EXHIBIT A
CALGENE, INC.
(FORMERLY CALGENE II, INC.)
AND
MONSANTO COMPANY
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
TABLE OF CONTENTS
ARTICLE 1 Effect of this Agreement........................................ 1
1.1 Effect of this Agreement........................................ 1
ARTICLE 2 Compliance with Securities Act.................................. 1
2.1 Certain Definitions............................................. 1
2.2 Requested Registration.......................................... 5
2.3 Company Registration............................................ 7
2.4 Expenses of Registration........................................ 8
2.5 Registration Procedures......................................... 8
2.6 Indemnification................................................. 9
2.7 Information by Holder........................................... 10
2.8 Rule 144 Reporting.............................................. 10
2.9 Transfer of Registration Rights................................. 11
2.10 Limitations on Subsequent Registration Rights................... 11
2.11 Termination of Registration Rights.............................. 11
2.12 "Market Stand-off" Agreement.................................... 11
ARTICLE 3 Anti-Dilution Rights and Limitations on Owner................... 11
3.1 Anti-Dilution Rights............................................ 11
3.2 Private Offering................................................ 12
3.3 Public Offering................................................. 12
3.4 Limitations..................................................... 12
3.5 Open Market Purchases to Maintain Ownership Percentage.......... 12
3.6 Limitations on Holder's Ownership............................... 12
3.7 Limitations on Holder's Resale of Company Securities............ 13
ARTICLE 4 Company and Calgene Corporate Governance........................ 13
4.1 Composition of the Board of Directors and Calgene Board......... 13
4.2 Solicitation and Voting of Shares............................... 15
4.3 Committees...................................................... 16
4.4 Approval Required for Certain Actions........................... 16
4.5 Enforcement of this Agreement................................... 18
4.6 Certificate of Incorporation and By-laws........................ 18
4.7 Advisors........................................................ 18
4.8 Injunctive Relief............................................... 18
ARTICLE 5 Governance of ▇▇▇▇▇▇▇▇.......................................... 19
ARTICLE 6 Miscellaneous................................................... 19
6.1 Governing Law................................................... 19
6.2 Successors and Assigns.......................................... 19
6.3 Entire Agreement; Amendment..................................... 19
6.4 Notices......................................................... 19
6.5 Delays or Omissions............................................. 20
6.6 Counterparts.................................................... 20
6.7 Severability.................................................... 20
6.8 Stock Legends................................................... 20
6.9 [This section intentionally left blank.]........................ 20
6.10 Audits Consultants and Inspections.............................. 20
6.11 No Third Party Beneficiaries.................................... 20
6.12 Sections and Articles........................................... 21
6.13 Headings........................................................ 21
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
AGREEMENT made as of the day of November, 1996, by and between Calgene,
Inc., a Delaware corporation (formerly known as Calgene II, Inc.), having its
principal place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Company"), and Monsanto Company, a Delaware corporation, having its principal
place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("Monsanto").
WHEREAS, Calgene Technology Corporation, a Delaware corporation and a
wholly-owned subsidiary of the Company (formerly known as Calgene,
Inc.)("Calgene"), and Monsanto have entered into an Agreement and Plan of
Reorganization, dated as of October 13, 1995 (the "Reorganization Agreement"),
and certain other Transaction Agreements (as defined in the Reorganization
Agreement) whereby Monsanto acquired shares of the Company's common stock, par
value $.001 per share ("Common Stock") and may acquire additional shares of
Common Stock;
WHEREAS, the Company and Monsanto agreed that the Company shall, at the
request of a Holder (as hereafter defined), register under the Securities Act
of 1933, as amended (the "Securities Act"), and register or qualify under any
applicable state securities or blue sky laws the Common Stock of the Company
acquired or to be acquired by Holder so as to permit a Holder to sell such
Common Stock in the public markets;
WHEREAS, the Company and Monsanto agreed on certain restrictions and
obligations with respect to the management and operation of the Company,
Calgene and Tomato Investment Associates, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Company ("Tomato Associates");
WHEREAS, the Company and Monsanto have entered into a Stock Purchase
Agreement dated as of September 27, 1996 (the "Stock Purchase Agreement")
pursuant to which Monsanto has agreed to purchase additional shares of Common
Stock of the Company; and
WHEREAS, in connection with the consummation of the transaction contemplated
by the Stock Purchase Agreement, the Company and Monsanto desire to amend the
Stockholders Agreement dated March 31, 1996 by and between the Company and
Monsanto (the "Prior Stockholders Agreement") in its entirety and to become
bound by the terms of this Agreement;
NOW, THEREFORE, in consideration of the promises and the mutual covenants
and conditions herein contained, the Company and Monsanto hereby agree as
follows:
ARTICLE 1
EFFECT OF THIS AGREEMENT
1.1 Effect of this Agreement. Effective upon the date hereof, and subject
only to the conditions set forth herein, all provisions relating to the
granting of registration rights and covenants related thereto made by the
Company and Monsanto shall be contained in this Agreement. The registration
rights and covenants provided herein set forth the sole and entire agreement
between the Company and Monsanto on the subject matter of registration rights.
ARTICLE 2
COMPLIANCE WITH SECURITIES ACT
2.1 Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings (all terms defined in this
Article 2 or in other provisions of this Agreement in the singular shall have
the same meaning when used in the plural and vice versa):
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"Affiliate" has the same meaning as in Rule 12b-2 promulgated under the
Exchange Act.
"Associate" has the same meaning as in Rule 12b-2 promulgated under the
Exchange Act.
"Board" or "Board of Directors" means the Board of Directors of the Company
except where the context otherwise requires.
"Calgene" has the meaning set forth in the recitals herein.
"Calgene Board" means the Board of Directors of Calgene.
"Calgene Director" means a member of the Calgene Board.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" means the Common Stock, $.001 par value, of the Company.
"Company" has the meaning set forth in the first paragraph hereof.
"Company Credit Facility" means the Holding Company Credit Facility
Agreement dated March 31, 1996 between the Company and Monsanto.
"Company Director" means an Independent Director who is designated for such
position by the Company in accordance with Section 4.1 hereof.
"Company Management Director" means the Chief Executive Officer (or, if
there is none at any time, a Director nominated by a majority of the Company
Directors) and a second Director who shall be nominated by a majority of the
Company Directors.
"Company Securities" has the meaning set forth in Section 3.1 hereof.
"Control Securities" means securities of the Company, other than Restricted
Securities, owned by a Holder at the time such Holder would be deemed to be an
Affiliate of the Company.
"Credit Facilities" means the Company Credit Facility and the ▇▇▇▇▇▇▇▇
Credit Facility.
"Director" means a member of the Board of Directors of the Company.
"Effective Date" means November , 1996.
"Effective Date Percentage" means the greater of 53% or the percentage of
outstanding shares of Common Stock of the Company held by Monsanto immediately
after the consummation of the transactions contemplated by the Stock Purchase
Agreement.
"Equity Security" means (i) any Common Stock or other Voting Stock, (ii) any
securities of the Company convertible into or exchangeable for Common Stock or
other Voting Stock or (iii) any options, rights or warrants (or any similar
securities) issued by the Company to acquire Common Stock or other Voting
Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Financial Purchaser" means a Person (i) purchasing Company Securities from
Monsanto for investment purposes or otherwise in the ordinary course of
business and not for the purpose nor with the effect of changing or
influencing the control of the Company and (ii) which Person is not already
primarily in the same lines of business as the Company.
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"▇▇▇▇▇▇▇▇" means ▇▇▇▇▇▇▇▇, Inc. formerly known as Tomato Investment
Associates, Inc.
"▇▇▇▇▇▇▇▇ Business" means the business transacted by Tomato Associates after
March 31, 1996, which business was transacted by ▇▇▇▇▇▇▇▇ prior to March 31,
1996.
"▇▇▇▇▇▇▇▇ Credit Facility" means the ▇▇▇▇▇▇▇▇ Credit Facility Agreement
dated March 31, 1996 between the Company and Monsanto.
"hereto", hereunder", "herein", "hereof" and the like mean and refer to this
Agreement as a whole and not merely to the specific article, section,
paragraph or clause in which the respective word appears.
