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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 27, 1996 (February
19, 1996)
Mycogen Corporation
-------------------
(Exact name of registrant as specified in its charter)
California 0-15881 95-3802654
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(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
5501 Oberlin Drive, San Diego California, 92121
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(Address of principal executive offices)
Registrant's telephone number, including area code: 619-453-8030
Not Applicable
--------------
(Former name or former address, if changed since last report.)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT. Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 19, 1996, Registrant acquired United AgriSeeds, Inc., a
Delaware corporation ("United AgriSeeds") and a subsidiary of DowElanco, an
Indiana General Partnership ("DowElanco"). Registrant issued about 4.5 million
shares of Registrant's Common Stock to DowElanco in exchange for United
AgriSeeds and cash. The information required by (a) and (b) is hereby
incorporated by reference from the Registrant's Press Release dated February 20,
1996, and attached hereto as Exhibit 28.1. The Registrant intends to continue
United AgriSeeds current business purpose.
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ITEMS 3 THROUGH 6. Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) It is anticipated that any applicable Financial Statements will be
available within the next (60) days and will be filed separately under Form
8-K/A.
(b) It is anticipated that any applicable Pro Forma Financial Statements will
be available within the next (60) days and will be filed separately under
Form 8-K/A.
(c) Exhibits.
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Exhibit Number Description
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2.1 Exchange and Purchase Agreement Among Mycogen
Corporation, Agrigenetics, Inc., DowElanco and
United AgriSeeds.
99.1 Registrant's Press Release dated February 20,
1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Mycogen Corporation
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(Registrant)
Date: February 27, 1996 /s/ James A. Baumker
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James A. Baumker
Vice President,
Chief Financial Officer,
Chief Accounting Officer
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EXCHANGE AND PURCHASE AGREEMENT
Among
MYCOGEN CORPORATION, a California corporation,
AGRIGENETICS, INC., a Delaware corporation,
DOWELANCO, an Indiana general partnership, and
UNITED AGRISEEDS, INC., a Delaware corporation
Dated as of
January 15, 1996
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS................................ 2
Section 1.1 Definitions.................................................. 2
ARTICLE 2
THE TRANSACTION............................. 7
Section 2.1 Sale and Purchase of Purchase Shares and Promissory Note..... 7
Section 2.2 Closing Balance Sheet Adjustment............................. 8
ARTICLE 3
THE CLOSING............................... 9
Section 3.1 Closing...................................................... 9
Section 3.2 Deliveries by Parent......................................... 10
Section 3.3 Deliveries by the Company and Agrigenetics................... 10
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............. 11
Section 4.1 Organization and Qualification; Subsidiaries................. 11
Section 4.2 Capitalization of the Company................................ 12
Section 4.3 Capitalization of Agrigenetics............................... 13
Section 4.4 Authority Relative to This Agreement......................... 13
Section 4.5 Waiver of Rights Agreement................................... 13
Section 4.6 Non-Contravention; Required Filings and Consents............. 14
Section 4.7 SEC Reports.................................................. 15
Section 4.8 Absence of Certain Changes................................... 16
Section 4.9 Finder's Fee................................................. 16
Section 4.10 Absence of Claims and Litigation............................. 16
Section 4.11 Taxes........................................................ 17
Section 4.12 Employee Benefits and Labor Matters.......................... 18
Section 4.13 Compliance................................................... 20
Section 4.14 Environmental Matters........................................ 20
Section 4.15 Intellectual Property........................................ 21
Section 4.16 Significant Agreements....................................... 21
Section 4.17 Product Registrations........................................ 22
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT............... 22
Section 5.1 Organization................................................. 22
Section 5.2 Authority Relative to this Agreement......................... 23
Section 5.3 Non-Contravention; Required Filings and Consents............. 23
Section 5.4 Capitalization of Subsidiary................................. 24
Section 5.5 Financial Statements......................................... 24
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Section 5.6 Absence of Certain Changes................................... 25
Section 5.7 Finder's Fee................................................. 25
Section 5.8 Absence of Claims and Litigation............................. 25
Section 5.9 Taxes........................................................ 26
Section 5.10 Employee Benefits............................................ 27
Section 5.11 Compliance................................................... 29
Section 5.12 Environmental Matters........................................ 29
Section 5.13 Intellectual Property........................................ 30
Section 5.14 Significant Agreements....................................... 30
Section 5.15 Charter Documents and Corporate Records...................... 31
Section 5.16 Assets....................................................... 31
Section 5.17 Licenses, Permits, Authorizations, Etc....................... 32
Section 5.18 Employee Relations........................................... 32
Section 5.19 Investment Intent............................................ 33
ARTICLE 6
COVENANTS................................ 33
Section 6.1 Conduct of Business of the Company, Agrigenetics
and Subsidiary............................................... 33
Section 6.2 Qualified Stock Purchase..................................... 36
Section 6.3 Access to Information and Facilities......................... 36
Section 6.4 Reasonable Best Efforts...................................... 37
Section 6.5 Public Announcements......................................... 37
Section 6.6 Indemnification of Subsidiary, Directors,
Officers, Employees and Agents............................... 38
Section 6.7 Notification of Certain Matters.............................. 38
Section 6.8 No Solicitation.............................................. 38
Section 6.9 Pre-Closing Restrictions on Stock Acquisitions............... 39
Section 6.10 Rights Agreement............................................. 40
Section 6.11 Post-Closing Covenants of the Company........................ 40
Section 6.12 Post-Closing Restrictions on Stock Acquisitions.............. 42
Section 6.13 Buyout Transaction........................................... 43
Section 6.14 Election of Directors........................................ 44
Section 6.15 Audited Financial Statements................................. 45
Section 6.16 Benefit Plans................................................ 46
Section 6.17 Post-Closing Human Resources Matters......................... 46
Section 6.18 Strategic Review Committee................................... 46
Section 6.19 Technology Agreement......................................... 47
ARTICLE 7
CONDITIONS............................... 47
Section 7.1 Conditions to Each Party's Obligations....................... 47
Section 7.2 Conditions to the Obligation of Parent and
Subsidiary................................................... 47
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Section 7.3 Conditions to the Obligations of the Company and
Agrigenetics................................................. 48
ARTICLE 8
TERMINATION; AMENDMENT; WAIVER...................... 49
Section 8.1 Termination.................................................. 49
Section 8.2 Effect of Termination........................................ 51
Section 8.3 Fees and Expenses............................................ 51
Section 8.4 Amendment.................................................... 51
Section 8.5 Extension; Waiver............................................ 51
ARTICLE 9
MISCELLANEOUS.............................. 52
Section 9.1 Survival of Representations and Warranties................... 52
Section 9.2 Indemnification.............................................. 52
Section 9.3 Entire Agreement; Assignment................................. 54
Section 9.4 Notices...................................................... 54
Section 9.5 Governing Law................................................ 55
Section 9.6 Parties in Interest.......................................... 55
Section 9.7 Specific Performance......................................... 55
Section 9.8 Severability................................................. 56
Section 9.9 Descriptive Headings......................................... 56
Section 9.10 Counterparts................................................. 56
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EXHIBITS AND SCHEDULES
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EXHIBITS
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EXHIBIT A
EXHIBIT B
SCHEDULES
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SCHEDULE 4.2
SCHEDULE 4.3
SCHEDULE 4.7.2
SCHEDULE 4.10
SCHEDULE 4.11
SCHEDULE 4.12.1
SCHEDULE 4.12.5
SCHEDULE 4.16
SCHEDULE 4.17
SCHEDULE 5.5.1
SCHEDULE 5.5.2
SCHEDULE 5.8
SCHEDULE 5.9
SCHEDULE 5.10.1
SCHEDULE 5.10.5
SCHEDULE 5.14
SCHEDULE 5.16.1
SCHEDULE 5.16.3
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EXCHANGE AND PURCHASE AGREEMENT
THIS EXCHANGE AND PURCHASE AGREEMENT, dated as of January 15, 1996, is
among MYCOGEN CORPORATION, a California corporation (the "Company"),
AGRIGENETICS, INC., a Delaware corporation ("Agrigenetics"), DOWELANCO, an
Indiana general partnership ("Parent"), and UNITED AGRISEEDS, INC., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Subsidiary").
WHEREAS, it is proposed that (i) Parent will sell to Agrigenetics all of
the outstanding shares of common stock, $1.00 par value per share, of Subsidiary
(the "Subsidiary Shares") in exchange for the sale by Agrigenetics to Parent of
2,707,884 shares (the "Seed Purchase Shares") of common stock, $.001 par value
per share, of the Company ("Common Stock") and the delivery to Parent of a
promissory note of Agrigenetics payable to Parent in the amount of $100,000
substantially in the form attached hereto as Exhibit A (the "Promissory Note")
and (ii) the Company will sell to Parent 1,745,450 shares of Common Stock (the
"Cash Purchase Shares") for $26,400,000 (the "Cash Payment") (such transactions
are collectively referred to herein as the "Transaction" and the Seed Purchase
Shares and Cash Purchase Shares (which together consist of 4,453,334 shares of
Common Stock) are collectively referred to herein as the "Purchase Shares");
WHEREAS, simultaneously with the execution and delivery hereof, Parent, The
Lubrizol Corporation, an Ohio corporation ("Lubrizol") and AGC Holdings, Inc., a
Delaware corporation, and an indirect wholly-owned subsidiary of Lubrizol
("Investor"), are entering into a stock purchase agreement (the "Stock Purchase
Agreement") pursuant to which Investor has agreed, among other things, to sell,
transfer and assign to Parent all of the shares of Common Stock and other direct
or indirect ownership interests in the Company held by Investor (the "Investor
Interests"); and
WHEREAS, the Board of Directors of the Company (the "Board") and Parent, in
accordance with its Amended and Restated Partnership Agreement, have approved
this Agreement and the transactions contemplated hereby and Parent, in
accordance with its Amended and Restated Partnership Agreement, has approved the
transactions contemplated by the Stock Purchase Agreement; and
WHEREAS, the Board of Directors of Agrigenetics and Parent, as the sole
shareholder of Subsidiary, have approved this Agreement and the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company, Agrigenetics, Parent and Subsidiary hereby agree as follows.
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ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. The following terms will have the meanings set
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forth below unless otherwise defined herein.
"affiliate" of a person means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person.
"beneficial owner" has the meaning set forth in Rule 13d-3 under the
Exchange Act.
"Blue Sky Laws" means laws and regulations of any state or territory of the
United States relating to the regulation of the offer and sale of securities.
"Board" means the board of directors of the Company.
"Buyout Transaction" means a tender offer, merger or similar transaction
involving Parent or one of its affiliates and the Company that offers each
holder of Common Stock other than Parent or its affiliates the opportunity to
dispose of some or all Common Stock owned by such stockholder for consideration
reflecting such stockholder's proportionate share of the Third Party Sale Value
Consideration, but will expressly exclude any sale of the Company's assets.
"Cleanup" means all actions required to: (1) cleanup, remove, treat or
remediate Hazardous Materials in the indoor or outdoor environment; (2) prevent
the Release of Hazardous Materials so that they do not migrate, endanger or
threaten to endanger public health or welfare of the indoor or outdoor
environment; (3) perform pre-remedial studies and investigations and post-
remedial monitoring and care; or (4) respond to any government requests for
information or documents in any way relating to cleanup, removal, treatment or
remediation or potential cleanup, removal, treatment or remediation of Hazardous
Materials in the indoor or outdoor environment.
"Closing" means the closing of the Transaction.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock Equivalent" means any Company Security (or fraction of a
Company Security) exchangeable for one share of Common Stock and/or having
voting power in an election of directors equal to that of one share of Common
Stock.
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"Company Securities" means shares of capital stock or other voting
securities of the Company, securities of the Company or of any subsidiary of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company, options, subscriptions, warrants, convertible
securities, calls or other rights to acquire from the Company, and obligations
of the Company to issue, deliver or sell any capital stock, voting securities or
securities convertible into or exchangeable for shares of capital stock or
voting securities of the Company and equity equivalents, interests in the
ownership or earnings of the Company or other similar rights.
"Confidentiality Agreement" means the Confidentiality Agreement entered
into on October 6, 1995 between Parent and the Company.
"control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the management policies of a
person, whether through the ownership of stock, as trustee or executor, by
contract or credit arrangement or otherwise.
"Data" means the technical and other data and studies which are necessary
to obtain and maintain Product Registrations.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or, if known to an authorized officer, oral) by
any person or entity alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from (a)
the presence, or Release into the indoor or outdoor environment, of any
Hazardous Materials at any location, whether or not owned or operated by the
Company or any of its subsidiaries or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all federal, state, local and foreign laws and
regulations relating to pollution or protection of human health and safety or
the environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conservation and Recovery
Act, the Clean Air Act, the Clean Water Act, the Occupational Safety and Health
Act of 1970, as amended, and similar state laws and other laws relating to
Releases or threatened Releases of Hazardous Materials or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, Release,
disposal, transport or handling of Hazardous Materials and all laws and
regulations with regard to recordkeeping, notification, disclosure and reporting
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requirements respecting Hazardous Materials, provided, however, that the term
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Environmental Laws will not include any Product Registrations.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"generally accepted accounting principles" will mean the generally accepted
accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession in the United
States, in each case applied on a consistent basis.
"Hazardous Materials" means all substances defined as Hazardous Substances,
Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. (S) 300.5, or defined as such by, or
regulated as such under, any Environmental Law, or which otherwise may be the
basis for any federal, state, local or foreign government requiring Cleanup.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Independent Directors" means a director of the Company (i) who is not and
has never been an officer or employee of the Company or any affiliate of the
Company, (ii) who is not and has never been an officer, employee or director of
Parent or any affiliate of Parent and (iii) who has no affiliation,
compensation, consulting or contracting arrangement with the Company, Parent or
any of their respective affiliates other than solely arising out of such
director's position as a member of the Board.
"Intellectual Property" means trademarks, service marks, brand names,
certification marks, trade dress, assumed names, trade names and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries and ideas, whether
patentable or not in any jurisdiction; patents, applications for patents
(including, without limitation, divisions, continuations, continuations in part
and renewal applications), and any renewals, extensions or reissues thereof, in
any jurisdiction; plant variety protection certificates, nonpublic information,
trade secrets, confidential information and proprietary materials and rights in
any
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jurisdiction to limit the use or disclosure thereof by any person; writings
and other works, whether copyrightable or not in any jurisdiction; registrations
or applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; any similar intellectual property or proprietary
rights; and any claims or causes of action arising out of or related to any
infringement or misappropriation of any of the foregoing.
"Investment Agreement" means Amended and Restated Equity Investment
Agreement dated December 31, 1993 between the Company, Agrigenetics, Investor
and MPS.
"Investor's Conversion Right" means the Investor's rights under the
Investment Agreement to convert its equity interest in Agrigenetics into shares
of Common Stock.
"Market Value" with respect to any security means the average of the daily
closing price for the trading days within the 90 calendar days preceding the
date of the proposed sale and purchase of such security on any national
securities exchange or inter-dealer quotation system on which the security is
then traded, or, if the security is not then traded on any national securities
exchange or inter-dealer quotation system, the fair market value of such
security.
"Material Adverse Effect" with respect to any person means a material
adverse effect, or the occurrence or existence of facts or circumstances
reasonably expected to result in a material adverse effect, on the business,
assets, results of operations, properties, or financial or operating condition
of such person and its subsidiaries taken as a whole or the ability of such
person (and to the extent applicable, its subsidiaries) to perform its (or
their) obligations under this Agreement or consummate the transactions
contemplated hereby.
"Measurement Date" means the earlier to occur of the Closing Date or, if
applicable, the date of termination of this Agreement pursuant to Section 8.1.
