UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 146(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
DELTA AND PINE LAND COMPANY
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1. Title of each class of securities to which transaction applies:
Common Stock, par value $0.10 ("D&PL common stock")
2. Aggregate number of securities to which transaction applies:
39,243,648 (as of October 6, 2006)
3. Includes (i) 36,437,131 outstanding shares of D&PL common stock as
of October 6, 2006; (ii) options to purchase 2,696,512 shares of
D&PL common stock outstanding as of October 6, 2006 with exercise
prices below $42.00 per share; (iii) 95,143 shares of D&PL
restricted common stock issued and outstanding as of October 6,
2006; and (iv) 14,862 shares of D&PL common stock reserved for
issuance with respect to outstanding restricted stock units as of
October 6, 2006.
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
The filing fee was determined based upon the sum of (a) 36,532,274
shares of D&PL common stock (including restricted common stock)
outstanding multiplied by $42.00 per share; (b) 2,696,512 shares of
D&PL common stock subject to outstanding options with exercise
prices below $42.00, multiplied by $18.52 per share (which is the
excess of $42.00 over the weighted average exercise price per share
of these stock options); and (c) 14,862 shares of D&PL common stock
issuable pursuant to outstanding restricted stock units multiplied
by $42.00 per share. In accordance with Section 14(g) of the
Securities Exchange Act of 1934, as amended, the filing fee was
determined by multiplying 0.000107 by the sum of the amounts
calculated pursuant to clauses (a), (b) and (c) of the preceding
sentence.
4. Proposed maximum aggregate value of transaction: $1,584,919,114
5. Total fee paid: $169,586.35
[X] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
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[LOGO]
DELTA AND PINE LAND COMPANY
November 7, 2006
Dear Stockholder:
You are cordially invited to attend a special meeting of the stockholders
of Delta and Pine Land Company, which will be held at the Madison Hotel, 79
Madison Avenue, Memphis, Tennessee on December 21, 2006, beginning at 10:00
a.m., Central Standard Time.
At the special meeting, we will ask you to consider and vote on a
proposal to adopt the Agreement and Plan of Merger, dated as of August 14,
2006, among Monsanto Corporation ("Monsanto"), Monsanto Sub, Inc. and Delta
and Pine Land Company ("D&PL," "we," "us," or "our"), providing for the
acquisition of D&PL by Monsanto. If the merger is completed, D&PL will become
a wholly-owned subsidiary of Monsanto, and you will receive $42.00 in cash,
without interest and less any applicable withholding taxes, for each share of
our common stock that you own and you will cease to have an ownership interest
in the continuing business of D&PL. A copy of the merger agreement is attached
as Appendix A to the accompanying proxy statement and you are encouraged to
read it in its entirety.
After careful consideration, our board of directors has unanimously
approved the merger agreement and determined that the merger and the merger
agreement are advisable and fair to, and in the best interests of, D&PL and
its stockholders. OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" THE ADOPTION OF THE MERGER AGREEMENT.
The proxy statement attached to this letter provides you with information
about the merger and the special meeting. Please read the entire proxy
statement carefully. You may also obtain additional information about us from
documents we filed with the Securities and Exchange Commission.
Your vote is very important. The merger cannot be completed unless D&PL
stockholders holding a majority of the outstanding shares entitled to vote at
the special meeting of stockholders vote to adopt the merger agreement. If you
do not vote, it will have the same effect as a vote against the adoption of
the merger agreement.
Whether or not you plan to attend the special meeting in person, please
complete, sign, date and return promptly the enclosed proxy card or vote
electronically via the internet or by telephone. If you hold shares through a
broker, trustee or other nominee, you should follow the procedures provided by
your broker, trustee or nominee. These actions will not limit your right to
vote in person if you wish to attend the special meeting and vote in person.
If you have any questions or need assistance voting your shares, please
call Georgeson Inc., which is assisting us, toll free at (866) 296-6841. Banks
and brokers can call (212) 440-9800.
On behalf of our board of directors, I thank you in advance for your
cooperation and continued support.
On behalf of your board of directors,
/s/ Jon E.M. Jacoby
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Jon E. M. Jacoby
Chairman of the Board
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE MERGER, PASSED UPON THE
MERITS OR FAIRNESS OF THE MERGER OR PASSED UPON THE ADEQUACY OR ACCURACY OF
THE DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This proxy statement is dated November 7, 2006 and is first being
mailed to stockholders on or about November 15, 2006.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 21, 2006
TO THE STOCKHOLDERS OF DELTA AND PINE LAND COMPANY:
NOTICE IS HEREBY GIVEN that the special meeting of stockholders of Delta
and Pine Land Company will be held at the Madison Hotel, 79 Madison Avenue,
Memphis, Tennessee on December 21, 2006, beginning at 10:00 a.m., Central
Standard Time, for the following purposes:
1. ADOPTION OF THE MERGER AGREEMENT WITH MONSANTO CORPORATION. To
consider and vote on a proposal to adopt the Agreement and Plan of Merger,
dated as of August 14, 2006, among Monsanto Corporation, Monsanto Sub, Inc.
and Delta and Pine Land Company.
2. ADJOURNMENT OR POSTPONEMENT OF THE SPECIAL MEETING. To approve the
adjournment or postponement of the special meeting, if necessary or
appropriate, to solicit additional proxies if there are insufficient votes at
the time of the meeting to adopt the merger agreement.
3. OTHER MATTERS. To transact such other business as may properly come
before the meeting or any properly reconvened meeting following any
adjournment or postponement thereof.
Only stockholders of record of our common stock as of the close of
business on October 23, 2006 will be entitled to notice of, and to vote at,
the special meeting and any adjournment or postponement of the special
meeting. Holders of D&PL common stock are entitled to appraisal rights under
the Delaware General Corporation Law in connection with the merger if they
meet certain conditions. See "Appraisal Rights" on page 65.
Your vote is important, regardless of the number of shares of our common
stock you own. The adoption of the merger agreement requires the affirmative
vote of the holders of a majority of the outstanding shares of our common
stock entitled to vote as of the record date. The approval of the proposal to
adjourn or postpone the meeting, if necessary or appropriate, to permit
further solicitation of proxies requires the affirmative vote of a majority of
the votes cast at the special meeting. Even if you plan to attend the meeting
in person, we request that you complete, sign, date and return the enclosed
proxy card and thus ensure that your shares will be represented at the meeting
if you are unable to attend. If you sign, date and mail your proxy card
without indicating how you wish to vote, your vote will be counted as a vote
"FOR" the adoption of the merger agreement, "FOR" the proposal to adjourn or
postpone the meeting, if necessary or appropriate, to permit further
solicitation of proxies, and in accordance with the recommendation of our
board of directors on any other matters properly brought before the meeting
for a vote. You may also vote your shares by proxy using a toll-free number or
the internet. We have provided instructions on the proxy card for using these
convenient services.
If you fail to vote by proxy or in person, it will have the same effect
as a vote against the adoption of the merger agreement, but will not affect
the adjournment or postponement of the special meeting, if necessary or
appropriate, to permit further solicitation of proxies. If you are a
stockholder of record and wish to vote in person at the special meeting, you
may withdraw your proxy and vote in person.
Please carefully read the proxy statement and other material concerning
our company, the merger and the other proposals enclosed with this notice for
a more complete statement regarding the matters to be acted upon at the
special meeting.
PLEASE DO NOT SEND ANY STOCK CERTIFICATES AT THIS TIME.
By order of the board of directors,
/s/ Jerome C. Hafter
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Jerome C. Hafter
Secretary
November 7, 2006
TABLE OF CONTENTS
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PAGE
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SUMMARY......................................................................1
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER...............5
CAUTION REGARDING FORWARD-LOOKING STATEMENTS................................11
THE SPECIAL MEETING OF STOCKHOLDERS.........................................12
Date, Time and Place......................................................12
Purpose of the Special Meeting............................................12
Recommendation of Our Board of Directors..................................12
Record Date; Stock Entitled To Vote; Quorum...............................12
Vote Required.............................................................12
Voting of Proxies.........................................................13
Revocability of Proxies...................................................14
Solicitation of Proxies...................................................14
Assistance................................................................14
Other Business............................................................14
THE PARTIES TO THE MERGER AGREEMENT.........................................16
General...................................................................16
Past Contacts, Transactions or Negotiations...............................16
THE MERGER..................................................................18
Background of the Merger..................................................18
Our Reasons for the Merger................................................22
Recommendation of Our Board of Directors..................................25
Opinion of D&PL's Financial Advisor.......................................25
Certain Effects of the Merger.............................................29
Effects on Us if the Merger is Not Completed..............................30
Interests of Certain Parties in the Merger................................31
Appraisal Rights..........................................................37
Delisting and Deregistration of Our Common Stock..........................37
Accounting Treatment......................................................37
Material United States Federal Income Tax Consequences of the Merger......37
Regulatory Approvals......................................................40
PROPOSAL 1 - THE MERGER AGREEMENT...........................................42
The Merger................................................................42
Timing of the Merger......................................................42
Directors and Officers of Surviving Corporation...........................42
Consideration to be Received by the Company's Stockholders in the Merger..42
Payment for Shares........................................................42
Treatment of Stock Options and Company Awards.............................43
Representations and Warranties............................................43
Covenants of D&PL.........................................................47
Covenants of Monsanto and Monsanto Sub, Inc...............................52
Covenants of Monsanto and Us..............................................53
Conditions to the Merger..................................................56
Termination of the Merger Agreement.......................................57
Effect of Termination.....................................................58
Amendment, Extension and Waiver...........................................63
Specific Performance......................................................63
Miscellaneous.............................................................63
APPRAISAL RIGHTS............................................................65
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..............67
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............................69
PROPOSAL 2 - ADJOURNMENT OR POSTPONEMENT OF THE SPECIAL MEETING.............70
OTHER MATTERS...............................................................71
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TABLE OF CONTENTS
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(continued)
PAGE
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FUTURE STOCKHOLDER PROPOSALS................................................72
Stockholder Proposals.....................................................72
Nomination of Director Candidates.........................................72
Copy of Bylaw Provisions..................................................72
WHERE YOU CAN FIND MORE INFORMATION.........................................73
INCORPORATION BY REFERENCE..................................................74
APPENDIX A AGREEMENT AND PLAN OF MERGER................................A
APPENDIX B OPINION OF UBS SECURITIES LLC DATED AUGUST 14, 2006.........B
APPENDIX C APPRAISAL RIGHTS............................................C
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SUMMARY
This summary highlights selected information from this proxy statement
and may not contain all of the information that is important to you. To
understand the merger fully, and for a more complete description of the legal
terms of the merger, you should carefully read this entire proxy statement,
the appendices attached to this proxy statement and the documents to which we
refer. The Agreement and Plan of Merger, which we refer to as the merger
agreement, dated as of August 14, 2006, among Monsanto, Monsanto Sub, Inc. and
D&PL, is attached as Appendix A to this proxy statement. We have included page
references in parentheses to direct you to the appropriate place in this proxy
statement for a more complete description of the topics presented in this
summary.
THE PARTIES TO THE MERGER AGREEMENT (PAGE 16)
D&PL, a Delaware corporation, and our subsidiaries are primarily engaged
in the breeding, production, conditioning and marketing of proprietary
varieties of cotton planting seed in the United States and other cotton
producing nations. We also breed, produce, condition and market soybean
planting seed in the United States.
Monsanto, along with its subsidiaries, is a leading global provider of
agricultural products for farmers. Monsanto produces leading seed brands,
including DEKALB(R), ASGROW(R), SEMINIS(R) and STONEVILLE(R), and develops
biotechnology traits that assist farmers in controlling insects and weeds.
Monsanto provides other seed companies with genetic material and biotechnology
traits for their seed brands. Monsanto also manufactures ROUNDUP(R) herbicide
and other herbicides. Monsanto's seeds, biotechnology trait products and
herbicides provide growers with solutions that improve productivity, reduce
the costs of farming, and produce healthier foods for consumers and better
feed for animals. Monsanto also provides lawn-and-garden herbicide products
for the residential market and animal agricultural products focused on
improving dairy cow productivity and swine genetics. Monsanto manages its
business in two segments: Seeds and Genomics, and Agricultural Productivity.
The Seeds and Genomics segment consists of the global seeds and traits
businesses and genetic technology platforms. The Agricultural Productivity
segment consists of the crop protection products (ROUNDUP(R) and other
glyphosate-based herbicides and selective chemistries), animal agriculture
businesses and lawn-and-garden herbicide products.
Monsanto Sub, Inc., a Delaware corporation, is a direct wholly-owned
subsidiary of Monsanto, formed solely for the purpose of facilitating the
merger.
THE MERGER (PAGE 18)
You are being asked to vote to adopt a merger agreement providing for the
acquisition of D&PL by Monsanto. Upon the terms and subject to the conditions
contained in the merger agreement, Monsanto Sub, Inc., a wholly-owned
subsidiary of Monsanto, will be merged with and into D&PL. As a result of the
merger, we will cease to be a publicly traded company and will become a
wholly-owned subsidiary of Monsanto.
MERGER CONSIDERATION (PAGE 42)
If the merger is completed, each holder of shares of our common stock
outstanding immediately prior to the merger (other than us, Monsanto, any
subsidiary of Monsanto and any holder who is entitled to and properly
exercises appraisal rights in compliance with the required procedures under
the Delaware General Corporation Law, or the DGCL) will be entitled to receive
$42.00 per share in cash, without interest and less applicable withholding
taxes, or the merger consideration. Monsanto is the only holder of our Series
M Convertible Non-Voting Preferred Stock, or the preferred stock. Upon
completion of the merger, the preferred stock will be cancelled and no payment
will be made to Monsanto with respect to the preferred stock.
EFFECT ON STOCK OPTIONS, RESTRICTED STOCK AND RESTRICTED STOCK UNITS (PAGE 43)
Upon completion of the merger:
o each holder of an outstanding stock option to purchase our common stock
whether or not vested, will be entitled to receive a cash payment (less
withholding taxes) equal to the excess of the merger
consideration over the exercise price per share of the stock option,
multiplied by the number of shares of common stock subject to the stock
option; and
o each holder of an outstanding equity award, including restricted stock
and restricted stock units but excluding stock options, whether or not
vested, will be entitled to receive a cash payment (less withholding
taxes and without interest) equal to the merger consideration in respect
of each share of common stock represented by these awards.
Upon completion of the merger, all of the outstanding stock options and
other outstanding equity awards, including all outstanding shares of
restricted stock and all restricted stock units, will be cancelled and
terminated.
CONDITIONS TO THE MERGER (PAGE 56)
We and Monsanto will not complete the merger unless a number of
conditions are satisfied or waived, as applicable, including the adoption by
our stockholders of the merger agreement, and the expiration or termination of
any applicable waiting period in the United States under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, or the HSR Act, and under the
competition laws of Spain.
EFFECTIVE TIME OF THE MERGER (PAGE 42)
If our stockholders adopt the merger agreement, the merger will become
effective no later than the third business day after the other conditions set
forth in the merger agreement have been satisfied or waived or at such other
time as we and Monsanto may agree in writing.
TERMINATION OF THE MERGER AGREEMENT (PAGE 57)
Subject to certain limitations set forth in the merger agreement, either
we or Monsanto can terminate the merger agreement under certain circumstances,
including if the other party breaches any of its representations, warranties,
covenants or agreements in a manner that would result in the failure of
certain closing conditions set forth in the merger agreement to be satisfied,
or if the merger is not completed by a specified date. Monsanto can terminate
the merger agreement if our board of directors withdraws, modifies or changes
its recommendation or approval of the merger agreement or the merger in a
manner adverse to Monsanto, if our board of directors approves, endorses or
recommends an acquisition transaction other than the Monsanto merger or if our
stockholders do not approve the merger agreement. We can terminate the merger
agreement prior to the date of the special meeting in order to enter into a
definitive acquisition agreement with a third party that our board of
directors has determined, in good faith after consultation with our outside
legal counsel and our financial advisor, is more favorable to our stockholders
than the merger with Monsanto, which we refer to herein as a superior
proposal, provided that prior to any such termination, we must comply with
certain terms set forth in the merger agreement which are described in this
proxy statement.
NO SOLICITATION OF OTHER OFFERS (PAGE 50)
The merger agreement does not permit us to solicit other acquisition
proposals. Prior to the date of the special meeting, we are permitted to
respond to a bona fide unsolicited written acquisition proposal from a
credible third party that is not subject to any material financing
uncertainties and that our board of directors determines in good faith, after
consultation with our outside legal counsel and our financial advisor, is, or
could reasonably result in, a superior proposal. In addition, prior to the
date of the special meeting, we may terminate the merger agreement and enter
into an agreement in respect of a superior proposal, so long as such action is
taken in response to a bona fide unsolicited written acquisition proposal from
a credible third party that is not subject to any material financing
uncertainties and that our board of directors determines in good faith, after
consultation with our outside legal counsel and our financial advisor, is a
superior proposal. We may only enter into such an agreement and terminate the
merger agreement after furnishing to Monsanto three business days' notice of
our intention to enter into an agreement in respect of a superior proposal and
furnishing Monsanto the opportunity to improve the terms of its offer.
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RECOMMENDATION OF OUR BOARD OF DIRECTORS (PAGE 25)
After due discussion and due consideration, our board of directors has
unanimously approved the merger agreement and determined that the merger
agreement and the merger are advisable and fair to, and in the best interests
of, D&PL and our stockholders. ACCORDINGLY, OUR BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT.
REASONS FOR THE MERGER (PAGE 22)
In making its recommendation that you vote "FOR" the adoption of the
merger agreement, our board of directors considered a number of factors more
fully described under the caption entitled "Our Reasons for the Merger."
SPECIAL MEETING; QUORUM; MERGER VOTE (PAGE 12)
We will hold the special meeting at Delta and Pine Land's Corporate
Offices, Madison Hotel, 79 Madison Avenue, Memphis, Tennessee on December 21,
2006, beginning at 10:00 a.m., Central Standard Time. The holders of a
majority of the outstanding shares of our common stock entitled to vote must
be present, either in person or by proxy, to constitute a quorum at the
special meeting. The vote required to approve Proposal 1, adoption of the
merger agreement, is the affirmative vote of the holders of a majority of the
shares of our common stock issued and outstanding on the record date for the
special meeting, and the vote required to approve Proposal 2, approval of the
adjournment or postponement of the special meeting, if necessary or
appropriate, to solicit additional proxies, is the affirmative vote of a
majority of the votes cast at the special meeting.
OPINION OF D&PL'S FINANCIAL ADVISOR (PAGE 25 AND APPENDIX B)
In connection with the merger, our board of directors received a written
opinion from our financial advisor, UBS Securities LLC, or UBS, as to the
fairness, from a financial point of view and as of the date of such opinion,
of the merger consideration to be received by holders of our common stock
(other than Monsanto, Monsanto Sub, Inc. and their respective affiliates). The
full text of UBS' written opinion, dated August 14, 2006, is attached to this
proxy statement as Appendix B. Holders of D&PL common stock are encouraged to
read this opinion carefully in its entirety for a description of the
assumptions made, procedures followed, matters considered and limitations on
the review undertaken. UBS' OPINION WAS PROVIDED TO OUR BOARD OF DIRECTORS IN
CONNECTION WITH ITS EVALUATION OF THE MERGER CONSIDERATION FROM A FINANCIAL
POINT OF VIEW, AND DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER AND DOES
NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER AS TO HOW TO VOTE OR ACT
WITH RESPECT TO THE MERGER.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (PAGE 37)
For U.S. federal income tax purposes, the merger will be treated as a
sale of the shares of our common stock for cash by each of our stockholders.
As a result, in general, each stockholder will recognize gain or loss equal to
the difference, if any, between the amount of cash received in the merger and
such stockholder's adjusted tax basis in the shares surrendered. Such gain or
loss will be capital gain or loss if the shares of common stock surrendered
are held as a capital asset in the hands of the stockholder, and will be
long-term capital gain or loss if the shares of common stock have a holding
period of more than one year at the time of the merger. Stockholders are urged
to consult their own tax advisors as to the particular tax consequences to
them of the merger.
INTERESTS OF CERTAIN PARTIES IN THE MERGER (PAGE 31)
Certain parties may have interests in the merger that are different from,
or in addition to, yours, including the following:
o our directors and executive officers hold stock options, restricted stock
and restricted stock units which will vest and be converted into the
right to receive $42.00 (net of any exercise price) for each share of
common stock represented by these awards upon completion of the merger;
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o we have entered into agreements with each of our executive officers that
provide for payments upon a change in control, or upon termination of
employment following a change in control, and for the continuation of
certain payments and benefits in order to induce the executive to remain
in our employ, the aggregate cost of which will be approximately $21.5
million as further discussed under the caption entitled "Interests of
Certain Parties in the Merger", and to ensure his or her continued
dedication and efforts without undue concern for his or her personal
financial and employment security; and
o under the merger agreement, our officers and directors will be
indemnified by Monsanto and us against certain liabilities and we or
Monsanto will maintain in effect directors' and officers' liability
insurance on behalf of those directors and officers.
Our board of directors was aware of these interests and considered them,
among other matters, in making its decisions.
APPRAISAL RIGHTS (PAGE 65 AND APPENDIX C)
Pursuant to section 262 of the DGCL our stockholders have the right to
dissent from the merger and receive a cash payment for the judicially
determined fair value of their shares of our common stock. The judicially
determined fair value under section 262 could be greater than, equal to or
less than the $42.00 per share that our stockholders are entitled to receive
in the merger. Stockholders that wish to exercise their appraisal rights must
not vote in favor of the adoption of the merger agreement and must strictly
comply with all of the procedures required by the DGCL.
REGULATORY APPROVALS (PAGE 40)
The merger is subject to the HSR Act. On August 28, 2006, we and Monsanto
each filed the required notification and report forms under the HSR Act with
the Federal Trade Commission, or the FTC, and the Antitrust Division of the
U.S. Department of Justice, or the Antitrust Division, and on September 27,
2006, the Antitrust Division issued a request for additional information and
documentary material, which is referred to as a second request, to us and
Monsanto. We and Monsanto will also be required to obtain approval of the
merger from governmental competition authorities in Spain, and on September
19, 2006, Monsanto filed the required notification in Spain on behalf of both
parties. The merger may be subject to certain regulatory requirements of other
municipal, state, federal and foreign governmental agencies and authorities.
The merger agreement that we had entered into with Monsanto on May 8, 1998 was
not completed because in 1999 Monsanto terminated its efforts to gain
government approval of the merger by withdrawing its pre-merger notification
filed pursuant to the HSR Act. Although there can be no assurances, our board
of directors concluded, after consulting with legal counsel, that antitrust
approvals are reasonably likely to be obtained for this merger. In reaching
this conclusion, our board of directors took into consideration, (i)
Monsanto's commitments under the merger agreement, including the obligation to
promptly offer to divest the United States cottonseed business acquired by
Monsanto in 2005, which encompasses the STONEVILLE(R) and NEXGEN(R) brands,
and (ii) the incentive for Monsanto to obtain the requisite approvals with
respect to antitrust and competition law matters created by the $600 million
termination fee payable to us by Monsanto in the event that these approvals
are not obtained, as more fully described in this proxy statement.
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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
The following questions and answers are intended to address some commonly
asked questions regarding the special meeting and the proposed merger. These
questions and answers may not address all questions that may be important to
you as our stockholder. Please refer to the more detailed information
contained elsewhere in this proxy statement, the appendixes to this proxy
statement and the documents referred to in this proxy statement.
Q: WHAT IS THE DATE, TIME AND PLACE OF THE SPECIAL MEETING?
A: The special meeting of our stockholders will be held at Delta and Pine
Land's Corporate Offices, Madison Hotel, 79 Madison Avenue, Memphis, Tennessee
on December 21, 2006, beginning at 10:00 a.m., Central Standard Time.
Q: WHO IS SOLICITING MY PROXY?
A: This proxy is being solicited by D&PL.
Q: WHAT AM I BEING ASKED TO VOTE ON?
A: You are being asked to consider and vote on the following:
o Proposal 1, adoption of the merger agreement;
o Proposal 2, approval of the adjournment or postponement of the
special meeting, if necessary or appropriate, to solicit additional
proxies if there are insufficient votes at the time of the meeting
to adopt the merger agreement; and
o the transaction of any other business that may properly come before
the special meeting or any properly reconvened meeting following any
adjournments or postponements thereof.
Q: WHAT IS THE PROPOSED TRANSACTION?
A: Once the merger agreement has been adopted by our stockholders and the
other closing conditions have been satisfied or waived, we will merge with
Monsanto Sub, Inc., and Monsanto will be our sole stockholder. Each of our
stockholders (other than us, Monsanto, any subsidiary of Monsanto and any
stockholder who is entitled to and properly exercises appraisal rights in
compliance with the required procedures under the DGCL) will receive $42.00
per share in cash, without interest and less any applicable withholding tax,
for each share of our common stock they own.
Q: HOW DOES OUR BOARD OF DIRECTORS RECOMMEND THAT I VOTE?
A: Our board of directors unanimously recommends that you vote:
o "FOR" Proposal 1, the adoption of the merger agreement; and
o "FOR" Proposal 2, the approval of the adjournment or postponement of
the special meeting, if necessary or appropriate, to solicit
additional proxies if there are insufficient votes at the time of
the meeting to adopt the merger agreement.
Q: WHAT VOTE OF OUR STOCKHOLDERS IS REQUIRED TO APPROVE THE PROPOSALS?
A: The votes required to approve the proposals are as follows:
o Proposal 1, the adoption of the merger agreement requires the
affirmative vote of the holders of a majority of the shares of our
common stock issued and outstanding on the record date for the
special meeting; and
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o Proposal 2, the approval of the adjournment or postponement of the
special meeting, if necessary or appropriate, to solicit additional
proxies requires the affirmative vote of a majority of the votes cast at
the special meeting.
Q: WHO IS ENTITLED TO VOTE AT THE SPECIAL MEETING?
A: Only stockholders of record as of the close of business on October 23,
2006, the record date for the special meeting, are entitled to receive notice
of and to vote at the special meeting. You will have one vote at the special
meeting for each share of our common stock you owned at the close of business
on the record date. On the record date, 36,546,395 shares of our common stock,
held by approximately 13,500 holders of record, were outstanding and entitled
to be voted at the special meeting.
Q: HOW MANY SHARES MUST BE PRESENT OR REPRESENTED AT THE SPECIAL MEETING IN
ORDER TO CONDUCT BUSINESS?
A: Holders of a majority of the shares of our common stock entitled to vote
must be present in person or represented by proxy before we may transact
business at the special meeting. This is called a "quorum". Both abstentions
and broker non-votes (which are discussed below) are counted for the purpose
of determining the presence of a quorum.
Q: WHAT DO I NEED TO DO NOW? HOW DO I VOTE?
A: We urge you to read this proxy statement, including its appendices,
carefully, and to consider how the merger affects you. If you are a
stockholder of record, then you can ensure that your shares are voted at the
special meeting by taking one of the following actions:
o complete, sign, date and mail each proxy card accompanying this
proxy statement and return it in the envelope provided;
o using a touch-tone telephone, call toll free 1-800-555-8140 and
follow the instructions. When asked for your voter control number,
enter the number printed just above your name on the front of the
proxy card accompanying this proxy statement. Your telephone vote is
quick, confidential and immediate. Please note that all votes cast
by telephone must be completed and submitted prior to December 20,
2006 at 11:59 p.m., Central Standard Time. Your telephone vote
authorizes the named proxies to vote your shares to the same extent
as if you marked, signed, dated and returned the proxy card. If you
vote by telephone, please do not return your proxy card by mail; or
o visit the internet voting site at
http://www.illinoisstocktransfer.com and follow the instructions on
the screen. When prompted for your voter control number, enter the
number printed just above your name on the front of the proxy card
accompanying this proxy statement. Your internet vote is quick,
confidential and immediate. Please note that all votes cast by
internet must be completed and submitted prior to December 20, 2006
at 11:59 p.m. Central Standard Time. Your internet vote authorizes
the named proxies to vote your shares to the same extent as if you
marked, signed, dated and returned the proxy card. This is a
"secured" web page site. Your software and/or internet provider must
be "enabled" to access this site. Please call your software or
internet provider for further information if needed. If you vote by
internet, please do not return your proxy card by mail.
Please do NOT send in your stock certificates at this time.
If your shares of our common stock are held in "street name" by your
broker, trustee or other nominee be sure to give your broker, trustee or
nominee instructions on how you want to vote your shares because they will not
be able to vote on the merger proposal without instructions from you. See the
question below "If my broker, trustee or other nominee holds my shares in
`street name,' will it vote my shares for me?"
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Q: HOW ARE VOTES COUNTED?
A: For Proposal 1, the adoption of the merger agreement, you may vote "FOR,"
"AGAINST" or "ABSTAIN." An abstention will not count as a vote cast on
Proposal 1 but will count for the purpose of determining whether a quorum is
present. As a result, if you "ABSTAIN" it has the same effect as a vote
"AGAINST" the adoption of the merger agreement.
For Proposal 2, the approval of the adjournment or postponement of the
meeting, if necessary or appropriate, to solicit additional proxies, you may
vote "FOR," "AGAINST" or "ABSTAIN." An abstention will not count as a vote
cast on Proposal 2 but will count for the purpose of determining whether a
quorum is present. If you "ABSTAIN" from voting on Proposal 2, it will have no
effect on the outcome of the vote.
If you sign and return your proxy but do not indicate how you want to
vote, your proxy will be voted "FOR" Proposal 1, adoption of the merger
agreement, "FOR" Proposal 2, approval of the adjournment or postponement of
the special meeting, if necessary or appropriate, to solicit additional
proxies, and in accordance with the recommendation of our board of directors
on any other matters properly brought before the special meeting for a vote.
Q: IF MY BROKER, TRUSTEE OR OTHER NOMINEE HOLDS MY SHARES IN "STREET
NAME," WILL IT VOTE MY SHARES FOR ME?
A: Yes, but only if you provide specific instructions to your broker,
trustee or nominee on how to vote. You should follow the directions provided
by your broker, trustee or nominee regarding how to instruct that person to
vote your shares. Unless you follow the instructions, your shares will not
be voted. If your broker, trustee or nominee does not vote your shares
because you fail to provide voting instructions, the effect will be a vote
against Proposal 1 because adoption of this Proposal requires the affirmative
vote of the holders of a majority of the shares of our common stock issued
and outstanding on the record date for the special meeting. A broker
non-vote will not count as a vote cast on Proposal 2 and will not affect the
outcome of the vote.
Q: MAY I VOTE IN PERSON?
A: Yes. Shares held in your name as the stockholder of record may be
voted in person at the special meeting. Shares held beneficially in street
name may be voted in person only if you obtain a legal proxy from the broker,
trustee or nominee that holds your shares giving you the right to vote the
shares at the special meeting. Even if you plan to attend the special
meeting, we recommend that you also submit your proxy or voting instructions
as described above so that your vote will be counted if you later decide not
to attend the meeting.
Q: WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF
RECORD AND AS A BENEFICIAL OWNER?
A: Most of our stockholders hold their shares through a broker, trustee or
other nominee (such as a bank) rather than directly in their own name. As
summarized below, there are some distinctions between shares owned of record
and those owned beneficially.
o Stockholder of Record. If your shares are registered directly in
your name with our transfer agent, Illinois Stock Transfer Company,
you are considered to be the stockholder of record with respect to
those shares and these proxy materials are being sent directly to
you. As the stockholder of record, you have the right to grant your
proxy directly to us or to vote in person at the special meeting. We
have enclosed a proxy card for you to use.
o Beneficial Owner. If your shares are held in a brokerage account, by
a trustee or by another nominee (such as a bank), you are considered
the beneficial owner of shares held in "street name," and these
proxy materials are being forwarded to you together with a voting
instruction card. As the beneficial owner, you have the right to
direct your broker, trustee or nominee how to vote and are also
invited to attend the special meeting.
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Since a beneficial owner is not the stockholder of record, you may not vote
your shares in person at the special meeting unless you obtain a "legal proxy"
from the broker, trustee or nominee that holds your shares, giving you the
right to vote the shares at the meeting. Your broker, trustee or nominee has
enclosed or provided voting instructions for you to use in directing the
broker, trustee or nominee to vote your shares.
Q: MAY I ATTEND THE SPECIAL MEETING?
A: You are entitled to attend the special meeting only if you were a
stockholder of record as of the close of business on the record date or if you
hold a valid proxy for the special meeting. You should be prepared to present
photo identification for admittance. If you are a stockholder of record or
hold your shares through our defined contribution plan under section 401(k) of
the Code, or the 401(k) plan, your name will be verified against the list of
stockholders of record or plan participants on the record date prior to your
being admitted to the special meeting. If you are not a stockholder of record
but hold shares in "street name" through a broker, trustee or other nominee,
you should provide proof of beneficial ownership on the record date, such as
your most recent account statement prior to October 23, 2006, a copy of the
voting instruction card provided to you by your broker, trustee or nominee, or
other similar evidence of ownership. If you do not provide photo
identification and comply with the procedures outlined above, you will not be
admitted to the special meeting.
The meeting will begin promptly at 10:00 a.m., Central Standard Time.
Check-in will begin at 9:00 a.m., Central Standard Time, and you should allow
ample time for the check-in procedures.
Q: WHEN SHOULD I RETURN MY PROXY CARD?
A: You should return your proxy card as soon as possible so that your
shares will be voted at the special meeting.
Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD OR AFTER
I HAVE VOTED ELECTRONICALLY VIA THE INTERNET OR BY PHONE?
A: Yes. You may change your vote at any time before the shares of our
common stock reflected on your proxy card are voted at the special meeting.
If your shares are registered in your name, you can do this in one of three
ways:
o first, you can deliver to our Secretary a written notice (dated
later than the date of your proxy card or the date on which you
voted electronically via the internet or by telephone) stating that
you would like to revoke your proxy;
o second, you can complete, execute and deliver to our Secretary a
new, later-dated proxy card for the same shares, provided the new
proxy card is received before the polls close at the special
meeting; or
o third, you can attend the meeting and vote in person.
Any written notice of revocation should be delivered to our Secretary at
or before the taking of the vote at the special meeting. Revocation of your
proxy without any further action will mean your shares will not be voted at
the special meeting or counted toward satisfying the quorum requirements. Your
attendance at the special meeting will not revoke your proxy unless you
specifically request to vote at the special meeting.
If you have instructed your broker, trustee or nominee to vote your
shares, you must follow directions received from your broker, trustee or
nominee to change your vote. You cannot vote shares held in "street name" by
returning a proxy card directly to us or by voting in person at the special
meeting, unless you obtain a legal proxy from the broker, trustee or nominee
that is the record holder of your shares.
- 8 -
Q: SHOULD I SEND IN MY STOCK CERTIFICATE(S) NOW?
A: No. After the merger is completed, you will receive written
instructions, including a letter of transmittal, for exchanging your shares
of our common stock for the merger consideration of $42.00 per share in cash,
without interest and less any applicable withholding tax.
Q: WHO WILL BEAR THE COST OF THE SOLICITATION?
A: The expense of soliciting proxies in the enclosed form will be borne by
D&PL. We have retained Georgeson Inc., a proxy solicitation firm, to solicit
proxies in connection with the special meeting at a cost of approximately
$10,000 plus reimbursement of out-of-pocket fees and expenses. In addition, we
may reimburse brokers, banks and other custodians, nominees and fiduciaries
representing beneficial owners of shares for their expenses in forwarding
soliciting materials to such beneficial owners. Proxies may also be solicited
by certain of our directors, officers and employees, personally or by
telephone, facsimile or other means of communication. No additional
compensation will be paid for such services.
Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
A: You may receive more than one set of voting materials, including
multiple copies of this proxy statement and multiple proxy cards or voting
instruction cards. For example, if you hold your shares in more than one
brokerage account, you may receive a separate voting instruction card for
each brokerage account in which you hold shares. If you are a stockholder of
record and your shares are registered in more than one name, you will receive
more than one proxy card. Please complete, sign, date and return each proxy
card and voting instruction card that you receive.
Q: HOW CAN I OBTAIN A SEPARATE SET OF VOTING MATERIALS?
A: If you share an address with another stockholder, you may receive only
one set of proxy materials, unless you have provided contrary instructions.
However, each stockholder will receive his or her own proxy card. If you
wish to receive a separate set of proxy materials, please call Georgeson
Inc. at (866) 296-6841, toll-free, to request a separate copy of these
materials. You will be provided with a separate copy of the materials, free of
charge, if you request them.
Q: WHAT HAPPENS IF I TRANSFER MY SHARES BEFORE THE SPECIAL MEETING?
A: The record date of the special meeting is earlier than the special
meeting and the date that the merger is expected to be completed. If you
transfer your shares of our common stock after the record date but before the
special meeting, you will retain your right to vote at the special meeting,
but will have transferred the right to receive $42.00 per share in cash to be
received by our stockholders in the merger. In order to receive the $42.00
per share, you must hold your shares through completion of the merger.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We are working toward completing the merger as quickly as possible, but we
cannot predict the exact timing. We expect to complete the merger no later
than three business days after obtaining stockholder approval, assuming that
all other closing conditions contained in the merger agreement have been
satisfied or waived at that time. See "Proposal 1 - The Merger Agreement -
Conditions to the Merger" on page 56.
Q: WHEN WILL I RECEIVE THE CASH CONSIDERATION FOR MY SHARES?
A: After the merger is completed, you will receive written instructions,
including a letter of transmittal, that explain how to exchange your shares
for the cash consideration to be paid in the merger. When you properly
complete and return the required documentation described in the written
instructions, you will receive from the paying agent a payment of the cash
consideration for your shares.
- 9 -
Q: AM I ENTITLED TO EXERCISE APPRAISAL RIGHTS INSTEAD OF RECEIVING THE
MERGER CONSIDERATION FOR MY SHARES?
A: Yes. As a holder of our common stock, you are entitled to appraisal
rights under the DGCL in connection with the merger if you meet certain
conditions, which conditions are described in this proxy statement under the
caption entitled "Appraisal Rights" on page 65.
Q: WHO CAN HELP ANSWER MY OTHER QUESTIONS?
A: If you have additional questions about the special meeting or the
merger, including the procedures for voting your shares, or if you would like
additional copies, without charge, of this proxy statement, you should contact
our proxy solicitation agent, Georgeson Inc. at (866) 296-6841, toll-free. If
your shares are held by a broker, trustee or other nominee, you may also call
your broker, trustee or nominee for additional information. Banks and brokers
can call (212) 440-9800.
- 10 -
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement, and the documents to which we refer you in this
proxy statement, contain forward-looking statements about our plans,
objectives, expectations and intentions. Forward-looking statements include
information concerning possible or assumed future results of operations of our
company, the expected completion and timing of the merger and other
information relating to the merger. Generally these forward-looking statements
can be identified by the use of forward-looking terminology such as
"anticipate," "believe," "estimate," "expect," "may," "should," "plan,"
"intend," "project" and similar expressions. You should read statements that
contain these words carefully. They discuss our future expectations or state
other forward-looking information, and may involve known and unknown risks
over which we have no control. Those risks include, without limitation:
o the satisfaction of the conditions to consummate the merger,
including the adoption of the merger agreement by our stockholders;
o the occurrence of any event, change or other circumstance that could
give rise to the termination of the merger agreement, including a
termination under circumstances that could require us to pay a $15
million termination fee to Monsanto;
o the effect of the announcement of the merger on our customer and
vendor relationships, operating results and business generally;
o the risk that the merger may not be completed in a timely manner or
at all, which may adversely affect our business and the price of a
share of our common stock;
o the potential adverse effect on our business and operations because
of certain covenants we agreed to in the merger agreement;
o increases in operating costs resulting from the expenses related to
the proposed merger;
o our inability to retain and, if necessary, attract key employees,
particularly in light of the proposed merger;
o the risk that we may be subject to litigation in connection with the
proposed merger;
o risks related to diverting management's attention from ongoing
business operations; and
o other risks detailed in our current filings with the SEC, including
"Item 1A. Risk and Uncertainties" in our Annual Report on Form 10-K
for our fiscal year ended August 31, 2006. See "Where You Can Find
More Information" on page 73.
We believe that the assumptions on which our forward-looking statements
are based are reasonable. However, we cannot assure you that the actual
results or developments we anticipate will be realized or, if realized, that
they will have the expected effects on our business or operations. All
subsequent written and oral forward-looking statements concerning the merger
or other matters addressed in this proxy statement and attributable to us or
any person acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to in this section.
Forward-looking statements speak only as of the date of this proxy statement
or the date of any document incorporated by reference in this document. Except
as required by applicable law or regulation, we do not undertake to release
the results of any revisions of these forward-looking statements to reflect
future events or circumstances.
- 11-
THE SPECIAL MEETING OF STOCKHOLDERS
This proxy statement is furnished in connection with the solicitation of
proxies in connection with a special meeting of our stockholders.
DATE, TIME AND PLACE
We will hold the special meeting at Delta and Pine Land's Corporate
Offices, Madison Hotel, 79 Madison Avenue, Memphis, Tennessee on December 21,
2006, beginning at 10:00 a.m., Central Standard Time.
PURPOSE OF THE SPECIAL MEETING
At the special meeting, we will ask you to (1) adopt the merger agreement
and (2) approve the adjournment or postponement of the special meeting, if
necessary or appropriate, to solicit additional proxies if there are
insufficient votes at the time of the meeting to adopt the merger agreement.
In addition, you will be asked to transact any other business that is properly
brought before the special meeting. We are not aware of any additional
business that may come before the special meeting.
RECOMMENDATION OF OUR BOARD OF DIRECTORS
Our board of directors unanimously (1) approved and adopted the merger
agreement and approved the merger and the transactions contemplated by the
merger agreement and (2) determined that the merger and the merger agreement
are advisable and fair to, and in the best interests of, D&PL and our
stockholders. Accordingly, our board of directors unanimously recommends that
you vote "FOR" adoption of the merger agreement and "FOR" the proposal to
adjourn or postpone the special meeting, if necessary or appropriate, to
solicit additional proxies if there are insufficient votes at the time of the
meeting to adopt the merger agreement.
RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
Only holders of record of our common stock at the close of business on
October 23, 2006, the record date, are entitled to notice of and to vote at
the special meeting. On the record date, 36,546,395 shares of our common stock
were issued and outstanding and held by approximately 13,500 holders of
record. Each holder of record of our common stock will be entitled to one vote
per share at the special meeting on the proposal to adopt the merger
agreement, the proposal to adjourn or postpone the special meeting, if
necessary or appropriate, and any other business that may come before the
special meeting.
The holders of a majority of the outstanding shares of our common stock
entitled to vote must be present, either in person or by proxy, to constitute
a quorum at the special meeting. We will count abstentions, either in person
or by proxy, and broker non-votes as discussed below, for the purpose of
establishing a quorum. If a quorum is not present at the special meeting, the
holders of a majority of the common stock represented at the special meeting
may adjourn the meeting to solicit additional proxies. In the event that a
quorum is not present at the special meeting, it is expected that the meeting
will be adjourned or postponed to solicit additional proxies.
If you hold shares beneficially in street name and do not provide your
broker, trustee or other nominee with voting instructions, your shares may
constitute "broker non-votes." Broker non-votes occur on a matter when a
broker, trustee or nominee is not permitted to vote on the matter without
instructions from the beneficial owner and instructions are not given. A
broker non-vote will have the effect of a vote against Proposal 1 because
approval of Proposal 1 requires the affirmative vote of the holders of a
majority of the shares of our common stock issued and outstanding on the
record date for the special meeting. A broker non-vote will not count as a
vote cast on Proposal 2 and will not affect the outcome of the vote.
VOTE REQUIRED
The adoption of the merger agreement requires the affirmative vote of the
shares representing a majority of the outstanding shares entitled to vote on
the merger agreement at the special meeting. If you abstain from voting,
either in person or by proxy, or do not instruct your broker, trustee or other
nominee how to vote your shares, it will
- 12 -
effectively count as a vote against the adoption of the merger agreement. The
affirmative vote of a majority of the votes cast is required for approval of
the adjournment or postponement of the special meeting, if necessary or
appropriate, to solicit additional proxies if there are insufficient votes at
the time of the meeting to adopt the merger agreement.
