Exhibit 10.1
CALGENE II, INC. CREDIT FACILITY AGREEMENT
THIS AGREEMENT is made as of the _____ day of ____________, 1996, by and
between CALGENE II, INC., a Delaware corporation having its principal office in
Davis, California (the "Company"), and MONSANTO COMPANY, a Delaware corporation
with its main offices at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("Monsanto").
In consideration of the mutual benefits accruing to each of the parties,
the receipt and sufficiency of which are hereby acknowledged, and in further
consideration of the mutual performance of this Agreement, the parties hereto
agree as follows:
ARTICLE I
AMOUNT AND TERMS OF THE LOANS
Section 1.01. Loans. During the Commitment Period (hereinafter defined),
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Monsanto agrees, on the terms and conditions hereafter set forth, to make three
(3) one (1) year loans, totalling not more than $45,000,000, to the Company for
general corporate purposes from time to time after the date hereof, not to
exceed at any time outstanding Fifteen Million Dollars ($15,000,000), said sum
being the "Commitment." Within said limits and prior to the occurrence of an
Event of Default (hereinafter defined), the Company may borrow, repay and
reborrow under this Agreement, each such borrowing or reborrowing being referred
to herein as an "Advance." Each Advance shall be in an amount of not less than
One Hundred Thousand Dollars ($100,000) and shall be in increments of One
Hundred Thousand Dollars ($100,000). Each request for an Advance shall be made
in writing substantially in the form attached hereto as Exhibit A and
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incorporated herein or on such other forms acceptable to Monsanto or in any
other manner acceptable to Monsanto. Monsanto shall process each request for an
Advance as soon as reasonably practicable but no later than ten (10) working
days after receipt of the Company's request. Each of the Loans (hereinafter
defined) shall consist of no more than twelve (12) Advances. Upon fulfillment of
the applicable conditions set forth in Article II hereof and subject to the
provisions of this Agreement, Monsanto shall make such Advances available to the
Company by wire transfer or otherwise as reasonably directed by the Company, but
the Company agrees to reimburse Monsanto for all such wire and other transfer
costs incurred by Monsanto, and the Company shall bear all risks of delays or
nondelivery or misdelivery of any such funds so wired or otherwise transferred
other than those caused by Monsanto's negligence or failure to transfer such
funds in accordance with the Company's directions. Any Advance under this
Agreement shall be deemed made on the day that the Advance proceeds are wired or
otherwise transferred or, if the Advance proceeds are used to repay an
outstanding Loan, on the day such proceeds are so applied. All Advances made on
or after the date of this Agreement and before the first anniversary of this
Agreement shall be considered to be part of "Loan One"; all Advances made on or
after the first anniversary of this Agreement and before the second anniversary
of this Agreement shall be considered to be part of "Loan Two"; all Advances
made on or after the second anniversary of this Agreement and before the earlier
of the third anniversary of this Agreement and September 30, 1998, shall be
considered to be part of "Loan Three." Loan One, Loan Two and Loan Three shall
hereinafter be collectively referred to as the "Loans" and individually as a
"Loan." The "Commitment Period" means the period from the date of this Agreement
to the earlier of September 30, 1998, or the third anniversary of the execution
of this Agreement or the date Monsanto terminates its obligations to make
further Advances or Loans hereunder pursuant to Section 5.02 hereof. The Loans
made pursuant to this Agreement shall be supported by the joint and several
guaranty (the "Guaranty") of the subsidiaries of the Company which are listed on
Exhibit B hereto (the "Subsidiaries" or a "Subsidiary") in the form attached
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hereto as Exhibit C.
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Section 1.02. Notes. Each of the Loans shall be evidenced by a promissory
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note in the form of Exhibit D attached hereto (a "Note"), payable to the order
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of Monsanto and representing the obligation of the Company to pay the amount of
the aggregate unpaid principal amount of such Loans made by Monsanto, together
with interest on the principal amount outstanding from time to time, as provided
in this Agreement. Each Note shall provide that the Company shall pay all
outstanding principal and accrued interest to Monsanto on the first anniversary
of the date of such Note or, in the case of the Note
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evidencing Loan Three, on the earlier of September 30, 1998, or the first
anniversary of the date of such Note; provided, however, that the Company shall
have the option to convert the outstanding principal and accrued interest into
shares of the Company's common stock as provided in Section 1.06 hereof, subject
to Monsanto's right to require the Company to sell shares and pay cash (as
provided in such Section 1.06). The Notes evidencing Loan One, Loan Two and Loan
Three shall be dated as of the date of this Agreement, as of the first
anniversary of this Agreement and as of the second anniversary of this
Agreement, respectively.
Section 1.03. Interest Rate. The outstanding principal balance of the
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Loans from time to time shall bear interest at two percent (2%) above Citibank's
published prime rate ("Note Rate"). Interest shall be compounded daily and
adjusted quarterly on each January 1, April 1, July 1 and October 1 pursuant to
calculations performed by Monsanto.
Section 1.04. Effects of Event of Default or Potential Default.
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Notwithstanding the foregoing and in addition to the remedies set forth in
Sections 5.02 and 5.03 hereof, upon an Event of Default and so long as such
Event of Default shall continue or, if Monsanto shall have accelerated the
maturity date of the then outstanding Loans pursuant to Section 5.02 hereof,
until the Loans are repaid in full, the principal amount of all Loans then
outstanding, together with all interest then accrued, shall thereafter bear
interest at the Default Rate (hereinafter defined), with interest payable upon
demand. The "Default Rate" shall be the per annum rate equal to three percent
(3%) above the Note Rate that would otherwise be applicable and thereafter until
paid in full. During the continuance of an Event of Default, the Company shall
have no right to obtain any new Advances under this Agreement.
A "Potential Default" shall be an event which, solely but for the lapse of
time or the giving of notice, or both, would constitute an Event of Default. If
a Potential Default then exists and has not been waived in writing by Monsanto
and does not itself constitute or is not declared an Event of Default, the
Company shall have no right to borrow any additional money beyond the principal
amount of Loans then outstanding.