"MPS" means Mycogen Plant Science, Inc.
"NASD Rules" means the rules and policies promulgated by the National
Association of Securities Dealers applicable to issuers of securities designated
for inclusion in the Nasdaq National Market, including, without limitation, the
By-Laws of the National Association of Securities Dealers and the Schedules
thereto.
"New Security" means any Company Securities issued by the Company after the
Closing other than (i) any securities issuable upon conversion of any
convertible Company Security outstanding as of the date of this Agreement, (ii)
any securities issuable
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upon exercise of any option, warrant or other similar Company Security
authorized as of the date of this Agreement and (iii) any securities issuable in
connection with any stock split, stock dividend or recapitalization of the
Company where such securities are issued to all stockholders of the Company on a
proportionate basis.
"person" means an individual, corporation, partnership, limited liability
company, association, trust, unincorporated organization, other entity or group
(as defined in Section 13(d)(3) of the Exchange Act).
"Product Registrations" means any approval of a governmental or other
regulatory body which is necessary to market, distribute or sell seeds,
pesticides or genetically modified products in any jurisdiction, including,
without limitation, registrations with the U.S. Environmental Protection Agency
pursuant to the Federal Insecticide, Rodenticide and Fungicide Act and the
regulations promulgated thereunder.
"Release" means any release, spill, emission, discharge, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment (including, without limitation, ambient air,
surface water, groundwater and surface or subsurface strata) or into or out of
any property, including the movement of Hazardous Materials through or in the
air, soil, surface water, groundwater or property.
"Rights" means the preferred share purchase rights under the Rights
Agreement.
"Rights Agreement" means the Company's Amended and Restated Rights
Agreement dated as of October 19, 1995, between the Company and The First
National Bank of Boston.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"subsidiary" or "subsidiaries" of any person means any corporation,
partnership, joint venture or other legal entity of which such person (either
alone or through or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holder of
which is generally entitled to vote for the election of the board of directors
or other governing body of such corporation, partnership, joint venture or other
legal entity.
"Subsidiary Securities" means shares of capital stock or other voting
securities of Subsidiary, securities of Subsidiary
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convertible into or exchangeable for shares of capital stock or voting
securities of Subsidiary, options, subscriptions, warrants, convertible
securities, calls or other rights to acquire from Subsidiary, and obligations of
Subsidiary to issue, deliver or sell any capital stock, voting securities or
securities convertible into or exchangeable for shares of capital stock or
voting securities of Subsidiary and equity equivalents, interests in the
ownership or earnings of Subsidiary or other similar rights.
"Technology Agreement" means the Technology Agreement that will be executed
between the Company, Agrigenetics and Parent at the Closing substantially in the
form attached hereto as Exhibit B.
"Third Party Sale Value" means the value that an unaffiliated third party
would be expected (based on financial analyses generally employed by investment
bankers in the preparation of a fairness opinion for an acquisition transaction)
to pay in an arms'-length transaction negotiated by a willing seller and a
willing buyer for all of the Company's then outstanding shares of Common Stock
and Common Stock Equivalents and not taking into account the potentially
controlling position of Parent, including its rights under Sections 6.11, 6.12
and 6.14.
"Third Party Sale Value Consideration" means consideration at least equal
as of the relevant date to Third Party Sale Value.
ARTICLE 2
THE TRANSACTION
Section 2.1 Sale and Purchase of Purchase Shares and Promissory Note.
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Upon the terms and subject to satisfaction or, if appropriate, waiver of all of
the conditions set forth in Article 7, at the Closing: (a) the Company will
issue the Seed Purchase Shares to Agrigenetics, (b) Parent will sell the
Subsidiary Shares to Agrigenetics in exchange for the Seed Purchase Shares and
the Promissory Note, (c) Agrigenetics will sell the Seed Purchase Shares and
deliver the Promissory Note to Parent in exchange for the Subsidiary Shares, and
(d) the Company will issue and sell to Parent, and Parent will purchase from the
Company, the Cash Purchase Shares in exchange for the Cash Payment. Parent will
pay the Cash Payment to the Company at the Closing by bank wire transfer of
immediately available funds to an account designated in writing by the Company,
or by such other means as is acceptable to the Company and Parent.
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Section 2.2 Closing Balance Sheet Adjustment.
--------------------------------
2.2.1 As used in this Section 2.2, the following terms will have the
meanings set forth below:
"Subsidiary Closing Balance Sheet" means the unaudited balance sheet of
Subsidiary prepared in accordance with generally accepted accounting principles
as of the Closing.
"Subsidiary Tangible Net Worth" means the tangible net worth of Subsidiary
as agreed upon between the Company and Parent based on the average tangible net
worth calculated from the balance sheets of Subsidiary for the four fiscal
quarters ending immediately preceding the date of determination of Subsidiary
Tangible Net Worth is made, which balance sheets will be prepared in accordance
with generally accepted accounting principles as mutually agreed. Parent will
provide the Company with its determination of the Subsidiary Tangible Net Worth
within 7 days of the date of this Agreement. In the event that the Company and
Parent are not able to agree on any of the matters in the immediately preceding
sentence within 22 days after the execution of this Agreement, then such dispute
immediately will be submitted for final and binding determination to a firm of
Neutral Auditors (as defined below). The Neutral Auditors will, within 30 days
after the submission of the relevant information to them, resolve any dispute in
the amount of the Subsidiary Tangible Net Worth and deliver a written report to
the Company and Parent. All expenses relating to the work, if any, to be
performed by the Neutral Auditors will be borne one-half by the Company and one-
half by Parent.
2.2.2 Parent will prepare and deliver to the Company the Subsidiary
Closing Balance Sheet on or before the 10th day after the Closing. The
Subsidiary Closing Balance Sheet will be prepared using the same procedures and
in all other respects consistently with the manner of preparing the quarterly
balance sheets of Subsidiary used to determine Subsidiary Tangible Net Worth.
2.2.3 In the event that the tangible net worth of Subsidiary based on the
Subsidiary Closing Balance Sheet is different than the Subsidiary Tangible Net
Worth, then an adjustment (the "Adjustment") will be made to the consideration
for the Transaction as follows:
(a) If such tangible net worth of Subsidiary is less than the Subsidiary
Tangible Net Worth, Parent will, in accordance with Section 2.2.4, pay to
Company an amount equal to the difference between such tangible net worth and
the Subsidiary Tangible Net Worth.
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(b) If such tangible net worth of Subsidiary is greater than the Subsidiary
Tangible Net Worth, the Company or Agrigenetics will, in accordance with Section
2.2.4, pay to Parent an amount equal to the difference between such tangible net
worth and the Subsidiary Tangible Net Worth.
2.2.4 The Adjustment will be paid in cash within 45 days after the receipt
of the Subsidiary Closing Balance Sheet (the "Adjustment Date"), unless the
Company, in accordance with Section 2.2.5, objects to any matter set forth in
the Subsidiary Closing Balance Sheet. Notwithstanding any objection by the
Company, the undisputed portion of the Adjustment will be paid by the Adjustment
Date, and the disputed portion will be, if applicable, paid within five days
after delivery by the Neutral Auditors (as defined below) of their written
report.
2.2.5 The Company will have 30 days after receipt of the Subsidiary
Closing Balance Sheet to object to any matter set forth therein or any
accounting principle applied in the preparation thereof. Such objection will be
in writing and will set forth in reasonable detail the nature of the objection
and the basis therefor. Failure by the Company to notify Parent in writing of
any objection within such 30-day period will be deemed to be acceptance by the
Company of the Subsidiary Closing Balance Sheet. In the event the Company and
Parent are unable to resolve any objection within 10 days from the date of
receipt of a notice of objection, the matter(s) in dispute will be submitted for
final and binding determination to a "Big Six" accounting firm selected by the
Company (but not any such firm that has previously provided services to the
Company or Parent or any of their respective subsidiaries), which firm will be
reasonably acceptable to Parent (the "Neutral Auditors"). The Neutral Auditors
will, within 30 days of submission of relevant information to them, resolve any
dispute in the amount of the Adjustment and deliver a written report to the
Company and Parent. All expenses relating to the work, if any, to be performed
by the Neutral Auditors will be borne one-half by the Company and one-half by
Parent.
ARTICLE 3
THE CLOSING
Section 3.1 Closing. The Closing will be held as soon as practicable
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after the satisfaction or, if appropriate, waiver of the conditions set forth in
Article 7. At the Closing, the parties hereto will consummate the Transaction.
The Closing will be held at the offices of Mayer, Brown & Platt, 190 South
LaSalle Street, Chicago, Illinois, 60603, or such other place as the parties may
agree. The date of the Closing is hereafter referred to as the Closing Date.
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Section 3.2 Deliveries by Parent. At the Closing, Parent will
--------------------
deliver:
3.2.1 the Subsidiary Shares to Agrigenetics;
3.2.2 the Cash Payment to the Company; and
3.2.3 such other documents and instruments, duly executed to the
extent required, as may be reasonably requested by the Company or Agrigenetics
in order to consummate the Transaction.
Section 3.3 Deliveries by the Company and Agrigenetics. At the
------------------------------------------
Closing, the Company will deliver, or will cause Agrigenetics to deliver, to
Parent the following:
3.3.1 Agrigenetics will deliver to Parent the Promissory Note;
3.3.2 Agrigenetics will deliver to Parent a certificate, or
certificates in such denominations as may be requested in writing by Parent,
evidencing Parent's ownership of the Seed Purchase Shares and the Company will
deliver to Parent a certificate, or certificates in such denominations as may be
requested in writing by Parent, evidencing Parent's ownership of the Cash
Purchase Shares. The certificates for the Purchase Shares will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS OR PURSUANT TO A WRITTEN
OPINION OF COUNSEL FOR THE COMPANY THAT REGISTRATION IS NOT REQUIRED."
; and
3.3.3 such other documents and instruments, duly executed to the
extent required, as may be reasonably requested by Parent in order to consummate
the Transaction.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent as follows:
Section 4.1 Organization and Qualification; Subsidiaries.
--------------------------------------------
4.1.1 Each of the Company, MPS, Agrigenetics and their respective
subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power and
authority would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
4.1.2 Each of the Company, MPS, Agrigenetics and their respective
subsidiaries is duly qualified or licensed and in good standing to do business
in each jurisdiction (including any foreign country) in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing would not, individually or in
the aggregate, have a Material Adverse Effect on the Company.
4.1.3 The Company has heretofore furnished to Parent complete and
correct copies of the Company's and Agrigenetics' Articles or Certificate of
Incorporation and By-Laws and, within 15 days of the execution of this
Agreement, will furnish the equivalent organizational documents of each of their
subsidiaries, each as amended through the date hereof. Such Articles of
Incorporation, By-Laws and equivalent organizational documents are in full force
and effect and no other organizational documents are applicable to or binding
upon the Company, Agrigenetics or their subsidiaries. Neither the Company nor
Agrigenetics is in violation of any of the provisions of their respective
Articles or Certificates of Incorporation or By-Laws in any material respect and
no subsidiary of the Company or Agrigenetics is in violation of any of the
provisions of such subsidiary's equivalent organizational documents in any
material respect.
4.1.4 The Company has heretofore furnished to Parent a complete and
correct list of the subsidiaries of the Company, which list sets forth the
amount of capital stock of or other equity interests in such subsidiaries owned
by the Company, directly or indirectly. No entity in which the Company owns,
directly or indirectly, less than a 50% equity interest is, individually or when
taken together with all other such entities,
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material to the business of the Company and its subsidiaries, taken as a whole.
Section 4.2 Capitalization of the Company. The authorized capital stock
-----------------------------
of the Company consists of (i) 40,000,000 shares of Common Stock of which, as of
January 12, 1996, 22,610,767 shares of Common Stock were issued and outstanding
(including 186,500 shares of Common Stock subject to restrictions issued
pursuant to employee benefit plans of the Company and its subsidiaries or
otherwise) and (ii) 5,000,000 shares of preferred stock, of which, as of January
14, 1996, 3,940 shares of Senior Redeemable Convertible Preferred Stock, Series
A ("Series A Convertible Preferred Stock") were authorized and 3,158 shares of
Series A Convertible Preferred Stock were issued and outstanding and 200,000
shares of Series B Junior Participating Preferred Stock were reserved for
issuance upon exercise of Rights. All outstanding shares of capital stock of
the Company have been validly issued, and are fully paid, nonassessable and free
of preemptive rights. As of January 12, 1996, (i) employee options to purchase
an aggregate of 4,169,506 shares of Common Stock were authorized, (ii) employee
options to purchase an aggregate of 4,151,248 shares of Common Stock were
outstanding, (iii) 4,169,506 shares of Common Stock were reserved for issuance
pursuant to employee options, and (iv) the weighted average exercise price of
such employee options was $9.76 per share of Common Stock. The Company has
previously provided Parent with a complete list of the dates upon which each
employee option outstanding as of the date of this Agreement becomes exercisable
by the holder thereof. As of January 12, 1996, 1,988,301 shares of Common Stock
were reserved for issuance upon conversion of the Series A Convertible Preferred
Stock and as of January 14, 1996, the outstanding shares of Series A Convertible
Preferred Stock were convertible into 1,815,274 shares of Common Stock and the
Investor's Conversion Right was convertible into 1,538,008 shares of Common
Stock. As of January 12, 1996, 43,500 shares of Common Stock were reserved for
future issuances pursuant to the Restricted Stock Issuance Plan. As of January
12, 1996, 250,000 shares of Common Stock were reserved for future issuances
pursuant to the Employee Stock Purchase Plan. Except as set forth above, and
except as a result of the exercise of employee options outstanding as of January
12, 1996, there are no Company Securities outstanding. Except as disclosed on
Schedule 4.2, there are no outstanding obligations of the Company or any of its
subsidiaries to sell or to repurchase, redeem or otherwise acquire any Company
Securities. Each of the outstanding shares of capital stock of each of the
Company's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and, except with respect to Agrigenetics or as otherwise disclosed
on Schedule 4.2, is directly or indirectly owned by the Company, free and clear
of all security interests, liens, claims, pledges, charges, voting agreements or
other encumbrances of any nature whatsoever (collectively, "Liens"). Except as
disclosed on
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Schedule 4.2, there are no existing options, calls, agreements or commitments of
any character relating to the issued or unissued capital stock or other
securities of the Company or any subsidiary of the Company.
Section 4.3 Capitalization of Agrigenetics. The authorized capital stock
------------------------------
of Agrigenetics consists of (i) 100,000 shares of common stock, $.001 par value
per share ("Agrigenetics Stock"), of which, as of January 12, 1996, 10,000
shares were issued and outstanding. MPS has good and valid title to 8,054
shares of Agrigenetics Stock, free and clear of any Liens. As of the date of
this Agreement, the remaining 1,946 outstanding shares of Agrigenetics Stock are
held by Investor and, assuming these shares of Agrigenetics Stock are exchanged
for Common Stock as contemplated by the Stock Purchase Agreement, MPS will have,
at the Closing, good and valid title to all of the shares of Agrigenetics Stock
issued and outstanding. All outstanding shares of Agrigenetics Stock have been
validly issued, and are fully paid, nonassessable and free of preemptive rights.
Except as set forth above there are outstanding (i) no shares of capital stock
or other voting securities of Agrigenetics, (ii) no securities of Agrigenetics
convertible into or exchangeable for shares of capital stock or voting
securities of Agrigenetics, (iii) no options, subscriptions, warrants,
convertible securities, calls or other rights to acquire from Agrigenetics, and
no obligation of Agrigenetics to issue, deliver or sell any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of Agrigenetics and (iv) no equity equivalents,
interests in the ownership or earnings of Agrigenetics or other similar rights
(collectively, "Agrigenetics Securities"). Except as disclosed on Schedule 4.3,
there are no outstanding obligations of the Company or any of its subsidiaries
to repurchase, redeem or otherwise acquire any Agrigenetics Securities.