VOTING OF PROXIES
To vote your shares, please take one of the following options;
o complete, sign, date and mail each proxy card accompanying this
proxy statement and return it in the envelope provided;
o using a touch-tone telephone, call toll free 1-800-555-8140 and
follow the instructions. When asked for your voter control number,
enter the number printed just above your name on the front of the
proxy card accompanying this proxy statement. Your telephone vote is
quick, confidential and immediate. Please note that all votes cast
by telephone must be completed and submitted prior to December 20,
2006 at 11:59 p.m. Central Standard Time. Your telephone vote
authorizes the named proxies to vote your shares to the same extent
as if you marked, signed, dated and returned the proxy card. If you
vote by telephone, please do not return your proxy card by mail; or
o visit the internet voting site at
http://www.illinoisstocktransfer.com and follow the instructions on
the screen. When prompted for your voter control number, enter the
number printed just above your name on the front of the proxy card
accompanying this proxy statement. Your internet vote is quick,
confidential and immediate. Please note that all votes cast by
internet must be completed and submitted prior to December 20, 2006
at 11:59 p.m. Central Standard Time. Your internet vote authorizes
the named proxies to vote your shares to the same extent as if you
marked, signed, dated and returned the proxy card. This is a
"secured" web page site. Your software and/or internet provider must
be "enabled" to access this site. Please call your software or
internet provider for further information if needed. If you vote by
internet, please do not return your proxy card by mail.
Voting your proxy does not limit your right to vote in person should you
decide to attend the special meeting. If your shares are held in the name of a
broker, trustee or other nominee, you will be provided voting instructions
from that entity and, in order to vote at the special meeting, you must obtain
a legal proxy, executed in your name, from that entity.
If you return your proxy card and it is completed, signed and dated, your
shares will be voted at the special meeting in accordance with your
instructions. If you return your proxy card and it is unsigned, then your vote
cannot be counted. If you return your proxy card and it is signed and dated,
but you do not fill out the voting instructions on the proxy card, the shares
represented by your proxy will be voted "FOR" the adoption of the merger
agreement, "FOR" the adjournment or postponement of the special meeting, if
necessary or appropriate, to solicit additional proxies if there are
insufficient votes at the time of the meeting to adopt the merger agreement,
and in accordance with the recommendation of our board of directors on any
other matters properly brought before the special meeting for a vote.
Stockholders who hold their shares of our common stock in "street name,"
meaning in the name of a broker, trustee or other nominee who is the record
holder, should follow the directions provided by their broker, trustee or
nominee regarding how to instruct that entity to vote their shares.
We do not expect that any matter other than the ones discussed in this
proxy statement will be brought before the special meeting. If, however, any
other matters are properly presented, the persons named as proxies will vote
in accordance with the recommendation of our board of directors on any other
matters so presented.
DO NOT SEND YOUR STOCK CERTIFICATES WITH YOUR PROXY. A LETTER OF
TRANSMITTAL WITH INSTRUCTIONS FOR THE SURRENDER OF YOUR STOCK CERTIFICATES
WILL BE MAILED TO YOU AS SOON AS PRACTICABLE AFTER COMPLETION OF THE MERGER.
- 13 -
REVOCABILITY OF PROXIES
If you hold your shares in your name, you have the unconditional right to
revoke your proxy at any time prior to its exercise by employing any of the
following three methods:
o first, you can deliver to our Secretary, at our principal executive
offices located at One Cotton Row, Scott, Mississippi 38772, a
written notice (dated later than the date of your proxy card)
stating that you would like to revoke your proxy;
o second, you can complete, execute and deliver to our Secretary a
new, later-dated proxy card for the same shares, provided the new
proxy card is received before the polls close at the special
meeting; or
o third, you can attend the special meeting and vote in person.
Any written notice of revocation should be delivered to our Secretary at
or before the taking of the vote at the special meeting. Revocation of your
proxy, without any further action, will mean your shares will not be voted at
the special meeting or counted towards satisfying the quorum requirements.
Your attendance at the special meeting will not revoke your proxy unless you
specifically request to vote at the special meeting.
If you have instructed your broker, trustee or other nominee to vote your
shares, you must follow directions received from that entity to change your
vote. You cannot vote shares held in "street name" by returning a proxy card
directly to us or by voting in person at the special meeting, unless you
obtain a legal proxy from your broker, trustee or nominee.
SOLICITATION OF PROXIES
D&PL is soliciting your proxy. In addition to the solicitation of proxies
by use of the mail, officers and other employees of D&PL may solicit the
return of proxies by personal interview, telephone, e-mail or facsimile. We
will not pay additional compensation to our officers and employees for their
solicitation efforts, but we will reimburse them for any out-of-pocket
expenses they incur in their solicitation efforts. We will request that
brokerage houses and other custodians, nominees and fiduciaries forward
solicitation materials to the beneficial owners of stock registered in their
names. We will bear all costs of preparing, assembling, printing and mailing
the notice of special meeting of stockholders, this proxy statement, the
enclosed proxy and any additional materials, as well as the cost of forwarding
solicitation materials to the beneficial owners of stock and all other costs
of solicitation.
We have retained Georgeson Inc. to aid in the solicitation of proxies for
the special meeting. Georgeson Inc. will receive a base fee of $10,000 plus
reimbursement of out-of-pocket fees and expenses.
ASSISTANCE
Stockholders who have questions regarding the materials, need assistance
voting their shares or require additional copies of the proxy statement or
proxy card should contact or call (toll-free):
Georgeson Inc.
17 State Street
New York, NY 10004
(866) 296-6841
Banks and brokers can call (212) 440-9800
OTHER BUSINESS
We are not currently aware of any business to be acted upon at the
special meeting other than the matters discussed in this proxy statement. If
other matters do properly come before the special meeting, we intend that
- 14 -
shares of our common stock represented by properly submitted proxies will be
voted by the persons named as proxies on the proxy card in accordance with the
recommendation of our board of directors.
In addition, the grant of a proxy will confer discretionary authority on
the persons named as proxies on the proxy card to vote in accordance with
their best judgment on procedural matters incident to the conduct of the
special meeting. Any adjournment or postponement may be made without notice by
an announcement made at the special meeting. If the persons named as proxies
on the proxy card are asked to vote for one or more adjournments or
postponements of the meeting for matters incidental to the conduct of the
meeting, such persons will have the authority to vote in their discretion on
such matters. However, if the persons named as proxies on the proxy card are
asked to vote for one or more adjournments or postponements of the meeting to
permit further solicitation of proxies if there are not sufficient votes at
the time of the meeting to adopt the merger agreement, they will only have the
authority to vote on such matter as instructed by you or your proxy or, if no
instructions are provided, in favor of such adjournment or postponement. Any
adjournment or postponement of the special meeting for the purpose of
soliciting additional proxies will allow our stockholders who have already
granted their proxies to revoke them at any time prior to their use.
- 15 -
THE PARTIES TO THE MERGER AGREEMENT
GENERAL
D&PL, a Delaware corporation, and our subsidiaries are primarily engaged
in the breeding, production, conditioning and marketing of proprietary
varieties of cotton planting seed in the United States and other cotton
producing nations. We also breed, produce, condition and market soybean
planting seed in the United States. We have used our extensive classical plant
breeding programs to develop a gene pool necessary for producing cotton
varieties with improved agronomic traits important to farmers (such as crop
yield) and to textile manufacturers (such as enhanced fiber characteristics).
During the 1980's we began to market our products, primarily cottonseed,
internationally. We sell our products in foreign countries through (i) export
sales to distributors and (ii) direct in-country operations through either
joint ventures or wholly-owned subsidiaries. Our principal executive offices
are located at One Cotton Row, Scott, Mississippi 38772, and our telephone
number is (662) 742-4000.
Monsanto, along with its subsidiaries, is a leading global provider of
agricultural products for farmers. Monsanto produces leading seed brands,
including DEKALB(R), ASGROW(R), SEMINIS(R) and STONEVILLE(R), and develops
biotechnology traits that assist farmers in controlling insects and weeds.
Monsanto provides other seed companies with genetic material and biotechnology
traits for their seed brands. Monsanto also manufactures ROUNDUP(R) herbicide
and other herbicides. Monsanto's seeds, biotechnology trait products and
herbicides provide growers with solutions that improve productivity, reduce
the costs of farming, and produce healthier foods for consumers and better
feed for animals. Monsanto also provides lawn-and-garden herbicide products
for the residential market and animal agricultural products focused on
improving dairy cow productivity and swine genetics. Monsanto manages its
business in two segments: Seeds and Genomics, and Agricultural Productivity.
The Seeds and Genomics segment consists of the global seeds and traits
businesses and genetic technology platforms. The Agricultural Productivity
segment consists of the crop protection products (ROUNDUP(R) and other
glyphosate-based herbicides and selective chemistries), animal agriculture
businesses and lawn-and-garden herbicide products. The principal executive
offices of Monsanto are located at 800 North Lindbergh Boulevard, St. Louis,
Missouri 63167, and its telephone number is (314) 694-1000.
Monsanto Sub, Inc., a Delaware corporation, is a direct wholly- owned
subsidiary of Monsanto, formed solely for the purpose of facilitating the
merger. The principal executive offices of Monsanto Sub, Inc. are located at
800 North Lindbergh Boulevard, St. Louis, Missouri 63167, and its telephone
number is (314) 694-1000.
PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS
We have had a commercial relationship with Monsanto since 1989, when we
started performing research together. Since 1996 we have used Monsanto traits
extensively in our germplasm pursuant to various license agreements. All but
approximately 10% of the domestic cottonseed and virtually all soybean seed we
sell contains one or more of Monsanto's traits. Our personnel have had
extensive recurring contact with Monsanto personnel, both in our direct
commercial relationships and in cotton industry-wide settings.
We entered into a merger agreement with Monsanto on May 8, 1998, which we
refer to as the 1998 merger agreement. On December 20, 1999, Monsanto withdrew
its pre-merger notification filed pursuant to the HSR Act. On December 30,
1999, we filed suit in the First Judicial District of Bolivar County,
Mississippi, seeking, among other things, the payment of the $81 million
termination fee and related expenses that we believed were due pursuant to the
1998 merger agreement, compensatory damages and punitive damages. On January
2, 2000, we and Monsanto reached an agreement whereby we would withdraw the
suit, without prejudice, for the purpose of negotiating a settlement of our
claims, and Monsanto would immediately pay the $81 million termination fee and
related expenses. On January 3, 2000, Monsanto paid us the $81 million
termination fee and related expenses. On January 18, 2000, after unsuccessful
negotiations, we re-filed our suit, which we refer to as the Monsanto
litigation. We seek in excess of $1 billion in compensatory and $1 billion in
punitive damages for breach of the 1998 merger agreement. On September 12,
2003, Monsanto amended its answer to include four counterclaims against us.
Monsanto is seeking unspecified damages for its counterclaims, including the
$81 million paid by Monsanto to D&PL as a termination fee and related
expenses. We answered the counterclaims, denying all liability. On December
21, 2004, Monsanto filed a motion to amend its answer to withdraw two of its
four counterclaims. On February 17, 2005, we filed a motion with the trial
court to amend our complaint to add a claim against Monsanto
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for fraudulently inducing us to extend the deadline to complete the merger
with Monsanto. As part of the current merger agreement, we and Monsanto have
received a continuance of the Monsanto litigation and have agreed not to
prosecute any claims or otherwise pursue the litigation until the earlier of
the termination of the merger agreement or the effective time of the merger,
although if the merger agreement is terminated for certain reasons, as set
forth in the caption entitled "Part 1 - The Merger Agreement - Effect of
Termination", the Monsanto litigation would be terminated and dismissed with
prejudice. In connection with the execution of the current merger agreement,
we, Monsanto and our respective affiliates also entered into three settlement
agreements which resolve or stay three civil lawsuits, three arbitrations and
several other commercial disputes between us and Monsanto, including an
arbitration in which Monsanto was seeking to terminate our rights to utilize
two transgenic cotton traits licensed to us by Monsanto, which has been
terminated with prejudice. We refer to these matters and the Monsanto
litigation collectively herein as the Monsanto disputes.
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THE MERGER
BACKGROUND OF THE MERGER
During the fiscal years 2001 through 2006, our management had engaged in
various discussions with a number of larger companies in the seed industry and
in complementary industries. These discussions resulted in, among other
things, a number of contractual and collaborative relationships. During the
course of these discussions, the topic of a possible sale of the company was
considered, and it became apparent that, in the context of placing a value on
our company, none of these companies were willing to either consider making an
offer in a price range that would be acceptable to D&PL or to attribute any
meaningful value to the pending Monsanto litigation. In addition, some parties
stated that they would not consider entering into a strategic transaction with
D&PL as long as there was pending Monsanto-filed arbitration seeking to cancel
our technology licenses. Furthermore, certain parties cited concerns about
Monsanto potentially seeking a return of the $81 million termination fee it
had paid as a result of the failed 1998 merger in its counterclaims to our
suit, as discussed above.
Our board of directors periodically reviews and assesses various
strategic alternatives available to us. In each of fiscal years 2005 and 2006,
our management and our financial advisor, UBS, participated in these
discussions. On July 10, 2006, our board of directors met with our management
and our financial advisor to discuss, among other things, the feasibility of
D&PL pursuing our then current strategy as an independent company and the
potential of pursuing a business combination transaction with another company
in the seed industry or a complementary industry.
Our board of directors and senior management have periodically reviewed
and assessed our business strategy, the various trends and conditions
impacting our business, and our ability to compete against companies with
vastly more resources and research capabilities than we could employ. Over the
course of the past year and a half, our senior management has reviewed a
variety of strategic alternatives for D&PL. These alternatives included
strategic corporate acquisitions, the acquisition of additional trait
licenses, and the expansion of our international presence. Among the issues we
considered was the acceptance of genetically modified cottonseed outside the
United States, including the registration of new genetic traits abroad,
negotiations between the United States and the World Trade Organization, and
The Farm Security and Rural Investment Act of 2002, which is set to expire in
2007.
We have had a long standing relationship with Monsanto dating back to
1989 when we entered into our first research agreement under which we first
began introgressing Monsanto's Bt technology into our cotton germplasm. That
original agreement and others with Monsanto were entered into and modified in
the intervening years, and today over 90% of the domestic cottonseed we sell
contains one or more of Monsanto's traits. In May 1998, we entered into the
1998 merger agreement with Monsanto, pursuant to which our stockholders would
have received shares of common stock of Monsanto. The transaction was
terminated by Monsanto in December 1999. In January 2000, we filed suit
against Monsanto in Bolivar County, Mississippi alleging, among other things,
that Monsanto had breached its obligations under the 1998 merger agreement. As
more fully described above, shortly following the commencement of this suit,
and in connection with an unsuccessful attempt to settle our claims against
Monsanto, on January 3, 2000, Monsanto paid an $81 million termination fee and
related expenses to D&PL. From the filing of that suit through August 14,
2006, we and Monsanto were involved in a number of other disputes described
elsewhere in this proxy statement. We and Monsanto and our respective legal
advisors met on several occasions from January 2000 up to June 2006 to discuss
the possible settlement of some or all of the Monsanto disputes, but no accord
was reached.
On July 2, 2006, W.T. Jagodinski, our President and Chief Executive
Officer, phoned Terrell K. Crews, Chief Financial Officer of Monsanto, to
discuss certain business matters of interest to both parties. During that call
Mr. Crews expressed his desire to meet and discuss a possible resolution of a
number of the legal disputes between the two companies. On July 6, 2006, Mr.
Crews phoned Mr. Jagodinski to congratulate D&PL on the financial results for
the quarter and during the course of that call Mr. Crews requested a meeting
on July 20 in Memphis, Tennessee, to discuss a global settlement proposal.
On July 10, 2006, at the regularly scheduled meeting of our board of
directors, Mr. Jagodinski briefed the board of directors on the conversations
he had with Mr. Crews on July 2 and July 6. The board of directors
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instructed Mr. Jagodinski to continue discussions with Mr. Crews if and only
if in the opinion of Mr. Jagodinski and our legal advisors the discussions
represented substantive settlement discussions of the Monsanto disputes.
On July 12, 2006, Mr. Jagodinski sent Mr. Crews an email stating our
desire to continue discussions only in the event such discussions represented
significant movement in Monsanto's position from previous settlement
discussions that occurred as recently as April 2006.
On July 17, 2006, Mr. Jagodinski and Mr. Crews exchanged emails
scheduling a meeting on July 20 in Memphis, Tennessee.
On July 20, 2006, Mr. Jagodinski and J. Patrick O'Malley, of Resolution
Counsel, LLP, a counsel to D&PL, met with Mr. Crews and Charles Burson, then
General Counsel of Monsanto, expecting to discuss the settlement of the many
disputes between the two companies. However, at this meeting, Mr. Crews
proposed to Mr. Jagodinski that D&PL should consider being acquired by
Monsanto and indicated a price range for an acquisition of D&PL which
represented a 7.6% premium over the closing price of D&PL common stock on July
20. At the time of these conversations, Monsanto was not aware of the required
change in control payments that might be due under our commercial contracts.
Mr. Jagodinski indicated that the price range was too low and did not reflect
the value of D&PL. Additionally, Mr. Jagodinski expressed initial concerns
regarding the antitrust aspects of any such transaction. Mr. Jagodinski and
Mr. Crews agreed to a meeting between each company's antitrust teams in
Washington D.C. at the earliest practical date. On July 25, 2006, Mr. Crews
and Mr. Jagodinski mutually agreed to set July 28 as the date for the parties
to meet with appropriate antitrust counsel from both sides. On July 27, 2006,
Monsanto's counsel, delivered a proposed form of confidentiality agreement to
our outside counsel, Fried, Frank, Harris, Shriver & Jacobson LLP, or Fried
Frank.
On July 28, 2006, in Washington, D.C., Mr. Jagodinski, Kenneth Avery, our
Vice President of Finance and Treasurer, Mr. O'Malley and Fried Frank met with
Mr. Crews, Mr. Burson, other members of Monsanto management, and Monsanto's
antitrust counsel to discuss the antitrust aspects of a potential acquisition
transaction between us and Monsanto. On the same day, Mr. Jagodinski and Mr.
Avery met with Mr. Crews and Jeffery Peterson, Vice President of Strategic
Negotiations of Monsanto, to discuss the timing and framework of future
discussions regarding the potential transaction.
At the conclusion of this meeting, Mr. Jagodinski called a special
meeting of our board of directors to be held on August 2, 2006 to update the
board of directors on the results of the July 28 meetings. During the meeting
of our board of directors, our counsel advised the board of directors
regarding the regulatory aspects of the potential transaction, and the board
of directors determined that management should continue discussions with
Monsanto. Additionally, during the meeting of our board of directors, our
counsel discussed the legal responsibilities of directors in the context of a
possible sale transaction.
Based upon the July 28 meetings with Monsanto, after conferring with D&PL
directors, Mr. Jagodinski discussed with our financial advisor certain
strategic alternatives, which included pricing issues, if our board of
directors were to decide to pursue a sale of D&PL. Our senior management also
consulted with our counsel regarding legal and structural issues relating to
our strategic alternatives, including strategies for pursuing a potential
transaction.
On August 2, 2006, Mr. Jagodinski met with our legal and financial
advisors to discuss potential transaction structures and strategies for moving
forward with the potential sale of D&PL. After such discussions and with the
concurrence of our board of directors, we concluded that it would be in D&PL's
best interests to focus on a transaction with Monsanto and seek to conclude
negotiations promptly and in a manner that would both avoid disruption of our
business and minimize the risk of premature publicity. To meet these
objectives, we concluded that Monsanto should be permitted access to certain
non-public information and established August 13 as the target date for the
completion of the sale negotiation process in light of the arbitration
hearings scheduled to begin on the following day as described below. In
advance of providing access to non-public information, we and Monsanto
negotiated and signed the previously delivered confidentiality agreement.
Because of the strategic importance of this acquisition opportunity to
each of D&PL and Monsanto and Monsanto's familiarity with D&PL, we believed
that the two companies could proceed quickly and confidentially.
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Mr. Jagodinski and R.D. Greene, our Senior Vice President of Corporate
Development and International, contacted Mr. Crews on August 5, 2006 to
further discuss Monsanto's interest in a potential sale transaction within a
price range acceptable to D&PL. During that conversation, Mr. Jagodinski
pointed to a per share price that was $40 or more as an indication of value
that D&PL might find acceptable.
On August 6, 2006, Mr. Crews phoned Mr. Jagodinski and indicated that
they should talk further about the potential value Monsanto was willing to
place on D&PL. Mr. Jagodinski and Mr. Crews agreed to discuss this further on
August 7. On August 7, 2006, Mr. Crews called Mr. Jagodinski to further
discuss the range of values and the deal terms that would be acceptable to
D&PL. During the course of this conversation Mr. Jagodinski indicated again
that Monsanto's offer needed to be $40 or more per share. Mr. Jagodinski and
Mr. Crews further discussed the timing of the negotiations and Mr. Jagodinski
noted that a number of his team members would have to be in Memphis,
Tennessee, on August 14 to attend the hearings in an arbitration proceeding
between Monsanto and D&PL scheduled to commence on that date, and that both
sides would therefore need to work quickly in order to conclude the
negotiation before the D&PL team would have to return to Memphis for the
arbitration.
On August 10, 2006, Willkie Farr & Gallagher LLP, or Willkie Farr,
distributed an initial draft of the merger agreement to us. Between August 10
and August 14, various face-to-face meetings and teleconferences took place
between our senior management and legal and financial advisors, and between
members of senior management of D&PL and of Monsanto and their respective
counsel and advisors. These discussions between us and Monsanto related to due
diligence matters, valuation, the terms of the proposed merger agreement, as
well as the terms and timetable for the potential settlement or continuance of
the various disputes between us and Monsanto. During this period, we also
responded to requests for additional information and documents from Monsanto.
On August 12, 2006, Mr. Jagodinski and Mr. Crews met to discuss costs relating
to the transaction, including professional fees, costs of compensation and
change in control arrangements and other transaction costs and details. On
August 13, Mr. Crews and Mr. Jagodinski met to discuss Monsanto's current
thinking with respect to valuation. Mr. Crews stated that, because of the
complex nature of the transaction, which would include both the purchase of
D&PL and, in certain situations, the settlement of the various legal matters
between the two companies, he believed that the parties should postpone the
arbitration proceeding scheduled to begin the following day. After
consultation with our board of directors, Mr. Jagodinski agreed to delay the
arbitration proceeding for one day until August 15. After agreeing to several
other key deal terms, Mr. Crews and Mr. Jagodinski agreed to a price of $42.00
per share in cash pending the approval of our board of directors.
Also on August 13, our board of directors held a meeting, at which our
legal and financial advisors were present, to discuss the proposed
transaction. At this meeting, our counsel discussed the legal responsibilities
of the directors in the context of a possible sale transaction and key issues
in the merger agreement. Also at this meeting, our financial advisor discussed
certain financial aspects of the proposed transaction. The independent board
members also met in executive session without management present.
On the morning of August 14, Willkie Farr distributed to us a revised
draft of the merger agreement. Later in the day, Mr. Jagodinski, Mr. Greene,
Mr. Avery and our various counsel met with Mr. Crews and other members of
Monsanto management and their counsel to discuss the revised draft of the
merger agreement. The discussion focused on conditions to closing, including
regulatory conditions and obligations, remedies for failure to close, interim
covenants and the scope of representations and warranties of D&PL. That same
evening, Willkie Farr distributed a revised draft merger agreement to us and
our counsel. Also that evening, our board of directors met with our senior
management and legal and financial advisors to discuss Monsanto's revised
offer of $42.00 per share, the $600 million termination fee payable to us by
Monsanto in the event Monsanto does not obtain antitrust approval of the
transaction, and other key provisions of the revised draft of the merger
agreement, including provisions requiring the termination of all disputes
between us and Monsanto in connection with a termination of the merger
agreement under certain circumstances. Our counsel presented the material
terms of the proposed merger agreement with Monsanto. Also at this meeting,
UBS delivered its oral opinion, which was subsequently confirmed by delivery
of a written opinion dated August 14, 2006, to the effect that, as of such
date and based on and subject to various assumptions, matters considered and
limitations described in its opinion, the merger consideration to be received
by holders of our common stock (other than Monsanto, Monsanto Sub, Inc. and
their respective affiliates) was fair, from a financial point of view, to such
holders. After further discussions, our board of directors unanimously
determined that the merger agreement and the merger was advisable and fair to,
and in the best interests of, D&PL and our stockholders, approved the merger
agreement and the transactions contemplated by the
- 20 -
merger agreement, and recommended that the D&PL stockholders approve and adopt
the merger agreement. Later on August 14, the parties executed the definitive
merger agreement and related settlement agreements. ACCORDINGLY, OUR BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF D&PL VOTE "FOR" THE
ADOPTION OF THE MERGER AGREEMENT.
- 21 -
OUR REASONS FOR THE MERGER
Our board of directors has unanimously determined that the merger
agreement and the merger is advisable and fair to, and in the best interests
of, D&PL and our stockholders. In reaching its determination, our board of
directors consulted with D&PL's management, as well as D&PL's legal and
financial advisors, and considered the following material factors:
FACTORS RELATING TO THE TRANSACTION GENERALLY
o Advantages of a Monsanto transaction. Our board of directors
believes that the acquisition of D&PL, with our distinctive
portfolio of germplasm, and our current technology relationship with
Monsanto represents a unique strategic opportunity for Monsanto.
Given the strategic importance of this opportunity to Monsanto, our
board of directors believes that Monsanto is the company most likely
to consummate a transaction within a price range acceptable to D&PL.
o Access to future technologies. Monsanto has a record of successfully
developing genetic traits for cotton. Currently, Monsanto is working
on developing new traits for cotton, for many of which we do not
currently have and perhaps could not attain licensing agreements. If
we do not have access to this new technology, our business could be
adversely affected, particularly if our competitors were to have
access to such technology. Furthermore, we do not have the financial
resources for research available to certain of our competitors and
therefore may be at a disadvantage with respect to the development
of new technologies.
o Challenges faced by us as an independent company. In terms of
maximizing stockholder value, our board of directors considered the
substantial risks and uncertainties associated with remaining an
independent public company, due to the competitive factors described
above.
o Opinion of our financial advisor. Our board of directors considered
the financial presentation of UBS, including its opinion dated
August 14, 2006, to our board of directors as to the fairness, from
a financial point of view and as of the date of the opinion, of the
merger consideration to be received by holders of our common stock
(other than Monsanto, Monsanto Sub, Inc. and their respective
affiliates), as more fully described below under the caption
entitled "Opinion of D&PL's Financial Advisor."
FACTORS RELATING TO THE SPECIFIC TERMS OF THE MERGER AGREEMENT WITH MONSANTO
o The merger consideration. The $42.00 per share to be received by our
stockholders represents a substantial premium to the historic
trading prices of D&PL common stock. The merger consideration
represents a 15.9% premium over the closing price of D&PL common
stock on August 14, 2006 (the trading day immediately preceding the
date of the announcement of the merger agreement), a 22.1% premium
over the average closing price of D&PL common stock over the 30 days
preceding August 14, a 36.6% premium over the average closing price
of D&PL common stock over the 90 days preceding August 14, a 42.3%
premium over the average closing price of D&PL common stock over the
180 days preceding August 14, and a 55.9% premium over the average
closing price of D&PL common stock over the one year period
preceding August 14, 2006. The merger consideration consists solely
of cash, which provides certainty of value to our stockholders.
o Terms of the merger agreement. Our board of directors considered the
terms and conditions of the merger agreement, including the parties'
representations, warranties and covenants, the conditions to their
respective obligations (as well as the likelihood that such
conditions would be satisfied), and the termination provisions
contained in the merger agreement. In connection with the foregoing,
our board of directors also evaluated the likely time period
necessary to close the transaction.
o Ability to respond to other indications of interest. Our board of
directors considered the provisions of the merger agreement that
permit us, in certain circumstances, to (i) furnish or disclose
non-public information to, and negotiate, explore or otherwise
engage in discussions with, a third party which has made a bona fide
unsolicited written proposal or expression of interest with respect
to an acquisition transaction and (ii) terminate the merger
agreement in order to enter into a definitive agreement in
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respect of a superior proposal without paying Monsanto a termination
fee. In considering these factors, our board of directors also
considered the fact that, in the event it elected to terminate the
merger agreement in order to enter into a definitive agreement in
respect of a superior proposal, the Monsanto litigation would be
terminated in all respects. See "Proposal 1 - The Merger Agreement -
Covenants of D&PL - No Solicitation" on page 50.
o Limited closing conditions. The merger agreement contains limited
conditions to the obligation of Monsanto to complete the merger.
Monsanto is generally obligated to close the merger notwithstanding
any breaches of D&PL's representations and warranties, unless those
breaches in the aggregate would have a material adverse effect on us
and our subsidiaries taken as a whole. Our board of directors
considered that the definition of material adverse effect,
essentially an "out" under the merger agreement, had been narrowed
by the exclusion of various occurrences, including: circumstances
resulting from reductions in planted acreage that affect the cotton
and soybean planting seed industries generally; and changes or
effects relating to general political or economic conditions, or
resulting from or arising out of developments or conditions in
agricultural, credit, financial or securities markets in general,
including any changes or effects caused by changes to governmental
agricultural policies, except, in each case, to the extent that the
applicable circumstances, changes or effects would affect us or our
subsidiaries in a materially disproportionate manner when compared
to the effects of these circumstances, changes or effects on other
persons engaged in the cotton and soybean planting seed industries,
in which event only the disproportionate amount is considered in
determining whether there has been any material adverse effect. See
"Proposal 1 - The Merger Agreement - Representations and Warranties"
on page 43.
o Antitrust Implications. Although there can be no assurances, our
board of directors concluded, after consulting with counsel, that
antitrust approvals for the merger are reasonably likely to be
obtained, and in connection with reaching this conclusion, our board
of directors took into consideration; (i) the fact that if all other
conditions to closing are met, but Monsanto is unable to obtain the
necessary antitrust approvals on or before February 14, 2007 (the
initial outside date under the merger agreement), Monsanto is
required to continue to pursue such approvals and the date for
completion of the merger will automatically be extended for up to an
additional six months beyond the initial February 14, 2007 outside
date, as set forth in the section captioned "Proposal 1 - The Merger
Agreement - Covenants of Monsanto and Us - Antitrust Matters" on
page 54; (ii) Monsanto's other commitments under the merger
agreement, including the obligation to promptly offer to divest the
United States cottonseed business acquired by Monsanto in 2005,
which encompasses the STONEVILLE(R) and NEXGEN(R) brands; and (iii)
the incentive for Monsanto to obtain the requisite antitrust
approvals created by the $600 million termination fee that is
payable to us in certain circumstances, including if the merger
agreement is terminated because the merger has not been completed by
the outside date and at that time, the waiting period under the HSR
Act or the competition laws of Spain has not expired or been
terminated. In considering these factors, our board of directors
also considered the fact that the Monsanto litigation will be
terminated in all respects in the event that the merger agreement is
terminated because the merger has not been completed by the outside
date and at that time, the waiting period under the HSR Act or the
competition laws of Spain has not expired or been terminated.
o Certain effects of termination of the merger agreement. In addition
to considering the implications of the transaction from an antitrust
perspective (and the related implications in the event that the
merger agreement is terminated due to antitrust matters, as
described above), our board of directors considered the other
consequences to D&PL in the event that the merger agreement is
terminated. For example, our board of directors considered the fact
that, in the event the merger agreement is terminated by Monsanto
due to a breach of our representations and warranties that we have
not cured or due to the merger not having been completed by the
outside date and D&PL having experienced a material adverse change,
(i) the obligations of the parties to obtain and maintain a
continuance or stay in respect of the Monsanto litigation will
terminate, and we will thereafter be permitted to pursue all rights
and remedies that we may have in respect of the Monsanto litigation,
and (ii) Monsanto's royalty percentage under certain agreements with
us will be decreased from 71% to 60% pertaining to the use of
Bollgard(R) technology and from 70% to 60% pertaining to the use of
Roundup Ready(R) technology.
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o Other considerations relating to the Monsanto disputes. The outcome
of any litigation or arbitration is inherently uncertain. After
review with litigation counsel, our board of directors believed that
the value of the Monsanto disputes to us was difficult to ascertain
and was advised that third parties had concluded in the context of
an acquisition of D&PL that they did not attribute significant value
to the Monsanto litigation. In addition, our board of directors
considered that (i) the termination of the lawsuits, arbitrations
and other commercial disputes between us and Monsanto, including the
arbitration proceeding in which Monsanto was seeking to terminate
our right to use two transgenic traits that we license from Monsanto
and (ii) the amendment of the terms of those licenses to avoid
reoccurrence of the disputes in arbitration, could reduce any
potential third party acquirer's concerns related to our licensing
agreements, thereby eliminating a deterrent to those third parties
that might have an interest in acquiring us.
o Approval by our stockholders. The sale must be approved by our
stockholders by vote of a simple majority of our outstanding shares.
Accordingly, the sale will not be consummated unless the transaction
is supported by such a majority.
POTENTIAL NEGATIVE FACTORS RELATING TO THE TRANSACTION
In the course of its deliberations, our board of directors also
considered a variety of risks and other potentially negative factors,
including the following:
o Exclusive nature of the negotiations between us and Monsanto. Our
board of directors believed that there could be risks of
jeopardizing Monsanto's willingness to proceed with a transaction
and with regard to confidentiality in expanding the sale process. As
mentioned above, other potential candidates to acquire D&PL had
previously indicated their unwillingness to offer a value deemed
adequate by our board of directors and also were concerned about the
Monsanto disputes relating to our license agreements with Monsanto.
At the same time, although the merger agreement precludes us from
actively soliciting alternative proposals, subject to the
limitations and restrictions contained in the merger agreement, our
board of directors is permitted to furnish information to and
conduct negotiations with a third party who submits an alternative
proposal and to terminate the agreement with Monsanto if we receive
a superior proposal. In the event that the merger agreement is
terminated in connection with our acceptance of a superior proposal,
we are not required to pay a termination fee to Monsanto, although
in those circumstances the Monsanto litigation that is currently
stayed pending the outcome of this transaction would be dismissed
with prejudice by the two parties.
o Taxable transaction. The merger consideration consists solely of
cash and will therefore be taxable to our stockholders for U.S.
federal income tax purposes. In addition, because our stockholders
are receiving cash for their stock, they will not participate after
the closing in future dividends, our future growth or the benefits
of synergies resulting from the merger.
o Required regulatory approval. It is possible that Monsanto may not
be able consummate the merger due to its inability to obtain
required antitrust approvals, in which case the merger would not
occur. In that circumstance, and subject to the terms set forth in
the merger agreement, Monsanto would owe D&PL a $600 million
termination fee. However, after consulting with counsel, our board
of directors concluded that the requisite antitrust approvals are
likely to be obtained. Moreover, the merger agreement provides that,
if Monsanto does not obtain antitrust approvals within six months of
the signing of the merger agreement, the period in which Monsanto
must continue to pursue these approvals automatically extends for
another six months.
o Conflicts. Certain of our directors and officers may have conflicts
of interest in connection with the merger, as they may receive
certain benefits that are different from, and in addition to, those
of our other stockholders. See "The Merger - Interests of Certain
Persons in the Merger."
o Failure to close. We may incur significant risks and costs if the
merger does not close, including the diversion of management and
employee attention during the period after the signing of the merger
agreement, potential employee attrition and possible adverse effects
on our business and customer
- 24 -
relations. In that regard, under the merger agreement, we must
conduct our business in the ordinary course and we are subject to a
variety of other restrictions on the conduct of our business prior
to completion of the merger or termination of the merger agreement,
which may delay or prevent us from undertaking business
opportunities that may arise or preclude actions that would be
advisable if we were to remain an independent public company.
RECOMMENDATION OF OUR BOARD OF DIRECTORS
The foregoing discussion summarizes the material factors considered by
our board of directors in its consideration of the merger. After considering
these factors, our board of directors concluded that the positive factors
relating to the merger agreement outweighed the negative factors. In view of
the wide variety of factors considered by our board of directors, the board of
directors did not find it practicable to quantify or otherwise assign relative
weights to the foregoing factors. In addition, individual directors may have
assigned different weights to various factors. Our board of directors approved
and recommends the merger agreement based upon the totality of the information
presented to and considered by it.
On August 14, 2006, after evaluating a variety of business, financial and
market factors, and after due discussion and due consideration, our board of
directors unanimously approved the merger agreement and determined that the
merger agreement and the merger are advisable and fair to and in the best
interests of D&PL and our stockholders. ACCORDINGLY, OUR BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF D&PL VOTE "FOR" THE ADOPTION
OF THE MERGER AGREEMENT.
OPINION OF D&PL'S FINANCIAL ADVISOR
On August 14, 2006, at a meeting of D&PL's board of directors held to
evaluate the proposed merger, UBS delivered to D&PL's board of directors an
oral opinion, confirmed by delivery of a written opinion dated August 14,
2006, to the effect that, as of that date and based on and subject to various
assumptions, matters considered and limitations described in its opinion, the
merger consideration to be received by holders of D&PL common stock (other
than Monsanto, Monsanto Sub, Inc. and their respective affiliates) was fair,
from a financial point of view, to such holders.
The full text of UBS' opinion describes the assumptions made, procedures
followed, matters considered and limitations on the review undertaken by UBS.
This opinion is attached as Appendix B and is incorporated into this proxy
statement by reference. UBS' OPINION IS DIRECTED ONLY TO THE FAIRNESS, FROM A
FINANCIAL POINT OF VIEW, OF THE MERGER CONSIDERATION TO BE RECEIVED BY HOLDERS
OF D&PL COMMON STOCK (OTHER THAN MONSANTO, MONSANTO SUB, INC. AND THEIR
RESPECTIVE AFFILIATES) AND DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER.
THE OPINION DOES NOT ADDRESS THE RELATIVE MERITS OF THE MERGER AS COMPARED TO
OTHER BUSINESS STRATEGIES OR TRANSACTIONS THAT MIGHT BE AVAILABLE WITH RESPECT
TO D&PL OR D&PL'S UNDERLYING BUSINESS DECISION TO EFFECT THE MERGER. THE
OPINION DOES NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER OF D&PL AS TO
HOW SUCH STOCKHOLDER SHOULD VOTE OR ACT WITH RESPECT TO THE MERGER. HOLDERS OF
D&PL COMMON STOCK ARE ENCOURAGED TO READ THIS OPINION CAREFULLY IN ITS
ENTIRETY. The summary of UBS' opinion described below is qualified in its
entirety by reference to the full text of its opinion.
In arriving at its opinion, UBS:
o reviewed publicly available business and historical financial
information relating to D&PL ;
o reviewed internal financial information and other data relating to
D&PL's business and financial prospects that were provided to UBS by
D&PL's management and not publicly available, including financial
forecasts and estimates prepared by D&PL's management;
o conducted discussions with members of D&PL's senior management
concerning D&PL's business and financial prospects;
- 25 -
o conducted discussions with members of D&PL's senior management and
other representatives concerning outstanding litigation and certain
other proceedings involving D&PL ;
o reviewed publicly available financial and stock market data with
respect to other companies UBS believed to be generally relevant;
o compared the financial terms of the merger with the publicly
available financial terms of other transactions UBS believed to be
generally relevant;
o reviewed current and historical market prices of D&PL common stock;
o reviewed the merger agreement; and
o conducted other financial studies, analyses and investigations, and
considered other information, as UBS deemed necessary or
appropriate.
In connection with its review, with D&PL's consent, UBS did not assume
any responsibility for independent verification of any of the information
provided to or reviewed by UBS for the purpose of its opinion and, with D&PL's
consent, UBS relied on that information being complete and accurate in all
material respects. In addition, with D&PL's consent, UBS did not make any
independent evaluation or appraisal of any of the assets or liabilities,
contingent or otherwise, of D&PL, and was not furnished with any evaluation or
appraisal. With respect to the financial forecasts and estimates prepared by
D&PL's management, UBS assumed, at D&PL's direction, that they were reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of D&PL's management as to the future performance of D&PL. In
addition, based on the belief of D&PL's management, UBS assumed, at D&PL's
direction solely for purposes of UBS' analyses, that the value that D&PL could
obtain for settling its pending litigation and arbitration proceedings with
Monsanto, in the aggregate, would not be material to D&PL's financial position
and prospects, and UBS therefore assumed that the outcome of such litigation
and arbitration proceedings would not change the conclusion reached in UBS'
opinion. UBS' opinion was necessarily based on economic, monetary, market and
other conditions as in effect on, and the information available to UBS as of,
the date of its opinion.
In connection with UBS' engagement, UBS was not authorized to, and did
not, solicit indications of interest in a business combination with D&PL from
any party. At D&PL's direction, UBS was not asked to, and it did not, offer
any opinion as to the terms, other than the merger consideration to the extent
expressly specified in UBS' opinion, of the merger agreement or the form of
the merger. In rendering its opinion, UBS assumed, with D&PL's consent, that
(i) D&PL, Monsanto and Monsanto Sub, Inc. would comply with all material terms
of the merger agreement and (ii) the merger would be consummated in accordance
with the terms of the merger agreement without any adverse waiver or amendment
of any material term or condition of the merger agreement. UBS also assumed
that all governmental, regulatory or other consents and approvals necessary
for the consummation of the merger would be obtained without any material
adverse effect on D&PL or the merger. Except as described above, D&PL imposed
no other instructions or limitations on UBS with respect to the investigations
made or the procedures followed by UBS in rendering its opinion.
In connection with rendering its opinion to D&PL's board of directors,
UBS performed a variety of financial and comparative analyses which are
summarized below. The following summary is not a complete description of all
analyses performed and factors considered by UBS in connection with its
opinion. The preparation of a financial opinion is a complex process involving
subjective judgments and is not necessarily susceptible to partial analysis or
summary description. With respect to the selected companies analysis and the
selected transactions analysis summarized below, no company or transaction
used as a comparison is either identical or directly comparable to D&PL or the
merger. These analyses necessarily involve complex considerations and
judgments concerning financial and operating characteristics and other factors
that could affect the public trading or acquisition values of the companies
concerned.
UBS believes that its analyses and the summary below must be considered
as a whole and that selecting portions of its analyses and factors or focusing
on information presented in tabular format, without considering all analyses
and factors or the narrative description of the analyses, could create a
misleading or incomplete view of the
- 26 -
processes underlying UBS' analyses and opinion. None of the analyses performed
by UBS was assigned greater significance or reliance by UBS than any other.
UBS arrived at its ultimate opinion based on the results of all analyses
undertaken by it and assessed as a whole. UBS did not draw, in isolation,
conclusions from or with regard to any one factor or method of analysis for
purposes of its opinion.
The estimates of the future performance of D&PL provided by D&PL's
management in or underlying UBS' analyses are not necessarily indicative of
future results or values, which may be significantly more or less favorable
than those estimates. In performing its analyses, UBS considered industry
performance, general business and economic conditions and other matters, many
of which are beyond the control of D&PL. Estimates of the financial value of
companies do not necessarily purport to be appraisals or reflect the prices at
which companies actually may be sold.
The merger consideration was determined through negotiation between D&PL
and Monsanto and the decision to enter into the merger was solely that of
D&PL's board of directors. UBS' opinion and financial analyses were only one
of many factors considered by D&PL's board of directors in its evaluation of
the merger and should not be viewed as determinative of the views of D&PL's
board of directors or management with respect to the merger or the merger
consideration.
The following is a brief summary of the material financial analyses
performed by UBS and reviewed with D&PL's board of directors in connection
with its opinion relating to the proposed merger. THE FINANCIAL ANALYSES
SUMMARIZED BELOW INCLUDE INFORMATION PRESENTED IN TABULAR FORMAT. IN ORDER TO
FULLY UNDERSTAND UBS' FINANCIAL ANALYSES, THE TABLES MUST BE READ TOGETHER
WITH THE TEXT OF EACH SUMMARY. THE TABLES ALONE DO NOT CONSTITUTE A COMPLETE
DESCRIPTION OF THE FINANCIAL ANALYSES. CONSIDERING THE DATA BELOW WITHOUT
CONSIDERING THE FULL NARRATIVE DESCRIPTION OF THE FINANCIAL ANALYSES,
INCLUDING THE METHODOLOGIES AND ASSUMPTIONS UNDERLYING THE ANALYSES, COULD
CREATE A MISLEADING OR INCOMPLETE VIEW OF UBS' FINANCIAL ANALYSES.