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Section 1.05. Miscellaneous Provisions Regarding Loan Payments and
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Interest. All payments on any Loan shall be made to Monsanto by wire transfer
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for deposit in Citibank, New York, New York, Account #▇▇▇▇▇▇▇▇ unless Monsanto
notifies Company of a different place for payments to be made. Loan One shall be
due and payable on the first anniversary of the Note evidencing Loan One or such
earlier date as all of the outstanding Loans have been declared due and payable
pursuant to Section 5.02 hereof. Loan Two shall be due and payable on the first
anniversary of the Note evidencing Loan Two or such earlier date as all of the
outstanding Loans have been declared due and payable pursuant to Section 5.02
hereof. Loan Three shall be due and payable on the earlier of September 30,
1998, or the first anniversary of the Note evidencing Loan Three or such earlier
date as all of the outstanding Loans have been declared due and payable pursuant
to Section 5.02 hereof. The date each Loan shall be due and payable shall
hereafter from time to time be referred to as the "Maturity Date" and,
collectively, as the "Maturity Dates." If Monsanto makes a new Loan hereunder on
a day on which the Company is required to or has elected to repay all or any
part of an outstanding Loan and the Company has not elected to exercise its
conversion rights under Section 1.06 hereof, Monsanto shall apply the proceeds
of this new Loan to make such repayment, and only an amount equal to the
difference (if any) between the amount being borrowed and the amount being
repaid shall be made available by Monsanto to the Company, as provided in
Section 1.01 hereof. All interest rates respecting any Loan hereunder are stated
on a per annum basis with a year of three hundred and sixty (360) days, and
interest is calculated on the actual number of days elapsed (including the first
day, but excluding the last day of any period for any Loan under this
Agreement). All Loans outstanding after their respective Maturity Dates or such
earlier date as all of the outstanding Loans have been declared due pursuant to
Section 5.02 hereof shall thereafter bear interest at the Default Rate on all
unpaid amounts until the Loans are fully paid.
Section 1.06 Right of Conversion in Lieu of Repayment. In lieu of
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repayment in cash of outstanding principal and accrued interest on each Maturity
Date, the Company, subject to Monsanto's right to require the Company to sell
shares and pay cash, as provided below, may elect to convert all or any portion
of the principal and accrued interest due under the applicable Loan into shares
of common stock of the Company at the average of the
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closing market prices for such shares during the thirty (30) trading days
immediately preceding the Maturity Date for such Loan (the "Average Market
Price"). In order to exercise its conversion rights, at least thirty (30) days
prior to the Maturity Date for a Loan, the Company shall send a written notice
(the "Conversion Notice") to Monsanto, stating that the Company intends to
exercise such conversion rights. The Conversion Notice shall specify the amount
of the principal and accrued interest that the Company intends to convert (the
"Conversion Amount").
Monsanto may, in its sole discretion and within five (5) business days
after its receipt of any Conversion Notice from the Company, give written notice
(the "Alternative Notice") to the Company, stating that all or any part of the
Conversion Amount set forth in such Conversion Notice (the "Alternative
Conversion Amount") shall be payable in cash. Upon receipt of an Alternative
Notice, (i) the Alternative Conversion Amount may no longer be converted into
shares of common stock of the Company (unless the Alternative Notice shall have
been withdrawn as provided below) and (ii) the difference, if any, between the
Conversion Amount and the Alternative Conversion Amount shall be converted into
shares of common stock of the Company in accordance with the terms of the
Conversion Notice and the applicable provisions of this Section 1.06. The
Company shall proceed promptly, using its best efforts and at its expense, to
take such actions as are necessary to effect the public sale of a number of
shares of its common stock (rounded to the next lowest full share) equal to the
Alternative Conversion Amount divided by the Average Market Price (the
"Offering"). The Alternative Conversion Amount shall be due and payable to
Monsanto in cash on the closing date for the Offering. On such closing date,
the net proceeds of such Offering shall be paid by the Company to Monsanto in
full payment and satisfaction of such Alternative Conversion Amount, even if
such net proceeds are less than or greater than such Alternative Conversion
Amount.
If the Offering has not closed within sixty (60) days after the Company's
receipt of an Alternative Notice, Monsanto may, thereafter and in its sole
discretion, withdraw its Alternative Notice at any time. If Monsanto withdraws
an Alternative Notice, then, within five (5) business days thereafter, the
Company shall issue to Monsanto a number of shares of
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common stock of the Company (rounded to the next lowest full share) equal to the
Alternative Conversion Amount divided by the Average Market Price.
If (i) the Company properly notifies Monsanto as provided above in this
Section 1.06 and (ii) Monsanto does not give an Alternative Notice for the full
Conversion Amount, then, within five (5) business days after the Maturity Date
for a Loan, the Company shall issue to Monsanto a number of shares of common
stock of the Company (rounded to the next lowest full share) equal to the
Conversion Amount (or the difference between the Conversion Amount and
Alternative Conversion Amount, as applicable) divided by the Average Market
Price.
Any portion of the Conversion Amount not converted as provided above (i.e.,
because such amount would require conversion into a fractional share) shall be
paid to Monsanto by wire transfer as set forth above. Upon any such conversion,
the amount converted shall first be applied to reduce the accrued interest due
on the Loan as of the Maturity Date, and any remaining portion of the amount
converted shall be applied to reduce the principal due on such Loan.
Each time the Company issues shares of its common stock (including any
shares issued pursuant to Section 5.03 hereof) to Monsanto, it shall deliver to
Monsanto an opinion from counsel to the Company in a form reasonably
satisfactory to Monsanto relating to the issuance of such shares.
Notwithstanding anything to the contrary contained in this Agreement, on
each Maturity Date, all outstanding principal and accrued interest not to be
repaid, or converted by the Company to shares of common stock of the Company, in
accordance with this Section 1.06 shall be repaid in full to Monsanto in
accordance with Section 1.05 hereof.
Section 1.07. Prepayments. The Loans may be prepaid in whole or in part
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at any time after giving at least three (3) days' prior written notice to
Monsanto.
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Section 1.08. Approved Persons. All requests for Advances (including any
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requests for continuation of Loans) shall be made by an Approved Person
(hereinafter defined). An "Approved Person" shall be any person designated in
writing from time to time by the Company who is authorized to make requests for
Advances in the name of the Company hereunder. Unless Monsanto otherwise agrees,
there shall not be more than three (3) Approved Persons at any one time nor
shall any Approved Person have his or her office located at any place other than
the Company's main office in Davis, California, but the Company shall have the
right to change the persons so designated upon written notice thereof to
Monsanto. Any such designation shall be executed by the President or the Chief
Financial Officer of the Company and shall contain a specimen signature of the
Approved Person. Monsanto shall be entitled to rely on any direction by an
Approved Person regarding the making of Advances or the transfer of funds
hereunder, or any such direction that Monsanto believes to be made by the
Approved Person, whether such direction be received by telephone, by facsimile
transmission, by TELEX, by mail or otherwise.
ARTICLE II
CONDITIONS OF LENDING
Section 2.01. Conditions Precedent to Loan One. The obligation of
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Monsanto to make the first Advance under Loan One is subject to the following
conditions precedent that:
(a) Acquisition Agreement Conditions. All of the conditions set forth
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in Section 8.2 of the Agreement and Plan of Reorganization("Acquisition
Agreement") between Monsanto and Calgene, Inc. ("Calgene"), dated October 13,
1995 must be fulfilled (or waived in writing by Monsanto) and all the documents
that Calgene or the Company is required to deliver to Monsanto pursuant to such
Section 8.2 must be delivered (or waived in writing by Monsanto).
(b) Documents. Monsanto shall receive the following, each dated the
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date hereof or such other date as may be specifically permitted, in form and
substance satisfactory to Monsanto:
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(i) Note. The Note for Loan One, duly executed by the
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Company.
