prior written consent of ELM.
2.6 License to ELM IP
a. License. If ELM IP is utilized in a Project and
incorporated in Developed IP, unless otherwise agreed in a Project Plan, DNAP
shall have a royalty bearing non-exclusive license under this Agreement with
respect to ELM IP solely to the extent necessary or reasonably appropriate for
DNAP to exercise its rights with respect to the Developed IP pursuant to
Section 4.2.
b. Royalty.
(i) DNAP shall pay a royalty to ELM for the use of
ELM IP which royalty shall be at standard industry rates, with the specific
amount to be negotiated as Projects are identified.
(ii) With each royalty payment, DNAP will provide to
ELM a written royalty statement verified by the President or Chief Financial
Officer of DNAP, setting forth the total sales identified by Product
designation or other basis upon which royalties are calculated during the
period covered by the statement. ELM shall have the right once per year to
designate an independent certified public accountant to inspect DNAP's books
and records relating to the basis upon which royalties are calculated.
2.7 Consultation. The parties specifically understand that the
modification of phenotypic traits through biotechnology and genetic
engineering is of potential significant competitive importance to the
industry. The parties need to work closely together to create and define
appropriate Projects. DNAP will use its reasonable best efforts to
continually apprise ELM of scientific developments relating to ELM's products,
and ELM will apprise DNAP of those aspects of its competitive strategy and
development plans for its products which are necessary or useful to DNAP with
respect to its obligations hereunder.
Article III. Research Program Funding
3.1 Payment by ELM
ELM shall pay DNAP in accordance with the payment schedule
established for each Project in the Project Plan, provided that if DNAP fails
to provide the resources it is committed to provide to a Project, then, in
addition to its other remedies provided for herein, such payments shall be
equitably adjusted.
3.2 Minimum Project Funding
ELM and DNAP shall undertake Projects with payment schedules
that will generate payments to DNAP of at least $9,000,000 each three years,
up to a maximum of $30,000,000 during the ten-year period beginning on the
effective date hereof, with the understanding that if the minimum payments in
any year exceed the amounts payable for research services provided by DNAP
hereunder, then such excess shall be available as a credit towards future
services but shall not reduce ELM's obligation to continue minimum funding.
Unless otherwise agreed by the parties, minimum funding of $625,000 shall be
paid to DNAP at the beginning of each calendar quarter during the term of this
Agreement until the maximum of $30,000,000 has been reached.
The payment obligations of ELM shall be reduced by payments
by ELM to DNAP, if any, under other agreements (e.g., calling for joint
development of seed or crops) whereby DNAP provides research or development
services for ELM. Similarly, in such event, DNAP's corresponding duty to
provide services hereunder shall be reduced.
3.3 Payment Level
Unless otherwise agreed in the Project Plan, ELM shall pay
DNAP all of DNAP's direct costs (including direct R&D overhead) plus an
industry standard operating margin, but in no event more than % of DNAP's
modified direct costs, as customarily computed by DNAP to include only
salaries, benefits, supplies and travel with respect to Project personnel.
Article IV. Rights to Results of Research Program
4.1 Ownership Rights
Subject to paragraph 4.2, ELM will own the entire right,
title and interest in all Developed IP, as well as all other inventions,
discoveries, improvements or other technology, arising out of each Project and
the Research Program, whether or not patentable, together with all patent
applications or patents based thereon, regardless of whether the Developed IP
are made by employees of ELM or employees of DNAP. ELM will have the right to
file, prosecute and maintain patent applications for all Developed IP (at
ELM's expense if outside a Project Plan). DNAP will promptly disclose to ELM
both the conception and the reduction to practice of Developed IP. DNAP
hereby represents and agrees that all employees and other persons acting on
its behalf in performing its obligations under this Agreement will be
obligated under a binding written agreement or applicable law to assign to
DNAP or ELM, as directed, all Developed IP made or developed by such employee
or other person. DNAP will make available to ELM or to ELM's authorized
attorneys, agents or representatives, (at ELM's expense if outside a Project
Plan) DNAP employees as necessary or appropriate to enable ELM to file,
prosecute and maintain patent applications and resulting patents with respect
to all Developed IP, for a period of time sufficient for ELM to obtain the
assistance it needs from such personnel. If DNAP requests that ELM take any
action in a proceeding incident to the Developed IP and ELM refuses or fails
to take such action, DNAP shall then have the right, but not the obligation,
in the name of ELM, to prosecute or defend any action or proceeding incident
to the Developed IP. Any such action shall be at the sole expense of DNAP.