Section 4.4 Authority Relative to This Agreement. The Company and
------------------------------------
Agrigenetics have all necessary corporate power and authority to execute and
deliver this Agreement, to perform their obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board and no other corporate proceedings
on the part of the Company or Agrigenetics are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by the Company and constitutes a
legal, valid and binding agreement of the Company enforceable against the
Company in accordance with its terms.
Section 4.5 Waiver of Rights Agreement. The Company and the Board have
--------------------------
taken all necessary action prior to the execution
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of this Agreement pursuant to the Rights Agreement so that Parent and its
affiliates will not be included in the definition of "Acquiring Person" (as
defined in the Rights Agreement), and that their acquisition of any shares of
Common Stock hereunder, under the Stock Purchase Agreement, or otherwise after
the date hereof will not cause any adverse consequence to Parent or its
affiliates, or the Company, including, without limitation, the occurrence of a
Distribution Date (as defined in the Rights Agreement) or any adjustment to the
Purchase Price (as defined in the Rights Agreement) as a consequence of the
transactions contemplated hereby, by the Stock Purchase Agreement, or any future
acquisitions or proposed acquisitions of shares of Common Stock by Parent or its
affiliates.
Section 4.6 Non-Contravention; Required Filings and Consents.
------------------------------------------------
4.6.1 The execution, delivery and performance by the Company and
Agrigenetics of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene or conflict with the
Articles or Certificate of Incorporation or By-Laws of the Company or
Agrigenetics or the equivalent organizational documents of any of their
respective subsidiaries; (ii) assuming that all consents, authorizations and
approvals contemplated by Section 4.6.2 have been obtained and all filings
described therein have been made, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to the Company, Agrigenetics, any of their
respective subsidiaries or any of their respective properties; (iii) contravene
or conflict with the NASD Rules; (iv) conflict with, or result in the breach or
termination of any provision of or constitute a default (with or without the
giving of notice or the lapse of time or both) under, or give rise to any right
of termination, cancellation, or loss of any benefit to which the Company,
Agrigenetics or any of their respective subsidiaries is entitled under any
provision of any Significant Agreement as defined in Section 4.16 or any
material agreement, contract, license or other instrument binding upon the
Company, Agrigenetics, any of their respective subsidiaries or any of their
respective properties, or allow the acceleration of the performance of, any
obligation of the Company, Agrigenetics or any of their respective subsidiaries
under any Significant Agreement or any material indenture, mortgage, deed of
trust, lease, license, contract, instrument or other agreement to which the
Company, Agrigenetics or any of their respective subsidiaries is a party or by
which the Company, Agrigenetics or any of their subsidiaries or any of their
respective assets or properties is subject or bound, or prevent the Company or
any of its subsidiaries from realizing the benefits otherwise obtainable by the
Company or any of its subsidiaries under any Permits (as defined below) or
property interests of Company or any of its
14
<PAGE>
subsidiaries or any contract, agreement, license, arrangement or commitment of
the Company or any of its subsidiaries relating to the business of the Company
with respect to employment arrangements, purchase, sale, lease or license of
assets, guarantees, restriction on conduct of business, leases, licenses,
letters of credit, powers of attorney, joint venture agreements or affiliate
agreements or require the affirmative consent or approval of any third party
under any such material contract, agreement, license, arrangement or commitment;
or (v) result in the creation or imposition of any Lien on any material asset of
the Company, Agrigenetics or any of their respective subsidiaries.
4.6.2 The execution, delivery and performance by the Company and
Agrigenetics of this Agreement and the consummation of the transactions
contemplated hereby by the Company and Agrigenetics require no action by or in
respect of, or filing with, any governmental body, agency, official or authority
(either domestic or foreign) other than (i) compliance with any applicable
requirements of the HSR Act; (ii) compliance with any applicable requirements of
the Exchange Act and state securities, takeover and Blue Sky Laws; and (iii)
such actions or filings which, if not taken or made, would not individually or
in the aggregate have a Material Adverse Effect on the Company or materially
interfere with the consummation of the transactions contemplated by this
Agreement.
Section 4.7 SEC Reports.
-----------
4.7.1 The Company has filed or will file when due all required forms,
reports and documents with the SEC since December 31, 1992 (collectively, the
"SEC Reports"), each of which has complied in all material respects with
applicable requirements of the Securities Act and the Exchange Act. As of their
respective dates, none of the SEC Reports, including, without limitation, any
financial statements or schedules included therein, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements of the Company included in the SEC Reports fairly present, in
conformity with generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto), the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and their consolidated results of operations and cash flows for
the periods then ended (subject to normal year-end adjustments in the case of
any unaudited interim financial statements). The Company has heretofore provided
complete and correct copies of each of the SEC Reports to Parent.
15
<PAGE>
4.7.2 Except as reflected or reserved against in the audited
consolidated balance sheet of the Company and its subsidiaries at August 31,
1995 or as set forth on Schedule 4.7.2, to the Company's knowledge, the Company
and its subsidiaries have no liabilities of any nature (whether accrued,
absolute, contingent or otherwise), except for liabilities incurred in the
ordinary course of business since November 30, 1995 which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Section 4.8 Absence of Certain Changes. Since August 31, 1995, there has
--------------------------
not occurred any change or event that has had a Material Adverse Effect on the
Company.
Section 4.9 Finder's Fee. No broker, finder, investment banker or other
------------
intermediary is entitled to any brokerage, finder's or other fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of the Company, other than BioScience
Securities, Inc., the fees and expenses of which will be paid by the Company.
Section 4.10 Absence of Claims and Litigation. Except as specifically
--------------------------------
disclosed in Schedule 4.10, as of the date hereof, there is no action, suit,
claim, investigation or proceeding pending against the Company or any of its
subsidiaries or any of their respective properties before any court or
arbitrator or any administrative, regulatory or governmental body, or any agency
or official, nor to the knowledge of the Company, is any action, suit, claim,
investigation or proceeding threatened against or affecting the Company or any
of its subsidiaries or any of their respective properties, other than claims
relating to alleged nonperformance of seeds or biopesticide products or
unsatisfactory services, which, in the aggregate, are adequately reserved
against in the consolidated balance sheet of the Company and its subsidiaries in
the ordinary course of business. Neither the Company nor any of its subsidiaries
nor any of their respective properties is subject to any order, writ, judgment,
injunction, decree, determination or award having, or which would reasonably be
expected to have, a Material Adverse Effect on the Company or which would
prevent or delay the consummation of the transactions contemplated hereby.
Except as specifically disclosed on Schedule 4.10, as of the date hereof, there
is no action, suit, claim, investigation or proceeding pending against, or to
the knowledge of the Company, threatened against or affecting the Company or any
of its subsidiaries or their respective properties before any court or
arbitrator or any administrative, regulatory or governmental body, or any agency
or official which in any manner challenges or seeks to prevent, enjoin, alter or
delay the Transaction or any of the other transactions contemplated hereby or by
the Stock Purchase Agreement.
16
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Section 4.11 Taxes. Except as set forth on Schedule 4.11, (a) the Company
-----
and its subsidiaries have filed, been included in or sent, all material returns,
declarations and reports and information returns and statements required to be
filed or sent by or relating to any of them relating to any Taxes (as defined
below) with respect to any material income, properties or operations of the
Company or any of its subsidiaries (collectively, "Returns"); (b) as of the time
of filing, the Returns correctly reflected in all material respects the facts
regarding the income, business, assets, operations, activities and status of the
Company and its subsidiaries and any other information required to be shown
therein; (c) the Company and its subsidiaries have timely paid or made
appropriate provision for all material Taxes that have been shown as due and
payable on the Returns that have been filed; (d) neither the Company nor any of
its subsidiaries is delinquent in the payment of any material Taxes or has
requested any extension of time within which to file or send any material
Return, which Return has not since been filed or sent or which extension has not
expired; (e) no material deficiency for any Taxes has been proposed, asserted or
assessed in writing against the Company or any of its subsidiaries (or any
member of any affiliated or combined group of which the Company or any of its
subsidiaries is or has been a member for which either the Company or any of its
subsidiaries could be liable) other than those Taxes being contested in good
faith by appropriate proceedings; (f) neither the Company nor any of its
subsidiaries has granted any extension of the limitation period applicable to
any material Tax claims other than those Taxes being contested in good faith by
appropriate proceedings; (g) neither the Company nor any of its subsidiaries is
subject to liability for Taxes of any person (other than the Company or its
subsidiaries), including, without limitation, liability arising from the
application of U.S. Treasury Regulation section 1.1502-6 or any analogous
provision of state, local or foreign law; (h) neither the Company nor any of its
subsidiaries is or has been a party to any material tax sharing agreement with
any corporation which is not currently a member of the affiliated group of which
the Company is currently a member; and (i) all Taxes which the Company or any of
its subsidiaries is required by law to withhold or collect, including sales and
use Taxes and amounts required to be withheld for Taxes of employees and other
withholding Taxes, have been duly withheld or collected and, to the extent
required, have been paid over to the proper taxing authorities or are held in
separate bank accounts for such purpose.
"Tax" means with respect to any person (i) any net income, gross income,
gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, value-added or windfall profit tax, custom duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest and any penalty, addition to tax or
17
<PAGE>
additional amount imposed by any taxing authority (domestic or foreign) on such
person and (ii) any liability of the Company or any subsidiary for the payment
of any amount of the type described in clause (i) as a result of being a member
of an affiliated or combined group.
Section 4.12 Employee Benefits and Labor Matters.
-----------------------------------
4.12.1 Within 15 days after the execution of this Agreement, the
Company will provide Parent with Schedule 4.12.1 which will contain a true and
complete list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, restricted stock issuance, severance or
termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement plan,
program, agreement or arrangement, sponsored, maintained or contributed to or
required to be contributed to by the Company, by Agrigenetics, or by any trade
or business, whether or not incorporated (an "ERISA Affiliate"), that together
with the Company or Agrigenetics would be deemed a "single employer" within the
meaning of section 4001 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), for the benefit of any employee or terminated employee of
the Company, Agrigenetics, or any ERISA Affiliate (the "Company Plans").
Schedule 4.12.1 will identify each of the Company Plans that is an "employee
benefit plan," as that term is defined in section 3(3) of ERISA (the "Company
ERISA Plans").
4.12.2 Each of the Company Plans has been operated and administered
in all material respects in accordance with its terms and in compliance with all
statutes, laws, orders, rules, regulations, judgments or decrees applicable to
each of the Company Plans including, but not limited to ERISA and the Code.
4.12.3 With respect to each of the Company Plans, Company and
Agrigenetics have made available to Parent or will make available to Parent
within 15 days of the execution of this Agreement a true and correct copy of (a)
the most recent annual report (Form 5500) filed with the Internal Revenue
Service, (b) such Company Plan, (c) each trust agreement and group annuity
contract, if any, relating to such Company Plan, (d) the most recent actuarial
report or evaluation relating to Company ERISA Plan subject to Title IV of ERISA
and (e) each determination letter, if any, relating to any of the Company Plans
and any related trusts which are intended respectively to qualify under Section
401(a) of the Code and to be exempt from taxation under Section 501(a) of the
Code.
4.12.4 With respect to the Company Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of the Company,
Agrigenetics, or any of their ERISA Affiliates, there exists no condition or set
of circumstances, including,
18
<PAGE>
without limitation, pending, threatened or anticipated claims, actions, suits,
proceedings, or investigations in connection with which the Company,
Agrigenetics, or any of their ERISA Affiliates, or any of the Company Plans,
could be subject to any liability that is reasonably likely to have a Material
Adverse Effect upon the Company, Agrigenetics and any of their ERISA Affiliates
or subsidiaries taken as a whole (except liability for benefits claims and
funding obligations payable in the ordinary course) under ERISA, the Code or any
other applicable law. This representation and warranty as a liability with
respect to the Company Plans includes, without limitation:
(i) liability for federal, state, local, or foreign taxes or civil
penalties;
(ii) termination indemnity liability;
(iii) liability for "reportable events" (within the meaning of
Section 4043 of Title IV of ERISA);
(iv) liability for any "accumulated funding deficiency" (as defined
in Section 302 of ERISA and Section 412 of the Code);
(v) liability under Sections 4064, 4069, or 4204 of ERISA; and
(vi) withdrawal liability under Section 4201 of Title IV of ERISA
with respect to any "multiemployer plan" (as defined in sections
3 (37) and 4001 of ERISA).
4.12.5 Except as will be set forth in Schedule 4.12.5, with respect
to the Company Plans, individually and in the aggregate, there are no funded
benefit contribution, or premium obligations for which contributions or payments
have not been made or properly accrued and there are no unfunded benefit,
contribution, or premium obligations which have not been made or accounted for
by reserves, or otherwise properly footnoted in accordance with generally
accepted accounting principles, on the financial statements of the Company,
Agrigenetics, and any of their ERISA Affiliates or subsidiaries, which
obligations are reasonably likely to have a Material Adverse Effect on the
Company, Agrigenetics, and any of their ERISA affiliates or subsidiaries, taken
as a whole.
4.12.6 Neither the Company nor any of its subsidiaries has any labor
contracts, collective bargaining agreements or other employment agreements with
any Company personnel or any representative of Company personnel. Neither the
Company nor any of its subsidiaries has engaged during the three immediately
preceding years in any unfair labor practice with respect to any
19
<PAGE>
Company personnel, nor is there any pending unfair labor practice complaint
against it. Except for routine grievance procedures, there is no labor strike,
dispute, slowdown, or stoppage pending or threatened against or affecting the
Company or any of its subsidiaries or their businesses. Neither the Company nor
any of its subsidiaries has experienced any primary or secondary work stoppage
or other labor difficulty involving its employees during the last five (5)
years.
Section 4.13 Compliance. Neither the Company nor any of its subsidiaries
----------
is in violation of, or has violated, any applicable provisions of (i) any laws,
rules, statutes, orders, ordinances or regulations, (ii) the NASD Rules, or
(iii) any material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise, or other instrument or obligations to which the
Company or its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties are bound or affected,
which, individually or in the aggregate, would result or reasonably be expected
to result in a Material Adverse Effect on the Company.
Section 4.14 Environmental Matters.
---------------------
4.14.1 The Company and its subsidiaries are in compliance with all
applicable Environmental Laws (which compliance includes, but is not limited to,
the possession by the Company and its subsidiaries of all permits and other
governmental authorizations required under applicable Environmental Laws for the
operation of the business of the Company and its subsidiaries, and compliance
with the terms and conditions thereof), except for any noncompliance that
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect on the Company.
4.14.2 There is no Environmental Claim pending or threatened against
the Company or any of its subsidiaries which individually or in the aggregate
would reasonably be expected to have a Material Adverse Effect on the Company.
4.14.3 Neither the Company nor any of its subsidiaries has, and to
the knowledge of the Company, no other person has, Released, placed, stored,
buried or dumped Hazardous Materials or any other wastes produced by, or
resulting from, any business, commercial or industrial activities, operations or
processes, on, beneath or adjacent to or in any property owned, operated or
leased or formerly owned, operated or leased by the Company or any of its
subsidiaries which, in either case, would require Cleanup pursuant to applicable
Environmental Laws which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company. Neither the Company
nor any of its subsidiaries has received notice that it is a potentially
responsible party for the Cleanup of any
20
<PAGE>
property, whether or not owned or operated by the Company or any of its
subsidiaries, which individually or in the aggregate would reasonably be
expected to have a Material Adverse Effect on the Company.