SELECTED COMPANIES ANALYSIS
UBS compared selected financial and stock market data of D&PL with
corresponding data, to the extent publicly available, of the following six
publicly traded companies in the agrochemical and seed industry:
o Makhteshim-Agan Industries Ltd.
o Monsanto
o Nufarm Limited
o Syngenta AG
o UAP Holdings Corp.
o Vilmorin & Cie, SA
UBS reviewed, among other things, enterprise values of the selected companies,
calculated as fully diluted equity value based on closing stock prices on
August 11, 2006, plus the book value of debt, preferred stock and minority
interest, less cash, as a multiple of latest 12 months earnings before
interest, taxes, depreciation and amortization, referred to as EBITDA, and
calendar years 2006 and 2007 estimated EBITDA. UBS also reviewed closing stock
prices of the selected companies on August 11, 2006 as a multiple of calendar
years 2006 and 2007 estimated earnings per share, referred to as EPS. UBS then
compared the multiples derived from the selected companies with corresponding
multiples implied for D&PL based both on the closing price of D&PL common
stock on August 11, 2006 and the merger consideration. Financial data of the
selected companies were based on publicly available research analysts'
estimates as compiled by the Institutional Brokers' Estimate System, referred
to as I/B/E/S consensus estimates, public filings and other publicly available
information. Estimated financial data of D&PL were based on internal forecasts
prepared by D&PL's management. This analysis indicated the following implied
mean, median, high and low multiples for the selected companies, as compared
to corresponding multiples implied for D&PL based both on the closing price of
D&PL common stock on August 11, 2006 and the $42.00 per share merger
consideration:
- 27 -
Implied Multiples for Implied Multiples Implied Multiples
Agrochemical/Seed Companies for D&PL Based for D&PL Based
---------------------------- on Closing Stock on
Price on August Merger
Mean Median High Low 11, 2006 Consideration
---- ------ ---- --- ----------------- -----------------
Enterprise Value as
Multiple of EBITDA:
--------------------
Latest 12 Months 10.4x 11.3x 15.2x 6.4x 13.9x 16.7x
2006E .......... 9.4x 8.7x 15.4x 6.5x 13.2x 15.9x
2007E........... 8.7x 8.0x 13.5x 6.4x 13.6x 16.4x
Closing Stock Price
as Multiple of EPS:
--------------------
2006E........... 17.5x 15.3x 32.0x 12.3x 25.2x 29.6x
2007E........... 15.0x 13.4x 25.6x 10.9x 26.1x 30.6x
SELECTED TRANSACTIONS ANALYSIS
UBS reviewed transaction values in the following 11 selected transactions
involving companies in the seed industry announced since January 1998:
ANNOUNCEMENT
DATE ACQUIROR TARGET
------------ -------------------------- ------------------------------------
2/14/06 United Phosphorus, Inc. Advanta Netherlands Holdings BV
2/17/05 Monsanto Emergent Genetics, Inc.
1/24/05 Monsanto Seminis, Inc.
6/25/04 Syngenta AG Golden Harvest Seeds, Inc. (90%
equity stake)
5/12/04 Syngenta AG Advanta BV
9/8/03 Fox Paine and Company, LLC Seminis, Inc.
3/1/99 E. I. du Pont de Nemours Pioneer Hi-Bred International, Inc.
and Company (80% equity stake not owned)
10/1/98 Hicks, Muse, Tate & Furst L. Daehnfeldt A/S
Incorporated
6/1/98 Monsanto Cargill, Incorporated (International
Seed Operations)
4/1/98 Monsanto Maharashtra Hybrid Seed Company
1/1/98 E. I. du Pont de Nemours Pioneer Hi-Bred International, Inc.
and Company (20% equity stake)
-----------------------------------------------------------------------------
UBS reviewed transaction values, calculated as the purchase price paid for the
equity, plus debt, less cash, in the selected transactions as multiples of
latest 12 months sales and EBITDA. UBS then compared the multiples derived
from the selected transactions with corresponding multiples implied for D&PL
based on the merger consideration. Multiples for the selected transactions
were based on publicly available information at the time of announcement of
the relevant transaction. Estimated financial data of D&PL were based on
internal estimates of D&PL's management. This analysis indicated the following
implied mean, median, high and low multiples for the selected transactions, as
compared to corresponding multiples implied for D&PL based on the $42.00 per
share merger consideration:
- 28 -
Implied Multiples
Implied Multiples for for
for Selected Transactions D&PL Based on
----------------------------- Merger
Mean Median High Low Consideration
---- ------ ---- --- -----------------
Transaction Value as
Multiple of:
-------------------
Latest 12 Months Sales... 3.2x 3.4x 5.2x 1.0x 3.4x
Latest 12 Months EBITDA.. 13.4x 12.7x 21.2x 6.8x 16.7x
DISCOUNTED CASH FLOW ANALYSIS
UBS performed a discounted cash flow analysis to calculate the estimated
present value as of August 31, 2006 of the stand-alone unlevered, after-tax
free cash flows that D&PL could generate over fiscal years 2007 through 2016,
based on internal estimates of D&PL's management. UBS calculated a range of
terminal values by applying a range of EBITDA terminal value multiples of 8.0x
to 10.0x to D&PL's fiscal year 2016 estimated EBITDA. The cash flows and
terminal values were then discounted to present value using discount rates
ranging from 11.0% to 14.0%. This analysis indicated the following implied per
share equity reference range for D&PL, as compared to the $42.00 per share
merger consideration:
Implied Per Share Equity
Reference Range for D&PL Merger Consideration
---------------------------------- ------------------------------
$30.02 - $40.54 $42.00
MISCELLANEOUS
Under the terms of UBS' engagement, D&PL has agreed to pay UBS customary
fees for its financial advisory services in connection with the merger, a
portion of which was payable in connection with UBS' opinion and a significant
portion of which is contingent upon consummation of the merger. In addition,
D&PL has agreed to reimburse UBS for its reasonable expenses, including fees,
disbursements and other charges of counsel, and to indemnify UBS and related
parties against liabilities, including liabilities under federal securities
laws, relating to, or arising out of, its engagement. In the past, UBS has
provided investment banking services to D&PL unrelated to the proposed
transaction, for which UBS has received compensation. In the ordinary course
of business, UBS, its successors and affiliates may hold or trade, for their
own accounts and the accounts of their customers, securities of D&PL and
Monsanto, and, accordingly, may at any time hold a long or short position in
such securities. D&PL selected UBS as its financial advisor in connection with
the merger because UBS is an internationally recognized investment banking
firm with substantial experience in similar transactions. UBS is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, leveraged buyouts, negotiated underwritings,
competitive bids, secondary distributions of listed and unlisted securities
and private placements.
CERTAIN EFFECTS OF THE MERGER
If the merger agreement is adopted by our stockholders and the other
conditions to the closing of the merger are either satisfied or waived,
Monsanto Sub, Inc., a wholly-owned subsidiary of Monsanto created solely for
the purpose of engaging in the transactions contemplated by the merger
agreement, will be merged with and into us, and we will be the surviving
corporation. When the merger is completed, we will cease to be a publicly
traded company and will instead become a wholly-owned subsidiary of Monsanto.
When the merger is completed, each share of our common stock issued and
outstanding immediately prior to the effective time of the merger (other than
shares owned by us, Monsanto or any subsidiary of Monsanto and other than
shares owned by any stockholder who is entitled to and properly exercises
appraisal rights in compliance
- 29 -
with the required procedures under the DGCL) will be converted into the right
to receive $42.00 in cash, without interest, subject to any applicable
withholding tax. Monsanto is the only holder of our preferred stock. Upon
completion of the merger, the preferred stock will be cancelled, and no
payment will be made to Monsanto. At the effective time of the merger,
outstanding stock options, restricted stock and restricted stock units will
vest and be converted into the right to receive $42.00 in cash (net of any
exercise price), without interest, subject to any applicable withholding tax,
for each share of common stock represented by these awards.
At the effective time of the merger, our stockholders will have the right
to receive the merger consideration but will cease to have ownership interests
in us or rights as our stockholders. Therefore, our stockholders will not
participate in our future earnings or growth and will not benefit from any
appreciation in our value or suffer from any depreciation in our value.
Our common stock is currently registered under the Securities Exchange
Act of 1934, as amended, which we refer to as the Exchange Act, and is quoted
on the New York Stock Exchange, or the NYSE, under the symbol "DLP." As a
result of the merger, we will be a wholly-owned subsidiary of Monsanto, our
common stock will cease to be traded on the NYSE and there will be no public
market for our common stock. In addition, registration of our common stock
under the Exchange Act will be terminated and we will no longer be required to
file periodic reports with the SEC.
When the merger becomes effective, the directors of Monsanto Sub, Inc.
will be the directors of the surviving corporation and our officers will be
the initial officers of the surviving corporation. Also at the effective time
of the merger, (i) the certificate of incorporation of Monsanto Sub, Inc., as
in effect at the effective time of the merger, will become the certificate of
incorporation of the surviving corporation until such time as it is amended in
accordance with applicable law, except that the name set forth in such
certificate of incorporation will be changed to Delta and Pine Land Company,
and (ii) the bylaws of Monsanto Sub, Inc., as in effect at the effective time
of the merger, will be become the bylaws of the surviving corporation until
such time as they are amended in accordance with applicable law.
EFFECTS ON US IF THE MERGER IS NOT COMPLETED
In the event that the merger agreement is not adopted by our stockholders
or if the merger is not completed for any other reason, our stockholders will
not receive any payment for their shares in connection with the merger.
Instead, we will remain an independent public company and our common stock
will continue to be traded on the NYSE. In addition, if the merger is not
completed, we expect that management will operate our business in a manner
similar to that in which it is being operated today and that our stockholders
will continue to be subject to the same risks and opportunities to which they
are currently subject, except as otherwise described in this proxy statement.
Accordingly, if the merger is not consummated, there can be no assurance
as to the effect of these risks and opportunities on the future value of your
shares of our common stock. In the event the merger is not completed, our
board of directors will continue to evaluate and review our business
operations, properties, dividend policy and capitalization, among other
things, make such changes as are deemed appropriate and continue to seek to
identify strategic alternatives to enhance stockholder value. If the merger
agreement is not adopted by our stockholders or if the merger is not
consummated for any other reason, there can be no assurance that any other
transaction acceptable to us will be offered or that our business, prospects
or results of operation will not be adversely impacted.
If the merger agreement is terminated by D&PL pursuant to a stand-alone
fiduciary termination event, as described below, we will be obligated to pay a
termination fee of $15 million to Monsanto. If the merger agreement is
terminated due to legal reasons related to antitrust or competition law
matters or due to an uncured material breach of certain covenants in the
merger agreement by Monsanto or Monsanto Sub, Inc., Monsanto will be obligated
to pay us $600 million, which we refer to as the Monsanto termination payment.
For a description of the circumstances triggering payment of the termination
fee and the Monsanto termination payment, see "Proposal 1--The Merger
Agreement--Effect of Termination" on page 58.
- 30 -
We and Monsanto have agreed to dismiss the Monsanto litigation with
prejudice if the merger agreement is terminated:
o by us due to (a) an uncured material breach of certain covenants in
the merger agreement by Monsanto or Monsanto Sub, Inc. or (b) the
failure to obtain antitrust approvals, in each case subject to the
payment by Monsanto of the Monsanto termination payment;
o by Monsanto due to an uncured material breach of certain covenants
in the merger agreement by us;
o by Monsanto upon our board of directors' approving, endorsing or
recommending any acquisition transaction other than the Monsanto
merger; or
o by us prior to the date of the special meeting to enter into an
agreement for a transaction that constitutes a superior proposal.
If the merger agreement is terminated for any other reason, we and Monsanto
will each be permitted to pursue any and all rights and remedies with respect
to the Monsanto litigation.
INTERESTS OF CERTAIN PARTIES IN THE MERGER
In addition to their interests in the merger as stockholders, certain
parties have interests in the merger that differ from, or are in addition to,
your interests as a stockholder. In considering the recommendation of our
board of directors to vote "FOR" the adoption of the merger agreement, you
should be aware of these interests. Our board of directors was aware of, and
considered the interests of, our directors and executive officers in approving
the merger agreement, the merger and the transactions contemplated by the
merger agreement. Except as described below such persons have, to our
knowledge, no material interest in the merger that differs from your interests
generally as a stockholder.
Stock Options
The merger agreement provides that all options to purchase our common
stock, whether granted under our various equity compensation plans or
otherwise, and that are outstanding at the effective time of the merger,
whether or not then exercisable, will be cancelled and converted into the
right to receive an amount in cash equal to the product of the number of
shares of our common stock subject to the option and the amount (if any) by
which $42.00, the merger consideration, exceeds the per share exercise price
of the option, without interest and less any applicable withholding tax.
- 31 -
Based on the number and exercise prices of vested and unvested options
held on October 23, 2006 by our executive officers and directors, as set forth
in the following table, our executive officers and directors will receive the
following amounts (before any applicable withholding tax) in settlement of
their respective options if the merger is completed:
OPTIONS THAT WILL VEST AS
VESTED OPTIONS A RESULT OF THE MERGER TOTALS
-------------------------- ----------------------------- -----------------------------
PAYMENT PAYMENT (NET OF TOTAL PAYMENT
(NET OF PER SHARE PER SHARE TOTAL (NET OF PER SHARE
NAME SHARES EXERCISE PRICE) SHARES EXERCISE PRICE) SHARES EXERCISE PRICE)
--------------------- -------- ------------------ ----------- ----------------- ---------- ------------------
NON-EMPLOYEE
DIRECTORS:
Nam-Hai Chua....... 113,685 $ 2,357,773 534 $ 12,298 114,219 $ 2,370,071
Jon E.M. Jacoby.... 113,685 $ 2,357,773 534 $ 12,298 114,219 $ 2,370,071
Joseph M. Murphy... 111,907 $ 2,320,808 534 $ 12,298 112,441 $ 2,333,106
F. Murray Robinson 20,794 $ 344,589 5,334 $ 92,000 26,128 $ 436,589
Stanley P. Roth.... 113,685 $ 2,357,773 534 $ 12,298 114,219 $ 2,370,071
Rudi E. Scheidt.... 113,685 $ 2,357,773 534 $ 12,298 114,219 $ 2,370,071
EXECUTIVE OFFICERS:
W.T. Jagodinski (1) 492,012 $ 9,650,632 44,911 $ 1,003,121 536,923 $ 10,653,753
Kenneth Avery...... -- $ -- 36,000 $ 668,700 36,000 $ 668,700
Charles R. Dismuke,
Jr................. 150,812 $ 2,802,298 -- $ -- 150,812 $ 2,802,298
R.D. Greene........ 99,702 $ 1,824,438 33,000 $ 700,200 132,702 $ 2,524,638
William V. Hugie... 65,406 $ 1,293,955 -- $ -- 65,046 $ 1,293,955
James H. Willeke... 17,321 $ 227,213 -- $ -- 17,321 $ 227,213
Other executive
officers (8
persons)........... 252,313 $ 4,161,225 24,000 $ 398,480 276,313 $ 4,559,705
(1) The amounts set forth for Mr. Jagodinski do not include any amounts due
related to income tax gross ups with respect to the income that may be
incurred by him with respect to his stock options. Pursuant to his employment
agreement, Mr. Jagodinski would receive an estimated income tax gross up of
$6,157,119 with respect to his vested options and $639,993 with respect to
options that will vest as a result of the merger. Mr. Jagodinski would also
receive an estimated excise tax gross up of $3,709,536, which is partially
attributable to the vesting of his options.
Other Awards
All outstanding awards granted to our executive officers and directors
under our equity compensation plans other than stock options, including
restricted stock and restricted stock units, will become immediately vested
and will be converted into the right to receive $42.00 per share in cash
without interest and less any applicable withholding tax. As of October 23,
2006, the following executive officers and directors held the following awards
other than stock options, and each individual listed below will receive the
following amounts (before any applicable withholding tax) in settlement of
their respective other awards if the merger is completed:
RESTRICTED STOCK
RESTRICTED STOCK UNITS TOTALS
---------------- ---------------- ----------------
TOTAL TOTAL
NAME SHARES PAYMENT SHARES PAYMENT SHARES PAYMENT
---------------------- ------ ------- ------ ------- ------ -------
NON-EMPLOYEE DIRECTORS:
Nam-Hai Chua -- $ -- 2,477 $ 104,034 2,477 $ 104,034
Jon E.M. Jacoby -- $ -- 2,477 $ 104,034 2,477 $ 104,034
Joseph M. Murphy -- $ -- 2,477 $ 104,034 2,477 $ 104,034
F. Murray Robinson -- $ -- 2,477 $ 104,034 2,477 $ 104,034
Stanley P. Roth -- $ -- 2,477 $ 104,034 2,477 $ 104,034
Rudi E. Scheidt -- $ -- 2,477 $ 104,034 2,477 $ 104,034
EXECUTIVE OFFICERS:
W.T. Jagodinski 12,902 $ 541,884 -- $ -- 12,902 $ 541,884
Kenneth Avery 4,000 $ 168,000 -- $ -- 4,000 $ 168,000
Charles R. Dismuke, Jr. 6,144 $ 258,048 -- $ -- 6,144 $ 258,048
R.D. Greene 6,746 $ 283,332 -- $ -- 6,746 $ 283,332
William V. Hugie 2,607 $ 109,494 -- $ -- 2,607 $ 109,494
James H. Willeke 1,258 $ 52,836 -- $ -- 1,258 $ 52,836
Other executive
officers (8 persons) 17,146 $ 720,132 -- $ -- 17,146 $ 720,132
- 32 -
Pursuant to the provisions of the 2005 Omnibus Stock Plan, dividends are
paid on restricted stock units issued to directors in the form of additional
restricted stock units when dividends are declared and paid on D&PL's
outstanding common stock, and in an amount, with respect to each restricted
stock unit, that is equivalent to the cash dividend paid on one share of
common stock. To the extent that dividends are declared and paid by D&PL
between October 23, 2006 and the closing of the transaction, the number of
restricted stock units held by the directors will increase based on the above
described policy.
The directors of D&PL have authorized the issuance of approximately
155,000 shares of restricted stock and restricted stock units to the
directors, officers and key employees of D&PL in accordance with the
provisions of the 2005 Omnibus Stock Plan. These shares of restricted stock
and restricted stock units, if issued, will vest over a three year period.
However, at the effective time of the merger, those shares of restricted stock
and restricted stock units will become immediately vested and will be
converted into the right to receive $42.00 per share in cash without interest
and less any applicable withholding tax. If the merger does not close, these
instruments will vest 40% on the first anniversary of their issuance, 30% on
the second anniversary of their issuance and the remaining 30% on the third
anniversary of their issuance.
Change in Control Provisions
We have entered into agreements with each of our executive officers that
provide for the continuation of certain payments and benefits in order to
induce the executive to remain in our employ, and to ensure his or her
continued dedication and efforts without undue concern for his or her personal
financial and employment security.
Mr. Jagodinski
--------------
On August 25, 2006, we entered into an amended and restated employment
agreement with W.T. Jagodinski, our President and Chief Executive Officer,
which we refer to as the Amended Employment Agreement. The Amended Employment
Agreement supersedes Mr. Jagodinski's prior restated employment agreement,
dated September 1, 1997 and modified on January 14, 1998, which we refer to as
the Prior Employment Agreement. The Amended Employment Agreement provides that
if Mr. Jagodinski is employed by us at the time of a change in control or has
been terminated by us in anticipation of a change in control, as those terms
are defined in the Amended Employment Agreement, then upon a change in
control, Mr. Jagodinski will be entitled to receive (1) an amount equal to
earned but unpaid base salary plus a pro rata portion of his highest bonus
earned in any of the five prior fiscal years, (2) an amount equal to three
times base salary (determined at the time of the change in control) plus his
highest bonus earned in any of the five prior fiscal years, (3) an amount
equal to 20% of the sum of base salary (determined at the time of the change
in control) plus his highest bonus earned in any of the five prior fiscal
years for purposes of obtaining accounting services, (4) the value of the
excess of Mr. Jagodinski's benefit under our retirement plan if he were to be
credited with an additional three years of service and his actual benefit at
the time of the change in control, (5) continuation of health and welfare
benefits at our cost (in addition to the right to COBRA coverage) for 36
months following the date of the change in control, (6) continued use of a
company-provided cellular phone, secretarial assistance, voice mailbox, mail
drop service, laptop computer, email account and vehicle and continued
coverage under directors and officers liability insurance policy, for 36
months after the change in control and (7) the right to a cash payment in lieu
of receiving shares of our common stock for exercisable options that Mr.
Jagodinski is required to surrender.
Mr. Jagodinski is entitled to receive a gross-up payment for any income
or employment taxes owed with respect to any payments or benefits received
upon a change in control such that the amount he retains after-tax is equal to
the amount he would have retained had no income or employment tax applied.
Under the Amended Employment Agreement, the income and employment tax gross-up
applies to all payments and benefits except payment of earned but unpaid base
salary and pro rata bonus and the payment of three times base salary plus his
highest bonus earned in any of the five prior fiscal years. The Amended
Employment Agreement provides that Mr. Jagodinski is also entitled to receive
a gross-up payment with respect to any excise taxes under Section 4999 of the
Internal Revenue Code of 1986, as amended, which we refer to herein as the
Code, incurred with respect to any payments or benefits received from us such
that the amount he retains after-tax is equal to the after-tax amount he would
have retained had no excise tax applied.
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In order to comply with Section 409A of the Code, all amounts payable
under the Amended Employment Agreement before January 1, 2007 will not be paid
earlier than the first business day after December 31, 2006.
The Amended Employment Agreement provides that upon his termination of
employment for any reason on or following a change in control or in
anticipation of a change in control, Mr. Jagodinski will not compete against
us for a period of 18 months from the date of termination of employment. For
purposes of the non-competition covenant of the Amended Employment Agreement,
Mr. Jagodinski may not engage or participate in, assist or have an interest
in, whether as an officer, director, partner, owner, employee or otherwise,
the operation, management or conduct of any business or enterprise that
engages in the cottonseed breeding, production and marketing process in the
same geographical area with any line of business in which we are now engaged.
Messrs. Avery and Greene
------------------------
On August 23 and 24, 2006, we entered into a severance protection
agreement with each of Kenneth M. Avery and R.D. Greene, respectively, that
provides that, if the respective executive is employed by us at the time of a
change in control (as that term is defined in the agreement) or has been
terminated by us in anticipation of a change in control, then upon a change in
control, the respective executive will be entitled to receive (1) a lump sum
payment equal to (a) earned but unpaid base salary plus a pro rata portion of
his highest bonus earned in any of the five prior fiscal years, (b) three
times base salary (determined at the time of the change in control) plus his
highest bonus earned in any of the five prior fiscal years, (c) with respect
to Mr. Greene, 30% of the sum of base salary (determined at the time of the
change in control) plus his highest bonus earned in any of the five prior
fiscal years and, with respect to Mr. Avery, $30,000, for purposes of
obtaining accounting services and (d) the value of the excess of the
respective executive's benefit under our retirement plan if he were to be
credited with an additional three years of service and his actual benefit at
the time of the change in control, and (2) for 36 months following the date of
the change in control, (a) continuation of health and welfare benefits, at our
cost (in addition to the right to COBRA coverage) and (b) continued use of
company-provided secretarial assistance, voice mailbox, laptop computer, email
account, mail drop service and vehicle.
Under the severance protection agreement, Mr. Greene is entitled to
receive a gross-up payment for any income or employment taxes owed with
respect to the payment made with respect to his obtaining accounting services
such that the amount he retains after-tax is equal to the amount he would have
retained had no income or employment tax applied. The severance protection
agreements provide that Messrs. Avery and Greene are each entitled to receive
a gross-up payment with respect to any excise taxes under Section 4999 of the
Code incurred with respect to any payments or benefits received from us such
that the amount such executive retains after-tax is equal to the after-tax
amount he would have retained had no excise tax applied.
Upon termination of employment for any reason on or following a change in
control or in anticipation of a change in control, the severance protection
agreements provide that each respective executive agrees not to compete
against us for 18 months from the date of termination of employment. For
purposes of this non-competition covenant, the respective executive may not
engage or participate in, assist or have an interest in, whether as an
officer, director, partner, owner, employee or otherwise, the operation,
management or conduct of any business or enterprise that engages in the
cottonseed breeding, production and marketing process in the same geographical
area with any line of business in which we are now engaged unless his new job
duties do not require or allow him to directly engage in activities that would
violate those prohibitions and he does not violate his contractual
confidentiality obligations to our company.
Messrs. Dismuke and Hugie
-------------------------
On August 21 and 24, 2006, we entered into a severance protection
agreement with each of Charles Dismuke, Jr. and William Hugie, respectively,
that provides that, if within 24 months of a change in control (as that term
is defined in the agreement), the respective executive's employment is
terminated by us without "cause" and other than due to "disability" or death,
or by the executive for "good reason" (as those terms are defined in the
agreement) or during the 30 day period following the first anniversary of the
change in control, the respective executive will be entitled to receive (1) a
lump sum payment equal to (a) earned but unpaid base salary plus a pro rata
portion of his highest bonus earned in any of the five prior fiscal years, (b)
three times base salary (determined at the time of the change in control or,
if greater, the date of termination of employment) plus his highest bonus
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earned in any of the five prior fiscal years, (c) $30,000 for purposes of
obtaining outplacement services and (d) the value of the excess of the
respective executive's benefit under our retirement plan if he were to be
credited with an additional three years of service and his actual benefit at
the time of the termination, and (2) for 36 months following the date of
termination of employment, (a) continuation of health and welfare benefits, at
our cost (in addition to the right to COBRA coverage) and (b) continued use of
company-provided secretarial assistance, voice mailbox, laptop computer, email
account, mail drop service and vehicle.
The severance protection agreements provide that Messrs. Dismuke and
Hugie are each entitled to receive a gross-up payment with respect to any
excise taxes under Section 4999 of the Code incurred with respect to any
payments or benefits received from us such that the amount such executive
retains after-tax is equal to the after-tax amount each would have retained
had no excise tax applied.
If Mr. Dismuke or Mr. Hugie qualifies as a "specified employee" under
Section 409A of the Code, payments made to the respective executive under the
applicable severance protection agreement may be delayed for six months from
the date of termination of employment.
If, during the term of the applicable severance protection agreement and
within 24 months of a change in control, Mr. Dismuke's or Mr. Hugie's
employment is terminated by us for disability, due to death or by the
executive for other than good reason and other than during the thirty-day
period following the first anniversary of the change in control, the
respective executive will receive earned but unpaid base salary plus a pro
rata portion of his highest bonus earned in any of the five prior fiscal
years. If either executive is terminated by us for cause, such executive will
only be entitled to earned but unpaid base salary.
Upon termination of employment for any reason on or following a change in
control or in anticipation of a change in control, the severance protection
agreements provide that each respective executive agrees not to compete
against us for 18 months from the date of termination of employment. For
purposes of the non-competition covenant of the severance protection
agreements, the respective executive may not engage or participate in, assist
or have an interest in, whether as an officer, director, partner, owner,
employee or otherwise, the operation, management or conduct of any business or
enterprise that engages in the cottonseed breeding, production and marketing
process in the same geographical area with any line of business in which we
are now engaged unless his new job duties do not require or allow him to
directly engage in activities that would violate those prohibitions and he
does not violate his contractual confidentiality obligations to our company.
Mr. Willeke and Other Executives
--------------------------------
On August 24, 2006, we entered into a severance protection agreement with
each of James H. Willeke and certain other executive officers that provides
that, if within 24 months of a change in control (as that term is defined in
the agreement), the respective executive's employment is terminated by us
without "cause" and other than due to "disability" or death, or by the
executive for "good reason" (as those terms are defined in the agreement) or
during the 30 day period following the first anniversary of the change in
control, the respective executive will be entitled to receive (1) a lump sum
payment equal to (a) earned but unpaid base salary plus a pro rata portion of
his or her highest bonus earned in any of the five prior fiscal years, (b) one
and one-half times the sum of base salary (determined at the time of the
change in control or, if greater, the date of termination of employment) and
his or her highest bonus earned in any of the five prior fiscal years, (c)
$30,000 for purposes of obtaining accounting services and (d) the value of the
excess of the respective executive's benefit under our retirement plan if he
or she were to be credited with an additional one and one-half years of
service and his or her actual benefit at the time of termination, and (2)
continuation of health and welfare benefits, at our cost for 24 months
following the date of the termination (in addition to the right to COBRA
coverage) and continued use of a company-provided vehicle for 18 months
following the date of the termination.
The severance protection agreements provide that each respective
executive is entitled to receive a gross-up payment with respect to any excise
taxes under Section 4999 of the Code incurred with respect to any payments or
benefits received from us such that the amount such executive retains
after-tax is equal to the after-tax amount he or she would have retained had
no excise tax applied.
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If any of the executives qualifies as a "specified employee" under
Section 409A of the Code, payments made to the respective executive under the
applicable severance protection agreement may be delayed for six months after
the termination of employment.
If, during the term of the applicable severance protection agreement and
within 24 months of a change in control, the employment of Mr. Willeke or any
one of the other executives that are parties to the agreement is terminated by
us for disability, due to death or by the executive for other than good reason
and other than during the 30 day period following the first anniversary of the
change in control, the respective executive will receive earned but unpaid
base salary plus a pro rata portion of his or her highest bonus earned in any
of the five prior fiscal years. If any executive is terminated by us for
cause, such executive will only be entitled to earned but unpaid base salary.
The following chart sets forth, for each named executive officer and for
our other executive officers as a group, the estimated cash change in control
or severance pay to which he or she would be entitled under the agreements
described above. Such estimates were derived based on historical compensation
information. Actual amounts may vary based on the timing of when such payments
are made. In the case of Messrs. Jagodinski, Greene and Avery, the change in
control pay is payable upon a change in control if the executive officer is
employed by us at the time of a change in control or has been terminated by us
in anticipation of a change in control. For our other named executives and for
the executive officers as a group, the chart sets forth the aggregate cash
amount that would be due as severance payments upon a qualifying termination
of employment within two years following the completion of the merger. The
calculations assume completion of the merger on August 31, 2006.
ESTIMATED CASH
CHANGE IN CONTROL OR
NAME SEVERANCE PAYMENTS(2)
----------------------------------------------------- ---------------------
W.T. Jagodinski(1)................................... $ 2,702,099
R.D. Greene(1)....................................... $ 1,497,000
Kenneth Avery(1)..................................... $ 1,059,000
Charles R. Dismuke .................................. $ 1,623,999
William V. Hugie(1).................................. $ 945,999
James H. Willeke..................................... $ 495,500
Other executive officers as a group (8 persons) ..... $ 3,382,662
(1) In determining the amounts above, each of these executives had values
assigned to their non-compete agreements of $4,050,000 for Mr. Jagodinski,
$1,850,000 for Mr. Greene, $750,000 for Mr. Avery, $2,800,000 for Mr. Dismuke,
and $900,000 for Mr. Hugie. We utilized a third party valuation firm to
appraise these non-compete agreements.
(2) Each of these executives is entitled to the gross up of any excise tax
that may be due as a result of these change in control severance agreements.
The amount of excise tax due is contingent on a number of factors including
the executive's wages and W-2 compensation in the period the calculation is
prepared as well as the value assigned to the executives' non-compete
agreements. Presently only Mr. Jagodinski would incur an excise tax and he is
entitled to a gross up of $3,709,536. In addition, the company will not be
entitled to an income tax deduction pursuant to section 280G of the Code with
respect to certain change in control payments to Mr. Jagodinski.
Employment-Related Provisions of the Merger Agreement
Following the closing date of the merger, Monsanto is obligated under the
merger agreement to cause us, as the surviving corporation in the merger, to
honor, pay and perform all of our obligations under all employment, severance,
termination indemnity, retention and change in control agreements with our
employees. For a period of two years following the effective date of the
merger, Monsanto is also obligated to cause us, as the surviving corporation
in the merger, to maintain and fund, in accordance with the Employee
Retirement Income Security Act of 1974, as amended, or ERISA, the Code and any
other applicable law, employee benefit and compensation plans and arrangements
that provide benefits and compensation to our employees that, in the
aggregate, are no less favorable than those in effect at the date of the
merger agreement. See "Proposal 1 - The Merger Agreement - Covenants of
Monsanto and Monsanto Sub, Inc. - Employee Benefits" on page 52.
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Directors' and Officers' Insurance
Monsanto has agreed, following the effective time of the merger, to
maintain in effect, or to cause us, as the surviving corporation in the
merger, to maintain in effect, for not less than six years following the
effective time of the merger, directors' and officers' liability insurance
covering the indemnified parties who are currently covered by our existing
directors' and officers' liability insurance, on terms and conditions no less
favorable to such directors and officers than those in effect on August 14,
2006 with respect to Monsanto's officers and directors.
APPRAISAL RIGHTS
Our stockholders have the right under Delaware law to dissent from the
adoption of the merger agreement, to exercise appraisal rights and to receive
payment in cash for the fair value of their shares of our common stock
determined in accordance with Delaware law. The fair value of shares of our
common stock, as determined in accordance with Delaware law, may be more or
less than the merger consideration to be paid to non-dissenting stockholders
in the merger. To preserve their rights, stockholders who wish to exercise
appraisal rights must not vote in favor of the adoption of the merger
agreement and must follow specific procedures. Dissenting stockholders must
precisely follow these specific procedures to exercise appraisal rights, or
their appraisal rights may be lost. These procedures are described in this
proxy statement, and the provisions of Delaware law that grant appraisal
rights and govern such procedures are attached as Appendix C to this proxy
statement. You are encouraged to read these provisions carefully and in their
entirety. See "Appraisal Rights" on page 65.
DELISTING AND DEREGISTRATION OF OUR COMMON STOCK
If the merger is completed, our common stock will be delisted from the
NYSE and deregistered under the Exchange Act and we will no longer file
periodic reports with the SEC.
ACCOUNTING TREATMENT
We expect that the merger will be accounted for by Monsanto using the
purchase method of accounting, in accordance with generally accepted
accounting principles. This means that Monsanto will record as goodwill the
excess, if any, of the purchase price over the fair value of our identifiable
assets, including intangible assets, and liabilities.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a discussion of the material United States federal
income tax consequences of the merger to U.S. holders whose shares of our
common stock are converted into the right to receive cash in the merger. The
discussion is based upon the Code, Treasury regulations, IRS rulings and
judicial and administrative decisions in effect as of the date of this proxy
statement, all of which are subject to change (possibly with retroactive
effect) or to different interpretations. The following discussion does not
purport to consider all aspects of U.S. federal income taxation that might be
relevant to our stockholders. This discussion applies only to stockholders
who, on the date on which the merger is completed, hold shares of our common
stock as a capital asset. The following discussion does not address taxpayers
subject to special treatment under U.S. federal income tax laws, such as
insurance companies, financial institutions, dealers in securities, tax-exempt
organizations, mutual funds, real estate investment trusts, investors in
pass-through entities, S corporations and taxpayers subject to the alternative
minimum tax. In addition, the following discussion may not apply to
stockholders who acquired their shares of our common stock upon the exercise
of employee stock options or otherwise as compensation for services or through
a tax-qualified retirement plan or who hold their shares as part of a hedge,
straddle, conversion transaction or other integrated transaction. If our
common stock is held through a partnership, the U.S. federal income tax
treatment of a partner in the partnership will generally depend upon the
status of the partner and the activities of the partnership. Partnerships that
are holders of our common stock and partners in such partnerships are urged to
consult their own tax advisors regarding the tax consequences to them of the
merger.
The following discussion does not address potential foreign, state, local
and other tax consequences of the merger. All stockholders are urged to
consult their own tax advisors regarding the U.S. federal income tax
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consequences, as well as the foreign, state and local tax consequences, of the
disposition of their shares in the merger.
For purposes of this summary, a "U.S. holder" is a holder of shares of
our common stock, who or that is, for U.S. federal income tax purposes:
o an individual who is a citizen or resident of the United States;
o a corporation (or other entity taxable as a corporation) created or
organized in or under the laws of the United States, any state of
the United States or the District of Columbia;
o an estate the income of which is subject to U.S. federal income tax
regardless of its source; or
o a trust if (1) a U.S. court is able to exercise primary supervision
over the trust's administration and one or more U.S. persons are
authorized to control all substantial decisions of the trust; or (2)
it was in existence on August 20, 1996 and has a valid election in
place to be treated as a domestic trust for U.S. federal income tax
purposes.
Except with respect to the backup withholding discussion below, this
discussion does not discuss the tax consequences to any stockholder who or
that, for U.S. federal income tax purposes, is not a U.S. holder.
o For U.S. federal income tax purposes, the merger will be treated as
a sale of our common stock for cash by each of our stockholders.
Accordingly, in general, the U.S. federal income tax consequences to
a stockholder receiving cash in the merger will be as follows:
o The stockholder will recognize a capital gain or loss for U.S.
federal income tax purposes upon the disposition of the
stockholder's shares of our common stock pursuant to the merger.
o The amount of capital gain or loss recognized by each stockholder
will be measured by the difference, if any, between the amount of
cash received by the stockholder in the merger and the stockholder's
adjusted tax basis in the shares of our common stock surrendered in
the merger. Gain or loss will be determined separately for each
block of shares, i.e. shares acquired at the same cost in a single
transaction, surrendered for cash in the merger.
o The capital gain or loss, if any, will be long-term with respect to
shares of our common stock that have a holding period for tax
purposes in excess of one year at the time of the merger. Long-term
capital gains of individuals are eligible for reduced rates of
taxation. There are limitations on the deductibility of capital
losses.
Cash payments made pursuant to the merger will be reported to our
stockholders and the Internal Revenue Service to the extent required by the
Code and applicable Treasury regulations. These amounts ordinarily will not be
subject to withholding of U.S. federal income tax. However, backup withholding
of the tax at applicable rates will apply to all cash payments to which a U.S.
holder is entitled pursuant to the merger agreement if (1) the holder fails to
supply the paying agent with the stockholder's taxpayer identification number
(Social Security number, in the case of individuals, or employer
identification number, in the case of other stockholders), certify that such
number is correct, and otherwise comply with the backup withholding rules, (2)
we have received notice from the Internal Revenue Service of the holder's
failure to report all interest and dividends required to be shown on the
stockholder's U.S. federal income tax returns, or (3) the holder is subject to
backup withholding in certain other cases. Accordingly, each U.S. holder will
be asked to complete and sign a Substitute Form W-9, which is to be included
in the appropriate letter of transmittal for the shares of our common stock,
in order to provide the information and certification necessary to avoid
backup withholding or to otherwise establish an exemption from backup
withholding tax, unless an exemption applies and is established in a manner
satisfactory to the paying agent. Stockholders who are not U.S. holders should
complete and sign a Form W-8BEN (or other applicable tax form) and return it
to the paying agent in order to provide the information and certification
necessary to avoid backup withholding tax or otherwise establish an exemption
from backup withholding tax. Certain of our stockholders will
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be asked to provide additional tax information in the appropriate letter of
transmittal for the shares of our common stock.
Backup withholding is not an additional tax. Any amounts withheld under
the backup withholding rules will be allowed as a refund or a credit against
your U.S. federal income tax liability provided the required information is
timely furnished to the Internal Revenue Service.
The foregoing discussion of certain material U.S. federal income tax
consequences is included for general informational purposes only. We urge you
to consult your own tax advisor to determine the particular tax consequences
to you, including the application and effect of any state, local or foreign
income and other tax laws, of the receipt of cash in exchange for shares of
our common stock pursuant to the merger.
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REGULATORY APPROVALS
General
At any time before or after the completion of the merger, the Antitrust
Division, the FTC, foreign competition authorities and others may challenge
the merger on antitrust grounds either before or after expiration or
termination of a relevant waiting period. Accordingly, at any time before or
after completion of the merger, any of the Antitrust Division, the FTC or
others could take action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the completion
of the merger or permitting completion subject to regulatory concessions or
conditions. As in every transaction, we cannot assure you that a challenge to
the merger will not be made or that, if a challenge is made, it will not
succeed.
Under the terms of the merger agreement, the parties have agreed to
cooperate and consult with one another in connection with the required
regulatory approvals. Monsanto has also agreed to (i) use reasonable best
efforts to ensure that no matter relating to the HSR Act or any other foreign
or domestic antitrust, competition or premerger notification, trade regulation
law, regulation or order, would prevent completion of the merger by the
outside date (as defined in "Proposal 1 - The Merger Agreement - Covenants of
Monsanto and Us - Antitrust Matters" on page 54), including promptly offering
to divest: (x) the United States cottonseed business acquired by Monsanto in
2005, including, the STONEVILLE(R) and NEXGEN(R) brands; and (y) a license to
Monsanto's currently commercialized cotton traits (i.e., the traits marketed
under the following trademarks: Roundup Ready(R), Roundup Ready(R) Flex,
Bollgard(R) and Bollgard(R) II) on terms with respect to financial terms and
stacking rights at least as favorable as contained in any existing commercial
license to those traits, and (ii) defend through litigation on the merits any
claim asserted in any court by any person in an effort to ensure that no
matter relating to any antitrust law would prevent completion of the merger by
the outside date (as defined in "Proposal 1 - The Merger Agreement - Covenants
of Monsanto and Us - Antitrust Matters" on page 54). We have agreed to use our
reasonable best efforts to cooperate with Monsanto in any such litigation.
See the subsequent caption entitled "The Merger Agreement - Covenants of
Monsanto and Us - Antitrust Matters," for a further discussion of provisions
of the merger agreement relating to regulatory approvals and the Monsanto
termination payment that Monsanto is obligated to pay to us in certain cases.
HSR Act and Antitrust
The HSR Act and related rules provide that transactions such as the
merger may not be completed until certain information has been submitted to
the FTC and the Antitrust Division and specified waiting period requirements
have been satisfied. On August 28, 2006, we and Monsanto each filed a
Notification and Report Form with the Antitrust Division and the FTC and
requested early termination of the waiting period. On September 27, 2006, the
Antitrust Division issued a second request to us and Monsanto. As a result,
the waiting period has been suspended and the parties may not complete the
merger until 30 days after both parties substantially comply with this second
request, unless the waiting period is terminated earlier by the Antitrust
Division or extended with the consent of us and Monsanto.
Foreign and Certain Other Regulatory Matters
We and Monsanto will be required to obtain approval in connection with
the merger from governmental competition authorities in Spain. On September
19, 2006, Monsanto filed the required notification on behalf of both parties.
Completion of the merger must be suspended prior to receiving approval,
although the parties to the merger agreement have applied to the relevant
authorities to allow them to complete the merger, subject to their own risk,
prior to clearance. A phase 1 clearance may be received in the normal course
one month after the notification is accepted by the authorities. If phase 1
clearance is not obtained and the matter is referred to a phase 2 inquiry,
approval, with or without conditions, may take a further three months. We and
Monsanto do not currently anticipate that the pursuit of this clearance or
approval will delay or restrict completion of the merger.
A filing is also required in Brazil and was filed with the governmental
competition authorities on September 4, 2006. There is no specific timeline
for approval by the Brazilian authorities, but we and Monsanto are not
prevented from completing the merger after the notification has been filed.
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The merger may be subject to certain regulatory requirements of other
municipal, state, federal and foreign governmental agencies and authorities.
We and Monsanto are currently working to evaluate and comply in all material
respects with these requirements, and do not currently anticipate that they
will delay or restrict completion of the merger. Except as noted above with
respect to the required filings under the HSR Act, the filings in Spain and
Brazil, and with respect to the filing of a certificate of merger in Delaware
at or before the effective time of the merger, we are not aware of any other
material government or regulatory requirements or approvals required for the
completion of the merger.
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PROPOSAL 1 - THE MERGER AGREEMENT
The following is a summary of selected provisions of the merger
agreement. While we believe that this description covers the material terms of
the merger agreement, it may not contain all of the information that is
important to you and is qualified in its entirety by reference to the merger
agreement, which is incorporated by reference in its entirety into this proxy
statement. We urge you to read the merger agreement carefully and completely
because it is the legal document that governs the merger. References in this
section to us generally includes our subsidiaries. References in this section
to obligations of Monsanto often mean obligations of Monsanto and Monsanto
Sub, Inc.
THE MERGER
If all of the conditions to the merger are satisfied or waived in
accordance with the merger agreement, Monsanto Sub, Inc., a wholly-owned
subsidiary of Monsanto, will merge with and into us, and we will be the
surviving corporation, which we refer to as the surviving corporation, in the
merger.
TIMING OF THE MERGER
The closing date for the merger will be no later than the third business
day following the satisfaction or waiver of all conditions to the merger or
another date to which we and Monsanto agree in writing.
On the closing date, we and Monsanto Sub, Inc. will file a certificate of
merger with the Secretary of State of the State of Delaware and will make all
other required filings under Delaware law. At that time, the merger will
become effective.
DIRECTORS AND OFFICERS OF SURVIVING CORPORATION
Upon completion of the merger, the directors of Monsanto Sub, Inc. at the
effective time of the merger will be the directors of the surviving
corporation, and our officers at the effective time of the merger will be the
officers of the surviving corporation after the merger.
CONSIDERATION TO BE RECEIVED BY THE COMPANY'S STOCKHOLDERS IN THE MERGER
At the effective time of the merger, each outstanding share of our common
stock, together with the associated preferred stock purchase right, or the
rights, and each share of our preferred stock (which, together with our common
stock and the rights, we refer to as the shares) (other than (i) any common
stock or preferred stock held by us as treasury stock or owned by Monsanto or
any subsidiary of Monsanto and (ii) any shares that are held by a stockholder
who is entitled to and properly exercises appraisal rights in compliance with
the required procedures under the DGCL) will be converted into the right to
receive a payment of $42.00 in cash, without interest and less applicable
withholding taxes.
Each share of common stock or preferred stock held by us as treasury
stock or owned by Monsanto or any subsidiary of Monsanto immediately prior to
the effective time of the merger will be cancelled and no payment will be made
in connection with the cancellation of these shares.