DNAP shall have no obligation to undertake any such action, and if DNAP should
do so, it shall have no liability to ELM for the sufficiency or adequacy of
any such actions taken by DNAP.
4.2 License Rights to Developed IP
Unless otherwise agreed in a Project Plan, ELM hereby grants
to DNAP a perpetual, royalty-free (except as provided in Section 2.6 hereof)
(a) non-exclusive license, to use the Developed IP for research purposes only
within the Field, and (b) sole license to use the Developed IP outside the
Field (which sole license is subject to ELM's retained rights to use the
Developed IP outside the Field). Such retained rights to use the Developed IP
outside the Field shall include, but not be limited to, the right to make
products and otherwise commercialize the Developed IP. ELM will promptly, on
request, execute any further document or license with respect to DNAP's rights
under this Section 4.2.
4.3 Notice of Patents Affecting Commercialization Rights
During the term of the Research Program, DNAP shall use all
reasonable efforts to inform ELM of:
(a) any patent owned by or patent application filed
by a third party of which DNAP is aware which claims a technology that DNAP is
considering for use in a Project, and that requires or may require one or both
of the parties to license rights thereunder in order to commercialize the
results of the Project; and
(b) any possible alternative to such a patented
technology of which DNAP is aware. In each such instance where DNAP is aware
of an alternative technology, the parties shall consider and discuss the
feasibility of using the alternative technology in place of the patented
technology.
Article V. Confidentiality
5.1 Duties
Each party shall: (i) keep confidential and not disclose to
any third person or entity, (ii) restrict access to only those of its
employees and consultants who have reason to know for the purposes of this
Agreement, and (iii) use solely for purposes of this Agreement, any and all
information and biomaterials received from the other party under this
Agreement, and all Developed IP of which it obtains knowledge, except as
provided in paragraph 5.2 below. Notwithstanding the foregoing each party
shall be free to use such information, biomaterials and Developed IP for
purposes of exercising its rights and fulfilling its duties under this
Agreement.
5.2 Exceptions
The duties of confidentiality, access restrictions and non-
use provided by paragraph 5.1(a) above shall not apply to information received
by one party ("Receiving Party") from the other party ("Disclosing Party") if
the information:
(a) is public information at the time of disclosure
by the Disclosing Party to the Receiving Party;
(b) subsequently becomes public information other
than by act or omission of the Receiving Party;
(c) is already in the lawful possession of the
Receiving Party, as can reasonably be demonstrated by documentary evidence
from the Receiving Party, at the time of first disclosure by the Disclosing
Party to the Receiving Party; or
(d) is independently developed by employees of the
Receiving Party who did not have access to the information.
Article VI. Event of Default/Remedies/Other Termination Rights
6.1 Event of Default
It shall be an Event of Default hereunder if either party
(i) fails to pay any sums payable pursuant to this Agreement as and when they
are due; or (ii) materially breaches this Agreement.