Section 4.15 Intellectual Property. Except to the extent that the
---------------------
inaccuracy of any of the following (or the circumstances giving rise to such
inaccuracy) individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on the Company: (1) the Company and each of
its subsidiaries owns, or is licensed to use (in each case, free and clear of
any Liens), all Intellectual Property used in or necessary for the conduct of
its business as currently conducted; (2) to the knowledge of the Company, the
use of any Intellectual Property by the Company and its subsidiaries does not
infringe on or otherwise violate the rights of any person; (3) to the knowledge
of the Company, no product (or component thereof or process) used, sold or
manufactured by and/or for, or supplied to, the Company or any of its
subsidiaries infringes or otherwise violates the Intellectual Property of any
other person; and (4) to the knowledge of the Company, no person is infringing
on or otherwise violating any right of the Company or any of its subsidiaries
with respect to any Intellectual Property owned by and/or licensed to the
Company and its subsidiaries. Schedule 4.10 sets forth a complete list of all
challenges, claims, infringements, interferences and pending or, to the
knowledge of the Company, threatened litigation relating to any Intellectual
Property owned, licensed or used by the Company or any of its subsidiaries.
Section 4.16 Significant Agreements. Schedule 4.16 sets forth as of the
----------------------
date of this Agreement a complete and correct list of all contracts, agreements,
indentures, leases, mortgages, licenses, plans, arrangements, understandings,
commitments (whether written or oral) and instruments (collectively,
"Contracts") that are material to the Company and its subsidiaries, including,
without limitation, the following: (i) all Contracts set forth as exhibits to
the Company's Annual Report on Form 10-K for the fiscal year ended August 31,
1995 and (ii) any Contract between the Company or any of its subsidiaries, on
the one hand, and on the other hand, Pioneer Hi-Bred International or any of its
affiliates (collectively, the "Significant Agreements"). Except as set forth on
Schedule 4.16, since August 31, 1995, there have been no transactions between
the Company or any of its subsidiaries, on the one hand, and the other parties
to the Significant Agreements or any of their respective affiliates, on the
other hand, other than transactions in the ordinary course of business
consistent with past practice pursuant to and in accordance with the terms of
the Significant Agreements. The execution, delivery and performance by the
Company of this Agreement and the consummation of the transactions contemplated
hereby do not and will not conflict
21
<PAGE>
with, or result in the breach or termination of any provision of or constitute a
default (with or without the giving of notice or the lapse of time or both)
under, or give rise to any right of termination, cancellation, or loss of any
benefit to which the Company or any of its subsidiaries is entitled under any
provision of any Significant Agreement.
Section 4.17 Product Registrations. Except as disclosed in Schedule 4.17,
---------------------
(i) the Company has obtained all Product Registrations required for the conduct
of its business or the business of any of its subsidiaries, (ii) the Company is
the sole and exclusive owner of all right, title and interest in such Product
Registrations, free and clear of any claim, security interest, lien, option or
charge of any kind, unless such Product Registrations must be held by companies
domiciled within a specific country, and (iii) the Company has an unrestricted
right to reference all studies and other Data used to obtain or maintain such
Product Registrations. The Company's Product Registrations are in full force
and effect and have not been used or enforced, or failed to be used or enforced,
in a manner that would result in their abandonment, cancellation or
unenforceability. There are no claims of adverse ownership, invalidity or other
opposition to or conflict with any of the Company's Product Registrations. To
the knowledge of the Company, neither the Company, nor any of its subsidiaries,
has violated or infringed or is in violation of or infringement of any Product
Registrations held by any other person. To the Company's knowledge, no
infringements or violations of the Company's Product Registrations have occurred
or are continuing. The Company's Product Registrations constitute all
registrations and other governmental approvals to market and sell the pesticide
or genetically modified products currently marketed and sold by the Company.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 5.1 Organization. Parent is a general partnership organized
------------
under the laws of the State of Indiana and Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and Parent and Subsidiary each has all requisite partnership or
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Subsidiary is duly qualified or
licensed and in good standing to do business in each jurisdiction (including any
foreign country) in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification
22
<PAGE>
or licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing would not, individually or in the aggregate, have
a Material Adverse Effect on Subsidiary.
Section 5.2 Authority Relative to this Agreement. Each of Parent and
------------------------------------
Subsidiary has all necessary partnership or corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by Parent in
accordance with its Amended and Restated Partnership Agreement, and by Parent as
the sole stockholder of Subsidiary, and no other partnership or corporate
proceedings on the part of Parent or Subsidiary are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by each of Parent and Subsidiary
and constitutes a legal, valid and binding agreement of each of Parent and
Subsidiary, enforceable against each of Parent and Subsidiary in accordance with
its terms.
Section 5.3 Non-Contravention; Required Filings and Consents.
------------------------------------------------
5.3.1 The execution, delivery and performance by Parent and
Subsidiary of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene or conflict with the
Amended and Restated Partnership Agreement, Certificate of Incorporation, By-
Laws or other organizational documents of Parent, any of its partners or
Subsidiary; (ii) assuming that all consents, authorizations and approvals
contemplated by Section 5.3.2 have been obtained and all filings described
therein have been made, contravene or conflict with or constitute a violation of
any provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to Parent, any of its partners or Subsidiary or any
of their respective properties; (iii) conflict with, or result in the breach or
termination of any provision of or constitute a default (with or without the
giving of notice or the lapse of time or both) under, or give rise to any right
of termination, cancellation, or loss of any benefit to which Parent or
Subsidiary is entitled under any provision of any Subsidiary Agreement (as
defined in Section 5.14 below) or any material agreement, contract, license or
other instrument binding upon Parent, Subsidiary or any of their respective
properties, or allow the acceleration of the performance of, any obligation of
Parent or Subsidiary under any Subsidiary Agreement or any material indenture,
mortgage, deed of trust, lease, license, contract, instrument or other agreement
to which Parent or Subsidiary is a party or by which Parent or Subsidiary or any
of
23
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their respective assets or properties is subject or bound, or prevent Subsidiary
from realizing the benefits otherwise obtainable by Subsidiary under any Permits
(as defined in Section 5.17 below) or property interests of Parent or Subsidiary
or any contract, agreement, license, arrangement or commitment of Parent or
Subsidiary relating to the business of Subsidiary with respect to employment
arrangements, purchase, sale, lease or license of assets, guarantees,
restriction on conduct of business, leases, licenses, letters of credit, powers
of attorney, joint venture agreements or affiliate agreements or require the
affirmative consent or approval of any third party under any such material
contract, agreement license, arrangement or commitment; or (iv) result in the
creation or imposition of any Lien on any asset of Parent or Subsidiary.
5.3.2 The execution, delivery and performance by Parent and
Subsidiary of this Agreement and the consummation of the transactions
contemplated hereby require no action by or in respect of, or filing with, any
governmental body, agency, official or authority (either domestic or foreign)
other than (i) compliance with any applicable requirements of the HSR Act; (ii)
compliance with any applicable requirements of the Exchange Act and state
securities, takeover and Blue Sky Laws; and (iii) such actions or filings which,
if not taken or made, would not, individually or in the aggregate, have a
Material Adverse Effect on Subsidiary or materially interfere with the
consummation of the transactions contemplated by this Agreement or the Stock
Purchase Agreement.
Section 5.4 Capitalization of Subsidiary. The authorized capital stock of
----------------------------
Subsidiary consists of (i) 1,000 Subsidiary Shares of which, as of January 12,
1996, 1,000 Subsidiary Shares were issued and outstanding. Parent has, and at
the Closing hereunder Parent will have, good and valid title to all of the
outstanding Subsidiary Shares, free and clear of any Liens. All outstanding
Subsidiary Shares have been validly issued, and are fully paid, nonassessable
and free of preemptive rights. Except as set forth above, there are no
Subsidiary Securities outstanding. There are no outstanding obligations of
Subsidiary to sell or to repurchase, redeem or otherwise acquire any Subsidiary
Securities. Subsidiary has no subsidiaries.
Section 5.5 Financial Statements. 5.5.1 Schedule 5.5.1 sets forth
--------------------
complete and correct copies of the pro forma unaudited financial statements of
Subsidiary for the twelve month periods ended September 30, 1994 and 1995.
Within 15 days after the execution of this Agreement, Parent will provide
Company a complete and correct copy of unaudited financial statements of
Subsidiary for the calendar quarters ended March 31, 1995, June 30, 1995,
September 30, 1995, and December 31, 1995. Within 10 days after the Closing
Parent will provide Company with a complete and correct copy of the Subsidiary
Closing Balance
24
<PAGE>
Sheet. All such financial statements collectively will hereinafter be referred
to as the "Subsidiary Financial Statements." The Subsidiary Financial Statements
and the calculations of the Subsidiary Tangible Net Worth and the average
tangible net worth fairly present, in conformity with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
in the notes thereto), the financial position of Subsidiary as of the dates
thereof and the consolidated results of operations and cash flows for the
periods then ended.
5.5.2 Except as reflected or reserved against in the audited
consolidated balance sheet of Subsidiary at September 30, 1995 or as set forth
on Schedule 5.5.2, to the knowledge of Parent, Subsidiary has no liabilities of
any nature (whether accrued, absolute, contingent or otherwise), except for
liabilities incurred in the ordinary course of business since September 30, 1995
which would not, individually or in the aggregate, have a Material Adverse
Effect on Subsidiary.
Section 5.6 Absence of Certain Changes. Since September 30, 1995, there
--------------------------
has not occurred any change or event that has had a Material Adverse Effect on
Subsidiary.
Section 5.7 Finder's Fee. No broker, finder, investment banker or other
------------
intermediary is entitled to any brokerage, finder's or other fee or commission
in connection with the transactions contemplated by this Agreement or by the
Stock Purchase Agreement based upon arrangements made by and on behalf of
Parent.
Section 5.8 Absence of Claims and Litigation. Except as specifically
--------------------------------
disclosed on Schedule 5.8, as of the date of this Agreement, there is no action,
suit, claim, investigation or proceeding pending against Subsidiary or any of
its respective properties before any court or arbitrator or any administrative,
regulatory or governmental body, or any agency or official, nor to the knowledge
of Parent, is any action, suit, claim, investigation or proceeding threatened
against or affecting Subsidiary or any of its properties, other than the claims
relating to alleged nonperformance of seeds, which, in the aggregate, are
adequately reserved against in Subsidiary's balance sheet in the ordinary course
of business. Neither Subsidiary nor any of its properties is subject to any
order, writ, judgment, injunction, decree, determination or award having, or
which would reasonably be expected to have, a Material Adverse Effect on
Subsidiary or which would prevent or delay the consummation of the transactions
contemplated hereby. Except as specifically disclosed on Schedule 5.8, as of
the date of this Agreement, there is no action, suit, claim, investigation or
proceeding pending against, or to the knowledge of Parent, threatened against or
affecting Parent or any of its partners or
25
<PAGE>
properties before any court or arbitrator or any administrative, regulatory or
governmental body, or any agency or official which in any manner challenges or
seeks to prevent, enjoin, alter or delay the Transaction or any of the other
transactions contemplated hereby or by the Stock Purchase Agreement. Neither
Parent nor any of its partners or properties is subject to any order, writ,
judgment, injunction, decree, determination or award which would reasonably be
expected to have a Material Adverse Effect on Subsidiary or would prevent or
delay the consummation of the transactions contemplated hereby.
Section 5.9 Taxes. Except as set forth on Schedule 5.9, (a) Subsidiary
-----
has filed, been included in or sent, all material returns, declarations and
reports and information returns and statements required to be filed or sent by
or relating to it relating to any Taxes with respect to any material income,
properties or operations of Subsidiary (collectively, "Subsidiary Returns"); (b)
as of the time of filing, the Subsidiary Returns correctly reflected in all
material respects the facts regarding the income, business, assets, operations,
activities and status of Subsidiary and any other information required to be
shown therein; (c) Subsidiary has timely paid or made provision for all material
Taxes that have been shown as due and payable on the Subsidiary Returns that
have been filed; (d) Subsidiary has made or will make provision for all material
Taxes payable for any periods that end before the Closing for which no
Subsidiary Returns have yet been filed and for any periods that begin before the
Closing and end after the Closing to the extent such Taxes are attributable to
the portion of any such period ending at the Closing; (e) the charges, accruals
and reserves for taxes reflected on the books of Subsidiary are adequate to
cover the Tax liabilities accruing or payable by Subsidiary in respect of
periods prior to the date hereof; (f) Subsidiary is not delinquent in the
payment of any material Taxes nor has it requested any extension of time within
which to file or send any material Subsidiary Return, which Subsidiary Return
has not since been filed or sent or which extension has not expired; (g) no
material deficiency for any Taxes has been proposed, asserted or assessed in
writing against Subsidiary (or any member of any affiliated or combined group of
which Subsidiary is or has been a member for which either the Company or any of
its subsidiaries could be liable) other than those Taxes being contested in good
faith by appropriate proceedings; (h) Subsidiary has not granted any extension
of the limitation period applicable to any material Tax claims other than those
Taxes being contested in good faith by appropriate proceedings; (i) Subsidiary
is not subject to liability for Taxes of any other person, including, without
limitation, liability arising from the application of U.S. Treasury Regulation
section 1.1502-6 or any analogous provision of state, local or foreign law; (j)
Subsidiary is not nor has it been a party to any material tax sharing agreement
with any corporation which is not currently a member of the affiliated
26
<PAGE>
group of which Subsidiary is currently a member; and (k) all Taxes which
Subsidiary is required by law to withhold or collect, including sales and use
Taxes and amounts required to be withheld for Taxes of employees and other
withholding Taxes, have been duly withheld or collected and, to the extent
required, have been paid over to the proper taxing authorities or are held in
separate bank accounts for such purpose.
Section 5.10 Employee Benefits.
-----------------
5.10.1 Within 15 days after the execution of this Agreement, Parent
will provide the Company with Schedule 5.10.1 which will contain a true and
complete list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, restricted stock issuance, severance or
termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement plan,
program, agreement or arrangement, sponsored, maintained or contributed to or
required to be contributed to by Subsidiary for the benefit of any employee or
terminated employee of Subsidiary (the "Subsidiary Plans"). Schedule 5.10.1 will
identify each of the Subsidiary Plans that is an "employee benefit plan," as
that term is defined in section 3(3) of ERISA (the "Subsidiary ERISA Plans").
5.10.2 Each of the Subsidiary Plans has been operated and
administered in all material respects in accordance with its terms and in
compliance with all statutes, laws, orders, rules, regulations, judgments or
decrees applicable to each of the Subsidiary Plans including, but not limited to
ERISA and the Code.
5.10.3 With respect to each of the Subsidiary Plans, Parent has made
available to the Company or will make available to Company within 15 days of the
execution of this Agreement a true and correct copy of (a) the most recent
annual report (Form 5500) filed with the Internal Revenue Service, (b) such
Subsidiary Plan, (c) each trust agreement and group annuity contract, if any,
relating to such Subsidiary Plan, (d) the most recent actuarial report or
evaluation relating to Subsidiary ERISA Plan subject to Title IV of ERISA and
(e) each determination letter, if any, relating to any of the Subsidiary Plans
and any related trusts which are intended respectively to qualify under Section
401(a) of the Code and to be exempt from taxation under Section 501(a) of the
Code.