"Holder" means Monsanto and, subject to Section 2.9 hereof and except for
purposes of Article 3 hereof, any subsequent holder of outstanding Registrable
Securities.
"Indemnified Party" has the meaning set forth in Section 2.6(c) hereof.
"Indemnifying Party" has the meaning set forth in Section 2.6(c) hereof.
"Independent Director" means a Director or Calgene Director (i) who is not
and has never been an officer or employee of Calgene, the Company, any
Affiliate or Associate of Calgene or the Company or of a Person that derived
five percent (5%) or more of its revenues or earnings in its most recent
fiscal year from transactions involving Calgene, the Company or any Affiliate
or Associate of Calgene or the Company, (ii) who is not and has never been an
officer or employee of Monsanto, any Affiliate or Associate of Monsanto or of
a Person that derived more than five percent (5%) of its revenues or earnings
in its most recent fiscal year from transactions involving Monsanto or any
Affiliate or Associate of Monsanto, (iii) who is not and never has been an
officer or employee of ▇▇▇▇▇▇▇▇, any Affiliate or Associate of ▇▇▇▇▇▇▇▇ or of
a Person that derived more than five percent (5%) of its revenues or earnings
in its most recent fiscal year from transactions involving ▇▇▇▇▇▇▇▇ or any
Affiliate or Associate of ▇▇▇▇▇▇▇▇, (iv) who has no affiliation, compensation,
consulting or contracting arrangement with Calgene, the Company, Monsanto,
▇▇▇▇▇▇▇▇ or their respective Affiliates or Associates or any other Person such
that a reasonable person would regard such Director as likely to be unduly
influenced by management of Calgene, the Company or Monsanto, respectively
(provided, however, that no Person shall be regarded as being unduly
influenced by the management of Monsanto merely because such Person serves or
previously served as a director of Monsanto or any Affiliate or Associate of
Monsanto), and (v) who has an outstanding reputation for personal integrity
and distinguished achievement in areas relevant to the Company.
Notwithstanding the foregoing, no member of the immediate family of any Person
who does not qualify to be an Independent Director by reason of clause (i),
(ii), (iii) or (iv) above shall be considered an Independent Director. For
purposes of the preceding sentence, the term "immediate family" shall have the
same meaning as set forth in Item 404(a) of Regulation S-K. Without limiting
the foregoing, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall qualify as an Independent Director so
long as he continues to qualify under clauses (iv) and (v) of such definition.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall not fail to qualify under clause (iv) above as a
result of his Change of Control Employment Agreement dated July 19, 1995, as
modified, or Consulting Agreement dated September 16, 1996 with the Company.
Any of the above restrictions may be waived by unanimous action of the Board
of Directors.
"Monsanto" has the meaning set forth in the first paragraph hereof.
"Monsanto Director" means a Director or Calgene Director, including any
Monsanto Management Director, who is designated for such position by Monsanto
in accordance with Section 4.1 hereof.
"Monsanto Management Director" means a Director or Calgene Director who is
designated for such position by Monsanto in accordance with Section 4.1 hereof
and who is or was an employee of Monsanto.
"New Percentage Ownership" has the meaning set forth in Section 3.6(c)
hereof.
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"Non-Financial Purchaser" means a Person, other than a Financial Purchaser,
purchasing Company Securities from Monsanto.
"Operating Plan" has the meaning set forth in Section 4.4(a)(ix) hereof.
"Other Selling Stockholders" has the meaning set forth in Section 2.2(c)
hereof.
"Percentage Interest" means the percentage of outstanding Voting Stock that
is controlled directly or directly by Monsanto and its Affiliates.
"Person" means a corporation, association, partnership, joint venture,
limited liability company, individual, trust, unincorporated organization, a
government agency or political subdivision thereof and any other entity.
"Preliminary Prospectus" means a preliminary prospectus as contemplated by
Rule 430 or 430A under the Securities Act included at any time in the
Registration Statement.
"Pre-Offering Percentage" has the meaning set forth in Section 3.1 hereof.
"Prospectus" means (i) the prospectus as first filed with the Commission
pursuant to Rule 424(b) under the Securities Act or, (ii) if no such filing is
required, the form of final prospectus included in the Registration Statement
at the effective date thereof or (iii) if a Term Sheet or Abbreviated Term
Sheet (as such terms are defined in Rule 434(b) and 434(c), respectively,
under the Securities Act) is filed with the Commission pursuant to Rule 424(b)
(7) under the Securities Act, the Term Sheet or Abbreviated Term Sheet and the
last Preliminary Prospectus filed with the Commission prior to the time the
Registration Statement became effective, taken together (including, in each
case, the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the Securities Act), together with any supplement to any of the
foregoing.
"Registration Statement" means any registration statement of the Company
filed under the Securities Act which covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including the Prospectus
relating thereto and all amendments and supplements to such registration
statement, including post-effective amendments, all exhibits and all material
incorporated or deemed to be incorporated by reference in such registration
statement.
"Registrable Securities" means shares of Common Stock issued or issuable to
Monsanto pursuant to the Transaction Agreements and the Prior Stockholders
Agreement and the Stock Purchase Agreement whether owned by Monsanto or a
permitted transferee of Monsanto and all such other securities of the Company
acquired by Monsanto or any Affiliate of Monsanto in accordance herewith.
"Register", "Registered" and "Registration", whether or not capitalized,
mean and refer to a registration effected by preparing and filing a
Registration Statement in compliance with the Securities Act and applicable
rules and regulations thereunder, and the declaration or ordering of the
effectiveness of such Registration Statement.
"Registration Expenses" means all expenses incurred by the Company in
compliance with this Article 2, including, without limitation, all
registration fees, qualification fees, filing fees, advertising and road show
expenses (excluding advertising and road show expenses incurred by a Holder),
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the
compensation of regular employees of the Company, which shall be paid in any
event by the Company).
"Reorganization Agreement" has the meaning set forth in the recitals herein.
"Requesting Holder" means a Holder requesting any registration pursuant to
Section 2.2 hereof.
4
"Restricted Securities" means the securities of the Company acquired by a
Holder from the Company or an Affiliate of the Company otherwise than pursuant
to a public offering.
"Section 16 Officers" has the meaning set forth in Section 4.3(b)(iii)
hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Expenses" means all underwriting discounts and selling commissions
applicable to the sale of Registrable Securities.
"Strategic Plan" has the meaning set forth in Section 4.4(a)(ix) hereof.
"Subsidiary" has the same meaning as in Rule l2b-2 promulgated under the
Exchange Act.
"Substantial Part" means more than ten percent (10%) of the total
consolidated assets of the Company 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.
"Tomato Associates" has the meaning set forth in the recitals herein.
"Transaction Agreements" has the meaning set forth in the Reorganization
Agreement.
"Trigger Event" means the earliest of (i) any time that Monsanto's
Percentage Interest is at least fifty-five percent (55%), (ii) the Company
elects to convert borrowings made from Monsanto into Equity Securities and
Monsanto's Percentage Interest is at least fifty percent (50%) after such
conversion, or (iii) the closing of Monsanto's purchase of additional shares
of Common Stock pursuant to the Stock Purchase Agreement.
"Unaffiliated Equity Holders" means holders of Equity Securities other than
Monsanto or any of its Affiliates.
"Voting Stock" means securities having the right to vote generally in any
election of Directors of the Company (other than solely by reason of the
occurrence of an event).
2.2 Requested Registration.
(a) Request for Registration. Holders of Registrable Securities shall have
the right to request (with such requests in writing and stating the number of
shares of Registrable Securities to be disposed of and the intended method of
disposition of shares by such Holders) up to two (2) registrations on Form S-3
(and up to two (2) additional registrations on Form S-3 for each conversion of
outstanding principal or interest into shares of Common Stock upon the
occurrence of an "Event of Default" under the Company Credit Facility or the
▇▇▇▇▇▇▇▇ Credit Facility (as defined in each such Credit Facility,
respectively)) at the Company's expense and an unlimited number of additional
registrations on Form S-3 at the selling Holder's expense, provided that the
requests for additional registrations are made by Holders of at least ten
percent (10%) of the Registrable Securities, subject only to the following:
(i) The Company shall not be required to effect a registration pursuant
to this Section 2.2 prior to September 30, 1998, unless an Event of Default
has occurred and is continuing under the Company Credit Facility or under
the ▇▇▇▇▇▇▇▇ Credit Facility, in which event the Company shall be required
to effect a registration pursuant to this Section 2.2 at any time upon the
request of a Holder with respect to any shares of Common Stock issued to a
Holder upon conversion of outstanding principal or accrued interest under
either the Company Credit Facility or the ▇▇▇▇▇▇▇▇ Credit Facility after
the occurrence of an Event of Default under either of such agreements.