6.2 Termination
The non-defaulting party shall have the right to terminate
this Agreement upon the occurrence of an Event of Default unless (i) the Event
of Default occurs under clause (i) of Section 6.1 and is cured within ten (10)
days after written notices thereof, or (ii) the Event of Default occurs under
clause (ii) of Section 6.1 and is cured within thirty (30) days after written
notice thereof, or (iii) the Event of Default occurs under clause (ii) of
Section 6.1 and is remediable but is not reasonably susceptible to cure within
such thirty (30) day period, then within such period of time as may be
required to cure the same if the defaulting party promptly commences to cure
such Event of Default within such thirty (30) day period and diligently
prosecutes such cure to completion as soon as is reasonably practicable; or
(iv) if such Event of Default is not one that can be remedied, the defaulting
party shall have taken reasonable steps within such thirty (30) day period to
prevent a recurrence of such breach; provided, however, that if such Event of
Default that cannot be remedied recurs in the same calendar year, the
nondefaulting party may, at its option, terminate this Agreement immediately
upon the recurrency by written notice to the other party. ELM's rights to
Developed IP and DNAP IP shall survive any termination by ELM pursuant to this
Agreement. DNAP's License rights to Developed IP shall survive any
termination by DNAP pursuant to this Agreement.
6.3 Other Remedies
In addition to all other remedies specified in Article 6,
the non-defaulting party shall have the right to pursue any and all available
legal or equitable remedies for the breach.
6.4 No Consequential Damages
In no event will either party be liable to the other or any
third party for any indirect, incidental or consequential damages with respect
to the performance or non-performance of this Agreement, whether arising out
of breach of warranty, breach of contract, tort (including negligence), strict
products liability or otherwise, even if advised of the possibility of such
damage or if such damage could have been reasonably foreseen, except only in
case of personal injury where applicable law requires such liability.
Article VII. Miscellaneous
7.1 Notices
All notices, demands, requests, and other communications
required or permitted hereunder shall be in writing and shall be deemed to
have been given when received by DNAP or ELM, as the case may be, at the
following addresses, or such other address as DNAP or ELM may from time to
time designate by written notice to the other as herein required:
EMPRESAS LA MODERNA, S.A. DE C.V.
Attn: Lic. Alejandro Sanchez-Mujica
Edificio Torrealta
Av. Roble 300 Mezzanine
66265 Garza Garcia, N.L.
Mexico
With a copy to: Thompson & Knight, P.C.
Attn: Joe A. Rudberg
1700 Pacific Avenue, Suite 3300
Dallas, Texas 75201
DNA PLANT TECHNOLOGY CORPORATION
6701 San Pablo Avenue
Oakland, California 94608-1239
Attn: Vice President, Business Development with a
copy to DNAP Legal Department at same address
7.2 Choice of Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of California, United States of America,
without giving effect to conflict of law principles.
7.3 Severability
In the event that any provision of this Agreement is held by
a court of competent jurisdiction to be unenforceable because it is invalid or
in conflict with any law of any, relevant jurisdiction, the validity of the
remaining provisions shall not be affected, and the rights and obligations of
the parties shall be construed and enforced as if the Agreement did not
contain the particular provision held to be unenforceable, and any provision
that is held not to be enforceable in shall nevertheless be enforceable to the
full extent permitted by law.
7.4 Amendments
No amendment or modification of this Agreement shall be
valid or binding unless in writing signed by the parties.
7.5 Assignment
Neither party may assign this Agreement to any other party
except to an Affiliate or to an entity acquiring the party or a all of the
party's business in the subject area.
7.6 Arbitration
(a) The parties hereby undertake to use good faith
efforts to settle all disputes arising under this Agreement. Failing
settlement, all disputes, including without limitation, claims of breach of
contract, fraud in the inducement and negligence shall be referred to binding
arbitration in Dallas, Texas, if arbitration is initiated by DNAP, or in San
Francisco, California, if the arbitration is initiated by ELM, in accordance
with the Commercial Rules of Arbitration of the American Arbitration
Association.