(ii) Guaranty. The Guaranty, duly executed by all the
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Subsidiaries.
(iii) Other Approvals. Such other approvals,
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resolutions, opinions or documents, as Monsanto may reasonably request.
Section 2.02. Conditions Precedent to Each Advance. The obligation
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of Monsanto to make any Advances under Loan One, Loan Two or Loan Three shall be
subject to the further conditions precedent that, on the funding date, (i) all
representations and warranties of the Company and the Subsidiaries contained in
this Agreement and the Guaranty shall be true, correct, accurate and complete in
all material respects as if made on such date (except (A) to the extent such
representations speak as of an earlier date or (B) for changes arising from
events permitted by the covenants specified in this Agreement), (ii) all
covenants specified in this Agreement shall have been complied with in all
material respects, (iii) no event shall have occurred and be continuing, or
would result from such Advance, which constitutes an Event of Default or
Potential Default, (iv) there shall not be initiated against the Company or any
Subsidiary any action, suit or proceeding at law or in equity or by or before
any court or government agency or authority or arbitral tribunal and there shall
not have occurred any legal, regulatory or other development or any other
circumstances whatsoever which, in the opinion of Monsanto, could reasonably be
expected to have a material adverse effect on (a) the business, assets,
operations or financial condition of the Company and its Subsidiaries taken as a
whole, or (b) the ability of the Company and its Subsidiaries to perform any of
their respective obligations hereunder or under the documents contemplated
hereby (each of the foregoing being hereafter referred to as a "Material Adverse
Effect"); provided, however, that no Material Adverse Effect shall be deemed to
have occurred based solely on the outcome of the litigation between the Company
and Enzo Biochem, Inc. ("Enzo"), (v) the Note evidencing Loan Two and the Note
evidencing Loan Three shall have been delivered by the Company to Monsanto
before any Advance under Loan Two or Loan Three, respectively, and (vi) an
Advance request in proper form shall have been submitted or made to Monsanto by
the Company.
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The making of a request by the Company for an Advance or a Loan hereunder,
whether in writing, or by telephone confirmed in writing, or otherwise, shall
constitute a certification by the Company that all representations and
warranties recited or referred to in this Section 2.02 and Article III hereof
are true as of and as if made the date of such request (except as set forth
above) and that all required conditions to the making of such Loan and any
Advance thereunder have been met.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Company. The
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representations and warranties of Calgene set forth in Section 6.2 of the
Acquisition Agreement are incorporated by reference herein. All such
representations and warranties shall be deemed made by the Company herein and
shall survive and be continuing so long as any principal or accrued interest is
outstanding under any of the Loans.
ARTICLE IV
COVENANTS OF THE COMPANY
Section 4.01. Affirmative Covenants. So long as any of the Loans or
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accrued interest shall remain unpaid or Monsanto shall have any Commitment
hereunder, the Company shall (and, where appropriate even if not so stated,
shall cause each of the Subsidiaries to), unless Monsanto shall otherwise
consent in writing, which consent shall not be unreasonably withheld:
(a) Preservation of Business and Corporate Existence. As to the
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Company and each Subsidiary, carry on and conduct its business affairs in
substantially the same manner as presently carried on and conducted, and
maintain in good standing its existence and its right to transact business in
those states in which it is now or may hereafter be doing business; and maintain
all licenses, permits and registrations necessary to the conduct of its
business.
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(b) Use of Proceeds. Use the proceeds of the Loans solely for general
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corporate purposes of the Company and the Subsidiaries. Regardless of the
general corporate purposes to which the Company chooses to apply the proceeds of
the Loans (including loaning any portion of the proceeds to Tomato Investment
Associates, Inc. ("Tomato Associates") and Calgene), all outstanding principal
and accrued interest of each Loan shall be due on each respective Maturity Date.
(c) Reporting Requirements. Furnish to Monsanto:
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(i) As soon as available and in any event within sixty (60)
days after the end of each calendar quarter, one (1) copy of the
consolidated and consolidating financial statements prepared by the Company
and certified by the Chief Financial Officer of the Company, and as soon as
available and in any event within one hundred twenty (120) days after the
end of its fiscal year, one (1) copy of its financial statements audited by
an independent public accountant. The financial state ments so provided
shall include, but not be limited to, the balance sheet, income statement
and cash flow statement of the Company, as well as consolidated and
consolidating statements of all Subsidiaries (which consolidating statement
need not be audited). Such financial statements shall be accompanied by a
written certification from the Chief Financial Officer of the Company (A)
stating that the financial statements present fairly the consolidated
financial condition of the Company and that no event has since occurred
which would constitute a Material Adverse Effect on the consolidated
financial condition of the Company from that represented on the financial
statements; (B) demonstrating in detail, satisfactory to Monsanto, the
Company's compliance with the financial covenants set forth in Sections
4.01(f) and 4.01(g) hereof at and as of the end of the quarter or fiscal
year, as applicable; (C) stating that no Event of Default or Potential
Default is then existing at the date of the certification; and (D) stating
that the representations and warranties contained in this Agreement and the
Guaranty are accurate and complete in all material respects.
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(ii) Promptly after the sending or filing thereof, copies of
all reports which the Company sends to any of its stock or security holders
and copies of all reports and other materials (including registration
statements, if any) which the Company hereafter files with the Securities
and Exchange Commission or any national securities exchange.
(iii) Such other information respecting the condition or
operations, financial or otherwise, of the Company as Monsanto may from
time to time reasonably request.
(d) Insurance. Insure and keep insured at all times with good and
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responsible insurance companies reasonably acceptable to Monsanto all of its
property of an insurable nature and maintain insurance against liability on
account of damage to persons or property in such manner and to the extent that
like risks are usually insured by others conducting similar businesses in the
general areas where the Company and each of the Subsidiaries conduct their
business. Company shall, upon request of Monsanto at any time, furnish a written
summary of the amount and type of insurance carried, the names of the insurers
and the policy numbers.
(e) Government Actions. Obtain and maintain all material
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authorizations and approvals, and other actions by, and make and maintain all
notices to or filings with, any governmental authority or regulatory body now or
hereafter required for the making and performance of this Agreement and the
Notes.
(f) Net Worth. Maintain, at and as of the end of the quarter or
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fiscal year, as applicable, consolidated Net Worth (hereinafter defined) of not
less than Ten Million Dollars ($10,000,000) and a minimum consolidated working
capital of not less than Five Million Dollars ($5,000,000) (which consolidated
working capital shall be the excess of Current Assets (hereinafter defined) over
Current Liabilities (hereinafter defined). Further, the ratio of Total Long-Term
Liabilities (hereinafter defined) to Net Worth shall not exceed the ratio of
one-to-one.
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As used herein, "Net Worth" shall mean the total of common and
preferred stock, paid in surplus, retained earnings and additional stockholders'
equity of the Company and the Subsidiaries on a consolidated basis less
intangibles, determined in accordance with generally accepted accounting
principles, consistently applied.