PAYMENT FOR SHARES
As of the effective time of the merger, Monsanto will enter into an
agreement with a paying agent reasonably satisfactory to us to make payments
of the merger consideration upon surrender of certificates representing our
common stock. As of that time, Monsanto will deposit with the paying agent an
amount of cash sufficient to pay the merger consideration to the holders of
shares. As soon as practicable after the completion of the merger, the paying
agent will mail a letter of transmittal and instructions to you advising you
how to surrender your stock certificates in exchange for merger consideration.
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YOU SHOULD NOT RETURN YOUR STOCK CERTIFICATES WITH THE ENCLOSED PROXY
CARD. FOLLOWING COMPLETION OF THE MERGER, YOU SHOULD NOT FORWARD YOUR STOCK
CERTIFICATES TO THE PAYING AGENT WITHOUT AN EXECUTED LETTER OF TRANSMITTAL.
You will not be entitled to receive the merger consideration until you
surrender your stock certificates to the paying agent, together with a duly
completed and executed letter of transmittal and any other documents the
paying agent reasonably requires. The merger consideration may be paid to a
person other than the person in whose name the corresponding certificate is
registered if the certificate is properly endorsed for transfer. In addition,
the person requesting payment must either pay any applicable stock transfer or
other taxes or establish to the satisfaction of Monsanto that any such tax has
been paid or is not applicable.
Following the effective time of the merger, and until stock certificates
are surrendered to the paying agent, the stock certificates will represent
only the right to receive the merger consideration, and no interest will be
paid or will accrue on the cash payable upon surrender of the stock
certificates. After the effective time of the merger, no transfers will be
made on our stock transfer books, except to settle any transfers that occurred
prior to the effective time, and any stock certificates presented to the
paying agent will be cancelled and exchanged for merger consideration.
TREATMENT OF STOCK OPTIONS AND COMPANY AWARDS
Upon completion of the merger:
o each holder of an outstanding stock option, whether or not vested,
will be entitled to receive a cash payment (less withholding taxes)
equal to the excess of the merger consideration over the exercise
price per share of the stock option, multiplied by the number of
shares of common stock subject to the stock option; and
o each holder of an outstanding equity award (including restricted
stock and restricted stock units, but excluding stock options),
whether or not vested, will be entitled to receive a cash payment
(less withholding taxes and without interest) equal to the merger
consideration in respect of each share of common stock represented
by these awards.
Upon completion of the merger, all of the outstanding stock options and
other outstanding equity awards, including all outstanding shares of
restricted stock and all restricted stock units, will be cancelled and
terminated.
REPRESENTATIONS AND WARRANTIES
In the merger agreement, we made certain customary representations and
warranties to Monsanto and Monsanto Sub, Inc., subject to exceptions disclosed
(a) to Monsanto and Monsanto Sub, Inc. in the disclosure letter delivered to
Monsanto and Monsanto Sub, Inc. in connection with the signing of the merger
agreement, or the company disclosure letter, or (b) in (i) our Annual Report
on Form 10-K for the fiscal year ended August 31, 2006, or our 2006 10-K, (ii)
our Quarterly Reports on Form 10-Q for the quarterly periods ended November
30, 2005, February 28, 2006 or May 31, 2006, which are collectively referred
to as the recent 10-Qs, (iii) any current report on Form 8-K that was filed by
us with the SEC following the date of the 2006 10-K and prior to the date of
the merger agreement, which are collectively referred to as the current
reports or (iv) our definitive proxy statement filed with the SEC on November
19, 2005. However, the representations and warranties that we made to Monsanto
and Monsanto Sub, Inc. in the merger agreement were not qualified by any
exhibits to the above referenced documents filed with the SEC (other than
press releases filed as exhibits to any of the current reports) or any
disclosures contained in the "risk factor" sections in any of the above
referenced documents filed with the SEC.
The representations and warranties made to Monsanto and Monsanto Sub,
Inc. by us in the merger agreement generally cover both us and our
subsidiaries and relate to:
o us and our subsidiaries' due organization, valid existence and good
standing and power and authority to operate their respective
businesses;
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o our corporate power and authority to enter into the merger agreement
and to carry out our obligations under the merger agreement;
o our capitalization, including the number of shares of common stock,
stock options, treasury stock and preferred stock outstanding;
o our ownership (either directly or through another subsidiary) of all
of the shares of capital stock of each of our subsidiaries;
o the required consents and approvals of third parties, including
governmental entities, relating to the merger;
o the absence of (i) any conflict with or violation of our
organizational documents or the organizational documents of our
subsidiaries, (ii) any violation or breach of or default under any
of the instruments or obligations to which we or our subsidiaries
are a party or bound or (iii) any violation of applicable law, in
each case arising from our entering into the merger agreement,
completing the merger or complying with the provisions contained in
the merger agreement;
o our SEC filings since August 31, 2002, the financial statements
contained in the 2006 10-K and the recent 10-Qs and certain matters
pertaining to the Sarbanes-Oxley Act of 2002, as amended;
o the absence of any undisclosed liabilities;
o since August 31, 2005, the absence of any "material adverse change,"
as described below;
o the absence of investigations, litigation or court orders against us
or any of our subsidiaries;
o the absence of any violations of the Foreign Corrupt Practices Act
of 1977, as amended, or the FCPA;
o significant contractual agreements to which we or our subsidiaries
are a party or bound, including those that restrict us or any of our
subsidiaries from freely engaging or competing in any line of
business anywhere in the world;
o environmental matters;
o tax matters;
o employment and labor matters;
o the possession of all licenses and permits necessary or required in
connection with the conduct of our and our subsidiaries' businesses
as now conducted, and the effectiveness of such licenses and
permits;
o real property owned and leased by us or our subsidiaries;
o intellectual property matters, including the ownership of or license
to use (i) all intellectual property that is material to us and our
subsidiaries taken as a whole and (ii) all germplasm that we or any
of our subsidiaries are presently selling or reasonably anticipate
selling within two years of the date of the merger agreement and
that is material to us and our subsidiaries taken as a whole;
o the absence of agreements with third parties which would grant any
third party access to the technology, including germplasm, of
Monsanto or any of its affiliates or obligate Monsanto or any of its
affiliates to grant to any third party access to any of the
technology, including germplasm, of Monsanto or any of its
affiliates, except, in each case, with respect to intellectual
property rights in improvements in technology that is licensed to
us;
o the absence of any violation by us or any of our subsidiaries with
(i) our or their organizational documents, (ii) any agreement
relating to indebtedness for borrowed money, (iii) any judgment,
decree
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or order which names us or any of our subsidiaries as a party or
(iv) any term of any other material agreement to which we or our
subsidiaries are a party or bound;
o our and each of our subsidiaries' businesses being in compliance
with all applicable laws, permits, licenses and other governmental
authorizations or approvals applicable to the operation of such
businesses;
o the accuracy and completeness of information supplied by us in this
proxy statement, and the compliance of this proxy statement as to
form with the requirements of the Exchange Act;
o the Rights Agreement, dated as of August 13, 1996, between us and
Harris Trust and Savings Bank, as amended, which we refer to as the
Rights Agreement;
o the absence of relationships with parties entitled to fees or
commissions in connection with the merger, other than UBS, our
financial advisor;
o our receipt of an opinion from our financial advisor;
o the number of the outstanding shares of common stock that must vote
in favor of the merger agreement at the special meeting in order to
approve and adopt the merger agreement and the transactions
contemplated by the merger agreement; and
o the inapplicability of state takeover statutes.
Many of our representations and warranties are qualified by "material
adverse effect," materiality and "knowledge of the company". For the purposes
of the merger agreement, (i) "knowledge of the company" and similar phrases
means the actual knowledge of any of three of our specified executive
officers, in each case assuming the compliance with the internal reporting
policies and procedures maintained by us and our subsidiaries as of the date
of the merger agreement; (ii) "material adverse effect" means any change or
effect that would have a material adverse effect on the business, assets or
financial condition of us and our subsidiaries taken as a whole, and (iii)
"material adverse change" means a material adverse change in the business,
assets or financial condition of us and our subsidiaries taken as a whole. In
respect of material adverse effect and material adverse change, any change or
effect resulting from or relating to the following is excluded:
o conditions or circumstances generally affecting the cotton and
soybean planting seed industries, including any conditions or
circumstances resulting from reductions in planted acreage that
affects the cotton and soybean planting seed industries generally,
other than any conditions or circumstances that affect us or our
subsidiaries in a materially disproportionate manner when compared
to the effects of those conditions and circumstances on other
persons engaged in the cotton and soybean planting seed industries,
provided that only the disproportionate amount will be considered in
determining whether those conditions or circumstances would have a
material adverse effect on the business, assets or financial
condition of us and our subsidiaries taken as a whole;
o the sale of seed containing technology licensed by us or any of our
subsidiaries from Monsanto or any of its affiliates;
o any of the litigation matters or investigations specifically
disclosed to Monsanto in the company disclosure letter;
o any change or effect relating to general political or economic
conditions, or resulting from or arising out of developments or
conditions in agricultural, credit, financial or securities markets
in general, including changes or effects caused by changes to
government agricultural policies, acts of terrorism or war or any
material worsening of these conditions existing as of the date of
the merger agreement, other than any change or effect that affects
us or our subsidiaries in a materially disproportionate manner when
compared to the effects of those changes and effects on other
persons engaged in the cotton and soybean planting seed industries,
provided that only the disproportionate amount will be
- 45 -
considered in determining whether those changes or effects would
have a material adverse effect on the business, assets or financial
condition of us and our subsidiaries taken as a whole;
o any weather condition or any hurricane, earthquake or other natural
disaster;
o any change or effect primarily attributable to the execution and
public announcement of the merger agreement, compliance by us and
our subsidiaries with the terms of the merger agreement, or
completion of the transactions contemplated by the merger agreement,
except any change or effect resulting from any change of control or
similar provision contained in any agreement to which we or any
subsidiary is a party or bound, unless the relevant agreement was
disclosed to Monsanto in the company disclosure letter;
o actions taken by Monsanto or any of its affiliates;
o insects or weeds developing resistance to the technologies of
Monsanto or its affiliates;
o actions of any governmental entity with respect to technologies of
Monsanto and its affiliates or from the failure of Monsanto or any
of its affiliates to obtain or maintain regulatory approvals with
respect to the technology of Monsanto or its affiliates; or
o any currency fluctuations.
The merger agreement also contains customary representations and
warranties made by Monsanto and Monsanto Sub, Inc. to us, subject to customary
qualifications for materiality. The representations and warranties made to us
by Monsanto and Monsanto Sub, Inc. relate to:
o their due organization, valid existence and good standing and power
and authority to operate their respective businesses;
o their power and authority to enter into the merger agreement and to
carry out their obligations under the merger agreement;
o Monsanto's ownership of all of the issued and outstanding shares of
capital stock of Monsanto Sub, Inc., and Monsanto Sub, Inc.'s lack
of obligations or liabilities other than those incurred in
connection its incorporation or the negotiation and completion of
the transactions contemplated by the merger agreement;
o the accuracy and completeness of information supplied by Monsanto
and Monsanto Sub, Inc. to us for inclusion in this proxy statement;
o the required consents and approvals of third parties, including
governmental entities, relating to the merger;
o the absence of relationships with parties entitled to fees or
commissions in connection with the merger, other than J.P. Morgan
Securities Inc., the financial advisor to Monsanto;
o Monsanto's access to the necessary funds to complete the
transactions contemplated by the merger agreement; and
o the absence of a requirement for a vote of Monsanto's stockholders
in order to authorize the completion by Monsanto of the transactions
contemplated by the merger agreement.
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COVENANTS OF D&PL
Conduct of Our Business Pending the Merger
Under the merger agreement, we agreed that, except as specifically
contemplated by the merger agreement, or as Monsanto otherwise consents in
writing (this consent not to be unreasonably withheld or delayed):
o our businesses and that of our subsidiaries will be conducted in the
ordinary and usual course, we will use reasonable best efforts to
preserve our business organization and goodwill intact, keep
available the services of our officers and employees and maintain
satisfactory relationships with suppliers, distributors, customers
and other business associates;
o we will not amend our certificate of incorporation or bylaws or
those of any of our subsidiaries;
o we will not split, combine, reclassify, repurchase, redeem or
otherwise acquire any of our outstanding shares;
o we will not declare, set aside or pay any dividend payable in cash,
stock or property with respect to the shares, but we are permitted
to declare and pay to holders of shares, in a manner consistent with
past practice as to timing, regular quarterly dividends of not more
than $0.15 per share (or not more than $0.17 per share commencing in
quarters ending after August 31, 2006);
o we and our subsidiaries will not issue or agree to issue any
additional shares of, or rights of any kind to acquire shares of,
capital stock of any class, other than:
o the issuance of shares of capital stock of our subsidiaries to
us;
o shares of our common stock upon the exercise of stock options
that were outstanding as of the date of the merger agreement
pursuant to our stock option plans; or
o grants of shares of restricted common stock or restricted
common stock units to our or our subsidiaries' employees,
officers, consultants and directors in accordance with past
practices and the terms of our stock option plans, subject to
certain limitations specified in the merger agreement;
o we and our subsidiaries will not enter into or amend or agree to
enter into or amend any contract or agreement with any works
councils or trade or labor unions representing our employees or the
employees of our subsidiaries, other than any work councils or trade
or labor unions in the People's Republic of China and only after
consulting with Monsanto;
o we and our subsidiaries will not, except as described in "Proposal
1- The Merger Agreement - Covenants of D&PL - No Solicitation" on
page 50, authorize, recommend or propose, or enter into an agreement
in principle or an agreement with respect to any merger,
consolidation or business combination (other than the Monsanto
merger) or any acquisition or disposition of any assets, except that
in the case of the acquisition or disposition of assets, the merger
agreement does not prevent us and our subsidiaries from:
o acquiring or disposing of assets outside of the ordinary course
of business consistent with past practice so long as the
aggregate amount of those assets to be acquired or disposed of
does not exceed $10,000,000; or
o acquiring or disposing of assets in the ordinary course of
business consistent with past practice;
o we and our subsidiaries will not, except as permitted by the merger
agreement, enter into or amend:
o any employment, consulting, severance or termination indemnity
agreement with any of our "named executive officers" or any of
our or our subsidiaries' directors;
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o any employment, consulting, severance or termination indemnity
agreement other than in the ordinary course of business
consistent with past practice;
o any change of control agreement; or
o any bonus, incentive compensation, deferred compensation,
profit sharing, retirement or other benefit plan, except as
required by law or regulations;
o we and our subsidiaries will not, except as permitted by the merger
agreement, make any contribution to any bonus, incentive
compensation, deferred compensation, profit sharing, retirement or
other benefit plan, except in the ordinary course of business
consistent with past practice or for contributions specifically
required pursuant to the terms of a plan;
o we and our subsidiaries will not, except as permitted by the merger
agreement, grant any salary increase, except in the ordinary course
of business consistent with past practice;
o we and our subsidiaries will not:
o except in the ordinary course of business consistent with past
practice, including the renewal or replacement of existing
debt, incur or assume any debt (including obligations in
respect of capital leases) other than under existing lines of
credit or to fund out-of-pocket costs incurred in connection
with the merger;
o assume, guarantee, endorse or otherwise become liable for the
obligations of any other person, except our subsidiaries in the
ordinary course of business; or
o make any loans, advances or capital contributions to, or
investments in, any other person other than a subsidiary of
ours (other than trade credit or customary advances to
employees and short-term investments pursuant to our customary
cash management systems in the ordinary course and consistent
with past practice);
o we will neither amend the Rights Agreement nor redeem any of the
rights granted under the Rights Agreement;
o except with respect to any litigation, arbitration, investigation or
other claim between us and any of our subsidiaries, on the one hand,
and Monsanto and any of its subsidiaries, on the other hand, neither
we nor any of our subsidiaries will settle or compromise any
material litigation, arbitration, investigation or other claim in a
manner that will have a material effect on us;
o we will not grant or permit to be created any lien on any of our
material assets or the material assets of any of our subsidiaries
other than liens specifically permitted by the merger agreement
(including (i) liens reflected in the balance sheet included in the
2005 10-K or the recent 10-Qs; (ii) liens of record consisting of
zoning or planning restrictions, easements, permits and other
restrictions or limitations on the use of real property which do not
materially detract from the value of, or a materially impair the use
of, such property by us and our subsidiaries in the operation of
their respective businesses; (iii) liens for current taxes,
assessments or governmental charges or levies on property not yet
delinquent or being contested in good faith and for which
appropriate reserves have been established in accordance with
generally accepted accounting principles in the United States (which
contested matters were disclosed to Monsanto in the company
disclosure letter); (iv) liens imposed by law; and (v) liens that do
not materially adversely affect the use or enjoyment of our assets
or properties or the assets and properties of our subsidiaries); and
o neither we nor any of our subsidiaries will agree in writing or
otherwise to take:
o any action that is prohibited under the merger agreement; or
- 48 -
o any action that would constitute a breach of any covenant or
agreement set forth in the merger agreement.
Stockholders' Meeting
We have agreed to hold the special meeting described in this proxy
statement. Subject to the exceptions discussed in "Proposal 1 - The Merger
Agreement - Covenants of D&PL - No Solicitation" on page 50 and to the
fiduciary duties of our board of directors, we have also agreed that our board
of directors would (i) recommend that our stockholders approve and adopt the
merger agreement at the special meeting and (ii) use reasonable best efforts
to obtain the necessary approval by our stockholders of the merger agreement
and the transactions contemplated by the merger agreement.
However, our board of directors may, if it determines in good faith,
after consultation with outside legal counsel, that the failure to do so would
result in a breach of its fiduciary duties to our stockholders:
o recommend the approval of any other merger, consolidation or other
business combination involving us or any of our material
subsidiaries or the acquisition of all or substantially all of our
or any material subsidiaries' assets or capital stock, which we
refer to as an acquisition transaction;
o determine that the merger agreement or the merger is no longer
advisable;
o withdraw (or modify in a manner adverse to Monsanto or Monsanto Sub,
Inc.) the approval of the merger agreement, the merger or any of the
other transactions contemplated by the merger agreement;
o recommend that our stockholders reject the merger agreement, the
merger or any of the other transactions contemplated by the merger
agreement and the merger; or
o resolve, agree or publicly propose to take any of these actions.
At the same time, the foregoing actions may only be taken:
o as a result of the occurrence of a material unforeseen change in our
business or financial condition (without giving effect to any actual
or perceived changes in our likelihood of success or any other
matters pertaining to the Monsanto litigation) or the market price
of our common stock; or
o in response to or related to an acquisition transaction (other than
the Monsanto merger) or a proposal or expression of interest in
respect of an acquisition transaction. However, if any action is in
response to or related to an acquisition transaction (other than the
Monsanto merger) or a proposal or expression of interest in respect
of an acquisition transaction, the action may only be taken in
accordance with the terms of the merger agreement described under
the caption entitled "Proposal 1 - The Merger Agreement - Covenants
of D&PL - No Solicitation" on page 50.
Access to Information; Cooperation; Related Matters
We will provide Monsanto and its representatives and advisors reasonable
access during normal business hours, and upon reasonable notice, to our
offices, properties, business plans and records, and we will provide Monsanto
and its representatives and advisors with financial and operating data and
other information as those persons may reasonably request, subject in all
cases to restrictions of applicable law. Any information that is so provided
will be subject to the terms of the confidentiality agreement dated August 9,
2006 between us and Monsanto, which we refer to as the confidentiality
agreement. Moreover, we and our subsidiaries are not required to make
available to Monsanto or its advisors and representatives:
o any information that is subject to confidentiality obligations that
do not permit disclosure;
o any information related to our or our subsidiaries' relationship
with certain parties disclosed to Monsanto in the company disclosure
letter; or
- 49 -
o any information that our Chief Executive Officer and Monsanto's
Chief Financial Officer agree (in good faith) constitutes
competitively sensitive information. If no agreement is reached, the
information will not be furnished.
We will, and will cause our affiliates to, cooperate and provide to
Monsanto and its representatives and advisors all relevant information
required by Monsanto and its representatives and advisors for the purpose of
ensuring that the business conducted by us and our subsidiaries complies with,
and does not raise material liability risks under, applicable laws and
regulations, including the FCPA and other applicable anti-corruption laws,
regulations and policies.
In addition, if, in connection with obtaining the regulatory approvals
required to complete the merger, Monsanto determines to sell or otherwise
dispose of us, we will, and will cause our subsidiaries and our respective
representatives and advisors to, provide all cooperation and assistance that
is reasonably requested by Monsanto in connection with such matters, subject
to certain limitations specified in the merger agreement.
No Solicitation
The merger agreement provides that we will not, and will not authorize or
permit any of our subsidiaries or any of our or their directors, officers,
employees, agents or representatives, directly or indirectly, to:
o solicit, initiate or encourage any inquiries or the making of any
proposal with respect to an acquisition transaction;
o negotiate, explore or otherwise engage in discussions with any
person (other than Monsanto and its directors, officers, employees,
agents and representatives) with respect to an acquisition
transaction; or
o enter into any agreement with respect to an acquisition transaction.
We also may not enter into any agreement, arrangement or understanding
requiring us to abandon, terminate or fail to complete the merger or any other
transactions contemplated by the merger agreement.
Despite these prohibitions, prior to the date of the special meeting, and
in response to a bona fide unsolicited written acquisition transaction
proposal or expression of interest from a credible third party that is not
subject to any material financing uncertainties and that our board of
directors determines, in good faith, after consultation with our outside legal
counsel and our financial advisor, constitutes or could reasonably result in a
superior proposal, we may furnish or disclose non-public information to, and
negotiate, explore or otherwise engage in discussions with, such third party.
In addition, prior to the date of the special meeting, and in response to
a bona fide unsolicited written acquisition transaction proposal or expression
of interest from a credible third party that is not subject to any material
financing uncertainties and that our board of directors determines, in good
faith, after consultation with our outside legal counsel and our financial
advisor, and after giving effect to all of the adjustments to the Monsanto
merger proposal which Monsanto may offer as described below, constitutes a
superior proposal, we may enter into an agreement with a third party in
respect of an acquisition transaction so long as we concurrently terminate the
merger agreement and incur the consequences summarized elsewhere in this proxy
statement. However, prior to entering into any agreement with a third party
and terminating the merger agreement, we must (i) have delivered written
notice to Monsanto of our intention to take these actions, and this written
notice must include the form of agreement that is to be entered into with the
third party or a written summary of all of the material provisions of the
agreement and (ii) Monsanto must be given three business days after the
delivery of this written notice to propose revisions to the terms of the
merger agreement (or make another proposal). We are only permitted to enter
into a definitive agreement with a third party in respect of an acquisition
transaction and terminate the merger agreement if, at the end of the three
business day period, our board of directors determines, in good faith, after
consultation with our outside legal counsel and our financial advisor, and in
the exercise of its fiduciary duties, and after giving effect to all of the
adjustments, which may be offered by Monsanto as contemplated by the
requirement above, that the agreement with the third party constitutes a
superior proposal. Under the merger agreement, a "superior proposal" means any
bona fide written offer in respect of an acquisition transaction that our
board of directors
- 50 -
determines in good faith, after consultation with our outside legal counsel
and our financial advisor, is more favorable to our stockholders than the
Monsanto merger.
We agreed to immediately cease, and to cause each of our subsidiaries and
our and their directors, officers, employees, agents and representatives to
immediately cease, any solicitations, discussions or negotiations existing on
the date of the merger agreement with any person (other than with Monsanto)
that has made or indicated an intention to make a proposal in respect of an
acquisition transaction.
Finally, we agreed to reasonably promptly notify Monsanto in writing of
the receipt of any inquiries or proposals and developments relating to an
acquisition transaction, and we are required to promptly furnish to Monsanto
either a copy of such proposal or a written summary of all of the material
terms of such proposal. We are also required to keep Monsanto reasonably
informed on a current basis of the occurrence of any material changes with
respect to these matters.
Employment, Retention, Severance and Noncompetition Agreements and Other
Compensation Arrangements
We are offering to two groups of key employees, which we refer to
respectively as the Key Employee Group and the Management Key Employee Group,
a Key Employee Employment Protection and Retention Agreement which we refer to
as the retention agreement. The retention agreement provides for a retention
bonus payment to be made on each of the effective time of the merger and the
four-, eight- and twelve- month anniversaries of the effective time of the
merger. The total retention bonus payable to employees who remain employed for
the entire twelve-month period is equal to one year base salary for the Key
Employee Group and six months base salary for the Management Key Employee
Group.
Under the retention agreement, if, prior to the twelve-month anniversary
of the effective time of the merger, the employment of any employee covered by
the retention agreement is terminated by us without "cause" or other than due
to "disability" or by the employee for "good reason" (as such terms are
defined in the retention agreement), the employee will be entitled to the
following, in satisfaction of all severance pay claims against us and our
subsidiaries: (i) a pro-rata portion of the total retention bonus; (ii) a lump
sum payment equal to the employee's base salary plus bonus; (iii) vested
amounts owed under our employee benefit plans; (iv) continuation of welfare
and fringe benefits plans until the first anniversary of the employee's
termination or, if earlier, the date the employee obtains comparable coverage;
(v) forgiveness of all forgivable loans outstanding at the effective time of
the merger; and (vi) if the employee uses a car provided by us, 50% of either
the present value of the remaining lease payments or buyout value of the car
if it is leased or the resale value of the car if it is owned. If any employee
would be subject to an excise tax pursuant to Section 280G of the Code with
respect to these payments, the payments will be reduced if doing so would
result in the employee receiving a larger after-tax amount. For the one year
period following the employee's termination, the employee is subject to
noncompetition and nonsolicitation covenants.
Prior to the effective time of the merger, the merger agreement allows us
to enter into employment, severance or change in control agreements with
certain executives and also allows us to pay a special cash award to
employees. We have entered into an amended and restated employment agreement
with W.T. Jagodinski and have entered into Severance Protection Agreements
with our executive officers, including Kenneth M. Avery, R.D. Greene, Charles
R. Dismuke, Jr., William V. Hugie, James H. Willeke and eight other vice
presidents. These agreements are described in "Interests of Certain Parties in
the Merger" on page 31.
We have determined that we will increase the 2006 bonus pool income used
for bonus calculation purposes to include $10 million attributable to costs
associated with the Monsanto disputes. This will result in an increase in the
bonuses paid for 2006 of up to $600,000. In addition, we have established a
one-time bonus pool of up to $2.4 million. This latter adjustment was made to
reflect the aggregate reduction in bonuses paid between 2000 and 2005
attributable to costs associated with the Monsanto disputes since these costs
were deducted from bonus pool income before the bonus formula was applied. We
have not determined which employees will receive an award or the size of any
individual employee's award or if any such awards will be made.
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COVENANTS OF MONSANTO AND MONSANTO SUB, INC.
Confidentiality
Prior to the effective time of the merger, Monsanto and Monsanto Sub,
Inc. will hold, and will use their reasonable best efforts to cause their
respective officers, directors, employees, consultants, advisors and agents to
hold, in confidence all material described as "Evaluation Material" under the
confidentiality agreement in accordance with the terms of the confidentiality
agreement.
Indemnification
For a period of not less than six years from the effective time of the
merger:
o Monsanto will, and will cause the surviving corporation to,
indemnify, to the fullest extent permitted under the DGCL, our
present and former directors and officers and the present and former
directors and officers of our subsidiaries, which we refer to
collectively as the indemnified parties, from and against all
losses, obligations, expenses, claims, damages and liabilities
arising in respect of actions taken prior to and including the
effective time of the merger in connection with their duties as
directors or officers. However,
o if any claim is asserted or made within this six-year period,
all rights to indemnification in respect of that claim will
continue until final disposition; and
o neither Monsanto nor the surviving corporation will be liable
for any settlement effected without Monsanto's prior written
consent (which consent will not be unreasonably withheld or
delayed).
o Monsanto or the surviving corporation will maintain in effect
directors' and officers' liability insurance covering the
indemnified parties who are currently covered by our existing
directors' and officers' liability insurance, on terms and
conditions no less favorable than those in effect at the date of the
merger agreement with respect to Monsanto's officers and directors.
In addition, in the event any indemnified party becomes involved in his
official capacity in any action, proceeding or investigation in connection
with any matter, including the merger, occurring prior to and including the
effective time of the merger, Monsanto will periodically reimburse, and will
cause the surviving corporation to periodically reimburse, that indemnified
party for his reasonable legal and other reasonable out-of-pocket expenses
incurred in connection with such matters.
Operations After the Effective Time
In the merger agreement, Monsanto stated that it currently intends to
maintain our offices, facilities and operations at their current locations.
Monsanto also stated that it looks forward to continuing the strong
relationship developed by us with the community in Scott, Mississippi.
Employee Benefits
From and after the closing date, Monsanto will cause the surviving
corporation to honor, pay and perform all obligations under all employment,
severance, termination indemnity, retention and change of control agreements
with or for our employees and our subsidiaries' employees. Moreover, Monsanto
will cause the surviving corporation to maintain and fund in accordance with
ERISA, the Code and any other applicable law, for a period of two years after
the effective time of the merger, employee benefit and compensation plans and
arrangements which, in the aggregate, provide benefits and compensation to
employees of the surviving corporation and its subsidiaries which are no less
favorable in the aggregate than those provided pursuant to the employee
benefit and compensation plans and arrangements in effect for those
individuals on the date of the merger agreement.
- 52 -
From and after the effective time of the merger, if our employees or the
employees of our subsidiaries participate in any employee benefit plan of
Monsanto or any of its subsidiaries, Monsanto will, and will cause its
subsidiaries to, cause those employee benefit plans to:
o recognize the service of the affected employees completed prior to
the effective time of the merger for participation, vesting and
eligibility for early retirement, but not for purposes of benefit
accrual or eligibility for subsidized retiree medical benefits; and
o waive any pre-existing condition limitations or exclusions under
group health plans of Monsanto or its subsidiaries.
If the merger is completed more than three months after the end of our
last completed fiscal year, then the amount of any bonuses payable to each of
our employees and the employees of our subsidiaries, in each case who are
eligible to participate in a bonus plan or arrangement for our fiscal year
that includes the closing date, will be determined consistent with our past
practices and will be payable no later than November 15 of the fiscal year of
the surviving corporation next succeeding the fiscal year that includes the
closing date.
COVENANTS OF MONSANTO AND US
Best Efforts
Subject to the terms and conditions of the merger agreement (including
the provisions relating to antitrust approvals), we and Monsanto will each use
its best efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws
and regulations to complete the merger. We and Monsanto will each provide to
one another and to one another's counsel information as may be required in
order to accomplish the foregoing actions.
Certain Filings are Required
Subject to the terms and conditions of the merger agreement (including
the provisions relating to antitrust approvals), we and Monsanto will
cooperate with one another in:
o determining what actions by, or filings with, any governmental
entity or what actions or consents are required to be obtained from
parties to any material contracts in connection with the merger; and
o seeking any actions, consents or approvals or making any filings,
furnishing required information and seeking timely to obtain any
actions, consents, approvals or waivers.
Public Announcements
We and Monsanto will consult with each other before issuing any press
release or making any public statement with respect to the merger agreement
and the merger. Moreover, except as may be required by applicable law or any
listing agreement with any national securities exchange, neither party will
issue a press release or make any public statement prior to obtaining the
other party's consent.
Notices of Certain Events
We and Monsanto must promptly notify the other of:
o any notice or other communication from any person alleging that
their consent is or may be required in connection with the merger;
o any notice or other communication received from any governmental
entity in connection with the merger;
- 53 -
o any actions, suits, claims, investigations or proceedings brought or
threatened, involving or affecting us or any of our subsidiaries, on
the one hand, or Monsanto or Monsanto Sub, Inc., on the other hand,
relating to the merger; and
o any action, event or occurrence that would constitute a breach of
any representation, warranty, covenant or agreement set forth in the
merger agreement.
Antitrust Matters
We and Monsanto have filed the Pre-Merger Notification and Report Forms
under the HSR Act with the FTC and the Antitrust Division, which we
collectively refer to as the Antitrust Authorities. On September 27, 2006, the
Antitrust Division issued a second request to us and Monsanto. As a result,
the waiting period under the HSR Act has been suspended and the parties may
not complete the merger until 30 days after both parties substantially comply
with this second request, unless the waiting period is terminated earlier by
the Antitrust Division or extended with the consent of us and Monsanto.
Following the issuance of a second request, the merger agreement requires that
we and Monsanto use reasonable best efforts to substantially comply with the
second request as promptly as practicable (and, in any event, we must
substantially comply with the second request no later than Monsanto).
In addition to filings with and responses to the Antitrust Authorities,
we, Monsanto and Monsanto Sub, Inc. will use our commercially reasonable
efforts to obtain all other material consents of third parties and
governmental entities, and to make all governmental filings necessary to the
completion of the merger.
Subject to the terms set forth in the merger agreement, each party will
cooperate and consult with the other party in connection with the antitrust
matters described under this caption. In particular, each party will, subject
to applicable law and the limitations in the merger agreement and except as
prohibited by any governmental entity:
o furnish to the other that information and assistance as the other
reasonably may request in connection with the preparation of any
submissions to, or agency proceedings by, any governmental entity
under the HSR Act or any comparable laws of foreign jurisdictions;
o promptly notify the other party of any communication from the
Antitrust Division, the FTC, any State Attorney General or any other
governmental entity, and permit the other party to review in advance
and accept all of the other party's reasonable comments in
connection with, any proposed written communication to any of the
foregoing;
o to the extent practical, not participate in any substantive meeting
or any material discussion or communication with any governmental
entity in respect of any filings, investigation or inquiry
concerning the merger agreement or the merger, unless it consults
with the other party in advance and, if permitted by the
governmental entity, gives the other party the opportunity to attend
and participate in the meeting or discussion, or to the extent prior
consultation is not practical, promptly report to the other party
the substance of the communication;
o furnish the other party with copies of all correspondence, filings,
and written communications between them and their affiliates and
representatives, on the one hand, and any governmental entities or
their staffs, on the other hand, with respect to the merger
agreement and the merger; and
o make available the party's respective counsel, experts and advisors
to the other party, and its respective counsel, experts and advisors
for the purpose of obtaining the required antitrust approvals.
Subject to the terms set forth in the merger agreement, Monsanto will use
reasonable best efforts to ensure that:
o no requirement for a waiver, consent or approval of the FTC, the
Antitrust Division, any State Attorney General or other governmental
entity;
- 54 -
o no decree, judgment, injunction, temporary restraining order or any
other order in any suit or proceeding; and
o no other matter relating to any antitrust law;
would prevent completion of the merger by February 14, 2007, unless the
relevant regulatory waiting periods under the HSR Act or competition laws of
Spain have not expired or been terminated by such date, in which case, this
date will be automatically extended to August 14, 2007, solely for the purpose
of Monsanto satisfying its obligations with respect to obtaining antitrust
approvals, including promptly offering to divest: (i) the United States
cottonseed business acquired by Monsanto in 2005, including the STONEVILLE(R)
and NEXGEN(R) brands; and (ii) a license to Monsanto's currently
commercialized cotton traits (i.e., the traits marketed under the following
trademarks: Roundup Ready(R), Roundup Ready(R) Flex, Bollgard(R) and
Bollgard(R) II) on terms with respect to financial terms and stacking rights
at least as favorable as contained in any existing commercial license to those
traits. All references in this proxy statement to the "outside date" mean
February 14, 2007 or August 14, 2007, as applicable.
Monsanto will also defend through litigation on the merits any claim
asserted in any court by any person in an effort to ensure that no matter
relating to any antitrust law would prevent completion of the Merger by the
outside date, and we have agreed to use our reasonable best efforts to
cooperate with Monsanto in connection with that litigation. If the merger
agreement is terminated (i) because the merger has not been completed by the
outside date and at that time, the waiting period under the HSR Act or the
competition laws of Spain has not expired or been terminated, (ii) because the
merger has not been completed by the outside date and (a) a United States
federal or state statute, rule or regulation or a United States federal or
state court order, injunction or other legal restraint or prohibition related
to antitrust or competition matters would prevent the completion of the merger
or (b) any other statute, rule, regulation, court order, injunction or other
legal restraint or prohibition related to antitrust or competition matters
that would, individually or in the aggregate, have or be reasonably expected
to have a material adverse effect (after giving effect to the merger) or would
subject any director, officer or other employee of Monsanto, Monsanto Sub,
Inc., us or any of our subsidiaries to any criminal liability would prevent
the completion of the merger or (iii) a law related to antitrust or
competition matters makes completion of the merger illegal or prohibited or a
final non-appealable governmental order related to antitrust or competition
matters prevents the parties from completing the merger, Monsanto will pay to
us $600 million in cash, which we refer to as the Monsanto termination
payment, and, upon making this payment, the Monsanto litigation will be
terminated in all respects and the parties will promptly take any and all
actions as may be required to dismiss the Monsanto litigation with prejudice.
Once Monsanto pays us the Monsanto termination payment, Monsanto will have no
other obligation to us under the merger agreement.
Confidentiality
The confidentiality agreement will remain in full force and effect until
its expiration in accordance with its terms.
Litigation Stay
Until the earlier to occur of the termination of the merger agreement and
the closing date, and subject to the rights of the parties in respect of the
Monsanto litigation as provided in the merger agreement, each party will take
all steps necessary to obtain (a) from the Mississippi Supreme Court a
continuance of up to twelve months of any hearing on, or decision in, Delta
and Pine Land Company v. Monsanto Company, et al, No. 05-M-00015-SCT
consolidated with No. 05-M-00016-SCT and (b) to the extent necessary, from the
Circuit Court of the First Judicial District of Bolivar County a stay of Delta
and Pine Land Company v. Monsanto Company, et al, Civil Action No. 2000-1. On
August 27, 2006, the Mississippi Supreme Court entered an order staying the
Monsanto litigation through February 27, 2007.
Prior to the earlier to occur of the termination of the merger agreement
in accordance with its terms and the closing date, we and Monsanto have agreed
not to, and to cause our respective affiliates not to, prosecute any claims we
or Monsanto may have in respect of or otherwise pursue the Monsanto
litigation.
- 55 -
In the event the parties are unable to maintain a stay or continuance of
the Monsanto litigation until the outside date, then the parties will:
o take all steps necessary to obtain a dismissal of the Monsanto
litigation without prejudice with leave to refile in (and only in)
the same forum;
o consent to this filing;
o waive, and not assert, any applicable statute of limitations or
defense relating to the passage of time caused by any dismissal or
non-pursuit of claims or counterclaims or failure to prosecute
caused by any dismissal or the non-pursuit of claims or
counterclaims; and
o waive, and not assert, any defense relating to or arising out of the
parties' conduct in connection with negotiating or attempting to
implement the merger agreement.
CONDITIONS TO THE MERGER
Conditions to the Obligations of Each Party
The obligations of us, Monsanto and Monsanto Sub, Inc. to complete the
merger are subject to the satisfaction or written waiver of the following
conditions:
o approval and adoption of the merger agreement by our stockholders;
o expiration or termination of any applicable waiting period under the
HSR Act and the competition laws of Spain relating to the merger
(provided that Monsanto can waive the requirement with respect to
the competition laws of Spain);
o the absence of any:
o United States federal or state statute, rule or regulation or
United States federal or state court order, injunction or other
legal restraint or prohibition that would prevent the
completion of the merger; and
o other statute, rule, regulation, court order, injunction or
other legal restraint or prohibition that would prevent the
completion of the merger, if the violation thereof would,
individually or in the aggregate, have or be reasonably
expected to have a material adverse effect (after giving effect
to the merger) or would subject any director, officer or other
employee of Monsanto, Monsanto Sub, Inc., D&PL or any of its
subsidiaries to any criminal liability.
However, before asserting this condition, each of the parties must have
used all reasonable best efforts to prevent the entry of the injunction, court
order, legal restraint or prohibition, to have the injunction, court order,
legal restraint or prohibition lifted or withdrawn, and to appeal as promptly
as possible the injunction, court order, legal restraint or prohibition that
may be entered.
Additional Conditions to the Obligations of Monsanto and Monsanto Sub,
Inc.
Monsanto's and Monsanto Sub, Inc.'s obligation to complete the merger is
also subject to the satisfaction or waiver of the following conditions:
o our representations and warranties in the merger agreement must be
true and correct as of the effective time of the merger, except
representations and warranties (a) which address matters only as of
a certain date, which must be true and correct as of that date, and
(b) relating to certain actions not having been taken during the
period between August 31, 2005 and the date of the signing of the
merger agreement, which must be true and correct as of the date of
the signing of the merger agreement. This condition will be
satisfied to the extent that the failures in the aggregate of our
representations and warranties
- 56 -
(disregarding any qualifications as to materiality contained in
those representations and warranties, and other than the
representations and warranties set forth in clauses (i), (ii) and
(iii) in the bullet point below) to be true and correct would not,
individually or in the aggregate, have a material adverse effect;
o our representations and warranties in the merger agreement relating
to: (i) our capitalization; (ii) our ownership and license to use
all germplasm that we or any of our subsidiaries are presently
selling or reasonably anticipate selling within two years of the
date of the merger agreement and that is material to us and our
subsidiaries taken as a whole; and (iii) the absence of any
agreements with third parties which would grant any third party
access to the technology, including germplasm, of Monsanto or any of
its affiliates, or obligate Monsanto or any of its affiliates to
grant to any third party access to any of the technology, including
germplasm, of Monsanto or any of its affiliates, in each case,
except with respect to intellectual property rights in improvements
to technology licensed to us or our subsidiaries, must be true and
correct as of the effective time of the merger, except to the extent
that the failure in the aggregate of these representations and
warranties (disregarding any qualifications as to materiality
contained in such representations and warranties) to be true and
correct, would not, individually or in the aggregate, result in or
be reasonably likely to result in aggregate liability to Monsanto or
any of its affiliates (including, in this case, us and our
subsidiaries) in excess of $4,000,000;
o there shall not have been any change that, individually or in the
aggregate, would have a material adverse change; and
o we shall have performed in all material respects all obligations,
and complied in all material respects with all agreements and
covenants, in each case required to be performed by or complied with
by us under the merger agreement on or prior to the effective time
of the merger.
Additional Conditions to the Obligation of D&PL
Our obligation to complete the merger is also subject to the satisfaction
or waiver of the following conditions:
o the representations and warranties of Monsanto and Monsanto Sub,
Inc. in the merger agreement must be true and correct as of the
effective time of the merger (except representations and warranties
which address matters only as of a certain date, which must be true
and correct as of that date), except to the extent that the failures
in the aggregate of those representations and warranties
(disregarding any qualifications as to materiality contained in
those representations and warranties) to be true and correct, would
not, individually or in the aggregate, have a material adverse
effect on or materially delay the ability of Monsanto or Monsanto
Sub, Inc. to complete the merger; and
o Monsanto and Monsanto Sub, Inc. shall have performed in all material
respects all obligations, and complied in all material respects with
all agreements and covenants, in each case required to be performed
by or complied with by them under the merger agreement on or prior
to the effective time of the merger.
Burden of Proof
Any party seeking to claim that a condition to its obligation to effect
the merger has not been satisfied by reason of the fact that a material
adverse change or a material adverse effect has occurred or would be
reasonably expected to occur or result will have the burden of proof to
establish that occurrence or likelihood.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated and the merger may be abandoned at
any time prior to the effective time of the merger (notwithstanding any
approval of the merger agreement by our stockholders ):
o by mutual written consent of D&PL and Monsanto;
- 57 -
o by either D&PL or Monsanto, if:
o the merger has not been completed on or before the outside
date. However, no party may terminate the merger agreement for
this reason if that party's failure to fulfill any of its
obligations under the merger agreement was the reason that the
effective time did not occur on or before the outside date; or
o completion of the merger is illegal or otherwise prohibited by
any law or final non-appealable court order;
o by Monsanto, if:
o our board of directors withdraws, modifies or changes its
recommendation or approval in respect of the merger agreement
or the merger in a manner adverse to Monsanto or Monsanto Sub,
Inc.;
o our board of directors approves, endorses or recommends any
acquisition transaction other than the Monsanto merger;
o our stockholders do not approve the merger agreement at the
special meeting (including any adjournment or postponement of
that meeting);
o we have breached any representation, warranty, covenant or
agreement contained in the merger agreement so that the closing
conditions relating to the truthfulness and correctness of our
representations and warranties, and our compliance with our
obligations, agreements and covenants under the merger
agreement, would not be satisfied as of any date following the
date of the merger agreement. However,
o we are entitled to cure any such breach (if curable)
within 20 days of receiving written notice from Monsanto;
and
o Monsanto may not terminate the merger agreement due to our
breach, if Monsanto is at that time also in material
breach of the terms of the merger agreement; or
o by us:
o prior to the date of the special meeting, and subject to the
terms of the merger agreement, to allow us to enter into an
agreement in respect of an acquisition transaction which our
board of directors has determined in good faith, after
consultation with our outside legal counsel and our financial
advisor, and in the exercise of its fiduciary duties, and after
giving effect to any adjustments that may be offered by
Monsanto, constitutes a superior proposal; or
o if Monsanto or Monsanto Sub, Inc. has breached any
representation, warranty, covenant or agreement contained in
the merger agreement so that the closing conditions as to the
truthfulness and correctness of Monsanto's representations and
warranties, and Monsanto's and Monsanto Sub, Inc.'s compliance
with their obligations, agreements and covenants under the
merger agreement, would not be satisfied as of any date
following the date of the merger agreement. However,
o Monsanto and Monsanto Sub, Inc. are entitled to cure (if
curable) any such breach within 20 days of receiving
written notice from us; and
o we may not terminate the merger agreement due to
Monsanto's or Monsanto Sub, Inc.'s breach if at that time
we are also in material breach of the terms of the merger
agreement.