(b) If, within seven (7) days after receipt by one party
of the other party's notice of intention to arbitrate, the parties are unable
to agree on a single arbitrator, each party shall have seven (7) days to
appoint its own arbitrator from a list selected by the American Arbitration
Association, and the arbitrators thus chosen shall together, within seven (7)
days of their appointment, appoint a third arbitrator from the list selected
by the American Arbitration Association. If either party fails to appoint its
own arbitrator within the specified period, the arbitrator appointed by the
other party shall be the sole arbitrator. If both parties fail to appoint
arbitrators within the specified period, or if the arbitrators appointed by
the parties fail to appoint a third arbitrator within the specified period,
the American Arbitration Association shall make the appointment. The parties
shall use their best efforts to appoint arbitrators who are knowledgeable in
the biotechnology industry. The decision of the arbitrator(s) shall be final
and may be enforced in any court of competent jurisdiction. The prevailing
party in any proceeding shall be reimbursed by the other party for all
expenses incurred in connection with arbitration.
7.7 No Joint Venture
The parties shall perform their obligations under this
Agreement as independent contractors and each party shall be solely
responsible for its own financial obligations. Nothing contained in this
Agreement shall be construed to imply a joint venture or principal and agent
relationship between the parties and neither shall have the right to create
any obligation, express or implied, on behalf of the other.
7.8 Counterparts
This Agreement may be executed in one or more counterparts,
each of which will be deemed an original, but all of which will constitute one
and the same instrument.
IN WITNESS WHEREOF the parties have executed this Agreement in
duplicate originals as of the date first above written, as evidence by the
signature below of thee authorized representatives.
EMPRESAS LA MODERNA, S.A. de C.V.
DNA PLANT TECHNOLOGY
CORPORATION
By:
Name:
By: Title:
Name:
Title: By:
Name:
Title:
Exhibit 10.6
NON-EXCLUSIVE PATENT LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("LICENSE AGREEMENT") is made and entered into
this 26th day of January, 1996, by and between BIONOVA U.S. INC., a Delaware
corporation (hereinafter BIONOVA) and DNA PLANT TECHNOLOGY CORPORATION, a
Delaware corporation (hereinafter DNAP).
WITNESSETH
WHEREAS, BIONOVA desires to have a non-exclusive license as recited
herein under the patent and patent applications listed in the attached
Schedule 1; and
WHEREAS, DNAP is willing to grant such license to BIONOVA, subject to
the terms and conditions hereinafter set forth.
NOW THEREFORE, for and in consideration of the mutual promises contained
herein, and for other good and valuable consideration, the parties hereto
agree as follows:
1. Definitions. In this LICENSE AGREEMENT, the following terms shall
have the following meanings:
a. LICENSED PATENTS shall mean the patents and patent
applications listed on the attached Schedule 1, patents to be issued pursuant
thereto, and all divisions, continuations, reissues, reexamination
certificates, substitutes, and extensions thereof.
b. LICENSED PRODUCTS shall mean any product or process covered
by one or more claims of the LICENSED PATENTS.
c. ROYALTY BEARING PRODUCTS shall mean the LICENSED PRODUCTS
that are covered by one or more issued and not lapsed or expired claims of one
or more of the LICENSED PATENTS.
d. NET SALES shall mean the gross invoice price of ROYALTY
BEARING PRODUCTS sold by BIONOVA or its Sublicensees minus documented returns
and allowances for defective goods. The gross invoice price shall not include
any sales, use or value added taxes.
2. License Grant To BIONOVA. DNAP grants to BIONOVA for the term of
this Agreement a non-exclusive license under LICENSED PATENTS to use the
LICENSED PATENTS and to make, have made, use and sell LICENSED PRODUCTS,
except that such license does not include rights in the areas listed in
Schedule 2. The license is non-transferable; provided, that DNAP consents to
BIONOVA'S sublicense of its rights hereunder to its Affiliates as of the date
of this Agreement provided that each such Sublicensee agrees to become bound
by the terms and conditions of this License (the "Sublicensees"). For
purposes of this provision, "Affiliates" means persons or entities
controlling, controlled by or under common control with the party, as well as
any majority owned entities of the party and of its other affiliates, and
"control" of an entity means either the power, directly or indirectly, to
direct or cause the direction of the management and policies of the entity,
whether by contract or otherwise, or the right to receive at least 50% of the
profits from such entity.