(ii) The Company shall not be required to effect a registration pursuant
to this Section 2.2 within one hundred eighty (180) days after the
effective date of the last such registration pursuant to this Section 2.2.
5
(iii) The Company shall not be required to effect a Registration
Statement in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting
such registration, qualification or compliance, unless the Company is
already subject to service in such jurisdiction and except as may be
required by the Securities Act or applicable rules or regulations
thereunder.
(iv) The Company shall not be required to effect a Registration Statement
for a period of not more than ninety (90) days immediately following the
delivery of a certificate signed by the President of the Company to the
Requesting Holders stating that, in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company
and its shareholders for such Registration Statement to be filed on or
before the date filing would otherwise be required hereunder; provided,
however, that the Company may not utilize this right more than once in any
twelve (12) month period and the Company may not exercise this right based
on the fact that the Company has recently registered any of its securities
for the account of a security holder or holders exercising their respective
demand registration rights.
If the Company cannot qualify for registration on Form S-3, then the Company
shall effect any registration required or requested by the Holder on Form S-1,
or such other appropriate form, in which event this Section 2.2 shall apply in
all respects as if the words "Form S-3" were replaced by the words "Form S-1"
or the appropriate designation for such other form.
(b) Notice of Inclusion. The Company shall give written notice to all
Holders of Registrable Securities of the receipt of a request for registration
pursuant to this Section 2.2 and shall provide a reasonable opportunity for
other Holders to participate in the registration; provided, however, that, if
the registration is for an underwritten offering, then the terms of Section
2.2(c) hereof shall apply to all participants in such offering. Subject to the
foregoing, the Company shall use its best efforts to effect promptly the
registration of all shares of Registrable Securities on Form S-3 to the extent
requested by the Holder or Holders thereof for purposes of disposition.
(c) Underwriting. If the Requesting Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
then they shall so advise the Company as a part of their request made pursuant
to this Section 2.2, and the Company shall include such information in the
written notice referred to in Section 2.2(b) hereof. The right of any Holder
to registration pursuant to this Section 2.2 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent requested and to the
extent provided herein.
The Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters of
recognized national standing, selected for such underwriting by a majority in
interest of the Requesting Holders and reasonably acceptable to the Company.
Notwithstanding any other provision of this Section 2.2, if the representative
advises the Requesting Holders in writing that marketing factors require a
limitation on the number of shares to be underwritten, then the Requesting
Holders shall so advise all Holders, and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated first among all Holders thereof in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the Registration Statement. No Registrable
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, then such person may elect to withdraw therefrom by written
notice to the Company, the underwriter and the Requesting Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration; provided, however, that, if, by the withdrawal of
such Registrable Securities, a greater number of Registrable Securities held
by other Holders may be included in such registration (up to the maximum of
any limitation imposed by
6
the underwriters), then the Company shall offer to all Holders who have
included Registrable Securities in the registration the right to include
additional Registrable Securities in the same proportion used to determine the
underwriter limitation in this Section 2.2(c).
If the underwriter has not limited the number of Registrable Securities to
be underwritten, then the Company and its executive officers, and such other
Persons as are determined by the Board of Directors, their successors, and
their assigns ("Other Selling Stockholders"), may include securities for their
own account in such registration if the underwriter so agrees and if the
number of Registrable Securities held by the Holders that would otherwise have
been included in such registration and underwriting will not thereby be
limited for any reason, including but not limited to the price for which the
Registrable Securities will be sold. To the extent that the underwriter wishes
to limit the number of shares to be included in the registration on behalf of
the Company and the Other Selling Stockholders, the shares of Common Stock to
be registered held by the Other Selling Stockholders shall be excluded from
such offering prior to excluding any shares held by the Company and those held
by the Company shall be excluded prior to excluding any Registrable Securities
held by the Holders.
2.3 Company Registration.
(a) Notice and Inclusion. If, at any time after September 30, 1998, the
Company shall determine to register any of its securities for its own account,
other than a registration relating solely to employee benefit plans, or a
registration relating solely to a Commission Rule 145 transaction, the Company
shall:
(i) promptly give to each Holder written notice thereof (which shall
include a list of the jurisdictions in which the Company intends to attempt
to qualify such securities under the applicable blue sky or other state
securities laws); and
(ii) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved
therein, all Registrable Securities specified in a written request or
requests, within twenty (20) days after receipt of the written notice from
the Company, by any Holder or Holders.
(b) Underwriting. If the registration of which the Company gives notice is
for a registered public offering by the Company of its securities through an
underwriting, then the Company shall so advise the Holders as a part of the
written notice given pursuant to Section 2.3(a)(i) hereof. In such event, the
right of any Holder to registration pursuant to this Section 2.3 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company, and all the Other
Selling Stockholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for underwriting by the Company. Notwithstanding any
other provision of this Section 2.3, if the underwriter determines that
marketing factors require a limitation on the number of shares to be
underwritten, then the underwriter may exclude from such registration and
underwriting some or all of the Registrable Securities held by the Holders or
the stock held by Other Selling Stockholders in accordance with this Section
2.3(b). The Company shall so advise all Holders and all Other Selling
Stockholders distributing their securities through such underwriting, and (i)
as to the first registration in which Holders are entitled to participate
pursuant to this Section 2.3, the number of Registrable Securities and other
securities that may be included in the registration and underwriting shall be
allocated among all Holders thereof on the basis that shares held by all the
Other Selling Stockholders who are not Holders shall first be excluded to the
extent required and, if further exclusion is necessary, shares held by the
selling Holders shall then be excluded; provided, however, that, as among the
respective Other Selling Stockholders as a group on the one hand and the
Holders as a group on the other hand suffering such exclusion, the exclusion
shall be in proportion, as nearly as practicable, to the amount of securities
entitled to inclusion in such registration held by each of the Other Selling
Stockholders as a group and each of the Holders at the time of filing the
Registration Statement; and (ii) as to all subsequent registrations, the
number of shares of Registrable Securities and other securities that may be
included in the registration and underwriting shall be allocated among all
Other Selling Stockholders and the Holders in proportion, as nearly as
practicable, to the respective amounts of securities entitled to inclusion in
such registration held by all such Other Selling Stockholders and Holders at
7
the time of filing the Registration Statement. For purposes of the
apportionment provisions in clause (i) above, for any selling Holder that is a
partnership or corporation, the partners, retired partners, and shareholders
of such Holder, the estate and family members of such partners and retired
partners, and any trusts for the benefit of any of the foregoing persons shall
be deemed to be a single "selling Holder," and any pro rata reduction with
respect to such selling Holder shall be based upon the aggregate number of
shares carrying registration rights owned by all entities and individuals
included in such "selling Holder," as defined in this sentence. If any Other
Selling Stockholder or Holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
2.4 Expenses of Registration. All Registration Expenses incurred in
connection with any registration qualification or compliance pursuant to this
Article 2 shall be borne by the Company; provided, however, that the
Registration Expenses for the fifth and all subsequent registrations under
Section 2.2(a) hereof requested by the Holders shall be borne by the
requesting Holders pro rata on the basis of the number of their shares so
registered. All Selling Expenses relating to the securities registered by
Holders and, if applicable, Other Selling Stockholders, and fees and
disbursements of counsel, shall be borne by the Holders or the Other Selling
Stockholders, as the case may be, of such securities pro rata on the basis of
the number of their shares so registered.
2.5 Registration procedures.
(a) Company shall use its best efforts to register or qualify the
Registrable Securities covered by such Registration Statement under such other
securities or blue sky laws of such United States jurisdictions as Holder
shall reasonably request and do any and all acts and things which may be
necessary or desirable to enable Holder to consummate the public sale or other
disposition in such jurisdictions; provided, however, that Company shall not
be required in connection therewith or as a condition thereto to qualify to do
business or file a general consent to service of process in any such
jurisdictions.