5.10.4 With respect to the Subsidiary Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of Parent there exists no
condition or set of circumstances, including, without limitation, pending,
threatened or anticipated claims, actions, suits, proceedings, or investigations
in connection with which Subsidiary, or any of the
27
<PAGE>
Subsidiary Plans, could be subject to any liability that is reasonably likely to
have a Material Adverse Effect upon Subsidiary (except liability for benefits
claims and funding obligations payable in the ordinary course) under ERISA, the
Code or any other applicable law. This representation and warranty as a
liability with respect to the Company Plans includes, without limitation:
(i) liability for federal, state, local, or foreign taxes or civil
penalties;
(ii) termination indemnity liability;
(iii) liability for "reportable events" (within the meaning of
Section 4043 of Title IV of ERISA);
(iv) liability for any "accumulated funding deficiency" (as defined
in Section 302 of ERISA and Section 412 of the Code);
(v) liability under Sections 4064, 4069, or 4204 of ERISA; and
(vi) withdrawal liability under Section 4201 of Title IV of ERISA
with respect to any "multiemployer plan" (as defined in sections
3 (37) and 4001 of ERISA).
5.10.5 Within 15 days after the date of this Agreement, Parent will
provide the Company with Schedule 5.10.5. Except as will be set forth in
Schedule 5.10.5, with respect to the Subsidiary Plans, individually and in the
aggregate, there are no funded benefit contribution, or premium obligations for
which contributions or payments have not been made or properly accrued and there
are no unfunded benefit, contribution, or premium obligations which have not
been made or accounted for by reserves, or otherwise properly footnoted in
accordance with generally accepted accounting principles, on the financial
statements of Subsidiary, which obligations are reasonably likely to have a
Material Adverse Effect on Subsidiary.
5.10.6 Subsidiary does not have any labor contracts, collective
bargaining agreements or other employment agreements with any company personnel
or any representative of company personnel. Subsidiary has not engaged during
the three immediately preceding years in any unfair labor practice with respect
to any company personnel, nor is there any pending unfair labor practice
complaint against it. Except for routine grievance procedures, there is no
labor strike, dispute, slowdown, or stoppage pending or threatened against or
affecting Subsidiary or its business. Subsidiary has not experienced any
28
<PAGE>
primary or secondary work stoppage or other labor difficulty involving its
employees during the last five (5) years.
5.10.7 None of the Company, Subsidiary, Agrigenetics or any of their
subsidiaries will be liable on or after the Closing in respect of any benefit
plan maintained or contributed to by any affiliate of Subsidiary prior to the
Closing.
Section 5.11 Compliance. Neither Parent nor Subsidiary is in violation
----------
of, or has violated, any applicable provisions of (i) any laws, rules, statutes,
orders, ordinances or regulations or (ii) any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise, or other
instrument or obligations to which Parent or Subsidiary is a party or by which
Subsidiary or their respective properties are bound or affected, which,
individually or in the aggregate, would result or reasonably be expected to
result in a Material Adverse Effect on Subsidiary.
Section 5.12 Environmental Matters.
---------------------
5.12.1 Subsidiary is in compliance with all applicable Environmental
Laws (which compliance includes, but is not limited to, the possession by
Subsidiary of all permits and other governmental authorizations required under
applicable Environmental Laws for the operation of Subsidiary's business, and
compliance with the terms and conditions thereof), except for any noncompliance
that individually or in the aggregate would not reasonably be expected to result
in any loss or liability to Subsidiary in excess of $100,000.
5.12.2 There is no Environmental Claim pending or threatened against
Subsidiary which individually or in the aggregate would reasonably be expected
to result in any loss or liability to Subsidiary in excess of $100,000.
5.12.3 Subsidiary has not, and to the knowledge of Parent, no other
person has Released, placed, stored, buried or dumped Hazardous Materials or any
other wastes produced by, or resulting from, any business, commercial or
industrial activities, operations or processes, on, beneath or adjacent to or in
any property owned, operated or leased or formerly owned, operated or leased by
Subsidiary, which, in either case, would require Cleanup pursuant to applicable
Environmental Laws which, individually or in the aggregate, would reasonably be
expected to result in any loss or liability to Subsidiary in excess of $100,000,
and Subsidiary has not received notice that it is a potentially responsible
party for the Cleanup of any property, whether or not owned or operated by
Subsidiary, which individually or in the aggregate would reasonably be expected
to result in any loss or liability to Subsidiary in excess of $100,000.
29
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Section 5.13 Intellectual Property.
---------------------
5.13.1 Except to the extent that the inaccuracy of any of the
following (or the circumstances giving rise to such inaccuracy) individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Subsidiary: (1) Subsidiary owns, or is licensed to use (in each case,
free and clear of any Liens), all Intellectual Property used in or necessary for
the conduct of Subsidiary's business as currently conducted; (2) to the
knowledge of Parent, the use of any Intellectual Property by Subsidiary does not
infringe on or otherwise violate the rights of any person; (3) to the knowledge
of Parent, no product (or component thereof or process) used, sold or
manufactured by and/or for, or supplied to, Subsidiary infringes or otherwise
violates the Intellectual Property of any other person; and (4) to the knowledge
of Parent, no person is challenging, infringing on or otherwise violating any
right of Subsidiary with respect to any Intellectual Property owned by and/or
licensed to Subsidiary. Schedule 5.8 sets forth a complete list as of the date
of this Agreement of all challenges, claims, infringements, interferences and
pending or, to the knowledge of Parent, threatened litigation relating to any
Intellectual Property owned, licensed or used by Subsidiary.
Section 5.14 Significant Agreements. Schedule 5.14 sets forth as of the
----------------------
date of this Agreement a complete and correct list of all contracts that are
material to the business, properties, assets, condition (financial or otherwise)
or results of operations of Subsidiary, except such contracts that were executed
in the ordinary course of business (collectively, the "Subsidiary Agreements").
Except as set forth on Schedule 5.14, since September 30, 1995, there have been
no transactions between Subsidiary, on the one hand, and the other parties to
the Subsidiary Agreements or any of their respective affiliates, on the other
hand, other than transactions in the ordinary course of business consistent with
past practice pursuant to and in accordance with the terms of the Subsidiary
Agreements. Except as specified on Schedule 5.14, all Subsidiary Agreements
required to be listed on Schedule 5.14 are valid and binding, enforceable (in
all material respects) in accordance with their respective terms and in full
force and effect. Neither Subsidiary nor, to the best of Parent's knowledge,
any other party thereto, is in breach of any material provision of or in default
under any material term of any such Subsidiary Agreement, and there exists no
condition or event which after lapse of time or notice (or both) would
constitute any such breach or default or result in any right of termination,
cancellation, acceleration or loss of any benefits thereunder. True and
complete copies of all such Subsidiary Agreements have been or will be delivered
to the Company within 15 days after the execution of this Agreement.
30
<PAGE>
Section 5.15 Charter Documents and Corporate Records. Parent and
---------------------------------------
Subsidiary have delivered to the Company or will deliver within a reasonable
time after signing true and complete copies of (i) the Certificate of
Incorporation and By-laws, or comparable instruments, of Subsidiary as in effect
on the date hereof, (ii) the stock books of Subsidiary and (iii) the minute
books of Subsidiary. The minute books of Subsidiary contain true and complete
records of all meetings and consents in lieu of meeting of the Board of
Directors (and any committee thereof) of Subsidiary, and its stockholders, for
the periods covered thereby and accurately reflect in all material respects all
transactions referred to in such minutes and consents in lieu of meeting.
Section 5.16 Assets.
------
5.16.1 Subsidiary owns or has the right to use all of the patents,
trademarks, tradenames, copyrights, conventional germplasm, real property and
equipment ("Assets") used predominantly in or necessary for the conduct of
Subsidiary's business as currently conducted; provided, however, that High Oil
-------- -------
Germ Plasm (as defined in Schedule 5.16.1) shall be specifically excluded from
Assets. Schedule 5.16.1 sets forth Parent's High Oil Germ Plasm as of the date
of this Agreement. To the extent any of the Assets were owned by Parent
immediately prior to the execution of this Agreement, they were transferred to
Subsidiary pursuant to the Transfer Agreement executed between Parent and
Subsidiary dated January 12, 1996, as amended.
5.16.2 None of the Assets are subject to Liens, except (i) Liens
incurred or made in the ordinary course of business which are not substantial in
character, amount or extent and do not materially impair the usefulness of such
properties and assets in the conduct of the business of Subsidiary; (ii) Liens
for taxes, assessments or other governmental charges or levies which are either
not yet due or are being contested in good faith and by appropriate proceedings
or can be paid without penalty and which do not materially impair the usefulness
of such Assets in the conduct of the business of Subsidiary; or (iii) as
reflected on the Subsidiary Balance Sheet.
5.16.3 Subsidiary has good and insurable fee title to, or a valid and
subsisting leasehold interest in, the real property and, in the case of such
owned real property, to all the buildings, structures and other improvements
located thereon. Subsidiary does not own or hold, and is not contractually
obligated under or a party to, any option, right of first refusal or other
contractual right to lease, purchase or acquire any real property or interest
therein. Within 15 days after the date of execution of this Agreement, Parent
will deliver to the Company true, correct and complete copies of all leases,
subleases, licenses and other agreements (including all modifications,
amendments and supplements thereto) for the leased real property
31
<PAGE>
listed on Schedule 5.16.3 (collectively, the "Real Property Leases"). Each Real
Property Lease is valid, binding and in full force and effect, all rent and
other sums and charges payable by Parent or Subsidiary as tenant thereunder are
current, no notice of default or termination under any Real Property Lease is
outstanding, no termination event or condition or uncured default on the part of
Parent or Subsidiary or, to Parent's and Subsidiary's knowledge, the landlord,
exists under any Property Lease and, to Parent's or Subsidiary's knowledge no
event has occurred and no condition exists which, with the giving of notice or
the lapse of time or both, would constitute such a default or termination event
or condition. Parent has not received notice of, and Parent has no knowledge of,
any pending, threatened or contemplated condemnation proceeding affecting the
real property or any part thereof or of any sale or other disposition of the
real property or any part thereof in lieu of condemnation. No portion of the
real property has suffered any material damage by fire or other casualty which
has not heretofore been completely repaired and restored to its original
condition.
Section 5.17 Licenses, Permits, Authorizations, Etc. Subsidiary has all
--------------------------------------
required governmental approvals, authorizations, consents, licenses, orders,
registrations and permits of all agencies, whether federal, state, local or
foreign (collectively, "Permits"), the failure to obtain which would be expected
to have a Material Adverse Effect on Subsidiary. Neither Parent nor, to
Parent's knowledge, Subsidiary, has received any notifications of any asserted
failure or is otherwise aware of any failure by it to have obtained any such
Permit or past and unremedied failure to obtain any such Permit. All Permits
are in full force and effect. No material violations have been alleged in
writing by any governmental authority or agency, whether federal, state, local
or foreign, and no proceeding is pending or, to the knowledge of Parent,
threatened, to revoke, suspend, cancel or limit a Permit, which revocation or
similar action would be expected to have a Material Adverse Effect on
Subsidiary. No action by any of the parties hereto is required in order that
all Permits will remain in full force and effect immediately after the Closing.
Section 5.18 Employee Relations. Subsidiary has approximately 160
------------------
employees. No union or other collective bargaining unit has been certified or
recognized by Subsidiary as representing any of its employees and, to the
knowledge of Parent, no union organizing efforts have been conducted within the
last five years or are now being conducted. Subsidiary has not at any time
during the last five years had, nor, to the knowledge of Parent, is there now
threatened, a strike, picket, work stoppage, work slowdown or other labor
trouble. Subsidiary has complied in all material respects with all applicable
laws, rules and regulations relating to the employment of labor, including,
without limitation, those relating to wages, hours,
32
<PAGE>
employment practices, terms and conditions of employment, collective bargaining,
equal opportunity or similar laws and the payment and withholding of taxes, and
Subsidiary has withheld all amounts required by law or agreement to be withheld
from the wages or salaries of its employees and is not liable for any arrears of
wages or other taxes or penalties for failure to comply with any of the
foregoing. There are no material claims, suits, actions, proceedings or
controversies pending or, to the knowledge of Parent, threatened between
Subsidiary and any of its employees, and, to the knowledge of Parent, no basis
exists for the making of any claim, suit, action or proceeding against
Subsidiary in respect of sexual harassment or discrimination based on sex, age,
race, disability or sexual orientation.
Section 5.19 Investment Intent. Parent is purchasing or acquiring the
-----------------
Purchase Shares for its own account for investment and not with a present view
to, or for sale in connection with, any distribution thereof in violation of the
Securities Act. Subject to compliance with the HSR Act, the purchase of the
Purchase Shares by Parent hereunder is legally permitted by all laws and
regulations to which Parent is subject.
ARTICLE 6
COVENANTS
Section 6.1 Conduct of Business of the Company, Agrigenetics and
----------------------------------------------------
Subsidiary. Except as otherwise expressly provided in this Agreement, during
- ----------
the period from the date hereof to the Closing, the Company, Agrigenetics and
their respective subsidiaries and Subsidiary will each conduct its operations
according to its ordinary course of business consistent with past practice, and
the Company, Agrigenetics and their respective subsidiaries and Subsidiary will
each use its best efforts to preserve intact its business organization, to keep
available the services of its officers and employees and to maintain existing
relationships with licensors, licensees, suppliers, contractors, distributors,
customers and others having business relationships with it. Without limiting
the generality of the foregoing, and except as otherwise expressly provided in
this Agreement, prior to the Closing, neither the Company and Agrigenetics on
the one hand, nor Subsidiary on the other hand, will, except, with the prior
written consent of the other:
6.1.1 amend or propose to amend its certificate or articles of
incorporation or by-laws or equivalent organizational documents;
6.1.2 authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments,
33
<PAGE>
subscriptions, rights to purchase or otherwise) any stock of any class or any
other securities or equity equivalents (including, without limitation, stock
appreciation rights), except, in the case of the Company, pursuant to any
Company Plan as in effect as of the date hereof or upon any conversion of Series
A Convertible Preferred Stock or upon exercise of the Investor's Conversion
Right, or amend any of the terms of any such securities or agreements
outstanding as of the date hereof;
6.1.3 split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock, or property or any combination thereof) in respect of its capital stock
(other than dividends or distributions by a directly or indirectly wholly owned
subsidiary of the Company), or redeem, repurchase or otherwise acquire any of
its securities or any securities of its subsidiaries;
6.1.4 (i) incur any indebtedness for borrowed money or issue any debt
securities or, except in the ordinary course of business consistent with past
practice, assume, guarantee or endorse the obligations of any other person; (ii)
except as the Company has previously informed Parent in writing, make any loans,
advances or capital contributions to, or investments in, any other person (other
than, in the case of the Company, to subsidiaries of the Company); (iii) pledge
or otherwise encumber shares of its capital stock or of its subsidiaries; or
(iv) except in the ordinary course of business consistent with past practice,
mortgage or pledge any of its assets, tangible or intangible, or create or
suffer to exist any Lien thereupon;
6.1.5 enter into, adopt or (except as may be required by law) amend
or terminate any bonus, profit sharing, compensation, severance, termination,
stock appreciation right, restricted stock, performance unit, stock equivalent,
stock purchase agreement, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreement, trust, plan, fund or
other arrangement for the benefit or welfare of any director, officer or
employee, increase in any manner the compensation or benefits of any director,
officer or employee or pay any benefit not required by any plan or arrangement
as in effect as of the date hereof (including, without limitation, the granting
of stock options, restricted stock, stock appreciation rights or performance
units); provided, however, the Company may adopt, amend or enter into (i)
-------- -------
employee stock option plans or agreements up to the limit described in Section
6.16.2 or (ii) in the case of employees who are not officers or directors,
provision for normal compensation increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense;
34
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6.1.6 acquire, sell, lease or dispose of any assets outside the
ordinary course of business or any assets which in the aggregate are material to
the Company and Agrigenetics on the one hand or Subsidiary on the other hand, or
enter into any contract, agreement, commitment or transaction outside the
ordinary course of business consistent with past practice;
6.1.7 change any of the accounting principles or practices used by
it;
6.1.8 (i) acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof; (ii) authorize any new capital expenditure or expenditures
which, individually, is in excess of $500,000 or, in the aggregate, are in
excess of $2,000,000 (in the case of the Company, other than capital
expenditures heretofore approved by the management of the Company in the
aggregate amount of $5,400,000 and additional capital expenditures that may be
approved by management of the Company to upgrade the production facilities which
shall not exceed $3,700,000; (iii) settle any litigation involving payments in
excess of $50,000 individually or $200,000 in the aggregate; or (iv) enter into
or amend any contract, agreement, commitment or arrangement with respect to any
of the foregoing;
6.1.9 make any tax election or settle or compromise any tax
liability;
6.1.10 pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in its financial statements
(or the notes thereto) or incurred in the ordinary course of business consistent
with past practice;
6.1.11 in the case of the Company or its subsidiaries, terminate,
modify, amend or waive compliance with any provision of, any of the Significant
Agreements, or fail to take any action necessary to preserve the benefits of any
Significant Agreement to the Company or any of its subsidiaries, and in the case
of Subsidiary, terminate, modify, amend or waive compliance with any provision
of, any of the Subsidiary Agreements (except as described in Schedule 5.14), or
fail to take any action necessary to preserve the benefits to Subsidiary of any
Subsidiary Agreements; or
6.1.12 except, in the case of the Company or its subsidiaries, as may
arise out of the discussions currently in progress that have been previously
disclosed to Parent in writing, enter into any licensing agreements, technical
35
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collaborations with third parties or any other similar transactions outside of
the ordinary course of business;
6.1.13 take, or agree in writing or otherwise to take, any of the
actions described above in this Section 6.1 or any action which would make any
of the representations or warranties of the Company or of Parent contained in
this Agreement untrue or incorrect or would result in any of the conditions
hereunder not being satisfied.