3. Royalties.
a. BIONOVA shall pay DNAP a running royalty fee of $250,000.00
for each full quarter during which this LICENSE AGREEMENT is in effect;
provided, however, the fee for the calendar quarter ending March 31, 1996
shall be $50,000 and the fee for the calendar quarter ending June 30, 1996
shall be $125,000.00. For any portion of a quarter during which this LICENSE
AGREEMENT is in effect BIONOVA shall pay DNAP a percentage of the applicable
quarterly fee equal to the number of days of such quarter divided by 91 days,
multiplied by the applicable quarterly fee.
b. BIONOVA may pay any royalty or other amounts due or payable
under this LICENSE AGREEMENT by crediting the amount of such royalty or other
payment against any indebtedness owed to BIONOVA by DNAP pursuant to that
certain Loan Agreement executed by and between DNAP and BIONOVA dated of even
date herewith.
c. BIONOVA shall make the royalty payments set forth in
subparagraphs (a) and (b) hereof sixty (60) days after the close of each
quarter.
d. With each royalty payment, BIONOVA will provide to DNAP a
written royalty statement verified by the President or Chief Financial Officer
of BIONOVA, setting forth the NET SALES identified by product designation upon
which royalties are calculated during the period covered by the statement.
DNAP shall have the right once per year to designate an independent certified
public accountant to inspect BIONOVA's books and records relating to NET SALES
upon which royalties are calculated.
4. BIONOVA's Option To Convert To Fully-Paid License. BIONOVA may,
at any time prior to September 30, 1996, notify DNAP that it is electing to
convert to a fully paid LICENSE with respect to the quarterly license fees
owed by BIONOVA under subparagraph 3(a) by paying the sum of $1,500,000 plus a
royalty equal to 2.5% of the NET SALES of ROYALTY BEARING PRODUCTS sold by
BIONOVA or its Sublicensees during any quarter subsequent to the election
during which this LICENSE AGREEMENT is in effect, which fully paid LICENSE
shall continue in full force and effect and shall not terminate until the last
to expire of the LICENSED PATENTS. At any time subsequent to September 30,
1996, if BIONOVA has not made the above described election, BIONOVA may upon
thirty (30) days notice to DNAP, convert to a fully paid royalty-free license
by paying DNAP the following sum as a lump sum payment for a fully paid up
license to BIONOVA and its Sublicensees: an amount when discounted, at a
discount rate of ten percent (10%), which, if added to the discounted stream
of any and all royalty payments made pursuant to subparagraph 3(a) hereunder
(with the exception of the March 31, 1996 and June 30, 1996 payments), would
yield a total present value as of the date of this Agreement of $5,000,000.00.
5. Enforcement of LICENSED PATENTS. DNAP will be solely responsible
at its own expense for using all reasonable efforts to prosecute and enforce
LICENSED PATENTS owned by DNAP; provided, however if BIONOVA requests that
DNAP take any reasonable action to prosecute and enforce the LICENSED PATENTS
and DNAP refuses or fails to take such action on a timely basis, BIONOVA shall
be permitted and authorized, in the name of DNAP or in the name of BIONOVA as
appropriate, to use all reasonable efforts to prosecute and enforce LICENSED
PATENTS. DNAP will provide BIONOVA with reasonable assistance in such
prosecution and enforcement. BIONOVA shall have no obligation to undertake
any such action, and if BIONOVA should do so, BIONOVA shall have no liability
to DNAP for the sufficiency or adequacy of any such actions taken by BIONOVA.