(b) The Company represents and warrants that, on the date of its
effectiveness, the Registration Statement will comply in all material respects
with the applicable requirements of the Securities Act and the rules
thereunder, including without limitation Rule 415; on the date of its
effectiveness, the Registration Statement will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein not
misleading; provided, however, that no representation is made by Company with
respect to information relative to any Holder; and the Prospectus will not
include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that no representation is made by Company with respect to information relative
to any Holder.
(c) If, at any time or times while the Registration Statement is effective,
Company notifies Holder that a development has occurred or is pending which,
based upon consultation with Company's legal counsel, Company reasonably
believes may cause the then current Prospectus not to be in compliance with
applicable securities laws, then Holder shall refrain from delivering the
Prospectus and from making any offers or sales of Registrable Securities
requiring the delivery of the Prospectus until such time as Company either
notifies Holder that the Prospectus complies with such laws or delivers an
amended Prospectus in replacement of the deficient Prospectus. Company shall
use its reasonable best efforts to minimize the time during which Holder must
so refrain, and no more than one (1) such period of refrain shall be imposed
during any period of one hundred eighty (180) days.
(d) At least two (2) business days prior to the initial filing of the
Registration Statement or Prospectus and no fewer than two (2) business days
prior to the filing of any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), Company shall furnish Holder, its legal counsel and the managing
underwriter, if any, copies of all such documents proposed to be filed, which
documents (other than those incorporated or deemed to be incorporated by
reference) shall be subject to
8
review of Holder, its legal counsel and such underwriters, if any, and Company
shall cause its officers and directors and the independent certified public
accountants to Company to respond to such inquiries as shall be necessary, in
the opinion of respective counsel to Company and any such underwriters, to
conduct a reasonable investigation within the meaning of the Securities Act.
Company shall not file any such Registration Statement or Prospectus or any
amendments or supplements thereto to which Holder, its legal counsel, or the
managing underwriters, if any, shall reasonably object on a timely basis
(i.e., within two (2) business days of receipt thereof).
(e) Company shall promptly notify Holder when the Registration Statement is
declared effective; notify Holder of any stop-order or similar proceeding by
the Commission or any state securities authority; and furnish such number of
Prospectuses, Prospectus supplements and other documents incident thereto as
Holder from time to time may reasonably request.
(f) In the event of any breach by Company of the provisions of Section 2.2,
2.3, 2.4 or 2.5, the parties agree that Holder will suffer irreparable harm.
Accordingly, the parties agree that the provisions of Sections 2.2, 2.3, 2.4
and 2.5 are specifically enforceable by Holder and that Holder shall be
entitled to temporary and permanent injunctive relief against Company and the
other rights and remedies to which Holder may be entitled to at law, in equity
or under this Agreement for any such breach.
2.6 Indemnification.
(a) Indemnification by the Company. The Company shall indemnify each Holder
with respect to which registration, qualification or compliance has been
effected pursuant to this Article 2, each of its officers, directors,
employees, agents and partners, each Person controlling such Holder within the
meaning of Section 15 of the Securities Act, each underwriter, if any, and
each Person who controls any underwriter within the meaning of Section 15 of
the Securities Act, against all expenses, claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any Prospectus, offering circular or other document
(including any related Registration Statement, notification or the like)
incident to any such registration qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration,
qualification or compliance. The Company shall reimburse each such Holder,
each of its officers, directors, employees, agents and partners, and each
Person controlling such Holder, each such underwriter and each Person who
controls any such underwriter for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
expense, claim, loss, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such
claim, loss, damage, liability, action or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder or underwriter and
stated to be specifically for use therein.
(b) Indemnification by the Holders. To the extent set forth in the second
sentence of this Section 2.6(b), each Holder shall, if Registrable Securities
or other securities held by such Holder are included in the securities as to
which such registration qualification or compliance is being effected,
indemnify the Company, each of its directors, officers, employees and agents,
each underwriter, if any, of the Company's securities covered by such a
Registration Statement, each Person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, each other
such Holder, each of such other Holder's officers, directors, employees,
agents and partners, and each Person controlling such Holder within the
meaning of Section 15 of the Securities Act against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact made by the Holder and
9
contained in any such Registration Statement, Prospectus, offering circular or
other document, or any amendment or supplement thereto or incident to any such
registration qualification or compliance or based on any omission (or alleged
omission) to state therein a material fact required to be made by the Holder
and stated therein or necessary to make the statements therein not misleading
or any violation by the Company of any rule or regulation promulgated under
the Securities Act applicable to the Company in connection with such
registration qualification or compliance as a result of any statement (or
based on any omission to state or alleged omission) required to be made by
such Holder. Each such Holder shall reimburse the Company, such other Holders,
directors, officers, employees, agents, partners, Persons, underwriters and
control persons for any legal or any other expenses reasonably incurred in
connection with investigating, preparing or defending any such expense, claim,
loss, damage, liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission
(or alleged omission) is made in such Registration Statement, Prospectus,
offering circular or other document or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished by the
Holder to the Company by an instrument duly executed by such Holder and stated
to be specifically for use therein; provided, however, that the obligations of
such Holders hereunder shall be limited to an amount equal to the proceeds to
each such Holder of Registrable Securities sold as contemplated herein in
connection with the particular registration qualification or compliance
involved.
(c) Notice. Each party entitled to indemnification under this Section 2.6
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought
and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom; provided, however, that counsel
for the Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and that the Indemnified
Party may participate in such defense at its own expense; and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section
2.6 unless such failure resulted in detriment to the Indemnifying Party. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
2.7 Information by Holder. Each Holder or Holders of Registrable Securities
in any registration shall furnish to the Company such information regarding
such Holder or Holders and the distribution proposed by such Holder or Holders
as the Company may reasonably request in writing but only to the extent as
shall be required in connection with any registration qualification or
compliance referred to in this Article 2.
2.8 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of
the Restricted Securities or Control Securities to the public without
registration, the Company agrees to:
(a) Use its best efforts to make and keep public information available as
those terms are understood and defined in Rule 144 under the Securities
Act;
(b) Use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements);
(c) For so long as a Holder owns any Restricted Securities or Control
Securities, furnish to the Holder forthwith upon request (i) a written
statement by the Company as to its compliance with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the Company,
and (iii) such other reports and documents so filed as such Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a Holder to sell any such securities without
registration; and
10
(d) When any Holder qualifies under Rule 144 for the unrestricted right
of sale under Rule 144, the Company shall, upon written request of such
Holder (such request to include sufficient detail as to establish how the
Holder so qualifies under Rule 144), promptly remove any restrictive legend
that may have been placed on any Restricted or Control Securities and issue
Common Stock of the Company free of such restrictive or other legends.
2.9 Transfer of Registration Rights. The rights to cause the Company to
register the Registrable Securities granted to each Holder by the Company
under Sections 2.2 and 2.3 hereof may be transferred or assigned to a
transferee or assignee in connection with the transfer or assignment of not
less than one million (1,000,000) shares of the Registrable Securities;
provided, however, that the Company shall be entitled to notice of any such
transfer of registration rights within thirty (30) days of the date such
transfer is effected.
2.10 Limitations on Subsequent Registration Rights. No owner or prospective
owner of securities of the Company shall have any registration rights other
than as set forth in this Agreement. The Company shall not, without the prior
written consent of the Holders (which consent shall not be unreasonably
withheld) of not less than sixty-six and two-thirds percent (66 2/3%) of the
Registrable Securities then held by Holders, enter into any agreement with any
owner or prospective owner of any securities of the Company that would allow
such owner or prospective owner to include such securities in any registration
filed under this Article 2 if such inclusion would adversely affect the rights
of any Holder.