EFFECT OF TERMINATION
If the merger agreement is terminated by any of the parties as permitted
by the merger agreement, the provisions in the merger agreement relating to
confidentiality, the effect of termination and the general contractual
provisions, including the provisions regarding governing law, remedies and
rules of construction, will survive.
- 58 -
In the event that the merger agreement is terminated by us due to
Monsanto's or Monsanto Sub, Inc.'s breach in a material respect of certain
covenants or agreements contained in the merger agreement and Monsanto's or
Monsanto Sub, Inc.'s failure to cure that breach within 20 days after we
inform Monsanto in writing of the breach, which we refer to as a parent
covenant termination event, Monsanto will pay us $600 million in cash. Upon
making this payment, the Monsanto litigation will be terminated and the
parties to the merger agreement will promptly take all actions as may be
required to dismiss the Monsanto litigation with prejudice.
In the event that the merger agreement is terminated by Monsanto due to
our board of directors withdrawing, modifying or changing its recommendation
or approval of the merger agreement or the merger in accordance with the terms
of the merger agreement and in a manner adverse to Monsanto or Monsanto Sub,
Inc., and at the time our board of directors withdrew, modified or changed its
recommendation or approval, our board of directors had not received a written
proposal or written expression of interest (whether or not publicly announced)
from any person (other than Monsanto or an affiliate thereof) with respect to
an acquisition transaction, which we refer to as a stand-alone fiduciary
termination event, then:
o we will pay Monsanto $15 million in cash;
o the obligations of the parties under the merger agreement to obtain
and maintain a continuance or stay, as applicable, in respect of the
Monsanto litigation and otherwise not to prosecute or pursue any
claims in respect of the Monsanto litigation will terminate; and
o the parties to the merger agreement will be permitted to pursue any
and all rights and remedies that they may have in respect of the
Monsanto litigation (including, if applicable, re-instituting all or
any portion of the Monsanto litigation that may be dismissed without
prejudice in accordance with the terms of the merger agreement).
In the event that the merger agreement is terminated by (i) Monsanto
because our board of directors approves, endorses or recommends any
acquisition transaction other than the Monsanto merger or (ii) us, prior to
the date of the special meeting, to allow us to enter into an agreement in
respect of an acquisition transaction which our board of directors has
determined in good faith, after consultation with our outside legal counsel
and our financial advisor, and in the exercise of its fiduciary duties, and
after giving effect to any adjustments that may be offered by Monsanto,
constitutes a superior proposal, each of which we refer to as a topping offer
termination event, then at the same time as the termination of the merger
agreement by us or Monsanto, the Monsanto litigation will be terminated and
the parties to the merger agreement will promptly take any and all actions as
may be required to dismiss the Monsanto litigation with prejudice.
If the merger agreement is terminated by Monsanto due to our breach in a
material respect of certain covenants or agreements contained in the merger
agreement, including if our board of directors has withdrawn, modified or
changed its recommendation or approval in respect of the merger agreement or
the merger in breach of the terms of the merger agreement, and we fail to cure
that breach within 20 days after Monsanto informs us in writing of the breach,
which we refer to as a company covenant termination event, then at the same
time as the termination of the merger agreement by Monsanto, the Monsanto
litigation will be terminated and the parties to the merger agreement will
promptly take any and all actions as may be required to dismiss the Monsanto
litigation with prejudice.
If the merger agreement is terminated by us or Monsanto other than in
connection with a termination which would give rise to an obligation to make
the Monsanto termination payment or in connection with a parent covenant
termination event, a stand-alone fiduciary termination event, a topping offer
termination event or a company covenant termination event, then, effective
upon the date of any such termination:
o the obligations of the parties to obtain and maintain a continuance
or stay in respect of the Monsanto litigation and otherwise not to
prosecute or pursue any claims in respect of the Monsanto litigation
will terminate; and
- 59 -
o the parties to the merger agreement will be permitted to pursue all
rights and remedies that they may have in respect of the Monsanto
litigation, which rights and remedies expressly survive any such
termination. However, if the merger agreement is terminated by
Monsanto due to the fact that:
o we have breached any of our representations or warranties
contained in the merger agreement in a manner that permits
Monsanto to terminate the merger agreement and have failed to
cure that breach within 20 days after Monsanto has informed us
in writing of the breach; or
o because the merger has not been completed by the outside date
and the material adverse change closing condition is not
satisfied on the effective date of the termination,
then, in addition to the consequences set forth above in respect of the
Monsanto litigation, Monsanto's royalty percentage under certain agreements
with us will be decreased from 71% to 60% pertaining to the use of Bollgard(R)
technology and from 70% to 60% pertaining to the use of Roundup Ready(R)
technology.
- 60 -
A summary table outlining the termination events follows.
------------- ----------- ------------------------------- ----------------------
TERMINATION PARTY SPECIFIC CONSEQUENCES
EVENT TERMINATING EVENT OF TERMINATION
------------- ----------- ------------------------------- ----------------------
Any N/A The merger agreement is not Monsanto pays us $600
Termination completed by the outside date million in cash.
Where and the waiting period under
Monsanto is the HSR Act or the -and-
Required to competition laws of Spain has
Make the not yet expired or been The Monsanto
Monsanto terminated. litigation is
termination terminated and the
payment parties must take all
-or- action to dismiss the
Monsanto litigation
with prejudice.
The merger agreement is not
completed by the outside date
and (a) a United States
federal or state statute,
rule or regulation or a
United States federal or
state court order, injunction
or other legal restraint or
prohibition related to
antitrust or competition
matters would prevent the
completion of the merger or
(b) any other statute, rule,
regulation, court order,
injunction or other legal
restraint or prohibition
related to antitrust or
competition matters that
would, individually or in the
aggregate, have or be
reasonably expected to have a
material adverse effect
(after giving effect to the
merger) or would subject any
director, officer or other
employee of Monsanto,
Monsanto Sub, Inc., us or any
of our subsidiaries to any
criminal liability would
prevent the completion of the
merger.
-or-
A law related to antitrust or
competition matters makes the
completion of the merger
illegal or prohibited or a
final non-appealable
governmental order related to
antitrust or competition
matters prevents the parties
from completing the merger.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Parent D&PL Monsanto or Monsanto Sub, Monsanto pays us $600
Covenant Inc. breaches in a material million in cash.
Termination respect certain covenants or
Event agreements and fails to cure -and-
the breach within 20 days
after we inform Monsanto in The Monsanto
writing of the breach. litigation is
terminated and the
parties must take all
action to dismiss the
Monsanto litigation
with prejudice.
- 61 -
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--------------------------------------------------------------------------------
Stand-Alone Monsanto Our board of directors We pay Monsanto $15
Fiduciary withdraws, modifies or changes million in cash.
its recommendation or approval
Termination of the merger agreement or the -and-
Event merger in accordance with the
terms of the merger agreement The parties are no
and in a manner adverse to longer obliged to
Monsanto or Monsanto Sub, Inc. obtain and maintain a
and, at that time, our board continuance or stay of
of directors has not received the Monsanto
a written proposal or written litigation.
expression of interest from
any person regarding an -and-
acquisition transaction.
The parties are
permitted to pursue
any and all rights and
remedies in respect of
the Monsanto
litigation.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Topping Offer Monsanto Our board of directors The Monsanto
Termination approves, endorses or litigation is
Event -or- recommends any acquisition terminated and the
transaction other than the parties must take all
D&PL Monsanto merger. action to dismiss the
Monsanto litigation
-or- with prejudice.
We terminate the merger
agreement, prior to the date
of the special meeting, to
allow us to enter into an
agreement in respect of a
transaction that constitutes
a superior proposal.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Company Monsanto We breach in a material The Monsanto
Covenant respect certain covenants or litigation is
Termination agreements and fail to cure terminated and the
Event the breach within 20 days parties must take all
after Monsanto informs us in action to dismiss the
writing of the breach. Monsanto litigation
with prejudice.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Material Monsanto We breach any of our The parties are no
Breach by representations or warranties longer obliged to
D&PL of in a manner that permits obtain and maintain a
Representations Monsanto to terminate the continuance or stay of
and Warranties merger agreement and fail to the Monsanto
-or- cure the breach within 20 litigation.
A Company days after Monsanto informs
Material us in writing of the breach. -and-
Adverse Change
-or- The parties are
permitted to pursue
The merger has not been any and all rights and
completed by the outside date remedies in respect of
and the material adverse the Monsanto
change closing condition is litigation.
not satisfied on the
effective date of the -and-
termination.
Monsanto's royalty
percentage under
certain agreements
with us is decreased
from 71% to 60%
pertaining to the use
of Bollgard(R)
technology and
- 62 -
from 70% to 60%
pertaining to the use
of Roundup Ready(R)
technology.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
------------- ----------- ------------------------------- ----------------------
TERMINATION PARTY SPECIFIC CONSEQUENCES
EVENT TERMINATING EVENT OF TERMINATION
------------- ----------- ------------------------------- ----------------------
Other D&PL Any other reason. The parties are no
longer obliged to
-or- obtain and maintain a
continuance or stay of
Monsanto the Monsanto
litigation.
-and-
The parties are
permitted to pursue
any and all rights and
remedies in respect of
the Monsanto
litigation.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AMENDMENT, EXTENSION AND WAIVER
At any time prior to the effective time of the merger, the parties to the
merger agreement may:
o extend the time for the performance of any of the obligations or
other acts of the parties;
o waive any inaccuracies in the representations and warranties or in
any document delivered pursuant the merger agreement; and
o waive compliance with any of the agreements or conditions contained
in the merger agreement, except for approval of our stockholders
and, in connection with all HSR Act filings, of the FTC and the
Antitrust Division.
The parties may amend or waive any provision of the merger agreement
prior to the effective time of the merger. After the adoption of the merger
agreement by our stockholders, no amendment or waiver requiring approval of
our stockholders shall be effective unless such approval is obtained.
SPECIFIC PERFORMANCE
The parties are entitled to specific performance of the terms of the
merger agreement, in addition to any other remedy to which they are entitled
at law or in equity.
MISCELLANEOUS
The merger agreement has been incorporated by reference in this proxy
statement to provide stockholders with information regarding its terms. Except
for its status as the contractual document that establishes and governs the
legal relations among the parties with respect to the transactions described
above, the merger agreement is not intended to be a source of factual,
business or operational information about the parties.
The representations, warranties and covenants made by the parties in the
merger agreement are qualified and limited, including by information in the
company disclosure letter. Representations and warranties may be used as a
tool to allocate risks between the respective parties to the merger agreement,
including where the parties do not have complete knowledge of all facts,
instead of establishing those matters as facts. Furthermore, the
representations and warranties may be subject to standards of materiality
applicable to the contracting parties, which may differ from those applicable
to investors. These representations and warranties may or may not have been
accurate as of any specific date and do not purport to be accurate as of the
date of this filing. Accordingly, they
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should not be relied upon as statements of factual information. Our
stockholders are not third-party beneficiaries under the merger agreement and
should not rely on the representations, warranties and covenants or any
descriptions thereof in this proxy statement as characterizations of the
actual state of facts or condition of us or our affiliates.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
ADOPTION OF THE MERGER AGREEMENT.
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APPRAISAL RIGHTS
The discussion of the provisions set forth below is not a complete
summary regarding your appraisal rights under Delaware law and is qualified in
its entirety by reference to the text of the relevant provisions of Delaware
law, which are attached to this proxy statement as Appendix C. Stockholders
intending to exercise appraisal rights should carefully review Appendix C.
Failure to follow precisely any of the statutory procedures set forth in
Appendix C may result in a termination or waiver of these rights.
If the merger is consummated, dissenting holders of our common stock who
follow the procedures specified in Section 262 of the DGCL within the
appropriate time periods will be entitled to have their shares of our common
stock appraised by a court and to receive the "fair value" of such shares in
cash as determined by the Delaware Court of Chancery in lieu of the
consideration that such stockholder would otherwise be entitled to receive
pursuant to the merger agreement.
The following is a brief summary of Section 262, which sets forth the
procedures for dissenting from the merger and demanding statutory appraisal
rights. Failure to follow the procedures set forth in Section 262 precisely
could result in the loss of appraisal rights. This proxy statement constitutes
notice to holders of our common stock concerning the availability of appraisal
rights under Section 262. A stockholder of record wishing to assert appraisal
rights must hold the shares of stock on the date of making a demand for
appraisal rights with respect to such shares and must continuously hold such
shares through the effective time of the merger.
Stockholders who desire to exercise their appraisal rights must satisfy
all of the conditions of Section 262. A written demand for appraisal of shares
must be filed with us before the special meeting. This written demand for
appraisal of shares must be in addition to and separate from a vote against
the merger. Stockholders electing to exercise their appraisal rights must not
vote "FOR" the merger. Any proxy or vote against the merger will not
constitute a demand for appraisal within the meaning of Section 262.
A demand for appraisal must be executed by or for the stockholder of
record, fully and correctly, as such stockholder's name appears on the share
certificate. If the shares are owned of record in a fiduciary capacity, such
as by a trustee, guardian or custodian, this demand must be executed by or for
the fiduciary. If the shares are owned by or for more than one person, as in a
joint tenancy or tenancy in common, such demand must be executed by or for all
joint owners. An authorized agent, including an agent for two or more joint
owners, may execute the demand for appraisal for a stockholder of record;
however, the agent must identify the record owner and expressly disclose the
fact that, in exercising the demand, he is acting as agent for the record
owner. A person having a beneficial interest in our common stock held of
record in the name of another person, such as a broker or nominee, must act
promptly to cause the record holder to follow the steps summarized below and
in a timely manner to perfect whatever appraisal rights the beneficial owner
may have.
A stockholder who elects to exercise appraisal rights should mail or
deliver his, her or its written demand to us at our address at One Cotton Row,
Scott, Mississippi 38772, Attention: Corporate Secretary. The written demand
for appraisal should specify the stockholder's name and mailing address, and
that the stockholder is thereby demanding appraisal of his, her or its share
of our common stock. Within ten days after the effective time of the merger,
we must provide notice of the effective time of the merger to all of our
stockholders who have complied with Section 262 and have not voted for the
merger.
Within 120 days after the effective time of the merger (but not
thereafter), any stockholder who has satisfied the requirements of Section 262
may deliver to us a written demand for a statement listing the aggregate
number of shares not voted in favor of the merger and with respect to which
demands for appraisal have been received and the aggregate number of holders
of such shares. We, as the surviving corporation in the merger, must mail such
written statement to the stockholder no later than the later of 10 days after
the stockholder's request is received by us or 10 days after the latest date
for delivery of a demand for appraisal under Section 262.
Within 120 days after the effective time of the merger (but not
thereafter), either we or any stockholder who has complied with the required
conditions of Section 262 and who is otherwise entitled to appraisal rights
may file a petition in the Delaware Court of Chancery demanding a
determination of the fair value of the shares of our
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common stock owned by stockholders entitled to appraisal rights. We have no
present intention to file such a petition if demand for appraisal is made.
Upon the filing of any petition by a stockholder in accordance with
Section 262, service of a copy must be made upon us. We must, within 20 days
after service, file in the office of the Register in Chancery in which the
petition was filed, a duly verified list containing the names and addresses of
all stockholders who have demanded payment for their shares and with whom we
have not reached agreements as to the value of their shares. If we file a
petition, the petition must be accompanied by the verified list. The Register
in Chancery, if so ordered by the court, will give notice of the time and
place fixed for the hearing of such petition by registered or certified mail
to us and to the stockholders shown on the list at the addresses therein
stated, and notice will also be given by publishing a notice at least one week
before the day of the hearing in a newspaper of general circulation published
in the City of Wilmington, Delaware, or such publication as the court deems
advisable. The forms of the notices by mail and by publication must be
approved by the court, and we will bear the costs thereof. The Delaware Court
of Chancery may require the stockholders who have demanded an appraisal for
their shares (and who hold stock represented by certificates) to submit their
stock certificates to the Register in Chancery for notation of the pendency of
the appraisal proceedings and the Delaware Court of Chancery may dismiss the
proceedings as to any stockholder that fails to comply with such direction.
If a petition for an appraisal is filed in a timely fashion, after a
hearing on the petition, the court will determine which stockholders are
entitled to appraisal rights and will appraise the shares owned by these
stockholders, determining the fair value of such shares, exclusive of any
element of value arising from the accomplishment or expectation of the merger,
together with a fair rate of interest to be paid, if any, upon the amount
determined to be the fair value.
Stockholders considering seeking appraisal of their shares should note
that the fair value of their shares determined under Section 262 could be
more, the same or less than the consideration they would receive pursuant to
the merger agreement if they did not seek appraisal of their shares.
Stockholders should also note that investment banking opinions as to the
fairness from a financial point of view of the consideration payable in a
merger are not opinions as to fair value under Section 262 of the DGCL. The
costs of the appraisal proceeding may be determined by the court and taxed
against the parties as the court deems equitable under the circumstances. Upon
application of a dissenting stockholder, the court may order that all or a
portion of the expenses incurred by any dissenting stockholder in connection
with the appraisal proceeding, including reasonable attorneys' fees and the
fees and expenses of experts, be charged pro rata against the value of all
shares entitled to appraisal. In the absence of a determination or assessment,
each party bears his, her or its own expenses. The exchange of shares for cash
pursuant to the exercise of appraisal rights generally will be a taxable
transaction for United States federal income tax purposes and possibly state,
local and foreign income tax purposes as well. See "The Merger - Material
United States Federal Income Tax Consequences of the Merger" on page 37.
Any stockholder who has duly demanded appraisal in compliance with
Section 262 will not, after the effective time of the merger, be entitled to
vote for any purpose the shares subject to demand or to receive payment of
dividends or other distributions on such shares, except for dividends or
distributions payable to stockholders of record at a date prior to the
effective time of the merger.
At any time within 60 days after the effective time of the merger, any
stockholder will have the right to withdraw his, her or its demand for
appraisal and to accept the terms offered in the merger agreement. After this
period, a stockholder may withdraw his, her or its demand for appraisal and
receive payment for his, her or its shares as provided in the merger agreement
only with our consent. If no petition for appraisal is filed with the court
within 120 days after the effective time of the merger, stockholders' rights
to appraisal (if available) will cease. Inasmuch as we have no obligation to
file such a petition, any stockholder who desires a petition to be filed is
advised to file it on a timely basis. No petition timely filed in the court
demanding appraisal may be dismissed as to any stockholder without the
approval of the court, which approval may be conditioned upon such terms as
the court deems just.
Failure by any stockholder to comply fully with the procedures of Section
262 of the DGCL, as reproduced in Appendix C to this proxy statement, may
result in termination of such stockholder's appraisal rights.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
To our best knowledge, based on information filed with the SEC and our
stock records, the following table sets forth, as of October 23, 2006, shares
of our common stock beneficially owned by each director, each named executive
officer, all executive officers and directors as a group, and shares of our
common stock, the following table also sets forth, as of June 30, 2006, shares
of our common stock beneficially owned by any person owning more than 5% of
our shares of common stock.
A person's beneficial ownership of common stock is determined in
accordance with the rules and regulations of the SEC. Except as indicated
elsewhere in the footnotes to this table, the persons named in the table have
sole voting power and investment power with respect to the shares of common
stock they beneficially own. In addition to the shares of common stock held by
each individual, shares of restricted stock and shares of common stock that
such person has the right to acquire as of October 23, 2006 or within 60 days
thereafter, upon the exercise of options granted by us, have been included.
AMOUNT OF
BENEFICIAL PERCENTAGE
NAME OF BENEFICIAL OWNER OWNERSHIP OF CLASS(1)
---------------------------------------------------- ---------- -----------
Eagle Asset Management, Inc. (2).................... 1,910,995 5.2
Alson Capital Partners LLC (3)...................... 1,897,500 5.2
Sterling Capital Management, LLC (4)................ 1,825,247 5.0
Jon E. M. Jacoby (5)................................ 174,052 0.5
Nam-Hai Chua (6).................................... 125,987 0.3
W.T. Jagodinski (7) (8)............................. 600,394 1.6
Joseph M. Murphy (9)................................ 114,241 0.3
F. Murray Robinson (10)............................. 164,110 0.4
Stanley P. Roth (11)................................ 166,154 0.5
Rudi E. Scheidt (12)................................ 145,766 0.4
Kenneth M. Avery (7) (13)........................... 11,200 0.0
Charles R. Dismuke, Jr. (7) (14)................... 210,052 0.6
R. D. Greene (7) (15)............................... 112,712 0.3
William V. Hugie (7) (16)........................... 69,896 0.2
James H. Willeke (7) (17)........................... 19,418 0.1
All Directors and Executive Officers as a Group (20
persons)(18) ....................................... 2,341,860 6.1
(1) Based on 36,546,395 shares outstanding on October 23, 2006.
(2) The mailing address for Eagle Asset Management, Inc. is 880 Carillon
Parkway, St. Petersburg, Florida 33733-0520.
(3) The mailing address for Alson Capital Partners LLC is 810 7th Ave Fl
39, New York, NY, United States.
(4) The mailing address for Sterling Capital Management is 4064 Colony
Road, Suite 300, Charlotte, North Carolina 28211.
(5) Includes the following shares: 5,437 shares owned by Jacoby
Enterprises, Inc., as to which Mr. Jacoby has sole power to vote and sole
power of disposition, 20,094 shares held in an IRA account, 8,200 shares held
by an LLC as to which Mr. Jacoby disclaims beneficial ownership and 26,636
shares owned beneficially by Mr. Jacoby. Also includes 113,685 shares of
common stock issuable upon exercise of stock options vested as of October 23,
2006, or within 60 days thereafter. The mailing address for Mr. Jacoby is 111
Center Street, Little Rock, Arkansas 72201.
(6) Includes 10,666 shares owned by Dr. Chua's wife, as to which Dr. Chua
disclaims beneficial ownership, and 1,636 shares owned beneficially by Dr.
Chua. Also includes 113,685 shares of common stock issuable upon exercise of
stock options vested as of October 23, 2006, or within 60 days thereafter.
The mailing address for Dr. Chua is c/o Laboratory of Plant Molecular
Biology, Rockefeller University, 1230 York Avenue, New York, New
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York 10021-6399.
(7) The mailing address for Messrs. Jagodinski, Avery, Dismuke, Greene,
Hugie and Willeke is One Cotton Row, Scott, Mississippi 38772.
(8) Includes 3,555 shares owned by Mr. Jagodinski's wife, as to which Mr.
Jagodinski disclaims beneficial ownership, and 91,925 shares owned
beneficially by Mr. Jagodinski. Also includes 492,012 shares of common stock
issuable upon exercise of stock options vested as of October 23, 2006, or
within 60 days thereafter, and 12,902 shares of restricted stock.
(9) Includes 698 shares owned by Mr. Murphy's wife, as to which Mr. Murphy
disclaims beneficial ownership, and 1,636 shares owned beneficially by Mr.
Murphy. Also includes 111,907 shares of common stock issuable upon exercise
of stock options vested as of October 23, 2006, or within 60 days thereafter.
The mailing address for Mr. Murphy is 200 East 42nd Street, 9th Floor, New
York, New York 10017.
(10) Includes 38,000 shares owned by a Charitable Remainder Unit Trust, as
to which Mr. Robinson disclaims beneficial ownership, and 105,316 Shares
owned beneficially by Mr. Robinson. Also includes 20,794 shares of common
stock issuable upon exercise of stock options vested as of October 23, 2006,
or within 60 days thereafter. The mailing address for Mr. Robinson is 1520
Woodruff Lane, Bloomington, Indiana 47401.
(11) Includes 27,500 shares owned by North American Capital Corporation, as
to which Mr. Roth has sole power to vote and sole power of disposition, and
24,969 shares owned beneficially by Mr. Roth. Also includes 113,685 shares
of common stock issuable upon exercise of stock options vested as of October
23, 2006, or within 60 days thereafter. The mailing address for Mr. Roth is
510 Broad Hollow Road, Suite 206, Melville, New York 11747.
(12) Includes 32,081 shares owned beneficially by Mr. Scheidt. Also
includes 113,685 shares of common stock issuable upon exercise of stock
options vested as of October 23, 2006, or within 60 days thereafter. The
mailing address for Mr. Scheidt is 54 South White Station Road, Memphis,
Tennessee 38117.
(13) Includes 7,200 shares of common stock issuable upon exercise of stock
options vested as of October 23, 2006 or within 60 days thereafter, and 4,000
shares of restricted stock.
(14) Includes 53,096 shares owned beneficially by Mr. Dismuke. Also includes
150,812 shares of common stock issuable upon exercise of stock options vested
as of October 23, 2006, or within 60 days thereafter, and 6,144 shares of
restricted stock.
(15) Includes 3,664 shares owned beneficially by Mr. Greene. Also includes
102,302 shares of common stock issuable upon exercise of stock options vested
as of October 23, 2006, or within 60 days thereafter, and 6,746 shares of
restricted stock.
(16) Includes 2,243 shares owned beneficially by Mr. Hugie. Also includes
65,046 shares of common stock issuable upon exercise of stock options vested
as of October 23, 2006, or within 60 days thereafter, and 2,607 shares of
restricted stock.
(17) Includes 839 shares owned beneficially by Mr. Willeke. Also includes
17,321 shares of common stock issuable upon exercise of stock options vested
as of October 23, 2006, or within 60 days thereafter, and 1,258 shares of
restricted stock.
(18) Includes 1,674,447 shares of common stock issuable upon exercise of stock
options vested as of October 23, 2006, or within 60 days thereafter, and
50,803 shares of restricted stock.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Registration Rights
Monsanto, as the sole holder of our preferred stock, has certain
registration rights associated with the common stock into which the preferred
stock is convertible. Monsanto has not converted the preferred stock as of the
record date.
Cotton Biotechnology Research Contracts
In October 2002, we and DeltaMax Cotton LLC, a limited liability company
jointly owned with Verdia, Inc., or Verdia, a wholly-owned indirect subsidiary
of DuPont, entered into collaborative research agreements with Temasek Life
Sciences Laboratory, or TLL, an organization organized under the laws of
Singapore. In February 2004 and November 2004, we entered into license
agreements for technology owned by TLL which is used in the development of
cotton products. Dr. Nam-Hai Chua, one of our directors, was the Chief
Scientific Advisor of Temasek Capital from April 2001 to March 2003 and was
appointed to be Corporate Advisor to Temasek Holdings from April 2003 through
March 2006, and has advised TLL since April 2004. Temasek Holdings is the
parent company of TLL and Temasek Capital. The value of the TLL agreements
with us and DeltaMax exceeds $60,000; however, the agreements are not
material, as defined by the SEC. The agreements also are not material for
Temasek, and according to Dr. Chua he did not advise TLL on those agreements
and he derives no particular or direct benefit from the agreements. Dr. Chua
recuses himself from any discussion and vote regarding DeltaMax's and our
agreements with TLL. In addition, Dr. Chua has been a paid consultant to
Pioneer Hi-Bred International, Inc., a DuPont subsidiary, for several years
and continues in this capacity. DuPont acquired Verdia in July 2004. Dr. Chua
did not consult with Pioneer/DuPont regarding this acquisition and he recuses
himself from any discussion and vote regarding DeltaMax.
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PROPOSAL 2 - ADJOURNMENT OR POSTPONEMENT OF THE SPECIAL MEETING
If we fail to receive a sufficient number of votes to adopt the merger
agreement, we may propose to adjourn or postpone the special meeting, if a
quorum is present, for a period of not more than 120 days for the purpose of
soliciting additional proxies to adopt the merger agreement. We currently do
not intend to propose adjournment or postponement of our special meeting if
there are sufficient votes to adopt the merger agreement. Approval of the
proposal to adjourn or postpone our special meeting for the purpose of
soliciting additional proxies requires the affirmative vote of a majority of
the votes cast at the special meeting by holders of shares of our common stock
present or represented by proxy and entitled to vote thereon.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL TO ADJOURN
OR POSTPONE THE SPECIAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT
ADDITIONAL PROXIES IF THERE ARE INSUFFICIENT VOTES AT THE TIME OF THE MEETING
TO ADOPT THE MERGER AGREEMENT.
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OTHER MATTERS
The board of directors currently knows of no other business that will be
presented for consideration at the special meeting. Nevertheless, should any
business other than that set forth in the notice of special meeting of
stockholders properly come before the meeting, the enclosed proxy confers
discretionary authority to vote with respect to such matters, including
matters that the board of directors does not know, a reasonable time before
proxy solicitation, are to be presented at the meeting. If any of these
matters are presented at the meeting, then the proxy agents named in the
enclosed proxy card will vote in accordance with their judgment.
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FUTURE STOCKHOLDER PROPOSALS
If the merger is completed, we will no longer have public stockholders
and there will be no public participation in any future meetings of our
stockholders. However, if the merger is not completed, our stockholders will
continue to be entitled to attend and to participate in our stockholder
meetings. We intend to hold the 2007 Annual Meeting only if the merger is not
completed, or if we are required to do so by law.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be included in the proxy statement and
presented at the 2007 Annual Meeting should have been received by us no later
than August 1, 2006. With regard to stockholder proposals not included in our
proxy statement but which a stockholder wishes to be brought before the 2007
Annual Meeting, our bylaws establish an advance notice procedure which
requires that we receive notice of such a proposal by not less than 60 days
nor more than 90 days prior to the date of the Annual Meeting; provided,
however, that in the event that less than 70 days notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be received not later than the close of
business on the 10th day following the day on which such notice of the date of
the Annual Meeting was mailed or such public disclosure was made. In addition
to the above requirements as to timeliness, the proposals must meet certain
eligibility requirements of the SEC.
NOMINATION OF DIRECTOR CANDIDATES
The Nominating Committee has adopted a policy with regard to considering
a stockholder's nominee. To submit a nominee for consideration, a stockholder
must provide the Nominating Committee:
o proof of the stockholder's eligibility to submit proposals in
accordance with Rule 14a-8(b) of the Exchange Act;
o a complete description of the candidate's qualifications, experience
and background; and
o the candidate's signed consent to serve on the board.
In general, the Nominating Committee will evaluate a candidate identified
by a stockholder using the same standards as it uses for candidates it
identifies. Before recommending a stockholder's candidate, the Nominating
Committee may also:
o consider whether the stockholder candidate will significantly add to
the range of talents, skills and expertise of the board;
o conduct appropriate verifications of the background of the
candidate; and
o interview the candidate or ask the candidate for additional
information.
The Nominating Committee has full discretion not to include a
stockholder's candidate in its recommendation of nominees to the board. If the
Nominating Committee does not recommend a stockholder's candidate to the
board, it will not make public the reason or reasons for its decision.
COPY OF BYLAW PROVISIONS
You may contact our Corporate Secretary at our principal executive
offices for a copy of the relevant Bylaw provisions regarding the requirements
for making stockholder proposals and nominating director candidates.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or
other information that we file with the SEC at its Public Reference Room, 100
F Street, N.E., Washington, D.C. 20549, at prescribed rates. Please call the
SEC at 1-800-SEC-0330 for further information on the operation of the public
reference room.
Our public filings are also available to the public from document
retrieval services and at the Internet site maintained by the SEC at
www.sec.gov.
If you have any questions about this proxy statement, the special meeting
or the merger or need assistance with the voting procedures, you should
contact Georgeson Inc., our proxy solicitor, toll free at (866) 296-6841.
Banks and brokers can call (212) 440-9880.
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INCORPORATION BY REFERENCE
The SEC allows us to incorporate by reference information into this proxy
statement. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. Information
that we file later with the SEC, prior to the closing of the merger, will
automatically update and supersede the previously filed information and be
incorporated by reference into this proxy statement.
We incorporate by reference any documents that may be filed with the SEC
between the date of this proxy statement and prior to the date of the special
meeting of our stockholders. These include periodic reports, such as Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K, as well as proxy statements (except for information furnished to the
SEC that is not deemed to be "filed" for purposes of the Exchange Act).
Any person, including any beneficial owner, to whom this proxy statement
is delivered may request copies of reports, proxy statements or other
information concerning us, without charge, by written or telephonic request
directed to us at Delta and Pine Land Company, Attention: Secretary, One
Cotton Row, Scott, Mississippi 38772, Telephone (662) 742-4000. If you would
like to request documents, please do so by December 14, 2006, in order to
receive them before the special meeting. In addition, these documents may also
be obtained through our website at www.deltaandpine.com.
You should only rely on information provided in this proxy statement. No
persons have been authorized to give any information or to make any
representations other than those contained in this proxy statement and, if
given or made, such information or representations must not be relied upon as
having been authorized by us or any other person. This proxy statement is
dated November 7, 2006. You should not assume that the information contained
in this proxy statement is accurate as of any date other than that date, and
the mailing of this proxy statement to stockholders shall not create any
implication to the contrary.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
dated as of
August 14, 2006
by and among
MONSANTO COMPANY
MONSANTO SUB, INC.
and
DELTA AND PINE LAND COMPANY
TABLE OF CONTENTS
Page
----
ARTICLE 1.
THE MERGER..................................................1
SECTION 1.01. The Merger..............................1
SECTION 1.02. Conversion of Shares....................2
SECTION 1.03. Payment for Shares......................3
SECTION 1.04. Certain Adjustments.....................5
SECTION 1.05. Stock Options and Company Awards........5
ARTICLE 2.
THE SURVIVING CORPORATION...................................6
SECTION 2.01. Certificate of Incorporation............6
SECTION 2.02. Bylaws..................................6
SECTION 2.03. Directors and Officers..................6
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............7
SECTION 3.01. Corporate Organization..................7
SECTION 3.02. Authorization...........................8
SECTION 3.03. Capital Stock...........................9
SECTION 3.04. Subsidiaries............................9
SECTION 3.05. Consents and Approvals; No Violation...10
SECTION 3.06. SEC Reports and Financial
Statements.............................10
SECTION 3.07. Absence of Undisclosed Liabilities.....11
SECTION 3.08. Changes................................12
SECTION 3.09. Investigations; Litigation.............14
SECTION 3.10. Contracts and Commitments..............15
SECTION 3.11. Environmental and Safety Matters.......16
SECTION 3.12. Taxes..................................18
SECTION 3.13. Employment Agreements..................18
SECTION 3.14. Change of Control Provisions...........19
SECTION 3.15. Employee Benefit Plans.................19
SECTION 3.16. Licenses...............................20
SECTION 3.17. Real Estate Leases.....................20
SECTION 3.18. Real Property..........................21
SECTION 3.19. Intellectual Property and Germplasm....21
SECTION 3.20. Compliance with Other Instruments
and Laws...............................23
SECTION 3.21. Employees..............................24
SECTION 3.22. Information Supplied...................24
SECTION 3.23. Rights Agreement.......................24
SECTION 3.24. Certain Fees...........................24
SECTION 3.25. Opinion of Financial Advisor...........24
SECTION 3.26. Voting Requirements....................25
SECTION 3.27. State Takeover Statutes................25
SECTION 3.28. No Additional Representations and
Warranties.............................25
i
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB....25
SECTION 4.01. Corporate Organization.................25
SECTION 4.02. Authorization..........................26
SECTION 4.03. No Prior Activities; Ownership of
Merger Sub Shares......................26
SECTION 4.04. Information Supplied...................26
SECTION 4.05. Consents and Approvals; No
Violations.............................26
SECTION 4.06. Certain Fees...........................27
SECTION 4.07. Necessary Financing....................27
SECTION 4.08. No Buyer Stockholder Vote..............27
ARTICLE 5.
COVENANTS OF THE COMPANY...................................27
SECTION 5.01. Conduct of Business by the Company
and its Subsidiaries Pending the
Merger.................................27
SECTION 5.02. Stockholders' Meeting..................30
SECTION 5.03. Access to Information; Cooperation;
Related Matters........................30
SECTION 5.04. No Solicitation........................33
SECTION 5.05. Employment and Noncompetition
Agreements.............................34
ARTICLE 6.
COVENANTS OF PARENT AND MERGER SUB.........................35
SECTION 6.01. Confidentiality........................35
SECTION 6.02. Indemnification........................35
SECTION 6.03. Operations After the Effective Time....36
SECTION 6.04. Employee Benefits......................36
ARTICLE 7.
COVENANTS OF BUYER AND THE COMPANY.........................36
SECTION 7.01. Best Efforts...........................36
SECTION 7.02. Certain Filings........................37
SECTION 7.03. Public Announcements...................37
SECTION 7.04. Further Assurances.....................37
SECTION 7.05. Notices of Certain Events..............37
SECTION 7.06. Preparation of the Company Proxy
Statement..............................38
SECTION 7.07. Consents; Antitrust Matters............38
SECTION 7.08. Confidentiality........................41
SECTION 7.09. Litigation Stay........................41
ARTICLE 8.
CONDITIONS TO THE MERGER...................................41
SECTION 8.01. Conditions to the Obligations of
Each Party.............................41
SECTION 8.02. Burden of Proof........................43
ARTICLE 9.
TERMINATION................................................43
ii
SECTION 9.01. Termination............................43
SECTION 9.02. Waiver.................................45
SECTION 9.03. Closing................................45
SECTION 9.04. Effect of Termination..................45
ARTICLE 10.
MISCELLANEOUS..............................................48
SECTION 10.01. Notices................................48
SECTION 10.02. Survival of Representations and
Warranties.............................49
SECTION 10.03. Amendments; No Waivers.................49
SECTION 10.04. Expenses...............................49
SECTION 10.05. Successors and Assigns.................49
SECTION 10.06. Governing Law; Submission to
Jurisdiction; Waiver of Jury Trial.....50
SECTION 10.07. Counterparts; Effectiveness............51
SECTION 10.08. Headings...............................51
SECTION 10.09. No Third Party Beneficiaries...........51
SECTION 10.10. Remedies...............................51
SECTION 10.11. Severability...........................51
SECTION 10.12. Rules of Construction..................52
SECTION 10.13. Entire Agreement.......................52
SECTION 10.14. Certain Defined Terms..................52
iii
DEFINED TERMS
Term Page Number
---- -----------
Acquisition Transaction..........................................34
Agreement.........................................................1
Buyer Material Adverse Effect....................................28
CERCLA...........................................................18
Certificate of Merger.............................................2
Certificates......................................................4
Closing..........................................................46
Closing Date.....................................................46
Company...........................................................1
Company 10-K.....................................................11
Company 10-Qs....................................................11
Company Award.....................................................6
Company Common Stock..............................................2
Company Disclosure Document......................................25
Company Disclosure Letter.........................................7
Company Proxy Statement..........................................10
Company Reports..................................................11
Company Stock Option Plans........................................6
Company Stockholders Meeting.....................................31
Confidentiality Agreement........................................31
Delaware Law......................................................1
Effective Time....................................................2
Environmental and Safety Requirements............................17
Environmental Lien...............................................18
ERISA............................................................20
Exchange Act.....................................................10
Filed Company SEC Documents.......................................7
Governmental Entity..............................................10
Hazardous Materials..............................................17
HSR Act..........................................................10
Indemnified Parties..............................................36
Investigation....................................................14
knowledge of the Company.........................................15
Licenses.........................................................21
Lien.............................................................21
Material Adverse Change..........................................12
Material Adverse Effect...........................................7
Merger............................................................1
Merger Sub........................................................1
Parent............................................................1
Paying Agent......................................................3
Payment Fund......................................................3
Permitted Liens..................................................22
Plans............................................................20
Release..........................................................17
Rights............................................................2
Rights Agreement.................................................25
Securities Act...................................................11
Series M Preferred Stock..........................................2
Shares............................................................2
Superior Proposal................................................35
Surviving Corporation.............................................2
Tax Returns......................................................18
Transaction.......................................................2
iv
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of August 14, 2006, by and among MONSANTO COMPANY, a
Delaware corporation ("Parent"), MONSANTO SUB, INC., a Delaware corporation
and a wholly-owned subsidiary of Parent ("Merger Sub"), and DELTA AND PINE
LAND COMPANY, a Delaware corporation (the "Company").
RECITALS
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
deem it advisable and in the best interests of the stockholders of such
corporations to effect the merger of Merger Sub with and into the Company
pursuant to this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have approved the acquisition of the Company by Parent through
the merger of Merger Sub with and into the Company on the terms set forth
in this Agreement, and the Board of Directors of the Company has
unanimously resolved to recommend that this Agreement and the transactions
contemplated hereby, including such merger, be approved and adopted by the
stockholders of the Company;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, Parent, the Company and the other parties named therein are
entering into several settlement agreements, dated as of the date hereof,
copies of which are attached hereto as Exhibits A, B and C, respectively
(collectively, the "Settlement Agreements"); and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE 1.
THE MERGER
SECTION 1.01. The Merger.
(a) At the Effective Time (as defined in Section 1.01(b) hereof),
Merger Sub shall be merged (the "Merger") with and into the Company in
accordance with the Delaware General Corporation Law ("Delaware Law"),
whereupon the separate existence of Merger Sub shall cease, and the
Company shall be the surviving corporation (the "Surviving
Corporation"). The Merger is sometimes hereinafter referred to as the
"Transaction."
1
(b) On the Closing Date (as defined in Section 9.03), the Company
and Merger Sub will file a certificate of merger with the Secretary of
State of the State of Delaware (the "Certificate of Merger") and make
all other filings or recordings required by Delaware Law in connection
with the Merger. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the
State of Delaware and any additional requirements of Delaware Law are
complied with or at such later time as is specified in the Certificate
of Merger (the "Effective Time").
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the assets, rights, privileges, powers and
franchises and be subject to all of the liabilities, restrictions,
disabilities and duties of the Company and Merger Sub, all as provided
under Delaware Law.
SECTION 1.02. Conversion of Shares.
(a) At the Effective Time and by virtue of the Merger and without
any action on the part of the holders thereof or any other Person:
(i) each share of common stock of the Company, $0.10 par value per
share ("Company Common Stock"), and Series M Convertible Non-Voting
Preferred Stock of the Company ("Series M Preferred Stock") held by
the Company as treasury stock or owned by Parent or any subsidiary of
Parent immediately prior to the Effective Time (collectively, the
"Non-Converted Shares") shall be canceled, and no payment shall be
made with respect thereto;
(ii) subject to Section 1.02(b) and Section 1.03, each share of
Company Common Stock, and the associated preferred stock purchase
right (the "Rights"), and each share of Series M Preferred Stock
(collectively, the "Shares") outstanding immediately prior to the
Effective Time shall, except as otherwise provided in clause (i) of
this subsection, be converted into the right to receive $42.00 in
cash, without interest (the "Merger Consideration"). As of the
Effective Time, all such Shares shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist,
and each holder of a certificate representing any such Shares shall
cease to have any rights with respect thereto, except the right to
receive the Merger Consideration upon surrender of such certificate in
accordance with Section 1.03 hereof; and
(iii) each share of common stock of Merger Sub, $0.01 par value per
share, outstanding immediately prior to the Effective Time shall be
converted into one share of common stock of the Surviving Corporation,
$0.01 par value per share.
(b) Notwithstanding any provision of this Agreement to the
contrary and to the extent available under Delaware Law, any Shares
outstanding immediately prior to the Effective Time that are held by a
stockholder (a "Dissenting Stockholder") who has neither voted in
favor of the adoption of this Agreement nor consented thereto in
writing and who has demanded properly in writing appraisal for such
Shares and otherwise properly perfected and not
2
withdrawn or lost his, her or its rights (the "Dissenting Shares"
and, together with the Non-Converted Shares, the "Excluded Shares") in
accordance with Section 262 of Delaware Law will not be converted
into, or represent the right to receive, the Merger Consideration.
Such Dissenting Stockholders will be entitled to receive payment of
the appraised value of the Dissenting Shares held by them in
accordance with the provisions of such Section 262, except that all
Dissenting Shares held by stockholders who have failed to perfect or
who effectively have withdrawn or lost their rights to appraisal of
such Dissenting Shares pursuant to Section 262 of Delaware Law will
thereupon be deemed to have been converted into, and represent the
right to receive, the Merger Consideration in the manner provided in
Section 1.02(a)(ii) hereof and will no longer be Dissenting Shares.