"Total Long-Term Liabilities" shall mean the total of all long-
term liabilities of the Company and the Subsidiaries on a consolidated basis,
determined in accordance with generally accepted accounting principles,
consistently applied.
"Current Assets" shall mean the total of all current assets of
the Company and the Subsidiaries on a consolidated basis, determined in
accordance with generally accepted accounting principles, consistently applied.
"Current Liabilities" shall mean the total of all current
liabilities of the Company and its Subsidiaries on a consolidated basis,
determined in accordance with generally accepted accounting principles,
consistently applied.
For purposes of making any calculation under this Article IV, the
outstanding principal of amounts loaned by Monsanto to the Company pursuant to
this Agreement or the ▇▇▇▇▇▇▇▇ Credit Facility Agreement of even date herewith
between Monsanto and the Company (the "▇▇▇▇▇▇▇▇ Credit Facility Agreement")
(except to the extent of the "Repayment Portion of Cumulative Free Cash Flow,"
as defined therein, which has not been paid to Monsanto), shall be deemed to be
stockholders' equity and not liabilities.
(g) Current Ratio. Maintain, on a consolidated basis, a ratio of
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Current Assets to Current Liabilities of at least one-to-one.
(h) Audits, Consultants and Inspections. Permit Monsanto (using
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Monsanto's internal and/or external auditors or any other person appointed by
Monsanto to whom the Company does not reasonably object) (i) to audit the books
and records, other financial information and business practices and operations
of the Company and its
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Subsidiaries, and (ii) to discuss the business practices and operations,
affairs, finances and accounts of the Company and its Subsidiaries with the
officers of the Company and its Subsidiaries and the independent public
accountants who review or audit the Company's financial statements, all at such
reasonable times and as often as may reasonably be requested. The Company shall
also permit inspection of its (and its Subsidiaries') properties, books and
records by Monsanto (using the persons identified above) during normal business
hours or at other reasonable times. The scope of all such audits, discussions
and inspections shall be determined by Monsanto in its sole discretion. Any
authorized representative of Monsanto who or which is not employed by Monsanto
(i) shall be required to execute a confidentiality agreement in a form approved
by the Board of Directors of the Company (which approval shall not be
unreasonably withheld or delayed) and (ii) may not be employed by or affiliated
with a competitor of the Company, as reasonably determined by the Board of
Directors of the Company; provided, however, that an independent certified
public accounting firm shall not be deemed to be employed by or affiliated with
a competitor of the Company even if such firm provides services to a competitor
of the Company.
(i) Payment of Taxes. Pay and discharge, before they become
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delinquent, all taxes, assessments and other governmental charges imposed upon
the Company, the Subsidiaries or any of its or their properties, or any part
thereof, or upon the income or profits therefrom and all claims for labor,
materials or supplies which, if unpaid, might be or become a lien or charge upon
any of its or their property, except such items as it or they are in good faith
appropriately contesting and as to which adequate reserves have been provided.
(j) Payment of Indebtedness. Pay any and all indebtedness for
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borrowed money payable or guaranteed by the Company (or any Subsidiary), and any
interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) in accordance with the agreement
or instrument relating to such indebtedness or guarantee, except those being
contested in good faith and as to which adequate reserves have been provided.
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(k) Notice of Subsequent Events. Immediately upon the President or
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Chief Financial Officer of the Company obtaining knowledge of (i) any material
adverse change in the condition or operation, financial or otherwise, of the
Company and its Subsidiaries; (ii) any Event of Default or Potential Default
under this Agreement; (iii) any default or potential default by the Company or
any of the Subsidiaries under or with respect to any instrument, contract or
agreement to which the Company or any of the Subsidiaries is a party or by which
the Company or any of the Subsidiaries is bound which may constitute a Material
Adverse Effect; (iv) any default or potential default by the Company or any of
the Subsidiaries under or with respect to any order, writ, injunction, decision
or decree of any court, governmental authority or arbitral body to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries is bound which may constitute a Material Adverse Effect; or (v)
any action or proceeding pending or, to the knowledge of the President or Chief
Financial Officer of the Company, threatened against the Company or any of the
Subsidiaries before any court, governmental authority or arbitral body which, if
decided adversely to the Company or such Subsidiary, would result in a Material
Adverse Effect, deliver to Monsanto a written certificate signed by such officer
specifying the nature thereof, the period of existence thereof and what action
the Company has taken and proposes to take with respect thereto.
(l) ERISA Compliance. If the Company or any of the Subsidiaries shall
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have any pension plan, comply with all requirements of the Employee Retirement
Income Security Act of 1974, as amended from time to time ("ERISA") relating to
such plan. Without limiting the generality of the foregoing, the Company (and
each of the Subsidiaries) shall not:
(i) Permit any Plan maintained by it to engage in any non-
exempt "prohibited transaction" as such term is defined in Section 4975 of
the Internal Revenue Code of 1986, as amended;
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(ii) Permit any Plan maintained by it to incur any
"accumulative funding deficiency," as such term is defined in Section 302
of ▇▇▇▇▇, ▇▇ ▇.▇.▇ (▇)▇▇▇▇, whether or not waived;
(iii) Terminate any such Plan in a manner which could result in
the imposition of a lien on the property of Company pursuant to ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇ ▇.▇.▇. (▇)▇▇▇▇; or
(iv) Take any action which would constitute a complete or
partial withdrawal from a Multiemployer Plan (hereinafter defined) within
the meaning of Sections 4203 and 4205 of Title IV of ▇▇▇▇▇, ▇▇ ▇.▇.▇.
(▇)(▇)▇▇▇▇ and 1385.
Notwithstanding any provision contained in this Section 4.01(l) to the
contrary, an act by the Company shall not be deemed to constitute a violation of
subparagraphs (i) through (iv) hereof unless Monsanto determines in good faith
that said action, individually or cumulatively with other acts of the Company,
does have or is likely to cause, a Material Adverse Effect.
Company shall have the affirmative obligation hereunder to report to
Monsanto any of those acts identified in subparagraphs (i) through (iv) hereof,
regardless of whether said act does or is likely to cause a Material Adverse
Effect.
(m) Compliance with Laws. Comply in all material respects with all
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applicable laws, rules, regulations and orders.
(n) Additional Subsidiaries. If the Company or any Subsidiary
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acquires or creates any additional majority-owned subsidiary hereafter, promptly
notify Monsanto in writing. Such additional subsidiary shall also, upon
capitalization and election of officers, execute and deliver to Monsanto a
guaranty of the Loans in the form attached hereto as Exhibit C and, upon such
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delivery, shall become a Subsidiary under this Agreement.
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(o) Reservation of Shares. Reserve adequate shares of common stock of
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the Company to be issued upon the occurrence of a conversion as described in
Sections 1.06 and 5.03 hereof.
(p) Further Assurances. From time to time, execute and deliver to
------------------
Monsanto such additional documents and provide such additional information as
Monsanto may reasonably require to carry out the terms of this Agreement and be
informed of the status and affairs of the Company and its Subsidiaries.