6. Notices. All notices, demands, requests, and other communications
required or permitted hereunder shall be in writing and shall be deemed to
have been given when received by BIONOVA or DNAP, as the case may be, at the
respective addresses set forth below or as BIONOVA or DNAP may from time to
time designate by written notice to the other:
BIONOVA U.S. INC.
c/o Thompson & Knight, P.C. (Attn: JAR)
1700 Pacific Avenue, Suite 3300
Dallas, Texas 75201
With a copy to:
Lic. Alejandro Sanchez-Mujica
Edificio Torrealta
Av. Roble 300 Mezzanine
66265 Garza Garcia, N.L.
Mexico
DNA PLANT TECHNOLOGY CORPORATION
6701 San Pablo Avenue
Oakland, California 94608-1239
Attn: Vice President, Business Development (with copy
to DNAP Legal Department, at the same address)
7. Modifications. No provision of this LICENSE AGREEMENT may be
modified, waived, or terminated except by instrument in writing executed by
the party against whom a modification, waiver, or termination is sought to be
enforced.
8. Severability. In case any of the provisions of this LICENSE
AGREEMENT shall for any reason be held to be invalid, illegal, or
unenforceable, such invalidity, illegality, or unenforceability shall not
affect any other provision hereof, and this LICENSE AGREEMENT shall be
construed as if such invalid, illegal, or unenforceable provision had never
been contained herein.
9. Election of Remedies. Each party shall have all of the rights and
remedies granted herein and available at law or in equity, and these same
rights and remedies shall be cumulative and may be pursued separately,
successively, or concurrently against the other party, or to the LICENSED
PATENTS at the sole discretion of the pursuing party. The exercise or failure
to exercise any of the same shall not constitute a waiver or release thereof
or of any other right or remedy, and the same shall be non-exclusive.
10. Form and Substance. All documents, certificates, and other items
required under this LICENSE AGREEMENT to be executed and/or delivered to a
party shall be in form and substance reasonably satisfactory to the receiving
party.
11. No Third Party Beneficiary. This LICENSE AGREEMENT is for the
sole benefit of BIONOVA (and its Affiliates to the extent they become
sublicensees hereunder) and DNAP and is not for the benefit of any third
party.
12. Number and Gender. Whenever used herein, the singular number
shall include the plural and the singular, and the use of any gender shall be
applicable to all genders.
13. Captions. The captions, headings, and arrangements used in this
LICENSE AGREEMENT are for convenience only and do not in any way affect,
limit, amplify, or modify the terms and provisions hereof.
14. Applicable Law. This LICENSE AGREEMENT shall be governed by and
construed in accordance with the laws of the State of California and the laws
of the United States of America.
15. Assignability. Except as provided in paragraph 2 hereof, neither
this LICENSE AGREEMENT nor any interest herein may be assigned, in whole or in
part, by a party without the prior written consent of the other party. The
parties hereto acknowledge that immediately subsequent to the execution of
this LICENSE, DNAP will be granting an Assignment of its ownership of the
LICENSED PATENTS to BIONOVA as security for repayment of its obligations under
the Loan Agreement. The Assignment shall not affect the rights or obligations
of either party hereunder. Notwithstanding the above, a party may assign this
LICENSE AGREEMENT to a successor of all or substantially all of its business
without the prior written consent of the other party, provided however, that
no such assignment shall be valid unless the assignee assumes all of the
duties and obligations of the assigning party.
16. General Assurances. The parties hereto agree to execute,
acknowledge and deliver all such further instruments, and to do all such other
acts, as may be necessary or appropriate in order to carry out the intent and
purposes of this LICENSE AGREEMENT.
17. Negation Of Agency And Similar Relationships. Nothing contained
herein shall be deemed to create any agency, joint venture or partnership
relationship between the parties hereto.
18. Confidentiality.
a. Duties: BIONOVA shall keep confidential and not disclose to
any third person or entity any information regarding the LICENSED PATENTS or
the LICENSED PRODUCTS received from DNAP under this LICENSE AGREEMENT, except
as provided in subparagraph (b) below. Notwithstanding the foregoing, BIONOVA
and any of its Sublicensees shall be free to use and disclose to their
advisors and consultants who agree to treat as confidential such information
for purposes of exercising its rights under this LICENSE AGREEMENT.
b. Exceptions: The duties of confidentiality, access
restrictions and non-use provided by subparagraph (a) above shall not apply to
information received by BIONOVA from DNAP if the information:
(i) is public information at the time of disclosure
by DNAP to BIONOVA;
(ii) subsequently becomes public information other
than by act or omission of BIONOVA;
(iii) is already in the lawful possession of BIONOVA,
as can reasonably be demonstrated by documentary evidence from BIONOVA, at the
time of first disclosure by DNAP to BIONOVA; or
(iv) is independently developed by employees of
BIONOVA who did not have access to the information.