2.11 Termination of Registration Rights. The registration rights granted
pursuant to this Article 2 shall terminate as to each Holder at such time as
(a) all Registrable Securities can be sold within a given three (3) month
period without compliance with the registration requirements of the Securities
Act pursuant to Rule 144 supported by a written opinion of legal counsel for
the Company, which opinion shall be reasonably satisfactory in form and
substance to legal counsel for such Holders, and (b) all accrued interest and
principal under the Company Credit Facility and the ▇▇▇▇▇▇▇▇ Credit Facility
has been repaid in full or converted into Common Stock of the Company (and
such Common Stock can be sold as provided in (a) above).
2.12 "Market Stand-off" Agreement. Each Holder hereby agrees that, to the
extent requested by the Company and an underwriter of a sale of Common Stock
(or other securities) of the Company for the account of the Company and not
for the account of a security holder or holders exercising their respective
demand registration rights, it shall not sell or otherwise transfer or dispose
of (other than to transferees who agree to be similarly bound) any Registrable
Securities during the ninety (90) day period following the effective date of a
registration statement of the Company filed under the Securities Act;
provided, however, that all officers and directors of the Company, all Other
Selling Stockholders and all other Persons with registration rights (whether
or not pursuant to this Agreement) shall enter into similar agreements. To
enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to the Registrable Securities of each Holder (and
the shares or securities of every other Person subject to the foregoing
restriction) until the end of such ninety (90) day period.
ARTICLE 3
ANTI-DILUTION RIGHTS AND LIMITATIONS ON OWNER
3.1 Anti-Dilution Rights. If, at any time after the Effective Date, Company
agrees to sell shares of its Common Stock or other Voting Stock ("Company
Securities") in a private or public offering (other than Company Securities
issued pursuant to the Company's stock option plans), Holder shall have the
right, but not the obligation, to acquire all or any portion of the Company
Securities sufficient for Holder to maintain, after the offering, the same
percentage of ownership of issued and outstanding Company Securities that
Holder possessed immediately prior to the offering (the "Pre-Offering
Percentage"). With respect to the issuance of Company Securities pursuant to
the Company's stock option plans, Holder shall have a right to maintain its
percentage ownership of issued and outstanding Company Securities by making
open market purchases as provided in Section 3.5 hereof.
11
3.2 Private Offering. With respect to a private offering, other than
pursuant to a Company stock option plan, Company shall, within five (5)
business days after the execution of any agreement entered into in connection
with such private offering, notify Holder in writing of the proposed offering
and provide Holder with copies of all related documentation, including, for
example, any letter of intent and the final contract. Holder shall have twenty
(20) business days from the date of receipt of Company's notice in which to
advise Company whether Holder elects to exercise its rights under Section 3.1
hereof. If Holder does not respond, or if Holder indicates that it will not
exercise its rights, Holder shall be considered irrevocably to have waived its
rights under Section 3.1 hereof with respect to such specific private
offering. If Holder timely advises Company that Holder will exercise its
rights under Section 3.1 hereof, Holder shall have the right to acquire all or
any portion of the necessary amount of the Company Securities to maintain
Holder's Pre-Offering Percentage at the price or value of the consideration
specified in the private offering agreement entered into between Company and
the purchaser. Closing shall be in accordance with the terms of the private
offering agreement, and Holder shall make such investment representations to
Company and shall provide Company with such other documentation at closing as
is reasonably required by Company to comply with applicable securities laws.
3.3 Public Offering. With respect to a public offering, Company shall notify
Holder no later than five (5) business days after Company has entered into a
letter of intent with its underwriters, and shall provide Holder with a copy
of the letter of intent. Holder shall have twenty (20) business days from the
date of receipt of Company's notice in which to advise Company whether Holder
elects to exercise its rights under Section 3.1 hereof. If Holder does not
respond or if Holder indicates that it will not exercise its rights, Holder
shall be considered irrevocably to have waived its rights under Section 3.1
hereof with respect to the public offering. If Holder timely advises Company
that Holder desires to retain its rights under Section 3.1 hereof, then, when
Company files a Registration Statement containing a Preliminary Prospectus
with the Commission, Company shall provide Holder with copies of the
Preliminary Prospectus and all subsequent amendments. Holder shall have twenty
(20) business days from its receipt of the Preliminary Prospectus in which to
exercise its rights under Section 3.1 hereof by making an offer to acquire all
or any portion of the necessary amount of Company Securities to maintain
Holder's Pre-Offering Percentage based on the price, less all Selling
Expenses, and the other terms contained in the final Prospectus. No such offer
to buy shall be accepted prior to the time that the Registration Statement
becomes effective. The Registration Statement shall indicate that Holder has
anti-dilution rights to purchase Company Securities on the terms offered to
the public.
3.4 Limitations. Notwithstanding the preceding provisions of this Article 3,
Company shall not be required to issue any fractional shares as a result of
Holder's exercise of its rights under Section 3.1 hereof. Company shall not be
required to transfer any Company Securities to Holder under this Article 3 if
to do so would result in the violation of any applicable law, rule or
regulation.
3.5 Open Market Purchases to Maintain Ownership Percentage. Notwithstanding
any other provision hereof, at any time after the Effective Date, Holder may
make such open market purchases of Company Securities as are necessary to
maintain Holder's percentage of ownership of issued and outstanding Company
Securities at the Effective Date Percentage or to increase its percentage of
ownership of issued and outstanding Company Securities to the Effective Date
Percentage. With respect to the issuance of Company Securities pursuant to a
Company stock option plan or any warrant, conversion right or other option,
Company shall notify Holder no later than ten (10) calendar days after the end
of each calendar quarter and within ten (10) calendar days of the record date
for a shareholder meeting and for dividend payments for Company Securities of
the number of shares and issuance price of Company Securities issued pursuant
to Company's stock option plans or any warrant, conversion right or other
option subsequent to the last notice given pursuant to this Section 3.5 so as
to enable Holder to make open market purchases of Company Securities as
permitted under this Section 3.5.
3.6 Limitations on Holder's Ownership. Except for purchases of Company
Securities made in accordance with this Article 3 or the Stock Purchase
Agreement, during the term of this Agreement, Holder shall not directly or
indirectly acquire any Company Securities except as follows:
12
(a) On and after March 31, 1996 until September 30, 1998, Holder shall not
increase or further increase its ownership of issued and outstanding Company
Securities above the Effective Date Percentage, except through one (1) or more
of the following:
(i) Conversion of principal and/or interest under the Company Credit
Facility or the ▇▇▇▇▇▇▇▇ Credit Facility into shares of Common Stock;
(ii) Issuance of Company Securities in an asset sale by Holder to Company;
and
(iii) A tender offer by Holder to increase its ownership to seventy percent
(70%) or more of the issued and outstanding Company Securities at a price
approved by the disinterested Directors of Company and based upon a
fairness opinion delivered to the Board of Directors of the Company by an
investment banking firm; provided, however, that, if Holder makes a tender
offer to increase its ownership to more than eighty percent (80%) of the
issued and outstanding Company Securities, such tender offer must be for
one hundred percent (100%) of the publicly traded Company Securities.
(b) After September 30, 1998, Holder may increase its ownership of Company
Securities through open market purchases or otherwise.
(c) If, at any time after the Effective Date, Holder shall elect to
increase its percentage of ownership of issued and outstanding Company
Securities above the Effective Date Percentage as permitted by paragraph (a)
above (such increased percentage hereafter being the "New Percentage
Ownership"), then thereafter Holder may make such open market purchases of
Company Securities as are necessary to maintain such New Percentage Ownership
or to increase its percentage of ownership of issued and outstanding Company
Securities to such New Percentage Ownership.
(d) Holder shall not be required to dispose of any Company Securities if
Holder's percentage ownership of Company Securities is increased as a result
of any recapitalization by Company or any other action taken by Company.
3.7 Limitations on Holder's Resale of Company Securities. Holder shall not
directly or indirectly sell any Company Securities (other than to an Affiliate
of Holder) except as follows:
(a) On and after March 31, 1997 until September 30, 1998, Holder may sell
Company Securities (i) as part of a joint venture, merger or sale of all or
substantially all of its current Crop Protection business unit, as such
business may be subsequently renamed or reorganized, or (ii) pursuant to a
tender offer by a third party to the shareholders of Company.