Section 4.02. Negative Covenants. Except as specifically provided
------------------
otherwise hereinbelow, so long as any Loan shall remain unpaid or Monsanto shall
have any Commitment hereunder, without the written consent of Monsanto, the
Company (and each of the Subsidiaries):
The following negative covenants set forth in this Section 4.02 shall be of
no force or effect during such period as the "Supermajority Requirements"
set forth in Article 4 of the Stockholders Agreement dated of even date
herewith between the Company and Monsanto are in effect. In the event such
"Supermajority Requirements" are no longer in effect, the foregoing
negative covenants shall be fully applicable to the Company (and, where
appropriate, each of the Subsidiaries).
(a) Acquisitions. Shall not enter into any merger or consolidation or
------------
acquire any business or assets that would constitute a Substantial Part
(hereinafter defined) of the Company and its Subsidiaries, taken as a whole,
whether such acquisition be by merger or consolidation or the purchase of stock
or assets or otherwise. "Substantial Part" means more than ten percent (10%) of
the total assets of the Company and its Subsidiaries, taken as a whole, as shown
on the Company's consolidated balance sheet as of the end of the most recent
fiscal quarter ending prior to the time the determination is made.
(b) Liens. Shall not, and shall not permit any Subsidiary to, pledge,
-----
mortgage or otherwise encumber or subject to or permit to exist upon or be
subjected to any
-16-
lien, charge or security interest of any kind (including any conditional sale or
other title retention agreement and any lease in the nature thereof), on any of
its properties of any kind or character at any time owned by the Company or any
Subsidiary other than:
(i) liens, pledges or deposits for workmen's compensation,
unemployment insurance, old age benefits or social security obligations, taxes,
assessments, statutory obligations or other similar charges, good faith deposits
made in connection with tenders, contracts or leases to which the Company or any
Subsidiary is a party or other deposits required to be made in the ordinary
course of business, provided in each case the obligation secured is not overdue
or, if overdue, is being contested in good faith by appropriate proceedings and
adequate reserves have been provided therefor in accordance with generally
accepted accounting principles, consistently applied, and that the obligation is
not for borrowed money, customer advances, trade payables, or obligations to
agricultural producers;
(ii) the pledge of assets for the purpose of securing an appeal
or stay or discharge in the course of any legal proceedings, provided that the
aggregate amount of liabilities of the Company or any Subsidiary so secured by a
pledge of property permitted under this subsection (ii) including interest and
penalties thereon, if any, shall not be in excess of One Million Dollars
($1,000,000) at any one time outstanding;
(iii) liens, pledges, mortgages, security interests or other
charges existing on the date hereof and disclosed in Exhibit E hereto; and
---------
(iv) liens, pledges, mortgages, security interests and other
encumbrances on property which secure indebtedness permitted under Section
4.02(l) hereof.
(c) Limitations on Merger and Disposition of Assets. Shall not merge
-----------------------------------------------
into or consolidate with any other entity, or lease, sell, transfer or otherwise
dispose of all or any Substantial Part of the Company and its Subsidiaries,
taken as a whole, except (i) pursuant to security interests granted in
connection with borrowings permitted under Section 4.02(l)
-17-
hereof and (ii) in the case of a merger or consolidation of the Company, (A) the
shareholders of the Company immediately prior to the merger or consolidation
continue to hold more than fifty percent (50%) of the outstanding voting power
of the surviving entity, (B) the surviving entity (after giving effect to the
merger or consolidation) has a net worth equal to or greater than the Company's
consolidated net worth (determined immediately prior to the merger or
consolidation) and (C) the surviving entity expressly assumes all of the
obligations of the Company under this Agreement.
(d) Non-Default Under Other Agreements. Shall not default upon or
----------------------------------
fail to pay any indebtedness for money borrowed as the same matures under any
agreement or permit to occur any other event which creates a default under such
or under any other agreement to which the Company is a party or by which it is
bound, in either case in an amount in excess of One Million Dollars
($1,000,000).
(e) Conflicting Agreement. Shall not enter into any agreement, any
---------------------
term or condition of which conflicts with any term or condition of this
Agreement.
(f) Changes in Accounting Principles. Shall not make any change in
--------------------------------
its principles or methods of accounting as currently in effect, except such
changes as are required by generally accepted accounting principles, or, without
prior written notice to Monsanto, change its fiscal year.
(g) Loans and Investments. Shall not make any investment in a
---------------------
corporation, firm or business or make loans or advances to any person except:
(i) Investments in interest bearing obligations of the United
States government, certificates of deposit issued by United States banks,
commercial paper and repurchase agreements or other short-term, high grade
(A-1, P-1 or similar rating) investments;
-18-
(ii) Advances to others in the form of progress payments,
prepaid rents, security deposits, grower loans or other advances customary
in transactions made in the ordinary course of business between persons not
affiliated with each other;
(iii) Subject to the provisions of Section 4.02(a) hereof,
investments in any partially- or wholly-owned Subsidiary or any
corporation, firm or business in the same type of business as the Company,
which line of business will continue after such investment;
(iv) The loans listed and described on Exhibit F hereto and
---------
additional purchase money loans to purchasers of assets of the Company or
its Subsidiaries which at no time in the aggregate exceed One Million
Dollars ($1,000,000);
(v) Loans and travel advances to employees of the Company
which, in the aggregate (inclusive of the employee loans listed on Exhibit
------
G hereto), do not exceed One Hundred Thousand Dollars ($100,000);
-
(vi) Loans or advances to any wholly-owned Subsidiary; or
(vii) Stock, obligations or securities received in settlement of
debts (created in the ordinary course of business) owing to the Company or
any Subsidiary.
Nothing in this subsection (g) shall be construed as preventing Company or any
Subsidiary from making any acquisition permitted under subsection (a) above of
this Section 4.02.
(h) Guaranties. Shall not guarantee the obligations of any
----------
corporation, person or entity, except endorsements of negotiable instruments or
checks deposited for collection acquired in the ordinary course of business and
except guaranties by (i) the Company or any Subsidiary of the obligations of any
of the wholly-owned Subsidiaries or
-19-
any subsidiary hereinafter acquired and becoming a wholly-owned Subsidiary
hereunder or (ii) any Subsidiary of the obligations of the Company.
(i) Capital Expenditures. Shall not make capital expenditures
--------------------
(including capitalized leases but excluding fixed assets acquired in connection
with corporate acquisitions), during any fiscal year of the Company, on a
consolidated basis, in an aggregate amount in excess of Sixty Million Dollars
($60,000,000).
(j) Dividends. Shall not pay or declare any dividends (either in
---------
cash or property) or make distributions on, or redeem, repurchase, retire or
otherwise acquire for value, any shares of stock of the Company (including,
options, warrants or other rights to acquire such shares of stock), other than
repurchases or redemptions of equity securities of the Company.