The Company will give Parent prompt notice of any written demands for
appraisal, attempted withdrawals of such demands, and any other
instruments served pursuant to applicable law received by the Company
relating to stockholders' rights of appraisal. The Company will give
Parent the opportunity to participate in and direct all negotiations
and proceedings with respect to demands for appraisal. The Company
will not, except with the prior written consent of Parent, make any
payment with respect to any demands for appraisals of Dissenting
Shares, offer to settle or settle any such demands or approve any
withdrawal or other treatment of any such demands.
SECTION 1.03. Payment for Shares.
(a) As of the Effective Time, Parent and Merger Sub shall enter
into an agreement with a bank or trust company selected by Parent
(which is reasonably satisfactory to the Company) as paying agent for
the Merger (the "Paying Agent "), which shall provide that Parent
shall deposit with the Paying Agent as of the Effective Time, for the
benefit of the holders of Shares (other than Excluded Shares), for
exchange in accordance with this Article 1, through the Paying Agent,
cash in an amount sufficient to make the payments to the holders of
Shares (other than Excluded Shares) contemplated by Section
1.02(a)(ii) hereof (the "Payment Fund"). The Payment Fund shall not be
used for any purpose other than as provided in the immediately
preceding sentence. The Payment Fund shall be invested by the Paying
Agent as directed by Parent; provided, however, that such investments
shall be in obligations of or guaranteed by the United States of
America or any agency or instrumentality thereof and backed by the
full faith and credit of the United States of America, in commercial
paper obligations rated 1 or P-1 or better by Moody's Investors
Service, Inc. or Standard & Poor's Corporation, respectively, or in
certificates of deposit, bank repurchase agreements or banker's
acceptances of commercial banks with capital exceeding $1 billion
(based on the most recent financial statements of such bank which are
then publicly available). Any net profit resulting from, or interest
or income produced by, such investments shall be property of and
payable to Parent, provided in the event of any losses due to the
investment of the Payment Fund, Parent shall be required to deposit
such additional amounts as may be required to ensure that the Payment
Fund is sufficient to make any and all payments contemplated by
Section 1.02(a)(ii) hereof.
3
(b) As soon as reasonably practicable after the Effective Time,
the Paying Agent shall mail to each holder of record of a certificate
or certificates which immediately prior to the Effective Time
represented outstanding Company Common Stock (the "Certificates")
whose shares were converted into the right to receive the Merger
Consideration pursuant to Section 1.02(a)(ii) hereof, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in surrendering the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate
for cancellation to the Paying Agent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably
be required by the Paying Agent, the holder of such Certificate shall
be entitled to receive in exchange therefor (subject to the terms of
Section 1.03(g)) an amount in cash equal to the Merger Consideration
with respect to each share of Company Common Stock represented by the
Certificate so surrendered, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of
Shares which is not registered in the transfer records of the Company,
the Merger Consideration payable in respect of the Shares represented
by such Certificate may be paid to a Person other than the Person in
whose name the Certificate so surrendered is registered if such
Certificate is properly endorsed or otherwise in proper form for
transfer and the Person requesting such issuance pays any transfer or
other taxes required by reason of the payment of such Merger
Consideration to a Person other than the registered holder of such
Certificate or establishes to the satisfaction of Parent that such tax
has been paid or is not applicable. Until surrendered as contemplated
by this Section 1.03, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon
such surrender the Merger Consideration which the holder thereof has
the right to receive in respect of such Certificate pursuant to the
provisions of this Article 1. No interest shall be paid or will accrue
on any cash payable to holders of Certificates pursuant to the
provisions of this Article 1.
(c) After the Effective Time, there will be no transfers on the
stock transfer books of the Company of Shares that were outstanding
immediately prior to the Effective Time other than to settle transfers
of Shares that occurred prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Paying Agent, they
will be cancelled and exchanged for the Merger Consideration as
provided in this Section 1.03.
(d) Any portion of the Payment Fund which remains undistributed to
the holders of the Certificates for six months after the Effective Time
shall be delivered to Parent, upon demand, and any holders of the
Certificates who have not theretofore complied with this Article 1 shall
thereafter look only to Parent for payment of their claims for Merger
Consideration.
(e) Neither Parent, Merger Sub, the Company, the Surviving
Corporation nor the Paying Agent shall be liable to any Person in
respect of any
4
amount delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate shall not
have been surrendered prior to two years after the Effective Time (or
immediately prior to such earlier date on which any Merger Consideration
would otherwise escheat to or become the property of any Governmental
Entity (as defined in Section 3.05 hereof)), any such Merger
Consideration shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation, free and clear of all claims
or interest of any Person previously entitled thereto.
(f) If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect
to such Certificate, the Paying Agent shall issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration due to
such person pursuant to this Agreement in respect thereof.
(g) The Surviving Corporation and the Paying Agent shall deduct
and withhold from amounts otherwise payable pursuant to this Agreement
to any holder of Shares or holder of Stock Options or Company Awards
any amounts required to be deducted and withheld with respect to such
payments under the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder (the "Code"), or any
provision of state, local or foreign law. Any amounts so deducted and
withheld will be timely paid to the applicable Governmental Entity and
will be treated for all purposes of this Agreement as having been paid
to the holder of the Shares or holders of Stock Options or Company
Awards, as the case may be, in respect of which such deduction and
withholding was made.
SECTION 1.04. Certain Adjustments. If after the date hereof and on or
prior to the Effective Time the outstanding shares of Company Common Stock
shall be changed into a different number, class or series of shares or any
other security by reason of any reclassification, recapitalization,
reorganization, merger, business combination, split-up, stock split,
combination or exchange of shares, or any dividend payable in stock or
other securities shall be declared thereon with a record date within such
period, or any similar event shall occur, the Merger Consideration shall be
equitably adjusted to reflect such change; provided, however, that nothing
contained herein shall be construed to permit the Company to take any
action with respect to its securities that is prohibited by the terms of
this Agreement.
SECTION 1.05. Stock Options and Company Awards.
(a) As of the Effective Time, each outstanding stock option to
purchase Company Common Stock (the "Stock Options"), whether granted
under the Company's 1995 Amended and Restated Long-Term Incentive Plan
or the Company's 2005 Omnibus Stock Plan (collectively, the "Company
Stock Option Plans") or otherwise, shall be cancelled and terminated
and the holder of such
5
Stock Option will, in full settlement of such Stock Option and in
exchange for the surrender to the Company of any certificate or other
document evidencing such Stock Option, receive from the Surviving
Corporation an amount (subject to Section 1.03(g)) in cash equal to the
product of (i) the excess, if any, of the Merger Consideration over the
exercise price per share of Company Common Stock of such Stock Option
multiplied by (ii) the number of shares of Company Common Stock subject
to such Stock Option (with the aggregate amount of such payment rounded
down to the nearest whole cent). The holders of Stock Options will have
no further rights in respect of any Stock Options from and after the
Effective Time.
(b) As of the Effective Time, each outstanding award (including
restricted stock, deferred stock, phantom stock, stock equivalents and
stock units), but excluding Stock Options (each a "Company Award"),
under the Company Stock Option Plans shall be cancelled and terminated
and the holder thereof shall be entitled to receive (subject to
Section 1.03(g)) from the Surviving Corporation an amount in cash
equal to the Merger Consideration in respect of each share of Company
Common Stock represented thereby, without interest. The holders of
Company Awards will have no further rights in respect of any such
Company Award from and after the Effective Time.
(c) Prior to the Effective Time, the Company will adopt such
resolutions and will take such other actions as shall be required to
effectuate the actions contemplated by this Section 1.05, without
paying any consideration or incurring any debts or obligations on
behalf of the Company or the Surviving Corporation, including, without
limitation, accelerating and causing the complete vesting, as of the
Effective Time, of all Stock Options and Company Awards.
ARTICLE 2.
THE SURVIVING CORPORATION
SECTION 2.01. Certificate of Incorporation. The certificate of
incorporation of Merger Sub in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law, except that the name set forth in such
certificate of incorporation shall be changed to Delta and Pine Land
Company.
SECTION 2.02. Bylaws. The bylaws of Merger Sub in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until
amended in accordance with applicable law.
SECTION 2.03. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed in accordance with
applicable law, (a) the directors of Merger Sub at the Effective Time shall
constitute the directors of the Surviving Corporation, and (b) the officers
of the Company at the Effective Time shall be the officers of the Surviving
Corporation.
6
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub that,
except as set forth in (i) the disclosure letter (the "Company Disclosure
Letter") delivered by the Company to Parent and Merger Sub
contemporaneously with the execution of this Agreement or (ii) in (x) the
Company 10-K or the Company 10-Qs (excluding any amendments to the
foregoing documents filed after the date hereof), (y) any current report on
Form 8-K (or any amendment thereto) that was filed by the Company with the
Securities and Exchange Commission (the "SEC") following the date of the
Company 10-K and prior to the date hereof (collectively, the "Current
Reports") or (z) the Company's definitive proxy statement filed by the
Company with the SEC on November 19, 2005 (excluding, in the case of
clauses (x), (y) and (z) immediately above, (A) all exhibits (other than
press releases filed as exhibits to any such Current Report) and (B) all
disclosures in any "Risk Factors" section contained in any of the foregoing
documents) (the "Filed Company SEC Documents"), it being agreed that all
disclosures in the Company Disclosure Letter in any one or more sections
referred to therein shall be deemed to have been disclosed in response to
each relevant and/or applicable section of this Agreement, so long as the
relevance of such disclosures to the representations made by the Company in
each such section is reasonably apparent:
SECTION 3.01. Corporate Organization. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite corporate power and authority to
own, operate and lease its properties and assets and to carry on its
business as it is now being conducted. The Company is duly qualified to do
business and is in good standing in each jurisdiction in which the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to
be so qualified or to be in good standing would not, individually or in the
aggregate, have a material adverse effect on the business, assets or
financial condition of the Company and the Subsidiaries taken as a whole
(after giving effect to the terms set forth in clauses (a)-(h) immediately
below, a "Material Adverse Effect"), except for any effect resulting from
or relating to:
(a) conditions or circumstances generally affecting the cotton and
soybean planting seed industries, including any conditions or
circumstances resulting from reductions in planted acreage that affects
the cotton and soybean industries generally (other than any such
conditions or circumstances that affect the Company or its Subsidiaries
in a materially disproportionate manner when compared to the effects of
such conditions and circumstances on other Persons engaged in the cotton
and soybean planting seed industries, provided that only the
disproportionate amount shall be considered in determining whether such
conditions or circumstances would have a material adverse effect on the
business, assets or financial condition of the Company and the
Subsidiaries taken as a whole);
(b) the sale of seed containing technology licensed by the
Company or any Subsidiary from Parent or any of Parent's Affiliates;
7
(c) any of the litigation matters or investigations specifically
described in the Company Disclosure Letter;
(d) any change or effect relating to general political or
economic conditions, or resulting from or arising out of developments
or conditions in agricultural, credit, financial or securities markets
in general, including, without limitation, any such change or effect
caused by changes to government agricultural policies, acts of
terrorism or war (whether or not declared) or any material worsening
of such conditions existing as of the date of this Agreement,
excluding, for all purposes of this clause (d), any such change or
effect that affects the Company or its Subsidiaries in a materially
disproportionate manner when compared to the effects of such changes
and effects on other Persons engaged in the cotton and soybean
planting seed industries (provided that only the disproportionate
amount shall be considered in determining whether such change or
effect would have a material adverse effect on the business, assets or
financial condition of the Company and the Subsidiaries taken as a
whole);
(e) any weather condition or any hurricane, earthquake or other
natural disaster;
(f) any change or effect primarily attributable to the execution
and public announcement of this Agreement, compliance by the Company
and its Subsidiaries with the terms of this Agreement (other than any
such change or effect that arises due to compliance by the Company and
its Subsidiaries with the terms of Section 5.01(a) that require that
the Company and its Subsidiaries to conduct their respective
businesses in the ordinary and usual course) or the consummation of
the transactions contemplated hereby, excluding any such change or
effect resulting from any change of control or similar provision
contained in any agreement to which the Company or any Subsidiary is a
party or is otherwise bound (other than any such change or effect
resulting from any change of control or similar provision contained in
any agreement that is listed in Section 3.14 of the Company Disclosure
Letter);
(g) (i) actions taken by Parent or any of its Affiliates, (ii)
insects or weeds developing resistance to the technologies of Parent
or its Affiliates or (iii) actions of any Governmental Entity with
respect to the technologies of Parent and its Affiliates or from the
failure by Parent or any of its Affiliates to obtain or maintain
regulatory approvals with respect to the technology of Parent or its
Affiliates; or
(h) any currency fluctuations.
SECTION 3.02. Authorization. The Company has the necessary corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by the
Company, the performance by the Company of its obligations hereunder and
the consummation by the Company of the transactions contemplated hereby
have been duly and validly authorized by the Company's Board of Directors,
have been unanimously approved by the Company's Board of Directors prior to
Parent
8
or Merger Sub becoming an "Interested Stockholder" as defined in Section 203
of Delaware Law and have been approved as otherwise required by the Company's
certificate of incorporation and bylaws, each as amended. Except for the
approval of this Agreement and the Merger by the Company's stockholders, no
other corporate proceeding on the part of the Company is necessary for the
execution and delivery of this Agreement by the Company, the performance of
the Company's obligations hereunder or the consummation by the Company of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or other laws
affecting creditors' rights generally or by the availability of equitable
remedies generally.
SECTION 3.03. Capital Stock. The authorized capital stock of the
Company consists of: (a) 100,000,000 shares of Company Common Stock, of
which, as of August 14, 2006, there were (i) 41,943,690 shares issued and
outstanding, (ii) 1,066,667 shares reserved for issuance upon conversion of
Series M Preferred Stock, and (iii) 5,637,600 shares held in the Company's
treasury (all of which shares are included in the number of issued and
outstanding shares in clause (i) immediately above); and (b) 2,000,000
shares of preferred stock, $0.10 par value per share, consisting of (i)
501,989 shares designated for issuance upon the exercise of the Rights as
Series A Junior Participating Preferred Stock, of which no shares are
issued or outstanding, and (ii) 1,066,667 shares designated as Series M
Preferred Stock, all of which were issued and outstanding as of August 14,
2006. All of the outstanding shares of capital stock of the Company have
been validly issued and are fully paid, nonassessable and free of
preemptive rights with no personal liability attaching to the ownership
thereof. As of August 14, 2006, except for the Rights, the Series M
Preferred Stock and options to acquire not more than 2,829,110 shares of
Company Common Stock pursuant to the Company Stock Option Plans, there are
no outstanding subscriptions, options, warrants, rights, contracts or other
arrangements or commitments obligating the Company or any Subsidiary to
issue or sell any shares of the Company's or any Subsidiary's capital stock
or other equity interests or any securities convertible into or
exchangeable for shares of the Company's or any Subsidiary's capital stock
or other equity interests.
SECTION 3.04. Subsidiaries. The Company Disclosure Letter lists all
direct and indirect Subsidiaries and, for purposes of Section 3.09(c) of this
Agreement, Anhui An Dai Cotton Seed Technology Company, Ltd., DeltaMax Cotton,
LLC and MDM Sementes De Algodao Limitada (collectively, the "Other Entities"),
shall be deemed a Subsidiary. Each Subsidiary is a corporation or other form
of business entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization, as
applicable, and has all requisite corporate or other power and authority to
own, operate and lease its properties and assets and to carry on its business
as it is now being conducted, and each Subsidiary is duly qualified to do
business and is in good standing in each jurisdiction in which the character
of its properties owned or held under lease or the nature of its activities
makes such qualification necessary, in each case, except where the failure to
be so qualified or to be in good standing would not, individually or in the
aggregate, have a Material Adverse Effect. All outstanding shares of capital
stock of each Subsidiary are validly issued, fully paid and nonassessable and
are owned by the Company or another Subsidiary free and clear of any liens,
claims or encumbrances, except for any director's qualifying shares.
9
SECTION 3.05. Consents and Approvals; No Violation. Except for (a)
applicable requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder (the "Exchange Act"), including
the filing with and clearing by the SEC of a proxy statement relating to
the Company Stockholders Meeting, as amended or supplemented from time to
time (the "Company Proxy Statement"), (b) the filing of a Pre-Merger
Notification and Report Form by the Company and the expiration or
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (c) applicable
requirements of foreign and supranational laws relating to antitrust and
anticompetition clearances, filings or notices, (d) the filing of the
Certificate of Merger as required by Delaware Law, (e) such filings and
consents as may be required under any environmental law pertaining to any
notification, disclosure or required approval triggered by the Merger or
the transactions contemplated by this Agreement, (f) filing with the NYSE
and the SEC with respect to the delisting and deregistration of the shares
of Company Common Stock and (g) such consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings as
may be required under the corporation, takeover or blue sky laws of various
states of the United States and jurisdictions outside the United States, no
filing with or prior notice to, and no permit, authorization, consent or
approval of, any Person, including any federal, state, local, foreign,
supranational or other governmental department, court, commission,
governmental body, board, bureau, agency, tribunal or instrumentality
(each, a "Governmental Entity") is necessary for the consummation by the
Company of the transactions contemplated by this Agreement. Neither the
execution and delivery of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will (i)
conflict with or result in any violation of any provision of the
certificate of incorporation or bylaws of the Company, each as amended, or
the certificate of incorporation, bylaws or analogous organizational
documents (in the case of non-corporate entities) of any Subsidiary, each
as amended, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which the Company
or any Subsidiary is a party or by which any of them or any of their
properties or assets may be bound, or (iii) violate any federal, state,
local or foreign order, writ, injunction, decree, statute, rule or
regulation applicable to the Company, any Subsidiary or any of their
properties or assets, excluding from the foregoing clauses (ii) and (iii)
violations, breaches or defaults which would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.06. SEC Reports and Financial Statements.
(a) Since August 31, 2002, the Company has filed all required
forms, reports and documents with the SEC required to be filed by it
pursuant to the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act") and the
Exchange Act (hereinafter collectively referred to as the "Company
Reports"), all of which have complied in all material respects with
all applicable requirements of the Securities Act and the Exchange Act
as of the filing date thereof. The Company Reports included (i) all
certificates required to be included therein pursuant to Sections 302
and 906 of the Sarbanes-Oxley Act of 2002, as amended, and the rules
and regulations promulgated
10
thereunder ("SOX"), and (ii) the internal control report --- and
attestation of the Company's outside auditors required by Section 404 of
SOX, to the extent such report and attestation was required to be
included therein under SOX.
(b) None of the Company Reports, including, without limitation,
any financial statements or schedules included or incorporated by
reference therein, at the time filed, contained any untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
(c) The consolidated balance sheets and the related consolidated
statements of income, cash flow and stockholders' equity (including,
without limitation, the related notes thereto) of the Company and its
consolidated Subsidiaries included in the financial statements
contained in the Company's Annual Report on Form 10-K for the year
ended August 31, 2005 (the "Company 10-K") and in the Company's
Quarterly Reports on Form 10-Q for the quarters ended November 30,
2005, February 28, 2006 and May 31, 2006 (collectively, the "Company
10-Qs"), present fairly the consolidated financial position of the
Company and its consolidated Subsidiaries as of their respective
dates, and the results of consolidated operations and cash flows for
the periods then ended, all in conformity with United States generally
accepted accounting principles ("GAAP") applied on a consistent ----
basis, except as otherwise noted therein, and in the case of unaudited
interim financial statements subject to normal year-end audit
adjustments and except for certain footnote disclosures required by
generally accepted accounting principles.
(d) The management of the Company has (i) implemented disclosure
controls and procedures (as defined in Rule 1315(e) of the Exchange Act)
that are reasonably designed to ensure that material information relating
to the Company and its consolidated Subsidiaries is made known to the
chief executive officer and chief financial officer of the Company by
others within those entities, and (ii) timely disclosed, based on its
most recent evaluation, to the Company's outside auditors and the audit
committee of the Company's Board of Directors (x) all significant
deficiencies and material weaknesses in the design or operation of
internal controls over financial reporting (as defined in Rule 1315(f) of
the Exchange Act) which are reasonably likely to adversely affect in any
material respect the Company's ability to record, process, summarize and
report financial data and (y) any fraud known to the Company, whether or
not material, that involves management or other employees who have a
significant role in the Company's internal controls over financial
reporting. Since September 1, 2004, any material change in internal
control over financial reporting or failure or inadequacy of disclosure
controls required to be disclosed in any Company Report has been so
disclosed.
SECTION 3.07. Absence of Undisclosed Liabilities. Except as would not,
individually or in the aggregate, have a Material Adverse Effect, neither
the Company nor any
11
Subsidiary has any liabilities (whether absolute, accrued or contingent),
except: (a) liabilities that are accrued and reserved against in the
consolidated balance sheet of the Company and the Subsidiaries or reflected in
the notes thereto, in each case included in the Filed Company SEC Documents;
(b) liabilities incurred since May 31, 2006 in the ordinary course of
business; (c) liabilities which, individually or in the aggregate, are not
required under GAAP to be set forth on the consolidated balance sheet of the
Company and its consolidated Subsidiaries; and (d) liabilities incurred after
the date hereof as specifically permitted by this Agreement.
SECTION 3.08. Changes. Since the date of the Company 10-K:
(a) there has been no material adverse change in the business,
assets or financial condition of the Company and its Subsidiaries
taken as a whole, (after giving effect to the terms set forth in
clauses (i)-(viii) immediately below, a "Material Adverse Change "),
except for any effect resulting from or relating to:
(i) conditions or circumstances generally affecting the
cotton and soybean planting seed industries, including any
conditions or circumstances resulting from reductions in planted
acreage that affects the cotton and soybean industries generally
(other than any such conditions or circumstances that affect the
Company or its Subsidiaries in a materially disproportionate
manner when compared to the effects of such conditions and
circumstances on other Persons engaged in the cotton and soybean
planting seed industries, provided that only the disproportionate
amount shall be considered in determining whether such conditions
or circumstances would have a material adverse effect on the
business, assets or financial condition of the Company and the
Subsidiaries taken as a whole);
(ii) the sale of seed containing technology licensed by the
Company or any Subsidiary from Parent or any of Parent's
Affiliates;
(iii) any of the litigation matters or investigations
specifically described in the Company Disclosure Letter;
(iv) any change or effect relating to general political or
economic conditions, or resulting from or arising out of
developments or conditions in agricultural, credit, financial or
securities markets in general, including, without limitation, any
such change or effect caused by changes to government
agricultural policies, acts of terrorism or war (whether or not
declared) or any material worsening of such conditions existing
as of the date of this Agreement, excluding, for all purposes of
this clause (iv), any such change or effect that affects the
Company or its Subsidiaries in a materially disproportionate
manner when compared to the effects of such changes and effects
on other Persons engaged in the cotton and soybean planting seed
industries (provided that only the
12
disproportionate amount shall be considered in determining whether
such change or effect would have a material adverse effect on the
business, assets or financial condition of the Company and the
Subsidiaries taken as a whole);
(v) any weather condition or any hurricane, earthquake or
other natural disaster;
(vi) any change or effect primarily attributable to the
execution and announcement of this Agreement, compliance by the
Company and its Subsidiaries with the terms of this Agreement
(other than any such change or effect that arises due to
compliance by the Company and its Subsidiaries with the terms of
Section 5.01(a) that require that the Company and its
Subsidiaries to conduct their respective businesses in the
ordinary and usual course) or the consummation of the
transactions contemplated hereby, excluding any such change or
effect resulting from any change of control or similar provision
contained in any agreement to which the Company or any Subsidiary
is a party or is otherwise bound (other than any such change or
effect resulting from any change of control or similar provision
contained in any agreement that is listed in Section 3.14 of the
Company Disclosure Letter);
(vii) (x) actions taken by Parent or any of its Affiliates,
(y) insects or weeds developing resistance to the technologies of
Parent or its Affiliates or (z) actions of any Governmental
Entity with respect to the technologies of Parent and its
Affiliates or from the failure by Parent or any of its Affiliates
to obtain or maintain regulatory approvals with respect to the
technology of Parent or its Affiliates; or
(viii) any currency fluctuations.
(b) there has been no direct or indirect redemption, purchase or
other acquisition of any shares of the Company's capital stock, or any
declaration, setting aside or payment of any dividend or other
distribution by the Company in respect of the Company's capital stock,
or any issuance of any shares of capital stock of the Company, or any
granting to any person of any option to purchase or other right to
acquire shares of capital stock of the Company or any stock split or
other change in the Company's capitalization, other than equity awards
in the ordinary course of business;
(c) neither the Company nor any Subsidiary has entered into or
agreed to enter into any new or amended contract with any works
council or trade or labor unions representing employees of the Company
or any Subsidiary;
(d) neither the Company nor any Subsidiary has entered into or
agreed to enter into any new or amended contract with any of the key
employees,
13
officers or directors thereof or otherwise increased the compensation
payable to the key employees, officers or directors of any such entity;
and
(e) neither the Company nor any Subsidiary has (i) entered into
or amended any bonus, incentive compensation, deferred compensation,
profit sharing, retirement, pension, group insurance, severance or
termination indemnity or other benefit plan except as required by law
or regulations or (ii) made any contribution to any such plan except
for contributions specifically required pursuant to the terms thereof.
SECTION 3.09. Investigations; Litigation.
(a) Other than reviews pursuant to the Antitrust Laws which may
be commenced in connection with the execution and delivery of this
Agreement, there are no pending investigations, reviews or inquiries
by any Governmental Entity with respect to the Company or any
Subsidiary or with respect to the activities of any officer, director
or employee of the Company or any Subsidiary (an "Investigation"),
nor, to the knowledge of the Company, is an Investigation threatened,
nor has any Governmental Entity indicated, to the knowledge of the
Company, an intention to conduct an Investigation, other than
Investigations which would not, individually or in the aggregate, have
a Material Adverse Effect. For the purpose of this Agreement, (i)
"knowledge of the Company" and similar phrases means the actual
knowledge of any executive officer of the Company included in the
"Company Knowledge Group" set forth in the Company Disclosure Letter,
in each case assuming the compliance with the internal reporting
policies and procedures maintained by the Company and its Subsidiaries
as of the date hereof and (ii) "Antitrust Laws" means the HSR Act or
any other foreign or domestic antitrust, competition or premerger
notification, trade regulation law, regulation or order.
(b) (i) There are no actions or proceedings pending or, to the
knowledge of the Company, threatened against the Company or any
Subsidiary by any Governmental Entity (other than actions or proceedings
that may be commenced under the Antitrust Laws solely in connection with
the transactions contemplated by this Agreement), which would,
individually or in the aggregate, have a Material Adverse Effect, (ii)
there are no outstanding domestic or foreign judgments, decrees or orders
against the Company or any Subsidiary enjoining any of them in respect
of, or the effect of which is to prohibit, any business practice or the
acquisition of any property or the conduct of business in any area that,
individually or in the aggregate, would have a Material Adverse Effect
and (iii) neither the Company nor any Subsidiary is in violation of, and
none of them has received any claim or notice that it is in violation of,
any federal, state, local or foreign laws, statutes, rules, regulations
or orders promulgated or judgments entered by any federal, state, local
or foreign court or other Governmental Entity, which violations,
individually or in the aggregate, would have a Material Adverse Effect.
14
(c) Without limiting the foregoing, to the knowledge of the
Company, neither the Company nor any of its Subsidiaries, nor any
director, officer, agent or employee of the Company or any of its
Subsidiaries, has, in the past five years, acting on behalf of the
Company or any of its Subsidiaries, (i) made, authorized, offered or
promised to make any unlawful payment or transfer of anything of
value, directly or indirectly through a third party, to any officer,
employee or representative of a foreign government or any department,
agency or instrumentality thereof (including any state-owned
enterprise), political party, political campaign or public
international organization, in violation of the U.S. Foreign Corrupt
Practices Act of 1977, as amended (the "FCPA"), or any applicable law
of similar effect; (ii) otherwise taken any action which would cause
the Company or any of its Subsidiaries to be in violation of the FCPA
or any application law of similar effect; or (iii) violated any
applicable law pertaining to export controls, antiboycott restrictions
or trade sanctions.
SECTION 3.10. Contracts and Commitments.
(a) As of the date hereof, the Company is not, nor is any
Subsidiary, a party to or bound by any oral or written contract:
(i) which is a "material contract" (as such term is defined
in Item 601(b)(10) of Regulation S-K promulgated under the
Securities Act) to be performed in full or in part after the date
of this Agreement that has not been filed or incorporated by
reference in the Company Reports;
(ii) that is a partnership, joint venture, strategic
alliance or cooperation agreement (or any agreement similar to
any of the foregoing), in each case which is material to the
Company and its Subsidiaries taken as a whole;
(iii) that prohibits the Company or any of its Subsidiaries
from freely engaging or competing in any line of business
anywhere in the world;
(iv) between the Company and any of its Affiliates (other
than Subsidiaries), directors or officers that is not on arms
length terms;
(v) pursuant to which the Company or any Subsidiary licenses
(as licensor or licensee) any cotton or soybean hybrids or any
germplasm or any other Intellectual Property related to cotton or
soybeans, in each case which is material to the Company and its
Subsidiaries taken as a whole, except in each case any of the
foregoing which is licensed to the Company or any Subsidiary by
the Parent or any of its Affiliates;
(vi) that involves an amount in excess of $1,500,000 and
pursuant to which the Company or any of its Subsidiaries has
incurred or accrued losses;
(vii) that by its terms may be terminated upon a change in
control of the Company or any of its Subsidiaries;
15
(viii) that commits the Company or any of its Subsidiaries
to purchase or sell any properties or assets outside of the
ordinary course of business for consideration in excess of
$1,500,000; or
(ix) that involves an unfulfilled obligation, individually
or in the aggregate, in excess of $1,500,000 and is incurred
outside the ordinary course of business and is not terminable by
the Company or any of its Subsidiaries upon less than 120
calendar days' notice for a cost of not less than $1,500,000.
The foregoing contracts and agreements to which the Company or any
Subsidiary are parties or are bound and that are listed in the Company
Disclosure Letter, together with all contracts and agreements filed as
exhibits to the Company Reports, are collectively referred to herein as the
"Company Material Contracts."
(b) (i) Each Company Material Contract is valid and binding on
the Company and any of its Subsidiaries that is a party thereto, as
applicable, and in full force and effect, except where the failure to
be valid, binding and in full force and effect would not, individually
or in the aggregate, have a Material Adverse Effect, (ii) the Company
and each of its Subsidiaries has and, to the knowledge of the Company,
all other parties thereto have, performed all obligations required to
be performed by such Person under each Company Material Contract,
except where such noncompliance would not, individually or in the
aggregate, have a Material Adverse Effect, and (iii) neither the
Company nor any of its Subsidiaries knows of, or has received written
notice of, the existence of any event or condition which constitutes,
or, after notice or lapse of time or both, will constitute, a default
on the part of the Company, any of its Subsidiaries or any other party
thereto under any Company Material Contract, except where such default
would not, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.11. Environmental and Safety Matters. Except as would not,
individually or in the aggregate, have a Material Adverse Effect:
(a) The Company and its Subsidiaries are in compliance with all
applicable Environmental and Safety Requirements. "Environmental and
Safety Requirements" means all federal, state, local and foreign
statutes, regulations, permits, ordinances and other provisions having
the force or effect of law, all judicial and administrative orders and
determinations and all common law, in each case concerning public
health and safety, worker health and safety, and pollution or
protection of the environment (including without limitation, relating
to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, Release or threatened Release (whether
onsite or offsite), control, or cleanup of any Hazardous Materials.
"Hazardous Materials" means any pollutant, contaminant, constituent,
chemical, raw material, product or by-product, petroleum or any
fraction thereof, asbestos or asbestos-containing material,
polychlorinated biphenyls, any hazardous waste, and any toxic,
radioactive, infectious or hazardous substance, material, or agent,
including all substances, materials or wastes which are subject to
regulation or give
16
rise to liability under any Environmental and Safety Requirements.
"Release" has the meaning set forth in CERCLA.
(b) Without limiting the generality of the foregoing, the Company
and its Subsidiaries are in compliance with all permits, licenses and
other authorizations that are required pursuant to Environmental and
Safety Requirements for the occupation of their facilities and the
operation of their business.
(c) To the knowledge of the Company, the Company and its
Subsidiaries have not received any written notice, report or other
information alleging any liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) or investigatory, removal,
remedial or corrective obligations, of the Company or its
Subsidiaries, in each case arising under Environmental and Safety
Requirements with respect to any of their respective current or former
properties and facilities or any current or former offsite properties
and facilities used in the business of the Company or its
Subsidiaries.
(d) The Company and its Subsidiaries have not treated, stored,
disposed of, arranged for or permitted the disposal of, transported,
handled, or Released, either onsite or offsite, any Hazardous
Materials, in each case so as to give rise to liabilities of the
Company or its Subsidiaries for response costs or natural resource
damages pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), as amended, or
similar state Environmental and Safety Requirements.
(e) Neither the Company nor its Subsidiaries have, either
expressly or by operation of law, assumed or undertaken any liability,
including without limitation any obligation for removal, corrective or
remedial action, of any other Person arising under any Environmental
and Safety Requirements.
(f) To the knowledge of the Company, no Environmental Lien has
attached to any property currently owned, leased or operated by the
Company or any Subsidiary. "Environmental Lien" means a lien, either
recorded or unrecorded, in favor of any Governmental Entity, arising
under Environmental and Safety Requirements.
(g) No facts or conditions at the current or former facilities or
properties of the Company or its Subsidiaries, or, to the knowledge of
the Company, any predecessor thereof, will prevent continued
compliance by the Company or any Subsidiary with applicable
Environmental and Safety Requirements, give rise to any investigatory,
removal, remedial or corrective obligations pursuant to Environmental
and Safety Requirements, or give rise to any other liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise)
pursuant to Environmental and Safety Requirements.
17
SECTION 3.12. Taxes.
(a) Except as would not have a Material Adverse Effect, (i) the
Company and each of the Subsidiaries has timely filed or will timely
file, taking into account extensions, (or has or will have had filed
on its behalf) all federal, state, local and foreign income and other
tax returns, reports and declarations ("Tax Returns")which are or were
required by applicable law to have been filed at or before the
Effective Time, (ii) each of the Company and the Subsidiaries has
timely paid or will timely pay (or has or will have paid on its
behalf), or where payment is not required to be made, has made or will
make adequate provision in reserves established on its financial
statements and accounts for the payment of, all taxes (including,
without limitation, all taxes required to be withheld, or any interest
and penalties on any taxes), in respect of the periods covered by said
returns, reports and declarations or any other taxable period ending
on or before the Effective Time, (iii) all Tax Returns, reports and
declarations filed by the Company and Subsidiaries, including, without
limitation, any amendments to date, have been prepared in good faith
and are complete and accurate in all material respects, (iv) no
deficiencies for any material tax, assessment or governmental charge
have been asserted or assessed in writing against the Company or any
of the Subsidiaries which have not been paid, settled or adequately
provided for through reserves established in the financial statements
and accounts of the Company and its Subsidiaries and, to the knowledge
of the Company, no such deficiency, assessment or charge has been
threatened.
(b) Neither the Company nor any of its Subsidiaries is obligated
to pay the taxes of any Person (other than the consolidated or similar
group of which the Company is the common parent or its equivalent)
under Treasury Regulation Section 1.1502-6 (or any similar provision
of state, local or foreign law).
(c) Neither the Company nor any Subsidiary has constituted a
"distributing corporation" or a "controlled corporation" within the
meaning of Section 355(a)(1)(A) of the Code in a distribution of stock
intended to qualify for tax-free treatment under Section 355 of the Code.
(d) Except as would not have a Material Adverse Effect, there are
no Liens (other than Permitted Liens) upon any properties or assets of
the Company or any of its subsidiaries arising from any failure or
alleged failure to pay any tax.
(e) Neither the Company nor any of its Subsidiaries is required
to make any disclosure to the Internal Revenue Service with respect to
a "listed transaction" within the meaning of Treasury Regulation
Section 1.6011-4(b).
SECTION 3.13. Employment Agreements. There are no written employment,
consulting, severance, change of control or similar agreements between the
Company or any Subsidiary, on the one hand, and any directors, officers,
consultants or employees of the Company or any Subsidiary, on the other
hand, which provide for annual
18
remuneration, severance payments, termination indemnities or other payments in
excess of $100,000.
SECTION 3.14. Change of Control Provisions.
(a) Except as disclosed in the Filed Company SEC Documents, as set
forth in the Company Disclosure Letter or as required under the terms of
Section 1.05 of this Agreement, none of the agreements described in Section
3.13 hereof and none of the Plans and no compensation plan maintained by
the Company or any Subsidiary for the benefit of their respective current
or former employees, officers, directors or consultants contains any
provision that would entitle any such employee, officer, director or
consultant to any additional or accelerated payments or benefits as a
result of the consummation of the Merger or the transactions contemplated
by this Agreement.
(b) Neither the Company nor any Subsidiary is a party to any
agreement, contract, arrangement or plan that has resulted or could result,
separately or in the aggregate, in the payment of any "excess parachute
payment" within the meaning of Section 280G of the Code (or any
corresponding provision of state, local or foreign law).
SECTION 3.15. Employee Benefit Plans. All material employee benefit
plans within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), maintained by the Company or
any of the Subsidiaries (collectively, the "Plans") and any related trusts
and funding vehicles are in compliance with, and have been administered and
operated in accordance with, the terms of such Plans, related trusts and
funding vehicles and applicable law, except for any failure to so comply,
operate or administer such Plans and related trusts and funding vehicles
that would not, individually or in the aggregate, have a Material Adverse
Effect. The Internal Revenue Service has issued a determination letter to
the effect that each such Plan which is intended to be "qualified" within
the meaning of Section 401(a) of the Code is so qualified and that its
related trust is tax exempt under Section 501(a) of the Code. No event which
constitutes a "reportable event" as defined in Section 4043 of ERISA has
occurred and is continuing with respect to any Plan subject to Title IV of
ERISA which presents a material risk of the termination or partial
termination of any such Plan or would, individually or in the aggregate, have
a Material Adverse Effect. At any time in the past six years, no Plan and no
plan maintained by an ERISA Affiliate that is subject to Title IV of ERISA
has been terminated pursuant to Title IV of ERISA in connection with which
any liability has been incurred by the Company or any Subsidiary which has
not been satisfied in full. Full payment has been made, or provision has been
made therefor, of all material amounts which the Company or any of the
Subsidiaries were required under the terms of the Plans or applicable law to
have paid as contributions to such Plans on or prior to the date hereof and
at any time during the past six years no Plan which is subject to Part 3 of
Subtitle B of Title I of ERISA has incurred any "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived. Neither the Company nor any of the Subsidiaries
has engaged in any nonexempt prohibited transactions in connection with any
Plan (or its related trust or funding vehicle) with respect to which the
Company, any of the Subsidiaries, or any officer, director or employee of the
Company or any of the Subsidiaries
19
would be subject to either a penalty pursuant to Section 502(i) of ERISA or a
tax imposed by Section 4975 of the Code nor, to the knowledge of the Company,
will the consummation of the transactions contemplated by this Agreement
constitute such a transaction which penalty or tax would, individually or in
the aggregate, have a Material Adverse Effect. Neither the Company nor any of
its Subsidiaries, nor any officer, director or employee of the Company or any
of its Subsidiaries, has incurred any liability under the fiduciary
provisions of ERISA, other than any liability that would not individually, or
in the aggregate, have a Material Adverse Effect. At any time in the past six
years, no claim, action or litigation has been made, commenced or, to the
knowledge of the Company, threatened with respect to any Plan or its related
trust or funding vehicle that would, if adversely determined, have
(individually or in the aggregate) a Material Adverse Effect. Neither the
Company nor any entity under "common control" with the Company within the
meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001 of
ERISA (an "ERISA Affiliate") has participated in or contributed to any
multiemployer plan as defined in Section 3(37) of ERISA at any time during
the past six years, and none of the Company nor any ERISA Affiliate has
incurred any "withdrawal liability" (as defined in Part I of Subtitle E of
Title IV of ERISA) at any time in the past six years that has not been
satisfied in full. With respect to each employee pension benefit plan (as
defined in Section 3(2) of ERISA) which is a defined benefit plan and is not
a multiemployer plan, the assets of such Plan available to meet the accrued
liabilities of such Plan would exceed such liabilities, based on the
actuarial assumptions used for plan termination. There does not now exist,
nor do any circumstances exist that could result in, any Controlled Group
Liability that would be a liability of the Company or any of its Subsidiaries
following the Closing that would, individually or in the aggregate, have a
Material Adverse Effect. "Controlled Group Liability" means any and all
liabilities (i) under Title IV of ERISA, (ii) under Section 302 of ERISA,
(iii) under Sections 412 and 4971 of the Code and (iv) as a result of a
failure to comply with the continuation coverage requirements of Section 601
et seq. of ERISA and Section 4980B of the Code or the requirements of Section
701 et.seq. of ERISA, other than such liabilities that, in each case, arise
solely out of, or relate solely to the Plans.
SECTION 3.16. Licenses. The Company and its Subsidiaries have obtained
all federal, state, local or foreign governmental and regulatory permits,
concessions, grants, franchises, licenses, authorizations and approvals
that are necessary or required in connection with the conduct of the
business as now conducted of the Company and the Subsidiaries
(collectively, "Licenses"), except where the failure to so obtain any such
License would not, individually or in the aggregate, have a Material
Adverse Effect. All of the Licenses are in full force and effect and, to
the Company's knowledge, will not be impaired or adversely affected by the
transactions contemplated by this Agreement in a manner or to a degree
that, individually or in the aggregate, would have a Material Adverse
Effect.
SECTION 3.17. Real Estate Leases. The Company Disclosure Letter sets
forth a list of all material leases and subleases existing as of the date
hereof (together with all amendments, supplements, nondisturbance
agreements and other agreements pertaining thereto) under which the Company
or any Subsidiary is lessor or lessee of any real property located in the
United States (the "U.S. Leases"). As to the U.S. Leases and the material
leases and subleases existing as of the date hereof under which the Company
or any Subsidiary is lessor or lessee of any real property that is not
located in the United States (the "Non-U.S. Leases" and, together with the
U.S. Leases, the "Company Leases"), except as would not, individually or in
the
20
aggregate, have a Material Adverse Effect, (a) there exists no breach or
default, and no event has occurred which with notice or passage of time (or
both) would constitute such a breach or default or permit termination,
notification or acceleration, on the part of the Company or any Subsidiary,
or on the part of any other party thereto, and (b) as of the Effective Time,
no third party consents, approval or authorizations shall be required for the
consummation of the Merger. To the Company's knowledge, there is no lien,
claim, option, charge, security interest, limitation, encumbrance or
restriction of any kind (any of the foregoing being a "Lien") on any of the
leasehold interests covered by the Company Leases except for (a) Liens
reflected in the balance sheet included in the Company 10-K or any Company
10-Q, (b) Liens of record consisting of zoning or planning restrictions,
easements, permits and other restrictions or limitations on the use of real
property which do not materially detract from the value of, or a materially
impair the use of, such property by the Company and its Subsidiaries in the
operation of their respective businesses, (c) Liens for current taxes,
assessments or governmental charges or levies on property not yet delinquent
or being contested in good faith and for which appropriate reserves have been
established in accordance with GAAP (which contested levies are described in
the Company Disclosure Letter), (d) Liens imposed by law, such as
materialman's, mechanic's, carrier's, workers' and repairmen's Liens securing
obligations not yet delinquent or being contested in good faith and for which
appropriate reserves have been established in accordance with GAAP or
securing obligations not being paid in the ordinary course of business in
accordance with customary and commercially reasonable practice, and (e) Liens
that do not materially adversely affect the use or enjoyment of the assets or
properties of the Company or its Subsidiaries (collectively, "Permitted
Liens").
SECTION 3.18. Real Property. The Company Disclosure Letter lists all
material real property owned by the Company or a Subsidiary thereof as of
the date hereof. Except as would not, individually or in the aggregate,
have a Material Adverse Effect, each of the Company and its Subsidiaries
has good title in fee simple to its respective real properties set forth in
the Company Disclosure Letter, in each case free and clear of all Liens,
except for Permitted Liens.
SECTION 3.19. Intellectual Property and Germplasm.