(b) After September 30, 1998, in addition to the rights to sell Company
Securities set forth in paragraph (a) above, Holder may sell Company
Securities (i) in a registered public offering pursuant to the registration
rights granted to Holder under this Agreement, (ii) through sales pursuant to
Rule 144 under the Securities Act, (iii) through sales of not more than ten
percent (10%) of the total issued and outstanding Company Securities to a Non-
Financial Purchaser, or (iv) through sales to a Financial Purchaser.
(c) After September 30, 1999, in addition to the rights to sell Company
Securities as set forth in paragraphs (a) and (b) above, Holder may sell
Company Securities through a private sale of thirty-five percent (35%) or more
of the total issued and outstanding Company Securities to a Non-Financial
Purchaser under circumstances where such third party assumes the applicable
and proportionate rights and obligations of Holder under this Agreement and
the other Transaction Agreements.
(d) Notwithstanding the foregoing, at any time after the Effective Date,
Holder may sell Company Securities issued to Holder upon conversion by Holder
of principal or accrued interest under either of the Credit Facilities after
the occurrence of an Event of Default under either of such Credit Facilities.
ARTICLE 4
COMPANY AND CALGENE CORPORATE GOVERNANCE
4.1 Composition of the Board of Directors and Calgene Board. The number of
Directors comprising both the Board of Directors and the Calgene Board and the
manner of nominating the members thereof shall be as follows:
13
(a) The number of Directors comprising the Board of Directors shall
initially be fixed at nine (9) Directors. The parties agree that the manner of
nominating, and the governance provisions relating to, the Board of Directors
and the Calgene Board shall be identical, and that the provisions of this
Section 4.1 set forth below and of Sections 4.3(c) and 4.3(d) hereof shall be
deemed to apply equally to the Calgene Board and Calgene Directors.
Accordingly, when applied to the Calgene Board, the term "Director" shall be
deemed to mean "Calgene Director", the term "Company", whether used alone or
as a modifier, shall be deemed to mean "Calgene", and the term "Board of
Directors" shall be deemed to mean "Calgene Board".
(b) Until changed in accordance with this Agreement, the Board of Directors
shall be comprised of nine (9) Directors, and the Company shall nominate for
election as Directors: (i) one (1) Company Management Director, (ii) three (3)
Company Directors, and (iii) five (5) Directors designated by Monsanto, at
least one (1) of which shall be an Independent Director.
(c) [This section intentionally left blank]
(d) At any time that Monsanto's Percentage Interest is at least seventy
percent (70%), (i) the Company shall nominate: (i) six (6) Directors
designated by Monsanto, which shall consist of the one (1) Company Management
Director and five (5) other Monsanto Directors (including at least one (1)
Independent Director) and (ii) three (3) Independent Directors. At such time
as Monsanto's Percentage Interest is at least ninety-nine percent (99%), the
Company shall nominate nine (9) Directors designated by Monsanto.
(e) Notwithstanding anything in the foregoing paragraphs (b) and (d) to the
contrary, (i) at any time Monsanto's Percentage Interest is less than forty
percent (40%) but at least twenty percent (20%), the Company shall nominate
three (3) Directors designated by Monsanto, (ii) at any time Monsanto's
Percentage Interest is less than twenty percent (20%) but at least ten percent
(10%), the Company shall nominate two (2) Directors designated by Monsanto and
(iii) at any time Monsanto's Percentage Interest is less than ten percent
(10%) but at least five percent (5%), the Company shall nominate one (1)
Director designated by Monsanto. If, at any time, Monsanto's Percentage
Interest is less than five percent (5%), the Company shall not be obligated to
nominate any Director designated by Monsanto. At any such time, all other
Directors, other than the Company Management Directors, shall be nominated by
the Company.
(f) The Independent Directors to be nominated by the Company from time to
time shall be nominated by action of a majority of Company Directors then in
office. The Company Directors shall consult with the other Independent
Directors as to the nomination of any Company Director, and in the event a
majority of the Company Directors are unable to agree upon any Company
Director nominee, then the majority of all the Independent Directors shall
nominate such nominee. In the event that no Company Directors are in office at
the time of any nomination of a Company Director, such Company Directors shall
be nominated by a majority of the Independent Directors then in office;
provided, however, that the holders of a majority of the outstanding Voting
Stock held by Unaffiliated Equity Holders shall be entitled to nominate and
elect Company Directors in lieu of any individuals so nominated to be such
Company Directors by a majority of the Independent Directors.
(g) The Company and Monsanto, respectively, shall have the right to nominate
any replacement for a Director nominated in accordance with this Section 4.1
by the Company or Monsanto, respectively, upon the death, resignation,
retirement, disqualification or removal from office for cause of such
Director. Such replacement for any Independent Director shall also be an
Independent Director unless, in the case of a replacement of a Monsanto
Director, the Monsanto Directors include more than the required number of
Independent Directors. The Board of Directors shall elect each person so
nominated by Monsanto or the Company pursuant to this paragraph (g). In
addition, the Board of Directors shall nominate the Company's Chief Executive
Officer to replace such officer's predecessor in office as a Company
Management Director.
(h) In the event that the number of Monsanto Directors on the Board of
Directors differs from the number that Monsanto has the right (and wishes) to
designate for nomination pursuant to this Section 4.1, (i) if the number of
Monsanto Directors exceeds such number, Monsanto shall promptly take all
appropriate action to cause to resign that number of Monsanto Directors as is
required to make the remaining number of such Monsanto Directors conform to
this Section 4.1 or (ii) if the number of Monsanto Directors otherwise is less
than such number, the Company shall promptly take all necessary action to
create sufficient vacancies on the
14
Board of Directors to permit Monsanto to designate the full number of Monsanto
Directors which it is entitled (and wishes) to nominate pursuant to this
Section 4.1 (such action to include seeking the resignation or removal of
Directors or, at the request of Monsanto, calling a special meeting of the
stockholders of the Company for the purpose of removing Directors to create
such vacancies to the extent permitted by applicable law). Upon the creation
of any vacancy pursuant to the preceding sentence, Monsanto shall nominate the
person to fill such vacancy in accordance with this Section 4.1 and the Board
of Directors shall elect each person so nominated. Notwithstanding the
foregoing, at each annual meeting of the stockholders of the Company, the
Company shall nominate such number of Directors as Monsanto is otherwise
entitled to designate under this Section 4.1.
(i) Notwithstanding anything herein to the contrary, no individual who is an
officer, director, employee, agent, partner or principal stockholder of any
competitor of the Company or any of its Affiliates (other than Monsanto and
its Affiliates) or any competitor of Monsanto or any of its Affiliates (other
than the Company) shall serve as a Director without the unanimous consent of
the Board of Directors.
(j) In the event that Monsanto desires to remove any Monsanto Director with
or without cause and Monsanto is unable to procure the resignation of such
Monsanto Director, then, upon the request of Monsanto, the Board of Directors
shall promptly call a special meeting of stockholders of the Corporation for
purposes of removing such Monsanto Director. In the event that the Company
desires to remove any Company Director with or without cause and the Company
is unable to procure the resignation of such Company Director, then, upon the
request of a majority of all of the Independent Directors then in office, the
Board of Directors shall promptly call a special meeting of stockholders of
the Company for purposes of removing such Company Director. In the event that
the Chief Executive Officer's employment with the Company is terminated for
any reason, then upon the request of either Monsanto or a majority of all of
the Independent Directors then in office, the Board of Directors shall
promptly call a special meeting of stockholders of the Corporation for the
purpose of removing such person as a Company Management Director.
(k) Notwithstanding anything to the contrary herein, the Board of Directors,
by unanimous action of all members of the Board of Directors, may increase the
number of directors comprising the Board of Directors and may elect, or
nominate for election, the director(s) to fill the vacancy or vacancies
created by such increase.
4.2 Solicitation and Voting of Shares.
(a) The Company shall use its best efforts to solicit from the stockholders
of the Company eligible to vote for the election of Directors proxies in favor
of the Company Management Directors and the nominees designated in accordance
with Section 4.1 hereof or the removal of any Director pursuant to Section
4.1(h) or 4.1(j) hereof.