(l) Limit on Indebtedness. Shall not create, assume or incur any
---------------------
indebtedness, in the aggregate, exceeding Fifteen Million Dollars ($15,000,000),
increasing by Five Million Dollars ($5,000,000) on each July 1 commencing July
1, 1996, plus amounts secured by inventory and/or receivables for working
capital lines and indebtedness incurred to acquire property, plant or equipment
and secured by the acquired asset, and any refinancing of any of the foregoing,
exclusive of (i) amounts outstanding under this Agreement or the ▇▇▇▇▇▇▇▇ Credit
Facility Agreement, and (ii) indebtedness approved by the Board of Directors of
the Company while the "Supermajority Provisions" were in effect.
ARTICLE V
EVENTS OF DEFAULT
Section 5.01. Events of Default. Any one (1) or more of the following
-----------------
events shall constitute an Event of Default under this Agreement, the Notes and
any other document or instrument pertaining to or necessary to carry out the
purposes of this Agreement:
-20-
(a) Payment Default. The Company fails to pay when due any
----------------
principal, interest or other amount which it is obligated to pay under this
Agreement and the Notes and such failure shall continue unremedied for five (5)
days after the date on which such payment was due.
(b) Representation Default. Any representation or warranty made by
-----------------------
the Company in this Agreement, the Notes, or in any certificate, notification or
report furnished hereunder, proves to have been incorrect or misleading in any
material respect when made or renewed and is material to the ability of the
Company to perform its obligations under this Agreement or the Notes.
(c) Other Provisions Default. The Company fails to perform or observe
-------------------------
any material covenant or agreement to be performed or observed by it under this
Agreement or the Notes or the Company fails to perform or observe any other
material term, covenant or condition in this Agreement or the Notes to be made
and performed by the Company and, in the case of any such default that is
curable by the Company, such default is not cured within ten (10) days after
written notice thereof by Monsanto.
(d) Authorizations Default. Any governmental filing, registration,
-----------------------
consent or approval necessary in connection with this Agreement or any document
contemplated hereby is withheld, revoked or restricted in a way which
constitutes a Material Adverse Effect, unless such revocation or restriction is
withdrawn.
(e) Cross Default. The Company or any Subsidiary (i) fails to pay
--------------
when due any indebtedness (in an amount in excess of One Million Dollars
($1,000,000)) senior to any of the Loans for which it is liable, contingently or
otherwise, and the lender declares such indebtedness to be immediately due and
payable, or (ii) commits a material breach of or defaults in the performance or
observance of any of the representations, warranties, covenants, terms or
provisions of, or a default otherwise occurs under, (a) the Acquisition
Agreement or any of the other Transaction Agreements (as defined in the
Acquisition Agreement), (b) the Insect-Protected Cotton License and Seed
Services Agreement dated as
-21-
of September 26, 1995 between Monsanto and Calgene, (c) the ▇▇▇▇▇▇▇▇ Credit
Facility Agreement, (d) the Stockholders Agreement between Monsanto and the
Company of even date herewith or (e) any other agreement or instrument between
Monsanto and the Company or any Subsidiary and, in the case of any such default
that is curable, such default is not cured within ten (10) days after the
Company or Subsidiary, as applicable, receives notice thereof.
(f) Lien Default. The holder of any lien, whether now or hereafter
-------------
existing, granted or assumed by the Company, and securing any indebtedness
exceeding One Million Dollars ($1,000,000) in the aggregate (whether or not
indebtedness of the Company) takes substantial steps to enforce the same because
of the nonpayment (whether by acceleration or otherwise) of the indebtedness
secured thereby.
(g) Judgment Default. A final judgment, order or conviction (whether
-----------------
criminal or civil) is rendered against the Company or any of its Subsidiaries or
its or its Subsidiaries' properties or assets which constitutes a Material
Adverse Effect and such judgment or order shall continue unsatisfied and the
execution thereof unstayed for a period of ninety (90) consecutive days.
(h) Bankruptcy Default. (i) the Company or any of the Subsidiaries
-------------------
shall fail to pay or shall admit in writing its inability to pay its debts as
they become due, shall become insolvent, howsoever evidenced, or shall make a
general assignment for the benefit of creditors; (ii) any proceeding shall be
instituted by or against the Company or any of the Subsidiaries under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors or any
similar law or seeking appointment of a receiver, trustee, or other similar
person for it or for any Substantial Part of its property and, if such
proceeding is not commenced by the Company or any of the Subsidiaries, it is
consented to or acquiesced in by the Company or any of the Subsidiaries or
remains undismissed for forty-five (45) days after institution; (iii) all or a
Substantial Part of the Company's or any Subsidiary's property is attached,
seized, levied upon or comes within the possession of any receiver, trustee or
similar person for the benefit of creditors; (iv) any action is taken or any
proceeding is filed
-22-
or commenced with respect to the Company's liquidation, dissolution or
termination of existence; or (v) the Company shall take any corporate action to
authorize any of the actions described in this subsection (h);
(i) Tax Lien Default. Any local, state or federal government agency
----------------
places a material lien against any asset of the Company or any Subsidiary as a
result of nonpayment of any tax obligation owed by the Company or such
Subsidiary, which lien is not removed within forty-five (45) days after
placement.
(j) ERISA Default. Any of the following events occur or exist with
-------------
respect to the Company or any Subsidiary: (a) any Prohibited Transaction
(hereinafter defined) involving any Plan; (b) any Reportable Event (hereinafter
defined) with respect to any Plan; (c) the filing under Section 4041 of ERISA
of a notice of intent to terminate any Plan or the termination of any Plan; (d)
any event or circumstance that might constitute grounds entitling the PBGC
(hereinafter defined) to institute proceedings under Section 4042 of ERISA for
the termination of, or for the appointment of a trustee to administer, any Plan,
or the institution by the PBGC of any such proceedings; (e) complete or partial
withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan or the
reorganization, insolvency or termination of any Multiemployer Plan; and, in
each case above, such event or condition, together with all other events or
conditions, if any, could, in the opinion of Monsanto, subject the Company to
any tax, penalty, or other liability to a Plan, a Multiemployer Plan, the PBGC,
or otherwise. For purposes of this Agreement: "Plan" means any employee benefit
or other plan established, maintained, or to which contributions have been made
by the Company or any ERISA Affiliate; "Reportable Event" means any of the
events set forth in Section 4043 of ERISA; "ERISA Affiliate" means any trade or
business (whether or not incorporated) that, together with Company, is treated
as a single employer under Section 414 of the Internal Revenue Code of 1986, as
amended; "Multiemployer Plan" means a Plan described in Section 4001(a)(3) of
ERISA which covers employees of the Company or any ERISA Affiliate; "PBGC" means
the Pension Benefit Guaranty Corporation or any entity succeeding to any or all
of its functions under ERISA; and "Prohibited
-23-
Transaction" means any transaction set forth in Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time.
(k) Guaranty Default. Any Subsidiary shall fail to perform or observe
----------------
its obligations under the Guaranty and such failure (other than failure to pay
to Monsanto sums due thereunder) shall not have been remedied within thirty (30)
days after written notice thereof shall have been given by Monsanto.