19. Term and Termination. This Agreement shall continue until the
date of the last to expire of the LICENSED PATENTS. In the event of a
material breach of this Agreement by either party and the failure to cure such
breach within 30 days of the receipt of written notice from the other party,
this Agreement shall terminate. In the event of such termination, the non-
breaching party retains all other rights and remedies available to it under
law, including the right to collect payments owed but not made. BIONOVA shall
have the unilateral right to terminate this LICENSE AGREEMENT by giving DNAP
thirty (30) days written notice of such termination together with payment of
all amounts due hereunder through the date of termination; provided, however,
upon termination BIONOVA and its Affiliates shall be required (i) to return
all materials regarding the LICENSED PATENTS that it would be required to keep
confidential under this Agreement except that BIONOVA's outside counsel may
retain a copy thereof to be held in confidence for the sole purpose of
preserving a record for any future litigation. and (ii) to cease any and all
use of the LICENSED PATENTS pursuant to this LICENSE AGREEMENT. BIONOVA's
obligation to pay royalties under this LICENSE AGREEMENT shall cease upon such
termination.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered on the date first above written.
BIONOVA U.S. INC.
By: /s/ Carlos Herrera
Name: Carlos Herrera
Title:Chairman of the Board and Chief
Executive Officer
DNA PLANT TECHNOLOGY CORPORATION
By: /s/ Robert Serenbetz
Name: Robert Serenbetz
Title:Chief Executive Officer
Exhibit 99.1
January 29, 1996
Unit of Empresas La Moderna To Combine with
DNA Plant Technology
ELM to Combine Operating Subsidiaries, Inject Cash, and Guarantee Long-Term
R&D Contracts in Exchange for Majority Ownership Position
Monterrey, Mexico, January, 29, 1996 -- Empresas La Moderna S.A. de C.V.
(NYSE/ADR:ELM) today announced it has signed a definitive agreement to combine
its fresh produce subsidiary, Bionova, with DNA Plant Technology Corporation
(Nasdaq:DNAP) in exchange for an approximate 70% interest in the new entity.
Under the terms of the agreement, approved by the DNAP Board of Directors, the
ELM unit agrees to combine the controlling interests in its $200 million fresh
produce business, Bionova S.A. de C.V. with DNAP under a new holding company,
DNAP Holding Corporation, and to inject $10 million in cash. At closing, ELM,
with its related companies, Asgrow Seed Company, Petoseed, Royal Sluis and
Agroindustrias Moderna, among others, will enter into contracts with DNAP
which will focus ELM's biotech R&D in DNAP, and will provide $30 million in
research funding over a ten-year period.
Following the transaction, it is anticipated that the common shares of the new
holding company, DNAP Holding Corporation, will be listed on Nasdaq.
Alfonso Romo Garza, Chairman and Chief Executive Officer of ELM, said, "This
agreement represents another important step in achieving our stated objective
of attaining global leadership in the agro-biotech and seed industries. We
believe the synergies and resulting benefits from this transaction should
enhance shareholder value, bring greater opportunities to the combined
entities and position ELM and its subsidiaries in the forefront of the
industry."
Mr. Romo noted that DNAP has developed worldwide leadership in the genetic
transformation of fruits and vegetables. ELM through its Seminis subsidiary
has world-class elite germplasm, an essential component for the delivery of
the promise of biotechnology. ELM's $200 million Bionova division, one of the
fastest growing producers and distributors of quality fresh produce, is
positioned to rapidly commercialize new products on a large scale. The
combination of these entities should provide an excellent opportunity to meet
the growing consumer need for quality, differentiated fresh products in a $50
billion retail market.