Section 6.2 Qualified Stock Purchase. The parties agree that the sale of
------------------------
the Subsidiary Shares in exchange for the Seed Purchase Shares and the
Promissory Note is intended to constitute a "qualified stock purchase" within
the meaning of Section 338 (d)(3) of the Code and the parties will not take any
positions inconsistent with that intention in any Return or Subsidiary Return.
Section 6.3 Access to Information and Facilities.
------------------------------------
6.3.1 Subject to applicable law, for a period of 90 days from the
date hereof, upon reasonable notice, the Company will give each of Parent and
its counsel, financial advisors, auditors, consultants and other authorized
representatives reasonable access to all senior management, outside accountants
and other experts and to all properties and books and records of the Company and
its subsidiaries, and the Company will permit each of Parent and its counsel,
financial advisors, auditors, consultants and other authorized representatives
to make such inspections of the foregoing properties, books and records as
Parent may reasonably require and will cause the Company's officers and those of
its subsidiaries to furnish Parent or its authorized representatives with such
financial and operating data and other information with respect to the business
and properties of the Company and any of its subsidiaries as Parent may
reasonably request. Any such access will be provided, and all such inspections
will be conducted, at reasonable times and in such a manner so as not to
interfere unreasonably with the operation of the business of the Company or its
subsidiaries. No investigation pursuant to this Section 6.3.1 will affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereunder. Information supplied and access granted
under this Section 6.3.1 will be subject to the Confidentiality Agreement.
6.3.2 Subject to applicable law, between the date hereof and the
Closing, upon reasonable notice, Subsidiary will give each of the Company and
its counsel, financial advisors, auditors, consultants and other authorized
representatives reasonable access to all senior management, outside accountants
and other experts and to all properties and books and records of Subsidiary, and
Subsidiary will permit each of the Company and
36
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its counsel, financial advisors, auditors, consultants and other authorized
representatives to make such inspections of the foregoing properties, books and
records as the Company may reasonably require and will cause Subsidiary's
officers and those of its subsidiaries to furnish the Company or its authorized
representatives with such financial and operating data and other information
with respect to the business and properties of Subsidiary as the Company may
reasonably request. Any such access will be provided, and all such inspections
will be conducted, at reasonable times and in such a manner so as not to
interfere unreasonably with the operation of the business of Subsidiary. No
investigation pursuant to this Section 6.3.2 will affect any representations or
warranties of the parties herein or the conditions to the obligations of the
parties hereunder. Information supplied and access granted under this Section
6.3.2 will be subject to the Confidentiality Agreement.
Section 6.4 Reasonable Best Efforts. Subject to the terms and conditions
-----------------------
herein provided, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, Parent,
Subsidiary, the Company and Agrigenetics will cooperate with one another (i) in
the preparation and filing of any required filings under the HSR Act; (ii) in
determining whether action by or in respect of, or filing with, any governmental
body, agency, official or authority (either domestic or foreign) is required,
proper or advisable or any actions, consents, waivers or approvals are required
to be obtained from parties to any contracts, in connection with the
transactions contemplated by this Agreement and taking into account the
transactions contemplated by the Stock Purchase Agreement; and (iii) in seeking
to obtain on a timely basis any such actions, consents and waivers and to make
any such filings. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party hereto will take all such necessary action.
Section 6.5 Public Announcements. Parent and Subsidiary, one the one
--------------------
hand, and the Company and Agrigenetics, on the other hand, will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
the Stock Purchase Agreement, and will not issue any such press release or make
any such public statement prior to such consultation, except as may be required
by applicable law or by applicable rules of any securities exchange or inter-
dealer quotation system.
37
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Section 6.6 Indemnification of Subsidiary, Directors, Officers, Employees
-------------------------------------------------------------
and Agents. The Company and Agrigenetics agree that all rights to
- ----------
indemnification existing in favor of the present or former directors, officers,
employees and agents of Subsidiary as provided in Subsidiary's Certificate of
Incorporation or By-Laws as in effect as of the date hereof with respect to
matters occurring prior to the Closing will survive the Closing and will
continue in full force and effect for a period of not less than five years.
Section 6.7 Notification of Certain Matters. The Company and Agrigenetics
-------------------------------
will give prompt notice to Parent and Subsidiary, and Parent and Subsidiary will
give prompt notice to the Company and Agrigenetics, of (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which would
be likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate and (ii) any failure of the Company, Agrigenetics,
Parent or Subsidiary, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, that the delivery of any notice pursuant to this Section
--------
6.7 will not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
Section 6.8 No Solicitation.
---------------
6.8.1 The Company will immediately cease any existing discussions or
negotiations with any third parties conducted prior to the date hereof with
respect to any Acquisition Proposal (as defined below). The Company will not,
directly or indirectly, through any officer, director, employee, representative
or agent or any of its subsidiaries, (i) solicit, initiate, or encourage any
inquiries or proposals that constitute, or could reasonably be expected to lead
to, a proposal or offer for a merger, consolidation, business combination, sale
of substantial assets, sale of shares of capital stock (including, without
limitation, by way of a tender offer) or similar transactions involving the
acquisition, in any manner, directly or indirectly, of a material equity
interest in or a material amount of voting securities or assets of the Company,
Agrigenetics or any of their respective subsidiaries, other than the
transactions contemplated by this Agreement (any of the foregoing inquiries or
proposals being referred to in this Agreement as an "Acquisition Proposal"),
(ii) engage in negotiations or discussions concerning, or provide any non-public
information to any person or entity relating to, any Acquisition Proposal, or
(iii) agree to, approve or recommend any Acquisition Proposal; provided, that
--------
nothing contained in this Section 6.8 will prevent the Company from (A)
furnishing information to, or entering into discussions or negotiations with,
any person in connection with an unsolicited bona fide written Acquisition
Proposal by such person or recommending an Acquisition Proposal
38
<PAGE>
to the stockholders of the Company or entering into an agreement with respect to
an Acquisition Proposal or terminating this Agreement, if and only to the extent
that the Board determines in good faith after consultation with outside legal
counsel that such action is necessary for the Board to comply with its fiduciary
duties to stockholders under applicable law and prior to furnishing such
information to, or entering into discussions or negotiations with, such person,
the Board receives from such person an executed confidentiality agreement in
form customary for transactions of such nature, and the Company may do the
foregoing without any liability for breach of this Agreement; and (B) complying
with Rules 14D-9 and 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal.
6.8.2 The Company will notify Parent immediately (and no later than
24 hours) after receipt by the Company of any Acquisition Proposal or any
request for non-public information in connection with an Acquisition Proposal or
for access to the properties, books or records of the Company, Agrigenetics or
any of their respective subsidiaries by any person or entity that informs the
Company that it is considering making, or has made, an Acquisition Proposal.
Such notice will be made orally and in writing and will indicate in reasonable
detail the identity of the offeror and the terms and conditions of such
proposal, inquiry or contract.
Section 6.9 Pre-Closing Restrictions on Stock Acquisitions. From the date
----------------------------------------------
of this Agreement until the Closing, neither Parent nor any of its affiliates
will, directly or indirectly, acquire or propose to acquire any shares of Common
Stock other than pursuant to this Agreement or the Stock Purchase Agreement or
any amendments hereto or thereto, unless, on or after the date of this
Agreement, (a) any person or group of persons other than (1) any person
specified in Rule 13d-1(b)(1)(i) and (ii) under the Exchange Act or (2) any
person who does not own 10% or more of the outstanding shares of Common Stock as
of the date of this Agreement, acquires beneficial ownership of shares of Common
Stock representing 10% or more of the then total outstanding shares of Common
Stock, (b) any beneficial owner, other than any person specified in Rule 13d-
1(b)(1)(i) and (ii) under the Exchange Act, of the Company who beneficially
owned 10% or more of the outstanding shares of Common Stock as of the date of
this Agreement acquires beneficial ownership of additional shares of Common
Stock representing 2% or more of the outstanding shares of Common Stock, (c) any
person or group of persons other than Parent or any of its affiliates commences
or makes a public announcement of an intention to commence a tender offer to
acquire 10% or more of the then total outstanding shares of Common Stock, (d)
any person or group of persons other than Parent or any of its affiliates makes
an Acquisition Proposal relating to shares of Common Stock representing 40% or
more of the then outstanding shares of Common Stock, which Acquisition
39
<PAGE>
Proposal is not conditioned on obtaining financing or financing commitments, or
(e) the Company enters into an agreement with any person pursuant to the proviso
in Section 6.8.1 or this Agreement has been terminated.
Section 6.10 Rights Agreement. Unless this Agreement and the Stock
----------------
Purchase Agreement have both been terminated according to their terms without
Parent or an affiliate, successor or assign of Parent having purchased any
shares of Common Stock under either this Agreement or the Stock Purchase
Agreement (collectively, "Double Termination"), the Company, from and after the
date of this Agreement (i) will take all necessary steps to ensure that the
Rights Agreement and the rights thereunder will not prevent Parent or an
affiliate of Parent from acquiring or proposing to acquire some or all of the
outstanding shares of Common Stock and (ii) will not amend, interpret or enforce
the Rights Agreement or adopt any new shareholder rights agreement or other
similar agreement, plan or measure, if such amendment, interpretation,
enforcement or adoption would have an adverse effect on Parent or on the ability
of Parent or an affiliate to acquire or propose to acquire some or all of the
outstanding shares of Common Stock. If a Double Termination occurs the action
described in Section 4.5 may be revoked.
Section 6.11 Post-Closing Covenants of the Company.
-------------------------------------
6.11.1 Subject to Section 6.12, so long as Parent has the right to
nominate at least two members to the Board, the Company will not, without the
prior written approval of Parent, issue any shares of Common Stock or Common
Stock Equivalents except: (i) shares of Common Stock authorized and reserved as
of the date hereof for issuance pursuant to any Company Plan, (ii) not more than
an aggregate of 2,000,000 new Common Stock Equivalents issued to directors,
officers or employees pursuant to any employee benefit plans approved by the
Company during the 3 year period after the Measurement Date and (iii) not more
than an aggregate of 2,000,000 shares of Common Stock in exchange for the assets
or securities of one or more other persons. In the event that the Company at
any time after the date of this Agreement declares or pays a dividend on any
Company Security payable in shares of Common Stock, subdivides or splits the
outstanding Common Stock, combines or consolidates the outstanding Common Stock
into a smaller number of shares, effects a reverse split of the outstanding
shares, or issues any shares of Common Stock in an exchange, reclassification,
consolidation or merger, the 2,000,000 share limitations in (ii) and (iii) above
will be proportionately adjusted accordingly. Whenever the Company proposes to
issue any shares of Common Stock pursuant to this Section 6.11.1, the Company
will offer Parent the right, exercisable within 60 days of such offer, to
purchase at Market Value such number of additional shares of Common Stock from
the Company as will prevent the Total Percentage Interest of Parent
40
<PAGE>
from being reduced as a result of the proposed issuance of Common Stock. For
purposes of this Section 6.11, "Total Percentage Interest of Parent" means the
percentage of shares of Common Stock beneficially owned by Parent and its
affiliates, determined on the basis of the total number of shares of Common
Stock actually outstanding.
6.11.2 Subject to Section 6.12, but notwithstanding the limitations
in Section 6.11.1, following the second anniversary of the Measurement Date, the
Company may issue New Securities for cash provided that the Company will have
first afforded Parent a right of first refusal to purchase all of the New
Securities proposed to be issued for cash in accordance with this Section 6.11.2
(other than any New Securities issued to (i) officers, directors or employees or
the Company and any of its subsidiaries pursuant to any Company Plan or newly
created employee benefit plan, and (ii) Parent or any of its affiliates). If
the Company proposes to issue any New Securities for cash at any time following
the second anniversary of the Measurement Date, the Company will deliver to
Parent a written notice stating the number and kind of New Securities proposed
to be issued, the identities of the persons to whom the New Securities are
proposed to be issued, the proposed cash issue price of the New Securities and
the other terms and conditions upon which the New Securities are proposed to be
issued (a "Right of First Refusal Notice"). For a period of 20 business days
following the date of Parent's receipt of a Right of First Refusal Notice,
Parent will have the right to purchase the New Securities described in the Right
of First Refusal Notice in whole or in part at a cash price equal to the Market
Value (the "Right of First Refusal") by so notifying the Company in writing. If
Parent has not notified the Company in writing of its intention to exercise such
Right of First Refusal by the close of business on the 20th business day
following Parent's receipt of the Right of First Refusal Notice, the Company may
issue such New Securities for cash in the manner stated in the Right of First
Refusal Notice, or, if Parent has notified the Company in writing of its
intention to exercise such Right of First Refusal only in part, the Company may
thereafter issue for cash the portion of the New Securities not being purchased
by Parent or its affiliates in the manner stated in the Right of First Refusal
Notice. If, subsequent to the date of any Right of First Refusal Notice, the
Company proposes to issue the New Securities described in the Right of First
Refusal Notice at a different price or on terms and conditions otherwise
materially different from those described in the Right of First Refusal Notice,
the Company will deliver to Parent a new Right of First Refusal Notice
describing such terms and conditions and repeat the foregoing procedures. The
Company and Parent understand and acknowledge that the foregoing Right of First
Refusal is not intended to enforce a common law preemptive right and is entered
into as a matter of contract at arms'-length. If the Right of First Refusal is
deemed to be invalid or unenforceable, in whole
41
<PAGE>
or in part, by the final judgment of a court of competent jurisdiction, the
Company will, for a period of 30 days following the date of such final judgment,
offer Parent the right to purchase at Market Value such number of additional
shares of Common Stock from the Company as will prevent the Total Percentage
Interest of Parent represented by the Common Stock then beneficially owned by
Parent from being reduced as a result of the proposed issuance of New
Securities.
6.11.3 So long as Parent has the right to nominate at least two
members to the Board, the Company will not, without the prior written approval
of Parent, merge, consolidate, exchange, sell, lease, transfer or otherwise
dispose of (i) the Company's plant science business (the "Seed Business") or
(ii) the Company's crop protection business (the "Crop Business").