Section 5.02. Rights of Monsanto. Upon the occurrence of an Event of
------------------
Default, Monsanto may, at its election, without notice of its election and
without demand, do any one (1) or more of the following (all of which are
authorized by the Company):
(a) Cease advancing money or extending credit to or for the benefit
of the Company;
(b) Subject to the provisions of Section 5.03 hereof, declare the
obligation of Monsanto to make Loans and Advances hereunder to be terminated,
whereupon the same shall forthwith terminate; and
(c) Subject to the provisions of Section 5.03 hereof, declare the
Notes, including all principal and accrued interest thereon, and all other
amounts payable under this Agreement to be forthwith due and payable, without
presentment, protest or further notice of any kind, all of which are hereby
expressly waived by the Company.
Section 5.03. Default Conversion. Upon the occurrence and during the
------------------
continuation of an Event of Default, for a period of thirty (30) days from the
occurrence of the Event of Default (the "Election Period"), the Company, subject
to Monsanto's right to require the Company to sell shares and pay cash, as
provided below, may elect to convert all or any portion of the principal and
accrued interest under any outstanding Loan into shares of common stock of the
Company at the average of the closing market prices for such shares during the
thirty (30) trading days immediately preceding the Default Conversion Date
-24-
(hereinafter defined) for such Loan (the "Default Average Market Price").
Monsanto shall not take any of the actions set forth in paragraphs (b) or (c) of
Section 5.02 hereof until the end of such Election Period. If all of the
principal and accrued interest are converted into shares of common stock of the
Company or paid in cash pursuant to this Section 5.03, Monsanto shall have no
further rights under Section 5.02 hereof, arising because of the Event of
Default for which such conversion or payment was made hereunder.
If the Company does not elect to convert all of the principal and accrued
interest under any outstanding Loan into shares of common stock of the Company
during the Election Period, then, within ten (10) days after such Election
Period, Monsanto may, in addition to any other remedies set forth in this
Agreement, elect to convert all or any portion of the remaining principal and
accrued interest under such Loan into shares of common stock of the Company at
the Default Average Market Price; provided, however, that in no event shall
Monsanto elect to convert principal and accrued interest into more than three
million (3,000,000) shares of common stock of the Company (as such number is
adjusted for stock dividends, stock splits and similar events affecting holders
of the Company's common stock) for each Loan.
In order to exercise the conversion rights described above, at any time
after the occurrence and during the continuation of an Event of Default, a party
shall send a written notice (the "Default Conversion Notice") to the other
party, stating that the exercising party intends to exercise such conversion
rights; provided, however, that, in the case of the Company, the Default
Conversion Notice may only be given during the Election Period. The Default
Conversion Notice shall specify (i) the amount of the principal and accrued
interest that the exercising party intends to convert (the "Default Conversion
Amount") and (ii) the date as of which such conversion shall take place (the
"Default Conversion Date"), which date shall not be later than ten (10) days
after the date of the Default Conversion Notice.
Monsanto may, in its sole discretion and within five (5) business days
after its receipt of any Default Conversion Notice from the Company, give
written notice (the "Alternative
-25-
Default Notice") to the Company, stating that all or any part of the Default
Conversion Amount set forth in such Default Conversion Notice (the "Alternative
Default Conversion Amount") shall be payable in cash. Upon receipt of an
Alternative Default Notice, (i) the Alternative Default Conversion Amount may no
longer be converted into shares of common stock of the Company (unless the
Alternative Default Notice shall have been withdrawn as provided below) and (ii)
the difference, if any, between the Default Conversion Amount and the
Alternative Default Conversion Amount shall be converted into shares of common
stock of the Company in accordance with the terms of the Default Conversion
Notice and the applicable provisions of this Section 5.03. The Company shall
proceed promptly, using its best efforts and at its expense, to take such
actions as are necessary to effect the public sale of a number of shares of its
common stock (rounded to the next lowest full share) equal to the Alternative
Default Conversion Amount divided by the Default Average Market Price (the
"Default Offering"). The Alternative Default Conversion Amount shall be due and
payable to Monsanto in cash on the closing date for the Default Offering. On
such closing date, the net proceeds of such Default Offering shall be paid by
the Company to Monsanto in full payment and satisfaction of such Alternative
Default Conversion Amount, even if such net proceeds are less than or greater
than such Alternative Default Conversion Amount.
If the Default Offering has not closed within sixty (60) days after the
Company's receipt of an Alternative Default Notice, Monsanto may, thereafter and
in its sole discretion, withdraw its Alternative Default Notice at any time. If
Monsanto withdraws an Alternative Default Notice, then, within five (5) business
days thereafter, the Company shall issue to Monsanto a number of shares of
common stock of the Company (rounded to the next lowest full share) equal to the
Alternative Default Conversion Amount divided by the Default Average Market
Price.
If (i) either party properly gives the other party a Default Conversion
Notice and (ii) in the case of a Default Conversion Notice given by the Company,
Monsanto does not give an Alternative Default Notice for the full Default
Conversion Amount, then, within five (5) business days after the Default
Conversion Date, the Company shall issue to Monsanto a number of shares of
common stock of the Company (rounded to the next lowest full share)
-26-
equal to the Default Conversion Amount (or the difference between the Default
Conversion Amount and the Alternative Default Conversion Amount, as applicable)
divided by the Default Average Market Price.
Any portion of the Default Conversion Amount not so converted (i.e.,
because such amount would require conversion into a fractional share or, in the
case of Monsanto, because the number of shares available are not adequate to
convert all of the Default Conversion Amount) shall be paid to Monsanto in cash.
Upon any such conversion, the Default Conversion Amount (including any portion
thereof paid to Monsanto in cash) shall first be applied to reduce the accrued
interest due on the Loan as of the Default Conversion Date, and any remaining
portion of the Default Conversion Amount shall be applied to reduce the
principal due on such Loan.
Section 5.04. Company's Obligations. The Company recognizes that, if the
---------------------
Company fails to perform, observe or discharge any of its obligations under this
Agreement or the other collateral agreements hereto, a remedy at law may not
provide adequate relief to Monsanto; therefore, the Company agrees that Monsanto
shall be entitled to seek temporary and permanent injunctive relief in any such
case without the necessity of proving actual damages. All of Monsanto's rights
and remedies granted under this Agreement and the collateral agreements hereto
are cumulative and nonexclusive. The Company shall pay upon demand all costs and
expenses, including, without limitation, reasonable attorneys' fees and
expenses, incurred by Monsanto in enforcing this Agreement. All such sums not
paid on demand shall be treated as outstanding principal under the Notes.