Under the terms of the agreement, holders of existing DNAP common stock will
receive one common share of DNAP Holding Corporation for each share of DNAP
common stock; each share of DNAP convertible preferred stock will receive
6.8375 shares of DNAP Holding Corporation common stock; and each share of DNAP
Series A preferred stock will receive 1,000 shares of DNAP Holding Corporation
common stock. The transaction is subject to approval of DNAP common
shareholders and other conditions. The transaction is expected to close in
the second quarter of 1996. JP Morgan are advising ELM, and Piper Jaffray and
BioScience Securities are advising DNAP.
As a result of the transaction, ELM through its agro-biotech division
subsidiaries will own approximately 70% of the common shares and designate
eight of the eleven seats of the new company's Board of Directors. The Board
of Directors will include six ELM representatives, Robert Serenbetz, current
Chairman of DNAP, and four independent directors, three of whom are current
board members of DNAP. Approval of a majority of a committee of independent
directors will, under a Governance Agreement, be required for certain matters,
including certain material transactions and transactions with ELM or its
affiliates.
"This business combination will create a leading-edge, technology-based
branded produce company, combining the biotechnology and value added produce
development expertise of DNAP with the production, distribution and scientific
strengths of Bionova and Seminis," stated Robert Serenbetz. "We started the
process of looking for a strategic partner several months ago that could offer
DNAP shareholders the best course for long-term success. The Board believes
this transaction is in the best long-term interests of all DNAP shareholders
and offers a promising outlook for the future."
Empresas La Moderna, a Pulsar Internacional company based in Monterrey,
Mexico, has operations in three divisions: Cigarettes, Agrobiotechnology and
Packaging. Bionova and Seminis are a part of the agrobiotechnology unit of
ELM. Its Bionova subsidiary is a leading grower and shipper of fruits and
vegetables in Mexico, and has distribution and marketing operations in the
U.S., Mexico and Canada. With 1995 sales of $200 million, Bionova has grown
six-fold since inception in 1992. Bionova is a fully integrated fresh produce
leader in North America producing and distributing through its operating
subsidiaries a broad range of premium produce products, including tomatoes,
peppers and melons under the brand name Master's Touch. Seminis, one of the
top five global producers of vegetable and agronomic seeds, holds a leading
22% worldwide market share in the vegetable seed category. Through a
combination of several strategic mergers of leading seed companies -- Asgrow
Seed Company, Petoseed and Royal Sluis -- Seminis today owns the world's
largest vegetable germplasm bank, operates R&D facilities in more than 25
countries and has sales of $535 million worldwide.
DNA Plant Technology Corporation, headquartered in Oakland, California, is a
leading agribusiness biotechnology company focused on developing and marketing
premium branded fresh and processed fruits and vegetables using advanced
breeding, genetic engineering, and other biotechnologies. Fresh World Farms,
a wholly-owned subsidiary of DNAP, markets a line of premium vegetables under
the Fresh World Farms brand, including tomatoes, carrot bites (baby whole
carrots), sweet red mini-peppers, and VegiSnax carrot sticks. DNAP's two-
track strategy uses advanced breeding to develop and market improved premium
products for today, while using genetic engineering to improve flavor and
shelf life of its products for tomorrow.
While the DNAP Board enthusiastically supports the ELM offer, in compliance
with its fiduciary obligations, the Board and its advisors are available to
receive inquiries from other parties interested in the possible acquisition of
or merger with DNAP and, as appropriate, to provide information and enter into
discussions and negotiations with such parties in connection with such
indicated interest.
Contact:
For ELM: Enrique Osorio For DNAP: Ed Lockwood
Empresas La Moderna DNAP
011-528-333-6841 (510) 450-9389
Elliot Sloane
Edelman Public Relations Worldwide
(212) 704-8126