(a) The Company Disclosure Letter lists (i) all of the United
States patents, certificates of plant variety protection, registered
trademarks, registered service marks, registered copyrights or
application for any of the foregoing, in each case that are owned by
the Company or its Subsidiaries as of the date hereof (collectively,
the "U.S. Intellectual Property" and, together with (x) all of the
patents, certificates of plant variety protection, registered
trademarks, registered service marks, registered copyrights or
application for any of the foregoing that are owned by the Company or
its Subsidiaries as of the date hereof (but excluding the US
Intellectual Property) and (y) all of the patents, certificates of
plant variety protection, registered trademarks, registered service
marks, registered copyrights or application for any of the foregoing
that are licensed to the Company or a Subsidiary as of the date hereof
for use in the conduct of their respective businesses, the
"Intellectual Property"), and (ii) all varieties and hybrids of cotton
and soybeans which the Company or its Subsidiaries are presently
selling in the United States or reasonably anticipates selling in the
United States within two years
21
of the date of this Agreement. The Company and its Subsidiaries own and
possess all right, title and interest in and to, or are licensed to use,
all of the Intellectual Property that is material to the Company and its
Subsidiaries taken as a whole. In the case where the Company's or its
Subsidiaries' use of the Intellectual Property is subject to a royalty
payment in excess of $2,000,000 per annum (excluding royalty payments
payable to Parent or any Affiliate thereof), the material terms of such
royalty payment are set forth in the Company Disclosure Letter. To the
knowledge of the Company, each item of material Intellectual Property
owned by the Company or a Subsidiary is valid and enforceable, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or other laws affecting creditors' rights
generally or by the availability of equitable remedies generally.
(b) The Company and its Subsidiaries own and possess all right,
title and interest in and to, or are licensed to use, in the manner
currently used by the Company and its Subsidiaries, all germplasm
(exclusive of transgenes and transgenic components) that the Company
or any Subsidiary is presently selling or reasonably anticipates
selling within two years of the date of this Agreement and that is
material to the Company and its Subsidiaries taken as a whole. In the
case where the Company's and its Subsidiaries' use of such germplasm
is subject to a royalty payment in excess of $2,000,000 per annum
(excluding royalty payments payable to Parent or any Affiliate
thereof), the material terms of such royalty payment are set forth in
the Company Disclosure Letter.
(c) To the knowledge of the Company, except (i) for any claim
that may be made by the Company or a Subsidiary against Parent or any
Affiliate thereof and (ii) as would not, individually or in the
aggregate, have a Material Adverse Effect, neither the Company nor any
of its Subsidiaries has received any notice of, and neither the Company
nor any of its Subsidiaries has any knowledge of any potential claim
that may be made by the Company or a Subsidiary against another Person
with respect to any infringement of any patent or certificate of plant
variety protection or misappropriation by a third party of the
Intellectual Property or any germplasm in the Company's or any
Subsidiary's breeding or research programs.
(d) Except (i) for any possible infringement of the intellectual
property rights of Parent or any of its Affiliates and (ii) as would
not, individually or in the aggregate, have a Material Adverse Effect,
to the knowledge of the Company, none of the operations and businesses
conducted by the Company or any of its Subsidiaries are infringing and
have not infringed any intellectual property rights of any other
Person and the transactions contemplated by this Agreement will not
impair any patent, trademark, trade name, copyright or other item of
Intellectual Property owned or used by the Company or any Subsidiary
in connection with the operation of their respective businesses.
(e) Neither the Company nor any of its Subsidiaries have entered
into or are bound by any agreement with any third party which would
grant any
22
third party access to the technology (including germplasm) of Parent or
any of its Affiliates (excluding, after the Closing Date, the Company
and its Subsidiaries), except with respect to intellectual property
rights in improvements to technology licensed to the Company or its
Subsidiaries under such applicable agreement that are made by Parent or
any of its Affiliates as a result of access to such technology from the
Company or its Subsidiaries, whether as a result of the execution and
delivery of this Agreement, the consummation of the transactions
contemplated hereby or otherwise, and neither the Company nor any of its
Subsidiaries have entered into or are bound by any agreement with any
third party which would obligate Parent or any of its Affiliates
(excluding, after the Closing Date, the Company and its Subsidiaries),
whether as a result of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or otherwise, to
grant to any such Person any access to any of the technology (including
any germplasm) of Parent or any of its Affiliates (excluding, after the
Closing Date, the Company and its Subsidiaries), except with respect to
intellectual property rights in improvements to technology licensed to
the Company or its Subsidiaries under such applicable agreement that are
made by Parent or any of its Affiliates as a result of access to such
technology from the Company or its Subsidiaries.
(f) Any other provision of this Agreement notwithstanding (but
subject to the next succeeding sentence), the Company makes no
representation or warranty whatsoever with respect to whether the
transgenes and transgenic components that are licensed by the Company
or any Subsidiary from a third party and used by the Company or any
Subsidiary in connection with the operation of their respective
businesses, are infringing the intellectual property rights of any other
Person. Notwithstanding the foregoing, to the knowledge of the Company,
as of the date hereof, such transgenes and transgenic components do not
infringe the intellectual property rights of any other Person (other
than Parent or any Affiliate thereof).
SECTION 3.20. Compliance with Other Instruments and Laws. Neither the
Company nor any Subsidiary is (a) in violation of any term of its
certificate of incorporation, bylaws or analogous organizational documents
(in the case of non-corporate entities), each as amended, (b) in violation
of any mortgage, indenture, instrument or agreement relating to
indebtedness for borrowed money or of any judgment, decree or order which
names the Company or any Subsidiary or (c) in violation of any term of any
other material instrument, contract or agreement to which it is a party or
by which it or any of its properties or assets is bound, except, in the
case of clauses (b) and (c) immediately above, to the extent that any such
violation would not, individually or in the aggregate, have a Material
Adverse Effect. The Company's and each Subsidiary's businesses are in
compliance with all federal, state, local or foreign statutes, laws,
ordinances, rules, governmental regulations, permits, concessions, grants,
franchises, licenses or other governmental authorizations or approvals
applicable to the operation of such business, except to the extent that the
failure of such compliance would not, individually or in the aggregate,
have a Material Adverse Effect.
23
SECTION 3.21. Employees. To the knowledge of the Company, as of the
date of this Agreement, no officer or group of employees of the Company or
any Subsidiary has any plans to terminate employment with the Company or
such Subsidiary other than employees with plans to retire. Without limiting
the generality of Section 3.20 hereof, the Company and its Subsidiaries
have complied in all respects with all laws relating to hiring or the
employment or cessation of employment of persons, including provisions
thereof relating to wages, hours, equal opportunity and collective
bargaining, and, to the knowledge of the Company, neither the Company nor
any Subsidiary has any labor relations problems (including without
limitation threatened or actual strikes or work stoppages or material
grievances), except as would not, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 3.22. Information Supplied. None of the information supplied
or to be supplied by the Company specifically for inclusion or
incorporation by reference in the Company Proxy Statement will, at the date
it is first mailed to the Company's stockholders or at the time of the
Company Stockholders Meeting, 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 therein, in light of the
circumstances under which they were made, not misleading. The Company Proxy
Statement will comply as to form in all material respects with the
requirements of the Exchange Act, except that no representation or warranty
is made by the Company with respect to statements made or incorporated by
reference therein based on information supplied by Parent or Merger Sub
specifically for inclusion or incorporation by reference in the Company
Proxy Statement. At the time of the filing of any disclosure document filed
after the date hereof pursuant to the Securities Act, the Exchange Act or
any state securities law (each a "Company Disclosure Document") other than
the Company Proxy Statement, each such Company Disclosure Document (as
supplemented or amended) will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading.
SECTION 3.23. Rights Agreement. The Company's Board of Directors has
taken any necessary action to provide that as a result of the execution and
delivery of this Agreement or any amendment hereto or the consummation of
the Merger and other transactions contemplated hereby, Parent and Merger
Sub will not become an "Acquiring Person," and no "Shares Acquisition Date"
or "Distribution Date" (as such terms are defined in the Rights Agreement,
dated as of August 13, 1996, between the Company and Harris Trust and
Savings Bank, as Rights Agent, as the same has been amended from time to
time (the "Rights Agreement")) will occur, and the Rights Agreement will
not be applicable to the execution and delivery of this Agreement or any
amendment hereto or the consummation of the Merger and other transactions
contemplated hereby.
SECTION 3.24. Certain Fees. Except in connection with the engagement
of UBS Securities LLC, neither the Company nor any Subsidiary has employed
any broker or finder or incurred any liability for any financial advisory,
brokerage or finders' fees or commissions in connection with the
transactions contemplated hereby.
SECTION 3.25. Opinion of Financial Advisor. The Board of Directors of
the Company has received the opinion of UBS Securities LLC to the effect
that, as of the date of
24
such opinion, the Merger Consideration is fair, from a financial point of
view, to the holders of Company Common Stock (other than Parent, Merger Sub
and their respective Affiliates), a copy of which opinion will be delivered
to Parent solely for informational purposes after receipt thereof by the
Company.
SECTION 3.26. Voting Requirements. The affirmative vote of the holders
of a majority of the outstanding shares of Company Common Stock at the
Company Stockholders Meeting to adopt this Agreement is the only vote of
the holders of any class or series of Company's capital stock necessary to
approve and adopt this Agreement and the transactions contemplated hereby.
Parent agrees to vote any Shares held by it in favor of approval and
adoption of this Agreement and the transactions contemplated hereby, to the
extent any such Shares are entitled to vote with respect to such matter.
The Board of Directors of the Company has duly and validly approved and has
taken all corporate action required to be taken by the Company's Board of
Directors for the consummation of the transactions contemplated by this
Agreement, and no less than two-thirds of the members of the complete Board
of Directors of the Company have approved this Agreement and declared its
advisability in accordance with the terms of Delaware Law.
SECTION 3.27. State Takeover Statutes. The Board of Directors of the
Company has approved this Agreement and the consummation of the Merger and
the other transactions contemplated hereby and such approval constitutes
approval of the Merger and the other transactions contemplated by this
Agreement by the Board of Directors of the Company under the provisions of
Section 203 of Delaware Law such that Section 203 of Delaware Law does not
apply to the Merger or the other transactions contemplated by this
Agreement. To the knowledge of the Company, no other state takeover statute
is applicable to the Merger or the other transactions contemplated by this
Agreement.
SECTION 3.28. No Additional Representations and Warranties. Parent and
Merger Sub acknowledge that neither the Company nor any other Person
advising or acting on behalf of the Company or any Affiliate of the Company
(i) has made any representation or warranty, express or implied, including
any implied representation or warranty, as to the condition,
merchantability, suitability or fitness for a particular purpose of any of
the assets used in the businesses of or held by the Company or any
Subsidiary or (ii) has made any representation or warranty, express or
implied, as to the accuracy or completeness of any information regarding
the Company or any Subsidiary or the business conducted by the Company or
any Subsidiary, in each case except as expressly set forth in this
Agreement.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to
the Company as follows:
SECTION 4.01. Corporate Organization. Each of Parent and Merger Sub is
a corporation duly organized validly existing and in good standing under
the laws of Delaware, with all requisite corporate power and authority to
own, operate and lease its properties and assets and to carry on its
businesses as now being conducted.
25
SECTION 4.02. Authorization. Each of Parent and Merger Sub has the
necessary corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement by each of Parent and Merger Sub, the performance by each of
Parent and Merger Sub of its obligations hereunder and the consummation by
each of Parent and Merger Sub of the transactions contemplated hereby have
been duly and validly authorized by the Boards of Directors of Parent and
Merger Sub and by Parent in its capacity as the sole stockholder of Merger
Sub, and no other corporate proceeding on the part of Parent or Merger Sub
is necessary for the execution and delivery of this Agreement by Parent or
Merger Sub, the performance by either of them of their respective
obligations hereunder and the consummation by Parent and Merger Sub of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Merger Sub and constitutes a
legal, valid and binding obligation of Parent and Merger Sub, enforceable
against each of them in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or other laws affecting creditors' rights
generally or by the availability of equitable remedies generally.
SECTION 4.03. No Prior Activities; Ownership of Merger Sub Shares.
Except for obligations or liabilities incurred in connection with its
incorporation or the negotiation and consummation of this Agreement and the
transactions contemplated hereby, Merger Sub has not incurred any
obligations or liabilities, and has not engaged in any business or
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any Person or entity. Parent owns all of the issued and
outstanding shares of capital stock of Merger Sub.
SECTION 4.04. Information Supplied. None of the information supplied
or to be supplied by Parent or Merger Sub specifically for inclusion or
incorporation by reference in the Company Proxy Statement will, at the date
it is first mailed to the Company's stockholders or at the time of the
Company Stockholders Meeting, 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 therein, in light of the
circumstances under which they were made, not misleading.
SECTION 4.05. Consents and Approvals; No Violations. Except for (a)
applicable requirements of the Exchange Act, (b) expiration or termination
of the waiting period under the HSR Act, (c) applicable requirements of
foreign and supranational laws relating to antitrust and anticompetition
clearances, filings or notices, (d) the filing of the Certificate of Merger
as required by Delaware Law (e) such filings and consents as may be
required under any environmental law pertaining to any notification,
disclosure or required approval triggered by the Merger or the transactions
contemplated by this Agreement and (f) such consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings as
may be required under the corporation, takeover or blue sky laws of various
states of the United States and jurisdictions outside the United States, no
filing with or prior notice to, and no permit, authorization, consent or
approval of, any Person, including any Governmental Entity, is necessary
for the consummation by Parent or Merger Sub of the transactions
contemplated by this Agreement. Neither the execution and delivery of this
Agreement by Parent or Merger Sub nor the consummation by Parent or Merger
Sub of the transactions contemplated hereby nor
26
compliance by Parent or Merger Sub with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the certificate of
incorporation or bylaws of Parent or Merger Sub, each as amended, (ii) result
in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or otherwise change the existing rights or
obligations of any party thereto) under, any of the terms, conditions or
provisions of any note, bond, mortgage indenture, license, agreement or other
instrument or obligation to which Parent or Merger Sub is a party or by which
Parent, Merger Sub or any of their respective properties or assets may be
bound, or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent or Merger Sub or any of their respective
properties or assets, excluding from the foregoing clauses (ii) and (iii)
violations, breaches or defaults which would not, individually or in the
aggregate, have a material adverse effect on or materially delay the ability
of Parent or Merger Sub to consummate the transactions contemplated by this
Agreement (a "Buyer Material Adverse Effect").
SECTION 4.06. Certain Fees. Except in connection with the engagement
of J.P. Morgan Securities Inc., neither Parent nor Merger Sub has employed
any broker or finder or incurred any liability for any financial advisory,
brokerage or finders' fees or commissions in connection with the
transactions contemplated hereby, and the fees of J.P. Morgan Securities
Inc. will be paid solely by Parent.
SECTION 4.07. Necessary Financing. Parent has available to it funds
sufficient to consummate the transactions contemplated by this Agreement,
including to pay the aggregate Merger Consideration to the stockholders of
the Company and all fees and expenses it and Merger Sub will incur in
connection therewith.
SECTION 4.08. No Buyer Stockholder Vote. No vote of the stockholders
of Parent is required under Delaware Law, the applicable rules and
regulations of the NYSE or any other applicable law or regulation, or
pursuant to the terms of Parent's certificate of incorporation or bylaws,
in order to authorize the consummation by Parent of the transactions
contemplated hereby.
ARTICLE 5.
COVENANTS OF THE COMPANY
SECTION 5.01. Conduct of Business by the Company and its Subsidiaries
Pending the Merger. The Company covenants and agrees that prior to the
Effective Time or the date, if any, on which this Agreement is earlier
terminated pursuant to Section 9.01 hereof, unless Parent shall otherwise
consent in writing (such consent not to be unreasonably withheld or
delayed) or except as otherwise specifically contemplated by this
Agreement:
(a) the businesses of the Company and the Subsidiaries will be
conducted only in the ordinary and usual course; the Company will use
its reasonable best efforts to preserve intact its business
organization and goodwill, keep available the services of its officers
and employees and maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with
it and the Subsidiaries; and the Company will reasonably
27
promptly notify Parent of any event or occurrence or emergency not in
the ordinary and usual course of the business of the Company or any
Subsidiary or that is material to the business of the Company and the
Subsidiaries, taken as a whole;
(b) the Company will not (i) amend its certificate of
incorporation or bylaws or the certificate of incorporation, bylaws or
analogous organizational documents (in the case of non-corporate
entities) of any Subsidiary or (ii) split, combine, reclassify,
repurchase, redeem or otherwise acquire any of the outstanding Shares
or declare, set aside or pay any dividend payable in cash, stock or
property with respect to the Shares, provided that the Company may
declare and pay to holders of the Shares, in a manner consistent with
past practice as to timing, regular quarterly dividends of not more
than $0.15 per share (or $0.17 per share commencing with quarters
ending after August 31, 2006);
(c) neither the Company nor any Subsidiary will issue or agree to
issue any additional shares of, or rights of any kind to acquire
shares of, its capital stock of any class other than (i) the issuance
of shares of capital stock of a Subsidiary to the Company, (ii) with
respect to the Company, shares of Company Common Stock issuable upon
exercise of stock options outstanding as of the date hereof pursuant
to the Company Stock Option Plans or (iii) the grant of shares of
restricted Company Common Stock or restricted Company Common Stock
units, in each case after the date hereof to employees, officers,
consultants and directors of the Company or any Subsidiary in accordance
with past practices and the terms of the Company Stock Option Plans,
provided that the number of shares of restricted Company Common Stock
together with the number of shares of Company Common Stock covered by
any restricted stock unit, in each case granted after August 31, 2006
and on or prior to August 31, 2007 shall not, in the aggregate, exceed
154,762 shares of Company Common Stock and, for each whole fiscal year
thereafter, the Company shall be permitted to grant up to 154,762 shares
of restricted Company Common Stock or restricted Company Common Stock
units, in each case on the terms set forth in this clause (iii);
(d) neither the Company nor any Subsidiary will enter into or
amend or agree to enter into or amend any contract or agreement with
any works councils or trade or labor unions representing employees of
the Company or any Subsidiary, except with respect to work councils or
trade or labor unions representing employees of the Company or any
Subsidiary in the People's Republic of China (provided that prior to
entering into or amending any such agreement with any works council or
trade or labor union, the Company shall consult with Parent);
(e) except as expressly permitted by Sections 5.02 and 5.04
hereof, neither the Company nor any Subsidiary will authorize,
recommend, propose or announce an intention to authorize, recommend or
propose, or enter into an agreement in principle or an agreement with
respect to any merger, consolidation or business combination (other
than the Merger) or any acquisition or disposition of any assets
(including, without limitation, any securities of any Subsidiary),
28
except that in the case of the acquisition or disposition of assets,
nothing contained herein shall limit the ability of the Company or any
Subsidiary from (i) taking any of the foregoing actions so long as (x)
the aggregate amount of assets to be acquired by the Company or any
Subsidiary outside of the ordinary course of business consistent with
past practice does not exceed $10,000,000 in the aggregate and (y) the
aggregate amount of assets to be disposed of by the Company or any
Subsidiary outside of the ordinary course of business consistent with
past practice does not exceed $10,000,000 in the aggregate or (ii)
acquiring or disposing of assets in the ordinary course of business
consistent with past practice;
(f) Except as set forth in Section 5.05, the Company will not and
will not permit any Subsidiary to (i) enter into or amend (x) any
employment, consulting, severance or termination indemnity agreement
(1) with any "named executive officer" (as defined in the Exchange
Act) or director of the Company or any Subsidiary or (2) other than in
the ordinary course of business consistent with past practice, (y) any
change of control agreement or (z) any bonus, incentive compensation,
deferred compensation, profit sharing, retirement, supplemental
retirement, pension, group insurance or other benefit plan, except as
required by law or regulations, (ii) make any contribution to any such
plan, except in the ordinary course of business consistent with past
practice or for contributions specifically required pursuant to the
terms thereof or (iii) grant any salary increase, except in the ordinary
course of business consistent with past practice;
(g) neither the Company nor any Subsidiary, which term for all
purposes of this clause (g) shall include the Other Entities, will (i)
except in the ordinary course of business consistent with past
practice, including the renewal or replacement of existing debt,
create, incur or assume any debt (including, without limitation,
obligations in respect of capital leases) other than under existing
lines of credit or to fund out-of-pocket costs incurred in connection
with the transactions contemplated hereby; (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person
except Subsidiaries in the ordinary course of business; or (iii) make
any loans, advances or capital contributions to, or investments in,
any other Person other than a Subsidiary (other than trade credit or
customary advances to employees and short-term investments pursuant to
customary cash management systems of the Company in the ordinary
course and consistent with past practice);
(h) the Company will neither amend the Rights Agreement nor
redeem any of the rights granted under the Rights Agreement without
the written consent of Parent;
(i) except with respect to any litigation, proceeding, action,
suit, arbitration, investigation or other claim between the Company
and any of its Subsidiaries, on the one hand, and Parent and any of
its Subsidiaries, on the other hand, neither the Company nor any
Subsidiary will settle or compromise any material litigation,
proceeding, action, suit, arbitration, investigation or other claim in
a manner that will have a material effect on the Company;
29
(j) grant or permit to be created any Lien on any of the material
assets of the Company or any Subsidiary (other than Permitted Liens);
and
(k) neither the Company nor any Subsidiary shall agree in writing
or otherwise to take (i) any action that it is prohibited from taking
by this Section 5.01, or (ii) any action that would constitute a
breach of any covenant or agreement set forth herein.
SECTION 5.02. Stockholders' Meeting.
(a) The Company shall cause a meeting of its stockholders (the
"Company Stockholders Meeting") to be duly called and held as soon as
reasonably practicable following the execution and delivery of this
Agreement and the clearance of the Company Proxy Statement by the SEC
for the purpose of voting on the approval and adoption of this
Agreement and the Merger, notwithstanding any actions taken by the
Board of Directors of the Company pursuant to the terms of this
Section 5.02. Subject to Section 5.04 and to its fiduciary duties, the
Board of Directors of the Company will (i) recommend approval and
adoption of this Agreement by the Company's stockholders and (ii) use
reasonable best efforts to obtain the necessary approval by the
Company's stockholders of this Agreement and the transactions
contemplated hereby.
(b) Notwithstanding anything contained in Section 5.02(a) hereof
to the contrary, the Board of Directors of the Company may, if it
determines in good faith, after consultation with outside legal
counsel, that the failure to do so would result in a breach of its
fiduciary duties to the stockholders of the Company, (i) recommend the
approval or adoption of any Acquisition Transaction, (ii) determine
that this Agreement or the Merger is no longer advisable, (iii)
withdraw (or modify in a manner adverse to Parent or Merger Sub) the
approval of this Agreement, the Merger or any of the other
transactions contemplated hereby, (iv) recommend that the stockholders
of the Company reject this Agreement, the Merger or any of the other
transactions contemplated hereby or thereby or (v) resolve, agree or
publicly propose to take any such actions; provided, that the
foregoing action may only be taken (x) as a result of the occurrence
of a material unforeseen change in the business or financial condition
of the Company (without giving effect to any actual or perceived
changes in the Company's likelihood of success or any other matters
pertaining to the Litigation) or the market price for the Company
Common Stock or (y) in response to or related to an Acquisition
Transaction (other than this Agreement) or a proposal or expression of
interest in respect thereof, provided that if such action is in
response to or related to an Acquisition Transaction (other than this
Agreement) or a proposal or expression of interest in respect thereof,
the foregoing actions shall only be taken in accordance with the terms
of Section 5.04.
SECTION 5.03. Access to Information; Cooperation; Related Matters.
(a) Subject to the terms hereof and of the existing
confidentiality agreement, dated August 9, 2006, between the Company
and Parent (the "Confidentiality Agreement"), in compliance with
applicable law and existing
30
agreements between the parties, during normal business hours, upon
reasonable notice and in a manner as shall not unreasonably interfere
with the conduct of the business of the Company or any Subsidiary, the
Company will give (or cause to be given) Parent, its counsel, financial
advisors, auditors and other authorized representatives, in each case
who are reasonably acceptable to the Company, reasonable access
throughout the period prior to the Effective Time to all of the offices,
properties, business plans, books, files and records of the Company and
the Subsidiaries, will furnish to Parent, its counsel, financial
advisors, auditors and other authorized representatives such financial
and operating data and other information as such Persons may reasonably
request and will instruct the Company's and its Subsidiaries' employees,
counsel and financial advisors to cooperate with Parent in its
investigation of the business of the Company and its Subsidiaries.
Without limiting the foregoing, Company shall, and shall cause its
Affiliates to, cooperate and provide Parent and its counsel, financial
advisors, auditors and other authorized representatives with all
relevant information required by Parent or any of the foregoing Persons
for the purpose of ensuring that the business conducted by the Company
and its Subsidiaries complies with, and does not raise material
liability risks under, applicable laws and regulations, including,
without limitation, the FCPA and other applicable anti-corruption laws,
regulations, and policies. Notwithstanding any other provision of this
Agreement, the Company and its Subsidiaries are not required to make
available to Parent or its counsel, financial advisors, auditors and
other authorized representatives (i) any information that is subject to
confidentiality obligations to another Person, which obligations do not
permit disclosure to Parent or any such other Persons (ii) any
information related to the Company's or a Subsidiary's relationship with
any of the Persons listed in Section 5.03(a) of the Company Disclosure
Letter (including any contracts or agreements between any such Person,
on the one hand, and the Company or any Subsidiary thereof, on the other
hand) or (iii) any information that the Chief Executive Officer of the
Company and the Chief Financial Officer of Parent agree (in good faith)
constitutes competitively sensitive information, provided in the event
that such Persons cannot so agree, such information shall be deemed
competitively sensitive, and the Company shall not be required to
provide access to (or cause to be provided access to) such information.
(b) The Company will furnish reasonably promptly to Parent a copy
of each report, schedule and other document filed or received by it
pursuant to the requirements of Federal or state securities laws.
Notwithstanding the foregoing, (i) no investigation made by Parent or
its counsel, financial advisors, auditors or other authorized
representatives, whether pursuant to this Section 5.03 or otherwise,
shall affect any representation or warranty contained in this
Agreement or the conditions to the obligations of Parent and Merger
Sub to consummate the Merger and (ii) nothing in this Agreement shall
require any Person to disclose any information in violation of any
applicable law, regulation or administrative order or decree and
nothing in this Agreement shall relieve any party of any existing
contractual obligations with respect to the use and/or disclosure of
such information.
31
(c) All information provided by one party to the other pursuant
to this Agreement shall be treated as "Evaluation Material" under the
Confidentiality Agreement.
(d) If, in connection with the performance by Parent and its
Affiliates of their respective obligations under Section 7.07 hereof,
including, without limitation, in the event that Parent determines to
sell or otherwise dispose of the Company as contemplated by Section
7.07 hereof, the Company shall, and shall cause its Subsidiaries and
their respective employees, counsel, financial advisors and other
representatives to, provide all cooperation and assistance that is
reasonably requested by Parent in connection therewith, including,
without limitation, (i) subject to the terms of the last sentence of
this Section 5.04(d), permitting the prospective buyer or buyers to
conduct due diligence in respect of the Company and its Subsidiaries
and to have access to all of the offices, properties, business plans,
books, files and records of the Company and the Subsidiaries, and any
other information regarding the Company and its Subsidiaries that any
such prospective buyer or buyers may reasonably request and (ii) if
applicable, in connection with the arrangement of any financing that any
prospective buyer or buyer may seek in connection with the purchase of
the Company, participation in meetings, due diligence sessions, road
shows, the preparation of offering memoranda, private placement
memoranda, prospectuses and similar documents. The obligation of the
Company to provide (or to cause to be provided) any information to any
Person under this Section 5.03 shall be conditioned upon the entry by
any such Person into an agreement with the Company similar to and no
less favorable to the Company as the Confidentiality Agreement, and
provided that the Company shall not be required to provide any such
Person with any information the Company is not obligated to provide (or
to cause to be provided) to Parent under Section 5.03, and provided
further than any obligations of the Company under this Section 5.04(d)
shall not unreasonably interfere with the conduct of the business of the
Company or any Subsidiary. Parent shall reimburse Company for all
reasonable expenses related to the performance of the Company's
obligations in this Section 5.03(d).
(e) As part of its investigation pursuant to Section 5.03(a),
following the execution and delivery of this Agreement, Parent will
continue to conduct due diligence with respect to the compliance by
the Company and its Subsidiaries (which term for purposes of this
Section 5.03(e) shall include the Other Entities) with the FCPA, and
the Company hereby agrees to fully cooperate with such efforts (and to
cause its Subsidiaries and their respective employees, counsel and
other representatives to fully cooperate with such efforts). If Parent
concludes that there is a possible violation of the FCPA by the
Company or any Subsidiary, Parent will so inform the Company, and the
Company will use its reasonable best efforts to resolve each such
violation and any issues related thereto, including by disclosing to
the applicable Governmental Entity the existence or occurrence of any
such violation if, in the opinion of the Company's outside counsel,
such disclosure should be made. In determining whether any
non-compliance with the FCPA by the Company or any Subsidiary is
material, or has
32
caused a Material Adverse Change or Material Adverse Effect, the
evaluation of such determination will be based solely on the effect of
such non-compliance on the Company and its Subsidiaries and shall not be
based upon the effect of such non-compliance on Parent and its
Affiliates. Notwithstanding anything contained herein to the contrary,
the Company's failure to resolve any violation or related issues in
respect of the FCPA prior to the Closing Date shall not result in a
breach of the terms set forth in this Section 5.03(e), it being
understood and agreed that the foregoing shall not affect the conditions
to the obligation of Parent and Merger Sub to effect the Closing,
including, without limitation, the conditions to Closing set forth in
Sections 8.01(d) and 8.01(f) hereof.
SECTION 5.04. No Solicitation.
(a) The Company agrees that, prior to the earlier of the
Effective Time or the termination of this Agreement, it shall not, and
shall not authorize or permit any of its Subsidiaries or any of its or
its Subsidiaries' directors, officers, employees, agents or
representatives, directly or indirectly, to solicit, initiate or
encourage (including by way of furnishing or disclosing non-public
information) any inquiries or the making of any proposal with respect to
any merger, consolidation or other business combination involving the
Company or any material Subsidiary or the acquisition of all or
substantially all of the assets or capital stock of the Company or any
material Subsidiary (an "Acquisition Transaction") or negotiate, explore
or otherwise engage in discussions with any Person (other than Parent or
its directors, officers, employees, agents and representatives), or
enter into any agreement, with respect to any Acquisition Transaction or
enter into any agreement, arrangement or understanding requiring it to
abandon, terminate or fail to consummate the Merger or any other
transactions contemplated by this Agreement; provided that the Company
may, prior to the date of the Company Stockholders Meeting, in response
to a bona fide unsolicited written proposal or written expression of
interest with respect to an Acquisition Transaction from a credible
third party that is not subject to any material financing uncertainties
and that the Company's Board of Directors determines, in good faith,
after consultation with its outside legal counsel and financial advisor,
constitutes or could reasonably result in a Superior Proposal, furnish
or disclose non-public information to, and negotiate, explore or
otherwise engage in discussions with, such third party, provided that
the Company concurrently discloses any material non-public information
to Parent as it is disclosing to such third party if such non-public
information has not previously been disclosed to Parent. Notwithstanding
the foregoing, the Company may, prior to the date of the Company
Stockholders Meeting, in response to a bona fide unsolicited written
proposal or written expression of interest with respect to an
Acquisition Transaction from a credible third party that is not subject
to any material financing uncertainties and that the Company's Board of
Directors determines, in good faith, after consultation with its outside
legal counsel and financial advisor, and after giving effect to all of
the adjustments which may be offered by Parent as contemplated by the
immediately following proviso, constitutes a Superior Proposal, enter
into a definitive agreement with a third party in respect of an
Acquisition Transaction (provided that
33
the Company shall concurrently with entering into such agreement
terminate this Agreement with the consequences specified in Section
9.04(d) hereof); provided, however, that the Company shall only be
permitted to enter into any such agreement (and terminate this Agreement
as provided in Section 9.01(f) hereof in connection therewith) if: (i)
the Company shall (x) have delivered written notice thereof to Parent,
which written notice shall include the form of the agreement that is to
be entered into with such third party or a written summary of all of the
material provisions thereof and (y) have given Parent three business
days after delivery of such written notice (together with the other
documents required to be delivered in connection therewith) to propose
revisions to the terms of this Agreement (or make another proposal); and
(ii) at the end of such three business day period, the Company's Board
of Directors shall have determined in good faith, after consultation
with its outside legal counsel and financial advisor, and in the
exercise of its fiduciary duties, and after giving effect to all of the
adjustments which may be offered by Parent as contemplated hereby, if
any, that such agreement with such third party constitutes a Superior
Proposal. As used herein, the term "Superior Proposal" means any bona
fide written offer in respect of an Acquisition Transaction that the
Company's Board of Directors determines in good faith, after
consultation with its outside legal counsel and financial advisor, is
more favorable to the stockholders of the Company than the Merger.
(b) The Company shall, and shall cause each of its Subsidiaries
and its and its Subsidiaries' directors, officers, employees, agents
or representatives, to immediately cease any solicitations,
discussions or negotiations existing on the date of this Agreement
with any Person (other than the parties hereto) that has made or
indicated an intention to make a proposal in respect of an Acquisition
Transaction.
(c) After the date hereof, the Company shall reasonably promptly
advise Parent in writing of the receipt, directly or indirectly, of
any inquiries or proposals, and of its intention to enter into any
agreement, relating to an Acquisition Transaction and any actions
taken pursuant to Section 5.04(a) hereof and shall promptly furnish to
Parent (and in any event within 24 hours following the receipt
thereof) either a copy of such proposal or a written summary of all of
the material terms of such proposal, and shall keep Parent reasonably
informed on a current basis (and in any event within 24 hours) of the
occurrence of any material changes, developments, discussions or
negotiations in respect of any of the foregoing.
SECTION 5.05. Employment and Noncompetition Agreements.
(a) As soon as practicable after the date hereof, the Company
shall (i) offer to the employees of the Company or its Subsidiaries
whose names are included in the list of the "Key Employee Group" set
forth in the Company Disclosure Letter, a Key Employee Employment
Protection and Retention Agreement in the form attached as an exhibit
to the Company Disclosure Letter and (ii) offer to the employees of
the Company or its Subsidiaries whose names are
34
included in the list of the "Management Key Employee Group" set forth in
the Company Disclosure Letter, a Key Employee Employment Protection and
Retention Agreement in the form attached as an exhibit to the Company
Disclosure Letter.
(b) As set forth in Section 3.07 and Section 3.08 of the Company
Disclosure Letter, prior to the Effective Time, the Company may enter
into employment, severance or change in control agreements with
certain executives and may pay a special cash award to employees.
ARTICLE 6.
COVENANTS OF PARENT AND MERGER SUB
Parent and Merger Sub agree that:
SECTION 6.01. Confidentiality. Prior to the Effective Time, Parent and
Merger Sub will hold, and will use their reasonable best efforts to cause
their respective officers, directors, employees, consultants, advisors and
agents to hold, in confidence all Evaluation Material (as defined in the
Confidentiality Agreement) in accordance with the terms of the
Confidentiality Agreement.
SECTION 6.02. Indemnification.
(a) Parent shall indemnify and shall cause the Surviving
Corporation to indemnify, to the full extent permitted under Delaware
Law, the present and former directors or officers of the Company and
the Subsidiaries (the "Indemnified Parties") from and against all
losses, obligations, expenses, claims, damages and liabilities arising
in respect of actions taken prior to and including the Effective Time
in connection with their duties as directors or officers of the
Company (including the transactions contemplated hereby) for a period
of not less than six years from the Effective Time; provided that (i)
in the event any claim or claims are asserted or made within such
six-year period, all rights to indemnification in respect of any such
claim or claims shall continue until final disposition of any and all
such claims and (ii) neither Parent nor the Surviving Corporation will
be liable for any settlement effected without Parent's prior written
consent (which consent shall not be unreasonably withheld or delayed).
Without limitation of the foregoing, in the event any Indemnified
Party becomes involved in such capacity in any action, proceeding or
investigation in connection with any matter, including the
transactions contemplated hereby, occurring prior to and including the
Effective Time, Parent shall periodically reimburse and shall cause
the Surviving Corporation to periodically reimburse such Indemnified
Party for his reasonable legal and other reasonable out-of-pocket
expenses (including the reasonable cost of any investigation and
preparation) incurred in connection therewith.
(b) For not less than six years after the Effective Time, Parent
or the Surviving Corporation shall maintain in effect directors' and
officers' liability
35
insurance covering the Indemnified Parties who are currently covered by
the Company's existing directors' and officers' liability insurance, on
terms and conditions no less favorable to such directors and officers
than those in effect on the date hereof with respect to Parent's
officers and directors.
SECTION 6.03. Operations After the Effective Time. Parent currently
intends to maintain offices, facilities and operations of the Company at
their current locations. Parent looks forward to continuing the strong
relationship developed by the Company with the community in Scott,
Mississippi.
SECTION 6.04. Employee Benefits. From and after the Closing Date,
Parent shall cause the Surviving Corporation to honor, pay and perform all
obligations under all employment, severance, termination indemnity,
retention and change of control agreements with or for employees of the
Company or any Subsidiary in accordance with the terms thereof. Parent will
cause the Surviving Corporation to maintain and fund in accordance with
ERISA, the Code and any other applicable law for a period of two years
after the Effective Time employee benefit and compensation plans and
arrangements which, in the aggregate, provide benefits and compensation to
employees of the Surviving Corporation and its Subsidiaries which are no
less favorable in the aggregate than those provided pursuant to the
employee benefit and compensation plans and arrangements in effect for such
individuals on the date hereof. From and after the Effective Time, if any
employees of the Surviving Corporation or any Subsidiary will participate
in any employee benefit plan of Parent or any of its subsidiaries, Parent
will, and will cause its subsidiaries to, cause such employee benefit plans
to (i) recognize the service of the affected employees of the Company or
its Subsidiaries completed prior to the Effective Time for participation,
vesting and eligibility for early retirement under such plans of Parent or
any of its subsidiaries, but not for purposes of (a) benefit accrual under
any employee benefit plan (within the meaning of Section 3(2) of ERISA) or
(b) eligibility for subsidized retiree medical benefits under any retiree
medical plans maintained or sponsored by Parent or any of its Subsidiaries
and (ii) with respect to group health plans, waive any pre-existing
condition limitations or exclusions under such plans of Parent or its
subsidiaries. If the Closing Date occurs more than three months after the
end of the Company's last completed fiscal year, then the amount of bonuses
payable, if any, to each employee of the Company or any of its Subsidiaries
who is eligible to participate in a bonus plan or arrangement sponsored or
maintained by the Company or any of its Subsidiaries for the fiscal year of
the Company that includes the Closing Date shall be determined consistent
with past practices of the Company and shall be payable no later than
November 15 of the fiscal year of the Surviving Corporation next succeeding
the fiscal year that includes the Closing Date.
ARTICLE 7.
COVENANTS OF BUYER AND THE COMPANY
The parties hereto agree that:
SECTION 7.01. Best Efforts. Subject to the terms and conditions of
this Agreement, including, without limitation, the terms and conditions set
forth in Section 7.07 hereof, each party will use its best efforts to take,
or cause to be taken, all action and to do, or
36
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate the transactions contemplated by this
Agreement. The Company, Parent and Merger Sub shall each furnish to one
another and to one another's counsel all such information as may be required
in order to accomplish the foregoing actions. If any state takeover statute
or similar statute or regulation becomes applicable to the Merger, this
Agreement or any of the other transactions contemplated hereby, the Company,
Parent and Merger Sub will take all action necessary to ensure that the
Merger and the other transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the
Merger and the other transactions contemplated by this Agreement.
SECTION 7.02. Certain Filings. Subject to the terms and conditions of
this Agreement, including, without limitation, the terms and conditions set
forth in Section 7.07 hereof, the Company, Parent and Merger Sub shall
cooperate with one another (a) in connection with the preparation of the
Company Proxy Statement and the Company Disclosure Documents, (b) in
determining whether any other action by or in respect of, or filing with,
any Governmental Entity or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts in
connection with the consummation of the transactions contemplated by this
Agreement and (c) in seeking any such actions, consents, approvals or
waivers or making any such filings, furnishing information required in
connection therewith or with the Company Proxy Statement and the Company
Disclosure Documents and seeking timely to obtain any such actions,
consents, approvals or waivers.
SECTION 7.03. Public Announcements. Parent, Merger Sub and the Company
will consult with each other before issuing any press release or making any
public statement with respect to this Agreement and the transactions
contemplated hereby and, except as may be required by applicable law or any
listing agreement with any national securities exchange, will not issue any
such press release or make any such public statement prior to obtaining the
other party's or parties' consent to any such public statement.
SECTION 7.04. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company and Merger
Sub, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf the Company and Merger Sub, any other actions
and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and
under any of the rights, properties or assets of the Company or Merger Sub
acquired or to be acquired by the Surviving Corporation as a result of, or
in connection with, the Merger.
SECTION 7.05. Notices of Certain Events. The Company, Parent and
Merger Sub shall promptly notify the other of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental
Entity in connection with the transactions contemplated by this
Agreement;
37
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against,
relating to or involving or otherwise affecting the Company or any
Subsidiary, on the one hand, or Parent or Merger Sub, on the other
hand, which relate to the consummation of the transactions
contemplated by this Agreement; and
(d) any action, event or occurrence that would constitute a
breach of any representation, warranty, covenant or agreement of it
set forth in this Agreement.
SECTION 7.06. Preparation of the Company Proxy Statement. As soon as
reasonably practicable following the date of this Agreement, the Company
shall prepare and file the Company Proxy Statement with the SEC. The
Company will use all reasonable efforts to cause the Company Proxy
Statement to be mailed to the Company's stockholders as promptly as
practicable after the Company Proxy Statement is cleared by the SEC. No
filing of, or amendment or supplement to, the Company Proxy Statement will
be made by the Company without providing Parent with the opportunity to
review and comment thereon, and the Company shall, promptly after its
receipt thereof, advise the Company of any request by the SEC for amendment
of the Company Proxy Statement or comments thereon and responses thereto or
requests by the SEC for additional information and the Company shall
provide Parent with copies of all such materials promptly following receipt
thereof and shall not respond thereto without providing Parent with an
opportunity to review any such response. If at any time prior to the
Effective Time any information relating to the Company, Parent or Merger
Sub or any of their respective affiliates, officers or directors, should be
discovered by the Company, Parent or Merger Sub which should be set forth
in an amendment or supplement to the Company Proxy Statement, so that the
Company Proxy Statement or any related documents would not include any
misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party which discovers such
information shall promptly notify the other party or parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law,
disseminated to the stockholders of the Company.
SECTION 7.07. Consents; Antitrust Matters.
(a) Subject to the terms and conditions set forth in this Section
7.07, Parent, Merger Sub and the Company shall use their commercially
reasonable efforts to obtain all material consents of third parties
(which, in any event, shall include consents in respect of the
contracts listed under the heading "Consents" in the Company
Disclosure Letter) and Governmental Entities (other than the Antitrust
Authorities), and to make all governmental filings, necessary to the
consummation of the transactions contemplated by this Agreement. The
Company and Parent shall as soon as practicable following the
execution and delivery of this Agreement (and, in any event, within
ten business days following the execution and delivery of this
Agreement) file the Pre-Merger Notification and Report Forms under the
HSR Act with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice (the "Antitrust
Division")
38
(collectively the "Antitrust Authorities") and, subject to the terms and
conditions set forth in this Section 7.07, shall use their best efforts
to respond as fully and as promptly as practicable to all inquiries
received from the FTC or the Antitrust Division for additional
information or documentation prior to the issuance of a Request for
Additional Information under the HSR Act (a "Second Request").
(b) In the event the Antitrust Division or the FTC issues a
Second Request, the parties hereto shall use reasonable best efforts
to substantially comply with the Second Request as promptly as
practicable (and in any event, the Company shall substantially comply
with a Second Request no later than Parent).
(c) In furtherance and not in limitation of the foregoing, and
subject to the terms set forth in this Section 7.07, each party shall
cooperate and consult with the other party in connection with the
actions referenced in this Section 7.07. In particular, each party
shall, subject to applicable law and the limitations set forth in
Section 5.03 and except as prohibited by any applicable representative
of any applicable Governmental Entity, (i) furnish to the other such
information and assistance as the other reasonably may request in
connection with the preparation of any submissions to, or agency
proceedings by, any Governmental Entity under the HSR Act or any
comparable laws of foreign jurisdictions; (ii) promptly notify and
apprise the other party of (and, if in writing, supply such party
with) any communication (or other correspondence or other memoranda)
to that party from the Antitrust Division, the FTC, any State Attorney
General or any other Governmental Entity, and permit the other party
to review in advance and accept all of the other party's reasonable
comments, in connection with, any proposed written communication to
any of the foregoing; (iii) to the extent practical, not participate
in any substantive meeting or any material discussion or communication
with any Governmental Entity in respect of any filings, investigation
or inquiry concerning this Agreement or the Merger, unless it consults
with the other party in advance and, as permitted by such Governmental
Entity, gives the other party the opportunity to attend and
participate thereat, or to the extent prior consultation is not
practical, shall promptly report to the other party the substance of
the communication; (iv) furnish the other party with copies of all
correspondence, filings, and written communications (and memoranda
setting forth the substance thereof) between them and their Affiliates
and their respective representatives on the one hand, and any
Governmental Entities or their respective staffs on the other hand,
with respect to this Agreement and the Merger; and (v) make available
such party's respective counsel, experts, and advisors to (and have
such persons participate with) the other party, and its respective
counsel, experts, and advisors for the purpose of (and in connection
with) the actions contemplated in this Section 7.07.