ARTICLE VI
RIGHT OF SETOFF
Section 6.01. Right of Setoff. Upon the occurrence and during the
---------------
continuance of any Event of Default, Monsanto is hereby authorized at any time
and from time to time, without notice to the Company (any such notice being
expressly waived by the Company), to set off and apply any and all funds at any
time held and other indebtedness at any time owing
-27-
by Monsanto to or for the credit or the account of the Company or any of the
Subsidiaries against any and all of the obligations of the Company now or
hereafter existing under this Agreement and the Notes, irrespective of whether
or not Monsanto shall have made any demand under this Agreement or the Notes and
although such obligations may be unmatured. Notwithstanding the preceding
sentence, Monsanto shall not apply any of such setoff amounts until the end of
the notice periods set forth in Section 5.03 hereof. The rights of Monsanto
under this Section 6.01 are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which Monsanto may have.
ARTICLE VII
SUBORDINATION
Section 7.01 Subordination.
-------------
(a) All of the obligations of the Company to Monsanto under this
Agreement and the Notes, including, without limitation, the Company's obligation
to repay any Advances (collectively, the "Subordinated Indebtedness"), shall to
the extent and in the manner hereinafter set forth, be subordinated and subject
in right of payment to the prior payment in full of a Senior Indebtedness.
"Senior Indebtedness" means (a) all indebtedness of the Company, including the
principal of and interest on such indebtedness, whether outstanding on the date
of this Agreement or thereafter created (i) arising under working capital lines
of credit secured by inventory and/or receivables, (ii) incurred to acquire
property, plant or equipment and secured by the acquired asset or (iii)
otherwise permitted under Section 4.02(l) hereof at the time such indebtedness
is incurred, and (b) any modifications, refundings, deferrals, renewals or
extensions of any such Senior Indebtedness, or securities, notes or other
evidences of indebtedness issued in exchange for such Senior Indebtedness;
provided, however, that in no event shall the obligations of the Company under
the ▇▇▇▇▇▇▇▇ Credit Facility Agreement constitute Senior Indebtedness under this
Agreement. No payment on account of principal or interest on the Subordinated
Indebtedness shall be made if, at the time of such payment or immediately after
giving the effect thereto, (i) there shall exist a default in any payment with
respect to any Senior Indebtedness or (ii) there shall have occurred an event of
default (other than a default in the payment of amounts due
-28-
thereon) with respect to any Senior Indebtedness, as defined in the instrument
under which the same is outstanding, permitting the holders thereof to
accelerate the maturity thereof, and such event of default shall not have been
cured or waived or shall not have ceased to exist. Notwithstanding the
foregoing or any other provision of this Section 7.01, nothing in this Section
7.01 shall restrict or otherwise limit Monsanto's or Company's rights under
Sections 1.06 or 5.03 hereof.
(b) In the event of any distribution, dividend, or application,
partial or complete, voluntary or involuntary, by operation or law or otherwise,
of all or any part of the assets of the Company or of the proceeds thereof to
the creditors of the Company or upon any indebtedness of the Company, occurring
by reason of the liquidation, dissolution, or other winding up of the Company,
or by reason of any execution sale, or bankruptcy, receivership, reorganization,
arrangement, insolvency, liquidation or foreclosure proceeding of or for the
Company or involving its property, no dividend, distribution or application
shall be made, and Monsanto shall not be entitled to receive or retain any
dividend, distribution, or application on or in respect of principal of or
interest on Subordinated Indebtedness, unless and until all principal of and any
interest on Senior Indebtedness then outstanding shall have been paid and
satisfied in full, and in any such event any dividend, distribution or
application otherwise payable in respect of Subordinated Indebtedness shall be
paid and applied on Senior Indebtedness until such Senior Indebtedness has been
fully paid and satisfied.
(c) The holders of Senior Indebtedness need not at any time give
Monsanto notice of any kind of the creation or existence of any Senior
Indebtedness, nor of the amount or terms thereof, all such notice being hereby
expressly waived. Also, the holders of Senior Indebtedness may at any time and
from time to time, without the consent of or notice to Monsanto, without
incurring responsibility to Monsanto, and without impairing or releasing the
obligation of Monsanto under this Agreement (i) renew, refund or extend the
maturity of any Senior Indebtedness, or any part thereof, or otherwise revise,
amend or alter the terms and conditions thereof, (ii) sell, exchange, release or
otherwise deal with any property by whomsoever at any time pledged, mortgaged or
otherwise hypothecated or subjected to a lien
-29-
to secure any Senior Indebtedness, and (iii) exercise or refrain from exercising
any rights against the Company and others, including Monsanto.
(d) Monsanto shall not sell, assign or otherwise transfer any
Subordinated Indebtedness, or any part thereof, except (i) upon the agreement of
the transferee or assignee to abide by and be bound by the terms hereof and (ii)
when Monsanto may assign its rights under the Stockholders Agreement dated of
even date herewith between Company and Monsanto.
(e) Monsanto shall cause all Subordinated Indebtedness to be at all
times evidenced by the Notes of the Company and shall cause all such Notes to
bear thereon a legend substantially as follows:
"The indebtedness evidenced by this Note is subordinate to any
and all indebtedness, obligations and liabilities of the maker
hereof to the holders of Senior Indebtedness in the manner and to
the extent set forth in the Credit Facility Agreement (as defined
below) to which reference is hereby made for a more full
statement thereof."
(f) If, notwithstanding the provisions of this Agreement, Monsanto
shall receive any payment of principal or interest on Subordinated Indebtedness
which the Company is not entitled to make pursuant to the terms hereof, whether
or not Monsanto has knowledge that the Company is not entitled to make such
payment, Monsanto shall promptly account for such payment and upon the demand of
the holders of Senior Indebtedness pay over such payment to such holders for
application to the Senior Indebtedness owing to such holders. No payment or any
distribution received by the holders of the Senior Indebtedness in respect of
Subordinated Indebtedness pursuant to any of the terms hereof shall entitle
Monsanto to any right, whether by virtue of subrogation or otherwise, in and to
any Senior Indebtedness unless and until all Senior Indebtedness has been fully
paid and satisfied and any commitment of the holders of Senior Indebtedness to
extend Senior Indebtedness to the Company has terminated.
-30-
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Incorporation of Acquisition Agreement. The provisions
--------------------------------------
contained in Article 12 of the Acquisition Agreement are incorporated herein by
this reference and shall apply to this Agreement to the same extent as if fully
set forth herein.
Section 8.02. Reinstatement of Indebtedness. This Agreement shall
-----------------------------
continue to be effective, or be reinstated, as the case may be, if, at any time,
payment, or any part thereof, of any amount paid by or on behalf of the Company
to Monsanto with regard to any Note is rescinded or must otherwise be restored
or returned (i) upon or in connection with the insolvency, bankruptcy,
dissolution, liquidation, or reorganization of the Company, or any Subsidiary,
or (ii) upon or as a result of the appointment of a receiver, intervenor, or
conservator of, or trustee, or similar officer for the Company or any Subsidiary
or any Substantial Part of the property of such entity or (iii) as a result of
Article VII hereof, all as though such payment has not been made.
-31-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CALGENE II, INC.
By:_______________________________________________
Title:____________________________________________
MONSANTO COMPANY
By:_______________________________________________
Title:____________________________________________
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