6.11.4 So long as Parent has the right to nominate at least two
members to the Board, the Company will not, without the prior written approval
of Parent, purchase, invest, lease or otherwise acquire securities or assets
which are not related to and for use in the Seed Business or the Crop Business.
6.11.5 After the Closing, the Company and Agrigenetics will use their
reasonable best efforts to cause Subsidiary to perform and comply with all of
its material contractual obligations existing as of the Closing, including such
obligations assigned by Parent to Subsidiary, where the failure of Subsidiary to
so perform and comply would result in actual damages or losses to Parent.
6.11.6 After the Closing, upon Parent's request, the Company will
establish a voluntary process by which Parent will be permitted to purchase
shares of Common Stock from participating employees of the Company upon the
exercise of employee stock options by such participating employees; provided,
--------
however, that Parent shall have no obligation to purchase any such shares of
- -------
Common Stock.
Section 6.12 Post-Closing Restrictions on Stock Acquisitions.
-----------------------------------------------
6.12.1 (a) For a period of 2 years from the Measurement Date, neither
Parent nor any of its affiliates will acquire or propose to acquire shares of
Common Stock from third parties which, when aggregated with all shares of Common
Stock beneficially owned by Parent and its affiliates other than any shares of
Common Stock which were acquired by Parent or any of its affiliates after the
Measurement Date directly from the Company or any of its subsidiaries or
employees, would constitute in excess of 60% of the then total outstanding
shares of Common Stock and (b) from the second anniversary of the Measurement
Date through the third anniversary of the Measurement Date, neither
42
<PAGE>
Parent nor any of its affiliates will acquire or propose to acquire shares of
Common Stock from third parties which, when aggregated with all shares of Common
Stock owned by Parent and its affiliates other than any shares of Common Stock
which were acquired by Parent or any of its affiliates after the Measurement
Date directly from the Company or any of its subsidiaries or employees, would
constitute in excess of 65% of the then total outstanding shares of Common
Stock; provided, however, that the foregoing restrictions will not apply if a
-------- -------
person or group other than Parent or its affiliates has made an Acquisition
Proposal in which it proposes to acquire 25% or more of the Company's then
outstanding shares of Common Stock or Common Stock Equivalents.
6.12.2 Except as provided in Section 6.13, at any time after the
Measurement Date, neither Parent nor any of its affiliates may acquire or
propose to acquire shares of Common Stock from persons, including the Company,
which, when aggregated with all shares of Common Stock then beneficially owned
by Parent and its affiliates, would constitute more than 79.9% of the then total
outstanding shares of Common Stock (taking into account in the calculation of
total outstanding shares of Common Stock any shares of Common Stock that the
Company issued or proposes to issue to Parent or any of its affiliates after the
Measurement Date).
Section 6.13 Buyout Transaction. Following the third anniversary of the
------------------
Measurement Date, Parent may increase its beneficial ownership of Common Stock
above 79.9% of the total outstanding shares of Common Stock only pursuant to a
Buyout Transaction complying with the following procedures:
6.13.1 If Parent is able to obtain the approval of a majority of the
Company's Independent Directors for a proposed Buyout Transaction after they
have received an opinion, satisfactory to them, from an internationally
recognized investment bank selected by the Independent Directors on the
aggregate Third Party Sale Value with respect to such Buyout Transaction, Parent
may proceed with such Buyout Transaction (in which event nothing in this
Agreement will prevent or impede such Buyout Transaction from proceeding or
being consummated and the Company will take all action reasonably necessary to
allow such transaction to proceed in accordance with the provisions hereof).
6.13.2 If pursuant to Section 6.13.1 Parent is not able to obtain the
approval of a majority of the Independent Directors for a proposed Buyout
Transaction within 60 days after such Buyout Transaction is first proposed to
the directors of the Company, Parent may either (a) withdraw such proposal or
(b) request arbitration of the amount of the Third Party Sale Value. Parent and
the Company will appoint an independent appraiser (which will be an
internationally recognized investment bank) mutually satisfactory to them that
will determine the aggregate
43
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Third Party Sale Value with respect to the proposed Buyout Transaction. If
Parent and the Company are unable to agree on a mutually acceptable appraiser
within such 15-day period, the Third Party Sale Value will be determined by an
independent appraiser (which will be an internationally recognized investment
bank) chosen by two other independent appraisers (which will be internationally
recognized investment banks), one of whom will be appointed by Parent and the
other of whom will be appointed by the Company or, if such two appraisers are
unable to agree on a third appraiser within seven days after the appointment of
the second of them, by the American Arbitration Association (or its successor);
provided, however, that if Parent or the Company will not have appointed its
- -------- -------
appraiser within 30 days after a request by Parent for determination of the
amount of the Third Party Sale Value, such determination will be made solely by
the appraiser selected by the other party. Parent and the Company may each
submit to the appraiser their respective positions on the Third Party Sale Value
and may also submit written and oral presentations to support their respective
positions. The appraiser will determine the aggregate amount of the Third Party
Sale Value. The appraiser will be directed to make its determination within 30
calendar days of appointment and such determination, when made, will be final
and binding with respect to the proposed Buyout Transaction.
6.13.3 Within 10 business days after the appropriate Third Party Sale
Value is determined pursuant to the procedures set forth above, Parent will
elect: (a) to proceed with a Buyout Transaction offering the Third Party Sale
Value Consideration payable in cash and/or marketable securities (in which event
nothing in this Agreement will prevent or impede such Buyout Transaction from
proceeding or being consummated and the Company will take all action reasonably
necessary to allow such transaction to proceed in accordance with the provisions
hereof, including obtaining the vote of the directors on the Board in favor of
such Buyout Transaction so as to obtain the requisite Board approval therefor);
or (b) to withdraw its proposal for a Buyout Transaction (in which event Parent
may not again propose a Buyout Transaction for a period of one year after such
withdrawal, unless it is invited to do so by the Company's Independent
Directors).
6.13.4 The fees and expenses of the appraiser will be divided equally
between Parent and the Company.
Section 6.14 Election of Directors.
---------------------
6.14.1 For a period of three years from and after the Measurement
Date, Parent and the Company will use their reasonable best efforts to cause the
following to occur: (i) at any time that Parent and its affiliates are the
beneficial owners
44
<PAGE>
of less than 20% of the then outstanding Common Stock, Parent will have the
right to designate for nomination one director to the Board; (ii) at any time
that Parent and its affiliates are the beneficial owners of less than 30% but in
any event not less than 20% of the then outstanding Common Stock, Parent will
have the right to designate for nomination two directors to the Board; (iii) at
any time that Parent and its affiliates are the beneficial owners of less than
50% but in any event not less than 30% of the then outstanding Common Stock, the
Company will cause the Board to consist of seven directors with three of such
directors to be designees of Parent, or, if the Board will for any reason
consist of a number of directors other than seven, with such number of directors
equal to the nearest whole number less than one-half times the total number of
directors to be designees of Parent; and (iv) at any time that Parent and its
affiliates are the beneficial owners of more than 50% of the then outstanding
Common Stock, the Company will cause the Board to consist of nine directors with
five of such directors to be designees of Parent, or, if the Board will for any
reason consist of a number of directors other than nine, with such number of
directors equal to the nearest whole number greater than one-half times the
total number of directors to be designees of Parent. The parties will use their
best efforts to obtain the resignations of all existing directors currently
serving at the designation of Investor prior to the closing of the transactions
contemplated by the Stock Purchase Agreement and to provide for the appointment
of Parent's designees, in order to effectuate the immediately preceding
sentence.
6.14.2 Parent's initial nominee to fill a particular seat on the
Board shall be entitled to any benefits or compensation then generally paid or
made available to new members of the Board. Any person subsequently nominated
by Parent to fill that particular seat on the Board after it has become vacant
for any reason (a "Replacement Director") shall not be entitled to any benefits
or compensation then generally paid or made available to new members of the
Board; provided, however, that such Replacement Director shall be entitled to
-------- -------
any benefits or compensation then generally paid or made available to incumbent
directors upon their reelection to the Board upon such Replacement Director's
reelection to the Board for terms following his or her initial term.
Section 6.15 Audited Financial Statements. Within 50 days after the
----------------------------
Closing, Parent will provide to the Company, a complete and correct copy of
audited financial statements of Subsidiary for the twelve-month periods ended
September 30, 1994 and September 30, 1995.
45
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Section 6.16 Benefit Plans.
-------------
6.16.1 Parent will assume or retain all liability for the payment of
any and all benefits accrued as of the Closing Date under any Subsidiary Plan
that is an unfunded deferred compensation plan, program, agreement or
arrangement or any "excess benefit plan" (as such term is defined in section
3(36) of ERISA).
6.16.2 Parent hereby agrees that, for a period of 3 years from the
Closing, it will vote the shares of Common Stock beneficially owned by it and
its affiliates and to cause its nominees on the Board to vote in favor of an
increase in the number of stock options and restricted stock awards issuable
under the Company Plans by up to a combined total of 2,000,000 new shares of
Common Stock (including any increase authorized by Section 6.1.5) for future
issuances under such Company Plans or newly created employee benefit plans,
subject to adjustment to reflect any stock split, recapitalization, stock
dividend or other similar event.
Section 6.17 Post-Closing Human Resources Matters.
------------------------------------
6.17.1 Parent and Company will form a transition steering committee
(the "Steering Committee") that will have responsibility for overseeing the
integration of Subsidiary and its employees with the Company and its
subsidiaries and employees. The Steering Committee will consist of 4 members, 2
of whom will be appointed by the Company and 2 of whom will be appointed by
Parent. Any Steering Committee action will require the unanimous consent of all
of the members. The Steering Committee will be effective immediately after the
Closing and may be discontinued at any time upon the mutual agreement of the
Company and Parent, but in no event will it exist beyond 12 months after the
Closing.
6.17.2 The Company and its subsidiaries will not implement any job
elimination programs that may impact current Subsidiary employees who have
satisfactory job performance without the approval of the Steering Committee for
as long as such committee is in existence. Any separations involving Subsidiary
personnel will be based on severance compensation policies approved by the
Steering Committee, with the Subsidiary personnel receiving credit for their
years of service with Subsidiary. For as long as the Steering Committee is in
existence, the committee will review modifications to the compensation and
benefits policies and programs offered to Subsidiary personnel.
Section 6.18 Strategic Review Committee. Parent and the Company will form
--------------------------
a Strategic Review Team to meet quarterly and on an "as-needed" basis to develop
and review (i) the strategic
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direction of the Company and its Subsidiaries and their projects, and (ii) the
tactics employed to pursue such strategic objectives. The Strategic Review Team
may from time-to-time designate subteams or specific personnel to review
technical, intellectual property, and financial issues that impact or support
the strategic direction of the Company and its Subsidiaries and their projects.
Section 6.19 Technology Agreement. The Company, Agrigenetics and Parent
--------------------
will execute and deliver the Technology Agreement at the Closing.
ARTICLE 7
CONDITIONS
Section 7.1 Conditions to Each Party's Obligations. The respective
--------------------------------------
obligations of each party hereto to effect the Transaction is subject to the
satisfaction or, if appropriate, waiver at or prior to the Closing of the
following conditions:
7.1.1 There will not be in effect any order, decree or ruling or
other action restraining, enjoining or otherwise prohibiting the Transaction, or
the purchase of the Investor Interests by Parent, which order, decree, ruling or
action will have been issued or taken by any court of competent jurisdiction or
other governmental body located or having jurisdiction within the United States
or any country or economic region in which the Company or any of its
subsidiaries or Parent or any of its affiliates, directly or indirectly, has
material assets or operations.
7.1.2 Any waiting period under the HSR Act applicable to the
transactions contemplated by this Agreement or the Stock Purchase Agreement will
have terminated or expired and there will have been no material modification to
the terms of the transactions contemplated by this Agreement or the Stock
Purchase Agreement.
Section 7.2 Conditions to the Obligation of Parent and Subsidiary. The
-----------------------------------------------------
obligations of Parent and Subsidiary to effect the Transaction is subject to the
satisfaction or, if appropriate, waiver at or prior to the Closing of the
following further conditions:
7.2.1 Provision will have been made to the reasonable satisfaction of
Parent that the Board will have the composition described in Section 6.14
immediately following the Closing.
7.2.2 The Stock Purchase Agreement will not have been terminated.
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7.2.3 The Company and Agrigenetics will have performed in all
material respects their respective covenants, agreements and obligations under
this Agreement to the date of the Closing.
7.2.4 Except as otherwise contemplated by this Agreement, the
representations and warranties of the Company contained in this Agreement which
are qualified as to materiality will be true and correct and which are not so
qualified will be true and correct in all material respects, in each case, as of
the date when made and at and as of the Closing as though newly made at and as
of that time, except that representations and warranties made as of a particular
date need only be so true and correct as of such date.
7.2.5 The Company will have delivered to Parent a certificate dated
as of the Closing and signed by the President and Chief Financial Officer of the
Company certifying as to (i) the accuracy, as of the date when made and at and
as of the Closing as though newly made at and as of that time, of the
representations and warranties of the Company contained in this Agreement which
are qualified as to materiality (except that representations and warranties made
as of a particular date need only be so accurate as of such date), (ii) the
accuracy, as of the date when made and at and as of the Closing as though newly
made at and as of that time, in all material respects of the representations and
warranties of the Company contained in this Agreement which are not so qualified
(except that representations and warranties made as of a particular date need
only be so accurate as of such date), and (iii) the performance in all material
respects of the obligations required by the Company and Agrigenetics to be
performed under this Agreement as of the Closing.
7.2.6 The Company and Agrigenetics will have delivered, or will be
delivering concurrently with the Closing, the Purchase Shares, the Promissory
Note and the documents and instruments required to be delivered by the Company
and Agrigenetics pursuant to Section 3.3.
Section 7.3 Conditions to the Obligations of the Company and Agrigenetics.
-------------------------------------------------------------
The obligations of the Company and Agrigenetics to effect the Transaction is
subject to the satisfaction or, if appropriate, waiver at or prior to the
Closing of the following further conditions:
7.3.1 Parent and Subsidiary will have performed in all material
respects their respective covenants, agreements and obligations under this
Agreement to the date of the Closing.
7.3.2 Except as otherwise contemplated by this Agreement, the
representations and warranties of Parent contained in this Agreement which are
qualified as to materiality will be
48
<PAGE>
true and correct and which are not so qualified will be true and correct in all
material respects, in each case, as of the date when made and at and as of the
Closing as though newly made at and as of that time, except that representations
and warranties made as of a particular date need only be so true and correct as
of such date.
7.3.3 Parent will have delivered to the Company a certificate dated
as of the Closing and signed by the Chief Financial Officer and General Counsel
of Parent certifying as to (i) the accuracy, as of the date when made and at and
as of the Closing as though newly made at and as of that time, of the
representations and warranties of Parent contained in this Agreement which are
qualified as to materiality (except that representations and warranties made as
of a particular date need only be so accurate as of such date), (ii) the
accuracy, as of the date when made and at and as of the Closing as though newly
made at and as of that time, in all material respects of the representations and
warranties of Parent contained in this Agreement which are not so qualified
(except that representations and warranties made as of a particular date need
only be so accurate as of such date), and (iii) the performance in all material
respects of the obligations required by Parent and Subsidiary to be performed
under this Agreement as of the Closing.
7.3.4 Parent will have delivered, or will be delivering concurrently
with the Closing, the Subsidiary Shares, the Cash Payment and the documents and
instruments required to be delivered by Parent pursuant to Section 3.2.