(d) Other than as provided elsewhere in this Section 7.07, Parent
shall take such reasonable best efforts to ensure that (x) no
requirement for a waiver, consent or approval of the FTC, the
Antitrust Division, any State Attorney General or other Governmental
Entity, (y) no decree, judgment, injunction, temporary restraining
order or any other order in any suit or proceeding, and (z) no
39
other matter relating to any Antitrust Law, would preclude consummation
of the Merger by the Outside Date, including promptly offering to
divest:
(i) the United States cotton seed business acquired by Parent
in 2005, including the Stoneville(R) and NexGen(R) brands, along
with substantially all the United States assets acquired in that
transaction, or to the extent those assets no longer exist or exist
in a different form, substantially equivalent assets; and
(ii) a license to Parent's currently commercialized cotton
traits (i.e., the traits marketed under the following trademarks:
Roundup Ready(R), Roundup Ready(R) Flex, Bollgard(R) and
Bollgard(R) II) on terms with respect to financial terms and
stacking rights at least as favorable as contained in any
existing commercial license to those traits.
In an effort to ensure that no requirement for a waiver, consent or
approval of the FTC, the Antitrust Division, any State Attorney General or
other Governmental Entity, no decree, judgment, injunction, temporary
restraining order or any other order in any suit or proceeding, and no
other matter relating to any Antitrust Law, would preclude consummation of
the Merger by the Outside Date, Parent shall defend through litigation on
the merits any claim asserted in any court by any Person, and in the event
of such litigation, the Company shall use its reasonable best efforts to
cooperate with Parent in such litigation.
(e) If, on or before the date that is six (6) months following
the date of the execution and delivery of this Agreement, the
condition to Closing set forth in Section 8.01(b) hereof has not been
satisfied, the Outside Date shall automatically be extended up to, but
not beyond, six (6) months, solely for the purpose of Parent
satisfying its obligations under Section 7.07(d).
(f) Notwithstanding any other provision of this Agreement,
including Section 7.07(d), in the event that this Agreement is
terminated pursuant to (i) Section 9.01(b) and at such time the
conditions to Closing set forth in Section 8.01(b) or 8.01(c) have not
been satisfied (in the case of Section 8.01(c), due to any statute,
rule, regulation, temporary restraining order, preliminary or
permanent injunction or other order or legal restraint, in each case
relating to antitrust or competition matters) or (ii) Section 9.01(c)
due to any law, regulation, judgment, injunction, order or decree
relating to antitrust or competition matters, and in either case, the
Merger has not been consummated, then within five business days
following such termination, Parent shall pay to the Company in cash
via wire transfer of immediately available federal funds an aggregate
amount equal to $600,000,000 (the "Antitrust Termination Payment") and
upon making such payment, the Litigation shall be terminated and
extinguished in all respects and the parties hereto shall promptly
take (or, if applicable, cause to be taken) any and all actions as may
be required to dismiss the Litigation with prejudice. Payment of the
Antitrust Termination Payment shall be the sole and exclusive remedy
of the Company for any breach by Parent of this Section 7.07. For the
avoidance of
40
doubt, upon the payment of the Antitrust Termination Payment pursuant to
the first sentence of this paragraph, Parent shall not have any other
obligation to the Company under this Agreement.
SECTION 7.08. Confidentiality. The Confidentiality Agreement will
remain in full force and effect until its expiration in accordance with the
terms thereof.
SECTION 7.09. Litigation Stay. Upon the execution and delivery of this
Agreement by all of the parties hereto, and until the earlier to occur of
the termination of this Agreement pursuant to the terms of Article 9 hereof
and the Closing Date, and subject to the rights of the parties hereto in
respect of the Litigation as further provided in Article 9 hereof, each
party shall take all steps necessary to obtain (a) from the Mississippi
Supreme Court a continuance of up to twelve months of any hearing on, or
decision in, Delta and Pine Land Company v. Monsanto Company, et al, No.
05-M-00015-SCT consolidated with No. 05-M-00016-SCT (the "Supreme Court
Case") and (b) to the extent necessary, from the Circuit Court of the First
Judicial District of Bolivar County a stay of Delta and Pine Land Company
v. Monsanto Company, et al, Civil Action No. 2000-1 (the "Lower Court Case"
and, together with the Supreme Court Case, the "Litigation"). Without
limiting the foregoing, prior to the earlier to occur of the termination of
this Agreement in accordance with Article 9 hereof and the Closing Date,
Parent and the Company shall not, and shall cause their respective
Affiliates not to, prosecute any claims they may have in respect of or
otherwise pursue the Litigation. Notwithstanding the foregoing, in the
event the parties are unable to obtain (or attain the maintenance of) such
stay or continuance from any court with jurisdiction to grant such stay or
continuance, including the Mississippi Supreme Court and, to the extent
applicable, the Circuit Court of the First Judicial District of Bolivar
County, then the parties shall (i) take all steps necessary to obtain a
dismissal of the Litigation without prejudice with leave to refile in (and
only in) the same forum, (ii) consent to such refiling, (iii) waive, and
not assert, any applicable statute of limitations or defense (whether in
equity or otherwise) relating to the passage of time caused by any such
dismissal or the non-pursuit of claims or counterclaims as of the date
hereof through the termination of this Agreement or failure to prosecute
caused by any such dismissal or the non-pursuit of claims or counterclaims
as of the date hereof through the termination of this Agreement and (iv)
waive, and not assert, any defense relating to or arising out of the
parties' conduct in connection with negotiating or attempting to implement
this Agreement.
ARTICLE 8.
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger
are subject to the satisfaction or written waiver of the following
conditions:
(a) this Agreement shall have been approved and adopted by the
stockholders of the Company in accordance with Delaware Law and the
Restated Certificate of Incorporation of the Company;
(b) (i) any applicable waiting period under the HSR Act relating
to the Merger shall have expired or been terminated, and (ii) any
applicable waiting or
41
similar period with respect to the competition laws of Spain shall have
expired or terminated, provided that Parent may, at any time and in its
sole discretion, waive the condition to Closing specified in this clause
(ii);
(c) no statute, rule, regulation, temporary restraining order,
preliminary or permanent injunction or other order enacted, entered,
promulgated, enforced or issued by any Governmental Entity or other
legal restraint or prohibition preventing the consummation of the
Merger shall be in effect, but only if it is (i) any United States
federal or state statute, rule or regulation or United States federal
or state court order, injunction or other legal restraint or
prohibition or (ii) except as otherwise expressly provided in Section
8.01(b) hereof, any other statute, rule, regulation, court order,
injunction or other legal restraint or prohibition if the violation
thereof would, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect (after giving effect to the
Merger) or would subject any director, officer or other employee of
Parent, Merger Sub, the Company or any of its Subsidiaries to any
criminal liability; provided, however, that prior to asserting this
condition each of the parties shall have used all reasonable best
efforts to prevent the entry of any such injunction, court order,
legal restraint or prohibition to have any such injunction, court
order, legal restraint or prohibition lifted or withdrawn, and to
appeal as promptly as possible any such injunction, court order, legal
restraint or prohibition that may be entered;
(d) with respect to the obligations of Parent and Merger Sub, (i)
the representations and warranties of the Company as set forth in this
Agreement (other than the representations and warranties set forth in
Section 3.03, the first sentence of Section 3.19(b) and Section
3.19(e) of this Agreement) shall be true and correct as if made on and
as of the Effective Time (other than those representations and
warranties which address matters only as of a certain date, which
shall be true and correct as of such certain date and other than the
representations and warranties set forth Sections 3.08(b)-(e), which
shall only need to be true and correct as of the date of this
Agreement), except to the extent that the failures in the aggregate of
such representations and warranties (disregarding any qualifications
as to materiality contained therein) to be true and correct would not,
individually or in the aggregate, have a Material Adverse Effect, and
(ii) the representations and warranties of the Company set forth in
Section 3.03, the first sentence of Section 3.19(b) and Section
3.19(e) of this Agreement shall be true and correct as if made on and
as of the Effective Time, except to the extent that the failures in
the aggregate of such representations and warranties (disregarding any
qualifications as to materiality contained therein) to be true and
correct would not, individually or in the aggregate, result in or be
reasonably likely to result in aggregate liability to Parent or any
Affiliate thereof (including, for these purposes, the Company and its
Subsidiaries (including the Other Entities)) in excess of $4,000,000,
and Parent shall have received a certificate of the chief executive
officer, president or vice president/finance of the Company to such
effect;
(e) with respect to the obligations of the Company, the
representations and warranties of Parent and Merger Sub as set forth
in this
42
Agreement shall be true and correct as if made on and as of the
Effective Time (other than those representations and warranties which
address matters only as of a certain date, which shall be true and
correct as of such certain date), except to the extent that the
failures in the aggregate of such representations and warranties
(disregarding any qualifications as to materiality contained therein)
to be true and correct would not, individually or in the aggregate,
have a Buyer Material Adverse Effect, and the Company shall have
received a certificate of the president, chief financial officer or
any vice president of Parent to such effect;
(f) with respect to the obligations of Parent and Merger Sub,
there shall not have been any change that, individually or in the
aggregate, would have a Material Adverse Change, and Parent shall have
received a certificate of the chief executive officer, president or
vice president/finance of the Company to such effect; and
(g) with respect to the obligations of Parent and Merger Sub, the
Company shall have performed in all material respects all obligations,
and complied in all material respects with all agreements and
covenants, in each case required to be performed by or complied with
by it under this Agreement on or prior to the Effective Time, and
Parent shall have received a certificate of the chief executive
officer, president or vice president/finance of the Company to such
effect; and, with respect to the obligations of the Company, Parent
and Merger Sub shall have performed in all material respects all
obligations, and complied in all material respects with all agreements
and covenants, in each case required to be performed by or complied
with by them under this Agreement on or prior to the Effective Time,
and the Company shall have received a certificate of the president,
chief financial officer or any vice president of Parent to such
effect.
SECTION 8.02. Burden of Proof. Any party seeking to claim that a
condition to its obligation to effect the Merger has not been satisfied by
reason of the fact that a Material Adverse Change or a Material Adverse
Effect has occurred or would be reasonably expected to occur or result will
have the burden of proof to establish that occurrence or likelihood.
ARTICLE 9.
TERMINATION
SECTION 9.01. Termination. This Agreement may be terminated and the
Transaction may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company):
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if the Merger has not been
consummated on or before February 14, 2007 (the "Outside Date");
provided, however, that the Outside Date shall be extended until
August 14, 2007 pursuant to the terms set forth in Section 7.07(e)
hereof and, in such circumstances, any and all
43
references in this Agreement to the "Outside Date" shall mean and refer
to such extended date; and provided, further however, that no party may
terminate this Agreement pursuant to this subsection if such party's
failure to fulfill any of its obligations under this Agreement shall
have been the reason that the Effective Time shall not have occurred on
or before said date;
(c) by either the Company or Parent, if there shall be any law or
regulation that makes consummation of the Transaction illegal or
otherwise prohibited or if any judgment, injunction, order or decree
enjoining Parent, Merger Sub or the Company from consummating the
Transaction is entered and such judgment, injunction, order or decree
shall become final and nonappealable;
(d) by Parent, if (i) the Company's Board of Directors shall
withdraw, modify or change its recommendation or approval in respect
of this Agreement or the Merger in a manner adverse to Parent or
Merger Sub, (ii) the Company Board approves, endorses or recommends
any Acquisition Transaction other than the Merger or (iii) this
Agreement has been submitted to the stockholders of the Company for
adoption at a duly convened Company Stockholders Meeting (including
any adjournment or postponement thereof) and the stockholders shall
not have approved this Agreement in accordance with the terms hereof
and Delaware Law and the Restated Certificate of Incorporation of the
Company;
(e) [Intentionally Omitted]
(f) subject to the terms of Section 5.04(a), by the Company prior
to the date of the Company Stockholders Meeting, to allow the Company
to enter into an agreement in respect of an Acquisition Transaction
which the Company's Board of Directors has determined, in good faith,
after consultation with its outside legal counsel and financial
advisor, and in the exercise of its fiduciary duties, and after giving
effect to all of the adjustments that may be offered by Parent as
contemplated by Section 5.04, constitutes a Superior Proposal;
(g) by Parent, if the Company has breached any representation,
warranty, covenant or agreement contained in this Agreement such that
the conditions to the obligation of Parent and Merger Sub to effect
the Closing that are set forth in Sections 8.01(d) or 8.01(g) hereof
would not be satisfied as of any date following the date hereof;
provided, however, that Parent may not terminate this Agreement
pursuant to this subsection unless any such breach has not been cured
within twenty (20) days after written notice thereof by Parent to the
Company informing the Company of such breach, it being understood and
agreed that no cure period shall be required for a breach which by its
nature cannot be cured; provided, further however, that Parent may not
terminate this Agreement pursuant to this subsection if it is then in
material breach of the terms of this Agreement; or
(h) by the Company, if Parent or Merger Sub has breached any
representation, warranty, covenant or agreement contained in this
Agreement such that the conditions to the obligation of the Company to
effect the Closing that are
44
set forth in Sections 8.01(e) or 8.01(g) hereof would not be satisfied
as of any date following the date hereof; provided, however, that the
Company may not terminate this Agreement pursuant to this subsection
unless any such breach has not been cured within twenty (20) days after
written notice thereof by the Company to Parent informing Parent of such
breach, it being understood and agreed that no cure period shall be
required for a breach which by its nature cannot be cured; provided,
further however, that the Company may not terminate this Agreement
pursuant to this subsection if it is then in material breach of the
terms of this Agreement.
Such right of termination shall be exercised by written notice of
termination given by the terminating party to the other parties hereto in
the manner hereinafter provided.
SECTION 9.02. Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken by or pursuant to resolutions of their
respective Boards of Directors, may (a) extend the time for the performance
of any of the obligations or other acts of the parties hereto, (b) waive
any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto, and (c) except for approval of
the holders of Shares and, in connection with all HSR Act filings, of the
FTC and the Antitrust Division, waive compliance with any of the agreements
or conditions contained herein. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid if set forth in an
instrument in writing signed on behalf of such party.
SECTION 9.03. Closing. Subject to the satisfaction or waiver of the
conditions contained in Section 8.01 hereof, the closing of the Merger
contemplated by this Agreement (the "Closing") shall take place at the
offices of Willkie Farr & Gallagher LLP in New York, New York as soon as
practicable (but in no event later than the third business day) after the
satisfaction or waiver of all of the conditions to the Merger contained in
Section 8.01 hereof (other than those conditions that by their nature are
to be satisfied by actions taken at the Closing, but subject to the
satisfaction or waiver of those conditions) or at such other time and place
as Parent and the Company shall agree in writing (the "Closing Date").
SECTION 9.04. Effect of Termination.
(a) If this Agreement is terminated pursuant to Section 9.01
hereof, this Agreement shall terminate with no liability on the part
of any party hereto, except that the agreements contained in Sections
6.01, 7.08, this Section 9.04 and Article 10 hereof shall survive the
termination hereof. The parties acknowledge and agree that upon any
such termination of this Agreement, the rights of the parties set
forth in this Section 9.04 shall be the sole and exclusive remedy of
the parties and the parties shall not have the right to pursue any
other remedy at law, in equity or otherwise in respect of this
Agreement and the transactions contemplated hereby, with all such
rights being waived to the fullest extent permitted by applicable law.
(b) In the event that this Agreement is terminated by the Company
pursuant to Section 9.01(h) hereof due to the fact that Parent or
Merger Sub has breached any of their respective covenants set forth in
Article 6 or Article 7 hereof (a "Parent Covenant Termination Event"),
then within five business days following
45
the termination of this Agreement by the Company upon the occurrence of
the Parent Covenant Termination Event, Parent shall pay to the Company
in cash via wire transfer of immediately available federal funds an
aggregate amount equal to $600,000,000 and upon making such payment, the
Litigation shall be terminated and extinguished in all respects and the
parties hereto shall promptly take (or, if applicable, cause to be
taken) any and all actions as may be required to dismiss the Litigation
with prejudice.
(c) In the event that this Agreement is terminated by Parent
pursuant to Section 9.01(d)(i) hereof, and (i) if the Company's Board
of Directors withdrew, modified or changed its recommendation or
approval in respect of this Agreement or the Merger in accordance with
the terms set forth in Section 5.02(b) hereof and (ii) at the time the
Company's Board of Directors withdrew, modified or changed its
recommendation or approval in respect of this Agreement or the Merger,
the Company's Board of Directors had not received a written proposal
or written indication of interest (whether or not publicly announced)
from any Person (other than Parent or any Affiliate thereof) with
respect to an Acquisition Transaction (a "Stand-Alone Fiduciary
Termination Event"), then (x) within five business days following the
termination of this Agreement by Parent upon the occurrence of such
Stand-Alone Fiduciary Termination Event, the Company shall pay to
Parent in cash via wire transfer of immediately available federal
funds an aggregate amount equal to $15,000,000, (y) the obligations of
the parties under the terms of Section 7.09 hereof to obtain and
maintain a continuance or stay, as applicable, in respect of the
Litigation and otherwise not to prosecute or pursue any claims in
respect of the Litigation shall terminate and (z) the parties hereto
shall be permitted to pursue any and all rights and remedies that they
may have in respect of the Litigation (including, if applicable,
re-instituting all or any portion of the Litigation that was dismissed
without prejudice in accordance with the terms of Section 7.09
hereof), which rights and remedies shall expressly survive any such
termination.
(d) In the event that this Agreement is terminated by (i) Parent
pursuant to Section 9.01(d)(ii) hereof or (ii) by the Company pursuant
to Section 9.01(f) hereof (each, a "Topping Offer Termination Event"),
then contemporaneously with the termination of this Agreement by the
Company or Parent, as applicable, upon the occurrence of such Topping
Offer Termination Event, the Litigation shall be terminated and
extinguished in all respects and the parties hereto shall promptly
take (or, if applicable, cause to be taken) any and all actions as may
be required to dismiss the Litigation with prejudice.
(e) In the event that this Agreement is terminated by Parent
pursuant to Section 9.01(g) hereof due to the fact that the Company
has breached any of its covenants set forth in Article 5 or Article 7
hereof, including, without limitation, if the Company's Board of
Directors withdrew, modified or changed its recommendation or approval
in respect of this Agreement or the Merger in breach of the terms set
forth in Section 5.02(b) hereof (a "Company Covenant Termination
Event"), then contemporaneously with the termination of this Agreement
by Parent
46
upon the occurrence of such Company Covenant Termination Event, the
Litigation shall be terminated and extinguished in all respects and the
parties hereto shall promptly take (or, if applicable, cause to be
taken) any and all actions as may be required to dismiss the Litigation
with prejudice.
(f) In the event that this Agreement is terminated by the Company
or Parent other than in connection with a termination which would give
rise to an obligation to make the Antitrust Termination Payment or a
Parent Covenant Termination Event, a Stand-Alone Fiduciary Termination
Event, a Topping Offer Termination Event or a Company Covenant
Termination Event, then, effective upon the effective date of any such
termination, (i) the obligations of the parties under the terms of
Section 7.09 hereof to obtain and maintain a continuance or stay, as
applicable, in respect of the Litigation and otherwise not to
prosecute or pursue any claims in respect of the Litigation shall
terminate and (ii) the parties hereto shall be permitted to pursue any
and all rights and remedies that they may have in respect of the
Litigation (including, if applicable, re-instituting all or any
portion of the Litigation that was dismissed without prejudice in
accordance with the terms of Section 7.09 hereof), which rights and
remedies shall expressly survive any such termination; provided,
however, that in the event that this Agreement is terminated by Parent
pursuant to (x) Section 9.01(g) hereof due to the fact that the
Company has breached any of its representations or warranties
contained in this Agreement or (y) Section 9.01(b) hereof and the
condition to closing set forth in Section 8.01(f) hereof is not
satisfied on the effective date of any such termination, in addition
to the consequences of such termination as set forth above in this
clause (f), (A) Section 2.1.39 of that certain U.S. Bollgard Gene
License and Seed Services Agreement, dated as of February 2, 1996, by
and among Parent, the Company and D&M Partners, as amended, shall,
effective upon the effective date of the termination of this Agreement
as contemplated by clause (x) or clause (y) immediately above, be
amended such that any and all references therein to "seventy-one
percent (71%)" or ".71" therein shall be changed to "sixty percent
(60%)" and ".60", respectively, and (B) Section 2.1.40 of that certain
U.S. Roundup Ready Gene License and Seed Services Agreement, dated as
of February 2, 1996, by and among Parent, the Company and D&M
Partners, as amended, shall, effective upon the effective date of the
termination of this Agreement as contemplated by clause (x) or clause
(y) immediately above, be amended such that Section 2.1.40 thereof be
deleted in its entirety and replaced with the following: "The term
MONSANTO ROYALTY PERCENTAGE" means sixty percent (60%)."
47
ARTICLE 10.
MISCELLANEOUS
SECTION 10.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile, telex or
similar writing) and shall be given:
If to Parent, Merger Sub or the Surviving
Corporation
(following the Effective Time), to:
Monsanto Company
800 North Lindbergh Boulevard
St. Louis, MO 63167
Facsimile: (314) 614-4832
Attention: Chief Financial Officer
with a copy to:
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
Attention: William H. Gump
Facsimile: (212) 728-8111
if to the Company (prior to the Effective Time), to:
Delta and Pine Land Company
P.O. Box 157
One Cotton Row
Scott, Mississippi 38772
Facsimile: (662) 742-3795
Attention: Chief Executive Officer
with copies to:
Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza
New York, NY 10014
Attention: Arthur Fleischer, Jr.
Peter Golden
Facsimile: (212) 859-4000
and
Fried, Frank, Harris, Shriver & Jacobson LLP
1001 Pennsylvania Avenue, NW
Washington, DC 20004
48
Attention: Lawrence R. Bard
Facsimile: (202) 639-7003
and
Phelps Dunbar LLP
111 East Capitol Street, Suite 600
P.O. Box 23066
Jackson, MS 39225
Attention: Jerome C. Hafter
Facsimile: (601) 360-9777
or such other address, facsimile or telex number as such party may
hereafter specify for the purpose by notice to the other parties hereto
delivered in accordance with the terms hereof. Each such notice, request or
other communication shall be effective (a) if given by facsimile or telex,
upon confirmation of receipt, or (b) if given by any other means, when
delivered at the address specified in this Section 10.01.
SECTION 10.02. Survival of Representations and Warranties. The
representations and warranties contained herein shall not survive the
Effective Time.
SECTION 10.03. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived
prior to the Effective Time if, and only if, such amendment or waiver
is in writing and signed, in the case of an amendment, by the Company,
Parent and Merger Sub or in the case of a waiver, by the party against
whom the waiver is to be effective; provided that after the adoption
of this Agreement by the stockholders of the Company, no such
amendment or waiver shall be effective if it requires further
stockholder approval under applicable law, unless the approval of the
requisite stockholders under applicable law has been obtained.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative
and not exclusive of any rights or remedies provided by law.
SECTION 10.04. Expenses. Except as provided in this Agreement, each
party shall pay its own costs and expenses relating to this Agreement and
the transactions contemplated hereby, except that each of Parent and the
Company shall bear and pay one-half of the costs and expenses incurred in
connection with the filing, printing and mailing of the Company Proxy
Statement (including SEC filing fees, but excluding the fees and expenses
of legal counsel and other advisors incurred in connection with the
foregoing).
SECTION 10.05. Successors and Assigns. This Agreement and the rights
and obligations hereunder may not be assigned; provided that this Agreement
may be assigned
49
by Parent and/or Merger Sub to, and the rights and obligations hereunder
shall be binding upon and inure to the benefit of, its legal successors and
assigns through a reorganization, merger, business combination or similar
transaction; provided further, however, that if Parent determines that there
is a reasonable likelihood that there would be a termination event that would
give rise to an obligation on the part of Parent to pay the Antitrust
Termination Payment, with not less than one (1) business day's prior written
notice to the Company, Parent and Merger Sub may enter into an agreement to
jointly assign their respective rights and obligations under this Agreement,
in whole but not in part, to any Person acceptable to the Company in its
reasonable discretion pursuant to an instrument by which such Person assumes,
effective immediately prior to Closing, all of the obligations of Parent and
Merger Sub under this Agreement and, upon, but not prior to, the Closing,
including without limitation, the deposit of the Payment Fund, each of Parent
and Merger Sub shall be deemed fully released from all of their respective
obligations hereunder.
SECTION 10.06. Governing Law; Submission to Jurisdiction; Waiver of
Jury Trial.
(a) This Agreement shall be construed in accordance with and
governed by the law of the State of Delaware, without giving effect to
any choice of law or conflict of law rules or provisions (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Delaware.
(b) Each of the parties hereto irrevocably agrees that any legal
action or proceeding with respect to this Agreement and the rights and
obligations arising hereunder, or for recognition and enforcement of
any judgment in respect of this Agreement and the rights and
obligations arising hereunder brought by the other party hereto or its
successors or permitted assigns shall be brought and determined
exclusively in the Delaware Court of Chancery, or in the event (but
only in the event) that such court does not have subject matter
jurisdiction over such action or proceeding, in the United States
District Court for the District of Delaware. Each of the parties
hereto agrees that mailing of process or other papers in connection
with any such action or proceeding in the manner provided in Section
10.01 or in such other manner as may be permitted by applicable laws,
will be valid and sufficient service thereof. Each of the parties
hereto hereby irrevocably submits with regard to any such action or
proceeding for itself and in respect of its property, generally and
unconditionally, to the personal jurisdiction of the aforesaid courts
and agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in
any court or tribunal other than the aforesaid courts. Each of the
parties hereto hereby irrevocably waives, and agrees not to assert, by
way of motion, as a defense, counterclaim or otherwise, in any action
or proceeding with respect to this Agreement and the rights and
obligations arising hereunder, or for recognition and enforcement of
any judgment in respect of this Agreement and the rights and
obligations arising hereunder (i) any claim that it is not personally
subject to the jurisdiction of the above named courts for any reason
other than the failure to serve process in accordance with this
Section 10.06(b), (ii) any claim that it or its
50
property is exempt or immune from jurisdiction of any such court or from
any legal process commenced in such courts (whether through service of
notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise) and (iii) to the fullest
extent permitted by the applicable law, any claim that (x) the suit,
action or proceeding in such court is brought in an inconvenient forum,
(y) the venue of such suit, action or proceeding is improper or (z) this
Agreement, or the subject matter hereof, may not be enforced in or by
such courts.
(c) Each party acknowledges and agrees that any controversy which
may arise under this Agreement is likely to involve complicated and
difficult issues and, therefore, each such party irrevocably and
unconditionally waives any right it may have to a trial by jury in
respect of any legal action arising out of or relating to this
Agreement or the transactions contemplated by this Agreement. Each
party to this Agreement certifies and acknowledges that (i) no
representative of any other party has represented, expressly or
otherwise, that such other party would not seek to enforce the
foregoing waiver in the event of a legal action, (ii) such party has
considered the implications of this waiver, (iii) such party makes
this waiver voluntarily, and (iv) such party has been induced to enter
into this Agreement by, among other things, the mutual waivers and
certifications in this Section 10.06(c).
SECTION 10.07. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts (including by means of telecopied
signature pages), each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
SECTION 10.08. Headings. Section headings used in this Agreement are
for convenience only and shall be ignored in the construction and
interpretation hereof.
SECTION 10.09. No Third Party Beneficiaries. Except for Section 6.02
hereof, no provision of this Agreement is intended to, or shall, confer any
third party beneficiary or other rights or remedies upon any Person other
than the parties hereto.
SECTION 10.10. Remedies. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms. It is
accordingly agreed that the parties hereto shall be entitled to specific
performance of the terms hereof, this being in addition to any other remedy
to which they are entitled at law or in equity.
SECTION 10.11. Severability. The provisions of this Agreement are
severable and the invalidity or unenforceability of any provision will not
affect the validity or enforceability of the other provisions of this
Agreement. If any provision of this Agreement, or the application of that
provision to any Person or any circumstance, is invalid or unenforceable,
(a) a suitable and equitable provision will be substituted for that
provision in order to carry out, so far as may be valid and enforceable,
the intent and purpose of the invalid or unenforceable provision and (b)
the remainder of this Agreement and the application of that provision to
other Persons or circumstances will not be affected by such invalidity or
unenforceability, nor will
51
such invalidity or unenforceability affect the validity or enforceability of
that provision, or the application of that provision, in any other
jurisdiction.
SECTION 10.12. Rules of Construction. The parties to this Agreement
have been represented by counsel during the negotiation and execution of
this Agreement and waive the application of any laws or rule of
construction providing that ambiguities in any agreement or other document
will be construed against the party drafting such agreement or other
document.
SECTION 10.13. Entire Agreement. This Agreement, including the
exhibits hereto, the Company Disclosure Letter, the Confidentiality
Agreement and the Settlement Agreements, embody the entire agreement and
understanding of the parties hereto in respect of the subject matter
contained herein and supersede all prior agreements and understandings,
both written and oral, between the parties with respect to such subject
matter.
SECTION 10.14. Certain Defined Terms. As used herein, the term (a)
"Person" means an individual, corporation, partnership, limited liability
company, limited liability partnership, syndicate, trust, association,
organization or other entity, including any Governmental Entity, and
including any successor, by merger or otherwise, of any of the foregoing,
(b) "Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person and (c) "Subsidiary" means, with respect to any Person, another
Person, an amount of the voting securities, other voting ownership or
voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of which)
is owned directly or indirectly by such Person. Notwithstanding any other
provision of this Agreement, the Company shall not be in breach of any
provision hereof that requires the Company to cause any Subsidiary to do or
take any action whatsoever if the Company and its Subsidiaries do not have
the power, authority or ability to cause the Subsidiary to do or take such
action under the organization documents of such Subsidiary, or any
agreement between the Company or its Subsidiaries and any other Person that
is in effect on the date hereof. Unless otherwise expressly specified in
this Agreement, a reference to a "Subsidiary" or "Subsidiaries" are
references to a Subsidiary or Subsidiaries of the Company.
[Signature page follows.]
52
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement and Plan of Merger to be duly executed by their
respective authorized officers as of the day and year first above
written.
MONSANTO COMPANY
By: /s/ Terrell K. Crews
-------------------------------
Name: Terrell K. Crews
Title: Chief Financial Officer
MONSANTO SUB, INC.
By: /s/ Nancy E. Hamilton
-------------------------------
Name: Nancy E. Hamilton
Title: Secretary
DELTA AND PINE LAND COMPANY
By: /s/ W.T. Jagodinski
-------------------------------
Name: W.T. Jagodinski
Title: President and
Chief Executive Officer
APPENDIX B
[LETTERHEAD OF UBS SECURITIES LLC]
August 14, 2006
The Board of Directors
Delta and Pine Land Company
100 Main Street
Scott, Mississippi 38772
Dear Members of the Board:
We understand that Delta and Pine Land Company, a Delaware corporation
("D&PL"), is considering a transaction whereby Monsanto Sub, Inc. ("Merger
Sub"), a Delaware corporation and wholly owned subsidiary of Monsanto Company,
a Delaware corporation ("Monsanto"), will merge with and into D&PL (the
"Transaction"). Pursuant to the terms of the Agreement and Plan of Merger,
dated as of August 14, 2006 (the "Merger Agreement"), among Monsanto, Merger
Sub and D&PL, each outstanding share of the common stock, par value $0.10 per
share, of D&PL ("D&PL Common Stock") will be converted into the right to
receive $42.00 in cash (the "Consideration"). The terms and conditions of the
Transaction are more fully set forth in the Merger Agreement.
You have requested our opinion as to the fairness, from a financial point
of view, to the holders of D&PL Common Stock (other than Monsanto, Merger Sub
and their respective affiliates) of the Consideration to be received by such
holders in the Transaction.
UBS Securities LLC ("UBS") has acted as financial advisor to D&PL in
connection with the Transaction and will receive a fee for its services, a
portion of which is payable in connection with this opinion and a significant
portion of which is contingent upon consummation of the Transaction. In the
past, UBS has provided investment banking services to D&PL unrelated to the
proposed Transaction, for which UBS has received compensation. In the ordinary
course of business, UBS, its successors and affiliates may hold or trade, for
their own accounts and the accounts of their customers, securities of D&PL and
Monsanto, and, accordingly, may at any time hold a long or short position in
such securities.
Our opinion does not address the relative merits of the Transaction as
compared to other business strategies or transactions that might be available
with respect to D&PL or D&PL's underlying business decision to effect the
Transaction. Our opinion does not constitute a recommendation to any
stockholder of D&PL as to how such stockholder should vote or act with respect
to the Transaction. At your direction, we have not been asked to, nor do we,
offer any opinion as to the terms, other than the Consideration to the extent
expressly specified herein, of the Merger Agreement or the form of the
Transaction. In rendering this opinion, we have assumed, with your consent,
that (i) D&PL, Monsanto and Merger Sub will comply with all material terms of
the Merger Agreement and (ii) the Transaction will be consummated in
accordance with the terms of the Merger Agreement without any adverse waiver
or amendment of any material term or condition thereof. We have also assumed
that all governmental, regulatory or other consents and approvals necessary
for the consummation of the Transaction will be obtained without any material
adverse effect on D&PL or the Transaction. In connection with our engagement,
we have not been authorized to solicit, and have not solicited, indications of
interest in a business combination with D&PL from any party.
In arriving at our opinion, we have, among other things: (i) reviewed
certain publicly available business and historical financial information
relating to D&PL ; (ii) reviewed certain internal financial information and
other data relating to the business and financial prospects of D&PL that were
provided to us by the management of D&PL and not publicly available, including
financial forecasts and estimates prepared by the management of D&PL ; (iii)
conducted discussions with members of the senior management of D&PL concerning
the business and financial prospects of D&PL ; (iv) conducted discussions with
members of the senior management and other representatives of
B-1
The Board of Directors
Delta and Pine Land Company
August 14, 2006
Page 2
D&PL concerning outstanding litigation and certain other proceedings involving
D&PL ; (v) reviewed publicly available financial and stock market data with
respect to certain other companies we believe to be generally relevant; (vi)
compared the financial terms of the Transaction with the publicly available
financial terms of certain other transactions we believe to be generally
relevant; (vii) reviewed current and historical market prices of D&PL Common
Stock; (viii) reviewed the Merger Agreement; and (ix) conducted such other
financial studies, analyses and investigations, and considered such other
information, as we deemed necessary or appropriate.
In connection with our review, with your consent, we have not assumed any
responsibility for independent verification of any of the information provided
to or reviewed by us for the purpose of this opinion and have, with your
consent, relied on such information being complete and accurate in all
material respects. In addition, with your consent, we have not made any
independent evaluation or appraisal of any of the assets or liabilities
(contingent or otherwise) of D&PL, nor have we been furnished with any such
evaluation or appraisal. With respect to the financial forecasts and estimates
referred to above, we have assumed, at your direction, that they have been
reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the management of D&PL as to the future performance
of D&PL. In addition, based on the belief of the management of D&PL, we have
assumed, at your direction solely for purposes of our analyses, that the value
that D&PL could obtain for settling its pending litigation and arbitration
proceedings with Monsanto, in the aggregate, would not be material to the
financial position and prospects of D&PL, and we therefore have assumed that
the outcome of such litigation and arbitration proceedings would not change
the conclusion reached in our opinion. Our opinion is necessarily based on
economic, monetary, market and other conditions as in effect on, and the
information available to us as of, the date hereof.
Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the Consideration to be received by holders of D&PL Common
Stock (other than Monsanto, Merger Sub and their respective affiliates) in the
Transaction is fair, from a financial point of view, to such holders.
This opinion is provided for the benefit of the Board of Directors in
connection with, and for the purpose of, its evaluation of the Transaction.
Very truly yours,
/s/ UBS Securities LLC
UBS SECURITIES LLC
B-2
APPENDIX C
APPRAISAL RIGHTS
ss. 262. Appraisal rights. (a) Any stockholder of a corporation of this
State who holds shares of stock on the date of the making of a demand pursuant
to subsection (d) of this section with respect to such shares, who
continuously holds such shares through the effective date of the merger or
consolidation, who has otherwise complied with subsection (d) of this section
and who has neither voted in favor of the merger or consolidation nor
consented thereto in writing pursuant to ss. 228 of this title shall be
entitled to an appraisal by the Court of Chancery of the fair value of the
stockholder's shares of stock under the circumstances described in subsections
(b) and (c) of this section. As used in this section, the word "stockholder"
means a holder of record of stock in a stock corporation and also a member of
record of a nonstock corporation; the words "stock" and "share" mean and
include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely
of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to ss. 251 (other than a merger effected pursuant to ss.
251(g) of this title), ss. 252, ss. 254, ss. 257, ss. 258, ss. 263 or ss. 264
of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of record by more than
2,000 holders; and further provided that no appraisal rights shall be
available for any shares of stock of the constituent corporation surviving a
merger if the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in subsection (f) of ss.
251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by the
terms of an agreement of merger or consolidation pursuant to ss. ss. 251, 252,
254, 257, 258, 263 and 264 of this title to accept for such stock anything
except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in respect
thereof) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash
in lieu of fractional shares or fractional depository receipts described in
the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under ss. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for such
meeting with respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder electing to
demand the appraisal of such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of such stockholder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal
of such stockholder's shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein provided.
Within 10 days after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of the date that
the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to ss. 228 or
ss. 253 of this title, then, either a constituent corporation before the
effective date of the merger or consolidation, or the surviving or resulting
corporation within ten days thereafter, shall notify each of the holders of
any class or series of stock of such constituent corporation who are entitled
to appraisal rights of the approval of the merger or consolidation and that
appraisal rights are available for any or all shares of such class or series
of stock of such constituent corporation, and shall include in such notice a
copy of this section. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders of
the effective date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting corporation the appraisal of
such holder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a
second notice before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of such
constituent corporation that are entitled to appraisal rights of the effective
date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or within
10 days after such effective date; provided, however, that if such second
notice is sent more than 20 days following the sending of the first notice,
such second notice need only be sent to each stockholder who is entitled to
appraisal rights and who has demanded appraisal of such holder's shares in
accordance with this subsection. An affidavit of the secretary or assistant
secretary or of the transfer agent of the corporation that is required to give
either notice that such notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be not
more than 10 days prior to the date the notice is given, provided, that if the
notice is given on or after the effective date of the merger or consolidation,
the record date shall be such effective date. If no record date is fixed and
the notice is given prior to the effective date, the record date shall be the
close of business on the day next preceding the day on which the notice is
given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who
has complied with subsections (a) and (d) hereof and who is otherwise entitled
to appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms
offered upon the merger or consolidation. Within 120 days after the effective
date of the
-2-
merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting
from the consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares. Such written statement shall be mailed to the
stockholder within 10 days after such stockholder's written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal
under subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted such stockholder's
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of
the certificates representing such stock. The Court's decree may be enforced
as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
-3-
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of such stockholder's demand for an appraisal and an acceptance of the merger
or consolidation, either within 60 days after the effective date of the merger
or consolidation as provided in subsection (e) of this section or thereafter
with the written approval of the corporation, then the right of such
stockholder to an appraisal shall cease. Notwithstanding the foregoing, no
appraisal proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized
and unissued shares of the surviving or resulting corporation.
-4-
THE DIRECTORS AND OFFICERS OF
DELTA AND PINE LAND COMPANY
CORDIALLY INVITE YOU TO ATTEND OUR
SPECIAL MEETING OF STOCKHOLDERS
Thursday December 21, 2006 10:00 A.M. Central Standard Time
The Madison Hotel
79 Madison Avenue
Memphis, Tennessee
You can vote in one of three ways: 1) by mail, 2) by internet, 3) by phone.
See the reverse side of this sheet for instructions.
IF YOU ARE NOT VOTING BY TELEPHONE OR BY INTERNET, COMPLETE BOTH SIDES OF THIS
PROXY CARD, DETACH AND RETURN IN THE ENCLOSED ENVELOPE TO:
Illinois Stock Transfer Co.
209 West Jackson Boulevard, Suite 903
Chicago, Illinois 60606
IMPORTANT
PLEASE COMPLETE BOTH SIDES OF THE PROXY CARD, SIGN, DATE, DETACH AND RETURN
IN THE ENCLOSED ENVELOPE.
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DETACH ATTENDANCE CARD
HERE
DETACH PROXY CARD HERE AND MAIL WITH PROXY CARD
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This proxy is solicited on behalf of
the board of directors. If not
otherwise specified on the reverse
side, this proxy will be voted FOR the
adoption of the merger agreement and
FOR the proposal to adjourn or
postpone the Special Meeting, if
necessary or appropriate, to permit
further solicitation of proxies, and
in accordance with the recommendation
of our board of directors on any other
matters properly brought before the
meeting for a vote. The undersigned
revokes all proxies heretofore given
to vote at such meeting and all
adjournments or postponements.
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V A
O B
T O
E V If you personally plan to
R E attend the Special Meeting of
Stockholders, please check
C N the box below and list names
O A of attendees.
N M
T E Return this stub in the
R enclosed envelope with your
O H completed proxy card.
L E Dated:____________________
R I/We do plan to attend the
N E Special Meeting. ______
U ________________________
M Attendees:
B ________________________ ____________________________
E
R ________________________ ____________________________
(Please sign here)
Please sign your name as it appears
above. If executed by a corporation,
a duly authorized officer should
sign. Executors, administrators,
attorneys, guardians and trustees
should so indicate when signing. If
shares are held jointly, at least one
holder must sign.
_______________________________
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TO VOTE BY MAIL
To vote by mail, complete both sides, sign and date the proxy card below.
Detach the card below and return it in the envelope provided.
TO VOTE BY INTERNET
Your internet vote is quick, confidential and immediate. Just follow these
easy steps:
1. Read the accompanying Proxy Statement.
2. Visit our internet voting site at
http://www.illinoisstocktransfer.com and follow
the instructions on the screen.
3. When prompted for your Voter Control Number, enter the number printed
just above your name on the front of the proxy card.
Please note that all votes cast by internet must be completed and submitted
prior to December 20, 2006 at 11:59 p.m., Central Standard Time. Your
internet vote authorizes the named proxies to vote your shares to the same
extent as if you marked, signed, dated and returned the proxy card. This is
a "secured" web page site. Your software and/or internet provider must be
"enabled" to access this site. Please call your software or internet
provider for further information if needed.
If You Vote By INTERNET, Please Do Not Return Your Proxy Card By Mail
TO VOTE BY TELEPHONE
Your telephone vote is quick, confidential and immediate. Just follow these
easy steps:
1. Read the accompanying Proxy Statement.
2. Using a Touch-Tone telephone, call toll free 1-800-555-8146 and
follow the instructions.
3. When asked for your Voter Control Number, enter the number printed just
above your name on the front of the proxy card below.
Please note that all votes cast by telephone must be completed and
submitted prior to December 20, 2006 at 11:59 p.m., Central Standard Time.
Your telephone vote authorizes the named proxies to vote your shares to the
same extent as if you marked, signed, dated and returned the proxy card.
If You Vote By TELEPHONE Please Do Not Return Your Proxy Card By Mail
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Has your name or address changed? If DELTA AND PINE LAND COMPANY REVOCABLE
so, please indicate changes below: PROXY
------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF
------------------------------------ THE BOARD OF DIRECTORS
------------------------------------
The undersigned hereby appoints
Jerome C. Hafter and Kenneth M.
Avery as Proxies, each with the
power to appoint his substitute, and
hereby authorizes each of them to
represent and to vote, as designated
below, all the shares of Common
Stock of Delta and Pine Land Company
which the undersigned is entitled to
vote at the Special Meeting of
Stockholders to be held on December
21 , 2006 or any adjournment
thereof. If any other business is
presented at the Special Meeting,
including whether or not to adjourn
the meeting, this proxy will be
voted, to the extent legally
permissible, by those named in this
proxy in their best judgment.
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RETURN TO: DELTA AND PINE LAND COMPANY 1. To adopt the Agreement and Plan of
C/O ILLINOIS STOCK TRANSFER CO. Merger, dated as of August 14, 2006,
209 WEST JACKSON BOULEVARD, SUITE 903 by and among Monsanto Company,
CHICAGO, ILLINOIS 60606 Monsanto Sub, Inc. and Delta and Pine
Land Company.
FOR AGAINST ABSTAIN
-- -- --
2. To approve the adjournment or
postponement of the Special Meeting,
if necessary or appropriate, to
solicit additional proxies if there
are insufficient votes cast at the
time of the Special Meeting to adopt
the merger agreement.
FOR AGAINST ABSTAIN
-- -- --
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