(b) In any election of Directors or any meeting of the stockholders of the
Company called expressly for the removal of Directors, so long as the Board of
Directors includes (and will include after any such removal) the number of
Monsanto Directors contemplated by Section 4.1 hereof and so long as such
meeting is properly called and Monsanto is properly notified in accordance
with the Company's by-laws and certificate of incorporation, Monsanto and its
Affiliates shall attend such meeting for purposes of establishing a quorum and
shall vote all their shares of Voting Stock (i) in favor of any nominee or
Director designated in accordance with Section 4.1 hereof, (ii) in favor of
removal of any Director as contemplated by Section 4.1(h) or 4.1(j) hereof,
and (iii) otherwise against the removal of any Director designated in
accordance with Section 4.1 hereof (other than in cases of removal of a
Director for cause); provided, however, that, if Monsanto and its Affiliates
elect to cumulate their votes in accordance with the Company's by-laws and
certificate of incorporation, then, in any vote electing Monsanto Directors,
Monsanto and its Affiliates may cast all of their votes in favor of one (1) or
more of the Monsanto Directors designated by Monsanto and in any vote with
respect to the removal of a Monsanto Director, Monsanto and its Affiliates may
cast all or any portion of their votes either in favor or against the removal
of any Monsanto Director unless a Monsanto Director is otherwise required to
be removed in accordance with Section 4.1(h) hereof. In any other matter
submitted to a vote of the stockholders of the Company, Monsanto and its
Affiliates may vote any or all of their shares in their sole discretion.
15
(c) Monsanto agrees that it will, and will cause any of its Subsidiaries
(other than the Company and its Subsidiaries) to, take all action as a
stockholder of the Company or as is otherwise reasonably within its control,
as necessary to effect the provisions of this Agreement, including, without
limitation, voting all shares of Voting Stock in favor of all persons
nominated in accordance with Section 4.1 hereof; provided, however, that, if
Monsanto cannot so take actions to give effect to all of the provisions of
this Agreement, it may first take actions to ensure that it receives all of
its benefits hereunder and then, to the extent possible, to give effect to the
provisions in favor of the Company.
4.3 Committees.
(a) The Board of Directors shall establish, empower and maintain the
committees of the Board of Directors contemplated by this Section 4.3.
(b) The following committees shall be established, empowered and maintained
by the Board of Directors at all times during the term of this Agreement:
(i) an Audit Committee, consisting of at least three (3) of the Company's
Independent Directors, which committee shall be authorized and empowered to
cause an audit to be performed of the Company and each of its Subsidiaries;
(ii) [This section intentionally left blank]
(iii) a Compensation Committee, responsible, among other things, for
recommending to the Board of Directors, for approval by a majority of the
Board of Directors, (a) the adoption and amendment of all employee benefit
plans and arrangements, (b) the engagement of, terms of any employment
agreements and arrangements with, and termination of, all persons
designated by the Company as "officers" for purposes of Section 16 of the
Exchange Act ("Section 16 Officers") and (c) the policies, limitations and
procedures under which the Stock Option Plan Administration Committee shall
operate; and
(iv) such other committees as the Board of Directors deems necessary or
desirable; provided, however, that such committees are established in
compliance with Section 4.4(a)(vi) hereof, if applicable.
(c) Except as otherwise provided in Section 4.3(b) hereof or as agreed by a
majority of the Monsanto Management Directors, the number of Monsanto
Directors on each committee of the Board of Directors shall be the same
proportion (but not less than one (1)) of the total membership of such
committee as the number of Monsanto Directors, as the case may be, is of the
entire Board of Directors. Except as otherwise provided in Section 4.3(b)
hereof, the Monsanto Directors on each committee of the Board of Directors
shall be determined by a majority of the Monsanto Management Directors.
(d) No action by any committee of the Board of Directors shall be valid
unless taken by unanimous written consent as provided in the Company's by-laws
or taken at a meeting for which adequate notice has been duly given or waived
by the members of such committee. Such notice shall include a description of
the general nature of the business to be transacted at the meeting, and no
other business may be transacted at such meeting unless all members of the
committee are present and consent to the consideration of such other business.
Any committee member unable to participate in person at any meeting shall be
given the opportunity to participate by telephone. The Board of Directors or
the remaining committee members shall designate an Independent Director or
Company Management Director to replace any absent or disqualified Independent
Director member or Company Management Director member, respectively, of any
committee and a majority of the Monsanto Management Directors shall designate
a Monsanto Director to replace any absent or disqualified Monsanto Director
member of any committee. Each of the committees established by the Board of
Directors pursuant to this Section 4.3 shall establish such other rules and
procedures for its operation and governance (consistent with the terms of this
Agreement) as it shall see fit and may seek such consultation and advice as to
matters within its purview as it shall require.
4.4 Approval Required for Certain Actions.
(a) On and after the Effective Date and until the earlier of a Trigger Event
or such date on which Monsanto's Percentage Interest is less than twenty-five
(25%), a majority of the Board, including at least one (1)
16
Company Director and one (1) Monsanto Management Director, shall be required
to approve any of the following:
(i) the entry by the Company or any of its Affiliates into any merger or
consolidation or the acquisition by the Company or any of its Affiliates of
any business or assets that would constitute a Substantial Part of the
Company (determined on a consolidated basis) whether such acquisition be by
merger or consolidation or the purchase of stock or assets or otherwise;
(ii) the sale, pledge, grant of security interest in, transfer,
retirement or other disposal of (A) a Substantial Part of the Company
(determined on a consolidated basis), except pursuant to a security
interest granted in connection with borrowings permitted under subsection
(iv) below or (B) the pledge or granting of a security interest in any
intangible property set forth in Exhibit B attached to the disclosure
letter from Monsanto to Calgene dated June 27, 1995 (the "Monsanto
Disclosure Letter");
(iii) any dividend by or return of capital by the Company or ▇▇▇▇▇▇▇▇
(other than such distributions by ▇▇▇▇▇▇▇▇ to the Company as are necessary
for the Company to timely perform its obligations under Sections 1.02 and
5.02(c) of the ▇▇▇▇▇▇▇▇ Credit Facility);
(iv) any incurrence or assumption, in the aggregate, by the Company, any
of its Affiliates or any combination thereof, of any indebtedness for
borrowed money at any time outstanding exceeding in the aggregate
(determined on a consolidated basis) the greater of (i) 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 seasonal working capital lines and indebtedness
incurred to acquire property, plant or equipment and secured by the
acquired asset, minus amounts outstanding under the Company Credit
Facility, or (ii) the amounts set forth in the Company's Operating Plan
(hereinafter defined), provided that loans under the ▇▇▇▇▇▇▇▇ Credit
Facility shall not be counted in this limitation;
(v) the repurchase or redemption of any Equity Securities of the Company,
other than from employees upon termination of employment or service;
(vi) the establishment of any new committees of the Board (or the Calgene
Board) or new or revised delegation(s) of Board (or the Calgene Board)
authority to any Board (or Calgene Board) committee or changes or revisions
to general delegations of authority to officers or other Persons for
categories of expenditures;
(vii) the adoption of or amendment to any benefit or incentive plans of
the Company or any of its Affiliates which would increase the annual cost
thereof by more than fifteen percent (15%) from the prior fiscal year or
any adoption of, or amendment to, any stock option plan;
(viii) the election, appointment or removal of the Chief Executive
Officer, Chief Operating Officer or Chief Financial Officer of the Company
and Calgene and their successors and the establishment of their annual or
long term compensation level and benefits and basis for awards (other than
agreements in effect on the Effective Date); provided, however, that
Monsanto shall have the right to select the Chief Technical Officer of the
Company and a controller reporting to the Chief Financial Officer of the
Company;
(ix) approval of the annual operating plan ("Operating Plan") and long-
term strategic plan ("Strategic Plan") of the Company and its Affiliates,
as well as the annual operating plan and long-term strategic plan for the
▇▇▇▇▇▇▇▇ Business, to be submitted to the Board annually for approval, and
any material changes thereto;
(x) any transaction between the Company (and its Affiliates), on the one
hand, and its (their) directors, officers or employees, on the other hand,
which is not in the normal course of business;
(xi) any modification of the Transaction Agreements;
(xii) any amendment of the by-laws or certificate of incorporation of the
Company, Calgene or Tomato Associates by the respective Boards of Directors
thereof;
(xiii) the issuance of any warrants for the purchase of Equity Securities
or the issuance of additional Equity Securities (other than warrants for
the purchase of Equity Securities) in excess of four million
17
(4,000,000) shares of Common Stock in any two (2) year period to a third
party, other than pursuant to plans referred to in subsection (vii) above;
(xiv) the sale or licensing by the Company or any of its Affiliates of
(A) any intangible property set forth in Exhibit B attached to the
disclosure letter from Monsanto to Calgene dated June 27, 1995 or (B) any
other intangible property for consideration (other than royalties
contingent on future sales) exceeding five million dollars ($5,000,000) in
the aggregate (determined on a consolidated basis) per transaction or per
series of related transactions;
(xv) new fixed capital investments, capital leases or noncancellable
operating leases by the Company and its Affiliates having annual payments
in the aggregate (determined on a consolidated basis) exceeding the
aggregate amount set forth in the Operating Plan;
(xvi) [This section intentionally left blank]
(xvii) any press release which mentions or directly or indirectly refers
to Monsanto, except as required by law and where Board approval cannot be
obtained in a timely manner;
(xviii) the initiation, settlement or termination of any suit or
proceeding concerning intellectual property, any other matter which could
have an adverse public affairs effect upon Monsanto or the filing of any
insolvency or bankruptcy proceeding by or on behalf of the Company or any
of its Affiliates; or
(xix) the removal or election of the directors of ▇▇▇▇▇▇▇▇.