ARTICLE 8
TERMINATION; AMENDMENT; WAIVER
Section 8.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Closing:
8.1.1 By mutual written consent of the Company, Agrigenetics, Parent
and Subsidiary.
8.1.2 By Parent or the Company if the Closing has not occurred prior
to April 30, 1996 unless such failure is solely a result of the failure to
satisfy the condition set forth in Section 7.1.2 on or prior to April 30, 1996,
in which event, by Parent or the Company if the Closing has not occurred prior
to July 31, 1996.
8.1.3 By Parent or the Company if any court of competent jurisdiction
or other governmental body located or having jurisdiction within the United
States or any country or
49
<PAGE>
economic region in which the Company or any of its subsidiaries or Parent or any
of the affiliates, directly or indirectly, has material assets or operations,
will have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Transaction and such order,
decree, ruling or other action will have become final and nonappealable.
8.1.4 By Parent if any court of competent jurisdiction or other
governmental body located or having jurisdiction within the United States or any
country or economic region in which the Company or any of its subsidiaries,
Parent or any of the affiliates or Investor or any of its affiliates, directly
or indirectly, has material assets or operations, will have issued an order,
decree or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the sale and purchase of the Investor Interests and such order,
decree, ruling or other action will have become final and nonappealable.
8.1.5 By Parent if (i) there will have been a material breach of any
representation or warranty of the Company contained herein or of Investor
contained in the Stock Purchase Agreement, or (ii) there will have been a
material breach of any covenant, agreement or obligation of the Company or
Agrigenetics contained herein or of Investor contained in the Stock Purchase
Agreement, in either the case of (i) or (ii) which will not have been cured
prior to 10 business days following notice of such breach.
8.1.6 By the Company if (i) there will have been a material breach of
any representation or warranty of Parent contained herein, (ii) there will have
been a material breach of any covenant, agreement or obligation of Parent, in
either the case of (i) or (ii) which will not have been cured prior to 10
business days following notice of such breach.
8.1.7 By Parent if the Stock Purchase Agreement will have terminated
without the consummation of the transactions contemplated thereby.
8.1.8 By Parent if the Board will have withdrawn or modified in a
manner adverse to Parent the Board's approval of this Agreement, the Transaction
or the approval of the transactions contemplated by the Stock Purchase Agreement
for the purpose of rendering the Rights Agreement inapplicable to the
transactions contemplated by the Stock Purchase Agreement, or the Company will
have indicated to Parent that the Company does not intend to consummate the
transactions contemplated by this Agreement or will have entered into an
agreement with respect to an Acquisition Proposal, or the Board will have
resolved to do any of the foregoing.
8.1.9 By the Company if and only to the extent that the Board has
determined in good faith after consultation with
50
<PAGE>
outside legal counsel that such action is necessary for the Board to comply with
its fiduciary duties to stockholders under applicable law.
Section 8.2 Effect of Termination. In the event of the termination of
---------------------
this Agreement pursuant to Section 8.1, the respective obligations of the
parties under this Agreement will terminate, except that, (i) if the Stock
Purchase Agreement has not been terminated according to its terms, the
provisions of Section 6.10, Section 6.11, Section 6.12 and Section 6.13 will
survive the termination of this Agreement, (ii) if Parent has purchased the
Investor Interests pursuant to the Stock Purchase Agreement, Section 6.14 will
survive the termination of this Agreement, (iii) this Section 8.2 will survive
the termination of this Agreement, and (iv) Section 8.3 will survive the
termination of this Agreement. Nothing contained in this Section 8.2 will
relieve any party from liability for any breach of this Agreement.
Section 8.3 Fees and Expenses. Each party will bear its own expenses and
-----------------
costs in connection with this Agreement and the transactions contemplated
hereby.
Section 8.4 Amendment. This Agreement may not be amended except by an
---------
instrument in writing signed by Parent and the Company. After the Closing, any
amendment to this Agreement must be approved by a majority of the Company's
Independent Directors in addition to a majority of the whole Board.
Section 8.5 Extension; Waiver. The Company and Agrigenetics, on the one
-----------------
hand, and Parent and Subsidiary, on the other hand, may (i) extend the time for
the performance of any of the obligations or other acts of the other party, (ii)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document, certificate or writing delivered pursuant
hereto, or (iii) waive compliance by the other party with any of the agreements
or conditions contained herein. Any agreement on the part of any party hereto
to any such extension or waiver will be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder will not constitute a waiver of such rights.
51
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ARTICLE 9
MISCELLANEOUS
Section 9.1 Survival of Representations and Warranties. Each of the
------------------------------------------
representations and warranties made herein will survive for a period of 24
months from the date of the Closing, provided, that the representations and
--------
warranties contained in Section 4.11 and Section 5.9 shall survive the Closing
and continue until the termination of any applicable statute of limitation. The
covenants and agreements herein will survive indefinitely.
Section 9.2 Indemnification.
---------------
9.2.1 The Company will indemnify and hold Parent and its affiliates
and any of their respective directors, officers, partners and affiliates of
partners, employees and agents (each, a "Parent Indemnified Party") harmless
from and against any and all losses, damages, claims, liabilities or obligations
(including interest, penalties, amounts paid in settlement and reasonable fees
and disbursements of attorneys) (collectively, the "Losses") (which, for the
purposes of this Section 9.2, will also include the reasonable fees and
disbursements of attorneys incurred by a Parent Indemnified Party in bringing a
claim under this Agreement, prosecuting its rights of indemnity in respect of
such claim and collecting any amounts awarded upon such claim) suffered,
sustained or incurred or required to be paid by any such Parent Indemnified
Party due to, based upon, arising out of or otherwise with respect to (i) any
breach of any representation, warranty, covenant, agreement or obligation of the
Company or Agrigenetics contained in this Agreement, (ii) any brokerage fees,
commissions or finders' fees payable on the basis of any action taken by the
Company or any of its affiliates and (iii) any Taxes or any liability with
respect to Taxes attributable to any merger of Subsidiary, any transfer of
assets of Subsidiary or any election with respect to Subsidiary pursuant to
Section 338(g) of the Code to the extent any of the foregoing occur after the
completion of the Transaction.
9.2.2 Parent will indemnify and hold the Company and its affiliates
and any of their respective directors, officers, employees and agents (each, a
"Company Indemnified Party") harmless from and against any and all Losses,
(which, for the purposes of this Section 9.2, will also include the reasonable
fees and disbursements of attorneys incurred by a Company Indemnified Party in
bringing a claim under this Agreement, prosecuting its rights of indemnity in
respect of such claim and collecting any amounts awarded upon such claim)
suffered, sustained or incurred or required to be paid by any such Company
Indemnified Party due to, based upon, arising out of or otherwise with respect
to (i) any breach of any representation, warranty,
52
<PAGE>
covenant, agreement or obligation of Parent or Subsidiary contained in this
Agreement and (ii) any brokerage fees, commissions or finders' fees payable on
the basis of any action taken by Parent or any of its affiliates.
9.2.3 If either a Parent Indemnified Party, on the one hand, or a
Company Indemnified Party, on the other hand, as the case may be (the
"Indemnitee"), receives written notice of any third party claim or potential
claim or the commencement of any action or proceeding which could give rise to
an obligation on the part of the Company, on the one hand, or Parent, on the
other hand, as the case may be, to provide indemnification (the "Indemnifying
Party") pursuant to Section 9.2.1 or 9.2.2, the Indemnitee will promptly give
the Indemnifying Party notice thereof (the "Indemnification Notice"); provided,
--------
that the failure to give the Indemnification Notice promptly will not impair the
Indemnitee's right to indemnification in respect of such claim, action or
proceeding unless, and only to the extent that, the lack of prompt notice
adversely affects the ability of the Indemnifying Party to defend against or
diminish the Losses arising out of such claim, action or proceeding. Delivery
of the Indemnification Notice will be a condition precedent to any liability of
the Indemnifying Party under the provisions for indemnification contained in
this Agreement. The Indemnification Notice will contain factual information (to
the extent known to the Indemnitee) describing the asserted claim in reasonable
detail and will include copies of any notice or other document received from any
third party in respect of any such asserted claim. The Indemnifying Party will
have the right to assume the defense of a third party claim or suit described in
this Section 9.2.3 at its own cost and expense and with counsel of its own
choosing; provided, however, that, the Indemnitee is kept fully informed of all
-------- -------
developments and is furnished copies of all papers; the Indemnitee is given the
opportunity, at its option, to participate at its own cost and expense and with
counsel of its own choosing (which will be reasonably satisfactory to the
Indemnifying Party) in the defense of such claim or suit; and the Indemnifying
party diligently prosecutes the defense of such claim or suit. In the event
that all of the conditions of the foregoing provision are not satisfied, the
Indemnitee will have the right, without impairing any of its rights to
indemnification as provided herein, to assume and control the defense of such
claim or suit and to settle such claim or suit. No settlement of any such third
party claim or suit will be made by the Indemnifying Party without the prior
written consent of the Indemnitee (which will not be unreasonably withheld). No
settlement of any such third party claim or suit will be made by the Indemnitee
if the Indemnifying Party will have assumed the defense thereof and will be in
compliance with its obligations with respect thereto as set forth above in this
Section 9.2.3. If the Indemnifying Party chooses to defend any claim, the
Indemnitee will make available to the Indemnifying Party any
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<PAGE>
books, records or other documents within its control that are necessary or
appropriate for such defense. Notwithstanding the foregoing, the Indemnitee will
have the right to employ separate counsel at the Indemnifying Party's expense
and to control its own defense of such asserted liability if in the reasonable
opinion of counsel to such Indemnitee (i) there are or may be legal defenses
available to such Indemnitee or to other Indemnitees that are different from or
additional to those available to the Indemnifying Party, or (ii) a conflict or
potential conflict exists between the Indemnifying Party and such Indemnitee
that would make such separate representation advisable.
9.2.4 The indemnification contained in Section 9.2 shall not apply to
the extent that a loss has been reimbursed pursuant to the Adjustment.
Section 9.3 Entire Agreement; Assignment. This Agreement, the
----------------------------
Confidentiality Agreement and the Technology Agreement (i) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersede all other prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof and (ii) will not be
assigned by operation of law or otherwise; provided that Parent may assign its
--------
rights and obligations in whole or in part (other than the rights of Parent to
nominate directors to the Board pursuant to Section 6.14) to any affiliate of
Parent, but no such assignment will relieve Parent of its obligations hereunder
if such assignee does not perform such obligations. This Agreement shall inure
to the benefit of and be binding upon Parent's successors and permitted assigns.
Section 9.4 Notices. All notices, requests, claims, demands and other
-------
communications hereunder will be in writing and will be given (and will be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
or by registered or certified mail (postage prepaid, return receipt requested),
to the other party as follows:
if to the Company or Agrigenetics:
Mycogen Corporation
5501 Oberlin Drive
San Diego, California 92121-1718
Fax: (619) 453-0142
Attention: President and Chief Operating Officer
54
<PAGE>
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Fax: 212-373-2085
Attention: Judith R. Thoyer
if to Parent or Subsidiary, to:
DowElanco
9330 Zionsville Road
Indianapolis, IN 46268
Fax: (317) 337-6954
Attention: General Counsel
with a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
Fax: 312-701-7711
Attention: Scott J. Davis
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
Section 9.5 Governing Law. This Agreement will be governed by and
-------------
construed in accordance with the law of the State of Delaware, without regard to
the principles of conflicts of law thereof, except for the General Corporation
Law of the State of California, as applicable to the Company, and the laws
applicable with respect to fiduciary duties of the Board, which will be governed
by and construed in accordance with the law of the State of California, without
regard to the principles of conflicts of law thereof.
Section 9.6 Parties in Interest. This Agreement will be binding upon and
-------------------
inure solely to the benefit of each party hereto and its successors and
permitted assigns, and nothing in this Agreement, express or implied, is
intended to or will confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 9.7 Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties will be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
55
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Section 9.8 Severability. The provisions of this Agreement will be deemed
------------
severable and the invalidity or unenforceability of any provision will not
affect the validity and enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision will be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid and unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons, entities or circumstances will not be affected by
such invalidity or unenforceability, nor will such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
Section 9.9 Descriptive Headings. The descriptive headings herein are
--------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 9.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which will be deemed to be an original, but all of which
will constitute one and the same agreement.
56
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[INTENTIONALLY LEFT BLANK]
57
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its representatives thereunto duly authorized, all as
of the day and year first above written.
MYCOGEN CORPORATION
/s/ CARLTON J. EIBL
By:___________________________________
Name: Carlton J. Eibl
Title: Executive Vice President
Finance and Legal
AGRIGENETICS, INC.
/s/ CARLTON J. EIBL
By:___________________________________
Name: Carlton J. Eible
Title: Vice President, Assistant
Secretary and Treasurer
DOWELANCO
/s/ WILLIAM C. SCHMIDT
By:___________________________________
Name: William C. Schmidt
Title: Chief Financial Officer
UNITED AGRISEEDS, INC.
/s/ THOMAS R. WILTROUT
By:___________________________________
Name: Thomas R. Wiltrout
Title: President
58
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FOR IMMEDIATE RELEASE CONTACT: Gary Hamlin
- --------------------- DowElanco
FEBRUARY 20, 1996 (317) 337-4799
Greg D. Taylor
The Lubrizol Corporation
(216) 943-4200
Michael Sund
Mycogen Corporation
(619) 453-8030
MYCOGEN, DOWELANCO FINALIZE STRATEGIC ALLIANCE
INDIANAPOLIS -- DowElanco, Mycogen Corporation (Nasdaq: MYCO) and The
Lubrizol Corporation (NYSE: LZ) today completed transactions through which
Mycogen acquired DowElanco's United AgriSeeds seed business and DowElanco took
approximately a 46 percent equity stake in Mycogen.
Mycogen issued approximately 4.5 million shares of Mycogen common stock to
DowElanco in exchange for United AgriSeeds and cash. In a separate transaction,
DowElanco purchased all of the 9.5 million shares of Mycogen common stock owned
by Lubrizol. Mycogen also reacquired certain rights in oil seed technology from
SVO Specialty Products, Lubrizol's specialty oils subsidiary. DowElanco will
hold approximately 13.9 million of the 30.4 million outstanding shares of
Mycogen common stock, and may acquire additional Mycogen common shares within
certain restrictions.
"The key to this alliance is our shared commitment to agriculture," said
Jerry Caulder, Mycogen's chairman and chief executive officer. "That common
purpose and the power of biotechnology will produce many exciting innovations to
help farmers around the world meet the rapidly growing demand for food and
fiber."
John Hagaman, DowElanco's president and chief executive officer, said, "our
vision for DowElanco is leadership in global agriculture, and this new alliance
is a tangible example of DowElanco's movement toward new technology that will
shape the future."
Caulder said United AgriSeeds and Mycogen Seeds will create an entity that
had 1995 sales of more than $100 million and ranked third in U.S. seed corn
sales.
"We are bringing United AgriSeeds and Mycogen Seeds together for seed
production this year and will combine operations and sales for 1997," said Carl
Eibl, Mycogen's president and chief operating officer. "Mycogen now has a
strong operating platform to commercialize value-added biotechnology seed
traits."
Mycogen is a diversified agricultural biotechnology company that develops
and markets technology-based products and provides crop protection services to
control agricultural pests and improve food and fiber production. Mycogen Seeds
is a leader in developing crop plants with genetically enhanced pest-resistance.
It is now marketing the first hybrid seed corn genetically engineered with
Bacillus thuringiensis (Bt) genes that produce a protein that gives corn plants
built-in resistance to European corn borer, a major pest in corn production.
DowElanco, with global sales of $2 billion, is a research-based
agricultural and specialty pest management company with significant research
initiatives aimed at insect, weed and plant disease management.
# # #