(b) After a Trigger Event and until the earlier of (i) March 31, 1999 or
(ii) Monsanto's Percentage Interest is at least seventy percent (70%), a
majority of the Board, including at least two (2) Company Directors, shall be
required to approve any of the following:
(i) the matters set forth in subsections (i), (ii), (vi), (viii), (ix)
and (xi) of paragraph (a) above; or
(ii) any transaction between the Company (and its Affiliates) and
Monsanto or any Affiliate of Monsanto.
(c) From and after the occurrence of both (i) a Trigger Event and (ii) March
31, 1999, and until Monsanto's Percentage Interest is at least ninety-nine
percent (99%), neither Monsanto nor any of its Affiliates shall enter into any
transaction with the Company or any of its Affiliates without the approval of
at least two (2) Company Directors.
4.5 Enforcement of this Agreement. The Independent Directors, acting by
unanimous consent, shall have full and complete authority on behalf of the
Company to enforce the terms of this Agreement.
4.6 Certificate of Incorporation and By-laws. The Company and Monsanto shall
take or cause to be taken all lawful action necessary to ensure at all times
that the Company's and Calgene's Certificate of Incorporation and By-laws are
not at any time inconsistent with the provisions of this Agreement. Not later
than the Effective Date, the Board of Directors shall amend the Company's By-
laws and the Calgene Board shall amend Calgene's By-laws to reflect the
provisions of this Agreement.
4.7 Advisors. The Independent Directors shall be entitled to retain, at the
cost and expense of the Company, the services of an investment banking firm of
national reputation of their choice and one (1) law firm of their choice to
advise them in their capacity as Independent Directors with respect to any
matter on which the Independent Directors are required or permitted to act
hereunder.
4.8 Injunctive Relief. In the event of a breach of the provisions of this
Article 4, a party hereto entitled to rights under this Article 4 will suffer
irreparable harm and the total amount of monetary damages will be impossible
to calculate and will therefore be an inadequate remedy. Accordingly, in such
event, such party shall be entitled to temporary and permanent injunctive
relief against the Company and any other breaching party and to any other
rights and remedies to which such party may be entitled to at law or in
equity.
18
ARTICLE 5
GOVERNANCE OF ▇▇▇▇▇▇▇▇
[This Article intentionally left blank.]
ARTICLE 6
MISCELLANEOUS
6.1 Governing Law. This Agreement shall be governed in all respects by the
laws of the State of Delaware (exclusive of such state's choice of laws
rules).
6.2 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors, and administrators of the parties
hereto.
6.3 Entire Agreement; Amendment. The Company and Monsanto hereby agree that,
as of the date of this Agreement: (i) the Prior Stockholders Agreement is
hereby amended in its entirety by this Agreement, (ii) the provisions of the
Prior Stockholders Agreement shall no longer be of any force or effect, (iii)
the Company and Monsanto shall be bound by the terms of this Agreement, and
(iv) this Agreement and the other documents delivered pursuant hereto
constitute the complete, exclusive and final understanding and agreement
between the parties with regard to the subjects hereof and thereof. Except as
specifically set forth herein, any term of Section 2 or 3 hereof may be waived
only with the prior written consent of the Company and the Holders of at least
sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of the
Registrable Securities. Any amendment or waiver effected in accordance with
this Section 6.3 shall be binding upon each Holder of the Registrable
Securities (including securities into which such Registrable Securities have
been converted) outstanding at the time, each future Holder of all such
securities, and the Company. Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by the Company and Monsanto, or in the case of a
waiver, by the party against whom the waiver is to be effective; provided that
no such amendment or waiver shall be effective without the approval of all of
the Independent Directors.
6.4 Notices. Any notice required or permitted to be given under this
Agreement shall be in writing, and shall be deemed sufficiently given when
delivered in person or transmitted by telegram or telecopier (confirmed by
mail), addressed as follows:
If to Monsanto: Monsanto Company ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Assistant Secretary
Telecopy Number: ▇▇▇-▇▇▇-▇▇▇▇
If to any other Holder, at such address and telecopy number as such Holder
shall have furnished the Company in writing.
If to Company: Calgene, ▇▇▇.▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ 95616Attention:
Chairman and Chief Executive
OfficerTelecopy Number: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as may be specified from time to time in a notice
given by such party. The parties agree to acknowledge in writing the receipt
of any such notice delivered in person.
19
6.5 Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any Holder of any Registrable Securities, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such Holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any party or any waiver on
the part of any party of any provisions or conditions of this Agreement must
be made in writing and shall be effective only to the extent specifically set
forth in such writing. All remedies, either under this Agreement, at law, in
equity or otherwise afforded to any party, shall be cumulative and not
alternative.
6.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.7 Severability. In the event that any provision of this Agreement becomes
or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided, however, that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to
any party.
6.8 Stock Legends. Subject to Section 2.8(d) hereof, certificates
representing Restricted Securities (other than Restricted Securities issued to
Monsanto in connection with the conversion of principal and/or accrued
interest under the Company Credit Facility or the ▇▇▇▇▇▇▇▇ Credit Facility
upon the occurrence of an Event of Default under either such Credit Facility)
issued to Monsanto pursuant to the Transaction Agreements and the Stock
Purchase Agreement shall bear the following legend:
"The securities represented by this certificate are subject to certain
resale restrictions and entitled to the benefits set forth in a
Stockholders Agreement dated March 31, 1996, as amended and restated on
November , 1996, between Calgene, Inc., a Delaware corporation (formerly
known as Calgene II, Inc.), and Monsanto Company, a Delaware corporation
(the "Agreement") . A copy of the Agreement and all amendments thereto are
on file in the office of the Secretary of the Company."
6.9 [This section intentionally left blank.]
6.10 Audits Consultants and Inspections. Monsanto (using Monsanto's
internal and/or external auditors or any other Person appointed by Monsanto to
whom the Company does not reasonably object) shall have the right (i) to audit
the books and records, other financial information and business practices and
operations of the Company and its Affiliates, and (ii) to discuss the business
practices and operations, affairs, finances and accounts of the Company and
its Affiliates with the officers of the Company and its Affiliates 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
Affiliates') 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 (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; 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.
6.11 No Third Party Beneficiaries. Nothing contained in this Agreement,
express or implied, is intended to or shall confer upon anyone other than the
parties hereto (and their successors and assigns, including, without
limitation, subsequent Holders and purchasers under Section 3.7(c)) any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
20
6.12 Sections and Articles. All sections and articles referred to herein are
sections and articles of this Agreement.
6.13 Headings. Headings as to the contents of particular articles and
sections are for convenience only and are in no way to be construed as part of
this Agreement or as a limitation of the scope of the particular articles or
sections to which they refer.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
Calgene, Inc.
By: _________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
Monsanto Company
By: _________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Executive Vice President
21